The Bank's assistance to China's energy sector

32898 THE WORLD BANK OPERATIONS EVALUATION DEPARTMENT The Bank's Assistance to China's Energy Sector Anthony Churchill and Cordula Thum Director-General, Operations Evaluation: Gregory K. Ingram Director: Ajay Chhibber Senior Manager: R. Kyle Peters Task Manager: Gene Tidrick 2005 This paper is available upon request from OED. It was prepared in 2003 as The World Bank a background paper for the China Country Assistance Evaluation Washington, D.C.  ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION The Operations Evaluation Department (OED) is an independent unit within the World Bank; it reports directly to the Bank's Board of Executive Directors. OED assesses what works, and what does not; how a borrower plans to run and maintain a project; and the lasting contribution of the Bank to a country's overall development. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank's work, and to provide accountability in the achievement of its objectives. It also improves Bank work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. OED Working Papers are an informal series to disseminate the findings of work in progress to encourage the exchange of ideas about development effectiveness through evaluation. The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. Contact: Operations Evaluation Department Knowledge and Evaluation Capacity Development (OEDKE) e-mail: eline@worldbank.org Telephone: 202-458-4497 Facsimile: 202-522-3125 http:/www.worldbank.org/oed  .ACRONYMS CNPC China National Petroleum Corporation GDP Gross Domestic Product GEF Global Environment Facility IFC International Finance Corporation MIGA Multilateral Investment Guarantee Agency LNG Liquefied Natural Gas NCPGC North China Power Group Corporation PHRD Policy and Human Resources Development Fund SPA Sichuan Petroleum Administration   Table of Contents 1 Summary of Report, No. 21891 ............................................................................................1 Lessons...................................................................................................................... 2 Recommendations..................................................................................................... 3 2. Update: Objective, Scope and Limitations...........................................................................4 Country and Sector Context: Recent Developments............................................................4 Overview of the Strategy.......................................................................................................5 Electric Power.................................................................................................................5 Petroleum (Gas only) Sector...........................................................................................6 Energy Efficiency and Renewable Energy .....................................................................6 3. Project and Sector Outcomes ................................................................................................6 Efficacy of Bank Projects: Performance and Outcomes (update)........................................6 Completion and Supervision Ratings....................................................................................6 Resettlement Aspects ............................................................................................................7 Institutional Development Impact and Sustainability ...........................................................7 Relevance of Bank Assistance ..............................................................................................8 New Directions......................................................................................................................8 Coal .............................................................................................................................9 Gas...............................................................................................................................10 Annexes Annex A: China Energy Projects ......................................................................................................11 Annex B: Major Institutional Development Components of Bank-Financed Power Projects ..........13 Annex C: Completion Ratings ..........................................................................................................18   Preface Part I of this report is the Summary of The Bank's Assistance to China's Energy Sector: An OED Country Sector Evaluation (Report No. 21891, February 28, 2001). The Sector Evaluation was produced by OEDSP, Alain Barbu, Task Manager. Part II of this report is an update and extension of the 2001 Sector Evaluation. The updated report was written by Anthony Churchill and Cordula Thum   1 1. Summary of Report no. 21891 (February 28, 2001) 1.1 China is now the second largest energy consumer in the world and the largest producer and consumer of coal. Owing to its large coal resources, it is and will remain in the foreseeable future largely energy self-sufficient, although crude oil imports have steadily increased since 1993. While the country's energy intensity, at 60,000 BTU per dollar of GDP, is three times the world average and twice that of all developing countries, it has been falling as a result of concerted energy conservation efforts over the past two decades. Industry accounts for as much as 75 percent of total energy consumption, but household use, now only 10 percent, is growing fast with recent improvements in the standard of living. Although service is of uneven quality, rural access to electricity is high: about 96 percent of the nation's villages and about 80 percent of rural families now have access to electricity. 1.2 In just 17 years, China has become the Bank's largest borrower in the energy sector having received about $7 billion in loans to date. Energy accounted for 20 percent of the Bank's total lending to China between 1983 and 1999. Electric power received the most (86 percent), followed by oil and gas (10 percent), energy efficiency and renewables (2 percent), and coal (2 percent). The sector also received $90 million in Global Environment Facility grants through the Bank. The Bank has also carried out a substantial amount of analytical and advisory services. Despite the amount of lending to the energy sector, the sheer size of the sector in China has made the World Bank, at least in financial terms, a relatively marginal player. Indeed, the Bank has had only limited involvement in the subsectors most critical to China's energy strategy, coal and petroleum. 1.3 The Bank's activities have been through four distinct periods. In the Early Years (1983