China - Henan Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 21500 IMPLEMENTATION COMPLETION REPORT (CPL-35310) ONA LOAN IN THE AMOUNT OF US$120 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A HENAN HIGHWAY PROJECT DECEMBER 19,2000 Transport Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the perfornance of their I official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2000) Currency Unit = Renminbi (RMB) = 100 Fen RMB 1.00 = US$ 0.1207 US$ I = 8.2782 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS EIRR - Economic Internal Rate of Return EMS - Electrical and Mechanical Systems FIDIC - Federation Intemationale Des Ingenieurs Conseils GOVAI - Gross Output Value of Agriculture and Industry HPCD - Henan Provincial Communications Department MOC - Ministry of Communications MOF - Ministry of Finance NPV - Net Present Value NTHS - National Trunk Highway System NWR - Northwest Region Roads RIP - Road Improvement Program ZLE - Zhengzhou-Luoyang Expressway Vice President: Jemal-ud-din Kassum, EAPVP Country Director: Yukon Huang, EACCF Sector Director: Jitendra N. Bajpai, EASTR Task Manager: Jacques M. Tollie, EASTR  FOR OFFICIAL USE ONLY CONTENTS Page No. 1. Project Data 1 2, Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 7 6. Sustainability 8 7. Bank and Borrower Performance 9 8. Lessons Leamed 11 9. Partner Comments 11 10. Additional Information 17 Annex 1. Key Performance Indicators/Log Frame Matrix 18 Annex 2. Project Costs and Financing 19 Annex 3. Economic Costs and Benefits 21 Annex 4. Bank Inputs 23 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 24 Annex 6. Ratings of Bank and Borrower Performance 25 Annex 7. List of Supporting Documents 26 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.   Project ID: P003581 Project Name. HENAN PROV. TRANSPORT Team Leader: Jacques M. Tollie TL Unit. EASTR ICR Type: Core ICR Report Date: December 19, 2000 1. Project Data Name: HENAN PROV. TRANSPORT L/C/TFNumber: CPL-35310 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: TH - Highways KEY DATES Original Revised/Actual PCD: 05/20/90 Effective: 03/24/93 03/24/93 Appraisal: 02/06/92 MTR: Approval: 11/17/92 Closing: 06/30/98 06/30/2000 Borrower/lmplementing Agency: PEOPLE'S REPUBLIC OF CHINA/HENAN PROVINCIAL COMMUNICATIONS DEPARTMENT Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam Kaji Country Manager: Yukon Huang Shahid Javed Burki Sector Manager: Jitendra N. Bajpai Daud Ahmad Team Leader at ICR: Jacques M. Tollie Heman Levy ICR Primary Author: Ephrem Asebe; Jacques M. Tollie 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project objectives were to: (a) relieve congestion in the heavily trafficked east-west corridor traversing Zhengzhou, capital of the 90 million populated Henan province, and linking Henan and western provinces to the new port of Lianyungang on the eastern shore; (b) improve accessibility in the province through rehabilitation of the provincial and rural road network; (c) strengthen highway sector agencies, mainly in the areas of investment planning, construction and maintenance management, and environment management; and (d) improve the efficiency of road freight transport services, with a particular emphasis on enhancing competition and facilitating entry by collective and small private operators. The project objectives were clear, focused and responsive to the development needs of the province. They also had high national priority. Recognizing the anticipated traffic growth, the Government had identified transport bottleneck to be one of the most severe constraints to economic growth. The economic reforms introduced since 1979 had led to a large upsurge in both freight and passenger traffic, severely taxing the transport system. The project was designed to achieve a better balance between demand and supply for the sustained development of the economy. As such, the objectives were in line with the Bank's Country Assistance strategy which supported sectoral reforms and investments aimed at removing infrastructure bottlenecks and modernizing the transportation system and its management. 3.2 Revised Objective: None 3.3 Original Components: The project components consisted of: (a) construction of the Zhengzhou-Luoyang Expressway, including service facilities and toll stations; (b) rehabilitation and improvement of five provincial roads and six rural roads in Northwest Henan where some of the poorest counties of the province were concentrated; (c) a province-wide local roads improvement program; (d) institutional strengthening through training and equipping of selected agencies in the Communications Department; and (e) a trucking study. These components were well related to achieving the objectives. In particular, the design was reasonably balanced between institutional capacity building and development of the road network; and within the road development components, it was balanced between the national, provincial and rural networks so as to capture fully the benefits from the investments being made. However, the project was technically demanding for the implementing agencies as the project's major component, the expressway including all facilities and the installation of electrical and mechanical systems (EMS), was the first to be constructed in Henan. Also, the design of the project underestimated the impact of traffic growth, compounded by the on-going rationalization of railway operations (specialization on long-distance traffic); it soon became apparent that the single carriage-way Zhengzhou-Luoyang Expressway was not adequate to handle the rapidly growing traffic and the design was changed to double carriage-way. In other respects, the design of the project identified all other important risks and provided adequate mitigating measures. In particular, satisfactory arrangements were made to preserve cultural properties and minimize risks of delays in the archeological zones traversed by the expressway. -2 -  3.4 Revised Components: The expressway was identified as top national priority and its first feasibility was carried out as far back as 1986 and was later updated in 1988. However, by 1994, rapid changes in traffic growth due to the continued booming economy and the diversion of traffic from railroad (following the railroad refusal to transport freight for distance of less than 200 kilometers) necessitated the move from single to dual carriage-way for the construction of the Zhengzhou-Luoyang Expressway. The additional financing was however bome by the Govenmuent and no restructuring of the project was deemed necessary. 3.5 Quality at Entry: The quality at entry is considered satisfactory, based on the relevance of project objectives, the quality of the technical, economic and financial analyses, the attention to preservation of the environment and cultural heritage, implementation readiness, and overall risk assessment and sustainability. Like most Bank financed projects of that period, the performance indicators were not explicitly developed; they were however retrofitted in the project at a later stage of project implementation. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The project has substantially achieved its major development objectives, the main shortcoming being the delay in the installation of the traffic engineering systems on the expressway. The overall satisfactory rating is based on the performance indicators shown in Annex 1. The physical targets have been substantially met with satisfactory economic returns. The significant traffic increase in the Zhengzhou-Luoyang corridor is no longer a problem for the province. Delays in implementation of the EMS works have been compensated by manual operation of some functions of the expressway. The road rehabilitation in Northwest Henan and the Road Improvement Program have substantially enhanced accessibility in remote areas of the province. The agricultural and industrial output value index has shown a steady increase in all counties affected by the project. Performance with safeguard policies including environmental, cultural property, and involuntary resettlement has been satisfactory. The training of staff has resulted in better performance of the five entities of HPCD that were selected for strengthening under the project. Some of the recommendations of the Henan Trucking Study have been implemented and an action plan has been developed for further implementation, complementing actions taken by the province for trade facilitation. 4.2 Outputs by components: 4.2.1 Traffic congestion relieved and mobility increased. The construction of the 120 km Zhengzhou-Luoyang Expressway (ZLE) has significantly eased traffic operation in the corridor. Construction of the expressway commenced in January 1993 and was completed on schedule after the contractual period of 36 months. The project was among the first to be competitively bid and administered under FIDIC conditions in the province. A two-year extension of the loan closing date was necessary to complete the traffic engineering contracts which required the supply and erection of the electrical/mechanical systems comprising the surveillance/control system, toll system and communication system. This delay resulted in a somewhat lower level of service of the expressway because of manual operation of the toll collection system and unavailability of other traffic control systems. -3 -  4.2.2 Accessibility in remote areas in the province improved. The component consisted in the rehabilitation and improvement of 5 provincial roads (180 km) and 6 rural roads (112 kin) in the Northwest region of Henan Province, and a total of 15 provincial roads (381.5 km) and 7 rural roads (110 km) under the Road Improvement Program. The general observation is that the rehabilitation of these roads has significantly improved access to the remote areas and expanded growth opportunities in poor areas of the province. The impact of this component was rated as highly satisfactory by local officials, who stressed that the communities served by the roads have seen their living standards improved by exploiting and selling local resources in the area. There was generally high demand at the local level for more Bank involvement in rural roads programs. 4.2.3 Supervision of Construction. Zhengzhou-Luoyang Expressway was supervised by a joint foreign/local team, which performed relatively well. The traffic engineering contract for Zhengzhou-Luoyang Expressway was also supervised by the same team. A local team supervised the roads in northwest Henan and RIP. The teams' performance have been satisfactory. 4.2.4 Equipment acquisition programs. Two programs were procured, the first for the operation and maintenance of the expressway, and the second for the institutional strengthening component. All equipment included under the project have been procured, delivered, and put to use by the relevant agencies. 4.2.5 Efficiency and effectiveness in public sector management of the road network enhanced Overseas as well as domestic training have been completed satisfactorily and there is a strong sense that the institutional strengthening program has had a positive impact on the management of the provincial highway sector. Both domestic and overseas training afforded opportunities for Henan Provincial Communication Department staff to acquaint themselves with the latest technologies in highway construction, management, and maintenance. A total of 233 persons (or 233 person-months) for domestic training and 124 persons (or 134 person-months) for overseas training were provided. On-the-job training and technology transfer by the foreign supervision consultant team were also offered. In total five institutions in HPCD were provided specific training and modem equipment: the Planning, Survey and Design Institute, the Scientific Research Institute, the Transport Polytechnic School, the Transport Vocational School, and the Expressway Construction Management Bureau. All acknowledged a positive outcome in terms of increased efficiency in discharging their duties. In particular, the Expressway Construction Management Bureau was exposed to modem methods in toll road organization and management, and is now ready to corporatize itself into an Expressway Company as part of the current restructuring of HPCD. 4.2.6 The Trucking Study. This study was satisfactorily completed in 1994. It was reviewed by a Review Panel in a meeting attended by Bank held in late 1994. The study was highly acclaimed by the Review Panel for: (a) the methodology it used; (b) the effective use of the joint local and foreign team of experts; and (c) its realistic analyses and practical recommendations with potential application at the national level. Several recommendations of the study have been implemented, including the creation of cargo consolidation terninals, vehicle inspection stations, weigh bridges maintenance and repair facilities, and rationalization of policies and regulations governing the trucking industry. The provincial government has given adequate attention not only to state-owned trucking enterprises but also to the development of the private trucking industry, and put emphasis on the construction of strategically located highway transport hubs in an effort to promote long distance trade. -4 -  4.2.7 Impact of Land Acquisition and Resettlement. The impact of the project under the ZLE, the Northwest Region Roads (NWR), and the Road Improvement Program (RIP) can be summarized as follows: ZLE NWR RIP Planned Actual Planned Actual Planned Actual Land acquisition 11,701 11,988 n.a. 3,077 n.a. 1,541 House demolition 122,913 136,918 n.a. 48,650 n.a. 37,153 (sq.m) I People affected by 5,527 5,660 n.a. 1,776 n.a. 3,392 relocation I I The larger than expected impact explained that the resettlement cost was increased by about 63%, mostly incurred for the construction of ZLE due to some missing items of temporary land use in the Resettlement Action Plan (RAP) and the increase in construction/reconstruction of infrastructures in the relocated villages. The amount of land acquisition under the project represented only 1% of the total cultivated land in the affected villages. The farmers spent the land compensation funds in opening wasteland, improving irrigation systems and increasing agricultural outputs. Some farmers in villages where a large amount of land acquisition was required, found new jobs in local enterprises. The resettlement evaluation undertaken by the independent monitoring unit showed that the net income of the project affected people has been improved for all. The resettlement objectives have all been met, i.e. restoration and improvement of income, livelihood and productivity of the affected people. All activities planned in the RAP including the rehabilitation program have been successfully completed. 4.2.8 Environmental Monitoring Results. Since the Zhengzhou-Luoyang corridor traverses mostly flat terrain and some hilly areas, construction of the ZLE was expected to have only very limited adverse impact on the environment, except in hilly areas, as soil erosion and drainage problems would occur; those were adequately identified and assessed in the EA report with mitigation measures in the EAP. Relevant engineering design and technical specifications provided specific treatments for the protection of embankment slopes and roadside drainage, which were applied during the construction and operation phases. No unforeseen adverse environmental problem emerged, either on ZLE or on the RIP and roads in Northwest Henan. Environment related reports/information were delivered on time to relevant parties in accordance with the project requirements. Some erosion or slope failures were reported, with a risk of temporary disruption and potential pollution to irrigation channels. However, HPCD were well equipped to handle such emergencies promptly and efficiently. Also, reduction of noise in towns and villages along the ZLE has been generally effective, owing to appropriate mitigation measures such as noise barrier installation. Control of air pollution has been more problematic in some areas, since factors were mostly outside the purview of the implementing agency. Protection of cultural heritage was particularly well handled. Because of the archeological importance of the last section near Luoyang, ancient capital of China, HPCD decided to (i) conduct an expanded survey of the sensitive area during project preparation and (ii) to start work on this section as soon as possible to mitigate any risk of delay in case of discovery during construction. The survey conducted before appraisal resulted in the discovery, excavation and recovery of historical relics from 133 undiscovered tombs along the right of way. Most of these are now on display in a special museum near Luoyang. Works on that -5-  section were allowed to commence early under advance contracting. Those measures proved effective in the preservation of the sites. 4.3 Net Present Value/Economic rate of return: 4.3.1 The Expressway. The Economic Intemal Rate of Retum (EIRR) of the expressway is estimated to be 25.1 % versus the SAR estimate of 28.9%, and the Economic Net Present Value (ENPV), at discount rate of 12%, is estimated to be RNMB 1.74 billion versus RMB 3.46 billion. The recalculated EIRR and ENPV are lower than anticipated at appraisal mainly because of significant increases in project costs despite the higher traffic on the expressway. The detailed economic analysis is in the ICR files (Annex 7) and a sunmmary is provided in Annex 3. 4.3.2 Northwest Region Roads (NWR) and Road Improvement Program (RIP). The NWR component was implemented as planned in the SAR. However changes occurred under the RIP which followed a programmatic approach. The EIRR for the NWR and RIP as a whole is estimated at 42.9%, a substantial increase from SAR expectations ( in the SAR, the EIRR for NWR's provincial road portion is 20.3% and for the rural road portion the rate is 30.5%. The EIRR for RIP was not available). Because the scope of RIP was changed, the ICR and the SAR evaluations of the RIP are not fully compatible. Details are provided in Annex 3. 4.3.3 EIRR and NPV for the total project. The EIRR and ENPV for the total project (the expressway, NWR and RIP) is estimated to be 29.6% and Y 6.15 billion, respectively, compared with 28% and Y 2.17 billion estimated in the SAR. 4.4 Financial rate of return: 4.4.1 The financial evaluation of the project is comprised of two types of analyses. The first type of analysis is for the revenue earning entity; and the second type analysis is for the non- revenue earming entity. Since the expressway (whose cost constitutes about 73 percent of the total project cost) generates revenues through tolls and there is no revenue for most of the roads under NWR and RIP, the analysis will focus on the expressway first, then on the fiscal impact of the NWR and RIP programs. 4.4.2 Revenue Earning Entity. At the opening of the new facility in late 1995, HPCD established a bureau to operate the expressway. The toll charges are the main revenue for the bureau, which is strictly controlled by the government. The net profit after tax is low because of the rigid toll control. The basic principle for toll collection on the expressway is repaying the Bank's loan, rather than maximizing the financial rate of return on the investment. The level of toll charge, therefore, was set on the low side with low annual growth increases (15 percent increase every five years or an average increase of 2.8 percent per year). Combined with the project cost overrun and low profit margin, this policy led to an estimated financial rate of return for the total investment of about 0.4% (in the SAR, there was no financial evaluation). -6 -  4.4.3 Non-revenue Earning Entity. Most of roads under NWR and RIP are toll free. The evaluation of the fiscal impact focused on the risks of insufficient funds for future operating expenses on the project roads. It shows that the fmancial risks of not having the revenue for supporting road maintenance would be minimal, as the expenditures on these activities constitute only a small fraction of HPCD's fund flow. Based on the record, the sum of the total maintenance expenditure of NWR and RIP is less than 1.3% of the total maintenance expenditure of HPCD during the 9th Five Year Plan. These low financing ratios indicate that the project presents a modest financial risk regarding availability of counterpart fund for the future maintenance of the project components. 4.5 Institutional development impact: The project has had a substantial institutional development impact, as noted above. The provincial institutions involved with implementation of the project have gained significant hands-on capabilities by handling such a complex project as ZLE from design to construction related problems such as land acquisition, resettlement and environmental monitoring. The skills acquired under the expressway component using the FIDIC contractual approach were directly applied in the construction of the govemment-funded dual carriage-way. Measures taken to strengthen the five institutions within BPCD were effective. The trucking study provided methodological approaches and a joint local/foreign management model which were useful in future studies. S. Major Factors Affecting Implementation and Outcome 5. 1 Factors outside the control of government or implementing agency: Growth of the local market. The main factor outside the control of govemrnent or implementing agency affecting project implementation and outcome was the rapid change in growth of the local market. Traffic grew faster than anticipated requiring changes in the design of the ZLE from single to dual carriage-way to accommodate the growing traffic. The traffic diversion due to changes in railway operation policies was also a factor in the design change to a four-lane facility. Extemal economic condition. Changes in exchange rates during the implementation period (from 5.45 RMB/$ in 1992 to 8.30 in 2000), and in particular the sharp devaluation of the Renminbi in January 1994, had an adverse effect on the contractors' performance. Difficult negotiations ensued to compensate for increases in costs of material and labor. 5.2 Factors generally subject to government control: Department reorganization. HPCD reorganization in 1996/97, and the insufficient staffing of the Foreign Capital Utilization Office which was responsible for managing the project, led to temporary weaknesses in project management. This was one of the reasons for delays in the supply and installation of the EMS component warranting an extension of the loan closing date. Traffic overloading There are signs of premature wear on the pavement surface of the expressway, especially on the right lane for slow traffic. This problem has been traced to a large extent to overloading, a serious issue in this corridor because of the heavy coal haulage between Shaanxi, Henan, and Jiangsu Provinces. All three provinces are tackling this difficult issue separately, but a joint strategy could be more effective. -7 -  5.3 Factors generally subject to implementing agency control: Delays in bid processing. The bids for the EMS works were opened in May 1996. Contract was to be signed by November 1996 and the works substantially completed by June 1998. But in actual fact, the contract was signed in January 1998 or about one year and a half later than originally planned. The original bid documents on the basis of which bids were invited were not written in specification style. Significant portions of the required electrical technology were either obsolete or inappropriate for the application, and this became a ground for disagreement. This was attributed to HPCD's lack of experience in this type of works and the temporary understaffing of the project management office. Design surveys. Insufficient topographical, geological and geotechnical investigations when designing the expressway led to substantial increases in some quantities of works (especially earthworks), and to cost overruns for most contracts on the expressway (para 5.4 below). 5.4 Costs and financing: As presented in Annex 2a, the total project cost in US dollar equivalent was almost identical to the appraisal estimate, showing that the physical and price contingencies were overall adequately assessed. However in local currency terms, the devaluation of the Renminbi led to a total cost increase of about 45%. Two components suffered substantial cost overruns: (i) civil works contracts for the expressway had an overrun of about 15% in US$ terms, mostly due to adverse geological conditions and some design enhancements; and (ii) in the case of the EMS contract for traffic engineering on the expressway, a gross underestimation of prices and quantities for key inputs occurred, leading to a six-fold increase in the final cost. The use of loan funds, broken down into ICB, NCB, and other procurement methods, did not differ significantly from the SAR estimates, as shown in Annex 2b. Regarding project financing, the Bank loan was used up to 93%, calling for an increased participation of the provincial and central governments (Annex 2c). 6. Sustainability 6.1 Rationale for sustainability rating: The project is likely to be sustainable when considering the achievements under each of the components, and sustainability is enhanced by follow-up projects, as shown below: (i) Traffic congestion has been remedied in the Zhengzhou-Luoyang corridor. The gap existing to the west between Luoyang and the border with Shaanxi Province is being tackled under the Second Henan Highway Project. Once the latter is completed, the east-west traffic traversing Henan will be facilitated. (ii) The RIP and Northwest Region Roads components have greatly enhanced accessibility throughout the province. The program is being expanded by focusing more on the poor areas under the RIPA (Road Improvement for Poverty Alleviation) component of the Second Henan Highway Project. - 8 -  (iii) Significant transfer of technology to local staff has been achieved and institutional capabilities have been strengthened. The current restructuring of HPCD will provide further incentives for efficiency gains. (iv) Important recommendations of the Trucking Study have been implemented, and an action plan has been developed for further implementation, to be monitored under the Third Henan Highway Project which is expected to become effective in early 2001. 6.2 Transition arrangement to regular operations: ZLE was opened to traffic in December 1995. The expressway has been operated without traffic engineering equipment and tolls were collected manually. After complete installation of the E&M systems in the first semester of 2001, the level of service will be substantially improved in terms of (i) waiting time at the toll booths, and (ii) incident or accident response time with the use of the emergency telephone and other traffic surveillance systems along the expressway. More generally, level-of-service type indicators, similar to the ones used in more developed expressway networks, will be used by the strengthened Expressway Company to monitor its operation. 7. Bank and Borrower Performance Bank 7.1 Lending: At the identification phase, the staff made sure that the project objectives and scope were consistent with both the government's priorities and the Bank's assistance strategy. During project preparation Bank staff helped the project to benefit from extensive consultations with experts on technical aspects of the project design. The initial feasibility studies were revised to meet Bank standards. However, they underestimated the traffic growth potential. As a result, as noted earlier, the single carriage-way design was later changed to double carriage-way. Appraisal was focused on what were perceived to be the main project risks: lack of experience of the implementing agencies with the design and construction of modern highways, international procurement bidding, related archeological, resettlement and environmental issues. Design standards, particularly with regard to the interchanges, were reviewed by consultants financed by the Finnish Trust Fund. Advance contracting and retroactive financing were provided, in particular to allow for an early start of works in the archaeologically sensitive zone. Attention was also paid to the Province's financial performance relative to its contributions. However, performance indicators were not developed during the lending phase. 7.2 Supervision: The Bank conducted 12 supervision missions from 1993 to 2000, an average of about 2 missions per year. A total of 90 staff-weeks were spent on supervision activities. Efficiency gains were achieved by Bank missions dealing with several projects during each stay. Continuity of staffing on the project was generally achieved, but the skill mix was limited. Resettlement and environment staff provided specialized reviews during the critical phases of the project, but could have been used more widely. As available resources from the field office increased, they were tapped accordingly. Given that the Zhengzhou-Luoyang Expressway component was the first of its kind in the Henan province, the Bank team paid special attention to minimizing the imnplementation risks. Supervisors and contractors were provided with timely advice on working properly under the FIDIC conditions of contract. In -9-  particular the roles of the employer, the "engineer", and the contractors had to be clarified several times over, as well as the relationships between local and foreign supervision teams which required facilitation from time to time. Bank supervision was also effective on other components. In the course of implementation of the rural roads components, staff facilitated the acceptance of competitive bidding in road works in preference to force account operations, even for small civil works contracts. Involvement was also substantial in the Trucking Study, where staff provided useful input. 7.3 Overall Bankperformance: Overall Bank performance is considered satisfactory, despite the acceptance during appraisal of the conservative traffic flow forecast for the Zhengzhou-Luoyang Expressway, which was contradicted soon after during implementation. Borrower 7.4 Preparation: The Borrower preparation of the project started as early as 1986. Land acquisition and resettlement based upon the original design of ZLE were carried out early. Recognizing its lack of experience with the construction of modem highways and with international procurement methods, HPCD was cooperative with the foreign assistance in charge of the technical design review. As noted above, traffic forecast underestimated the number of lanes to be constructed. 7.5 Government implementation performance: The government shown strong commitment to the satisfactory completion of the project. Compliance with the loan covenants was generally adequate. Both central and provincial Government staff were supportive of the institutional reforms proposed under the program. However excessively long time was needed to get all clearances on the bid documents and then on the evaluation report from the concerned provincial and central government agencies. 7.6 Implementing Agency: Most of the civil works were packaged in appropriate size and contracted out on time. The supervision of ZLE was carried out by a joint foreign/local team, which performed relatively well. The Northwest Henan highways and the Road Improvement Program components were supervised by local teams. However there was some failure to anticipate the difficulties of procuring major works like the EMS. Procurement delays led to a two-year extension of the loan closing date, and another six months will be needed to complete installation of all systems. An interim completion report for this component was prepared, and HPCD will provide the final completion report in early 2001. Some difficulties were experienced in 1996/97 with overall project management. The Foreign Capital Utilization Office, having to deal with several other projects, was less and less responsive to the demands of this particular project. Project management was rated unsatisfactory for some time. Finally in late 1997 the FCUO was strengthened and performance resumed satisfactorily. - 10 -  7.7 Overall Borrower performance: Overall performance of the Borrower is considered satisfactory despite the difficulties in completing the EMS component. 8. Lessons Learned Proper design of the expressway, including allfacilities. As noted above, substantial cost and time overruns were encountered because the technical complexity of expressway construction and operation was underestimated. It is cost-effective to spend more time to refine the engineering design, both of the expressway and of the EMS component. Then tendering of the EMS works should start at least two years before the civil works are expected to be completed. Promotion of interprovincial trade. The Trucking Study was instrumental in identifying the barriers to long-distance traffic and making recommendations to facilitate long-distance trade. With the development of the National Trunk Highway System (NTHS), increased emphasis was put on interprovincial cooperation, especially at provincial border stations. This lesson was learned, with the Bank initiating the series of "National Highway Projects" grouping two or three provinces traversed by a long section of the NTHS. The first National Highway Project involved Henan and Hebei Provinces around the north-south section of the NTHS linking Beijing to Guangdong. Relevance of Local Roads Improvement Programs. Both the Northwest Henan Roads and the RIP components have shown the significant benefits achieved under rural roads programs, as well as the high appreciation and demand from local people for this type of Bank involvement. This lesson was learned in the follow-up project with the Road Improvement for Poverty Alleviation (RIPA) component, which has confirmed the effectiveness of this type of action to target poverty. 9. Partner Comments (a) Borrower/implementing agency: ZHENGZHOU-LUOYANG EXPRESSWAY PROJECT ICR (SUMMARY) ZHENGZHOU-LUOYANG EXPRESSWAY PROJECT ICR (SUMMARY) A. Zhengzhou - Luoyang Expressway: Civil Works Completion Report Outline 1. Zhengzhou - Luoyang Expressway (ZLE) is the first expressway financed by the World Bank in Henan Province and it is located in the loessial belt lying north to the Longhai Railway and south to the Yellow River. The expressway starts from the east to the west, linking the capital Zhengzhou with the ancient capital Luoyang and it is the busiest section of the Lianyungang Port to Hurguss Expressway which is one of the major trunk highways constituting "the Double Cross" in the highway system of China. ZLE passes through Xinyang, Gongyi, Yanshi and Mengjin and links up with national highways 107 and 108, becoming the communication link with the north and the south, the east and the west parts of China. 2. The first phase (the northem carriageway) of ZLE is the works financed by the Bank, including Contract No. 10 which was commenced on May 1, 1992, earlier than other contracts, and which was - 11 -  implemented by a contractor (No. 15 Engineering Bureau of MOR) through LNCB though it could have been undertaken by force account as agreed by the Bank. The works of Contracts No. 6 through 9 were actually commenced from January 1, 1993 and completed by December 1995 by the successful contractors selected through ICB, namely No. 1 Engineering Bureau of China National Building Construction Corp., Henan Provincial Transport and Highway Engineering Bureau, No. 15 Engineering Bureau of MOR, and No. 1 Highway Engineering Corp. of MOC. 3. The second phase (the southem carriageway) of ZLE was financed with domestic funds and the works were commenced from September 1994 and completed by June 1996. In the early beginning of 1995, the provincial government decided that the second phase works shall be completed simultaneously with the first phase works by December 1995. The second phase works under Contracts No. 6 7, 9 and 10 were undertaken by the same contractors who undertook the first phase works except for the second phase works included under Contract No. 8 which were divided into six contracts procured by NCB. 4. ZLE stretches for a distance of 120.5 km and as the alignment runs through flat region, slightly rolling region and mountainous region, driving speed and subgrade width were designed by adoption of two standards for the flat areas and the mountainous areas, respectively. ZLE is a dual direction four-lane highway with all access under control and equipped with sound traffic safety, service and operation facilities as well as tolling system. Design standards are as follows: a) Calculated driving speeds: 120 km/h for flat areas; and 100 km/ h for mountainous and hilly areas. b) Width of subgrade: 26 m-wide subgrade for flat areas, including a 3 m-wide median, driving lanes and curb belts of 2 x 8.75m in width, hardened shoulders of 2 x 2 m in width, and earthen shoulders of 2 x 0.75m in width; and 24.5 m-wide subgrade for hilly and mountainous areas, including a median of 2 m in width, driving lanes and curb belts of 2 x 8.5 m in width, hardened shoulders of 2 x 2 m in width and earthen shoulders of 2 x 0.75m in width. B. Construction and Supervision of Buildings along Zhengzhou-Luoyang Expressway 5. The construction projects of buildings along Zhengzhou-Luoyang expressway include administration (bureau), toll gate, maintenance work area and service area. 16 contracts was started successively. Among them, contracts No. 1 to No. 4 are of projects using world bank loans and the others are using domestic capital. In accordance with the requirement of FIDIC and based on the contractual agreements, design drawings and construction codes, all-weather supervision is conducted to the project on every side and the quality, progress and investment of the project are well controlled. In particular, the result is remarkable in quality control. Appraisal and acceptance were performed by the quality supervision stations of the local , municipal authorities and Communications Bureau. Except that Contract No. 8 was assessed to be qualified, all the other contracts reached the standard of excellent projects. - 12 -  C. Zhengzhou-Luoyang Expressway Survey of Maintenance 6. In Henan Provincial Expressway Construction and Operation Administration, a maintenance division was set up, responsible for maintenance management of expressways in the province, including preparation of yearly maintenance programs, maintenance specifications and maintenance procedures; programming, supervision and testing and acceptance of heavy maintenance works and some special maintenance works of the expressways across the province; and inspection and evaluation on the maintenance activities perforned by the branch offices. The expressway section between ZherlgztlOl 1 and Luoyang is under the management and maintenance of Zhengzhou and Luoyang Branch Offices. There is a maintenance division and a maintenance depot, looking at expressway repairing and maintenance. Henan Expressway Maintenance Center, which is still under construction, is located at Xuedian, Zhengzhou and will be equipped with advanced machines and equipment such as MARINI100 asphalt mixing plant, ABG-422 pavers, WIRTGEN 200DC milling machines, INGERSOLAND and HAMM road rollers. The center is expected to be capable of implementing independently expressway specialized maintenance operations and providing asphalt mnixed materials for repairing and asphalt for joint filling undertaken by nearby branch offices. 7. Along the ZLE, there are 40 staff involving in maintenance, the staging is 3km/person. Taking various measures actively to achieve good maintenance management, as follows: a) Giving a full play to the maintenance equipment available b) Establishment of an expressway maintenance quality control system c) Establishment of the Central Lab d) Implementation of the Supervision System for Special Works and Heavy maintenance e) Safety f) Emphasis on routine maintenance and strengthening inspection g) Information Management for In-door Management h) Staff training i) Systems and Regulations j) Study and Research 8. Experience and Lessons: a) It was found, in the implementation of pavement special works, that differential strength exists between the newly-laid concrete base and the base of the existing pavement and that the treatment currently made to flexible pavement leading to difficult bonding between rigid layer and flexible layer in the base of the pavement, which becomes the weak point of frequent distresses-It is therefore necessary to apply new design, new materials, new techniques and new workmanship for pavement special works. b) It is worthy further research for solutions for treatment to pavement cracking and joints, especially the cracking in compound type pavement and joints as well as the bonding between rigid and flexible layers left after pavement special works. c) It is worthy attention to how to further give full plays to the maintenance equipment available, how to raise to the maximum degree the application rate of the machines and equipment and to open extemal market by using the heavy-duty equipment in order to create economic benefits. - 13-  d) Most of the distresses occurred in the expressway pavements, subgrades, bridges and culverts in Henan have direct or indirect connection with moisture, and therefore, more attention to expressway drainage systems should be given by the research and design departments. e) In view that the Highway Maintenance Specifications were prepared for ordinary roads and are not quite suit to the maintenance of expressways, it is recommended that an expressway maintenance specifications be prepared and publicized. D. Zhengzhou-Luoyang Expressway Traffic Engineering Status 9. Up to the end of August 2000, the ZLE traffic project progress is 84.68%. In June and July 2000, PD twice pointed out shortcoming in installation according to the contract requirement, and asked the Contractor finish preparation before machine complement. PD also reported to HPCD in term of "first test" in the Contract, and following into three-month test operation if the "first test" can be approved. According to the progress, the "first test" will be gone through in the middle of Sept. 2000, and test operation phases in Oct. 2000, and examination and acceptation phases in end of Dec. 2000 if everything is all right. E. Land Acquisition and Resettlement Management 10. Zhengzhou-Luoyang Expressway passes through 7 counties 21 townships and 117 villages of Zhengzhou and Luoyang. A total amount of 799.21 hectare land has been acquired for this Project, and it resettles 1288 households (5660 people), and the total project resettlement investment amounts to 121.1132 million yuan. Physical index investigation was started in early 1991, and compensation had fully dispersed to individuals by June 1992. Relocation of ground attachments was completed in October 1992, and at the beginning of 1993, compensation for houses was fully disbursed and relocation of houses started. By May 1994, all resettlers had finished house building and moved into their new houses. 11. The administration of resettlement implementation of this Project is organized by the High-Grade Highway Construction Headquarters of Henan Provincial Bureau of Communication, whose name has been changed to Henan Provincial Expressway Development Co., Ltd., while the construction headquarters at Zhengzhou City and Luoyang City take charge of implementation. F. Environmental Management 12. The construction unit of the project (i.e. the Headquarters for Advanced Highway Construction of Henan Province) seriously carried out the rules and regulations for the appraisal of the influence on the environment during the whole process of feasibility study, design, construction and trial operation. The construction unit also basically implemented the measures for environmental protection according to the requirements in the official, written reply given by the National Environmental Protection Bureau to the report on the appraisal of the influence on the environment and it has realized the goal of having the facilities of environmental protection and the project itself designed, constructed and put into operation at the same time. - 14 -  13. In April 2000, the check and acceptance meeting for the completion of the task of environmental protection for the project was presided over by the National Environmental Protection Bureau. It was decided that the construction of the project was basically up to the standards for check and acceptance, the check and acceptance of the facilities of environmental protection was approved and the demands for further improvement of the remaining problems were made. G. Financial Management and Disbursements under Henan Highway Project 14. Financial Management. One level calculation system was applicable to financial management, financial division in the Authority was in charge of calculating cost and expenditure, the cost and expenditures by the corresponding sub-authorities were internally packed by themselves, and these financial sheets were absent from the current summaries, and also they function the additional information to the whole expenses of the project. Besides for 616.96 million RMB yuan financed by the Bank (equivalent to 74.52 million USD), 316 million RMB yuan aided by MOC and 483.2 million RMB yuan collected within the province had been spent on the north range implementation of ZLE. 15. Up to now, 1.5 billion RMB yuan had been completed for performing the north range of ZLE, which include 117.13 million RMB yuan for house engineering, 102.07 RMB yuan for land fee, 1090.95 million RMB yuan for highway construction and 55.88 million RMB yuan for equipment and plant procurement, however, completion certificate approval is not addressed for ZLE. And in addition, to comply with the requirement from the upper level, assets of ZLE, appraised and confirmed by legal procedure, and valued by the date of April 30, 2000, has been incorporated into the newly reorganized Henan Expressway Development Co., Ltd., and later, the asset management and calculation of the expressway will abide by the codes specified in Financial Managemnent Methods for Expressway Company and Accounting Regulations for Highway Operation Enterprises released by the Ministry of Finance (hereinafter called "MOF"). In the whole period of the project implementation, its financial management and accounting calculation had successfully passed the audit procedure by qualified audit department in every fiscal year, such management and calculation comply with the financial and accounting specifications from both Chinese side and the Bank. 16. Accounting withdrawal and its submittal proceeded in a strictly manner as specified in the loan agreement for the requested items and their proportion, up to date, 74.52 million USD had been withdrawn, of this figure, 65.8 million USD flown toward civil engineering, 6.66 million USD toward commodities and the rest 2.06 million USD toward consulting service and training center. The specifically accounting number was opened in Henan Provincial Financial Department (hereinafter called "HPFD"), expenditure numbers were opened in HPCD and the Authority, respectively. In the later stage, due to the policy variation, the number in the Authority could not undertake payment obligation any longer, payrnent of foreign currency was directly finished by the accounting number of HPCD. 17. As to the procedure of accounting withdrawal and its submittal, according to the payment amount required by the engineer in the issued measurement and payment certificate, the Authority completed the application forns on the base of certificate types and requirements, and submitted them to HPCD, who then transferred and delivered these fonns to HPFD, HPFD, discovering no faults after checking, would distribute the corresponding amounts to HPCD from the specifically accounting number, and HPCD paid the amounts to the Authority. 18. Operation Income and Expenditure Balance. During its construction, the Authority regarded KLE as one integrity for its financial management and accounting calculation, the Bank-supported project was restrained to the north range of ZLE, and more, in the course of project implementation, some items such - 15 -  as traffic engineering and house works cannot be separated artificially between the south and the north ranges, if only seen from the sum distribution, much large amounts occurred to the north range of ZLE, as well, after completion of the whole KLE, its roadway asset was overall transferred to the then-incorporated Expressway Construction Management Bureau of HPCD, (hereinafter called "the Bureau"), even for operation stage, both north and south ranges have not been parted with each other. 19. During its construction period, ZLE was administrated and calculated as one of component of KLE; and with its entrance of operation phase, three sub-bureaus were established along the line in Kaifeng, Zhengzhou and Luoyang cities for their divided sections' management of the expressway, respectively, dated by August 31, 2000, 883.06 million RMB yuan had been recouped from the entire KLE, of the amount, 501.02 million RMFB yuan from both ranges of ZLE, more details are like this, 66.75 million RMB yuan for 1996, 81.13 million RMB yuan for 1997, 94.69 rnillion RMB yuan in 1998, 157.56 million RMB yuan in 1999 and 100.89 million RMB yuan by the end of August of the current fiscal year. The expenditures for operation management mainly consist of operation taxes and their addition, management fees (including staff wages, highway admninistration cost, levy administration fee, civilization construction expense), maintenance cost on expressway and its depreciation (calculation & withdrawal for this item exclusive before restructuring), expense for equipment purchase (specifically scheduled cost for this item prior to restructuring) and financial expenses. H. Zhengzhou-Luoyang Expressway Toll Management 20. The AADT of Zhengluo freeway in 1999 is 12007 Vehicles/day, the peak hourly traffic volume V) of Zhengluo freeway in one direction is 655 vehicles/hour, about 1032 PCU/hour. The AADT in 1999 is 12007 vehicle/day, is 17.1% more than the AADT in 1998 which is 10256 vehicle/day. The increase ratio of the traffic volume is 5% higher than the increase ratio 12.1% in 1998. It says that the increasing of the standard of toll fee has less influence to the traffic in Zhengluo Freeway ,the Zhengluo Freeway has very higher attraction to the traffic volume. The toll income of Zhengluo Freeway in 1999 is 168,830 thousand RMBY; it is 70% more than the income in 1998 that is 99,035 thousand RMBY. 1. Trucking Study 21. As in provinces in China, the trucking industry in Henan Province is struggling to adapt from a structure that met the needs of the former planned economy to one that must now meet the significantly different and growing needs of the new socialist market economy. The industry is experiencing considerable difficulties in trying to come to terms with the nature of the changing environment and the rapid pace of change. The difficulties include an inappropriate institutional structure, inefficient and outdated equipment and work practices, poor management, inefficient enterprise structures, inappropriate fiscal conditions, and a deficient road structure with poor connectivity. 22. The Terms of Reference defined three basic objectives for the Henan Trucking Study. These were: * To describe in detail the present situation and structure of the trucking industry. * To identify and assess present problems and constraints which are preventing development of the Industry. - 16 -  * To prepare a series of recommendations which will lead to overall improvement in efficiency in the industry, and which will provide the basis for meeting the expanding needs of the market economy, and hence the objectives for economic development. These objectives were met to the satisfaction of the client, and some recommendations have already been implemented, while others are under consideration. J. Institutional Strengthening/Staff Training Implementation Assessment 23. Institutional strengthening was ,as a component of Henan Highway Project, to improve and strengthen the major functions of the road management, scientific research and education departments in Henan Provincial Communications Department (HPCD). The strengthening covered five agencies: the planning, survey and design institute of HPCD; Henan Provincial Transport Polytechnic School; Henan Provincial Transport Vocational School; and the Expressway Construction Management Bureau. The approaches by which the strengthening was achieved consisted of: (1) provision of some necessary equipment for the institutions to be strengthened to improve their mechanization and modernization of construction and management aspects; (2) provision of training courses in China and abroad to the staff on key or weak posts of the institutions so that skills and they could introduce their learning from the courses to improve the overall caliber of their colleagues. 24. Generally the training program under Henan Highway Project was successful thanks to the strong support and assistance from the World Bank and MOC. An investigation was conducted by issuing and collecting questionnaires about the effect of the training courses and the finding show that the training courses brought in good benefits. Through training, some advanced technologies and management skills were absorbed and introduced from developed countries, substantially raising the career qualification and technical skills of our engineers and managerial and effectively facilitating the development of the highway sector in the province. K. Overall Assessment 25. Through World Bank-financed highway project the FIDIC clause of the conditions of contract have been widely adopted in Henan Province for highway construction works since this system is very advantageous and effective; Through the training of personnel, a batch of professionals were trained on highway maintenance and traffic engineering. These people were well trained, and broadened and made full use of their knowledge during project irnplementation and they played important roles in their work. During the project preparation and irnplementation, the Bank staff provided a lot of assistance to the Implementation Agency. Henan Provincial Government and Henan Provincial Transport Department would like to express heartfelt thanks to the World Bank for its cooperation and support ,and hope to have further opportunity to get the Bank's assistance and the chance for even better cooperation. (b) Cofinanciers: None (c) Other partners (NGOs/private sector): None 10. Additional Information - 17 -  Annex 1. Key Performance Indicators/Log Frame Matrix Outcome/Impact Indicators: Indicator Proicted in SAR I/ Actual/Latest Estimate 1992 1995 1999 1992 1995 1999 A. Gross Output Value of Agriculture and Industry (GOVAI) (in RMB million) 1. GOVAI along ZLE corridor 45.8 114.1 155.1 45.9 114.3 155.5 2. GOVAI in counties affected by Local 11.9 17.8 54.0 12.0 17.9 54.4 Roads Programs B. Average Daily Traffic (vehicles/day) 1. On ZLE 3,993 5,928 8,434 12,097 2. On existing Road 310 3,329 3,976 7,008 4,883 5,599 7,452 C. Traffic closure on Local Roads (days) 23 19 9 20 15 3 Output Indicators: Indicator Proiected in SAR 1/ Actual/Latest Estimate Expressway Construction 120.0 km 120.0 km Local Roads in Northwest Henan 292.0 km 292.0 km Road Improvement Program 740.0 km 491.5 km Number of Staff Trained (staff-months) 360.0 (366.6 km) 357.0 (367.0 kmn) I/ Indicators were not explicitly specified at appraisal and were retrofitted at a later stage of project implementation. - 18-  Annex 2. Project Costs and Financing Annex 2a-1. Project Cost by Component (in US$ million equivalent) Project Cost by Component Appraisal Estimate Actual/Latest Percentage of Estimate Appraisal Zhengzhou-Luoyang Expressway 119.10 137.17 115% E&M works on ZLE 1.83 11.12 608% Local Roads in Northwest Henan 42.08 40.26 96% Road Improvement Program 90.76 59.90 66% Subtotal 253.77 248.45 98% Equipment 14.49 13.08 90% Institutional strengthening and studies 6.55 5.92 90% Land Acquisition and Resettlement 25.89 28.76 111% Total 300.70 296.21 99% Annex 2a-2. Project Cost by Component (in RMB million) Project Cost by Component Appraisal Estimate Actual/Latest Percentage of Estimate Appraisal Zhengzhou-Luoyang Expressway | _648.97 1,097.33 169% E&M works on ZLE 10.03 _ 91.51 912% Local Roads in Northwest Henan 229.30 322.08 140% Road Improvement Program 494.55 479.20 97% Subtotal 1,382.85 1,990.12 144% Equipment 78.96 104.64 133% Institutional strengthening and studies 35.69 47.36 133% Land Acquisition and Resettlement 141.00 230.04 163% Total 1,638.50 2,372.16 145% - 19 -  Annex 2b. Project Costs by Procurement Arrangements (in US$ million equivalent) ExDenditur Procurement Method Procurement Method e Categories AiDraisal Estimate Actua/Latat Estimate ICB NCB Others NBF Total ICB NCB Others NBF Total Works 103.23 117.81 32.73 253.77 111.10 105.26 32.07 ___ 248.45 Goods 8.46 6.03 14.49 8.02 5.08 13.08 Service 6.55 6.55 5.92 5.92 Others _ 25.89 25.89 _ 28.76 28.76 Total 111.69 117.81 45.31 25.89 300.70 119.12 105.26 43.07 28.76 296.21 Annex 2c. Project Financing by Component (in US$ million equivalent) raisal Estimate Actua /Latest Estimate Perce of A oraisal Component Bank Govt. Cofin- Bank Govt. Cofm- Bank Govt. Cofin- ancier ancier % % ancier ZLE 57.24 25.16 36.70 59.69 39.48 39.50 104% 157% 108% E&M works 0.88 0.95 0.00 6.91 4.21 0.00 785% 443% Northwest 13.48 28.60 0.00 12.72 27.54 0.00 94% 96% Roads iI_ RIP 32.28 58.48 0.00 19.50 40.40 0.00 60% 69% Subtotal __ Equipment 12.80 1.69 0.00 10.87 2.21 0.00 85% 131% Institutional 3.32 3.23 0.00 2.31 3.61 0.00 70% 112% strengthening LAR 0.00 25.89 0.00 0.00 28.76 0.00 111% Total |120.00 144.00 36.70 112.00 146.21 39.50 93% 102% 108% The column under "Cofinancier" represents the Central Government while the Provincial Government is the principal project owner. - 20 -  Annex 3: Economic Costs and Benefits SUMMARY OF ECONOMIC RE-EVALUATION 1. The economic re-evaluation of the project covers the following three components: (a) Construction of the 120 km Zhengzhou- Luoyang Expressway (ZLE); (b) The 11 roads in the northwest region (NWR) of Henan province. This includes rehabilitation and improvement of 5 provincial roads (totaling 180.2 kin) and the upgrading of 6 rural roads (totaling 111.5 km); and (c) A province- wide road improvement program (RIP) comprising the rehabilitation and improvement of provincial, prefecture and rural roads. 2. The economic analysis is based on the re-evaluation of data on traffic, operational performance, costs and benefits of project components. The methodology used was similar to that employed by the SAR and is summarized as follows: (a) capital investment and maintenance costs were revised to reflect December 2000 prices and are included in the cost stream; (b) the benefits stream, also reflected in December 2000 prices, were included, and consist of savings in vehicle operating costs, reduced traffic congestion on existing routes, and enhanced road safety; and (c) a project life of 20 years has been assumed and the capital investment period for all components was from 1992 to 1998, depending on the construction phases. 3. During project implementation, some project components under RIP have been modified. Some of the roads have been replaced with new roads and the scope of RIP has also changed. The economic analysis of these new components were included in the ICR. 4. The re-evaluation report is comprised of four parts. Part I is the economic evaluation of ZLE; Part II is the economic evaluation of NWR and RIP; Part III is the overall economic evaluation of the project, including probabilistic risk analysis, and; Part IV is the financial evaluation of the project. This document is available in the Project ICR File (see Annex 7). 5. This annex provides summary tables on the economic re-evaluation of ZLE, the two Local Roads Programs, and the project as a whole. - 21 -  A. ZHENGZHOU - LUOYANG EXPRESSWAY (ZLE) Economic Cost (Y million), EIRR (in %) and NPV (12%, Y million) The SAR The ICR Cost 1,056.74 /_a 2,076.51 EIRR 28.9 25.1 NPV 1,742.36 /_a 3,457.8 La: Updated to 2000 prices by multiplying with a factor of 1.52 SENSITIVITY ANALYSIS EIRR (in %) NPV(12%, Ybillion) VOC savings reduced by 15% 23.0 2.82 Passenger time savings reduced to zero 24.4 3.25 Congestion savings reduced to zero 24.2 3.12 Total benefits reduced by 15% 22.8 2.69 B. NORTHWEST REGION ROADS (NWR) AND ROAD IMPROVEMENT PROGRAM (RIP) NWR AND RIP PROJECT COST COMPARISION (YUAN MILLION) Estimate (Yuan million) Actual (Yuan million) Dec. 1991 prices Dec. 2000 prices Financial Dec. 2000 prices (B)/(A) Economic Economic (A) (Current) Economic (B) (in %) NWR 406.35 617.11 322.16 335.96 54.4 RIP 736.46 1,116.95 460.63 446.57 40.0 Total 1,142.81 1,734.06 La 782.79 782.53 45.1 La: Updated to 2000 constant prices by multiplying with a factor of 1.52 EIRR AND NPV OF THE NWR AND THE RIP EIRR (in %) NPV (12%, Yuan million) The SAR The ICR The SAR /a The ICR NWR 20.3 - 30.5 24.4 396.51 420.7 RIP n.a.. 59.2 31.43 2,275.0 Total n.a. 42.9 427.94 2,695.7 La: Updated to 2000 prices by multiplying with a factor of 1.52. C. THE OVERALL ECONOMIC EVALUATION OF THE PROJECT EIRR (in %) and NPV (12%, Y million) Sunmmary The SAR The ICR EIRR NPV EIRR NPV The expressway 28.9 1,742.36 25.1 3,457.8 NWR 20.3 - 30.5 427.94 24.4 420.7 RIP -- -- 59.2 2,275.0 Total Project 28.0 2,170.3 29.6 6,153.5 - 22 -  Annex 4. Bank Inputs () Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Ecotomists. I FMS, etc.) Implementation Development MonthlYear Count Specialty Progress Objective Identification/Preparation June, 1989 I EC September, 1989 2 EC, TS February, 1991 1 EC April 1991 3 EC, TS, HE Appraisal/Negotiation November, 1991 5 ES, OA, RS, HE, TS March, 1992 5 EC, ES, OA, 2 TS August 1992 2 TS, HE November 1992 2 EC,TS Supervision September, 1993 2 EC, HE HS HS April 1994 6 TE/P, HE, 2 RS, ES, D/FS S HS August 1994 2 TE/P, HE S HS October 1994 3 TE/P, TIS, HE S HS June 1995 2 TE/P,HE S HS November 1995 4 TE/P,HE, OA S S June 1996 3 TE/P, HE, OA S S July 1997 2 TE/P, OA S July 1998 3 3 HE S S April 1999 3 3 HE S S October 1999 1 HE S S January 2000 3 HE, RS, D/lS S S ICR June 2000 3 HE, RS, ES S S EC=Economist; TS=Transport Specialist; HE=Highway Engineer; ES=Enviromnental Specialist; OA=Operational Analyst; RS=Resettlement Specialist; TE/P Transport Engineer/Procurement; T/lS=Training/Institutional Strengthening; D/FS=Disbursement/Financial Specialist (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ (,000) Identification/Preparation 100 319 Appraisal/Negotiation 80 247 Supervision 89 234 ICR 10 30 Total 279 830 - 23 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Z Macro policies O H O SU * M O N O NA Z Sector Policies O H *SUOM O N O NA N Physical O H *SUOM ON O NA Z Financial O H * SU O M O N O NA Z Institutional Development 0 H * SU O M 0 N 0 NA Z Environmental O H * SU O M O N O NA Social Z Poverty Reduction O H * SU O M O N O NA 0 Gender OH OSUOM ON ONA Z Other (Please specify) O H *SUOM O N O NA Resettlement J Private sector development 0 H * SU O M 0 N 0 NA Z Public sector management 0 H * SU O M 0 N 0 NA ZOther (Please specify) O H * SU O M O N O NA Poverty Reduction - 24 -  Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performnance Rating