China - Second Xinjiang Highway

 ICRR 11839 Report Number : ICRR11839 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 08/30/2004 PROJ ID : P003643 Appraisal Actual Project Name : Second Xinjiang Highway Project Costs 658 532.3 US$M ) (US$M) Country : China Loan/ US$M ) 300 Loan /Credit (US$M) 240 Sector (s): Board: TR - Roads and Cofinancing 0 0 highways (98%), US$M ) (US$M) Vocational training (1%), Mining and other extractive (1%) L/C Number : L4099 Board Approval 97 FY ) (FY) Partners involved : Closing Date 12/31/2002 12/31/2003 Prepared by : Reviewed by : Group Manager : Group : Kavita Mathur Peter Nigel Freeman Alain A. Barbu OEDST 2. Project Objectives and Components a. Objectives The objectives of the project were to: (a) support development of road infrastructure to relieve congestion, and stimulate socio-economic development in the Urumqi-Kuitun Highway (UKH) corridor; (b) improve maintenance of the regional highway network; (c) promote development of institutional capacities of Xinjiang Communication Department (XCD), through training and other means; (d) increase highway safety; and (e) promote transport linkage with neighboring provinces and countries. b. Components Project components were: (a) construction of a 267.4 km Urumqi-Kuitun Highway (UKH) on new right-of-way (ROW) between Urumqi and Kuitun consisting of: (i) a 218.3 km 4-lane expressway between Urumqi and Kuitun; (ii) a 32.4 km bypass to the west of Urumqi, including an 18.5 km 2-lane Class 2 highway and a 13.9 km 4-lane Class 1 highway; and (iii) a 16.7 km 4-lane Class 1 highway linking UKH with the Turpan-Urumqi-Dahuangshan Highway (TUDH) built under the previous project. (b) Supply and installation of electrical, electronic and mechanical equipment for toll collection, telecommunication and lighting of bridges, interchanges and toll collection area; and construction along UKH of management and maintenance buildings, parking and service areas. (c) Construction, rehabilitation and upgrading of 4 linking roads with a total length of 18.8 km. (d) Construction supervision of UKH including facilities and linking roads. (e) Highway maintenance program to maintain and rehabilitate about 2,450 km of existing highway network during the Ninth Five-Year Plan (9 FYP). (f) Provision of equipment. (g) Institutional development consisting of strengthening relevant institutions affiliated with XCD through staff training. (h) A highway safety program consisting of identification and improvement of black spots, road signing and marking works, on-the-job training programs, and provision of specialized equipment. (i) A strategic study of regional transport. c. Comments on Project Cost, Financing and Dates The Loan Agreement was amended three times, first, in December 2000 to cancel US$60.0 million project cost savings from the loan; second, in August 2002 to extend the loan closing date from December 31, 2002 to December 2003 to enable the borrower to complete two important components dealing with training and highway safety; and finally, in February 2003 to reallocate the proceeds between loan categories. 3. Achievement of Relevant Objectives: The objective to support development of road infrastructure to relieve congestion, and stimulate socio-economic development in the Urumqi-Kuitun Highway (UKH) corridor was achieved. The Urumqi-Kuitun Highway (UKH) was opened to traffic in November 2000, one year ahead of schedule. A total of 266 km of highway (Expressway 218 km, Class I 30 km, Class II 18 km), plus the 18.5 km of linking roads were constructed under 14 contracts. Electrical, electronic and mechanical equipment for toll collection, telecommunication and traffic monitoring was installed. The completion of UKH and associated roads has relieved congestion to a limited extent. The objective to improve the maintenance of the regional highway network was achieved. A total of 310 km of roads were resurfaced and 1318 km strengthened under the project. The Xinjiang Highway Administration Bureau (XHAB) carried out additional rehabilitation work - 563 km resurfaced and 2064 km strengthened. The condition of the paved road network in good/fair condition increased from 46.3% in 1997 to 65% in 2000 and 80% in 2003. The roughness index improved from 6.7 mm/m in 1997 to about 5 mm/m at the end of the project. The objective to promote the development of institutional capacity of Xinjiang Communication Department (XCD) was achieved through the provision of overseas and domestic training and study tours, and also through active participation in project implementation. The staff received training in topics such as highway engineering, transport economics, highway maintenance management, traffic engineering, etc. The objective to increase highway safety was mostly achieved through black spot identification and improvement, development of methods for measuring the economic losses due to traffic accidents, and development of safety audit procedures. However the statistics on traffic accidents were only marginally improved. The objective to promote transport linkage with neighboring provinces and countries was achieved. A Regional Transport Study was carried out to identify the main gaps in transport linkages with neighboring provinces and countries. Several recommendations of the study have been implemented, in particular those dealing with the expansion of the highway investment program. Recommendations on institutional reforms led to a more effective dialogue between XCD and other departments involved in trade facilitation, which is supported under the follow-on project. 4. Significant Outcomes/Impacts: The opening of Urumqi-Kuitun Highway has provided an improved connection with the arterial network east of Urumqi on the one side, and with the main economic development areas on the west on the other side. The capacity of XCD to plan and carry out maintenance was improved through the introduction of a computerized pavement management tool and through the practical training in procurement of contracts on a competitive basis as well as in contract management. Progress was made in improving traffic safety. A report on Safety Audit Procedures was completed leading to a proposal for black spots improvement which is being considered under the follow-on project. A report on "Methods for Measuring of Economic Losses due to Traffic Accidents" was completed. It is being used for formulating future traffic safety policies and plans. Monitoring for road safety, environmental impacts and quality of civil works have been instituted. 5. Significant Shortcomings (including non-compliance with safeguard policies): During the construction of UKH, the implementing agency overlooked the risk of further settlements in the poor soil areas and minimized the consolidation time required for full stabilization. The risk materialized soon after opening of UKH. Damages were important in some settled sections. Repair works were completed in late 2003. 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. 7. Lessons of Broad Applicability: Capacity building and the process of change takes time. At the concept stage, it is important to realize that only so much can be achieved under any one operation. At the design stage, action plans for short term and longer term implementation need to be prepared. During implementation, it is important to combine institutional strengthening activities with practical execution of major tasks. For toll rate setting there is a need to compromise between economic and financial returns in a context of low affordability of tolls to prospective users. The approach taken by the China under the project can be considered a good practice: (i) financial costs were not fully covered, only debt, (ii) the amortization schedule was customized to better reflect revenues, (iii) tolls were applied to the parallel, congested roads in order to maintain the allocation of traffic between the two highways at an economic optimum, while generating more revenues, and (iv) to deal with the equity issue, local exemptions were granted. 8. Assessment Recommended? Yes No Why? To assess the innovative toll rate setting approach adopted by China under this project . 9. Comments on Quality of ICR: The overall quality of the ICR is satisfactory.