China - Shanghai Metropolitan Transport Project

C C_ C (..4G. 4.- 4-fi -7 U P' I f2. DOInit of TheWorld Bank FOR OF0CL USE ONY macRovlTcIHR cully Re'pcirt No. P 5276-CHA Type: (PM) RepNo. P-5276-CHA CARR1, C. t X74604 / / MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 44.4 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A SHANGHAI METROPOLITAN TRANSPORT PROJECT AUGUST 12, 1991 Tis docment has a reried diW stubu and my be sed by recipiem only In the perforne of . . tde ofal dis. IIts c*tOtS may Mwt otwwhe be disclosed wit Word Bsc ankorizatia  CURRENCY EQUIVALENTS (as of .April 1991) Currency name = Renminbi Currency unit - Yuan (Y) - 100 Fen $1.00 = Y 5.22 $0.19 c Y 1.0 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 square meter (ne) - 10.76 square feet (ft2) . square kilometer (kin) 0 0.4 square miles (mi2) 1 hectare (ha) = 0.01 km2 = 2.47 acres (ac) 1 kilogram (kg) 2.2046 pounds (lbs) ABBREVIATIONS EM.R Economic Rate of Return ICB International Competitive Bidding IDA International Development Association LCB Local Competitive Bidding NMV Nonmotorized Vehicle SMG Shanghai Municipal Government  wo0 OFFICIAL USE ONLY CHINA SHANGHAI METROPOLITAN TRANSPORT PROJECT Credit and.Project Summary Borrowers People's Republic of China Beneficiarst Shanghai Municipal People's Government Amounts SDR 44.4 million ($60.0 million equivalent) Terms: Standard, with 35 years' maturity Relendins Terms: From the Government of China to Shanghai Munmcipal Gov- ernments 20 years including 5 years of grace at fixed interest rate of 1.9 percent per annum with 0.75 percent per annum commitment fee on outstanding balance. The foreign exchange risk would be borne by the Shanghai Municipal Government. Financins Plan: Local Foreign Total ($ million) Shanghai Municipal Government 78.8 9.4 88.3 IDA 0.0 60.0 60.0 Total 78.8 69.4 148.3 Economic Rate of Returns Zhongshan Road 18 percent Inner City Road Improvements 32 percent Staff Appraisal Reports Report No. 8465-CHA IBRD 22042 Ths document ha a mrected dstrbudon and may be used by rcipients only in th pe.ron7;fe of their oficl duties ltb contents may not otherwise be disclosed without Wofld _a; auht4ation.  MEMORAPDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 44.4 MWLLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE SUANGUAI METROPOLITAN TRANSPORT PROJECT 1. The following memorandum and recounendation on a proposed credit to China for SDR 44.4 million ($60 million equivalent) is submitted for approval. The proposed credit would be under standard IDA terms with 35 years maturity. It would be used to finance urban transport facilities and provide technical assistance to strengthen planning and management in the urban transport sub- sector. The proposed onlending terms between the Ministry of Financ.. and the Shanghai Municipal Government (SMG) would be 20 years including five years' grace at 1.9 percent interest per year with 0.75 percent per year commitment fee on outstanding balance. The foreign exchange risk would be borne by SMG. 2. Background. The urban sector in China has experienced unprecedented growth since 1979, when urban econoire reforms were first introduced. Although constrained by recent controls oi capital investment and counter- inflationary measures imposed by the central government, urban economic devel- opment continues and city populations are swelling with increasing numbers of migrant workers seeking off-farm employment. More than 5 million persons are estimated to join the urban ranks in China eac.. year. Declining levels of service, despite rising expectations, and backlogs in providing public service to industry and households are major issues facing China's urban managers. 3. The substantial infrastructure needs and severe resource constraints facing China's central and local governments call for a well focused assis- tance strategy. In response, the Association has adopted a strategy which involves* (a) introducing tools to tdefine investment priorities; (b) utiliz- ing existing facilities more effectitely; (c) making sector planning and man- agement more demand-responsive; (d) encouraging greater cost recovery from users of public utility services; and le) putting into operation environmental resource management in urban areas. Following these objectives, studies were carried out during 1988 and 1989, with assistance from the French Consultant Trust Funds and the U.S. Trade and Development Program, to develop strategies for resolving urban transport problems in the Shanghai Metropolitan Region. These studies identified a program of investments for urban transport Improve- ment, as well as important institutional strengthening work in line with the Association's adopted strategy. 4. Lessons Learned from Previous Bank Operations. This would be the first urban transport project in China supported by the Association. Two previous projects, Medium-Sized Cities Development (Loan 3286/Credit 2201) and Liaoning Urban Infrastructure (Loan 2219), include urban transport components but since they were approved only in December 1990 and February 1991, respec- tively, little experienci has been gained on implementation. Experience on the Shanghai Sewerage Protect (Loan 2794/Credit 1779), which also involves major construction in urban Shanghai, has been good and this is attributed to sound preparation and strong management. These two elements have been stressed in the preparation and design of this project with substantial tech- nical assistance provided during project preparation and also allocated for  -2- project implementation, including components for project management support and construction oupervision. 5. Rationale for IDA Involvement. A significant contribution of the Association's participation in the preparation of an urban transport invest- ment program In Shanghai has been balancing the emphasis on various modes of traffic, including nonmotorized vehicle tMQV) routes, and on prioritiaation of investments. The emphasis placed on seeking alternative low-cost options has In the short run enabled the Shanghai authorities to save or defer more than $500 million on large urban transport investments and stressed the setting of priorities in the analysis of the urban transport investmeut program. The immediate Shanghai transport problem arises partly from the need to make up for decades of neglected investment in infrastructure. The Bsank Group can assist Shanghai in modernizing its approach to urban transport planning and implementation, and in fiscal planning to achieve affordable development. A finer definition of urban transport investment priorities will require use of well-adapted traffic models, improved area expansion plans, NKV routes, light rail systems, and combined transport development with land development or redevelopment. IDA has extensive experience in these fields and can help Shanghai tap other international experience that might not be directly acces- sible to it. 6. Prolact Obiectives. The principal objective cJf the project is to provide the basis for developing an efficient urban transport system in Shanghai. In order to achieve this objective, the project is designed to increase capacity, reduce congestion, and improve efficiency of the transport networks and to improve the planning, programming, finance, and management of tQe urban transport system in Shanghai. The project would represent the first stage of a long-term program intended to upgrade and develop the urban trans- port infrastructure of Shanghai in order to meet the demands generated by modernization of the local economy. 7. Prolect Description. This project represents the first investment slice of priority works intended to upgrade and develop the urban transport infrastructure of the Shanghai Metropolitan Region (population 13 million). It Involves: (a) construction of a 5.5 km viaduct over Zhongshan Road, with surface road improvements underneath and to the north and south of the via- duct; (b) traffic management and safety including the introduction of a 1.1 km of busway along the Bund and 19 km of NKV roads; and (c) technical assistance to strengthen the mmnicipality's capabilities for planning and implementing urban transportation measures, effecting improvements in traffic and safety, and improving bus operations. Resettlement of about 2,150 households and about 200 enterprises would be required. The project is expected to 1 com- pleted by June 30, 1997. The total cost of the project is estimated at $148.3 million, with a foreign exchange component of $69.4 million (47 percent). Provision has been made for retroactive financing of Civil Works on account of payments made for expenditures after July 1, 1990, up to the date of the agreement, but not to exceed SDR 2.9 million ($3.9 million equivalent). The financing plan and estimate of costs are shown in Schedule A. Amounts and methods of procurement and disbursement, and the schedule of disbursements are shown in Schedule B. A timetable of key project processing events and the status of iank Group operations in China are given in Schedules C and D, respectively. Staff Appraisal Report No. 8465-CHA dated August 12, 1991, is being distributed separately.  S. Zuvironmental Impact. The Project is expected to have a positive environmental impact due to net reductions in engine emissions (associated with higher vehicle speeds), reduced traffic accidents, and improved housing and sanitation conditions for families relocated under the Project. 9. Agreed Actions. The Shanghai Municipal Government has agreed, inter alla, on the following actious, (a) to furnish to the Association, commencing June 30, 1992, details of the municipality's medium-term transportation investment plan and subsequent annual investment plani, for the Association's review and comments until completion of the project; (b) to carry out the resettlement of the people affected by the project, in accordance with the plan agreed with the Association, including the various steps to be taken and the schedule for resettlement monitoring and reporting to the Association: (c) to maintain the Project Implementation Unit with the necessary staffing and responsibilities satisfactory to the Association; and (d) to furnish the Asso- ciation, not later than January 1, 1992, the arrangements for coordinating, planning and implementing the Traffic Safety and Management Program. 10. Benefits. The project would alleviate traffic congestlon and improve road safety in the Shanghai Metropolitan Region. The improvements financed through this project directly address the most serious traffic pzob- lems in the inner city. Benefits would accrue from savings in vehicle operat- ing costs, personal savings associated with shorter travel time, and reduction in accident costs, with an internal economic rate of return (ERR) estimated at 18 percent for the Zhongshan Road investments and 32 percent for the Inner City Road improvements. 11. Risks. Project risks mainly involve delays in the construction of the Zhongshan viaduct and the needed demolition and resettlement. The land needed for resettlement is already available to the agencies concerned. The agencies responsible for demolition and resettlement have a great deal of experience in this area, and resettlement for this project would be included as a small part of Shanghai's already ongoing resettlement program. Given the record of the Shanghai Municipal Government in major projects involving sub- stantial demolition and resettlement, the risks are judged to be small. 12. Recommendation. I am satisfied that the proposed credit would com- ply with the Articles of Agreement of the Associaticot and I recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D.C. August 12, 1991  _ 4 . Schedule A CHINA SHANGHAI METROPOLITAN TRANSPORT PROJECT Estimated Costs and Financing. Plan $ million) Percent Local Foreign Total of total Estimated costs Major arterial roads 55.2 52.0 107.1 88.? Traffic safety and management 6.8 2.7 9.4 7.8 Technical assistance 0.0 4.2 4.2 3.5 Base cost (June 1991) 61.9 58.9 120.8 100.0 Physical contins*acies 6.2 5.5 11.7 9.7 Price contingencies 10.7 5.1 15.8 13.1 Total project cost/a 78.8 69.4 148.3 122.7 Financing vlan IDA 0.0 60.0 60.0 40.5 Shanghai Municipal Government 78.8 9.4 88.3 59.5 Total financing reQuired 78.8 69.4 148.3 100.0 La Including identifiable taxes of Y 8.07 million ($1.55 million equivalent).  - 5 - Schedule B CHINA SHANGHAI METROPOLITAN TRANSPORT PROJECT Procurement and Disbursement Procurement Method (S million, including contingencies) Category ICB LCB Other Total Civil works 54.1 18.3 5.4 77.8 (37.4) (12.6) (3.7) (53.8) goods and equipment - 1.0 0.9 1.9 (0.7) (0.9) (1.6) Technical assistance - - 4.6 4.6 (4.6) (4.6) Resettlement - 56.2 - 56.2 (0.0) (0.0) Taxes and overheads - - 7.8 7.8 (0.0) (0.0) Total 54.1 75.5 18.7 148.3 (37.4) (13.3) (19.2) (60.0) Z of loan fwuds 62.3Z 22.3? 15.42 100.0? Notes Figures in parentheses represent the amounts (including contingencies) expected to be disbursed from the credit proceeds. Disbursement ($ million) 1. Civil works 51.1 70? of total expenditures for civil works 2. Goods and 1.5 100? of foreign expenditures, equipment 100? of expenditures (ex-factory), and 752 of local expenditures for other items procured locally 3. Technical 4.6 100? of total expenditures assistance 4. Unallocated 2.8 Total 60.0 Estimated Disbursements ($ million) IDh fiscal year FY92 FY93 FY94 FY'5 FY96 FY97 Annual 6.0 3.1 15.0 22.1 9.2 4.6 Cumulative 6.0 9.1 24.1 46.2 55.4 60.0  . 6 - Schqdule C CHRINA SHANGHAI METROPOLITAN TRANSPORT PROJECT Timetable of Kel Prolect Processing Events (a) Time taken to prepare the projectt 18 months (b) -Project prepared bys The Shanghai Municipal People's Government, with the assistance of consultants (c) First presentation to IDA and first May 1988 (identification) missions (d) Departure of appraisal mission: September 1989 le) Negotiations: April 1991 (f) Planned date of effectiveness: December 1991  -7- Schedule 0 Page 1 f 3 STAUS OF WUl GRWP OPRATIOIS IN THE PEOPLE'S REPUBLIC OF CHINA A. STATEMENT Of SW LOS AND IDA CREDITS (As of Jura 30, 1991) Loan? rAUt (USS willion) Credit Hor- (net of cancew lations) Number FY rower Purpose a IDA Undisb. (a) Ten loans and fourteen credits have been fully disbursed. 1030.5 793.9 Of ltch SECAL