china - world bankdocuments.worldbank.org/...document-p110632-2017-0… · web viewimplementation...

Document ofThe World Bank

Report No: ICR00003960

IMPLEMENTATION COMPLETION AND RESULTS REPORT(IBRD-80420)

ON A

LOAN

IN THE AMOUNT OF US$100 MILLION

TO THE

PEOPLE’S REPUBLIC OF CHINAFOR A

SICHUAN SMALL TOWNS DEVELOPMENT PROJECT

May 31, 2017

Social, Urban, Rural and Resilience Global Practice Global PracticeChina and Mongolia Country Management UnitEast Asia and Pacific Region

i

CURRENCY EQUIVALENTS

(Exchange Rate Effective December 31, 2016)

Currency Unit = Renminbi (RMB) RMB1.00 = US$0.1440

US$ 1.00 = RMB6.94

FISCAL YEARJanuary 1 – December 31

ABBREVIATIONS AND ACRONYMSAHH Affected HouseholdsBCR Benefit Cost RatioCPS Country Partnership StrategyCSI Core Sector IndicatorEA Environmental AssessmentEIA Environmental Impact Assessment EIRR Economic Internal Rate of ReturnEMP Environment Management PlanFM Financial ManagementFMM Financial Management Manual FYP Five Year PlanGIS Geographic Information System GDP Gross Domestic ProductGoC Government of ChinaIBRD International Bank of Reconstruction and Development IEG Independent Evaluations Group (of the Bank)IFI International Financing Institutions IOI Intermediate Outcome Indicators IR Involuntary ResettlementKPI Key Performance IndicatorsLID Low Impact DevelopmentLA Loan AgreementM&E Monitoring and EvaluationMIS Management Information System MoF Ministry of FinanceMTR Mid-Term ReviewMu Chinese unit of land area measurement (1 ha=15mu) NCB National Competitive BiddingNDRC National Development and Reform CommissionNPV Net Present Value

ii

PAP Project Affected People O&M Operations and MaintenanceOMM Operation, Maintenance and ManagementPDO Project Development ObjectivesPDRC Provincial Development and Reform Commission PFB Provincial Finance BureauPIU Project Implementation Unit PLG Provincial Leading Group PMO Project Management OfficePPMO Provincial Project Management Office QAE Quality at EntryRA Results FrameworkRAP Resettlement Action PlanRMB Renminbi (Chinese Currency) SA Social AssessmentSPG Sichuan Provincial Government SRAP Supplementary Resettlement Action PlanSSTDP Sichuan Small Towns Development Project SUDP Sichuan Urban Development ProjectSUEP Sichuan Urban Environment ProjectTA Technical AssistanceWDR World Development ReportWERP Wenchuan Earthquake Recovery ProjectWTP Water Treatment PlantWWTP Wastewater Treatment Plant

Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez, GSURRSector Manager: Abhas K. Jha, GSURR

Project Team Leader: Ji You, EACCFICR Team Leader: Tuo Shi, GSURR

iii

People’s Republic of ChinaSichuan Small Towns Development Project

CONTENTS

Data SheetA. Basic InformationB. Key DatesC. Ratings SummaryD. Sector and Theme CodesE. Bank StaffF. Results Framework AnalysisG. Ratings of Project Performance in ISRsH. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design2. Key Factors Affecting Implementation and Outcomes3. Assessment of Outcomes4. Assessment of Risk to Development Outcome5. Assessment of Bank and Borrower Performance6. Lessons Learned7. Comments on Issues Raised by Borrower/Implementing Agencies/PartnersAnnex 1. Project Costs and FinancingAnnex 2. Outputs by ComponentAnnex 3. Economic and Financial AnalysisAnnex 4. Bank Lending and Implementation Support/Supervision ProcessesAnnex 5. Summary of Borrower's ICR and/or Comments on Draft ICRAnnex 6. Comments of Cofinanciers and Other Partners/StakeholdersAnnex 7. List of Supporting DocumentsAnnex 8. Social Safeguards…………………………………………………………...76Annex 9. Photos before and after the Project…………………………………………80

MAP

A. Basic Information

Country: China Project Name:Sichuan Small Towns Development

Project ID: P110632 L/C/TF Number(s): IBRD-80420

iv

ICR Date: 04/14/2017 ICR Type: Core ICR

Lending Instrument: SIL Borrower:PEOPLE'S REPUBLIC OF CHINA

Original Total Commitment:

USD 100.00M Disbursed Amount: USD 93.32M

Revised Amount: USD 100.00MEnvironmental Category: BImplementing Agencies: Sichuan Provincial Project Management Office Cofinanciers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 12/22/2009 Effectiveness: 09/28/2011 09/28/2011 Appraisal: 07/19/2010 Restructuring(s): 01/29/2016 Approval: 05/10/2011 Mid-term Review: 06/19/2015 06/12/2015 Closing: 12/31/2016 12/31/2016

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies: Moderately Satisfactory

Overall Bank Performance: Moderately Satisfactory Overall Borrower

Performance: Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance IndicatorsImplementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Project at any time (Yes/No):

NoQuality at Entry (QEA):

None

Problem Project at any Yes Quality of None

v

time (Yes/No): Supervision (QSA): DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes Original Actual

Major Sector/Sector Transportation Urban Transport 60 57 Water, Sanitation and Waste Management Wastewater Collection and Transportation 10 13 Flood protection 20 27 Water Supply 10 3

Major Theme/Theme/Sub Theme Environment and Natural Resource Management Environmental Health and Pollution Management 7 15 Air quality management 7 1 Soil Pollution 7 4 Water Pollution 7 10 Urban and Rural Development Urban Development 80 85 Urban Infrastructure and Service Delivery 80 85

E. Bank Staff Positions At ICR At Approval

Vice President: Victoria Kwakwa James W. Adams Country Director: Bert Hofman Hsiao-Yun Elaine Sun Practice Manager/Manager:

Abhas Kumar Jha Ede Jorge Ijjasz-Vasquez

Project Team Leader: Ji You Ji You ICR Team Leader: Tuo Shi ICR Primary Author: Tuo Shi

vi

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)The project development objective is to improve priority infrastructure in the Project Counties / Districts in Sichuan Province.

Revised Project Development Objectives (as approved by original approving authority)

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Urban Roads, Increased population with access to road transportation network, Puxin Town (Number)

Value quantitative or Qualitative)

0 10,250 30,000

Date achieved 04/08/2011 12/31/2016 12/31/2016

Comments (incl. % achievement)

Exceeded by 192%. In anticipation of the construction of project roads, the local government expanded construction of public rental and resettlement housing which attracted a greater number of resident to the area than originally expected.

Indicator 2 : Urban Roads, Increased population with access to road transportation network, Panlian Town (Number)


0 7,200 20,000

Date achieved 04/08/2011 12/31/2016 12/31/2016


Exceeded by 178%. In anticipation of the construction of project roads, the local government expanded construction of public rental and resettlement housing which attracted a greater number of resident to the area than originally expected.

Indicator 3 : Urban Roads, Increased population with access to road transportation network, Liujiang Town (Number)


0 5000 5300

Date achieved 01/19/2016 12/31/2016 12/31/2016

vii


Exceeded. PDO indicator added through restructuring for the new investment on road in Liujiang Town

Indicator 4 : Urban Roads, Travel time along selected traffic corridor, Penglai Town (Luogui Road) (Minutes)


13 6 6

Date achieved 04/08/2011 12/31/2014 12/31/2015Comments (incl. % achievement)

100% achievement.

Indicator 5 : Urban Roads, Travel time along selected traffic corridor, Fengming Town (Binjiang Road south segment) (Minutes)


27 8.5 8


Slightly exceeded. Also supported by optimization of traffic signal system that further reduced travel time.

Indicator 6 : Urban Roads, Travel time along selected traffic corridor, Fengming Town(North Outer Ring Road)(Minutes)


20 7 7


Achieved.

Indicator 7 : Canal and Embankment Improvement, flood protection, Yingxi Town


3-5 year flood 20 year flood 20 year flood


Achieved. The embankments were lined and landscaped to improve flow and sewerage has been intercepted

Indicator 8 : Canal and Embankment Improvement, flood protection, Hongchuan Town



viii


Achieved.

Indicator 9 : Canal and Embankment Improvement, flood protection, Panlian Town




Achieved.

Indicator 10 : Canal and Embankment Improvement, water quality improvement, Yingxi Town


Less than Class V Class IV Class IV

Date achieved 04/08/2011 12/31/2013 12/31/2014


Achieved. See Table b) in Annex 2 for the monitoring data, pictures before and after the project, and China’s water quality classification system.

Indicator 11 : Canal and Embankment Improvement, water quality improvement, Hongchuan Town


Less than Class V Class IV Class IV


Achieved. See Table b) in Annex 2 for the monitoring data, pictures before and after the project, and China’s water quality classification system

Indicator 12 : Institutional, Number of agreed OMM plans operationalized (Number)


0 25 25

Date achieved 04/08/2011 12/31/2014 12/31/2016


Achieved. OMM units have been identified; existing OMM equipment and instruments are listed, and additional maintenance equipment required have been proposed; annual OMM investments have been estimated; trainings were held

Indicator 13: Increased population with access to improved water supply, Liujiang Town (Number)

ix


0 20,000 20,000

Date achieved 12/21/2015 12/31/2016 05/30/2017


Achieved with delay. By December 31, 2016 when the project was closed, the WTP was 80% completed. All works were completed by end of April, 2017. The test running was completed and final acceptance made, with the WTP being fully operational and designed capacity (2,500 m3/day) achieved, by end of May 2017.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Urban Roads, Length of roads constructed and/or upgraded, Puxin Town (Kilometers)

Value (quantitative or Qualitative)

0 13.22 13.6


Slightly exceeded.

Indicator 2 : Urban Roads, Length of roads constructed and/or upgraded, Penglai Town (Kilometers)


0 8.84 10.99 11.61

Date achieved 04/08/2011 12/31/2014 12/31/2016 12/31/2016Comments (incl. % achievement)

Exceeded. With project restructuring, 2.51 Km of road rehabilitation were added; however works were decreased by 1.79 Km due to master plan change.

Indicator 3 : Urban Roads, Length of roads constructed and/or upgraded, Yingxi Town (Kilometers)


0 2.66 2.64


99% achieved. Road length shortened due to optimization of preliminary designs.

x

Indicator 4 : Urban Roads, Length of roads constructed and/or upgraded, Fengming Town (Kilometers)


0 4.05 4.82


Exceeded by 19%. Approximately additional 0.77Km of branch road rehabilitated.

Indicator 5 : Urban Roads, Length of roads constructed and/or upgraded, Chonglong Town (Kilometers)


0 3.29 3.29


Achieved.

Indicator 6 : Urban Roads, Length of roads constructed and/or upgraded, Panlian Town (Kilometers)


0 2.81 2.81


Achieved. 0.8 Km by local funding.

Indicator 7 : Urban Roads, Length of roads constructed and/or upgraded, Liujiang Town (Kilometers)


0 2.41 2.41


Achieved. IOI added through restructuring for the new road investment in Liujiang Town.

Indicator 8 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Puxin Town (Kilometers)


0 41.41 43.10

Date achieved 04/08/2011 12/31/2014 12/31/2016

xi


Exceeded by 4%.

Indicator 9 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Penglai Town (Kilometers)


0 14.94 19.25 19.25


Achieved. 4.31 Km of drainage pipelines was added through project restructuring.

Indicator 10 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Shunqing District (Kilometers)


0 9.55 10.63


Exceeded by 11%. Minor increase as a result of the detailed design

Indicator 11 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Jialing District (Kilometers)


0 14.43 14.43


Achieved.

Indicator 12 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Hongchuan Town(Kilometers)


0 18.76 20.84 20.84


Achieved. 2.08 Km of drainage pipeline was added under project restructuring.

Indicator 13 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Fengming Town(Kilometers)

Value 0 12.48 12.53

xii

(quantitative or Qualitative) Date achieved 04/08/2011 12/31/2014 12/31/2014Comments (incl. % achievement)

Achieved.

Indicator 14 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Chonglong Town(Kilometers)


0 18.68 18.70


Achieved.

Indicator 15 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Panlian Town(Kilometers)


0 7.29 7.28


99.9% achieved.

Indicator 16 : Water Supply and Drainage Network, Length of water supply and drainage pipelines installed, Liujiang Town(Kilometers)


0 13.10 13.10


Achieved. Additional investment after project restructuring, involving 13.10 Km long of storm-water, sewer and water-supply pipelines.

Indicator 17 : Canal and Embankment Improvement, Length of river cleaned and length of river embankment rehabilitated, Puxin Town (Kilometers)


0 4.49 4.49


Achieved. 3.61 Km by local funding. Multiple changes were made due to local master change and optimization of design

Indicator 18 : Canal and Embankment Improvement, Length of river cleaned and length

xiii

of river embankment rehabilitated, Yingxi Town (Kilometers)


0 2.75 2.75


Achieved.

Indicator 19 : Canal and Embankment Improvement, Length of river cleaned and length of river embankment rehabilitated, Huohua Town (Kilometers)


0 5.89 5.90


Achieved.

Indicator 20 : Canal and Embankment Improvement, Length of river cleaned and length of river embankment rehabilitated, Hongchuan Town (Kilometers)


0 9.20 11.44 11.44

Date achieved 04/08/2011 12/31/2014 12/31/2016 12/31/2016


Achieved. Under project restructuring, additional works of dredging 2.24 Km canal, 2.2Km of new embankment and 1.8 Km of embankment improvement were added

Indicator 21 : Canal and Embankment Improvement, Length of river cleaned and length of river embankment rehabilitated, Panlian Town (Kilometers)


0 1.47 1.47


Achieved.

Indicator 22 : Increased water treatment capacity in Liujiang Town (m3/day)


0 2,500 2,500

Date achieved 12/21/2015 12/31/2016 05/30/2017Comments Achieved with delay. By December 31, 2016 when the project was closed,

xiv

(incl. % achievement)

the WTP was 80% completed. All works were completed by end of April, 2017. The test running was completed and final acceptance made, with the WTP being fully operational and designed capacity (2,500 m3/day) achieved, by end of May 2017.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements(USD millions)

1 10/05/2011 Satisfactory Satisfactory 0.00

2 11/12/2012 Moderately Satisfactory Moderately Unsatisfactory 0.00

3 06/26/2013 Moderately Satisfactory Moderately Satisfactory 2.00 4 12/22/2013 Moderately Satisfactory Moderately Satisfactory 7.20 5 06/24/2014 Moderately Satisfactory Moderately Satisfactory 18.22 6 11/26/2014 Moderately Satisfactory Moderately Satisfactory 30.92 7 06/21/2015 Moderately Satisfactory Moderately Satisfactory 57.52 8 12/15/2015 Moderately Satisfactory Moderately Satisfactory 63.23 9 06/16/2016 Satisfactory Satisfactory 79.55

10 12/27/2016 Satisfactory Moderately Satisfactory 93.32

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes MadeDO IP

01/29/2016 S S 72.34 The Xinjin WWTP and the sewage pump station (PS) in Pengshan were dropped due to changes in their local master plans. The resulting Loan savings of US$17 million were used to finance additional physical works for (a) wastewater interception, canal and embankment improvements in Hongchuan Town in Hongya County); (b) urban roads, storm water management, a WTP (2,500 m3/day) and a Geographic Information System (GIS)

xv

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD

Reason for Restructuring & Key Changes MadeDO IP

based infrastructure management system in Liujiang Town in Hongya County; and (c) road rehabilitation in Penglai Town in Daying County.

I. Disbursement Profile

xvi

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. In 2008, Sichuan Province comprised a population of 88 million, with 32 cities (including county level cities) and 163 counties and districts, and a per capita GDP of RMB 15,378 (US$2,228). It was the fourth most populous province in China and accounted for one-third of China’s western region population and GDP. Its strategic geopolitical location, size, availability of natural resources, and potential for economic growth made Sichuan Province an integral component of the Government of China’s (GoC) Western Region Development Program, which became China’s national development strategy since 2000.

2. For Sichuan, the development of towns has long been critical to its development. At appraisal, 62% of Sichuan’s population lived in towns of less than 25,000 people, which was significantly more than the national average of 44%. The Sichuan Provincial Government (SPG) was trying to limit physical migration to the major cities of Chengdu and neighboring Chongqing and was promoting the economic development of the many towns dispersed throughout the province, in order to provide livelihood opportunities to the urbanizing population while balancing economic and social needs. Some towns showed excellent potential for sustainable economic development, given their geographic location, rapidly developing industries and/or service sectors, or tourism resources (cultural or natural), but deficiencies in their existing infrastructure hampered growth and caused deteriorating environmental conditions. Sanitation and water supply systems were often inadequate; wastewater treatment was poor or nonexistent; flood protection measures were weak; and transport networks were inefficient.

3. At appraisal the Bank and Sichuan province had worked together successfully for over 15 years in tackling urban environmental problems and improving living conditions. The Bank published the “World Development Report 2009: Reshaping Economic Geography”, which reframes the policy debates on urbanization, territorial development, and regional integration and draws practical implications for urbanization policies in today’s developing countries. The framework and recommendations of this report were drawn upon to help refine and enhance Sichuan’s own strategic development plan. GoC’s urban-rural integration policies promoted the integration of urban-rural social and economic development as a necessary requirement for the country to achieve its development objectives. Chengdu, provincial capital of Sichuan, was selected by the State Council in 2006 as a pilot city for the Urban-Rural Integration Program. The project formed part of the Bank’s urban-rural program in support of GoC’s overall Urban-Rural Integration Program. Other projects in this program included the Bank-supported urban-rural linkage program in neighboring Chongqing Municipality.1

1 Other recent Bank projects in China with a focus on small towns included Zhejiang Qiantang River Basin Small Town Environment Project, Shaanxi Small Towns Infrastructure Project, Jiangxi Poyang Lake Basin and Ecological Economic Zone Small Town Development Project

1

4. Consistency with Country Partnership Strategy. The project supported three out of five themes of the Bank’s China Country Partnership Strategy (CPS) for 2006-2010 (Report No. 35435-CN) discussed by the Board on May 23, 2006: (a) reducing poverty, inequality, and social exclusion; (b) managing resource scarcity and environmental challenges; and (c) improving public and market institutions. By focusing on infrastructure investments in small towns, the project supported the objectives of China’s 11th Five Year Plan (FYP, 2006-10) which aimed to facilitate the development of small towns and secondary cities as a key component of an optimized urbanization strategy, to promote urban-rural integration and build a more environmentally friendly society. Additionally, this strategic focus on development of small towns complemented GoC’s US$586 billion fiscal stimulus package through the provision of infrastructure to promote domestic growth and mitigate the impact of the slowdown caused by the global financial crisis starting in 2008.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)5. The PDO in the PAD and Loan Agreement was “to improve priority infrastructure in the Project Counties/Districts in Sichuan Province”. The key performance indicators (KPI) in the main text of PAD included: 1) increased population with access to road transportation network in new urban areas and reduced travel time in existing urban areas; 2) increased flood protection standard compliance and improved water quality in canals; 3) evidence of satisfactory completion of work as planned to achieve the local government required environmental and flood control standards. In the Results Framework (Table (c) in Annex 3) KPIs #1 and #2 are broken out to four different KPIs but are the same in spirit. However, KPI#3 is reformulated as: “Number of agreed OMM plans operationalized”.

1.3 Revised PDO and Key Indicators, and reasons/justification6. At the project restructuring in 2015, the PDO was not revised, but a KPI “increased population with access to improved water supply” was added to measure the outcome of the new water treatment plant (WTP) and water pipelines to be installed in Liujiang Town of Hongya County. A number of core sector indicators (CSI) were added during implementation in response to a corporate mandate, but were never officially added in a formal restructuring.

1.4 Main Beneficiaries

7. The PAD did not explicitly state the main beneficiaries or primary target group. As implicated by the PDO and project design, the primary target group was the residents of all the project towns, of which the total population was about 450,000 at appraisal. A second group of beneficiaries constituted the responsible government agencies at provincial and county/district level and utilities involved in project implementation, who would benefit from the institutional strengthening and capacity building activities under Component 2.

1.5 Original Components 8. The total estimated cost of the project was US$169.95 million, with an IBRD loan of US$100 million. The project was originally comprised of two components:

2

Component 1 – Small Town Infrastructure Development (Total cost: US$166.15 million; IBRD US$95.95 million, 95.95% of total loan). Construction of selected urban roads, water supply networks, storm and sewerage drainage networks, canal and river embankments and a wastewater treatment plant (WWTP) in the Puxing Town of Xinjin County, Hongchuan Town of Hongya County, Fengming Town of Pengshan County, Panlian Town of Miyi County, Penglai Town of Daying County and Chonglong Town of Zizhong County, Huohua Town of Jialing District and Yingxi Town of Shunqing District, in order to promote local economic development and improve environmental services. Table 1 in Annex 2 provides the details of each sub-component as planned at appraisal.

Component 2 – Institutional Strengthening and Capacity Building (Total cost: US$3.8million, 100% Loan financed). Provision of technical assistance (TA) for project implementation by developing the institutional capacity of Project Implementation Units (PIU), including TA for: (a) project construction management and supervision (design review, advisory services, traffic safety audit and engineering supervision), and for traffic management capacity development; (b) on-the-job training for staff of the Project Counties/Districts for operation maintenance and management (OMM) of their infrastructure investments; and (c) independent monitoring of Environmental Management Plans (EMPs) and Resettlement Action Plans (RAPs) and training and study tours during implementation.

1.6 Revised Components

9. Upon the 2015 project restructuring, the Xinjin WWTP and the sewage pump station (PS) in Pengshan were dropped due to changes in their local master plans. The resulting Loan savings of US$17 million were used to finance additional physical works for (a) wastewater interception, canal and embankment improvements in Hongchuan Town in Hongya County); (b) urban roads, storm water management, a WTP (2,500 m3/day) and a Geographic Information System (GIS) based infrastructure management system in Liujiang Town in Hongya County; and (c) road rehabilitation in Penglai Town in Daying County. As a result, the cost for component 1 went from US$166.15 to US$137.91.

1.7 Other significant changes

10. Competitive bidding and the dropping of the wastewater treatment facility in Xinjin and a sewage pump station in Pengshan resulted in loan savings of about US$17 million, which was proposed by the client to be used to finance additional civil works in the project counties of Hongya and Daying. These new civil works are in line with the PDO and will enhance achievement of the PDO of improving priority infrastructure in the project counties. The investments have been carefully selected to ensure they do not impose any additional risks to the project and can be completed by the original Loan closing date of December 31, 2016.

11. Changes made through restructuring include:

3

1) deleting construction of a wastewater treatment facility in Xinjin and a sewage pump station in Pengshan;

2) using the resulting loan savings of US$17 million to finance additional physical works for (a) wastewater interception, canal and embankment improvements in Hongchuan Town in Hongya County); (b) urban roads, storm water management, a water treatment plant (2,500 m3/day) and a GIS based infrastructure management system in Liujiang Town in Hongya County; and (c) road rehabilitation in Penglai Town in Daying County;

3) changing the component costs and financing plan; 4) increasing the disbursement percentage for civil works from 92% to 100%;5) reallocating Loan proceeds among disbursement categories; 6) revising the Results Framework; and7) deleting two covenants that are no longer applicable.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Soundness of Background AnalysisThe preparation of the project was built on a sound foundation of both analysis and planning. The country and sector background and government strategies were thoroughly studied and analyzed. Project design took into account lessons from the long collaboration between Sichuan Province and the Bank in the urban sector as well as from similar Bank projects in China, including the then ongoing Sichuan Urban Development Project (SUDP, Ln. 4838), assessments by the Bank’s Independent Evaluation Group (IEG), and relevant Bank reports. Lessons reflected in the project design included: 1) the need for small towns to plan for urban infrastructure based on future demand to ensure sustainability of investments; 2) screening out small towns with weak financial capacity to avoid potential difficulties in raising counterpart funding; 3) avoiding overdesign based on a combination of accurate future demand projections, cost-effective technical specifications, and appropriate design standards.

Assessment of Project Design12. The project design was simple with one construction component and one TA component, which were logically linked to achieving the PDO. All infrastructure subprojects chosen for inclusion under the project were required to conform to three principles: a) compliance with national, provincial and county/district development plans; b) promotion of balanced urban and rural development; c) replicability and readiness for implementation. Conformity with all three criteria ensured that the investments were “priority infrastructure”. These infrastructure investments responded to the key deficiencies in existing infrastructure of selected towns, and were closely linked to improvements of accessibility, livability, productivity and environment sustainability of these towns that are important for unleashing their development potential. Most investments involved three key sectors: roads, water and sewerage, and drainage. The

4

main complexity was that Component 1 covered eight different towns each with limited capacity.

13. One institutional issue proved problematic during implementation. While all the other project districts/counties designated their respective county/district Planning and Construction Bureau as the PIU, Xinjin County has appointed the Chengdu Small Towns Investment Corp. Ltd (CSTIC) as its PIU. The rationale for this was that CSTIC had considerable experience in project management and operations. However, CSTIC was located Chengdu, about 23 km from Xinjing County. At the beginning of implementation, Xinjin Government designated Xinjin County Urban-Rural Construction Investment Co. to serve as the acting PIU on behalf of CSTIC during the project implementation. This abrupt institutional change resulted in lost time in re-allocating assignments, slowed preparation of bidding documents, and generally delayed implementation in Xinjin.

Adequacy of Government’s Commitment14. The GOC’s commitment to this project at preparation was significantly affected by the Wenchuan Earthquake, with the Sichuan Provincial Government (SPG) very much focused on the earthquake recovery works. While the first mission (identification mission) was undertaken in April 2009, with pressure and priority focused on the quick implementation of WERP by both the central government and SPG, the preparation process was significantly slowed down due to constrained resources with the same PPMO responsible for both WERP and this proejct. It took more than 10 months by Sichuan to complete all required technical documents, including FSRs, safeguards and fiduciary documents, to enable the Bank to conduct pre-appraisal.

Assessment of Risks 15. The risk “Implementation Capacity within the PPMO is limited due to its current workload, which includes SUDP, WERP, and the AFD financed Earthquake Recovery Program” was correctly identified in PAD, but the rating of “Moderate” is an underestimate. Although the Bank team had highlighted the urgency of ensuring adequate staffing, facilities and other resources to be made available to the PPMO from the start of project preparation with agreement reached during project, the PPMO still encountered a shortage of staff at the early stage of implementation, leading to significant delay as almost all of PPMO’s limited capacity and resources were focused on the priority implementation of WERP.

16. The risk “Unforeseen land acquisition and resettlement issues could delay project implementation” was rated as “Moderate” in PAD, which is an underestimate. By project closure, 348 households in 4 project counties were still not resettled. Executions of land acquisition and resettlement took longer than planned and had slowed down the progress in some subcomponents. Some subcomponents had to be dropped or switched to be financed by local funding due to the land acquisition and resettlement issues encountered in the implementation process, as summarized in Table (d) of Annex 2.

5

17. The PAD would have benefited from explicitly identifying the risk of local master plans changes, given the well-known fact that China’s urban setting has been a fast-changing environment with frequent master plan changes, as well as the relatively large number of counties/districts included under the project. As it turned out, multiple changes were made to various sub-components of civil works during implementation, for which the most common reason was local master plan changes (Table (d) of Annex 2). This had affected the implementation substantially and contributed to the long delay at the early stage of implementation.

18. Based on the assessments above, the overall risk rating in PAD, which is “Moderate”, is considered an underestimate and a “Substantial” rating would be more appropriate.

Quality at EntryRating: Moderately Satisfactory 19. The strategic relevance and context of the project were very strong. The preparation of the project was built on a sound foundation of both analysis and planning. Project design took into account lessons from the long collaboration between Sichuan Province and the Bank in the urban sector as well as from similar Bank projects in China. The project design was simple with one construction component and one TA component, which were logically linked to achieving the PDO. Subprojects were carefully chosen according to a set of criteria that would ensure that all assets investments financed by the project would be “priority” investments. Meanwhile, the PAD could have been improved in the aspects of risk rating and respective mitigation measures as mentioned above, and M&E design and quality of the Results Framework (see Section 2.3).

2.2 Implementation

20. Implementation delay at the early stage. The project got off to a slow start. The project was approved by Board in May 2011 and loan effectiveness was on September 28, 2011, when the SPG as well as every counties/district governments at that time had focused on the reconstruction and recovery works following the Wenchuan Earthquake. Most of the engineering design took place in late 2012, with the first contract of civil works signed on April 26, 2013, leading to more than one year’s delay in implementation. A shortage of staff was experienced in the Sichuan Provincial Project Management office (PPMO) whose work load included implementation of SUDP (approved September 2006) and WERP (approved February 2009). Given the emergency nature of the project, the PPMO focused almost exclusively on implementing WERP. The slow start-up is reflected in the “moderately unsatisfactory” (MU) rating for implementation progress (IP) in the Implementation Status Report (ISR) of November 2012 (see datasheet, Section G, #2).

21. Implementation brought back to track. Due to the substantial completion of the procurement of all sub-projects under the WERP, the PPMO was able to turn its attention back to this project. The PPMO’s capacity was also strengthened with the consultants for project construction supervision and management mobilized. Meanwhile, in order to accelerate the implementation, the Bank took proactive actions including CMU’s

6

meetings with central government authorities (NDRC and MOF), task team’s briefing to MOF and interactions with SPG during field missions. As a result, the project was brought back to track in 2013 with the construction eventually started and advancement of procurement on a large number of contracts, as reflected in the upgrading of IP rating to “Moderately Satisfactory” in the ISR of June 2013 (see datasheet, Section G, #3).

22. Completion of works by project closing. Despite a significant startup delay, all works included at appraisal were completed seven months before the original closing date with savings of US$17 million to carry out additional works (See Section 1.6). Most of activities added through the project restructuring were also completed before the original Loan closing date of December 31, 2016, except for the WTP in Liujiang (see Section 3.2 for details). Disbursements stands at 93.3% at the ICR completion (see section 3.3 for analysis on the loan saving). According to the ICR team’s observation and information from the task team and the client, timely completion of the works, despite the significant startup delay, are related to the following factors that compensated for the lost time.

23. Simple project design. As mentioned in Section 2.1, the project design was simple with one construction component and one TA component, which were logically linked to achieving the PDO. All infrastructure subprojects were carefully chosen according to a set of criteria that would ensure that all assets investments financed by the project would be “priority” investments.

24. Contracting approach and design institute. Another important factor contributing to the timely completion of the project was the large contracting approach adopted where the minimum value of each contract had to be US$10 million. From the beginning of the project preparation, the Bank task team and procurement specialist and PPMO emphasized the importance of procurement efficiency and ease for the PIUs if all civil works in one project county/district could be lumped into one large contract (except for Xinjing county, where Sichuan wanted to avoid contract size was larger than NCB ceiling). This resulted in a smaller number of contracts to manage, while at the same time increasing the attractiveness of bidding on the contracts. The result was greater competition among contractors (five to 12 bids for each contract), more efficient procurement, and the resulting loan savings (see Section 3.3 for the analysis on the efficiency gain from this contracting approach). Also contributing to the implementation efficiency was that only one local design institute was used for all physical investments in each of the project counties/districts.

Project Changes25. Changes in local master plans. Multiple changes were made to the various civil works sub-components as summarized in Table (d) of Annex 2. The most common reason for changes was master plan changes. The town with the most significant changes, with the greatest overall impact on the project, was Puxin Town of Xinjin County, the largest sub-component ($50 million) under component 1 at appraisal. In 2013, the town made significant changes to its master plan including major changes for Tianfu New District. The master plan changes caused significant increases in the amount of

7

resettlement required, and led to the deletion of the WWTP in Puxin Town during the restructuring. (A WWTP was still completed by local funding outside the project.)

26. Another common reason for project changes was optimization of engineering designs. During the implementation of the Fengming Town (Pengshan County) sub-component, the construction of a lift pump station (PS) in the existing wastewater treatment plant (WWTP), as originally planned, was not agreed in a review meeting by local experts due to dangerous excavation affecting adjacent water-retaining structure. After optimization of the design of interceptor sewer, the lift PS in the contract was cancelled and the sewage has been intercepted to the WWTP by gravity.

Mid-term Review (MTR)/Restructuring 27. The above-mentioned implementation delay subsequently led to significant delay of the MTR. While the MTR was initially planned for December 2013, the draft MTR proposal was eventually submitted by the PPMO to the Bank in May 2015. The document proposed to utilize the US$17 million in Loan savings to finance additional civil works in three towns of two existing project counties (two towns in Hongya County and one town in Daying county). The MTR/Restructuring mission was carried out in June 2015. After appraising the new works, the Bank agreed they would enhance achievement of the PDO; would not impose any additional risks to the project; and could be completed by the original Loan closing. Due to lengthy domestic approval process, the project restructuring request from MOF was received on December 18, 2015. Bank management approved this Level II restructuring on January 29, 2016. The changes made are elaborated in Section 1.6.

28. The conclusion of restructuring by Jan 2016 left the project with less than one year to complete the new investments by the project’s original closing date of December 31, 2016, putting their completion at high risk. The Bank team duly cautioned the client of the risk with the tight time frame left and suggested them consider extension of the project as necessary (AM, Nov 2015), although Sichuan insisted to complete all the new investments by the original closing date. As it turned out, most of the new activities were completed by December 31, 2016, except for the WTP in Liujiang Town, which was about 80% completed at closing (see Section 3.2 for details), with delay caused by slow execution of land acquisition.

29. Incomplete Resettlement. By project closing, 348 households have yet to be resettled in 4 project counties (Xinjin, Miyi, Zizhong and Jialing). To address the remaining resettlement, a Supplementary Resettlement Action Plan (SRAP) was prepared and agreed upon between Sichuan and the Bank. According to the SRAP, most of the remaining households would be allocated with resettlement houses by March 2017 and get the keys by September 2017. While progress was made as planned in 2 counties (Xinjin and Miyi), further delay in resettlement of the remaining PAPs happened in the other 2 counties, Zizhong and Jialing, as some households decided to wait for the original resettlement housing to be constructed, while keeping receiving monthly subsides. As a result, by end of March 2017, 114 households in these 2 counties were not resettled. An

8

updated action plan and schedule have been agreed upon with respective parties. More details can be found in Section 2.4 and Annex 8.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

M&E Design30. The results framework (RF) at appraisal identified the overall project outcome indicators and the intermediate outcome indictors for each sub-component (Annex 3 of PAD). There are 11 KPIs and 20 Intermediate Outcome Indicators (IOIs) in total, as these indicators were designed according to multiple types of infrastructure investments spread out in 8 project towns. The project mainly financed roads, water/sewerage and canals/embankment works. All 3 sectors are clearly represented with measurable indicators that are easy to understand. The KPIs all had baselines and the IOIs were assumed a zero baseline because they were all “done under the project”. Baseline data for results indicators were agreed during project appraisal, including clearly specified definitions for all indicators. The KPIs can be logically met through the IOIs.

31. The RF could have been improved by a) defining the end target values more clearly and explicitly; b) including annualized targets for IOIs so as to enable monitoring the project progress on a gradual base; c) eliminating some inconsistencies with language and target values - for example, the yearly target values for KPI #1 should have been cumulative just as those for KPI #2; d) adding a column to provide supplementary remarks as clarification on some indicators as necessary – for example, explanation for differentiating Urban Roads KPIs into two sets, i.e.“Increased population with access to road transportation network” and “Travel time along the selected traffic corridor”.

M&E Implementation and Utilization32. The M&E was implemented as planned with respective data on indicators collected by local PMOs and PPMO and updates were provided in the project semi-annual progress reports. During the project restructuring, the RF was revised to accommodate the changes in the components, including a) adding a KPI “Increased population with access to improved water supply in Liujiang Town”; b) adding a new KPI for Liujiang Town into the KPIs set of “Urban Roads: Increased population with access to road transportation network”; c) adding an IOI for Liujing into the IOIs set of “Urban Roads: Length of roads constructed (km, for new urban areas) and upgraded (km, for existing urban areas)”; d) adding an IOI for Liujiang into the IOIs set of “Water Supply and Drainage Network: Length of water supply and drainage pipelines installed (Km)”; e) dropping the IOI “Wastewater Treatment Constructed (Puxing Town)”; f) revising the end target values of respective IOIs (Urban Roads for Penglai Town, Water Supply and Drainage Network for Penglai Town and Hongchuan Town, Canal and Embankment Improvement for Hongchuan Town). Unfortunately the Bank missed an opportunity to address the above-mentioned RF quality issues with the restructuring.

33. As a result of implementation delays, little progress toward the KPIs was observed from the ISRs until 2015, as the RF did not offer annualized targets in many cases. Therefore, the indicators were not utilized as a strong tool to inform management of major bottlenecks and facilitate decision-making or proactive actions, such as

9

increasing supervision frequency or having meetings with senior government officials. Some IOIs were not completely included in all ISRs: there are over 20 IOIs after restructuring, but somehow only seven IOIs were included in ISRs #9 and #10.

34. Nevertheless, according to the Borrower’s ICR, implementation and utilization of a quantitative M&E system was a good learning and capacity building process for local governments under the project, through which their existing M&E system and capacity have been strengthened with benefits expected beyond the project implementation period.

2.4 Safeguard and Fiduciary Compliance

35. The project triggered the following Bank safeguard policies: (a) OP4.01: Environmental Assessment; (b) OP4.11: Physical Cultural Resources; and (c) OP4.12: Involuntary Resettlement.

Environmental Safeguards

36. The project was appropriately classified as Category “B”. As anticipated during project preparation, the project operation has brought substantial environmental benefits, and no large-scale, significant and irreversible negative impacts are found during project implementation.

37. During project preparation, eight Environmental Impact Assessment (EIA) documents were prepared for the 8 sub-components in PAD, and in each EIA document, an associated Environmental Management Plan (EMP) has also been developed. Based on these EIA documents, an English language Consolidated Environment Assessment (CEA) Summary Report has been compiled to present the key issues of the sub-component EIA documents. All documents have been prepared on the basis of Chinese legal and policy framework for environmental protection, master plans and environmental plans, as well as applicable Bank safeguard policies. In accordance with Bank policies, public consultation and information disclosure were conducted during the preparation of the environmental assessment. Chinese language EIA documents were displayed locally several times from September 2009 to March 2010 through various means, such as internet, information boards, and notices in local communities. The English language CEA summary report was disclosed through the Bank’s InfoShop on July 7, 2010. With the project restructuring, an EIA and EMP, satisfactory to the Bank, were prepared for the proposed new subprojects, both documents were disclosed locally on March 16, 2014 and submitted to InfoShop for disclosure on Dec. 17th, 2015.

38. Environmental Assessment (OP/BP 4.01). Compliance with the Bank’s environmental safeguard policies was satisfactory. Based on the project semi-annual EMP implementation reports and the results of public consultation conducted during project implementation, the project investments are known to produce significant environmental benefits such as the improvements of traffic conditions, ambient air quality, flood control capacity, water supply treatment and distribution, drainage and wastewater collection and treatment, and surface water quality in the eight counties of Sichuan Province. The PMO and PIUs established and maintained satisfactory

10

environmental management capacity, supplemented with external environmental monitoring consultants who independently carried out regular EMP monitoring and reporting. During project implementation, special support was provided to small towns whose environmental management capacity was limited. Adverse impacts were adequately assessed and mitigated during project implementation as an integral part of each construction contract. As reported in the project semi-annual EMP implementation reports, extensive public consultations were also carried out during project implementation through questionnaire surveys (200 person*times) within project-affected areas, through which it was found that adequate mitigation measures had been ensured to cope with environmental and social impacts during construction and the public has witnessed significant environmental benefits brought by the project Neither environmental issue nor environmental complaint was received during project construction.

39. Physical Cultural Resources (OP/BP 4.11). During EA preparation OP4.11 Physical Cultural Resources was triggered because the proposed road improvement and flood control components in Hongya County are located within the planning control zone of the Zhou Family Temple, which is a provincial level protected cultural relic. During the construction of the road improvement and flood control components in Hongya County, appropriate mitigation measures were taken to protect the nearby Zhou Family Temple, a provincial level protected cultural relic. No significant negative impact resulted from the project.

Social Safeguards 40. All project sub-components involved land acquisition and resettlement. Individual RAPs for each of these sub-components by each project county and district were prepared in Chinese by the respective institutes, assisted by the respective PMO, house demolition offices and land resources bureaus. Consultation and surveys were done with affected villages and communities, and potential displaced persons. RAPs including RPF as an annex were prepared in compliance with OP 4.12 Involuntary Resettlement, and describe in detail the impacts, affected populations, consultation process, rehabilitation measures, budget, and implementation and monitoring arrangements. An Executive Summary RAP covering all sub-components was prepared in English and Chinese. The RAPs were disclosed locally in Chinese from July 2-17, 2010 in all component sites. The Executive Summary RAP was disclosed at the Bank’s InfoShop on July 7, 2010.

41. Most of the project civil works were very limited in scale and did not affect large numbers of people. Resettlement compensation was done in compliance with the Chinese government regulations and the World Bank policy in accordance with the RAPs. Resettlement implementation was regularly monitored by an independent external resettlement monitoring agent in addition to PMO’s internal monitoring. The Bank task team also conducted regular supervision missions in project sites to monitor the progress over the project implementation period. All resettlement was done in accordance with Chinese regulations and Bank policies and overall social safeguards policies were complied with satisfactorily. No complaints were received throughout the project. The

11

project provided an effective grievance redress mechanism with contact persons and details for local affected people. In some cases, in order to deal with differences between new and old policies, additional government budget was provided to increase compensation standards up to the replacement cost at the actual implementation time rather than the standards set in the RAP a couple of years ago.

42. Mid-term review/restructuring. Per section 1.6 above, loan savings of US$17 million were used to finance additional physical works in Liujiang Town and Hongchuan Town of Hongya County and Penglai Town in Daying County. The new investments in Hongchuan Town in Hongya County and Penglai Town in Daying County did not require any land acquisition or resettlement. The infrastructure improvements in Liujiang town in Hongya County required the acquisition of only 19.7mu (1.3ha) of land, which affected 19 households, (83 people) in Yang Village and Lianghe Village. A RAP satisfactory to the Bank was prepared and disclosed on July 30, 2015 locally and on July 29, 2015 in the World Bank Infoshop.

43. Land Acquisition and Resettlement Results. In total, land acquisition occurred in the eight counties and districts of the project. It acquired 2387.32 mu of collective land and 526.95 mu state-owned land. Land acquisition affected 2802 households or 8720 people. As for house demolition, the project actually demolished 142,192.3 m3 of houses, totally affecting 605 households. The project also demolished 39,867.25 m3 structures of 34 enterprises or other entities. Total affected households are 2802 with a total of affected people 8720.

44. The table below summarizes land acquisition and housing demolition impacts of the project, comparing estimates in RAPs and actual implementation. It shows a limited increase from the estimated to actual land acquisition and resettlement in the project.

Affected households by losing houses

Permanent land acquisition (mu)

House demolition(m²)

RAP estimates

Actual RAP estimates


Actual

528 605 1804.11 2387.32 127872.9 142192.3

45. During project implementation the PMOs and PIUs complied strictly with the requirement of the resettlement policies and the RAP. The PIUs attached great importance to the restoration of public facilities and carried out high-standard livelihoods restoration. External monitoring indicated that the income level of affected residents was higher than before the project and their standards of living have been recovered or improved. Knowing resettlement may not be completed in time, the Bank urged the PMOs to take actions two years prior to the loan closing date. More frequent supervision missions were conducted to push PMOs to accelerate construction of resettlement sites or explore alternative solutions.

12

46. Remaining resettlements issue and agreed actions. By project closing, 348 households have yet to be resettled in 4 project counties (Xinjin, Miyi, Zizhong and Jialing). A main reason for the delay is that the resettlement houses for this project are only a small part of large scale resettlement sites constructed by respective local governments for displaced people not only under this Bank project but also for some other domestic projects. The construction of these large scale resettlement sites was delayed and their implementation was not under control of the Bank’s project.

47. To address the remaining resettlement, a Supplementary Resettlement Action Plan (SRAP) was prepared and agreed upon between Sichuan and the Bank. According to the SRAP, most of the remaining households would be allocated with resettlement houses by March 2017 and get the keys by September 2017. While progress was made as planned in 2 counties (Xinjin and Miyi), further delay in resettlement of the remaining PAPs happened in the other 2 counties, Zizhong and Jialing, as some households decided to wait for the original resettlement housing to be constructed, while keeping receiving monthly subsides. As a result, by end of March 2017, 114 households in these 2 counties were not resettled. An updated action plan and schedule have been agreed upon with respective parties (See Annex 8 for details).

48. Monitoring will continue to check the progress in all the promised actions for the remaining resettlement. External monitoring institution are already contracted to conduct independent monitoring and evaluation of the remaining resettlement until full completion (the latest group of 38 households in Jialing will be resettled by Dec. 2018). Related county governments will secure sufficient budgets for the remaining resettlement as needed. As guarantee mechanism, Sichuan PPMO have collected and submitted to the Bank a series of documents corresponding to the action plan, which are listed in Annex 8.

Procurement 49. Eleven NCB works contracts, one goods contract and four consulting contracts were procured under the Project. All were undertaken in accordance with Bank guidelines with no complaints and incidents of mis-procurement. Most of works contracts were implemented on time schedule, in a satisfactory quality and with less cost overrun percentages being 5% to 8%. No major or significant variations and claims were reported during the construction. Some of contracts bidding were often processed behind the expected time schedule as the design preparation used to be planned on a realistic time frame.

Financial Management 50. Financial management (FM) of the project complied with Bank policies. The project FM system provided, with reasonable assurance, accurate and timely information that Bank loan proceeds were used for the intended purposes. Counterpart funds were provided as planned. Project accounts were properly maintained and the required interim unaudited financial reports (IUFRs) were prepared in a timely manner to reflect the project’s implementation status, sources and usage of project funds. The auditors issued unqualified (“clean”) opinions on all audits and any issues identified were addressed by the implementing agency concerned. The PPMO financial staff was quite experienced

13

and responsive to assisting the PIUs with daily tasks. The overall project financial management performance is satisfactory.

2.5 Post-completion Operation/Next Phase

51. Development, operationalization and training of OMM plans were an integral part of Component 2. At loan closing, 25 OMM plans had been operationalized, meeting the end target. In the time-bound OMM plans, the OMM units have been identified; existing OMM equipment and instruments are listed, and additional maintenance equipment required have been proposed; annual OMM investments have been estimated; the trainings of asset OMM were held in 2016. However, the works in Liujiang Town added under the restructuring could see O&M issues since they did not have OMM plans at closing. With the completion of most project activities, some government institutions separated their O&M functions from their administrative divisions by forming state-owned companies, but the transferring of function from government institutes to the state-owned companies is still to be completed. Decisions are still to be made at the local government level about who would operate and maintain the facilities installed in this project.

52. Guidance books have been developed for assets management of road, sewer and embankment, which are based on the technical specifications to outline the procedures and requirements for establishing infrastructure inventory, field inspection and data collection, conducting condition ratings, running asset management analysis, updating and maintaining the asset management system, and provide maintenance and repair recommendations. The guidance books are expected to help local governments expand the new OMM system to the whole county and include more municipal infrastructures such as power, gas, communication, fibre optical, etc.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

Relevance of ObjectivesRating: High53. The PDO of improving priority infrastructure in the project counties and districts in Sichuan Province was highly relevant to the Bank’s CPS and the borrower’s strategies. As stated above, the project supported three out of five themes of the Bank’s CPS for 2006-2010: (a) reducing poverty, inequality, and social exclusion; (b) managing resource scarcity and environmental challenges; and (c) improving public and market institutions. It also supported the objectives of China’s 11th FYP (2006-10) which aimed to facilitate the development of small towns and secondary cities as a key component of an optimized urbanization strategy, promote urban-rural integration and build a more environment friendly society.

54. The project objective remained highly relevant to current country and Bank strategies. China's 12th FYP (2011-2015) gave greater prominence to urbanization in inland regions and smaller cities. The 13th FYP (2016-2020) sets up the agenda to step up

14

the pace of new urbanization, make further progress in building a new socialist countryside, strive to bridge the gap between urban and rural development, and facilitate urban and rural integration. The National New-Type Urbanization Plan (2014-2020) issued by the State Council in 2014, sets out a blueprint for China’s future urbanization and economic development, one which is to be more environmentally sustainable and people-centered and aims to convert more rural migrants to urban residents. An important goal of the Bank’s current CPS for China (FY13-FY16) was to address the tremendous environmental and service delivery challenges China’s cities face as they grow at unprecedented rates and scales.. In 2014, the Bank and GOC completed a joint report entitled “Urban China: Towards Efficient, Inclusive and Sustainable Urbanization” to help China forge a new model of urbanization. With a PDO that aimed at facilitating sustainable urban development by removing identified infrastructure bottlenecks, the project addressed a critical challenge for China’s growing counties and towns.

Relevance of Design and Implementation Rating: Substantial 55. The project activities in the components were logically linked to the indicators in the RF and were relevant for achieving the PDO. Under Component 1, subprojects were carefully chosen according to a set of criteria that would ensure that all assets investments financed by the project would be “priority” investments (see Section 2.1). These infrastructure investments, including urban roads, water supply networks, storm and sewerage drainage networks, canal and river embankments and a wastewater treatment facility, responded to the key deficiencies in existing infrastructure of the participating towns, and were closely linked to improvements of accessibility, livability, productivity and environment sustainability that were important for unleashing their development potential. The project design also included TA for project construction management and supervision to enhance quality control, on-the-job training for the staff of the PIUs and independent monitoring for safeguards implementation. It had a traffic safety audit to provide training on best practices and to develop a technical handbook. It also had TA linked to the development of OMM plans that were necessary for the sustainability of the assets and a KPI and a covenant to enforce their production. The project contained no extraneous policy requirements and studies to complicate its design.

56. The new civil works added with the January 2016 restructuring further enhanced achievement of the PDO. These investments were selected in the MTR proposal submitted in May 2015 based on the original criteria and that they would not impose any additional risks to completing the project by the original Loan closing date. However, as mentioned in Section 2.2, conclusion of restructuring by Jan 2016 left less than one year to complete the new investments, putting their completion at high risk. As it turned out, the Liujiang WTP was not fully completed at closing.

3.2 Achievement of Project Development ObjectivesRating: Substantial 57. The PDO was to improve priority infrastructure in the Project Counties and Districts in Sichuan Province. Under Component 1, subprojects were carefully chosen according to a set of criteria that would ensure that all assets investments financed by the project would be “priority” investments. After selection of the subprojects, the original

15

designs done during preparation were subject to detailed design review by TA funded under Component 2. Works were also monitored and supervised with TA under Component 2 to ensure conformity with appropriate quality standards and compliance with safeguards. Once the works were completed, all project owners, with training received from the project, produced OMM plans satisfactory to the Bank, for their assets, with the exception of new works in Liujiang Town added in restructuring. Good results were evident through the achievement of the results indicators, with the majority either fully met or exceeded. Below is a discussion of the extent to which the project helped improve priority infrastructure in each of the participating counties and districts. More details can be found in Table (a), (b) and (c) in Annex 2.

58. Puxing Town, Xinjin County. Chengdu Municipality listed Xinjin County as a pilot county for its urban-rural integration program and Puxing Town was a key town, located at the core of one of four key logistic zones around Chengdu. The physical investments under this sub-component were designed mainly to serve the new town center, which had no paved roads.

59. The project financed the construction of 13.6 km of urban roads, mainly local access roads including three bridges, compared to the original target of 13.22 km (see IOI #1); installation of 43.1 km of water, storm water and sewer pipes, compared to the original target of 41.41 km (see IOI #8); and environmental improvement and rehabilitation of the Mumashan Irrigation Canal for a total length of 4.49km, meeting the original target (see IOI #17). These infrastructure investments have significantly improved the accessibility and livability of nearby residential areas and increased the town’s urban area by least two km2. An outcome was that the investments attracted private enterprises and public institutions to move into the new area, including real estate developer, hospital, theme park, sports center, vocational education college, traffic police bureau, etc. At the same time, Puxing authorities expanded public rental housing schemes and resettlement housing construction in the area. Increased housing coupled with expanded job opportunities triggered a population increase. As a result, per KPI #1, the increased population with access to the road transportation network at loan closing was 30,000, exceeding the appraisal target of 10,250 by 19,750 or 192%.

60. The originally planned WWTP was dropped from the project with the restructuring due to master plan changes related to the Tianfu New District. However, a new WWTP, with an installed capacity of 10,000 m3/day (compared to 3,000m3/day as originally planned), was built with local funding. This WWTP is now in operation and wastewater in Puxing Town is being treated there.

61. Penglai Town, Daying County. Penglai town, seat of Daying county, is located in a strategic transport corridor between Chengdu and Chongqing. Key industries in Daying include chemicals, building materials, textiles and food processing. The physical investments under this sub-component were designed to improve the urban road network, upgrade municipal facilities along these roads, and ameliorate environmental sanitation services in the existing urban area.

16

62. At completion the project financed the rehabilitation of 10 roads for a total length of 11.61 km, compared to the end target of 10.99 km (see IOI #2); improvement of 19.25 km of storm and sewer pipes along the roads, of which 4.31km were added in the restructuring, meeting the end target (see IOI #9); installation of a by-pass drainage pipeline for 392 septic tanks in the urban area, for a total length of 3996 m, with local funding only. The roads renovated under the project have improved urban transportation in Penglai Town significantly. Per KPI #4, the travel time along the Luogui Road has declined from 13 minutes to six minutes, meeting the end target.

63. Yingxi Town, Shunqing District, Nanchong City. Nanchong city is located in west-central Sichuan along a strategic transport corridor between Chengdu and Chongqing. Yingxi Town, in southern Shunqing district, is about 10 km from the center of Nanchong city, and serves as the key traffic hub in northern Nanchong City. At appraisal the town master plan foresaw new industrial and vocational education zones in the area. However, this was constrained by infrastructure deficiencies, with no paved roads in the planned vocational education zone, and pollution and flooding issues with the the Yingxi Creek flowing through the town. The project investments were to provide a road network in the new vocational education zone where there were no roads and to improve the environment along Yingxi Creek, to diminish the risk of flooding and improve the town’s livability, which would improve the sustainability and business environment of the industrial and vocational education zones.

64. At completion the project financed construction of a 2.64 km long road, compared to the original target of 2.66 km (see IOI #3). This road, the Binhe Road, connects the vocational education zone to the existing road network. This road link has facilitated transport for residents and for the vocational schools, thereby contributing to the town’s development strategy as a new vocational education zone. Additionally the project constructed 10.63 km of storm pipes and sewer pipes compared to the target of 9.55 km (see IOI #10). It also rehabilitated 2.75 km of river embankments with canal dredging and ecological restoration, meeting the original target (see IOI #18). At completion, the project embankment works and new sewer interceptors reduced the town’s flood risks and enhanced the environment, and thus improved the sustainability and business environment for the industrial and vocational education zones. Per KPI #7, embankment and dredging works along the Yingxi river (canal) raised the flood protection capacity from a 3-5 Year Flood to a 20 Year Flood, meeting the end target. Per KPI #10, the water quality has also improved from less than class V to class IV, meeting the end target. Before the project, the monitoring data of the water body of Yingxi River were worse than the Class IV standards and the water environment quality was poor; upon completion of the project, the water quality has been greatly improved with significant positive environment effect, as respective monitoring data reached Class IV. (See Table (b) in Annex 2 for the monitoring data, pictures before and after the project, and China’s water quality classification system)

65. Huohua Town, Jialing District, Nanchong City. Jialing District is a central district of Nanchong City, and Huohua town, the district seat, was considered the key industrial development area of Nanchong city. Xiaoshanzi River, a seasonal river

17

flowing through Huohua town, served the functions of flood discharge and wastewater interception, which created serious environmental and flooding problems for the urban section of town, undermining sustainability and productivity of the industrial development and liveability of the Jialing District’s urban area. The project investments were designed to intercept wastewater generated along both sides of the urban section of the river and improve the river embankments, while creating access roads along the embankment.

66. At completion, the project financed installation of 14.43 km of storm and sewerage drainage pipelines, meeting the original target (see IOI #11); 5.9 km of canal and embankment improvements, including improvements of 2.82 km of river embankments and 3.1 km of a new branch canal, meeting the original target (see IOI #19). Completion of this sub-component has augmented the flood protection standard of the canals to 20 Year Flood, separated rain water and sewage, and prevented industrial wastewater from being directly discharged to the river, which reduced vulnerability of the urban area to flooding, increased sustainability of industrial development along the river, improved the overall environment and livability of Huohua Town and Jialing District, and increased its attractiveness to new investments.

67. Hongchuan Town, Hongya County, Meishan City. Hongya County is located in the south-west rim of the Sichuan Basin. Hongchuan Town, the county seat, was listed as the provincial level pilot town for the small town development program in Sichuan Province. At appraisal the old Town Moat flowing through the town center was receiving increasing amounts of wastewater discharge due to increased urbanization, causing serious water pollution in the Qingyi River. The physical investments were designed to divert the wastewater flows from the Qingyi River upstream of the Town Moat and intercept the wastewater generated along the Town Moat. More physical investments, including wastewater interception, canal and embankment improvements were added with the restructuring.

68. At completion the project financed: (a) installation of 18.76 km of wastewater interception pipes along both banks of the Town Moat, included at appraisal, and another 2.08 km of drainage pipelines, as added with the restructuring, meeting the end target (see IOI #12); (b) construction of 4.4 km of canals, dredging of 4.8 km of the moat and construction of 8.8 km of sidewalks and a greening belt on both sides of the moat, as included at appraisal, and dredging of 2.24 km of canals, 2.2 km of new embankments and 1.8 km embankment improvements, as added in restructuring, meeting the end target (IOI #20). As a result, the river water has been diverted from the Qingyi River into the canal around the town, and the sewage has been intercepted and diverted to Hongya’s WWTP. These physical investments have significantly improved the town’s environment, livability and resilience to flooding. More than 6,400m3/day of domestic wastewater are being collected and sent to the WWTP where 350 tons of CODcr and 31 tons of NH4+-N are being removed annually. Per KPI #11, the water quality category has been improved from less than class V to class IV, meeting the end target. Before the project, untreated domestic sewage were discharged directly into the river, leading to extremely poor river water quality. Monitoring data of the water body of Hongchuan

18

River were worse than the Class IV level. Upon completion of the project, the water quality has been greatly improved with significant positive environment effect, as respective monitoring data reached Class IV. (See Table (b) in Annex 2 for the monitoring data, pictures before and after the project, and China’s water quality classification system). As per KPI #8, the flood protection function has improved from a 5-10 Year Flood to 20 Year Flood, meeting the end target.

69. Fengming Town, Pengshan County, Meishan City. Fengming town is the county seat of Pengshan County, listed as one of 19 pilot counties for urban-rural integrated social and economic development, and is a national-level ecological model county. Pengshan County is the hub of two key local expressways (Chengdu to Leshan and Chengdu to Yaan). The project investments were designed to support urban expansion, promote urban-rural integration and improve local environment and liveability by completing the road network on the urban fringe, providing drainage and sewerage system and rehabilitating the embankments along the new road.

70. At completion the project financed construction of 2.95 km of riverside roads and an emergency access road along the embankment with a length of 1.87 km, exceeding the original target by 19% (see IOI #4). To address storm drainage and sewerage, the project constructed 5.3 km of storm pipes and 4.99 km of sewage pipes, 2.18 km of water supply pipelines, and improved 1.21 km of flood discharge canals, meeting the original target (see IOI #13). As a result of these investments, the south section of Binjiang Road, together with associated drainage and sewerage system, have been constructed, which completed a key missing section of the urban road network on the south urban fringe by Minjiang river, provided enabling infrastructure and environmental conditions for land development and urban expansion in this area, and relieved increasing traffic pressure on other existing roads. Per KPI #5, the travel time for this traffic corridor has been reduced from 27 minutes to eight minutes, exceeding the end target of 8.5 minutes. (Optimization of the traffic signal system saved further travel time.)

71. Chonglong Town, Zizhong County, Neijang City. Chonglong town is the county seat of Zizhong County southeast of Chengdu. At appraisal the town was urbanizing rapidly and was envisioned to serve as a passenger station on a high speed railway between Chengdu and Chongqing. The project investments were designed to complete the missing section of the outer ring road, link the railway station with the downtown area, and provide drainage facilities along the new road, so as to maximize the economic contributions of the high speed railway to local development, complete the urban road network of the county town and relieve traffic pressure on other existing roads.

72. At completion the project financed construction of 3.29 km to complete the outer ring road, meeting the end target (see IOI #5) as well as 18.7 km of storm and sewer pipelines along the new outer ring road, meeting the original target (see IOI #14). As a result, the ring road around Chonglong Town was completed and now connects to the high-speed railway station which opened in 2015, and it has become the main road from the high-speed railway station to the downtown of Zizhong County. Transportation in

19

northern Zizhong County has improved significantly, reducing the traffic pressure on Tuojiang No 1 bridge and Tuojiang No. 2 bridge. Per KPI #6, the travel time along this traffic corridor was reduced from 20 minutes to seven minutes, meeting the end target.

73. Panlian Town, Miyi County, Panzhihua City. Panlian town is the county seat of Miyi County and is the most remote project county in terms of distance from Chengdu. At appraisal the physical investments were designed to extend the urban road network and construct a flood protection embankment for the new urban area, in order to integrate the rural areas in southern part of the town into the urbanized areas.

74. At completion the project financed construction of four new urban roads for a total length of 2.81km, meeting the original target (see IOI #6); installation of 2.06 km of sewerage pipes, 2.69 km of storm pipes, and 2.54 km of water supply pipes, meeting the original target (see IOI #15); construction of a new embankment of 1,470 m with landscaping for flood protection, meeting the original target (see IOI #21). These works expanded the urban area south of town. The new roads have significantly improved the livability and accessibility of the town. During the same period, the local government expanded its public rental housing schemes and resettlement housing construction, which resulted in a population increase, resulting in more population benefiting from the project than the original target value. Per KPI #2, the increased population with access to the road transportation network at project completion is 20,000, exceeding the original appraisal target of 7,200 by 12,800 or 178%. Construction of the new embankments with landscaping has significantly improved both the flooding resilience and environment of the town. Per KPI #9, the flood protection function has improved from 8-10 year flood to 20 year flood, meeting the original target.

75. Liujiang Town, Hongya County, Meishan City. Liujiang is located in the south-west part of Hongya county and is the west gateway to the world-renowned Mount Emei tourism area. The town itself is also a historical town with booming tourism industry. At restructuring, the tourism industry and overall social-economic development of the town was constrained by infrastructure bottlenecks in urban roads, storm drainage and sewerage, and water supply. The new works added with the restructuring were to address these bottlenecks.

76. At completion, the project financed (a) construction of 2.41 km road, including 0.44 Km of road rehabilitation, meeting the end target (IOI #7); construction of three bridges and a parking lot; installation of 13.10 km long of storm-water, sewer and water-supply pipelines, meeting the end target (IOI #16); construction of a “storm-water garden” which serves the storm water management system; installation of a GIS based infrastructure management system. These works have significantly improved the town’s environment and accessibility. Located in the major tourism area of the historical town, these works have provided necessary infrastructure facilities to support other tourism-related developments, such hotel, catering street and new residential area, further promoting the tourism industry and bringing better economic prospective for local residents. Per KPI #3, the increased population with access to the road transportation network at project completion is 5,300, exceeding the end target of 5,000 by 300 or 6%.

20

77. Under a tight time frame, the work of the WTP was not completed by project closing as planned. By end of 2016, the work was 80% completed, with the main structures and the equipment were completed and put in place but the general layout, landscaping, debugging and commissioning of equipment not completed, with delay caused by slow execution of land acquisition. All works were eventually completed by end of April, 2017. The test running was completed and final acceptance made, with the WTP being fully operational and designed capacity (2,500 m3/day) achieved, by end of May 2017. The end target value of KPI #13, “20,000 increased population with access to improved water supply in Liujiang Town”, was achieved by end of May 2017.

78. TAs under Component 2. In addition to the investment activities under Component 1, TAs under Component 2 also contributed to improving priority infrastructure in the participating counties and districts. In addition to providing on-the-job training, detailed design, supervisory services and project construction management services, the key output was completion of 25 OMM plans, all of which had been operationalized, meeting the end target of KPI #12. In these time-bound OMM plans, the OMM units have been identified; existing OMM equipment and instruments are listed, and additional maintenance equipment required has been proposed; annual OMM investments have been estimated; the trainings on asset OMM were held in 2016. Unfortunately, the Liujiang sub-component added with the restructuring do not have OMM plans. Some government institutions have separated their O&M functions from their administrative divisions by forming state-owned companies.

3.3 EfficiencyRating: High79. At appraisal a comprehensive cost-benefit analysis was conducted to evaluate the economic viability of each of the five road construction and upgrading sub-components, and the three river rehabilitation subcomponents. Since no major changes were made to these subcomponents, and in order to ensure consistency and continuity, the same cost-benefit methodology, including models and assumptions, have been applied for the same sub-components to analyze the project’s efficiency (see Annex 3 for details). The new estimates are based on updated data on project benefits and costs upon completion which were provided by the respective county governments/sub-PMOs and the PPMO.

80. The results show that economic returns of these sub-components are similar to or higher than appraisal estimates across the board as shown below.

Components At Appraisal At Completion

NPV(million RMB) EIRR NPV

(million RMB) EIRR

Road Development

Pengshan 73.61 13.71% 82.52 14.49%Xinjin 130.20 11.40% 112.84 13.83%Daying 74.75 13.15% 84.46 16.42%Zizhong 80.00 13.04% 103.30 16.00%Miyi 953.89 18.50% 294.85 23.02%

River Rehabilitation

Shunqing 6.10 8.89% 37.89 12.47%Jialing 38.30 21.47% 70.85 35.22%

21

Hongya 48.40 20.65% 86.31 32.45%

81. Sensitivity analyses were conducted for the same eight sub-components. The sensitivity analysis (under the assumption of either/both a 10% decrease in economic benefits and a 10% increase in total costs) shows that the investments are economically robust.

82. Administrative efficiency. All works included at appraisal were completed at least seven months before the original closing date with US$17 million in savings, part of which were used to carry out additional works in the project counties of Hongya and Daying. The total project cost at ICR completion is US$142 million, which is about 84% of the estimated project cost of US$169.7 million. Total disbursement stands at 93.3% at the ICR completion. To some extent, the reduced cost is due to foreign exchange rate fluctuations, optimization of engineering designs and some sub-components being switched to local funding, but the saving is also attributable to efficient procurement and sound contract management as discussed below.

83. The works for major components of the project adopted a large contracting approach, with each contract value greater than US$ 10 million, increasing the competitiveness of each contract (5 to 12 bids for each contract). All works contracts were signed with the prices being lower than the estimations by about 30% to 45%. Even considering the market factor that FSR cost and Bid cost is estimated on the sector cost norms and practically higher than the market average pricing level by about 15%, the contracts are still signed with an average competitive discount of 23.14%. As for comparison, the similar project SUDP (under the same PPMO) has an average competitive discount of 9.68%. (See the table below and Annex 3 for detailed analysis).

Summary Analysis Sheet For Contracts Costs (In CNY)

Contract FSR Cost Estimation

Bid Cost Estimation

Contract Price

Discount Percentage

Market Discount1

Competitive Discount2

Batch 1 768.63 770.71 482.71 37.37% 15.00% 22.37%XJ1 116.27 120.63 65.6 45.62% 15.00% 30.62%XJ2 129.66 124.13 78.84 36.49% 15.00% 21.49%PS-1 66.52 58.35 33.76 42.14% 15.00% 27.14%SQ-1 74.98 81.17 54.37 33.02% 15.00% 18.02%JL-1 71.67 54.75 35.96 34.32% 15.00% 19.32%HY-1 68.03 88.71 53.59 39.59% 15.00% 24.59%DY-1 92.29 87.86 57.04 35.08% 15.00% 20.08%ZZ-1 80.1 86.03 53.93 37.31% 15.00% 22.31%MY-1 69.11 69.08 49.62 28.17% 15.00% 13.17%

Batch 2 (Restructuring) 126.61 126.61 91.39 27.82% 0.00% 27.82%

HY2-1 26.04 26.04 22.23 14.63% 0.00% 14.63%HY2-2 67.27 67.27 41.83 37.82% 0.00% 37.82%HY2-3 4.85 4.85 4.75 2.06% 0.00% 2.06%

22

DY2-1 28.45 28.45 22.58 20.63% 0.00% 20.63%Total 895.24 897.32 574.1 36.02% 12.88% 23.14%

SUDP 3 3238.87 3226.22 2429.99 24.68% 15 ％ 9.68%Note：1) FSR Cost and Bid Cost is estimated on the sector cost norms and practically higher than the market average pricing level by about 15% with respect to the management capacity and capability of the PMO. This 15% discount is not applied to Batch 2 contracts because cost estimation was more accurate upon restructuring. 2) The discount factor due to competitive bidding can be resulted by the overall discount percent less the market discount factor. 3) For comparison purpose, the summary bidding indicators of SUDP under the same PMO are given for base reference.

84. Efficiency was negatively impacted by significant project implementation delay during the first almost two years of project implementation period. This was compensated by the simple project design and the approach of one project county/district using only one local design institute for the engineering design and carrying out the physical implementation via one large civil works contract, which contributed to timely completion of the works despite the significant startup delay.

85. As most project components were for public infrastructure and had no revenue generation, financial analysis at appraisal was carried out to confirm that the borrowers (eight county/district governments) would be able to afford the project investments, including adequate financial resources to: (a) contribute the required counterpart funds; (b) repay the amount borrowed from the Bank; and (c) maintain and operate the assets created.

86. As it turned out during project implementation, counterpart funds were provided as planned through a mixture of central government bonds and grants, provincial municipal grants, and local borrowings from the government and commercial banks. The annual requirement for counterpart financing for the project was relatively small (less than 2.2% of annual government disposable revenues) and did not seriously pressure government fiscal expenditures. Government debt levels were also low compared with their fiscal revenues (under 1:1) and were in a safe range. As the sub-components were generally the largest urban development projects that the borrowing counties/districts had ever had, they were careful regarding the financial aspects of the project, in particular to budget requirements for O&M of the assets. In the time-bound OMM plans prepared under the project (except for investments in Liujiang), the OMM units have been identified; existing OMM equipment and instruments are listed, and additional maintenance equipment required have been proposed; annual OMM investments have been estimated.

3.4 Justification of Overall Outcome RatingRating: Satisfactory 87. The overall outcome of the project is rated Satisfactory. Relevance of the PDO is rated High, and relevance of design and implementation is rated as Substantial. Efficacy is rated Substantial, with all indicators met or exceeded by project closing except for those pertaining to the WTP in Liujiang town. Efficiency is rated High with EIRRs meeting or exceeding original estimates and with demonstrably competitive procurement.

23

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

88. This project did not have a specific poverty focus. However, as reported in the Borrower’s ICR, in the project area, over 500,000 people are now benefiting from the environmental and transportation improvements resulting from enlargements of the urban areas, increased land values and improved residential living standards. These improvements have been especially beneficial for the poorer people in the local communities. For five project towns on which data are available (Puxin, Penglai, Fengming, Chonglong and Panlian), the GDP per capita in 2016 is on average 31% higher than that in 2012. In addition, through the implementation of the project, public attitudes towards land development, resettlement, environmental awareness and participation have been significantly improved. The participating local governments have gained useful inputs and comments from the public, which are beneficial for future planning and policy-making for other urban projects.

(b) Institutional Change/Strengthening

89. As reported in the Borrower’s ICR, all project counties/districts PIUs cited strengthened capacity in planning, procurement (contract bidding, award and supervision), project management and financial management as key outcomes of the project, as well as improved awareness of OMM requirements of newly constructed infrastructure. Moreover, the PIUs emphasized that as a result of the project, they now can now better assess and select investments based on economic and financial considerations and have improved their capacity to evaluate the merits of individual investments. The introduction of traffic safety management and the asset management system has similarly improved their overall capacity to prioritize, monitor and evaluate investments and improve public service delivery.

90. An international traffic safety engineer visited Sichuan, and provided a seminar and on-site training to local municipal traffic planning and management authorities in each project town. The training seminar included practical tips and best practice experience in traffic calming, road safety, traffic channelization and enforcement of traffic rules. A Traffic Safety Management Guidebook was developed, and international good practices in traffic safety management were implemented in Pengshan, Daying, Shunqing, Zizhong, Xinjin and Miyi. According to the borrower, traffic safety management in the respective project counties/districts was improved and traffic rules was enforced. For instance, Pengshan had re-organized the traffic signals and signs in accordance with the Guidebook for reducing the travel time and enhancing of traffic safety, contributing to the reduction of travel time along Binjiang Road south segment to 8 min, which is even lower than the end target of 8.5 min.

(c) Other Unintended Outcomes and Impacts

91. There were no unintended outcomes or impacts noted.

24

4. Assessment of Risk to Development Outcome Rating: Moderate92. Fiscal capacity for OMM costs (Moderate). The considerable investments in new road and embankment infrastructure will result in higher OMM costs for the project counties/districts as well as extra expenses on planning, management and database upkeep. To address this challenge, the project helped build their capacity by developing well financed OMM plans and an asset management system. A covenant in the legal agreements required the project counties/districts to furnish the Bank an annual plan and budget for OMM. However, in the absence of sustained effort towards asset management, the allocation of sufficient resources for OMM may remain a challenge, which would be even greater if the projected economic growth is not reached and/or at times of greater fiscal pressure.

93. Other developments in surrounding areas (Moderate). Some of the project sub-components are in new urban areas of project towns (Panlian Town and Liujiang Town) and actually serve as the leading developments in these new urban areas. Therefore, upon completion of these project investments, other developments in surrounding areas, either public infrastructure or private development, are still underway or just getting started. The risk is that these surrounding developments may not be completed as planned due for unforeseen reasons, which could delay or otherwise affect the full realization of the development benefits since the project assets are part of an integrated development plan.

94. Remaining resettlement (Significant). As mentioned in Section 2.4, implementation of the action plan to address the remaining resettlement was delayed in two counties, and 114 households were still not resettled as of March 2017. Close monitoring needs to be continued to ensure the completion of all remaining resettlement and avoid related reputational risk. Internal mechanisms should be defined in order to enable a monitoring process of the remaining resettlement after project closure.

95. Risk of natural disaster. (Moderate) The risk of future natural disasters affecting the project assets cannot be fully mitigated. The project did decrease the flood risks in several towns, but heavy seasonal rains caused by climate change could overwhelm those assets. Also, although these towns are outside the realm of the worst seismically active areas in Sichuan, the risk of damage from earthquakes remains. On the other hand, all infrastructure built under the project are based on the new and enhanced national and local earthquake intensity codes which provide mandatory earthquake damage protection in Sichuan after Wenchuan earthquake. Therefore, this risk is considered moderate.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory

25

96. During project preparation, the Bank mobilized a task team with a comprehensive mix of expertise as required by the project, such as urban planning, transport, municipal and sanitary engineering, social and economic analysis and environmental engineering.

97. As previously mentioned in Sections 2.1 and 3.1, project design took into account lessons from the long collaboration between Sichuan Province and the Bank in the urban sector as well as from similar Bank projects in China. The project design was simple with one construction component and one TA component, which were logically linked to achieving the PDO. Subprojects were carefully chosen according to a set of criteria that would ensure that all assets investments financed by the project would be “priority” investments. The main complexity was that Component 1 covered eight different towns in eight different counties, resulting in a large geographical scope and thus difficulties in monitoring and supervision.

98. The Bank team closely monitored the preparation of relevant technical documents and intervened in a timely manner when quality issues with the FSRs were found. Appraisal on the fiduciary and safeguards aspects were satisfactory. Against the challenge of overlap with WERP, the project was delivered in 15 months from PCN review to Board approval for a cost of US$264,750 (see Annex 4).

99. Meanwhile, as mentioned in Section 2, the PAD could have been improved in the aspects of risk rating and respective mitigation measures (regarding implementation capacity within the PPMO, land acquisition and resettlement, and local master plan changes), M&E design and quality of the Results Framework (RF).

(b) Quality of Supervision Rating: Satisfactory100. Good quality supervision was evident through timely completion of project sub-components, achievement of most results indicator targets and closing of the loan without an extension. The Bank team identified construction quality issues in some sub-components and urged the PMOs and construction management and supervision consultants to take immediate corrective actions by tightening their field construction supervision (ISR sequences 5 and 6). This guidance was critical to achieving high quality results under the project. The diligence of Bank management and the task team was appreciated by the implementing agencies, in terms of delivering timely instructions on Bank procedures; review, comment, and approval of bid documents; instructions on management and social dimensions, as well as inspections and directions during Bank missions.

101. Starting with effectiveness in September 2011, the Bank team undertook seven full supervision missions and issued 10 ISRs. Supervision missions were undertaken only once a year during 2012-2014. Again, this was to some extent due to prioritization of SUDP and WERP under the same PPMO and consideration for not overburdening the PPMO with too many visits. Meanwhile, overlap of team members, especially the TTL, with the WERP task team, enabled combining some supervision activities with WERP missions. This also led to saving of supervision costs, as the Bank Budget (BB) spent during this period was significantly less that the following FYs (Table (b) in Annex 4).

26

The implementation delay at the early stage resulted in the IP rating being downgraded to MU in late 2012 (ISR #2). In order to accelerate the implementation, the Bank took proactive actions including CMU’s meetings with central government authorities (NDRC and MOF), task team’s briefing to MOF and interactions with SPG during field missions, which helped bring the project implementation back to track. With the construction eventually started and the advancement of procurement on a large number of contracts, the IP rating was appropriately upgraded to MS in mid-2013 (ISR #3).

102. Originally planned for December 2013, the MTR was significantly delayed following the implementation delay as mentioned in Section 2.2. With the MTR mission conducted in June 2015, the task team provided strong support to client with the restructuring in terms of ensuring the balance between “hard” physical investments and “soft” capacity building for the new works, optimizing the FSRs, preliminary engineering designs and safeguards documentations, giving sufficient flexibility to the client but also ensuring the new works fit the PDO. The Bank team had also advised the client to proceed with procurement (including signing contracts following Bank guidelines) while pursuing restructuring request by MOF to the Bank, and informed the client that it would be solely responsible to finance the additional activities if the restructuring were not approved. While project restructuring request from MOF was received on December 18, 2015 due to lengthy domestic approval process, it took only about a month for the Bank to process this level-2 restructuring, which was approved on January 29, 2016, with the Christmas and New Year holiday in between. The Bank team duly cautioned the client of the risk with the tight time frame left for completing the new works and suggested them consider extension of the project as necessary (AM, Nov 2015), although Sichuan insisted to complete all the new investments by the original closing date.

103. The Bank task team was relatively stable over the project cycle, with the same TTL and FM specialist from project preparation to project closing, and other key team members (procurement and safeguards) unchanged until the very late stage of implementation (ISR 9#/10#), reducing the complications and costs of transition and contributing to the good quality of supervision.

104. The Bank missed an opportunity to address the RF quality issues (see section 2.3) with the restructuring. Some IOIs were not completely included in all ISRs: there are over 20 IOIs after restructuring, but only seven IOIs were included in ISRs #9 and #10. Several ISRs were submitted by the task team with substantial delay (ISR #5/#6/#7).

Safeguards 105. Supervision of environmental safeguards aspects was satisfactory. Environmental specialists with the required skills were consistently part of the core Bank supervision missions, in day-to-day follow-up, and in interactions with the PMO and PIUs.

106. Supervision of social safeguards ensured that all resettlement was carried out in accordance with Chinese regulations and Bank policies and overall social safeguards policies were complied with satisfactorily. No complaints were received throughout the project. Knowing resettlement may not be completed on time, the Bank task team began

27

urging the PMOs to take actions two years prior to the loan closing date. More frequent supervision missions were conducted to push PMOs to accelerate construction of resettlement sites or explore alternative solutions. Strong actions and close follow-up, including a social safeguards mission in November, 2016, were undertaken by the team to the pending resettlement sites in four project counties. The resultant time-bound action plan, as agreed with the PPMO, provincial authorities and respective county governments in December 2016, gave Bank management the confidence to close the loan as scheduled.

Fiduciary 107. Bank’s procurement specialists worked closely with the Task Team and the Client to provide advice and assistance to resolve issues and expedite procurement decisions and ensured that all procurements were undertaken in accordance with Bank guidelines with no complaints and incidents of mis-procurement. FM supervision ensured the project compliance and overall satisfactory performance of the project FM.

(c) Justification of Rating for Overall Bank Performance

Rating: Moderately Satisfactory108. The overall Bank performance is rated Moderately Satisfactory based on the Moderately Satisfactory rating for quality at entry and Satisfactory rating for quality of supervision.

5.2 Borrower Performance

(a) Government PerformanceRating: Moderately Satisfactory 109. For the purpose of this analysis, the “government” is considered the Sichuan Provincial Government (SPG). As mentioned in Section 2.1, adequacy of government’s commitment to this project during both preparation and in the early stages of implementation was significantly affected by the Wenchuan Earthquake in 2008, with SPG very much focused on the earthquake recovery works, leading to slow start-up of implementation and subsequent delay in MTR/Restructuring. Despite the agreement reached during negotiations that adequate qualified technical staff would be maintained in the PPMO, government did not adequately staff up the PPMO to accommodate its workload. However, once attention was turned back to this project, the SPG’s commitment and support remained strong, particular in assisting all the subproject entities to obtain sufficient counterpart funding, which was critical to completing the project on time.

110. County/district governments in the project areas gave strong commitment and support to the implementation of subprojects, including prioritizing the construction of these subprojects, supporting public awareness supporting, ensuring sufficient counterpart funding, and initiating and providing OMM costs for the project assets.

111. After the MTR mission in June 2015, Sichuan embarked lengthy internal approval process for the restructuring package, including approval by county/district governmental agencies to FSRs, EIAs and land acquisition screening and final approval to the

28

restructuring proposal by Sichuan PDRC and PFB. The project restructuring application was sent from Sichuan to MOF around mid-October, 2015 (AM, Nov. 2015), and the Bank received the project restructuring request from MOF on Dec. 18, 2015.

(b) Implementing Agency or Agencies PerformanceRating: Moderately Satisfactory 112. The Sichuan PPMO, with its rich experience with Bank projects, and its project management and construction supervision consultants, worked actively with all the local PIUs to complete the original project on time and under budget. Against the challenges with widespread subprojects in 8 counties/districts, the Sichuan PPMO had provided clear guidance and effective management in the project preparation and implementation, including progress management, investment management, quality and safety management, etc. Construction quality issues were identified by two consecutive supervisions missions in Dec 2013 and Sep 2014, which were eventually resolved in 2015 through mobilization of more competent field construction supervision engineers with intensified field supervision work starting October 2014.

113. The county/district PIUs assumed active management functions throughout the project. Each subproject entity designated the necessary resources to execute their subprojects. However, the capacity and efficiency of PIUs in managing the subprojects varied, which caused difficulties. Their varying capacities also placed extra responsibility on the PPMO to coordinate and communicate among the PIUs across a project with a large geographic area. For instance, the issues of land acquisition and resettlement could not be addressed by PIUs themselves, but required intervention from their local governments and land agencies for resettlement. Slow execution of land acquisition and resettlement hampered progress in Xinjin, Jialing, Zizhong and Miyi County/District, and led to incomplete resettlement by project closing and further delay after project closing. Slow execution of land acquisition issues caused delay to the construction of the WTP in Liujing Town of Hongya County, which was not completed by project closing as planned.

(c) Justification of Rating for Overall Borrower PerformanceRating: Moderately Satisfactory 114. The overall Borrower performance is rated Moderately Satisfactory given that both Government Performance and IA Performance are rated Moderately Satisfactory.

6. Lessons Learned

115. Ensure sufficient project management capacity of IAs in relation to the workload, or minimize overlap of project implementations. As reflected by the significant delay in the implementation and MTR of this project, even for a very experienced PMO like the Sichuan PPMO, it is still difficult to manage more than one Bank project at the same time. Once the PMO’s capacity is found not to be commensurate with their work load, it is important for the Bank team to take proactive measures, such as elevating the issue to higher level government authorities, to push for strengthening of the capacity . Hiring of an experienced and qualified consultant for both project management and field construction supervision is also instrumental to

29

strengthening of project management capacity. Meanwhile, when a capacity constraint is foreseeable, adjustment to certain project preparation schedule could be considered so as to minimize overlap of multiple project implementations under one PMO.

116. Project implementation can be significantly affected by changes in local master plans, and so the risk should be identified early with sufficient mitigation measures. While local master plan changes are beyond the control of either the Bank or IAs, the risk is foreseeable given the well-known fact that China’s urban setting has been a fast-changing environment with frequent master plan changes, and thus should be identified as early as possible. To mitigate the risk, selection of sub-components could try to avoid civil works that are likely to be subject to upcoming master plan changes. This is particular important for a project with sub-components spread out across multiple regions, each with their own master plan.

117. M&E design and utilization. The Results Framework should be properly designed with clearly defined end target values and annualized targets for both KPIs and IOIs so as to enable monitoring of the project progress on a gradual base and utilization of the indicators as a strong tool to inform management of major bottlenecks and facilitate decision-making or proactive actions.

118. A simplified procurement plan can contribute greatly to the timely implementation and completion of a project. A larger contracting approach in accordance with Bank guidelines could result in less contract number, great attractiveness and efficient competitiveness, and large loan savings. This approach was adopted under this project and contributed greatly to its timely completion as mentioned in Section 2.2 and 2.4.

119. When land acquisition or resettlement delays are foreseeable, early and proactive actions should be undertaken in advance of the project closing date. It is critical to coordinate project resettlement schedule with local resettlement schemes related to larger domestic development programs, so as to ensure that project resettlement, if merged into a local resettlement scheme, would not be delayed due to delay in the local scheme. Experienced external social monitoring consultants are important to provide guidance and conduct regular monitoring for the PMO. Timely and intensive consultations with affected people is critical in solving resettlement problems. It is useful to request signed commitment letters from local governments and willingness letters from households as well as time-bound action plans for addressing pending resettlement issues.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies120. An advanced draft of the ICR was circulated for comments to the Sichuan PPMO. The PPMO came back with comments with two major issues raised.

Implementation delay at the early stage

30

121. PPMO’s comment. After the effectiveness, there’s still a lot of work to do before the civil works get started, including roughly 4 months for preliminary investigation and design, 5 months for detailed design and construction drawings, and 5 months for the Bank’s review on the drawings and bidding documents and the procurement process. So it would take about 14 months in total, which is a process every Bank project would goes through before the construction. Therefore, “more than one year’s delay” is not accurate.

122. Bank ICR team’s response. The project was approved by Board in May 2011 and become effective in September 2011. As recorded in the AM of December 2013, by the time of the supervision mission in December 2012, the project had incurred a delay of about 12 months. According to the information provided by the PPMO previously, most of the engineering design took place in late 2012, with the first contract of civil works signed on April 26 2013. As mentioned several times in the ICR, this delay was mainly caused by the SPG’s focus on the Wenchuan Earthquake recovery works and the PPMO’s prioritization of WERP implementation, which was also acknowledged in the Borrower ICR. This delay had also subsequently led to the delay of MTR from December 2013 to May 2015.

Rating for Government and IAs Performance 123. PPMO’s comment. The rating for the government and the IAs, as well as the overall borrower performance, should be satisfactory, because (i) the implementation was not delayed as described, (ii) all the original activities at appraisal were completed at least 7 months before project closing, (iii) most of the additional projects were completed within the original closing date and created more benefits.

124. Bank ICR team’s response. Regarding point (i), the delay indeed took place as elaborated in the ICR team’s response above. Regarding point (ii) and (iii), these achievements mentioned have been acknowledged several times in this ICR, based on which the Overall Outcome is rated Satisfactory. However, a Satisfactory rating for the government and the IAs, as well as the overall borrower performance, could not be justified due to several other issues as mentioned in the ICR, besides the implementation delay, including: delay in MTR from December 2013 to May 2015, which was also caused by the slow start of implementation, and further delay in the restructuring; incomplete work of WTP in Liujiang Town by project closing; incomplete resettlement by project closing and further delay after project closing; construction quality issues identified by two consecutive supervisions missions. Relatedly, in seven out of the ten ISRs issued, including the last ISR, the rating for Overall Implementation Progress (IP) was Moderately Satisfactory (see Section G in Date Sheet).

125. Other minor comments from the PPMO are incorporated into the ICR.

(b) CofinanciersNot applicable.

(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)Not applicable.

31

Annex 1. Project Costs and Financing

a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Component 1 Small Town Infrastructure DevelopmentPuxing Town, Xinjin County 49.96 30.94 61.93Penglai Town, Daying County 16.36 13.18 80.56Yingxi Town, Shunqing District 15.98 15.27 95.56 Huohua Town, Jialing District 15.46 6.00 38.81Hongchuan Town, Hongya County 16.98 18.04 106.24Fengming Town, Pengshan County 13.91 14.74 105.97Chonglong Town, Zizhong County 18.63 14.08 75.58Panlian Town, Miyi County 18.62 16.66 89.47Liujiang Town, Hongya County - 9.00 0Component 2 – Institutional Strengthening and Capacity BuildingProject construction management, supervision and capacity development

3.40 3.33 97.94

Independent monitoring of environmental management plan (EMP)

0.20 0.17 85.00

Independent monitoring of resettlement action plans (RAP) 0.20 0.17 85.00

A GIS based infrastructure management system in Liujiang Town in Hongya County (restructuring)

- 0.23 0

Total Baseline Cost (sum of above) 169.70 141.81 83.57

Physical Contingencies 0.00

0.00

0.00

Price Contingencies 0.00

0.00

0.00

Total Project Costs 169.70 141.81 83.57Front-end fee PPF 0.00 0.00 .00Front-end fee IBRD 0.00 0.25 .00

Total Financing Required 169.70 142.06 83.71

32

b) Financing

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 69.95 48.74 69.93 International Bank for Reconstruction and Development 100.00 93.32 93.32

33

Annex 2. Outputs by Component

a) Summary of the Actual Project Outputs

Component Sub-component At appraisal/restructuring Actual Outputs Notes for changes Component 1 Small Town Infrastructure Development

Puxing Town, Xinjin County

Urban Roads Construction of 18 roads in the new town area (13.22 km in total length).

Construction of 18 roads in the new town area (13.60 km in total length).

Slightly increased as variation for branch roads of alleyway, which improved the residential circumstance area along with the project road.

Water supply/drainage and Wastewater Treatment

Construction of water supply, storm and sewer pipes, each totaling about 41.41 km; construction of a secondary WWTP with capacity of 3,000 m3/day (with ultimate capacity 6,000 m3/day for 2030).

Construction of water supply, storm and sewer pipes, each totaling about 43.10 km.

After the master plan changed and the design optimised, the total length of the pipeline are slightly increased.

Due to the master plan of the Tianfu New District and the wastewater in Puxing Town are intercepted into a new WWTP in Tianfu New District, which was built in 2014 with capacity of 10,000 m3/day. Therefore, after the project restructuring, the output of the WWTP is not monitored.

Canals and Embankment Improvement

Environmental improvement and rehabilitation of the Mumashan Irrigation Canal, for a total length of 4.49km.

Environmental improvement and rehabilitation of the Mumashan Irrigation Canal, for a total length of 4.49km.

Penglai Town, Daying County

Urban Roads Improvement of 7 roads (Qijiang Middle Road, Qijiang East Road, Shuyuanjie, Nanhuajie, Qilinjie, Keguanjie, Jiaotongxiajie, Luogui) for a total length of 7.61 km; construction of a road (Gubaxi Road, 1.23km long) and a bridge (Hongqi Bridge, 58 m long and 25 m wide).

Improvement of 8 roads (Qijiang Middle Road, Qijiang South Road, Qijiang East Road, Binhe Road, Shuyuanjie, Nanhuajie, Jiaotongxiajie, Luogui) for a total length of 7.87 km; construction of a road (Gubaxi Road, 1.23km long) and a bridge (Hongqi Bridge, 58 m long and 25 m wide).

After the master plan changed and the design optimised, the roads of Qilinjie and Keguanjie had been switched to Qijiang South Road and Binhe Road as constructed, and total length of the road constructed is changed from 8.48Km to 9.10Km.

34

Component Sub-component At appraisal/restructuring Actual Outputs Notes for changes Urban Roads (restructuring)

Road rehabilitation (2.51 km) Road rehabilitation (2.51 km)

Storm Drainage and Sewerage

Improvement of storm and sewer pipes along the 7 roads (storm pipes of 7.86 km; sewage pipes of 7.09 km).

Improvement of storm and sewer pipes along the 8 roads (storm pipes of 7.30 km; sewage pipes of 7.64 km).

Due to the design optimised, total length of the pipelines is changed from 14.95Km to 14.94Km.

By-passing pipeline of the septic tank

Installation of a by-passing pipeline for 392 septic tanks in the urban area, for a total length of 3996 m.

Installation of a by-passing pipeline for 392 septic tanks in the urban area, for a total length of 3996 m.

Storm Drainage and Sewerage (restructuring)

Improvement of storm and sewer pipes for 4.31Km.

Improvement of storm and sewer pipes for 4.31Km.

35

Component Sub-component At appraisal/restructuring Actual Outputs Notes for changes Yingxi Town, Shunqing District

Urban Roads Construction of a 2.66 km long road

Construction of a 2.64 km long road

Slight decreased after the detail design optimized.


Construction of storm pipes of 4.2 km in total length, and 5.35 km of sewer pipes.

Construction of storm pipes of 4.2 km in total length, and 6.43 km of sewer pipes.

Additional inputs of sewer pipes are for the branch sewer pipes connected.


River embankment improvement of 2.75 km, including 5.48 km of new embankment (2.64 km on the left, 2.85 km on the right), with canal dredging and ecological restoration.

River embankment improvement of 2.75 km.

Huohua Town, Jialing District

Storm and Sewerage Drainage

7.21 km of storm pipes, and 7.22 km of sewerage

7.21 km of storm pipes, and 7.22 km of sewerage

Storm and Sewerage Drainage (restructuring)

Wastewater interception (2.08 km of sewer network)


2.82 km of river embankment improvement, and 3.1 km of new branch canal, construction of 8 bridges (8 m long), 0.88 km of ecological slope protection, 15,099 m2 of greening area, 17,737 m2 of sidewalk (with a design standard of 1 in 20 year flood, and including dredging, canal improvement, river access road construction, and tree planting).

2.8 km of river embankment improvement, and 3.10 km of new branch canal, construction of 8 bridges (8 m long), 0.88 km of ecological slope protection, 15,099 m2 of greening area, 17,737 m2 of sidewalk (with a design standard of 1 in 20 year flood, and including dredging, canal improvement, river access road construction, and tree planting).

Slight changes during the implementation.

Canals and Embankment Improvement (restructuring)

Canal and embankment improvements (4.04 km)

Hongchuan Town, Hongya County

Sewerage 18.76 km of wastewater interception pipes along both banks of the Town Moat

18.76 km of wastewater interception pipes along both banks of the Town Moat

Sewerage Drainage (restructuring)



36

Component Sub-component At appraisal/restructuring Actual Outputs Notes for changes Moat and Embankment Improvement

Construction of 4.4 km canal (A, C section); dredging4.8 km of moat canal; construction of 8.8 km of sidewalk and greening belt on both sides of the moat, 15 bridges (8 m long).

Construction of 4.4 km canal (A, C section); dredging4.8 km of moat canal; construction of 8.8 km of sidewalk and greening belt on both sides of the moat, 15 bridges (8 m long).

Canals and Embankment Improvement (restructuring)



Fengming Town, Pengshan County

Urban Roads Construction of 2.18 km of riverside road, and an emergency access road on the embankment, 1.87 km long.

Construction of 2.95 km of riverside road, and an emergency access road on the embankment, 1.87 km long.

Additional roads are for the branch road of 0.77Km long constructed.


Construction of 5.30 km of storm pipes and 4.99 km of sewage pipes, and a wastewater lift pump station inside the existing WWTP (15000 m3/d).

Construction of 5.30 km of storm pipes and 5.05 km of sewage pipes.

Slight changes for the sewage pipes. The lift pump station was canceled after the design optimized, and the sewage enter the existing WWTP by gravity flow.

Water supply 2.18 km of water supply pipeline.

2.18 km of water supply pipeline.

Canals Improvement of 1.21 km of flood discharge canal.

Improvement of 1.21 km of flood discharge canal.

Chonglong Town, Zizhong County

Urban Roads Construction of 3.29km of outer ring road.

Construction of 3.29km of outer ring road.


Construction of 6.50 km of storm pipes, and 7.84 km of sewer pipes along the new outer ring road.

Construction of 6.50 km of storm pipes, and 7.85 km of sewer pipes along the new outer ring road.

Slight increased for sewer pipes.

Water Supply Construction of 4.35 km of water supply pipes along the new outer ring road

Construction of 4.35 km of water supply pipes along the new outer ring road

Panlian Town, Miyi County

Urban Roads Construction of 4 new urban roads for a total length of 2.81km

Construction of 4 new urban roads for a total length of 2.81km


Sewerage pipes of 2.06 km, and storm pipes of 2.69 km

Sewerage pipes of 2.06 km, and storm pipes of 2.69 km

Water Supply Construction of water supply pipes of 2.54 km

Construction of water supply pipes of 2.53 km

Slight decreased.

37

Component Sub-component At appraisal/restructuring Actual Outputs Notes for changes Flood Protection Construction of a new

embankment of 1,470 m, and 4410 m2 of greening area along the embankment

Construction of a new embankment of 1,470 m, and 4410 m2 of greening area along the embankment

Cable trench 2.89 km of cable trench 2.89 km of cable trenchLiujiang Town, Hongya County

Urban Roads Urban roads (2.41 km), three bridges, a parking lot

Urban roads (2.41 km), three bridges, a parking lot


storm water management system and a water supply plant (capacity of 2,500 m3/day) with associated water distribution pipelines of 13.1 km

storm water management system and a water supply plant (capacity of 2,500 m3/day) with associated water distribution pipelines of 13.1 km

Component 2 – Institutional Strengthening and Capacity Building

Project construction management, supervision and capacity development

Design review advisory service, construction management and site supervision

Design review advisory service, construction management and site supervision

Traffic safety audit, traffic management capacity development

Traffic safety audit, traffic management capacity development

Network operation, maintenance and management (OMM) capacity development.

Network operation, maintenance and management (OMM) capacity development.

On-the-job training On-the-job training Independent monitoring of environmental management plan (EMP)

Independent monitoring of environmental management plan (EMP)

Independent monitoring of resettlement action plans (RAP)

Independent monitoring of resettlement action plans (RAP)



38

b) Water monitoring Data for Hongchuan Town and Yingxi Town China’s water quality classification system

39

River Name Monitoring Date

Water Quality Monitoring Data（Unit：mg/L）

Photos Water ClassificationpH CODcr BOD5 NH3-N DO

Fecal coliform

（each/L）

Hong-chuan River,Hong-chuan Town,

Hongya county

Water Quality before

the Project2

2009.09.25 8.32 42.3 12.5 3.2 — 34000

>Class VThe monitoring data of the water body of Hongchuan River in terms of CODcr、BOD5、NH3-N、Fecal coliform were exceeding the standards by various levels before the Project, in particular, the untreated domestic sewage were discharged directly into the Cheng-nan River and Cheng-bei Huchenghe River, as a result of extreme poor river water quality incidentally with odor and nigrescent and with aquatic plants, garbage and greasy dirty floating on the river. The water quality sensory data was not meeting Class V.

Water Quality after the Project3

2016.12.20 7.96 10.1 2.1 0.087 9.3 500

Class IVUpon completion of the project, the water environment quality has been greatly improved with significant positive environment effect, and has reached Class IV.

2 Data Source: From the EIA of SSTDP Hongya subcomponent.

3 Data Source: From Hongya County EPB.40

River Name Monitoring Date

Water Quality Monitoring Data（Unit：mg/L）

Photos Water ClassificationpH CODcr BOD5 NH3-N DO

Fecal coliform

（each/L）

Yingxi River, Yingxi Town, Shun-qing

District

Water Quality before

the Project4

2009.11.3 8.04 31.5 7.2 2.36 — 11000

Class VThe monitoring data of the water body of Yingxi River in terms of CODcr、BOD5、NH3-N were exceeding the standards by various levels before the Project and the water environment quality was pretty poor.

Water Quality after the Project5

2017.1.18 8.28 12.1 1.9 0.205 7.9 600

Class IVUpon completion of the project, the water environment quality has been greatly improved with significant positive environment effect, and has reached Class IV.

Threshold for Class Ⅳ 6~9 ≤30 ≤6 ≤1.5 ≥3 ≤20000 From China Standard: GB3838-2002 Environmental Quality Standards of Surface WaterThreshold for Class Ⅴ 6~9 ≤40 ≤10 ≤2.0 ≥2 ≤40000

4 Data Source: From the EIA of SSTDP Shunqing subcomponent.

5 Data Source: from Shunqing District EPB.41

c) Achievements of Project Outcome and Intermediate Outcome Indicator

Project Outcome Indicator

Baseline2010

End Value(2016.12.31)

by Bank loan financing

by non-Bank financing

Original End Target (PAD)

Revised End Target (restructuring and design changes)

1 Urban Roads (new urban area): Increased Population with access to road transportation networkKPI 1 Puxin Town 0 30,000 10,250 10,250KPI 2 Panlian Town 0 20,000 7,200 7,200KPI 3 Liujiang Town(restructuring)

5,300 5,000

2 Urban Roads (existing urban area): Travel time along the selected traffic corridorKPI 4 Penlai Town (Luogui Road)

13 minutes 6 6 6

KPI 5 Fengming Town (Binjiang Road south segment)

27 minutes 8 8.5 8.5

KPI 6 Chonglong Town (North Outer Ring Road)

20 minutes 7 7 7

3 Canal and Embankment Improvement (flood protection function)KPI 7 Yinxi Town 3-5 year

flood20 year flood

20 year flood

20 year flood

KPI 8 Hongchuan Town 5-10 year flood

20 year flood

20 year flood

20 year flood

KPI 9 Panlian Town 8-10 year flood

20 year flood

20 year flood

20 year flood

4 Canal and Embankment Improvement (water quality improvement)KPI 10 Yinxi Town Less than

Class VClass IV Class IV Class IV

KPI 11 Hongchuan Town Less than Class V

Class IV Class IV Class IV

5 Institutional: KPI 12 Number of agreed OMM plans operationalized 0 25 25 25

6 Increased population with access to improved water supply KPI 13 Liujiang town(restructuring)

0 20,000

Intermediate Outcome Indicator

1 Urban Roads: Length of roads constructed (km, for new urban areas) and upgraded (km, for existing

41

Project Outcome Indicator

Baseline2010

End Value(2016.12.31)

by Bank loan financing

by non-Bank financing

Original End Target (PAD)

Revised End Target (restructuring and design changes)

urban areas)

IOI 1 Puxin Town 0 13.6 12.48 1.124 13.22 13.60

IOI 2 Penglai Town 0 11.61 9.82 1.79 8.84 10.99

IOI 3 Yingxi Town 0 2.64 2.64 2.66 2.66IOI 4 Fengming Town 0 4.82 3.62 1.2 4.05 4.82IOI 5 Chnglong Town 0 3.29 2.95 0.34 3.29 3.29IOI 6 Panlian Town 0 2.81 2.01 0.8 2.81 2.81IOI 7 Liujiang Town (restructuring) 0 2.41 2.41 2.41

2 Water Supply and Drainage Network: Length of water supply and drainage pipelines installed (km)

IOI 8 Puxin Town 0 43.10 29.5 13.6 41.41 42.94IOI 9 Penglai Town 0 19.25 16.54 2.71 14.94 19.25IOI 10Yingxi Town 0 10.63 10.63 9.55 9.55

IOI 11 Huohua Town 0 14.43 6.30 8.13 14.43 14.43

IOI 12 Hongchuan Town 0 20.84 15.99 4.85 18.76 20.84IOI 13 Fengming Town 0 12.53 6.54 5.99 12.48 12.48IOI 14 Chonglong Town 0 18.70 14.0 4.70 18.68 18.68IOI 15 Panlian Town 0 7.28 5.14 2.14 7.29 7.29IOI 16 Liujiang Town (restructuring) 0 13.10 13.10

3 Canal and Embankment Improvement: Length of river cleaned and length (km) of river embankment rehabilitated (km)IOI 17 Puxin Town 0 4.49 0.88 3.61 4.49 4.49IOI 18 Yingxi Town 0 2.75 2.67 0.08 2.75 2.75IOI 19 Huohua Town 0 5.90 2.97 2.93 5.89 5.89IOI 20 Hongchuan Town 0 11.44 11.08 0.36 9.20 11.44IOI 21 Panlian Town 0 1.47 1.14 0.33 1.47 1.47

4 Wastewater Treatment ConstructedIOI 22 Increased water treatment capacity in Liujiang Town (m3/day) (restructuring)

0 2,500

42

d) Summary of Project Changes Sub-

component Original target Stage of change

Nature of change

Reasons for change Revised target

1. Xinjin Sub-Component – Puxing Town

Urban Roads: Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

13.22

Implementation

Added：Increased the branch roads of alleyway among 9#, 13# and 8# roads: 612m.

Additional works as variation, which improved the residential circumstance area along with the project road.

13.60Implementation

Switch to local funding: Renovated roads (1.124Km) including sewer and storm pipeline under the road.

The renovated road including the pipeline underneath had been completed before the commence of the Xinjing Contract due to the urgent need locally.

Implementation

Dropped: 1# road had been shortened by 230m, which section will cross an existing road by a bridge.

Due to the master plan changed, the section will be built with the bridge.

Water Supply and Drainage Network: Length of water supply and drainage pipelines installed (Km)

41.41

Design

Switch to local funding: Water supply pipeline (13.60Km) had been moved out from the Project.

The local water company built the water network due to the master plan changed.

42.94

Design

Added partially: 29.34 km of drainage pipelines was included in the contract.

The master plan changed, and the detail design made accordingly.

Canal and Embankment Improvement: Length of river cleaned and length (Km) of river embankment rehabilitated

4.49

Design

Switch to local funding: 0.8Km long of No. 1 canal had been improved by local funds before the design.

After optimum design, the length of canal is only 3.69Km in the Contract, which is different with PAD.

4.49

Implementation Switch to local Because new

43

Sub-component Original target Stage of

changeNature of

changeReasons for

change Revised target

(Km)

funding: No 1 canal (1.79Km) has been dropped from the Contract.

master plan approved and the Gudi lake is under construction, and the related canal was built by local funds only.

Implementation

Switch to local funding: 1.02Km long is shorten for No 2 canal, and it was built by local funds only.

Due to changes of local master plan, the No 2 canal will be just connected to the existing culvert of Cheng-Ya Express Highway.

Wastewater Treatment Constructed Puxing Town (3,000 m3/day, secondary process)

1 Design

Switch to local funding: The WWTP has been moved out of the Project.

Due to the master plan of the Tianfu New District and the wastewater in Puxing Town are intercepted into a new WWTP in Tianfu New District, which was built in 2014 with capacity of 10,000 m3/day.

1

2. Daying Sub-Component – Penglai TownUrban Roads: Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

8.48

Restructuring

Added: 2.51 Km of road rehabilitation was added to this subproject.

Project restructuring,

10.99

Implementation

Switch to local funding: The sections of Qijiangdonglu (1.218Km) and Binghelu (0.575Km) were dropped from the contract and had been built by local

According to the updated master plan, the width of the section roads need to be expanded, which costed too much more, and built by local funding

44


changeNature of

changeReasons for


funding. only.Water Supply and Drainage Network: Length of water supply and drainage pipelines installed (Km)

14.94

Restructuring

Added: 4.31 Km of drainage pipelines was added to this subproject

Project restructuring.

19.25

Implementation

Switch to local funding: 1.21 Km sewer under a road to be built had been installed by local funding

Due to the master changed, the sewer is under the new planed road and was installed with the road constructed together.

Design

Switch to local funding: Approximately 1.5Km long of drainage pipeline had been built before the detail design.

The storm pipes were installed due to the national storm protection funds provided.

3. Shunqing Sub-Component – Yingxi TownUrban Roads: Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

2.66 - - - 2.66


9.55 - - - 9.55

Canal and EmbanKment Improvement: Length of river cleaned and length (Km) of river mbankment rehabilitated (Km)

2.75 Implementation

Switch to local funding: One end of canal improved is shorten for 80m long due to more ecology bank in the section

Local farmer had made more greening on the both banks on the section by using of their own funds.

2.75

45


changeNature of

changeReasons for


4. Jialing Sub- Component – Huohua TownWater Supply and Drainage Network: Length of water supply and drainage pipelines installed (Km)

14.43

Design

Switch to local funding: Approximately 5.32Km of sewer interceptor and storm pipeline had been built.

Along with the related area developed, those sewer pipelines were built before the engineering design.

14.43

Implementation

Switch to local funding: Approximately 1.917 Km of sewer and 0.891Km of storm pipeline had been built.

Due to the master plan changed, those pipelines were overlapped with ongoing projects under the construction.

Canal and Embankment Improvement: Length of river cleaned and length (Km) of river embankment rehabilitated (Km)

5.89

Design

Switch to local funding: Approximately 2.1Km long of branch canals as connected to the canals of Dushanwan, Baimamiao and Luochenggou had been improved by local farmers by the greening on both banks in the hill valley.

After the optimized design, those branches were not included in the Contract.

5.89

Implementation

Switch to local funding: Approximately 0.83Km of canals are switched to local funding.

Due to master plan changed, the section of canal had been built with a public park.

5. Hongya Sub-Component – Hongchuan and Liujiang TownHongchuan TownWater Supply and Drainage Network: Length of water supply and drainage pipelines installed (Km)

18.76

Restructuring

Added: 2.08 Km of drainage pipeline was added to this component


20.84

Design Switch to local funding:

In optimization of the engineering

46


changeNature of

changeReasons for


approximately 4.85Km of interceptor along with one side of the old canal.

design, only one line of sewer interceptor along the old canal was designed.

Canal and Embankment Improvement: Length of river cleaned and length (Km) of river embankment rehabilitated (Km)

9.20

Design

Switch to local funding: The section with the length of 360m long on the gate at the entrance of Qinyijiang river had been built before the engineering design.

The shorten length is caused by optimum detail design, and detail design made that the target of total length of the canal is 8.84Km, which is different from the PAD.

11.44

Restructuring

Added: Additional works of 2.24 Km canal and embankment improved were added to this subproject.

Project restructuring,

Liujiang TownUrban Roads: Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

- Restructuring

Added: The contract involves 2.41 Km road construction, including 0.44 Km of road rehabilitation.

Project restructuring. 2.41


- Restructuring

Added: The contract involves 13.10 Km long of storm-water, sewer and water-supply pipelines.


13.10

Water Treatment Plant Constructed: 2500m3/day

- Restructuring Added


1

6. Pengshan Sub-Component – Fengming TownUrban Roads: 4.05 Implementation Switch to local Due to the

master plan 4.05+0.77

47


changeNature of

changeReasons for


Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

funding: 1.2 Km of road on top of embankment was built before the commence of contract

changed, the urgent development of the embankment area was done by local funding.

Implementation

Added: Additional 0.77Km of branch road had been re-built after the drainage pipeline was build.

The variation was made due to the requirement of local residential, which the local transportation is improved.


12.48

Design

Switch to local funding: 2.18 Km of water supply pipeline was switched to local funding.

Due to the master plan changed, the local water company built the water pipeline by themselves.

12.48

Implementation

Switch to local funding: 3.72Km of sewer and storm pipeline under branch roads was switched to local funding.

Due to mater plan changed, the urgent development of the road with pipeline was done by local funding.

7. Zizhong Sub-Component – Chonglong TownUrban Roads: Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

3.29

Implementation

Switch to local funding: A section of road (180m long) had been built with the Avenue together by using local funding only.

Due to the section of road (180m long) overlapped with Panshi Avenue, which had to be built with the Avenue together.

3.29

Implementation

Switch to local funding: The section of the route was changed and shortened by approximately 154 m to local funding.

Because avoiding of the land acquisition and resettlement, the road was simply built by local founding only.

48


changeNature of

changeReasons for



18.86

Implementation

Switch to local funding: The pipeline (1.42Km) has been built by local funding only.

Water supply pipeline had been reduced due to the changes of master plan in the Railway Station Area.

18.86

Implementation

Switch to local funding: 1.91Km of sewer pipeline and 1.37Km of storm pipeline had been built by local funding only.

Due to the changes of master plan in the Railway Station Area, those pipelines had been built along with a canal beside of the road.

8. Miyi Sub-Component – Panlian TownUrban Roads: Length of roads constructed (Km, for new urban areas) and upgraded (Km, for existing urban areas)

2.81 Implementation

Switch to local funding: About 800 meters of Xihuan and Shuidian roads had been narrowed and paved by local funding only.

Due to the land acquisition and resettlement, the sections of roads had been simply built, and are connected the existing road.

2.81


7.29

Implementation

Switch to local funding: The 800m of the sewer pipeline was built with the roads built by local funding.

Due to the land acquisition and resettlement, the section of road was narrowed and paved by local funding and the sewer pipeline was built together ensure the sewage drained into municipal sewer system.

7.29

Implementation

Switch to local funding: 1.34Km of water pipeline had been built by local funding only

Due to the master plan changed, the re-layout of water pipeline network had to be done.

Canal and Embankment

1.47 Design Switch to local funding; 330m

The shorten length is caused

1.47

49


changeNature of

changeReasons for


Improvement: Length of river cleaned and length (Km) of river embankment rehabilitated (Km)

long of the embankment had been improved before the detail design.

by optimum detail design, the embankment is connected with existing dike with the same function.

50

Annex 3. Economic and Financial Analysis

Economic Analysis1. At appraisal a comprehensive cost-benefit analysis was conducted to evaluate the economic viability of each of the five road construction and upgrading sub-components, and the three river rehabilitation subcomponents. Since no major changes were made to these subcomponents, and in order to ensure consistency and continuity, the same cost-benefit methodology, including models and assumptions, have been applied for the same sub-components to analyze the project’s efficiency. The new estimates are based on updated data on project benefits and costs upon completion which were provided by the respective county governments/sub-PMOs and the PPMO.

2. Economic Benefits. The main identified economic benefits of the project include: savings in travel time and cost due to improved road conditions in the project areas; avoided loss of life and economic loss from traffic accidents due to improved transportation conditions; productivity increases and better access of local residents to public services (e.g., education, medical care, cultural services); energy savings and associated pollution reduction due to improved road conditions; increases in amenity and land values associated with improved transportation conditions and the environment; avoided economic loss from flood/drought due to river rehabilitation; better public health and quality of life due to improved water supply and drainage systems; and better quality of the water environment and soils in the project and surrounding areas due to improved water supply, drainage and sanitation.

3. Economic Costs. The project’s economic costs are mostly capital investment costs (including associated resettlement and environmental mitigation costs, as identified by environmental and social safeguard analysts) and operation and maintenance (O&M) costs.

4. Valuation Methods Used. Economic costs and benefits of each investment component or subcomponent were quantified as much as possible. For road construction and river rehabilitation, where economic benefits can be quantified and monetized fairly easily, cost-benefit analysis is used to quantitatively examine the economic viability of investments. Different valuation methods were used to quantify and monetize economic benefits, including the change in productivity approach (e.g., the increase of productivity of industry and service sectors and savings in travel time and costs as a result of improved roads) and land value increases due to infrastructure development and environmental enhancement. Sensitivity analysis was also conducted to test the robustness of the results of the cost-benefit analyses.

5. Road construction and upgrading. This category includes five different subcomponents: (a) road development in new areas of Xinjin County; (b) road development in Daying County; (c) Southern segment of Bingjiang Road development in Pengshan County; (d) Northern outer Ring Road of Zhonglong Town in Zizhong County; and (e) road development in Miyi County. Cost-benefit analysis was conducted for each

51

of these sub-components. Table below summarizes the results of economic analysis of the road construction and upgrading components.

Summary of Cost-Benefit Analyses of Road Components

Components NPV(millionRMB)

EIRR BCR Sensitivity Analysis (assuming 10%cost increase and 10% benefitreduction)NPV(million RMB)

EIRR BCR

Pengshan 82.52 14.49% 1.95 56.84 12.21% 1.59

Xinjin 112.84 13.83% 1.45 50.86 10.52% 1.18Daying 84.46 16.42% 2.16 61.46 13.99% 1.77Zizhong 103.30 16.00% 2.13 74.75 13.63% 1.75Miyi 294.85 23.02% 4.13 246.52 20.31% 3.38

6. River Rehabilitation Components. This category of investments includes the following components: (a) Yingxi River rehabilitation in Shunqing District of Nanchong Municipality; (b) Xiaoshanzi River rehabilitation in Jialing District of Nanchong Municipality; and (c) Hucheng River rehabilitation in Hongya County of Meishan Municipality, respectively. Cost-benefit analysis was conducted for each of these components applying the same methodology. The results are summarized in the Table below.

Summary of Cost-Benefit Analyses of River Rehabilitation Components

Components NPV(millionRMB)

EIRR BCR Sensitivity Analysis (assuming 10%cost increase and 10% benefitreduction)NPV(million RMB)

EIRR BCR

Shunqing 37.89 12.47% 1.95 2378.42 11.39%

1.42

Jialing 70.85 35.22% 1.45 5640.82 28.70%

2.39

Hongya 86.31 32.45% 2.16 6654.66 25.83%

2.09

7. These results show that economic returns of these sub-components are similar to or higher than appraisal estimates across the board as shown below. Sensitivity analyses were conducted for the same eight sub-components.. The sensitivity analysis (under the assumption of either/both a 10% decrease in economic benefits and a 10% increase in total costs) shows that the investments are economically robust.

EIRRs at Appraisal and Completion

Components At Appraisal At CompletionNPV EIRR NPV EIRR

52

(million RMB) (million RMB)

Road Development

Pengshan 73.61 13.71% 82.52 14.49%Xinjin 130.20 11.40% 112.84 13.83%Daying 74.75 13.15% 84.46 16.42%Zizhong 80.00 13.04% 103.30 16.00%Miyi 953.89 18.50% 294.85 23.02%

River Rehabilitation

Shunqing 6.10 8.89% 37.89 12.47%Jialing 38.30 21.47% 70.85 35.22%Hongya 48.40 20.65% 86.31 32.45%

8. Other components. For the Xinjin Wastewater Treatment Plant and Associated Pipelines Component, cost-effectiveness analyses and technical analyses were conducted several times to ensure the selection of the most appropriate technical solution at least cost. However, this component was dropped during project restructuring due to change of master plan. Other categories of investments, e.g., septic tanks in Daying County, and flood control embankment in Miyi County, benefit local residents through improvements to public health and quality of living, avoided economic loss from floods, productivity increases, and an improved environment. Given the modest size of the investments, it was either not feasible or not cost-effective to quantify or monetize their economic benefits. Therefore, no quantitative economic analysis was conducted.

9. Administrative efficiency. All works included at appraisal were completed at least seven months before the original closing date with US$17 million in savings, part of which were used to carry out additional works in the project counties of Hongya and Daying. The total project cost at ICR completion is US$142 million, which is about 84% of the estimated project cost of US$169.7 million. Total disbursement stands at 93.3% at the ICR completion. To some extent, the reduced cost is due to foreign exchange rate fluctuations, optimization of engineering designs and some sub-components being switched to local funding, but the saving is also attributable to efficient procurement and sound contract management as discussed below.

10. The works for major components of the project adopted a large contracting approach, with each contract value greater than US$ 10 million, increasing the competitiveness of each contract (5 to 12 bids for each contract). All works contracts were signed with the prices being lower than the estimations by about 30% to 45%. Even considering the market factor that FSR cost and Bid cost is estimated on the sector cost norms and practically higher than the market average pricing level by about 15%, the contracts are still signed with an average competitive discount of 23.14%. As for comparison, the similar project SUDP (under the same PPMO) has an average competitive discount of 9.68%.

Summary Analysis Sheet For Contracts Costs (In CNY)

Contract FSR Cost Estimation

Bid Cost Estimation

Contract Price

Discount Percentage

Market Discount1

Competitive Discount2

Batch 1 768.63 770.71 482.71 37.37% 15.00% 22.37%XJ1 116.27 120.63 65.6 45.62% 15.00% 30.62%

53

XJ2 129.66 124.13 78.84 36.49% 15.00% 21.49%PS-1 66.52 58.35 33.76 42.14% 15.00% 27.14%SQ-1 74.98 81.17 54.37 33.02% 15.00% 18.02%JL-1 71.67 54.75 35.96 34.32% 15.00% 19.32%HY-1 68.03 88.71 53.59 39.59% 15.00% 24.59%DY-1 92.29 87.86 57.04 35.08% 15.00% 20.08%ZZ-1 80.1 86.03 53.93 37.31% 15.00% 22.31%MY-1 69.11 69.08 49.62 28.17% 15.00% 13.17%

Batch 2 (Restructuring) 126.61 126.61 91.39 27.82% 0.00% 27.82%

HY2-1 26.04 26.04 22.23 14.63% 0.00% 14.63%HY2-2 67.27 67.27 41.83 37.82% 0.00% 37.82%HY2-3 4.85 4.85 4.75 2.06% 0.00% 2.06%DY2-1 28.45 28.45 22.58 20.63% 0.00% 20.63%Total 895.24 897.32 574.1 36.02% 12.88% 23.14%

SUDP 3 3238.87 3226.22 2429.99 24.68% 15 ％ 9.68%Note：1) FSR Cost and Bid Cost is estimated on the sector cost norms and practically higher than the market average pricing level by about 15% with respect to the management capacity and capability of the PMO. This 15% discount is not applied to Batch 2 contracts because cost estimation was more accurate upon restructuring. 2) The discount factor due to competitive bidding can be resulted by the overall discount percent less the market discount factor. 3) For comparison purpose, the summary bidding indicators of SUDP under the same PMO are given for base reference.

11. Efficiency was negatively impacted by significant project implementation delay during the first almost two years of project implementation period. This was compensated by the simple project design and the approach of one project county/district using only one local design institute for the engineering design and carrying out the physical implementation via one large civil works contract, which contributed to timely completion of the works despite the significant startup delay.

Financial Analysis

12. As most of the project components are public infrastructure and have no revenue generation, financial analysis at appraisal was carried out to confirm that the Borrowers (eight county/district governments) have sufficient financial capability to afford the investments of the Project, including adequate financial resources to: (a) contribute required counterpart funds; (b) repay the amount borrowed from the Bank; and (c) maintain and operate the assets created under the Project.

13. As it turned out during the project impletion, counterpart funds were provided as planned through a mixture of central government bonds and grants, provincial municipal grants, and local borrowings from the government and from the commercial banks. The annual requirement for counterpart financing for the project is relatively small (less than 2.2% of annual government disposable revenues) and did not bring serious pressure to government fiscal expenditure. Government debt levels are also low compared with the fiscal revenues (under 1:1) and were in a safe range. As the sub-components are generally the largest urban development projects that the project counties/districts have ever had,

54

they have paid careful attention to the financial aspects of the project, in particular to budget requirements for the operation and maintenance of the assets created under the project. In the time-bound OMM plans prepared under the project, the OMM units have been identified; existing OMM equipment and instruments are listed, and additional maintenance equipment required have been proposed; annual OMM investments have been estimated.

55

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/Specialty

LendingChongwu Sun Senior Environmental Specialist GEN2A Environmental SafeguardsMara K. Warwick Country Director EACPF TTL up to identification stageDan Xie Program Assistant EACCF Project Support

Ji You Operations Officer EACCF Task Team LeaderJun Zeng Senior Social Development Specialist GSU06 Social SafeguardsXiaoke Zhai Senior Transport Specialist GTI10 Urban Transport Tokao Ikegami Consultant IAOJP Sanitary EngineerJohn Smithson Consultant Municipal Engineer Xin Chen Senior Program Assistant EACCF Project Support

Yi Geng Senior Financial Management Specialist GGO20 Financial Management

Jianjun Guo Senior Procurement Specialist GGO08 Procurement Zheng Liu Procurement Specialist GGO08 Procurement Zhi Liu Lead Infrastructure Specialist EASTS Urban Transport Jian Xie Senior Environmental Specialist GEN03 Economic & Financial AnalysisChuntai Zhang Consultant GTIDR Financial Analyst Supervision/ICRXiaoke Zhai Senior Transport Specialist GTI10 Urban Transport Ji You Operations Officer EACCF Task Team LeaderChongwu Sun Senior Environment Specialist GEN2A Environmental Safeguards

Yi Geng Senior Financial Management Specialist GGO20 Financial Management

Jianjun Guo Senior Procurement Specialist GGO08 Procurement Hongkun Yang Consultant GGO08 Procurement Dan Xie Program Assistant EACCF Project SupportHongwei Zhao Program Assistant EACCF Project SupportJun Zeng Senior Social Development Specialist GSU06 Social SafeguardsMeixiang Zhou Social Development Specialist GSU02 Social SafeguardsXiaodan Huang Environmental Specialist GEN2A Environmental SafeguardsTuo Shi Urban Economist GSU08 ICR TTL & Primary Author Geoffrey Read Consultant Infrastructure Specialist

Rufei Zhang Consultant GSU08 Urban Planning and Institutional Specialist

Wanshan Li Consultant GWA02 ICR Technical Support

56

(b) Staff Time and Cost

Stage of Project CycleStaff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

LendingFY09 9.35 25.74FY10 34.36 177.59FY11 12.35 61.42

Total: 56.06 264.75Supervision/ICR

FY12 3.40 9.47FY13 10.65 32.15FY14 6.73 23.20FY15 8.87 59.61FY16 11.34 46.33FY17 22.34 90.18

Total: 63.33 260.94

57

Annex 5. Summary of Borrower's ICR and/or Comments on Draft ICR

1. ASSESSMENT OF DEVELOPMENT OBJECTIVE, DESIGN AND QUALITY AT ENTRY

Original Objective1.1. Full details of objectives have been provided in the Project Appraisal Document（Report No: 55552 – CN ） of April 8, 2011 – Section B, Project Description, and Annex 4: Detailed Project Description. The same objectives are cited in the Loan Agreement Number 8042-CN and the Project Agreement, which were signed on June 30, 2011. The specific project development objective (PDO) is to improve priority infrastructure in the Project Counties and Districts in Sichuan Province.

Revised Objective1.2. There has been no change in the main Project objectives during implementation.

Original Components1.3. There were two original components in the SSTDP.

Component 1: Small Town Infrastructure Development1.4. Construction of selected urban roads, water supply networks, storm and sewerage drainage networks, canal and river embankments and etc. in the Xinjin, Hongya, Pengshan, Miyi, Daying and Zizhong Counties, and the Jialing and Shunqing Districts, in order to promote local economic development and improve environmental services.

Component 2: Institutional Strengthening and Capacity Building1.5. Provision of technical assistance for the implementation of Project activities by developing the institutional capacity of Project Participants implementing the project, including provision of technical assistance for: (a) project construction management and supervision (including design review, advisory services, traffic safety audit and engineering supervision), and for traffic management capacity development; (b) on-the-job training for staff of the Project Counties/ Districts for operation maintenance and management of their infrastructure investments; and (c) independent monitoring of EMPs and RAPs.

Changes in SSTDP1.6. There has been no change in the project components. However, there were several changes in scopes of the components during implementation. The changes were reviewed or reported or approved through review of the bidding document and result frameworks as well as the SSTDP Mid-Term Review. There were also other changes in the design of some of the project components in order to optimize the project outputs, but without change in Project objectives. The major changes are described below.

Changes as Made in Design1.7. SSTDP was firstly proposed before “512” Wenchuan Earthquake in 2008 and it was requested for adjustment as to accommodate the initiatives for reconstruction and recovery after the earthquake. The components in the project counties/districts under SSTDP was then prepared and appraised in 2010-2011 with some detailed engineering design changes. The construction started in May 2013 and in the meantime, the master plans in most of the project areas had been adjusted accordingly.

58

Changes as Made during Implementation1.8. The changes as made during project implementation include four categories: i) to add additional alley feeder roads along with landscaping, i.e. in Xinjin County for improvement of surrounding environment; ii) to construct project components by local funding due to the changes of local master plans, i.e. Binghe Road E., Qijiang Middle Road, and storm pipelines and sewers, etc. in Daying County; iii) to cancel the lifting pump station contract in Pengshan County for the purpose of design optimization; and iv) to construct a limited number of roads by local funding as to accommodate the requirements of the land acquisition and resettlement in Miyi County and Ziyong County.

Project Restructuring1.9. The project restructuring was approved by WB on December 17, 2015 with major changes including: (i) cancelling the investment of Xinjin Wastewater Treatment Plant from Component 1 of the Project; (ii) using the loan savings of $17 million to support additional investments as agreed by Sichuan and the Bank; (iii) increasing disbursement percentage for Category (1) Civil Works from 92% to 100%; (iv) revising the Results Framework to reflect these changes. A package of new investments funded by the Project’s loan saving in three towns of two existing project counties (two towns in Hongya county and one town in Daying county) was agreed, including i) Wastewater interception, moat and embankment improvement in Hongchuan Town, Hongya County (contract HY2-1); ii) Infrastructure improvement in Liujiang Town, Hongya County (contracts HY2-2 and HY2-3); iii) Road rehabilitation in Penglai Town, Daying County (DY2-1).

Institutional Development and Capacity Improvement Component1.10. There is no change in the Technical Services under the SSTDP, but added one technical assistance service for digital Liujiang town in the project restructuring. Implementation of the Project Management and Construction Supervision Component (TA1), External EMP Monitoring and Evaluation (TA2) and External RAP Monitoring and Evaluation (TA3) as well as Digital Liujiang Town (TA4) were enhanced with deeper involvement of the international and national consultants in the whole project management through entire project period, ensuring the successful of the project implementation. Even though additional investment for new physical works in the Project restructuring is added, the contract prices of TA1, TA2 & TA3 are not increased while the completion contract price of TA1 service is reduced after critical input management of TA services.

Quality at Entry1.11. Project preparation at appraisal can be evaluated as satisfactory when compared with SSTDP actual outcome. The overall project design (as stated in PAD as well as Loan Agreement) proved to be in line with the government and WB development strategy in China and it is in line with the plans of enlarging urban population to access those roads built under the SSTDP and reducing the high pressure of the transportation and population density in city center, improving the urban infrastructure for the urbanization. The scope of the project and the primary project design proved to be appropriate. The feasibility studies and engineering design for each project component (as well as for the overall project) proved to be generally appropriate. The technical designs employed the advanced and yet commercially available technologies, such as the LID concept employed in Xinjin and Hongya sub-components.

2 ACHIEVEMENT OF OBJECTIVE AND OUTPUTS

Outcome / Achievement of Objective

59

2.1 SSTDP has contributed to sustainable development of the participating small towns, through improvement of their public and environmental infrastructure and services, strengthen their absorption capacity, and encourage rural migration to the cities and small towns in Sichuan.2.2 Implementation of SPG strategy to promote economic development of project towns is hampered by deficiencies in existing infrastructure in these towns, and by deteriorating environmental conditions. At completed, the selected sub-components have provided savings in travel time and costs, avoid loss of life and economic loss from traffic accidents, give better access to public services including water, sewerage and drainage facilities, an increase in amenity and land values associated with improved transportation and environmental conditions.2.3 The project has been making satisfactory progress toward improving priority infrastructure in the project counties and districts. The PDO of this project have largely been achieved with many of the key PDO-level Indicators and Intermediate Outcome Indicators surpassing the targets set at Appraisal and revised at the Project Restructuring. In Puxing Town of Xinjin County and Panlian Town of Miyi County, the increased population with access to the road transportation network now stands at 30,000 and 20,000, substantially higher than the original targets of 16,000 and 11,200 people. The travel time along a selected corridor in Penglai has declined from 13 minutes to 6 minutes as expected. The travel time along a selected corridor in Fengming has declined from 27 minutes to 8, slightly exceeded the end target of 8.5 minutes. In Chonglong, the travel time along the chosen corridor has declined from 20 minutes to 7 minutes which achieved the original goal. Canal and embankment improvements have fully attained their goals as seen in the Result Frameworks (RF). The project activities of civil works as originally appraised had completed by May 2016, seven months ahead of project closing.2.4 The Implementation of additional investments agreed at the Project Restructuring was substantially completed by project closing of December 31, 2016, except the works of water treatment plant (WTP) in Liujiang Town. By end of 2016, the main structures and the equipment were completed and put in the place, but the general layout, landscaping and installation of the WTP could not be completed. Due to the many raining in early of 2017, Chinese New Year Holiday as well as poor organization of the contractor, the rest of works in the WTP is completed by April 25, 2017, and the test running and the acceptance of the works will be done before end of May 2017.2.5 At SSTDP completion, the achievement and outcome are gradually and obviously revealed.

Outputs and Outcomes by Components2.6 The following sub-components were completed:

Xinjin County – Puxing Town (USD49.96 million at PAD; USD 30.94 million at completion)

2.9. The component had been satisfactorily implemented between 2013 and 2016. The component includes: (a) the construction of 18 sections of local access roads and associated sewers and drainage, bridges, as well as landscaping activities with length of 13.60Km roads including three bridges; and; and (b) the construction of canal (4.6Km long) associated with Gudihu lake for the irrigation and scenery.2.10. By completing the SSTDP Xinjin Sub-Component, the significant development of infrastructure in Puxing Town has been made and the outcome of the Project has obviously been emerged. Specifically:

60

(1) Alley roads, squares as well as parking places in the residential area had been built, which the circumstances of society humanity around residential area in the Puxing Town have been significantly improved. The increased population with access to the road transportation network now stands around 30,000.

(2) The section of storm-water garden as well as permeable road-surface along with the road #2 had been built. The concept of Low Impact Development (LID) and green infrastructure (GI) design had been introduced and implemented. The collection of the data for use in the GI design as well as monitoring of the results of the green infrastructure had been made, which will provide the basic design- parameters and advantages for further GI design.

(3) The infrastructure built in Puxing town under the Project makes at least 2 sq. Km of urban area increased, which has attracted many enterprises, units to be entered in the new area, i.e. Hengda Real Estate Company, Sichuan Orthopaedic Hospital, AP Fairy-Tale Theme Garden Invested by the Press Group of Sichuan Daily, Sports Competition Center of Tibet Physical Education Bureau, Xinjin Branch of Chengdu Industrial Technical Vocational Education College, Peony Theme Park with commercial supporting facilitates under Beijing Shanghe Peony Agricultural Development Co. Ltd., Express Highway No. 1 Branch Bureau of Traffic Police Brigade under Sichuan Public Security Department, etc., and total investment was more than RMB 10 billion by the end of 2016.

(4) After the infrastructure in Puxing Town has been established under SSTDP, the great improvement of local economies, urbanization progress as well as people life at poor level have been made.

Daying County – Penglai Town (US$ 16.36 million at PAD; US$ 13.18 million at completion)

2.11. The component had been satisfactorily implemented between 2013 and 2015. The component includes: (a) Urban Roads - Improvement of 10 roads (Qijiang Middle Road, Qijiang East Road, Qijaing South Road, Binhe Road, Shuyuanjie, Jiaotongxiajie, Luogui Road in the Appraisal stage, as well as Extension of Luogui Road, Extension of Qijiang South Road and Hongqi Avenue in the project restructuring) for a total length of 11.61 Km; (b) Storm Drainage and Sewerage - Improvement of storm and sewer pipes along the roads, including the project restructuring (19.31 Km long of storm and sewage pipelines); and (c) By-passing pipeline of the septic tank - Installation of a by-passing pipeline, which part of works was only completed by using of local founding.2.12. By completing SSTDP component, Penglai town, Daying County has become the second center of city of Suining. The infrastructures built under the Project has made the county move forward to its development objective, which are Highland of Modern Enterprises, Destination of National Famous Tourism, and Modern Ecological-Garden City. Specifically:

(1) The innovated roads under the Project have made much better improvement of the urban transportation in Penglai town, Daying County. The travel time along a selected corridor (Luogui road) in Penglai has declined from 13 minutes to 6 minutes as expected. The barrier-free way on the innovated roads under the Project had made the very good impressions to the National Games for the Disabled held in Daying county in 2015.

(2) By completing of the sewer interceptors and by-pass pipeline of septic tank, more than 2000 m3/day of the domestic wastewater are increased in Daying Wastewater Treatment Plant (WWTP) and the concentrates of wastewater entering the WWTP is increased, and the total increasing quantities of CODcr removed are more than 256t annually.

Shunqing District – Yingxi Town (US$ 15.98 million at PAD; US$ USD 15.27 million at completion)

2.13. The component had been satisfactorily implemented between 2013 and 2014. The component includes: (a) Urban Roads - Construction of a 2.66 Km long road; (b) Storm Drainage and Sewerage -

61

Construction of storm pipes of 3.37 Km in total length, and 7.26 Km of sewer pipes; and (c) Canals and Embankment Improvement - River embankment improvement of 2.75 Km, including 5.48 Km of new embankment (2.64 Km on the left, 2.85 Km on the right), with canal dredging and ecological restoration.2.14. By completing SSTDP component, the circumstance of Yingxi town of Shunqing District, Nancong City has been improved a lot and the urban population has increased from 8,000 at the appraisal stage to 14,000 in 2016. Specifically:

(1) The Binhe road had been built and connected with the existing road, for which the transportations around have been improved for the residents and the vocational schools along with the road;

(2) After the completion of the project, the embankment has been built as green and ecological bank and sewer has been intercepted. Along with greening bank and greening spots, the residents are feeling happy and relaxed during off-hours in the area;

(3) The embankment of Yingxi river (canal) for the flood protection has been improved from once of 3-5 years to once of 20 years; and

(4) The quality category of the river has been improved from class V to class IV since 2015.

Jialing District – Huohua Town (US$ 15.46 million at PAD; US$ USD 6.00 million at completion)

2.15. The component had been satisfactorily implemented between 2013 and 2015. The component includes: (a) Storm and Sewerage Drainage - 7.21 Km of storm pipes, and 7.22 Km of seweragee; and (b) Canals and Embankment Improvement – 2.82 Km of river embankment improvement, and 3.1 Km of new branch canal.2.16. By completing the SSTDP Jialing District – Huohua Town sub-component, the storm and sewerage drainage system and canals and embankment provisions have been developed and improved significantly. Specifically:

(1) By completing SSTDP component, the environmental improvement of Huohua town of Jialing District, Nancong City has been made and more than 25,000 of urban population has been benefited from the Project. Huohua town has become the center of politics, culture, education in Jialing District, Nancong city.

(2) By completing the sewer installation of under SSTDP Jialing sub-component, more than 9600m3/day of domestic wastewater has been collected into the WWTP and the pollutants of CODcr 365 t, BOD5 146t, NH4+-N 36.5t have been removed annually.

(3) By completing of the improvement of canals and embankment in Huohua town under SSTDP sub-component, the flood protection standard of the canals has been increased as once in twenty-years

Hongya County – Hongchuan Town and Liujiang Town (US$ 16.98 million at PAD; US$ USD 27.04 million at completion)

2.17. The component had been satisfactorily implemented between 2013 and 2016. The Hogchuan Town component includes: (a) Sewerage before the project restructuring - 18.76 Km of wastewater interception pipes along both banks of the Town Moat; (b) Moat and Embankment Improvement before the project restructuring– Construction of 4.4 Km canal (A, C section); dredging 4.8 Km of moat canal; construction of 8.8 Km of sidewalk and greening belt on both sides of the moat; (c) Under the project restructuring, 2.08 Km of drainage pipeline was added to this component; (d) Under the project restructuring, additional works of dredging 2.24 Km canal, 2.2Km new embankment and 1.8 Km embankment improvement were added to this subproject. The Liujiang Town component includes: (a) Road - 2.41 Km road construction, including 0.44 Km of road rehabilitation; (b) Pipelines - 13.10 Km long of storm-water, sewer and water-supply pipelines; (c) A water treatment plant - 2500m3/day; and (d) Digital City Framework Building and Piloting Project in Liujiang Town, including MIS/GIS Equipment purchased.

62

2.18. By completing the SSTDP Hongya county sub-component, the urban area of Hongchuan Town and Liujiang Town has been developed significantly. Specifically:

(1) The works of Hongya subcomponent without the project restructuring have been completed in 2015. The river-water has been introduced from Qingyi river into the canal around the town of Hongya County and the sewage has been intercepted into Hongya WWTP. The quality category of the river in Hongchuan town has been improved from class V to class IV in 2015.

(2) By completing the sewer installation of under SSTDP Hongchuan sub-component, more than 6,400m3/day of domestic wastewater has been collected into the WWTP and the pollutants of CODcr 350 t, NH4

+-N 31 t have been removed annually.(3) By completing SSTDP Hongchuan town sub-component, the land value along the canals

(moats) with approximately 2700mu has been increased as at least RMB 60,000 per mu, which increased government income at least RMB 16.5 million in 2016. The residential buildings and service industry have gradually grown up. There are several delegations from other provinces and other countries visited the project in Hongya county.

(4) The green infrastructure (GI) project had been implemented in Liujiang town, Hongya County, where an historical town is developed into a tourist town and retirement community. A variety of GIs such as rain gardens, bioswales, permeable pavement, wetlands had been installed throughout the newly developed area. Stormwater will be collected to support landscaping and to supplement non-potable urban water use. This Project had made a good example of how to incorporate sustainable development, green design in internationally funded program. This GI program offers a number of learnings that can contribute to urban water management, green growth, and support policy making for sustainable development.

(5) By completing the SSTDP Liujiang sub-component, the five-star hotel, catering street, and new residential area, etc. have being setup along with Storm-Water Garden, which has brought many investments and more tourists in Liujiang town and made the good economies prospective future in Liujiang, and benefits a lot to the poor level people and more than 20,000 residents in Liujiang town as well as 120,000 visitors each year will be benefited.

(6) By completing the Digital City Framework Building and Piloting Project in Liujiang Town, the WIFI hot-points have been covered in whole area of old town, which the special Wechat and MIS platforms have been setup and guided tourists on the traveling spots, parking area, catering, entertainments, etc.

(7) The GIS system of Ground Pipeline Management has been also setup in the Digital Liujiang Town, which will provide the systemization of Liujiang assets management and make an efficient OMM plan of the ground pipeline management.

Pengshan County (District) – Fengming Town (US$ 13.91 million at PAD; US$ USD 14.74 million at completion)

2.19. The component had been satisfactorily implemented between 2013 and 2015. The component includes: (a) Urban Roads - Construction of 2.95 Km of riverside road, and an emergency access road on the embankment, 1.87 Km long; (b) Storm Drainage and Sewerage - Construction of 5.30 Km of storm pipes and 4.99 Km of sewage pipes, improvement of 1.21 Km of flood discharge canal; and (c) Water supply: - 2.18 Km of water supply pipeline (local funding only).2.20. By completing of SSTDP Pengshan sub-component, transportation and environment have been improved in Fengming Town. Specifically:

(1) The sewage has been intercepted into the existing WWTP through gravity flow after optimum design and cancelling of the pump station, which saving operation cost at least RMB 250,000 annually.

(2) After the sewage intercepted, more than 10,000m3/day of sewage is increased to the WWTP, and annually 730t of CODcr pollutants will be increased to be removed.

63

(3) The south section of Binjiang Road as well as the road on top of embankment has been connected, and the travel time in south section of Binjiang Road has been reduced from 27 minutes to 8 minutes, which has been connected with existing road and is going to be connected to the express highway to city of Meishan.

(4) The road built on the top of embankment meets the requirement of flood protection and emergency maintenance of the embankment

Zizhong County – Chonglong Town (US$ 18.63 million at PAD; US$ USD 14.08 million at completion)

2.21. The component had been satisfactorily implemented between 2013 and 2015. The component includes: (a) Urban Roads - Construction of 3.29Km of outer ring road; and (b) Storm Drainage and Sewerage and Water Supply- Construction of 18.70 Km long of the pipeline along the new outer ring road.2.22. By completing of SSTDP Zizhong sub-component, transportation and environment have been improved in Chonglong Town. Specifically:

(1) Along completion of the north section of outer ring road, the transportation of north area of Zizhong county, i.e. Chonglong Town has been improved by the outer ring road, which has been made the ring road network around Chonglong town and reduced the traffic pressure on Tuojiang No 1 bridge and Tuojiang No. 2 bridge, and it is also connected to 2015 opened High-speed Railway Station, and it has become the main road from the high-speed railway station to the downtown of Zizhong County. The travel time on the north outer segment has been reduced from 20 minutes to 7 minutes. More than 90,000 people benefited from the access road. By end of 2015, the traffic flow on this outer ring road is approaching at approximately 2400 pcu/hr.

(2) After completion of the north section of Outer Ring Road as well as the opening of High-speed Railway Station in Chonglong town, land value along the ring road in Chonglong town and Shuinan town has been increased, and the land area of about 700 mu has been or will be developed, additional income from land development has been reached to RMB 265 million in 2016.

Miyi County – Panlian Town (US$ 18.62 million at PAD; US$ USD 16.66 million at completion)

2.23. The component had been satisfactorily implemented between 2013 and 2015. The component includes: (a) Urban Roads - Construction of 4 new urban roads for a total length of 2.81Km; (b) Storm Drainage and Sewerage - Sewerage pipes of 2.06 Km, and storm pipes of 2.69 Km; (c) Water Supply- Construction of water supply pipes of 2.54 Km; and (d) Flood Protection - Construction of a new embankment of 1,470 m with landscaping.2.24. By completing of SSTDP Miyi sub-component, the transportation and environment as well as standard of flood control have been improved in Panlian Town. Specifically:

(1) The embankment and landscaping works of Miyi subcomponent have been completed, and then the flood protection of the Panlian Town has been improved from once of 8-10 years to once of 20 years and the circumstances along Anning river embankment has been improved.

(2) By completing of SSTDP Miyi sub-component, the urbanization progress of south urban zone, i.e. Panlian town has been made and the transportation circumstances have been improved. The populations in Panlian town were changed from 42,000 at the project appraisal period to approximately 65,000 in 2016.

(3) By completing of sewer interceptors in SSTDP Miyi subcomponent, the sewage discharges to Anning river in the south urban zone have been declined, and more than 90% sewage in the zone entered the existing WWTP. The pollutants of CODcr 652 t, SS 721 t, etc. have been removed annually

64

Institutional Strengthening and Capacity Building Component (US$ 3.8 million at PAD; US$ USD 3.90 million at completion)

2.25. The component has been satisfactorily implemented between 2012 and 2017. The component includes the Project Management and Construction Supervision (TA1), EMP Monitoring (TA2), RAP Monitoring (TA3), Digital City Framework Building and Piloting Project in Liujiang Town (TA4) including training for SPPMO, City PMOs, all the PIAs, and other relevant government agencies as well as contractors. The implementation of the component has substantially improved government capacity in executing the project, ensuring the project quality, and improving the efficiency of the execution.

Economic Internal Rate of Return2.26. The components are economically as same as the results at the appraisal stage. Specifically, the economic internal rate of return (EIRR) of the five road construction and upgrading components are 14.49% (Pengshan), 13.83% (Xinjin), 16.42% (Daying), 16.00% (Zizhong), and 23.02% (Miyi), respectively; the EIRR of the three river rehabilitation components are 12.47% (Shunqing), 35.22% (Jialing), and 32.45% (Hongya), respectively.

Financial Rate of Return2.27. As most of the project components are public infrastructure and have no revenue generation, the PIAs (eight county/district governments) had sufficient financial capability to afford the investments of the Project, including adequate financial resources to: (a) contribute required counterpart funds; (b) repay the amount borrowed from the Bank; and (c) maintain and operate the assets created under the Project. 2.28. The annual requirement for counterpart financing for the project is relatively small (less than 2.2% of annual government disposable revenues) and did not bring serious pressure to government fiscal expenditure. Government debt levels are also low compared with the fiscal revenues (under 1:1) and were in a safe range.

Institutional Development Impact2.29. There are 8 subproject entities within the overall project. Among the 8 entities, only Chengdu Small Town Investment Company (CSTIC) is a state-own company and rest of entities is the government institutions. Since the Puxin Town subcomponent is located in Xinjin County, Xinjin County Urban-Rural Construction Investment Co. served as the acting Project Implementing Agency (PIA) on behalf of CSTIC during the project implementation. At the project completion, their institutional improvements have been achieved through their internal improvements and their reforms from the existing entity structures.2.30. Along with the current government’s market oriented reform agenda, most of government institutions are managing the project investments and infrastructure maintenance, which is converting to the company structure. Plans and innovations towards the reform have been clearly noticed, which include the relevant entities for asset operation and maintenance (O&M). The good practices of institutional strengthening and management have been learnt from the World Bank missions as well as the Consultant.2.31. The counties/districts PCBs and the investment company are usually in charge of urban construction including the project preparation, technical document review, tendering, construction, framework review, etc.; by end of SSTDP completion, the PIAs through the various trainings during the project preparation and implementation have learnt many of the differences between international and national practices, and the good international practices, methods as well as guidelines have been applied in their work.

65

2.32. There are 25 OMM entities under the Project, who are in charge of the operation, maintenance and management in the project towns. Under the directions of the Consultant as well as the OMM entities, the time-band OMM Plans and Assets Management Manuals have been developed and applied in the assets management

Social Improvements2.33. Whilst the objectives of the Project were essentially urban development in nature there have been important social benefits. In the project area, over 0.5 million people are now benefiting from the environmental and transportation improvements resulting from enlarging of urban area, increasing of land value and improving of residential living standards. These improvements have been especially beneficial for the poorer people in the local communities.2.34. Urbanization is now the national strategy in China. SSTDP is a project of infrastructure improvement and development for Sichuan small towns. In addition, through the implementation of the project, the public attitudes towards channelization of transportation, land development and resettlements, environmental awareness and participation have been significantly improved. On the other side, Government has gained useful inputs and comments from the public, which is beneficial for the future planning and policy making for potential projects on the urban development.2.35. For the urban development project, the easing of congestion on transportation in central downtown, and promotion of urbanization progress are the important objective. As completion of SSTDP, the service levels of the infrastructure in the project countries/districts have been improved.

3 MAJOR FACTORS AFFECTING IMPLEMENTATION AND OUTCOME

Factors Outside the Control of Government or Implementing Agency3.1 The events of 5.12 Wenchuan Earthquake and 8.30 Panzhihua Earthquake in 2008 as well as 4.20 Lushan Earthquake in 2013 had affected the progress of SSTDP during the preparation and implementation. The SSTDP project preparation started in 2008 and the re-screening of the Project was done after the 5.12 Wenchaun Earthquake, and some of small towns listed in SSTDP before the earthquake had to be included in Wenchuan Earthquake Recovery Project (WERP). The SSTDP preparation schedule had been delayed. The SSTDP came into effective in July 2011; however, due to the fact that the Sichuan government at that time focused on the Wenchuan earthquake recovery work, the Bank’s procurement procedure was complex and the approval was slow, as well as the geological surveys, preliminary designs, and construction drawings had to take the time to be completed and approved; the construction of SSTDP was eventually started in 2013, which was also delayed for almost one year. Eventually the PIA’s of the project counties/districts as well as SPPMO had provided a great effort on the completion of the Project in the time.3.2 Value of RMB currency has being steadily increased since the SSTDP loan agreement was in effective in 2011 and the exchange rate between US dollar and Renminbi Yuan has changed from 1:6.8 at the SSTDP appraisal, and 1:6.15~6.27 during 2013~2015, finally to 1:6.9 again in late of 2016 at the end of SSTDP implementation. Most of disbursement with amount of USD 61.5 million was made during the period from 2013 thru 2015, so that approximately RMB 36.9 was lost after the USD 61.5 million was withdrawn as compared with the rate at the appraisal stage.

Factors Generally Subject to Government Control3.3. Due to the changes of city master plans, some of the subcomponents had to be changed accordingly and in time. For instance, (1) The Subcomponent of Puxing Town, Xinjin County has been restructured due to the master plan changed for the new Tianfu New District, and the wastewater treatment plant as stated in the Project Agreement has been dropped from SSTDP, and it had been built by local funding only; (2) The water supply pipeline as originally stated in subcomponent of Fengming Town, Pengshan County in PAD was not included in the PS-1 contract and Pangshan

66

government had decided to re-plan water supply network and to finance the construction of water supply networks by local own funding only.3.4. The changes in institutions and leaderships in Xinjin had affected the progress of construction. At beginning of the implementation, Xinjin Government designated an acting project implementing agent (PIA) - Xinjin County Urban-Rural Construction Investment Co. served on behalf of CSTIC, for which the institution changed took a time to re-allocated the assignments to the related parts and consumed the valuable project time on the preparation of the bidding document and also caused the delay of the implementation.

Factors Generally Subject to Implementing Agency Control3.5. After the Project restructuring, the amendment of Loan Agreement states that the percentage of expenditure for the works (Category 1) by the loan under SSTDP has been changed from 92% to 100%. It is understandable that the Project needed huge investment, and the amendment of the SSTDP loan agreement had relieved the pressure of the counterpart funding during the implementation period. However, the huge investment needed as well as the increase of compensation in land acquisition and resettlement had also resulted in the switching of sub-components in the project counties/district to local funding project only even though the regional master plans’ changes were the main reason, i.e. (i) Daying subcomponent had switched the renovation of Binhe Road and Qijiang Eastern Road to a local funded project due to the master plan changed as well as no much funding allocated in the SSTDP Daying subcomponents; (ii) Zizhong subcomponent had to switch a part of road landscaping and road lamp local funding due to the investment limited; and (iii) the road in Jialing subcomponent did not included in the Project due to the loan limited during the preparation, only earthworks and sewer and storm-water pipeline were implemented, and the related roads were completed with local funding.3.6. Low bids occurred in the procurements of some packages. Due to the current status of the construction market in China and the Bank’s procurement regulations, the PIAs could not prevent the low capability contractors to win some of the bids even though the evaluation to verify the bidders’ capacities took a time in the SSTDP implementation. This has caused delays on implementations in some engineering and civil works. It also generated difficulties in strictly following international contract management practice.3.7. The situations on the sites during the construction, which were different from the descriptions of the design, caused the changes of design drawings during the construction and increased the actual completion cost of the civil works. For example, (1) the works in Shunqing is located between Yingxi river and a highway, and during the construction of the section A0+540~A0+650 along the embankment of canal, the adjacent highway along with the canal was caused by sinking and cracks due to excavation of slop for the embankment. The designer had to provide additional design for landslip resistance on the bank, and resisted piles had been built and the sinking and crashing on the section of highway has been stopped. (2) The landslip on a section of hill along Xihuan Road happened in Miyi subcomponent during the raining season, and the quick action for dealing with the emergency had been taken. The designer had provided an additional design for the slop protection. (3) The Yangliuhe Bridge as designed in Liujiang subcomponent in the project restructuring had to be re-designed due to the late definition of flood-control standard on the river need to be followed. The cost of the contract HY2-2 was increased.

Costs and Financing

Costs3.8. Total project cost is currently estimated at USD 142.06 million (refer to the Table below), which is close to the estimated project cost (USD 169.70 million) in PAD at appraisal. The following are the main reasons that have caused the project cost variation:

67

Chinese currency value had been increased. The exchange rate of RMB against USD has been changed from 6.8 at the appraisal stage, to 6.2 during implementation period from 2013 thru 2015, and to 6.9 at the project completion, and most of loan withdrawn was happen in 2013 thru 2015, which caused lowering of RMB investments;

Competitive bidding procedure and good contract management were carried out during SSTDP implementation, which saved the project budget;

The estimation of engineering cost at the design stage was based on preliminary design; while the project was implemented through competitive biddings which were based on the detail engineering designs, and the optimized designs were adopted during the implementation. The final prices of the contracts were reduced as compared to the estimations of engineering costs for most of the components at Appraisal;

Some of sub-components in SSTDP had been switched to local funded project due to the changes of regional master plans.

Financing

68

3.9. The utilization of WB loan and counterpart fund, and information on sources of counterpart fund are provided in Table of SSTDP Cost Summary above. The required counterpart funds were provided through a mixture of central government bonds and grants, provincial municipal grants, and local borrowings from the government and from the commercial banks. The financing split at the project completion is Loan fund 65.69% and Government 34.31% as compared to the appraisal split of Loan 58.84% and Government 41.16%.

4 SUSTAINABILITY4.1. In overall terms the project can be considered sustainable. Each project county/district in SSTDP has already made the time-bonded OMM Plan, and the plans have been realized step by step, refer to the Table 4-1 at below. The Assets Management Manuals and Road Safety Manual under SSTDP have been provided, which makes all infrastructures in good service stage in the future operation.4.2. Sustainability needs to be viewed in terms of (i) the ability to operate and maintain the assets, (ii) the land development arrangements put in schedule, and (iii) adequate and further investment arrangements for development sustainability.

5 BANK AND BORROWER PERFORMANCE

Bank5.1. The WB’s performance during the phases of project identification, preparation, appraisal and implementation for the project is considered to be satisfactory. The diligence of WB managers and staff was appreciated by all the implementing agencies. The work of the WB Beijing Office was highly appreciated in terms of timely instructions to SSTDP on WB procedures; review, comment, and approval of bid documents; and instructions on management and social dimensions, as well as inspections and directions during the Bank’s mission in the Project.

Borrower5.2. The national and provincial government’s commitment to the project remained strong and supportive during all phases of the project. The government has assisted all the subproject entities to gather sufficient counterpart funding.5.3. SPPMO had provided his great direction, moving forward and management in the Project preparation and implementation, including progress management, investment management, quality and safety management, etc., which has made the successful completion of the Project.5.4. County/district governments in the project region have given utmost support for the construction at all the subprojects, including the public awareness supporting, counterpart funding supporting, priority project support in the counties/district, etc.5.5. County/district governments have made great efforts towards the initiation and provision of the OMM costs for the project assets. The county/district governments are also committed for further investment to public services. For those investments that may have notable impacts to the local social and economic situations, the governments and PIAs have formed long-term and annual plans.5.6. The county/district PIAs resumed active management functions throughout the project. Each subproject entity has designated necessary resources to execute the subproject. However, the capacity and efficiency of PIAs in managing the subprojects had been varied, which had caused difficulties for PIAs (who lacked experience at the beginning of the project implementation stage) as well as SPPMO to coordinate and communicate among the relevant agencies for such large-scale and comprehensive project. For instance, the issues of land acquisition and resettlement cannot only be addressed by

69

PIAs themselves, which usually needed the supporting from the local governments and land resource agencies. All these factors had increased the difficultness in implementation.5.7. Slow executions of the land acquisition and resettlement components under SSTDP had slowing of SSTDP progress in some of subcomponents, i.e. Xinjin, Jialing, Zizhong and Miyi. The construction site for the development of urban infrastructure usually takes narrow area with long distance. It involves temporary or permanent occupation of large pieces of land, which had to be acquired before construction. The land acquisition & resettlement should follow the policy as setup by the government. The executions took longer than the original schedule and results slowing of the project progress.

6 LESSONS LEARNED

6.1. The implementation process has been a successful and valuable experience for all the agencies involved. Lessons have been learned in respect to implementation management, institutional and financial reforms, promotion of environmental protection, and raise of public awareness and participation, and advance technology introduced and sustainable development of infrastructure. Some of the main points can be summarized below:

6.1.1. The realistic result frameworks are important to be setup. In the project preparation stage, both WB and the Government should avoid setting unduly optimistic goals and objectives for the project to achieve. This includes the targets, indicators of outputs and outcomes, environmental improvement and financial improvement. Setting realistic targets, indicators and using stepped approach (with a workable action plan) may be more practical. SSTDP had be the good practice at the project preparation, and the inputs and outcomes as setup under SSTDP had been achieved at the completion stage.6.1.2. Risk Analysis and Management are impotent during the implementation of the Project. Risk management during the project implementation is important to ensure the successful completion of the Project. SSTDP Consultant provided the risk analysis and risk management by using the methods of the Decision Tree, which the potential risks at the aspects of the progress, cost and quality during the implementation, as they might be occurred, had been detected, predicted and analyzed. The risk management report had reminded the client, contractor and project supervisor to pay more attentions on the weakness aspects of the progress, cost and quality during the contract implementation of the works, and reduced the risks in time, and made the Project moving forward without the more blocks and dangerous. 6.1.3. Integration of Project management and construction supervision. The good project management and construction supervision system similar to the FIDIC as well as with good international practice had been adopted in the SSTDP implementation and the successes had been achieved on the aspects of contact management, cost control, quality control, etc. In this arrangement, SPPMO and the Consultant can manage the contracts under the Project efficiently on aspects of quality, schedule, cost and safety. In addition, it is also easier for the Consultant to conduct the skill transfer of international construction management practices. This methodology could be adopted for those future projects in China either being financed by the multilateral Banks financed or being financed by the domestic banks. However, there are still several issues influenced the practice of contract management:

(i) As definition in the contract of civil works, the completion cost should be reviewed and adopted by the Project Supervisor and the Employer; but as the regulation in China, the completion cost must be also reviewed and audited by an auditing firm, which will usually take a time and reduce completion cost as approved by the Project Supervisor and the Employer, which usually not only caused the disputes between the contractor and the auditing firm, but also caused the delay of disbursement schedule. The good way would be suggested that the auditing firm is working close to the

70

Employer during the construction in the interim disbursement and then finish the auditing as soon as the contract completion; and also suggested that the government auditing requirement be included in the conditions of contract.

(ii) The policy of land acquisition and resettlement has been setup by the government, and any blocks and bottlenecks have to be solved by the relevant government agencies, which really took time. High efficiency work by each government agency should be strengthen during the project implementation, and a strick regulation, which the contract of the civil works shall not be signed if the site is not available for the construction, is recommended to set up.

6.2. More inputs should be spent during the preparation stage, including geological survey, FSR and design. Most of civil works in the Project had occurred many variations or changes, which caused increasing of completion cost. Therefore, the feasibility studies, preliminary design as well as detail design should be conducted in enough details for all aspects of technical, geological survey, hydrological survey, financial, economic, institutional, environmental and social topics, following WB rules and guidelines, so as to pave a sound base for the engineering design to avoid un-necessary changes during the implementation of contract.6.3. Increased attention should be given to safeguard issues and the risks they pose on the timely completion of resettlement. Usually the involuntary resettlement has to wait for the residential building of resettlement to be built up, on which the critical issue could be the waiting took a long time after the completion of the Project, such as in the towns of Xinjing, Zizhong, Jialing and Miyi. The practice under the SSTDP is that the local government makes their efforts to allocate the involuntary resettlements to the existing residential buildings with their satisfactory, and rest of resettlements who are willing to wait for new residential building to be built-up have made their writing confirmations and the government promises to provide the compensations with their satisfactory.6.4. Green Infrastructure (GI) Design

The concepts of Low Impact Development (LID) and green infrastructure (GI) design have been applied in SSTDP. Rain gardens, bioswales, permeable pavement, and wetlands for urban stormwater management had been installed in the subcomponents of Xinjin, Liujiang and Daying. A performance evaluation study by collecting field data from installed GIs in Xinjin was conducted. The report describing the study in Xinjin including preliminary analysis and results is shown in Appendix 11.

Green infrastructure (GI) such as rain garden and permeable pavement offers a holistic solution for urban water management. GI provides a decentralized and on-site management of stormwater, which is infiltrated into ground through permeable surfaces or taken up by plants, therefore, reducing the need of fresh water for landscape irrigation and potentially reducing the demand on infrastructures (e.g. possibly smaller storm sewer pipes). GI offers the benefits of combining stormwater management infrastructure with green landscaping (USEPA 2003, Christianson et al. 2004, Davis et al. 2009, Roy- Poirier et al. 2010). Although the majority of the SSTDP funds are allocated to build roads, water networks, and sewerage. GIs are incorporated in project program of three towns. The GI application demonstrated how the concept of World Bank’s Eco2 Cities (Ecological Cities as Economic Cities) can be implemented, when environmental, economic and social development are integrated in urban development.The GI application is to retain and use stormwater on site to support landscapes and supplement non-potable water use. For examples, rain gardens and permeable pavement for pedestrian sidewalks were installed along a section of Road no. 2 in Xinjin.

Similar to the learning from LID and GI application in Liujiang in Section 2.2.5, the learnings include (1) introducing the concept of LID and GI at early stage of the program; (2) knowledge transfer to project managers and design engineers; (3) closely working with the contractors during the construction stage; (4) dissemination of learned

71

knowledge to benefit the broad community. The unique aspect of the Xinjin project is the field performance evaluation on the installed GIs (rain gardens and permeable pavement). It is recognized that the performance of GI for stormwater management critically depends on the weather condition (i.e. adequate rain falls), the annual rain season in Xinjin is limited to a few summer months, still the field study shows reduced storm runoff from GI application and the benefit of LID.

The LID concept has been applied in Xinjin, Liujiang, and Daying subcomponent where a number of green infrastructures were implemented including rain gardens, permeable pavement, bioswales, and wetland for on-site management of stormwater runoff. The green infrastructures were integrated into the overall development plan and engineering design. The learning from implementing LID and GIs such as introducing the concept of LID and GI at early stage of the program; transferring knowledge to project managers and design engineers; working closely with the contractors during the construction stage; and disseminating the learned knowledge and experience can benefit future projects for sustainable development of towns and cities.

6.5. Traffic Safety Management Traffic Safety Management has been concerned more and more along the traffic

increasing in China. One of the purposes under SSTDP is to provide guidance on how to control the critical points in traffic planning, safety design, management and maintenance for small towns, such as the reasonable selection of route of road, optimize the width and cross-section form of the road, selection of intersection type, traffic calming (reduction of traffic flow), road safety, traffic channelization, enforcement of traffic rules and design optimization of road signs, markings, lighting and traffic signals. The international expert of traffic safety management had provided his training presentation to the project counties/districts, i.e. Xinjing, Daying, Shunqing, Pengshan, Zizhong and Miyi.

The guidebook under SSTDP has been prepared in a manner that presents useful information in an easy to use format. The guidebook incorporates proven road safety improvement techniques that are adaptable to the current project situation. In the guidebook, the cause analysis of traffic accident has been done, i.e. (1) key reason of person’s health, psychic, physiology, diathesis as well as actions, etc., including drivers and pedestrians; (2) reason of vehicle’s safety performance; (3) road conditions including road line-type, vision, flatness, etc.; (4) circumstance status including visibility, raining, ice, etc.; and the precautionary measures are also introduced, i.e. (i) assistance system of safety driving; (ii) advance notice and reminding of traffic situations and circumstance status; (iii) technology and methodology for analysis of and dealing with the traffic accidents.

The main purposes of the traffic safety management are to raise awareness of road safety; for drivers to recognize that driving a car is the most dangerous thing that they do; focus on elevating the consciousness of all road users; improve the recognition of vulnerable road users (VRUs); identify defensive driving techniques that are proven to prevent crashes, injuries and fatalities; identify strategies to improve road safety that are practical and implementable within the current situation and identify proven methods to gain greater compliance with traffic rules.

As the good practices of international safety management introduced, the transportation of the traffic safety management in SSTDP project counties/districts have been improved and the traffic rules have enforced. For instance, Pengshan had re-organized the traffic signals and signs in accordance with the Guidebook for reducing the travel time and enhancing of traffic safety, so that traffic travel time in Binjiang Road south segment has been reduced to 8 min, which even lower than the target of 8.5 min.

72

Similar advance outcome has also been achieved in Xinjing, Daying, Zizhong, Miyi, etc. The good practices will enhance the traffic management in the project towns and will also be valuable experience to the urban towns of China.

6.6. OMM Plan and Assets Management The OMM Plan and Assets Management are important work for the municipal

infrastructure facilities to be operated for a long time with good performance, which have made more and more attentions on the system work of OMM units. As lessons of previous project, the more inputs on the physical works constructed but less inputs on operation, maintenance and management (OMM) used to be happened, which caused the service life of the infrastructure could only be lasted for a short period. Under SSTDP the time bonded OMM Plans for the built road, embankment/canal, sewer and stormwater pipeline have been prepared for the project counties/districts, which operation units have been made their short-term and long-term OMM Plans accordingly and will keep the infrastructure increasing the service life.

The Assets Management guidance books have been developed for OMM and assets management of road, sewer and embankment to outline the procedures and requirements for establishing infrastructure inventory, field inspection and data collection, conducting condition ratings, running asset management analysis, updating and maintaining the asset management system, and provide maintenance and repair recommendations. The guidance book has been used by the operation and maintenance department. The guidance book as developed has guided the OMM not only for the establishing infrastructures in SSTDP, but also will guide the new OMM system to whole county. Based on this demonstration system (guidance book), the local government can expand the system to include more municipal infrastructures such as power, gas, communication, fiber optical, etc. in the future so that the municipal government can better manage and maintain the urban infrastructures and use the maintenance funding more efficiently.

73

Annex 6. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable

74

Annex 7. List of Supporting Documents

1. Project Appraisal Document (PAD) No. 55552-CN dated April 8, 20112. Project Agreement, Loan Agreement and Amendments3. Draft Borrower’s Completion Report and annexes4. Aide Memoires and ISRs5. Restructuring Paper, January 2016

75

Annex 8 Social Safeguards

1. All project sub-components involved land acquisition and resettlement. Individual RAPs for each of these sub-components by each project county and district were prepared in Chinese by the respective institutes, assisted by the respective PMO, house demolition offices and land resources bureaus. Consultation and surveys were done with affected villages and communities, and potential displaced persons. RAPs including RPF as an annex were prepared in compliance with OP 4.12 Involuntary Resettlement, and describe in detail the impacts, affected populations, consultation process, rehabilitation measures, budget, and implementation and monitoring arrangements. An Executive Summary RAP covering all sub-components was prepared in English and Chinese. The RAPs were disclosed locally in Chinese from July 2-17, 2010 in all component sites. The Executive Summary RAP was disclosed at the Bank’s InfoShop on July 7, 2010.

2. Most of the project civil works were very limited in scale and did not affect large numbers of people. Resettlement compensation was done in compliance with the Chinese government regulations and the World Bank policy in accordance with the RAPs. Resettlement implementation was regularly monitored by an independent external resettlement monitoring agent in addition to PMO’s internal monitoring. The Bank task team also conducted regular supervision missions in project sites to monitor the progress over the project implementation period. All resettlement was done in accordance with Chinese regulations and Bank policies and overall social safeguards policies were complied with satisfactorily. No complaints were received throughout the project. The project provided an effective grievance redress mechanism with contact persons and details for local affected people. In some cases, in order to deal with differences between new and old policies, additional government budget was provided to increase compensation standards up to the replacement cost at the actual implementation time rather than the standards set in the RAP a couple of years ago.

3. Mid-term review/restructuring. Per section 1.6 above, loan savings of US$17 million were used to finance additional physical works in Liujiang Town and Hongchuan Town of Hongya County and Penglai Town in Daying County. The new investments in Hongchuan Town in Hongya County and Penglai Town in Daying County did not require any land acquisition or resettlement. The infrastructure improvements in Liujiang town in Hongya County required the acquisition of only 19.7mu (1.3ha) of land, which affected 19 households, (83 people) in Yang Village and Lianghe Village. A RAP satisfactory to the Bank was prepared and disclosed on July 30, 2015 locally and on July 29, 2015 in the World Bank Infoshop.

4. Land Acquisition and Resettlement Results. In total, land acquisition occurred in the eight counties and districts of the project. It acquired 2387.32 mu of collective land and 526.95 mu state-owned land. Land acquisition affected 2802 households or 8720 people. As for house demolition, the project actually demolished 142,192.3 m3 of houses, totally affecting 605 households. The project also demolished 39,867.25 m3 structures of

76

34 enterprises or other entities. Total affected households are 2802 with a total of affected people 8720.

5. The table below summarizes land acquisition and housing demolition impacts of the project, comparing estimates in RAPs and actual implementation. It shows a limited increase from the estimated to actual land acquisition and resettlement in the project.

Affected households by losing houses

Permanent land acquisition (mu)

House demolition(m²)

RAP estimates



Actual

528 605 1804.11 2387.32 127872.9 142192.3

6. During project implementation the PMOs and PIUs complied strictly with the requirement of the resettlement policies and the RAP. The PIUs attached great importance to the restoration of public facilities and carried out high-standard livelihoods restoration. External monitoring indicated that the income level of affected residents was higher than before the project and their standards of living have been recovered or improved. Knowing resettlement may not be completed in time, the Bank urged the PMOs to take actions two years prior to the loan closing date. More frequent supervision missions were conducted to push PMOs to accelerate construction of resettlement sites or explore alternative solutions.

7. Remaining resettlements issue and agreed actions. By project closing, 348 households have yet to be resettled in 4 project counties (Xinjin, Miyi, Zizhong and Jialing). A main reason for the delay is that the resettlement houses for this project are only a small part of large scale resettlement sites constructed by respective local governments for displaced people not only under this Bank project but also for some other domestic projects. The construction of these large scale resettlement sites was delayed and their implementation was not under control of the Bank’s project.

8. To address the remaining resettlement, a Supplementary Resettlement Action Plan (SRAP) was prepared and agreed upon between Sichuan and the Bank, together with signed commitment letters and willingness letters from local governments and households. According to the SRAP, most of the remaining households would be allocated with resettlement houses by March 2017 and get the keys by September 2017; only 25 households in Jialing District signed the willingness letter to voluntarily wait to be resettled by end of 2018, while keeping receiving monthly transition subsidies.

9. Continued monitoring of the remaining resettlement was conducted during the ICR mission undertaken in March 2017. It was found that, while progress was made as planned in 2 counties (Xinjin and Miyi), further delay happened in the other 2 counties, Zizhong and Jialing. According to the SRAP, majority of remaining households would move into existing resettlement sites, offered by the county government as alternative to the originally planned resettlement sites, and thus the house allocation was expected to be

77

completed by March 2017. However, a lot of these households changed their mind back and forth and didn’t take government’s offer in the end. Instead, they decided to still wait for the original resettlement housing to be constructed, while keeping receiving monthly subsides. As a result, by end of March 2017, 114 households in these 2 counties were not resettled. To address this issue, the Bank team had extensive discussions and follow-ups with the Sichuan PPMO, Sichuan DRC and FB, and county government representatives, who have been working together actively to accelerate the resettlement while respecting the voluntary choices of households. Based on this, an updated action plan and schedule have been agreed upon with respective parties, as summarized in the table below.

Xinjin148 households not yet resettled by loan closing:- Resettlement housing allocation is completed by Mar 2017- Keys will be available to all households by Sept 2017

Miyi54 households not yet resettled by loan closing: - Resettlement housing allocation is completed by Mar 2017- Keys will available to all households by Sept 2017

Zizhong

80 households not yet resettled by loan closing, and among them: - by Mar 2017 ICR mission, 22 are resettled- 58 originally planned to be fully resettled by Sept 2017 will be further delayed till Jun

2018, voluntarily waiting for the original resettlement house to be constructed

Jialing

66 households not yet resettled by loan closing, and among them: - by Mar 2017 ICR mission, 10 are already resettled- 56 originally planned to be fully resettled by Sept 2017 will be further delayed till Dec

2018, including:-14 to be resettled by May 2017-4 to be resettled by Dec 2017-38 to be resettled by Dec 2018, of which 25 had signed the willingness letter in Dec 2016

Total 348 households not yet resettled by project closing. ICR mission has found 114 households were not resettled yet, majority of which (96) will be resettled by Jun or Dec 2018.

10. In Xinjin County and Miyi County, all the remaining households have signed agreements on resettlement house in the resettlement sites. These people will get their resettlement house keys by Sept. 2017.

11. In Zizhong County, resettlement of 22 households has been completed since Dec 2016 into an existing resettlement site (Donglinba), which was offered by the county government as an alternative to the originally planned resettlement site. According to the SRAP submitted in Dec 2016, the rest 58 households had also agreed to move into the same existing resettlement. However, the Bank ICR mission was informed that these households changed their mind and didn’t take the offer. Instead, they decide to wait for the originally planned resettlement housing as for now, since the originally planned resettlement site is closer to their original living place, and they can still receive monthly transitional subsidies of 240 yuan per person before being resettled. Zizhong government plans to start the construction of the originally planned resettlement site in July 2017 and

78

complete it by May 2018. This resettlement site will be 6,200 sqm and can accommodate 72 households. The remaining 58 households will be resettled by June 2018.

12. In Jialing District, resettlement of 10 households has been completed. 56 households are waiting for resettlement sites under construction. Of all the remaining households, 14 households have chosen Chapansi resettlement site and are expected to be resettled by May 2017; 4 households have chosen Liyang Sanqu resettlement site and are expected to be resettled by December 2017; the rest 38 households chose to wait for the resettlement site in Xiaoqiaozi and Huanglianwan sites and are expected to be resettled by December 2018.

13. All the displaced people have been receiving monthly transition subsidies while waiting for the under-construction resettlement sites, and will keep receiving monthly transition subsidies until they get the key to the resettlement houses.

14. Monitoring will continue to check the progress in all the promised actions for the remaining resettlement. External monitoring institution are already contracted to conduct independent monitoring and evaluation of the remaining resettlement until full completion (the latest group of 38 households in Jialing will be resettled by Dec. 2018). Related county governments will secure sufficient budgets for the remaining resettlement as needed.

15. As guarantee mechanism for the above-mentioned action plan, Sichuan PPMO have collected and submitted to the Bank the following documents:

1) Updated Supplementary Resettlement Action Plan for the remaining resettlement2) A Progress Report from the External Monitoring Institute on the current status and

action plan3) Commitment letters by Jiangling District Government with the government stamp to

guarantee government’s time-bound actions for completing the remaining resettlement.

4) Commitment letter by Zizhong County Government with the government stamp to guarantee government’s time-bound actions for completing the remaining resettlement.

5) Willingness letters signed by each of the remaining households, showing their voluntary willingness of either moving into alternative resettlement sites provided by country government or waiting for the originally planned resettlement sites to be completed.

6) Samples of signed house allocation agreement for resettled households from each of the 4 counties, i.e. Xinjin, Miyi, Zizhong and Jialing

7) For Zizhong County - Approved plan (with government stamp) for the construction of the resettlement site for the remaining 58 households near North Outer Ring Road

8) For Jialing District and Zizhong County - signed contract with the external monitoring institute for continuing monitoring the resettlement progress until end of 2018.

79

Annex 9 Photos before and after the Project Photos are uploaded in a separate file due to the limit on the size of Main Document.

81

MAPIBRD 42963

81