People s Republic of China: Preparing the Chongqing Urban Rural Infrastructure Development Demonstration Project

Transcription

1 Technical Assistance Report Project Number: July 2008 People s Republic of China: Preparing the Chongqing Urban Rural Infrastructure Development Demonstration Project

2 CURRENCY EQUIVALENTS (as of 18 July 2008) Currency Unit yuan (CNY) CNY1.00 = $ $1.00 = CNY ABBREVIATIONS ADB Asian Development Bank CMG Chongqing municipal government DMF design and monitoring framework DRC development and reform commission EA executing agency EIA environmental impact assessment EMP environmental management plan FSR feasibility study report IA implementing agency km kilometer PPMS project performance monitoring system PRC People s Republic of China RP resettlement plan SEIA summary environmental impact assessment TA technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification Targeted intervention (TI-M). Sectors Multisector (water supply and sanitation, transport and communication) Subsectors Water supply and sanitation, roads and highways Themes Inclusive social development, sustainable economic growth, environmental sustainability Subthemes Human development, fostering physical infrastructure development, urban environmental improvement NOTE In this report, $ refers to US dollars.

3 Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General K. Gerhaeusser, East Asia Department (EARD) Director A. Leung, Officer-in-Charge, Social Sectors Division, EARD Team leader Team members T. Villareal, Urban Development Specialist, EARD H. Gunatilake, Senior Economist, ERD M. Gupta, Social Development Specialist (Safeguards), EARD S. Popov, Senior Environment Specialist, EARD W. Walker, Social Development Specialist, EARD J. Wang, Project Officer (Urban Development and Water Supply), People s Republic of China Resident Mission, EARD

4 o 'E o 'E o 32 00'N CHONGQING URBAN--RURAL INFRASTRUCTURE DEVELOPMENT DEMONSTRATION PROJECT IN THE PEOPLE'S REPUBLIC OF CHINA Chengkou o 32 00'N Project Area Provincial Capital City/Town Wuxi Expressway National Road Other Road Kaixian Fengjie Wushan HUBEI River Provincial Boundary Boundaries are not necessarily authoritative. Wanzhou Trancheng Yunyang SICHUAN Zhongxian Hechuan Changshou Fengdu Chang Jiang Shizhu Beibei Fuling Qianjiang CHONGQING Nan'an Dadukou Yongchuan Jiangjin Shuijiang Nanchuan Qijiang Wulong Pengshui GUIZHOU o 29 00'N Wansheng Youyang o 29 00'N Xiushan N GUIZHOU Kilometers HR o 'E o 'E

5 I. INTRODUCTION 1. During the Country Programming Mission in December 2007, the People s Republic of China (PRC) confirmed its request for assistance from the Asian Development Bank (ADB) to finance the proposed Chongqing Urban Rural Infrastructure Development Demonstration Project. Financing will be under a sector loan to improve infrastructure facilities and municipal services, support employment generation, improve rural living conditions, and reduce poverty in a range of towns and villages. The project preparatory technical assistance (TA) is scheduled for processing in A Fact-Finding Mission was conducted from 20 May 5 June 2008 in Chongqing. This report is based on the understanding reached with the Government regarding the impact and outcome, methodology and key activities, cost estimates, financing plan, and implementation arrangements for the TA, as well as the Mission s observations. II. ISSUES 2. The Government of the PRC aims to increase economic productivity and narrow the urban rural income gap through coordinated development of urban and rural areas. The 11th Five-Year Program ( ) of the Government and Chongqing municipality identified urbanization as a key development objective, with emphasis on balancing regional development and promoting growth with equity by coordinating urban rural infrastructure improvements and strengthening development of urban settlements around metropolitan areas. The Chongqing municipality s 11th Five-Year Program also seeks to considerably improve production and living conditions for poverty-struck regions and minority nationality regions. 2 This approach is consistent with ADB s strategic priorities in the PRC. 3. The PRC National Development and Reform Commission (DRC) has identified Chongqing as the key city for coordinated and comprehensive reform in urban and rural areas. Chongqing municipality, in turn, has adopted the strategies of Suitable Centralization and Linkages in One Region and one ring two wings. 3 These strategies integrate urban and rural infrastructure development objectives to create more balanced development and narrow the urban rural economic gap. Poor road infrastructure, which restricts access within and between towns, and the lack of a clean and reliable water supply inhibit economic growth and poverty alleviation. The strategy of urban rural integrated infrastructure development will adopt a proactive approach to maximize the benefits of urbanization through parallel development of rural towns. Coordinated urban rural infrastructure development will improve productivity and lead to more effective, better managed, and more efficient subregional municipal services. 4. Chongqing is located in the southern central part of the PRC, between the Qingzang highlands and the plains of the middle and lower Yangtze River. 4 It borders the provinces of Guizhou, Hubei, Hunan, Shanxi, and Sichuan and is a major hub for water, land, and air transport. Chongqing covers an area of 82,400 square kilometers (km) and comprises 19 districts and 21 counties. 5 Chongqing s population at the end of 2006 was million, comprising mainly Han Chinese with a significant mix of other ethnicities. 6 Three of the 14 districts or counties in which 1 The TA first appeared in the business opportunities section of ADB s website on 12 May The 11 th Five-Year Program states that 60% of communities shall be connected by metalled roads and difficulties in obtaining potable water shall be eliminated. 3 The one ring two wings strategy refers to the economic ring forming the core city area of Chongqing and the two wing areas of west Chongqing municipal region and the eastern Yangtze River region. 4 Chongqing was granted provincial status, reporting directly to the state government, in The district area has a higher gross domestic product than the county area although both are second tier administrations reporting to Chongqing municipal government. 6 The total ethnic minority population for 2006 was 1.73 million, of whom Tujia and Miao groups represented 3.6% and 1.8% of the total population, respectively.

6 2 subprojects are proposed are autonomous, with ethnic minority majorities. The urban population of Chongqing represents 46.7% of the province s total population. In the 14 subproject districts or counties, the urban population averages only 16.5% and the total rural population is 10.1 million. Income levels across Chongqing lag behind those of the coastal areas of the PRC. In 2006, about 1.6 million rural people (9.6% of the total rural population of Chongqing) lived on low incomes and 504,300 rural people (5.0% of the total rural population of the 14 districts or counties) lived on incomes below the official absolute poverty line. 7 Twelve of the 14 districts or counties included in the proposed project are listed as critical by the PRC for poverty aid development. Challenging geological and topographical conditions, and an under-developed local economy have restricted the construction of infrastructure facilities in these poorer rural regions. An indigenous peoples assessment concluded that category A is applicable. 5. The proposed sector project comprises about 70 discrete components, located across 14 district or county administrative areas. All subprojects will support approved development master plans and sector programs. The subprojects cover two sectors: roads and potable water supply. Roads will be located in urban and rural areas and will vary in standard from class III to class IV. The roads subprojects seek to (i) improve the existing road infrastructure and reduce accidents in towns; (ii) assist commercial access for trade promotion; (iii) improve access from and between village communities and urban centers; (iv) reduce the cost of transporting farm inputs to rural communities, and farm products to markets; (v) improve access to social services, such as schooling and medical services; and (vi) improve incomes and living standards in poor areas. The water supply subprojects will (i) provide treatment and improve piped potable water supplies to urban and rural populations; (ii) facilitate the planned expansion of towns to provide manufacturing jobs; (iii) improve the health of the local population and reduce productivity losses caused by illness; and (iv) strengthen the local economy, increase employment, and reduce poverty. All water supply subprojects have planned parallel projects for wastewater collection and treatment, which will be funded by the Chongqing municipal government (CMG). A rapid environmental assessment proposed that a category A assessment be conducted since the project will impact urban and rural communities by constructing new roads, upgrading existing tracks, constructing pipelines, and establishing new ground water sources. 6. The roads subprojects will construct a total of 980 km of roads of varying widths and capacities that will directly benefit about 760,000 people. Of this total length, 509 km will be new roads while 471 km of existing roads will be upgraded, many of which are no more than rough stone tracks. Included in the project are 26 bridge structures, with a total length of 1,200 meters, and 354 culverts. The water supply subprojects involve the treatment of an additional 168,650 cubic meters per day of raw water from reservoir sources and ground water springs, and the expansion of transmission and distribution pipe networks to supply potable water across 17 towns, benefiting more than 590,000 people. Construction will involve a total land acquisition of about 200 hectares and resettlement of 427 households, or about 1,280 people. An involuntary resettlement initial assessment concluded that the project is category B. 7. The proposed sector project will develop selected towns and provide vital links with surrounding rural communities. The project will assist CMG s development program and reduce the incidence of poverty. Institutional strengthening and a sustainable approach to utility service provision at the district level will form the cornerstone of the project. Improved road access will link rural communities directly with markets, increasing incomes, reducing costs through transport savings, and providing access to jobs in the towns. Improvements to the quality of the water supply 7 The official absolute poverty line in 2005 was CNY786 per capita per year. In 2007 the poverty line was raised to CNY1,067 per capita per year, but continued to be lower than the international standard of $1 per capita per day. The 4.95% national poverty incidence equates to million people.

7 3 will reduce the incidence of waterborne diseases and associated medical costs, and provide communities more opportunities for food processing and other economic activities. 8. ADB s strategy is to help the PRC build a harmonious society and boost rural development. The proposed project focuses on ADB's Strategy 2020 ( ) and PRC s Country Partnership Strategy ( ): 8 promoting efficient infrastructure, strengthen environmental management, and support inclusive growth and balanced development (to help the Government build a xiaokang [moderately well-off] society) by supporting sustainable urban rural integrated development. The project will develop markets and create jobs by supporting urbanization and improving access from villages to towns, while still protecting the environment. Rural communities are expected to benefit from the project s poverty reduction activities. In 2007, 2,000 poor villages experienced water shortages while 687 villages suffered from limited access to roads, limiting residents opportunities to market farm products, seek employment, and access education and health facilities. 9. The project will develop sustainable municipal infrastructure, increase economic activity and employment, and protect the environment in the poorer eastern regions of Chongqing. The Government has requested ADB to provide a $100 million loan to support the project. ADB has adopted a participatory approach, under which town and village stakeholders have identified the major problems in their areas and highlighted actions needed to address those problems. 9 The project is justified on the basis of supporting the poor by improving their economic and social conditions, raising living standards, reducing health risks, and supporting the national and regional infrastructure development strategies. Numerous internationally-supported agricultural and infrastructure projects are either under construction or have been completed across the municipality and the necessary implementation capacity exists within CMG. Those projects will be reviewed to draw relevant lessons for the ensuing loan. III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 10. The project s impact will be improved water supply facilities and services, and efficient urban rural transport infrastructure within and between 63 towns and villages in 14 districts or counties in the mountainous eastern regions of Chongqing. The total length of roads to be constructed or improved is 980 km. The total additional water supply treated will be 168,650 cubic meters per day, which will require new and reconstructed pipelines totaling 531 km. The project s outcome will be a sector project design agreed to by the PRC and ADB, and the completion of the feasibility study reports (FSRs). The design and monitoring framework (DMF) is in Appendix 1. B. Methodology and Key Activities 11. The TA will be implemented in three phases. Phase 1, lasting 2 months, will comprise studies to (i) assess constraints to economic development, adverse environmental impacts of inadequate water supplies in district or county towns, and lack of appropriate road infrastructure; (ii) review CMG s town-level economic development strategies, priorities, and investment plans; (iii) identify problems associated with inadequate access to water supplies and rural roads in the core subprojects; (iv) review the likely resettlement impact of the core subprojects; (v) develop a project DMF; (vi) provide guidance to CMG s design institutes on FSR preparation; and (vii) prepare an inception report. During phase 2, lasting for 3 months, the TA will (i) assess the potential impacts of 8 ADB Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank ( ). Manila; and ADB PRC: Country Partnership Strategy ( ). Manila. 9 Stakeholder workshops were conducted in four representative towns during the fact-finding mission.

8 4 the proposed components based on technical, institutional, environmental, social and ethnic, economic, financial, and other factors; (ii) formulate balanced infrastructure development strategies comprising structural and nonstructural measures; (iii) update FSRs components; (iv) assist CMG to prepare draft environmental impact assessments (EIAs), resettlement plans, social development plans, ethnic minority development plans, and an ethnic minority development framework according to ADB s guidelines and policies, and conduct public consultations and disclosure of relevant information; (v) develop technical, thematic, and safeguards assessment guidelines for evaluating subprojects during project implementation; (vi) refine the DMF through a stakeholder workshop in each of the core subproject districts; and (vii) prepare an interim report. Phase 3, lasting 3 months, will assist CMG to (i) formulate an investment sector project for ADB funding; (ii) consolidate FSRs prepared in phase 2; (iii) formulate procurement needs and arrangements; (iv) justify the subproject respective financial, economic, social, and environmental terms; (v) audit outputs of CMG design institutes FSRs, and comment as appropriate on non-core components; (vi) prepare a best practice strategy for linking urban and rural development infrastructure in areas where there is a strong interrelated economy; (vii) prepare a draft final report; and (viii) issue the final report after receiving comments from ADB and CMG not more than 6 weeks after the issue of the draft final report. An initial poverty and social analysis for Chongqing municipality is in Appendix CMG has extensive experience with internationally-funded projects, including ADB-funded projects. Some, but not all, of the implementing agencies in the subproject districts or counties have experience of implementing such projects. In addition to providing guidance to CMG design institutes on FSR preparation, the consultants will provide training during project preparation and in three one-day workshops conducted in both a northeast and a southeast district or county town. The workshops will focus on (i) the DMF and a project performance management system, (ii) the EIA and environmental management planning, (iii) resettlement plans and social development, and (iv) procurement and loan disbursement procedures. The workshops will be held after the inception reports have been finalized. 13. Major risks to the successful implementation of the TA include (i) inadequate counterpart support and performance, (ii) lack of adequate and timely provision of necessary data, (iii) delay in submitting required studies, (iv) delay in appointing and mobilizing consultants and design institutes, and (v) inadequate performance by the consultants and design institutes. To mitigate the risks, the recruitment and performance of the consultants and design institutes will be monitored closely by ADB. The Government has agreed to provide adequate counterpart support and all necessary data according to an agreed-upon timetable. Close coordination among the consultants, executing and implementing agencies, and ADB will further mitigate the risks. C. Cost and Financing 14. The total cost of the TA is estimated to be $1,200,000 equivalent. It is proposed that $900,000 be financed on a grant basis by ADB s TA funding program. CMG will provide the balance of local costs, equivalent to $300,000, to cover in-kind counterpart costs and services including staff, office space, furniture, administrative support and interpretation services, logistics and local transportation (within district or county). ADB has informed the Government that approval of the TA does not commit ADB to finance any ensuing project or to extend any further TA with respect to the implementation of any recommendations of the TA. The detailed cost estimates are in Appendix 3.

9 5 D. Implementation Arrangements 15. CMG will be the Executing Agency for the TA. CMG has established a project leading group chaired by a vice mayor of Chongqing municipality and comprising representatives from the municipal DRC, Finance Bureau, Poverty Reduction Bureau, Construction Bureau, Audit Bureau, Communication and Transport Department, and Water Resources Bureau to provide guidance and support to the proposed project. Chongqing DRC will take the lead in maintaining interdepartmental coordination; liaising with ADB on matters relating to TA implementation; facilitating access to required data and surveys; and appointing sufficient, experienced professional staff, including an interpreter/translator, who will work with the consultants on a full-time basis. 16. The proposed TA will be implemented over an 8-month period and is expected to start in February 2009 and be completed by end October A total of 75.5 person-months of consulting services (21.5 international and 54.0 national) will be required. The international consultants will provide expertise in urban rural infrastructure development, transport planning and management, road engineering, water treatment and supply engineering, financial and economic analyses, resettlement and social impact analysis (poverty, gender and ethnic minorities), institutional capacity development, and preparing the EIA. The national consultants will have expertise in rural road and transport engineering, civil and geotechnical engineering, water treatment and supply engineering, economic and financial analyses, environmental protection and management, resettlement and social impact analysis, and institutional capacity development. The terms of reference for the consultants are in Appendix An international consulting firm in association with national consultants will be engaged in accordance with ADB s Guidelines on the Use of Consultants (2007, as amended from time to time). ADB will select and engage consultants on the basis of the quality of the proposal (80%) and the cost (20%) of the services to be provided (quality- and cost-based selection method) using simplified technical proposal procedures. All reports by the consultants will be prepared in English and translated into Chinese. Tripartite meetings involving ADB staff, the consultants, and CMG will be held in Chongqing city to provide guidance to the consultants and to review their reports. 18. Chongqing DRC will take the lead in providing a suitably furnished office with utilities and telecommunication access, district or county-level transport (excluding transport between subproject locations) for consultants, materials, maps, data and documents required by the TA; and will cover the cost of utilities for the use of the consultants, counterpart professional staff, and support staff. The consultants will procure TA equipment in accordance with ADB s Procurement Guidelines (2007, as amended from time to time) and will transfer the equipment to CMG upon completion of the TA. IV. THE PRESIDENT S DECISION 19. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance, not exceeding the equivalent of $900,000 on a grant basis to the Government of the People s Republic of China for preparing the Chongqing Urban Rural Infrastructure Development Demonstration Project, and hereby reports this action to the Board.

10 6 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Performance Targets and/or Indicators Data Sources and/or Reporting Mechanisms Assumptions and Risks Impact The impact of the project is improved water supply facilities and efficient urban rural transport infrastructure in 14 districts/counties and 63 towns/villages that are located in the mountainous northeast and southeast regions of Chongqing. Increased urban rural linkages and roads per square kilometer in rural areas by Increased paved-road access from 75.4% to 95.0% within towns, and from 54.2% to 60.0% in villages by Improved water supply coverage in rural communities by Improved road access of poor communities to markets and manufacturing employment by CMG Annual Report/ project reports CMG Annual Report/ project progress reports Annual socioeconomic surveys undertaken as part of the PPMS. CMG records and statistics District/county statistics; Poverty Reduction Office annual data Annual socioeconomic surveys undertaken as part of the project performance monitoring system Assumptions Project design and construction are implemented effectively. Project financing requirements, including those from ADB, are provided on time. The Government and ADB sign Loan and project agreements. Risks Costs are higher than foreseen. Development pressures outpace completion of planned infrastructure. Outcome The outcome of the TA will be a project design agreed to by the PRC and ADB, and completed FSRs. Project design will include a demonstration and capacity development effect. Memorandum of understanding signed by the Government and ADB at final tripartite meeting by end of October Memorandum of understanding Assumptions The Government s priorities do not change. The Government does not seek other sources of funding. Outputs 1. Analysis of 11th Five-Year Program; project districts/counties master plans, sector plans, policies, financing requirements, and institutional capacities Analysis of current situation, institutional capacities and future policies and directions for district and county development in the province to be completed by the end of month 1 of the project preparatory TA. Inception report and first tripartite review meeting Assumptions Domestic FSRs are prepared in a thorough and timely manner. Domestic EIAs are comprehensive and prepared in timely manner.

11 Appendix 1 7 Design Summary Performance Targets and/or Indicators Data Sources and/or Reporting Mechanisms Assumptions and Risks 2. Technical, environmental, economic, financial, and social appraisal of the roads and water sectors Consensus reached on the midterm draft report by month 5 of TA. Interim report and second tripartite review meeting Support comes from all levels of government agencies concerned. 3. RPs, poverty and social assessment reports, EMDPs, and EMDF Socioeconomic impact of the subproject components and policy options on vulnerable groups and implications for resettlement. 4. SEIA and EMP 5. Institutional capacitybuilding plan and corporate development plan 6. Best practice strategy to link urban rural development infrastructure in areas with a strong inter-related economy Household surveys completed by month 3 of TA. Focus group discussions on affected and beneficiary communities Poverty and SAs completed by month 4 of TA. Draft SEIA and EMP submitted for review by start of month 8 of the TA. CMG agrees in principle to include capacity-building component in the project design and to introduce good corporate governance and sustainability mechanisms in relevant district, county, township agencies. CMG agrees to replicate strategy for the rest of Chongqing municipality. Survey findings, focus group discussions, affordability analysis, and draft RPs EIAs of various project components and final consultant report Midterm review mission Discussions during the midterm review mission Information is made available to consultants in timely manner. Land acquisition and resettlement issues are addressed at an early stage. Risks Appointment of domestic design institutes by government is delayed. Performance of domestic design institute(s) is inadequate, resulting in poorly prepared FSRs, EIAs, RPs, and social assessments. 7. Participatory plan assessments 3 tripartite meetings to be conducted at inception, midterm, and final tripartite meeting; and Minutes of the tripartite meetings 8 stakeholder workshops (1 per district/county) to be conducted to develop problem and objectives Material output from workshops

12 8 Appendix 1 Design Summary Performance Targets and/or Indicators Data Sources and/or Reporting Mechanisms Assumptions and Risks tree analyses, and DMF. 8. Training workshops Training workshops to be conducted after inception report and before interim report stages: Material and notes of workshops 2 x 1 day workshops (repeats) for EA and IAs to develop EIAs and EMPs 2 x 1 day workshops (repeats) for EA and IAs to develop RPs, indigenous peoples and SAs 2 x 1 day training workshops for EA and IAs on procurement and disbursement procedures Capacity strengthening by knowledge transfer in the field in applying ADB project preparation procedures. Standard and contents of output of FSRs 9. Draft final assessments completed for preparing the investment project. Draft proposal prepared as part of the consultant final report and submitted to ADB by the end of month 7. Draft final report of the consultants and ADB project team 10. Final assessments completed based on comments from ADB and CMG. Final report submitted 30 days after comments on draft final report. Comments from CMG, ADB, and tripartite review Activities with Milestones Activities 1.1 Review current infrastructure constraints to economic development in towns and villages, and urgency of mitigating needs related to linked infrastructure and services in the subproject communities (month 1). 1.2 Review and analyze municipal sector plans and county and district 11th Five-Year development plans and programs and their financing requirements (month 1). 1.3 Review likely resettlement impact of the proposed subprojects (months 1 2). 1.4 Review likely impacts on indigenous peoples and assess social poverty issues (months 1 2). 1.5 Submit TA inception report and hold first tripartite meeting (month 2). Inputs ADB to provide $900,000 grant including consultancy inputs: 21.5 person-months international and 54 person-months national. The Government to provide $300,000 equivalent in counterpart facilities and services to include a technical

13 Appendix 1 9 Activities with Milestones Activities 2.1 Assess the technical, financial, economic, environmental, and social viability of subproject components, including conducting household survey (months 1 4). 2.2 Analyze the subproject component and policy options for environment impact, poverty reduction, social impact, and involuntary resettlement (months 2 4). 2.3 Estimate detailed costs and financing plan and institutional arrangements for different subproject components (months 3 5). 2.4 Develop capacity-building, sustainability measures for demonstration effect and improve financing of subproject governments (month 4). 2.5 Develop best practice strategy for linking urban and rural development infrastructure in areas where there is a strong inter-related economy. 2.6 Establish monitoring and evaluation systems for subprojects including technical, thematic, and safeguards assessment guidelines for evaluating subprojects to be selected during project implementation (month 5). 2.7 Conduct second stakeholder workshop and tripartite meeting (month 5). 2.8 Conduct 3 x 1-day training workshops in each demonstration town for implementing agencies and design institutes on procurement/disbursement, RPs, IPDPs, SAs, and EIAs and EMP (months 2 4). Inputs assistance project office with full-time professional staff and one full-time translator/interpreter, and preparation of FSRs, RPs, IPDPs, SAs, and EIAs and EMP. Government inputs will include counterpart staff on district/county level to facilitate data collection, surveys and stakeholder inputs. 3.1 Fine-tune the technical, financial, economic, environmental, and SAs based on tripartite discussions (months 6 7). 3.2 Formulate sector investment projects for ADB funding and confirm procurement and disbursement needs and arrangements (month 7). 3.3 Submit draft final report (months 7 8). 3.4 Submit final report and hold third tripartite meeting (month 8). Milestones 1. Consultant mobilization February Submission of draft inception report March First tripartite meeting March Conduct DMF, PPMS, RP, IP, SA, and April/May 2009 EIA and EMP workshops in demonstration towns 5. Conduct procurement and disbursement May 2009 workshop 6. Submit of draft interim report June Second tripartite meeting June Submit draft final report August Third tripartite meeting September Issue final report and TA closing September/October 2009 ADB = Asian Development Bank, CMG = Chongqing municipal government, DMF = design and monitoring framework, EA = executing agency, EIA = environmental impact assessment, EMDF = ethnic minority development framework, EMDP = ethnic minority development plan, EMP = environmental management plan, FSR = feasibility study report, IA = implementing agency, IPDP = indigenous peoples development plan, PPMS = project performance management system, PRC = People s Republic of China, RP = resettlement plan, SA = social assessment report, SEIA = summary environmental impact assessment, TA = technical assistance.

14 10 Appendix 2 INITIAL POVERTY AND SOCIAL ANALYSIS Country/Project Title: People s Republic of China/Chongqing Urban Rural Infrastructure Development Demonstration Project Lending/Financing Modality: Project Preparation Technical Assistance Grant Department/ Division: East Asia Department/ Social Sectors Division I. POVERTY ISSUES A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy Based on the country poverty assessment, the country partnership strategy and the sector analysis describe how the project would directly or indirectly contribute to poverty reduction and how it is linked to the poverty reduction strategy of the partner country. The project will improve rural health by increasing access to safe potable water; and raise incomes by improving road access to markets and employment. B. Targeting Classification 1. Select the targeting classification of the project: General Intervention (GI) Individual or Household (TI-H); Geographic (TI-G); Non-Income MDGs (TI-M1, M2, etc.) 2. Explain the basis for the targeting classification: The project will assess its impact on beneficiaries, especially socioeconomic and health impacts, by identifying poverty-related baselines for project monitoring and evaluation. C. Poverty Analysis 1. If the project/program is classified as TI-H, or if it is policy-based, what type of poverty impact analysis is needed? 2. What resources are allocated in the project preparatory technical assistance (PPTA)/due diligence? 8 person-months of input by poverty/social development specialist are included in project design. 3. If GI, is there any opportunity for pro-poor design (e.g., social inclusion subcomponents, cross subsidy, pro-poor governance, and pro-poor growth)? During project design, poverty and social analysis to be conducted will provide the pro-poor growth measures and governance on town levels. Design and monitoring framework workshops were held in community areas during technical assistance (TA) factfinding. Township and village participation in project design is required by terms of reference for PPTA consultants. The project is focused on assisting the poor. II. SOCIAL DEVELOPMENT ISSUES A. Initial Social Analysis Based on existing information: 1. Who are the potential primary beneficiaries of the project? How do the poor and the socially excluded benefit from the project? The roads subprojects will benefit about 760,000 people and the water supply subprojects will benefit about 590,000 people. Of these totals, up to 21% of the rural beneficiaries are classified as poor, and up to 71% of the population in subproject counties are from ethnic minorities. 2. What are the potential needs of beneficiaries in relation to the proposed project? Project beneficiaries are in need of safe, adequate, and reliable potable water supplies; easier access to towns to sell produce and goods and find employment.; easier access to social needs (schools, hospitals etc.); and improved delivery of fuels and materials to remote settlements. 3. What are the potential constraints in accessing the proposed benefits and services, and how will the project address them? Potential constraints include lack of effective formal and informal mechanisms to enable poor and marginalized groups to access proposed benefits and services. The project will include assessment of social risks and effectiveness of governance institutions to formulate mitigation measures to address the constraints.

15 Appendix 2 11 B. Consultation and Participation 1. Indicate the potential initial stakeholders. Stakeholders comprise local government (district/county/town levels), commercial interests, educational institutions, and village communities. Stakeholder analysis will be undertaken to identify the following: (i) stakeholders interest in, importance to, and influence over the project; (ii) local institutions and processes on which to build; and (iii) a strategy for stakeholders participation. 2. What type of consultation and participation is required during the PPTA or project processing (e.g., workshops, community mobilization, involvement of nongovernmental organizations and community-based organizations, etc.)? A participatory process will be an integral part of implementation of the PPTA to ensure a high level of congruence of goals among all major stakeholders. A series of participatory workshops will be held to ensure full participation of major stakeholders in the design process of the proposed projects. The workshops will be based in the subproject districts. 3. What level of participation is envisaged for project design? Information sharing Consultation Collaborative decision making Empowerment 7 4. Will a consultation and participation plan be prepared? Yes No Please explain. It will be required as part of the consultants proposal. C. Gender and Development 1. What are the key gender issues in the sector and/or subsector that are likely to be relevant to this project or program? Provision of adequate, safe, and reliable potable water will improve living conditions, particularly for women and girls who traditionally carry out the duties of washing and cooking. 2. Does the proposed project or program have the potential to promote gender equality and/or women s empowerment by improving women s access to and use of opportunities, services, resources, assets, and participation in decision making? Yes No Please explain. Improved access to safe, potable water supplies and village-to-town roads will benefit rural communities. 3. Could the proposed project have an adverse impact on women and/or girls or widen gender inequality? Yes No Please explain Men and women will enjoy equal access to the project s benefits. 4. Will PPTA/due diligence prepare actions/measures to prevent and minimize adverse gender impacts and maximize positive ones? Gender issues are seen as significant. Action/measures to prevent and minimize adverse gender impacts and maximize positive ones will be assessed during project preparation. III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Issue Involuntary Resettlement Nature of Social Issue About 427 households (1,280 people) are expected to relocate and up to 200 hectares of used land will be permanently lost. Significant/Limited/ No Impact/Not Known Not significant because less than 200 persons affected per subproject. Plan or Other Action Required Full Plan Short Plan Resettlement Framework No Action Uncertain Indigenous Peoples Up to 71% of non-han ethnicities in static and migrant populations in counties. Significant in some districts/counties. Plan Other Action Indigenous Peoples Framework No Action Uncertain

16 12 Appendix 2 Issue Labor Employment Opportunities Labor Retrenchment Core Labor Standards Nature of Social Issue The project will generate employment opportunities both during and after infrastructure development. Access to markets and to employment will be improved. The project will comply with national labor laws with regard to provision of health and sanitation facilities on construction sites. Significant/Limited/ No Impact/Not Known Significant Plan or Other Action Required Plan Other Action No Action Uncertain Affordability Affordability analysis will be conducted during PPTA. Not yet known; social assessment survey budget included in PPTA. Action No Action Uncertain Other Risks and/or Vulnerabilities HIV/AIDS Human Trafficking Others IV. Not yet known Not yet known Plan Other Action No Action Uncertain PPTA/DUE DILIGENCE RESOURCE REQUIREMENT 1. Do the terms of reference (TOR) for the PPTA (or other due diligence) include poverty, social and gender analysis and the relevant specialist(s)? Yes No If no, please explain why. 2. Are resources (consultants, survey budget, and workshop) allocated for conducting poverty, social and/or gender analysis, and consultation and participation during the PPTA or due diligence? Yes No If no, please explain why. PPTA = project preparatory technical assistance, TA = technical assistance.

17 Appendix 3 13 COST ESTIMATES AND FINANCING PLAN ($ 000) Item Total Cost A. Asian Development Bank (ADB) Financing a 1. Consultants a. Remuneration and Per Diem i. International Consultants (21.5 person months) ii. National Consultants (54.0 person months) b. International and Local Travel 40.0 c. Reports and Communications b Equipment c Workshops d Surveys e Translation f Representative for Contract Negotiations g Contingencies 22.0 Subtotal (A) B. Government Financing 1. Office Accommodation and Transport h Local Counterpart Support Staff i Surveys and Investigations a. Environmental Impact Assessments 24.0 b. Socioeconomic Surveys 32.0 c. Project Design Contingencies 19.0 Subtotal (B) Total 1,200.0 a Financed by ADB s technical assistance funding program. b Includes office communications, interpreter, translation into Chinese, printing and binding of reports, and related dissemination costs. c Includes desktop computers, printer, photocopier, and software. This provisional cost item is not subject to competitive bidding. d Includes training workshops and field training. This provisional cost item is not subject to competitive bidding. e Includes contingent valuation survey. This provisional cost item is not subject to competitive bidding. f Refers to miscellaneous documents translated into English. g Includes the cost of travel and per diem for government representatives invited for contract negotiations. h Includes telephone lines (1 international) and district/county level transport. i Includes office supplies, administrative support, remuneration and per diem of executing/implementing agency counterpart support staff. Source: ADB estimates.

18 14 Appendix 4 OUTLINE TERMS OF REFERENCE FOR CONSULTANTS A. Objectives 1. The objectives of the technical assistance (TA) are to (i) identify the most appropriate municipal infrastructure, urban rural road linkages, and potable water supplies; expand and strengthen urban rural links; facilitate economic development; enhance environmental protection and management; strengthen safeguards areas; support local trade and commerce; facilitate employment generation; and raise income levels in the towns of mountainous districts and counties in Chongqing; (ii) prepare feasibility studies for an investment sector project based on detailed assessment of eight core subprojects in the northeast and southeast regions of Chongqing; (iii) establish criteria for selection and prioritization of project towns; (iv) provide training to local design institutes and implementing agencies (IAs) to increase institutional capacity specifically aimed at project planning, preparation and implementation procedures to an international standard; (v) formulate measures for sustainability of the project including sustaining improved capacity of local governments; and (vi) design the project, using as reference the demonstration subprojects in each district/county, for possible funding by the Asian Development Bank (ADB). B. Policy Dialogue 2. Policy dialogue is ongoing between ADB and the People s Republic of China (PRC) in connection with ADB s urban lending program in the PRC. To strengthen the dialogue in relation to the projects, the consultants will prepare notes for policy dialogue, based on discussions with the Chongqing municipal government (CMG) on (i) best practice strategy for linking urban and rural development infrastructure in areas where there is a strong inter-related economy; (ii) strategies and enabling legislation required to facilitate development of district and county administrations, including the sectors covered under the project; (iii) activities and interventions needed to strengthen the ability of district and county local governments to guide their own development; (iv) targeting regional resources for efficiency and equity; (v) developing public private partnerships to introduce private sector management expertise and money to water supply systems; (vi) cost recovery and tariff reform; (vii) rural poverty reduction, social protection, and resettlement policies; (viii) participatory approach to project design; and (ix) regulatory enforcement and monitoring. C. Design and Monitoring Framework 3. In consultation with government agencies, the public, and project stakeholders, the consultants will develop, through stakeholder workshops and meetings, a design and monitoring framework (DMF) for each subproject that outlines the impact, outcomes, outputs, and inputs or activities in accordance with the Guidelines for Preparing a Design and Monitoring Framework (Second Edition), ADB The consultants will collect baseline indicators, as appropriate, and develop baseline urban rural infrastructure and services provision, and environmental and social indicators (including income, poverty, health and other relevant data) necessary to effectively monitor project performance. Each project framework will be developed using problem-tree analysis, risk and sensitivity analysis, and a participatory approach involving beneficiaries and stakeholders in project development, which will form the basis for the project performance management systems (PPMS). 2 1 ADB Project Performance Management System: Guidelines for Preparing a Design and Monitoring Framework (Second Edition). Manila. 2 Initiated by town workshops during the initial TA Fact-Finding Mission in May 2008.

19 Appendix 4 15 D. Training 4. The Executing Agency (EA) has experience managing internationally funded projects, although the IAs in the subproject districts/counties have varied experience. The consultants will provide appropriate training as a continuous exercise during project preparation. The consultants will conduct three workshops per subregion (northeast and southeast), which will cover: (i) DMF/PPMS, (ii) environmental impact assessment (EIA) and environmental management plan (EMP), and (iii) resettlement plans (RPs) and social development initiatives. The workshops will be held after the issuance of inception reports. In addition, the consultants will provide initial guidance to the CMG s design institutes on (i) preparation of the sector frameworks, subproject selection and prioritization criteria; (ii) subproject monitoring parameters; and (iii) ADB procedures for application in the preparation of the feasibility study reports (FSRs) for the remaining non-core subprojects. The consultants will provide practical training in the field during preparation of subprojects and audit the six draft final FSRs, excluding raw data, provided these are made available reasonably within the consultant s contract period. E. Overall Scope of Work 3 5. The TA will be implemented over a period of 8 months with the draft final report being completed before the end of month 8. The districts and counties of Chongqing are mountainous and access to some components may be difficult. The subprojects are divided between two distinct geographic areas: northeast and southeast Chongqing. It is suggested that the national consultants be divided into two teams to carry out their duties. The consultants will work in close association with the EA and will accomplish the following activities: (i) review and assess the development master plans, sector plans, investment plans, and institutional capacity of the EA and IAs to ensure each subproject will meet the criteria for ADB lending; (ii) establish criteria for subproject selection; (iii) prepare an FSR for each subproject, including an assessment of the technical, financial, economic, social, and environmental impacts of the subproject and its components in accordance with ADB policies and guidelines; (iv) formulate the subprojects to improve urban rural infrastructure to facilitate the development of towns, villages, employment generation, and environmental protection in accordance with sectoral development strategies for districts/counties; (v) prepare best practice strategy for linking urban and rural development infrastructure in areas where there is a strong inter-related economy; (vi) provide training and capacity building in the IAs of subprojects; and (vii) provide guidance to CMG s design institutes in preparation of the FSRs for the remaining six subprojects to a standard acceptable to the PRC and ADB. The scope of the consultants work is given in the following paragraphs. 1. Technical Aspects (2 international consultants, 5.0 person-months for roads, 3.0 person-months for water, total 8.0 person-months; and 5 national consultants, 12.0 person-months for roads, 9.0 person-months for water, 3.0 person-months for geotechnical engineering, total 24.0 person-months) 6. The sectors to be covered in subprojects across the northeast and southeast regions of Chongqing are road construction and water supply. The core subprojects will be applied variously across a range of towns and will comprise 51 roads components and 19 water treatment and supply components. The total length of roads is 980 kilometers and includes a total of 26 bridge structures and 354 culverts. The combined capacity of water treatment plants is 168,650 cubic meters per day and the total length of water supply and distribution pipework is 531 kilometers. For each of the subprojects, as applicable, the consultants will assess and prepare recommendations on (i) demand capacities and suitability of proposed carriageway standards and designs for the roads and associated structures, road safety measures, and design parameters; (ii) suitability of 3 Detailed terms of reference for individual team members will be provided.

20 16 Appendix 4 proposed water resources for potable water supplies, with particular attention to raw water quality and sustainability issues, pressure and leakage control, supply zoning in distribution networks, and demand management; and (iii) geotechnical implications of the road alignments, embankment stability, road structures, water pipeline trenching, and other related issues. In addition, the consultants will (i) undertake a procurement capacity assessment of each subproject entity; and (ii) recommend specific actions for future maintenance of assets and necessary institutional strengthening to ensure future managerial, technical, and financial sustainability of operations. 2. Environmental Impact Assessments (international consultant, 2.0 person-months; and 2 national consultants, 2.5 person-months each) 7. The consultants will review the EIAs of the subprojects, and help each district/county government prepare a summary environmental impact assessment (SEIA), and, where necessary, an EMP for each subproject component, following ADB s Operations Manual Section F1 on Environmental Considerations in ADB Operations (2006), Public Communications Policy (2005), and ADB s Environmental Assessment Guidelines (2003). The consultants will identify any gaps between the EIAs and ADB environmental requirements, and recommend additional studies to fill these gaps and improve the EIAs. Other specific duties will include: (i) identify risks and provide mitigating measures, where appropriate, and provide inputs in the write-ups for the EIAs and relevant sections of the FSRs; (ii) assist CMG with stakeholder participation and consultation during subproject SEIA preparation and document these results in the SEIA; (iii) evaluate the environmental appropriateness of the subprojects and the use of the proposed technology; (iv) provide the necessary environmental analysis and justification inputs for the financial and economic analyses of each subproject; (v) establish environmental baseline indicators and performance targets for the DMF; (vi) prepare environmental assessment and review procedures and environmental tools, such as cumulative impact assessment or strategic environmental assessment, to be agreed upon with the Government for assessing subsequent subprojects; (vii) prepare the terms of reference and budgetary requirements for independent environment monitoring and evaluation during project implementation; (viii) prepare environmental guidelines for evaluating subprojects to be selected during project implementation; (ix) ensure that the EMPs are prepared in conformity with ADB requirements; (x) prepare a powerpoint presentation of SEIA for ADB peer review; and (xi) attend ADB peer review meeting and incorporate comments provided for the SEIA. 3. Financial Analysis and Management Assessment (international consultant, 3.0 person-months; and 2 national consultants, 3 person-months each) 8. The consultants will make a financial analysis of each subproject and its components and an analysis of the financial performance of the relevant revenue-generating entities in accordance with ADB s Guidelines on the Financial Management and Analysis of Projects (2005). In particular, the consultants will (i) work with the TA economists to provide financial information and analysis relevant to a review of policy and practice relating to financing, operating, and maintaining urban infrastructure services; (ii) assess the financial sustainability of the sector components; (iii) document and present the historical financial statements of subproject entities; (iv) identify trainings and areas for improvement with respect to the quality of financial statements, disclosure, and overall financial management system; (v) review the financial performance of subproject entities in the past five years and evaluate their financial capacity regarding cost recovery, borrowing capacity, and subsidies; (vi) prepare income statements, balance sheets, and cash flow statements for relevant subproject entities in nominal terms, forecast the results for 20 years after the beginning of full sector subproject operation, and calculate relevant financial ratios; (vii) review the detailed cost tables with unit costs, physical quantities, and phasing of the project cost; and review and identify contract packages and the financing plan; (viii) analyze and summarize