Project Name China-Iodine
Deficiency Disorders Control (IDDC) Project
Region East
Asia and Pacific
Sector Human
Resources
Project ID CNPA37156
Borrower People's
Republic of China
Implementing Agency
China National Salt Industry Corporation
(CNSIC)
Beijing,
China
Tel:
(86-1) 301-0678
Fax:
(86-1) 301-7787
Date PID Prepared
February 1, 1995
Projected Appraisal Date February
1995
Projected Board Date June
1995
Available
Project Documents
1. Sector and Project Background. Insufficient
intake of iodine, an essential micronutrient in human and animal
diet, causes a variety of
physical and mental disabilities, collectively known as iodine
deficiency disorders (IDD). Among humans, the best
known effects of
iodine deficiency are goiter, an enlargement of the thyroid gland,
and cretinism, a severe form of mental retardation which may be
associated with deaf-mutism, dwarfism, and spastic palsy of lower
limbs. It is now increasingly recognized that iodine
deficiency also causes less severe but more widespread intellectual
impairment, as well as spontaneous abortion, still births, and
new-born deaths. IDD is the leading known preventable
cause of intellectual handicap. While women and children
are particularly at risk of IDD, the combined effects cause loss
of productivity and dynamism in whole communities. Therefore
IDD is now regarded not only as a public health issue but also
as an impediment to human and economic development.
2. It is estimated that more than 1.5 billion people
worldwide, including over 400 million in China, live in areas
which put them at risk of IDD. Large tracts of land
and fresh water bodies in China are seriously deficient in iodine,
and consequently, dietary iodine intake through agricultural and
animal foodstuffs is insufficient. Until recently,
it was believed that IDD, as measured by the prevalence of goiter
and cretinism, was restricted to defined endemic areas, located
in specific counties in all provinces and municipalities of China
except Shanghai. However, recent biochemical evidence
from communities in areas hitherto considered non-endemic, and
better understanding of the spectrum of disorders, indicate that
a much higher proportion of the total population is at risk, and
that the delineation between endemic
and non-endemic areas is inappropriate. The Government
of China, with the active support of UNICEF and the Bank, wants
to achieve universal iodization of salt by end 1996 on an emergency
basis.
3. Since the 1950s the Government of China (GOC) has
conducted programs for protection against goiter. These programs
achieved good
progress, but were hampered by: lack of appropriate
mechanisms to prevent the sale of non-iodized salt; inadequate
control of iodized salt
quality; and lack of community awareness about IDD and the benefits
of iodized salt. The current National IDD Elimination
Program (NIDDEP) began with a National Advocacy Meeting in Beijing
in September 1993, convened by the State Council with U.N. support,
and attended by national representatives of all relevant sectors
and by all provinces. The meeting affirmed the Governmentþs
strong ommitment to taking urgent actions to achieve
the goal of elimination of IDD by the year 2000 and considered
drafts of two key documents which have since been formally issued
as the framework of the Program: (a) the þNational
Outline for the Plan to Eliminate IDD in China by the Year 2000þ;
and (b) the þPlan of Actionþ for implementing the Outline. The
primary elements of the Programþs strategy, as stated in
these documents, are to: adopt universal iodization
of all edible salt by end 1996 as the principal intervention to
reduce IDD; mobilize society in support of the Program through
multisectoral coordination and management at different levels;
educate the population on the impact of IDD and methods of prevention;
and strengthen the legal framework to prevent production and consumption
of non-iodized salt.
4. In January 1994, the GOC asked the Bank to finance
salt iodization (production, packaging and distribution) as a
component of the
Comprehensive Maternal and Child Health (MCH) Project (Cr. 2655-CHA)
and the Bank accepted the request, as IDDC particularly benefits
women and children and is in line with the country and sector
assistance strategy. However, at appraisal of the MCH Project,
some important technical and financial aspects of IDDC component
were not resolved to both Bank and GOC satisfaction. GOC
and Bank therefore agreed that the MCH and IDDC components would
be processed as two separate projects. The MCH Project
was presented to the Board on October 18, 1994. The
IDDC Project feasibility study was completed in December 1994
and is considered acceptable for appraisal of the proposed project.
5. Project Objective. The projectþs
objective is to reduce the incidence of Iodine Deficiency Disorders
in China by supporting the
Governmentþs National Iodine Deficiency Disorders Elimination
Program (the Program) through financing investments in production,
iodization, and packaging and distribution of iodized salt.
6. Project Description. The project would
comprise two components: (a) Iodization and Packaging Facilities
component; and (b) Technical
Assistance (TA) component. Under the first component,
the salt iodization capacity in China would be increased from
about 3.5 million
tons per year (mtpy) to about 8.2 mtpy, by modernization of existing
capacities and creation of additional capacities. About
107 enterprises
would be involved in salt iodization. At of
the salt iodization locations at the producer end, facilities
for upgrading raw salt quality
to the level required for iodizing would be established. In
addition, the project would finance creation of a total packaging
capacity of 8.0
mtpy to ensure that the salt reaching the consumers meets the
minimum iodine level standards. At the iodizing stations
(producer end), part of the salt would be packaged in retail (0.5
- 1.0 kg) plastic pouches for nearby regional retail markets,
and the rest in large (50 kg) bags
for transport to other regions for repackaging (distribution end)
in retail pouches at 75 locations. Thus, a total of
182 enterprises would
be included in the project.
7. The Technical Assistance Component consists of
two parts: (a) specific TA required for the IDDC project
management and implementation; and (b) general TA for institutional
development and strengthening of the implementing agencyþs
management capabilities. The first category of specific
TA would include project management, information systems, and
project accounting experts assisting the Project Implementation
Unit (PIU). The second category of more general TA
would consist of support for establishment of: (i)
management and distribution systems; (ii) quality control and
monitoring system; (iii) training facilities; and (iv) R&D
facilities at central, provincial, and county levels.
8. The salt industry in China is a state monopoly
with all salt resources owned by the State. The project
would be implemented by the
China National Salt Industry Corporation (CNSIC) under the administrative
control of the China National Council for Light Industry.
CNSIC is vested with the executive functions for administering
the salt industry, including planning and ensuring execution of
production
capacities, production volumes, marketing and distribution arrangements,
and administering R&D facilities, in accordance with State
Council plans for the industry as a whole. For facilities
to be established at the 182 locations, selection of technology
for process and equipment, as well as basic engineering and procurement
of imported equipment, would be carried out by CNSIC centrally
with the help of appropriate consulting services satisfactory
to the Bank. CNSIC has selected the participating enterprises
according to criteria acceptable to the Bank. Care
has been taken to select primarily viable enterprises while preserving
the universal salt iodization objective. The Bank has
reviewed the technology and procurement arrangements. Since
the Bank would rely on CNSIC to organize and monitor the project
activities at the enterprise level and will not conduct its own
prior review and approval of each enterprise subproject, technical
assistance is included in the project to help CNSIC perform its
implementation and coordination functions. Bank supervision
missions will do spot-checking of enterprise level project activities.
9. Project Cost, Financing and On-lending. Total
financing required for the project is estimated at $114.56 million
equivalent. The Credit
and Loan, totaling $27 million equivalent, would finance 90% of
the foreign exchange requirements of the project, or 24% of the
total
project cost. The balance (10%) of the foreign exchange
requirements would be met through grants from two U.N. agencies:
UNIDO/UNICEF ($3.0 million). Local currency component
of $84.56 million equivalent would be financed as follows: 30%
would be lent by the National Development Bank to CNSIC to be
onlent by CNSIC to the individual enterprises; 30% would be provided
by the Central Salt Industry Development Fund; and 40% would be
raised through local provincial salt industry funds. The
proceeds of the IDA Credit and IBRD Loan would be on-lent by the
Government to CNSIC at a blend interest rate of 2.7% plus commitment
charges with maturity of 20 years, including 5 years of grace. Foreign
exchange and interest rate risks would be borne by CNSIC. CNSIC
would contract with an agent bank to handle disbursements and
collection of funds, to and from 182 participating enterprises.
10. Project Implementation. CNSIC would
be responsible for the coordinated implementation of the project. Beijing
Consulting and
Engineering Corporation (BCEL) would be responsible for representative
standard design for salt upgrading, iodizing, and packaging plants;
development of procurement specifications for imported equipment
materials. Procurement of imported and domestic equipment
and materials for the physical facilities based on BCEL and CNSICþs
procurement specifications would be carried out by China International
Tendering Company (CITC) under contract with CNSIC. The
individual enterprises who would own and operate the salt upgradation,
iodization, and packaging facilities would be responsible for
carrying out detailed engineering, site engineering work, and
site construction through local subcontracting.
11. Project Sustainability. Universal iodization
of salt is the most sustainable method to prevent IDD. The
project directly supports this
key intervention, through creation of physical facilities for
iodizing and packaging salt, and ensuring appropriate quality
of the iodized
salt. The Governmentþs National IDD Elimination
Program and the associated action program contain appropriate
measures for education and surveillance activities. Under
the Programþs assigned responsibilities, MOH would independently: (a)
carry out awareness creation and advocacy campaigns through mass
media and NGOs; (b) establish base line IDD status and track improvements
periodically; þ equip health stations with appropriate equipment,
and establish testing methods and standards; and (d) train health
workers at all levels in IDD control and monitoring. Successful
salt iodization under the project, combined with the enhanced
public awareness of the advantages of iodized salt consumption,
would contribute to a gradual and significant reduction in the
incidence of Iodine Deficiency Disorders in China. It
should, however, be noted that IDD, unlike, for example, small
pox, cannot be fully eliminated.
12. Lessons Learned from Previous Bank Group Assistance. The
Bank Group has supported five health sector projects in China. The
first two health projectsþRural Health and Medical Education
Project (Cr. 1472- CHA) and Rural Health and Preventive Medicine
Project (Cr. 2723-CHA) -- have been completed except for the vaccine
production component under the second project. The
Integrated Regional Health Development Project (Cr. 2009-CHA)
also includes a MCH component in three large prefectures, with
emphasis on improved planning and management, and its progress
has been satisfactory. The Infectious and Endemic Disease
Control Project (Cr. 2317-CHA) has been satisfactorily assisting
China to control tuberculosis in twelve provinces and schistosomiasis
in eight provinces. The Rural Health Workers Development
Project (Cr. 39-CHA) includes programs to train rural health workers. Finally,
the recently approved MCH Project (Cr. 2655-CHA) will help improve
the quality and effectiveness of maternal and child health programs,
and increase the access, affordability, and utilization of MCH
care. Two other projects, the Medium-sized Cities Development
Project (Ln. 3286-CHA/Cr. 2201-CHA) and the Second Rural Water
Supply Project (Cr. 2336-CHA), also include substantial components
to improve rural health. The Bank Group has also
completed two sector studies (in 1984 and 1990) in health and
one in poverty alleviation (1992).
13. Lessons learned from Bank Group health projects
include the need to: ensure well organized and adequately
staffed project management offices at all levels; provide clear
guidelines for implementation supervision; and ensure adequate
and high quality equipment for the intended project activities. The
project design also reflects lessons learned from implementation
of two industrial projects in China,
including: avoiding overly ambitious project scope;
ensuring adequate implementation management arrangements; reducing
delays in ICB
procurement through attention to the learning needs of the borrower;
and careful estimation of capital requirements and adequacy of
local
financing arrangements. The design of the proposed
project has addressed these lessons as follows: (a)
the estimates for total financing requirements have been built
up by making adequate allowances for physical and price contingencies,
and working capital; (b) agreements would be reached on the sources
of counterpart financing, and that the funds would be available
in a timely manner, including any cost
overruns; þ selection has been made of a procurement agency
(China International Tendering Company) that is familiar with
Bank uidelines
for procurement of goods and of consultants; and (d) CNSIC would
be provided with consultants and advisers for project management,
costs and financial control systems, and information systems.
The Bankþs analysis of salt iodization programs in other
countries has identified the following critical success factors: (a)
iodization of all salt for human and animal consumption; (b) multi-sectoral
involvement in planning and administration of the program; þ
strong advocacy with salt manufacturing and trading agencies;
(d) supporting legislation and enforcement; (d) monitoring of
iodine levels in salt at plant and retail level; (f) consumer
education on benefits of iodized salt, product
recognition, etc.; (g) strong links to and support from the global
initiative; (h) external technical and financial support in key
aspects
of the program; and (i) efficient program monitoring and dissemination
of progress data. The proposed project is addressing
these needs,
either through design of the project components for salt iodization,
or in seeking assurances from the Government and arrangements
for regular dialogue on progress of NIDDEP.
14. Environmental Assessment. The project
would have no significant impact on the environment. The
salt iodization and packaging physical facilities under the project
would be established mostly in existing enterprises. Creation
of such facilities would involve relatively small areas and would
not involve major problems of displacement of land use for agriculture,
aquaculture or human resettlement. There would be very
little, incremental liquid effluents from the industrial work,
none of them considered toxic or hazardous. There are
no recognized serious occupational hazards or negative health
impacts from salt processing.
15. Project Benefits. Successful implementation
of the salt iodization project will assist China to achieve the
national programþs objective of virtual elimination of IDD
and sustained control. Salt iodization is a cost effective
means to provide the small amount of iodine required for human
health and development. The projectþs support
for universal salt iodization in China will provide direct social
and economic benefits by: (a) reducing infant mortality
and severe congenital deformity; (b) improving work capacity/work
output; and þ improving intellectual capacity. Indirect
benefits of the project include: (a) reduction of the
cost to society of handicapped and completely dependent people,
resulting in a cost savings for the health care and welfare systems;
(b) reduced expenditures in the education system from fewer learning
disabilities and grade repetition; þ increased economic returns
from improvements in livestock and wool production; (d) strengthening
of coordination between industry and health sectors; and (e) improved
planning, execution, and management capabilities.
16. Project Risks. There are two main risks
to the project. First, there is a risk that the population
will continue to consume non-iodized
salt. This may happen because non-iodized edible salt
remains available and/or is cheaper. The GOC, already
aware of the risk from past
experience, has promulgated regulations that would forbid production
and sale of non-iodized edible salt for general consumption. The
regulations assign specific responsibilities to provincial governments,
salt administration bureaus, and CNSIC to monitor conformance
and impose penalties. The progress being achieved in
enforcement will be an important performance indicator for the
project. The assurances being sought from CNSIC that
it would carry out the project according to a Project Implementation
Plan will enable the Bank to follow-up on this matter during project
implementation. At present, there is no price differential
between iodized and non-iodized salt at the consumer level. The
Government wishes to proceed cautiously on the rate of price increase
for iodized salt. This is considered prudent and acceptable,
and will further mitigate the risk of non-iodized salt consumption. As
a durable strategy, and as part of the Program, MOH, with the
assistance of U.N. agencies, would mount public awareness and
information campaigns that would, over time, create a þdemand-drivenþ
market for iodized salt and reduce the risk of non-iodized salt
consumption. Second, there are potential risks in the
areas of manufacturing technology, timely delivery of equipment,
and project management. The technologies to be used
for raw salt quality improvement and iodization are relatively
simple and proven. The high priority status accorded
to the project by the GOC, coupled with the strengthening of project
implementation capabilities of CNSICþs Project Implementation
Unit through the TA component, should minimize the risk and ensure
timely completion.
Contact Point:
Public Information Center
The World Bank
H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Note: This is information on an evolving
project. Certain components may not necessarily be
included in the final project.
