Project Name China-Third
National Highway Project
Region East
Asia and Pacific Region
Sector Transport
Project ID number
CNPE36949
Borrower People's
Republic of China
Implementing Agency
Hubei Provincial Communication Department
Mr. Shao Hongshan
Deputy Director
Hubei Provincial Communication Department
Date of this PID June,
1998
Appraisal Date June,
1997
Board Date May,
1998
Project Cost/Financing:
IBRD 250
million
Central Government 129
million
Provincial Government
300 million
Total costs
679 million
Available
Project Documents
Background
1. China's economic development
since the opening of its economy in the late 1970s has resulted
in a 9.5 percent average annual rate of economic growth. Key facets
of this growth are rapidly increasing domestic and foreign trade
as well as increasing personal mobility and consumption of energy.
These, in turn, have caused the demand for transport to surge.
Supply capacity, however, is constrained, and this is now being
recognized as one of the most serious bottlenecks to future economic
growth and efficiency. In particular, motorization is growing
rapidly, but road transport, for historical reasons, has not been
widely developed in much of China outside its cities. China's
road network ranks among the sparsest in the world relative to
geographic area or population.
2. China's Ninth Five'Year
Plan (9FYP, 1996'2000) emphasizes a reduction in transport bottlenecks,
which are now being recognized as a growing constraint to rapid
economic development. The diversification and structural transformation
of the economy, toward more light and agroindustry and more interprovincial
trade, coupled with severe capacity constraints of the railways,
are causing an accelerating demand for road transport. This national
pattern also applies to the highway project in Hubei. The new
Beijing'Zhuhai (Jingzhu) Expressway, linking the north and south
of China, crosses the provinces of Hebei, Henan, Hubei, Hunan,
and Guangdong over a distance of approximately 2,500 kilometers
(km). Once completed, it will connect Beijing with Guangdong's
fast'growing Pearl River Delta and Hong Kong. The Shanghai' Chengdu
Expressway (Hurong) is also a main route linking the east to the
west of China over a distance of approximately 2,000 km, crossing
the provinces of Shanghai, Jiangsu, Anhui, Hubei and Sichuan.
Both routes have the highest priority among the 12 national trunk
routes in the National Trunk Highway System (NTHS). Both are designed
as high'grade, high'performance facilities, at a minimum four'lane
standard, fully access'controlled, and will be operated throughout
as toll highways.
Project Context
3. The Bank is already heavily
involved in the construction of substantial sections of Jingzhu
expressway, between Beijing and Guangzhou. Under the still ongoing
National Highway (NH1) Project, two important sections in Hebei
and Henan provinces have already been completed and are open to
traffic. Under the Second National Highway (NH2) Project, two
priority sections of Jingzhu expressway in northern Guangdong
and southern Hunan are presently being undertaken. Under the proposed
Third National Highway (NH3) Project, several important sections
of Jingzhu and Hurong expressways would be undertaken. Finally,
the proposed Fourth National Highway (NH4) Project will cover
two important expressway sections in Hunan and Hubei, as well
as a major Wuhan Yangtze River Bridge under a proposed build'operate'transfer
(BOT) arrangement. These four National Highway Projects constitute
a well'thought' out and well'balanced series of investment operations
that assist the Government of China (GOC) and the concerned provinces
in the timely completion of China's highest priority expressway
corridor between Beijing and Guangzhou.
4. Hubei Province. Hubei Province
lies in the center of China, in the middle reaches of the Yangtze
River and to the north of Dongting Lake. Hubei has a population
of 57.7 million covering an area of 185,900 km2. Topographically,
Hubei is high in the west and low in the east, south and north,
with plains in the center and opening to the southwest. The province's
commercial and industrial center is Wuhan, its capital, with a
population of about 6 million. Wuhan is one of China's key transportation
hubs, located at the crossroads of the new North'South (Beijing'Zhuhai)
and East'West (Shanghai'Chengdu) expressways, of several main
railway lines, and of river routes on the Yangtze River, Asia's
longest and most important river. The economy of Hubei has grown
by 10 percent annually since 1980 while the vehicle fleet in Hubei
grew three times in 10 years between 1986 and 1997, on an average
of 11 percent per year. The highway network in Hubei comprises
about 48,700 km, of which only 5,608 km (about 11.5 percent of
the total) are class 1 and 2 roads.
Project Objectives
5. The proposed project would
be the third in the series of NH1'NH2'NH3'NH4 projects for the
Jingzhu expressway in Guangdong, Hunan, Hubei, Henan, and Hebei
Provinces. It would build on its predecessors NH1 and NH2 and
would precede NH4 by about one year. All four projects in the
series would support an integrated approach to expressway corridor
development, with each of the four operations contributing selected
priority sections that would gradually develop into a full corridor
system. The specific objectives of the NH3 project would be to:
(a) relieve road transport congestion and improve the integration
of interregional trade and commerce by assisting in the further
development of the NTHS in the principal North'South and East'West
transport corridors and allowing for the early completion of a
functional expressway network in Hubei province, thus enabling
through traffic to bypass Wuhan City; (b) strengthen institutional
capacity at HPCD and related institutions through provision of
training, technical assistance and equipment in planning, design,
construction, operation and maintenance of Hubei's highway network;
(c) develop a policy dialogue in the areas of the commercialization
and corporatization of provincial expressway companies and highway
maintenance management; and (d) improve the safety of road transport.
Project Components
6. This highway project would
comprise:
(a) Construction of the northern section
of the Beijing'Zhuhai (Jingzhu) expressway (143 km) and two short
sections of the Shanghai'Chengdu (Hurong) expressway (54 km in
total) (which would be connected by the Junshan Yangtze Bridge
proposed to be built under a BOT scheme under the proposed Fourth
National Highway Project). The works would also include construction
of administration, service and maintenance facilities as well
as the supply and installation of electrical, electronic and mechanical
(E&M) equipment for
tolling, telecommunication, traffic monitoring, and lighting of
interchanges, toll plazas and service areas; (b)
An interconnecting road program (33 km) connecting the expressway
sections to existing road infrastructure in the North'South (Jingzhu)
and East'West (Hurong) corridors; (c)
Construction supervision services for all expressway sections
and their interconnecting roads; (d) Studies/technical
assistance in (i) highway maintenance management, (ii) expressway
commercialization and corporatization; and (iii) several road
traffic safety components; (e) Staff training
programs, covering all aspects of highway planning, design, construction,
operation, finance and maintenance; and (f)
Equipment for: (i) control of construction quality and monitoring
of the environment; (ii) operation and maintenance of expressways
after their completion; (iii) maintenance of the provincial road
network; and (iv) bridge information system (BMS), pavement management
system (PMS) and maintenance management system (MMS).
Project Cost and Financing
7. The total project cost is
estimated to be $679 million equivalent, excluding loan commitment
charges and interest during construction. The Bank loan of about
$250 million would be onlent to Hubei Province. The
remainder of the cost would be met through contributions from
the Ministry of Communications (MOC) and the Provinces.
Project Implementation
8. HPCD would have overall
responsibilities for implementation of all project parts. The
Jingzhu and Hurong Expressways would be constructed under 12 contract
sections to be awarded following international competitive bidding
(ICB) procedures. All contractors for these sections would be
prequalified. National competitive bidding (NCB) procedures acceptable
to the Bank would be used for all interconnecting roads, and for
service areas, toll plazas, as well as administration and maintenance
buildings along Jingzhu and Hurong
Expressways. Construction supervision would be provided by a joint
international/local supervision team. The project implementation
arrangements as proposed in Hubei's Project Implementation Plan
are satisfactory. The project would be implemented during the
period 1998'2004.
Rationale for Bank Involvement
9. The proposed project is
consistent with the Bank's Country Assistance Strategy for China,
presented to the Board on March 18, 1997 and the progress note
to be presented on May 28, 1998, which support China's need to
rapidly modernize and expand its infrastructure, including the
highway system. By helping the Government to plan and build the
NTHS, of which the Jingzhu and Hurong expressways are key elements,
the Bank supports this essential long'term solution to the serious
transport problems facing China, removing infrastructure bottlenecks,
facilitating interprovincial trade, and promoting long'distance
road traffic. This would help arrest a growing regionalism while
furthering the liberalization, facilitation, and cost reduction
of transport—key requirements for market'oriented reforms
to succeed. Early completion of the two expressways would be vital
to the future economic development of Hubei Province since this
would open up this inland province for much needed increases in
interprovincial trade with fast'growing Guangdong, Hong Kong and
Shanghai and help realize the full economic benefits from large'scale
expressway development.
10. Since demand for new expressways in
China is well beyond any similar requirement existing in the world
today and certainly outstrips available public funding by a wide
margin, Bank involvement in the construction of the new expressways
in Hubei is a positive addition to the resources of China. However,
these resources are insufficient to close the funding gap. By
conservative estimates China requires $20 to 25 billion of capital
from the private sector to meet its highway program goals over
the next 10 years. Through sponsorship of model BOT prequalification
and bidding document preparation and development of a competitive
and transparent procurement procedure, the Bank was able to play
an important formative role in the establishment of a BOT concession
framework, conducive to the attraction of private financing for
China's highway program. Further, as a result of the Junshan Yangtze
Bridge BOT Project, for which the Bank funded a feasibility analysis
and is prepared to support an international marketing effort by
MOF, the State Planning Commission (SPC), MOC and HPCD, China
now has the opportunity to test the international market with
a toll bridge project that is commercially viable. The experience
that will be gained from this first BOT highway/bridge project
will be very valuable to the ongoing development of China's ambitious
toll expressway program.
11. Bank support is also justified by
project assistance to institutional development, which, besides
the provision of training and equipment, would include studies
on expressway commercialization and corporatization, and highway
maintenance management. This would support the introduction of
market principles and mechanisms in highway financing, operation,
management and maintenance. Bank involvement is also expected
to benefit the design and quality of construction of expressways
as well as road traffic safety. NH3 would additionally foster
improved practices in the areas of environment, land acquisition
and resettlement of project'affected people.
Lessons Learned from Past Operations in the Sector
12. The Bank has accumulated
substantial experience through the preparation and implementation
of 20 highway projects in China, seven of which have been closed.
While the overall performance of highway projects is by and large
satisfactory, some problems have occurred, including inadequate
quality of construction, cost overruns and a late start in the
engineering design and procurement of traffic engineering facilities,
which have delayed completion of highway projects. Preparation
of the proposed NH3 project has specifically addressed the above
issues. The engineering designs and bid documents for the project
expressways are being reviewed by international experts, and construction
will be supervised by a joint international/local consulting team,
with the local team receiving both formal (in China and abroad)
and on'the'job training in supervision of construction activities
and environmental aspects of road development. The conceptual
designs of the traffic engineering facilities have already been
completed and approved by MOC.
13. Several of the most important lessons
learned in implementation of highway projects worldwide concern
road maintenance. Bank policy papers in 1979 and 1988 underscored
the fact that neglect of road maintenance can ultimately result
in very high costs to restore infrastructure, and that new road
construction must be balanced with the need for road maintenance.
Previously, this was not an issue in China—adequate funds
were being set aside for this purpose and maintenance was adequately
carried out. However, with the expansion of the NTHS, with its
high costs, the rapid increase in traffic volumes, and the trend
toward using larger trucks with heavier axle loads, concern is
growing about the accelerating maintenance requirements in the
future. An analysis of the sources and uses of highway funds during
the next five years in Hubei revealed that the project province
would be able to meet their highway expenditure plans.
14. The Bank's recent, albeit limited,
experience with the operation and management of tolled expressways
in China indicates the need for improvement in this area. The
proposed project therefore provides training for staff and equipment
for efficient and safe operation and maintenance of the project's
high'grade highways. Moreover, the project province would benefit
from the results of high'grade highway commercialization and corporatization
as well as maintenance management studies that will be undertaken
as part of NH3. Limited
experience with highway safety programs in China has pointed to
the difficulty of their implementation due to poor coordination
between the traffic police and the highway departments. The proposed
project addresses this problem by focusing on highway safety,
which, in view of the rapid expansion of the road network and
fast motorization in Hubei, is becoming an important issue.
15. Experience in the area of land acquisition
and resettlement has generally been satisfactory. However, the
lesson has been that the Bank should make its requirements well
known to the Chinese agencies at an early stage in the preparation
of a new project. Experience in the environmental area in China
has generally been favorable; however, more attention should be
paid to environmental supervision and monitoring during construction,
and to training of personnel. The resettlement and environmental
aspects of the project were properly addressed throughout preparation,
resulting in specific environmental plans for the design, construction
and operation phases of the project as well as in resettlement
action plans. Both plans would be monitored throughout implementation.
Moreover, the proposed project would provide equipment for environmental
supervision and monitoring as well as training of staff.
Environmental Aspects
16. The two expressways and interconnecting
roads are classified as category A from an environmental perspective.
Their Environmental Impact Assessments (EIAs) were prepared, and
together with their Environmental Action Plans (EAPs), reviewed
by the Bank and found to be satisfactory. The Bank also reviewed
and found satisfactory the basic policies, planning proposals
and institutional arrangements used in the preparation of all
EIAs and EAPs. The EIAs indicate that the proposed alignments
for the high'grade highways will not adversely affect ecologically'sensitive
areas and, provided that the EAPs are implemented properly, the
construction and operation of the highways
should have no adverse impacts on the environment. Major environmental
impacts during construction will include noise and dust, alteration
of hydrological regimes, soil erosion, interference with local
traffic, impact on local ecology, and irrigation systems.
Land Acquisition and Resettlement Aspects
17. A Resettlement Action Plan (RAP) has
been prepared for the NH3 project by the Hubei Expressway Resettlement
Office of HPCD. The RAP is based on the National Resettlement
Policy of China and the Bank's Operational Directive 4.30 on Involuntary
Resettlement, and forms the basis of implementation of land acquisition
and resettlement of the proposed project. In the preparation of
the resettlement component of this project, attention was paid
to ensure that the resettlement policies are effectively implemented
and monitored. The main objective of the resettlement program
is to improve the standards of living of the Project'Affected
Persons (PAPs) or at least to restore them to the levels before
resettlement.
Contact Point:
The InfoShop
The World Bank
1818 H Street, N.W.
Washington, D.C. 20433
Telephone No. (202)458 5454
Fax No. (202) 522 1500
Note: This is information on an evolving project. Certain activities
and/or components may not be included in the final project.
Processed by the InfoShop week ending July 3, 1998.
