Document of The World Bank Report No: ICR2906 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-48120) ON A LOAN IN THE AMOUNT OF US$100 MILLION TO THE PEOPLE’S REPUBLIC OF CHINA FOR A FUZHOU NANTAI ISLAND PERI-URBAN DEVELOPMENT PROJECT (P070519) November 11, 2013 China and Mongolia Sustainable Development Unit Sustainable Development Department East Asia and the Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective) Currency = Renminbi (RMB) Currency Unit = Yuan (Y) Appraisal Completion Effective February 2007 Effective May 2013 Y1.00 = US$0.12 Y1.00 = US$0.1640 US$1.00 = Y8.3 US$1.00 = Y6.0970 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AADT Annual Average Daily Traffic LAR Land Acquisition and Resettlement CPS China Country Partnership Strategy LUTP Leaders in Urban Transport Planning CAS Country Assistance Strategy MTR Mid-Term Review EIRR Economic Internal Rate of Return M&E Monitoring and Evaluation ENPV Economic Net Present Value PDO Project Development Objectives EIA Environmental Impact Assessment PLG Project Leading Group EMP Environmental Monitoring Plan PPMS Project Performance Monitoring System EEM External Environmental Monitoring QCBS Quality and Cost Based Selection FBDMC Fuzhou Bus Depot Management Company QBS Quality Based Selection FEMS Fuzhou Environmental Monitoring Station RAP Resettlement Action Plan FMG Fuzhou Municipal Government RPF Resettlement Policy Framework FUCDC Fuzhou Urban Construction Development Company SEPA State Environmental Protection Agency Fuzhou World Bank Loan Project Management FPMO Office TA Technical Assistance GDP Gross Domestic Products Regional Vice President: Axel van Trotsenburg, EAPVP Country Director: Klaus Rohland, EACCF Sector Director: John Roome, EASSD Sector Manager: Mark Lundell, EASCS Task Team Leader: Ke Fang, SASDT ICR Team Leader Yan Zong, EASCS CHINA FUZHOU NANTAI ISLAND PERI-URBAN DEVELOPMENT PROJECT A. Basic Information .................................................................................................................... i B. Key Dates ................................................................................................................................ i C. Ratings Summary .................................................................................................................... i D. Sector and Theme Codes ........................................................................................................ ii E. Bank Staff ............................................................................................................................... ii F. Results Framework Analysis .................................................................................................. ii G. Ratings of Project Performance in ISRs............................................................................... vii H. Restructuring (if any) ........................................................................................................... vii I. Disbursement Profile ........................................................................................................... viii 1. Project Context, Development Objectives and Design ........................................................... 1 2. Key Factors Affecting Implementation and Outcomes ........................................................... 4 3. Assessment of Outcomes ...................................................................................................... 11 4. Assessment of Risk to Development Outcome ..................................................................... 15 5. Assessment of Bank and Borrower Performance.................................................................. 16 6. Lessons Learned.................................................................................................................... 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................... 20 Annex 1. Project Costs and Financing ...................................................................................... 21 Annex 2. Outputs by Component.............................................................................................. 22 Annex 3. Economic Analysis .................................................................................................... 24 Annex 4. Bank Lending and Implementation Support/Supervision Processes ......................... 28 Annex 5. Beneficiary Survey Results ....................................................................................... 30 Annex 6. Stakeholder Workshop Report and Results ............................................................... 31 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................. 32 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................................... 36 Annex 9. List of Supporting Documents................................................................................... 37 A. Basic Information Fuzhou Nantai Island Country: China Project Name: Peri-Urban Development Project Project ID: P070519 L/C/TF Number(s): IBRD-48120 ICR Date: 11/07/2013 ICR Type: Core ICR THE PEOPLE'S Lending Instrument: SIL Borrower: REPUBLIC OF CHINA Original Total USD 100.00M Disbursed Amount: USD 92.93M Commitment: Revised Amount: USD 92.93M Environmental Category: A Implementing Agencies: Fuzhou Development and Reform Commission Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 02/17/2004 Effectiveness: 02/16/2007 02/16/2007 06/14/2011 Appraisal: 02/28/2005 Restructuring(s): 03/19/2013 Approval: 12/15/2005 Mid-term Review: 10/15/2009 12/02/2009 Closing: 06/30/2011 05/31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at any time Yes Quality at Entry (QEA): None (Yes/No): Problem Project at any Quality of Supervision Yes None time (Yes/No): (QSA): DO rating before Moderately Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Rural and Inter-Urban Roads and Highways 48 40 Sub-national government administration 3 5 Urban Transport 49 55 Theme Code (as % of total Bank financing) City-wide Infrastructure and Service Delivery 40 40 Environmental policies and institutions 20 20 Injuries and non-communicable diseases 20 20 Pollution management and environmental health 20 20 E. Bank Staff Positions At ICR At Approval Vice President: Axel van Trotsenburg James W. Adams Country Director: Klaus Rohland David R. Dollar Sector Manager: Mark R. Lundell Jitendra N. Bajpai Project Team Leader: Ke Fang Shomik Raj Mehndiratta ICR Team Leader: Yan Zong ICR Primary Author: Jean Paul Velez F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the project is to support sustainable peri-urban development in Fuzhou (as it expands to include Nantai Island) by providing strategic transport infrastructure and ii by strengthening the city's decision support system on land development and management. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Travel times (for autos and public transport) from key points in Nantai Indicator 1: Island to central Fuzhou. Corridor 1 Autos: 22 14 15 Public transport 1: 46 35 35 Corridor 2 Autos: 43 35 28 Corridor 3 Autos: 25 22 18 Public transport 2: 35 30 30 Corridor 4 Public Transport: 83 75 63 Date achieved 03/09/2005 05/31/2013 04/30/2013 Comments Achieved. Target values for autos and public transport were achieved (incl. % for all four corridors. Specifically, target values were achieved six achievement) times, exceeded three times, and slightly lower one (1 minute difference, considered inconsequential). Indicator 2: Increase in level of public transport coverage. No. of bus routes: 53 70 114 No. of route-km: 327.5km 700km 910 km Annual No. of bus 85.8 million 200 million 739.6 million passengers (person- times/year): Date achieved 03/09/2005 05/31/2013 04/30/2013 Comments Achieved. Public transport coverage in terms of number of bus routes (incl. % and number of bus route-km and annual bus passengers increased achievement) beyond the target values set at appraisal. Public transport demand also exceeded target value. Indicator 3: Adoption of measures stemming from Technical Assistance Incorporation of a City does not City has City has mechanism to coordinate have mechanism incorporated incorporated 1 Public transport travel time: in-vehicle travel time in minutes + walk time in minutes + wait time in minutes + transfers one time. 2 Public transport travel time: in-vehicle travel time in minutes + wait time in minutes + wait time in minutes + transfers one time. iii land use and transport mechanism in mechanism in planning in the master master plan master plan update plan update update Adoption of a tool to City does not City has adopted GIS based land use monitor land values (a have tool tool planning and land GIS-based system) management tools have been developed under other projects and widely used. Adoption of initiatives to City does not City has adopted The city has improve planning and have initiatives initiatives adopted initiatives built environment in carried out under Nantai Island from TA, planning projects such as the adoption of financed by new urban design domestic funds. guidelines, action to preserve historic areas or zoning regulations based on specific functional specifications. Date achieved 03/09/2005 05/31/2013 04/30/2013 Comments Achieved. Originally planned measures to improve the land use and (incl. % transport planning process were implemented either under the Project or achievement) through domestic-funded projects by the FMG. Indicator 4 : Other Indicators Monitored Increase Population in 480,000 No target value 786,900 Nantai Island: in the PAD Size (product value) of 20.93 billion No target value 55.97 billion CNY secondary industry in CNY in the PAD Nantai Island: Road maintenance 52.9 million No target value 58.97 million CNY budget provided to road CNY in the PAD maintenance department in Fuzhou: Mode shares in Fuzhou No target values in the PAD Pedestrians: 35.25 23.54 Cycle: 30.06 9.1 Electric Cycle: 27.47 Bus: 12.45 18.14 Taxi: 1.1 4.1 Motorcycle: 13.77 2.2 Autos: 7.37 13.7 Others: 1.75 iv Date achieved 03/09/2005 05/31/2013 11/01/2013 Comments Achieved. These indicators did not have target values in the PAD. (incl. % achievement) Population and product value of secondary industry in Nantai Island exceeded the FMG’s projections at appraisal. Mode share changes show an increase in public transport, cycles/e- cycles, and private auto use, while walking decreased significantly. The current mode share is consistent with a city growing in size and income. Transport demand is being met by a balanced mode share. (b) Intermediate Outcome Indicator(s) Actual Value Original Target Formally Achieved at Indicator Baseline Value Values (from Revised Completion or approval documents) Target Values Target Years Component 1 Progress rate of physical works and the beginning of operations for road infrastructure (percentage of civil works completed) NJBL: 0 100 At FMG’s 84% of original project request, and 100% of revised NJBR target Section III was dropped (16% of original project) 3RR: 0 100 100 Kuiqi Bridge: 0 100 99 Date achieved 03/09/2005 05/31/2013 11/01/2013 Comments: Substantially achieved. All major works for all three road investments have been completed, and all three are now fully operational. At the FMG’s request, Section III of Nanjiangbin Road (16% of the original project extension) was dropped due to changes in planned road network needs. Functionality of Nanjiangbin Road was not compromised by this change. Bank financing for this section was reallocated to other elements of the road component. The non-motorized transport access ramps to the Kuiqi Bridge have not been completed, due to delays in carrying out necessary resettlement activities (minor in scope). Component 2 Progress rate of works for public transport infrastructure (percentage of civil works and equipment completed) Bus Priority 0 100 100 Date achieved 03/09/2005 05/31/2013 11/01/2013 Comments: Achieved. The pilot bus priority lane was implemented and started operations in 2007. Building on this experience, and studies carried out as part of the Public Transport TA, seven additional bus priority lanes have been v implemented throughout the city. Jinshan Bus 0 100 80 Depot Date achieved 03/09/2005 05/31/2013 11/01/2013 Comments: Partially achieved. The construction of Jinshan Bus Depot faced delays during implementation. At the time of writing this ICR, 80 percent of construction targets have been met. The project will be completed by March 2014. Dispatching 0 100 PT ITS (GPS 100 equipment and supported other equipment subcompone nt was dropped. Date achieved 03/09/2005 05/31/2013 11/01/2013 Comments: Procurement of dispatching equipment and other ITS was dropped from the Bank-financed project as part of the second restructuring conducted in March 2013. However, FMG kept this initiative, and expanded it in scope, in line with the Bank’s suggestions. The equipment will be deployed and operational in early 2014. Component 3 Progress in completion of institutional development and TA activities. Strategic Study conducted Study conducted Planning TA Public Transport Study conducted Study conducted TA Computerization Management system No management procured, data systems procured. Data collected, and staff was collected as part of trained TA studies. Training on management systems (FM) was completed. Training Number of staff Various training trained, skills initiatives completed assessment on Bank procedures, and public transport planning and operations. The number of staff trained and skills developed were not tracked. Date achieved 03/09/2005 05/31/2013 04/30/2013 Comments: Achieved. Based on the FMG’s priorities, the Strategic Planning TA focused on preparation of studies in support of detailed economic development strategies for the local port areas in Nantai Island. Recommendations from studies were adopted in the new strategy for the port. Recommendations from the Public Transport TA were adopted as part of the Public Transport Master Plan and led to better land use and transport planning coordination in the general Master Plan update (the Master Plan itself is understood as ‘the mechanism’). vi Various training initiatives completed on Bank procedures (safeguards, FM, procurement) and public transport planning and operations (bus sector reforms, bus priority schemes, ITS, Leaders in Urban Transport Planning Program). The number of staff trained and skills developed were not tracked. G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 03/21/2006 Satisfactory Satisfactory 0.00 2 03/30/2007 Satisfactory Satisfactory 0.25 3 04/03/2008 Satisfactory Moderately Satisfactory 1.75 4 06/25/2009 Moderately Satisfactory Moderately Satisfactory 15.12 5 10/12/2009 Moderately Satisfactory Moderately Satisfactory 16.71 6 04/21/2010 Satisfactory Moderately Satisfactory 40.41 7 05/05/2011 Satisfactory Satisfactory 75.31 8 03/24/2012 Satisfactory Moderately Satisfactory 82.84 Moderately 9 12/20/2012 Unsatisfactory 89.45 Unsatisfactory 10 05/24/2013 Moderately Satisfactory Moderately Satisfactory 92.93 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions The loan closing date was extended to March 31, 2013. 06/14/2011 S S 75.31 This is to complete remaining project activities, and therefore fully achieve the project development objective. US$6.33 million was cancelled. Withdrawal of the proceeds of the loan was revised. The loan closing date was extended to May 31, 2013. 03/19/2013 N MU U 89.45 The extension would allow the client to complete the remaining project activities under the Strategic Road Infrastructure Component (Third Ring Road vii ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions and Kuiqi Bridge) which accounts for 76.63% of the total original project investment and is critical to achieving the development objectives of the Project. I. Disbursement Profile viii 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Country and Sector Context 1. At the time of appraisal (July 2005) China continued to experience high levels of economic growth and its cities had become vibrant economic engines. China’s achievements in terms of economic growth and poverty reduction in the preceding 25 years had been impressive, quadrupling per capita Gross Domestic Products (GDP) and lifting over 400 million people from absolute poverty. The 10th Five-Year Plan (2001-2006), aiming to achieve annual GDP growth rates of at minimum 7 percent, had been characterized as one of transition from a rural to an urban economy, and the ongoing structural changes were evident. From 1995 to 2002, Chinese cities had increased their population by 150 million residents, and, by 2005, they were attracting more than 50 percent of all foreign direct investment in the country. 2. At the local level, cities, particularly those in the fast growing coastal regions, were grappling with rapid transformations. Their growing population required fast production of new housing units, be it by the redevelopment of the existing city or its expansion to undeveloped areas. The expansion of most cities to agricultural or mixed-use lands in their periphery was imminent, and, thus, strategic investments in infrastructure, particularly transport infrastructure, were necessary to support that process and ensure good accessibility moving forward. 3. Most Chinese cities, however, lacked the institutional capacity, as it pertained to decision support tools and implementation systems, to manage their growth strategically towards agreed- upon economic development and sustainability goals. Global experience indicates that urban development is path-dependent, meaning that once strategic investments are made and trends take hold, development patterns are ‘locked in’ along a particular path that is exceptionally hard to reverse. As such, if growing cities continued their peri-urban expansion in an unplanned manner, the consequences could be very costly for the millions of Chinese urban dwellers and future generations to come. Rationale for Bank Involvement 4. In relation to the ongoing process of urban expansion and peri-urban development, there were two areas for Bank involvement. First, the Bank could offer cities technical and financial support to conduct strategic transport infrastructure investments that facilitated the expansion in efficient and sustainable patterns. Second, the Bank could work alongside city governments to help put in place the requisite structure of institutions, policies and mechanisms that would guide city expansion within those same lines of efficiency and sustainability. 5. Fuzhou, the capital of Fujian Province, was a rapidly growing city where Bank’s involvement could have an impact. Local GDP growth had averaged 13-16 percent in the preceding decade and pressures for rapid urban expansion were accelerating. The city projected that its population would grow from 1.58 million in 2002 to over 2.4 million in 2020, with a parallel increase in per capita income from US$1,070 to US$10,000. 6. The Fuzhou Municipal Government (FMG) requested the Bank to support the construction of three major road projects and a bus depot in Nantai Island, one of its designated areas for urban expansion. Located south of Fuzhou’s city center within the bordering Min River, Fuzhou’s Master Plan dictated that Nantai Island, which has a surface of 142 km2, should 1 increase its urbanized area from 12 km2 (8.5 percent) in 1999 to 121 km2 (85 percent) in 2020 to accommodate the expected population growth from 344,000 to 800,000 residents in that period. The proposed road investments constituted the core transport infrastructure investments devised to set off the urbanization of Nantai Island. Bank involvement would see that these investments were made in ways that supported public transport use and encouraged the use of non-motorized modes, thus providing quality services for lower-income populations and offering alternatives to help reduce overall dependence on private vehicle use. 7. The FMG also asked for additional Bank support to strengthen its ability to manage the city’s growth and peri-urban expansion processes, through two strategic lines of work. First, the FMG requested the Bank’s contribution to review and update the city’s Urban Transport and Urban Development Master Plans (official revisions to the then active 1995-2010 Plans were due in 2006), particularly, in relation to the expansion of public transport services in the city. Second, the FMG requested the Bank’s help to strengthen the local institutions, systems and processes to carry out the necessary infrastructure investments (transport, energy, water and sanitation, etc.) to carry out the city’s peri-urban expansion agenda effectively. 8. More generally, the rationale was that through a Bank investment project, the FMG would have the opportunity to learn from the Bank’s experience in institutional development, procurement and financial management, both globally and throughout China. This would be the first Bank project prepared and implemented by the FMG. At the appraisal stage, the Bank Task Team was already reporting signs of the positive impact of the Bank’s rigor in project preparation on local agencies’ staff. Moving forward to implementation, the Bank’s involvement was also expected to contribute better procurement under Bank guidelines, and improved project management and construction quality. Contribution to Higher Level Objectives 9. With China entering the ranks of middle-income developing countries in 2000, the Bank’s 2003-2005 Country Assistance Strategy (CAS) sought to support the country through a period of crucial transitions. In particular, the CAS aimed to aid the country in: (i) the transition from a rural, agricultural society to an urban, industrial society; and (ii) the transition from a centrally-planned economy to a more globally integrated market-based economy. The project looked to assist Fuzhou through such transitions by offering technical and financial assistance in support of the city’s peri-urban expansion. The project’s potential demonstrational effects could also prove to have positive impact in other cities in the country going through a similar process. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) PDO 10. Project Development Objective is to support sustainable peri-urban development in Fuzhou (as it expands to include Nantai Island) by providing strategic transport infrastructure and by strengthening the City’s decision support system on land development and management. Key Indicators 11. The key project outcome indicators selected (detailed in Data Sheet, Section F, above) were indicators measuring the urban development activity in Nantai Island (population, and size of manufacturing industry), reduction in travel times between locations in Nantai Island and central Fuzhou, and the adoption of the recommendations of the TA component leading to 2 outcomes such as more effective transit-oriented development and more effective public transport service. In turn, the key project output indicators monitored the implementation of selected priority investments, and the successful completion of the TA activities. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 12. The PDO and key indicators were not changed throughout the project. 1.4 Main Beneficiaries 13. The proposed project beneficiaries were, in general, the population of Fuzhou, as the development of Nantai Island would allow efficient and sustainable urban growth to accommodate the city’s growing population and expanding industries, thus preventing overcrowding and congestion. The primary target group was comprised of those residing, commuting or traveling to Nantai Island at the time, and those projected to do so in the foreseeable future. Another target group included the municipal institutions responsible for land use planning and management that would be strengthened through TA and institutional development activities. 1.5 Original Components (as approved) 14. The project was structured in three different components: 15. A strategic road infrastructure component (US$248.64 million, US$88.22 Bank financing) comprising the construction of three road projects to facilitate the urbanization of Nantai Island: (i) Nanjiangbin Road, a 4.1 km riverside road along the south bank of the Min River, coupled with a 1.1 km southern approach road to the Qianheng Bridge and the local road network of Nantai Island; (ii) the southern section of the Third Ring Road (hereon simplified as Third Ring Road), an 11.6 km segment of a six-lane expressway providing expedient mobility across Nantai Island and opening up new areas for urban development; and (iii) the Kuiqi Bridge, a double-pylon, double-plane, cable-stayed structure across the Min River, serving as the connecting link in the road network between Nantai Island and Fuzhou’s urban core. 16. A public transport component (US$20.50 million, US$8.87 Bank financing) aiming to improve the efficiency and quality of service of public transport in Nantai Island through the construction of the Jinshan Bus Depot, a facility to integrate overnight parking and a maintenance depot for buses, a dispatch center, and a passenger interchange. In addition, the component included the enhancement of on-street operations through the introduction of different technologies and on-street priority for public transport services in one key corridor. 17. An institutional development and TA component (US$2.90 million, US$2.90 Bank financing) to maximize the benefits and sustainability of the investment components, and to support capacity-building efforts to strengthen the FMG’s agencies. Specifically, areas of focus included the development of public transport plans, capacity building for regulation, planning and operations of public transport, and capacity building to support urban development management. 3 1.6 Revised Components 18. The scope of the project components remained unchanged until the completion of the project. The only major revision was the cancelation of Nanjiangbin Road Section III, due to changes in the planned road network that made this section unnecessary. 1.7 Other significant changes 19. At the request of the FMG and China’s Ministry of Finance, the project was restructured twice. The first loan restructuring took place in June 2011, extending the loan closing date from June 30, 2011 to March 31, 2013 (i.e., 21 months). The objective of this restructuring was to ensure the completion of all project activities, and therefore fully achieve the project development objective. The second loan restructuring took place in March 2013, canceling US$6.33 million of the loan total earmarked for the construction of Jinshan Bus Depot, support ITS procurement, and related TA activities. It also extended the loan closing date to May 31, 2013. As such, the final Bank loan totaled US$93.67 million. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Adequacy of the Project Concept 20. The project’s concept, combining road investments of different levels of hierarchy, and strategic public transport investments and TA activities, represented a good practice in terms of putting in place basic transport infrastructure elements to promote the development of Nantai Island. In turn, additional activities under the proposed institutional development and TA component were devised to facilitate pursuing sustainability goals in the medium term, once key infrastructural investments had been completed and the local authorities had developed the necessary capacities to work on such issues. Adequacy of Government Commitment 21. The Task Team was able to develop a strong working relationship with the FMG during preparation, an issue of special importance in Fuzhou where the local leadership played a more direct ‘hands-on’ role in transport planning decisions. The strength of this relationship allowed Cathedral candid discussions on various project implementation issues and agreements on appropriate solutions between the Bank team and the implementing agencies during the project implementation. The FMG also decided to go beyond the local resettlement policy and carry out an extensive consultation process regarding the relocation of the administration building of Fanchuanpu Cathedral, a local cultural heritage site that obstructed the optimal alignment of Nanjiangbin Road, notwithstanding the longer implementation period and additional costs that such approach would entail. Adequacy of Risk Assessment 22. The risk assessment carried out as part of project preparation identified some of the project’s most critical risks and put in place adequate mitigation measures to enhance project implementation. In relation to the investment components, the two main risks identified were procurement issues and quality of construction. In response, project design incorporated: (i) a 4 detailed action plan to strengthen the procurement capacity of the implementing agencies, and a project-specific procurement manual; and (ii) a number of TA activities related to construction supervision to ensure high construction quality. For the TA component, the main risk identified was a potential lack of government ownership and acceptance of the policy recommendations and other outcomes, thus, project design incorporated special flexibility to ensure that the activities carried out would respond to government priorities during implementation. However, risks related to the implementation of social and environmental safeguards were underestimated. Although the required safeguard instruments were put in place, the time to implement them was not properly assessed. Overall Quality at Entry 23. At appraisal, the Task Team had completed the preparation of a sound project, addressing directly the client’s need to expand to Nantai Island, while demonstrating the Bank’s value added through the inclusion of investments and TA activities promoting public transport use, and the adoption of special provisions pertaining to environmental and social safeguards. All technical designs and analyses had been prepared by well recognized and experienced Chinese design institutes, and reviewed by the Task Team. The project also displayed a clear client orientation. The FMG urgently needed to start the works on Nanjiangbin Road, thus, during preparation the Task Team supported the local agencies in the bidding of a first section of the project to be financed retroactively by the Bank’s loan under the advanced works modality. 2.2 Implementation Progress at Mid-Term Review 24. During the first two years of implementation, the project faced delays primarily related to resettlement issues. By the project’s Mid-Term Review (November 30, 2009), US$20.562 million out of the loan of US$100 million had been disbursed, versus a disbursement of US$50 million expected by that date. Implementation results were, nevertheless, already evident. The pilot bus priority lane had been completed, and civil works for Nanjiangbin Road were almost finished. Overall, the three project components were showing progress, and it was considered likely that the project development objective would be met by project closing. Moreover, the project had achieved some notable outcomes, including: (i) the administration building of Fanchuanpu Church had been successfully relocated to great satisfaction of the local community and the local authorities, and positive media coverage; (ii) the FMG had adopted a new progressive resettlement policy, incorporating special provisions to ensure that sufficient care and attention were paid to potentially displaced people; and (iii) the FMG had established a Regional Wetlands Protection Plan to preserve this valued local ecosystem along the Min River. 25. The main resettlement issues remaining were two. First, the construction of Jinshan Bus Depot had not yet started due to continuous delays in completing the required land acquisition process. Second, as civil works on Kuiqi Bridge progressed, the land for building resettlement houses for affected populations by its northern section remained unavailable. As part of the Mid- Term Review, it was agreed that the FMG would give special priority to the resolution of both of these issues. 26. Overall, progress on resettlement was slow, but consultations with all the displaced populations and villagers affected by the project revealed that most people were satisfied with their new situations. Local authorities demonstrated a commitment to listening to complaints and concerns of affected villagers and families, and to work with them to find mutually agreeable 5 solutions. While project delays were a concern, the Task Team supported the extensive consultations followed by the local authorities. Project Restructuring 27. As noted in Section 1.7, the project was restructured twice during its lifespan. In June 2011, the first loan restructuring extended the loan for a period of twenty-one (21) months, pushing the project closing date from June 30, 2011 to March 31, 2013. The extension was needed to complete delayed investment activities, including the Kuiqi Bridge, the Third Ring Road and Jinshan Bus Depot. In March 2013, the second loan restructuring extended the loan for two (2) more months, setting the final closing date of May 31, 2013. The extension aimed to allow for the completion of a few remaining minor works under the Kuiqi Bridge and the Third Ring Road. The second restructuring also included the cancelation of US$6.33 million of the loan allocated for Jinshan Bus Depot, ITS equipment and TA activities that were not going to be spent by the loan closing. Progress by Project Closing Date 28. All major investments under the strategic road infrastructure component were completed by the closing date of the project. Sections I and II of Nanjiangbin Road were completed successfully following the Mid-Term Review, while Section III (a 1.1 km approach to the Qianheng Bridge) was dropped from the Bank-financed project shortly thereafter at the FMG’s request. The planned functionality of Nanjiangbin Road at appraisal was not compromised by this change. The main works for the Third Ring Road and the Kuiqi Bridge were completed by project closing, after some delays in implementation due to resettlement issues. The resettlement delays stemmed from lengthy negotiations with affected populations (see Paras 25, 26). Minor works remained to be completed for both projects at project closing, including a series of linking ramps at the Third Ring Road – Fuquan Expressway intersection and four non-motorized transport access ramps to the Kuiqi Bridge. At the time of writing this ICR, the FMG reported that the Third Ring Road’s linking ramps would be completed in November 2013, while it could not offer a definitive estimation of when the Kuiqi Bridge’s non-motorized transport access ramps would be completed, since necessary resettlements (minor in scope) were delayed. 29. The main investment under the public transport component, Jinshan Bus Depot, had only completed 35 percent of its construction targets at project closing. The primary sources of delays were two. First, a slow and very difficult land acquisition process, which caused almost two years delay (though in the end, land acquisitions were completed satisfactorily and without major complaints). Second, a series of local government reforms in 2010 and 2011 affecting public transport operations and management that led to delays in the completion of Jinshan Bus Depot’s final designs and the procurement of its civil works contractor for another two years. The reform process started just when the land acquisition had been completed, so the overall impact of these two delays was compounded. At the time of writing this ICR, the FMG reported that civil works at Jinshan Bus Depot had made substantial progress since project closing (having met 80 percent of construction targets), and estimated that they would completed by March 2014. Procurement of ITS equipment in support of operations at Jinshan Bus Depot should also be completed by March 2014 (in fact, the city is planning to extend its ITS deployment throughout the city in 2014). Accordingly, the FMG expects that Jinshan Bus Depot will be fully operational by June 2014. The public transport component also included the implementation of a pilot bus priority lane in central Fuzhou, which was completed in 2007. Building on this experience, and studies carried out as part of the Public Transport TA, seven additional bus priority lanes have been implemented 6 throughout the city. Currently, there are eight bus priority corridors for a total of 40 km in operation. The city plans to expand its bus priority network to a total of 120 km by 2018. 30. The institutional development and TA component was substantially implemented by the project closing date, albeit with some modifications in scope and implementation delays. The Public Transport TA, aimed to support the improvement of public transport services in Fuzhou, was fully implemented as originally planned. The Public Transport Master Plan approved by the local government adopted key recommendations from the Public Transport TA in relation to public transport route increases and the development of bus priority corridors. In addition, sector reforms to improve quality of service and overall sector performance were also adopted following the Public Transport TA’s recommendations, including the establishment of a public transport regulator and an independent bus terminal and depot management company, and the formation of new public transport operators. 31. The Strategic Planning TA, aiming to address strategic planning issues and support the effective implementation of urban development plans, was also implemented with some modifications in its original scope, to reflect rapid changes in the urban development context and the FMG’s policy priorities. During the early part of the project implementation, Fuzhou underwent a process of rapid economic growth and population increase that exceeded all previous projections. In response, the FMG carried out a number of large size planning projects with their own funds, and through those projects, implemented all those strategic planning initiatives with its own funds. As such, that were included to the Project, in a larger scale and faster speed. Those initiatives originally included under the Strategic Planning TA were implemented in reasonably good quality through those locally-funded projects, including: (i)included the development of GIS-based systems for land use monitoring and the development of analytical techniques to support the city planning department; (ii), the development of a Strategic Impact Assessment framework; (iii), the development of a short-term strategy for urban heritage management; and (iv) the development of urban design guidelines that promote transit-oriented development. The planning initiatives were implemented in reasonably good quality under those domestic-funded projects. Consequently the FMG and the Task Team agreed to modify the scope of the Strategic Planning TA (funded with the loan) to focus on the preparation of detailed strategies for the redevelopment of the port areas in Nantai Island, which are considered of vital importance to the economic growth of, not only Nantai Island, but Fuzhou as a whole. Key recommendations generated from this work were largely adopted by the local authorities as part of the port’s strategy and Nantai Island’s Master Plan. Additionally, this work adopted a rigorous planning process including stakeholder consultations and quantified spatial economic analyses, which demonstrated the value of international best practices to local planners. Cost Increases 32. Project costs increased from US$324 million at appraisal to US$526 million at completion, with all additional funding provided by the client. The main factors contributing to these increases were: (i) US dollar depreciation relative to the RMB (about 26 percent); (ii) increased construction material prices and inflation; and (iii) increased resettlement costs for the Third Ring Road, the Kuiqi Bridge and Jinshan Bus Depot. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 33. The M&E framework devised in project preparation established a series of outcome indicators to follow progress in achieving the project development objective (namely, travel times by car and public transport, public transport coverage and ridership, and the adoption of 7 recommendations from the TA component) and a series of output indicators to follow progress in completing the project’s main investment and activities (see Data Sheet, Section F). These indicators were selected adequately and comprehensively from a technical, institutional and operational standpoint. The M&E framework proposed that outcome indicators were only to be reported to the Bank at project start, Mid-Term Review and completion, granted the inherent complication in measurement. Intermediate indicators were reported to the Bank in semi-annual progress reports on project implementation throughout the project’s life, serving this purpose appropriately. 2.4 Safeguard and Fiduciary Compliance Environmental Safeguards 34. The project was classified as Category A under OP 4.01 Environmental Assessment due to the environmental impact caused by the construction of new roads in an urban setting. Consequently, a comprehensive Environmental Impact Assessment (EIA) and an Environmental Monitoring Plan (EMP) were developed as part of project preparation, and implemented with the support of a sound environmental management system put in place by the client (in terms of staffing, supervision and reporting). As such, project performance on environmental safeguards is considered satisfactory. 35. Notably, the project’s achievements in environmental preservation went beyond the original project goals. The FMG’s initial proposal included a section of Nanjiangbin Road running through a wetlands island located along the Min River. Partly the intent of that section was the promotion of land development in the wetlands, which comprised a potential source of important revenues for the city. Due diligence during preparation identified that this type of development would have a considerable adverse environmental impact for Fuzhou and its surrounding region due to the loss of the wetlands’ vast ecological, hydrological and aesthetic values. It was agreed between the State Environmental Protection Agency (SEPA), the local authorities and the Bank to postpone the immediate reclamation of the wetlands for development, and instead carry out a more thorough impact and alternatives analysis. Subsequently, the local authorities and the Bank agreed to modify the scope of the project, cancelling the section of Nanjiangbin Road that ran through the wetlands. Moreover, a detailed study on the wetlands was eventually completed, prompting the government to adopt a Regional Wetlands Protection Plan for all wetlands identified, and appointing the local Forest Service for its implementation. Though a small development with minor impact was still allowed in the main wetlands island, this was much more limited than the original proposal that would have destroyed the entire ecological system. In addition, the scope of the Regional Wetlands Protection Plan, which goes well beyond the project’s direct areas of impact to cover a much wider area, entails environmental preservation of even more significant proportions. Social Safeguards 36. A Resettlement Action Plan (RAP) was prepared during project preparation for Nanjiangbin Road and the Third Ring Road, while a Resettlement Policy Framework (RPF) was prepared for the project to guide the preparation of a RAP for the Kuiqi Bridge and Jinshan Bus Depot, since the details regarding the alignment and location of these two investments had not been finalized by appraisal. Both the RAP and RPF were developed in accordance with local laws and the Bank’s OP 4.12 on Involuntary Resettlement, building on consultations with different groups of affected people. Both the RAP and RPF were successfully carried out without any major complaints. Ex-post interviews with resettled people indicate a high level of satisfaction. 8 Although the outcome was satisfactory, the considerable delays and additional costs in resettlement lead to a moderately satisfactory rating for social safeguards. 37. One of the project’s flagship accomplishments on social safeguards is the successful relocation of the administration building of Fanchuanpu Cathedral, a provincial cultural heritage site that obstructed the optimal alignment for Nanjiangbin Road. With the Bank’s support, the local authorities carried out a long and exhaustive public consultation process to agree on the best alternative to deal with the situation. The resulting relocation strategy had the building (a 1,500 ton structure originally erected in 1929) lifted, moved in parallel 89 meters, rotated 90 degrees, and moved again another 30 meters. This impressive effort captured the attention of the national media. Moreover, today the Fanchuanpu Cathedral and its administration building work in unison, providing great services to the local community and visitors. Both in its community consultation process, and in the engineering feat itself of relocating such a large building, this project demonstrated best practice for cultural preservation, and is a reference for the rest of the country. 38. It is also worth noting that the social safeguards efforts carried out during implementation went beyond the original scope of actions devised during project preparation. The alignment of Nanjiangbin Road went through a slum area of 3,000 households (10,000 habitants), yet only 480 households were directly affected by the alignment. After multiple consultations, the FMG decided to resettle the slum’s population (all 3,000 households), with the aim of improving living conditions for this low-income community. The development and eventual impact to the community of this resettlement process were so positive that the FMG decided to adopt the general framework, principles and practices utilized under a new local resettlement policy. Given its provisions to ensure that local government agencies can offer a range of quality resettlement alternatives and potentially displaced populations are properly empowered to decide between those alternatives, this policy stands as a benchmark in terms of resettlement practices to be referenced and adopted by other cities in China. Financial Management 39. Project performance in financial management was satisfactory. Through its lifetime, the project maintained an adequate project financial management system that provided, with reasonable assurance, accurate and timely information on the project progress and use of the Bank loan proceeds. In some instances there were significant delays in the local internal approval of disbursements, prompting the Bank to promote better communication among the different government agencies involved. Another source of delays in disbursement was that, initially, the loan balance on the designated account was insufficient for the size of different expenditure disbursement requests. This led to the Bank working with local authorities on improving their financial management practices, and an eventual increase in the authorized allocation to the designated account. Procurement 40. Project performance in procurement was generally satisfactory. In total, 16 procurement contracts were awarded, including: (i) 12 civil works contracts through international competitive bidding and national competitive bidding based on the Bank’s Procurement Guidelines; and (ii) 4 consulting service contracts under Quality and Cost Based Selection (QCBS) and Quality Based Selection (QBS) based on Bank’s Guidelines on Consultant Recruitment. Most procurement delays can be attributed to limited local capacity for the evaluation of bids and proper due diligence, partly in the case of Jinshan Bus Depot. Additional delays were incurred due to 9 complaints made in relation to a few bidding processes, which were elevated to the corresponding higher authorities and adequately resolved. 2.5 Post-completion Operation/Next Phase Finalization of Project Investments 41. At project closing, all major investments under the strategic roads component were completed, and were fully operational and providing high levels of service. Nanjiangbin Road opened to traffic in April 2010, bringing to fruition an important element of Nantai Island’s road network and improving access to neglected lands adjacent to the Min River. The Third Ring Road opened in January 2012, relieving congestion for movements in, out and through Nantai Island, and constituting the main development spine in the south of Nantai Island. Finally, the Kuiqi Bridge opened in December 2011, offering an improved connection between the central city and Nantai Island, and the corresponding adjacent areas. Only two minor civil works had not been completed at project completion: the linking ramps at the Third Ring Road – Fuquan Expressway intersection and the non-motorized transport ramps to the Kuiqi Bridge. At the time of writing this ICR, the FMG reported that the Third Ring Road’s linking ramps would be completed in November 2013, while it could not offer a definitive estimation of when the Kuiqi Bridge’s non- motorized transport access ramps would be completed, since necessary resettlements (minor in scope) were delayed. 42. At project closing, completed works at Jinshan Bus Depot comprised site preparation and foundations, or 35 percent of construction targets. Following the second project restructuring, the FMG sent a letter to the Bank asserting its commitment to complete Jinshan Bus depot with local funds. At the time of writing this ICR, the FMG reported that civil works at Jinshan Bus Depot had made substantial progress since project closing (having completed 80 percent of construction targets) and estimated that they would complete construction by March 2014. Procurement of ITS equipment in support of operations at Jinshan Bus Depot is also expected to be completed by March 2014, in line with the Bank’s suggestions. Accordingly, the FMG expects that Jinshan Bus Depot will be fully operational by June 2014. The pilot bus priority lane was implemented in 2007. Building on this experience, and studies carried out as part of the Public Transport TA, seven additional bus priority lanes have been implemented throughout the city. Currently, there are eight bus priority corridors for a total of 40 km in operation. The city plans to expand its bus priority network to a total of 120 km by 2018. Operation & Maintenance Arrangements 43. All the facilities completed under the project are now operated and maintained by experienced government agencies, funded through annual budgetary allocations from the municipal government. The sustainability of these facilities over the years is very likely, on the basis of the fact the works were done on a sound design and construction quality without any defects. In addition, the FMG has confirmed to the Bank that all project facilities have been adopted by the relevant departments, which have appropriate budgets for the facilities’ operations and maintenance. Finally, the city has adequate knowledgeable and skilled personnel to operate and maintain the infrastructure. Sustainability of Reforms and Institutional Capacity 44. As a byproduct of project preparation and the implementation of the TA component, the FMG carried out a series of institutional reforms in the public transport sector aiming to improve 10 quality of service and overall sector performance. These reforms included: (i) provisions promoting the formation of new public transport service operators, incentivized to compete among themselves ‘for the market’; (ii) the establishment of a public transport services regulator, tasked with ensuring good overall sector performance, the individual supervision of operators’ performance, and the bidding of new routes; and (iii) the establishment of a bus terminal and depot management company, independent from any of the operators. These reforms have helped to improve public transport services in Fuzhou, as well as the rapid expansion of services into Nantai Island. Given the strong momentum, the sustainability of the reforms supported under the project is assured. 45. As described earlier, two significant reforms were also implemented in environmental and social safeguards issues. In the field of environmental conservation, the adoption of a Regional Wetlands Protection Plan stands as the final outcome of a larger process of raising awareness and building local capacities in identifying and preserving the vast ecological, hydrological and aesthetic values of this important local ecosystem. Important elements of this plan have already been implemented, and it is expected that both government and the public will be champions for ensuring the long-term sustainability of the Regional Wetlands Protection Plan. On social safeguards, the FMG adopted a new resettlement policy incorporating a series of special provisions to protect the rights and needs of potentially displaced populations, while ensuring the efficient implementation of resettlements. The sustainability of the reform is also ensured by the successful resettlement processes carried out for the project, by means of the strong trust and buy-in that they generated from both local authorities and the public in this type of approach to resettlement. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Rating: Satisfactory 46. Relevance of Objectives, Design and Implementation is rated Satisfactory, primarily in light of an appropriate, yet modest project design focused heavily on major urban roads as a means to promote sustainable peri-urban development. Objective 47. The project’s overarching objective of supporting sustainable peri-urban development in Fuzhou through strategic investments in transport infrastructure continues to be a relevant issue in most Chinese cities today. Current official estimations indicate that China’s economy will continue growing at a fast pace for the next two decades (2011-15: 8.6 % annual GDP growth, 2016-20: 7.0%, 2021-25: 5.9%, 2026-30: 5.0%). Accordingly, as Chinese cities consolidate themselves as central engines of economic growth and employment, urban populations will continue rising rapidly. Today, China’s urban population comprises roughly half of the country, and by 2030, the urban share of the population is expected to reach two-thirds (i.e. adding about 13 million more urban dwellers to Chinese cities every year). The Bank’s China Country Partnership Strategy (CPS) for FY2013-16, is aligned with China’s 12th Five-Year Plan (2011- 2015), emphasizes the importance of promoting sustainable urban development. In particular, the CPS designates “supporting greener growth” as one of two strategic themes of action, with “the promotion of low carbon urban transport” chosen as a specific outcome to pursue under it. 11 Design 48. The project’s design, combining roads of different levels of hierarchy, strategic public transport investment and TA activities, and supporting institutional development activities, is considered to be an appropriate approach to address the FMG’s goal of promoting Fuzhou’s peri- urban expansion. The Bank’s influence is evidenced in the cancelation of the proposed dyke and the section of Nanjiangbin Road that affected the main wetlands island, and in the inclusion of the public transport component and strategic TA activities. Perhaps project design could have incorporated additional public transport investments to further enhance the sustainability profile of urban development in Nantai Island. However, TA activities and Bank sector dialogue with FMG were instrumental in expanding public transport services and increasing public transport ridership in Nantai Island. Implementation 49. The project’s implementation relevance is supported by the achievement of the project development objective, as target levels for all outcome indicators have been met, including travel time reductions, increased public transport coverage and ridership, the adoption of recommended planning initiatives to strengthen urban planning capacity, and the adoption of key recommendations to improve public transport. All major investments under the road component have been completed in good quality and were fully operational at project closing, while Jinshan Bus Depot, the main investment under the public transport component, is expected to be completed by March 2014 and operational by June 2014. Additional high-impact outcomes achieved through project implementation comprised the establishment of the Regional Wetlands Protection Plan, the successful relocation of the administration building of Fanchuanpu Cathedral, the improvement of living conditions for roughly 10,000 slum dwellers, and the establishment of a new local resettlement policy. 3.2 Achievement of Project Development Objective Rating: Satisfactory 50. Achievement of Project Development Objective is rated Satisfactory, because the intent of the project development objective has been fully realized. Target values for the outcome indicators associated with the strategic road infrastructure component and the public transport component have been met, and target values for the outcome indicators associated with the institutional development and TA component have also been met. 51. The project development objective, “to support sustainable peri-urban development in Fuzhou (as it expands to include Nantai Island) by providing strategic transport infrastructure and by strengthening the City’s decision support system on land development and management”, has been realized. Urban development in Nantai Island has become a reality, exceeding all projections made at project appraisal. From 2005 to 2013, the population of Nantai Island almost doubled, increasing from 480,000 to 786,900 habitants (the projection at appraisal was 800,000 habitants in 2020). In that same period, the annual size (in product value) of Nantai Island’s secondary industry increased at an even faster rate, from RMB 209.3 billion to RMB 559.7 billion. The project’s road investments opened different areas of Nantai Island for residential and industrial development (specifically, the north in the case of Nanjiangbin Road, and the south in the case of the Third Ring Road), and improved general access from Nantai Island to central Fuzhou (particularly, Nanjiangbin Road and the Kuiqi Bridge). The balanced growth of both 12 population and industry in Nantai Island entails a more sustainable development pattern for Fuzhou, as: (i) at a larger city level, the growth of new origins and destinations in Nantai Island decongests areas in central Fuzhou, and allows for more balanced bidirectional traffic flows between central Fuzhou and Nantai Island; and (ii) within Nantai Island, this balanced growth facilitates proximity between jobs and residential locations, leading to shorter commute distances more easily done in public transport and non-motorized transport. With its expansion to Nantai Island, Fuzhou boasts today a modal share profile that supports sustainable urban development with high modal shares for walking (23.54 percent), cycles/e-cycles (36.57 percent) and buses (18.14 percent). Fuzhou’s urban development process is now supported by a strengthened decision support system for land development and management. The city’s master plan was updated during project implementation, incorporating different recommendations by the Task Team on the development of public transport priority corridors, integrated transport and land use planning, strategic zoning, and environmental protection. Fuzhou also adopted a strategy for land redevelopment and expansion of the port areas in Nantai Island based on quantified spatial economic analyses (and local staff were trained to implement this approach in the future). 52. All the target values for the outcome indicators associated with the strategic road infrastructure component and the public transport component have been met (see Data Sheet, Section F for details). First, travel times have been reduced in all the four selected corridors from Nantai Island to central Fuzhou for both private vehicles and public transport, either meeting the proposed target value or exceeding it (one target was not reached by 1 minute, so it is still considered met). On average, there was a 32 percent reduction in travel times for private vehicle trips and a 21 percent reduction for public transport trips. Second, public transport development in Nantai Island is evidenced by significant increases in public transport services and demand. Public transport coverage increased in the total number of routes (from 53 in 2005 to 114 in 2013) and in route-km (from 327.5 to 912), surpassing the target values set at appraisal. Public transport ridership increased considerably from 85.8 million trips in 2005 to 739.6 passenger trips in 2013, also exceeding the target set at appraisal. 53. All the target values for the outcome indicators associated with the institutional development and TA component are considered to have been met. The first indicator was the incorporation of a mechanism to coordinate land use and transport planning in the Master Plan update. Its target value is met as recommendations from the Public Transport TA, such as the implementation of a series of public transport priority corridors and specific measures to promote transit-oriented development in Fuzhou were adopted as part of the Public Transport Master Plan and led to better land use and transport planning coordination in the general Master Plan update. The second indicator was the adoption of a GIS-based tool to monitor land use and land values. The target value is considered met, as; (i) the FMG, through a parallel city-wide initiative to strengthen the planning capacity of its agencies, established a GIS-based land use planning and management system during project implementation; and (ii) the FMG’s period. The city’s planning department and land resource management department have adopted GIS-based tools to monitor land use and land values. The third and final indicator was the adoption of initiatives to improve planning and built environment in Nantai Island from TA activities, such as the development of strategic environmental impact assessment framework, the adoption of new urban design guidelines, actions to preserve historic areas, or zoning regulations based on specific functional specifications. The target value is considered met as those initiatives have been developed, in reasonably good quality as assessed by the Bank Task Team, and adopted by the FMG through several city-wide strategic planning projects which were funded with domestic funds. The strategic planning tools developed under these initiatives have significantly strengthened the FMG’s planning capacity not only for the development in Nantai Island, but also for the entire city. 13 3.3 Efficiency Rating: Satisfactory 54. Efficiency is rated Satisfactory, as an ex-post economic evaluation of the project yields economic rate of return of is 18.7 percent, exceeding the World Bank recommended discount rate of 12 percent for transport infrastructure projects. 55. At appraisal, an economic evaluation was carried out for the road component alone, determining that its three investments (Nanjiangbin Road, the Third Ring Road and the Kuiqi Bridge) combined had an economic rate of return of 15.5 percent (2005 prices, project life of 20 years) and a net present value of RMB 489.3 million (12 percent discount rate). A new economic evaluation was prepared for this ICR using a similar methodology as that used at appraisal, but with updated information on project costs and socio economic data. The new economic evaluation yields an economic rate of return of is 18.7 percent and a net present value of RMB 2,067 million. In spite of important cost increases for the three investments, a higher EIRR is achieved mainly due to higher traffic levels and higher passenger time cost. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 56. Overall Outcome is rated Satisfactory. The assessment is that an appropriate project design was implemented successfully to realize the project development objective in an efficient manner, though one significant project investment is still to be completed. At the time of writing this ICR: (i) all major investments under the strategic roads component had been completed; (ii) the pilot bus priority lane had been implemented and civil works for Jinshan Bus Depot were progressing on schedule towards completion in March 2014; and (iii) a breadth of TA activities had been successfully implemented, responding to the FMG’s priorities. Moreover, implementation was leveraged to achieve additional outcomes of great significance such as the institutional reforms in public transport sector, the establishment of the Regional Wetlands Protection Plan, the successful preservation of the administration building of Fanchuanpu Cathedral, the improvement of living conditions for roughly 10,000 slum dwellers, and the establishment of a new local resettlement policy. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 57. Although the project was not a poverty-targeted project, the project as a whole supported poverty reduction goals by improving transport infrastructure and services, which in turn improved the efficiency and productivity of individuals and firms, leading to economic growth and general increase in levels of income. Moreover, the implementation of the resettlement action plan had a positive impact on improving living conditions of specific groups of poor urban dwellers in Fuzhou. The resettlement for Nanjiangbin Road stands as an exemplary case of this practice. The project alignment went through a slum area of 3,000 households (10,000 habitants), in its majority wageworkers with limited household incomes. The housing stock in the slum was of poor quality and marginal market value –typically built with rudimentary methods and unreliable materials, and many even lacking basic facilities for subsistence such as a kitchens or toilets. The road alignment itself only affected 480 households, but after multiple consultations, following the community’s request, the FMG decided to resettle the entire population. The 14 original relocation site had to be expanded and redesigned, and significant new funds allocated to provide the necessary transitional support to each household. In total, 4,642 new apartments were built for this particular community, with few households opting instead for cash compensations or earlier resettlement into existing apartments. Ex-post interviews revealed high levels of satisfaction with the resettlement process. The size and quality of the new apartments represent a significant improvement in living conditions for the community. Additionally, in contrast to their former homes, the new apartments are household assets that can be transacted in the market according to each household’s own interest. (b) Institutional Change/Strengthening 58. Throughout project preparation and implementation, the Bank continuously made an explicit effort to strengthen local capacities and help city officials build broader support networks, by organizing a number of high-level seminars on public transport planning issues in Fuzhou, and inviting local officials to participate in similar Bank-sponsored events around the country. One seminar took place in Fuzhou in November 2007 at the onset of project implementation. The thematic focus was public transport reforms, with speakers from different cities in China and overseas sharing their experiences on bus enterprise reform and public transport development. Another seminar held in Fuzhou took place in June 2012, at the tail end of project execution. This seminar was the first offering in China of the World Bank’s flagship urban transport training program Leaders in Urban Transport Planning (LUTP) – a program devised to help participants analyze and make decisions in relation to complex urban transport issues. Fuzhou’s LUTP was attended by senior and mid-level transport professionals from Fuzhou and other cities in the country. In addition to these capacity building events, the Bank also invited FMG officials to participate in the numerous activities of the Bank’s City-to-City Peer Learning Program, where they had the opportunity share their experiences, challenges, and lessons learned in implementing Bank-financed urban transport projects. (c) Other Unintended Outcomes and Impacts (positive or negative) 59. N/A 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 60. N/A 4. Assessment of Risk to Development Outcome Rating: Low 61. Risk to the Development Outcome is rated Low, as it is unlikely that any changes compromising the realization of the project development outcome may occur during the project’s useful life. Fuzhou and Nantai Island continue to enjoy rapid economic growth and the FMG has a robust fiscal environment to deepen development and sustain the gains achieved under the project. A potential threat to the benefits from travel time savings and vehicle operating cost savings could be a deterioration of the roads due to poor maintenance practices, yet the good economic fiscal environment, as well as local policies and procedures ensure the proper funding of operations and maintenance. While project benefits could be threatened by a decrease in coverage of public transport services, the current trend seems to indicate that coverage of public transport services will only increase in response to growing ridership figures. Moreover, Fuzhou 15 recently submitted its application to the Ministry of Transport’s Transit Metropolis program, which aims to help Chinese cities in the promotion of public transport use and integrated transport and land use planning practices. Beyond the Ministry’s approval of that application, this points to Fuzhou’s general aim to pursue a broader agenda that would be in line with the long- term preservation of the project benefits. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 62. Bank Performance in Ensuring Quality at Entry is rated Satisfactory because, while project design in its concept was modest, the overall quality of preparation and final design was notable. The Task Team provided significant value by expanding the government’s proposal to include international good practices. The project’s design addressed Fuzhou’s need to expand to Nantai Island, primarily through the development of strategic road investments, but also pursuing key public transport improvements. The project design also incorporated lessons learned in prior Bank projects in China supporting urban development, avoiding a multi-sector structure that had proven very challenging to implement. Technical analysis at entry allowed the Bank to approve the retroactive financing of the first section of Nanjiangbin Road, having ensured its technical quality and the upholding of the Bank’s safeguard and fiduciary policies. In relation to environmental safeguards, at entry the Task Team had already identified the high ecological value of the regional wetlands and agreed with the local authorities that their plan to expand Nanjiangbin Road through the main wetlands island and build a dyke along the Min River would be dropped. This was an unanticipated high impact outcome stemming from project preparation. In relation to social safeguards, both a RAP and a RFP were prepared, the former already identifying the need to relocate the administrative building of Fanchuanpu Cathedral. While both of these safeguard instruments allowed for the completion of all resettlement successfully, without major complaints or non-compliance issues, the Task Team may have underestimated the risk that resettlement issues represented to the timely implementation of the project’s investments. (b) Quality of Supervision Rating: Satisfactory 63. Quality of supervision is rated Satisfactory, as the Task Team demonstrated the ability to adapt to major challenges during implementation, ultimately supporting the delivery of the project development objective, and additional high-impact outcomes. All major investments and TA activities will have been completed by March 2014, when Jinshan Bus Depot is finished. In their implementation, the Task Team provided extensive supervision support to ensure good quality, devising solutions to the different challenges that arose, and, when possible, providing additional assistance and encouragement for the pursuit of strategic high-impact initiatives. This is most evident in the case of Fanchuanpu Cathedral, where implementation confronted two major challenges: the relocation of a local heritage site, the administrative building of Fanchuanpu Cathedral, and the resettlement of 480 households located in a slum area. The Task Team collaborated closely with the local authorities to overcome all these challenges, achieving the successful relocation of the heritage site and resettlement of the slum (3,000 households in total). 16 In turn, these achievements empowered the local authorities to adopt a new, progressive resettlement policy providing special provisions to protect potentially affected populations. The establishment of the Regional Wetlands Protection Plan was another significant outcome of supervision activities. Having agreed during preparation with the local authorities to drop their plan to expand Nanjiangbin Road through the main wetlands island and build a dyke along the Min River, supervision activities supported proper studies detailing the value of the wetlands were completed, eventually allowing the government to adopt the Regional Wetlands Protection Plan for all wetlands identified, and appointing the local Forest Service to carry out their safeguarding. 64. Resettlement activities, albeit all the positive outcomes achieved in the end, represented the main challenge during project implementation. At project entry, the local framework to implement the RAP and RPF was limited, thus, supervision activities were used to build the requisite local capacities and leadership support to successfully complete all the required resettlement activities without any major complaints or non-compliance issues – and going beyond the policy requirements in the case of Nanjiangbin Road. The fact that some of these processes took long periods of time, years even particularly in negotiations with a few hold-out groups, was not a reflection of poor quality implement by the government or Bank supervision. The local government correctly refrained from exercising enforcement actions on these groups, allowing necessary time for the negotiations to come to a satisfactory solution to all parties. This was an important improvement vis-à-vis the prior practice in Fuzhou, and it was a sound decision from the Bank side to encourage the government agencies to take time in negotiating with affected households. The Task Team displayed an understanding that building local capacity takes time and patience. Today, local government agencies in Fuzhou have a mature expertise to carry out large resettlements and are supported by a progressive resettlement policy i.e. the framework is now in place to implement resettlement processes in a more efficient and fair manner. This is an important outcome of the project. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 65. Overall Bank Performance is rated Satisfactory based on project quality at entry and quality in supervision. Quality at entry was achieved by a thorough preparation process, devising a project that addressed the client’s need to promote peri-urban expansion to Nantai Island through strategic road investments, while demonstrating the Bank’s value added in the inclusion of investments and TA activities promoting public transport use, and in the adoption of special provisions pertaining environmental and social protection. Quality of supervision is evidenced by the completion of most major investments and TA activities, and the achievement of the project development objective. In addition to TA activities, the Task Team carried out a leadership training program on sustainable urban transport planning for key actors in Fuzhou that participated in the development of the Public Transport Master Plan and other important sector initiatives. The Task Team was proactive in trying to resolve major complications during implementation, particularly in resettlement, but also showed patience in its granting of extensions and other provisions requested by the client to see their priorities and needs properly addressed by the project. Overall, quality of supervision is confirmed by the project’s high-impact achievements during implementation. 17 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 66. Government performance is rated Satisfactory due to the strong ownership and commitment demonstrated towards the achievement of the project development objective and additional high-impact initiatives. The local leadership and the Task Team developed a strong working relationship during project preparation. The fruits of this relationship are evident in the final project design, which incorporated significant changes to the project originally presented by the FMG. In the implementation stage, the merits of the local government are numerous. Broadly speaking, it demonstrated commitment to project implementation by providing all the necessary additional funding in the face of project cost increase. Specific political support was also offered on critical issues. For instance, following the conclusion of the studies estimating the value of the wetlands ecosystem, the local leadership established the Regional Wetlands Protection Plan and modified its development for the main wetlands island from a high impact to a low impact proposal. Similarly, on resettlement issues, the local leadership granted all the necessary support (and patience) for negotiations with affected communities to mature at their own pace to reach solutions satisfactory to all parties (the relocation of the administrative building of Fanchuanpu Cathedral, and the resettlement of populations for Nanjiangbin Road and Jinshan Bus Depot are all exemplary cases). Moreover, building on the positive experiences implementing the first resettlement in accordance with the Bank’s resettlement policy, the local leadership went on to adopt a new local resettlement policy incorporating special provisions to protect the rights of potentially displaced populations. Eventually, during implementation, a new local leadership would take office causing some delays in project execution, particularly as it moved to restructure FMG’s administrative organization. However, the new leadership adopted many of the Bank’s recommendations in relation to the public transport sector, which ended up constituting part of the administrative reforms. Those reforms will bring significant benefits to the public transport sector in the long term, although it caused some delays in project implementation as the new organizations were weak in project execution and needed time to develop their capacity. Also, as the extended project closing date arrived and the construction of Jinshan Bus Depot had barely started, the new local leadership offered the Bank all assurance that it would provide its own funding to complete the project. More recent report indicating that Jishan Bus Depot should be completed by March 2014. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 67. The work of the implementing agencies is rated Satisfactory because of their dedication and commitment to the achievement of the project development objective. Being the first Bank project ever prepared and implemented in Fuzhou, the implementing agencies (originally, Fuzhou Urban Construction Development Company and Fuzhou Public Transport Company) lacked experience with the Bank’s procedures and practices. However, the implementing agencies demonstrated a willingness to improve their capacity through training, capacity building initiatives and the general ‘day-to-day’ interactions of working with the Task Team on the project – this diversified form of capacity building proved to be quite effective, with both implementing agencies developing effective working units with time. As described above, officials from the implementing agencies deserve special commendation for allowing the negotiation processes with affected populations to take the necessary time irrespective of the effect that the ensuing delays 18 would have on their performance evaluations or other similar pressures. Moreover, it was their groundwork, seeing that these processes came to successful resettlements, which set the stage for the eventual resettlement policy reform. In the last few years of the project implementation, there was significant restructuring in local government that led to a number of changes in the project implementation arrangements, including: (i) responsibility for urban transport was shifted from the construction commission to the transport commission; (ii) the implementation agency for the public transport component was shifted from the bus company to the newly established bus terminals and depots management company; (iii) the project management office was entirely moved from the development reform commission to the newly established municipal finance and trade office; and (iv) eventually key staff who originally worked on the project from the beginning were moved from the project management office to other departments due to their own career development needs. These changes cost the project some delays due to the learning curve of the new personnel/organizations in relation to the project and the Bank’s processes, the need to establish new communication channels, etc. However, the new teams also showed commitment to the successful completion of the project. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 68. Overall Borrower Performance is rated Satisfactory, as both the local leadership and the implementing agencies demonstrated a strong commitment to the achievement of the project development objective, despite the different challenges that made project implementation difficult. Project delays in resettlement and procurement can be attributed in part to the FMG’s inexperience working with the Bank and implementing its policies. Again, delays that accrued to ensure that resettlement negotiations were completed to the satisfaction of all parties are considered well justified. Other delays, such as those stemming from the change in local leadership and the government restructuring process seem to be unavoidable. Both, local leadership members and agency staff were instrumental in bringing about all the outcomes, from the completion of all major investments, to the adoption of seminal reforms in resettlement and environmental protection. 6. Lessons Learned 69. Project preparation for urban transport projects should account for lengthy land acquisition and resettlement activities. Land acquisitions and resettlement activities constituted the main challenge to the timely implementation of the project. Approvals of land acquisitions and negotiations with affected communities extended for months, years even in more than one occasion, before definitive settlements were reached. While resettlement outcomes were ultimately positive, delays in implementation led to cost increases and delays in the realization of project benefits. The lesson derived is simple: large land acquisition and resettlement activities in an urban setting are complicated and extend over long periods of time. There are no shortcuts in implementation. On the contrary, the Bank’s experience in China is that typically these processes take more time than originally budgeted in project design. Task Teams are advised to take special actions during project preparation and design to account for this, including: (i) work solely on the basis of definitive information stated in official documents, such as official land use master plans, land use and land ownership certificates, approved municipal budgets, etc.; (ii) prepare in-house a realistic assessment of all the necessary steps to complete land acquisitions and resettlements; (iii) use project preparation stage to advance strategic issues, such as carrying out detailed consultations, completing approval of land use changes, or enhancing local resettlement policies; 19 (iv) schedule all land acquisitions and resettlement activities as early as possible in project implementation if not done during project preparation; and (v) plan a back-loaded disbursement profile. 70. High-impact outcomes can be leveraged from the preparation and implementation of Bank safeguards. As part of the preliminary background analysis for the preparation of the project’s environmental safeguards, the high ecological value of the regional wetlands was identified, and two project investments that were detrimental to this ecosystem were dropped. Follow-up studies provided a detailed account of such value and offered recommendations for its protection moving forward. The FMG adopted most recommendations stemming from those studies, including the establishment of a Regional Wetlands Protection Plan and the pursuit of a low impact development plan for the main wetlands island. Similarly, the implementation of the project’s social safeguards yielded high-impact outcomes, such as the preservation of the administration building of Fanchuanpu Cathedral and the improvement of living conditions through resettlement for 3,000 households (10,000 people approx.) formerly living in a slum. These early successes were so positive that the FMG decided to adopt the general framework, principles and practices of the project’s social safeguards under a new local resettlement policy. 71. The M&E framework should be designed in a way that the achievement of outcome can be easily assessed. One of the project’s outcome indicators was the adoption of initiatives to improve planning and built environment in Nantai Island from TA activities, such as the adoption of new urban design guidelines, actions to preserve historic areas, or zoning regulations based on specific functional specifications. This type of indicator is generic and unspecified, and does not offer a clear way to assess if it was actually achieved. Good indicators lend themselves to a straightforward assessment by the evaluator. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 72. A summary of the Borrower’s ICR is included in Annex 6. [Borrower’s comments on this ICR are pending] (b) Cofinanciers 73. N/A (c) Other partners and stakeholders 74. N/A 20 Annex 1 Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 1. Road Component 248.42 494.28 198.97% -1.1 Nanjiangbin Road 31.14 32.68 104.95% -1.2 Third Ring Road South 158.57 326.25 205.75% -1.3 Kuiqi Bridge 58.71 135.35 230.54% 2. Public Transport Component 20.48 30.32 148.14% -2.1 Jinshan Depot 19.27 30.32 157.45% -2.2 Bus Priority Corridor 1.21 0.00 n/a 3. Institutional Development and 2.90 0.95 Technical Assistance Component 32.76% Total Baseline Cost 271.80 525.55 193.45% Physical Contingencies 22.62 0.00 n/a Price Contingencies 30.04 0.00 n/a Total Project Costs 324.46 0.00 n/a Front-end fee PPF 0.00 0.00 n/a Front-end fee IBRD 0.25 0.25 100.00% Total Financing Required 324.71 525.80 161.93% The exchange rate at appraisal is 8.28:1, and the exchange rate at project completion is 6.15:1. (b) Financing Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Cofinancing Appraisal (USD millions) (USD millions) Borrower 224.46 432.87 192.85% International Bank for Reconstruction 100.00 92.93 92.93% and Development 21 Annex 2 Outputs by Component Appraisal Plans Actual Accomplishments at the time of ICR and Any Variances Component 1: Road Infrastructure Component 1 Nanjiangbin Road, a 4.1 km The project comprised the construction of a 40-50 meter wide lenghth of riverside road along the (including green area) 4.1 kilometer length of Class I urban riverside south bank of the Min River, road along the south bank of the Min River between the Fourth Min providing access to and promoting River Bridge and the line of the proposed Qianheng Bridge to improve the redevelopment of neglected the traffic situations in Nantai Island. The works included the areas in Nantai Island; constructions of road foundation, road surface, bridges & culverts, drainages, water supplies, lighting and landscape etc. The constructions were completed in April 2010. The completion of NJBL has provided access to, and enabled the redevelopment of neglected areas in Nantai Island, as well as forming an important part of the road network of Nantai Island. 2 Phase II of the Third Ring Road This component comprised the construction of a 11.6 km long urban (South), an 11.6 km segment of a expressway with the width of 50-79 meter to thoroughly mitigate traffic six-lane expressway providing tensions passing in and out on Nantai Island and address traffic jam expedient mobility across Nantai issue in central Fuzhou city. The works also included the constructions Island and opening up new areas of two interchanges (FuQuan Express Higway interchange and Luozhou for urban development; interchange), four separated interchanges (Fuxia highway interchange), nine bridges, rain drainages, water supply pipelines, communication lines, power lines, lighting, traffic control facilities and landscape etc. Except the constructions of ramps connecting to FuQuan express highway, most part of the constructions of 3RR were completed by the end of December 2011. On 1 Jan. 2012, the main way of 3RR, starting from Wenbian interchange at the north end of Wenbian bridge to the south end of Kuiqi Bridge, has been completed and the main way of whole third ring road of Fuzhou city opens for traffics. The completion of 3RR together with other projects has thoroughly mitigated traffic tensions in Nantai Island and addressed traffic jam issue in central area of Fuzhou. 3 Kuiqi Bridge, a double-pylon, The project was to construct a 1.1 kilometer long double-plane, double- double-plane, cable-stayed plane, cable-stayed bridge crossing Min river in order to connect 3RR structure across the Min River, and north Jianbin road with airport express highway to improve traffic serving as the connecting link in situations in Nantai Island and east part of Fuzhou city and to strengthen the road network between Nantai the linkage between Cangshan district and Mawei district as well. Island and Fuzhou’s urban core. Except the construction of four ramps for pedestrians and non- motorized vehicles both south and north sides, main road of Kuiqi Bridge was completed at the end of December 2011 and was open to traffic. Component 2: Public Transport Component 1 Jinshan Depot, a facility to The project preparations were initiated in 2004. As the land acquisition integrate overnight parking (196 and resettlement issues, as well as procurement activities for the civil spaces for phase 1) and a works contract were delayed, until loan closing date, the project has maintenance depot for buses (36 only completed site preparation, enclosing wall, water & power supply maintenance bays and pits), a for constructions, and some 15% of main constructions. The remaining dispatch center, and a passenger works are to be completed by local funding. interchange. 2 Bus Priority Corridor, to be This activity was funded entirely by local funds. chosen from two alternatives for a first phase demonstration. The two 22 Appraisal Plans Actual Accomplishments at the time of ICR and Any Variances alternatives are: The North-South Wuyi-Wusi road corridor between the Provincial Sports Center and Jiangbin Road. The east-west corridor Gongye Guoho Corridor from the second ring road in the west to Lianjiang Middle Road. Component 3: Institutional Development and Technical Assistance Component (US$ 2.90 million) 1 Strategic Planning TA The scope of the TA was modified to focus on development of the city’s ports. The study “Fuzhou Port Economy Development Strategy Study” has been completed. 2 Support to Public Transport, Fuzhou Urban Public Transport Planning Study was started in including two studies: a Long- December 2009, and its final report was submitted in October 2012. term Public Transport Plan and FMG approved the Fuzhou Urban Public Transport Planning (2010 to Development of a five-year 2020), and most of the study recommendations have already been Forward Planning Program. adopted by the relevant authorities of FMG. Final report on Long-Term Public Transport Plan was approved on September 28, 2012 by FMG. 3 Training and project During the Project implementation, various trainings covering implementation support procurement, financial management, loan disbursement, resettlement and environment management have been provided to the relevant staffs of implement agencies, and total of over 150 person times have been trained, which has facilitated the smooth implementation of the Project. Other training was planned and implemented annually based on needs identified by the city. 23 Annex 3 Economic Analysis 1. For re-assessing the economic viability of the Project after completion, economic reevaluation was carried at the ICR stage by using similar methodology as that at project appraisal. In the economic reevaluation, actual project costs and socioeconomic data were used. The traffic forecast at appraisal was adjusted according to latest socioeconomic development status in the project area. The economic reevaluation assumed that due to improvement of the project roads (Nanjiangbin Road and the Third Ring Road) and bridge (Kuiqi Bridge), the vehicles on the project roads could drive at faster speed with lower operating cost and less travel time. Economic benefits were calculated by comparing the “with-project” and “without-project” cases. Consequently, the Economic Internal Rate of Return (EIRR) was calculated and sensitivity analysis was also carried out. Socioeconomic Development and Traffic Forecast 2. The traffic analysis at appraisal was based the projections of population growth and economic development in the project area. The projections indicated that the population of Fuzhou would grow at an annual rate of 2.9% in 2002–2010 and of 2.5% in 2011–2020, while the population of Nantai Island would grow steadily at an annual rate of 2.9% in 2002–2020. These growth projections have been proven to be underestimated. At actual, the population of Fuzhou grew at average 3.80% per annum while the population of Nantai Island grew at a 4.37% per annum in the period of 2002–2010 (in fact, the population of Nantai Island has grown at a 5.17% annual rate in the last 4 years). In the meantime, the economic development was also much faster than what estimated at appraisal. At appraisal, it was assumed that the average GDP of Fuzhou would grow at average annual rates of 8–10%. At actual, the GDP grew at 10–15% in the period of 2001–2011 and reached US$8,268 in 2011. Such faster population and economic development in the project area has generated huge traffic demand. In considering actual socioeconomic development and traffic status, the traffic forecast at appraisal was revised by adding 10% and the traffic forecast was also adjusted. Table A3.1 Adjusted Traffic Forecast for the Project (vehicle, AADT) Car Bus Total Adjusted Traffic Forecast 2015 34,729 9,104 43,833 2020 44,324 12,183 56,507 2025 51,384 15,549 66,932 2030 59,568 19,844 79,412 Average Annual Growth Rate 2011-2020 5% 6% 2020-2030 3% 5% AADT = annual average daily traffic Source: Estimations by the Bank’s ICR team 24 Project Costs 3. At actual, the total project cost was RMB3,233.67 million ($525.80 million equivalent at the exchange rate of $1.00 = RMB6.15). The actual project cost was much higher than that estimated at appraisal ($324.71 million), about 61.9% higher. The civil works costs for Nanjiangbin Road increased by about 5.0%. But the civil works costs for both the Third Ring Road and the Kuiqi Bridge exceeded by more than 100% than their original estimations. The actual costs of the three investments were used in the economic reevaluation. In the reevaluation, the operation costs for the public buses using the project roads were considered at (i) 60 buses; (ii) 20 trips a day per bus; and (iii) operation cost of RMB8.79 per 100 km. It was also assumed that the operation cost would increase by 2% per year considering the traffic increase and service improvement. The maintenance cost for the public buses were estimated at RMB30,000 per bus per year. The maintenance costs for the project roads and bridge were estimated at RMB200,000 per kilometer for the roads and RMB400,000 per kilometer for the bridge. The periodical maintenances were estimated at (i) the buses would be replaced every 10 years at RMB500,000 per bus; and (ii) the roads and bridge would be rehabilitated every 5 years at RMB2.00 million per km. All of these costs were converted into economic costs using an average factor of 0.90. Project Benefits 4. By comparing the “with-project” and “without-project” cases, the main sources of the economic benefits were (i) the savings in vehicle operation cost (VOC); and (ii) the savings in passenger travel time cost. The VOC savings in RMB per vehicle-kilometer were estimated at RMB0.36 for car and RMB1.09 for bus respectively, which were adopted from other similar cities in China. Due to improvements of the project roads and bridge, the vehicle speeds would increase from 25–30 kilometer per hour for the “without-project” case to 30–40 kilometers per hour for the “with-project” case. The passenger time cost was estimated to be average RMB24.25 per hour according to the actual GDP per capita ($8,268) of the project area in 2011. It was also assumed that the passenger time cost would increase along the economic development by 8% per year in 2011–2015, 6% in 2016–2020, and 3% onward. In the calculation of the passenger traveling time cost savings, number of passengers per vehicle and percentage of business trips were also considered. The economic benefits were calculated to be total RMB304.9 million in 2013 (the first fully operation year). The results of the economic benefit calculation also show that the total benefits were 34% from the VOC savings and 66% from the passenger time cost savings in the early stage of the project operation. However, the benefits from the passenger time cost savings increased significantly along with the economic development, reached 77% in 2030. Economic Reevaluation 5. Based on above assumptions and calculations, the EIRR was recalculated at 18.7% for the project, which is higher than that estimated at appraisal (15.5%). The higher EIRR was mainly due to higher traffic level and higher passenger time cost. The 25 recalculated EIRR shows that the project is considered economically viable and has a relatively high level of efficiency. The details of the EIRR calculation for the Project are in Tables A3.3. The EIRR was subjected to sensitivity analysis to test different scenarios of costs and benefits. The sensitivity analysis results in Table A3.2 showed that the project continues to be economically viable for all tested scenarios. If a 20% operation and maintenance cost increase were to be combined with a 20% benefit reduction, the EIRR would be 15.4% for the Project. The sensitivity analysis also showed that the EIRR is more sensitive to changes in benefits. Therefore, the governments should keep high traffic level and continue to promote public transport development. Table A3.2 Sensitivity Analysis ENPV@12% Scenario Case EIRR (RMB million) Base Case 18.7% 2,067.7 Traffic or Benefit 10% 20.3% 2,586.0 20% 21.9% 3,104.4 -10% 17.1% 1,549.3 -20% 15.5% 1,030.9 Operation and Maintenance Cost 10% 18.7% 2,058.0 20% 18.7% 2,048.3 -10% 18.8% 2,077.4 -20% 18.8% 2,087.0 Combination Increase O&M Costs 10% & Reduce Benefit 10% 17.1% 1,539.6 Increase O&M Costs 20% & Reduce Benefit 20% 15.4% 1,011.5 Note: EIRR = Economic Internal Rate of Return, ENPV = Economic Net Present Value, Source: the World Bank ICR team 26 Table A3.3 Economic Reevaluation of the Project (RMB million) Costs Benefits Net Present Year Capital O&M Total VOC Time Total Benefit Value 2007 11.47 11.47 -11.47 -22.64 2008 11.47 11.47 -11.47 -18.05 2009 216.12 216.12 -216.12 -303.64 2010 549.55 549.55 -549.55 -689.36 2011 655.68 1.09 656.77 100.76 147.79 248.54 -408.23 -457.21 2012 718.40 3.38 721.77 106.23 168.84 275.07 -446.70 -446.70 2013 747.60 5.43 753.03 112.00 192.90 304.90 -448.13 -400.12 2014 5.55 5.55 118.09 220.39 338.48 332.92 265.40 2015 5.68 5.68 124.51 251.80 376.31 370.63 263.80 2016 32.66 32.66 131.28 304.95 436.23 403.58 256.48 2017 5.68 5.68 138.43 341.97 480.40 474.72 269.37 2018 5.81 5.81 145.97 383.49 529.46 523.64 265.29 2019 5.95 5.95 153.92 430.06 583.98 578.03 261.47 2020 31.09 31.09 162.31 482.29 644.59 613.50 247.78 2021 32.57 32.57 168.64 519.59 688.23 655.66 236.44 2022 5.59 5.59 175.24 559.81 735.05 729.46 234.87 2023 5.72 5.72 182.12 603.18 785.29 779.57 224.11 2024 5.85 5.85 189.28 649.94 839.22 833.37 213.91 2025 5.99 5.99 196.74 700.38 897.12 891.13 204.22 2026 32.90 32.90 204.51 754.76 959.28 926.38 189.56 2027 5.93 5.93 212.62 813.42 1,026.04 1,020.10 186.37 2028 6.07 6.07 221.06 876.68 1,097.74 1,091.67 178.08 2029 6.21 6.21 229.86 944.92 1,174.77 1,168.56 170.19 2030 31.24 31.24 239.03 1,018.51 1,257.54 1,226.30 159.47 2031 32.72 32.72 248.59 1,097.90 1,346.49 1,313.78 152.54 2032 5.74 5.74 258.56 1,183.54 1,442.10 1,436.36 148.90 2033 -1455.15 5.88 -1449.28 268.95 1,275.93 1,544.88 2,994.15 277.14 Economic Internal Rate of Return (EIRR): 18.7% Discount Rate: 12% Economic Net Present Value (2013) 2,067.66 Source: the World Bank ICR team 27 Annex 4 Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Responsibility/ Names Title Unit Specialty Lending Benjamin Darche Consultant SASDT Daniel R. Gibson Consultant EASDE Edward B. Dotson Consultant SASDT Ke Fang Lead Transport Specialist SASDT Maria Luisa G. Juico Program Assistant EASIN Peishen Wang Consultant EASCS Shomik Raj Mehndiratta Lead Urban Transport Specialist LCSTR TTL EASTE - Rafael Dely Consultant HIS Rodney J. Stickland Consultant SASDT Yan Zong Transport Specialist EASCS ICR TTL Zhefu Liu Sr. Social Development Specialist EASCS Supervision/ICR Cuong Duc Dang Sr. Urban Specialist EASVS Dawei Yang Consultant EASTS Ke Fang Lead Transport Specialist SASDT TTL after MTR Haiyan Wang Sr. Finance Officer CTRLN Jean Paul Velez Consultant EASCS Limei Sun Program Assistant EACCF Peishen Wang Consultant EASCS Shomik Raj Mehndiratta Lead Urban Transport Specialist LCSTR TTL before MTR Wenling Chen Consultant AFTTR Xiaoke Zhai Sr. Transport Specialist EASCS Zhefu Liu Sr. Social Development Specialist EASCS (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY03 6.47 FY04 227.36 FY05 239.82 FY06 37.95 Total: 511.60 Supervision/ICR FY06 2.78 FY07 64.49 FY08 74.56 28 FY09 64.14 FY10 67.72 FY11 61.69 FY12 34.64 FY13 60.82 Total: 430.84 29 Annex 5 Beneficiary Survey Results (if any) Not applicable 30 Annex 6 Stakeholder Workshop Report and Results (if any) Not applicable 31 Annex 7 Summary of Borrower's ICR and/or Comments on Draft ICR 1. The Project and Its Objectives. Fuzhou is the capital city and a major cultural, commercial and industrial center of Fujian Province. Early in the 21st century, Fuzhou Municipal Government has been implementing the urban development strategy of expanding east and south. Nantai Island development is the key component of this development strategy. However, the poor infrastructures in Nantai are far behind the requirement of development. To accelerate the development of urban infrastructures including roads and public transport system in particular is the first priority of the urban development strategy of expanding east and south. The Fuzhou Nantai Island Peri-Urban Development Project (the Project), together with locally financed initiatives, was designed to relieve transport infrastructure bottlenecks in Nantai Island. The objective of the Project is to support sustainable peri urban development in Fuzhou (as it expands to include Nantai Island) with the provision of strategic transport infrastructure and by strengthening the city’s decision support system on land development and management. 2. Summary of Project Implementation. The Fuzhou Nantai Island Peri-Urban Development Project consists of strategic road development component, public transport development component and capacity building component, including four structural subprojects: NJBL (phase I and phase II, construction of 4.1km long urban trunk road), the Third Ring Road (construction of 11.6km long urban expressway), Kuiqi Bridge (construction of a 1115.1m long double-pylon, double-plane, cable-stayed bridge crossing Min river), and Jinshan depot (construction of a depot with a total floor area of 38,199 ㎡ and parking capacity of 360 buses). The project completed the construction of 4.1km long urban trunk road in Nanjiangbinlu, 11.6km long urban expressway in 3RR, Kuiqi Bridge, but will complete Jinshan depot using local funds. All projects have achieved and will achieve their expected targets including outputs and outcomes. In addition, the project completed its capacity building targets to support Fuzhou port economy development and urban public transport development and staff training activities. All loan covenants have generally been complied with prior to loan closing and were accepted by the World Bank. 3. Performance of Borrower and Executing Agency. The Borrower, Executing Agencies (EAs) and Implementing Agencies (IAs) have jointly and individually fulfilled their obligations during project implementation and regularly communicated with the World Bank. Fuzhou World Bank Loan Project Management Office (FPMO) ensured there was adequate coordination between the World Bank, the IAs, contractors and various supporting consultants. The Project Leading Group (PLG) demonstrated strong leadership by providing the necessary counterpart funds to the Project. Two IAs implemented the project in an effective and efficient manner. Construction standards for the 3RR and Kuiqi Bridge were evaluated as meeting international best practice. However, as the rapid but unclearly defined urban development was simultaneously happening in Fuzhou, particularly in Nantai Island, the PLG despite much effort in providing policy decisions and inter-agency coordination, was unable to totally resolve the Land Acquisition and Resettlement (LAR) issues for Jinshan depot subproject in time so that the construction of this subproject would not be completed by the loan closing date and the loan proceeds originally allocated for it could not be disbursed completely, thus greatly reducing the loan utilization efficiency. 4. Performance of World Bank. Overall, the World Bank performed satisfactorily during Project preparation and implementation. It has sent 10 missions to carry out semi-annual/annual reviews during the 7-year period and in December 2009 Mid-Term Review (MTR) was sent to conduct midterm review activities. The review missions provided various valuable pieces of advice on Project implementation in particular, they provided very valuable guidance on wetland 32 protection and historic cultural heritage protection. The World Bank took active actions to process from the borrower and FPMO promptly and efficiently including bid evaluation, contract awards and the extension of loan closing etc. Withdrawal applications were processed and disbursed on time. All of these inputs greatly contributed to the successful implementation of the Project. 5. Effectiveness in Achieving Outcome. Achievement of the performance targets was moderately satisfactory. Except for Jinshan depot which has not been completed, all other targets (including development objectives and intermediate results) were met and exceeded, notably the targets of travel times from Nantai Island to Fuzou downtown area and other designated areas and public transport coverage in Nantai greatly exceeded the anticipated targets, and these targets will certainly be sustainably developed. Although the achievements of the designated development targets cannot be entirely ascribed to Project implementation, the significance of the Project to improve urban traffic infrastructure in Nantai Island and to boost its rapid urbanization is possible. In addition, the successful experiences on taking active and effective measures to protect affected ecological environment and historic cultural relics during Project implementation would have active demonstrational significances on the ecological civilization construction in Fuzhou as a famous city with its history and culture. 6. Efficiency in Achieving Outcome and Outputs. FMG utilized the World Bank loan to implement the Project to the right locations, reflecting development priorities, which have greatly mitigated the traffic tensions in Nantai Island and Fuzhou urban areas, increased traffic capacities and velocity, substantially reduced traffic operation costs, improved the public transport networks, and effectively reduced the travel time of residents as well. 7. Lessons Learnt. The successful implementation of the Project mainly attributed to its design firmly relevant to the local economic and social development strategy. The subprojects included in the Project were the development priorities of the local government - notably the three strategic roads subprojects. These three road subprojects were listed as the key projects and for the people’s project, therefore, all related to funds, LAR and other policies required for the project implementation received priority support and full coordination. 8. TA-Fuzhou Urban Public Transport Planning Study was designed by the Project to address FMG’s urgent issue. Therefore, the very important research outputs have been given by FMG and its concerned authorities and most of its study recommendations have been well adopted, which has played a significant role in Fuzhou urban public transport development. It is recommended that the TA in the future loan projects should be designed through extensive consultation with the local government authorities so that the TA could address the government’s urgent issues and TA outputs could be fully adopted. 9. During the Project preparation and implementation, protecting the ecological environment and historic cultural relics possibly impacted were considered, and effective measures were taken to minimize the adverse impacts caused by the Project implementation, which has all played an important role in achieving the exceeded targets of ecological environment and social development of the Project. 10. The cost estimates for external environmental monitoring prepared at Project preparation were not incorporated by the design institutes into the overall project cost. As such, no government approval on the specific budget allocation for External Environmental Monitoring (EEM) was obtained. The absence of budget provisions resulted in such services conducted after the mid implementation period. Fuzhou Environmental Monitoring Station (FEMS) was 33 eventually appointed to undertake EEM at no cost to the Project. They have provided their best effort and adequate resources to fulfill their EEM obligations, but this is causing a huge cost burden to FEMS. 11. The Project did not make arrangements to engage the consultants to support project implementation, which resulted in Project management not properly being in place and the Project performance monitoring and evaluation not systematic. Therefore, the consulting services to support the Project implementation need to be improved. The consulting services financed by the loan proceeds were arranged to facilitate the establishment of Project Performance Monitoring System (PPMS) and assist FPMO to prepare and submit various reports in timely manner in the formats acceptable to the World Bank. 12. Recommendations. FMG shall actively coordinate and facilitate Fuzhou Urban Construction Development Company (FUCDC) to complete the remaining construction activities of the remaining ramps at Fu-Quan Interchange under 3RR, the LAR activities related to the remaining two ramps for pedestrians and non-motorized vehicles and their construction activities under Kuiqi Bridge. All the remaining construction activities are to be completed in time so that the full functions of 3RR and Kuiqi Bridge could be brought into play. 13. FMG shall provide sufficient budget funds, actively coordinate and facilitate Fuzhou Bus Depot Management Company (FBDMC) to progress with the construction activities of Jinshan depot so that it would be in operation as early as possible to promote the optimization of public transport networks in Nantai Island and even in Fuzhou city. 14. FMG shall increase the budget for operation and maintenance of urban facilities including roads and bridges. Meanwhile, FMG shall also cause the respective operating units at all times, to operate and maintain the completed roads and bridge in accordance with sound administrative, financial, engineering, environmental, and O&M practices. 15. It is recommended that at the appraisal for projects like the Project for the loan financing the World Bank should pay more attention to the implementation arrangement, assessing the project management capacity to identify the project management risks as possible, and designing the proper options to strengthen capacity building. If the project could not establish the permanent project management office equipped with the full time professional project management staff, arrangements to provide consulting services for the support of project implementation shall be made to build up EA’s project management capacity so that the risks of the project management not attune with the requirements caused by various unpredictable reasons could be avoided as possible. 16. Considering the reality that China is in the course of fast urbanization, while PRC’s laws and regulations on the rural land ownership and property rights are not perfect and prevailing mechanism of land and housing expropriation could not adapt to the development demands, resulting in the substantial delays of lots development projects due to the LAR activities, it is recommended that the World Bank initiate the technical assistance related to the improvement of land and housing expropriation mechanism for development projects and it is priority to carry on and try in the PRC’s projects financed by the World Bank loan. 17. Cost estimates for external environmental monitoring and external resettlement monitoring prepared at project preparation should be incorporated by the design institutes into the overall project cost, and all these costs should be financed by the World Bank loan. These 34 external monitors are to be recruited through proper consultant recruitment procedures to ensure essential services are conducted throughout project implementation. 35 Annex 8 Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 36 Annex 9 List of Supporting Documents 1. Research on Strategies for the Development of Fuzhou’s Port Economy; 2. Fuzhou Urban Public Transport Priority System Assessment including Fuzhou Urban Transit-Oriented Development Study; 3. External Social Monitoring Reports in 2008, 2009, 2010, 2012, and 2013; 4. Project Audit Reports in 2007, 2008, 2009, 2010, 2012, and 2013. 37 IBRD 33943 100 ° 110 ° 120 ° 130 ° RUSSIAN CHINA F E D E R AT I O N 50 ° FUZHOU NANTAI ISLAND PERI-URBAN DEVELOPMENT PROJECT 50 ° HEILONGJIANG PROJECT ROADS EXISTING ROADS M O N G O L I A PROJECT BRIDGE EXISTING RAILROADS JILIN PROJECT DEPOT L O G N 40 ° O LIAONING DEM. M Sea PEOPLE’S EI REP. OF of N Beijing KOREA Japan 0 200 400 600 Kilometers 40 ° TIANJIN HEBEI REP. OF GANSU KOREA NI NG XIA SHANXI Ye l l o w SHANDONG QINGHAI Sea SHAANXI HENAN JIANGSU ANHUI ng 30 ° Jia SHANGHAI XIZANG HUBEI g SICHUAN G an IN East Ch Q G ZHEJIANG 30 ° N China O CH Fuzhou HUNAN JIANGXI Sea GUIZHOU Fuzhou (For detail, FUJIAN see main map) Center City YUNNAN TAIWAN GUANGXI GUANGDONG MYANMAR HONG KONG 20 ° 20 ° MACAO VIETNAM LAO PEOPLE’S DEM. REP. HAINAN THAILAND PHILIPPINES 100 ° 110 ° 120 ° NAN JIANG BIN LU JINSHAN DEPOT KUIQI BRIDGE Nantai Island 3rd RING ROAD PHASE II M in J ia n g This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. NOVEMBER 2005