China - Liaoning Medium Cities Infrastructure Project

Document of The World Bank FOR OFFICIAL USEONLY ReportNo: 35588-CN PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDLOAN INTHEAMOUNT OFUS$218MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A LIAONINGMEDIUMCITIES INFRASTRUCTURE PROJECT M a y 24,2006 Transport Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bankauthorization.  CURRENCYEQUIVALENTS (ExchangeRateEffectiveMarch31,2006 CurrencyUnit = Yuan Y 8.037 = US$l US$0.1244 = Y 1.00 FISCALYEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS APL Adaptable ProgramLoan FRIC FushunRoadInfrastructureand ATC Area Traffic Control ReconstructionComponent AWP Annual Work Program FRMC FushunSecondary RoadRehabilitation BPTC Benxi Public Transport andRoadMaintenance Equipment Component Component BRIC BenxiRoadInfrastructure and FTSC FushunTraffic Safety andTraffic ReconstructionComponent Management Component BRMC BenxiSecondaryRoad GDP Gross Domestic Product Rehabilitation and Road IBRD International Bank for Reconstruction Maintenance Equipment and Development Component I C IntegratedCircuit BTSC BenxiTraffic Safety andTraffic ICB International Competitive Bidding Management Component ID Institutional Development Component CAS Country Assistance Strategy UM Inspectionand Maintenance CCTV Closed Circuit Television ITS Intelligent Transport System CNAO China National Audit Office JPTC Jinzhou Public Transport Component CPB City Planning Bureau JRIC JinzhouRoadInfrastructureand CQS Consultants' Qualifications ReconstructionComponent (WA) decibels JRMC Jinzhou Secondary Road DPTC DengtaPublic Transport Rehabilitation and RoadMaintenance Component Equipment Component DRC Development and Reform JTSC JinzhouTraffic Safety and Traffic Committee Management Component DRIC DengtaRoadInfrastructure and JUTPMO JinzhouUrbanTransport Project ReconstructionComponent Management Office DRMC Dengta Secondary Road km Kilometer Rehabilitation and Road LAES Liaoning Academy of Environmental Maintenance Equipment Sciences Component LASS LiaoningAcademy o f Social Sciences DTSC DengtaTraffic Safety and Traffic LDRC LiaoningDevelopment and Reform Management Component Committee EIA Environmental Impact Assessment LG Leading Group EIRR Economic Internal Rate o f Return LMCIP Laoning MediumCities Infrastructure EMP Environmental Management Plan Project EPB Environment Protecting Bureau LPCD LiaoningProvincial Construction FB Financial Bureau Department FPTC FushunPublic Transport LPCG LiaoningProject Coordinating Group Component  LPDF Liaoning ProvincialDepartment o f PMlO Auborne particulate matter less than Finance 10 micrometers indiameter LPEPB LiaoningProvincialEnvironmental PPTC PanjinPublic Transport Component ProtectionBureau PRIC PanjinRoadInfrastructure and LPTC LiaoyangPublic Transport Reconstruction Component Component PRMC Panjin Secondary RoadRehabilitation LRB LandResource Bureau and RoadMaintenance Equipment LRIC Liaoyang Road Infrastructure Component Reconstruction Component PSBTPB Public Security Bureau Traffic Police LRMC Liaoyang Secondary Road Brigade Rehabilitationand Road PT Public Transport Component Maintenance Equipment PTS Passenger Time Savings Component PTSC PanjinTraffic Safety and Traffic LTSC Liaoyang Traffic Safety and Management Component Traffic Management Component PUMB Public Utility Management Bureau LUCRPO Liaoning UrbanConstruction and QCBS Quality and Cost Based Selection Renewal Project Office RAP Resettlement Action Plan LUTP LiaoningUrbanTransport Project RI Road Infrastructure and Reconstruction m Meter Component MBD ModelBiddingDocuments RIB Resettlement InformationBooklet M C B Municipal Communications RM Secondary RoadRehabilitation and Bureau RoadMaintenance Equipment MFB Municipal Finance Bureau Component MFMD Municipal Facility Management RSC Road Safety Committee Division SEPA State Environmental Protection MOF MinistryofFinance Agency MV Motorized Vehicle State-owned Enterprises MVECS Motor Vehicle EmissionControl Square Kilometer Strategy Square Meter NCB National Competitive Bidding Technical Assistance NDRC National Development Reform Terms o f Reference Commission Traffic Safety and Traffic Management NMV Non-motorizedVehicle Component NO2 NitrogenDioxide UCB Urban ConstructionBureau NPV Net Present Value UCC Urban Construction Committee NRSL National Road Safety Law UNDB UnitedNations Development Business PCN Project Concept Note veh-km Vehicle-kilometer pcuih Passenger Car Unit/hour voc Vehicle OperatingCost PMO Project Management Office VSL Variable-spread Loan Vice President: Jeffrey Gutman, Acting EAPVP Country ManagedDirector: DavidR.Dollar, EACCF Sector Manager: Jitendra N.Bajpai, E A S T R Task Team Leader: Shomik Raj Mehndiratta, EASTR   CHINA China-Liaoning Medium Cities Infrastructure Project CONTENTS Page A. Strategic Context and Rationale .......................................................................................... 1 1. Country and Sector Issues................................................................................................... 1 2. Rationale for Bank Involvement......................................................................................... 2 3. Higher-Level Objectives to which the Project Contributes ................................................ 3 B. Project Description ............................................................................................................... 3 1. LendingInstrument............................................................................................................. 3 2. Project Development Objective andKey Indicators ........................................................... 3 3. Project Components ............................................................................................................ 3 4. Lessons Learned and Reflected inthe Project Design........................................................ 6 5. Alternatives Considered andReasons for Rejection ........................................................... 7 C. Implementation ..................................................................................................................... 8 1. Partnership Arrangements ................................................................................................... 8 2. Institutional and Implementation Arrangements ................................................................ 8 3. Monitoring and Evaluation o f Outcomes/Results............................................................... 9 4. Sustainability and Replicability .......................................................................................... 9 5. Critical Risks and Possible Controversial Aspects ............................................................. 9 6. Loan Conditions and Covenants ....................................................................................... 11 D Appraisal Summary . ............................................................................................................ 13 1. Economic and Financial Analyses .................................................................................... 13 2. Technical ........................................................................................................................... 14 3 . Fiduciary ........................................................................................................................... 14 4. Social................................................................................................................................. 15 5. Environment ...................................................................................................................... 15 6. Safeguard Policies............................................................................................................. 16 7. Policy Exceptions and Readiness...................................................................................... 16  Annex 1:Country and Sector or Program Background ......................................................... 18 Annex 2: Major Related Projects Financedby the Bank and/or other Agencies .................35 Annex 3: Results Framework and Monitoring ........................................................................ 36 Annex 4: Detailed Project Description ...................................................................................... 43 Annex 5: Project Costs ............................................................................................................... 67 Annex 6: Implementation Arrangements ................................................................................. 69 Annex 7: Financial Management and DisbursementArrangements ..................................... 76 Annex 8: Procurement Arrangements ...................................................................................... 80 Annex 9: Economic and Financial Analysis ............................................................................. 87 Annex 10: Safeguard Policy Issues ............................................................................................ 99 Annex 11: Project Preparation and Supervision ................................................................... 110 Annex 12: Documents inthe Project File ............................................................................... 112 Annex 13: Statement of Loans and Credits ............................................................................ 115 Annex 14: Country at a Glance ............................................................................................... 120 Annex 15: Public Participation Process .................................................................................. 122 Annex 16: Maps ......................................................................................................................... 131 IBRD34627.34670.34629.34669.34668.34667. 34628  CHINA CHINA-LIAONING MEDIUMCITIES INFRASTRUCTUREPROJECT PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASTR Date: May 24, 2006 Team Leader: Shomik Raj Mehndiratta Country Director: David R.Dollar Sectors: General transportation sector (100%) Sector ManagedDirector: Jitendra N.Bajpai Themes: Other urbandevelopment (P) Project ID: PO99992 Environmental screening category: Full I Assessment Lending Instrument: Specific Investment Loan n [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 218.00 Proposedterms: VSL, 20 years, including 5 years of grace and annuity principal repayment, at S$218 million plus variable spread for Variable-Rate RECONSTRUCTIONAND DEVELOPMENT Total: 413.42 112.00 525.42 Borrower: People's Republico f China, representedby Ministry o fFinance ResponsibleAgency: Liaoning ProvincialDepartmentofFinance 103 NorthNanjing Street HepingDistrict Shenyang LiaoningProvince People's Republicof China. 110002 Facsimile: 86-24-2283-4167  TY 2007 2008 2009 2010 2011 2012 b u a l 10.00 25.00 50.00 50.00 60.00 23.00 hmulative 10.00 35.00 85.00 135.00 195.00 218.00 Project implementation period: Start July 1,2006 End: June 30,201 1 Expectedeffectiveness date: December 31,2006 Expected closing date: December 31,201 1 Does the project depart from the CAS in content or other significant respects? Ref: PAD A.3 [ ]Yes [XINO Does the project require any exceptions from Bank policies? Re$ PAD D.7 [XIYes [ ]No Have these been approvedby Bank management? [XIYes [ ]No I s approval for any policy exception sought from the Board? [ ]Yes [X ] No Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.5 [XIYes [ ] N o Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ]No Project development objective Re$ PAD B.2, TechnicalAnnex 3 The objective o f the Project i s to assist the Borrower's Project Cities inenhancing: (i)the performance and quality o f their existing urban transport infrastructure interms o fmobility, access, and safety; (ii) efficiency and effectiveness of their urbanpublic transport androad the maintenance services; and (iii) the responsiveness o f their urbantransport systems to the needs o fpopulation without access to private motorizedvehicles. Project description [one-sentence summary of each component] Re$ PAD B.3.a, Technical ~ Annex 4 The project covers the center cities o f Panjin, Jinzhou, Fushun,Benxi and Liaoyang municipalities, and the county town o f Dengta inLiaoyang municipality. The Road Infrastructureand ReconstructionComponent(RI) [US$330.93 million, including resettlement costs of US$l05.1million] includes road improvements inthe primary, secondary and tertiary networks that would address current transport problems and bottlenecks. The SecondaryRoadRehabilitationand RoadMaintenanceEquipment Component(RM) [US$ll3.40 million] will finance rehabilitation o f major segments o f the participating cities' roadnetwork to improve last-mile access to pedestrians andbicyclists, and finance road maintenance equipment. The Traffic Safety and Traffic ManagementComponent(TS) [US$22.18 million] supports the implementationo f the NRSL through enhanced traffic management, monitoring andtraffic control systems (including traffic signals and intersection improvements) to improve safety and traffic flow.  The PublicTransportComponent(PT) [US$14.45 million] includes provision o fbuspriority facilities andimprovements inpublic transport planningand operations inthe project cities. It includes investments inpublic transport infrastructure such as on-street bus priority and transit oriented traffic engineering, shelters, terminals and interchanges. The InstitutionalDevelopmentComponent(ID) [US$4.85 million] supports technical assistance intransport planning and management, reform inroad maintenance practices and in the structure o f the public transport industry, and includes project management assistance. Which safeguard policies are triggered, if any? Re$ PAD D.6, TechnicalAnnex 10 Environment Assessment (OP/BP/GP 4.01) Involuntary Resettlement (OP/BP 4.12) Significant, non-standard conditions, if any, for: Re$ PAD C.7 Boardpresentation: None. Loadcrediteffectiveness: Acceptable legal opinions. Covenantsapplicableto projectimplementation: 1. The Project Implementing Entity shall cause each Project City to: (a) prepare, in accordance with terms o f reference satisfactory to the Bank, and furnishto the Bank by February 15 in each calendar year, beginning on February 15, 2007, for review and approval, a proposed action plan for the carrying out o f its Respective Parts o f the Project during the same calendar year, said work plan to include, inter alia, the scope and schedule o f activities under its Respective Parts o f the Project, the financing plan and detailed budget arrangements (including required counterpart finds as validated by eacf Project City); (b) thereafter, carry out such Respective Parts o f the Project in accordance with such actior plan as shall have been approved by the Bank; and (c) provide to the Bank for its prior concurrence any proposed modification or waiver o f it: respective annual action plan, or any provisions thereof, prior to puttinginto effect sucl modification or waiver. 2. The Project Implementing Entity shall cause each Project City to engage consultants from time to time, in adequate numbers, with expertise, terms o f reference, qualification anc experience, acceptable to the Bank, as required for supervision of civil works implemented unde: its Respective Parts o f the Project.  3. The Project ImplementingEntityshall cause each Project City to: (a) conduct a public survey usingpublic participatory process on the impacts and benefits of the Project by June 30, 2008, and June 30, 2011 respectively, under terms o f reference and inaccordance with methodologies acceptable to the Bank; (b) after each public survey promptly prepare and furnishto the Bank a report integrating the results o f the public survey performed pursuant to sub-paragraph (a) o f this paragraph and setting out the measures recommended to address the issues raised by the public duringthe public surveys; and (c) thereafter immediately take all measures required to carry out the conclusions and recommendations o f said reports and the Bank's views on the reports, ifany. 4. The Project ImplementingEntityshall cause each Project City to: (a) arrange an annual meetingchaired by its respective Road Safety Committee inOctober o f each calendar year, starting October 2006, to review the records o f road safety and traffic flows o f such year on selected corridors and intersections in the respective Project City based on the measurements o f traffic volumes androad safety agreed with the Bank; and (b) promptly after each meeting, prepare and immediately thereafter implement a time-bound I action plan to improve safety and traffic flows in the above-mentioned corridors and intersections. 5. The Project Implementing Entity shall cause each Project City to notify the Bank reasonably inadvance of adopting or puttinginto effect any policies which may result inchanges to the following: (a) legal status or corporate form o f state-owned bus companies; (b) granting of bus route or bus network concessions longer than three (3) years in duration; and (c) transfer from government ownership o f bus fixed infrastructure, such as depots, interchanges, terminals, and maintenance workshops. 6. During the Project implementation, the Project Implementing Entity shall cause each Project City to furnish an annual report to the Bank, by December 15 o f each calendar year, beginningDecember 15, 2006, describing the procurement completed insuch year for non-Bank financed road maintenance contracts in the Project City, which report should include, among other things, with respect to such road maintenance contracts, the number o f bidders and their bid prices as announced at the bid opening, contract owner's cost estimate, the selected bidder, the signed contract price, and the reasons for rejection o fthe lowest bid, ifany.  A. STRATEGIC CONTEXTAND RATIONALE 1. Country and Sector Issues UrbanTransport inthe medium cities o fLiaoning provinceinnortheast Chinapresents a combination o f challenges peculiar to their historic and recent economic context, as well as those being faced by cities all across China. Supporting the northeast through a period of economic transition. While Chinahas become an international symbol o f economic growth and poverty alleviation inthe last three decades, the medium cities inLiaoninghavebenefited only to a limitedextent from this prosperity. Before the market oriented reforms o f the late seventies, Liaoningwas one o f the country's major industrial centers, focusing on heavy industry and mining. The province became China's most urbanizedprovince with 53 percent urbanpopulation (2003, China Statistics Year Book). Much of the urbanpopulation settled ina number o fmedium cities with economies anchored around a small number o f state-owned industrial and miningenterprises. Such enterprises havehad mixed success inthe transition to a market economy, and have generally found themselves under severe financial pressure. This has inturnput fiscal pressure on andweakened the economic base o f the cities, an impact that has been further exacerbated with the imminent exhaustion o f ore lodes in some areas. As a result, at a time when many o fthe cities inChina's coastal region (as well as the two large cities o f Shenyang and DalianinLiaoning) havebeen investing heavily intransport infkastructure, the road and public transport systems inthe medium cities o f Liaoninghave suffered from systemic fiscal neglect. This accumulated underfunding has resulted ina serious deterioration o f the asset base and underprovision o fbasic transportation services. Mucho fthe existingroad infrastructure inthese cities i s inurgent need o frenovation. The secondary road system, essential for "last-mile" access, and to provide alternative routes to major arterials for bicycle traffic (which i s the mainstay o f much o f the population), is ina particularly bad state o f repair. Public transport services suffer inaddition from inadequate funding o f largely city-run bus services, lack of modernization o fmethods andtechnology, and the lack o fadequate auxiliary infrastructure to support effective bus service. The urban environment o f the cities i s declining as a consequence, and a recent investment climate study conductedby the Bank found that "livability" concerns hadbecome a significant factor undermining the investmentclimate in Liaoning's mediumcities. Indeed, inthe absence o f an effort to systematically preserve, rehabilitate and manage the transport network and related services, urban infrastructure quality might well become a significant problem constraining the future economic prospects o f Liaoning. These cities and their residents would benefit significantly fkom investments that support rehabilitation andupgrading o f the urban transport infrastructure. The challenge of cost-effective service delivery. Given the limited financial ability o fthe cities to continue to support services such as public transport and road maintenance, traditionally provided by local government inChina, there i s an urgent need to identify cost effective mechanisms for service delivery, such as those that take advantage o f market efficiencies. Such a shift i s also inline with national priorities; ina recent official document (Opinion #46 in October 2005) China's State Council has recommendedthat cities transition toward the use o f marketmechanisms for localpublic utility infrastructure and service delivery. 1  Ensuring"people-centered" development. Muchcanbe done to make the transport planning and management process in all Chinese cities more responsive to the national government's stated "People First" development strategy and the desire to create a socially harmonious society. The national government has taken several actions inrecent years to operationalize these general strategies inthe context of urbantransport. The National Road Safety Law (NRSL), promulgatedin2004 and now under implementation, explicitly values safety over mobility, and focuses especially on the most vulnerable roadusers; pedestrians and cyclists involved intraffic accidents are considered, by default, victims needingredress. Similarly, the State Council (via Opinion #46 inOctober 2005), the Ministryo f Construction, as well as the highest levels of Chinese leadership, have promoted the provision o f priority to public transport incities in official documents and public announcements. However, local governments' success in implementingthese priorities remains limited. InLiaoning, as elsewhere in China, the municipal transport planning and management processes too often still produce large high-profile transport investments (which focus disproportionately on the needs o f the motorized few), to the detriment o fthe most vulnerable, who are left with inadequate levels o fbasic services and safety. 2. Rationale for Bank Involvement As part o f a program to revitalize the industrial base inthe country's northeast, the Government of China has programmed a series o f Bank urban infrastructure investment projects inLiaoning. Theprovincial government has asked the Bankto support urbantransport, environment and heating investments inhigh-priority medium sized cities. The proposed Liaoning MediumCities Infrastructure Project (LMCIP), focusing on urban transport, i s the first o f a series o f three projects; an urban environment project and a heating project are under preparation for the coming fiscal years. The Bank i s well positioned to help Liaoning's cities address their urbantransport challenges, both interms of the Bank's competitive advantage infinancing and policy advice, as well as in terms o f a strong and longrelationship with Liaoning province. The Bank has been Liaoning's development partner for over fifteen years, and has provided around US$400 million for four urbaninfrastructureprojects alone, includingthe Liaoning UrbanTransport Project (LUTP), which was successfully completed inDecember 2005. The Bank brings a combination o f 15 years o f experience working inChina on urban transport with international experience with good practice on urbantransport solutions. O fparticular relevance to this project i s the Bank's experience with traffic safety, the use o fmarket mechanisms for the provision o f transport services, and the use o fplanning processes that facilitate transport outcomes responsive to the needs o f the majority o fthe population without access to private automobiles. Finally, Bank assistance also provides the project cities an opportunity to gain from the Bank's extensive global and China experience with institutional development, procurement and financial management. The project cities have already benefited from the analytical rigor o f Bank project preparation and appraisal to achieve optimal project design. Value-added duringimplementation would include cost savings through procurement under Bank guidelines, and improved project management and construction quality. 2  3. Higher-LevelObjectivesto whichthe ProjectContributes The project is consistent with the 2006-10 Country Partnership Strategy (approved bythe Board on May 23,2006), which seeks among other objectives, to improve the competitiveness o fthe various regions of China andthe overall investmentclimate, and to address the needs o f disadvantaged groups and underdeveloped areas through financing infrastructure. Specifically, the project supportsthe objectives of: (a) reducingpoverty, inequality, and social exclusion; (b) financing sustained and efficient growth; and (c) improving public andmarket institutions. B. PROJECTDESCRIPTION 1. LendingInstrument The Bankwill finance the project through a Specific InvestmentLoan. The loan wouldbe payable in20 years, including 5 years of grace and annuity principal repayment, at six-month LIBORfor US$218millionplus variable spread for Variable-Rate Single Currency Loans. 2. ProjectDevelopmentObjectiveand Key Indicators The objective o fthe Project is to assist the Borrower's Project Cities inenhancing: (i) the performance and quality o f their existing urban transport infrastructure interms o f mobility, access, and safety; (ii) the efficiency and effectiveness o ftheir urban public transport and road maintenance services; and (iii) the responsiveness of their urbantransport systems to the needs of population without access to private motorizedvehicles. The indicators usedto measure project outcomes can be classified under two categories: Those relating to the performance of the roadnetwork, measured through: (a) satisfaction levels with transport facilities (mobility, access, safety) expressed by a panel o fpublic participants; (b) the percent o f the road network functioning as an all-weather road; (c) weightedtravel time for all users (bicycles, cars, bus, pedestrians) over a selected set o f travel itineraries; (d) number of traffic accident fatalities; and (e) use o f open competitive biddingmethods on apilot basis to award maintenance contracts. 0 Those relating to public transport services, measured through: (a) satisfaction levels with public transport services, expressed by a panel o f public participants; (b) competitive award o fbus route franchises to multiple independent operators on a pilot basis; (c) improved level of bus service (measured by number ofbus passengers and vehicle kilometer (veh-km) o f revenue service) in at least one project city; (d) network coverage o f public transport, measured inroute kilometer (km) per square km; and (e) adoption o f effective bus priority measures (as measured by difference inthe operating speeds along priority sections). 3. ProjectComponents The project covers the center cities of Panjin, Jinzhou, Fushun, Benxi, and Liaoyang municipalities, and the county town o fDengta inLiaoyang municipality. The project has been designedto reverse the deterioration ofthe asset base, improve the "livability" and investment climate, and support initiatives that reflect national andprovincial priorities related to urban transport. The designhas been refined through extensive consultationwith user groups. The project has five components ineach city, as summarized inTable 1. The overall project cost i s 3  estimated at US$524.9 million, which will bepartly financedby the proposed US$218 million InternationalBank for Reconstruction andDevelopment (IBRD) loan. Benxi Fushun Jinzhou Liaoyang Panjin Dengta Total Roadinfrastructure and 65.46 36.03 56.34 93.75 67.51 11.83 330.93 reconstruction Secondaryroad 27.19 8.72 27.33 17.03 30.53 2.59 113.40 rehabilitation androad maintenance eauinment Public transport 3.46 0.06 1 1.84 2.76 I 6.22 I 0.11 14.45 Traffic safety andtraffic 3-00 7.97 I 3.88 3.23 1 3.91 I 0.18 22.18 management Institutionaldevelopment 0.97 0.74 1.oo 1.o 0.97 0.17 4.85 Contingencies 8.22 4.93 8.63 8.39 7.66 1.23 39.07 Front-End Fee 0.11 0.07 0.12 0.12 0.11 0.02 0.55 Total 108.41 58.53 99.14 126.28 116.91 16.14 525.42 Most o fthe project investments are concentrated inrehabilitation andreconstructiono f the existingroad network to make up for previous under funding, to bringthe network up to a good state o f repair, and to improve overall accessibility and safety. Two significant initiatives influenced the choice o f road investments and concomitant traffic management designs. First, a survey o fbicycle users was conducted inFushun. Second, technical planninganalysis was supplementedby an extensivepublic participationprocess inall project cities, with the goal o f understanding the important urbantransport related concerns o f the citizens and obtainingtheir inputinto project design. The survey o fbicycle users identified the needfor bicycle-friendly traffic management measures to address concerns related to absent or poorly designed bicycle lanes, encroachment from pedestrians (often because o fthe absence o f functioning sidewalks), illegally parked cars, and construction; and increased the focus on the need for a high-quality secondary road system to provide critical last-mile access andto offer bicyclists alternatives to major arterials where conflicts with motor vehicles were maximized. These results were complemented by the public participation findings (see Annex 15), which also focused on the needto improve sidewalks, street furniture, andthe quality o fthe secondary road systemto address concerns relating to drainage duringrains and inwinter. These initiatives were instrumental inthe design and scope o f the secondary road rehabilitation component andthe traffic management solutions proposed inthe traffic safety component. Further, the public participation also endorsed the need for the proposednew infrastructureproposals ineach city - inparticular raising concerns about the quality ofdrainage andthe steepnessofslopes on current rail crossings (underpasses and overpasses). The passageo fthe NRSL in2004 and initial efforts to implement it provided a rare opportunity to help the project cities to both define and implement a comprehensive safety agenda. The traffic safety andtraffic management component combines investments intraffic management and control with support for a multi-institutional capacity buildingeffort developedto helpthe newly formed municipal level Road Safety Committees (RSCs) execute their responsibilities. 4  Similarly, the project has been structuredto support ongoing provincial initiatives to introduce market efficiencies inroadmaintenance practices andthe public transport industry. Inresponse to provincial directives, cities are inthe midst o f a move to contract major road maintenance activity. The project provides training, technical support and investments to help maintenance agencies intheir evolving roles relatedto planning and effectively contracting maintenance activity. The component also supports investments and technical assistance to help maintenance companies prepare for a competitive environment. All the project cities are also inthe midsto frestructuringpublic transport industryinresponse to provincial directives to increase private sector involvement inthe sector. The initial focus o f the cities was on generating inwardinvestments for city-owned public transport enterprises without adequate attention on a post-reform regulatory environment that would protect the interests o f the city and its bus passengers. The project i s supporting cities inunderstandingthe implications o f different reform options for all stakeholders, as well as supporting interestedcities in undertaking comprehensive reform that protects the interests o f all the stakeholders. Concerns from the public participation, particularly from women, also helpedfocus the public transport component on supporting a network review and supporting bus prioritypilots inthe project cities. A briefdescriptiono fthe project components follows: a detailed description is presentedin Annex 4. The RoadInfrastructureandReconstructionComponent(RI) [US$330.93 million, including resettlement costs o fUS$l05.1 million] includes road improvements inthe primary, secondary and tertiary networks that would address current transport problems andbottlenecks. The SecondaryRoadRehabilitationandRoadMaintenanceEquipmentComponent(RM) [US$113.40 million] will finance rehabilitation o f major segments o f the participating cities' roadnetwork to improve last-mile access to pedestrians andbicyclists, and finance road maintenance equipment. The Traffic Safety andTraffic ManagementComponent (TS) [US$22.18 million] supports the implementation o fthe NRSLthrough enhanced traffic management, monitoring andtraffic control systems (including traffic signals and intersection improvements) to improve safety and traffic flow. The PublicTransport Component(PT) [US$14.45 million] includes provision o fbuspriority facilities and improvements inpublic transport planningand operations inthe project cities. It includes investments inpublic transport infrastructure such as on-street bus priority and transit oriented traffic engineering, shelters, terminals and interchanges. The InstitutionalDevelopmentComponent(ID) [US$4.85 million] supports technical assistance (TA) intransport planningandmanagement, reform inroad maintenance practices and inthe structure ofthe public transport industry, andincludes project management assistance for LiaoningUrban Construction and Renewal Project Office (LUCRPO). 5  4. Lessons Learnedand Reflectedinthe Project Design The Independent EvaluationGroup (formerly the Operations EvaluationDepartment) and the Quality Assurance Group assessmentso fthe Bank's infrastructureportfolio inChinahave confirmed satisfactory project implementation, outcomes, and project management. Experience from a full range o fprojects financed by the Bank inthe transport and urban sectors points to the importance o f Borrower ownership (particularly o f institutional development components) and appropriateness o f capital investments, as well as arrangements for proper operations and maintenance. This project has been designed to incorporatethese lessons. Specific design decisions based on lessons from past experience include: (a) Selectinghigh impact capital investments. A multi-pronged strategy was used to identify appropriate investments bymovingbeyond a focus on bigvisible infrastructure, such as ring roads, to strategic investments and support through: 0 Pre-screening to identzh high impact investments. Inresponse to past experience o f the difficulty o f scaling down politically attractiveroadproposals late inthe preparation process when the results o f a formal economic analysis become available, all significant investments for this project (any roads with more than four lanes, any bridges, overpasses andunderpasses) were intensively pre-screened duringproject identification and several proposals with likely low economic returns were dropped. 0 Adoptingpeople-centered planning. As bicycles account for up to halfthe vehicular travel inthe project cities, the transport models explicitly modeled bicycle demand and economic evaluations includedbenefits accrued by bicyclists. This helped to raise planners' awareness and sensitivity to the needs o f non-motorizedmodes. 0 Inclusive processes. A major achievement o f this project duringpreparation has been the successful development o f a meaningful public participation process that influenced project design (see Annex 15 for more detail). (b) Developinga client-driven institutional agenda. A constant challenge inurbantransport projects inChina has been to reconcile the need for reform to ensure sustainability with the knowledge that reform i s successful only when it i s client-driven. The project supports national policies on reform o fboth roadmaintenancepractices and the public transport industrythroughtraining and consulting support to all the project cities to understand the implications o f different reform options based on recent Chinese and international experience. However, only cities that have expressed active interest inreform implementation are provided additional support. (c) Enhancingtraffic safety. Past traffic safety interventions inChina have focusedprimarily on `bottom-up' on-street interventions such as junction channelization, which have resulted inlocalizedbenefits. However, the institutionalimpacthasbeenlimited; international experience indicates that sustained impact needs buy-infrom city leadership. This project buildson the RSCs to bringtogether all relateddecision makers inthe city to implement the NRSL. Itwould also establish a systematic monitoring programto institutionalize effective safety strategies. (d) Improving cost estimatesand minimizing disbursementlags. Market prices havebeen used to estimate costs, instead o fthe norm prices used inthe past. Implementation 6  arrangements, funds flow, and withdrawal procedures have beenreviewed to minimize potential disbursement delays. 5. Alternatives Considered and Reasons for Rejection Project Scope and Program Options. A numbero f alternatives were reviewed with Liaoning Province and Government (Ministry o f Finance, MOFNational Development and Reform Commission, NDRC) to determine the optimal packaging for the urban infrastructure investmentsproposedinthe medium cities o fthe province (i.e,, cities other than Shenyang and Dalian). These included: (a) an adaptable program loan (APL) with three stages; (b) three multi-sector projects (Le., each project coveringurban transport, urban environment, and heating and gas), each focusing on a selected number o fmediumcities; (c) two projects, with the first focusing on urban transport and urban environment, and the second focusing on heating and gas; and (d) a series of three sectoral projects, starting with a project focusing on urban transport, and followed inrapid succession by projects focusing on urban environment, and heating and gas supply. Key considerations inthe packaging decision included the needto complement the investmentswith appropriate sectoral and institutional reforms, and the needto complete a significant portion o f the overall program by the end o f China's Eleventh FiveYear Plan, i.e., 2010. The APL approach was discarded because: (a) o fthe difficulty indefiningappropriate triggers to move to the second and third projects inthe context o fmulti-sector and multi-city projects; and (b) the approval o f the second and third projects would each take at least two (and perhaps three) years after the approval o f the preceding project, thus making the 2010 target difficult to attain. Option (b) o f three multi-city projects, each handling multiplesectors, was not considered feasible because o f the long lead time required for preparing a comprehensive first project with an appropriate set o f investments and corresponding sectoral reforms inmultiple sectors. Option (c), with a first project addressing urban transport and urban environmental issues was considered at the Project Concept Note (PCN) meeting. It was recognized that such a project would be complex; it was therefore decided that the Bank would consult with the Government to split the first project into two separate sectoral projects, i.e., one for urbantransport and the other for urban environment. Following agreement with Government, the alternative o f three separate sectoral projects - Option (d) - was selected. LMCIP i s the first o f these three projects. Investment Components. As discussed earlier, project identification included an intensivepre- screening o f individual investment proposals. This was followed by an economic analysis in which the entire road infrastructure program ineach city was tested against a "no project" scenario. High-cost or large-scale investments (rail andbridge crossings, roads with more than four motorized vehicle (MV) lanes), together with investments not related to immediate problems (new development roads), were analyzed individually. For such investments, a significant effort was made to generate the lowest cost alternative that preserved the benefits (see Annex 9). An attempt was made inthe early stages o fpreparation to contain the scope to the road infrastructure, secondary road and traffic safety components. The consultation process showed that such a project would not respond adequately to the needs o f people without access to private motor vehicles, and consequently more emphasis was placed on the public transport component. 7  C. Implementation 1. PartnershipArrangements The project i s fi-ee-standing and does not have any other co-financiers. 2. InstitutionalandImplementationArrangements ImplementationArrangements. The Liaoning Provincial CoordinatingGroup (LPCG), established by Liaoning Provincial government, chaired by a Vice Governor o f Liaoning, will provide high-level guidance to the project, and coordinate on policy and institutional issues related to the project. The Liaoning Province Department o f Finance (LPDF) i s responsible for integrated management o f the Project, includingproviding guidance to the LUCRPO and monitoring day-to-day Project implementationby LUCRPO. LUCRPO, established under the Liaoning Provincial Construction Department (LPCD), i s responsible for day-to-day Project implementation. Eachparticipating city has established a city Leading Group (LG), inwhich government leaders participate. The LGs are responsible for providing policy guidance, and coordination support for the project. Under their direction, the city project management offices (PMOs) will manage and coordinate day-to-day project preparation and implementation. Under LUCRPO's guidance and supervision, PMOs will participateinbiddingdocument design, bid evaluation, and contract negotiation, and will beresponsible for signingprocurement contracts. Upon completion o f infi-astructure works, PMOs will provide satisfactory review o f the work completed. The completed facilities and infrastructure will be owned by the city governments, but will be operated, managed, and maintained by responsible government entities. Detailedproject responsibilities and implementation arrangements are given inAnnex 6. ConstructionSupervision. The project includes two layers o f construction supervision: general project supervision inall cities, and local supervision for individual cities. General project supervision will be provided by a consulting firm selected on the basis o f international competition. Local supervision will be carried out by local consultants who will perform periodic on-site supervision and provide construction supervision reports. FundFlow. The Bank loanto the People's Republic of Chinawillbeon-lent to Liaoning Province, which will inturn on-lend them to the participating municipalities. The designated account (DA) will be established andmanagedby LPDF. Disbursement. Municipal/city PMOswill submit the withdrawalapplications andrelated invoices for civil works and equipment to the Municipal Financial Bureau (MFB) for checking, who will forward the invoices to LPDF, copying LUCRPO for verification. Upon LUCRPO's verification, LPDF will release funds from the project DA to the contractors or to the MFBs, to enable them to make payments to the contractors. Consultants will submit invoicesto LUCRPO, who will review and forward the invoices to LPDF for payment. ResettlementCompensationFundFlow. MFBwill allocate funds to the resettlement implementing entity (either resettlement companies, or the land acquisition and resettlement service division inthe case o f Panjin) according to the project implementationprogress. The resettlement implementing entity will: (a) pay the land acquisition and resettlement tax and fees 8  to the Land Resource Bureau (LRB) and the city Resettlement Office; and (b) deposit the compensation funds into a local bank or credit union. Payments to the affected people or entity will be made by the bawcreditunionbased onthe certificates issuedby the resettlement implementing agencies. All resettlement will be financed from counterpart funds. 3. Monitoring and Evaluation of Outcomes/Results Annex 3 lists the mainoutcome indicators for the project, as well as the principal results indicators for each component. Additional indicators are listed inthe various documents inthe project files (for example, the Environmental Management Plan, EMP). LUCRPO and the city PMOSwill regularly collect data required for monitoring and evaluation of outcomes. LUCRPO will review the results on the basis o fvarious progress reports, and take appropriate corrective action. 4. Sustainability and Replicability Past experience suggests that the investment program i s likely to be constructed to high-quality standards and completed on schedule. Long-term sustainability o f the road assets will, however, depend on effective and timely maintenance. The roadmaintenance component will raise awareness, improve planningand delivery o fmaintenance, and support funding levels required to ensure sustainability o f the roadnetwork ineach project city. Public transport services are currently dominated by state-owned enterprises (SOEs) whose ownership base i s being transformed during2006-07, mostlyby sale or transfer of stock to management and staff. The default plans are to give concessions to the transformed SOEs for most or the entire network. Such a strategy would lock the cities into monopoly (or near- monopoly) situations which would not be inthe best interests o f the city or potential public transport customers. The project includes technical assistance (TA) to help cities understand the options, benefits and implementation mechanisms for various models o fmarket reform. Sustainability o fproject investments ultimately depends on each city's ability to successfully diversify its economic base. The project supports that quest, by reducing transport constraints to economic growth. Acknowledging the risks associated with long-term economic recovery o f some o f these dense, settled and sizable cities (the urbanarea inthe smallest municipality, Liaoyang, i s larger than Helsinki, and the largest - Fushun s larger than Dublin),the selection - i of project cities is based on an analysis o f their current fiscal capacity. 5. CriticalRisks and Possible Controversial Aspects Potential Risks ProposedMitigationMeasures RiskRatingwith Mitigation Improvements to the road 1 Letters of commitment from Mayors and annual reports; S infrastructure systemwill support for reforminmaintenance practices to increase not be sustaineddue to productivity; covenant to implement reformeffectively; TA inadequatemaintenance. and equipment to assist inbetter maintenance planning. 9  PotentialRisks ProposedMitigationMeasures IRiskRatingwith Mitigation Congestion caused by Busservice improvements andpriority measures should S increasedmotorization preserve the mobility o f bus passengers. The annual will limit travel time monitoringprogramwill highlightand address significant savings from the project traffic management issues on the identified corridors and investments. intersections. Accidents will increase Results basedmonitoringprogram will review safety in M despite project identified key corridors and intersections on an annual investments . basis and develop effective implementation measures. Public transport reform Cities will be supported inthe use o f standardized franchise M will not attract new terms. The combinedmarket inthe project cities would operators increase the attractiveness o f the city franchises for investors. TA includes outreach to potential investors from Dalian, Shenyang, Anshan, and Fushun,where multiple operators (including major internationalinvestors) are already present. The cities will respond to Highlightsuccess o feffective measures andraise increases inmotorization awareness. Public consultation duringimplementation; by adopting MV capacity monitoring program, including traffic safety audits; design enhancements that solutions to increase the permanence o f MV/NMV reduceieliminate measures separations (street lights at the MV/NMV separation). such as bus priority and MVInon-motorized vehicle (NMV) separation that help the vulnerable. To Project ComponentResults Road Infrastructure and M Reconstruction 0Roadsiintersections will Technical reviews, public consultation during be designed or implementation implementedwithout hlly addressingneeds o f the vulnerable 0Road schemes changed Annual reviews o f the implementationprogram duringimplementation SecondaryRoad Rehabilitation and Road Maintenance Equipment 0Maintenance fimding Letters o f commitment from Mayors and annual reports S from each city 0Municipalities reverse Support from the Provincial ConstructionDepartment their commitment toward road maintenance after project implementation Safety and Traflc Management 0 Safety measures will be Results based implementationprogram; feedback from M ineffective participatory monitoring 10  Public Transport 0Reformwill be executed TA, support ofthe Provincial ConstructionDepartment M by SOE operator without considering city interests 0Lack o f political Participatorymonitoring; TA; implementation and commitment to give evaluation o f demonstration,schemes. priority to public Restructuring o f the SOE; introductiono f new entrants on a transport; labor and competitive basis, and maintaining total number o fbusjobs employment issues as a through bus service expansion result o f public transport reform Overall Risk Rating I I I I S/M Note: HighRisk-H, Substantial Risk- S, ModestRisk- M,Low or NegligibleRisk-N. 6. LoanConditions andCovenants Legal Covenants Proceeds o f the loan shall be on-lent to Panjin, Jinzhou, Fushun,Benxi, and Liaoyang municipalities at the same terms and conditions as the Bank loan, with the municipalities bearing the foreign exchange risk. Implementation Covenants 1. The Project ImplementingEntityshall cause each Project City to: (a) prepare, inaccordance with terms of reference satisfactory to the Bank, and furnishto the Bank by February 15 ineach calendar year, beginning on February 15,2007, for review and approval, a proposed actionplan for the carrying out o f its Respective Parts o f the Project duringthe same calendar year, said work planto include, inter alia, the scope and schedule o f activities under its RespectiveParts o f the Project, the financing plan and detailed budget arrangements (including required counterpart funds as validated by each Project City); (b) thereafter, carry out such Respective Parts o fthe Project inaccordance with such action plan as shall have been approvedby the Bank; and (c) provide to the Bank for its prior concurrence any proposed modification or waiver o f its respective annual action plan, or any provisions thereof, phor to puttinginto effect such modification or waiver. 2. The Project Implementing Entity shall cause each Project City to engage consultants, from time to time, inadequate numbers, with expertise, terms o freference, qualification and experience, acceptable to the Bank, as required for supervision o f civil works implemented under its Respective Parts o f the Project. 11  3. The Project ImplementingEntityshall cause each Project City to: (a) conduct a public surveyusingpublic participatoryprocess on the impacts and benefits o f the Project by June 30,2008, and June 30,201 1respectively, under terms o f reference and inaccordance with methodologies acceptable to the Bank; (b) after each public surveypromptly prepare and furnishto the Bank a report integrating the results o f the public survey performed pursuant to sub-paragraph (a) o f this paragraph and settingout the measures recommendedto address the issues raised by the public duringthe public surveys; and (c) thereafter immediately take all measures requiredto carry out the conclusions and recommendations o f said reports and the Bank's views on the reports, ifany. 4. The Project ImplementingEntityshall cause eachProject City to: (a) arrange an annual meetingchaired by its respective Road Safety Committee inOctober o f each calendar year, starting October 2006, to review the records o f road safety and traffic flows o f such year on selected corridors and intersections inthe respective Project City based on the measurements o f traffic volumes and road safety agreed with the Bank; and (b) promptly after eachmeeting, prepare and immediately thereafter implementa time-bound action planto improve safety and traffic flows inthe above-mentioned corridors and intersections. 5. The Project Implementing Entityshall cause each Project City to notify the Bank reasonably inadvance o f adopting or puttinginto effect any policies which may result inchanges to the following: (a) legal status or corporate form o f state-owned bus companies; (b) granting o f busroute or bus network concessions longer than three (3) years induration; and (c) transfer from government ownership o fbus fixed infrastructure, such as depots, interchanges, terminals, andmaintenance workshops. 6. Duringthe Project implementation, the Project ImplementingEntityshall cause each Project City to furnish an annual report to the Bank, by December 15 o f each calendar year, beginningDecember 15,2006, describingthe procurement completedinsuch year for non-Bank financed roadmaintenance contracts inthe Project City, which report should include, among other things, with respect to such road maintenance contracts, the number o fbidders andtheir bidprices as announced at the bidopening, contract owner's cost estimate, the selected bidder, the signed contract price, andthe reasons for rejection o fthe lowest bid, ifany. Reporting and Monitoring The following reports shall be furnishedto the Bank: 0 Monitoring Reports. LUCRPO will furnishhalfyearly reports on implementation o f the Environment Management Plan (EMP) andResettlement Action Plan(RAP). 12  0 Progress reporting and mid-project review. LUCRPO will furnisha semi-annual progress report on project implementation, by February 15 and August 15 o f each year, starting with February 2007 anduntil the project i s completed. Inaddition, LUCRPO will submit a project mid-termreview report by December 31,2008. 0 Annual Review. LUCRPO will conduct an annual review o fimplementation progress, to address emerging problems and to agree on the Annual Work Program (AWP) for the following year. The review will take place by December 15 o f each year starting2006. 0 AWP. LUCRPO will furnish the consolidated AWP by February 15 each year starting 2007, based on city-specific AWPs prepared by the respective implementing agencies. D. Appraisal Summary 1. Economic and FinancialAnalyses Economic Analysis A formal economic evaluation was conducted for the roadinfrastructure component, which accounts for about 56 percent o f the loan and 70 percent o f total project cost (115 individual sub- projects inthe six project cities). The principal measured benefits are: savings invehicle operating costs (VOCs), reduced congestion, and time savings for pedestrians, bicycle riders, and bus and auto passengers. The estimated overall economic internal rate o freturn(EIRR) for the component i s 15.23 percent. Table 2 summarizes the results o f economic evaluationby city and key individual projects. See Annex 9 for more details. Table 2 rojects Roadmaintenance works inthe project are overdue corrective maintenance, essential to preserve the integrityo f the road network, and o f critical importance to the majority o f the population which does not use automobiles. Design o fthe maintenanceworks has beenoptimized from a long-term cost-effectiveness perspective, given the physical (extreme winters) and economic (inadequate short-term maintenance budgets) environments o f the project cities. The traffic safety and management components are small investments that past experience indicates provide very significant benefits inincreased levels o f safety (lower levels o f accidents, fatalities and associated economic loss) and savings intravel time. 13  Thepublictransport investmentscomprise mostly low-cost elements, which are either essential operational items (such as dispatching equipment, end-of-route turnarounds, off-street parking, andmaintenancefacilities), or which enhance quality for the passengers (such as transfer interchanges and bus shelters). Designs for all works have been optimized from a cost- effectiveness perspective. Such investments typically provide highrates o f return interms of increases inthe competitiveness o fthe bus service, and lower operational costs relatedto higher productivity and lower maintenance costs. Implementation o f the bus prioritymeasures will benefit passengers intime savings; operators will be able to lower operating costs through higher bus productivity. Financial Analysis Total revenues and expenditures (off and on budget, transfers, and earmarked funds) were analyzed for each municipality. Total infrastructure revenues and infrastructure fixed asset and recurrent/maintenance expenditures, as defined by the Urban Construction Expenditure and Maintenance Fund, were also analyzed. Available infrastructure spending, defined as total infrastructure revenues less `routine' infrastructure recurrent/maintenance expenditure, was calculated as a key `surplus' ratio used to assess availability o f funds for counterpart funding, debt service, andoperations and maintenance requirements. The Bank team conducted a municipal debt analysis. As Chinese municipalfinancial practices are not yet consistent with the international practices, it i s not possible to obtain integrated and reliable data for off-budget debt and contingent liabilities. However, overall, the municipal finance analysis shows that LMCIP i s affordable for all project cities, and the proposed counterpart fundingstrategies are sound (more detail inAnnex 9). 2. Technical All investment components havebeenpreparedbyreputable Chinese designinstitutes. Project designs are technically sound, represent the most appropriate cost-effective alternative, and are based on sound engineering practice. A key feature o f project design has beenthe use o f an extensive public participationprocess to complement technical analysis (see Annex 15). All project cities conducted an extensive three-stage effort - focus groups, open meetings, and questionnaires - to obtain public inputinto the project design, targeting the needs o f vulnerable groups such as the elderly, migrantworkers, the mobility impaired, and the poor. Women-only groups were consulted to ensure that needs and issues specific to women were properly identified. Project feasibility studies include a section indicating the manner inwhich issues raisedinthe public participation process havebeen addressed inthe feasibility studies. Follow- uprounds ofparticipation will be conducted duringimplementation to adjust designs based on feedback. 3. Fiduciary FinancialManagement. On the basis o f guidelines issuedby the FinancialManagement Sector Board on November 3,2005, the project meets minimumBank financial management requirements, as stipulated inBP/OP 10.02. The project's implementing agencies have taken necessary actions to ensure that the project will have inplace an adequate financial management system that can provide, with reasonable assurance, accurate andtimely information on the status of the project inthe reporting format required by the Bank (see Annex 7). 14  Procurement. A procurement capacity assessmentofthe implementing agencies, carried out prior to appraisal, concluded that the overall risk o fthe procurementprocess i s average (details inAnnex 8). An actionplanto strengthen theprocurementcapacityofthe implementing agencies has been agreed with LUCRPO andthe PMOSof the project cities. The plancalls for the preparation and dissemination o f a project-specific procurementmanual, training workshops, and measures to avoid excessive cost overruns and improve procurement economy and efficiency. Ways inwhichthe Tendering and BiddingLaw o f China differs from Bank guidelineswere addressed inthe assessment, and clarifications havebeen included inthe Project Agreement for the procedures to be followed for Bank-financedNational Competitive Bidding (NCB) procurement. It i s expected that all o fthe project cities will finance some civil works relatedto the 3,RMand TS components and some consulting services related to the ID component in2006 usingretroactive financing. Only payments for expenditures made after April 10, 2006, are eligible for retroactive financing, and the ceiling for suchpayments is limited to US$40 million for civil works and consulting services. 4. Social The project has significant social benefits as it supports: the improvement o f the secondary and feeder road networks; the development o fpublic transport, pedestrian, and bicycle facilities; and traffic safety measures. The pioneering public participation process undertakenduring preparation enables the project to address the transport-related needs o f vulnerable groups, indicated above. As highlighted earlier, it was also designed to be sensitive to gender issues by conducting women-only focus groups. The project has adverse impacts related to the needfor landacquisition and involuntary resettlement; though insome cases displaced persons viewed the housing demolition as an opportunity to improve their living conditions significantly. Intotal, the project will affect 4,994 households, 677 enterprises and shops, and 31,547 people inthe six cities. RAPShave been developed for each project city, which are inaccordance with local laws and are consistent with the World Bank OP 4.12 on Involuntary Resettlement. The plans (see Annex 10) describe in detail the impacts, affected populations, consultation process, rehabilitation measures, budget, and implementation andmonitoring arrangements. LUCRPO i s very familiar with Bank safeguard policies (as the proposed project would be the fifth Bank-financedproject managedbyLUCRPO) and Liaoning has a good track recordof implementingresettlement consistent with Bank guidelines. A screening for ethnic minority communities revealedthat there are no ethnic minority communities inthe project area, though some individual minority households will be affected. Based on this finding, it i s the Bank's assessment that this project does not trigger Bank OP 4.10 on Indigenous People. 5. Environment The project i s classified as a Category A project under OP 4.01, Environmental Assessment, because o f the disruptioncaused by the construction o fnew roads inan urbansetting. The Liaoning Academy o f Environmental Sciences, a State Environmental ProtectionAgency (SEPA) Class A - accredited agency for Environmental Impact Assessments (EIAs) inChina, jointly with local environmental institutes, preparedEIAs andEMPs for each project city, 15  according to national policies andregulations as well as Bank guidelines. The requiredtwo-step consultation was conducted duringthe EIA preparationprocess (see Annex 10). These documents were disclosed locally and inWashington, D.C., inJanuary 2006. The final EIA reports were furnishedto the Bank inmid-March 2006. The project facilitates environmentally desirable planningandphysical improvements inthe urban transport networks o fthe six project cities by supporting safety, the development o f secondary roads that promote NMV travel, pedestrian and bicycle ways andpublic transport. In addition, all project investmentshave beendesigned to minimize any adverse impact on the physical environment; none o fthe components encroach on any environmentally sensitive terrain. Duringproject implementation there willbeconstruction relatedimpacts anddisruption, including temporary landoccupation, generation o f dust, soil erosion, spoil disposal, disruption of local traffic, sanitation of construction camps, noise, possibility o f increased air pollution, and treatment of wastewater (primarily from bus depots). These impacts will be mitigated based on the comprehensive EIA and the EMP (see Annex 10). Theproject will nothave significant negative environmental impacts; all adverse environmental impacts can be avoided, reduced and minimized, provided the mitigation measures developed inthe EMPs are properly implemented. The EIAs determinedthat the Bank's policy on Cultural Property, OPN 11.03, is not triggered because no significant cultural relics were found inthe project areas. However, preventive measures have beenproposed inthe EMP for any chance-find items. 6. Safeguard Policies Table 3 provides details of the safeguard policies triggered by the project. Table 3: Safeguard Policies Triggered by the Project Safeguard policies triggered by the project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [ I Natural Habitats (OP/BP 4.04) [ I [XI Pest Management (OP 4.09) [ I [XI Cultural Property (OPN 11.03, beingrevised as OP 4.11) [I [XI Involuntary Resettlement (OP/BP 4.12) [XI [ I Indigenous Peoples (OD 4.20, beingrevised as OP 4.10) ** [ I [XI Forests (OP/BP 4.36) [ I [XI Safety o f Dams (OP/BP 4.37) [ I [XI Projects inDisputed Areas (OP/BP/GP 7.60) * [I [XI *Projects on International Waterways (OP/BP/GP 7.50) [ I [XI Bysupportingthe proposedproject, the Bank does not intend to prejudice the final ** determination o f the parties' claims on the disputed areas. Inthe context of Chinaprojects, indigenouspeoplesrefer to ethnic minorities. 7. PolicyExceptions and Readiness The project has obtained a waiver from BankManagementwithregards to the current BP 4.01 requirement relating to translations o f EL4reports. Chinese language EIA andRAP reports have 16  beenprepared for project activities proposed ineach city; and havebeenreviewed and disclosed separately in each project city and inthe Bank Infoshop as appropriate. Inaddition, a Consolidated EL4 and EMP for the project covering all cities, and a Summary RAP for the entire project, have beenpreparedinEnglishand disclosed. These documents include detailed findings and recommendations, andaddress in sufficient depthand detail all the critical issues and data needed to support their findings and recommendations. BankManagement i s satisfied that on the basis o f staff review o f these documents, as well as a review o fthe local language reports by qualified country office and international staff, that the Bankhas complied with the review obligations set out inOP 4.01 without the need to resort to translate all o f the detailed city specific reports into English. Inaddition, Bankmanagement i s satisfied that the Bank would meet the disclosure objectives set out inthe policy through disclosure of the above English language documents, together with the disclosure o f city specific EIAs, EMPs andRAPSinthe Chinese language. The project will comply fully with all other Bank policies. The project meets regional readiness criteria for implementation. 17  Annex 1:Country and Sector or ProgramBackground CHINA:China-LiaoningMediumCitiesInfrastructureProject Northeast China, specifically the provinces o f Liaoning, Jilin and Heilongjiang, constitute the country's old industrial base with a population o f 107million, and a gross domestic product (GDP) o f Y 1,500 billion. As a result o fheavy state investment inthe 1950s, by 1957, over one- quarter o f China's entire industrial stock was concentrated inLiaoning province. However, the economic base o f heavy manufacturing andprimary industry, largely operated by SOEs has had mixed success inadapting to the emerging market economy inthe last three decades. Though the annual GDP growth for all three provinces averaged 8-10% inthe period 1980-2004 (with an average o f 9.3% annually for Liaoning), growth has been insufficient both inmeeting public expectations and ingenerating adequate employment for the urban workforce. Indeed, despite significant GDP growth, due to lay-offs from SOEs, urbanemployment growth inLiaoning province inthe period 1999-2003 has been negative 2 percent. Inresponse to the northeast's lagginggrowth, particularly when compared to the fast growing coastal regions o f the southeast, the State Council launcheda program inOctober 2003 to "revitalize" northeast China andthe old industrial bases. Government has asked the Bank to finance investments and provide policy advice to support the government to develop and implement its strategy for revitalizing the northeast. The Bank's policy work included an investment climate study, which found that northeast cities laggedbehind other major Chinese cities (particularly coastal cities) inurbaninfrastructure indicators including roads, tap water and waste water treatment. The report concluded that "continued investment inurban infrastructure i s likely needed to enhance the appeal o f northeast cities to investors; especially foreign Investment inurban transport and infrastructure has been shown to support growth.. ...In investors. ..investment inurbaninfrastructure may counteract the emergence o f local poverty. addition, greater reliance on private providers o fpublic services can help to increase competition, counteract urbanpoverty, and enhance the quality o f life innortheast cities".' This project i s the first ina series o fthree plannedurbaninfrastructureprojects that focus on urbaninfrastructureimprovements and service delivery reforms inthe medium size cities o f Liaoning province. It will be followed byprojects that focus on urbanenvironment (water, wastewater and solid waste) and urbangas and heating. UrbanTransportIssuesinChina Overview. This assessment summarizes the Bank's experience withurban transport inChina- twelve urbantransport projects completed or underway, as well as considerable analytical work carried out. Considerationo furbantransport tends to be dominated by a focus on investment, particularly the construction o fnew roads. (There i s also an interest ininvesting inmetros, although this i s balanced byNDRC guidelines on the criteria municipalities have to meet before they can launch studies on metros). Road maintenance i s generally underfunded. Untilrecently, public transport was given little encouragement except for revenue subsidies and some limited China: Facilitating Investment and Innovation. A Market-Oriented Approach to Northeast Revitalization. Report 34943-CN. Poverty Reductionand Economic Management Unit,East Asia and Pacific Region. World Bank. February 15,2006 18  capital works funding; however it i s now a focus o f attention following the issue o f State Council Opinion #46 o f October 2005 "On the Opinion on UrbanPassenger Transport Priority Development." While individual cities were tryingto deal with traffic safety, it was not untilthe NRSLwas passed in2004 that the necessary legal and institutional arrangements to address the issue were inplace. Traffic management has gradually been improving as more andbetter trained staffjoined the Traffic Police, and through various national programs such as the "People First" Initiative. Withincrease incar ownership andusage, emissions from vehicles form an increasingshare o ftotal emissions at the city level. Concern about emissions from motor- vehicles i s rising and many cities now have inplace some kindo f Motor Vehicle Emission Control Strategy (MVECS). RoadNetwork. Concerned with the increasingnumberso f cars on the roads, leaders and professionals alike have focused on increasingroadnetwork capacity through new construction, or by reducing the amount o f road space available for NMVs. However few cities seem to follow a systematic approach to investment decisions, which seek to identify problems, examine options, select the most cost effective solution, and then produce a time basedprioritized investment program. Many wish to: (a) buildroads into areas designated for development, in order to use the money from landsales to finance more road construction; (b) build the roads shown inthe master plans far earlier than requiredto cater for travel demands; or (c) buildurban ringroads parallel to and a short distance from expressway ringroads, arguingthat the traffic functions are different. Transport models and other planning techniques which would correct these tendencies are increasingly being used, but their role indecision makingi s still limited. Roadinvestment has also focused on primary roads, rather thanbeing used to strengthen the networks as a whole - including secondary and local access roads. This i s inpart due to the road networks being seen interms o f engineering design standards that have to bemet, rather than in terms o fthe functions the roads perform. The concept o f a functional road hierarchy i s not yet fully understood. Multilevel interchanges are often sought by leaders when singleflyovers or even signal controlledjunctions would be more cost effective, and less intrusive on the urban environment. RoadMaintenance. Routine and periodic maintenance o f roads has been accorded a lower priority inthe use o f infrastructure funds thanroad construction. On average a city budgets about 50% o f the amount considered necessary to maintain the network ingood condition. This money i s usedto maintain the most heavily trafficked roads -the primaryand secondary roads - themajority o fwhich are kept ingood condition. However, this has still meant that much maintenance i s deferred untilfull reconstruction becomes necessary. To improve budgeting (and to allow multi-year budgeting), and undertake maintenance on a more systematic needs-based approach, cities are increasinglyusingmaintenance management systems. Simple paper based systems are quite adequate initially (especially insmaller cities) to learnthe business process. InformationTechnology based systems are being introduced, but without adequate understanding o fthe key functional requirements, or business processes being adjusted, or people trainedto make most cost effective use o f them. Inthe past allmaintenance work was carried out in-house. Inorder to increase the cost effectiveness o fmaintenance, efforts are now underway to separate the "government" function 19  (of planning, programming, budgeting, quality management and contracting actual maintenance work) from the teams actually undertaking the work. The teams undertaking the works are being transformed into road maintenance "companies" and are being asked to bid for the works. PublicTransport. Buses constitute the majority ofpublic transport service inChina, and form the backbone o f the passenger transport network ineven quite large cities (for example Wuhan and Xi'an). Rail-based passenger transport services are limitedto a small number o f the largest cities (e.g., Beijing, Shanghai, and Guangzhou). The bus network i s generally extensive even in cities that have rail systems, but quite often i s not well matched with the developing parts o fthe city and the changing travel and residence patterns. Much o f the public transport supply i s still provided by SOEs or joint-ventures where the state has majority stake. Internal reforms inthe last decade have ensured relatively low staffing levels and inmost cities bus companies runon little or no subsidy. However, there has beenrelatively little modernization o fmanagement methods, operational systems, maintenance practices, or use o f Intelligent Transport System (ITS). As motorization rates increase, even though a majority o fresidents do not have access to private vehicles, bus speeds inincreasingly congested streets are falling and there i s a pressing needfor on-street priority. Though operators have been able to finance bus replacement with loans from local banks, they generally do not have adequate depot facilities for storingbuses overnight, funds for maintaining them, or informationtechnology equipment for routinebusiness, maintenance and operations functions. Limitedmoney has been invested inother public transport infrastructure, e.g., interchanges, passenger information systems. Bus priority andbus rapid transport have been tried and sustained inonly a few places. This situation should change with the issue o f State Council Opinion #46 which requires local governments to give more priority to public transport indecisionmaking andallocation offunds. Industryreform is still inits early stages. Separation o fthe "government" functions (of policy, planning, regulation, procuring services Erom operators, and quality management of service delivery) from the bus operators i s underway. Cities have started enterprise reform - transforming the bus companies from municipal government departments into SOE "companies", and trying to attract "non-public" capital to invest inthem. However, government regulatory andprocurement functions need further strengthening; too often the new "investors" ask for (and all too often havebeen given) thirty year operating franchises to operate the system with few safeguards built-into protect the municipality or the traveling public, Traffic Safety. The magnitude o fthe traffic safety probleminthe project cities, and China in general, is dauntingly stark inthe context o f fatalities and injuries. There has been a sharp increase inroad traffic accidents and casualties inChina since the mid 1980s. During2005, there were 110,000 fatalities inChina; Le. `Evevyfive minutes, every day of the year, oneperson is killed in trafic accident in China. ' In 2002, for every 10,000 registered vehicles, there were 13.7traffic accident deaths inChina, comparedto 1.6 fatalities inthe UnitedStates o fAmerica, 1.4fatalities inCanada, 1.2 fatalities inAustralia and 1.O fatality inUnited Kingdom. Thereasons for this highrate o ffatalities are many and complex. Untilrecently, road safety was not a focus for any of the national, provincial or municipal government institutions or agencies; 20  rather, most o f the attentionplaced on managing the road network was on increasing efficiency for motor vehicles. Indeed, duringthe past 15 years, motorization has been equated by many to modernization, and despite comprising a large majority o fthe traffic stream, pedestrians and bicyclists have often been considered byplanners and local leadership as a nuisance and a symbol o fbackwardness. Consequently, they have been accorded second-class status on the roadnetwork, as cities have investedheavily innew infrastructureto accommodate motor vehicles. Secondary road systems, o f critical importance for NMVs, have been neglected and have fallen into disrepair. Sidewalks are in similarly indifferent condition, with encroachment by commerce andparkedprivate autos a common problem. This has focused all traffic, motor vehicles as well as bicycles, onto the major arterial system. Facilities for bicycles have suffered significantly. While conditions for bicyclists inChinese cities are better than inmany parts o f the world -physical segregation between MV and NMV traffic on major roads i s common-recent trends have generally been unfavorable. At worst, some cities (such as Shenyang, the provincial capital o f Liaoning) have removed dedicated NMV facilities from the network infavor o f expanded motor vehicle lanes. A common problem i s that the effectiveness o f dedicated sidewalk and bicycle facilities, even where they exist, i s limitedby a management focus primarilyon motor vehicles: encroachment during construction is common, there i s patchy attention to issues such as snow removal and removal o f debris, and increasingly there i s a problem o f illegal parkinginbicycle facilities. Conditions for bicyclists and pedestrians are particularly poor at intersections, where the guidingmanagement principle has been to facilitate higher speeds and flows for motor vehicles. While moderntraffic management technologies, particularly for intersection management, are being used and are becoming common, their benefits have not been felt by the majority non-auto usingpublic. The focus o ftraffic management efforts has beentechnological, onhigh-tech control facilities. Use o fjunction channelization and other techniques to reduce conflicts and improve conditions for all roadusers has been limited. Traffic police have invested considerable funds inbuildingmodemtraffic management command centers, areatraffic control (ATC) systems, and closed circuit television (CCTV) cameras. While these technologies can have an important role inensuring safe and efficient traffic outcomes, to date their use has primarily been to facilitate motor vehicle flow. Inthe case o f A T C systems and traffic signals, pedestrian and bicycle friendly uses such as pedestrian signals, signal phasing (specially targeted towards bicycles and pedestrians) or facilities such as mid-block pedestrian crossings, are rare. The net result has been a facilitation o f higher MV speeds, reduction o f space for NMVs, and more traffic, which has ledto the very serious safety problems for all road users. Untilrelatively recently, anytraffic safety initiatives, includingaccident analysis, remedial measures and roaduser education, were generated by the traffic police and were local inscale. However, inrecent years there has been a growing realization o fthe importance and scale o f the traffic safety challenge and a growing focus on this issue culminating inthe passage o f the NRSL. TheNSRL, implementedin2004, provides a welcome institutional and comprehensive focus on traffic safety. To implement the law, RSCs are being set up at different levels o f government to coordinate safety initiatives. These RSCs provide an institutional anchor around which traffic safety strategies have started emerging. 21  Air Quality Management. Emission standards for new vehicles and the timingo ftheir introduction are set nationally by SEPA. Cities are responsible for enforcing standards, including for in-use vehicles. Manycities have developed MVECS, but o f uneven quality and with variable results inimplementation. With growth incar ownership andusage, more effort and investment will beneeded for monitoring and inspection and maintenance. Guidelines are required to help cities prepare MVECS and to ensure cost effective inspection and maintenance. Project City Background This project supports the development o fthe urbantransport systems inthe municipalities o f Benxi, Fushun,Jinzhou, Liaoyang, and Panjin. Basic data for the involved cities i s shown in Table A1.l. total population inthe five municipalities i s around 10million people, while The the six cities involved inthe project have a total o f 4.2 million urbaninhabitants. Total GDP for the five municipalities reached Y 164billion in2004. Table Al.1: Project City Demographics Population 2004 GDP 2004 GDP Per capita Total Urban w 107 (Yuan) Benxi 1,570,000 950,000 29,360 18,701 Fushun 2,255,000 1,428,000 37,500 16,630 Jinzhou 3,075,000 872,000 33,700 10,959 Liaoyang 1,823,500 715,000 29,000 15,903 Dengta n.a. 70,000 n.a. n.a. Panjin 1,244,000 575,000 34,107 27,417 Total 9,967,500 4,610,000 163,667 16,420 All o fthese cities are industrial cities, built around a small core o fheavy or primary industrial enterprises. Table Al.2 summarizes their economic base, growth trends and recent economic performance. The cities have had mixed economic results inthe recent past: they have seen very higheconomic growth inthe last year; however, all but Panjin (which is home to one of China's important oil fields and refinery) have seen their share o f the provincial GDP reduce in the past decade. The table also illustrates that urban infrastructure funding for the medium cities, on a per-capita basis, i s generally around halfthat o f Shenyang and Dalian, where much o f the economic growth inthe last decadehas occurred. 22  11 Ti )le A1.2: Proj ct Cities: I :onomic Characteristics GDP Percent of Provincial I Urban Construction I City Key Industries growth G 2003-2004 1990 Annual RMB-ca ita Large Cities Shenyang 20.9 24.4 1,339 Dalian 18.5 23.9 1,258 ~ MediumCities 1.Benxi Steel 14% 4.0 2.Fushun Coal 15% 6.6 3. Jinzhou Heavy Industry 16% 6.0 4. Liaoyang Chemicals 16% 4.3 5.Panjin Oil 8% 4.3 Overview of Transport Conditions Motor vehicle ownership i s growing inall o f the cities, but motor vehicles per 1000 inhabitants rates (including motorcycles) for the five municipalities remain low (see Table Al.3). Except for Jinzhou, motorcycles ownership i s restrictedinthe project cities and i s not a significant factor in thetransport system. Benxi Fushun Jinzhou Liaoyang Panjin MVI 1000persons (2005) 33 52 129 93 97 Annual MV growth (1996 2004) 2.6% 1% 2.2% 0.7% 2.1% Total growth 1996 -2004 23% 8% 19% 5yo 18% Walking, cycling and bus riding accounts for more than 80 percent o f daily trips inall cities as can be seen from Table Al.4. Modal Split 2005 Benxi Fushun Jinzhou Liaoyang Panjin Walk 60 41 33 33 37 Bicycle 7 19 41 43 27 Bus 19 29 12 14 16 Others 14 11 14 10 20 The road network inall o f the cities is focused on a small number o f arterial roads where most traffic, regardless of mode, i s concentrated. Branch roads and alleys have little continuity across main streets, and arejust usedto increase traffic levels o f all traffic on the arterials. The road network as a whole i s inpoor condition (see Table Al.5 below), a problem especially acute on the secondary and branch road systems. Facilities for bicyclists andpedestrians are limited even on the arterial road network (see safety discussion below). The condition o f the roadnetwork significantly reduces its effectiveness inproviding safe accessibility and mobility. The majority non-auto usingpopulation i s disproportionately affected. The poor condition o f the road network, especially the non-arterial network, impacts the safety o f the bicyclists and pedestrians who depend on this system for last-mile access. Lower travel speeds (due to poor road 23  conditions) also make bus service less attractive and less competitive; passengers see increases in travel times and operators see increased operating costs. Inaddition, all ofthe cities havebottlenecks that limiturbanconnectivity and constraintheir access to the expressway system. InFushun, Jinzhou, Dengta and Liaoyang, and Benxi, railway crossings are a major issue inthe urban roadnetwork, creatingbottlenecks within the city (as in Fushunand Benxi) or inthe city's accessto the intercity expressway system. The master plans inall the cities are heavily expansion oriented, even whenrecent population growths are small (with the exception o f Panjin), and highly car-oriented, although car users represent a minor part o f people traveling within the cities. However, the master plans also call for addressing key access bottlenecks, and call for significant upgrading o f the roadnetwork within the city to complement anurbanrenewal process. A briefcharacterization ofthe roadnetworks ineach city that identifies key transport bottlenecks follows. Benxi. The Taizi River runs from the northeast to the southwest through the urban area and divides the city into two parts, both o fwhich are heavily developed. The Taizi River and a set o f mainrailway lines together constitute a major barrier between the two parts o fthe city. There are no roads connecting industry north o f the river to the expressway system. Inthe urban area there are only two bridges crossing the river, Caitun and Xihu. Both were built inthe 1930s and have three metric ton load limitations. Congestion on bothbridges i s significant andthe lack o f adequate river crossings i s a significant impediment to connectivity inthe city. The road network i s heavily influenced by the mountainous area inwhich it i s built. Fushun. The HunRiver runsthrough the city from east to west, conditioningthe city structure: 30 km along the river, 6 - 8 km across the river. There are nine bridges across the HunRiver. The roadnetwork is mostly river oriented, with some exceptions where other naturalbarriers (such as the coal mine) make changes init. Fushunparticipated inthe recently completed LUTP, which financed a series o fmajor east-west roads, including the HunheNan Road, south o fthe river and river crossings. Most o f the city's road system i s inrelatively good condition, partially as a result o f LUTP. However, the city's access to the newlybuilt Shenyang - Dalian expressway, via the Gebu corridor i s poor and needs upgrading. Additionally, the road network inthe northwest ofthe city, ahistorically poor area, is poor andis inneed o frenewal. Jinzhou. The mainurban area o f Jinzhou i s divided into three parts, separated by the Beijing - Shenyang Railway andthe Xiaoling River. Transportation between the three parts i s accomplished primarilythrough five existing underpasses and five river-crossing bridges, including one railway bridge. Existingrail underpasses suffer from severe congestion and have some clearance limitations, making it difficult to connect the north and center o f the city. The historical core o f the city i s north o f the Xiaoling River, and the city has ambitious expansion plansina southward direction. These plans include the development o f a new township five km south o f the existing city at Nanzhan (inwhat is currently agricultural land) providing a new high-speed passenger rail station on the Beijing - Dalian line, and further developments towards the port on the Bohai Sea, a further 15 km southward. Liaoyang. The current developed city lies mainly between main rail lines inthe west and the Liao River that runs from north to south on the east. The city master plan calls for expansion 24  east of the river, while some new developments are also planned west o f the river. Rail lines form a barrier between the central part o f the city andthe western outskirts. Both o f the city's main access points to the expressway are also west o fthe rail lines. This rail line is crossed by two mainunderpasses (Beiyuan andXuwangzi) with congestion problems and difficult access in winter due to a combination o f frost and highslopes. The roadnetworkinthe downtown area presents basically a gridiron shape, and has already been formed by three W E arterial roads (Zhonghua Street, Xinyun Street and Nanjiao Street) and four N- S arterial roads (Tiexi Road,- MinzhuRoad, Xinhua Road and WenshengRoad), completedby three W - E secondary roads (Beishao Street, Qingnian Street and Nanjiao Street) and another three N- S secondary roads (Shengli Roads, Jiefang Road and Weiguo Road). There i s no ringroad inthe city. The secondary road network (branch and feeder roads) i s poor, particularly inthe northeastern shanty town and inthe southern part of the city. Panjin. Panjin is dividedby the Liao river into an historical core inthe north and new settlements inthe south. Inthe north, the Shuangtaizi district includes the old city with narrow roads, while inthe south Xinglongtai district i s a newly developed area, based on the Liaohe Oil Fields. The city's master planalso considers the growth o f Shuangtaizi district towards the north and inthe southwest. There are two mainbridgesconnectingbothparts ofthe city, the Shuangtaizi andthe Panjin Bridges. The connections betweenthe north and south sections o fthe city need improvement, particularly interms o f improving access to the existingbridges. The Xinglongtai Road, connecting the city to the expressway to the west, needs to be upgraded. Maintenance Issues The five cities exhibit the maintenance issues found inother cities inChina: much o f the network i s inpoor condition due to lack of adequate budgets, limitedmaintenance planning, and low productivity o f maintenance works. Existing Road Condition. As discussed above, the road networks inthe various cities are ina poor condition (see Table Al.5). Drainage and lightingwere mentionedby the public duringthe consultationprocess as two o fthe most visible failures on the road network. ition (March, 2006) Benxi Dengta Fushun Panjin Arterial roadnetwork 54 18 83 73 Secondary road network 43 49 37 34 Branch roads 36 30 37 74 Carriageway 49 49 74 54 Bicycle lanes n.a n.a 82 70 22 25 Sidewalks 70 28 58 62 38 Whole road network 51 45 72 60 33 28 Roads inan unacceptable condition: it is no longer possible to drive safely and comfortably at 40 kmihr during the night under specified weather conditions (excluding heavy rain-showers, fog, snow and ice). The roadhas to allow for safe and comfortable use, within 15 minutes after a heavy rain shower. Bicycle lanes and sidewalks inan unacceptable condition: a person i s no longer able to travel at a normal speed without risking an accident due to the condition of the pavement. 25  Budget. Most cities invest insufficiently inroadmaintenance. Table Al.6 compares the budget allocations with actual maintenance needs duringthe tenth five year planperiod (2001-2005). On average the project cities budget about 50% o fthe amount necessary to keep their network in acceptable condition. This money i s usedto maintain the most heavily trafficked roads -the primaryand secondary roads -which arekeptinabetter condition thenthe rest ofthe network. However this has still meant that muchmaintenance i s deferred untilfull reconstructionbecomes necessary. Jinzhou 49,270,000 333,264,000 283,994,000 Both allocation and demand figures exclude maintenance o f structures. Source on demand: Panjin, municipal maintenancedepartment; other cities, WorldBank analysis. Demand assessments prepared on basis o f standard maintenance cycles. These figures present benchmark values for budgets for the current assets (pavement Y 13/m2/year; streetlights Y 1000ipieceiyear; and drains Y 25,000ikmiyear). As Table Al.7 indicates, allocations for roadmaintenance are increasingslowly; the commitments for the coming five years reflect partially the Bank's engagement with the cities to raise awareness o f the importance o f roadmaintenance. Table A1.7: Project Cities: Recent RoadMaintenance Budget Allocations and Year Plan llaintenanc Year Benxi Fushun Jinzhou Liaoyang Panjin 2001 20.04 9.50 8.24 n.a. 7.34 2002 22.37 7.20 9.13 n.a. 8.35 2003 26.82 5.00 9.24 n.a. 13.32 2004 36.29 143.50 11.24 n.a. 11.24 2005 33.11 147.80 11.42 n.a. 8.37 2006- 54.00 295.00 146.00 75.20 124.00 2010 (planned) I MaintenancePlanning. Allocations for road maintenance also suffer from poor levels o f planningand supply of information from the maintenancedepartments to the decisionmakers. With exception ofPanjin, the maintenance departments develop their plans only after the budgets have been allocated. (Panjin develops a budget request and subsequently prioritizes maintenance works on the basis of allocations). Budget estimates are based on coarse standardized estimates and are not based on any real estimate ofthe state and needs ofthe system. There is a needto develop maintenance management methods that can be usedto buildmore credible, transparent budget estimates, which could beused to ensure that adequate resources are available for the real maintenance needs. Implementationof Works. Maintenance works are largely carriedout bymunicipal maintenance companies, of which there i s one per city. Within the municipal maintenance departments, the separation o f the "government" functions o fplanning and budgeting, and the "enterprise" functions o f implementation, are at an early stage. The cost-effectiveness o f 26  implementation o f road maintenance works varies considerably. Table A1.8 presents aggregated costs for typical maintenance works. These prices are higher than compared to similar works in the United States, where prices for overlays andmill andreplace works are about 90 to 100 ~ ~ $ / r.iin 3 Table A1.8: Unit Costs for TvDical Road Maintenance Works Benxi Dengta Fushun Panjin Jinzhou Llfaoyang Current average cost (US$ per cubic meter) 107.8 141.7 102.7 149.4 100.4 121.2 The Government has enacted several laws to improve the cost-effectiveness o f road maintenance. Two reforms are ofparticular interest. The procurement and relatedlaws aim to increase competition betweenproviders o f civil works (including maintenance) and recommend adopting competitive biddingprocedures. Inaddition, the Government has instructed cities to improve productivity through separation o f ownership and management authorities. As Table Al.9 indicates, the Project cities are inthe midst o fthis reform and it is expected that the combination o fmore commercial SOE management and competition among civil work maintenance providers will result insignificant productivity gains and cost reductions. Share of 2005 Maintenance City LegalStatus of RoadMaintenance ContractsAwarded to City Company SOE Benxi Commercialized SOE with legal monopoly 100% Fushun City division commercialized in2004 43% Jinzhou 7 SOE contractors, 2 supplier SOEs - all 100% commercialized Liaoyang Commercialized entity with hybridstock - 100% based employee ownership Panjin Unit ofcity-not commercialized 70% Traffic Safety and Traffic Management Fatality Rates. The sustained motor vehicle growth inrecent years (though at levels significantly lower than the national average) has resulted inparticularly severe safety issues, especially for the vulnerable roadusers: the pedestrians and cyclists. As the fatality rates in2005 (see Table A1 .lo) suggest, this i s a particular problem inurban areas where fatality rates are significantly higher thanthe national average o f 9.9 fatalities per 10,000 motor vehicles, and a substantial number o f those impacted are the vulnerable road users and the poor. ' l1Source: Table 14 o f Asphalt Overlay Effectiveness: Minnesota Department o f Transportation, October 2000. (adjusted for inflation at 3%) ht~://nt1.bts.~ov/1ib/11000/11500/11592/2000-3.pdf 1 27  Table A1.lO: Project Cities 2005 Fatality Rates I Benxi I Fushun 1 Jinzhou 1 Liaoyang I Panjin Fatalitiedl0,000 Traffic Management: Equipment and Methods. Utilization o f traffic control and management equipment lags motorization levels inthe project cities. None o f the cities except Fushunhave ATC systems, additional traffic signals are requiredinall the cities, and the traffic control command centers inall o f the cities needmodernizing and upgrading. InBenxi, Jinzhou and Panjin, the existing closed circuit television (CCTV) equipment i s dated andthere i s a need to add more units to facilitate the efficient functioning o fthe traffic control command centers. Several major intersections would benefit from redesigninlight o f current traffic volumes and muchmore can be done to provide effective separation between motorized and NMVs along major arterials. Parking has become a serious problem due to an absence o f a clear parking policy, limited availability o f legal parking options and low levels o f enforcement (inpart due to unclear regulations). As a result, it i s not uncommon to find MVs parked on sidewalks andbicycle lanes, thusrequiringpedestrians to make detours onto the roadway andMV lanes, inevitably exposing themselves to highsafety risks. It i s estimated that demand exceeds supply for parkingby 6,000 spots inthe center o f Panjin and 7,000 spots incentral Liaoyang. Inrecent months, cities have started examininga combination o fmeasures, including the provision o f additional legal parking spots, andreinforcement o f enforcement standards (inthe last 6 months o f 2005, the traffic police inFushunand Panjin issued 16,000 and 22,000 citations for parking and traffic violations, respectively). As the initial challenges related to staffing, authority to levy penalties and operational regulations are clarified, the effective enforcement and collection o fpenalties should get sorted out. However, the cities are a long way away from developing a comprehensive parkingpolicy that balances the needto accommodate cars, with the development o fincentives that promote instead a culture promoting the use o f public transport and NMVs inthe central city areas. Traffic Law Enforcement. There i s also a need to complement investments intraffic control equipment with additional staffing andtraining to ensure effective enforcement. With the promulgation o f the NRSL, the province and the cities are slowly sorting out various regulations (detailed enforcement andpenalty procedures) with regard to drivers and vehicles (moving violations and parking). For example, inFushun, the regulations governing parkinglaw enforcement and penalties were published only on March 15, 2006. This process has beenunder way since October 2004 andit i s expected that all the project cities would have issued their regulations by mid2006. Traffic Safety Education. Since October 2004, the RSCs inall the project cities have been aggressively promoting the education o f all road users (MV drivers, pedestrians and cyclists), with regardto the provisions o ftraffic behavior andthe relatedpenalties for violations. The initial emphasis was on teaching traffic safety andtraffic law education through schools (students and parents), and then moving on to employees at various work unitsand later through 28  general publicity, advertisements, mobile vans with messageboards and cartoons. This effort appears to be quite successful, though its impact i s difficult to measure. InstitutionalArrangements. Prior to the promulgation o f the NRSLinMay 2004, institutional fragmentation and the lack o f a single agency that had the appropriate institutional authority or responsibility to address safety related concerns limitedthe development o f effective safety strategies inthe project cities. Construction, design and maintenance o fthe road network are the responsibility o furban constructionbureaus and committees that havebeenprimarily concerned with buildingnew infrastructure. Coordinationwith the traffic police, who haveresponsibility for traffic management, enforcement and safety, has been limited. However, the new NRSL focused top decisionmakerson traffic safety needs. Detailed implementationregulations require provincial and local governments to establish multi-agency RSCs to implement the law effectively. InLiaoning, the RSCs were set up at the provincial and municipal level inall the project cities inlate 2004 and they are now getting off the ground to take up the traffic safety challenge. These committees are multi-agency and multi-disciplinary leadership groups. In addition, they are the designated group to be held accountable for traffic safety outcomes within their physicaljurisdiction. RSCs have been set up inall the project cities for the sole purpose o f enhancing traffic safety and traffic management. They have the authority to pull various agencies and resources together to take on this major challenge. They are still inthe incubator stage, willing to make a start but with little expertise and experience. Public Transport Public Transport Services and Operators. Public transport inthe project cities i s generally at a basic level and inneed o f development, see Table A1.11. There are a number o f common characteristics relating to services, operators and industryreform. First, network design i s weak. Network density i s low, routes are meandering (as shownby linearity coefficient), and the percent o f the city within easy walk o fbus stops i s below recognizednorms. The cities have experienced major changes inemployment patterns and levels, residential locations etc. These are being addressed through route extensions, but the core networks have not been reviewed. Service quality appears to be quite variable, andpoor insome locations. Frequencies are low in manycities, even inpeak times. Thismakespublic transport less attractive, particularly for journeys requiring transfers. Buses do not have a favorable on- street operating environment. There i s no effective bus priority and what exists i s not respected. Bus speeds vary from moderate to slow. The poor condition o froad surfaces reduces speeds, damaging buses and increasingtheir operating costs, and makes conditions uncomfortable for passengers. Passenger facilities including stop signs, shelters, interchanges and route termini are not well provided, and inmany cases are below basic minimumquality. 29  within 500 meters of a bus stop Monthlybus 12,000,000 26,666,000 6,330,000 4,319,166 5,370,000 passengers Bus mode share of I 19 I d aI 12.4 1 14I 16.1 OPERATORS Number o fbuses 573 (566 bus, 807+ 516 (425 bus, 374 (292 bus, 326 (165 bus, operated 7 m/bus) 91 &us) 82 &us) 161&us) Buses parked 90 d a 100 30 68 overnight inbus facilities Monthly veh-kms 2,276,873 12,160,000 2,120,000 2,030,000 1,299,432 av. 2005 Annual subsidy None since Y 0.5- 1.0 Y 4-4.5 Y 3 million Y 8.5 million 1995 million mi11ion 1FINANCIALDATA- 1 I I I I I REPORTED SOE Total Annual I 121,000,000 I 196,000,000 I 73,660,000 I 18,925,000 1 29,300,000 Revenue (2005) SOE Total Annual I 129,000,000 I 170,000,000 I 83,670,000 I 20,980,000 I 37,900,000 d a not available SOE Bus Operators are generally marginalor makingmoderate losses. Subsidylevels are modest, and it i s not clear that they are actually paid inhll.SOEs have generally been through internal staff efficiency reform and (on the basis o fthe limiteddata provided) have reasonable staffing levels. However, the enterprise management approach, information systems, operating methods and maintenance methods have not been developed. It is probable that there are still significant cost and quality improvements to be achieved. Maintenance facilities range from basic to poor. There are no modemmaintenance facilities, and even central facilities lack basic equipment such as lifting gear. Engines are being maintained on the ground inthe open. It i s not possible to optimize the value from new bus investment inthese conditions. Depots and other support facilities are not well provided, and 30  inmany cases arebelow basic minimumquality. Overnightparkingon-street is high,upto 70 percent in some cases. Tariffs are controlled and appear to be determined more by the perception o f citizens' affordability rather than the actual costs o f service provision. The bus market is controlled at the moment by SOE operators. SOE bus operators have 100% o f the scheduledbus market in four cities and 65% inthe fifth (Fushun). There i s little effort made to bringinnew operators, except as subcontractors to the SOEs. Insome o f the cities, the minibus operators and small operators havebeen displaced. Characteristics of Passenger Transport Organization and Reform. State Council Opinion #46 provides guidance on market reform, and this i s complementedby an Opinion document from Liaoning Province. To date, there has not been substantial reform inthe project cities, other than inFushunwhere four non-SOE operators have 425 buses and a 27.6% share. Bus service inthe other project cities i s operated bymonopoly SOEs. There are policies inplace to open the market for other operators, but no practical mechanisms to do so. SOE ownership reform i s centered on: 0 Transfenring ownership to management and employees (already partially done inPanjin); 0 Nominal effort to find external investors, but no visible interest to do so andno achievement to date; 0 Maintaining the company as a single entity; and 0 Granting lengthy franchise to the SOE for the core network, and favorable conditions to win any newroutes. This creates the conditions where monopoly companies either inpublic or (quasi-) private ownership will totally dominate the bus market, and where the real market for bus services i s effectively closed for periods o f 8, 16 or 30 years. The specific situation inthe cities i s summarized inTable Al.12. 31  Table A1.12: Public TransDort Reform BENXI FUSHUN JINZHOU LIAOYANG PANJIN SOE Reform- Planto sell or Open the Transform Plan to sell or Corporatised status and transfer stock to company to ownership in transfer stock in2004,49% plans management and investment, aim 2006. Stock to management sold to staff staff. for completion in ownership not and staff in and 2007. clear. 2006. management. External Possible, but Possible, but Possible, but Possible, but Possible, but investors? none identified none identified none identified none identified none identified Market Transformed Mechanism Transformed Multi-operator market would be opening SOE will be already exists. SOE will be established, market to be opened. given 1-2 Four other given 1-2 N o visible mechanisms to protectedyears operators have protected years achieve this since concessions to to prepare. 35% o f the to prepare. SOE haveiwill shut the main market. Existing market. Riski s that private operators will be protected monopolies will be given all their created, withjust a few new current routes. routes occasionally available for Not clear how or bidding to give the appearance o f when open open market. market will be created. Franchise New franchise New franchise Five year Current Agreement agreements agreement will already on two franchise to be network signed in be put inplace to routes; all to be granted to new granted to 2004. Gives cover all current on new basis by SOE, andto SOE, creating effective networks. end-2006. subsequent monopoly on monopoly on Duration 5-8 franchises. core routes. current routes years. Duration o f to SOE for concession is eight years unclear. Future with right o f franchises 5 - 8 renewal. years. Air Quality andMotor Vehicle Emissions Control Ambient levels of particulate emissions are highin all of the cities, however vehicles are not considered a significant cause o f air pollution. Motorization levels inall project cities are low. Table A1.13, which shows the number o f cars, trucks and motorcycles inthe urban areas o fthe project cities, indicates that though motorization i s increasing, in2005 the cities had less than 50,000 cars and less than 20,000 trucks. Furthermore, all the project cities are industrial, with significant heavy and extractive industries. 32  City Trucks Cars Motorcycles Benxi 8,636 18,75 1 2,247 Fushun 12,199 42,638 18,919 Jinzhou 10,884 39,442 61,860 Liaoyang 19,084 19,133 28,474 Panjin 17,486 28,868 9,534 All the project cities arebeneficiarieso f aprovincial vehicle inspection andmaintenance program. As part o f a pilot initiated by SEPA, Liaoning Provincial Environmental Protection Bureau(LPEPB) i s establishing a province-wide vehicular inspection and maintenance systemto ensure that all registered vehicles inthe province will undergo periodic inspectionina regime where inspection and maintenance operations (I/M)will be independent o f each other. The program will initially be piloted inthe14 largest cities o f the province (including all the project cities) and will have the following key features: Unified planning, standards, supervisionand specifications. Inlinewith international practice, cities willuse anadvanced inspectionmethodto monitor the emission loads instead o f concentrations andwill be able to determine compliance status to the latest and fbture load based emission standards (e.g., Euro I11and IV). Theprivate sector will be invited to bidfor the construction o finspection stations and operations based on concessionary terms; the government will not finance capital investment and/or facility operations. A motor vehicle emission control center has been established under LEPB to coordinate, supervise, and guide the establishment and long term operations o f the I/Msystem. Some o f the cities have already established motor vehicle emission control offices, under their respective municipal Environmental ProtectionBureaus (EPBs). The provincial center will provide guidance and assistance to, as well as be a coordination center for, the municipal offices. The province will also establish a system for the management o frepair andmaintenance o fthe I/Mprogram. A keymanagement tool willbeto accredit repair shops basedontheir technical and equipment capabilities for emission retrofitting. The province will also provide supervision of the repair operations and technical staff training and examinations. The provincial government has established the necessaryregulatory framework for the I/M system. Regulationrequiringall motor vehicles to go through annual emission inspections as a condition for registration renewal i s already inplace. A fee o f Y 40 per inspection has been set inacircular issuedjointly bythe LPDF andPrice Bureau. The LPEPB has started implementing this program and the Bank i s providing themtechnical advice and guidance. 33  The specific plan i s to establish the province wide I/Msystem intwo years. As first steps, the largest six cities (including two o fthe project cities) will start construction in2006. The remaining cities will buildtheir systems starting the second halfof 2006. 34  Annex 2: M a j o r Related Projects Financed by the B a n k and/or other Agencies CHINA: China-Liaoning Medium Cities Infrastructure Project Sector issue Ongoing projects Latest supervision (PSR) ratings Implementation Development Bank-financed Progress (IP) Objective (DO) Addressingurbantransport needs ShanghaiMetropolitan S S inacomprehensive manner: Transport Project I 0 Selective road investments (completed) to enhance capacity and Shanghai Metropolitan S relieve bottlenecks. Transport Project I1 0 Public transport (completed) investments and support to Liaoning UrbanTransport S policy, operations, and Project (completed) planning. Guangzhou City Center S 0 Traffic management safety. Transport Project (on-going) 0 Development of amotor UrumqiUrbanTransport S vehicle emission control Project (on-going) strategy. Shijiazhuang Urban S Transport Project (on-going) 0 Roadmaintenance. Wuhan UrbanTransport S 0 Training and capacity building. Project (on-going) Supportingperi-urban expansion FuzhouPeri-urban and coordination with transport DevelopmentProject (on- and urbanplans. going) UrbanEnvironment Liaoning Urban S S InfrastructureinLiaoning Infrastructure Project Liaoning Environment S S Project Liao River BasinProject H S H S Other development agencies Japan Bank for International Cooperation (formerly Overseas Economic CooperationFundof Japan) 0 ShenyangAir Pollution Control Project, Phase I(under implementation) 0 Water Source PrograminYingkou (under implementation) 0 Environment ImprovementProgram inShenyang, PhaseI1(under implementation) 0 Integrated Environment Improvement PrograminAnshan (under implementation) Asian Development Bank 0 Shenyang-BenxiExpressway (completed) 0 Yingkou Port (completed) 0 DandongPort (completed) 0 Dalian Water IntakeProject (completed) 0 Liaoning Environmental Gas and Heating Project (under implementation) PSR: Project Supervision Report. S: Satisfactory 35  Annex 3: Results Framework and Monitoring CHINA: China-Liaoning MediumCities Infrastructure Project Results Framework Project development Outcome indicators Use of outcome information objective The objective ofthe Project is to Those relating to the performance Supporting local government assist the Borrower's Project Cities of the road network, measured decision-makers inmanaging the inenhancing: through: urban transport systemo f the cities on a continual basis (a) the performance and quality o f (a) satisfaction levels with transport their existing urbantransport facilities (mobility, access, infrastructure interms o f safety) expressedby a panel o f mobility, access, and safety; public participants; (b) the efficiency and effectiveness (b) the percent ofthe roadnetwork o f their urban public transport functioning as an all-weather and road maintenance services; road; and (c) weighted travel time for all users (c) the responsiveness of their (bicycles, cars, bus, pedestrians) urbantransport systems to the over a selected set o f travel needs o fpopulation without itineraries; access to private motorized (d) number oftraffic accident vehicles. fatalities; and (e) use o f open competitive bidding methods on a pilot basis to award maintenance contracts. Those relating to public transport services, measured through: (a) satisfaction levels with public transport services, expressed by a panel o fpublic participants; (b) competitive award ofbus route franchses to multiple independent operators on a pilot basis; (c) improved level o f bus service (measured by number o f bus passengers and vehicle kmo f revenue service) inat least one project city; (d) network coverage o fpublic transport, measured inroute km per square km; and (e) adoption o f effective bus priority measures (as measured by difference inthe operating speeds along priority sections). 36  Intermediate results, Results indicators for each one per component component Use of results monitoring ComponentOne Component One ComponentOne RoadInfrastructure and Completion o f the works Monitoring implementation progress Reconstruction Component and action planto addresspossible delays ComponentTwo ComponentTwo ComponentTwo Secondary RoadRehabilitation and Completion o f the works and Monitoring o f implementation Road Maintenance Equipment successful procurement o f goods progress and action plan to address Component possible delays ComponentThree Component Three ComponentThree Public Transport Component Completion o f the works Monitoring o f implementation progress and action plan to address possible delays ComponentFour ComponentFour ComponentFour Traffic Safety and Traffic Completion o f the works and Monitoring o f implementation Management Component successful procurement o f good progress and actionplanto address possible delays ComponentFive ComponentFive ComponentFive Institutional Development Completion o f studies, training and Monitoring o f implementation Component studytours progress and action plan to address 37  I 1 .-c 3Y Y s ? k t + 00 M 1 P n d  s g g 13 .e i t L  0 d --+  I b ki 3 N 3 I  -x x Y G U 5 3 36 3 8236 2 2 Gae!" !& e 1, 0 3 3 N 3 N N N 0 3 3 0 N N N N 0 c-4 3 0 N 3 N N 0 0 3 0 hl hl N hl 0 0 3 0 N N N N 0 0 0 rc 0  Annex 4: DetailedProjectDescription CHINA: China-LiaoningMediumCitiesInfrastructureProject LMCIP covers the medium-size cities o f Panjin, Jinzhou, Fushun,Benxi and Liaoyang, as well as the county level city of DengtainLiaoyang municipality. It i s a comprehensive urban transport project, with each city targetingcomplementary investments inthe roadnetwork (a road infrastructure and reconstruction component, and a secondary road rehabilitation androad maintenance component), intraffic safety and traffic management, and inpublic transport to achieve the main objectives o f accessibility, safety, and connectivity. The RoadInfrastructureandReconstructionComponent (RI)[US$330.93 million including resettlement costs of US$105.1 million] includes road improvements inthe primary, secondary andtertiary networks that would address current transport problems andbottlenecks. The investments cover 179 kminthe six cities. The focus o f the investment is on the reconstruction o f existing roads, including selective widening that will enhance the performance o f the road network for all users interms o fmobility, convenience and safety. The Institutional Development (ID) component also includes TA related to this component to support continuation and institutionalization ofwork undertaken duringpreparationrelatedto the transport modeling process and public participation inthe transport planningprocess. The SecondaryRoadRehabilitationandRoadMaintenanceEquipmentComponent (RM) [US$113.40 million] will finance rehabilitation o f major segments o fthe participating cities' road network to improve last-mile access to pedestrians and bicyclists, and finance road maintenance equipment. The rehabilitation works cover 280.5 km, o f which 61% are branch roads, streets inneighborhoods and alleys, and 29% are secondary roads. The works can be characterized as routine corrective maintenance without changing the road cross-section. Most o f the roads provide access primarilyfor cyclists andpedestrians andthe works aim to bring back road conditions to original maintainable levels. Inaddition, the component finances equipment usedby the municipal maintenance departments for monitoring, planningand small and emergency maintenance works. The ID component also includes assistance to support effective preventive maintenance planning. The component also supports ongoing reform o f municipal maintenance practices by strengthening city-owned maintenance companies with training(financedbythe IDcomponent) and equipment, prior to supporting cities to divest these companies (as requiredby provincial directives) and contracting out all maintenance activities larger than a threshold value. Project cities will use open competitive procurement procedures for works to invite and select bidders on the self-financed maintenance works. TA support will be provided to the municipal maintenance departments (whose core function will infuture be plannedmaintenance) to implement this reform effectively andprovide advisory supportto the newly formed maintenance companies. Grant TA i s beingsought to explore a framework for performance-based contracting. Bothcomponents include: (a) Provision o fpedestrian and non-motorized transport facilities, traffic management, and traffic safety arrangements, including: (i)physical separation of MV andNMV lanes on 43  major roads; (ii) islands inlongpedestrian crossings; and (iii) safety intersection design based on safety issues. (b) Care onpavement design regardingtraffic loads, drainage and frost considerations due to the extreme winter conditions. (c) Street furniture and accessibility, including the needs o f the mobility impaired (by way o f features such as curb cuts and Braille markings). The Traffic Safety andTraffic ManagementComponent (TS) [US$22.18 million] supports the implementation o fthe NRSLthrough support for enhanced traffic management, monitoring and traffic control systems (including traffic signals and intersectionimprovements) to improve safety and traffic flow. The ID component also supports this component with TA to: (a) support the cities to develop and implement a traffic safety audit program on selected corridors and intersections based on an annual monitoring program; and (b) support training and regional study tours to understand domestic and international experience and good practice on traffic control, enforcement and parking. The component i s consistent with the "People First" policy initiative of the government and reflects the needs o f all road users, particularly those o f pedestrians and cyclists. It i s designed with six objectives: (a) investmentintechnology to modernize traffic control systems; (b) investment inprotecting the vulnerable road users byrationalizingthe allocation o froad space for all modes; (c) effective monitoring o f the traffic volumes (MVs andNMVs) and speed on selected arterial corridors andmonitoring o f traffic volumes (MVs, andNMVs and pedestrians) and time delay for MVs at selected major intersections; (d) mobilizing the RSCs to undertake appropriate traffic management actions arising from the results-oriented monitoring o f traffic safety; (e) effective enforcement o f the NRSLto enhance traffic safety; and (0 effective enforcement o f laws and regulations regarding on-street and off-street parking, particularly MV parkingon sidewalks, andthe invasion o fthe cycle lanes byMVs. Proposed investments ineach city (described indetail later inthis Annex) are based on a traffic safety andtraffic management plan developed by each city that outlined current traffic management practices and identifiedneeds andkeypriorities. Ingeneral, (a) All the project cities will modernize their traffic management equipment and technologies by addingATCs, more traffic signals, redlight cameras, CCTV, and speedmeasuring equipment. New ATC systems are proposed for Benxi, Jinzhou, Liaoyang and Panjin. Fushun,which already has anATC system, is adding 16new signals at various intersections. All new and upgraded traffic signals will have proper pedestrian and bicycle lights andthe relatedtraffic control systems will be re-engineered to accommodate this. (b) Interms o fenforcement and education enhancement technologies, all cities except Fushun will addnew CCTV units, and all except Liaoyangwill add redlight cameras. Traffic management command centers will be upgraded inJinzhou, Liaoyang andPanjin. New electronic sign boards will be installed inall cities except Liaoyang. Fushunwill buy a safety education vehicle. Panjin will procure new mobile speed measurement equipment. 44  (c) All project cities will undertake substantial increases insigns and markings to enhance the preventive element o f traffic management. The project will financejunction channelization and other improvements to ensure safe mobility for all classes o fusers onproject roads, as well as a selected number o f other intersections. All intersections, where signals will be upgraded or new signals installed, will bere-designed and channelizationwill be put into reflect the volume o f pedestrians and cyclists. Proper lane separation will be undertaken at the intersections and inthe vicinity o f these intersections; and safety islands will bebuilt where pedestrian andbicycle volumes are highenough. All o fthe cities, except Liaoyang (where there i s already significant lengtho f lane separation between MVs and NMVs) will undertake lane separation between MVs and NMVs, ranging from 11kminBenxi to 26 km inJinzhou. These investments will be supplemented by a series o f `soft' measures designed specifically to support the city RSCs to implement the NSRL. Traffic safety audits will be conducted on a set of corridors and intersections that are highvolume and/or highaccident prone, and actions taken to reduce the risk o f accidents. Actual safety, traffic flow, andrecords o f enforcement actions (including a summary of red light violations, speed violations, parking violations) for these corridors will bemonitored annually and action plans developed jointly with the RSCs for corridors and intersections where the safety performance does not improve significantly. The action-plans will include changes in enforcement strategies, traffic management, black-spot improvements and other similar strategic measures. Interms o f traffic flow, public transport flows will be explicitly monitored and action plans focusing on public transport oriented traffic management developed to facilitate public transport improvements. It i s expected that the concentration o f effort relatedto improved safety, flow and public transport service would maximize the impact o fthe project on these selected corridors. The Public Transport Component(PT) [US$14.45 million] includes provision o fbus priority facilities and improvements inpublic transport planning and operations inthe project cities. This consists o f investmentsin: (a) public transport infrastructure at bus stops, including bus shelters, upgraded bus stop signage, and busbays allowing buses to pull infrom general traffic; (b) bus interchanges and terminals, with dispatching, parkingand light maintenance facilities, and for use as overnight parking facilities; (c) bus lanes and other bus-friendly traffic management measures; and (d) introduction o f new routes and existing route extensions. These facilities were designed on the basis of trends indemand and service, to address existing problems and taking into account the needs o f the mobility impaired. These investments will enhance the quality, safety and level o fpublic transport services while reducing their operating and maintenance costs. Inaddition, the ID component supports this component by supporting TA related to bus priority, network planning, and support for restructuring o f the public transport industryto increase the role o f the private sector, lower net costs and increase the effectiveness o fbus service. BusPriority Lanes areproposedinBenxi, Jinzhou, Liaoyang andPanjin. Thebudgetedunitcost perkmis based on an expectation o fhighquality design, best practice inroad surface delineation, markings, and curbside/gantry signage, education and training campaigns, and evaluation. The project finances TA for training and study tours to understandoptions and best practice, which will precede implementation o f the bus priority lanes. 45  The InstitutionalDevelopmentComponent(ID) [US$4.85 million] includes project management assistance for LUCRPO, and supports TA to complement the investment components. The latter includes: TA to support public participation duringimplementation; training and assistance relatedto the use o f the transport planning models developed during preparation; training and institutionalizationon preventativemaintenance planningpractices; support for road maintenance reform; support for public transport reform; training and assistance related to bus priority design; training and assistancerelatedto traffic enforcement strategies; and support for institutionalizing traffic safety audits. Theproject has beendesigned at, and will be executed at, the city level. The project includes an overall project management component which i s common to all o fthe cities andwill be executed with the coordination of LUCRPO. Institutional development insupport of individual components has beendiscussed as part o f the respective components. BENXI The Benxi component includes road construction, bridges, associated drainage system, road lighting, andbus stops. The component locations are shown inthe attached city map. BRIC:BenxiRoadInfrastructureandReconstructionComponent(US$41.39 million investment,US$20.75 millionresettlement,andUS$2.90 milliondesignandmanagement fees) The Benxiroadinfrastructure and reconstruction sub-component will support: completion ofthe urbanroadnetwork; improve the network to accommodate increasedtraffic; improvetraffic conditions inthe central area; and strengthen transportationbetween the old urban area and the new developments. As shown inTable A4.1, this includes reconstruction o f 14roads and construction o f 3 new ones (total length 29.4 km)north and south o f the Taizi River (including three creek crossing bridges), andthe Beidi Bridge across the river and main rail lines. Road auxiliary facilities include drainage and street lights inall sub-projects. 46  No. Name Class Length Width Contents I BRIC1 I Huanshan 1 Secondary 1 2.45 I 25 I ReconstructiodlS%newalignment I ~ BRIC2 Guangyu Trunk 1.68 25 Reconstruction BRIC3 Houshi Secondary 2.39 15 Reconstruction/80% new alignment k C 4 I Xihu(Hexi) 1 Trunk I 1.03 I 25 I Reconstruction BRIC5 Shujing Secondary 3.47 20 Reconstruction/ 35% new alignment BRIC6 Xifen Secondary 1.13 25 Reconstruction BRIC7 Jiefang 2ndSouth Branch 1.39 20 Reconstruction BRIC8 Xincheng North Secondary 0.3 20 Reconstruction BRIC9 Pingshanheng 3rd Branch 0.93 15 Reconstruction BRIC10 Pingshanheng 4' Branch 0.93 15 Reconstruction I BRIC11 I Digong I Trunk I 2.45 I 30 1 Reconstructiodl5%newalignment 1 Xihu(Houhu) Secondary 1.79 20 Reconstructiodl5%newalignment I BRIC13 I Liutang II Secondary I1 0.88 I1 18 I1Reconstruction II BRIC14 Meitie Jie Secondary 1.15 17 Newroad BRIC15 Huazhong Secondary 0.58 30 Newroad BRIC16 Beishan Secondary 2.68 20 Newroad I RRTC17 I I BRIC18 I Oianiin I Trunk I 4.2 I 25 I Reconstructiod80%newalignment I Beidi I Bridge I 0.96 I 21 I New bridge BRMC:BenxiSecondaryRoadRehabilitationandRoadMaintenanceEquipment Component (US$25.19 million(includingUS$1.89 millionequipment), andUS$1.76 million design andmanagementfees) BRMC comprises five activities: (a) BRMC1 - BRMCl will rehabilitate 317,940 m2o fpavements on 43 roads, andrehabilitate and repair sidewalks o f a total area o f202,537 m2on 44 roads. (b) BRMC2 - BRMC2will preserve or re-install original 1,372 street lights on 44 roads over a total length of 43.7 km. (c) BRMC3 - BRMC3 will construct 43.7 km o f drains to improve the efficiency o f 44 roads. (d) BRMC4 - BRMC4will provide equipment to carry out small and emergency maintenance works, including a concrete and gravel mixer, a generator set, a street light service vehicle, sewer sludge collection equipment, pipe and cable detector, high-pressure water injector and related truck, a pipe plug, a mobile traffic information system and a hydraulic cutter. 47  (e) BRMCS - BRMCS will finance the purchase o f loaders, rollers, trucks, millers, a paver, asphalt cutter, cranes, asphalt mixing plant and water browsers. BPTC: BenxiPublicTransportComponent(UW3.22 million(includingUW1.35 million equipment),andUS$0.23 milliondesignandmanagementfees) BPTC will finance works relatedto the constructiono f 10km o fbus priority on three roads to be selected as demonstration for the city. It will finance works related to three bus interchanges, including one at the railway station and one at the long-distance bus terminal to facilitate multi- modal transfers, and a dispatch center with control systemlocated at the third interchange station inthe growtharea ofthe city. Itwill also finance six busbays, andthe installation of691bus stop signs and informationplates, and 276 bus shelters on all existing and new routes. Details o f the investment are presented inTable A4.2. ProposedInvestmentItems BPTCl 10kmof buspriority lanes on three roads to be selected BPTC2 Six busbays at Technical School, Minsheng, and Fire Station* BPTC3 Three interchanges at Railway Station, Dongfen Passenger Station, and Xiaopu BPTC4 Dispatch centre and control system located at Xiaopu I BPTCS I 691 bus stoD sims on current and new routes BPTC6 276 bus shelters on current and new routes Note: project costs are combined with the costs o f other works on the same roads under RIor FW component * BTSC:BenxiTrafficSafety andTrafficManagementComponent (US$2.8 million, and US$0.2 milliondesignand managementfees) BTSC comprises eleven activities. It will finance equipment and civil works to enhance traffic safety and the overall efficiency o f the road network inthe city. Equipment financed under BTSC includes an ATC system with 19 new traffic signals, CCTV and red light cameras, electronic variable message signs, and other related equipment as shown inTable A4.3. BTSC will also finance intersectionre-design at selected intersections and lane separation between MV and NMVs on 11.2 kmo f arterial roads. 48  TableA4.3: BenxiTraffic Safetv andTrafficManagementComnonent IProposedInvestmentItems BTSCl A T C System with 19 new traffic signals BTSC2 21 CCTV units BTSC3 13 Red Light Cameras BTSC4 Lane separation for MVs andNMVs, 11.2 km* BTSC5 6 Electronic Traffic Information Boards BTSC6 Channelization at 3 junctions" BTSC7 351traffic signs* I BTSC8 Lane markings. 45,600 m2* BTSC9 I1 signal maintenance vehicle BTSClO Radio phone system (200 units, 3 Relay Platforms and 7 Base Stations) BTSCl1 Traffic accident clearance vehicle Note:* thesecosts are included inthe costs o f other works on the same roads under RIor Rh4component BTSC also includes an annual monitoring plan on 15 intersections and 8 arterial roads shown below inTable A4.4. Every May, startingMay 2007, the city will conduct traffic counts to determine traffic flow (volumes o f all modes) and speed for MVs. Inaddition, annual traffic accident data (number o f accidents, fatalities, injuries and economic loss) will be reported for the city as a whole, and the intersections and corridors identified inTable A4.4. The monitoring program will be coordinated with component IDTS2, as described below. 8 YumingRoad Tielu Intersection 9 Mingsheng Intersection 10 Yongfeng Intersection 11 Dasha Intersection 12 Beidi Intersection 13 Dongfen Intersection 14 Nandi Intersection 15 Qianjin Intersection FUSHUN The Fushuncomponent includes road construction, interchanges, associated drainage system, androadlighting;it does not contain a public transport component. The component locations are shown inthe attached city map. 49  FRIC: FushunRoadInfrastructureandReconstructionComponent(US$28.33 million, US$5.5 millionresettlementcosts,and US$1.98 milliondesignandmanagementfees) Fushunroadinfrastructure andreconstructionsub-component will support completion ofthe urban road network north o f the river and improve access to Shenda Expressway. It includes the upgrading o f two major traffic corridors inthe city, involving 11.9 kmo ftrunk roads (including three river crossingbridges) and six railway crossings on nearby roads. Auxiliary facilities include street lights, drainage & sewerage pipelines, and watedgaskeating supply. Details are shown inTable A4.5. No. Name Class Length Width (km) (m) Contents FRIC1 Gebu TrUnk 3.5 28 Reconstructiodwidening FRIC2 Gaoshan Trunk 8.4 25133 Reconstructiodwidening New construction o f six rail Rail crossings Secondary underpasses- one on Gebu, five on I secondary roads near Gaoshan FRIC4 1 Bridges Trunk Three bridges on Gaoshan Road FRMC:FushunSecondaryRoadRehabilitationandRoadMaintenanceEquipment Component(US$S.lmillion(includingUS$1.12 millionequipment),andUS$0,57million designandmanagementfees) FRMC comprises four activities: (a) FRMC1 - FRMCl will rehabilitate pavements of 205,520 m2on 30 roads with a total lengthof20.1km,rehabilitate andrepair sidewalks ofatotal areaof 95,975 m2ofthe same roads, and repair, rehabilitate and reconstruct drainage for a total length o f 22.4 km on these roads. (b) FRMC2 - FRMC2 will improve traffic safety and social safety by installing 574 street lights on 30 roads over a total lengtho f 20.1 km. (c) FRMC3 - FRMC3 will finance a mobile asphalt regeneration plant for the municipal road maintenance department. (d) FRMC4 - FRMC4will strengthen the roadmaintenance company to enable it to compete successhlly inthe post-reform environment by financing the purchase o f six rollers and a suction and pressure hose. FPTC: FushunPublicTransport Component(US$0.06 million) Three bus bays will be constructed as part o f the road infrastructure component. 50  FTSC: FushunTraffic Safety andTrafficManagementComponent (US$7.41 million (includingUS3.11millionequipment),andUS$0.52 millionmanagementanddesignfees) FTSC component will finance equipment and civil works to enhance traffic safety and the overall efficiency o f the road network inthe city. Equipment to be financed includes an ATC systemwith 16 new traffic signals, a license platerecognition system, CCTV andredlight cameras, electronic variable message signs, and other related equipment as shown inTable A4.6. Itwill also finance intersectionre-design at 16intersections and lane separation between MV and NMVson24 kmo fXincheng road and 10 other arterials. ProposedInvestmentItems FTSC1 Traffic management facilities (signs andmarking) including signs, MV/NMV separations, reconstructiono f South Station area and markings. FTSC2 16 traffic signals and ATC facilities FTSC3 Electronic variable message signs, solar-warning lights, manually controlled Pedestrian simals FTSC4 10 traffic patrol vehicles FTSC5 6 accident investigationvehicles FTSC6 Traffic control data system vehicle with video camera FTSC7 2 signal repair andmaintenance vehicles FTSC8 14 MV speedmonitor devices with video cameras FTSC9 300 wireless electronic communication systems FTSClO Road safety propaganda vehicle with video editingand display devices FTSCl1 61 red li&t cameras I FTSC12 1 16CCTV I FTSC also includes an annual monitoring plan on 15 intersections and 10 arterial roads shown in Table A4.7. Every May, startingMay 2007, the city will conduct traffic counts to determine traffic flow (volumes o f all modes) and speed for MVs. Inaddition, annual traffic accident data (numberof accidents, fatalities, injuries and economic loss) will bereported for the city as a whole and the intersections and corridors identified inTable A4.7. The monitoring program will be coordinated with component IDTS2, described below. 51  ISuiHuaRoad IXincheng Road/and Longcheng Street 14 Xiyi Road and Xisan Street 15 Dandong Road and Kangping Street LIAOYANG The Liaoyang component includes road construction, bridges, associated drainage and road lightingsystems, landscaping, traffic management, public transport, androadmaintenance. The component locations are shown inthe attached city map. LRIC:LiaoyangRoadInfrastructureReconstructionComponent(US$53.17 million, US$36.4 millionresettlementcosts, and US$3.72 milliondesignand managementfees) The Liaoyang road infrastructure and reconstruction component will improve: traffic conditions inthe northeast and south parts o fthe city; accessto the expressway; and communication betweenboth sides o f the mainrail line. It will support urban upgrading indifferent areas of the city and assist inadapting the road network to accommodate travel demands. It involves works on 43 roads (new construction and upgrading) with a total length o f 53.5 km; 30 o f the affected roads (35.4 km) are branchroads and alleys. LRIC includes the widening o f two existing rail underpasses (Beiyuan and Xuwangzi), a new overpass (Shengli) to complement the work on the Xuwangzi underpass, and a new underpass (Xiaozhuang) givingbetter access from the city center towards the expressway. Auxiliary facilities such as drainage and street lights are included at present inall the sub-projects. Details are shown inTable A4.8. 52  No. Name Class Length Width (km) (m) Contents LRIC1 Wangshui TlUnk 1.42 38 New construction. LRIC2 Xinhua North Tl-Llnk 2.57 38 ReconstructiodExtension (30%) ~~ LRIC3 Xinhua South Trunk 0.93 38 Reconstruction LRIC4 Minzhu Trunk 0.35 38 Reconstruction I LRIC5 I Wensheng I Trunk I 1.37 I 42 I Newconstruction I LRIC6 Beigong Secondary 0.94 21 ReconstructiodExtension (60%) LRIC7 Qianjin Secondary 1.95 21 Reconstruction I LRIC8 I Jiefang 1 Secondary I 1.48 I 28 I ReconstructiodExtension(60%) 1 LRIC9 Beishao Secondary 0.90 32 ReconstructiodExtension (60%) Xiaopu Secondary 2.16 28 ReconstructiodExtension (15%) IILRIC10 LRICll Gongnong Secondary 1.17 32 Newconstruction LRIC12 II Beixin IISecondary II 1.09 I1 32 IIReconstructiodExtension(30%) II LRIC13 Jiahe Secondary 1.79 32 New construction LRIC14 9 roads Branch 5.76 18/24 Newconstruction I LRIC15 I 14roads I Branch I 22.39 I 18/24 I Reconstruction I LRIC16 7 roads Alleys 7.22 9115 ReconstructioniNew construction LRIC17 Beiyuan Rail crossing 0.02 42 Widening of existing underpass LRIC18 Xiaozhuang Rail Newunderpass (replaces an existing crossing 0.07 29 pedestrian's only overpass) I LRIC19 I Xuwangzi Rail I I I crossing 0.10 40 Widening o f existing underpass LRIC20 Shengli I Street flvover 0.09 Relatedto Xuwangzi underpass I LRMC:LiaoyangSecondaryRoadRehabilitationandRoadMaintenanceEquipment Component (US$15.8 million,includingUS$1.32 millionequipment),andUS$1.11 million design andmanagementfees) LRMC comprises four activities: (a) LRMCl - LRMC1 will rehabilitate pavements o f 754,100 m2on 41 roads, andrehabilitate and repair sidewalks o f a total area o f 545,700 m2o f 48 roads. (b) LRMC2 - LRMC2 will improve traffic safety andsocial safety through installing 2,765 street lights on 48 roads. (c) LRMC3 - LRMC3 will improve road access by constructing 14.5 km of drainage on 31 roads. 53  (d) LRMC4 - LRMC4 will strengthen the roadmaintenance company for competing successfully inthe post-reform environment by financingthe purchase o f a paving machine, a roller, street light maintenance equipment, a millingmachine, and suction and pressure hose. LPTC:LiaoyangPublicTransportComponent(US$2.56 million,includingUS$0.69 millionequipment) LPTC will support works related to the construction o f 15.85 km o f bus priority on four sections o f four roads, as well as four end-of-route bus-turnarounds, a bus parking facility, and 60 bus stop shelters and signage at 146 bus stops on 8 new bus routes. Details o f the investment are presented inTable A4.9. ProposedInvestmentItems LPTCl 15.85 kmof bus priority on four sections on Zhonghua Da St. (Shengli Rd.- Shenyin Rd), MinzhuRd. (Zhonghua D a St. -Nanhuan St.), Xinyun D a St. (Minzhu Rd.-Wensheng Rd.)*, and Xinhua Rd. (Zhonghua D a St. -Nanhuan St.) LPTC2 4 busturnaround facilities located at Qianjin Street, NanchangRoad (north section), Zhongxin Road (south section), Ad Xinhua Road (north Section) LPTC3 A bus parking facility at Liaohua LPTC4 146bus stop signs on 8 new routes LPTC5 60 bus shelters on 8 new routes LTSC: LiaoyangTraffic Safety andTrafficManagementComponent (US$3.02 million, andUS$0.21milliondesign andmanagementfees) LTSC will finance equipment and civil works to enhance traffic safety and the overall efficiency o fthe roadnetwork inthe city. Equipmentfinanced by the project includes an ATC system with 47 new traffic signals, a GPS system to assist the police communication system and to coordinate ambulatory response to road accidents, CCTV, electronic variable message signs, and other related equipment, as shown inTable A4.10. ProposedInvestmentItems LTSC1 Command Center Upgrading, installation and commissioning LTSC2 New A T C System, covering 47 intersections LTSC3 20 CCTV Units, installedat 20 intersections LTSC4 16 Electronic Traffic Information Boards, installed at 10 intersections LTSCS 1GPS System, 200 unitswith server and software, linking traffic police and also ambulance vehicles 54  LTSC also includes an annual monitoring plan on 11intersections and 10 arterial roads shown in Table A4.11 below. EveryMay, startingM a y 2007, the city will conduct traffic counts to determine traffic flow (volumes o f all modes) and speed for MVs. Inaddition, annual traffic accident data (number of accidents, fatalities, injuries andeconomic loss) will be reported for the city as a whole, and the intersections and corridors identified inTable A4.11. The monitoring program will be coordinated with component IDTS2 as described below. I i Roads Intersections 1 i MinzhuRoad Xinyun Street and MinzhuRoad 2 Xinhua Road Xinyun Street and WushengRoad 3 Wensheng Road Xinyun Street and Zhongxin Road 4 Shengli Road Xinyun Street and Xinhua Road 5 i Zhonghua Road Xinhua Road and QingnianStreet 6 Xinyun Street Xinhua Road and Sandao Street 7 Qingnian Street Minzhu Road and Nanjiao Street 8 Nanjiao Road Minzhu Road and Tuanjie Street 10 WenshengRoad and Qingnian Street 11 Xinhua Road and Xinxing Street JINZHOU The Jinzhou component includes road construction, bridges, associated drainage system, road lighting, andbus stops. The component locations are shown inthe attached citymap. JRIC: Jinzhou RoadInfrastructure andReconstruction Component (US$45.61 million, US$7.1 million resettlement costs, and US$3.19 million design and management fees) Jinzhou's road infrastructure and reconstructioncomponent will improve the existing road network inthe old part o f the city, address bottlenecks at the mainrail line crossings (thus improving connections betweennorthern and central areas), and complete the road network south o fthe river. It involves works on 13 roads (new construction and upgrading) with a total length o f 45.4 km and 2 new rail passes (Hankou and Guangzhou) to solve congestion at existing level crossings. Drainage and street lights are included inall the proposed sub-projects. Details are shown inTable A4.12. 55  No. Name Class Length Width (km) (m) Contents JRIC1 Yunfei Trunk 2.00 30 Reconstruction JRIC2 Beijing Trunk 2.47 30 Reconstruction ~ JRIC3 Nanjing Trunk 4.15 30 Reconstruction JRIC4 Jiefang Trunk 10.9 40 Reconstruction FJRIC~~~ Zhongyang I Trunk 4.06 40 Reconstruction I JRIC6 I Yan'an I Trunk 6.09 22/30 Reconstruction Songpo I Trunk 4.99 24 Reconstruction I JRIC8 I Zhongyangnorth 1 Trunk 1.58 36 Reconstruction Keji Trunk 3.24 44 Newconstruction ~ I JRIClO 1 Chongqing II Secondary 11I1II 2.43 I111II 22 I111IIReconstruction IIIIII ~ _____ ~ JRICl1 Jinxing Secondary 1.90 32 New construction JRIC12 Wuhan Branch 0.88 32 Newconstruction JRIC13 Changsha Branch 0.80 20 New construction JRIC14 Hankou Rail New underpass, replacing level crossing 0.05 26 crossing New underpass + overpass, JRIC15 Guangzhou Rail crossing 0'07' 0.23 29 replacing level crossing and damaged bridge JRMC: JinzhouSecondaryRoadRehabilitationandRoadMaintenanceEquipment Component(US$25.35 million(includingUS$2.95millionequipment), andUS$1.77 million designandmanagementfees) JRMC comprises six activities: (a) JRMC1 - JRMCZ will rehabilitate pavements o f 1,057,400 m2on 41 roads, and rehabilitate andrepair sidewalks o f a total area o f 378,500 m2onthe same roads. Itwill also carry out corrective repairs on Nan and Nuerge bridges. (b) JRMC2 -JRMC2 will preserve or reinstall original 561 street lights on 2 roads with a total length o f 5.3 km. (c) JRMC3 - JRMC3 will construct 29.6 kmo f drains on 24 roads over a total length o f 70.1 km. (d) JRMC4 - JRMC4 will install 1,745 street lights on28 roads. (e) JRMC5 - JRMC5 will finance equipment, including a street light service vehicle, mowers, trimmers, water browsers, a chemical sprayer, a multifunctional maintenanceunit,a small roller, mobile traffic information systems, and deflection meters. 56  (f) JRMC6 JRMC6 will strengthen the road maintenance company for competing - successfully inthe post-reform environment by financing equipment, including a miller, asphalt sprayer, loaders, water browser, trucks, excavators, hydraulic cutters, rollers, pavers, scrapers, cranes, and a mobile mixingplant. JPTC: JinzhouPublicTransport Component (US$1.70 million) JPTC will finance works relatedto the construction o f 9.5 kmo fbus priority infive sections of ,five roads. It will also finance works related to three interchange terminals and three end-of- route bus turnarounds. Details o f the investment are presented inTable A4.13. ProposedInvestmentItems JPTC1 9.5 kmo fbus priority lanes infive sections on LiminSt. (BeijingRd- Hubei Rd), AiminSt. (BeijingRd-Hubei Rd),Zhongyang South St. (Xiaolinghe NanQiao - GuangcaiZhungpan), Luoyang Rd. (Renmin St. - Jiafang St.), Shiying St. (Yanan Rd. -ZhongyangDa St.) JPTC2 3 interchange terminals at Fuzhou St, Zhanqian and Shenglicun JPTC3 3 end-of-route bus turn-around at Bohai University, Xinzhi St., andNanshan JTSC: JinzhouTraffic Safety andTrafficManagementComponent(US$3.62 million,and US$0.25 milliondesign andmanagementfees) JTSC will finance equipment and civil works to enhance traffic safety and the overall efficiency o f the roadnetwork inthe city. Equipmentfinanced includes an ATC system with 45 new traffic signals, CCTV andred light cameras, electronic variable message signs, and other related equipment as showninTable A4.14. The component will also finance 26 km o f lane separations between MVs andNMVs. TableA4.14: JinzhouTraffic Safety andTraffic ManagementComponent II !2 I New ATC system, covering 45 intersections JTSC3 I 18 CCTV Units JTSC4 I 48 red light cameras JTSC5 5 Electronic variable message signs JTSC5 Traffic control data system vehicle with video camera JTSC6 A traffic signal maintenance vehicle JTSC also includes an annual monitoring planon 14 intersections and 8 arterial roads shown below inTable A4.15. Every May, starting May 2007, the city will conduct traffic counts to determine traffic flow (volumes o f all modes) and speed for MVs. Inaddition, annual traffic accident data (number o f accidents, fatalities, injuries and economic loss) will be reported for the city as a whole, and inthe intersections and corridors identifiedinTable A4.15. The monitoring program will be coordinated with component IDTS2, described below. 57  Roads Intersections 1 Jiefang Road Jiefang Road and Central Boulevard 2 BeijingRoad Central Boulevard and NanjingRoad 6 Central Boulevard Zhongyang Road and Luoyang Road 7 ShihRoad Jiefang Road and Zhengzhou Road 8 ShiyingStreet Jiefang Road and Shiying Street 9 Jiefang road and Guizhou Street -- 10 1 11 ChongqingRoad and Aimin Street I Shih Road and Chenndu Street I PANJIN The Panjin component includes road construction, bridges, associated drainage system, road lighting, andbus stops. The component locations are shown inthe attached citymap. PRIC: PanjinRoadInfrastructure andReconstructionComponent (US$32.59 million, US$32.32 million resettlement costs, and US$2.23 million design and management fees) Panjin's road infrastructure and reconstruction component will support the improvement of road networks in Shuangtaizi and Xinglongtai districts, bothto improve existingtraffic conditions and to accommodate future travel demand, and also to promote economic development and urban construction. It will also improve accessibility to existing bridges, by giving access to the roads crossing the bridges. It involves reconstruction o f four roads and new construction o f eight roads, with a total length o f 26 km (including two small bridges). It includes the buildingo fnew ramps at Shuangtaizi Bridge from Xindi Street, as well as drainage and street lights facilities. Details are shown inTable 4.16. 58  No. Name Class Length Width Contents PRIC1 Xingong West Secondary 3.00 46 Newconstruction PRIC2 HuibinWest Trunk 1.45 51 Newconstruction ~ ~ PRIC3 shiyou Tl-Llnk 1.29 43 New construction PRIC4 Liao H e South Trunk 1.48 5 1 New construction PRIC5 Xingong (East) Trunk 3.43 36 Reconstruction PRIC6 Xinglong Av. (West) Trunk 3.59 42 Reconstruction PRIC7 Gongye I Trunk 1 1.68 1 37 I Reconstruction I [PRIC8 II Hubin [ Secondary I 2.87 [ 24 I Newconstruction I PRIC9 Xindi Secondary 4.16 Newconstruction. Includesnew I l6 rampsasShuangtaiziBridge PRIClO I Changzheng I Secondary 1 1.23 II 24 11Newconstruction I ~~~ PRICl1 Limin Secondary 1.07 15 Reconstruction PRICl2 Xlnkalhe Branch 0.36 24 New construction PRMC: PanjinSecondaryRoadRehabilitationandRoadMaintenanceEquipment Component (US$28.34 million(includingUS$2.82 million equipment), andUS$1.9 million managementand designfees) PRMC comprises five activities: (a) PRMCl - PRMC1will rehabilitate pavements o f 1,600,000 m2on 38 roads, and will also rehabilitate and repair sidewalks and bicycle lanes with an area o f 523,400 m2on these roads. (b) PRMC2 - PRMC2will construct 42.5 kmo fdrainage on25 roads over atotal length of 35.6 km. (c) PRMP3 - PRMP3 will install 2,899 street lights on 25 roads. (d) PRMC4 - PRMC4 will finance street light service vehicles and multifunctional maintenance vehicles. (e) PRMC5 - PRMC5 will strengthen the road maintenance company for competing successfully inthe post-reform environment by financing equipment, including a paver, miller, rollers, suction and pressure hose, water browsers, trucks, trailer, high-pressure hose, truck and lift. 59  PPTC: PanjinPublicTransport Component (US$5.06 million(includingUS$2.29 million equipment), andUS$0.35 milliondesignandmanagementfees, andUS$0.65 million resettlementcosts) PPTC will finance works related to the construction o f 18.6 kmo fbus priority infour sections o f four roads, and 5 kmo fbuspriority lanes inthe north city on streets to be determined. It will also finance works related to 26 busbays and an interchange terminal at the railway stationto facilitate multi-modal transfers. It will further finance a dispatch center and control system for north (located at the interchange) and south city services, an Integrated Circuit (IC) card system, and needed workshop equipment at a city centre facility. PPTC will also finance 2 bus turnarounds, 139bus shelters, and installation o f 1,256 bus stop signs and information plates. Details of the investmentare presented inTable A4.17. ProposedInvestmentItems PPTCl 18.5 kmofbus priority lanes on Xinglongda St. (Shuangxing Rd-Taishan Rd.), Shiyouda St. (Liaohenan Rd- Shuangxingnan Rd.), Taishan Rd. (Huibinda St - Gongyeda St.), Shuangxing Rd. (Huibinda St. - Xingyouda St.), Xingong Street East (Panshi West Rd- East Outer HuanRd), and one road inthe North city.* PPTC2 26 bus bays on Xinlongda St., Shiyouda St., TaishanRd., and ShuangxingRd. PPTC3 An interchange terminal at Panjin RailwayStation PPTC4 2 bus turnarounds andparking at Liulihe and San Changdistrict PPTC5 2 dispatchingcentre and control system with GPS, locatedat Xinlongtai district and Shuan&aizi PPTC6 IC Card system for 300 buses PPTC7 189 bus shelters on existingand new routes PPTC8 1360 bus stop signs on all existing and new routes PPTC9 Workshop equipment at Xinglongtai maintenance facility PTSC: PanjinTraffic Safety andTrafficManagementComponent (US$3.65 million,and US$0.26 milliondesignandmanagementfees) PTSC will finance equipment and civil works to enhance traffic safety and the overall efficiency o fthe road network inthe city. Equipmentfinanced includes an ATC system with 34 new traffic signals, CCTV andred light cameras, and other related equipment, as shown inTable A4.18. The component will also finance channelization at 9 intersections, signs andmarkingson 38 secondary roads, and 15 km o f lane separations betweenMVs andNMVs. 60  Proposed Investment Items PTSCl Channelization at 9 intersections * PTSC2 Enhancingpedestrian andbicycle safety and separation at 17 intersections and 5 roads PTSC3 Signal lights for pedestrians and cyclists at 9 intersections PTSC4 Lane separation between MVs and NMV on 5 arterial roads* PTSC5 New ATC system(34 crossings, 18 crossings with pedestrian signals) PTSC6 33 Red Light Cameras at 17 intersections I PTSC7 I Command Center umxadinn. installation and commissionine I PTSC8 A traffic signal maintenance vehicle PTSC9 2 tow trucks 1I PTSCl1 II PTSClO 6 mobile speedmeasuring units v Install 3 warning liht signals at intersections outside A T C PTSC12 2 accident investigationvehicles and equipment Note: these costs are included inthe costs of other works on the same roads under RIor RMcomponent * PTSC also includes an annual monitoring planon 15 intersections on 8 arterial roads shown in Table A4.19. Every May, starting May 2007, the city will conduct traffic counts to determine traffic flow (volumes o f all modes) and speed for MVs. Inaddition, annual traffic accident data (number o f accidents, fatalities, injuries and economic loss) will be reported for the city as a whole, and the intersections and corridors identified inTable A4.19. The monitoringprogram will be coordinatedwith component IDTS2 as described below. Roads Intersections 1 Taishan Road Xinglong Street 2 Hongqi Street ShuangxingRoad/Xinggong Street 3 Shuangxing north street ShuangxingRoad/Xinglong Street 4 Shuangxingsouth street Taishan Road/Shifu Street 5 Shiyou Street TaishanRoad/Shiyou Street 6 Liaohe Road ShuangxingRoad/Shiyou Street I BohaiRoad I Shuanaxinrr Road/Huibin SI 8 Xinggong Street Hongqi Street/Bohai Road 9 Shengli Street/Liaohe Road 10 S h i h StreetBhuangxing Road 11 Liaohe Road/Hongqi Street 12 Taishan Road/Xinggong Street 13 Xinglong Street/Liaohe Road 14 Shiyou Street/Liaohe Road 15 HuibinStreet/Taishan Road 61  DENGTA The Dengta component includes road construction, bridges, associated drainage system, road lighting, andbus stops. Component locations are showninthe attached city map. DRIC:DengtaRoadInfrastructureandReconstructionComponent(US$8.12 million, US$3.07 millionresettlement costs, and US$0.57 milliondesign andmanagementfees) DRIC will help incompleting the city's arterial network, improving traffic conditions inthe city and at the rail crossings, andupgrading the lower level road system. As shown inTable A4.20, this will be achieved with works on seven road sections (new construction andupgrading) with a total length o f 9.7 km, with the improvement o f 6.5 kmo f alleys, and with the widening o f an existing rail underpass. Drainage and sewerage pipelines and street lights complement the proposed sub-projects. No. Name Class Length Width (km) (m) Contents DRIC1 Zhao LinWest Trunk 2.17 28 Reconstruction DRIC2 WenHuaNorth Trunk 0.41 28 New construction DRIC3 Wen Hua South Trunk 1.20 28 Reconstruction DRIC4 Guang Ming East Trunk 1.27 36 New construction DRIC5 Guang Ming West Trunk 1.oo 36 Reconstruction DRIC6 Guang Ming South Secondary 2.01 26 Reconstruction DRIC7 Tadong Secondary 1.63 25 New construction DRIC8 Alleys 6.48 Reconstruction DRICg SouthRail Underpass Widening of existing underpass DRMC:DengtaSecondsryRoadRehabilitationandRoadMaintenanceEquipment Component(US$2.4 million(includingUS$0.57 millionequipment), andUS$0.17 million designandmanagementfees) DRMC comprises four activities: DRMC1 - DRMC1will rehabilitate pavements of 135,6 12m2on seven roads, and rehabilitate andrepair sidewalks of a total area of 29,173.5 m2on five roads. DRMC2 - DRMC2 will construct drainage over the entire 1.7 kmof Tiexi Street. DRMC3 - DRMC3 will finance a street light service vehicle. 62  DRMC4 - DRMC4 will finance the purchase o ftwo rollers, a paver, an excavator, a water spraying truck and a crane. DPTC:DengtaPublicTransportComponent (US$O.l million) DPTC will finance 38 bus stops and 2 dispatch offices. DTSC:DengtaTraffic Safety andTraffic ManagementComponent (US$0.17 million) DTSC will finance US$O.17million o f equipment. InstitutionalDevelopment(ID) Component This component will finance technical assistanceinthe form of consultancy, training and study tours to support project implementation and to complement the investment components such that the project's development objectives can be realized. Details o fthis component are summarized inTableA4.21 anddiscussedbelow. IDPM1. Support for tendering agents to assist with procurement. IDPM2. Project management support for LUCRPO and the project cities. IDRI1. Publicparticipation. Consultant services will be financed to provide public inputto: ensure that implementation related concerns raisedby the public duringpreparation are adequately addressed; ensure that project investments are designed ina manner that maximizes benefits for the users; provide feedback on the safety and traffic management impact on the identified corridors and intersections; measure the public's general satisfaction with mobility, convenience, cost and safety elements o fthe city's urban transport system; and understand any other transport relatedconcerns raisedby the public. Participationwould include, at a minimum: well-publicized public meetings, attended by local government officials and officials involved with implementing the project; a series o f focus groups that target vulnerable groups such as the elderly,migrantworkers, the unemployed, people depending onthe road system for employment (such as handcart or paratransit drivers); women-only focus groups to ensure that women's issues are properly understood; individual interviews with a selection o fmobility impaired individuals; and quantitative interviews that will include a core panel sample o f individuals consulted duringpreparation. At least two rounds o fparticipation will be conducted during implementation. IDRI2. Assistance in transport planning. Inorder to institutionalize the knowledge base relating to formal transport modeling developed as part o fproject preparation, the cities will hire a consultant team to support training on the model system developed during preparation, and support the city inusingthe model for modeling related issues duringthe project period. The consultant's tasks will include: ensuring that the city's construction committee (or its equivalent agency) has an appropriate license for any software needed to runthe transport model and use its results; providing training for construction committee members and leaders to raise awareness o f the modelingprocess, its requirements andpotential benefits; updating the input data for the 63  model by way o f surveys, traffic counts etc.; usingthe updated model to support the city to conduct an economic analysis for the project implementation completion report; and supporting the city to use the model to prepare its road infrastructure andmaintenance investmentplans for the 2011-2015 five-year planperiod. IDRM1. Assistance inpreventative maintenanceplanning. The objective ofthis assignment is the adoption o f an appropriate Maintenance Control System for MunicipalRoadNetworks inthe project cities. The Consultant will develop and test a maintenance planningsystemand tools; andprepare manuals, guidelines and supportingtraining materials for inspectors and road asset managers. The Consultant will train the inspectors and asset managers inapplying the tools and manuals, and review every year the quality o fthe five-year maintenance plan. IDRM2. Assistance in road maintenancecontracting. The objectives o fthistask areto: support successful implementation o fthe reform o f the MunicipalMaintenance Companies (SOE) through advisory support, information supply and training to city governments; and ensure a successful adaptation o f the reformed municipal maintenance companies to competitionby 2010. Success o f the first objective will, among others, be measured with indicators like cost reductions incivil works, reductionofoverhead costs withinthe administration, andreducednumber of workers. Success o fthe second objective will be measured interms o fmarket shares, employment figures, turnover and profit. IDPTl. Bus priority and operations management. This task would include: training, study tours and discussions on concepts and designfor bus priority lanes, based on experiences in China and elsewhere, focusing on functional requirements, operational characteristics, traffic impacts, designissues, accommodating other road-users especiallyNMV, signage and awareness, staff training, enforcement, andproblem-solving. It would also include training on: operations management, with a focus on comprehensive operations management and dispatchingconcepts; optimizing resources and meeting service quality targets; functions, organization and staffing levels; advanced technologies (ITS) for operations management, including GPS, communications systems, control center software andhardware; specification and procurement o f systems. IDPT2. Bus network review and supportfor bus transport enterprise reform. This task would include: (a) an assessment o f the bus transport situation, including financial, operational and market structure issues on benchmarks, as far as possible; (b) network review, including know- how transfer for professionals, and implementing network review as preparatory action for cities about to tender out part or all of their network; (c) training, study tours and discussions on different reform options, based on experiences inChina and elsewhere, focusing on risks and operational implications o f different models; (d) organizing outreach with bus operators and potential investors to explain their perspectives to the city and to increase operator awareness o f the markets inthese cities; (e) assistance to a selection o f interested cities indeveloping an extended road map for reform, including an actionplan and support for choosing a reform model; and (f) support for implementation, including support for disinvestment o f the public transport company, developing concession contract documents, supportingthe tendering and tender evaluation process, supporting business planningand training for the erstwhile public transport company; (g) supporting the companies to evaluate the reform experience; and (h) 64  supporting SOEs which have commercialized, indeveloping their management capacity, Management Information System capability and maintenance capabilities. IDTS1. Trainingand regional study tour on trafic enforcement andparkingstrategies. The trainingcomponent will comprise two parts:trainingon effective enforcement strategies and training on parkingstrategies. Training on enforcement will include: (a) evaluation o f enforcement methods and strategic development o f staff for enforcement to create law abiding driver behavior; (b) evaluation o f the effectiveness o f enforcement equipment (such as red light cameras) andmonitoring equipment (such as CCTV); and (c) the development o f dynamic enforcement strategies, combining traffic control systems, electronic surveillance equipment and enforcement staffing. The component dealing with the development o fparking strategies will include: (a) the assessment o fparking sufficiency and demand; (b) development o f parking enforcement strategies and determining equipment and man-powerneeds; and (c) planningfor future parking needs. Regional study tours will focus on the leadership (policy makers from RSCs) andthe senior professional staff from the traffic police to study andunderstand how other successful cities in the region, bothin China and abroad, handle their problems successfully. More importantly, to learn about longrange and short range strategies to control and to manage parkingproblems without causing traffic flow impediments. The selected group will visit cities inChina (Beijing, Shanghai, Guangzhouand HongKong) and internationally (Singapore, Seoul andTokyo). The tour will be guided by an expert to facilitate the learning process. IDTS2. Trafic safety audits and supporting monitoringfor trafic safety and management components. This technical assistance component i s designed to strengthen the process and the product o fthe annual monitoring for traffic safety, development o f remedial action plans, and the implementation o f these plans duringthe next year. The traffic safety audit sub-component will include: (a) the training of traffic police to conduct annual traffic safety audits during 2006-08; (b) supervisingthe conduct o f such audits inthe initial two years ofproject implementation; and (c) assisting inthe preparationo fremedial action plans duringthe three years 2006-09. Briefly, the traffic safety audits should assess the over all traffic safety inthe city, identify critical elements o f safety and critical locations (physical elements such as the roads, intersections, traffic control equipment, channelization, and lane separation) and behavioral elements such as driver behavior, education, enforcement, and suggest changes as necessary. The output o f the safety audits i s the primary inputinto the analysis o f the current problems and the preparation o f remedial action plans. The objectives o f the remedial action plans include taking pro-active actions necessary to enhance traffic safety inthe city. 65  Table A4.21: InstitutionalDevelopmentComponentInvestmentSummary I I I ProposedItems IDPM1 I Support for procurement agent 2007 - 2009 IDPMl1 I Support for procurement agent for 2006 procurements IDPM2 Support for project management, designreview and constructionsupervision IDPM21 Preparation of Technical Specifications for constructionworks in2006 IDRIl Public DarticiDation IDRI2 Transport planning TnRM1 IIPreventative maintenance nlanninn E m 2 I S u ~ ~ ofort roadmaintenance reform r I IDPTl Buspriority IDPT2 Support for public transport reform IDTS1 Traffic enforcement andparking strategies ~ IDTS2 Traffic safety audits and monitoring Grantfinancingwill be sought for IIDGl Framework for Derformance-basedcontracting. IDG2 I Strengthening Provincial Construction Department onpublic transport reform 66   L M C I LOAN ALLOCATION SUMMARY (INUSD) Amount o fthe Loan allocated (Expressed in % ofExpendituresto be Cateeorv Millions of Dollars) Financed (1)Panjin's RespectiveParts ofthe Project 44.83 (a) Civil Works 31.05 51% (b) Goods 8.76 100% (c) Consultants' services, Training, workshops and study tour 0.97 100% (d)Unallocated 3.93 100% (e) Front-endFees* 0.11 (2) Jinzhou's Respective Parts o fthe Project 47.62 (a) Civil Works 35.55 51% (b)Goods 6.57 100% (c) Consultants' services, Training, workshops andstudy tour 1.00 100% (d)Unallocated 4.38 100% (e) Front-endFees* 0.12 (3) Fushun'sRespectiveParts of the Project 27.46 (a) Civil Works 20.24 51% (b) Goods 4.23 100% (c) Consultants' services, Training, workshops and study tour 0.74 100% (d) Unallocated 2.19 100% (e) Front-endFees* 0.07 (4) Benxi's RespectiveParts o fthe Project 44.61 (a) Civil Works 33.95 51% (b) Goods 6.04 100% (c) Consultants'services, Training, workshops and study tour 0.97 100% (d)Unallocated 3.55 100% (e) Front-end Fees* 0.11 (5) Liaoyang's RespectiveParts o f the Project 46.19 (a) Civil Works 34.48 51% (b)Goods 6.93 100% (c) Consultants'services, Training, workshops and study tour 1.00 100% (d)Unallocated 4.27 100% (e) Front-endFees* 0.12 (6) Dengta's RespectiveParts o f the Project 6.68 (a) Civil Works 5.13 51% (b) Goods 0.74 100% (c) Consultants' services, Training, workshops andstudy tour 0.17 100% (d)Unallocated 0.62 100% (e) Front-end Fees* 0.02 T O T A L 218.00 *Amount due under Section 2.04 of LoanAgreement 68  Annex 6: ImplementationArrangements CHINA: China-LiaoningMediumCitiesInfrastructureProject ProvincialLevelImplementingAgencies The LPCG, established by Liaoning Provincial government, chaired by a Vice Governor o f Liaoning, will be responsible for providing overall guidance on project implementation, including coordinating any policy and institutional issues related to the project. LPDF will be responsible for integratedmanagement and providing implementation guidance. LUCRPO, which has been established under LPCD, will be the primaryinterlocutor with the Bank, and responsible for day-to-day project implementation. The principalprovinciallevelimplementingagencies are: Liaoning Development and Reform Committee (LDRC) i s responsible for overall economic and investment planning.' It i s also responsible for providing funding sources and management for government and SOE investment projects. LDRC's main responsibilities towards LMCIP are to review and authorize project plans and investment applications as well as to plan, arrange and authorize the use o f foreign funds and counterpart funding. Liaoning Provincial Department of Finance (LPDF) i s responsiblefor provincial government and its agencies' financial management, financial planning, budget allocation and control. LPDF, as the government agency incharge o f debt management and the official Bankloanborrower, manages and supervises all Bank financed projects inthe province. LPDF i s also incharge o f financial management, disbursement and financial reporting o f the project. Liaoning Provincial Construction Department (LPCD) i s responsiblefor the management o furban infrastructure inthe province as well as the management ofpublic transport planningand infrastructure constructionplanning. Iti s incharge o furbaninfrastructure development planning, urban development planning and for providing policy guidance on individual cities' urbantransport planning. Liaoning Provincial Environment Protection Bureau (LPEPB)i s incharge o f environmentalplanning,monitoring, andmanagement. It is responsible for setting relevant environmentallaws and/or rules, monitoring, managing and controlling noise, pollution, and vehicle emission. It i s also responsible for developing pollution control and environmental management plan. Inthe L M C Iproject, LPEPB i s responsible for review and approval of LMCIP's environment assessment reports. LUCRPO,established under LPCD, is responsible for the day-to-day works relatedto project preparation, implementation, andmanagement. 69  City LevelImplementingAgencies Eachparticipating city has established a Leading Group (LG). These LGs are responsible for providing policy guidance and delegating project responsibilities to relevant entities. LGs are chaired by the mayors (or vice mayors who oversee the urban construction activities). Under their overall direction, municipal or city PMOs will manage and coordinate the day-to-day Project preparation and implementation. The major relevant city entities includethe following: Municipal Development and Reform Committee (DRC) (or Development and Reform Bureau (DRB) in Dengta) i s responsible for the overall government economic and investment planning, as well as the financial planning and management o f government investedprojects, and SOE investments. Municipal DRCs are also incharge o f developing five year plans and the annual investmentplan. The DRCs review and authorize the financial planso f development projects, and also review andauthorize the local investment proposals and foreign fund applications. The DRCs have assisted government inthe review and authorization o f LMCIP. (InDengta, the Development and ReformBureau- DPB - performs the functions o f DRC). Municipal Financial Bureau (MFB) i s incharge o futilizingand managing project funds, andraising counterpart funding. As the municipal government debtrepresentative, the MFB guides, manages, andholds responsibilities for the Bank loan project inthe municipality. It reviews and authorizes the disbursement requests against the project designated account as well as reporting to the municipal government. Municipal Environment Protection Bureau (EPB) i s responsible for monitoring the city's environmental conditions on a regular basis. The EPB i s responsible for implementing environmental laws and regulations, and inspecting the implementation o f environmental impact mitigation measures duringthe project construction and operation. Inaddition, EPBs will review environment performance reports submitted by contractors and city PMOs. Municipal Pubic Security Bureau Traffic Brigade (PSBTB) i s the implementing agency for road safety improvement and traffic management. PSBTB will implement the traffic safety andtraffic management component under LMCIP, and operate, manage and maintainthe facilities and equipment installedunder the project. A Municipal Road Safety Committee (RSC)has beenrecently established ineachproject city inresponse to the NRSL. The RSCs, comprised o f the leadership o f all relevant city agencies, are the leadership groups responsible for ensuring higher traffic safety levels and appropriate traffic management strategies for each city. These committees are headed in each city bythe Vice-Mayor incharge o fpublic security ineach city. These committees meet regularly to review issues related to traffic safety and have the authority to recommend measures - if such changes are needed to improve road safety. RSCs will review the progress and implement changes - intraffic management, inenforcement strategies and other related o f the TS component and provide guidance as appropriate. 70  Municipal Urban Construction Committee (UCC). The UCC i s incharge o fplanning, construction, management and maintenance of urbaninfrastructure facilities. Its main responsibilities include urbaninfrastructure development planning, urban development planning (including public transport, traffic management, road construction and maintenance planning,implementationandmanagement), andinfrastructure construction, operation, maintenance andmanagement. Municipal UCCs also supervise the operation o f their subordinary entities, including construction companies and design institutes. Municipal UCCs are supported by government tax income. Municipal Urban Construction Bureau (UCB). UCBs are responsible for the implementation o furban constructionplan developed by UCCs. UCBs have a division responsible for the planning and implementation o furban infrastructure maintenance. Municipal Project Management Offices (PMO, City PMO in the case of Dengta). Municipal or City PMOs are responsible for the day-to-day management and coordination o f project preparation and implementation. InLiaoyang, Benxi, Fushunand Jinzhou, the PMOs are established under the UCCs. InPanjin, the PMO i s established under the Panjin UCB. The DengtaPMO i s established under DengtaPublic Utility Management Bureau (PUMB) o f the city government. The city PMOs are temporary entities established for the duration of Bank financed projects and other donor financed projects. Implementation Arrangement by Project Component at City Level Implementation arrangements for each project component are described below. Further details are available inthe project files. Road Infrastructure and Reconstruction@I): responsible for the preparation, Major entities implementation and management o f road infrastructure projects include (a) municipal or city PMOs; (bi) UCCs, which planurbanconstruction projects and approve the AWP, and/or (c) UCB, which manages andmaintains infrastructure facilities, and/or (d) municipalor city Planning Bureau(PB). Responsibilities o f each o f these entities are summarizedbelow. Municipal PMO or Dengta PMO was responsible for the initial project preparation and will coordinate and manageproject implementation. PMOs will participate inNCB and International Competitive Bidding (ICB) procurement, particularly inbiddingdocument design, bid evaluation, contract negotiation and contract signing. PMOs will coordinate andmanage contractors' construction andmaterial supply. Upon completion o f infrastructure works, PMOs will review and confirm satisfactory completion o fwork. Infrastructure facilities constructed under the project will be owned by the city government. UCCplansurbanconstructionprojects, participates ininitial project identification, and is responsible for developing financial plans. UCCs will authorize the AWP andthe budget developed by the PMOs. UCCs will also authorize payment for works. These functions are carried out inDengtaby the PUMB. 71  UCB provided data andinformation for feasibility studies and designs. UCB will also manage the infrastructure facilities once they are built. Municipal OYCity PB i s responsible for roadnetwork planning o f the city. PB participatedin (and provided data and inputs for) the preparation o f feasibility studies, preliminary designs, and detailed designs. Secondary Road Rehabilitation and Road Maintenance Equipment (RM). The preparation andimplementation o fthis component involves the: (a) PMOs, (b) UCCs to approve project identification and scope; and (c) the municipal/city entity incharge o f infrastructure maintenance to propose project contents, to facilitate the implementation, and to maintain the infrastructure built. Themaintenance entities are: the Municipal Facility ManagementDivision (MFMD)o f UCB for Liaoyang; the MFMDo f UCC for Benxi; the Municipal Management Divisiono f UCC for Jinzhou; the Road Rehabilitation Office o fU C B inFushun; and the City Public Works Management Division o f UCB for Panjin. InDengta, these responsibilities will be carried out by the PMOs andthe PUMB. Responsibilities o f each o f these entities are summarized below. Municipal and Dengta PMOs were responsible for the initial project preparation andwill coordinate andmanage project implementation. PMOs will participate inN C B and ICB procurement, particularly inbiddingdocument design, bid evaluation, contract negotiation and contract signing. Upon completion o f the work, PMOs will review and confirm satisfactory completion o f work. RM facilities constructed under the project will be owned bythe city government andmanagedby the UCB. UCCplansinfrastructure rehabilitationwork andwill participate inthe review, coordination and supervisiono f the project. It will authorize the annual work program and the budgets, and authorize payments for completed works. This function will be carried out inDengtaby PUMB. Municipal/City Maintenance Entity (name varies) develops road maintenance plans, subject to UCC approval, and assists inthe identification and determination o froad maintenance projects. The maintenance entities will also implement the maintenance work andreceive the project TA on preventive maintenance. UCB will beresponsible for the management andmaintenance o fthe infrastructure facilities completed under the project. Traffic Safety and Traffic Management (TS). This component i s preparedand implemented jointly by: (a) PMOs; (b) UCCs to review and approve project proposals and scope; (c) the PSBTBs to propose project contents, participate inthe implementation, and manage the systems developed under the TS project components; and (d) RSCs to provide overall guidance on the TS projects. Responsibilities o f each o f these entities are summarizedbelow. Municipal and Dengta PMOs coordinatedthe initial project preparation and identification. PMOs will coordinate andmanage project implementation; be incharge of preparinglender documents for N C B and ICB procurements tender design, and will participate inthe bidding 72  process and contract negotiation o fprocurement ledby LUCRPO. PMOs will authorize payment for completed works. PSBTB proposedproject contents, participated inproject designs, and will beresponsible for project implementation. PSBTBs have assigned dedicated staff for the project, who will either remain intheir original office, or transfer temporarily to PMOs over the duration o fthe project. Upon completion o f the project, the facilities and equipment installedunder the project will be ownedbythe government, and operated, maintained and managed by PSBTB. UCCreviewed and approved PSBTB's proposals. UCCs (PUMB inDengta) will also authorize the AWP developed by PSBTB, and authorize payments for completedworks. RSCs provide overall guidance and coordination support to the safety and traffic management component. StartingOctober 2006, RSCs will meet annually to monitor the safety and traffic flow on specified locations. Results fiom the review will be incorporatedby PSBTB into the annual work plan for the coming year. PublicTransport (PT). The preparation, implementation andmanagement ofthe public transport component involves: (a) PMOs; (b) the public transport companies, who have been fully consulted inthe preparationofthisproject component, andwill use the facilities built; and (c) the agencies supervisingthe public transport companies, which supervise and coordinate the participation o f public transport companies inthe project. The public transport management entities are: the UCC inBenxi; the UCBs inPanjin and Liaoyang; the PUMBs inJinzhou and Dengta; and the Municipal Communications Bureau (MCB) inFushun. Municipal and Dengta PMOs were responsible for initialproject identificationandpreparation; andwill coordinate andmanage project implementation. PMOs will develop an annual implementation plan, coordinate supervision, and verify works and confirm payment. Public Transport Company participated inproject identification and design, and provided data for feasibility study and project designs. Public transport companies willjoin contract negotiations, participate inand oversee project implementation. Bus companies will also collect data on monitoring indicators and submit progress reports. They will either assign dedicated staff for the project, or send staffto the PMOs for the project period. Upon completion o f work, the public transport companies will use, operate and manage the facilities built; the facilities will be owned by government. The facilities o fbus routes (e.g., end-of-route turn-around) would be usedby the bus entity which operates the relevant bus route; i.e., where services are operated by operators other than the SOE, those operators will be able to use these facilities built under the project. Public Transport Management Entity: UCCand/or UCB reviewed and approved component content . They will supervise and coordinate the participation o f public transport companies in the project. They will be responsible for budget planningand payment authorization. They will participate inthe component implementation, and will own the facilities built. They will authorize the payments for the work completed. 73  PUMB (Dengta and Jinzhou). Same as above. MCB. Same as above. InstitutionalDevelopment. LUCRPO, throughthe project procurement agent, will organize the procurement o f all consulting services under the ID component. Inparticular, LUCRPO will develop technical biddingdocuments incorporatingrequirementsfi-om individual cities through their PMOs. Uponreceipt ofthe bids, municipal/city PMOs and LUCRPO willjointly evaluate the bids and develop the bid evaluationreports. Each consulting contract will bejointly signed bythe involvedparticipatingmunicipalities. LUCRPOwill provide office space for all consultants. LUCRPO will submitrelatedinvoices to the municipal PMOs and MFB for review and verification. LPDF will make the payments from the project DA to the consulting firms. Equipment. LUCRPO will procure international specialist consulting services to help develop the technical bid documents for equipment procurement. The project procurement agent will develop the business clauses and LUCRPO will submit the bid document for Bank review. Municipal biddingand procurement will be arranged by municipal PMOs. LUCRPO will be responsible for arrangingthe bidding, under overall management at provincial level. A bid evaluation committee (composed o fmunicipal/city PMOs, the relevant agencies, technical specialist and staff from individual cities, and domestic bidevaluation specialists engaged by the procurement agent) will evaluate the bids, and submit the results for LUCRPO to review. Individual PMOs and/or relevant city implementing agencies will negotiate with equipment suppliers and sign separate city contracts. ImplementationArrangementsfor Other ProjectManagementActivities Project management activities relatingto environmental and resettlement aspects are discussed below. Environment. LUCRPO, with its dedicated environmental specialist staff, andthe PMOs will coordinate and take ultimate responsibility for environmental performance and environmental management duringconstruction. LUCRPO, based on individual cities' environmental reports, organized cities to contract with the LAES. LAES carried out the EIA duringpreparation, and prepared EMPs. LAES will provide environmental trainingto contractors and construction supervisors. LUCRPO and the individualPMOs will prepare specifications on environmental performance for contractors and for construction supervision. Municipal EPBs will review and monitor the implementationo f environment policies, and review the environment performance reports submitted by the contractors and PMOs. Resettlement. Resettlement implementation agencies andtheir responsibilities are summarized below. MunicipaZ/City project LG provides leadership support and policy guidance for land acquisition and resettlement. It reviewed and approved the resettlement action plans. 74  MunicipaKity PMO developed the RAPS,and will manage and coordinate resettlement activities, includinginternal monitoring and reporting. Resettlement Company will implement the RAP approved by the Bank, and develop resettlement internal monitoring reports to be submittedto the PMO. InPanjin, this function will be carried out by land acquisition service station andhousing demolishment service division. LRB facilitates andguides resettlementprocedures, determines themethods andindicators of measurement for compensation, reviews and approves resettlement activities. LRB also supervises and audits resettlement activities. Urban Construction Resettlement Ofice measures the indicators to determine compensation amounts, implements land acquisition and demolishing ofbuildings, supervises resettlement activities and manages resettlement disputes. Municipal/City Housing Property Division investigates and manages issues relatedto the status and changes inproperty rights. Design Institutes involved are responsible for the engineering design and determine project areas and resettlement areas. Municipal FB allocates funds for resettlement compensation. Independent MonitoringAgent engaged by the city PMO to perform independent external monitoring and supervision on land acquisition and resettlement activities. 75  Annex 7: FinancialManagementandDisbursementArrangements CHINA: China-LiaoningMediumCitiesInfrastructureProject Overview The Bank has conducted an assessment o f the adequacy o f the financial management system o f the project. The assessment, based on guidelines issuedbythe Financial Management Sector Board on November 3,2005, has concluded that the project meets minimumBank financial management requirements, as stipulated inBP/OP 10.02. Inthe Bank's opinion, the project will have inplace an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information on the status o f the project inthe reporting format agreed with the project and as required by the Bank. Fundingsources for the project include Bank loan and counterpart funds. Bank loanproceeds will flow from the Bankinto the project DA to be set up at (andmanagedby) LPDF, to various MFBs, to project implementing agencies, andto contractors or suppliers. The LoanAgreement will be signed betweenthe Bank and the People's Republic o f China through the MOF, and on- lending agreements for the Loan will be signed between M O F and the government o f Liaoning Province through LPDF, and between LPDF and various MFBs. Counterpart funds will be government appropriation from various municipal governments. Audit Arrangement Inlinewith other Bankfinanced projectsinChina, the projectwillbe auditedinaccordance with InternationalAuditing Standards and the Government Auditing Standards o f the People's Republic o f China. The Liaoning Provincial Audit Office has been identified as auditors for the project. Annual audit reports will be issued by the above audit center and will be subject to reviews by the China National Audit Office (CNAO). The Bank currently accepts audit reports issued by CNAO or provincial/regional audit bureaus/offices for which CNAO i s ultimately responsible. LPDF will submit the annual audit report o fproject financial statements to the Bank within six months after the endo f eachcalendar year, as stipulatedinthe LoanAgreement. FundsFlow andDisbursementArrangement Fundsflow for the Loan will follow Bank and MOF requirements. One DA will be established andmanagedby LPDF. The funds flow is as follows: 76  - The DA MFB - Municipal Contractors World managed PMO + /Suppliers Bank by LPDF Inaccordance withthe generalagreement betweenthe Bank andMOF, the projectwill use traditional disbursement techniques and will not use report-based disbursements. The Loanwould be disbursedagainst eligible expenditures as inTable A7.1. Amount of the Loan Percentageof Allocated Expenditures Category (in US$ million) to be financed (1) Civil works 160.395 51% (2) Goods 33.28 100% (3) Consulting services, 4.85 100% training/workshops (4) Front-end Fee 0.545 (5) Unallocated 18.93 Total 218.00 Four disbursement methods are available for the project: reimbursement, advance, direct payment and special commitment. LPDF will be directly responsible for the management, monitoring, maintenance and reconciliation o f the DA. Supporting documents requiredfor disbursements will be preparedand submittedby respective MunicipalPMOSthrough MFB, to LPDFfor final verification and - consolidation, before sendingto the Bank for further disbursement processing. The flow o fthe withdrawal application i s as follows: Municipal Approved World PMO 'Approved by MFB by LPDF 'Bank FinancialManagementandReportingArrangements ImplementingEntity. Ineachproject city, a MunicipalPMOhas beenestablished to be responsible for project coordination and management, as well as day to day project implementation. Project accounting and withdrawal applications will be managed by the PMO (more details inAnnex 6). 77  Accounting and Reporting. Administration, accounting and reporting o fthe project will be set upinaccordance with the Circular #13: "Accounting Regulationsfor World Bank Financed Projects" issuedby M O F inJanuary 2000. The circular provides in-depth instructions on accounting treatment o f project activities, and covers the following: 0 Chart o f accounts 0 Detailed accounting instructions for each project account 0 Standard set o fproject financial statements 0 Instructions on the preparation o fproject financial statements The standard set o f project financial statements mentioned above has been agreed between the Bank and MOF, and applies to all Bankprojects appraised after July 1, 1998. It includes the following: 0 Balance sheet 0 Statement o f source anduse o f funds byproject components 0 Statement o f implementation o f loan agreement 0 Statement of DA 0 Notes to the financial statements EachPMO will manage, monitor and maintainthe respectiveproject accountingrecords. Original supporting documents for project activities will be retainedby each PMO. Inaddition, each PMO will prepare financial statements, which will then bereviewed, approved and consolidated by LPDF before furnishing them to the Bank for review and comment on a regular basis. One o fthe factors critical to successful implementation o f project financial management i s adequate project accounting staff with educational background andwork experience commensurate with the work they are expected to perform, i s Based on discussions, observation and review o f the educational background and work experience o fthe staff identifiedfor financial and accounting positions inthe implementing agencies, the Bank considers that the financial staffs are qualified and appropriate to the work they are expected to perfom. To strengthen financial management capacity and achieve consistent quality o f accounting work, a project financial management manual (the Manual) has beenprepared. The Manual provides detailed guidelines on financial management including internal controls, accountingprocedures, fund and asset management, withdrawal applicationprocedures, financial reporting and auditing arrangements. Internal Control and InternalAuditing. The project does not have an independent internal audit facility. However, it is the Bank's assessment that this will not impact the project's financial management; management and monitoring by LUCRPO and individual PMOS, supplemented with annual external audits, will ensure that financial management controls are functioning appropriately. 78  Information System. Some PMOSwill use computerized financial management information software, while others will maintainthe project accounting books manually. The Bank will monitor the processing o f accounting closely, especially inthe initial stages o fproject implementation, to ensure complete and accurate financial information i s provided in a timely manner. Supervision Plan. A detailed supervision plan for this project will be included as part o fthe China Audit Strategy document, taking into consideration the size o fthe project and the financial management risk rating. 79  Annex 8: ProcurementArrangements CHINA: China-LiaoningMediumCitiesInfrastructureProject A. General Procurement for the proposed project will be carried out inaccordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated M a y 2004, "Guidelines: Selectionand Employment o f Consultants byWorld Bank Borrowers" dated May 2004, and the provisions stipulated inthe legal documents. The general description o f various items under different expenditure categories i s shown below. For each contract to be financed by the Loan, the different procurementmethods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame are indicatedinthe Procurement Plan. The Procurement Planwill be updated at least annually (or as required) to reflect actual project implementationneeds and improvements ininstitutional capacity. ProcurementofWorks. Works procuredunder this projectwould include: (a) civil works related to the road infrastructure and road maintenance components; (b) civil works related to the public transport component (bus priority lanes, bus interchanges, bus turnarounds, busbays and shelters); and (c) traffic signs and markings under the traffic safety and traffic management component. Civil works in(b) and (c) abovewill be packaged into (a), ifthe works can be executed together with the road infiastructure or roadmaintenance works. The preliminary designs and detailed designs shall be approved by the Bank inadvance for all prior review and post review contracts. Procurement will be done usingMOF's model biddingdocuments (MBD) dated May 1997,agreed with the Bank for all NCB contracts below US$15 million for each contract, andthe Bank's Standard Pre-qualification Documents, May 2004, for large bridge contracts. Procurementof Goods. Goods procuredunderthisproject would include: (a) ATC andother traffic safety andmanagement equipment (CCTV, red light cameras, large screen display panels, and special vehicles); (b) roadmaintenance equipment; and (c) dispatching system for Benxi and Panjin, and I C Card system for Panjin. ICB (for contracts above US$500,000) and NCB (for contracts above US$lOO,OOO) apply to (a) and (b) above, while N C B and Shopping (for contracts not more thanUS$lOO,OOO per contract) apply to (c) above. N C B procurementwill be done usingMOF's MBDdated May 1997 agreed with the Bank. TheBank's Standard Bidding Documents, Supplyand Installation o f Plant and Equipment, May 2004 or Standard Bidding Documents for Procurement of Goods, M a y 2005 will be used for ICB contracts. Selectionof Consultants. Consultants selected underthis project wouldberequired for assistance on: (a) project management, design andbiddingdocument review, construction supervision and procurement agents; (b) public transport reform and operations management; (c) road maintenance reform and operations management; and (d) traffic safety and traffic management. Short lists o f consultants for services estimated to cost less than US$300,000 equivalent per contract may be composed entirely o fnational consultants inaccordance with the provisions o fparagraph 2.7 of the Consultant Guidelines. Universities and Government Research institutions engaged as consultants will be selected inaccordance with the provisions 80  ofparagraphs 1.11(c) and 2.8 o f the Consultant Guidelines. Procurement agents will be selected inaccordance withthe provisions ofparagraphs 1.11(b), 3.17 and4.4 ofthe Consultant Guidelines. B. Assessment of the Agency's Capacityto ImplementProcurement Procurement activities will be carried out by LUCRPO and each o f the project municipalities. LUCRPO will serve as the main counterpart to the Bank, and will have overall responsibility for project implementation, inaccordance with the Loan and Project Agreements. The Bank conducted an assessment o fthe capacity o f the implementing agency to implement procurement actions for the project. The assessmentreviewed the organizational structure for implementing the project and the interactionbetweenproject staff responsible for procurement in LUCRPO and the relevant units ineach project city. LMCIP i s the fifthBank financed urban infrastructure project to be implementedby LUCRPO andproject cities inthe province; Dengtais the only first time sub-borrower o f a Bank loan. The procurement risk has beenassessedas average. There are some deviations from the Bank's guidelines ingovernment's own procurement practices, including the use o f a `bracketing and merit point' system. The provisions inthe legal documents for N C B procurement, Bank prior reviews andpost reviews o fN C B procurement, as well as training on the Bank's policies and procedures will address these issues. The Bank's procurement guidelines will be followed for Bank financed contracts. Issues/risks relating to procurement under the project havebeen identified and included inthe procurement capacity assessment report. Corrective measures havebeen agreed to and implemented. C. ProcurementPlan The Borrower has developed a Procurement Plan for project implementation. This plan has been agreed betweenthe Borrower and the Bank and i s available at the LUCRPO office inShenyang, China. It will also be available inthe Project database and inthe Bank's external website. The Procurement Plan will be updatedinagreement with the Bank annually (or as required) to reflect project implementationneeds and improvements ininstitutional capacity. Works, goods and consultant services under urban transport projects are procured on a yearly basis and city governments approve the annual investment plan at the beginning o f the year. Roads and bridges are usually constructed within one or one and a halfyears, and rehabilitated/maintainedwithin one construction season. The construction seasoninnortheast China i s from April to November, so the biddingprocess shall be completed before April. Some civil works contracts in2006 will be financed under retroactive financing. Equipment procurement will start from 2007, after the loan i s signed. 81  Equipment under the traffic management component and the roadmaintenance component will be packaged on a city basis. LUCRPO will guide and coordinate the procurement o ftraffic management equipment and roadmaintenance equipment by each city, e.g., preparation o f specifications. Equipment will be grouped together on "slice and package" basis to increase the procurement scale. However, contracts for equipmentwill be signed by each city. Office equipment will be procuredby LUCRPO for all project cities on "slice andpackage" basis to increase the scale, since the equipment i s standardized and available o f fthe shelf. Busplates and waiting pavilions will bepackaged as goods contract for each city. Roads and bridges under the road infrastructure and road maintenance components ineach project city will be packaged into one or two contract lots each year. Bus terminals, stops, bus bays, some bus priority lanes, bus interchanges andbus turnarounds under the public transport component, andtraffic signs and markings under the traffic safety and traffic management component may bepackaged together with the relevant roads under RI or RMcomponents. However, works under PT component may be executed independent o f RIor RM contracts. Drains and sewers, traffic lines, traffic signs, street lighting, landscaping and greening along the route, etc., will be included inthe bill o f quantities o fthe road contract. The sub-contractors for traffic signs and markings, street lighting, and landscapingshall be indicatedinthe bids and evaluated duringbidevaluation. Service lines andpipes for water supply, power supply, telecommunication, gas, TV, and heating utilities, which are barredunder the roadpavement are not included inthe road contracts andwill bebuilt by other contractors before the road i s paved. The city PMO shall coordinate with the owners and contractors for these urbanutilities to ensure that the works are implemented smoothly. Road contracts shall be signed only after any resettlement required i s completed inaccordance with the approved RAP. All consultants willbe selectedby LUCRPO inconsultationwith the municipalPMOS. Prior review thresholds for LMCIP are indicated inTable A8.1 CivilWorks Goods Consultant Consultant Services Services Firm Individual Above US$ 5 million 500,000 200,000 50,000 82  The procurement method thresholds for LMCIP are indicated inTable A8.2. TableA .2: Proci -ementM thod Thresholds Civil Works Goods Consultant Services ICB (US$) >15 >500,000 >300,000 (short list not more million than two from a country) NCB advertisement in >2 >300,000 <300,000 (shortlist may be a national newspaper million limitedto national consultants) (US$) NCB advertisement in <2 <300,000 >200,000 - QCBS a provincial million <200,000 -Consultants' newspaper (US$) Qualifications (CQS) or Shopping (US$) NA <100,000 Individual Consultant Advertisement.Inaddition to a nationalnewspaper, all Procurement Notices for ICB, and consultant contracts above US$200,000 for firms, will be advertised on UnitedNations Development Business online and dgMarket. The advertisement for Expression o f Interest for selection o f consulting firms will be in a national newspaper, regardless o f contract value. Bidproposal evaluation and contract awardwill bepublishedinaccordance withparagraph2.60 of the Guidelines for works and goods, andparagraph 2.28 of the Guidelines for consultant services. RetroactiveFinancing. Inaccordance with paragraph 1o f SectionIV (B), Schedule 2 o fthe LoanAgreement, only payments for expenditures made after April 10,2006, are eligible for retroactive financing, and the ceiling for suchpayments i s limitedto US$40 millionfor civil works and consulting services. Procurement documents for the contracts eligible for retroactive financing from eachproject city will be submittedto the Bank for prior review. The retroactive financing period is one year before signingo f the loan. D. Frequencyof ProcurementSupervision The Bank will monitor procurement closely through its prior review procedures, regular supervisionmissions, andprocurement post-review missions. Inaddition to the prior review supervisionto be carried out from Bank offices, post reviews o fprocurement actions will be carried out every six months, as recommendedby the procurement capacity assessment. 83  DETAILS OF THE PROCUREMENT ARRANGEMENT INVOLVING INTERNATIONAL COMPETITION 1. Goods andWorks andNon-consultingServices (a) Table A8.3 summarizes the contract packages which will be procuredunder ICB and direct contracting: 1 Table AS.3:* List of' pipmentto be procured sing CB andDi 3 4 5 h 9 ~~ Ref.No. Contract Estimated Procurement P-Q Domestic Notes (Description) cost Method Preference US$000 (yesho) Area Traffic Control Supply BTS23 (ATC) andtraffic NA Yes & signals inBenxi - Install Area Traffic Control Supply PTS23 (ATC) and traffic NA Yes Prior I 2007 & 1 signals inPanjin Install Area Traffic Control Supply JTS23 (ATC) and traffic 1,545 ICB NA Yes Prior 2007 & signals inJinzhou - I Install Area Traffic Control 7 Supply LTS23 (ATC) and traffic 1,445 ICB NA Yes Prior 2007 & - 11 signals inLiaoyang Install 1I BTS22 Equipment for traffic A few management inBenxi 1,500 -NA Yes Prior lots PTS22 Equipmentfor traffic A few management inPanjin 2,005 ICB -NA Yes Prior lots Equipmentfor traffic I JTS22 management in 1,370 ICB NA Yes Prior A few Jinzhou lots Equipment for traffic LTS22 management in 1,000 ICB NA Yes Prior 2007 A few lots ~ Liaoyang Equipment for traffic DTS22 management in 140 ICB NA Yes Prior A few lots ~ Dengia Equipment for road FRM21 maintenance in 900 1 ICB NA Yes Prior A few Fushun lots BRM21 Equipmentfor road maintenance inBenxi 1,520 -NA Yes Prior 2007 PRM21 Equipmentfor road maintenance inPanjin 2,270 -NA Yes Prior Equipmentfor road JRM21 maintenance in 1,865 NA Yes Prior A few Jinzhou I ICB 84  Equipment for road LRM21 maintenance in 1,060 ICB NA Yes Prior 2007 A few Liaoyang lots Equipmentfor road DRM21 maintenance in 460 ICB NA Yes Prior 2007 A few Dengta lots Total 18,765 (b) ICB Goods contracts estimated to cost above US$0.5 million for per contract will be subject to prior review bythe Bank. 2. Consulting Services (a) Table A8.4 summarizes consulting assignments that will require a short list of international filTIlS. mal Firms 1 2 3 4 5 6 7 Ref. Descriptionof Assignment Estimated Selection Review Expected Comments No. cost Method by Bank Proposal US$ 000 (Prior / Submission Post) Date IDPM1 Procurement agent for works Percentage 2007-2009, goods & 900 QCBS Prior May 2006 contract consultant services IDPM2 Project management, design Time based review, construction 1,300 Prior May 2006 contract supervision IDRM2 Road maintenance reform, Time based management and support to Prior contract SOE, including overseas training IDPT2 Public transport reform, bus Time based network planning, and 600 contract Strengthening SOE management capacity, including overseas training IDTS1 Enforcement o ftraffic Time based management, parkingpolicy, 300 I QCBS I Prior I 2007 contract including overseas training Total 3,580 IDG1 Assistance on output based Funded by road maintenance Prior 2007 PPIAF IDG2 Strengthening Provincial Fundedby a Construction Department on I Prior 2007 grant ~ Public Transport Reform 85  Notes: The first and second capital letters: ID - Institutional Development, The third and fourth capital letters: PT - Public Transport, TS -Traffic Safety, RI- Road Infrastructure, RM- RoadMaintenance, P M- Project Management (b) Consultancy services estimated to cost above US$200,000 per contract and Single Source selection of consultants (firms) for assignments estimated to cost above US$50,000 for individualconsultant will be subject to prior review bythe Bank. (c) Short lists composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than US$300,000 equivalent per contract, maybe composed entirely o f national consultants inaccordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. (d) Table A8.5 summarizes consulting assignments where the shortlists could be constituted entirely o f domestic firms. 1 2 3 4 5 6 7 Ref.No. Descriptionof Estimated Selection Review Expected Comments Assignment cost Method by Bank Proposal US$ 000 (Prior / Submission Post) Date IDPM11 Procurement agent for 200 CQS Prior April 2006 Percentage works 2006 contract IDPM21 Preparation o f Technical 200 CQS Prior April 2006 Lump-sum Specifications for works contract 2006 IDRI1 Public participation 60 sss Prior 2006 LumpSum contract IDRI2 Transport planning 250 QCBS Prior 2007 Lump sum IDRM1 IPreventative road 120 I CQS IPost I2006 ILumpsum maintenance planning contract IDPTl Buspriority 140 CQS Post July 2006 Lump sum contract IDTS2 Traffic safety auditing 300 Firmor Prior 2006 Time based Individual completed contract Consultant until2009 The contract for the second round of public participation was awarded to the Liaoning Academy of Social Sciences (LASS) on a Single Source Selection basis. LASS i s an eligible entity that has carried out the first roundo fparticipation work financed by Liaoning cities, and was selected through a competitive process. LASS created a valuable asset inthe first round of consultations - a scientifically chosen representative panel sample that was needed for the second round o f work, As the second roundwas a continuation o f the initial work, and as LASS was uniquely qualified to do the work, it was agreed that the loan-financed second roundcould be awarded on a single source selection basis. 86  Annex 9: Economic and Financial Analysis CHINA: China-Liaoning MediumCities Infrastructure Project ECONOMIC ANALYSIS Overview All project components have been subject to an economic analysis. For the components besides the road infrastructure component, the generally modest individual investments have been designed to reflect a wealth o f Chinese and international experience that indicates that small investments in maintenance, traffic safety, traffic management and public transport facilities have very higheconomic returns and distributionalbenefits. Roadmaintenance works inthe project include overdue corrective maintenance, essential to preserve the integrity o f the road network, and o f critical importance to the majority o f the population which does not use automobiles. Designo f the maintenance works has been optimized from a long-term cost-effectiveness perspective, given the physical (extreme winters) and economic (inadequate short-term maintenance budgets) environments o f the project cities. The traffic safety and management components are small investments that past experience indicates provide very significant benefits inincreased levels o f safety (lower levels o f accidents, fatalities and associated economic loss) and savings intravel time. The public transport investments comprise mostly low-cost elements, which are either essential operational items (such as dispatching equipment, end-of-route turnarounds, off-street parking, and maintenance facilities), or which enhance quality for the passengers (such as transfer interchanges andbus shelters). Designs for all works havebeen optimized from a cost- effectiveness perspective. Such investments typically provide highrates o f return interms o f increases inthe competitiveness o f the bus service, and lower operational costs related to higher productivity and lower maintenance costs. Implementation o f the bus priority measures will benefit passengers intime savings while operators will be able to lower operating costs through higherbusproductivity. A formal economic evaluationbasedon an analysis usingatransport planningmodel was conducted for the road infrastructure component (115 sub-projects inthe six cities) which accounts for about 56% o f the loan and 70% o f total project cost. Both costs and benefits reflect December 2005 prices, and a project life o f 15 years i s assumed. Financial costs have been converted to economic costs by the elimination o f price contingency, taxes, customs duty on imported materials, and by the application o f shadow price factors. The resulting overall economic cost i s about 96.7 percent o fthe financial cost. Inall cities, an overall analysis was undertaken, together with individual evaluations for key projects. 87  Screening A pre-screeningbased on aninformal assessment of economic returnwas anintegralpart o fthe project identification process. At the beginningo f the identification process, twelve cities made proposals for urbantransport investments, totaling US$1.2billion inaggregate. These proposals were a combination o f major road expansion projects (such as ringroads andbridges) and a significant number o fproposals to finance major roads to facilitate urbanexpansion. The following criteria were developed to guide the cities to identify project components: 0 Focus on investments targeting existing bottlenecks inbuilt-upareas. 0 Transport plans and policies shouldbe reviewed ina comprehensive manner, with particular emphasis on: (a) Enhanced implementation o f the new NRSL. (b) Enhancements inthe secondary roadnetwork to complement the investments in improving major roads. (c) An independentlymanaged (i.e., by a non-governmentalbody) participatory planning process to complement the technical planningprocess. The set of cities and components included inthe project reflect the result of an extensive screening that has yielded a self-selected group o f six cities with urban transport investments that address existing problems with reasonably scaled solutions. These cities are committed to sectoral reforms to complement the investments. The overall investments ineach city have then been hrther screened by LPDF from a financial capacity perspective. Alternatives All o fthe significant stand-alone investments -i.e., investments with a cost larger thanYlOO million, or those with more than four lanes for motor vehicles - were subject to a rigorous alternatives analysis to ensure that the lowest-cost alternatives meeting the traffic needs were chosen. The key features o f the alternatives analysis ineach city are summarizedinthe subsequent paragraphs. Benxi. The main individual project inBenxi i s the Beidi Bridge. The city i s divided into two by the Taizi River. There are only two bridges across the river inthe urbanarea, and both of them have load constraints due to age and damaged structure. Additionally, one o f them can only be accessedvia an underpass which has clearance constraints. As a result, there are no road freight connections between the expressway and the industrieslocated to the north and west o f the Taizi river. Extensive analyses o f alternative locations for a new bridge were conducted, takinginto account constraints of geography and the location o f existing industries. Onthe west side of the river, mountains constrainthe northern limits o f the bridge approach. Onthe east side o fthe river, steel factories constrainpossiblebridge locations on the south. Inlight o fthese constraints, the selected spot i s the best option for the construction o f the new bridge; the selected design i s simple and represents the appropriate solution. 88  Fushun. The investments inFushunarelimitedto improvement oftwo existingroads including small bridges and rail crossings. All projected rail crossings have been designed as underpasses. .Jinzhou. Jinzhou City has two mainbarriers: a rail linedividing the north section o fthe city from the central area, and the river, which separates the southern section o f the city from the central core. The rail lines form a significant bottleneckbetweenthe north and central areas. Existing rail crossings are concentrated inthe western part o f the city, and have clearance and drainage constraints. The key investments inJinzhou will include improvement o f two rail crossings on Hankou and Guangzhou roads. An analysis o f alternatives was conducted to identify the lowest cost solution for both crossings. At Hankou, a simple underpass i s the chosen solution. The proposed crossing at GuangzhouRoad consists o f a combination o f anunderpass crossing o fthe main rail line and an overpass crossing a secondary set o f rail lines. Liaoyang. Rail crossings are the mainbottlenecks inLiaoyang, limitingaccess to the expressway. Two existing underpasses provide the city's primary access to the expressway. The proposednew underpass at Xiaozhuang i s currently a pedestrian bridge with highslopes, and was identified as particularly inneed o f improvement duringthe public participation process. It i s located inthe middle of the existing crossings and its construction will shorten the distance between crossings. After an extensive screening, low cost alternatives were selected for all three underpasses. Panjin. A significant effort was undertaken to reduce the size o fmost new road constructiodupgrading. Panjin does not have any significant stand-alone investments. Dengta. The main investment i s the widening of Zaolin rail underpass. A rail line currently demarcates the western edge of Dengta City. Two railunderpasses connect the expressway and the developing areas west o fthe rail line to the urbanarea. Zaolin i s the southern o fthese underpasses, and suffers from congestion, clearance constraints and significant drainage problems. There are no sidewalks or,bicycle lanes and it i s particularly inconvenient for pedestrians and cyclists. The selected option retains an enhanced version o f the current underpass for motor vehicles and adds two low cost sections on each side for bicyclists and pedestrians. Methodology Transport user benefits, i.e., savings inVOCs and passenger travel time, were estimated from an urbantransport network analysis through the development o f a transport model, based on household and motor vehicle surveys, together with traffic counts. The calibratedmodels were usedto simulate network traffic performance under different scenarios - with and without the project. The simulation results, including travel distance, times, and speeds for eachpersonal or vehicular trip, were usedto estimate travel time and cost savings that constitute the transport user benefits. The household survey also generated pedestrian and bicycle O D matrices, andboth classes o fusers were explicitly modeled inthe evaluation o fproject benefits. Details canbe found inthe project files. 89  Other project benefits, such as improvedtraffic safety, reduced road congestion and auto emissions were not quantified because o f the lack o f reliable data. The EIRR and NPV presented inthis annex can therefore be considered somewhat conservative. MainAssumptions Forecasts of traffic volumes were modeledbased on trends for related variables inparticular, population. Table A9.1 presents population forecasts for the project cities. Table A9.1: Population Forecast Population(`000) Annual Growth City 2005 2010 2020 2010 2020 Benxi 950 1,034 1,013 1.7% -0.2% Fushun 1,428 1,450 1,494 0.3% 0.3% Jinzhou 872 903 921 0.7% 0.2% Liaoyang 715 853 1,030 3.6% 1.9% Paniin 575 727 977 4.8% 3.0% Forecasts o fmotor vehicle growth are presented inTable A9.2 and the resulting modal split forecast i s presented inTable A9.3 (cars are included in `others' inthe table). All forecast trends are based on observed growths inrecent years, indicating auto ownership rates o f around 140 veh/l 000 (including motorcycles) in2020. Period Benxi Fushun Jinzhou Liaoyang Panjin 2000 to 2005 22.8% 8.6% 6.4% 2.7% 12.1% 2005 to 2010 16.4% 7.8% 3.4% 5.6% 8.6% 2010 to 2020 5.5% 5.4% 2.1% 3.2% 4.8% City Walk Bicycle Bus Other Walk Bicycle Bus Other Benxi 60 7 19 14 56 5 22 17 Fushun 41 19 29 11 39 18 31 12 Jinzhou 33 41 12 14 35 40 13 12 Liaoyang 33 43 14 10 33 40 16 11 Panjin 37 27 16 20 35 24 17 24 Economic Internal Rate of Return Traffic assignment has been carried out for each city to represent traffic volumes at the end of project implementation and in2020. As a summary, a small number o f important roads have been selected in each city. Current and forecast motor vehicle flows (pcu/h) duringpeak hour are presentedinTable A9.4 below. This pcu figure comes from the current vehicle distribution inthe cities, where more than 30% ofvehicles are "heavy vehicles", i.e., buses andtrucks (all 90  sizes). An average conversionrate (dividingthe pcuby the conversation factor provides an estimate o f vehicle flow) could be: 1.25 for Liaoyang, Jinzhou, and Fushun; 1.15 for Panjin; and 1.35 for Benxi. I I Table A9.4: Current and Forecast Flows I 1 TrafficFlow (pcdhinpeak hour) City Street Section 2005 2010 2020 Benxi Huazhong 1,776 2,232 Xihu(Hexi section) 1,442 1,288 1,656 Digong Street 1,095 1,920 2,632 Beidi Bridge 3,519 4,617 Fushun Gebu Gebu nol7 bus yard - 1,344 2,552 3,634 Gaoshan Ningyuan Lingqian - 1,198 3,147 4,673 Jinzhou Chongqing Road Hankou Renmin - 1,156 764 780 N.Central Avenue Zhaoyang Beijing - 644 1,983 2,396 Keji Road Ximiang Wuhan - 890 1,152 Liaoyang Xinhua Road (North) Tiexi Gongnong - 641 1,456 1,906 MinzhuRoad Linguang- Nanhuan 297 1,799 2,359 Jiefang road Aimin - Qingnian 600 936 Panjin Xinlong Av. (West) Jincheng LiaoheNan - 606 1,079 1,128 XindiRoad Bohai- ShuangxingN. 620 716 Liaohe NanRoad , Shiyou- S h i h 1,958 2,023 2,497 The overall EIRR for the whole project i s estimated at 15.23 percent, and N P V (at 12 percent discount rate) i s estimated to be Y 586.17 million, as summarized inTable A9.5. Present Value of TotalCosts NPV (million EIRR(in (million City Project Yuan, 12%) Y O ) Yuan, 12%) Benxi Overall 439.7 16.87 162.1 BeidiBridge 98.3 13.93 17.7 Fushun Overall 372.0 14.4 90.0 Jinzhou Overall 425.1 13.63 47.9 Hankou RC 51.3 12.11 0.9 Guangzhou RC 125.1 13.60 5.9 Liaoyang Overall 645.9 14.80 125.4 Xuwangzi Underpass + Shengli Beiyuan Underpass 8.5 21.87 6.7 Bridge 70.5 19.80 39.7 Xiaozhuang Underpass 25.1 15.93 6.3 Panjin Overall 546.4 16.36 160.7 All cities All projects 2,429.1 15.23 586.2 Bicyclists and pedestrians are forecast to benefit 45 percent from travel time savings; bus users, 33 percent; cars, 10percent; andfkeight traffic, the remaining12 percent. 91  SensitivityAnalysis Thebasic evaluationofthe project, by standalone investmentsand as a whole, shows that the investments are economically viable, and the sensitivitytests (with respect to a one-year delay in project completion, higher cost, lower benefit, lower passengertime savings (PTS), zero growth of time value, and lower traffic projection) confirm this result. See Table A9.6 below. NPV (12Y0, Parameter EIRR(YO) millions of yuan) (a) Delay the completion by one year Higher capital cost (+lo%) 15.23 523.37 13.85 362.13 (b) Lower benefits (-10%) 13.61 284.64 Combine (a) and(b) 12.32 60.61 Lower value o f PTS (15%) 13.98 351.64 1Zero growth of time value 11.35 -100.90 Lower traffic projection (-10%) 13.94 344.95 Switchingvalues (c) Cost increase to reduce EIRRto 12% 124% id) Benefit reductionto reduce EIRRto 81% 12% Combine (c) and (d) to reduce EIRR to Cost: 111%; Benefits: 89% Inaddition, sensitivitytests withvariations incosts andbenefits ofthe project indicatethat the conditions for the project's viability to fall below the minimum acceptable threshold, e.g., a negativeNPV by using 12percent discount rate or an EIRRlower than 12percent, are unlikely to occur. Benefits would have to fall to less than 81 percent o fthose inthe base case with no change incosts, costs would have to increase to more than 1.24 times those of the base costs, or costs would have to increase by 11percent andbenefits fall to 89 percent at the same time. The results o f sensitivitytests (EIRR inpercentage) to cost andbenefit variation are summarized in Table A9.7. Table A9.7: Sensitivity of EIRRto Cost and BenefitVariation I Variation n benefits incost -50 -40 -30 -20 -10 0 10 20 -40 12.48 15.23 17.79 20.21 22.54 24.80 27.00 29.17 -30 10.36 12.89 15.23 17.43 19.53 21.55 23.52 25.43 -20 8.64 11.01 13.19 15.23 17.16 19.01 20.80 22.54 -10 7.21 9.46 11.51 13.42 15.23 16.95 18.61 20.21 0 5.99 8.14 10.09 11.90 13.61 15.23 16.78 18.28 10 4.94 7.00 8.87 10.60 12.22 13.76 15.23 16.64 20 4.01 5.99 7.79 9.46 11.01 12.48 13.88 15.23 30 3.18 5.11 6.85 8.45 9.94 11.36 12.70 13.99 92  Municipal FinancialAnalysis The objective o f the municipal finance analysis was to confirm that the municipalities participating inLMCIP have sufficient financial resources to afford the investments. Specifically, municipalities shouldhave sufficient resources to: (a) contribute the required counterpart funds; (b) repay the amount borrowed from the Bank; and (c) maintain and operate the assets created under the project. Due to limited data availability, complementary analysis on municipal public debt was carried out only on official public debt, i.e., without taking off-budget debt and contingent liabilities into account. Methodology. For each municipality, total revenues and expenditures (off and onbudget, transfers, and earmarked funds) were analyzed. Total infkastructure revenues, infrastructure fixed asset investments and recurrent/ maintenance expenditures, as given by the Urban Construction Expenditure and Maintenance Fund, were also analyzed. Available infrastructure spending, defined as total infrastructurerevenues less `routine' infrastructure recurrent/maintenance expenditure, was calculated as a key `surplus' ratio usedto assess the ability to provide counterpart funds, debt service, and operations/ maintenance expenditures. Total municipal revenues, infrastructurerevenues and expenditures were projectedby the municipalities up to 2010 at lower rates thanrecent historical trends, based on conservative planning assumptions (especially interms o f infrastructure revenues). Given the lack o fmulti- year budgets and the highincidence o f one-off municipal fundingpatterns (Le., through land sales), these projections can however only be initial estimates (and less emphasis was therefore placed on the projecting the outer years, i.e., beyond 2010). Moreover, particular attentionwas paid to the municipalities' reliance on land sales (as one o f the least predictable funding sources) interms oftheir importance as a source ofcounterpart funds. Summary Results The municipal finance analysis shows that project investments are broadly affordable for all cities, and the proposed counterpart fundingstrategies are sound (see Table A9.8). Inall municipalities, project investments constitute only a small fraction o ftotal municipal expenditures, never exceeding 5 percent. As a share o f available infrastructure spending, the percentages are higher (as further explainedbelow), but arejudged to be affordable. All municipalities are experiencing highgrowth - with anticipatedpositive spillovers on available infrastructure funds (for example, through higher urban construction and maintenance tax revenues) not all o f which i s reported inthe current estimates. Interms o fpublic official debt, the municipalities show very low percentages o f official debt relative to GDP -not surprising given the restrictions placed on direct borrowing bymunicipalities. Total project debts relative to provincial fiscal revenues are very small, never exceeding 0.5 percent o f total provincial revenues, so there i s negligible credit repayment risk at the provincial level. Despite this overall positive situation, the LPCGagreed (so as to minimize any unforeseen risk to project implementation, for example, through the lack o f counterpart funds) to work with the Bankto solve any issues relatedto implementation, including any issues related to the availability o f counterpart funds. 93  l lmaximum o f total project costs are a % o f total municipal revenue Benxi. Table A9.9 summarizes the results o fthe financial analysis inBenxi. Total project costs constitute about 5 percent o f total revenues inBenxi municipality. Infrastructure revenues are expected to grow roughly inline with municipal revenues and abit lower thanthe most recent historic trends. Benxi intends to provide counterpart funds via a state grant and a loan from ChindState Development Bank, and the rest (about 50 percent) through the urbanconstruction and maintenance tax. Project counterpart fund requirements are about 25 percent o f total estimated annual urban construction and maintenance tax. Land sales constitute only a small part o ftotal infrastructure revenue projections (and are not expected to grow, a conservative planningassumption). However, Benxi's municipalrevenues depend largely on a single source, with Benxi Steel contributing about 80 percent oftotal revenues. Also, project counterpart funds constitute a large part o f the surplus available for infrastructure spending (close to 80 percent). However, LMCIP i s the only major infrastructure investment project inthe city. Interms o f total project cities, with around 5 percent o f GDP as official debt - the new World Bank (and other) debt as a percentage o f GDP - Benxi i s one o f the more indebtedmunicipalities among the debt to fund LMCIP i s taken into account. Table A9.9: Be: ui Fin: icialAnalysis I actual actual actual1 actual11 proj.1 proj.1 proj.1 proj.1 proj.1 200: 2004 2005 2006 2007 2008 2009 2010 Total Revenue 2,449 3,099 3,290 3,617 3,895 4,217 4,553 4,918 5,311 Total RojectCostAs %of Total Revenues 4% 4% 4% 4% 3% InfrastructureRevenue 228 280 UrbanConstructionMaintenanceTax 114 143 164 208 218 228 238 248 298 LandSales 62 51 90 50 50 50 50 50 50 Other 51 87 76 100 154 157 159 161 163 InfrastructureMaintenance' RecurrentExpenditures 134 196 225 282 293 305 316 327 377 SurplusAvailablefor InfrastructureSpending 94 84 106 76 129 130 131 132 134 of h i c h isfor LMClP(counterpartfundsonly) 102 102 102 102 102 LMClPasa %of SurplusAvailablefor InfrastructureSpending LMClPCounterpartFunds(%) 79% 78% 78% 77% 76% LMClPPayrents(%) 4% 8% 10% 12% 15% LMClPCounterpartFundingSources(asa %of Total FundingSource) 1 UrbanConstruction/MaintenanceTax (YO) 23% 22% 21% 21% 17% Fushun. TableA9.10 summarizes the resultso fthe financial analysis inFushun. The project constitutes about 2 percent o f total municipal revenues. Infrastructure revenue growth i s projected to grow inline with total revenue, both somewhat more slowly than recent historic averages. The main sources o f infrastructure revenue are urbanconstruction and maintenance tax and land sales. The project constitutes, on average, about 40 percent o f total available spending for infrastructure. Counterpart funding sources are identified as urbanconstruction and maintenance tax andland sales; however both constitute only a small fraction o f total funds 94  available inthat category (only about 10percent to 30 percent ineach category respectively). Debtservice payment and operations and maintenance are projectedto be within the range of affordability. I TableA! 10: F shun `manc a1Analysis - actual actual actua actual1 proi.1 proi.1 proi.1 2002 - 200: 20oL 20051 2:oi 20001 200U)i Total Revenue 3,639 3,872 4,544 4,719 3,681 3,874 4,085 Total Roject Costsas a %of Total Revenue Infrastructure Revenue 263 355 364 420 414 433 501 UrbanConstruction MaintenanceTax 132 148 180 161 179 199 251 LandSales 77 118 89 81 80 75 80 Other 53 89 95 178 155 159 170 InfrastructureMaintenandRecurrentExpenditures 177 301 282 295 344 310 259 406 SurplusAvailable for InfrastructureSpending 86 54 82 125 71 123 242 116 ofMi&isfor LMClP(counterpart funds only) 4 8 4 8 4 8 LMClPas a %of SurplusAvailablefor InfrastructureSpending LMClPCounterpart Funds (%) LMClPDebtService Payrents(%) 4% 5% 3% 9% 11% I LMClPCounterpartFundingSources(asa %of Total FundingSource) UrbanConstructiodMaintenanceTax (%) 13% 11% 9% 9% 8% LandSales (%) 32% 34% 32% 32% 32% Jinzhou. Table A9.11 summarizes the results o fthe financial analysis inJinzhou. Project costs inJinzhouare about 3 percent oftotal municipal revenues, which are estimated to grow at about halfthe rate o f actual revenue growth inthe last three years (reflecting a conservative planning assumption). Project counterpart fundrequirements constitute about 30 percent o ftotal surplus available for infrastructure investment. The single biggest counterpart funding source i s an allocation from central government, with the urban construction and maintenance tax and land sales contributing the remainder. Boththese categories draw on only a small fraction o f total available resources, with project counterpart funding constituting around 5 percent and 10 percent o f total urban construction andmaintenance tax and land sales respectively. Overall, counterpart find availability i sjudged adequate inlight o f the fact that they only require a limited fraction o f the total resources available to fund infra~tructure.~Debt service payment and operations and maintenance are projected to also be within the range o f affordability, with debt service inthe initial years constituting, on average, 3 percent. Even when principal repayment and operation and maintenance expenditures are taken into account, (after 2010) project expenditures do not exceed 25 percent o f available spending for infrastructure - though the planning horizon i s too far inthe future to produce reliable predictions. Total official debt (including LMCIP) as a percentage of GDP i s about 1percent and i s constant over time. Total infrastructure revenues are projected, by the municipality, to grow faster than the historical rates. However, even if growth were at the historical averages counterpart funds as a percentage of revenue i s only a limited amount of total available spending. 95  I Table A9.11:I JinzhouFinancialAnalysis actual IactualI actual1 actual1 pr0j.I pr0i.I pr0j.I pr0i.I proid 2002 2003 20041 20001 %I I 20051 Total Revenue 3,580 4,130 4,370 5,300 5,360 5,790 6,320 6,920 7,630 Total ProjectCostAs %of Total Revenues InfrastructureRevenue 4 4 3 4 6 8 416 492 586 643 750 830 UrbanConstructionMaintenanceTax 108 123 179 205 236 272 313 334 LandSales 108 260 148 114 158 182 200 242 272 Other 227 a5 124 128 167 171 196 223 InfrastructureMaintenandRecurrentExpenditures 93 196 190130 166 194 238 269 339 379 SurplusAvailable for InfrastructureSpending 350 272 234 250 298 34% 374 411 451 ofwhich isfor LMCIP (counterpartfunds only) 84 a4 84 84 84 LMCIPas a %of SurplusAvailable for InfrastructureSpending LMCiPCountemartFunds(%I . . LMCIPPayments (%) LMCIP CounterpartFundingSources(asa YOof Total FundingSource) UrbanConstruction/MaintenanceTax (%) Land Sales (%) Liaoyang/ Dengta. Table A9.12 summarizes the results o fthe financial analysis inLiaoyang. LiaoyangMunicipality (under which Dengta falls) i s projectedto spend about 4 percent interms of total project costs relative to total municipal revenue. Infrastructure revenue i s projected to grow significantly more slowly than inthe recent past - reflecting conservative planning assumptions by Liaoyang MPB. Total counterpart fundingrequirements are about 30 percent o f total surplus available for infrastructure spending. Counterpart funds will come inroughly equal proportion from the urban construction andmaintenance tax and land sales. Counterpart funding claims constitute about one third o f available infrastructure revenue sources ineach category. Given that the overall infrastructure revenue projections were made based on such conservative planningassumptions bythe municipality (for example, infrastructure revenues areprojectedto grow by less than a third o frecent historical trend), Liaoyang i s not expected to face counterpart fundingproblems. Debt service payment and operations andmaintenance expenditures were projectedto also be within the range o f affordability. InDengtaCounty, total project costs constitute about 4 percent oftotal countylevelrevenues, and as such no affordability issues are anti~ipated.~Liaoyang is directly responsible for Dengta's counterpart find requirements and debt service repayments. Based on the earlier analysis o f the municipal finances inLiaoyang, Dengta's participation inthe project should not affect Liaoyang's financial situation significantly. A sensitivity analysis showed that the inclusiono f Dengta's project costs (about 10percent o f total project costs inLiaoyang) inthe municipal finance analysis for Liaoyangwill not affect any o f the affordability ratios ina substantive way. Dengta does, however, propose to provide counterpart hnds particularly through land sales. 96  I Table A9.12: L loyal `sis --actual actual proj.1 proj.1 proj.1 proj.1 proj 2002 200: 2004 2005 2006 2007 2008 2009 201C Total Revenue 2,378 2,751 3,454 4,068 4,759 5,568 6,515 7,623 8,918 Total ProjectCost As %of Total Revenues 4% 4% 3% 3% 2% InfrastructureRevenue 259 381 512 676 695 741 803 876 973 UrbanConstructionMaintenanceTax 64 80 110 149 174 204 239 279 327 LandSales 15 51 61 159 183 210 242 278 320 StateBonds 48 120 157 169 125 100 80 60 50 Other 132 130 184 199 213 227 242 259 276 InfrastructureMaintenance/RecurrentEwpenditure 109 158 202 279 276 295 320 349 388 SurplusAvailablefor InfrastructureSpending 149 223 310 397 418 446 483 527 584 of which isfor LMClP(counterpartfunds only) 128 128 128 128 128 LMClPas a %of SurplusAvailablefor InfrastructureSpending LMClPCounterpartFunds (%) 31% 29% 27% 24% 22% LMClPPayments(%) 2% 4% 6% 6% 7% LMClPCounterpartFundingSources(asa %of Total FundingSource) Urban Construction/MaintenanceTax (%) 40% 35% 30% 25% 22% LandSales(%) 32% 27% 24% 21% 18% LMClPCounterpartFundingSources (asa % IncreaseOver Previous ..ir) Urban Construction/MaintenanceTax (%) 17% 17% 17% 17% 17% LandSales(%) 15% 15% 15% 15% 15% Panjin. Table A9.13 summarizes the results o fthe financial analysis inPanjin. Project costs are about 5 to 6 percent o f total municipal revenues (with municipal revenue growing somewhat more slowly thanhistorical rates). Infrastructure revenue i s expected to grow inline with overall municipal revenues. Panjin i s endowed with a large oil field and therefore much o f Panjin's economy and municipal tax revenues are derived from oil (about 70 percent of total municipal revenues); this also explains Panjin's highper capita income, the highest among project cities. Infrastructure revenue inPanjin relies to a significant extent on financial transfers from the municipal government (about 30 - 40 percent). Total counterpart funding requirement as a percentage o f surplus available for project investments i s about 30 percent. Counterpart funds are derived, inparticular, from the urbanconstruction andmaintenance tax and land sales (together addingup to 50 percent) and a local commercial bank loan (50 percent). Counterpart funds from landsales appear to be a highpercentage oftotal land sale funds available. Debt service payment and operations and maintenance are projectedto be within the range o f affordability. 97  I Table A! 13: Panjin Financi .ysis actualI actualI 2002; 20031 200 2,190 3,012 3yZ0 actual Total Revenue 3,40' Total ProjectCosts as a %of Total Revenue InfrastructureRevenue' 509 632 662 49( UrbanConstruction MaintenanceTax 184 261 284 21( 231 254 279 307 338 FinancialAllocationfromDisposableIncorre 184 241 256 13: 148 163 180 198 210 LandSales 59 45 29 3( 33 36 4 0 4 5 50 Other 82 85 93 11: 133 143 158 173 190 InfrastructureMaintenandRecurrentEwnditures* 179 188 186 17: 228 249 218 184 194 SurplusAvailable for InfrastructureInvestment 330 444 476 31; 317 347 439 539 594 ofvhich isfor LMCIP(counterpartfunds only) 114 114 114 114 114 LMCIPas a %ofSurplusAvailablefor Infrastructurelnvestrrents L K l PCounterpartFunds(%) 36% 33% 26% 21% 19% LMclPDebtServicePaymnts(%) 2% 3% 3% 3% 3% LMCIPCounterpartFundingSources(as a %of Total FundingSource UrbanConstruction/ MaintenanceTax (%) 13% 12% 11% 10% 9% LandSales(Yo) 86% 79% 71% 63% 57% LMCIPCounterpartFundingSources(asa % IncreaseOver Previous ar) UrbanConstruction/MaintenanceTax (%) LandSals(Yo) 98  Annex 10: SafeguardPolicy Issues CHINA: China-Liaoning Medium Cities Infrastructure Project RESETTLEMENT As described inAnnex 4, LMCIP will finance improvements and new construction o f about 115 roads (primary, secondary, andneighborhood) totaling about 179 km, improvements to traffic management and safety, road maintenance, and public transport inthe cities o f Liaoyang, Jinzhou, Panjin, Benxi, Fushun and Dengta. Resettlement impacts o fthe project have been reduced significantly through optimizing the design o f each component and subcomponent. Socioeconomic and Inventory Survey Under the guidance o f LUCWO, a socioeconomic and inventory survey was carried out by each municipal project office, jointly with the housing demolition offices, LRBs and other relevant bureaus at the municipal level. Table A1O.l summarizes the process. Table A1O.l: Detailed Information of Socioeconomic and Inventorv Survev Project Impact Project resettlement impacts include permanent land acquisition, residential house demolition, demolition o fbuildingsbelonging to enterprises and public institutions, demolition o f shops, infrastructure and ground attachments. These impacts will be scattered in 12districts/counties: Baita, Wensheng, and Taizihe districts o f Liaoyang city; Linghe, Guta, and Lingnanxindistricts o f Jinzhou; Xinglongtai, and Shuangtaizi districts o f Panjin; Xihu, Pingshan, and Mingshan districts o f Benxi; Shunchengdistrict o f Fushun;andtwo streets o f Dengta. The project will 99  affect 4,994 households and 677 enterprises and shops, and will affect 31,547 people inall. The collective land acquired i s currently being usedprimarily for housingand a very limited amount of farm land will be acquired. Details are included inindividual city RAPs and summarized in Table A10.2. Table A10.2: Detailed Resettlement Impacts Type of Impacts 1 Benxi Dengta Fushun Jinzhou Liaoyang Panjin Total Affected 0 12 0 0 863 0 875 Collective households land Affected 0 45 0 0 3,396 0 3,441 persons Affected 0 0 0 0 0 304 304 I State-owned households land IIAffected 0 0 0 0 0 1,222 1,222 persons Affected 1,338 71 292 401 802 564 3,468 residence households demolition Affected 4,3 16 252 857 1,016 2,280 1,893 10,614 persons Rural Affected 0 0 0 0 712 263 975 residence households demolition Affected 0 0 0 0 2,708 919 3,627 persons Affected Number 43 2 49 12 58 19 183 enterprises Affected 5,159 30 185 96 2,853 1,504 9,827 I population Affected Number 8 2 6 6 0 5 26 public Affected 120 28 0 20 0 2,096 2,264 institutions population Affected Number 259 0 91 34 61 23 468 -et affected Dersons I 11.892 I 35 Linkage. Contemporaneously with the project, FushunMunicipal Government is resettling residents o f two shantytowns located along Gaoshan road, which i s part o f the project. Though a review o f these activities concluded that they are not `linked' to LMCIP as per OP4.12 (since these activities are not essential to achieve LMCIP objectives), a due diligence review o f the resettlement associated with the shanty town project was conducted. Based on an independent review commissioned at the Bank's request, it was concludedthat resettlement associated with the shanty town project was found to have been conductedina manner generally consistent with OP 4.12 objectives, andto the general satisfaction o f displaced persons. Resettlement Policies andLegal Framework The RAPs were prepared inline with relevant Chinese laws and regulations, as well as the Bank OP 4.12 on Involuntary Resettlement. Details are provided inChapter 4 o f the RAP. 100  Principles The following basic principles were adopted for resettlement planning: acquisition o f land and other assets, and relocation o f people, will be minimized as much as possible; all project affectedpeople residing, working, doing business or cultivating land required for the project as o f the date o f the baseline surveys are entitled to rehabilitation measures sufficient to assist them to improve or at least maintaintheir pre-project living standards, income-earning capacity and production levels. Lack o f legal rights to the assets lost will not bar them from entitlement to such rehabilitationmeasures; rehabilitation measures due to land acquisition to beprovided are: (a) agricultural land for land o f equal productive capacity; (b) compensation for land acquisition and resettlement subsidy for the farmers affected by land acquisition; and (c) other forms o f assistance; replacement agricultural land will be as close as possible to the land that was lost; plans for acquisition o f land and other assets, and provision o f rehabilitation measures will be carried out inconsultationwith the affectedpeople; financial and physical resources for resettlement and rehabilitation will be made available as and when required; all affected people losing their place o f residence will be relocated directly as far as possible (that is, use o f transitory housing will be minimized); institutional arrangements will ensure effective and timely design, planning, consultation and implementation o fthe Resettlement Plan; and effective and timely supervision, monitoring and evaluation o f RAP implementationwill be carried out. CompensationLevels Based on the `Land Law' o f China, compensation o f collective land i s composed o f three elements: land compensation, resettlement subsidy and compensation for standing crops. Compensation rates o f collective landare determinedbased on approach provided inthe Land Law in China. Compensationo f urban state owned land i s determined based on the Circular o f State Owned Land Transferring. Compensation rates o f structures are determined based on their replacement cost. The replacement cost will be determined in a two-step fashion. At the planning stage, the following were used as reference inthe RAP to calculate estimates o f the replacement cost o f housingindifferent cities: (a) commercially built housing and equivalent but older housing on the real estate market; (b) the price o f economical housing built by government for low income people; and (c) the construction cost o fresettlement housing built by government especially for displaced persons. Duringimplementation, houses to be demolished will be evaluated by 101  government certified real estate evaluation agencies based on local government policies. At that time the higher o f (a) the rates inthe RAP and (b) the acceptable rates determined as a result o f the house evaluation will be adopted as the compensation rate. LivelihoodRehabilitation Strategy and Measures Separate strategies for livelihood rehabilitationhave been devised for different classes o f affected people, enterprises and institutions as summarized below: 0 Affected farmers. The socioeconomic survey indicatedthat agricultural income constitutedbetween 0 and 18.13% o f the total income of affected farmers. The major portion o f income for this group i s generated from non-agricultural activities, including temporary job outside the community and small business operations. To restore the loss o f agricultural income, three different measures have been designed, based on consultation with affected people: (a) cash compensation; (b) land re-distribution; and (c) training for jobs. 0 Affected urban residents. Different relocation methods will be applied to the affected urbanhouseholds, based on extensive consultations with the affected population. Three options will be offered: (a) cash compensation; (b) replacement housing; and (c) provision o f inexpensive cheap rental housing. 0 Affected rural residents. Affected rural residents will be offered two options: (a) full package o f cash compensation, including structure and land; or (b) cash compensation for structure, and provision o fhousing plot to construct houses on their own. 0 Affected enterprises, institutions, and shops. Compensation for business loss has been provided for inthe RAPS. New sites will be provided to affected enterprises, institutions andshops. Salary will bepaidto employees duringthe replacement period, and employees will not lose their job due to relocation. 0 Affected public infrastructure. Compensationwill bepaidto the relevant government agencies or local governments to restore the affected infrastructure and services based on replacement value. Institutional Arrangements A multi-level institutional structure has beenestablished for the implementationofRAPs. An independent monitor has been selected for resettlement implementation. Details o f staffing and their responsibilities are provided inindividual RAPs. Briefly, the PMOSare the administrative institutions incharge o f RAP implementation intheir respective cities. Their responsibilities include preparation o f resettlement policy; planningthe resettlement; guaranteeing the timely implementation o fthe plan, managingcapital allocation; and takingprimary responsibilityfor monitoring. The implementingagency responsible for land acquisition and demolition, and the appropriate personnel at these agencies are provided inthe RAPs. 102  TableA10.3: ResettlementOrganizationsandItsResponsibilities ProjectCity ImplementingInstitution Benxi . Benxi urbanconstruction office Dengta Dengta civil engineering company Fushun Shuancheng district shed upgradingheadquarters Jinzhou Urban investment company. House demolition and resettlement company Liaoyang National land resources bureau. Demolition company Panjin Landacquisition service station Buildnew houses Demolition service station PublicConsultationandParticipation Public consultation and participationplayed a key role informulating the RAPs. The affected residents, business people anddistrict governments participatedinthe census, inventory and formulation o fthe livelihood rehabilitation strategy, measures and relocation sites. Their feedback has beenincorporatedinthe RAPs. The RAPs include a list o fmajor consultation sessions (see also Annex 15). Public consultation and participationwill continue duringRAP implementation. Project information will beprovided to the affected people through TV, radio, newspapers, bulletins and posters. The RAP will be summarized into a resettlement information booklet (RIB) and distributedto all affected households. GrievanceRedressMechanism A mechanismhasbeen designed for grievance redress under each o fthe project components. All grievances canbe filed inbothwritten andverbal form. The redress channel lies within the project management and government systems. Recording requirements and response time frame have been established for grievance resolution. Briefly, the mechanism i s designed to escalate unsolved grievances up the local government chain o f command, startingfrom local demolition offices to the municipal government authorities. Affected persons can seek redress incivil courts for grievances not addressed even at this level. This mechanism will be disclosed as part o f the RIB. ResettlementImplementationMonitoring Internal and external monitoringhas been designed as part o fproject resettlement management. Project resettlement offices will carry out internal monitoring o fthe resettlement implementation ineachproject city andLUCRPOwill beresponsible for preparingthe summary internal monitoring report. The monitoring procedures, content, staffing, responsibility, time frame and reporting havebeen detailed inthe RAPs. An external monitor has been selected for independent monitoring o f RAP implementation. The independent monitoring will cover 103  physical progress o f RAP implementation, including compensation payment, allocation o f residential sites, farmland allocation, andrestorationof infrastructure. The independent monitor will also review the public consultationprocess, operationo fthe resettlement project offices, grievance redress mechanisms and restorationo f livelihood o f the affected farmers. Independent monitoring will be conducted once a year duringthe project implementation period. ResettlementBudget andDisbursement A detailed resettlement budgethasbeendeveloped on the basis o fthe inventory andthe compensation rates developed. This budgetincludes the base cost, management fees, and contingencies. The total resettlement budgeti s about $105.8 million. Resettlement will be financed entirely through counterpart funds. Resettlement funds will be disbursed from the municipal governments to the various entitled units through the city PMO. ENVIRONMENT EnvironmentalImpacts andEnvironmentalManagementPlans This section describes the environmental impacts and EMPs o f LMCIP. The discussion is based on the consolidated EIA report and EMP preparedby LAES, with assistance from local environmentalresearch institutes, local environmental monitoring stations, and an international environmental specialist. EIA documents identifypotential environmental benefits and consequences o f the project, propose measures to avoid, mitigate or otherwise compensate negative environmental impacts duringconstruction and operation, and allow incorporation o f appropriate measures inthe design to mitigate negative impacts to a minimumand acceptable level. The EIAhas beenpreparedon the basis o f China's legal and policy framework for pollution control and environmental protection, master plans and environmental plans o f the six project citiedcounty, as well as applicable World Bank safeguard policies. Applicableregulatory discharge and environmental standardshavebeen used as the primary reference to determine the extent andlevel o f impacts. The EIA applies methodologies set out invarious technical guidelines issued by SEPA. The scope o f the project covered bythe EIA i s based on project feasibility study reports for each o f the project components prepared bythe Liaoning UrbanPlanning Design andResearch Institute. EnvironmentalBaseline GeneralSetting. Liaoning Province, locatedinthe northeast o f China, i s one o fthe heavy industrial bases inthe country. Fushun,Benxi, Jinzhou, Panjin and Liaoyang are important cities inthe Liaoningregional development plan, and are located alongthe two prioritydevelopment corridors that will receive financial and institutional support for infrastructure development inthe context o fthe Revitalization o fNortheast Program. 104  Climate, River, Hydrogeology, and Ecology. Liaoning Province i s located inthe temperate zone with distinct seasons. The cities are situated inthe Liao River Basin, except for Jinzhou, which i s inthe Xiaoling River Basin. The Liao River Basin drains through 11important industrial and population centers and vast agricultural fields inthe province. Project investments are located in urbanized or agricultural setting, where majority o f the native flora and fauna have adapted to the sometimes inhospitable environment. IdentiJication of Sensitive Receptors. Based on the criteria described inthe EIA report and the rounds o f detailed site investigationby the Bank along all sites and alignments, 31sensitive receptors inFushun, 16 inBenxi, 43 inLiaoyang, 13 inPanjin, 10 inJinzhou and 2 inDengta havebeenidentified as being vulnerable to increased air pollution and noise from the increased traffic volume after the project. These sensitive receptors are the focus o f the impact assessment, particularly air quality and noise-related impacts. Detailed information i s available inthe EIA reports. Air Quality Baseline. Ingeneral, most o f the air quality parameters monitored duringthe EIA will meet the applicable standards, except airborne particulate matter less than ten micrometers indiameter (PM10), and occasionally carbonmono-oxide andhydrocarbons inselected cities. As the cities inthe province are all industrial cities, despite the substantial efforts madeto renovate, upgrade, and in some cases close industries to control pollution, air quality, particularly related to particulate pollution from coal combustion, remains a concern. Construction sites, sand storms from surrounding areas, and ambient dust also contribute to particulate pollution in the ambient air inthe project cities. Motor vehicle emissions are not yet a major air pollution factor according to the monitored results during the EIA. Most o f the monitoredparameters relatedto motor vehicle emissions meet the applicable standards. Although growing, at present the motor vehicle fleets inthe project cities are generally very small. Acoustic Quality Baseline. Monitoring data shows that the monitored sensitive receptors and other project areas experience noise levels exceeding the applicable standards when located adjacent to existing roads. Greenfield sites and small alleys, which currently do not have motor vehicle traffic, have a good acoustic environment. Motor vehicle traffic seems to be a significant source o f noise, even though current traffic volumes are generally not highand speeds are low; indications are that the highnoise i s due to the poor road surface, frequent acceleration and braking(which generates highnoise and constant use o fthe horn) due to poor road conditions, traffic congestion and poor traffic management. Although insome cases standardsare exceeded to a very significant extent (insome cases up to 20 decibels, dB(A)), the impact o f the baseline noise levels on sensitive receptors i s limited, based on the season. Innortheast China, most multi-storey buildings, including schools, hospitals, residential houses and other sensitive receptors, have double glazed windows for heat insulation. Duringlate fall, winter and early springwhen windows are closed, the noise impact i s substantially reduced. Although the windows are not designed specifically for noise reduction, the two glass layers can reduce noiseby about 15-20 dB(A) when properly closed. 105  Vibration Baseline. Benxihas similar roads and traffic conditions as all the other project cities andwas monitoredto reflect the general vibration baseline conditions for the overall project areas. Monitoringresults indicate that all points meet the standards, except for the first floor o f a buildingadjacent to the main railway, whichreceived significant vibration impact. Culturalproperty. An initial cultural property screening along the entire project area, including the alternative alignments, was conducted inaccordance with Bank OP4.11. The screening covered culturalhistoric sites or buildingswithin 500 meters on both sides o f the project road alignments. The cultural relics investigation consisted o f three parts: literaturereview, field reconnaissance and consultation with relevant authorities. The investigation found that the project activities pass near a "city level" park andtemple inBenxi, a "provincial level" protected park, pagoda andmuseuminFushun,and200 meters fiom a "state level" protectedpagoda in Liaoyang. Inall cases, the investigation found that the proposed activities would increase the quality of access to the sites, without any encroachment or adverse impact. Details are available inthe consolidated EIA. EnvironmentalBenefit- Operations LMCIP will bringsignificant positive impacts and benefits to the natural environments o f the six project cities/county. This project facilitates environmentally desirable outcomes bypromoting alternatives to private motorized travel thereby reducing local and GHGpollutionandpromoting safety, especially for cyclists and pedestrians. Works under the road maintenance component will improve the condition o f the sidewalks, feeder and tertiary road system, and reduce road dust. The road infrastructure component will enhance travel conditions for pedestrians and cyclists on major and secondary roads, and finances MV/NMV separation on major roads. The public transport component supports improvements inbus service and operations, which will contribute to makingthe public transport system more attractive. Inaddition, the air quality analysis suggests that inmany cases, the improvements inurban streets will reduce vehicle emissions and contribute to improved local air quality. The traffic safety andtraffic management component creates a safer travel environment for pedestrians and bicyclists through improvements to major road corridors and intersections. Analysis of Alternatives Alternatives were considered for each component duringthe preparation o f the feasibility studies, with the objective o fminimizing the negative environmental impacts. As has been described inAnnex 9, this resulted inenlargingthe scope o fthe secondary road rehabilitation component, and on focusing the road infrastructure component on reducing existing transport congestion. InPanjin, an analysis o f alternatives considered for the proposed HuBinRoad led to a modification o f the original design to avoid encroachment towards a neighborhood lake. Details o f the process and specific issues associated with the alternatives analysis are provided in Chapter 6 o f the consolidated EIA report and summarizedinAnnex 9. 106  Environmental Impacts and Mitigation Project components will potentially cause a variety o f short-term construction and longer-term operational impacts. A series o fmitigation measures have beenplanned to reduce the impacts to acceptable levels during construction and operation. Mitigationmonitoring procedures have been established and the organizations responsible for monitoring have been designated. Construction Phase. Project components could cause short-term impacts, such as dust, noise, traffic, soil erosion, workers' safety, and solid wastes from construction activities, community activities and public health issues. Various measures plannedto reduce them to acceptable levels havebeen described inthe EIA andthe EMP, includingrestrictions onnight-time construction, mandating the use o f low-noise machinery and construction methods, and the development o f detailed plans for the disposal o f soil and waste disposal. Operation Phase. Project impacts on air quality are limitedand pollutant concentrations comply with applicable standards. The primary negative impact o f the project i s predicted to be higher than standard noise levels at a selection o f identified locations. However, some sensitive receptors inproject locations have baseline noise levels higher than standard. Inother locations, the project i s expected to lower noise levels through eased congestion and improved road quality. The negative impact o fthe project on noisewill be most significant ingreen field sites and alleys, where there is no motor vehicle traffic at present. Duringimplementation, noiselevels at affected sensitive receptors willbemonitored, and residents and other affected people will be consulted on the actual noise impact with regard to their life and/or work. The results o f this monitoring and consultation will serve to identify locations where window ventilation or air conditioners will be installed to mitigate noise impact. Details o f all mitigation measures andthe responsible agencies for their implementation and supervision are provided inthe EMP. Environmental Management and Monitoring Environmental management organizations involved inLMCIP construction and operation and their hnctions are summarizedinthe consolidated EIA. Briefly, the EPB andthe municipal EPBs inBenxi, Fushun, Liaoyang, Panjin and Jinzhou, are responsible for enforcement o f laws and regulations, implementation o f environmental policies/programs, setting up and enforcing discharge standards, providing guidance on environmental matters, reviewing environmental reports and handling environmental emergencies. As the project proponent, LUCRPO and the city PMOs will take ultimate responsibility for environmental performance and environmental management duringconstruction. Environmental staff inLUCRPO and city PMOs will be responsible for ensuring the implementation o f mitigation measures. All project city PMOs will engage environmental specialists for supervision. They will work closely with the design institutes and contractors, as necessary, to modify andupdate the mitigation measures needed duringconstruction and implementation. Supervisionwill involveregular monthlymeetings andreviews o f site environmental reports, diaries and records, andregular site inspections and investigations. 107  Environmental Management Plan. An EMP has been developed as a stand-alone document for each o f the six project cities. The EMPs include the applicable policy basis and environmental standards, the environmentalmanagement system, the mitigation measures, monitoringplans, institutional arrangements, capacity building, andthe estimated costs for the mitigation measures andmonitoringprograms duringthe construction and operationphases. Cities have formally adopted the EMPs, which estimate a total mitigation cost o f about US$4 million. Monitoring. Monitoringparameters include noise, dust, water quality, and solid waste disposal. Duringconstruction, daily routinemonitoring willbe conducted (mainlyby contractors) through visual observations for parameters such as air-borne dust, and muddyrun-off discharge to the rivers. Limitedequipment measurements through hand-held noise meters will be carried out by contractors and construction supervision companies. Professional monitoring units,using standard methods recognizedby regulatory authorities, will be arranged to monitor the parameters specified inthe EMP. Professional monitoring units will also review overall compliance status. Monitoring reports will be compiled at intervals ofthree to six months, summarizing the findings. These reports will be submittedto the project proponents, as well as to all relevant agencies and the Bank. Duringthe operation phase, noise levels will bemonitored every three to six months. Duringoperation, each city PMO will contract qualified professional monitoring units to conduct the monitoring program accordingto the parameters specified inthe EMP. Capacity Building. The EMP includes training programs for professional, managerial and technical personnel from Government, project proponents and operationunits, environmental institutions, contractors, and construction supervisors. Mandatory environmental training will be provided for contractors and construction supervisors prior to the commencement o f construction. The training will cover the basics of environmental protection andpollution control, contents o f the respective city EIAs and the requirements o fthe EMPs, methodologies o f site environmental management and monitoring, and reporting requirements. Public Consultation Apart from the consultation conducted to obtain inputsinto project design, two rounds o fpublic consultation were conducted ineach o f the six project cities duringthe preparation of the EIA: the first round was duringthe EIA TOR preparation stage, to obtain the public's views, concerns and comments on the project design, and potential adverse environmental impacts. The second round was conducted duringthe draft EIA report stage to explain the results o fthe impact assessments,mitigation measures, and the EMP. Details are provided inAnnex 15. Public concerns and opinions expressed are addressed inthe EIA, and where appropriate, have been communicated to the relevant authorities for response andrequired follow-up actions. Summary of InformationDisclosure The draft EIAreports were released on January 25,2005 onthe LAES website. Theprintedcity EIAreportswere distributed duringthe week o f February 6,2006 to the city PMOSand/or local EPBs for public review. 108  Information about the project and the process o f the EIA was published inthe local media through advertisements or public notices. These include brief announcements of project content, the process of EIA, the contact persons and their telephone numbers for the public to express their concerns or opinions on the EIA. The media disclosure i s summarized inthe table below. ummaryof R edia Disclosui Benxi Fushun Liaoyang Panjin Jinzhou Date December 15, January 12, January 16, November January 13, 2005 2006 2006 30,2005 2006 Media Benxi Daily Fushun Daily Liaoyang PanjinDaily JinzhouDaily Dailv Content Brief Brief Brief Brief Brief description; description; description; description; description; major major major major major environmental environmenta1 environmental environmental environmental impacts, impacts, impacts, impacts, impacts, benefits, benefits, benefits, benefits, benefits, invitationto invitation to invitationto invitationto invitation to provide opinions provide provide provide provide opinions opinions opinions opinions Contact PMO officials, PMO PMO PMO EIAteam, persons with names and officials, with officials, with officials, with withnames contact names and names and names and and contact telephone contact contact contact telephone numbers telephone telephone telephone numbers numbers numbers numbers 109  Annex 11: Project Preparation and Supervision CHINA: China-Liaoning Medium Cities Infrastructure Project Table All.1: Project Schedule Stage of Project Planned Actual PCNreview September 20,2005 InitialPID to PIC February17,2006 Initial ISDS to PIC February 17,2006 Appraisal Negotiations May 10,2006 Board or RVP approval June 27,2006 Planneddate of effectiveness December 31,2006 Planneddate of midtermreview June 30,2009 Plannedclosing date December 31,2011 Key institutions responsible for preparation of the project: 0 MinistryofFinance 0 NationalDevelopment andReform Commission 0 Liaoning ProvincialGovernment, including LPDF, LDRC, LPCD, LPEPB, and LUCRPO. 0 LAES,LASS 0 Municipal governments of Benxi, Fushun, Jinzhou, Liaoyang, andPanjin; Dengta local government; and UrbanConstruction, Finance, Development and Reform Commissions and other associatedorganizations ineachcity. 0 LiaoningUrbanandRuralDesign Institute, ShenyangComprehensive Traffic Design Institute, DalianMaritime Institute, Harbin Institute of Technology, City designinstitutes inLiaoyang, Jinzhou, PanjinandFushun. 110  Bankstaff andconsultantswho workedon the projectare listedinTableA11.2. Table A11.2: BankStaff andConsultantsAssigned to Project Name Title Unit Shomik Raj Mehndiratta Senior Transport Specialist East Asia Transport Sector and Task Team Leader Unit M e i Wang Senior Counsel East Asia Legal Department Junxue Chu Senior Finance Officer FinancialManagement and DisbursementGroup 1 Raja Iyer LeadManagement Specialist East Asia UrbanDevelopment Sector Unit Wenling Chen Junior Professional Associate East Asia Transport Sector unit Axel Bauemler Senior Private Sector Infrastructure Vice Presidency Development Specialist Chaogang Wang SocialDevelopment Specialist Environment and Social Development Department Chongwu Sun Environmental Specialist Environment and Social Development Department Dawei Yang Procurement Specialist East Asia Central Operations ServicesUnit HaixiaLi FinancialManagement East Asia Central Operations Specialist ServicesUnit Teresita Ortega ProgramAssistant East Asia Transport Sector Unit Xuan Peng Team Assistant East Asia Transport Sector Unit Miguel Angel Reguero UrbanTransport Planner Consultant Oscar Gutierrez-Bolivar UrbanTransport Planner Consultant Avarez John van Rijn Maintenance Institutional Consultant Specialist LuisPolonio Sanchez RoadEngineer Consultant BrendanFinn Public Transport Specialist Consultant Setty Pendakur Safety & Traffic Management Consultant Xiaovun Li Public Particbation Consultant 111  Annex 12: Documents inthe ProjectFile CHINA: China-LiaoningMediumCities InfrastructureProject FeasibilityStudy andPlans 1. Liaoyang, Jinzhou, Panjin, DengtaUrban Transportation Improvement Project Feasibility StudyReports (Infrastructure Engineering,Economic Analysis, InfrastructureMaintenance, Traffic Management and Travel Demand Analysis Volumes) inChinese, Liaoning Urban- Rural Design Institute, October 2005 2. Benxi, Dengta, Jinzhou, Liaoyang and Panjin UrbanTransport Component, Summary (Consolidated) Feasibility Study for RI, RM, RS, andPT, Urban and Rural Planning Design Institute o f Liaoning Province, January 2006. 3. Gebu Passageway and Gaoshan RoadReconstructionProject Feasibility Research Report, Provided by FushunPMO, February 27,2006 4. Road Maintenance Plans for the World Bank FinancedLiaoning Medium Cities Infrastructure Project UrbanTransport Component-Benxi, Jinzhou, Liaoyang, andPanjin Urban Transport Component (inEnglish), Liaoning Urbanand Rural Construction and Planning Design Institute andBenxi MunicipalManagement Department, January 2006 5. Liaoning Urban Transport Project RoadMaintenance Study Final Report, prepared for Liaoning Urban Construction and Renewal Project Office (LUCRPO) by ObenneyerPlanen +Beraten GmbH, October 2003 6. BenxiTraffic Management Planning Report Summary(2005-20) inEnglish, Traffic PlanningAcademe o fDalianMaritimeUniversity, December 20,2005 7. World Bank FundedLiaoning MediumCities Project UrbanTransportation Project, Jinzhou UrbanTransportation Upgrading Project Feasibility Study Report-Traffic Management Report (inEnglish), Shenyang Zhongji Traffic Research Institute, Liaoning Urban& Rural Construction & PlanningDesign Institute, and Jinzhou Urban Transportation Project Office, received through GETINSA on January 16,2006 8. Summary for Traffic Management PlanningReport o f Liaoyang (2005-20 10) (prepared for WorldBank Mission) inEnglish, Shenyang Zhongji Traffic Institute, December 20,2005 9. Condensed Public Transportation Plan for Benxi City, DalianMaritimeUniversitytransport Plan andResearch Institute, January 7,2006 10. Summary ofPublic Traffic Planning Report (2005-2010), Liaoyang City (For World Bank Mission), Shenyang Transportation Institute, December 2005 Safeguards 11.World Bank FinancedLiaoning MediumCity Improvement Project UrbanTransport Component, Environmental Assessment Executive Summary, Environmental Assessment, Environmental Management Plan, Liaoning Academy o f Environmental Sciences, March 2006 12. Draft Consolidated Environmental Impact Assessment for LiaoningMedium City InfrastructureProject (Urban Transport Component), Liaoning Academy o f Environmental Sciences, February 2006 13. EIA reports for Liaoyang, Dengta, Panjin, Fushun, Benxi and Jinzhou inChinese, April 2006 112  14. EMP reports for Liaoyang, Dengta, Panjin, Fushun,Benxi, andJinzhou inChinese, April 2006 15. World Bank Financed Liaoning MediumCities InfrastructureProject (LMCP) Urban Transport Component - ResettlementAction Plan (Executive Summary) (Chinese and English), UrbanPlanning and DesignInstitute o f Liaoning Province, December, 2005, and February 2006 16. Resettlement Action Plan for World Bank Financed Liaoning MediumCities Infrastructure Project-Benxi, Dengta, Liaoyang, Fushun,Jinzhou, andPanjinUrbanTransport Component (Chinese Version), Liaoning Urban-Rural Planning Design Institute, December 2005 17.Memos o f comments made bythe Bankon Chinese versions ofRAPS,November and December2005 18. Memo o f comments madeby the Bank on Chinese versions o f EA reports, October 2005 - March 2006 19. LMCIP Responseon issues raised at ISDS meeting April 17 Public Participation 20. The Report o f the First Participatory Social Assessment o fPanjin, Liaoyang, Jinzhou, Fushun, Dengta, andBenxiUrbanTransportation Improvement Project (Abstract inEnglish, FullReport inChinese), September 2005 to January2006 21. Draft PowerPoint Slides on Social Assessments ofthe LiaoningWorld Bank Urban Transportation Project, LiaoningAcademy of Social Sciences, October 25,2005 22. Powerpoint Slides on FushunBicycle User Survey, World Bank, September 2005 23. TRB Presentation (Powerpoint Slides) onUsingPublic Participation Techniques to Improve UrbanTransport Project DesigninLiaoningChina, January 2006 24. World Bank LiaoningUrbanTransport Project -the Report o fthe Second Participatory Social Assessment o fJinzhou, Liaoyang, Dengta, Panjin, Fushun,andBenxi Urban Transportation Improvement Project, Sociological Institute of LiaoningAcademy of Social Science, ResearchDuration: April 2006 Procurement 25. Liaoning MediumCities Infrastructure Project (LMCIP) Procurement Capacity Assessment Report, the World Bank, March6,2006 26. Procurement manual/ instruction, LiaoningProvincialFinanceDepartment and LUCRPO (in Chinese), April 27,2006 27. GeneralProcurement Notice (GPN), April 2006 28. ProcurementPackaging Plan, LUCRPO, March28,2006 Financial 29. LiaoningMediumCities Infrastructure Project FinancialManagement Assessment, Prepared byHaixiaLi,Financial Management Specialist, EASPC, ReviewedbyDavidI, Financial Sr. Management Specialist, EAPCO. 30. LiaoningWorld Bank FinancedMediumCity Infrastructure Project Transport Component DraftFinancialManagement Manual(inChinese), LUCRPO, April, 2006 113  31.LMCIP Municipal Financial/ Counterpart FundAnalysis, the World Bank, March, 2006 ConsultantReports 32. Inception Report on Liaoning Medium Cities InfrastructureProject Review o fFeasibility Studies, Engineering Designs and Institutional Strengtheningo f the Road Maintenance Agencies, Liaoning Province, GETINSA, November, 2005 33. Project Economic Analysis, GETINSA, March, 2006 34. Cost analysis inpreparation for cost estimate 35. Summary o f traffic data and forecasts from the feasibility studies 36. Design guidelines 37. Review o f first year projects Others 38. Commitment Letters fromthe project city government, January, 2006 39. Commitment Letters from project city governments, April 2006 40. City by city project implementation arrangement, April 2006 41. Liaoning Motor Vehicle Emission Inspectionand Maintenance System Background Paper, October 2005 42. Progress o f in-use Automobile Inspectionand Maintenance (UM) Project inOur Province and Suggestions on Utilization of WB Grants, April 2006 114  Annex 13: Statement of LoansandCredits CHINA: China-LiaoningMediumCitiesInfrastructureProject Difference between expectedand actual Original Amount inUS$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm Rev'd PO75732 2006 CN-ShanghaiUrban APL2 180.00 0.00 0.00 0.00 0.00 180.00 6.67 0.00 PO84742 2006 CN-IAIL I11 200.00 0.00 0.00 0.00 0.00 199.50 16.27 0.00 PO85333 2006 CN-Fifth Inland Waterways 100.00 0.00 0.00 0.00 0.00 99.75 4.95 0.00 PO86629 2006 CN-HeilongjiangDairy 100.00 0.00 0.00 0.00 0.00 100.00 0.00 0.00 PO70519 2006 CN-Fuzhou Nantai IslandPen-Urban 100.00 0.00 0.00 0.00 0.00 100.00 0.67 0.00 Dev PO94388 2006 CN-HFC-23 Emissions Reduction 0.00 0.00 0.00 0.00 0.00 935.13 0.00 0.00 PO96158 2006 CN-RenewableEnergy I1(CRESP 11) 86.33 0.00 0.00 0.00 0.00 86.33 0.00 0.00 PO72721 2005 CN-GEF-Heat Reform & Bldg Egy Eff. 0.00 0.00 0.00 18.00 0.00 16.20 1.23 0.00 PO71094 2005 CN Poor Rural Communities - 100.00 0.00 0.00 0.00 0.00 99.66 19.66 0.00 Development PO69862 2005 CN - Agricultural TechnologyTransfer 100.00 0.00 0.00 0.00 0.00 94.50 5.37 0.00 PO68752 2005 CN-Inner MongoliaHighway & Trade 100.00 0.00 0.00 0.00 0.00 91.54 1.54 0.00 Comd PO57933 2005 CN-TAI BASIN URBAN ENVMT 61.00 0.00 0.00 0.00 0.00 48.83 5.10 0.00 PO75730 2005 CN-HUNAN URBAN DEV 172.00 0.00 0.00 0.00 0.00 165.14 8.14 0.00 PO67828 2005 CN-RenewableEnergy Scale-upProgram 87.00 0.00 0.00 0.00 0.00 86.57 17.33 0.00 PO67625 2005 CN-GEF-RenewableEnergyScale-up 0.00 0.00 0.00 40.22 0.00 40.22 -0.35 0.00 Program PO81161 2005 CN-CHONGQING SMALL CITIES 180.00 0.00 0.00 0.00 0.00 180.00 2.17 0.00 PO81346 2005 CN-LIUZHOU ENVIRONMENT 100.00 0.00 0.00 0.00 0.00 96.50 -0.10 0.00 MGMT PO86505 2005 CN-NlIiGBO WATER & ENVMT 130.00 0.00 0.00 0.00 0.00 120.46 -9.54 0.00 PO66955 2004 CN-ZHEJIANGURBAN ENVMT 133.00 0.00 0.00 0.00 0.00 113.58 1.83 0.00 PO65463 2004 CN-Jiangxi IntegratedAgric. Modem. 100.00 0.00 0.00 0.00 0.00 91.05 25.88 0.00 PO69852 2004 CN-Wuhan UrbanTransport 200.00 0.00 0.00 0.00 1.oo 175.67 157.47 0.00 PO65035 2004 CN-Gansu &Xinjiang Pastoral 66.27 0.00 0.00 0.00 0.00 45.69 11.49 0.00 Development PO84003 2004 CN-GEF GUANGDONG PRD URB 0.00 0.00 0.00 10.00 0.00 10.00 1.27 0.00 ENV PO81749 2004 CN-Hubei ShimanHighway 200.00 0.00 0.00 0.00 1.oo 136.14 37.14 0.00 PO77615 2004 CN-GEF-Gansu& Xinjiang Pastoral 0.00 0.00 0.00 10.50 0.00 8.61 5.03 0.00 Develop PO73002 2004 CN-Basic EducationinWestern Areas 100.00 0.00 0.00 0.00 0.00 68.39 44.91 0.00 PO75035 2004 CN-GEF-Hai Basin Integr. Wat. 0.00 0.00 0.00 17.00 0.00 14.13 5.09 0.00 Env.Man. PO75602 2004 CN-2nd NationalRailways (Zhe-Gan 200.00 0.00 0.00 0.00 1.oo 97.14 -38.53 -39.53 Line) PO75728 2004 CN-GUANGDONG/PRD UR ENVMT 128.00 0.00 0.00 0.00 0.64 108.29 -4.27 0.00 PO77137 2004 CN-4th Inland Waterways 91.00 0.00 0.00 0.00 0.46 82.86 6.65 6.15 PO40599 2003 CN-TIAYJINURB DEV I1 150.00 0.00 0.00 0.00 0.00 134.80 25.39 0.00 PO67337 2003 CN-2nd GEFEnergyConservation 0.00 0.00 0.00 26.00 0.00 8.27 25.37 0.00 PO58847 2003 CN-3rdXinjiang Hwy Project 150.00 0.00 0.00 0.00 0.00 57.22 27.22 0.00 PO76714 2003 CN-2ndAnhui Hwy 250.00 0.00 0.00 0.00 0.00 154.78 35.04 0.00 115  PO68058 2003 CN-Yixing PumpedStorage Project 145.00 0.00 0.00 0.00 0.00 123.30 31.23 0.00 PO70191 2003 CN-SHANGHAIURB ENVMT APLl 200.00 0.00 0.00 0.00 0.00 157.36 36.73 0.00 PO70441 2003 CN-Hubei Xiaogan Xiangfan Hwy 250.00 0.00 0.00 0.00 0.00 41.71 -4.95 0.00 PO68049 2002 CN-Hubei Hydropower Dev inPoor 105.00 0.00 0.00 0.00 0.00 35.19 16.52 0.00 Areas PO70459 2002 CN-Inner Mongolia Hwy Project 100.00 0.00 0.00 0.00 0.00 40.16 6.83 0.00 PO71147 2002 CN-Tuberculosis ControlProject 104.00 0.00 0.00 0.00 0.00 57.43 22.99 0.00 PO64729 2002 CN-Sustainable ForestIyDevelopment 93.90 0.00 0.00 0.00 0.00 36.74 12.25 0.00 PO60029 2002 CN-GEF-Sustain. Forestry Dev 0.00 0.00 0.00 16.00 0.00 8.99 11.53 0.00 PO58846 2002 CN-Natl Railway Project 160.00 0.00 0.00 0.00 0.00 23.34 21.68 0.00 PO47345 2001 CN-HUAI RIVER POLLUTION 105.50 0.00 0.00 0.00 0.00 53.49 53.49 0.00 CONTROL PO45915 2001 CN-Urumqi UrbanTransport 100.00 0.00 0.00 0.00 0.00 34.47 34.47 0.00 PO51859 2001 CN-LIAO RIVER B A S K 100.00 0.00 0.00 0.00 0.00 32.71 26.51 0.00 PO56199 2001 CN-3rd InlandWaterways 100.00 0.00 0.00 0.00 0.00 39.13 14.96 0.00 PO56516 2001 CN-Water Conservation 74.00 0.00 0.00 0.00 0.00 6.85 4.02 0.00 PO56596 2001 CN-Shijiazhuang UrbanTransport 100.00 0.00 0.00 0.00 0.00 66.10 66.10 0.00 PO58845 2001 CN-JiangxiI1Hwy 200.00 0.00 0.00 0.00 54.77 26.50 61.60 0.00 PO64730 2000 CN-Yangtze Dike Strengthening 210.00 0.00 0.00 0.00 0.00 79.46 79.46 79.46 PO49436 2000 CN-CHONGQING URBAN ENVMT 200.00 0.00 0.00 0.00 3.70 113.69 100.66 0.00 PO64924 2000 CN-GEF-BELTINGENVMTI1 0.00 0.00 0.00 25.00 0.00 21.93 24.01 18.73 PO45910 2000 CN-HEBEI URBANENVIRONMENT 150.00 0.00 0.00 0.00 0.00 52.21 35.21 0.00 PO42109 2000 CN-BEUING ENVIRONMEKT I1 349.00 0.00 0.00 25.00 0.00 240.85 223.41 0.00 PO56424 2000 CN-Tongbai Pumped Storage 320.00 0.00 0.00 0.00 100.00 43.39 127.19 0.00 PO58844 2000 CN-Henan ProvincialHwy 3 150.00 0.00 0.00 0.00 0.00 25.64 24.30 0.00 PO58843 2000 CN-GuangxiHighway 200.00 0.00 0.00 0.00 19.70 20.71 35.75 6.05 PO43933 1999 CY-SICHUAN URBANENVMT 150.00 2.00 0.00 0.00 0.00 61.34 57.33 56.20 PO36953 1999 CN-HEALTH IX (Shiyong Wang, Back- 10.00 50.00 0.00 0.00 0.40 21.23 20.40 11.28 UP) PO46564 1999 CY-Gansu & Inner Mongolia Poverty 60.00 100.00 0.00 0.00 13.30 4.57 18.46 -9.13 Red. PO46829 1999 CN-Renewable Energy Development 100.00 0.00 0.00 0.00 0.00 2.62 2.62 2.62 PO42299 1999 CN-Tec Coop Credit IV 10.00 35.00 0.00 0.00 0.00 22.42 20.83 0.00 PO41268 1999 CN-Nat Hwy4/Hubei-Hunan 350.00 0.00 0.00 0.00 0.00 32.35 32.35 0.00 PO38121 1999 CN-GEF-RENEWABLEENERGY 0.00 0.00 0.00 35.00 0.00 15.74 34.77 21.33 DEVELOPMENT PO57352 1999 CN-RURAL WATER I V 16.00 30.00 0.00 0.00 0.00 5.41 5.90 0.36 PO51888 1999 CN-GuanzhongIrrigation 80.00 20.00 0.00 0.00 0.00 10.73 11.12 0.00 PO51856 1999 CN-AccountingReform & Development 27.40 5.60 0.00 0.00 0.00 9.65 9.59 0.00 PO51705 1999 CN-FujianI1Highway 200.00 0.00 0.00 0.00 0.00 27.13 27.13 3.12 PO49665 1999 CN-AnningValley Agric. Development 90.00 30.00 0.00 0.00 0.00 2.70 3.83 -2.84 PO45788 1998 CN-Tri-ProvincialHwy 230.00 0.00 0.00 0.00 5.04 0.97 6.01 0.00 PO03539 1998 CN-SustainableCoastal ResourcesDev. 100.00 0.00 0.00 0.00 2.06 33.88 35.94 16.73 PO51736 1998 CN-E. ChindJiangsu Power 250.00 0.00 0.00 0.00 86.00 12.94 98.94 12.28 PO36414 1998 CN-GUANGXI URBANENVMT 72.00 20.00 0.00 0.00 13.48 39.37 52.31 9.89 PO03566 1998 CN-BASIC HEALTH(HLTHB) 0.00 85.00 0.00 0.00 0.00 16.00 11.98 0.00 PO03606 1998 ENERGYCONSERVATION 63.00 0.00 0.00 22.00 0.00 13.74 13.99 0.00 PO03619 1998 CN-2nd Inland Waterways 123.00 0.00 0.00 0.00 37.00 6.03 43.03 6.03 PO03614 1998 CN-Guangzhou City Transport 200.00 0.00 0.00 0.00 20.00 82.58 102.58 39.61 PO03637 1997 CN-NAT'L RURAL WATER 3 0.00 70.00 0.00 0.00 0.00 0.22 3.44 3.02 116  PO36405 1997 CN-WanjiazhaiWater 400.00 0.00 0.00 0.00 75.00 4.51 79.51 4.51 PO44485 1997 SHANGHAI WAIGAOQIAO 400.00 0.00 0.00 0.00 0.00 46.13 46.13 46.13 PO03594 1996 CN-GansuHexi Comdor 60.00 90.00 0.00 0.00 0.00 48.01 49.87 19.14 Total: 10,072.40 537.60 0.00 244.72 434.55 5,948.57 2,300.10 311.14 CHINA STATEMENT OF IFC's Heldand DisbursedPortfolio (millions o fU.S. dollars) ~~ Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic 2002 ASIMCO 0.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00 2005 BCCB 0.00 59.20 0.00 0.00 0.00 59.03 0.00 0.00 2003 BCIB 0.00 0.00 11.89 0.00 0.00 0.00 0.00 0.00 2006 BUFH 8.04 0.00 0.00 0.00 8.04 0.00 0.00 0.00 2005 Babei 0.00 5.00 0.00 0.00 0.00 5.00 0.00 0.00 BabeiNecktie 11.00 0.00 0.00 6.00 8.94 0.00 0.00 4.88 1999 Bank of Shanghai 0.00 21.76 0.00 0.00 0.00 21.76 0.00 0.00 2000 Bankof Shanghai 0.00 3.84 0.00 0.00 0.00 3.84 0.00 0.00 2002 Banko f Shanghai 0.00 24.67 0.00 0.00 0.00 24.67 0.00 0.00 2005 BioChina 0.00 3.00 0.00 0.00 0.00 0.15 0.00 0.00 2002 CDH China Fund 0.00 2.12 0.00 0.00 0.00 0.00 0.00 0.00 2005 CDH China I1 0.00 18.00 0.00 0.00 0.00 4.60 0.00 0.00 2003 CSMC 0.00 7.17 0.00 0.00 0.00 7.17 0.00 0.00 2005 CT Holdings 0.00 0.00 40.00 0.00 0.00 0.00 0.00 0.00 2004 CUNA Mutual 0.00 11.47 0.00 0.00 0.00 0.94 0.00 0.00 2005 ChangyuGroup 0.00 18.09 0.00 0.00 0.00 18.07 0.00 0.00 1998 ChengduHuarong 4.04 3.20 0.00 3.91 4.04 3.20 0.00 3.91 2004 China Green Ener 20.00 0.00 0.00 0.00 11.50 0.00 0.00 0.00 2004 ChinaRe Life 0.00 0.27 0.00 0.00 0.00 0.27 0.00 0.00 1994 ChinaWaldenMgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2006 chinasoft 0.00 0.00 15.00 0.00 0.00 0.00 0.00 0.00 2004 Colony China 0.00 16.07 0.00 0.00 0.00 4.68 0.00 0.00 2004 Colony China GP 0.00 0.84 0.00 0.00 0.00 0.22 0.00 0.00 2006 Conch 80.51 40.43 0.00 0.00 80.51 0.00 0.00 0.00 2002 Darong 10.00 1.50 0.00 8.00 6.67 1.50 0.00 5.33 2006 Deqingyuan 0.00 2.82 0.00 0.00 0.00 0.00 0.00 0.00 1994 Dynamic Fund 0.00 5.43 0.00 0.00 0.00 3.77 0.00 0.00 2005 FangXin SHMT 7.20 0.00 0.00 4.80 7.20 0.00 0.00 1.42 2005 FangXin Limited 0.00 4.67 0.00 0.00 0.00 4.67 0.00 0.00 2005 FangXin SHDX 1.80 0.00 0.00 1.20 0.60 0.00 0.00 0.12 2005 FangXin SZFX 1.20 0.00 0.00 0.80 1.20 0.00 0.00 0.24 2004 Fenglin 19.00 0.00 6.00 14.00 14.77 0.00 6.00 13.79 2005 Five Star 0.00 0.00 7.00 0.00 0.00 0.00 0.00 0.00 117  2006 GDIH 50.23 0.00 0.00 0.00 50.23 0.00 0.00 0.00 2003 Great Infotech 0.00 1.73 0.00 0.00 0.00 1.03 0.00 0.00 2005 HiSoft Tech 0.00 4.00 0.00 0.00 0.00 3.oo 0.00 0.00 2004 IB 0.00 52.18 0.00 0.00 0.00 52.18 0.00 0.00 2004 JiangxiChenming 50.00 12.90 0.00 40.00 40.00 12.90 0.00 20.00 2006 LaunchTech 0.00 8.35 0.00 0.00 0.00 0.00 0.00 0.00 2001 MaanshanCarbon 6.00 2.00 0.00 0.00 6.00 2.00 0.00 0.00 2005 MaanshanCarbon 11.00 1.oo 0.00 0.00 5.00 1.oo 0.00 0.00 2005 Minsheng 15.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 MinshengBank 0.00 23.50 0.00 0.00 0.00 23.50 0.00 0.00 2005 MinshengBank 0.00 2.80 0.00 0.00 0.00 2.79 0.00 0.00 2001 NCCB 0.00 8.94 0.00 0.00 0.00 8.82 0.00 0.00 1996 Nanjing Kumho 0.00 3.81 0.00 0.00 0.00 3.81 0.00 0.00 2004 Nanjing Kumho 34.00 2.23 0.00 0.00 34.00 2.23 0.00 0.00 2001 New China Life 0.00 5.83 0.00 0.00 0.00 5.83 0.00 0.00 2005 New Hope 0.00 0.00 45.00 0.00 0.00 0.00 0.00 0.00 1995 NewbridgeInv. 0.00 0.22 0.00 0.00 0.00 0.22 0.00 0.00 2005 North Andre 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 Orient Finance 0.00 0.00 2.86 3.51 0.00 0.00 2.86 3.51 2003 PSAM 0.00 1.98 0.00 0.00 0.00 0.00 0.00 0.00 RAKChina 13.00 0.00 0.00 0.00 13.00 0.00 0.00 0.00 2006 SAC 3.00 1.60 0.00 0.00 0.00 0.00 0.00 0.00 2003 SAIC 12.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 2000 SEAF SSIF 0.00 3.82 0.00 0.00 0.00 2.14 0.00 0.00 2004 SHCT 40.00 0.00 0.00 30.00 30.86 0.00 0.00 23.14 2004 SIBFI 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.00 1998 ShanghaiKrupp 21.00 0.00 0.00 41.99 21.00 0.00 0.00 41.99 2006 ShanshuiGroup 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.00 1999 Shanxi 12.61 0.00 0.00 0.00 12.61 0.00 0.00 0.00 2002 Sino Gold 0.00 2.40 0.00 0.00 0.00 2.40 0.00 0.00 2005 StoraEnso 50.00 0.00 0.00 25.00 0.00 0.00 0.00 0.00 2006 TBK 4.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 VeriSilicon 0.00 1.oo 0.00 0.00 0.00 1.oo 0.00 0.00 Wanjie High-Tech 12.19 0.00 0.00 0.00 12.19 0.00 0.00 0.00 2004 Wumart 0.00 3.24 0.00 0.00 0.00 3.24 0.00 0.00 2003 XACB 0.00 19.14 0.00 0.00 0.00 2.64 0.00 0.00 2004 Xinao Gas 25.00 10.00 0.00 0.00 25.00 10.00 0.00 0.00 2003 Zhengye-ADC 15.00 0.00 0.00 7.00 11.59 0.00 0.00 5.41 2002 Zhong Chen 0.00 5.00 0.00 0.00 0.00 5.00 0.00 0.00 Total portfolio: 552.57 443.40 127.75 186.27 416.95 324.85 8.86 123.80 118  Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. 2002 SML 0.00 0.00 0.00 0.00 2004 NCFL 0.00 0.00 0.02 0.00 2004 SIBFI 0.00 0.00 0.00 0.00 2004 CCB-MS NPL 0.00 0.00 0.00 0.00 2002 Zhong Chen 0.00 0.00 0.00 0.03 2004 chi^ Green 0.00 0.00 0.01 0.00 2006 LaunchTech 0.01 0.00 0.00 0.00 2005 MS Shipping 0.00 0.01 0.00 0.00 2002 Sino Mining 0.01 0.00 0.00 0.01 2003 Peak Pacific 2 0.00 0.01 0.00 0.00 Total pendingcommitment: 0.02 0.02 0.03 0.04 119  Annex 14: Country at a Glance CHINA: China-Liaoning MediumCities Infrastructure Project East Lower. POVERTY and SOCIAL Asia & middle. China Pacific income Development diamond' 2004 Population,mid-year(millions) 1296.5 1,870 2,430 GNIper capita (Atlas method, US$) 1290 1280 1580 Lifeexpectancy T GNI(Atlas method, US$ billions) 1,672.5 2,389 3,847 Average annual growth, 1998-04 Population(%J 0.7 0.9 10 Laborforce (%) 0.8 11 0.7 GNI Gross , per primary ~ M o s t recent estimate (latest year available, 1998.04) capita nrollment Poverty (%ofpopulation belownationalpo vertyline) 5 Urbanpopuiation (%of totalpopulation) 40 41 49 Lifeexpectancyat birth (pars) 71 70 70 - Infant mortality(per lOOOlivebirths) 30 32 33 Child malnutrition (%ofchildrenunder5) 13 25 I1 Access to improvedwatersource Access to an improvedwatersource(%ofpopulation) 77 78 81 Literacy (%ofpopulation age 15y 91 90 90 Gross primaryenrollment omof school-age population) 125 113 114 --China Male 125 113 115 1 -Lo wer-middle-incomegroup Female 115 1P It? KEY ECONOMIC RATiOS and LONG-TERM TRENDS 1984 1994 2003 2004 Economic ratios. GDP (US$ billions) 256.1 542.5 1,418.3 1653.8 Gross capitalformationlGDP 34.4 412 43.8 45.2 Eqorts of goods and servicesiGDP 113 25.3 342 39.7 Trade Gross domestic savings1GDP 34.5 42.7 42.5 44.9 Gross nationalsavings1GDP 35.3 42.7 432 46.1 Current account balanceiGDP 0.7 19 3 2 4.2 Interest payments1GDP 0.4 0.9 0.5 0.4 Domestic Capital Total debt1GDP 4.7 18.5 13.6 n.7 savings formation Total debt serviceiexports 7.3 7.7 7 2 3.6 Present value of debtlGDP 73.3 Present value of debtlevorts 36.4 Indebtedness 1984-94 1994.04 2003 2004 2004-08 (average annualgrowth) GDP 9.4 8.3 9.3 9.5 8.0 GDP percapita 7.9 7.4 8.6 8.9 7.3 Exportsof goods and services 8.1 7.3 26.8 28.4 14.4 STRUCTURE o f the ECONOMY lgE4lgg4 IGrowth o f capital and GDP (Oh) I (%of GDP) Agriculture 32.0 20.2 14.6 15.2 ' O - Industry 43.3 47.8 522 52.9 l5 Manufacturing 35.5 34.4 36.7 37.3 lo Services 24.7 319 332 319 Householdfinal consumption expenditure 512 44.5 44.9 43.1 1 " 99 00 OI 02 03 0: I Generalgov't final consumption expenditure 142 't.8 't.6 Q.0 Imports of goods and services 114 23.4 31.7 36.7 -GCF -GDP 1984-94 1994-04 2003 (average annualgrowfh) Agnculture 4.0 3.3 2.5 Industry f2.3 13.0 P.7 Manufacturing 117 13.1 14.9 13.2 Services 9.8 8.2 7.3 Householdfinal consumption expenditure 8.1 7.9 6.1 Generaigov't final consumption expenditure 9.4 8.6 4.8 99 00 01 02 03 04 Gross capitalformation 9.1 9.5 18.9 13.0 -Exparts -Imports imports of goods and services 9.9 15.5 24.8 22.5 Note:2004 data are preliminaryestimates 'Thediamonds showfour keyindicators inthecountry(in bo1d)comparedwthits income-group average. fdata are missing,thediamond wi1 be incomplete. 120  China PRICES andGOVERNMENT FINANCE I 1984 1994 2003 2004 Inflation (Oh) Domestic prices (%change) 10- Consumer prices 8.3 24.1 12 3.9 Implicit GDP deflator 4.9 8.9 2.1 6.5 Government finance (%of GDP,includes current grants) Current revenue 22.9 119 18.7 19.4 Current budget balance .. 10 13 19 Overall surplusideficit -0.8 -12 -2.8 -17 1 ----GDPddlator -CPI I TRADE 1984 1994 2003 2004 (US$ miliions) Export and import levels (US$ mill.) Totalexports (fob) 26,139 Q1006 438,228 593,369 Food 3,232 13,015 7,533 18,870 Fuel 6,027 4,069 1IIM 14,476 '600 000 Manufactures 14,205 132298 403,560 5 5 2 , a ~ Total imports (cif) 27,413 15614 412,760 561423 400 000 Food 2,331 3.137 5,959 9,56 Fuel and energy 139 4,035 29,214 46,003 200 000 I Capitalgoods 7,245 51,467 192,869 252,624 Export price index(200O-x)O) 50 133 9a 132 98 99 00 01 02 03 04 Import price index(200O=x)O) 74 96 Q2 112 .Exports mlmports Terms of trade (2000=00) 68 x17 95 91 BALANCE o f PAYMENTS 1984 1994 2003 2004 (US$ miliions) k u r r e n t account balance to GDP (%) Exports of goods and services 29,039 137,378 485,003 655,827 Imports of goods and sewices 29,183 Q7,213 448,924 606,543 ? T Resource balance -144 o,Sa 36,079 49,284 Net income 1,534 -1,036 -7,838 -3,523 Net current transfers 442 1,337 7,634 2 2 , m Current account balance 1,832 Q,469 45,875 68,659 Financing items (net) -2,363 20,058 71,ua 07,705 Changes innet reserves 531 -30,527 -1l7,023 -206,364 1 98 99 00 01 02 03 04 M emo: Reserves includinggold (US$ miibons) .. 57,770 416.208 622,945 Conversion rate (DEC,local/US$J 2.8 8.6 8.3 8.3 EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 (US$miiiions) IComposition o f 2004 debt (US$ mill.) Total debt outstanding and disbursed 12,082 130.457 83,567 l77,709 IBRD 73 5,933 13,657 11035 A. 11,035 IDA 181 6,097 13,314 13,670 Total debt service 2,285 11,135 37,073 24,498 IBRD 6 679 2,690 1124 IDA 4 50 219 262 Composition of net resourceflows Official grants 112 337 Officialcreditors a31 3.17 -3,092 -2,485 Pnvate creditors 240 6,691 -1,778 -13,373 Foreigndirect investment (net inflows) 1,419 33,787 55,507 60,906 Portfolio equity(net inflows) 0 3,915 7,729 x1,923 I F 55,772 World Bank program Commitments 959 4,035 1,250 1250 I A IBRD E- Bilatwd Disbursements 197 2,060 1,68 1246 B IDA -- D Other multilaterd - F- Private Principal repayments 0 323 2,459 999 C - I M F G Short-term - Net flows 197 1,737 -843 247 Interest payments 9 406 450 387 Net transfers 187 1,331 -1,293 -140 ~- Development Economics 121  Annex 15: PublicParticipationProcess CHINA: China-LiaoningMediumCitiesInfrastructureProject Inadditionto the public consultations requiredfor environmental impact assessmentand resettlement planningunder Chinese law and Bank regulations, the project also incorporated a public participation process as a separate strategic input into the project preparationto enhance project design. This annex provides details on the public participation processes conducted both for project design, and under the EIA and resettlement planning processes. PUBLIC PARTICIPATIONINPROJECTDESIGN International experience suggests that public participation duringthe technical planning process generates solutions with widespread benefits, while minimizing adverse impacts. A major achievement o f this project has beenthe successhl development o f a meaningfulpublic participation process that influencedproject designs. Public participation was integrated into the project cycle and carried out inthree phases: (a) Phase I(project design and feasibility stage), when participation was designed to identify key issues o f concernto the public; (b) Phase I1(post appraisal stage), when solutions were presented to the public for review and comments; and (c) Phase I11(project implementation stage), duringwhich the satisfaction level o f the public with project implementation and outcomes will be ascertained. PhaseIandI1PublicParticipation InSeptember andNovember 2005, PhaseIparticipation, was carriedout to complement the technical analysis inproject design andpreparation. The objectives o f the process were to determine the public's key concerns, to prioritize problems to be solved under the project and to incorporatepublic inputs into project design. Phase I1public participation was carried out in April 2006. The major objectives o fPhaseI1were to: (a) determinethe public's assessment of the extent to which the findings from the Phase Iparticipatory process were addressed inthe project design; (b) measure the public's assessment of the quality o f the urban transport systems inthe project cities; and(c) public concerns relatingto project implementation andtheir suggestions on ways these concerns could be addressed. Methods. Forbothphaseso fpublic participation, LASSwas contracted bythe cities to conduct extensive three-stage efforts - focus groups, open meetings and questionnaires - to obtain public inputinto the project design. Special efforts were made to ascertainthe needs o fvulnerable groups, such as the elderly, migrants, the unemployed,the laid-off and the disabled. "Women only" discussions were conducted to ensure that needs and issues specific to women were properly identified. Findingsfrom Phase Iled to special attention duringPhase I1to involve pedestrians, bicyclists, andbus users. Design institutes and city authorities attendedthe discussions to ensure responsiveness to the issues raised inthe project design. Table A15.1 summarizes the work done. 122  Table A15.1: Summarv of PhaseIandI1PublicParticinationProcess This effort successfully highlighted to city leaders problems such as the poor conditions o f secondary roads and sidewalks, safety at intersections, the need to separate the stream o f non- motorizedtraffic, and the need to improve public transport service. Ithelped to address, on a prioritybasis, the needs o fthe non-auto population. City authorities have noted that while such participatory planning was not part o f the previous planningpractice, it provided them with a good model for interactingwith the public on transport planningissues. Phase IFindings. Findingsfrom PhaseIare summarizedbelow: (a) The pavement and drainage facilities o f secondary roads and alleys are often inpoor condition. (b) Sidewalk conditions and walkability are problematic. (c) There i s lack o f separation between MV andNMV,bothphysically and from a traffic management perspective. (d) Thereis lack o f street lightingand signage. (e) There are differences, based on gender, inthe needs expressed on safety, security and public transport. Women raised concerns on lack o f street lights, poor quality bus services (schedules, transfers, longwaits, etc.), andunsafe road crossings. The participatoryprocess resulted insignificant changes to the project compared to the initial proposals: (a) the initial proposals focused primarily on facilitating new urban developments and road expansion, whereas the participatory process resulted inthe emphasis being shiftedto sidewalks, the needs o f pedestrians, secondary road improvements, and traffic management, 123  especiallythe separation of MV and NMV traffic; and (b) latent issues, e.g., missingstreet lights andpoor public transport services, were pickedupto addressthe needs ofthe vulnerable segments o f the population. PhaseIImpact. The feasibility studies include a section highlightinghow the issues raisedin the public participation process are addressed inproject design. Table A15.2 summarizes the major issues raised and addressed by the project. TableA15.2: Addressingthe ConcernsRaisedbythe PublicinProjectDesign RI IssueslRequestsRaisedby the Public Benxi Dengta Fushun Jinzhou Liaoyang Panjin Improve drainage condition in some roads or the city network RIA WA WA WA RIA WA Improve quality of alley and secondary roads: pavement, traffic lights or street lighting RIA WA WA RIA WA improve quality of problematic arterials: pavement, traffic lights, or street lighting RIA WA WA WA RIA Improve damaged street lights WA WA Add new street lights WA RIA Improve tunnel lighting WA Enhance disability access (barrier-free path) RIA WA R/A WA Improve public facilities: bus stations, phone booth, trash bins, public restroom, etc., RIA W- RIA WA Improve greening and beautify the street pedestrian crossing R/- R/A Rl- Road widening at some locations W- RIA Relieve traffic pressure on some roads with new alternative roadslbridge constructions RS Regulate speeding issues at some intersections R/A Reduce traffic accidents in problematic locations WA RIA Improve the separation of MVINMV traffic, walkability, and pedestrian safety RIA WA WA WA RIA WA Improve traffic flow and congestion conditions on problematic locations WA WA RIA WA Regulate the routing of freight traffic W- WA Ban the illegal use of roads by peddlers and vehicle parking RI- Manage the illegal use of sidewalks W- Manage bus parking to free bus parking from other road facilities R/A RIA Over or underground pedestrian passes at heavy traffic intersections W- RIA R/- Manage bicycle parking and solve bicycle stealing problem RIA W- Manage overloading problem W- Lack of sign post at intersections WA Strengthen traffic Management at chaos sections WA Rl- Strengthen coordinated management of main roads, secondary roads, and alieys WA WA Better monitor traffic violations and maintain traffic safety RIA Manage parking W- W- Lack of road monitoring system W- Manage tricycle traffic W- Lack of guardrail in rail crossings and segments WA Add separate bike path on main and secondary roads W- Strengthen the promotion of traffic rule to the residents W- WA PT Increase bus numbers (capacity) and services in certain areas RIA WA W- W- Rl- Increase bus stops and improve bus stop signages R/A WA RIA Extend some bus routes RIA WA Improve smoothness of bus transfer RIA Improve the management of bus facility (e.g., advertisement at bus stops) WA Improve public transport management efficiency Rl- Improve bus routing WA RIA Reduce bus fares, especially lower fares for seniors and the disabled RIA W- R/- Lack of bus priority lanes in some routes RIA W- R/A Improve bus access to the disabled and seniors (e.9, dedicated seats, disability facility) RIA W- RIA W- Rl- RM Improve road maintenance RIA WA Other ~ Reduce vehicle emission and noise pollution W- Difficult traffic condition during road construction WA Reduce taxi price W- WA: Raised and addressed. W-.Raised, but was not considered or could not be addressed under the project. 124  PhaseI1Findings. Findingsfi-om the Phase I1process, summarizedinthe tables below, include: (a) Most o f the participants agreed that the revised designs satisfactorily reflected the concerns raised inthe Phase Iparticipationprocess. Participants also made suggestions on additional improvements to problems related to: drainage andpavement conditions, infrastructure management and maintenance, illegal use o f sidewalks, poor bus stop facilities, MV/NMV separation, signal timing optimization, and accessibility for the disabled. (b) The following concerns relatedto implementation, and suggestions to addressthem were made: 0 Participants expressed concerns over construction quality and suggested that quality of the project and optimization o f fundutilizationwill be improved by greater involvement o f the public. 0 Construction impacts on noise, air quality, and the disruption caused by construction were viewed as the major concerns. Suggestions were made to avoid late construction at night,and to clean construction solid waste ina timely manner. 0 Participantsraisedresettlement concerns related to affordability, locations of new houses, compensation methods, andproper use o f compensation funds. (c) Public participation process was highly welcomed by the participants. Suggestions were made on how to better engage the public into decision making. PhaseI1Impact. Project design will be adjusted inthe following ways to reflect the above findings from the Phase I1publicparticipation: (a) To reflect the public's concerns related to construction quality and governance issues it was agreed that: 0 The public would be kept properly informed about the project through publicizing project information via a variety ofmedia. 0 Various channels will be made available for the public to provide inputs into project development and decision making, e.g., dedicated public opinion phone number, workshops, surveys, newspapers, website, and etc. (b) Participants have identified issuesthat needto be further solved, relatedto public transportation andinfrastructure improvements not includedinthe Project, as summarized ineach city's participation report. These issues will be specifically answered and/or addressed either through this project or by separate projects inthe cities. 0 Itis agreed that public transportationissues will be addressedinthe network review of the TA component. 125  0 The process has identified great needs for some infrastructureimprovements that are not fundedthrough this project. The city governments agreed to provide the identifiedimprovements through domestic funds. However, such projects shall be the priorities to be financed through the unallocatedportion of LMCIP loan, should it become available. PhaseI11PublicParticipation Duringthis stage, theparticipatingcities will hire an independent consultant to follow uponthe public participation work conducted duringproject preparation. At least two rounds o f participation will be conducted, and annual participation i s beingconsidered. This phase o f participation will provide public input into the implementationo f the process to ensure that implementation related concerns raised by the public duringpreparationare adequately addressed' that the project investments are designed ina manner that maximizes benefits for the users; provide feedback on the impact of the project traffic safety component on the identified corridors and intersections; that the public's general satisfaction with mobility, convenience, cost and safety elements of the city's urbantransport system are measured; any other transport related concerns raisedby the public are understood. PUBLIC CONSULTATIONDURINGENVIRONMENTALIMPACT ASSESSMENT AND RESETTLEMENTPLANNING PublicConsultationduringEIA Process Two rounds o f public consultation were carried out duringthe environmental assessment: the first round during the preparationo f EA TOR, between August to November 2005; and the second roundat the draft EA report stage inearly January 2006 inthe six project cities/county town. The primary technique used inpublic consultation was public opinion survey either through questionnaires or public meetings, or both. This was supplemented by interest group interviews such as temple/mosque communities, cultural properties management, and relevant agencies. Consultation was focused primarily on the project areas, and the people consulted included mainly those who will be affected directly by the project. Relevant government and non-government organizations, and experts from academic institutions on various environmental and socio-economic issues, have also been consulted. Intotal, 599 individuals responded to the questionnaire surveyinthe first round o f consultation, and about 438 persons participatedinthe second round o f consultation. The consulted public was mostly aware o f the proposedproject and the majority o f them expressed their support. The predominant concern from the affected public was increased noise following project implementation, airborne dust and inconvenience duringconstruction and on- time and fair payments for resettlement compensation. Other concerns included motor vehicle emission, community severance, loss o f urban green space, disturbed areas rehabilitation, communication channel to voice their concerns about the project, etc. Public concerns and suggestions were addressed by including a series o f dust control measures duringconstruction, noise insulation windows and noisebarriers at sensitive receptors which are 126  expected to experience significant incrementalincrease innoise levels after the completion of the project. A landscaping program with more new trees planted than those cut duringthe project has beenplanned. A program has been established for continued public consultation, including proper channels to receive public concerns and complaints. Concerns expressed by the public on resettlement, relocation and livelihood rehabilitation havebeen addressed with appropriate measures inthe RAPS. Incompliancewiththe EIAprocess requirements ofthe government andthe Bank,the completed draft EIA and EMPreports were released inpublic places inthe project area, including libraries, PMO offices, etc. The public has the access to the reports at these places. In addition, project information (including availability o fthe reports) was conveyed to the public through major daily newspapers inthe project cities/county. The reports have also beenreleased on the LPEPBwebsite, with a link to the LAES. Public consultation activities and information disclosure are summarized inTable A15.3 and Table A15.4, respectively. whom andfor whom meeting 1OO"affectedpeople SeG.52005 offile Second IIPublic IIBenxiPMO and the Bank for 68 IIJanuary 10, II BenxiPMO I OP4.01 round meeting local affected people 2006 office Public Dengta PMO and the Bank for January 12, Dengta PMO OP4.01 meeting 51affectedresidents 2006 office Public FushunPMO andthe Bank for January 9, FushunPMO OP4.01 meeting 50 affected residents 2006 office Public Jinzhou PMO and the Bankfor January 8, Jinzhou PMO OP4.01 meeting 54 affected people 2006 office 1 Public Liaoyang PMO and the Bank for January 15, Liaoyang OP4.01 meeting 100 affected people I 2006 office I I Public I 1IPanjinPMO and the Bank for January 6, PanjinPMO I OP4.01 meeting 105 affected people II2006 11joffice 127  TableA15.4: InformationDisclosureSummarv No Components Newspapers Date Content ContactPersons 1 Benxi BenxiDaily December 15,2005 Briefdescription; City PMO officials 2 Dengta Liaoyang Daily January 12,2006 major (withnames and 3 Fushun FushunDaily January 12, 2006 environmental contact telephone 4 Liaoyang Liaoyang Daily January 13,2006 impacts, numbers) 5 Jinzhou Jinzhou Daily January 13,2006 benefits, 68 Panjin PanjinDaily November 30, 2005 invitation for Dublic orinions Public ConsultationProcessduringResettlementPlanning Bank guidelines, as well as national, provincial andmunicipalpolicies andregulations on land acquisition and demolition, require that the legal rights o f displaced persons beprotected. Accordingly, the project RAPShave been prepared after consultation with the affected persons. Tables A15.5 and A15.6 summarize the public participation process and the disclosure procedures for resettlement. Contents Place Participants Method Time Period Liaoyang Panjin Jinshou Fushun Dengta Benxi Conclusion ~ Physicalquantity investigation in projectareas 2005.6-8 2005.8 2005.8 2005.46 2005.6-7 2005.11 Projectareasocialeconomy Affected Persons PMOmembers, interview Dataconfirmed situation investigationand locus affected persons compensation& resettlement 2005.6-8 2005.8 2005.8 2005.4-6 2005.7-8 2005.11 intent Compensationand Municipal PMOmembers, Workshop 2o05,8 resettlementpolicy PMO affected persons and 2005.9 2005.8 2005.1 2005.9 2005.11 Resettlementplan representatives discussion 2005.8 2005.9 2005.8 2005.12 2005.1 2005.12 128  Table A15.6: Disclosure Procedure for Resettlement Disclosure Remarks media Liaoyang Jinzhou Panjin Fushun Dengta Benxi Project introduction municipal radio stations and TV 2005.7 2005.9 2005.12 2005.10 2005.12 stations October Chinese; Generalintroduction o f municipal radio project land acquisition stations and TV 1 stations I I I I I I Municipal policies o f Chinese; I I I land acquisition and municipal web 2005November~2005.12~2005.12~2005.12~2005.12 12005.12 house demolition sites Liaoyang Jinzhou Panjin Fushun Liaoyang Benxi Daily, Residents ~ Daily IDaily /Daily IDaily IDaily 12006. committee Chinese; 2006. 2006 2006 1.11 1.12 1.25 1.12 Resettlement plan municipal radio PMO, PMO PMO, Urban report disclosure stations and TV stations, library library library infrastructure newspaper construction office, Demolition denartment Chmese; Resettlement plan handouts to booklets displaced After Board approval persons 129   Annex 16: Maps CHINA: China-LiaoningMediumCities InfrastructureProject Map 1 CHINA AND LIAONINGPROJECTAREA MAP (IBRD34627) Map 2 BENXIPROJECTSUMMARY MAP (IBRD34670) Map 3 DENGTA PROJECT SUMMARY MAP (IBRD34629) Map4 FUSHUNPROJECT SUMMARY MAP (IBRD34669) Map 5 JINZHOUPROJECT SUMMARY MAP (IBRD34668) Map 6 LIAOYANGPROJECTSUMMARY MAP(IBRD 34667) Map 7 PANJINPROJECTSUMMARY MAP (IBRD34628) 131   IBRD 34627 RUSSIAN FEDERATION CHINA KAZAKHSTAN HEILONGJIANG LIAONING MEDIUM CITIES MONGOLIA JILIN Sea INFRASTRUCTURE PROJECT of KYRGYZ REP. MONGOL Japan PROJECT LOCATION AND CITIES LIAONING LIAONING D.P.R. OF XINJIANG NEI KOREA BEIJING BEIJING JAPAN HEBEI TIANJIN REP. OF KOREA SHANDONG Yellow PROJECT CITIES QINGHAI SHANXI Sea NINGXIA JIANGSU GANSU SHAANXI HENAN SELECTED CITIES AND TOWNS ANHUI SHANGHAI E a s t XIZANG PROVINCE CAPITALS SICHUAN HUBEI ZHEJIANG C h i n a RIVERS CHONGQING S e a HUNAN GUIZHOU JIANGXI FUJIAN National Capital PROVINCE BOUNDARIES TAIWAN YUNNAN GUANGDONG Province Boundaries GUANGXI P h i l i p p i n e INTERNATIONAL BOUNDARIES HONG KONG S e a International Boundaries MACAO VIETNAM B a y o f LAO HAINAN B e n g a l P.D.R. PHILIPPINES 120