China - Guangzhou City Center Transport Project

Report No. PIC684 Project Name China-Guangzhou City Center Transport Project Region East Asia and Pacific Sector Transportation Project ID CNPA3614 Borrower People's Republic of China Implementing Agency (provisional) Guangzhou Urban and Rural Construction Commission Mr. Deng Hanying, Vice Director Project Office 29, Fujian Road, 7th Floor Guangzhou 510100 Tel: (86 20) 3818 9282 Fax: (86 20) 3818 9282 Environment Category A Date this PID prepared June 1996 Projected Appraisal Date November 1996 Projected Board Date May 1997 1. Country and Sector Background. China has enjoyed strong economic growth since the opening to foreign investment in the late 1970s. Annual growth in the most advanced eastern provinces has reached double-digit rates, stimulated by an increasingly rapid transition to a market economy. This growth is putting pressure on city transport systems, and traffic congestion has increased substantially in recent years. If allowed to increase unchecked, congestion will have serious implications for personal mobility, economic growth, and the quality of the urban environment. 2. Increasing traffic congestion is a symptom of several underlying trends in China's cities. The main causes appear to be the rapid pace of motorization (for both person and freight movements) and the increasingly intensive use of bicycles in city centers. While all traffic suffers from the effects of congestion, the main victims are bus public transport services which are now deteriorating in several cities at a time when demand for travel is generally rising with increasing affluence. Increased traffic noise and air pollution, and increased community severance, are other undesirable manifestations of the urban transport problem. 3. A serious obstacle to tackling these issues is the fragmented nature of urban transport administration and regulation. As a result, cities tend to focus on expensive building solutions -- new highways and urban rail systems -- which appear to be more straightforward to administer and receive priority from the city leaders. While there is a need for new infrastructure, much can be done by better management in several areas: better traffic management  of the existing street system; greater autonomy and incentives to bus operators with Government restricting itself to a regulatory role; and effective control of the demand for transport through consistent pricing policies. There are opportunities for the private sector to contribute, particularly in the rejuvenation of bus operations, but cities need to create the right legal and regulatory environment for these to flourish. All these issues are now being examined in greater depth 4. Guangzhou Municipality. Guangdong Province in the South of China is in the vanguard of the transition to the market economy. Guangzhou, the capital city of the province located on the Pearl River some 100 kms upstream from Hong Kong, has recorded annual GDP growth rates averaging 13t since 1978 and exceeding 20t since 1987. Economic growth is being matched by physical growth: the built-up area now occupies 188 sq km, up from 54 sq km in the late 60s, and the city planned area, designated for master planning purposes, has recently been increased from 330 sq km to 500 sq km. Much of the new expansion is taking place to the east along the Pearl River, and to the North where it is planned to re-locate the airport. Registered population is now estimated at nearly 4 million. This is boosted by an additional 1 million unregistered population largely comprising laborers and workers attracted from the countryside. As a result of this economic and physical growth, the city is beginning to suffer from severe traffic congestion. 5. Guangzhou Municipality (GM) approached the Bank in 1992 to request funding to support transport infrastructure development, in particular additional sections of the Expressway Ring Road then partly under construction. Given the complexity of the transport issues involved, GM and the Bank agreed to first conduct a comprehensive transport study to identify and review key transport issues and to recommend a strategy for future transport development. Both policy and infrastructure measures were considered. The Guangzhou Urban Transport Study (GUTS) was initiated in early 1993 using Japanese funding from the Policy and Human Resources (PHRD) trust fund. The work of the Study was reviewed periodically by a joint GM/Bank Steering Group with international and domestic experts, and the draft Final Report was presented in June 1994. The key recommendations of the GUTS Final Report are for: (a) a public transport-oriented city center with improved management of roads and pedestrian facilities, and both physical and economic disincentives to the use of private transport. (b) a relatively unrestricted road-based suburban and regional transport system with rail provision in corridors of proven high demand; a first east-west metro line has started construction, a north-south line is being planned, and further extensions of the metro are under consideration to link the growth areas in the east and north with the city center. (c) reform of bus operations aiming eventually for private - 2 -  operations with Government restricting itself to a regulatory role; this builds on initiatives already underway in Guangzhou. (d) a formal liaison process to coordinate the activities of the various transport agencies leading eventually to a restructuring of urban transport management within GM. 6. Project Objectives. Four major objectives can be identified for the project, all deriving directly from the conclusions of GUTS: (a) improve the efficiency and amenity of the transport system in the city center; (b) support the reform and restructuring of bus transport for greater efficiency and improved market orientation, (c) improve the city environment, in particular by reducing motor vehicle pollution; and (d) develop transport institutional capability. 7. Project Description. Five major project components have been identified: i) City Center Traffic Management and Safety (TMS). This component seeks to improve the amenity and environment of the city center by segregating traffic flows, reducing traffic congestion (and thereby levels of vehicle pollution), and improving traffic management. Physical works, policy measures, and institutional development are included. The main thrust of the physical works will be to start the process of rationalizing the street network in the city center based on a functional hierarchy of roads providing: (a) priority to public transport; (b) separated routes for bicycles, (c) improved facilities for pedestrians; (d) effective traffic management measures; (e) improved traffic signal control; (f) improved parking facilities (appropriately priced); (g) improved traffic safety; The works will focus on improvements to one area of the city center as a pilot for the methods and approach which can be used for TMS work in other parts of the city center following completion of this project. Candidate policy measures for controlling the level of demand for private transport use will be evaluated during preparation, with particular emphasis on appropriate parking policy, considering both level of provision and pricing. The implementation plan for this component would seek to build institutional management capability, considering: (a) coordination mechanisms among agencies; (b) training and human resources development; (c) initiation of a rolling program of TMS projects throughout the City; and (d) traffic regulation and enforcement. ii) Highway Infrastructure. Candidate highway improvement projects have been identified based on proposals in GUTS focussing on improvements to sections of the Inner Ring Road (IRR), including two new bridges. Properly integrated with the -3 -  local street system, these roads would help remove through traffic from the inner city districts thereby supporting the efficient traffic functioning of the city center street system. Technical assistance would be provided for construction management support and environmental monitoring. iii) Bus Transport Improvements (BTI). The objectives of this component would be to improve the quality and financial viability of bus services provided to the public by the introduction of competition. The strategy to be followed calls for facilitating private sector involvement in bus operations, perhaps via an intermediate stage of corporatizing the existing bus companies, and assisting Government to transition from a bus operations role to a regulatory role. A comprehensive program of institutional improvements would be introduced supported as necessary by the purchase of equipment and vehicles. This component would seek to build on the existing momentum for institutional reform and involvement of the private sector. iv) Motor Vehicle Pollution Control (MVPC). This component would complement and support the ongoing Environmental Technical Assistance Project (P-6056-CHA) by supporting practical measures to reduce motor vehicle pollution in Guangzhou, and contributing to the national strategy for reducing motor vehicle pollution. Pilot evaluation of vehicle inspection and maintenance (VIM) regimes (perhaps with an emphasis on motorcycles), alternative fuels, modification to conventional fuels, and remote sensing of highly polluting vehicles, are being discussed as possible options. v) Technical Assistance. In addition to technical assistance identified above to support implementation of project components, other technical assistance is under consideration, including (a) preparation of an urban transport investment financing strategy (including management of private financing) and (b) support for transport planning building on the work started in GUTS. 8. Project Financing. Components have been identified totalling approximately $550 million; this could increase somewhat if resettlement for the City Center TMS proves significant. The proposed project loan would allow for Bank financing 100% of technical assistance components and imported materials, and between 30-50% of the cost of civil works (excluding resettlement). GM would finance the balance. This probably represents an upper limit to the project size, and GM are reviewing their needs based on Identification Mission discussions. During preparation, the size of the project and the feasibility of the financing plan will be further assessed. 9. Project Implementation. The implementation arrangements will likely involve various agencies of the Guangzhou Urban and Rural Construction Commission (GURCC), most importantly the Urban Construction Department, the Engineering Administration Bureau, the Public Utilities Bureau, and the City Planning Bureau, with links to the Guangzhou Environmental Protection Office, and Guangzhou Public Security Bureau. Coordination of these agencies would be under the - 4 -  auspices of a leading group designated by the Municipality, with day to day running coordinated by a Project Implementation Unit probably located in the GURCC Urban Construction Department. 10. Project Sustainability. Institutional sustainability of transport management and planning functions would be enhanced under the project through development action plans supported by technical assistance. The main expenditures under the project would be for investments which are part of a larger program of municipal infrastructure upgrading; the investments would not generate financial returns directly. GM's capability for infrastructure investment and subsequent maintenance appears to be adequate, but will be further assessed. The BTI component aims to improve the financial viability of bus operations and relieve GM of major financial responsibilities in this subsector, both aspects enhancing financial sustainability. 11. Lessons Learned from Past Operations. Implementation of previous Bank-financed urban transport projects has indicated the following (mostly derived from the work on two projects in Shanghai): (a) municipalities have demonstrated strong capability in civil works design and construction, often requiring little Bank assistance in these areas, (b) municipal institutions still have only limited experience in treating environmental issues, transport planning and investment programming, and require more assistance to deal effectively with the complex nature of the issues in these fields, (c) successful implementation of traffic management measures requires strong inter-agency coordination which can be promoted and facilitated through a lending project which emphasizes the importance of traffic management. For Guangzhou, GUTS initiated a process of planning and investment programming which the project aims to build upon. To address the issue of coordinating traffic management more effectively, the project aims to develop the institutional mechanisms for coordination under the City Center TMS component which can provide the basis for a continuing TMS program after completion of the Project. 12. Poverty Category. Not applicable. 13. Environmental Aspects. The project is proposed as Category A with EAs required for all highway subcomponents; EA preparation will be assisted under a recent PHRD grant. Some of the components will involve involuntary resettlement for which Resettlement Action Plans will be required. Environmental issues will also be addressed under the project through the Motor Vehicle Pollution Control component and through TA. 14. Program Objective Category. Environmentally sustainable development. 15. Contact Point. Public Information Center The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458 5454 Fax: (202) 522 1500 - 5 -  Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending June 21, 1996. - 6 -