China - Anhui Provincial Highway Project

Document of The World Bank Report No: 34849 IMPLEMENTATION COMPLETION REPORT (SCL-44210) ON A LOAN IN THE AMOUNT OF US$200 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR ANHUI PROVINCIAL HIGHWAY PROJECT February 22, 2006 Transport Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective June 1, 2005) Currency Unit = Yuan (Y) Y1.00 = US$ 0.12374 US$ 1.00 = Y8.08154 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AADT - Annual Average Daily Traffic ADB - Asian Development Bank AECL - Anhui Expressway Company Limited AHAB - Anhui Highway Administration Bureau AHP2 - Second Anhui Highway Project APCD - Anhui Provincial Communications Department E&M - Electrical and Mechanical EAP - Environmental Action Plan EIRR - Economic Internal Rate of Return FIRR - Financial Internal Rate of Return GOVAI - Gross Output Value of Agriculture and Industry HAE - Hefei-Anqing Expressway HMP - Highway Maintenance Program ICB - International Competitive Bidding MOC - Ministry of Communications MTE - Medium Truck Equivalent NCB - National Competitive Bidding NPV - Net Present Value NTHS - National Trunk Highway System PEO - Project Execution Office RAP - Resettlement Action Plan VOC - Vehicle Operating Costs Vice President: Jeffrey Gutman, Acting EAPVP Country Director David R. Dollar, EACCF Sector Manager Jitendra N. Bajpai, EASTR Task Team Leader/Task Manager: Aurelio Menendez, EASTR  CHINA Anhui Provincial Highway Project CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 9 6. Sustainability 11 7. Bank and Borrower Performance 12 8. Lessons Learned 14 9. Partner Comments 16 10. Additional Information 22 Annex 1. Key Performance Indicators/Log Frame Matrix 23 Annex 2. Project Costs and Financing 25 Annex 3. Economic Costs and Benefits 29 Annex 4. Bank Inputs 49 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 51 Annex 6. Ratings of Bank and Borrower Performance 52 Annex 7. List of Supporting Documents 53 MAP(S) 1. Anhui Transport System (IBRD No. 29507R) 2. Hefei-Anqing Expressway (IBRD No. 29508R)  Project ID: P050036 Project Name: Anhui Provincial Highway Project Team Leader: Aurelio Menendez TL Unit: EASTR ICR Type: Core ICR Report Date: February 22, 2006 1. Project Data Name: Anhui Provincial Highway Project L/C/TF Number: SCL-44210 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Roads and highways (98%); Sub-national government administration (2%) Theme: Municipal governance and institution building (P); Access to urban services and housing (S) KEY DATES Original Revised/Actual PCD: 02/24/1998 Effective: 04/15/1999 05/28/1999 Appraisal: 08/25/1998 MTR: Approval: 12/15/1998 Closing: 08/31/2004 08/31/2005 Borrower/Implementing Agency: PEOPLE'S REPUBLIC OF CHINA/ANHUI PROVINCIAL COMMUNICATIONS DEPARTMENT Other Partners: STAFF Current At Appraisal Vice President: Jeffrey S. Gutman Jean-Michel Severino Country Director: David R. Dollar Yukon Huang Sector Manager: Jitendra N. Bajpai Jitendra N. Bajpai Team Leader at ICR: Aurelio Menendez Yasuhiro Kawabata ICR Primary Author: Aurelio Menendez 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project had the following objectives: (i) to relieve traffic congestion and improve the mobility and integration of inter-provincial trade, commerce and tourism between Anhui and the coastal region; (ii) to improve and rehabilitate the existing national and provincial highways; (iii) to improve the safety of road transport; and (iv) to strengthen the institutional capacity of the Anhui Provincial Communications Department (APCD) and its related sector institutions. The project objectives were clear and in accordance with the long-term development goals of the Government of China. The project objectives were also in line with the Bank's Country Assistance Strategy (CAS) for China presented to the Board on March 18, 1997. The Bank's strategy (confirmed in a similar manner in the subsequent 2003 CAS) supported the alleviation of infrastructure bottlenecks aimed at stimulating the economic development of interior lagging provinces through the provision of better inter-provincial connections and direct access to ports and major cities in the coastal provinces. 3.2 Revised Objective: The project objectives remained the same throughout project implementation. 3.3 Original Components: The project consisted of the following four components: a) Construction of the Hefei-Anqing Expressway (HAE). This component included: (i) the construction of a high-grade highway of about 152 km between Hefei and Anqing in Anhui, divided into two sections, one of about 126 km between Hefei and Haohebu and another of about 26 km between Goehebu and Anqing , the second-largest city in the Anhui Province, including the construction of interchanges; (ii) construction of toll stations and auxiliary service and office buildings along the highway; and (iii) supply and installations of electrical, electronic, and mechanical equipment for toll collection, monitoring, telecommunications and lightning systems. b) Highway Maintenance Program (HMP). This component consisted of the improvement and rehabilitation of about 240 km of provincial highways in the areas of Luan, Shouxian, Chaolu, Xiaohuai, and Yangtao in Anhui as part of a program to strengthen the condition of critical road segments and promote the upkeep of the existing highway network. c) Highway Safety Component. For carrying out a program of improvement in highway safety in Anhui consisting of a study on highway traffic accidents and a pilot program for improvement of accident black spots. d) Institutional Strengthening Component included: (i) strengthening the institutional capacity of the Anhui Provincial Communications Department and its affiliated institutions in the areas of highway planning, design, construction management and supervision, operations and maintenance; traffic safety; financial planning; project implementation management; and environmental protection and monitoring; through the provision of training, equipment and consultants' services; and (ii) carrying out a study with a view to formulate recommendations for the improvement of the planning, financing, management, and operation of expressways and other toll highways in Anhui. - 2 -  The project also included the counterpart funds for the financing of the resettlement and rehabilitation of persons to be affected by the construction of the HAE. In addition, given the uncertainties involved particularly in the construction of the new HAE, the project included a large allocation to price and physical contingencies (amounting to about 19% of the total project costs). 3.4 Revised Components: The components remained substantially similar during project implementation. The only major departure from the initial financing plan involved the component for the supply and installation of electrical and mechanical (E&M) works. Ultimately, as explained below, the financing of this component was assumed by the APCD. Also, complementary investments under the highway rehabilitation component were implemented to use part of the unallocated funds. Tendering activities for the supply and installation of E&M works commenced in March 2000 as planned. However, the internal clearance process for bid evaluation at the provincial and central levels substantially delayed procurement of this component. While the HAE was completed and opened to traffic in October 2002, tendering activities for the E&M works were still under bid evaluation. In order to avoid further delays, APCD decided to locally finance the contract for the supply and installation of E&M works so that the implementation of this component could be completed quickly and the necessary E&M equipment and the related facilities could become operational sooner for the safe operation of the highway. This component was finally completed in August 2003, which constituted a delay of about five months compared to the originally scheduled date. About two years before the original closing date, --once the ultimate costs of the HAE could be estimated with a high degree of certainty and, hence, APCD could calculate with a similar degree of certainty the amount of funds under the unallocated category that were to remain unused--, the APCD estimated that there would be about US$25 million of unused loan funds and proposed to use these funds for the implementation of complementary investments under the highway rehabilitation component. The Bank approved this proposal in November 2002. Complementary roads included about 259 km of rural roads in 8 counties, among which 6 counties were classified as poor. 3.5 Quality at Entry: The overall quality at entry is rated satisfactory. This rating is based on: (i) the consistency of project objectives with China's priorities for the sector; (ii) strong ownership of the project by APCD; (iii) the importance given to Bank policies, particularly those required by the environmental and resettlement safeguards, and to those of a sector-specific nature suggested during preparation (like those related to road-safety aspects); (iv) the importance assigned to technology transfer and quality assurance; and (v) the appropriate combination of and balance among project components to achieve the project objective. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Despite delays in the implementation of some project components, the project objectives were substantially met and its achievement is assessed as satisfactory. - 3 -  A. Relieve traffic congestion and improve the mobility and integration of international trade, commerce and tourism. The execution of the investments for the construction of the HAE was adequately completed by the scheduled date. In 2002, when the HAE opened to operations, the congestion along the project-targeted corridor was relieved substantially and the overall transport capacity and mobility along the corridor was enhanced. The traffic diverted to the newly completed expressway varied by road segment, from 17% to 73%. The traffic volume on the main National Trunk Highway System (NTHS) section between Hefei and Gezidun was much higher than estimated (between 9% and 32%). On the other hand, the diversion rate from the existing road to the HAE was slightly lower than initially estimated, and the diversion rate on the southern branch line of the expressway (the Gezidun