China - Inland Waterways Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 23319 IMPLEMENTATION COMPLETION REPORT (CPL-39100; SCL-39106) ONA LOAN IN THE AMOUNT OF US$210 MILLION TO THE PEOPLE'S REPUBLIC OF CHNA FOR AN INLAND WATERWAYS PROJECT December 27, 2001 Transport Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective October 1, 2001) Currency Unit = Yuan Yuan 1.00 = US$ 0.12 US$ 1.00 = Yuan 8.28 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS dwt dead weight ton EIRR Econornic Internal Rate of Return FIDIC Federation Intemationale Ingenieurs-Conseils FIRR Financial Internal Rate of Return GCD Guangxi Conmnunications Department GOC Govemment of China GXJPH Guangxi Xijiang Project Headquarters GXWCDC Guangxi Xijiang Waterway Construction and Development Corporation HaP Hangzhou Port HeP Hengyang Port HPCD Hunan Provincial Communications Department HXNCDC Hunan Xiangjiang Navigation Construction and Development Corporation HuP Huzhou Port ICB International Competitive Bidding IWW Inland Waterway IWT Iland Water Transportation JP Jiaxing Port MOC Ministry of Communications MOF Ministry of Finance NCB National Competitive Bidding NPV Net Present Value SAR Staff Appraisal Report SOE State-owned Enterprise TTL Task Team Leader ZNAB Zhejiang Navigation Administration Bureau ZP Zhuzhou Port ZPCD Zhejiang Provincial Communications Department Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Yukon Huang, EACCF Sector Manager/Director: Jitendra N. Bajpai, EASTR Task Team Leader/Task Manager: Toshiro Tsutsumi, EASTR  FOR OFFICIAL USE ONLY CHINA INLAND WATERWAYS 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 5 6. Sustainability 7 7. Bank and Borrower Performance 7 8. Lessons Learned 9 9. Partner Comments 10 10. Additional Information 25 Annex 1. Key Performance Indicators/Log Frame Matrix 26 Annex 2. Project Costs and Financing 27 Annex 3. Economic Costs and Benefits 29 Annex 4. Bank Inputs 59 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 61 Annex 6. Ratings of Bank and Borrower Performance 62 Annex 7. List of Supporting Documents 63 Map IBRD 31723 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   Project ID: P003493 Project Name: INLAND WATERWAYS Team Leader: Toshiro Tsutsumi TL Unit: EASTR ICR Type: Core ICR Report Date: December 27, 2001 1. Project Data Name: INLAND WATERWAYS L/C/TFNumber: CPL-39100; SCL-39106 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: TP - Ports & Waterways KEY DATES Original Revised/Actual PCD: 03/18/93 Effective: 11/29/95 11/29/95 Appraisal: 11/12/94 MTR: 05/15/98 03/01/98 Approval: 06/20/95 Closing: 06/30/2001 06/30/2001 Borrower/Implementing Agency: PRC/DOCS FOR HUNAN; GUANGXI & ZHEJIANG Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Russell Cheetham Country Manager: Yukon Huang Nicholas C. Hope Sector Manager: Jitendra N. Bajpai Richard Scurfield Team Leader at ICR: Toshiro Tsutsumi Mohammed Rasheed ICR Primary Author: Toshiro Tsutsumi; Han-Kang Yen; Teresita Ortega 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 Sustainabilitv: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The main development objectives were to: (a) improve inland waterway (IWW) management by introducing organizational and financial reforms in line with the market economy; (b) expand IWW capacity by widening and deepening channels to improve navigation, which required constructing dams (in Hunan and Guangxi) to increase the water level; (c) improve connections between IWW and land transport services by appropriately equipping IWW ports; (d) generate hydroelectric power by utilizing the differential heads at the dams; and (e) enhance the capabilities of the IWW management entities. 3.2 Revised Objective: There were no revised objectives. 3.3 Original Components: The project included work in one autonomous region (Guangxi province) and two provinces (Hunan and Zhejiang). The project components in each province (in alphabetic order) are: (a) in Guangxi, construction of a dam and shiplock at Guigang, upgrading of the Xijiang IWW channel, and installation of hydropower generation facilities at the dam; (b) in Hunan, construction of a dam and shiplock at Dayuandu, upgrading of the Xiangjiang IWW channel, installation of hydropower generation facilities at the dam, and expansion of two river ports (Hengyang and Zhuzhou); and (c) in Zhejiang, improvement of four major IWW channels and construction of three river ports-at Huzhou, Jiaxing and Hangzhou-to link IWW and land transportation modes. The original summary costs and the final project component ratings are: Component Cost Rating Channel/Ports/Dam/Shiplock Construction $68,800,000.00 S Power Generator/Cargo Equipment $136,500,000.00 S Technical Assistance and Training $4,700,000.00 S 3.4 Revised Components: There were no revised components, but the scope of some components was revised during implementation, following actual IWW development. * In Hunan Province, the number of new berths at the two river ports (financed locally) was reduced because of an economic slowdown and changes in traffic pattems. Three coal berths at Hengyang were converted to two general cargo berths, and two coal and one general cargo berths at Zhuzhou were converted to one multi-purpose terminal. * In Zhejiang, the channel design was modified, and the channel was upgraded from Class 5 to Class 4 (for 500-dwt vessels) to coordinate the channel class of Grand Canal with that in neighboring Jiangsu Province. -2 -  3.5 Quality at Entry: (None) 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: 4.1.1 The project was implemented satisfactorily and the objectives are very likely to be met. In relation to the original objectives (see paragraph 3.1): (a) the capacity of IWW agencies improved through cormmercialization. Guangxi and Hunan Provinces commercialized IWW agencies by creating new state-owned enterprises (SOE), which are financially autonomous with satisfactory operating ratios; (b) The physical capacity of IWW expanded with the widening and deepening of navigation channels; (c) Connections between IWW and land transport were improved by the construction of transshipment ports and the appointment of commercial operators for the ports; (d) Hydropower stations in Guangxi and Hunan have been operating at higher utilization rates than expected; and (e) The capacity of IWW agencies has increased through the training of their staff. 4.1.2 Performance indicators were not mandatory when the Staff Appraisal Report (SAR) was prepared in May 1995. The project was officially retrofitted and the indicators included after discussions with the implementing agencies and the Government of China (GOC) in December 1997. Because major economic benefits were expected from transportation cost savings that would result from the use of larger vessels, average vessel size was selected as the rnain performance indicator. The volume of inland waterway traffic also was selected as a performance indicator to compare inland waterways to roads and railways and monitor IWW competitiveness as a transportation mode. For monitoring financial sustainability, the working ratio of the IWW agencies was selected as a performance indicator. 4.1.3 During project implementation, the average vessel size increased. Vessel size in Hunan and Zhejiang increased as estimated, but the increase in Guangxi was lower than the estimate because of slow economic growth and the fact that, despite implementation of the project, IWW development lagged behind railway and highway development. Although a railway from Kunming to Nanning and a highway from Guizhou to Guigang were completed before the end of 1997, a proposed coal terminal at Nanning to transfer coal from road or rail to IWW (a separate project financed locally) was not constructed on time. The delay was due to the unavailability of land around Nanning. The completion of the new terminal downstream of Nanning is scheduled for 2006. When the new terminal is completed, Inland Water Transportation (IWT) in Guangxi is expected to be fully competitive and its average vessel size is expected to increase quickly. 4.1.4. The increase in IWW traffic also was generally lower than was estimated because of slow economic growth. Although economic growth is expected to be slow for some time, IWW traffic is expected to grow steadily because the basic demand for bulk materials (coal, ore, and construction materials) is still strong. 4.1.5 IWW agencies have been financially sustainable. Operating ratios and working ratios were very close to the estimates and are expected to improve after hydropower generation reaches full operational status. 4.2 Outputs by components: 4.2.1 All project components have been satisfactorily completed. Guangxi and Hunan provinces finished upgrading their IWW channels by constructing dams and shiplocks at Guigang (Guangxi) and Dayuandu - 3 -  (Hunan). Hydropower generation at each dam has been satisfactory. The IWW agencies in the two provinces were commercialized, and independent SOEs were formed to develop waterways and operate the dams and shiplocks. Zhejiang Province successfully upgraded its channels by widening and deepening and constructed the three river ports. Channel development, mainly for the Grand Canal section, was coordinated with neighboring Jiangsu Province. 4.2.2 The capacity of IWW agencies has improved through technical assistance and training. A financial reform plan, including development of the computerized accounting system and related training, has been satisfactorily implemented. 4.2.3 The Environmental Action Plans and Resettlement Action Plans were substantially followed and overall environmental management and implementation of resettlement has been satisfactory. The Resettlement Action Plans for the Hunan and Guangxi components underwent major revisions during implementation. Implementation in Zhejiang and Hunan was generally smooth and successful, while in Guangxi, the implementation of the plan met with some problems. Compensation has been paid in all three provinces, which enabled the affected populations to cany out their livelihood development activities. In Guangxi, however, the last payment from the land compensation fund to the affected people in Hengxian County and Guigang Municipality has not been made. The Bank strongly recommends that Guangxi Communications Department (GCD) and local governments deliver all land compensation funds to the affected people. 4.3 Net Present Value/Economic rate of return: 4.3.1 The overall Economic Internal Rate of Return (EIRR) of the project at completion is estimated to be 22.3 percent, compared to the SAR estimate of 22.1 percent, and the actual net present value (NPV) of CNY 4,485 million is compared to the estimated CNY 4,046 million. The EIRR and NPV at completion are similar to those estimated at appraisal, which is due mainly to the strong traffic performance of Zhejiang's project channels, which offset the combined negative impact from the low traffic for the three ports in Zhejiang and the shiplock in Guangxi. The breakdown of the EIRR and NPV, compared with those in the SAR, by province, are as follows (see details in Annex 3A): EIRR (%) and NPV (12%, CNY miltion) Summary The SAR The ICR Guangxi Hunan Zhejiang Total Guangxi Hunan Zhejiang Total EIRR 21.1 16.9 30.1 22.1 9.9 16.8 37.4 22.3 NPV 1,166.2 511.4 2,368.8 4,046.4 (228.6) 587.9 4,125.8 4,485.1 4.4 Financial rate of return: 4.4.1 The project was substantially completed and some components were put into operation in 2000. Three provincial IVVW agencies are revenue-earning entities. The financial analyses covered each entity and the overall project. The Financial Intemal Rate of Return (FIRR) is estimated to be 5.9 percent, and the NPV (at a discount rate of 5.6 percent) is estimated to be CNY 181.8 million. In the SAR, there are no FIRR or NPV calculations. The breakdown of the FIRR and NPV, by province, is as follows (see details in Annex 3B): FIRR (%) and NP (5.6%, CNY million) Summary FIRR NPV Guangxi 8.0 444.3 Hunan 5.0 (101.6) Zhejiang 4.4 (159.8) Total Project 5.9 181.8 -4-  4.5 Institutional development impact: 4.5.1 Major institutional development under included the commercialization of IWW agencies in Guangxi and Hunan. Guangxi created the Guangxi Xijiang Waterway Construction and Development Corporation (GXWCDC) during project irnplementation, and Hunan created the Hunan Xiangjiang Navigation Construction and Development Corporation (HXNCDC) at the beginning of the project. Both corporations received their initial assets from the communications departments of the provinces and now operate with financial autonomy. Revenues are generated by selling electricity and, for GXWCDC, collecting shiplock fees. Experienced staff were recruited, and extensive training (domestic and overseas) was provided on shiplock and hydropower operation, IWW development, financial management, and environmental protection. In Zhejiang, competitive bidding was carried out for leasing the three river port facilities to private operating companies. Operation of the three river ports has been commercialized. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: 5.1.1 Hunan and Guangxi suffered historical floods in 1996. The imnplementation of civil works was delayed because the flooding affected the construction of dams and made the modification of dam designs necessary. After the recovery period, additional reinforcement works (i.e., raising the level of the cofferdams) were added, and the contract price increased. However, delays were reduced through the capable performance of contractors and supervision consultants. 5.1.2 The economic slowdown in Asia in 1997-1998 had a negative impact on IWW traffic. Although IWW traffic growth was lower than estimated (except in Hunan and Zhejiang, which sustained strong demand), the EIRR of 22.3 percent for the project is still considered satisfactory. The economic slowdown also may have affected the upgrading of IWW vessels. The expected replacement of vessels did not occur during project implementation because of the low profit margins of the shipping companies. 5.2 Factors generally subject to government control: 5.2.1 Transport development strategy by Ministry of Communications (MOC). MOC established IWW development plans for the Yangtze River Delta (including the Hunan and Zhejiang components) and the Pearl River Delta (including the Guangxi component). The GOC policy that allows IWW agencies to generate and sell hydroelectric power by utilizing dams for navigation purposes encouraged the provincial govemments to create commercialized SOEs for operating and administrating IWW. The Guangxi IWW agency had the first experience in constructing a small damn/shiplock at Guiping, a locally financed project. This Bank-financed IWW project provided the second and third large-scale examples of dam/shiplock construction and operation, with better quality hydropower-generating units and operational technology imported from developed countries. 5.2.2 The deregulation of the transport tariff was key to the success of the project. The transport tariff was deregulated step by step-at first, the tariff was fully regulated, then it became negotiable within a range of 20 percent of the tariff at the start of the project, and now has been fully deregulated. IWT now offers a tariff for bulk cargo that is competitive with that of long-haul rail transportation. 5.2.3 Ministry of Finance (MOF) implemented a financial management system reform to follow intemational standards. The financial reform component of the project was satisfactorily implemented under the favorable environment of the IWW agencies. There were no major difficulties in implementing the reforms. -5 -  5.2.4 Power market reform impacted the financial sustainability of the project. The Ministry of Electric Power was commercialized, and the power market has been further deregulated. The State Development and Planning Commission proposed several reforms to shift the price of power to the market price. Because the main revenues of GXWCDC and HXNCDC come from power sales, the efficient and deregulated operation of power plants will be critical for their financial sustainability. 5.3 Factors generally subject to implementing agency control. 5.3.1 The level of shiplock fees is set by provincial governments. Guangxi decided to collect a shiplock fee, while Hunan decided not to. The Bank recommended that the provinces collect fees to recover costs and to create a fee structure that favors large vessels. Hunan, however, wishes to encourage all IWW traffic without imposing any additional user charges. The consequences of the different policies have yet to be fully manifested, but at this point, IWW traffic and average vessel size have increased faster in Hunan Province than in Guangxi. 5.3.2 Ownership of the project by the implementing agencies was very strong. Although there were some delays in the initial stages due to procurement procedures and the 1996 flood, the project was completed on time without any extension of the closing date. Early procurement delays because of the implementing agencies' lack of familiarity with Bank procurement policy and the complexity of the procurement items (equipment for generating hydropower) were quickly overcome. Each of the three implementing agencies was capable and had the management ability to catch up the lost time. 5.3.3 The major institutional reform component, commercialization of the IWW agencies in Guangxi and Hunan, has been successfully implemented. 5.4 Costs and financing: 5.4.1 The actual project cost was about 14 percent higher than the estimate-$592.38 million compared to $517.5 million-in large part because of increased civil works costs and resettlement costs in the Hunan and Zhejiang components. The increase in civil works costs was due to the damages from the unexpected large floods and the high physical contingency in the detailed design. The increase in civil works in Zhejiang was due to the modification of the channel section design (deepening and widening) in coordination with Jiangsu Province to make the design compatible with the Grand Canal design. Increased resettlement costs were due to added bank protection works to reduce the amount of inundated land in the reservoir areas. People welcomed this modification and it should be considered as good practice. 5.4.2 Actual project costs by province are compared to the appraisal estimates in the following table. Actual Costs vs. Appraisal Estimates by Province in US$ million Province Actual Cost Appraisal Estimate Difference Guangxi 229.0 246.4 -7% Hunan 237.7 211.8 +12% Zhejiang 125.7 98.6 +27% 5.4.3 The project savings of $15 million, derived from the competitive bidding for the Guangxi power generation units, was canceled on May 26, 2000. As of November 29, 2001, $185,919,725 was disbursed, - 6 -  and the undisbursed balance is $9,080,275. The balance will be canceled after the special accounts are closed. The central and provincial governments financed the rest of the project. Guangxi had to start the major civil works for the construction of its dam/shiplock before World Bank Board approval of the project and wished to follow local procurement procedures. Although the civil works contracts for Guangxi were financed locally, the Bank reviewed the qualifications of contractors to ensure that overall construction quality was satisfactory. 6. Sustainability 6.1 Rationale for sustainability rating: 6.1.1 While the increase in IWW traffic was smaller than the SAR estimate, it is expected to continue to grow steadily, because vessel size is increasing, the IWT mode along the project IWW corridors is more competitive and demand for bulk cargo is still strong. The freight tariff is following market direction, and the previously distorted freight tariff has been corrected. China's IWT sector is becoming more competitive. 6.1.2 Maintenance of the channels will not pose a problem. During the preparation and implementation stages, it was confirmed that the IWW channels under the project will require only minimum maintenance dredging. It is very likely that the channels will provide better navigational conditions for LWW traffic. 6.1.3 Now that the management and operations staff has been trained and is experienced, the sustainability of the power stations depends on the demand and price for power. Power demand in Guangxi and Hunan is increasing sharply, and there are no altemative power sources near the project areas. The current power price is sufficient for the sustainability of power operations and it is very likely that price will be maintained at a sustainable level. 6.2 Transition arrangement to regular operations: 6.2.1 The new commercialized IWW agencies, GXWCDC in Guangxi and HXNCDC in Hunan, must demonstrate their capability in operating power houses and shiplocks efficiently and in managing waterways. So far, the power output at each station has been satisfactory and there is little doubt that the stations will continue to operate at a high level of efficiency. 7. Bank and Borrower Performance Bank 7. 1 Lending: 7.1.1 This project was the first Bank-financed IWW project in China, and, therefore, preparation took longer than normal (about 31 months between identification and appraisal). The Bank carefully reviewed China's economic situation and institutional arrangements for IWW development. From identification to Board approval, the Bank contributed 210.7 staff weeks. The Bank carefully reviewed the feasibility study reports that were prepared by the Chinese consultants and found them to be comprehensive, complete and reliable. Bank missions were organized to include a mix of specialized skills-a maritime specialist, a waterway specialist, a dam engineer, an organizational and management expert, an economist and financial analyst, an environment specialist, and a resettlement specialist. 7.2 Supervision: 7.2.1 Supervision was straightforward and based on the carefully designed implementation of the project. Bank supervision mission skills were appropriately mixed, with an engineer, an economist/financial analyst, and environment and resettlement specialists. - 7 -  7.2.2 The Bank's core supervision mission, comprising the technical task team leader (TTL) and economist/financial analyst, visited the construction sites about twice a year, which was sufficient to discuss major issues and implement necessary actions. Resettlement and environment supervision missions also were conducted periodically, but separately from the core supervision missions, depending on the urgency of issues and the availability of the Bank specialists. The Bank's response from headquarters to supervision matters was quick and timely. The Bank kept the same core staff on the team (TTL, economic/financial specialist, and resettlement specialist) from preparation to the completion of the project. With this continuity, the Bank team could build and preserve the client agencies' trust and provide proper and timely guidance to the implementing agencies. The Bank's staffing input for project supervision was typical at 134.1 staff weeks. 7.3 Overall Bank performance: 7.3.1 Although preparation time was lengthy, it was necessary to ensure the satisfactory project implementation, and overall Bank performance was satisfactory. Supervision was efficient. The continuity of the team was key to the successful outcome of the project. Borrower 7.4 Preparation: 7.4.1 Although the level of comprehensiveness of documents prepared by Borrower agencies varied widely, the three implementing agencies cooperated well among themselves and with Bank missions. Because this was the first IWW project in China, the central and provincial governments and implementing agencies were unfamiliar with the Bank's requirements, but the implementing agencies hired experienced consultants to consolidate the feasibility study reports of the three provinces to meet the Bank's appraisal requirement. 7.4.2 The GOC has specific guidelines on preparing feasibility reports and cost estimates, and the Bank has its own guidelines on project cost estimates, such as for price contingencies and the components to be included in the project cost. It took some time to reconcile the differences between the GOC and Bank guidelines because the cost estimates of the implementing agencies had already been authorized by the GOC, and the implementing agencies had little flexibility in making changes. 7.4.3 The implementing agencies were cooperative with Bank missions. The specific performance of each province is summarized as follows: (a) Guangxi-Guangxi had experience with a sirnilar project for MOC, the construction of a dam/shiplock at Guiping. This was an MOC pilot project for an IWW agency to construct and operate a hydropower station. Guangxi, therefore, benefited from the knowledge it gained from that project in preparing and designing the Bank IWW project, including a dam/shiplock. (b) Hunan-Although the new company, HXNCDC, was just being established, the leadership of the company was very strong and the company was fully supported by the Provincial Communication Department. The feasibility study report provided was comprehensive. (c) Zhejiang-The preparation of the Zhejiang component started a little later than the preparation of the other two components, due to the different identification timing. However, because of Zhejiang's experience with a chEnnel improvement project and the construction of river ports, it was able to catch up and follow the time table. Its coordination with Jiangsu Province on the Grand Canal development was very satisfactory. - 8-  7.5 Government implementation performance: 7.5.1 GOC selected high-priority project components and was fully comnmitted to the project. Thus, the proposed project design and GOC's implementation support were good. MOC provided guidance and training to the implementing agencies for preparing the Bank-financed project. MOC, as well as MOF, joined the Bank preparation missions so as to fully understand and expedite project preparation. 7.5.2 GOC's intervention in the procurement process, for large equipment (power-generating units) in particular, may have created procurement delays. This intervention should be eliminated as soon as possible. It was fortunate that the procurement delay under the project was limited to a few months. 7.6 Implementing Agency: 7.6.1 The overall performance of the three implementation agencies was satisfactory. Hunan and Zhejiang had strong ownership of the project and implementation was well managed. Guangxi changed management during implementation, and ownership subsequently weakened. A resettlement issue in the Guangxi component is still pending (see paragraph 4.2.3). 7.6.2 Because this was the first Bank-financed project for all the implementing agencies, a lack of familiarity with Bank procedures was a major concem in the initial stages of implementation. An extensive project launch workshop was held to forestall potential procurement problems. However, the three implementation agencies selected the same Chinese intemational tendering company to assist in the Intemational Competitive Bidding (ICB) process, and a company representative attended pre-appraisal and appraisal missions to understand the background of the Bank procurement policy and procurement packaging. Some minor deviations at the initial stage of the project were promptly rectified, and no major issues arose in procurement. MOC selected capable implementation agencies, and although they were new to the Bank-financed project, they quickly acquired and efficiently applied knowledge of Bank procedures. 7.7 Overall Borrower performance. 7.7.1 Overall Borrower performance is considered satisfactory. Three implementation agencies have complied with the conditions and requirements of the legal agreements. The Environmental Action and Resettlement Action Plans have been substantially implemented. 8. Lessons Learned 8.1.1 Overall, the first Bank-financed IWW project in China has been a success. Commercialization of the IWW agencies based on the hydroelectric power operations will be successful if the market demand for power is analyzed carefully and evaluated feasibly. China understands that its inland waterways are an important part of its infrastructure and should be developed in coordination with other modes of transportation. It is a recognized globally that inland waterways can be an efficient transport mode and should be better utilized. Following the first IWW project, the designs of the second IWW project (Loan 4328-CHA) and the third IWW project (Loan 462 I-CHA) have been based on the same model as this project and are now being implemented. 8.1.2 China's deregulation of freight tariffs, in particular in the 1Wf sector, has advanced more quickly than expected. In a more competitive environment, shipping companies must modernize their fleets to improve operational efficiency. MOC has realized this and is preparing policy guidelines to encourage and expedite the IWT fleet modernization process. -9-  8.1.3 In contrast to the situation of other transport modes, coordination between agencies responsible for water resource management and waterway transport is satisfactory. There have been no specific conflicts between these agencies during the implementation of any of China's rWW projects. 8.1.4 Given that a waterway may cross country borders, coordination between countries is gaining importance in the environment of trade globalization. China is working on this issue with Thailand, Laos, and Cambodia for the Mekong River, and with Vietnam for the Red River. The Bank's role in supporting such coordination may become more important in the future. 9. Partner Comments (a) Borrower/implementing agency: A. Guangxi Province 1. Objective of the Project 1.1 The implementation of the project was to: (a) form the 847-km-long 1,000-dwt navigation channel from Nanning to Guangzhou so as to increase the navigation benefits; and (b) form the water-land integrated transportation network together with Nan-Kun railway and Pan-Bai highway to develop westem China. 1.2 The objectives of the project were to help Guangxi province to: (a) improve the management of inland navigation and introduce institutional and financial reform; (b) increase the navigation ability along Xijiang river by canalizing, widening and deepening the navigation channel; (c) improve the connection between waterway and highway by facilitating advanced equipment in inland port; (d) generate power by utilization of water head; and (e) strengthen the ability of inland waterway navigation. 1.3 Components of the project: (a) A 14.5-m water head dam and a shiplock were constructed at Guigang to increase the water level, and an access road bridge, office building and anti-inundation facilities also were constructed; (b) The Guigang and Nanning navigation channels were improved; (c) A hydropower station with an installed capacity of 120 MW (4x30 MW) and annual power output of 600 GWh were constructed together with a 60-km-long power transmission line; (d) turbine/generator units, flood discharge gates., shiplock gates and corresponding equipment and telecommunications were supplied and installed; and (e) technical assistance and training of personnel. - 10 -  2. Implementation and Result 2.1 The main civil works (shiplock power station and dam) commenced construction on January 1, 1995. The shiplock was completed on January 1, 1998. The first hydropower generating unit was put into operation on February 1, 1999, and all four units were put into operation by August 23, 1999. The quality of shiplock power station and dam were evaluated as good. 2.2 The Nanning-Guigang navigation channel was improved section by section. The Xijin-Guigang section was improved from January 20, 1997 to December 20, 1997, and the Nanning-Xijin section was improved from September 28, 1999 to June 30, 2000. Now Nanning-Guigang navigation channel reaches Class 3 standard, which allows 1,000 dwt vessel to navigate all year. The quality was evaluated as good. 2.3 The procurement for civil works and equipment not only conformed with the State regulations but also met the requirements of the World Bank. National Competitive Bidding (NCB) followed the Model Bidding Documents prepared by the MOF and agreed by the World Bank. For the Intemational Competitive Bidding (ICB) contract, China Tendering Company was entrusted to be the procurement agency, and the bidding documents and tendering followed the World Bank procurement guidelines. The bidding and tendering works were performed well. 2.4 The implementation of the project was supervised by both the society and the government. The engineering supervision was performed by Guangxi Bagui Engineering Supervising & Consulting Company, and the engineering quality was supervised by Guangxi Communications Engineering Quality Supervision Station. 2.5 The project also involved 1,227.75 person-months of training, consisting of policy support, implementation support and institutional strengthening, of which 506 person-months were for domestic training and 721.75 person-month for overseas training. The training was originally planned for 413 person-months (256 person-months for domestic training and 157 person-month for overseas training). After the training, the implementation and operation staff improved their ideas, technical knowledge, and management experience, and played an important role in implementation and operation of the project. 2.6 The following studies were performed: (a) Planning and Development of Information & Network Management System of the Project; (b) Technical Study of Overflow Cofferdam with Earth Core for the Project; (c) Analysis of Speeding up the Construction Period of the Project; (d) Study of the Optimal Water Level under the Integrated Operation of Guiping and Guigang Hydropower Stations; (e) Reform and Development of Guangxi Iland Waterway Transportation; and (f) Maximization of Power Generating Benefit under the Premise of Assuring Navigation Water Level during Flood Season for the Project. - 11 -  2.7 The purpose of developing an information and network management system was to reduce the effort required to carry out management and promote working efficiency. The system was designed and developed since the first half of 1994, and was improved during application. Now the system can be used for searching, analysis, statistics and disbursement, and can be applied to construction and management in medium and large projects. 2.8 The technical study of the overflow cofferdam with earth core aimed to utilize the existing earth cofferdam for this project by widening and increasing the dam height to save construction cost. This purpose had been achieved. 2.9 The analysis of speeding up the construction period of the project was aimed to reduce the construction period for the second phase dam from 2 years to 1 year. By doing this, water could be stored to the designed water level ahead of schedule and more power could be generated. The result of the study were fully applied. 2.10 The purpose of the study of optinal water level for Guiping and Guigang hydropower stations was to achieve maximum power generation under the premnise of assuring the navigation water level. 2.11 According to the requirements of State institutional reforms and the World Bank, the construction and operation of the project should be commercialized. On January 23, 1999, Guangxi Xijiang Waterway Construction and Development Corporation (GXWCDC) was approved to be established by Guangxi Provincial Government to be in charge of the management of Guiping and Guigang navigation junctions, and to set up a modernized enterprise system. 2.12 After the establishment of GXWCDC, the financial system was set up to (a) standardize the financial income and disbursement for the whole company (including three subsidiary companies), (b) help control and reduce the costs, and (c) help to collect funds for repayment, project maintenance and constructing new projects. 2.13 The computer accounting system of Guangxi Xijiang Project Headquarters was accepted by GCD at the end of 1996. Since January 1, 1997, computers have been used to handle financial affairs. Since its establishment in January 1999, GXWCDC also has implemented the computerized financial system and has gained efficiency in the accounting process and great improvement in accounting quality. 2.14 GXWCDC currently focuses its business on power generating by Guigang and Guiping hydropower stations. The selling of electric power of GXWCDC was 578 million kWh in 1999 and 750 million kWh in 2000. The company also collected tolls from ships passing through Guiping and Guigang shiplocks, which was CNY 2.3 million in 1999 and CNY 2.4 million in 2000. The selling of electric power from January to July in 2000 was 294 rnillion kWh, and the cargo through the shiplocks reached 4.8602 million tons. The financial status of the company remains good. 2.15 The actual total investment is expected to be within the budgetary estimate. The preliminary design of the project was started in 1989 and was approved in 1995. Because the preparatory work started many years ago, the construction period was very long, and the project was also affected by such factors as: the adjustment of state policy, the change in foreign exchange rate and the important design modification, so the original budgetary estimate was obviously different from actual expenditures. Thus, the general budgetary estimate of the project had to be modified. According to the actual situation, the project investment rate between domestic and foreign capital should be adjusted after considering the change in foreign exchange rate, the savings from bidding and optimized design and the use of reserve. The foreign - 12 -  capital is estimated to be decreased by US$18,000,000 and the domestic capital to be increased by CNY 167,596,500. The total investment was estimated to be CNY 1,994,576.500. The following components were involved in the budgetary modification: Guigang navigation junction works, access road, Yujiang River bridge, telecommunication works and Nanning-Xijin navigation channel improvement works. 3. Main Factors Affecting the Project 3.1 Advantageous factors: (a) Most staff of the Client and the supervision company have construction and management experience on similar projects. Most of them took part in the construction of Guiping Navigation Junction Project; (b) As the Client, GCD has the ability to coordinate the relationship and conflict between the project implementation agency and related govemment departments, local enterprises and farmers to ensure the smooth implementation of the project; (c) The two main design institutes of the project were rich in design experience. The design was concise and feasible; (d) Contractors with abundant experience in similar projects were selected to implement the main works; and (e) The reliable fund resources assured the continuous construction of the project. 3.2 Disadvantageous factors: (a) The domestic subcontractors of the foreign equipment suppliers did not pay much attention to this project, which resulted in the delay of delivery of the equipment and thus, the operation date of Unit I was postponed by 7 months; and (b) The compensation fee for reservoir inundation was much more than the original budgetary estimate. The main reasons were: the compensation rate increased greatly, the preliminary design was not precise enough, and the budget for this part was reduced during the budgetary estimate review period. 4. Sustainability of the Project 4.1 As a communications infrastructure construction project, the benefit of this project was mainly focused on social aspects. The construction of the project will increase the navigation class from Nanning to Guigang, improve the local communications facilities, increase local government income tax and local people's employment, and establish a good basis for development in this area. 4.2 The benefit of the project mainly comes from the income from power generating. With the reform of the electric power system, the price and the selling volume of electricity will face severe market competition. But at present, the agreed price can ensure the loan repayment ability and further development. - 13-  5. World Bank's Action 5.1 The work efficiency of the World Bank for this project was very high. The appraisal mission of the Bank visited Guangxi and started to prepare the appraisal report in December 1994, and the project agreement was signed on August 31, 1995. It is a very high working efficiency that took only 9 months to complete a series of review, evaluation and signing of the agreement. 5.2 During the construction period, the supervision efficiency of the Bank was also very high. In average, it took no more than 10 week-person to visit the site. 5.3 During the period of preparing the bidding documents and procurement, the World Bank provided many important comments and instructions. 6. Borrower's Action 6.1 The preparation and implementation works of the Borrower was satisfactory. Except for the 7-month delay for Unit 1, other main working processes were completed according to the plan. Up to now, except for the two bridges of the access road component to be inspected and analyzed, all the other works have been completed and approved for final acceptance. All the signed contracts were performed quite well. 7. Evaluation of Works 7.1 The project consisted of five components: Guigang Navigation Junction (shiplock power station and dam), power output works, Nanning to Guigang navigation channel improvement, telecommunications works of navigation channel and access road. Except for the access road, all the other works have passed the final acceptance by GCD and quality was evaluated as good. 8. Future Operation 8.1 A modem enterprise system has been set up in GXWCDC and it is improving. 8.2 Because of the different power-generating volumes, the electric price and loan repaying ability between Guigang and Guiping navigation junction, GXWCDC will make the integrated dispatching between the two junctions to get the best benefit for the whole company. 8.3 GXWCDC is building a local area network (LAN) to connect the headquarters with three subcompanies, to realize network management and improve management level and efficiency. 8.4 GXWCDC plans to reform the Mechanical & Electric Equipment Installation Sub-company to a company that has a Class 3 construction qualification and legal entity and can independently obtain construction and erection contracts. By doing so, GXWCDC will expand its business scope and increase income. 8.5 GXWCDC will implement the Naji navigation junction project to improve navigability between Baise and Nanning. It is said that the pre-feasibility appraisal report evaluated by China Intemational Engineering Consulting Company has been sent to State Development and Planning Commission. Once the report is approved, Naji project will become the new development resource for GXWCDC. - 14 -  9. Important Experience 9.1 The steady and experienced construction, management and operation teams are the basis for a successful project. 9.2 The information management system will greatly improve the management efficiency. 9.3 Because the communications infrastructure construction projects usually have a broad involvement, especially in land acquisition and resettlement, the coordination between govermment departments is very irnportant. 9.4 During the preparation period of the project, the quick development of highway transportation was not given enough attention. So, during the implementation of the project, the counterpart projects (mainly construction of a coal terminal at Nanning) were not implemented with the same speed, thus there was not a good connection between railway and waterway transportation, which resulted in the decrease of freight volume along the upstream waterway. 9.5 The legal entity system should be strictly followed. The enterprise and govenmuent functions should be separated from each other so as to fully ensure the deciding rights of the enterprise. Only by doing so, the project can be implemented with good quality and quick speed, and the investment can be controlled. B. Hunan Province 1. The project objective, design, implementation and operation experience 1.1 Objective Xiangjiang is the largest river in Hunan Province; the river area is the most developed area in Hunan Province. The objective of this project was to develop Xiangjiang waterway by using the potential waterway resource of Xiangjiang. By building a navigation and hydropower junction at Dayuandu, 62 km downstream of Hengyang and widening the channel from 40 m to 90 m, Xiangjiang waterway will be a 1,000 dwt Class, I push 4 fleet, high-class waterway. Xiangjiang waterway connects with the main channel of the Yangtze River and provides service for the development of the export-oriented economy of Hunan through upgrading the transportation capability of Xiangjiang. 1.2 Design The objective of the project design is to build a navigation and hydropower junction at Dayuandu (which is composed of a dam, a ship lock, a powerhouse and a dam crest highway bridge, with the main purpose of navigation and generating electricity). There are 23 sluice gates in the dam with a width of 20 m for each gate. The total length of sluice gates is 531 m. The size of the ship lock is 180 m x 23 m, with the threshold depth of 3 m for the 1,000 dwt class. A fleet with I push tow plus 4 barges can pass at one time. The designed annual pass-through capability is 12 million tons. The powerhouse is river-bed style and four through-flow bulb turbine generator units, each with a capacity of 30 MW/unit were erected. With the total capacity of 120 MW, the average annual output is 585 million kWh. A dam crest highway bridge (for 20-ton trucks) with a total length of 678 m and a width of 9.75 m crosses on top of 23 sluice gates and the powerhouse. - 15-  It is a junction with the comprehensive function of navigation, generating, upgrading irrigation condition and developing tourism, which was found to be according to the principals of comprehensive utilization of water resources and sustainable development strategy. The design of the junction was found to be very successful because of its reasonable plan layout, safety building, succinct and effective structure, and convenient operation management. 1.3 Implementation and operating experience The project was commenced in December 1995, and the ship lock was officially operated and the first unit started to generate electricity three years later in December 1998. In October 1999, all four power generating units started operation. On May 1, 2000, the reservoir was operating at the normal water level. The whole project was completed half a year ahead of the original schedule. The main experiences are as follows: (a) It adopts the system of legal person responsibility. The owner of the project was responsible for the planning, fund raising, organizing design and project procurement, the operation management after its completion, and the repayment of World Bank's loan and interest. This gives the Owner a leading position throughout the implementation process. It is good for speeding up the implementation progress and to transform the project from construction period to the operation period. The project was implemented with quick progress, good quality and high benefit. (b) The Owner paid much more attention to the employment and training of staff, human resource is the key to operation management. Powerhouse management is a completely new subject in the Communication Department and they do not have these kinds of professionals. Through consultation with specialists and intensive domestic and overseas training for university graduates, sufficient knowledge was obtained. The transition from construction to operation periods was smooth. (c) During the construction process, HXNCDC invited experienced specialists as technical advisors to the project. They resolved many important construction safety problems such as geology and foundation treatment, building design safety, construction safety, flood safety and operation safety. The activity of the Dam Safety Panel was effective; it ensured the safety and stability of the dam and other buildings. 2. Evaluation of Project Implementation 2.1 The borrower cooperated with the World Bank officers very actively, friendly and effectively. The borrower always looked to the World Bank officers as good partners; everything the officers did was to help the borrower's better implementation of the project; every time before the World Bank's supervision missions, the task manager provided a tentative work schedule for the borrower's preparation. This made the borrower understand the purpose and the contents of the supervision better and do their best to meet the requirement of the supervision. 2.2 During the implementation of the project, reallocation of the loan proceeds was necessary to meet the actual increased cost in civil works and decreased cost in equipment. Many unexpected change orders were necessary for civil works contracts because of the complex subsoil condition of the project site. Equipment cost was lower than estimates due to competitive bidding. - 16-  3. Evaluation of the performance of the Bank and other main partners 3.1 This project is the first World Bank-financed Inland Waterway Project in China and HXNCDC was not familiar with the project procurement and other guidelines of World Bank financed project. There was no similar project to be used for reference. The borrower had a lot of difficulties in making implementation progress at the beginning of the project. Even the local specialists did not know how to meet the requirements of the Bank. In the aspect of project procurement, in particular, the preparation of the bidding documents and evaluation report, the borrower took some roundabout course and wasted lots of time. Active communication between the Bank and the borrower changed this situation. The task team leader, financial analyst, resettlement specialist and many other experts from the Bank have given the borrower lots of comments and suggestions in details. With the help of this, the borrower became familiar with the requirements very soon. 3.2 The officers responsible for the World Bank-financed project management in MOC and MOF provided great support and guidance during preparation and implementation of the project. They recommended this project very actively and played a very important role in the approval process by the Bank. During the identification, pre-appraisal and appraisal of the project, MOC and MOF organized local specialists and held the training program for the borrowers. Project Officers, Mr. Cao Zhengtian, Mr. Mo Xiaolong and others provided free consultant services and guidance in project preparation, and invited project consultants for technical assistance. 3.3 During implementation period, in accordance with its commitment, MOC provided CNY 500 million, appropriate funds for the project, which is more than the promised amount. This made a great contribution to the project. 3.4 Hunan provincial government paid much more attention and gave great support to the project. In accordance with its commitment in the project agreement, Hunan Provincial Government gave its overall support in raising project funds, making favorable policies and decisions of power price. In order to resolve the actual problems of construction, leaders of Hunan Provincial Government usually visited the site for supervision and guidance. Target Assess Management Method was adopted to strictly control the progress and quality. At the same time, the Government made great contribution to the resettlement of the reservoir area by organizing and coordinating with municipal governments and providing guidelines. 3.5 The project officers of the World Bank Office in Beijing provided good service for NCB procurement, and actively and warmly guided and helped in the preparation of bidding documents, financial management, disbursements and so on. 3.6 Hunan Provincial Communications Department (HPCD) is the direct supervisor and leader of this project. HPCD also made great contribution in ensuring the counterpart funds were appropriately managed. During implementation of the project, HPCD not only effectively monitored the progress, quality and cost of the project, but also coordinated HXNCDC's relationship well between different partners of the project. HPCD also provided strong guarantee for HXNCDC's organization, personnel training and employment. 3.7 Project officers from Hunan Provincial Financial Department provided good guidance in helping HXNCDC use the Special Account of the Bank's loan. Every disbursement was checked very carefully, on time disbursement was ensured, and counterpart funds were guaranteed. The Special Account was safely managed. In addition, introduction and dissemination of the project to the public were made. - 17-  3.8 Hunan Provincial Auditing Department audited the financial statements and the certificates of the expenditures very independently, carefully, in details and fairly, and submitted the Auditor's Report to the Bank in accordance with the agreed schedule. They built a bridge of trust between the Bank and HXNCDC through reflecting the real financial performance and payments of HXNCDC. 4. Proposed arrangements for future operation 4.1 HXNCDC will organize future activities of the Dam Safety Panel, which completed an overall assessment of the dam and operation safety, for dam safety during operation period. 4.2 HXNCDC will assist the World Bank in post-appraisal of the project. HXNCDC will also prepare the agreed perfornance indicators to the Bank after the completion of the project. C. Zhejiang Province 1. Introduction 1.1 The World Bank completed the pre-appraisal for Zhejiang Province's part of China Inland Waterway Project in May 1994 and the appraisal in November 1994. hn May 1995, the negotiation of the project loan took place and the Loan and Project Agreement was signed. On August 31 1995, the loan was declared effective. The project account was closed on June 30, 2001. All tasks stated in the SAR, Loan and Project Agreements have been completed. This report is a formal evaluation of the execution of these tasks. 2. Project Description 2.1 Project Objective (a) to improve the transportation capacity of inland waterways in Zhejiang Province; (b) to improve linkage of inland waterway transportation and other transportation modes; (c) to introduce financial and technical innovation suitable for a market economic system and make operation and technology modernization of inland waterway transportation; and (d) to provide training for improvement of administration capacity of inland waterway transportation. 2.2 The Project includes: (a) reconstruction of Beijing-Hangzhou Grand Canal, Changxing-Huzhou-Shanghai Channel, Hangzhou-Shanghai Channel and Zhapu-Jiaxing-Suzhou Channel; (b) construction of Hangzhou inland port, Jiaxing inland Port and Huzhou inland Port, and providing advanced handling equipment; and (c) execution of each implementation plan. 3. Achievement of the Project Objective 3.1 All the project objectives mentioned are achieved: (a) 190.3 km composed of Beijing-Hangzhou Grand Canal, Changxing-Huzhou-Shanghai Channel, - 18 -  Hangzhou-Shanghai Channel and Zhapu-Jiaxing-Suzhou Channel is reconstructed, in which 140 km is Class 4 channel and 50.3 km is Class 5 channel, and 49 bridges are constructed; (b) Hangzhou Inland River Bulk Cargo Operation Port District, Jiaxing Waterway-Railway Transfer Port District and Huzhou Waterway-Railway Transfer Port District are constructed, including 6 berths of 500 ton, 31 berths of 300 ton, an increased annual throughput of 6.03 million tons, and corresponding handling equipment, warehouses, storage yards, administration houses and environmental protection facilities; and (c) the training plan and financial reform are completed. 4. Forming and Preparation of the Project 4.1 In November 1992, the World Bank assigned a mission to Zhejiang Province to visit the project site. The mission identified the project and propose working requirements for Shanghai-Hangzhou multi-purpose transportation project, including Shanghai-Hangzhou Expressway and Inland Waterways. Zhejiang Province provided "Inland Waterway Works Project Book." Thereafter, The China State Planning Commission combined the inland waterway component with Hunan Inland Waterway Transportation Project and Guangxi Inland Waterway transportation Project into the China Inland Waterways Project. 4.2 In April 1993, a mission assigned by the World Bank visited Zhejiang Province for the appraisal preparation work of the proposed project and completely discussed the feasibility study report, environment impact evaluation, economic and financial problems and other matters. The mission requested additional information and invited experts to help project preparation. During the mission, Zhejiang Province provided the Feasibility Study Report and Environment Impact Evaluation Report and other relative information. 4.3 In November 1993, Zhejiang Provincial Planning Committee approved the Feasibility Study Reports of four channels and three port districts of the project. At the same time the State Environment Protection Bureau and Zhejiang Province Environment Protection Bureau respectively approved the Environment Impact Evaluation Reports of these seven components. In March and April 1994 Zhejiang Provincial Planning Committee approved the preliminary designs of these seven components. 4.4 Agreed with the World Bank, the MOC organized and invited seven domestic experts to consolidate the Feasibility Study Report of China Inland Waterways Project. In April 1994, a detailed and complete report, including project components for Zhejiang, Hunan and Guangxi, was submitted to the World Bank. 4.5 In May 1994, the World Bank made the pre-appraisal for the project, discussed and reached agreement on project design, cost estimate, procurement method, administration and organization reform, personnel training, environmental protection, land acquisition and resettlement and economic and financial aspects. At that time Zhejiang Province provided the preliminary design, implementation plan for environmental protection, land acquisition and resettlement and the procurement list. 4.6 In November 1994, the World Bank formally appraised the project, discussed and reached agreement on the project cost estimate and financing plan, procurement method and loan amount, implementation plan for environmental protection, land acquisition and resettlement, economy and finance, organization, supervision and training. - 19-  4.7 The project loan negotiation took place and the Project Loan Agreement was signed in May 1995 in Washington D.C. and it was declared effective August 31, 1995. The loan amount allocated to Zhejiang Province is US$40 million. 5. Objectives of the Project 5.1 The objectives of the project in the SAR were: (a) To improve the administration of inland waterway and introduce reforms in organization and finance, according to market economic principles; (b) To widen and deepen channels to improve navigational capacity; (c) To improve the linkage of waterway transportation and land transportation by equipping inland river ports with modem equipment; and (d) To provide training and strengthen the administration ability of inland waterway transportation. 5.2 In order to achieve these objectives, the scope of the project includes: (a) Reconstruction of Beijing-Hangzhou Grand Canal, Changxing-Huzhou-Shanghai Channel, Hangzhou-Shanghai Channel and Zhapu-Jiaxing-Suzhou Channel, including widening and deepening channels, and construction of bridges spanning the channels; (b) Construction of Hangzhou Inland Port, Jiaxing Inland Port and Huzhou Inland Port, providing advanced handling equipment and improving linkage of waterway and land transportation to enhance production capacity and effectiveness; and (c) Execution of each implementation plan, including personnel training plan. 6. Project Implementation 6.1 Channels. 190.3 km of Beijing-Hangzhou Canal, Changxing-Huzhou-Shanghai Channel, Hangzhou-Shanghai Channel and Zhapu-Jiaxing-Suzhou Channel, in which Beijing-Hangzhou Canal, Hangzhou-Shanghai Channel and the downstream section of Changxing-Huzhou-Shanghai Channel are reconstructed according to the Class 4 standard (for 500 ton ship navigation). Zhapu-Jiaxing-Suzhou Channel and the upstream section of Changxing-Huzhou-Shanghai Channel are reconstructed in tenns of the Class 5 standard (for 300-ton ship navigation). The excavated earthwork on land is 6.27 million m, dredged earthwork in water is 6.05 million mi, paved revetment is 123.6 km, and 49 new bridges are constructed. According to the agreement with the World Bank, the civil works for channels were divided into 15 contracts and NCB was adopted according to the World Bank Procurement Guidelines and the Bidding Docurnents approved by the World Bank. 6.2 The summary of each contract is as follows: (a) Contract No.1 (Beijing-Hangzhou Grand Canal) is 15.93 kmn, conmmenced in September 1996 and completed in September 1999. (b) Contract No.2 (Beijing-Hangzhou Grand Canal) is 17.83 km, commenced in January 1996 and completed in December 1998. (c) Contract No.3 (Beijing-Hangzhou Grand Canal) is 20.08 kin, commenced in December 1995 and completed in September 1997. - 20 -  (d) Contract No.4 (Changxing-Huzhou-Shanghai Channel) is 8.24 kIn, commenced in April 1996 and completed in September 1998. (e) Contract No.5 (Changxing-Huzhou-Shanghai Channel) is 4.3 kmn, commenced in January 1996 and completed in June 1997. (f) Contract No.6 (Hangzhou-Shanghai Channel) is 13.55 km, commenced in December 1995 and completed in December 1998. (g) Contract No.7 (Hangzhou-Shanghai Channel) is 7.9 km, commenced in September 1996 and completed in December 1997. (h) Contract No.8 (Hangzhou-Shanghai Channel) is 17.15 kIn, commenced in March 1996 and completed in June 2000. (i) Contract No.9 (Hangzhou-Shanghai Channel) is 16.84 km, commenced in April 1996 and completed in December 1998. (j) Contract No.10 (Hangzhou-Shanghai Channel) is 15.07 km, commenced in April 1996 and completed in December 1998. (k) Contract No. 1 I (Zhapu-Jiaxing-Suzhou Channel) is 8.52 km, commenced in May 1996 and completed in December 1999. (I) Contract No.12 (Zhapu-Jiaxing-Suzhou Channel) is 22.79 km, commenced in May 1996 and completed in December 1999. (m) Contract No.13 (Zhapu-Jiaxing-Suzhou Channel) is 10.76 km, commenced in April 1996 and completed in December 1996. (n) Contract No.17 (Beijing-Hangzhou Canal) is 3.64 km, commenced in June 1998 and completed in December 1999. (o) Contract No.18 (Hangzhou-Shanghai channel) is 7.70 km, commenced in November 1997 and completed in June 2000. 6.3 Channel promotion from Class 5 to Class 4. According to the original plan, Beijing-Hangzhou Canal, Hangzhou-Shanghai Channel and Changxing-Huzhou-Shanghai Channel were reconstructed in terms of the Class 5 standard. According to the State Master Trunk Waterway Plan and the development plan in the Ninth Five-Year Plan period, Zhejiang Province determiined and the World Bank agreed in 1997 that the above channels were to be reconstructed based on Class 4 standard. Contracts No. 1 through No.4 and Contracts No.6 through No.10 were implemented by modifying contracts. New Contract No.17 and Contract No.18 were implemented through NCB. 6.4 Ports. According to the achieved agreements with the World Bank, the civil works of ports were divided into three contracts, which were completed by NCB based on the World Bank Procurement Guidelines and the Bidding Documents approved by the World Bank. Contract No.14, Jiaxing Railway-Waterway Transfer Port District, composed of 2 berths of 500 ton and nine berths of 300 ton, was commenced in May 1995 and completed in September 1998. Contract No.15, Huzhou Railway-Waterway Transfer Port District, composed of I berth of 500 ton and nine berths of 300 ton, was commenced in April 1995 and completed in June 1997. Contract No.16, Hangzhou Port Inland River Bulk Cargo Operation District, composed of three berths of 500 ton and 13 berths of 300 ton, was commenced in November 1996 and completed in December 2000. 6.5 Equipment Procurement. According to the agreement achieved with the World Bank, the handling equipment procurement for Hangzhou, Jiaxing and Huzhou Ports was divided into three contracts. The Contract No. 1 was for handling equipment for Jiaxing and Huzhou Ports totaling 6 items composed of 18 sets. Contract No.2 was for handling equipment for Hangzhou Port totaling five items composed of 43 sets. The both contracts were completed through NCB based on the World Bank Procurement Guidelines and the Bidding Documents reviewed by the World Bank, and the equipment have been installed completely and - 21 -  put into operation. Contract No.3 was for smaller equipment for Hangzhou, Jiaxing and Huzhou Ports and procured by shopping method agreed by the World Bank, this contract is completed. 6.6 Construction Supervision. As agreed with the World Bank, Zhejiang Provincial Communications Department (ZPCD) set up a separate supervision organization in 1995 for the project. The supervision organization is composed of 1 Engineer Office and 12 resident supervision groups (in 1997 supervision group for Contract No. 18 was added and set up) with setting up supervision specifications, organizing supervision training and signing supervision agreement with the Employer. 6.7 Staff Training. The program of overseas study tour and training was for 11 subjects, 106 persons/months with 103 persons participating. In fact, the completed overseas study tour and training included 121.5 persons/months with 141 persons participating. 7. Operation Condition 7.1 The operation condition of four channels and three ports are good. 7.2 By the end of 2000, the four channels including the parts constructed with domestic funds were completed, and the channels were promoted from Class 6 to Class 4 and Class 5. Their navigational capacity is increased, and the transportation cost for ships is reduced. The improvement of navigation condition promotes the development of fleet structure: bigger ships, standardized and in series. This will .save transportation time, speed up ship turnover, reduce marine accidents and increase anti-disaster ability. Therefore the social and economic benefits are obvious. 7.3 After the three ports were put into operation, there is difference between the actual throughput and the estimated one. The reason is that production structure and energy structure are being adjusted in China, and the throughput of coal is much reduced. But in Huzhou and Jiaxing port districts, large-scaled state cereal reservoir warehouses are constructed, the throughputs of cereal, timber, fertilizers and chemical materials are increasing. In Hangzhou City, the port districts and ship handling points are dismantled along both banks of Beijing-Hangzhou Grand Canal for the city plan and environmental protection, and consequently the throughput in Hangzhou Inland River Bulk Cargo Operation District is increasing. Thus the economic benefits of the three ports will turn to be good. 8. Contractor and Consultant Work 8.1 The project includes 18 civil works contracts and the contractors were selected through NCB. Each contractor strictly executed and completed the contract with excellent construction quality. The main works quantities are: the excavated earthwork on land 6.27 million m; the dredged earthwork in water 6.05 mnillion m'; the paved revetment 123.6 km and 49 new-constructed bridges; six berths of 500 ton, 31 berths of 300 ton, increased annual throughput 6.03 million tons, and corresponding handling equipment, warehouses, storage yards, administration houses and environmental protection facilities. 8.2 Beijing-Hangzhou Grand Canal passed the as-built acceptance examnination organized by MOC and Zhejiang Provincial Government in November 2000, and was appraised to be an excellent project. Huzhou Port passed the as-built acceptance examination organized by Zhejiang Provincial Planning Committee and was appraised to be an excellent project. Jiaxing Port passed the as-built acceptance examination organized by Zhejiang Provincial Planning Committee and was appraised to be a qualified project. Zhejiang Provincial Planning C'ommittee will examine the other three channels and Hangzhou Port by the end of 2001. - 22 -  8.3 Consultant Work. Experts consulted the Feasibility Study Report of the project. After confirmation by the World Bank, the MOC invited seven experts to consult on the Feasibility Study Report of China Inland Waterways Project. In April 1994 a detailed and complete report on the projects in three provinces was submitted to the World Bank and satisfied the World Bank. 8.4 Supervision Engineer Work. As agreed with the World Bank, the project was supervised by the separate supervision organization set up by ZPCD. In 1995 the supervision organization is set up. The supervision organization adopted two-level supervision system, namely composed of the Engineer Office and 12 resident supervision groups (in 1997 the resident supervision group for Contract No.18 was added). The Engineer controlled the works quality, timing and payment according to the Federation Internationale d 'Ingenieurs-Conseils (FIDIC) conditions, on the base of construction contract and supervision procedures and methods. In order to guarantee construction quality, the Engineer was in charge of all management issues concerning quality. For example, the raw materials were not allowed to be used before tests were past. During construction, the Engineer tested and checked the works in construction, and if the quality was not qualified, the unqualified works were rejected and not paid; thus the works quality and investment were all under control. 8.5 Experience. Many experiences have been obtained after implementing the project: (a) It is an effective method by setting up strict supervision procedure to strengthen construction supervision and guarantee construction quality, progress, investment and satisfactory construction management; (b) It is important to help the contractor, according to contract conditions and technical specifications before each item of work is started, improve his working ability and efficiency and so that contract can be completed on time with satisfactory quality standards,; (c) Strengthening site administration and inspection, namely the Engineer being on site and supervising each stage of construction, is the guarantee for works quality to achieve the required quality standard; (d) Inspection before each new item is to be started is an effective method to meet the quality requirement; (e) The Employer is the implementation and organization center to coordinate the relative parties to control quality, progress and investment; and (f) Earnestly accepting the World Bank's instruction and providing active cooperation is the guarantee to complete the project. 9. Work of Implementation Department 9.1 Project Preparation. ZPCD made full preparations. In November 1993, Zhejiang Provincial Planning Committee approved the Feasibility Study Reports of the seven components composed of the four channels and the three ports. At the same time the State Environment Protection Bureau and Zhejiang Provincial Envirownent Protection Bureau respectively approved the Environmental Impact Evaluation Reports of these seven components. In March and April 1994, Zhejiang Province Planning Committee approved the Preliminary design of the seven components. This project is the first inland waterway transportation project financed by a World Bank loan in Zhejiang Province and China. From November 1992, the project identification, pre-appraisal, appraisal and negotiation were completed, in May 1995 the loan agreement was signed with the World Bank. - 23 -  9.2 Hangzhou Port Inland Water Bulk Cargo District was designed by Hangzhou Design Institute of Communications. The other six components were designed by Zhejiang Provincial Planning, Designing and Research Institute of Communications. 9.3 The environmental impact evaluation of the project was undertaken by Zhejiang Provincial Scientific Design and Research Institute of Environment Protection. The Environmental Impact Evaluation Reports of 7 components were completed during the period from February 1991 to March 1994. From April 1991 to October 1994, the State Environmental Protection Bureau and Zhejiang Provincial Environment Protection respectively approved these reports. In January 1995 the Environment Protection Action Plan was completed and approved by the World Bank. In the same year, periodical monitoring started. For the channel projects, the periodical monitoring was executed by the city and county environment monitoring stations where the project is located; for the port projects, periodical monitoring was executed by the environment monitoring stations in the port districts. The monitoring reports were submitted to the World Bank. Beijing-Hangzhou Grand Canal, Jiaxing Port and Hangzhou Port have passed the environment protection as-built acceptance examination organized by the environment protection bureau. The environmnent protection as-built acceptance examination for the other components will be executed during the as-built acceptance examination. 9.4 Project Implementation. Zhejiang Province Government paid much attention to the project. In October 1993 Zhejiang Province Government set up the Leadership Group of Hangzhou-Jiaxing-Huzhou Inland Waterway Network Reconstruction Project. Leaders of the relative departments and leaders from Hangzhou City, Huzhou City and Jiaxing City to be responsible for the coordination of important things are presented in the Group, including a Vice Govemor of Zhejiang Province. The Project Administration Office was organized under the Group.The office is responsible for the organization, coordination, bidding, plan and financial administration of the project construction. 9.5 Experiences. During "the Ninth Five-Year Plan" period, Zhejiang Province constructed five main channels like Beijing-Hangzhou Grand Canal, totaling 410 km and Hangzhou port, Jiaxing port and Huzhou port, in which four channels totaling 190.3 km and three ports were invested by the World Bank, thus the inland waterway construction is promoted strongly. The construction enterprise was selected through NCB, the total quality control was executed by a supervision Engineer, the supervision teams, construction teams, administration teams and design teams have gained rich experience through the project. They were trained and strengthened by construction of projects. All these are valuable exercises and successful implementation for big development projects of Zhejiang Province. The success of the project promoted the administration and construction of Zhejiang Inland Waterways to a new level. 10. Factors Affecting the Project 10.1 The project is the first inland waterway project invested by the World Bank in Zhejiang Province. There was no previous experience to refer to during the preparation of the project. Under the instruction of MOC and the World Bank, the preparation of the project was completed successfully. The project includes four channels and three ports, including 18 civil works contracts, which are scattered widely. Although it was difficult to implement, the project was completed satisfactorily through the hard work of all participants. - 24 -  11. Bank Performance 11.1 Preparation of the Project. The project identification mission of the World Bank visited Zhejiang Province in November 1992. In three years from then, the missions from the World Bank cooperated with the State Development and Planning Commission, MOC and ZPCD and determiined the scope of the project. The World Bank assigned many missions to investigate technology, organization and economy and completed the appraisal of the project. The World Bank Staff Appraisal Report described the implementation scope, economic benefit and organization arrangement of the project. 11.2 Project Implementation. The World Bank assigned many missions to inspect the project and provided numerous feasible recommendations and suggestions regarding quality, progress and financial administration, and promoting the implementation of the project. 11.3 Cooperation of executive organization and the World Bank. The cooperation between the executive organization and the World Bank is satisfactory. The officers from the World Bank fully understood the desire of Zhejiang Province to develop its inland waterway transportation infrastructure and provided support. On the condition that the amount was not changed, the World Bank agreed to increase civil works quantities. Zhejiang Province and ZPCD felt satisfied and thankful for the World Bank's cooperation and support. 11.4 Experiences. The main achievements were: (a) through the construction of the project invested by the World Bank, the competitive bidding, FIDIC conditions and supervision system have been widely used in waterway construction in Zhejiang Province; and (b) through staff training, part of the technical staff has been trained in planning and designing, construction administration, project supervision, financial administration, maintenance and operation administration. The good training broadened their knowledge and the knowledge was used in the implementation of the project and will play an important role in future projects. 12. Work Plan for Future 12.1 With the improved condition by the project invested by the World Bank, Zhejiang Province completed the upgrading of the five main channels in the north of Zhejiang Province and the three ports during the Ninth Five-Year Plan period, changed the navigational condition in this area completely, and planted trees and flowers along the banks of Beijing-Hangzhou Grand Canal. It is so beautiful that it has become the State-level model channel. During the Tenth Five-Year Plan period, Zhejiang Province has decided to plant trees and flowers along the banks of this five channels continuously, and at the same time Hangzhou-Ningbo Canal will be constructed to connect the waterways systems in the north and the east of Zhejiang Province. Thus the waterways network in Hangzhou-Jiaxing-Huzhou area will link to Ningbo Port. Another two main channels in Hangzhou-Jiaxing-Huzhou area will be constructed. (b) Cofinanciers: There were no cofmanciers for the project. (c) Other partners (NGOs/private sector): There were no other partners. 10. Additional Information There are no specific additional informnation. - 25 -  Annex 1. Key Performance Indicators/Log Frame Matrix Outcomelimpact Indicators: 1998 1999 2000 2001 2002 Target Actual Target Actual Target Actual Target Actual Target Actual 1. Traffic ('000): Guangxi: Xijiang/Guigang Shiplock (cargo tons) 2,500 1,707 3,130 1,556 4,190 1,360 5,610 7,500 Hunan: Dayuandu Shiplock (cargo tons) 3,600 3,450 3,870 3,620 4,150 3,700 4,330 4,500 Zhejiang: Hangzhou Port (throughput tons) -- - -- -- 500 -- (a) 1,500 3,000 Huzhou Port (throughput tons) 500 460 700 430 900 300 1,100 1,150 Jiaxing Port (throughput tons) -- -- 400 - 1,000 180 1,400 1,500 2. Average Barge Size (dwt): Guangxi Xijiang/Guigang shiplock 120 132 150 131 200 135 250 300 Hunan Dayuandu shiplock site 120 110 150 175 200 180 250 300 Zhejiang: a. Beijing- Hangzhou Grand Canal 85 88 100 96 120 110 150 180 b. Changxing- Huzhou- Shanghai 80 80 90 85 110 100 140 170 c. Zhapu- Jiaxiang- Suzhou Channel 60 55 80 61 100 75 120 150 d. Hangzhou- Shanghai Channel 80 75 90 83 110 95 140 170 3. Financial Performance - Operating Ratio (%): Guangxi 32 35 31 49 27 50 27 27 Hunan 110 N.A. 106 10 103 77 100 97 Zhejiang 73 72 73 73 72 53 71 70 (a): The port was still under construction. Outcome Indicators: Indicator/Matrix Projected in last PSR Actual/Latest Estimate Guangxi: Construction of a dam/shiplock complex one complex one complex Hunan: Construction of a dam/shiplock complex one complex one complex Zhejiang: Improved length of the four channels 190.3 km 190.3 km - 26 -  Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Pereentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million Guangxi: Construction of Dam/shiplock and channel 73.80 116.53 157.9 improvement Guangxi: Supply of equipment for power generation and 76.70 61.83 80.6 shiplock Guangxi: Technical assistance and training 10.40 28.64 275.4 Guangxi: Land acquisition and resettlement 6.40 22.00 343.8 Hunan: Construction of Dam/shiplock and tenninals at the 70.10 130.86 186.7 two ports, and channel improvement Hunan: Supply of equipment for power generation and 68.90 80.80 117.3 shiplock Hunan: Technical assistance and training 9.60 9.60 100 Hunan: Land acquisition and resettlement 9.20 16.41 178.4 Zhejiang: Channel improvement and construction of the 64.30 83.00 129.1 three ports Zhejiang: Supply of equipment for port operation 3.90 3.39 86.9 Zhejiang: Technical assistance and training 2.40 2.39 99.6 Zhejiang: Land acquisition and resettlement 9.80 36.93 376.8 Total Baseline Cost 405.50 592.38 Physical Contingencies 25.80 Price Contingencies 86.20 Total Project Costs 517.50 592.38 Total Financing Required 517.50 592.38 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICe NCB 1N4B.F. Total Cost 1. Works 66.60 94.50 0.00 101.60 262.70 (28.20) (40.60) (0.00) (0.00) (68.80) 2. Goods 158.20 3.40 2.00 45.90 209.50 (131.20) (3.30) (2.00) (0.00) (136.50) 3. Services 0.00 0.00 4.70 23.20 27.90 (0.00) (0.00) (4.70) (0.00) (4.70) 4. Land Acquisition and 0.00 0.00 0.00 25.40 25.40 Reseftlement (0.00) (0.00) (0.00) (0.00) (0.00) Total 224.80 97.90 6.70 196.10 525.50 (159.40) (43.90) (6.70) (0.00) (210.00) - 27 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Expenditure Category CB PNcurement B M ethod N.B.F. Total Cost 1. Works 60.35 137.99 132.05 330.39 (28.44) (61.46) (0.00) (0.00) (89.90) 2. Goods 87.34 3.69 0.46 54.53 146.02 (87.34) (3.69) (0.46) (0.00) (91.49) 3. Services 0.00 0.00 4.53 36.10 40.63 (0.00) (0.00) (4.53) (0.00) (4.53) 4. Land Acquisition and 0.00 0.00 0.00 75.34 75.34 Resettlement (0.00) (0.00) (0.00) (0.00) (0.00) Total 147.69 141.68 4.99 298.02 592.38 (115.78) (65.15) (4.99) (0.00) (185.92) Miscellaneous includes land acquisition, resettlement, and design costs. Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Component (in US$ million equivalent) :; : 0 : 07-00 Q tli-X- V Perce~~~~~~~ntage of Appraisal Cornponent Appraisal Estimate ActuallLatest Estimate P opi _______ Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. Guangxi Component 80.00 166.40 56.39 172.61 70.5 103.7 Hunan Component 90.00 121.80 89.95 147.72 99.9 121.3 Zhejiang Component 40.00 58.60 39.58 86.13 99.0 147.0 - 28 -  Annex 3. Economic Costs and Benefits Annex 3A: Cost/Benefit Analysis Summary Preface 1. The economic evaluation of the project covers the constructions of five river ports, four channels and two dams (including shiplock and power facilities) in Guangxi, Hunan and Zhejiang provinces: (a) In Guangxi, construction of a dam and shiplock, upgrading of the main IWW channel, and construction of a hydropower generation facilities at dam; and (b) In Hunan, construction of a dam and shiplock, upgrading of the main IWW channel, construction of a hydropower generation facilities at dai, and expansion of two river ports; and (c) In Zhejiang, improvement of four major IWW channels and construction of IWW/ land transport links at three river ports. The detailed project components are tabulated as follows: Dams Channel Ports Guangxi Guigang dam Hunan Dayuandu dam -- 2 (Hengyang port and Zhuzhou port) Zhejiang 4 Channels 3 (Hangzhou port, Huzhou port and Jiaxing port) Total 2 Dams /_I 4 Channels 5 Ports /_1: Including constiuction of shiplock and power station 2. The analysis is based on the actual and forecasted operating data on traffic, unit transport cost, power generation, economic project cost and transport user benefits. The methodology used was similar to that employed by the SAR and is summarized as follows (a) capital investment and maintenance costs, revised to reflect December 2001 prices; (b) the benefit stream, also reflecting December 2001 prices, comprises: (i) savings in transport cost for the channels, (ii) economic benefits from power generation, (iii) reduced congestion on the existing ports and channel; (c) the project life for the benefit estimation is assumed to be 20 years; and (d) full benefits started to accrue on the dams and channels in 2000, and for the five ports between 2000 and 2001 (depending on the completion timing of the terminals). 3. During project implementation, some project components were slightly modified. The economic evaluations for the project cover these new changes within the ICR. 4. This annex is comprised of three parts. Part I is the method used for the cost and benefits analysis; Part II is the economic evaluation for each provincial component; and Part III is the overall economic evaluation of the project, including probabilistic risk analysis. - 29 -  PART I: METHOD Economic Cost 5. Financial costs were converted to economic costs by shadow pricing for each of the input items and domestic/foreign price escalations. The actual total economic cost of the project at completion is 8.7 percent higher than the SAR estimate, at constant December 2001 prices. The differences in actual versus estimated economic costs in Guangxi, Hunan and Zhejiang are 10.9 percent, 21.2 percent and 40.1 percent, respectively. Economic Cost Comparison (CNY million) The SAR The ICR ICR/ SAR (Dec. 1994) (Dec. 2001) (A) (Dec. 2001) (B) (B/A in %) Guangxi 1,962.30 2,151.88 1,917.45 -10.9 Hunan 1,375.08 1,514.15 1,834.58 21.2 Zhejiang 664.80 741.16 1,038.67 40.1 Total 4.002.18 4.407.19 4.70.0 l Sources: GCD, HPCD, ZPCD and the Bank staff. Economic Benefits 6. As in the SAR, three different analyses were used, depending on the nature of the components, to quantify the economic benefits, i.e., the inland waterways for shiplocks and channels, the power stations, and the inland waterway ports. 7. Shiplocks and Channels. The economic benefits of building the two shiplocks and improving the four channels are to provide low-cost transport for dry bulk cargo through the use of larger ships. Without the project, traffic congestion on those transport corridors would have worsened over the years and the traffic would have transferred to more expensive modes. 8. Simple queuing modeling was employed to quantify the benefits. The benefits of the project consist of: (a) unit transport cost savings by using larger shipments; (b) reduced travel distances for waterbome traffic; (c) elimination of the need to transport via the higher cost mode (highway); and (d) total operating costs savings due to reduced congestion and faster transport. 9. The economic unit waterway transport costs for various sizes of shipment and vehicle operating costs (VOC) used in the economic evaluation to estimate the benefits of the shiplocks and channels are summarized in the tables below: Economic Barge Operating Cost (Yuan/1,000 tkm) 60 ton 120 ton 300 ton 600 ton 1,000 ton Variable cost 277 105 43 15 10 Fixed costs 97 44 36 34 31 Total 374 149 79 49 41 Sources: GCD, HPCD and the Bank staff. - 30 -  VOC For Medium Truck (Yuan/1,000 vehicle-km) /1 Fuel 800 Tires 65 Maintenance 752 Crew 41 Depreciation 111 Total 1,769 /_1: Paved flat roll for 3.5-ton loading capacity, I 10 hp, average speed 50 km per hour and purchase price of 150,000 Yuan withl0-year life time Sources: ZPCD and the Bank staff. 10. Power Stations. The project areas in Guangxi and Hunan are short of electricity. Even with the completion of the project, in 2000, the local power companies, on average, have been forced to shut off power supply 5.2 times every day for Guangxi and 9.7 times every day for Hunan. This shortage occurs on a year-round basis. The economic value of electricity is dependent on the seasons (normal, wet and dry). For the normal season, it is estimated at 0.40Y/kWh based on the sectoral average. This value would be reduced to zero during the wet season and raised three times as high during the dry season. The seasons in the project areas, by month, are listed as follows: Dry season Normal season Wet season Guangxi January - March April - May, November - December June October Hunan October - January February - March, August - September April - July Sources: GCD and HPCD. 11. Ports. The economic analysis primarily focuses on the benefits derived from relieving congestion in the port. The new project berths will yield quantifiable benefits in the form of savings in cargo handling costs, shipping time (both waiting time and operating time), and cargo time. 12. Savings in Cargo Handling Costs. Cost savings are expected in the direct handling of cargo in the new facilities when compared with the former facilities at the port. Without the project, the only way to handle traffic in excess of available berth capacity would have been through more costly lightering, which is estimated to cost three to four times more than nonnal handling. Lightering has been assumed for cargo tonnage in excess of berth capacity at 95 percent occupancy, at a cost three times that of normal handling. Substantial savings in handling costs are expected after the renovation of existing berths and at the new berths. Savings in handling costs have been converted to economic benefits by shadow-pricing the main cost components of normal handling and of lightering. Conversion factors of 1.05 for berth handling and 1.1 for lightering are used; these factors were estimated in a previous Bank study. 13. Saving