China - Liaoning Urban Transport Project

Document of The World Bank Report No: 18800-CHA PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$150.0 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE LIAONING URBAN TRANSPORT PROJECT February 25, 1999 Transport Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective February 1998) Currency Unit = RMB RMB 1=US$ 0.12 US$ 1.00 = RMB 8.30 FISCAL YEAR January I December 31 ABBREVIATIONS AND ACRONYMS APTC Anshan Public Transport Company LUTP Liaoning Urban Transport Project ARO Resettlement Office of Anshan Urban MFB Municipal Finance Bureau Construction Bureau ASPT Anshan Public Transport MOF Ministry of Finance ASRI Anshan Road Infrastructure MV Motorized Vehicle ASRM Anshan Road Maintenance MVECS Motor Vehicles Emissions Control Strategy ASTA Anshan Technical Assistance NCB National Competitive Bidding ASTM Anshan Traffic Management NMHC Non-Methane Hydrocarbons AWP Annual Work Plan NMV Non-Motorized Vehicle CAS Country Assistance Strategy NPV Net Present Value CPO City Project Offices NRCR National Research Center for Resettlement EA Environmental Assessment OPRC Operations Procurement Review Committee EAP Environmental Action Plan PAP Project Affected People EIA Environmental Impact Assessment PHRD Policy and Human Resources Development (Fund) EPB Environment Protection Bureau PIP Project Implementation Plan ERR Economic Rate of Return PPMO Provincial Project Management Office FLASS Fushun Land Acquisition Service Station PO Project Office FSPT Fushun Public Transport PFB Provincial Financial Bureau FSRI Fushun Road Infrastructure PSR Project Supervision Report FSRM Fushun Road Maintenance RAP Resettlement Action Plan FSTA Fushun Technical Assistance RMC China Resident Mission FSTM Fushun Traffic Management SEPA State Environmental Protection Administration GOC Government of Chini SPTGC Shenyang Public Transport Group Company ICB International Competitive Bidding SOE Statement of Expenditures ICR Implementation Completion Report SYPT Shenyang Public Transport ITC International Tendering Company SYRI Shenyang Road Infrastructure LFB Liaoning Financial Bureau SYRM Shenyang Road Maintenance LPB Liaoning Planning Bureau SYTA Shenyang Technical Assistance LPLT Liaoning Project Leading Team SYTM Shenyang Traffic Management LPTTS Liaoning Province Traffic and Transport Study VOC Vehicle Operating Costs LUCRPO Liaoning Urban Construction and Renewal Project Office Vice President: Jean-Michel Severino Country Manager/Director: Yukon Huang Sector Manager/Director: Jitendra N. Bajpai Task Team Leader/Task Manager: Richard G. Scurfield  CHINA LIAONING URBAN TRANSPORT PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 3 2. Key performance indicators 3 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 4 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic ciloices 6 C. Project Description Summary 1. Project components 7 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 10 4. Institutional and implementation arrangements II D. Project Rationale 1. Project alternatives considered and reasons for rejection 14 2. Major related projects financed by the Bank and other development agencies 14 3. Lessons learned and reflected in proposed project design 15 4. Indications of borrower commitment and ownership 16 5. Value added of Bank support in this project 17 E. Summary Project Analyses I. Economic 17 2. Financial 17 3. Technical 18 4. Institutional 20 5. Social 20 6. Environmental assessment 20 7. Participatory approach 21 F. Sustainability and Risks 1. Sustainability 22 2. Critical risks 22 3. Possible controversial aspects 23  - jj_- G. Main Loan conditions 1. Effectiveness conditions 23 2. Other 23 H. Readiness for Implementation 23 1. Compliance with Bank Policies 24 Annexes Annex 1: Project Design Summary 25 Annex 2: Detailed Project Description 27 Annex 2A: Project Description: Institutional Strengthening and Technical Assistance 35 Sub-Component 37 Annex 2B: Liaoning Motor Vehicles Emissions Control Strategy Study Annex 3: Estimated Project Costs 38 Annex 4: Cost Benefit Analysis Summary 40 Annex 5: Financial Summary 46 Annex 6: Procurement and Disbursement Arrangements 47 Table A: Project Costs by Procurement Arrangements 52 Table Al: Consultant Selection Arrangements 53 Table B: Thresholds for Procurement Methods and Prior Review 54 Table C: Allocation of Loan Proceeds 55 Annex 7: Project Processing Schedule 56 Annex 8: Documents in Project File 57 Annex 9: Statement of Loans and Credits 58 Annex 10: Country at a Glance 61 Annex I 1: Institutional Arrangements 63 Annex 12: Summary of Environmental Assessment and Action Plans 66 Annex 13: Summary of Resettlement Action Plan 72 Annex 14: Assessment of Project Financial Management Systems 78 Annex 15: Development Background by City 81 MAP(S) IBRD 30063 - Liaoning Urban Transport Project - Shenyang IBRD 30062 - Liaoning Urban Transport Project - Fushun IBRD 30061 - Liaoning Urban Transport Project - Anshan  CHINA Liaoning Urban Transport Project Project Appraisal Document East Asia and Pacific Region China Country Unit Date: February 25, 1999 Team Leader: Richard G. Scurfield Country Manager/Director: Yukon Huang Sector Manager/Director: Jitendra N. Bajpai Project ID: 41890 Sector(s): TU - Urban Transport Lending Instrument: Specific Investment Loan (SIL) Theme(s): Poverty Targeted Intervention: No Project Financing Data N Loan L Credit El Grant E Guarantee O Other (Specify) For LoanslCredits/Others: Amount (US$m) 150.0 Proposed Terms: El To be defined LI Multicurrency N Single currency USD E Standard Variable LI Fixed X LlBOR-based Grace period (years): 5 Years to maturity: 15 Commitment fee: 0.75% Front end fee on Bank loan 1.00% Financing Plan: Oi To be defined Source Local Foreign Total Government 222.5 11.4 233.9 IBRD 0.3 149.7 150.0 IDA 0.0 0.0 0.0 Total: 222.8 1 161.1 383.9 |Borrower: People's Republic Of China | Guarantor:  Page 2 Responsible agency: Shenyang, Anshan and Fushun Municipal Governments via Liaoning Urban Construction and Renewal Project Office (LUCRPO) Address: No.19 Caita St. Shenyang Contact: Mr. Zeng Juequn, Director Tele: 024-23842898 Fax: 024-23922290 E-mail: LUCRPOA@PUB.SY.LNPTA.NET.CN Liaoning Provincial Bureau of Finance Debt Management Division 103 North Nanjing Street, Heping District Contact: Mr. Ma Shulai, Vice-Division Chief Tele: 024-22702780-1103 Fax: 024-22834167 E-mail: LPBFMSL@PUB.SY.LNPTA.NET.CN Implementing agency(ies): Shenyang Project Office Address: Wanghu Road No. 2 Heping District, Shenyang Contact Person: Mr. Sun Dong, Project Manager Tel: 024-23242198 Fax: 024-23873718 Email: Anshan Project Office Address: Jinglong Building 2109, Shengli Road, Tiedong District, Anshan Contact Person: Mr. Mao Shuan Zhu, Project Manager Tel: 0412-2240027 Fax: 0412-5532355 Email: Fushun Project Office Address: Hebei Road 60-2, Xinfu District, Fushun Contact Person: Ms. Yang Hua, Project Manager Tel: 0413-7725098 Fax: 0413-7725098 Email: Estimated disbursements ( Bank FY/US$M): FY 1999 2000 2001 2002 2003 2004 Annual 10.0 35.0 45.0 33.8 19.0 7.2 Cumulative 10.0 45.0 90.0 123.8 142.8 150.0 Project implementation period: July 1999 to June 2004 Expected effectiveness date: 07/01/99 Expected closing date: 12/31/2004 OCS PAD) Form: Octohcr 9, 1998  Page 3 A: Project Development Objective 1. Project development objective: (see Annex I) Within the three cities of Shenyang, Fushun, and Anshan in the Province of Liaoning the objective is to improve urban transport system productivity so as to facilitate economic and social developmenit w ithin the project cities. Specifically the project will: I. Alleviate bottlenecks in the road system through the development of higil grade facilities. secondary roads, rail crossings, missing links, and widenings. 2. Increase efficiency and effectiveness of public transport services throughi development of bus corridors and passenger facilities and modernized maintenance facilities. 3. Improve maintenance of road investments through development of modernized and sustainable pavement management systems. 4. Improve environmental sustainability of project investments through development of a motor vehicle emissions control strategy. 5. Improve operational efficiency and safety of the road system through channelization of modal traffic and development of NMV facilities, signalization, and other traffic management measures. 6. Strengthen local capacity for urban transport system management through study tours, technical assistance, and targeted training. 2. Key performance indicators: (see Annex I) Objective Performance Indicators Alleviate infrastructure bottlenecks * Corridor Journey (Travel) Time Improve maintenance of road investments * Pavement condition * Sustainable maintenance budget * Average cost of maintenance performed Improve environmental sustainability of * Air quality standard project investments 0 Development of a Motor Vehicle Emissions Control Strategy * Adoption and implementation of the Strategy Improve operational efficiency and safety of * System throughput measured by screen line flows by mode with road system occupancy and travel time * Total accidents, total deaths, and percent involving pedestrians and bicyclists Increase the efficiency and effectiveness of * Annual subsidy public transport service 0 Average operating cost per revenue km. service  Page 4 B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R98-107 Date of latest CAS discussion: 05/28/98 China: Country Assistance Strategy Full Report, 16321-CHA, February 27, 1997 Progress Report, R98-107, May 6, 1998 The sector-related Country Assistance Strategy goals of the project are: 1. Promote Growth with Economic Stability; 11. Alleviate Infrastructure Constraints; and V. Safeguard the Environment. For the three project cities of Shenyang, Fushun and Anshan, the project will contribute to these goals by increasing city-wide productivity and raising the standard of living for the cities' inhabitants, through targeted and sustainable improvements to the urban transport system. 2. Main sector issues and Government strategy: Sector Issues The major issues facing the urban transport sector in China stem from increasing motorization rapid urbanization, inefficient public transport and poorly coordinated institutional arrangements for managing urban traffic. Specifically, 3 Urban traffic congestion is already an important constraint to urban productivity; * Air pollution from vehicle emissions poses a serious health threat to the urban population. * Road safety is a major issue in all Chinese cities. Also the technical capacity to analyze problems, and to design and implement solutions is weak. In particular, use of roads by pedestrians and bicycles is becoming increasingly dangerous. * The road network density in China's cities is typically lower than that found elsewhere and investment in new capacity is needed. * Cities must make more efficient use of the existing road network. However, while modern traffic management practices are beginning to develop in some cities, the complementary traffic engineering skills are still in short supply. * Public transit is hindered by a lack of capacity and outdated equipment, and is operating on congested roads which result in slow operating speeds. * Public transport companies are encumbered by inefficient management practices as well as non-core obligations. However, public transport enterprise reform is taking place in many cities in China, often with the participation of private operators.  Page 5 * The role of government is evolving from directly producing services (as an operator) toward enabling their provision (as a franchise manager). However, these changes are almost always taking place within an inadequate regulatory environment. * Institutional mechanisms for the coordination of urban land use and transportation developmenit exist through the "master planning" process, but the relationships between land use and transport are not well understood. * In most cities, policy-making, management and regulation of the sector is uncoordiniated and uneven. Government Strategy In response to the need for a comprehensive treatment of these topics, a symposium was held in Beijing in late 1995, to discuss China's Urban Transport Development Strategy, sponsored by the Ministry of Construction, Ministry of Finance, the People's Bank of China, the World Bank and the Asian Development Bank. The concluding statement of the symposium (summarized below) provides the basis for urban transport policy and strategy in China. Two to three years ago, only the very largest municipalities were concerned ahout urban transport. Water supply and sewage disposal seemed more urgent problems. This has changedfor one very clear reason: the rising number of motor vehicles - cars, trucks, taxis and motorcycles - has resulted in a sharp increase in traffic congestion. Urban transport is complex. Action is needed in many areas at the same time - policv, institutions, management, prices, infrastructure construction and other investments. It does not help to solve one problem if others are ignored There was considerable agreement among the delegates on the general lines of actions to be taken. These were brought together as five principles, four criteria and eight actions. The five principles represent themes that should guide urban transport planning and operations at this time in China's development. They were that: * Transport is about moving people and goods, not vehicles; * Transport prices should reflect full social costs; * Transport reforms should deepen to align with socialist market principles so as to increase efficiency; * The role of government should be to guide transport development; * The role of the private sector in providing transport services should be encouraged. City plans and policies for managing transport should meet four criteria: * Environmental sustainability * Economic viability * Financial affordability * Social acceptability Consistent with these principles and criteria, eight actions are recommended to: * Reform urban transport administration;  Page 6 * Upgrade the status of traffic management; * Prepare a strategy to mitigate motor vehicle air and noise pollution; * Develop policies to manage traffic demand; * Develop a strategy for mass transit; * Reform public transport management and operations; * Develop a financing strategy for the transport sector; * Strengthen the framework for transport planning and capacity building. Agreements reached at the Symposium, in conjunction with the CAS for China and local development plans, together provide the Strategic Context for this project. 3. Sector issues to be addressed by the project and strategic choices: All three project cities of Shenyang, Anshan and Fushun face common issues with respect to the development of their urban transport systems. These include: Fragmented Policy-Making. Policy-making within the sector suffers from poor institutional coordination and low technical capacity to support decision-making. Inadequate Road Network. Each city's road network is poorly developed and lacks hierarchy. Other factors include: * The division of the central area by railways with inadequate road crossings; o Underdeveloped primary road systems within the road hierarchy; * Missing links in the road network causing poor network connectivity; * Inadequate budgets and institutional problems; * Conventional road maintenance planning is not practiced. Loss of Public Transit Mode Share. Several factors contribute to declining mode shares for public transit including increasing motorization of travel with rising affluence. Other factors include: * Large increases in the number of motor vehicles; * Slow bus operating speeds (slower than bicycle travel, ranging from 5-8 km/hr); * Poorly developed route networks and transfer points; * Larger conventional buses are losing favor in comparison with minibuses which provide a higher-level of service, but which can often cause congestion at stops; * Underdeveloped regulatory capacity to manage competition and the entry of new participants; * Large public transport companies in each city continue to struggle to reform their operations within a context of fixed public operating subsidies and fare structures. Chronic and Recurrent Congestion. Slow operating speeds and safety incidents are caused by: * A lack of proper control and management of mixed traffic; * A lack of adequate mode segregated facilities; * Responsibility for traffic management is also generally limited to the enforcement aspect, with limited capacity to undertake traffic impact analysis, circulation plans, safety analysis. Additional background on the sector issues facing each city is presented in Annex 15.  Page 7 C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The project will support the development of infrastructure, services and institutions in the three cities of Shenyang, Fushun and Anshan as described below: Shenyang - The project will augment the existing urban road network through the construction of additional capacity in the principal east-west corridors, provide additional crossings of the railway lines which divide the city, improve the quality of road maintenance and traffic management, improve the quality of public transport services through the provision of exclusive bus lanes and improved mainteniance and bus terminal facilities, and strengthen local capacity for the management of urban transport operations and services through studies, technilcal assistance and training. Public Transport. The project will construct a bus maintenance repair facility with the capacity to maintain 1.000 buses per annum, a bus terminus which will provide facilities for three bus routes and parking spaces for 150 buses, and provide related equipment for these facilities. Bus priority facilities will be provided, including a proposed exclusive center-lane busway. Traffic Management. The project will finance traffic management improvements to 38 local roads. These improvements will include channelizationi of intersections, road widening, an area traffic control system, traffic signs and markings, the development of pedestrian facilities and the provision of 18.1 km of NMV exclusive roads. Road Infrastructure. Three major east-west corridors will be developed under the project. The Beiye-Lianhe corridor involves the reconstruction of two major east-west roads to form a contiguous corridor, the construction of the Gonghe Railway overpass and the Gonghe Interchange. The Jianshe- Nanwu Road improvements will require the construction of a 4 km section of elevated road and the Fangxinig Square interchange. The third corridor is Pangjiang Jie Street, a four-lane section of the First Ring Road, which will be improved to a six-lane standard. Road Maintenance. The project will finance re-surfacing and reconstruction of 43 local roads, and the purchase of road maintenance equipment. Fushun - The project will strengthen the urban transport network through the construction of the Hunhenan Corridor, (a new major east-west road corridor), the provision of bus priority facilities and NMV exclusive roads, support bus maintenance and road maintenance, the provision of improved traffic management facilities, and strengthen the local capacity for the management of urban transport operations and services through studies, technical assistance and training. Public Transport. The project will provide modern bus maintenance equipment and develop 6.7 km of exclusive bus priority facilities on existing and improved roads. Traffic Management. The project will finance improved traffic management facilities along two major road corridors and in one area. Seventeen junctions will be included in a coordinated traffic control system.  Page 8 Road Infrastructure. The project will construct the 18.5 km Hunhenan expressway along the south bank of the Hun river, and a parallel 18.3 km local service road. The expressway will provide a road for motor vehicles only, and its construction will allow the improvement of the parallel Hunhenan Road as an arterial road for mixed traffic. The project will also provide access from the Hunhenan corridor to several of the city's major development zones, including two economic development zones, two industrial areas, the railway station and the new Wanxin city center area. The project will also finance the Wanxin bridge and interchange to service a resettlement area on the north side of the river. Road Maintenance. The project will finance the reconstruction and paving of 15.5 km of roadway, along four routes and finance modern road maintenance equipment. Anshan - The project will finance the reconstruction of the main north-south corridor and the construction of an interchange between the primary north-south (Jianguo) and east-west (Yongchang Jie to Huangang Road) corridors. The project will also provide funds to upgrade an existing tram exclusive way, bus priority facilities and NMV exclusive roads. The project will also finance traffic management improvements, road maintenance works and technical assistance, including studies and training to strengthen the institutions in the city to manage and operate urban transport services more effectively. Public Transport. The project will finance works whiich will provide 6.2 km of tramway and 5.4 km of busway. It will also finance equipment for upgrading of the tramway system. In addition, the project includes a bus transfer station which will serve 17 bus routes. Trofflc Management. The project will finance channelization of eight junctions, develop 5.6 km of NMV exclusive roads, and finance off-street parking facilities. In addition, the project will provide traffic signal equipment, signs and marking, and specialized management vehicles. Road Infrastructure. The project will construct nine facilities including improvements to the principal north-south (Jianguo) corridor in the city, the Wuyi interchange, and the Shahe bridge (which will provide an improved truck route to the north of the city.) Road Maintenance. The project will reconstruct Hongqi Road (4 km), sidewalks along six roads, and selected improvements to other urban roads. Institutional Strengthening and Technical Assistan ce. This sub-component will support the development of selected sector institutions in the three cities through the provision of appropriate training and office equipment as well as providing consulting services to assist with the detailed design activities for some of the smaller and specialized components (see Annex 2A for further details). The major items are as follows: Public transport. The project will finance (i) additional design studies of the bus priority facilities and the preparation of operating plans for their use once they are completed; (ii) a review of the options for public transport reform in the three cities. This study will review experience in other cities in China and from other cities around the world so as to permit the development of plans for the development of future policies and regulations in the project cities. Traffic management. The project will finance additional design studies of the area control systems, the development of parking policy and management plans, and an analysis of traffic accidents. Road maintenance. Plans will be prepared to assist municipalities to establish formal road  Page 9 maintenance systems, and staff will be trained through domestic and international training. Motor Vehicles Emissions Control Strategy (MVECS). The project will finance the preparation of a strategy study and action plans to assist the municipalities to identify and implement appropriate measures to protect the environment. Project Management. Consulting services will be financed to assist with the preparation of bid documentation and provide construction supervision, and to provide training to improve the quality of project supervision. Indicative Bank- % of Component Sector Costs % of financing Bank- (US$M) Total (US$M) financing A. Shenyang Component 165.4 43.1 63.6 42.4 B. Fushun Component 91.3 23.8 38.1 25.4 C. Anshan Component 119.2 31.0 41.6 27.7 Technical Assistant 6.5 1.7 5.2 3.5 Total Project Costs 382.4 99.6 148.5 99.0 Front-end fee 1.5 0.4 1.5 1.0 Total Financing Required 383.9 100.0 150.0 100.0 2. Key policy and institutional reforms supported by the project: The project will support the following on-going reforms: Sector Management. Inadequate urban transport sector coordination and management is one of the major challenges facing all Chinese cities. In order to address this problem, a transport management committee has been established in all three cities to strengthen policy making within the sector. These committees are made up of officials representing all the essential sector agencies. They have high-level authority to coordinate all aspects of urban transport management, including the development, approval, review and monitoring of urban transport management policies. Public Transport Reform. Public transport reform programs were initiated in each city in the early 1990s. Each seeks to maintain and attract public transport riders through improved services while reducing the need for public subsidies. The major strategies to achieve these goals include improving operating efficiencies and the introduction of private participation in the sector. Strategies to cut costs and improve operating efficiencies include consolidation of units, divestiture of assets (relocation to lower cost locations), replacing ticket conductors with fareboxes, re-deployment of staff (to new functions, contracting status or other tertiary operations). In parallel, each municipality is experimenting with various "joint operations" to introduce private participation in the sector. The project will support the development of public transport in each city through the provision of bus priority corridors and facilities, and the modernization of maintenance capabilities. In addition, the project seeks to reduce of public subsidies as a measure of project performance. Finally, studies and training proposed under technical assistance will further the development of policies to promote more diverse operating practices and ownership of public transport services. Officials in Liaoning have already undertaken a study tour of the public transport system in Curitiba, Brazil, at their own initiative and using  Page 10 local funds. Traffic management circulation and enforcement plans, parking management plans . In the past, the building of new roads has always been the first priority of most municipal governments in China. Increasing the efficiency of existing roads has not been given sufficient priority. During project preparation, both the provincial and municipal governments recognized the importance of the traffic management improvements. The Shenyang city government has created a series of policies to promote traffic management. The other two cities have also introduced traffic management improvement policies. During the implementation of the project, the traffic management policies will be reviewed, monitored and improved through the provision of training, technical assistance and study tours. Institution building for road maintenance. As described above, due to inadequate funding and under-management of road maintenance, there is no systematic routine or periodic maintenance of roads in the project cities. This has resulted in a large backlog of maintenance needs. City officials now recognize the need to institute reforms including raising maintenance budgets to sustainable levels, staff reductions, and gradual transformation of city maintenance crews to contracting units. In order to facilitate this reform, it is proposed to pilot a maintenance management system under the project which will include the development of performance and maintenance standards, and work program planning, budgeting and scheduling. In parallel, maintenance funding would be brought to needed levels. Environmental emissions strategy. The three project cities - Shenyang, Anshan and Fushun - recognize that unchecked growth in motor vehicles fleet will gradually erode the benefits of the project. The cities therefore recognize the need to implement controls on vehicle emissions. The proposal to develop a Motor Vehicles Emissions Control Strategy (MVECS) for Liaoning will take advantage of both international experience and the experience of other cities in China. The program will include: implementation of an unleaded fuiel program, establishment of a vehicle Inspection and Maintenance (I/M) system, establishment of a Vehicle Emission Research Center, introduction of catalytic converters, development of alternative fuel technologies, and expansion of the automated monitoring network to monitor air pollution. It will also include a training component. If the program is implemented as envisaged, the program is expected to reduce mobile source contribution to the overall air pollution by 30-40 percent over a five-year period. Annex 2B provides more information on this activity. The development of the MVECS is scheduled to begin in July 1999, but it should be noted that the compilation of emissions information during the preparation of the EAs for the LUTP represents a substantial step towards the program objectives. 3. Benefits and target population: The direct benefits of the project are expected to accrue to passenger and freight transport system users in the form of reduced travel time, lower transport costs, and increased reliability and safety of the urban transport system. The project will also strengthen the policy-making, regulatory, and implementation capacity of sector institutions. Secondary or indirect effects of these benefits should include lower producer (and possibly consumer) prices, increased sustainability of sector investments, and improved sector management, together resulting in improved development potential of the city. Consideration of geographically-based target populations also influenced project design in each city. In Shenyang, infrastructure improvements will allow public transport services to reach populations in the north-eastern section of the city. This area was previously under-served by traditional transit due to inadequate vertical clearance for buses at the Shenfu Railway underpass. In Fushun, construction of a new river crossing will facilitate relocation of residents and businesses now situated atop subsiding land in the south of the city (due to coal pits) to a new district in the north-east of the city. The new district will  Page 11 additionally be the new center for the city government. In Anshan, improvements to the road network will provide access to three industrial economic development zones to the south, supporting the municipality's goals of economic diversification. 4. Institutional and implementation arrangements: Institutional Arrangements for Implementation. Overall project management is the responsibility of the Liaoning Urban Construction and Renewal Project Office (LUCRPO), which has been established under the direction of the Liaoning Project Leading Team (LPLT). The LPLT is chaired by the vice-governor. who is responsible for urban construction activities, with members participating from the Financial Bureau, Construction Commission, Environmental Protection Bureau, Auditing Bureau and Public Security Bureau. LUCRPO will be the primary interlocutor with the Bank. In each project city, a Project Leading Group has been established. These groups are responsible for the coordination of project planning activities and implementation in their respective jurisdictions and are chaired by the vice-mayors who oversee the urban construction activities. Under their overall direction, the municipal Project Offices will manage and coordinate the day-to-day implementation of the project. Individual project components will be managed as follows (see Annex I I for description of each agency's roles and responsibilities): P Public Transport Companies, under the general direction of the Public Utilities Bureau in each city, will manage the public transport sub-components. i Traffic Brigades in each of the three cities will be responsible for traffic management improvements and will also be responsible for the implementation of the bus priority lanes. 9 Road infrastructure components will be implemented by the municipal Project Offices on behalf of the Municipal Urban Construction Commissions. * Road Maintenance Agencies within the Municipal Construction Commissions will manage the implementation of the road maintenance sub-components. * Liaoning Environment Protection Bureau will coordinate the development of the overall environmental improvement policies and municipal Environment Protection Bureaus will monitor the implementation of the environmental action plans. * Municipal Land Acquisition and Resettlement Offices will implement the resettlement activities included within the project. Implementation Arrangements. The project will be implemented over a five-year period, from July 1, 1999 to June 30, 2004. The loan will close on December 31, 2004. The Project Implementation Plan (PIP) was prepared by LUCRPO and each municipal PO for use in the management of the project. The PIP includes the implementation schedule, procurement plan, disbursement schedule, performance indicators and monitoring for the overall project and for project component activities. A copy of the PIP is available in the Project File. An Annual Review of the project will provide the opportunity to review implementation progress, to  Page 12 address emerging problems and to agree on the AWP for the following year. The review will take place by December 15 of each year starting in 1999, so as to ensure appropriate provision is made for counterpart funds in municipal budgets. Annual Work Program (AWP) will be drawn up by the implementing agencies, within the framework included in the PIP. It will provide a forward looking construction program, show the progress achieved in the preceding year, and confirm the availability of counterpart funds. It will be the responsibility of LUCRPO to assemble the AWP into a single document for discussion during the Annual Review of the project. World Bank Supervision Arrangements. Responsibility for supervision of the project will remain with the RMC field office, with participation from team members from both RMC and headquarters. Specifically, the supervision plan includes the following: * A project launch workshop will be arranged soon after Board approval which will give focus on the essential project management activities including, procurement, financial management, and implementation of the resettlement and environmental action plans. - Two formal supervision missions a year will be scheduled, including the annual review mission. All such missions will comprise the task team leader, an operations officer from RMC, plus technical, procurement or other specialists from HQ or RMC as required. Environmental, resettlement and financial specialists will visit the project at least once every year. Field-based staff will maintain regular contact with the POs between scheduled missions, and will make additional field visits as deemed necessary. * A mid-term Review of the project is scheduled for the first half of 2001. This will provide an opportunity for a more in-depth review of the project and evaluation of progress towards achievement of project objectives. Financial Arrangements. The Ministry of Finance will on-lend World Bank loan funds to the Liaoning Provincial Government (through the Finance Bureau), which will in-turn on-lend funds to each of the municipal governments of Shenyang, Anshan and Fushun. There will be no subsidiary loans to any entity beyond the municipalities. On-lending terms will be the same as the Bank's with the exception of the interest waiver and commitment fee waiver. Retroactive-flnance will be provided for civil works and consulting services in each of the project cities in the amount of US$13.0 million. The Procurement method for civil works is NCB and for consulting services is QCBS. Procurement Arrangements. Procurement arrangements are described in more detail in Annex 6. The ability of the implementing agencies to implement the procurement plan was assessed and found to be adequate. LUCRPO has managed two previous Bank projects and has generally performed satisfactorily. This agency will be supported by a tendering company that is well established and has long experience of the Bank's procurement procedures. In addition, LUCRPO propose to recruit an expatriate implementation advisor to assist them with these tasks. Finally, in collaboration with LUCRPO, training will be provided to enhance the skills of the staff assigned to the city project offices, for which staffing plans have been discussed and agreed with the Bank. Contracts subject to prior review by the Bank will be: (a) Civil Works contracts, ICB/NCB valued at  Page 13 US$2,000,000 and above; (b) contracts for the procurement of Goods valued at US$250,000 and above; and (c) Consultant Services contracts employing (i) firms, valued at US$ 100,000 and above and (ii) individuals, valued at US$50,000 and above. Disbursement Arrangements. Disbursement arrangements are described in Annex 6, Table C. A Special Account will be established in the amount of US$12 million. SOEs will be used for all contracts under US$2 million equivalent for Civil works, US$0.25 million for Goods, US$100.000 for consulting firms and US$50,000 for individual consultants and training contracts. Accounting, Financial Reporting and Auditing Arrangements . LUCRPO and each of the municipal project offices will have overall responsibility for establishing and monitoring the use of a uniform project accounting system. Financial records and accounts, in a format suggested by the Bank, will be retained by the project office and relevant agencies concerned with component funding, payment and disbursement. LUCRPO will consolidate all project financial statements from the project implementing agencies into a single project financial report on a bi-annual basis for monitoring purposes and annually for audit purposes. In line with audit arrangement for other Bank-financed projects in China, the project will be audited by the State Audit Administration. Work to refine the project accounting and reporting system will be continued during implementation. Assessment of Project Financial Management System (see Annex 14 for details). The project task team has conducted an assessment of the Project Financial Management System for Liaoning Provincial Financial Bureau (PFB), Liaoning Urban Construction & Renewal Project Office (LUCRPO), Shenyang/Fushun/Anshan Financial Bureaus, and Shenyang, Fushun, Anshan Project Offices. The review included accounting standards, internal control systems, accounting practices, staffing and reporting requirements, agency responsibilities, budget system and audit arrangement. Except as noted in the Action Plan and follow-up actions listed in Annex 14, the project is found to have in place a project financial management system that can provide, with reasonable assurance, accurate and timely information required by, and acceptable to, the Bank. It was noted that the PFB has substantial experience with the World Bank's and MOF's requirements and procedures in preparation and processing of withdrawal applications and the financial management of projects. The project's financial and accounting units, especially Fushun and Anshan, will be adequately staffed with qualified staff before project implementation. Technical assistance and focused training will be provided under the project to strengthen financial management capabilities and financial/accounting skills. In addition, detailed internal control regulations for each city's project office will be prepared in advance of the effectiveness of the project. The Bank's Resident Mission in Beijing will support the implementation of the training and technical assistance programs as necessary, and will supervise the financial management of the project. Monitoring and Evaluation. Monitoring of all aspects of project implementation activities including performance indicators, will be the responsibility of LUCRPO. Monthly reports, provided by the implementing agencies, will provide the basis for monitoring. Progress on the project will be communicated to the Bank by means of quarterly progress reports which will include both consolidated information for the total project and individual reports on each component. Every year, as the basis for the annual review, LUCRPO will collect project progress and performance data to allow actual performance to be compared against agreed indicator targets (see Annex I and PIP). During implementation, these performance indicators will be reviewed by the government and the Bank. Areas for improvement will be identified and measures to achieve them will be proposed. Special assessments will be carried out at the time of the mid-term review and project completion.  Page 14 LUCRPO will prepare a detailed project completion report and submit it to the Bank not later than three months after the loan closing date, so that the ICR can be issued within six months of the latter date. D: Project Rationale 1. Project alternatives considered and reasons for rejection: While the project rationale is rooted in the economic development goals in each city's Master Plan and transport master plan, the project itself has evolved substantially during project preparation. The use of alternatives analyses revealed where it was possible to achieve the desired benefits at lower cost and impact. Wlhere this was possible, larger scale and higher-cost infrastructure proposals were rejected in favor of more modest and well-balanced solutions. In some cases, entire concepts were abandoned. For others, over-designed facilities were scaled back while preserving options to stage construction upgrades as futtire capacity needs warrant. For example, in Sheniyang the original proposal to upgrade 17 km. of the First Ring Road to a uniform elevated 4-lane urbani expressway standard was rejected. It was replaced with a program of spot widening and grade separation. junction improvements, the enhancement of parallel routes and improved traffic management within the corridor. Other examples of scaled back investments include: Fanxinig Square in Sheniyang, Wuyi Interchange in Anshan and Hunhenan Expressway and interchianges in Fusitin. In some cases, where impacts were considered too great, proposals were rejected altogether, as with the case of the proposed Wugong Viaduct in Fushun (a viaduct which would hiave bisected a major pedestrian oriented/commercial street). [he re-scoped project allowed for the expansion of the traffic management program from area traffic control to incliude other elements such as channelization, NMV route development and parking. Likewise, the road maintenance component was expanded from equipment to include some rehabilitation works. Most significantly of all, the redesign of the infrastructure component supported transformation of the public transport component to include public transport reform and the provision of bus priority facilities. As a result, this component evolved from one which was heavily vehicle-oriented to a broader based program of reform and investment. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings (Bank-financed projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Urban transport improvement First and Second Shanghai S S Metropolitan Transport Projects Public transport reform Medium-Sized Cities S S Development Project Urban transport improvement Liaoning Urban Infrastructure S S Project  Page 15 Urban transport improvement Tianjin Urban Development and S S Environment Project Urban transport improvement Guangzhou City Center S S Transport Project Other development agencies Traffic management European Union grant financing for Beijing 2nd and 3rd Ring Road Intelligent Transport Systems Motor vehicle emission control UNDP grant financing of Beijing vehicle emissions inspection program Energy and environmental sustainability International Institute for Energy Conservation are supporting integrated transport planning in Linzhou, Henan and Xiamen (U.S. EPA financed) P/DO Ratings: HS (Highly Satisfactbry), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: A wide range of urban transport and highway projects in China, and around the world provide a wealth of lessons from which it has been possible to draw upon during project preparation. Some of the major lessons learnt are summarized below: It is important to manage investment priorities. Recent Bank-financed urban transport projects in Shanghai and Guangzhou reflect strong local interest in single-standard, high-grade, urban ring road development. Facing hard budget constraints and urban transport problems of a different scale and nature, the infrastructure components in Shenyang, Anshan and Fushun reflect a departure from this approach. In-depth analysis and consensus-building, undertaken jointly by local teams working closely together with consultants and the Bank, led to a project design reflecting a high degree of balance and ownership. It is important to manage road space more effectively. In general, all Bank-financed urban transport projects in all countries aim to demonstrate the importance of good traffic management to the safe and efficient performance of the urban transport system. The development of a consensus around this view in each of the project cities augers well for the sustainability of the project. Timely project preparation is important for successful implementation. Experience from around the world underlines the importance of rigorous, early preparation for major civil and ancillary works and early preparation for procurement activities. This is especially important in the urban transport context, where traffic and other impacts during construction may cause greater risks to project costs and schedules. Advance preparation of bidding documentation and independent design reviews have fostered smooth implementation and have helped reduce variations during the implementation period. The appointment of an implementation advisor, financed by the project, will further assist with the preparation of later contracts.  Page 16 Quality control of design activities is important to a successful outcome. The quality of road and traffic engineering design activities in China is generally very satisfactory. However, Bank experience in both the highway and urban transport sectors in China, demonstrates the importance of taking steps to ensure that the local designers are aware of best international practice. Poorly designed roads result in safety risks for users, while poorly constructed roads lower economic benefits and increase vehicle-operating costs. Design reviews incorporated in the preparation process have ensured that effective preventive actions were taken at the design stage. The Bank also financed a road safety review at the pre-appraisal stage. Quality assurance during construction is also vitalfor a successful outcome. Generally, the Bank has been satisfied with the quality of road construction activities in China. However, experience has shown, that it is necessary to build quality control mechanisms into all projects. Higher costs result from premature deterioration, when corrective actions in the form of increased maintenance and/or rehabilitation are required. To address this concern, a series of measures has been built into the project including stringent contractor prequalification, careful formulation of supervision arrangements, (including engagement of international experts), and training of local supervision staff. Witlhout sound project management tlere will not be a successful outcome. Close supervision of programs, has shown to be critically important to successful project implementation. The agreement of an annual review process and the requirement to produce an Annual Work Program are designed to ensure that project implementation proceeds efficiently. The implementation of the technical assistance and training activities is importantfor project sustainability. Based on the Bank's experience with institutional and policy aspects of urban transport projects, the balanced implementation of project investments and technical assistance are important for sustainable outcomes. During preparation, local officials have already demonstrated an appreciation of the complexities of various activities proposed in the project, and view training and other forms of technical assistance as an important part of the project. A comprehensive program has been developed as described in the PIP. Sustainability depends on the successful implementation of the resettlement and environmental programs. Experience with respect to the implementation of resettlement and environmental programs in China has generally been favorable. However, careful attention will be paid to supervision of these activities during construction including the training of personnel and the monitoring of impacts once the new facilities are in operation. 4. Indications of borrower commitment and ownership: The strongest indication of borrower commitment and ownership has been the high levels of human and financial resources which have been dedicated to the project since its inception as an idea, over ten years ago. The Bank's links to Liaoning Province in the urban sector date back to the Liaoning Province Traffic and Transport Study (LPTTS) undertaken in 1987-88 with funding from the Australian Government and the World Bank as executing agency. The study focused on the same three cities of Shenyang, Anshan, and Fushun, first undertaking a diagnostic of current urban transport conditions, and then going on to identify and evaluate projects for transport investment. The 1988 LPTTS was launched as part of the preparation of an urban investment project for Liaoning Province, but the focus on urban transport was premature. Leaders in Liaoning Province, like most other authorities in China at the time, were more interested in development of water supply and wastewater treatment. Accordingly, the Bank went on to finance two projects in these sectors. The Liaoning Urban  Page 17 Infrastructure Project was approved in early 1991 with a total investment of about $130 million, and an IDA credit of about $80 million. The credit included only a small $17 million component for urban transport investments in Shenyang. Subsequently, a second urban project, the Liaoning Environment Project was approved in 1994 for a total investment of $350 million with a loan of $1 110 million. There were no transport components included in this second project. Local officials re-commenced their study of transport needs in 1994, pre-dating the Bank's involvement in the project in March of 1996. Since that time, local officials have continued to demonstrate strong support for the development of the project. The commitment is demonstrated by their strong involvement in all project preparation activities through the newly established project offices in each city and the creation of new institutional arrangements to coordinate project activities and develop transportation policies. Local officials also participated in the International Workshop for Traffic Management Improvement held in Shenyang in September, 1997. Officials from Liaoning Province and all three project cities also recently traveled on a locally-financed study tour to Curitiba, Brazil, in order to learn about busway planning and urban transportation management. The municipalities have additionally implemented a pilot channelization project in Fushun and traffic management works in Shenyang. These pilots have allowed each city to gain experience and boost their confidence and knowledge of these techniques. In Shenyang, several measures were implemented to reduce traffic conflicts between bicycles and motor vehicles usinig traffic signal phasing. In Fushun, the pilot intersection is the first in the city to use multi-phase signal phases and channelization. 5. Value added of Bank support in this project: During the preparation process, the Bank has encouraged each of the cities to view urban transport system maniagement as a multi-faceted activity which must include policy reform, management of the road space as well as road construction, making provision for NMVs and public transport vehicles as well as private cars, and the need to coordinate all traffic planning and management activities. The Bank has also been helpful in the mobilization of finance for project preparation, the provision of technical advice to demonstrate international and domestic best practice, and the provision of advice on project and sector management. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (supported by Annex 4): * Cost-Benefit Analysis: NPV=US$629 million; ERR = 34.9 % O Cost Effectiveness Analysis O Other The estimate of project benefits is based on the evaluation of sub-projects that account for about 78 percent of the total cost. The principal evaluated benefits were time savings and vehicle operating cost savings to users of the transport system, including cyclists. Pedestrians would also be significant beneficiaries of the many of the sub-projects, but lack of data on their numbers precluded a formal estimate of their benefits. There would be additional benefits from reductions in accidents, particularly to cyclists and pedestrians, but lack of data also precluded a formal estimate of their magnitude. 2. Financial (see Annex 5): NPV=US$ million; FRR= % There are no commercial components included in this project.  Page 18 Fiscal Impact: Analyses of the fiscal impacts of the project in the three cities included consideration of each city's capacity to finance the costs of the project, taking into account the positive longer term effects of the project. This analysis took into account both budgetary and extra budgetary revenues, and expenditures, including debt finance and on-going maintenance costs. Based on the review of the 1993-2005 city construction budget for the three cities, the combination of budgetary and extra-budgetary resources dedicated to the project were found to be sufficient, net of their respective 1998-2005 city construction expenditure programs. For Shenyang, funds would still be available to finance other construction projects. Projected resources were found to adequately cover debt service costs during the operating period, with payment of principal and financing charges peaking at 4.8 and 2.7 of cumulative revenues in the year 1999 and 2004, respectively. For Fushun, this project will absorb most of the funds available to finance city construction projects. As a result, the municipal government has agreed that the city construction revenue will not be used to finance other major construction project during the implementation of this project. For Anshan, projected resources are also found to adequately cover debt service costs during the implementing period, with payment of principal and financing charges peaking at 2.7 of cumulative revenues in the year 2004. Increasing public funds to road maintenance. Funds for road maintenance are allocated from a municipal construction fund. The maintenance expenditures of the three municipalities have been reviewed and it has been agreed that future funds for road maintenance will be increased to sustainable levels. Future expenditures will be allocated in accordance with the road maintenance plan. Decreasing subsidies of public transport operations . Currently, the three municipalities provide capital support and operating subsidies to the public bus companies in each city. Subsidies are financed out of general funds. The three municipalities have agreed to include reduction of operating subsidies to the bus companies as a performance indicator for the project. 3. Technical: A technical review of each of the components was carried out by Bank staff and consultants. Each proposal was analyzed in terms of its functional design, scale, safety, its social and environmental impacts, and the institutional and financial arrangements for sustainability. More detailed summaries of the technical review of the investment proposals are presented below: Infrastructure: During project preparation, the Bank reviiewed alternatives for all major infrastructure proposals. To achieve the objectives for most of the proposals (whether rail crossing, missing link, widening or general upgrading of capacity), grade separation was required so as to assure the safety of non-motorized travelers. Alternatives analysis included consideration of the operational performance of the scheme to meet projected motor vehicle demands and to provide for non-motorized and pedestrian traffic. In many cases, costly and over-designed proposals were scaled down to provide for more modest solutions without sacrificing project benefits, while preserving options for future improvements. Other design considerations included minimization of land acquisition, social and environmental impacts. Safety and design reviews of preliminary designs for the major infrastructure and traffic management proposals were conducted by local and international consultants in May, 1998, with comments  Page 19 incorporated into designs by July, 1998. Traffic management plans involving NMV and pedestrian improvements were also reviewed by an international expert in this area and incorporated into the designs. Public Transport: Public transport proposals were reviewed in two parts: (1) maintenance, and terminal facilities; and (2) bus-lanes and busways. Bus maintenance and terminalfacilities. For each city, an analysis of maintenance backlogs and future needs provided the basis for establishing the demand for facilities performing different classes of maintenance. In addition, the review considered whether this demand could be provided by the private sector within a reasonable timeframe (generally not), and how publicly operated maintenance facilities would be operated (independently and commercially). In most cases, proposals for major repair facilities were justified (as in Shenyang, where no major repair facility exists for the city's fleet of large buses). Smaller and lower-class maintenance facilities, proposed in combination with parking or terminal proposals generally were not considered economic and were rejected. The major repair facility proposed for Bank financing in Fushun was later withdrawn in favor of local financing. Proposed terminal facilities were reviewed in Shenyang and Anshan. The Bank supported the public transport functions of all proposals. These would involve surface terminal facilities serving major bus routes. Proposals in Shenyang also included parking and maintenance functions which did not appear economically justified nor financially viable, given the high costs of the proposed underground or multi-story structures. One very simple joint bus depot and parking facility has also been included in the project for Shenyang. Bus-lane and busways. These proposals were analyzed as independent projects and in combination with the infrastructure investments and traffic management improvements. Most of these facilities will be combined with other motor vehicle and/or NMV facilities. During project preparation, the technical review of bus corridor proposals focused on demand on major public transport corridors and consideration of the location of the bus lanes and busways (i.e., in the center or along the side of the road). Detailed discussions also examined key operational issues, e.g., how the priority facilities would be used by the bus operators and the design of junctions and roundabouts. More detailed physical designs will be prepared with the help of consultants funded by the project. Traffic Management. Traffic management proposals were grouped in two parts: (1) channelization and other strategies for modal separation, including development of NMV routes; and (2) traffic control devices. Clhannelization and othter circulation/modal separation strategies, including NMV and bus priority schemes, were prepared by the Public Security Bureau. The strategy to determine the location of improvements and designs was based on consideration of the overall traffic circulation plan and the function of adjacent facilities (e.g., MVINMV only pairs). Plans were well developed and Bank staff and consultant review further strengthened the designs. In order to provide for the sustainability of pedestrian and NMV improvements, particular attention will be given to pedestrian and NMV facility design in detailed design, as well as necessary enforcement of their use during project implementation. There is a high degree of ownership of the traffic control proposals. Bank reviews of the proposals focused on "right-sizing" the technology used to solve traffic flow and safety problems. For example, in Shenyang, the Bank team initially considered the proposed area traffic control scheme, with demand-based green-wave signalization, somewhat advanced for existing needs. However, local experience and satisfaction with an existing area traffic control system (for the first ring road) and high ownership of the proposed new system  Page 20 (for central area) convinced the Bank that the system would be well used. Specification of the design and functionality of the system will be developed through proposed TA. Road maintenance. Ineffective institutional management and low technical capacity in this sector call for a strategy of piloting maintenance management systems and incremental development of capacity within the sector through project implementation and training. 4. Institutional: a. Executing agencies: Day-to-day implementation will be the responsibility of the municipal Project Offices under the overall direction of LUCRPO (see Annex 11 for Roles and Responsibilities of project implementing agencies). b. Project management: LUCRPO has extensive experience in managing Bank-financed projects. It has proved very effective and is very knowledgeable. Its staff is very familiar with Bank procedures. However, additional training will be provided for all staff in both the city and provincial implementation offices to ensure that all are familiar with the latest Bank procedures. 5. Social: Separate resettlement plans have been prepared for Shenyang, Anshan and Fushun to mitigate adverse impacts created by land acquisition. In sum, the project will require acquisition of more than 3,000 mu (about 190 hectares) of land, will lead to demolition of more than 300,000 square meters of housing and other structures, will cause the relocation of more than 16,000 persons, and altogether will affect more than 32,000 people. Each of the three RAPs meets or exceeds Bank resettlement standards, containing specific measures to promote income restoration or improvement. The RAPs also promote developmental objectives by contributing to higher living standards among relocated persons, most of whom will move from older, substandard housing to new housing with modern facilities and improved infrastructure with project support. In keeping with increased Bank emphasis upon implementation processes, care has been taken to ensure that adequate resources have been directed to Bank supervision and independent project monitoring. In addition, a midterm resettlement review will occur within the first two years of project implementation, to systematically assess resettlement performance and to modify plans as necessary to improve effectiveness. 6. Environmental assessment: Environment Category 1S A 1 B l C The project is classified as a Category A project according to the World Bank's Environmental Assessment Operational Directive 4.01. An Environmental Assessment (EA) Report and an Environmental Action Plan (EAP) was prepared for each of the three cities; Shenyang, Anshan and Fushun. These documents, as well as a Summary Report were reviewed by the World Bank and were found to meet the requirements of OD 4.01. The EA reports were also reviewed and cleared by the Chinese State Environmental Protection Administration (SEPA). The Summary Report concludes that the proposed project will assist in providing a long-term solution to traffic congestion, improve the quality of urban life and stimulate economic development. The report also notes that the project will result in degradation of environmental quality to some extent, in the immediate vicinity (-.300 m) of the project areas, but should result in a positive contribution to pollution control in the overall urban area. Air quality in all three cities is poor. The daily average concentration of non-methane hydrocarbons  Page 21 (NMHC) exceeded the standards for all readings. Nitrogen oxide (NOx) levels exceeded the daily average standard 70 percent of the time during the heating season and 30 percent of the time during the non-heating season. Carbon monoxide (CO) readings were exceeded 32 percent of the time during the heating season. Improvements in infrastructure is expected to increase vehicular speed and lead to more efficient traffic movement. As a result, even with growth of the motor vehicle population in all three cities, it is predicted that the total pollutant emissions of hydrocarbons (HC), CO and NOx will be less after the project. All three cities recognize that this improvement is temporary, and acknowledge the need for a vehicle emission control program. Existing noise levels recorded in all three cities indicate that just over half of the monitoring stations have levels which exceeded the day-time standards and almost all exceeded the night-time standard. The noise problem is serious, and will continue to deteriorate as the traffic volume increases. Mitigation measures will be applied during construction. During the operation phase, measures to be adopted fall into three categories: planning, noise attenuation measures (use of sound absorption barriers 10 - 15 dB(A) reduction, double glazed windows 20 - 25 dB(A) reduction) in combination with indoor air conditioning; and management (maintenance of sound absorption barriers, enforcement of horn use restrictions, testing of vehicle noise, restriction of heavy-duty traffic, and restrictions of vehicular speed). Compensation may be applied where the cost of other mitigation is prohibitive or not feasible for technical reasons. Some trees and green space will be lost due to the project. To compensate. an additional 139,300 m of green space will be established. The project has several positive aspects in terms of economic growth and an improvement in the traffic movement, which will contribute to an improvement in urban air quality. The potential negative effects of the project include increase in noise levels, some loss of agricultural land, and resettlement. These impacts are adequately addressed through mitigation and resettlement plans. The improvement in air quality, however, is temporary and with the growth in motor vehicle population, the traffic will increase, resulting in eventual increase in congestion and consequent increase in emissions and deterioration of air quality. To address this, the three cities have agreed to develop and implement vehicle emission control programs. 7. Participatory Approach (key stakeholders, how involved, and what they have influenced or may influence: if participatory approach not used, describe why not applicable): a. Primary beneficiaries and other affected groups: As part of the planning process, planners in each project city performed interviews and surveys of stakeholders within the affected area of proposed projects. For example, the environmental assessment included two rounds of public consultation via on-site interviews, informal discussions and surveys to collect public views on general concerns including those relating to resettlement and the environment. The public consultation included participation from a range of persons including workers, farmers, students, business professionals and government employees. A range of age groups was also represented. The process resulted in development of mitigation measures including re-design of specific project activities. Approval rates for the project increased from 84 percent, 96 percent, and 90 percent in Shenyang, Anshan, and Fushun, respectively to 90 percent, 98 percent and 98 percent between the first and second round interviews. b. Other key stakeholders: Not applicable.  Page 22 F: Sustainability and Risks 1. Sustainability: Project sustainability will depend on the quality of project implementation, the success of institutional reforms and the adequacy of available finance to support ongoing project operating and maintenance costs. Continued reforms in public transit, road maintenance and sector coordination are especially critical to ensure long-term benefits of the project. Sustainability will also depend in part upon the compatibility of local land use planning and pricing policies, which are outside of the project's direct scope. 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure From Outputs to Objective Effective management and finance N Strengthened project and financial falters in project implementation into management, annual work plan, operational phase monitoring of performance and monitoring indicators. Inadequate network restructuring and N Effectiveness condition for terminal planning, enforcement of commencement of TA for bus schemes. public transit priority facilities; delay in A commitment to reduce subsidies was reform agenda threatens sustainability reached during negotiations and is of project investments. included within the performance indicators. Dated covenant on study of public transport operations and management. Generated demand erodes benefits of N Traffic growth is slow, will be road improvements monitored. Dated covenant on parking study and implementation. Vehicle emissions strategy is enforced M Dated covenant on vehicle emissions study and implementation. Maintenance budgets are inadequate to M Commitment on increased maintenance meet needs funding reached during negotiations and reflected in performance indicators Staff knowledge gained is incorporated N into professional practice From Components to Outputs Cooperation of project and relevant N non-project municipal agencies continues Local support for all project N components is ensured. Overall Risk Rating N Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)  Page 23 3. Possible Controversial Aspects None G: Main Loan Conditions 1. Effectiveness Conditions Standard Conditions of effectiveness and Project Implementation Agreements between Liaoning Province and each Project City. 2. Other [classify according to covenant types used in the Legal Agreements.] Dated covenants for: (i) Progress Reports. By December 15 of each year, furnish an annual work plan covering the following twelve months to the Bank for its review and comment. Also, to prepare quarterly reports, annual reports and a mid-term report integrating the results for the project monitoring activities. (ii) Parking Study. By December 31, 2000, to complete a parking study for three cities which shall make recommendations concerning the implementation of a management system, including pricing, of both on-street and off-street parking spaces which can be implemented within a reasonable time in accordance with an action plan acceptable to the Bank. (iii) Emission Control Study. By December 31, 2001, to complete the development of a strategy for the control of emissions from vehicles in Liaoning which can be implemented in a reasonable time in accordance with an action plan acceptable to the Bank. Implementation of the motor vehicle emissions control strategy for each project city by December 31, 2002. (iv) Public Transport Operating Policy: By December 31, 2000 to complete a study to review the experience of public transport operating reform in the three cities, collect and review experience in other cities in China, and to prepare a strategy for the development of public transport, including operating policies and regulations in the project cities. H. Readiness for Implementation 1 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. L 1. b) Not applicable. El 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. X 4. The following items are lacking and are discussed under loan conditions (Section G): The bidding documents for the first year's procurement activities are all available with the exception of two ICB contracts for which pre-qualification documents have been received.  Page 24 1. Compliance with Bank Policies Z 1. This project complies with all applicable Bank policies. O 2. The following exceptions to Bank policies are recommended for approval. The project complies witi all other applicable Bank policies. Jitendra N. Bajpai Yuko ang Team Leader Sector Manager/Director Country Manager/Director  Page 25 Annex I Annex 1: Project Design Summary CHINA: Liaoning Urban Transport Project Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: Improve the productivity of Improved service levels and Annual project reports with City economic development the urban transport system to efficiencies of public transport perfornance indicators. and restructuring efforts facilitate economic operations. maintain or generate development and improved economic growth. quality of life. Improved operational Annual Review Land use and pricing policies efficiency and safety of are complimentary with existing roadways. transport policies and investments. Reduced infrastructure Mid-Term Review Effective management and bottlenecks. finance continue beyond project implementation into operational phase. Improved road maintenance. Annual Review Enhanced local capacities and Implementation Completion improved decision-making. Report Output from each Output Indicators: Project reports: (from Outputs to Objective) component: Bus priority schemes Increased average bus speeds PO to monitor project progress Effective network operating; improved and vehicle availability and submit quarterly progress restructuring and terminal maintenance condition of combined with lower average reports. planning, enforcement of vehicles. operating subsidies, public transit priority increased length of operating facilities. Progress with reform routes. agenda. Traffic management and Increased throughput Bank to conduct regular Generated demand does not safety program operational combined with limited supervision missions. erode benefits of road and maintaining acceptable degradation of service improvements (future demand levels of service. (maintain or improve average managed adequately). operating speeds). Reduced fatalities, including pedestrian and bicycle deaths. Primary road network Decreased journey times. Joint review of project providing high-capacity progress to take place cross-town service. annually and at the project mid-term.  Page 26 Annex I Pilot maintenance Adequate funding for Maintenance budgets are management system under maintenance. adequate to meet needs. implementation. Increase in share of roads in good condition combined with reduced average maintenance costs. Vehicle emissions control Motor Vehicle Emission Vehicle emissions strategy is strategy adopted. Control is implemented. enforced. Institutional strengthening Quality of projects Staff knowledge gained is and technical assistance incorporated into professional program completed. practice. Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) Public Transport US$24.5 million LUCRPO and POs maintain Cooperation of project and monthly progress reports. relevant non-project municipal agencies continues Traffic Management US$28.6 million LUCRPO provides Bank with Local support for all project quarterly progress reports components is ensured. which compare planned and actual progress for each component in terms of cost and physical works. Infrastructure US$291.8 million Monthly disbursement reports which compare planned with actual disbursements by component. Road Maintenance US$3 1 million Semiannual financial management report Institutional Strengthening US$6.5 million Annual audit report Performance indicator Total US$ 382.4 million I  Page 27 Annex 2 Annex 2: Project Description CHINA: Liaoning Urban Transport Project By Component: Project Component I - US$167.6 million SHENYANG Public Transport (SYPT) - US$10.09 million The public transport sub-component is designed to increase the efficiency and effectiveness of public transport services through the development of bus priority facilities, and the provision of modern maintenance facilities and equipment. * SYPT/I 1.0 - Bus Maintenance Repair Facility -- works to construct a 60,274 square meter bus maintenance repair facility to provide facilities for medium and major repair services for 1000 buses per annum and overnight parking. * SYPT/2 1.0 - Bus Maintenance Equipment -- equipment for the bus maintenance repair facility described above. * SYPT/12.0 - Da Dongmen Bus Terminal -- works to construct a 4082 square meter bus terminal facility to serve three bus routes and provide parking for 150 buses and cars. * SYPT/22.0 - Da Dongmen Bus Terminal Equipment -- equipment for the Da Dongmen Bus Terminal, described above. ? SYPT - Project Management. Shenyang municipality and its public utility agencies will finance the costs associated with the design, supervision and implementation of this sub-component. Traffic Management (SYTM) US$20.21 million The objective of this sub-component is to improve the operational efficiency and safety of the road system through junction channelization, the provision of NMV and bus priority facilities, the provision of modern traffic control facilities, and other traffic management measures. * SYRM/1 1.0/TM - Traffic Management (Phase 1) -- works for the improvement of 4.4 km of roadway, including the construction of NMV facilities along two roads, nine junction channelizations, the widening of two roads, and the construction of three missing-links. * SYRM/12.0/TM - Traffic Management (Phase 2) -- works for the provision of 15.5 km of NMV facilities along four roads. * SYRM/13.0/TM - Traffic Management (Phase 3) -- works for the provision of a 2.5 km NMV roadway and the widening of one road. * SYRM/14.0/TM - Traffic Management (Phase 4) -- works with a total length of 3.5 km including the widening of two roads and the construction of one missing-link.  Page 28 Annex 2 * SYTM/2 1.0 - Traffic Engineering Equipment -- hardware and equipment including traffic signals, signs, road markings, barriers and street furniture to support junction channelizations, pedestrian improvement along 27 roads and NMV facilities along three roads. * SYTM/22.0 - Traffic Management Equipment -- hardware and equipment for traffic management improvements (e.g., traffic signals, signs, and road markings) along 11 routes (including NMV facilities along three roads, the provision of signs for bus lanes and seven motor-vehicle roads). * SYTM/23.0 - General Traffic Management Equipment -- equipment to support road management, incident detection, and the rehabilitation and extension of the area traffic control system. * SYTM - Project Management. The Shenyang municipality and its public security agencies will finance the costs of design, supervision and management for this sub-component. Road Infrastructure (SYRI) US$113.49 million The objectives of this sub-component are to alleviate infrastructure bottlenecks and to improve the operational efficiency of the road network through development of high-grade road facilities, improved secondary roads, rail crossings, missing-links, and the widening of existing roads. * SYRI/I 1.0 - Pangjiang Street and Lianhe Road --- works to widen and construct 8 km. of roadway in two corridors: Pangiiang Jie is one of the few low capacity sections of the first ring road. Lianhe Road is one of the most important east-west corridors within the city. This improvement will increase bus operating speeds and reliability through the provision of an exclusive center of the road busway within a major public transport corridor between the Shenyang South Station and Shenyang North Station. It will also reduce congestion on existing east/west corridors by attracting through traffic now using the Shifu Corridor, as well as to improving access to development areas for general traffic and for public transport to the Beizhan and Xita development areas. * SYRI/12.0 - Gonghe Railway Overpass and Changjiang Underpass -- works to construct a 1.6 km road including the provision of the: Gonghe railway overpass which will provide a much needed crossing of the rail tracks. Changiang underpass to carry north/south truck and automobile traffic across the rail tracks. * SYRI/ 13.0 - Gonghe Interchange -- works to construct 2 km of new roadway and an interchange which will connect the Gonghe Railway Overpass with Shifu Road, Lianhe Road and Shengli Jie. These form parts of major east-west and north-south road corridors within the city. * SYRI/14.0 - Beiyi Road -- works to construct a 4 km roadway. Shenyang has been divided by railways into three parts: the Tiexi, Tiedong and north areas. This component will provide a higher capacity east-west connection between Tiexi and Tiedong, by providing improved road access and allow better integration of the city's public transport network. * SYRI/1 5.0 - Jianshe and Nanwu Road -- works to construct 4 km of urban roadway. This elevated  Page 29 Annex 2 road includes a railway overpass designed to relieve a critical bottleneck created by the Shenda Rail Line which divides the Tiexi and Heping districts. * SYRI/1 6.0 - Fangxing Square Interchange -- works to construct the Fangxing Square interchange which will connect Janshe and Nanwu viaduct to four other roads (three east-west roads and one north-south road). * SYRI - Land Acquisition and Resettlement -- land acquisition (1,081 mu) and the resettlement of people (21,977 affected people), businesses, enterprises and public facilities (169,685 sq. m. housing demolished). * SYRI - Project Management. Shenyang municipality and construction agencies will finance the costs of design, supervision and management for this sub-component. Road Maintenance (SYRM) US$21.69 million The objective of this sub-component is to improve maintenance of roads through the development of modernized and sustainable pavement management practices. * SYRM/I .0/RM - Road Maintenance (Phase 1) -- repaving and reconstruction of 14.32 km of roadway along 12 routes. * SYRM/12.0/RM - Road Maintenance (Phase 2)-- repaving and reconstruction of 15.34 km of roadway along 12 routes. * SYRM/1 3.0/RM - Road Maintenance (Phase 3) -- repaving and reconstruction of 19.12 km of roadway along 18 routes. * SYRM/14.0/RM - Road Maintenance (Phase 4) -- repaving and reconstruction of 1.9 km roadway along one route. * SYRM/21.0 - Road Maintenance Equipment -- road maintenance equipment, including rollers, loaders, a crane, a paver and crack sealer, and other vehicles. * SYRM - Project Management. Shenyang municipality and its construction agencies will finance the costs of design, supervision and implementation for this sub-component. Institutional Strengthening and Technical Assistance (US$2.13 million) The objectives and scope of this sub-component are more fully explained in Annex 2A * SYTA/3 1.0 - International TA. * SYTA - Domestic TA.  Page 30 Annex 2 Project Component 2 - US$93.4 million Fushun Public Transport (US$1.84 million) The public transport sub-component is designed to increase the efficiency and effectiveness of public transport services through the development of bus priority corridors and facilities and the provision of modern bus maintenance equipment. * FSTM/1 L.0/PT - Public Transport -- works to construct a 2.3 km. of bus lane along Xinfu Road. * FSRM/1 1.0/PT - Public Transport -- works to construct a 3 km bus lane along Yongji Road. * FSRM/13.0/PT - Public Transport -- works to provided a 1.3 km bus lane along Liquan Road. * FSPT/2 1.0 - Equipment for Bus Depot -- modern maintenance equipment for a local bus depot. e FSPT - Project Management -- The Fushun Municipality and its public transport agency will finance the associated with the design and implementation of this sub-component. Traffic Management (US$3.35 million) The objective of the sub-component is to improve the operational efficiency and safety of the road system through improved junction channelization, the development of NMV and bus priority facilities, improved traffic signal control, and the provision of other traffic management measures. * FSTM/I 1.0/TM - Traffic Management -- works in two road corridors and one sub-area of the city, including 17 junction improvements (signs and markings, channelization etc.). 3 FSTM/2 1.0 - Traffic Management Equipment -- traffic management equipment including items for enforcement, towing, traffic control, and incident management. * FSTM - Project Management -- costs of design, supervision and implementation of this sub-component will be financed by Fushun municipality and its public security agency. Road Infrastructure (US$81.12 million) The objectives of this sub-component are to alleviate infrastructure bottlenecks and to imiprove the operational efficiency of the road network through the development of high-grade road facilities, improved secondary roads, rail crossings, missing-links, and the widening of existing roads. Specifically, the project will finance improvements along the Hunhenan Corridor, with a total length of 24.8 km. The project will develop an 18.5 km expressway along the south bank of the Hun River, from Hunhe Bridge to Wanxin Bridge, and reconstruct an 18.3 km parallel local road from Gucheng Bridge to Dongzhou Bridge, which will include separate facilities for motor vehicles, buses and NMVs. The project will also finance connections from Hunhenan Road to a number of development areas (two economic development zones, two industrial area, one residential area, the railway station, the new Wanxin government center area), and a new Wanxin bridge and interchange.  Page 31 Annex 2 * FSRI/I 1.0 - Hunhenan Road -- works to construct the 2.27 km expressway from Gebu Bridge to Jiangjun Bridge, and an interchange at Changchun Bridge. * FSRI/12.0 - Hunhenan Road -- works to construct the 1.2 km expressway and widen the local road from Xinhua Bridge to Changchun Bridge. * FSRI/13.0 - Hunhenan Road -- works to construct the 3.9 km expressway road from Heping Bridge to Gucheng Bridge. * FSRI/14.0 - Hunhenan Road -- works to construct an interchange at Guchenlglelkou Bridge. * FSRI/ 15.0 - Hunhenan Road-- works to widen the 2.27 km local road from Gebu Bridge to Jiangjun Bridge, construct a 2.25 km expressway and widen the local road from Jiangjun Bridge to Xinhua Bridge, to upgrade Xinhua Bridge. and provide a 3.43 km expressway and widen the local road from Gucheng Bridge to Gebu Bridge. * FSRI/1 6.0 - Hunhenan Road -- works to construct the Wanxin Bridge and its southern interchange, and connections to the new resettlement area. * FSRI/17.0 - Hunhenan Road -- works to construct a 2.85 km expressway and widen the local road from Changchun Bridge to Wanxin Bridge. * FSRI/1 8.0 - Hunhenan Road -- works to widen the 6.3 km local road from Wanxin Bridge to Dongzhou Bridge, the southern interchange of Hunhe Bridge, and the southern interchange of H eping Bridge. * FSRI/19.0 - Hunhenan Road -- works to construct a 2.6 km expressway from Hunhe Bridge to Heping Bridge. FSTM/I I.0/RI - Road Infrastructure -- works to construct a missing link on Xifuping Road (I km) and to widen Wugong and Xisan Streets (1.48 kin). * FSRM/I I.0/RI - Road Infrastructure - works to construct 1.65 km of Ningyuan Street. e FSRI - Land Acquisition and Resettlement. The constructioni of the urban roads will involve land acquisition (796 mu) and the resettlement of people (8,633 affected people), businesses, enterprises and public facilities (134,205 sq. m. housing to be demolished). * FSRI - Land Acquisition and Resettlement for the missing link on Xifuping Road. The construction of urban roads will involve the resettlement of people (213 affected people), businesses, enterprises and public facilities (2200 sq. m. housing to be demolished). * FSRI - Project Management. Fushun municipality and its construction agencies will finance the costs of design, supervision and implementation management for this sub-component. Road Maintenance (US$4.95 million) The objective of this sub-component is to improve maintenance of roads through the development of modernized and sustainable pavement management practices.  Page 32 Annex 2 * FSRM/I I .O/RM - Road Maintenance -- works to repave and reconstruct 1.76 km of Yongning Street. * FSRM/12.0 - Suihua Road Maintenance -- works to repave and reconstruct 6.4 km of Suihua Road. * FSRM/1 3.0/RM - Road Maintenance -- works to repave and reconstruct 2.32 km of Beizhen Street. * FSTM/1 I.O/RM - Road Maintenance -- works to repave and reconstruct 5 km of Heping Road. * FSRM/2 1.0 - Road Maintenance Equipment -- modern road maintenance equipment including maintenance vehicles. * FSRM- Project Management (US$0.30 million). Fushun municipality and its construction agencies will finance the cost of design, supervision and implementation for this sub-component. Institutional Strengthening and Technical Assistance (US$2.18 million) The objectives and scope of this sub-component are more fully explained in Annex 2A. * FSTA/3 1.0 - International TA * FSTA- Domestic TA Project Component 3 - USS 121.3 million Anshan Public Transport (US$12.59 million) The public transport sub-component is designed to increase the efficiency and effectiveness of public transport services through development of bus and tram corridors, and the provision of more modern facilities and equipment. * ASPT/I 1.0 - Tram Upgrading -- works to upgrade a 5.2 km roadway which provides an exclusive right of way for tram operations. * ASTM/I 1.0/PT - Public Transport -- works to provide a 7,706 square meter Wuyi bus transfer facility. * ASPT/12.0 - Tram/BuslNMV-Only Road -- works to construct 4.8 km of exclusive busway on Shengli road, 0.6 km of bus and NMV-only roacl on Renmin Road, and a 1.0 km tram and NMV-only route along Zhonghua Road. * ASPT/2 1.0 - Tram Upgrading Equipment -- equipment to upgraded tram operations. * ASPT - Project Management. Anshan municipality and its construction and public utility agencies will finance the costs of the design, supervision and implementation of this sub-component.  Page 33 Annex 2 Traffic Management (US$4.98 million) The objective of the sub-component is to improve operational efficiency and safety of the road system through improved junction channelization, the development of NMV and bus priority facilities, improved traffic signal control, and the provision of other traffic management measures. * ASTM/1 1.0/TM - Bus Transfer/Channelization/Off-street Parking -- works to chaninelize eight junctions and provide 14,320 square meters of off-street surface parking. * ASTM/12.0/TM - NMV Exclusive Road -- works to construct 3.97 km of NMV exclusive road. * ASTM/2 1.0 - Traffic Management Equipment -- traffic engineering equipment such as signs, road marking equipment, and median and pedestrian dividers. * ASTM/22.0 - Traffic Management Equipment -- traffic engineering equipment such as signs, road marking equipment, and median and pedestrian dividers. * ASTM/23.0 - Special-use Vehicles -- road marking, towing and signal maintenance vehicles. * ASTM - Project Management. Anshan municipality and its public security agencies will finance the costs of design, supervision and implementation of this sub-component. Road Infrastructure (US$97.23 million) The objectives of this sub-component are to alleviate infrastructure bottlenecks and to improve the operational efficiency of the road network through development of high grade road facilities, improved secondary roads, the provision of rail crossings and missing-links, and the widening of selected roads. * ASRI/I 1.0 - South Ring Road -- works to construct a 1.4 km southern section of the Ring Road which will provide a link to the Sifangtai Economic Development Zone and improve connections to the southern parts of the Tiexi District, and three other economic development zones. * ASRI/12.0 - Zhonghua Road and Yuanlin Road -- works to reconstruct 0.43 km of Zhonghua R oad, and 1.53 km of Yuanlin Road. This improvement will permit the diversion of traffic from Zhonghua Road to the Yuanlin Road and the South Ring Road corridor, thus enabling the designation of Zhonghua Lu as a tram/NMV only road. * ASRI/13,0 - Wuyi Interchange -- works to construct the Wuyi interchange at the junction of the major north-south and east-west corridors within the city. The proposed design is a two-level interchange which alleviates severe congestionl at this major junction of two existing arterial roads. * ASRI/14.0 - Huangang Road and Yongchang Street -- works to reconstruct and widen 3.26 km. of the Huangang/Yongchang corridor which serves as the major east-west arterial corridor through the center of Anshan. * ASRI/15.0 - South Jianguo Road -- works to reconstruct a 4.3 km section of Jianguo Road. * ASRI/1 6.0 - North Jianguo Road -- works to improve a 4.1 km section of North Jianguo Road  Page 34 Annex 2 which will provide a high-capacity north-south corridor for traffic passing through the city. * ASRI/ 1 7.0 - Laodong Road and Hebei Road and Shahe Bridge -- works to reconstruct the 1.8 km Laodong Road and construct Shahe Bridge, thereby providing a truck route between Lianshan Industry Development Zone and the Jianguo Road corridor, and an alternative route to Shengli Road. Construction of a 1.05 km section of Hebei Road is also included in this sub-component. * ASRI - Land Acquisition and Resettlement. The construction of the urban roads will involve land acquisition (1,382 mu) and the resettlement of people (1,774 affected people), businesses, enterprises and public facilities (1,382 sq. m housing to be demolished). * ASRI - Project Management. Anshan municipality and its construction agencies will finance the costs of design, supervision and implementation of this sub-component. Road Maintenance (US$ 4.38 million) The objective of this sub-component is to improve maintenance of roads through the development of modernized and sustainable pavement management practices. * ASRM/I 1.0 - Hongqi Road -- works to repave and reconstruct 4 km of Hongqi road. O ASTM/12.0/RM - Pedestrian sidewalk maintenance -- works to provide 62,946 square meters of sidewalk improvements. * ASRM - Project Management. Anshan municipality and its construction agencies will finance administrative costs including design, supervision and implementation management for this sub-component. Institutional Strengthening and Technical Assistance (US$2.17 million) The objectives and scope of this sub-component are more fully explained in Annex 2A * ASTA/3 1.0 - International TA. * ASTA - Domestic TA. Project Numbering Scheme: Shenvang Component SYPT Public Transport SYTM Traffic Management SYRI Road Infrastructure SYRM Road Maintenance SYTA Technical Assistance Fushun Component FSPT Public Transport  Page 35 Annex 2 FSTM Traffic Management FSRI Road Infrastructure FSRM Road Maintenance FSTA Technical Assistance Anshan Component ASPT Public Transport ASTM Traffic Management ASRI Road Infrastructure ASRM Road Maintenance ASTA Technical Assistance Annex 2A: Project Description Institutional Strengthening and Technical Assistance Sub-Component The objective of this sub-component is to strengthen local capacity for urban transport system management through study tours, technical assistance, and targeted training. The costs have been indicated under the components of the municipalities. The activities financed in the sub-component will include: I international consultant and local expert support for bid document preparation, 2. international consultant and local team cooperation on construction supervision, 3. a MV emission control strategy (MVECS) study and follow-up actions, 4. a bus exclusive ways design study, 5. a study of development of the road maintenance plan, 6. a traffic signal control system study, 7. study of public transport policy and regulations, 8. a study of parking policy and management, 9. a study of the traffic accidents, 10. domestic training in urban transport development (various topics), 11. international training in urban transport development (various topics), 12. office equipment. LUCRPO is responsible for coordinating all activities within this sub-component unless otherwise noted. The implementation agencies and their participation in the sub-component are as follows: Provincial Level. A. Liaoning Urban Construction and Renewal Project Office is responsible for coordinating the following TA activities. I. International consultants to assist with bid document preparation. 2. International consultants to assist with construction supervision. 3. International consultants for seven studies. 4. Domestic training in areas including project management, construction supervision, financial management and procurement. 5. International training including all aspects related with urban transport management. 6. Purchase of office equipment.  Page 36 Annex 2 B. Liaoning Financial Bureau (LFB). 1. Domestic training for project financial management. 2. International training for project and financial management, and urban transport investment analysis. C. Liaoning Planning Bureau (LPB). 1. Domestic training on urban and transport planning. 2. International training on urban and transport planning, and urban road investment planning. D. Liaoning Environment Protection Bureau. 1. Participating in the MVECS study. 2. Participating in domestic and international training on environment assessment. Municipal Level. The three municipal governments, will provide counterpart funds for these activities. The three project offices will be responsible for selection and management of local teams. A. City Transport Management Committees. 1. Participating and coordinating urban transport related policies studies. 2. Participating in domestic and international training on coordination of the urban transport system including urban planning, urban transport policies, urban transport design and operation. B. Project Offices. 1. Responsible for organizing local design teams for bidding document preparation, and construction supervision teams. 2. Providing counterpart staff for seven studies. 3. Participating in domestic and international training. 4. Equipment including computers, software and office equipment. C. Land Acquisition and Resettlement Offices will participate in domestic and international training on resettlement. D. Environmental Protection Bureaus. 1. Participating in MVECS study. 2. Participating in domestic and international training on environment assessment. E. Municipal Design and Research Institutes. 1. Participating in training for preparation of contract documentation. 2. Participating in the construction supervision training activities. 3. Participating in studies related to urban construction design and construction. 4. Participating in domestic and international training on urban planning, transport planning, urban transport design and construction. F. Public Transport Companies. 1. Participating in public transport studies. 2. Participating in domestic and international training on public transport. 3. Provided with some office equipment. G. Municipal Urban Traffic Brigades. 1. Participating in signal control system and parking studies. 2. Participating in domestic and international training on traffic management.  Page 37 Annex 2 H. Municipal Maintenance Departments. 1. Participating in road maintenance study. 2. Participating in domestic and international training on road mailitenanice. 3. Provided with some office equipment. Annex 2B: Liaoning Motor Vehicles Emissions Control Strategy (MVECS) Study The three project cities - Shenyang, Anshan and Fushun - recognize that ultimately. uLichiecked growtih in motor vehicles fleet will lead to reduced vehicle speed and increase in congestion. This will cancel out the benefits of the project. The cities therefore recognize the need to implement controls on vehicle emissionis. The proposed Motor Vehicle Emission Control Strategy (MVECS) has been developed in recognition of the fact that the sustained growth of the vehicle fleet size demands must lead to more vehicle emissions unless an appropriate emission reduction strategy is implemented. In similar circumstances, other cities, both domestically and internationally, have committed themselves to the implementationi of MVECS. The Province enjoys some lead time because of the long turnover time of the vehicles in the fleet. IloN ever, it is prudent to begin the preparation of the strategy as soon as possible. The Liaoning MVECS was developed in consultation with the Bank and is designed to take advantage of the experience of other cities in China, as well as international technological expertise. The objective is to develop strategies and provide a strong foundation for the program to address the problem of increasing air pollution from mobile sources. The proposed program will include: implementation of the national unleaded fuel program; establishment of a vehicle Inspection and Maintenance (I/M) system (monitoring and enforcement of the motor vehicle standards); establishment of a Vehicle Emission Research Center (development of stringent motor vehicle emission control standards and regulations; introduction of catalytic converters; engine improvements; development of clean or alternative fuel technologies); and expansion of the automated monitoring network to monitor air pollution. If the program is implemented as envisaged, the l/M program is expected to reduce mobile source contribution to the overall air pollution by 30-40 percent over a five-year period. The remaining components of MVECS are longer term: to train staff; conduct research to support new initiatives (promotion of public transportation; increase of motor vehicle speeds (i.e. eliminate bottlenecks); limit on the size of the motor vehicle fleet; and retirement of aged vehicles); and understand the dynamics of air quality in the cities and the contribution of vehicle emissions to the overall air pollution. As part of the MVECS, a workshop will bring participants together from the three cities, the National and Provincial Governments, other cities and external participants. The proposed workshop is seen to be an excellent way to share knowledge and identify the more successful stratagems. The development of the MVECS is scheduled to begin late in 1999, but it should be noted that the compilation of emissions information during the preparation of the EAs for the LUTP represents a substantial step towards the program objectives. It is notable that the concept of an MVECS program was developed during the course of the environmental assessment, and that it is to some extent a proactive initiative.  Page 38 Annex 3 Annex 3: Estimated Project Costs CHINA: Liaoning Urban Transport Project Local Foreign Total Project Cost By Component US $million US $million US $million Shenyang 91.3 62.2 153.5 Fushun 45.6 37.2 82.8 Anshan 69.1 40.5 109.6 Total Baseline Cost 206.0 139.9 345.9 Physical Contingencies 11.2 13.4 24.6 Price Contingencies 5.6 6.3 11.9 Total Project Costs 222.8 159.6 382.4 Front-end fee 1.5 1.5 Total Financing Required | 222.8 161.1 383.9 Local Foreign Total Project Cost By Category US $million US $million US $million Goods 2.5 22.4 24.9 Works 122.3 134.2 256.5 Services 0.6 5.9 6.5 Training 0.0 0.0 0.0 Other 94.5 0.0 94.5 Total ProjectCosts 219.9 162.5 382.4 Front-end fee 1.5 1.5 Total Financing Required 219.9 164.0 383.9  Page 39 Annex 3 Project Costs by Activity for each City 1 : |China I I Liaonina urban Transport Project Components by Financiers (US$ M) Indicative Percentage Bank % of Bank Costs (SM) of Total Financing Financing A. Shenyang Public Transport 10.09 3% 5.6 56% Traffic Management 20.21 5% 12 59% Road Infrustracture 113.49 30% 35.8 32% Road Maintenance 21.69 6% 10.2 47% Technical Assistant 2.13 1 % 1.7 80% Subtotal Shenyang 167.61 44% 65.3 39% B. Fushun l Public Transport 1.84 0% 1.1 38% Traffic Management 3 35 1_% 2.3 88% Road Infrustracture 81.12 21% 32.1 39% Road Maintenance 4.95 1% 2.7 50% Technical Assistant 2.18 1% 1.7 78% Subtotal Fushun T 93.44 24% 39.9 43% C. Anshan I Public Transport 12.59 3% 7 56% Traffic Management 4.98 1% 3.1 62% Road Infrustracture 97.23 25% 29.5 30% Road Maintenance 4.38 1% 1.9 43% Technical Assistant 2.17 1% 1.8 83% Subtotal Anshan | 121.35 32% 43.3 36% Total Project 382.4 100% 148.5 39% Front End Fee 1.5 1.5 Total Project Cost 383.9 _150  Page 40 Annex 4 Annex 4: Cost Benefit Analysis Summary CHINA: Liaoning Urban Transport Project Units are in $US millions: [For projects with benefits that are measured in monetary terms] Present Value of Flows Fiscal Impact Economic Financial Analysis Analysis' Taxes Subsidies !Benefits: 880.0 Costs: 254.0 Net Benefits: 626.0 IRR: | 34.9% Summary of Benefits and Costs: Project selection The Project includes investments in, and improvements to, the operation of the urban transport system. Investments include junction improvements, road maintenance and reconstruction, construction of cycle routes and "missing links" in the road network, designation of, and adapting infrastructure for, bus-only lanes and equipment for traffic management. Operational changes include institutional reform and strengthening, new traffic operation and maintenance procedures and new traffic safety enforcement actions. Where possible, for each identified infrastructure or operational problem alternative solutions were identified and compared on the basis of a subjective assessment that took account of the costs of implementation and operation and the potential benefits to road or public transport users. The evaluation of alternative solutions to each infrastructure problem was informed by a detailed description of the problem, with data on traffic, cyclists and pedestrians presently using the facility deemed to be the problem. Site visits were made by the study team before alternative solutions were prepared and assessed. Project Evaluation The selected alternative to address each problem was compared through a cost benefit analysis with continuing with the present infrastructure or operating methods. The benefits taken into account in the analysis were reductions in vehicle operating costs, savings in time to vehicle occupants and cyclists (and to pedestrians at intersections where improvements were proposed), while the costs were those of implementation and operation. Given the high projected rate of growth of private motorized transport, the benefits were assessed over a period ofjust 15 years, compared with the more usual 20 or 25 years for transport infrastructure projects. Sensitivity tests were made with shorter periods of 10 and 5 years, particularly to take account of the limited capacity increase from junction improvements. Benefits to cyclists were assessed rather differently. Although overall cyclists are expected to benefit from the project, some of the specific sub-projects will result in them suffering time delays as priority is given to motorized traffic. In addition, some of the cycle routes will result in disbenefits to some cyclists who  Page 41 Annex 4 presently use streets from which they will be banned during the peak traffic periods for motorized vehicles (usually later than the cycle peak period). So for cyclists an assessment was made of the overall time saving from the implementation of the package of measures for each city. Full economic evaluations were made for project sub-components that account for about 78 percent of the total project costs. Excluded sub-components were those that have not yet been sufficiently defined for their costs and benefits to be estimated (the most significant of these is the proposed bus priority scheme in Shenyang), area-wide traffic management schemes, off-street car parking facilities, equipment for road nmaintenance, institutional strengthening and technical assistance. Main Assumptions: Deo1and projectionis Projections were made of population, employment and car ownershiip growth, and on the basis of these, estimates were made of the growth in private motorized traffic and bus passengers, and the decline in the use of cycles. No estimate was made of the impact of the proposed cycle ways on increasing the future use of cycles. The demand for travel by personal motorized travel was projected to increase at an average of 6 percent per year for the 15-year analysis period, while bus travel would increase by 8 percent per year, but cycle use would decline by 2.5 percent per year and walk trips by 3 percent per year. Value of tine savin7gs The estimated value of time savings to the beneficiary were based on their projected personal incomes. For behavioral analyses, projecting how users of the transport system would react to changes in infrastructure, drivers of private motorized vehicles were assumed to have five times the average personal income, while all other beneficiaries were assumed to have the average wage. The value of time savings for business travel was assumed to be 1.5 times the relevant wage rate, to take account of non-wage costs to employers, whereas for non-business travel the value was assumed to be 35 percent of the relevant wage rate. For evaluation purposes, business travel time savings were valued at the same rate as for behavioral analysis, but for people traveling for purposes other than business, time savings for all road users were valued at 35 percent of the average value of non-work time. This difference was based on an equity argument, that the social value of non-work time is the same for everyone and not dependent on income. Value of travel time savings Units Behavioral Evaluation value value Income 7.1 7.1 National average Estimated car occupants income Yuan/hour 35.3 35.3 Estimated other travelers' income Yuan/hour 7.1 7.1 Value of time Business travel by car occupants Yuan/hour 35.3 35.3 Other business travelers 7.1 7.1  Page 42 Annex 4 Non-business travel by car Yuan/hour 12.4 3.0 occupants Other non-business travel Yuan/hour 2.5 3.0 Vehicle operating costs (VOC) Estimates of vehicle operating costs were derived from the HDM-HPFP model. The revisions to the data from the model were to take account of the unusual cost figures for China, in which fixed costs and materials costs assume a higher proportion than in other countries, as well as of the smaller than usual size of vehicles used in urban areas in China compared with other countries. The VOC for each type of vehicle (car, bus and truck) were expressed as formulae that took account of road and traffic conditions through parameters for road surface roughness and traffic speed. Economic evaluation results Three indices of economic performance were applied to each sub-component of the project, the results being summed or averaged as appropriate to give the relevant values for each city. For sensitivity tests, the values are reported for only one index, the MERR (modified economic rate of return). The modification to the standard measure assumes that the project benefits can be reinvested at the average rate of return on public sector investments, assumed to be 12 percent, and not at the rate of return of the investment being evaluated. This modification does not change the ranking of sub-components but increases the estimated ERR values below the average rate of 12 percent and reduces those above it. The other economic performance indices used were the standard ERR (economic rate of return) and the NPV (net present value, assuming a discount rate of 12). Evaluation results by citv Shenyang Anshan Fushun Project Net present value US$258m US$169m US$199m US$626m Modified ERR 16.7% 20.8% 19.8% 17.4% Basic ERR 32.2% 42.8% 449% 34.9% Distribution of benefits About 72 percent of the benefits are expected to come froim vehicle operating cost savings, about 25 percent from time savings and the balance from reduced investment in buses (through higher availability of existing buses with the Shenyang garage in operation). While cars are expected to increase to about 11 percent of total daily traffic (vehicle-km) in the period up to 2015, they are projected to receive about 53 percent of the project benefits. Buses will make up about 25 percent of traffic and bus passengers will receive about 24 percent of benefits. Commercial vehicles will make up about 54 percent of traffic and receive about 17 percent of benefits. Cyclists will account for about 21.5 percent of person trips and receive about 6 percent of benefits. Of the benefits to private vehicles, about one quarter will be in time savings and the remainder in operating cost savings. For bus passengers, about 30 percent of the benefits will be time savings, the remainder being fare savings (assuming that fares are set in proportion to bus  Page 43 Annex 4 operating costs). The only quantified benefits for cyclists were time savings. Since the bus priority schemes to be included in the project have not yet been specified, they were not included on the economic evaluation. They are expected to result in considerable additional benefits to bus passengers, and disbenefits to other motorized vehicles, so the final distribution of benefits between different types of vehicles and their occupants are likely to be quite different to those shown here. Distribution of benefits (based on thre present value of user benefits) Basic Lower value of Zero value of Lower Vehicle time time Operating costs Car occupants 53.4% 51.2% 52.1% 53.4% Public transport passengers 22.8% 26.0% 21.4% 23.0% Public transport passengers 1.6% 1.8% 2.4% 2.0% Cyclists 5.5% 2.5% 0.0% 15.1% Trucks 16.7% 18.5% 24.2% 6.6% Total 100.0% 100.0% 100.0% 100.0% Total (U$ present value) 880.0 767.4 587.6 705.2 Sensitivity analysis / Switching values of critical items: Sensitivity analysis and Switching values of critical items: Sensitivity tests Sensitivity tests were carried out for the following alternative assumptions: a. Private motorized vehicle drivers on business travel had only 2 1/2 times the average wage b. zero value of travel time savings for evaluation b. the level of demand would grow at 4 percent per year on average instead of 6 percent c. vehicle operating costs would be only 75 percent of those derived from the HDM. d. investment costs would be up to 40 percent higher than estimated Sensitivity test ERR Lower value of business time 32.4% Zero value of time 24.1% Lower rate of growth of demand 33.2% Lower vehicle operating costs 24.1% Higher investment costs 26.4%  Page 44 Annex 4 Switching values Four parameters were analyzed to determine what value they would need to take for the NPV to be zero or less - rate of growth of demand, construction costs, the value of travel time savings and vehicle operating cost savings. Taking the parameters individually, none of the switching values would have a significant probability. Even if traffic were not to increase from present levels, the NPV would remain just positive, and for the NPV to fall to below zero, traffic would have to reduce at about 3 percent per year. Despite the restructuring of basic industries in Liaoning and the dependence on an iron and steel industry that is likely to substantially reduce its employment, a sustained reductioni in travel demand of this level is considered highly unlikely. If the only chiange from basic parameter values were in construction costs, they would need to increase by an average of more than 260 percent to produce this result, another highly improbable outcome. One of the more controversial values used in the evaluation is that of the value of travel time savings. However. these make up only about 25 percent of the total quantified benefits of the project, and even with zero values of time, it would have a substantially positive NPV. Some of the sub-components that are designed specifically to relieve congestion and therefore have time savings as their principal objective, Would have negative NPVs under this circumstance. Another parameter with a controversial value is vehicle operating costs. Despite the efforts to derive values that are applicable to urban traffic conditions in China, great uncertainty surrounds the figures used. However, the values would have to be reduced to about 15 percent of those used in the basic evaluation for the NPV to fall below zero, yet another highly improbable outcome. Single parameter switchin2 values Parameter Change in value needed to result Estimated probability of in a negative NPV occurrence Rate of growth of demand -3% per year Less than 1% Lower vehicle operating costs 13% of basic value Less than 5% Lower value travel time 'savings Less than zero Negligible Increased construction costs 287% more than basic value Less than 1% Various combinations of the values of the parameters could also lead to a negative NPV. Some of these, and their assessed probabilities of occurrence are included in the following table. None of the parameter combinations has a significant probability, although they are all higher than those for the single parameter outcomes.  Page 45 Annex 4 Multiple Parameter switching values Parameter value | Parameter probability Construction Value of Vehicle Construction Value of Vehicle Joint Cost time operating Cost time operating Probability cost cost 120% 22% 100% 40% 20% 65% 5.2% 130% 27% 100% 35% 22% 65% 5.0% 140% 33% 100% 30% 30% 65% 5.9% 150% 36% 100% 25% 35% 65% 5.7% 160% 41% 100% 15% 40% 65% 3.9% 170% 45% 100% 10% 45% 65% 2.9% 120% 25% 90% 40% 21% 60% 5.0% 120% 40% 50% 40% 40% 40% 6.4% 140% 40% 75% 30% 40% 50% 6.0% 140% 60% 15% 30% 60% 10% 1.8% 160% 50% 70% 15% 50% 45% 3.4% 160% 57% 56% 15% 55% 40% 3.3% If the difference between the present value of financial and economic flows is large and cannot be explained by taxes and subsidies, a brief explanation of the difference is warranted, e.g. "The value of financial benefits is less than that of economic benefits because of controls on electricity tariffs."  Page 46 Annex 5 Annex 5: Financial Summary CHINA: Liaoning Urban Transport Project Years Ending IMPLEMENTATION PERIOD Year I Year 2 1 Year 3 Year4 Year 5 I Year 6 Year 7 Total Financing Required Project Costs Investment Costs 6.0 104.3 103.2 78.3 37.4 33.5 0.0 Recurrent Costs 0.3 10.2 3.7 2.8 1.5 1.2 0.0 Total Project Costs 6.3 114.5 106.9 81.1 38.9 34.7 0.0 Front-end fee 1 .5 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 7.8 114.5 106.9 81.1 38.9 34.7 0.0 Financing IBRDIIDA 3.6 42.0 42.3 31.4 16.3 14.4 0.0 Government 4.2 72.5 64.6 49.7 22.6 20.3 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 4.2 71.6 64.1 49.6 22.6 20.3 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -Total Project Financing 7.8 114.5 106.9 81.1 38.9 34.7 0.0 OPERATIONAL PERIOD | Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total Financing Required Project Costs Investment Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Front-end fee 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ITotal Financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 fFinancing IBRD/IDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Government 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0  Page 47 Annex 6 Annex 6: Procurement and Disbursement Arrangements CHINA: Liaoning Urban Transport Project Procurement Procurement Assessment LUCRPO will coordinate, and have overall responsibility, for all procurement activities financed by the project while the municipal Project Offices will be responsible for day-to-day activities within their respective jurisdictions. As required by domestic regulations, the China International Tendering Company (ITC) has been recruited as the procurement agent for the project. Specifically, * LUCRPO will review all project documents before they are issued, will supervise the bidding, evaluation, and contract award processes. They will also be the Bank's primary interlocutor on general procurement issues and on issues relating to program management, and will keep a record of all important correspondence. * The municipal project offices will be responsible for the preparation of the technical sections of the bidding documents and for the management of contract implementation. They will keep a record of all correspondence. They will also issue the disbursement requests. * ITC will be responsible for managing all aspects of ICB procurement and preparation of the commercial parts of the documentation for both the ICB and NCB contracts. It will be also the Baank's primary interlocutor for all matters related to the ICB contracts. Finally, they will maintain the master filing system for ICB procurement. LUCRPO has gained substantial experience on Bank-financed procurement as the manager of two previous Bank projects and its staff have been used to train the staff in less experience agencies. Further, the Liaoning Finanicial Bureau previously prepared and issued an internal procurement manual and procedure for Bank-financed projects in the province, based on the Bank's procurement guideline of 1995. The manual included sections on bidding procedures, evaluation, contract management, and review. The manual provides a very good foundation for the activities included in current project, but it needs to be updated. ITC is one of the original and most experienced procurement agencies in China. Staff assigned to the project by this agency are very familiar with the requirements of Bank-financed procurement. The Shenyang Project Office has had some experience of Bank-financed projects and has some knowledge of Bank-financed procurement. However, the project offices in Fushun and Anshan have had no such experience. In order to strengthen the procurement abilities of the municipal staff, especially in Fushun and Anshan, a suitable training program has been developed (details in the PIP). In addition, international and domestic procurement experts will be recruited to the teams in the project offices. A procurement plan (included in the PIP), and internal procurement review and control procedure (also included in the PIP) have been found satisfactory. LUCRPO also has a very good record keeping system. However, a system guidelines need to be prepared so as to ensure consistent record keeping between the four agencies and to be used when training staff in the municipalities. LUCRPO will provide guidelines for the maintenance of the project record system, and will help municipal staff to establish such a system within the municipalities, before the end of the first quarter of 1999.  Page 48 Annex 6 Overall, the task team considers the proposed arrangements for managing procurement are satisfactory. In particular, it found that the procurement plan, procurement procedures, internal organization and control, and staffing plan are adequate. However, as noted above, so as to fill the gaps identified by the assessment, the implementing agencies have agreed to implement a training program for municipal staff, update the provincial procurement manual and develop project record keeping systems at the municipal level. These activities will be completed before the end of the first quarter of 1999. Procurement Procedure Goods and works shall be procured in accordance with the provisions of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 and revised in January and August 1996 and September 1997 (the Guidelines). Chinese Model Bidding Documents published by Tsinghua University Press, dated May 1997, or the Bank's Standard Bidding Documents will be used for all Bank-financed procurement. Consultants' services shall be procured in accordance with the provisions of the Guidelines: Selection and Employment of Consultants by World Bank Borrowers revised by the Bank in September 1997 (the Consultant Guidelines). The proposed procurement plan is included in the PIP, and provides a schedule for each step of the procurement process. It shall be updated annually and furnished to the Bank for its review and approval, in accordance with the provisions of paragraph I of Appendix I to the Guidelines. All Bank-financed procurement shall be undertaken in accordance with the approved plan. ICB goods and works shall be procured in accordance with the provisions of Section 11 of the Guidelines. Bidders for all ICB contracts for works shall be pre-qualified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines. Post qualification will be used for ICB goods contracts and NCB works contracts. Domestic preferences shall apply in accordance with the provisions of paragraphs 2.54 and 2.55 of the Guidelines which will apply to goods manufactured in China to be carried out by domestic contractors (other than goods manufactured in the Hong Kong Special Administrative Region of the Borrower.) The invitation to pre-qualify or bid for each contract is estimated to cost US$ 10,000,000 equivalent or more for goods and works and US$200,000 equivalent or more for consultant services shall be advertised in accordance with the procedures applicable to large contracts under paragraph 2.8 of the Guidelines and 2.5 of the Consultant Guidelines, that is to be advertised in United Nations Development Business (UNDB) and publication in at least one newspaper of national circulation in China. Procurement methods (Table A) Procurement under the project would be carried out as show in Table A for the project as a whole (all three cities). ICB procedures will be used to select the contractors for the major road infrastructure sub-components in each of the three project cities (except some parts of south ring road, Zhonghua Road and Yuanlin road in Anshan and Hunhenan road in Fushun) as well as some facilities (traffic sign, paint, separation fence, etc.) for Shenyang. Road infrastructure works shall be packaged to ICB civil works contracts of between US$10 to 30 million.  Page 49 Annex 6 The ICB percentages are 69 percent in Shenyang, 70 percent in Anshan and 61.5 percent in Fushun in terms of Loan. The overall ICB percentage is between 45 to 51 percent of total project amount. The total amount of ICB contracts including both civil works and equipment is US$196.6 million. Civil works contracts for public transport, traffic management and road maintenance are to be procured through NCB procedures. Civil works contracts for infrastructure and public transport will normally be tendered as individual contracts. Whereas the contracts for traffic management and road maintenance works will normally be tendered jointly, for the same section of the roads, so as to facilitate construction management. Works is estimated to cost less thani US$ 1 0,000,000 equivalent per contract, up to an aggregate amount not to exceed US$84.5 million equivalent, may be procured under contracts awarded on the basis of National Competitive Bidding procedures in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. Goods estimated to cost less than US$250,000 equivalent per contract, up to an aggregate amount not to exceed US$1,000,000 equivalent, may be procured under contracts awarded on the basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. For international shopping, three quotations from qualified contractors from two different countries are required. Requests for quotations should indicate the description and quantity of the goods, as well as the desired delivery time and place. It is currently estimated that there will be 51 packages including both civil works and equipment for ICB and NCB which will be grouped together so that the number of invitations to bid will be 51 over a six-year period [ 19 for Shenyang (1998 to 2002), 16 for Anshan and 16 for Fushun (1999 to 2003)]. Since it is a GOC requirement that the province must appoint an authorized procurement agency to manage all ICB procurement, the project office has hired ITC of CNTIC as the procurement agent. Prior review thresholds (Table B) Civil Works and Equipment Prior Review With respect to each contract for: (a) works is estimated to cost US$2,000,000 equivalent or more; (b) goods is estimated to cost US$250,000 equivalent or more. Post Review With respect to each contract not governed by the above paragraph on prior review, the procedures set forth in paragraph 4 of Appendix I to the Guidelines shall apply. Advance Contracting and Retroactive Financing Shenyang implementing agencies have conducted the NCB procurement for road maintenance of Shenzhou Road and Heilongjiang St. (one contract) and Zhulin Rd and South Jiuzhong Rd (one contract) for advance contracting and Retroactive Financing. Although the Bank has cleared the bid evaluation report on October 12, 1998, it does not commit the Bank to make a loan to finance for the contracts.  Page 50 Annex 6 Employment of Consultants Consultants' services shall be procured and awarded in accordance with the provisions of Section 11 of the Consultant Guidelines applicable to quality-and cost-based (QCBS) selection of consultants (see Table Al) Prior Review by the Bankfor the Selection of Consultants Prior review is required for all consultants contracts above US$ 100,000 (for company contracts) and US$50,000 for contracts to be awarded to individual consultants, as detailed below: (a) With respect to each contract estimated to cost the equivalent of US$200,000 or more, the procedures set forth in paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a) and 5 of Appendix I to the Consultant Guidelines shall apply. (b) Prior review is required with respect to each contract estimated to cost the equivalent of US$]100,000 or more, but less than the equivalent of US$200,000, the procedures set forth in paragraphs 1, 2 (other than the second subparagraph of paragraph 2(a)) and 5 of Appendix I to the Consultants' Guidelines shall apply. (c) With respect to each contract for the employment of individual consultants estimated to cost the equivalent of US$50,000 or more, the qualifications, experience, terms of reference and terms of employment of the consultants shall be furnished to the Bank for its prior review and approval. The contract shall be awarded only after the said approval shall have been given. Post Review of Consultants Contracts With respect to each contract not governed by Prior Review, the procedures set forth in paragraph 4 of Appendix I to the Consultants' Guidelines shall apply. Bank Service Standards The Bank will endeavor to respond within ten working days. The substantial comments will be given in ten working days for all contracts of NCB, IS, ICB below US$15 million and Consultant selection below US$200,000; 15 working days for contracts of ICB between US$15 million to US$25 million and Consultant selection over US$200,000 subject to RPA review and 20 working days for ICB over US$25 million (bid evaluation only) subject to OPRC review. Disbursement Allocation of loan proceeds (Table C) Table C shows the allocation of loan proceeds by category and the disbursement percentages proposed in each category. The estimated disbursements by year and cumulative is shown as part of the Project financing Data in the cover page. Use of statements of expenditures (SOEs): SOEs will be used for all contracts under US$2 million equivalent for works and under US$250,000 for goods, US$ 100,000 for consulting firms, and US$50,000 for individual consultants and training.  Page 5S Annex 6 Special account: A special account in the amount of US$10 million will be established, the estimated average expenditure for a four-month period. Applications for replenishment, supported by appropriate documentation, will be submitted monthly or when the amounts withdrawn equal 50 percent of the initial deposits, whichever comes first.  Page 52 Annex 6 Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other' N.B.F. Total Cost 1. Works 171.9 84.6 0.0 0.0 256.5 (82.5) (40.6) (0.0) (0.0) (123.1) 2. Goods 24.7 0.2 0.0 0.0 24.9 (20.0) (0.2) (0.0) (0.0) (20.2) 3. Services 0.0 0.0 5.2 1.3 6.5 (0.0) (0.0) (5.2) (0.0) (5.2) 4. Miscellaneous 0.0 0.0 0.0 94.5 94.5 (0.0) (0.0) (0.0) (0.0) (0. 0) 5. Front-end fee 0.0 0.0 1.5 0.0 1.5 (0.0) (0.0) (1.5) (0.0) (1.5) Total 196.6 84.8 6.7 95.8 383.9 (102.5) (40.8) (6.7) (0.0) (150.0) Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies 2/ Includes civil works and goods to be procured through international shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.  Page 53 Annex 6 Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) Consultant Selection Method Services Expenditure QCBS QBS SFB LCS CQ Other N.B.F. Total Cost' Category A. Firms 5.2 0.0 0.0 0.0 0.0 0.0 1.3 6.5 (5.2) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (5.2) B. Individuals 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) Total 5.2 0.0 0.0 0.0 0.0 0.0 1.3 6.5 (5.2) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (5.2) 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guideleines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank loan.  Page 54 Annex 6 Table B: Thresholds for Procurement Methods and Prior Review Contract Value Contracts Subject to Threshold Procurement Prior Review Expenditure Category (US$ thousands) Method (US$ millions) 1. Works 1 0,000 and above ICB, 2 and above Below 10,000 NCB 2. Goods 250 and above ICB, NCB or 0.25 and above Below 250 International Slhoppinig 3. Services As per 1997 Guidelines 0.1 for firms 0.05 for on individuals ConsuIltant services 4. Miscellaneous N/A | Total value of contracts subject to prior review: US$230 million Overall Procurement Risk Assessment Low Frequency of procurement supervision missions proposed: One every 6 months (includes special procuremenit supervisioni for post-review/audits) Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.  Page 55 Annex 6 Table C: Allocation of Loan Proceeds Expenditure Category Amount in USSmillion Financing Percentage Civil Works 111.9 48% Equipment 18.4 100% /100% /75% Training and Consultant 5.2 100% Services Unallocated 13.0 Total Project Costs 148.5 Front-end fee 1.5 Total 150.0 Note: 1. A special account in the amount of US$10 million will be established. 2. SOEs will be used for all contracts under US$2 million equivalent for works and uLider US$250,000 for goods, US$100,000 for consulting firms, and US$50,000 for individual consultalits and trainitig.  Page 56 Annex 7 Annex 7: Project Processing Schedule CHINA: Liaoning Urban Transport Project Project Schedule Planned ! Actuall Time taken to prepare the project (months) 157 124.9 First Bank mission (identification) 08/06/95 08/06/95 Appraisal mission departure 12/03/98 12/15/98 Negotiations 01/19/99 01/19/99 Planned Date of Effectiveness 06/01/99 Prepared by: Shenyang, Anshan and Fushun Municipalities LUCRPO Preparation assistance: Japanese PHRD Grants Bank staff who worked on the project included: Name Speciality Richard Scurfield, EACCF Task Team Leader / Transport Zong Yan, EACCF Urban Transport Tilly Chang, EASTR Urban Transport Peter Midgley, ISGKM Former Task Manager Stephen Stares Former Task Manager Wenyan Dong, EACCF Team Assistant Nenuca Robles, EASTR Team Assistant |OTHER TASK TEAM MEMBERS Robin Carruthers, EASTR Economics Daniel Gibson, EASES Social Analysis Hoi-Chan Nguyen, LEGEA Legal Anil Somani, EASES Enviroiinmenit Yang Dawei. EACCF Procuremcent Zhi Liu, TWUTD Urban T1ransport Zou Youlan, EACCF Resettlemcnt PEER REVIEWERS Paul Guitink. LCFSP Slobodan Mitric, ECSIN Sam Zimmerman, Consultant Urban T'ransport  Page 57 Annex 8 Annex 8: Documents in the Project File* CHINA: Liaoning Urban Transport Project A. Project Implementation Plan General Project Implementation Report (all three cities), Sept. 1998 Project Implementation Plans for Shenyang, Sept., 1998 Project Implementation Plans for Fushun, Sept., 1998 Project Implementation Plans for Anshan, Sept., 1998 B. Bank Staff Assessments C. Other I. Liaoning Urban Transport Strategy Plan, 1995 Sept. Chinese/English 2. Shenyang Urban Transport Plan, 1996 May, Chinese/English 3. Anshan Urban Transport Plan, 1995, Chinese 4. Fushun Urban Transport Plan, 1996, Chinese 5. Shenyang Urban Traffic Management Report, 1996 May, Chinese/English 6. Anshan Urban Traffic Management Report, 1996 May, Chinese/English 7. Fushun Urban Traffic Management Report, 1996 May, Chinese/English 8. Shenyang Public Transport Management Report, 1996 May, Chinese/English 9. Anshan Public Transport Management Report, 1996 May, Chinese/English 10. Fushun Public Transport Management Report, 1996 May, Chinese/English 11. Shenyang Road Maintenance Report, 1996 May, Chinese/English 12. Shenyang Road Maintenance Report, 1996 May, Chinese/English 13. Shenyang Road Maintenance Report, 1996 May, Chinese/English 14. Shenyang Urban Transport Project Feasibility, 1997 Nov., Chinese Study Report 15. Anshan Urban Transport Project Feasibility, 1998 April, Chinese Study Report 16. Fushun Urban Transport Project Feasibility, 1998 March, Chinese Study Report 17. Shenyang Urban Transport Project, 1998 March, Chinese/English, Preliminary Design 18. Anshan Urban Transport Project, 1998 March, Chinese/English, Preliminary Design 19. Fushun Urban Transport Project, 1998 March, Chinese/English Preliminary Design 20. LUTP, 1998 March, Chinese/English Feasibility Study Report (4 volumes) 21. Liaoning Urban Transport Project EA Summary, 1998 March, Chinese/English 22. Shenyang EIA, 1998 March, Chinese/English 23. Anshan EIA, 1998 March, Chinese/English 24. Fushun EIA, 1998 March, Chinese/English 25. Shenyang EAP, 1998 March, Chinese/English 26. Anshan EAP, 1998 March, Chinese/English 27. Fushun EAP, 1998 March, Chinese/English 28. Shenyang RAP, 1998 March, Chinese/English 29. Anshan RAP, 1998 March, Chinese/English 30. Fushun RAP, 1998 March, Chinese/English 31. Liaoning Urban Transport Project, 1996 Sept., Chinese/English, Interim Report 32. Addendum to LUTP, 1996 Dec., Chinese/English, Project Interim Report 33. Liaoning Urban Transport Project Summary, 1997 July, Chinese/English *Including electronic files  Page 58 Annex 9 Annex 9: Statement of Loans and Credits CHINA: Liaoning Urban Transport Project Difference between expected and actual Original Amount in USS Millions disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd Number of Closed Projects: 106 CN-PE-49665 1999 PRC ANNINGVALLEYAG.DEV 90.00 3000 000 11994 000 000 CN-PE-50036 1999 PEOPLE'S REPUBLIC OF CHIN ANHUI PROVINCIAL HWY 20000 000 0.00 20000 2.49 000 CN-PE-63123 1999 PRC YANGTZEFLOODEMERGY 4000 4000 000 so80 000 0 00 CN-PE-3539 1998 PRC SUSTCOASTRESDEV 10000 000 000 10000 292 000 CN-PE-3566 1998 PRC BASICHEALTH 000 8500 000 8690 1 15 000 CN-PE-35698 1998 PRC HUNANPOWERDEVELOP 30000 000 000 300.00 300 000 CN-PE-3591 1998 GOC STATE FARMS COMMERCI 15000 000 0.00 11048 -2842 0.00 CN-PE-3606 1998 PEOPLE'S REPUBLIC OF CHIN ENERGY CONSERVATION 6300 000 000 6300 224 000 CN-PE-3614 1998 MINISTRYOF FINANCE GUANGZ. CITYCRT.TRP 20000 000 0.00 20000 1059 000 CN-PE-3619 1998 CHINA 2NDINLAND WATERWAYS 12300 000 0.00 12300 1550 0.00 CN-PE-36414 1998 PEOPLES REPUBLIC OF CHINA GUANGXI URBAN ENV 72.00 2000 000 8935 -1 53 000 CN-PE-36949 1998 PRC NAT.HWY3-HUBEI 250.00 000 0.00 242.00 867 0.00 CN-PE40185 1998 PEOPLE'SREPUBLICOFCHiN SHANDONGENVIRONMENT 9500 000 000 92.00 1765 000 CN-PE45788 1998 PRC TRI-PROVINCIAL HWY 23000 000 0 00 23000 32 04 0 00 CN-PE-46563 1998 PRC TARIM BASIN II 90.00 6000 0.00 15240 11 69 000 CN-PE-46952 1998 PRC FOREST. DEV. POORAR 100.00 10000 0.00 20396 717 14.34 CN-PE49700 1998 GOC IAIL-2 30000 000 0.00 280.00 470 0.00 CN-PE-51736 1998 PRC E. CHINA/JIANGSUPWR 25000 000 0.00 250.00 7186 0.00 CN-PE-56491 1998 PRC HEBEI EARTHQUAKE 000 2840 0.00 2101 -2 82 0.00 CN-PE-34081 1997 PRC XIAOLANGDIMULTI. II 430.00 000 0.00 36440 8607 0.00 CN-PE-3590 1997 PRC QINBA MTS. POVTY RED 3000 15000 000 157.27 2239 0.00 CN-PE-3635 1997 PRC VOC. ED. REFORM PROJ 1000 2000 0.00 17.37 1.95 000 CN-PE-3637 1997 PRC NATLRURWATERIII 000 70.00 0.00 6542 8.89 000 CN-PE-36405 1997 PRC WANJIAZHAIWATERTRA 40000 0.00 0.00 32866 -301 000 CN-PE-3643 1997 GOC XINJIANG HIGHWAYS II 300,00 0 00 0 00 237.28 54,28 0 00 CN-PE-3650 1997 PRC TUOKETUOPOWER/INNER 40000 000 000 398.00 118.12 000 CN-PE-3654 1997 PRC HUNAN/GUANGHWY2-NH2 40000 000 0.00 350.40 80.39 000 CN-PE-36952 1997 PRC BASIC ED. IV 000 8500 0.00 5051 -21.08 000 CN-PE-38988 1997 PRC HEILONGJIANGADP 12000 000 0.00 9702 7.74 0.00 CN-PE-44485 1997 GOC SHANGHAI WAIGAOOIAO 40000 000 0.00 40000 5269 000 CN-PE-34618 1996 PRC LABORMARKETDEV 1000 2000 000 2446 21.16 0.00 CN-PE-3507 1996 P.R.C. ERTAN HYDRO II 400 00 0 00 0.00 31.51 -22.40 0.00 CN-PE-3563 1996 PRC ANIMAL FEED 15000 000 0.00 139.57 104.20 12.92 CN-PE-3569 1996 PRC SHANGHAI-ZHEJIANG HI 26000 000 775 110.73 . 23.83 13.17 CN-PE-3589 1996 YUNNAN PROV. GOV. DISEASE PREVENTION 000 10000 000 71.22 55.07 000 CN-PE-3594 1996 PRC GANSU HEXI CORRIDOR 60 00 90 00 0.00 129.18 24.33 0 00 CN-PE-3599 1996 PRC YUNNAN ENVIRONMENT 12500 2500 000 14129 1424 0.00 CN-PE-3602 1996 PRC HUBEI URBAN ENV. PRO 12500 2500 000 128.27 75.00 0.00 CN-PE-3638 1996 SHANGHAIMUN. GOVT SEEDSSECTORCOMMER 8000 2000 000 84.49 28.54 0.00 CN-PE-3646 1996 CHINA CHONGQINGINDPOLCT 17000 000 000 169.38 95.13 0.00 CN-PE-3648 1996 PRC SECOND SHANGHAI SEWE 250 00 0 00 000 165.68 73.87 0.00 CN-PE-3649 1996 PRC SHANXI POVERTY ALLEV 000 10000 0.00 35.64 -12.39 0.00 CN-PE-3652 1996 PRC 2ND SHAANXI PROV HWY 21000 000 0.00 148.70 54.69 0.00 CN-PE-36950 1996 PRC BASIC ED. POOR III 000 100.00 0.00 14.43 -23.65 0.00 CN-PE-40513 1996 PRC 2ND HENAN PROV HWY 210.00 0.00 0.00 181.05 51 72 0.00 CN-PE-3493 1995 GOC INLAND WATERWAYS 420 00 0 00 0 00 286.07 4.79 0.00 CN-PE-3571 1995 PRC RAILWAYS VII 40000 0.00 000 384.39 19505 0.00 CN-PE-3585 1995 SHENYANGIND. REFORM 17500 000 000 10080 4720 0.00 CN-PE-3596 1995 YANGTZEBASIN WATER 10000 110.00 0.00 41.11 -12.08 0.00 CN-PE-3598 1995 LIAONING ENVIRONMENT 110.00 0.00 0.00 7021 55.69 0.00  Page 59 Annex 9 Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd CN-PE-3800 1995 PRC TECHNOLOGYDEVELOPME 20000 000 000 13294 41.52 0.00 CN-PE-3603 1995 PRC ENT HOUSING SOC SE 27500 7500 2000 204 50 153.52 4.17 CN-PE-36041 1995 MOF FISCAL & TAX REF. & 50 00 25 00 0 00 66 82 41 27 0 00 CN-PE-3612 1995 PRC XINJIANG HIGHWAYi 15000 000 000 5543 4343 0.00 CN-PE-3634 1995 PRC MATERNALCHILDHEALT 000 9000 000 2207 968 0.00 CN-PE-3636 1995 PRC BASIC EDUC IN POOR & 000 100 00 0 00 3 95 -2 68 0.00 CN-PE-3639 1995 PRC SOUTHWEST POV. REDUC 9500 200.00 0.00 151 15 2964 000 CN-PE-3642 1995 PRC ZHEJIANG POWER DEVT 400 00 0 00 0 00 147 91 -47 89 0 00 CN-PE-3647 1995 GOC ECONOMICLAWREFORM 000 1000 000 582 5.46 000 CN-PE-36947 1995 PRC SICHUAN TRANSMISSION 27000 000 000 141 78 126.75 8341 CN-PE-37156 1995 MOH IODINE DEF. DISORDER 700 2000 700 214 11.74 -071 CN-PE-3502 1994 PRC RURHEALTHMANPOWER 000 11000 000 3198 2315 000 CN-PE-3504 1994 PRC HEBEIIHENAN NATIONAL 380.00 000 000 48.65 830 000 CN-PE-3540 1994 PRC LOESS PLATEAU 0 00 150 00 000 31 02 -24 41 0 00 CN-PE-3557 1994 PRC FOREST RESOURCE DEV 000 20000 0.00 47.66 1552 -2964 CN-PE-3562 1994 PRC XIAOLANGDI MULTIPURPOSE 460 00 000 0 00 083 0 83 0 00 CN-PE-3586 1994 PRC SHANGHAI ENVIRONMENT 160 00 0 00 0.00 72.20 65 65 0 00 CN-PE-3593 1994 PRC SONGLIAO PLAIN ADP 0.00 20500 0.00 2658 -1575 000 CN-PE-3595 1994 GOC REDSOILSIIDEVELOP 0.00 15000 000 4163 1411 000 CN-PE-3809 1994 SHANGHAI MUNICIPAL GOVT SICHUAN GAS DEV & CONSERVATION 255 00 0 00 0 00 129 77 74 28 0 00 CN-PE-3622 1994 GOC SHANGHAI MTP II 150.00 0 00 0 00 748 7 49 0 00 CN-iE-3626 1994 GOVERNMENT OF PRC FUJIAN PROV HIGHWAY 140 00 000 000 5863 3129 279 CN-PE-3833 1994 PRC TELECOMMUNICATIONS 250 00 0.00 30.00 19.55 49 55 0 00 CN-PE-3641 1994 PRC YANGZHOU THERMAL POWER 350 00 0 00 0.00 75.98 5615 0 00 CN-PE-3644 1994 P.R.C XIAOLANGDIRESETTLEMENT 000 11000 000 2636 637 000 CN-PE-3473 1993 GOVT OF PEOPLES REP. OF C ZHEJIANG MULTICITIES 000 11000 000 2949 26.06 000 CN-PE-3512 1993 PRC SHANGHAIPORTREST 15000 000 2574 388 27.77 220 CN-PE-3518 1993 PRC GUANGDONGPROV TRANSPORT 24000 000 000 208 -2.94 0.00 CN-PE-3533 1993 PRC TIANJIN IND 11 150 00 0 00 16.00 4217 4765 882 CN-PE-3559 1993 PRC AGRIC SUPPORT SERVI 000 11500 000 1074 -216 000 CN-PE-3561 1993 PRC SICHUAN ADP 0 00 147 00 0.00 5.66 0 00 0 00 CN-PE-3567 1993 PRC EFFECTIVE TEACHING S 0 00 100 00 0.00 22.81 20 72 2078 CN-PE-3570 1993 PRC RAILWAY VI 420 00 000 0 00 94 61 92.29 0 00 CN-PE-3580 1993 PRC SO.JIANGSU ENVIRON PROTECT 25000 000 000 415 -1 87 000 CN-PE-3581 1993 PRC HENAN PROV. TRANSPORT 120 00 0 00 0 00 10 78 10.79 0 00 CN-PE-3592 1993 PRC REF. INSrL.& PREINVEST(CRISP) 0 00 50 00 0 00 2019 19.61 0.00 CN-PE-3597 1993 PRC TAIHU BASIN FLOOD CO 100.00 10000 000 4756 4317 0.00 CN-PE-3616 1993 PRC TIANHUANGPING HYDRO 300 00 0.00 0 00 6670 47 99 0.00 CN-PE-3623 1993 ROC FINANCIALSECTORTA 000 6000 0.00 21.07 1602 000 CN-PE-3627 1993 PRC GRAIN DISTRIBUTION P 32500 165.00 0.00 32787 321 30 5464 CN-PE-3632 1993 BEIJINGMUNICIPALITY ENVIRONMENTTECHASS 000 5000 000 1105 11.06 -015 CN-PE-3503 1992 R.O.C. ZOUXIAN THERMAL POWE 310 00 0.00 0 00 7 79 7.80 0 00 CN-PE-3534 1992 MIN. OF PUBL.HEALTH ZHEJIANG PROV TRANSP 220 00 0 00 0 00 20 24 20.25 8 55 CN-PE-3564 1992 BEIJINGENVIRONMENT 4500 8000 000 2579 20.42 2.84 CN-PE-3565 1992 SHANGHAIMETROTRANS 000 6000 0.00 389 068 0.00 CN-PE-3568 1992 TIANJINURBDEV&EN 000 10000 000 18.90 1524 -607 CN-PE-3624 1992 INFECTIOUS DISEASES 000 129.60 0.00 34.15 28.47 2843 Total: 1462000 399000 106.49 1025295 2899.63 22029 Active Closed Projects Projects Total Total Disbursed (IBRD and IDA): 8256.18 12525.26 20781.44 of which has been repaid: 64.81 2473.13 2537.94 Total now held by IBRD and IDA: 18438.66 9692.71 28131.37 Amount sold: 0.00 0.00 0.00 of which repaid: 0.00 0.00 0.00 Total Undisbursed: 10252.95 28.86 10281.81 Actual disbursements to date minus intended disbursements to date as projected at appraisal.  Page 60 Annex 9 CHINA STATEMENT OF l[FC's Held and Disbursed Portfolio 31 -Dec- 1998 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic o Pacific Ports 0.00 0.00 3.64 0.00 0.00 0.00 3.64 0.00 1987/92/94 China Bicycles 8.50 0.00 3.39 0.00 8.50 0.00 3.39 0.00 1993 Shenzhen PCCP 3.76 0.00 0.99 0.00 3.76 0.00 0.99 0.0( 1993 Yantai Cement 14.56 0.00 1.95 7.77 14.56 0.00 1.95 7.77 1994 China Walden JV 0.00 0.00 6.00 0.00 0.00 0.00 3.53 0.(0 1994 China Walden Mgt 0.00 0.00 0.01 0.00 0.00 0.00 0.01 (0(0 1994 Dynamic Fund 0.00 0.00 12.35 0.00 0.00 0.00 10.08 t0(. 1994 Dalian Glass 20.50 0.00 2.40 40.50 20.50 0.00 2.40 40.50 1994/97 PTP Leshan 12.20 0.00 1.00 16.00 12.20 0.00 1.00 16.00 1995 Dupont Suzhou 23.36 0.00 4.15 46.80 23.36 0.00 4.15 46.80 1995 Newbridge Inv. 0.00 0.00 9.40 0.00 0.00 0.00 6.10 (.00 1995 Suzhou PVC 22.00 0.00 2.48 22.20 17.49 0.00 2.48 17.65 1996 Beijing Hormel 5.00 0.00 0.50 5.50 5.00 0.00 0.50 5.50 1996 Jingyang 40.00 0.00 0.00 100.00 40.00 0.00 0.00 100.00 1996 Tianjin Kumho 11.17 0.00 0.00 33.00 0.00 0.00 0.00 0.0( 1996 Nanjing Kumho 16.00 0.00 3.81 45.50 13.63 0.00 3.81 38.75 1996 Weihai Weidongri 4.33 0.00 0.00 0.00 4.33 0.00 0.00 0.0( 1997 Ningbo 0.00 0.00 2.00 0.00 0.00 0.00 2.00 0.00 1997 Orient Finance 13.33 0.00 0.00 16.67 13.33 0.00 0.00 16.67 1997 PTP Hubei 12.63 0.00 0.00 25.38 8.31 0.00 0.00 16.69 1997 Rabobank PTPC 2.40 0.00 0.00 2.40 0.00 0.00 0.00 0.00 1998 Caltex Ocean 21.00 0.00 0.00 45.00 8.91 0.00 0.00 19.09 1998 Rabobank SHFC 2.75 0.00 0.00 2.75 2.25 0.00 0.00 2.25 1998 Chengxin-IBCA 0.00 0.00 0.36 0.00 0.00 0.00 0.00 0.00 1998 Zhen Jing 0.00 0.00 2.00 0.00 0.00 0.00 0.00 0.00 Total Portfolio: 233.49 0.00 56.43 409.47 196.13 0.00 46.03 327.67 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 1998 CHENGDU CHEMICAI. 7.40 3.2t) 0.00 8.60 1998 EURECA 0.(( 3.00 0.(0 0.00 1998 LESHAN SCANA 6.10 1.35 (0(0 0.00 1998 ORIENT FIN A INC 3.33 (0(0 0.00 0.00 1998 JIANGSU COLINE 6.50 0.(( 0.00 0.00 1998 SHANGHAI KRUPP 30.00 (.(( 0.00 78.44 1998 WUHAN PORT 5.00 (.00 0.00 5.00 1998 ZHEJIANG COLINE 6.50 (.(( 0.00 0.00 1998 WUHAN CIG 0.00 1.50 0.00 0.00 1998 XIB 50.00 20.00 0.00 0.00 1998 ZHEN JING 4.50 0.00 0.00 0.00 1997 CHINEFARGE 12.80 0.00 0.00 20.00 1997 NISSAN/DONGFENG 20.20 0.00 0.00 27.00 1997 PTP HOLDINGS 0(00 1.50 0.00 0.00 1997 SMC 14.00 0.00 0.00 14.00 1996 TIANJIN 9.10 0.00 0.00 9.10 Total Pending Commitment: 175.43 30.55 0.00 162.14  Page 61 Annex 10 Annex 10: Country at a Glance CHINA: Liaoning Urban Transport Project East Lower- 1128/99 POVERTY and SOCIAL Asia & middle- ___ China Pacific Income Development diamond 1997 Population. mid-year (mi//ions) 1,227.2 1.753 2.282 Life expectancy GNP per capita (Atlas method, USS) 860 970 1.230 GNP (Atlas method. USS billions) 1,055.4 1.707 2.818 Average annual growth, 1991-97 Population (%) 11 1 3 12 Labor torce (I) 1 1 14 13 GNP ,. Gross per ~ --~ primary Most recent estimate (latest year available, 1991-97) capita enrollment Poverty (% of populaton below national poverty line) 7 Urban population (% of total population) 32 32 42 Life expectancy at birth (years) 70 68 69 I Infant mortality (per 1,000 live births) 32 38 36 Child malnutrition (% of children under 5) 16 16 Access to sate water Access to sate water (% ofpopulatton) 90 84 84 Illiteracy (% of population age 15+) 19 17 19 Gross primary enrollment (% of school-age population) 120 118 114 - China Mate 121 120 116 Lower-middle-income group Female 120 119 113 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1976 196 1996 1997 GOP (USS billions) 151.6 295 7 816 5 902.0 onomic ratios Gross domestic investment/GDP 27.9 37,7 39.6 38 2 Exports of goods and services/GDP 5.0 12.2 21.0 230 Trade Gross domestic savings/GDP 28.5 35 2 41 7 42 7 Gross national savings/GDP 28.5 35.3 40 4 41.4 Current account balance/GDP 02 -2.5 0 9 3 2 Domestic Interest payments/GDP 0.2 0 6 06 Investment Total debt/GDP 8.0 15.8 16 3 Savings Total debt service/exports 96 8 7 8 6 Present value of debt/GDP 14 9 Present value of debtlexports 62 7 Indebtedness 1976-86 1987-97 1996 1997 1998-02 (average annual growth) GDP 9 3 10.1 9.6 8 8 - China GNP per capita 8 3 8.6 8.7 7 4 Lower-middle-income group Exports of goods and services 18.8 16 6 5.6 27 6 STRUCTURE of the ECONOMY 1976 1966 19S6 1997 Growth rates of output and Investment (%) (% of GDP) 30 Agriculture 32 8 27 1 20 4 18 7 Industry 454 44.0 49 5 49 2 20 Manufacturing 29 5 35 5 37 8 37 3 o Services 21 7 28 9 301 321 Private consumption 64 0 51 4 46 7 45 7 92 93 94 95 9 97 General government consumption 75 134 11.6 116 GDI -- GDP Imports of goods and services 4 5 14 7 189 185 1976-S6 1987-97 1996 1997 Growth rates of exports and Imports (%) (average annual growth) Agriculture 60 44 51 35 'o Industry 11 0 138 121 108 30 Manufacturing 128 133 116 99 I Services 120 87 79 8.3 2 Private consumption 93 88 11 1 62 lo General government consumption 94 9 9 95 8.2 o Gross domestic investment 108 11 2 82 586 92 93 94 95 56 97 Imports of goods and services 22 5 12 8 59 13.1 - Exports -* Imports Gross national product 9 8 9 9 9 8 8 5 Note 1997 data are preliminary estimates This table was produced from the Development Economics central database. The diamonds show four key Indicators in the country (in bold) compared with its Income-group average. If data are missing, the diamond will be incomplete.  Page 62 Annex 10 China PRICES and GOVERNMENT FINANCE 1976 1986 1996 1997 Inflation (%) Domestic prlces (X change) 30 - Consumer prices 6 5 9 4 7 9 20 Implicit GOP deflator 4 0 466 559 1 12 s5 Government finance 1 (% of GDP, incrudes current grants) 0 Current revenue 24 0 11 4 12 0 92 93 94 95 96 97 Current budget balance 5 6 0 6 0 6 GDP aellatar --CPI Overall surplus/deficit -1 8 .1 5 -1 5 TRADE (USS millions) 1976 1986 1996 1997 Export and import levels (USS millions) Total exports (fob) 30.942 151 066 182.696 2 Food 4.448 10.232 11:054 Fuel 3 683 5.929 6.967 *s90 oo0 Manufactures 19.670 129.141 158.767 Total imports (cif) 42.904 138.838 142,361 100 0009 Food 2.002 7.866 6.308 50I0 Fuel and energy 504 6 877 10.306 Capital goods 20.415 59.610 57.930 . Export price index (1995=100) 66 Import price index (1995=100) 69 : *Expxrls Ulrpxrts Terms of trade (1995= 100) 96 BALANCE of PAYMENTS 1976 1986 1996 1997 Current account balance to GDP ratio I%) (US$ millions) Exports of goods and services 7.383 29.583 171,700 207,253 . T Imports of goods and services 7.125 37.472 154.100 166.755 Resource balance 258 -7.889 17 600 40.498 2 Net income 0 176 -12.370 -15.900 i:1 Net current transfers 0 255 1,922 4.660 i i = 92 9 Current account balance 258 -7.458 7,152 29.258 Financing items (net) 5.410 28.248 6.599 Changes in net reserves 2 048 -35.400 -35. 857 4 Memo: Reserves including gold (US$ millions) 16.417 111 .728 146.448 Conversion rate (DEC. Iocal/US$) 1 9 3 5 8 3 8 3 EXTERNAL DEBT and RESOURCE FLOWS 1976 1986 1996 1997 ! (USS millions) i'Composition of total debt, 1997 (USS millions Total debt outstanding and disbursed 23.719 128.817 146.697 IBRD 965 7.616 8.239 A 8.239 IDA 774 7.579 7,830 G 31.4 8: 7.830 Total debt service 2.974 15.756 18.445 : 2904 IBRD 66 840 858 IDA 8 73 81 E 20.782 Composition of net resource flows Official grants 155 249 228 Official creditors 1 165 4.401 4.315 Private creditors 3.693 6.454 8.134 Foreign direct investment 1 875 40.180 44.236 Portfolio equity 0 3.466 8.457 F 75 478 World Bank program Commitments 1.120 1.900 2.425 A - IBRD E- Bilateral Disbursements 607 2.097 2.275 B - iDA 0 -Other muwtilateral F - Private Principal repayments 0 364 377 C - IMF G - Short-term Net flows 607 1734 1898 Interest payments '5 549 562 Net transfers 532 1 185 1 335 Note. This table was produced from the Development Economics central database 1/28/99  Page 63 Annex I I Additional Annex No.: 11 Institutional Arrangements Institutional Arrangements for the preparation and implementation of the project are presented as follows: Participating Agency Role Component (s) (see the Responsibilities (see agency descriptions package plan) below) Liaoning Urban Coordination All project activities Organization, Construction and Renewal Management coordination, and Project Office (LUCRPO) management of the overall project Liaoning Financial Bureau Financial management All project activities Financial management (LFB) including disbursements for the project Liaoning Planning Planning and investment All project activities Development of the Commission (LPC) management investment program and obtaining national approval for the project Liaoning Auditing Bureau Project auditing All project activities Financial and (LAB) investment auditing Liaoning Environment Review the EIA All project activities Review of EIA, and Protection Bureau (EPB) obtaining SEPA approval Shenyang Transport Coordinate city Urban transport sector Review and implement Management Committees transport policy and transport plan; identify regulation transport projects and coordinate agencies involved Shenyang Project Office Project implementation all Shenyang project Organization, management activities coordination, management; and implementation of Shenyang component Shenyang Land Acquisition Land acquisition and all Shenyang project Resettlement policy and and Resettlement Office resettlement activities implementation  Page 64 Annex I I Participating Agency Role T Component (s) (see the Responsibilities (see agency descriptions package plan) below) Shenyang Environment Environment assessment all Shenyang project Evaluation and Protection Bureau and protection activities implementation of protection/mitigation actions Shenyang Municipal Design Design and supervision all Shenyang project Design and coordination and Research Institute activities with supervision teams Shenyang Transit Co. Project construction and all SYPT projects Project planning, design management implementation operation Shenyang Traffic Brigade Project construction and all SYTM projects Project planning, design management implementation operation Shenyang Municipal Road Project construction and all SYRM Projects Project planning and maintenance Division management implementation Fushun Transport Coordinating city Urban transport sector Review and implement Management Committees transport policy and transport plan; identify regulation transport projects and coordinate agencies involved Fushun Project Office Project implementation all Fushun project Organization, management activities coordination, management; implementation Fushun Land Acquisition Land acquisition and all Fushun project Resettlement policy and and Resettlement Office resettlement activities implementation Fushun Environment Environment assessment all Fushun project Evaluation and Protection Bureau and protection activities implementation of protection/mitigation actions Fushun Municipal Design Design and supervision all Fushun project Design and coordination and Research Institute activities with supervision teams Fushun Transit Co. Project construction and all FSPT projects Project planning, design management implementation operation  Page 65 Annex 11 Participating Agency Role Component (s) (see the Responsibilities (see agency descriptions package plan) below) Fushun Traffic Brigade Project construction and all FSTM Projects Project planning, design management implementation operation Fushun Municipal Road Project construction and all FSRM Projects Project planning and maintenance Division management implementation Anshan Transport Coordinating city Urban transport sector Review and implement Management Committees transport policy and transport plan; identify regulation transport projects and coordinate agencies involved Anshan Project Office Project implementation all Anshan project Organization, management activities coordination, management; implementation Anshan Land Acquisition Land acquisition and all Anshan project Resettlement policy and and Resettlement Office resettlement activities implementation Anshan Environment Environment assessment all Anshan project Evaluation and Protection Bureau and protection activities implementation of protection/mitigation actions Anshan Municipal Design Design and supervision all Anshan project Design and coordination and Research Institute activities with supervision teams Anshan Transit Co. Project construction and all ASPT projects Project planning, design management implementation operation Anshan Traffic Brigade Project construction and all ASTM Projects Project planning, design management implementation operation Anshan Municipal Road Project construction and all ASRM Projects Project planning and maintenance Division management implementation  Page 66 Annex 12 Additional Annex No.: 12 Summary of Environmental Assessment and Action Plans (as revised 12/23/98) 1.0 Project Summary The Liaoning Urban Transport Project consists of three sub-projects in the cities of Shenyang, Fushun and Anshan. The sub-projects comprise five components: public transport, traffic management, infrastructure, road maintenance and institutional strengthening. The project is classified as a Category A project according to the World Bank's Environmental Assessment Operational Directive 4.01. An Environmental Assessment (EA) Report and an Environmental Action Plan (EAP) was prepared for each of the three cities: Shenyang, Anshan and Fushun. These documents, as well as a Summary Report were reviewed by the World Bank and were found to meet the requirements of OD 4.01. The EA was also reviewed and cleared by the Chinese State Environmental Protection Administration (SEPA). The Summary Report concludes that the proposed project will assist in providing a long-term solution to traffic congestion, improve the quality of urban life and stimulate economic development. The report also notes that the project will result in degradation of environmental quality to some extent, in the immediate vicinity (-300 m) of the project areas, but should result in a positive contribution to pollution control in the overall urban area. 2.0 Project Components 2.1 Shenyang Components of the project in Shenyang include: a bus terminal and a bus repair facility; six street and corridor improvements (widening of sections ranging from I to 3.1 km) as well as the reconstruction of 6.8 km of Lianhe Road. The Jianshe-Nanwu corridor will consist of a 3.8 km elevated viaduct. Additional shorter sections (< 1.1 km) will be constructed to improve traffic flow. 2.2 Anshan Major components of the project in Anshan include the construction, reconstruction and widening of segments of surface roads totaling 18.8 km. Other components include five viaducts (159-621 m) and the 3.2 km Wuyi interchange as well as three underpasses (< 50 m each) and one 216 m bridge. 2.3 Fushun The major component of the Fushun project is the widening of the Hunhe Road (24.8-km) which runs along the Hunhe River. 3.0 Existing Environment 3.1 Air Quality Based on monitoring results, air quality in all three cities is poor. The daily average concentration of  Page 67 Annex 12 non-methane hydrocarbons (NMHC) exceeded the standards for all readings. Nitrogen oxide (NOx) levels exceeded the daily average standard 70 percent of the time during the heating season and 30 percent of the time during the non-heating season. Carbon monoxide (CO) readings were exceeded 32 percent of the time during the heating season. All readings of CO in Anshan during the non-heating season exceeded the daily average, but the standard was rarely exceeded in Shenyang and Fushun during the non-heating season. Airborne lead (Pb) concentrations exceeded the standard in the non-heating season in all cities. Twenty monitoring points were selected in the area of assessment, with six in Shenyang, eight in Anshan and six in Fushun. The poor air quality in the three cities, is due in part, to motor vehicle emissions. The monitoring included heating and non-heating seasons and shows a significantly higher level of pollution in the heating season. Other significant findings are: all NMHC readings of daily average concentration exceeded the standard by 0.6 to 6.7 times; 72 percent of daily average NOx readings exceeded the standard in the heating season; and the maximum standard exceedance is 5.9 times higher than the standard; 28 percent of NOx readings of daily average exceeded the standard in the non-heating season, and the maximum standard exceedance is 3.8 times higher than the standard; 32 percent of CO readings of daily average exceeded the standard in the heating season and the maximum standard exceedance is 3.3 times higher than the standard; all CO readings of daily average exceeded the standard in the non-heating season in Anshan, but few exceeded the standard in Fushun and Shenyang; Pb daily average reading at one monitoring point (Lifu Hospital) in Shenyang exceeded the standard in the heating season; daily average Pb readings at four monitoring points exceeded the standard by a factor of 0.3 to 0.9 in the non-heating season. 3.2 Noise Existing noise levels recorded in all three cities were generally high; just over half of the monitoring stations had levels that exceeded daytime standards and almost all exceeded the nighttime standard. There were 44 monitoring points for noise level, 20 in Shenyang, 16 in Anshan and 8 in Fushun. The monitoring results showed that 56 percent of the daytime values exceeded the standard by 0.1 to 21.0 dB (A and 96 percent of night time values exceeded the standard by 1. I to 24.0 dB (A (with one exception, in Fushun). 3.3 Vibration The vibration level in the area of assessment met the standard in all but one case. 3.4 Sunshine In the three project cities, the sunshine hours in December were 155-164, with a sunshine percentage of 55 to 57 percent. The sunshine level in the three cities is above the national average. 3.5 Surface Water The surface water bodies potentially affected by the project are the Nansha River in Anshan and Hunhe River in Fushun. The surface water was polluted to different degrees, mainly due to industrial wastewater and domestic sewage. The major pollutants are COD, NH3-N and oil. 3.6 Socio-econoniics Shenyang is the political, economic, cultural, and scientific center and the traffic and communications hub of Liaoning Province. It is an important industrial base in the country and the largest city in Northeast  Page 68 Annex 12 China. Anshan has the largest iron and steel based metallurgical industry in China. Fushun is a heavy industry city, with coal, petroleum processing and ferrous metal smelting and processing. The total population in the urban areas of the three cities is 7,520,000, with 4,728,000 in Shenyang, 1,442,000 in Anshan and 1,350,000 in Fushun. The total urban area of the cities is 4,792 km2 (Shenyang - 3,495 km2, Anshan - 622 km2 and Fushun - 675 km2). 4.0 Impact Assessment The most significant issues in all three cities are noise, air quality, and socioeconomic issues. There are a number of sensitive receptors including schools, kindergartens and hospitals adjacent to the project in both Shenyang and Anshan. Residential buildings are adjacent to sections of the project in all three cities. 4.1 Air Quality Based on the expected growth of the motor vehicle population in all three cities, it is predicted that the total pollutant emissions of hydrocarbons (HC), CO and NOx will be less with the project because of more efficient traffic movement. This conclusion is based on predicted increases in vehicular speed resulting from the infrastructure improvements. All three cities recognize that this improvement is temporary and acknowledge the need for vehicle emission controls. Impact on Air Quality along the Proposed Roads The peak hour and daily average concentrations of the pollutants with and without the project are presented in Table I. It can be generally concluded that the concentrations with the project are lower than without. Table 1: Pollutant Concentration along the proposed Roads (With - Without) in mg/m3 City I CO I NOx HC Peak hour daily average Peak hour daily average Peak hour daily average Shenyang -2.98-+11.17 -0.61-+4.43 -0.21-+0.72 -0.04-+0.30 -0.44-+1.72 -0.09-+0.05 Anshan -3.40-+1.50 -2.55-+1.13 -0.20-+0.20 -0.15-+0.15 -0.70-+0.20 -0.38-+0.15 Fushun -1.24--8.15 -1.11--7.10 -0.09--0.63 -0.08--0.55 -0.08--0.91 -0.41-1.62 Impact on the Overall Urban Air Quality According to the predicted traffic volume in the three cities, the Motor Vehicle (MV) volume in Shenyang, Anshan and Fushun will be 354,000, 146,502, and 115,000. The pollutant emission will be inversely proportional to the travel speed. Thus, with the increase of the travel speed after the implementation of the project, the total pollutant emission in the city center with the project will be much less than without (Table 2).  Page 69 Annex 12 Table 2: The Comparison of Predicted Pollutant Concentration in 2010 Without the Project _ With the Project Average r Average | speed of speed of City MVs (km/h) HC(tVh) CO(tlh) NOx(t/h) MVs (km/h) |HC(t/h) !CO(tlh) ]NOx(t/h) Sheny_ 21.4! 2.69' 18.78 0.79_L 29.8" 2.2 _15.47 0.76 Anshan 361 2.21 13.11 1.121 38.5 1.731 10.04 0.92 Fushun 187 1.95! 11.8 0.721 28.11 1.48__ 9_.__ _0.67 Mitigation The cities recognize the need to implement controls on vehicle emissions. This is because of existing air quality conditions, as well as the eventual reduction in vehicle speed because of fleet growth that will cancel the benefits discussed above. Since it is not possible to mitigate the deterioration in air quality only along the alignments, a Motor Vehicle Emission Control component is being incorporated into the project. The objective is to develop strategies and provide a strong foundation for a program to address the problem of increasing air pollution from mobile sources. The program, now in development, will consider the following components: the introduction of unleaded gasoline; establishment of a vehicle Inspection and Maintenance (I/M) system; establishment of a Vehicle Emission Research Center; and expansion of the automated monitoring network to monitor air pollution. If the program is implemented, the I/M program is expected to reduce mobile source contribution to the overall air pollution by 30-40 percent over a five-year period. The remaining components: to train staff; conduct research to support new initiatives; and understand the dynamics of air quality in the city and the contribution of vehicle emissions to the overall air pollution, are longer term. 4.2 Noise The noise problem is serious and will continue to deteriorate as the traffic volume increases. The comparisons of noise levels for typical sensitive points indicated the daytime noise levels would be 3 - 5 dB (A) higher with the project than without. The nighttime levels were predicted to be I - 3 dB (A) higher with the project than without it. To minimize and mitigate noise problems, a number of measures will be adopted. Construction will not be permitted between 8:00 p.m. and 6:00 a.m., and each construction site will be planned to reduce potential effects of noise (e.g., selective placement of noisy equipment and the controlled routing of heavy vehicles). During the operation phase, measures to be adopted fall into three categories: planning (e.g., adjustment of the distance between buildings and the red line to be not less than 20 m, supplemented where necessary by other measures such as road-side planting etc.); noise mitigation measures (use of sound absorption barriers 10 - 15 dB (A reduction), double glazed windows 20 - 25 dB (A reduction) in combination with indoor air conditioning; and management (maintenance of sound absorption barriers, enforcement of horn use restrictions, testing of vehicle noise, restriction of heavy-duty traffic, and restrictions of vehicular speed). Compensation may be applied where the cost of other mitigation is prohibitive or not feasible for technical reasons. 4.3 Water Quality In Fushun, the construction and operation of the road along of the Huanhe River is not predicted to adversely affect the water quality of the river.  Page 70 Annex 12 4.4 Socio-economic Factors Total land acquisition in all three cities, is 422,859 m2. The landowners are to be compensated and the current inhabitants resettled. Some trees and green space will be lost due to the project and the affected landowners are to be compensated. With proposed planting and rehabilitation of land a net increase of 576,657 m2 of forested land will ultimately be established. The proposed project will require the resettlement of households and enterprises in each of the cities. In Shenyang, 3107 households and 183 enterprises and institutions are expected to be affected. Numbers in Anshan are 1751 and 478, respectively and are much reduced in Fushun (6 and 7, respectively). Separate Resettlement Plans have been prepared. 5.0 Environmental Action Plans The Environmental Action Plans for the three cities provide an adequate documentation of the mitigation measures and environmental protection procedures. The preparation of these reports has resulted in an increased capacity among the environmental institutions for conducting these assessments. The use of Geographic Information Systems has been particularly useful in presenting this complex collection of subprojects for understanding and evaluation. 6.0 Public Participation 6.1 Approach, Methodology and Content On-site interviews, informal discussions and surveys were conducted to collect public opinion based on the existing situation, socio-economic status, and the specific project in each city. The surveys and investigations were carried out during two periods. The initial round of public participation concentrated on introducing the project components and obtaining opinions on potential effects. The second round consisted of reviewing proposed mitigation with the public to document concerns related to the proposed measures. 6.2 Investigation Results of Public Participation The initial round of public participation in Shenyang, Anshan and Fushun was held on Dec. 12-22, Dec. 2-5 and Nov. 10-28, 1996. Those interviewed were workers, farmers, students, businessmen and officers of the government agencies, with an age structure ranging from children below 18 years old, adults and seniors. The public input concentrated on the potential problems caused by the proposed project, such as noise disturbance, transportation and communication inconvenience, land acquisition and resettlement. The results showed that 84 percent, 96 percent and 90 percent were in favor of the proposed projects and 7 percent, 4 percent and 8 percent were opposed to the project in Shenyang, Anshan and Fushun. Based on the results of the initial round of public participation, additional mitigation measures were considered, such as, sound absorption barriers, modifications to the design, and an increase in the number of pedestrian signals. Subsequently, the approval rate of the second round was 90 percent, 98 percent, and 98 percent in Shenyang, Anshan and Fushun. 7.0 Identification and Analysis of Alternatives To mitigate some of the environmental problems and pollution caused by the project, a number of  Page 71 Annex 12 alternatives within each city were evaluated. This resulted in changes in the design to avoid, for example, encroachment on park areas in Shenyang. The proposed alternatives in each city were analyzed for potential effects related to air quality, noise, water quality and land use changes. Although not many alternatives are presented, because of the nature of the projects, the reports demonstrate a thorough analysis of the impacts of the alternatives considered. 8.0 Institutional Strengthening and Training The project includes environmental monitoring and training components to evaluate the effectiveness of mitigation measures, to respond to unanticipated environmental impacts during construction, and to provide supporting information for formulating regulations and improving traffic management and environmental controls.  Page 72 Annex 13 Additional Annex No.: 13 Summary of Resettlement Action Plan Background 1. This Annex presents the Land Acquisition and Resettlement aspects associated with the Liaoning Urban Transport Project. It is based on the Resettlement Action Plans (RAPs). The project components consist of infrastructure; traffic management; public transport; and road maintenance in the three cities of Shenyang, Anshan and Fushun. The total land expropriated for the construction and relocation would be 3,259 mu and the total population affected by land acquisition and relocation amounts to 32,597. Policy Framework 2. In addition to the national laws and regulations mentioned in the main text, the following local regulations govern land acquisition and resettlement in the three cities of Liaoning Provinces: * Details on Management and Implementation of Urban House Demolishing in Liaoning Province; * Provisional Regulation on Implementation of Land Administration Law of P.R.C. in Liaoning Province; * Administrative Provisions of Urban House Demolishing in Shenyang City; * Resolution on User-Pay State-Owned Land by People's Government of Shenyang City; * Provisional Regulation on Urban House Demolishing in Anshan City;