China - Guanzhong Irrigation Improvement Project

Document of The World Bank Report No: 18966 PROJECT APPRAISAL DOCUMENT FOR A PROPOSED LOAN OF US$80 MILLION EQUIVALENT AND A PROPOSED CREDIT OF SDR 14.7 MILLION (US$20.0 MILLION EQUIVALENT) TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE GUANZHONG IRRIGATION IMPROVEMENT PROJECT APRIL 22, 1999 Rural Development & Natural Resources Sector Unit East Asia and the Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective January 1999) Currency Unit = Renminbi (RMB) Yuan (Y) Y 1.00 = US$ 0.12 US$1.00 = Y 8.3 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASUREMENTS 1 meter (in) = 3.28 feet(ft) 1 kilometer (km) = 0.62 miles I square kilometer = 100 ha I hectare (ha) = 15 mu = 2.47 acres 1 ton (t) = 1,000 kg = 2,205 pounds PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ADP Agricultural Development Project AB Agricultural Bureau CAS Country Assistance Strategy ERR Economic Rate of Return FMS Financial Management System GOC Government of China ID Irrigation District MOF Ministry of Finance MWR Ministry of Water Resources NEPA National Environmental Protection Agency NPV Net Present Value O&M Operation and Maintenance OCC Opportunity Cost of Capital OFD On-Farm Development PFB Provincial Finance Bureau PIP Project Implementation Plan PMO Project Management Office PPC Provincial Planning Commission TA Technical Assistance WCB Water Conservancy Bureau WUA Water User Association Vice President: Jean-Michel Severino, EAP Country Director: Yukon Huang Sector Manager: Geoffrey Fox Task Team Leader: Bert L. Kramer CHINA Guanzhong Irrigation Improvement Project Table of Contents PAGE NO. A. Project Development Objective ....................................................2 1. Project development objective and key performance indicators..........2 B. Strategic Context .......................................................................... 2 1. Sector-related CAS goal supported by the project . .............2 2. Main sector issues and Government strategy ............ .....2 3. Sector issues to be addressed by the project and strategic choices.......3 C. Project Description Summary .................................................4 1. Project components. ........................... .........4 2. Summary of project components and costs ....... ............5 3. Key policy and institutional reforms supported by the project........6 4. Benefits and target population .............6........6 5. Institutional and implementation arrangements ..... ...........6 D. Project Rationale ..................................................................... 9 1. Project alternatives considered and reasons for rejection.................9 2. Major related projects financed by the Bank and/or other development agencies ............................ .....10 3. Lessons learned and reflected in project design .. .................10 4. Indications of borrower commitment and ownership . ............11 5. Value added of Bank support in this project............. ..........Il E. Summary Project Analysis ...................................................... 12 1. Economic analysis ....................................12 2. Financial analysis..............................12 3. Technical .................................... ...... 13 4. Institutional ...........................................16 5. Social ........................................ ..... 17 6. Environmental assessment........................18 7. Participatory approach .................................18 PAGE NO. F. Sustainability and Risks............................................................ 19 1. Sustainability................................19 2. Critical risks.......................................19 3. Possible controversial aspects............................19 G. M ain Loan Conditions .............................................................. 20 1. Effectiveness conditions...............................20 2. Other conditions...............................20 H. Readiness for Implementation .......................................................21 I. Compliance with Bank Policies..................................................... 21 ANNEXES Annex 1. Project Design Summary ...............................22 Annex 2. Project Description ...................................24 Annex 3. Estimated Project Costs................................31 Annex 4. Economic and Financial Analysis.....................34 Annex 5. Financing Plan...............................58 Annex 6. Procurement and Disbursement Arrangements ................59 Annex 7. Land Acquisition and Resettlement...........................66 Annex 8. Project Processing Budget and Schedule..........................73 Annex 9. Documents in Project File..............................74 Annex 10. Statement of Loans and Credits .......... ................75 Annex 1l. Country at aGlance ............................79 MAPS IBRD No. 29961 - Project Location Map CHINA Guanzhong Irrigation Improvement Project Project Appraisal Document East Asia and Pacific Region Rural Development and Natural Resources Sector Unit Date: April 5, 1999 Task Team Leader/Task Manager: Bert L. Kramer Country Director: Yukon Huang Sector Manager: Geoffrey B. Fox Project ID: CN-PE-51888 Sector: Agriculture Program Objective Category: Environmentally Sustainable Development (EN) Lending Instrument: Specific Investment Loan Program of Targeted Intervention: [ ] Yes [X ] No Project Financing Data [X] Loan [X] Credit [] Guarantee [] Other For Loans/Credits/Others: Amount (US$m/SDRm): IBRD Loan of US$80 Million and IDA Credit of SDR14.7 Million equivalent Proposed terms: [] Multi-currency [X] Single currency: US$ Grace period (years): 5 Loan/10 Credit. [] Standard Variable [] Fixed [X] LIBOR- based Years to maturity: 20 Loan/35 Credit. Commitment fee: 0.75%Loan/0.50%Credit Service charge: 0.0%Loan/0.75%Credit. Front-end fee: 1.00% of Loan Financing plan (US$m): Source Local Foreign Total Government 73 - 73 Co-financiers - - - IBRD 80 80 IDA - 20 20 Beneficiaries 27 - 27 Total 100 100 200 Borrower: People's Republic of China Responsible agency: Water Conservancy Bureau of Shaanxi Province Estimated disbursements (Bank FY/US$M): 2000 2001 2002 2003 2004 2005 Annual 16.2 19.8 19.5 17.5 18.2 8.8 Cumulative 36.0 55.5 73.0 91.2 100.0 [ ] Partial credit [] Partial risk Project implementation period: 1999 - 2004 Expected effectiveness date: September 1, 1999 Expected closing date: June 30, 2005 OSD PAD Form: July 30, 1997 Page 2 A: Project Development Objective 1. Project development objective and key performance indicators (see Annex 1) The project will improve the performance of existing irrigation systems in the Guanzhong Plain of Shaanxi Province and thereby raise agricultural production, in particular of grains, and farm incomes. It will support reforms of Shaanxi's irrigation sector that are aimed at strengthening the organizational, technical and financial aspects of Irrigation Districts and at transferring water management below the branch canals to the farming communities. Key performance indicators are: (i) additional areas receiving full irrigation; (ii) adequate level and collection rate of water charges; (iii) increased agricultural production; (iv) higher net incomes of project beneficiaries; and (v) improved water use efficiencies. B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1) CAS document #: 16321-CHA, March, 1997. Date of latest CAS discussion: March 18, 1997. CAS Progress Report #: R98-107 ofMay 6, 1998 discussed May 28, 1998. The project will support Government's strategies endorsed in the CAS to: (i) intensify irrigated agricultural production; (ii) reform irrigation management, including the transfer of management responsibilities to beneficiaries; (iii) strengthen physical and financial sustainability of irrigation systems; (iv) improve cost recovery; (v) develop available water resources and improve water use efficiencies; (vi) incorporate in projects water storage, water transfer, irrigation and drainage improvements and flood control measures; (vi) focus on the reconstruction of essential infrastructure; (vii) improve rural employment and incomes; and (viii) alleviate poverty. 2. Main sector issues and Government strategy 2.1 China faces a major challenge to feed its vast and growing population. Population growth, and higher per capita use as a result of higher incomes, will increase annual grain consumption from 480 million ton at present to 700 million ton by 2020. The Ninth Five Year Plan (1996-2001), aims to increase China's grain production to 500 million tons, along with substantial gains in cotton and oilseeds. 2.2 With 22 percent of the world's population and only 7 percent of the arable land, China has to make up for the loss of land to cities and industries by more intensive use of farm land. About one- half of China's 100 million ha of cultivated land is currently irrigated. The productivity of irrigated land averages twice that of rainfed land and is less subject to losses caused by drought. Since 1949, the area under irrigation has grown from 20 to 50 million hectares, and irrigated land now produces 70 percent of the total grain output and about 80 percent of fruit and vegetables. Almost all of the future increases in grain production will have to come from irrigated lands. In some areas, flood control, drainage and salinity control offer prospects for higher agricultural production; so far, drainage works have reclaimed 4.8 million hectares of saline land and eliminated waterlogging on 19 million hectares. Page 3 2.3 To enable further growth in agricultural production and to satisfy the anticipated growth in municipal and industrial demand, it is estimated that China's available water resources would need to increase to 670 billion m' by 2010 if existing water use requirements are maintained. It is estimated that only about one half of this increased demand can be met through additional development of water resources, the remainder will need to be met through water savings or demand management. In recognition of these problems the Governments of China and of Shaanxi have concluded that major water use efficiency gains are essential to meet and counteract the growing demand and water scarcity. 2.4 The key issues for sustainability in the irrigation sub-sector are how to: (a) pay for irrigation and drainage improvement investments and operation and maintenance (O&M); (b) achieve more efficient management of the irrigation systems; (c) increase local participation and "ownership" of irrigation; and (d) design, implement, operate and maintain irrigation projects to higher technical, institutional and financial standards. In addition to improvement of irrigation facilities and gains in agriculture production, there is a need for irrigation management reforms to satisfy the above agenda. The project provides an opportunity to support much-needed reform programs in management and operation and maintenance through turnover of O&M responsibilities and improved physical and financial sustainability. The need for such reforms is strongly supported by China's Ministry of Water Resources (MWR) as reflected in ongoing water resources sector work carried out with support from ADB, World Bank and other donors. 3. Sector issues to be addressed by the project and strategic choices 3.1 Issues and strategies The expansion of China's irrigation systems has produced major gains in crop production and farm incomes, but expenditures on new infrastructure has strained the resources available from the central government and the provinces for the upgrading of older infrastructure works. Also at the local level (cities, counties and townships) collection of water charges from the farmers falls often short of the funds needed for operation and maintenance (O&M). Financial and organizational aspects related to water charges, aimed at increased economic and financial efficiency and overall sustainability of irrigation investments and institutions, require strengthening. Greater direct participation of water users in the management of irrigation systems is needed to achieve this. 3.2 Upgrading existing systems The situation in the project areas is typical of the problems and opportunities of China's irrigation sector. The dams, weirs, canals and pumping stations, mostly older than 25 years and some dating back to the 1930s, are in need of repair and/or replacement. But revenues from water sales are too low to cover the cost of repairs or replacements. Water use is lower than it should be because of problems in the main systems and distortions in water management at the farm level and the collection of water charges. This limits the Irrigation Districts' earning power and their ability to finance improvements. The project will rehabilitate and upgrade existing irrigation systems mainly through investments in technical improvements of storage facilities, diversion headworks, pumping stations and main and minor irrigation and drainage networks, on-farm development works, and institutional support and development. With good quality agricultural support services already in place, the project will maximize the benefits from irrigation and drainage investments and will utilize better the limited land resources available for agriculture. 3.3 Irrigation management reform A major problem faced by almost all irrigation and Page 4 drainage systems in China is inadequate O&M, which is due primarily to insufficient government budget support, low water charges, inefficient collection and inadequate participation from the irrigation water users. This has resulted in a vicious cycle of new investment, system deterioration, and then rehabilitation of irrigation and drainage systems. The project would address these problems by providing support for: (i) measures to strengthen the sustainability of irrigation and drainage O&M and irrigated agriculture; (ii) reforms to make irrigation management more efficient and responsive to users; (iii) increased participation of entrepreneurs and farmers in operation and maintenance practices and decision making; and (iv) improved irrigation system performance. The above measures would lead to effective decentralization of irrigation services, and better cost recovery. A recent government policy is to encourage the provinces to reform the way irrigation systems are managed, which will be supported under the project. 3.4 Water charges There are several weaknesses in the present arrangements for charging for water. First, water charges at the farm level are often combined with levies of the local governments and, therefore, the price for a unit of water is set at a level needed to meet tax targets. Thus, the cost of water to the farmer appears to be much higher than if he had to pay a single water fee. Second, only a small part of the funds collected are used for improvement or repair of the irrigation works. Third, the Irrigation Districts that supply the water have difficulty in obtaining their portion of the funds collected; this lowers their capacity and incentive to deliver a reliable supply. Finally, the high charges and low reliability combine to discourage the farmers from irrigating their land, which in turn further reduces the revenue of the Irrigation Districts. The project will address the financial and organizational aspects related to water charges aimed at increased economic efficiency and overall sustainability of irrigation investments and to eventually expand the new concepts to other areas in Shaanxi. C: Project Description Summary 1. Project components and cost (project description see Annex 2; project cost see Annex 3) 1.1 Project description The Guanzhong Plain in the Wei River Valley, in which the nine Irrigation Districts under the project are located, is Shaanxi's main production base for grain, cotton and oilseeds. It relies on irrigated agriculture to achieve high, sustainable yields. Although the nine irrigation areas are already equipped with irrigation and drainage systems, land development and agricultural services, a significant part of the areas needs improvement and some tracts of land remain to be adequately developed. Most of the existing irrigation and drainage systems, including water storage and diversion infrastructure facilities, are several decades old, have suffered from poor design and construction standards and inadequate operation and maintenance (O&M) due to lack of resources, and are now in need of rehabilitation. Consequently, the performance of these systems has gradually deteriorated. In addition, for some of the systems the secondary and minor canal networks and on-farm development works were never fully completed, and in some cases never built at all. Relatively modest investments in the improvement and completion of these systems can yield high returns. Critical needs include: (a) irrigation and drainage infrastructure rehabilitation and completion; (b) use of both ground and surface water; (c) on-farm development works improvement and expansion; (d) institutional strengthening and irrigation management reform; (e) increased farmers participation in O&M; and (f) introducing realistic water pricing. The project would support investments and address institutional constraints in these critical areas. Page 5 1.2 The project would improve existing physical infrastructure and management procedures for water delivery to end users at the lateral level and below in nine project areas', which provide irrigation to about 524,000 ha in the Guanzhong Plain in the Wei River Valley of Shaanxi Province. The project seeks to: * Raise existing diversion weirs to increase storage capacity, and repair and strengthen existing storage facilities, and construct water transfer tunnel (component 1); * Upgrade 600 km of main and branch canals, extend 200 km of drainage systems, repair or replacement of 25 major structures, rehabilitate 50 pumping stations and install new pumps, motors, auxiliary equipment, and transmission lines (component 2); * Upgrade existing minor canals, drains and on-farm development works on 180,000 ha of partially irrigated land and expand or construct new systems on 50,000 ha of land that is not presently irrigated (component 3); * Reform irrigation management at main and minor system level, improve access roads and O&M buildings, and install monitoring and communications equipment (component 4). 2. Summary ofproject components and costs Component Category Cost Incl. % of Bank- % of Contingencies Total disbursements Bank- (US$M) (US$M) financing 1. Improvement and expansion physical 48.5 24.3 32.4 67 of water source 2. Improvement of major physical 69.8 34.9 47.9 69 distribution system 3. Improvement and expansion physical 39.2 19.6 11.8 30 of minor distribution system 4. Improvement of O&M management 5.2 2.6 4.3 83 policy institutional 5. Training, study tours and institutional 1.8 0.9 1.8 100 technical assistance 6. Project management management 4.0 2.0 1.0 25 7. Survey, design and management 4.4 2.2 - - supervision physical 8. Land acquisition and physical 4.8 2.4 - - resettlement management 9. Front-end fee (1% of IBRD financial 0.8 0.4 0.8 100 Loan) TOTAL INVESTMENT COST 178.6 89.3 100.0 56 10. Interest during construction financial 21.4 10.7 - - TOTAL COST 200.0 100.0 100.0 50 The nine subprojects and their originally designed irrigation areas are: Baojixia - 194,810 ha; Jinghuiqu - 89,360 ha, Jiaokou - 79,820 ha; Taoqupo -21,220 ha; Shitouhe - 24,670 ha; Fengjiashan - 90,910 ha; Yangmaowan 21,330 ha; Luohuiqu 49,550 ha; and Shibuchuan 20,670 ha. Total 592,340 ha. Page 6 3. Key policy and institutional reforms supported by the project 3.1 The project will support Shaanxi's efforts to: (i) ensure more rational and efficient use of limited land and water resources in the Guanzhong Plain; (ii) modernize existing infrastructure, in particular pumping plant and canals through lining; (iii) organize efficient water user participation in operation and maintenance of the irrigation and drainage systems below the branch canal outlets; (iv) ensure physical and financial sustainability of irrigation; (v) improve cost recovery; and (vi) protect and improve the quality of the environment. 4. Benefits and target population 4.1 The project will aim to: (a) increase grain production to 4.4 million tons per year, which is about 20% above the average production during 1991-96; (b) increase employment opportunities through the expansion of the irrigated area by about 50,000 ha; (c) increase incomes for farmers in the project areas; (d) increase the cultivation of cash crops with higher net returns; (e) introduce better irrigation methods leading to improved and more efficient water use; (f) support irrigation management reforms, aimed to improve the organizational, financial and technical sustainability of operation and maintenance; and (g) delegate responsibilities for operation and maintenance below the branch canal outlets to water-users and others. 4.2 Shaanxi has a population of about 34 million people, of which 80% is directly or indirectly involved in agriculture. The total population in the nine irrigation areas to be improved under the project amounts to about 6.8 million, of which 5.5 million are associated with the agricultural sector. Major cities, such as Xian, Yangling, Weinan and Tongchuan are located within the nine Irrigation Districts and depend on them for the supply of grains, vegetables, cooking oil and other crops. The current average net income per capita for the project area ranges from about Yuan 500 to Yuan 665 per annum ($62 to $83, assuming an average farm size of 1 mu). 5. Institutional and implementation arrangements 5.1 Project Leading Group Project implementation will be guided and monitored by a Project Leading Group (PLG) chaired by Shaanxi's Vice Governor for Agriculture and comprised of the directors of the Water Conservancy Bureau, Planning Commission, Finance Bureau, Land Administration Bureau, and the Agricultural Development Office. Project Management Offices (PMOs) have been set up at the provincial level within the Water Conservancy Bureau and in each of the Irrigation District offices. 5.2 Provincial Project Management Office The Provincial Project Management Office (PPMO) have been set up as a separate office of the Provincial Water Conservancy Bureau (PWCB). The staff will total about 20. The PMO Director and Deputy Director will be seconded from the Water Conservancy Bureau. They will be at the level of deputy director and chief engineer, and charged with the daily operation of the PMO. Three divisions will be established: Engineering, Planning and Finance and General Services. The duties of the PPMO will be to: (i) serve as a link between the Bank, the Provincial Finance Bureau, the WCB and the IDs; (ii) review and approve the preparation of ICB tenders for civil works and goods, NCB bids for civil works with values in excess of US$0.6 million, and bid evaluation and award recommendations put forward by the WCB; (iii) process requests for disbursement from the IDs, including verification and consolidation and preparation and submission of withdrawal applications to the World Bank Division (WBD) in the Provincial Finance Bureau; (iv) receive Bank/IDA funds disbursed from the Page 7 Special Account and pass them on to the IDs, (for the four City owned IDs this will be via the City Finance Bureaus); (v) manage receipt and disbursement of the Province's and local Government's counterpart contributions and maintain a Counterpart Fund Account; (vi) carry out field inspections to verify payment claims, physical progress and quality of work; (vii) prepare financial statements and physical and financial progress reports, including procurement; and (viii) periodically update project cost estimates. 5.3 Provincial Water Conservancy Bureau The provincial Water Conservancy Bureau (PWCB) will have overall responsibility for the technical execution of the project. The PWCB, through its Project Management Office, will: (a) manage the design and construction of major works such as new dams and the raising of existing dams carried out under ICB contracts and NCB contracts estimated to cost in excess of US$0.6 million; and (b) manage, with assistance from a National Tendering Corporation, the procurement under ICB of civil works, pumps, motors and other equipment. The PPMO will be the "Employer" for such contracts. Also, the PPMO will review and approve all NCB contracts processed by the nine Irrigation Districts (IDs). 5.4. Irrigation District Project Management Office An Irrigation District Project Management Office (IDPMO) will be established in each Irrigation District and assigned the following duties: (i) review and approve the preparation of NCB bid documents and the bid evaluation and award recommendations put forward by the Irrigation District for those contracts to cost US$0.6 million or less; (ii) receive, review, approve and pass on to the PPMO periodic requests for disbursement against contractor payment certificates and unit price applications for minor works, including land leveling programs; (iii) make payments to contractors; (iv) carry out physical spot checks of minor works and land leveling works to verify disbursement applications; (v) prepare financial statements and reports on physical and financial progress; and (vi) periodically update cost estimates. 5.5 Irrigation District Each Irrigation District (ID) will: (i) manage the design and construction of the major distribution system improvement works and refurbishing of the pumping stations; (ii) process NCB contracts; (iii) install the pump station equipment referred to above; and (iv) provide technical assistance and supervision of the design and construction of minor irrigation, drainage and land leveling works below the branch canals carried out by Cities, Counties, Townships and beneficiaries. 5.6 The City and County Water Conservancy Bureaus will be responsible for organizing and executing design and implementation of minor irrigation works, with technical guidance from IDs. They also will be responsible for planning, design and implementation of on-farm development programs, including farm ditches and land leveling. IDPMOs will provide technical and financial guidance to the WCBs of the Cities and Counties and oversee the implementation of the minor irrigation, drainage and on-farm development works. 5.7 Financing arrangements The estimated project cost is US$200 million (Yuan 1660 million). An IBRD Loan of US$80 million and an IDA Credit of SDR 14.7 million (US$20 million equivalent) will finance 50% of the project cost. About US$100 million (Yuan 830 million) will be financed by provincial, local governments and beneficiaries (Annex 5: Financing Plan). Repayment of the Bank Loan and IDA Credit will be the responsibility of the Government of China, who will recover from the Shaanxi Government. In turn the Shaanxi Government will recover from local governments and project beneficiaries. The terms of on-lending the IBRD Loan and IDA have been Page 8 agreed between the Central Government and the Government of Shaanxi. The Ministry of Finance (MOF) will on-lend the IBRD Loan of US$80 million to Shaanxi's Finance Bureau on terms and conditions as received from the Bank: 20 year repayment and a 5 year grace period, Bank charged interest rate, a 1% front-end fee and a 0.75% commitment fee. MOF will on-lend Shaanxi the IDA Credit of US$20 million equivalent on the same terms and conditions as received from IDA, with the exception that the grace period will be reduced to 5 years and the repayment period to 17 years. 5.8 Foreign exchange risks will be borne by Shaanxi. Commitments from the provincial and local governments to provide adequate and timely counterpart funding have been provided. The PPMO will submit to the Bank by December 1 of each year, the annual work program for each Irrigation District, financial plans and budgets for the following year's implementation plans. The submission will include evidence that the Provincial and Local Governments will provide adequate and timely counterpart funding. 5.9 Financial management Procedures for management of Bank funds will be improved in accordance with OD 10.02. Because of past Bank Group supported projects the Provincial Finance Bureau staff are familiar with past financial management requirements of the Ministry of Finance (MOF) and the Bank. Most project expenditures will be made through ICB/NCB contracts and will be properly documented. Agreed unit-rates will be used for minor irrigation system works and land leveling procured through force account. This will help to simplify financial management for the project. 5.10 The project's Financial Management System (FMS) aspects (budgeting, accounting, internal control, auditing and reporting), staffing and equipment requirements have been analyzed. Plans, procedures, guidelines and reporting and staffing requirements for an improved FMS to be adopted under the project have been confirmed by all parties concerned. Detailed guidelines for the introduction of the improved FMS are provided in the Borrower's Project Implementation Plan (PIP). They include plans for strengthening financial management capacities of the Provincial Finance Bureau, City Finance Bureaus, the Provincial PMO and IDPMOs, including staff training. 5.11 The Special Account (SA) for the Bank/IDA funds will be kept in the Provincial Finance Bureau (PFB). A World Bank Division (WBD) in the PFB has managed Bank supported projects in the past and its staff is familiar with the processing of withdrawal applications and disbursement of funds. The PPMO will review disbursement requests from the IDPMOs, make changes, if necessary, in consultation with the IDPMO and prepare withdrawal applications. These will be forwarded to the Financial and Accounting Unit of the WBD for review and, if they are found to be correct, withdrawals will be made from the Special Account and the funds will be transferred to the PPMO. The PPMO will then distribute the funds to the finance divisions of the IDs owned by the province. Funds to be disbursed to the City owned IDs will be sent directly to the City Finance Bureaus, but only after the PPMO has signed off on the transfer. The WBD will also process requests from the PPMO for direct payments to suppliers from the Special Account. Financial management and control systems for the project, including tabular formats for financial reporting, have been confirmed. 5.12 Project records and accounts, including the Special Account, for each fiscal year would be audited, and the annual audit report would be submitted to the Bank by each July 1 of the following year. The Shaanxi Provincial Audit Bureau would be retained as the auditor for the project. Page 9 5.13 Monitoring and reporting The PPMO will monitor the project's physical and financial progress and prepare six-monthly progress reports. It will instruct the IDPMO's to monitor and report physical and financial progress in their areas. This will include monitoring of key performance indicators as listed in Annex 1. The PPMO would carry out regular technical inspections in the project areas, of which the major findings will be summarized in the progress reports. These reports are to be submitted to the Bank by August 15 of each year covering the preceding January to June period and by February 15 for the preceding July to December period. A mid-term review will be undertaken by June 1, 2002. Prior to that, not later than March 1, 2002 the PPMO will prepare a mid-term report that will summarize the results of monitoring and evaluation, identify problems encountered during implementation, revise project costs, and discuss measures to complete the project as scheduled. The Borrower's Implementation Completion Report (ICR) for the project will be furnished to the Bank within six months after the Loan Closing Date. 5.14 Periodic monitoring and evaluation (M&E) of the lateral systems turnover and ID management reform efforts will be implemented during the entire project implementation period. The M&E will: (i) consider the lateral turnover program developments within the broader ID management reform program, and provide guidance for changes where this may be beneficial; and (ii) provide guidance and planning advice for continued enhancement and strengthening of the ID management reform process. 5.15 Under the M&E program random evaluation of the management reform program will be carried out. Specialist services will be obtained primarily from an NGO, such as a local university, who will assist with the implementation of the M&E program. The services will be used to assist the PPMO, and would be implemented in close cooperation with the PPMO and/or ID staff. Such assistance is expected to include the organization of periodic seminars to: (i) present and review progress made with the irrigation management reform program; (ii) discuss issues arising and develop solutions or action programs; and (iii) present lessons and experience from similar national and international reform program. D: Project Rationale 1. Project alternatives considered and reasons for rejection 1.1 Inclusion of the project in a possible Adaptable Project Lending (APL) operation for Water Conservation and Rehabilitation of Large Scale Irrigation Projects in China's Northern Plain was considered and discussed with the Government of China. It was rejected because: (i) a free-standing operation in the water resources sector for Shaanxi Province only was preferred; and (ii) Government of China and Shaanxi Province wanted this to be processed as fast as possible. The latter was considered more likely to happen as a free-standing operation than as part of an APL. 1.2 Following the policy directives issued by the State Planning Commission (SPC) in December 1997 Shaanxi Province has taken steps to initiate irrigation management reform programs in the Guanzhong Plain. They are aimed at: (i) management reform of the Irrigation Districts; and (ii) transfer of O&M of the minor irrigation systems (the lateral canal level and below) to individual contractors , water user associations or joint stock cooperative organizations. Consideration was given to the exclusive introduction under the project of one "turnover" model only. However, this approach was rejected in favor of following a more flexible approach which acknowledges variable physical conditions and preferences of farmers. Page 10 1.3 There are no practical alternatives for the improvement of existing infrastructure facilities. The new minor distribution systems could have been excluded, but this would deny many families of irrigation benefits enjoyed by other farmers in adjacent areas. 2. Major related projects financed by the Bank and/or other development agencies: Sector Issue Project Latest Supervision (Form 590) Ratings Implementation Development Progress (IP) Objective (DO) Bank-financed 1. Improvement of irrigation and Northern Irrigation Closed S drainage systems Project 12/31/97 ($72.7 million) S 2. Expansion of irrigation and water Shaanxi Agriculture Closed U supply systems and agriculture Development Project 6/30/97 support. ($106.0 million) U 3. Improvement of irrigation and Irrigated Agriculture HS HS drainage systems and agriculture Intensification Project services improvement ($335.0 million) 4. Improvement of irrigation and Tarim Basin Project Closed HS drainage systems and environmental ($125.0 million) 12/31/97 river management S 5. Improvement of irrigation and Henan Agriculture S S drainage systems and strengthening Development Project agriculture services ($110.0 million) 6. Improvement of irrigation and Hebei Agriculture S S drainage systems and agriculture Development Project services improvement ($149.9 million) 7. Improvement of irrigation and Yangtze Basin Water S S drainage systems, strengthening Resources Project farmer participation in O&M and ($210.0 million) river basin management I_I IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design 3.1 The Bank has supported 16 water resource and irrigation projects in China over the last 17 years serving more than 5 million hectares. Generally, these projects have been implemented efficiently, and time and cost overruns have not been excessive despite periods of sharp price escalation. Likewise rates of return have equaled or exceeded appraisal estimates. The best performing projects have generally been those where Water Conservancy Bureaus at all administrative levels had a leading role in project design, planning, and implementation. Page 11 3.2 Key lessons from previous Bank supported water resources projects are that: (i) detailed organizational and staff arrangements should be formulated and agreed before implementation; (ii) counterpart funding should be committed and secured at all levels of government before implementation, based on an accurate and realistic year-by-year project financing plan; (iii) project design should support the "user pays" principle; (iv) active participation of beneficiaries from the initial project formulation stages into the operation and maintenance stage would increase effectiveness of project implementation and performance; (v) irrigation, drainage and flood protection investments should include adequate cost recovery levels from beneficiaries; (vi) projects should include institutional development support for the strengthening of provincial and local Water Conservancy Bureaus; (vii) baseline data of key performance indicators should be established for all components before or at appraisal; and (viii) the project launch workshop and/or initial Bank supervision missions should focus first on resolving procurement and disbursement issues. 3.3 The Shaanxi ADP project, which was closed mid-1997, has been rated unsatisfactory. This is due mainly to the delayed completion of the Donglei Lift Irrigation Scheme, caused by organizational, procurement and funding problems. Lessons learned from the design and implementation of the Donglei Scheme have been taken into account for the formulation of this project. Some of these lessons are the need for: (i) compliance with the Bank's procedures for procurement of goods and works; (ii) adequate and timely counterpart funding; (iii) water user participation in O&M of irrigation systems; and (iv) efficient coordination between the various provincial and local government agencies involved in project implementation. 4. Indications of Borrower commitment and ownership 4.1 Good feasibility and other reports in English were prepared by Shaanxi in an efficient and timely manner and adequate arrangements have been put in place for project preparation and implementation. Generally, Shaanxi has been cooperative and responsive in providing data and information needed for efficient and timely processing of the project. 4.2 The Government of Shaanxi has taken steps towards irrigation management reform, including the transfer of O&M responsibilities of minor systems to water users. There is strong general support for the project from provincial leadership and strong commitment to proceed with essential reforms, with or without World Bank support. 4.3 While there have been problems with the implementation of the Donglei Lift Scheme component under Shaanxi ADP, the provincial leaders are determined to avoid these problems under the project. Government of Shaanxi is committed to provide the necessary funds to complete the Donglei component by end 1999. 5. Value added of Bank support in this project 5.1 Shaanxi has a long and successful history with irrigation and drainage development and is committed to improve institutional, technical and financial aspects of water management in the Guanzhong Plain. The project would help to accelerate irrigation management reforms. The Bank, considering its past involvement and experience with large water resources development projects in China, has the expertise to help Shaanxi to: (i) modernize existing infrastructure; (ii) support irrigation management reform, including turning over O&M of minor systems to independent operators and water users; (iii) promote efficient use of limited land and water resources, greater Page 12 crop diversification and increased agricultural production; (iv) protect and improve the environment; and (v) recover operation and maintenance and a reasonable portion of the investment costs through enforcing appropriate levels of water charges. Bank involvement will accelerate the rehabilitation of irrigation systems in the Guanzhong Plain and has convinced PMO/WCB to pay more attention to economical and financial analysis. As a result the proposed Xijao dam was deleted from the project and the water saving technology component scaled down. In addition, Bank involvement made Shaanxi decide to pay closer attention to ensure financial sustainability of the Irrigation Districts, and to the resettlement and environmental aspects under the project. 5.2 Bank involvement will help all levels of Government in Shaanxi to address organizational, technical and financial improvements in the irrigation sector and to take into account the achievements and lessons learnt from the implementation of the Donglei Lift Scheme component under Shaanxi ADP. E: Summary Project Analysis 1. Economic analysis (see Annex 4) [x] Cost-Benefit Analysis: NPV=US$ 117 million (RMB 967 million); ERR= 26%. 1.1. The project will substantially increase the incomes of about 5.5 million rural people, who belong to the poorest in China. Irrigation of the fertile loess soils is beneficial, as it generally doubles the yields of most agricultural crops and secures a stable and reliable income in a farming environment, which is threatened by frequent and severe droughts. The benefits of the project will arise from a combination of institutional and management reforms and investments in infrastructure works. About 330,000 ha will receive more reliable irrigation supplies and about 50,000 ha of currently rainfed land will be irrigated for the first time. The benefits from increased agricultural production in the various IDs have been quantified; the economic rates of return (ERR) range from 15 to 38 percent for the individual IDs with an overall ERR of 26 percent for the project. The ERR in some IDs seems to be relatively high for investment in irrigation development. However, there are significant sunk-costs in all IDs and the benefits arising from the management reform programs require little investment. In addition the reform efforts are catalyzed by improvements of critical physical infrastructure. 1.2 Other important benefits of the project, which have not been quantified, arise from investments in dam rehabilitation and dam safety monitoring, which will reduce the risk of dam failure. Dam failures might cause costly damage in downstream areas and require significant replacement expenditures. The project will also improve surface water use efficiency resulting in less reliance on groundwater. This will provide relief to areas where the current rate of groundwater extraction appears to exceed recharge. The project will therefore contribute to the preservation of a valuable natural resource: groundwater, the main source for cities, towns and industries. 2. Financial analysis (see Annex 4) 2.1 Financial impact on Irrigation Districts (IDs) The management reform at the lateral canal level and below will introduce private sector management principles in distribution and sales of irrigation water. This will lead to a high level of transparency and discipline in all transactions and payments with significant efficiency gains. The combination of management reform and improvement of physical infrastructure will allow each of the nine IDs to sell more water with lower Page 13 overhead costs per unit of water sold. This will generate sufficient income to cover fully the operational costs and to maintain the irrigation system so that performance will not deteriorate. This will result in the IDs becoming financially sustainable and independent from government funding. 2.2 Farm income Typical farms have been selected to model the changes in income resulting from the project. All farm incomes will benefit significantly from the project. In absolute terms annual farm incomes will increase between RMB 1,500 and RMB 4,200. The relative increase in income will be highest for smaller farms. They are projected to triple. Small farmers tend to suffer more from poor irrigation than richer farmers, who often have also access to groundwater. Returns to labor will also increase significantly, again with the largest gain for the smaller farms. 2.3 Cost recovery Investments in major irrigation works would be recovered through the water charges levied. Water costs in the "with project" situation differ from ID to ID and range from 6 Fen to 21 Fen per M . The large cost difference is caused by the amount of pumping required; some IDs have negligible pumping whereas others have to pump most of the water. Loan and interest repayment provisions have been included in the water costs. Their share in the water cost ranges from 1.1 Fen in Fengjiashan ID to 10.9 Fen per m3 in Taoqupo ID. For full cost recovery, including loan and interest repayment, irrigation water can be sold to the lateral operators at prices between 6 Fen in the lowest and 24 Fen per in. This will allow setting water charges for farmers in some cases significantly lower as compared with current payments. Nevertheless, total income for the IDs is estimated to almost triple in the future. 2.4 Farmers and lateral operators would finance about 30% of investment requirements for the minor distribution system from the World Bank. The remaining costs would come from their own contribution mostly by providing their labor. The annual loan and interest repayment costs for individual farms would be less than 10% of the incremental annual income. 3. Technical 3.1 The project components have no unusual technical features. The Province, in particular the Water Conservancy Bureau, the Shaanxi Design and Research Institute (SDRI) and the Irrigation Districts, all have considerable experience in : (i) design and construction of irrigation and drainage works; (ii) preparation of bills of quantities and technical specifications for works and goods; and (iii) in preparation of cost estimates. Investment cost for the project's major works were found to be well prepared and realistic. 3.2 Wei river basin The Wei River is the largest tributary of the Yellow River. It rises in the Wushu Mountains of Gansu Province. The Wei river basin area covers about 63,000 k2, with 34,000 km2 of this in Shaanxi , 23,000 km2 in Gansu and 6,000 km2 in Ning Xia province. The current and future water use from the Wei river basin in Ning Xia Province will be negligible. The maximum irrigable area in Gansu that can be realistically supplied from Wei River & tributaries is estimated at 1.12 million mu (75,000 ha). The currently irrigated area is 880,000 mu (59,000 ha). To supply this area the demand from the Wei River is estimated at around 570 Mm3 per annum, of which 200 Mm' is extracted from groundwater. Other potential development areas in Gansu are small high level valley plateaus, largely dependent on groundwater. As this source is deep, costs for development and utilization are generally prohibitive. It is estimated that the future projected demand in Gansu will not exceed 800 Mm', mainly because additional land suitable for irrigation is scarce. Additionally, irrigation of this land would require heavy investments in storage facilities, Page 14 which also appear to be prohibitive. It is therefore concluded that future development in Gansu will have limited impact on the availability and reliability of water flowing into the Wei river and its tributaries, and through into Shaanxi. 3.3 Water supply and demand The water supply and demand situation for the project area was analyzed with a simplified demand model by the Shaanxi Design and Research Institute (SDRI). They carried out an operations study for each of the nine Irrigation Districts with demands projected through to 2013, assuming that upgraded and new facilities, as currently planned, would be completed. General assumptions used in the model were: * Irrigation water demands are for cropped areas at full development. Other non- agricultural water demands are projected up to year 2013; * Time interval used is ten days and the model is run for an average water year; * The model allows for interconnections between IDs; * Upstream diversions in Gansu are in line with agreed allocations; * Allowance is made for canal closures during high sediment flows; * Groundwater pumping capacity is based on studies of safe yields; * Municipal and industrial demands have priority over irrigation. The study concluded that that the two largest IDs -- Baojixia and Fengjiashan -- will have a surplus of surface water in an average year and there will be no shortages in other IDs. In a below-average water year, cut backs in water deliveries would lead to reduced crop yields in those areas that have no access to groundwater. Increased use of groundwater may impact upon Wei River flows, but this was not taken into account. 3.4 Improvement and expansion of water source The PMO/WCB retained a Dam Safety Review Panel (DSRP) of foreign and national experts in June, 1998. The DSRP undertook the first review of ten existing dams and weirs, the proposed raising of the Linjiacun weir on the Wei river and the proposed Xijao dam on the Qinghe river. No major issues were identified with the planning and design features of the proposed raising of the Linjiacun weir. At the Shibuchuan dam cracks in the downstream face are a source of concern; further investigation is ongoing to determine the exact cause of the cracks and to find a solution. At the Taoqupo dam the slope above the spillway channel has to be flattened to make it stable. Some lesser problems were noted at several of the other dams, and the panel recommended some further investigations in order to define the need for remedial works. The findings and recommendations made by the DSRP have been reviewed and technical and economical assessments were made to determine viability of the remedial works on the dams. DSRP's recommendations have been adopted by Shaanxi and will be implemented under the project. 3.5 Improvement of major distribution systems 3.5.1 Pumping plant The rehabilitation of pumping plant is necessary, appropriate and cost-effective and in line with modern industry technical standards. The condition of the buildings have deteriorated seriously in some cases and are unfit for continued long-term use. Replacement with slightly larger buildings incorporating overhead cranes is both necessary and appropriate in order to comply with modem standards of safety and maintenance practice. The specifications for pumps and motors and associated electrical and mechanical equipment were reviewed in detail. A variety of technical improvements were identified and documented for inclusion in the technical Page 15 specifications. These improvements center mainly on better specifications for pump materials, better enclosure standards for motors and improved dust-proofing and enclosure of electrical panels. Assessments were also made of the design of pump intakes, prevention of pump impeller cavitation and the layout of pump houses. Improved design procedures and methods of calculation ensure that the suction capability of pumps is correctly calculated and specified. The cost estimates for rehabilitation of the pumping plant were found to be realistic for the scopes of work involved. Procurement packaging and implementation schedules were also assessed. 3.5.2 Canal improvement The key factors influencing overall canal conveyance efficiency include: (i) seepage losses; (ii) flow measurement methods and structures; (iii) impact of canal lining and its susceptibility to frost heave; and (iv) sediment management. The assessment findings confirm that WCB's lining designs to replace badly damaged lining and for new lining. are technically viable for use in the project. They have been tested successfully in the project area for two or more seasons. 3.5.3 Drain repair and reshaping The project includes a drainage improvement component in lowland areas of Luohuiqu, Jiaokou, Jinghuiqu and Baojixia IDs, which are located adjacent to the Wei River. The drainage works are required mainly for surface water removal, but also for salinity control and groundwater management. Engineering criteria and cost estimates were found to be appropriate for the project conditions. 3.5.4 Repair & replacement of major structures The critical condition of major structures (inlet works, bifurcations, tunnels, pump stations, aqueducts and siphons), particularly for impact in event of failure, and proposed measures for remedial works have been analyzed. It confirmed the need for improvements to guarantee security of flows to critical downstream command areas, including the low yield land improvement and expansion areas. 3.6 Improvement and expansion of minor distribution system Assessments have been made of: (i) reshaping of existing lateral and sub-lateral canals with repair and/or addition of lining in about 180,000 ha throughout the nine IDs; and (ii) earthworks and lining for new lateral and sub- lateral canals in about 50,000 ha throughout the nine IDs, currently without minor irrigation facilities. These were found to be essential to successful project implementation. The land leveling requirements in the 50,000 ha expansion area were analyzed and found to be realistic. 3.7 Water saving technology The proposed large scale demonstrations of drip and sprinkler installations in Baojixia and Luohuiqu IDs have been analyzed. It was concluded that the investment would not be attractive for the average farmer in the project area. Since significant experience has already been gained with applying on-farm water saving technologies in Shaanxi and elsewhere in China, these and possible new methods will be studied under the project during the first two years of project implementation. Provisions have been included for that purpose. Modest investments in financially viable on-farm technologies could be financed in the later project years, depending on the outcome of the studies. 3.8 Operation and maintenance Farmers in the project area acknowledged the need for improved delivery of irrigation water to their fields. Physical improvements to be carried out throughout the irrigation systems in the nine IDs, including improvements of O&M facilities such as access roads and buildings, will help to improve the situation and are therefore justified. Page 16 3.9 Communication system The technical features of new microwave communication facilities for the nine IDs, cost estimates, procurement packaging and installation arrangements have been assessed. They were found to be acceptable and essential for efficient operation and appropriate for the intended uses. The system is to enhance management and planning procedures for improved water dispatch, control and delivery from headworks to lateral head inlets. 4. Institutional 4.1 Executing agencies The WCB/PPMO will also have overall responsibility for the technical execution of the project. Key management, technical and financial staff have been seconded from the WCB and SDRI to the PPMO. The PPMO will: (i) manage the design and construction of several major works such as new dams and the raising of existing dams carried out under ICB contracts; and (ii) manage, with assistance from a National Tendering Corporation, the procurement under ICB of pumps, motors and other equipment. The PPMO will be the "Employer" for large ICB/NCB contracts, and will also oversee the NCB contracts to be implemented under the direct supervision of the nine Irrigation Districts (IDPMO's). The project's nine Irrigation Districts2, through their PMOs, will be responsible for implementing most of the project activities in their service area. 4.2 Major system management reform Efficient management practices are key aspects for the future successful operation of the improved systems. The reform efforts will address the need for: (i) organizational changes within each Irrigation District; (ii) staffing changes and better defined job descriptions, responsibilities, lines of command and performance incentive programs; (iii) enhancement of financial management, accounting and administrative procedures; (iv) training of staff; and (v) improvement of the O&M rules, regulations and procedures. Plans are already in place for reduction of personnel in each Irrigation District. To accommodate staff reductions, whilst improving and/or expanding the command area, training and study tours will be provided to improve skills. This is expected to improve system management, resulting in more timely and adequate water delivery to fee paying customers. Technical assistance will be provided as needed to assist project management with the reform program. 4.3 Minor system management reform A program of turning over management of minor systems to independent operators is ongoing. Several types of management arrangements have been adopted. In cases where the minor systems are in reasonably good condition, the managers are selected by the farmers. In other cases water user associations are organized. Where the systems require rehabilitation, operators or contractors are selected on a competitive basis taking into account their willingness to invest in improvements. A common feature is that the operators retain a portion of the water sales revenue to pay for operating personnel and system improvement. Water charges are collected directly by the operators and not by the local government. As a result funds are readily available for management and system repairs and the water users see a clear link between the fees they pay and the quality of service. Reports from the field suggest that the reforms are welcomed by the farmers. The project will support and accelerate the turnover program. Technical assistance will be provided to assist project management with the implementation, monitoring and evaluation of the turnover program. 4.4 Project management Project management arrangements are designed to ensure good 2 Fengjiashan, Yangmaowan, Taoqupo and Shibuchuan are owned by the Cities of Baoji, XianYang and Weinan respectively. The remaining five IDs are owned by Shaanxi province. Page 17 coordination between Government Bureaus and Irrigation Districts associated with project implementation and the delivery of high quality design and implementation of the project components. Staff, with experience in managing the implementation of similar projects, has been appointed to the Provincial and IDPMOs. Project management staff will participate in training and study tours under the project, to improve: (i) the knowledge and understanding of resources and assets under their control; (ii) management of technical, financial and administrative tasks; (iii) monitoring and evaluation of project implementation performance; (iv) physical and financial progress reporting; and (v) future O&M of project facilities. 4.5 Technical assistance, training and study tours Project staff will benefit from technical assistance, specific training programs and participation in study tour opportunities under the project. The latter will allow them to examine and appreciate how irrigation systems in other parts of China and other countries are designed and managed. Long term benefits are expected to be gained from the provision of technical assistance to WCB and Irrigation District personnel. 5. Social 5.1 Social impact The project will improve the quality of life of a large number of small farming households in the nine irrigation areas. This arises from the provision of better and more timely irrigation, resulting in higher yields, increased cropping intensities and the expansion of irrigated areas. Indirectly many others involved in processing and marketing of farm products will benefit as well. Additionally, standards of living in villages and townships in the project areas will improve from the provision of a more reliable water supply. 5.2 Resettlement and land acquisition The raising of the Linjiacun and Luohuiqu diversion weirs requires the acquisition of land for the reservoir areas. There are also a limited number of people who will be affected (PAPs) by land acquisition required for the construction of other infrastructure works, including canals. The number of Project Affected People (PAP) is 1,133. Of them 684 will have to be relocated because of the raising of the Linjiacun weir. To mitigate the adverse impacts of these works, PMO/WCB prepared a comprehensive Resettlement Action Plan (RAP) in accordance with OD 4.30 for the resettlement and compensation requirements of those affected. The main objective of the RAP is that both the resettled people and the host populations receiving them, will not be adversely affected by the resettlement, nor will the project have detrimental impact on their living standard. Resettled families will be moved to locations benefiting from the project, where their house and amenities will be improved. Their new earning potential will be at least as good as previously and income losses during the transition period will be compensated for. The Bank found the RAP, which has been approved by the Government of Shaanxi, to be satisfactory. It includes: (i) details of people and assets affected; (ii) legal framework for land acquisition and compensation; (iii) institutional arrangements; (iv) cost details and budget requirements; (v) implementation schedule; (vi) participation, consultation and grievance procedures; and (vii) monitoring and evaluation by project agencies and an independent external group. 5.3 Independent monitoring of the implementation of the RAP will be carried out by the National Research Center for Resettlement (NRCR). The monitoring will cover: (i) physical progress with resettlement implementation; (ii) Project Affected People (PAP) livelihood restoration; (iii) PAP participation in the resettlement process; (iv) grievances and effectiveness of Page 18 the grievance procedures; and (v) proposed measures for improvement. The RAP is summarized in Annex 7 and the detailed RAP is available from the project file. 5.4 Role of women The role of women in irrigated agriculture in the project area was assessed to understand their current role and how this might be affected by the project. Field surveys and household interviews were conducted to determine: (i) the current role of women in the project area; and (ii) actions the project could undertake to assist women farmers. The main findings were that women increasingly are doing more of the farm work, because an appreciable number of men have migrated to the cities for work. They generally come back only during the harvest season. Most women know about the project, strongly support it and want to participate in its implementation. In general the feminization of irrigated agriculture requires the Agricultural Bureau (AB) to put in place special measures to ensure that: (i) agricultural extension will reach out to women farmers specifically; (ii) special extension programs are developed for them in the field of irrigation management; and (iii) monitor the project impact on school children enrollment, particularly girls. 6. Environmental assessment: Environmental Category B 6.1 Justification/rationale for category rating The project is designated a "B" Category, because project implementation is not expected to have negative environmental impacts. The project consists almost entirely of modifications to existing infrastructure (dams, canals, drains, roads, structures, pumping stations and related works). There exists some badly polluted water in rivers and canals in the project area, that is used for irrigation, in particular in Jiaokou and Baojixia IDs. However, the pollution problem is not expected to deteriorate because of the project; in fact improved water management will be a positive benefit. The Provincial authorities are taking action to strengthen and enforce pollution control regulations and, therefore, the situation is expected to improve in the future. 6.2 Environmental impact An Environmental Impact Assessment (EIA) of the project works has been carried out. It addresses potential adverse environmental impacts satisfactorily. Particular attention was paid to the adverse effects of the raising of the Linjiacun and Luohuiqu diversion weirs. The EIA includes an Environmental Management and Monitoring Plan, which details mitigation measures, monitoring requirements and associated costs. Successful monitoring requires regular water quality and other environmental analyses and good coordination between government agencies, such as provincial EPA, WCB and AB. Project works would be implemented in accordance with the Environmental Management and Monitoring Plan. 7. Participatory approach 7.1 Primary beneficiaries and other affected groups Project officials have consulted farmers who will benefit from improved irrigation and drainage. This consultation, through information sharing and collaboration, will continue during planning and implementation of irrigation management reform programs. In general strong support for the project exists among the beneficiaries, in particular from women farmers. Secondary beneficiaries will be staff of PMO, WCB and IDs. They will benefit from technical assistance, training and study tours and from involvement in the irrigation management reform programs. The participatory approach will be used for the implementation of the minor system and land leveling works. Page 19 7.2 Other key stakeholders Irrigation management reform will result in the deployment of O&M staff currently employed by the Irrigation Districts. Some of the ex-ID staff are expected to compete for the award of long-term contracts for managing O&M of lateral canal systems in close cooperation with water users. In such cases they will become key stakeholders in the project. F: Sustainability and Risks 1. Sustainability Project sustainability will depend on: (a) effective project management arrangements; (b) sound design and implementation standards: (c) strong interagency coordination at various government levels to ensure equitable water allocation and distribution to and within the nine IDs; (d) the introduction of efficient and sustainable irrigation management procedures and effective cost recovery arrangements to assure adequate O&M funding. These elements have been incorporated in the project design. 2. Critical risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure Annex 1, cell "from Outputs to Objective" * Timely implementation of good quality project works M * Introduce incentives, staff training to strengthen management capacity, timely provision of counterpart funds, good quality construction supervision * Active participation of farmers in O&M of project M * Provide training, information sharing and facilities incentive programs * Introduce adequate levels of water charges M * Ensure good quality irrigation supplies and extension services to enable high production levels * Distortions in pricing of project produce N * Diversify crops cultivated in the project * Problems with transport and marketing of produce M * Address transport constraints through e.g. road improvement; and crop promotion campaigns * Input supply shortages M * Monitor regional stockpiling and input pricing Annex 1, cell 'from Components to Outputs" * On time completion of project design work M * Retain experienced design group; careful and regular monitoring of design work performance by PMO and Bank * Counterpart funding constraints S * Monitoring funding commitment and periodic review with Finance Bureaus * Resettlement will be carried out as stipulated in the M * Supervision by Borrower and Bank; ensure agreed RAP adequate funding * Damage caused by extraordinary floods, droughts or M * Adopt reasonable design standards and earthquakes establish crisis management and early warning systems * Dam safety reviews will be conducted in accordance M * Timely recruitment and periodic review by with agreed plans DSRP and availability of adequate funds to carry out reviews Overall Risk Rating Modest I Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 3. Possible controversial aspects None Page 20 G: Main Loan Conditions 1. Effectiveness conditions Standard 2. Other conditions a) Establish and maintain water charges which cover the O&M costs and portion of the investments made under the project to allow for Loan repayment. PPMO will: (i) prepare and furnish to the Bank the proposed schedule of water charges in each ID, including the timetable for its establishment, by December 1, 2001; (ii) submit to the Bank annually by March 31 (starting 2002) a status report on the collection rate of water charges, review annually the water charges for each of the nine Irrigation Districts and adjust the charges to levels needed to cover O&M cost and Loan repayment requirements; and (iii) maintain separate accounts for water charge collections, and the use of these funds for O&M of the irrigation and drainage systems and repayment of Loan. b) Maintenance of the Project Leading Group, Provincial PMO and PMOs in the nine Irrigation Districts with terms of reference, resources acceptable to the Bank and competent staff in adequate numbers. c) Furnish to the Bank by December 1 of each year work programs including the ID reform plan and financial plans for the following year, including evidence of adequate counterpart funding from all levels of Government. d) Maintenance of separate records and accounts for the project, audit of project records and accounts including the Special Account and statement of expenditure for each fiscal year, and submission of the audit report for each fiscal year to the Bank by July 1 of the following year. e) (i) Compliance of the project with the Project's Enviromental Management and Monitoring Plan; (ii) Submission to the Bank by March 31 of each year of a report summarizing the results of the previous year of environmental management plans for the project area. f) By March 1, 2002 an evaluation will be carried out of the irrigation management reform efforts. The findings and recommendations will be considered during the mid-term review to be held no later than June 1, 2002. g) Convene the DSRP at regular intervals to review the status of works in progress on existing storage facilities and weirs; preparation of an 0 & M plan and emergency preparedness plan for the Water Storage Facilities included in the Project by June 1, 2002; after completion of works; and undertaking periodic inspection of these facilities to rectify any safety-related deficiencies. h) A mid-term review of project implementation will be carried out by June 1, 2002. A Page 21 report for this review will be prepared and furnished to the Bank not later than March 1, 2002. The report will summarize the results of monitoring and evaluation under the project, problems encountered during project implementation, revised cost estimates, and measures recommended to complete the project. i) Annual overseas training and study tours plans will be submitted to the Bank by December 1 each year for review. j) The Project will be implemented in accordance with the RAP, and monitor and report resettlement semiannually by February 15 and August 15 each year. H: Readiness for Implementation [x] The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [x] The procurement documents for the first year's activities are complete and ready for the start of project implementation. [x] The Project Implementation Plan (PIP) has been appraised and found to be realistic and of satisfactory quality. I. Compliance with Bank Policies [x] This project complies with all applicable Bank policies. This project involves: * Environmental Impacts (OP 4.01) (BP 4.01) (GP 4.01) * Gender Issues (OP 4.20) * Involuntary Resettlement (OD 4.30) * Financial Management (OP 10.02) (BP 10.02) * Local Cost Sharing (GP 6.30) (OP 6.30) (BP 6.30) * Dam Safety Review (OP 4.37) Task Team Leader: Bert L. Kramer Sector Manager: Geoffrey B. Fox Country Director: Yukon Huang Page 22 Annex 1 China: Guanzhong Irrigation Improvement Project Project Design Summary Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions Sector-Related CAS Goal: 1) Promote better utilization 1) Expansion of areas under 1) Data made available by 1) Stable political transition, of marginal lands through irrigated agriculture Government of China and maintenance of reform introducing sustainable the Government of program in post-Deng era techniques 2) Higher overall water use Shaanxi Province 2) Intensify irrigated efficiency resulting in 2) No large external shocks agriculture production increased water affecting terms of trade, 3) Sustainable development availability current account balance or and management of water foreign exchange rates and land resources 3) Increased grain yields and 4) Poverty alleviation cropping intensities 3) Government maintains budget allocations for food 4) Higher net incomes of security programs project beneficiaries Project Development Objectives: 1) Increase agricultural 1) Crop yields and 1) Statistical information 1) No change in existing production, in particular cropping intensities from Prefecture and policy framework for grains and cash crops County Government agriculture production 2) Increase net incomes of 2) Increased per capita net agencies particularly with regard project farmers incomes to land tenure and 3) Strengthen 2) Periodic progress pricing organizational, technical 3) Farmers assume O&M reports on project 2) Demand for agriculture and financial aspects of responsibilities, implementation production continues to irrigation management increased levels of grow at 5% per year. and O&M water charges and 3) Government maintains collection rates commitment for improved management of water resources Outputs: (Outputs to Objective) 1) Implementation of 1) Physical parameters of I) Periodic surveys to test 1) No delays in physical works completed works against benchmark data implementation of 2) More efficient water use 2) Areas brought under maj or project works per unit area and improved and new 2) Semi-annual progress 2) Adequate incentives for production obtained irrigation reports farmers to participate in 3) Higher yields and 3) Higher crop production O&M of the project cropping intensities per unit area 3) Special monitoring and 3) Adequate levels of because of improved 4) Farers receiving better evaluation reports water charges irrigation and drainage support services 4) No distortions in pricing systems 5) Farmers paying 4) Reports prepared by of project produce 4) Agricultural production increased water charges Bank supervision 5) No problems with on newly irrigated lands missions transport and marketing 5) Increased revenues from of project produce water charges 6) No input supply ProjectDeve tproblems Page 23 Project Components/Sub- components: 1) Rehabilitation of storage 1) Inputs (budget for each 1) The Government of 1) Completion of project facilities and diversion component) Shaanxi through its design work takes place head works 2) Design and construction implementing agency as planned 2) Rehabilitation and of remedial works for 9 and participating 2) Counterpart funding is expansion of irrigation dams and 2 diversion prefectures and county made available in canal systems works governments will accordance with agreed 3) Rehabilitation and 3) Repair about 25 major regularly monitor financing plan extension of drainage structures, lining and project implementation. 3) Key inputs such as systems general repair of about 2) Semi-annual progress fertilizer and 4) Rehabilitation of 600 km canals reports will be prepared construction materials pumping plant 4) Repair and extension of surmarizing the status will be made available 5) Completion of minor about 200 km of drains of project when needed canal systems, on-farm 5) Improvement or implementation and 4) Extraordinary floods, development works and replacement of about 50 highlighting droughts or earthquakes land development pumping stations implementation issues. do not occur 6) Irrigation management 6) Technical assistance, 3) The Bank will sent 5) Dam safety reviews will reform and training, study tours and periodic (1-2 times a be conducted in strengthening of O&M provision of goods year) supervision accordance with agreed 7) Introducing modem missions to the project plans communication systems area to review status of 6) Resettlement will be implementation and carried out as stipulated issues and exchange in the agreed RAP views on its findings with GoveIment of _____ ____ ____ _____ _ __ ____ _____ ____ ____ Shaanxi_ _ _ _ _ _ _ _ _ _ _ _ Page 24 Annex 2 Project Description A: General Description 1. The project areas The project covers nine Irrigation Districts that together serve a net area of about 573,000 ha in the Guanzhong Plain in the Wei River Valley of Shaanxi Province. The ID locations and main features are shown in the attached IBRD Map # 29961. The canals and pumping stations are all older than 25 years and some date back to the 1930s. A number of dams have been built in the past 30 years to provide seasonal storage. There is a need to repair and improve the canals and carry out remedial works on the dams. The minor systems are also in need of repair and upgrading over most of the command areas. Also, at present, farm land, totaling about 50,000 ha of the command area, lack a water distribution system and depend solely on rainfall. The aim of the project is to repair and improve the dams and main canal systems, upgrade and complete the minor systems, and support irrigation management reform. 2. Rainfall averages between 500 and 800 mm, depending on location in the project area. Shaanxi's mean annual rainfall is 660 mm. Sixty five percent (65%) of the rain falls in the summer between June and October. Therefore supplementary irrigation is required in particular during the spring and late fall seasons. The main crops in the area are winter crops wheat (428,000 ha) and rape seed (32,000 ha), planted in November and harvested in June, and maize (322,000 ha) planted in June/July and harvested in October. Other crops of importance are apples (57,000 ha) and cotton (38,000 ha), which are summer crops. All of these crops can be grown without irrigation. But, farmers can more than double their yields when their crops are irrigated and reduce losses when severe droughts occur. 3. The flows in the Wei River and its tributaries are in most years sufficient to meet the full irrigation requirements of the project areas. However, irrigation supply to most farmers in the project areas is generally inadequate in terms of quantity and timing of water because of deficiencies in the physical works and weaknesses in the arrangements for water management in the major and minor canal systems. The project aims to address these weaknesses and to maximize the benefits through the repair and improvement of the facilities in the project area, which will be carried out in parallel with the reform of water management as described below. 4. Irrigation management reform The irrigation systems in the Guanzhong Plain typically consist of main, branch, sub-branch, lateral and sub-lateral canals. The Shaanxi Province Administration is moving to reform the arrangements for water management at and below the lateral canal level. One of the main features of the reform is to issue long-term leases to qualified individuals who would be responsible for operation and maintenance, and would be allowed to recover their costs through water charges. In most cases, a contract is for a lateral which typically serves 50 to 200ha, but larger units served by a sub-branch canals, which in some cases include multiple laterals, have been leased. The contracting system will replace a system where management is largely the responsibility of section heads at the responsible management station, technicians, and village water managers who are directly employed by the IDs. Page 25 5. There are several weaknesses in the present system. Firstly, water charges are often combined with levies of the local governments. In such cases, the price for a unit of water is set at a level needed to meet tax targets, resulting in an apparent "cost of water" to the farmer being much higher than it would be when paying a single water fee. Secondly, the funds collected are not used to improve or repair the sub-laterals and laterals. Thirdly, the Irrigation Districts that supply the water have difficulty in obtaining their portion of the collected funds; thus lowering their capacity and incentive to deliver a reliable supply. Finally, the high charges and low reliability combine to discourage the farmers from irrigating their land, which in turn reduces the revenue of the Irrigation District, as well as overall district/village productivity. 6. Leasing of laterals has only recently (since late 1997) been initiated and, therefore, experience with the new arrangement is limited. However, there is strong support for it among the farmers who see several advantages. They will have one contact to deal with when they ask for water (from the locally managed Management Station) and the contractor will have a financial incentive to meet their needs and put pressure on the operators of the main ID system to deliver required quantities to schedule.. Also, the price they pay for water will be clearly defined and measured (through improved fixed measurement structures) and be free of other unrelated charges. Prospects for the success of the contracting arrangement are enhanced by China's tradition of strong leadership and community spirit at the village level. There will be no shortage of experienced and responsible individuals to act as contractors. And with good leadership the farmers will be responsive. 7. Progress made with turning over management of lateral systems to independent operators is so far satisfactory. Several management systems have been adopted. In cases where the existing laterals and sub-laterals are in reasonably good condition , the managers are selected by the farmers. In other cases, water user associations (WAU) are organized. Where the systems require rehabilitation, contractors are selected on a competitive basis taking into account their willingness to invest in improvements. A common feature is that the operators retain a portion of the water sales revenue to pay for operating personnel and system improvement. Water charges are collected directly by the operators, and passed through to the ID via the management stations. Under the old system, the charges were collected by the local government usually in conjunction with general revenues. Because of this, funds were not always reallocated back to the ID, and this resulted in system repairs being neglected. Consequently, the farmers saw no link between the fees they paid and the quality of service received and were thus wary of commitment. However, reports from the field on the current changes suggest that the reforms are welcomed by the farmers. The improvement and expansion of the minor systems will be coordinated with the overall ID management reform program, and it is expected that this will greatly enhance the benefits to the water users in the project. B: Description of Project Components Project component 1: Improvement and expansion of water source (Cost US$48.5 million) 8. There are eleven dams in the project area. Nine of these are storage dams of varying size designed to impound gully or river flows in the summer for use in the fall and spring. Two are existing diversion weirs/dams that will be converted to storage dams. Four of the smaller gully Page 26 dams provide limited storage, but their main purpose is to provide an embankment to carry main canals across deep river valleys. Details of the dams are given in the PIP. Component 1 also includes the construction of a 10 km tunnel, which is to transfer water from Fengiiashan ID to Yangmoawan ID. 9. Two existing diversion weirs -- Linjiacun weir on the Wei river, and Luohuiqu weir on the Luo river -- will be raised to provide additional storage. At Linjiacun, Baojixia District, the existing masonry weir will be modified and raised to carry six 10 m by 6.7 m gates. This will allow the retention level of the reservoir to be raised from El. 615 to El. 636 to provide live storage of 32 Mm3. On the Luo river the masonry weir will be modified to carry six 9 m by 14 m gates to provide 5.4 Mm' of additional storage. An important function of these dams is to regulate releases from upstream hydroelectric projects which are operated for daily peaking power. At each site the existing intakes will be replaced and the sediment basin and the related gates downstream of the dam will be renovated. 10. An existing 61 m-high earth and rockfill dam on the Qu river supplies water to irrigation systems in the Taoqupo District. The plan is to modify the spillway structure to add nine gates, so as to raise the retention level by 4.5 m, increasing the overall storage by 10 Mm' to 40 Mm3. 11. The eleven existing weirs/dams form part of the irrigation systems of the nine IDs. These were reviewed by a Dam Safety Review Panel (DSRP) in July 1998. Remedial measures identified as necessary by the Panel included: * better instrumentation; * replacement of gates on key outlet structures; * excavation to make slopes more stable at critical locations; * repair of slope protection; 12. The DSRP recommended further investigations of the Taoqupo and Shibuchuan dams, where cracks in the dam bodies are a cause for concern, so as to determine details for remedial works. The Panel also reviewed proposals for the raising of two weirs, and commented on the designs. The project has endorsed the recommendations of the Panel and the remedial works have been included under this component. Investigations on the Taoqopu and Shibuchuan dams have been initiated and provisions have been made for the implementation of the resulting remedial works under the project. Project component 2: Improvement of major distribution system (Cost US$69.8 million) 13. Improvement of major canal system Most main and branch canals are partially lined with concrete panels or masonry. There are sections in all IDs where the lining has been damaged. Measurements indicate that the losses in unlined canals are significantly higher than in the lined ones. The combination of damaged lining and unlined sections also reduces the velocity of flow and carrying capacity of the canals. Repair and completion of lining will raise the conveyance capacity and reduce losses. The higher velocity of flow will reduce sediment deposition which is a problem throughout the nine IDs. There are also places where flumes and aqueducts need to be strengthened and actions taken to stabilize slopes along the canals (high embankments in cuttings, embankments across gullies). Improvements comprise of upgrading and reinforcing 600 km of trunk (main) and branch canals, including the lining of 515 km of (main) and branch canals, the repair and desilting Page 27 of 200 km of drainage systems, and the repair or replacement of 25 major structures. Works included are: * embankment strengthening - elevated section and steep slope stability, groundwater and drainage control, seepage mitigation * canal lining - repair and new, for improved hydraulic performance, for better section stability and maintenance, and to mitigate seepage losses * structures - major & minor (bifurcations, aqueducts, siphons, tunnels, escape structures) - for improved hydraulic flow and distribution control, flow measurement, general command area and infrastructure access, and drainage underpasses * roads - access to management stations, key structures, canal maintenance, monitoring and supervision * drainage canals improvement - to alleviate wet season inundation in low areas, to prevent water logging, manage groundwater and salinity. 14. Rehabilitation of pumping plant Pumping plant is installed to lift water to higher terraces, as an integral part of the canal distribution systems. The major works under the project include the rehabilitation (refitting of equipment) of about 50 pumping stations in 6 IDs. Most of the pumping plant was built in the 1960's and early 1970's to low technical standards and has now deteriorated to such an extent that major rehabilitation work is necessary. Many of the old pump- houses are in need of replacement. Many of the original pump house designs did not allow for the inclusion of electrical rooms or station cranes. A total of 47 pump houses will therefore be renovated or replaced, and 28 internal station cranes will be provided, mostly for stations in the Jiaokou ID. Works for 18 of the pump houses will be supported by the Bank Loan. 15. The old pumps have deteriorated due to the combined effects of erosion by sediment laden waters and cavitation. A total of 172 pumps will be replaced with improved modem versions. The old motors have deteriorated due to aging and contamination by dust and moisture, resulting in electrical failure of motor windings. A total of 172 motors will be replaced by new motors with improved technical specifications. Some pumping station electrical equipment will also be replaced and modernized, including transformers, switch-gear and control panels. High voltage power supplies to some pumping stations (mainly Jiaokou) will be upgraded to stabilize the supply voltage and improve reliability. A total of 26 km of new power line will be installed together with a major new sub-station at Gushi in Jiaokou. Project component 3: Improvement and expansion of minor distribution system (Cost US$39.2 million) 16. Improvement and expansion of minor distribution system The project will improve existing minor canals, drains and on-farm development works on about 180,000 ha of partially irrigated land, and expand new systems to about 50,000 ha of land that currently has no irrigation distribution network at the lateral level. The main works are : * earthwork and lining (repair and new) for a number of the existing lateral and sub-lateral canals, to improve water distribution in about 180,000 ha; Page 28 * land leveling in 50,000 ha of expanded area, to the typical squared type distribution network, having a canal density of about 60 m per hectare; * newly lined lateral and sub-lateral canals for the expanded areas; * new structures for improved water measurement in both improved and expanded areas; * where applicable, improved integration of the surface water supplies with groundwater. Project component 4: Improvement of O&M (Cost US$5.2 million) 17. O&M works and buildings The project will improve access roads to key infrastructure works and renovate management stations and research facilities as follows: * improvement of main access roads to dams in Taoqupo, Yangmaowan and Shibuchuan, for improved operation and maintenance; * rehabilitation of deteriorated management stations in Baojixia, Jiaokou and Shibuchuan; * improvement of research facilities, and provision of modem technology, in Baojixia, Jinghuiqu, Jiaokou and Luohuiqu. 18. Communication system The project will provide improved communications systems for both fixed and mobile communication purposes in all nine districts. This will enhance system management and planning procedures for improved water dispatch, control and delivery from headworks to lateral head inlets. A new trunking radio system will be provided for each ID with facilities for two radio frequencies, suitable for both voice and data transmission. These systems will utilize microwave transmission between major centers. The nine separate systems will be capable of future expansion to inter-link them with each other and with a central District Control Center that may be established eventually in Xian. 19. Irrigation management reform Efficient irrigation management practices are key aspects for future successful O&M of the improved systems. The management reforms are to be accomplished at two levels: (i) at main system level (headworks to lateral head) managed by IDs; and (ii) at minor or lateral canal system and below, through the turnover of O&M responsibilities to groups of farmers (water user associations) or through contracts with single operators, joint stock-holder or stock holders). 20. At the main system level the reform efforts will address the need for: (i) organizational changes within each Irrigation District; (ii) staffing changes and better defined job descriptions, responsibilities, lines of command and performance incentive programs; (iii) enhancement of financial management, accounting and administrative procedures; (iv) training of staff; and (v) improvement of the O&M rules, regulations and procedures. Plans are already in place for a reduction of personnel in each Irrigation District. To accommodate staff reductions, whilst improving and/or expanding the command area, training and study tours will be provided to improve skills. These reform efforts are designed to improve system management, and to result in timely and adequate water delivery to fee paying customers. Technical assistance will be provided to assist project management with the reform program. Page 29 21. At the lateral system level, several management reform models are being tried. In cases where the existing laterals and sub-laterals are in reasonably good condition , the managers are selected by the farmers. In other cases, water user associations are often organized. Where the systems require significant rehabilitation, contractors are selected on a competitive basis through auction, or the formation of operator/user joint stock-holders or limited stock-holders securing leases to manage a system. The selection procedure takes into account their capability and willingness to invest in system improvements. A common feature is that the operators retain a portion of the water sales revenue to pay for operating personnel and system improvement. Water charges are collected directly by the operators. Under the old system, the charges were collected by the local government usually together with other charges and/or taxes. As a result the system repairs were neglected and the farmers saw no link between the fees they paid and the quality of service. Reports from the field and a recent survey suggest that the reforms are welcomed by the farmers. The stock-holder approach is currently favored. The improvement and expansion of minor systems under the project will be coordinated with the lateral system turnover program. Project component 5: Training, study tours and technical assistance (Cost US$1.8 million) 22. Project management and other staff will participate in training and study tours under the project, to improve: (i) the knowledge and understanding of resources and assets under their control; (ii) management of technical, financial and administrative tasks; (iii) monitoring and evaluation of project implementation performance; and (iv) physical and financial progress reporting. This will allow them to examine and appreciate how irrigation systems in other parts of China and elsewhere are managed. Long term benefits will be gained from the provision of technical assistance, through the provision of direct advice to WCB and Irrigation District personnel, aimed at strengthening the irrigation district management systems (technical, administrative and financial). Details of training programs, study tours and technical assistance under the project are given in the PIP. Project component 6: Project management (Cost US$4.0 million) 23. Project management arrangements are designed to ensure good coordination between Government Bureaus and Irrigation Districts associated with project implementation. Emphasis will be placed on the delivery of high quality design and efficient implementation of the project components. Staff, with experience in managing the implementation of similar projects will be appointed to the Provincial and Irrigation District Project Management Offices. Project component 7: Survey, design and supervision (Cost US$4.4 million) 24. Survey, design and construction supervision will be 100% financed from local counterpart funds. The project will retain the services of the Shaanxi Design and Research Institute (SDRI), to assist with completing the designs of the major works and to supervise the IDs in finalizing the designs for the canal improvement works. In turn the IDs will direct the City and County Water Conservancy Bureaus, who will be responsible for finalizing designs for minor works, to standards laid down by SDRI. A "Grade A" group will be selected to supervise the construction of the Linjiacun dam under an ICB contract. For the NCB type works, "Grade B" groups will be retained for construction supervision. B" groups will be retained for construction supervision. Project component 8: Land acquisition and resettlement (Cost US$ 4.8 million) Page 30 25. The raising of the Linjiacun and Luhuiquo diversion weirs and the installation of gates on the spillway of the Ganhe dam requires the acquisition of land to accommodate enlarged storage facilities. There are also people who will be affected by land acquisition required for the construction of other infrastructure works, including canals. The total number of Project Affected People (PAP) is 1,133. A Resettlement Action Plan (RAP) has been prepared in accordance with OD 4.30 to facilitate the mitigation of the adverse impacts of the project on the PAPs. For the Linjiacun Headwork, 100 ha (1,500 mu) of land will be acquired and 684 people will need be relocated due to the inundation of the land for the reservoir. In addition, about 100 ha (1,435 mu) of land will be expropriated for expanding irrigation systems, including the heightening of the Ganhe dam and Luohuiqu headworks. Those actions do not require relocation of people affected. 26. Independent monitoring of the implementation of the RAP will be carried out under the project. The monitoring will cover the following aspects: (i) physical progress with resettlement implementation; (ii) PAP livelihood restoration; (iii) PAP participation in the resettlement process; (iv) grievances and effectiveness of the grievance procedures; and (v) proposed measures for improvement. Further details on the resettlement requirements are presented in Annex 7. The RAP is available in the project files and on request. Page 31 Annex 3 Estimated Project Costs 1. Project costs have been estimated for the entire project and for the nine IDs. The estimates are based on quantities for civil works and construction materials prepared by Shaanxi using mid-1998 prices. The costs for improving and expanding the minor distribution system have been estimated based on sample designs for representative areas in each ID. The total project cost is estimated at US$200 million, which includes a foreign exchange currency component of about 40%. Project cost summaries are given in Tables A and B of this annex. Further cost details are in the PIP. 2. The costs related to planning, survey, design, construction supervision and quality control have been estimated at 4 percent of the base costs. An overhead fee of 0.3 percent of the base costs for the ID management offices and 0.7 percent of the base costs for the provincial project management office is added for project management. Physical contingencies of 10 percent are applied to all civil works for the dams, the canal systems and for goods, except for the minor distribution system and for vehicles and office equipment. They are equivalent to US$9.9 million. Price contingencies have been calculated based on projected MUV-5 price escalation factors of 1.3 percent for 1999 and 2.5 percent for the years thereafter. In addition a price escalation of 2.5 percent is added to take into account price increases for the period between mid-1998 and the expected project start. The total price contingency is estimated at about 11 percent of the project base costs, which is equivalent to about US$17.6 million. Interest during construction (IDC) and other charges levied during the construction period on the disbursed and undisbursed portions of the World Bank Loan, including the IBRD front-end fee of US$0.8 million or 1% of the Loan amount, will accumulate to about US$22.2 million over the five-year implementation period. These costs are included in the total project cost estimate. Page 32 Annex 3: Table A Project Cost Summary Component Total Cost % of Total (US$ million) 1. Improvement and expansion of water source 48.5 24.3 2. Improvement of major distribution system a) Pumping facilities 16.1 8.0 b) Canal and drainage system 53.8 26.9 Sub-total Improvement of major distribution system 69.8 34.9 3. Improvement and expansion of minor distribution system 39.2 19.6 4. Improvement of O&M 5.2 2.6 5. Training, study tours & technical assistance 1.8 0.9 6. Project management 4.0 2.0 7. Survey, design & supervision 4.4 2.2 8. Land acquisition & resettlement 4.8 2.4 9. Front-end fee (1% of IBRD Loan) 0.8 0.4 TOTAL INVESTMENT COST 178.6 89.3 Interest during construction (IDC) 21.4 10.7 TOTAL COST 200.0 100.0 Included: Physical contingencies 9.9 5.9 Price contingencies 17.6 11.0 Page 33 Annex 3, Table B: Project Cost Estimates (in US$ million equivalent) Neatrg ailte'73 - -~ 4.6 8.1 -0. 5 Rpiofsoaeaddvrinfclte .00 2.6 0.0 .9 .75 1.5 01 .3 83 9 0 Q' 0 9 or *9 a C. .0 :5 J- Component S N 6 9 . 1 N 1 . -. 48 1. Improvement and Expansion of Water Source New storage facilities 17.37 - - - - - 4.63 8.16 - - 30.2 15% Repair of storage and diversion facilities 7.00 2.68 0.60 3.90 0.75 1.95 0.14 - 1.33 - 18.3 9% Sub-total Improvn. & Expans. of W. Source 24.37 2.68 0.60 3.90 0.75 1.95 4.77 8.16 1.33 - 48.5 24% 2. Improvement of Major Distribution System a) Pumping Facilities Rehabilitation of pump houses 0.56 2.55 - 0.03 - 0.28 0.50 - - - 3.9 2.0% Pumps, motors and other equipment 2.50 4.65 - 0.16 - 0.24 0.26 - 0.04 - 7.9 3.9% Equipment Installation 1.31 2.62 - 0.03 0.07 0.25 - 0.00 - 4.3 2% Sub-total 4.37 9.82 - 0.22 - 0.58 1.01 - 0.05 - 16.1 8.0% b) Canal and Drainage System Canal improvement 14.27 4.56 9.67 4.92 1.44 2.00 3.17 4.62 2.61 - 47.3 23.6% Drain repair and reshaping 0.36 0.88 1.53 - - - - 1.03 - - 3.8 1.9% Repair & replacement of major structures 1.56 0.95 - - - 0.22 - - - - 2.7 1.4% Sub-total 16.19 6.39 11.19 4.92 1.44 2.22 3.17 5.65 2.61 - 53.8 26.9% Sub-total Improvement of Major Distrib. System 20.56 16.21 11.19 5.14 1.44 2.80 4.19 5.65 2.66 - 69.8 34.9% 3. Improvement and Expansion of Minor Distribution System Improvement areas 6.13 2.20 2.47 0.80 0.66 1.96 0.52 1.71 0.97 - 17.4 8.7% Expansion areas 0.39 0.70 1.14 0.82 1.58 4.41 0.82 0.93 0.95 - 11.7 5.9% Land leveling 0.48 0.80 1.05 0.68 1.14 2.77 0.70 0.92 0.86 - 9.4 4.7% Water saving distribution technology - - - - - - - - - 0.62 0.6 0.3% Sub-total Improv.&Exp. of Minor Distr. Syst. 7.00 3.70 4.66 2.30 3.38 9.15 2.03 3.56 2.79 0.62 39.2 19.6% 4. Improvement of O&M Access roads improvement - - - 0.32 - - 0.05 - 0.17 - 0.5 0.3% Renovation O&M buildings 0.38 0.45 0.52 - 0.15 - 1.5 0.8% Water management equipment 0.12 0.17 - - - - - - - - 0.3 0.1% Telecommunication 0.79 0.29 0.64 0.17 0.16 0.32 0.08 0.21 0.23 - 2.9 1.4% Sub-total Improvement of O&M 1.30 0.91 1.16 0.49 0.16 0.32 0.13 0.21 0.55 - 5.2 2.6% 5. Training, Study Tours & Technical Assist. Irrigation districts/Provincial PMO - - - - - - - - - 1.81 1.8 0.9% 6. Project Management Project offices 0.28 0.13 0.10 0.03 0.02 0.06 0.05 0.09 0.03 0.61 1.4 0.7% Vehicles 0.16 0.10 0.10 0.06 0.06 0.06 0.06 0.10 0.06 0.17 0.9 0.5% Computer, and other office equipment 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.08 0.2 0.1% Project management fee Districtproject management(0.3% of L-6) 0.15 0.07 0.05 0.03 0.02 0.04 0.03 0.05 0.02 - 0.5 0.2% Provincial PMO cost (0.7% of .-5) - - - - - - - - - 0.99 1.0 0.5% Sub-total Project Management 0.59 0.31 0.26 0.13 0.11 0.17 0.15 0.24 0.12 1.86 4.0 2.0% 7. Survey/Design/Superv. (4% of 1,2,4) 1.68 0.66 0.45 0.32 0.11 0.23 0.31 0.47 0.17 - 4.4 2.2% 8. Land Acquisition & Resettlement 4.22 - - - - - - 0.62 - - 4.8 2.4% TOTAL INVESTMENT COST 59.73 24.48 18.32 12.28 5.96 14.62 11.59 18.92 7.61 4.28 177.8 88.9% Interest During Construction and Fees 8.14 3.23 2.35 1.56 0.61 1.48 1.46 2.48 0.89 - 22.2 11.1% TOTAL COST 67.87 27.70 20.67 13.84 6.57 16.10 13.04 21.41 8.51 4.28 200.0 100% Included: Physical Contingencies 3.72 1.60 1.01 0.77 0.18 0.39 0.74 1.13 0.33 - 9.9 5.9% Price Contingencies 5.92 2.43 1.82 1.22 0.59 1.45 1.15 1.88 0.72 0.40 17.6 11.0% Percent of TOTAL COST 33.9% 13.9% 10.3% 6.9% 3.3% 8.1% 6.5% 10.7% 4.3% 2.1% 100% Page 34 Annex 4 Economic and Financial Analysis A. Background 1. The project will improve and expand irrigation systems of nine Irrigation Districts in the Guanzhong plain of Shaanxi Province. Irrigation of the fertile loess soils is very beneficial. It generally doubles the yields of most agricultural crops and secures a stable and reliable income in a farming environment, which is threatened by frequent and severe droughts. The project will substantially increase the incomes of about 5.5 million rural people, who are some of the poorest in China. 2. The project will support irrigation management reforms designed to introduce private sector management principles in distribution and sale of irrigation water. This process is expected to lead to significant efficiency gains in the use of surface water. It will make surface water irrigation more attractive and thus reduce pressure on the use of ground water. The reforms will be carried out with or without the project. 3. The reforms are already launched in all nine Irrigation Districts, however, the success of the reform process is linked to the ability to provide adequate quantities of water to the operators of lateral systems in a timely manner. The project will therefore improve obsolete physical infrastructure. The investments in headworks and major distribution system facilities will increase the amount of water available for irrigation, by increasing storage capacity, reducing conveyance losses and increasing canal capacities. This together with investments in minor distribution systems and on-farm development will provide reliable irrigation to farmers. About 330,000 ha will receive more reliable irrigation supplies and about 50,000 ha of currently rainfed land will be irrigated for the first time. 4. The combination of institutional reform and improvement of physical infrastructure will give the nine Irrigation Districts long-term financial sustainability. Each Irrigation District will generate enough income in the future not only to cover fully the operational costs but also to maintain and reinvest in the systems in such a way that their performance will not deteriorate. B. Economic Analysis 5. The benefits of the project are measured in incremental net value of production at full development. The analysis is done over 20 years using an annual discount rate of 12 percent. 6. Economic prices World market reference prices are used for major traded products such as fertilizers, wheat, maize and cotton. For all other products, financial prices as observed in the project areas have been used. The financial and economic prices are shown in Table 1. The calculation of world market prices is shown in Table 2. For farm and unskilled labor a wage rate of RMB 10 per day is used which reflects the economic opportunity cost of labor in the area. 7. Operations cost The main operations cost is the energy cost of pumping. Other cost are the annual cost of preventive and routine maintenance. The resulting costs, as shown in Table 1, vary Page 35 significantly among the Irrigation Districts and range from 9 to 23 Fen per m3 in the 'without project' and 6 to 21 Fen per m3 in the 'with project' situation. 8.7 Crop models and economic net value of production (NVP) The benefits of irrigation are shown in crop models, presenting the inputs and outputs for the major agricultural crops in physical and value terms under: (i) rainfed; (ii) partly irrigated; and (iii) fully irrigated conditions (Table 3). Based on these crop models, the economic Net Value of Production (NVP) per hectare has been estimated for the various irrigation conditions. A summary is provided in Table 4. 9. Cropping pattern and total incremental NVP The current, future 'without project', and future 'with project' cropping situation is shown in the cropping pattern table (Table 5). It is assumed that about 410,000 ha are currently receiving irrigation water at either insufficient quantities and/or at sub-optimal times. This area is expected to decrease to about 330,000 ha in the 'without project' situation due to the management reform programs in the near future. As a result the fully irrigated area in the "without project" situation increases to about 200,000 ha. The project will provide these remaining 330,000 ha with full and timely irrigation. In addition, about 50,000 ha of currently rainfed areas will receive irrigation for the first time as a result of the project. The calculation of the incremental NVP is shown in Table 5. 10. A breakdown of the project benefits by commodity shows that the major products - wheat and maize - contribute 21 and 34 percent respectively to the benefits of the investment. Vegetables and apples will contribute 16 percent each while cotton and rapeseed are of lesser importance and contribute 5 and 8 percent respectively to the project benefits. In terms of areas, about two thirds of the project benefits are generated from the improvement of currently irrigated areas, with the remaining one third coming from areas to be irrigated for the first time. 11. Results The ERR of the project is estimated at 26 percent. The ERRs of the individual irrigation systems of the nine IDs range from 15 to 38 percent (detailed cash flows and sensitivity parameters are shown in Table 6). Main results are: Irrigation District Net Present Value Economic Rate of Return RMB million % OCC 12% Baojixia 289 24 Jinghuiqu 172 34 Jiaokou 74 20 Taoqupo 32 19 Shitouhe 73 38 Fengjiashan 178 37 Yangmaowan 14 15 Luohuiqu 118 27 Shibaochuan 17 18 Total Project 967 26 12. High returns for Shitouhe and Fengjiashan are realized because they have sufficient water and there is good potential to increase and improve the irrigated area. In Yangmaowan on the other hand, Page 36 the supply of water is limited and a relatively large investment in a tunnel is needed to transfer water from Fengjiashan. The ERR of 15 percent reflects these high investment costs in comparison to an incremental irrigation area of 3,300 ha and improved irrigation of 9,900 ha only. 13. Sensitivity analysis The economic return of the project investment has been tested for cost overruns and lower than expected benefits. For all IDs the ERRs remain above 12 percent even under a combination of adverse events. 14. Assumptions about future 'without project' situation The economic analysis described above assumes that the performance of the irrigation systems in the 'without project' case would improve somewhat due to the ongoing management reform programs. However, it could be argued that without the project the irrigation infrastructure will further deteriorate and a larger area would suffer from unreliable water supply, as system failures become more frequent. It was found that such assumption will only moderately change the ERR of the project. For example, if the project would prevent a decline in irrigation service to about 20% of the land (assumed to be well irrigated in the 'future without project' case), then the ERR of the project would increase from 26% to 29% (see Table 6). 15. Non-quantified economic benefits Other important benefits of the project, which have not been quantified, arise from investments in dam rehabilitation and dam safety monitoring, which will reduce the risk of dam failure. Dam failures might cause costly damages in downstream areas and require significant replacement. The project will also improve surface water use efficiency resulting in less reliance on groundwater. This will provide relief to areas where the current rate of groundwater extraction appears to exceed recharge. The project will therefore contribute to the preservation of a valuable natural resource: groundwater, the main source for cities, towns and industries. C. Financial Analysis 16. Operation and Maintenance (O&M) and Water Charges The current water charges (excluding charges for electricity costs) in the nine IDs range from 7.5 Fen/m3 in Fengjiashan to 23.0 Fen/m3 in Shibuchuan. In none of the IDs the charges are sufficient to cover the current expenditures of the IDs. The shortfall is generally covered by subsidies from the government budget. The main reasons for the difficult financial situation of the IDs are: (i) low water sales; (ii) inefficient collection of water fees; and (iii) high overhead costs for management. The system of management is anchored to the traditional Chinese standards of government, which allows a large number of staff and associated financial burdens of pension and other social security system payments, and an array of expenditures and fees with no direct linkage to O&M activities for the irrigation systems. 17. The government's intention to cease subsidies for O&M of irrigation systems will likely require a raise of the current level of water charges. However, in the long-run the on-going management reforms at the lateral and ID levels, including the reduction of ID staff, together with the planned physical improvements are expected to result in significant efficiency gains in all nine irrigation districts. More water will be sold to farmers at lower operational costs per unit of water. Therefore, the above efficiency gains combined with reasonable water price levels, will set the stage for the generation of sufficient revenues to cover: ' These loan and interest repayments do not include repayment for the minor distribution system investments, which is expected to be recovered directly from benefiting farmers. Page 37 * all operational costs, such as salaries, management fees, electricity for pumping and office operations; * the costs for regular maintenance, including repair and overhaul of equipment and civil works to keep the irrigation infrastructure in good operational condition; and * interest and loan repayment costs for the investments made by the project. Introducing this approach under GIIP is expected to gradually generate enough revenues to cover the above costs and provide long-term financial stability and independence to the IDs. 18. Future O&M costs, including costs for periodic overhaul and repair have been projected for all nine IDs. Different levels of water sales by the IDs of 40, 80, and 100 percent of the field demand at full development have been used for a computation of the water cost per m3 (Table 9). The calculation shows that the O&M cost per m3 of water supplied to the head of a lateral varies significantly between IDs. The variation depends mainly on the type of irrigation system and investment costs. At a supply level of 80 percent of the field demand the cost would range from 6.3 Fen per m3 in Shitouhe to 23.8 Fen per m3 in Jiaokou. These costs include loan repayments and interest charges ranging from 1.1 Fen in Fengjiashan to 10.9 Fen per m3 in Taoqupo (See Table 9). 19. In addition to the water charges levied by the IDs the "operators" of the lateral systems will charge farmers a small fee. The resulting total irrigation water charge in each ID could be set at levels, which are reasonable for farmers to pay. Projected water charges ID O&M Costs Overhaul and Loan/Interest Total Total Repair Repayment Costs in Fen/m at 80% sales level at 40% sales level Baojixia 4.86 3.8 4.5 13.2 23.9 Jinghuiqu 3.40 2.3 4.1 9.8 18.0 Jiaokou 15.89 5.1 2.8 23.8 35.0 Taoqupo 2.72 7.6 10.9 21.3 42.2 Shitouhe 2.18 2.2 1.9 6.3 12.4 Fengjiashan 9.02 3.5 1.1 13.7 20.4 Yangmaowan 5.76 4.2 9.4 19.3 34.9 Luohuiqu 3.64 2.8 4.7 11.1 20.2 Shibuchuan 3.41 4.5 6.1 14.0 27.8 20. Farm models The likely financial impact of the project on farm household incomes has been analyzed for a number of typical farm models (Table 10). The models include: * medium size farm, cropping 1 ha with currently no access to irrigation, that will receive irrigation on 70% of the cropped land (farm model A); * medium size farm with access to unreliable irrigation, that will benefit from a reliable irrigation water supply in the future (farm model B); * small and poor farm with 0.6 ha crop land, that will receive irrigation on 0.1 ha of its land (farm model C); Page 38 * above average size farm with 1.2 ha crop land, of which 1 ha is already partially irrigated; this farm is engaged in apple and vegetable production with only small areas for grain production; the project will provide full irrigation to all farm land (farm model D). 21. Details about cropping pattern and financial results are shown in Table 10; the major indicators are: Farm model Net income from Return to labor Change in Loan and cropping without family income interest family labor repayment (Yuan) (Yuan/day) (Yuan/year) (Yuan/year) Without with Without With A 1,221 3,183 18.5 26.0 +1,962 -144 B 4,044 5,896 31.4 32.2 +1,851 -46 C 764 2,255 18.6 36.4 +1,491 -21 D 12,732 16,852 40.5 48.2 +4,121 -88 22. All farms will benefit significantly from the project. In absolute terms farm incomes will increase between RMB 1,491 (farm model C) and RMB 4,121 (farm model D). However, while the absolute increase will be highest for the apple-producing farm model C, the relative increase in income will be highest for the poorest farms, which are projected to triple. Returns to labor will also increase significantly, again with the highest relative increases for the poorest farms (farm model C). 23. Loan costs are based on the assumption that farmers will finance about 35% of the investment required for improvement and expansion of minor distribution systems from the World Bank loan/credit. The remaining costs will come from their own contribution mostly by providing their labor. On-lending interest rates of 8% per annum and repayment over 6 years have been assumed. The annual loan and interest repayment costs for individual farms will be small (see table above). In all cases the repayment cost will be less than 10% of the incremental annual income. Page 39 Annex 4, Table 1: Agricultural Input and Output Prices (RMB in constant 1998 prices) Unit Financial Economic Wheat kg 1.30 1.08 Maize kg 1.10 0.94 Cotton lint kg 11.00 9.24 Cotton seed kg 1.00 0.80 Rape Seed kg 2.30 1.96 Vegetables kg 0.60 0.60 Apples kg 0.80 0.80 Wheat straw kg 0.10 0.10 Maize stover kg 0.03 0.03 Wheat seed kg 3.00 3.00 Maize seed kg 6.00 6.00 Seed Cotton kg 2.90 2.90 Rape Seed seed kg 10.00 10.00 Vegetable seed kg 20.00 20.00 Nitrogen kg 2.00 2.09 Phosphate kg 1.80 1.86 Potash kg 3.20 3.20 Manure ton 20.00 20.00 Pesticide kg 20.00 20.00 Labor day 15.00 10.00 Economic Water Costs, RMB/m3 (for calculation see Table 9.) without project with project Baojixia m3 0.136 0.087 Jinghuiqu m3 0.089 0.057 Jiaokou m3 0.229 0.210 Taoqupo m3 0.203 0.103 Shitouhe m3 0.086 0.044 Fengjiashan m3 0.147 0.125 Yangmaowan m3 0.143 0.099 Luohuiqu m3 0.096 0.064 Shibaochuan m3 0.155 0.079 Page 40 Annex 4, Table 2: Estimated Import/Export Parity Prices (for the year 2005 expressed in 1998 prices) Unit Export Price Parities Import Price Parities Cotton Cotton Wheat Maize Cotton Urea TSP Oil Cake Lint g/ (W.Europe) (S.Korea) (US. Atl. (U.S. (U.S. Gulf) (Russia) (N.Africa) port) Gulf) World Market Reference Price: World market prices a/ US$/ton 708 155 125 112 1,557 151 132 Quality adjustment % 0% 0% 0% 0% 30% 0% 0% Ocean freight US$/ton -25 -20 +25 +20 +45 +48 +42 CIF/FOB price US$/ton 683 135 150 132 1,135 199 174 Internal Transport, Trade and Processing Costs: CIF/FOB price (Yuan) b/ Yuan/ton 5,669 1,121 1,242 1,093 9,419 1,653 1,445 Port charges c/ Yuan/ton -35 -35 +35 +35 +72 +40 +40 Trade margins (10% of CIF/FOB Yuan/ton -567 -112 +165 +145 prices) Wholesaler to port d/ Yuan/ton -180 -180 Producer to wholesaler Yuan/ton -36 -36 Port to wholesaler Yuan/ton +180 +180 Wholesaler to retailer el Yuan/ton +36 +36 Retailer to major consumption place Yuan/ton -180 -180 -234 Conversion rate % 17% 53% 100% 100% 100% 100% 100% Farm to/from retailer (12km) f/ Yuan/ton -12 -12 -12 -12 -12 +12 +12 Processing costs Yuan/ton -21 -49 Economic farm gate price Yuan/ton 792 340 1,085 936 9,245 2,086 1,858 Financial farmgate price Yuan/ton 800 450 1,300 1,100 11,000 2,000 1,800 Conversion factor % 99% 76% 83% 85% 84% 104% 103% Notes: a/ Basic assumption of price projections are taken from World Bank Commodity Markets and the Developing Countries, A World Bank Quarterly. Price for wheat refers to U.S. Soft Red Winter No. 2 F.o.b., 1997/98 price, using the relative price increases as projected by the World Bank for Canadian Western Red Spring. Price for cotton lint refers to A Index quality Liverpool, Oct. 1998 quotation, using the same relative price increases as projected by the World Bank. Prices for Cotton Oil and Cake are average prices of 1998 published by FAO. b/ Exchange rate of 8.3 Yuan per US$. c/ Local price used. d/ Dalian-Xian approximately 1200km; 0.165 Yuan per kIn and ton local price; 30% additional adjustment for bulky products. e/ 0.3 Yuan per ton per km local price; 30% adjustment for bulky products. f/ 1.0 Yuan per ton per km local price; 30% adjusted for bulky products. g/ One ton of seed cotton equals 380kg lint, 55kg oil, 400kg cake and 165kg waste; a weighted conversion factor for seed of 0.8 is used. Page 41 Annex 4, Table 3: Crop Budgets per hectare Wheat Unit Price Quantity Financial Values (Yuan) Economic Values (Yuan) Unit Fin. Econ. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Inig. Output Wheat kg 1.3 1.1 3,000 4,500 5,000 3,900 5,850 6,500 3,255 4,882 5,425 Wheat Straw kg 0.1 0.1 2,400 3,600 4,000 240 360 400 240 360 400 Total Output 5,400 8,100 9,000 4,140 6,210 6,900 3,495 5,242 5,825 Operating Inputs Seed kg 3.0 3.0 150 135 135 450 405 405 450 405 405 Urea kg 2.0 2.1 450 675 750 900 1,350 1,500 939 1,408 1,565 Phosphate kg 1.8 1.9 360 540 600 648 972 1,080 669 1,003 1,115 Manure ton 20.0 20.0 0.6 0.9 1.0 12 18 20 12 18 20 Pesticide kg 20.0 20.0 12 15 10 240 300 200 240 300 200 Machinery Yuan 450 600 600 450 600 600 Animal labor Yuan 60 - - 60 - - Tax Yuan 156 234 260 Other Yuan 110 105 85 110 105 85 Irrigation /a Partial irrigation m' 0.28 0.14 1,200 - 336 - - 163 - Full irrigation m3 0.28 0.09 1,800 - - 504 - - 156 Labor Family labor WDs 15.0 10.0 60 80 95 900 1,200 1,425 600 800 950 Total Input 3,926 5,520 6,079 3,530 4,803 5,095 Net Value of Production /b 214 690 821 -35 440 729 Maize Unit Price Quantity Financial Values (Yuan) Economic Values (Yuan) Unit Fin. Econ. Rainfed Partly Irr. Fully Irig. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Output Maize kg 1.1 0.9 3,000 4,300 5,800 3,300 4,730 6,380 2,808 4,024 5,428 Maize Stover kg 0.03 0.03 3,600 5,160 6,960 108 155 209 108 155 209 Total Output 6,600 9,460 12,760 3,408 4,885 6,589 2,916 4,179 5,637 Operating Inputs Seed kg 6.0 6.0 40 40 40 240 240 240 240 240 240 Urea kg 2.0 2.1 510 731 986 1,020 1,462 1,972 1,064 1,525 2,057 Phosphate kg 1.8 1.9 150 215 290 270 387 522 279 399 539 Potash kg 3.2 3.2 30 43 58 96 138 186 96 138 186 Manure ton 20.0 20.0 0.6 0.9 1.2 12 17 23 12 17 23 Pesticide kg 20.0 20.0 3 4 5 60 80 100 60 80 100 Machinery Yuan 200 225 250 200 225 250 Tax Yuan 132 189 255 Other Yuan 150 150 150 150 150 150 Irrigation la Partial irrigation m3 0.28 0.14 1,200 - 336 - - 163 - Full irrigation M3 0.28 0.09 2,400 - - 672 - - 208 Labor Family labor WDs 15.0 10.0 70 80 90 1,050 1,200 1,350 700 800 900 Total Input 3,230 4,424 5,720 2,801 3,737 4,653 Net Value of Production /b 178 461 869 115 442 984 to be continued Page 42 Annex 4, Table 3: Crop Budgets per hectare (continued) Cotton Unit Price Quantity Financial Values (Yuan) Economic Values (Yuan) Unit Fin. Econ. Rainfed Partly Irr. Fully Irrig. Rainfed Partly IrT. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Output Cotton lint kg 11.0 9.2 300 550 750 3,300 6,050 8,250 2,773 5,085 6,934 Seed cotton kg 1.0 0.8 600 1,100 1,500 600 1,100 1,500 480 880 1,200 Total Output 900 1,650 2,250 3,900 7,150 9,750 3,253 5,965 8,134 Operating Inputs Seed kg 2.9 2.9 75 75 75 218 218 218 218 218 218 Urea kg 2.0 2.1 360 660 900 720 1,320 1,800 751 1,377 1,878 Phosphate kg 1.8 1.9 150 275 375 270 495 675 279 511 697 Potash kg 3.2 3.2 - - - - - - - - - Manure ton 20.0 20.0 0.6 1.1 1.5 12 22 30 12 22 30 Pesticide kg 20.0 20.0 30 60 90 600 1,200 1,800 600 1,200 1,800 Machinery Yuan 400 425 450 400 425 450 Tax Yuan 132 242 330 Other Yuan 180 240 - 180 240 Irrigation /a Partial irrigation m 0.28 0.14 1,500 - 420 - - 204 - Full irrigation n 0.28 0.09 2,100 - - 588 - - 182 Labor Family labor WDs 15.0 10.0 90 105 120 1,350 1,575 1,800 900 1,050 1,200 Total Input 3,702 6,097 7,931 3,159 5,186 6,694 Net Value of Production /b 199 1,054 1,820 94 778 1,440 Rape Seed Unit Price Quantity Financial Values (Yuan) Economic Values (Yuan) Unit Fin. Econ. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Output Rape Seed kg 2.3 2.0 1,500 2,000 2,800 3,450 4,600 6,440 2,933 3,910 5,474 Total Output 1,500 2,000 2,800 3,450 4,600 6,440 2,933 3,910 5,474 Operating Inputs Seed kg 10.0 10.0 8 7 7 80 70 70 80 70 70 Urea kg 2.0 2.1 225 300 420 450 600 840 469 626 876 Phosphate kg 1.8 1.9 150 200 280 270 360 504 279 372 520 Potash kg 3.2 3.2 150 20 28 480 64 90 480 64 90 Manure ton 20.0 20.0 0.3 0.4 0.6 6 8 11 6 8 11 Pesticide kg 20.0 20.0 15 15 15 300 300 300 300 300 300 Machinery Yuan 400 425 450 400 425 450 Animal labor Yuan 300 240 210 300 240 210 Tax Yuan 138 184 258 Other Yuan 180 150 120 180 150 120 Irrigation /a Partial irrigation m 0.28 0.14 1,200 - 336 - - 163 - Full irrigation m' 0.28 0.09 1,800 - - 504 - - 156 Labor Family labor WDs 15.0 10.0 40 50 60 600 750 900 400 500 600 Total Input 3,204 3,487 4,256 2,894 2,918 3,403 Net Value of Production /b 246 1,113 2,184 38 992 2,071 to be continued Page 43 Annex 4, Table 3: Crop Budgets per hectare (continued) Vegetables Unit Price Quantity Financial Values (Yuan) Economic Values (Yuan) Unit Fin. Econ. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Output Vegetables kg 0.6 0.6 18,000 55,000 64,000 10,800 33,000 38,400 10,800 33,000 38,400 Total Output 18,000 55,000 64,000 10,800 33,000 38,400 10,800 33,000 38,400 Operating Inputs Seed kg 20.0 20.0 8 7 7 160 140 140 160 140 140 Urea kg 2.0 2.1 450 1,375 1,600 900 2,750 3,200 939 2,868 3,338 Phosphate kg 1.8 1.9 360 1,100 1,280 648 1,980 2,304 669 2,044 2,378 Potash kg 3.2 3.2 180 550 640 576 1,760 2,048 576 1,760 2,048 Manure ton 20.0 20.0 4 11 13 72 220 256 72 220 256 Pesticide kg 20.0 20.0 15 15 15 300 300 300 300 300 300 Machinery Yuan 400 600 675 400 600 675 Tax Yuan 432 1,320 1,536 Other Yuan 210 375 455 210 375 455 Irrigation /a Partial irrigation n? 0.28 0.14 4,000 - 1,120 - - 544 - Full irrigation n? 0.28 0.09 5,400 - - 1,512 - - 468 Labor Family labor WDs 15.0 10.0 300 450 600 4,500 6,750 9,000 3,000 4,500 6,000 Total Input 8,198 17,315 21,426 6,326 13,351 16,058 Net Value of Production /b 2,602 15,685 16,974 4,474 19,649 22,342 Apple Unit Price Quantity Financial Values (Yuan) Economic Values (Yuan) Unit Fin. Econ. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Rainfed Partly Irr. Fully Irrig. Output Apple kg 0.8 0.8 22,000 27,000 30,000 17,600 21,600 24,000 17,600 21,600 24,000 Total Output 22,000 27,000 30,000 17,600 21,600 24,000 17,600 21,600 24,000 Operating Inputs Urea kg 2.0 2.1 1,320 1,620 1,800 2,640 3,240 3,600 2,754 3,380 3,755 Phosphate kg 1.8 1.9 880 1,080 1,200 1,584 1,944 2,160 1,635 2,006 2,229 Potash kg 3.2 3.2 220 270 300 704 864 960 704 864 960 Manure ton 20.0 20.0 4.4 5.4 6.0 88 108 120 88 108 120 Pesticide kg 20.0 20.0 45 60 75 900 1,200 1,500 900 1,200 1,500 Tax Yuan 704 864 960 Other Yuan 750 1,000 1,000 750 1,000 1,000 Irrigation la Partial irrigation M3 0.28 0.14 1,500 - 420 - - 204 - Full irrigation m? 0.28 0.09 2,500 - - 700 - - 217 Labor Family labor WDs 15.0 10.0 300 350 400 4,500 5,250 6,000 3,000 3,500 4,000 Total Input 11,870 14,890 17,000 9,831 12,262 13,781 Net Value of Production /b 5,730 6,710 7,000 7,769 9,338 10,219 a/ Cost for irrigation water refer to Baojixia irrigation area and differ in other irrigation districts (see Table 1, and Table 9.) b/ Negative values indicate that the production does not fully pay for the used labor, which is mostly family labor. Page 44 Annex 4, Table 4: Crop Yields and Economic Net Value of Production per hectare (NVP) Yield /a Economic Net Value of Production per hectare b/ (kg/ha) (RMB/ha) Wheat rainfed 3,000 -35 -35 -35 -35 -35 -35 -35 -35 -35 partly irrig. 4,500 440 496 328 360 500 426 431 487 416 fully irrig. 5,000 729 783 508 699 806 660 707 770 743 Maize rainfed 3,000 115 115 115 115 115 115 115 115 115 partly irrig. 4,300 442 498 330 362 502 428 433 489 418 fully irrig. 5,800 984 1,056 689 944 1,086 891 954 1,038 1,003 Cotton rainfed 300 94 94 94 94 94 94 94 94 94 partly irrig. 550 778 849 639 678 854 761 767 838 749 fully irrig. 750 1,440 1,502 1,181 1,405 1,529 1,358 1,413 1,487 1,456 Rape Seed rainfed 1,500 38 38 38 3& 38 38 38 38 38 partly irrig. 2,000 992 1,049 881 912 1,053 979 984 1,040 969 fully irrig. 2,800 2,071 2,124 1,849 2,041 2,147 2,001 2,048 2,111 2,085 Vegetables rainfed 18,000 4,474 4,474 4,474 4,474 4,474 4,474 4,474 4,474 4,474 partly irrig. 55,000 19,649 19,838 19,277 19,382 19,851 19,604 19,619 19,808 19,571 fully irrig. 64,000 22,342 22,502 21,677 22,252 22,571 22,133 22,274 22,464 22,384 Apples rainfed 22,000 7,769 7,769 7,769 7,769 7,769 7,769 7,769 7,769 7,769 partly irrig. 27,000 9,338 9,409 9,198 9,238 9,414 9,321 9,327 9,398 9,309 fully irrig. 30,000 10,219 10,293 9,911 10,177 10,325 10,122 10,187 10,275 10,238 a/ There are no significant differences in the yield levels and input parameters between the various irrigation districts. b/ The differences in NVP per hectare among the irrigation districts are explained by differences in the costs for water (see Table 9). Negative values indicate that the production does not fully pay for the used labor, which is mostly family labor. Page 45 Annex 4, Table 5: Cropping Pattern and Total Net Value of Production (NVP) Cropping Pattern - Baojixia Irrigation District Net Value of Production (NVP) - Baojixia Irrigation District Command Area: 190.320 ha (Million RMB) existing situation without project with projec existing situation without project with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated Irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 1,800 111,700 31,400 1,800 89,360 53,357 142,683 Wheat -0.06 49.12 22.90 -0.06 39.30 38.92 104.07 Maize 200 91,000 29,000 200 72,800 49,279 131,777 Maize 0.02 40.19 28.54 0.02 32.15 48.50 129.70 Cotton 7,300 2,100 5,840 3,568 9,543 Cotton - 5.68 3.02 - 4.55 5.14 13.74 Rape Seed 100 7,300 2,100 100 5,840 3,568 9,543 Rape Seed 0.00 7.24 4.35 0.00 5.80 7.39 19.76 Vegetables 6,100 2,000 4,880 3,399 9,088 Vegetables - 119.86 44.68 - 95.89 75.93 203.04 Apples 100 12.800 4.000 100 10,240 6,797 18,176 vApples 0.78 119.53 40.87 0.78 95.62 69.46 185.74 Total cropping area 2,200 236,200 70,600 2,200 188,960 119.968 320,81 Sum of category 0.74 341.63 144.38 0.74 273.30 245.33 656.05 Command area 2,000 146,437 41,883 2,000 117,149 71,171 190,320 Total all areas 486.74 519.37 656.05 Crop. Intensity (%) 110% 161% 169% 110% 161% 169% 169% Incremental NVP 136.68 Cropping Pattern - JInghulqu Irrigation District Net Value of Production (NVP) - Jinghuiqu Irrigation District Command Area: 88.660 ha 'Million RMB) existing situation without Proi with project existino situaVon without roiect with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 4,000 49,800 14,500 4,000 39,840 24,201 66,506 Wheat -0.14 24.72 11.35 -0.14 19.78 18.95 52.07 Maize 1,000 41,000 13,600 1,000 32,800 22,699 62,378 Maize 0.12 20.43 14.35 0.12 16.34 23.96 65.84 Cotton 300 6,000 2,000 300 4,800 3,338 9,173 Cotton 0.03 5.10 3.00 0.03 4.08 5.01 13.78 Rape Seed 100 2,700 1,000 100 2,160 1,669 4,587 Rape Seed 0.00 2.83 2.12 0.00 2.27 3.55 9.74 Vegetables 1,800 500 1,440 835 2,293 Vegetables - 35.71 11.25 - 28.57 18.78 51.60 Apples 1 100 6,700 2,000 100 5,360 3,338 9,1 - Apples 0.78 63.04 20.59 0.78 50.43 34.36 94.42 Total cropping area 5,500 108,000 33,600 5,500 86,400 56,079. 15,1 Sum of category 0.79 151.83 62.671 0.79 121.46 104.60 287.46 Command area 4,670 64,660 19,330 4,670 51,728 32,262 88,660 Total all areas 215.28 226.85 287.46 Crop. Intensity (%) 118% 167% 174%1 118% 167% 174%1 174% Incremental NVP 60.61 Cropping Pattern - Jlaokou Irrigation District Net Value of Production (NVP) - Jiaokou Irrigation District Command Area: 78.6.40 ha (Million RMB) existina situation without Proit with projei existing situation without project with project non- partially fully non- partially fully fully dnon- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 2,600 44,000 13,000 2,600 35,200 21,701 59,003 Wheat -0.09 14.44 6.60 -0.09 11.55 11.02 29.96 Maize 300 35,900 12,000 300 28,720 20,032 54,464 Maize 0.03 11.85 6.26 0.03 9.48 13.80 37.51 Cotton 300 7,500 2,600 300 6,000 4,340 11,801 Cotton 0.03 4.79 3.07 0.03 3.83 5.13 13.94 Rape Seed 100 2,650 900 100 2,120 1,502 4,085 Rape Seed 0.00 2.33 1.66 0.00 1.87 2.78 7.55 Vegetables 100 1,750 550 100 1,400 918 2,496 Vegetables 0.45 33.73 11.92 0.45 26.99 19.90 54.11 Apples 100 4,300 1,500 100 3,440 2,504 917 Apples 0.78 39.55 14.87 0.78 31.64 24.82 67.47 Total cropping area 3,500 96,100 30,550 3,500 76,880 50,997 154,11 Sum of category 1.20 106.69 46.39 120 85.36 77.44 210.54 Command area 3,330 57,983 17,327 3,330 46,387 28,923 78,640 Total all areas 154.28 163.99 210.54 Crop. Intensity (%) 105% 166% 176% 105% 166% 176% 176% Incremental NVP 46.55 to be continued Page 46 Annex 4, Table 5: Cropping Pattern and Total Net Value of Production (NVP) (continued) Cropping Pattern - Taoqupo Irrigation District Net Value of Production (NVP) - Taoqupo Irrigation District Command Area: 19.330 ha (Million RMB) existing situation without project with proiec existing situation without oroject with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 2,700 9,800 1,800 2,700 7,840 3,600 13,048 Wheat -0.09 3.53 1.26 -0.09 2.82 2.52 9.13 Maize 600 5,300 1,300 600 4,240 2,600 9,423 Maize 0.07 1.92 1.23 0.07 1.53 2.46 8.90 Cotton Cotton - - - - - - - Rape Seed 200 1,000 200 200 800 400 1,450 Rape Seed 0.01 0.91 0.41 0.01 0.73 0.82 2.96 Vegetables 400 100 320 200 725 Vegetables - 7.75 2.23 - 6.20 4.45 16.13 Apples 200 1,800 400 200 1,440 800 2900 Apples 1.55 16.63 4.07 1.55 13.30 8.14 29.51 Total cropping area 3,700 18,300 3,800 3,700 14,640 7,600 27,545 Sum of category 1.54 30.74 9.19 1.54 24.59 18.38 66.62 Command area 3,330 13,333 2,667 3,330 10,667 5,333 19,330 Total all areas 41.46 44.51 66.62 Crop. Intensity (%) 111% 137% 143% 111% 137% 143% 143% Incremental NVP 22.11 Cropping Pattern - Shitouhe Irrigation District Net Value of Production (NVP) - Shitouhe Irrigation District Command Area: 21.270 ha (Million RMB) existing situation without proiect with projeci existing situation without orooect with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 5,700 9,000 2,000 5,700 7,200 3,809 16,093 Wheat -0.20 4.50 1.61 -0.20 3.60 3.07 12.97 Maize 2,000 8,700 2,000 2,000 6,960 3,809 16,093 Maize 0.23 4.37 2.17 0.23 3.50 4.14 17.48 Cotton 0 0 Cotton - - - - - - - Rape Seed 300 800 270 300 640 514 2,173 Rape Seed 0.01 0.84 0.58 0.01 0.67 1.10 4.66 Vegetables 400 60 320 114 483 Vegetables - 7.94 1.35 - 6.35 2.58 10.90 Apples 300 950 200 300 760 381 1,609 Appes 2.33 8.94 2.06 2.33 7.15 3.93 16.62 Total cropping area 8.300 19,850 4,530 8,300 15,880 8,628 36,451 Sum of category 2.37 26.60 7.78 2.37 21.28 14.82 62.62 Command area 6,670 11,957 2,643 6,670 9,565 5,035 21,270 Total all areas 36.76 38.48 62.62 Crop. Intensity (%) 124% 166% 171% 124% 166% 171% 171% Incremental NVP 24.15 Cropping Pattern - Fengjilashan Irrigation District Net Value of Production (NVP) - FengJiashan Irrigation District Command Area: 85.580 ha (Million RMB) existing situation without proiect with projecl existing situation without proiect with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated Irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 15,300 39,000 11,900 15,300 31,200 19,661 64,212 Wheat -0.53 16.62 7.85 -0.53 13.30 12.97 42.36 Maize 2,900 22,300 7,400 2,900 17,840 12,226 39,930 Maize 0.33 9.55 6.60 0.33 7.64 10.90 35.59 Cotton 0 0 Cotton - - - - - - - Rape Seed 900 5,200 2,300 900 4,160 3,800 12,411 Rape Seed 0.03 5.09 4.60 0.03 4.07 7.60 24.83 Vegetables 1,850 450 1,480 743 2,428 Vegetables - 36.27 9.96 - 29.01 16.46 53.74 Apples 700 6,350 1,500 700 5,080 2,478 8,094 Apples 5.44 59.19 15.18 5.44 47.35 25.09 81.93 Total cropping area 19,800 74,700 23,550 19,800 59,760 38,909 127,0 Sum of category 5.28 126.71 44.19 5.28 101.37 73.01 238.45 Command area 18,000 51,720 15,860 18,000 41,376 26,204 85,580 Total all areas 176.18 179.66 238.45 Crop. Intensity (%) 110% 144% 148% 110% 144% 148% 148% Incremental NVP 58.79 to be continued Page 47 Annex 4, Table 5: Cropping Pattern and Total Net Value of Production (NVP) (continued) Cropping Pattern - Yangmaowan Irrigation District Net Value of Production (NVP) - Yangmaowan Irrigation District Command Area: 19,280 ha (Million RMB) existing situation without project with project existing situation without project with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 2,500 9,200 2,500 2,500 7,360 4,253 13,616 Wheat -0.09 3.96 1.77 -0.09 3.17 3.01 9.62 Maize 900 8,000 2,500 900 6,400 4,253 13,616 Maize 0.10 3.46 2.38 0.10 2.77 4.06 12.99 Cotton 0 0 Cotton - - - - - - - Rape Seed 100 550 200 100 440 340 1,089 Rape Seed 0.00 0.54 0.41 0.00 0.43 0.70 2.23 Vegetables 400 100 320 170 545 Vegetables - 7.85 2.23 - 6.28 379 12.13 Apples 200 1,000 350 200 800 595 1,906 1 Apples 1.55 9.33 3.57 1.55 7.46 6.07 19.42 Total cropping area 3,700 19,150 5,650 3,700 15,320 9,611 30,772 Sum of category 1.57 25.14 10.35 1.57 20.11 17.61 56.39 Command area 3,330 12,410 3,540 3,330 9,928 6.022 19,280 Total all areas 37.07 39.30 56.39 Crop. Intensity (%) 111% 154% 160% 111% 154% 160% 160% Incremental NVP 17.09 Cropping Pattern - Luohulqu Irrigation District Not Value of Production (NVP) - Luohulqu Irrigation District Command Area: 53,550 ha (Million RMB) existing situation without project with project existing situation without project with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated Irrigated irrigated irrigated irrigated Irrigated irrigated irrigated irrigated Wheat 3,200 27,300 7,400 3,200 21,840 12,893 37,680 Wheat -0.11 13.31 5.70 -0.11 10.64 9.93 29,02 Maize 900 21,200 6,500 900 16,960 11,325 33,097 Maize 0.10 10.37 6.75 0.10 8.30 11.76 34.37 Cotton 600 7,100 2,100 600 5,680 3,659 10,693 Cotton 0.06 5.95 3.12 0.06 4.76 5.44 15.90 Rape Seed 2,000 600 1,600 1,045 3,055 Rape Seed - 2.08 1.27 - 1.66 2.21 6.45 Vegetables 1,100 300 880 523 1,528 Vegetables - 21.79 6.74 - 17.43 11.74 34.32 Apples 5,100 1,500 4,080 2,613 7,638 Apples - 47.93 15.41 - 38.34 26.85 78.48 Total cropping area 4,700 63,800 18,400 4,700 51,040 32,059 93,691 Sum of category 0.06 101.42 38.99 0.05 81.14 67.93 198.53 Command area 4,000 39,033 10,517 4,000 31,227 18,323 53,550 Total all areas 140.46 149.12 198.53 Crop. Intensity (%) 118% 163% 175% 118% 163% 175% 175% Incremental NVP 49.41 Cropping Pattern - Shibaochuan Irrigation District Net Value of Production (NVP) - Shlbaochuan Irrigation District Command Area: 16,950 ha (Million RMB) existing situation without project with project existing situation without project with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 2,000 7,050 600 2,000 5,640 2,060 10,342 Wheat -0.07 2.94 0.45 -0.07 2.35 1.53 7.69 Maize 1,200 4,650 500 1,200 3,720 1,717 8,619 Maize 0.14 1.95 0.50 0.14 1.56 1.72 8.64 Cotton 0 o Cotton - - - - Rape Seed 300 800 60 300 640 206 1,034 Rape Seed 0.01 0.78 0.13 0.01 0.62 0.43 2.16 Vegetables 700 50 0 560 172 862 Vegetables - 13.70 1.12 - 10.96 3.84 19.29 Apples 500 1,600 100 500 1,280 343 1,724 Apples 3.88 14.89 1.02 3.88 11.92 352 17.65 Trtal cropping area 4,000 14,800 1,310 4,000 11,840 4,498 22,581 Sum of category 3.96 34.25 3.22 3.96 27.40 11.04 55.43 Command area 4,000 11,967 983 4,000 9,573 3,377 16,950 Total all areas 41.43 42.41 55.43 Crop. Intensity Va100% 124% 133% 100% 124% 133% 1hincremental NVP r 13.02 to be continued Page 48 Annex 4, Table 5: Cropping Pattern and Total Net Value of Production (NVP) (continued) Cropping Pattern - Nine Irrigation Districts Net Value of Production (NVP) - Nine irrigation Districts Command Area: 573,580 ha (Million RMB) existing situation without project with project existing situation without project with project non- partially fully non- partially fully fully non- partially fully non- partially fully fully irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated irrigated Wheat 39,800 306,850 85,100 39,800 245,480 145,535 423,184 Wheat -1.4 133.1 59.5 -1.4 106.5 101.9 296.9 Maize 10,000 238,050 74,800 10,000 190,440 127,939 369,399 Maize 1.2 104.1 70.8 1.2 83.3 121.3 351.0 Cotton 1,200 27,900 8,800 1,200 22,320 14,905 41,209 Cotton 0.1 21.5 12.2 0.1 17.2 20.7 57.4 Rape Seed 2,100 23,000 7,630 2,100 18,400 13,046 39,426 Rape Seed 0.1 22.7 15.5 01 18.1 26.6 80.4 Vegetables 100 14,500 4,110 100 11,600 7,073 20,448 Vegetables 0.4 284.6 91.5 0.4 227.7 157.5 455.3 Apples 2,200 40,600 11,550 2,200 32,480 19,851 58,028 Apples 17.1 379.0 117.6 17.1 303.2 202.2 591.2 Total cropping area 55,400 650,900 191,990 55,400 520,720 328,350 951,693 Sum of category 17.5 945.0 367.2 17.5 756.0 630.2 1,832.1 Command area 49,330 409,500 114,750 49,330 327,600 196,650 573,580 Total all areas 1,329.7 1,403.7 1,832.1 Crop. Intensity (%) 112% 159% 167% 112% 159% 167% 166% Incremental NVP 428.4 Average Cropping Break-down of Annual incremental Net Value of Production: Intensity (%): 157% 158% 166% RMB mill. % By crop: Wheat 89.8 21% Maize 145.3 34% Cotton 19.3 5% Rape Seed 35.6 8% Vegetables 69.7 16% Apples 68.7 16% Total 428.4 100% By-improving land from: partial irrigation to full irrigation 290.4 68% rainfed to full irrigation 138.0 32% Total 428.4 100% Page 49 户 Page 50 Anne 4, Table 7: Crop Water Requirements and Costs of Water Baoiixia Jinghuiqu Jiaokou Cropped Cropped Water Cost per Water Water Total Total Cropped Cropped Water Costper Water Water Total Total Cropped Cropped Water Costper Water Water Total Total area area with used ha used used costs costs area area with used ha used used costs costs area area with used ha used used costs costs present project without with without with present project without with without with present project without with without with situation project project project project situation project project project project situation project project project project (ha) (ha) (-I/ha) (RMB/ha) (mill. MI) (RMB mill.) (ha) (ha) (ml/ha) (RMB/ha) (mill. MI) (RMB mill.) (ha) (ha) (-'/ha) (RMIB/ha) (mill. In,) (RMB mill.) Water Fee 0. 132 RMBIm' 0. 098 RMBIM' 0.238 RMBIM3 Wheat partly irrig. 111,700 0 1,200 158 134.0 - 17.7 - 49,800 0 1,200 118 59.8 - 5.9 - 44,000 - 1,200 286 52.8 - 12.6 - fully irrig. 31,400 142,683 1,800 237 56.5 256.8 7.4 33.8 14,500 66,506 1,800 177 26.1 119.7 2.6 11.8 13,000 59,003 1,800 429 23.4 106.2 5.6 253 Maize partly irrig. 91,000 0 1,200 158 109.2 - 14.4 - 41,000 0 1,200 118 49.2 - 4.8 - 35,900 - 1,200 286 43.1 - 10.3 - fully irrig. 29,000 131,777 2,400 316 69.6 316.3 9.2 41.7 13,600 62,378 2,400 236 32.6 149.7 3.2 14.7 12,000 59,003 2,400 572 28.8 141.6 6.9 33.7 Cotton partly irrig. 7,300 0 1,500 198 11.0 - 1.4 - 6,000 0 1,500 147 9.0 - 0.9 - 7,500 - 1,500 357 11.3 - 2.7 - fully irrig. 2,100 9,543 2,100 277 4.4 20.0 0.6 2.6 2,000 9,173 2,100 206 4.2 19.3 0.4 1.9 2,600 11,801 2,100 500 5.5 24.8 1.3 5.9 Rape Seed partly irrig. 7,300 0 1,200 158 8.8 - 1.2 - 2,700 0 1,200 118 3.2 - 0.3 - 2,650 - 1,200 286 3.2 - 0.8 - fully irrig. 2,100 9,543 1,800 237 3.8 17.2 0.5 2.3 1,000 4,587 1,800 177 1.8 8.3 0.2 0.8 900 4,085 1,800 429 1.6 7.4 0.4 1.8 Vegetables partly irrig. 6,100 0 4,000 527 24.4 - 3.2 - 1,800 0 4,000 393 7.2 - 0.7 1,750 - 4,000 953 7.0 - 1.7 - fully irrig. 2,000 9,088 5,400 712 10.8 49.1 1.4 6.5 500 2,293 5,400 530 2.7 12.4 0.3 1.2 550 2,496 5,400 1,287 3.0 13.5 0.7 3.2 Apples partly irrig. 12,800 0 1,500 198 19.2 - 2.5 - 6,700 0 1,500 147 10.1 - 1.0 - 4,300 - 1,500 357 6.5 - 1.5 - fully irrig. 4,000 19,176 2,500 329 10.0 45.4 1.3 6.0 2,000 9,173 2,500 245 5.0 22.9 0.5 2.3 1,500 6,808 2,500 596 3.8 17.0 0.9 4.1 Total Water Used at Field Level (ml mill.) 461.7 704.8 210.9 332.3 189.8 310.4 Incremental Water Used at Field Level (ml mill.) 243.2 121.4 120.7 Potential Income from Water Fees (RMB mill.) 60.8 92.9 20.7 32.6 45.2 74.0 Incremental Income from Water Fees (RMB mill.) 32.0 11.9 28.81 to be continued Page 51 Anne 4, Table 7: Crop Water Requirements and Costs of Water (continued) Taoqupo Shitouhe Fengilashan Cropped Cropped Water Cost per Water Water Total Total Cropped Cropped Water Cost per Water Water Total Total Cropped Cropped Water Cost per Water Water Total Total area area with used ha used used costs costs area area with used ha used used costs costs area area with used ha used used costs costs present project without with without with present project without with without with present project without with without with situation project project project project situation project project project project situation project project project project (ha) (ha) (mllha) (RMB/ha) (mill. m) (RMB mill.) (ha) (ha) (m'ha) (RAM/ha) (mill. mi) (RMB mill.) (ha) (ha) (m'/ha) (RMB/ha) (mill. M') (RM mill.) Water Fee 0.213 RMB/m' 0.063 RMB/Im' 0.137 RMB/m' Wheat partly irrig. 9,800 - 1,200 255 11.8 - 2.5 - 9,000 - 1,200 76 10.8 - 0.7 - 39,000 - 1,200 164 46.8 - 6.4 - fully irrig. 1,800 13,048 1,800 383 3.2 23.5 0.7 5.0 2,000 16,093 1,800 114 3.6 29.0 0.2 1.8 11,900 64,212 1,800 246 21.4 115.6 2.9 15.8 Maize partly irrig. 5,300 - 1,200 255 6.4 - 1.4 - 8,700 - 1,200 76 10.4 - 0.7 - 22,300 - 1,200 164 26.8 - 3.7 - fully irrig. 1,300 9,423 2,400 510 3.1 22.6 0.7 4.8 2,000 16,093 2,400 152 4.8 38.6 0.3 2.4 7,400 39,930 2,400 328 17.8 95.8 2.4 13.1 Cotton partly irrig. - - 1,500 319 - - - - - - 1,500 95 - - - - - - 1,500 205 - - - - fully irrig. - - 2,100 446 - - - - - - 2,100 133 - - - - - - 2,100 287 - - - - Rape Seed partly irrig. 1,000 - 1,200 255 1.2 - 0.3 - 800 - 1,200 76 1.0 - 0.1 - 5,200 - 1,200 164 6.2 - 0.9 - fully irrig. 200 1,450 1,800 383 0.4 2.6 0.1 0.6 270 2,173 1,800 114 0.5 3.9 0.0 0.2 2,300 12,411 1,800 246 4.1 22.3 0.6 3.1 Vegetables partly irrig. 400 - 4,000 850 1.6 - 0.3 - 400 - 4,000 253 1.6 - 0.1 - 1,850 - 4,000 547 7.4 - 1.0 - fully irrig. 100 725 5,400 1,148 0.5 3.9 0.1 0.8 60 483 5,400 341 0.3 2.6 0.0 0.2 450 2,428 5,400 738 2.4 13.1 0.3 1.8 Apples partly irrig. 1,800 - 1,500 319 2.7 - 0.6 - 950 - 1,500 95 1.4 - 0.1 - 6,350 - 1,500 205 9.5 - 1.3 - fully irrig. 400 2,900 2,500 531 1.0 7.2 0.2 1.5 200 1,609 2,500 158 0.5 4.0 0.0 0.3 1,500 8,094 2,500 342 3.8 20.2 0.5 2.8 Total Water Used at Field Level (m' mill.) 31.9 59.9 34.9 78.1 146.2 267.1 Incremental Water Used at Field Level (m' mill.) 28.0 43.2 120.9 Potential Income from Water Fees (RMB mill.) 6.8 12.7 2.2 4.9 20.0 36.5 Incremental Income from Water Fees (RMB mill.) 5.9 2.7 16.5 to be continued Page 52 Annex 4, Table 7: Crop Water Requirements and Costs of Water (continued) Yangmaowan Luohuiqu Shibaochuan Cropped Cropped Water Cost per Water Water Total Total Cropped Cropped Water Costper Water Water Total Total Cropped Cropped Water Costper Water Water Total Total area area with used ha used used costs costs area area with used ha used used costs costs area area with used ha used used costs costs present project without with without with present project without with without with present project without with without with situation project project project project situation project project project project situation project project project project (ha) (ha) (m/ha) (RMB/ha) (mill. mI') (RMB mill.) (ha) (ha) (ml/ha) (RNB/ha) (mill. m') (RMB mill.) (ha) (ha) (m /ha) (RMB/ha) (mill. m') (RMB mill.) Water Fee 0.19 RMB/m' 0.111 RMB/m' 0.140 RMB/m' Wheat partly irrig. 9,200 - 1,200 232 11.0 - 2.1 - 27,300 - 1,200 134 32.8 - 3.7 - 7,050 - 1,200 168 8.5 - 1.2 - fully irrig. 2,500 13,616 1,800 348 4.5 24.5 0.9 4.7 7,400 37,680 1,800 201 13.3 67.8 1.5 7.6 600 10,342 1,800 252 1.1 18.6 0.2 2.6 Maize partly irrig. 8,000 - 1,200 232 9.6 - 1.9 - 21,200 - 1,200 134 25.4 - 2.8 - 4,650 - 1,200 168 5.6 - 0.8 - fully irrig. 2,500 13,616 2,400 463 6.0 32.7 1.2 6.3 6,500 33,097 2,400 268 15.6 79.4 1.7 8.9 500 8,619 2,400 336 1.2 20.7 0.2 2.9 Cotton partly irrig. - - 1,500 290 - - - - 7,100 - 1,500 167 10.7 - 1.2 - - - 1,500 210 - - - - fully irrig. - - 2,100 405 - - - - 2,100 10,693 2,100 234 4.4 22.5 0.5 2.5 - - 2,100 294 - - - - Rape Seed partly irrig. 550 - 1,200 232 0.7 - 0.1 - 2,000 - 1,200 134 2.4 - 0.3 - 800 - 1,200 168 1.0 - 0.1 - fully irrig. 200 1,089 1,800 348 0.4 2.0 0.1 0.4 600 3,055 1,800 201 1.1 5.5 0.1 0.6 60 1,034 1,800 252 0.1 1.9 0.0 0.3 Vegetables partly irrig. 400 - 4,000 772 1.6 - 0.3 - 1,100 - 4,000 446 4.4 - 0.5 - 700 - 4,000 560 2.8 - 0.4 - fully irrig. 100 545 5,400 1,043 0.5 2.9 0.1 0.6 300 1,528 5,400 602 1.6 8.2 0.2 0.9 50 862 5,400 756 0.3 4.7 0.0 0.7 Apples partly irrig. 1,000 - 1,500 290 1.5 - 0.3 - 5,100 - 1,500 167 7.7 - 0.9 - 1,600 - 1,500 210 2.4 - 0.3 - fully irrig. 350 1,906 2,500 483 0.9 4.8 0.2 0.9 1,500 7,638 2,500 279 3.8 19.1 0.4 2.1 100 1,724 2,500 350 0.3 4.3 0.0 0.6 Total Water Used at Field Level (m' mill.) 36.7 66.9 123.1 202.6 23.1 50.1 Incremental Water Used at Field Level (m' mill.) 30.2 79.5 27.0 Potential Income from Water Fees (RMB mill.) 7.1 12.9 13.7 22.6 3.2 7.0 Incremental Income from Water Fees (RMB mill.) 5.8 8.9 3.8 Page 53 Annex 4, Table 8 Water Requirements at Field Level and Expected Income from Water Charges Total water used at field level Potential income from water Estimated sales of water by (mill.m) charge (RMB mill.) Irrigation District (RMB mill.) a/ present future with incre - present future with incre - present future with Incre- project mental project mental (40% of project mental demand) (80% of demand) Baojixia 461.7 704.8 243.2 60.8 92.9 32.0 24.3 74.3 50.0 Jinghuiqu 210.9 332.3 121.4 20.7 32.6 11.9 8.3 26.1 17.8 Jiaokou 189.8 310.4 120.7 45.2 74.0 28.8 18.1 59.2 41.1 Taoqupo 31.9 59.9 28.0 6.8 12.7 5.9 2.7 10.2 7.5 Shitouhe 34.9 78.1 43.2 2.2 4.9 2.7 0.9 4.0 3.1 Fengjiashan 146.2 267.1 120.9 20.0 36.5 16.5 8.0 29.2 21.2 Yangmaowan 36.7 66.9 30.2 7.1 12.9 5.8 2.8 10.3 7.5 Luohuiqu 123.1 202.6 79.5 13.7 22.6 8.9 5.5 18.1 12.6 Shibaochuan 23.1 50.1 27.0 3.2 7.0 3.8 1.3 5.6 4.3 Total 1,258.2 2,072.2 814.0 179.8 296.2 116.4 71.9 236.9 165.0 a/ It is assumed that the remaining water comes from other sources such as ground water or are not paid for. Page 54 Annex 4, Table 9: Economic Operation and Maintenance Costs (yr 5 to 20 after project start, constant 1998 prices) 6 r_ . 0 0 0 9 0 to M Parameters for Cost Calculation Total Command Area '000 ha 190.32 88.66 78.64 19.33 21.27 85.58 19.28 53.55 16.95 Fixed Assets Civil works before project (1) RMB mill. 423.3 153.3 168.8 87.5 27.4 122.6 19.5 82.3 37.6 Civil works after project (2) RMB mill. 764.6 251.2 265.3 160.9 45.6 159.5 89.6 196.9 70.3 Equipment before project (3) RMB mill. 33.7 5.8 31.0 1.6 3.6 38.9 1.5 3.8 1.7 Equipment after project (4) RMB mill. 62.1 11.1 73.4 4.3 4.9 43.5 4.4 5.5 3.9 Staff Management staff (5) No. 95 33 56 8 9 33 9 18 8 Administrative and field staff (6) No. 380 129 226 34 35 127 30 69 39 Pumping Parameters Installed capacity (7) MW 28.54 6.67 29.49 0.91 0.20 33.62 3.29 4.23 0.14 Serviced area by pumping (8) '000 ha 61.40 9.67 78.64 1.30 0.50 29.27 4.00 10.7 0.13 Max. needed pump running time (9) hi/year 1,542 2,098 3,346 448 2,048 1,372 1,873 2,554 1,535 Aggregated average lift (10) m 34.1 68.0 35.0 17.8 35.0 89.0 78.3 47.0 95.0 Water Demand Total at field level (11) mill.m 705 332 310 60 78 267 67 203 50 of which demand in: Areas serviced by pumping (12) mill.ml 227 36 310 4.0 2.0 91 14 40 0.4 Areas serviced by gravity (13) mill.ml 477 296 - 56 76 176 53 162 50 Total demand at head works (14) mill.ml 1,410 665 621 120 156 534 134 405 100 of which demand in: Areas serviced by pumping (15) mill.m 284 45 621 5.0 2.5 114 17 51 0.5 Areas serviced by gravity (16) mill.m' 1,125 619 - 115 154 420 116 355 100 Operating Costs Staff Costs Management (17) RMB mill. 1.14 0.40 0.67 0.10 0.11 0.40 0.11 0.22 0.10 Admin. and field staff (18) RMB mill. 3.04 1.03 1.81 0.27 0.28 1.02 0.24 0.55 0.31 Other (pension, etc.) (19) RMB mill. 0.78 0.27 0.47 0.07 0.07 0.26 0.07 0.14 0.08 Sub-totalstafftcosts RMBmill. 4.96 1.70 2.95 0.44 0.46 1.68 0.41 0,91 0.48 Qf]ice and Management Costs (20) RMB mill. 8.36 2.86 4.96 0.74 0.78 2.82 0.70 1854 0.82 Energy Power needed at full supply (21) MWh/y. 44,003 13,985 98,659 407 401 46,140 6,163 10,795 207 Pumping costs at full supply (22) RMB mill. 17.60 5.59 39.46 0.16 0.16 18.46 2.47 4.32 0.08 Other (23) RMB mill. Pumping cost per me (24) Fen 6.2 12.3 6.4 3.2 6.4 162 14.2 8.5 17.3 Sub-total Operating Costs 30.93 10.15 47.37 1.34 1.40 22.96 3.57 6.77 1.38 Maintenance and Periodic Overhaul and Repair Costs Civil works (25) RMB mill. I5.3 5.0 5.3 3.2 0.9 3.2 1.8 3.9 1.4 Equipment (26) RMB mill. 6.2 1.1 7.3 0.4 0.5 4. 4 0.6 0.4 Sub-total Maintenance and Overhaul RMB mill. 21.5 6.1 12.6 3.6 1.4 7.5 2.2 4.5 1.8 Loan Repayment Loan size (27) RMB mill. 217.37 93.66 60.46 44.74 10.13 20.54 42.91 65.64 20.96 Loan Interest Rate (% p.a.) (28) 8.0% Repayment after 5y. grace (years) (29) 15 Annualconstantpayments (30) RMBmill. 25.40 10.94 7.06 5.23 1.18 2.40 5.01 7.67 2.45 TOTAL COSTS (100% use) (31) RMB mill. 77.82 27.22 67.08 10.21 3.98 32.90 10.82 18.93 5.63 TOTAL COSTS (80% use) (32) RMB mill. 74.30 26.10 59.19 10.18 3.95 29.21 10.33 18.06 5.62 TOTAL COSTS (40% use) (33) RMB mill. 67.26 23.86 43.40 10.11 3.89 21.83 9.34 16.34 5.58 Costs lateral entrance (100% use) (34) Fen/mi 11.0 8.2 21.6 17.1 5.1 12.3 16.2 9.3 11.2 Costs lateral entrance (80% use) (35) Fen/m' 13.2 9.8 23.8 213 6.3 13.7 19.3 11.1 14.0 Costs lateral entrance (40% use) (36) Fen/m 23.9 18.0 35.0 42.2 12.4 20.4 34.9 20.2 27.8 to be continued Page 55 Annex 4, Table 9: Economic Operation and Maintenance Costs (yr 5 to 20 after project start constant 1998 prices) (continued) Cost break-down at an utilization level of 80% Irrigation staff and office costs (37) Fen/mi 2.4 1.7 3.2 2.4 2.0 2.1 2.1 1.5 3.2 Electricity and other energy (38) Fen/nil 2.5 1.7 12.7 0.3 0.2 6.9 3.7 2.1 0.2 Overhaul and repair (39) Fen/in' 3.8 2.3 5.1 7.6 2.2 3.5 4.2 2.8 4.5 Loan and interest repayment (40) Fen/nl 4.5 4.1 2.8 10.9 1.9 1.1 9.4 4.7 6.1 Existing Water Charges (end l998) Fen/trW 11.6 10.0 11.5 11,5 9.5 7.5 16.6 22.0 23.0 (excluding costs for electricity) Economic Costs used in the Economic Costs Benefit Analysis (loan repayment costs excluded): Without project (40% level) (41) Fen/nl 13.6 8.9 22.9 20.3 8.6 14.7 14.3 9.6 15.5 With project (80% level) (42) Fen/nn' 8.7 5.7 21.0 10.3 4.4 12.5 9.9 6.4 7.9 Notes, assumptions and method of calculation: (1) Estimation provided by PMO (2) (1) plus estimated project investment costs (3) Estimation provided by PMO (4) (3) plus estimated project investment costs (5) Information provided by PMO (6) Information provided by PMO (7) Information provided by PMO, (8) Information provided by PMO. (9) Maximum pumping needs to serve full water demand. Estimation based on water demand, average lift, installed capacity and an assumed pumping efficiency of 60%. (10) Average accumulated lift by surface water pumping (gravity serviced area excluded). (11) Calculated from crop budgets and cropping pattern used in the financial and economic analysis. (12) Assuming same per hectare demand in areas served by pumping and areas served by gravity. (13) Assuming same per hectare demand in areas served by pumping and areas served by gravity. (14) Assuming an overall conveyance efficiency of 50% (15) Assuming an average conveyance efficiency of 60% (Jiaokou 50%) from pumping station to field. (16) (13)-(15) (17) Total average annual staff costs of RMB 12,000 per staff. (18) Total average annual staff costs of RMB 8,000 per staff. (19) 25% of active staff number with a pension level of 75% of salary level. ((5)+(6))*25%*75% (20) 80% of salary costs for office operation (transportation, electricity, communication, consumnables, etc.) (21) Pumping efficiency of 60%. (22) (7)*(9)/(1,000)*0.40 RMB (assuming electricity price of RMB 0.40 per kWh (23) undefined (24) (22)/(15)*100 (25) 2% of civil works assets. (26) 10% of equipment assets. (27) Preliminary cost and loan disbursement estimation, excluding investment in minor distribution system. (28) Preliminary (29) Preliminary (30) Assumirng constant annual repayments over 15 periods (31) Assuming that 100% of the water demand at field level would be supplied from the system. (32) Assuming that 80% of the water demand at field level would be supplied from the system. (33) Assuming that 60% of the water demand at field level would be supplied from the system. (34) If 100% of the calculated field demand would be supplied from the systems, - theoretical demand. (35) If 80% of the calculated field demand would be supplied from the systems;- target to be reached. (36) If 40% of the calculated field demand would be supplied from the systems;- reflecting current supply level. Page 56 Annex 4, Table 10: Financial Analysis of Typical Farming Households in the Project Area Farm A: Rainfed cropping without Cropping Pattern Net Income from Return to Change in project will receive full irrigation on Cropping without Family Labor Family 70% of the crop land family labor Income (ha) (RMB) (RMB/day) (RMB/year) without with without with without with Total area 1.00 1.00 Rainfed 1.00 0.30 Partially irrigated - - Fully irrigated - 0.70 Cropping intensity 110% 1.50 Crops Wheat rainfed 0.80 0.30 891 334 Wheat fully irrigated 0.50 - 1,123 Maize rainfed 0.20 246 - Maize fully irrigated 0.50 - 1,109 Rape seed rainfed 0.10 85 - Rape seed fully irrigated 0.20 - 617 Total 1,221 3,183 18.51 25.99 +1,962 Annual loan and interest repayment (see calculation below) -144 Farm B: Farm with partial Cropping Pattern Net Income from Return to Change in irrigation receives full irrigation on Cropping without Family Labor Family all land family labor Income (ha) (RMB) (RMB/day) (RMB/year) without with without with without with Total area 1.00 1.00 Rainfed Partially irrigated 1.00 Fully irrigated - 1.00 Cropping intensity 110% 160% Crops Wheat partially irrigated 0.60 1,134 - Wheat fully irrigated 0.60 - 1,348 Maize partially irrigated 0.20 332 - Maize fully irrigated 0.60 - 1,331 Rape seed partially irrigated 0.10 186 - Rape seed fully irrigated 0.20 - 617 Apple partially irrigated 0.20 2,392 - Apple fully irrigated 0.20 - 2,600 Total 4,044 5,896 31.35 32.22 +1,851 Annual loan and interest repayment (see calculation below) -46 to be continued Page 57 Annex 4, Table 10: Financial Analysis of Typical Farming Households in the Project Area Farm C. Small and poor rainfed farm Cropping Pattern Net Income from Return to Family Change in receives irrigation on small area and plants Cropping without Labor Family Income vegetables and rape seed family labor (ha) (RMB) (RMB/day) (RMB/year) without with without with without with Total area 0.60 0.60 Rainfed 0.60 0.50 Partially irrigated Fully irrigated - 0.10 Cropping intensity 117% 133% Crops Wheat rainfed 0.50 0.50 557 557 Maize rainfed 0.10 0.20 123 246 Rape seed rainfed 0.10 85 - Rape seed fully irrigated 0.05 - 154 Vegetables fully irrigated 0.05 - 1,299 Total 764 2,255 18.64 36.38 +1,491 Annual loan and interest repayment (see calculation below) -21 Farm D: Apple and vegetable producer Cropping Pattern Net Income from Return to Family Change in with unreliable water supply receives Cropping without Labor Family Income reliable irrigation family labor (ha) (RMB) (RMB/day) (RMB/year) without with without With without with Total area 1.20 1.20 Rainfed 0.20 Partially irrigated 1.00 Fully irrigated - 1.20 Cropping intensity 125% 125% Crops Wheat rainfed 0.20 223 - Wheat partially irrigated 0.10 189 - Wheat fully irrigated 0.30 - 674 Maize rainfed 0.20 246 - Maize fully irrigated 0.10 - 222 Cotton partially irrigated 0.10 263 - Cotton fully irrigated 0.10 - 362 Vegetables partially irrigated 0.10 2,244 - Vegetables fully irrigated 0.20 - 5,195 Apple partially irrigated 0.80 9,568 - Apple fully irrigated 0.80 - 10,400 Total 12,732 16,852 40.48 48.22 +4,121 Annual loan and interest repayment (see calculation below) -88 Loan Repayment Calculation Unit New areas Improved areas Loan size (35% of investment costs) RMB mill. 46.86 38.64 Area ha 49,330 180,000 Loan size per hectare RMB/ha 950 215 Loan Interest Rate (% p.a.) 8.0% Repayment years 6 Annual constant payments RMB/halyear 205.48 46.43 Page 58 Annex 5 Financing Plan Source of Funds year 1 year 2 year 3 year 4 year 5 year 6 Total (million Yuan) % I. For the Five Province Owned IDs 1/ From Provincial Government: Finance Bureau: Special Fund for 55.5 59.7 59.4 53.1 47.8 14.9 290.4 51 Water Resources Planning Commission Infrastructure 10.4 12.4 13.6 11.9 10.1 8.4 66.8 12 Capital Fund Provincial Finance Bureau Special 10.4 12.4 13.6 11.9 10.1 8.4 66.8 12 Fund Sub-total 76.3 84.5 86.6 76.9 68.0 31.7 424.0 74 From Local Governments and Beneficiaries: Baoji 5.6 5.2 5.1 3.8 3.2 2.6 25.5 5 Xianyang 12.1 10.1 11.8 10.9 13.1 10.4 68.5 12 Weinan 3.2 6.7 5.5 5.9 8.1 3.1 32.5 6 Tongchuan 0.6 0.9 0.9 0.7 0.7 0.4 4.2 1 Xian 1.5 2.5 3.0 3.0 3.7 2.0 15.6 3 Sub-total 23.0 25.4 26.3 24.3 28.8 18.5 146.3 26 TOTAL 99.3 109.9 112.9 101.2 96.8 50.2 570.3 100 II. For the Four City Owned IDs 2/ Provincial Finance Bureau: Special 3.0 5.8 6.7 5.4 5.0 3.2 29.1 11 Fund for Water Resources City Infrastructure Capital Fund 6.0 9.4 11.3 9.8 9.0 6.3 51.8 20 Local Finance Fund 8.1 13.9 16.1 12.5 11.5 7.1 69.2 27 Sub-total 17.1 29.1 34.1 27.7 25.5 16.6 150.1 58 Contributions from Beneficiaries: Baoji 8.7 12.8 11.5 6.4 8.8 5.8 54.1 21 Xianyang 1.7 2.5 2.6 1.7 2.4 1.2 12.1 5 Weinan 9.5 12.0 7.6 6.2 4.4 3.9 43.5 17 Sub-total 19.9 27.3 21.7 14.3 15.6 10.9 109.7 42 TOTAL 37.0 56.4 55.8 42.0 41.1 27.5 259.8 100 GRAND TOTAL of I and II 136.3 166.3 168.7 143.2 137.9 77.7 830.1 50 World Bank Loan/Credit 134.8 164.5 166.8 150.4 155.7 57.8 830.0 50 TOTAL 271.1 330.8 335.5 293.6 293.6 135.5 1660.1 100 1/ Baojixia, Jinghuiqu, Jiaokou, Taoqupo and Shitouhe IDs 2/ Fenjiashan, Yangmaowan, Luohuiqu and Shibuchuan IDs Page 59 Annex 6 Procurement and Disbursement Arrangements A: PROCUREMENT 1. Procurement agencies The Water Conservancy Bureau (WCB) of Shaanxi province, through its PPMO, will have overall responsibility for the technical execution of the project. The PPMO will retain a National Tendering Corporation to manage bidding for equipment procured through ICB. The WCB/PPMO will: (a) manage the design and construction of several major works such as new dams and the raising of existing dams carried out under ICB and NCB contracts; (b) cooperate with the National Tendering Corporation for the procurement under ICB of pumps, motors and other equipment; and (c) oversee the preparation, advertising, bidding and bid evaluation of the smaller NCB contracts for works carried out by the IDs. The IDs will: (a) manage the design and construction of the main conveyance systems and pumping stations; (b) install the pump station equipment referred to above; and (c) provide technical assistance and supervision for minor irrigation works and land leveling below the branch canals carried out by the counties, townships and villages. 2. Procurement methods The Guidelines for procurement under IBRD Loans and Credits published by the Bank in January 1995 and revised in January and August 1996, September 1997 and January 1999 will be applied to all Bank-financed procurement of goods and works. The Model Documents developed by the Ministry of Finance and the Bank will be adopted for all International Competitive Bidding (ICB) and National Competitive Bidding (NCB) for civil works and goods, and the Standard Bid Evaluation Form will be used. Procurement of civil works through ICB and through NCB with estimated values exceeding US$0.6 million will be managed by the PPMO. Works procured through NCB with estimated values of US$0.6 million and less will be managed by the Irrigation District PMO (IDPMO). Small works contracts, procured through small works procedures and force account, will by managed by City and County level Water Conservancy Bureaus with guidance from the IDs. Project component costs and procurement arrangements are shown in Table A. Thresholds for procurement methods and for prior review are shown in Table B. Detailed procurement schedules for all major and minor works and goods are provided in the PIP and available in the project file. 3. Civil works Works estimated to cost US$10.0 million equivalent or more per contract will be procured under ICB procedures. Works costing less than US$10 million but not less than US$0.2 million equivalent per contract ( up to an aggregate of $92.5 million) may be procured under NCB procedures. Works costing less than $0.2 million equivalent per contract ( up to an aggregate of US$7.1 million) may be procured under small works procedures. Minor irrigation and on farm development works costing less than US$0.1 million equivalent per assignment ( up to an aggregate of US$39.2 million) may, with prior Bank agreement be procured under force account using community participation. Specifically, the contract for the raising the Linjiacun weir (US$12.0 million) will be procured through ICB procedures following pre-qualification of bidders. The Luohuiqu weir (US$8.2 million) and other remedial works at existing dams (US$ 27.5 million) will be procured through NCB in about 23 packages ranging in value from US$0.5 million to US$5.0 million and in 16 packages (US$0.7 million) through Small Works (SW) bidding procedures, including lump-sum, fixed price contracts awarded on the basis of quotations obtained from three (3) qualified domestic contractors in response to a written invitation. Works for major Page 60 canals, drainage system improvements and associated works such as towers for telecom, 0 & M buildings, pumphouses and access roads (US$64.1 million) are widely dispersed over nine IDs, that cover an area measuring over 200 km from west to east. These works will be carried out over short periods each year when the canals are not in use, and will be procured through NCB (US$56.9 million) in about 118 contract packages ranging from US$0.2 million to US$2.0 million and in 91 bids (US$6.4 million) through SW procedures. The construction of minor irrigation improvement works (US$29.8 million) and land leveling works (US$9.4 million) will be procured through force account which will be subject to prior approval by the Bank. The minor irrigation works will consist of the repair and lining of lateral and sub-lateral canals. These works will be carried out with community participation arranged by the County Water Conservancy Bureaus under the direction of the management stations of the Irrigation Districts. Each assignment will not exceed US$100,000 equivalent. The land leveling works will be carried out with community participation, primarily farmers working on their own land, under the direction of the operators of lateral canals with technical guidance and control from the county and township water conservancy bureaus. 4. Goods Contracts for pumps and valves (ICB-1: US$2.1 million), motors and transformers (ICB-2: US$2.4 million), hoists and overhead cranes (ICB-3: US$0.4 million), electrical equipment and panels (ICB-4: US$2.9 million) will be procured through four ICB packages. ICB bids will also be invited for communications equipment (ICB-5: US$1.9 million) and vehicles (ICB-6: US$0.9 million). A few goods, with values ranging between US$250,000 and US$100,000, will be procured through NCB procedures (US$0.2 million). A margin of preference of 15% of the CIF price of imported goods or actual customs duties, whichever is lower, will be applied to domestically manufactured goods procured through ICB. Miscellaneous other equipment (US$0.3 million) in packages costing less than US$100,000 will be purchased through international (US$0.2 million) and other equipment in packages costing less than US$50,000 may be purchased through national shopping (US$0.1 million). For international shopping three price quotations will be obtained from qualified suppliers in at least two different countries. Two vehicles and some office furniture and equipment, suitable for retro-active financing, will be procured through national shopping. 5. Procurement of services The employment of international and national consultants (US$ 0.5 million) would be in accordance with the Bank's "Guidelines for Selection and Employment of Consultants by World Bank Borrowers" of January 1997, revised in September 1997 and January 1999. For consultant services the standard request for proposals, dated July 1997 and revised in April 1998, will be used. All consulting contracts are expected to cost less than US$100,000 and will use the "Selection based on Consultant's Qualifications" or "CQ" procedures. "Single Source Selection" procedures will be used for project management and dam safety consultant contracts not costing less than $50,000 each after prior approval from the Bank. Individual consultants will be procured under the procedures in the guidelines for employment of individuals. All consulting assignments with values over US$200,000 will be advertised in Development Business. The organization and implementation of training and study tours programs (US$1.3 million) would be 100 percent financed by the Bank loan based on programs subject to prior review by the Bank. 6. Other items not financed by the Bank Land acquisition and resettlement cost (US$4.8 million), interest during construction (US$21.4 million), survey, design and construction supervision (US$4.4 million), project management fees (US$1.5 million), and some small works Page 61 including office buildings (US$3.5 million), totaling US$35.6 million would be fully funded by Shaanxi. Groups to undertake survey, design and construction supervision will be selected from a short-list of qualified firms based on appropriate terms of references. 7. Prior review All ICB contracts for works (US$10.0 million or more) and goods (US$250,000 or more) would be subject to: (i) prior review; and (ii) a "no objection letter" from the Bank. For NCB procurement of civil works costing US$200,000 or more bid documents, bid evaluation and award recommendation reports for the first bid in each ID will be subject to prior review by the Bank. Thereafter, only bids exceeding US$1.5 million will be subject to prior review. This will cover 17 contracts representing about 38 percent or US$34.8 million of the NCB contract value of US$ 92.5 million. Contracts for consultant services in excess of US$50,000 for individual consultants (US$0.1 million) and US$100,000 for firms will be subject to prior review. Overseas and domestic training and study tours (US$1.3 million) will be reimbursed based on programs agreed with the Bank. All other contracts will be subject to ex-post review by Bank supervision missions (see Table B). B: DISBURSEMENT 8. Disbursement for civil works and buildings will be 67 percent made against eligible payments to contractors for works executed and for authorized mobilization advances. Disbursement for goods and equipment, including vehicles, will be at 100 percent of foreign expenditures for direct imports, 100 percent of the ex-factory costs for locally manufactured items, and 75 percent of expenditures for other items procured locally. Loan disbursement for minor irrigation works and land leveling will be 30% of eligible expenditures. If these activities are carried out under force account with community participation, disbursements will be 30 percent against unit rates based on statement of works completed for each minor system. For this purpose unit rates for specific items have been confirmed with the Borrower, and will be periodically updated. The unit rates are for the construction of a kilometer of earthwork, lining and structures for laterals and sub-laterals and for a hectare of land leveling. The rates (details are provided in the PIP) will apply to all minor works in each ID under the project. Random checking of these specific items will be easy to make for PPMO staff and World Bank supervision missions. Disbursement for research, training, study tours and consultant services will be 100% of eligible expenditures. Expenditures for works under contracts costing less than US$1.5 million equivalent ( excluding the 1st NCB contract procured in each ID), goods under contracts costing less than US$0.2 million equivalent, services provided by firms under contracts costing less than US$0.1 million equivalent, services less than US$50,000 equivalent, and training, study tours, and research regardless of cost will be disbursed against Statement of Expenditures (SOE). See Table C: Allocation of Loan and Credit Proceeds. The estimated disbursement schedule for the Bank Loan/Credit is given in Table D. 9. To facilitate disbursement, a Special Account (SA) in US dollars, would be opened at a commercial bank acceptable to the Bank, with an initial deposit of US$4.0 million up to maximum of US$7.0 million, which is approximately equivalent to the Bank's disbursement for four months of project implementation. Applications for replenishment for the SA would be submitted monthly or when the account is drawn down to 50 percent of its initial deposit, whichever comes first. The Provincial Bureau of Finance will make payments within 2 weeks after receipt and review of withdrawal applications. The lower level BOF will pass on the funds promptly, and no later than 2 Page 62 weeks after the funds were received. 10. Retro-active financing To avoid delays in the startup of the project, retro-active Bank financing of SDR 4.0 million (US$5.5 million equivalent) is recommended to cover expenditures incurred between September 1, 1998 and the date of signing of the Loan/Credit Agreement. The agreed activities eligible for retro-active financing are detailed in the PIP. Page 63 Annex 6, Table A: Project Costs by Procurement Arrangements (in US$ million) Expenditure Category Procurement Method ICB NCB Other/a NBF Total Civil Works and Buildings 12.0 92.5 7.1 3.5 115.1 (8.1) (62.0) (4.7) (0.0) (74.8) New storage facilities 12.0 18.1 - - 30.2 (8.1) (12.1) (20.2) Repair of storage and diversion facilities - 17.5 0.7 - 18.2 (11.7) (0.5) (12.2) Canal and Drainage System - 51.1 2.7 - 53.8 (34.2) (1.8) (36.0) Access roads improvement - - 0.5 - 0.5 (0.4) (0.4) O&M buildings, telecommunication - - 2.8 - 2.8 (1.9) (1.9) Installation and rehabilitation of pump houses - 5.8 0.3 2.1 8.2 (3.9) (0.2) (0.0) (4.1) Project offices - - - 1.4 1.4 (0.0) (0.0) Goods/Equipment 10.4 0.2 0.3 - 10.9 (10.4) (0.2) (0.2) (10.9) Pumps, motors, etc. 7.6 0.2 0.1 - 8.0 (7.6) (0.2) (0.1) (8.0) Vehicles 0.9 - - - 0.9 (0.9) (0.0) (0.9) Telecommunication, water management 1.9 - - - 1.9 (1.9) (0.0) (1.9) Computer, and other office equipment - - 0.2 - 0.2 (0.1) (0.1) Improvement/Expansion of Minor Distribution - 39.2 - 39.2 (11.8) (11.8) Training, Study Tours & Technical Assist. - - 1.8 - 1.8 (1.8) (1.8) Front-end Fee (1% of IBRD loan) - - 0.8 - 0.8 (0.8) (0.8) Other /b - - - 32.1 32.1 (0.0) (0.0) Total 22.4 92.8 49.2 35.6 200.0 (18.5) (62.2) (19.3) (0.0) (100.0) /a Include procurement of small works (SW) through price quotations, shopping (national, international), community participation and force account for minor distribution system and on-farm works and consultant services, training and study tours. /b Includes management costs, and IDC. Note: NBF = Not Bank-Financed. Bank disbursement in parentheses. Page 64 Annex 6, Table B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Contract Values Category (Threshold) Method Subject to Prior (US$M) (US$ x 1,000) Review (US$ x 1,000) Total Subject to Value Prior Review Value % 1. Civil Works (a) Major Works >10,000 ICB All 12.0 12.0 100 >200 to<10,000 NCB A11>1,500 92.5 34.8 38 <200 SW None 7.1 - - NBF 3.5 Total 115.1 46.8 41 (b) Minor <100 FA None 39.2 - Works Total 39.2 - - 2. Goods >250 ICB All 10.4 10.4 100 >100 to <250 NCB None 0.2 - - >50 to <100 ISP None 0.2 - - <50 NSP None 0.1 - - Total 10.9 10.4 95 (a) Technical >100 QCBS All assistance <100 CQ None 0.2 - - Individual Individual >50 0.1 0.1 100 <50 Single Source None 0.2 - - (b) Training >100 All 1.3 1.3 100 and study tours Total 1.8 1.4 78 Notes: All contracts not subject to Bank prior review would be subject to Bank post review All contracts for individual consultants and all single source contracts in excess of $50,000 would be subject to prior Bank review. ICB: International Competitive Bidding NCB: National Competitive Bidding SW: Procedures for Small Works (Quotations) FA: Force Account and Community Participation ISP: International Shopping Procedures requiring at least three price quotations NSP: National Shopping Procedures requiring at least three price quotations QCBS: Quality and Cost Based Selection CQ: Consultants' Qualifications NBF: Not Bank Financed NCB civil works subject to prior review by the Bank: 1. all contracts > $1,500,000 2. first NCB bid document in each ID irrespective of value Page 65 Annex 6, Table C: Allocation of Loan and Credit Proceeds Amount of the Amount of the Category Credit Allocated Loan Allocated % of Expenditure to be Financed (Expressed in million (Expressed in million SDR Equivalent) US$) 1. Works for Improvement 10.2 60.9 67% and Expansion of Water Source, Major Distribution System and O&M 2. Works for Minor 0.7 10.8 30% Distribution System and On-farm Development 3. Goods 3.7 5.8 100% of foreign expenditures, 100% of local expenditure (ex- factory cost) and 75% of local expenditures for other items procured locally 4. Research, Training, 0.1 1.7 100% Study Tours and Consultants' Services 5. Fee 0.8 Amount due under Section 2.04 of the Loan Agreement Total 14.7 80.0 Page 66 Annex 6, Table D: Estimated Disbursement Schedule IBRD/IDA Disbursement Disbursement Profile Fiscal Year/ Semester Cumulative Cumulative Year/ Cumulative Semester ($ Million) (%) Semester (%) 2000 Year 1 First (Jul-Dec 1999) 8.0 8.0 8 First 0 Second (Jan-Jun. 2000) 8.2 16.2 a/ 10 Second 5 2001 Year 2 First (Jul-Dec 2000) 9.8 26.0 26 First 30 Second (Jan-Jun. 2001) 10.0 36.0 36 Second 38 2002 Year 3 First (Jul-Dec 2001) 10.0 46.0 46 First 46 Second (Jan-Jun. 2002) 9.5 55.5 55 Second 54 2003 Year 4 First (Jul-Dec 2002) 9.0 64.5 65 First 66 Second (Jan-Jun. 2003) 8.5 73.0 73 Second 74 2004 Year 5 First (Jul-Dec 2003) 9.5 82.5 82 First 82 Second (Jan-Jun. 2004) 8.7 91.2 91 Second 90 2005 Year 6 First (Jul-Dec 2004) 5.0 96.2 96 First 94 Second (Jan-Jun 2005) 3.8 100.0 100 Second 100 a/ Including retroactive financing of US$5.5 million to cover expenditure incurred between September 1, 1998 and Loan/Credit signing and US$0.8 million for the front-end fee. Completion Date: December 31, 2004 Closing Date: June 30, 2005 Page 67 Annex 7 Land Acquisition and Resettlement 1. This Annex describes the land acquisition and resettlement requirements under Guanzhong Irrigation Improvement Project (GIIP). A detailed Resettlement Action Plan (RAP) has been prepared to facilitate the mitigation of the adverse impacts of the raising of the Linjiacun weir to create additional storage. The raising of the existing weir at Linjiacun requires 1,500 mu of land and 841 people will be affected, of which 684 need to be relocated due to the inundation of the reservoir. In addition, 1,435 mu of land will be expropriated for improvement and expansion of irrigation systems in Baojixia and Luohuiqu Irrigation Districts without requiring relocation of the affected people. Following are the details of the plan for rehabilitation. The total base cost of land acquisition and resettlement under GIIP is Y36 million. 2. General The Linjiacun Headwork is located to the west of Baoji City in the far western part of the Baoijixia Irrigation District. The headwork arrangements, including the Lunjiacun weir, were completed in 1958 to provide irrigation water to 14 counties under the jurisdiction of the cities of Xian, Xianyang and Baoji. The weir is 27 meters high and 138 meters long. The weir will be heightened by 21 meters to increase the storage capacity and water use efficiency. This causes the inundation of farmland and buildings, including houses. 3. Objective and principle of resettlement The main objective of land acquisition and resettlement compensation is to ensure that the standards of living and income levels of all project affected persons (PAPs) will not be affected, or affected to a minimal extent. To mitigate the adverse impacts the Resettlement Office of Baoji County has prepared a comprehensive strategy for implementing land acquisition and resettlement requirements. The strategy is based on the principle of "land for land" and encouragement of diversified economic activities in the rural affected areas. 4. Census & socio-economic survey The reservoir area comprises 11 communities or groups belonging to 7 villages and 4 townships in Baoji County. Major crops grown are maize and wheat. Harvest is once a year in the hilly area and twice a year in the plain where irrigation is available. The average yield of grain in 1997 was 185 kg per mu. The population largely consists all small farmers, with an average net income of Yuan 865 per capita in 1997. 5. Adverse project impact To allow the enlargement of the reservoir by raising the height of the existing weir 1,048 mu of land need to be acquired permanently. Of the 841 PAPs, 684 will have to move, while 157 will remain where they are. Their village will be protected by a dike to be constructed under the project.The land situation is shown in Table 1. Page 68 Annex 7, Table 1: Land Situation Village Group Total Total Land Land Land Holding Land Residence Population Cultivated Holding per Acquisition per Capita after Adjustment Model Land Capita Land per Capita Redistribution (in mu.) 1. Fangtang 2nd 194 380 1.96 7.50 1.92 -0.04 move up group 2. Fangtang 3rd 347 574 1.65 148.15 1.63 -0.02 190 upward group 3. Fangtang 4th group 66.87 127 out 4. Fangtang 5th 111 413 3.72 94.80 2.87 -0.85 move-up group 5. Lijiahe Cun 218 523 2.40 157.40 4.11 1.71 86 upward & 129 out 6. Chengli 1st 175 291 1.66 77.74 1.66 0.00 protected by group 7. Chengli 3rd 141 341 2.42 60.52 1.99 -0.43 a levee group 8. Zuluo Cun 498 2034 4.08 179.60 3.72 -0.36 move-up 9. Liuchuang 991 3205 3.23 136.65 3.10 -0.14 move up Cun 10. Hujiashan 536 1394 2.60 77.01 2.46 -0.14 move up 11. Lijialeng I I 1 41.00 Total 3211 9155 2.85 1047.24 2.15 -0.70 6. In addition to the loss of cultivated land, 88 mu of house plots and 310 mu of tree gardens will be inundated. Moreover, affected assets include 13,527 m2 of houses, 7,171 m2 of auxiliary facilities, 28,123 scattered trees, 28 pumping stations, 8 tubewells, 9.4 km of rural roads, 6.3 km of power transmission lines and 2.8 km of telecommunication lines. 7. Legal framework for land acquisition and resettlement The Government of China has issued a number of laws, regulations and guidelines related to resettlement planning and implementation. The Resettlement Action Plan (RAP) has been prepared in accordance with the stipulations of the these laws, regulations and guidelines. The main laws and regulations are the following: * Land management law of the People's Republic of China (1988); * Regulations on land acquisition and resettlement compensation for large and mid-size water and hydropower projects (1991); * Design specifications on treatment of reservoir inundation for water Resources and hydroelectric power projects; Page 69 * Details on inventory of reservoir assets for water resources and hydroelectric Power Projects. 8. Rehabilitation plan Investigations and consultations with the project affected people concluded that 157 PAP in the Chengli 1st and 3rd groups do not need to be relocated. A 2 m high and 1,000 m long dike will be built to protect them. 428 PAP will move to higher elevations within the same village group locations and 256 PAP in Fangtang 3rd and 4th groups as well as in Lijiahe will be moved to the Zhouyuan Township outside of the reservoir area (see the last column of Table 1). New houses will be built in the relocation areas, based on agreed standards for village layout and house design. The provision of infrastructure facilities for water and electricity supplies, roads, telecommunications etc. has been included in the plan. Facilities for public services, such as schools, clinics, shops, T.V. station, homes for retired people are also be provided and included in the RAP. 9. For agricultural development, 60 mu of marginal land will be developed, 150 mu of hilly land will be reclaimed and developed into terraces, 120 mu of land will be leveled, 210 mu of dry land will be prepared for irrigation and 60 mu of irrigated land will be improved. Training will focus on agricultural extension programs to improve animal husbandry, planting of orchards, strawberry and vegetables cultivation, development of fish-cages, etc. With land development and changes in cropping pattern agricultural production will increased in the future. 10. Policy incentives The preferential resettlement policy consists of: (i) tax exemption on agricultural products from land lost; (ii) no taxes to be levied on house plots; (iii) priority to PAPs for the construction of civil works, e.g. roads, levees and schools; (iv) incentives of Yual,500/person to those who move out of the reservoir area early; and (v) provision of low-interests loans to PAPs. 11. Costs and budget Compensation for land acquisition will be based on average production values over three years: 1995-1997. A production value multiplier of 8 is used for land acquisition and resettlement compensation of cultivated land. The resettlement cost of Yuan 24.5 million has been included in the project cost. The break-down of the resettlement cost and the annual expenditure plan are shown in Tables 2 and 3. Page 70 Annex 7, Table 2: Resettlement Cost Estimate Item Unit Unit Cost (Y) Quantity Value (Y1,000) 1. Cultivated land -irrigated land mu 8791.20 422 3,707 -dry slope land mu 4634.08 218 1,008 -dry plain land mu 6103.24 140 857 -river plain mu 5447.64 269 1,464 Sub-total mu 1048 7,036 2. Other land -house plot mu 3814.53 88 334 -tree gardens mu 310 2,714 Sub-total 398 3,048 3. Houses -brick & concrete house sq.m 280 1371 384 -brick & timber house sq.m 180 1449 261 -timber & earthen house sq.m 150 10707 1,606 4. Other structures sq.m 7,171 291 Sub-total 20,697 2,542 5. Trees 384 6. Other infrastructures 148 7. Specific items 6,439 8. Moving subsidies 950 9. Clean res. base 40 Base Cost 20,331 10. Administrative. fee 3% of base-cost 618 11. Training 2% of base-cost 412 12. Survey & design 2% of base-cost 412 13. M& E 1.8% of base-cost 362 14. Contingencies 10% of base-cost 206 TOTAL 24,448 Page 71 Annex 7, Table 3: Annual Investment Plan unit: Yuan 1,000 Items 1998 1999 2000 2001 Sub-Total 1. Land acquisition and 2,560 3,800 2,600 1,123 10,083 resettlement 2. Household compensation 800 2,440 409 375 4,024 3. Specific items 700 2,800 2,289 650 6,439 3. Cleaning of reservoir base 40 40 4. Administration fee 260 590 507 473 1,830 5. Contingencies 500 800 733 2,033 Total 4,320 10,130 6,644 3,355 24,448 12. Organizational arrangements The Provincial Resettlement Office (PRO) oversees the Resettlement Office (RO) of Baoji County, which has the main responsibility for resettlement implementation. For general resettlement matters the RO of Baoji County works closely with the RO of the Baojixia Irrigation District office. The RO of Baoji County will oversee four Township ROs responsible for resettlement implementation in the reservoir area and one Township RO for resettlement implementation to relocation areas in Zhouyuan Town. At the grass-root level, resettlement implementation is guided by Village Committees and Village leaders. 13. Consultation and participation A survey was carried out to find out more about the PAPs, in particular their attitude towards the project and resettlement requirements. The outcome of the survey was positive. Seven meetings were held with various groups of people and interviews of each affected household were undertaken to discuss major issues. Topics included the selection of the relocation areas, compensation rates and rehabilitation plans. As a result Resettlement Associations with representatives from the affected farmers will be set up in each affected village. 14. Grievances and appeals process Since the entire resettlement and rehabilitation program is carried out with active participation of the PAPs, no major grievance issues are expected to come up. However, detailed procedures to address grievances have been established for the project. This allows the PAPs to put forward any complaint related to land acquisition and resettlement. The aim is to respond to possible complaints of the PAPs timely, effectively and transparently. The process is designed to be simple, accessible, transparent and fair. 15. Implementation schedule It will take 3.5 years to complete the entire land acquisition and resettlement process under the project. The preparatory stage is planned from September to December 1998; the stage for construction of the relocation areas from October 1998 to October 2001; and production rehabilitation stage will end in May 2002. 16. Monitoring & Evaluation (M&E) Monitoring of the resettlement process will be conducted by the Provincial Resettlement Offices through the RO of Baoji County. A semi-annual progress report would be submitted to the Provincial PMO and the World Bank by July 1 and Page 72 December 31 of each year. An external and independent group, The National Research Center for Resettlement (NRCR), will review progress with RAP implementation twice a year in 1999 and 2000 and once a year in 2001 and 2002. Their progress reports will be furnished to the Provincial PMO and the World Bank at the same time. 17. Other resettlement components Under the Baojixia Irrigation District another 857 mu of cultivated land on relatively steep slopes will be inundated due to raising the Ganhe Dam by 4 meters to increase storage. In Luohuiqu Irrigation Area, the height of the weir will be increased by 2 meters to allow more water to be stored in the dry season and the main canal will be improved. These works require 578 mu of land in 6 villages of 2 townships in Dali and Pucheng Counties. No structures and assets will be affected and no people need to relocate from the affected areas. The land acquisition requirement is summarized in Table 4. 18. Some villages will loose considerable areas of cultivated land. For those PAPs irrigation facilities will be provided to enable higher crop yields. It has been agreed to provide four pumping stations for the Luohuiqu PAPs and another four for the Ganhe reservoir PAPs. In addition, a 3 m high and 500 m long dike will be built to protect 300 mu of farmland in Fanjiahe Village. Agricultural preferential policies will be applied and priority will be given to recruit PAPs for the implementation of project works. Annex 7, Table 4: Land Acquisition for Ganhe & Luohuiqu Components Name of Project Land Acquisition (mu) Compensation Rates (Y) Permanent Temporary Sub-total Permanent Temporary JSub-total 1. Baojixia Irrigation District Heightening of Ganhe Headwork 857 0 857 7,640 0 6,547,500 Improvement of South Main Canal 0 102 102 0 1,000 x 3 306,000 yrs Linjiacun Headwork Site 0 95 95 0 1,000 x 3 285,000 yrs 2. Luohuiqu Irrigation Disrtrict Heightening of Ganhe Headwork 486 0 486 3,256,000 Improvement of South Main Canal 92 127 219 1,416,000 Total 1,435 324 1,759 7,640 0 11,810,500 Page 73 Annex 8 Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (excluding grant funding) (At final PCD stage) LENP 150,000 127,000 LENA 120,000 50,000 LENN 65,000 25,000 SPN 360,000 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 11 First Bank mission (identification) 03/15/1998 03/18/1998 Appraisal mission departure 02/01/1999 01/08/1999 Negotiations 04/01/1999 03/29/1999 Planned Date of Effectiveness 09/01/1999 __/__/1999 Prepared by: Water Conservancy Bureau of the Government of Shaanxi Province Preparation assistance: PHRD Grant from Japan, Australian Trust Fund Task team members who worked on the project included: Name Specialty Bert L. Kramer Task Manager Cecilia Belita Team Assistant Xiaolan Wang Team Assistant/Financial Analyst Johannes Ter Vrugt Agriculturist Zou Youlan Resettlement Josef Ernstberger Economist William T. Smith Engineering/Procurement Ben Hallam Engineering Tony Shen Financial Management Nicolette DeWitt/Philip Daltrop Lawyers Keith Caney Mechanical Engineering Jiang Ping O&M Li Yan Wu Environment Page 74 Annex 9: Documents in the Project File (including electronic files) A. Project Implementation Plan Guanzhong Irrigation Improvement Project (GIIP): Project Implementation Plan, March 1999. Annex 1: Management Reform Program Details Annex 2: Main Characteristics of Dams Annex 3: Project Costs Estimates Annex 4: Financing Plan Annex 5: Financial Management System Annex 6: Procurement Arrangements Annex 7: Contract Packages for Works and Goods Annex 8: Implementation Schedules for Works and Goods Annex 9: Equipment, Training & Study Tours, Disbursement Schedule Annex 10: Resettlement Framework Guidelines Annex 11: Key performance Indicators B. Bank Staff Assessments 1. Appraisal Mission Aide-Memoire and Annexes dated January 26, 1999 2. Pre-appraisal Mission Aide-Memoire and Annexes dated September 29, 1998 3. Preparation Mission Aide-Memoire and Annexes dated July 12, 1998 C. Other 1. Feasibility Study Report; On the rehabilitation Project of 9 Major Irrigation Districts in Guanzhong Plain, Shaanxi Province; Shaanxi Investigation, Design and Research Institue of Water Conservancy and Hydro-electric Power; Xian, China, October 1997. 2. Supplementary Feasibility Study Reports; The Project of Guanzhong Irrigation District of Shaanxi Province Using World Bank Loans; Shaanxi Investigation, Design and Research Institue of Water Conservancy and Hydro-electric Power; March 1998, Xian. 3. Shaanxi Guanzhong Irrigation District Upgrading Project: Resettlement Action Plan (RAP) dated September 1998. 4. Environmental Impact Assessment for Guanzhong Irrigation Improvement Project (GIIP) dated December 1998. 5. Report of the Dam Safety Review Panel for Project Dams dated July 1998. 6. Irrigation System Management Reform Report dated March 1998. 7. Project Implementation Plan for GIIP and Annexes dated November 1998 8. Miscellaneous project preparation documents prepared during 1998 by Government of Shaanxi with Assistance from the Shaanxi Investigation, Design and Research Institute of Water Conservancy and Hydro-electric Power. Page 75 Annex 10 Statement of Loans and Credits A. Status of Bank Group Operations in China Operations Portfolio As of 12-Apr-99 Difference Between expected OIoirigial Aiouit in US$ Millions and actual P'ro ject 10 You.r Li'rroiwer Em pun 1 10 ) 1 lA C I I at I os U11d sbursed Oriq Frm Rev'd Number of Closed Projects: 106 Active Projects CN-PE-3653 1999 PEOPLE'S REPUBLIC OF CHIN CONTAINER TRANSPORT 71.00 0.00 0.00 71.00 10.55 0.00 CN-PE-41890 1999 PEOPLE'S REPUBLIC OF CHIN LIAONING URB TRANSP 150.00 0.00 0.00 150.00 0.00 0.00 CN-PE-49665 1999 PRC ANNING VALLEY AG.DEV 90.00 30.00 0.00 119.03 0.00 0.00 CN-PE-50036 1999 PEOPLE'S REPUBLIC OF CHIN ANHUI PROVINCIAL HWY 200.00 0.00 0.00 200.00 7.45 0.00 CN-PE-51856 1999 MINISTRY OF FINANCE ACCNTG REFORM & DEV 27.40 5.61 0.00 32.96 1.36 0.00 CN-PE-63123 1999 PRC YANGTZE FLOOD EMERGY 40.00 40.00 0.00 79.21 0.00 0.00 CN-PE-3539 1998 PRC SUST COAST RES DEV 100.00 0.00 0.00 96.00 -.25 0.00 CN-PE-3566 1998 BASIC HEALTH 0.00 85.00 0.00 81.99 .05 0.00 CN-PE-35698 1998 PRC HUNAN POWER DEVELOP. 300.00 0.00 0.00 300.00 9.00 0.00 CN-PE-3591 1998 PRC STATE FARMS COMMERCI 150.00 0.00 0.00 102.59 -32.91 0.00 CN-PE-3606 1998 GOC ENERGY CONSERVATION 63.00 0.00 0.00 63.00 2.87 0.00 CN-PE-3614 1998 PEOPLE'S REPUBLIC OF CHIN GUANGZ. CITY CRT.TRP 200.00 0.00 0.00 192.00 5.61 0.00 CN-PE-3619 1998 MINISTRY OF FINANCE 2ND INLAND WATERWAYS 123.00 0.00 0.00 123.00 18.50 0.00 CN-PE-36414 1998 CHINA GUANGXI URBAN ENV. 72.00 20.00 0.00 88.83 -1.20 0.00 CN-PE-36949 1998 PEOPLES REPUBLIC OF CHINA NAT.HWY 3-HUBEI 250.00 0.00 0.00 242.00 12.00 0.00 CN-PE-40185 1998 PRC SHANDONG ENVIRONMENT 95.00 0.00 0.00 92.00 21.75 0.00 CN-PE-45788 1998 PEOPLE'S REPUBLIC OF CHIN TRI-PROVINCIAL HWY 230.00 0.00 0.00 230.00 39.70 0.00 CN-PE-46563 1998 PRC TARIM BASIN II 90.00 60.00 0.00 140.76 5.11 0.00 CN-PE-46952 1998 PRC FOREST. DEV. POOR AR 100.00 100.00 0.00 200.81 8.50 17.00 CN-PE-49700 1998 PRC IAIL-2 300.00 0.00 0.00 280.00 3.30 0.00 CN-PE-51736 1998 GOC E. CHINA/JIANGSU PWR 250.00 0.00 0.00 250.00 92.38 0.00 CN-PE-56491 1998 PRC HEBEI EARTHQUAKE 0.00 28.40 0.00 10.66 -9.81 0.00 CN-PE-34081 1997 PRC XIAOLANGDI MULTI. II 430.00 0.00 0.00 331.51 89.27 0.00 CN-PE-3590 1997 PRC QINBA MTS. POVTY REI 30.00 150.00 0.00 148.35 23.88 0.00 CN-PE-3635 1997 PRC VOC. H:. Hi,FOIM POJl 10.00 20.00 0.00 15.19 1.30 0.00 CN-PE-3637 1991 PRC NATI, IdUl( WATKR II 1 .00 10.00 0.00 62.10 10.38 0.00 CN-PE-36405 1997 PHC WAN.JAZJA1 WATER TA 400.00 0.00 0.00 320.09 5.08 0.00 CN-PE-3643 1997 PRC XINJIANG IllGHWAYS 11 300.00 0.00 0.00 230.72 57.72 0.00 CN-PE-3650 1997 GOC TUOKETUO POWER/INNER 400.00 0.00 0.00 394.61 137.17 0.00 CN-PE-3654 1997 PRC HUNAN/GUANG HWY2-NH2 400.00 0.00 0.00 336.64 86.62 0.00 CN-PE-36952 1997 PRC BASIC ED. IV 0.00 85.00 0.00 41.37 -26.19 0.00 CN-PE-38988 1997 PRC HEILONGJIANG ADP 120.00 0.00 0.00 93.02 8.38 0.00 CN-PE-44485 1997 SHANGHAI WAIGAOQIAO 400.00 0.00 0.00 400.00 53.05 0.00 CN-PE-34618 1996 PRC LABOR MARKET DEV. 10.00 20.00 0.00 24.00 22.16 0.00 CN-PE-3507 1996 GOC ERTAN HYDRO II 400.00 0.00 0.00 25.23 -22.55 0.00 CN-PE-3563 1996 PRC ANIMAL FEED 150.00 0.00 0.00 138.78 110.45 18.79 CN-PE-3569 1996 P.R.C. SHANGHAI-ZHEJIANG HI 260.00 0.00 7.75 110.73 32.49 22.50 CN-PE-3589 1996 PRC DISEASE PREVENTION 0.00 100.00 0.00 69.06 58.11 0.00 CN-PE-3594 1996 PRC GANSU HEXI CORRIDOR 60.00 90.00 0.00 125.65 26.19 0.00 CN-PE-3599 1996 YUNNAN PROV. GOV. YUNNAN ENVIRONMENT 125.00 25.00 0.00 139.13 18.15 0.00 CN-PE-3602 1996 PRC . HUBEI URBAN ENV. PRO 125.00 25,00 0.00 123.98 76.31 0.00 Page 76 Difference Between expected Original Amount in US$ Millions and actual Fiscal ____________________________ disbursements a/ Project ID Year Borrower Purpose IBRD IDA Cancellations Undisbursed Orig Frm Rev'd CN-PE-3638 1996 PRC SEEDS SECTOR COMMER. 80.00 20.00 0.00 80.15 27.70 0.00 CN-PE-3646 1996 PRC CHONGQING IND POL CT 170.00 0.00 77.99 91.22 102.45 0.00 CN-PE-3648 1996 SHANGHAI MUN. GOVT SECOND SHANGHAI SEWE 250.00 0.00 0.00 157.96 76.95 0.00 CN-PE-3649 1996 CHINA SHANXI POVERTY ALLEV 0.00 100.00 0.00 34.56 -8.05 0.00 CN-PE-3652 1996 PRC 2ND SHAANXI PROV HWY 210.00 0.00 0.00 139.29 51.28 0.00 CN-PE-36950 1996 PRC BASIC ED. POOR III 0.00 100.00 0.00 11.93 -20.76 0.00 CN-PE-40513 1996 PRC 2ND HENAN PROV HWY 210.00 0.00 0.00 175.14 51.14 0.00 CN-PE-3493 1995 PRC INLAND WATERWAYS 420.00 0.00 0.00 275.02 -9.54 0.00 CN-PE-3571 1995 PRC RAILWAYS VII 400.00 0.00 29.00 344.67 201.66 -2.97 CN-PE-3585 1995 GOC SHENYANG IND. REFORM 175.00 0.00 0.00 97.54 49.74 0.00 CN-PE-3596 1995 PRC YANGTZE BASIN WATER 100.00 110.00 0.00 35.28 -12.19 0.00 CN-PE-3598 1995 LIAONING ENVIRONMENT 110.00 0.00 0.00 70.21 58.65 0.00 CN-PE-3600 1995 PRC TECHNOLOGY DEVELIOPMP 200.00 0.00 0.00 125.74 43.65 0.00 CN-PE-3603 1995 PHC ENT. HOUOING soc. SE 2/1.00 1b.00 20.00 199.14 155.96 7.94 CN-PE-36041 1995 MOF FISCAL & TAX REF. & 50.00 25.00 0.00 66.31 41.61 0.00 CN-PE-3612 1995 PRC XINJIANG HIGHWAY 1 150.00 0.00 0.00 47.85 37.86 0.00 CN-PE-3634 1995 PRC MATERNAL CHILD HEALT 0.00 90.00 0.00 18.42 8.84 0.00 CN-PE-3636 1995 PRC BASIC EDUC IN POOR & 0.00 100.00 0.00 3.39 -1.46 0.00 CN-PE-3639 1995 PRC SOUTHWEST POV. REDUC 95.00 200.00 0.00 143.78 32.70 0.00 CN-PE-3642 1995 ZHEJIANG POWER DEVT 400.00 0.00 0.00 136.50 -44.02 0.00 CN-PE-3647 1995 PRC ECONOMIC LAW REFORM 0.00 10.00 0.00 5.51 .5.59 0.00 CN-PE-36947 1995 GOC SICHUAN TRANSMISSION 270.00 0.00 0.00 132.50 119.80 80.99 CN-PE-37156 1995 PRC IODINE DEF. DISORDER 7.00 20.00 7.00 1.91 11.57 -.19 CN-PE-3502 1994 MOH RUR HEALTH MANPOWER 0.00 110.00 0.00 29.62 24.07 0.00 CN-PE-3504 1994 PRC HEBEI/HENAN NATIONAL 380.00 0.00 0.00 48.65 15.63 0.00 CN-PE-3540 1994 PRC LOESS PLATEAU 0.00 150.00 0.00 27.96 -23.21 0.00 CN-PE-3557 1994 PRC FOREST RESOURCE DEV 0.00 200.00 0.00 40.47 13.01 -32.36 CN-PE-3562 1994 PRC XIAOLANGDI MULTIPURPOSE 460.00 0.00 0.00 .83 .83 0.00 CN-PE-3586 1994 PRC SHANGHAI ENVIRONMENT 160.00 0.00 0.00 62.73 57.29 0.00 CN-PE-3593 1994 PRC SONGLIAO PLAIN ADP 0.00 205.00 0.00 25.39 -12.80 0.00 CN-PE-3595 1994 PRC RED SOILS II DEVELOP 0.00 150.00 0.00 40.36 16.45 0.00 CN-PE-3609 1994 GOC SICHUAN GAS DEV & CONSERVATION 255.00 0.00 0.00 122.62 71.13 0.00 CN-PE-3622 1994 SHANGHAI MUNICIPAL GOVT SHANGHAI MTP II 150.00 0.00 0.00 7.36 7.37 0.00 CN-PE-3626 1994 GOC FUJIAN PROV HIGHWAY 140.00 0.00 0.00 58.63 36.62 8.35 CN-PE-3633 1994 GOVERNMENT OF PRC TELECOMMUNICATIONS 250.00 0.00 30.00 15.27 45.27 0.00 CN-PE-3641 1994 PRC YANGZHOU THERMAL POW 350.00 0.00 0.00 74.09 57.77 0.00 CN-PE-3644 1994 PRC XIAOLANGDI RESETTLEMENT 0.00 110.00 0.00 25.56 8.87 0.00 CN-PE-3473 1993 P.R.C. ZHEJIANG MULTICITIES 0.00 110.00 0.00 19.79 19.17 0.00 CN-PE-3512 1993 GOVT OF PEOPLES REP. OF C SHANGHAI PORT REST. 150.00 0.00 25.74 3.88 29.10 2.86 CN-PE-3518 1993 PRC GUANGDONG PROV. TRANSPORT 240.00 0.00 0.00 2.08 -.94 0.00 CN-PE-3533 1993 TIANJIN IND. II 150.00 0.00 40.35 13.59 44.43 7.93 CN-PE-3559 1993 PRC AGRIC. SUPPORT SERVI 0.00 115.00 0.00 10.41 -1.50 0.00 CN-PE-3561 1993 PRC SICHUAN ADP 0.00 147.00 0.00 5.49 0.00 0.00 CN-PE-3567 1993 PRC EFFECTIVE TEACHING S 0.00 100.00 0.00 9.59 7.98 8.04 CN-PE-3570 1993 PRC RAILWAY VI 420.00 0.00 0.00 94.61 93.62 0.00 CN-PE-3580 1993 PRC SO.JIANGSU ENVIRON. PROTECT. 250.00 0.00 0.00 4.15 -.31 0.00 CN-PE-3581 1993 PRC HENAN PROV. TRANSPORT 120.00 0.00 0.00 9.59 9.60 0.00 CN-PE-3592 1993 PRC REF. INST'L.& PREINV 0.00 50.00 0.00 18.47 18.48 0.00 CN-PE-3597 1993 PRC TAIHU BASIN FLOOD CO 100.00 100.00 0.00 47.43 43.08 0.00 CN-PE-3616 1993 PRC TIANHUANGPING HYDRO 300.00 0.00 0.00 65.95 49.37 0.00 CN-PE-3623 1993 PRC FINANCIAL SECTOR T.A 0.00 60.00 0.00 19.16 16.21 0.00 CN-PE-3627 1993 PRc GRAIN DISTRIBUTION P 325.00 165.00 0.00 325.46 322.19 86.20 CN-PE-3632 1993 ROC ENVIRONMENT TECH ASS 0.00 50.00 0.00 10.71 11.06 .03 CN-PE-3503 1992 ZOUXIAN THERMAL POWE 310.00 0.00 0.00 7.79 7.80 0.00 CN-PE-3534 1992 PRC ZHEJIANG PROV TRANSP 220.00 0.00 0.00 19.91 19.92 12.42 CN-PE-3564 1992 BEIJING MUNICIPALITY BEIJING ENVIRONMENT 45.00 80.00 0.00 25.28 20.02 8.32 CN-PE-3565 1992 SHANGHAI METRO TRANS 0.00 60.00 1.69 1.32 -.08 0.00 CN-PE-3568 1992 R.O.C. TIANJIN URB DEV & EN 0.00 100.00 0.00 18.33 15.24 -2.50 CN-PE-3624 1992 MIN. OF PUBL.HEALTH INFECTIOUS DISEASES 0.00 129.60 0.00 31.49 26.83 26.79 Total 14,868.40 3,995.61 239.52 10,014.74 3,012.63 270.14 Page 77 Difference Between expected Original Amount in US$ Nillions and actual Fiscal disbursements a/ Project ID Year Borrower Purpose IBRD IDA Cancellations Undisbursed Orig Frm Rev'd Active PrOj2cts lsdPoet oa Total Disbursed (IBRD and IDA); 8,558.59 12,529.50 21,088.09 of which has been repaid: 73.75 2,515.23 2,588.98 Total now held by IBRD and IDA: 18,550.68 9,648.52 28,199.20 Amount sold : 0.00 0.00 0.00 Of which repaid : 0.00 0.00 0.00 Total Undisbursed : 10,014.74 21.95 10,036.69 a. Intended disbursements to date minus actual disbursuinents to doLL ju prujuctud at aprisaicl. Note: Disbursement data is updated at the end of the first week of the month and is currently as of 31-Mar-99. Page 78 China B. STATEMENT OF IFC's Committed and Disbursed Portfolio As of 28-Feb-99 (In US Dollar Millions) Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1987/92/94 China Bicycles 8.50 3.39 0.00 0.00 8.50 3.39 0.00 0.00 1993 Shenzhen PCCP 3.76 .99 0.00 0.00 3.76 .99 0.00 0.00 1993 Yantai Cement 13.51 1.95 0.00 7.22 13.51 1.95 0.00 7.22 1994 China Walden .JV 0.00 6.00 0.00 0.00 0.00 3.53 0.00 0.00 1994 China Walden Mgt 0.00 .01 0.00 0.00 0.00 .01 0.00 0.00 1994 Dalian Glass 20.50 2.40 0.00 40.50 20.50 2.40 0.00 40.50 1994 Dynamic Fund 0.00 12.35 0.00 0.00 0.00 10.08 0.00 0.00 1994/97 PTP Leshan 12.20 1.00 0.00 16.00 12.20 1.00 0.00 16.00 1995 Dupont Suzhou 23.36 4.15 0.00 46.80 23.36 4.15 0.00 46.80 1995 Newbridge Inv. 0.00 7.19 0.00 0.00 0.00 3.89 0.00 0.00 1995 Suzhou PVC 22.00 2.48 0.00 22.20 22.00 2.48 0.00 22.20 1996 Beijing Hormel 5.00 .50 0.00 5.50 5.00 .50 0.00 5.50 1996 Jingyang 40.00 0.00 0.00 100.00 40.00 0.00 0.00 100.00 1996 Nanjing Kumho 16.00 3.81 0.00 45.50 13.63 3.81 0.00 38.75 1996 Tianjin Kumho 11.17 0.00 0.00 33.00 0.00 0.00 0.00 0.00 1996 Weihai Weidongri 4.11 0.00 0.00 0.00 4.11 0.00 0.00 0.00 1997 Ningbo 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 1997 Orient Finance 13.33 0.00 0.00 16.67 13.33 0.00 0.00 16.67 1997 PTP Hubei 12.63 0.00 0.00 25.38 10.96 0.00 0.00 22.04 1997 Rabobank PTPC 2.40 0.00 0.00 2.40 0.00 0.00 0.00 0.00 1998 Caltex Ocean 21.00 0.00 0.00 45.00 13.68 0.00 0.00 29.32 1998 Chengxin-IBCA 0.00 .36 0.00 0.00 0.00 0.00 0.00 0.00 1998 Rabobank SHFC 2.75 0.00 0.00 2.75 2.25 0.00 0.00 2.25 1998 Zhen Jing 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 1998 Pacific Ports 0.00 3.64 0.00 0.00 0.00 3.64 0.00 0.00 Total Portfolio: 232.22 54.22 0.00 40S.92 206.79 45.82 0.00 347.25 Approvals Pending Commitment Loan Equity Quasi Partic 1998 CHENGDU CHEMICAL 7.40 3.20 0.00 8.60 1997 CHINEFARGE 12.80 0.00 0.00 20.00 1998 EURECA 0.00 3.00 0.00 0.00 1998 JIANGSU COLINE 6.50 0.00 0.00 0.00 1998 LESHAN SCANA 6.10 1.35 0.00 0.00 1997 NISSAN/DONGFENG 20.20 0.00 0.00 27.00 1998 ORIENT FIN A INC 3.33 0.00 0.00 0.00 1997 PTP HOLDINGS 0.00 1.50 0.00 0.00 1998 SHANGHAI KRUPP 30.00 0.00 0.00 78.44 1997 SMC 14.00 0.00 0.00 14.00 1996 TIANJIN 9.10 0.00 0.00 9.10 1998 WUHAN CIG 0.00 1.50 0.00 0.00 1998 WUHAN PORT 5.00 0.00 0.00 5.00 1998 XIB 50.00 20.00 0.00 0.00 1998 ZHEJIANG COLINE 6.50 0.00 0.00 0.00 1998 ZHEN JING 4.50 0.00 0.00 0.00 Total Pending Commitment: 175.43 30.55 0.00 162.14 Page 79 Annex 11 Country at a glance East Lower- POVERTY and SOCIAL Asia & middle. Chma Pacific income Development diamond* 1997 Pop,iaiorn. rn-,ear Imllionz) 1 227 2 1.753 2 282 Life expectancy GNP per capa lAtias memnoo. USS) 860 970 1.230 GNP,41oasmernoc US50illions. 1.0554 1.707 2.818 Average annual growth. 1991-97 Population (%) 1 1 1 3 12 Labor force (%) 1 1 14 1 GNP Gross per - primary Most recent estimate (tlatest year avallablte, 1991497) capita enrollment Poverty (% of population below national povedy line) 7 1.1roan population % of rotalpopuiarloni 32 32 42 Ldo ectanc, at birth,.earsl 70 88 69 In'ant mortail, per 1 000 Ine Drrns,I 32 38 36 Cnild malnutrition ( ; of chaoren under 5) 16 16 Access to safe water A.:.:ets vo sale hater 1i4 ofpopLtar,on,, 90 84 84 Ilierac, , -f population 3ge 15*.1 19 17 19 GroEs primar enrolment 1% ofschmoo-agepopularion) 120 118 114 - Ch,na Mle 121 120 116 I Lover-mrddle-income group Female 120 119 113 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1976 198 1996 1997 - - Economic ratios' GDP USS barons; 151 6 295 7 8165 9020 Gross cmeslc in.esiment-GDP 279 37 ' 39.6 382 Trade Exports of goods ard ser,cesGDP 50 122 21 0 230 Grois aomest-c sa.ings.GDP 285 352 41 7 42 7 Gross nai.cnal sa-ngs*GDP 28 5 35 3 40 4 41 4 C,,rrent account balarce-GDP 0 2 -2 5 0 9 32 Domestic Ir.1-rresi pa,mentvGDP 0 2 06 01 Investment ToLai aertGDP 8 0 158 16 3 s Tot.l debt ser.,ce-awports 96 8 7 86 Prescn .aiue Of OeVLGDP 149 1 Precent .alue 01 0ebLeAports 627 Indebtedness 1976-86 1987-97 1996 1997 1998-02 I.eag ,)nnu.al groThl GDP 93 10 1 96 88 - Cluna GNP per ca;ta 8 3 66 8 7 74 Lover-m-ddle-income group Exrcrocf coas and serces 188 166 56 2'6 STRUCTURE of the ECONOMY 1976 1986 1996 1997 Growth rates of output and Investment (%) (% of GDP) s Agriculture 32.8 27.1 20.4 18.7 30 Industry 45.4 44.0 49.5 49.2 20 Manufacturing 29.5 35.5 37.8 37.3 10 Services 21.7 28.9 30.1 32.1 Private consumption 64.0 51.4 46.7 45.7 92 93 94 95 9s 97 General government consumption 7.5 13.4 11.6 11.6 GDI - GDP Imports of goods and services 4.5 14.7 18.9 18.5 (average annual growth) 1976-86 1987-97 1996 1997 Growth rates of exports and Imports (%) Agriculture 6.0 4.4 5.1 3.5 40 Industry 11.0 13.8 12.1 10.8 o Manufacturing 12.8 13.3 11.6 9.9 Services 12.0 8.7 7.9 8.3 Private consumption 9.3 8.8 11.1 6.2 10 General government consumption 9.4 9.9 9.5 8.2 0 Gross domestic investment 10.8 11.2 8.2 5.6 92 93 94 95 96 97 Imports of goods and services 22.5 12.8 5.9 13.1 - Exports - Imports Gross national product 9.8 9.9 9.8 8.5 Note: 1997 data are preliminary estimates. This table was produced from the Development Economics central database. The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. Page 80 China PRICES and GOVERNMENT FINANCE Domestic prices 1976 1986 1996 1997 Inflation (% change) 30 Consumer prices . 6.5 9.4 7.9 2 Implicit GDP defiator 4.0 4.6 5.9 1.2 1s Government finance (% of GOP, includes current grants) Current revenue .. 24.0 11.4 12.0 92 93 94 95 96 9 Current budget balance .. 5.6 0.6 0.6 - GDP deflator -CPi Overall surplus/deficit .. -1.8 -1.5 -1.5 TRADE (US$ millions) 1976 1986 1996 1997 Export and import levels (US$ millions) Total exports (fob) .. 30,942 151,066 182,696 200,000 Food .. 4,448 10,232 11,054 Fuel .. 3,683 5,929 6,987 150,000 Manufactures .. 19,670 129,141 158,767 Total imports (cif) .. 42,904 138,838 142,361 100000 Food .. 2,002 7,866 6,308 5o,DOo Fuel and energy .. 504 6,877 10,306 Capital goods .. 20,415 59,610 57,930 Export price index (1995=100) .. 66 91 92 93 94 95 96 97 Import price index (1995=100) .. 69 .. .. a Exports a Imports Terms of trade (1995=100) .. 96 BALANCE of PAYMENTS (US$millions) 1976 1986 1996 1997 Current account balance to GDP ratio (%) Exports of goods and services 7,383 29,583 171,700 207,253 4- Imports of goods and services 7,125 37,472 154,100 166,755 1 - Resource balance 258 -7,889 17,600 40,498 Net income 0 176 -12,370 -15,900 Net current transfers 0 255 1,922 4,660 91 92 'i4 94 95 96 97 Current account balance 258 -7,458 7,152 29,258 91 2 Financing items (net) .. 5,410 28,248 6,599 Changes in net reserves .. 2,048 -35,400 -35,857 Memo: Reserves including gold (US$ millions) .. 16,417 111,728 146,448 Conversion rate (DEC, local/US) 1.9 3.5 8.3 8.3 EXTERNAL DEBT and RESOURCE FLOWS 1976 1986 1996 1997 (US$ millions) Composition of total debt, 1997 (US millions) Total debt outstanding and disbursed .. 23,719 128,817 146,697 IBRD .. 965 7,616 8,239 IDA .. 774 7,579 7,830 A: 8,23g G: 31,464 B: 7,830 Total debt service .. 2,974 15,756 18,445 :2,904 IBRD .. 66 840 858 Ad ft liD IDA .. 8 73 81 E: 20,782 Composition of net resource flows Official grants .. 155 249 228 Official creditors .. 1,165 4,401 4,315 Private creditors .. 3,693 6,454 8,134 Foreign direct investment .. 1,875 40,180 44,236 Portfolio equity .. 0 3,466 8,457 F: 75,478 World Bank program Commitments .. 1,120 1,900 2,425 A - IBRD E - Bilateral Disbursements .. 607 2,097 2,275 B- IDA 0 - Other multilateral F - Private Principal repayments .. 0 364 377 C- IMF G - Short-term Net flows .. 607 1,734 1,898 Interest payments .. 75 549 562 Net transfers .. 532 1,185 1,335 Note: This table was produced from the Development Economics central database. 1/28/99 MAP SECTION BRD 29961 ____ - ---------108109- ''fC H l' N( Y,lnn&CHINAN GUANZHONG IRRIGATION IMPROVEMENT PROJECT (GIlP) SHAANXI PROVINCE Heyang PROJECT IRRIGATION DISTRICTS -* MANAGEMENT STATlONS -N The nine Irrigation Districts and their 11 HEADWORKS originally designed irrigation areas areo ae - MAIN CANALS irrigation district hectores Y t 35<- BRANCH CANALS COUNTY HEADQUARTERS - PROVINCE CAPITALS (INSET) ClIESgongchuan \ Pucheng ---- COUNTYBOUNDARJES PROVINCE BOUNDARIES (INSET) Headwork TOTAL 592,340 RAILROADS 1A,QUF URYCATYK Da HIGHWAYS DIW. RIVERS 35¢ -- .- n,-1-- i-- ...MONGOLIA N -, 2 , opI) - REP ÅOREA - 'HE . . . - HANX, -M--Gkl H AN G IA U -~~~- f - .ý .. . . - -A h -|e.|_ Hu H- - _. ..: -- - HUN ANGXi4 pi- -- '1tofThe,orld'ank GU.HOUOFU | | colos,dnomiatios9--nT/WÀ MA 99 ..- m p y , o t e ar oH nm e wCuNavs.nfanynerrit ry,"oUVnET AU-A any nndrse en a ank .11sch'bunda ines P So China Sea iU -M n-- - -n-l- -n-n n-- - - - - - M A Y 1 9 99n