Document of

The World Bank

FOR OFFCLL USE ONLY

(1 /2 ± >/ C-L--/v/5Report No. P-6475-CHA

MEMORANDUM AND RECONMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

AND THE

INTERNATIONAL DEVELOPMNT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO $100.0 MILLION

AND A PROPOSED CREDIT

OF SDR 74.8 MILLION

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR A

YANGTZE BASIN WATER RESOURCES PROJECT

APRIL 3, 1995

This document has a restricted distribution and may be used bv recipients only in the performance oftheir official duties. Its contents mav not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS(September 1994)

Currency Unit = Yuan (Y)$1.00 = Y 8.7

Y 1.00 = $0.11

WEIGHTS AND MEASURES

1 meter (m) = 3.28 feet (ft)1 cubic meter (in 3 or cum) = 35.31 cubic feet

1 kdlometer (km) = 0.62 milesI hectare (ha) = 15 mu

1 ton (t) = 1,000 kg1 kilogram (kg) = 2.2 pounds

ABBREVIATIONS AND ACRONYMS

EIA - Environmental Impact AssessmentHPD - Hydro and Power Department (Hunan)LHPC - Lishui Hydro and Power Corporation (Hunan)MWR - Ministry of Water ResourcesO&M - Operation and MaintenanceSIDD - Self-Financing Irrigation and Drainage DistrictWRD - Water Resources Department (Hubei)WSC - Water Supply CorporationWUA - Water User AssociationYWRC - Yangtze Water Resources Commission

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

CHINA

YANGTZE BASIN WATER RESOURCES PROJECT

LOAN/CREDmr AND PROJECr SUMMARY

Borrower: People's Republic of China

Beneficiaries: Provinces of Hubei and Hunan and the Yangtze Water ResourcesCommission (YWRC).

Amount: Loan - $100 million equivalentCredit - SDR 74.8 million ($110 million equivalent)

Terms: Loan: 20 years' maturity, i-acluding 5 years of grace, at the Bank'sstandard variable interest rateCredit: Standard IDA ternm with 35 years' maturity

Financing Plan: See Schedule A.

Poverty: Not applicable.

Economic Rateof Return: 23 percent

Staff AppraisalReport: Report No. 13674-CHA

Map: IBRD 26373

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorizaLion.

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE

INTERNATIONAL BANK FOR RECONSTRUCTION ANI DEVELOPOMENAND THE INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORSON A PROPOSED LOAN AND CREDIT

TO THE PEOPLE'S REPUBLIC OF CHINAFOR A YANGTZE BASIN WATER RESOURCES PROJECT

1. I submit for your approval the following memorandum and recommendationon a proposed loan of $100 million equivalent and credit of SDR 74.8 million ($110million equivalent) to the People's Republic of China to help finance the Yangtze BasinWater Resources Project. The proposed loan would be for a term of 20 years, including5 years of grace, at the Bank's standard variable interest rate. The proposcd credit wouldbe for a term of 35 years under standard IDA terms. The proceeds of the loan and creditwould be onlent to Hubei and Hunan Provinces at an interest rate of 4 percent withrepayment in 20 years, including 5 years of grace. The foreign exchange risk would beborne by the provinces of Hubei and Hunan for their respective components.

2. Background. Agriculture in China provides sustenance for 1.2 bi'lionpeople and a livelihood for some 200 million farm fanilies. Foodgrains occupy about75 percent of the cultivated area, and intensive cultivation practices in grain farming allowChina to feed about 22 percent of the world's total population from 7 percent of theworld's arable land. With growth in the economy, however, the urban/rural income gapis widening. Rural net income per capita in 1992 was Y 784, compared to a disposableafter-tax per capita income of Y 1,826 for urban households. Increases in efficiency ofproduction per unit area represent one means of narrowing this gap, and increasing theoutput of staple grains remains a priority of the Government of China. Since half ofChina's cultivated agricultural land is irrigated, and irrigation currently accounts for about70 percent of total grain output, improvements to irrigation systems are an importantmeans of increasing the reliability, productivity and profitability of agriculture and rualincome. Irrigation permits high cropping intensities ranging from 120 percent in the dry,cold northernmost areas of the country to 250-300 percent in the southern provinces, andyields under irrigation are among the highest in Asia. Further intensification throughbetter irrigation and drainage will allow Chinese farmers to enjoy an increasing standardof living and to diversify production to meet the needs of an increasingly market-orientedeconomy with more sophisticated food requirements. Currently, about 80 percent of fruitsand vegetables are produced under irrigation, and the productivity of irrigated land inChina averages about twice that of rainfed land.

3. Past progress in increasing grain production has been mixed, with significantincreases from 1978 to 1984 after the introduction of rural reforms followed by stagnatinggrain production in 1984-88. Production reached a new peak in 1990-92 following furtherinvestment in agriculture, principally in irrigation rehabilitation and expansion, and theintroduction of reforms in grain procurement, prices, distribution and subsidies. Centralplanning of grain marketing has largely been eliminated, and grain prices are approaching

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world levels as grain commodity exchanges develop in several centers, including Wuhanand Changsha in the project areas. The value of grain production has declined from aboutone half to one third of the gross value of agricultural output as production of fruits,vegetables, and animal products has increasevd to meet changing consumer demand. Localgovernments have recognized these changes and now place a high priority on developmentof underutilized lands for production of high-value, nonstaple food and commercial crops.Water resources development is therefore vital to continued improvement in China'sagricultural performance.

4. Two overriding water resource issues are the growing water snortage in theNorth, particularly the Yellow River Basin, and weak river basin authorities withoutadequate statutory or regulatory basis for effective comprehensive river basin developmentand management. In addition, many large irrigation schemes constructed in the 1950s and1960s were hastily designed and built with low-quality materialls and equipment. Now,most require major rehabilitation and upgrading, many still lack irrigation distribution anddrainage networks at the terdary and farm level, and almost all suffer from inadequateoperation and maintenance (O&M). Moreover, management of most medium and largeirrigation schemes is fragmented among different governmental jurisdictions, and directparticipation by the farmers in system operation, maintenance and decision-making, exceptat the lowest levels, is very limited. This reduces farmers' sense of ownership andresponsibility, and their willingness to pay water charges sufficient for long-runsustainability. Completion, repair, rehabilitation and upgrading of existing irrigationfacilities, coupled with strengthened O&M and increased farmer participation, present amajor opportunity for investment, and are a high priority of the Govemment, the BankGroup and the proposed project. In addition, the rapid economic development in urbanand rural areas has raised the flood damage potential and created new demands for higherlevels of flood protection, which is also a major objective of the proposed project.

5. The proposed project areas in Hubei and Hunan are well placed to benefitfrom policy reform and favorable attitudes toward water resource investment by regionalgovemments, if physical constraints to production can be overcome. Irrigated areaproductivity in these areas is limited by recurring drought in late summer, frequentflooding in some areas, relatively dry winters, and also by imbalanced fertilizerapplications, particularly inadequate supplies of (largely imported) potassium fertilizers.Irrigation rehabilitation and development, flood control, watershed protection, andimprovements to fertilizer supply under the proposed project can ease these constraints.The proposed construction of a dam in the Lishui River Basin is considered particularlyimportant because it will improve protection from the very severe flooding that continuesto constrain economic growth in northern Hunan. Improved flood control along the Lishuiand in the Dongting Lake area downstream is considered a national priority. Incomes inthe Hunan project area are about half the national average due in part to lack of irrigationand liability to severe flooding in the tiree-month rainy season. Almost 20 percent ofhouseholds in the Province are below the absolute poverty line.

6. Project Objectives. The main objectives are to: raise agriculturalproduction and incomes; improve flood control; reduce the risk and impact of floods;

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introduce a more sustainable and cost-effective system for O&M of irrigation and drainageschemes; and promote institutional reform and strengthening and improve planning andmonitoring in the water sector. Key institutional development objectives would be tointroduce comprehensive management of the Lishui River Basin in Hunan, and establishself-financing irrigation and drainage districts (SIDDs), each comprising a Water SupplyCorporation (WSC) and Water User Associations (WUAs) based on farmers' participation.This would promote cost recovery, decentralization of services delivery, and participationby users, which are key elements of Govemment and Bank Group water resources policy.These institational changes would be pilot efforts to prepare for the future when currentgovernment bujdget support for irrigation is expected to decline. The project is alsoexpected to alleviate poverty among several million rural dwellers through a combinationof irrigation, drainage, flood control, and power benefits.

7. Project Description. The project areas lie to the north and south of themiddle reach of the Yangtze River in Hubei and Hunan Provinces. The project worksrepresent a cross-section of the highest-priority water control investments in the twoprovinces. The project would comprise the following components and subprojects:

(a) Hubei Component (32 percent of project costs): (i) essential repair andrehabilitation works to upgrade four existing irrigation schemes with a totalbenefiting area of 271,200 ha; (ii) improvement of flood control over336,000 ha and drainage facilities for some 28,000 ha in the Sihu area;(iii) nonwater subprojects in aquaculture, forestry, grassland development,and soil improvement; and (iv) institutional development and capacitybuilding to establish WSCs and WWUAs at irrigation subprojects, andstrengthen the Hubei Water Resources Department (WRD); and

(b) Hunan Component (68 percent of project costs): (i) completion of twopartly constructed irrigation systems covering an area of about 50,000 ha;(ii) construction of the Jiangya Multipurpose Dam on the Loushui River inthe Lishui River Basin consisting of a 128 m high concrete dam with a300 MW power plant, which would mainly provide flood control, andresettlement of the reservoir population of about 12,587 people plus incomerehabilitation for an additional 3,196 people; (iii) technical support forimprovement of design and management of flood control works for theDongting Lake area covering some 250,000 ha; (iv) institutionaldevelopment support to establish the Lishui Hydro and Power Corporation(LHPC) as owner/operator of Jiangya Dam and as manager of the LishuiRiver Basin; and (v) institutional development and capacity building toestablish WSCs and WUAs at irrigation subprojects, and strengthen theHunan Hydro and Power Department (BPD).

8. Project Implementation. The Provincial Governments of Hubei and Hunanwould implement their subprojects under the project. Provincial line agencies and theirlower-level offices would implement the specific irrigation and drainage subprojects, andthe nonwater subprojects in Hubei, in the field; and LHPC, which is jointly owned by

- 4 -

Hunan and the Ministry of Water Resources, would implement Jiangya Dam in Hunan.Project Leading Groups and Project Management Offices have been established in Hubei,Hunan and LHPC to coordinate implementation. Estimated project costs total $551.9million equivalent, of which foreign exchange totals $196.8 million equivalent (36 percentof total costs). The Association would finance SDR 74.8 million ($110 millionequivalent), and IBRD $100 million equivalent (totaling 100 percent of foreign exchangecosts and about 4 percent of local costs). To allow rapid start-up of work under theproject, retroactive financing totaling $21 million equivalent (comprised of SDR 5.4million for Hubei and SDR 8.8 million for Hunan) has been recommended to coverexpenditures incurred between August 18, 1994 and the date of signing of the Credit andLoan Agreements. This would accelerate mobilization of the ICB contractor for JiangyaDam, ongoing construction works, start-up of new construction, early procurement ofequipment and materials, and technical assistance. A breakdown of project costs and thefinancing plan are shown in Schedule A. Amounts and methods of procurement and ofdisbursements, and the disbursement schedule, are shown in Schedule B. A timetable ofkey project processing events and the status of Bank Group operations in China arepresented in Schedules C and D, respectively. A map is also attached. The StaffAppraisal Report, No. 13674-CHA dated April 3, 1995, is being distributed separately.

9. Project Sustainability. The financial sustainability of irrigation anddrainage investments under the project is suppoited by: (a) a water pricing policy designedto recover at least long-run O&M costs and part of capital costs (especially subloanamortization costs); (b) strong cost recovery features under the project for water users andestablishment of WUAs that would promote more ownership and involvement by users ininvestment planning and O&M; and (c) establishment at each subproject of a WSC thatwould gradually take over responsibility for O&M of the main irrigation canal and maindrainage 'lystems, sell water to WUAs and be designed for financial viability. TheProvincial Govemments have demonstrated their commitment to these concepts, and haveagreed to implement appropriate supporting covenants under the project. The Jiangya Damsubproject would introduce flood protection fees and require power sales and floodprotection agreements designed to safeguard the financial viability of LHPC.

10. Lessons Learned from Previous Bank Group Operations. The BankGroup has so far supported 15 agricultural projects in China with major water resourcescomponents, mainly for inigation, with associated lending of some $3.9 billion andcovering a total irrigation command area of about 3.8 million ha. Key lessons fromprevious water resource projects are that project design should support the 'user pays"principle, and users' (farmers') participation should be explicitly built into projectplanning, implementation and operation; flood protection investments should include costrecovery from beneficiaries; irrigation and water conservancy projects shouid includeprovisions for unified irrigation system management; and projects should build institutionalcapacity of provincial and local water resource institutions. Lessons learned fromwatershed management projects are that greater stress should be put on crop diversificationto reduce market and technical risks, and emphasis should be on conservation and long-term physical and financial viability of participating households. These lessons arereflected in the design of the proposed project.

- 5 -

11. Rationale for Bank Group Involvement. The proposed project isconsistent with the Bamik Group's Country Assistance Strategy for China distributed to theBoard in August 1993. That strategy emphasized income enhancement and povertyalleviation as the highest priorities in the agricultural sector. It also highlighted the needto improve water resource planning, especially in major flood-prone areas. As designed,the proposed project would benefit mainly rural dwellers many of whom live below thepoverty line, and one of the major new subprojects (Liuduzhai project area, with apopulation of about 300,000) is locatad in a remote region that is classified as an absolutepoverty area. The project would also provide substantial direct environmental and healthbenefits through flood control by Jiangya Dam, soil conservation from the forestry andgrassland components, and construction techniques in the Sihu subproject that would reduceschistosomiasis and malaria breeding areas. Bank Group involvement is also important topromote better policy, and institutional change and development in the water resourcessector. The project would support development of self-financing irrigation districts basedon farmers' participation, and establishment of comprehensive management for the LishuiRiver Basin; both are primary elements of Bank Group and Government of China waterresources policy. It would also further technological innovation in water resources.Jiangya Dam would employ a new, more cost-effective construction technique that wouldenable more rapid completion, and it would be among the highest dams of its type in theworld upon completion; and several of the irrigation subprojects would incorporate canallining and automated canal monitoring systems on a pilot basis for improved operationalefficiency.

12. Actions Agreed. Agreements were reached at negotiations that Hubei andHunan would: (a) establish and support WSCs and WUAs at irrigation and drainagesubprojects; (b) provide support to WSCs equal to the level of support provided to othergovernment entities responsible for O&M of irrigation and drainage areas; (c) assign theright to the farmers' customary labor for public works to WSCs and WUAs; (d) completecost recovery studies for SIDDs and establish water charge rates based on those studiessatisfactory to the Bank/IDA; and (e) carry out a mid-term review of project progress.Hunan would: (a) carry out the Environmental Monitoring and Management Plan andResettlement Action Plan for Jiangya Dam; (b) maintain the dam safety panel for Jiangya;(c) appoint an international consultant firm for technical assistance for Jiangya Dam; and(d) ensure that LHPC reaches agreements for sale of power (sufficient to provide debtservice coverage of 1.5) and receives fees for flood protection from Jiangya Dam.Appointment by Hunan of a domestic firm as the Project Engineer for Jiangya Damimplementation and satisfactory progress on Jiangya Dam resettlement were conditions ofBoard presentation and have been met. Disbursement of Y 20 million by LHPC forresettlement and certification that the People's Construction Bank of China would provide$44 million of local financing for Jiangya were conditions of negotiations.

13. Environmental and Resettlement Aspects. Project investments shouldgenerate substantial environmental and health benefits due to improved water control andflood protection. In the drainage subproject, project construction activities will bemodified to reinforce ongoing schistosomiasis and malaria control programs in low-lyingareas. Most other subprojects will have minimal negative incremental environmental

- 6 -

impacts because they are for rehabilitation of existing systems, and are located in higher-elevation irrigated areas that are not affected by schistosomiasis. The EnvironmentalImpact Assessment for the project has been completed. Jiangya Dam and reservoir inHunan are the only components with major environmental impacts. The EnvironmentalManagement and Monitoring Plan covers Jiangya Dam, and also the Sihu subproject inHubei, the latter mainly with regard to schistosomiasis and malaria control measures.There are no environmental issues with regard to flora and fauna; five rare and endangeredspecies that are affected are well represented outside the area, and existing downstreamdams on the Lishui River already form a barrier to migratory fish.

14. Jiangya Dam and reservoir will involve resettlement of some 12,587 peoplein three counties, and the Jiangya Resettlement Plan and Resettlement Action Plan (RAP)have been completed. A total of 567 people have already been satisfactorily resettled fromthe dam site. The remaining resettlement would be done in four stages: to elevation138 m (421 people) by April 1995; 138-160 m (3,574 people) by September 1995;160-200 m first group (2,050 people) by December 1995 and second group (3,363 people)by Decenmber 1996; and 200-236 m (3,179 people) by December 1997. An additional3,196 people would lose all or most of their land, and economic rehabilitation would beprovided to replace their lost income. Some 29 village sites and six market towns wouldbe developed under the project. Most of the people (75 percent) would be given farmlandat higher elevations to grow fruits, tea and Chinese medicinal herbs; the remainder wouldget jobs in township and village enterprises (19 percent) or be employed in aquaculture andgrain farming (6 percent). Per capita costs would total about $3,100. LHPC would beresDonsible for the overall implementation of fiangya Dam resettlement, and ResettlementBureaus in the affected counties would carry out their respective resettlement plans. First-stage resettlement must be completed by about end-April 1995 and is being closelymonitored.

15. Participatory Approach. WSCs and WUAs to be established for irrigationand drainage subprojects would incorporate participation of the farmer beneficiaries,including women. Farmers would be represented on the Board of WSCs, and woulddirectly operate and manage WUAs. WUAs would be involved in planning andconstruction of their local systems.

16. Project Benefits. Project investments would benefit directly nearly700,000 ha and some 5 million people in Hubei and Hunan. The Hubei Component wouldgenerate incremental agricultural production valued at some Y 767 million/year ($88million) at full development, creating annually about 12 million days/year (nearly 50,000new jobs) of permanent, productive employment for unskilled labor. The HunanComponent would generate incremental agricultural production valued at about Y 192million/year ($22 million) and employment totaling about 4.9 million days/year (about16,000 new jobs); electricity valued at Y 384 million/year ($44 million); estimated averageflood control benefits of Y 185 million/year ($21 million); and unquantified personalsafety, navigation, tourism and other benefits. The project would reduce poverty byraising both fanner income and employment opportunities, and improve health by reducingthe potential for malaria and schistosomiasis in selected areas. By introducing both

- 7 -

increased farmer participation and self-financing of irrigation, the project will also promotesustainable irrigation development and growth. Benefits included in the economic analysisare increased crop production, and flood protection and power supply from Jiangya Dam.All components and subprojects have acceptable economic rates of return (ERRs), and theaggregate ERR for the project as a whole is estimated at 23 percent.

17. Risks. The major risks concern: (a) construction of Jiangya Dam, whichwould be among the highest dams of its type in the werld when completed. The mostcritical risk is the supply of cement and fly asil, which must be continuous; theinternational contractor would bear this risk. Availability and timing of counterpartfunding is also a significant risk for delays and cost increases. To minimize this risk,Bank Group funding for Jiangya Dam has been allocated to cover most of the ICB contractfor the dam body; and a condition of negotiations was certification that the People'sConstruction Bank of China would provide a $44 million equivalent loan for Jiangya. Tominimize technical risks, intemational implementation technical assistance and institutionaldevelopment support for LHPC has also been provided, and the design has been reviewedand construction will be monitored by an independent dam safety panel of local andinternational experts; (b) institutional innovations for WSCs and WUAs that would takeover responsibility for O&M of irrigation subprojects. These innovations would be pilottested, phased in gradually, and supported by a comprehensive capacity-building program,and the Provincial Governments have already demonstrated a strong commitment tocarrying out these innovations through covenants under the project; and (c) nonwatersubprojects in Hubei. Beneficiaries of nonwater subprojects would be carefully selectedas they must manage the investrmients at a profit. Risks would be minimized throughcontinuous consultation by the project staff with beneficiaries, especially during the earlyyears of operation.

18. Recommendation. I am satisfied that the proposed loan and credit wouldcomply with the Articles of Agreement of the Bank and IDA and recommend that theExecutive Directors approve the proposed loan and credit.

Sven SandstromActing President

Attachments

Washington, D.C.April 3, 1995

- 8 - Schedule A

CHINA

YANGTZE BASIN WATER RESOURCES PROJECT

ESTMATED COsTs AND FINANCING PLAN($ million)

Local Foreign Total

Estimated Cost LaHIubei -Component

Zhanghe Irrigation Area 8.4 7.9 16.3Dongfeng rripation Area 8.2 8.5 16.6Yindan Irrigation Area 11.1 8.9 20.0Wenxia Irrigation Area 7.0 6.2 13.3Sihu Irrigation Area 18.6 17.0 35.6Aquaculture Development 9.4 2.9 12.3Forestry Development 6.7 1.4 8.0Grasslands Development 6.5 4.2 10.6Soil Improvement 5.2 4.2 9.4

Subtotal Hubei Base Costs 81 61.1 142.3

Hunan ComponentJiangya Multipurpose Dam 148.4 95.9 244.3Tieshan Irrigation Area 30.0 3.9 33.9Liuduzhai Irrigation Area 25.1 5.3 30.5Dongting Lake Research 1.0 1.3 2.3Lishui Hydro and Power Corp. 1.0 1.2 2.2PMOIWRB Institutional Support 0.6 0.6 1.3

Subtotal Hunan Base Costs 206.1 1083 314.4

Totl Base Costs 287.3 9.4 4567

Physical Contingencies 21.1 16.2 37.3Price Contingencies 46.6 11.3 57.9

Total Priject Costs 35 50 196.8 512

Financing PlanGOC/Provinces/Constriction Bank 341.8 - 341.8[BRD Loan/IDA Credit 13.2 196.8 210.0

La Project costs include duties and taxes.

Note: Totals may not sum due to rounding.

-9- -Schdule BPage 1

CHINA

YANGTZE BASIN WATER RESOURCES PROJECT

SUMARY OF PROPOSED PROCUREMENT ARRANGE DM($ million)

Procurement Method TotalCategory ICB LCB Other FA NBF Cost

Land Acguisition/Resettlement - - - - 50.4 50.4

Civil WorksJiangya Dam 70.0 22.0 - 3.5 59.0 154.5

(39.0) (9.5) - (1.5) - (50.0)Irrigation/Drainage - 93.4 12.5 23.7 3.6 131.2

- (27.0) (6.0) (9.0) - (42.0)Nonwater Subprojects - 14.5 6.3 20.8

- (3.3) - (3.0) - (6.3)

EguiDmentJiangya Plant Equipment 40.5 15.0 0.5 - 18.0 74.0

(31.0) (7.5) (0.4) - - (38.9)Irrigation and Drainage 3.2 8.6 1.2 - - 13.0

(2.5) (6.0) (0.5) - - (9.0)Nonwater Subprojects 1.6 1.3 0.6 - - 3.5

(1.0) (1.0) (0S5) - - (2.5)Vehicles 0.6 6.2 - - - 6.8

(0.5) (5.0) - - - (5.5)

Commodities 7.0 3.1 5.2 - 13.4 28.7(4.5) (2.0) (3.3) - - (9.8)

Construction Materials 28.8 4.8 0.7 - - 34.3(20.0) (3.0) (0-5) - - (23.5)

TA/TrainingaseanchImplementation Support - - 8.2 - - 8.2

- - (8.2) - - (8.2)lnstitutional Development - - 14.3 - - 14.3

- - (14.3) - - (14.3)

Project Management - - - - 10.2 10.2

Total Cot 151.7 168.9 43.2 33.5 154 6 551.9(985 {64.3) 0337) (13 5) (210.0)

Notes: 1. Other refers to international and local shopping and consultant services.2. FA is Force Account. NBF is Not Bank-Financed.3. Figures in parentheses are the amounts financed by the Bank/IDA.4. Costs include duties and taxes which are not financed under the Loan/Credit.5. Commodities indude grass seed, fish seed, breeding stock, feeder calves, etc.

- 10 - Schedule 1Page 2

DIURSENMS

Amount of:Loan Credit % of Expenditures

Category (Sa in) (SDRmln) to be frnaced

Hubei:(1) Works 12.50 10.70 40%

(2) Goods (xculuding locally procured 19.00 15.75 100% of forcign cxpenditures, 100% of localfertilizers and comrmodities under expenditures (ex-factory cost) and 75% of localPart D of the Project) cxpenditures far other items procured locally

(3) Consultants'services, training, 2.S0 2. IS 100%study tours, resarch and tudics

(4) Unallocated 4.00 -

Hltnan: Irigation Subprqiecfs(5) Works 8.50 6.80 30%

(6) Goods S 10 4.10 100% of foreign expcnditures, 100% of localexpenditures (cx-factory cost) and 75% of localexpenditures for other items procured locally

(7) Consultnnts'services,training, 1.60 1.20 100%stuy tours, research and studies

Flnan: Jianga Dam and LMPC(3) Works

(a) Jiangyn Main Dam 19.00 15.20 75%(b) Other Workd 3.50 2.80 50%

(9) Goods 16.50 13.20 100% of foreign expenditures, 100% of localexpenditures (ex-factory cost) and 75% of localexpenditures for other items procured locally

(10) Consultants' services, training, 3.60 2.90 100%study ,ours, resarch and studies

(11) Unallocated 4.20 -

Total 100.00 74.80

Estimated Disbursement

IBRD/IDA FY 1296 1997 1998 1999 2000 2001---- ($ million)---

Annual 46.2 52.5 52.5 33.6 21.0 4.2Cumulative 46.2 98.7 151.2 184.8 205.8 210.0

- 11 - Schedule C

CHINA

YANGTZE BASIN WATER RESOURCES PROJECT

TIMETABLE OF KEY PROJECr PROCESSING EVENTS

(a) Time taken to prepare the project: 26 months

(b) Prepared by: Central and Provincial Governmentswith assistance of foreign and localconsultants, FAO/CP, and the Bank

(c) First Bank mission: June 1992

(d) Appraisal mission departure: August 18, 1994

(e) Negotiations: February 1995

(f) Expected date of effectiveness: August 1995

(g) List of relevant PCRs and PPARs: Project Completion Report-China:Pishihang-Chaohu Area DevelopmentProject (Loan 2579-CEIA/Credit 1606-CHA), June 17, 1993

The prqject was appraised by the following: Messrs./Mmes. R. Reidinger (TaskManager), U. El-Hanbali, W. Ochs, H. Plusquellee, Mei Xie, W. Price, R. Crooks,R. Zweig, J. Fringer, S. Gulyani (Bank), and W. Almand, J. Anderson, R. Chisholm,R. Clark, Bi Mingjiang, rlang Ping, Li Qun, Lin Zong-Cheng, and R. Radosevich(Consultants). Mr. B. Trembath (Bank) also assisted in the preparation and appraisal ofthe project. The peer reviewers are S. Ganguly (AF2AE), U. Kuffner (EMTWU),W. Ochs (AGRNR), and W. Price (ASIEN). The Division Chief is Joseph Goldberg, andthe Department Director is Nicholas C. Hope.

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ScheduLe DPage 1 of 3

STATUS OF BANK GROUP OPERATIONS IN THE PEOPLE'S REPUBLIC OF CHINA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of December 31, 1994)

Loan/ Amount (USS million)Credit Bor- (net of cancellations)

Number FY rower Purpose Bank IDA Undisb.(a)

33 Loans and 42 credits have been fully disbursed. 3,118.3 2,602.3 -Of which SECAL:

2967/1932 88 PRC Rural Sector Adj. 200.0 93.2 -

2678/1680 86 PRC Third Railway 160.0 (70.0)(b) 10.42723/1713 86 PRC Rural Health & Preventive Med. 15.0 65.0 12.91764 87 PRC Xinjiang Agricultural Dev. - 70.0 1.9

2794/1779 87 PRC Shanghai Sewerage 45.0 (100.0)(b) 6.62811/1792 87 PRC Beijing-Tianjin-Tanggu Expressway 25.0 175.0 9.62812/1793 87 PRC Gansu Provincial Dev. (20.0)(b) 150.5 17.21835 87 PRC Ptanning Support & Special Studies 20.7 5.22852 87 PRC Wujing Thermal Power 190.0 - 8.2

2877/1845 88 PRC Huangpu Port 63.0 (25.0)(b) 7.41885 88 PRC Northern Irrigation - 103.0 8.92943 88 PRC PharmaceuticaLs 127.0 - 0.8

2951/1917 88 PRC Sichuan Highway 75.0 (50.0)(b) 22.72955 88 PRC Beilungang II 165.0 - 22.32958 88 PRC Phosphate Dev. 62.7 - 9.42968 88 PRC Railway IV 200.0 - 13.41984 89 PRC Jiangxi Provincial Highway - 61.0 3.51997 89 PRC Shaanxi Agricultural Dev. - 106.0 18.82006 89 PRC Textbook Development - 57.0 0.42009 89 PRC Integrated Reg. Heatth - 52.0 14.43006 89 PRC Ningbo & Shanghai Ports 76.4 9.23007 89 PRC Xiamen Port 36.0 - 1.33022 89 PRC Tianjin Light Industry 154.0 - 42.1

3060/2014 89 PRC Inmer Mongolia Railway 70.0 (80.0)(b) 9.03066 89 PRC Hubei Phosphate 137.0 - 47.1

307312025 89 PRC Shandong Prov. Highway 60.0 (50.0)Cb) 21.83075 89 PRC Fifth Industrial Credit 300.0 - 0.82097 90 PRC Jiangxi Agric. Dev. - 60.0 3.22114 90 PRC VocationaL & Tech. Educ. - 50.0 5.52145 90 PRC National Afforestation - 300.0 89.92159 90 PRC Nebei Agricultural Dev. - 150.0 45.72172 91 PRC Mid-Tangtze Agricultural Dev. 64.0 17.7

3265/2182 91 PRC Rural Credit IV 75.0 200.0 39.63274/2186 91 PRC Rural Indust Tech (SPARK) 50.0 64.3 28.03286/2201 91 PRC Medium-Sized Cities Dev. 79.4 52.9 40.5

2210 91 PRC Key Studies Development - 131.2 45.32219 91 PRC Liaoning Urban Infrastructure - 77.8 10.6

3316/2226 91 PQC Jiangsu Provi. Transport 100.0 (53.6)(b) 30.22242 91 PlC Henan Agricul. Dev. - 110.0 64.2

3337/2256 91 PRC Irrig. Agricul. Intensif. 147.1 187.9 101.83387 92 PRC Ertan Hydroelectric 380.0 47.32294 92 PRC Tarim Basin - 125.0 66.62296 92 PRC Shanghai Metro Transport - 60.0 20.03406 92 PRC RaiLways V 330.0 - 127.5

3412/2305 92 PRC Daguangba Multipurpose 30.0 37.0 14.6

2307 92 PRC Guangdong PDP - 162.0 111.53415/2312 92 PRC Beijing Environment 45.0 80.0 76.02317 92 PRC Infectious and Endemic Disease Cont - 129.6 103.83433 92 PRC Yanshi ThermaL Power 180.0 - 32.22336 92 PRC Rural Water Supply and Sanitation - 110.0 68.82339 92 PRC Educ. Development in Poor Provs. - 130.0 70.83443 92 PRC Regional Cement Industry 82.7 - 38.7

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Schedule 0Page 2 of 3

Loan/ Amount (USS million)Credit Bor- Cnet of cancellations)Number FY rower Purpose Bank IDA Undisb.(a)

3462 92 PRC Zouxian ThermaL Power 310.0 - 229.33471 92 PRC Zhejiang Provincial Hfghway 220.0 - 137.32387 92 PRC Tianjin Urban Devt. & Envir. - 100.0 72.42391 92 PRC Ship Waste Disposal 15.0 15.92411 93 PRC Sichuan Agricultural Devt. 147.0 93.23515 93 PRC Shuikou Hydroelectric II 100.0 - 68.52423 93 PRC Financial Sector TA 60.0 53.53530 93 PRC Guangdong Provinciat Transport 240.0 - 178.03531 93 PRC Henan Provincial Transport 120.0 - 83.02447 93 PRC Ref. Inst'l and Preinvest. - 50.0 43.53552 93 PRC Shanghai Port Rest. and Devt. 150.0 - 132.32457 93 PRC Changchun Water Supply & Env. - 120.0 117.72462 93 PRC Agriculture Support Services - 115.0 98.7

3560/2463 93 PRC Taihu Basin Flood Control 100.0 100.0 144.22471 93 PRC Effective Teaching Services - 100.0 98.23572 93 PRC Tianjin Industry II 150.0 - 150.03582 93 PRC South Jiangsu Envir. Prot. 250.0 - 235.92475 93 PRC Zhejiang Multicities Devt. 110.0 97.43581 93 PRC Railway VI 420.0 - 362.43606 93 PRC Tianhuangping Hydroelectric 300.0 - 277.5

3624/2518 93 PRC Grain Distribution 325.0 165.0 475.52522 93 PRC EnvironmentaL Tech. Assist. - 50.0 45.92539 94 PRC Rural Health Workers Devt. 110.0 105.63652 94 PRC Shanghai Metro Transport II 150.- 74.03681 94 PRC Fujian Provincial Highways 140.0 122.63687 94 PRC TeLecommunications 250.0 - 250.02563 94 PRC Second Red Soils Area Devt. - 150.0 140.82571 94 PRC Songliao Plain Agric. Devt. - 205.0 195.13711 94 PRC Shanghai Environment 160.0 - 157.03716 94 PRC Sichuan Gas Devt & Conservatn. 25.0 - 255.03718 94 PRC rangzhou Therml Power 350.0 350.03727 94 PRC Xiaolangdi Multipurpose 460.0 - 400.62605 94 PRC Xisolangdi Resettlement - 110.0 107.92616 94 PRC Loess Plateau Watershed Devt. - 150.0 144.22623 94 PRC Forest Resource Devt. & Prot. - 200.0 192.33748 94 PRC National Highway 380.0 - 380.0

3773/2642 95 PRC Ent. Housing/Soc Sec Reform 275.0 75.0 351.93781 95 PRC Liaoning Environment Cc) 110.0 - 110.03787 95 PRC Xinjiang Prov. Highways (c) 150.0 - 150.02651 95 PRC Basic Ed for Poor/Minorities Cc) 100.0 100.33788 95 PRC Shenyang Industrial Reform (c) 175.0 - 175.02654 95 PRC Economic Law Reform Cc) - 10.0 10.02655 95 PRC Comp Maternal/Child Health Cc) 90.0 89.7

Total 12,118.6 8,026.2 8,697.6

of which has been repaid 1,005.7 14.2

Total now hetd by Bank and IDA 11,112.9 8,012.0

Amtount sold: Of which repaid

Total Undisbursed 5,735.1 2,962.5 8,697.6

(a) As credits are denominated in SDRs (since IDA Replenishment VI), undisbursed SOR creditbalances are converted to dollars at the current exchange rate between the dollar and the SDR.In some cases, therefore, the undisbursed balance indicates a dollar amount greater than theoriginal principal credit amount expressed in dollars.(b) Credit fully disbursed.(c) Not yet effective.

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Schedule 0Page 3 of 3

9. STATEMENT OF IFC INVESTMENTS(As of Decenber 31, 1994)

Invest- Type of Loan Equity Totalment No. FY Borrower . Business -- (US$ MilLion) -------

813/2175 851 Guangzhou Auto Automobile 15.0 4.5 19.586/91

974 87/88 China Investment Co. DFCs 3.0 - 3.0

1020 88/ China BicycLes BicycLe 17.5 3.4 20.992/94 Bicycles Co. Ltd. Manufacture

1066 89 Crown Electronics Electronics 15.0 - 15.0

1119 89 Shenzhen Solar Electric 2.0 1.0 3.0Light/Power

3423 93 Shenzhen PCCP Manufacturing 4.0 1.0 5.0

3150 93 Yantai Cement Cement 28.7 2.0 30.7

3881 94 China Walden Mgt. Capital Mkts. - 7.5 7.5

94 Dynamic Fund Venture - 20.0 20.0Capital

94 Newbridge Inv. Securities Mk - 8.0 8.0Financing Instit.

95 Dalian Glass Glass 61.0 - 61.0

Total Gross Comaitments 146.2 47.4 193.6

Less cancellations, terminations, 57.3 - 57.3repayments, write-offs, and sales

Total Comitments now Held by IFC 89.0 47.4 136.4

TotaL Undisbursed 17.5 28.4 45.9

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