China - Fujian Provincial Highway

 ICRR 11834 Report Number : ICRR11834 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 08/30/2004 PROJ ID : P003626 Appraisal Actual Project Name : Fujian Provincial Highway Project Costs 528.8 465.0 US$M ) (US$M) Country : China Loan/ US$M ) 140 Loan /Credit (US$M) 119.9 Sector (s): Board: TR - Roads and Cofinancing 0 0 highways (99%), US$M ) (US$M) Sub-national government administration (1%) L/C Number : L3681 Board Approval 94 FY) (FY) Partners involved : Closing Date 06/30/2000 12/31/2003 Prepared by : Reviewed by : Group Manager : Group : Kavita Mathur Peter Nigel Freeman Alain A. Barbu OEDST 2. Project Objectives and Components a. Objectives The objectives of the project were to: (a) support the continued development of road infrastructure in Fujian Province to facilitate mobility and increase the efficiency of road transport in the interest of stimulating economic activity; (b) develop an action plan for strengthening the provincial road construction industry; (c) assist in the development of institutional capabilities for transport planning and investment prioritization; and (d) facilitate the transfer of highway construction and maintenance technology through staff training and the provision of modern laboratory and road maintenance equipment. b. Components The components of the project were: 1. Construction of the 81.4 km section of the Quanzhou-Xiamen (QXE) four-lane divided, access controlled highway, a Class 1 standard-access highway to Xiamen (6.2 km) and a Class 2 standard access road to Shedian (6.3 km) 2. Supply and installation of electrical, electronic and mechanical (E & M) equipment for tolling, traffic monitoring, telecommunications, lighting and safety devices for tunnels; 3. Improvement of three provincial road sections (58.3 km) and paving of four road sections (200.7 km); 4. Construction supervision for the expressway and other roads; 5. Procurement of equipment for operations and maintenance of the QXE, road laboratories and the development and application of a Road Data Bank (RDB) and a Pavement Management System (PMS); 6. A study of the provincial road construction industry; and 7. Staff training. Revised Components: Pavement construction, supply and installation of E & M equipment, and supervision for the Fuzhou-Quangzhou Expressway (FQE). c. Comments on Project Cost, Financing and Dates The devaluation of the RMB in early 1994 resulted in massive loan savings, amounting to one third of the loan amount. Moreover, lower than expected bid prices for all four ICB contracts on QXE resulted in additional savings. On July 27, 1998, the Loan and Project Agreements were amended to include new components and the closing date was extended from June 30, 2000 to December 31, 2003. On October 2001, the borrower canceled US$ 18.1 million and US$ 0.5 million was canceled at project closing. 3. Achievement of Relevant Objectives: The objective to support the development of road infrastructure in Fujian Province was achieved.  The two major highways, the Xiamen-Quangzhou Expressway (QXE) and the Fuzhou-Quangzhou Expressway (FXE) were completed on time and were opened to traffic in late 1997 and 1999 respectively. The long distance traffic has been diverted to the expressway, but the diversion is lower than forecast. The ex-post Economic Rate of Return was satisfactory at 18%, albeit below the appraisal estimate of 25%. Improvement of three provincial road sections and paving of four road sections was completed. The seven roads were opened to traffic between 1994 and 1997. The opening of the roads have improved the living standards of the population served by these roads. For instance, in one of the road service areas, the annual average per capita income increased from 2,123 RMB in 1995 to 3,864 RMB in early 2001. The objective to develop an action plan for the strengthening of the provincial road construction industry was considered no longer relevant during implementation. A Provincial Road Construction Study and Nation Wide Survey was carried out but the recommendations of the study were not implemented by the Fujian Provincial Transport Department (FPTD) staff. Around the time the study was completed, contractors from outside the province started winning contracts in Fujian. This combined with the policy of commercializing the industry, created the pressure on local construction companies to reform and restructure. The objective to develop institutional capabilities for transport planning and investment prioritization was achieved to a certain extent with the introduction of a road data bank (RDB) and pavement and bridge management system programs (PMS and BMS) for the core arterial road network of the province. There is no incentive to use and update the database for PMS because of lack of sufficient funding for periodic maintenance. The objective to facilitate the transfer of highway construction and maintenance technology through staff training and the provision of modern laboratory and road maintenance equipment was achieved. Over 200 staff members from various branches of the FPTD were trained overseas in construction management and supervision, financial control, planning and design, material tests, road data bank, financing activities, E&M works, operational management of roads and expressways, safety, quality control, tunneling, soft soil treatments, environmental protections, and human resources development. Numerous training courses were also organized locally, in which trainees returning from abroad lectured on what they had learned. 4. Significant Outcomes/Impacts: The opening of the FQE and QXE has linked Fuzhou, the provincial capital to Xiamen, the province’s most important port. Local products such as flower wise mushrooms, timber, block stone, bamboo, tea leaves and Chinese medicinal herbs can now be transported quickly and exported. Modern highway planning and management tools (RDB, PMS, BMS) were introduced and provincial staff developed a detailed data base for the road network. New concepts and practices in highway management and technology were introduced to the FPTD. Modern methods in toll road management were also introduced. 5. Significant Shortcomings (including non-compliance with safeguard policies): 1. There were significant delays in the installation of electrical, electronic and mechanical (E & M) equipment for tolling and traffic monitoring. 2. One of the roads completed in November 1995 was in a deteriorated and damaged condition by 2001, after less than six years of operation. 3. Poor upfront design and insufficient planning for upgraded roads under the rural network improvement program led to a cost increase of 65% over original contract price. 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely The overall sustainability is rated "Likely". However, there are concerns regarding the maintenance of the smaller paved roads by the counties that have to rely on local revenues for additional capital and recurrent expenditures. One of  the roads completed in November 1995 was in a deteriorated and damaged condition by 2001, after less than six years of operation. Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. 7. Lessons of Broad Applicability: In countries where the Bank is involved in a number of provinces/states, there should be more exchange of experience between provinces/states facing similar problems in project execution and dealing with the Bank. This could save time and different provinces/states can avoid going through the same learning process over and over again. 8. Assessment Recommended? Yes No 9. Comments on Quality of ICR: An excellent ICR, covering all aspects of the project including the safeguard policy on environmental assessment and resettlement. There is one minor shortcoming - an error in the Bank and the Provincial Government contribution in the Annex 3 cost table.