China - Hubei Xiaogan - Xiangfan Highway Project

Report No. PID10695 Project Name China-Hubei Xiaogan-Xiangfan Highway (@) Project Region East Asia and Pacific Region Sector Highways Project ID CNPE70441 Implementing Agency Address: No. 428, JianShe Ave. Hankou, Wuhan, Hubei, 430030 China Contact Person: Mr. Ren Binian, Director Tel: (027) 8383-2933 Fax: (027) 8386-9260 Environment Category A Date PID Prepared April 12, 2002 Auth Appr/Negs Date April 11, 2002 Bank Approval Date September 26, 2002 1. Country and Sector Background Several important pieces of transport sector work have been carried out by the Bank in the last five years: Strategy for the Transport Sector (Forward with One Spirit, 1997/98), Operations Evaluation Department (OED) Report on China Transport (1999), Review of Highway Technical Assistance (1999) and China Highway Strategy Review (October 2001). These, together with several high-level highway policy seminars, especially the discussion of the latter report at a workshop with Chinese government on November 14, 2001, have identified four key issues for the road sector: (i) meeting investment needs to sustain economic development, trade and integration, (ii) improving accessibility to remote/low income areas, (iii) fostering sustainable road sector management, and (iv) addressing road traffic safety issues.Meeting investment needed to sustain economic and social development, trade and integration. The macroeconomic growth and structural transformation of China's economy, toward more light and agro-industry and more inter-provincial trade, are causing an accelerating demand for road transport. In the past decade, China has embarked on major highway investment programs to expand the road network and remove transport bottlenecks that constrain economic development, socioeconomic integration and the reduction in regional disparities. China invested US$13 billion in highways in 1997 and more than doubled this effort in 1998, 1999 and 2000. At the core of the program is the construction of the National Trunk Highway System (NTHS), about 35,000 km of high-grade highways connecting China's 100 major cities and estimated at US$150 billion. Thus, 30t of investments went to NTHS in the last three years and completed sections reached 10,000 km by 1999. Other high-grade highways retained as core priorities by Ministry of Communication (MOC) mobilized another 30t of investments, whereas 25t went to the improvement of existing roads and 15t to rural roads. At 1.4 million km as at end 2000, China highway network still ranks among the sparsest in the world relative to geographic area and population, and there remains intraprovincial and interprovincial disparities, especially with the linking of western provinces to center and eastern China. Accordingly, the balance of  expenditure in the road sector has to be carefully considered in the coming years, to ensure that funds are efficiently allocated to investments supporting overall economic development and trade, specific needs of western provinces and regional integration.More generally, the financing of this huge investment program is a daunting task and traditional resources are inadequate to meet demands. Historically, road expenditures have been essentially funded from public resources, through a combination of central government, local budgets, road user charges, multi and bilateral loans channeled through the public sector. The main road user charge is the road maintenance fee (around RMB 30 billion a year); other charges, including the vehicle tax, contribute half as much. The former is rather inefficient, as it generates less than 40 percent of its potential. In addition, road users' contribution is a heavy burden at around one quarter or road expenditures. The replacement of those charges by a fuel tax was voted by the National Congress in November 1999, but implementation has been deferred indefinitely. During 1998 - 2000, almost 50 percent of road development has been financed with domestic bank loans to or guaranteed by local government, and with proceeds of bonds issued by central government and onlent to local governments. This mode of financing is not sustainable in the long run as it increases government debts and banks have to limit their exposure to any given single sector. Several provinces have also raised private financing from investors through two models: Joint Ventures agreements (80 transactions in 14 provinces by end 2000) that have mobilized RMB 75 billion (US$9 billion) equity, essentially from Hong Kong based private sources, and the securitization of toll roads with share issues on stock exchanges and private placements amounting to RMB 16 billion (US$2 billion). Although private financing is significant relative to other countries, it has contributed less than 10t of China's total commitment to new road construction since the early 80s. Upside potential is limited by two constraints: the few road projects that can attract full private sector financing - and most are likely to be in the Eastern/Coastal region on corridors where traffic levels are high - and the inadequacy of the legal and regulatory framework. The latter issue is addressed in a report on "Private Participation in Infrastructure in China" prepared by the Bank Group at the request of the State Development and Planning Commission; it was also discussed during a conference in Beijing attended by government and private sector representatives on November 15 - 16, 2001.In this context, government should focus on building a reliable and stable financing scheme of road activities based on user fees. In addition, reforms are needed in several areas of the overall environment for private participation to more widely contribute to highway financing: development of the domestic bond market and its opening to corporate issuers, which would provide additional long term funding sources to strengthened and consolidated commercialized toll road entities, widening of the range of public-private partnerships models, improved governance and effective competition in the procurement of private investors, more efficient risk allocation and changes in the legal and regulatory framework.Improving accessibility to remote, low income areas. The geography of China poses heavy demand and difficulty on the provision of basic road access in various parts of the country, particularly in inner low income provinces. The highest incidence of poverty is found in inland provinces and in remote mountainous areas of other provinces, like in Hubei. Central and local governments have emphasized the role of transport access to integrate the national economy, stimulate growth in remote areas and insure basic mobility needs of the -2 -  poor. Improving infrastructure lowers transport costs of goods and services in addition to providing people with access to social services and economic opportunities. For example, investment in county and township roads increased from RMB 1.7 billion in 1992 to over RMB 17.6 billion (US$2 billion) in 1996; during the Ninth Five Year Plan, 188,000 km of local class III and higher class roads were constructed and 5,000 villages made accessible. However, the task in China is still huge and requires significant public resources. The Bank's highway projects in China aim to address poverty issues arising from poor accessibility through targeted interventions in low income areas. Sufficient funding by provincial and central government proves difficult to achieve, since they are reluctant to borrow for the purpose of financing roads that do not generate revenue applicable to loan repayment.Sustainable road sector management. The sustainability of the highway sector greatly depends on how provincial and local highway institutions will address the growing challenges of their transition to a market-supporting role, network expansion, standards and control of construction quality, and preserving road assets, as follows:- Transition to market role. The role of government is evolving towards one of policy maker, planner, and regulator, whereas it traditionally acts in China as a direct owner and provider of services for highway financing, construction and operation. This strategic adjustment is needed to ensure efficient market based activities whose development is at the core of government strategy. The reform of the management of the expressway network has started, although at an uneven pace between coastal and inner provinces, with the commercialization and corporatization of newly built high grade highways generating stable toll-based revenue and their operation by independent but government owned shareholding companies. However, this has led to the proliferation of highway corporations, each managing a relatively short section of roads. Hence, the creation of a China model for Provincial Toll Road Authority remains a far-reaching strategic choice that the highway sector is facing today, with long-term implications. More widely, the challenge is for government to efficiently refocus on its new market support role and to foster in parallel the development of independent enterprises (including entities not owned by the state) that can provide cost-effective services for road construction and operation. - Highway construction quality. Incidences of bridge and road failings or premature wear and tear of highway pavements have raised awareness of high-level government officials on the quality issue. The problem has both technical and administrative roots. Contractors, mostly domestic, are not always well managed, frequently face irregular payments and often come under pressure to shorten the construction period. In some cases, quality control suffers because of the lack of authority assigned to the construction supervision agency by the owner vis-a-vis contractors. While central government appreciates Bank involvement in the sector since it leads generally to improved design reviews, and supervision and construction quality, there remains a definite need to apply strict quality standards and control their enforcement in future Bank highway loans.- Sustainability of road maintenance. In most provinces, proper maintenance is constrained by available budget funding, with problems on the allocation of funds between maintenance and new construction given the rapid pace of network expansion and the continued growth in vehicle-kilometers. Consequently, the preservation of road assets has become a serious issue whereas proper maintenance prevents the deterioration of infrastructure, increases its life and reduces future rehabilitation and reconstruction costs. Sector institutions and the - 3 -  existing framework for resource mobilization have to satisfactorily address future maintenance needs. Accordingly, provincial Communication Departments need to develop sustainable funding mechanisms, but also to be encouraged to: (i) implement a comprehensive road maintenance policy, (ii) refine their road information systems and effectively use it for road maintenance, planning and operations, (iii) adjust their organizational structures and training programs to maintenance challenges, and (iv) increase competitive and market based procurement of maintenance services through contractual schemes drawing on private sector capacity.Improving Road Traffic Safety. Traffic accidents has been a major problem in China, that has the world's highest road accident rate by many measures, despite the relatively low rate of motorization; furthermore the accident rate is increasing at a faster pace than traffic. In 1999, 83,500 people were killed and 286,000 injured in over 400,000 accidents, up by around 7% in deaths, 28% in injuries and 19% in accidents from 1998; estimates for 2000 show an even bigger jump in the number of road fatalities, rising by almost 15% to 95,000. Besides deaths and injuries, accidents cause property damages and entail high overall economic and social costs. In fact, road safety problems result from several causes: low awareness and risky behavior of road users, very new drivers, poor vehicle condition, inadequate road design and maintenance, insufficient law enforcement and traffic surveillance, lack of rescue services, and ineffective traffic accident information system. Diffused institutional responsibilities in these areas make it difficult to address the problem of road safety in a comprehensive manner, since improving road safety requires coordinated actions on "Engineering, Education and Enforcement", usually referred as "the 3 Es". Responsible government agencies should develop an agenda on areas within their responsibility, like the "Engineering" aspects of road safety for the Ministry of Communication and Provincial Communication Departments (PCD). An illustration is the development by several provinces, including Hubei, of safety audit processes. MOC is planning to make it systematic for project design. The Bank's role has essentially been confined so far to matters under the institutional and financial jurisdiction of road agencies. Bank projects have nevertheless supported some cooperation with other agencies, mainly traffic police, on specific activities like accident information systems and black spot treatment programs. PCDs should generalize those institutional initiatives. In addition, government entities at all levels, like PCDs and traffic police department in each province, must strengthen their coordination on enforcement issues and widen it to education; and policy coordination matters must be elevated to the highest levels of government. Government StrategyThe strategy of central and provincial governments intends to ensure that the highway system contributes to the overall economic growth, development and trade, and social integration by facilitating the mobility of people, goods and services, given both the comparative economic and technical advantages of roads vis a vis other modes of transport and financial constraints. In the Ninth Five Year Plan, investment priorities for the highway sector were to rapidly develop the NTHS and provincial and rural roads that feed into it, and to implement reform policies and regulations that relate to financing in order to ensure funds are used efficiently. The strategy succeeded to a large extent with the construction of 240,00 km of highways, including 13,000 km of expressways. However, crucial policy reforms have lagged, as mentioned earlier with the postponement of the fuel tax. In the Tenth Five-Year Plan (2001-2005) the transport sector goals are -4 -  primarily to support economic growth and spread its benefits to lower income populations, with a high attention to the lagging western provinces whose development is a key objective for government. In the road sector, priority is given to expanding and improving the infrastructure network, mainly through capacity increases, and to further develop transport services using these infrastructures. The plan targets a 200,000 km extension of roads of various classes (around US$84 billion) and entails the following agenda:continue the construction of the NTHS, bringing the length of this backbone network to 26,000 km with the objective to fully complete it by 2010;improve especially highway infrastructure to and within western areas in order to reduce their isolation. A multipronged plan includes the following investments:- the development of 8 East-West and North-South corridors totaling about 15,000 km to link the interior regions to the coastal area and to link western provinces together by 2020. This includes both NTHS projects and additional key routes;- the rehabilitation and upgrading of about 180,000 km of the road network in the western areas; and- the development of about 150,000 km of local roads to improve access in rural area and alleviate poverty in rural towns and villages; andimprove accessibility to low income populations in all regions of China with a goal to ensure road accessibility to 95t of townships and 93t of villages;In addition, policy and institutional reforms and the development of market regulations will intensify in the context of the country move toward a market based economy. Reforms will intend to achieve the following objectives:develop market role in the construction and operation of infrastructure and in the provision of transport services. The underlying policy is that government role of highway builder and operator will shift to one of regulator, by increasingly relying on competitively contracted works and services, to let market the fully play its role. Thus, resource allocation would rely more on the market than on government. As infrastructure is a "Public good", the contracting of future road construction, and in certain cases road operation, will be through competitive bidding. However, there will be three types of projects: projects which can be fully financed by the market, projects requiring some government contribution to complement private participation, and projects not suitable for private financing and to be implemented by Government, albeit through competitively awarded contracts;strengthen the efficiency of road sector management and reorganize it to maximize the use of scarce resources through planning, programming, institutional optimization and the introduction of modern methods and technologies;widen highway financing methods and improve the legal and regulatory framework to mobilize new sources of user charge-based revenues and promote public/private financing mechanisms. The latter includes the securitization of mature assets by strengthened toll road operators, the mobilization of bond savings, the extension of domestic bank funding to privately developed projects, the establishment of a comprehensive legal and regulatory framework and the development of contract models; andimprove traffic safety. 2. Objectives The project aims to provide a more effective, safe and efficiently managed transport infrastructure supporting social and economic development and trade in Hubei province and improving transport links to western lagging regions.To meet those development objectives, the project will produce the following outputs:Increased transport capacity and relieved traffic congestion in the Xiaogan - Xiangfan corridor, and reinforced regional - 5 -  integration of the lower developed western areas of Hubei province with the construction of Xiaogan - Xiangfan Expressway, a section of the Yinchuan (Ningxia) - Wuhan itinerary aiming to unlock western provinces;Improved accessibility in low income areas in Hubei province through a program of rehabilitation and upgrading of local roads in poor counties; andImproved efficiency and sustainability of road management and better road safety conditions through the provision of training, technical assistance and equipment to Hubei Provincial Communication Department (HPCD) and related provincial road agencies. 3. Rationale for Bank's Involvement The Bank has financed about 20 percent (3,500 km) of the first phase of the high priority NTHS in China, and contributed with corresponding projects to accelerating the institutional reform and strengthening of the highway sector in many provinces. The Bank is heavily involved in Hubei with the financing of arterial highways and institutional reform through the Third and Fourth National Highway projects.Through its further involvement in Hubei with the new project, the Bank would first contribute financial resources needed to help remove bottlenecks and increase traffic capacity in a corridor crucial for the province's economic development and contributing to reducing the isolation of western provinces. By sustaining a policy dialogue and with the experience gained in over 15 years of work in the China highway sector and in highway reform in other countries, the Bank would continue playing a catalytic role in the adaptation of Hubei's road sector to the challenges of sustainable road management and the move towards market based activities, and in the development of institutional and manpower capacity in highway planning, design, supervision, construction, operation, maintenance and finance. Similarly, the Bank support would assist HPCD in improving provincial practices in environment protection, land acquisition and resettlement, and social and participatory aspects of highway projects. Furthermore, the design and quality of construction of the new roads would benefit from the Bank involvement. 4. Description The project is comprised of three components to address the above mentioned sector issues. All components will be implemented by the Hubei Provincial Communication Department.Increased Highway Capacity and Regional IntegrationThe main capital investment component of the project is the 243.5 km long Xiaogan - Xiangfan Expressway (XXE). The new infrastructure will provide more efficient, safe and effective highway infrastructure in a corridor servicing about a quarter of Hubei province including the developing auto industry belt. XXE will: (i) directly serve about 6.8 million inhabitants and link several major industrial and hub cities: Wuhan (Provincial capital), Yunmeng (250,000 pop), Anlu (40,000 pop), Suizhou (340,000 pop), Zaoyang (210,000 pop), and Xiangfan (789,000 pop), and (ii) reach the less developed western and mountainous part of Hubei where most poor counties are located. Thus, it will help stimulate social and economic development and decrease disparities in the province. XXE is a stand-alone expressway section and the achivement of this component objectives is not dependent upon other road investments. In addition, XXE will complete the provincial expressway triangle which is an integral part of the Hubei road network. At its eastern end, it connects with NH3, a Bank-financed section of the arterial Beijing - Zhuhai expressway corridor that opened to traffic in December 2001; at its - 6-  western end, XXE will connect with on the one hand the existing North-South NR207 and the parallel Xiangfan - Jinzhou Expressway, and at the same time the existing NR316 and the parallel Xiangfan - Shiyan expressway that run towards the North-East of Hubei and Shaanxi province. Both expressways are under construction by Hubei province and planned to open to traffic in 2004, before the completion of XXE.XXE will be a 2x2 lanes expressway connecting with 14 interchanges. In addition 3 class 2 connecting highways (31 km) will link up important urban poles. Expressway operations will be supported by management centers, four service and rest areas and necessary traffic management and O&M equipment.Improved Accessibility in Poor Counties (RRIP)The project includes a Rural Road Improvement Program in Poor Counties (RRIP) to improve road access in low income areas. Various subprojects under this component will rehabilitate and upgrade existing roads to Class 4, 3 or 2 levels. The road selection criteria include county level income, expected impacts on population served, consistency with the provincial priorities and economic rate of return. The intent of this component is to ensure all weather road access to townships and provincial highway system, thereby improving access to product markets, and social services and facilities. The first phase of the RRIP has been defined. It consists of three projects covering 259 km (US$34.8 million), all located in nationally classified poor mountainous Western counties (Ensh'i county in Ensh'i Autonomous Region, Zhuxi and Zushan counties in Shiyan prefecture). The second phase will bring the component size to about US$60 million; additional road sections will identified during the project implementation on the basis of the above mentioned (social and poverty) criteria and in full compliance with all safeguard policies. Institutional Development and Road Sector ManagementThis component will strengthen the capacity of the highway sector in the province and the sustainability of highway management in the following areas:Building Sector Institutions and Transition to Market Role. HPCD has to acquire new skills and practices through a multiyear institutional development plan promoted under NH3 and NH4. The project will build on the past achievements and further the transition of HPCD to the needs of a market economy through a training program for government entities on highway planning, design, supervision, management and operation and on road safety. It will also assist in the dissemination of skills across the road sector with the strengthening of the provincial Highway Training Center.Sustainability of Road Management. Under the previous projects HPCD recognized the need to address maintenance management and established a road information system, a maintenance planning and programming process and evaluated the merits of introducing a competitive maintenance contracting practice. These tools will be critical for maintenance needs assessment and budget allocation, particularly after the introduction of the fuel tax in China. The new project will support the application of road maintenance systems and introduce the maintenance by contract practice in the sector. Assistance will focus on developing road maintenance procurement through alternative contractual schemes - including performance based approaches. In addition an approach to tackling vehicle overloading will be developed and tested on a pilot basis. Options for the consolidation of commercialized toll roads will also be examined.Road Traffic Safety. The road traffic safety remains a serious concern in Hubei province. The previous projects (NH3 and NH4) have raised HPCD's awareness about road safety issues and created a Road Safety Unit, developed safety guidelines for the design, construction and operation of roads. The project will institutionalize the above tested - 7-  methods, scale up black spot treatment practice across the province, and assist HPCD in strengthening cooperation among other entities under the Provincial Safety Council.Provision of equipment. HPCD will acquire equipment to monitor project construction quality along XXE, compliance with safeguard requirements during construction, and to ensure satisfactory traffic operations. 5. Financing Total ( US$m) BORROWER $450.00 IBRD $250.00 IDA Total Project Cost $700.00 6. Implementation Hubei Provincial Communications Department (HPCD) is the executing Agency at all stages of project preparation and implementation. Specific responsibilities are allocated as follows:The World Bank Finance Project Office (WBFO) in HPCD is responsible for the overall coordination of project activities and relationship with the Bank. It already plays that role under NH3 and NH4 projects.On XXE, a preparation group managed by a Vice Director of HPCD has been established to coordinate preparation tasks and supervise design works carried out by the Hubei Design Institute. A Project Headquarters (Hubei Provincial Xiaoxiang Expressway Construction Headquarters) established within HPCD and a shareholding company owned by HPCD (Hubei Provincial Xiaoxiang Expressway Company Ltd) will implement XXE and interconnecting roads (most of their staff are the same). Supervision of works will be undertaken by a joint team associating domestic firms and an international engineering consultant.Upon its completion, XXE will be operated by Hubei Provincial Xiaoxiang Expressway Company Ltd.The RRIP component is being prepared by the Hubei Highway Administration Bureau - a department of HPCD - and will be implemented by construction headquarters organized by that agency at the county level.The World Bank Finance Project Office will be directly responsible for the institutional development components. The Financial Management Assessment carried out during preparation concludes that the project will have in place an adequate project financial management system. Hubei Provincial Financial Bureau (HPFB) will carry out all financial aspects of project implementation, including financing arrangements, financial management and overall financial monitoring. HPFB will also be responsible for maintaining, monitoring and reconciling special accounts to be established for the project, and for submitting withdrawal applications to the Bank. HPFB has had extensive prior experience with Bank projects and is familiar with Bank disbursement procedures. Procurement will be managed by Hubei Provincial Xiaoxiang Expressway Company Ltd. The capacity assessment carried out during project preparation confirms that arrangements made and staff training considered are satisfactory.By and large, project institutional and implementation arrangements are similar to those made by Hubei province on the ongoing NH3 and NH4 projects. Thus, experience gained by HPCD will be fully available, through both the direct involvement of units, like WBFO or HPFB, that have already assumed similar tasks and are familiar with Bank procedures, and the transfer of staff from existing Project Offices.At the central level, overall direction of the project will rest with the MOC in Beijing, which will assume an oversight role and provide some technical support to the implementing - 8 -  agency. The Bank borrower will be the People's Republic of China, which in turn will onlend the loan proceeds to Hubei Province through the Ministry of Finance (MOF) on the same conditions.The project will be implemented during 2002 - 2007. 7. Sustainability Experience from completed and ongoing highway projects financed by the Bank in China shows a great commitment of implementing agencies to project physical components, that account for the majority of project costs. This is confirmed in Hubei with ongoing NH3 and NH4 projects and the same ownership is expected with the new project. First, the expressway component is a key element of Hubei structuring highway network and is included in its provincial Tenth Five Year Plan; the province financing contribution is also taken into account in budget forecasts. The project financial evaluation shows that XXE toll income, upon the project completion and opening to traffic, should be sufficient to both ensure province's ability to repay the Bank loan on time and fund timely and relevant maintenance. However, the level of tolls and their regular review and increase are important for the financial viability of the project. Second, the local road improvement program addresses road network deficiencies in low income counties and accessibility improvements are considered by Hubei to be a key component of its provincial poverty alleviation plan. Finally, the institutional strengthening and road safety components build upon ongoing NH3 and NH4 objectives to which HPCD is highly committed and include activities identified by HPCD during project preparation and aiming to improve road management sustainability. 8. Lessons learned from past operations in the country/sector While the overall performance of the large Bank highway portfolio in China is by and large satisfactory, a number of problems have occurred during the implementation of earlier projects and have been taken into consideration in the design of the proposed project. Issues on capital investment components primarily include: insufficient soil investigations during feasibility studies, underestimation of the technical complexity of expressway construction leading to inadequate engineering designs; insufficient bid documents, that all too often lead to significant cost variations of civil works; delays in resettlement operations that have affected works schedule; insufficient attention at design stage to restoring local accesses resulting in costly changes during construction; insufficient quality control of construction; late tendering of electrical and mechanical facilities components, which has delayed the completion of some projects or restrained the quality and efficiency of operations during several months. Thus, the project design and implementation plan have been prepared by HPCD to address corresponding risks. For example, HPCD has established the resettlement organization at the very early stages of project preparation and took into consideration the outcome of surveys to design local crossings; an international consultant will also review the design of XXE, at the detailed stage on the most complex sections, and will advise on the preparation of the technical elements of the bid documentation; finally, tendering of O&M works is also scheduled early enough to ensure facilities are completed prior to the opening to traffic of the expressway.Experience with rural roads improvement programs completed so far in China, for example in the Second Shaanxi Highway Project and the Second Henan project, have shown that significant benefits are achieved as well as high appreciation and demand from local people for -9-  this type of Bank involvement. The provision of basic access all-weather roads effectively contribute to reducing poverty in rural areas, especially when combined with programs for socioeconomic development.Since the 1999 OED assessment on the China portfolio has clearly determined that the policy dialogue between China and the Bank in the highway sector needs to be further strengthened, the institutional component takes stock of policy and reform activities under the ongoing NH3 and NH4 projects. More than three years after NH3 effectiveness date, results are encouraging indeed, in that HPCD is showing strong ownership of institutional activities developed under those projects. In order for the institutional component to rank on an equal level with road construction and network capacity expansion, a pro-active approach is being taken. The component has been prepared by HPCD in close dialogue with the Bank and builds on NH3 and NH4 outcomes, with the participation in the Bank team of an experienced institutional and policy expert that has been working on previous projects since their beginning. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) Issues The main environmental issues associated with the Hubei Highway Project are the following:The selection of an optimal alignment, to avoid and minimize impacts on villages and communities, agricultural lands, cultural relic sites, and sensitive and adverse terrain; Adequate public consultation during the preparation and implementation of the project; and Integration of environmental mitigation measures in the Environmental Action Plan (EAP). A poorly selected alignment could lead to increase loss of agriculture land, loss of residences and livelihood of affected people, disruption in the day-to-day activities of the communities, and increase the risk of disturbing potential cultural heritage sites along the alignment. The major environmental impacts during the construction of the proposed Expressway and the other roads include increases in noise, soil erosion, and the generation of dust. Lesser impacts include alteration of hydrological regimes; interference with local people and traffic; and impacts on local ecology and irrigation system. The impact of haul traffic of construction materials (noise, dust, congestion, traffic safety, etc.) using the existing roads and access roads is of potential concern. Safe disposal of excess excavated material from cuts and tunnels will also require close attention during design and supervision. Traffic noise, air pollution from vehicle exhaust emission, soil erosion, pollution from service areas and impacts from induced development are identified as potential major adverse impacts during the operation period.The draft EA Summary report states that there is little forestation in the areas South of the Yandian along the alignment. Vegetation of the area is primarily crops including rice, wheat, cotton, cole, etc. The project passes no state-owned tree farms, natural reservation areas, forest park, breed forest of endangered animals or national defense formation. The closest tree farm, Baizhaoshan Tree Farm, is about 1 km away from the alignment. On Natural Habitat, because of low forest cover in the province (about 17T) there are no protected or natural habitats or reserves. This draft EA Summary also states that "there are not many of wild animals and plants in the area close to the sections Xiaonan, ..and Xiangyang", and that "..there is no wild animals within the alignment corridor." The key stakeholders are the Hubei Provincial Communication Department (HPCD), farmers who may lose land, - 10 -  villagers who may be displaced or impacted because of the alignment passing through or near their villages, communities which may become divided by the alignment, and hospitals, schools, libraries, and individual households which may be impacted by the construction and operation of the proposed Expressway and interconning roads, and by the improvements of rural roads. 11. Contact Point: Task Manager Michel Bellier The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 202 458 5382 Fax: 202 522 3573 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending April 19, 2002.