China - Beijing-Tianjin-Tanggu Expressway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16389 IMPLEMENTATION COMPLETION REPORT CHINA BEIJING-TIANJIN-TANGGU EXPRESSWAY PROJECT (LOAN 2811-CHA/CREDIT 1792-CHA) March 11, 1997 Infrastructure Operations Division China and Mongolia Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Yuan (Y) 1987 (appraisal) $1 = Y 3.72 1988 $1 = Y 3.72 1989 $1 = Y 3.76 1990 $1 = Y 4.78 1991 $1 = Y 5.32 1992 $1 = Y 5.53 1993 $1 = Y 5.76 1994 $1 = Y 8.60 1995 $1 = Y 8.50 FISCAL YEAR January I - December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft I kilometer (km) 2 0.62 mile (mi) I square meter (m ) 2 = 10.76 square feet (ft) I square kilometer (km = 0.4 square miles (mi) I hectare (ha) = 0.01 km = 2.47 acr5s (ac) = 15 mu I mu = 666.7 m = 0.0667 ha I kilogram (kg) = 2.2046 pounds (Ibs) 1 metric ton (t) = 2,204 pounds (Ibs) ABBREVIATIONS AND ACRONYMS 8FYP - Eighth Five-Year Plan 9FYP - Ninth Five-Year Plan ADT - Average Daily Traffic BTTE Beijing-Tianjin-Tanggu Expressway BTTEUC - Beijing-Tianjin-Tanggu Expressway United Corporation DF - Diversion Factor E&M - Electronic, Electrical and Mechanical ERR - Economic Rate of Return FRR - Financial Rate of Return HPDI - Highway Planning and Design Institute HSRI Highway Scientific Research Institute ICB - International Competitive Bidding ICR - Implementation Completion Report MOC - Ministry of Communications PMS - Pavement Management System SAR - Staff Appraisal Report TOR - Terms of Reference VOC - Vehicle Operating Cost Vice President Jean-Michel Severino, EAP Director : Nicholas C. Hope, EA2 Division Chief Richard Scurfield, EA21N Staff Member Otto Raggambi, Highway Engineer, Consultant, EA21N  FOR OFFICIAL USE ONLY CONTENTS PREFACE ......................................................... iii EVALUATION SUMMARY ..........................................................v PART I: PROJECT IMPLEMENTATION ASSESSMENT ................................. 1 A. Project Objectives and Description .......................................1 B. Achievement of Project Objectives ........................................................2 C. Major Factors Affecting the Project ......................................................... 18 D. Project Sustainability ......................................................... 19 E. Bank Performnance ......................................................... 20 F. Borrower Performance ................................................ 22 G. Assessment of Outcome ......................................................... 23 H. Future Operation ......................................................... 24 I. Key Lessons Learned ......................................................... 24 PART II: STATISTICAL TABLES ......................................................... 27 Table 1: Summary of Assessments ......................................................... 27 Table 2: Related Bank Loans/Credits ......................................................... 28 Table 3: Project Timetable ......................................................... 29 Table 4: Loan/Credit Disbursement: Cumulative Estimate and Actual ......... 29 Table 5: Key Indicators for Project Implementation ...................................... 30 Table 6: Key Indicators For Project Operations .............................................. 30 Table 7: Studies included in Project ......................................................... 30 Table 8a: Project Costs ......................................................... 31 Table 8b: Project Costs ......................................................... 31 Table 8c: Project Financing ......................................................... 32 Table 9: Economic Costs and Benefits ......................................................... 32 Table 10: Status of Legal Covenants ......................................................... 33 Table 11: Compliance with Operational Manual Statements ......................... 34 Table 12: Bank Resources: Staff Inputs ......................................................... 34 Table 13: Bank Resources: Missions ......................................................... 34 ANNEX 1: ECONOMIC AND FINANCIAL EVALUATION ............................. 35 ANNEX 2: BORROWER'S CONTRIBUTION TO THE ICR ............................ 54 ANNEX 3: SUPERVISION/ICR MISSION'S AIDE MEMOIRE ....................... 65 MAP: Beijing-Tianjin-Tanggu Expressway-IBRD 19661R This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   - iii - IMPLEMENTATION COMPLETION REPORT CHINA BEIJING-TIANJIN-TANGGU EXPRESSWAY PROJECT (LOAN 2811-CHA/CREDIT 1792-CHA) PREFACE This is the Implementation Completion Report (ICR) for the Beijing-Tianjin- Tanggu Expressway in China for which Loan 281 1-CHA, for $25.0 million, and Credit 1792-CHA, for SDR 98.9 million ($125.0 million equivalent), was approved on May 12, 1987. The credit and the loan were closed on December 31, 1995, and the last disbursement from the loan account was made on January 26, 1996. The ICR was prepared by Messrs. Otto Raggambi (Highway Engineer, Consultant) and Han-Kang Yen (Research Analyst), and Ms. Alla Weinstein (Transport Specialist, Consultant) in the Infrastructure Operations Division, China and Mongolia Department of the East Asia and Pacific Region of the Bank, and reviewed by Messrs. Richard Scurfield, Chief, EA2IN and Yo Kimura, Project Advisor, EA2DR. The borrower's implementation evaluation summary for the project is annexed to the ICR. Preparation of this ICR began in April 1995, and an ICR mission had discussions with representatives of the Ministry of Communications (MOC) and the Beijing-Tianjin Tanggu Expressway United Corporation (BTTEUC) in July 1995. Further consultation was held between MOC, BTTEUC and Bank personnel regarding the preparation of the ICR in Beijing in November 1996. The ICR is based on discussions held in the field, materials available in the project file and additional data provided by BTTEUC. BTTEUC also submitted to the Bank a copy of its evaluation report for the expressway and other project components.   - v - CHINA BEIJING-TIANJIN-TANGGU EXPRESSWAY PROJECT (LOAN 2811-CHA/CREDIT 1792-CHA) EVALUATION SUMMARY Introduction and Project Objectives 1. The Chinese economy, which started accelerating in the early 1980s, greatly increased road transport demand. To address the problem of road transport constraints, the Chinese Government had decided to accord high priority to increasing road capacity on the heavily trafficked segments of the national and provincial road networks. The Beijing-Tianjin-Tanggu Expressway (BTTE) reflects this priority, along with the project's much needed transfer of technology to municipal/provincial transport departments through acquisition of modern equipment and staff training, and addressing broader subsectoral issues, such as highway finance, better use of local bitumen and management of tolled highways. 2. The project's objectives were to assist the Government in meeting the road transport needs in one of the most important and congested corridors in China, and in increasing the efficiency and cost effectiveness of the highway subsector. To achieve such objectives the scope of the project was formulated as follows: (a) construction of a high-standard tolled expressway (143 km) and two connecting roads; (b) technical assistance for improving the planning, development and maintenance of the highway system by setting up a road data bank on the highway network; (c) the undertaking of studies on (i) methods of financing the expansion and improvement of the highway network; (ii) upgrading the quality of local bitumen to be used for high-class road pavement, and (iii) identifying appropriate procedures for operating and maintaining the expressway; (d) staff training in the area of transportation planning; and (e) continuing assistance in highway-related research and modernization of design, construction and materials specifications, and civil works contract documentation. 3. The major component of the project aimed at reducing congestion and travel time for road traffic in the key corridor between Beijing and Tanggu, through Tianjin, one of the largest industrial centers in the country, by the construction of a tolled expressway on a more direct route than available along the sections of the arterial road network. The project's other components reflected the broader institutional priorities for the highway subsector, which conformed to the strategy of the Central Government and the assistance strategy of the Bank Group.  - vi - Implementation Experience and Results 4. The project's key objective of constructing a new tolled expressway between Beijing and Tanggu was achieved but with a substantially higher cost and a marginally higher economic rate of return (ERR) than originally estimated. More specifically: (a) the economic cost in the ICR, at December 1995 constant prices, is about 116 percent higher than the SAR estimate due to quantity variations, design changes and price escalation; and (b) the ERR increased from the appraisal estimate of 14.5 percent to 15.7 percent, indicating that the higher benefits, generated by the higher-than-forecast volume of traffic using the BTTE, more than offset the higher than estimated investment cost. 5. Originally, the construction of the BTTE was scheduled to start in October 1987 and to be completed in about 38 months, by December 31, 1990. Although the construction of the Expressway commenced at the end of December 1987, with a slightly less than two months delay, it was completed only in April 1995. However, civil works were completed in September 1993, which allowed the opening of the expressway to traffic over its full length. The implementation schedule of the civil works was adversely affected by (a) delays in land acquisition and the removal of obstructions from the right-of way, (b) a variety of design changes, some of them substantive, (c) exceptionally heavy rainfalls during 1988, and (d) poor subsoil conditions, particularly on the Tianjin-Tanggu section of the BTTE. Also, in mid-1990, resources from other sections of the Expressway were transferred to the Beijing-Tianjin segment in order to assure that this section could be opened to meet the transport needs of the Asian Games in September/October 1990. Such a measure was disruptive, and contributed to the overall delay to the execution of the civil works. However, the major delay in full completion of the BTTE was caused by the protracted preparation and procurement process for supply and installation of the electrical and mechanical (E&M) works, covering tolling, telecommunications, traffic monitoring and lighting systems for the BTTE. The Bank, in recognition of the implementation difficulties encountered, extended the loan/credit closing date by three years from December 31, 1992 to December 31, 1995. 6. In addition to the above impediments there have been other factors which adversely affected the implementation of the BTTE, particularly in its initial phase: (a) deficiency of engineering design and technical specifications, (b) the poor performance of the contractors, and (c) the lack of experience of the employers, contractors and most of the supervision staff in the construction of high-class highway with magnitude, complexity and administrative and technical requirements similar to that of the BTTE. As a combined effect of such shortcomings, the execution and the quality of works were not controlled effectively, and a substantial portion of the civil works carried out in 1988 failed to meet the technical specifications. However, the Bank Group, in recognition of the seriousness of the situation initiated the introduction of remedial measures in early 1989, following consultation with the Borrower. It was agreed that MOC would: (a) sign a formal contract agreement for supervision services with each of the three Resident Supervision Units; (b) ensure that the units would be operating fully independently from the municipal/provincial authorities and report directly to the Engineer's Representative, (c) insist that contractors prepare realistic  - vii - work programs and submit those to the Engineer for his consent, and (d) keep the Bank fully informed about the progress of works and compliance with quality requirements and other conditionalities under the contracts. Furthermore, it was agreed that no disbursement requests would be submitted to the Bank Group until the Office of the Engineer's Representative certified that, after a complete reassessment of the quality of the works executed during 1988 and in early 1989, all substandard works had been rectified. Also, MOC, BTTEUC and the supervision units took steps to strengthen the supervision organization through employing additional staff, extensive staff training, acquisition of transport vehicles and the provision of test laboratories. The defective works carried out during 1988 were subsequently remedied and the Bank Group's disbursement resumed in the second half of 1989. 7. Although quality problems emerged throughout, the effectiveness of such measures resulted in a gradual but substantive improvement in contract management and quality control by the construction supervision units. From 1989 onward an acceptable modus operandi emerged in the course of the execution of the BTTE, within the constraints of the ability and preparedness of the employers, contractors and construction supervision units. While it would be unrealistic to assume that all elements of the works on the BTTE were executed without quality shortfalls, the BTTE may be regarded as one of the best major highways constructed in China to date. 8. In retrospect, there are a number of mitigating circumstances regarding the delays and the deficiencies encountered during the implementation of the BTTE. It is apparent that the contracting period of 30-36 months for civil works was too short, considering the complexity of the engineering requirements, and the generally poor sub-soil conditions along several section of the Expressway's alignment over which the embankments constructed required a minimum of 12 months to settle. Regarding the E&M component of the BTTE, it could be argued that a much earlier start on the preparation of this component could have preempted the excessive implementation delay of the BTTE and the project as a whole. In this regard, it may be noted that this was the first time that such kind of E&M works had been undertaken in China. The complexity of the task, combined with the overall management requirements for the implementation of the BTTE civil works, to which a higher priority had been given, understandably led to the delay encountered in the completion of the E&M component. Overall, considering that the BTTE was the first high-class highway project applying principles of international project administration, and despite the delays and other difficulties during implementation of the civil works, the satisfactory completion of the BTTE has been a commendable achievement. It provided an excellent opportunity for acquiring technological and managerial experience for a large group of highway engineers and technicians, and, furthermore, the very satisfactory performance of the Expressway during several years of service is good indication of the successful outcome of the efforts of all the entities involved in its implementation. 9. The procurement of equipment for the operation and maintenance of the BTTE, and the staff training program were accomplished satisfactorily, although some adjustments had to be made to the type and quantity of equipment procured and the areas  - viii - of training, compared to the original stipulations in the SAR and the Minutes of Negotiations. The changes made were well considered and regarded as appropriate. 10. It was intended that assistance would be provided under the project to support the development of a road data bank in Beijing Municipality. However, sufficient progress had already been made by the Beijing Municipality Road Administration on this prograrn by the end of the 1980s, and it was not considered expedient to get involved in the program. Therefore, the Bank agreed instead to provide assistance for the establishment of a pavement management system specifically designed for the BTTE, which now forms an integral part of the overall BTTE Management System. 11. Three broader road transport subsectoral issues were addressed through three studies: (a) identifying alternative sources for financing highway development; (b) analyzing the potential for the utilization of local bitumen for high-class road pavements; and (c) formulating a management system for the operation of the BTTE, as a possible pattern for the management of other major toll highways in China. The outcomes of these studies have been mixed. The highway finance study would have benefited from a better-focused policy framework prior to its launching or, at least, from a more persistent follow-up of the study's recommendations. The study of local bitumen was useful, but there has been a lack of coordinated effort by the Borrower to obtain greater benefits from following up the study's finding and recommendations. The Management System for the BTTE is in place and it functions satisfactorily. Summary of Findings, Future Operations, and Key Lessons Learned 12. Notwithstanding the difficulties, substantial delays and quality deficiencies encountered during the implementation of the BTTE, the key component of the project, as well as the minor components of the project, were implemented satisfactorily. The ICR estimate of the ERR confirm that the project's development objectives have been achieved, and that the condition of the project civil works facilities and the benefits emanating from the investments made, as detailed in Annex 1, are sustainable and are not expected to be exposed to substantial future risks. 13. The Financial Analysis presented in Annex 1 shows a rate of return of 5.2 percent, and also confirms that the toll revenues are expected to be more than adequate to cover the repayment of financial obligations and the expenses required for the satisfactory maintenance of the BTTE. 14. All prerequisites are in place to ensure that the physical condition of the BTTE is sustainable through regular routine and periodic maintenance. Furthermore, the BTTE United Corporation (BTTEUC) is a well-established entity and regarded to be capable of ensuring that the BTTE will be satisfactorily operated and maintained. An Operation Manual for the BTTE under preparation is designed to define the appropriate performance parameters, which should help ensure that the operation of the BTTE is monitored effectively at regular intervals.  - ix - 15. The implementation of the equipment and staff training components of the project was also satisfactory. While the efforts put into the highway finance and local bitumen studies were adequate, lack of follow-up on the findings and recommendations of the studies by the Chinese entities and the Bank Group render the outcome less than fully satisfactory. BTTEUC, through a study, achieved a satisfactory set up for the administration of the BTTE. 16. The following lessons learned are relevant to the still ongoing and future Bank Group-financed highway projects in China: (a) The noted deficiencies of the civil works design and technical specifications highlighted the urgent need for the revision, improvement and consolidation of engineering design and technical specifications into national standards for the construction of high-class highways in China. (b) The late start and the slow progress made on the preparation of the E&M works for the BTTE, covering tolling, traffic monitoring, telecommunication and lighting systems, added about two years to the implementation period of the project. In the future, E&M design documentation should be an integral part of the overall design documentation for major highways, and the designated executing agencies and the Bank Group should ensure that the design and technical specifications for the E&M works are ready at the same time as the design and technical specifications for the highway civil works contracts. (c) The contractors and almost all of the supervision staff had been affiliated with the same transport divisions of the two municipalities and the province involved in the construction of the BTTE. Such an arrangement created difficulties in adhering to the principles of the general conditions of the contract according to which the Employer, Supervision and Contractor should be separate and independent entities. While over the years the administrative and financial independence of the contracting entities evolved quite extensively, the staffing of the supervision units is still predominantly provided from local highway administration units. Assuring the impartiality of the construction supervision units is imperative, and, therefore, the creation of an independent construction supervision industry in China should be pursued as a matter of high priority. (d) Preparation and follow-up to the recommendations of studies are frequently deficient, and the Bank Group's participation in and guidance to ongoing studies have often been inadequate. Since, in most cases, studies are included in the projects at the Bank Group's initiative, Bank Group staff should put much more effort into identifying the rationale and appropriate timing of the studies, and the extent of the borrower's interest  - x - in the subject through more substantive consultation with the borrower and the beneficiaries in the project preparatory phase. Moreover, it is seldom that sufficient provision is built into the studies regarding a follow-up mechanism to the likely implementation phase of the studies' recommendations. The above observations are pertinent to the Highway Finance and Local Bitumen studies carried out under the project.  - 1 - CHINA BEIJING-TIANJIN-TANGGU EXPRESSWAY PROJECT (LOAN 2811-CHA/CREDIT 1792-CHA) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES AND DESCRIPTION 1. China joined the World Bank Group in 1980 and lending operations began soon after. However, Bank involvement with highway infrastructure only began in April 1983, with the identification of the first Highway Project (Loan 2539/Credit 1954-CHA). The project provided funding for the improvement of provincial roads and the construction of critical missing links in nine provinces, particularly those that constrained interprovincial road transport. Although the involvement was limited, this initial step helped familiarize the Bank Group with the highway subsector issues in China and identify subsectoral priorities in subsequent projects. It became apparent that the shortage of capacity in heavily congested corridors of the national and provincial road networks constitutes one of the major impediments to accelerated development of the country's economy. In recognition of the need for urgent initiatives to address this issue, the Chinese Government accorded high priority to providing adequate capacity in key road transport corridors under the Seventh Five-Year Plan (1986-90, 7FYP) and subsequent Five-Year Plans. The Bank Group supported such government objective, as reflected in the Bank Group's lending strategy for the development of the highway subsector from the mid- 1980s onward. 2. The Beijing-Tianjin-Tanggu Expressway (BTTE) project was the first of the major Bank-financed highway projects that aimed at addressing the capacity constraints on the particularly heavily trafficked sections of the interprovincial arterial roads linking Beijing, Tianjin and Tanggu. Thereafter, between 1985 and 1996 the Bank Group approved the financing of another 16 highway projects as listed in Part II, Table 2 of this report. To date, six of the highway projects have been completed, and a Project Completion Report (PCR) and three ICRs were issued for the first Highway Project (August 1992), Shaanxi Provincial Highway Project (June 1996), Jiangxi Provincial Highway Project (January 1997) and Jiangsu Provincial Transport Project (January 1997). Although, with the exception of the first Highway Project, the projects listed commenced later than the BTTE, they were smaller in scope and were finished within the originally envisaged implementation period. The construction of the BTTE was a major undertaking and its implementation was delayed by three years. 3. The project's primary objective was to provide urgently needed road traffic capacity expansion in the important transport corridor between the national capital of  - 2 - Beijing, Tianjin and the port city of Tanggu in Tianjin Municipality. At the time of project preparation, traffic between Beijing and Tanggu had to pass through 10 cities and townships of varying sizes and 7 railway crossings, and had to intercept at grade more than 20 other roads and some 100 pedestrian and animal-drawn cart traffic paths on 166 km of arterial road links. By contrast, the BTTE was designed as a 143 km fully access- controlled expressway with 8 interchanges and 2 connecting roads (11.2 km) to provide easy access to the Expressway. 4. In addition to financing a highway capacity improvement component aimed at easing capacity constraints, provisions were made also under the project to help expedite the transfer of advanced technologies through the provision of modem equipment for the operation of the BTTE and a diversified staff training program. Three studies were undertaken to promote policy, technology and management initiatives: (a) exploring alternative modes for financing the expansion and improvement of the highway network; (b) upgrading the quality of local bitumen to be used for high-class road pavements, and (c) identifying an appropriate way to operate and maintain the expressway. Moreover, the project was intended to support the Beijing Municipal Highway Bureau's program for establishing a road data base and introduce methodologies for evaluating road conditions and applying comprehensive road maintenance management systems to facilitate the improvement and upgrading of the national and provincial road networks in the Municipality. 5. The Bank loan and IDA credit for the Beijing-Tianjin-Tanggu Expressway Project were approved by the Bank Group in May 1987. The above-outlined scope of the project was in line with investment priorities for road network development of the local governments involved, and it was also consistent with the Central Government's policy and the Bank Group's assistance strategy for the development of the road transport subsector in China. 6. The Ministry of Communications (MOC) was designated to take full responsibility for the execution of the project through its Highway Administration Department. However, since the alignment of the BTTE traverses the Beijing and Tianjin municipalities and Hebei Province, it was agreed at negotiations that MOC would enter into a Project Implementation Agreement with the three local governments to form a United Corporation to exercise the day-to-day executive functions for the implementation of the BTTE. B. ACHIEVEMENT OF PROJECT OBJECTIVES 7. Project objectives were substantially achieved as indicated by the following review of the various components.  - 3 - Beijing-Tianjin-Tanggu Expressway Civil Works 8. The Beijing-Tianjin-Tanggu Expressway project component comprised the construction of a 142.7 km four-lane dual carriageway, access-controlled tolled expressway. The expressway traverses 35.00 km, 6.84 km and 100.85 km of Beijing Municipality, Hebei Province and Tianjin Municipality, respectively. The alignment starts at the southeastern part of the fourth ring road in Beijing and ends at the Hebei Road in the Tanggu District of Tianjin Municipality (Map). In addition, as agreed at negotiations, two four-lane divided connecting roads were constructed, under local financing, to facilitate access to the Expressway: a 3.1 km link between the third and the fourth ring roads at the Beijing end, and an 8.1 km link extending from the southeastern end of the Expressway to the port of Tianjin (Xingang) through the Tianjin Technical and Economic Development Area and Tax-Free Zone. 9. The Expressway complex includes 8 interchanges, 4,913 m of twin viaducts, 48 bridges, 27 overpasses, 9 toll stations, 1 traffic control center, 3 road service areas and 3 maintenance/operations management stations. The pavement of the Expressway consists of stabilized subbase and road-base layers, and three asphalt concrete layers (only two layers were placed in soft-soil settlement areas between km 86 to km 142; the wearing course will be placed, under local financing, after the consolidation of the embankment reaches the required limits). Road furniture comprises guard rails, road markings, traffic signs and boundary fencing. 10. Feasibility Study and Engineering Design. The preliminary engineering and feasibility study were prepared by the Highway Planning and Research Institute (HPDI) and reviewed by Bank Group staff. The engineering design was prepared by the First and Second Survey and Design Institutes of MOC and HPDI, with the involvement of the Highway Scientific Research Institute (HSRI) and the Chongqing Highway Research Institute. The design documentation was reviewed by a foreign consultant firm, a service financed under bilateral aid. 11. Despite the seemingly thorough design efforts, the documentation did not meet normally accepted international standards. Numerous design deficiencies were identified in the course of implementation. Some design details were omitted, and there were contradictions, errors and impractical stipulations in the design documents and the technical specifications. Although the skill of highway design institutions have improved considerably over the years, it is understandable that at the time the design for the BTTE was prepared there was a lack of experience in designing high-class highways in China. Also, there has been excessive time gap between the completion of the design and the commencement of works, and field conditions changed during such an interval. It became, largely, the task of the supervision staff to identify and remedy the design deficiencies, although at times, local design institutes were also called upon to complete  or modify some elements of the design. The detection and correction of such defects contributed to implementation delays. 12. The majority of the variation orders issued were for relatively minor changes involving an increased number and changed location of drainage structures and underpasses. However, major design changes also occurred, which included: (a) the substantial redesign of a railway underpass on the Beijing section of the BTTE; and (b) the redesign of the service building structures since the contract drawings provided only outline designs that were inadequate for construction purposes, and conceptual changes had also been introduced, which contributed to cost increases. 13. In addition to the design changes due strictly to technical reasons, several modifications had to be introduced due to the initial lack of information on future land use and transport generating investment plans. Also, it seems, that consultations with authorities at district, township and village levels may not have been adequate during the planning and design phases of the BTTE. The more notable adverse effects of such shortcomings were: (a) In the vicinity of Tianjin City the original design included two twin viaducts (1,777 m and 1,000 m) that were connected by a 980 m embankment section. This scheme was changed to a 3,710 m long continuous twin viaduct, incurring a cost increase of about Y 17.42 million, of which Y 10.0 million was financed by the Tianjin Municipality, against which Bank Group funds were not disbursed. The change became necessary to avoid conflicts with major road crossings, existing buildings/factories and zoning regulations of Tianjin Municipality. (b) The layout of the toll station and the interchange at Jinzhuang Road were also radically changed because urban development proceeded beyond the limits envisaged at the time the alignment of the expressway was defined. (c) In order to comply with the Beijing municipal building code, it was necessary to relocate the Traffic Control Center from the original site adjacent to the expressway to Fangzhuang, a suburb of Beijing near to the starting point of the BTTE. Also, the original size of the building was increased, and, therefore it was agreed that about one third, i.e., about Y 9.0 million, of the Center's cost would be financed by Beijing Municipality, against which Bank Group funds were not disbursed. 14. Implementation. The procurement of civil works was carried out following International Competitive Bidding (ICB) procedures. Each of the four civil works contracts was awarded to a local/foreign joint venture. The principal local contractors were contracting units of the respective municipalities and Hebei Province, although the contractor for the Tianjin Viaduct was an engineering corporation of MOC. The role of the foreign joint-venture partners, three from Japan and one from France, was confined to  - 5 - on-site technical advisory services, with only limited influence on the contractors' overall performance. The compensation of the foreign personnel on three of the civil works contracts was based on person-month fees that, together with mobilization and accommodation expenses, represented insignificant portions of the total contract amounts. Thus, the involvement of foreign firms in the contract was more of a technical cooperation-type arrangement than a joint venture in the conventional meaning of the term. The participating foreign firms did not provide plant, equipment or any other physical and financial resources, the provision of which remained the responsibility of the local contractors. 15. Originally, the construction of the BTTE was scheduled to start in October 1987 and to be completed in about 38 months, by December 31, 1990. Although the construction commenced at the end of December 1987 with a slightly less than two months delay, the Expressway's civil works were completed only in September 1993, in 69 months, which allowed the opening of the expressway to traffic over its full length. However, the Expressway was completed progressively, and it was opened to traffic in the following sequence: From 0 km (Beijing end) to 72 km in January 1991, (36 months), to 98 km in December 1991 (48 months), and to 109 km in October 1992 (58 months). The first 72 km section was opened temporarily between during September 12 and October 24, 1990, to accommodate traffic in connection with the Asian Games. The BTTE was closed for traffic when the Asian Games ended for full completion, and it was reopened again in January 1991. 16. All civil works were completed within the extended time for completion granted under the contract. Justification for awarding time extensions included the recognition of the problems related to land acquisition delays, obstructions within the rights-of-way, problems encountered with design documentation, frequent issuance of variation orders due to design changes, exceptionally heavy rainfalls in 1988, and increased quantities of works. Also, in mid-1990, resources from other parts of the Expressway were transferred to the Beijing-Tianjin segment in order to assure that this section could be opened to meet the transport needs of the Asian Games in September/October 1990. Such a step disrupted and adversely effected the progress of works on the other sections of the Expressway, and contributed to the overall delay in completing the civil works. The longest completion delay occurred on the last section of the expressway toward Tanggu, which required soft- soil treatment. Delays also occurred because of the employer's commitment that fill materials from borrow pits be delivered to the site by farmers, which, as it happened, limited the contractors' access to fill material in a timely manner. However, regarding delays, it should be noted that stipulating 30-36 months construction periods under the civil works lacked sound engineering judgment. Such timing was too tight for the complexity of the task. Also, an extensive length of the Expressway's alignment had poor sub-soil conditions over which the embankments constructed required a minimum of 12 months to settle. 17. Performance of Supervision Organization and Contractors. The overall responsibility for contract administration and construction supervision of the civil works  - 6 - rested with MOC. The Director of the Department of Highway Administration was appointed as the "Engineer," with the powers and responsibilities laid down in the FIDIC conditions. The construction was supervised by a joint local/foreign team. The organization in the field was based on a three-tier hierarchy of responsibilities: (a) Office of the Engineer's Representative, located in Tianjin, was set up by MOC to undertake supervision tasks on behalf of the Engineer, with staff members provided by the First Survey and Design Institute of MOC in Xi'an; (b) Offices of Senior Resident Engineers were established in Beijing, Hebei and Tianjin; and (c) Offices of Resident Engineers were established for each construction contract. The Chinese supervision staff for the BTTE civil works totaled about 220 professionals, i.e., about 1.5 persons per km. Five foreign engineers were attached to the supervision organization during most of the construction period; one Senior Resident Engineer on each of the four construction contracts and one Chief Resident Engineer at the Office of the Engineer's Representative. The foreign supervision input amounted to 207 person-months of long-term engineers. In addition, there were six short-term visits by experts covering such technical disciplines as soft-soil engineering, traffic management, electronic data processing and asphalt concrete technology. This level of staffing made it possible for the foreign engineers to involve themselves in all significant project matters and play a meaningful role in the contract administration and construction supervision. The foreign supervisors were jointly in charge of contract administration and involved in technical decisions. Their signatures were required on payment certificates and other contractual documents. On-the-job as well as formal training of Chinese staff were important elements of the duties of foreign supervision personnel. 18. While such an organizational structure seemed appropriate, it took considerable time and effort to make it sufficiently effective. Since the internationally accepted conditions of contracting were largely unknown within the highway sector in China at the outset of the BTTE project, it is not surprising that the requirement for independent supervision of construction was not well understood by the executing agencies and the contractors. During the Bank's first and second site supervision missions in October 1988 and January 1989, it was noted that municipal/provincial supervision units were not independent from the local governments. It became also apparent that the Chinese civil works contractors: (a) had little appreciation for the requirements according to which works were required to be inspected and tested by the construction supervision units; (b) had no internal quality control system; (c) were not well prepared and equipped for meeting the requirements of the technical specifications under the contracts, and (d) had no experience in the preparation of work programs and routine monitoring of performance. It was not uncommon that unqualified subcontractors were mobilized and insufficiently guided by the principal contractors and thus were unable to execute the works satisfactorily. 19. As the combined effect of the poor performance of the contractors, and the inexperience of the supervision units in the initial phase of implementation, the execution and the quality of the works were not controlled effectively, and, consequently, a substantial portion of the works done in 1988 failed to meet the technical specifications.  As an outcome of the late 1988 and early 1989 Bank Group missions' findings, it was agreed that MOC would take remedial measures in the interest of enhancing the effectiveness of the supervision organization through (a) signing a formal contract agreement for supervision services with each of the three Resident Supervision Units; (b) ensuring that the units would be operating independently from the municipal/provincial authorities and report directly to the Engineer's Representative, (c) insisting that contractors prepare realistic work programs and submit those to the Engineer for his consent, and (d) keeping the Bank Group informed about the progress of works and compliance with quality requirements and other conditionalities under the contracts. Furthermore, it was agreed that no disbursement requests would be submitted to the Bank Group until the Office of the Engineer's Representative certified that, after a complete reassessment of the quality of the works executed during 1988 and in early 1989, all substandard works had been rectified. The defective works carried out during 1988 were subsequently remedied and disbursements resumed in the second half of 1989. Also, MOC, BTTEUC and the supervision units took steps to strengthen the supervision organization through employing additional staff, extensive staff training, acquisition of transport vehicles and the provision of test laboratories. 20. Although the performance of contractors indicated gradual improvement, the underlying causes for poor workmanship were not entirely overcome, and there was a recurrence of quality defects to various degrees during the entire period of implementation, as documented in the monthly reports issued by the Office of the Engineer's Representative and also noted and reported by Bank Group supervision missions. However, as the local supervision staff gained more experience and became more independent, firmer and decisive in their handling of the contractors, the effectiveness of supervision improved. This, combined with the substantive contribution of foreign supervisors, increased sufficiently the performance and effectiveness of the supervision organization to handle the emerging problems and assured that the defective works were rejected and redone and that a generally acceptable work quality was achieved overall. The satisfactory overall performance of the BTTE after several years in service is a good measure of the successful outcome of the efforts of those involved in the implementation of the Expressway. Electronic, Electrical and Mechanical (E&M) Works 21. Implementation and Supervision. The design of the E&M works and the preparation of bid documents for the BTTE was carried out by HSRI. The drawings and technical specifications were confined to the presentation of an outline of the system's configurations, leaving the detailed design to be proposed by the contractors. The overall system comprised the supply and installation of electronic, electrical and mechanical equipment for (a) traffic surveillance (closed-circuit television, ultrasonic detectors); (b) traffic control devices (variable message and speed limit signs); (c) communications network (roadside emergency telephones, cable and radio communication network) (d) toll collection module (toll facilities, vehicle registration, control center with computer graphics and map display and operations console); and (e) provision of overhead lighting at interchanges and toll plazas.  - 8 - 22. Bids were called in October 1990 and opened in April 1991 according to ICB procedures. The package had been divided into four separate subsystems (Traffic Detection and Management, Integrated Communications Network, Closed Toll Collection Facilities; and Roadway Lighting) and four contracts covering the subsystems were awarded in August 1992, 18 months after the bids were opened, at an aggregated contract amount of Y 106.59 million. Works commenced in late November 1992, with an implementation schedule for 24 months except for the lighting component, which was to be completed in 18 months. There was a two- to five-month delay in completion, and the most delayed contract was completed in April 1995. The final payment of Y 111.45 million in aggregate was only marginally higher (4.5 percent) than the original aggregate amount of the contracts on account of variation of work items. The contracts did not provide for price escalation. All works were completed within the extended time for completion granted under the contract. The reasons for the award of time extension were mainly related to problems encountered during system integration. Overall, the performance of the contractors involved was satisfactory. 23. Since this was the first time that an E&M system for expressway operation was to be installed in China, the preparation of design, bidding documents, evaluation and award of bids took considerably longer time than originally assumed. The bids were called only in October 1990, which was close to the originally scheduled target for the completion of the BTTE, including E&M works. The evaluation of bids took about 18 months, because of the unexpected complexities of technical details and procurement issues. Although the delay in the completion of civil works on the last 34 km section of the BTTE warranted a one-year extension of the loan/credit closing date, the subsequent two one-year extensions were granted almost exclusively on account of the substantial delay in the preparation and installation of the E&M component of the project. 24. The supervision team included one foreign Senior Resident Engineer and two local Deputy Senior Resident Engineers. More than 20 Chinese staff participated in the technical supervision and contract administration, which were carried out from two offices, one in Tianjin and the other one in Beijing. The supervision arrangements were appropriate. 25. Being the first integrated traffic operation and management system for expressways in China, there were, understandably, deficiencies in all three major areas of implementation, such as contracting, supervision and the employer's administrative functions. The separation of the E&M works into four subsystem contracts was done in the interest of reducing the overall cost. Although this objective was achieved, difficulties emerged between the independent contractors in the coordination of interrelated technical systems, especially during the systems-integration phase. Such experience combined with the findings of a Bank-initiated study, financed from Consultant Trust Funds, under which more recent E&M contracting practices for expressway traffic operations and management were reviewed, have helped formulate a better-focused approach to the execution of traffic operations-related E&M works on toll highways in China. Consequently, E&M works for tolling, traffic operation and  - 9 - communication systems under more recent Bank-financed highway projects have been contracted under one contract to a single firm or a joint venture, with the prime contractor taking responsibility for coordinating the inputs of the joint-venture partners. Also, the procurement process has been modified to follow a two-phased approach under a new set of the Bank's standard documents. 26. Environmental Protection. An environmental impact assessment for the BTTE was carried out between September 1989 and August 1990 by personnel of a group of local institutions experienced in environmental assessment. The evaluation focused on the potential adverse impact of the Expressway on the atmosphere, noise levels, soils and vegetation. The assessment identified no major environmental risks in any of these areas. However, after completion of works, deficiencies were noted at some underpasses, where the elevation of the underpass as constructed did not allow permanent solutions for adequate drainage. BTTEUC has been gradually dealing with such situations, partly by assuring that the accumulated water is pumped out expeditiously after heavy rains. 27. In July 1995, a group, comprising the State Environmental Protection Bureau, the Environmental Protection Office of MOC, the Environmental Protection Bureau of Tianjin and the Environmental Protection Bureau of Beijing carried out a comprehensive inspection of the BTTE with regard to environmental protection. The conclusion was that (a) the noise levels on both sides of the expressway are within the required environmental standards, (b) the tidying up of earth borrow pits used to obtain fill material had been satisfactorily accomplished, and (c) the landscaping along the highway is complete and pleasing. The group consented to the environmental acceptance of the BTTE in a document titled "Environmental Protection of BTT Expressway." However, it was pointed out in the document that with increased traffic the noise levels are expected to rise and there will be a need for the regular monitoring of noise levels, and taking appropriate measures to protect noise-sensitive zones. Also, more stringent measures will be required for controlling vehicles carrying hazardous materials. The responsibility for actions on these matters rests with BTTEUC. 28. Land Acquisition and Resettlement. The land and resettlement-related information gathered during the preliminary design of the BTTE was subsequently discussed with local governments at county, township and village levels, and provided the baseline data for the land acquisition and resettlement. The local governments of the two municipalities and Hebei Province had the responsibility for administering the land acquisition and resettlement process according to national laws and national and municipal/provincial regulations. Such regulations conformed to the Bank's guidelines and requirements with respect to involuntary resettlement. The information on the area of land and houses and attached structures was verified and corrected based on final design data. Village representatives participated in the quantification and the overall assessment process, which provided the basis for the compensation payments. 29. Due to design variations, appreciation of property values and inflation, the originally estimated cost of land acquisition and resettlement increased from the original  - 10- estimate of Y 81.82 million to Y 235.39 million. The Bank's Resettlement Review Mission held discussions with representatives of the two municipalities and the Hebei Province in November/December 1994. The mission confirmed that the resettlement actions, in general, were carried out satisfactorily and in line with Bank Group policies and procedures. However, the mission noted that some of the affected people may have experienced temporary difficulties in restoring their standard of living. Notwithstanding this, the BTTE project has brought considerable benefits to the people through the major investments made in the corridor of the Expressway. Such investments, mainly commercial enterprises, created many job opportunities and contributed to increased income levels, which helped offset the adverse impact of the resettlement on those who initially had been handicapped. 30. Construction Costs. The SAR cost estimates for the expressway's civil works and E&M supply and installation works was Y 890.60 million (Y 771.85 million and Y 118.75 million, respectively), including physical and price contingencies. The final cost based on certified payments to the contractors amounted to Y 1,479.0 million (Y 1,367.55 million and Y 111.45 million, respectively), representing a cost increase of about 66 percent in current prices, which resulted from cost overruns on civil works contracts as there was a slight saving on the E&M mechanical works that was absorbed by the higher cost of civil works. Of this amount, 58 percent was due to greater-than- expected physical quantities and extra works carried out through variation orders issued to the contractors and 42 percent was due to price escalation. In addition, as indicated in para. 8, two connecting roads were constructed at both ends of the BTTE under local financing at a cost of Y 196.13 million, and the two municipalities and Hebei Province also financed civil works, which were related to the impact of the Expressway on the adjacent secondary and tertiary road networks and other public facilities. The extent of the associated expenses, which had not been taken into consideration at project appraisal, were quite substantial and amounted to Y 243.00 million. This amount, together with commonly considered cost items, such as land acquisition and resettlement, engineering design and construction supervision, and some other minor items as listed in Table 2B of Annex 1, increased the overall financial cost of construction of the BTTE to Y 2,221.95, corresponding to a cost increase of about 139 percent over the SAR estimate of Y 928.04 million, in terms of current cost. 31. Economic Evaluation. The ICR's economic evaluation is presented in Annex 1. It shows an estimated ERR of 15.7 percent, compared to the SAR estimate of 14.5 percent. The reestimation was based on final cost of investment, revised shadow prices, corridor traffic data and traffic projection based on actual split of traffic between the existing arterial road and the new highway from 1990 to mid-1995, and revised traffic forecasts from mid-1995 onward, and updated vehicle operation costs (VOCs). The reestimated economic cost of the BTTE, in 1995 constant prices, is presented in Table 2A of Annex 1. The evaluation took into consideration the phased opening of the various sections of the BTTE to traffic. Although the SAR and ICR estimates of the ERR differ only marginally, the cost and benefit interrelations have changed significantly. The increase in investment cost has been offset by the substantially higher-than-expected  - 11 - increase in corridor traffic, a large portion of which diverted to the BTTE. More specifically: (a) the economic cost in the ICR, at December 1995 constant prices, is about 116 percent higher than the SAR estimate, and (b)the 1995 Beijing-Tianjin- Tanggu corridor traffic, compared to SAR traffic forecast, on one section quadrupled, on two sections more than doubled and on the remaining two sections increased by about 60 percent above SAR forecast, and (c) the proportion of the corridor traffic that diverted to the Expressway has been higher than assumed at project appraisal, except on the first section of the BTTE southeast of Beijing and between Tianjin and Tanggu. 32. The proportions of traffic that are diverting to and generated by the Expressway are different to that anticipated in the SAR (para. 4 of Annex 1). The reasons for the differences are difficult to identify, since the SAR projections were made with insufficient data base for forecasting traffic growth and distribution between alternative routes in a rapidly expanding urbanized environment with sustained high economic growth. In addition, the development of the arterial road network was different to that expected. Following the appraisal, a high-standard, all purpose ring road was built around Tianjin City, and the section of the arterial road between Tianjin and the Tanggu District was also upgraded. Actual traffic growth in the corridor has been much higher than expected, and the rate of diversion to the BTTE has been similar to that expected, except on the first (Beijing) and last (Tanggu) sections. Diversion at the Beijing end has been lower than expected partly because entry and exit for trucks between the BTTE and at the third and fourth Beijing ring roads are restricted by regulations. It has been low over the Tianjin-Tanggu section because the existing arterial road provides a shorter route between Tanggu and the eastern and central part of Tianjin city than the BTTE. 33. Financial Evaluation. Based on the data (as of November 1996) provided by BTTEUC, the financial analysis carried out indicates that the financial rate of return (FRR) on the BTTE investment is estimated at 5.2 percent, as detailed in Table 6 of Annex 1. This level of FRR indicates that the BTTE is expected to generate sufficient revenues from tolls to cover not only maintenance and administrative expenses but also all financial obligations, including the repayment of the Bank loan and the IDA credit. 34. Tolling. The Development Credit Agreement stipulated that the level of tolls charged on the BTTE should not exceed 30 percent of the financial VOC savings. Following a preliminary analysis carried out by BTTEUC, toll rates were established in January 1991 when the first 72 km section of the BTTE was opened for traffic. The toll rates were revised in 1994 and are still in force. As detailed in paragraphs 16-18 of Annex 1, an approximating analysis was carried out to deternine the relationship between the prevailing toll rates and the VOC savings for the BTTE. The conclusions of ICR's analysis are as follows: (a) on the average for the Expressway, 1996 toll rates for vehicles in all categories, except that for tractor-trailers, exceed 30 percent of the financial VOC savings;  - 12- (b) on those sections of the Expressway where the travel distance is substantially shorter than on the alternative road network, the 30 percent VOC savings are close to or even higher than the toll rates for the various categories of vehicles; (c) wherever there is no travel distance saving for the traffic using the Expressway or it is not significant, the 30 percent VOC saving falls below the toll rate, indicating that the user of the Expressway is likely to be overcharged in relation to the benefits gained by using the Expressway; (d) a uniform, per-km-based toll rate is inequitable because of the high sensitivity of the VOC savings to travel distance/time savings; and (e) a comprehensive origin and destination survey-based study would be required for reaching more reliable conclusions regarding the determination of a reasonable balance between toll charges and vehicle operating cost savings. 35. As recorded in para. 6 of the Agreed Minutes of Negations dated March 20, 1987, the Chinese Delegation and the Bank Group team agreed that the expressway operating organization's monitoring unit would update origin and destination matrix data for the BTTE, and that a refinement of the vehicle operating cost would to be done jointly by MOC and the Bank Group prior to the opening of the Expressway. Furthermore, Section 4.03 of the Development Credit Agreement stipulated that the VOC savings were to be calculated in a manner agreed between the Borrower and the Association. Since these conditionalities were not fully complied with during the implementation of the project, it is recommended that MOC, BTTEUC and the Bank Group rectify this omission in the near future in the interest of establishing a methodology for the determination of toll rates, which could set a pattern for nationwide application. Equipment Procurement 36. Provisions were made under the project for the purchase of basic highway maintenance equipment, such as trucks, loaders, motorgraders, asphalt and concrete mixers, asphalt and milling machines, pavers and rollers. In addition, the list also included patrol vehicles, heavy-duty tow trucks and ambulances needed for the operation of the expressway and for clearing broken down vehicles and dealing with emergencies in case of accidents. The budget for equipment acquisition under the project was $6.0 million, including physical and price contingencies. 37. The original list of equipment, which was attached to the Minutes of Negotiations, had to be revised substantially, partly because of the underestimate of the cost of equipment acquisition. Also, because of a restriction on importing vehicles, the acquisition of some type of vehicles would have not been possible under the Bank's procurement guidelines. Eventually, 14 types of highway maintenance and operations equipment, comprising 48 units, were procured at a cost of $6.96 million.  - 13 - 38. As stipulated in the loan agreement, about 75 percent of the equipment, in cost terms, was to be procured through ICB procedures. However, some of the items to be purchased were available from only a limited number of suppliers, and only a few units were required at relatively low cost; the Bank waived the ICB requirement for some of the items and agreed that about 65 percent of the total cost of purchase be done through ICB and the rest through international and local shopping. The equipment procured is regarded as appropriate in type, quality and number to meet the anticipated maintenance and operations needs of the BTTE. Road Management 39. As indicated in the SAR, it was intended to set up a computerized road data bank for the Beijing Municipality, although there was no elaboration on how it should be pursued, and no funds were earmarked for this purpose under the project. Furthermore, by the time the implementation of the project got under way, good progress had already been made on the establishment of a Pavement Management System (PMS)-oriented road data base, which was the forerunner of the PMS system designed by the Beijing Highway Bureau. This system, which was well advanced by the end of 1988, was one of the pilot systems that contributed to the development of the Chinese PMS in HSRI. For the above reasons, it was not considered expedient to get involved with the Beijing Municipality's road data bank development under the project. 40. However, it was considered appropriate to formulate a PMS that would meet the specific requirements of the BTTE in the framework of the BTTE's Management System. An agreement to formulate a PMS for the BTTE was signed between BTTEUC and HSRI in November 1991. During the system's preparation, a group of personnel involved visited some of the eastern states of the United States, and the information gathered regarding expressway operations was particularly useful for PMS's computer hardware selection and software development. HSRI submitted the data system to BTTEUC for testing at the end of 1992, and the system's development was completed in May 1993. The cost of the assignment was $200,000, including expenses for hardware and software needs, which was financed from the proceeds of the loan/credit. 41. The PMS software has been installed in each of the three Expressway Management Offices (Beijing, Hebei and Tianjin), and BTTEUC intends to establish a computer linkup between the three offices and the Traffic Control Center. Independently from this system, the PMS has been operational in the Beijing Municipality since the early 1990s, covering 2,260 km of the national and municipal highways. A HSRI- developed PMS is also operational in Tianjin Municipality and covers 1,665 km of the network. The PMS being applied in Hebei Province covers 9,765 km of the network. Studies 42. Financing Highway Development. In recognition of the increasing financial resource needs for the expansion, improvement, rehabilitation and maintenance of the highway network, it was considered appropriate to carry out a study to help identify  - 14- alternative sources of financing for highway sector development in China during the last decade of the century. In particular, the terms of reference stipulated that the study should determine: (a) the financial needs of the road sector (in terms of recurrent and capital cost), broken down by administrative classification of the network (i.e., national, provincial and local) during the 1990s; (b) the required levels of user revenues; (c) alternative tax instruments that could be applied, and their proportion of the total level of revenues; and (d) a tax structure, for the various category of vehicle groups (cars, buses, trucks of different sizes etc.). 43. The study was carried out by HSRI during 1990 and 1991 under the guidance of MOC and with the support of one foreign expert. Key members of the study team visited Mexico and the United States during this period to examine highway financing practices in these countries. The study report, released in June 1991, provided a comprehensive set of information on the present systems of road financing and future financial needs. The key conclusion and recommendation of the study was that the bulk of revenues for the road sector should be raised through taxing fuel. However, traditionally, transport fuel taxation has not been a revenue source in China, and when a few years earlier a proposal was made for its introduction as an alternative revenue source, it was not endorsed by the Government. Fuel taxation is regarded as a major policy issue in China, which would require that the proposal for its acceptance be considered at the highest level of the Government. In light of its rejection before, the concerned ministries of the Central Govermment were reluctant to pursue this matter any further. 44. The Bank Group, in light of the standoff at Central Government level regarding the fuel taxation issue, and considering that highway financing is primarily a municipal/ provincial responsibility, decided to pursue the highway funding issue at the provincial level under the Bank-financed Guangdong Provincial Highway Project. The final report of the provincial highway finance study, completed in March 1995, identified 19 potential sources for financing highway-related expenditures, which subsequently were narrowed to four new sources of financing options that are presently being pursued by the Province: (a) issuing of stocks and bonds; (b) exploring possible overseas financing windows for raising capital; (c) selling operational rights of existing toll facilities to private investors; and (d) investigating build-operate-transfer arrangements for expressway projects. The Province and the Bank is maintaining a dialogue on the development of these alternative modes of financing. 45. Local Bitumen. The locally produced bitumen in China was regarded to be of inferior quality, particularly for the pavement of high-class highways. The study's main objective was to carry out comprehensive testing of local bitumen produced in selected refineries using crude oils of different characteristics to deterrnine whether, through changes in refinery processes, the quality of local bitumen could be improved to the same level as that of imported bitumen and, thereby, could lead to reduction of the quantity of imported bitumen needed for the construction of high-class road pavements.  - 15 - 46. The study was carried out jointly by HSRI of MOC and BTTEUC during 1987-91. The study provides comparison of the properties of domestic bitumen, obtained primarily from heavy-crude oils in the refineries of Shanjiasi (Shandong Province), Huanxingling (Liaoning Province) and Karamay (Xinjiang Autonomous Region), with the properties of bitumen produced by refineries in Albania, Japan, Singapore and the United Kingdom from various crude oil sources. Some field studies were also conducted to compare the performance of asphalt pavements made with local versus imported bitumen. The investigation of the feasibility of utilizing local bitumen for the BTT (in part), Shenyang-Dalian (whole), and Shanghai-Jiadine (whole) expressways was also completed. 47. The report provides good coverage of the physical and mechanical properties of the domestic and imported bitumen, and it affirms that such properties of the domestic bitumen derived from heavy-crude oils compare well with that of imported bitumen. An exception relates to durability; the asphalt layers made with domestic heavy-crude oil bitumen appear to be somewhat less durable than asphalt layers made with imported bitumen but possibly within acceptable limits. On the other hand, test results of domestic bitumen derived from light crude oils have confirmed that such bitumen is, in many respects, inferior to bitumen derived from heavy-crude oils, and its use in road pavements would, normally, lead to accelerated pavement deterioration. 48. The final report of the study, completed in June 1991, concluded that some domestic bitumen could meet the requirements of high-class highway pavements and dependence on imported bitumen could be reduced. However, the choice of suitable crude oil and adjustment of processing techniques will be essential to the production of satisfactory quantity and quality of the bitumen. Presently, only the three refineries referred to above have such potential. Unfortunately, since 1991, the heaving crude oil supplied from the Shengli Oil Field to the Shanjiasi refinery has been mixed with light crude oil of high wax content, and, at present, the bitumen from this refinery does not meet the specifications as a high-grade bitumen. 49. There have been some beneficial impact of the study on a limited scale: (a) the Huanxingling bitumen has been widely adopted for expressway pavements in north and northeast China, including Liaoning Province and Beijing Municipality; and (b) the Karamay bitumen is being used in Shanxi and Yunnan provinces and Xinjiang Autonomous Region, although the use is not yet widespread due to transportation constraints. Furthermore, MOC has assured the Bank Group that efforts are continuing to introduce new technologies to expand the use of local bitumen for high-class highway pavements. 50. As a whole, the local bitumen production is still far from meeting the needs of high-class highway construction in China, either in quantity or in quality. Therefore, it will be necessary to continue to import a considerably large quantity of bitumen. Any major impact through the production of local, high-quality bitumen in greater quantity at a competitive price would require substantial efforts and investment, and the major  - 16- obstacles to achieving such objectives are: (a) the refineries using heavy crude oils, a prerequisite for higher-grade bitumen production, are located in relatively remote areas of the country (Liaoning Province and Xinjiang Autonomous Region), and high transportation cost to most locations in China increases price levels to that of imported bitumen; (b) the transportation systems and methods for transporting liquid bitumen in bulk are not in use, and supply time is unreliable; (c) producing bitumen as a well- controlled derivate, and not as a by-product of the refinery process, is costly and it requires the reduction of production quantities of some more profitable derivates, such as gasoline and diesel fuel. 51. The Bank Group in its comments on the study highlighted the significance of utilizing domestic natural resources, achieving foreign exchange savings and extending the life of road pavements. Such benefits could be achieved through the production of improved-quality local bitumen. The Bank Group suggested setting up an interministerial committee to formulate a plan of action for addressing the multiplicity of issues involved in improving local bitumen production, transportation and marketing. However, there has been no indication that such initiative was pursued by MOC at such a level, neither has been follow-up action taken by the Bank Group. 52. Organization of Expressway Operation and Maintenance. At the time of formulating the project, there was no experience in operating and maintaining tolled expressways in China. The primary objective of the study was to identify and then establish a suitable organizational structure for administering the BTTE. This objective was pursued through studying the organization patterns of corporations in countries with extensive networks of tolled highways, and blend such practices with local requirements and regulations. The study was completed satisfactorily and a report titled "A Research Report on the Organization and Management of BTT Expressway" was issued in October 1991. By that time, the implementation-related organization structure of BTTEUC was already in place. Therefore, the report covered mainly the management of the operational aspects of the BTTE, including: (a) the organizational structure and delineation of management responsibilities; (b) tolling strategy and determination of toll levels; (c) financial management; and (d) administrative procedures and regulations. After reviewing the report, both MOC and the Bank Group considered that the report's recommendation on staffing was excessive, which view was accepted by BTTEUC. A supplementary report was released in May 1992 with a revised organizational structure and staffing for the Corporation. 53. The study was an important undertaking for formulating the structure and functions of BTTEUC. The Corporation established for the implementation and operation of the BTTE is representative of a corporate body under the recently promoted economic management system in China. Such an arrangement is a breakaway from the traditional administration pattern and the strict region/province separating practices under the planned economic system of the country. BTTEUC, after initial difficulties, managed the implementation of the BTTE reasonably well, and is well prepared for administering the operation and maintenance of the Expressway.  - 17- Staff Training Program 54. As outlined in the SAR, the objectives of the staff training program were to: (a) provide training equipment and material, such as audiovisual training aids and laboratory, computer and photogrammetry equipment and technical literature, ($85,000); (b) arrange visits of foreign academic experts to lectures on selected topics to municipal/ provincial institutes in Beijing, Tianjin and Hebei on selected technical topics (six visits, $30,000); and (c) organize short- and medium-term training courses and study tours for staff of entities associated with the project to cover the following topics: transport planning, transport economics, soils and materials engineering, highway maintenance and equipment management, construction management and supervision, new construction materials and technology, financial management and accounting and technical interpreting (360 person-months, $445,000). The program was scheduled to commence in November 1987 and be completed by June 1992. 55. The training program implemented comprised training courses and study tours abroad in Australia, Denmark, France, Germany, Italy, Spain, Japan and the United States. A total of 42 persons participated in the program, involving about 140 person-months at an overall cost of $800,000, i.e., $5,700/person-month. The program covered the following topics: administration system for the operation and maintenance of expressways, scope of E&M works for traffic operations (tolling, telecommunication and traffic surveillance systems), maintenance management for roads and bridges, soft-soil treatment for highway embankments, data base for expressway performance monitoring, preappraisal and postevaluation of highway projects and financial management and accounting. The first training course was conducted in July 1990 and the last one in November 1994. In addition to the above listed program, the training of about 450 local supervision personnel in construction supervision and contract management was undertaken during December 1988 and March 1989. Such training was carried out by the foreign consulting firm contracted to provide supervision services, and the cost associated with this program was covered under the consultant services contract. There were also extensive on-the-job training programs for local supervisors during the various phases of the construction of the BTTE. 56. The training program as executed differed from that originally planned, for various reasons: (a) loan/credit proceeds were not used for acquiring training tools because such materials and equipment became available on the local market and were well within the means of the institutions involved to purchase them with local funds (b) the training program was delayed and some groups, unfortunately, missed the opportune time for training, such as English interpreters, despite the recognition of its benefits; (c) the original training plan lacked components for expressway operation, management and service, which were added as important areas of training; (d) some training topics, such as transport planning and transport, were dropped on consideration of having lower priority than some others; (e) contrary to the expectation that some courses would be conducted in China, almost all were organized abroad, which added travel costs, and used consultants for providing training services and organizing and facilitating study tours. In some instances, courses were arranged through state road authorities at relatively low cost.  - 18- 57. It is considered that the areas of training were well chosen, and provided the staff as well as the institutions involved with both immediate and long-term benefits. The training group members were professional staff with technical or financial management background. On the whole, the program exposed the participants to advanced technologies abroad, which were pertinent to the priority needs of the executing agencies. The study tours abroad widened the vision of the participants and enhanced their knowledge. Despite the relatively high person-month costs, which point to the need to explore more efficient ways to conduct training courses, the training program under the project can be regarded as highly successful. Notwithstanding this, less costly training programs with a mix of training abroad balanced with courses/seminars organized through local institutions with selective involvement of foreign experts in areas where local expertise could be a good alternative approach in the future, as this would provide opportunity for training more staff resulting in even greater benefits to the institutions. C. MAJOR FACTORS AFFECTING THE PROJECT 58. The major factors that adversely affected the implementation of the BTTE were: (a) the poor quality of the engineering design and technical specifications; (b) the executing agencies, the contractors and supervision staff had no previous experience in implementing highway projects of similar magnitude, complexity and technical requirements, and also lacked contracting practices under international contracting conditionalities; (c) poor performance of the contractors. The negative effects of such shortcomings were particularly apparent and detrimental to the quality of works in the initial phase of implementation and also contributed to the implementation delays. According to the SAR schedule, the project was expected to be completed by mid-1992 with a closing date of the loan and credit on December 31, 1992. However, the project was completed only in mid-1995, and the loan/credit was closed only on December 31, 1995, three years later than originally expected. 59. The implementation of the project was delayed for a number of reasons. Although a 72 km section, i.e. 50 percent of the BTTE, was completed, more or less, on time, the rest of the civil works proceeded more slowly mainly because of frequent design changes, requiring the issuance of variation orders, and some major deviations from the original concept of the design, such as the construction of a major viaduct near Tianjin instead of an earth embankment. There was also a transfer of resources from other sections of the BTTE to the Beijing-Tianjin segment in mid-1990 to ensure the opening of that section for the Asian Games. Such regrouping of the labor force slowed the completion of civil works, particular of the Tianjin-Tanggu section of the BTTE. Thus, the civil works of the BTTE were completed fully only in September 1993, although some sections of the expressway beyond the first 72 km section had been opened to traffic earlier (para. 15). However, the delay in the completion of the BTTE and the project, as a whole, was mainly caused by the protracted preparation of design for, and the slow procurement of, the E&M supply and installation works, covering tolling, telecommunications, traffic monitoring and lighting systems for the BTTE. The  - 19 - execution of this component commenced only in November 1992 and was completed in April 1995. 60. The Bank Group's recognition at the end of 1988 of the high risk of proceeding with the project without insisting on full compliance with contract conditionalities paid off, and there was a gradual but substantive improvement in contract management and quality control by the construction supervision units. Although quality problems emerged through out, the effectiveness of supervision has improved within the constraints of the ability and preparedness of the employers, contractors and construction supervision units, and from 1989 onward an acceptable modus operandi emerged in the course of the execution of the BTTE. Overall, considering that the principles of international contract administration were hardly known before, and that the BTTE was the first high-class highway project in China, the implementation of the civil works, despite its shortcomings, has been a commendable achievement, and it provided an excellent opportunity for acquiring technological and managerial experience, even if some price had to be paid for the learning process. Also, in retrospect, the contracting periods of 30- 36 months for civil works have been too tight on account of the poor sub-soil conditions along several section of the Expressway alignment, over which the embankments constructed required a minimum of 12 months to settle. Regarding the E&M component of the BTTE, it could be argued that a much earlier start on the preparation of could have preempted the excessive implementation delay of the BTTE and the project as a whole. In this context, it is important to note that this was the first time that such kind of E&M works had been undertaken in China. Such a novelty, combined with the overall management requirements for the implementation of the BTTE civil works, to which a higher priority had been given, understandably led to the delay encountered in the completion of the E&M component. 61. Two of the minor components of the projects, such as procurement of maintenance equipment and staff training, were executed with some modifications, without deviating from the original objectives of these components. The road data base component for the Beijing Municipality road network was substituted with a PMS component for the BTTE because the road data base and PMS development were already satisfactorily addressed by the Municipality itself. The execution of the three studies on highway financing, local bitumen usage and the development of a management system for the BTTE proceeded according to their respective terms of reference. However, the first two studies have had only limited impact on the policy issues covered by the studies. The management system for the BTTE is in place and functions satisfactorily. D. PROJECT SUSTAINABILITY 62. The physical condition of the BTTE has shown no signs of adverse deterioration since it has been in service, and BTTEUC is well organized and equipped to meet the anticipated routine maintenance requirements of the BTTE. The increase in corridor traffic is expected to continue in line with the trend of the economic development in the influence area of the Expressway. There is no discernible risk to steady growth in toll  - 20 - revenues, and the necessary funding for maintenance, loan repayment, and, thus, achieving the overall development objectives of the project seems to be well assured. 63. The maintenance and operation equipment fleet acquired under the project should provide adequate long-term service, since operators have been trained, sufficient stock of essential spares have been purchased and maintenance facilities have been provided along the BTTE. 64. The PMS, as an integral part of the Management System for BTTE, is functioning, and represents an important tool for maintenance decisions. It is expected that the system with regularly collected input data will be operating satisfactorily, and the output information of the system will be used for maintenance decisions in terms of the timing and the nature of the technical solutions. 65. The information from the staff training program, despite the involvement of a relatively small proportion of staff, has filtered through the organizations involved and helped in the formulation of administrative and technical decisions that are reflected in the operation of the BTTE. The effect of the training has also benefited the Beijing and Tianjin municipalities and Hebei Province, as well as MOC, beyond the strictly BTTE- oriented impact of the program. E. BANK PERFORMANCE 66. The project was consistent with the sectoral investment priority of the Beijing and Tianjin Municipalities and Hebei Province, the development objectives of the Central Governnent and the country assistance strategy of the Bank Group. The identification of the components, preparation, appraisal and supervision of the project were satisfactory. Although, partly through hindsight, the following weaknesses have been noted: (a) It could be argued that the Bank Group could have been more alert to the quality of design and technical specifications. However, since a review of the design documentation prepared by design institutions was checked by foreign consultants engaged under bilateral aid, it is understandable that Bank Group staff felt assured that the risk of design deficiencies had been substantially reduced. Less-than-satisfactory engineering design was not an isolated case, and the Bank Group had similar experience with some other Bank-Group-financed highway projects in China. Since the Bank has no resources to undertake in-depth review of designs and technical specifications, from 1991 onward the Bank Group mobilized Consultant Trust Funds and involved consultants in the preparation phase of the engineering design and technical specifications, working jointly with local design institutions. Such an approach was aimed at improving the quality of design documentation through participation in the design process, rather than reviewing already completed packages, in which case there had been a reluctance to introduce changes once the documentation had been completed. Recently, the Bank Group achieved the same objective  - 21 - through including in project preparation mission teams a highway design specialist to scrutinize the engineering design and technical specifications. (b) The Bank Group's supervision efforts were adequate and commensurate with the project's size and complexity. In critical stages, such as in late 1988 and early 1989, when it was identified that contractors were not complying with the conditions of the contracts, decisive and firm actions were taken by the Bank Group. An agreement was negotiated with MOC and BTTEUC, which amounted to an informal suspension of disbursements until such time as all previously constructed defective works had been corrected and the Office of the Engineer's Representative had certified that the quality of civil works had been restored to meet the technical specifications. This measure helped ensure that a firm discipline was established for the acceptance of future works. The ongoing works were regularly supervised by the Bank Group, particularly in the early phases of the implementation. Also, because of the BTTE's proximity to Beijing, short but frequent visits to the site and consultations between Bank Group missions and MOC/ BTTEUC took place, which do not show up in Bank Group records as formal missions. (c) The Bank Group's performance in the preparation, implementation and follow-up of the studies has been mixed: The Highway Finance Study might have benefited from extensive prediscussions with the Ministry of Finance and MOC in the Central Government to ensure that the study was regarded by the Chinese Government as a much-needed and timely undertaking within the country's overall transport sector strategy. While the terms of reference were reasonably clear regarding the study's objectives, it received only cursory attention from the Borrower during the progress of the study and no formal comments were given on the study's finding by any of the ministries of the Central Government. The Bank Group's discussions with HSRI regarding the study's follow-up remained inconclusive, and the Bank Group was unable to enter into a meaningful dialogue with the ministries of the Central Government on a strategy for the further handling of the key issues and recommendations presented in the study's final report. In light of the impasse, the Bank Group decided to pursue many of the same objectives of the study but narrowed the scope of the new study to one province under the Guangdong Provincial Highway Project (para. 44). The Local Bitumen Study arrived to a more definite conclusion, and the study's findings had some impact on the increased though still very limited use of good-quality local bitumen for high-class road pavements. Nevertheless, the study established the potential for wider use of bitumen  - 22 - from local refineries capable of producing bitumen with properties comparable to imported bitumen. Although MOC has been promoting the wider use of local bitumen for high-class highway pavements, the study's recommendations for more radical measures have not been pursued in a resolute manner and in accord with the oil refinery and transport industries for establishing consistent production quality and efficient mode of transportation for high-grade bitumen. Similarly, the Bank Group has not continued dialogue with the Central Government in the interest of encouraging further action on this matter. The evolution of the Organization of Expressway Operation and Maintenance for the BTTE had limited Bank Group participation and input. It has evolved from the experience gained by BTTEUC's study tours abroad and the Corporation's own initiatives to adjust such experience to local conditions. However, the organization and management study report was reviewed by the Bank Group, and its comments were taken into account in the supplementary report (para. 52). F. BORROWER PERFORMANCE 67. Formally, MOC was the designated Executing Agency for the project. However, MOC, structurally and functionally, as a line ministry, was not suited for such role, and the executive agency functions were delegated to BTTEUC, which was specifically established for this purpose. The Corporation represented the three beneficiaries, Beijing and Tianjin Municipalities and Hebei Province, and assumed the repayment obligations of the loan and credit. However, MOC retained the functions of the Engineer and the Engineer's Representative, thus ensuring, to some degree, the independence of the construction supervision organization. 68. BTTEUC was a first-time de-facto executing agency for a Bank Group-financed project and this was a notable element in the way the project was administered, particularly in the early phases of implementation. BTTEUC was not well prepared for the administrative requirements associated with Bank Group borrowing or for the management of major contracts based on ICB conditionalities. The Corporation's role was further complicated by the fact that most contracting units under the contracts, and the bulk of the supervision staff, belonged to Beijing and Tianjin Municipalities and Hebei Province. In the beginning, it was common for the employers and contractors to have the tendency to communicate directly without the involvement of the joint local/ foreign supervision team and this practice, which conflicted with FIDIC conditions of contract, took quite some time to overcome. The performance of BTTEUC showed impressive improvement as the implementation of the project proceeded. It became a well-organized institution, capable of exercising prudent judgment in critical situations. It recognized the importance of ensuring the quality of work, and became a supporter of the independence of the supervision units. It also recognized the limitations of the contractors, and rather than demanding unrealistic deadlines for completion, gave priority  - 23 - to ensuring that the quality requirements were complied with. In the case of quality defects, BTTEUC supported the supervision to get defective works redone as a condition for processing of progress payments. MOC's role was also supportive in this regard. While it would be unrealistic to assume that all elements of the works on the BTTE were executed without quality shortfalls, the BTTE may be regarded as one of the best major new highways constructed in China to date. BTTEUC also demonstrated initiative and sound judgment in handling the implementation of the other components of the project. The training programs were well selected and organized, and considerable care was taken to choose the right equipment for the maintenance and operation of the BTTE. BTTEUC also made commendable efforts in setting up an organization, which is expected to ensure the efficient operation of the BTTE. G. ASSESSMENT OF OUTCOME 69. Despite the initial difficulties and some setbacks encountered during the implementation of civil works, the implementation of the project is regarded as satisfactory. The developmental objectives of the project were achieved and are considered sustainable without perceptible elements of risk. The stream of benefits is expected to be maintained, or even increase, because of the favorable prospect for continued strong economic activity in the influence area of the BTTE, which would translate into continued traffic growth in the corridor, with a high percentage of additional traffic making use of the expressway. 70. Overall, the contractors' performance was uneven. After very disappointingly poor performance the contractors' performance improved but constant vigilance of the supervision staff was required to mitigate quality defects, which, even so, showed up rather frequently throughout implementation of the project. The contractors' shortfalls were attributable to unfamiliarity with contracting requirements to which they had not been previously exposed, lack of suitable equipment fleet for the type of works and technical requirements, serious and recurrent cash flow problems, and inexperience in managing and organizing the construction of high-class highways. The contractors' relatively poor performance placed an added burden on the construction supervision teams, which, particularly in the beginning, were handicapped by a lack of experience with supervision procedures under international contract conditionalities. Credit is due to the foreign supervising engineers attached to the joint local/foreign supervision team, not only for their direct involvement in the field in quality control, but also for their extensive formal and on-the-job training efforts through which they increased the technical skills of the local supervisors in a relatively short time. 71. The outcome on sectoral development initiatives under the project through the three studies has been marginal. The Highway Finance Study had some inconsistencies that required several sessions of discussions with Bank Group staff. But more importantly, there was neither provision nor willingness for its follow-up to bring the study's finding to a definite conclusion. The Local Bitumen study came up with correct technical conclusions but it was less articulate in outlining a definite line of actions for  - 24 - pursuing the issues. It was, primarily, up to Borrower to take the initiative and pursue the setting up of an interministerial coordinating committee for formulating a plan of action for expanding the utilization of high-quality bitumen, the production of which on a broader scale was found to be viable by the study. The Expressway Operation and Maintenance Study achieved its objective by providing BTTEUC with sufficient information for setting up the management organizations for the BTTE. 72. The level of technology transfer through training is not easy to measure due to a lack of well-defined baseline parameters. The training courses and study tours were well selected and provided a satisfactory level of exposure to new concepts and incentives for adopting them selectively in the Chinese environment. However, the program involved fewer trainees than it could have had with a better mix of training abroad and locally organized courses/seminars, involving local institutions and a well-balanced participation of local and foreign experts, although the cost per trainee was lower than under recent Bank-financed highway projects. The technology transfer through modem equipment for the operation and maintenance of the BTTE should achieve its objectives and ensure that the new facilities will be efficiently operated and adequately maintained. 73. Overall, the project was implemented within the terms of the development credit and loan agreements, and in substantial compliance with the Bank's procedural requirements. Credit/loan proceeds were not extended to any component of the project without obtaining prior clearance from the Bank Group. H. FUTURE OPERATION 74. BTTEUC is responsible for the operation and maintenance of the BTTE. Interim manuals for the management and maintenance of tolling, traffic surveillance and integrated communication systems of the BTTE were issued in October 1995. The PMS for the BTTE, developed under the project (para. 40), is also operational and provides the basis for the scheduling of the periodic and routine maintenance activities for the BTTE. BTTEUC is in the process of consolidating administrative and technical regulations, which are expected to be issued during 1997 as an Operations Manual for the BTTE. Also, BTTEUC has undertaken to submit to the Bank an operation report annually and a postevaluation of economic benefits every three years. I. KEY LESSONS LEARNED 75. Some of the more critical shortfalls noted in connection with the implementation of the project, which have also been encountered on recently completed and still ongoing Bank-financed projects, comprise the following: (a) The design and technical specification deficiencies in the technical documentation for the BTTE highlighted the need for the consolidation of design and technical specification standards for the construction of high- class highways in China. This is a topic that had been frequently raised with MOC but without reaching an understanding on proceeding with the  - 25 - task. The Bank Group should take up this matter with the Central Government in the interest of formulating a viable solution for the development of national design standards and technical specifications, possibly involving local highway design institutions to be assisted by foreign experts as required. (b) The late start and the slow progress made on the preparation of the E&M works for the BTTE, covering tolling, traffic monitoring, telecommunication and lighting systems related E&M works added about two years to the implementation period of the project. Substantial implementation delays for the same reason have been experienced under other Bank-financed highway projects. In the future, E&M design documentation should be an integral part of the overall design documentation for major highways, and the Central Government and the Bank Group should ensure that the design and technical specifications for the E&M works are ready at the same time as the design and technical specifications for the civil works contracts of the highway. (c) The fact that the contractors and almost all of the supervision staff were affiliated with the same transport divisions within the Beijing and Tianjin municipalities and Hebei Province created difficulties in adhering to the principles of the general conditions of contract, according to which the employer, supervision and contractor should each be an entirely separate and independent entity. In the initial phase of the implementation the separate roles and responsibilities of the three parties were not well understood, which, apparently, led to confusion and conflicts. This problem was gradually overcome to an acceptable degree as the implementation of the project proceeded, but it was not fully eliminated. Similar conflicts have also emerged under other Bank-financed projects. While over the years the financial independence of the contracting entities has evolved extensively, the staffing of the supervision units are still predominantly provided from local highway administration units with only a limited level of independence from the employer and local governments. It is therefore imperative that the creation of an independent construction supervision industry be pursued as a matter of high priority, which could initially provide supervision services in joint ventures with foreign consulting firms, and eventually on its own. An initiative along these lines has already been taken under the Second Henan Provincial Highway Project, the outcome of which should be monitored, and if found satisfactory, be followed up expeditiously by the Central Government and the Bank Group. (d) It appears that the preparation of the Highway Finance Study was deficient and lacked sufficient consultation with the Borrower. Furthermore, only limited efforts were made by the Borrower and the Bank Group to follow  - 26 - up on the recommendations of the Highway Finance and the Local Bitumen studies. It has been noted that preparation and follow-up of studies are frequently deficient, and Bank Group's guidance to ongoing studies have been often inadequate. Since in most cases studies are included in the projects at the Bank Group's initiative, the Bank Group should put much more effort into identifying the expediency and focus of the studies, and the extent of the borrower's interest in the subject through more substantive consultation with the borrowers and beneficiaries of the loan/credit in the project preparatory phase. Furthermore, it is seldom that sufficient provision is built into the studies regarding a follow-up mechanism to the likely implementation phase of the studies' recommendations. The above observations are pertinent to the highway finance and local bitumen studies carried out under the project.  - 27 - PART II: STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues x Other social objectives X Environmental objectives X Public sector management X Private sector development X B. Project Sustainability Likely Unlikely Uncertain x C. Bank Performance Highly Satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X D. Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation X Implementation X Covenant compliance X Operation (if applicable) X E. Assessment of Outcome Highly Satisfactory Unsatisfactory Highly Satisfactory Unsatisfactory x  -28 - TABLE 2: RELATED BANK LOANS/CREDITS Year of Loan/credit title Purpose approval Status Preceding operation 1. Highway Project provincial road network FY85 completed Ln. 2539-CHA/Cr. 1954-CHA expansion/improvement Following operations 1. Shaanxi Provincial Highway Project see footnote La FY88 completed Ln. 2952-CHA 2. Sichuan Provincial Highway Project see footnote LA FY88 completed Ln. 295 1-CHA/Cr. 1917-CHA 3. Jiangxi Provincial Highway Project see footnote LA FY89 completed Cr. 1984-CHA 4. Shandong Provincial Highway Project see footnote La FY89 ongoing Ln. 3073-CHA/Cr. 2025-CHA 5. Jiangsu Provincial Transport Project see footnote La FY91 completed Ln. 3316-CHA/Cr. 2226-CHA 6. Zhejiang Provincial Highway Project see footnote LA FY92 ongoing Ln. 3471-CHA 7. Henan Provincial Highway Project see footnote la FY93 ongoing Ln. 3531-CHA 8. Guangdong Provincial Highway Project see footnote LA FY93 ongoing Ln. 3530-CHA 9. Fujian Provincial Highway Project see footnote da FY94 ongoing Ln. 3681-CHA 10. Hebei/Henan National Highway Project see footnote La FY94 ongoing Ln. 3748-CHA 11. Xinjiang Highway Project see footnote La FY95 ongoing Ln. 3787-CHA 12. Shanghai-Zhejiang Highway Project see footnote La FY96 ongoing Ln. 3929-CHA 13. Second Shaanxi Provincial Highway Project see footnote La FY96 ongoing Ln. 3986-CHA 14. Second Henan Provincial Highway Project see footnote La FY96 ongoing Ln. 4027-CHA 15. Second Xinjiang Highway Project see footnote La FY97 ongoing Ln. 3643-CHA 16. Second National Highway Project see footnote La FY97 ongoing Ln. 3654-CHA Za These highway projects, typically, have had the following components: (a) construction of a major highway; (b) improvement of provincial roads; (c) procurement of road maintenance equipment; and (d) institutional development components, such as RDB and PMS programs, staff training and selected subsector-oriented studies.  - 29 - TABLE 3: PROJECT TIMETABLE Steps in project cycle Date planned Date actual Identification (Executive Project Summary) N/A 06/84 Preparation N/A 03/85 Appraisal 10/86 10/86 Negotiations 03/87 03/87 Board presentation 04/87 05/12/87 Signing 07/87 09/14/87 Effectiveness 09/87 12/08/87 Project completion 06/92 04/95 Loan closing 12/92 12/31/95 TABLE 4: LOAN/CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL ($ million) FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 Appraisal estimate 18.00 50.00 95.00 130.00 150.00 Actual 13.90 26.15 72.79 90.14 114.69 137.33 148.09 151.40 158.53 Actual as %of estimate 77.21 52.30 76.62 69.34 76.46 91.55 98.73 100.93 105.69 Yearly distribution in % 8.77 16.49 45.91 56.86 72.35 86.62 93.41 95.50 100.00 Date of final disbursement January 26, 1996  - 30 - TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Estimated Actual Start Complete Start Complete 1. Expressway Construction Sep-86 Oct-90 Dec-87 Sept-93 2. E & M Supply and Installation - - Nov-92 Apr-95 3. Expressway Maintenance, Operation and Feb-88 Nov-89 May-92 May-95 Monitoring Equipment 4. Consulting Services Sep-87 Jan-90 Jan-88 Jun-95 5. Studies Oct-87 Jun-91 Jul-90 Jun-92 6. Staff Training Oct-87 Jun-92 Jul-90 Nov-94 7. PMS for BTTE Oct-87 Aug-90 Nov-91 Nov-93 TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS Length (km) Traffic (1995 ADT) Estimated Actual Estimated Actual Expressway Construction Section 1: Beijing-Majuqiao 14.0 14.0 5,850 13,100 Section 2: Majuqiao-Nanying 28.0 28.0 4,150 12,900 Section 3: Nanying-Yangcun 30.2 30.2 4,150 11,250 Section 4: Yangcun-Tianjin 36.7 36.7 6,100 9,700 Section 5: Tianjin-Tanggu 33.8 33.8 7,250 5,850 Total 142.7 142.7 TABLE 7: STUDIES INCLUDED IN PROJECT Studies on Financing Highway Development, Local Bitumen and Organization for Expressway Operation and Maintenance were included in the Project. The first two were carried out by the Highway Scientific Research Institute of MOC and the latter by BTTEUC. The overall cost of the studies was Y 1.42 million, about evenly shared between the three studies. The objectives of the studies, in general, have been achieved. However, there was a lack of effort both on the part of the Borrower and the Bank Group to follow up on the findings and recommendations of the highway finance and local bitumen studies. The assessment of the implementation of the studies is presented in paras. 42-51 of Part I of the ICR.  - 31 - TABLE 8A: PROJECT COSTS ($ million) Appraisal Estimate Actual/Latest Estimate Item Local Foreign Total Local Foreign Total Civil Works a. BTTE 81.79 93.88 175.68 151.00 172.78 323.78 b. Two Conn. Roads to BTTE - - - 26.56 14.30 40.86 E&M Works 5.41 21.62 27.03 4.06 16.20 20.26 Construction Supervision 0.00 4.49 4.49 4.35 4.50 8.85 Equipment 0.00 5.00 5.00 0.00 6.96 6.96 Staff Training 0.00 0.81 0.81 0.00 0.80 0.80 Studies 0.27 0.27 0.54 0.28 0.10 0.38 Road Panning 0.00 0.20 0.20 0.00 0.20 0.20 Base Cost 87.47 126.27 213.74 186.25 215.84 402.09 Physical Contingencies 8.75 12.63 21.37 - - - Price Contingencies 7.48 11.08 18.56 Total Contingencies 16.23 23.71 39.93 - - - Land Acquisition 22.11 0.00 22.11 63.08 0.00 63.08 Total Project Cost 125.81 149.98 275.79 249.33 215.84 465.17 TABLE 8B: PROJECT COSTS (Y million) Appraisal Estimate Actual/Latest Estimate Item Local Foreign Total Local Foreign Total Civil Works a. BTTE 302.64 347.36 650.00 724.80 642.75 1,367.55 b. Two Conn. Roads to BTTE - - - 127.49 68.64 196.13 E & M Works 20.00 80.00 100.00 22.28 89.17 111.45 Construction Supervision 0.00 16.60 16.60 20.87 16.65 37.81 Equipment 0.00 18.50 18.50 0.00 25.97 25.97 Staff Training 0.00 3.00 3.00 0.00 2.99 2.99 Studies 1.00 1.00 2.00 1.04 0.38 1.42 Road Panning 0.00 0.74 0.74 0.00 0.75 0.75 Base Cost 323.64 467.20 790.84 896.48 847.20 1,743.68 Physical Contingencies 32.36 46.72 79.08 - - - Price Contingencies 27.68 41.00 68.67 Total Contingencies 60.04 87.72 147.76 - - - Land Acquisition 81.82 0.00 81.82 235.39 0.00 235.39 Total Project Cost 465.50 554.92 1,020.42 1,131.87 847.20 1,979.07  - 32 - TABLE 8c: PROJECT FINANCING ($ million) Source Appraisal Estimate Actual/Latest Estimate IDA 125.0 133.5 IBRD 25.0 25.0 Government 125.8 306.7 Total 275.8 465.2 TABLE 9: ECONOMIC COSTS AND BENEFITS (Y million) Costs La Benefits Lb NPV k ERR (%) The ICR Beijing-Tianjin-Tanggu Expressway 3,274.71 209.56 1,109.70 15.7 The SAR Beijing-Tianjin-Tanggu Expressway 1,387.59 50.45 n.a. 14.5 la December 1995 prices. Lb First-year benefits. k Discount rate = 12 percent.  - 33 - TABLE 10: STATUS OF LEGAL COVENANTS Agree- Covenant Original Revised ment Section class(es) Status Date Date Description of Covenant Comments Loan 2.02(b) 5 C Open and maintain a Special Account in dollars in a bank on terms and conditions satisfactory to the Bank 3.01(a) 5 C Commitment to project objectives, meeting obligations under the Development Credit Agreement 3.01(b) 10 C Adhering to Implementation Program set forth in Schedule 4 3.02 10 C Commitment to comply with Schedule 3 of the Development Credit Agreement 3.03(a) 5 C The Borrower to enter into a Project (b) Implementation Credit Agreement with Beijing Municipalit), Tianjin Municipality and Hebei Province, acceptable to the Bank 4.01 (a) I C Maintaining adequate financial recording and (b) (c) meeting auditing reporting requirements Project 4.02 (a) 5 C Establish and maintain an Expressway Operating Organization (EOO) 4.02 (b) 9 C Within EOO establish and maintain a unit for monitoring toll rates, traffic flow, traffic diversion and vehicle axle loads 4.03 9 CP Toll rates charged not to exceed 30% of the Partially fulfilled vehicle operating cost saving for the Expressway 4.04 13 C Borrower to ensure that connecting roads to the Expressway shall be open to traffic upon the completion of Expressway 2.05 7 C Carry out resettlement actions as agreed Status: C - Complied with CD - Compliance after delay NC - Not complied with SOON - Compliance expected in reasonably short time CP - Complied with partially NYD - Not yet due Covenant Class: I - Accounts/audit 2 - Financial performance/generate revenue from beneficiaries 3 - Flow and utilization of Project funds 4 - Counterpart funding 5 - Management aspects of the Project or of its executing agency 6 - Environmental covenants 7 - Involuntary resettlement 8 - Indigenous people 9 - Monitoring,, review and reporting 10 - Implementation 11 - Sectoral or cross-sectoral budgetary or other resource allocation 12 - Sectoral or cross-sectoral regulatory/institutional action 13 - Other  - 34 - TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS There was no significant lack of compliance with an applicable Bank Operational Manual Statement (OD or OP/BP) TABLE 12: BANK RESOURCES: STAFF INPUTS FY 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total Preappraisal 24.3 24.3 Appraisal 5.2 19.6 24.8 Negotiations 17.9 17.9 Supervision 4.4 5.1 14.5 9.9 9.4 5.7 5.2 3.6 9.9 8.2 75.9 Completion 11.9 6.8 18.7 Total la 24.3 5.2 41.9 5.1 14.5 9.9 9.4 5.7 5.2 3.6 9.9 20.1 6.8 161.6 TABLE 13: BANK RESOURCES: MISSIONS Performance rating Number Days Specialized Implemen- Develop- Stage of Project Month/ of in staff skills La tation ment Types of Cycle year persons field represented status Ll objectives problems LZ Identification 02/85 - - EN,EC Preparation 06/85 3 10 PO,EC,FA Preappraisal 08/85 6 12 EN,EC Appraisal 10/86 4 5 EN,EC Negotiation 03/87 6 - EN,EC,PO LC,DO,RA Board approval 05/87 - Signing 09/87 Effective 12/87 - - - Supervision 1 10/88 2 5 EN,TS 2 1 Supervision 2 08/89 1 5 EN 2 1 Supervision 3 12/89 1 5 EN 2 1 Supervision 4 07/90 1 5 EN 2 1 Supervision 5 11/90 1 5 EN 2 Supervision 6 11/92 2 5 EN,RA 2 1 Supervision 7 05/94 1 5 EN 2 1 Supervision 8 08/95 1 5 EN 2 1 & Completion I Completion 2 11/95 1 2 RA - - La PO: Project Officer; EN: Engineer; FA: Financial Analyst; EC: Economist; OS: Operations Specialist; EN: Environmentalist; LC: Legal Counsel; CO: Country Officer; DO: Disbursement Officer; RA: Research Analyst; TS: Training Specialist. Lb 1: Highly satisfactory; 2: Satisfactory. la Typical problems included: design changes, quality deficiency and delays.  - 35 - ANNEX 1 ANNEX 1: ECONOMIC AND FINANCIAL EVALUATION Preface 1. In the Staff Appraisal Report (SAR) for the Beijing-Tianjin-Tanggu Expressway Project (Report No. 6344-CHA), the economic evaluation was presented for the construction of a 143 kin, 4-lane divided, controlled-access, tolled expressway connecting Beijing and Tianjin (the second and the third most populated municipalities in China) with the new port of Xingang at Tanggu and the necessary connecting roads between Beijing and Tanggu. 2. The economic analysis presented in this ICR is based on updated data on traffic, vehicle operating cost (VOC), economic cost and road user benefits, taking into account revised assumptions regarding future traffic growth projection. The methodology used in the economic analysis for this ICR is similar to that used in the SAR and is summarized in the following: (a) capital investment and maintenance costs have been revised to reflect December 1995 prices and included in the cost stream; (b) the benefit stream, also reflecting December 1995 prices, has also been included, and consists of savings in VOC, reduced traffic congestion on the existing road, and reduction in cost of accidents; (c) a project life of 20 years (1996-2015) has been assumed and the capital investment period for the expressway is during 1987-1995; and (d) full benefits started to accrue on the BTTE in October 1993, although between September 1990 and October 1993 partial benefits accrued because, in addition to the opening of the first 72 km section of the BTTE to traffic in September 1990, two additional sections, 26 km and 11 km in length, were opened to traffic in December 1991 and October 1992, respectively. 3. As in the SAR, the highway was divided into five sections. Section 1: from Beijing to Majuqiao (14.0 km); Section 2: from Majuqiao to Nanying (28.0 km); Section 3: from Nanying to Yangcun (30.2 km); Section 4: from Yangcun to Tianjin (36.7 km); and Section 5: from Tianjin to Tanggu (33.8 km).  - 36 - ANNEX I Cost and benefit analysis were carried out separately for each section as well as the highway as a whole. Corridor Traffic 4. The 1995 corridor traffic and its distribution between the old and the new highway is presented in the following table, indicating SAR forecast and actual traffic census data: NUMBER OF MOTORIZED VEHICLES PER DAY (ADT) FOR 1995: The New Diversion The Old Road Expressway Total Corridor Factor (DF) (1) (2) (3)=(1)+(2) (4)=(2)/(3) SAR: Section 1 2,146 5,843 7,989 73.1% Section 2 3,367 4,143 7,510 55.2% Section 3 8,843 4,146 12,989 31.9% Section 4 7,838 6,075 13,909 43.7% Section 5 3,625 7,247 10,872 66.7% Actual: Section 1 19,891 13,093 32,984 39.7% Section 2 4,712 12,902 17,614 72.3% Section 3 10,061 11,252 21,313 52.2% Section 4 12,992 9,671 22,663 42.7% Section 5 17,425 5,861 23,286 25.2% (Actual/SAR) ratios: Section 1 926.9% 224.1% 412.9% Section 2 139.9% 311.4% 234.5% Section 3 113.8% 271.4% 164.1% Section 4 165.8% 159.2% 162.9% Section 5 480.7% 80.9% 214.2% Sources: BTTEUC and the Bank staff. 5. As shown above, the 1995 corridor traffic on all five sections (i.e., the sum of traffic on the parallel sections of the existing arterial road and the BTTE ) was much higher than the SAR estimates. Also, the actual diversion of traffic to the BTTE had been at a higher rate than forecast (Sections 2 and 3) or at about the same rate (Section 4), except for Sections 1 and 5, on which the DF was substantially lower than expected. However, because of the overall increase in corridor traffic, over and above SAR expectation, the traffic volume of the BTTE in 1995 well exceeded SAR forecast on each section of the Expressway.  - 37 - ANNEX I Traffic Projection 6. The opening of the BTTE caused a relatively quick traffic buildup to respond to the long pent-up road transport demand along this corridor, particularly during the first three years. Notwithstanding this, the ICR's traffic forecast for the Expressway is more conservative than the SAR estimates because: (a) the traffic on Section 5 remained well below exceptions; (b) the DF ratios for Sections 1 and 5 are still below SAR projections; (c) the distance savings between some of the parallel sections of the BTTE and the existing arterial roads are not significant enough to encourage diversion from the arterial road to the BTTE; and (d) further growth in urban development along the parallel arterial roads is expected generate local traffic growth, which could limit the rate of corridor traffic diversion to the BTTE. 7. The long-term traffic growth rate (1993-2010) for the expressway has been estimated in the range of 5.4 to 6.8 percent, compared with the SAR estimate of a uniform growth rate of 8.2 percent for all four sections. The traffic projections by sections are summarized as follows: TRAFFIC FORECAST COMPARISON FOR THE NEW HIGHWAY (ADT) BY SECTIONS: Section 1 Section 2 Section 3 Section 4 Section 5 Beijing- Majuqiao- Nanying- Yangcun- Tianjin- Majugiao Nanying Yangcun Tianjin Tanggu SAR: 1993 4,828 3,425 3,426 5,020 5,989 1994 5,311 3,767 3,769 5,522 6,588 1995 5,843 4,143 4,146 6,075 7,247 2000 9,409 6,675 6,675 9,785 11,675 2005 13,197 9,362 9,362 13,724 16,369 2010 18,509 13,132 13,132 19,248 22,959 Average growth p.a. 1993-2010 8.2% 8.2% 8.2% 8.2% 8.2% ICR: 1993 9,818 9,878 9,045 8,032 5,503 1994 12,239 12,058 10,516 9,039 5,478 1995 13,093 12,902 11,252 9,671 5,861 2000 18,364 18,096 15,782 13,564 8,220 2005 23,438 23,096 20,142 17,311 10,491 2010 29,913 29,476 25,707 22,094 13,389 Average growth p.a. 1993-2010 6.8% 6.6% 6.3% 6.1% 5.4% Note: All figures are rounded. 8. The projected traffic for the five sections of the expressway for year 1993-2015, by type of vehicles, is detailed in Table 1 of this Annex. From 1993-95, actual traffic  - 38 - ANNEX I data have been used, while for subsequent years the following growth rates have assumed: (a) basic expressway traffic to increase by 7.0 percent per year between 1995 and 2000, and 5.0 percent per year thereafter; (b) generated traffic would be 10 percent of basic traffic. 9. In the SAR, by comparison, the basic traffic growth rate for the new expressway was 10.0 percent per year between 1995 and 2000; and 7 percent per year thereafter. The generated traffic growth rate was assumed to be 55 to 60 percent of the normal traffic. It was further assumed that some railway traffic, both passenger and freight, would divert to the expressway. Diversion of railway traffic has been discounted in the revised projection because (a) the highway tariffs are much higher than those for rail (about 30 fen per ton-km or passenger-km for highway and 4 to 6 fen per km passenger-km or ton-km for railway); and (b) the average railway transport distance in Beijing and Tianjin are generally much longer than the total length of the expressway, so the effect of the BTTE would be marginal at most. Economic Costs 10. Financial costs have been converted to economic costs (Table 2) by applying shadow prices shown in Table 3. The overall effect of the revised financial costs and shadow prices that the total economic cost of the project is 116.1 percent higher than the SAR estimate, both at constant December 1995 prices. HIGHWAY ECONOMIC COST COMPARISON (Y million) SAR ICR ICR/SAR Mar 1986 Dec 1995 Dec 1995 (in%) Total Costs 916.41 1,515.26 3,274.71 +116.1 Economic Benefits 11. The economic analysis includes the benefits derived from (a) VOC savings for both basic and generated traffic, (b) relieved congestion on the existing road, and (c) accident cost saving (Table 5). 12. Based on the actual traffic performance, it is estimated that about 25 to 72 percent of corridor traffic has diverted to the new highway. The lower traffic level on the existing arterial roads reduces congestion and VOCs, and the sum of the two produces an average 15 percent reduction in VOCs up to 1995. Thereafter, because of the gradual buildup of  - 39 - ANNEX 1 traffic on the existing arterial roads, the savings would be reduced by 1 percent for each of remaining five-year periods, reaching an 11 percent saving by 2015. 13. The annual average number of accidents per km per year on the existing road between 1987 and 1990 (without the BTTE), was 3.20. With the BTTE, between 1991 and 1994, the number of accidents on the old road reduced to 1.77 per km per year between 1991 and 1994. For the BTTE, the accident rate was 0.71 per km per year. For estimating future road accident cost savings, it was assumed that the reduction in the number of accidents, resulting from the construction of the highway, would be one accident per km per year at a cost of Y 15,000 for each accident. Overall Economic Evaluation 14. The overall ERR on the highway investment is estimated to be 15.7 percent versus the SAR estimate of 14.5 percent (Table 5). Total costs and benefits streams, Economic Rate of Return (ERR) and Net Present Value (NPV), for each section of the expressway are presented in Tables 5A-5E. SAR ICR Best estimate of rate of return 14.5% 15.7% NPV (12%, Y million) n.a. 1,109.7 Financial Evaluation 15. The estimated financial rate of return (FRR) against the full costs of the expressway is 5.2 percent as indicated below, and detailed in Table 6 of this Annex. The estimate is based on the final estimate of the financial cost of the project as indicated in Table 2B, and the information provided by BTTEUC regarding: (a) maintenance cost, (b) projected toll revenues, (c) operating cost for the BTTE, and (d) loan repayment schedule. The result indicates that the BTTE is expected to recover its full operating cost and to generate sufficient revenues to repay the Bank loan and IDA credit.  -40 - ANNEX I FINANCIAL ANALYSIS RESULTS Input Data: Total cost Y 2,464.99 million Debt Y 599.75 million Equity Y 1,905.28 million Period of loan 20.0 years Loan interest rate (onlending rate) 4.2% Grace period 5.0 years Results Rate of return on equity 6.8% Financial rates of return: Best estimate 5.2% Toll revenue (-10%) 3.9% Operating costs (+10%) 5.1% Toll revenue (-10%) and operating costs (+10%) 3.7% Level of Toll Charges 16. The expressway is operated as a closed toll system with 9 toll stations along the expressway. The tolls are determined for four groups of vehicles: (a) passenger cars and small trucks; (b) medium trucks and buses; (c) large trucks and buses; and (d) truck- trailers. Toll levels are calculated at a uniform per km rate for the four classes. and presently are as follows: Y 0.25, Y 0.35, Y 0.45 and Y 0.60 per km for the four categories of vehicles, respectively. 17. In the absence of a comprehensive traffic origin and destination pattern and VOC cost saving calculation for the various trips involved, the ICR used an approximating analysis to highlight the present relationships between the prevailing toll rates and the financial VOC savings on the five sections of the BTTE for which economic evaluations have been carried out and economic and financial VOC costs have been available, as of 1996, as indicated in Table 7. 18. From the ICR's analysis the following tentative conclusions may be drawn: (a) On the average, the toll rates for all types of vehicles, except for tractor- trailers, exceed 30 percent of the VOC savings. However, on those sections where the travel distance on the Expressway is significantly shorter than on the parallel arterial road, the 30 percent of the VOC saving is close or even higher than the toll rate, such as on Sections 3 and 5. This could indicate that toll rates higher than 30 percent of the VOC savings are not necessarily a deterrent to road users, if it results from substantive distance and time savings. However, wherever the difference between the travel distance on the parallel section of the arterial road and the section of  -41- ANNEX 1 the BTTE is not significant, the VOC saving falls below the toll rate indicating that the road user is likely to be overcharged in relation to the benefits gained by using the expressway. Also, small vehicles (cars, small trucks) seem to pay proportionally higher toll rates than truck-trailers or even heavy trucks. (b) The ICR assessment, even in its rudimentary form, seems to indicate, that a uniform, strictly per km based toll rate is inequitable because of the high sensitivity of VOC savings to travel distance/time saving. This would be advantages in situations when long-distance traffic has built up to such degree that shorter, more direct trips on the expressway should be discouraged in the interest of reducing congestion or ensure a high-level of service condition on the expressway. However, on the BTTE there is still sufficient capacity, and a better differentiated tolling rates , closer to the de facto VOC savings, would be appropriate. (c) A comprehensive, origin and destination survey-based study could lead to more reliable conclusions and the determination of toll rates in a more rational manner. Such a study could also attempt to examine in greater depth the effect of arterial network congestion on VOCs, which at present may be underestimated and result in an underestimate of the VOC savings between trips taken on the BTTE and the sections of the arterial network.  TWe I - Beijing-Tianjin-Tauggu Expressway Trafrw Summary (ADT) km Of"- (Vlix i.%) Le Rd am ROW codtm AVOW p"d (bWb=) I n III IV v I-V I n ID IV v I 11 in IV v I 11 In IV v I n RI IV IV Om roe& 15.0 15.0 9.0 1S.0 15.0 4 F F F F F I I 11 I I FWr Fair P- Foiff Foir 4S 45 45 45 45 b 19.5 19.5 14.0 2D.0 20.0 1_b 1.0% 1.0% 1.09A ilo% LOSA (P-.d) (P..d) (Pr-d) (Pr-d) (P-,W) 15.0 13.0 15.0 15.0 15.0 4 F F F p F EV. EM. Eitp Gwd Good Good G..d God OD 90 30 80 so b 20.0 20.0 20.0 2D.0 20.0 1.2% 1.2-A 1.2% 3.0% 1.7% a,-td) oto OIW-4) 04WW) (M d) Sn.11 cW_ -Nkdin BV


Ba
-

Svwll Ttuck- -MO&= Tnwk-

Tnwk - -TDO. 7
9&,- - TOW--- RMI lh
WALIWW WthoM Willat W"- Wkb ftw;od p-j- witb Prqd Poiga "k ftojm Wjd wm"ea Wjd Wkh Projet Projd With Projet Projet Wikh Projea projod vrith ftoja OM ER
OW E)W- Old Old lixprm Old Old Exp
Old Old Eq
Old Old Eveu Old Oid ERMN Old Old Evtm Old 014 EVEM Old road --MY real -way 'od '.W ."Y mA .d -,my -d 100 -- od -,d -y v..d road -wsy WWI rod -way roM mW -way W 5.M 3,142 2.750
.477 1,964 1,513 1,992 1,374 618 4,459 884 3.575 3,201 1.276 1.925 2,495 9192 1,513 Z052 196 1,836 23,MS 9,618 13,750 ""t 7.634 3,916 1,719 4.492 Z447 2,045 2.549 1,713 836 5,934 1.101 4,333 4,194 1,391 Z60 3,269 1,224 Z045 Z75S 245 2,510 30,Vn IZ237 IS.3W 1995 ,168 4,190 3,979 4.W7 2,619 2,188 2.728 1,833 895 6,330 1,178 5,172 4,497 S.702 Z785 3,497 1,309 z ISO Z947 262 2.685 3Z"4 13.093 19,891 200 4:436 5,676 5.580 61742 3, 73 3
069 3.SV 2.572 1,2SS 8,906 1,653 7,253 6,293 Z317 3,W 4,905 I.Sm 3,069 4,133 367 3.766 46,262 18,364 27,119S 2005 14,S04 7,SQO 7,004 8.540 4.2 3.852 4
856 3,281 1,575 11.214 Z 109 9,105 7,950 3,047 4,903 61196 2.344 3,852 5,197 469 4,728 53.4S7 23,438 35.019 21110 1S."O 9,572 9,088 10,992 5.983 4,999 6,232 4,188 2,044 14.507 Z692 131815 20M) 3.889 6,362 7.990 Z"l 4,"9 6173P3 593 6,135 75,355 29. 913 45,442 20 I , 23,917 12,217 11,60) 1,1,015 7.635 6,390 7,953 5,344 Z09 18,515 3,436 1S.079 13,083 4.963 8.120 10.1" 3,319 6,380 4.594 764 7,830 %.175 38, I77 57.9198 Arew Read 3.00 Ntgt
4.0127 3.161 866 2.452 1,976 476 1,579 1,382 196 2,015 889 1,126 1,890 1,2S4 606 1,464 998 476 733 198 585 14,2D9 9.8713 4.331 1994 4 740 1.959 881 2.8% Z412 484 I'SBS 1,697 198 2.2m 1,035 1.145 Z 185 1,569 617 1,690 I'M 454 836 241 593 16,462 12,058 4,404 l"5 5:071 4,129 942 310" zsft 518 Z020 1,807 213 Z386 1.161 1,225 2.337 1.677 660 IMS 1.290 SIB a" 2u 636 17,614 12.902 4,712 2DW 7,113 5,791 1.322 4,346 1,619 727 2.831 Z533 298 3,347 1,629 1.718 31277 2,352 925 Z537 1.810 727 1.254 362 892 24,705 18,096 6,609 2ODS 9,2711 7.391 1.887 1637 4,619 t.038 3.657 3,233 424 4,532 Z079 Z453 4,323 3,002 1,321 1.3,48 Z310 1,039 1,736 462 1,274 32,531 23.096 9,05 21' 11 585 9,432 Z 153 7,079 5,895 1.184 4,611 4,126 495 5,452 2.653 Z799 5,339 3,832 1,507 4,132 7.949 1. IS4 2,043 5" 1,433 40.241 29,476 10,765 20 I'5' 14:786 tZ 038 7 743 9.035 7.324 1,511 5.886 5,267 619 6,95% 3,336 1,572 6,815 4,891 1,924 5,273 3,762 1,511 2,607 752 1,255 51.36( 37,620 13,740 A"m Romd 0.00 "W
20 4,652 ZS% 1.753 Z 776 1.30 967 1.661 1,266 395 3,099 814 Z285 1406 1.176 1,230 J,872 905 %7 L.367 lei 1,136 17,833 9.045 8.788 Im 5,246 3.365 1.831 3,137 2,103 t.034 1,597 1.473 424 3,39) 946 Z445 2.681 1.367 1,316 21096 1.052 1,034 1,479 210 1,269 19,919 10.516 9,403 1995 5,613 3.60) Z012 3.357 Z250 1.107 Z027 1,575 452 1,629 1,013 Z616 Z872 1,463 1.409 Z232 L. 125 1,107 1.533 225 1.359 21.313 11,252 10,061 2m 7,972 5
050 2.422 4,708 3.156 1,552 Z345 Z210 635 5,069 L,420 3,669 4,028 Z052 1,976 3,130 1,578 1.552 2.221 316 1,905 29,893 15.782 4.111 2m 10,047 6,445 3,602 6.009 4.029 1.981 3,632 Z821 911 6.495 1,813 4.682 5,139 Z613 Z523 3,995 Z014 1.981 Z834 403 7,431 38.151 20,142 18,009 20 JZSZ 9,226 4,597 7,669 5,141 Z528 4,634 3.3" 1,035 9.290 Z314 5.976 6.560 3,342 1.21S 5.0" Z571 Z528 3.617 514 3,103 48.692 25,707 22,995 2DI 16.3" 10.499 5,967 9,789 6,562 3.227 5,914 A.5" 1,321 10,530 2,953 7.627 8,372 4,265 4,107 6,508 3,281 1.227 4.616 656 3,960 6Z 145 32,W9 2P.336 Acm Rood 0.00 S.b- IV, Yqpew-Ti.Min lik
26.00 36.70 4,940 Z.570 Z270 ZrA 1,606 1.248 1,636 1,125 sit 3,673 723 21950 2.633 1,044 I'Sag Z051 303 1,248 1.693 161 1,532 19.380 8.02 11,348 i9% 5,320 Z892 Z428 3,144 I's" 1,336 1.911 1,265 546 3,9171 814 3,157 2.873 1,17S 1,700 Z240 904 1,336 1.8" 181 1,639 21,151 91 0
9 515 5.6" 3.05 Z598 -3,363 1,934 1,429 1,940 I.-A55 595 4.20 970 3.373 3,076 1,257 1,819 Z396 %? 1.429 1.947 193 1.7.54 2Z663 2.992 20010 7,984 4 3" 3,644 4.717 Z 713 2,004 Z 721 Um 921 5,959 1.221 4,738 4,314 1,763 Z551 3,360 L336 Z004 Z731 271 7,460 31.786 13.364 IS,= 2005 10. 91 5:50 4,651 6.WA 3.462 2.559 3,470 Z424 1.046 7,605 1
558 6,047 55.506 2.2M 3,256 4,289 1,731 ZS59 3,486 346 1140 40.567 1?.311 23.Z56 2110 13.0[06 7,070 5,936 ?,664 4,419 31265 4,431 31094 1,337 9,705 1,988 7.717 7.OV 2.M 4,155 5,474 Z209 3,265 4,449 442 4,007 51,776 U094 29,682 2D..' 16.574 S'"s 7.576 9,791 5,624 4,167 5.643 3.937 1.706 IZ380 Z531 9,949 8,958 3.655 5,303 6,979 2.112 4.167 5,676 362 5.124 66,001 26.IS9 37.232 Acco Rod 0.00 Seebm V.- rAqp
TWW 993 43.00 33.80 4. W5 76i 3.044 ZTTS 1.101 1.674 1,456 771 685 4.452 495 3,957 Z846 715 2.131 2.224 350 i.674 Z 165 tio '4055 20,723 5,503 15,220 M 5.010 1:753 3,257 2,897 1.096 1.791 1.500 766 734 4,727 493 4.234 Z992 712 2.280 Z339 S48 1,791 Z308 110 2.198 21,763 5,471 16.285 1515 5.361 1,876 3,485 3.089 1,172 1.917 1,604 821 733 5.058 527 4,531 3.202 762 2,440 2.503 SS6 1,917 2,469 117 2.352 23,236 5.861 17.425 2OW 7,518 2.630 4,998 4,332 1,644 Z688 Z252 1.151 1.101 7,094 740 6,354 4,490 1,069 3,421 3,510 = Z6811 3.463 164 3.2" 3Z659 8.220 24.439 2003 91395 3.357 6,238 5,529 ZM 3,01 zrn 1.469 1,403 91054 944 8.110 5,731 1,364 4,367 4,480 1,049 3,431 4,421 2to 4,211 41.632 10
491 31,191 2110 IZ246 4,294 7.962 7,057 Z678 4,379 3."5 1,874 1,791 11.355 1,205 19,350 7,314 1,741 "73 5.718 1,339 4.379 5.642 268 5.37A 53.197 13,389 39.11M 20 15,629 5.468 10,161 9.007 3,418 5.509 4,VS Z392 Z2116 14.748 1,339 13,210 9,335 Z222 7,113 7,2" 1,709 5'5" 7.201 342 61859 67.8% MM so. SD7 Acea Road Tow I d &OWTW"
TW*PEV..-W A: 168.00 142.70 B: 166.00 152.70 Lw c RoodprAmet, U. WiLh wd bd. I_b: O*thtbvdo.,UmfdwaMrood(Nwiyu%-Y-&-)n2lxm. Le: Fi Fl.L W VADy. M:Mont*-w
_'t: 'k WW.W tbt - Mok Bi wAh tbt Wcm r-*&, Le: All the fApm we roudd.  - 43 - ANNEX 1 TABLE 2A: FINANCIAL AND ECONOMIC COST SUMMARY (Y million) 1987 1988 1989 1990 1991 1992 1993 1994 1995 Total A. Financhil (Current): Beijlng-Majuqlao 14.08 24.94 27.71 68.25 31.81 46.44 11.51 10.23 7.00 241.97 Majuqlao-Nanying 27.15 90.44 66.96 52.08 40.56 31.49 11.85 24.16 14.11 358.80 Nanylng-Yangcun 29.89 55.80 45.28 52.39 43.72 28.07 46.65 58.50 17.45 377.75 Yangcun-Tlanjln 36.32 87.33 89.36 68.05 49.54 56.13 146.76 109.14 21.27 663.90 Tlanjin-Tanggu 33.39 76.77 55.69 12.56 26.72 36.95 201.84 116.09 19.52 579.53 Total 140.83 335.28 285.00 253.33 192.35 199.08 418.61 318.12 79.35 2221.95 B. Economic (Dec. 1995 prices): Beijlng-Majuqiao 27.09 46.53 44.96 102.78 44.01 64.27 14.99 11.13 6.69 362.45 Majuqlao-Nanying 52.07 168.18 108.27 78.15 55.90 43.43 15.39 26.19 13.44 561.02 Nanying-Yangcun 57.17 103.41 72.98 78.36 60.10 38.61 60.37 63.22 16.56 550.78 Yangcun-Tanjln 111.13 161.91 144.03 101.81 68.05 77.16 189.89 117.94 20.17 992.09 Tianjin-Tanggu 63.94 142.48 89.90 18.84 36.75 50.85 261.46 125.60 18.55 808.37 Total 311.40 622.51 460.14 379.94 264.81 274.32 542.10 344.08 75.41 3274.71 I_1 All the figu are rounded. TABLE 2B: COMPONENTS OF FINANCIAL COST (Y million, in current prices) For Economic Evaluation For Financial Evaluation Civil Worb: Financial Cost a. BTTE 1,367.55 Cost as for economic evaluation 2,221.95 b. Acces roads to BTTE 196.13 Additional cost items c. Supplementary civil works 243.00 Equipment acquisition 25.97 E A M 111.45 Two studies (Hwy finance, local bitumen) 4.53 Staff training 2.99 Subtotal 1,918.13 Loan/Credit ervicing 209.55 Offer Invesunmu Itenu; Subtotal 243.04 Land acquiition and resettlement 235.39 Engimeeru deign 20.10 Total 2,464.99 Contnmctio supev ion 37.81 Environmental Survey 0.90 Management Study for BTTTUEC 0.47 PMS for BTTE 0.75 Administrtie Overhead of BTTUEC 8.40 Subtotal 303.82 Total 2,221.95  Table 3: Shadow Price Calculation (Y _mon. December 1995 pie.) Coeivler-MatoqLa Mojuqlia-Nylni Nonylg-Yaecun Yangeun-Timiin Tbajin-Tanugu Conver --Totai -men - Financial-- Econo finanacal- Ecces- Financal--- cone- - Financial- Econo- --Fn ina bal Econo. project factor Loca Foreign Total ak Lecal Ferign To _ ic Local Foren Total ak lAocal Foecign Total kic Local Foreign Total n ic P Land 2.00 25.96 0.00 25.96 25.96 40.41 0.00 40.41 40.41 39.63 0.00 39.63 39.63 53.69 0,00 53.69 53.69 55.09 0.00 55.09 55.09 3 C Unrilled 100 1199 0.00 11.99 11.99 1E.67 0.00 1.67 1I.67 21.92 0.00 21.92 21.92 34.10 000 34.10 34.10 3373 0.00 33.73 33.73 - Semiskhlied/Tecbnkian 067 1271 0.00 22.71 8.52 lR978 0.00 19.78 13.25 23.47 0.00 23.47 15.72 38.90 0.00 38.90 26.06 35.70 0.00 35.70 23.92 > SupervIsr 2.00 4.20 4.14 *.34 12.54 6.54 5.42 11.96 I8.50 5.64 4.68 10.32 15.96 11.20 7.57 18.77 29.97 10.20 5.75 15.95 26.15 MAbterias: / Sto 1.00 6.61 6.54 13.15 13.15 10.29 *.56 18.85 18.85 12.25 10.01 22.26 22.26 36.14 24.23 60.37 60.37 24.24 13.61 37.85 37.85 8 0 Timber 1.00 2.98 2.94 5.92 5.92 4.63 3.84 8.47 8.47 3.11 6.61 14.72 14.72 15.06 10.05 25211 25.11 15.85 8.89 24.74 24.74 (9 Cement 1.00 5.92 5.87 11.79 11.79 9.21 7.69 16.90 16.90 10.52 8.64 19.16 19.16 24.06 1624 4030 4030 19.44 20.88 30.32 30.32 Sand O.8O 3.94 0.00 194 3.15 614 0.00 6.14 4.91 7.6 0.00 7.86 6.29 19.09 0.00 19.09 25.27 12.83 0.00 12.t3 10.26 LO Stow 0.80 16.87 0.00 16.87 13.50 26.26 0.00 26.26 21.01 29.33 0.00 29.33 23.46 63.20 0.00 6820 54.56 51.35 0.00 51.35 41.08 Btuawn 2.00 931 0.00 9.31 9.31 14.49 0.00 14.49 14.49 15,85 0.00 15.85 15.85 31.06 0.00 31.06 31,06 22.77 0.00 22.77 22.77 - Othe 0.10 17.12 17.5S 35.37 31.81 27.73 22.92 50.71 45.16 29.66 24.25 53.91 47,9S 52.20 35.10 87.30 76.86 51.20 22.77 79.97 69.73 '0 ( Fuel: Dkse 1.00 5.82 0.00 5.82 5.82 9.07 0.00 9.07 9.07 10.21 0.00 10.21 10.21 14.07 0.00 14.07 14.07 17.72 0.00 17.72 17.72 GaCoie 100 502 0.00 5.02 5.02 7.81 0.00 7.81 7.81 9.63 0.00 9.63 9.63 12.69 0.00 22.69 22.69 16.97 0.00 16.97 1697 Heavy iO 200 226 0.00 2.26 2.26 3.52 0.00 3.52 3.52 5.09 0.00 5.09 5.09 8.17 0.00 8.17 8.27 12.17 0.00 12.17 12.17 Otiel 1.00 2.67 0.00 2.67 2.67 4.15 0.00 415 4.15 5.37 0.00 5.37 5.37 6.90 0.00 6.90 6.90 2282 0.00 22.82 11.82 Water 0.80 2.26 000 2.26 1.81 3.52 0.00 3.52 2.82 5.09 0.00 5.09 4.07 9.66 0.00 9.66 7.73 9.49 0.00 9.49 7.59 .4 EzkIck 1.50 520 000 5.20 7.80 8.10 000 U80 125 7.83 0.00 7.83 11.75 1446 .0.00 14.46 21.69 15.40 0.00 1540 23.20 ConutrucUlo 1200 509 5.01 10.10 10.10 7.93 6.55 14.48 14.48 9.97 8.17 12.14 18.14 21.79 14.59 36.38 36.38 14.64 8.16 22.80 2230 Z mccimacaleq_slpse It 2-00 4.69 3543 40.12 40.12 7.30 46.40 53.70 53.70 7.44 6.06 13.50 13.50 15.61 10.47 26.01 26.08 12.42 7.00 19.42 19.42 Othen 0.10 31.25 0.00 31.25 2S.00 41.62 0.00 41.62 31.90 39.97 32.72 72.69 64.70 64.70 43.52 108.21 95.27 61.90 34.85 96.75 84.37 TOtnl 132.57 77.43 2611.ff 240.24 24.17 8.44 3MA.1 367.22 048 101.14 405.98 385.41 551.75 161.76 713.51 676.33 564.93 117.91 622.84 591.661 Oval to 6.96 0.9 0.9 5 .95 _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- I): M^ auioum I# bawm_-'  -45 - ANNEX 1 TABLE 4: ECONOMIC VEHICLE OPERATING COSTS (Y per km, December 1995 prices) --Goo-------- ---------Fafr----------- -----Poor------ Flat Roll HRif Mount. Flat Roil Hill Mount. Flat Roll Hm Mount Small car 0.440 0.460 0.475 0.518 0.538 0.553 0.671 0.691 0.706 Small bus 0.813 0.965 1.089 1.052 1.222 1.361 1.346 1.500 1.639 Medium bus 1.281 1.488 1.667 1.702 1.949 2.150 2.244 2.461 2.662 Largebus 1.436 1.751 2.031 1.975 2.378 2.710 2.393 2.782 3.114 Snalbtruck 0.625 0.781 0.899 0.702 0.858 0.975 0.858 0.995 1.132 Medlumntruck 0.664 0.818 0.972 0.730 0.897 1.049 0.882 1.049 1.216 Large truck 0.880 1.078 1.276 1.006 1.223 1.414 1.197 1.414 1.618 Tractor/trailer 1.646 2.171 2.625 1.898 2.471 2.953 2.260 2.802 3.300 Note: Without the project, both road condition and flow will deteriorate quickly with high traffic growth and shift towards heavier vehicles. Considered 2% p.a. cost increase.  - 46 - ANNEX 1 TABLE 5: ECONOMIc EVALUATION (TOTAL EXPRESSWAY) (Y million, December 1995 prices) Base Case Costs Benfits- VOC Reduced Net Gener- Cong.On Reduced Net Constru Road Sav- ated Exist Accid Cash Year -ction Maint. Total ings Traffic Road -ents Total Flow Total: Beijig-Tainjin-Tanggu Expressway 1987 311.40 311.40 (311.40) 1988 622.51 622.51 (622.51) 1989 460.14 460.14 (460.14) 1990 379.94 0.31 380.25 2.04 0.10 0.26 0.01 2.41 (377.84) 1991 264.81 13.51 278.32 62.13 3.11 12.26 0.59 78.09 (200.2) 1992 274.32 27.43 301.75 110.29 5.54 25.67 1.19 142.69 (159.1) 1993 542.10 53.45 595.55 187.46 9.38 58.12 2.31 257.27 (338.28) 1994 344.08 53.45 397.53 241.78 12.08 63.43 2.31 319.60 (77.93) 1995 75.41 53.45 128.86 291.28 14.55 67.89 2.31 376.03 247.17 1996 53.45 53.45 344.83 17.23 69.47 2.31 433.84 380.39 1997 53.45 53.45 406.12 20.29 71.08 2.31 499.80 446.35 1998 53.45 53.45 476.52 23.82 72.75 2.31 575.40 521.95 1999 53.45 53.45 557.63 27.88 74.45 2.31 662.27 608.82 2000 53.45 53.45 651.37 32.59 76.17 2.31 762.44 708.99 2001 53.45 53.45 731.72 36.60 75.60 2.31 846.23 792.78 2002 53.45 53.45 822.62 41.14 75.04 2.31 941.11 887.66 2003 /_a 80.18 80.18 925.60 46.28 74.48 2.31 1,048.67 968.50 2004 /_a 80.18 80.18 1,042.41 52.10 73.92 2.31 1,170.74 1,090.57 2005 53.45 53.45 1,175.11 58.73 73.34 2.31 1,309.49 1,256.04 2006 53.45 53.45 1,303.57 65.15 70.93 2.31 1,441.96 1,388.51 2007 53.45 53.45 1,446.43 72.30 68.60 2.31 1,589.64 1,536.19 2008 53.45 53.45 1,605.37 80.25 66.33 2.31 1,754.26 1,700.81 2009 53.45 53.45 1,782.25 89.09 64.15 2.31 1,937.80 1,884.35 2010 53.45 53.45 1,979.12 98.96 62.06 2.31 2,142.45 2,089.00 2011 53.45 53.45 2,178.99 108.95 56.73 2.31 2,346.98 2,293.53 2012 53.45 53.45 2,399.27 119.96 51.85 2.31 2,573.39 2,519.94 2013 53.45 53.45 2,642.10 132.10 47.39 2.31 2,823.90 2,770.45 2014 53.45 53.45 2,909.81 145.47 43.32 2.31 3,100.91 3,047.46 2015 53.45 53.45 3,204.99 160.22 39.60 2.31 3,407.12 3,353.67 Total 3274.71 EERR = 15.7% ===== NPV (12%) = 1109.7 First Year Return =.3% Ia: Major resurfacing. / b: All figures are rounded.  -47 - ANNEX 1 TABLE 5A: ECONOMIC EVALUATION (SECTION 1) (Y million, December 1995 prices) Base Case Costs ___________- - VOC Reduced Net Gcner- Cong.0n Reduced Net Constru Road Sav- ated Exist Accid Cash Year -clion Maint. Total fgs Traffic Road -ents Total Flow Section 1: Beijing-Majuqiao 1987 27.09 27.09 (27.09) 1988 46.53 46.53 (46.53) 19S9 44.96 44.96 (44.96) 1990 102.78 0.07 102.85 0.20 0.01 0.06 0.00 0.27 (102.58) 1991 44.01 2.33 46.34 6.71 0.34 2.06 0.10 9.21 (37.13) 1992 64.27 4.33 68.60 12.46 0.63 3.83 0.19 17.11 (51.49) 1993 14.99 5.95 20.94 17.14 0.86 5.27 0.26 23.53 2.59 1994 11.13 5.95 17.08 25.62 1.28 7.12 0.26 34.28 17.20 1995 6.69 5.95 12.64 32.04 1.59 7.62 0.26 41.51 28.87 1996 5.95 5.95 38.43 1.91 7.80 0.26 48.40 42.45 1997 5.95 5.95 46.09 2.29 7.98 0.26 56.62 50.67 1998 5.95 5.95 55.28 2.75 8.17 0.26 66.46 60.51 1999 5.95 5.95 66.30 3.30 8.36 0.26 78.22 72.27 2000 5.95 5.95 79.53 3.98 8.56 0.26 92.33 86.38 2001 5.95 5.95 90.19 4.51 8.46 0.26 103.42 97.47 2002 5.95 5.95 102.27 5.11 8.36 0.26 116.00 110.05 2003 /-a 8.93 8.93 115.97 5.79 8.26 0.26 130.28 121.36 2004 /_a 8.93 8.93 131.51 6.56 8.16 0.26 146.49 137.57 2005 5.95 5.95 149.13 7.44 8.06 0.26 164.89 158.94 2006 5.95 5.95 166.71 8.32 7.83 0.26 183.12 177.17 2007 5.95 5.95 186.36 9.31 7.61 0.26 203.54 197.59 2008 5.95 5.95 208.33 10.41 7.39 0.26 226.39 220.44 2009 5.95 5.95 232.89 11.64 7.18 0.26 251.97 246.02 2010 5.95 5.95 260.33 13.02 6.98 0.26 280.59 274.64 2011 5.95 5.95 287.68 14.39 6.38 0.26 308.71 302.76 2012 5.95 5.95 317.90 15.90 5.83 0.26 339.89 333.94 2013 5.95 5.95 351.30 17.57 5.33 0.26 374.46 368.51 2014 5.95 5.95 388.21 19.41 4.87 0.26 412.75 406.80 2015 5.95 5.95 428.99 21.44 4.46 0.26 455.15 449.20 Total 362.45 EIRR = 16.3% NPV (12%) = 158.3 First Year Return 5.8% /_a: Major resurfacing. /b: All figures are rounded.  - 48 - ANNEX 1 TABLE 5B: ECONOMIC EVALUATION (SECTION 2) (Y million, December 1995 prices) Base Case Cosa Benefiht - ________ _- VOC Reduced Net Gener- CongOn Reduced Net Constru Road Sav- ated Exist Accid Cash Year -ction Maint. ToW ings Traffic Road -ents Total Flow Section 2: Majuqi-Nanying 1987 52.07 52.07 (52.07) 1988 16S.1 168.18 (16S.18) 19S9 108.27 108.27 (10.27) 1990 78.15 0.11 78.26 0.35 0.02 0.05 0.00 0.42 (77.84) 1991 55.90 3.S6 59.76 11.74 0.59 1.56 0.17 14.06 (45.70) 1992 43.43 7.12 50.55 21.63 1.09 2.88 0.31 25.91 (24.64) 1993 15.39 9.80 25.19 29.78 1.50 3.97 0.42 35.67 10.48 1994 26.19 9.80 35.99 40.17 2.00 4.01 0.42 46.60 10.61 1995 13.44 9.80 23.24 47.18 2.36 4.31 0.42 54.27 31.03 1996 9.80 9.80 54.54 2.73 4.41 0.42 62.10 52.30 1997 9.80 9.80 63.05 3.16 4.51 0.42 71.14 61.34 1998 9.80 9.80 72.89 3.66 4.62 0.42 81.59 71.79 1999 9.80 9.80 84.27 4.23 4.73 0.42 93.65 83.85 2000 9.80 9.80 97.43 4.89 4.84 0.42 107.58 97.78 2001 9.80 9.80 109.08 5.47 4.91 0.42 119.88 110.0 2002 9.80 9.80 122.12 6.12 4.98 0.42 133.64 123.84 2003 /_a 14.70 14.70 136.72 6.85 5.05 0.42 149.04 134.34 2004 /_a 14.70 14.70 153.06 7.66 5.12 0.42 166.26 151.56 2005 9.80 9.80 171.36 8.56 5.18 0.42 185.52 175.72 2006 9.80 9.80 188.62 9.42 4.91 0.42 203.37 193.57 2007 9.80 9.80 207.62 10.37 4.65 0.42 223.06 213.26 2008 9.80 9.80 228.53 11.42 4.40 0.42 244.77 234.97 2009 9.80 9.80 251.55 12.57 4.17 0.42 268.71 258.91 2010 9.80 9.80 276.88 13.85 3.95 0.42 295.10 285.30 2011 9.80 9.S0 303.87 15.20 3.61 0.42 323.10 313.30 2012 9.80 9.80 333.49 16.68 3.30 0.42 353.89 344.09 2013 9.80 9.80 366.00 18.31 3.01 0.42 387.74 377.94 2014 9.80 9.80 401.68 20.09 2.75 0.42 424.94 415.14 2015 9.80 9.80 440.84 22.05 2.51 0.42 465.82 456.02 Total 561.02 EIRR= 13.0% NPV (12%) = 52.6 First Year Return = 4.6% /a: Majr rsurfacinr. /_b: All fgures are rounded.  -49 - ANNEX 1 TABLE 5C: ECONOMIC EVALUATION (SECTION 3) (Y million, December 1995 prices) Base Case Costs - Benefits- - VOC Reduced Net Gener- Cong.On Reduced Net Cosntm Road Sav- ated Exist Accid Cub Year -ction Maint. Total ings Traffic Road -Onts Total Flow Section 3: Narrig-YaY cun 1987 57.17 57.17 (57.17) 1938 103.41 103.41 (103.41) 1939 72.98 72.98 (72.98) 1990 78.36 0.13 78.49 1.49 0.07 0.15 0.01 1.73 (76.76) 1991 60.10 4.16 64.26 46.25 2.31 4.78 0.18 53.52 (10.74) 1992 38.61 7.48 46.09 83.11 4.16 8.59 0.32 96.18 50.09 1993 60.37 10.57 70.94 117.51 5.88 12.15 0.45 135.99 65.05 1994 63.22 10.57 73.79 143.46 7.18 13.00 0.45 164.09 90.30 1995 16.56 10.57 27.13 163.21 8.16 13.91 0.45 185.73 158.60 1996 10.57 10.57 184.53 9.23 14.23 0.45 208.44 197.87 1997 10.57 10.57 208.63 10.43 14.56 0.45 234.07 223.50 199S 10.57 10.57 235.88 11.79 14.90 0.45 263.02 252.45 1999 10.57 10.57 266.69 13.33 15.25 0.45 295.72 285.15 2000 10.57 10.57 301.54 15.07 15.60 0.45 332.66 322.09 2001 10.57 10.57 331.88 16.59 15.47 0.45 364.39 353.82 2002 10.57 10.57 365.27 18.26 15.34 0.45 399.32 388.75 2003 / I 15.86 15.86 402.02 20.10 15.21 0.45 437.78 421.93 2004 / a 15.86 15.86 442.47 22.12 15.08 0.45 480.12 464.27 2005 10.57 10.57 486.98 24.35 14.94 0.45 526.72 516.15 2006 10.57 10.57 533.09 26.66 14.46 0.45 574.66 564.09 2007 10.57 10.57 583.56 29.18 14.00 0.45 627.19 616.62 2003 10.57 10.57 638.81 31.94 13.55 0.45 684.75 674.18 2009 10.57 10.57 699.29 34.96 13.12 0.45 747.82 737.25 2010 10.57 10.57 765.49 38.28 12.71 0.45 816.93 806.36 2011 10.57 10.57 834.69 41.74 11.62 0.45 888.50 877.93 2012 10.57 10.57 910.14 45.51 10.62 0.45 966.72 956.15 2013 10.57 10.57 992.41 49.62 9.71 0.45 1,052.19 1,041.62 2014 10.57 10.57 1,082.12 54.10 S.88 0.45 1,145.55 1,134.98 2015 10.57 10.57 1,179.95 58.99 8.11 0.45 1,247.50 1,236.93 TOtWl 550.78 EIRR = 2S.0% NPV (12%) = 1,065.2 First Year Retum - 17.2% I_b: ME firesurfacivg . I_b: Al figre ate rounded.  - 50 - ANNEX 1 TABLE 5D: ECONOMIC EVALUATION (SECTION 4) (Y million, December 1995 prices) Base Case Costs - Benefits- VOC Reduced Net Gener- Cong.On Reduced Net Constru Road Sav- ated Exist Accid Cash Year -ction Maint. Total inga Traffic Road -ents Total Flow Section 4: Yangcun-Tianjin 1987 111.13 111.13 (111.13) 1988 161.91 161.91 (161.91) 1989 144.03 144.03 (144.03) 1990 101.81 101.81 (101.81) 1991 68.05 3.16 71.21 (2.57) (0.13) 3.86 0.14 1.30 (69.91) 1992 77.16 8.50 85.66 (6.91) (0.34) 10.37 0.37 3.49 (82.17) 1993 189.89 12.85 202.74 (10.44) (0.52) 15.68 0.56 5.28 (197.46) 1994 117.94 12.85 130.79 (8.68) (0.44) 16.78 0.56 8.22 (122.57) 1995 20.17 12.85 33.02 (4.45) (0.22) 17.96 0.56 13.85 (19.17) 1996 12.85 12.85 2.38 0.12 18.38 0.56 21.44 8.59 1997 12.85 12.85 9.21 0.46 18.81 0.56 29.04 16.19 1998 12.85 12.85 16.04 0.80 19.25 0.56 36.65 23.80 1999 12.85 12.85 22.87 1.14 19.70 0.56 44.27 31.42 2000 12.85 12.85 29.71 1.49 20.15 0.56 51.91 39.06 2001 12.85 12.85 36.96 1.85 19.97 0.56 59.34 46.49 2002 12.85 12.85 45.98 2.30 19.80 0.56 68.64 55.79 2003 /-a 19.28 19.28 57.20 2.86 19.63 0.56 80.25 60.98 2004 /_a 19.28 19.28 71.16 3.56 19.46 0.56 94.74 75.47 2005 12.85 12.85 88.55 4.43 19.29 0.56 112.83 99.98 2006 12.85 12.85 102.55 5.13 18.68 0.56 126.92 114.07 2007 12.85 12.85 118.76 5.94 18.09 0.56 143.35 130.50 2008 12.85 12.85 137.53 6.88 17.51 0.56 162.48 149.63 2009 12.85 12.85 159.27 7.97 16.95 0.56 184.75 171.90 2010 12.85 12.85 184.44 9.22 16.41 0.56 210.63 197.78 2011 12.85 12.85 207.91 10.39 15.00 0.56 233.86 221.01 2012 12.85 12.85 234.37 11.71 13.71 0.56 260.35 247.50 2013 12.85 12.85 264.20 13.20 12.53 0.56 290.49 277.64 2014 12.85 12.85 297.82 14.88 11.46 0.56 324.72 311.87 2015 12.85 12.85 335.73 16.77 10.48 0.56 363.54 350.69 Total 992.09 EIRR = 5.2% NPV (12%) (418.8) First Year Retumn = 0.7% /_a: Major resurfacing /_b: All figures are rounded.  -51- ANNEX I TABLE 5E: ECONOMIC EVALUATION (SECTION 5) (Y million, December 1995 prices) Base Case costs ---Benefits ----------- VOC Reduced Net Gener- Cong.On Reduced Net Constiru Road Sav- ated Exist. Accid Cash Year -ction Maint. Total ings Traffic Road -ents Total Flow Section 5: Tianjin-Tanggu 1987 63.94 63.94 (63.94) 198g 142.48 142.48 (142.48) 1989 89.90 89.90 (89.90) 1990 18.84 18.84 (18.84) 1991 36.75 36.75 (36.75) 1992 50.85 50.85 (50.85) 1993 261.46 14.28 275.74 33.47 1.66 21.05 0.62 56.80 (218.94) 1994 125.60 14.28 139.88 41.21 2.06 22.52 0.62 66.41 (73.47) 1995 18.55 14.28 32.83 53.30 2.66 24.09 0.62 80.67 47.84 1996 14.28 14.28 64.95 3.24 24.65 0.62 93.46 79.18 1997 14.28 14.28 79.14 3.95 25.22 0.62 108.93 94.65 1998 14.28 14.28 96.43 4.82 25.81 0.62 127.68 113.40 1999 14.28 14.28 117.50 5.88 26.41 0.62 150.41 136.13 2000 14.28 14.28 143.16 7.16 27.02 0.62 177.96 163.68 2001 14.28 14.28 163.61 8.18 26.79 0.62 199.20 184.92 2002 14.28 14.28 186.98 9.35 26.56 0.62 223.51 209.23 2003 /-a 21.42 21.42 213.69 10.68 26.33 0.62 251.32 229.90 2004 /-a 21.42 21.42 244.21 12.20 26.10 0.62 283.13 261.71 2005 14.28 14.28 279.09 13.95 25.87 0.62 319.53 305.25 2006 14.28 14.28 312.60 15.62 25.05 0.62 353.89 339.61 2007 14.28 14.28 350.13 17.50 24.25 0.62 392.50 378.22 2008 14.28 14.28 392.17 19.60 23.48 0.62 435.87 421.59 2009 14.28 14.28 439.25 21.95 22.73 0.62 484.55 470.27 2010 14.28 14.28 491.98 24.59 22.01 0.62 539.20 524.92 2011 14.28 14.28 544.84 27.23 20.12 0.62 592.81 578.53 2012 14.28 14.28 603.37 30.16 18.39 0.62 652.54 638.26 2013 14.28 14.28 668.19 33.40 16.81 0.62 719.02 704.74 2014 14.28 14.28 739.98 36.99 15.36 0.62 792.95 778.67 2015 14.28 14.28 819.48 40.97 14.04 0.62 875.11 860.83 Total 808.37 EIRR= 15.6% NPV (12%) = 252.4 First Year Return = 8.9% /La: Major resurfacing. /_b: All figues are rounided.  - 52 - ANNEX 1 TABLE 6: FINANCIAL EVALUATION (Y million) Net Sensitivity Best Estimates (Total Highway) / I Cash Revenue Costs Benefits Net Flow Total Operating (-10h/.) Self- Loan- Total Operating Loan Net Cash on Revenue Costs Operating Year fmancing IBRD Subtotal Maint. Total Revenue Costs Repay. Revenue Flow Equity (-10%) (+10%) (+10/%) (1) (2) (3-1+2) (4) (5-3+4) (6) (7) (8) (9=6-7-8) (10=9-5) (11=9-2-4) (12) (13) (14) 1987 109.04 47.19 156.23 156.23 -156.23 -109.04 -156.23 -156.23 -156.23 1988 323.58 48.38 371.96 371.96 -371.96 -323.58 -371.96 -371.96 -371.96 1989 221.95 94.22 316.17 316.17 -316.17 -221.95 -316.17 -316.17 -316.17 1990 186.52 94.52 281.04 0.31 281.35 -281.35 -186.83 -281.35 -281.35 -281.35 1991 118.78 94.62 213.40 13.51 226.91 15.41 11.40 0.00 4.01 -222.90 -128.28 -224.44 -224.04 -225.58 1992 157.72 63.13 220.85 27.43 248.28 36.91 21.59 0.00 15.32 -232.96 -169.83 -236.65 -235.12 -238.81 1993 409.30 55.11 464.41 53.45 517.86 53.48 21.76 94.61 -62.89 -580.75 -525.64 -586.10 -582.93 -588.27 1994 304.08 48.84 352.92 53.45 406.37 112.94 32.62 95.10 -14.78 -421.15 -372.31 -432.44 424.41 435.71 1995 74.31 13.70 88.01 53.45 141.46 116.78 49.55 128.36 -61.13 -202.59 -188.89 -214.27 -207.55 -219.22 1996 53.45 53.45 192.00 51.11 140.48 0.41 -53.04 -53.04 -72.24 -58.15 -77.35 1997 53.45 53.45 275.54 55.08 135.00 85.46 32.01 32.01 4.46 26.50 -1.05 1998 53.45 53.45 315.47 57.01 153.22 105.24 51.79 51.79 20.24 46.09 14.54 1999 53.45 53.45 359.49 58.86 158.11 142.52 89.07 89.07 53.12 83.18 47.24 2000 53.45 53.45 409.66 60.77 164.63 184.26 130.81 130.81 89.84 124.73 83.77 2001 53.45 53.45 445.58 62.75 171.15 211.68 158.23 158.23 113.67 151.96 107.40 2002 53.45 53.45 486.06 64.79 177.67 243.60 190.15 190.15 141.54 183.67 135.07 2003 80.18 80.18 531.63 66.90 185.82 278.91 198.73 198.73 145.57 192.04 138.88 2004 80,18 80.18 582.90 69.07 193.97 319.86 239.68 239.68 181.39 232.77 174.48 2005 53.45 53.45 640.51 71.31 202.12 367.08 313.63 313.63 24958 306.50 24245 2006 53.45 53.45 728.90 73.63 202.12 453.15 399.70 399.70 326.81 39234 319.45 2007 53.45 53.45 831.32 76.02 202.12 553.18 499.73 499.73 41660 492.13 40900 2008 53.45 53.45 950.43 78.49 0.00 871.94 818.49 818.49 723.45 810.64 715.60 2009 53.45 53.45 1089.51 81.04 0.00 1008.47 955.02 955.02 846.07 946.92 837.97 2010 53.45 53.45 1252.58 83.67 0.00 1168.91 1115.46 1115.46 990.20 1107.09 981.84 2011 53.45 53.45 1400.55 86.39 0.00 1314.16 1260.71 1260.71 1120.66 1252.07 1112.02 Total 1905.28 559.71 2464.99 1110.26 3575.25 FinancialRateofReturn= 5.2% 6.8% 3.9%/ 5.1% 3.7% - - -- Net Present Value (12%) = -1007.7 -664.6 -1146.9 -1029.5 -1168.7 /_1: Actual to 1995, estimates forl 996 and 1997, projection thereafter.  - 53 - ANNEX I TABLE 7: FINANCIAL VOC SAVINGS VS. TOLL RATES (Y/km, 1996 current prices) Section of BTTE Smn3a Med. Large Small Med. Large Tractor- Distance Savingsvs Car Bus Bus Thick Thick Truck Trader Arterial Route Section 1: Beijing-Majuqiao Savings -1996 0.19 0.88 1.09 0.38 0.24 0.38 1.88 4.0 km 30% of Savings -1996 0.06 0.26 0.33 0.11 0.07 0.12 0.56 Section 2: Majuqiao-Nanying Savings -1996 0.16 0.76 0.99 0.22 0.18 0.29 0.83 2.0 kmn 300/o of Savings -1996 0.05 0.23 0.30 0.07 0.05 0.09 0.25 Section 3: Nanying-Yacun Savings -1996 0.61 2.46 3.05 0.93 0.78 1.17 3.52 15.8 kni 30% of Savings -1996 0.18 0.74 0.92 0.28 0.23 0.35 1.06 Section 4: Yangcun-Tianjin Savings -1996 (0.05) 0.08 0.14 0.03 (0.09) (0.08) 0.74 (10.7) kn 30% of Savings -1996 (0.01) 0.03 0.04 0.01 (0.03) (0.02) 0.22 Section 5: Tinjin-Tanggu Savings -1996 0.40 1.66 1.96 0.94 0.56 0.86 4.91 14.2 kmn 30% of Savings -1996 0.12 0.50 0.59 0.28 0.17 0.26 1.47 Average Savings -1996 0.26 1.17 1.45 0.50 0.33 0.53 2.38 Total 25.3 km 30% of Savings -1996 0.08 0.35 0.43 0.15 0.10 0.16 0.71 Snall Med. Large Tractor- Vehicles Vehicles Yehicles Trailer BTTE Toll Charges -1996 0.25 0.35 0.45 0.60 30% of VOC Savinos (1996): Section 1 Beijing-Majuqiao 0.09 0.17 0.22 0.56 Section 2 Majuqi-Nanying 0.06 0.14 0.19 0.25 Section 3 N-nying-Yangcun 0.23 0.49 0.63 1.06 Section 4 Yangcun-Tianjin 0.00 0.00 0.01 0.22 Section 5 Tianjin-Tanggu 0.20 0.33 0.42 1.47 Average30%ofVOCSavings(FulllengthofBTTE) 0.11 0.23 0.30 0.71 Raos: 30% of VOC Savn Toll Rate Section I Beijing-Majuqiao 0.34 0.48 0.49 0.94 Section 2 Majuqiao-Nanying 0.23 0.40 0.43 0.41 Section 3 Nanying-Yangcun 0.93 1.39 1.41 1.76 Section 4 Yangcun-Tianjin -0.01 0.00 0.02 0.37 Section S Tianjin-TanWgg 0.80 0.95 0.94 2.46 Average30%ofVOCSavingp(FulllengthofBTTE) | 0.46 0.64 0.66 1.19  - 54 - ANNEX2 ANNEX 2: BORROWER'S CONTRIBUTION TO THE ICR BEIJING-TIANJIN-TANGGU EXPRESSWAY PROJECT SUMMARY EVALUATION REPORT by BTT Expressway United Corporation June 1996 The scope of the Beijing-Tianjin-Tanggu (BTT) Expressway Project is defined in Loan Agreement (281 1-CHA) and Credit Agreement (1972-CREDIT), and the project is fully appraised in the World Bank's Staff Appraisal Report (Report No. 6344-CHA). The Loan and Credit Agreements were signed by the Ministry of Finance, PRC, the International Bank of Reconstruction and Development and the International Development Association on September 14, 1987 and came into force on December 13, 1987. All the objectives of the Project laid down in the Staff Appraisal Report and the Loan/Credit Agreements have been realized. The present report contains the Executing Agency's evaluation of the Project. I. INTRODUCTION 1. The project defined in the Bank's Staff Appraisal Report and the Loan/Credit Agreements include the following features: (a) construction of a 143 km long, dual 2 lanes, controlled access, toll expressway from Beijing to the new port of Xingang at Tanggu in Tianjin; (b) acquisition and installation of the traffic monitoring, telecommunication and tolling systems for the Expressway; (c) provision of consulting services for the construction supervision and quality control of the Expressway and training of the local supervision staff; (d) provision of basic road maintenance and operation facilities for the Expressway; (e) establishing a data base for Beijing Municipality; (f) carrying out the following studies: (i) Study on the Method of Financing the Expansion, Improvement and Rehabilitation of the Highway Network  - 55 - ANNEX2 (ii) Study on Application of Local Bitumen for Road Pavements (iii) Study on Organization and Management of Expressway Operation and Maintenance; (g) staff training. 2. Accomplishments: (a) A newly built 142.69 km long expressway out of which 2.29 km, from Ningchegu Road of Tanggu District to Hebei Road in Tianjin, is Class I Highway. In addition, a 3.07 km link road, from the starting point of the BTT Expressway Project to the Third Ring Road in Beijing and another 8.07 km link road, from the end of the BTT Expressway Project to Tianjin Port as well as to the Tanggu Economic Development Zone and Preferential Tax Zone, were built. (b) The traffic monitoring, telecommunications and tolling systems for the whole Expressway were acquired from Germany, Canada and Spain, respectively. (c) The contract for the supervision consulting services of the BTT Expressway was awarded to Kampsax International A/S of Denmark. In addition, the Danish consultants arranged for 25 trainee man-months of overseas training according to the contract. (d) 48 items of equipment, of 14 different types, for highway maintenance and operation were purchased separately from suppliers in Germany, Japan and USA in 1993 and 1995. (e) The three studies have been completed, and the study reports have been submitted to the Bank. (f) The data base, for the specific use in the operation management of the BTT Expressway, has been successfully developed and put into operation. (g) 140 man-months of staff training were accomplished in respect of financial management, traffic engineering, soft ground, road & bridge maintenance, highway data base, post-evaluation of projects, management systems, etc. II. ACHIEVEMENT OF PROJECT OBJECTIVES 3. The State Planning Commission's document No. JJ[1984]035: "Reply re. Design Instruction for Jing-Jin-Tang Highway for Automobiles only", granted the Jing-Jin-Tang Highway for Automobiles only (the original name of BTT Expressway) the right to take up a loan from abroad (e.g. the World Bank). The State Planning Commission's  - 56 - ANNEX2 document No. JJ[1986]1283 of July 1986: "Reply re. Design Instruction for BTT Expressway", approved that a loan of US$150,000,000 could be taken up from the World Bank for the BTT Expressway Project. At that time, the Chinese government was in the process of seeking financial assistance from the World Bank in order to ease the problem of the country's relative backwardness with regard to communications and transportation, which was hindering the economic development. The Seventh Five-Year Plan aimed to develop and improve the highway system by implementing optimum planning for highway maintenance and construction as well as to upgrade and improve the highway transportation industry. The Bank had already in 1980 begun preliminary discussions concerning the highway industry with the Chinese government, and the first batch of highway projects was confirmed in June 1983. Preparations for the BTT Expressway was at that time being undertaken by the Ministry of Communications (MOC), and these efforts were helped by the provision of consultant services, financed by ADAB, by the highway agency of New South Wales and Mounsell Consultants, both of Australia. On March 12, 1986 the World Bank made a preappraisal for the BTT Expressway, and the formal appraisal followed in October 1986. In March 1987 the loan negotiation for the BTT Expressway was held in Washington, D.C., USA. The delegation of the Chinese government was led by Mr. Luo Qing from the Ministry of Finance and Mr. Chen Sen from MOC. The negotiation reached a consensus on the final loan document. On September 14 of the same year the loan agreement for BTT Expressway Project was signed by the Chinese government and the Bank, and came into force on December 13, 1987. 4. During the appraisal, through several discussions with MOC and representatives from the relevant province and municipalities, the Bank was convinced that due to the continuous increase of the import and export of goods as well as the development of tourism in the Beijing-Tianjin-Tanggu region, one of the most important and crowded transportation corridors, the traffic volume of the existing Beijing-Tanggu highway had already far exceeded the original design capacity. In consequence, traffic jams and traffic accidents frequently occurred. This situation was extremely detrimental to the requirement for economic development. It was therefore deemed necessary to build an expressway to remedy the highly unacceptable state of affairs. This project would, furthermore, produce additional benefits such as (i) improvement of technical design, construction and materials specifications and (ii) strengthening of the contracting process, construction supervision, etc. of the Chinese highway industry. To achieve these targets staff training, studies, establishment of a data base and a series of measures aimed at the upgrading of the future highway operation management would be implemented. III. PROJECT PLANNING AND DESIGN 5. The Project Objectives expressed in the Bank's appraisal report are: (a) to construct 142 km of high standard toll expressway;  - 57 - ANNEX2 (b) technical cooperation in planning, development and maintenance of the highway network, establishing a road data base; improving the quality of local bitumen; and identifying the appropriate way to operate and maintain the expressway; (c) training of transportation planning staff; (d) giving further support to highway study and research, to upgrade the standard of design, construction and materials specifications as well as civil engineering contract documents. 6. In order to achieve the above project objectives, it was agreed to proceed with the following items during the final negotiations; (a) civil engineering of the 143 km long toll expressway; (b) acquisition and installation of electronic, electrical and mechanical facilities necessary for the Project; (c) appointment of Chinese and foreign supervision engineers; (d) purchase of facilities for expressway maintenance and operation management; (e) staff training; (f) three studies, i.e. "raising funds for expansion and improvement of the highway network", "the potential for using local bitumen for expressway pavements", and "organization and management of expressway operation and maintenance"; (g) establishment of highway data base. IV. PROJECT IMPLEMENTATION 7. The civil works of the 143 km long toll expressway were divided into 4 construction contracts. The international competitive bidding, which was carried out according to the requirements of the Bank's "Guidelines for Procurement", took place from September 6, 1986 to June 24, 1987, with the International Tendering Company of the China Technical Import and Export General Company as the representative of the employer. The result of the tender evaluation was approved by the State Tender Evaluation Commission and affirmed by the Bank. The successful bidders were 4 Sino- Japanese/Sino-French joint ventures. The civil works contracts were signed in Beijing on October 27, 1987. The Chief Supervision Engineer issued order of commence on November 25, 1987 and the construction formally began on December 23, 1987.  - 58 - ANNEX2 8. The whole of Contract No. 1 and the 72 km long western section of Contract No. 2 were opened to traffic in January 1991. The eastern section of Contract No. 2 and the whole of Contract No. 4 (Tianjin viaduct) were opened to traffic on September 30, 1992. The length of expressway under traffic was then 109 km. In September 1993, upon completion of Contract No. 3, the entire 143 km of expressway came into service. 9. Contract No. 5 of the BTT Expressway Project comprised the acquisition and installation of electronic, electrical and mechanical facilities, including telecommunication, traffic monitoring and tolling systems for the whole expressway. Bids were called on October 20, 1990, and opening took place on April 23, 1991 through four steps: preliminary evaluation, clarification, post-examination of qualification, final evaluation. The result of the evaluation was approved by the State Tender Evaluation Commission and affirmed by the Bank. Contract negotiations began in April 1992, and signing took place in Beijing on August 1, 1992. The construction period lasted from November 28, 1992 to April 30, 1995. 10. Selection of consultants for supervision and training was made through limited international competitive bidding. Kampsax International A/S of Denmark was awarded the contract. Altogether 248 man-months were utilized for the services. The joint supervision team, consisting of Chinese and foreign engineers, succeeded in keeping construction time, quality and cost effectively under control. 11. Purchase of the maintenance and operation management facilities for the expressway was carried out in two batches. The first 11 items of equipment, of 2 kinds, were acquired through direct purchase before the end of 1993. The remaining 37 items of equipment, of 12 kinds, were purchased through international competitive bidding, and delivery took place up to July 1995. 12. Some adjustments have been made to the program for staff training. The training actually carried out embraced the following 7 topics: maintenance management and equipment, financial management and accounting, traffic engineering design and application, road and bridge maintenance, soft ground design and construction, expressway data base, post-evaluation of expressway projects. Altogether, the training comprised 140 trainee man-months. The above training played an important role in upgrading the technical and management level of the staff concerned. 13. The 3 studies were successfully completed. The topics concerning "raising funds" and "local bitumen" were both covered by the Highway Scientific Research Institute of MOC. Their achievements have benefited the macroeconomic policy decision-making of the Chinese government and have encouraged the use of local bitumen in high-class highway pavements. The study on "expressway organization and management", carried out by BTT Expressway United Corporation, has amply demonstrated the need for a well though out expressway management system. 14. The data base was developed specifically to serve the needs of the BTT Expressway. The software development was accomplished by the Highway Scientific  - 59 - ANNEX2 Research Institute of MOC from June 1992 to June 1993. The hardware allocation was completed in August 1993 and was ready for use in November 1993. V. OPERATIONAL EXPERIENCE 15. The operational experience with the various items provided under the World Bank loan for the BTT Expressway is predominantly good. 16. Since the BTT Expressway was opened to traffic its mean annual increase of traffic volume has been 26.4%. The average traffic volume for 1995 was 10,168 vehicles per day, distributed as follows: Dayangfang-Majuqiao 16,129 per day, Majuqiao- Langfang 15,843 per day, Langfang-Yangcun 12,575 per day, Yangcun-Tianjin 6,751 per day, Tianjin-Tanggu 3,900 per day. The traffic volume in the section Dayangfang- Yangcun has already exceeded the forecast level, that for Yangcun-Tianjin has approached the forecast, whereas Tianjin-Tanggu is well below the forecast level. However, the economic development in the Beijing-Tianjin-Tanggu region and the construction of economic development zones along the Expressway strongly indicate that the operational benefit of the Project will be attained. To this end it is realized that guiding and restrictive measures should be taken to divert more traffic to the Tianjin- Tanggu expressway section, to reach the corresponding design target. 17. The traffic monitoring, telecommunication and tolling systems have ensure the toll income of the whole Expressway. Furthermore, the timely collection and processing of traffic data enable modem and effective operation management of the expressway. 18. The physical conditions of the BTT Expressway is good and no adverse harmful signs appeared since it was put into service. Therefore, the BTT Expressway have been awarded the following honorable titles: "One of the greatest Ten Highway Projects since reform and opening up" by MOC in 1993, the "Special Prize of the National Best Engineering Design with favorable impact at home and abroad since reform and opening up" by the Ministry of Construction in 1994, the "First Prize of High-quality Highway Project" by MOC in 1995, and, finally, the "LUBAN Prize of Civic Engineering of China (national high-quality project in 1996). The latter is the highest quality prize in China's civil engineering industry, and the BTT Expressway is so far the only completed expressway project that has won this outstanding honor. In addition, an important achievement of a scientific research study: "Complete Sets of Technologies for BTT Expressway Construction" won the Special-class Prize for Scientific and Technologic Progress of MOC in 1996. 19. All the newly purchased maintenance equipment have already been put into operation for maintenance and emergency rescue operations. The said equipment play an important role in ensuring traffic safety, fast re-opening of the expressway following accidents and in providing good operational conditions.  - 60 - ANNEX2 20. In addition to the BTT Expressway, the achievements of the 3 studies have been put into effect in Hainan Province as well as the Shenyang-Dalian, Shanghai-Nanjing and Jinan-Qingdao expressway projects, with good results. 21. The successful implementation of the supervision and the foreign consultant services contract have played a great role in promoting the supervision system in China and in introducing the FIDIC Conditions for project administration in construction contracts. It has also provided the BTT Expressway United Corporation with a high quality expressway, effectively reducing future maintenance cost. 22. The development and application of the data base of the BTT Expressway have provided numerous data for effective monitoring of the operation and management system. The data base also gives access to useful information for policy decisions by the management organization. VI. PERFORMANCE OF ENTITIES INVOLVED 23. Design Institute: The main designers of the BTT Expressway are the following 5 units: First Highway Survey and Design Institute of MOC, Second Highway Survey and Design Institute of MOC, Highway Planning and Design Institute of MOC, Highway Scientific Research Institute of MOC, Chongqing Highway Scientific Research Institute of MOC. The said units completed all the tender documents, including the design drawings. They also participated in the review of design variations of major works during the construction period and the completion acceptance of the works. 24. Contractors: The contractors were selected through international competitive bidding. There were 51 Chinese and foreign contractors applying for the civil works tender documents. Through the prequalification exercise 40 individual contractors and joint ventures were permitted to submit bids. Public bid opening was held in Beijing on June 24, 1987. Through evaluation and selection Contract No. I was awarded to the Joint Venture of China Road and Bridge Engineering Corporation, First Highway Engineering Corporation of MOC and Nishimatsu Construction Co. Ltd. (Japan); Contract No. 2 was awarded to the Joint Venture of Tianjin 5th and 1st Municipal Engineering Co. And Beugnet Co. (France); Contract No. 3 was awarded to the Joint Venture of Tianjin First Municipal Engineering Co. And Nippon Hodo Co. Ltd. (Japan); Contract No. 4 was awarded to the Joint Venture of First Highway Engineering Corporation of MOC and Kumagai Gumi Co. Ltd. (Japan). Calling bids for Contract No. 5 began on October 2, 1990. Ten contractors and joint ventures joined the competition. Bid opening took place on April 23, 1991. The preferred bidders were: the Joint Venture of SBH Electrical Engineering Co. (Germany) and China International Trust and Investment Corporation won the traffic monitoring system; CANAC Telecommunication Co. (Canada) won the integrated telecommunication system; SAINCO Traffic Control Co. Ltd. (Spain) won the tolling system; and Tianjin Schroeder Illumination Equipments Co. Ltd. (Sino-Belgium joint enterprise) won the lighting system.  - 61- ANNEX2 The main works completed by the contractors during the contract period were: subgrade earthwork 16,627,300 m3, soft ground treatment 49 km, bituminous concrete 2 pavement 3,589,500 m , viaducts 4,913 m/2 units, large bridges 1,022.56 m/2 units, medium and minor bridges 1,794.5 m/44 units, culverts and underpasses 19,242.m/528 units, interchanges 8 units, overpass bridges 27 units, building structures 56,000 m 2/13 locations, 6-core optical cable 150 km, emergency telephones 142 units, telecommunication center 1 location, changeable message sign 8 pcs., changeable speed limit sign 12 pcs., meteorological stations 3 locations, video camera 5 units, control center 1 location, magnetic card toll lane 65 lanes/9 locations, toll center 1 location. During construction all the contractors complied strictly with the terms of the contracts. Work quality, progress and construction cost were effectively controlled. The Project was considered to be of "leading national level and advanced international standard" at the meeting of the State Acceptance Committee. 25. Supervision/Consultants: The supervision and the consultant services of the BTT Expressway, led by Chief Supervision Engineer, Mr. Yang Shengfu, and Chief Resident Engineer, Mr. Tim Waage of Kampsax A/S Denmark, was fruitful. The 3-level supervision organization (Office of Engineer's Representatives-Senior Resident Engineer's Offices-On-site Supervision Teams) consisting of Chinese and foreign supervision engineers, applied strict management control of to construction quality, time limits and costs according to FIDIC conditions and supervision routines. The joint supervision team adopted creative site control procedures, carried out spot checks, introduced test frequency control and test data statistics for materials and completed works. In summary, more than 80 management processes were defined and over 260 diagrams for supervision work were produced. In addition, an experience report of 1.1 million Chinese characters was compiled, which has been received with acclaim by the Chinese supervision community. The consultants' staff sent to BTT Expressway by Kampsax totaled 9 persons and 248 man-months. The foreign engineers' high sense of duty and serious working attitude set a fine example for the supervision work of the BTT Expressway. The signing power delegated to the foreign consultants effectively upgraded the quality control capability of the supervision management and ensured strict compliance with contract stipulations. 26. Lessons Learned: (a) To select qualified contractors strictly according to International Competitive Bidding procedures gives a strong assurance for satisfactory works quality at a reasonable construction price. (b) To execute the supervision system strictly, to give full play to the consultants' experts, to uphold the authority of the supervision engineers to allow them to enforce justly and independently the contract conditions, are the keys to ensure the construction quality.  - 62 - ANNEX2 (c) To prepare bid/contract documents methodically and rigorously is important to ensure smooth project execution. (d) To actively coordinate the Bank's missions and heed the advice given will expedite project execution. (el The preparation of purchase work shall speed up and bring forward. VII. PERFORMANCE OF EXECUTING AGENCIES 27. Preparation of Project: In 1978 the Ministry of Communications began the preparation work for the construction of the Beijing-Tianjin Expressway on the basis of original investigations for Beijing-Tianjin-Tanggu Highway. In 1982, the first "Feasibility Study Report on Construction of Beijing-Tanggu Highway" was accomplished. In 1984 the State Council gave approval to list this project as one of the World Bank's loan candidates for 1985-1987. The Bank project identification mission for the BTT Expressway took place in May 1984. The second "Feasibility Study Report on Construction of BTT Expressway" was issued in September 1984, taking account of the Chinese government's requirement that the BTT Expressway should be a toll road as well as the Bank's comments regarding supplementary economical and financial analyses. The preliminary design documents were completed in November 1984, and the "Design Instruction for the BTT Expressway" was submitted to the State Council. The Bank carried out the preappraisal in March 1986 and the formal appraisal in October 1986. At the end of the same year, the preparation of the bidding document was completed. In March 1987 the loan negotiation for the BTT Expressway was held in Washington, D.C., USA. The loan agreement was signed by the Chinese government and the Bank on September 14, 1987 and came into force on December 13, 1987. 28. Implementation of Project: According to the instruction of the State Council, Beijing Municipality, Tianjin Municipality and Hebei Province organized the Beijing Company, Tianjin Company and Hebei Company of BTT Expressway as the employers of the Project, to be responsible for the construction and management of the corresponding sections of the expressway. In April 1987 the 3 companies formed the BTT Expressway United Corporation to act as a general representative of the Project, to be responsible for coordinating and treating matters not suitable for any regional company alone, including receiving the World Bank's project missions. The three regional companies would be responsible for the management of civil engineering contracts, land acquisition and resettlement as well as financial management. The United Corporation would be responsible for the unified construction and management of Contract No. 5 as well as the coordination and implementation of the subprojects under the loan agreement, such as equipment purchase, studies, staff training, data base development, etc. The date of closing of the account for the project loan has been extended three times. The final date is December 31, 1995.  - 63 - ANNEX2 29. Lessons Learned: (a) The system of employer's responsibility carried out on the BTT Expressway was effective and exact. From the beginning of the construction to current operation management, the United Corporation has constantly followed up and taken charge of the project so that unnecessary waste of time and efforts has been greatly reduced. (b) The independent supervision system was effectively promoted and willingly respected by the employers. An expressway of high quality was thereby obtained. (c) The implementation and arrangement of the project must be well coordinated. The acquisition of electronic, electrical and mechanical facilities as well as maintenance equipment should not be disjointed with the construction of the civil works. (d) The contents of studies and staff training should be closely coordinated with the needs of the project, should serve the project and be subordinate to the project. (e) preparations for the setting-up of the operation management should be made early in the project, and funds should be allocated in the loan to cover expenses during the initial stages of management operations. VIII. PERFORMANCE OF THE BANK 30. Preparation of Project: As far back as 1980, during the preparation of the first report about the economic development in China, the Bank held preliminary discussions about the highway industry with the Chinese government. In June 1983, when the World Bank affirmed the first batch of loans for China's highway sector, the BTT Expressway Project was included. Further discussions about this project, which commenced in 1984, led to the formal appraisal report of April 17, 1987 (December 12, 1986). This report identified the project objectives and features, financing plan, project benefits and outlined a project implementation plan. 31. Implementation of Project: During the implementation of the project the Bank worked in close cooperation with the executing agencies. In addition to keeping in touch with the project through the regular progress reports, the Bank sent missions, twice a year in average, to inspect the construction site and to assist the executing agencies in resolving problems in the implementation, so as to ensure that the project would be smoothly implemented. The aide memoires, which were prepared at the conclusion of ever mission, recorded the work of the Bank in a clear and concise way. 32. Relationship with Executing Agencies: The cooperation between the Bank and the BTT Expressway United Corporation, as well as the 3 regional companies, have been  - 64 - ANNEX2 good and cheerful. The Bank officials were understanding and gave full support to circumvent restraints caused by the particular situation in China. Their missions greatly facilitated the implementation of the project. 33. Lessons Learned: (a) It must be fully understood that both the Bank and the executing agencies are working towards the same goal. The cooperation between the parties must be frank, open and based on mutual understanding and support. (b) The implementation of the project nurtured and tempered a batch of qualified Chinese professional personnel familiar with the international practice of construction, management and supervision of large highway projects. (c) Since the construction period of this type of project is always quite long, it would reduce the potential for misunderstandings in the course of the implementation if the Bank's project officials could be retained throughout. IX. OPERATIONAL PLAN 34. (a) To make full use of the facilities put into the Project during the construction period, build a modern management system, continue to apply the principle of "unified construction, unified management, unified tolling, unified repayment". (b) To work out a series of manuals, systems and regulations for future operation management, make full use of the data base of the BTT Expressway, accumulate and unceasingly collect data and information concerning highway operation, provide a scientific approach to the operation management. (c) To give priority to the work of diverting more traffic to the Tianjin- Tanggu section. (d) To provide a high-speed, simple and safe mode of transportation for the development zones along the expressway to promote social benefits and at the same time increase the toll income of the expressway, so as to make the operation of the BTT Expressway even better. 35. It has been decided through consultation that the United Corporation will submit to the Bank an operation report annually and a post-evaluation of the economic benefits every 3 years.  - 65 - ANNEX3 ANNEX 3: SUPERVISION/ICR MISSION'S AIDE MEMOIRE 1. This Aide Memoire records the major points of discussions and understandings reached among representatives of the Ministry of Communications (MOC) (Mr. Ren Jinxiong), the Beijing-Tianjin-Tanggu Expressway United Corporation (BTTEUC) (Messrs. Tian Ning Shou and Dong Ping Ru) and the World Bank (Messrs. 0. Raggambi and Huang Bang Ben) regarding the implementation of the Beijing-Tianjin-Tanggu Expressway Project on July 1 and 14, 1995. BTT Expressway Activities during 1995 2. Following the understanding reached during the November 1994 Bank supervision mission's visit regarding the implementation of the still outstanding works during 1995, the Bank agreed to a further one-year extension of the loan/credit closing date to December 31, 1995. 3. The activities identified in November 1994 for execution in 1995 included the commissioning of the E&M works covering telecommunication, traffic monitoring and toll operation systems and the delivery of maintenance equipment procured during 1994. All other works under the project had been completed. 4. Regarding the E&M works, the commissioning has been completed, the works have been accepted, and the maintenance periods have commenced. Some pavements are still outstanding on the telecommunication and traffic monitoring contracts. Maintenance equipment, except two items, has been delivered. Resettlement 5. A Bank Resettlement Mission (RM) visited the project site in November/ December 1994 and had discussions with representatives of BTTEUC and local governments regarding the execution of the resettlement actions. The RM concluded that some of the adversely effected people may have initially experienced difficulties in restoring their standards of living. However, there is a consensus that the project brought considerable benefits to the people because of the major investments, which have taken place in the project area, have created job opportunities. 6. RM also noted that the proper drainage of underpasses is still a problem. BTTEUC informed the mission that it had been well aware of this, and has been taking  -66 - ANNEX3 measures to alleviate the inconvenience caused through providing pumps and maintenance crews to remove the water. Disbursements 7. The expected final amount of disbursement of the Credit (Credit 1792-CHA) according to categories is: Category (1) Civil Works SDR 83,638,000 Category (2) Equipment-Part A SDR 6,366,000 Category (3) Equipment-Others SDR 4,293,800 Category (4) Consultant/Training SDR 4,602,200 Total SDR 98,900,000 8. The expected final amount of disbursement of the Loan (Loan 2811 -CHA) according to categories is: Category (1) Civil Works $ 17,139,800 Category (2) Equipment-Part A $4,424,400 Category (3) Equipment-Others $3,435,800 Category (4) Consultant/Training 0 Total $25,000,000 Preparation of an Implementation Completion Report (ICR) 9. The Bank, in its letter dated June 6, 1995, informed BTTEUC about the scope of and procedures for the preparation of an ICR for the Project. Regarding the economic reevaluation for the BTT Expressway, request for the submission of relevant data was also attached to the Bank's letter. During the course of discussions the following key points were covered: 10. Economic Evaluation-BTT Expressway (a) BTTEUC, if considered necessary, will make direct contact with Mr. Han- Kang Yen, Research Analyst, Transport Division for clarification of some aspects of the data, requested by the Bank; (b) a traffic flow diagram along the full length of the highway indicating the volume of through and turning traffic at interchanges will be provided; (c) in addition to routine maintenance cost, costs associated with elimination of defects, further protection or improvement cost will be provided in sufficient detail on a year-to-year basis; and (d) all relevant information will be submitted to the Bank by August 31, 1995.  - 67 - ANNEX3 11. BTTEUC's Report. It was agreed that BTTEUC's implementation report(s), covering all project components (expressway civil and E&M works, supervision, equipment procurement, staff training, three studies, RDB/PMS development) will be submitted to the Bank by November 30, 1995. It was further agreed that the reports, in addition to providing factual information and data, would also cover the qualitative aspects of the activities. Regarding civil works, all major deviations from original plans and major variation orders will be reported and discussed with sufficient explanation for the changes. 12. Draft CIR Report by Bank Staff. Based on the report(s) and information provided by BTTEUC, and records available in the Bank, Bank staff will prepare a draft CIR report, which is expected to be sent to MOC and BTTEUC for review by the end of January 1996, and BTTEUC's comments on the report are expected to be received in the Bank by the end of February 1996. 13. BTTEUC's Summary Evaluation Report (ER). A summary evaluation report, not exceeding 10 pages will be prepared by BTTEUC by mid-February 1996 and submitted to the Bank, through MOC/MOF by mid-March 1996. The suggested scope and the structure for the summary report are indicated in Annex 1 and Annex 2, respectively. 14. Future Operation Plans and Monitoring. It was agreed that as part of its plan for the future operation of the BTT Expressway, BTTEUC would undertake the following actions: (a) Prepare and thereafter maintain an Administrative Operation Manual for the overall management and the day to day operation of the BTT Expressway. The manual will include (i) a schedule for taking measures for improving the operational efficiency of the expressway, such as enforcing traffic regulations, taking measures for reducing accidents, etc.; (ii) procedural instructions and formats for the regular monitoring of traffic volume, prevailing toll rates, toll revenues, budgets and expenditure statements, maintenance costs, cost of additional investments to improve the efficiency of the highway system, accident records and any other items that have a bearing on the operation of the system; (iii) monitoring land use changes in the highway corridor that could be attributed to the highway; and (iv) provision for the reevaluation of the economic benefits, from the end of 1995 in three-year intervals. (b) The format for the storage and presentation of the information will be determined by BTTEUC within the framework of BTTEUC's administration system. Note: The original of the Aide Memoire, signed by representatives of BTTEUC and the Bank Group, is in the Project File.   MAP SECTION  IBRD 19661R A GofZ80 o~oH E BE BE I G ~ ~ ~ ~ ~ ~~~~~~~EE BEIJING ~~~~~~~~~~~~~~~~~~ ITOO~Mt miHEE 14.0K - ossn Nor~~~~~~~~~~~~~I,O0 ~ ~ ~ ~ ~ ~ ~ ~ TINI , NProose 'INeG .19. Singie toc0k oA,,oys BEI GS HI f HEBE- Po,rirCe bou,,daries BEIJING- TIANJIN- TANGGU EXPRESSWAY cO ~~~~- ~~~~~~~~~ ~~Proposed Projects: Existing: q ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ - Expressway - Primary roads - -Connecting roads Secondary roads ~-Tolligates - o-Double track railways - 1o~~e sin o0Q(o~ so~ Interchanges Single track railways 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~4]-Service areas Canals 72.2 Km ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~ ~~~Highwary administration Rivers headquarters Airports ci ~~~~~ TANGGU ~~~~~~~~0 Maintenaince depotsUrnaes Bus stops 4 78 a Towns and villages 7NJIN --Ioghe' - Bigs- Province boundaries 0 Communication points Terminals (toll plazas) T/A NJ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 10 15 20 s H Shu.ng~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~klmll 0" 0~,,oodo,,, o o ., m ZI. ord =0 MORCH 5997   IMAGING Report No.: 16389 Type: ICR