Document of The WorldBank FOROFFICIALUSEONLY ReportNo: 31322-CN PROJECT APPRAISAL DOCUMENT ONA PROPOSED LOAN INTHEAMOUNT OFUS$lOOMILLION TO THE PEOPLE'S REPUBLIC OF CHINA FORA FIFTHINLANDWATERWAYSPROJECT September 14,2005 Transport Sector Unit East Asia andPacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bankauthorization. CURRENCY EQUIVALENTS (Exchange Rate EffectiveAugust 2005) Currency Unit = RMB (Yuan) RMBl.OO = US$0.12 U S $ l= RMB8.11 FISCAL YEAR January1 - December31 ABBREVIATIONS AND ACRONYMS CAS CountryAssistance Strategy CCMO Cuijiaying Complex Management Office CNAO China NationalAudit Office dwt Deadweight Tonnage EIA Environmental Impact Assessment EIRR Economic Internal Rate ofReturn EMP Environmental Management Plan FIRR Financial Internal Rate o fReturn FSL Fixed-SpreadLoan GWh Gigawatt hour HPCD HubeiProvincialCommunications Department HPFD HubeiProvincialFinance Department ICB International Competitive Bidding IWT InlandWaterway Transport kW Kilowatt LIBOR London Interbank OfferedRate MBD Model BiddingDocuments MOC MinistryofCommunications MOF MinistryofFinance NCB NationalCompetitive Bidding NDRC NationalDevelopment and ReformCommission NPV Net PresentValue RAP ResettlementAction Plan SEPA StateEnvironmental Protection Agency SHEIDI SecondHarborEngineering Investigation & DesignInstitute TA Technical Assistance VSL Variable-Spread Loan WBFPO World Bank-Financed Projects Office Vice President: Mr.Jemal-ud-din Kassum, EAPVP Country Director: Mr.DavidDollar, EACCF Sector Director Mr.Jitendra N.Bajpai, EASTR Task Team Leader: Mr.GrahamSmith. EASTR FOROFFICIAL USEONLY CHINA FifthInlandWaterwaysProject CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and sector issues.................................................................................................... 1 2. Rationale for Bankinvolvement ......................................................................................... 1 3. Higher level objectives to which the project contributes.................................................... 2 B PROJECTDESCRIPTION . ................................................................................................. 2 1. Lendinginstrument ............................................................................................................. 2 2. Project development objective andkeyindicators.............................................................. 2 3. Project components............................................................................................................. 3 4. Lessonslearned andreflected inthe project design............................................................ 4 5. Alternatives considered andreasonsfor rejection .............................................................. 4 C. IMPLEMENTATION .......................................................................................................... 5 1. Institutionalandimplementation arrangements.................................................................. 5 2. Monitoringand evaluation of outcomes/results.................................................................. 6 3. Sustainability andreplicability ........................................................................................... 6 4. Critical risksandpossible controversial aspects................................................................. 7 5. Loan conditions and covenants........................................................................................... 7 D APPRAISAL SUMMARY . ................................................................................................... 8 1. Economic and financial analyses........................................................................................ 8 2. Technical............................................................................................................................. 9 3. Fiduciary........................................................................................................................... 10 4. Social................................................................................................................................. 11 5. Environment...................................................................................................................... 11 6. Safeguardpolicies ............................................................................................................. 12 7. Policy exceptions and readiness........................................................................................ 13 This document has a restricted distribution and may be used by recipients only in the performanceof their official duties Its contents may not be otherwisedisclosed . without World Bank authorization . Annex 1:Country and Sector Background .............................................................................. 14 Annex 2: Major Related Projects Financed by the Bank ........................................................ 19 Annex 3: Results Framework and Monitoring ........................................................................ 20 Annex 4: Detailed Project Description ...................................................................................... 23 Annex 5: Project Costs............................................................................................................... 28 Annex 6: ImplementationArrangements ................................................................................. 29 Annex 7: Financial Management and Disbursement Arrangements ..................................... 31 Annex 8: Procurement Arrangements ...................................................................................... 37 Annex 9: Economic and FinancialAnalysis ............................................................................. 41 Annex 10: Safeguard Policy Issues ............................................................................................ 47 Annex 11:Project Preparation and Supervision ..................................................................... 54 Annex 12: Documents inthe Project File ................................................................................. 56 Annex 13: Statement of Loans and Credits .............................................................................. 58 Annex 14: Country at a Glance ................................................................................................. 63 MAPS IBRD33930 FifthInlandWaterways Project IBRD33931 FifthInlandWaterways Project. SystemontheHanRiver Water IBRD33932 FifthInlandWaterways Project. Layoutofthe CuijiayingNavigation& General Hydropower Complex IBRD34053 FifthInlandWaterways Project. ofReservoir InundationImpact CHINA CHINA: FIFTHINLANDWATERWAYS PROJECT APPRAISAL DOCUMENT EASTASIA AND PACIFIC EASTR Date: September 14,2005 Team Leader: GrahamSmith Country Director: DavidR. Dollar Sectors: Ports, waterways and shipping Sector Director: Jitendra N.Bajpai (55%); Renewable energy (45%) Themes: Infrastructure services for private sector development (P); Rural services and infrastructure (S); Water resourcemanagement (SI Project ID: PO85333 Environmental screening category: Full Assessment LendingInstrument: Specific Investment Loan Safeguard screening category: A Project FinancingData [XILoan [ ]Credit [ ]Grant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Total Bank financing(US$m.): 100.00 Proposedterms: VSL, standardterms Borrower: People's Republic o f China representedby Ministryo f Finance Responsible Agency: HubeiProvincialCommunications Department No. 428, JianSheAve. Hankou, Wuhan Hubei,China 430030 Tel: (027) 8346-0753 Fax: (027) 8386-0754 proiectoffice@,hbit.~ov.cnn TY 2006 2007 2008 2009 2010 2011 k u a l 10.00 25.00 30.00 20.00 10.00 5.00 Zumulative 10.00 35.00 65.00 85.00 95.00 100.00 Significant, non-standard conditions, if any, for: Re$ PAD C.5 Boardpresentation: None Loan effectiveness: 1.1 Receipt o flegal opinions from the national government onthe LoanAgreement andfrom Hubei Province on the Project Agreement. Covenants applicable to project implementation: 2.2 Retroactive fmancing: Retroactive financing ofup to $10 million is proposed for expenditures on civil works incurred after October 1,2005. 2.3, Financialperformance targets: CCMO is to maintain a debt service ratio ofnot less than 1.3 and an operatingratio of not less than 70%, and other performancetargets set out in Annex 3. 2.4 Flow of funds: The authorized allocation for the special account will start at $4 million, raisedto $7 milliononce disbursementsfrom the corresponding part o f the loanexceed $30 million. 2.5 HubeiProvincei s to carry out the EnvironmentalManagement Plan andResettlement Action Plan, h i s hto the Bank anyproposed revisions to theseplans, and carry out those revisions to which the Bank agrees. 2.6 Progress reporting: HPCD i s to submit, byFebruary 15 andAugust 15 of each year, startingwith February2006 anduntilthe projectis completed, a semi-annual progress report on the project's implementation, includingimplementation of the Environmental Management Plan andthe ResettlementAction Plan, covering the period January-June and July-December respectively. 2.7 Dam safety: CCMO i s to continue to employ a panel of dam safety experts for the Cuijiaying Complex to review the adequacy of its design and construction procedures, prepare an acceptableplan for (a) construction supervision andquality assurance; (b) instrumentation; (c) operation andmaintenance; and (d) emergencypreparednessacceptable to the Bank, and carry out periodic safety inspections ofthe Damafter its completion. 2.8 Bank review of studies: HPCD i s to give the Bank anopportunity to comment on the recommendations ofthe studies on strengthening the planningandmanagement o f waterways andonpower pricingby December 15,2007, and ofthat on logistics by March 15,2008. 2.9 Coordination with upstreamdams: Consistent with the agreement dated March 8, 2005 covering the CuijiayingComplex's construction phase, HPCD is to submit by December 31,2008 an agreementwith the upstream dams goveming exchange of informationabout water releasesand dam safety issuesduringCuijiaying's operating phase. A. STRATEGICCONTEXTAND RATIONALE 1. CountryandSector Issues InChina's central andsouthernprovinces largenavigableriverslinkmanyofthemajorcities. This creates exceptionally favorable conditions for inlandwater transport (see Map 33930). Today inlandwaterways carry roughly 10percent of freight intons while, reflectingthe lengthof the mainnavigable waterways, 27 percentofthe freight ton-km are performedby inland waterways. On some ofthe rivers' upper sections, limitedwater depthprevents safe year-round access by vessels o fmorethan 50 tons capacity. Iti s possible, at reasonablecost and with moderate environmental impact, to deepensuch navigation channelsto allow greaterpenetration upstream. A healthy return on investment canbe achievedby developing at the same time the hydropower andwater storagepotential. Economic development o fthe central andwestern provinces will dependon improvingtheir transport sectors inorder to lower transport costs for coal, minerals andthe manufacture o f industrial and consumer goods. Two major rivers cross Hubei Province: the Yangtze andthe Han. Coal andminerals, requiredbythe Xiangfanindustrial zone, are extractedupstreamalong the HanRiverinShaanxi Province. 2. Rationalefor BankInvolvement The province o f Hubei, inthe center of China, wishes to builda multi-purpose damandshiplock on the HanRiver 17kmdownstream from the city of Xiangfan (see Map 33931). This navigation andpower generation complex i s known as Cuijiaying. A comprehensiveflood control, navigation, water resources, andhydropower planfor the Han River, that includes the Cuijiaying complex, was first developed in 1956. Ithasbeenrevised severaltimes since, andi s expectedto be completed by 2020, providing the HanRiver region of Hubei and Shaanxi with a key inlandwaterway transport route. The proposeddevelopment at Cuijiayingi s a step inthis long-term development planthat includes the construction of 16dams, nine inHubei and seveninShaanxi. Two inHubei, at DanjiangkouandWangfuzhou, havebeen completed. The others are scheduled for completion instages by 2017-18. Hubeiprovincial government gives priorityto constructionof Cuijiayingbecauseofthe urgent need for reliable sources of electricity. Inrecent years consumptionhas grownrapidly (10-15 percent per year) inpacewith Xiangfan's industrial development andurbanexpansion. The power company hashaddifficulty keepingup with demand andneeds to expand generating capacity urgentlyifpower shortages areto be avoided. Forecastsdeveloped for the feasibility study on Cuijiaying show that traffic on the Hubei section ofthe HanRiver will increase from 11million tons in2003 to 18.5 milliontons in2010. The traffic will bemost densebetween Xiangfan and Wuhan. More than 90% of the waterway traffic on the Hubeisection will start from Xiangfan. Fromthe viewpoint o ftraffic flow, it would appear that either Cuijiaying or the Xinglong dam, about midwaybetween XiangfanandWuhan, should havepriority interms o ftimingof development over the other steps. 1 The Cuijiayingreservoir will also serve animportant purposeinensuringthe availabilityo f water to a large areaofirrigated farmland northeast ofXiangfan. Hometo some 3 million people, it has inrecent years suffered drought andwater shortages, as the mainriver feedingthe area hasbegunto dryup. That river --the Tang-- flows into the Hanat Xiangfan, andthe Cuijiayingreservoir will back up the TangRiver far enoughto feed year-round existing pumping stations and thence an existing network o f distributionchannels. 3. Higher-level Objectives to which the Project Contributes The 2003 -2005 China Country Assistance Strategy (CAS) stresses the Bank's support to China's makingtwo historic transitions --from a rural, agricultural society to anurban, industrialized society, and from a centrally plannedeconomy to a more globally integrated market-based economy. To this end its maingoals are to: 0 improve the business environment andhelp accelerateChina's transition to amarket economy; 0 addressthe needs of the poorer and disadvantagedpeople andregions (mainly central and western provinces); and 0 facilitate a more environmentally sustainabledevelopment process. The Chinesegovernment has included this projectinits borrowingprogram from the World Bankbecauseit exemplifies the CAS goals ina regionthat is predominantly ruralbut undergoingrapidurbanization and industrialization. B. PROJECTDESCRIPTION 1. LendingInstrument The Bankwill finance the project through a specific investment loan. Hubeihas selectedthe variable-spread loan (VSL) option, inwhich the spreadover LIBORi s reset every semester. Its mainreasonfor preferring'this to a fixed-spread loan (FSL) i s that the spreadon aVSL i s slightlylower under most scenarios andbecauseHubeidoesnot foreseeusingthe conversion option or other flexible features that distinguishan FSL.VSL repayment terms are governed by standardcountry terms. 2. Project Development Objective and Key Indicators The project's development objective is to enhancethe standardoflivinginthe HanRiver region bydeveloping its potential water resources, including: (a) increasing the waterway transport capacity along the HanRiver andits cost- effectiveness; and (b) ensuringthe availabilityofsustainablehydropower andwater resources for use inthe Xiangfan area andthe Tangdong farmlandregion. The project will produce the following outputs: 2 0 Navigation-The proposedlock and 38-km longreservoir will accommodate 1,000-ton capacity vessels. Currently the largest vessels that cannavigate this section year-round are 200-ton boats. 0 Power -About 390 GWhofhydropower per year will beprovided to XiangfanCity. 0 Water resources - Water will be available for domestic, industrial, and agricultural uses (irrigation o f 118,000 ha of farmland) inthe Xiangfanregion. 0 Floodcontrol-The Cuijiayingdamwill add its reservoir to the storage capacity alongthe HanRiver for attenuatingflood surges duringthe rainyseason. The following keyoutcome indicators havebeenselected: 0 Navigation- Shipsupto 1,000 dwt will be able to transit the navigational channel, and the lock will be available to accommodateexpectedthroughput. This will be measuredby the mean elevation o fthe reservoir, and the availability ofthe lock. 0 Power -Efficiencyinconstruction of electric generatingcapacity will bemeasuredbythe cost per kW capacity installed compared with generatingunits of similar size elsewhere in China. Efficiency inoperation and maintenanceo fthe powerhouse will bemeasuredby the hours per year when the turbines are available for use (at times when electricity i s demanded andthe water level inthe reservoir permits operation). 3. Project Components The project hastwo components: Cuijiaying Navigation and Power Complex (total US$197.68 million, IBRDUS$98.81 million). Themaincomponent consistsof: 0 Construction of the dam, power station, and shiplock. The dam will have a maximum height of 18mand a weighted averagehead o f 6.3m. The shiplock will benear the west bank of the river andthe power house towards the east bank (see Map 33932). Thepower station will have aninstalled capacity o f90 MW (six turbines) with an averageannual generation of 390 GWh, net o f internal losses. Thepower plantwill be connectedto the grid for Xiangfan Prefecturevia a substation less than 1kmfrom the dam. The shiplock will be a Class I11in accordancewith the Chinese lock classification and capable o f accommodating vessels up to 1,000 ton capacity with an effective chamber o f 180x 23 x 3.5m. The dam site will be linked to the west bankby a short access road andbridgesover the shiplock. 0 Reservoir bank protection: The banks o fthe reservoir will be strengthenedto ensuretheir stability, therebyprotecting the adjoiningfarmlands andvillage settlements from flooding. In all about 30 kmo f embankment will betotally reinforced; the total areao f slopeprotection will be 19.3 ha. Institutional Development (US$1.47 million, IBRDUS0.94 million) The systems, institutions, andprocessesneededto implement the Cuijiaying complex need strengthening. Theproject will assistthrough technical assistanceprograms inthe following areas: 3 0 Capacity buildingwill be providedto the implementingagencies (Hubei Provincial Communications Department and the Cuijiaying Complex Management Office-see below) throughtraining and studytours. 0 Studies will be carried out on (a) strengthening institutional capacity ininlandwaterway planningand administration inHubeiProvince; (b) logistics planninginHubeiProvince; and(c) power pricing. 4. Lessons Learned andReflected inthe Project Design Useful lessons canbe drawn from the experienceo f three on-goingwaterway projects inChina andtwo recent hydro-electric projects. 0 Prior projects have shown the importanceof thorough investigation of geotechnical conditions for the dams' foundations, as deficiencies have ledto redesign and delays. The Bank has workedwith HubeiProvincialCommunications Department(HPCD) to ensure proper attention was givento this subject. 0 Prior projects have also shown the importance o f a dam safety panel to provide expert guidance on design andoperational issues. Accordingly, HPCD appointed such apanel, which has developed dam safety policies andmade sure that thesepolicies are reflected inthe design, the construction andthe start ofoperation. 0 The earlier projects have shown the value o f coordination and good informationexchange among the various agenciesinvolvedinmanaging water resourcesina givenriver valley for flood control, irrigation, power generation andnavigation. Such coordination will gain inimportance when peak-hour pricingfor power i s introduced inthe coming years. 0 Initial doubts about whether the market would take advantageo fthe increasednavigation capacity have provedgroundless. Largervessels have beenintroduced as was hopedand the averagevessel sizehas typically doubled within about five years. Previously almost all waterway vessels were self-powered, but now one sees a growing numberof `tows' (pusher units) propelling a set ofun-poweredbarges, a far more efficient option for large cargo shipments. 0 The ErtanHydropower Project also showed that even a largeproject couldmake, on its own, only a limited contributiontoward the development inits service area of a competitive market amongindependentpower producers. Inthis regard aspirations for a single investment project should therefore bemodest. 5. Alternatives Considered andReasons for Rejection Several alternatives were appraised: four locations for the dam's axis, the option oflocating the power house adjoining the west or east bank, alternative reservoir elevations and storage capacities, and different options regarding the turbines (see Map 34053). The design firm chose the axis linewhich offered the best geological conditions, the turbine configuration which offered the lowest cost per kW ofpower capacity, andthe storage capacity which maximized power generationduringpeak hours. 4 C. IMPLEMENTATION 1. Institutional andImplementationArrangements Executingagency The project will beimplementedbythe HPCD. It has created a dedicatedunit,the Cuijiaying Complex Management Office (CCMO), to implement and manage the construction ofthe Cuijiaying complex. CCMO's key staffcome from HPCD. CCMO will manage and operate the facility uponits completion. The World Bank-Financed Projects Office (WBFPO) i s anHPCD department that has successfully managed four World Bank transport projects. It i s responsible for coordinating project preparation and will remainthe Bank's main counterpart duringimplementation. Similar arrangementshave proven effective underthe previous projects. Fundsflow The loanwill beto the People's Republic of China through its Ministryof Finance (MOF), and on-lending agreementswill be signedbetweenMOF andthe govemment of HubeiProvince through its Finance Department. The Bankloanproceedswill flow from the Bankinto the project special account to be set up andmanagedbythe HubeiProvincialFinance Department (HPFD) to HPCD andthento CCMO and finally to contractors or suppliers. The loanwill be disbursedusingtraditional techniques andnot basedonproject management reports, inaccordance with a general agreementbetween the Bank and MOF. Project ManagementActivities Project implementationplan. WBFPO has prepared aproject implementation plan, which i s acceptableto the Bank. Procurement. An institutional assessment conducted duringpre-appraisal showed that adequate skills are available to managethe procurement operations (Annex 8). A procurement planhas been developed as part ofthe Project Implementation Plan. Financial management. Responsibilities for financial management activities were likewise confirmed duringpre-appraisal. A financial management specialist reviewed the current set-up andfoundit adequateto manageproject funds (Annex 7). The client has drawnup a financial managementmanual, takingthe Bank's comments into account. Environment. HPCD has submitted an EnvironmentalImpactAssessment (EIA) and an Environmental Management Plan(EMP), which the Bankhas found satisfactory. Responsibilities for all environmental management activities are included inthe Plan(Annex 10). Resettlement. HPCDhas also prepared a Resettlement Action Plan(RAP), which sets out responsibilities for implementingresettlement. Ithasbeen found satisfactory bythe Bank (Annex 10). 5 Coordination with upstreamdams. Management ofthe Cuijiayingcomplex will require close coordination on water releaseswith upstreamdams, especially the very large Danjiangkou dam 142kmupstream. HPCD has providedthe Bank an agreement datedMarch 8,2005, together with a supplementary letter datedMarch24,2005, inwhich the entitymanaging Danjiangkou confirms its intent (a) to keep discharges duringCuijiaying's construction below levels that mightendangerits cofferdam; (b) to minimizewater releasesduringthe closure ofthe Cuijiaying dam; and (c) at all times to managereleasesinsuch a way as to avoid suddenmassive variations. Itagreesto keep Cuijiayinginformedofits releasesinatimelymanner andto exchangerelevant information, especially as regards flood control measures. 2. Monitoringand Evaluation of OutcomesDXesults Annex 3 lists the mainoutcome indicators for the project. HPCD and CCMO will regularly collect the data requiredfor monitoringand evaluation of outcomes and results. They will review the results on the basis of various progressreports, andtake appropriate corrective action where needed. 3. Sustainability and Replicability Sustainability: The potential responseofthe market to the availability o f improvedwater transport infrastructure will dependon many factors, most of thembeyond the control ofthe project implementingagency. Inthe Bank-financed first InlandWaterways Project, completed in2001, the averagesizeofvesselspassingthrough the Guiganglock increased 17% inthe first year of operation and a further 44% the following year. Underthe Second InlandWaterways Project a similarly rapid switch to larger vessels was also seen. There is little doubt that the electricitygeneratedby the proposed damwill bepurchasedbythe localpower distribution companies. Today generating capacity i s short; inthe future the low marginal cost ofhydro-electricity will make it attractive. The national government i s seeking ways to reduce acid rain, puttinghydro-electricity ina strongposition. Furthermore, the peak season for electricity demand (air conditioning) coincides with the peak rains. CCMO expects to sign a long-term power purchase agreement with the provincial transmission and distribution company before operations begin. Power pricing is included inthe technical assistanceto assist CCMO innegotiating the sale o fpower generatedat Cuijiaying. Replicability: Similar navigational complexes and institutionaldevelopment programs have beendevelopedunder the first, Third, and FourthInlandWaterways Projects. It i s to behoped that these, together with the present project, will serve to demonstrategood practice as regards cost-effective technical design, safety provisions, environmental and social safeguards, and coordination among different entities managing dams onthe same river. China's geography i s suchthat the scope for such replicationi s large. 6 4. CriticalRisks and PossibleControversialAspects Institutional Capacity Thanksto (among other things) its involvement with the previous andon-going Bankhighway projects, the institutionalcapacity of HPCD i s strong, aside from requiringnew technical support insomespecialized areas. Baseduponthe lessonslearnedfromthepriorBank-financed navigational complexes, the macro-economic, financial, policy-related and politicalrisks of this project not meetingits development objectives are low. South to North Water Diversion Project (see Annex 4) The Central Government hasdeveloped aplanto transfer water from the water-surplus Yangtze River Basinto the water-deficit Huang(Yellow), Huai, andHai Basins. There will bethree major transfer routes: the Eastern, Middleand Western Routes. The Middle Route Schemewill divert 9.5 billionm3ofwater from the Danjiangkou Reservoir to the BeijingandTianjin metropolitan areas startingin2010 andbuildingup gradually over 13 years to 2023. Inplanningfor the Cuijiayingcomplex arangeof scenarioshavebeenconsideredincludingWith andWithout the planned Southto NorthDiversion.Withthe South-North Diversion, the regulated minimumflows inthe HanRiver below Danjiangkouwill be enough to sustain year- roundnavigation invessels up to 500 tons capacity (a flow o f 490 m3/secto ensure a water depth o f 1.8m). Without the South-NorthDiversion, the minimumregulated flow canmaintain vessels ofbetween 500 and 1,000 tons capacity. The completion o f all downstream complexesby 2017- 2020 together with proper regulation should provide aminimumflow capable of serving 1,000- ton vessels, with or without the South-North Diversion. 5. Loan Conditions and Covenants Effectiveness Condition 1.1 Receipt o f legal opinions from the national government on the LoanAgreement and from HubeiProvince onthe ProjectAgreement. Covenants Agreement reached with the Government 2.1 ThePeople's Republic of Chinaas the borrower will on-lend the proceeds ofthe loanto HubeiProvince on the same terms and conditions as the Bank loan, includingthe foreign exchangerisk. Agreements reached with Hubei Province 2.2 Retroactive financing: Retroactive financing o fupto $10 million (10% of the loan amount) is agreed for expenditures on civil works incurred after October 1,2005. 2.3 Financial performance targets: CCMO i s to maintaina debt service ratio o fnot less than 1.3 andanoperatingratio ofnotless than 70%, andother performance targetsset out in Annex 3. 7 2.4 Flow o f funds: The authorized allocation for the special accountwill start at $4 million, raisedto $7 million once disbursements fiom the corresponding parto fthe loan exceed$30 million. 2.5 Hubei Province i s to carry out the Environmental Management PlanandResettlement Action Plan, furnish to the Bank any proposedrevisions to these plans, and carry out those revisions to which the Bank agrees. 2.6 Progress reporting: HPCD i s to submit, by February 15 and August 15 of each year, startingwith February 2006 anduntilthe project is completed, a semi-annual progressreport on the project's implementation, includingimplementation of the Environmental Management Plan andthe Resettlement Action Plan, covering the periodJanuary-JuneandJuly-December respectively. 2.7 Damsafety: CCMOis to continue to employ apanel ofdamsafety expertsfor the Cuijiaying Complex to reviewthe adequacyof its design and construction procedures, prepare a detailed plan for (a) construction supervision and quality assurance; (b) instrumentation; (c) operation and maintenance; and (d) emergencypreparedness acceptableto the Bank, and carry out periodic safety inspections of the Dam after its completion. 2.8 Bankreview of studies: HPCD isto givethe Bank anopportunity to comment onthe recommendations of the studies on strengthening the planningandmanagemento fwaterways andonpower pricingbyDecember 15,2007, andofthat onlogistics byMarch 15,2008. 2.9 Coordination with upstream dams: Consistent with the agreement datedMarch 8, 2005 covering the Cuijiaying Complex's construction phase, HPCD i s to submitby December 31,2008 an agreement with the upstream dams governing exchange ofinformation about water releases anddam safety issuesduringCuijiaying's operating phase. D. APPRAISAL SUMMARY 1. EconomicandFinancialAnalyses . Economic (Cost benefit) ElRR=22, NPV (at 12%)=US$234million The economic evaluation of the CuijiayingNavigationand Power Complex covers construction o fthe shiplock andthe power station. The principal measuredbenefits of the project are savingsintransport costs byusingthe inlandwaterway with large vessels, the economic value o fthe power, and the value o f increased farm output thanks to the reliable irrigation. The estimated overall economic internalrate ofreturn (EIRR) for the project is about 22%. Construction ofthepower station constitutes about 75% ofthe total project cost. The overall economic net present value (NPV), based on a 12% discount rate, i s estimated at about $234 million, o f which the navigationimprovementsare estimatedto contribute about 40%, the power house 35%, andthe irrigation about 23%. As noted earlier, farmlands northeast ofXiangfannow irrigated bywater pumpedfrom the TangRiverwhich entersthe Hana short distance above the damsite, will benefit fiom the creation ofthe Cuijiaying reservoir, as it will sustain the minimumwater levelrequired for 8 existingpumpsto continueworking. Without the reservoir it is fearedthe river will run dry. The impact is estimatedat a difference inproduction ofabout 60,000 tons per year, from extra yieldper hectare and/or extra area under cultivation. Air quality benefits would addto the abovebut their monetary value would be small. A detailed assessment i s providedinAnnex 9. Financial FIRR=6% HPCDintendsto fundthe Cuijiaying Complex from a combination ofequity (49.5%) inthe form ofgrants from the national andprovincial budgets, anddebt (50.5% from the World Bankloan. Itplanstorelyonrevenue frompower sales to repaythe Bankloan; the state requiresno dividends onthe equity. The power stationwill generate enoughrevenueover the loanperiodto finance operations, maintenance and debt servicewith a constantannuity amortization schedule. CCMO will chargeno shiplock fees. HPCDhas confirmedthe availability of sufficient counterpartfunds andits capacityto finance the capital investmentandoperatingexpenses. Allthe indicators showthat the financial risks are moderate. A detailedassessmentis providedinAnnex 9. 2. Technical 2.1 Geological andFoundation Issues Among the four damaxes evaluated for the Cuijiaying complex as part o fthe feasibility study, the one chosenwas foundto be the most suitable on grounds o ftopography, geophysical conditions andhydrology. Itwas modeltested ina hydraulic laboratory. The preliminary design o fthe shiplock, powerhouse, dam and reservoir were essentially complete at the time o f appraisal. The detailed design was preparedbythe Hubei Communications Planning andDesign Institute, assistedbythe HunanWater Resourcesand Hydropower Investigations, Designand ResearchInstitute. The Dam Safety Panel assisted and advised HPCD on geological andconstruction issues (as requiredbythe Bank's Operational Policy 4.37). The final design is to be completed by September2005. 2.2 Coordination of Water Releases with UpstreamDams The existing Danjiangkou reservoir is very large, enoughto allow sufficient regulation of flows ofthe lower HanRiver throughout all but the driest ofyears, as well as delivery o fthe 9.5 billion m3plannedto bedivertedto northern China. The volume ofits reservoir is today some 60 times greater thanthe proposed Cuijiaying reservoir, and after expansion will be ahundredtimes greater. The volumes to bereleasedby Danjiangkoucould be sufficient for profitableoperation ofthe Cuijiayingcomplex, whether or not the Central South-North Diversion Scheme goes ahead as currently plannedor i s delayed. 9 A regulation scheme agreedwith the upstreamanddownstream stakeholders andadheredto by the operators o fthe Danjiangkou damis required to ensurereasonablepower generation and navigation. With the operation ofthe MiddleRoute Scheme o fthe South to NorthWater DiversionProject, this regulation scheme will be crucial inallowing the Cuijiayingcomplex to operate successfully. The Wangfuzhou dam, immediately downstream from Danjiangkou, is an existing dam similar in size to Cuijiaying. Iti s managedbythe Danjiangkou company. Fromthe time the CuijiayingComplex starts construction, day-by-day consultations and coordination with boththese upstreamdams will be neededregarding their releases ofwater, to ensure stablenavigating conditions on the river andto protect the Cuijiaying construction site. HPCD hasprovidedthe Bank an agreement dated March8,2005, complemented by a supplementary letter datedMarch24,2005, with the HanRiverWater Resources andPower Group (the company responsible for the Danjiangkou andWangfuzhou Dams) governing exchangeofinformation about water releasesduringCuijiaying's construction phase. This agreementis acceptable to the Bank. Consistent with the above agreement datedMarch 8,2005 governing Cuijiaying's construction phase, HPCD i s to submitbyDecember 31,2008 an agreement with the upstream dams governing exchangeo finformationon water releases and dam safety issues during Cuijiaying's operatingphase. 3. Fiduciary FinancialManagement The appraisalteam concluded, on the basis of guidelines issuedbythe Financial Management Sector Boardon October 15, 2003, that the project meets minimumBank financial management requirements, as stipulated inBP/OP 10.02. The project's implementingagencies have taken the necessaryactions to ensure that the project has inplace an adequatefinancial management system that canprovide, with reasonable assurance, accurate and timely informationon the status ofthe project inthe reportingformat required bythe Bank (see Annex 7). Procurement A procurement capacity assessment ofthe implementingagencieswas carried out duringpre- appraisal (see Annex 8). The assessment concluded that the overall risk ofthe procurement processwas average. HPCD and dependentinvolved entities have allocated adequateresources, including experienced staff, to implementthe project. These agencies are familiar with Bank procurement procedures. To strengthenthe procurement capacity o fthe implementingagencies, HPCD has prepared and disseminatedaproject-specific procurement manual, conducted training workshops, andhas taken measuresto avoid excessive cost overruns and improve procurement economy and efficiency. Ways inwhich the Tendering and BiddingLaw o f Chinadiffers from Bank guidelines were addressedinthe assessment, and clarifications for the procedures to be followed for Bank-financed NCB procurement are includedinthe Project Agreement. 10 4. Social The main adversesocial impact of the project i s year-round flooding of landwithin the river banksthat today is flooded duringonly a few summer months andis cultivated duringthe rest of the year. Demolition o fhouseswill be limitedto the dam construction site. Resettlement planningactivities included (a) detailedinventoryofimpacts andacensus of affected people; (b) socio-economic survey; (c) a social assessment; and (d) consultations with the localpopulation. The project requires 2,643 ha ofpermanent landacquisition (96% ofwhich are riverbanklands), and96 haoftemporary land'acquisition. Theproject also requires the demolitionof41,600 m2 ofhouses, including 23,800 m2ofprivate houses. The affectedpopulation i s about 25,700 people in7,273 households, including261 people in67 householdsrequired to relocate. Project construction will also affect somepublic facilities, business and enterprises. The social assessmenthas also documented and evaluated the project's likely impacts, including gender aspects-much o fthe landto be acquired i s farmed bywomen. Giventhe run-offnature of the reservoir, most o fthe landsto be lost are low-yielding, subject to annual flooding. Besides, most o fthe affected householdswill lose only a strip o fland, a low percentage of their total landholding. Therefore the landloss impact on their family income and livelihoodwill be limited. The social assessment also records the concerns andrecommendations ofvarious stakeholdersas well as possible fishery impacts inthe HanRiver, and identifies project beneficiaries. Broadly speaking, these impacts are moderate. Appropriate mitigationmeasuresfor these impacts havebeenreflected inthe project design and the ResettlementAction Plan (RAP). The RAP hasbeen developed inline with locallaws, policies andWorld Bank OP 4.12, with active participationo f local governments and the affected people. The RAP documentsthe impacts, presents the policy framework, and describes the relocation arrangements andlivelihood rehabilitationmeasures. It also sets out plans for rehabilitating affected public facilities, environmental measuresassociatedwith resettlement, engineeringmeasuresfor embankmentprotection, the reservoir clearanceplan, construction camp managementmeasures, and a grievance redressmechanism, as well as a cost estimate, an implementation schedule, and organization andmonitoring arrangements. The total resettlement budget is estimated at $26.1 million, or about 12% of the total project cost. Resettlement will be financed with government funds. 5. Environment The project site i s 17km downstream of XiangfanCity, the secondlargest inHubeiProvince. There are no nature reserves or protected areas near the site. The structure o fthe complex would bearun-of-river type damwith amaximumheight of 18m. The mainadverseimpacts ofthe project are: (a) noise, water and air pollutionduringthe construction period; (b) disruptionof fish habitats duringoperation ofthe complex; and (c) flooding oftwo ancient underground graves andassociatedrelics. The nearest residential areais 400mwest ofthe site andhas apopulation o f about 200 people, and some other residential areas along the routes from quarries for construction materials to the damsite have also beenidentified. There are no schools or 11 hospitals within the impacted area. The nearestwater intake i s 1.5 kmdownstream and i s for industrial use. An EnvironmentalImpactAssessment was conductedandanEnvironmental ManagementPlan was developed inlinewith localregulations and World Bank OP4.01, along with atwo-step public Consultationinaccordancewith the Bankpolicy. The EIA andthe EMP cover the full range o f environmental impacts, including altematives analysis, andnecessarymitigation measures. Inaccordancewith consultation with the local fishery and environmental departments, the EMP plansto construct a fish conservation center to releasenot only commercial but also non-commercial fishfry upstreamofthe complex. A fishway will bebuilt into the damto avoid interruptingthe movement of migratory eels swimmingupstreamto reach spawningbeds. Provisions to protect the two culturalheritage sites are included inthe Environmental Management Plan. Construction o fthe cofferdam (inthe case o f one site) and filling ofthe reservoir (inthe case o fthe other site) will not be allowed to proceed untilthe provincial cultural relics and archeology institute, under the guidance ofthe provincial culturalrelics bureau, has explored each site and taken appropriate measuresto relocate whatever itjudges warranted. Correspondinglanguagewill be included inthe civil works contracts. Chinese law, procedures andinstitutional capacity arewell developedinthis area andfullymeet the requirements ofBank policy. The safeguards team i s satisfied that proceduresbeing applied are technically sound and appropriate. Actions takento mitigate environmental impacts, includingprogress indealing with the cultural relic sites, will bemonitored bythe environmental monitoringunit andreported to the Bankin HPCD's twice-yearly progressreports, bymid-Februaryandmid-Augusteachyear starting with February2006, untilthe project is completed. The total cost for environmental protection i s estimated at $3.8 million or less than2% oftotal project cost. 6. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [XI [I Natural Habitats (OP/BP 4.04) [I [XI PestManagement(OP 4.09) [I [XI CulturalProperty (OPN 11.03, beingrevised as OP 4.11) [XI [I InvoluntaryResettlement (OP/BP 4.12) [XI [I Indigenous Peoples(OD 4.20, beingrevised as OP 4.10) [I [XI Forests(OP/BP 4.36) [I [XI Safety o fDams (OP/BP 4.37) [XI [I Projects inDisputedAreas (OP/BP/GP 7.60) [I [XI Projects on International Waterways (OP/BP/GP 7.50) 11 [XI 12 7. Policy exceptions and readiness Theproject entails no exceptions to Bankpolicies, andwillbe ready to start implementation soon after plannedBoard approval inthe secondquarterof FY2006. 13 China: FifthInland Waterways Project Annex 1: Country and Sector Background 1 MainSector Issues andGovernmentStrategy - The rapid growth o fthe Chinese economy has overloaded its transport network, which is strugglingto keep pace. Invaryingdegrees the infrastructure of all transport modeshasbeen modernized andupgraded, but the tonnagesto bemovedhave grown so fast and so broadlythat inplacesthere havebeenlongtimelagsbeforenewcapacity couldbeputinto operation. The expansion o f cities has especially strainedurbantransport systems designed for far smaller populations. The introductionofhigher-capacity andhigher-quality transport services -notably long-distance trucking-has also laggedbehind demand.Private road transport operations are growing rapidly but state-ownedenterprises still have a substantial market share. Bottlenecks in infrastructure have beenthe main focus of investments inall modes: roads, railways, waterways, and especially urban transport. A sectorwide issue is how to ensure transparencyinthe awarding o f contracts (competitive bidding) andensuring compliance with their price andquality provisions (supervision). Bottlenecks inservices remain serious. Becauseo fthe under- development o f China's services sector, the long inlanddistances, andthe railway's concentration on its traditional bulk cargoes, it was estimated in 1999that China's logistics costs (transportation, warehousing anddistribution) were highat 18 % o f GDP, comparedto 9.5 % in the USA inthe mid-1990s. Moreover, whereas indeveloped economies transport accounts for 25% ofthe total logistics cost, inChina it was closer to half. Over the past five years big improvements havebeenmade inthe transportation infrastructure and services inthe coastal provinces, butthe inlandprovinces are still lagging. Private sector participationinthe growth o f China's highway system i s advancedinterms of bothdevelopment models andprivate capital flows. The private sector has contributed nearly 10%o f China's total commitment to new construction since the inception of economic reform in the early 1980s- highcompared to most countries. However, the degreeo f risk transfer from the public sector hasbeen limitedandobstacles to increased flows of funds are found inthe legal andregulatory framework for private participationininfrastructure. Transport's role inpromotion of trade: China's exports are crucialto the success o f its economy. However, internaltransport costs are high, so that coastal provinces enjoy a considerable advantage incompetition with inlandprovinces. Part o fthe problemfor the inland provinces i s distance; part i s inefficiencyor inappropriate pricing. Intermodal logistic chains are weak. Ifthe inlandprovinces are to share inthe export boom--either directly or as suppliers o f inputsto manufacturers nearthe coast-- special efforts arerequiredto improvetheir access to seaports andto overcome resistanceto cooperation across institutionalboundaries. China's membership o fWTO requires opening up o ftransport services to foreignparticipation. This maybe goodnews for exporters but badnews for Chinese transport firms. Issues related to roads: The Government faces many strategic choices: how to balancethe population's desire for greaterpersonal mobility (car ownership) with protecting the environment and especially air quality; how to balance spending on expressways with lower class roads; how 14 to share costs betweennational andprovincial governments; how to finance highways -whether bytolls or throughauser charge addedto fuel; how to attractprivate finance andmanagement skills into road construction andmaintenance; and how to make all roads safer. It also faces the question: how far should it interveneto promote efficient service-oriented trucking companiesin the privatesector, andby what means?Government spendinghas been concentratedheavily on the expresswaysmakingup the national trunkhighwaynetwork, raisingquestions whether spendingmoreonupgrading andmaintaining existingroadsmighthave donemoreto improve access inpoor regions. The legal framework for private participation ininfrastructure needs attention. Railwayissues: After careful deliberation and analysis of international experience, the Government has adopted strategic goals for the national railway system, aimingto make it more responsive to the market.It is gradually spinningoffnon-transport activities as independent companies. Itplansto legally separatetransport operations fkom government oversight, but it remains to bedecided how andwhen. Secondary strategic goals also needto be decided upon: how far to enable competition among companiesofferingrail transport services (private or otherwise); how far to allow pricingflexibility so that prices can reflect costs more closely, service by service, and carriers and customers can enter into contracts covering not only pricebut also service quality; andhow to deal responsibly with surplus labor, as informationtechnology eliminates the needfor manyjobs. Inlandwaterway issues: More thanmany countries, nature hasblessedChinawith large navigable rivers linkingmany of its major concentrations ofpopulation, especially inthe center and southwhere rainfallis high. Somerivers carry passengers; all carry largevolumes o fbulk cargoes, especially coal, construction materials such as sandand gravel, timber, andmineral ores. Many o fthese cargoes are hauled from rural areas (mines, quarries and forests) to urban areas for processing. Thesemines, quarries and forests are often important sources o f employment inpoor rural areas. However, on the rivers' upper reacheslimitedwater depth preventssafe year-round accessbyvessels over 100tons. Manyofthe costs of operating vessels vary far less thantheir carrying capacity, so larger vessels and sets ofbargespushedby a single power unit can offer substantially lower costs per ton carried. At relatively modest cost the navigation channels on these rivers canbe deepenedsufficiently to enable much largervessels to reach far upstreambut thenmay require costly periodicmaintenance. Separating the power unit fromthe bargesallows the former to bekept inrevenue-earning operation while the bargesawait loading andunloading. Inlandwaterway transport (IWT) offers the added advantage that it has less impact on the environment than rail or road transport. Accordingly, to ease the pressure of demandfor new,roadsandimprovedrailways, the Government hasrecently steppedup investmentinwaterways to deepennavigationchannels andupgrade navigational aids, at the same time as it has undertaken public works to control floods. Government strategy: The Government i s tackling all the aboveissueswith varyingdegrees of success. Construction goes well everywhere. The Government has decided inprincipleto introduce a fuel surchargeto fundroads buthas not yet passedlegislationto implementit, apparently dueto the complexity o fthe issue and opposition from vested interests. Much remains to be done to make the roads safer, especially on driver education and enforcement. A window of opportunity maybe closing to take tough action to restrain private car use, as one new 15 car-manufacturing joint venture after another is announced. Onurbantransport the more innovative cities are buildingundergrounds (metros) or busways; some are improvingtraffic managementand taking steps to makestreets safer for cyclists andpedestrians. Many are catering to private cars to excess, without addressingthe longer-term sustainability of car-based city land-useplans andthe urgentneedfor anorderlyparkingregime (space, charges and enforcement) and other measuresto managedemand. The Ministryof Railways, having announcedits general intentionto undertake 'three separations', needs to set a timetable to implementthem andaddress its surplus labor issue. TheMinistryofCommunications is drafting laws to govem inlandwaterways (the infrastructure) and inlandwater transport (the services), to bringmore consistency inrelevantpublic policies fromprovince to province andto codify good practice. On export competitiveness the Government i s eager to improve access for inland provinces andi s seeking ways to lower their transport costs and strengthenthe logistics services linkingthem with external markets. 2 Sector Issues to be Addressed by the Project and Strategic Choices - The market for inlandwaterway transport: China's geography and the locationofpopulation are exceptionally favorable to IWT anduntilthe 1960'swaterway transport accounted for 70-90 percent of Chma's inlandtransport market. But today it accounts for only 5-10 percent of China's inlandtransport market. A study financed under the Second InlandWaterways Project found that inlandwater transportation o f low-valuecommodities such as coal hada distinct cost advantageover other modes for distances less than 400 kmbut lost out to roadinterms of flexibility. InJiangsuprovince, whose waterways allow vessels ofupto 400-500 ton capacity andwherebargehow combinations arebeginningto beused, the averageinlandwater transport tariffis about 1.1US centper ton-km, andthis couldbereducedby20-30% ifmorevessel owners were to take full advantage andtrade up to larger vessels andbargehow combinations. The situation i s comparable to other countries that useinlandwater transportation extensively. Efficient river transport on the Mississippi or the Rhine, for example, can offer rates of 0.5-1.0 U S cent per ton-km for consignments o f 500-2,000 tons, which canrarelybe equaledby rail (typically 1-3 US centsper ton-km for consignments of 100-1,000 tons), while trucks usually cost 6-10 cents per ton-km (for consignments o f 5-20 tons). Whether a cargo owner prefers river transportation to rail or road, however, depends on the specifics ofhis demand. His choice is drivenbynot only the line-haul pricebut also the size and frequency of consignment, its volume andregularity, the need for speedy or predictable delivery, careinloading andunloading, and control against pilferage. Transport inlarge river vessels will be attractive to customerswith large volumes o fundifferentiated cargo of low value, needingto behauledover regular routes inlarge consignments, from origins andto destinations near a riverbank. As the Chineseeconomy matures andshifts toward-manufacturingofhigh-value intermediate andfinished products, the primarysector andconstructionwill decline inrelative importance, shrinlungthe marketfor IWT. This transition will befelt first inthe coastalprovinces. However, IWTmay continue to thrive inlandfor bulk cargoes, oversize loads or dangerous cargo andeveninthe coastalprovinces itmayprosper wherethe roador rail alternative is not readily available, such as a river delta. A niche marketmay also develop for containers where the 16 servicebyroador rail i s deficient. Taken together, it i s likely that the demand for transport on China's major rivers will remain substantial for at least the next couple of decades. Coordinating multiple uses of rivers: Riversare usefulnot only for transport but also for urbanwater supply, farm irrigation, andgeneration of electricity. Inmuchof Chinarainfallis highlyseasonal, so river flows needto beregulatedandthe risk of floodinghasto bemanaged. Damsbuilt for flood protection, electricity generation andirrigationimpose aneedfor ship locks andintegratedmanagementofwater releasesthroughout the year. Managingthe rivers for these multiple uses andreconcilingconflictingdemands i s not easy and merits Bank support. Promotion of independentpower producers: In2003 the Chinesegovernment launched a major restructuring o fthe power sector, ending the provincial monopolies o fintegrated generation, transmission and distribution companiesby spinningoff generation. For many years already hydro dams have sold their powerto the integrated monopolies from a weak position, beingpaidonly enough to cover their identifiable costs o fproduction. Inthe new, competitive structure, they will gain innegotiating power and financial autonomy, as they acquire the rightto deliver power directly to major customers at privatelynegotiatedprices; and all generators, hydro or thermal, become legally independentof the distributioncompanies, so the hydro producers will no longer be selling to their competitors. Peakhour pricingi s also being introduced. Most hydro plants focus on peak productionbecausethey lack sufficient water inthe dry seasonfor daylong generation, so thiswill give themanopportunity to increasetheir revenue substantially. Incompensation, the 'family-style' cooperation with their buyerswhichhas prevailed hitherto will be replacedby more contractual, arms-length commercial relationships, andrisks will have to be evaluatedmore formally and allocated appropriately. Steering IWT operators toward larger vessels: Entrepreneurs contemplating investingin barges andtows want to be assuredo f a steady demandfi-om cargo owners ando funiform and assurednavigating conditions on the routes sought by the cargo owners. Since the Government has devolved the operation ofriver fleets to the private sector, the means available to it to encouragenew enterprisesto enter the IWTmarket are limitedto: (a) providingthe infrastructure;(b) pricingit appropriately; (c) licensingoperators for safety; and(d) providing transitional assistanceinpromotingthe market between cargo owners andvessel operators and ensuringthe dissemination ofmarket information(logistics centers andinlandcontainer terminals). In2001the Governmentpromulgated ruleson(a) standardsfor vessels; and(b)managementof old and over-age vessels. However, barringmany o f the existing vessels on the grounds that they are old andperhapsunsafewill not ensurethat new larger vessels are put into use. A large number o fvessels operating on China's waterways are small self-propelled boats owned by individualsandoperatedbythe owner andhis family, livingon board. They lack the financing to trade up to larger vessels. Upgradingo fthe fleet will require a shift fi-om small family-based ownership to larger corporate ownership, a willingness to invest innewer technology, and access to financing. Public policy instruments to promote the use o flarger vessels havebeenthe subject o f a study carried out for Jiangsuprovinceunder the Second InlandWaterways Project. The study 17 documentedthat the market responseinJiangsuhas been good, butrecommended the provincial government to consider taking certain measuresto speedup the transition. These range from the creation of a special fund to finance the construction of standardizedvessels, differentialcharges for use o f channels and locks to discouragethe continuing use of small vessels, restricting the use of locks for small vessels, prohibiting the use ofnon-standardvessels and crafts with a capacity of less than 60 tons inClass 5 waterways over aphasedperiod, and administrative measuresto deny the registration o fnew vessels that are non-standard. Cost recovery for waterway infrastructure: The national government expects provinces to recover some butnot all public expenditures on waterway infrastructure through chargesto IWT users-unless revenuesfrom power sales suffice. Most provinces with large waterway systems levy annual fees on vessels to cover channelmaintenance andcharges for the use o f shiplocks. They aim to generateenoughrevenue from these fees to cover operation and maintenance. The remaining finance has to come from power revenues, or where (as inJiangsu) the shiplocks are not combined with power plants, from generalrevenuesavailable to the'province, with some funding also from the nationalbudget. Thoseprovinces whichhaveborrowedfrom the World Bankalso aimto cover their debt service onthe Bank loan, whichtypically is about40% ofthe capital cost. This results ina level o f cost recovery for waterway investment andmaintenance that i s one o fthe highest inthe world. Governments inthe EUandNorthAmerica do not seek substantial cost recovery from inlandwaterways, becauseo ftheir environmental benefits. Thispolicy on cost recovery for inlandwaterway infi-astructure strikes an appropriate balance between subsidyand financial autonomy, but there remains room for improvement, such as in modifylngthe structure andlevel o f fees to give stronger incentives for efficient use o fthe infrastructure andto makethe grounds for subsidymore transparent. 18 China:FifthInlandWaterways Project Annex 2: Major Related Projects Financed by the Bank Sector Issue Projects I Latest Supervision Ratings lank-financed Implementation Development Progress Objective 0 Removetransport bottlenecks by IWWl (completed) S S improving IWT facilities IWW2(on-going) S S 0 Removetransport bottlenecks by IWW3 (on-going) S S improving IWT facilities facilities as part o f integrated IWW4 (on-going) S S 0 Highwaysafety 0 Operationandmaintenance o f high-grade highways Cost recovery 19 China:FifthInlandWaterways Project Annex 3: Results Framework and Monitoring Results Framework PDO Outcome Indicators Use of Outcome Information Enhancethe standard of livingin ;he HanRiver region by 0Navigation: Jeveloping its potentialwater - Meanreservoir elevation Usedby HPCD for cross resources, including: (m) :omparison with other [a) increasingthe waterway - Availability of the lock navigational complexes onthe transport capacity along the Han HanRiver, andmeasurethe River andits cost-effectiveness; :fficiency ofthe investment. and 0 Power: Usedby CCMO to measurethe (b) ensuring the availability o f - hours per year whenthe six efficiency ofthe operationo f the sustainablehydropower and turbines are available for use power plant. water resources for use inthe - cost per kW capacity installed Xiangfan area andthe Tangdong farmlandregion. Intermediate Results Results Indicators for Each Use o f Results Monitoring One per Component Component Component One: Cuijiaying Component One: Component One: Complex Construction o f the Cuijiaying Progressrate o fworks and Monitoringof implementation Complex procurement o f equipment progress andactionplanto addresspossible delays. Component Two: Institutional Component Two: Component Two: Development: 0 Training and study tours 0 Number o f stafftrained Monitoringof implementation progress and actionplanto 0 Studies will be carried out on 0 Study reports completed addresspossible delays. (a) strengthening institutional capacity ininlandwaterway planning and administration inHubeiProvince; (b) logistics planningin Hubei Province; and (c) pricingo f power to be supplied by CCMO. 20 /x ~ fr sn 0 0 0 0 2m N \o x1 3m I a 0 0 0 0 sn N xi 3 00 I 0 0 N ' 0 cz 0 N 2 1 h I v1 v1 0 E s s 0 /9 3 53 gs g g Q\ Q\ s g s s 0 00 VI /I VI r- s VI N g s m s \O 22 China: FifthInlandWaterways Project Annex 4: Detailed Project Description 1. The projectinvolvesthe integrateddevelopment o fwater resources to improveinland navigation on the HanRiver and generatepower inthe areao fXiangfanCity. The project consistso f a dam, shiplock andhydro-electric power plant at Cuijiaying on the middlereacheso f the HanRiver. On completion, the power plant at Cuijiayingwill generate some 390 GWhof power per year. The shiplock will enable 1,000-ton capacity vessels andbarge-pusher combinations to navigate all the way from Danjiangkouto Wuhan, a distance of 649 km, upon completion o fthe long-term development planofthe HanRiver in2020. Long-term Development Planfor the HanRiver 2. The HanRiver is one o fthe largest tributaries on the middle reacheso fthe Yangtze River. Its total length, fiom its sourceon the southern slopes o fthe Quinlingmountains in Shaanxi province, to where itjoins the Yangtze River at Wuhan, is 1,567 km. The total "fall" i s 1,964 myandis divided into three typicalriver reaches. The river's "upper reach", from the source down 918 kmto the Danjiangkou Reservoir, passes through amountainous area andis accessible only to boats no larger than50 tons incapacity. The 140-kmsection between Danjiangkou andXiangfan --part o fthe river's middlereach-- i s shallow andwide andcan accommodate 100-200ton-capacityboats. Waterwayimprovement works areunderway onthis sectionto enable500-ton vessels to navigateyear-round. The 530 kmsectionbetweenXiangfan andWuhancanalreadyaccommodate500-tonvesselsyear-round. The river's annualrun-offtotals 53.9 billionm3;annualaveragedischarge(at theNianpanshanhydro-station)is 1,710 m3/sec.The river'spotentialhydro-powercapacityis 6.14 millionkWa(now exploitedis 2.20 millionkWa). 3. A comprehensive flood control, navigation, water resourcesandhydropower long-term development planfor the HanRiverprovides Shaanxi andHubeiwith a key inlandwaterway transport route. Approved bythe Ministryo f Communications in 1998, itincludes the construction of 16dams: seveninShaanxi andnineinHubei. O fthese, two havebeen CompletedinShaanxi --Shiquan andAnkang-and two inHubei --Danjiangkou and Wangfuzhou (see Map 34053). The balance o fthe Hubei complexes are scheduledfor completion instages by 2020. 4. The Planaims to achieve the following vessel capacity standards for the HanRiver: Yangxian-Ankang-300tons; hkang-Danjiangkou-500tons; andDanjiangkou-Wuhan -1,000 tons. The planned Cuijiaying complex, 142kmdownstream from Danjiangkou, i s a focal point inthis long-term development planandits shplock isdesignedto accommodate 1,000-ton vessels. However, the shiplock will not berequired to handle this size o fvesseluntilthe River's long-term development planfor both shiplocks andnavigationchannelshasbeen completed in 2017-20. 5, The specifics o fthe developments are as follows. 23 I-CuijiayingNavigationandPowerComplex(US$197.68million) Construction o f shiplock, power station, and dam: The shiplock will benear the west bank o fthe river andthe power station near the east bank. Details follow: The shiplock will be a Class I11inaccordancewith the Chineselock classification and capable o f accommodating vessels o fup to 1,000 ton capacity with an effective chamber of 180x 23 x 3.5m over the gate sill. The power station will have an installed capacity o f 90 MW (comprising 6 bulb turbines each o f 15 MW capacity) with an average annual generation o f 390 GWh. Thepower plantwill be connectedto the grid for XiangfanPrefecture at two transformer stations, one at 220 kV andthe other at 110kV, eachlessthan 1kmfrom the dam. A floodgate-dam will comprise 20 floodgates eachof20mnet width. Top floodgate-dam elevation will be 66.0 m. Design flood frequency anddischargerequirement for 1in50 years will be 19,600 m3/sec.The floodgates will have a discharge capacity of some25,380 m3/sec. An earthen(clay) damwill connectthe floodgates damandthe river's east (left) bank. Top elevation for bothwill be 66.0 m; total lengthwill be about 1,354m andmaximumheight 18m(from the bottomofthe footings to the top ofthe sluicegate). The damwill providea weighted averagehead o f 6.3m (design head 4.7m). A 200m-long accessroadanda concretebridge60 x 6mwill connectthe complex to thewest (right)riverbank. A steelliftingbridge26 x 6mwill spanthe shiplock to complete the dam- top roadconnectionbetweenthe two river banks. The access roadon the east (left) bank i s very short, as the earthen dampracticallyterminates at the mainroad. Reservoir bankprotection: Stone cladding o fthe reservoir bankswill ensurethat the slopeswill remain stable and thus protect the adjoining farmlands andvillage settlementsagainst flooding. Inall about30 kmofembankmentwillbereinforced; the total areaofslopeprotection willbe 19.3 ha. Equipmentto support HPCD andCCMO operations ($3.88 million) 0 Vehicles for access to project sites Software 0 IThardware(work stations) Construction supervision services (US$ 1.05 million) Consultants will be employed to administer andoversee implementation on behalfo fHPCD. Engineeringservices duringconstruction (US$80,000) International consultants who have beenhelping HPCD to preparethe Cuijiaying Project (not financed bythe Bank)may be called upon for follow-up advice onparticular issues. 24 11-Institutional Development(US$1.47 million) Capacity Building(US$960,000) 0 Capacity buildingwill beprovidedto HubeiProvincialCommunications Department, including WBFPO and CCMO, through technical assistance, training and studytours. 0 The Cuijiaying Complex will beHPCD's first experiencewith waterway projects. The capacity building,to include overseastrainingtours, will benefit not only the implementation ofworks, but the managementofthe entire complex after its completion. Strengthening institutional capacity ininlandwaterway planningand administration inHubei Province (US$120,000) 0 Consultants will investigatepresent conditions on waterways inHubeisuch as the Yangtze, HanandQingjiangRivers andanalyzethemajor factors that restrict their development. 0 They will review the waterway experienceindeveloped countries suchas Germanyandthe USA andinthe developed coastalprovinces ofChina, contrasting themwith present waterway conditions inHubei. 0 The consultantswill recommendpolicies andmeasuresfor waterway development inHubei as regards infrastructure, standardization ofvessels and operating practices, and facilities for loading andunloading cargo. Lo~sticsplanninginHubeiProvince (US$240,000). The objectives of the study are to: 0 promote effective co-operation among waterway and landtransportation means; 0 evaluatethe costs andbenefits of developing river-sea non-stop transport; and 0 recommendonthe development of transportation meanswhich can adapt to dynamic market requirements inorder to promote the province's external oriented economy. Pricingofbower to be supplied bv Cuiiiavina Complex (US$150,000). The objective ofthe studyis to preparearationaldetermination ofthe on-net power tarifffor the CuijiayingProject under alternative ways the power market couldbe organized inhture, so as to ensurethat under various head conditions the generatedpower will becompetitive and ensuremaximumfinancial income. Cuijiaying Complex: Damand Powerplant Data I Unit IQuantity IRemarks 25 Unit Quantity Remarks Live storage 106m' 40 River flow regulation Daily Maximum flood elevation m 64.25 Normal pool level m 62.73 Deadlevel m 62.23 Note:* Deductingan amount of 9.5 billionm3that will be diverted bythe South-North MiddleRoute DiversionProject from the original annualaverage run-off. 26 South to North Water Diversion 6. Currently underimplementation, the Middle RouteProject for South-to-North Water Diversion(the DiversionProject) will divert a water volume of as much as 9.5 billionm3per year from the existingDanjiangkou Reservoir on the HanRiverto northern China. To this end, the DanjiangkouReservoir will significantly increaseits storagecapacity through raisingits dam by 12m. The CuijiayingDam, located 142kmdownstream ofthe Danjiangkou Dam, receives most (though not all) its inflow from the releaseo f the Danjiangkou Dam. Therefore, the design o fthe Cuijiaying complex should take full account ofthe impacts ofraisingthe Danjiangkou damandthe water volume to bedivertedfrom the Danjiangkou reservoir. Among them arethe following keyissues: 0 Lower flood flows: After raising its dam, the Danjiangkou Reservoir will significantly increase its storage capacity by 67%, from 17.4billionm3to 29.0 billionm3,resulting in amuchhigher degree o f downstream flood protection, from the existing once in20 years to once in 100years. 0 Higher heads for power: Dueto its larger capacity, the DanjiangkouReservoir will store muchmore floodwater thanbefore andreleaselower flood flows downstream. Hence the tailrace level o fthe Cuijiaying power plant will belowered by 0.3-0.5m and the heads for power will increasebythe same amount. 0 Power generation of Cuijiaying Complex: Inthe design ofthe Cuijiayingproject, its annual generation i s 390 GWhproducedby the available water o f 34.1 billion m3,which i s the original annual averagerun-off o f 43.6 billion m3,deducting9.5 billion m3to be diverted bythe DiversionProject. (Obviously the latter will no longer be available for the generation ofthe Cuijiaying Complex ). Ifthe DiversionProject were not built,the annual generation of CuijiayingProject would increaseby about 30%. Iffor one reason or another the DiversionProject i s delayed or the water volume to betransferred i s reduced, either one would addmore water for generating additional power to the CuijiayingProject, resultinginanincrease inCuijiaying's generation o fup to 120 GWh, or RMB 50 million($6 million) inits revenue. 7. The foregoing discussion shows that the water volume to bereleasedbyDanjiangkou plusthat from the basin areabetweenDanjiangkouand Cuijiayingcouldbe sufficient for profitableoperation ofthe Cuijiaying complex, whether or not the DiversionProject goes ahead on schedule or i s delayed, and also whether or not the full diversion as currently planned is achieved or a reduced diversion instead. 27 China:FifthInlandWaterways Project Annex 5: Project Costs Project Cost By Component Non-Bank Bank- Financed Financed Total US$ million US$ million US$ million I.CuijiayingComplex -- Civilworks 39.55 56.93 96.48 Goods 32.16 41.82 73.98 - Construction supervision -- Landacquisition 1.05 0.00 1.05 Engineering services duringconstruction 0.02 0.06 0.08 and resettlement 26.09 0.00 26.09 Subtotal 98.87 98.81 197.68 II. -- Training InstitutionalDevelopment 0.26 0.70 0.96 Studies 0.27 0.24 0.51 Subtotal 0.53 0.94 1.47 Total Baseline Cost 99.40 99.75 199.15 Contingencies (physical & price) 11.71 0.00 11.71 Total Project Costs 111.11 99.75 210.86 Front-endfee 0.00 0.25 0.25 Total Financing Required 111.11 100.00 211.11 'Identifiable taxes andduties are US$6.84m, making the total project cost, net o ftaxes, US$204.27 million. The share of project cost net oftaxes is 96.8%. 28 China: FifthInlandWaterways Project Annex 6: ImplementationArrangements The project will beimplemented by HPCD. Its World Bank-Financed Projects Office (WBFPO) has coordinated project preparation. HPCD has set upthe HubeiProvincial Cuijiaying Navigation & Power Complex ManagementDepartment (CCMO), to implement and operatethe Cuijiaying Complex. CCMO will manageconstruction works with the assistanceof domestic supervision firms. It will operate the CuijiayingComplex after it opens for navigation. CCMO's key staffwill come from HPCD. Itwill be the Bank's main counterpart duringimplementation. Similar arrangementswere madeonthe four previous Bank-financedinlandwaterway projects in China andhave provedeffective. EngineeringDesign HPCD hiredthe HubeiCommunications Planning andDesignInstitute andthe HunanWater Resourcesand HydropowerInvestigations, Designand ResearchInstitute to carry out the design studies for the Cuijiaying complex. Resettlement HPCD establishedajoint team for the preparation ofthe resettlement action plan(RAP), involvingthe local government andconsultants. The plan, developed inline with local laws, policies andWorld Bank OP 4.12, describesindetail the resettlement implementation arrangements. HubeiProvince has establisheda multi-level organizational framework to plan andimplement resettlement. This framework hasresettlement offices at different levels of governments, includingproject level, prefecture/city and district. They havebeen staffedwith experiencedexperts and their responsibilities have been specified inthe RAP. Theproject office has designedboth internal and independentmonitoringmechanisms for implementing the RAP. Internal monitoringwill be conducted through the resettlement offices at various levels of government. Environment HPCD has prepared an environmental managementplan(EMP) on the Cuijiayingcomplex that includespractical and cost-effective measuresnecessaryto mitigate the project-related impacts byincorporatingtheminthe design andbyimplementingthem duringthe construction and operation phases. The EMP also specifies the appropriate monitoringplans, training, institutional arrangements, implementation schedule, budget needs, etc. necessaryto implement the mitigationmeasures and strengthenthe borrower's capacity. Since the project will be the fifth Bankproject implementedbyHubeiprovince, HPCDhasdevelopedample in-house capacity inits environment unitto implement, supervise andmonitor the EMP. InstitutionalDevelopment HPCD will managethe institutional development component. 29 Procurement HPCD will be responsiblefor carrying out the procurement under the project. CCMO will handlethe day-to-day managementofthe projectincludingtheprocurement process. Two staff who have beenfamiliarized with Bank-financedprocurement inprevious transport projects have been transferred to CCMO. To obtain necessaryprofessional assistancefor ICBprocurement, HPCD has selected China International Technology Company as procurement agent for the project. This agent hasmore than a decade o f experiencehandlingBank-financedICB procurement. The above implementingagencieshave beenassessedto have adequatecapacity to carry out the procurement under the project. 30 China: FifthInlandWaterways Project Annex 7: FinancialManagement and Disbursement Arrangements Summary 1. TheBankteamhas assessedthe adequacyofthe project's financial managementsystem, applying guidelines issuedbythe Financial Management Sector BoardinOctober 2003. It concluded that the project meets minimumBank financial managementrequirements, as stipulated inBP/OP 10.02. Inthe team's opinion, the project will have inplace an adequate project financial managementsystemthat canprovide, with reasonableassurance, accurate and timely informationon the status of the project inthe reporting format agreedwith the project and as requiredbythe Bank. 2. Fundingsourcesfor the project include the Bankloanandcounterpart funds. The loan will be signedbetweenthe Bank andthe People's Republic ofChinathroughits Ministryof Finance (MOF), andon-lending agreements for the Bank loans will be signed betweenMOF and the Government o fHubeiProvince through the HubeiProvincialFinance Department (HPFD) andthenbetweenthe Finance Department andthe Communications Department. The loan proceedswill flow from the Bank into the project special account to be set up at andmanagedby the HPFD to HPCD andthen to the project implementing entity, the Cuijiaying Complex Management Office (CCMO) and finally to contractors or suppliers. The loanwill be disbursed usingthe traditional disbursementtechniques andnot report-baseddisbursements, inaccordance with the general agreementbetweenthe Bank andMOF. The counterpart funds will be government appropriations. 3. No outstanding audits or audit issues exist with the implementingagency involvedinthe proposed project. The task team will, however, continue to be attentive to financial management matters andaudit covenantsduringproject supervisions. RiskAnalysis 4. The following risks with correspondingmitigatingmeasureshavebeen identified: Mitigating Measures The project i s straightforward, HPCD has experience in Bankprojectsandis familiar withBank's requirement and procedures. The task teamwill closely monitor the project from the initial stageto ensure smooth preparationand imdementation. II. Risk Control a. ImplementingEntity Moderate Although HPCD i s experienced with Bankprojects, it i s the first time for themto implement an inland waterway project. Key personnel at CCMO come from HPCD. Detailed research relatedto the inlandwaterway industrywill be conducted bythe implementingentity andthe task team will provide support to the project. 31 b.FundsFlow Low Allthe Bank's loanwill bemanagedbyHPFD,which has experiencewith several Bankprojectsbefore and i s qualifiedto handle this project. c. Staffing Low For some financial staff who are new to the Bankproject, training has beenprovidedat the initial stage and the task team will performclose monitoring and supervision throughout the implementation process. d. AccountingPolicies Low Accounting policies andprocedures are already inplace. andProcedures e. InternalAudit IModerate The internal audit o f HPCDwill act as the internal audit I function for this project. For efficiency, no assessment will be made on its competency andthe task teamwill rely on external audit andBank supervisionreviews. f.ExternalAudit Low The external auditors, CNAO, have extensive audit experience with previous Bankprojects. g. Reportingand Low Format o f financial statementsandfrequency of submission Monitoring have been clearly definedbythe Bank and MOF. h.InformationSystems Low The computerized financial management system"User Friend (Yong You)" will be usedby CCMO. The task team will closely monitor the processing o f its accounting work in the initial stage and subsequentregular supervision missions. 5. Strengths: BothHPCD and HPFDhave satisfactorily completed three Bank highway projects with a fourthunder implementation. Their extensive prior experience on Bank-financed projects will benefit the implementation ofthis project. Weaknesses: It i s the first time for HPCD and CCMO to implementaninlandwaterway and hydropower project. To addressthe lack of experience inthis industry, the followingproposed solutions havebeen identified: The financial staff of CCMO will gain further understanding of the project byreceiving training/workshops fkom HPCD. Inaddition, the financial staffwill visit the various on- going inlandwaterway projects financed by the Bank,which will help themto properly design a suitable accounting andreporting system for this project. 0 Financial managementpolicies andprocedures are documented indetail ina financial managementmanual. This enables the financial staffo f CCMO to better familiarize themselveswith Bank's requirements regardingproject financial management. FinancialManagement Arrangements 6. Implementing entity: To implement this project locally inXiangfan City, a new legally autonomousentity, CCMO, was establishedbyHPCD and Hubei ProvincialNavigationBureau inMarch2005. Underthe overallcontrolandmanagementofHPCD, the project's construction component will be implementedby CCMO. Inaddition, HPCD will use its WBFPO as the agencyresponsible for coordinating project preparation and for implementingthe technical assistance. 32 ~, The organization chart i s as follows: WBFPO HPCD-HubeiProvincialCommunications Department CCMO-Cuijiaying Complex ManagementOffice WBFPO-World Bank-FinancedProjects Office 7. Fundsflow: One special accountwill be set up andmanagedbythe HPFD. The funds flow will be as follows: 1 - I I TheWorld Suppliers and Bank HzsG+I I HPCD -b CCMO + contractors 8. Counterpartfunds willbegovernment appropriations provided to CCMO through HPCD. 9. Staffing: Adequate project accounting staffwith educationalbackground andwork experience commensuratewith the work they are expectedto performi s one of the factors critical to successful implementation ofproject financial management. Based on discussions, observation andreview o fthe educational background andwork experienceo f the staffidentified for financial and accounting positions inCCMO, the Bankteam notes that the staff are qualified andappropriate to the work they are expectedto assume. 10. The financial managementmanual (the Manual) preparedby WBFPO i s designedto strengthenfinancial managementcapacity and achieve consistent quality o f accounting work. It provides detailed guidelines on financial management, internal controls, accounting procedures, fund and asset managementandwithdrawal application procedures. The Bankteam commented on the first draft o fthe Manual at appraisal and suggested some changes. The final version of the Manual(dated April 19,2005) hasbeen formally adoptedby CCMO and distributed to all the relevant financial staffbefore implementation o fthe project begins. 11. As someofthe financial staff arenew to Bank-financedprojects, HPCD is providingall financial andaccounting staff with a well-designed and focused training programon project financial managementprior to project start-up, to ensure a good understanding and knowledge o f the following: Bank's financial managementpolicy anddisbursementprocedures 0 Fund/asset/contract management 0 Format and content ofproject financial statements 0 Audit requirement 33 12. Accounting policies andprocedures: The administration, accounting andreporting of the project will be set up inaccordancewith the Circular #13: "Accounting Regulations for World BankFinancedProjects'' issuedinJanuary 2000 bythe Ministryo f Finance. The circular provides in-depthinstructions on accounting treatment ofproject activities and coversthe following: 0 Chart of account 0 Detailed accounting instructions for eachproject account 0 Standard set ofproject financial statements 0 Instructions onthe preparation o fproject financial statements 13. The standardset ofproject financial statementsmentionedabovehasbeenagreedto betweenthe Bank and MOF and applies to all Bankprojects appraised after July 1, 1998 and includes the following: 0 Balance sheet 0 Statement of source anduse of fund 0 Statemento fimplementation of loanagreement 0 Statement of special account 14. CCMO will beresponsible for: 0 managing, monitoringandmaintaining project accountingrecords; 0 retaining original supportingdocuments for project activities; 0 preparingfinancial statementsandsubmittingthemto the Bank for reviews and comments on a regular basis. 15. Reporting and monitoring of financial statements: Inline with the newly issued Financial MonitoringReport guidelines, the un-audited project financial statementswill be submittedas partofthis report to the Bankon a semi-annualbasis (prior to August 15 and February 15 ofthe following year). 16. Internal audit: Although the internal audit of HPCD will act as the internal audit function for this project, we have not assessed and will not assess the competenceo fthe internal audit dueto the costhenefit of doing such work. As such, reliance will not beplaced on work performed bythe internal auditor. However, we would at least review internal audit reports as partofour normal supervision. This couldidentifyissuesfor our consideration and also provide some support for the development ofthe internal audit function. 17. Informationsystems: The computerized financial management system "User Friend (Yong You)", awell established accounting software package approved by MOF, will be usedby CCMO for this project. The task team will closely monitor the processingof its accounting work, especially inthe initial stage to ensure complete and accurate financial informationis providedin a timely way. 34 Audit Arrangements 18. The Bank requires project financial statements to be audited inaccordancewith standards acceptableto the Bank. Inlinewith other Bank-financed projects inChina, the project will be audited inaccordancewith International Auditing Standards andthe Government Auditing Standardsof the People's Republic o f China. The Audit Department o fHubeiProvince (ADHP) hasbeen identified as auditors for the project. Annual audit reports will be issuedinthe name of ADHP and subject to reviews bythe ChinaNationalAudit Office (CNAO). The Bank currently accepts audit reports issuedby CNAO or provincialh-egional audit offices for which CNAO i s ultimatelyresponsible. 19. The annual audit reports ofproject financial statementswill be submitted to the Bankby CCMO within 6 months o fthe end o f each calendar year. Impactof ProcurementArrangements 20. Thethresholds set for procurementpost-review (see below) will be consistentwith those set for statements of expenditures for disbursementpurposes. The financial management specialist andprocurement staffwilljointly participate insupervision missions to make sure contracts awarded are inlinewith the Bank's procurement guidelines and contract payments made are inaccordance with the terms ofthe contract andwell supported. DisbursementArrangements 21. The loanwill be disbursedusingtraditional techniques andnot report-based disbursement, inaccordance with the general agreementbetweenthe Bank andMOF. The loan proceeds will be disbursedagainst eligible expenditures as follows: (i) civil works - 59 % of expenditures, (ii) equipment - 100%of foreign expenditures, 100% o f local expenditures (ex- factory) and75% of other items procured locally, (iii) consulting services- 100%of expenditures, and (iv) technical assistanceor training-100% o f expenditures. 22. Disbursement methods, such as replenishment, direct payment and special commitment, are available for the project. The statement-of-expenditure limits,inline with the procurement post-review thresholds, will be as follows: (i) all contracts for civilworks estimatedto cost the equivalent of $ 5 millionor less; (ii) contracts for goods estimated to cost the equivalent o f $ all 500,000 or less; (iii) consultant contracts estimated to cost $ 100,000 (firm) or $ 50,000 (individual) or less; and (iv) all training. 23. One special account will be establishedat andmaintained byHPFD for this project. The authorized allocation for the account will not exceedUS$7million, equivalent to about 4 months of eligible expensesreimbursable via special account. The initial authorized allocation from the BankwillbeUS$4millionuntilthe aggregatewithdrawalsandoutstanding Special Commitments are equal to or exceedUS$30 million equivalent. Fromthe special account in HPFD, the Bank funds will be disbursed to a special account set up at HPCD, and then to CCMO and finally to suppliers and contractors. 35 24. HPFD will bedirectly responsible for the management, monitoring, maintenance and reconciliation of the SA activities ofthe project. Supporting documentsrequired for Bank disbursementswill bepreparedandsubmittedby CCMO to HPCD andthento HPFD for - - - - verification and approvalbefore sending to the Bank for further disbursementprocessing. The flow o fthe withdrawal application will be as follows: Contractors Approval Approval Approval World or suppliers byCCMO byHPCD byHPFD Bank Action Plan 25. HPCDhas agreedto complete the training of all relevant project financial staffbythe time ofproject launch. SupervisionPlan 26. A detailed supervision planfor this projectwillbeincluded as partofthe ChinaAudit Strategy document, which is currently inprocess. This document will take into considerationthe size ofthe project and the risks identified. 36 China: FifthInland Waterways Project Annex 8: ProcurementArrangements A. General 1. Procurement for the proposed project would be carried out inaccordance with the World Bank's "Guidelines: Procurementunder IBRDLoans andIDA Credits" datedMay 2004; and "Guidelines: Selection andEmployment of Consultantsby World Bank Borrowers" datedMay 2004, andthe provisions stipulatedinthe Project Agreement. For each contract to be financed bythe Loan, the different procurementmethods or consultant selection methods, the needfor prequalification, estimated costs, prior review requirements, andtime frame have beenagreed betweenthe Borrower andthe Bankproject team inthe Procurement Plan. The Procurement Plan willbeupdatedat least annually or as requiredto reflect the actual project implementation needs andimprovements ininstitutionalcapacity. 2. Procurement of works (US96.48 million): Works procured under this project will include: HanRiver CuijiayingNavigationComplex dam; shiplock civil works; powerhouse construction; and subsidiaryconstruction such as short access roads andbridges, as well as installation of equipment andmetal structures. The procurement will be done usingthe Bank- approved Chinese ModelBiddingDocuments (MBD) for all International Competitive Bidding (ICB) andNationalCompetitive Bidding(NCB). Incompatibilities between Chinese procurement procedures and the Bank's are addressed in theprocurement annex to the Project Agreement using the standard languagefor thispurpose. All new revisions to the Bank's StandardBiddingDocuments since 1997will beincorporatedinto the existing MBDs. For civil works contracts each estimatedto cost US$15 million or more, bidders will beprequalified and ICBprocedure will beused.For other contracts for civil works, NCB procedure acceptableto the Bankwillbeadopted. 3. Procurement of goods (US73.98 million): Goods to beprocuredunder the projects would be Power Station Equipment(turbines, generators and control system); metal structures andhoists for dam, power station andshiplock; andnecessarycommunication equipment, etc. The procurement will be done usingthe Bank-approved Chinesemodel biddingdocuments for all ICB andNCB. All new revisions to the Bank's StandardBiddingDocuments since 1997 will be incorporated into the existing MBDs. The Bank's StandardBiddingDocuments will beused when anapplicable MBD is not available. Contracts eachestimatedto cost US$0.5 million or more for Goods will beprocured throughICB; NCB will beused for contracts each estimated to cost less thanUS$0.5 million; and for contracts each estimatedto cost less thanUS$O. 1million, Shopping procedure will beused. 4. Selection of consultants (US2.60 million): Consultants are expectedto behiredto provide services inthe following areas: studies, training, and studytours as needed. Quality- and Cost-based Selection (QCBS) will beused for contracts eachestimatedto cost US$200,000 or more; contracts eachestimatedto cost lessthanUS$200,000 may be awarded on the basis of Selection Basedon the Consultants' Qualifications (CQS); assignments for consulting services meetingthe requirement ofpara. 5.1 ofthe Bank's Consultant Guidelines will be contracted on the basis of Selection o f Individual Consultants(1C). Short lists of consultants for services 37 estimatedto cost less than$300,000 equivalent per contract maybe composed entirely of national consultantsinaccordancewith the provisions ofparagraph 2.7 ofthe Consultant Guidelines. B. Assessment of the Agency's Capacity to Implement Procurement 5. Procurement activities will be carried out by CCMO, with the assistanceof WBFPO. In addition, aprocurement agent (tenderingcompany) will behiredto provide assistancein preparingbiddingdocuments, advertising, bidopening, bidevaluation, etc. The design institutes hiredfor this project will assist WBFPO and CCMO inpreparingthe technical partofthe biddingdocuments. 6. The Bankteam assessedthe capacity of the implementingagenciesto implement procurement actions for the project inOctober, 2004. Itreviewedthe organizational structure for implementing the project and the interactionbetweenthe project's staffresponsible for procurement and the relevant Provincialunits for administration and finance. 7. The keyissuesandrisks concerningprocurement for implementation ofthe project have been identifiedas follows: (i) proceduresstipulatedby Chinese Tendering andBiddingLaw the are different from the procedureso fthe Bank's Procurement Guidelines; (ii) the staff inCCMO andWBFPO needto betrained onthe Bank's new Procurement Guidelines and procurement procedures. The corrective measureswhich have been agreed are: (i) provisions for Bank- financed NCBprocurement are incorporated into the Project Agreement; and (ii) for all training staff from CCMO and WBFPO inlinewith the Bank's new Guidelines and procedureswill be provided bythe Bankteam duringthe project launch workshop. 8. The overall project risk for procurement i s average. C. ProcurementPlan 9. HPCDhas developed a procurement planfor project implementation setting out the contract packaging, the procurement methods to be applied for eachpackage, andtheir timing. It was discussedandagreedbyHPCD and the Bank team at appraisal. Itwill be available at WBFPO as well as inthe project's database andthe Bank's external website. The procurement planwill beupdatedinthe semi-annualproject progressreports andas requiredto reflect the actualproject implementation needs. D. Frequency ofProcurement Supervision 10. Inadditionto the priorreview supervisionto becarried outinBankoffices, the capacity assessment ofWBFPO and CCMO recommendedthat supervision missions visit the field every six months and carry out post review o fprocurement actions once a year. E. Details ofthe Procurement Arrangements involvingInternational Competition (a) Contract packagesto beprocured following ICB anddirect contracting are as follows: 38 Works ~1 Contract (Description) Estimated Procure- Pre- Domestic Review Expected cost ment Qual Prefer- by Bank Bid (us$ Method ence (Prior / Opening million) (yes/no) Post) Date W1 Opendiversion channel excavation 14.98 NCB N N Prior Dec-05 andprevention, constructionof auxiliary dams W 2 Construction o f longitudinal cofferdam and river closure works, sluice gates, power house, ship lock, fishway, rock-fill dam, connection works, and temporary works. W3 Bridge pavement deck system across sluice gates, powerhouse, anddam. W4 Buildingworks and other works. NCB W5 Environmental protectionworks 2.15 NCB N N Post Jan-07 W6 Reservoir bankprotection and 2.79 NCB N N Post Jul-06 limprovement works W7 /Installationo fturbine-generator 3.20 NCB N N Post Nov-08 1.18 N C B N N Post Apr-07 related works. Total 96.48 I I Goods Ref. Contract (Description) Estimated Procure- Pre- Domestic Review Expected No. cost ment Qual Prefer- byBank Bid (US$ Method ence (Prior / Opening million) (yedno) Post) Date G1 Bulbturbine sets andappurtenant 45.46 ICB N Y Prior May-06 equipment G2 Metal structure o f floodgate, ship 13.65 ICB N Y Prior Jan-07 lock, and powerhouse G3 Gantry crane at top of floodgate 1.39 I C B N Y Prior Jun-07 G4 Main transformers 0.63 ICB N Y Prior Jun-07 G5 Switchyard equipment 0.37 N C B N N Post Ju-07 G6 Hydraulic hoists for sluice gate and 4.81 ICB N Y Prior Dec-06 ship lock. G7 Miscellaneous equipment 3.79 Shopping N N Post NA (including installation) G8 Project management equipment 3.88 NBF NA NA NA NA Total I 73.98 I 39 (b) Priorreview: ICB andNCB contracts eachestimatedto costUS$5 million or more for civil works and contracts for goods above US$500,000 eachwill be subject to prior reviewbythe Bank. (c) The consulting assignmentsare programmed as follows: Ref. Description of Assignment Estimated Selection Review by Expected Expected No. Cost Method Bank Proposals Contract (US$ (Prior / Submission Implementing million) Post) Date period T1 Strengthening institutional capacity 0.12 NBF NA NOV-06 12months ininlandwaterwayplanningand administration inHubeiProvince T2.1 Logistics planning inHubei 0.16 CQS Prior Mar-06 24 months Province (overseas services) T2.2 Logistics planning inHubei 0.08 NBF NA Mar-06 24 months Province (domestic services) T3.1 Power pricing(overseas services) 0.08 CQS Post Jul-06 18 months T3.2 Power pricing (domestic services) 0.07 NBF NA Jul-06 18 months T4 Engineering services during 0.08 CQS Post Jan-06 48 months construction T5 Construction supervision services 1.05 NBF NA Dec-05 48 months T6 Training 0.96 CQS Post Dec-06* 45 months Total I 2.60 I Date initial proposals are expected to be submitted. Other proposals expected to be submitted later. Prior review for consulting;services: Consulting services estimatedto cost above US$lOO,OOO per contract for firms and US$50,000 per contract for individualconsultants and all single-source selection o f consultants (ifany) for assignments will be subjectto prior review by the Bank. Short lists composedentirely o fnational consultants: Short lists of consultants for services estimatedto cost less than US$300,000 equivalent per contract, may be composed entirelyof national consultants inaccordancewith the provisions ofparagraph 2.7 of the Consultant Guidelines. Note: ICB = internationalcompetitive bidding NA = Not applicable NCB = national competitive bidding CQS = selection based onthe NBF = non-Bank-financed consultant's qualifications 40 China: FifthInlandWaterways Project Annex 9: Economic andFinancialAnalysis A. EconomicAnalysis 1. The CuijiayingNavigationandPower Complex will generateseveraltypes o f economic benefit. Savings to waterway traffic are expectedto contribute about 40 percent ofthe total; electric power will contribute about 35 percent; and extra farm output due to reliable irrigation, together with air quality improvement from the replacement of fossil fuels byhydro-electricity, will contribute about 25 percent. We havenot attemptedto quantifyflood controlbenefits. 2. A single rateof economic retum is calculated for the entire complex becausethe splitting ofjoint costs betweenpower, navigation, irrigation and flood control is arbitrary. The costs and benefits usedinthis evaluation reflect January 2005 prices and a project life o f 25 years. The financial costshavebeen converted to economic costs by eliminatingprice contingency, taxes andcustoms duty on importedmaterials. Theresultingoverall economic cost is about 95 percent ofthe financial cost. Cuijiaying Shiplock and Waterway Transport 3. Overview: The HanRiver (1,567 km)is the largest andmost important tributaryof the Yangtze River. The Cuijiaying complex i s located on the middlereachesof the HanRiverin HubeiProvince andis the thirdof atotal ofnineshiplocks plannedbythe Hubei government along the HanRiver. The proposed lock i s a Class I11inaccordancewith the Chinese classification and can accommodate 1,000-ton ships. The current standardo f the navigation channeli s 500 tons andthe future standardfor which Cuijiayingi s beingdevelopedwill be 1,000 tons uponcompletion o fthe last shiplock (Yakou) downstream of Danjiangkouin2017. 4. Traffic analysis: Inlandwaterways are the cheapestandthe most environmental friendly of all transport modes, particularly for low-valuedry bulks: sand and gravel, cement and other construction materials, coal, fertilizer, ores, etc. There are manyquarries andmines inthe mountainous areas o fthe upstream HanRiver. These cargoes-making up 90 percent ofthe total rivertraffic-- are shipped to industrialandresidential users inthe downstream city ofWuhan (the provincial capital) andto the cities along the Yangtze River. However, the HanRiver carries only a small fraction of the 40 million tons o f cargo transported inthe Xiangfan-Wuhan area: in2003 ninepercent o fthe total. Most went byroad(75 percent). A lesser amount (16 percent) went bythe low-grade, single-track railwaybetween Xiangfan andWuhan. Rail traffic with other origins anddestinations bringstotal traffic onthat line to 18.8million tons peryear-- approachingthe line's design capacity of 20 million tons. The railway has no expansion plan dueto technical difficulties inthe mountainous areas west ofXiangfan. 5. These figures are summarized as follows: 41 2003 Total Traffic by Modes (`000 ton) IWW Railway Road Total Total Traffic: Downstream 2,574 3,236 16,803 22,613 Up stream 1,085 3,351 13,288 17,724 Total (a) 3,659 6,587 30.091 40,337 Modal split: 9yo 16% 75% 100% O fwhich Dry bulks Constructionmaterials 3,140 720 3,750 7,610 Coal 85 1,970 540 2,595 Ores 70 925 480 1,475 Subtotal (b) 3,295 3.615 4,770 11,680 @/a) 90% 55% 16% 29% Sources: HPCD, Bank staff 6. Traffic forecast: Inrecent years river traffic at the project site has grown 3-4 percent annually, slower thanthe local economy as awhole, which has grown at 7-8 percent per year. The waterway's capacity i s almost fully used. Unless the current bottleneck i s eased, some of the low-valueddry bulks will have to be transportedby other means or not sold at all. Basedon the traffic origiddestination estimates, the river traffic mayreach 8 million tons within five years ofthe dam's completion, from 3.7 million tons in2003. O fthese, 2.6 million tons are the demandfrom localquarries andmines. The inlandwaterway traffic forecast at the project site is summarized as follows: Actuals Forecasts 1995 2000 2003 2005 2010 2015 2020 Total Traffic (without the project): Up stream 582 765 1,085 1,190 1,440 1,850 2,270 Downstream 2,373 2,157 2,574 2,740 3,190 3,730 4,140 Total (a) I2,955 2,922 3,659 3,930 4,630 5,580 I 6,410 O fwhich Drybulks Constructionmaterials 1,987 2,356 3,140 3,360 3,955 4,700 5,330 Coal 233 79 85 90 105 115 125 Ores 274 78 70 80 110 145 185 3,530 4,170 4,960 5,640 90% 90% 89% 88% 3 Additional traffic demand (with the project) (c) 310 2,840 3,640 4940 8420 10050 Sources: HPCD, Bankstaff 7. Economic benefits: The expected shift o f traffic from smaller to larger vessels, includingcombinations o funpoweredbarges and a tow, will reduce the cost oftransport for the traffic that inany event would have usedthe river. Itwill also generateextra traffic of up to 3.6 million tons that otherwise would have to be carried by more costly transportmeans, or not at all. The estimated transport cost for using200-ton ships i s 1.5 U S cents per ton-km, whereas with the largest barges the unit cost o f transport canbebrought downbelow 0.5 cents. (This takes into 42 account the ship investment, depreciation, maintenance, operating andmanagementcosts.) By reference to recent experienceonthe HanRiver and inthe Pearl RiverDelta, a 60% growthin the average load ofvessels canbe expectedover eachfive-year period (roughly a 10%increase per year) from 2009 to 2022. Bythat time anaveragevesselloadof 800 tons wouldbereached. The average trip distanceis expectedto be about 560 km, which today typically costs $8-9 equivalent per ton. The average savingper trip ingoing from amix ofvessels of less than200 tons to amix averaging 400 tons by2015 i s estimated at $3.00 per ton, and a further saving of $1.80 per ton --for a total saving of $4.80 per ton-- whenthe entire riverup to Danjiangkou becomes accessibleto 1,000-ton vessels and combinations. Byfive years after opening ofthe shiplock, transport savings accruingto the Hubeieconomy are expectedto reach $18 millionper year, andto plateauby about 2022just short of $40 million per year. Power Station 8. Power market: In2003, the total power shortage for XiangfanCity --the project site-- was 1,138 GWh. Part of the local electricity hadto be imported from outside. The shortage threatens to get worse as the local economy continues to grow rapidly. The total annualpower generation o f Cuijiayingcomplex i s designedto be about 390 GWhby 2011(net of internal losses of 2%). All will be sold to the localpower company. Itwill beusedmainlyfor baseload duringwet (summer) monthsandpeak loadduringdry (winter) months. 9. Economic Benefits: The economic value o fthe incremental power to be generatedby the project i s estimatedby reference to the next cheapest alternative sources (a mix of coal and gas-fired thermal energy). All the major parametersandmethodologies used inquantifjmgthe economic benefits for the power station adhere to (or are scaledup from) those usedinthe economic evaluation of the Bank-financed "Hubei Hydropower Development inPoor Areas Project" (May 2002). One adjustment i s that Cuijiayingwill generate a larger share ofits output inpeakperiods; the other is anupdatinginthe expectedeconomicpriceof coalandoil. 10. The replaced energyby the proposed project consists of about 93 MW o f coal-fired thermal as base load, combined cycle gas as shoulder load and gas turbine as peak load. The economic value o fthe power i s estimated to be RMB 0.365 (4.4 U S cents) per kWh, or about $18 million per year. Reliable Irrigation 11. The improvement inthe reliability of irrigationwater supply i s expectedto be reflected in additional farm output. The total areaunder irrigatedcultivationi s about 118,000 ha. Current yields of rice, peanuts, etc. average 3.3 tons per hectare. It i s conservatively assumedthat this will improveby 15percent, that is, 0.5 extra tons per ha. The averagevalue oflocal farm production, net o f farmers' inputs, i s about $200 per ton. This gives an overall value o f about $12 million per year (23% of total benefits overall). EmissionReductions 12. Comparedwith the alternative o f coal- and gas-fbeled plants, the hydropower will reduce the emission of air pollutants: sulphur dioxide, nitrogenoxide, carbon dioxide and suspended 43 particulates (soot). The net local environmental benefits are estimated at about $1millionper year --about 2% o ftotal benefits. Project DesignAlternatives 13. Six alternatives were tested: three for the optimal scale ofoutput andthree for the selection ofthe project site. The final choiceswere selectedonthe basis ofthe geological conditions, the quantityofcivil works, themaximumpower output, thehigher ERandcoordination withthe local inlandwaterway networks. Details are available inthe feasibility studyreports. OverallEconomic Evaluation of the Project 14. TheoverallERofthe project rangesbetween 14 and22 percent, depending on expectationsabout the pace o fthe shift to larger vessels, the opportunity cost of electricity, and the inclusionor exclusion o f irrigationbenefits. The results, together with sensitivity tests and the switching values, are summarized as follows: ER,SensitivityTests andSwitch Value Summary m: EIRR(Yo) Total project - 22.2 Higher capital cost (+lo%) Sensitivitvtest: 20.8 No generatedtraffic 21.2 Completiondelayed by one year 20.3 Slower switch to larger barges 18.9 Omitting irrigationbenefits 18.1 Slower switchto larger barges, no irrigationbenefits 14.0 Switchingvalues: %increaseldecrease Cost increaseto reduce EIRRto 12%(a) +120% Benefit reductionto reduce EIRRto 12%(b) -55% Combine (c) and (d) to reduce EIRRto 12% Cost: +30%, benefits -40% 15. Project Risks: The mainrisk is ifthe navigation benefits do not materialize, either becausethe market fails to respondinsupplyinglarger vessels, or becauseincrementaltraffic i s not attractedaway from rail or roadtransport. B. FinancialAnalysis 16. Preface: The financial evaluation o fthe project comprises two sections: (a) an assessmento fthe revenue-earning entity --the power station-- focusing on its consolidated financial statement; (b) financial performance indicators and financial covenants. The financial cost of capital i s assumedto be 4.0 percent for the Bank loan (50.5 percent o ftotal capital); the equity portion (49.5 percent) i s not required to pay a dividend. 44 FinancialEvaluationof the Power Station 17. Operation. CCMO is a financially independententityresponsiblefor operatingthe entire Cuijiaying complex, not only day-to-day managementandoperation andmaintenancebut also loan repayment. Its revenuewill come solely fiom power sales; the provincial governmentwill regulate the power sales price. An officialdocument, issuedbyXiangfancity government, guarantees to purchaseall the power generatedbyCuijiaying at RMB0.42 / kwh(5.1 U S cents). This tariffwill besubjectto approvalbythe HubeiPricingCommissionbutisreasonable,inthat itis consistent with the currentpower pricingprinciples set byNDRC. Itis also intherangeoftariffs approved recently for smallhydro projects inwesternHubeiunderthe Bank-supportedHubeiHydropower Development inPoor Areas Project (on-going, launchedin2002). 18. Cash flow. Despitethe financial repayment pressures for the Bank's loanwhich start fiom 2011, the power station's cashflow shouldbe sufficient to meet all loanrepayment needs andnormaloperation andmaintenance. In2011, for example, revenues (net ofVAT) will be over $16 million but total working costs will barelyexceed $2 million. The annuityto repay the Bankloanwill bealittleunder $9 million. Operation andmaintenance expenses are expectedto grow gradually thereafter but the cashflow i s expectedto allow a debt service coverageratio remaining above 1.4. This will be aided ifmodest increasesinpower price are negotiated (10 percent for the first five years or 1.9percent per year and 15 percent or 2.8 percent per year for the subsequent five years). 19. Counterpart funds: HPCD hasreiteratedits full commitment to the project, guaranteeingits financial viability, releasing anofficial document to the Bank confirming its full financial support. 20. Financialinternalrate of return (FIRR): Withthe proposedpower sales price, the project should not need any external cash injection. The financial evaluation shows that the best estimateFIRRon total capital i s 6 percent. This should be expected, since the costing formula uponwhich the tariff i s basedallows for a returnon equity of 4 percentagepoints abovethe prevailingcost oflong-term debt, andthe interestrate on the Bank's loanwill beabout 4 percent. The planneddebt/equity ratio i s close to 50/50. Becauseo fthe low profitability inearly years, the FIRR andNPV will not changemuch ifcompletion i s delayed by one year. 21. The criticalvariables determiningfinancial viability are the power tariff, the power output, andinflationinoperation and maintenance. The tariff i s subject to final negotiation with the Xiangfanpower distributioncompany, and the HubeiPricingCommission has the power to impose a lower tariff. Power output could fall below forecast inthe event of drought or equipment breakdown (supply induced) or competitionfiom other generating companies (reduceddemand). Inefficient operation could lead to higher O&M expenditures. A further concern commonto hydropower projects i s that construction may take longer than the loan grace period. However, HPCD plans(credibly) to commission the first turbines within 4 years of starting construction, allowing ayear and a halfs cushionbefore the first repayment o fprincipal falls due. 45 MaintainingNavigation Conditions on the H a n River: FinancialRequirements 22. HPCDbudget forecasts show that the investment andmaintenance of the HanRiver waterway constitute only a small fraction of HPCD's fund flow. Basedon HPCD's financing plan, the capital investment for the waterway will requirelessthan7.3 percent ofits projected annual total revenue. Inaddition, the required operating cost ofthe waterway i s less than27 percent o fthe total maintenanceexpenditure o f HPCD. These low ratios indicate that the project presents a moderate financial risk as regardsthe availability of counterpart funds for the construction andmaintenanceofthe project waterway. HPCD:Investments, Revenue and Maintenance Expenditures (RMB million) 2005 2006 2007 2008 2009 2010 Investments and Revenue: Total Project Investment (a) 147 137 252 514 841 Total HPCD Revenue (b) 9,503 11,423 11,150 11,393 11,547 11,459 Ratios (a)/(b) 1.5% 1.2% 2.3% 4.5% 7.3% -- Maintenance Expenditures: Total Waterway Operation Cost (c) 8.7 48.3 Total Maintenance Expenditure (d) 140 150 159 170 180 Ratios (c)/(d) 5.2% 26.9% Sources: HPCD andBankstaff. 23, The total lengtho fnavigable inlandwaterways inHubeii s about 7,260 km. This length has not changedinyears andit i s not expectedto change duringthe 1lth Five-Year Plan(FYP, 2006-2010) andthe 12thFYP (2011-2015). The total maintenance expenditures allocated to inlandwaterways will beincreasedsteadily from 2006 to 2015. Basedon the available financial data, the averageannual increaseinspendingon inlandwaterways for the 1lth and the 12th FYP FYP will be 6.5 percent and7.9percent, respectively. Duringthe same period, the domestic inflation rate i s forecastedat under 3 percent. This means that the net increasesofmaintenance expenditure will be 3.5-5.0 percent annually during2006- 2015. This increasing trendwill enhancethe quality andlong-term sustainability ofthe inlandwaterway operations inHubei. FinancialPerformanceIndicators and FinancialCovenants 24. To ensurethat the project entities will have sufficient liquidity, assurances havebeen obtainedthat beginningin2005, HPCDwill prepareannually arolling five-year financial plan, whichwill be discussedwith the Bankspecifically withregardsto the projectedtotal revenueand the projectedtotal expenditures. 25. For financial monitoring, the operating ratio and debt service coverageratio were selected as financial performance indicators. Duringproject operation, these indicators will be closely monitored bythe Bank. A variance o f less than 15 percent from agreed financial forecasts will be acceptable. The Cuijiaying Complex is required by covenant to maintain an operating ratio of 70percent and a debt sewice ratio of at least 1.3. Inthe event that the targets are not achieved, HPCD will be called on to improve the Complex's financial performance to the extent possibleby increasing tariffs or reducingcosts or capital expenditures. However, this risk i s consideredmoderate. 46 China: FifthInlandWaterways Project Annex 10: Safeguard Policy Issues A. Social SafeguardIssues 1. Social assessment. A joint team conducted a social assessment inthe project areas. The social assessmentwas designedto include: (i) a project impact analysis, (ii) aspects ofthe gender project preparation, (iii)assessment o fpossible fishery impacts downstream, (iv) identify possible ethnic minority communities inthe project areas andrecommend necessaryactions in line with the Bankpolicy, and (v) project beneficiary assessment. 2. Basedon terms ofreference preparedby the World Bank, the team prepared aworking plan, guidelines for interviews andgroup discussions, andquestionnaires. The social assessment was conductedthrough i)desk analysis ofhistoricaldata, govemment statistics andacademic research; ii)sample field surveys through interviews, group discussions, questionnaire surveys andiii)analysisand documentationofthe findings. 3. Keyfindings are as follows, 0 The project dam is on the outskirts o f Xiangfan Municipality. Project works and the reservoir inundation would affect the urbanas well as rural areas. The project areahas experiencedincreasingdiversificationinemployment, with a clear drop o f labor force in plantingindustryandfarmingincome inoverall householdincome. 0 Adverse project impacts are mainly related to acquisition o f farmland andhouse impacts are mainly at the damsite. Land acquisition impact i s consideredrelatively small because: (i) o fthe affected lands are low-yieldingriverbank lands that are subject to most annual flooding, and (ii)non-farmincome hasbecome the primary source o fhousehold income. Most ofthe riverbanklandson the Yuliang Islands are cultivated on a leasebasis bymigrantfarmers fiom outsidethe provinces. Generally the leasesare annual. 0 Women play amoreprominent role inagriculture while menare engagedmore innon- farm employment. Womenhave demonstratedenthusiasminpublic affairs, particularly invillage politics. While theproject may affect women morethroughlandacquisition, it i s also seen as opening up non-farm employment opportunities for women with cash compensation. 75% of the women interviewed preferred cash compensation. Their concerns are over the adequacy o f compensation rates, and timely andtransparent payments. 0 Fisheryresourcesinthe HanRiverhavebeendecreasingover the years. There areboth formal and informal fishermen. The former are mostly operating on a family basis with their ownfishingboats. The project is seen ashavingbothnegative andpositiveimpacts on fisheries. The negative impacts are related to fish resource decrease and difficulties of fishing. Theproject is also seen as providing anopportunity witha larger water surface area for bigger fishery operations. The recommendations includereleaseo f fingerlings anddevelopment of cage fishing. 47 0 There are no ethnic minoritycommunities livinginthe project areas. e Theproposedproject offers multiplebenefits through improvednavigation conditions on the HanRiver andimprovedirrigationreliability. Direct project beneficiaries include people andbusinesses engagedinrivertransportation, farming communities inthe vicinity o fXiangfan and the localpopulation that would take advantageof employment opportunities under the project. 4. Land acquisition and resettlementplanning. The Complex will createa run-off reservoir. These activities will require acquisition of land, relocation of somehouses andpublic facilities. Hubei Communications Departmentestablishedajoint team for the resettlement planning,involving local governmentsand expert consultants. A resettlement action plan(RAP) was developed inline with local laws, policies andWorld Bank OP 4.12. Theplanningactivities included i)a detailed inventoryo fvarious different categorieso f impacts and census of affected people, tabulatedbyhouseholds andvillages, ii)a socioeconomic survey inthe project areas to analyzethe project impacts, understandthe socioeconomic background inthe project areas, iii)a social assessment inthe project areas andiv) consultations with the localpopulation. 5. TheRAP contains descriptions ofthe policy framework, adverseimpacts andaffected population. The project would require 2,643 ha ofpermanent landacquisition (96% of which are riverbank lands), and 95.9 ha oftemporary landacquisition. The project would also require the demolitiono f41,620 m2o fhouses, including23,790 m2o fprivatehouses. About 25,700 people in7,273 householdswouldbeaffectedbylandloss and261peoplein67 householdswouldbe affected byhouse demolition. Public facilities affected include drainage gates and stations, irrigation canals, pump stations, power and cable lines etc. Eight enterpriseswill bepartially affected. 6. The RAP documents the rehabilitation measuresdevelopedinconsultation with the affected villages and local governments. Various options havebeen discussedwith the affected people, includingredistributionofremaining land and cashpayments. Specific livelihood rehabilitation measureshave beendeveloped andrecommended for village groups. These options will be further discussed and finalized within the farmer groups for implementation. The 67 families losingtheir houses all plannedto buildtheir replacement houseswithin the same village. The villages will provide newresidential plots andthe specific house sites will be finalized through consultation o fthe affected households. All relocating households will be serviced with existingpublic facilities andinfrastructure. Five affectedbusiness families will be provided business sites along the street within the same village. The affected enterprises will receive cash compensation for their rehabilitation. All the affected public facilities will be redesignedand compensatedat reconstruction cost. The RAP also describes environmental measuresassociatedwith resettlement, engineeringmeasures for embankment protection, the reservoir clearanceplan and construction camp site managementmeasures. 7. The RAP also contains a detailed resettlement budget and financing plandeveloped on the basis o fthe inventory and compensation rates. The total resettlement budgeti s estimated at RMB 190.2 million, about $ 23 million. Resettlement will befinanced entirely from government funds. 48 8. TheRAP describes indetail arrangementsfor implementingthe resettlement. Hubei Province has establishedamulti-level organizational framework for the planningand implementation phases. This framework has resettlement offices at different levels of government, includingthe project level, prefecture/city and district. These offices have been staffed with experienced experts and their responsibilities have been specified inthe RAPS. The project officehas designedbothintemal andindependent mechanisms for montoring implementation ofthe resettlementplan. Intemalmonitoringwill be conducted through the resettlement offices at the various levels of government. 9. The RAP was preparedwith active participation o fthe affected population. The local governments, village leaders andthe affectedpopulationtook part inthe census, inventory, the finalizationof the damlocation, the compensation rates, the relocation andlivelihood development schemes. Project information andresettlement policies were disseminated among thembefore andduringthe consultationprocess. The affectedpopulation was systematically consulted through the social assessment andtheir feedbackhasbeenincorporated inthe RAP. The final draft RAP hasbeen placed inlocal libraries andits availability hasbeenannouncedin localnewspapers. The project office will prepare aResettlement InformationBooklet and distribute itto all affected households after the project appraisal. The project officehas designed a grievance redressmechanism. Any grievances will beredressedthrough the resettlement managementat different levels. The RAP contains detailed proceduresand a timeframe for grievance redress. This mechanism will be described inanddisclosed through the Resettlement InformationBooklet. B. Environmental Safeguard Issues A. Background 1. The Environmental Assessment (EA) for this project was carried out bythe Second Harbor Engineering Investigation & DesignInstitute(SHEIDI), which i s independentfrom the project owner, the HubeiProvince Communication Department (HPCD), interms of financial andpersonnel management. The TOR ofthe EIA were draftedby SHEIDIand approved bythe Bankas well asby SEPA. The draft EIA andEMP were reviewedbythe Bankandthe final versions were submitted to the Bank inDecember 2004. The revised draft EIA was submitted to SEPA inlate February 2005 for its final approval. B. BriefProject Description 2. Thisproject comprises (1) the construction of a 1,000-t-class navigation andpower generation complex and (2) capacitybuildingthrough technical assistance, studies and training. The complex is arun-of-river type damabout 18minheight and2.1 kminwidth, andincludes 90 MW power generators. 3. The complex is located 17kmdownstream of Xiangfan City, the second largest city in Hubei Province. The reservoir will extend33 kmupstreambeyond the city andits normal capacity will be 245 million m3.The inundation areawill be limitedto the areanow flooded seasonally(98 ha). 49 4. The HanRiver Development Planenvisages 16 dams on the river, amongwhich nineare inHubeiProvince andseveninShaanxiProvince. InHubeiProvince, two damshave already beenconstructed andthe Cuijiaying complex will bethe third. It i s independent fiom other dams interms ofengineeringandeconomics. Oneofthe existingdams, Danjiangkou,is located 142 kmupstreamofthe Cuijiayingcomplex anditsreservoirisbeingenlarged andwillbe 100times largerthanthe Cuijiayingcomplex. Accordingly, the design ofthe Cuijiaying complex will take into accountthe new hydraulic conditions to be createdbythe raisedDanjiangkouDam. C. ExistingEnvironment, PossibleImpacts, andMitigationMeasures 5. Protected areas. The project i s near the second largest city inHubei and hasbeenunder preparation for a longtime. The EIA report has confirmed that there were no protectednatural areas around the project site. The result was also confirmed by aWetland Directoryfiom IUCN andbya ChinaBiodiversity Reviewfiom the World Wildlife Fund. The areas to beinundated are composedof flood lands (75%), farm lands (18%), andindustrial use (6%). The major part o fthe inundation will occur at Yuliangzhou Island, which i s currently used as a commercial, residential, andtourist area. 6. Criticalnatural habitats and protected species. Inorder to identify critical natural habitats, SHEIDIconducted document surveys, four field surveys with the participation of two ecological experts fiom a localuniversity, andconsultation with local environmental andfishery authorities. As aresult, (1) one o fthe natural fish spawningbedswas found at the upper stream o fthe reservoir, and (2) one fish speciesthat belongs to the second-classo f nationallyprotected species, catostomid fish, hasbeenidentifiedinthe river. Inaddition, eel were identified as a migratory speciesto be impacted. Though they are targets of environmental protection, the EIA does not regard them as "critical" becausethey exist not only at the project site but also all along the middlereachesofthe river. A professor o fthe Aquatic Biological Institute ofthe Chinese Academy of Science, invitedas an external reviewer, endorsedthe results o fthe survey. 7. While impacts duringthe construction periodon the spawningbeds andfish species are expectedto be small, separation ofhabitats by the complex would have some impacts. Thus, the project will finance US$ 0.3 million for the construction o f a fish protectioncenter, which will be operatedbythe local fishery department. The center will hatchandrelease fiy ofthe affected species. A fishway will bebuiltinto the Cuijiaying dam to allow fish to swimupstream. 8. Culturalrelics. HPCD hiredthe HubeiProvincialInstitute o f Cultural Relics and Archeology to do a survey onthe impacts on cultural relics. This institute identifiedtwo ancient cemeteries that will be submergedon 2 ha each and recommendedexcavation andrelocation of tombs. Onei s located near the village o f Dukou and the secondis near the village o f Chenpo. The Dukousite is below the dambut inthe footprint ofthe cofferdam andwill be affected as early as July 2005. The other site will be submergedbythe reservoir when filled inJuly 2008. Accordingto "The ProgramReport of Cultural Relics Protectionon CuijiayingNavigationWater Power DamProject of HanRiver", revised January 24,2005 andprovided to the appraisal mission, the Dukou site will be excavatedinSeptemberand October 2005 and the excavation of the Chenpo site will take five months and i s forcastedto be finishedby the end of 2006. 50 9. The analysis and excavation ofthe sites will also be implemented by the HubeiProvincial Institute of CulturalRelics andArchaeology, under the leadership of the HubeiProvincial Cultural Relics Bureau. The work i s financed by HPCD from the landacquisitionbudget. The estimatedcost o f the analysis andexcavation is approximately RMB2.7 million ($0.3 million). 10. Provisions to protect the cultural heritage sites are includedinthe Environmental Management Plan. Construction ofthe cofferdam (inthe case o f the Dukou site) and filling of the reservoir (inthe case ofthe Chenpo site) will notbe allowed to proceed untilthe provincial cultural relics and archeology institute, under the guidance o fthe provincial cultural relics bureau, has explored each site andtaken appropriate measuresto relocate whatever itjudges warranted. Corresponding languagewill be includedinthe civil works contracts, coveringboth the known sites andchance findings. Chinese law, procedures and institutionalcapacity are well developed inthis area and fully meet the requirements of Bankpolicy. The safeguardsteam i s satisfied that proceduresbeingapplied are technically sound and appropriate. 11. Progressindealing with the two sites will bemonitoredbythe environmental monitoring unitandreportedto the BankinHPCD's twice-yearly progressreports. 12. Water pollution. Duringthe constructionperiod, necessarymitigationmeasuresto ensurenational emission standards will betaken includinginstallationo f sedimentation ponds, oil separators, and septic tanks for sewage. Duringthe operatingphase, the risk of eutrophication is rather small becausethe detention time o fthe reservoir i s very short, about two days, anda new public wastewater treatment facility, which will cover 60% of the city area population, will start to operatebythe timethe Cuijiaying complex is completed. 13. Water intakes. Upstream o fthe complex severalwater intakes will be inundated but manywater intakes will take advantageofthe increasedwater level. Belowthe damthe nearest water intake, which i s for industrialuse, i s located 1.5 kmaway. 14. Residential areas, schools, and hospitals. The nearest residential area is 400m west of the construction site and has a population of 206 people. Mitigation measuresfor dust andnoise prevention will betaken. There are no schools andhospitals near the site. 15. Materials transportation. The EIAhas identified quarries andborrow pits, and examined the impacts ofmaterials transportation. Residential areas along the major routes have been identifiedandprevention measuresfor noise anddust will betaken. 16. Dumpingsites. Inaccordance with consultation with local governments, dumpingsites havebeen selectedbehindthe riverbank. After the construction, the dumping sites will be covered with vegetation. The materials to be dumpedwill come from the dam construction and no dredgingwill be done. The wastes to be dumpedwill betested for heavy metals. 17. Vegetation. Vegetation around the construction site will bereinstated after the completion o fthe construction works. 18. Construction camps. An annual health check will be conducted for construction workers. The construction camps will be equipped with a drinkingwater facility and a 51 wastewater treatment facility. The sanitarysituation ofthe camp will be supervised frequently duringthe constructionperiod. 19. Transmission lines. The power plantwill be connectedto the gridfor the Xiangfan Prefecture lessthan 1km from the dam. Along the new alignment, there are no sensitive spots such as residential areas or natural habitats. No pesticides will beused. 20. Alternatives analysis. Duringthe preparation o f the project, several alternatives were examined interms o flocation andheight of the damas well as Without-Project alternative. Minimizingthe extent ofresettlementwas the major factor to determine the locationof the dam. The height o fthe dami s not so influential to the environmental protection because all the alternatives arebelow the natural flooding level. 21. Cumulative impacts. The EIA analyzed cumulative impacts o fthe plannednine dams in HubeiProvince andidentifiedthe hydraulic impact as the major one. There are amix oflarge reservoir-type dams, which would cause major impact on the hydrology, andrun-of-river type dams, which would havelittle impact. Generally speaking, the impacts of separationof fish habitats to be causedbythose cascadingdams would be limitedbecausethe distancesbetween dams arelarge enough for ordinary species, but some species that needhabitats of greater length would bemore seriously affected. However, practically speaking, there are no such species except for eels, as the DanjiangkouDam was constructed inthe 1960s. 22. Indirect impacts. The EIA analyzed indirectimpacts andidentifiedmotor vehicle industryas one example ofthe mostpositivelyimpacted areas, thanks to the shift ofheavy traffic fromroadsto the river. The EIA expectsno major environmental impacts from the future operation ofthe transport industry since their performance regarding compliance with environmental regulations i s satisfactory andthe modal shift oftraffic from roadto waterway would decrease pollution. D. EnvironmentalManagement Plan 23. Environmentalmonitoring. Duringthe construction and the operation phases, the project's actual impacts on the environment will bemonitored, to identifyunexpected environmental problems at an early stage, andto adjust environmental measuresas appropriate. Environmental monitoringwill be entrusted to a local environmental monitoringcenter. The results ofthe monitoringwill bereportedtwice-yearly to the Bank, bymid-February andmid- August eachyear starting with February2006, untilthe project is completed. 24. Institutionalarrangements and training. HPCD will assign staffresponsible for environment protection at eachlevel ofproject implementation, namely at the project office in HPCD, at the Chief Supervision Office, with the sectoral supervision divisions, andwith each contractor. To enhanceenvironmental protectionknowledge andskill, those staffwill receive intensivetraining. 25. Biddingdocuments. The EMP will be a part o fthe biddingdocuments andits implementation will belegally bindingon each contractor. 52 E. PublicConsultationandInformationDisclosure 26. A two-stagepublic consultation was carried out inaccordancewith the World Bank's guidelines: (a) shortly after environmental screeningandbeforethe terms o freference for the EAwere finalized (December 2003); and(b) after the draft EAreport was prepared(April 2004). The consultation was conductedthrough meetings with the localpeople at the project-affected towns andthrough surveys with questionnaires. Project-affected individuals, organizations of concernedvillagers, andvillage committees were intensivelyconsulted. The major concerns of the consulted people were relatedto the resettlement. 27. Inmid-December 2004 the EL4andEMP weredisclosed attheprojectsite (Xiangfan City) and HPCD (Wuhan City), as well as inthe Infoshop inWashington D.C. 53 China: FifthInlandWaterways Project Annex 11: Project Preparation and Supervision Planned Actual PCNreview June 9,2004 InitialPID to PIC June 23,2004 Initial ISDS to PIC June 30,2004 Appraisal January 24,2005 Negotiations August 29,2005 Board/RVP approval October 11, 2005 Planneddate o f effectiveness February 15,2006 Plannedclosing date June 30,201 1 HPCD preparedthe project, assistedby: (a) the HubeiCommunications Planning andDesign Institute; (b) the HunanWater Resources andHydropower Investigations, Design andResearch Institute for the engineering design ofthe Cuijiayingcomplex; (c) the SecondHarbor EngineeringInvestigation & DesignInstitute for the environmental safeguarddocuments; (d) BeijingUniversity for social surveys; and(e) Eastern ChinaPlanning& DesignInstitute for the RAP. Bank staffandconsultantswho workedonthe project included: Name Title Unit GrahamSmith Task Team LeadedSector Leader EASTR John Scales DeputyTeamLeadedSeniorTransport Specialist EASTR ZhangWenlai Transport Specialist EASTR Han-KangYen ResearchAnalyst EASTR XinChen ProgramAssistant EASTR EmmanuelPy Junior Professional Associate EASTR Xiaowei Guo Procurement Specialist EAPCO GengYi FinancialManagement Specialist EAPCO ChaohuaZhang Senior Social Sector Specialist EASSD Naoya Tsukamoto Senior Environmental Engineer EASEN KekChoo Chung Waterway Specialist Consultant Richard Scheiner Civil Engineer Consultant HongyunLiu Hydropower Specialist Consultant JiangDai Hydropower Specialist Consultant Maria Lourdes Pardo/ Lawyers LEGEA Margaret Png Bankfunds expendedto dateonproject preparation: 1. Bankresources: $330,000 2. Trust funds: 0 3. Total: $330,000 54 Estimated Approval and Supervision costs: 1. Remainingcoststo approval: $ 5,000 2. Estimated annual supervision cost: $65,000 55 China:FifthInlandWaterwaysProject Annex 12: Documentsinthe ProjectFile 1.ProjectMngt 2. Technical 56 2.17 Seismic RiskAssessment Report HPCD No Draft 1-Jul-94 Report 3. ProcurementII3.1 IRevisedProcurement Plan I Plan PMO Yes Draft 24-Jan-05 3.2 IRevisedProcurement Plan PMO II Yes II Draft II24-Jan-05 Schedule 4. Financial 4.1 FinancialMngt Manual Doc PMO No FirstDraft 31-Dec-04 5. Environment 5.1 EA Summary Report HPCD Yes 5.2 EIA Report 2nd Harbor Eng. Yes Investigation & Design Institute 5.3 EMP Report 2nd Harbor Eng. Yes Final 24-Jan-05 Investigation& Design Institute 5.4 The ProgramReport o f Report HubeiProvincial Yes Cultural Relics Protection Institute o f Final on Cuijiaying Navigation Cultural Relics Power DamProject o f the and HanRiver Archaeology 5.5 Outline Environmental Outline 2nd Harbor Eng. Yes Assessment Report Inv.&Design Institute 6. Social 6.1 RAP Report Huadong Yes Final 24-Jan-05 Investigation& Design Institute 6.2 Work Outline for Outline 2nd Harbor Eng. Yes Draft Mar. 2004 Resettlement Report Inv.& Design Institute 6.3 Social Assessment Report Social Survey Yes Final 24-Jan-05 Center o f Peking University andQuality ControlPlan 7.7 Preliminary Monitoring Plan HPCD Yes Draft 24-Jan-05 Equipment Plan 7.8 Safety andEmergency Plan HPCD Yes Final 24-Jan-05 Treatment Measure 57 China:FifthInlandWaterwaysProject Annex 13: Statement of Loans andCredits Differencebetween expectedandactual OriginalAmount inUS$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd PO57933 2005 CN-Tai BasinUrbanEnvironment 61.30 0.00 0.00 0.00 0.00 61.30 0.00 0.00 PO73002 2004 CN-BasicEducationinWestemAreas 100.00 0.00 0.00 0.00 0.00 99.34 -0.66 0.00 PO84003 2004 CN-GEF GUANGDONGPRDURB 0.00 0.00 0.00 10.00 0.00 10.00 0.00 0.00 ENV PO66955 2004 CN-ZHEJIANG URBANENVMT 133.00 0.00 0.00 0.00 0.00 133.00 0.00 0.00 PO65035 2004 CN-Gansu& Xinjiang Pastoral 66.27 0.00 0.00 0.00 0.00 64.41 7.08 0.00 Development PO69852 2004 CN-WuhanUrbanTransport 200.00 0.00 0.00 0.00 0.00 198.00 109.48 0.00 PO81749 2004 CN-HubeiShimanHighway 200.00 0.00 0.00 0.00 0.00 200.00 0.00 0.00 PO77615 2004 CN-GEF-Gansu& Xinjiang Pastoral 0.00 0.00 0.00 10.50 0.00 10.50 1.38 0.00 Develop PO77137 2004 CN-4thInlandWaterways 91.00 0.00 0.00 0.00 0.00 91.00 0.58 0.00 PO75602 2004 CN-2ndNationalRailways(Zhe-Gan 200.00 0.00 0.00 0.00 0.00 200.00 0.00 0.00 Line) PO75728 2004 CN-GUANGDONGPRD URENVMT 128.00 0.00 0.00 0.00 0.00 128.oo 0.00 0.00 PO65463 2004 CN -Jiangxi IntegratedAgric. Modem. 100.00 0.00 0.00 0.00 0.00 99.00 4.73 0.00 PO67337 2003 CN-2ndGEFEnergyConservation 0.00 0.00 0.00 26.00 0.00 14.60 19.42 0.00 PO68058 2003 CN-YixingPumpedStorageProject 145.00 0.00 0.00 0.00 0.00 132.52 -2.80 0.00 PO76714 2003 CN-2ndAnhui Hwy 250.00 0.00 0.00 0.00 0.00 247.50 25.08 0.00 PO40599 2003 CN-TIANJINURB DEV I1 150.00 0.00 0.00 0.00 0.00 143.82 5.33 0.00 PO58847 2003 CN-3rdXinjiang HwyProject 150.00 0.00 0.00 0.00 0.00 92.81 10.72 0.00 PO70441 2003 CN-HubeiXiaoganXiangfan Hwy 250.00 0.00 0.00 0.00 0.00 135.32 -19.68 0.00 PO70191 2003 CN-SHANGHAI URBENVMTAPLl 200.00 0.00 0.00 0.00 0.00 184.92 7.50 0.00 PO60029 2002 CN-Sustain.ForestryDev(Natura1 0.00 0.00 0.00 16.00 0.00 14.11 5.00 0.00 Forest) PO58846 2002 CN-Natl Railway Project 160.00 0.00 0.00 0.00 0.00 31.60 8.26 0.00 PO71147 2002 CN-TuberculosisControlProject 104.00 0.00 0.00 0.00 0.00 79.19 -24.81 0.00 PO70459 2002 CN-Inner MongoliaHwy Project 100.00 0.00 0.00 0.00 0.00 85.60 11.27 0.00 PO68049 2002' CN-Hubei HydropowerDevinPoor 105.00 0.00 0.00 0.00 0.00 79.75 17.08 0.00 Areas PO64729 2002 CN-SUSTAINABLEFORESTRYDEV 93.90 0.00 0.00 0.00 0.00 71.77 8.94 0.00 PROJECT PO56199 2001 CN-3rdInlandWaterways 100.00 0.00 0.00 0.00 0.00 71.36 7.02 0.00 PO51859 2001 CN-LIAORIVERBASIN 100.00 0.00 0.00 0.00 0.00 59.00 27.24 0.00 PO47345 2001 CN-HUAI RIVERPOLLUTION 105.50 0.00 0.00 0.00 0.00 81.08 -24.42 0.00 CONTROL PO56516 2001 CN - WATER CONSERVATION 74.00 0.00 0.00 0.00 0.00 31.14 7.24 0.00 PO56596 2001 CN-ShijiazhuangUrbanTransport 100.00 0.00 0.00 0.00 0.00 85.41 60.04 0.00 PO58845 2001 Jiangxi I1Hwy 200.00 0.00 0.00 0.00 54.77 57.14 7.25 0.00 PO45915 2001 CN-UrumqiUrbanTransport 100.00 0.00 0.00 0.00 0.00 46.16 46.16 0.00 PO49436 2000 CN-CHONGQING URBAN ENVMT 200,oo 0.00 0.00 0.00 3.70 146.15 76.65 0.00 58 PO58843 2000 GuangxiHighway 200.00 0.00 0.00 0.00 0.00 87.29 45.19 0.00 PO42109 2000 CN-BEUINGENVIRONMENTI1 349.00 0.00 0.00 25.00 0.00 276.92 193.74 0.00 PO45910 2000 CN-HEBEIURBANENVIRONMENT 150.00 0.00 0.00 0.00 0.00 112.00 51.50 0.00 PO58844 2000 31dHenan Prov Hwy 150.00 0.00 0.00 0.00 0.00 43.61 23.94 0.00 PO64924 2000 CN-GEF-BEUING ENVMTI1 0.00 0.00 0.00 25.00 0.00 23.32 20.76 6.17 PO64730 2000 CN Yangtze Dike Strengthening - 210.00 0.00 0.00 0.00 0.00 102.43 102.43 0.00 Project PO45264 2000 CN-SMALLHLDR CATTLEDEV 93.50 0.00 0.00 0.00 0.00 8.15 3.76 0.00 PO56424 2000 CN-TONGBAIPUMPEDSTORA 320.00 0.00 0.00 0.00 100.00 136.86 111.22 0.00 PO58308 1999 CN-PENSIONREFORMPJT 0.00 5.00 0.00 0.00 0.00 1.16 1.17 0.00 PO43933 1999 CN-SICHUANURBANENVMT 150.00 2.00 0.00 0.00 0.00 84.94 85.43 29.36 PO57352 1999 CN-RURAL WATER N 16.00 30.00 0.00 0.00 0.00 18.25 15.23 11.19 PO03653 1999 CN-ContainerTransport 71.00 0.00 0.00 0.00 18.61 2.71 21.32 0.63 PO41268 1999 CN-Nat Hwy4iHubei-Hunan 350.00 0.00 0.00 0.00 0.00 37.87 28.71 0.00 PO38121 1999 CN-GEF-RENEWABLEENERGY 0.00 0.00 0.00 35.00 0.00 21.87 30.28 11.80 DEVELOPMENT PO60270 1999 CN-ENTERPRISEREFORMLN 0.00 5.00 0.00 0.00 0.00 2.25 3.75 3.53 PO36953 1999 CN-HEALTH IX 10.00 50.00 0.00 0.00 0.00 31.38 22.26 -0.91 PO41890 1999 CN-LiaoningUrbanTransport 150.00 0.00 0.00 0.00 0.00 23.52 23.52 0.00 PO42299 1999 TEC COOP CREDIT N 10.00 35.00 0.00 0.00 0.00 34.23 -12.39 0.00 PO51705 1999 FujianI1Highway 200.00 0.00 0.00 0.00 0.00 43.45 43.45 0.00 PO50036 1999 AnhuiProvincialHwy 200.00 0.00 0.00 0.00 9.60 20.23 29.83 0.00 PO49665 1999 CN-ANNING VALLEY AG.DEV 90.00 30.00 0.00 0.00 0.00 15.79 11.95 0.00 PO46564 1999 CN - Gansu & InnerMongoliaPoverty 60.00 100.00 0.00 0.00 13.30 30.71 27.54 -9.97 Red. PO46829 1999 RENEWABLEENERGY 100.00 0.00 0.00 0.00 0.00 12.87 99.87 10.00 DEVELOPMENT PO46051 1999 CN-HIGHER EDUC. REFORM 20.00 50.00 0.00 0.00 0.00 5.69 7.31 0.00 PO51856 1999 ACCOUNTING REFORM& 27.40 5.60 0.00 0.00 0.00 17.60 17.51 0.00 DEVELOPMENT PO51888 1999 CN- GUANZHONGIRRIGATION 80.00 20.00 0.00 0.00 0.00 21.30 18.50 0.00 PO56216 1999 CN - LOESS PLATEAUI1 100.00 50.00 0.00 0.00 0.00 14.86 17.00 -3.49 PO36414 1998 CN-GUANGXIURBANENVMT 72.00 20.00 0.00 0.00 10.19 58.34 66.60 32.52 PO03619 1998 CN-2ndInlandWaterways 123.00 0.00 0.00 0.00 37.00 15.35 52.35 2.66 PO46563 1998 CN TARIM BASINI1 - 90.00 60.00 0.00 0.00 2.67 2.55 5.85 0.00 PO35698 1998 HUNAN POWERDEVELOP. 300.00 0.00 0.00 0.00 145.00 21.52 166.52 -9.25 PO03614 1998 CN-GuangzhouCity Transport 200.00 0.00 0.00 0.00 20.00 100.31 120.31 100.31 PO03606 1998 ENERGYCONSERVATION 63.00 0.00 0.00 22.00 0.00 30.50 18.00 0.00 PO45788 1998 Tri-ProvincialHwy 230.00 0.00 0.00 0.00 0.00 15.58 15.58 0.00 PO51736 1998 E. CHINNJIANGSU PWR 250.00 0.00 0.00 0.00 86.00 40.55 126.55 16.12 PO49700 1998 CN- IAIL-2 300.00 0.00 0.00 0.00 0.00 1.65 1.65 1.05 PO37859 1998 CN-GEF EnergyConservation 0.00 0.00 0.00 22.00 0.00 0.71 22.06 0.00 PO03539 1998 CN- SUSTAINABLE COASTAL 100.00 0.00 0.00 0.00 2.06 43.92 45.98 -0.40 RESOURCESDEV. PO46952 1998 CN -FOREST.DEV. POOR AR 100.00 100.00 0.00 0.00 0.00 21.97 -77.09 10.80 PO40185 1998 CN-SHANDONGENVIRONMENT 95.00 0.00 0.00 0.00 1.40 20.07 21.47 11.30 PO03566 1998 CN-BASIC HEALTH(HLTH8) 0.00 85.00 0.00 0.00 0.00 34.49 24.31 0.00 PO36949 1998 CN-NatHwy3-Hubei 250.00 0.00 0.00 0.00 0.00 21.15 21.15 0.00 PO03590 1997 CN - QINBAMOUNTAINS POVERTY 30.00 150.00 0.00 0.00 0.00 3.20 6.55 -0.07 REDUCTIOK PO03637 1997 CN-NAT'L RURAL WATER 3 0.00 70.00 0.00 0.00 0.00 0.56 3.77 3.35 59 PO36405 1997 CN - WANJIAZHAI WATERTRA 400.00 0.00 0.00 0.00 75.00 13.07 88.07 1.09 PO03650 1997 TUOKETUOPOWEWINNER 400.00 0.00 0.00 0.00 102.50 29.50 132.00 29.50 PO44485 1997 SHANGHAIWAIGAOQIAO 400.00 0.00 0.00 0.00 0.00 70.45 48.55 51.67 PO40513 1996 20dHenanProvHwy 210.00 0.00 0.00 0.00 19.00 12.88 31.88 24.88 PO03594 1996 CN - GANSUHEX1CORRIDOR 60.00 90.00 0.00 0.00 0.00 71.13 60.31 0.00 PO03599 1996 CN-%"AN ENVMT 125.00 25.00 0.00 0.00 19.48 35.68 56.92 18.43 PO34618 1996 CN-LABOR MARKETDEV. 10.00 20.00 0.00 0.00 0.00 5.48 7.61 0.00 PO03602 1996 CN-HUBEIURBANENVIRONMENT 125.00 25.00 0.00 0.00 47.32 17.07 66.43 5.44 PO03639 1995 CN-SOUTHWEST POVERTY 47.50 200.00 0.00 0.00 0.01 1.26 25.36 25.36 REDUCTIONPROJECT PO03571 1995 CN-7th Railways 400.00 0.00 0.00 0.00 119.00 10.28 129.28 10.28 PO03603 1995 CN-ENT HOUSING& SSR 275.00 75.00 0.00 0.00 57.46 38.05 93.43 9.75 PO03596 1995 CN-YangtzeBasinWater Resources 100.00 110.00 0.00 0.00 1.92 0.21 4.60 4.60 Project PO03540 1994 CN-LOESSPLATEAU 0.00 150.00 0.00 0.00 0.00 0.71 0.04 0.00 PO03632 1993 CN-ENVIRONMENTTECHASS 0.00 50.00 0.00 0.00 0.00 0.86 1.44 1.12 Total 11,829.37 1,612.60 0.00 191.50 945.99 5,155.81 2,833.99 408.82 CHINA STATEMENT OFIFC's Held and Disbursed Portfolio InMillionsofUS Dollars Committed Disbursed IFC IFC FYApproval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2002 ASIMCO 0.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00 2003 Anjia 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 2004 Antai 40.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 BCB 0.00 0.00 11.60 0.00 0.00 0.00 0.00 0.00 1999100102 Bankof Shanghai 0.00 24.67 0.00 0.00 0.00 24.67 0.00 0.00 2002 CDHChinaFund 0.00 12.20 0.00 0.00 0.00 1.20 0.00 0.00 2003 CSMC 0.00 12.00 0.00 0.00 0.00 9.60 0.00 0.00 2004 CUNAMutual 0.00 12.00 0.00 0.00 0.00 1.47 0.00 0.00 1998 ChengduH m n g 5.61 3.20 0.00 6.25 5.61 3.20 0.00 6.25 1998 Chengxin-IBCA 0.00 0.06 0.00 0.00 0.00 0.06 0.00 0.00 1992 ChinaBicycles 4.50 0.00 0.00 0.00 4.50 0.00 0.00 0.00 2004 ChinaGreen Ener 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 ChinaII 28.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 ChinaReLife 0.00 15.41 0.00 0.00 0.00 15.41 0.00 0.00 1994 ChinaWaldenMgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2004 ColonyCapital 0.00 17.31 0.00 0.00 0.00 0.00 0.00 0.00 2004 ColonyChina 0.00 0.96 0.00 0.00 0.00 0.00 0.00 0.00 2002 Darong 10.00 1.50 0.00 8.00 0.00 0.00 0.00 0.00 1995 Dupont Suzhou 6.23 0.00 0.00 0.00 6.23 0.00 0.00 0.00 1994 DynamicFund 0.00 7.91 0.00 0.00 0.00 6.25 0.00 0.00 2004 Fenglin 19.00 6.00 0.00 18.00 0.00 0.00 0.00 0.00 60 2003 Great Infotech 0.00 3.50 0.00 0.00 0.00 2.80 0.00 0.00 2002 HuarongAMC 9.00 2.51 0.00 0.00 9.00 0.01 0.00 0.00 2004 IB 0.00 52.18 0.00 0.00 0.00 52.18 0.00 0.00 2002 IEC 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 Jiangxi Chenming 0.00 12.90 0.00 0.00 0.00 0.00 0.00 0.00 1998 LeshanScam 3.46 1.35 0.00 0.00 3.46 1.35 0.00 0.00 2001 MaanshanCarbon 8.25 2.00 0.00 0.00 8.25 2.00 0.00 0.00 2001 MinshengBank 0.00 23.50 0.00 0.00 0.00 23.50 0.00 0.00 2001 NCCB 0.00 26.58 0.00 0.00 0.00 26.46 0.00 0.00 1996104 NanjingKumho 34.00 2.23 0.00 0.00 0.00 0.00 0.00 0.00 2001 NewChinaLife 0.00 30.70 0.00 0.00 0.00 23.32 0.00 0.00 1995 Newbridge Inv. 0.00 1.95 0.00 0.00 0.00 1.95 0.00 0.00 1997 Orient Finance 5.71 0.00 0.00 7.14 5.71 0.00 0.00 7.14 2003 PSAM 0.00 1.93 0.00 0.00 0.00 0.00 0.00 0.00 1997100 PTPHoldings 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 2001 PeakPacific 0.00 0.00 25.00 0.00 0.00 0.00 0.00 0.00 2003 SAIC 12.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2004 SIBFI 0.00 0.08 0.00 0.00 0.00 0.00 0.00 0.00 2000 SSIF 0.00 4.50 0.00 0.00 0.00 1.02 0.00 0.00 1998 ShanghaiKrupp 26.25 0.00 0.00 57.74 26.25 0.00 0.00 57.74 ShanghaiMidway 0.00 16.02 0.00 0.00 0.00 16.02 0.00 0.00 1999 Shanxi 15.16 0.00 0.00 0.00 12.61 0.00 0.00 0.00 1993 ShenzhenPCCP 3.76 0.00 0.00 0.00 3.76 0.00 0.00 0.00 2002 Sin0Gold 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 2001 Sino-Forest 20.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 1995 SuzhouPVC 0.00 2.48 0.00 0.00 0.00 2.48 0.00 0.00 2000 Wanjie Hospital 12.27 0.00 0.00 0.00 12.27 0.00 0.00 0.00 1996 Weihai Weidongri 0.69 0.00 0.00 0.00 0.69 0.00 0.00 0.00 2004 Wumart 0.00 6.48 0.00 0.00 0.00 6.48 0.00 0.00 2003 XACB 0.00 19.94 0.00 0.00 0.00 0.00 0.00 0.00 2004 Xinao Gas 25.00 10.00 0.00 0.00 25.00 10.00 0.00 0.00 1993 Yantai Cement 3.13 0.00 0.00 0.00 3.13 0.00 0.00 0.00 2003 Zhengye-ADC 15.00 0.00 0.00 7.00 6.14 0.00 0.00 2.86 2002 ZhongChen 0.00 5.00 0.00 0.00 0.00 0.00 0.00 0.00 Totalportfilio: 347.02 355.09 36.60 104.13 152.61 247.47 0.00 73.99 61 Approvals PendingCommitment ~~ FY Approval Company Loan Equity Quasi Partic. 2002 ASIMCO 0.00 0.00 0.01 0.00 2004 Antai 0.00 0.00 0.00 0.04 2004 CCB-MS NPL 0.00 0.00 0.00 0.00 2003 Cellon 0.00 0.01 0.00 0.00 2004 ChenmingLWC 0.06 0.00 0.00 0.16 2004 ChinaGreen 0.00 0.00 0.01 0.00 2002 HuarongAMC 0.02 0.00 0.00 0.00 2002 IEC 0.00 0.00 0.01 0.00 2002 KHF 0.00 0.00 0.00 0.00 2004 NCFL 0.00 0.02 0.00 0.00 2003 PeakPacific2 0.00 0.01 0.00 0.00 2004 SIBFI 0.00 0.00 0.00 0.00 2002 SML 0.00 0.00 0.00 0.00 2002 Sino Mining 0.01 0.00 0.00 0.01 2002 ZhongChen 0.00 0.00 0.00 0.03 Total pendingcommitment: 0.09 0.04 0.03 0.24 62 CN-FifthInlandWaterways Project Annex 14: Country at a Glance East Lower- POVERTY and SOCIAL Asia & middle- China Pacific income Development diamond' 2002 Population, mid-year (millions) 12810 1838 2,411 Lifeexpectancy GNIpercapita (Atlas method, US$) 950 950 1390 GNI(Atlas method, US$ billions) 128.1 1740 3,352 T Average annual growth, 1996-02 Population(%) 0.8 10 t O Labarforce@) 0.9 12 22 Gross M o s t recent estimate (latest year available, 1996-02) primary capita enrollment Poverty(%of populationbelownatlonalpovertyline) 5 Urbanpopulation (%offotalpopulation) 38 38 49 Lifeemtancy at birth(pars) 71 69 69 i Infant mortality (per~OWlive births) 30 33 30 Childmalnutrition (%of childrenunder5) n 15 11 Access to improvedwater source Access to animprovedwater source (%ofpopulation) 75 76 81 Nliteracy(%ofpopu/afionage 159 14 U U Gross primaryenrollment (%ofschoolagepopulation) a 6 n 6 111 -China Male a5 0 5 111 Low-middie-income group Female n 8 0 6 in ~ KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 1992 2001 2002 GDP (US$ billions) Economic ratios' 2215 454.6 167.1 1,232.7 Gross domestic investmentlGDP 332 36.2 38.5 410 worts of goods and ServicesiGDP 8.9 8.5 25.5 29.5 Trade Gross domestic savingslGDP 34.8 37.7 40.9 44.0 Gross nationalsavingslGDP 35.1 38.0 40.0 43.8 Current account balanceiGDP 2A 19 15 2.9 Domestic InterestpaymentslGDP 0.2 0.6 0.5 0.5 savings investment Total debtlGDP 3.8 15.9 14.6 P.6 Total debt servicelexports 8.0 8.6 7.7 6.1 i Presentvalueof debt/GDP 14.1 Presentvalueof debffexports 518 Indebtedness 1982-92 1992-02 2001 2002 2002-06 (everageannualgrowth) GDP 9.7 9.0 7.5 8.0 7.5 -China GDP percapita 8.1 8.0 6.7 7.2 6.6 Lowr-middle-income aroUD ~ ~1 STRUCTURE o f the ECONOMY 1982 1992 2001 2002 Growth o f investment and GDP (%) (%of GDP) Agriculture 33.3 218 15.8 14.5 Industry 45.0 43.9 50.1 51.7 Manufacturing 37.3 33.1 34.2 44.5 Services 21.7 34.3 34.1 33.7 Private consumption 50.7 49.2 45.7 42.5 Generalgovernmentconsumption 14.5 0.1 13.4 us Imports of goods and services 7.3 18.0 23.1 26.5 -GDI -GDP 1982-92 1992-02 Iroi 2001 2002 (averageannualgrowth) Growth of exports and imports (%) I Agriculture 4.6 3.7 2.8 2.9 industry 11.6 113 8.4 9.9 Manufacturing 112 n.4 9.0 8.1 'to Services 117 8.4 8.4 7.3 Privateconsumption 114 8.1 2.8 1.9 Generalgovernment consumption 9.9 8.4 n.5 7.O 1 97 98 99 00 Gross domestic investment 9.5 9.7 u.9 14.9 Importsof goods and services 9.7 P.8 n.8 27.5 -Exports -Imports 63 I 1992 2001 2002 G 4 Q P -0n 1 9 la 3tt w 7 771 b@ 2 8 11 ra -4 7 onu 3 1392 2001 2082 Export and import twots [US$ miff f dug))iI! 4 $80 %a%?> a1a49 87,030 78 ilb BY 5942 2401 2002 w i774 1?>422 4 9 24 220051 287 731 8.5 83 Ei;' EXTERNAL DEBT Ifid R f S Q U R C E FLOWS 2982 1492 2801 2402 (US Campositidn of 20#2 d4bi (US$ mifi ) Tot 72128 iBRD u 5 IDA 1 J A: l2.331:1 8 6 6 .le0 50 I . . 24u rm China: FifthInlandWaterwaysProject Maps IBRD33930 FifthInlandWaterways Project IBRD33931 FifthInlandWaterways Project-Water SystemontheHanRiver IBRD33932 FifthInlandWaterways Project-GeneralLayout ofthe CuijiayingNavigation& Hydropower Complex IBRD34053 FifthInlandWaterways Project-Impact ofReservoir Inundation 65 100° 110° RUSSIAN FEDERATION CHINA FIFTH INLAND WATERWAYS Gulian HEILONGJIANG PROJECT MONGOLIA Mangui JILIN Sea of MAJOR NAVIGABLE WATERWAYS XINJIANG Mordaga Japan MONGOL LIAONING JAPAN Heihe D.P.R. OF RIVER PORTS NEI BEIJING KOREA BEIJING PREVIOUS BANK FINANCED RIVER PORTS TIANJIN HEBEI SEA PORTS Wuyiling REP. OF 50° 50° KOREA SHANXI PREVIOUS BANK FINANCED SEA PORTS SHANDONG Yellow Manzhouli NINGXIA Tongjiang QINGHAI Bei'an Sea PREVIOUS BANK FINANCED SHIPLOCKS Hailar Hegang GANSU PREVIOUS CHANNEL IMPROVEMENTS SHAANXI HENAN JIANGSU Shuangyashan Songling Jiamusi East Qiqihar ANHUI MAJOR ROADS Cuijiaying Dam Suihua R. SHANGHAI China HEILONGJIANG Sea Hulin EXISTING RAILWAYS XIZANG Yirshi Anda HUBEI SICHUAN Han ZHEJIANG Jixi SELECTED CITIES CHONGQING For details, see Harbin PROVINCE CAPITALS IBRD 33931 Mudanjiang Baicheng GUIZHOU HUNAN JIANGXI NATIONAL CAPITAL National FUJIAN Suifenhe Capital PROVINCE BOUNDARIES YUNNAN TAIWAN Province GUANGXI GUANGDONG Jilin INTERNATIONAL BOUNDARIES PACIFIC Boundaries Changchun MYANMAR HONG KONG Tumen International MACAO Tongliao JILIN OCEAN Boundaries LAO VIETNAM Songjianghe P.D.R. Siping HAINAN PHILIPPINES Erenhot MONGOLIA Yuanbaoshan 120° Fuxin Fushun 130° Huade LIAONINGShenyang 40° Liaoyang MONGOL Benxi Jinzhou Anshan NEI Sea Yingkou Dandong of Jining DEM. PEOPLE'S Hohhot Zhangjiakou Japan BEIJING REP. OF KOREA To Urumqi Baotou Datong Qinhuangdao BEIJING Yumen Dalian Tianjin Tangu Bo Hai Shizuishan TIANJIN Shenmu HEBEI Yinchuan REP. OF Shijiazhuang Yantai Shengli KOREA Wuwei Zhongwei Taiyuan Hengshui Dezhou NINGXIA Zibo Huang Xining Yan'an (Yellow Jinan SHANXI Handan Heze SHANDONG Qingdao River) Changzhi He Yanzhou Shijiusuo Yellow QINGHAI Lanzhou Houma Jiaozuo Xeitai No.2 (IWW2) Zaozhuang Grand Yueshan Kaifeng Shangqiu Lianyungang Sea GANSU Tongchuan Canal Pixian Xuzhou SHAANXI Luoyang Zhengzhou Suqian No.3 (IWW2) Tianshui Baoji Xi'an Huaibei Huanyin No.3 (IWW2) For detail, see Pingdingshan Huanian No.3 (IWW2) IBRD 33931 JIANGSU HENAN Mengmiao Jianbi No.2 (IWW2) Bengbu Fuyang Huainan Zhenjiang Yangpingguan Nantong Ankang Nanjing Zhangjiagang Han River Wuxi Xiangfan Hefei Wuhu Shanghai 30° HUBEI Cuijiaying ANHUI Huzhou Jiaxing Dam Tongling Channel Improvements East Chang Jiang (Yangtze (IWW1) Wuhan Anqing Hangzhou Ningbo XIZANG Chengdu River) Huangshi Bailutang China Zhicheng ZHEJIANG 30° SICHUAN Da Xian Jiujiang Jingdezhen Sea Chongqing Shimun Chenglingji Zigong Xingtanbian Xiaonanhai Nanchang Zhuzhou Dam/ Wenzhou Luohuang Changsha Shiplock (IWW3) Yibin Yingtan Xiangtan JIANGXI Zhuzhou Xichang Huaihua HUNAN Pingziang Shaowu Channel Jiuchang Zhijiang Channel Imp.(IWW3) Improvements Dayuandu Dam Laizhou (IWW1) GUIZHOU (IWW1) Hengyang Fuzhou ANMAR Guiyang Panzhihua Le An Yong'an FUJIAN MY Dongchuan Zhangping Hongshui Guilin Xiamen Kunming He Xiniu Dam Meixian TAIWAN YUNNAN Right River Liuzhou Naji Dam GUANGDONG Shantou Baise GUANGXI Wuzhou Longchuan Dam (Youjiang) Guiping Guangzhou (BMP) Guigang Xijiang Shenzhen Hong Kong Channel River NanningYujiang HONG KONG Improvements Left Channel Improvements (IWW4) (IWW4) MacaoMACAO (Zuojiang) 20° Maoming Channel Improvements (IWW2) ANMAR Beihai Guigang Dam (IWW1) Channel Shanjiang MY VIETNAM Improvements 0 100 200 300 400 500 MILES (IWW1) 0 200 400 600 800 KILOMETERS 20° LAO PEOPLE'S Haikou This map was produced by the Map Design Unit of The World Bank. IBRD AUGUST DEM. REP. HAINAN The boundaries, colors, denominations and any other information THAILAND shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any PHILIPPINES 33930 endorsement or acceptance of such boundaries. 2005 100° 110° 120° IBRD 33931 106° 107° 108° 110° 111° 112° 113° 114° This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Zhouzhi XI'AN Group, any judgment on the legal status of any territory, or any 34° endorsement or acceptance of such boundaries. 34° Feng Xian S H A A N X I GANSU Shang Xian Dan H E N A N Jiang Danfeng Liuba He Bao HeiHe Xushui Lueyang iuhS Xun QianyouH He e Huangjin Yang Xian Jinqian He Gorge Shiquan He Xi Ziwu 33° YudaiHe Hanzhong Shiquan anuhC 33° Xi River Nanyang Yunxi Shu River Zhumadian Jiahe RIver River Muma He H anRiver Han Xunyang Gushan River Ankang Shiyan Nanyang He Danjiangkou Bai He Guangyuan Ankang uDHe Danjiangkou Tang Huai He Laohekou Wangfuzhou S I C H U A N Zhushan Xinji Xinyang 32° Fang Xian N anHe 32° Xiangfan Cuijiaying Shipping and Hydropower Project RUSSIAN Suizhou FEDERATION Yakou Yun Shui HEILONGJIANG C H O N G Q I N G H U B E I MONGOLIA Dafu JILIN Nianpanshan Shui CHINA 31° LIAONING WATER SYSTEM ON Chang Jiang Yingcheng MONGOL D.P.R. OF Xiaogan Daxian (Yangtze Jingmen Han 31° NEI BEIJING KOREA BEIJING THE HAN RIVER Wanxian River) River HEBEI TIANJIN REP. OF Yichang CUIJIAYING DAM Tianmen SHANXI Yellow KOREA Huajiawan SHANDONG Sea EXISTING DAMS QINGHAI NINGXIA Xinglong JIANGSU FUTURE DAMS WUHAN GANSU SHAANXI HENAN East ANHUI TANGDONG IRRIGATION AREA China Zhicheng Xiantao Area of Shashi SHANGHAI S/N WATER TRANSFER AQUEDUCT Map HUBEI Sea Enshi SICHUAN HAN RIVER BASIN ZHEJIANG River) 30° RIVER PORTS 30° CHONGQING JIANGXI HUNAN (Yangtze GUIZHOU FUJIAN SELECTED CITIES YUNNAN TAIWAN PROVINCE CAPITALS GUANGXI GUANGDONG PACIFIC NATIONAL ROADS CHONGQING HONG KONG OCEAN Chang Jiang MACAO RAILROADS 0 25 50 75 Kilometers LAO VIETNAM PROVINCE BOUNDARIES P.D.R. H U N A N 106° HAINAN 107° PHILIPPINES 108° 109° 0 25 50 Miles 111° 112° 113° 114° AUGUST 2005 CHINA GENERAL LAYOUT OF THE CUIJIAYING NAVIGATION & HYDROPOWER COMPLEX Administrative Buildings Shiplock Ac cess Earthen Road Sluice Gates Dam Power House 0 100 200 300 400 500 METERS This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Huangjin Gorge 450 450 Shiquan LEGEND: 410 400 River Xi Existing Complex 362 Ankang Future Complex 350 330 (m) 300 Xunyang River RIver 250 240 Level Shu 218 Jiahe Gushan 196 181 200 IWW5 170 (final) Water Danjiangkou Cuijiaying 157 (earlier) 150 Wangfuzhou 100 88 Xinji 78 Yakou Shaanxi Hubei Nianpanshan 64 Huajiawan 57 Xinglong 50 Province Province 51 42 36.5 1300 1250 1200 1150 1100 1050 1000 950 900 850 800 750 700 650 600 550 500 450 400 350 300 IBRD Distance from Yangtze River (Wuhan) (km) MAY 33932 2005 IBRD 34053 To Gaoying To Gaoying CHINA IMPACT OF RESERVOIR INUNDATION 62.23 METERS (ALTERNATIVE ANALYZED) To Shuanggou 62.73 METERS (LEVEL ADOPTED) 63.23 METERS (ALTERNATIVE ANALYZED) URBAN ZONES MAIN ROADS RAILROADS To Taipingdian To Wanxian To Wanxian To Calyangpu To Shuanggou To Guanghua Han RUSSIAN FEDERATION River XIANGFAN HEILONGJIANG XIANGYANG To Yushan MONGOLIA JILIN Sea of Japan MONGOL LIAONING JAPAN CHINA NEI D.P.R. OF BEIJING KOREA BEIJING TIANJIN HEBEI REP. OF KOREA SHANXI SHANDONG Yellow QINGHAI NINGXIA Sea GANSU SHAANXI HENAN JIANGSU CuijiayingANHUI East Dam R. SHANGHAI China Sea SICHUAN HUBEI Han ZHEJIANG PACIFIC CHONGQING OCEAN To Fang-Chia-Chi 0 500 1000 1500 2000 GUIZHOU HUNAN JIANGXI FUJIAN National METERS Cuijiaying YUNNAN TAIWAN Capital (scale approximate) GUANGXI GUANGDONG Dam Province This map was produced by the Map Design Unit of The World Bank. HONG KONG The boundaries, colors, denominations and any other information MACAO Boundaries shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any LAO VIETNAM International endorsement or acceptance of such boundaries. P.D.R. Boundaries HAINAN PHILIPPINES To Yicheng AUGUST 2005