People s Republic of China: Southern Gansu Roads Development Project

Transcription

1 Completion Report Project Number: Loan Number: 2295 July 2018 People s Republic of China: Southern Gansu Roads Development Project This document is being disclosed to the public in accordance with ADB s Public Communications Policy 2011.

2 CURRENCY EQUIVALENTS Currency Unit yuan (CNY) At Appraisal At Project Completion 20 Oct Dec 2015 CNY1.00 = $ $ $1.00 = CNY8.02 CNY ABBREVIATIONS ADB Asian Development Bank EIA environmental impact assessment EIRR economic internal rate of return EMP environmental management plan FIRR financial internal rate of return GCHC Gansu Changda Highway Company Limited GDP gross domestic product GEPB Gansu Environmental Protection Bureau GPCD Gansu Provincial Communications Department GPTD Gansu Provincial Transport Department GPG Gansu Provincial Government GPHAB Gansu Provincial Highway Administration Bureau ITS intelligent transport system LAR land and acquisition resettlement MOC Ministry of Communications MOT Ministry of Transport PCR project completion report PEPB Provincial Environmental Protection Bureau PRC People s Republic of China SDAP social development action plan TA technical assistance VOC vehicle operating cost WACC weighted average cost of capital WEIGHTS AND MEASURES km kilometer km/h kilometer per hour mu unit of area equivalent to 667 square meters PCU passenger car unit p-km passenger-kilometer m 2 square meter t-km ton-kilometer NOTES In this report, $ refers to United States dollars.

3 Vice-President Stephen Groff, Operations 2 Director General Amy Leung, East Asia Department (EARD) Director Sujata Gupta, Transport Division, EARD Team leader Team member Rebecca Stapleton, Transport Specialist, EARD Ligaya Cuevas-Arce, Senior Operations, Assistant, EARD Katherine Guy, Transport Specialist, EARD Ma. Concepcion Jea Macrohon, Associate Project Analyst, EARD Anders Pettersson, Unit Head, Project Administration, EARD Jurgen Sluijter, Transport Economist, CWRD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

4 BASIC DATA MAP CONTENTS Page I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 2 A. Project Design and Formulation 2 B. Project Outputs 2 C. Project Costs and Financing 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 7 G. Technical Assistance 7 H. Consultant Recruitment and Procurement 8 I. Safeguards 9 J. Monitoring and Reporting 10 III. EVALUATION OF PERFORMANCE 11 A. Relevance 11 B. Effectiveness 11 C. Efficiency 11 D. Sustainability 12 E. Development Impact 13 F. Performance of the Borrower and the Executing Agency 13 G. Performance of the Asian Development Bank 13 H. Overall Assessment 14 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14 A. Issues and Lessons 14 B. Recommendations 15 APPENDIXES 1. Design and Monitoring Framework Special Features of the Project Project Cost at Appraisal and Actual Project Cost by Financier Original and Revised Loan Allocation Chronology of Main Events Appraisal and Actual Implementation Schedule Organization Chart Contract Awards and Disbursement of ADB Loan ADB Financed Contracts Government Financed Contracts Evaluation of Land Acquisition and Resettlement Environmental Impact Analysis Status of Compliance with Loan Covenants Economic Reevaluation Financial Reevaluation and Sustainability Analysis Social Development Impact Assessment 94 i v

5 A. Loan Identification BASIC DATA 1. Country People s Republic of China 2. Loan number and financing source 2295, ordinary capital resources 3. Project title Southern Gansu Roads Development Project 4. Borrower Ministry of Finance, People s Republic of China 5. Executing agency Gansu Provincial Transport Department0F1 6. Amount of loan $300 million 7. Project completion report number Financing modality Loan B. Loan Data 1. Appraisal Date started Date completed 2. Loan negotiations Date started 6 June June November November 2006 Date completed 3. Date of Board approval 18 December Date of loan agreement 13 November Date of loan effectiveness In loan agreement Actual Number of extensions 6. Project completion date Appraisal Actual 7. Loan closing date In loan agreement Actual Number of extensions 11 February January December September June September Financial closing date Actual 28 December Terms of loan Interest rate Maturity (number of years) Grace period (number of years) 10. Terms of relending (if any) Interest rate Maturity (number of years) Grace period (number of years) Second-step borrower LIBOR + 0.6% 25 5 Not applicable 1 Gansu Provincial Transport Department was known as the Gansu Provincial Communications Department at the time of the Report and Recommendation of the President (2006).

6 ii 11. Disbursements a. Dates Initial Disbursement 7 October 2010 Effective Date 18 January 2008 Final Disbursement 16 November 2015 Actual Closing Date 28 December 2015 Time Interval 61 months Time Interval 96 months b. Amount ($ million) Original Allocation (1) Increased/(decr eased) during Implementation (2) Canceled during Implementation (3) Last Revised Allocation (4=1+2 3) Amount Disbursed (5) Undisbursed Balance a (6 = 4 5) Category 1. Civil Works A: Expressway B: Rural Roads C: Township Bus 5.00 (3.89) Stations 2. Equipment 3.10 (0.19) Consulting Services 1.80 (0.56) Total a Includes undisbursed balance of $ for rural roads and $0.06 for township bus stations. C. Project Data 1. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed ADB Financed Other External Financing , Total 1, , Interest During Construction Costs Borrower Financed ADB Financed Other External Financing Total ADB = Asian Development Bank.

7 iii 2. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual A. Base Cost 1. Civil Works 1, , Equipment Land Acquisition and Resettlement Consulting Services, Training, and Project Management 5. Rural Roads and Township Bus Stations Subtotal (A) 1, ,918.4 B. Contingencies C. Financing Charges Total 1, , Project Schedule Item Appraisal Estimate Actual Date of contract with consultants 2007 Nov 2009 Completion of engineering designs N/A May 2008 Civil works contract Date of award Sep 2009 Jan 2010 Sep 2013 Completion of work Dec 2011 Dec 2013 Sep 2016 Completion of equipment installation N/A May 2013 Start of operations Expressway completed and opened to traffic Dec 2013 Dec 2013 Local road completed and opened to traffic Dec 2013 Sep 2016 Other milestones N/A = not applicable. 4. Project Performance Report Ratings Implementation Period Ratings Development Objectives Implementation Progress From 18 December 2006 to 31 December 2010 Satisfactory Satisfactory From 1 January 2011 to 28 December 2015 On track On track

8 iv D. Data on Asian Development Bank Missions Name of Mission Date No. of Persons No. of Person- Days Specialization of Members a Fact-Finding 7 16 Mar a1, b, c, d, e, f Appraisal 6 14 Jun a1, b, c, d, g, h Inception 9 14 Jul a2, i, j, k, l Consultation Jun m Loan Review Nov a2, i, j, n Loan Review Nov m Loan Review Sep m, n Midterm Review 30 May 8 Jun a3, o, p Loan Review Apr a3, o, q Loan Review Apr a3, n, r, s Loan Review May a3, o, r, t LAR Safeguards Mission Dec n Loan Review Oct a3, o, u Loan Review 8 (Special Safeguards) Jun o, v Loan Review Nov a3, j, w, x Project Completion Review 30 Jan 7 Feb a4, m, y, j, u, x LAR = land acquisition and resettlement. Notes: a a1 = financial specialist and mission leader; a2 = senior financial specialist and mission leader; a3 = unit head, project administration and mission leader; a4 = transport specialist and mission leader; b= principal project economist, c = senior resettlement specialist; d = project specialist (roads); e = social development specialist, f = economist, g = senior transport specialist, h = principal counsel, i = head, project administration unit; j = associate project analyst; k = project officer (resettlement); l = procurement officer, People s Republic of China Resident Mission; m = transport specialist; n = resettlement specialist and staff consultant; o = environmental specialist/staff consultant; p = operations officer; q = social development specialist (safeguards), Environment and Social Safeguard Division; r = safeguards specialist; s = young professional (environment); t = principal social development specialist (safeguards); u = social development specialist (safeguards)/staff consultant, v = giant salamander expert/staff consultant; w = transport economist; x = financial specialist/staff consultant; y = senior environment specialist.

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11 I. PROJECT DESCRIPTION 1. Despite rapid economic growth and a reduction in the national poverty rate, as of 2005, about 208 million people in the People s Republic of China (PRC) were still living in poverty. The incidence of poverty was higher in the PRC's landlocked western provinces, where the gross domestic product (GDP) per capita was less than half that of the national average and about onethird of the eastern provinces. Inadequate road networks, road transport bottlenecks, and poor transport services and the resulting high transportation costs were major constraints to sustainable economic growth and poverty reduction in the western region The Southern Gansu Roads Development Project took place in one of the PRC s poorest areas Gansu province in the western region. In 2005, Gansu ranked 30th among the 31 provincial-level administrative units, with a per capita GDP of just 45% of the national average. At project appraisal, the project area of Longnan prefecture had a poverty incidence of 42%, Dingxi city poverty incidence was 39%, and Tianshui city was 29%. 3. The difficult mountainous terrain and inadequate road network isolated southern Gansu from local, regional, and national markets and social services, and severely impeded the mobility of residents. At appraisal, Gansu's road density was 9.1 kilometers (km) per 100 square kilometers (km 2 ), significantly lower than the national average of 20.0 km per 100 km 2. Of the 3,237 villages in the project area, 24% had no road access, 25% had no bus service, and 57% of the 169 townships had no all-weather roads.22 There was also no expressway, class I road,3 3 airport, or railway linking Longnan, the focal project prefecture, to surrounding regions. Travel would take hours to reach the closest major cities of Chengdu, Lanzhou, and Xi'an, km from Longnan. The project was designed to construct an important section of the Lanzhou Haikou expressway corridor, construct and upgrade rural roads, and provide bus services to rural areas, thereby improving transport in southern Gansu to link the poor, isolated region to key economic growth centers and essential services. 4. At appraisal, the project was to (i) build a 134-km, four-lane, access-controlled toll expressway between Wudu and Guanzigou, including tunnels, bridges, interchanges with toll stations, connector roads, administrative stations, and service areas; (ii) upgrade 357 km of rural roads to improve access to 27 townships and 275 villages in poor areas; (iii) build 200 township bus stations to provide new bus services; (iv) improve transport services by pilot-testing a road transport action plan in Longnan; (v) promote corporate governance; and (vi) strengthen local transport authorities capacity in construction supervision, road safety, asset management, and project management by providing consulting services and training.4f4 The project design and monitoring framework (DMF) is in Appendix Several special features were included in the project to accelerate institutional and policy reforms and enhance the impact and benefits to the project area. These included (i) improving rural roads for poverty reduction, with roads selected on the basis of road network efficiency, economic potential, poverty incidence, and population density; (ii) improving rural transport services to enable more reliable, affordable, convenient, and safe transport for local residents; (iii) reforming rural road maintenance and developing a sustainable rural road maintenance plan; 1 Government of the People s Republic of China Western Region Development Strategy. Beijing. 2 Townships are fourth-level administrative units in the PRC, similar to municipalities or communes in other countries, and may contain villages. Villages are fifth-level, informal administrative units. 3 PRC s road classification includes expressways (width 28.0 meters [m]), Class I (25.5 m), Class II (12 m), Class III (8.5 m), Class IV (7 m) and unclassified roads. Class I roads are four lane, paved, all-weather roads with design speeds of kilometers per hour and 15,000 30,000 average annual daily traffic. 4 ADB Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People s Republic of China for the Southern Gansu Roads Development Project. Manila.

12 2 (iv) tendering for road maintenance and encouraging private sector participation to improve maintenance operations; (v) adopting an intelligent transport system for improved tolling, vehicle monitoring, safety, maintenance, traffic management, weather, and other warning systems; and (iv) developing a computerized asset management database and system. Some of the special features are encompassed in the six project outputs. A stand-alone evaluation of the project's special features has been undertaken and is in Appendix 2. A. Project Design and Formulation II. DESIGN AND IMPLEMENTATION 6. The project was formulated in accordance with the PRC's national development priorities, particularly, to promote balanced growth in the western region as outlined in the Eleventh Five- Year Plan.5F5 These priorities included (i) completion of the National Trunk Highway System (NTHS); (ii) improved rural roads, including rural road maintenance and rural transport services to ensure sustainability and efficiency; and (iii) promoting regional cooperation. The project supported the strategy through constructing an important section of the NTHS from Wudu to Guanzigou, upgrading rural roads, providing bus stations, and improving transport services. All project outputs improved access to and within southern Gansu province, improving mobility, promoting economic growth and contributing to the reduction of poverty in rural areas. 7. The project also reflected Asian Development Bank s (ADB) operational priorities as outlined in the PRC Country Strategy and Program Update ( ), in particular, to improve connectivity in the western regions of the PRC and ensure a network of rural roads supports the NTHS to improve accessibility in poor areas.6f6 8. In May 2008, the Wenchuan earthquake the epicenter of which was nearby in Sichuan province caused significant damage to the project area. Of 2.7 million people in Longnan, 1.7 million (63%) were evacuated and 890,000 (33%) lost their homes. All levels of government diverted resources to work on earthquake recovery and restoration. Following the earthquake, new geotechnical surveys, redesign, and changes to the resettlement plans were required. 9. Originally, the project was to build 200 class V township bus stations.7f7 However, due to planning changes following the 2008 earthquake, land acquisition challenges, and low economic return rates from some bus stations, the government requested changes be made to this output. With ADB's approval, the scope was revised in July 2009 to 30 class V or above bus stations and 1,500 bus stops. During the midterm review in 2011, the project DMF was revised to reflect redesign and scope changes, and improve monitoring effectiveness and relevance.8f8 B. Project Outputs 10. Output 1: Wudu Guanzigou Expressway. This was the major project output, accounting for 68% of the project cost and 61% of ADB's financing at appraisal. The Gansu Changda Highway Company (GCHC) implemented the expressway as designed. 5 A key theme of the Eleventh Five-Year Plan, , was the Western Regional Development Strategy, aimed at reducing development disparities between western and eastern regions. Gansu is one of the western provinces. Government of the People s Republic of China The Eleventh Five-Year Plan for National Economic and Social Development of the People s Republic of China. Beijing. 6 ADB People s Republic of China: Country Strategy and Program Update ( ). Manila. 7 Bus centers in the PRC are classified by design capacity into class-i V bus stations and bus stops. The design capacity of a class-v station is less than 300 passengers daily with the average construction area of 250 square meters. 8 Changes made to the DMF were minor and related mostly to ensuring it was in line with ADB s updated guidelines.

13 The expressway opened to traffic in December 2013 with four lanes, a minimum design speed of 80 km/hour, 24.5 meters (m) wide subgrade and the loading capacity of bridges and tunnels of a Class I road. However, the final alignment was only km long, rather than 134 km as originally envisaged (para. 27). The expressway has seven interchanges, 46 tunnels, and 122 bridges, including the PRC's first two-storey road bridge. Bridges and tunnels account for 69% of the total road length. The longest bridge is 5.3 km and the longest tunnel is 9.1 km. The expressway has two service areas, nine toll stations, and 32 weighbridges, including one at each expressway exit and two overload limitation stations, and has been integrated into the national electronic toll collection system. At completion, the expressway output successfully achieved the targets envisaged at appraisal. Road capacity was increased, travel time from Wudu to Guanzigou was reduced from 8 hours to 1.5 hours, and vehicle operating costs per km reduced from CNY2.70 to CNY1.75, better than the CNY1.93 estimated at appraisal. The Gansu Provincial Expressway Administration Bureau (GPEAB) operates the expressway and the Gansu Provincial Highway Administration Bureau (GPHAB) provides maintenance. 11. Output 2: Rural Road Upgrading. Seven rural roads with a total length of km, 0.42 km longer than was envisaged at appraisal, were upgraded from unclassified to class IV or III roads as planned, and road safety signs and markings are displayed as envisaged. Table 1 presents the planned rural roads improvement program against the actual completion. Table 1: Rural Roads Improvement Program Planned versus Actual Road Name Length (km) Improvement Completion Date Planned Actual Planned Actual Planned Actual Wudu Lixian km to class III, and 40 km to class IV Full length to class III Apr 2013 Sep 2016 Sijaba Changheba To class IV To class IV Mar 2010 Aug 2010 Baihegou Wangguan km to class III, and 8 km to class V Full length to class III Nov 2006 Nov 2008 Zhaojiaba Tianchi To class IV To class IV Oct 2006 Nov 2008 Chengxian Er lang To class IV To class IV Mar 2007 Dec 2007 Honghe Kuanchuan To class IV To class IV Jan 2007 Oct 2007 Yangba Ganjiangba To class IV To class IV Dec 2006 Dec 2008 Source: Gansu Provincial Transport Department. 12. The Wudu Lixian road was upgraded to class III in its entirety. The detailed design assumed that due to the geotechnical conditions, some sections of Wudu Lixian road, particularly a 40 km section above 2,500 m altitude, would only be able to support a class IV road.9f9 However, during construction, it was discovered that the terrain geometry would support a class III road in its entirety. The Baihegou Wangguan road was also upgraded to class III in its entirety. 13. Output 3: Rural Bus Stations and Stops. All bus stations and stops were constructed in line with the revised scope (para. 9) and achieved the target to provide bus stations and increase inter-province and inter-county bus routes. Seven bus stations were constructed in Longnan, and 23 in Dingxi. Twenty-eight bus stations are class V, one is class II, and one is class IV. In line with the government's policy to consolidate government functions, most of the bus stations serve as multi-function buildings, containing other public services such as police, local health centers, satellite transport bureau offices, and/or tourism service centers. There are 781 bus stops in Longnan, 601 in Tianshui, and 118 in Dingxi. The use of the bus stops has varied from location to location. In some instances, users are flagging down buses on the side of the road instead of 3 9 Survey equipment was not able to access parts of the Wudu-Lixian road alignment to confirm the terrain and possible geometry during design phase as there was no preexisting road and the terrain was extremely steep.

14 4 using the bus stops, which has safety implications for passengers. Lixian county, however, has had success in encouraging the use of bus stops by attracting residents to the bus stops through the provision of community bulletin boards (Appendix 2). 14. Output 4: Pilot Testing of Transport Action Plan in Longnan Municipality. Longnan developed and implemented a transport action plan as envisaged, improving transport services in the area (Appendix 2). As part of this plan, the Longnan Transport Association was established in May 2009, and is responsible for reviewing the performance of the transport service providers to ensure the quality of the service for residents. As envisaged at appraisal, bus route licensing and ticket pricing reforms have been completed. 15. At appraisal, 25% of villages in the project area had no bus service. It envisaged that through improvements to the transport system, bus services would become available to 90% of villages by This indicator was revised during the midterm review to state that bus services would be provided to all nine counties, 100% of townships and 90% of administrative villages at completion. By 2016, 100% of townships and 90% of administrative villages in the project area had access to bus and/or mini-bus services as envisaged and by the end of 2017, 95% of all villages in Gansu had access to a bus service. 16. Output 5: Improvement of Corporate Governance. At appraisal, it was planned that corporate governance and efficiency would be improved by separating the policy and planning functions from the construction and operations and maintenance (O&M) functions for the project. Operations was removed from GCHC's business scope in 2006, as was maintenance in In 2009, GCHC became a company dedicated to the construction of high-class roads, including expressways, class I roads, and class II roads with pavement meeting the standard of expressways or class I roads. During the midterm review, targets for this output were revised to include technical innovation and investment. By 2016, GCHC had successfully (i) issued provisional regulations on procurement of construction materials to ensure transparency, economy, and quality of the materials;10f10 (ii) developed Guidelines on Standardization of Expressway Construction and an Operational Manual on Expressway Engineering;1F11 (iii) introduced a standardized management system from project preparation to procurement, construction management, pavement, subgrade, bridges and tunnels, experimenting and testing, and anti-corruption; (iv) increased efforts to economize on water, land, construction materials, and energy, and to reduce emissions through research and engineering design; (v) improved rules and regulations on construction quality control; (vi) attached greater importance to the assessment of environmental impact and mainstreaming of environmental considerations into the engineering design; (vi) delivered 100% of their investment targets; and (vi) made eight technical innovations.12f Output 6: Capacity Development. The international consulting service contract for construction supervision and capacity development was awarded in October The consultants were fielded in November 2009 and provided a total of person-months of services, 0.59 person-months more than envisaged. 18. An overseas training program for 33.5 person-months was developed and agreed with ADB in Training subjects included (i) project management and transport service management; (ii) operation of expressways and private sector participation; (iii) road transport 10 GCHC Provisional Regulations on Procurement of Construction Materials. Lanzhou. 11 GCHC Guidelines on Standardization of Expressway Construction. Lanzhou; GCHC Operational Manual on Expressway Engineering. Lanzhou. 12 Innovation included tunnel construction in mountainous areas, safety features, double-storey bridge construction, landslide hazard detection, seismic design, disaster prevention technology, construction materials and pavement.

15 information technology; (iv) construction and business management of roads, bridges, and tunnels; (v) logistic policy development and operation; (vi) construction supervision and quality control; and (vii) maintenance of expressways and rural roads. Initially, training was planned to be conducted in the US, Europe, and Australia from 2011 to However, due to the government's tightening policies, at project completion, only one study tour (six GPTD personnel, 10-day program) on project management and transport service management had been fielded to the US and Canada in December F13 Other training programs were canceled and the related ADB funding was reallocated to Output 2 to offset the increased costs of the Wudu Lixian road. C. Project Costs and Financing 19. The total project cost at appraisal was estimated at $1,660 million while the actual project cost was $2,275.1 million, a 37% increase in dollar terms. In local currency, the project cost increase was only 10%.14F14 These costs are shown in Table 2. The difference in the increase in dollar terms compared with CNY relates to the 24% appreciation of the yuan against the dollar during project implementation. Detailed project costs at appraisal versus completion are in Appendix 3. Table 2: Cost at Appraisal versus Cost at Completion Item Appraisal Completion Increase Appraisal Completion Increase $ (million) $ (million) % CNY (million) CNY (million) % Expressway 1, , , , Rural Roads Bus stations Contingencies n/a n/a n/a n/a n/a IDC , , Total 1, , , , CNY = yuan, IDC = interest during construction, n/a = not applicable. Source: Gansu Changda Highway Company Limited; Gansu Provincial Transport Department. 20. Cost increases for the expressway are attributable to (i) the appreciation of the yuan against the dollar; (ii) increases in the cost of equipment, labor, and materials post-earthquake; (iii) higher land acquisition and resettlement costs due to alignment changes and increases in compensation rates; (iv) increased environmental protection, including additional slope protection measures;15f15 (v) increased project management costs; and (vi) an increase in financing charges resulting from the use of additional domestic loans to finance a larger share of the project. 21. Six of the seven rural roads experienced only minor cost increases due to material and labor cost increases during implementation. Most of the cost increase for rural roads was for the Wudu Lixian road and is attributed to the entire road being upgraded to a class III road, rather than a combined class III and class IV. Other causes of the increase include (i) increases in equipment, material, and labor costs post-earthquake; (ii) improvements in design standards between 2006 and redesign approval in 2010 requiring additional safety and environmental features (para. 27); (iii) an alignment change made during detailed design to build a 507 m long bridge to reduce the risk of landslides and other geographic risks, improve water and soil conservation, and improve environmental protection; and (iv) increases in the cost of land acquisition and resettlement Following central government changes in policy, study tour travel was restricted. 14 Using exchange rate of $1 = CNY8.02 (rate in RRP) to convert the costs at appraisal in dollars into CNY. 15 Due to the delay in design approval, the national design standards had changed, requiring additional environmental protection measures be included in the final expressway design.

16 6 22. Bus stations and stops under Output 3 cost 32% less in dollar terms than at appraisal. This cost reduction was due to the change in scope (para. 9). 23. At appraisal, the $300 million ADB loan was to finance 18% of the total project cost. At project completion, ADB's financing represented 13.2% of the total project costs. Financing by the Gansu Provincial Government decreased substantially, representing only 1.4% of the final share of funding. At project completion, the Ministry of Transport (MOT)16F16 provided CNY2.169 billion (equivalent to $335.6 million) or 14.8% of project costs. Borrowing from banks to cover the additional project costs rose from $712.6 million, representing 43% of project costs, to $1,607.9 million representing 70.7% of project costs. This additional borrowing led to an increase in financing charges. The Bank of Communications was not able to arrange a syndicate of banks as planned and so a syndicated loan was arranged by the State Development Bank to provide most of the bank borrowed funds.17f17 The project costs, planned versus actual, is in Appendix 3, and the cost by financier is in Appendix 4. D. Disbursements 24. The final disbursement under the loan, for the Wudu Lixian road, was made in November 2015 and the loan reached financial closure 28 December By loan closure, $ million of the $300 million loan was disbursed, with loan savings of $ canceled at loan closing. The Gansu Provincial Transport Department (GPTD), the project executing agency, processed and prepared the withdrawal applications in accordance with ADB's Loan Disbursement Handbook, and overall disbursement was satisfactory. The first disbursement was made on a reimbursement basis in October 2010 and the final disbursement in November ADB s financing percentage of expressway civil works was increased twice to utilize loan savings, first from 28% to 54% in November 2010; and then to 61% in June Reallocation of loan proceeds was undertaken in October 2013, November 2014, and July 2015 from outputs 3 and 6 to cover financing shortfalls of outputs 1 and 2. The revised ADB loan allocation is in Appendix 5. E. Project Schedule 26. At appraisal, ADB expected that the loan would be signed in April 2007 and become effective on 31 July The project was to be implemented over 5 years, with the loan closing on 30 June The expressway was completed by December 2013, six of the seven rural roads were completed by 2010, the bus stations were completed by the end of 2016 and Wudu Lixian road was completed by September The ADB loan was extended twice, closing December 2015 (para. 24). The chronological events are in Appendix 6, and the implementation schedule planned versus actual is in Appendix The delay in the opening of the expressway is mostly explained by the earthquake and the complex geotechnical conditions, which posed challenges for the finalization of the alignment. GPTD submitted the preliminary expressway design to the MOT for approval in June However, the MOT did not approve the design until 15 May 2008, three days after the earthquake. Following the earthquake, new geological surveys were required, delaying the finalization of the detailed design. Further, national standards had been updated between the initial design in The Ministry of Transport was previously known as the Ministry of Communications. 17 According to the PRC government s requirements, a loan exceeding CNY3 billion needs to be provided by a syndicate of banks. The syndicate included the Industrial and Commercial Bank of China, Bank of Communication, China CITIC Bank, Bank of Agriculture, China Construction Bank, State Development Bank, Agriculture Development Bank, and was underwritten by the State Development Bank.

17 and redesign, in 2008, requiring additional environmental protection and road safety elements in the project outputs. After detailed design, the expressway was km, 3.68 km shorter than envisaged at appraisal, and part of the alignment was shifted by 200 m. Following design approval, the 23 subgrade civil works contracts were procured from 2009 to 2010, and civil works began in June 2009, 19 months behind schedule. 28. The Wudu Lixian road was completed in September 2016 instead of April The delay was due to (i) the need to redesign the alignment after the earthquake; (ii) failure of the first tender due to post-earthquake cost increase in labor, material, and equipment; (iii) the need to update and resubmit the design with revised standards and increased costs (para. 8), which was then reapproved in July 2012 by the Gansu Development and Reform Commission; and (iv) lengthy heavy rains throughout the construction period, which caused difficult geotechnical conditions and risk of landslides resulting in delayed construction progress. A second tender attempt was made in October 2012 with a revised budget almost 3.75 times higher than the original. The first batch of contracts was awarded in March 2013, with construction starting the following month and completed in September F. Implementation Arrangements 29. As envisaged at appraisal, GPTD was the executing agency, responsible for the overall implementation of the project. GCHC, a state-owned enterprise established in 2001, was the implementing agency for the expressway construction. The Longnan Transport Bureau (LNTB) implemented rural roads under the guidance of the GPHAB and GPTD. The Gansu Provincial Transport Administration Bureau implemented the bus station and transport service outputs under the guidance of GPTD. The organizational structure is in Appendix For the expressway, GCHC established a project management office to provide construction supervision and quality control, comprising the GPTD's representative, chief engineer, and international consultants. The project management office engaged 16 firms and established 20 resident offices to supervise project implementation. Each resident office and contractor appointed dedicated staff to oversee the environmental and safety aspects of the project. G. Technical Assistance 31. ADB financed a project preparatory technical assistance (TA) of $770,000 equivalent, on a grant basis from ADB's TA Special Fund under the Western Roads Development Project.18F18 The TA assessed the project's technical, environmental, financial, economic, social, and institutional feasibility, and helped the government strengthen institutional reforms related to roads. The TA started in August 2005, the final report for Southern Gansu Roads Project was submitted and found acceptable by ADB in May 2006, and the TA was completed in December F19 The TA produced the required outcome, and the subsequent loan processing was based on the TA findings and recommendations ADB Technical Assistance to the People s Republic of China for Preparing the Western Roads Development Project. Manila. 19 In 2007, a change in scope and extension of the TA was approved. This was to conduct a study to review existing expressway tolls and traffic diversion patterns, update the traffic diversion model, and determine optimum toll rates for Gansu and Sichuan Provinces, taking into account the current socioeconomic development in the PRC.

18 8 H. Consultant Recruitment and Procurement 32. ADB financed an international consultant contract to a total value of $1.7 million for project management, supervision, and training. At completion, consulting services to the value of $1.24 million were completed. The balance related to training, which was reduced in line with government tightening policies (para. 18). The international consultants were selected and engaged based on a full technical proposal, using the quality-and-cost-based selection method in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). Recruitment began in August 2008, the request for proposals was issued in April 2009 and the contract was signed in October The lengthy recruitment period was attributed to the desire for consultant mobilization to coincide with the start of construction. 33. The government financed domestic consultant contracts to the value of CNY357.6 million. The consultants were recruited in accordance with the PRC national procedures, which were acceptable to ADB. GCHC engaged 57 consulting firms or research institutes for the expressway to undertake the feasibility study and engineering design, environmental impact assessment, land acquisition and resettlement (LAR) planning, external monitoring of the environmental and social impacts, construction supervision, and expressway completion review and acceptance. LNTB also engaged seven firms to prepare the environmental impact assessment, feasibility study, and engineering design, and to supervise the construction of the Wudu Lixian road. It also engaged an individual to monitor and report on LAR implementation. 34. The performance of the consultants during construction was satisfactory. The ADBfinanced international consultants generally performed well, delivering high-quality outputs on time and establishing good working relationships with GPTD and GCHC. The national consultants provided a significant amount of services during project implementation, and GCHC was happy with the support provided in ensuring the quality of the project. 35. All ADB-financed procurement followed ADB's Procurement Guidelines (2007, as amended from time to time). ADB financed nine civil works contracts and 3 equipment contracts for the project expressway procured via the international competitive bidding (ICB) one stage one envelope bidding procedure. The two ADB-funded equipment packages envisaged at appraisal, testing and training and laboratory equipment, were not pursued as that equipment was procured under other projects. Instead, three packages of maintenance equipment were procured. There were no issues relating to procurement or contract processing timeframes for the expressway. 36. At appraisal, the Wudu Lixian road was divided into four contract packages, to a value of $16.1 million, to be financed by ADB. Procurement for the Wudu Lixian road failed in its first attempt (para. 28). After approval of the revised design and cost estimates, works were split into 15 smaller packages, of which ADB agreed to finance four to a value of $16.3 million (three for civil works and one for pavement and traffic safety facilities).20f20 Procurement of the four ADBfinanced packages followed ADB's national competitive bidding procedures. It took 7 months to procure the civil works packages and 6 months to procure the pavement and traffic safety facilities package. The other six rural roads were government financed and procured in accordance with the PRC national procedures. 37. At appraisal, ADB was to finance $5 million out of $10 million allocated to the provision of 200 township bus stations. When the scope was revised in 2009 (para. 9), ADB agreed to finance 24 of the township bus stations to a value of $1.1 million. In October 2013, the savings from this 20 Even after the revised increased budget was approved, the budget was still too low to attract the large contractors from outside of Gansu to the remote area. Packages had to be split to be manageable for local contractors.

19 output were reallocated to output 1. The actual contract awards are in Appendix 9. The contracts financed by ADB are in Appendix 10 and those financed by the government are in Appendix The performance of contractors and suppliers was satisfactory. The civil works were completed in accordance with specifications and applicable quality standards and in compliance with environmental and social safeguard requirements. The equipment for O&M was supplied, installed, and commissioned as scheduled. I. Safeguards 39. The project was classified as involuntary resettlement category A, including land acquisition, temporary land occupation, and demolition of houses, and category A for environment. 40. Land acquisition and resettlement. During project appraisal, two resettlement plans were prepared in accordance with ADB s Policy on Involuntary Resettlement (1995) and relevant PRC policies and regulations.21f21 The resettlement plans were updated based on final designs and detailed measurement surveys, approved by ADB, and disclosed to the affected persons. 41. The LAR for the expressway started in May 2009 and was completed by December For the Wudu Lixian road, demolition and resettlement started in June 2013 and was completed by December The permanent land acquisition was 7,305.2 mu at appraisal and 7,262.5 mu at completion, a decrease of 0.6%.2F22 For the expressway, 6,413.6 mu was acquired, a decrease of 1.7% from the planned 6,526.2 mu. For the Wudu Lixian road, mu was acquired, an increase of 9% from the planned 779 mu. House demolitions increased 28.7%, from 89,665.1 m 2 in the resettlement plan to 115,363.0 m 2 at completion. For the expressway, house demolitions were 31.8% higher than expected, 107,264.0 m 2 instead of 81,407.1 m 2. For the Wudu Lixian road, house demolitions were 8,099 m 2, a decrease of 1.9% compared to the planned 8,258 m 2 and 10,752 households were affected by the project, 1,029 more households than planned; however, 3,344 fewer people were affected compared to the 38,476 persons estimated in the resettlement plan. The total LAR cost was CNY579.7 million, 12.9% (or CNY55.23 million) higher than the estimated budget of CNY million in the final resettlement plans, most of which is attributed to higher compensation rates, which increased in line with the rising costs of labor and equipment post-earthquake. 42. Based on the monitoring and evaluation reports, project completion review (PCR) mission site visits, discussions with affected persons, and discussions with GPDOT, GCHC, and related county and city coordination offices (Lixian, Wenxian County, and Wudu), the LAR of the project was satisfactory. No complaints, grievances, or other concerns were noted, and the evaluation concluded that affected persons were better off than before the project. The evaluation of the LAR is in Appendix Environment. A summary environmental impact assessment (SEIA) and environmental management plan (EMP) was prepared by the GPTD with the help of TA consultants in line with ADB s Environmental Assessment Guidelines (2003)23F23 and Environment Policy (2002)24F24 and disclosed on the ADB website in May The SEIA concluded that the adverse environmental impacts of the project could be reduced to an acceptable level through the implementation of the EMP. During detailed engineering design, alignment changes in the expressway were made 9 21 ADB Policy on Involuntary Resettlement. Manila. 22 A mu is a Chinese unit of measurement (1 mu = square meters = 1/15 ha). 23 ADB Environmental Assessment Guidelines. Manila. 24 ADB Environment Policy. Manila.

20 10 mainly to improve safety and connectivity. Additional due diligence was carried out and confirmed that the revised alignment reduced (i) impacts from landslides, (ii) ecological impacts on natural reserves, (iii) disturbance to affected people, and (iv) impacts on land acquisition and housing demolition. 44. Annual environmental monitoring reports were prepared and submitted to ADB as agreed, detailing the progress made against the EMP. GCHC completed the domestic environmental completion technical review in accordance with the PRC laws and regulations, and it concluded that adverse environmental impacts were mitigated adequately throughout the project and no significant environmental damage occurred during construction. This report was publicly disclosed. 45. The environmental assessment was carried out based on the available information and data from environmental monitoring reports, due diligence reports, and environmental completion reports, discussions with relevant authorities, and site visits. Overall, implementation of the project environmental management was satisfactory. Specific plans for conservation, water, and soil protection were developed and implemented successfully. Good engineering practices incorporating environmental protection measures were implemented along the expressway and the Wudu Lixian road alignments. The PCR mission confirmed that there were no outstanding complaints or issues of non-compliance against relevant standards and regulations. 46. The PCR mission observed that a small section of the Wudu Lixian road was damaged by overloaded trucks from a nearby quarry, as well as landslide risks in the steep mountainous sections of the road despite significant measures taken by experts during both design and construction stages. The PCR mission was informed that repair and maintenance of the Wudu Lixian road, including additional greening measures, will be undertaken in 2018 to help reduce the risk of landslides. Recommendations regarding heavy vehicle use on the Wudu Lixian road to reduce road damage were also discussed (para. 68). The environmental impact analysis is in Appendix 13. J. Monitoring and Reporting 47. Of the 81 loan covenants, 68 were complied with, three were partly complied with, one is being complied with, five were not applicable, and four were no longer relevant. The covenant on corporate governance, which required GCHC to enter into a concession framework agreement for the O&M of the expressways and refinancing of road sector assets, is no longer relevant because of GCHC's revised business scope (para. 16). The financial covenants are also no longer relevant as GCHC does not incur debt and does not have operating expenditure or revenue. Covenants partly complied with relate to the delay in submission of some progress reports. The status of compliance with the covenants in the loan and project agreements are in Appendix The GPTD engaged Tongji University as the external body to undertake baseline, resettlement, and social development monitoring. The GCHC engaged Longnan Environmental Monitoring Station for external monitoring and assessment of environmental impacts during construction. Monitoring, assessment, and project performance reports all provided adequate information and data on environmental, socioeconomic, social, and sector development indicators, and no significant issues were identified. Audited accounts and financial statements were submitted to ADB as required and the auditor raised no significant issues.

21 11 III. EVALUATION OF PERFORMANCE A. Relevance 49. The project is rated highly relevant. The project completed one of the missing links of the NTHS, improved rural roads and the availability, affordability, and efficiency of the transport system in an isolated region of western PRC. At appraisal, the project was fully aligned with both the government's Western Regional Development Strategy25F25 and ADB's operational priorities. At completion the project is still highly relevant, aligned to the priority to improve inclusive economic growth through reducing regional and rural-urban disparities.26f26 The provision of all-weather roads and affordable transport services to the townships and villages has significantly improved rural mobility and reduced poverty in the region. The nature of transport has changed significantly during project implementation, particularly with the evolution of on-demand transport and ride share services. Scope changes to the bus station output improved the relevance of the design, reducing the number of large stations and resulting in a more flexible transport system. The project also included innovative design features in seismic design and hazard detection, which enhanced project outcomes (para. 16). Further, the GPTD and the LNTB have successfully adapted bus stations, bus stops, and transport plans to serve multiple purposes and meet the changing demands of the communities, further increasing relevance. B. Effectiveness 50. The project was highly effective in achieving its stated outcome: to improve transport conditions and services in Longnan municipality. The expressway, rural roads, bus stations, and bus stops were effectively delivered to a high quality of construction. The successful completion of the expressway has reduced travel time between Wudu and Guanzigou from 8 hours to 1.5 hours. At completion, it was calculated that vehicle operating costs per km were reduced from CNY 2.70 to CNY1.75, better than the CNY1.93 estimated at appraisal. Bus services have been successfully established to all villages in the project area, and implementation of the transport action plan, road safety features, and road safety training have improved the availability and quality of transport services in the project area. The project was successfully implemented without any environmental or safeguard issues. 51. The seven rural roads provide crucial all-weather road access to administrative villages in the project area. Prior to construction of the Wudu Lixian road, residents only had a 1 m wide path and relied on donkeys to transport farm produce to markets. Produce can now be sent to market on trucks, resulting in time savings and the ability to transport more product, enabling farmers to increase their productivity. The improvements to the roads and transport services have delivered crucial connectivity to poor areas, increasing rural incomes (from CNY1,780 in 2007 to CNY5,405 in 2015) and reducing poverty in the project area. For residents in the mountainous section of the Wudu Lixian road, travel to Wudu has reduced from one day to 1 hour, greatly increasing their mobility. C. Efficiency 52. The project was less than efficient in achieving its intended outcome and outputs. This is attributed to the low weighted average traffic across the entire project expressway and, to a lesser extent, the increase in project costs. Despite lower than expected numbers, traffic grew 40% from 2014 to 2015, and 17% from 2015 to 2016 and is expected to reach adequate traffic levels that suit project design over the medium-term. Although there were delays in project completion, the 25 See footnote ADB Transforming Partnership: People s Republic of China and Asian Development Bank,

22 12 majority resulted from unforeseeable circumstances, such as the 2008 earthquake and heavy rains during construction. Further, despite these delays, project implementation was reasonably efficient and delivered the envisaged project outcome. 53. Traffic forecast. About 5,225 passenger car units (PCU) per day made use of a section of the expressway in the first year of operations and 9,151 PCU in the second year of operations. However, a significant portion of these vehicles consists of local traffic, using only a short section of the expressway. The average annual daily traffic for the project expressway at completion, i.e., the equivalent traffic traveling the entire project expressway length, was 1,800 PCU, below the estimate at appraisal of 5,500 PCU.27F27 The opening of two connecting highways is expected to increase traffic on the expressway significantly: (i) Wudu to Weiyuan expressway in 2020, linking Wudu to Lanzhou, the capital of Gansu province; and (ii) Wudu to Juizhaigou expressway in Jiuzhaigou is one of the top 10 tourist destinations in the PRC, and vehicles from both the north and south using the new expressway to Juizhaigou will travel along the project expressway. 54. Economic reevaluation. The economic viability of the project was reevaluated based on the updated traffic data and forecast, actual project investment, and operation cost. The reevaluated economic internal rate of return (EIRR) of the project is 6%, below the EIRR estimate at appraisal of 17.9%. However, both travel times and vehicle operating costs have reduced substantially demonstrating the benefit of the expressway. Further, local use of the expressway is high, and Longnan GDP has grown more than 8% per annum in , demonstrating the wider economic benefits and the important local function of the project. The economic reevaluation is in Appendix 15. D. Sustainability 55. The project is rated as likely sustainable as the project outcomes and outputs are likely to be maintained throughout the economic life of the project. All project components are well designed, and the quality of construction is satisfactory. The GPHAB is responsible for maintaining all of the expressways in Gansu, including the project expressway, and has extensive experience. The GPHAB receives funding from fuel taxes and expressway toll revenue allocations. Its funding allocation for maintenance activities has increased from CNY463 million in 2012 to CNY1.32 billion in 2016, or by 186% in the 5-year period. For rural roads, the government introduced a fuel tax reform in 2009 establishing a stable funding source for rural road O&M. Both the GPHAB and the LNTB receive adequate funding to maintain the project expressway, rural roads, and bus stations. This funding allocation is likely to increase as the government continues to pursue the Western Development Strategy.28F28 The project also included the development of asset management databases and maintenance plans, enhancing the maintenance capacity and sustainability of the project (Appendix 2). Given the government s continued commitment to developing the western region, the stable funding allocations for maintenance works, and the commitment of both the GPHAB and the LNTB to proactive maintenance, it is reasonable to expect the sustainability of the project outputs. 56. Financial reevaluation. At appraisal, it was envisaged the GCHC would operate and maintain the expressway and a financial internal rate of return (FIRR) was calculated. However, the FIRR is no longer relevant as an assessment of sustainability, because at completion there is no direct link between toll revenue collection and O&M, and the GCHC does not earn revenue or incur debt (para. 16). As such, no FIRR was calculated at completion. The provincial government has guaranteed both the domestic bank loans and the ADB loan and timely debt repayment is expected. The financial reevaluation is in Appendix The annual average daily vehicle km for 2017 is approximately 234,576 km. 28 See footnote 1.

23 13 E. Development Impact 57. The impact of the project is rated as highly satisfactory. The improved connectivity has provided better mobility for previously isolated residents and increased access to (i) markets for agricultural and industrial products; (ii) employment opportunities; and (iii) schools, hospitals, and other social services. This has resulted in significant contributions to local economic growth and poverty reduction. The poverty incidence in Longnan fell from 42% at appraisal,29f29 to 20.5% in F30 From 2007 to 2015, both GDP and per capita income exceeded 8% growth per annum. The net per capita income of rural farmers increased from CNY1,780 in 2007 to CNY5,405 in 2015, and per capita GDP increased from CNY3,782 in 2007 to CNY11,982 in 2015, demonstrating overall economic growth in the area and the positive socioeconomic impact of the project. Freight costs in the project area fell from CNY0.78 per ton per kilometer in 2007 to CNY0.65 per ton per kilometer in As of 2017, the rural roads benefit 3,201 administrative villages, 1.8 million people, who now also benefit from access to a regular bus service. The average travel time from the administrative villages to Longnan reduced from 5 hours in 2007 to 3 hours in 2015, and this has improved resident mobility as evidenced by the increased number of trips taken. Produce from farmers in the villages is now collected by truck and the farmers have increased productivity and yields as the improved transportation to market has enabled them to sell more produce. The social impact analysis is included in Appendix 17. F. Performance of the Borrower and the Executing Agency 58. The performance of the borrower (the Ministry of Finance) and the executing agency (GPTD) were rated satisfactory. Project management during the preparation and implementation phases was efficient and effective. The GCHC (the implementing agency) had previously administered an ADB loan and was familiar with ADB's policies and procedures and was able to manage project implementation effectively. 59. Given the complexities of the resettlement, the geological environment, and the unforeseen circumstances of the 2008 earthquake, implementation was reasonably efficient despite some delays in project completion. The project was implemented in accordance with the arrangements envisaged at appraisal. A systematic project management system was put in place to ensure the effective use of funds and the borrower and the GCHC were able to obtain additional counterpart financing to meet the shortfall resulting from the increased project costs. Domestic funds were mobilized on time, withdrawal applications were submitted in a timely manner, and contractors were paid on time. The LAR was completed on time and to the satisfaction of affected people. Although there were some minor disputes regarding land acquisition and house area, they were all resolved at the village or township level in a timely manner. After construction, quarterly progress reports were not always submitted in a timely manner and the quality of reports was below standard. However, through close communication, ADB was able to get all required information. GCHC's technical capacity was strong, but their capacity to monitor and measure social impact was limited. Overall, the GCHC managed the project satisfactorily. G. Performance of the Asian Development Bank 60. ADB's performance was rated satisfactory. The project was administered and supervised from ADB headquarters. During implementation, ADB fielded missions once a year, was in frequent communications with the GPTD and the GCHC, and helped identify potential problems and resolve issues. During the midterm review mission in June 2011 and throughout 29 See para During project implementation, the national poverty line standard was changed. The national poverty line per capita was raised from CNY1,274 to CNY2,300 in The 2011 poverty line is the current standard.

24 14 implementation, ADB provided useful guidance on the environment and resettlement monitoring and reporting, procurement, and disbursement issues. ADB mobilized additional national environment staff consultants to support the GCHC in the preparation of an environmental due diligence report as required. ADB's timely approval of bidding documents, bid evaluation reports, loan reallocation requests, and extensions of the completion date, contributed to the smooth and successful implementation of the project. Withdrawal applications were processed efficiently and loan funds were disbursed on time. Both the GPTD and the GCHC were satisfied with ADB's performance. H. Overall Assessment 61. Overall, the project is rated successful. The project formulation and design were highly relevant to both the Government of the PRC and ADB's development strategies. The project outcome was achieved, and the rural roads and improved public transportation complement the expressway in bringing benefits to rural residents. Although the project was less than efficient, the infrastructure outputs were delivered effectively. The implementation arrangements were effective, environmental mitigation measures were satisfactory, and the LAR was implemented to the satisfaction of the affected persons. The project facilities are likely to be effectively operated and adequately maintained and, therefore, sustainable. The project supported economic growth and poverty reduction in southern Gansu and the project area through significant improvements to the transport system. Overall Ratings Criteria Relevance Effectiveness Efficiency Sustainability Overall Assessment Development impact Borrower and executing agency performance Performance of Asian Development Bank Source: Asian Development Bank. Rating Highly relevant Highly effective Less than efficient Likely sustainable Successful Highly satisfactory Satisfactory Satisfactory A. Issues and Lessons IV. ISSUES, LESSONS, AND RECOMMENDATIONS 62. The project was undertaken in one of the most complex geotechnical terrains in the PRC. The GCHC, supported by the GPTD, undertook several technical research and development studies during detailed design of the expressway to address the project s challenging geotechnical conditions. Application of these studies resulted in the PRC s first two-storey road bridge, reduction of landslide risk and reduction of the overall environmental impact. However, the original project schedule did not adequately consider the complexity of the project location in terms of isolation, terrain, and climate. Although most delays were from the earthquake, additional studies and surveys before final design may have resulted in a more accurate project schedule. 63. Jobs for women during construction were envisioned at appraisal; however, the nature of the work was mostly unsuitable for women (Appendix 17). Surveys undertaken during project preparation should aim to understand the interest of women in the type of work the project is likely to generate and identify potential barriers. This will lead to more appropriate gender employment targets and encourage the inclusion of project features that enhance female participation.

25 64. The project was undertaken over a long period, during which on-demand transport services significantly increased, reducing the demand for traditional bus services and replacing it with the need for more flexible, on-demand mini-bus services. The provision of 30 bus stations and smaller stops, rather than 200 stations, and the encouragement of mixed-use stations is a sign of the government s commitment to ensuring the project is relevant to the community. This type of flexibility will increase in importance as the rate of change of transport technology and services increases. Another lesson is that multi-purpose buildings are a more efficient use of resources, particularly in rural areas. B. Recommendations 65. Future monitoring. The covenant on the project performance monitoring requires that the project impact be monitored 3 years after completion and a report summarizing the key findings be submitted to ADB. As the rural roads and bus stations were not completed until 2016, these reports, including progress of the indicators in the DMF, should continue to be submitted to ADB until Further action or follow-up. The government's acceptance of the expressway is expected to take place by end The GCHC should submit to ADB a report by Quarter I 2019 on the government's acceptance including the process, organizations involved, aspects assessed, and conclusions. Acceptance for the rural roads should also be provided to ADB when received by GPTD. 67. Timing of the project performance evaluation report. If the Independent Evaluation Department opts to prepare a project performance evaluation report, the appropriate timing for preparing this report would be any time after the GPTD formally receives government acceptance of the expressway and the rural roads. 68. General. Government officials should be encouraged to develop and enforce policies and/or penalties for vehicle overloading to reduce damage and ensure the sustainability of rural roads (para. 46). Possibilities that may be explored by relevant authorities include, but are not limited to, penalties or road-use agreements, through which the quarrying or trucking companies are designated responsibility for the maintenance and repair of the sections of road they use. 69. The Wudu Lixian road was added to the national highway network in 2013 and, though no date has yet been proposed, the road, or sections of the road, will be upgraded from Class III to Class II. It is recommended that prior to the upgrade, the surrounding land use be surveyed and a section of the road be designed and constructed for heavy vehicle use. 70. The use of performance-based contracts with residents for rural road maintenance should be encouraged to reduce the administrative burden for the local transport bureau and increased income for the residents along the road. Training of local transport bureau staff and the adoption of lessons learned from other provinces who have benefitted from the use of such contracts are recommended. 71. The PCR mission recommended that government officials encourage residents to use the bus stops as intended to increase their safety. Officials, including the traffic police, should undertake activities such as regulation and enforcement of bus drivers mandatory use of the bus stops, public education and safety campaigns, and other policies and training including lessons learned from other counties on how to improve the use of bus stops. 15

26 16 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Sustainable economic growth and poverty reduction in Gansu province and the project area Performance Targets and Indicators At Mid-Term Review At Completion Gross domestic product (GDP) is forecast to increase per annum by 7% to 8% for Gansu and 8% to 9% for the project area during GDP growth rate for Gansu: 2010: 11.8% 2011: 12.5% 2012: 10.9% 2013: 12.1% 2014: 8.9% 2015: 8.1% 2016: 7.6% GDP growth rate for Longnan: 2010: 11.8% 2011: 12.5% 2012: 13.1% 2013: 11.5% 2014: 9.0% 2015: 11.0% 2016: 8.4% Outcome Transport conditions and services are improved in Longnan municipality Per capita rural income in the project area will increase from CNY1,300 in 2005 to CNY2,500 in 2015 Poverty incidence in the project area is reduced from 37% in 2005 to 16% in 2015 a Trade within and between Gansu and Sichuan is forecast to increase Traffic volume on the expressway increased from 5,500 passenger car units (PCU) in 2012 to 6,344 pcu in 2014 Vehicle operating costs for a car reduced from CNY2.70 per vehicle-km without the Project to CNY1.93 with the Project in 2014 Bus services provided to all 9 counties, 100% townships, and 90% administrative villages by 2014 Per capita rural income in Longnan increased to CNY4,024 in 2014 and CNY 5,404 in 2015 Poverty incidence in Longnan was 20.1% in 2015 b No statistics Traffic volume on the expressway was 5, 225 PCU in 2014, 9,151 pcu in 2015 and 11,270 in 2016 Travel time reduced by 6.5 hours from 8 to 1.5 hours Vehicle operating costs for a car is calculated as CNY1.75 per vehicle-km Bus services provided to all 9 counties, 97.4% townships, and 77% administrative villages in 2014; 98% townships and 85% administrative villages in

27 Appendix 1 17 Design Summary Performance Targets and Indicators At Mid-Term Review At Completion 2015 and 100% townships and 90% administrative villages by 2016 Outputs 1. Wudu Guanzigou Expressway constructed 2. Seven local roads upgraded in the project area 3. Additional rural bus stations/ stops provided in the project area 4. Regulatory framework for bus service provision improved in the project areas Bus passengers increased by 1.5 times by km expressway with design speed of 80 km/hour, road width of 24.5 m, and four lanes in two directions constructed by 2013 Greening and landscaping completed by 2013 Equipment for road maintenance and safety procured by 2013 Traffic management facilities and toll collection, monitoring and communication systems installed by 2013 Adverse environmental and social impact mitigated by 2013 About 100,000 jobs created during construction 357 km of local roads with safety signs and markings upgraded by township bus stations and 1,500 village bus stops completed by 2013 Market entry conditions eased by streamlining administrative procedures and replacement of licensing system with the registration system by 2010 Bus passengers increased by 2.98 times during 2010 to km expressway with design speed of 80 km/hour with subgrade road width of 24.5 m, and four lanes in two directions completed and opened to traffic in Dec 2013 Completed in 2013 Equipment procured in 2012 Facilities installed by 2013 Mitigation completed in ,000 people per day, or 1,800,000 person-days of local labor per year for the expressway, throughout the construction period 216 km upgraded by 2010, and km upgraded by September ,500 bus stops were completed by 2009, 24 bus stations completed by 2013, and 6 bus stations completed between 2014 and 2016 Achieved by 2013, and has undergone annual continuous improvement and streamlining

28 18 Appendix 1 Design Summary Performance Targets and Indicators At Mid-Term Review At Completion Bus fare adjustment responding Bus fare allowed to adjust freely to market allowed for village within a range set by the service operators by 2010 government since GCHC corporate governance improved 6. Capacity enhanced for transport and logistics development, construction supervision, road safety and project management Service performance standards defined in licenses by 2010 Small service providers consolidated into stronger ones in terms of service quality and safety by 2010 Annual investment of CNY4 billion to CNY5 billion from 2007 to 2013 Eight technical innovations on investment and energy saving, construction safety, and earthquake resistance made by Policy, engineering design, and construction supervision philosophy improved to incorporate social and environmental considerations and considerations of resource optimization by Service performance standards defined in licenses since 2007 Consolidation since 2007 into 2 major service providers Investment in 2011: CNY 7.60 billion in 2012: CNY10.30 billion in 2013: CNY 8.57 billion in 2014: CNY 3.98 billion in 2015: CNY 4.30 billion in 2016: CNY 7.50 billion in 2017: CNY 9.10 billion Science and research subjects were completed. 1 was completed in 2012, 3 in 2013, 2 in 2014 and 2 in Social and environmental considerations and emission reduction mainstreamed in the engineering design and construction supervision. Water, land, construction materials, and energy were economized. a 37% is the straight average of rural poverty incidence at appraisal: 42% in Longnan, 29% in Tianshui and 39% in Dingxi. b 20.1% is the straight average of rural poverty incidence at completion: 20.5% in Longnan, 19% in Tianshui and 20.7% in Dingxi. Source: Asian Development Bank.

29 Appendix 2 19 SPECIAL FEATURES OF THE PROJECT A. Introduction 1. While the main investment financed by the project was construction of the Wudu Guanzigou Expressway, several special features were included in the project design to enhance the impact and benefits in the project area and accelerate institutional and policy reforms to improve road maintenance practices, road transport services, and corporate governance. These special features focused on (i) rural road improvement program for poverty reduction, selected on the basis of road network efficiency, economic potential, poverty incidence and population density; (ii) improving rural transport services to enable more reliable, affordable, convenient and safe transport for local residents; (iii) rural road maintenance reform and the development of a sustainable rural road maintenance plan; (iv) tendering for road maintenance, encouraging private sector participation to encourage improved maintenance operations; (v) adopting an intelligent transport system for improved tolling, vehicle monitoring, safety, maintenance, traffic management, weather and other warning systems; and (iv) development of a computerized asset management data base and system. The project also included policy dialogue on (i) promoting road safety and (ii) controlling vehicle emissions. Of the $300 million Asian Development Bank loan, $39.2 million was committed to five of these features. During project implementation, the total allocation to the special features was $100 million for two of the features. 2. At project completion, these special features varied in achievement. This is attributable to the following factors: (i) limited financial support under the project; (ii) the success of many of the features required financing commitments from the government, which proved difficult to secure, particularly for the policy-oriented special features; (iii) design of these features required greater planning and consideration for successful implementation; and (iv) limited political influence and motivation at the lower levels of government. Table A2.1 shows the proposed activities specified at appraisal, financing allocations, and the notable achievements attained by the end of the project. Table A2.1: Summary of the Special Features Proposed Activities and Achievements Proposed Activity and Financing Actual Achievements and Financing Assessment I. Enhance accessibility to low-income areas (Output 2) $29.2 million CNY233.8 million Upgrading seven rural road sections totaling 357 kilometers (km) from unclassified to class IV or III roads to $93.2 million CNY million In total, km of rural road sections were upgraded: Wudu Lixian ( km) Better connections between the expressway and rural roads have enabled more agricultural products to reach markets and allowed facilitate minimum connectivity of the Sijaba Changheba (47 km) farmers to increase yields. As core rural road network for each Baihegou Wangguan (49 km) reliable transport to markets has township to a nearby main road. Zhaojiaba Tianchi (28 km) become more readily available, Chengxian Er lang (23 km) farming in remote or isolated areas Honghe Kuanchuan (36 km) has been stimulated and yields have increased. Access to off-farm Yangba Ganjiangba (33 km) employment opportunities has also broadened. The alignment for Wudu Lixian was adjusted during implementation, resulting in an additional 0.42 km compared to appraisal. Wudu Lixian and Baihegou Wangguan were also upgraded to class III along the whole alignment compared to the planned combination of class IV and class III. Interviews were conducted with residents along Wudu Lixian. The residents are extremely positive, citing that the access before was inadequate and only a ~1 meter (m) wide dirt track limiting access to foot, motorbikes or donkey-drawn carts resulting in high transportation costs to market. The farmers produce is now collected by truck

30 20 Appendix 2 Proposed Activity and Financing Actual Achievements and Financing II. Improve rural transport services (Outputs 3 & 4) Pilot testing a road transport action plan in Longnan Financing not allocated Pilot testing of some of the recommendations from the action plan prepared under TA 4351-PRC: Policy Reform in Road Transport to improve its efficiency, such as easing the rules that confine bused to individual routes and fixed schedules, thereby reducing the potential for improved productivity, and allowing cost savings to be passed on to road users as lower fares. LNTB has developed and implemented the following measures under the transport action plan: (i) experimenting on replacing licensing with registration system, (ii) allowing village transport service providers to adjust bus fares within a certain range responding to the market demand, (iii) helping establish transport associations, (iv) consolidating small service providers into stronger companies with private investment, and (v) adding road safety facilities such as guardrails, speed deflators, road signs or warnings and treating black spots for 6,400 km roads. Longnan Transport Association was established in May It reviews performance of the transport service providers in terms of meeting the quality and safety standards every five years. Those who do not meet triple A standard will be required to improve and may face loss of license in case of failure in raising to the standard. Bus stations $10 million CNY80.2 million $6.8 million CNY43.9 million Provide a more reliable, safe, convenient and regular bus service to local residents. Construct 200 bus stations (Longnan: 100; Tianshui: 50; Dingxi: 50). Local communities will be encouraged to actively participate in planning, implementation and monitoring. Local communities that invest in the bus stations will have priority in running the business and getting its profits. The bus stations will be constructed in tandem with the upgrading of the local roads to ensure efficient provision of services when the local roads are completed. Under the project, 30 bus stations and 1,500 bus stops were constructed: Longnan: 781 bus stops, 7 bus stations Tianshui: 601 bus stops Dingxi: 118 bus stops, 23 bus stations Since the bus stations were constructed, the government has encouraged mixed-use of the buildings to be combined with local level public services. The majority of the bus stations have been combined with other public services such as police stations, transport bureau offices, health centers, and/or tourism information centers. Some stations are being rented to private businesses. Of the 30 bus stations, the uses are: Bus stations only (3) Combined with local health Assessment and the farmers are able to increase productivity and yields because the transportation to market has greatly improved, enabling them to sell more produce. Transport services by bus or minibus are readily available along the rural roads and have increased access to markets, schools, health services and towns for employment opportunities. Local government is making it easier for providers to enter the market; however, private operators must operate under the umbrella of a company. It is noted that the transport services decline over the winter months as the road conditions become more challenging because of ice and snow; however, during the rest of the year the transport services are considered sufficient and affordable. Fares reported in Kang County, Longnan were: (i) CNY3.5 for a bus to the township 13 km away, and (ii) CNY55 for a bus to a neighboring county 185 km away. The conversion of the bus stations to multiuse buildings enhances the sustainability of the bus stations and also provides much-needed office space for the local level public services. The bus stops cannot be considered sustainable as envisioned. Safety of the bus passengers is a concern, as passengers flag down buses on the road side rather than using the designated stops which would improve their safety. The provision of bus stop infrastructure without the inclusion of user behavior activities, such as public education and safety campaigns, policies and regulations for bus drivers, legislation and enforcement on the use of designated stops and other

31 Appendix 2 21 Proposed Activity and Financing III. Rural road maintenance reform Sustainable rural road maintenance Financing not allocated During project preparation, a rural road maintenance plan was prepared and agreed with GPTD to strengthen the sustainability of the rural network in the project area. The plan aimed to (i) develop a core road network for establishing a road maintenance management system, (ii) compile condition data, (iii) enhance road safety facilities, and (iv) promote preventive maintenance. Actual Achievements and Financing centers (5) Combined with transport bureau offices and/or police station (7) Combined with highway maintenance centers (6) Combined with tourist information center (1) Combined with private businesses (7) Inspection station for overloaded trucks (1) The bus stops were constructed by 2009 and have experienced variable use since. In many cases, the stops are underused or have been converted to other uses (e.g. covered motorcycle parking, covered mahjong playing areas, etc.). This is largely because the needs of the public have changed and on-demand transport options have increased. It has become much easier to book a minibus to pick up passengers outside their homes, and buses are increasingly stopping as they are flagged, rather than at designated stops. In some cases, the bus stops are used as envisioned because they are located at the junction of a rural road and a township road, or at a shop or other place of key community interest. In Lixian county, the local officials have encouraged local residents to use the bus stops by adding community bulletin boards thereby attracting the residents to the bus stops. Prior to project completion, GPHAB developed a computerized road database of basic information including construction year, length and class of road. Starting in 2014, condition data of each road is managed by the relevant local transport bureaus which plan maintenance programs annually based on the road conditions and traffic. Major maintenance is reported back to GPHAB. Regular training is provided for maintenance staff through all levels of government (i.e. provincial, prefecture and county level) for all road classes. LNTB is in the process of developing a computerized database in 2018 in partnership with Shandong province. Assessment policies and training, resulted in a less than sustainable outcome for bus stop infrastructure. Further, the rise in the provision of on-demand and door-to-door transport services has changed the demand for bus services effecting the demand for rigid bus stop infrastructure. However, the converted uses of many of them is encouraging; the communities have identified different needs which are being met by converting the bus stops. The computerized database is limited to basic information and not condition data, as was envisaged. There are no plans for GPHAB to disseminate a computerized database to lower levels of government. However, each local transport bureau develops their own databases for condition data and maintenance, and with training received from GPHAB, best practice preventative maintenance practices are being achieved. LNTB s dedication to building a computerized asset management database shows their commitment to leading practice asset management and maintenance practices.

32 22 Appendix 2 Proposed Activity and Financing Actual Achievements and Financing Assessment Tendering for road maintenance (Output 6) $50,000 (equivalent to 2 personmonths of consultant time) reallocated Financing cancelled and The project was to develop standard bidding documents for procurement of performance-based road maintenance contracts with the help of international consultants and conduct a training program to subnetwork maintenance managers during the project. IV. Adopt an intelligent transport system (ITS) Develop and implement an ITS action plan Financing not allocated An action plan was developed and was to be implemented with the help of consultants. The ITS features of the project include: (i) one traffic control subcenter connected to the main provincial traffic control center for all expressways, (ii) advanced toll payment system, (iii) variable message displays to provide road users with information about speeding and enforcement, (iv) emergency telephones and surveillance technology, (v) detection of black spot locations and property damage, (vi) monitoring of speed limits congestion and overloaded vehicles, and (vii) coordination of emergency service agencies. Financing was reduced to 1 personmonth at loan inception and the Road Maintenance Consultant was cancelled in April Performance-based road maintenance contracting is common for national/provincial highways. In 2017, Gansu province began encouraging performance-based road maintenance contracts for all other categories of roads for major maintenance; i.e. any road that reach a threshold amount of maintenance costs are required to participate in performance-based road maintenance contracting. The local roads upgraded under the project are currently maintained directly by the local transport administration bureaus. The ITS features of the project have been implemented on the expressway, as envisaged. Provide international training on ITS $66,000 A one-month international training The training was not provided. It was program was to be provided to 6 originally part of the overseas study persons. tour training program but because of tightened government restrictions, only one study tour was fielded, and the other study tours were cancelled. V. Prepare and implement an asset management plan Prepare a plan to establish a computerized system Financing not allocated Prepare an asset management plan, with the assistance of consultants The asset management plan was submitted to ADB on 31 July The local transport administration bureaus are encouraged to explore performance-based rural road maintenance contracting for routine maintenance, i.e. establishing maintenance groups of residents along each road to perform regular routine maintenance. Other ADB projects including Loan 3217-PRC: Yunnan Pu er Regional Integrated Road Network Development Project; and TA 7673-PRC: Community-Based Rural Road Maintenance by Women Ethnic Minority Groups; have piloted approaches which could serve as models for implementation of performancebased rural road maintenance in the project area. The ITS system established is adequate. The lack of training on ITS does not appear to have had any effect on the project. The ITS system is advanced and operating as expected. The asset management plan was prepared as envisioned and a

33 Appendix 2 23 Proposed Activity and Financing engaged under the project, which will establish a computerized database system and promote the use of modern equipment. Actual Achievements and Financing The computerized database system was established prior to project completion by GPHAB. Road asset management training program Financing not allocated Develop a training program to Trainings are provided at least two or enhance the road asset three times every year by both management skills of provincial and GPHAB and GPEAB to prefecture local government staff to ensure level including new technical sustainability of the operation of procedures, use of software, etc. expressway and local roads. VI. Road safety Promoting road safety Financing not allocated The project was to: (i) establish an inter-agency road safety committee in Gansu to facilitate project implementation; (ii) ensure, in collaboration with Gansu Public Security Bureau, a team of bureau personnel will patrol the project roads; (iii) adopt specific safety facilities, such as emergency stop lanes, reinforced pavement in tunnels, and reinforced traffic signaling; (iv) conduct independent road safety audits during design, construction and before start of operation; (v) install axle-weighing stations at expressway entrances; (vi) establish a traffic surveillance center to monitor operations; and (vii) raise public awareness and disseminate road safety knowledge by linking the GPTD website with the ADB road safety website. Road safety is promoted as envisaged. The inter-agency road safety committee consists of six agencies: GPEAB, the Highway Traffic Patrol, GPHAB, the Highway Accident Response Unit, the Medical Emergency Response Unit, and the Fire Department. The road safety audit was done by the China Transport No.1 Road Survey and Design Institute at preliminary engineering design stage. A monitoring and surveillance system has been established, and the expressway is monitored 24 hours. Tunnels longer than 120 m are under surveillance by the traffic surveillance center. Rescue teams can arrive within 30 minutes. The safety management and operation system is regularly updated. Road safety audit and risk management plan (Output 1) $50,000 (equivalent to 2 personmonths of consultant time) month of consultant time) $25,000 (equivalent to 1 person- Conduct a road safety audit and Financing was reduced to 1 personmonth at loan inception. The develop a risk management plan to cover areas of safety concern during contracted international consultant construction, especially construction withdrew from the project in July 2012 of bridges and tunnels, and develop and was replaced by the team leader a risk management plan to cover at that time. safety concern prior to opening of the expressway, and recommend additional traffic engineering, particularly for lighting, hazard barriers, signage, and marking. Assessment computerized database was established. However, it is not clear if the database followed the asset management plan or if it was independently established. The road asset management training programs are adequate. Road safety management on the expressway is adequate. The road safety audit and risk management plan implemented during the project was adequate. ADB = Asian Development Bank, GEPB = Gansu Environmental Protection Bureau, GPEAB = Gansu Provincial Expressway Administration Bureau, GPHAB = Gansu Provincial Highway Administration Bureau, GPTD = Gansu Provincial Transport Department, ITS = intelligent transport system, km = kilometer, LNTB = Longnan Transport Bureau, m = meter. Source: Project completion review mission; meetings with GPHAB, GPEAB, Gansu Provincial Transport Administration Bureau, Gansu Changda Highway Company Ltd., and relevant local government officials.

34 24 Appendix 2 B. Conclusion 3. Some of the special features were not allocated sufficient financing to support implementation or were not adequately formulated. This was particularly true for the rural transport and maintenance reforms, which involve considerable institutional change and often require specific central government interventions and significant budget allocations in order to develop and implement targeted reform strategies. Further, the planning and design of the bus stops proved to be inadequately formulated, although the measures to replace some bus stations with bus stops reduced the construction of unnecessary infrastructure. The outcome of the bus stops would be improved, and passenger safety enhanced, through education and enforcement of the use of the designated bus stops. However, the fact that the government and communities have found alternative uses for the infrastructure has demonstrated flexibility and has still resulted in a beneficial outcome for the community. Other special features were largely successful. Those features which were closely aligned to specific government strategies, such as the promotion of road safety, improvement of road safety design and the transport plan, were successful regardless of funding allocation. Overall, the special features did enhance the development impact of the project, though improvements could have been made to allocate sufficient funding to each feature up-front in project design, particularly those features that were stand-alone in nature rather than part of larger government transport strategies, to ensure their success.

35 Appendix 3 25 PROJECT COST AT APPRAISAL AND ACTUAL ($ million) Item At Appraisal At Completion Amount Amount A. Base Costs 1. Expressway Civil Works 1, , Equipment Land Acquisition and Resettlement Consulting Services, Training, and Project Management Rural Roads and Township Bus Stations Subtotal (A) 1, ,918.4 B. Contingencies C. Financing Charges during Construction Total (A+B+C) 1, ,275.2 Source: Asian Development Bank estimates.

36 26 Appendix 4 PROJECT COST BY FINANCIER Table A4.1: Project Cost at Appraisal by Financier ($ million) Item Cost ADB % of Cost BOC % of Cost Government % of Cost A. Base Cost a 1. Earthwork Pavement Structures Tunnels Interchanges Buildings and roadside facilities Environmental protection and landscaping Expressway civil works 1, Tunnel equipment Safety and maintenance equipment Land acquisition and resettlement Consulting services and training Project design and supervision b Local roads financed by Asian Development Bank 14. Local roads financed by the Government 15. Township bus stations Project management c Subtotal (A) 1, B. Contingencies 1. Physical Contingency d Price Contingency e Subtotal (B) C. Interest f during Construction Total Project Costs 1, % of Total Project Cost 100% 18% 43% 39% ADB = Asian Development Bank, BOC = Bank of Communications. Note: Exchange rate used: $1 = CNY8.02 at appraisal. a In 2006 prices, including taxes. Environmental protection included under civil works as $80.1 million, and costs for monitoring $5.5 million. b Includes $26.7 million design cost. c Includes $11.3 million research, testing, and quality control cost. d At 10% base cost. e At 3% per annum for for local currency costs and 1.9% per annum for foreign exchange cost during f This is based on the prevailing United States dollar 5-year swap rate plus a spread for the ADB loan and prevailing interest rate for the China Construction Bank. Note: Numbers may not sum precisely because of rounding.

37 Appendix 4 27 Table A4.2: Project Cost at Completion by Financier Total Cost ADB % of Cost Domestic Banks Item % of Cost % of Cost A. Civil Works a 1. Expressway subgrade and pavement 1, , Buildings and roadside facilities b Environmental protection and landscaping Expressway civil works 1, , Safety and maintenance equipment Land acquisition and resettlement Consulting services and training Project design and supervision b Local roads financed by Asian Development Bank 9. Local roads financed by the Government Township bus stations Project management c Subtotal (A) 1, , B. Contingencies 1. Physical Contingency d Price Contingency e Subtotal (B) C. Interest f during Construction Total Project Costs 2, , % of Total Project Cost 100% 13.19% 70.68% 16.14% ADB = Asian Development Bank, MOT = Ministry of Transport. Numbers may not sum precisely because of rounding. Note: Exchange rate used: $1 = CNY at completion date of 28 December a At appraisal, civil works cost was divided into costs of earthwork, pavement, structures, tunnels, interchanges, buildings, and roadside facilities; and equipment for the expressway was classified into tunnel equipment and safety and maintenance equipment. At completion, Gansu Changda Highway Company Limited informed that actual costs could not be categorized in the same manner and were categorized into expressway subgrade and pavement civil works, building and ancillary facility civil works, traffic engineering equipment, electric equipment, and safety and maintenance equipment. b Includes cost for tunnel and electric equipment. MOT/ Gov t

38 28 Appendix 5 ORIGINAL AND REVISED LOAN ALLOCATION Table A5.1: Original and Revised Loan Allocation Original Original ADB Revised Revised ADB Category Item Allocation ($) Financing (%) Allocation ($) Financing (%) 1A Expressway 275,100, ,438, B Rural Roads 15,000, ,302, C Township Bus 5,000, ,107, Stations 2 Equipment 3,100, ,905, Consulting Services 1,800, ,245, and Overseas Training Total 300,000, ,000,000 ADB = Asian Development Bank. Sources: Gansu Changda Highway Company Limited and Asian Development Bank. Table A5.2: Project Financing Planned versus Actual ($ million) Source Planned Actual Share of Share of Amount Amount Total (%) Total (%) Asian Development Bank Domestic Banks/State Development Bank , Ministry of Transport Gansu Provincial Government Sources: Gansu Changda Highway Company Limited and Asian Development Bank.

39 Appendix 6 29 Date A. General CHRONOLOGY OF MAIN EVENTS Mar Loan fact-finding mission fielded Events 24 May Management review meeting held and advance procurement action approved 6 14 Jun Loan appraisal mission fielded 20 Jul Staff review committee meeting held Nov Feasibility study for Wudu Guanzigou Expressway approved Nov Loan negotiations 18 Dec Loan approved Oct General procurement notice published on ADB website 13 Nov Loan signing Jan Loan effectiveness 26 Dec 2009 May 3 Jul GPCD requested upgrading of selected township bus stations and substitution of remaining township bus stations with administrative village bus stops Civil works commencement for the expressway (government-financed contracts) MOF requested to revise construction of 200 Class-V township bus stations to be construction of 30 Class-V or higher bus stations and 1,500 rural administrative village bus stops. 13 Jul ADB approval on MOF s request for adjusting the scope of the bus stations Oct First disbursement 22 Nov 1st increase in ADB financing percentage for Expressway Civil Works from 28% to 54% approved by ADB 2011 Jun Procurement of Wudu-Lixian road failed in securing contractors 1 Sep 2012 Jul Apr 11 Oct 1st extension of loan closing date from 30 Jun 2012 to 30 Jun 2014 approved by ADB The revised feasibility study with increased budget for the Wudu-Lixian road was re-approved by the Gansu Development and Reform Commission Civil works commencement for the Wudu-Lixian road (government-financed contracts) (a) 1st reallocation of loan proceeds from the township bus stations and equipment categories to the expressway category approved by ADB; and (b) 2nd extension of loan closing date from 30 Jun 2014 to 30 Sep 2015 approved by ADB 18 Jun 2nd increase in ADB financing percentage for Expressway Civil Works from 54% to 61% approved by ADB (ADB initiated) 25 Nov 2nd reallocation of loan proceeds from the expressway, equipment, and consulting services categories to the rural roads category approved by ADB (ADB initiated)

40 30 Appendix 6 Date Jul Events 3rd reallocation of loan proceeds from the consulting services category to the rural roads category approved by ADB (ADB initiated) 16 Nov Last disbursement 28 Dec Loan financial closing B. Project Management Consultants (Quality and Cost-Based Selection Method, 80:20, Full Technical Proposal) Aug Submission 1 (shortlisting and RFP issuance) submitted to ADB 24 Sep ADB Submission 1 approval 9 Oct from the EA on reason for delay in the RFP too early to send due to the slow progress of the civil works procurement Apr Invitation Letters and RFP issued to 6 shortlisted firms 30 May Deadline for submission and opening of technical proposals 22 Jun Sep Fax from GCHC on report on evaluation of technical proposals for consultant firms received by ADB / ADB comments sent to GCHC by 29 Jul ADB Approval Fax on Submission 2-Technical Evaluation Report 27 Aug Submission 3 (Evaluation of Financial Proposals and Final Ranking) approved by ADB 10 Sep Contract negotiations and contract signing with first-ranked firm, H&J Inc. 29 Oct ADB Approval Fax on Submission 4 - Draft Negotiated Contract (H&J Inc.) 7 Dec Signed contract for H&J Inc. received by ADB 28 Sep Mar Fax from GCHC received by ADB requesting replacement of team leader of international consultant for H&J Inc. due to serious illness Fax from ADB re non-agreement of proposed replacement expert for the team leader position (Yu Chen), H&J Inc. 2nd proposed expert for team leader position submitted by H&J Inc. to ADB for approval / ADB approval of proposed expert (Mr. Carl Shaflik) C. Civil Works Expressway (International Competitive Bidding, Single Stage One Envelope Procedure) 2008 May Preliminary design for Wudu-Guanzigou Expressway approved Feb 11 Feb 11 Mar 16 Mar GCHC request to use domestic funds for the 9 Expressway contracts (WG3, WG8, WG9, WG10, WG11, WG18, WG19, WG20, and WG21) Draft IFB and bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22) received by ADB 1st round of comments from ADB on draft bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22) sent to GCHC ADB approval on use of domestic funds for the 9 Expressway contracts (WG3, WG8, WG9, WG10, WG11, WG18, WG19, WG20 and WG21)

41 Appendix 6 31 Date Events GCHC submitted revised bid docs for 13 Expressway Civil Works Contracts 5 Jun (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22), 2nd submission to ADB 2nd round of comments from ADB on revised bid docs for 13 Expressway Civil 29 Jun Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22) sent to GCHC 6 Jul GCHC submitted revised bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4 to WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22), 3rd submission to ADB Jul 3rd round of comments on revised bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22) sent to GCHC 20 Jul GCHC submitted revised bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22), 4th submission to ADB 29 Jul 4th round of comments (sent by ) on revised bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22) sent to GCHC 6 Aug ADB no objection fax to bid docs for 13 Expressway Civil Works Contracts (WG1, WG2, WG4, WG5, WG6, WG7, WG12, WG13, WG14, WG15, WG16, WG17, and WG22) 10 Aug IFB posted in ADB web and China Daily, and BDs issued to prospective bidders 1 Sep Jan GCHC fax requesting extension of bid submission deadline from 22 Sep 2009 to 10 Oct Sep ADB no objection fax on extension of bid submission deadline 23 Sep Addendum No.1 sent by GCHC to ADB (by ) 10 Oct Bid submission deadline and record of bid opening 6 Nov GCHC 1st submission of BER for 13 Expressway Civil Works Contracts (WG1, WG2, WG4 to WG7, WG12 to 17, WG22) 17 Nov ADB fax re comments on BER for WG1, WG12, WG13, and WG16 sent to GCHC 21 Nov Reply from GCHC on BER comments 28 Dec PC Paper approved for WG1, WG12, WG13, and WG16 Fax to EA on ADB approval of contract awards for WG1, WG12, WG13, and WG16 sent 19 Jan Contract signed for WG1 Draft PC Paper for WG2, WG4, WG5, WG7, WG14, WG15, WG17, and WG22 22 Jan circulated to OGC and COS2 (now PFP2) for comments with deadline of 29 Jan Feb Contract signed for WG16 15 Feb Contract signed for WG12 and WG13 22 Feb ADB fax to GCHC re comments on BER for WG2, WG4, WG5, WG7, WG14, WG15, WG17, and WG22 9 Mar ADB no objection to extend bid validity from 180 days to 270 days (sent by ) 8 Apr Notification of Bid Validity Extension sent to all bidders by GCHC 7 May PC Paper approved for WG4, WG5, WG14, WG15 and WG17

42 32 Appendix 6 Date 7 May Events Fax to EA on ADB approval of contract awards for WG4, WG5, WG14, WG15 and WG17 10 May GCHC request to use domestic funds to finance civil works contract WG6 18 May ADB approval to use domestic funds to finance civil works contract WG6 20 May GCHC request to use domestic funds to finance civil works contracts WG2, WG7, and WG22 28 May ADB approval on GCHC request to use domestic funds to finance civil works contract WG2 and WG7 31 May ADB approval on GCHC request to use domestic funds to finance civil works WG22 1 Jun Contracts signed for WG4, WG5, WG14, WG15, and WG17 7 Jun Signed contracts for WG1, WG12, WG13, and WG16 received by ADB Dec Wudu-Guanzigou Expressway opened to traffic D. Civil Works Local Roads (National Competitive Bidding Procedure) Feb Submission of draft IFB and BD for LWSG2, LWSG3, LWSG4 to ADB (1st NCB) 20 Feb ADB initial comments on draft BD and IFB for LWSG2, LWSG3, LWSG4 sent by 16 Apr Revised BDs for LWSG2, LWSG3, LWSG4 submitted to ADB 23 Apr Draft IFB and BD for LWSG2, LWSG3, LWSG4 circulated to OSP2 and OGC for comments with deadline of 30 Apr May Fax to EA re comments on draft IFB and BD for LWSG2, LWSG3, LWSG4 9 May Revised BDs for LWSG2, LWSG3, LWSG4 incorporating comments submitted to ADB 10 May IFB and BD for LWSG2, LWSG3, LWSG4 approved by ADB 17 May IFB for LWSG2, LWSG3, LWSG4 published in several websites in PRC ( and China Tendering Weekly) and BD issued to prospective bidders 21 Jun Bid submission deadline and Record of Bid Opening for LWSG2, LWSG3, LWSG4 9 Jul Draft BER for LWSG2, LWSG3, LWSG4 submitted to ADB (by ) 10 Jul ADB comments on draft BER or LWSG2, LWSG3, LWSG4 (by ) 20 Aug Revised BER for LWSG2, LWSG3, LWSG4 submitted to ADB (by ) 26 Aug ADB clarifications on revised BER or LWSG2, LWSG3, LWSG4 (by ) 2 Sep Procurement Paper approved and fax to EA on ADB approval of contract awards for LWSG2, LWSG3, LWSG4 sent 12 Sep Contracts signed for LWSG2, LWSG3, LWSG4 4 Nov Signed contracts for LWSG2, LWSG3, LWSG4 received by ADB

43 Appendix 6 33 Date Events May Submission of draft IFB and BD for LWSG12 to ADB (2nd NCB) 16 May ADB comments on draft BD and IFB for LWSG12 (by ) 20 May IFB and BD for LWSG12 approved by ADB 16 Jul IFB for LWSG12 published in several websites in PRC ( and China Tendering Weekly) and BD issued to prospective bidders 14 Aug Bid submission deadline and Record of Bid Opening for LWSG12 30 Sep Draft BER for LWSG12 submitted to ADB (by ) 2 Oct ADB comments on draft BER or LWSG12 (by ) 9 Oct Revised BER for LWSG12 submitted to ADB (by ) and ADB comments on revised BER (by ) 17 Oct Revised BER (2nd revisions) for LWSG12 submitted to ADB (by ) 24 Oct Procurement Paper approved and fax to EA on ADB approval of contract award for LWSG12 sent 12 Nov Contract signed for LWSG12 4 Dec Signed contract for LWSG12 received by ADB E. Goods (International Competitive Bidding, Single Stage One Envelope Procedure) 28 Jul Submission of draft BD for road maintenance equipment: (i) E1-Highway Patrol 2011 Vehicle, (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant 1 Aug Submission of IFB for road maintenance equipment: (i) E1-Highway Patrol Vehicle, (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant 2 Aug ADB initial comments on IFB and BD for road maintenance equipment: (i) E1- Highway Patrol Vehicle, (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant (by ) 16 to 23 Aug Circulation of draft BD for road maintenance equipment: (i) E1-Highway Patrol Vehicle, (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant to OGC and OSP2 for comments ADB fax to EA on draft BD for road maintenance equipment: (i) E1-Highway 29 Aug Patrol Vehicle, (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant 6 Sep EA submission of revised IFB and BD IFB and BD for road maintenance equipment: (i) E1-Highway Patrol Vehicle, 8 Sep (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant issued 20 Oct Bid submission deadline and record of bid opening 25 Oct to 1 Nov 30 Nov Feb 21 Feb IA published the bid evaluation result on following the PRC Govt procedure EA asked ADB about a complaint received on the evaluation for Package E3 as a result of the publication of the bid evaluation result on draft BER for (i) E1-Highway Patrol Vehicle, (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant received by ADB Draft PC Paper circulated to COS2 and OGC for comments with deadline of 27 Feb 2012

44 34 Appendix 6 Date Events 8 Mar PC Paper approved for (i) E1-Highway Patrol Vehicle, (ii) Package E2- Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant ADB no objection fax to award the contracts for (i) E1-Highway Patrol Vehicle, 12 Mar (ii) Package E2-Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant Contracts signed for (i) E1-Highway Patrol Vehicle, (ii) Package E2-22 Mar Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant Signed contracts for (i) E1-Highway Patrol Vehicle, (ii) Package E2-17 Apr Maintenance Vehicle, (iii) E3-backhoe loader & bitumen mixing plant received by ADB ADB = Asian Development Bank, BD = bidding documents, EA = executing agency, BER = bid evaluation report, GCHC = Gansu Changda Highway Company Limited, GPCD = Gansu Provincial Communications Department, IA = implementing agency, IFB = invitation for bids, MOF = Ministry of Finance, NCB = national competitive bidding, OGC = Office of General Counsel, OSP2 (now PFP2) = Procurement Division 2, PC = procurement committee, RFP = request for proposal.

45 Appendix 7 35 APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULE Activities A. Project Processing 1. Feasibility Study and Approval 2. Preliminary and Approval 3. Detailed Design and Approval 4. Advance Action and Approval 5. Loan Approval 6. Loan Signing 7. Loan Effectiveness B. Land Acquisition 1. Resettlement Plan (RP) Preparation 2. RP Distribution 3. Preparation of Land Acquisition and ML&R Approval 4. Land Acquisition Activities Planned Actual (Expressway) Actual (local roads) Planned Actual (Expressway) Actual (local roads) Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual

46 36 Appendix 7 Activities C. International Consultants 1. RFP preparation 2. RFP issuance and proposals submission 3. Technical evaluation and approval 4. Financial evaluation and approval 5. Negotiation and contract award 6. Mobilization and Service Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual D. Expressway Subgrade Contracts 1. BD preparation and approval 2. BD issuance and submission 3. Qualification evaluation and approval 4. Bid evaluation and approval 5. Negotiation and contract award 6. Preparation works 7. Construction Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual

47 Appendix 7 37 Activities E. Expressway Pavement and Traffic Control 1. BD preparation and approval 2. BD issuance and submission 3. Qualification evaluation and approval 4. Bid evaluation and approval 5. Negotiation and contract award 6. Preparation works 7. Construction Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual F. Expressway Planting, Building 1. BD preparation and issuance 2. Bid evaluation and contract award 3. Construction Planned Actual Planned Actual Planned Actual G. Expressway Equipment 1. BD preparation and issuance 2. Bid evaluation and contract award Planned Actual Planned Actual

48 38 Appendix 7 Activities 3. Installing H. Local Roads 1. BD preparation 2. BD issuance and submission 3. Bid evaluation and contract award 4. Construction Planned Actual Planned Actual Planned Actual Planned Actual Planned Actual I. Township Bus Station Planned 1. Implementation Actual BD = bidding document, ML & R = Ministry of Land and Resources, RFP = request for proposal. Source: Asian Development Bank and Gansu Provincial Transport Department.

49 Appendix 8 39 ORGANIZATION CHART Gansu Provincial Transport Department, EA Gansu Provincial Highway Administration Bureau (rural road component) Gansu Changda HighwayCo., Ltd., IA for the expressway construction Gansu Provincial Transport Administration Bureau, (transport service component) Longnan Municipal Transport Bureau Wudu Project Management Office Chief Engineer Deputy General Director Deputy Chief Engineer / International Team Leader International Team (HJI) Chief Supervisor Office Local Roads Department On-site Office at Luotang Engineering Department Safety Department Land Acquisition Department General Affairs Office 11 REOs for Subgrade Civil Works 1 REO for Pavement Works 2 REOs for Building and Ancillary Facilities 2 REOs for Traffic Engineering and Landscaping 3 REOs for Electrical and Mechanical Implementation 23 Contractors for Subgrade Civil Works 1 Contractor for Pavement 7 Contractors for Building 7 Contractors for Traffic Engineering 3 Contractors for Landscaping 10 Contractors for Eletrical & Mechanical EA = executing agency, REO = resident engineer s office. Source: Asian Development Bank.

50 40 Appendix 9 CONTRACT AWARDS AND DISBURSEMENT OF ADB LOAN Table A9.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total Total ADB = Asian Development Bank. Source: Asian Development Bank. Table A9.2: Annual and Cumulative Disbursement of ADB Loan Proceeds a ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total Total ADB = Asian Development Bank. a Includes disbursements to advance accounts. Source: Asian Development Bank.

51 Appendix Contract No. PCSS Nos. Contract Description 01A Civil Works Expressway (Subgrade) WG1 WG4 WG5 WG12 WG13 WG14 WG15 WG16 WG17 ADB FINANCED CONTRACTS Table A10.1: Contract Packages Financed by the Asian Development Bank ($ million) Procurement Mode Date Approved Contract Date Contractor/Supplier Contract Value (CNY) ADB Financing (CNY) ADB Financing ($) 0002 Erchu Co., Ltd. of China 57,644,633 8,931,593 K0+000~ K Jan Jan ,267, Railway Tunnel Group 37,286,066 6,093, China Railway Tunnel Group 58,648,823 9,089,527 K ~ K May-10 1-Jul ,164, Co., Ltd. 49,895,654 8,157, China Railway No.4 63,552,716 9,850,148 K ~ K May-10 1-Jun ,468, Engineering Group Co., Ltd. 64,596,692 10,322, No.2 Engineering China 89,056,921 13,844,448 K ~ K Jan Feb ,870, Railways 17 Bureau Group 65,475,684 10,567, The Third Engineering Co. 114,811,025 17,795,080 K71+000~ K ICB 8-Jan Feb ,534, Ltd. of FHEC CCCC 102,429,131 16,426, The 1st Engineering Co., Ltd. 117,648,442 18,272,991 K76+400~ K May-10 1-Jun ,380, of FHEC of CCCC 99,540,746 16,011, Right K85+287~ K ; CCCC Second Harbour 142,600,132 22,164,898 7-May-10 1-Jun ,327, Left K ~ K Engineering Co. 137,280,994 22,087, Right K ~ K98+920; Beijing Hailong Highway 192,306,261 30,002,183 8-Jan-10 1-Feb ,508, Left K92+390~K Engineering Corp. 142,009,289 22,882, Right K98+920~K ; CCCC First Highway 127,999,968 19,980,805 7-May-10 1-Jun ,871, Left K ~K Engineering Co., Ltd. 98,642,479 15,956,360 01B Civil Works Rural Roads Subtotal 01A 3,568,393, ,761,425, ,438,563 LWSG K8+000~K Sep Sep-13 Gansu Zhaotong Road & Bridge Eng g. Co., Ltd. 29,186,161 23,731,355 3,851,978 LWSG K27+000~K NCB 2-Sep Sep-13 LWSG K42+000~K Sep Sep-13 Henan Hengjian Road & Bridge Engineering Co., Ltd. Gansu Zhaotong Road & Bridge Eng g Co., Ltd. 29,734,051 24,077,781 3,916,249 15,908,876 11,685,087 1,898,954

52 42 Appendix 10 Contract No. PCSS Nos. Contract Description Procurement Mode Date Approved Contract Date LWSG K8+000-K Oct Nov-14 Contractor/Supplier Gansu Zhaotong Road & Bridge Eng g Co., Ltd. Contract Value (CNY) ADB Financing (CNY) ADB Financing ($) 51,861,925 40,660,999 6,634,500 01C Civil Works Township Bus Stations Subtotal 01B 126,691, ,155,222 16,301, Construction of Bus Station in Xinsi Town Shopping 6-Sep-10 6-Sep-10 Gansu Anxia Engineering Division 600,000 94, Construction of Taoyang Town Bus Station Township Bus Station - 22 Packages Shopping 6-Sep-10 6-Sep-10 Lintao Construction Engineering Company 43,890,000 2,000, ,591 Shopping Various 4,399, ,387 Subtotal 01C 43,890,000 6,999,283 1,107, Equipment E Highway Patrol Vehicle Shaanxi Kingflying Trade Co., Ltd. 3,085,812 3,085, ,962 E Maintenance Vehicle ICB 12-Mar Mar-12 Beijing EA Machinery Equipment Co., Ltd. 5,702,250 5,702, ,890 E Backhoe Loader & Bitumen Mixing Plant China Shaanxi Dacheng International Trade Co. 9,446,974 9,446,974 1,502,201 Subtotal 02 18,235,036 18,235,036 2,905, Consulting Services 0001 H&J Inc. QCBS 29-Oct-09 7-Dec-09 H&J Inc. 1,245,987 Subtotal 03 1,245,987 TOTAL (01A+01B+01C+02+03) 1,886,815, ,999,239 Source: Asian Development Bank, Gansu Provincial Transport Department, and Gansu Changda Highway Company Limited.

53 Appendix GOVERNMENT FINANCED CONTRACTS Table A11.1: Contract Packages Financed by the Government (CNY) Contract No. Contract Description Contractor/Supplier/Consultant A. Consulting Services (Expressway) Contract Value (CNY) Procurement Mode EIA Environmental Protection Center under Ministry of Transport 1,100,000 GPP Environment Monitoring Longnan Environment Monitor Station 85,000 GPP Geology Hazards Appraisal Water Conservation Assessment Water Conservation Monitor Gansu Geology Hazards Preventative Engineering Survey & Design Institute Gansu Provincial Water Conservation Science & Research Institute Gansu Lvhua Ecology Engineering Consulting Co., Ltd. 240,000 GPP 720,000 GPP 585,000 GPP Resettlement Monitoring Tongji University 765,000 GPP International Tender for Civil Works and Equipment CNCCC International Tendering Co., Ltd. 1,063,823 GPP Technical Consulting Service for Bituminous Pavement Shaanxi Changda Boyuan Highway Maintenance Science & Technology Co., Ltd. 350,000 GPP Feasibility Study Preliminary & Detailed Design Design for S206 Daanmiao to Yaodu section Reconstruction Review on Preliminary and Detailed Design Review on Design for Wudu to Guanzigou Construction Road Gansu Province Transportation Planning, Survey & Design Institute Co., Ltd. CCCC First Highway consultants Co., Ltd.; Gansu Province Transportation Planning, Survey & Design Institute Co., Ltd; China Highway Engineering Consulting Company; Chongqing Transport Science & Research Design Institute 20,500,000 GPP 186,171,837 GPP CCCC First Highway Consultants Co., Ltd. 1,980,000 GPP Wuhan Zhongjiao Consulting Company 7,500,000 GPP Lanzhou Qianyuan Transport Planning & Design Consulting Center 250,000 GPP Review on Design for Traffic Works Review on Design for Building Works Gansu Huashun Transport Science & Technology consulting Co., Ltd. Gansu Huashun Transport Science& Technology consulting Co., Ltd. 160,000 GPP 300,000 GPP Review on Design for E&M Facilities CCCC Second Highway Consultants Co., Ltd. 298,000 GPP

54 44 Appendix 11 Contract No. Contract Description Contractor/Supplier/Consultant Review on Costs of Building Works Gansu Zhongxin Engineering Consulting Co., Ltd. Contract Value (CNY) Procurement Mode 217,735 GPP WGJL01 Construction Supervision Gansu Traffic Engineering Construction Supervision Company 6,979,502 GPP WGJL02 Construction Supervision Shandong Hengjian Engineering Supervision Consulting Co., Ltd. 7,215,200 GPP WGJL03 Construction Supervision Shandong Linyi Traffic Engineering Consulting Supervision Center 7,269,610 GPP WGJL04 Construction Supervision Jiangsu Xufang Engineering Consulting Supervision Co., Ltd. 8,476,026 GPP WGJL05 Construction Supervision Xian Fangzhou Engineering Consulting Co., Ltd. 10,360,454 GPP WGJL06 Construction Supervision Yunnan Highway Engineering Supervision Consulting Company 10,415,038 GPP WGJL07 Construction Supervision Beijing Hua Lu Shun Engineering Consulting Co., Ltd. 7,800,000 GPP WGJL08 Construction Supervision Beijing Hua Tong Road and Bridge supervision& Consultancy Co., Ltd. 9,414,678 GPP WGJL09 Construction Supervision Gansu Traffic Engineering Construction Supervision Company 9,135,088 GPP WGJL10 Construction Supervision Shenzhen Expressway Consulting Co., Ltd. 8,909,991 GPP WGJL11 Construction Supervision Hebei Huada Highway Engineering Consulting Supervision Co., Ltd. 8,819,922 GPP WGJL12 Construction Supervision Jinan Jinnuo Highway Supervision Co., Ltd. 1,500,000 GPP WGLMJL1 Construction Supervision Beijing Gangtong Highway & Bridge Engineering Supervision Co., Ltd. 3,483,000 GPP WGFJJL01 Construction Supervision Gansu Traffic Engineering Construction Supervision Company 4,394,880 GPP WGFJJL02 Construction Supervision Lanzhou Jiaoda Engineering Construction Supervision Co., Ltd. 4,420,000 GPP WYJL01 Construction Supervision Beijing Gangtong Highway &Bridge Engineering Supervision Co., Ltd. 5,156,650 GPP WYJL02 Construction Supervision Gansu Traffic Engineering Construction Supervision Company 3,822,110 GPP WJJL1 Construction Supervision China Highway Engineering Consulting Group Co., Ltd 2,880,312 GPP WJJL2 Construction Supervision Beijing Taikehuacheng Technology & Information Consulting Co., Ltd. 3,490,909 GPP

55 Appendix Contract No. Contract Description Contractor/Supplier/Consultant WJJL3 Construction Supervision Contract Value (CNY) Procurement Mode Beijing Highway & Bridge International Engineering Consulting Co., Ltd. 3,499,174 GPP Investigation for Environment Acceptance Investigation for Water Conservation Acceptance Investigation for EIA Variations Environment Investigation for Natural Reserve Area Emergency Plan for Environment Issue Beijing Jingguohuan Environment Technical Development Co., Ltd. Xian Planning & Design Institute under Upper and Middle Reaches of Yellow River Administration Bureau Shaanxi Zhongshen Environment Science & Technology Development Co., Ltd. Gansu Chuangxin Environment Science & Technology Co., Ltd. Gansu Huaan Registered Safety Engineer Office 1,690,000 GPP 530,000 GPP 300,000 GPP 120,000 GPP 160,000 GPP Water Conservation Onsite Supervision Yangtze River Water Resource Co., Ltd. 420,000 GPP B. Consulting Services (Wudu Lixian road) Environmental impact assessment Construction supervision Feasibility study and engineering design Engineering design review C. Civil Works Expressway B.1 Subgrade Environmental Quality Evaluation Research Center, Lanzhou University Beijing Hualujie Highway Engineering Technology Co., Ltd.; Sichuan Jianchong Engineering Project Management Co., Ltd.; Beijing Gangtong Road and Bridge Engineering Supervision Co., Ltd.; and Gansu Huashun Transportation Technology Consulting Co., Ltd. Gansu Kangda Highway Design Consulting Co., Ltd Lanzhou Qianyuan traffic planning and design consulting center 184,000 GPP 5,872,588 GPP 5,348,640 GPP 414,634 GPP WG2 K8+500~K Gansu Highway & Bridge Construction Group Co., Ltd. 117,415, GPP WG3 K15+085~K China Railway No. 4 Engineering Group Co., Ltd. 195,713, GPP WG6 K35+100~K Antong Construction Co., Ltd. 217,730, GPP WG7 K39+800~K Gansu Highway & Bridge Construction Group Co., Ltd. 414,440, GPP WG8 K45+030~K Gansu Highway & Bridge Construction Group Co., Ltd. 309,820, GPP WG9 K48+120~K China Railway Tunnel Group Co., Ltd. 444,861, GPP

56 46 Appendix 11 Contract No. Contract Description Contractor/Supplier/Consultant WG10 K56+603~K China Highway & Bridge Engineering Co., Ltd. Contract Value (CNY) Procurement Mode 432,642, GPP WG11 K61+180~K Heibei North Highway Engineering Construction Group Co., Ltd. 409,985, GPP WG18 WG19 K ~K K ~K K ~K K ~K The First Engineering Co., Ltd. of CCCC 417,977, GPP Fujian First Highway Engineering Company 472,044, GPP WG20 K ~K K ~K Shanxi Mingtai Engineering Construction Co. Ltd. 494,256, GPP WG21 K ~K K ~K Antong Construction Co., Ltd. 577,484, GPP WG22 K ~K K ~K No. 1 Engineering Co. of China Railways 4 Bureau Group Corp. 523,499, GPP WG23 Wudu Connecting Line Gansu Highway & Bridge Construction Group Co., Ltd. 81,902, GPP B.2 Pavement LM1 K0+000~K CCCC-SHB Third Engineering Co., Ltd. 456,342, GPP B.3 Building and Ancillary Facilities FJ1 Gansu Guanglin Construction & Installation Co. Ltd. 19,047, GPP FJ2 Gansu No.1 Construction Group Co., Ltd. 24,274, GPP FJ3 FJ4 FJ5 FJ6 FJ7 B.4 Traffic Safety Engineering Gansu Huaheng Construction Engineering Co. Ltd. China Railway No. 5 Engineering Group Co., Ltd. Gansu Sanli Engineering Construction Co., Ltd. Gansu Road and Bridge No.4 Road Engineering Co., Ltd. Gansu Hengtai Construction and Installation Co., Ltd 49,714, GPP 28,916, GPP 31,921, GPP 60,869, GPP 71,360, GPP JA1 K0+000~K Shanxi Changda Transport Facilities Co., Ltd. 32,201, GPP JA2 K18+062~K Beijing Yihuo Anxun Transport Technology Co., Ltd. 28,471, GPP JA3 K36+716~K Maomin Municipal Road Construction Co., Ltd. 23,974, GPP

57 Appendix Contract No. Contract Description Contractor/Supplier/Consultant JA4 K69+494~K Jiangxi Gandong Road and Bridge Construction Co., Ltd. Contract Value (CNY) Procurement Mode 33,761, GPP JA5 K0+000+~K Gansu Zhiguang Intelligent Transport and Control Technology Co., Ltd. 14,991, GPP JA6 K56+000~K Zhejiang University Zhongkong Information Technology Co., Ltd. 22,582, GPP JA7 K0+000~K Xuzhou Guanghuan Steel Structure Engineering Co., Ltd. 19,677, GPP B.5 Afforestation and Landscaping Works LH1 K0+000~K29+5 Gansu Huayun Landscaping and Greening Engineering Co. 31,739, GPP LH2 K29+500~K Gansu Yuanlong Road and Bridge Automation Road Engineering Co., Ltd. 24,443, GPP LH3 K70+365~K Ningxia Jiankun Gardening Industry Development Co., Ltd. 20,055, GPP B.6 Toll Collection, Monitoring, and Communications System JD1 K0+000~K China Railway No.1 Bureau Group Electric Engineering Co., Ltd. 95,623, GPP JD2 K56+603~K China Railway No. 12 Group Electrification Engineering Co., Ltd. 42,142, GPP JD3 K56+603~K Shaanxi Zhenghe Hantang Engineering Co., Ltd. 45,463, GPP JD4 K0+000~K Lanzhou Longqing Transport Technology Co., Ltd. 44,278, GPP JD5 K70+308~K ZhiGuang Jietong Science and Technology Co., Ltd. 46,970, GPP JD6 K95+850~K Xian Jinlu Transport Engineering Science Development Co., Ltd. 49,040, GPP JD7 K ~K Gansu Zhiguang Intelligent Transport and Control Technology Co., Ltd. 51,309, GPP JD8 K0+000~K Hunan Shijian Installation & Construction Co., Ltd. 20,445, GPP JD9 K56+603~K Henan Zhongtian Xiaofang Engineering Co., Ltd. 19,996, GPP JD10 K ~K Gansu Maidao Construction Engineering Co., Ltd. 22,170, GPP DL1 Jingchuan Niedu Co., Ltd. 59,091, GPP DL2 LED1 Shanghai Moen Electric Share Holding Co., Ltd. Shandong Langchao Huaguang Lighting Co., Ltd. 34,981, GPP 6,405, GPP

58 48 Appendix 11 Contract No. Contract Description Contractor/Supplier/Consultant Contract Value (CNY) Procurement Mode LED2 D. Wudu Lixian Road Shanghai Shanshi Electronic Engineering Co., Ltd. 4,767, GPP LWSG-1 K0+000~K8+000, pavement works Wudu Xingchao Road and Bridge Co., Ltd./ Longnan Municipality Hongtong Highway Engineering Co., Ltd. 20,274,910 GPP LWSG-5 KK52+000~K (subgrade, bridges & culverts) Zhonghaijjan Road and Bridge Construction Co., Ltd. 41,257,066 GPP LWSG-6 LWSG-7 LWSG-8 LWSG-9 LWSG-10 LWSG-11 K60+920~K (subgrade, bridges & culverts) K70+000~K (subgrade, bridges & culverts) K80+000~K (subgrade, bridges & culverts) K95+000~K (subgrade, bridges & culverts) K ~K (subgrade, bridges & culverts) K ~K civil works and pavement (subgrade, bridge, culvert) Qingyang Hongde Transportation Construction Co., Ltd. Gansu Zhengde Engineering Construction Group Co., Ltd. Wuwei Jinyang construction Engineering Company 24,572,014 GPP 32,940,050 GPP 20,339,421 GPP Gansu Zhaotong Road and Bridge Co., Ltd. 27,196,963 GPP Gansu Tengtai road and Construction Co., Ltd. Tianshui Municipality Municipal Engineering Co., Ltd. 32,309,673 GPP 33,628,028 GPP LWSG-13 K52+000~K pavement engineering Gansu Zhengde Engineering Construction Group Co., Ltd. 17,281,710 GPP LWSG-14-1 K70+000~K pavement engineering Gansu Yiyang Construction Engineering Co., Ltd. 15,786,442 GPP LWSG-14-2 K88+000~K pavement engineering Tianshui Municipality Municipal Engineering Co., Ltd. 13,885,698 GPP LWSG-15 K ~K pavement engineering Tianshui Municipality Municipal Engineering Co., Ltd. 31,666,100 GPP Transport safety section K K Transport safety pavement engineering Guangxi Honglu Transportation Engineering Co., Ltd. 3,311,169 GPP

59 Appendix A. Background EVALUATION OF LAND ACQUISITION AND RESETTLEMENT 1. At appraisal, the project was to (i) build a 134-kilometers (km) four-lane access-controlled toll expressway between Wudu and Guanzigou, including tunnels, bridges, interchanges with toll stations, connector roads, administrative stations, and service areas;31f1 (ii) upgrade 357 km of rural roads to improve access to 27 townships and 275 villages in poor areas; (iii) build 200 township bus stations to provide new bus services; (iv) improve transport services by pilot-testing a road transport action plan in Longnan; (v) promote corporate governance; and (vi) strengthen local transport authorities in construction supervision, road safety, asset management, and project management by providing consulting services and training. On 10 July 2009, with Asian Development Bank s (ADB) approval, the scope of component three was revised to: 30 class V or above bus stations and 1,500 bus stops. 2. The project was classified as involuntary resettlement category A, including land acquisition, temporary land occupation and demolition of houses. Initial investigations on land acquisition and resettlement (LAR) were undertaken during the project preparatory technical assistance. This initial study found that only outputs (i) and (ii) would involve LAR. 3. During project appraisal two resettlement plans were developed in accordance with ADB s Involuntary Resettlement Policy (1995) and relevant PRC policies and regulations: (i) resettlement plan for Wudu Guanzigou Expressway; and (ii) Resettlement plan for rural roads and bus stations. The resettlement plans were updated based on final designs and detailed measurement surveys and were approved by ADB and disclosed to the affected persons. The final resettlement plan for the expressway was approved by ADB and disclosed to the affected persons in November Of the seven local roads, six were completed before 2013, involving limited land acquisition and resettlement. A due diligence report (DDR) on land acquisition and resettlement for these six roads was submitted and disclosed on the ADB website in July According to the DDR, the affected persons were happy with the road upgrades and satisfied with the LAR. For the seventh road, Wudu Lixian road, the updated resettlement plan based on detailed measurement survey was approved by ADB and disclosed on the ADB website in January Wudu Lixian road was completed by September B. Implementation Arrangements 5. The institutional setup for LAR followed the Resettlement plans. For the expressway, Gansu Changda Highway Company Limited (GCHC) set up a resettlement division to lead planning, consultation and participation, funding, LAR implementation supervision, and internal monitoring and evaluation. Longnan city and county/city coordination offices, together with taskforces at the township and villages, carried out LAR work and GCHC engaged an external monitor, Tongji University, to carry out independent monitoring and evaluations from December 2009 until completion. 6. For Wudu Lixian road, Longnan municipal government set up a Project Management Office (PMO) responsible for planning, coordination, implementation and monitoring of resettlement activities. The county/city coordination offices, together with taskforces at township 1 The final alignment was 130 km.

60 50 Appendix 12 and villages, carried out LAR work and the PMO engaged an external monitor, the Beijing Zhongfachengmei Consultants, to carry out independent monitoring and evaluations from March 2014 until completion. C. Scope of Land Acquisition and Resettlement 7. Permanent land acquisition for the project was 7,305.2 mu at appraisal and 7,262.5 mu at completion, a decrease of 0.6%.32F2 For the expressway, 6,413.6 mu was acquired, a decrease of 1.7% from the planned 6,526.2 mu. For Wudu Lixian road, mu was acquired, an increase of 9% from the planned 779 mu. These minor changes in land acquisition are the result of scope changes during detailed design and construction and the final measurement surveys. 8. House demolition for the project increased 28.7%, from 89,665.1 square meters (m 2 ) in the resettlement plan to 115,363 m 2 at completion. For the expressway, housing demolition was 31.8% higher than expected, 107,264 m 2 instead of 81,407.1 m 2. For Wudu Lixian road, 8,099 m 2 houses were demolished, a decrease of 1.9% compared to the planned 8,258 m 2. These changes are attributed to alignment changes during design and construction. 10,752 households were affected by the project, 1,029 more households than planned, however, 3,344 fewer people were affected compared to the 38,476 persons estimate in the resettlement plan. Despite the increase in number of households, there was no significant change in overall impact of housing demolition. 9. The LAR for the expressway started in May 2009 and was completed by December All affected persons were compensated according to the resettlement plan; however, following the increased cost of building materials and labor after the earthquake, many chose to live in temporary accommodation until the cost of construction reduced. Thus, resettlement to the new housing was completed only at the end of 2015 by choice of the affected persons. For the Wudu Lixian road, demolition and resettlement started in June 2013 and was completed by December Based on monitoring and evaluation reports, project completion report mission site visits, discussions with affected persons, and discussions with Gansu Provincial Transport Department (GPTD), GCHC, and related County/City Coordination Offices (Lixian, Wenxian County and Wudu), it is concluded that the LAR of the Project was satisfactory. No complaints, grievances or other concerns were noted and affected persons are better off than before the project. The comparison of planned versus actual LAR impact is shown in Table A A mu is a Chinese unit of measurement (1 mu = square meters = 1/15 ha).

61 Appendix Table A12.1: Comparison of Land Acquisition, House Demolition and Resettlement Impact (mu) Activity Expressway Wudu Lixian road Total Planned Actual Difference Planned Actual Difference Planned Actual Difference Permanent LA 6, , , , Permanent LA - including farmland 3, , , , , ,461.1 Temporary LA , , , House demolition 81, , , , , , , ,697.9 Affected persons 8,604 9,617 1, ,0752 1,209 - by permanent 35,435 31,457-3, , ,132-3,344 LA Affected persons by house demolition 2,203 1, , mu = Chinese unit of measurement (1 mu = square meters = 1/15 ha), LA = land acquisition. Source: GCHC Resettlement Completion Report; LNTB D. Resettlement policies and compensation rates 11. The approved final resettlement plans were prepared in line with the Laws and Regulations promulgated by the PRC and Gansu Province, and also met the requirements of ADB s relevant policies, including (i) the Land Administrative Law (2004); and (ii) Forest Law of the People s Republic of China (1998), Implementation Measures for the Land Administration Law of the PRC in Gansu Province (Promulgated on September 2, 1999, revised and effective as of March 30, 2002); and (iii) Notice of the Gansu Provincial Government on Issuing the Unified Standards for Annual Output Value and Regional Integrated Land Price Compensation in Land Acquisition (GPG [2012 No.151). 12. The rates for land acquisition detailed in the expressway resettlement plan were CNY35,800/mu to CNY46,800/mu for irrigated land, and CNY26,910/mu to CNY35,000/mu for dryland in Wudu District; and CNY40,000/mu for irrigated land, and CNY20,000/mu for dryland in Wen County. 13. The rates for house demolition were CNY950/m 2 for frame structures, CNY730/m 2 for concrete and brick structures, CNY550/m 2 for brick and timber structures, CNY500/m 2 for earth and brick with brick pier structures in Wudu District; and CNY650/m 2 for steel and concrete structures, CNY550/m 2 for concrete and brick structures, CNY480/m 2 for brick and timber structures and CNY400/m 2 for earth and timber structures in Wen County. 14. The rates for land acquisition in the Wudu Lixian road resettlement plan were from CNY 10,577/mu to CNY39,276/mu for farmland in Wudu District; and CNY15,444/mu to CNY19453/mu for farmland in Lixian County, in accordance with the regulation of GPG [2012 No.151]. The rates of forest land were 75% of those of farmland. Actual compensation rates for house demolition along Wudu Lixian road were much higher than those in resettlement plan:

62 52 Appendix 12 CNY1,000-CNY1,200/m 2 for concrete and brick structures (compared to CNY730/m 2 ), CNY900 CNY1,000/m 2 for brick and timber structures (compared to CNY550/m 2 ) and CNY780 CNY800/m 2 (compared to CNY400/m 2 ) for earth and timber structures. In addition, affected persons relocated by Wudu Lixian Road were granted a government relocation allowance of CNY11,500, resulting in a much higher LAR rate for Wudu Lixian road. 15. Households affected by house demolition chose cash compensation and self-relocation. Households self-relocated in the same villages, and new houses were built close to their original houses with same, or better, infrastructure and services. During the project completion review mission, consultation with some of the affected households indicated that they appreciated their improved houses and living conditions at the relocated sites. E. Resettlement Cost and Funding 16. The total LAR cost was CNY579.7 million, 12.9% (or CNY55.23 million) higher than the estimated budget of CNY million in the final resettlement plans. This increase is attributed to (i) higher compensation rates which increased in line with the rising costs of labor and equipment post-earthquake, and (ii) reclassification of some land types, e.g. from urban land to irrigated farm land, resulting in higher compensation rates. The planned versus actual LAR costs are shown in Table A12.2 below. Table A12.2: Land Acquisition, House Demolition and Resettlement Impact Comparison (CNY 000) Activity Expressway Wudu Lixian road Total Permanent and temporary land acquisition Planned Actual Planned Actual Planned Actual Difference 28, , , , ,196.8 House demolition 5, , , , , ,349.1 Special facilities and attachments 3, , , , ,728.7 Other fees 12, , , , ,651.4 Total 49, , , , , , ,623.3 Source: GCHC Resettlement Completion Report; LNTB Of the total LAR cost, GCHC and Gansu transport department contributed CNY million, and the local government contributed the remainder. ADB verified with GCHC, Coordination offices, and the external monitors that all compensation had been paid to affected persons. F. Rehabilitation and Income Restoration 18. According to project documents and discussions with related stakeholders, the impact of land acquisition varied in affected villages. In most cases, land acquisition for the project was assessed as having only minor impacts and small income losses for affected households (AHs), but no livelihood impacts. The small income losses were fully offset by cash compensation, direct and indirect employment opportunities and/or increased economic activities generated by

63 Appendix improved road access. All AHs supported the Project as it was seen to promote local economic development and income growth. 19. The major measures for livelihood and income restoration undertaken for the project included: (i) cropping pattern adjustment to plant more cash crops (i.e., tea plantation, olive tree plantation, and walnut) to improve income; (ii) provision of technical training in cash crop plantation and other non-agricultural employment skills such as cooking and livestock raising; and (iii) employment on project construction activities. During the project completion review mission, consultations with affected persons confirmed that incomes had been improved. 20. Special assistance was provided to vulnerable groups and severely AHs, which included: (i) provision of help in housing reconstruction; (ii) provision of government subsidies; and (iii) priority in technical training and unskilled jobs. 21. With the implementation of income restoration measures, the income of AHs has been either restored or improved when compared with that before the project. Surveys of AHs conducted for the expressway by the external monitor showed that all sample households had restored their income by 2013, and that the average per capita income increased from CNY2,520 in 2009 to CNY4,010 in The quality and size of houses was also improved; the average house area per household increased from m 2 to m 2. G. Participation and Consultation, Complaints and Grievance Redress 22. The planned information disclosure, participation and consultation activities for LAR were timely and effectively carried out. Such activities included: (i) distribution of updated resettlement information booklet among all affected people; (ii) organization of at least two villagers meetings per year in each natural village from ; (iii) publicizing actual resettlement impacts and compensation of each affected household in each natural village; i(v) arranging various training; and (v) carrying out monitoring and evaluation activities. 23. A grievance redress mechanism (GRM) was set up in accordance with the resettlement plan to address any project-related grievances of affected persons. The GRM was publicized among affected persons along the expressway and Wudu Lixian road through distribution of resettlement information booklets and through villagers meetings. The project s resettlement policy was people-centered, with high compensation rates. GCHC, County Coordination Offices, and townships conducted frequent consultation and participation activities and maintained regular communication with affected persons. Although there were some minor disputes raised on items such as the amount of land acquisition or house area, land category, house structure, etc., they were all resolved to the satisfaction of the affected persons in a timely manner at the village or township level. No complaints regarding LAR were received by the Gansu Provincial Transport Department (GPTD) during implementation. H. Monitoring and Evaluation 24. Both internal and external monitoring of LAR activities was undertaken throughout the project. Ten external monitoring and evaluation reports for the expressway and three external monitoring and evaluation reports for Wudu Lixian Road were submitted to ADB and disclosed. In general, the requirements on resettlement monitoring and evaluation were complied with; the resettlement plans were well developed, and a professional evaluation system was established. Suggestions provided by the external monitors were adopted and led to the smooth

64 54 Appendix 12 implementation of LAR. Monitoring, assessment and project performance reports all provided adequate information and no significant issues were identified. I. Lessons Learned and Conclusion 25. The lessons learned from the project LAR are as follows: (i) LAR activities lasted more than 10 years, from project appraisal to completion, and during this time some staff changed. It would be beneficial for the staff involved in LAR to be kept stable. It is crucial for all staff involved in LAR to learn and apply not only the national laws and procedures for LAR implementation but also ADB's requirements for LAR; this will facilitate a smoother process and ensure the alignment of expectations of ADB and the government throughout the project. (ii) The actual resettlement costs increased significantly due to the increase of land acquisition compensation rates; the commitment and allocation of adequate funds resulted in smooth LAR; (iii) to effectively implement resettlement measures and resolve affected persons grievances, full consultations and public participations are important. The close cooperation with the community and the establishment of an effective GRM was effective and resulted in a positive outcome for LAR. 26. Based on monitoring and evaluation reports, PCR mission site visits, discussions with affected persons, and discussions with GPDOT, GCHC, and related County/City Coordination Offices (Lixian Wenxian County, and Wudu), it is concluded that the LAR of the Project was satisfactory and in compliance with the resettlement plans. No complaints, grievances or other concerns were noted and affected persons are better off than before the project, demonstrating the success of LAR for the project and the positive impact of the project on affected persons.

65 Appendix A. Introduction ENVIRONMENTAL IMPACT ANALYSIS 1. The project is classified as environment category A. A summary environmental impact assessment (SEIA), containing an environmental management plan (EMP) and an environmental monitoring plan (EMoP) were prepared and assessed in May 2006 for (i) constructing a new, 134 kilometers (km) four-lane expressway;3f1 (ii) upgrading seven local roads; and (iii) transportation service centers that include three freight and passenger centers, 100 township bus terminals, and 300 village bus stops. The SEIA was based on the domestic EIA on the express way, which was prepared by Environmental Protection Center of Ministry of Communication (EPCC) in 2005 and approved in 2008 and additional environmental impact assessment on other project components done by the project preparation team. The SEIA identified sensitive environmental receptors, including several areas of tourist spots and cultural heritage sites such as famous caves, Yaozai creek, Wufeng mountain and numerous villages, townships, and schools that were sensitive to soil erosion, construction noise and dust. A set of comprehensive mitigation measures was prepared and carried out during the project implementation. The minor scope change in numbers of bus stations and bus stops was done in 2009, which did not affect the EMP. 2. The construction of six rural roads except for Wudu Lixian road was completed in The expressway was completed in 2013 and was opened to public in December The bus stations were completed in 2016 and Wudu Lixian rural road was completed in September The environmental completion report was prepared by Beijing Xinguohuan Environmental Technology Development Co., Ltd., which includes results from on-comprehensive site investigation, dialogues with relevant authorities and affected people, environmental monitoring reports (EMR) and construction data, additional environmental monitoring data carried out by Longnan City Environmental Protection Monitoring Station and Gansu Lvchuang Environmental Science and Technology Co., Ltd. The environmental acceptance review was arranged by the implementing agency34f2 and confirmed that EMP was well implemented and mitigation measures for ecological environmental protection, water quality projection, and noise were effective. The acceptance review also confirmed that public opinion survey confirmed high satisfaction from affected people and road users on environmental protection work of the project. It is also confirmed that no major complaints were made during the construction and trial operation of the project. 3. The project completion review mission by Asian Development Bank (ADB) was conducted from 30 January to 7 February During the mission, inspection of relevant sites and facilities was carried out and discussions with representatives from the executing agency (EA) and IAs were held. This report is prepared based on information obtained from the mission, site visit observation, and the records of EMRs prepared and submitted between 2006 and Table A13.1 shows the reports reviewed for project completion assessment relevant to environment impacts. 1 The final alignment was 130 km. 2 New requirements on environmental acceptance procedure were introduced since October 2017.

66 56 Appendix 13 Table A13.1: Reports Reviewed for Project Completion No. Report Title 1 Longnan Environmental Monitoring Station Environmental Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 2 Longnan Environmental Monitoring Station. June 2011.Semi-Annual Environmental Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 3 Longnan Environmental Monitoring Station. December Annual Environmental Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 4 Gansu Changda Highway Co., Ltd., June Semi-Annual Environmental Monitoring Report. Prepared for submission to ADB 5 Gansu Changda Highway Co., Ltd, December Annual Environmental Monitoring Report. Prepared for submission to ADB 6 Longnan Environmental Monitoring Station. July Environmental Quality Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 7 Longnan Environmental Monitoring Station. November Environmental Quality Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 8 Gansu Changda Highway Co., Ltd, August Annual Environmental Monitoring Report. Prepared for submission to ADB 9 Longnan Environmental Monitoring Station. April Environmental Quality Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 10 Gansu Changda Highway Co., Ltd, October Annual Environmental Monitoring Report. Prepared for submission to ADB 11 Longnan Environmental Monitoring Station. February Environmental Quality Monitoring Report. Prepared for the Gansu Provincial Transportation Department for submission to ADB. Longnan City, Gansu, People's Republic of China 12 Gansu Provincial Water Resources Department Soil Conversation Facilities Acceptance of Gansu Province-Qualification Certificate. (No.: S411), which includes Acceptance Certificate (No ) by Water & Soil Conservation Bureau of Gansu Provincial Water Resources Department 13 Gansu Changda Highway Co., Ltd., Environment completion Report for Acceptance. Prepared for Environment Completion Expert Review and for submission to ADB. ADB = Asian Development Bank, Source: Gansu Changda Highway Company Limited. B. Institutional Arrangement and Capacity Training for Environment Management 4. Gansu Province Transport Department (GPTD) was the EA for the project, and took overall responsibility for environmental management performance, including inspection, monitoring, reporting, and initiating corrective actions or measures. The IAs of project components were responsible for daily project operation, as well as EMP implementation, environmental monitoring and reporting during the project implementation. The institutional setting was adequate and the EA and IAs carried out task execution for the project environmental management as agreed at project appraisal. Table A13.2 provides the summary of institutional arrangements for the project s environmental management and the implementation status.

67 Appendix Table A13.2: EMP Responsibilities and the Summary of Implementation Status Duties and Responsibilities Agreed at the Project Appraisal Project EA: Gansu Province Transport Department (GPTD) Complied. Implementation Status Will be responsible for setting up the environmental management system, consisting of inspection, monitoring, reporting, and initiating corrective actions or measures. Will contract Gansu Changda Highway Company (GCHC) to implement the Project. Project IA for Expressway: Gansu Changda Highway Company (GCHC) Will prepare an EMP execution schedule for the contractors; Will prepare and provide the following specification clauses for incorporation into the bidding procedures: (i) a list of environmental items to be budgeted by the bidders in their proposals; (ii) environmental clauses for contract conditions and specifications; and (iii) full EIA and SEIA for compliance. Will establish environmental protection unit at the IA before the construction activities; Will contract a supervision company, which will be responsible for inspection, monitoring, and evaluating implementation of mitigation measures. Will be responsible for organizing the training program, which will cover (i) implementing mitigation measures; (ii) schools near the construction area; and (iii) documentation and reporting. Project IA for local roads: Longnan Municipal Transport Bureau (LMTB) Will be responsible for setting up the environmental management system for local roads, and local county communication bureaus will be assigned as implementing agencies. Project IA for freight and passenger centers: Gansu provincial transport administrative bureaus (GPTABs) GPTD took overall responsibility on EMP, monitoring, reporting and if necessary, initiation of corrective actions/measures. GPTD contracted Gansu Changda Highway Company (GCHC), a state-owned enterprise established in 2001 to manage the expressway. Complied. GCHC established a project management office to provide construction supervision and quality control, comprising the EA's representative, chief engineer and international consultants. The PMO engaged 16 firms and established 20 resident offices to supervise project implementation. The PMO appointed a Chief Engineering Office (CEO) and Resident Engineers (RE) at each resident office, who are responsible not only for supervision of the construction operations but also supervision of environmental, health and safety (EHS) aspects on site. In addition, an international consulting firm has been contracted for inspection and audit of the construction work performance. All the bidding documents and contracts had environmental clauses and EMP provision. Training programs were organized and implemented covering the ADB environmental safeguards, environmental mitigation measures, EHS aspects and measures, GRM, and other EMP requirements including monitoring and reporting. Complied. LMTB designated staff for EMP implementation, who is responsible for communicating with contractors and supervision company for EMP implementation. Complied. GPTAB designated staff for EMP implementation, who is responsible for communicating with

68 58 Appendix 13 Duties and Responsibilities Agreed at the Project Appraisal Will be responsible for setting up an environmental management system and to assign implementing agencies. Independent environmental monitor. Supervision construction company Contractors Implementation Status contractors and supervision company for EMP implementation. Complied. The Longnan Prefecture Environmental Monitoring Station was engaged, conducted environmental monitoring for air quality, water quality and noise level, and prepared semi-annual environmental quality monitoring reports. Complied. Sixteen construction supervision companies were engaged and carried out close supervision and management, including proper implementation of EMP. Complied. Contractors took responsibility and implemented the EMP and EHS requirements, ensuring that practices are undertaken in accordance with the relevant legislative requirements and contract documents. C. Environmental Impacts and Mitigations 5. Soil erosion. At project appraisal, soil erosion impacts were given close attention, as the project involved constructing several tunnels and the alignment passed some areas where severe erosion already occurred. A soil erosion protection plan was developed, which included a range of engineering and management related mitigation actions and measures for subgrades and embankments, bridges, tunnels, disposal sites, borrow sites, and temporary land use areas. The EMRs and the 2017 soil conservation quality certificate confirmed that the project met relevant requirements and technical specifications with regards to soil conservation. The certificate includes comments on increasing efforts on maintenance and repair, recognizing the importance of regular maintenance and quick response times for any repair that may be required. 6. The project involved a large amount of earthworks: The expressway alone involved 12.5 million cubic meter (m 3 ) of excavation, the borrow of 4.4 million m 3, the filling of 12.1 million m 3, and the spoil of 6.7 million m 3. Proper engineering measures were carried out at excavation sites, borrow and spoil pits. Over 201 hectares of land was remediated for the expressway project component. Vegetation measures were taken to cover a total of hectares: over 3.5 million trees and million shrubs were planted. Grass was planted on more than hectares. To ensure the stability of slopes, a range of protection measures were installed suitable to each specific location and condition along the expressway (Figure below).

69 Appendix Figure A13.1: Slope Protection Measures Installed along the Expressway Grid + planting grass at K cutting slope Arch Skeleton + planting grass at Gushuizigou Arch skeleton + planting grass, drainage ditch at Pipa Tunnel entrance Drainage ditch of subgrade toe at Ranjiashan Entrance Drain ditch, six arrises + planting grass at Pipa Interchange Source: Environment Completion Report (2017). Arch skeleton + vegetative bag at Yuhuang Tunnel entrance 7. Despite detailed engineering design and measures installed for slope protection, which were based on extensive geotechnical studies, the project completion review mission still observed potential landslide and/or rockfall risks in steep mountainous areas of Wudu Lixian local road. The mission was informed that additional greening works are planned for 2018 along Wudu Lixian Road. It is strongly recommended that the IA continue dialogue with the relevant government authorities to ensure sufficient resources to carry out continuous road maintenance and safety operation, including emergency responses against road damage and accident induced by land/rock slides in this region.

70 60 Appendix Air quality. The project SEIA provided baseline air quality data along the project areas, which showed local air quality was fairly good, meeting Class II Air Quality Standard (GB ), except for a few villages. Construction dust, emissions from asphalt and concrete mixing, emissions from boilers at service facilities, and traffic related emissions were predicted as main potential sources to deteriorate air quality. During construction, dust control was paid serious attention, particularly at excavation sites. Asphalt concrete mixing stations were carefully selected, and their emissions were monitored. Construction trucks were covered to mitigate dust generation. During project implementation, the PRC regulations became stricter and restricted the use of small coal boilers in the project area, as they do not meet the Emission Standard of Boiler Air Pollutants (GB ). The PCR mission confirmed that some small coal boilers at service facilities have already been replaced with methanol-fueled boilers, and all other remaining boilers will be replaced by October The EMRs and the environmental completion report confirmed that adequate mitigation measures for air quality have been well implemented and ambient air quality monitoring showed that results met the Ambient Air Quality Standards (GB ) as well as the standards revised in Noise. The project SEIA recorded noise baseline data at 9 residential and 11 schools as representative sensitive receptors within 200 meter right-of-way, which showed no noise issue. The EMRs and the environmental completion report confirmed that adequate noise control measures were carried out during construction and noise barriers were installed in various noise sensitive areas based on actual noise monitoring data. It is confirmed that no persistent complaints have been received regarding noise and it is concluded that noise mitigation measures were adequately carried out. At the environmental completion review, additional noise monitoring was performed at a total of 74 noise monitoring sites including 65 residential sites and 9 schools. The results showed that all met the ambient noise standards both during the day and at night. 10. Water and wastewater. At project appraisal, the SEIA identified the project area included a number of seasonal and non-seasonal water bodies, including Luotanghe and Datuanyuhe rivers, which are designated as Class I and Class II rivers respectively by the Gansu provincial government. Extensive water protection measures were developed and carried out to mitigate impacts on water quality, particularly for the construction of bridges and tunnels and to protect drinking water sources. To protect water quality of existing surface water and groundwater, a wide range of mitigation measures were developed and the implementation of the mitigation measures was adequately carried out, with close communication with relevant water bureaus during the project construction. 11. To mitigate construction wastewater impacts of the project, special attention was made. Sediment tanks were installed, and construction wastewater was recycled and reused to minimize any discharge to surface water bodies. The record in EMRs and the environmental completion confirmed that contractors built settling ponds, treated oily wastewater using oil separators, and provided sanitary latrines at workers camps to mitigate impacts on local watercourses. After construction, all the temporary wastewater treatment methods were properly uninstalled and the sites were restored. 12. Drainage and runoff collection systems were also installed at the bridges. Particularly bridges that cross important rivers like Bailongjiang, Luotong, and Datuayu rivers also had rainwater collection systems. The detailed design of centralized drainage system for expressway bridges crossing water for Wuguan Expressway, issued in January 2015, confirmed the successful completion to construct rainwater collection pipes and accident treatment tanks at a total of 20 bridges. The total length of drainage pipe installed is 5,075 meters and a total of 22 accident treatment tanks, with or without oil and water separation pools, were installed.

71 Appendix The records from the EMRs and the environmental completion report confirmed that mitigation measures to protect water quality have been effective, as shown by the water quality monitoring during construction. The sewage treatment measures were also properly implemented, and the monitoring results at the outlet of service center sewage treatment facilities met the Integrated Wastewater Discharge Standard (GB ). 14. The construction of the 23 km of the expressway was completed prior to the designation of drinking water source protection areas by Longnan Municipal People's Government in 2012 and To enhance preventive measures to protect drinking water sources, drainage ditches with sufficient capacity were provided in those road sections, reinforced concrete guard rails are set on both sides of the bridges, and crash barriers are arranged on large and medium-sized bridges located in those road sections. A total of 2,895 meters drainage pipes and 12 accident treatment tanks were installed for those bridges in drinking water protection zones. Emergency response plans specifying prevention measures for risks of hazardous chemical spills and other types of risks/accidents that may pollute drinking water sources were developed and strictly implemented.

72 62 Appendix 13 Figure A13.2: Drainage Pipes and Accident Treatment Tanks at the Project Bridges Source: Environment Completion Report (2017). 15. Ecology. After the project appraisal in 2006, Baishui river national nature reserve was designated as a part of the 2009 zoning plan. The nearest point of the experimental zone of the nature reserve to the expressway alignment is 1.36 km at K The nearest distances between the expressway and the buffer zone and the core area of the Baishui reserve are 2.8 km and 4.2 km, respectively. It was confirmed that there was no borrow pit or nor spoil site within and