China - Hunan Power Development Project

Document of The World Bank Report No: 36567 IMPLEMENTATION COMPLETION REPORT (SCL-43500) ON A LOAN IN THE AMOUNT OF US$300 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A HUNAN POWER DEVELOPMENT PROJECT June 29, 2006 Energy and Mining Sector Unit East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2005) Currency Unit = RMB (Yuan) Y1.00 = US$ 0.125 US$ 1.00 = Y8.0 Exchange Rate Effective throughout project implementation (1997-2005) Currency Unit = RMB (Yuan) Y1.00 = US$0.121 US$1.00 = Y8.28 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BOT Build, Operate and Transfer CAS/CPS Country Assistance Strategy/Country Partnership Strategy CDGC China Datang Group Company EA Environmental Assessment EPB Environmental Protection Bureau ERP Enterprise Resource Planning System EMP Environmental Management Program FMIS Financial Management Information System HEPC Hunan Electric Power Company ICB International Competitive Bidding IERR Internal Economic Rate of Return LPP Leiyang Power Plant PPA Power Purchasing Agreement QAG Quality Assurance Group RAP Resettlement Action Plan TA Technical Assistance T&D Transmission and Distribution Vice President: Jeffrey Gutman (Acting) Country Director David R. Dollar Sector Manager Junhui Wu Task Team Leader/Task Manager: Jianping Zhao  CHINA HUNAN POWER DEVELOP. CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 1 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 13 6. Sustainability 15 7. Bank and Borrower Performance 16 8. Lessons Learned 17 9. Partner Comments 19 10. Additional Information 25 Annex 1. Key Performance Indicators/Log Frame Matrix 26 Annex 2. Project Costs and Financing 27 Annex 3. Economic Costs and Benefits 29 Annex 4. Bank Inputs 31 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33 Annex 6. Ratings of Bank and Borrower Performance 34 Annex 7. List of Supporting Documents 35  Project ID: P035698 Project Name: HUNAN POWER DEVELOP. Team Leader: Jianping Zhao TL Unit: EASEG ICR Type: Core ICR Report Date: June 28, 2006 1. Project Data Name: HUNAN POWER DEVELOP. L/C/TF Number: SCL-43500 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Power (100%) Theme: Rural services and infrastructure (P); Climate change (P); Pollution management and environmental health (P); Other financial and private sector development (P); Decentralization (S) KEY DATES Original Revised/Actual PCD: 10/09/1997 Effective: 12/13/1999 12/13/1999 Appraisal: 03/28/1998 MTR: Approval: 06/18/1998 Closing: 12/31/2004 12/31/2005 Borrower/Implementing Agency: GOC/HEPC/CDGC Other Partners: N/A STAFF Current At Appraisal Vice President: Jeffrey Gutman (Acting) Jean-Michel Severino Country Director: David R. Dollar Yukon Huang Sector Manager: Junhui Wu Yoshihiko Sumi Team Leader at ICR: Jianping Zhao Hsiao-Yun Elaine Sun ICR Primary Author: Ivy H. Cheng 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The main objective of the project was to alleviate power shortages in Hunan by providing efficient, reliable  and environmentally sound power supply. This was the first World Bank involvement in the power sector in Hunan, and the project was designed to address some of the technological, environmental and institutional development challenges facing the province by taking into account successful international experiences. The project was expected to contribute to ease the issue of uneven development and widening gap between coastal and inland areas in China. It was responsive to the prevailing priorities of the Government, consistent with the Bank's strategy, and supportive of the implementing agency's development objectives (refer to Section 3.5 Quality at Entry). The project was complex as it was to introduce new technology along with institutional improvements, all in the midst of a major sector reform. It was also the first experience of the Hunan Electric Power Company (HEPC), an otherwise well-managed and competent utility, to manage a Bank-assisted operation. However, the project's preparation and implementation were considered within HEPC's reach, given support on technical, procurement and financial issues were integrated into the project design. 3.2 Revised Objective: Project objective was not revised. 3.3 Original Components: The project included four components: (a) Phase II Leiyang Power Plant (LPP) - supply and installation of two additional 300 MW anthracite-fired generating units at LPP to alleviate power shortage, improve the generation mix in a system dominated by seasonal hydropower, and facilitate the retirement of ten small, aging, inefficient, and polluting generation units in the Hunan provincial power grid; (b) reinforcement of the existing 220kV transmission systems