Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD423 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$150 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A GUIYANG RURAL ROADS PROJECT (P129401) January 31, 2014 China and Mongolia Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective August 2, 2013) Currency Unit = RMB RMB 1.00 = US$ 0.16 US$ 1.00 = RMB 6.13 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CPS Country Partnership Strategy CQ Selection Based on Consultant's Qualifications DA Designated Account DRC Development and Reform Commission ECOP Environmental Code of Practice EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EMP Environmental Management Plan FSR Feasibility Study Report FM Financial Management FMS Financial Management Specialist GDP Gross Domestic Productivity GEI Guizhou Environmental Institute GMFB Guiyang Municipal Finance Bureau GMTB Guiyang Municipal Transport Bureau GPAO Guizhou Provincial Audit Office GPFB Guizhou Provincial Finance Bureau GPG Guizhou Provincial Government GPMO Guiyang Transport Project Office of the World Bank Loan GRRP Guiyang Rural Roads Project GRRCO Guiyang Rural Road Construction Office GTP Guiyang Transport Project GUMP Guiyang Urban Master Plan (1996-2010) GUPDI Guiyang Urban Planning & Design Institute IBRD International Bank of Reconstruction and Development IC Individual Consultant Selection ICB International Competitive Bidding IPDP Indigenous Peoples Development Plan ITC International Tendering Company MBD Model Bidding Document MDRC Municipal Development and Reform Commission MOF Ministry of Finance NBF Not Bank Financed NCB National Competitive Bidding NPV Net Present Value PIE Project Implementing Entity PRC People's Republic of China QCBS Quality and Cost-Based Selection RAP Resettlement Action Plan RFP Resettlement Framework Plan RMB Renminbi (currency) SBD Standard Bidding Document SEA Strategic Environmental Assessment SOE Statements of Expenditure TOR Terms of Reference TY Guiyang Tongyuan Road Construction Co. Ltd. Regional Vice President: Axel van Trotsenburg, EAPVP Country Director: Klaus Rohland, EACCF Acting Country Director: Kathryn Funk, EACCF Sector Director: John Roome, EASSD Sector Managers: Mark Lundell, EASCS Abhas K. Jha, EASIN Task Team Leader: Holly Krambeck, EASIN  China: Guiyang Rural Roads Project TABLE OF CONTENTS Page STRATEGIC CONTEXT ............................................................................................1 A. Country Context ......................1.......................... B. Sectoral and Institutional Context............................................ 1 C. Higher Level Objectives to which the Project Contributes ........... ........ 3 II. PROJECT DEVELOPMENT OBJECTIVE(S).........................................................3 A. PDO........................................................ 3 Project Beneficiaries .....................3.........................3 PDO Level Results Indicators.............................................. 4 III. PROJECT DESCRIPTION .........................................................................................4 A. Project Components ..................................... ........ 4 B. Project Financing .......................................... ..... 5 Project Cost and Financing .....................5...... ...............5 C. Lessons Learned and Reflected in the Project Design. ......... ............. 6 IV. IMPLEMENTATION ..................................................................................................7 A. Institutional and Implementation Arrangements ..................... ..... 7 B. Results Monitoring and Evaluation . .......................... ......... 8 C. Sustainability................................. .............. 8 V. KEY RISKS AND MITIGATION MEASURES...................................................... 9 A. Risk Ratings Summary Table .................................... 9 B. Overall Risk Rating Explanation .............................. ...... 9 VI. APPRAISAL SUMMARY .........................................................................................10 A. Economic and Financial Analysis .............................. ..... 10 B. Technical .................................................... 12 C. Financial Management....................... ................ 12 D. Procurement ......................................... ......... 12 E. Social (including Safeguards) ...................................... 13 F. Environment (including Safeguards) ................................. 14 Annex 1: Results Framework and Monitoring. .......................... ......16 Annex 2: Detailed Project Description ..................................................................................20 Annex 3: Implementation Arrangements .............................................................................29 Annex 4: Operational Risk Assessment Framework (ORAF)................ .....39 Annex 5: Implementation Support Plan ................................................................................45 Annex 6: Project M aps ................................................................................................................ 47 PAD DATA SHEET China Guiyang Rural Roads Project (P129401) PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASCS Report No.: PAD423 Basic Information Project ID Lending Instrument EA Category Team Leader P129401 Investment Project B - Partial Assessment Holly Krambeck Financing Project Implementation Start Date Project Implementation End Date 06-Mar-2014 31-Dec-2018 Expected Effectiveness Date Expected Closing Date 06-Aug-2014 30-Jun-2019 Joint IFC No Sector Managers Sector Director Country Director Regional Vice President Mark R. Lundell and John A. Roome Klaus Rohland Axel van Trotsenburg Abhas K. Jha Borrower: People's Republic of China. Responsible Agency: Guiyang Municipal Government Project Leading Group Contact: Mr. Zhang Xiang Title: Director Telephone 86-851-4770713 Email: gpmo@vip.163.com No.: Project Financing Data(in USD Million) [X] Loan [ ] Grant [ ] Other ] Credit [ ] Guarantee Total Project Cost: 250.00 Total Bank Financing: 150.00 Financing Gap: 0.00 Financing Source Amount Borrower 100.00 International Bank for Reconstruction and 150.00 1 Development Total 250.00 Expected Disbursements (in USD Million) Fiscal Year 2015 2016 2017 2018 2019 2020 Annual 20 25 35 35 30 5 Cumulative 20 45 80 115 145 150 Proposed Development Objective(s) The development objective of the Project is to provide improved transport accessibility in selected areas of Guiyang, in a sustainable manner. Components Component Name Cost (USD Millions) Upgrading/Improving County and Township Roads 147.36 Rehabilitation of County and Township Roads 77.23 Rural Roads Maintenance Pilot 12.00 Technical Assistance 1.00 Institutional Data Sector Board Transport Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Co- Mitigation benefits % Co-benefits % Information and communications Information technology 1 0 0 Transportation Rural and Inter-Urban 99 15% 0 Roads and Highways Total 100 D I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural services and infrastructure 80 Trade and integration Trade facilitation and market access 20 Total 100 11 Compliance Policy Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [X] Does the project require any waivers of Bank policies? Yes [ ] No [ X] Have these been approved by Bank management? Yes[ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [X] Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ] Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name Recurrent Due Date Frequency Project Implementing Entity (Guizhou X CONTINUOUS Province) Description of Covenant The Guiyang Municipal Government shall form a Project Leading Group headed by the Vice-Mayor and with representation of the Secretary General of the Vice-Mayor's office, Guiyang MDRC, Guiyang MFB, Guiyang MTB, and Guiyang EPB and assigned with such power, funds and other resources as shall be necessary. Name Recurrent Due Date Frequency Guiyang Project Management Office X CONTINUOUS Description of Covenant The Guiyang Municipal Government shall establish a GPMO, responsible for the overall management of Project implementation, including activities related to environment, resettlement, finance, and administration, headed by a qualified and experienced manager who shall be the director of the GPMO, and assisted by a Deputy Director, and Resettlement, Environment, and Procurement specialists, under ToR satisfactory to the Bank 111 Name Recurrent Due Date Frequency Safeguards Compliance X Yearly Description of Covenant The Guiyang Municipal Government shall carry out the Project in accordance with all safeguards instruments agreed with the Bank. Prior to implementation of each Project batch, environmental and resettlement screening sheets and/or EMP and RAP in accordance with the environmental codes of practice and resettlement planning framework, shall be prepared and submitted to the Bank for no- objection. Name Recurrent Due Date Frequency Project Reporting X CONTINUOUS Description of Covenant Guiyang Municipal Government shall regularly submit project, financial management, procurement, environmental safeguards, and social safeguards reports in accordance with the legal agreements. Conditions Name n/a Type n/a Description of Condition n/a Team Composition Bank Staff Name Title Specialization Unit Limei Sun Program Assistant Program Assistant EACCF Eric Lancelot Senior Transport Peer Reviewer LCSTR Engineer Mitsuyoshi Asada Senior Transport Peer Reviewer EASIN Specialist Satoshi Ishihara Senior Social Peer Reviewer EASTS Development Specialist Teresita Ortega Program Assistant Program Assistant EASWE Kishor Uprety Senior Counsel Senior Counsel LEGES Junxue Chu Senior Finance Officer Senior Finance Officer CTRLN Fang Zhang Financial Management Financial Management EASFM Specialist Specialist Holly Krambeck Transport. Economist Team Lead EASIN Xuan Peng Program Assistant Former Program Assistant EACCF Jun Zeng Social Development Social Development EASCS Specialist Specialist Jingrong He Procurement Specialist Procurement Specialist EASR2 iv Ning Yang Environmental Specialist Environmental Specialist EASCS Xiaoke Zhai Sr. Transport Specialist Sr. Transport Specialist EASCS Geoffrey John Kurgan Consultant Consultant EASCS Non Bank Staff Name Title Office Phone City Serge Cartier van Dissel Maintenance Consultant Jakarta, Indonesia Baoru Song Project Management Beijing, China Consultant Chuntai Zhang Economist Consultant Beijing Locations Country First Location Planned Actual Comments Administrative Division China Guizhou Province Guiyang X Municipality V  I. STRATEGIC CONTEXT A. Country Context 1. For the past twenty years, the Chinese economy has grown at a remarkable pace, at an average rate of more than 8 percent per year. This growth has not been spread evenly throughout the country, with growing wealth disparities between the coastal and inland regions, and between the urban and rural areas. In support of shared prosperity for all Chinese people, the Government of China has been addressing this issue by giving priority to economic development in the lagging western and central regions and by providing financial support to transport infrastructure development in rural areas. 2. Guizhou Province (pop. 35 million), on GDP per capita basis, is the poorest province in China. Its GDP per capita is about USD 3,000, which is only 50% of the national average and about 20% the GDP per capita in Beijing. This poverty stems, in part, from the geography of Guizhou, a heavily mountainous, landlocked province in southwestern China. 3. Guiyang Municipality, the capital city of Guizhou Province, includes 6 districts, 3 counties and 1 county-level city. The municipality boundaries span a substantial area of more than 8,034 km and encompass hilly and mountainous terrain, with elevations ranging from 500 to 1,760 meters above sea level. In 2010, Guiyang Municipality had a total population of 4.32 million, of which 1.38 million (about 32%) lived in the rural areas. About one fourth of the rural population in Guiyang is ranked as "poor", with people whose annual incomes are below the national poverty line. The Guiyang Municipal Government has been taking steps to alleviate poverty and reduce the urban-rural disparity, including improvement of the rural road network. B. Sectoral and Institutional Context 4. National Rural Road Development Plan. During the period of 11th Five-Year-Plan (2006-2010), China invested approximately RMB 954 billion (US$157 billion) in construction and improvement of about 1.87 million km rural roads. Almost all the townships in China have accessible roads, about 97 percent of which are paved by asphalt or cement concrete; and 99.4 percent of the administrative villages have accessible roads, about 84% of which are paved. However, compared with the eastern and central regions, the western region still lags far behind in rural roads development. Most of the unpaved roads are located in the western provinces, and the general road condition and standards in western provinces are poorer as compared with those in the coastal region, due to lack of investment in road maintenance and upgrading. 5. Currently, the development of rural roads system in China is guided by the prevailing national 12th Five-Year-Plan for Transport Development, which spans 2011 through 2015. According to this plan, the strategy for rural roads development is (i) to provide all the administrative villages in the western region with asphalt or cement concrete paved roads, in order to meet the basic travel demand of the farmers; (ii) to improve the infrastructure and facilities for rural roads, including reconstruction of bridges and provision of safety and safeguard facilities, in order to enhance climate-linked risks and improve the traffic safety; and (iii) to improve the overall condition of rural roads network, including the improvement of county and township roads, in order to upgrade the comprehensive service capacity of the rural 1 roads network. The plan aims to achieve a total length of 3.9 million km paved rural roads in China by the end of 2015. 6. Guiyang Rural Roads Development Plan. At the end of 2011, the total length of rural roads in Guiyang was about 7,875 km, which included 1,624 km county roads, 1,494 km township roads, 4,715 km village roads and 42 km special-purposed roads. While Guiyang's trunk highways linking to other cities were upgraded and its urban transport network has been under expansion, the rural roads network in Guiyang is generally underdeveloped. The condition of rural roads, mostly Class IV1 or unclassified, is generally poor and with low quality of service. Existing asphalt and cement concrete pavements have extensively deteriorated due to usage beyond expected service life, overloading, and lack of maintenance, and there still remain a substantial number of roads that are still unpaved. The poor road conditions have caused much inconvenience and high travel costs for villagers, particularly in the mountainous areas. 7. Guiyang has been implementing rural roads development programs to address the shortcomings of the rural road network. During the period of 11th Five-Year-Plan, the municipality invested approximately RMB1,081 million (USD176 million) to construct or improve about 3,259 km of the rural roads. Under the Guiyang Rural Roads Development 12th Five-Year-Plan, Guiyang aims to (i) provide all the county, township and administrative village roads with asphalt or cement concrete pavement; (ii) improve the capacity for disaster mitigation and traffic safety by rehabilitating bridges and providing safety and safeguard facilities; and (iii) optimize the rural roads network and its comprehensive service standard by upgrading or rehabilitating a number of county and township roads. 8. The main activities expected to be carried out by 2015 are listed in the Table-i: Table-1: Guiyang Rural Roads Development 12th Five-Year-Plan (2011-2015) Description of works Unit Quantity 1 Upgrading/improvement of county and township roads km 357 2 Rehabilitation of county and township roads km 1,804 3 Asphalt or concrete pavement for administrative village roads km 1,370 4 Traffic safety and safeguards facilities km 1,724 5 Disaster mitigation and treatment km 286 6 Reconstruction or modification of dangerous bridges no./meter 30/647 7 New construction of bridges no./meter 15/1,985 8 Construction of special-purposed roads km 625 9. The rural roads development in Guiyang is administrated by the Guiyang Municipal Transport Bureau (GMTB), which is responsible for the planning, implementation and maintenance of the rural roads network in Guiyang. Under its supervision, the county level transport bureaus are responsible for managing the construction and maintenance of the county and township roads in their respective county; and the township governments are responsible for managing the construction and maintenance of the village roads in their jurisdictions. Class IV for this project represents a two-lane road with 20km/h design speed and 6.5m width of top subgrade. 2 10. A growing significant issue faced by the GMTB in managing its rural road program is keeping assets maintained despite a limited budget for monitoring, routine maintenance activities, and medium and major maintenance activities. The GMTB is responsible for maintaining a network of nearly 8,000 km of rural roads, and in 2012, received a maintenance budget only RMB 65 million (USD10.6 million) from provincial, municipal, and county/district- level sources. According the GMTB, a minimum of RMB 240 million (USD39 million) is required. The GMTB is seeking ways to lower the cost of asset monitoring and maintenance activities, as well as to increase the efficacy of these activities to reduce longer term costs. 11. The proposed Project is the second transport project that the Bank has financed in Guiyang. The first Guiyang Transport Project (GTP), which is on-going and to be completed by December 2013, has a rural roads sub-component. Further details on this Project may be found in the section on Lessons Learned and Reflected in the Project Design. C. Higher Level Objectives to which the Project Contributes 12. The Project will contribute to the improvement of the rural roads networks in Guiyang by implementing the Guiyang Rural Roads Development 12th Five-Year-Plan (2011-2015). The improvement of the rural roads will provide the local rural people with more efficient transport access to education, healthcare, work opportunity and outside markets. Therefore, the Project will contribute to poverty alleviation and socio-economic development of the suburban areas of Guiyang, as well as shared prosperity, since integrating the rural population with the urban economies would benefit both populations. 13. The proposed Project is in line with the Strategic Theme One and Theme Two of Bank Country Partnership Strategy (CPS) FY2013-2016 for China, 'Supporting Greener Growth' and 'Promoting More Inclusive Development', respectively. The proposed Project will address the Theme One through optimizing energy use by reducing transport costs for rural road users; and it will address the Theme Two by improving the rural roads network to increase the accessibility of education, healthcare and markets to the rural people of Guiyang. II. PROJECT DEVELOPMENT OBJECTIVE(S) A. PDO 14. The development objective of the Project is to provide improved transport accessibility in selected areas of Guiyang, in a sustainable manner. 15. This objective will be achieved through the upgrading and rehabilitation of rural roads selected from the Guiyang Rural Roads Development 12th 5Five-Year Plan, as well as implementation of maintenance pilot activities. Project Beneficiaries 16. The project road users. The proposed project would upgrade, improve, or rehabilitate up to 940 km of rural roads and support a rural road maintenance pilot in Guiyang Municipality. Upon completion, the Project roads would substantially improve the connectivity in the project 3 area and benefit transporters and passengers through shorter travel times and lower road accident rates. 17. Residents in the project area. The urbanization rate in Guiyang is only 38 percent -- lower than the national average of 50%. The proposed Project roads will pass through up to 339 administrative villages, home to 703,103 residents. The first confirmed batch of 22 roads to be implemented within the first two years of the project would improve 233 km of roads, impacting 340,664 people, of which 84,014 are minorities and 39,644 live below the poverty line. The upgrading and rehabilitation of the Project roads would stimulate socioeconomic development -- all people, including the poor and women, in the project area would benefit from more working opportunities during and after the project, increased income from their labor and farm products, improved livelihood through access to critical services, such as education and health care facilities. 18. Also, through the rural road maintenance pilot (Component C), Guiyang may test a community-based road maintenance contract scheme in Wudang County, which would deliver specialized training and employment opportunities to local residents. 19. Women. Drawing upon a successful pilot in neighboring Yunnan Province as a model, the proposed community-based road maintenance contract scheme would encourage a minimum number of women (including indigenous women) to be employed in all aspects of the maintenance teams (supervision, record management, auditing, labor, etc.). This would contribute to the Project's focus on shared prosperity. PDO Level Results Indicators 20. The achievement of the PDO will be measured by: (i) Number of people with access to an all-season road; (ii) Percent travel time savings on upgraded / improved (iii) Percent travel time savings on rehabilitated roads; and (iv) Length of roads served by the maintenance pilot activity. These key indicators are supplemented by relevant intermediate indicators, presented in Annex 1. III. PROJECT DESCRIPTION A. Project Components 21. The proposed Project will support the implementation of the activities under Guiyang Rural Roads Development 12th Five-Year-Plan, with a particular focus on the upgrading/improvement of existing lower class roads and the rehabilitation of county and township roads in poor condition. In addition, the Project will help build the capacity for rural roads maintenance. To this end, the Project will include the following four components: 22. Component A: Upgrading/improving county and township roads (Cost: USD147 million; IBRD: USD74 million) will provide all-season roads to villagers and increase transport capacity in key corridors. Physical outputs include: (i) upgrading one county road from Class IV to Class II; and (ii) improving unclassified county and township roads to Class IV. 4 23. Component B: Rehabilitation of county and township roads (Cost: USD78 million; IBRD: USD51 million) supports the rehabilitation of deteriorated county and township roads. The physical outputs of the component include rehabilitated roads, with improved safety and drainage features. 24. Component C: Rural road maintenance pilot (Cost: USD12 million; IBRD: USD12 million) will enable the Guiyang Municipal Transport Bureau to test and verify methods to improve the cost efficiency and efficacy of the Guiyang Municipality rural road maintenance program. The component comprises three distinct parts: (i) Development of the rural road maintenance pilot design; (ii) Implementation of the rural road maintenance pilot; and (iii) Improvement of the Guiyang Rural Roads Management Information System. 25. Further details on the sub-components included in the maintenance pilot may be found in Annex 2. 26. Component D: Technical assistance (TA) (Cost: USD1 million; IBRD: USD1 million) supports the implementation of two technical assistance programs that contribute to the longer term sustainability of the rural road program: (a) Rural road network plan and (b) Training and study tours. 27. Further details on all of these components are in Annex 2. B. Project Financing 28. The Bank will finance the Project through Investment Project Financing (IPF). The loan will be payable in 18 years, including a 6-year grace period, and level repayment at six-month LIBOR-based US dollar plus variable spread, with all conversion options. Project Cost and Financing 29. The total estimated cost of the Project is RMBl.53 billion, or USD250 million. The Table below presents the project costs and the Bank's financing by components. Unit: US$1 million IBRD or IDA Project Components Project cost inci % Financing Financing 1. Upgrading / Improving Country and 147.355 74.050 50.25% Township Roads 77.230 50.535 65.43% 2. Rehabilitation of Country and Township 12.000 12.000 100% Roads 1.000 1.000 100% 3. Rural Road Maintenance Pilot 4. Technical Assistance 237.585 137.585 Total Costs Total Project Costs 237.585 137.585 Interest during Construction 12.000 12.000 100% Front-End Fees 0.375 0.375 Total Financing Required 250.000 150.000 60% 5 C. Lessons Learned and Reflected in the Project Design 30. Under the Guiyang Transport Project (GTP), which closed on December 31, 2013, the Bank financed the rehabilitation and upgrading of rural roads in Guiyang Municipality, as well as construction of a new urban arterial, construction of rural bus stations, and provision of miscellaneous technical assistance activities, including the development of a GIS-based rural road maintenance system. Lessons learned through this project, as well as from other projects in China and other countries, have been applied to the design of the new Guiyang Rural Roads Project (GRRP), as follows: 31. Institutional Arrangements. Two different institutional arrangements were utilized during the GTP - one where the GPMO hired an implementing agency to manage all contracts, and one where the GPMO acted itself as an implementing agency. The roads completed under the former approach encountered substantial delays, largely due to lack of coordination with county-level governments. The roads completed under the latter structure were completed on- time, and without issue. Under the GRRP, a formalized version of the latter structure has been adopted (see Institutional and Implementation Arrangements for further details). 32. Counterpart Funding. The GTP encountered delays due to unavailability of counterpart funding to cover resettlement costs and contractor payments. To avoid this issue under the GRRP, the following measures have been included: (i) Provision of a commitment letter from the Guiyang Municipal Government (GMG) (received in July 2012), guaranteeing availability of municipality-level counterpart funds for the project; (ii) Agreement between the GMG and the district-level governments to share the costs, with details listed in Table 2; and (iii) Rolling project selection method that only supports roads for which local government funding is already in place. 33. Rural Roads Maintenance. Under the GTP, a GIS-based rural road maintenance system was developed for the Guiyang Municipal Transportation Bureau (GMTB). This system will be further developed under the GRRP to expand functionality. In addition to this system an additional project component has been added to the GRRP to address the general lack of available funding for maintaining rural roads (the combined municipal and county budgets for supporting routine road maintenance is sufficient to cover about 1% of the 8,000-km network each year) and that newly rehabilitated roads quickly show signs of wear due to lack of monitoring (as confirmed during GTP site visits). The new comprehensive rural road maintenance component (Component C), includes: (i) maintenance pilot design technical assistance activity and (ii) implementation of the pilot (further details may be found in Annex 2). Component D, Technical Assistance Activities, further supports the Rural Road Maintenance Pilot under Component C by providing training support as well as development of a rural road network plan, which would include maintenance consideration. 34. Project Components - Combining Urban and Rural Roads. Under the GTP, project components included both urban arterial construction and rural road rehabilitation projects. This structure proved to be problematic, as the magnitude of construction and management works to be undertaken for new construction of urban arterials is substantially greater than that required for rural road rehabilitation. Thus, under the GTP, while considerable attention was paid in the early years to the implementation of the urban road construction project, very little was paid to 6 the rural road project, resulting in completion delays towards the end of the project. To avoid this problem moving forward, the GRRP includes only rural road projects and limits Class II upgrading to only one segment, since this kind of upgrading requires more resources than rehabilitation or Class IV improvement. 35. Community-Based Maintenance Approaches. Given that continuous, high-quality maintenance activities are a substantial factor in ensuring Project sustainability, the Team pulled together experiences from multiple countries and regions to support further development of Component C, the Rural Road Maintenance Pilot. For example, the World Bank and the Asian Development Bank both executed community-based contract (CBC) schemes in China - in Jiangxi and Yunnan provinces, respectively. Chinese-language training materials prepared through these projects were disseminated to the GPMO and GMTB staff, to provide a basis for discussion potential inclusion in the Project as a pilot. Examples of community-based contracts in Vietnam and multiple countries in Latin America were also shared. 36. Contracts. Prior Bank projects that focused specifically on rural roads improvement, such as the Second Rural Roads Sector Project in Colombia, identified the execution of too many contracts over a large geographic area as a key risk factor. The number of GRRP contracts has been limited, and the geographic scope limited to Guiyang Municipality only. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 37. The Guiyang Municipal Government will maintain a Project Leading Group (PLG) headed by a Vice-Mayor and with representation of the Secretary General of the Mayors' office and the related government agencies, to provide oversight and to coordinate the implementation of the Project and ensure the availability of the funds and other resources needed for the Project. As a readily established office that has been managing the on-going Guiyang Transport Project, the Guiyang World Bank funded Project Management Office (GPMO) will continue to handle the day-to-day management of the proposed project on behalf of PLG. 38. The GMTB will be responsible for managing the implementation of the Project under the oversight of PLG and GPMO. It will form a Guiyang Rural Roads Construction Office (GRRCO) to handle the day-to-day implementation management and be considered the Implementing Agency (IA). The GRRCO, established by the Guiyang Municipality, under Guiyang Municipal Transport Bureau, is the dedicated implementing agency for the Project, responsible for the daily management of Project implementation. 39. Each of the project counties will form a branch construction office, under the management and supervision of GRRCO, to be responsible for the implementation of the roads in the respective county. This structure was found to work effectively during the Guiyang Transport Project. 7 40. The GRRCO will be responsible for procurement of all contracts for civil works, with the GMTB as the legal entity that would sign them. The GRRCO will comprise several departments, including Chief Engineering Office, Foreign Affairs Office, Engineering Department, Contract Management Department, Land Acquisition and Resettlement Department, Financial Management Department, and Administration Office. The GRRCO has about 26 staff, which may be expanded and enhanced according to the project implementation requirements. Some staff in the GRRCO were involved in the implementation of the Guiyang Transport Project and have substantial experience in implementing World Bank financed projects, but new staff without prior experience with Bank Project may be added, as needed. 41. The GRRCO will be responsible for all procurement activities, with the GMTB as the legal entity that would sign all contracts. While most project tasks will be implemented by the GRRCO, some will be directly implemented by the project districts/counties, such as land acquisition and resettlement, as well as daily project implementation monitoring. Therefore, each project district/county will form a branch construction office, under the management and supervision of the GRRCO, to be responsible for the implementation of the rural roads and select maintenance pilot activities each participating county. 42. The GPMO and the Bank team will provide necessary training on Bank policies, procurement, financial management (FM), safeguards, and contract management to the Project staff during the preparation and throughout implementation. 43. Further details on these arrangements may be found in Annex 3. B. Results Monitoring and Evaluation 44. Annex 1 lists the PDO Level results indicators and intermediate results indicators for each component. The PMO will coordinate the relevant agencies in collecting data required for monitoring and evaluation of outcomes. 45. GMTB will be responsible for providing results data; it already has in place procedures and resources to do so, leveraging the same staff and systems that were developed under the Guiyang Transport Project. The Bank and GPMO/GRRCO will jointly monitor and evaluate the emerging results which will be presented in the project progress reports. Corrective actions will be recommended and taken as appropriate and necessary. Monitoring activities to ensure achievement of the target values is are described in the Result Framework in Annex 1. C. Sustainability 46. The Project will help build the capacity of the GMTB in planning, construction management and maintenance of the rural roads network through Component C - the Rural Road Maintenance Pilot - as well as the proposed technical assistance package, which includes training activities, as well as support for planning the next five-year rural road network plan. See Annex 2 for further details. 8 V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Risk Category Rating Stakeholder Risk M Implementing Agency Risk - Capacity S - Governance M Project Risk - Design M - Social and Environmental M - Program and Donor L - Delivery Monitoring and Sustainability S Overall Implementation Risk M Note: M (Moderate), S (Substantial) B. Overall Risk Rating Explanation 47. The overall risk assessment for this Project is Moderate. Four key project risks are: (a) counterpart funds may not be available in a timely manner, given that the municipal and county governments are faced with heavy financing constraints; (b) lack of sustainability of improved road maintenance/management focus/practices beyond the Project; (c) the new institutional structure that has been proposed for the project may not turn out to be effective when implemented on a large scale; and (d) inadequate supervision capacity at the district/county level. 48. The following mitigation measures have been incorporated into the project to mitigate these key risks: a) To mitigate the risk that counterpart funds may not be available in a timely and adequate manner, at the stage of project preparation, Guiyang municipal government has provided the Bank with a commitment letter confirming the provision of counterpart funds, as well as a counterpart funding plan and assurance mechanism. b) To mitigate the maintenance risk, the Project has been redesigned to include a robust TA that will support the design of a well-conceived rural road maintenance pilot, which would be implemented as a Project component. TA activities also include improvement of Guiyang's rural road GIS-based maintenance system, to include analysis tools for road prioritization. c) Although the PLG and GPMO have experience in managing the Bank-funded project, the project has a risk that some staff with the implementing agencies may not be familiar with Bank policies (GRRCO is responsible for fiduciary aspects of the project, as well as 9 ensuring safeguards are monitored, while the district-level and country governments are responsible for land acquisition, resettlement, and monitoring contractor compliance with the EMP). To mitigate this risk, training on Bank policies and contract management will be provided to the GMTB, GRRCO, and project counties, and a complete operation manual will be set out to guide the project implementation. VI. APPRAISAL SUMMARY A. Economic and Financial Analysis 49. Road segments under Components A and B will be drawn from the Guiyang Rural Roads Development 12th Five-Year Plan on a rolling basis and grouped into five "batches". During Appraisal, only the project scope for Batch I was formulated, which included 22 rural roads. This first batch has been used as the basis to estimate overall project costs and to conduct the socio- economic impact evaluation. 50. Economic Analysis. The economic evaluation of Batch I (22 road segments, covering 250 km) was carried out by comparing the "with-project" and "without-project" cases. The economic viability of the project was assessed by calculating economic internal rate of return (EIRR), based on the following parameters: change in vehicle operating costs, travel time savings, construction costs, operating and maintenance costs, and financing charges. According to these results, which were based on data provided in the feasibility study report (FSR), the EIRR was 22.6 percent for the Batch I. 51. Thus, the project is considered to be economically viable. The sensitivity analysis found that the EIRRs were higher than the economic opportunity cost of capital (12%) for all tested scenarios. Even at the worst case of increasing capital costs by 20%, increasing maintenance cost by 20 percent, and decreasing benefits by 20 percent, the EIRR was still 16.2 percent. The reason for the high benefits largely stems from the low cost to improvement ratio exhibited by upgrading, improvement, and rehabilitation projects - that is, travel speeds and accessibility can be substantially improved at a low cost, relative to green field construction. 52. Financial Capacity Analysis. Project costs are estimated based on the field investigation of sampled roads, the actual costs of rural roads of the Guiyang Transport Project, and the domestic policies and regulations. A contingency of 12 percent of the baseline of civil works has been included, to account for both physical and price contingencies. 53. Counterpart funding responsibility will vary between the county-level and district-level local governments. In the participating districts (Huawei, Wudang, Baiyun, and Nanming), the district governments would be responsible for 10 percent of civil works costs, and 100 percent land acquisition, resettlement, and "other" costs. The Municipality would cover debt service for the World Bank loan, which comprises 90 percent of civil works costs. In the participating counties (Xiuwen, Xifeng, Kaiyang, Qingzhen City), the counties would be responsible for 100 percent of project costs, including repayment of the World Bank loan, which covers 90 percent of civil works. The following table summarizes these arrangements. 10 Table-2: Overview of Counterpart Project Financing ResponsibilitieS2 Activity District Municipality Civil Works 10% 90% (WB Loan) Resettlement 100% 0% Land Acquisition 100% 0% Improve to IV USD 190,000 / km USD 240,000 / km Rehabilitation USD 40,000 / km USD 110,000 / km County Civil Works 10% + 90% WB Loan Resettlement 100% Land Acquisition 100% Improve to IV USD 430,000 / km Rehabilitation USD 150,000 / km 54. Analysis of the district government annual budgets show that for road rehabilitation, if the projects were spread out equally between the four districts and three counties (-65 km each) 3, then the total cost to each district would equal between 0.5 percent and 1.3 percent of each district's total expenditures in 2012, which seems reasonable. Similarly, if the class IV road improvement projects were spread out equally (-26 km each), the total cost to each district would be between 1 percent and 2.4 percent of each district's total expenditures in 2012 - again, reasonable for a an infrastructure project that would have such a substantial impact on the economic development of the district. 55. Similarly, for the county governments, the total rehabilitation project comprise between 3 percent and 4.4 percent of local fiscal expenditures in 2012, and for improvements to class IV, from 3.3 percent to 4.9 percent -- though, it should be kept in mind that a substantial portion of these expenditures would be covered by the Bank's long term, low-interest loan, so that actual burden in a given year would be lower, more in line with the district governments. That said, these projects do represent a significant portion of annual expenditures , with costs many times higher than what is typically spent on transportation (1.6 to 2.5 times higher than 2012 transport expenditures for rehabilitation projects, and 1.8 to 2.8 times higher for improvement to class IV projects). 56. Given the potential funding burden in the participating counties, substantial emphasis has been placed during the project design phase on the counterpart funding assurance mechanism, whereby participating local governments are required, up front, to place their share of project funding in a designated account managed by the implementing agency, which is then managed and disbursed by that agency on behalf of the local government through project completion. This mechanism has been formally approved by the Vice Mayor and the GMFB. A similar procedure 2 Note that there are two exceptions to this allocation plan: (1) For the first batch of 22 rehabilitation projects, the Bank loan will cover 70% of civil works, as has already been agreed upon between the Municipality and the participating local governments; (2) For the road upgrade from Class IV to Class II (there will be one 20 km segment included in the project), the Bank loan will cover about 70% of civil works. Selection of this project will be partially based on availability of counterpart funding to support the project. 3 There are 8 participating local governments, but it is possible that not every government will participate in the end, so 7 out of 8 have been assumed, to be conservative. 11 was successfully employed in the second batch of rural road rehabilitation projects in the Guiyang Transport Project. 57. Further details on the counterpart funding assurance mechanism and these analyses may be found in the Project Documents. B. Technical 58. The Project activities mainly include three types of activities: (1) road improvement, which refers to improving an unclassified road to meet the standards of a Class IV road; (2) road upgrading, which in this case refers to upgrading one road segment from Class IV to Class II; and (3) road rehabilitation, which involves repairing damaged Class IV roads. The Project will also include a maintenance pilot, through which the counterparts can pilot a range of methods, materials, and contract structures for increasing the efficacy and efficiency of rural road maintenance in Guiyang. 59. The technical requirements of the civil works follow the national and provincial codes and standards. The key requirements of traffic safety facilities (e.g., street markings, signage, guardrails, etc.) and drainage system are clearly defined in feasibility study report to guide detailed engineering design. C. Financial Management 60. The Guiyang Project Management Office (GPMO) which implements the Guiyang Urban Transport Project, will be responsible for procurement cycle management and contract management of civil works in the project. The Guiyang Rural Roads Construction Office (GRRCO) established under the Guiyang Municipal Transport Bureau (GMTB) will be responsible for the project implementation including project accounting and financial reporting. The financial staffs in GPMO and GRRCO have adequate experience with the Bank-financed operations. The Guizhou Provincial Finance Bureau (GPFB) will manage Bank loan proceeds, including the Designated Account (DA). An assessment of the project financial management arrangements identified the principal FM risk as counterpart funds not placed at the disposition of the project in a timely manner possibly impeding the smooth implementation of the project. To mitigate the above FM risk, an enhanced counterpart funds assurance mechanism has been elaborated in the Project Financial Management Manual (FMM) to document the counterpart funds related cost sharing, budgeting, commitment and appropriation arrangements. 61. With implementation of the proposed actions, the FM arrangements will satisfy the World Bank's requirements under OP/BP 10.00. See Annex 3 for additional information. D. Procurement 62. Guiyang Rural Roads Construction Office (hereinafter referred to as GRRCO) has been established under Guiyang Municipal Transport Bureau by the Guiyang Municipality as the dedicated project management office for the Project, which will be responsible for procurement cycle management and contract management of the whole project. The GRRCO will also be responsible for communications with the Bank, preparing the procurement plan and its updates, 12 the bidding documents, and the request for proposals, organizing the bidding/selection process, procurement and contract monitoring and obtaining the required domestic approvals and submitting procurement documents for Bank review. 63. As the bulk of the staff of the GRRCO will be allocated from the current ongoing Bank funded Guiyang Transport Project, therefore the GRRCO procurement staff have previous experiences with Bank procurement policies and procedures. The major procurement risk identified is possible noncompliance with Bank procurement policies by the GRRCO due to unfamiliarity with specific Bank procurement policies and procedures or as a result of conflict between local bidding procedures and Bank procurement policies. This risk will be mitigated through: 1) the employment of a qualified procurement agent with requisite experience in procurement in projects financed by the Bank or other multilateral financial institutions; 2) the preparation of a procurement manual to guide procurement cycle management; and 3) close coordination with GRRCO and necessary guidance and supervision from the Bank; 4) targeted training and capacity building of GRRCO staff. Further details are provided in Annex 3. 64. A draft procurement plan for the initial 18 months of the Project implementation, prepared by GRRCO, has been reviewed by the Bank and finalized. The procurement plan will be updated in agreement with the Bank annually or as required to reflect actual project implementation needs and improvements in institutional capacity. E. Social (including Safeguards) 65. Indigenous Peoples OP/BP 4.10. Several ethnic minority groups reside in the project area, including Miao and Buyi communities. Some of them have been identified as Indigenous Peoples in accordance with OP4.10. 66. Social Assessment. A social assessment (SA) study has been carried out during project preparation, with a focus on ethnic minority groups. The social assessment (SA) was conducted by a qualified team including economist and sociologists, which carried out intensive fieldwork in selected sample villages, with a focus on the Miao and Buyi ethnic minority communities. The villages/communities fully understood the potential risks and opportunities associated with the project, and expressed their interest, enthusiasm and broad support to the project activities. 67. Ethnic Minority Development Plan. Based on the findings of the Social Assessment study, an Ethnic Minority Development Plan (EMDP) was developed to ensure that project activities on rural roads development are offered to these communities in the same way as other project beneficiaries and that their participation in the Project would be encouraged. 68. Resettlement Policy Framework. A Resettlement Policy Framework has been developed according to relevant local laws and regulations as well as World Bank OP 4.12. It describes the overall legal framework, planning principles, procedures, compensatory and rehabilitation approach, consultation and participatory requirements, training plans, grievance redress mechanisms, organization and monitoring arrangements. The Framework was disclosed initially on Infoshop on September 4, 2013 and then re-disclosed on October 9, 2013. 13 69. Resettlement Action Plan. Per the Resettlement Policy Framework, a Resettlement Action Plan will be prepared for each Project Batch, commencing with Batch I in 2014 (see Annex 2 for a list of road segments included in Batch 1). 70. Grievance Redress. A mechanism has been established for grievance redress. Grievances can be filed both orally and in writing. Starting at village and neighborhood committee level, the grievances can be elevated to county/district, city level if they are not satisfied with the resolution at the lower level. The affected people could also file their cases in court if they are not satisfied with the resolution by the project authority. All grievances and their resolution will be recorded. This mechanism has been disclosed to the local population and will be further disseminated through the Resettlement Information Booklet. 71. Gender Aspects. Special attention has been paid to the views and needs of women, so as to address gender concerns in project planning and implementation. Women participated actively in the consultation meetings, and the social assessment includes a specific chapter for analyzing impacts on women. The relevant records will be appropriately documented and shared with the design consultant. In addition, the community-based road maintenance pilot may have a focus on integrating women into all aspects of the maintenance teams. 72. Information Disclosure. The prepared EMDP and SA were disclosed locally in Chinese on August 29, 2013. The English versions of the documents were initially posted in the World Bank's Infoshop on September 4, 2013, and then disclosed again on October 9, 2013. The Resettlement Framework Plan was disclosed on October 15, 2013. F. Environment (including Safeguards) 73. The Project will provide improved access and better road conditions to local communities. Potential negative impacts may arise from the upgrading and rehabilitation of existing rural roads, thus, OP4.01 Environmental Assessment is triggered. The Project has been assigned Category B, due to the limited environmental and social impacts. 74. Main impacts may include soil erosion, dust and noise, and social disturbance during construction. The Project owner engaged an accredited EIA consultant to prepare an Environmental Assessment for the project. Due to the rolling selection process employed in the Project, Environmental Code of Practices (ECOPs) were selected as the EA instrument. The ECOPs draw upon the experiences and lessons learned from the rural road component of existing Bank-financed Guiyang Transport Project and cover institutional arrangement, typical road construction/rehabilitation activities by type, and a training plan. 75. Per the ECOPs, an EMP will be prepared prior to commencement of each Batch activity, starting with Batch I in 2014 (see Annex 2 for a list of road segments to be included in Batch 1). The ECOPs also provide procedures for screening, preparation, and review of investment/site specific EAs/EMPs that will be developed during Project implementation. The ECOPs were reviewed by the Bank team and are satisfactory, based on the Bank safeguards requirements. 76. Public consultation and information disclosure were carried out during Project preparation through bulletin boards, questionnaire interviews, and public meetings. Public 14 opinion was incorporated into the Project design and ECOPs (details on this process may be found in the ECOP documents). The full draft ECOPs were disclosed locally on August 6, 2013, and are thus accessible to the public. The ECOP main report was were disclosed on Infoshop on August 29, 2013. The second volume was disclosed on October 31, 2013. 15 Annex 1: Results Framework and Monitoring China: Guiyang Rural Roads Project Results Framework Project Development Objectives PDO Statement The development objective of the Project is to provide improved transport accessibility in selected areas of Guiyang, in a sustainable manner. These results are at Program Level Project Development Objective Indicators Respon Cumulative Target Values sibility Data Source/ for Unit of End Methodology Data Ihdicator Name Core Measure Baseline YR1 YR2 YR3 YR4 Target Frequency Collecti on Number of People with Access to an Number 0.00 51,816 126,874 126,874 Annually Project Survey GMTB All-Season Road Travel time Bi- savings on anal Percentage 0.00 40.00 annually, Project Survey GMTB upgraded / aggregated improved roads by year. Travel time Percentage 0.00 15.00 Bi- Project Survey GMTB 16 savings on annually, rehabilitated aggregated roads annually. Road length impacted by impaiteanbeKilometers 0.00 20 45 75 105 125.00 Annually Project Survey GTMB maintenance pilot activity Intermediate Results Indicators Respon Cumulative Target Values sibility Data Source/ for Unit of BEnd Methodology Data Indicator Name Core tBaseline YR YR2 YR3 YR4 Frequency Collecti on Roads rehabilitated, Kilometers 0.00 232 252 472 550 659.00 Annually Project survey GTMB Rural Percent Ha RRMIS and annual maintenance rrlra budget allocated rrlra tMPercentage 0.00 80.00 Annually maintenance budget GMTB to RRMIS-tae .0 identified for medium-to-major priority roads repairs. Number of trainees who attdtrain ig wNumber 0.00 25 50 75 100 100.00 Annually Project survey GMTB attended training and study tours 17 China: Guiyang Rural Roads Project Results Framework Project Development Objective Indicators Indicator Name Description (indicator definition etc.) Share of rural population with access to an all- Number of rural people in the project area who season road live within 2 kilometers (typically equivalent to a 20-minute walk) of an all-season road. This indicator is also known as Rural Access Index (RAI). An all-season road is motor able all year by the prevailing means of rural transport (often a pick- up or a truck which does not have four-wheel- drive). Predictable interruptions of short duration during inclement weather (e.g. heavy rainfall) are acceptable, particularly on low volume roads. Travel time savings on upgraded / improved roads The travel time saving is based on a 25% sample of the total number of segments upgraded or improved in a given year. The travel times shall be taken bi-annually, consistently during a known non-peak travel time. Travel time savings on rehabilitated roads The travel time saving is based on a 25% sample of the total number of segments rehabilitated in a given year. The travel times shall be taken bi- annually, consistently during a known non-peak travel time. Road length impacted by maintenance pilot activity Total km covered by routine maintenance activities supported by the Project. Cumulative measure. Intermediate Results Indicators Indicator Name Description (indicator definition etc.) Roads rehabilitated, Rural Kilometers of all rural roads reopened to motorized traffic, rehabilitated, or upgraded under the project. Rural roads are roads functionally classified in various countries below Trunk or Primary, Secondary or Link roads, or sometimes Tertiary roads. Such roads are often described as rural access, feeder, market, agricultural, 18 irrigation, forestry or community roads. Typically, rural roads connect small urban centers/towns/settlements of less than 2,000 to 5,000 inhabitants to each other or to higher classes of road, market towns and urban centers. Percent maintenance budget allocated to RRMIS- Percent annual rural road maintenance budget identified priority roads allocated to medium-level to major repairs identified through the RRMIS. Number of trainees who attended training and study Cumulative. tours 19 Annex 2: Detailed Project Description China: Guiyang Rural Roads Project Overview 1. The Project roads are drawn from the Guiyang Municipality Rural Roads Development 12th Five-Year-Plan (2011-2015). The main works to be carried out by 2015 are listed in the Table-i: Table A2-1: Guiyang Rural Roads Development Plan (2011-2015) Description of Works Unit Quantity 1 Upgrading/improvement of county and township roads km 357 2 Rehabilitation of county and township roads km 1,804 3 Asphalt or cement concrete pavement for administrative village km 1,370 roads 4 Traffic safety and safeguards facilities km 1,724 5 Anti-disaster protection and treatment km 286 6 Reconstruction or modification of dangerous bridges no./meter 30/647 2. The Guiyang Municipal Government has requested Bank support for the implementation of the Plan giving priority to the upgrading/improvement and rehabilitation of the county and township roads. 3. The proposed Project includes the following four components, which would be implemented across 6 districts (Naming, Huaxi, Wudang, Baiyun, Yunyan, Guanshanhu), 3 counties (Kaiyang, Xiuwen, Xifeng), and 1 county-level city (Qingzhen): 4. Component A: Upgrading/improving county and township roads (Cost: USD147 million; IBRD: USD74 million) will provide all-season roads to villagers and increase transport capacity in key corridors. Physical outputs include: (i) upgrading one county road from Class IV to Class II; and (ii) improving unclassified county and township roads to Class IV. 5. Component B: Rehabilitation of county and township roads (Cost: USD78 million; IBRD: USD51 million) supports the rehabilitation of deteriorated county and township roads. The physical outputs of the component include rehabilitated roads, with improved safety and drainage features. 6. Component C: Rural road maintenance pilot (Cost: USD12 million; IBRD: USD12 million) will enable the Guiyang Municipal Transport Bureau to test and verify methods to improve the cost efficiency and efficacy of the Guiyang Municipality rural road maintenance program. The component comprises three distinct parts: (i) Development of the rural road maintenance pilot design; (ii) Implementation of the rural road maintenance pilot; and (iii) Improvement of the Guiyang Rural Roads Management Information System. 20 7. Component D: Technical assistance (TA) (Cost: USD1 million; IBRD: USD1 million) supports the implementation of two technical assistance programs that contribute to the longer term sustainability of the rural road program: (i) Rural road network plan and (ii) Training and study tours. 8. The following sections describe these components in greater detail. Component A: Rural Road Upgrading and Improvement 9. Batches. Component A roads will be selected during Project implementation from the pool of 12th Five-Year Plan roads, based on a set of pre-determined criteria, including traffic volume, affected population, availability of counterpart funds, severity of damage, and degree of resettlement or land acquisition required. 10. Improvements and Alternatives Considered. In addition to basic upgrading and improvement activities, additional safety and drainage features have been incorporated into the basic design requirements, to ensure that the new roads are not just better quality, but also safer and with a longer lifespan. Both asphalt and cement pavement have been considered in the feasibility study. Asphalt pavement has been selected due to the following considerations: existing pavement material is primarily asphalt and construction costs would be lower. To reduce land acquisition, the alignment of the roads to be upgraded will mostly follow the existing alignments except where sharp curves and steep longitudinal slopes need to be improved for traffic safety improvement. Different kinds of guardrails and drainages have been compared and the more cost-effective solutions have been selected. 21 Component B: Rural Road Rehabilitation 11. Batches. The "first batch" of 22 road segments out of the total number of projects identified in the 12th Five-year plan has been identified, and the remainder of Component B roads will be selected during Project implementation from the pool of 12th Five-Year Plan roads, based on a set of pre-determined criteria, including traffic volume, affected population, availability of counterpart funds, severity of damage, and degree of resettlement or land acquisition required. Project cost estimates, as well as expected socio-economic impacts of the project, are primarily based on this identified batch. 12. The following process was used to derive this first batch: a) Step 1: 115 candidate road segments were selected from the Guiyang Rural Roads 12th 5-Year Development Plan. b) Step 2: Each segment was assigned a score (scale: 1-5) in the following categories: level of damage; traffic volume and population density (using data from the RRMIS system); availability of local-government funding; level of land acquisition and/or resettlement required; and track record of the local government. Roads segments that scored between 22 and 25 were selected for further study - 41 in total. The Feasibility Study Report (FSR) includes tables with all of the segments and their scores. c) Step 3: These 41 roads were ranked by originally planned implementation schedule, and the top 25 were then selected for Batch 1. d) Step 4: In the FSR, a detailed field survey was conducted on each of these segments, identifying specific civil works requirements, by km. Table A2-2: Selected First Batch Projects under Component B (2014) # Road Segment Location Length Class Activity (kmn) 1 Yongwen-Jinzhong Kaiyang County 11.7 IV Rehab 2 Gangzhai-Maoyun Kaiyang County 15.8 IV Rehab 3 Yongwen-Wenquan Kaiyang County 16.7 IV Rehab 4 Sanwangmiao-Miping Kaiyang County 7.6 IV Rehab 5 Xiaba-Maoping Kaiyang County 7.3 IV Rehab 6 Weicheng-Maige Qingzhen City 22.8 IV Rehab 7 Liwo-Maocao Qingzhen City 18.5 IV Rehab 8 Yangchang-Xiaba Wudang District 14.1 IV Rehab 9 Meinvguan-Sanjiang Wudang District 3.9 IV Rehab 10 Xinpu-Xiangzhigou Wudang District 7.5 IV Rehab 11 Toupu-Pianpo Wudang District 15 IV Rehab 12 Shuitian-Caijiazhai Wudang District 4 IV Rehab 22 13 Pianpo-Xiaohekou Wudang District 1.7 IV Rehab 14 Longtan-Fenghuangshao Baiyun District 5.8 IV Rehab 15 Erfenchang-Dulaying Baiyun District 5.9 IV Rehab 16 Longdongpu-Maochang Nanming District 16.6 IV Rehab 17 Qingyan-Pingfa Huaxi District 13.9 IV Rehab 18 Longchang-Chalukou Huaxi District 12 IV Rehab 19 Maojing-Kaiba Huaxi District 9.2 IV Rehab 20 Qingyan-Maojing Huaxi District 2.6 IV Rehab 21 Xifeng County-Xiaozhaiba Xifeng County 10 IV Rehab 22 Tiantai-Xinglong Xifeng County 9.8 IV Rehab Total 232.4 13. Improvements and Alternatives Considered. In addition to basic rehabilitation activities, additional safety and drainage features have been incorporated into the basic design requirements, to ensure that the new roads are not just better quality, but also safer and with a longer lifespan. Both asphalt and cement pavement have been considered in the feasibility study. Asphalt pavement has been selected due to the following considerations: existing pavement material is primarily asphalt and construction costs would be lower. To reduce land acquisition, the alignment of the roads to be rehabilitated will mostly follow the existing alignments except where sharp curves and steep longitudinal slopes need to be improved for traffic safety improvement. Different kinds of guardrails and drainages have been compared and the more cost- effective solutions have been selected. Component C: Rural Road Maintenance Pilot 14. The purpose of the maintenance pilot is to identify and test different methodologies for improving the efficiency and efficacy of the Guiyang rural roads maintenance program. By identifying successful strategies, the GMTB would be better positioned to both maintain the investments made under this project over a longer period of time, as well as the rural road network that falls outside of the Project scope. The component comprises three distinct parts: a) Design of the rural road maintenance pilot; b) Implementation of the rural road maintenance pilot; and c) Improvement of the Guiyang Rural Roads Management Information System. 15. This flexible structure has been employed to ensure sufficient time and resources are dedicated to identifying alternatives and designing a well-structured program and monitoring mechanism, to optimize the chance of a successful pilot outcome. 23 16. The design of the rural road maintenance pilot (USD400,000) will be carried out through a specific Pilot Design TA responsible for analyzing options that address five specific issues: a) Maintenance Practices. Based on a review of current maintenance practices, needs and budgets, the TA will analyze options including road maintenance groups, maintenance contractors, maintenance yards (with related options for ownership/operation and work scope), performance-based contracting, and staff training. Implementation may include construction of 0-2 maintenance yards; b) Overloading Control. Based on traffic surveys and a review of overloading sources and control mechanisms, the TA will analyze options including mobile weighing equipment, road sensors/cameras, fixed overloading control stations, and changes to overloading fines. Implementation may include construction of 0- 5 overloading control stations; c) Monitoring and Surveying. Based on a review of data requirements and current collection techniques, the TA will analyze options including alternative data collection options, road condition surveying equipment, road inventory surveying tools, and mobile- and web-based inspection technologies. Implementation may include purchase of 0-1 road survey vehicle and mobile equipment; d) Maintenance Implementation Funding. Based on an analysis of existing maintenance funding levels, sources and expenditure, the TA will assess options including alternative funding sources, leveraging increased funding through project support, and improving efficiency of funding use. Implementation may include maintenance funding support from the project; e) Pavement Maintenance Materials. Based on a review of current pavement maintenance materials and application techniques, the TA will assess options including alternative materials and application techniques and the need for a rural roads materials supply station. Implementation may include trialing of materials and techniques.4 17. Based on this analysis, the Pilot Design TA will present a menu of the best alternatives for review by the GMTB and participating agencies. On the basis of these recommendations, GMTB will select a number of options to be piloted under this component and determine the scope and budget allocation for each selected option (based on a total implementation budget of USD11.4 million). 18. The second phase of the Pilot Design TA will prepare detailed design and implementation plan for the selected options. TA activities will be completed in the first year after project effectiveness and implementation will be carried out during the remainder of the project duration. 4 The construction of a materials supply station will not be included under this project, but is being considered by GMTB using other funding sources. 24 19. Component C also includes a second TA aimed at further improvement of the Guiyang Rural Roads Management Information System (GRRMIS) developed under the GTP (USD200,000). This will strengthen the planning and monitoring capacities of the GRRMIS, expand the database to include additional data, and provide training in the use of GRRMIS at municipal and county/district level. Further details may be found in the Project Documents. Component D: Technical Assistance 20. The technical assistance program comprises two separate activities, designed to support the long term sustainability of the Project investments. 21. Rural Road Development Plan (USD 500,000). The GMG faces significant resource challenges in preparing long term plans for developing the rural road network and has requested assistance in developing standardized procedures for preparing travel demand models and related analyses for rural road development planning. By ensuring a high-quality network plan, the GMTB can strike a balance between social and economic development objectives, road capacity, and maintenance needs, and supporting better connectivity throughout the Municipality. 22. Training and Study Tours (USD 500,000). Training activities will focus primarily on road safety, network planning, alternative construction materials, maintenance contracting methods, and maintenance methodologies. Project Costs and Implementation Schedule 23. Following is the proposed project implementation schedule, by component: Table A2-3: Proposed Project Implementation Schedule Year Component Indicators USD million* % Total* B Rehabilitation 232 km 2014 44.682 C Maintenance Plan 0.40 D Consulting Service 0.60 18.28% D Training 0.025 A Upgrade to Class II 20 km 2015 81.837 D Training 32.78% 0.1025 A Upgrade to Class IV 102 km 2016 39.175 B Rehabilitation 118 km 22.752 C Maintenance Pilot 2.00 25.69% C RRMIS 0.20 D Training 25 0.0975 A Upgrade to Class IV 78 km 2017 30.181 C Maintenance Pilot 4.70 13 .99% D Training 0.0975 B Rehabilitation 109 km 2018 18.373 C Maintenance Pilot 4.70 9.26% D Training 0.0775 Total** 250.000 * Rough estimate, based on average cost per km of construction. Actual costs per Project batch will vary. ** Excludes Other Costs (e.g., interest during construction and front end fee) - some slight discrepancy due to rounding error from currency conversion. 26 Table A2-4: Proposed Project Cost Breakdown (I) Total Civil Land & World Cost Works Resettlement Other* Bank GMG Bank % Component A Class IV to Class II 79.119 43.72 24.67 10.729 30.00 49.12 38% Class x to Class IV 68.237 48.94 11.46 7.837 44.05 24.19 65% Component B Rehabilitation 77.229 56.57 0.57 20.089 50.535 26.69 66% Component C Maintenance Pilot 12.00 - - 12.00 12.00 - 100% Component D Technical Assistance 1.00 - - 1.00 1.00 - 100% Other Interest. during Constr. 12.04 - - 12.04 12.04 - 100% Front-End Fee 0.375 0.375 0.375 0% TOTAL 250.00 149.23 36.70 64.07 150.00 100.00 60% *e.g., construction design and management fees Table A2-5: Proposed Project Cost Breakdown (II) Total Cost Financing Plan (USD million) Cost Items in USD in RMB % of million million IBRD I. Base Costs a. Upgrading country road 92.66 568.00 74.05 18.61 79.9% (1) Upgrading county road to Class II 43.72 268.00 30.00 13.72 68.6% (2) Improving county/township roads to Class IV 48.94 300.00 44.05 4.89 90.0% b. Rehabilitation of county/township roads 56.57 346.78 50.535 6.035 89.3% c. Rural road maintenance 12.00 73.56 12.00 0.00 100.0% (1) Rural road maintenance development planning pilot 0.40 2.45 0.40 0.00 100.0% (2) Rural road maintenance pilot implementation 11.40 69.88 11.40 0.00 100.0% 27 (3) Rural road maintenance management information 0.20 1.23 0.20 0.00 100.0% system Phase II d. Capacity building programs 1.00 6.13 1.00 0.00 100.0% (1) Rural road network planning 0.50 3.07 0.50 0.00 100.0% (2) Training and study tour 0.50 3.07 0.50 0.00 100.0% e. Land acquisition and resettlement 36.70 224.97 0.00 36.70 0.0% f. Construction supervision and implementation monitoring 3.38 20.72 0.00 3.38 0.0% (1) Construction supervision 2.98 18.22 0.00 2.98 0.0% (2) External social safeguard monitoring 0.24 1.50 0.00 0.24 0.0% (3) External environmental monitoring 0.16 1.00 0.00 0.16 0.0% g. Project preparation and management 9.80 60.07 0.00 9.80 0.0% (1) Project design and preparation 7.46 45.73 0.00 7.46 0.0% (2) Project implementation management 2.34 14.34 0.00 2.34 0.0% Subtotal (I) 212.11 1,300.23 137.585 74.525 65.0% II. Contingencies 0.00 Subtotal (II) 25.475 156.16 0.00 25.475 0.0% III. Financial Charges 0.00 1. Front-end fee 0.375 2.30 0.375 0.38 0.0% 2. Interest during construction 12.04 73.81 12.04 0.00 100.0% Subtotal (III) 12.415 76.11 12.415 0.00 97.0% Total (1+11+111) 250.00 1,532.50 150.00 100.00 60.0% Note: 1.Physical contingency is estimated at 9% of the total base cost. 2.Price contingency is estimated at 3% of the total case cost. 3. Front-end fee is estimated at 0.25% of the total loan. 4. Interest during construction is estimated at 2.83% per annum, including 1.83% LIBOR based interest rate and 1.0% of spread. 5. Exchange rate of US$1.00 = RMB6.13 is applied. 28 Annex 3: Implementation Arrangements China: Guiyang Rural Roads Project Project Institutional and Implementation Arrangements Project administration mechanisms 1. The Guiyang Municipal Government will maintain a Project Leading Group (PLG) headed by a Vice-Mayor and with representation of the Secretary General of the Mayors' office and the related government agencies, to provide oversight and to coordinate the implementation of the Project and ensure the availability of the funds and other resources needed for the Project. As a readily established office that has been managing the on-going GTP project, the Guiyang World Bank funded Project Management Office (GPMO) will continue to handle the day-to-day management of the proposed project on behalf of PLG. 2. The GMTB will be responsible for managing the implementation of the Project under the oversight of PLG and GPMO. It will form a Guiyang Rural Roads Construction Office (GRRCO) to handle the day-to-day implementation management. Each of the project counties will form a branch construction office, under the management and supervision of GRRCO, to be responsible for the implementation of the roads in the respective county. 3. The PLG and GPMO have gained experience in managing and implementing the first Bank-funded Guiyang Transport Project. The existing management and coordination mechanisms have proven to be effective. On the other hand, although they have rich experience in implementing rural roads projects following the domestic procedures, GMTB and the project counties have less experience in implementing World Bank-funded project and limited knowledge of the Bank policies. 4. The GMTB and project counties will, therefore, assign qualified and experienced staff to implement the project. And the GPMO and the Bank team will provide necessary training on Bank policies, procurement, financial management (FM), safeguards, and contract management to the project staff during the preparation and throughout implementation. 5. The following diagram summarizes the institutional arrangements that will be deployed through the Project. 29 Diagram of Project Implementation Arrangement China: Guiyang Rural Roads Project Guiyang Municipal Government Project Leading Group Project Management Office Agencies for Executing (PMO) the Pilot Study and TAs Guiyang Municipal Transport Bureau Guiyang Rural Road Construction Office (GRRCO) Director Deputy Directors Chief Engineer Office Engineering Division Foreign Affair Division Procurement Division Financial Management Department Land Acquisition and Resettlement Administration Division Division PMOs of Participating Districts (Counties or Municipalities) 30 Financial Management, Disbursements and Procurement Financial Management 6. The FM capacity assessment identified the following principal risk: counterpart funds not placed at the disposition of the project in a timely manner possible impeding the smooth implementation of the project. 7. Mitigation measures to address the above risk have been agreed that an enhanced counterpart funds assurance mechanism has been elaborated in FMM acceptable to the Bank to document the counterpart funds procedures related to cost sharing, budgeting, commitment and appropriation arrangements. 8. Overall, the residual FM risk after mitigation for the project is assessed as Moderate. 9. Guiyang Rural Roads Construction Office (GRRCO) established under Guiyang Municipal Transport Bureau (GMTB) will be responsible for the project implementation including project FM related day-to-day works including project accounting and financial reporting. The GRRCO has three financial staff. One financial manager, one accountant, and one cashier are already in place. Based on discussions, observation and review of educational background and work experience of the staff identified for financial and accounting positions in GPMO and GRRCO, the task team noted that they are qualified and appropriate to the work they are expected to assume. 10. Budgeting. The annual project implementation plan, including the funding budget and the resources, will be prepared by Guiyang Rural Roads Construction Office (GRRCO). Budget variance analysis will be conducted on semi-annual basis by GRRCO and reviewed by the GPMO, to inform management of significant variances from plan that may need corrective actions. The counterpart funds for project construction will be borne by city/county/district finance bureaus. To make sure that the counterpart funds could be appropriated in a timely manner during project implementation, the counterpart funds budget committed by local governments shall be included in their sectoral budget and the counterpart funds availability will also be reflected in the budgeting report. Based on the approved budget and implementation progress, the related finance bureaus will provide government appropriations to the project. 11. Funds flow. The Bank loan proceeds will flow from the World Bank into the designated account (DA) which will be set up at, and managed by GPFB. GPFB will be directly responsible for the management, maintenance and reconciliation of DA activities. Supporting documents required for World Bank disbursements will be prepared and submitted by responsible implementing agency, GRRCO to GPFB through the GPMO and the Guiyang Municipal Finance Bureau as well as the three county and one city finance bureaus which are directly managed by the province. GPFB will reimburse funds to GRRCO for the Bank financed portion paid by GRRCO first or disburse funds to the contractors directly or through finance bureaus for payment of eligible expenditures. 31 12. The World Bank loan agreement will be signed between the World Bank and the People's Republic of China through its MOF, the on-lending loan agreement will be entered into by MOF and Guizhou Provincial Government through Guizhou Provincial Finance Bureau (GPFB). The Bank loan used by districts managed by Guiyang Municipality will be further on- lent to Guiyang Municipal Government through Guiyang Municipal Finance Bureau. For the three counties and one city directly managed by the province, Guizhou Provincial Government will through GPFB further on-lend the Bank loan to the county and city governments through the related finance bureaus. 13. Accounting and financial reporting. The administration, accounting and reporting of the project will be set up in accordance with Circular #13: "Accounting Regulations for World Bank Financed Projects" issued in January 2000 by the MOF. The standard set of project financial statements has been agreed between the World Bank and MOF. 14. Yongyou(User Friend), a computerized accounting and reporting system approved by MOF and assessed by the Bank, will be adopted by GRRCO for this project. The detail chart of accounts and project profile will be established before project start. 15. Project management office (PMO) established under GMTB will take the responsibility of overall project management, oversight and coordination. The GRRCO will be the implementing unit (PIU) to be responsible for day-to-day project FM related matters including project accounting and project financial reporting. Original supporting documents will be retained by the GRRCO. The project financial statements will be prepared by GRRCO and reviewed by the PMO. The unaudited semi-annual project financial statements will be furnished to the World Bank by the PMO no later than 60 days following each semester (the due dates will be August 30th and February 28th). 16. Internal control. The related accounting policy, procedures and regulations were issued by MOF, and the FMM will be prepared and issued to align the financial management and disbursement requirements among various implementing agencies. 17. Audit. Guizhou Provincial Audit Office (GPAO) has been identified as the auditor for the project. The annual audit reports will be issued by GPAO and will be due to the World Bank within six months after the end of each calendar year. GPAO has extensive experience with auditing the Bank financed operations. According to the World Bank Policy on access to Information, the audit reports for all investment lending operations for which the invitation to negotiate was issued on or after July 1, 2010, need to be made publicly available in a timely fashion and in a manner acceptable to the Bank. Audit reports will be made publicly available on the website of the provincial auditor. Following the World Bank's formal receipt of the audited financial statements from the borrower, the World Bank and the Government will make them available to the public in accordance with the World Bank Policy on Access to Information. Disbursements 18. Four disbursement methods are all available for the project: advance, reimbursement, special commitment and direct payment. Supporting documents required for World Bank 32 disbursement under different disbursement methods will be documented in the Disbursement Letter issued by the World Bank. 19. The loan will disburse primarily through advances to a segregated US dollar designated accounts (DA) to be opened at a commercial bank which has been assessed as acceptable to the World Bank. The DA will be managed by GPFB. The ceiling of the DA will be determined and documented in the Disbursement Letter. Upon receipt of GRRCO's withdrawal applications, GPFB will reimburse funds to GRRCO for the Bank financed portion paid first by GRRCO or directly disburse funds to the contractors for payment of eligible expenditures 20. The World Bank loan would be disbursed against eligible expenditures as in the following table: Category Amount of the Loan Percentage of Allocated Expenditures to be (expressed in USD) financed (inclusive of Taxes) (1) Works (a) under Part A.1 of the Project 30,000,000 68.6% (b) under Part A.2 of the Project 44,050,000 90% (c) under Part B of the Project 50,535,000 89.3% (2) Goods, Non-consulting 13,000,000 100% services, consultants' services, training, workshops and Incremental Operating Costs (3) Front-end Fee 375,000 Amount payable pursuant to Section 2.03 of the Loan Agreement in accordance with Section 2.07 (b) of the General Conditions (4) Interest During Construction 12,040,000 Amounts payable pursuant to Section 2.04 of the Loan Agreement in accordance with Section 2.07(c) of the General Conditions TOTAL AMOUNT 150,000,000 21. Retroactive financing will apply for payments made prior to the date of the Loan Agreement, but on or after January 31, 2014, to an aggregate amount not to exceed US$30,000,000 equivalent. 33 22. Supervision Plan The supervision approach for this project is based on its FM risk rating, which will be evaluated on regular basis by the FMS in line with the FMSB's FM Manual and in consultation with relevant task team leader. The initial FM supervision will focus on financial staff training and compliance of the Bank's FM and disbursement related requirements. Procurement 23. Procurement Entity. Guiyang Rural Roads Construction Office (hereinafter referred to as GRRCO) has been established under Guiyang Municipal Transport Bureau by the Guiyang Municipality as the dedicated project implementation agency for the Project, which will be responsible for procurement cycle management and contract management of the works under the project. The GRRCO will also be responsible for communications with the Bank; preparing the procurement plan and its updates, the bidding documents, and the request for proposals; organizing the bidding/selection process, procurement and contract monitoring and obtaining the required domestic approvals and submitting procurement documents for Bank review. In addition, dedicated County/District level Construction Offices in each county/district involved will be set up to participate in the resettlement and construction supervision of the project under the leadership of the GRRCO. 24. Procurement Risk Assessment and Mitigation Measures. As most staff of the GRRCO will be allocated from an ongoing Bank funded Guiyang Transport Project, GRRCO staffs have obtained procurement experiences with the Bank funded Project and familiarized with Bank procurement policies and procedures, but the procurement capacity of procurement staff still need to be further strengthened for the implementation of the project. From the findings of the procurement capacity and risk assessment, the overall procurement risk for the project is assessed as Moderate. 25. The key risk concerning procurement for implementation of the project are: (i) non- compliance with Bank procurement Guidelines when processing the local bidding formalities due to unfamiliarity with specific Bank procurement policies and procedures, and a tendency to comply with local procedures when they conflict with Bank Procurement Guidelines; (ii) weak capacity of the GRRCO staff in project procurement and contract management. 26. In view of these risks, the following actions will be carried out during implementation: (i) hiring of a procurement agent with experiences in procurement in Bank-financed projects to support the GRRCO; (ii) provision of training sessions to the GRRCO staff on the Bank's procurement policies, methods, procedures, as well as the use of standard bidding/proposal documents and evaluation principles; (iii) preparation of a procurement procedures manual to provide guidance to project implementers; (iv) where necessary, early procurement support missions by the Bank's procurement specialist; (v) annual field procurement supervision missions to review procurement actions where needed, and (vi) close coordination between GRRCO and the Bank team. 27. Procurement Policies and Guidelines. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement of Goods, Works, 34 and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and the provisions stipulated in the legal agreements. NCB shall be carried out in accordance with the Law on Tendering and Bidding of the People's Republic of China promulgated by Order of the President of the People's Republic of China on August 30, 1999 subject to the modifications stipulated in the Legal Agreement in order to ensure broad consistency with the Bank's Procurement Guidelines. 28. Procurement of Works & Goods. Procurement will be done by using the Bank's SBD for all ICB contracts and National Model Bidding Documents agreed with or satisfactory to the Bank for all National Competitive Bidding. Further details are provided in Annex 2 and in the procurement plan. 29. Selection of Consultants. The Bank loan will finance consulting services contracts to assist GRRCO in project implementation. The Bank's Standard Request for Proposal shall be used for all consulting assignments with firms. Short lists of consultants (firms) for services estimated to cost less than US$ 500,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 30. Training, Workshops and Study Tours. Training, including study tours and workshops, are required under the project. Detailed programs would be developed by the GRRCO during project implementation and included in the annual work plan for Bank review. Actual expenditures incurred in accordance with the approved detailed programs would be used as the basis for reimbursement. All training, workshops and study tours will be subject to the Bank's prior review. 31. Procurement Plan. A draft project procurement plan for the initial 18 months of project implementation has been prepared and reviewed by the Bank and finalized. It will also be available in the Project's database and on the Bank's external website. The plan is available at the GRRCO office. The procurement plan will be updated in agreement with the Bank annually or as required to reflect actual project implementation needs and improvements in institutional capacity. 32. Procurement Methods and Bank Prior Reviews. The thresholds for procurement methods and Bank prior review as indicated in Table A3 below shall be followed for project procurement implementation. Besides the prior review thresholds and any specific prior review requirements under Loan Agreement and Bank Guidelines, any other contract not subject to Bank prior review would be subject to procurement post review by the Bank in accordance with Bank Guidelines. 35 Table A3-1: Thresholds for Procurement Methods and Prior Review Contract Value Capte r Threshold Procurement Method Prior Review Threshold (US$) Category (US$) 1. Civil Works >25,000,000 ICB All ICB Contracts <25,000,000 NCB the first 2 NCB contract and all <200,000 Shopping contracts >= USD 15 million the first Shopping contract 2. Goods >3,000,000 ICB All ICB Contracts <3,000,000 NCB the first 2 NCB Contracts <100,000 Shopping the first Shopping Contract Direct Contracting All direct contracting contracts regardless of value 3. Consultant >300,000 QCBS/QBS All Services <300,000 CQS The first CQS Contract Individual Consultants Only in Exceptional Cases Single Source Selection All single source contracts (Firm) >USD 20,000 Single Source Selection (Individual) Notes: ICB: International Competitive Bidding CQS: Selection Based on the Consultants' Qualifications NCB: National Competitive Bidding SSS: Single Source Selection DC: Direct Contracting IC: Individual Consultant selection procedure QCBS: Quality- and Cost-Based Selection NA: Not Applicable QBS: Quality-Based Selection 33. While some reviews will be carried out from the Bank offices, Bank procurement supervision missions will visit the field to carry out procurement supervision or post-review of procurement activities at least once every 12 months. The post review sampling ratio would be one out of 10 contracts. 34. Advance Contracting and Retroactive Financing. Retroactive financing of up to US$ 30 million from the Bank loan will be allowed for eligible expenditures incurred after project Appraisal but within 12 months of signing of the Loan Agreement. Payments will be made only for contracts procured in accordance with applicable Bank procurement procedures. Environmental and Social (including safeguards) Environmental 35. The project will result in benefits in terms of providing improved access and road conditions to local communities. Potential impacts are associated with road rehabilitation and construction of overloading monitoring stations. OP4.01 Environmental Assessment is triggered. The project is assigned Category B due to the limited impacts of the project. 36. Environmental Impacts. Physical activities to be supported by the project would include improvement and rehabilitation of rural roads and construction of overload monitoring stations. Because of its rehabilitation nature largely within existing right-of-way, the project would not require significant land acquisition or structure relocation, with the exception of a small number of roads that may require small land acquisition due to minor adjustments in curves. Though to a reduced extent, the implementation would cause limited impacts on the environment including 36 soil erosion and subsequent water pollution, damage on vegetation and animals, and noise and dust problems mainly during construction. 37. Environmental Assessment. Given the nature of the proposed works and their low potential environment impacts, Environmental Code of Practices (ECOPs) were selected as the EA instrument. The project owner engaged GPESRDI, a class A EIA institute accredited by Ministry of Environmental Protection to prepare the ECOPs. 38. The ECOPs draw on the experiences and lessons learned from the rural road component of existing Bank financed Guiyang Transport Project. The ECOPs include how to manage the implementation of ECOPs, such as institutional arrangements, responsibilities and roles of each implementation stakeholders, specific code of practices for access road, site preparation, borrow pits and spoil sites, slope stabilization and cut/filling, drainage, bridge and culvert, etc. The ECOPS also cover cross-cutting issues, such as soil erosion control, social disturbance management, wastewater treatment, management of cultural relics, health and safety, and solid waste management. In addition, a set of procedures for candidate rural road, including screening, environmental document preparation, review and approval, reporting and documentation is included in the ECOPs. 39. During project preparation, the ECOPs were shared and discussed with relevant project management staff and design engineer to ensure proper incorporation of the ECOPs into engineering design. The ECOPs will be included in the bidding document and civil works contract to be followed by the contractors. The project owner will engage an Environmental Management Consultant (EMC) to help manage the implementation of ECOPs during project implementation. 40. Public Consultation and Information Disclosure. During the project preparation, the project owner and EIA Consultant carried out information disclosure and public consultation through posters, questionnaire survey, interviews and public meetings in project counties, townships and villages. Consulted people include potentially affected villagers, local governments and agencies. Their comments and suggestions were incorporated into the project design and ECOPs. Full draft ECOPs were disclosed on the websites of each project township and websites of 7 local government or transport bureau on August 6, 2013. The ECOPs is thus accessible to the public. The ECOP main report was disclosed via the World Bank InfoShop on August 29, 2013, and volume 2 on October 31, 2013. Social Safeguards 41. Indigenous Peoples OP/BP 4.10. Several ethnic minority groups reside in the project area, including Miao, Buyi, Dong, Yi, and Gelao communities. Some of them have been identified as Indigenous Peoples in accordance with OP4. 10. 42. Social Assessment. A social assessment (SA) study has been carried out during project preparation, with a focus on ethnic minority groups. The social assessment (SA) was conducted by a qualified team including economist and sociologists, which carried out intensive fieldwork in selected sample villages, with a focus on the Miao and Buyi ethnic minority communities. The 37 villages/communities fully understood the potential risks and opportunities associated with the project, and expressed their interest, enthusiasm and broad support to the project activities. 43. Ethnic Minority Development Plan. Based on the findings of the Social Assessment study, an Ethnic Minority Development Plan (EMDP) was developed to ensure that project activities on rural roads development are offered to these communities in the same way as other project beneficiaries and that their participation in the Project would be encouraged. 44. Resettlement Policy Framework. A Resettlement Policy Framework has been developed according to relevant local laws and regulations as well as World Bank OP 4.12. It describes the overall legal framework, planning principles, procedures, compensatory and rehabilitation approach, consultation and participatory requirements, training plans, grievance redress mechanisms, organization and monitoring arrangements. The framework was initially disclosed on Infoshop on September 4, 2013, and then later re-disclosed on October 15, 2013. 45. Grievance Redress. A mechanism has been established for grievance redress. Grievances can be filed both orally and in writing. Starting at village and neighborhood committee level, the grievances can be elevated to county/district, city level if they are not satisfied with the resolution at the lower level. The affected people could also file their cases in court if they are not satisfied with the resolution by the project authority. All grievances and their resolution will be recorded. This mechanism has been disclosed to the local population and will be further disseminated through the Resettlement Information Booklet. 46. Mainstreaming Gender. Special attention has been paid to the views and needs of women through the social impact assessment process, so as to mainstream gender concerns in project planning and implementation. The social impact assessment includes specific chapter for analyzing impacts on women, which mostly include positive impacts related to accessing schools, hospitals, and markets. Women participated actively in the consultation meetings. 47. Information Disclosure. The prepared EMDP and SA were disclosed locally in Chinese on August 29, 2013. The English versions of the documents were posted in the World Bank's Infoshop on September 4, 2013, and then later re-disclosed on October 9, 2013. Monitoring & Evaluation 48. Achievement of the PDO will be monitored by a combination of indicators on implementation progress, number of benefited people and saving of travel time, etc. GMTB will be responsible for providing the data and has in place procedures and resources to do so, leveraging the same staff and systems that were responsible for monitoring under the Guiyang Transport Project. The Bank and GPMO/GRRCO will jointly monitor and evaluate emerging results presented in the project progress reports. Corrective actions will be taken as appropriate. 38 Annex 4: Operational Risk Assessment Framework (ORAF) China: Guiyang Rural Roads Project (P129401) Risks 1.1 Stakeholder Risk Rating Moderate Risk Description: Risk Management: The stakeholders of the project include the Resettlement Actions Plan will be prepared and implemented with public consultation and community governments of municipal, county and participation, to ensure the interest of the affected people is appropriately protected. township levels, the local communities, and the road users. Public information about road closure will be announced to the road users so that they can select alternative travel routes during construction. Traffic management measures will be taken to ensure The governments have strong commitments safety during the construction. to improve the rural roads by requesting a Bank loan to finance the implementation of Criteria for selection of roads to be included in the program include minimal/zero resettlement and/or the rural roads development plan. As the land acquisition activity requirements. direct beneficiary, the local communities Resp: Client Status: Not Stage: Both Recurrent: Due Frequency fully recognize the benefits and welcome Yet Date: the road improvement activities. Due The people who are affected by land acquisition or resettlement may be against the project, and road users may be affected during the construction when the roads are fully or partly closed. 39 2. ~ Imlmetn Agenc A Rsk (icudn Fiuir Rsks 2.1 Capacity Rating Substantial Risk Description: Risk Management: The Guiyang Municipal Government will GMTB and project counties will assign qualified and experienced staff to implement the project. maintain the Project Leading Group (PLG) headed by a Vice-Mayor and the GPMO to GPMO and the Bank team will provide necessary training on Bank policies, procurement, financial manage and coordinate the project. This is management (FM), safeguards, and contract management to the GMTB and project counties. a readily established mechanism from management of the first Guiyang Transport Guiyang municipal government will provide the Bank with a commitment letter confirming the Project. provision of counterpart funds on time. Although the PLG and GPMO have GMTB will provide technical support on construction management to the project counties. experience in managing and implementing Bank-funded projects, the project has a The Bank team will carry out semi-annual supervision to review compliance. new institutional structure for managing the project, and some staff managing The financial management and disbursement mechanism should be established based on the nature of safeguards and fiduciary aspects of the expenditures to be funded. project may be new. Also, there is a chance Resp: Client Status: Not Stage: Both Recurrent: Due Frequency the GPMO director may retire within the Yet Date: first year of implementation, which may Due cause some delays. Based on prior experience under the Guiyang Transport Project, there is a risk that counterpart funds may not be made available in a timely and sufficient manner, given that the municipal and county governments are faced with heavy financing constraints. A possible procurement risk is non- compliance with Bank procurement 40 policies. 2.2 Governance Rating Moderate Risk Description: Risk Management: The Guiyang Municipal Government has GPMO and GMTB will jointly manage and coordinate the day-to-day implementation issues, and seek strong leadership and control over the PLG's support and guidance if needed. county governments. The GMTB has strong ownership and accountability in the Sound institutional mechanisms, oversight and collaboration will be maintained and enforced during rural roads development plan, and has project implementation. direct control over the implementation of Resp: Client Status: Not Stage: Both Recurrent: Due Frequency the plan by the county level bureaus. Close Yet Date: oversight and leadership by the PLG, and Due close supervision and collaboration by GMTB will be key to a satisfactory project implementation. The GPMO director may retire before completion of the project, which could cause some implementation delays. 3.1 Design Rating Moderate Risk Description: Risk Management: The project is technically simple, with Engineering design will be done by qualified and experienced design institutes, and will be reviewed minimal requirements for new technology. by experienced domestic technical expert panel. 41 The risk is that inadequate design for slope The Bank team will do sample review on the design of the first batch roads. protection and drainage works may cause a large number of work variations and The rural roads under this project will be proposed and selected following a set of screening criteria to changes during the construction. avoid a "cherry-picking" selection process. A practical internal mechanism for reviewing and clearing variations will be established. Bank supervision will review variations and provide training as needed to ensure that variations are handled in accordance with contracts and Bank procurement guidelines. Resp: Both Status: Not Stage: Both Recurrent: Due Frequency Yet Date: Due 3.2 Social and Environmental Rating Moderate Risk Description: Risk Management: Although the environmental and social Well-defined ECOP frameworks will be prepared during project preparation to address institutional impacts might be minor due to: (i) the arrangement, roles and responsibilities, procedures for environmental and social management, project batch criteria including minimal mitigation measures, documentation and reporting and budget requirements. resettlement impacts; and (ii) no greenfield development, the local safeguards GPMO will provide guidance on the safeguards compliance. Also, independent social and monitoring capacity is relatively low. environmental consultants will be deployed to monitor safeguards compliance. If the ECOPs are not properly The Bank's safeguards specialists will supervise the compliance and provide guidance during project implemented, there could be negative preparation and implementation. environmental impacts such as soil erosion Resp: Client Status: Not Stage: Both Recurrent: Due Frequency and subsequent water pollution, damage on Yet Date: vegetation and animals, and noise and dust Due problems mainly during construction. Any non-compliance on social safeguards will cause negative impact to local people and/or communities, and will delay the project implementation. 42 3.3 Program and Donor Rating Low Risk Description: Risk Management: This is a free standing project and there are no other donors. Resp: Status: Stage: Recurrent: Due Frequency Date: 3.4 Delivery Monitoring and Rating Substantial Sustainability Risk Description: Risk Management: The civil works under the project include The delivery progress will be reported in the semi-annual project progress report, and will be monitored the upgrading and rehabilitation of the by the Bank through reviewing the report and on spot supervision twice a year. existing county and township roads and are planned to be implemented in four years at Component C includes further strengthening on local capacity to monitor and maintain roads. about 20% each year for each of the five Resp: Client Status: Not Stage: Imple Recurrent: Due Frequency years. Although M&E on the delivery Yet menta Date: monitoring will be relatively Due tion straightforward by assessing the actual progress against the work plan, there were substantial construction delays experienced through the Guiyang Transport Project due to: landslides, unavailability of counterpart funds, and interference from local villagers. Further, the sustainability of the project will depend on the maintenance of the improved roads. Although there are maintenance mechanisms in place, there is a risk that the funding for maintenance may be not sufficient or not made available in a timely manner by the participating local governments. 43 Overall Implementation Risk: Moderate Risk Description: The overall risk assessment for this Project is moderate. Key risks are: (1) counterpart funds may not be available on time given that the municipal and county governments are faced with heavy financing constraints; (2) the roads may not be sufficiently maintained beyond the project; and (3) the new institutional structure that has been proposed for the project may not be as effective as it was during the last phase of the previous Guiyang Transport Project, since this project is being implemented on a larger scale. 44 Annex 5: Implementation Support Plan China: Guiyang Rural Roads Project Strategy and Approach for Implementation Support 1. The implementation support plan (ISP) has been developed taking into account the risks identified and the agreed risk management measures listed in the ORAF (see Annex 4). As the overall implementation risk is rated moderate, and the risk ratings of all categories (except implementation capacity, which is rated substantial) are rated either moderate or low, the focus of Bank implementation support will be on strengthening of capacity of the implementing agency. Implementation Support Plan 2. Table below summarizes the areas of focus during implementation support and the supporting measures. Areas of Focus Supporting Measures Strengthening of Implementing Capacity The Bank team will provide necessary training on Bank Although the PLG and GPMO have policies, procurement, financial management (FM), experience in managing and implementing safeguards, and contract management to the GMTB and the Bank-funded project, the GMTB and project counties. counties, have no experience in implementing the Bank project and are not An operation manual will be made to include detailed familiar with Bank policies. procedures and guidelines related to the project implementation. A specific training will be provided to There is a risk that counterpart funds may the project counties to ensure the operation manual is not be made available in a timely and understood and implemented. sufficient way given that the municipal and county governments are faced with The Bank team will carry out semi-annual supervision to financing constraint. review on compliance and provide guidance. Combined internal mechanism and the Bank disbursement measure will be designed to ensure that the counterpart funds are made available on time. Technical Design and Variations The Bank team will do sample review on the design of The risk is that inadequate design for slope the first batch roads, which should be done qualified and protection and drainage works may cause a experienced design institutes. large number of work variations and changes during the construction. A practical internal mechanism for reviewing and clearing variations will be established. Bank supervision will review variations and provide training as needed to ensure that variations are handled in accordance with contracts and Bank procurement guidelines. Resettlement Management The GPMO will assume the overall responsibility for the implementation of the resettlement program and EMDP. 45 The GPMO will work with the district and county government offices to implement the resettlement programs. These offices have competent and experienced staffs. Their respective responsibilities and functions are described in the RPF. An experienced social consultant will be hired to assist the PMO during project implementation. To enhance local capacity on resettlement management, trainings will be provided to the project staff during project implementation. An external monitor will be hired to monitor the resettlement performance. Resources Needed for Implementation Support 3. An overview of the focus areas and resources needed for implementation support is presented in table below. Resource Estimate Number of Time Focus Skills Needed (tfwek/ya) Trips (staff weeks! year) Trp (no. per year) Task leadership 2 1 Technical Specialist 2 1 Financial Management 1 1 Capacity building and Specialist training Procurement Specialist 1 1 First 12 Environmental Specialist 1 1 months Social Development 1 1 Specialist Detailed engineerng Technical Specialist 2 1 design Tendering and Procurement Specialist 2 1 contract awarding Technical Specialist 1 1 Implementation 20 2 progress and quality Financial Management 2 1 Compliance of Specialist 1360 fiduciary and Procurement Specialist 2 2 safeguards policies Environmental Specialist 3 2 Social Development specialist 3 2 Resolving remaining As appropriate 10 issues Monitoring and As appropriate 3 evaluation 46 IBRD) 3969 CHNA 10600 106'15E 106 30E 10645 To Zunyi ZUNYI PR E FEICTURE 107153 GUIYANG RURAL ROADS PROJEC EXPRESSWAYS *M o e EXPRESSWAYS UNDER CONSTRUCTION NATIONAL HIGHWAYS PROVINCIAL ROADS 2 RAILROADS 0 TOWNSHIP SEATS [ To Yehexiang 0 COUNTY CAPITALS PREFECTURE CAPITAL - - - COUNTY BOUNDARIES PREFECTURE BOUNDARIES BIJIE PREFE TURE ~iyn© Q/NA UE 27 911 ToQiaLv XEuwen CHINA• 6~ 6 GUYA NG ftF-ECT U-RE i Wudang Baqyuno264 Qingzhen 1 an ouiyang©o QIANNAN BUYEI 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 judgmenton the legal status of any territory,orany endorsement oracceptance ofsuch boundaries. o.@ PREFEICTU E MONGOLIA JiL/IN f~ > KIAGNINXDEM.JIEOPLE'5 -" LANN E L'-T Guiding E REP FKOREA /' /l~ '_~.OA 7'I I /N ,o V AN1HEBEI EPO GANS'Ns1 [SHANDONG Yellsow O,NGHA, Sea--an n GASUNHAANX A ýANHUI HANGHAhu H u axi HUBHEJN East ANSHUN 6 China Sea SI s') GUIZHOU NAN /JANGXI PREFEICTURE FU) AN YUNN . TWAN 6941 2 6 GIANGDON UANGM 1ONG ONG VIETNAM To Huishui KILOMETERS S E s N China Sea 106 15 106 30 106 5 10700 107 15 TAILAN EM C ~LDCEBE 20 DECEMBER 201 IBRD 39699 CHIlN A 10600E 106'15' 106 30E 10645 To Zunyi ZUNYI PR EFECTURE 107151 GUlANG RURAL ROADS PROJECT COUNTY AND TOWNSHIP ROADS UNDER 12TH FIVE-YEAR PLAN COUNTY AND TOWNSHIP ROADS UNDER 12TH FIVE-YEAR PLAN: COUNTY ROADS TOWNSHIP ROADS EXPRESSWAYS To Yehexiang * - = =EXPRESSWAYS UNDER CONSTRUCTION NATIONAL HIGHWAYS PROVINCIAL ROADS RAILROADS BI.IE PREFECTURE 9 TOWNSHIPSEATS 0 COUNTY CAPITALS PREFECTURE CAPITAL \ - C- - OUNTY BOUNDARIES PREFECTURE BOUNDARIES Xiuwen o GUz. YA NG R -FE-CTU-E CHINA 7 "Won Biyun o225 Qingzhen Gui yang© QIANNAN BUYEI This map w,as producsed by the Map Desigo Unit of The World Baok.fiynLo The boundaries, colors, denominations and any other in formaton > AND M IA shown on this map do not imply, on the part of The World Bank n n Group, any judgment on the legal status of any territory,or any endorsement oracceptonce ofsuch boundaries. 3 N~anmin° MONGOLIA o LAONNG EM PLE'S ToGuiding E ss REP*1FKOREA H X HEBEi IEP SHANDONG Yelo,w OSNGA SToQiannan GANSU HAANX HENAN UANYV ANHI ANGAIH ua x o HUBE ANSHUN N S IANHEJIAN East China Sea s'GUIZHU N AN IJANGv Iý P RE FE C(TU RE t IU/ FUJIAN YUNNAN . TAIWAN 0A'lt 29154 GUANGDON1 GUANGM, HONG 0051 VIETNA ä-TNAM ShTO Håshui KILOMETERS P E SN China SeaPHL 10600 106 15E 10630T 106'45'E 107'00'E 10715' D RR P20LI NES DECEMBER 201