China - Anhui Provincial Highway Project

Report No. PID6606 Project Name China-Anhui Provincial Highway Project (@) Region East Asia and Pacific Sector Transport Project ID CNPE50036 Borrower People's Republic of China Beneficiary Anhui Provincial Government Implementing Agency Anhui Provincial Communications Department (APCD) Mr. Li Yunduo, Director, APCD Mr. Liu Xiaoyao (contact person) 9th Floor, Huayi Mansion, No. 95 Shouchan Road, Hefei, Anhui, China Tel. No. 86-551-265-7273 86-551-263-2446 Fax No. 86-551-264-8049 Date this PID Prepared October 7, 1998 Date Initial PID Prepared February 24, 1998 Appraisal Date August 30 - September 2, 1998 Tentative Board Date December 1998 Project Cost/Financing: IBRD 200 million Central Government 77 million Provincial Government 177 million Total costs 454 million Country and Sector Background 1. Since the early 1980s, China's transport demand has grown much faster than capacity and the ability of the system to deal with it. This has led to increasing bottlenecks and delays, declining quality of service, and an enormous backlog of deferred investments. Compared to other countries, road network density in China is still very low, particularly when measured on an area basis. China has 19 linear km/1000 ha of road, which is only 3 W of that of USA. Governments at all levels have therefore embarked on a major highway investment and improvement program. By the end of 1997, highway mileage of the whole China has reached 1.2 million km, of which high-grade highways (motor vehicles only) have exceeded 19,400 km. The total length of completed expressways counts for 4,771 km and the current highway network is accessible to all county centers, 97 9 of townships, and 81 W of villages. 2. At the central level, the basic strategy is to develop a National Trunk Highway System (NTHS) for the exclusive use of motor vehicles (giving priority to five north-south and seven east-west corridors). The Ministry of Communications (MOC) has been developing the NTHS, consisting of 12 interprovincial trunk expressways spanning China and totaling some 35,000 km.  The Bank has already been involved in the construction of substantial sections of these priority corridors of NTHS. At the provincial/regional level, the strategy is to concentrate on network maintenance and the expansion and improvement of provincial and rural road networks. 3. According to the national plan for poverty alleviation of 80 million people within 7 years, attention is being paid to expedite the highway construction in poor areas. This policy agenda envisages that at least each county center would be connected to a major trunk highway by a collector/distributor road and that more than 85 W of administrative villages would be accessible to highways. MOC has been recently restructured, but it still needs to be strengthened to carry out its reformed mandate in matters such as finance, standardization for planning, management and operation of the NTHS. Local (provincial and municipal) governments are expected to continue to mobilize most investment resources required (including access to private investment and capital markets) and to modernize maintenance capacity and improve cost recovery. They are also expected to further the development of the road user services and road construction industry through deregulation and promotion of competition, access to modern technology and better management. The Bank has prepared a report (No. 11819-CHA dated February 1994), "CHINA - Highway Development and Management Issues, Options and Strategies", which provides recommendations for action in the foregoing areas which will form the basis for future Bank Group assistance in the sector. Furthermore, the Bank has recently issued a report (No.15959-CHA, April 23, 1998), "China Forward with One Spirit: A Strategy for the Transport Sector", which provides recommendations for action in the transport sector including highways. 4. Anhui is a land locked interior province, with a level of economic development far that of coastal provinces. Anhui with the capital in Hefei covers a total land area of 139,200 km2 occupying 1.4 W of the total for China, while the population (1995) amounted to about 60 million or about 4.9 W of the national total. Agricultural and mineral extraction are the main resources in Anhui. The provincial gross domestic product per capita was 2,696 yuan in 1995, only 71 W of the national average. Lack of transport infrastructure is one of the factors behind the depressed economic conditions in these provinces. 5. The national highway Route 206 runs parallel tot he proposed expressway (HAE) with a total length within the direct influence area of 175 km. Traffic volume on this Route 206 has rapidly increased since 1985. In May 1996, the daily traffic ranged between 12,500 and 22,000 vehicles per day, having grown at an average rate of 15.9 W in the previous ten years. An OD survey (conducted on May 1996) indicates that small passenger (32.5 W ), and medium trucks (28. 8 t) make up most of the traffic, and that the types of freight transported are mostly mineral resources (coal, iron, and oil) and building materials including cement. Under the current Ninth Five-Year Plan (1996- 2000), Anhui Province is giving priority to expanding, maintaining and strengthening the existing national and provincial highway network. Project Objectives 6. The proposed project would have the following objectives: (a) relieve traffic congestion and improve the mobility and integration of interprovincial trade, commerce and tourism between the low-income province of Anhui and the coastal region with its large potential markets and deep-water ports; (b) to -2 -  improve and rehabilitate the existing national and provincial highways; (c) to improve the safety of road transport; and (d) to strengthen the institutional capacity of the Anhui Provincial Communications Department and its related sector institutions, through provision of training, technical assistance and equipment, in planning, design, construction, operation and maintenance. Project Description 7. The project include construction of two sections of a 153 km Hefei-Anqing Expressway (HAE), one of 126 km between Hefei and Gaohebu (with a design speed of 120 km/hr) and another of 27 km from Gaohebu to Anqing (with a design speed of 100 km/hr). These sections would be common to two expressways whose construction is partly being supported by the Bank, one connecting Beijing with Fuzhou and the other connecting Shanghai with Chengdu. Other policy, physical and institutional components are aimed improving the quality of highway maintenance, traffic safety and administration in province. 8. The proposed project would comprise: (a) construction of a 153 km expressway connecting Hefei and Anqing (HAE). (b) a program to improve national and provincial highways. This program involves: i) Improvement and rehabilitation of existing national and provincial highways (6 highway sections with a total length of 240 km); and ii) Analysis of Planning, Finance, and Operation of Toll Expressways. (d) a highway safety component. This component will involve; i) Improvement of black spots (i.e. intersections, and improvement of sections with insufficient sight distance) and ii) a Study of highway traffic accidents. (c) Institutional strengthening/training of agencies/institutions involved in highway research, planning, design, construction supervision, construction, environmental monitoring, resettlement, highway safety, operation and maintenance. Project Cost and Financing 9. The project is estimated to cost about $ 454 million (still tentative), including land acquisition and contingencies. The Bank loan of about $ 200 million would be onlent to Anhui Province. It would be at the Bank's standard interest rate for LIBOR-based US dollar single currency loans, with a maturity of 20 years, including a 5 year grace period. The Central Government (MOC) would provide the equivalent of about $77 million, while Anhui Province would provide the equivalent of about $177 million or the remaining costs of the project. Implementation 10. APCD has overall responsibility for project preparation and implementation. The Anhui Highway Administration Bureau (AHAB) is responsible for the implementation of the HMP and the Highway Safety Program. APCD has established a World Bank Loans Project Execution Office (PEO) and supplied it with adequate staff, offices, related equipment and operating budget. It will -3 -  ensure coordination among all the involved agencies and to affect the smooth preparation and implementation of the project. Overall direction of the project at the central level would rest with MOC. Since this would be the first Bank-financed project to be implemented by APCD, MOC would assume a coordinating role and provide more than usual technical support. 11. The International Tendering Company has been retained as the procurement agency for all aspects of civil and electrical and mechanical works of the project requiring ICB and for equipment to be procured from abroad. The supervision of construction of the HAE would be carried out by a joint foreign/local supervision team. The project would be implemented during 1999- 2003. Rationale for Bank Involvement 12. The Bank's Country Assistance Strategy (CAS) for China (16321-CHA, March 1997 and Progress Report (R98-107, May 28, 1998)) supports China's strategy to reduce poverty and to relieve infrastructure bottlenecks, by inter alia, rapidly modernizing and expanding its highway system. In addition, the CAS supports China's efforts to direct more of its investments to the interior provinces to help arrest the rising inequalities between the prosperous coastal and southern provinces and the rest of the country. The project would help reduce infrastructure bottlenecks by increasing highway capacity through construction of expressway (HAE) in the Province's key priority corridor (most segments of HAE are important sections of NTHS). This project would contribute to the alleviation of the poverty by providing direct access to ports and major cities in the coastal provinces, which in turn would help arrest a growing regionalism while furthering the facilitation and cost reduction of transport, which are key requirements for market-oriented reforms to succeed. The proposed highway maintenance component would be aimed at stabilizing the condition of the existing network at a sustainable level. Bank support is also justified by assistance to institutional and human resources development of the agencies involved in highway planning, design, construction, supervision, operation and maintenance. Bank involvement is expected to contribute the improvement of traffic safety. The project would foster improved practices in the areas of environment protection and land acquisition and human resettlement. Lessons Learned from Past Operations in the Sector 13. The Bank has accumulated substantial experience through the preparation and implementation of 20 highway projects in China, seven of which have been completed. While the overall performance of these projects is by and large satisfactory, a number of problems have occurred, which have been taken into consideration in the proposed project's design. The problems include: inadequate preliminary engineering designs and bid documents; quality control of construction; late commencement of electrical and mechanical facilities component (which has delayed completion of some projects and necessitated extension of the closing date of several Bank loans); and the need for improved highway management and operation, especially for toll expressways. 14. The engineering designs and bid documents for the proposed expressway including E & M facilities, have been reviewed by international experts from the early stage of project preparation. Quality control of construction will be addressed through increasing the frequency and quality of the Bank's - 4 -  supervision. This will be reflected in the proposed supervision mission plan. Timely completion of the E&M component will be achieved through strict control and early commencement of the design and tendering procedures. Management and operation of the new expressway will be less problematic than in other provinces because of the already functioning expressway company. A study to be completed early in the project will indicate how the operation of the new expressway can best be integrated with that of those already in operation. 15. There is also a concern that funds for highway maintenance might be insufficient to cover an expanding and higher grade highway network. During appraisal , agreement was reached on a program to monitor maintenance activities and results, and realistic annual targets for their future condition. In the proposed highway maintenance component, about $ 20 million of Bank's loan will be allocated to implementing part of the agreed program. 16. Previous experience with highway safety programs in China has pointed to the difficulty of their implementation due to lack of coordination between the Traffic Police and the Highway Departments. This issue reflects a general difficulty with inter-departmental coordination in China. However, in Anhui Province, coordination between these agencies is better than other provinces. It has been agreed that the necessary data on the traffic accidents would be provided for the proposed traffic accident analysis, and its analysis will benefit from participation of the Traffic Police. APCD has already set up a research team with its Highway Administration Bureau as the lead unit, with participation of the Traffic Police. In addition to the study on traffic accidents, the improvement of blackspots would be included in the proposed highway safety component. 17. Experience of previous highway projects in land acquisition and resettlement activities has generally been satisfactory . A Bank resettlement specialist has been involved from the beginning of the preparation of this project. Experience in the environmental area in China has also generally been favorable. However, more attention would be paid to environmental supervision during construction and to training of personnel. Environmental Aspects 18. The project is a category "A" from an environmental point of view. Environmental impact assessments (EIA) and Environmental Action Plans (EAP) have been prepared for the proposed expressway. Major environmental impacts include noise and air pollution during construction and operation; alteration of hydrological regimes, soil erosion and impacts on local ecology during construction; impacts on cultural relics; and transportation of construction materials during construction. The final EIAs and EAPs were submitted to the Bank in June 1998. With respect to the Highway Maintenance Program (HMP), a Sectoral Environmental Assessment approach would be applied. The Initial Environmental Evaluation Reports (IEE) and EAPs were submitted to the Bank in May 1998 and found satisfactory. Land Acquisition and Resettlement Aspects 19. The project will require land acquisition and resettlement. The Resettlement Action Plans (RAPs) for the proposed expressway were submitted to the Bank in May 1998. Efforts were made during project preparation to minimize land acquisition and resettlement through modifications to highway - 5 -  alignments and designs. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending October 9, 1998. - 6 -