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Document of The World Bank

Report No: ICR0000180

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-45410)

ON A

LOAN

IN THE AMOUNT OF US$ 180.3 MILLION

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR A

GUANGXI HIGHWAY PROJECT

December 17, 2007

Transport, Energy and Mining Unit Sustainable Development Department East Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective February 6, 2007)

Currency Unit = RMB RMB 1.00 = US$ 0.13 US$ 1.00 =RMB 7.76

FISCAL YEAR

January 1-December 31.

ABBREVIATIONS AND ACRONYMS 9FYP Ninth Five Year Plan ASEAN Association of Southeast Asian Nations CAS Country Assistance Strategy EA Environmental Assessment EAP Environmental Action Plan EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return GAR Guangxi Autonomous Region GCD Guangxi Communications Department GDP Gross Domestic Product GEAB Guangxi Expressway Administration Bureau GHAB Guangxi Highway Administration Bureau HNIMP Highway Network Improvement and Maintenance Program HSP Highway Safety Program ICB International Competitive Bidding ISR Implementation Status Report M & E Monitoring and Evaluation MOC Ministry of Communications MOF Ministry of Finance NCB National Competitive Bidding NPV Net Present Value NR National Road NTHS National Trunk Highway System PAD Project Appraisal Document PDO Project Development Objective PMO Project Management Office PQI Pavement Quality Index RAP Resettlement Action Plan SNH Shuiren-Nanning Highway TTL Task Team Leader VOC Vehicle Operating Cost

Vice President: James W. Adams Country Director: David R. Dollar

Sector Manager: Magda Lovei Project Team Leader: John Carter Scales

ICR Team Leader: John Carter Scales

CHINA CN-Guangxi Highway Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design............................................... 12. Key Factors Affecting Implementation and Outcomes .............................................. 43. Assessment of Outcomes ............................................................................................ 74. Assessment of Risk to Development Outcome......................................................... 105. Assessment of Bank and Borrower Performance ..................................................... 116. Lessons Learned ....................................................................................................... 127. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 13Annex 1. Project Costs and Financing.......................................................................... 14Annex 2. Outputs by Component ................................................................................. 15Annex 3. Economic and Financial Analysis................................................................. 17Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 20Annex 5. Beneficiary Survey Results ........................................................................... 22Annex 6. Stakeholder Workshop Report and Results................................................... 23Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR..................... 24Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders....................... 29Annex 9. List of Supporting Documents ...................................................................... 30MAP –IBRD 30387 MAP –IBRD 30388 MAP –IBRD 30389

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A. Basic Information Country: China Project Name: CN-Guangxi Highway Project ID: P058843 L/C/TF Number(s): IBRD-45410 ICR Date: 12/25/2007 ICR Type: Core ICR

Lending Instrument: SIL Borrower: THE PEOPLE'S REPUBLIC OF CHINA

Original Total Commitment:

USD 200.0M Disbursed Amount: USD 180.3M

Environmental Category: A Implementing Agencies: Guangxi Communications Department Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 04/08/1999 Effectiveness: 02/08/2001 02/08/2001 Appraisal: 11/14/1999 Restructuring(s): Approval: 03/28/2000 Mid-term Review: Closing: 06/30/2006 06/30/2007 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory

Overall Bank Performance: Satisfactory Overall Borrower

Performance: Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments

(if any) Rating

Potential Problem Project No Quality at Entry None

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at any time (Yes/No): (QEA): Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Roads and highways 97 97 Sub-national government administration 3 3

Theme Code (Primary/Secondary) Infrastructure services for private sector development Primary Primary Municipal governance and institution building Primary Primary Rural services and infrastructure Primary Primary E. Bank Staff

Positions At ICR At Approval Vice President: James W. Adams Jemal-ud-din Kassum Country Director: David R. Dollar Yukon Huang Sector Manager: Magdolna Lovei Jitendra N. Bajpai Project Team Leader: John Carter Scales Supee Teravaninthorn ICR Team Leader: John Carter Scales ICR Primary Author: Kek Choo Chung F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project had two development objectives: - provide an effective transport link between the Borrower's land-locked provinces of Guizhou, Yunnan and Sichuan and its southern coastal areas through Guangxi Zhuang Autonomous Region; and - strengthen the institutional capacity of Guangxi's highway sector agencies to enable them to administer, regulate, manage and operate the sector with greater effectiveness and efficiency.

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Revised Project Development Objectives (as approved by original approving authority) The development objectives remained unchanged throughout the implementation of the Project. (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : ADT on SNH (veh./day)

Value quantitative or Qualitative)

Ave.Shuiren-Ertang: 0 Shuiren-Duan: 0 Duan-Mashan: 0 Mashan-Wuming: 0 Wuming-Xijin: 0 Xijin-Ertang: 0

Ave. Shuiren-Ertang: 4699 Shuiren-Duan: 3,513 Duan-Mashan 4,050 Mashan-Wuming 4,982 Wuming-Xijin 7,852 Xijin-Ertang 5,137

Ave. Shuiren-Ertang: 3895 Shuiren-Duan: 2423 Duan-Mashan: 3590 Mashan-Wuming: 4589 Wuming-Xijin: 5296 Xijin-Ertang: 6536

Date achieved 12/31/1999 12/31/2005 12/31/2005

Comments (incl. % achievement)

ADT on the new SNH in its first full year of operation was 83% of the target value determined at the time of appraisal, indicating that the diversion rate of traffic from the old road (NR210) to the new highway (SNH) was slower than estimated.

Indicator 2 : ADT on NR210 (vehicles/day)


Ave. Shuiren-Xijin: 3133 Shuiren-Duan: 1838Duan-Mashan: 2109Mashan-Wuming: 3811Wuming-Xijin 6523

Ave. Shuiren-Xijin: 2125 Shuiren-Duan: 1153 Duan-Mashan: 1179 Mashan-Wuming: 2290 Wuming-Xijin: 5539

Ave. Shuiren-Xijin: 3587 Shuiren-Duan: 2878 Duan-Mashan: 3260 Mashan-Wuming: 2935 Wuming-Xijin: 7366

Date achieved 12/31/1999 12/31/2005 12/31/2005 Comments (incl. % achievement)

ADT on the existing NR 210, upon the first full year of operation of the SNH, was 169% of the target value due to the lower than expected rate of diversion of traffic to the newly constructed SNH (see Indicator 1 above).

Indicator 3 : ADT speed on NR210 (km/hr) Value quantitative or

Ave. Shuiren-Xijin: 34.2 Shuiren-Duan: 33.5

Ave. Shuiren-Xijin: 36.0 Ave. Shuiren-Xijin:

58.0

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Qualitative) Duan-Mashan: 36.2 Mashan-Wuming: 33.3 Wuming-Xijin: 35.5

Shuiren-Duan: 35.1 Duan-Mashan: 38.9 Mashan-Wuming: 35.6 Wuming-Xijin: 36.5

Shuiren-Duan: 58.0Duan-Mashan: 58.0Mashan-Wuming: 58.0 Wuming-Xijin: 58.0


The average speed on the existing NR 210 was 160% faster than the average target speed at the completion of the Project.

Indicator 4 : Accidents on NR 210 (number/year)


Shuiren-Duan: 880 Duan-Mashan: 850 Mashan-Wuming: 1280 Wuming-Xijin: 220




The number of accidents dropped dramatically to about 1% to 5% of the accident rate prior to the commencement of the Project.

Indicator 5 : Tonnage of goods transported to coastal provinces (1000 tons/year) Value quantitative or Qualitative)

696 1258 1442


The tonnage of goods transported to coastal provinces was about 15% higher than target value in the first year of full operation of the SNH.

Indicator 6 : ADT on HNIMP


Dahua-Mashan: 2054 Wuxu-Jiuxu: 2285 Qintang-Wuli: 2179 Wuli-Hengxian: 2179 Shanxin-Guigang: 75698 Hengxian-Mashan: 4860Giuxu-Shangjiao: 2416 Tese-Donglan: 2542 Dahua-Zhoulu: 1672 Zhoulu-Shuanglian: 1568

Dahua-Mashan: 2914 Wuxu-Jiuxu: 2976Qintang-Wuli: 3004 Wuli-Hengxian: 2920 Shanxin-Guigang: 11043 Hengxian-Mashan: 5879

Dahua-Mashan: 5206 Wuxu-Jiuxu: 1469 Qintang-Wuli: 3727Wuli-Hengxian: 4857 Shanxin-Guigang: 9293 Hengxian-Mashan: 904 Giuxu-Shangjiao:

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Giuxu-Shangjiao: 2922 Tese-Donglan: 3075 Dahua-Zhoulu: 2022 Zhoulu-Shuanglian: 1897

2362 Tese-Donglan: 3254 Dahua-Zhoulu: 1438 Zhoulu-Shuanglian: 1313

Date achieved 12/31/2000 12/31/2005 12/31/2005

Comments (incl. % achievement)

Of the 10 roads in HNIMP, 4 have higher traffic than expected in 2005, ranging from 6% to 79%; 5 have lesser traffic ranging from 24% to 40%; while one (Hengxian-Mashan), which is still under construction, has only 15% of the traffic forecasted.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : % of civil works on SNH Value (quantitative or Qualitative)

0 100 100


Construction of SNH was completed by the end of September. The highway was opened to vehicles on 09/28/2004

Indicator 2 : % of highway improved/rehabilitated under HNIMP Value (quantitative or Qualitative)

0 100 100


HNIMP was completed by the end of 2005 except for the Hengxian-Mashan Road.

Indicator 3 : % of black-spots improved Value (quantitative or Qualitative)

0 100 100


The black-spot improvement program was completed as scheduled.

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Indicator 4 : No. of person-months of completed training Value (quantitative or Qualitative)

0 718.5 917.5


The number of person-months of completed training exceeded the planned target by 28%

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 06/15/2000 Satisfactory Satisfactory 0.00 2 12/11/2000 Satisfactory Satisfactory 0.00 3 06/07/2001 Satisfactory Unsatisfactory 8.00 4 10/18/2001 Satisfactory Satisfactory 12.69 5 03/18/2002 Satisfactory Satisfactory 23.54 6 12/12/2002 Satisfactory Satisfactory 51.57 7 05/06/2003 Satisfactory Satisfactory 62.83 8 10/02/2003 Satisfactory Satisfactory 77.49 9 04/26/2004 Satisfactory Satisfactory 97.43

10 09/09/2004 Satisfactory Satisfactory 116.32 11 06/02/2005 Satisfactory Satisfactory 145.82 12 03/16/2006 Satisfactory Satisfactory 159.59 13 03/30/2007 Satisfactory Satisfactory 176.93

H. Restructuring (if any) Not Applicable

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., PAD/ISR, not evaluative)

1.1 Context at Appraisal The Guangxi Highway Project (the Project) was identified in April 1998 at a time when the surging demand for transport in China, particularly roads, was just beginning to be realized. Passenger transport by road in 1980 constituted 32.0% of the total; by 1997 it had gone to 55.3%. Freight transport showed a similar trend, doubling from 6.6% of the total to 14.0% during the same period. Studies undertaken by the Bank concluded that the country's road network capacity fell short of demand, that deficiency in capacity had led to transportation bottlenecks that restricted the development of the Chinese economy, and that the problem was due mainly to inadequate investment, insufficient reforms and management and operational weaknesses. These studies included (i) “China Highway Development and Management: Issues, Options and Strategies” (February 1994), (ii) “China, Forward with One Spirit: A Strategy for the Transport Sector” (March 1996), (iii) “Review of Highway Technical Assistance” (December 1998), and (iv) “Issues Note for China Highway Strategy” (May 1999) Inadequate capacity and poor accessibility had undermined the development of China's interior provinces, resulting in economic disparity between rich coastal areas with access to deep-water ports and poor landlocked provinces. In the medium term, China's main transport concern was to ensure that its highway system helped integrate the country's economy and facilitated the movement of goods and services. The Ninth Five Year Plan (9FYP)(1996-2000) gave priority to the rapid development of the National Trunk Highway System (NTHS), the construction of provincial and rural roads that fed into the NTHS, and policy and regulatory reform that focused on the financing of highways. A measure of success was achieved; by 1998 some 7,500 km out of the planned 17,000 km of highways in Phase 1 of the NTHS had been built, with another 4,000 km due for completion in 2000. It was evident that the Project supported China's strategy to correct the imbalance in economic development between her coastal areas and her interior provinces. It also met the Bank's investment priority (CAS R98-107, May 28, 1998) of expanding China's transport infrastructure to reduce bottlenecks that constrained economic growth and affected the quality of life.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The Project had two development objectives (Schedule 2, Loan Agreement):

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a) provide an effective transport link between the Borrower's land-locked provinces of Guizhou, Yunnan and Sichuan and its southern coastal areas through Guangxi Zhuang Autonomous Region; and

b) strengthen the institutional capacity of Guangxi's highway sector agencies to enable them to administer, regulate, manage and operate the sector with greater effectiveness and efficiency.

Key indicators for monitoring performance (section A2, PAD) included: a) Reduced time for inter-provincial trips due to a more efficient highway system

involving lower cost and shorten distance; b) More staff trained, formally and-on-the job, in technical and managerial skills, to

respond to the needs of an expanded, high-grade highway network; c) An increased budget to rehabilitate and maintain provincial roads (other than the

high-grade network); and d) Fewer traffic accidents, especially on the heavily traveled corridors.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The development objectives and key indicators remained unchanged throughout the implementation of the Project.

1.4 Main Beneficiaries, The main beneficiaries of the Project were the provinces of Guizhou, Yunnan, Sichuan, and Guangxi Autonomous Region; four of the country's poorest provinces. When the Project was proposed in 1998, these provinces had a per capita GDP of $265, $476, $467 and $524 respectively with the national average income per capita at $733. Specifically in Guangxi, the Project would directly benefit an estimated 4 million people living in the towns and counties impacted by the development, 80% of whom were ethnic minorities, and where per capita GDP ranged between $145 and $180, way below the national average of $733. Finally, the Project would also benefit the administration of Guangxi Communications Department (GCD) and related agencies and entities.

1.5 Original Components (as approved) The Project had four parts (See Schedule 2, Loan Agreement) Part A: Highway Capacity Expansion (total estimated cost $406.7 million) Part A comprised constructing a 238 km Shuiren-Nanning Highway (SNH) in Guangxi consisting of (a) the construction of about 97 km of Class 2 highway between Shuiren and Duan and related interchanges; (b) the construction of about 141 km of expressway

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between Duan and Nanning and related interchanges; (c) the construction of toll stations, service and parking areas, and administration and maintenance facilities; and (d) the supply and installation of electrical, electronic and mechanical equipment for toll collection, traffic monitoring, lighting and telecommunication. Part B: Highway Network Improvement and Maintenance Program (total estimated cost $64.7 million) Carrying out a program of rehabilitation and maintenance of ten selected sections of provincial roads totaling some 236 km. Part C: Highway Safety Program (total estimated cost $2.9 million) Carrying out a black spot improvement program in twelve selected locations in the provincial highway network in Guangxi. Part D: Institutional Development (total estimated cost $2.6 million) Carrying out a program to build up the capacity of highway sector agencies and institutions in Guangxi in areas of planning, design, construction supervision, operation and maintenance, project management, and environmental and resettlement monitoring, through the provision of training and equipment. Carrying out studies on (a) the design of slopes on road embankments and environmental protection and (b) highway construction and economic development in poor areas.

1.6 Revised Components There was no revision of the Project's components. There were, however, changes within each of the components as explained below in section 6.7.

1.7 Other significant changes Several changes in the design and scope of work occurred during the implementation of the Project. Early in the Project a supplemental and detailed geo-technical investigation was undertaken along the entire alignment of SNH in order to improve substructure design. This led to significant changes, resulting in over 676 contract variations amounting to approximately $7.3 million. Significant changes were also made in the contracts for building works and interchange design. According to the original plan, building works consisted of the construction of 7 toll stations, 2 service areas, 3 parking areas and 3 administrative maintenance depots at Mashan, Xijin and Sanan. During the detailed design stage, detailed site investigations were made and, based on these investigations, the exact locations and arrangements for the management/maintenance depots and service facilities were revised. An interchange and toll station at Yilingyan, maintenance offices at Daxing and Duan and a monitoring center at Sanan were added. The original design of having two interchanges at Xijin was

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also amended to combine them into one. The revisions in the building works led to an estimated increase in cost from $7.6 million to $13.5 million. Due to the increase in the scope of building works, contracts for their construction were revised from two to three packages. The original composition of roads in the Highway Network Improvement and Maintenance Program (HNIMP) was also revised in the course of project implementation. At the time of project appraisal (February 2000), ten roads totaling some 236 km were selected based on criteria that included the pavement quality index (PQI), the degree of congestion and the Economic Internal Rate of Return (EIRR). Following a review in February 2002, five of the roads were replaced by roads that were better qualified to meet the selection criteria, two of the roads were combined into one, and one had its length for improvement extended by 11 km. The net effect of the revision was to reduce the estimated cost of HNIMP from $57.0 million to $48.6 million and the total length of roads for improvement marginally from 236 km to 231 km. An amount of $19.7 million was cancelled at the request of the Borrower on November 30, 2004.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry The construction of SNH was launched by the Guangxi Communications Department (GCD) based on a pre-feasibility study completed in 1996. Project preparation commenced with a pre-identification mission in September 1998 followed by an identification mission in November the same year. Due to the passage of time, the pre-feasibility study was substantially revised with a fresh O-D survey undertaken in October, 1998, to take into account recent growth in the economy and, as a result, various development options were considered. Preliminary designs of works to be undertaken were completed in March 1999 and were reviewed by foreign consultants financed by the Japanese Trust Fund (PHRD). The preparation and design of the Project took into account lessons learned from seven completed and sixteen on-going highway projects in China. Past projects, in particular, had revealed a tendency to compromise quality in order to shorten the construction schedule; roads had been opened to traffic upon completion of civil works without waiting for the installation of electrical and mechanical facilities, and that the Bank imposed TA and required heavy foreign consultant input. To address these issues, the Project Management Office (PMO) set up to manage the implementation of the Project was staffed with a strong team of consultants (foreign and domestic) and local on-site staff. In addition, TA studies included in the Project had direct application in project

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implementation and required minimum inputs from foreign consultants. Finally, the Bank would provide more oversight through its field office. The resettlement action plan (RAP) was prepared in accordance with the land administration law of the country and the Bank’s operational directives on involuntary resettlement and indigenous people. Preparation of the plan included a detailed inventory of assets, census of the affected population, review of socio-economic conditions on the project areas and a study of impacts on poverty. The consultation process which produced active feedback from the local and county governments and village leaders that helped to finalize the resettlement plan was adequate. Environmental assessment (EA) of the Project took cognizance of the country’s laws relating to environmental protection, pollution control and the protection of cultural relics. In carrying out the EA, residents along the project routes were regularly consulted and their opinions reflected in the project design and environmental mitigation measures. The environmental impact assessment (EIA) and the environmental action plan (EAP) submitted in October 1999 were reviewed and found satisfactory by the Bank. Risks, mainly institutional (government commitment, accountability for use of internal and external resources, external pressures, application of skills and familiarity with Bank procurement guidelines) were identified and measures to mitigate these risks were included in the Project design. Inherent was the risk that the highway might not be utilized to the extent forecasted. To ensure, in part, that the proposed highway would be effectively used, it was necessary that the condition of access roads connecting the interchanges and intersections along the highway be improved. Agreement was reached during project preparation to have the improvements completed by April 2004 when the SNH was to be completed.

2.2 Implementation The Project was implemented at a total cost of $556.8 million, a difference of 6.4% from the estimated cost of $524.7 million (excluding interest during construction) due principally to the appreciation of the Renminbi (RMB) relative to the dollar. Civil works and resettlement cost more than originally estimated but the increase was offset by a reduction in the cost of equipment. Loan disbursement was less than estimated due to reduced costs in categories with higher disbursement percentages The commencement of work was delayed by about a year due to processing in obtaining approval from the State Council. This delay resulted in the implementation performance being rated unsatisfactory in ISR Seq 3. However, notices to contractors to commence construction were soon issued and the rating was upgraded to satisfactory in the subsequent ISR. Once started, project implementation on the whole proceeded satisfactorily. The Project was not at risk at any time. SNH, the major component of the Project, was completed on schedule (second half of 2004) despite the late start of work.

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Work on HNIMP started in 2002 with improvements to the Dahua-Mashan road. All roads in the program were completed between July 2003 and August 2005, with the exception of the Hengxian-Mashan road, which was completed in March 2007. Reasons for the delay included poor management on the part of the contractor, a shortage of crushed aggregates due to production and supply being poorly regulated by local authorities, a protracted process for approving variations, and an extremely low price that deterred the contractor from providing sufficient resources. The delay required an extension of the loan closing date by a year from June 30, 2006 to June 30, 2007. Highway Safety Program: Under the program, 12 locations on existing roads were identified for black-spot improvements. The Bank and GCD agreed on the exact locations for improvements during Bank supervision missions in February and November 2001. The program was satisfactorily completed at a cost of US$2.26 million, less than the US$ 2.58 million set aside for the program. Institutional Strengthening: In September 2001 the institutional development component to be financed by the loan was increased from two studies to four by the addition of a study on stone-filled embankments and one on the treatment of unsuitable soil. GCD, on its own initiative, launched several in-house training courses (not included in the project budget) using internal resources and instructors. The foreign supervision consultants (Snowy Mountain Engineering Corporation --Australia) offered a course on contract management and construction supervision. Outputs of the component exceeded expectation (see Annex 4, Outputs by Component).

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The Project was monitored annually in accordance with key performance indicators. The rate of progress in project implementation for each component was also measured against planned targets of the amount of work to be completed for each year. The choice of indicators was appropriate for measuring achievement of the Project's objectives. However, only NR210 was earmarked for accident-rate monitoring and only one section of NR 210 was in the Highway Safety Program. It would have been more appropriate if target rates applicable to all roads in the program were included. In the absence of such targets, accident rates at other roads were not monitored. The construction quality of the Project, rated "excellent" by provincial authorities, was, indeed, very good. SNH and the roads improved under HNIMP, upon completion, were utilized more or less as forecasted although the diversion rate of traffic from the existing highway, NR210, to the newly constructed SNH was lower than expected (see Annex 1, Results Framework Analysis)

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2.4 Safeguard and Fiduciary Compliance Compliance with loan covenants was timely and satisfactory. Safeguard and fiduciary compliance was good. Environmental monitoring during project implementation was in accordance with the Environmental Action Plan. Requirements for environmental monitoring were included in contract documents and, to ensure their compliance, contractors were required to deposit cash amounting to 2% of the contract value at the commencement of the contract, to be returned at the end of the contract to the contractor upon the satisfactory performance in accordance with the contract clauses related to environmental protection. This measure effectively assured sound implementation of the environmental safeguards. Upon completion of the SNH in September 2004, environmental monitoring was shifted from construction to operation. Final acceptance of satisfactory compliance was certified at the end of 2005 by the (national) Ministry of Communications' Environmental Protection Center. A decree issued in 2000 resulted in land compensation rates for Guangxi being lower than stipulated in the RAP (34% lower for paddy fields and 19% for dry land). Following Bank intervention, GCD made up the compensation, mainly in kind, in the form of village infrastructure (rural roads, power supply, irrigation and drainage canals, primary schools, pavement of loose slopes behind homes, land filling of home plots, etc.) after extensive consultation with the affected villagers. Follow-up surveys found that the livelihood of affected villagers was not only restored but their income had increased an average of 23% and the average size of the resettled home unit increased from 28.1 sqm. to 83.5 sqm. A resettlement assessment undertaken by the external monitor concluded that the resettlement and rehabilitation program was satisfactorily concluded.

2.5 Post-completion Operation/Next Phase Upon completion, the Class 2 section of SNH became the responsibility of the Guangxi Highway Administration Bureau and the expressway section the responsibility of the Guangxi Expressway Administration Bureau. A financially independent entity was established in 2004 for purpose of operating the highway. This arrangement was in accordance with the current practice of GCD and seemed to be working well. Maintenance of the project roads is estimated to require about 1% of the provincial annual budget. This is well within the means of the provincial government. The budget allocation for maintenance has been increased annually by about 14% from an average of RMB 10,490 per km to RMB 24,660 per km between 2000 and 2005. It would appear that the policy change towards a more balanced allocation of financial resources between new construction and maintenance of existing roads, an aim of the Project, has begun to take root.

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Traffic on SNH during the first full year of operation (2005) was 83 % of the volume forecasted at the time of appraisal. This was due to a slower rate of diversion from NR210 than expected. Inclusive of traffic on NR210, however, the Shuiren-Nanning corridor had an average daily traffic of 7,482 vehicles a day, an increase of 10% over the forecasted volume (6,796 vehicles). Environmental monitoring was to continue until after a full year of operation to ensure adequate compliance with safeguard measures. The sustainability of the Project is rated high. The project highway is an integral part of the strategic international corridor linking the Pearl River Delta with the ASEAN countries. Currently, Guangxi has a total of 1,459 km of expressways. With the completion of SNH, highway development in Guangxi is being accelerated. By 2010, Guangxi expects to have more than 3,000 km of expressways. Radiating from this expressway network, accelerated construction of provincial roads connecting counties, townships and villages in remote areas can be expected.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation The objectives of the Project were to provide an effective transport link between the Borrower’s land-locked provinces of Guizhou, Yunnan and Sichuan and its southern coastal areas through Guangxi and to strengthen the institutional capacity of Guangxi’s highway sector agencies. The Project was designed to meet the former objective through the construction of SNH and the latter through formal and on-the-job training and technical studies that would provide inputs in the planning, design, construction and operation of highways. The Project was also designed to increase the mobility of the poor in remote areas of Guangxi by improving conditions of existing provincial roads through increased budget allocation for maintenance and measures to increase road safety. The objectives, design and implementation of the project are consistent with the Bank’s current assistance strategy for China of upgrading transport infrastructure to link inland provinces to the coast so that transportation benefits accrue to the poor while also improving network management and traffic safety. (See Country Partnership Strategy for the People’s Republic of China for the Period 2006-2010 dated May 23, 2006). The Project would also meet China’s main transport concern of ensuring that its highway system help integrate the country’s economy and facilitate the movement of goods and services. The Project was, and continues to be, highly relevant to the development needs of the country in general and of Guangxi in particular.

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3.2 Achievement of Project Development Objectives Based on the performance indicators for monitoring and evaluation, the Project has achieved its objectives. The construction of SNH has reduced travel time between Shuiren and Nanning from more than 8 hours to about 3 hours. Guangxi’s institutional capacity to administer, regulate, manage, and operate the sector has been strengthened with 6 studies that have direct application in the design, construction and operation of highways, the provision of some 900 person-months of training, and a five-fold increase in the budget for road maintenance. The Highway Safety Program appeared to have achieved its objective. Traffic accidents at various sections of NR210 on the Shuiren-Nanning corridor dropped dramatically to 1% to 5% of the pre-project rate. Tonnage of goods transported to coastal provinces increased from about 700,000 tons in 1999 (year of appraisal) to some 1.5 million tons in 2005.

3.3 Efficiency The investment in the Project was cost effective. The economic internal rate of return (EIRR) of the SNH was determined to be 22.5%; the net present value (NPV), at a discount rate of 12%, at RMB 4,780 million. Comparable estimates in the PAD were 16.4% for the EIRR and RMB 1,246 million for the NPV. The EIRR (29.3%) and NPV (RMB 680 million) for the HNIMP were also better than the PAD's estimates of 24.3% and RMB 247 million. Overall, the recalculated EIRR and NPV for the entire project were 22.9% and RMB 5,460 million, which were better than anticipated at appraisal (17.0% and RMB 1,493 million). This was due mainly to (a) no cost overrun of the total project cost, (b) the higher traffic demand on the SNH corridor, and (c) no delay in opening of the main road. Discounted net cash flow has a negative value due to a low income stream from toll collection on the Class 2 section of the highway. However, the fiscal impact analysis of the Project confirmed that GCD would have sufficient financial capacity to support operating expenses, as well as to meet the financial obligations for the project roads.

3.4 Justification of Overall Outcome Rating Rating: Satisfactory The Project's outcome is rated satisfactory as a result of the relevance and favorable achievement of the Project development objectives. Travel time between Shuiren and Nanning has been reduced from an average of 8.7 hours to about 2.9 hours, thus providing a more effective linkage of the interior provinces of Guizhou, Yunnan and Sichuan to the coast. Budget allocation for the maintenance of provincial roads in the past 5 years had increased at an average of 14% annually. Improved maintenance of the highway network, especially in remote areas, would increase the mobility of the poor. Traffic accident reduction on the NR210 was dramatic, demonstrating the success of the Highway Safety Program.

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3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development An estimated one million man-months of unskilled labor were generated during the four-year construction period, contributing positively to the alleviation of poverty in the region. Farmers who had been resettled to new areas had benefited from the cultivation of higher valued crops and fruit trees. Average income in the affected counties increased 22.6%. The average size of a home increased from 28.1 sq. m to 83,5 sqm. The livelihood of people resettled due to land acquisition was better off than in the past. (b) Institutional Change/Strengthening Under the Project, more staff were trained and more technical assistance studies were undertaken under the Project than planned. Technical assistance studies (for more details, see Annex 4, Outputs by Component) were relevant to current challenges faced by GCD and its related agencies in the normal course of their work and, with the training provided under the Project, would contribute to the long term capacity building particularly in relation to highway engineering, construction supervision, contract management, resettlement, environmental monitoring and highway management, maintenance and administration. (c) Other Unintended Outcomes and Impacts (positive or negative) There were no unintended outcomes or impacts.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops No beneficiary survey or stakeholder workshops were conducted in the Project.

4. Assessment of Risk to Development Outcome Rating: Low or Negligible The risk to development outcome is low or negligible. SNH is part of the NTHS, effectively linking the interior provinces of southwest China to the deep water ports of Zhangjiang, Beihai and Fancheng. Capacity building in GCD has been enhanced and more funds are being allocated for road maintenance Traffic on SNH in the first year of full operation has been lower than forecasted due to the slower than expected rate of diversion of traffic from NR210. An accelerated rate of diversion of traffic from NR210 to SNH can be expected, as there is a clear advantage, in terms of travel time, in using SNH (less than 3 hours) over that of NR210 (more than 8 hours).

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5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues)

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory Bank performance in ensuring quality at entry is rated satisfactory. The design of the Project was highly relevant to the development needs of the country in general and of Guangxi in particular (b) Quality of Supervision Rating: Satisfactory The quality of Bank supervision was satisfactory. Field supervision missions focused on the timely completion of work and their impact on the achievement of the Project's development objectives and were regularly mounted twice a year. Issues that emerged during implementation were attended to efficiently and promptly. Compliance with safeguard and fiduciary policies was monitored closely. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory Overall, Bank performance is rated satisfactory taking into account its performance in ensuring quality at entry and the consistency and quality of its supervision throughout the implementation of the Project.

5.2 Borrower Performance (a) Government Performance Rating: Satisfactory Government performance was satisfactory. The Ministry of Communications, directing the Project at the central level, closely supervised project co-ordination during the first year of project implementation. (b) Implementing Agency or Agencies Performance Rating: Satisfactory Implementing Agency Performance

Guangxi Communications Department

GCD created a Project Management Office (PMO) to manage the preparation and execution of the Project. GCD/PMO's performance in preparing, designing and implementing the Project was generally satisfactory. The Project was completed efficiently at the cost estimated. The EIRR of the Project at 23% was more than the

12

return of 17% estimated at the time of appraisal.

Some delays in project implementation could have been avoided or minimized if consultants undertaking the design of SNH had not erred in their initial construction drawings. Conceivably if site investigations in the first instance had been more comprehensive and design drawings examined more rigorously the errors might not have arisen. HNIMP and HSP could also have been completed earlier if preparatory works on the two programs had commenced in earnest earlier. The later than expected completion of HNIMP could be attributed to the time taken in completing the EIAs for the replacement roads, but no justification could be offered for the late commencement of HSP. Procurement of the electrical and mechanical equipment went through a protracted process before bid documents were formalized, although in the end the equipment was installed in time forthe opening of SNH. Better management of the bidding process would have avoided the delay.

Co-operation between the implementing agency and the Bank was good. GCD/PMO discharged their fiduciary responsibilities conscientiously and professionally. Compliance with the Bank's requirements and loan covenants was timely and highly satisfactory.

The loan closed 12 months later than scheduled due to the delay in completing the upgrading of the Hengxian-Mashan road.

(c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory Overall, the Borrower's performance may be considered satisfactory based on its performance in the preparation, design, implementation and post-completion operation of the SNH and other project roads.

6. Lessons Learned Site investigations should be comprehensive and detailed to minimize inconsistencies between construction drawings and field conditions. Contract variations would have been minimized if designs and technical specifications had been subjected to closer and more rigorous examination and review. Planning and design of interchanges and administrative and maintenance facilities warranted careful consideration before contracts were awarded. It was found, for example, that administrative facilities were inadequate and incorrectly located and two interchanges were provided for Xijin when only one was needed. The additional works resulted in a revision in contract packaging and some attendant delay in the

13

commencement of work. Fortunately the delay did not impact on the commencement of operation of SNH. Close supervision by the supervising consultants focused on carefully selected sites in the field paid dividends in terms of ensuring quality and timely completion of work. The cash deposit of 2% of contract sum required of contractors ensured that environmental safeguard measures contained in civil works contracts would be carefully executed. Technical studies providing assistance and solutions to specific problems encountered in project implementation were well received and appreciated by the implementing entity.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Borrower commented that consideration should be given to the rejection of bids where unit rates had not been correctly priced. The Bank’s procurement guidelines on the examination of bids are explicit that unless a bid is substantially unresponsive to the bidding documents, it should not be excluded from further consideration. It would seem that where an examination of a bid reveals an inconsistency in the pricing of the unit rates, which by itself is not a material deviation from the terms, conditions and specifications in the bidding documents, the bidder should be called upon to clarify the inconsistency. (b) Cofinanciers There are no cofinanciers on this project (c) Other partners and stakeholders There are no other partners on the project. Comments were not received from other stake holders.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate(USD M)

Actual/Latest Estimate (USD M)

Percentage of

AppraisalHIGHWAY CAPACITY EXPANSION 404.65 503.34 124% HIGHWAY REHABILITATION AND IMPROVEMENT PROGRAM

56.72 48.61 86%

HIGHWAY SAFETY COMPONENT 2.58 2.26 88% STRENGTHENING OF HIGHWAY MANAGEMENT CAPACITY OF GCD

2.96 2.55 86%

Total Baseline Cost 466.91 556.76 119% Physical Contingencies 39.30 0.00 0% Price Contingencies 16.50 0.00 0%

Total Project Costs 522.71 556.76 107% Front-end fee IBRD 2.00 2.00 100% Interest during construction 42.11 43.62 104%

Total Financing Required 566.82 602.38 106%

(b) Financing

Source of Funds Appraisal Estimate (USD M)

Actual/Latest Estimate (USD M)

Percentage of

Appraisal INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 200.00 180.30 90%

LOCAL GOVTS. (PROV., DISTRICT, CITY) OF BORROWING COUNTRY 366.82 422.08 118%

Total 566.82 602.38 106%

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Annex 2. Outputs by Component

Component/Output Planned

(PAD 1999)

Actual on Completion Highway Capacity Expansion A. Construction of SNH, comprising a) Class 2 Highway, Shuiren-Duan b) Expressway, Duan-Nanning Building Facilities Electrical and Mechanical Facilities

238.0 km

97.0 km

141.0 km

9 interchanges, 7 toll stations, 2 service areas, 3 parking areas, 3 facilities for highway administration and maintenance

Toll collection system, communication system, monitoring and surveillance system, lighting system, vehicle detection equipment, message board

236.8 km

96.6 km

140.2 km 8 interchanges, 8 toll stations, 2 service areas, 2 parking areas, 5 facilities for highway administration and maintenance, 1 monitoring center Toll collection system, communication system, monitoring and surveillance system, lighting system, vehicle detection equipment, message board

B. Highway Network Improvement and Maintenance Program, consisting of Improvements to 10 provincial roads Total length of improvements (km)

236.0

comprising: Bose-Tianlin 65 Pingcun-Jiuxu 18 Dahua Linking Rd 16 Mashan Linking Rd 4 Qintang-Wuli 11 Wuli-Heng City 30 Changle-Hepu 20 Shinan-Guigang 37 Wujia-Hepu 15 Wuming-Luoyu 20

231.1

comprising: Dahua-Mashan 19.5 Wuxu-Jiuxu 23.0 Qintang-Wuli 23.1 Wuli-Hengxian 24.1 Shanxin-Guigang 36.8 Hengxian-Mashan 27.0 Jiuxu-Shangjiao 22.2 Tese-Donglan 23.4 Dahua-Zhoulu 20.0 Zhoulu-Shuanglian 12.0

C. Highway Safety Program, consisting of black-spot improvements to 12 accident prone locations, at

11.04 km

Classified as

11.04 km

Classified as

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G210: Mashan-Nanning. 700m Tianshan-Bingyang 1460m G324: Tiandeng-Nanning 300m S20332: Pinguo-Bama 953m G323: Yizhou-Nanning 2260m G209: Rongan- Liuzhou 1200m G209: Wuxuan-Guigang 550m G209: Wuxuan-Guigang 1000m G322: Yizhou-Nanning 500m G323: Yizhou-Nanning 620m G323: Yizhou-Nanning 1100m G323: Donglan-ama 400m

4 4 3

Unclassified 4 3 3 4 3 3 4 4

Mountain –2 Mountain –2 Mountain-2 Mountain-2 Mountain-2 Mountain-2 Mountain-2 Mountain-2 Mountain-2 Mountain-2 Mountain-2 Mountain-2

D. Institutional Strengthening and Training, consisting of Number of person-months of completed training (domestic & overseas) of which Domestic Overseas Number of Studies

736.5

588.5 148.0

4

consisting of : (i)Treatment of Unsuitable Soils (ii)Stone Embankment Compaction for Sub-grade (iii)Smooth Surface Blasting and Slope Greening (iv) Highway Development Strategy and Policy in the Western Region

917.5

789.3 128.2

6

consisting of : (i)Treatment of Unsuitable Soils (ii)Stone Embankment Compaction for Sub-grade (iii)Smooth Surface Blasting and Slope Greening (iv) Highway Development Strategy and Policy in the Western Region (v)Toll Highways and Toll Structures (vi) Limestone Cutting Reduction and Aesthetics of Slopes.

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Annex 3. Economic and Financial Analysis The economic evaluation is composed of two major components: (a) the Shuiren - Nanning Highway (SNH), including the Class II road between Shuiren- Duan and the expressway between Duan – Nanning, and (b) the 10 local roads under the Highway Network Improvement and Maintenance program (HNIMP). An economic evaluation for the whole project covering all the components is also undertaken in this exercise. Both costs and benefits in the analysis reflect December 2005 prices. The economic internal rate of return (EIRR) of SNH is estimated at 22.5%; the net present value (NPV), at a discount rate of 12%, is estimated at RMB 4,780 million, compared to the PAD estimate of 16.4% in EIRR and RMB 1,246 million for the NPV. The reevaluated EIRR and NPV of the roads under HNIMP is estimated at 29.3% and RMB 680 million, respectively, compared to 24.3% and RMB 247 million estimated by the PAD. The reevaluated EIRR and NPV for the HNIMP were also better than the PAD's forecast. The recalculated EIRR and NPV for the entire project are estimated to be 22.9% and RMB 5,460 million respectively, which are better than anticipated at appraisal (17.0% and RMB 1,493 million), mainly because of (a) a very limited economic cost overrun for the entire project (b) the higher traffic demand on the SNH corridor, and (c) no delay in opening of the main road. Table 4.1 Economic and Financial Evaluation Summary

PAD ICR

EIRR (%)

ENPV (12%, mY)

FIRR (%)

FNPV (6.0%, mY)

EIRR (%)

ENPV (12%, mY)

FIRR (%)

FNPV ( 5.5%, mY)

Shuiren- Nanning Highway (SNH)

16.4 1,246 7.1 582 22.5 4,780 -- (4,300)

Highway Network Improvement and Maintenance Program (HNIMP)

24.3 247 -- -- 29.3 680 -- --

Total Project 17.0 1,493.0 -- -- 22.9 5,460 -- -- Traffic

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The SNH opened to traffic in September 2004 and the traffic on the new and the old roads in 2005 were 141% and 198%, respectively, of the PAD's estimates. The total corridor traffic (the sum of traffic on the new and the old roads) in 2005 was 157% of the PAD estimate at appraisal. For 2005, the road diversion ratio (the portion of the road users using the new road) was 65%. A higher diversion ratio for 2006 was expected. This would indicate that road users were gradually accepting the toll road concept. The traffic growth rates of the corridor and the new road for 2006 are expected to be about 8.1% and 7.2%, respectively, higher than the PAD's estimates. In the long –term (2006-2025), traffic on the corridor was estimated to grow at 3.6%. The traffic and distribution between the old and the new highways are presented in Table 5.1 below. Table 4.2: Number of Motorized Vehicles per Day (2004-2025)

PAD ICR Old New Diversion Old New Diversion road road Total ratio road road Total Ratio (1) (2) (3=1+2) (4=2/3) (5) (6) (7=5+6) (8=6/7) 2004 3,574 - 3,574 - 3,593 3,809 7,402 51.5% 2005 1,075 2,762 3,837 72.0% 2,125 3,895 6,020 64.7% 2006 1,104 2,952 4,056 72.8% 2,081 5,135 7,216 71.2% 2010 1,230 3,850 5,080 75.8% 2,570 6,620 9,190 72.0% 2015 1,400 5,370 6,770 79.3% 3,070 8,420 11,490 73.3% 2020 1,340 7,000 8,340 83.9% 3,390 9,910 13,300 74.5% 2025 1,300 9,130 10,430 87.5% 3,450 10,760 14,210 75.7% Average growth pa 2006-2025 0.9% 6.1% 5.1% - 2.7% 4.0% 3.6% - Sources: GCD and the Bank staff.

Fiscal Impact of the SNH and HNIMP Investments While on average the road networks during the period 2000 –2005 increased 3% annually, the average yearly maintenance expenditure increased 14%, resulting in a net increase in average maintenance expenditure per kilometer from RMB 10,490 in 2000 to RMB 24,660 ($3,000) in 2005. The total annual maintenance required for the project roads is, however, less than 1% of the annual budgeted maintenance expenditures for GCD in 2000- 2005. This low ratio indicates that the project presents a very modest financial risk as regards the availability of counterpart funding for the future maintenance of the project roads.

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Table 4.3 Total Project Maintenance Cost vs. Total GCD Maintenance Expenditures (RMB million)

2000 2001 2002 2003 2004 2005 Total Project Maintenance (a) - - - 0.5 1.9 10.7 Total Budgeted Maintenance (b) 562 485 790 840 889 1,529 Ratios (a)/(b) - - - 0.06% 0.21% 0.70%

Sources: GCD and Bank staff. About 79% of the total project cost was financed in the form of borrowings (World Bank: 34% and the local banks: 45%). For the loan repayments, GCD budgeted sufficient reserves to meet its financial obligations. In 2005, for example, the total loan repayment of the project (principal and interest payments for foreign and domestic loans) is estimated to be RMB 155 million, which constitutes only 6% of the total budgeted loan repayment reserves of GCD in that year. Compared to the total revenue of GCD, the loan repayments came to only 1.3%. This indicates that the loan repayment of the project will not pose any problem on GCD's cash flow. All the financial indicators show that the fiscal impact and risks are modest. Table 4.4. GCD: Fiscal Impact (RMB million)

2005 Total Loan Repayment of the Project (a) 154.7 Total Loan Repayment Reserves (b) 2,581 Total GCD Revenue (c) 12,073 Ratio (a) / (b) 6.0% Ratio (a) / (c) 1.3%

Sources: GCD and Bank staff.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/SpecialtyLending Supervision/ICR Simon Bradbury Division Manager LOAG1 Disbursement Robin C. Carruthers Consultant EASTE Economist Xin Chen EACCF Team Assistant Junxue Chu Finance Officer LOAG1 Disbursement Kek Choo Chung Consultant EASTE Engineer

Sandra G. Durham Financial Management Specialist EAPCO FM aspects

Carlos Ricardo Escudero Lead Counsel LEGEA Legal aspects

Luiz C. Gazoni Consultant LCSPT Procurement

Yi Geng Financial Management Specialist EAPCO FM aspects

Yasuhiro Kawabata Consultant EXTTK Former TTL

Xiaofeng Li Senior Program Assistant EACCF Team Support

Zhefu Liu Senior Social Development Spec. EASSO Resettlement Aspects

Hoi-Chan Nguyen Sr Counsel LEGEA Lawyer

John Carter Scales Sr Transport. Spec. EASTE TTL, Project management

Soichiro Seki Sr Environmental Engr. EASES Environmental SpecialistChongwu Sun Sr Environmental Spec. EASRE Environmental aspects

Supee Teravaninthorn Lead Transport Economist AFTTR Former TTL

Hongkun Yang Consultant EASTE Procurement Dawei Yang Procurement Spec. EAPCO Procurement Wenlai Zhang Transport. Spec. EASTE Engineer Chaohua Zhang Sr Social Sector Spec. EASSO Resettlement aspects Youlan Zou Consultant EASUR Resettlement

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(b) Staff Time and Cost

Staff Time and Cost (Bank Budget Only)

Stage of Project Cycle No. of staff weeks

USD Thousands (including travel and

consultant costs) Lending

FY98 3.13 FY99 180.96 FY00 70 227.15 FY01 -0.12 FY02 0.00 FY03 0.00 FY04 0.07 FY05 0.00 FY06 0.00 FY07 0.00

Total: 70 411.19 Supervision/ICR

FY98 0.00 FY99 0.00 FY00 4 1.65 FY01 15 38.15 FY02 17 65.60 FY03 13 50.29 FY04 13 78.02 FY05 12 47.57 FY06 9 52.16 FY07 6 25.44

Total: 89 358.88

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Annex 5. Beneficiary Survey Results (if any) None

23

Annex 6. Stakeholder Workshop Report and Results (if any) None

24

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Project Background The Shuiren to Nanning Highway (SNH), the primary component of the Guangxi Highway Project, is a 2-lane Class 2 highway (96.56 km) from Shuiren to Duan and a 4-lane access-controlled expressway from Duan to Nanning (141 km). Officially opened on September 28, 2004, it has 9 large bridges, 12 minor bridges, 8 interchanges, 46 level crossings, several connector roads (bituminous pavement) and 8 toll plazas. SNH replaces the existing NR 210 in linking the relatively poor land-locked provinces of Guizjou, Yunnan and Sichuan to the southern seaports of Beihai and Fancheng in Guangxi and Zhangjiang in Guangdong. The construction of SNH was conceptualized in 1998. Project preparation for Bank financing started in March 1999. The Bank appraised the Project in November the same year. The loan was negotiated in Washington DC in February 2000 and approved on March 28, 2000. Project implementation was managed by the Project Management Office (PMO) of Guangxi Communications Department (GCD). PMO was established in August 1999. Project Objective and Design The primary objective of the Project was to provide a more efficient and cost effective transport link between the land-locked provinces of Guizhou, Yunnan and Sichuan and the southern coast areas through Guangxi and to strengthen the institutional capacity of the highway sector agencies of Guangxi. The Project was also designed to improve the conditions of several existing roads in the poorer rural counties as well as to reduce traffic accidents on the provincial road network. Project Components With the above objective in mind, the Project was designed with the following components:

• Highway Capacity Expansion consisting of the construction of SNH; • Highway Network Improvement and Maintenance Program (HNIMP) consisting

of a program to rehabilitate and improve the maintenance of selected sections of the provincial highway network;

• Highway Safety Program (HSP) comprising remedial measures (black-spot improvements) in selected locations of the provincial highway network; and

25

• Institutional Development consisting of training programs in highway planning, design, construction supervision, operation and maintenance, environmental and resettlement monitoring and the carrying out of studies to provide technical assistance in soil treatment, design of slopes and embankments, the economics of highway development in poor areas.

Project Outputs

The outputs of the Project included i) the 238 km Shuiren-Nanning Highway constructed as designed; ii) 10 provincial roads improved to the standards of Class 2 roads; iii) 12 black-spot improvements with a total length of 11,043 m; iv) 917 man-months of training and v) 6 technical studies. Project Outcomes The outcome of the Project was favorable. It included, as expected,

• a reduction in travel time on the Shuiren-Nanning corridor of some 5 hours; • an increasing volume of goods transported between the land-locked provinces and

the coast as a result of the savings in transport cost; • significant improvements in the existing provincial road network; • a considerable reduction in traffic accidents; and • enhanced institutional capacity among GCD's transport entities.

Poor communities (mainly minorities) in Guangxi's mountainous counties benefited through better access to markets, public services and places of employment. The Project facilitated the increase in living standards of the local rural population. Project Implementation The Project was implemented satisfactorily and on schedule except for the Hengxian-Mashan Road in HNIMP, whose completion was delayed by about 10 months to January 2007 due mainly to poor contract management on the part of the contractor and the regulated supply of construction material by local authority. This delay caused an extension of the Closing Date from June 30, 2006 to June 30, 2007 Overall, the quality of work was rated "excellent" by provincial standards. Highway Capacity Expansion: The construction of SNH was implemented through 10 civil works contracts for the roadway, 3 contracts for building works and one contract for electrical and mechanical works. Due mainly to geo-technical difficulties, there were some revisions in the scope of work for the roadway and the buildings that increased the construction cost by about 28.5%. By end September 2004, all civil works contracts

26

were substantially completed satisfactorily and SNH was opened to traffic on September 28. Revisions in the scope of work for buildings included a re-arrangement of the management and maintenance depots and service facilities, the addition of an interchange at Yilingyan, a maintenance office at Duan, a monitoring center at San'an and the amalgamation of the two interchanges at Xijin into one. The works were executed through three contracts instead of two as was originally planned. The cost of this sub-component was increased from RMB 57.4 million to RMB 97.7 million. Highway Network Improvement and Maintenance Program: The original composition of roads in the program was determined during project appraisal. The Bank agreed to the revision of the composition and it was revised before the commencement of work on the program. This, however, did not delay the overall completion of the Project. Highway Safety Program: The12 accident-prone locations for remedial improvements were selected in discussions with the Bank task team during review missions in February and November 2002. Three site offices were set up to manage the improvement works that came to a total of US$ 2.26 million (US$ 2.90 million estimated at appraisal). Improvements at 2 locations were completed in December 2004, the rest by end December 2005. Institutional Strengthening: The training program has successfully provided an added dimension to the Guangxi Highway Administration Bureau and the Guangxi Expressway Administration Bureau. The impact on institutional strengthening was positive, particularly with regard to highway administration and management. Four studies funded by the loan and two by domestic funds not only provided timely application of new methodologies to the on-going construction and offered practical solutions to some of the difficulties encountered in construction, but also provided valuable information that may be adopted in future projects. Environment Safeguards The EIA and EAP prepared by Xian Highway Engineering Institute were approved in November 1999. During project design, due consideration was given to environmental issues related to alignment selection, crossing locations, bridge, culvert, slope protection and landscaping. During construction, environmental monitoring was entrusted to Guangxi Environmental Science and Research Institute. Initially RMB 28.00 million was budgeted for implementation of environmental safeguard measures. Actual cost amounted to RMB 79.32 million. The increase in cost was largely due to changes in the requirements for highway landscaping and slope protection.

27

Measures to safeguard the environment were included in contract documents. To ensure that these measures would be implemented properly, contractors were required to deposit cash amounting to 2% of the contract sum which would be refunded upon the satisfactory completion of work. This procedure worked very well and ensured a sound implementation of environmental safeguards. Environmental monitoring was conducted faithfully at required time intervals. Annual Environmental Monitoring Reports were submitted to the Bank regularly. Land Acquisition and Resettlement PMO maintained close liaison with local authorities to coordinate land acquisition and the relocation of public utility services. Sub-offices were set up at county level to manage day-to-day operation. Total land acquired amounted to 23,748 mu; 150,93m sq. m of buildings were demolished and the number of households and persons affected were 881 and 34,302 respectively. Total resettlement costs amounted to RMB 486 million. Compensation was paid timely. During implementation, a decree stipulating land compensation rates was passed that had the effect of lowering the compensation rates provided in the RAP. This was not acceptable to the Bank and following high-level discussions with MOF and MOC in February 2002, GCD agreed to make up the shortfall in kind in the form of community infrastructure improvements. In consultation with villagers concerned, 25 sites were selected for the improvement works. Eight External Resettlement Monitoring Reports and eight Internal Resettlement Reports were timely furnished to the Bank during implementation in accordance with the Loan Agreement. The final Resettlement Completion Report was accepted by the Bank in August 2005. Transition Arrangements and Operation Upon the commencement of operation of SNH on September 28, 2004 responsibility for the Class 2 section passed to GHAB's Hechi Highway Administration Bureau while that for the expressway section passed to the GEAB's Nanning Expressway Administration District. GHAB and GEAB are two among the ten divisions of GCD, a functional body of the government of Guangxi Autonomous Region. At the end of 2004, Guangxi had a total highway length of 59,704 km. Sustainability The Project is sustainable in view of the achievement of the Project's development objective that is in conformity with national and regional transport plans and strategies. Revenue generated from toll collection is sufficient to meet the cost of operating and

28

maintaining the project highway. Budget allocation for road/highway maintenance had been increased significantly in the last 2 years and will be further increased as more highway lengths are added. Highway Classification Maintained by Maintenance Cost

2004 (RMB million) Maintenance Cost

2005 (RMB million) Fully closed, access controlled expressways

GEAB 24.6 147.5

Class 1 through Class 4 and unclassified roads

GHAB 622,8 2,096.8

Government Plans China is in the process of implementing the Great Western Development Strategy to expedite the economic development of the western region. SNH is playing a significant role in providing a needed ocean outlet for part of the western region as well as becoming an integral part of the strategic international corridor linking the Pearl River Delta with the ASEAN countries. Performance of Bank The World Bank provided assistance in areas of project design, technical concepts, and issues related to environmental safeguard and resettlement during the preparation of the Project. During appraisal, attention was focused on technical standards, alignment of the highway, design of interchanges and linking roads and the staffing of the PMO. During the implementation period, an average of two supervision missions a year was undertaken. Overall, the Bank's performance throughout the preparation and implementation of the Project has been satisfactory. Although there was a change of task manager during the period of implementation, Bank's performance at supervising the Project was not interrupted or affected. Bank staffs assigned to the Project were professionals with positive and helpful attitudes. GCD/PMO maintained an amicable working relationship with the Bank task team throughout the entire process. Lesson learned Contractors tended to include in their offers unit rates that were unbalanced-very high for those items where they expected variations and very low for those items where variations were not expected. Under such circumstances, awarding contract to the lowest evaluated bidder, as required by the Bank's procurement guidelines, without considering the reasonableness of the offered price in totality, might not be in the best interest of the employer/client. It would be preferable if the employer has some flexibility to reject an offer where it was obvious that unit rates were not reasonably priced.

29

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders None

30

Annex 9. List of Supporting Documents 1. Project Implementation Plan, November 1999 2. Feasibility Study Report (Shuiren-Nanning Highway), June 1998 3. Feasibility Study Report with updated OD Survey, March 1999 4. Supplemental Feasibility Study Report, July 1999 5. Summary of EIA Implementation, October 1999 6. Environmental Protection Implementation Plan, October 1999 7. EA Statement, October 1999 8. Poverty Impact and Social Assessment Report, July 1999 9. Resettlement Action Plan, November 1999 10. Ethnic Minority Development Plan, October 1999 11. Institutional Strengthening and Training, November 1999 12. Report of Economic/Financial Evaluation and Evaluation of the Project, November 1999 13. Highway Maintenance Improvement Component, November 1999 14. Equipment Procurement Report, August 1999 15. Request for Proposals for Consultant 16. Prequalification Document for Civil Works, October 1999 17. Report on the Preparation of Highway Safety Component, November 1999 18. Review of Engineering Designs and Bidding Documents, Phase I Final Report, July 1999; Phase II Final Report, November 1999 19. Financial Management Assessment Report and Format for Financial Statement 20. Financial Manual 21. Procurement Capacity Assessment and Procurement Manual

For detail, seeIBRD 30388

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NG

QIN

G

BEIJI

NG

TIANJIN

SHANGHAI

X I N J I A N G

Q I N G H A I

X I Z A N G

S I C H U A N

G A N S U

SHAANXI

SHANXI

HENAN

G U I Z H O U

Y U N N A N G U A N G X I

H U N A N

HUBEI

G U A N G D O N G

HEBEI

SHANDONG

JIANGSU

ANHUI

ZHEJIANG

JIANGXI

HONG KONG

FUJIAN

TAIWAN

HAINAN

L I A O N I N G

J I L I N

HEILONGJIANG

BEIJING

URUMQI

XINING

CHENGDU

CHANGSHA

NANCHANG

HEFEI

KUNMING

LHASA

GUIYANG

WUHAN

ZHENGZHOU

XI'AN

TAIYUAN

HANGZHOU

SHANGHAI

JINAN

SHIJIAZHUANG

SHENYANG

CHANGCHUN

HARBIN

NANJING

NANNING

HAIKOU

FUZHOU

GUANGZHOU

YINCHUAN

HOHHOT

LANZHOU

TIANJIN

CHONGQING

Jinhua

Baoji

Jiujiang

Yantai

Dalian

Huocheng

Kuytun

Dahuangshan

Turpan

Qingdao

Tanggu

Lianyuang

Jining

Manzhouli

Tongjiang

Suifenhe

Dandong

Nantong

Xinxiang Kaifeng

Xuzhou

ShantouTanxi

Huangpu

LongyangShenzhen

Zhanjiang

Beihai

Hengyang

Zhanjzhou

Foshan

Zhuhai

Ningbo

Sanmenxia

LuoyangWeinan

Tongguan

Xiamen

Quanzhou

THAILAND

LAO PEOPLE’S

DEM. REP.

V IETNAM

MYA

NM

AR

MYA

NM

AR

REP. OFKOREA

DEM. PEOPLE’SREP. OF KOREA

R U S S I A N F E D E R AT I O N

M O N G O L I A

KAZAKHSTAN

KYRGYZREPUBL IC

TAJIKISTAN

UZBEKISTAN

MACAO

PHIL IPP INES

Huang H

e

Chang Jiang

Y e l l o wS e a

S e a o f J a p a n

E a s t

C h i n a

S e a

ferry

70∞ 80∞

80∞

30∞

20∞

40∞

50∞

100∞ 110∞ 120∞

20∞

30∞

40∞

50∞

90∞ 10∞ 110∞ 120∞ 130∞

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endo r s emen t o r a c c e p t a n c e o f s u c h boundaries.

0 100 200 300 400 500 MILES

0 200 400 600 800 KILOMETERS

IBRD 30387

FEBRUARY 2000

CHINA

GUANGXI HIGHWAY PROJECT

MAJOR HIGHWAYS:

COMPLETED

UNDER CONSTRUCTION

PLANNED BEFORE 2005

PLANNED AFTER 2005

SELECTED TOWNS

PROVINCE CAPITALS

NATIONAL CAPITAL

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

324

324

324

325

325

325

209

209

324

322

323

323

209

209

322

322

321

321

321

321

321

207

207

207

207

207

323323

323

209

210

210

324324

322

322

322324

323

323

20123

20332

20331

20341

20342

20343

20343

20253

20252

20251

20231

20222

20221

20211

20171

20181 20165

20184

20182

20161

20312

20318

20212

20314

20311

20315

20323

2032220324

20311

20312

20214

20321

20122

20124

20124

20131

20131

20133

20141

20183

20031

20134

20121

Bose

Hechi

Wuzhou

Yulin

Guilin

Liuzhou

NANNING

FangchengGezu

Liucheng

LuzhaiLipu

Pingle

Zhongshan

Hexian

FuchuanYaozu

ZiyuanQuanzhou

LongshengGezuSanjiang

Dongzu

RongshuiMiaozu

Rong'an

Yongfu

Lingchuan

Xing'an

Guanyang

YangshuoGongchengYaozu

Lingui

MengshanJinxiuYaozu

Pingnan

Guiping

Wuxuan

Rongxian

Beiliu

Luchuan

Bobai

Hepu

Pubei

Beihai

Lingshan

Mashan

Shangsi

NingmingPingxiang

Longzhou

Daxin

Tiandeng

Fusui

Yongning

WumingLong'an

Pingguo

Tiandong

Tianyang

Bama Yaozu

LuochengMulaozu

HuanjiangMaonanzu

Nandan

Fengshan

Leye

Tian'e

Donglan

LingyunTianlin

Xilin

Longlin Gezu

Dahua Yaozu

Du'anYaozu

Mashan

Zhoulu Shanglin

Binyang

Guigang

Hengxian

LaibinHeshan

Xincheng

Yishan

Debao

Jingxi

Napo

Chongzuo

Cenxi

TengxianCangwu

Zhaoping

Liujiang

Xiangzhou

Qinzhou

V I E T N A M

Y U N N A N

G U I Z H O U

H U N A N

GU

AN

GD

ON

G

Beibu Gulf

Xun Jiang

Yu Jia

ng

Rong

Jian

g

Hongshui He

You Jiang

Zuo Jiang

Hongshui He

Nanpan Jiang

Yong Jiang

Gui Jiang

He Jian

g

Xi Jiang

1

109

278

4

3

6

5

To Chongqing

1

1

2

3

4

5

6

7

2

3

4

5

6

7

The proposed highway of Hechi (Shuiren) to Nanning The total length: 236.0 kmShuiren to Du'an-96.8 km (class II)Du'an to Nanning-139.2 km (expressway)

The proposed highwayof Luizhai to Shuiren The total length: 95.5 km

Under construction Shuirento Liuzhou highwayThe total length: 202.1 km

Planned highway of Nanning to TanluoPrincipal Line: Liangqing to TanluoThe total length: 58.2 kmBranch line: Shipu to XijingThe total length: 11.3 km

Planned highway of Nanning to YouyiguanThe total length: 180.1 km

The proposed highwayof Xingye to Liujing

Under construction Hepu to ShankouhighwayThe total length: 37.2 km

For detail,See IBRD 30389

Dongxi

Yizhou

Shuiren

Luizai

Lian Jiang

1

2

3

4

5

6

7

8

9

10

Dahua–Mashan20 kilometers

Wuxu–Jiuxu23 kilometers

Qintang–Wuli23 kilometers

Wuli–Hengxian24 kilometers

Shanxin–Guigang37 kilometers

Hengxian–Mashan27 kilometers

Jiuxu–Shanjiao22 kilometers

Tese–Donglan23 kilometers

Dahua–Zhoulu20 kilometers

Zhoulu–Shuanlian12 kilometers

HIGHWAY NETWORK MAINTENANCEAND IMPROVEMENT SECTIONS INPOVERTY AREAS:

B a y o fB e n g a l

P h i l i p p i n e

S e a

E a s t

C h i n a

S e a

Yel lowSea

Sea

of

Japan

BEIJING

HEILONGJIANG

JILIN

LIAONING

NEI MONGOL

HEBEI

BEIJING

TIANJIN

SHA

NXI

SHAANXIGANSU

QINGHAI

XINJIANG

XIZANG

NIN

GXI

A

SHANDONG

HENAN

ANHUI

ZHEJIANG

SHANGHAI

SICHUAN

CHO

NGQIN

G HUBEI

GUIZHOU

HUNAN

JIAN

GXI

FUJIAN

GUANGXI GUANGDONG

TAIWAN

HAINAN

YUNNAN

HONG KONG

JIANGSU

MACAO

RUSSIANFEDERATION

MONGOLIA

KAZAKHSTAN

JAPAN

PHILIPPINES

VIETNAM

REP. OFKOREA

D.P.R. OFKOREA

LAOP.D.R.

KYRGYZREP.

National Capital

Province Boundaries

International Boundaries

IBRD 30388R

JANUARY 2008

0 10 20 30

KILOMETERS

40 50 60

COUNTY CAPITALS

PREFECTURE CAPITALS

PROVINCE CAPITAL

SEAPORTS, RIVER PORTS

PROVINCE HIGHWAYS

NATIONAL HIGHWAYS

RAILROADS

CANALS

RIVERS

COUNTY BOUNDARIES

PREFECTURE BOUNDARIES

PROVINCE BOUNDARIES

INTERNATIONALBOUNDARIES

CHINA

GUANGXI HIGHWAY PROJECTSHUIREN - NANNING HIGHWAY AND

ROAD IMPROVEMENT SECTIONS IN POVERTY AREAS

PROPOSED SHUIREN - NANNING HIGHWAY

HIGHWAYS UNDER CONSTRUCTION

PLANNED/PROPOSED HIGHWAYS

EXISTING INTERCHANGES

PROPOSED INTERCHANGES

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

To Guizhou

Shuiren Interchange(start of Shuiren-Nanning

Highway)

end ofShuiren-Nanning

Highway

Du'an Interchange

Mashan Interchange

Fucheng Interchange

Xijing-2 Interchange

Ertang Interchange

Wuming InterchangeXijing Interchange

323

323

210

210

210

210

322324

20323

20222

20324

K100

K150

K200

K250

K300

Shuiren

Hechi

Xiakao

XiaaoYaonan Daxing Gaoling

Fucheng

Ertang

Yongning

Wuming

Du'anYaozu

Mashan

Dahua

HECHI

NANNING

Hongshui He

Yong

Jia

ng

CHINA

GUANGXI HIGHWAY PROJECTSHUIREN - NANNING HIGHWAY

PROPOSED SHUIREN - NANNING HIGHWAY (EXPRESSWAY)

PROPOSED SHUIREN - NANNING HIGHWAY (CLASS II ROAD)

PROPOSED INTERCHANGES

EXISTING NATIONAL HIGHWAY

EXISTING PROVINCE HIGHWAYS

COUNTY ROADS

RAILROAD

SELECTED TOWNS

COUNTY CAPITALS

PREFECTURE CAPITAL

PROVINCE CAPITAL

RIVERS

INSET:

PREFECTURE BOUNDARIES

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARY

20323

210

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

IBRD 30389

FEBRUARY 2000

Areaof Map

Bose

Qinzhou

Hechi

Wuzhou

Yulin

Guilin

Liuzhou

NANNING

FangchengGezu

Shuiren

Beihai

V I E T N A M

Y U N N A N

G U I Z H O UHUNAN

GU

AN

GD

ON

G

Beibu Gulf

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