China - Tianjin Urban Development and Environment Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 22217 IMPLEMENTATION COMPLETION REPORT (IDA-23870) ONA CREPDIT IN THE AMOUNT OF SDR 73.3 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A TIANJIN URBAN DEVELOPMENT AND ENVIRONMENT PROJECT June 20, 2001 Urban Development Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective as of June 20, 2001) Currency Unit = Yuan Y1.00 = US$ 0.12 US$ 1 = Y 8.28 METRIC SYSTEM FISCAL YEAR January I December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy EPB Environmental Protection Bureau ERR Economic Rate of Return Fund Tianjin Industrial Pollution Control Fund GIS Geographical Information System GOC Government of China IRR Inner Ring Road MOC Ministry of Construction MOF Ministry of Finance MRR Middle Ring Road PMIO Planning and Management Inprovement (Leading Group) Office PMO Project Management Office TA Technical Assistance TMG Tianjm Municipal Government TOR Terns of Reference UPB Tianjin Urban Planning Bureau URCC Tianjin Urban and Rural Construction Comrnission Vice President: Mr. Jemal-ud-din Kassum, EAPVP Country Manager/Director: Mr. Yukon Huang, EACCF Sector Manager/Director: Mr. Keshav Varna, EASUR Task Team Leader/Task Manager: Mr. Songsu Choi, EASUR  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT CHINA: TIANJIN URBAN DEVELOPMENT AND ENVIRONMENTAL PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings I 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 10 6. Sustainability 12 7. Bank and Borrower Performance 13 8. Lessons Learned 15 9. Partner Comments 16 10. Additional Information Annex 1. Key Performance Indicators/Log Frame Matrix 18 Annex 2. Project Costs and Financing 19 Annex 3. Economic Costs and Benefits 21 Annex 4. Bank Inputs 22 Annex 5. Ratings for Achievement of Objectilves/Outputs of Components 24 Annex 6. Ratings of Bank and Borrower Performance 25 Annex 7. List of Supporting Documents 26 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   Project ID: P003568 Project Name: Tianjin Urban Development and Environment Project Team Leader: Songsu Choi TL Unit: EASUR ICR Type: Core ICR Report Date: June 30, 2001 1. Project Data Name: Tianjin Urban Development and Environment L/C/TF Number: IDA-23870 Project Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: US - Urban Environment; UY - Other Urban Development KEY DATES Original Revised/Actual PCD: 02/15/1989 Effective: 11/06/1992 Appraisal. 04/15/1991 MTR: Approval: 06/17/1992 Closing: 12/31/1998 12/31/2000 Borrower/lmplementing Agency: People's Republic of China/TIANJIN MUNICIPAL GOVT Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Attila Karaosmanoglu Country Manager: Yukon Huang Shahid Javed Burki Sector Manager: Keshav Varna Zafer Ecevit Team Leader at ICR: Songsu Choi Songsu Choi ICR Primary Author: Herbert Boehm 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, H{U=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: HS Sustainability: HL Institutional Development Impact: H Bank Performance: S Borrower Performance: HS QAG (if available) ICR Quality at Entry: HS Project at Risk at Any Time: No The QA G did not exist at the timne ofproject approval in 1992.  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: Background. Since the early 1980s China has been undergoing remarkable growth and transformation. A key feature of the development was a radical decentralization of finances and authority to local governments, especially municipal governments. Provincial and local governments have come to control about 70% of total fiscal resources, and municipalities about 35% of it. In addition, through their control of most state-owned enterprises, municipal governments have indirect control of even larger resources. A major challenge has been to develop new ways to manage the economic and government systems to replace the command planning system. GOC has largely limited itself to setting broad policy goals and guidelines and let local governments to set detailed goals and programs and implement them. Another major aspect of China's recent development has been a rapid urban growth. The urban population increased from about 17% of total national population in 1980 to about 29% by 1990 and to about 36% in 2000. Urban economies have grown by more than 12% a year on average between 1985 and 1995. By the early 1990s, the central and local governments have come to see housing, health care and other services as necessary infrastructure and incentives for economic expansion. At the same time, serious environmental deterioration resulting from the population pressure and rapid industrialization has become a prominent policy issue in cities. The city of Tianjin, at appraisal China's third largest city with 5 million inhabitants, has been a major industrial and transportation center in northern China. The Tianjin Municipal Government (TMG) is a provincial level authority which manages not only the city itself but also surrounding counties and districts which include some 9 million people. Tianjin was established as an international port in the late 19th century and developed in 8 fragmented concessions until World War II. Since then efforts focused on rehabilitation and integration of infrastructure and the environmental improvement of the city. A major earthquake which destroyed much of Tianjin in 1976 further spurred these efforts, which was sustained due to rapid overall economic growth in the ensuing decades. Objectives. The stated objectives of the project were: to help TMG improve its planning and management of infrastructure and the environment, so as to enhance its responsiveness to diverse and changing demands and constraints; and to support a set of high priority investments to meet medium-term needs in environmental sanitation, urban trasnport, and industrial pollution control. The project objectives were in line with the policy of GOC and TMG to: improve the urban environment and infrastructure and establish an effective institutional and financial framework for infrastructure and environmental management. The objectives were consistent with the CAS which defined the Bank Group's main assistance focuses as: facilitating the transition of the planning and management system toward one suited for a decentralized market-oriented economy, on helping to ease infrastructure constraints to economic growth, and on protecting the environment. The objectives were broad and ambitious, but consistent with the actual record of reform and development in China as a whole and in Tianjin in particular. 3.2 Revised Objective: n.a. 3.3 Original Components: The project would achieve these objectives through implementation of the following six components. - 2 -  Infrastructure Planning and Management (1JS$8.6 million). In order to enhance efficiency and responsiveness of its infrastructure programs, TMG was to carry out an action plan to improve its infrastructure monitoring, planning, budgeting and management systems. The project financed technical assistance and training to introduce improved analytical and planning tools such as a geographical information systems (GIS) and multi-year capital budgeting. The component also included various studies and training programs for the environmental santitation, transportation, and pollution control associated with institutional development actions described below. Environmental Sanitation (US$25.7 million). The project supported (a) provision of drainage and sewage collection systems in four residential, industrial and institutional areas; (b) improvements to three controlled natural drainage channels which convey storm water flows from drainage basins of about 7,600 ha of the city area; and (c) improvements in financial and operational management of drainage and sewerage services. Solid Waste Management (US$12.4 million). This component financed (a) an expansion of the fleet of waste collection and street cleaning vehicles and maintenance equipment; (b) technical assistance to formulate a plan for a sound system of solid waste treatment and disposal; and (c) implementation of the first phase of the plan. Industrial Pollution Control (US$39 million). This component financed: (a) industrial pollution control subloans through a Fund to finance small-scale investments for waste minimization by undustrial enterprises; and (b) institutional strengthening of the Environmental Protection Bureau (EPB), its affiliated institutions, and the Fund in the areas of pollution monitoring, pollution control technology development, and financial evaluation and management of pollution control investments. Urban Transport (US$33.3 million). Most of Tianjin's strategic transportation assets required complementary facilities to function at potential. The project provided for: (a) Roads: completion of the Inner Ring Road improvement by widening 3.4 km of the Ring Road, and improvement of the Middle Ring Road by building an overpass at the intersection with the Beijing-Tianjin Highway; (b) Bus system: construction and equipment of two maintenance depots for about 90 buses, and terminals; (c) Public transport policy and management study: to help TMG evaluate travel demand and supply factors, and formulate an improved public transport management system; and (d) Traffic management: introduction of an area traffic control system in the central district of the city. Resettlement ($34.7 million). This component aimed to provide better housing for the project affected households (4,046 estimated at appraisal) through a new, more market-oriented procedures. The new procedures would introduce quasi-market transactions for replacement housing, allowing the relocatees to choose their new housing units from a large number of apartments in diverse locations, rather than having to take those built and allocated by the government. Assessment of Design. The project components were consistent with the project objectives. They were also broadly consistent with the city's own plan, but contained some significant differences. For one, the project had fewer components than originally proposed, to limit complexity. On the other hand, some of the components featured targets and modes different from the city's own programs. The planning and management component was made broader than TMG's proposed focus on computerization. The choice of solid waste disposal technology was deferred to a study instead of supporting TMG's plan for a mechanized composting plant. The industrial pollution control component was made far larger and more demand-oriented than TMG's original program focusing on monitoring and prescribed solutions. The - 3 -  resettlement component introduced a system that moved the housing choice from the government to affected households. These adjustments were consistent with the main project objective of improving the planning and management of infrastructure and environment. These on the other hand introduced considerable novelty and hence substantial risks to implementation and borrower ownership. These risks were identified during preparation and appraisal, and various safeguards were developed. Identification of detailed pragmatic steps toward reform and a few clearly targeted practical improvements, instead of idealistic and abstract norms, helped increase the understanding and feasibililty of the actions, as well as the strong commitment by the TMG management. Further, TMG had a strong track record in implementation and institutional reforms, and the circumstances during preparation afforded ample time to engage local officials and reach clear understanding. In most cases the innovations introduced proved to be feasible and effective. In the case of planning and management improvement and industrial pollution control fund, however, unforeseen difficulties made it necessary to scale back the goals. Still, much has been achieved even in these components, and on balance, the risks appear to have been well worth taking. 3.4 Revised Components: The study on solid waste management under the project (but financed with a bilateral grant rather than the Credit) recommended sanitary landfill as the best technological choice for solid waste disposal, which was then financed under the project. Also partly as a result of another study under the project, the public transportation (bus) company was significantly restructured. The restructuring consisted mainly in the break-up of the company into 8 competing operating companies, and involvement of private and foreign entities in the operation of buses as well as ancilliary services. As a result, there was no longer a need for public investment in maintenance garages. Traffic signal control center construction was not financed by the Bank as the plan changed from a stand-alone building to a part of a larger office building funded by TMG. Rapidly changing economic framework and market conditions presented serious threats to most old state-owned enterprises, which constituted the majority of Tianjin's industries. This in turn reduced the pool of financially sound potential borrowers of industrial pollution control subloans made available under the project. Instead of compromising on financial or environmental standards (no financing of new production lines), it was decided to scale back the subloan facility by $10 million to $9 million. The above three changes resulted in considerable project cost savings. In addition, the local currency was devalued from YS.45 to about Y8.5 per US dollar early during the implementation, more than offsetting the escalation in civil works and resettlement costs. These savings were utilized for four additional investment schemes that were within the original agreed (legal) definition of the project: a new pumping station in one of the areas where sewers were improved under the project; improvement of a road that connected IRR to MRR; a railroad overpass linking the bus terminal area with IRR; and an overpass in the intersection of MRR and a road to the airport. 3.5 Quality at Entry: The quality at entry of the project is rated highly satisfactory. This rating is based on the project's consistency with the Bank's CAS and government priorities, and carefully designed and meaningful innovations. The Bank's applicable safeguard policies on involuntary resettlement and environmental - 4 -  assessment were adhered to adequately. In fact, under this project, resettlement was made a component of the project rather than a safeguard measure incidental to another component, and improvement of resettlement procedures and criteria was made an explicit project activity. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Overall, the project's outcome was highly satisfactory and the project objectives have been largely achieved. The project helped to establish new systems and approaches to plan and manage infrastructure and environmental services and facilities. Effective new systems have been established for resettlement, public transportation, financial and institutional management of drainage and sewerage, and industrial pollution control. These increased the demand responsiveness and sustainability of the infrastructure and environmental management in Tianjin, and by demonstration effects and incorporation in national guidelines, in other cities of China. Introduction of improved analytical tools for infrastructure management and of the industrial pollution fund mechanism did not fully meet the ambitious appraisal targets, but still contributed significant innovations to the infrastructure and environmental management systems in Tianjin and in other cities. Physical investments under the project have been implemented generally on time and at high enough quality to eam national recognition for quality. They resulted in significant improvements in the quality of life for the citizens of Tianjin, meeting or exceeding appraisal targets. The sewerage and drainage works have diminished duration and severity of flooding and health hazards, benefitting nearly half a million people. The urban roads and traffic management components have helped to limit the increase in traffic congestion that grew along with the number of motor vehicles that about quadrupled over the last decade. The public bus system has improved and diversified its services and has increased ridership rapidly since its restructuring in 1995. Most of the industrial pollution control subprojects have been implemented satisfactorily and resulted in significant and efficient pollution reduction. 4.2 Outputs by components: This section describes only the physical outputs of investment components. Outcomes of institutional development components, consisting of the action plan for general infrastructure planning and management improvement and subsectoral institutional development actions are discussed later under Section 4.4. Drainage and Sewerage: This component produced highly satisfactory physical outcomes. Under the project drainage and sewerage facilities were built in four areas whose drainage and sewerage systems had been incomplete and therefore suffered heavy flood damages and discharged untreated sewage unto natural water courses or irrigation channels. In addition, three major controlled natural drainage channels were cleaned and interceptors installed. In one of the areas that used to be severely flooded, annual flooding of indoor areas was eliminated and duration of standing water was reduced from 34 days to a matter of a few hours. Untreated sewage that used to be discharged to irrigation and natural channels from two of the areas is now conveyed to sewage treatment plants. Three other sewage plants now under preparation would receive sewage from the other two areas. As the population in the affected areas increased during the project period, the beneficiaries are estimated to number about 450,000. The quality of the works was highly satisfactory, and techniques developed for the cleaning of the drainage channels is being used in works in and outside Tianjin. Solid Waste Management. This component is rated satisfactory. The additional solid waste collection fleet of 191 vehicles expanded and partly renewed the old fleet, and has been effectively maintained and used. The study led to the construction of a Shuangkou solid waste landfill with a capacity of 2,700 tons - 5 -  per day, and a leachate treatment plant with a capacity of 300 tons per day, both the largest in China. It was constructed according to international good practice, at high quality, necessary given the flat topography and shallow aquifer of Tianjin. The construction was delayed due to site selection and resettlement difficulties but completed in early 2000. Operations began in early 2001 after delays waiting for completion of a transfer station and delivery of hauling trucks (not part of the project), and now used near capacity. Industrial Pollution Control. This component is rated satisfactory in view of the quantitative underachievement (Y 123 million financing versus the appraisal target of Y 240 million), balanced against the high quality and sustainability. The component targeted a niche of industrial process modifications that would be financially viable but whose benefits would be primarily environmental -- neither end-of-pipe treatrnents that are fully additional costs, nor new production lines that reduce pollution but are justified on financial grounds alone. It was however difficult to identify many sound proposals of this sort, made more difficult by rapidly deteriorating financial conditions of most old state-owned enterprises. The Fund nevertheless refused to compromise the integrity of the original criteria. In the end, these difficulties limited the subprojects to 42 (out of 58 pre-screened proposals), with average investment of about Y 4 million (about $500,000). All of the subprojects, except four in enterprises that closed, are in operation. A survey of 24 subprojects that cost some Y 110 million in total shows a reduction of more than 7000 tons a year of COD alone, and an annual financial gain of Y 29 million, a rate of return of 21%. Roads and Traffic Management: Highly satisfactory. The project financed the upgrading and completion of the Inner Ring Road (3.5 km including a bridge expansion) and construction of an overpass at the intersection of MRR and the Beijing-Tianjin highway. Most of the Credit originally allocated for components that were later cancelled or down-sized was reallocated to expansion of a road linking IRR and MRR and construction of two key overpasses, one at the intersection of MRR and airport road, and another a railway overpass connecting the bus terminal area to the IRR. The project also financed the procurement of traffic control signal system for 70 main intersections in the central city area, complete with self-adjusting traffic control software and control substations. The intersections were also improved with channelization and electronic sign boards. The project also financed equipment for detection and management of traffic violations and accidents. These investments helped contain the growth of traffic congestion caused by increased number of motor vehicles (300,000 in 1991 growing to 1.2 million in 2000). The following analysis of improvements right before and after the traffic control system installation gives an indication of the benefits: motor vehicle speed increased by about 10%, vehicle stoppage decreased by 21.7%, and the effective road passage capacity is up by 18%. Public Transport System: Development of commercial maintenance services and a radical restructuring of the bus company (see 4.4 below) greatly diminished the justification for publicly owned maintenance garages. Therefore the project investment for public transportation was limited to a passenger bus transit hub at the rear plaza of the Tianjin railway station, completed and put into operation in 1996. The original design capacity was for three bus lines, but it now accommodates seven. Resettlement: This component resulted in highly satisfactory outcomes as it greatly improved housing conditions of relocatees by replacing the old housing with new ones about 2.7 times the size and equipped with plumbing that old housing lacked, while facilitating the project implementation and redevelopment of the old near-slum areas. The scope of resettlement was expanded from about 13,500 persons to about 19,000 persons as a result of increased road construction. 4.3 Net Present Value/Economic rate of return: An economic internal rate of return for the entire project was not calculated at the appraisal because of - 6 -  difficulty properly quantifying certain benefits of the subprojects, such as social, institutional and environmental benefits. The SAR, however, did estimate internal economic rates of return for: the roads improvement component; the traffic control signal system; the workshops and terminals; and the drainage improvement schemes. For these components the SAR gave a weighted average economic rate of return of about 25% for investment components accounting for 40% of the total project costs. For the three road components added at the late stage of implementation, the feasibility studies estimated rates of return of about 25.1%. Using the same methodology as in the SAR, an economic re-evaluation of these components was undertaken, and the weighted average economic rate of return has been estimated at about 23% The drainage schemes had estimated ERRs between 18%-52%, or an average of 30%, counting only the reduction in property damage from flooding. At completion, ERRs ranged from 22%-55%, due to the higher density of properties and population and better-than-expected flood control. Estimated ERR for the road improvement schemes was 20.3% at appraisal and 25.1% for additional road components. Estimated ERRs at completion are 12.8% and 24.4% respectively. The ERR for traffic management component was estimated at 25% at appraisal, and 33% at completion. The ERRs were positively influenced by the larger increases in traffic and in time value, and negatively by the large cost overrun on roads built in the early stage. This reduced estimate of efficiency weighed heavily on the average ERR. 4.4 Financial rate of return: Financial rate of return of 19% was estimated for only a small sample of industrial pollution control subprojects identified at the time of appraisal. As indicated above, an analysis of more than half of the completed subprojects indicated a FRR of 21 %ho. 4.5 Institutional development impact: The project's institutional development impact is rated highly satisfactory overall, in view of the broad scope and high significance of institutional development. The primary objective of the project was to make long-term gains in the efficiency and equity of TMG's infrastructure and environmental programs through implementation of (a) studies and training to improve analytical tools for infrastructure planning and management, and (b) institutional and financial action plans for various subsectors. Highly satisfactory results have been obtained under the latter action plans (b), and satisfactory outcomes under (a). Tianjin Drainage Company (TDC). The project helped to improve financial and institutional framework of the drainage and sewerage operations. The sewerage tariffs for non-residential users were raised from YO.09-0.12/m3 to YO.30 in 1993; to YO.40 in 1998; Y 0.60 in 2000; and Y 0.80 in 2001. A residential tariff was introduced at Y 0.10 per m3 in 1997, raised to Y 0.20 in 1999, and to Y 0.35 in 2001. These tariffs, the highest among large Chinese cities, would not only cover full operating expenses but also considerable portion of capital expenditures for ambitious expansion of the wastewater treatment system. As important as tariff increases were improvements in management systems, accounting, billing and collection. At the outset of the project, cost analysis exercise was carried out and costs for storm water drainage, wastewater collection, and treatment are accounted for separately. Tariff exemptions that used to be given at an ad hoc fashion were replaced by a system of explicit and specific exemptions matched with appropriate compensations by TMG in 1993 and abolished altogether in 1998. The yield (combination of the billing and collection efficiencies) has increased from 43% to 95%. TDC was established in 1995 taking over the operations and most of the staff from the Drainage Division. While the incorporation was consistent with the government objective of separating service operations from the governnent, the Bank pushed for clarification of accountability and autonomy, common gaps in incorporation of the type in China. This deficiency was addressed over tirme with increased autonomy of the Company, including - 7 -  capital budgeting functions, use of performance indicators, and separation of non-core businesses such as construction. Solid Waste Management. A Tianjin Urban Solid Waste Administration Plan and Feasibility Study, financed with a bilateral grant in place of the Credit, produced a number of useful recommendations to improve the solid waste management system. TMG revised its environmental sanitation master plan incorporating many of the recommendations, including a shift from mechanical composting and scattered dumping sites to that of large scale transfer stations and sanitary landfills. The first landfill was financed under the project, along with the associated equipment, leachate treatment plant, laboratory, operational planning and training. TMG was convinced enough of the merit of the landfill to plan another landfill at the other side of the city, and established an independent operating entity to manage the landfill, to be financed from a solid waste management fee and a dumping fee. Industrial Pollution Control Fund. The project supported an establishment of the Fund as a way to establish a demand-oriented and sustainable alternative to the usual end-of-pipe solutions prescribed by the government and financed with a grant from pollution levy revenues. Initially the Fund and its financial advisor (a state-owned bank) focused on technical merits with scant attention to overall financial conditions of the borrowers, consistent with investment financing practices under the planned economy. This, however, resulted in serious arrear problems, forcing the Fund to strengthen its financial appraisal and to look for non-state sector firms. Nevertheless the quantitative target for the component had to be reduced by more than half The Fund also strengthened the collection efforts, including legal actions through the court system, still a novel approach in China. As a result, it nriAaged to reduce its arrears and bad debts to below 15%, a rate better than commercial banks. The staff of the Fund have been invited by the national and several local authorities to advise on technical and financial aspects of similar operations. TMG has decided to keep the Fund operating after the project closing with an added responsibility to manage bilaterally funded pollution control projects. Public Transportation. By 1995 the Public Transporat Company had been losing ridership steadily and TMG subsidies increased to Y 250 million a year. The public transport policy and management study financed under the proejct introduced a traffic projection model which is still used extensively for various transportation planning purposes. It also recommended a set of management improvement measures for the Tianjin Public Transport Company (PTC) ranging from financial management systems to bus deployment and to staff training. However, the Bank team reached a different conclusion that incentive system was the most critical impediment to improving the bus services. It therefore recommended a radical restructuring of PTC and introduction of competition and private investments as the key first step. Senior management of TMG accepted the Bank recommendation, sent delegations to study systems in various countries, and instituted the following measures: break-up of PTC into 8 semi-autonomous operating companies, two of which formed joint ventures with outside partners, competitive award of route concessions, and limitation of TMG subsidy to a total of Y 100 million. While these were resisted by PTC and its parent bureau at first, immediate and large benefits led to strong acceptance and extension of the measures. At project closing, PTC as a group owned 4,484 buses, running 299 routes, with a total length of 6,822 kin, serving some 480 passenger trips a year, up by 140%, 45%, 45%, and 60% respectively compared to the end of 1995. These measures also resulted in the reduction of bus to transport worker ratio from 1:29 in 1992 to 1:4 in 2000. Additional 18 companies also provide bus services. Tianjin residents expressed a satisfaction rate of 94%, up from 83% in 1996. The experience has been studied and emulated by a large number of Chinese cities. Resettlement. The project's physical investments were located mostly in the densely built-up central city area, requiring resettlement of some 4,000 households. In fact resettlement was considered a main benefit - 8 -  rather than cost, it improved the housing conditions the affected households while starting the process of redeveloping the old city areas. The way it was implemented was, however, problematic as the government built the replacement housing and assigned the households arbitrarily. Under the project it was agreed to experiment with a new system whereby the affected households would be given a voucher to buy housing equivalent to replacement housing that they would be entitled to. The vouchers would be used on housing of their choosing among several developments Ihat TMG enters into agreement with. This was at first strongly resisted by the District governments and the procedures needed fine-tuning as the implementation proceeded. Soon, however, the procedure became popular with relocatees and developers, and the government also found them simpler and facilitate real estate market development. The procedure was therefore made standard for most relocation programs in Tianjin, and adopted by various cities of China including Beijing. The voucher system paved the way to cash compensation, now widely accepted due to the full development of the real estate markel.. General Infrastructure Planning and Management Improvement. The TA program to improve the general analytical and planning tools produced a generally high quality design of the required analytical tools and information systems, comprehensive infrastructure GIS maps for selected areas, in-depth studies of actual cases such as sewerage operations and a selected area development. It however ran out of time and stopped short of extensive training of staff in these tools and their integration in regular planning and management routines. This was due to a long delay in the recruitment of adequate international consultants and then the delay by the latter in producing adequate results. TMG committed considerable resources to establish a high-level organization (Planning and Management Improvement Leading Group) and its Office, equip it with adequate office facilities and full-time staff, and train a large number of staff in computing and other basic skills. The Leading Group Office however experienced difficulties selecting and negotiating with candidates for Chief Advisor, who was supposed to help recruit and manage a large team of international and local consultants. After considerable delay it was decided to restructure the consultancy for more conventional implementation by foreign and local consultant teams without the Chief Advisor, but with a Monitor. In the meantime, a few consultants were invited. to carry out some limited high priority work to develop financial management systems, a basic GIS system, and planning for coastal area development. The main consultants were finally selected in 1996, an international team led by a national federation of municipalities and a local team combining a consulting firm and two universities. However, the lead international consultant had difficulty with routine contractual steps and the team had to be reorganized. Work therefore commenced only in late 1997, with a foreign engineering firm in lead. The first phase work, completed in July 1998, however, fell far short of the mark as few analyses and recommendations went beyond generic rudimentary treatment, reflecting little understanding of unique local issues and substantial local level of knowledge. While the team included a few experts with substantial China experience, experts in core analytical disciplines had extensive international experience but no prior experience in China. They were handicapped also by insufficient collaboration with local experts and officials. The delays and disappointing results severely tested the commitment of TMG, but it persisted to implement the component as planned. The international consultant team was again reorganized, corrected some deficiencies of the first phase work and started working on the second phase in early 1999, and produced a set of adequate results by September 2000. lThis did not leave enough time for full testing and training, but several of the analytical and information systems have been put to use. These included: project screening procedures, some of the GIS system, partial computerization of information flow, operational monitoring and planning, life-cycle costing, some project evaluation techniques, and various specific case studies. In view of the serious and high-level efforts, one may consider the iniitial detailed targets as too ambitious and -9-  the actual outcome as a good basis for necessary longer-term efforts. TMG is planning the necessary follow-up work to develop further concrete procedures to apply the techniques, train the staff, and incorporate them more broadly in its operations. It also proposes to carry out some of these under the Second Tianjin Urban Development and Environment Project, just identified in May 2001. On balance, overall institutional impact is rated highly satisfactory given the major innovations in public transportation, industrial pollution control, solid waste management, and resettlement systems successfully introduced, sustained, and nationally disseminated. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: At appraisal, the domestic inflation rate was projected at 5% a year. However, actual inflation of general price level was 16%, 21% and 15% in 1993, 1994 and 1995, respectively. This increased the cost of the project in local currency terms, but the government was able to manage this thanks to sound financial and fiscal measures and systems as seen below. The inflation during the 1993-95 is believed to have been lower in Tianjin, and that in later years have been lower than 5% a year. The reform in economic systems was initiated by the government but also brought about unintended consequences including deterioration of conditions for state-owned enterprises that constituted the major part of Tianjin's economy. As they were the main intended beneficiaries of industrial pollution control subloans available under the project, the economic change made it difficult to identify financially secure subprojects, forcing a reduction the subloan program. It also caused bad debt problems which required a great deal of efforts and ingenuity of the Industrial Pollution Control Fund to resolve and still resulted in considerable write-offs (4 out of 42 subloans). Transition toward the market also weakened the justification for bus maintenance garages, and TMG decided to cancel these instead of proceeding with the questionable investments. 5.2 Factors generally subject to government control: The central government devalued the local currency in 1994 from Y 5.5 per US$ to Y 8.5, thereby more than restoring the purchasing power of the Credit eroded by inflation of the early 1990s. While this greatly increased the counterpart financing requirements, TMG was able to allocate sufficient local financing as the government revenues were elastic to the nominal economic output and TMG placed a high priority to the project. TMG, through the Project Leading Group and specifically its Urban and Rural Construction Commission (URCC), also maintained strong commitment to policy and institutional improvement goals of the project. It undertook major and usually difficult policy actions promptly against resistance, such as sewerage tariff increases, use of new resettlement procedures, restructuring of PTC, and continued work on planning and management improvement. The URCC also maintained the Project Management Office (PMO) with competent staff and adequate budgets and it effectively coordinated and supported project preparation, implementation, and monitoring and mobilized high-level actions promptly when they were needed. One area that PMO had some difficulty was disbursement of the Credit and local funds, subject to the control of the Finance Bureau. Insufficient clarity regarding the disbursement procedures and eligibility slowed down the disbursement in earlier years of implementation, especially for consultant services and training, and little of the training expenditures were reimbursed. From about 1996, further, changes in overall TMG organizations and associated personnel movements began to pose some difficulties to project implementation. The PMO's effectiveness was reduced by three changes in top management between 1996 - 10-  and 1999, slow replacement of staff, and general tightening of URCC budgets. 5.3 Factors generally subject to implementing agency control. The implementing agencies of the project were: the Municipal Engineering Bureau, Environmental Sanitation Bureau, Public Utility Bureau and the Public Transport Company, Traffic Management Institute, and Industrial Pollution Control Fund. Their performance was highly satisfactory overall. Conventional investment components were completed in time and at high quality, in line with the strong track record of the implementing units. For civil works procurement, the Bank procedures were quickly mastered and managed competently. Equipment and consultant procurement generally posed more difficulties, particularly the preparation of technical specifications involving unique issues for each package. Procedural and technical issues significantly delayed the procurement of the signal control system (two stage bidding), and the management information technology system. These difficulties however can hardly be attributed to the implementing agencies, but to the complicated nature of the tasks and the novelty of the contractual concepts and procedures required for the Bank-financed contracts. Conceptual gaps and institutional inertia also gave rise to resistance to some innovations introduced under the project, such as the new resettlement procedures and PTC restructuring. However, these gaps were eventually bridged and these significant innovations were well implemented for great benefits. The industrial pollution control subloan scheme posed difficult challenges especially under the rapidly changing market context, but the Fund and EPB persisted with efforts to make the concept work, and have attained significant success. One of the changes in TMG organizations was the separation of construction management function from the Municipal Engineering Bureau to the new Municipal Engineering Corporation. This weakened the coordination with related agencies, especially regarding transportation. Although most of the project implementation was over by about 1997, these difficulties, combined with weaknesses in PMO, resulted in delays and gaps in preparation of additional components. This illustrates the difficulty and risk involved in even relatively small organizational changes. 5.4 Costs andfinancing. The total project cost incurred, excluding duties and taxes, are currently estimated at US$229 million which is 17.4% higher than the original SAR cost estimate of US$195 million. As seen above, actual inflation from 1993 to 95 was far higher than the originally projected 5% per year, but at least in dollar terms, the effect was largely offset by steep devaluation of the local currency and the inflation in later years was lower than 5%. Instead, most of the cost increase can be attributed to adjustments of component scopes described in Section 3. A little over $20 million of Credit (over $20 million) was saved from lower cost of equipment procurement, cancellation of two bus maintenance garages and a large reduction in the industrial pollution control subloans. This Credit was reallocated to three roads and a pumping station, which involved far more civil works (eligible for 60% IDA financing) and resettlement (only residential resettlement financed by IDA) than the preceding. Civil works and residential resettlement were eligible for 60% IDA financing, lower than goods, and non-residential resettlement and land acquisition were not financed by IDA at all. Even some of the residential resettlement for later road works was not financed by IDA as the PMO and the implementing agency were not able to process the necessary procedures. Cost estimation turned out broadly accurate, except in the case of road works. Earlier road works experienced considerable cost overruns and the last one a considerable underrun. Large discrepanies between estimates and actual market costs of road works are known to be widespread in China, and often blamed on the standard rates established by the Ministry of Transportation, although local design institutes are responsible for adjustments to the local markets. - 11 -  According to the SAR, the project was to be funded by TMG for US$77.9 million, the industrial enterprises borrowing the pollution control subloans for US$17.1 million and IDA for US$ 100 million. According to the latest estimates, TMG funding increased greatly to US$118.9 million equivalent, the industrial enterprises financed US$10.2 million, and IDA's total disbursement amounted to US$99.5 million. A part of the increase in TMG funding is due to the increase in local financing requirements discussed inimediately above. Another reason is that the industrial pollution control investments, which would have been financed by industrial enterprises to a substantial extent, was also reduced and the Credit reallocated to road and sewerage components that required full counterpart financing by TMG. Internal administrative arrangements blocked disbursement for most of the training expenditures under the project, forcing full financing by implementing agencies and URCC from other resources. Although in US$ terms the Credit disbursement fell short of the approved amount by only US$0.5 million, but due to SDR and dollar exchange rates variation, unused balance of the IDA Credit was about SDR 2,515,000 (US$3.14 million), which was canceled. 6. Sustainability 6.1 Rationale for sustainability rating: The project achievements are highly likely to be sustained. All physical assets have been completed and are fully operational. Tianjin is a thriving industrial and commercial city which will make full use of the assets and require more, and which can generate sufficient resources through tax and user fees to operate and maintain the assets. Tianjin has been maintaining the infrastructure assets at fastidious standards and schedule recommended by the Ministry of Construction, and the high construction quality of facilities created under the project should allow for sustained operation with normal maintenance efforts and expenditures. Sewerage tariffs have been increased to levels higher than most other large cities of China, and certainly sufficient for adequate operation and maintenance as well as substantial funding of capital expenditures. The TDC has been improving its organizational, financial, and technical capacities, including real-time monitoring of key parts of the drainage and sewerage system. Further work to continue these improvements are being proposed for the proposed Second Tianjin Urban Development and Environment Project. For solid waste management, recommendations from the study supported under the project have been incorporated in the city's environmental sanitation master plan. A laboratory was established along with the landfill and the leachate treatment plant to monitor and ensure quality of operation, and operational planning and training have also been completed. TMG has recently introduced solid waste management fees, among the first cities to do so, and established an independent landfill operating unit. For industrial pollution control, TMG has decided to maintain the Fund established under the project with some added responsibilities. Despite some arrears, the Fund is solvent, thanks partly to the pollution levy revenues contributed as equity, and has sufficient reflows to continue its operation. This will allow utilization of the expertise in both technical and financial areas that the Fund staff built up during the project. Facilities to improve management and maintenance of the bus operations were originally included in the urban transport component of the project. While most of these were cancelled, the cancellation was not due to reduced attention to these aspects but due to restructuring of the bus operations to one based on the market mechanisms. All indications are that the restructuring has led to larger and more efficient - 12 -  operations, an improvement which is likely to be sustained and expanded. The traffic control signals and the traffic accident and violation systems are being operated and maintained well by the traffic police, which is planning further expansion of the systems. The new resettlement procedures based on market transactions completely replaced the old system of administrative assignments, and are being replaced with a more market-based system using cash rather than vouchers. Some of the systems established under the infrastructure planning and management systems improvement work have already been put to use. 6.2 Transition arrangement to regular operations: As discussed above, most of the facilities built under the project and the institutional innovations introduced have already been incorporated in the city's regular operations. In some cases the new systems introduced under the project have been further modified (such as using cash instead of vouchers for resettlement) and assets have been added (such as a solid waste transfer station) by the TMG and implementing agencies themselves to make them more fully integrated in the regular programs and systems. In the case of the infrastructure planning and management systems improvement, many of the analytical tools introduced under the project require field testing, modifications, and training to be fully incorporated in the regular procedures, as these steps could not be completed due to serious delays in the component. This work is being proposed for support under the Second project proposed for Bank financing. Other follow-up work proposed under the Second Project include institutional development and improved planning for sewerage and transportation sectors, and expansion of the traffic management system. 7. Bank and Borrower Performance Bank 7.1 Lending: IDA's performance in lending is rated highly satisfactory. The project was initially identified in June 1989 and appraised in May 1992. The long preparation period, due to the slow down of overall Bank operations in China during that period, allowed a thorough and detailed preparation. The project design was broadly consistent with policy priorities of GOC and TMG but included substantial departures from the proposal by TMG, in the form of stronger emphasis on institutional development and new approaches. There were few conceptual changes from the initial identification to the appraisal stages, but details continued to evolve, especially for innovative approaches. In hindsight, these efforts appear not to have been sufficient as some of the activities advocated by the team appear to have been overly ambitious or insufficiently understood by the implementing agencies, causing initial difficulties and later changes. However, the preparation work firmly focused the project toward important institutional development, which have been followed through during implementation and resulted in significant and unusual achievements. The project team was staffed with highly experienced specialists, effectively coordinated and represented by the task team leader (TTL). The team also developed strong collaborative relationship with the borrower teams. 7.2 Supervision: IDA's performance in supervision is rated satisfactory. In view of TMG's strong implementation capacity and the extensive preparation work, it was projected that the project would require about 30 percent less IDA efforts than to an average Bank project on supervising investment components, but more for other aspects. This projection turned out to be correct, but the supervision efforts required for non-physical elements tumed out to be more than projected. The IDA management allowed normal levels of resources but various resource saving strategy was employed to meet the higher supervision requirements. One was the substantial use of staff in the Beijing office, two hours from Tianjin. Another was the travel cost savings by combining the visit by intemational staff and consultants with visits to other projects. This, - 13-  however, apparently required that some mission members visit Tianjin in different times and the TTL had to consolidate their findings later. Most important was the strategy to focus on a small number of major issues for a given period of time until adequate resolution, while devoting relatively little time and resources to other issues and to routine and technical implementation details. On the other hand, the cost saving strategies resulted in some deficiencies in timeliness and coverage of the supervision and documentation. The arrangement nevertheless appears to have been highly effective also due to the competence of the implementing agencies and due to the strong relationship between the TMG and IDA teams. This relationship and efficiency appear largely attributable also to the remarkable continuity of the IDA team with a TTL involved in all stages of the project and with the same municipal engineer on board through most of the critical implementation period, forming a strong relationship with the counterpart team which also had maintained a high degree of continuity. 7.3 Overall Bankperformance: Overall, IDA's performance is rated satisfactory due to the high quality and innovation in preparation and flexible and effective supervision provided. Borrower 7.4 Preparation: The borrower's performance in preparation is rated highly satisfactory. TMG, URCC, and the implementing agencies had established a track record and reputation of high quality preparation and strong implementation of infrastructure and environmental work through the reconstruction since the earthquake of 1976. Consistent with this, by the time the project was identified TMG already had thoroughly prepared project feasibility reports and a well coordination organization for project preparation and implementation. Details were discussed in a straightforward and professional manner, and most of the information requested by the mission was promptly provided. Senior managers paid full attention and resolved issues clearly and promptly. When it proved difficult for local design institutes to prepare final design and bidding documents to the standard asked by IDA, TMG mobilized and financed considerable foreign consultant assistance on its own resources. 7.5 Government implementation performance: Government's performance in implementation was highly satisfactory. High level attention was maintained and timely and forceful intervention was provided. Commitments were honored despite sometimes serious difficulties, in such cases as the planning and management improvement component and the implementation of new resettlement procedures. In general, the senior management remained interested and committed to policy reforms and sought the missions' advice on a variety of issues even unrelated to the project. These continued commitment may be partly related to the general continuity of the senior managers involved in the project. Sometimes important actions such as the tariff increases during the inflationary period due to political and other difficulties, but they were eventually carried out as soon as the circumstances allowed. The PMO and the Planning and Management Improvement Leading Group Office (PMIO) were maintained with an adequate number of staff fully involved and familiar with the project. PMO hired competent specialists to ensure the quality of implementation and compliance with IDA requirements. PMIO maintained adequate staff and offices to prepare for and support the main TA activities despite the delay of the latter. However, it experienced considerably difficulties in mobilizing and managing foreign consultants as discussed in detail in Section 4.4. In the last few years of implementation, PMO experienced frequent turnover of management, weakening its coordination and monitoring functions. However, few components were left to be implemented by then and the implementing agencies carried out most of the technical work, its negative impact on project was relatively limited. - 14 -  7.6 Implementing Agency: The project involved three implementing Bureaus - Municipal Engineering, Public Utility, Environmental Protection, and Environmental Sanitation -- the first accounting for the dominant share of the project. Components were implemented by a number of operating units under them -- such as the Municipal Engineering Corporation, PTC, TDC, and the Industrial Pollution Control Fund. The same agencies which prepared the project were entrusted with implementation of the components. In general, their performance as a whole has been highly satisfactory during both preparation and implementation. Even where the achievements were below appraisal targets as in the case of the planning and management improvement studies and the pollution control fund, the underachievements were not due to lack of efforts or competence on the part of the implementing agencies but various factors discussed in Section'4. 7.7 Overall Borrower performance: The Borrower's overall performance is rated highly satisfactory for the high levels of commitment and hihg quality of works at all levels, during preparation and most of the implementation period, on new and complex project tasks as well as physical investment components. 8. Lessons Learned Past record is a good indicator of the future performance; and A productive economy and competent implementing organizations make most reasonable investments productive. -- Refer to the quality and speed of physical construction consistent with the track record of the Tianjin implementing agencies, despite new procedures that they had to work under; and -- High rates of economic return attributable to the efficient implementation and the growth of the economy and hence the demand for the facilities, even while the components are on paper similar to others in different contexts. New systems and approaches can be greatly more rewarding, and Policy and incentive frameworks often matter more than operational and technical refinements. - Refer to the new approaches introduced under the project with greatest benefits, especially the restructuted public transport company and new resettlement procedures. Their main benefits were in changed incentives for improved end results, rather than refined operating procedures or improvements in technical throughputs. Innovations, however, can be difficult and risky, and They require good preparation, flexibility, and most importantly, the committed and competent organization. -- Refer to the great variance in difficulties and achievements between various innovations and institutional development efforts under the project. Since almost by definition the difficulties with the innovations cannot be predicted and prepared for, the more important is to remain flexible to recognize and deal with unexpected difficulties. This also requires persistence in the face of difficulties, which requires high-level comnritment and competent organization. Further, only organizations that have basic competence would be able to appreciate and benefit from advanced innovations. Understanding of local conditions and users' own motivated learning are critical to the success of institutional development, and intemational knowledge can be useful only if deployed in well-defined contexts. - 15 -  -- Refer to difficulties experienced by international experts hired to introduce improved planning and management techniques, and the steep learning curve they experienced in gaining understanding the local context; improved productivity of a new set of experts after the PMIO was able to better define the desired product; the success in PTC restructuring based on knowledge gained by senior managers through relatively rough-and-ready study of other systems. Flexibility is necessary to ensure high overall efficiency of the project under rapidly changing circumstances, and The project design should build in the flexibility. -- Refer to the bus garages which could have been, but did not have to be, kept under the project. On the other hand, the reallocation had to be accommodated within the narrow confines of the legal definition of the project, which may not have been best use of the Credit. The usefulness of the open provision for solid waste disposal, used for a landfill, also attests to the necessity of built-in flexibility in project definition. The procurement procedures for goods and information systems are beneficial but overly complex and time consuming even for the most competent borrowers. -- Refer to long delays in procuring the traffic control signal system and other equipment packages, which may outweigh the resulting cost savings. 9. Partner Comments (a) Borrower/implementing agency: This ICR is based on detailed ICRs prepared by individual implementation agencies, listed in Annex 7. Officials of TMG and the implementing agencies also discussed with IDA's ICR missions in November 2000 and May 2001, sunmmarized in the aide memoire listed in Annex 7. The views of TMG and the implementing agencies recorded in these documents can be summarized as follows: The project has made an important contribution to the development of Tianjin in several ways. First, it has been a significant and visible part of the urban construction programs under Tianjin's 8th and 9th Five-Year Plans. Second, it has introduced or stimulated major, market-oriented reforms in all urban infrastructure sectors involved: public transportation, solid waste management, pollution control, residential resettlement and redevelopment, traffic management, and drainage systems. Third, the project helped enhance the quality of urban infrastructure and environmental investments (winning national awards for quality) and demonstrated the value of thorough and comprehensive project preparation. Fourth, as a result of the above, the project has contributed to enhancement of the environment for foreign and domestic investments not only in infrastructure but also in commercial and industrial activities. TMG and the project staff also highly value the long friendship with the Bank's project team and appreciate their advice regarding broad urban development and management as well as through various assistance to facilitate project implementation. TMG agrees with the mission's view of the various strengths and problems of the project implementation, and intends to continue to pursue various initiatives started under the project. TMG finds that the recommendations developed under the planning and management study are useful, even though there was insufficient time to apply them broadly. Further advances in these and other areas mission points out would be inevitable and necessary as the country as a whole moves more toward the market systems and more opening to the outside world. TMG wishes the Bank to continue to support TMG in this endeavor through follow-up projects. Similarly, the drainage company (TDC) appreciated the Bank's advocacy and advice for its institutional - 16 -  and financial improvements throughout the implementation period. Also, the representatives of the industrial pollution fund (the Fund) agreed that the creation and operation of the Fund was a difficult, but worthwhile experiment that yielded a great deal of operational knowledge and experience which are essential to comprehensive efforts for pollution control. Both the Fund and EPB expressed appreciation for IDA's strong support for pollution control and the advice and support given to develop the Fund's management and financial knowledge. (b) Cofinanciers: Not applicable (c) Other partners (NGOs/private sector): Not applicable 10. Additional Information - 17 -  Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Im ct Indicators: # Beneficanes from Drainage Improve- 350,000 450,000 ments Average Increase in Vehicle Speed on Inner about 25% about 30%** Ring Road Bus passenger trips net of transfers 446 million per year 479 million Staff per Bus 8 4 Note: Outcome indicators were not fUly specified at the time of appraisal. The targets or projections are SAR projections for 2000, where they exist. ** Compared with scenario without project. Actual vehicle speed declined due to increase in number of cars. Output Indicators: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _P r * t, In00 l a st P$ %i.S _ _ _ _ _L _ _ _ _ _ _ _ _ _ _ _ _ __ _a Total Length of Road Upgrading 3,500 m 5,615 m Number of Overpasses 1 3 Traffic control signals 90 72 Number of Drainage Channels Controlled 3 3 Drainage improvement Coverage 7,600 ha. 7,600 ha. Pumping Stations Constructed 8 9 Pollution Control Subloans Y 143 miNion Y 123 million Landfill Capacity per Day 2,000 ton 2,700 ton Persons Resettled 13,480 18,975 Demolished Housing Floor Area 90.883 m2 98,743 m2 Resettled Housing Floor Area 231,000 m2 247,000 m2 Bus Terminal 1 1 Bus Maintenance Depots 2 0 End of project - 18 -  Annex 2. Project Costs and Financing Poect Cost by Component (in US$ million equivalent) ApoivkW. A4tuaULate ft rc.nta0Obf 15Eslimate EsUmtat Ap)^ls Prolct Cost B_y Component USS million US$ million . Planning, Management and Technical Improvement 8.60 9.49 110.3 Drainage and Sewerage 25.70 20.78 80.9 Solid Waste Management 12.40 17.46 140.8 Urban Transport 33.30 89.29 268.2 Industrial Pollution Control 39.00 15.38 39.4 Resettlement 34.70 76.50 220.5 Total Baseline Cost 153.70 228.90 Physical Contingencies 19.20 0.00 Price Contingencies 22.10 0.00 Total Project Costs 195.00 228.90 Total Financing Required 195.00 228.90 Project Costs by Procuremet Arrangements (Appraisal Estimate) (US$ million equivalent) | Expenditure CMegory | ICB Procurement MOlhor tB... NCB Other~ 1. Works 0.00 45.10 2.20 0.00 47.30 (0.00) (27.20) (1.20) (0.00) (28.40) 2. Goods 23.20 3.80 1.60 0.00 28.60 (22.50) (2.90) (1.30) (0.00) (26.70) 3. Services 0.00 0.00 5.60 9.70 15.30 TRG, TA, Design, SPN, (0.00) (0.00) (5.60) (0.00) (5.60) Mgmt 4. Miscellaneous 0.00 0.00 48.70 0.00 48.70 Industrial Pollution Control (0.00) (0.00) (19.00) (0.00) (19.00) 5. Resettlement Works 0.00 0.00 33.60 0.00 33.60 (0.00) (0.00) (20.30) (0.00) (20.30) 6. Land Acquisition 0.00 0.00 0.00 21.60 21.60 (0.00) (0.00) (0.00) (0.00) Total 23.20 48.90 91.70 31.30 195.10 (22.50) (30.10) (47.40) (0.00) (100.00) Project Costs by Procurement Arrangements (ActuallLatest Estimate) (US$ million equivalent) Prourement Method' Expenditure Ctgory C NCO 2 K..F. Totl Cost 1. Works 0.00 93.60 3.00 0.00 96.60 (0.00) (56.20) (1.70) (0.00) (57.90) 2. Goods 14.90 6.50 0.80 0.00 22.20 (14.40) (4.90) (0.60) (0.00) (19.90) - 19 -  3. Services 0.00 0.00 6.80 11.40 18.20 TRG, TA, Design, SPN, (0.00) (0.00) (6.80) (0.00) (6.80) Mgmt 4. Miscellaneous 0.00 0.00 15.40 0.00 15.40 Industrial Pollution Control (0.00) (0.00) (9.00) (0.00) (9.00) 5. Resettlement Works 0.00 0.00 45.90 0.00 45.90 (0.00) (0.00) (6.20) (0.00) (6.20) 6. Land Acquisition 0.00 0.00 0.00 30.60 30.60 (0.00) (0.00) (0.00) (0.00) (0.00) Total 14.90 100.10 71.90 42.00 228.90 (14.40) (61.10) (24.30) (0.00) (99.80) " 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 national 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. Project Financing by(in US$ million equivalent) Total Project Cost 100.00 77.90 17.10 99.80 118.90 10.20 99.8 152.6 59.6 (excluding duties and taxes) - 20 -  Annex 3. Economic Costs and Benefits Internal Economic Rate of Return SAR ICR Roads Improvement Component 23% 18% Traffic Control Signal System 25% 32% Workshops and Terminals 24% N/A Hub Bus Terminal 23% 25% Drainage Improvement Schemes 18-52% 22-55% Weighted Average 25% 23% -21 -  Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Speialty ~ Perfoirmance RAting (:e.g 2 Economists, I FMS, etc.) :Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 06/1989 4 1 Econ, I Plan, I San, 1 PHS 8/1989 6 1 Econ, I Plan, I San, I PHS, I Trans, I Fin 3/1990 6 1 Econ, I Plan, I Env, I Fin, I Trans, 1 San 9/1990 3 1 Econ, I Fin, I Env, I San Appraisal/Negotiation 05/1991 10 1 Econ, I Plan, I Env, 1 Fin, I Operations Officer, I Trans, I Sanitary Engineer, I Procurement Specialist, I PHS, I Env 05/1992 ? I Econ, 1 Counsel, 1 Disbursement Officer Supervision 11/1992 4 1 San, 1 Trans, 1 Econ, 1 S S Env 6/1993 2 1 San, 1 Econ S HS 5/1994 2 1 San, 1 Trans, I Econ S HS 10/1994 3 1 San, I Fin, 1 Econ HS S 5/1995 4 1 San, I Fin, I Trans, I Econ, I HS S Res 11/1995 3 1 Fin, I Trans, I Econ, I Res HS S 5/1996 5 1 San, I Fin, I Chem, 1 Trans, I HS S Econ 10/1996 5 I San, 1 Econ, I Fin, I Res, 1 S HS Env 11/1997 4 1 San, 1 Econ, I Fin, I Env S HS 6/1998 6 1 San, I Econ, I Chem, I Fin, I S HS Env, I Res 11/1998 4 1 San, 1 Econ, I Fin, I San S HS 5/1999 6 1 San, 1 Econ, I Fin, I Chem, 1 S HS Res, I Trans 5/2000 1 1 Econ S HS 11/2000 4 1 Econ, 1 Fin, 1 Trans, I Env ICR 5/2001 2 1 Economist, 1 Fin S HS Acronyms: Chem - Chernical Engineer; Econ - Economist; San - Sanitary/Municipal Engineer; Env - Environmental Engineer or Specialist; Fin - Financial Analyst; Plan - Urban Planner; PHS - Public Health - 22 -  Specialist; Res - Resettlement Specialist; Trans - Transportation Planner; (b) Staff: Stage of Projcct Cycle Actual/Latest Estimate _____- __________- - No. Staff weeks USS (L000) Identification/Preparation 134.2 388,125 Appraisal/Negotiation 50.4 177,875 Supervision 145.4 654,670 ICR 6.8 28,300 Total 335.4 1,244,470 - 23 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating El Macro policies O H OSUOM O N * NA 3 Sector Policies *H OSUOM ON O NA M Physical *H O SU O M O N O NA 3 Financial O H *SUOM O N O NA X Institutional Development 0 H * SU O M 0 N 0 NA WEnvironmental * H OSUOM O N O NA Social O Poverty Reduction O H OSUOM O N * NA O Gender O H OSUOM O N * NA F Other (Please specify) 0 H O SU O M 0 N 0 NA Resettlement 2 Private sector development 0 H O SU O M 0 N 0 NA Z Public sector management 0 H O SU O M 0 N 0 NA E Other (Please specify) O H OSUOM O N * NA Private sector development effects: the positive contribution of the new resettlement system on the development of real estate market, the joint venture and new bus lines, initiatives given to borrowing enterprises in design of industrial pollution control measures. -24-  Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating El Lending *HSOS OU OHU Ea Supervision OHS OS OU OHU Il Overall OHS *S O U O HU 6.2 Borrowerperformance Rating El Preparation *HS OS O U O HU I Government implementation performance * HS O S 0 U 0 HU El Implementation agency performance *HS OS 0 U O HU O Overall *HS OS 0 U O HU - 25 -  Annex 7. List of Supporting Documents 1. Borrower's ICR, Novemer 2000 - April 2001 2. Resettlement Completion Report, March 2001 3. ICR Aide Memoire, May 2001 - 26 -