major change in scope and implementation arrangementsthrough a combination of hefei municipal...

Major Change in Scope and Implementation Arrangements

Project Number: 36595 Loan Number: 2328-PRC May 2009

People's Republic of China: Anhui Hefei Urban Environment Improvement Project

CURRENCY EQUIVALENTS (as of 12 May 2009)

Currency Unit - yuan (CNY)

CNY1.00 = $0.1466 $1.00 = CNY6.8230

ABBREVIATIONS

ADB – Asian Development Bank EA – executing agency HMG – Hefei municipal government HUCIC – Hefei Urban Construction Investment Company HXSAOC – Hefei Xincheng State Assets Operating Company Limited IA – implementing agency km – kilometer m3 – cubic meter PMO – project management office WWTP – wastewater treatment plant

NOTE

In this report, "$" refers to US dollars Vice-President C. Lawrence Greenwood, Jr., Operations Group 2 Director General K. Gerhaeusser, East Asia Department (EARD) Director A. Leung, Urban and Social Sectors Division, EARD Team leader R. Mamatkulov, Urban Development Specialist, EARD Team member C. Navarro, Project Officer (Portfolio Management), EARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page MAPS

I. INTRODUCTION 1

II. BACKGROUND 1 A. Scope of the Project 2 B. Original Cost Estimates and Financing Plan 3 C. Status of Project Implementation 4

III. THE PROPOSED CHANGES 5 A. Change in Project Scope 5 B. Change in Implementation Arrangements 6 C. Reallocation of Loan Proceeds 6

IV. ASSESSMENT 6

V. RECOMMENDATION 7

APPENDIXES 1. Original Design and Monitoring Framework 8 2. Summary Cost Estimates and Financing Plan 12 3. Status of Contract Awards and Disbursements 15 4. Revised Design and Monitoring Framework 17 5. Updated Project Cost Estimates 21 6. Proposed Reallocation of Loan Proceeds 24 7. Allocation and Withdrawal of Loan Proceeds 26

Changjiang

(Yangtze R.)

Chao Lake

HEFEI

FeixiLu'an

Shucheng

Yuexi

Tongcheng

Lujiang

Tongling

Wuhu

Taihu

Wangjiang

Qimen

Qianshan

Anqing

Huainan

Bengbu

Fuyang

Huaibei

Suzhou

Dingyuan

Chao Xian

Maanshan

Huangshan

Xuancheng

Ningguo

S H A N D O N G

H E N A N

J I A N G X I

H U B E I

J I A N G S U

A N H U I

Z H E J I A N G

Provincial Capital

City/Town

Main Road

Secondary Road

Railway

River

Provincial Boundary

Boundaries are not necessarily authoritative.

ANHUI HEFEI URBAN ENVIRONMENT IMPROVEMENT PROJECTIN THE

PEOPLE'S REPUBLIC OF CHINA

0 20 40 60 80

Kilometers

N

09-0987a HR

Map 1

119 00'Eo

119 00'Eo

116 00'Eo

116 00'Eo

34 00'No34 00'No

30 00'No 30 00'No

Sili R.

Nanfei R.

Shiwuli R.

Ershibu R.

Dongpu Reservoir

Dafangyin Reservoir

Chao Lake

SHUSHAN

BAOHE

LUYANG

YAOHAI

Subcomponent 1.1Contruction of Shiwuli RiverWastewater Treatment Plant

Subcomponent 1.4Improvement of closedQinxi Road Landfill Site

Subcomponent 2.3Sili River Rehabilitation andFlood Control Improvement

Subcomponent 1.2Construction of WangtangWastewater TreatmentPlant Phase 2 + AssociatedSewers

Subcomponent 2.1Ershibu River Rehabilitationand Flood Control Improve-ment

Subcomponent 2.2Banqiao River Rehabilitationand Flood Control Improve-ment

Subcomponent 1.3Improvement of MunicipalSewers throughout HefeiCity (indicative only)

Subcomponent 2.4Improvement of Chao LakeFlood Control Works

CHANGFENG

FEIXI

FAIDONG

Wastewater Treatment Plant

River

District Boundary

County Boundary

Boundaries are not necessarily authoritative.

ANHUI HEFEI URBAN ENVIRONMENT IMPROVEMENT PROJECTIN THE

PEOPLE'S REPUBLIC OF CHINA

0 100 200 300

Meters

N

09

-09

87

b H

R

Ma

p 2

I. INTRODUCTION 1. On 24 April 2007, the Asian Development Bank (ADB) approved the loan for the Anhui Hefei Urban Environment Improvement Project1 from its ordinary capital resources for $150.0 million. The loan and project agreements were signed on 28 August 2007 and became effective on 8 January 2008. The expected loan closing date is 31 March 2013. 2. The total project cost is $372.36 million, of which $150 million is to be financed by ADB, with the remaining $222.36 million to be financed by the People's Republic of China (PRC) through a combination of Hefei municipal government (HMG) and district government budget sources ($82.94 million and $71.4 million, respectively), domestic loans from PRC banks ($55.7 million), and enterprise bonds ($12.32 million). 3. This Board paper describes the change in scope and implementation arrangements arising from the cancellation of the Xinzhan Zone road infrastructure and traffic management component of the Project (component 3). The component sought to improve road infrastructure and traffic management in the Xinzhan Zone and would require permanent acquisition of approximately 344 hectares of land (69% of which is cultivated). The component cannot be implemented as planned because of restrictions placed on the use of agricultural land for infrastructure by the Government. In view of this, HMG, the project executing agency (EA), has proposed canceling this component and reallocating the allocated loan proceeds to component 1 (wastewater and waste management) and component 2 (river rehabilitation and flood control improvement), and increasing the percentage of ADB financing of a subcomponent in component 2. 4. The cancellation as proposed by HMG will change the overall purpose of the Project in terms of the benefits that would result from improvement of transport services. The change qualifies as a major change in scope under para. 6 of Project Administration Instructions 5.04.2

II. BACKGROUND 5. The Project is a key environmental improvement and management initiative undertaken by HMG to meet national environmental guidelines and ensure Hefei’s sustainable growth. As designed, the Project aims to bring tangible benefits to the environment of Hefei, the capital of Anhui province, by (i) enhancing the quality of its water resources; (ii) strengthening wastewater treatment facilities and sewer networks; (iii) reducing the incidence and damage of flooding in three rivers and Chao Lake; and (iv) improving urban air quality, and reducing road accidents and vehicular emissions through a more efficient city road network and integrated transport management operations in a model development zone. The Project provides institutional capacity-building in support of urban environmental management and policy reforms to ensure sustainability of the Project and related facilities. 6. The impact of the Project as designed is to improve the urban environment, public health, and quality of life in Hefei by (i) reducing waterborne and airborne diseases, road accidents, and vehicular emissions; and (ii) increasing employment, investment, and business

1 ADB. 2007. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People's Republic of China for the Anhui Hefei Urban Environment Improvement Project. Manila 2 ADB. 2008. Project Administration Instructions. PAI No. 5.04: Change in Project Scope or Implementation

Arrangements. Manila

2

opportunities. The outcome of the Project as designed will be improved public wastewater management, flood control, and transport services in Hefei by

(i) increasing the wastewater treatment rate from 50% to 80% by 2012; (ii) upgrading water quality from worse than class V to at least class V in Banqiao,

Ershibu, and Sili rivers by 2012, with longer-term potential for upgrading to between class IV and class V by 2015 and eventually to class III;

(iii) reducing the probability of floods in the Banqiao, Ershibu, and Sili rivers from an average of every 3–5 years to 50–100 years by 2011–2012;

(iv) reducing the probability of floods in Chao Lake from an average of every 10–20 years to at least every 20 years, and reducing erosion of the lake bank and improving the ecological environment of the lake by 2012; and

(v) creating a sustainable road transport system that is safe, economically viable, and environmentally friendly in the Xinzhan Zone by 2012, resulting in increased industrial development, more jobs, and better health and safety.

7. The design and monitoring framework contained in the report and recommendation to the President is in Appendix 1. 8. HMG is the EA for the Project. The project implementing agencies (IAs) are (i) Hefei Urban Construction Investment Company (HUCIC), (ii) Hefei Chao Lake Ecological and Environmental Improvement Construction and Administrative Bureau, and (iii) Hefei Xincheng State Assets Operating Co. Ltd. There are seven subcomponents under HUCIC being carried out through the following arrangements: (i) HUCIC manages the Qingxi Road Landfill Rehabilitation subcomponent; (ii) the Hefei Municipal Drainage Office manages three subcomponents (Ershibu River, Banqiao River, and Sili River flood control); and (iii) the Hefei Wastewater Treatment Administrative Department manages three subcomponents, (Shiwuli River wastewater treatment plant [WWTP], Wangtang WWTP phase II, and Hefei sewerage improvement). The Hefei Chao Lake Ecological and Environmental Improvement Construction and Administrative Bureau is directly in charge of the Chao Lake subcomponent. Hefei Xincheng State Assets Operating Co. Ltd. (HXSAOC) implements the Xinzhan Zone component. Institutional capacity building is being implemented through the project management office (PMO). A. Scope of the Project 9. As designed, the Project has three components: (i) wastewater and waste management, (ii) river rehabilitation and flood control improvement, and (iii) improved road infrastructure and traffic management in the Xinzhan zone. These components comprise 10 infrastructure investment subcomponents, with institutional capacity building undertaken through the project management and operation component. 1. Wastewater and Waste Management 10. The component has four subcomponents, the first of which is the construction of the Shiwuli River WWTP, with a capacity of 50,000 cubic meters per day (m3/day) and a network of 73.7 kilometers (km). The second subcomponent is the construction of Wangtang phase II WWTP with a treatment capacity of 100,000 m3/day, a recycled water pump station with a capacity of 35,000 m3/day, and about 33.4 km of sewer network. The third subcomponent is the construction of sewers for four WWTPs throughout Hefei City, which will include installation of

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206 km of sewer network of varying diameters and construction of one sewage pumping station. The fourth subcomponent is improvement to the closed Qingxi Road Landfill site, including installation of (i) a capping system and surface water drainage system to prevent rainwater infiltration; (ii) a leachate collection and piping system to Wangtang WWTP; (iii) a gas collection and gas flare-off system; (iv) a vertical subsurface membrane wall to prevent groundwater intrusion and leakage of leachate into the Nanfei River; and (v) extensive landscaping and planting of an urban park. 2. River Rehabilitation and Flood Control Improvement 11. The river rehabilitation and flood control improvement component in Hefei has four subcomponents. The first three subcomponents comprise rehabilitation and flood control improvement for the Banqiao, Ershibu, and Sili rivers. Work includes river dredging, widening and reinforcement of banks, sediment disposal from dredging, and construction of storm water discharge pipelines. Storm water pumping stations, sewer mains, and sewerage pump stations will also be constructed to enable transfer to WWTPs. Ancillary works include construction of access roads and bridges, and necessary landscaping. The fourth subcomponent involves improvements to Chao Lake flood control works to enhance the ecological environment, strengthen water and soil conservation, and increase flood control capacity. Work includes extension of up to 35.7 km of banks, construction of 20.7 km of erosion control structures, construction of a 56.3 km wave break forest belt, construction of wave breaks (walls), and road construction around the lake banks.

3. Improved Road Rehabilitation and Flood Control Improvement 12. The component on improved road infrastructure and traffic management in the Xinzhan Zone was intended to focus on improving road infrastructure and traffic management in the Xinzhan Zone, including by building nine roads (three main trunk roads and six secondary trunk roads). As designed, work was to include construction of 26.4 km of roads and complete ancillary works, including necessary storm water network associated with the construction; and completion and testing of a pilot traffic management, surveillance, and control system to ensure sustainable, integrated, and safe operation after project completion. 4. Institutional Capacity Building 13. The Project also provides for institutional capacity building for project management to ensure that the stakeholders are able to implement the Project effectively and to manage project facilities. Capacity building will include project management consulting services and training during loan implementation. This is intended to help the IAs (i) become operationally efficient and financially sustainable entities; (ii) comply with relevant national policies for cost recovery, tariff, and enterprise reforms of the wastewater sector; (iii) develop sound operation and maintenance plans for future service provision and commercial growth; (iv) develop a public awareness training program on environmental protection and social impact monitoring; and (v) improve the efficiency of traffic management in the Xinzhan zone. B. Original Cost Estimates and Financing Plan 14. The total cost of the Project was estimated at $372.36 million, financed through (i) the ADB loan to finance 40.3% of the project cost (equivalent to $150 million) to cover civil works, equipment and supplies, project management consulting services, and training and financial

4

charges on the loan during construction; and (ii) the Government, which agreed to finance the remaining $222.36 million through a combination of HMG ($82.94 million) and district government budget sources ($71.4 million), domestic loans from PRC banks ($55.7 million), and enterprise bonds ($12.32 million). The original cost estimates and financing plan are in Appendix 2. C. Status of Project Implementation 1. Wastewater and Waste Management 15. Shiwuli River WWTP has nine civil works and four equipment contracts, of which five civil works and three equipment contracts have been awarded. The following have been achieved: (i) about 82% of phase 1 and phase 2 civil works have been completed, (ii) 24.3 km of sewerage pipelines have been constructed and 6.9 km pipelines are under construction, and (iii) the civil works for Feilong Road Pump Station has already started. It is expected that the WWTP will be completed during the first half of 2009; the remaining sewage pipelines will be undertaken together with the city road construction. 16. Wangtang WWTP has seven civil works and six equipment contracts, of which three civil works and two equipment contracts have been awarded. About 72% of the WWTP civil works have been finished or are expected to be completed by mid-2009. The remaining eight contracts are expected to be awarded during the first half of 2009. 17. Improvement of Hefei municipal sewers has eight civil works, one geographic information system and one equipment contracts, of which four civil works contracts have been awarded. About 29.6 km of pipelines have been constructed and about 11 km of pipelines are currently under construction. Of the remaining four civil works contracts, two will be awarded in 2009. 18. Improvement of the closed Qingxi Road Landfill site has two civil works contracts and one miscellaneous equipment contract. Construction has been completed and the equipment contract has been awarded. 2. River Rehabilitation and Flood Control Improvement 19. Ershibu River rehabilitation and flood control improvement has six civil works and two equipment contracts. Contract awards for three civil works have been approved in December 2008. The remaining contracts are to be awarded in 2009 and completion of this component is expected in mid-2010. 20. Banqiao River rehabilitation and flood control improvement has six civil works and two equipment contracts. Three civil works and one equipment contracts have been awarded. Construction is ongoing for the three civil works contracts, with 7.8 km of sewage pipeline and 16% of the river channel dredging completed. 21. Sili River rehabilitation and flood control improvement has six civil works and three equipment contracts. Three civil works contracts have been awarded and the award of three more contracts was approved by ADB in December 2008. One civil works contract has been completed.

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22. Chao Lake flood control has four civil works and one equipment contracts. Contracts for wave prevention and bank protection have been awarded and works will be completed by the second quarter of 2009. 3. Improved Road Rehabilitation and Flood Control Improvement 23. This component has not started because of problems associated with land acquisition (para. 3). The EA has proposed cancellation of this component. 4. Institutional Capacity Building 24. The Project provides institutional capacity-building measures in urban environmental management and policy reforms to ensure sustainability of the Project and related facilities. A project management consultant has been engaged to assist the EA in implementing institutional capacity building. The services are ongoing and the consultants have provided training to the PMO and IAs on procurement, construction and financial management, and operation of the WWTP, pumping station, and sewerage pipeline system. 25. Loan Covenants. Compliance with the covenants in the Loan Agreement is satisfactory. 26. Contract Awards and Disbursements. Project implementation is progressing well, with 49.8% of the loan amount contracted and 25.9% of the loan amount disbursed as of 23 April 2009. A total of 33 contracts have been awarded. The status of contract awards and disbursements by component is in Appendix 3.

III. THE PROPOSED CHANGES A. Change in Project Scope 27. At the end of 2007, the EA, IA, and PMO reported to the loan inception mission that the Xinzhan Zone road infrastructure and traffic management component did not start as planned due to the delay in obtaining approval from the Government for agricultural land acquisition. According to PRC legislation, the use of agricultural land for construction requires approval of the State Council. As a result of the latest economic developments, including a shortfall in agricultural production due to reduced output from agricultural land and the economic recession, the Government has restricted allocation of agricultural land for infrastructure construction, making approval highly unlikely. To avoid project implementation delays, the EA proposed canceling this component and replacing it with a similar component commensurate with the current project component in terms of objectives, scope, and cost. The proposed replacement was submitted in April 2008 and reviewed by ADB for compliance with ADB safeguard policies. The review revealed that the proposal does not meet ADB safeguard requirements, and substantial time and resources would be required to complete the environment and social impact assessment. It was agreed that the proposal would be discussed in detail during the loan review mission in November 2008. 28. In November 2008, the ADB loan review mission was informed that the previously proposed replacement component would no longer be pursued because the IA was financially over-leveraged and therefore unable to provide counterpart funding during the first 2 years of proposed component implementation. Consequently, it was proposed that the road infrastructure and traffic management component be cancelled.

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29. The component was intended to address traffic management and to help minimize air pollution generated from traffic volumes associated with urban development. The Xinzhan Zone was to be used as pilot area, with the approach expanded across Hefei and potentially to other cities in the PRC, if successful. With the proposed cancellation, the Project's anticipated impact will not be fully realized, in terms of benefits such as: (i) improved road networks and road conditions; (ii) increased mobility; (iii) reduced traffic congestion and vehicle operation costs; (iv) improved road safety and reduced traffic accidents; (v) reduced travel time; and (vi) better and quicker access to markets, employment, and income-generation opportunities. The revised design and monitoring framework is in Appendix 4. B. Change in Implementation Arrangements 30. The responsibility of HXSAOC as IA would cease following cancellation of the Xinzhan Zone road infrastructure and traffic management component, necessitating changes in the loan and project agreements. C. Reallocation of Loan Proceeds and Increase in ADB Financing of Subcomponent

2.1 (Ershibu River Rehabilitation and Flood Control Improvement) 31. The total project cost is currently estimated at $429.70 million, against the appraisal estimate of $372.36 million (Appendix 5). The increase in total project cost is due to the actual cost of contracts being higher than estimated during appraisal as a result of unusual increases in labor costs and construction materials in the recent years. The EA requested that the total savings of $36.3 million realized from (i) cancellation of $30.8 million from Component 3 (Xinzhan Zone Road), (ii) identified savings of $2.184 million from Qingxi Road Landfill, and (iii) $3.325 million from Sili River Rehabilitation be reallocated to the remaining subcomponents. The proposed reallocation of loan proceeds and the distribution of $36.3 million is presented in Appendix 6. 32. In order to maximize utilization of loan proceeds, the EA also proposed increasing the financing of subcomponent 2.1 (Ershibu River rehabilitation and flood control improvement) from 48% to 70%, to be in line with the financing percentage of other subcomponents. Schedule 3 of the Loan Agreement would be revised to reflect the increased ADB financing of Ershibu River Rehabilitation and Flood Control Improvement (category 1.5). The revised Schedule 3 of the Loan Agreement is in Appendix 7.

IV. ASSESSMENT 33. The change in project scope and implementation arrangements will not materially affect the overall impact of the Project, which is to improve the environment, public health, and quality of life in Hefei City. There are no incremental impacts on the environment and persons affected by involuntary resettlement and land acquisition. The financing plan of the Project as approved by the Board will not change; i.e., the ADB loan will remain at $150.0 million and the remaining cost is to be financed by the Government. The change in project management structure resulting from the cancellation of component 3 will not materially affect the implementation arrangements of the remaining Project components. The approval of the change in scope and implementation arrangements will facilitate project implementation and will address the expected cost overrun.

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V. RECOMMENDATION 34. The Management recommends that the Board approve on a no-objection basis the major change in scope, change in implementation arrangements, and reallocation of loan proceeds arising from the cancellation of Xinzhan Zone road infrastructure and traffic management component of the Project.

8 Appendix 1

ORIGINAL DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets/Indicators

Data Sources/Reporting Mechanisms

Assumptions and Risks

Impact Improved environment, public health, and quality of life in Hefei City

Incidence of waterborne and airborne diseases reduced by 10% from the 2005 levels by 2015 Water quality of the rivers in Hefei City to reach between class IV and V by 2015 with a longer-term goal of class III Air quality improved in the project area by 2015 with targets to be identified by PPMS Increased investment and business opportunities with gross domestic product rising annually by 15% from CNY85 billion in 2005

Monitoring reports of the Hefei Environmental Protection and Water Resources Conservancy Bureau Health Bureau data on drinking water quality and incidence of infectious diseases Statistical yearbooks of the Hefei Statistics Bureau Monitoring reports of Hefei Communications Bureau Air quality indicators to be collected as part of PPMS Annual socioeconomic surveys undertaken as part of PPMS ADB post-project evaluation report

Assumptions • Timely implementation of

Hefei’s 11th Five-Year Program and other medium- to long-term development plans

• Priorities for improving the

environment of Hefei do not change

• Government support for

reform processes • Continued support from the

Hefei government to improve water and air quality

Risks • Urban growth, including

influx of migrants, in Hefei exceeds forecasts and exerts more pressure on improved urban infrastructure

• Weak enforcement of

environmental laws and regulations

Outcome Improved public wastewater management, flood control, and transport services in Hefei City

Wastewater treatment rate is increased from the current 50% to 80% by 2012 Water quality of the Ershibu, Banqiao, and Sili rivers is improved to at least class V by 2012, with longer-term goal of class IV and class III The probability of flooding incidence from the Sili, Banqiao, and Ershibu rivers is reduced from an average of 3–5 years to 50–100 years by 2012 The probability of flooding incidence in Chao Lake is reduced from an average of 10–20 years to at least every 20 years, and the ecological environment of the Lake is improved through reduction in soil erosion by 2012

Wastewater effluent quality and quantity monitoring data Flood control data, river flow, water quality data Traffic monitoring data from Communication Bureau Air pollution data Government’s project completion report ADB review missions ADB project completion report

Assumptions • Continued growth in demand

for water supply and wastewater services to achieve full capacity utilization

• Government support for tariff

increase • Customers are willing to pay

increased tariffs • Environmental Protection

Bureau enforces environmental monitoring standards

Appendix 1 9

Design Summary




Improved traffic flow by 30% from 2005 figures (8,600–12,000 vehicles per hour) by 2012 Reduced traffic accidents by 20% from 2005 figure (1,399 accidents per year) by 2012 Vehicle emission testing center near Xinzhan is operational in the project area by 2010

Outputs Component 1 Wastewater and waste management in Hefei City 1.1 Shiwuli River WWTP is operational 1.2. Wangtang WWTP phase II and associated sewers are operational 1.3 Municipal sewers throughout Hefei City are improved 1.4 The closed Qingxi Road Landfill site is improved Component 2 River rehabilitation and flood control improvement of Hefei 2.1 Ershibu River rehabilitation and flood control is improved 2.2 Banqiao River rehabilitation and flood control is improved

Wastewater collected and treated at the 50,000 m3/day Shiwuli River WWTP by 2012 Wastewater collection increased and treatment upgraded at the 100,000 m3/day Wangtang II WWTP by 2012 Increased wastewater collection in the 206 km sewer pipelines to be connected to the existing Wangxiaoying WWTP, Wangtang I WWTP, Zhuzhuanjing WWTP, and Caitianpu WWTP by 2012 Membrane wall to prevent leaks into the Nanfei River constructed, with a cap, leachate, and gas collection systems, as well as landscaping, by 2009 River widening and dredging, installation of pump stations, and bank strengthening, including slope protection, diverting wastewater to a WWTP, and constructing access roads with landscaping on the river banks completed by 2012 River widening and dredging, and bank strengthening, including slope protection, diverting

Wastewater system data (rate of capacity utilization, influent and effluent flow volumes). Water supply data, (rate of utilization and flow volumes) River flow records of Hefei Hydrological and Water Resources Management Bureau Site inspection and project implementation reports. Water quality monitoring program data ADB review missions Monitoring wells around Qingxi Road Landfill and Nanfei River Environment monitoring reports Updated resettlement plans Semiannual progress reports Resettlement completion reports

Assumptions • Effective stakeholder

participation and ownership developed

• Strong support from the

Anhui and Hefei governments

• EA supports capacity

building of IAs • Timely approval of land

acquisition at the national level and implementation of resettlement activities

Risks • Resistance by some

stakeholders on resettlement and tariff increases

• Local geological conditions

affect construction activities • Trained staff leave their

position before 1 year after operation startup

10 Appendix 1

Design Summary




2.3 Sili River rehabilitation and flood control is improved 2.4 Chao Lake flood control works are improved Component 3 Road infrastructure and traffic management in the Xinzhan Zone 3.1 Road infrastructure and traffic management in the Xinzhan Zone is improved Project management capacity is improved

wastewater to a WWTP, and constructing access roads with landscaping on the river banks completed by 2011 River widening and dredging, and bank strengthening, including slope protection, diverting wastewater to a WWTP, constructing bridges and a pump station, and constructing access roads with landscaping on the river banks completed by 2010 Embankment strengthening, constructing erosion control structures, planting a wave-break forest belt, and constructing wave-breaks (walls) and access roads with landscaping on the flood embankments completed by 2011 Construction of 26.4 km urban roads: Xinfei, Huainan, Huanyuan, Xinfeng, and Dianchang roads completed by 2012 Pilot traffic system completed and tested for replication in Hefei City by 2012 Efficiency of the HMG and PMO is improved and skills of IA staff is upgraded by 2012

Activities with Milestones Inputs Component 1: Wastewater and Waste Management in Hefei City 1.1 Construction of Shiwuli River WWTP Activity (1) Design the facilities, allocate land, procure equipment and vehicles, and

recruit 38 permanent staff Activity (2) Provide wastewater treatment capacity of 50,000 m3/day by 2012 Activity (3) Construct 68.63 km of sewer mains (300–1,600 mm) and one pumping

station in the river basin by 2012 1.2 Construction of Wangtang II WWTP and Associated Sewers Activity (4) Design the facilities, allocate land, procure equipment and vehicles, and

recruit permanent staff Activity (5) Provide wastewater treatment capacity of 100,000 m3/day by 2012 Activity (6) Construct 33.43 km of sewer mains (1,000–1,400 mm), a 35,000 m3/day

recycled water pump station and three sewage pumping station by 2012

ADB − $150 million − Undertake regular review

missions − Provide training in ADB

procedures, including procurement

HMG and IAs − About $200 million

equivalent in counterpart − Hire design institutes and

Appendix 1 11

Activities with Milestones Inputs 1.3 Improvement of Municipal Sewers Throughout Hefei City Activity (7) Install 206 km of sewers of varying diameters connecting to the existing

WWTPs of Wangtang I, Zhuzhuanjin, Caitianpu, and Wangxiaoying by 2012 Activity (8) Construct one sewage pumping station and install a geographic information system by 2012 1.4 Improvement of the Closed Qingxi Road Landfill Site Activity (9) Construct 1.6 km membrane wall, cap, leachate and gas collection systems,

surface water drainage systems, and landscape the site by 2009 Component 2: River Rehabilitation and Flood Control Improvement of Hefei 2.1 Ershibu River Rehabilitation and Flood Control Improvement Activity (10) Complete river dredging, widening, and reinforcement of banks by 2012 Activity (11) Construct 12 km of storm water discharge pipeline (400–1,200 mm) and two

rainwater pump stations by 2012 Activity (12) Construct 16 km of sewer mains (300–800 mm) and two sewer pump

stations by 2012 Activity (13) Construct necessary ancillary works by 2012 2.2 Banqiao River Rehabilitation and Flood Control Improvement Activity (14) Complete river dredging, bank widening, and reinforcement works by 2011 Activity (15) Construct necessary ancillary works such as roads along both banks by

2011 Activity (16) Install a wastewater interceptor network and necessary greening by 2011 2.3 Sili River Rehabilitation and Flood Control Improvement Activity (17) Widen and dredge 3.18 km of the river, including bank enhancement, by

2010 Activity (18) Install storm water discharge pipeline (400–1,800 mm diameter), sewer

mains (300–800 mm), and one rainwater pump station by 2010 Activity (19) Construct necessary ancillary works by 2010 2.4 Improvement of Chao Lake Flood Control Works Activity (20) Reinforce 35.7 km of collapsed banks and construct an additional 20.65 km

of soil erosion structures by 2011 Activity (21) Complete a wave-break forest belt with a length of 56.3 km by 2011 Activity (22) Construct wave-breaks (walls) and necessary road construction around the

banks by 2011

Component 3: Road Infrastructure and Traffic Management in the Xinzhan Zone Activity (23) Construct 26.4 km of urban roads (Xinfei, Huannan, Huanyuan, Xinfeng,

and Dianchang) by 2012 Activity (24) Complete ancillary works, including necessary storm water network

associated with the construction by 2012 Activity (25) Complete and test a pilot traffic management system by 2012 Institutional Capacity Building for Project Management Activity (26) Complete organizational arrangements for the Hefei PMO to be able to

implement the Project by 2007 Activity (27) Complete necessary organizational arrangements for IAs (hiring staff;

setting up accounting systems; and improving financial, administrative, and human resource policies and procedures) by 2007

Activity (28) Develop plans, budgets, and procedures for loan implementation and project control in the PMO

Activity (29) Complete HMG, PMO, and IA staff training by 2012 (training in ADB procedures, procurement, pollution control, flood control and prevention, solid waste treatment, environmental monitoring, and financial management)

Activity (30) PMO and IAs have refined the PPMS and established targets and procedures no later than 6 months after loan effectiveness

secure other consulting services

− Contract tendering, select contractors according to new ADB procurement guidelines for NCB and ICB

− Provide planning and resources for public disclosure and consultation activities

ADB = Asian Development Bank, EA = executing agency, ICB = international competitive bidding, HMG = Hefei municipal government, IA = implementing agency, km = kilometer, m3 = cubic meter, mm = millimeter, NCB = national competitive bidding, PMO = project management office, PPMS = project performance monitoring system, WWTP = wastewater treatment plant.

12 Appendix 2

SUMMARY COST ESTIMATES AND FINANCING PLAN

Table A2.1: Summary Cost Estimates CNY Million $ Million Equivalent Item

Foreign Exchange

Costs

Local Currency

Costs

Total Costs

Foreign Exchange

Costs

Local Currency

Costs

Total Costs A. Base Cost Civil Works 414.61 967.42 1,382.03 52.48 122.46 174.94 Capital Goods 117.98 0.00 117.98 14.93 0.00 14.93 Equipment, Vehicles, and Furniture 1.62 0.00 1.62 0.21 0.00 0.21 Land Acquisition and Resettlement 0.00 537.61 537.61 0.00 68.05 68.05

Environmental Protection 33.97 0.00 33.97 4.30 0.00 4.30 Environmental Monitoring 0.49 0.00 0.49 0.06 0.00 0.06 Taxes and Duties 39.70 151.05 190.76 5.03 19.12 24.15 Subtotal (A) 608.37 1,656.08 2,264.46 77.01 209.63 286.64 B. Implementation and Capacity Building Support Survey, Investigation, Design and Mapping 14.25 56.99 71.24 1.80 7.21 9.02 Institutional Development and Strengthening 1.00 0.00 1.00 0.13 0.00 0.13 Consulting Services and Training 9.60 2.40 12.00 1.22 0.30 1.52 Implementation Assistance 27.70 27.70 55.40 3.51 3.51 7.01 Subtotal (B) 52.55 87.09 139.64 6.66 11.02 17.68 Subtotal (A+B) 660.92 1,743.17 2,404.10 83.67 220.65 304.32 C. Other Costs Research and Development 0.20 0.00 0.20 0.03 0.00 0.03 Initial Working Capital 1.28 0.00 1.28 0.16 0.00 0.16 Subtotal (C) 1.48 0.00 1.48 0.19 0.00 0.19 Total Base Cost (A+B+C) 662.40 1,743.17 2,405.58 83.86 220.65 304.51 D. Contingencies Physical 49.95 127.98 177.93 6.32 16.20 22.52 Price 22.45 68.43 90.88 2.84 8.66 11.50 Subtotal (D) 72.40 196.41 268.81 9.16 24.86 34.02

Appendix 2 13

CNY Million $ Million Equivalent Item

Foreign Exchange

Costs

Local Currency

Costs

Total Costs

Foreign Exchange

Costs

Local Currency

Costs

Total Costs E. Financing Charges During Implementation

Financial Charges During Implementation-Interest During Construction 185.12 80.54 265.67 23.43 10.20 33.63

Financial Charges During Implementation-Other 1.62 0.00 1.62 0.21 0.00 0.21 Subtotal (E) 186.74 80.54 267.29 23.64 10.20 33.84 Total Project Cost 921.54 2,020.12 2,941.68 116.66 255.71 372.37

Source: Asian Development Bank estimates.

14 Appendix 2

Table A2.2: Summary Costs by Financier Item

Total Cost

ADB Loan

Local

Bank Loan

Enterprise

Bond

District

Government

Hefei Municipal

Government A. Base Cost Construction Civil Works 174.94 109.91 15.22 8.11 14.76 26.94 Capital Goods 14.93 14.93 0.00 0.00 0.00 0.00 Equipment, Vehicles, and Furniture 0.21 0.00 0.00 0.00 0.00 0.21 Land Acquisition and Resettlement 68.05 0.00 13.61 1.63 34.95 17.86 Environmental Protection 4.30 0.00 1.48 0.12 0.05 2.65 Environmental Monitoring 0.06 0.00 0.01 0.00 0.01 0.04 Taxes and Duties 24.15 0.00 6.40 0.85 8.11 8.79 Subtotal (A) 286.64 124.84 36.72 10.71 57.88 56.48 B. Implementation and Capacity Building Support Survey, Investigation, Design and Mapping 9.02 0.00 0.00 0.00 2.28 6.74 Institutional Development and Strengthening 0.13 0.00 0.00 0.00 0.00 0.13 Consulting Services and Training 1.52 1.52 0.00 0.00 0.00 0.00 Implementation Assistance 7.01 0.00 0.00 0.00 0.78 6.24 Subtotal (B) 17.68 1.52 0.00 0.00 3.06 13.11 Subtotal (A+B) 304.32 126.36 36.72 10.71 60.94 69.59 C. Other Costs Research and Development 0.03 0.00 0.00 0.00 0.00 0.03 Initial Working Capital 0.16 0.00 0.13 0.00 0.00 0.03 Subtotal (C) 0.19 0.00 0.13 0.00 0.00 0.06 Total Base Cost (A+B+C) 304.51 126.36 36.85 10.71 60.94 69.65 D. Contingencies 34.03 0.00 8.65 1.61 10.47 13.30 E. Financing Charges During Implementation 33.83 23.64 10.20 0.00 0.00 0.00 Total Project Cost 372.37 150.00 55.70 12.32 71.41 82.95

Source: Asian Development Bank estimates.

Appendix 3 15

STATUS OF CONTRACT AWARDS AND DISBURSEMENTS ($)

Cat. No.

Category Description

Allocation

Contracts

Uncontracted Loan Balance

Disbursed

Undisbursed

Loan Balance

Undisbursed Contract Balance

01a Civil Works-Shiwuli River WWTP and Associated Sewers 10,379,000 14,210,725 (3,831,725) 5,179,925 5,199,075 9,030,801

01b Civil Works-Wangtang II WWTP and Associated Sewers 11,515,000 5,196,595 6,318,405 3,136,487 8,378,513 2,060,108

01c Civil Works-Expansion of Sewer Network for Four WWTPs 9,461,000 5,061,675 4,399,325 647,664 8,813,336 4,414,011

01d Civil Works-Improve Qingxi Road Landfill Site 5,077,000 2,156,985 2,920,015 1,706,142 3,370,858 450,842

01e Civil Works-Ershibu River Rehabilitation and Flood Control Improvement

11,263,000 3,787,040 7,475,960 0 11,263,000 3,787,040

01f Civil Works-Banqiao River Rehabilitation and Flood Control Improvement

8,926,000 9,933,344 (1,007,344) 3,395,973 5,530,027 6,537,371

01g Civil Works-Sili River Rehabilitation and Flood Control Improvement 10,630,000 3,160,582 7,469,418 2,011,865 8,618,135 1,148,716

01h Civil Works-Chao Lake Bank Rehabilitation and Flood Control Improvement

13,890,000 16,825,785 (2,935,785) 3,016,164 10,873,836 13,809,621

01i Civil Works-Xinzhan Zone Road Infrastructure and Traffic Management

28,769,000 0 28,769,000 0 28,769,000 0

16 Appendix 3

Cat. No.

Category Description

Allocation

Contracts

Uncontracted Loan Balance

Disbursed

Undisbursed

Loan Balance

Undisbursed Contract Balance

02a Capital Goods-Shiwuli River WWTP and Associated Sewers 3,471,000 4,536,971 (1,065,971) 3,198,819 272,181 1,338,153

02b Capital Goods-Wangtang II WWTP and Associated Sewers 5,774,000 7,108,933 (1,334,933) 0 5,774,000 7,108,933

02c Capital Goods-Expansion of Sewer Network for Four WWTPs 316,000 0 316,000 0 316,000 0

02d Capital Goods-Ershibu River Rehabilitation and Flood Control Improvement

2,693,000 0 2,693,000 0 2,693,000 0

02e Capital Goods-Banqiao River Rehabilitation and Flood Control Improvement

152,000 0 152,000 0 152,000 0

02f Capital Goods-Sili River Rehabilitation and Flood Control Improvement

190,000 424,677 (234,677) 0 190,000 424,677

02g Capital Goods-Chao Lake Bank Rehabilitation and Flood Control Improvement

284,000 735,599 (451,599) 112,507 171,493 623,092

02h Capital Goods-Xinzhan Zone Road Infrastructure and Traffic Management

2,053,000 0 2,053,000 0 2,053,000 0

03 Project Management and Consulting Services 1,519,000 1,519,000 0 503,348 1,015,652 1,015,652

04 Interest and Commitment Charge 23,638,000 0 23,638,000 933,052 22,704,948 0

99 Imprest Account 0 0 0 15,000,000 (15,000,000) 5,000,000)

Total 150,000,000 74,657,911 75,342,089 38,841,947 111,158,053 36,749,017WWTP = wastewater treatment plant. Source: Loan Financial Information System, status as of 23 April 2009.

Appendix 4 17

REVISED DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and/or Indicators

Data Sources and/or Reporting Mechanisms


Impact Improved environment, public health, and quality of life in Hefei City

Incidence of waterborne and airborne diseases reduced by 10% from the 2005 levels by 2015 Water quality of the rivers in Hefei City to reach between class IV and V by 2015, with a longer-term goal of class III Increased investment and business opportunities with gross domestic product rising annually by 15% from CNY85 billion in 2005

Monitoring reports of the Hefei Environmental Protection and Water Resources Conservancy Bureau Health Bureau data on drinking water quality and incidence of infectious diseases Statistical yearbooks of the Hefei Statistics Bureau Annual socioeconomic surveys undertaken as part of PPMS ADB post-project evaluation report

Assumptions • Timely implementation of

Hefei’s 11th Five-Year Program and other medium- to long-term development plans

• Priorities for improving the

environment of Hefei do not change

• Government support for

reform processes • Continued support from the

Hefei government to improve water and air quality

Risks • Urban growth in Hefei,

including influx of migrants, exceeds forecasts and exerts more pressure on improved urban infrastructure

• Weak enforcement of

environmental laws and regulations

Outcome Improved public wastewater management and flood control in Hefei City

Wastewater treatment rate is increased from the current 50% to 80% by 2012 Water quality of the Ershibu, Banqiao, and Sili rivers is improved to at least class V by 2012, with a longer-term goal of class IV and class III The probability of flooding incidence from the Sili, Banqiao, and Ershibu rivers is reduced from an average of 3–5 years to 50–100 years by 2012 The probability of flooding incidence in Chao Lake is reduced from an average of 10–20 years to at least every 20 years, and the ecological environment of the lake is improved through reduction in soil erosion by 2012

Wastewater effluent quality and quantity monitoring data Flood control data, river flow, water quality data Government’s project completion report ADB review missions ADB project completion report

Assumptions • Continued growth in demand

for water supply and wastewater services to achieve full capacity utilization

• Government support for tariff

increase • Customers are willing to pay

increased tariffs • Environmental Protection

Bureau enforces environmental monitoring standards

18 Appendix 4

Design Summary




Outputs Component 1 Wastewater and waste management in Hefei City 1.1 Shiwuli River WWTP is operational 1.2. Wangtang WWTP phase II and associated sewers are operational 1.3 Municipal sewers throughout Hefei City are improved 1.4 The closed Qingxi Road Landfill site is improved Component 2 River rehabilitation and flood control improvement of Hefei 2.1 Ershibu River rehabilitation and flood control is improved 2.2 Banqiao River rehabilitation and flood control is improved 2.3 Sili River rehabilitation and flood control is improved

Wastewater collected and treated at the 50,000 m3/day Shiwuli River WWTP by 2012 Wastewater collection increased and treatment upgraded at the 100,000 m3/day Wangtang II WWTP by 2012 Increased wastewater collection in the 206 km sewer pipelines to be connected to the existing Wangxiaoying WWTP, Wangtang I WWTP, Zhuzhuanjing WWTP, and Caitianpu WWTP by 2012 Membrane wall to prevent leaks into the Nanfei River constructed, with a cap, leachate, and gas collection systems, as well as landscaping by 2009 River widening and dredging; installation of pump stations; bank strengthening, including slope protection; diversion of wastewater to a WWTP; and construction of access roads with landscaping on the river banks completed by 2012 River widening and dredging; bank strengthening, including slope protection; diversion of wastewater to a WWTP; and construction of access roads with landscaping on the river banks completed by 2011 River widening and dredging; bank strengthening, including slope protection; diversion of wastewater to a WWTP; construction of bridges and a pump station; and construction

Wastewater system data (rate of capacity utilization, influent and effluent flow volumes); water supply data (rate of utilization and flow volumes) River flow records of Hefei Hydrological and Water Resources Management Bureau Site inspection and project implementation reports. Water quality monitoring program data ADB review missions Monitoring wells around Qingxi Road Landfill and Nanfei River Environment monitoring reports Updated resettlement plans Semiannual progress reports Resettlement completion reports

Assumptions • Effective stakeholder

participation and ownership developed

• Strong support from the

Anhui and Hefei governments

• EA supports capacity

building of IAs • Timely approval of land

acquisition at the national level and implementation of resettlement activities

Risks • Resistance by some

stakeholders on resettlement and tariff increases

• Local geological conditions

affect construction activities • Trained staff leave their

positions before 1 year after startup of operations

Appendix 4 19

Design Summary




2.4 Chao Lake flood control works are improved Project management capacity is improved

of access roads with landscaping on the river banks completed by 2010 Embankment strengthening; construction of erosion control structures; planting of a wave-break forest belt; and construction of wave-breaks (walls) and access roads with landscaping on the flood embankments completed by 2011 Efficiency of the HMG and PMO improved and skills of IA staff upgraded by 2012

Activities with Milestones Inputs Component 1: Wastewater and Waste Management in Hefei City 1.1 Construction of Shiwuli River WWTP Activity (1) Design the facilities, allocate land, procure equipment and vehicles, and

recruit 38 permanent staff Activity (2) Provide wastewater treatment capacity of 50,000 m3/day by 2012 Activity (3) Construct 68.63 km of sewer mains (300–1,600 mm) and one pumping

station in the river basin by 2012 1.2 Construction of Wangtang II WWTP and Associated Sewers Activity (4) Design the facilities, allocate land, procure equipment and vehicles, and

recruit permanent staff Activity (5) Provide wastewater treatment capacity of 100,000 m3/day by 2012 Activity (6) Construct 33.43 km of sewer mains (1,000–1,400 mm), a 35,000 m3/day

recycled water pump station and three sewage pumping station by 2012 1.3 Improvement of Municipal Sewers Throughout Hefei City Activity (7) Install 206 km of sewers of varying diameters connecting to the existing

WWTPs of Wangtang I, Zhuzhuanjin, Caitianpu, and Wangxiaoying by 2012 Activity (8) Construct one sewage pumping station and install a geographic information system by 2012 1.4 Improvement of the Closed Qingxi Road Landfill Site Activity (9) Construct a 1.6 km membrane wall, cap, leachate and gas collection

systems, surface water drainage systems, and landscape the site by 2009. Component 2: River Rehabilitation and Flood Control Improvement of Hefei 2.1 Ershibu River Rehabilitation and Flood Control Improvement Activity (10) Complete river dredging, widening and reinforcement of banks by 2012 Activity (11) Construct 12 km of storm water discharge pipeline (400–1,200 mm) and two

rainwater pump stations by 2012 Activity (12) Construct 16 km of sewer mains (300–800 mm) and two sewer pump

stations by 2012 Activity (13) Construct necessary ancillary works by 2012 2.2 Banqiao River Rehabilitation and Flood Control Improvement Activity (14) Complete river dredging, bank widening, and reinforcement works by 2011 Activity (15) Construct necessary ancillary works such as roads along both banks by

2011 Activity (16) Install a wastewater interceptor network and necessary greening by 2011 2.3 Sili River Rehabilitation and Flood Control Improvement Activity (17) Widen and dredge 3.18 km of the river, including bank enhancement, by

2010

ADB − $150 million − Undertake regular review

missions − Provide training in ADB

procedures, including procurement

HMG and IAs − About $200 million

equivalent in counterpart funding

− Hire design institutes and secure other consulting services

− Contract tendering, select contractors according to new ADB procurement guidelines for NCB and ICB

− Provide planning and resources for public disclosure and consultation activities

20 Appendix 4

Activities with Milestones Inputs Activity (18) Install storm water discharge pipeline (400–1,800 mm diameter), sewer

mains (300–800 mm) and one rainwater pump station by 2010 Activity (19) Construct necessary ancillary works by 2010 2.4 Improvement of Chao Lake Flood Control Works Activity (20) Reinforce 35.7 km of collapsed banks and construct an additional 20.65 km

of soil erosion structures by 2011 Activity (21) Complete a wave-break forest belt with a length of 56.3 km by 2011 Activity (22) Construct wave-breaks (walls) and necessary road construction around the

banks by 2011

Institutional Capacity Building for Project Management Activity (23) Complete organizational arrangements for the Hefei PMO to be able to

implement the Project by 2007 Activity (24) Complete necessary organizational arrangements for IAs (hiring staff;

setting up accounting systems; and improving financial, administrative, and human resource policies and procedures) by 2007

Activity (25) Develop plans, budgets, and procedures for loan implementation and project control in the PMO

Activity (26) Complete HMG, PMO, and IA staff training by 2012 (training in ADB procedures, procurement, pollution control, flood control and prevention, solid waste treatment, environmental monitoring, and financial management)

Activity (27) PMO and the IAs have refined the PPMS and established targets and procedures no later than 6 months after loan effectiveness.

ADB = Asian Development Bank, EA = executing agency, ICB = international competitive bidding, HMG = Hefei municipal government, IA = implementing agency, km = kilometer, m3 = cubic meter, mm = millimeter, NCB = national competitive bidding, PMO = project management office, PPMS = project performance monitoring system, WWTP = wastewater treatment plant.

Appendix 5 21

UPDATED PROJECT COST ESTIMATES

Estimate at Appraisal Updated Estimate as of November 2008 $1 = CNY7.9 $1 = CNY6.83 Total Cost Total Cost Item CNY1,000 Equivalent $1,000 CNY1,000 Equivalent $1,000

A. Base Cost 2,405,569.80 304,502.60 2,558,296.70 354,915.10

1. Wastewater and Waste Management 550,713.40 69,710.80 641,961.20 87,616.10 a. Shiwuli River WWTP 155,221.10 19,648.30 199,758.70 29,247.30 Civil Works 109,436.20 13,852.70 148,030.00 21,673.50 Equipment and Materials 27,617.10 3,495.80 33,560.00 4,913.60 Land and Resettlement 6,922.80 876.30 6,922.80 1,013.60 Environmental Protection Monitoring 1,370.00 173.40 1,370.00 200.60 Taxes and Duties 9,875.00 1,250.10 9,875.90 1,446.00 b. Wangtang II WWTP and Associated Sewers 177,520.00 22,470.90 222,003.10 32,504.20 Civil Works 115,937.70 14,675.70 140,960.00 20,638.40 Equipment and Materials 46,049.20 5,829.00 65,510.00 9,591.50 Land and Resettlement 0 0 0 0 Environmental Protection Monitoring 1,370.00 173.40 1,370.00 200.60 Taxes and Duties 14,163.10 1,792.80 14,163.10 2,073.70 c. Municipal Sewers for Four WWTPs 132,509.50 16,773.40 166,585.60 18,014.80 Civil Works 123,810.10 15,672.20 110,480.00 16,175.70 Equipment and Materials 2,498.80 316.30 6,360.00 931.20 Land and Resettlement 302.30 38.30 302.30 44.30 Environmental Protection Monitoring 1,060.00 134.20 1,060.00 155.20 Taxes and Duties 4,838.30 612.40 48,383.30 708.40 d. Qingxi Road Landfill Site 85,462.80 10,818.20 53,613.80 7,849.80 Civil Works 61,529.00 7,788.50 28,780.00 4,213.80 Equipment and Materials 300.00 38.00 1,200.00 175.70 Land and Resettlement 11,596.30 1,467.90 11,596.30 1,697.80 Environmental Protection Monitoring 480.00 60.80 480.00 70.30 Taxes and Duties 11,557.50 1,463.00 11,557.50 1,692.20

22 Appendix 5

Estimate at Appraisal Updated Estimate as of November 2008 $1 = CNY7.9 $1 = CNY6.83 Total Cost Total Cost Item CNY1,000 Equivalent $1,000 CNY1,000 Equivalent $1,000 2. River Rehabilitation and Flood Control 1,044,239.00 132,182.10 1,107,341.30 162,128.90 a. Ershibu River 436,766.30 55,286.80 483,184.30 70,744.30 Civil Works 186,707.00 23,633.80 235,000.00 34,407.00 Equipment and Materials 21,275.00 2,693.00 19,400.00 2,840.40 Land and Resettlement 165,559.80 20,956.90 165,559.80 24,240.10 Environmental Protection Monitoring 15,376.00 1,946.30 15,376.00 2,251.20 Taxes and Duties 47,848.50 6,056.80 47,848.50 7,005.60 b. Banqiao River 210,281.60 26,618.00 285,086.60 41,740.40 Civil Works 112,545.00 14,246.20 182,050.00 26,654.50 Equipment and Materials 1,200.00 151.90 6,500.00 951.70 Land and Resettlement 62,728.90 7,940.40 62,728.90 9,184.30 Environmental Protection Monitoring 6,823.00 863.70 6,823.00 999.00 Taxes and Duties 26,984.70 3,415.80 26,984.70 3,950.90 c. Sili River 211,684.30 26,795.50 144,008.30 21,084.60 Civil Works 168,696.00 21,353.90 96,500.00 14,128.80 Equipment and Materials 1,850.00 234.20 6,370.00 932.70 Land and Resettlement 25,745.20 3,258.90 25,745.20 3,769.40 Environmental Protection Monitoring 1,500.00 189.90 1,500.00 219.60 Taxes and Duties 13,893.10 1,758.60 13,893.10 2,034.10 d. Chao Lake 185,506.80 23,481.80 195,062.10 28,559.60 Civil Works 159,483.70 20,187.80 166,600.00 24,392.40 Equipment and Materials 2,591.00 328.00 5,030.00 736.50 Land and Resettlement 12,604.80 1,595.50 12,604.80 1,845.50 Environmental Protection Monitoring 6,048.20 765.60 6,048.20 885.50 Taxes and Duties 4,779.10 604.90 4,779.10 699.70 3. Road Infrastructure and Traffic Management 669,505.00 84,747.40 669,505.00 84,747.40 a. Xinzhan Zone Road 669,505.00 84,747.40 669,505.00 84,747.40 Civil Works 343,889.50 43,530.30 343,889.50 43,530.30

Appendix 5 23

Estimate at Appraisal Updated Estimate as of November 2008 $1 = CNY7.9 $1 = CNY6.83 Total Cost Total Cost Item CNY1,000 Equivalent $1,000 CNY1,000 Equivalent $1,000 Equipment and Materials 16,219.00 2,053.00 16,219.00 2,053.00 Land and Resettlement 252,147.20 31,917.40 252,147.20 31,917.40 Environmental Protection Monitoring 431.50 54.60 431.50 54.60 Taxes and Duties 56,817.80 7,192.10 56,817.80 7,192.10 B. Implementation and Capacity Building 139,636.40 17,675.50 138,011.20 20,206.60 Survey, Investigation, Design, and Mapping 71,239.90 9,017.70 71,239.90 10,430.40 Institutional Development and Strengthening 1,000.00 126.60 1,000.00 146.40 Consulting Services and Training 12,000.00 1,519.00 10,374.80 1,519.00 Implementation Assistance 55,396.50 7,012.20 55,396.50 8,110.80 C. Other Costs 1,476.00 186.80 1,478.00 216.10 Research and Development 200.00 25.30 200.00 29.30 Initial Working Capital 1,276.00 161.50 1,278.00 186.80 D. Contingencies 268,804.90 34,025.90 268,804.90 39,355.90 Physical 177,927.90 22,522.50 177,927.90 26,050.90 Price 90,877.00 11,503.40 90,877.00 13,305.00 E. Financial Charges 267,284.90 33,833.50 241,992.00 35,430.70 Interest Charges - Local Loans 80,543.00 10,195.30 80,543.00 11,792.50 Interest Charges - ADB Loan 185,122.10 23,433.20 160,048.60 23,433.20 Commitment Fees - ADB Loan 1,619.80 205.00 1,400.40 205.00 Total Cost 2,941,659.60 372,362.00 3,069,093.60 429,701.70

ADB = Asian Development Bank, WWTP = wastewater treatment plant. Source: Hefei municipal government.

24 Appendix 6

PROPOSED REALLOCATION OF LOAN PROCEEDS ($)

Original Loan Allocation

Revised Loan Allocation

Category Description/No. Civil

Works Capital Goods

Total

Cancellation and

Distribution of Xinzhan

Road

Distribution of Savings from Sili

River

Distribution of Savings

from Qingxi Road

Landfill Civil

Works Capital Goods

Total

Shiwuli River WWTP (Cat. 01 & 02a)

10,379,000 3,471,000 13,850,000 6,851,000 15,943,000 4,758,000 20,701,000

Wangtang II WWTP (Cat. 01b & 02b)

11,515,000 5,774,000 17,289,000 5,234,000 2,184,000 15,531,000 9,176,000 24,707,000

Sewer Network for Four WWTPs (Cat. 01c & 02c)

9,461,000 316,000 9,777,000 552,000 9,461,000 868,000 10,329,000

Qingxi Road Landfill Site (Cat. 01d)

5,077,000 5,077,000 (2,184,000) 2,893,000 2,893,000

Ershibu River Rehabilitation and Flood Control Improvement (Cat. 01e & 02d)

11,263,000 2,693,000 13,956,000 10,371,000 21,680,000 2,647,000 24,327,000

Banqiao River Rehabilitation and Flood Control Improvement (Cat. 01f & 02e)

8,926,000 152,000 9,078,000 7,738,000 15,929,000 887,000 16,816,000

Sili River Rehabilitation and Flood Control Improvement (Cat. 01g & 02f)

10,630,000 190,000 10,820,000 (3,325,000) 6,626,000 869,000 7,495,000

Appendix 6 25

Original Loan Allocation

Revised Loan Allocation

Category Description/No. Civil

Works Capital Goods

Total

Cancellation and

Distribution of Xinzhan

Road

Distribution of Savings from Sili

River

Distribution of Savings

from Qingxi Road

Landfill Civil

Works Capital Goods

Total

Chao Lake Bank Rehabilitation and Flood Control Improvement (Cat. 01h & 02g)

13,890,000 284,000 14,174,000 76,000 3,325,000 16,839,000 736,000 17,575,000

Xinzhan Zone Road Infrastructure and Traffic Management (Cat. 01i & 02h

28,769,000 2,053,000 30,822,000 (30,822,000)

Project Management and Consulting Services (Cat. 03)

1,519,000 1,519,000

Interest and Commitment Charge (Cat. 04)

23,638,000 23,638,000

Total 150,000,000 0 0 0 150,000,000 — = not available, WWTP = wastewater treatment plant. Sources: Hefei municipal government (as of November 2008) and Loan Financial Information System (as of 23 April 2009).

26 Appendix 7

Attachment to Schedule 3

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Anhui Hefei Urban Environment Improvement Project)

Category ADB Financing Basis

Amount Allocated $ Number Item

Category Subcategory

Percentage of ADB Financing from

the Loan Account 1 Civil Works 104,902,000

1.1 Shiwuli River WWTP and Associated Sewers

15,943,000 75% of expenditure claimed

1.2 Wangtang II WWTP and Associated Sewers


1.3 Expansion of Sewer Network for Four WTPs

9,461,000 60.4% of expenditure claimed

1.4 Improve Qingxi Road Landfill Site 2,893,000 65% of expenditure claimed

1.5 Ershibu River Rehabilitation and Flood Control Improvement


1.6 Banqiao River Rehabilitation and Flood Control Improvement


1.7 Sili River Rehabilitation and Flood Control Improvement


1.8 Chao Lake Bank Rehabilitation and Flood Control Improvement


1.9 Xinzhan Zone Road Infrastructure and Traffic Management

0

2 Capital Goods 19,941,000 2.1 Shiwuli River WWTP and Associated

Sewers 4,758,000 100% of expenditure

claimeda 2.2 Wangtang II WWTP and Associated

Sewers 9,176,000 100% of expenditure

claimeda 2.3 Expansion of Sewer Network for Four

WWTPs 868,000 100% of expenditure

claimeda 2.4 Ershibu River Rehabilitation and Flood

Control Improvement 2,647,000 100% of expenditure

claimeda 2.5 Banqiao River Rehabilitation and Flood

Control Improvement 887,000 100% of expenditure

claimeda 2.6 Sili River Rehabilitation and Flood Control

Improvement 869,000 100% of expenditure

claimeda 2.7 Chao Lake Bank Rehabilitation and Flood

Control Improvement 736,000 100% of expenditure

claimeda 2.8 Xinzhan Zone Road Infrastructure and

Traffic Management 0

Appendix 7 27

Category ADB Financing Basis Amount Allocated $

Number Item Category Subcategory

Percentage of ADB Financing from

the Loan Account 03 Project Management and Consulting

Services 1,519,000 100% of expenditure

claimeda 04 Interest and Commitment Charge 23,638,000 100% of amount due

Total 150,000,000 a Exclusive of taxes and duties imposed within the territory of the Borrower. ADB = Asian Development Bank, WWTP = wastewater treatment plant. Source: Loan Agreement for Loan 2328-PRC: Anhui Hefei Urban Environment Improvement Project.

major change in scope and implementation arrangementsthrough a combination of hefei municipal...

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