China - Grain Distribution and Marketing Project

Document of The World Bank Report No: 26047 IMPLEMENTATION COMPLETION REPORT (IDA-25180; TF-23905; CPL-36240; SCL-3624A) ON A LOAN IN THE AMOUNT OF US$325 MILLION AND A CREDIT IN THE AMOUNT OF SDR118.9 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A GRAIN DISTRIBUTION AND MARKETING PROJECT June 27, 2003 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective May 2003) Currency Unit = Yuan Y1.0 = US$ 0.12 US$ 1.00 = Y8.3 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CIECC China International Engineering Consulting Corporation CPMO Central Project Management Office DWT Deadweight tons FCMO Foreign Capital Management Office ICR Implementation Completion Report ID Intermediate Depot ICB International Competitive Bidding ITC International Tendering Company MDT Ministry of Domestic Trade MOC Ministry of Commerce MOF Ministry of Finance NCB National Competitive Bidding NEC Northeast Corridor PD Primary Depot PMO Project Management Office SAR Staff Appraisal Report TA Technical Assistance tph Tons per hour Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Yukon Huang, EACCF Sector Manager/Director: Mark D. Wilson, EASRD Task Team Leader/Task Manager: Alan Piazza, EASRD  CHINA GRAIN DISTRIBUTION AND MARKETING PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 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 17 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 Objectives/Outputs of Components 24 Annex 6. Ratings of Bank and Borrower Performance 25 Annex 7. List of Supporting Documents 26 Annex 8. Implementing Agency's ICR Summary 27 Annex 9. Transition To Bulk Grain Handling 37 Maps IBRD 24607, 24608 and 24609  Project ID: P003627 Project Name: Grain Distribution and Marketing Project Team Leader: Alan L. Piazza TL Unit: EASRD ICR Type: Core ICR Report Date: June 26, 2003 1. Project Data Name: Grain Distribution and Marketing Project L/C/TF Number: IDA-25180; TF-23905; CPL-36240; SCL-3624A Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Ports, waterways and shipping (30%); Crops (30%); Agricultural marketing and trade (25%); General transportation sector (9%); Central government administration (6%) Theme: Administrative and civil service reform (P); Trade facilitation and market access (P); Rural markets (S); Regulation and competition policy (S) KEY DATES Original Revised/Actual PCD: 09/30/1991 Effective: 12/15/1993 12/15/1993 Appraisal: 11/16/1992 MTR: 07/14/1997 07/14/1997 Approval: 06/17/1993 Closing: 06/30/2000 12/31/2002 Borrower/Implementing Agency: PRC/MIN OF COMMERCE Other Partners: AIDAB (Australia), CIDA (Canada), FAO, France, Netherlands, UNDP STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam S. Kaji Country Director: Yukon Huang Shahid Javed Burki - Department Director Sector Director: Mark D. Wilson Joseph R. Goldberg - Division Chief Team Leader at ICR: Alan Piazza Alan Piazza ICR Primary Author: Albert Nyberg; Alan Piazza 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:HL Institutional Development Impact:SU Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: This was an extremely large scale project with highly ambitious policy reform, institutional development, and physical infrastructure objectives. The project comprised some 384 sites in thirteen provinces and municipalities with a total investment of about US$1 billion. As stated in the Staff Appraisal Report (SAR), the primary objectives of the project were to (a) support the Government's grain sector reforms aimed at improving the policy and institutional environment, (b) assist institutional and infrastructure development in physical and commodity markets, and (c) facilitate the expansion and greatly improve the efficiency of China's domestic and international grain trade through investments in critical infrastructure. The project objectives closely reflected the Borrower's strong interest in reform of the grain sector and improved efficiency in grain distribution and marketing. In particular, the Government wanted to reduce its mounting fiscal losses on supplying grain to urban consumers (prior to the project, urban retail grain prices were considerably less than rural procurement prices). The grain distribution and marketing system was dominated by inefficient bag handling which further increased costs and thereby added to government expenditure in the grain sector. Building upon the policy reform recommendations of the Bank's 1991 study "China: Options for Reform in the Grain Sector," the project's objectives were clearly stated, important, and consistent with the CAS objectives of supporting rural economic reform and development. 3.2 Revised Objective: The project objectives remained unchanged. 3.3 Original Components: The bulk of the project investments focused on the introduction of modern, high-speed, bulk handling technologies to improve grain marketing efficiency and increase capacity. The technologies involved were not well known to national engineers specializing in grain-handling, though they were well proven and widely utilized in the developed countries. Therefore, considerable efforts were made to ensure that international technical assistance consultants, knowledgeable in the current technology and modern logistical systems, were engaged as counterparts with national design engineers, construction supervisors, and project implementation managers. In addition, considerable training investments were made. The training was conducted primarily through domestic training institutes, but also involved international training financed through the project's training budget and through operational and maintenance training provided by international equipment suppliers. The project was organized and implemented on the basis of the following transportation "corridors", market services, and training and TA components: (1) Northeast Corridor - Dayao Bay and Bayuquan Ports (21.6% of total project cost at appraisal). A major and increasing proportion of China's feed grain (corn) and soybeans was produced in the northeastern provinces. However, at the time of project preparation, marketing flows were hampered by grain policies that promoted storage rather than trade, and by antiquated physical marketing facilities. The grain sector was being liberalized and it was becoming increasing apparent that grain handling and transportation facilities would increasingly constrain marketing and production. As has been the case in many other countries over the last century, this necessitated the modernization of marketing infrastructure and the improvement of grain logistics. Also, at the time of appraisal, wheat inflows were increasing through the Dalian ports which service the northeastern provinces. A key component of the project was to be the development of a Dayao Bay Terminal at the recently developed Dayao Bay Port (in Dalian in Liaoning province). The terminal would comprise a wheat unloading berth capable of accommodating 80,000 DWT vessels, two 30,000 DWT corn loading berths, two 1,200 tph ship unloaders and four 800 tph ship unloaders, 300,000 tons of vertical silo storage, high speed hopper rail wagon loading and - 2 -  unloading facilities, and state-of-the-art conveying, weighing, ancillary facilities, and site infrastructure. In addition, the Bayuquan Grain Terminal was to be constructed in the new Bayuquan port area (in Yingkou in Liaoning province). The terminal would comprise a corn loading berth for vessels of 30,000 DWT vessels, two 800 tph ship loaders, 100,000 tons of vertical silo storage, high speed hopper rail wagon loading and unloading facilities, and appropriate ancillary equipment and infrastructure. These two terminals were designed to increase port grain outflow capacity by 10.1 million tons (including 7.1 million tons through the Dayao Bay Terminal and 3.0 million tons through the Bayuquan Grain Terminal) and inflow capacity by 3.0 million tons (through the Dayao Bay Terminal). (2) Northeast Corridor - Hinterland (54.6% of total project cost at appraisal). The project outflow of 10.1 million tons would be sourced from 59 intermediate grain depots (ID), strategically located along rail lines in high production counties (in the four northeastern provinces of Liaoning, Jilin, Heilongjiang, and Inner Mongolia) which, in turn, would be serviced by 279 country depots (primary depots