China - Tri-provincial Highway

 ICRR 12863 Report Number : ICRR12863 IEG ICR Review Independent Evaluation Group 1. Project Data: Date Posted : 03/03/2008 PROJ ID : P045788 Appraisal Actual Project Name : Cn-tri-provincial Hwy US$M ): Project Costs (US$M): 658.70 649.27 Country : China Loan/ US$M ): Loan /Credit (US$M): 230.0 225.0 Sector Board : TR Cofinancing (US$M ): US$M): 0 0 Sector (s): Roads and highways (84%) Sub-national government administration (16%) Theme (s): Rural services and infrastructure (29% - P) Access to urban services and housing (29% - P) Municipal governance and institution building (28% - P) Infrastructure services for private sector development (14% - S) L/C Number : L4356 Board Approval Date : 06/23/1998 Partners involved : Closing Date : 06/30/2005 06/30/2007 Evaluator : Panel Reviewer : Group Manager : Group : Antti P. Talvitie Peter Nigel Freeman Soniya Carvalho IEGSG 2. Project Objectives and Components: a. Objectives: (a) To increase the efficiency and safety of traffic in highway priority corridors in order to facilitate faster socioeconomic development; (b) To provide improved access to targeted poor counties; (c) To improve highway sector institutional capacity; and (d) To improve the safety of road transport b.Were the project objectives/key associated outcome targets revised during implementation? No c. Components (or Key Conditions in the case of DPLs, as appropriate): The Project consisted of the following components : 1. Construction of Main Highways with a total length of about 687 km comprising. Cost at appraisal US$587.56 million (with contingencies); and 576.48 million at completion.  Baotou-Dongsheng Highway (103 km) of which 92 km are a 4-lane Class 1 highway and 11 km are a 2-lane Class 2 highway in Inner Mongolia; Baiyinchagan-Fengzhen Highway (142 km) a 2-lane Class 2 highway in Inner Mongolia; Liugouhe-Zhonghe Expressway (33.5 km) a 4-lane expressway in Gansu; Xujiamo -Jiepaicun Highway (64 km) a 2-lane Class 2 highway in Gansu; Guyaozi-Wangquanliang Highway (94 km) of which about 83 km provide 2 lanes for traffic on a 4-lane Class 1 highway subgrade and about 11 km are a 2-lane Class 2 highway in Ningxia; and Yanchi-Xingren Highway (250.5 km), a 2-lane Class 2 highway in Ningxia. 2. Road Improvement Program for Poverty Alleviation (RIPA) comprising the construction and improvement of about 1892 km of rural roads in poor counties, of which 803 km are in Gansu, 836 km in Inner Mongolia and 253 km in Ningxia. Cost at appraisal US$41.04 million (with contingencies); US$43.50 million at completion. 3. A program to strengthen institutional capacity in highway planning, design, supervision, construction, operation and maintenance in each of the Project Provinces . Cost at appraisal US$28.60 million; and US$28.72 million at completion. 4. A highway safety program to reduce traffic accidents on highways . Cost at appraisal US$1.50 million; and US$0.57 million at completion. The Loan Agreement describes the project as consisting of three parts, with a part each in Inner Mongolia Autonomous Region (Part A), Gansu Province (Part B) and Ningxia Hui Autonomous Region (Part C). The Project Appraisal Document (PAD) describes the project thematically . While there is a difference in how the Project is presented, the components are identical in both documents . The project components were also similar in all three Project Provinces. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The Borrowers--the Central government and the provinces --paid 65% of the project costs; a significant share . The project costs were estimated conservatively . Because the contingencies did not materialize additional road rehabilitation, construction or improved designs were implemented . There were significant design and project component changes and the Loan agreement was amended twice without changing the objectives . Design change of the Baotou-Dongsheng Highway (BDH) in Inner Mongolia resulted in an improved highway and left the existing Class 2 road for local and slow traffic. In Ningxia the Guyaozi-Wangquanliang Highway (GWH) was upgraded to a full 4-lane expressway standard for safety and maintenance reasons . The latter required a supplemental feasibility study before Bank approval. The planned components were implemented on schedule . However, the loan closing date was extended by two years to June 30 2007 in order to utilize project savings in Gansu . This enabled the rehabilitation of an additional 85 km of existing Class 2 road. At project completion US$5 million was cancelled. 3. Relevance of Objectives & Design: The objectives were relevant and consistent with China's transport development plans and the Bank ’s Country Assistance Strategy (CAS-1998): (i) alleviating infrastructure bottlenecks and increasing road network capacity, and (ii) helping to alleviate poverty in China . These objectives remain relevant because they directly relate to three pillars of the Country Partnership Strategy (CPS-2006): Reducing poverty, inequality, social exclusion; Financing sustained and efficient growth; and Improving public and market institutions, and because they indirectly relate to the remaining two pillars of the CPS: Integrating China to the world economy; and managing resource scarcity and environmental challenges. The project design was good and the components were well selected . The results framework was logical and had both outcome and time -bound output indicators. There was a plausible connection between project activities and project objectives . 4. Achievement of Objectives (Efficacy): To increase the efficiency and safety of traffic in highway priority corridors in order to facilitate faster socioeconomic development. The highways in the target corridors were implemented as planned . The design of the road capacity was increased in two corridors due to anticipated growth in travel demand . The economic benefits, the traffic (30% above target with two exceptions ), and the travel speeds (12-50% above target) were higher than expected or targeted. In those cases that the benefits are lower (at present), result from unavailability of connecting links, which are due to open in two years . Socioeconomic development was fostered : the gross output value of agriculture and industry (GOVAI), occurring during this and other projects in the three provinces, exceeded targets by 36 to 60%. Also school enrollment has increased . Achievement of this objective is rated high . To provide improved access to targeted poor counties . The RIPA component was implemented in full . Daily traffic on the RIPA roads increased much more than targeted (50-320%), signaling user benefits and economic growth, except in Ningxia where the result fell 8% short of the target. The sum of days the RIPA roads were closed to traffic reduced from about 2000 days annually to 4 days (only 8% of the target). Thus the areas served by the RIPA roads gained permanent access to the main road and the markets . The ERR for the RIPA roads ranged from 25 to 58% and was higher in every province than the ERR for the main roads . The achievement of the objective is high . To improve highway sector institutional capacity . The project included a training program, both in China and abroad, in which 385 persons participated. Studies, manuals, improved standards, acquisition of modern equipment, and training abroad straightened the capacity the Provincial Communications Departments (PCD) to design, manage, supervise, operate and maintain highways . Coordination between the traffic police and the PCDs has been institutionalized and manuals have been developed to improve safety and road maintenance . TA and the project experience are likely to have a continuing positive impact on road management, resettlement, environmental monitoring and administration. The achievement of the objective is high . To improve the safety of road transport . The road safety program was completed . The black spot elimination program had very good results and the accident rates were reduced more than 50%. The number of accidents in the project roads is only 2-5% of the accidents before the project, and 12% less than the target. The awareness of the importance of road safety has improved . A coordination mechanism between the PCDs and the traffic police was established which resulted in improvement of traffic safety and reduction in vehicle overloading . The achievement of the objective is high. 5. Efficiency (not applicable to DPLs): Benefit-cost analyses showed results expected in the PAD . Although the ICR ERR is slightly lower the coverage at completion is higher because of the inclusion of the RIPA roads in the analysis . The total net benefits of the project are substantially higher than at appraisal . ERR )/Financial Rate of Return (FRR) a. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal Yes 23.2% 89.2% ICR estimate Yes 20.7% 95.5% * Refers to percent of total project cost for which ERR/FRR was calculated. 6. Outcome: The project supported the CAS-1998 and the remained relevant for the CPS -2206. It exceeded its planned targets or indicator values; in a few cases the forecast travel demand has not yet materialized due to missing links . However, taking into account the higher coverage, the ERR is close to that estimated at appraisal . Two new roads were built or rehabilitated with project savings . The target for the gross output value of agriculture and industry (GOVAI) was exceeded; poverty was reduced; school enrollment has increased; accidents have been effectively reduced; and, institutional capacity was improved . a. Outcome Rating : Highly Satisfactory 7. Rationale for Risk to Development Outcome Rating: Even though the main highways do not cover the full costs from the tolls, which was expected, the remaining coverage for the loan payments is but a small fraction of the provinces' highway budgets . Likewise, the low volume RIPA roads' maintenance requires less than 5 per cent of the road maintenance budgets . TA to improve institutional capacity was successful; environmental impacts were appropriately mitigated; resettlement was carried out properly; there was positive socioeconomic development; and, there is government ownership . Bank monitoring of the project roads after completion confirms that the roads are well maintained by trained staff . a. Risk to Development Outcome Rating : Negligible to Low 8. Assessment of Bank Performance: Analysis and justification for the Project was sound and project preparation was comprehensive . Bank supervised the project well, responded to the clients' needs in modifying the components' designs when warranted, and monitored all aspects of the project closely to ensure achievement of project outputs and results, and compliance with the safeguard requirements . at -Entry :Satisfactory a. Ensuring Quality -at- b. Quality of Supervision :Satisfactory c. Overall Bank Performance :Satisfactory  9. Assessment of Borrower Performance: The MOC and MOF, at the central level, assisted in the preparation of the Project . During the implementation stage, they followed the Project closely and helped to resolve issues promptly . The PCD's implementing entities had an occasional "learning curve" but performed responsibly, supervised skillfully, and ensured that the Project was executed as agreed and outputs achieved as planned a. Government Performance :Satisfactory b. Implementing Agency Performance :Satisfactory c. Overall Borrower Performance :Satisfactory 10. M&E Design, Implementation, & Utilization: Key indicators for monitoring performance : (i) Average daily traffic (ADT) on proposed and existing highways in selected high priority corridors; (ii) Average speed on proposed and existing highways; (iii) Traffic accident rates on proposed and existing highways; (iv) Gross output value of agriculture and industry of main highway corridors; (v) ADT on roads included in the Road Improvement Program for Poverty Alleviation (RIPA); (vi) Number of days/year the roads in RIPA were closed to traffic; and (vii) Bank loan recovery (in each province) through tolls on the main highways. In addition, the rate of progress in implementing each component was measured against planned targets for each year of project. These served as bench -marks for monitoring project implementation progress . Data for monitoring the indicators were collected and reviewed according to the agreed plan . Arrangements for the collection of data were instituted to assure the sustainability of their collection and usage for monitoring performances beyond the project implementation period . The M&E design was pragmatic, good proxies for outcomes, and the indicators are measurable . The implementation was systematic and utilization served both the project implementation and its results . a. M&E Quality Rating : Substantial 11. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Overall the safeguards were managed satisfactorily, in spite of some surprises . Environmental management was built into the overall project management system and was complied with . Independent environmental monitoring was conducted by local environmental agencies in accordance with the EAPs . The RAP miscalculated the land acquisition and the floor area of demolished homes . The total cost of resettlement more than doubled as a consequence . This was a direct result of the expansion of several project roads during implementation. Land use of the impacted area in Inner Mongolia was revised upward; the cultivable land in the affected area increased by over 70%; irrigation was provided to some dry land, and low -yielding cultivated grassland was returned to forest. RAP and land acquisition were implemented in compliance with the Bank's guidelines . Procurement was undertaken in accordance with Bank procurement procedures . There was an initial misunderstanding in Ningxia of the requirement for the Bank's prior approval of major changes in the scope of work of project financed contracts . After clarifications, contract management proceeded satisfactorily . Financial management met acceptable standards . Compliance with the requirement for independent auditing of annual project accounts was good. 12. Ratings : 12. ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Highly Satisfactory The project exceeded its target values and there were no shortcomings in the project implementation. Risk to Development Negligible to Low Negligible to Low Outcome :  Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate . 13. Lessons: 1. The Bank can manage projects that cover areas (provinces) with different levels of socioeconomic development and professional capacity . The key is to have good performance indicators, focus on the objectives, and be responsive to the clients' needs and levels of competence . 2. Success in infrastructure projects is strongly dependent on client motivation . In the Tri-provincial Highway project the clients, the provincial communications departments, were highly motivated to succeed . They learned from mistakes, adjusted to changes --for example resulting from weather-related setbacks--and implemented the (planned) project on time. 3. Successful projects, like the China Tri -provincial Highway project, are an experiential learning opportunity . The increased economic activity, whether resulting from this or other projects in affected areas, the reductions in accidents, the competence to deal with large projects and related environment and resettlement issues, gave an incentive and confidence for the participating provinces . They have embarked on their own initiative on new road construction and rehabilitation works for all road classes . The socioeconomic benefits and reductions in poverty from them are likely to be substantial . 14. Assessment Recommended? Yes No 15. Comments on Quality of ICR: The ICR, though long and occasionally not to the point, was informative and explained the project implementation experience and its results well . The inclusion of the financial analysis and fiscal impact of the project to complement the benefit-cost analysis for both the main and the RIPA roads was good . a.Quality of ICR Rating : Satisfactory