The World Bank China: Gansu Rural-Urban Integration Project (P132775) REPORT NO.: RES32018 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF CHINA: GANSU RURAL-URBAN INTEGRATION PROJECT APPROVED ON MARCH 31, 2015 TO PEOPLE’S REPUBLIC OF CHINA TRANSPORT & DIGITAL DEVELOPMENT EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Bert Hofman Senior Global Practice Director: Jose Luis Irigoyen Practice Manager/Manager: Binyam Reja Task Team Leader: Yang Chen The World Bank China: Gansu Rural-Urban Integration Project (P132775) ABBREVIATIONS AND ACRONYMS FSR Feasibility Study Report M&E Monitoring and Evaluation MTR mid-term review PDO Project development objective PMO Project Management Office RF Results Framework The World Bank China: Gansu Rural-Urban Integration Project (P132775) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P132775 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 31-Mar-2015 30-Jun-2021 Organizations Borrower Responsible Agency People’s Republic of China GansuProvincial Project Team Project Development Objective (PDO) Original PDO The project development objective is to provide residents in Wuwei Municipality and Linxia Prefecture with improved connectivity between rural and urban areas. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-84800 31-Mar-2015 25-May-2015 14-Aug-2015 30-Jun-2021 150.00 107.62 42.38 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank China: Gansu Rural-Urban Integration Project (P132775) Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The US$150 million loan for the Gansu Rural-Urban Integration Project was approved by the Board on March 31, 2015 and was signed on May 25, 2015. The loan became effective on August 14, 2015 and has a closing date of June 30, 2021. The Project development objective (PDO) is to provide residents in Wuwei Municipality and Linxia Prefecture with improved connectivity between rural and urban areas. The project comprises three components: Wuwei Road Network Improvement, Linxia Road Network Improvement, and Technical Assistance and Project Management. The main civil works of the project are the new construction and rehabilitation of 15 rural or urban roads in Wuwei and Linxia. 2. The project is making steady progress towards its PDO and all indicators in the Results Framework are on track to meet their respective targets. The mid-term review (MTR) in November 2017 confirmed that the PDO remains highly relevant and is achievable by the current project closing date of June 30, 2021. Overall implementation progress is satisfactory. By May 2018, Gansu has invested US$104 million (RMB 710 million) in the project, which amounts to 52% of the total project cost estimated at appraisal. As of August 2018, cumulative disbursement from the Bank loan had reached US$101.79 million (68% of the total loan amount). The project is in compliance with legal covenants, as well as Bank fiduciary and safeguard policies. There are no overdue audit reports and no outstanding issues raised by the auditors in the audit reports. There have been some delays in land acquisition and resettlement. The status of implementation of each component is summarized below. 3. Component 1: Wuwei Road Network Improvement. Civil works for six of the nine roads under the project have either been completed or almost completed. However, changes are required to two of the road sections. Part of Wuwei A7 Road overlaps with a parallel road development project for the Gansu International Inland Port Zone. The scope reduction of A7 results in a loan saving of US$4.4 million. The construction of Wuwei A9 Road has been taken over by the province (outside the project) as A9 has been designated as a critical poverty alleviation project by the provincial government. Dropping of A9 results in a loan saving of US$6.4 million. 4. Component 2: Linxia Road Network Improvement. Civil works of five of the six project roads have been completed. However, Linxia B5 Road overlaps with the newly proposed Yongda Highway project and its removal from the project will result in a loan saving of US$24 million. 5. Component 3: Technical Assistance and Project Management. Activities under this component are progressing well. 6. As 2 out of 15 project roads need to be dropped from the project and one road has a reduced scope due to duplication with recent domestically-funded road construction works, Wuwei and Linxia proposed three new roads as replacement. The Bank team has appraised these three new roads as technically feasible and economically viable. These three newly proposed roads will be completed by current loan closing date. With these three new road works included, the project expects to utilize all the approved US$150 million loan. Given the replacement of three project roads, the team is refining the Results Framework (RF) following the latest Bank operation standard of Monitoring and Evaluation (M&E). There is no need to amend the project legal agreements. II. DESCRIPTION OF PROPOSED CHANGES 7. It is proposed to replace Wuwei A9, Linxia B5, and a portion of Wuwei A7 by three newly proposed roads, as summarize below. The Feasibility Study Reports (FSRs) for these three newly proposed roads confirm that they are The World Bank China: Gansu Rural-Urban Integration Project (P132775) technically feasible and economically viable, and meet the Road Selection Criteria set forth in Annex 2 of the PAD. Safeguards documents for these three new roads are acceptable to the Bank team and have been disclosed. The PMOs can proceed with the procurement of these new project activities on completion of the proposed restructuring. Wuwei and Linxia governments have provided counterpart funds in a timely manner for smooth land acquisition and resettlement, as for the construction of these three new roads. The proposed changes do not require any amendment to the legal agreements for the project. 8. The proposed new roads are (see Attachment 1 Locations of Project Roads): (a) Widening of the existing road from Gulang Town to Shuangta Industrial Zone (A10) in place of the reduction in scope of Wuwei A7. The US$12.32 million investment for this road has an economic internal rate of return of 13.02%. (b) New road connecting Xijing Township Xingmin Village to S308 (A11) in place of Wuwei A9. The US$9.02 million investment for this road has an economic internal rate of return of 13.35%. (c) New rural road to improve accessibility for villagers to the new industrial park and county seat (B6) in place of Linxia B5. The US$23.26 million investment for this road has an economic internal rate of return of 13.66%. 9. It is also proposed to revise the RF to reflect the changes in project roads and to improve the quality of the RF. The description and data source/methodology for all indicators in the RF are refined and clearly stated in the RF in line with current M&E quality standards. Baseline, current, and target values for some indicators (e.g. PDO indicator 1 and 2) are updated using the correct calculation methods (see Results Framework table in Section IV and the Indicator Description and Monitoring table in Attachment 2 Revised Results Framework). Proposed changes to specific indicators are: (a) The original PDO indicator 2 “Share of Rural women with Access to an All-Season Road” is changed to a sub- indicator (1.2) of PDO indicator 1 as it is a breakdown of the same indicator. The original PDO sub-indicator “Number of rural people with access to an all-season road” remains as a supplemental sub-indicator 1.1. This PDO indicator 1 will measure the coverage aspect of the connectivity improvement as stated in the PDO. (b) Original PDO indicators 3 and 4 are proposed to be combined as PDO indicator 2 “average travel time savings on selected key project roads connecting rural and urban areas in Wuwei and Linxia” to better measure the efficiency aspect of connectivity improvement between rural and urban areas in Wuwei and Linxia as stated in the PDO. Specific roads connecting rural and urban areas in Linxia County, Wuwei Liangzhou District and Wuwei Gulang County are selected to calculate the average travel time savings. (c) Original intermediate indicator 5 is proposed to be replaced by “length of ChinaRAP assessments undertaken with commitment to address road safety recommendations” in line with the Bank’s new road safety safeguard guidance. (d) Original intermediate indicator 1 and 2 measuring implementation progress are broken down to Wuwei and Linxia to meet the latest M&E requirement of mapping intermediate indicators to project components. Target values (length of roads constructed or rehabilitated) are updated to reflect the replacement of three project roads. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. The World Bank China: Gansu Rural-Urban Integration Project (P132775) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank China: Gansu Rural-Urban Integration Project (P132775) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component A: Wuwei Road Component A: Wuwei Road 138.56 Revised 132.02 Network Improvement Network Improvement Component B: Linxia Road Component B: Linxia Road 73.30 Revised 68.28 Network Improvement Network Improvement Component C: Technical Component C: Technical 4.07 Revised Assistance and Project 3.31 Assistance Management TOTAL 215.93 203.61 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 0.00 0.00 2016 5,000,000.00 38,900,783.00 2017 15,000,000.00 44,864,045.50 2018 25,000,000.00 15,000,000.00 2019 30,000,000.00 30,000,000.00 2020 45,000,000.00 16,000,000.00 2021 30,000,000.00 5,235,171.50 The World Bank China: Gansu Rural-Urban Integration Project (P132775) . Results framework COUNTRY: China China: Gansu Rural-Urban Integration Project Project Development Objectives(s) The project development objective is to provide residents in Wuwei Municipality and Linxia Prefecture with improved connectivity between rural and urban areas. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 More people have access to an all-season road connecting rural and urban areas in Wuwei and Linxia (Action: This Objective is New) Share of Rural women with Access to an All- 65.00 66.00 69.00 72.00 74.00 75.00 78.00 78.00 Season Road (Percentage) Action: This indicator has been Marked for Deletion 1. Share of rural population with access to an all-season road in 62.00 79.00 81.00 82.00 83.00 Wuwei and Linxia (Percentage) Rationale: Action: This indicator has The definition and detailed method of calculation for this indicator is further clarified. Baseline and target numbers and percentages are updated accordingly. This been Revised indicator does not count the additional population with access to all-season road because of road constructed outside the project, to ensure proper attribution. The World Bank China: Gansu Rural-Urban Integration Project (P132775) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 1.1 Number of rural people with access to an all-season road in 1,121,751.00 1,420,887.00 1,463,514.00 1,492,784.00 1,510,000.00 Wuwei and Linxia (Number) Rationale: Action: This indicator The definition and calculation method was clarified, and the baseline and target numbers were updated accordingly. has been Revised 1.2 Share of rural women with access to an all-season road in 62.00 79.00 81.00 82.00 83.00 Wuwei and Linxia (Number) Rationale: Action: This indicator The definition and calculation method was clarified, and the baseline and target numbers were updated accordingly. has been Revised People save significant time travelling between rural and urban areas in Wuwei and Linxia (Action: This Objective is New) Travel time savings between select O-D pairs connected partially by 0% 1% 2% 6% 7% 8% 8% 8% newly constructed or rehabilitated roads (Text) Action: This indicator has been Marked for Deletion The World Bank China: Gansu Rural-Urban Integration Project (P132775) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 2. Average travel time savings on selected key project roads connecting 0.00 28.00 30.00 35.00 38.00 rural and urban areas in Wuwei and Linxia (Percentage) Rationale: Action: This indicator has This indicator is revised with origin and destination specified to be the starting and ending point of project road sections to ensure attribution. Calculation method been Revised is also clarified with baseline and target values updated accordingly. PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 Wuwei Road Network Improvement (Action: This Component is New) 1. Length of roads rehabilitated or 0.00 45.20 51.20 57.60 63.40 constructed in Wuwei (Kilometers) Rationale: Action: This indicator has been This intermediate indicator is revised to reflect the implementation progress in Component 1 Wuwei Road Network Improvement. Revised Linxia Road Network Improvement (Action: This Component is New) 2. Length of roads rehabilitated or 0.00 34.70 39.70 47.90 47.90 constructed in Linxia (Kilometers) The World Bank China: Gansu Rural-Urban Integration Project (P132775) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 Rationale: Action: This indicator has been This intermediate indicator is revised to reflect the implementation progress in Component 2 Linxia Road Network Improvement Revised Technical Assistance and Project Management (Action: This Component is New) 3. Preparation of long term No No No Yes Yes maintenance strategies (Yes/No) Rationale: Action: This indicator has been The measurement of the indicator is changed from percentage to yes/no to simplify monitoring. Revised 4. Number of counterpart staff who attended training and study tours 0.00 295.00 425.00 483.00 535.00 (Number) Rationale: Action: This indicator has been The target value for this indicator is increased to reflect the more advanced progress in training and study tours. Revised 5. Length of ChinaRAP assessments undertaken with commitment to 0.00 0.00 70.00 100.00 100.00 address road safety recommendations (Kilometers) Rationale: Action: This indicator has been This indicator on road safety is revised following the Bank's new road safety safeguard guidance. Revised IO Table SPACE The World Bank China: Gansu Rural-Urban Integration Project (P132775) . The World Bank China: Gansu Rural-Urban Integration Project (P132775) Note to Task Teams: End of system generated content, document is editable from here.