China - Shanghai Environment Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 25717-CHA IMPLEMENTATION COMPLETION REPORT (CPL-37110; SCPD-3711S) ON A LOAN IN THE AMOUNT OF US$160 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE SHANGHAI ENVIRONMENT PROJECT June 30, 2003 Urban Development Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective March 10, 1994) Currency Unit = Yuan (Y) Y1.00 = US$ 0.12 US$ 1 = Y 8.3 METRIC SYSTEM FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BOD Biological Oxygen Demand CAS Country Assistance Strategy GOC Government of China ICB International Competitive Bidding NCB National Competitive Bidding NTU National Turbidity Unit SAR Staff Appraisal Report SCG Songjiang County Government SDC Songjiang Drainage Company SEMC Shanghai Environmental Monitoring Center SEPB Shanghai Environmental Pollution Board SESAB Shanghai Environmental Sanitation Administration Bureau SHUEP Shanghai Urban Environment Program SMG Shanghai Municipal Government SMSC Shanghai Municipal Sewerage Company SMWC Shanghai Municipal Waterworks Company SS Suspended Solids SSP1 Shanghai Sewerage Project SSP2 Second Shanghai Sewerage Project SWA Shanghai Water Authority SWAOD Shanghai Water Asset Operations Company SWEC Shanghai Water Environment Construction Company SWWTP Songjiang Wastewater Treatment Plant Vice President: Mr. Jemal-ud-din Kassum, EAP Country Director: Mr. Yukon Huang, EACCF Sector Director: Mr. Keshav Varma, EASUR Task Team Leader/Task Manager Mr. Mats Andersson, EASUR  IMPLEMENTATION COMPLETION REPORT CHINA: SHANGHAI ENVIRONMENT PROJECT 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 8 5. Major Factors Affecting Implementation and Outcome 14 6. Sustainability 17 7. Bank and Borrower Performance 19 8. Lessons Learned 23 9. Partner Comments 24 10. Additional Information 24 Annex 1. Key Performance Indicators/Log Frame Matrix Annex 2. Project Costs and Financing Annex 3. Economic Costs and Benefits Annex 4. Bank Inputs Annex 5. Ratings for Achievement of Objectives/Outputs of Components Annex 6. Ratings of Bank and Borrower Performance Annex 7. List of Supporting Documents  Project ID: P003586 Project Name: SHANGHAI ENVIRONMENT PROJECT Team Leader: Mats Andersson TL Unit: EASUR ICR Type: Core ICR Report Date: June 29, 2003 1. Project Data Name: SHANGHAI ENVIRONMENT PROJECT L/C/TF Number: CPL-37110; SCPD-3711S Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Water supply (70%); Sewerage (21%); Sub-national government administration (8%); General water/sanitation/flood protection sector (1%) Theme: Water resource management (P); Pollution management and environmental health (P); Environmental policies and institutions (P); Other urban development (P); Municipal governance and institution building (S) KEY DATES Original Revised/Actual PCD: 04/02/1992 Effective: 03/10/1994 03/10/1994 Appraisal: 07/06/1993 MTR: Approval: 08/03/1994 Closing: 06/30/2000 12/31/2002 Borrower/Implementing Agency: People's Republic of China/Municipality of Shanghai Other Partners: None STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam Kaji Country Director: Yukon Huang Zafer Ecevit (Acting) Sector Manager: Keshav Varma Katherine Sierra Team Leader at ICR: Mats Andersson Geoffrey Read ICR Primary Author: Terry Hall 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:HL Institutional Development Impact:H Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: HS Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The principal objective of the project was to provide a sustainable environment for the long-term economic and social development of Shanghai, while providing a competitive framework for industrial growth. In particular, the project focused on ensuring an adequate supply of potable water and halting the rapid deterioration of water quality in Shanghai. Specific objectives were to: (a) provide safe drinking water; (b) identify and control sources of pollution; (c) expand water quality monitoring; (d) improve municipal solid waste and nightsoil management; (e) improve municipal, environmental and utility management and finances; and (f) support training, feasibility studies, and future investment project preparation. This project was formulated during a time of profound change in China, with growing awareness and emphasis on the control of environmental degradation as a prelude to increased economic growth and external interactions, particularly along the eastern seaboard. The development objective is very much in line with the Central Government's environmental policy and the water pollution control regulations introduced in the late 1980's. Legislation pertaining to solid waste management was at the formative stage at that time. Shanghai Municipal Government (SMG) has taken a lead role in developing and implementing appropriate environmental strategies over the years. Prior to the identification of the Shanghai Environment Project (SEP) in 1991, the Bank Group worked with the Government of China (GOC) on a number of projects across the country, addressing environmental degradation issues, including the Shanghai Sewerage Project (SSP1, Credit 1179-CHA/Loan 2749-CHA) with SMG. When SEP was identified the Shanghai Sewerage Project was being implemented successfully and was well managed. Institutional and financial management reforms included in this project were also implemented by SMG. Assessment of Objectives: The Bank Group's Country Assistance Strategy (CAS) in 1993 highlighted the need to support economic reform while assisting infrastructure modernization in an environmentally responsive way, with problems best addressed at municipal and regional level where the Bank's comparative advantage could be used most effectively. At that time the GOC accorded highest priority to environmental protection targeting industrialized cities and regions, including the Shanghai Municipal region where SEP is located. Environment-related sector work carried out by the Bank included a number of urban sector surveys, and an Environmental Strategy Paper which identified major environmental issues, causes and remedies for addressing them. The recommended program of environmental operations assessed institutional capacity and included the Shanghai Environment Project (SEP). Thus, the SEP objective was very much in line with the CAS, focusing on: (a) developing strategies for improved quality of the environment; (b) prioritizing environmental improvements; (c) supporting priority environmental investments; (d) strengthening environmental institutions; and (e) promoting sound financial and cost-recovery policies. - 2 -  Referring to the specific project objectives, the project was geared toward improving the drinking water supply and quality for Shanghai implementing measures for pollution control at source, in particular regarding the highest industrial polluters, and establishing a modern water quality monitoring environment at the water intake facility. Municipal solid waste and night soil management were to be enhanced through own financing. 3.2 Revised Objective: The original objectives remained valid throughout the project and therefore were not revised. 3.3 Original Components: The original investment program comprised the following project components (PCs): PC1. Drinking Water Quality Protection ($291.7 m.). This component included the construction of a major raw water supply system for Shanghai Municipality, including a new intake on the Huangpu River at Da Qiao (of about 5.4 million m3/day capacity), pump stations, 25 km of multiple-barrel low-pressure supply culverts, surge protection, telemetry and controls, selected improvements to existing treatment facilities and distribution systems, and the strengthening of operational and financial procedures. Implementing Agency: The Shanghai Municipal Waterworks Company (SMWC), the largest water utility in China, had been well established for many years. Objective: To safeguard the source of drinking water for Shanghai by relocating the water intake at Da Qiao some 27 km further upstream from the existing intake source at Linjiang, where water quality had become unacceptable due to pollution which had become heavily polluted. When combined with measures provided in other project components, the works under the PC1 component provided a sound strategy for securing safe drinking water for Shanghai. PC2. Upper Huangpu Catchment Pollution Control ($64.6 m.). This component was designed to protect and improve the water quality at the new Da Qiao intake and conveyor system through the construction of wastewater conveyance systems in the Wujing and Minhang neighborhoods, including the provision of secondary and tertiary sewers. The component as designed, included: pre-discharge treatment for 33 major industrial polluters (financed outside of SEP); and the Wujing/Minhang sewer system (part of the SMG Wastewater Master Plan). This system was designed to discharge some 700,000 m3/day of domestic and pre-treated industrial flows to a proposed east-flowing conveyor (now built and operational under the Second Shanghai Sewerage Project (Loan 3987-CHA)), for discharge to the Changjiang at Bailonggang, thus reducing the Huangpu River's pollution. Implementing Agency: Shanghai Municipal Sewerage Company (SMSC). Prior to SEP, the Bank was already working with this company on the on-going Shanghai Sewerage Project (SSP1 project, Credit 1779-CHA, Loan 2749-CHA) at that time. The financial and institutional reforms already implemented under SSP1 were carried over to this SEP component. - 3 -  Objective: The objective of this component was one of three interlinked interventions to safeguard and improve the river water quality at Da Qiao (the other two are discussed under PC3 and PC4). The Wujing/Minhang areas on the west bank of the Huangpu River below Da Qiao contained a concentration of industry considered to be substantially responsible for pollution discharges to the river (which is tidal much well further upstream than Da Qiao). PC3. Songjiang Wastewater Pollution Control ($38.9 m.). The This component provided for protection and improvement of water quality at the new Da Qiao intake and conveyor system through the extension of the domestic and industrial wastewater collection and treatment facilities in Songjiang Town, including provisions for system connections. Implementing Agency: Songjiang Wastewater Treatment Plant (SWWTP), now renamed as the Songjiang Drainage Company (SDC). Objective: This component was designed to address the discharge of untreated domestic and industrial wastewater from Songjiang Town into the Huangpu River in the near vicinity of Da Qiao. Effective treatment of this pollution load would remove this threat to river water quality at Da Qiao. PC4. Pollution Sources and Water Quality Monitoring ($4.7 m.). The construction of a water quality monitoring laboratory near the new water supply intake, together with associated sampling and analytical equipment to monitor quality in the Upper Huangpu Catchment were included in PC4. Implementing Agency: Shanghai Environmental Monitoring Center (SEMC). Objective: The objective of this component was to strengthen and expand SEMC's capacity to monitor Huangpu River water quality. PC5. Municipal Solid Waste and Nightsoil Management ($43.9 m.). This component The developed appropriate solid waste and nightsoil management strategies, and financed investments in a mechanical plant and civil works for system improvements. Support was also provided for improved nightsoil disposal. Implementing Agency: Shanghai Environmental Sanitation Administration Bureau (SESAB). Objective: The component included support for conversion of existing emergency bad weather dumping facilities to prevent pollution of away from surface water (Huangpu River and Suzhou Creek), and investments in technical assistance and a new plant and equipment to improve productivity for long-term environmental benefits. PC6. Institutional Strengthening through Technical Assistance and Training ($12.8 m.) - 4 -  . Support for and strengthening of environmental, financial and utility management and to support operations, training, preparation of a Shanghai Water Master Plan, geographic information systems development in support of planning and the Shanghai Economic Reform Action Plan, water supply and wastewater management and environmental monitoring, institutional strengthening of SESAB, including the management of workshops and landfill operations, feasibility studies, and future project preparation. The Shanghai Environment Master Plan and Hazardous Waste Management Study, financed by Australia and Norway respectively, were implemented in parallel with SEP. Implementing Agency: SMG. Objective: To improve municipal, environmental and utility management and finances, and to support training, feasibility studies, and future investment project preparation. Assessment of Designs: All the above components were interlinked, appropriately addressing the principal objective of the project. They were designed to respond to the specific objectives as stated above. PC1 Protect Drinking Water Quality