Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005906 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-83690-CHA) ON A LOAN IN THE AMOUNT OF US$150 MILLION TO THE People's Republic of China FOR THE CN Yunnan Honghe Prefecture Diannan Center Urban Transport June 30, 2022 Transport Global Practice East Asia And Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2021) Currency Unit = RMB 6.35 RMB = US$1 US$ = SDR 1 FISCAL YEAR January 1 – December 31 Regional Vice President: Manuela V. Ferro Country Director: Martin Raiser Regional Director: Ranjit J. Lamech Practice Manager: Benedictus Eijbergen Task Team Leader(s): Xiaoke Zhai, Anita Shrestha ICR Main Contributor: Hei Chiu ABBREVIATIONS AND ACRONYMS BAU Business as Usual BP Bank policy EIRR Economic Internal Rate of Return EIA Environmental Impact Assessments EMP Environmental Management Plans FM Financial Management GHG Greenhouse Gas IBRD International Bank for Reconstruction and Development ICM Integrated Corridor Management ICR Implementation Completion Report IPF Investment Project Financing ITS Intelligent Transport System ISR Implementation Status and Results Report J1 Jianshui 1 J2 Jianshui 2 J3 Jianshui 3 J4 Jianshui 4 M1 Mengzi 1 M2 Mengzi 2 M3 Mengzi 3 M4 Mengzi 4 M5 Mengzi 5 M&E Monitoring and Evaluation MTDIC Mengzi Transport Development and Investment Company OP Operations Policy PAD Project Appraisal Document PEO Project Execution Office PMO Project Management Office RAP Resettlement Action Plan RF Results Framework SI Sensitivity Index SV Switching Value TA Technical Assistance VAT Value-added Tax WRD Western Region Development US$ United States Dollar TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 5 A. CONTEXT AT APPRAISAL .........................................................................................................5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ..................................... 11 II. OUTCOME .................................................................................................................... 12 A. RELEVANCE OF PDOs ............................................................................................................ 12 C. EFFICIENCY ........................................................................................................................... 21 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 22 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 22 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 23 A. KEY FACTORS DURING PREPARATION ................................................................................... 23 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 23 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 25 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 25 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 26 C. BANK PERFORMANCE ........................................................................................................... 28 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 29 V. LESSONS AND RECOMMENDATIONS ............................................................................. 29 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 31 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 50 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 52 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 53 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 60 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 61 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name CN Yunnan Honghe Prefecture Diannan Center Urban P101525 Transport Country Financing Instrument China Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency People's Republic of China Honghe Prefecture Government Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to improve the safety, accessibility and efficiency of trips taken by residents in the core urban areas of Mengzi City and Jianshui County. Page 1 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 150,000,000 150,000,000 150,000,000 IBRD-83690 Total 150,000,000 150,000,000 150,000,000 Non-World Bank Financing 0 0 0 Borrower/Recipient 198,610,000 105,800,000 39,630,000 Total 198,610,000 105,800,000 39,630,000 Total Project Cost 348,610,000 255,800,000 189,630,000 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 15-May-2014 29-Sep-2014 20-Mar-2017 30-Jun-2020 31-Dec-2021 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 16-Mar-2020 59.74 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial Page 2 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 03-Sep-2014 Satisfactory Satisfactory 0 02 09-Mar-2015 Satisfactory Moderately Satisfactory 0 03 03-Jun-2015 Satisfactory Moderately Satisfactory 0 04 11-Dec-2015 Unsatisfactory Moderately Unsatisfactory 0 05 06-Jun-2016 Unsatisfactory Unsatisfactory 2.00 06 15-Nov-2016 Unsatisfactory Unsatisfactory 2.00 07 03-May-2017 Moderately Satisfactory Moderately Unsatisfactory 8.50 08 21-Nov-2017 Moderately Satisfactory Moderately Unsatisfactory 14.55 09 20-Apr-2018 Moderately Satisfactory Moderately Satisfactory 20.26 10 24-Dec-2018 Moderately Satisfactory Moderately Unsatisfactory 27.41 11 09-May-2019 Moderately Satisfactory Moderately Unsatisfactory 38.64 12 05-Dec-2019 Moderately Satisfactory Moderately Unsatisfactory 47.47 13 20-Apr-2020 Satisfactory Moderately Satisfactory 59.74 14 09-Sep-2020 Satisfactory Satisfactory 73.04 15 23-Mar-2021 Satisfactory Moderately Satisfactory 90.48 SECTORS AND THEMES Sectors Major Sector/Sector (%) Transportation 100 Urban Transport 98 Public Administration - Transportation 2 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Page 3 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Urban and Rural Development 100 Urban Development 100 Urban Infrastructure and Service Delivery 100 Environment and Natural Resource Management 15 Climate change 15 Mitigation 15 ADM STAFF Role At Approval At ICR Regional Vice President: Axel van Trotsenburg Manuela V. Ferro Country Director: Klaus Rohland Martin Raiser Director: John A. Roome Ranjit J. Lamech Practice Manager: Abhas Kumar Jha Benedictus Eijbergen Task Team Leader(s): Fei Deng Xiaoke Zhai, Anita Shrestha ICR Contributing Author: Hei Chiu Page 4 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Beginning in 2000, the central government of China launched the Western Regional Development Program (WRD) to narrow the development gaps between the western region and the eastern region. With the support of WRD, the western region registered an average annual GDP growth of 11.9 percent, surpassing the national GDP growth rate. The economic growth and urbanization were still unevenly distributed in 2011 between eastern and western regions- for instance, per capita GDP in the eastern provinces was almost two times of the western provinces, and the urbanization in terms of the urban population was 68% and 43%, respectively. To further promote inclusiveness and boost shared prosperity, the central government approved 12th Five-Year (2011-2015) Plan of the Western Regional Development Program. It emphasized additional support for infrastructure development in minority-concentrated areas and border regions. The Honghe Hani and Yi Autonomous Prefecture Diannan Area (Southern Yunnan Province), where the Project is located, was one of the priority areas. 2. Unlike many coastal cities that had completed most of their construction programs of basic urban transport infrastructure in the past decades, small and medium cities in the western region still faced the problem of inadequate transport infrastructure and services, which was a major constraint for the residents to access public services and job opportunities. Therefore, urban transport investment remained at the top of the local government’s agenda in the western region. 3. The national government and large cities recognized that a systematic approach, which prioritized the movement of people and goods rather than vehicles, was needed to meet the travel demand generated from urbanization as well as to avoid all kinds of problem that many Chinese cities had encountered. The systematic and sustainable approach was relatively new practices for small and medium cities in the western regions. Although vehicle ownership was still very low in the small and medium cities in the western region, these cities were beginning to experience traffic congestion and increasing road accidents. Many small and medium cities were focusing on widening roads for vehicles. In addition, the fatality number related to transport-related accidents increased. Overall, there was a need to make a mindset shift and take actions to make the urban transport system sustainable. 4. The Project was fully aligned with the World Bank Group’s China Country Partnership Strategy (CPS) for the Fiscal Year 2013-16 which identified ‘greener growth’ as a key strategic pillar. The project design was aligned with the key intervention areas specified under the Outcome 1.3: (i) accelerating the shift to public transport and improving transport efficiency through city-specific transport investments, giving priority to large cities in the central and western regions; (ii) piloting institutional and technological innovations that have potential for scaling up in cities throughout China, such as public transport integration. 5. Honghe Hani and Yi Autonomous Prefecture is located in the south of Yunnan Province and strategically positioned in the Kunming-Hanoi economic corridor, with a population of 4.5 million, among which 48% are ethnic minorities. The Project is located in Mengzi City and Jianshui County. In 2012, Mengzi City was the Page 5 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) prefectural capital city covering a total area of 2,228 km2 with a population of 422,600. Jianshui County is well- known for its old town with 1200 years history. At the time of appraisal, the economic development of Mengzi and Jianshui was below the national average, per capita GDP was respectively, 65% and 45% of the national average. 6. Both Mengzi City and Jianshui County were facing many challenges, which were very similar to other small and medium cities in the western region: 1) severe challenges to their urban road network, where links were missing in the existing road network, hampering the mobility and accessibility of the entire area; 2) urbanization and motorization was fast growing with a more than 20% annual increase of motorization from 2010 to 2011; 3) investment decisions, urban road design, and management prioritized motorized vehicles and not public transport, pedestrians and non-motorized vehicles ; 4) public transport services was inadequate and poor; 5) fatalities related to transport-related accidents was high- with 18 fatalities in Mengzi and 31 in Jianshui in 2010; 6) historical downtown was full of motorized traffic limiting tourism development and culture preservation; 6) low capacity to tackle urban transport issues efficiently and cost-effectively. Theory of Change (Results Chain) 7. The Theory of change is summarized in the diagram below. Page 6 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Page 7 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Project Development Objectives (PDOs) 8. The PDO is to improve the safety, accessibility and efficiency of trips taken by residents in the core urban areas of Mengzi City and Jianshui County. Key Expected Outcomes and Outcome Indicators 9. The achievement of the PDO is measured through a set of four PDO-level indicators, as shown below: Expected Key Outcomes Outcome Indicator PDO Element 1: Improve the • PDO Level Results Indicator 2: Increased number of people accessibility of trips taken by residents with access to urban transport services in the core urban areas of Mengzi City and Jianshui County PDO Element 2: Improve the efficiency • PDO Level Results Indicator 1: Reduced travel time of public of trips taken by residents in the core transport users during peak hour on the project corridors urban areas of Mengzi City and Jianshui • PDO Level Results Indicator 3: Increased annual public County transport ridership PDO Element 3: Improve the safety of trips taken by residents in the core • PDO Level Results Indicator 4: lower annual urban transport urban areas of Mengzi City and Jianshui related fatalities. County 10. For Mengzi, to address the challenges of lacking road network hierarchy and missing links, the road network improvement components were designed to fill missing links in the existing road network to optimize the functional hierarchy and overall efficiency of the road network in Mengzi. For example, the construction of a bypass would divert the through traffic on Xuefu road, which bisected the campus of Honghe University in Mengzi. To improve the accessibility, public transport operations, and safety in Mengzi, Integrated Corridor Management (ICM) approach was applied to three corridors, which concentrates all required interventions in a few selected corridors in an integrated manner, to seize synergies of the investments and maximize their benefits. ICM comprised a package of integrated measures including civil works, Intelligent Transport System (ITS) and road safety design, education, and traffic regulation interventions covering bus priority lanes, bus stops, junctions, and mid-block pedestrian crossings, parking management, and e-bike management. At the project appraisal time, the bus services were provided by the profit-driven private sector without clear performance requirements. The residents suffered from deteriorating service levels, and especially the residents lived along less profitable bus routes. Therefore, bus reform was integrated into the Project to support the government in regulating the industry and incentivizing the operators to perform and serve underserved poor communities. Mengzi housed many primary and middle schools. However, the road safety assessment identified that road safety around the school zones was poor. A safe school transportation demonstration program was designed to pilot a transport management plan around school zones. It was the first Project in China to systematically Page 8 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) introduce school transport safety measures which include infrastructure and equipment upgrades along with public campaigns, training, and technical assistance, which focus on awareness-raising, behavior, and policy advocacy. 11. Similar interventions were designed for Jianshui. The distinctive design of Jianshui component is around the historic downtown. During the project preparation, the historical downtown was the main tourist destination, attracting 4 million visitors annually. Jianshui had set the ambition to further develop its tourism industry. However, the increased private cars and motorbike traffic inside the historical sites created an unpleasant walking environment for both tourists and residents, which limited the potential of the tourism industry development and brought increasing safety risks to the community. The core urban area integrated transport improvement adopted the ICM approach to the roads surrounding the historic downtown. The road network improvement was to construct the South Bypass, which would alleviate the through traffic from the historic downtown. It was envisioned that the ICM and South Bypass would enable the historical downtown to implement traffic-calming measures, such as banning car traffic. Similar to Mengzi, two private bus operators were providing poor services to the residents and tourists. Therefore, a similar bus reform TA was designed to address this issue. Table 1. Estimated and Completion Costs by Component Allocated Actual Amount at Components Description Amount Approval (US$ (US$ Million) Million) 249.68 111.56 Part A, Mengzi City IBRD: 100 IBRD: 98.74 Counterpart: Counterpart: 149.68 12.82 Component This component comprises four sub-components: (i) 145.6 22.66 M1: Road changing the function of Honghe Avenue from a fast IBRD: 30.73 IBRD: 13.99 Network Re- road (National Road 326) to an urban arterial that Counterpart: Counterpart: functioning better accommodates public transport, non- 114.87 8.67 and motorized transport and pedestrians; (ii) extension of Improvement Jinhua Road to create a short north-south link for traffic to bypass the Old Town; (iii) extension of Zhaozhong Road as an additional access road in the downtown area; and (iv) a new Xuefu Road Bypass to divert heavy traffic away from the existing Xuefu Road which cuts through Honghe University campus. Component This component includes safety, accessibility and 44.55 43.84 M2: Integrated operational improvements of three major corridors, IBRD: 32.72 IBRD: 27.63 Corridor namely, Tianma Road, Beijing Road and Yinhe Road. Counterpart: Counterpart: Management. An ITS is included in this component to improve 11.83 16.21 traffic management in the three corridors. Component This component includes three sub-components: (i) 43.84 37.81 M3: Public public transport infrastructure (three integrated bus IBRD: 27.63 IBRD: 34.97 Page 9 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Transport depots and two bus terminals); (ii) bus stops and bus Counterpart: Counterpart: Priority. bays; and (iii) ITS for bus operation. 16.21 2.84 Component This component includes: (i) model school transport 7.91 1.57 M4: School zone; (ii) home to school transportation IBRD: 5.51 IBRD: 1.57 Transport demonstration; and (iii) public campaign, training and Counterpart: Safety technical assistance (TA). It finances the development 2.4 Improvement of a transport management plan for schools, training and studies, and the procurement of 15 school buses and on-board monitoring units, as well as the construction of school bus stops. Component This component includes: (i) urban transport related 2.53 1.87 M5: studies; (ii) consultancy for project management and IBRD: 2.15 IBRD: 1.87 Institutional technical support; (iii) training and study tours; and (iv) Counterpart: Strengthening. public communication and education campaigns. 0.38 103.03 78.06 IBRD: 50 IBRD: 51.26 Part B, Jianshui Part Counterpart: Counterpart: 53.03 26.8 Component J1: This component includes: (i) safety, accessibility and 18.73 14.57 Core Urban operation improvements on three major corridors, IBRD: 12.55 IBRD: 13.48 Area namely, Jianshui Avenue, Yinhui Road and North Counterpart: Counterpart: Integrated Chaoyang Road, which form a triangle serving Jianshui 6.18 1.09 Transport County’s core urban area; and (ii) an ITS to improve Improvement traffic management on the three corridors. Component J2: This component includes: (i) public transport 16.02 12.60 Public infrastructure (two bus depots); and (ii) ITS for bus IBRD: 7.95 IBRD: 12.51 Transport operation. Counterpart: Counterpart: Priority 8.07 0.09 Component J3: This component finances construction of the South 64.41 48.67 Urban Road Bypass, which will divert through traffic from the IBRD: 25.87 IBRD: 23.30 Network historical downtown to the outskirts of the urban Counterpart: Counterpart: Improvement center. 38.54 25.37 Component J4: This component includes: (i) urban transport related 1.25 1.08 Institutional studies; (ii) consultancy for project management and IBRD: 1 IBRD: 1.08 Strengthening technical support; (iii) training and study tours; and (iv) Counterpart: public communication and education campaigns. This 0.25 component is joint with component M5. 352.71 189.63 IBRD: 150 IBRD: 150 Total Project Cost Counterpart: Counterpart: 202.71 39.63 Page 10 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 12. The PDO remained the same. Revised PDO Indicators 13. The PDO indicators have remained unchanged. Revised Components 14. The components funding remained the same. A few activities have been revised to incorporate the overall expanded project scope toward the PDO. Other Changes 15. During the restructuring in 2020, the following changes were approved for Mengzi and Jianshui, respectively. Mengzi Part: 1) Due to changes in Mengzi’s transport plan and delays in land acquisition and resettlement, three roads improvement 1 , two bus depots, and one bus terminal were dropped; 2) expansion of the integrated traffic management system from a few corridors to the entire core urban areas to promote the traffic management capability; 3) Purchasing 45 hybrid buses, 120 electric buses, and installation of 60 electric bus charging stations were added; 4) home to school transportation demonstration were canceled due to the estimated high operation and maintenance costs, which the school could not afford. Home to school services were provided by bus operators after the bus reform. Jianshui Part: (i) construction of additional bus stops, and (ii) purchase of 100 electric buses and installation of 50 electric bus charging stations were added. 16. The allocation of loan proceeds and percentage of expenditures for eligible expenditures in works categories were adjusted. The loan closing date was extended from June 30, 2020 to December 31, 2021. Rationale for Changes and Their Implication on the Original Theory of Change 17. Overall, there was no significant impact on the Theory of Change. 1 The original cost of the road infrastructure in Mengzi (Component M1) is 144.21 million in total, with 32.12 million IBRD finance (IBRD accounts for 22% of Component M1), for the improvement of four urban roads. The majority of the cost under the counterpart fund is land acquisition in dense urban areas. During project implementation, 3 out of 4 roads were canceled. Jinhua Road (1.3 km to fill the missing north-south link) and Zhaozhong road (770 meters as an access route in the downtown area) were canceled due to delays in land acquisition. These two short roads involved the resettlement of a large number of urban residents. Land acquisition cost had increased during project implementation. Honghe avenue re-functioning was canceled due to the change of transport plan. The prefecture government built a tramway on Honghe avenue without coordinating with Mengzi city. Page 11 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 18. The PDO remains highly relevant to GoC’s priorities at the national and sectoral levels. China’s 14th FYP for Economic and Social Development, covering 2020-2025, highlights green development and shared prosperity, as well as a strong emphasis on decarbonization. China sets the twin goals of reaching carbon emission peaking in 2030 and neutralization in 2060. Decarbonizing transport is also the key strategy for the transport sector. The 14th Five-Year Plan for Modern Comprehensive Transport Development (2021-25) calls for green and low carbon transport, safety improvement, and smart mobility. The safety improvement targets are set as mandatory targets. 19. The Project is well aligned with the World Bank Group’s Country Partnership Framework for China (FY2020-2025) around the engagement area “Promoting Greener Development”. It would help achieve Objective 2.5, “promoting low-carbon transport and cities” and contribute to Objective 2.2, “reducing air, soil, water and marine plastic pollution”. The Project also supports the World Bank’s global agenda on transport, which aims to decarbonize and reduce adverse environmental impacts of transport, while ensuring safe and inclusive mobility solutions for all and supporting connectivity and economic growth. 20. In May 2022, the State Council issued a new policy to promote the development and urbanization of counties 2 . It emphasized the importance of counties in the urban-rural development agenda and explicitly mentioned the counties located near the borders. Improving the public infrastructure and services is the key focus of this policy. Under the transport section, it articulates improvements are needed for urban roads, non-motorized lanes, pedestrian environment, traffic management, road safety facilities, public transport terminals, public charging infrastructure, and parking system. The project is highly relevant to this new policy. 21. The PDO is also aligned with China’s global commitment to GHG emission reduction in the priorities set in the Second National Communication on Climate Change of the People’s Republic of China to UNFCCC in November 2012 and China’s Intended Nationally Determined Contribution (INDC) issued in 2015, calling for sustained efforts in GHG emissions control and energy conservation from the transport sector. 22. The relevance is High. 2 http://www.gov.cn/zhengce/2022-05/06/content_5688895.htm Page 12 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Assessment of Achievement of Each Objective/Outcome 23. The PDO has been unpacked into three subsets. The achievements of each PDO subset are discussed below: PDO 1: Improve the accessibility and the efficiency of trips taken by residents in the core urban areas of Mengzi City and Jianshui County 24. The efficacy analysis of this outcome focuses primarily on the PDO indicator, nine associated intermediate indicators3, and other achievements. 25. The linked PDO indicator for accessibility is “total number of people within 300 m of public transport services”, which has two sub-indicators to evaluate Mengzi and Jianshui, respectively. At the end of the project, the number of people with access to urban transport services has increased from 195,000 to 297,900 in Mengzi, which exceeded the targets with an additional 37,900 residents. Jianshui exceeded the target with an additional 32,000 residents who gained easier access. 26. Almost all the intermediate indicators (8 out of 9) related to this outcome have been achieved. The highlights include the following: i) 403 bus stations have been upgraded and constructed for Mengzi and 90 for Jianshui. Significant improvement on public transport coverage is shown in the map below. The bus stops provide shelter and seats, and some are equipped with interactive electronic displays of bus routes, real-time location of the buses, and helpful information such as bus network maps and locations of shopping malls and restaurants; ii) In total, 26.4 km roads have been upgraded with an enhanced environment for public transport including dedicated bus lanes, pedestrian and non-motorized transport, including 6 bus priority lanes are in operations in Mengzi and Jianshui (3 lanes each); iii) in total four bus terminals were built in Mengzi and Jianshui, which achieved the target. All the terminals are equipped with charging infrastructure for the e-bus fleet. 3As improving accessibility and efficiency are closely linked in both infrastructure and operational dimensions, the intermediate results indicators and the outputs for the PDO 1 and 2 have a few overlaps. Page 13 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) 27. It is remarkable that the project activities in Jianshui enabled the entire historic downtown to ban private car traffic and implement traffic calming measures. The project financed the integrated corridor management on the urban roads adjacent to the downtown, including improvement of public transport and pedestrian environment, and diverted the through traffic to the newly constructed Southern Pass. Within the historic downtown, the estimated mode shift from motorized trips to walking trips annually is 5 million by residents and 8 million by tourists. It facilitated the tourism development and economic development in Jianshui – total number of tourists increased from 4 million in 2014 to 12 million in 2021. Revenue from the tourism industry increased from RMB 2.3 billion in 2014 to RMB 13.8 billion in 2021. Details on all indicators can be found on Annex 1. 28. The assessment for this PDO 1 is High. Page 14 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) PDO 2: Improve the efficiency of trips taken by residents in the core urban areas of Mengzi City and Jianshui County 29. The efficacy analysis of this outcome focuses primarily on the two related PDO indicators, ten associated intermediate indicators, and other achievements. The two PDO indicators are i) Reduced travel time of public transport users during peak hours on the project corridors; ii) Annual public transport ridership. Each indicator has two sub-indicators to evaluate Mengzi and Jianshui, respectively. 30. The travel time by public transport users during peak hours on the project corridor was reduced from 22.5 minutes to 14 minutes in Mengzi and from 20 minutes to 13 minutes in Jianshui, which largely exceeds the targets. Improvement of the road network hierarchy, development of ICM including dedicated bus lanes and new bus stops, bus reforms, bus fleet upgrades, and ITS system all contribute to this achievement. 31. Regarding the annual public transport ridership indicator, Mengzi reached 9.21 million passenger trips (57% of the target), and Jianshui reached 5.83 million passenger trips (40% of the target). Despite missing the targets, the performance of Mengzi is higher than the national average, and Jianshui is equivalent to the national average by comparing the actual number with the baseline data. The statistical data of the Ministry of Transport show that bus passengers in cities consecutively declined from 2015 to 2020 in China, with a 31.8% decrease in 2020. With the project support, Mengzi recorded an increase in bus ridership compared to 2014. The reasons for lower ridership include i) the two years’ COVID-19 impact on travel demand and acceptance of using public transport, which is outside the project control, especially considering both Mengzi and Jianshui took strict measures to control COVID-19 pandemic; 2) delays in implementation of the bus company reforms, constructions, and procurement; 3) accelerated increase of private cars with a 35% and a 76% increase respectively in Mengzi and Jianshui between 2015-2020; 4) ride-sharing services were introduced in Mengzi in 2019 which experienced 35 folds increase in 2020 and registered 1.1 million rides in 2021 public; and 5) emergence of e-bikes and e-bike sharing programs which is related to COVID-19 impact on mobility preferences, for instance, 10 million trips were registered under e-bike sharing program in 2021 alone in Mengzi. It is anticipated the public transport ridership in Mengzi and Jianshui will be back to normal increase after the COVID-19 pandemic by considering a higher satisfaction rate of bus users (120% increase in Mengzi and 50% increase in Jianshui), more buses and bus lines in operation, better and affordable bus services, and government’s priority of decarbonizing transport sector to achieve China’s carbon emission peak and neutralization goals. The other achievements of this outcome indicator are discussed in the following paragraphs as complementary evidence. 32. Almost all intermediate indicators (9 out of 10) related to this outcome have been achieved. In addition to the improvements on bus stops and the upgraded 26.4 km roads discussed under PDO element 1, the highlights are discussed below. 33. The user satisfaction rate has increased from 30% to 66% in Mengzi and 48% to 72% in Jianshui, exceeding both targets. In general, the female users have a higher satisfaction rate- 69% in Mengzi and 77% in Jianshui. This significant improvement in user satisfaction is rarely observed in other urban transport projects. 34. Both Mengzi and Jianshui achieved the target on e-bus procurement. Mengzi and Jianshui phased out diesel buses and replaced them with e-buses which generate substantial GHG savings and reduced air pollution. In total, 265 new e-buses (with a driving range of 220 km to 250 km per charge) and associated Page 15 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) charging facilities are in operation. Mengzi purchased 165 e-buses and installed 17 charging stations. The new buses replaced 65 older and inefficient diesel buses (45% of the existing 146-bus fleet) and increased the bus fleet for expanded services. Jianshui procured 100 e-buses which replaced the entire diesel fleet. It is estimated that the new e-buses will save about US$905,000 in operating costs and 2,100 tons of carbon emissions per year compared to diesel buses. The buses are equipped with information systems connected to the newly constructed bus operation center and e-payment system, which enhances the user experience. 35. The smart ITS systems for bus operations are under operation in Mengzi and Jianshui, which improved the efficiency and service level of the bus operations and saved operating costs for the bus companies. The buses are equipped with ITS, which are connected to the newly constructed bus operation center for dispatching and monitoring bus services on a real-time basis for optimal service levels. The ITS system can enforce safe driving behavior as well by sending alerts for speeding and other unsafe behaviors. The ITS capability also enabled the launching of a mobile app for checking bus services, making travel decisions, and paying for bus fares through mobile payment options. Riders can provide feedbacks through bus services’ social media accounts. 36. The Project completed two major bus reforms in Mengzi and Jianshui, respectively. In Mengzi City, the municipal government’s efforts -in implementing public transport reform to increase public transport coverage, improve service, and increase the mode share of public transport- translated into a sharp increase in bus ridership and increased user satisfaction rate. Prior to the reform, public bus services were provided by two private bus operators; services were sporadic and unreliable due to the lack of formal operating agreements and enforcing service standards proved to be difficult. User dissatisfaction and complaints were common. Mengzi municipal government completed the buy-out of the two private operators in 2019 and established the Mengzi Transport Development and Investment Company (MTDIC) to provide public transport services. With the newly completed public transport infrastructure financed by the Project (namely the dedicated bus lanes on major corridors, new bus stops, and the new bus dispatch and operation center) and armed with recommendations for service improvements from the recently completed transport master plan financed by the Project, MTDIC has instituted improvements on three major bus routes by nearly doubling service coverage (longer routes) and increasing service frequency (from every 30 to 60 minutes to every 7 to 9 minutes) to cover previously underserved activity centers (such as hospitals, government service centers, and passenger transport hubs). Twenty-five new school bus routes are introduced and serve 1400 students on a daily basis. Feedback from bus riders has been positive. The reform in Mengzi was completed earlier than in Jianshui, resulting in visible impacts on the ground. The rationale and the process of Jianshui’s reform are very similar to Mengzi. However, due to delays in reaching a buy-out agreement with two private bus companies, the reform was completed a few months before the project closing date. The newly Page 16 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) established bus company plans to launch a county-wide campaign to promote the improved services and regain market share. 37. In Mengzi, bus ridership increased by 60% after the intervention, and rider satisfaction improved. The issues that were complained the most by riders have been addressed, for example, poor on-time performance, insufficient services (long wait time, etc.), missing getting off the bus for the destination because there were no designated bus stops, and no announcement of stops on the bus, bus routes and service time were difficult to find and difficult to make payments because no payment changes were readily available. More importantly, taking buses became cool and popular again because of the creative public campaigns via social media. The government further enhanced the accessibility of public transport to the resident by actively designating “free ride” and “free use of shared e-bike” days on the last Friday of each month to attract new riders and offering “wedding buses” for rent for transporting guests of large weddings to venues for enjoyment and safety (this service became popular). Both Mengzi and Jianshui frequently utilized social media to promote public transport, including introducing new routes and new services. 38. In addition, the traffic control systems vastly improved the traffic management capability of Mengzi and Jianshui. The project funded two traffic control systems (in Mengzi and Jianshui, respectively) with supporting equipment installed in intersections. The outcome includes the congested intersections reduced from 23 to 10 in Mengzi, and the system enables emergency response function to allow ambulance travel in synchronized green lights along corridors. The traffic policies stated that the traffic control systems largely improved their efficiency in managing traffic and enforcement. 39. The assessment for this PDO 2 is substantial. PDO 3: Improve the safety of trips taken by residents in the core urban areas of Mengzi City and Jianshui County 40. The efficacy analysis of this outcome focuses on the outcome indicator of annual urban transport related fatalities, achievement of intermediate indicators, and supporting data. 41. The annual urban transport-related fatalities are measured in two sub-indicators to evaluate Mengzi and Jianshui, respectively. Although Jianshui is close to achieving the target, both Mengzi and Jianshui did not meet the targets partially due to the design of the indicator and challenges in changing behavior. The indicator underestimated the business-as-usual case and overestimated the replication effects outside the project financed activities. One weakness of using fatality numbers as outcome indicators is that many contributing factors are outside the project control, such as increased exposure due to the 35% and 76% increase in private car ownership in Mengzi and Jianshui. The best practice is to include both measurements of accidents and exposure. 75% fatality Jianshui were caused by drunk driving, which is outside the original theory of change. During the project implementation period, the urbanized area increased much faster than expected. Given the indicator is set to measure the whole urban area, it increased the difficulty of meeting the targets. 42. Mengzi successfully reverted the increasing trend of fatalities. In Mengzi, an increasing trend in fatality numbers was observed before the completion of the project activities. After completion of the activities, Page 17 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) there is an overall decreasing trend of fatalities. Despite the fact that Mengzi had reduced the fatality number from the peak of 30 in 2017 to 12 in 2021, it is still missing the end target- 7 annual fatalities. Another positive evidence can be shown by the number of total accidents. Although the results framework did not measure total number of accidents in Mengzi, number of accidents have also been reduced due to project improvements. The annual total accidents number is reduced from 1600 on average between 2015- 2017 to 1500 between 2018-2021 in Mengzi. 43. The project made a significant contribution to the traffic calming measures in the historic downtown, including banning motorized traffic. The estimated net present value of the safety improvement is around US$ 0.9 million. The pedestrian-only streets attracted more visitors and residents to enjoy the historical area in a safe manner. The business owners also benefit from the traffic calming measures, which make their store fronts safer and accessible. Although it cannot be entirely attributed to the project, the number of visitors increased from 4 million in 2014 to 12 million in 2021. 44. All intermediate indicators related to this outcome have been achieved. The key intermediate indicators associated with this outcome are summarized below i) number of junctions installed with ITS in Mengzi and Jianshui; ii) number of schools implemented “model school transport zone” pilot in Mengzi; iii) length of roads constructed and/or re-functioned; iv) length of roads improved in Mengzi; and v) length of roads constructed in Jianshui. In total, 26.4 km roads have been upgraded with enhanced road safety features such as traffic signals, enforcement cameras, pedestrian crossing, dedicated bike lanes, safe islands, lighting, pavement painting, and many others. 45. The management capacity and efficiency of traffic police in Mengzi and Jianshui have been considerably enhanced by advanced ITS. The Project funded the design and development of Mengzi and Jianshui’s integrated traffic management center and the procurement of large sets of traffic monitoring systems and equipment. The scope got expanded beyond the selected corridors to cover the entire core urban area in Mengzi and Jianshui during the project implementation. The Project completed ITS installation in 98 and 55 junctions in Mengzi and Jianshui, respectively. It enables all the major intersections to synchronize traffic signals of major roadways in the core urban area, prioritize the safety of pedestrian crossings, enable the traffic police to monitor real-time traffic and respond quickly to incidents, and collect and share traffic data for operation, management and enforcement purposes among various responsible government agencies. Page 18 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) 46. The outcomes of these activities include: i) average response time of traffic police has been reduced from 15 minutes to 10 minutes after completion of the ITS system in Mengzi; ii) improved the capability of enforcing illegal crossing and parking demonstrated by a sharp increase of tickets issued after the operation and followed by a sharp decrease, which shows the effectiveness of new cameras for enforcement. Before installation of cameras, total number of identified illegal parking violation was 19,137 in 2017. Installation of cameras largely improved the capability of identifying illegal parking. In 2018 a total of 90,449 tickets were issued for illegal parking and with continuous enforcement in 2021 number of issued tickets dropped to 21,563. Page 19 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) 47. Nineteen major school zones in Mengzi have completed a holistic road safety improvement, including the sets of traffic calming measures and safety improvement measures around the schools, training provided to teachers, students, and family, and enhanced police enforcement around the school zones. The feedback from the residents is very positive. The fatality related to transport accidents around the school zones decreased to 0 in 2021 after the completion of all physical work in 2020. 48. The project financed a traffic safety education center in Mengzi, which was completed in 2020. Within a year, it received 14,000 visitors. It provides training and demonstrations to students and refresher courses for drivers and the general public. The design of the center is interaction-based, with a dedicated section for the younger generation. It is well received by visitors from Mengzi and beyond. With the success of the center and increased demand for road safety education, the government may expand and upgrade the center in the future. 49. Mengzi City installed physical barriers to separate non-motorized traffic from vehicular traffic on busy arterial roads, replaced outdated traffic signages with and installed new uniformed traffic signages, and painted visible and durable pavement markings throughout the core urban area. 50. The assessment of this PDO 3 is modest. Justification of Overall Efficacy Rating 51. Based on the efficacy assessment for the three PDO elements, the overall efficacy rating is substantial. Page 20 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) C. EFFICIENCY Assessment of Efficiency and Rating 52. Ex-post cost-benefit analysis is conducted. Annex IV provides more details of the analysis. The project results in improved reduced travel speed, access to public transport services, and enhanced road safety in Mengzi and Jianshui. The benefits fall into three groups: User surplus which includes reduced travel times, changes in travel costs, and service quality in terms of reliability and punctuality; Operator Surplus which includes changes in operating costs net of changes in operating revenues; Nonusers of the infrastructure who experience changes in congestion and accidents as a result of the changes in modes generated by the Project, as well as more general effects such as any changes in GHG emission and air pollution level. 53. The Economic Internal Rate of Return (EIRR) estimated for the Project is 21.5% for Mengzi and 22.2% for Jianshui, which are above the sector average. A 12% economic discount rate is used in this analysis. The EIRR is much higher than the 12% economic discount rate. It is also much higher than the value at the appraisal due to cost savings and the prioritization of cost-effective measures during restructuring. In terms of GHG reduction, the e-bus activities will generate 4,843 tons of CO2 savings per year. The sensitivity analysis demonstrated the robustness of the estimation (shown in the tables below). Economic Evaluation Result The first two terms Base Operating costs Financial happen at the same scenario +10% gain -10% time Mengzi EIRR 21.5% 21.5% 19.5% 19.4% NPV (million) 328.45 327.75 249.59 248.89 Jianshui EIRR 22.2% 22.2% 19.7% 19.7% 54. In addition to the benefits included in the above EIRR calculation, the Project also generated indirect benefits. i) Although the analysis does not include the indirect GHG reduction from the modal shift from car to walking for the trips within the historic downtown in the above EIRR calculation, the long-term saving is substantial. Since the project facilitated implementation of the traffic calming measures in the historic downtown, it also generated indirect safety benefits. The net present value of the economic benefit is around US$ 0.9 million. ii) The project also generates wider economic benefits that go beyond the benefit normally evaluated during the appraisal of the Project. The wider economic benefit includes improving economic welfare and creating jobs. It is demonstrated by the increased revenue from the tourism industry. Given there is no standard methodology to qualify the wider economic benefit and the complexity to qualify the attribution of the project, the efficiency analysis in this ICR does not qualify it explicitly. Page 21 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) 55. Administrative Efficiency. The project fund was 100% disbursed. Almost all the planned activities were completed within estimated costs. The competitive bidding generated substantial cost savings. The savings were utilized for additional activities. The Project registered an 18-month extension due to delays in implementation and COVID-19 restrictions. Based on the documents shared by the client, COVID-19 restrictions created at least five months' delays which are outside the project’s control. Despite the extension, the Project also expanded the scope of the traffic management system and public transport. The implementation was accelerated after the restructuring. 56. Taking into account the above factors, efficiency is rated High. D. JUSTIFICATION OF OVERALL OUTCOME RATING 57. Based on the high relevance and substantial rating for the efficacy and efficiency. The overall outcome is rated as Satisfactory. E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 58. Females rated the public transport user satisfaction around 3% higher than males in both Mengzi and Jianshui. During the project period, the user satisfaction survey recorded a 3%-5% higher increase in the satisfaction rate among female users in both Mengzi and Jianshui. Female-friendly amenities, such as nursing rooms and family rooms, are built inside bus terminals. In general, females' share in tourism employment is greater than the overall economy. As the Project facilitated the tourism development of Jianshui, the Project indirectly enhanced the economic opportunities for females. Institutional Strengthening 59. The Project substantially strengthened institutional and technical capacity in Mengzi and Jianshui. As Mengzi is the prefecture capital, the visible improvement in bus stops and bus lanes has shown a demonstration impact on other cities and counties within Honghe prefecture. The ITS system enhanced the capability of the traffic police in management, enforcement, and utilizing analytics to inform decision makings. The bus reforms improved the quality of bus services and the government’s ability to manage contracts with service providers. Mobilizing Private Sector Financing 60. With the improvement of bike lanes in Mengzi, Mengzi government introduced e-bike sharing programs in 2020, provided by three private operators. 10 million trips were recorded in 2020 alone. All the e-bikes are powered by electricity. The modal shift from cars and motorbikes to e-bikes contributed to GHG reduction. Page 22 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Poverty Reduction and Shared Prosperity 61. The project contributed to the tourism development of Jianshui. The annual visitor's number increased from around 4 million in 2015 to 12 million in 2021. The revenue from the tourism industry increased from RMB 2.3 billion in 2014 to RMB 13.8 billion in 2021. Other Unintended Outcomes and Impacts 62. Air pollution reduction resulting from the measures taken to reduce the GHG emissions is a major co- benefit of the project. The estimated annual reduction from the e-buses is around 2705 tons per year. The government also raised awareness on improving public transport and encouraging modal shift as a means to tackle both GHG emissions and local air pollution. More importantly, the governments gained experience in implementing these measures and tested their effectiveness. It aligns with China’s carbon neutralization goal announced in 2020. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 63. The soundness of the design, with effective forward-looking interventions and demonstrations: The holistic approach is still highly relevant in today’s context, which combines road network improvement, ICM, dedicated school safety improvement, ITS, and bus reforms. 64. During the project appraisal, the mindset of the prefecture, city, and county governments was focused on prioritizing vehicles rather than people with a knowledge gap in sustainable transport interventions. During the project identification, the proposal from Mengzi and Jianshui were solely focused on urban roads. Recognizing the importance and difficulties in getting the buy-in of the holistic approach, the task team leveraged extensive global knowledge and lessons learned in past projects to bridge the gaps. For example, the former top executive of a world leading bus operator was invited to advise the project preparation and capacity-building events. ChinaRAP was mobilized to conduct a road safety assessment and make recommendations for road safety improvements. The activities in Jianshui centered around the historical downtown proved to be a huge success. More stringent travel demand measures should be added to the project design, which may help with controlling the motorization rate. 65. Underestimate the difficulty and cost of resettlement caused delays later on. Component 1 in Mengzi requires substantial co-finance for land acquisition. The cost of resettlement is underestimated. The risk of delays due to resettlement is not properly assessed. The readiness could be enhanced. In addition, since the Bank’s finance has a relatively low ratio of IBRD financing for component 1 in Mengzi- 22%4, it may lower the motivation of the government to overcome barriers in the project implementation stage. B. KEY FACTORS DURING IMPLEMENTATION 66. Resettlement in both Mengzi and Jianshui delayed the implementation. In Mengzi, the main issue is about 4 The majority of the cost under the counterpart fund is land acquisition in dense urban areas. Refer to footnote 1. Page 23 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) matching and adjusting the risk assessment with appropriate mitigation measures. In Jianshui, the main reason is due to the change in the national land use law on basic agricultural land after the project appraisal. It makes the approval process for South Pass Road construction much longer than expected, which is outside the project’s control. In addition, the resettlement issues of one particular household and one hospital took a few years to resolve, which prevented the timely completion of the South Pass Road. Thanks to the tremendous efforts the PEO in Jianshui and the task team spent in resolving the challenges around resettlement, there is no resettlement legacy issue left after the project closing as per the external social safeguard monitoring report, the social safeguard rating for the project is satisfactory. Resettlement agencies and the project authorities shall be commended for resolving the challenging resettlement and receiving good feedback from the affected families 67. Due to transport plan changes, leadership changes, and a lack of coordination between Honghe Prefecture government and Mengzi City government, several activities got delayed during the implementation for Mengzi components. The leadership changes affected the ability to implement bus reforms which require renegotiation of complex contracts and financial buyout. One road re-functioning activity- Honghe avenue- were canceled because Honghe Prefecture government constructed a new tramway on Honghe avenue without coordinating the plan with Mengzi City. The coordination between different level of government can be strengthened, especially for prefecture/ provincial capital cities. The project was initially under the management of Honghe Prefecture’s construction department but later shifted to the finance department, which has a relatively lower capability of managing urban transport projects. It also affected the implementation. On the positive side, the project management consultant provided strong support to Mengzi and Jianshui during the project implementation. The frequent exchanges between Mengzi and Jianshui also organically strengthened their capacity. 68. Urban transport projects overall are complex in terms of geographic scope, the number of agencies involved, procurement of large civil works and equipment packages, amount of resettlement required, and required reforms. The difficulty of managing this complexity is amplified in small and medium size cities where capacity is lower than in large cities. Although the project preparation tried to address these challenges, frequent leadership changes make this even more difficult to address. As the project includes forward-looking interventions, it needs strong buy-in from the top leadership and strong coordination among government entities throughout the process. Due to frequent changes on the client-side, the buy- in and commitment may change from time to time. The project design includes a bus reform consultancy contract as one project effectiveness condition. But it still took Mengzi 4 years and Jianshui 5 years to complete the reform, including the buy-out of private bus companies. It is important for the task team to constantly retore the commitment from the client. 69. COVID-19 pandemic negatively impacted the project implementation schedule and also changed the assumptions under the Theory of Change. It was estimated that five months to 8 months of delays were caused by COVID restrictions. The COVID-19 pandemic has largely reduced travel demand, especially the demand to use public transport. Therefore, it is hard to achieve the ridership indicators. The global and national data confirmed the dramatic decline in public transport ridership due to COVID-19. 70. Joint efforts between the client and task team turned an Unsatisfactory rating project back to a Satisfactory rating: The project was rated as Unsatisfactory for more than one year. The task team escalated the issues to both the Bank’s management and the client’s management. Both directors of the two PEOs were changed. The new teams on the client side demonstrated stronger capacity in handling complex procurement, resettlement, and managing contracts. The task team also extended more support through technical meetings and strengthened the client's procurement and project management training. Page 24 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) 71. Procurement: Bidding of larger works contracts attracted many construction firms for participation and consequently resulted in very lower pricing due to extreme competitiveness. On a general assessment, the final awarded contracts’ price was discounted by -10% to -25% of the average of bids and by -25% to -40% of the preliminary estimation. Most of the bidding results were justified in common practices and common senses. In exceptional cases, additional provisions and conditions as provided in the bidding document, such as requesting unit prices analysis and clarifying project cash flow balance, increasing the performance guarantee amount was regarded as a good practice and effective way to protect the client from any potential risks beyond the contract5. Similarly, bidding of major goods contracts for ITS and e-buses have competed widely with satisfactory results, about 30-45% budget savings due to appropriate and sufficient pre-bid market surveys. However, frequent complaints to the bidding qualification criteria and key technical specifications. Most of them are related to large equipment contracts. All had been investigated diligently and appropriately settled down timely. There were no investigations opened by the Integrity Vice Presidency concerning activities financed by the project. The learning curve for the PEOs was very deep at the beginning due to lack of capacity and complex nature of contracts. The Bank provided timely support in building up the capacity of the PEOs. 72. Contract implementation and administration were poor for the early batch of contracts but rapidly improved for major contracts over on-job learning and practicing. Procurement post reviews were carried out regularly and identified long delays and numerous and large cost variations for most contracts as consequences of substantial changes in design, serious land acquisition and resettlement issues, contractors’ slow progress as of the alleged low contract price, and price increments of construction material, interruptions or suspensions due to COVID-19 pandemic influences. All had been handled and processed appropriately in accordance with the conditions of the contract. No major quality issues were reported. The procurement assessment was moderately satisfactory in early Implementation Status and Results Reports (ISRs) and the procurement rating was upgraded to satisfactory later. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 73. A comprehensive Results Framework (RF) was designed at appraisal to monitor progress towards achieving the PDO. The indicators, measurement, and data collection methods were adequate, clearly defined, quantifiable and time bound. Most of the indicators were straightforward, and both PEOs and consultants had the capacity to collect the data required. 74. There was some scope for improvement: the targets related to road safety and bus ridership were ambitious. It was partially due to two reasons: i) the overestimated population growth rate, which was based on the data from city master plans; and ii) underestimated business-as-usual case for road safety indicators. In particular, the project selected fatality number as the project outcome indicator, which depends on multiple factors and is outside the project's control. The Project set a few city-wide improvement targets for safety reductions and public transport ridership. But the justification of the project attribution is not strong enough. The underlining assumption is that replication impacts will make 5 Balance is needed as additional measures shall not discourage potential bidders from bidding. Page 25 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) an impact on the ground during the project period, which is not realistic. This creates issues in evaluating the efficacy of the Project later on- the achievement cannot receive the scores accordingly. Given bus reforms are important activities under the project, an intermediate indicator with a clear definition can be added to measure the progress. For the road safety indicators, the BAU potentially underestimates fatality numbers without factoring in all the motorization rate, aggressive urbanization, the difficulty of changing behavior, and the emergence of e-bikes. M&E Implementation 75. M&E implementation was satisfactory. Data on project implementation were reported to the Bank regularly in the required templates and supporting evidence. The project management consultant has dedicated staff on M&E and implemented the required surveys for user satisfaction. The collected data were adequate for the assessment of the achievement of the PDO and intermediate indicators. The M&E indicators were revised to reflect changes during restructuring. However, opportunities were missed to correct the population assumption earlier and include COVID-impact on public transport ridership. In addition, the greater expanded scope of the project was not fully captured in the results framework such as city-wide traffic control centers. M&E Utilization 76. During the midterm review, the PMO, PEOs, and the Bank team reviewed the project implementation progress, identified key implementation risks and issues, and discussed remedy actions to achieve the PDOs and indicators. The client’s mid-term review report is comprehensive and reports all the indicators and project status. The added and dropped activities were aligned with the PDO indicators. One shortcoming is that the restructuring was completed quite late, which was only half year before the original closing date. At the restructuring time, all activities got accelerated. However, it is still too optimistic about showing results right after activity completion for the safety and public ridership indicators. 77. The traffic control system in Mengzi was completed earlier than Jianshui, it shows the capability of utilizing traffic data to improve the enforcement and police's response time to accidents. This ITS system institutionalized the M&E capacity in the traffic police. Justification of Overall Rating of Quality of M&E 78. The M&E framework overall was adequate, with minor weaknesses. The Quality of M&E is rated Substantial. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 79. Environmental Safeguards. This project was classified as Category B as the potential environmental impact during construction and operation are small scale, site-specific in the urban area of Mengzi City and Jianshui County and can be readily mitigated with good engineering design and good construction Page 26 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) management practice. Bank policy, OP/BP 4.01 on Environmental was triggered, along with Bank policy OP/BP 4.11 on Physical Cultural Resources (The component for Jianshui involved two roads, i.e., North Chaoyang Road and Yinghui Road that are in the vicinity of Jianshui Old Town where three buildings/structures are the cultural relics protected at national and prefecture levels). Environmental Impact Assessments (EIAs) and Environmental Management Plans (EMPs) were developed separately for Mengzi City and Jianshui County and disclosed prior to the project appraisal in compliance with Bank, safeguards policies. The EMPs were generally well implemented by Mengzi and Jianshui PEOs who dedicated their respective staff responsible for internally monitoring and managing environment safeguards affairs. Proper Grievance Redress Mechanism has been in place and The Bank received no complaints regarding environmental issues. An environmental monitoring consultant has been recruited by Honghe PMO since the commencement of project implementation to provide professional and external monitoring. A total of 13 external monitoring reports, including updated mitigation and measures and monitoring plans, have been prepared and submitted to the Bank. Throughout the project implementation, all construction activities complied with relevant provisions of EMPs as recorded in the external environmental monitoring reports. Following EMP, work contractors took mitigation measures, such as using commercial concrete, regularly spraying water to construction sites, suspending construction activities at nighttime, etc., for de-dusting and lowering noise disturbance in the populated urban area. COVID-19 prevention measures have been effectively maintained. Mitigation measures for protecting cultural relics in Jianshui were included in the EMPs and were implemented adequately. Ambient environmental quality (surface water, air, and noise) has been regularly monitored at several sensitive receptor locations in Mengzi and Jianshui. Monitoring results confirmed the overall compliance and little/no environmental impacts from the construction activities. 80. At the time of the ICR mission, nearly all construction works had been completed, and some bus depots were in trial operation. Air quality and noise impact on sensitive receptors along the line and wastewater discharge from the bus depots are monitored during the early operational phase and indicated in the most cases, the air emission and noise impact and wastewater discharge from bus depots are in compliance with applicable standards, except that the noise level at a few points along the constructed roads exceeded the applicable standards, one bus depot in Jianshui county (near the rail station) were monitored to be in non-compliance with wastewater discharging standard as it has insufficient wastewater recycling and treatment facility and uncovered by the city sewer system. At the time of ICR preparation, the Jianshui PMO and Jianshui Xinan Public Transport Co. Ltd (the operator of the bus depots in Jianshui), are taking remediation actions to address non-compliance with the wastewater discharging standard of this bus depot by calling for bidding to outsource a third service company to install vehicles cleaning equipment and wastewater recycling treatment system at the bus depot of railway station, and to provide the service for cleaning and maintenance of 128 public transport vehicles at the railway bus depot site for two years. The overall environmental safeguards performance of the project is satisfactory. 81. Social Safeguards: This project required 58 hectares of collective land and 72,997 square meters of rural houses at the peri-urban areas in both Mengzi and Jianshui cities. 219 families with 777 populations were relocated physically into their new apartments or houses, and 1187 rural families with 5,597 populations were affected economically by land acquisition. The RAPs were prepared prior to the project appraisal, including impacts survey, replacement cost evaluation to private properties, resettlement policy framework, livelihood restoration, and resettlement monitoring, etc. The RAPs provided proper guidance Page 27 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) to implement the resettlement activities in both cities and resettlement monitoring. The RAPs were carried out in consistence with the RAPs and national requirements on land acquisition and resettlement activities. The compensations were paid prior to the activities incurred. The information associated with the numbers of land and housing space was published on the village-information-walls to be supervised by villagers and villager itself-check in a transparent way. Every affected family received a local bank account in which the compensation was paid directly to the affected family when they agreed to the required land and housing without any deduction at the ways of cash compensation delivery. In Mengzi city, all displaced families were relocated into apartments with all facilities and in Jianshui city, all displaced families moved into townhouses built by their contracted construction teams. The project authorities assigned staff working on the resettlement works with village committees and municipal departments and is responsible for answering any questions or concerns as one layer of the grievance redress process among four layers. The resettlement monitoring works were undertaken twice a year as the third eye of the project authority. 82. Procurement: A total of 31 contracts was included in the final updated procurement, of which six works and four goods contracts are for Jianshui with a total signed value CNY276.36 million; 6 works and 4 goods contracts for Mengzi with a total signed value CNY548.96 million; and 11 consulting services contracts are for both and the prefecture with a total signed value CNY17.68 million. The earlier batch of the contracts was procured and signed before 2016 with implementation completed by the end 2019, while the major contracts were delayed for procurement in 2018-2019 and completed by mid-2021. Early in implementation, many procurement management problems occurred due to lack of capacity and similar project experiences, such as inefficient administrations with no-decision, ineffective communications with the Bank, long-time land acquisition and resettlement, but a great of improvements were achieved over time, and close and frequent supervision by the Bank resulted in overall satisfactory compliance with the Bank’s procurement policies. 83. Financial Management (FM): The project had an adequate project financial management system that provided, with reasonable assurance, accurate and timely information that the loan was being used for the intended purposes. The project accounting and financial reporting were in line with the regulations issued by MOF and the requirements specified in the loan agreement. No significant FM issues were noted throughout the project implementation, and the FM-related issues or weaknesses raised during FM implementation could be resolved on a timely basis. The project audit reports were all with unqualified audit opinions. In addition, the withdrawal procedure and funds flow arrangement was appropriate. The loan proceeds could be disbursed to the project in a timely manner for intended purposes. C. BANK PERFORMANCE Quality at Entry 84. The Bank worked effectively with the government to design this project, which was instrumental in shaping the frontier of urban transport and addressed challenges in small and medium cities. The project design was sound and covered all required aspects for project implementation with a holistic system Page 28 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) approach. The institutional arrangements were well-designed. Safeguards and fiduciary aspects were thoroughly prepared, including an assessment of cultural heritage. The Bank mobilized its global network and provided extensive assistance to Honghe, Mengzi, and Jianshui to develop the Terms of Reference (TOR) for technical assistance and review technical designs. The former top executive of a world leading bus operator was invited to advise on the project preparation and capacity-building events. ChinaRAP was mobilized to conduct a road safety assessment and make recommendations for road safety improvements. The inputs from the Bank team were considered instrumental in project preparation. Quality of Supervision 85. During the later stage of the project, the task team turned around this project from an Unsatisfactory rating to a satisfactory rating and expedited the implementation in one year. The task team spent extensive efforts in mobilizing global expertise to support this project. The Global Lead for urban transport was one of the Task Team Leaders. Team Meetings with the prefecture leaders were arranged to resolve critical issues during the implementation. Extensive procurement and contract management training was provided to the PMO and PEOs. The social safeguard team and coordinator paid special visits to the pending resettlement sites and expedited the implementation during the last year, which enabled the South Pass in Jianshui to be completed and open to traffic before the project closing. The area for improvement includes the potential to reduce transactional costs due to the frequent handover of Task Team Leaders. Justification of Overall Rating of Bank Performance 86. Overall Bank’s performance is satisfactory. D. RISK TO DEVELOPMENT OUTCOME 87. The risk to development outcome is low for the following reasons: (i) the project is still highly relevant to the national and city’s priorities, and the bus reforms established as a result of the project will be continued; (ii) the asset including the infrastructure and ITS system are still new and well maintained which will continue to generate impacts after the project closures for better accessibility, efficiency, and safety; (iii) operations and maintenance arrangements are in place, e.g., the e-bus includes eight years maintenance contract with the suppliers; However, the COVID-pandemic still creates some risk for the public transport to regain the ridership. The national government has created subsidy and tax break policies to support the bus operations weather the COVID-pandemic. Based on the economic analysis, the social-economic benefits are higher than expected. The sensitivity analysis also demonstrated the robustness for continuous social and economic impact. V. LESSONS AND RECOMMENDATIONS 88. Design forward-looking interventions can enhance development impact. The holistic approach of ICM proves to be effective for the small and medium-sized cities in China. It ensued the project is still highly relevant in today’s context. However, during project preparation and implementation, it requires more Page 29 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) effort to maintain the government’s commitment and ensure strong coordination, especially during frequent leadership changes. To get the buy-in of the holistic approach to addressing urban transport issues, the project provided extensive assistance to the small and medium-sized cities to bridge the knowledge and capacity gaps during project design. In general, the government of small and medium- sized cities may be more interested in building more roads to resolve urban transport issues. Therefore, constantly restoring the buy-in and commitment from the new leadership is vital. 89. This project directly contributed to the long-term development of Jianshui by facilitating the historic downtown tourism development and culture preservation. It is rare that the project helped the client to achieve the longer-term outcome within the project cycle. The interventions of creating good public transport and NMT access around the historic downtown as well as providing an alternative to through traffic are effective. The commitment from the government is critical in converting the whole historical area into pedestrian-only zones. The economic and social impact generated should be better measured in the RF. 90. The following elements should trigger more rigorous risk assessment during the project design and implementation, followed by adequate mitigation measures and adjustments: i) urban road in dense downtown with substantial resettlement, especially the Bank’s finance is much lower than counterpart fund; ii) apply a holistic approach in a small or medium-sized city; iii) involve bus reforms and potentially buy-out of private bus company; iv) the overlapping responsibility of prefecture/ provincial government on city planning or transport planning; v) the first time to implement World Bank project; and vi) ambitious public transport ridership target during COVID-19. 91. Overall, the global community should invest more in projecting the road safety BAU and designing road safety indicators. The fatality number involves many factors which are outside the project's control. It also does not include consideration of changes in exposures. In addition, currently, there is no widely available methodology to forecast the BAU of road accidents and fatalities. Therefore, it prevents the task team from setting appropriate ambitions on road safety targets. Given the impact of motorization and urbanization, pattern changes dramatically during project implementation; without a reliable methodology, it is hard to adjust the targets during restructuring. Given most of the project activities were completed later than expected, the time lag effects should factor into the design and adjusting of the targets. Road accident numbers could be added as an intermediate indicator if the fatality number is the outcome indicator. It may reflect the project achievement in a more measurable way. 92. It is critical to educate the road users under the safe system approach. Given it is difficult to change the behavior, if drunk drivers were the leading causes of fatalities, the project design should put more resources into educating the drivers and enforcing the rules. 93. The project design can consider more travel demand measures. As the traffic volume of the private car increased sharply during the project period, it affected both the attractiveness of public transport and exposure related to road accidents. Supply-side measures can be more effective if travel demand measures are included and implemented, such as rigorous parking management. However, as these demand-side measures are more difficult to gain buy-in from both the government and the public, it requires more effort from the task team and more TA allocation to bridge the capacity gap. . Page 30 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: PDO Indicators Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator One: Reduced travel Minutes 22.50 10.50 17.50 14.00 time of public transport users during the peak hour on the 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 project corridors - Sub- Indicator 1.1: Yinhe Road (Mengzi City) Comments (achievements against targets): Exceeded the target. During restructuring, this indicator was revised to replace travel time on Tianma Road (was cancelled) by travel time on Yinhe Road. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator One: Reduced travel Minutes 20.00 15.00 15.00 13.00 Page 31 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) time of public transport users 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 during the peak hour on the project corridors - Sub- Indicator 1.2: Jianshui Avenue (Jianshui County) Comments (achievements against targets): Exceeded the original target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator Two: Increased Number 195,000.00 450,000.00 260,000.00 263,400.00 number of people with access to urban transport 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 services - Sub-Indicator 2.1: total number of people within 300 m of public transport services in Mengzi City (Persons) Comments (achievements against targets): Exceeded the target. During restructuring, this indicator was revised to adjust both baseline and target values based on the revised population forecast. Page 32 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator Two: Increased Number 182,000.00 292,000.00 111,000.00 113,100.00 number of people with access to urban transport 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 services - Sub-Indicator 2.2: number of people within 300 m of public transport services in Jianshui County (persons) Comments (achievements against targets): Exceeded the target. During restructuring, this indicator was revised to adjust both baseline and target values based on the revised population forecast. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator 3: Increased annual Number 9.12 33.00 16.00 9.21 public transport ridership - Sub-Indicator 3.1: annual 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 public transport ridership in Mengzi City (million passenger trips) Comments (achievements against targets): During restructuring, this indicator was revised to adjust the target value to reflect the observed trends in population and ridership from 2013 to 2017. Page 33 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator 3: Increased annual Number 9.30 23.00 14.50 5.83 public transport ridership - Sub-Indicator 3.2: annual 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 public transport ridership in Jianshui County (million passenger trips) Comments (achievements against targets): During restructuring, this indicator was revised to adjust the target value to reflect the observed trends in population and ridership from 2013 to 2017. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator 4: Lower annual Number 6.00 6.00 7.00 13.00 urban transport related fatalities - Sub-Indicator 4.1: 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 annual urban transport related fatalities in Mengzi City Comments (achievements against targets): Page 34 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Indicator 4: Lower annual Number 8.00 6.00 6.00 8.00 urban transport related fatalities - Sub-Indicator 4.2: 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 annual urban transport related fatalities in Jianshui County Comments (achievements against targets): A.2 Intermediate Results Indicators Component: Mengzi Part - Component M1: Road Network Re-functioning and Improvement Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Kilometers 0.00 15.40 4.60 4.60 (Component M1): Road Network Re-functioning and 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Improvement - Intermediate Result Indicator One: length of roads constructed and/or re-functioned Comments (achievements against targets): Page 35 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Achieved the target. Component: Mengzi Part - Component M2: Integrated Corridor Management Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Kilometers 0.00 17.40 12.70 12.70 (Component M2): Integrated Corridor Management - 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Intermediate Result Indicator One: length of roads improved Comments (achievements against targets): Achieved the target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 90.00 98.00 98.00 (Component M2): Integrated Corridor Management - 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Intermediate Result Indicator Two: number of junctions installed with ITS Page 36 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Comments (achievements against targets): Achieved the target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 90.00 403.00 403.00 (Component M2): Integrated Corridor Management - 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Intermediate Result Indicator Three: number of bus stops constructed/improved Comments (achievements against targets): Achieved the target. Component: Mengzi Part - Component M3: Public Transport Priority Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 5.00 2.00 2.00 (Component M3): Public Transport Priority - 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Intermediate Result Indicator One: number of bus Page 37 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) infrastructure constructed Comments (achievements against targets): Achieved the target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Percentage 30.20 50.00 66.00 (Component M3): Public Transport Priority - 15-Jan-2014 31-Dec-2019 31-Dec-2021 Intermediate Result Indicator Two: public transport user satisfaction ratio (total) Intermediate Result Percentage 30.50 50.00 69.00 (Component M3): Public Transport Priority - Intermediate Result Indicator Two: public transport satisfaction ration (women) Comments (achievements against targets): Achieved and exceeded the original target. Page 38 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Indicator Number 0.00 0.00 165.00 165.00 Three (Component M3): Buses procured 02-Mar-2020 31-Dec-2021 31-Dec-2021 31-Dec-2021 Comments (achievements against targets): This indicator was added during restructuring. Achieved the target. Component: Mengzi Part - Component M4: School Transport Safety Improvement Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 13.00 19.00 19.00 (Component M4): School Transport Safety 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Improvement - Intermediate Result Indicator One: number of schools implemented “model school transport zone” pilot Comments (achievements against targets): The target became more ambitious during the restructuring. Achieved the target. Page 39 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Component: Mengzi Part - Component M5 & J4: Institutional Strengthening Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 15.00 15.00 (Component M5&J4): Institutional Strengthening - 15-Jan-2014 31-Dec-2019 31-Dec-2021 Intermediate Result Indicator One: number of TAs completed Comments (achievements against targets): Achieved the original target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 300.00 394.00 (Component M5&J4): Institutional Strengthening - 15-Jan-2014 31-Dec-2019 31-Dec-2021 number of staff trained (persons) Comments (achievements against targets): Achieved the original target. Page 40 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Component: Jianshui Part - Component J1: Core Urban Area Integrated Transport Improvement Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Kilometers 0.00 9.70 9.10 9.10 (Component J1): Core Urban Area Integrated Transport 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Improvement - length of roads improved Comments (achievements against targets): Achieved the target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 19.00 55.00 55.00 (Component J1): Core Urban Area Integrated Transport 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Improvement - number of junctions installed with ITS Comments (achievements against targets): The target became more ambitious during the restructuring. Achieved the target. Page 41 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 43.00 236.00 90.00 (Component J1): Core Urban Area Integrated Transport 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 Improvement - number of bus stops constructed/improved Comments (achievements against targets): During the restructuring, this target was increased based on the proposal from the county. However, in the subsequent mission, the county would like to procure more e-buses to support the bus reform. It was agreed that the resources allocated to bus stop would be shifted to e-bus procurement. Component: Jianshui Part - Component J2: Public Transport Priority Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Number 0.00 2.00 2.00 2.00 (Component J2): Public Transport Priority - number 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 of bus infrastructure constructed Comments (achievements against targets): Page 42 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Achieved the target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Percentage 48.80 70.00 72.00 (Component J2): Public Transport Priority - public 15-Jan-2014 31-Dec-2019 31-Dec-2021 transport user satisfaction ratio (total) Intermediate Result Percentage 49.00 70.00 77.00 (Component J2): Public Transport Priority - public transport user satisfaction ratio (women) Comments (achievements against targets): achieved and exceeded the original target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Indicator Number 0.00 0.00 100.00 100.00 Three (Component J2): Buses procured 02-Mar-2020 31-Dec-2021 31-Dec-2021 31-Dec-2020 Page 43 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Comments (achievements against targets): This indicator was added during the restructuring. Target achieved. Component: Jianshui Part - Component J3: Urban Road Network Improvement Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Intermediate Result Kilometers 0.00 6.70 6.40 6.40 (Component J3): Urban Road Network Improvement - 15-Jan-2014 31-Dec-2019 31-Dec-2021 31-Dec-2021 length of roads constructed Comments (achievements against targets): Achieved the target. Page 44 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) B. KEY OUTPUTS BY COMPONENT As improving accessibility and efficiency are closely linked in both infrastructure and operational dimensions, the intermediate results indicators and the outputs for the outcome PDO 1 and 2 have a few overlaps. Objective/Outcome 1 Improve the accessibility of trips taken by residents in the core urban areas of Mengzi City and Jianshui County Outcome 1. number of people within 300 m of public transport services in Jianshui County Indicators 1. Length of roads constructed and/or re-functioned (M1&J3: Road Network Re-functioning and Improvement) 2. Length of roads improved (M2& J1: Core Urban Area Integrated Transport Improvement) 3. Number of bus stops constructed/improved (M2 &J1: Integrated Corridor Management) Intermediate 4. Number of bus infrastructure constructed (M3&J2: Public Transport Priority) Results 5. Public transport user satisfaction ratio (total)(M3&J2: Public Transport Priority) Indicators 6. Public transport satisfaction ration (women) (M3&J2: Public Transport Priority) 7. Buses procured (M3&J2: Public Transport Priority) 8. Number of TAs completed (M5&J4: Institutional Strengthening) 9. Number of staff trained (persons) (M5&J4: Institutional Strengthening) Mengzi: 4.6km Xuefu Road Bypass constructed, diverting heavy traffic away from the existing Xuefu Road which cuts through Honghe University campus Key Outputs Jianshui: 6.4 km South Bypass constructed, diverting through traffic from the historic downtown to the outskirts of the urban by center. Component (linked to the Mengzi: 12.7 km of, Tianma Road, Yinhe Road, and Beijing Road upgraded (with bus stops, bus priority lanes, road safety remedy achievement measures, optimized junctions, pedestrian crossings, parking management, installation of traffic control and monitoring of the equipment) Objective Jianshui: 9.1 km of Jianshui Avenue, Chaoyang North Road, and Yinghui Road, which form a triangle serving Jianshui County’s /Outcome 1) historical downtown, upgraded in Jianshui (with bus stops, bus priority lanes, road safety remedy measures, optimized junctions, pedestrian crossings, parking management, installation of traffic control and monitoring equipment) Mengzi Page 45 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) • Bus reform completed • 403 bus stops constructed/upgraded • 2 new bus depots • ITS system and equipment for bus priority • 165 e-buses and 17 charging stations Jianshui • Bus reform completed • 90 new bus stops • Two new bus depots • 100 e-buses and 30 charging stations • a bus priority intelligence system Capacity building • 15 TA delivered • 394 people trained Objective/Outcome 1 Improve the efficiency of trips taken by residents in the core urban areas of Mengzi City and Jianshui County Outcome 1. Reduced travel time of public transport users during peak hour on the project corridors Indicators 2. Annual public transport ridership 1. Length of roads constructed and/or re-functioned (M1&J3: Road Network Re-functioning and Improvement) 2. Length of roads improved (M2& J1: Core Urban Area Integrated Transport Improvement) 3. Number of junctions installed with ITS (M2& J1: Integrated Corridor Management) 4. Number of bus stops constructed/improved (M2 &J1: Integrated Corridor Management) Intermediate 5. Number of bus infrastructure constructed (M3&J2: Public Transport Priority) Results 6. Public transport user satisfaction ratio (total)( M3&J2: Public Transport Priority) Indicators 7. Public transport satisfaction ration (women) (M3&J2: Public Transport Priority) 8. Buses procured (M3&J2: Public Transport Priority) 9. Number of TAs completed (M5&J4: Institutional Strengthening) 10. Number of staff trained (persons) (M5&J4: Institutional Strengthening) Page 46 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Mengzi: 4.6km Xuefu Road Bypass constructed, diverting heavy traffic away from the existing Xuefu Road which cuts through Honghe University campus Jianshui: 6.4 km South Bypass constructed, diverting through traffic from the historical downtown to the outskirts of the urban center. Mengzi: 12.7 km of, Tianma Road, Yinhe Road, and Beijing Road upgraded (with bus stops, bus priority lanes, road safety remedy measures, optimized junctions, pedestrian crossings, parking management, installation of traffic control and monitoring equipment) Jianshui: 9.1 km of Jianshui Avenue, Chaoyang North Road, and Yinghui Road, which form a triangle serving Jianshui County’s historical downtown, upgraded in Jianshui (with bus stops, bus priority lanes, road safety remedy measures, optimized Key Outputs junctions, pedestrian crossings, parking management, installation of traffic control and monitoring equipment) by Mengzi Component (linked to the • Bus reform completed achievement • 403 bus stops constructed/upgraded of the • 2 new bus depots Objective/Ou • ITS system and equipment for bus priority tcome 1) • 165 e-buses and 17 charging stations Jianshui • Bus reform completed • 90 new bus stops • Two new bus depots • 100 e-buses and 30 charging stations • a bus priority intelligence system Mengzi: ITS in operation for whole urban area, installation of ITS equipment at 60 intersections Jianshui: ITS in operation for whole urban area, installation of ITS equipment at 55 intersections Institutional Strengthening • 15 TA delivered and 394 people trained Page 47 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Objective/Outcome 2 Improve the safety of trips taken by residents in the core urban areas of Mengzi City and Jianshui County Outcome 1. annual urban transport related fatalities Indicators 1. Length of roads improved (M2& J1: Integrated Corridor Management) 2. Number of junctions installed with ITS (M2& J1: Integrated Corridor Management) Intermediate 3. Number of schools implemented “model school transport zone” pilot (Intermediate Result (M4: School Transport Safety) Results 4. Number of bus stops constructed/improved (M2 &J1: Integrated Corridor Management) Indicators6 5. Number of TAs completed (M5&J4: Institutional Strengthening) 6. Number of staff trained (persons) (M5&J4: Institutional Strengthening) Mengzi: ITS in operation for whole urban area, installation of ITS equipment at 60 intersections Jianshui: ITS in operation for whole urban area, installation of ITS equipment at intersections Mengzi: 12.7 km of, Tianma Road, Yinhe Road, and Beijing Road upgraded (with bus stops, bus priority lanes, road safety remedy measures, optimized junctions, pedestrian crossings, parking management, installation of traffic control and Key Outputs monitoring equipment) by Component Jianshui: 9.1 km of Jianshui Avenue, Chaoyang North Road, and Yinghui Road, which form a triangle serving Jianshui County’s (linked to the historical downtown, upgraded in Jianshui (with bus stops, bus priority lanes, road safety remedy measures, optimized achievement junctions, pedestrian crossings, parking management, installation of traffic control and monitoring equipment) of the Mengzi: 4.6km Xuefu Road Bypass constructed, diverting heavy traffic away from the existing Xuefu Road which cuts through Objective/Ou Honghe University campus tcome 2) Jianshui: 6.4 km South Bypass constructed, diverting through traffic from the historical downtown to the outskirts of the urban center. Mengzi: • 19 school zones upgraded with traffic claiming infrastructure, equipment, and management plan. • School safety TA delivered including stakeholder got consulted and trained 6 Public transport improvements which also contributed to safety improvement. The outputs are listed above. Page 48 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Institutional Strengthening: • 15 TA delivered and 394 people trained • Public communication and education campaigns Page 49 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Paul Vallely Task Team Leader(s) Jingrong He Procurement Specialist(s) Youxuan Zhu Social Specialist Feng Ji Social Specialist Patricia Maria Fernandes Social Specialist Meixiang Zhou Social Specialist Supervision/ICR Xiaoke Zhai, Anita Shrestha Task Team Leader(s) Hongkun Yang Procurement Specialist(s) Fang Zhang Financial Management Specialist Limei Sun Team Member Zhefu Liu Social Specialist Yan Zhang Procurement Team Yiren Feng Environmental Specialist B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY12 14.150 111,767.73 FY13 13.025 172,028.53 Page 50 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) FY14 16.280 125,787.95 FY15 0 0.00 Total 43.46 409,584.21 Supervision/ICR FY14 0 605.76 FY15 13.600 55,657.05 FY16 17.041 84,645.54 FY17 17.556 112,364.16 FY18 21.603 144,228.69 FY19 19.592 155,948.05 FY20 19.410 134,111.70 Total 108.80 687,560.95 Page 51 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Mengzi Part - Component M1: Road Network Re- 30.73 13.99 46% functioning and Improvement Mengzi Part - Component M2: Integrated Corridor 32.72 44.10 135% Management Mengzi Part - Component 27.63 34.97 127% M3: Public Transport Priority Mengzi Part - Component M4: School Transport Safety 5.51 1.57 28% Improvement Mengzi Part - Component M5: Institutional 2.15 1.87 87% Strengthening Jianshui Part - Component J1: Core Urban Area Integrated 12.55 13.48 107% Transport Improvement Jianshui Part - Component J2: 7.95 12.51 157% Public Transport Priority Jianshui Part - Component J3: Urban Road Network 25.87 23.30 90% Improvement Jianshui Part - Component J4: 1 1.08 46% Institutional Strengthening Total 150 150 100% Page 52 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) ANNEX 4. EFFICIENCY ANALYSIS 1. Methodology and Assumptions This report uses a cost-benefit analysis to measure the economic efficiency of Yunnan Honghe Prefecture Diannan Center Urban Transport Project, i.e., how the resources and inputs have been translated into the required economic benefits and how the project will benefit society as a whole rather than just the project itself. The analysis is based on various regulations, guidelines and industrial policies related to investment estimation and economic evaluation of construction projects issued by relevant departments of China, as well as the “Handbook on Economic Analysis of Investment Operations” 7 and “Bank Guidance - Implementation Completion and Results Report (ICR) for Investment Project Financing (IPF) Operations”8 issued by the World Bank. The efficiency analysis followed the same approach adopted in the Project Appraisal Document (PAD). It includes the following steps: 1) determine the costs incurred by the project; 2) identify and determine the direct economic benefits generated by the project; 3) find out the cost savings during operation; 4) distribute expected costs and benefits over the project life cycle; 5) recalculate the economic internal rate of return (EIRR) of each subproject. A 12% economic discount rate adopted in the PAD is still used. The general assumptions and methods for economic re-evaluation of the project are as follows:  The cost items are valued using the domestic price numeraire and expressed in constant 2022 prices so that the effect of general inflation is excluded.  The actual implementation period of the project is seven years, from 2015 to 2021.  Most of the transportation facilities formed by the project have a life span of about 10 years. It is assumed that the transportation facilities of the project, including electric buses, will be repurchased in 2031.For this, replacement costs will occur.  The exchange rate between US dollar and RMB is US dollar 1 = RMB 6.4 yuan.  The items such as subsidies, taxes and duties that should be considered in financial analysis are excluded from the economic analysis since they transfer resources from one party to another without reducing or increasing the amount of resources available for the economy as a whole. The rate of value-added tax (VAT) for civil works is 9% and the VAT rate for goods is 13%. The average tax rate adopted for economic capital costs is 11%. The financial charges during implementation are also excluded.  The conversion factor for converting the financial value into an economic value is as follows: Shadow exchange rate factor (SERF) is 1.023; the shadow wage rate factor (SWRF) is 0.8 as recommended by relevant Chinese guidelines.9  The cost for non-revenue components of this project is also included in the economic costs.  As a usual situation, most of the infrastructural project risks are concentrated on the construction stage. Once the construction is complete, the risks mainly rest with the benefit materialization, facility operation and maintenance. Sensitivity analysis examines the impacts of changes in key variables on the project's economic result in comparison with the basic scenario, thus identifying the factors that need special attention to ensure the economic viability of the project. Key variables examined in the analysis include the operating and maintenance costs (O&M) and economic benefits. 7 Handbook on Economic Analysis of Investment Operations，1998 8 Published in 2017 9 《建设项目经济评价方法与参数》 Page 53 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Only adverse changes of the variables are considered in the analysis. Two indicators are used to measure the sensitivity of a key variable. The sensitivity index (SI) is the ratio of the change percentage of net present value to the change percentage of the related variable. The switching value (SV) is the percentage change in a variable that makes the net present value equal to zero.  In the PAD the economic analysis for Mengzi City and Jianshui County was carried out as two independent sub-projects, respectively. In order to maintain comparability, the economic reevaluation follows the same treatment method. 2. Mengzi Subproject The contents of Mengzi sub-project include: 1) rehabilitation and improvement of urban road networks; 2) integrated management of the three preferential public bus corridors; 3) improved public transport’s service delivery infrastructure and equipment, including the newly purchased electric vehicles during the medium-term restructuring of the project; 4) demonstration approaches for traffic safety; 5) institutional capacity building. 1) Economic benefits from urban roads improvement Savings in vehicle traffic operating costs are due to improved road conditions. In order to calculate the vehicle operating cost savings, an average of 79,176 PCUs per day were measured on project roads, and this traffic volume was projected to grow at an average rate of 1% per year. A number of 16.1km of roads was applied in the calculation. In a without-project scenario, the vehicle operating unit cost was assumed to be RMB1.95 yuan per kilometer on average. At the project completion, the vehicle operating cost, including fuel, lubricating oil, tire wear, vehicle depreciation, maintenance, insurance, and other fixed expenses, was estimated as RMB1.75 yuan/km per vehicle. To calculate the economic value of the passenger travel time savings, the cars were divided into 95 percent passenger cars and 5 percent non-passenger cars, according to transportation authorities' estimates. Considering the mix of different types of cars, the average passenger car is estimated to have five people on board. Since most of the improved roads are in crowded downtown or residential areas, people living nearby benefit greatly. The project's monitoring indicators show that the time spent by vehicles on relevant roads has decreased from 22.5 minutes before the project to 17.5 minutes in 2021, saving 0.08 hours per person per day. In order to obtain the average time value of passengers, it is assumed that the vehicles are on the roads for 250 days per year, i.e., 2000 hours, with a time use parameter of 0.5 as empirical data. As a common analytical practice, a passenger's time value comes from the local per capita disposable income, which was RMB31,760 yuan in 2020. Therefore, the passenger's unit time value is RMB7.94 yuan per hour. Non-passenger vehicles, which save freight transportation time, averaged about 3,959 vehicles per day at project completion. Considering the inflation factor of the past few years, assuming that a non-passenger vehicle carries an average of 5.5 tons of cargo each time, the shadow price of goods is RMB1200 yuan per ton. Assuming a non-passenger car works 16 hours a day, then each car saves 0.13 hours a day, and a car saves 46 hours a year. The economic value of saving in transport time for cargo and goods is regarded as a saving in the financial cost for funds that finance the cargo and goods being carried around on the roads. Thus, the economic discount rate of 12% is used as the interest rate to calculate the cost of capital. In order to calculate the life loss and economic loss avoided due to the reduction of traffic accidents, it is estimated that the accident incidence rate is 0.17 and 0.15 per 10,000 vehicles per kilometer in the without-project and with-project cases, respectively, which decreases by 11.8%. The average shadow Page 54 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) price of loss in a traffic accident is RMB14,000 yuan. 2) Operating cost saving through substitution of electric vehicle The project has purchased 165 pure electric or hybrid public buses to replace existing oil-fueled vehicles. Improvements in vehicle performance have resulted in savings in fuel costs and maintenance materials. These buses can save RMB7.94 million yuan in a normal year. 3) The economic value of carbon dioxide emission reduction The newly purchased electric vehicles generate significantly fewer air pollutants and greenhouse gas emissions than petroleum-based vehicles, and the resulting reduction in emissions has economic value. This paper only considers the economic benefit of carbon dioxide abatement. The cleaner public bus purchased can reduce 2,705 tons of carbon dioxide in a normal year. The price used to calculate the economic value of carbon dioxide abatement follows the recommendations of the relevant World Bank's Guide10. The guidance recommends the use of carbon dioxide prices of US$40 / ton and US$80 / ton for the 2020 base year in the economic analysis. To be conservative, only low prices are used in this paper. Therefore, it can be predicted that the economic benefit of carbon dioxide emission reduction over the evaluation period will increase from about RMB700,000 yuan to 1 million yuan. 4) Economic costs The estimated financial construction cost of Mengzi subproject was US$245 million, equivalent to RMB1.492 billion. During the mid-term restructuring, Component 1’s scope was narrowed and competitive bidding generated substantial savings, resulting in a considerable reduction in the cost. The actual construction cost was RMB758 million yuan, 49.2 % less than the budget. The annual maintenance cost of the relevant roads is RMB102,000 yuan. The service life of the transportation facilities of the project, including the electric vehicles, is about 10 years. It is assumed that they will be purchased again in 2031, thus resulting in replacement costs. 5) Results of cost-benefit analysis EIRR is derived from the net benefit streams, resulting in an EIRR of 21.5%, significantly higher than the 12% threshold and higher than the 15.78% estimated by the initial assessment. There are two causes for the difference between the two EIRRs. Firstly, the capital cost was sharply reduced through the mid-term restructuring. Secondly, the initial appraisal did not include the benefits from operating cost savings due to the substitution of electric vehicles for the oil-fueled ones and the economic value of carbon dioxide emission reduction, which are considered in this economic reevaluation. A sensitivity analysis of the economic benefits proves that Mengzi subproject has a strong ability to resist risks in the economic sense. The subproject would be economically unsound only if the benefit decreases by 41.7% or the operating cost increases by 4677%. Even if both factors were to change negatively by 10% simultaneously, the economic result would still be 19.4%, well above the 12% minimum requirement. 10 Guidance Note on Shadow Price of Carbon in Economic Analysis，2017 Page 55 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Economic Reevaluation Result of Mengzi Sub-project The first two terms Base Operating costs Financial gain - happen at the same scenario +10% 10% time EIRR 21.5% 21.5% 19.5% 19.4% ENPV 328.45 327.75 249.59 248.89 SI N/A (0.02) 2.40 N/A SV N/A - 4677.3% 41.7% N/A 3. Jianshui Subproject The contents of Jianshui sub-project include: 1) integrated management of the three preferential public bus corridors; 3) improved public transport’s service delivery infrastructure and equipment, including the newly purchased electric vehicles during the medium-term restructuring of the project; 3) rehabilitation and improvement of urban road networks; 4) institutional capacity building. 1) Economic benefits from urban roads improvement To calculate the vehicle operating cost savings from the roads improvements, an average of 54,000 PCUs per day are measured on project roads, and this traffic volume is projected to grow at an average annual rate of 1.5% between 2022 and 2026, and 1% per year thereafter. A number of 9.1km roads is used in the calculation. After analysis, the vehicle operating cost in the scenario without project is 1.95 yuan per kilometer on average. In a without-project scenario, the vehicle operating unit cost was assumed to be RMB1.95 yuan per kilometer on average. At the project completion, the vehicle operating cost, including fuel, lubricating oil, tire wear, vehicle depreciation, maintenance, insurance and other fixed expenses, was estimated as RMB1.75 yuan/km per vehicle. In order to calculate the economic value of passengers' travel time savings, it is informed that according to the rule of the local traffic administration, all motor vehicles running on the relevant roads are passenger vehicles, and non-passenger vehicles are restricted from operating. Considering the mix of different types of cars, the average passenger car is estimated to have five people on board. The project's monitoring indicators show that the time spent by car users on the project’s roads has decreased from 20 minutes before the project to 16 minutes in 2021, saving 0.07 hours per person per day. In order to obtain the average time value of passengers, it is assumed that the vehicle is on the road for 250 days per year, i.e., 2000 hours, with a time use parameter of 0.5 as empirical data. Based on the RMB37,241 yuan of per capita disposable income in Jianshui County in 2020, the passenger's unit time value is estimated to be RMB9.31 per hour. In order to calculate the life loss and economic loss avoided due to the reduction of traffic accidents, it is estimated that the accident incidence rate is 0.17 and 0.15 per 10,000 vehicles per kilometer in the without-project and with-project cases, respectively, which decreases by 11.8%. The average shadow price of loss in a traffic accident is RMB14,000 yuan. Page 56 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) 2) Operating cost saving through substitution of electric vehicle The project has purchased 100 pure electric or hybrid public buses to replace existing oil-fueled vehicles. Improvements in vehicle performance have resulted in savings in fuel costs and maintenance materials. These buses can save RMB6.25 million yuan in a normal year. 3) The economic value of carbon dioxide reduction The newly purchased electric vehicles produce fewer air pollutants and greenhouse gas emissions than petroleum-based vehicles. The cleaner public bus purchased can reduce 2,138 tons of carbon dioxide in a normal year, and the economic benefit of carbon dioxide emission reduction over the evaluation period will increase from about RMB600,000 yuan to 860,000 yuan. 4) Economic costs The estimated financial construction cost of Jianshui subproject was US$101 million, equivalent to RMB615 billion. Due to competitive bidding and activity adjustment, the actual construction cost was RMB362.7 million yuan, 41.0% less than the budget. Due to the short period of operation after the project completion, the three roads have not incurred maintenance costs in recent years. Therefore, referring to the maintenance cost of Mengzi’s roads, each kilometer costs about RMB62,200 yuan per year. Its total cost of maintaining the roads is RMB590,000 yuan a year. The service life of the transportation facilities of the project, including the electric vehicles, is about 10 years. It is assumed that they will be purchased again in 2031, thus resulting in replacement costs. 5) Results of cost-benefit analysis As a result of the economic reevaluation for Jianshui subproject, the EIRR is recalculated as 22.2%, higher than the 12% economic discount rate and higher than the 13.77% estimated at the time of initial assessment. Again, the same as Mengzi subproject, the two causes for the difference between the two EIRRs are firstly, the capital cost was significantly below the original estimation; secondly, the initial appraisal did not include benefits in the economic analysis from operating cost saving due to the substitution of electric vehicles for the oil-fueled ones and the economic value of carbon dioxide emission reduction, as the e-buses were added during the restructuring. The sensitivity analysis of project economic benefits demonstrates that Jianshui subproject has strong economic resistance to risks. The subproject would only be economically unfeasible only if the benefit decreases by 38.4% or the operating cost increases by 3,637%. Even if both factors were to change negatively by 10% at the same time, the economic return on investment would still be 19.7%, well above the 12% minimum. Economic Reevaluation Result of Jianshui Sub-project The first two terms happen at Base scenario Operating costs +10% Financial gain -10% the same time EIRR 22.2% 22.2% 19.7% 19.7% ENPV 115.94 115.62 85.78 85.46 SI N/A (0.03) 2.60 N/A SV N/A - 3637.2% 38.4% N/A Page 57 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Indirect impact: there are other indirect impacts generated by the project. Although the task team does not include these indirect in the EIRR calculation, the following paragraphs is trying to describe and quantify them. The roads in Jianshui Ancient City have been transformed into pedestrian streets to bring about economic benefit by reducing CO2 emissions. In 2021, the total population of Jianshui County was 534,700, and the number of private cars was 72,000. The ancient city has 3,821 households and 9,873 people. If this project were not implemented, there would be 1,330 private cars in the ancient city assuming the car owndership proportion to household numbers. It is assumed that the number of private cars increase by 2% annually in a without-project scenario. Based on the 10L/100km of average fuel consumption by each vehicle, 2.36kg of CO2 emitted per liter of burning oil, and 1km travel by each vehicle every day in the ancient city, the annual CO2 emission from the 1,330 vehicles would be 114.6 tons. It means the project implementation can reduce 114.6 tons of CO2 emissions in the current year. The price used to calculate the economic value of carbon dioxide abatement follows the recommendations of the World Bank's Guidance Note on Shadow Price of Carbon in Economic Analysis. It can be predicted that the economic benefit of carbon dioxide emission reduction brought about by the change of the traffic roads into pedestrian streets in Jianshui Ancient City will increase from RMB18,000 to 67,000 in the 20-year evaluation period. The present value of the total economic benefit is RMB289,900. The roads in Jianshui Ancient City have been transformed into pedestrian streets to bring about the economic benefit by eliminating losses from traffic accidents.In Jianshui County the average number of trips per resident per day (working day) is 3.38, and the proportion of trips by car is 9.39%. It can be calculated that in the without-project case the daily traffic flow in the ancient city is 3134 vehicles/day. Presumably the traffic flow would grow at an average annual rate of 1.5%. The roads in the ancient city were transformed into pedestrian streets. It could basically eliminate the losses of life and property caused by motor vehicle traffic accidents, which is considered as an indirect economic benefit of the project. The estimated traffic accident rate is 0.17 times per 10,000 vehicles per kilometer, and the average shadow price of loss in a traffic accident is RMB14,000 yuan. Based on the 1km of average driving mileage per vehicle and 3,134 vehicles per day, the value of loss to be avoided in the ancient city thanks to the project in one year during the 20-year evaluation period would increase from RMB163,000 to 326,000. The present value of the related economic benefit is RMB5.77 million. There are also some economic benefits of the project that cannot be accurately quantified with the available information. For example, urban public transport system plays a part in restricting and guiding the basic units of urban areas, and dedicated bus lane corridors can often form urban development spaces. This project shall make full use of the bus rapid transit corridors to transform and develop the urban landscape and land functions along the line, sort out the traffic routes along the line, and improve the traffic conditions in the central city. The functions of land use can also be adjusted appropriately, and the linear corridor can play a guiding role in both real estate development and local employment expansion. 4. Conclusion of project economic reevaluation After 7 years of project implementation, Yunnan Honghe Prefecture Diannan Center Urban Transport Project has basically completed the tasks of the original plan (except the activities cancelled by the medium-term adjustment). Through the rehabilitated urban roads, perfected preferential public transport corridors, and other traffic management and transport safety facilities, the Project has started to play a role of social infrastructure in the project area. Page 58 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Economic evaluation has been done by identifying and monetizing the benefits such as vehicle operating cost saving, transport time saving for passengers and cargo, thanks to the newly improved road conditions and rapid transit corridors; energy and maintenance cost savings and greenhouse gas emission reduction due to the replacement of oil-fueled vehicles by electric public buses. The actual capital cost of the project and the predicted operation and maintenance cost are used to match the economic benefits of the project, and the economic internal rate of return has been recalculated. The EIRRs of Mengzi sub-project and Jianshui sub-project are 21.5% and 22.2%, respectively, which exceed the 12% economic benchmark rate of return and are also higher than the initially evaluated figures. The project also generated indirect positive impacts, which were not included in the EIRR calculation. The sensitivity analysis concludes that the project possesses a strong ability to withstand the economic risks associated with potentially declining economic benefits and fluctuations in operating and maintenance costs. Therefore, the overall future economic benefits of the project are sustainable. Page 59 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS On May 31, 2022, Honghe PMO received the draft of implementation completion and results report of the Yunnan Honghe Prefecture Diannan Center Urban Transport project from the World Bank. At the Bank's request, the Honghe PMO and the Mengzi and Jianshui PEO evaluated the report. The report evaluates the work and implementation of the project in the project preparation stage and implementation period, and completes the overall evaluation of the project from three aspects: (1) Outcomes; (2) key factors that affected implementation and outcome; and (3) bank performance. In addition, the author summarizes the experience and puts forward some valuable suggestions. The report comprehensively summarizes the activities and achievements achieved during the implementation of the project from five aspects :(1) project context and development objectives; (2) project outcomes; (3) project context and development objectives; (4) bank performance, compliance issues, and risk to development outcome; (5) lessons and recommendations. The report provides the objective assessment of the achievement of each indicator of the project development objectives set during the project evaluation phase, as well as the environmental and social impacts. The report also accurately evaluated the value of application and promotion of the results, and summarized experience from project management, capacity building and other aspects. Overall, the report is comprehensive, objective, fair, targeted and clear. The project is evaluated from the perspective of system, and it is objectively pointed out that the Honghe project is delayed due to various reasons and the project is greatly adjusted in the mid-term adjustment stage, which provides valuable experience for the future project management of Honghe PMO, Mengzi and Jianshui PEO. The Bank has provided strong support and guidance at all stages of project planning, design, implementation, monitoring and evaluation. Intervention consequent purpose quality is satisfactory to the bank, covering all major aspects of the project, including planning and strategy development, technical support, environment, and social security institutions, strengthen monitoring and evaluation, operation and maintenance, etc. In particular, when the project fell behind due to very difficult problems in the middle period of implementation. We got strong help from the World Bank and finally made the mid-term adjustment of the project successfully completed. The quality of bank supervision is critical to the success of projects. It provides full support and guidance for the design, implementation, monitoring and evaluation of the project during the whole project implementation period. When the PMO encountered any problems, it will communicate with the World Bank, and the project managers and experts of the World Bank solved them in a timely and patient manner, so that the problems can be solved quickly and well. In the project evaluation stage, experts from the World Bank fully exploited the positive benefits of the project to Mengzi and Jianshui, and actively helped the Honghe Project to improve its rating. The overall rating of the World Bank's performance was satisfactory, and there was no defect in the quality of intervention and supervision. Page 60 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) Figure 1 Selected Project Achivements in Mengzi Page 61 of 62 The World Bank CN Yunnan Honghe Prefecture Diannan Center Urban Transport (P101525) Figure 2 Project Map in Jianshui Figure 3 Selected Project Achievements in Jianshui Page 62 of 62