FOR OFFICIAL USE ONLY Report No: ICR00006500 IMPLEMENTATION COMPLETION AND RESULTS REPORT (Loan No. 8837-CN) ON A LOAN IN THE AMOUNT OF US$150 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE CHINA: LIAONING SAFE AND SUSTAINABLE URBAN WATER SUPPLY PROJECT November 18, 2024 Global Department of Water East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2024) Currency Unit = Chinese Yuan (CNY) CNY 1 = US$0.14 FISCAL YEAR January 1 - December 31 For Official Use Only Regional Vice President: Manuela V. Ferro Country Director: Mara K. Warwick Regional Director: Anna Wellenstein Practice Manager: Maria Angelica Sotomayor Araujo Task Team Leader (s): Xiaokai Li, James Boon Hwee Tay ICR Main Contributor: Mi Lin The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT ABBREVIATIONS AND ACRONYMS Abbreviation Full Term AM Aide Memoire BP Bank Procedure CPS Country Partnership Strategy CPF Country Partnership Framework DMA District Metered Area E&S Environmental and Social EIRR Economic Internal Rate of Return EMP Energy Management Plan FIP Financial Improvement Plan FIRR Financial Internal Rate of Return GIS Geographic Information System GRM Grievance Redress Mechanism IBNET International Benchmarking Network for Water and Sanitation Utilities ICR Implementation Completion and Results Report IPF Investment Project Financing For Official Use Only LMC-2 Second Liaoning Medium Cities Infrastructure Project M&E Monitoring and Evaluation MoF Ministry of Finance MTR Midterm Review NBF Non-Bank Financed NRW Nonrevenue Water PAD Project Appraisal Document PCR Physical Cultural Resources PDO Project Development Objective PIU Project Implementation Unit PMCU Project Management and Coordination Unit PPMO Provincial Project Management Office PPP Public-Private Partnership RAP Resettlement Action Plan SDGs Sustainable Development Goals SWS Smart Water System WSC Water Supply Company WTP Water Treatment Plant The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT TABLE OF CONTENTS DATA SHEET............................................................................................................................................... i I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ......................................................................... 1 A. CONTEXT AT APPRAISAL ..................................................................................................................................... 1 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ........................................................................................ 4 II. OUTCOME ......................................................................................................................................... 7 A. RELEVANCE OF PDO .............................................................................................................................................. 7 B. ACHIEVEMENT OF PDOs (EFFICACY) ..................................................................................................................... 7 C. EFFICIENCY ........................................................................................................................................................... 12 D. JUSTIFICATION OF OVERALL OUTCOME RATING ............................................................................................... 13 E. OTHER OUTCOMES AND IMPACTS ..................................................................................................................... 13 III. KEY FACTORS AFFECTED IMPLEMENTATION AND OUTCOME ............................................................ 14 A. KEY FACTORS DURING PREPARATION ............................................................................................................... 14 For Official Use Only B. KEY FACTORS DURING IMPLEMENTATION ........................................................................................................ 15 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ..................... 16 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...................................................................................... 16 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE .............................................................................. 17 C. BANK PERFORMANCE ......................................................................................................................................... 18 D. RISK TO DEVELOPMENT OUTCOME ................................................................................................................... 19 V. LESSONS AND RECOMMENDATIONS ................................................................................................ 19 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS .............................................................................. 21 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ............................................ 27 ANNEX 3. PROJECT COST BY COMPONENT .............................................................................................. 29 ANNEX 4. EFFICIENCY ANALYSIS .............................................................................................................. 29 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ...................... 33 ANNEX 6. SUPPORTING DOCUMENTS ...................................................................................................... 34 Annex 6.1. Efficacy Analysis .................................................................................................................................... 34 Annex 6.2. Disbursement Data ............................................................................................................................... 37 Annex 6.3. Smart Water Systems ........................................................................................................................... 38 Annex 6.4. Water Quality Analysis ......................................................................................................................... 47 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT DATA SHEET @#&OPS~Doctype~OPS^dynamics@icrbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name China: Liaoning Safe and Sustainable Urban Water Supply P158713 Project Product Operation Short Name Investment Project Financing (IPF) Liaoning Safe and Sustainable Urban WS Operation Status Approval Fiscal Year For Official Use Only Closed 2018 Original EA Category Current EA Category Partial Assessment (B) (Restructuring Data Sheet - 27 Jul Partial Assessment (B) (Approval package - 25 Jan 2022) 2022) CLIENTS Borrower/Recipient Implementing Agency Liaoning Urban Construction and Renewal Project PEOPLE'S REPUBLIC OF CHINA Management Company Limited (LUCRPMC) DEVELOPMENT OBJECTIVE Original Development Objective (Approved as part of Approval Package on 24-Jan-2022) The project development objectives are to improve water quality and operational efficiency of selected water supply utilities in the project areas. s s s s s s s s s @#&OPS~Doctype~OPS^dynamics@icrfinancing#doctemplate FINANCING Financing Source Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) i The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT World Bank Financing 250,000,000.00 150,700,033.90 150,700,033.90 IBRD-88370 250,000,000.00 150,700,033.90 150,700,033.90 Non-World Bank Financing 136,290,000.00 74,580,000.00 46,390,000.00 Borrower/Recipient 136,290,000.00 74,580,000.00 46,390,000.00 Total 386,290,000.00 225,280,033.90 197,090,033.90 RESTRUCTURING AND/OR ADDITIONAL FINANCING Amount Disbursed Date(s) Type Key Revisions (US$M) • Components • Results • Disbursement Estimates • Disbursement Arrangements 27-Jul-2022 Portal 96.40 • Loan Closing Date Extension • Loan Cancellations • Reallocations For Official Use Only • Implementation Schedule @#&OPS~Doctype~OPS^dynamics@icrkeydates#doctemplate KEY DATES Key Events Planned Date Actual Date Concept Review 28-Jun-2016 30-Jun-2016 Authorize Negotiations 08-Feb-2018 03-Feb-2018 Approval 06-Jun-2018 06-Jun-2018 Signing 06-Aug-2018 Effectiveness 02-Nov-2018 23-Oct-2018 ICR/NCO -- Restructuring Sequence.01 Not Applicable 27-Jul-2022 Mid-Term Review No. 01 21-May-2021 22-Mar-2021 Automatically populated Operation Closing/Cancellation 30-Jun-2024 from Loans System @#&OPS~Doctype~OPS^dynamics@icrratings#doctemplate ii The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT RATINGS SUMMARY Outcome Bank Performance M&E Quality Satisfactory Moderately Satisfactory Substantial ISR RATINGS Actual Disbursements No. Date ISR Archived DO Rating IP Rating (US$M) 15 0.00 01 07-Sep-2018 Satisfactory Satisfactory 0.00 02 11-Mar-2019 Satisfactory Satisfactory 0.00 03 26-Sep-2019 Satisfactory Moderately Satisfactory 2.00 04 08-Dec-2019 Satisfactory Moderately Satisfactory 10.00 For Official Use Only 05 25-May-2020 Moderately Satisfactory Moderately Satisfactory 10.00 06 20-Nov-2020 Moderately Satisfactory Moderately Satisfactory 25.00 07 04-Jun-2021 Moderately Satisfactory Moderately Satisfactory 49.98 08 11-Dec-2021 Moderately Satisfactory Moderately Satisfactory 79.67 09 01-Jun-2022 Moderately Satisfactory Moderately Satisfactory 96.40 10 23-Aug-2022 Satisfactory Satisfactory 96.40 11 22-Feb-2023 Satisfactory Satisfactory 111.27 12 22-Aug-2023 Satisfactory Satisfactory 119.92 13 29-Oct-2023 Satisfactory Satisfactory 119.92 14 04-May-2024 Satisfactory Satisfactory 138.95 @#&OPS~Doctype~OPS^dynamics@icrsectortheme#doctemplate SECTORS AND THEMES Sectors Adaptation Mitigation Major Sector Sector % Co-benefits Co-benefits (%) (%) iii The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT FY17 - Public Administration - Water, FY17 - Water, Sanitation 6 31 22 Sanitation and Waste Management and Waste Management FY17 - Water Supply 94 30 21 Themes Major Theme Theme (Level 2) Theme (Level 3) % FY17 - Adaptation 30 FY17 - Climate change FY17 - Mitigation 21 FY17 - Environment and Natural Resource FY17 - Energy FY17 - Energy Efficiency 100 Management FY17 - Water FY17 - Water Resource Management Institutions, Policies and 26 Reform FY17 - Urban and Rural FY17 - Urban Water and FY17 - Urban Development 80 Development Sanitation For Official Use Only ADM STAFF Role At Approval At ICR Practice Manager Sudipto Sarkar Maria Angelica Sotomayor Araujo Regional Director n/a Anna Wellenstein Global Director Guang Zhe Chen Saroj Kumar Jha Practice Group Vice President Laura Tuck Juergen Voegele Country Director Bert Hofman Mara K. Warwick Regional Vice President Victoria Kwakwa Manuela V. Ferro ADM Responsible Team Leader Khairy Al-Jamal Xiaokai Li Co-Team Leader(s) Sing Cho James Boon Hwee Tay ICR Main Contributor Mi Lin iv The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL 1. At the time of appraisal, China was transitioning toward a more sustainable growth path. After a period of unprecedented economic growth (10 percent on average per year) and rapid urbanization (more than 50 percent of the population living in cities in 2016 and expected to reach 70 percent by 2030), China’s development policy started to address the country’s economic, environmental, and social imbalances. The 12th five-year plan (2011–2015) and 13th five-year plan (2016–2020) thus emphasized green growth models, focusing on pollution reduction, energy efficiency, water supply improvement (a target of 95 percent urban water coverage), and innovative infrastructure (for example, digital systems). 2. Urban water supply faced significant challenges. Despite being the world’s second largest economy and home to one-fifth of the world’s population, China possessed only 7 percent of the world’s freshwater resources. Water scarcity, driven by both limited water availability and diminishing water quality, remained one of the most pressing challenges to sustainable urban development. Nationwide, the urban water deficit was estimated at six billion m3 a year, with 420 cities having insufficient water supply and 110 facing severe water shortages.1 Water pollution imposed serious economic-, ecological-, and health-related costs. Water loss emerged as a significant challenge in the urban water supply sector. In response, the State Council issued the Action Plan for Prevention and Control of Water Pollution, aiming to reduce water loss to 12 percent by 2017 and to 10 percent by 2020. For Official Use Only 3. A series of ambitious and innovative national policies showcased China’s determination to address water sector challenges. These include the Three Red Lines, which incorporated strict water resources management measures: (a) limiting water abstraction to ensure sustainable use of scarce water resources, (b) improving water use efficiency and productivity to ensure better allocation of water resources to sustain its socioeconomic objectives; and (c) reducing water pollution to achieve environmental objectives and the ecological civilization construct. Furthermore, China introduced multiple regulations that address water loss in urban distribution networks and drive water use efficiency including the 13th five-year plan for Building Water Saving Society, the Standard for Water Loss Control and Assessment of Urban Water Distribution System (CJJ92-2016), and the Action Plan for Prevention and Control of Water Pollution. 4. Improvement of urban water supply infrastructure was one of Liaoning’s development focuses. Liaoning Province, located in the northeast of China, experienced rapid urbanization when becoming one of the country’s major industrial centers and a national key grain production base. However, a decline in economic growth due to a downturn in heavy industry over the past decade led to a lag in infrastructure maintenance and development. Obsolete water supply systems resulted in nonrevenue water (NRW) losses—through leaks, unbilled usage, or inefficient management—that averaged 38 percent across the province and surged up to 64 percent in some areas. As a result, the Government prioritized economic revitalization of the province and investments in dilapidated water supply infrastructure, including water treatment plants (WTPs), pipelines, water meters, and pumping stations. The province also issued a provincial regulation following sectoral standards (CJJ92-2016) to promote NRW reduction in all cities,2 establishing a target of 25 percent NRW to reduce water losses and save energy. 5. Urban water supply in Liaoning faced water quality risks. Located in a water-scarce region, Liaoning has only one- third of China's national average water resources per capita (that is, 820 m³ per year). The major sources of water supply in Liaoning, the Liao River and groundwater, were experiencing deteriorating water quality, posing challenges for the 1 World Bank; Development Research Center of the State Council, the People’s Republic of China. 2014. Urban China: Toward Efficient, Inclusive, and Sustainable Urbanization. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/18865. 2 World Bank. 2017. Energy Saving Management Action Plan for Liaoning Safe and Sustainable Urban Water Supply Project. Page 1 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT provision of reliable and safe water supply.3 Outdated water treatment, storage, and distribution systems increased the risk of contamination. For instance, many secondary booster pumping stations used old water tanks that lacked proper maintenance and cleaning (see figures in Table A6.4.4 in Annex 6.4). Frequent breaks and leaks in the aging pipelines heightened the risk of contaminants seeping into water supply systems. Additionally, there was an urgent need to enhance the province’s capacity for water quality management and monitoring. The updated drinking water quality standard issued at national level (that is, GB5749-2006) expanded the number of regulated water quality parameters from 35 (in GB 5749- 85) to 106, which imposed stricter requirements for water testing and quality management.4 6. Operational efficiency of water supply companies (WSCs) in Liaoning was relatively low. In addition to water loss, high levels of NRW also led to energy inefficiency for water treatment, pumping and distribution. Power consumption in these companies was mainly driven by pumping requirements for water intake and distribution, including pressurized systems that distribute water through pipelines. Due to the high NRW, the energy efficiency of Liaoning WSCs was 45 percent below the national average in terms of specific energy consumption.5 At the same time, the WSCs in Liaoning are publicly owned and operated by the municipality, with low water tariffs. Therefore, the high operational costs of these publicly owned water utilities are not fully recovered through water tariffs, generally, depending on government subsidies. 7. The Liaoning Safe and Sustainable Urban Water Supply project sought to improve urban water supply services in Liaoning Province, China. It was consistent with the Government of China’s objectives as set out in both the 12th five- year plan (for example, 95 percent of urban water coverage, water resource conservation, and pollution reduction) and the 13th five-year plan (for example, innovative infrastructure, green development, and plans to reduce energy intensity For Official Use Only by 15 percent). The project emphasized water quality risk reduction, operational efficiency, water-related energy reduction, and smart water systems (SWSs), 6 which aligned with Liaoning’s priorities for a green transition to clean energy.7 8. The project targeted five cities in Liaoning Province—Shenyang, Anshan, Fushun, Fuxin, and Gaizhou—that were of strategic importance to the provincial economy and ready for upgrades to their water supply infrastructure services. These cities shared the following water supply challenges that urgently needed to be addressed. (a) Outdated and deteriorating infrastructure systems compromised water quality by increasing the risk of contamination and affecting the reliability of supply services. Aging pipelines were prone to leaks, corrosion, and external pollutants, which not only degraded water quality but also resulted in significant water loss. In high rise buildings, reduced water pressure led to inconsistent supply, which further compromised water quality and reliability. Addressing these challenges required improving infrastructure to ensure safe, reliable, and continuous access to clean water. (b) High costs and inefficiencies in water supply systems threatened long-term sustainability. Factors such as high energy consumption per unit of water sold, low revenue due to high NRW, and low tariffs contributed to the system’s financial unsustainability. Additionally, weaknesses in system management and institutional capacity, combined with inadequate data collection, hindered network optimization and integrated system management. Many utilities adopted a reactive rather than a proactive approach, failing to utilize predictive 3 The 2015 State of the Environment Report reported that the water quality of the Liao River was deteriorating, with Grade I-III water levels dropping to 40 percent, the lowest among China’s seven major rivers. 4 The most recent version, GB5749-2022, has been mandatorily implemented in China since April 2023. The number of water quality parameters was reduced from 106 (in GB5749-2006) to 97. 5 0.51 kWh per m3 compared to the national average of 0.35 kWh per m3 (Smith, K., et al. 2015. Impact of Urban Water Supply on Energy Use in China: A Provincial and National Comparison. Springer Science and Business Media, Dordrecht). 6 The SWS featured a comprehensive data collection and decision-making system, acting as a digital twin for the whole production system of the water companies. It integrated all relevant information needed for effective water supply service management. 7 Liaoning Government. 2018. 13th Five-Year Plan for Liaoning Industrial Development. https://gxt.ln.gov.cn/gxt/zhzx/ghzc/CE0CCD32BB1B46408695C3795E47586C/index.shtml#. Page 2 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT models to detect water loss and address leakages promptly, which further escalated operational costs. This narrow focus on infrastructure over broader service quality factors, such as NRW reduction, reliability, and customer satisfaction, undermined the overall efficiency and sustainability of water services. 9. The project aligned with the World Bank’s China Country Partnership Strategy (CPS) at the time of appraisal (FY13–16, Report No. 67566-CN). The project directly contributed to the CPS target of expanding safe water supply in more than 50 small towns and cities while improving service quality and efficiency. With activities designed for energy efficiency improvements, the project also supported greener growth (Strategic Theme 1) and enhanced urban environmental service (Outcome 1.2). The previous engagement through the Second Liaoning Medium Cities Infrastructure Project (LMC-2) (P092618) led to improvement in performance and sustainability of water supply services and was rated satisfactory. This project (P158713) built on the previous success by scaling up the activities and extending LMC-2’s scope. 10. Investment Project Financing (IPF) was the most appropriate World Bank instrument for this project given the specific nature of the investments. Also, the World Bank has significant experience in the water sector, providing the tools and capacity to help upgrade the sector to international standards in a systematic manner. By working closely with the World Bank, the borrower would build capacity for both the water utilities and the government entities involved in the project. Theory of Change (Results Chain) For Official Use Only 11. Figure 1 shows the Theory of Change derived from the project description in the Project Appraisal Document (PAD). Figure 1. Theory of Change Project Development Objectives (PDOs) 12. The PDO as stated in both the Loan Agreement and the PAD was “to improve water quality and operational efficiency of selected water supply utilities in the project areas.” Page 3 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Key Expected Outcomes and Outcome Indicators • Outcome 1: To improve the water quality of selected water supply utilities in the project areas. o PDO original indicator 1: Direct project beneficiaries (Number), of which female (%) o PDO original indicator 2: Compliance with water quality health standards (%) • Outcome 2: To improve operational efficiency of selected water supply utilities in the project areas. o PDO original indicator 3: Non-Revenue-Water in each project city (%) o PDO original indicator 4: Energy consumption by the water utilities in each project city (kWh/m3). Component 1: Water supply service infrastructure improvement (estimated cost at appraisal: US$287.14 million, including IBRD loan of US$185.06 million and counterpart funding US$102.09 million; actual cost: US$133.30 million, of which IBRD US$105.08 million; counterpart funding US$28.22 million). 13. The component financed infrastructure investments required to improve water supply services, reduce NRW, and increase energy efficiency, including the following: (a) Construction, upgrade, and repair and/or rehabilitation of water reservoirs, treatment plants, pump stations, booster pumps, transmission and distribution pipelines, and control valves; (b) Installation and replacement of water meters for (i) district and bulk water supply and (ii) commercial, industrial, and household customers; (c) Installation and/or replacement of household water service connections. For Official Use Only Component 2: Water supply service management improvement (estimated cost at appraisal: US$57.08 million, of which IBRD US$48.63 million and counterpart funding US$8.45million; actual cost: US$38.09 million, of which IBRD US$34.95 million and counterpart funding US$3.14 million). 14. The component supported enhancing the water supply service management through NRW reduction, water quality monitoring, energy savings, and effective asset management, including (a) Mapping and modeling of all water distribution systems; (b) Development and implementation of the NRW reduction plan; (c) Development of the Energy Management Plan (EMP); (d) Development and upgrade of computerized water supply management systems; (e) Enhancement of water quality monitoring for all WTPs and for the water distribution network and other system facilities; (f) Upgrading of sampling and testing capacity for water testing laboratories; (g) Preparation of financial improvement plans; and (h) Capacity building of project companies in developing and managing public-private partnership (PPP) arrangements. 15. Component 3: Project implementation support and institutional strengthening (estimated cost at appraisal: US$16.94 million, of which IBRD US$15.69 million and counterpart funding US$1.25 million; actual cost: US$5.88 million, of which IBRD US$5.85 million and counterpart funding US$0.03 million). 16. The component supported consultancy services in institutional capacity building for WSCs in participating cities as well as project implementation and incremental operating costs of the Provincial Project Management Office (PPMO). This included training, study tours and capacity building of water company staff and project management consultants for design reviews and construction supervision. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets 17. The project had one Level 2 restructuring on July 18, 2022. The PDO did not change, but the PDO indicators and outcome targets were revised. The subprojects in two cities, Shenyang and Fuxin, were canceled. Page 4 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Revised PDO Indicators For PDO Outcome 1: • The target of the PDO indicator ‘Direct project beneficiaries (number)’ was revised from 5,690,000 to 2,504,686. The definition was also further clarified.8 • A new PDO indicator for Outcome 1 was added: ‘Percentage of population in project cities receiving water supply from rehabilitated/upgraded WTPs under this project’. • The original PDO indicator ‘Compliance with water quality health standards’ was dropped. For PDO Outcome 2: • The target for PDO indicator ‘Non-Revenue-Water in each project city (%)’ was revised for Fushun WSC from 22.1 percent to 21.6 percent and for Gaizhou from 35.1 percent to 35.2 percent. The targets for Shenyang and Fuxin were dropped. • The PDO indicator ‘Energy consumption by the water utilities in each project city (kWh/m3)’ target was revised from 0.36 to 0.765 for Gaizhou and the baseline corrected from 0.58 to 0.87 for Shenyang WSC. Revised Components 18. The main revisions of the components are as follows: For Official Use Only • Dropped subprojects for Shenyang and Fuxin. December 31, 2021, was agreed as the cut-off date for IBRD loan disbursement for these two cities. Revised activities • Component 1: Fushun WSC and Gaizhou WSC added activities, including upgrading of six WTPs, more pipeline rehabilitation, and rehabilitation and construction of additional pumping stations. • Component 2: Fushun WSC and Gaizhou WSC added activities to expand/upgrade their SWSs. • Component 3: The activities ‘Building the capacity of project companies in developing and managing PPP arrangements’ and ‘International training and visits’ were canceled. Other Changes 19. Other key changes, including extension of the closing date, financing, and revisions to indicators, are as follows: (a) One-year extension. The original loan closing date was extended by a year to June 30, 2024. (b) Reduced and reallocated financing. The IBRD loan amount was reduced from US$250 million to US$150.70 million; counterpart funds were reduced from US$136.29 million to US$74.58 million. The undisbursed loan of the two dropped cities (US$84,403,273.33 and US$14,896,692.77) were canceled as of March 25, 2022, and a minor reallocation among loan disbursement categories was made for the remaining subprojects. (c) Changes in intermediate results indicators o Two new intermediate results indicators were added: ‘Number of self-tested water quality parameters of each WSC’ (with targets 9 of Fushun: 35; Gaizhou: 9) and ‘Water supply capacity of 8 To avoid double counting, it was decided at restructuring that this indicator would include those benefiting from : (a) improved water treatment, (b) new/renovated pumping stations, (c) rehabilitated pipelines and secondary booster stations, (d) new/replaced water meters, and (e) supply pipelines. Overlapping beneficiaries were counted only once, while SWS beneficiaries were considered indirect. 9 Anshan already had full self-testing capacity that met national requirements before the project, so no need to add targets for self-testing. Page 5 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT rehabilitated/upgraded water treatment plants under this project (million m3/day)’ (with targets of Anshan: 1.15; Fushun: 0.24; Gaizhou: 0.06). The indicator ‘Grievances responded and/or resolved within the stipulated service standards for response times (%)’ was replaced with a new indicator ‘Grievance settlement rate within the stipulated service standards for response time (%)’. Rationale for Changes and Their Implication on the Original Theory of Change 20. The changes implemented with the restructuring were mainly due to the following reasons: (a) Reduced project scope: changes in government plans. Due to the availability of other concessional funds, the Government decided to drop the remaining activities in two cities (Fuxin and Shenyang) from the project and financed the remaining activities using other funds. The undisbursed IBRD loan for Fuxin and Shenyang was canceled. The target for the PDO indicator of ‘direct project beneficiaries’ was reduced accordingly. (b) Changes in components: loan savings and scaling up SWSs. The loan savings from competitive bidding were used for additional investments in Fushun and Gaizhou, including the upgrading of WTPs and expansion of water supply services in strategically important districts. As the development and application of SWSs began to demonstrate positive outcomes in improving operational efficiency, more SWS activities were also added, such as the installation of more smart water meters and scaling up district metered areas (DMAs) pilots. (c) Project extension: COVID-19 and short effective construction period. Liaoning was one of the provinces in China most financially affected by the COVID-19 pandemic.10 Restrictions in the project cities from 2020 to For Official Use Only 2022 substantially affected procurement and implementation progress. This led to slow project progress before the midterm review (MTR), the cancellation of international training and visits, and the extension of the project closing date. With long and cold winters, construction in Liaoning is only possible for about six months each year, from late March to October. The extension allowed for catching up on the construction schedule, which was largely delayed during COVID-19. (d) Dropped activities for PPP: crippled investment environment. The economic effects of COVID-19 led to an unfavorable investment environment. The weakened economy and existing low water tariffs limited the cities’ revenue generation and constrained their ability to fully support the operation and maintenance of the WSCs. The PPP thus became infeasible and relevant activities were dropped. (e) Energy consumption targets changed: the alteration of the water source. At appraisal, Gaizhou City planned to receive treated water from Guojiatun WTP in Yingkou City. However, in 2019, Yingkou City decided to use Guojiatun WTP to meet its own water demand due to increased urbanization and population growth. Gaizhou therefore changed its water source to the existing Yangjiadian WTP in Gaizhou. Corresponding activities planned for Guojiatun WTP (for example, extending water pipelines) were therefore canceled. The baseline and target for energy consumption indicators in Gaizhou were also revised accordingly. (f) Adjustments to the Results Framework: clarifications of key objectives and indicators. The project, as described in the PAD, aimed to strengthen the water supply services that ensured consumers received water of satisfactory quality. However, Outcome 1, as stated above, failed to convey the management aspect of the designed project activities. The 2022 restructuring sought to more clearly align the PDO with the project’s true intent, that is, ‘to improve water quality management’; however, this required approval by the World Bank’s Board of Executive Directors and the client’s authorities which would have resulted in a prolonged process for both the World Bank and client. In order to streamline the process, the team was advised to optimize the results indicators rather than revise the PDO. A new PDO indicator for Outcome 1, ‘Percentage of population in project cities receiving water from rehabilitated/upgraded WTPs’ was introduced. This new 10 https://www.gov.cn/xinwen/2020-05/18/content_5512536.htm. Page 6 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT indicator considered that the rehabilitated and upgraded WTPs in the three remaining WSCs could reduce contamination risks through advanced disinfection methods and better monitoring systems, reflecting a management focus on the water quality. Meanwhile, the original PDO indicator for Outcome 1 ‘Compliance with water quality health standards’ was moved as an intermediate results indicator and renamed ‘Number of self-tested water quality parameters of each WSC’. This name change reflects the project’s intention of encouraging WSCs to enhance their self-testing capacity as per the updated national requirements (see context in paragraph 5. ) 11 instead of just meeting the national water quality standards, which all WSCs had already met even before the project started. 21. The changes resulting from the restructuring did not affect the Theory of Change. II. OUTCOME A. RELEVANCE OF PDO Rating: High 22. The PDO remained highly aligned to the current World Bank Country Partnership Framework (CPF) (FY20–25) at project closure. The project directly contributed to Engagement Area 2 ‘Promoting Greener Development’ in the CPF (Report No. 117875-CN) by supporting a transition to a lower carbon energy path in water supply and promoting better quality of service and high operational efficiency. Additionally, the PDOs are well aligned with the China Country Climate and Development Report by promoting operational and energy efficiency improvements and reducing associated For Official Use Only greenhouse gas emissions in the water supply sector. 23. The project continued to be well aligned with China’s national priorities, as articulated in the 14th five-year plan (2021–2025) and the Long-term Vision for 2035. China’s 14th five-year plan and Long-term Vision for 2035, 12 announced in 2021, considers water conservation a national priority. The reduction of urban water loss and the conservation of water resources have been achieved through the reduction of pipeline water leakage and strengthening of municipal water management under this project. 24. The PDO remained closely aligned with the global water agendas. The project directly contributed to Sustainable Development Goal (SDG) 6 (Water and Sanitation), SDG 7 (Affordable and Clean Energy), and SDG 9 (Industry, Innovation, and Infrastructure) by contributing to the access to safe drinking water and improved quality, efficiency (including operational, energy, and financial efficiency), and sustainability of water supply services. The PDO aligned with the objectives of the Water Action Decade 2018–2028 by focusing on sustainable water management and efficiency. The project’s systematic design also aligned with the Water Security and Climate Adaptation Global Challenge Program recently set up by the World Bank Group, which adopts a One World Bank approach to promote systemic change and grow investments across water sectors. 25. Given the close alignment of the PDO with the current CPF and client country priorities, and the global agenda, relevance of the PDO is rated High. B. ACHIEVEMENT OF PDOs (EFFICACY) Rating before restructuring: Substantial Rating after restructuring: High 11 The baseline value of the original PDO indicator (33 percent) was calculated by dividing the number of water testing parameters that each WSC fulfilled (35) by the revised total (106), as recommended by the updated national standard (GB5749-2006). 12 National Development and Reform Commission. 14th Five-Year Plan and the Long-term Vision for 2035. https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202103/t20210323_1270124_ext.html. Page 7 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 26. The PDO was to assist the borrower in improving water quality ‘management’ (see discussion in paragraph 20 (f)) and operational efficiency of selected water supply utilities in Liaoning Province. A split rating was applied because the project reduced its scope following the restructuring by dropping two of the five cities and accordingly revised a few PDO indicators and intermediate results indicators along with their associated targets. A detailed analysis of the achievements of all indicators relating to the two PDO outcomes can be found in Annex 6.1. Outcome 1: To improve the water quality of the selected water supply utilities in the project areas. Table 1. Selected Indicators for Outcome 1 (See full list of indicators in Table A6.1.1 of Annex 6.1 Efficacy Analysis). No. Indicator Indicator Name Unit Scope Baseline Actual (By Original % of Revised % of Type June 30, Target Original Target Revised 2024) (PAD) Target Target Achieved Achieved 1 PDO Direct project Number Total 0 2,738,901 5,690,600 49.57 2,504,686 109.35 indicator beneficiaries Anshan 0 1,290,156 — n.a. 1,136,400 113.53 Fushun 0 1,267,000 — n.a. 1,267,000 100.00 Gaizhou 0 181,745 — n.a. 101,286 179.44 2 PDO Percentage of pop. Percentage Anshan 0 60 — n.a. 60 100.00 indicator in project cities Fushun 0 100 — n.a. 100 100.00 receiving water Gaizhou 0 100 — n.a. 100 100.00 supply from For Official Use Only upgraded WTPs 3 Intermediate Length of new or Kilometers Total 0 101.108 300 33.70 98.560 102.59 results rehabilitated main Anshan 0 42.280 — n.a. 40.498 104.40 indicator pipelines for water Fushun 0 58.76 — n.a. 58.00 101.31 supply Gaizhou 0 0.068 — n.a. 0.068 100.00 4 Intermediate Water supply million Total 0 1.15 — n.a. 1.15 100.00 results capacity of m3/day Anshan 0 0.24 — n.a. 0.24 100.00 indicator upgraded WTPs Fushun 0 0.85 — n.a. 0.85 100.00 under this project Gaizhou 0 0.06 — n.a. 0.06 100.00 5 Intermediate Number of self- Number Fushun 35 47 — n.a 47 100.00 results tested water indicator quality parameters Gaizhou 9 42 — n.a 42 100.00 of each WSC 6 Intermediate Customer Percentage Average 65 95.97 75 127.96 85.00 112.91 results satisfaction with indicator the quality of water supply services 27. More people benefited from improved water supply systems with reduced contamination risks. The project supported the improvement of water supply systems, from the water source to end users. For example, the project rehabilitated existing WTPs and replaced old pipelines, pumps, and water tanks prone to breaks, corrosion, and contamination. The modernization and refurbishment of such infrastructure, along with the establishment of a real-time alert system, improved the integrity of the water treatment and distribution system, reducing contamination risks. By June 2024, the project had completed 101.11 km of ‘rehabilitated main pipelines for water supply’, surpassing the revised target of 98.56 km (Table 1). As a result, pipeline bursts in Fushun decreased from 4,237 cases in 2018 to 2,532 cases in 2023, while in Gaizhou they fell from 1,532 to 675, and in Anshan from 17.74 cases to 4.13 cases per 100 km. The significant Page 8 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT reduction of pipeline bursts led to decreased water loss and contamination risks and ensured the continuous delivery of high-quality water to end users. As a result, 2,738,901 people have directly benefited from these improvements, surpassing the revised target of ‘Direct project beneficiaries’ by 109.35 percent (Table 1). The dropping of the two cities (Shenyang and Fuxin) accounts for the approximately 50 percent reduction in potential beneficiaries compared to the original target (Table 1).13 28. The WTPs were upgraded with secured water quality. The project supported the rehabilitation and upgrading of all WTPs in Fushun and Gaizhou, as well as the largest WTP in Anshan,14 which enhanced the reliability of the water quality supplied by the WSCs. Project interventions included advancements in mixing, flocculation, sedimentation, disinfection processes, and backwash recycling system, as well as the upgrading of automatic control and monitoring systems and the installation of real-time online water quality monitoring facilities (see more in Annex 6.4). Notably, this project adopted an advanced method of disinfection (for example, generating Sodium Hypochlorite [NaClO] out of salt) to reduce the environmental and security concerns associated with liquid chlorine in surrounding communities. This is a relatively new disinfection method in China, which has enhanced the efficiency, robustness, and security of water disinfection. All three project cities fully achieved the targets of the newly added PDO indicator of ‘Percentage of population in project cities receiving water supply from upgraded WTPs’ (Table 1). The full achievement of 1.15 million m3 per day target for the intermediate indicator of ‘water supply capacity of upgraded WTPs’ further demonstrates the positive impacts of these infrastructure improvements. 29. Water quality testing and monitoring capability significantly improved. The number of self-tested water quality For Official Use Only parameters were added after MTR and only measured in Fushun and Gaizhou, given Anshan met its full capacity prior to the project (Table 1). Both cities fully met the targets by the end of the project (Fushun: 47; Gaizhou: 42). Staff capacity for water quality testing also improved, with 564 trained ‘on asset management systems, water quality monitoring, and pipe leakage detection and repairing’, reaching 225.6 percent of the revised target of 250 (Table A6.1.1). All three WSCs procured and installed online water quality monitoring equipment and laboratory water quality testing instruments (for example, gas chromatograph and atomic absorption spectrometer), which enabled real-time water quality monitoring and enhanced the testing capacity of the water quality. The water quality test results showed that the water supplied by the three WSCs fully met the requirements of new drinking water standards (see Annex 6.4.3). 30. Customers were highly satisfied with the water supply services of the project WSCs. With the project interventions, residents can now enjoy high-quality and safe water supply services, including steady water quality, adequate pressure and flow, a convenient payment system, and timely responses and treatment of reported water supply issues (Annex 6.4.2). The ‘customer satisfaction with the quality of water supply services’ has significantly improved through implementation, from 65 to 95.97 percent on average, surpassing both the original target by 127.96 percent and revised target by 112.91 percent (Table 2). The satisfaction survey collected data on customer’s evaluation of water turbidity, water pressure, safety, and continuity, indicating the overall quality of water supply services (Annex 6.4.2). Similar outcomes were obtained when gender was considered. ‘Percentage of women satisfied with the quality of water supply services’ reached 93.98 percent on average, surpassing both the original target and revised targets (Table 1). The setting up of the customer service hotline system (see Case 3 in Annex 6.3.3) in the SWS helped address the complaints and issues raised by customers. Accordingly, the ‘Grievance settlement rate within the stipulated service standards for response times’ reached 99.6 percent, almost achieving the original target and exceeding the revised target. 13 Nevertheless, the two dropped cities continued their planned investments using their own funds, resulting in additional beneficiaries that were not included under this project (evidenced by Fuxin and Shenyang’s updates during the ICR mission). 14 The project supported the upgrading of Wangjiayu WTP in Anshan, which supplies water to at least 60 percent of the population. The remaining WTPs in Anshan were constructed or upgraded in recent years by the Government. Page 9 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 31. Given that the operation partially achieved its original outcome targets (the gap is mainly due to the dropping of the two cities), the rating for original Outcome 1 is Modest. Given that the operation exceeded or fully achieved its revised outcome targets and desired results, the rating for Outcome 1 after restructuring is High. Outcome 2: To improve the operational efficiency of the selected water supply utilities in the project areas Table 2. Selected Indicators for Outcome 2 (see full list of indicators in Table A6.1.2) No. Indicators Indicator Unit Scope Baseline Actual (By Original % of Original Revised % of Revised Type Name June 30, Target Target Target Target 2024) (PAD) Achieved Achieved PDO Indicator Non-Revenue- Percentage Anshan 30.90 23.600 24.00 105.80 24.000 105.80 1 Water in each Fushun 38.80 21.600 22.10 102.99 21.630 100.17 project city Gaizhou 64.10 33.300 35.10 106.21 35.200 106.57 3 PDO Indicator Energy kWh/m Anshan 0.46 0.450 0.45 100.00 0.450 100.00 consumption Fushun 0.55 0.504 0.51 115.00 0.505 102.22 2 by the water Gaizhou 1.60 0.95a 0.36 52.42 (68.47) 0.765 77.84 (101.68) utilities in each (0.751) project city Intermediate Number of Number Total 0 211,877 115000 184.24 199,694 106.10 results water meters Anshan 0 99,081 n.a. 99,081 100.00 — For Official Use Only 3 indicator installed Fushun 0 40,098 — n.a. 40,098 100.00 Gaizhou 0 72,698 — n.a. 60,515 120.13 Intermediate Number of Number Total 0 143 270 52.96 143 100.00 results secondary Anshan 0 80 — n.a. 80 100.00 4 indicator booster pumps Fushun 0 33 — n.a. 33 100.00 installed/reha bilitated Gaizhou 0 30 — n.a. 30 100.00 Intermediate Working ratio - Anshan 1.02 0.84 0.90 150.00 0.90 150.00 5 results Fushun 0.95 0.84 0.85 110.00 0.85 110.00 indicator Gaizhou 1.30 0.92 0.95 108.57 0.95 108.57 Note: Gaizhou is changing its water source from groundwater to surface water, which will reduce energy needs for pumping. Once the water source is changed, the estimated energy consumption is expected to be 0.751. 32. The project substantially reduced NRW. NRW is a result of physical leakage (for example, pipe leakages), non- physical leakage (for example, meter omissions), and non-charge legal water use (for example, water used for firefighting and public utilities). The project addressed these issues by rehabilitating pipelines, installing district and household water meters, and developing an SWS, reducing both the physical and non-physical leakages. Case studies demonstrated the attributable contribution of project interventions to the efficient measuring of water use and the reduction of NRW (Tables A6.1.3 and A6.1.4 in Annex 6.1). In Fushun and Anshan, case studies showed significant reduction in NRW (ranging from 27 percent to 60 percent) due to project-financed meter and pipeline rehabilitations (Table A6.1.4). At closure, the project replaced 1,089.5 km of residential pipelines and installed 1,558 district water meters and 211,877 residential water meters, significantly reducing the leakages and uncharged water loss, and exceeding the revised targets (Tables 2 and A6.1.2). As a result, all three project cities exceeded both original targets and revised targets on NRW reduction (Table 2). Among them, Gaizhou was able to significantly reduce NRW from 64.1 percent to 33.3 percent, and Anshan and Fushun were better than the provincial average (that is, 25.4 percent). The reduction of NRW annually saved approximately 45 million m3 of water across Anshan, Fushun, and Gaizhou, by decreasing the volumes of water extracted, treated, and distributed. The reduction in water loss also enhanced the efficiency of energy utilization. Page 10 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 33. The project enhanced energy efficiency, leading to considerable energy savings. The PDO indicator ‘the energy consumption by the water utilities in each project city’ was achieved, reducing average consumption from 0.888 to 0.568 kWh per m3 (Table 2). All the cities fully reached the targets except for Gaizhou, which was awaiting a change in its water source (Table 2).15 In Fushun, the main energy reduction came from the rehabilitation of the water plants, including the replacement of 35 old motors which, according to operational experience of the WSC, can save 2.4 million kWh per year (that is, 5 percent). In Anshan, the reduction mainly came from the rehabilitation of 80 pumping stations, which were built 30 years ago (verified by the client’s progress Report No. 10 and in Annex 6.4 [Water quality analysis]). A total of 143 ‘secondary booster pumps installed/rehabilitated’ also contributed to improved energy efficiency, reaching 52.96 percent of the original target and 100 percent of the revised target (Table 2). According to the controlled tests in Anshan, rehabilitation of the secondary booster pumps led to an approximate 40 percent reduction of energy consumption (for example, from 4,464 kWh per month to 2,715 kWh per month in Lishan #7 pumping station and from 7,158 kWh per month to 4,426 kWh per month at the Dade Yuting pumping station). 34. The working ratio at each WSC increased notably, signalizing effective operational cost recovery. The ‘working ratio’ represents the ratio of all operating costs (excluding taxes, interests, depreciation, and debt service) divided by the total revenue including water charges and fees, subsidies, and revenue from other services. A lower value indicates better operational efficiency and financial sustainability. Due to the implementation of energy improvement and financial improvement plans (FIPs) as well as the real-time monitoring systems enabled by the SWS, Anshan, Fushun, and Gaizhou have significantly improved their operational efficiency (for example, reduced NRW, reduced energy consumption for water production and delivery, shorter time to detect and address pipeline leaks, and fewer leakage accidents, thus For Official Use Only lowering maintenance costs). The resulting savings in operating costs amounted to approximately US$7.83 million in Anshan, US$15.51 million in Fushun, and US$4.76 million in Gaizhou (see details in Annex 4). As a result, the working ratio significantly exceeded the targets by 150 percent in Anshan, 110 percent in Fushun, and 109 percent in Gaizhou (Table 2). 35. The SWS established in each WSC systematically enhanced operational efficiency. At closure, more comprehensive SWSs were developed and implemented in all three WSCs than originally planned at appraisal. All three WSCs established ‘computerized asset management systems’ and ‘NRW control systems’, installed ‘the agreed new water quality online monitoring facilities’ and built the geographic information system (GIS), reaching the overall target and sub- targets for SWSs (Table A6.1.2). Anshan and Fushun also established planned ‘hydraulic network models’. These systems were integrated into the SWSs, which significantly enhanced operational efficiency. For example, Anshan established a smart water supply management platform, which integrated comprehensive data related to water treatment, real-time water quality monitoring, and operation data of pumps and pipelines. Based on the comprehensive data collected, integrated, hydraulic models were used to understand the impacts on water pressure in the event of pipeline bursts (see Case 1 in Annex 6.3.1). The DMA leakage monitoring and management system was used to identify pipeline leakages and dispatch repair requests to WSC staff through a mobile app to ensure timely repair, saving daily water loss and energy (see Case 2 in Annex 6.3.2). Meanwhile, the WSCs used the SWS to manage personnel more efficiently through a real-time performance evaluation system, which comprehensively collects relevant data on the repair work orders (see Case 3 in Annex 6.3.3). With detailed data on maintenance duration and technical difficulty, the WSCs can evaluate work efficiency and professional skill level, thus creating targeted incentive mechanisms and capacity-building plans. With multi- dimensional data collection, cross-sectoral information integration, and real-time monitoring and warning systems, the SWS profoundly improved the water supply service management, making it more efficient and evidence based. More examples and photos can be found in Annex 6.3. 36. Given that the operation exceeded or fully achieved both its original and revised outcome targets (and is likely to do so for the energy saving in Gaizhou), the ratings for both original and revised Outcome 2 are High. 15 Gaizhou is expected to reduce energy consumption to 0.751 once there is a change in the water source. Page 11 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Justification of Overall Efficacy Rating 37. Compared to the original targets, the operation almost fully achieved its objectives even though some indicators were not met due to the exclusion of the two cities. Still, the project not only successfully enhanced water supply management for the remaining three cities but also surpassed the targets for most of the indicators for both outcomes after the restructuring. 38. The overall efficacy is rated Substantial against the original targets and High against revised targets. C. EFFICIENCY Rating: Substantial Assessment of Efficiency and Rating 39. According to the ICR efficiency analysis, the project had a higher economic internal rate of return (EIRR) and financial internal rate of return (FIRR) for two of the three water utilities than those in the PAD analysis (Table 3). Project investments were selected based on strategic importance (for example, the number of leakage incidents), with investments designed to increase the efficiency of the utilities’ service delivery. The main economic benefits from implementation were cost savings from reduced leakages and reduced costs at renovated pumping facilities (through reduced electricity costs, costs of chemicals for water treatment, and repair and maintenance costs) and implementation of SWSs. The direct economic benefits stemming from project interventions were enhanced by the impacts of climate change mitigation. The retrofitting of water supply and distribution networks and installation of more energy-efficient For Official Use Only pumps not only enhanced the utilities’ energy efficiency but also reduced energy losses and CO2 emissions. A scenario in which the project was not implemented assumed a further deterioration of the supply network with increased leakage rates and associated costs. 40. Economic analysis. At appraisal, an economic analysis was prepared with a cost-effectiveness analysis and a cost- benefit analysis. At completion, the analysis used the same approach adopted at appraisal but applied actual project costs and benefits, recalculating the EIRR, and comparing the results with the initial estimates. The EIRR results of the subprojects were 26.5 percent for Anshan, 36.7 percent for Fushun, and 21.5 percent for Gaizhou, which are all higher than the benchmark economic rate of return of 10 percent. The EIRRs of all WSCs at completion indicated that the project is economically viable and robust. 41. Financial assessment. The financial assessment identified the expected savings from more efficient water and electricity consumption, as well as from the repair and maintenance of water-related infrastructure. The financial analysis at appraisal showed a positive internal rate of return and improved financial performance of the companies from implementing the project. Financial projections at project closure showed further improvements toward the financial sustainability of operations. Similar to the cost-benefit analysis, the FIRRs of Fushun and Gaizou were much higher than at appraisal, while that of Anshan was close due to lower-than-expected demand development. The FIRRs of the utilities were limited by the non-revision of water tariffs, though increases are projected over the near to medium term. Table 3. EIRR and FIRR at Appraisal and Completion for the Three Selected WSCs City EIRR at Appraisal (%) EIRR at Completion (%) FIRR at Appraisal (%) FIRR at Completion (%) Anshan 31 26.5 18 18.7 Fushun 11 36.7 9 27 Gaizou 3 21.5 4 16.5 42. The project improved the energy efficiency of utilities and reduced energy losses . According to the statistical data from previous years, during implementation, the annual electricity savings for each subproject before and after the project implementation were 2.33 million kWh for Anshan, 8.9 million kWh for Fushun, and 1.09 million kWh for Gaizhou. Page 12 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT As assumed at appraisal, CO2 emission could be reduced by 0.95 kg per kWh of electricity saved. As a result, the annual CO2 emission reduction of each subproject was 2,216 tons in Anshan, 8,482 tons in Fushun, and 1,038 tons in Gaizhou. 43. Implementation efficiency. The project’s one-year extension was well justified to allow satisfactory completion of all the planned and newly added activities, considering the impacts of the COVID-19 pandemic and the short effective construction period in Liaoning. The extension did not have a negative impact on project efficiency. Following the restructuring, project implementation and disbursement followed the revised schedule. The loan savings from competitive bidding were efficiently utilized for the newly added activities in Fushun and Gaizhou. 44. Rating. The project investments led to improved financial status and cost savings in all WSCs through reduced water supply costs, leakages, repair and maintenance expenses, and electricity costs. Meanwhile, the unit energy consumption of water produced by each WSC improved, reducing the total energy consumption and improving the financial situation of enterprises to varying degrees. The assessments of economic and financial benefits from the investments at closure showed satisfactory results. Thus, the overall efficiency is rated Substantial. D. JUSTIFICATION OF OVERALL OUTCOME RATING 45. The split rating was applied as in Table 4. The outcome rating based on original targets is Moderately Satisfactory based on High relevance, Substantial efficacy and Substantial efficiency. The outcome rating based on revised targets is Highly Satisfactory, given its High relevance, High efficacy and Substantial efficiency. Considering the outcome rating and disbursement ratio before and after restructuring,16 the overall outcome rating is rated Satisfactory. For Official Use Only Table 4. Split Rating Results Original Targets Revised Targets (after restructuring) Relevance High Efficacy Substantial High Improve water quality of selected water supply Modest High utilities in the project areas. Improve operational efficiency of selected water High High supply utilities in the project areas. Efficiency Substantial Outcome ratings Moderately Satisfactory Highly Satisfactory Numerical value of the outcome ratings 4 6 Disbursement 96.4 53.68 Share of disbursement 0.64 0.36 Weighted value of the outcome rating 2.6 2.1 Final Outcome rating 4.72 (rounded to 5) Note: Highly Satisfactory (6); Satisfactory (5); Moderately Satisfactory (4); Moderately Unsatisfactory (3); Unsatisfactory (2); Highly Unsatisfactory (1). E. OTHER OUTCOMES AND IMPACTS Gender 46. The project had three gender-related indicators: ‘Female beneficiaries’ of the project; ‘Percentage of women satisfied with the quality of water supply services’; and ‘Number of Female Staff received training on asset management systems, water quality monitoring, and pipe leakage’. All three indicators exceeded their targets. Specifically, 199 female staff members (Anshan 120; Fushun: 51; and Gaizhou: 28) received training, surpassing the revised target of 93. In addition, women held multiple key leadership positions in the companies (for example, key staff in SWSs). The increased 16 The disbursement ratio is calculated based on the restructuring approval date of July 18, 2022 (see Annex 6.2: Disbursement data). Page 13 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT engagement of women in the project was a positive step toward gender inclusion and empowerment in the traditionally male-dominated water sector. Also, as women often manage household tasks related to water access, improvements in water supply services could significantly reduce their workload. Institutional Strengthening 47. The institutional strengthening of water supply service management institutions in the selected cities was a core outcome of the project. During implementation, 564 WSC staff participated in trainings related to asset management systems, water quality monitoring, and pipe leakage detection and repairing. Additional training covered bid preparation, contract management, and SWSs as well as on-site inspection missions. The SWSs significantly improved data collection, real-time management, emergency response, grievance redress mechanisms (GRMs), and resource optimization of the WSCs. The hydraulic modelling embedded in the system was one of the first in the province and will likely play an important role in leakage detection, NRW reduction, and emergency response. Furthermore, the project developed a performance benchmarking report for the water supply industry in Liaoning, which helped the WSCs better understand their water supply situation compared to other cities in the province and provided clearer targets for future improvements. Mobilizing Private Sector Financing n.a. Poverty Reduction and Shared Prosperity For Official Use Only 48. The project improved the quality of lives for local communities, especially vulnerable groups. This was reflected in improved customer satisfaction and timely responses to the GRM. For example, interviews of disabled couples in Gaizhou revealed significant benefits from the project, as household water access improved from intermittent, low- pressure water supply to continuous, high-pressure, good-quality water. The WSC staff also provided additional service and communication to accommodate the needs of poor and disabled groups, ensuring that no one was left behind. Other Unintended Outcomes and Impacts n.a. III. KEY FACTORS AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 49. The project benefited from a comprehensive analysis of the needs of the WSCs in improving service quality and efficiency. The project design successfully captured the key interventions required for achievement of the project objectives. The identification and selection of the project cities considered social and financial enabling factors and a risk assessment that included adequate proposed mitigation measures. A comprehensive analysis with significant data collection was prepared during project preparation to ensure project design aligned with the priorities and immediate needs of each WSC. The considerable needs for service and infrastructure improvements served as a strong motivation for the WSCs to reach the objectives of the project. 50. The project encountered challenges in the articulation and validation of local situations when determining the appropriate indicators for monitoring progress. While the indicators included in the Results Framework generally aligned with the PDOs, ambiguities in understanding the actual water quality situation on the ground resulted in the inaccurate selection and specification of certain indicators. This was the case for the indicator ‘Compliance with water quality health standards’, which was revised during the restructuring (see paragraph 20. ). Additionally, there were some discrepancies in the Results Framework due to linguistic confusions (for example, some reports were initially prepared in Chinese and then translated into English or were available only in Chinese) in the communication between the client and the World Page 14 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Bank, as revealed in the client’s reports. 17 Furthermore, a few indicators had inaccurate baseline values or vague definitions that were adjusted and redefined during the restructuring (see paragraphs 17. ). 51. The lack of a solid counterpart funding plan for each project city led to significant delays in the procurement of non-Bank financed (NBF) contracts. Counterpart funding played a significant role in financing of the project. However, unclear sources and applications of counterpart funds during preparation, along with major changes at loan negotiation (for example, the decision to change the World Bank loan disbursement percentage to 100 percent for World Bank- financed contracts and expenditures), reduced momentum in securing counterpart funds and implementing NBF contracts. The deferral of a planned water tariff increase due to the pandemic and differences in bid evaluation practices between the Government and the World Bank further contributed to the delays. Even during the last year of implementation (that is, mid-2023), the World Bank team had to intensify communication with the PPMO, Project Implementation Units (PIUs), and city governments (including the city mayors) to secure counterpart funds. Eventually, with strong support of city leadership, counterpart funding was provided as agreed. B. KEY FACTORS DURING IMPLEMENTATION Factors Subject to the Control of Government and Implementing Entities 52. The well-designed and coordinated implementation arrangements were critical factors for effective implementation. The implementation arrangement was similar to the previous World Bank-financed water project, LMC- 2, which had proven effective for project reporting, operation, and monitoring. For example, to address the tight For Official Use Only construction schedules for new activities in Fushun and Gaizhou after the restructuring, weekly construction plans were prepared, and biweekly reviews were conducted among the WSCs, PPMO, and World Bank through regular communication, reporting, and site inspections. The close cooperation among all parties ensured accelerated project progress over the last two years. 53. Seamless integration of capacity building with the project design and implementation. In addition to the training given by the World Bank and PPMO, consultants were hired to support the monitoring and evaluation (M&E) process and improve the design and implementation of project key activities (for example, NRW reduction, EMPs, FIPs, and utility performance reports). Throughout the process, the consultants provided hands-on support, which improved the technical capacity of the WSCs’ managers and staff and ensured efficient and technically sound design. 54. Uneven capacity in technical designs and procurement among WSCs led to delays during early implementation stages. Due to the limited institutional capacity at some WSCs and an incomplete evaluation during project preparation, Procurement Plans lacked sufficient detail and consideration. For example, the absence of comprehensive geological surveys in the preliminary design phase, misalignment of water transmission pipelines emerging in the construction design phase, and underestimated contract lengths due to winter construction suspensions 18 in Liaoning all delayed project progress. Capacity and progress inconsistencies among WSCs, particularly the slow start in Shenyang and Anshan, further added to management challenges and delayed the overall project schedule. However, these delays were gradually addressed and improved on over time, especially following the restructuring. To enhance local institutional capacity, the World Bank team and PPMO provided a series of customized training workshops for the city WSCs’ staff, including training on project management, procurement, financial management, disbursement arrangements, and M&E. Steps were also taken to expedite access to counterpart funds (see paragraph 51. ). Implementation progress gradually accelerated with improved capacities and secured counterpart funds. 17 The client’s latest project implementation plan stated the project's goal as “to improve the quality of water supply services and to enhance the operational efficiency of water supply utilities” in Liaoning Province. In the Chinese context, the terms for ‘supplied water quality’ and ‘the service quality of water supply’ might be using the same words ‘供水质量’, contributing to this minor inconsistency with the agreed PDO. It also indicated the true intent of the project’s goal on ‘management’ aspects of water quality. 18 Due to weather constraints, the effective construction period in Liaoning is only six months, from April to October. Page 15 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 55. Change of the financial situation. At the MTR, the client identified more suitable concessional loans for the two project cities (Shenyang and Fuxin) and decided to drop them from the project. The decision to exclude the two cities was based on financial considerations and COVID-19-related uncertainties, aligning with both the client needs and World Bank requirements. During the ICR mission, it was confirmed that both WSCs successfully completed their planned project activities with alternative funding. Fuxin even exceeded the original targets, setting a new standard for the province by reducing the NRW ratio to 13 percent, as reported during the mission. Factors Subject to World Bank Control 56. The World Bank team showed flexibility in adjusting the project design to align with project objectives. The team was responsive to the client’s evolving priority needs. Implementation support missions were conducted regularly, and follow-up actions were documented. For example, during the MTR, the World Bank team supported the increased activities of Fushun and Gaizhou based on reassessed needs. Given the issue of a constrained timeline affected by COVID- 19, the World Bank team proactively worked with the PPMO to supervise and manage implementation progress, co- developed a detailed implementation plan, and provided timely feedback and guidance for the monthly progress. 57. The World Bank team conducted a series of supervision missions and provided essential technical guidance, effectively improving institutional capacity and operational sustainability. A team of technical experts from the World Bank offered hands-on support in NRW reduction, energy saving, and SWS establishment, enhancing the operational efficiency and sustainability of the water systems. The World Bank team also conducted thorough reviews and provided guidance to ensure compliance with its environmental and social (E&S) protection policies and procurement For Official Use Only requirements. However, the changes of four task team leaders and other experts during project preparation and implementation required adapting to new management and communication approaches. Factors outside the Control of Government and Implementing Entities 58. The COVID-19 pandemic weighed heavily on China, particularly Liaoning Province, and was a major constraint in project implementation. Quarantine measures restricted personnel movement, hindering project activities and contributing to the withdrawal of two project cities and the project extension. For example, the design institute could not complete project construction drawings on time, delaying procurement. The bidding process stalled due to the closure of the transaction center. Awarded contracts were not implemented, and ongoing contracts faced delays due to pandemic control measures and late delivery of equipment and materials. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 59. The M&E design presented a clear structure but had moderate shortcomings, including the omission of the management services aspect in the wording of Outcome 1 (see paragraph 20 (f)), indicator design, and baseline data. A few indicators had unclear definitions (for example, categories of direct beneficiaries and energy consumption per unit of water supplied/sold), requiring clarifications during restructuring. Additionally, the PDO indicator for Outcome 1 (that is, compliance with water quality health standards) neither clearly reflected its true purpose nor aligned with the project’s key activities for Outcome 1, leading to its replacement after the MTR. Despite this oversight, the remaining indicators (5 PDO indicators and 13 intermediate results indicators) effectively measured the project’s impact from a systemic perspective, covering areas such as water supply infrastructure, water quality testing capacity, energy consumption, financial sustainability, digital integration and innovation, institutional capacity, and customer satisfaction. The team provided customized targets for each WSC based on a careful examination of their different contexts and capacities. The Page 16 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT detailed and meticulous revisions of the indicators during restructuring proved effective in strengthening the M&E framework and boosting project progress. M&E Implementation 60. The project hired an external consultant to help with monitoring of the Results Framework. The consultant worked closely with the project team (including a dedicated M&E team in each WSC) to gather indicator data and prepare regular performance reports (11 in total) to analyze progress and identify any challenges or bottlenecks in project implementation. The close collaboration between the WSCs, PPMU, PIUs, World Bank team, and third-party monitoring proved to be a successful model to ensure that the team remained up to date on project developments and helped keep project progress on track. M&E Utilization 61. The project team made full use of the indicators to track project progress. Project ISR and client progress reports referred to the progress and targets of the results indicators. The restructuring revision of the indicators helped the project refocus on tangible actions that could effectively improve the water supply service of the selected WSCs. Project-financed SWSs were incorporated into targeted WSCs to support real-time monitoring of water supply, water distribution, and water consumption (Annex 6.3 SWS). Justification of Overall Rating of Quality of M&E 62. The overall rating of the M&E quality is Substantial. Although there were some moderate shortcomings in the For Official Use Only design, the M&E implementation and utilization proved effective in assessing the achievement of the objectives and testing the links in the results chain. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 63. Regarding E&S safeguards, the project adhered to all applicable policies as outlined in the PAD: (a) Environmental Assessment (OP/BP 4.01); (b) Physical Cultural Resources (PCR, OP/BP 4.11); (c) Involuntary Resettlement (OP/BP 4.12); and (d) Safety of Dams (OP/BP 4.37), with key safeguard instruments disclosed on February 28, 2017, through the Liaoning Housing and Construction Department’s official website http://www.lnjst.gov.cn/website/main/index.aspx. 64. For this Category B (partial assessment) project, all planned mitigation activities were completed, ensuring compliance with the triggered safeguards policies. OP/BP 4.01 was triggered given the potential impacts from construction, disinfectant use, and noise from pumping stations. New activities in Fushun and Gaizhou after the MTR resulted in updated Environmental and Social Management Plans, disclosed locally on the WSCs’ websites on January 20, 2022 (Fushun), and January 18, 2022 (Gaizhou). OP/BP 4.11 was triggered given the potential effects on the Nanguan Catholic Church, a provincial-level PCR. Public consultations underpinned the decision to not allow construction during religious festivals. The new activities proposed after the MTR were located away from any PCRs. OP/BP 4.12 was triggered given the potential minor impact on land acquisition from the pump stations and pipeline installation, though no physical displacement occurred. A Resettlement Action Plan (RAP) along with other E&S instruments were prepared and monitored by a consulting firm. Newly added activities conducted in Gaizhou after the MTR involved a minor temporary occupation (900 m2), for which an action plan was developed to manage its potential impact. No outstanding issues related to project land use were identified. OP/BP4.37 was triggered given that some WTPs and pipelines in the project depended on existing reservoirs. Dam safety review reports were prepared by an independent dam expert. All the related dams were structurally and operationally safe and continuously monitored. 65. During implementation, it emerged that the Operational Policy on Projects on International Waterways (OP 7.50) may have to be triggered for Fuxin WSC because of a change of the water source supplying the city’s treatment plant. However, as Fuxin WSC was dropped following the project restructuring, OP 7.50 was no longer applicable. There were no other exceptions or waivers. Page 17 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 66. Procurement. The general performance of borrower’s procurement was rated Moderately Satisfactory. Low institutional capacity and the impacts of the pandemic delayed the planned procurement time frame for a significant number of contracts, especially at the early stage of project implementation, and resulted in unstable quality of procurement documents. Risks of collusion were identified, especially for large contracts, and addressed with appropriate risk mitigation measures including, in some cases, rebidding. During the MTR, proactive measures were suggested to accelerate the process, including closer collaboration between the procurement monitoring coordinator, the design consultants, and procurement agent. PPMO and WSCs were also required to provide timely update of cost estimates and monitor staff time inputs. Following the restructuring, the procurement progress significantly improved, achieving the revised project timeline. 67. Financial management. The borrower had a satisfactory performance in financial management. They maintained adequate accounting records of all transactions and submitted Interim Financial Reports and audit reports and followed up on audit findings in a timely manner. Most of the external audit reports received unqualified (clean) opinions. No exceptions or waivers from the World Bank’s fiduciary policies and procedures were recorded. 68. Overall, the project complied with the World Bank's environmental, social, and fiduciary standards, with no significant issues affecting its performance. C. BANK PERFORMANCE Quality at Entry For Official Use Only 69. World Bank performance at entry was rated Moderately Satisfactory. The project was strategically relevant, and the project components and activities were thoughtfully designed, effectively responded to the core needs of the sector and presented strategic relevance to local, regional, and national priorities. The project built on experiences from past projects (for example, LMC-2) for water supply and sanitation improvements. The identification of the project areas was based on evidence-based analysis on the socioeconomic situation of multiple provinces in China and their strategic importance. The project design sought to elevate the sector to international standards and best practices. A robust implementation arrangement with an experienced Project Management and Coordination Unit (PMCU, which is PPMO for this project) was critical for effective implementation. 70. However, there were moderate shortcomings regarding the M&E design as discussed earlier (see paragraph 59. ). The PDO description for Outcome 1 (that is, to improve water quality) should have stated ‘to improve water quality management’ to better reflect the true intent of the project: to ensure continuous delivery of high-quality water and minimize the risks of contamination delivered to end-users (also refer to paragraph 20 (f)). 71. The procurement and the details of the counterpart funding could have been done/planned more carefully during project preparation with the clients. A more proactive approach could have prevented significant changes during restructuring and reduced procurement delays and the counterpart funding gap at later stages of the project cycle. Quality of Supervision 72. The World Bank quality of supervision was rated Satisfactory. The team effectively tracked project progress (evidenced by routine Aide Memoires and ISRs), demonstrated candor and quality on performance reporting, and ensured adequacy of supervision inputs and processes. More than two missions per year were conducted with key staff. A virtual review mission was conducted during COVID-19 in Spring 2020. The team closely supervised all E&S aspects to make sure that there were no significant risks to the communities, and precautionary measures were prepared. The team made timely and correct decisions in revising the indicators, including correcting baseline values, adjusting target values, and replacing outdated indicators with more relevant ones. 73. Despite the staff turnover during initial project implementation (including multiple rotations of task team leaders, procurement, and E&S specialists), continuity in staffing during the final two years of the project catalyzed progress and Page 18 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT facilitated advancements in achieving project indicators. The team that inherited the project brought an enhanced understanding of the nuances of the indicators, baselines, and evolving socioeconomic conditions based on a closer investigation of project documents and local context, as well as communication with the client. This improved understanding, in conjunction with the deep engagement of the client, underpinned the specifics of the restructuring and adjustment of the results indicators. Justification of Overall Rating of Bank Performance 74. Given the moderate shortcomings in quality at entry and the minor shortcomings in quality of supervision, the overall rating of World Bank Performance was Moderately Satisfactory. D. RISK TO DEVELOPMENT OUTCOME 75. The project significantly enhanced the sustainability and resilience of water supply services in the project cities by investing in the rehabilitation and modernization of WTPs, control systems, pipelines, and pumping stations; developing SWSs; and building capacity through management and technical training. The project laid a solid foundation for the sustainable development of urban water supply facilities and the provision of safe and stable water services to urban residents in Liaoning. The completed works and equipment installed were handed over with operation and maintenance plans and/or user manuals to the appropriate operation teams of the respective WSCs. The SWS not only improved the company’s ability to collect and analyze all the data and information for evidence-based decision-making but also facilitated dynamic coordination across departments, reducing silos and bolstering the overall institutional capacity that For Official Use Only will continue to function after the project. 76. While the project has improved operational sustainability and resilience, risks may still arise from internal factors such as maintenance continuity and the adaptability of the infrastructure to future demands or climate changes. External risks include economic fluctuations that could affect the financial viability of water utilities, shifting government priorities, inconsistent support for water tariff increases, or environmental challenges such as pollution or climate change that could compromise water quality. The project’s design incorporated measures to mitigate such risks, including the enhancement of water quality testing capabilities and the strengthening of management systems. Still, the long-term sustainability of these outcomes will depend on the continued financial health of the water utilities, the effectiveness of the SWSs in adapting to new challenges, and the sustained commitment of local governments to support these utilities for improving water tariff strategies to ensure their operational sustainability in the long run. The adaptability of the WSCs to withstand changes in the operating environment, particularly in the face of unforeseen global impacts or climate threats, will be crucial for the lasting success of the development outcomes achieved. V. LESSONS AND RECOMMENDATIONS 77. A comprehensive project design that integrates infrastructure improvements, capacity building, and new technologies effectively addresses both short-term needs and long-term sustainability of water supply services. The project included infrastructure rehabilitation and upgrading, water quality testing, and management enhancements, which led to immediate service improvements. For the long term, the project focused on institutional capacity building, promoting smart technologies, and implementing financial improvement plans to ensure sustainability. Third-party monitoring and external consultants have enhanced PIUs' ability to track progress, reduce NRW, and improve SWS operations. Hands-on training and cross-regional exchanges have further motivated WSCs to adopt innovations and improve service quality. Recommendation: A deep understanding of client needs, embracing innovations (e.g., SWSs), and a focus on institutional capacity building through various methods (e.g., lecture-style training, on-the-job training, cross-unit exchange, benchmarking exercises) are critical to project design. 78. Effective M&E including a solid M&E design and engagement of an experienced expert team is critical for project success. Initial misunderstandings, such as confusing water quality test indicators with compliance measures, highlighted Page 19 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT the need for clear communication between the World Bank and client during preparation to ensure accurate definitions and shared expectations. During early implementation, a dedicated M&E expert or team should be appointed to address errors promptly. The onboarding of a third-party monitoring consultant, E&S experts, and technical consultants (especially for the SWS) enabled timely performance analysis and issue resolution. For example, in Anshan, after unexpected energy use following secondary pump station upgrades, expert teams optimized pump operations by adjusting the timing and changing the type of pumps, which helped achieve energy saving targets. Recommendation: A dedicated discussion with the client at project appraisal should focus on key project details and Results Framework validation. Early involvement of M&E and E&S experts, along with technical support for innovative activities, would ensure timely adjustments of the project design, integrated system improvements, and smooth project completion. 79. A well-organized implementing arrangement with an experienced project team is crucial for effective implementation. The project benefited from a seasoned PMCU and experienced external consultants, which ensured strong oversight and quality document preparation. Each city-owned WSC had its own PIU led by the company leaders, enabling effective coordination and cross-departmental implementation of SWSs. Staff continuity on both the client and World Bank sides was critical, while turnover posed a risk. Recommendation: Replicating the PMCU-PIU structure, led by senior experts and experienced implementing agencies, and maintaining team consistency are key to improving project efficiency in future World Bank operations. 80. A robust counterpart funding plan is crucial for the timely procurement and delivery of NBF contracts. Counterpart funding played a significant role in the financing and timely delivery of this project. As mentioned in For Official Use Only paragraph 51. the unclear sources and applications of counterpart funds during preparation, combined with the revised disbursement percentage (increased to 100%, which means that the project cost could be fully financed by the World Bank loan) in the loan agreement, reduced momentum in securing counterpart funds. This became an unneglectable delaying factor for the procurement and implementation of NBF contracts in the project cities. Recommendation: It is necessary to ensure a diversified disbursement percentage in the loan agreement, supported by a clearly defined counterpart fund plan during preparation. Sharing financial responsibility between the World Bank and the borrowers reduces financial risks and enhances borrower commitment and ownership, thereby incentivizing effective project management and delivery. 81. Comprehensive SWS can significantly transform water supply management. The SWS organically integrated multiple management modules and monitoring systems, playing an effective and critical role in WSC operation, monitoring, and management. The platform integrated GIS with subsystems for marketing, NRW, pipelines, smart meters, booster pump stations, customer service, and hydraulic modeling, streamlining the entire water supply process—from raw water sourcing to production, distribution, usage analysis, and leakage predictions. On the service side, it strengthened the efficiency and timeliness of water quality monitoring and infrastructure maintenance, empowered data- driven and systematic decision-making, and improved transparency and customer satisfaction. Staff management also benefited, with enhanced supervision of work orders, improved inter-departmental coordination, and technical capacity building through on-the-job training. The overall implementation of the SWS fostered operational sustainability and efficiency across WSCs. Recommendation: The World Bank could and should provide robust technical support and promote a systematic, integrated approach to water supply improvements through technical and management innovations. The systematic management approach, as demonstrated in the delivery of SWS, can be promoted in other projects, which can drive broader sectoral improvements and ensure sustainable service management. Page 20 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS @#&OPS~Doctype~OPS^dynamics@icrresultframework#doctemplate A. RESULTS FRAMEWORK PDO Indicators by Outcomes To improve water quality of selected water supply utilities in the project areas Indicator Name Closing Period Actual Achieved at Baseline Closing Period (Current) (Original) Completion Month/Yea Resul Month/Yea Result Month/Yea Month/Yea Result Result r t r r r 0.00 Jan/2018 2,504,686.00 Jun/2024 2,738,901 Jun/2024 Comments on achieving targets With the completion of all the planned project works and facilities Direct project including rehabilitation of water treatment plants, water distribution beneficiaries (Number) pipelines and pumping stations, etc., the direct beneficiaries of the project have reached 2738901 (Anshan: 1290156; Fushun 1267000; Gaizhou 181745), exceeding the end target of 2,504,686. 0.00 Jan/2018 49.00 Jun/2023 49.91 Jun/2024 Female beneficiaries Comments on achieving targets The percentages of female beneficiaries are 50.09%, 50.39% and (Percentage) 49.24% in Anshan, Fushun and Gaizhou cities, respectively. Percentage of Anshan: 0Fushun: 0Gaizhou: 0 Jan/2018 Anshan: 60Fushun: 100Gaizhou: Jun/2024 Anshan: 60; Jun/2024 population in project 100 Fushun: 100; cities receiving water Gaizhou: 100 supply from rehabilitated/upgrad ed water treatment plants under this project (Percentage) (Text) To improve operational efficiency of selected water supply utilities in the project areas Page 21 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Indicator Name Closing Period Actual Achieved at Baseline Closing Period (Current) (Original) Completion Month/Yea Resul Month/Yea Result Month/Yea Month/Yea Result Result r t r r r Shenyang:31.16%Anshan:35.35%Fushun:37.02%Fuxin:23.8%Gaizhou: Jan/2018 Shenyang:-- Jun/2024 Anshan:23.6 Jun/2024 62.5% Anshan:24.0%Fushun:21.6%Fuxi %; Non-Revenue-Water n:--Gaizhou:35.2% Fushun:21.6 in each project city %; (Text) Gaizhou:33.3 % To improve operational efficiency of selected water supply utilities in the project areas. Indicator Name Closing Period Actual Achieved at Baseline Closing Period (Current) (Original) Completion Month/Yea Resul Month/Yea Result Month/Yea Month/Yea Result Result r t r r r Weighted Average:0.888 Jan/2018 Weighted Average: 0.49 Jun/2023 Anshan:0.450 Jun/2024 kwh/m3Shenyang:0.87Anshan:0.46Fushun:0.55Fuxin:0.96Gaizhou:1.6 kwh/m3Shenyang:-- ; Anshan:0.450Fushun:0.505Fuxin Fushun:0.504 :--Gaizhou:0.765 ; Gaizhou: Energy consumption 0.95 by the water utilities Comments on achieving targets Anshan and Fushun cities have fully achieved the end-project targets of in each project city (kWh/m3) (Text) energy consumption. Gaizhou city is expected to achieve the end project target when the water source in one district is switched from groundwater to surface water. The weighted average is expected to reach 0.485 by then, exceeding the end-project target of 0.490. Intermediate Indicators by Components Component 1: Water supply service infrastructure improvement Indicator Name Closing Period Actual Achieved at Baseline Closing Period (Current) (Original) Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year 0.00 Jan/2018 98.56 Jun/2024 101.11 Jun/2024 Page 22 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Length of new or Comments on achieving targets The cumulative achievement (101.108km) has exceeded the end- rehabilitated main project target of 98.566km. Anshan: 42.28; Fushun: 58.76; Gaizhou: pipelines for water supply (Kilometers) 0.068 Number of secondary 0.00 Jan/2018 143.00 Jun/2024 143.00 Jun/2024 booster pumps installed Comments on achieving targets Anshan, Fushun, and Gaizhou have all achieved the expected targets, or rehabilitated (Number) which is 80, 33, 30 respectively Number of district water 0.00 Jan/2018 1,558.00 Jun/2024 1,558.00 Jun/2024 meters installed Comments on achieving targets Anshan, Fushun, and Gaizhou have all reached the expected targets, (Number) which is 151, 1256, 151 respectively 0.00 Jan/2018 199,694.00 Jun/2024 211,877.00 Jun/2024 Number of water meters Comments on achieving targets Anshan, Fushun, and Gaizhou have all reached the expected targets, installed (Number) which is 99081, 40098, 72698 respectively Water supply capacity of 0.00 Feb/2018 1.15 Jun/2024 1.15 Jun/2024 rehabilitated/upgraded Comments on achieving targets Anshan, Fushun, and Gaizhou have all reached the expected targets, water treatment plants under this project (million which is 0.24, 0.85, 0.06 respectively m3/day) (Number) Component 2: Water supply service management improvement Indicator Name Closing Period Actual Achieved at Baseline Closing Period (Current) (Original) Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Shenyang:0.85Anshan:1.02Fushun:0.95Fuxin:0.88Gaizhou:1.30 Jan/2018 Shenyang:-- Jun/2024 Anshan:0.84; Jun/2024 Anshan:0.9Fushun:0.85Fuxin:- Fushun: 0.84 -Gaizhou:0.96 Gaizhou: Working Ratio (Text) 0.92 Comments on achieving targets All the three cities have exceeded the expected targets. Customer satisfaction 65.00 Jan/2018 85.00 Jun/2024 95.97 Jun/2024 with the quality of water Comments on achieving targets Anshan, Fushun, and Gaizhou all exceeded the expected targets, reaching 97.26%, supply services 98.71%, and 91.94% of customer satisfaction, respectively. (Percentage) Page 23 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Percentage of women 65.00 Jan/2018 85.00 Jun/2024 93.98 Jun/2024 satisfied with the quality Comments on achieving targets Anshan, Fushun, and Gaizhou have all exceeded the expected targets, reaching of water supply services 95.62%, 96.99%, 89.33% respectively (Percentage) Establishment of Smart 0.00 Feb/2022 3.00 Jun/2024 3.00 Jun/2024 Water System Comments on achieving targets All three smart water systems in the project WSCs were established and (Number) operational. Fushun: 35Gaizhou: 9 Jun/2018 Fushun: 47Gaizhou: 42 Jun/2024 Fushun: 47; Jun/2024 Number of self-tested Gaizhou: 42 water quality parameters of each WSC (Text) Comments on achieving targets Anshan has already reached national requirements before the project started, so no target was set here. Component 3: Project Implementation support and institutional strengthening Indicator Name Closing Period Actual Achieved at Baseline Closing Period (Current) (Original) Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Number of water utility 0.00 Jan/2018 250.00 Jun/2024 564.00 Jun/2024 staff received training on Comments on achieving targets Anshan, Fushun, and Gaizhou have all exceeded the expected targets, reaching 279, asset management 196, and 89 respectively systems, water quality monitoring, and pipe leakage detection and repairing (Number) Number of Female Staff 0.00 Jan/2018 93.00 Jun/2024 199.00 Jun/2024 received training on asset Comments on achieving targets The results excluded the female staff previously trained by the WSCs using other management systems, funds. Anshan, Fushun, and Gaizhou have all exceeded the expected targets, reaching water quality monitoring, 120, 51, 28 respectively. and pipe leakage (Number) Fushun: 85%Anshan: 78%Gaizhou: 80% Jan/2018 Fushun: 98%Anshan: Jun/2024 Anshan: Jun/2024 Grievance settlement rate 98%Gaizhou: 98% 100%; within the stipulated Fushun: service standards for 100%; response time (%) Gaizhou: (Text) 98.78% Page 24 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT For Official Use Only B. KEY OUTPUTS To improve water quality of selected water supply utilities in the project areas 1. Direct project beneficiaries 2. Female beneficiaries PDO Indicators 3. Percentage of population in project cities receiving water supply from rehabilitated/upgraded water treatment plants under this project (Percentage) 1. A total 2,738,901 beneficiaries, out of which 49.91% are female Key Outputs 2. 60% of population in Anshan and 100% of population in Fushun and Gaizhou receiving (linked to the achievement of the PDO Outcome) water supply from rehabilitated/upgraded water treatement plants under this project To improve operational efficiency of selected water supply utilities in the project areas 1. Non-Revenue-Water in each project city PDO Indicators 2. Energy consumption by the water utilities in each project city (kWh/m3) 1. Nonrevenue water was reduced to 23.6% Anshan, 21.6% Fushun, and 33.3% Gaizhou Key Outputs 2. Energy consumption was reduced to 0.45 kWh/m3 in Anshan, 0.504 kWh/m3 in Fushun, and (linked to the achievement of the PDO Outcome) 0.95 kWh/m3 in Gaizhou Component 3: Project Implementation support and institutional strengthening 1. Number of water utility staff received training on asset management systems, water quality monitoring, and pipe leakage detection and repairing Intermediate Results Indicators 2. Number of Female Staff received training on asset management systems, water quality monitoring, and pipe leakage 3. Grievance settlement rate within the stipulated service standards for response time (%) Page 25 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 1. A total of 564 water utility staff got relevant trainings for water supply service Key Outputs 2. 199 female staff received relevant trainings for water supply service (linked to the achievement of the Component) 3. Grievance settlement rate reached an average of 99.6% Component 2: Water supply service management improvement 1. Working Ratio 2. Customer satisfaction with the quality of water supply services Intermediate Results Indicators 3. Percentage of women satisfied with the quality of water supply services 4. Establishment of Smart Water System 5. Number of self-tested water quality parameters of each WSC 1. Working ratio reached 0.84 in Anshan and Fushun and 0.92 in Gaizhou. 2. Customer satisfaction with the quality of water supply services reached 95.97% on average (Anshan: 97.26%; Fushun: 98.71%; Gaizhou: 91.94%) Key Outputs 3. On average, 93.98% of women were satisfied with the quality of water supply services (linked to the achievement of the Component) 4. Three smart water systems wereestablished. 5. The number of self-tested water quality parameters in Fushun rose to 47, and 42 for Gaizhou. Anshan had reached the standards since project started (106) Component 1: Water supply service infrastructure improvement 1. Length of new or rehabilitated main pipelines for water supply 2. Number of secondary booster pumps installed or rehabilitated Intermediate Results Indicators 3. Number of district water meters installed 4. Number of water meters installed 5. Water supply capacity of rehabilitated/upgraded WTP under this project (million m3/day) 1. 101.108 km of upgraded pipelines for water supply 2. 143 secondary booster pumps were installed/rehabilitated. Key Outputs 3. 1,558 district water meters installed (linked to the achievement of the Component) 4. 211,877 water meters installed 5. The water supply capacity of upgraded water treatment plants under this project reached 1.15 million m3/day Page 26 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Khairy Al-Jamal Team Leader (previous) Sing Cho Team Leader (previous) Lilian Pena Pereira Weiss Team Leader (previous) Xiaokai Li Team Leader James Boon Hwee Tay Team Leader Si Gou Team Leader Yi Dong Financial Management Specialist Wang Yueming Financial Management Specialist Jianjun Guo Procurement Specialist Hua Xu Procurement Specialist Yunlong Liu Procurement Specialist Yongli Wang Environmental Specialist Ji Feng Environmental Specialist Zhefu Liu Social Development Specialist Meixiang Zhou Social Development Specialist Dening Chen Social Development Specialist Aristeidis Panou Counsel Evarist F. Baimu Counsel Zhuo Yu Finance Officer Minghe Zheng Finance Officer Dongqi Qian Finance Analyst Anqi Li Senior Finance Assistant Knud Lauritzen Financial Analyst Pratibha Mistry Water Supply and Sanitation Specialist Toyoko Kodama Water Supply and Sanitation Specialist Ximing Zhang Dam Safety Specialist Chirong Huang Wastewater Engineer Shunong Hu Water Engineer Page 27 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Non-Revenue Water Management and Smart Water Qiang Xu System Specialist Yan Zhang Procurement Team Yan Wang Financial Management Team Ouyang Li Safeguard Team Huiying Guo Program Assistant Dan Xie Program Assistant Ru Xin Zhao Team Member Mi Lin ICR Author Natasha Zamecnik ICR Consultant @#&OPS~Doctype~OPS^dynamics@icrannexstafftime#doctemplate B. STAFF TIME & COST Staff Time & Cost Stage of Project Cycle No. of Staff Weeks US$ (including travel and consultant costs) Preparation FY16 16.475 76,355.26 FY17 39.462 265,271.40 FY18 28.805 211,797.16 FY19 0.200 2,100.44 Total 84.94 555,524.26 Supervision/ICR FY19 25.985 244,313.74 FY20 38.732 344,279.61 FY21 54.809 449,866.67 FY22 30.485 216,971.38 FY23 47.975 332,716.53 FY24 23.184 189,704.51 Page 28 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT FY25 10.688 62,625.46 Total 231.86 1,840,477.90 ANNEX 3. PROJECT COST BY COMPONENT Component IBRD Amount at IBRD Amount at IBRD Actual at Project Approval (US$, Restructuring (US$, Closing (US$, millions) millions) millions) Component 1: Water supply service 185.06 112.05 105.08 infrastructure improvement Component 2: Water supply service 48.63 32.19 34.95 management improvement Component 3: Project Implementation 15.69 5.82 5.85 support and institutional strengthening Front-End Fee 0.62 0.63 0.63 Total 250.00 150.70 146.51 ANNEX 4. EFFICIENCY ANALYSIS A. Implementation Efficiency Analysis 1. The project was implemented in an efficient way. After the midterm restructuring, implementation in the three project cities followed the timeline with the budgeted costs and planned results, as outlined in the Results Framework. The project’s efficiency related to utilization of the loan allocation and provision of counterpart funding developed satisfactorily. Disbursements followed the revised schedule, resulting in overall loan savings of less than 3 percent of the total restructured World Bank loan commitment of US$150.7 million. 2. For key results related to NRW and energy consumption reduction, which have a direct impact on the efficiency of the project investments, the project overall reached the targets estimated at project entry. Table A4.1. Results Framework - Indicators Directly Affecting the Economic Benefits of the Project Project City Baseline Target Result NRW (%) Anshan 35.4 23.6 24.0 (23.2a) Fushun 37.0 21.6 21.6 (21.3a) Gaizhou 62.5 33.3 36.4 (32.7a) Energy Consumption (kWh/m3) Anshan 0.46 0.45 0.45 (0.447a) Fushun 0.55 0.505 0.504 (0.500a) Gaizhou 1.60 0.765 0.96b (0.957a) Note: a. Project companies’ forecast for 2024. Page 29 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT b. Gaizhou is expected to reach the target once the transition to a new surface water source is in place. 3. Conclusion. Considering the pandemic, the project was implemented with a high degree of efficiency. After the restructuring at the MTR, the project followed the budgeted timeline concerning disbursements and counterpart funding and with limited loan-savings. Additionally, the budgeted results were achieved by the three project cities. B. Economic Analysis 4. Introduction. An economic analysis was conducted during project preparation, with cost-effectiveness analysis and cost-benefit analysis. The cost-effectiveness analysis showed examples of cost-effectiveness considerations being included in decision-making for efficient implementation. Economic cost-benefit analysis was conducted in quantitative terms at project entry to confirm that the economic benefits of implementing the project exceed the economic costs with a safe margin. 5. Cost-effectiveness analysis. Elements of cost-effectiveness analysis were included for justification at project entry as well as during implementation. This concerns, for example, the selection of rehabilitation projects. Least-cost methodology was adopted to evaluate cost-effectiveness for the selection of piping material. 6. From project entry, the selection of the rehabilitation projects within each project city was based on optimizing investment effectiveness. This included the selection of rehabilitation efforts in communities with the highest rates of pipe bursts and other needed repairs. Communities with a high number of pipe burst incidents primarily had older networks, and selections were made based on recordings of repair activities. However, communities with newer networks were also selected for rehabilitation efforts. Based on the data from project entry, analysis showed that maintenance efforts related to incidents for the selected communities increased by 3–4 percent annually, with associated increases in costs of repairs and maintenance. With the ongoing aging of the water supply network in the communities, this trend was expected to continue without rehabilitation by the project. The improved network management being implemented as a part of the project further contributes to identifying the most cost-effective strategies for rehabilitation efforts. 7. Economic cost-benefit analysis. A cost-benefit analysis was conducted in a quantitative manner to economically justify the scale of project investments. While project investments provide consumers with economic benefits from improved water quality, the approach taken to estimate the project-related benefits mainly included the direct cost savings related to infrastructure investments. These included savings in raw water from NRW reductions, savings in electricity costs, savings in repair and maintenance activities, and other savings derived from improved management of the water supply system. For Gaizhou specifically, where the service metering was improved, effects from water conservation, associated with improvement to consumer accountability of water services, were included. 8. The net impact from benefits achieved was estimated using the with/without project methodology. The ‘with’ project scenario included main assumption of NRW reductions, while the ‘without’ project assumption included further deterioration of the water supply system over the years. 9. The result of the economic cost-benefit analysis ex ante showed satisfactory levels of economic return in terms of internal rate of return and net present value. The revised analysis ex post, based on actual achievements from project implementation, showed results above the ex-ante estimation. This reflects that the project was implemented according to time, costs, and expected achievements. The results of the economic cost-benefit analysis are presented in Table A4.2. Table A4.2. EIRR Results Project City Ex Ante (%) Ex Post (%) EIRR Anshan 31 27a Fushun 11 37 Gaizhou 3 22 Page 30 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Note: a. The reduction in EIRR compared to estimated ex post value is due to lower-than-expected water demand development at project entry. 10. Conclusion. From an economic perspective, the project was implemented as planned with cost-effective solutions and a significant economic return of the capital spent. The cost-effective solutions resulted in a reduction in the NRW and energy consumption according to planned levels. For the cost-benefit analysis, the results in terms of EIRR are overall higher or at the same level compared to estimations at project entry. C. Financial Analysis 11. Introduction. A financial analysis was conducted at project entry to evaluate the affordability of the project for the project cities and WSCs and demonstrate that the project will generate financial returns to the water companies with financial sustainable operations. At project completion, the financial setup confirmed the sustainability of the operation. 12. FIP and working ratio. As a separate component and to support the financial development of the project companies, FIPs were developed for each of the WSCs. The financial performance of the water companies was expected to improve along with the project results, and all project companies participated in development of the FIP. 13. To reflect the expected financial development and the improvements to the water supply service management, a financial target for the project companies’ working ratio was included in the Results Framework. Due to the financial improvements achieved, all the project companies began operating with a working ratio below 1.0. These developments have been achieved despite tariffs not being revised during implementation. The FIPs indicated potential further cost reductions beyond what was expected at project entry. Only Fushun did not fully meet the target set at project entry, but the water company is on track to improve its financial performance by end-2024. Fushun last revised its utility tariffs in 2016. Table A4.3. Results Framework - Financial Indicator of Working Ratio Project City Baseline Target Result Anshan 1.02 0.90 0.84 Fushun 0.95 0.85 0.84 Gaizhou 1.30 0.96 0.92 14. Affordability of services. An tariff affordability analysis conducted at project entry revealed that the projected tariffs were affordable for low-income households. Affordability of services to especially low-income households is closely linked to the service level of the water supply operations, and this was promoted by the project: improving the quality of water supplied and limiting the pipe incidents by rehabilitating the supply network. Specifically, in Gaizhou, with the project’s implementation of additional metering, increased treatment capacity, and NRW reduction, there was a transformation in water supply services from an intermittent supply to a 24-hour supply of clean water. The transformation in service level improved the affordability of the water supply service, as it relieved residents of other expenses such as costs of household water treatment. 15. Water tariff development. In the assumption of the financial analysis at project entry, water tariffs were to be revised every five years to account for changes in costs over time. Tariffs were not revised during implementation, partly due to the COVID-19 pandemic. The water tariffs were last revised in Anshan in 2018, in Fushun in 2016, and in Gaizhou more than 20 years ago. The tariffs are however expected to be revised in the coming years to reflect cost increases and support the financial sustainability of implemented service improvements. Consumers’ willingness to pay for services will reflect service improvements, assuming all other factors remain equal. 16. Forecast of project companies’ financial status. During implementation, financial forecasts were established as a part of the development of the project companies’ FIP. As with the financial forecast at project entry, the ex-post forecasts include tariff revisions, which have not been seen over the last year partly due to the pandemic. Tariff revision of CNY 0.5 Page 31 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT per m3 for Fushun and CNY 0.4 per m3 for Gaizhou were included in the analysis as forecast assumptions. This follows indications from the water companies. This level of revision for both companies is below 20 percent and is found justifiable considering the years without revisions and the improvements made to the water supply services. No further revisions were included for Anshan. Table A4.4. Financial Projection of Anshan Water Supply Operations by the FIP Subcomponent Anshan WSS Income Items 2023 2024 2025 2026 2027 2028 2029 (CNY, millions) Actual Projected Projected Projected Projected Projected Projected Revenue 380.8 399.9 419.9 440.9 462.9 486.0 510.3 Production cost –233.4 –237.7 –242.1 –246.6 –251.1 –255.8 –260.5 Overhead and other costs –98.7 –99.8 –104.8 –110.0 –115.5 –121.2 –127.3 EBITDA 48.7 62.4 73.0 84.3 96.3 109.0 122.5 Depreciation –75.4 –77.9 –86.9 –83.6 –80.5 –77.6 –74.8 EBIT –26.7 –15.5 –13.8 0.7 15.8 31.5 47.8 Interest expense/income –0.5 –29.1 –29.7 –30.4 –30.7 –30.7 –30.2 EBT –27.7 –44.5 –43.5 –29.7 –14.9 0.8 17.5 Note: EBITDA = Earnings before interest, taxes, depreciation, and amortization; EBT = Earnings before tax. Table A4.5. Financial Projection of Fushun Water Supply Operations by the FIP Subcomponent Fushun WSS Income Items 2023 2024 2025 2026 2027 2028 2029 (CNY, millions) Actual Projected Projected Projected Projected Projected Projected Revenue 257.4 267.7 278.4 289.5 301.1 313.1 325.6 Production cost –212.1 –214.1 –211.6 –209.0 –206.5 –204.0 –201.6 Overhead and other costs –34.1 –35.9 –37.4 -38.8 –40.5 –42.1 –43.7 EBITDA 11.1 17.6 29.4 41.6 54.2 67.1 80.4 Depreciation –44.9 –39.1 –51.3 –50.0 –48.8 –47.6 –46.5 EBIT –33.8 –21.5 –21.8 –8.4 5.4 19.4 33.9 Interest expense/income -0.8 –27.0 –25.2 –23.9 –22.6 –21.1 –19.4 EBT –31.6 –48.5 –47.0 –32.3 –17.2 –1.6 14.4 Table A4.6. Financial Projection of Gaizhou Water Supply Operations by the FIP Subcomponent Gaizhou WSS Income Items 2023 2024 2025 2026 2027 2028 2029 (CNY, millions) Actual Projected Projected Projected Projected Projected Projected Revenue 20.7 22.4 24.1 26.1 28.2 30.4 32.9 Production cost –16.4 –12.3 –12.9 –13.5 –14.1 –14.8 –15.5 Overhead and other costs –5.3 –5.6 –6.0 –6.5 –7.0 –7.6 –8.2 EBITDA –1.0 4.5 5.2 6.1 7.0 8.0 9.1 Depreciation –2.1 –2.0 –9.3 –8.9 –8.6 –8.2 –7.9 EBIT –3.2 2.4 –4.0 –2.8 –1.6 –0.2 1.2 Interest expense/income 0.0 –10.1 –9.8 –8.8 –8.4 –7.9 –7.5 EBT –1.0 –7.7 –13.8 –11.7 –10.0 –8.2 –6.2 17. The financial forecasts indicate that the project companies are likely to increase revenues and operate with improved financial performance. Specifically, both Anshan and Fushun water supply companies are moving toward profitability by the end of the decade, thereby securing long-term financial sustainability of their operations. However, the actual future financial results will largely depend on timely tariff revisions to support cost recovery of the provided services. Page 32 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 18. Financial cost-benefit analysis. At project completion, a financial cost-benefit analysis was conducted to investigate the FIRR from the project investments. The results show that the FIRR of the project investments is expected to be higher than 15 percent for all project companies. The result is beyond the results expected ex ante, where the FIRR was estimated below 10 percent for both Fushun and Gaizhou. Table A4.7. FIRR Results Project City Ex Ante (%) Ex Post (%) FIRR Anshan 18 19 Fushun 9 27 Gaizhou 4 17 D. Overall Efficiency Rating 19. Rating: Substantial. Overall, the project met the targets set at project entry, with quality improvements in service provision of water to the consumers in the three project cities. Specifically, in Gaizhou, the transformation of service from intermittent supply to a metered, continuous supply of clean water has benefited the residents. After two cities exited the project following the restructuring, disbursements followed the revised schedule, with overall loan savings of less than 3 percent of the total restructured IBRD commitment of US$150.7 million. The EIRR at project completion was higher than the estimated value for Fushun and Gaizhou and slightly lower for Anshan due to lower-than-expected development in demand. Overall, with an EIRR of above 20 percent, the project’s efficiency is slightly higher than what is expected within the water sector. Moreover, the financial improvements achieved by the project companies add to the financial sustainability of the water supply operations and thereby safeguard the benefits achieved from the investments. Thus, the project’s overall efficiency is rated Substantial. ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS We have carefully read the whole report and put forward the following comments: 1. The whole report truthfully describes the contents and achievements of the project construction; 2. The report evaluates the relevance, effectiveness and efficiency of the project implementation process and achievements and obtains the rating result that the whole project is "Satisfactory". We are appreciated to accept the result; and 3. The report summarizes the project lessons and learned objectively, which has good reference significance for guiding the future project preparation and implementation. Once again, we would like to thank the World Bank for its strong support in preparation and implementation of this project. Liaoning Urban Rural Construction and Renewal Project Management Company Ltd. October 28, 2024 Page 33 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT ANNEX 6. SUPPORTING DOCUMENTS Annex 6.1. Efficacy Analysis Table A6.1.1. Outcome 1 Target Achievement No. Indicator Type Indicator Name Unit Scope Baseline Actual (By Original % of Revised % of June 30, Target Original Target Revised 2024) (PAD) Target Target 1 PDO indicator Direct project Number Total 0 2,738,901 5,690,600 49.57 2,504,686 109.35 beneficiaries Shenyanga 0 0 — n.a 0 n.a Anshan 0 1,290,156 — n.a 1,136,400 n.a Fushun 0 1,267,000 — n.a 1,267,000 100.00 Gaizhou 0 181,745 — n.a 101,286 179.44 Fuxina 0 82,000 — n.a 0 n.a 2 PDO indicator Female beneficiaries Percentage Average 0 49.91 49 101.85 49 n.a Anshan 0 50.09 — n.a — n.a Fushun 0 50.39 — n.a — n.a Gaizhou 0 49.24 — n.a — n.a 3 PDO indicator Percentage of Percentage Anshan 0 60 — n.a 60 100.00 population in project Fushun 0 100 — n.a 100 100.00 cities receiving water Gaizhou 0 100 — n.a 100 100.00 supply from rehabilitated/upgraded water treatment plants under this project 4 Intermediate Length of new or Kilometers Total 0 101.108 300 33.70 98.56 102.59 results rehabilitated main Anshan 0 42.28 — n.a 40.498 104.40 indicator pipelines for water Fushun 0 58.76 — n.a 58 101.31 supply Gaizhou 0 0.068 — n.a 0.068 100.00 5 Intermediate Water supply capacity million Total 0 1.15 — n.a 1.15 100.00 results of m3/day Anshan 0 0.24 — n.a 0.24 100.00 indicator rehabilitated/upgraded Fushun 0 0.85 — n.a 0.85 100.00 water treatment plants Gaizhou 0 0.06 — n.a 0.06 100.00 under this project 6 Intermediate Customer satisfaction Percentage Average 65 95.97 75 127.96 85 112.91 results with the quality of Anshan 65 97.26 n.a — n.a indicator water supply services Fushun 65 98.71 n.a — n.a Gaizhou 65 91.94 n.a — n.a 7 Intermediate Percentage of women Percentage Average 65 93.98 75 125.31 85 110.56 results satisfied with the Anshan 65 95.62 — n.a — n.a indicator quality of water supply Fushun 65 96.99 — n.a — n.a services Gaizhou 65 89.33 — n.a — n.a 8 Intermediate Number of self-tested Number Fushun 35 47 — n.a 47 100.00 results water quality Gaizhou 9 42 — n.a 42 100.00 indicator parameters of each WSC 9 Intermediate Number of water Number Total 0 564 754 74.80 250 225.60 results utility staff received Anshan 0 279 — n.a 115 242.61 indicator training on asset Fushun 0 196 — n.a 85 230.59 Page 34 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT No. Indicator Type Indicator Name Unit Scope Baseline Actual (By Original % of Revised % of June 30, Target Original Target Revised 2024) (PAD) Target Target management systems, Gaizhou 0 89 — 50 178.00 water quality monitoring, and pipe leakage detection and repairing n.a. Intermediate Number of Female Number Total 0 199 300 66.33% 93 213.98 results Staff received training Anshan 0 120 — n.a 38 315.79 indicator on asset management Fushun 0 51 — n.a 30 170.00 10 systems, water quality Gaizhou 0 28 — n.a 25 112.00 monitoring, and pipe leakage (Number, Custom) Note: a. The actual values for Shenyang and Fuxin were measured in December 2021. Table A6.1.2. Outcome 2 Target Achievement No. Indicator Indicator Name Unit Scope Baseline Actual (By Original % of Revised % of Revised Target Type June 30, Target Original Target 2024) (PAD) Target 1 PDO Non-Revenue-Water Percentage Shenyang* 33.00 31.80 29.80 n.a n.a Indicator in each project city Anshan 30.90 23.60 24.00 105.80 24.00 105.80 Fushun 38.80 21.60 22.10 102.99 21.63 100.17 Fuxin* 25.70 19.70 16.20 n.a n.a Gaizhou 64.10 33.30 35.10 106.21 35.20 106.57 2 PDO Energy consumption kWh/m3 Shenyang* 0.58 -> 0.79 0.47 -> n.a 0.79 100.00 Indicator by the water utilities 0.87b 0.79bⴕ in each project city Anshan 0.46 0.45 0.45 100.00 0.45 100.00 Fushun 0.55 0.504 0.51 115.00 0.505 102.22 Fuxin* 0.96 0.85 0.84 n.a 0.85 100.00 c Gaizhou 1.6 0.95 (0.751) 0.36 52.42 0.765 77.84 (68.47) (101.68) 3 Intermediate Number of secondary Number Total 0 143 270 52.96 143 100.00 results booster pumps Anshan 0 80 — n.a 80 100.00 indicator installed/rehabilitated Fushun 0 33 — n.a 33 100.00 Gaizhou 0 30 — n.a 30 100.00 4 Intermediate Number of district Number Total 0 1,558 945 164.87 1,558 100.00 results water meters Anshan 0 151 — n.a 151 100.00 indicator installed Fushun 0 1,256 — n.a 1,256 100.00 Gaizhou 0 151 — n.a 151 100.00 5 Intermediate Number of water Number Total 0 211,877 115,000 184.24 199,694 106.10 results meters installed Anshan 0 99,081 — n.a 99,081 100.00 indicator Fushun 0 40,098 — n.a 40,098 100.00 Gaizhou 0 72,698 — n.a 60,515 120.13 Page 35 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT No. Indicator Indicator Name Unit Scope Baseline Actual (By Original % of Revised % of Revised Target Type June 30, Target Original Target 2024) (PAD) Target 6 Intermediate Working Ratio - Shenyanga 0.85 0.85 0.8 0.00 — n.a results Anshan 1.02 0.84 0.9 150.00 0.9 150.00 indicator Fushun 0.95 0.84 0.85 110.00 0.85 110.00 a Fuxin 0.88 0.85 0.85 100.00 — n.a Gaizhou 1.3 0.92 0.95 108.57 0.95 108.57 7 Intermediate Establishment of Number Total 0 3 n.a 3 100.00 results Smart Water System indicator 7.1 Sub- Establishment of a Number Total 0 2 3 66.67 2 100.00 indicator hydraulic network Anshan 0 1 — n.a 1 100.00 models with 24 hours' Fushun 0 1 — n.a 1 100.00 simulation capability 7.2 Sub- Establishment of a Y/N Total 0 3 5 60.00 3 100.00 indicator computerized asset Anshan 0 Y — n.a Y 100.00 management system Fushun 0 Y — n.a Y 100.00 Gaizhou 0 Y — n.a Y 100.00 7.3 Sub- Establishment of a Y/N Anshan 0 Y — n.a Y 100.00 indicator NRW control system Fushun 0 Y — n.a Y 100.00 Gaizhou 0 Y — n.a Y 100.00 7.4 Sub- Installation of the Number Total 0 48 — n.a 48 100.00 indicator agreed new water Anshan 0 39 — n.a 39 100.00 quality online Fushun 0 5 — n.a 5 100.00 monitoring facilities Gaizhou 0 4 — n.a 4 100.00 Note: a. The actual values for Shenyang and Fuxin were measured in December 2021. Activities for these two cities were dropped after the restructuring. b. The values in red were revised during the restructuring. c. Gaizhou is changing the water source. Once the water source is changed, the energy consumption is expected to be 0.751. Table A6.1.3. Comparison of Metered Water before and after Rehabilitation in the Three WSCs (Case studies for Outcome 2) City Gaizhou Fushun Anshan Study area Residential area Business area Non-residential Residential Residential area area area No. of households 4,755 1,050 1,378 525 7,070 Metered water before 71,494 m3 22,686 m3 38,049.75 m3 34, 455m³ 209,760 m3 rehabilitation (2022 January– (2022 January– (2021 February–July) March) March) Metered water after 83,240 m3 (2024 24,229 m3 (2024 42,253.23 m³ 38,057 m³ 213,917 m3 (2022 rehabilitation January–March) January–March) February–July) Metered water increase 12.0 6.8 11.0 9.46 6.7 (%) Page 36 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Table A6.1.4. Comparison of NRW before and after rehabilitation in Fushun, and Anshan (Case studies for outcome 2) City Fushun Anshan Study area Residential Residential Residential Residential area 1 Residential Residential Residential area 1 area 2 area 3 area 2 area 3 area 4 No. of households 1,937 1,503 1,493 624 264 508 467 Rehabilitation details 2,078 m 1,438 m 2,020 m 95 m pipelines 264 water 508 water 467 water meters Pipelines pipelines pipelines rehabilitated, 624 meters meters changed, 2,625 m rehabilitate rehabilitated rehabilitated water meters changed changed pipelines d changed rehabilitated Monthly average of 29,689 23,193 9,504 6,794 3,957 6,680 4,376 supplied water (before) (m3) Monthly average of charged 15,152 11,782 5,357 2,429 1,501.67 3,548.92 2,434 water (before) (m3) NRW (before) (%) 48.96 49.2 43.7 64.25 62.05 40.87 44.38 Monthly average of 17,655 14,443 5,660 2,880 1,327 5,917 3,143 supplied water (after)(m3) Monthly average of charged 15,427 12,612 4,942 2,715 1,220 5,135 2,628 water (after) (m3) NRW (after) (%) 12.62 12.8 10.32 16.73 8.10 13.21 16.39 NRW reduction (%) 36.34 36.4 33.38 47.52 53.95 27.66 27.99 Annex 6.2. Disbursement Data Figure A6.2.1. Time Series for Disbursement and Accumulated Total 160.00 16.00 Millions Millions 140.00 14.00 96.40 M 120.00 by Jul. 2022 12.00 Accumulated Total Disbursement 100.00 10.00 80.00 8.00 60.00 6.00 40.00 4.00 20.00 2.00 - - Mar 15, 2021 Apr 26, 2023 Aug 14, 2022 Dec 18, 2020 Dec 18, 2020 Dec 21, 2020 Mar 16, 2021 Feb 15, 2022 Feb 15, 2022 Jan 25, 2024 Jul 19, 2019 Jul 9, 2021 Jul 12, 2021 Oct 16, 2019 Oct 15, 2020 Oct 20, 2021 Oct 21, 2021 Oct 31, 2022 Oct 31, 2022 Nov 22, 2021 Nov 7, 2023 Jun 18, 2024 Source: Based on data from Operations Portal. Page 37 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Annex 6.3. Smart Water Systems19 6.3.1. Anshan Anshan Background for Smart Water Management 1. Anshan WSC has been engaged in information construction and application for nearly 40 years and has actively responded to the country’s development and promotion of information construction requirements. It has put forward the construction and development goals of SWS and has strived to achieve integrated management of supply, drainage, and sewage through information construction; comprehensively improve the management and service level; and ensure the safety of supply, drainage, and sewage production. 2. However, due to technical and financial constraints, the WSC’s information development has entered a bottleneck period where it is difficult to upgrade and update hardware equipment and software systems, which has directly affected the group’s information construction development and business progress. 3. Through the implementation of the World Bank project, Anshan WSC has solved two major problems. First, it established a new main data center and data disaster recovery center, which provided the WSC great support and guarantee for future software construction and application levels. This also significantly improved data and information security management, meeting the construction and development needs of the WSC’s informatization. Second, a water supply management platform was built to achieve data integration and comprehensive business management related to water supply production and pipe network operations. This greatly improved water supply management and helped achieve the management goals of evidence-based water supply and safe water supply. Through this project, the SWS has significantly improved in terms of smart water supply management platform, leakage analysis and management system, GIS, and hydraulic model system. Table A6.3.1. Main Functions of the Anshan SWS Smart water supply management platform Mobile APP of water supply management (including real-time monitoring, alarm system, and instruction query) 19 Figures were obtained from Client ICR. Page 38 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT ‘One map’ of Water supply system (including water treatment plant, Water purification process and real-time data display pipeline, and booster station) (for example, turbidity, residual chlorine, water level, flow, pump pressure, and pump current) DMA divisions and the statistics Leakage analysis and warning system (including warnings for abnormalities in water flow, communication, pressure, electricity, and so on) Information network collection Hydraulic model application Case 1: Hydraulic models helped understand the impacts on water pressure in the events of pipeline bursts 4. Due to the serious aging of raw water pipelines, there have been several raw water pipeline bursts in recent years, resulting in reduced production and pressure at the Wangjiayu Water Plant. In response to this, a simulation of the operating conditions when a pressure reduction event occurs was conducted. Using the DN1200 pipeline from the first phase of the Wangjiayu Water Plant as an example, the low-pressure operation of the water supply when a raw water pipeline bursts was simulated, along with the impact of the water plant’s reduced production capacity on the surrounding areas. The current operating pressure is 0.227 MPa, which is adjusted down to 0.18 MPa, and the model is calculated. 5. Conclusion. Since the High-tech Institute is close to the Wangjiayu Water Plant, it has certain geographical advantages. Therefore, when the pipe burst occurred and the Wangjiayu Water Plant reduced production and pressure, although the pressure at the High-tech Institute dropped, the impact on the area was relatively low, and the water supply demand could still be met. Page 39 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Figure A6.3.1. High-Tech Institute Management Network Map 6. The High-tech Institute has independent water supply, clear boundary measurement, complete basic equipment, and complete pipe network topology data, which provides a good foundation for modeling. Therefore, the High-tech Institute was selected as the hydraulic model test area. This model update is divided into three stages: the first stage - pipe network topology update; the second stage - pipe network water volume and operation parameter update; and the third stage - model calibration. Figure A6.3.2. Comparison between Simulated and Measured Values 6.3.2. Fushun Fushun Background for Smart Water Management 7. Fushun Water Supply Co., Ltd. was established in 1908. It is a large state-owned public utility enterprise with 1,543 employees. As of the end of 2015, the water supply area covered an area of 95 km2 and the total number of water users was 1.267 million. The company has five water supply branches: Shenfu, Wanghua, Xinfu, Hebei, and Dongzhou. 8. In the twenty-first century, the Fushun WSC has gradually built an office automation system, business meter reading system, dispatching command system, secondary pump station monitoring system, pipe network information system, water plant video monitoring system, and user service system. The existing smart water platform has functions for the daily query of some pipe network data, facility statistics, pipe network leakage points, pipe network facilities, water outage plan, water use survey, data monitoring, and so on. However, many problems remain. For example, the monitoring system is insufficient, the management method of pipeline network data is outdated, facility management capabilities are weak, water supply guarantee capabilities are insufficient, service and operation and maintenance methods are outdated, and the level of information technology application is low. Page 40 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 9. The SWS development of the Fushun subproject financed by the World Bank includes software and hardware procurement and dedicated network construction, pipe network and topographic map update and storage, data governance and data resource integration, cloud data center platform construction, pipe network GIS and basic business system construction, customer service business system construction, production operation management platform construction, data monitoring center platform construction, and smart water supply standard construction. It addresses several major problems in smart water management: (a) The construction of the production scheduling system has enabled functions such as data integration, process management, comprehensive display of key performance indicators, and intelligent statistical analysis. The role of the smart water platform was initially demonstrated. (b) The large work order system significantly improves work efficiency. Through automated and intelligent process management, the system can quickly create, assign, and track work orders, reducing the tedious process of manually recording and transmitting information, making the work process smoother. (c) The hotline system project has significantly improved the efficiency of government services and the level of administrative support. (d) The WSC portal website has become an important platform for information disclosure. Through the website, users can easily obtain the latest policies, news, and data reports on water supply, sewage treatment, water resources protection, and so on, which greatly improves the transparency of water affairs work and enhances the public’s trust in water affairs groups. The WeChat official account has also successfully created a public service platform with water affairs characteristics. By publishing water affairs policies, water supply information, water conservation knowledge, and so on, it provides the public with convenient water affairs services. (e) The construction of the hydraulic model realizes the combination of GIS pipe network data and water plant monitoring data, using both revenue and water demand data to simulate the hydraulic situation of the pipe network in the whole city. This model can be preliminarily used for data analysis and decision-making. Table A6.3.2. Main Functions of the Fushun SWS Smart water integrated management platform Page 41 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT ‘One map’ of monitoring points ‘One picture’ of maintenance cases Secondary pumping station management system Information network GIS picture Hydraulic model application Case 2: Application of DMA leakage monitoring and management system 10. On April 1, 24, the DMA division Sunshine Lijing Phase II, under Li Shisuo, configured an abnormal alarm and issued a data alarm for the minimum flow at night in this DMA division. The community ’s pipe network and water meters were inspected and checked. Through personnel inspections, leaks in the pipeline were found, and the repair personnel were immediately coordinated to repair the damaged pipe sections. Before the repair, the minimum flow at night in the community assessment table was 47 m3 per hour. After the repair, the instantaneous flow was reduced to 10 m3 per hour, and the change in instantaneous flow was reflected in real time. It is estimated that the daily water saving reaches 888 m3. The generation and rapid processing of abnormal alarms have accelerated the progress of the Fushun Water Supply Group in reducing leakage and saving water supply electricity consumption. Page 42 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Figure A6.3.3. SWS Alarmed the Abnormally High Flow Rate of a DMA Division 6.3.3 Gaizhou Gaizhou Background for Smart Water Management 11. Gaizhou WSC Limited (hereinafter referred to as Gaizhou WSC) is a public welfare enterprise responsible for the production and supply of drinking water to 605 enterprises and institutions in Gaizhou and its suburbs and more than 120,000 people. Gaizhou City uses groundwater as the source of urban water supply. After the construction of the Henan Water Plant in 2004 and the expansion of the Tashan Water Plant in 2012, the current water supply capacity is 65,000 tons per day. 12. As Gaizhou WSC develops, the demand for overall pipeline control, water supply problem handling, and leakage control is increasing due to the lack of water information systems and pipeline monitoring equipment. Before the World Bank project was implemented, Gaizhou WSC lacked information systems and intelligent equipment and relied on traditional manpower to carry out daily work, which mainly caused the following problems: (a) Unclear network assets. The geographical locations of subdivided pipelines and urban pipelines are unclear due to their early construction, preventing unified dynamic management. The water supply network is not visualized, and the speed of positioning after the pipe burst is slow. (b) Lack of information systems. The level of water affairs informationization is low, which cannot provide effective support for the business. The water affairs operational efficiency is low, the water leakage rate is higher than the national and Liaoning provincial averages, and the water fee revenue is not satisfactory. The operation and scheduling rely entirely on manual experience. Not only is the training cycle long, but manual errors will bring greater uncertainty to the safe scheduling of water supply. The user hotline has only one landline, which cannot fully meet the needs of users, and there is a lack of feedback measures to assess the timeliness of disposal and user satisfaction. (c) Insufficient intelligent monitoring equipment. Before the World Bank project was implemented, there were few monitoring points in the pipeline network. Even though there were a few pressure gauges and flow meters, they had no remote transmission function, no daily inspections and maintenance, and weak data collection capabilities. Due to the lack of data, water supply management decisions lacked data basis, resulting in high safety risks. Page 43 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 13. With the help of the World Bank, the Gaizhou WSC built a SWS, bridging the gap between its information infrastructure and management needs. This project enhanced the intelligent water supply management system, including software development, hardware installation, information system training, and establishment of relevant systems and standards. It optimized management processes, clarified responsibilities, and established a performance appraisal mechanism, thereby improving management efficiency, water supply safety, service levels, and economic benefits. On June 16, 2023, under the guidance of the World Bank expert delegation, Gaizhou WSC established a comprehensive operation and dispatching center for smart water management. The center, led by a director and a team of 15 young members, began a six-month trial operation of various systems, including the operation charging system, online business hall, secondary water supply system, pipe network GIS, pipe network inspection management system, customer service hotline system, zoning metering system, metering management center, and water supply dispatching system. Through comprehensive training at Jiaxing Heda Company, the team gained the ability to independently operate the smart system, fostering the development of information system talents and promoting the sustainable development of smart water management. Case 3: Hotline system 14. By recording and analyzing in detail the materials, solutions, and other data related to the repair work order, the SWS can form a real-time performance evaluation system for maintenance personnel. This involves comprehensively collecting relevant data from the repair work order, which includes detailed information such as the time, location, and content of the repair; the equipment and parts involved; the type, quantity, and cost of materials used in the repair process; the solutions taken by the maintenance personnel, including specific repair steps, tools used, and technical difficulty; and the completion time of the work order, including the start and end time points. An in-depth analysis of the collected data can be conducted. By calculating the average maintenance time of maintenance personnel, the SWS can evaluate their work efficiency. Based on the technical difficulty of the solution, the management team can evaluate the professional skill level of the maintenance personnel. Table A6.3.3. Main Functions of the Gaizhou SWS Operation charging system (integrated the five previously Metering management system (access to 40,000 smart scattered revenue systems to facilitate statistical management remote meter data to help water companies understand and upper-level decision-making) water usage patterns and pipeline load; connect with operation charging system to improve water revenue) Water supply dispatch system Source well data, including water flow, voltage, and so on Page 44 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT The pipeline network GIS includes data on valves, fire Pipeline network data statistics and trend analysis hydrants, monitoring points, and the entry of 539 km pipelines Distribution map of secondary water supply pump stations Online Business Hall (users can update their info and water (staff can use the mobile app to issue valve switching usage directly through the website, handle common instructions for problematic pump stations) business, and learn about water supply and water outage information in a timely manner). Pipeline network inspection management system The customer service hotline system (provides users with (GIS+Web+App mode makes inspection work traceable and rapid and accurate information consultation, daily service, workload visible and controllable) and feedback collection.) Mobile phone service (WSC staff can monitor water flow DMA system anomalies and solve problems in a timely manner through mobile app, and users can consult business and pay water bills remotely through the WeChat official account) Page 45 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Training and Technical Exchange on SWSs 15. The 553 employees of Anshan, Fushun, and Gaizhou WSCs participated in various special management and technical trainings, which has broadened their management horizons, improved their technical knowledge, and deepened their understanding of digital and information-based enterprise management. Many employees have seen the achievements of advanced WSCs in management and technology application through external training and inspections and have set clear goals for their own improvement. Table A6.3.4. Example Photos of the Technical Capacity Building for SWSs in the Three WSCs Anshan WSC training 1 Anshan WSC training 2 Fushun WSC training 1 Fushun WSC training 2 Page 46 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Gaizhou WSC training 1 Gaizhou WSC training 2 Annex 6.4. Water Quality Analysis 6.4.1. Summary of Project Interventions for Water Quality Improvements 16. Below is a summary of the impact of project interventions for Outcome 1 - to improve the water quality of selected water supply utilities in the project areas. Anshan 17. Before the project was implemented, the water quality of Anshan’s urban water supply system was difficult to guarantee, the level of intelligent management needed to be further improved, and water supply infrastructure such as pipe networks and water meters needed to be further improved. Through the construction of this project, Anshan’s urban water supply system has been further improved, and the urban water supply system has achieved the following goals: (a) Wangjiayu Water Plant supplies water to 70 percent of users in Anshan City. The first phase of the water plant was completed and put into operation in July 1993, and the second phase was completed and put into operation in 2010. After a period of operation, it was found that if the water was operated at full capacity according to the designed treatment capacity, the water quality of the water leaving the plant would be difficult to stably meet the requirements of the national water quality standard (GB5749-2006). Therefore, to ensure the quality of the water leaving the plant, the Wangjiayu Water Plant has been operating at a level lower than the designed capacity and cannot operate at full capacity. In addition, the water plant also has problems with aging equipment and some facilities that are not conducive to water volume regulation. (b) With the rehabilitation of the conventional treatment facilities of the WTP, the effluents from the Wangjiayu WTP meet the national GB5749-2006 standard. When operating at full load, all indicators of the effluent water meet the current national standards, and the turbidity of purified water is less than 1 NTU. At the same time, the safety of the water plant’s disinfection system is improved to ensure the safety of residents around the WTP, and the needs of the water plant’s intelligent management automation are met. (c) Through the rehabilitation of old pipelines and coordinated planned system flushing, the number of pipelines with severe aging and rust has been greatly reduced. This has improved water quality, reduced the maintenance workload, and resolved the problem of occasional pipeline shedding at the end of the pipeline network and the intersection of water sources, thereby reducing the probability of pipeline damage and the probability of secondary water pollution. (d) By renovating 80 secondary booster pumping stations, the risk of pollution, which previously occurred as water traveled through pipelines, reservoirs, and other stages, is eliminated. This comprehensive upgrade eradicates the hidden dangers of secondary drinking water pollution, ensuring stable water supply and guaranteeing water quality safety. Page 47 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Fushun 18. The water supply network in Fushun City was first built in 1908. Before the project was implemented, a considerable part of the network had serious problems such as burst pipes and leakage due to long operation time and substandard pipe materials (grey cast iron pipes). Among the five water plants of Fushun Water Company, Wujiabao WTP was built in 1983, Jiangjun WTP was built in 1993, Park WTP was built in 1908, and Haicheng WTP was built in 1992. None of them had undergone comprehensive and systematic upgrades of their process and control systems. Many equipment and valves have exceeded or are close to their designed service life (30 years), and their integrity has been reduced to the minimum. The maintenance workload is large, which has affected the normal operation of the WTPs and caused instability in water output and water quality. 19. Through this project, the water supply environment and terminal water quality in Fushun urban areas have been comprehensively improved, the quality of life of the people has been improved, the waste of water resources has been avoided, the normal operation of industrial production has been guaranteed, and the construction and development of Fushun has been promoted. 20. In terms of improving water quality and safety: (a) Through project construction, especially after the restructuring, the investment in WTP rehabilitation accounted for 56.58 percent. Through the replacement of water pumps, fans, valves, and related power distribution systems and automation transformation, the process operation stability and reliability of the WTP have been significantly improved, the disinfection capacity and water supply safety have been improved, the city’s water supply safety has been guaranteed, the energy consumption of water treatment has been reduced, and the city’s water supply users have benefited. (b) Comprehensive monitoring and management of the water sources, reservoirs, water plants, pumping stations, pools and their pipe network water pressure, water volume, and water quality (turbidity, residual chlorine, and pH) monitoring points of the water supply system ensures the management requirements of water supply volume, water pressure, and water quality (turbidity, residual chlorine, and pH) in the entire Fushun area. This provides strong technical support for the construction of a water supply service system in Fushun City, ensuring sufficient water supply capacity, balanced water supply pressure, compliant water quality, stable pipe network operation, economical and efficient operation, first-class service levels, and safe guarantees, to achieve scientific water supply. Gaizhou 21. Gaizhou WSC was established in 1972 and uses groundwater as a water source for the urban area. According to a comprehensive analysis of Gaizhou’s groundwater resources, the average ratio of groundwater extraction to exploitable volume in Gaizhou has reached 90 percent, and the groundwater in the Daqing River Basin has been seriously overexploited. At the same time, there is also a serious problem of leakage in the community pipe network, especially in the old city and the urban-rural fringe area where ‘metering’ cannot be implemented, resulting in a large loss of water. The company’s production and sales ratio is seriously unbalanced, with an NRW of 64.10 percent in 2015, and it has been in a debt-ridden operation. 22. Through the project, Gaizhou WSC achieved the goals set by the project. 23. First, in terms of improving the water quality of water supply provided by the water company: (a) Gaizhou has realized the transformation of urban water supply from groundwater to surface water through the construction of the water diversion pipeline from Yangjiadian. While protecting local groundwater resources, it has guaranteed the drinking water demand and water quality safety of urban residents and enterprises and institutions and supported the sustainable development of social economy. Compared with Page 48 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT the original plan to draw water from Guotun WTP, the water supplied by the two water plants meets the national drinking water hygiene standards (GB5749-2006). Some indicators of the water quality from the Yangjiadian WTP are better than those from the Guotun WTP. The specific data are shown in Table A6.4.1. Table A6.4.1. Comparison of Effluent Quality between Guotun WTP and Yangjiadian WTP No. Items Guotun Water Yangjiadian Water Drinking Water Standard (GB5749-2006) 1 Water source Shimen Reservoir Yushidong Reservoir 2 Water supply 50,000 m3 per day Recent 15,000 m3 per day Long-term 50,000 m3 per day 3 Total coliform bacteria / (CFU/100 mL ) Not detected Not detected Not to be detected 4 Thermotolerant coliform bacteria / — — Not to be detected (CFU/100 mL ) 5 Total colony count / (CFU/mL ) 3 1 100 6 Arsenic / (mg/L) ＜0.001 ＜0.001 0.01 7 Cadmium / (mg/L) ＜0.001 ＜0.001 0.005 8 Chromium (hexavalent) / (mg/L) ＜0.004 ＜0.004 0.05 9 Lead / (mg/L) ＜0.003 ＜0.003 0.01 10 Mercury / (mg/L) ＜0.0001 ＜0.0001 0.001 11 Selenium / (mg/L) ＜0.004 ＜0.004 0.01 12 Cyanide / (mg/L) ＜0.001 ＜0.001 0.05 13 Fluoride / (mg/L) 0.51 0.41 1.00 14 Nitrate (as N) / (mg/L) 3.22 2.52 10 (20 when water source is limited ) 15 Chloroform / (mg/L) 0.0132 0.0011 0.06 16 Carbon tetrachloride / (mg/L) ＜0.0001 ＜0.0001 0.002 17 Chroma (Platinum-Cobalt Chroma Unit) 0 0 15 18 Turbidity (nephelometric turbidity unit) / 0.43 0.61 1 NTU 3 when water source and water purification technology conditions limit 19 Smell and taste 0 0 No odor or taste 20 Visible to the naked eye none none none 21 pH 7.39 7.51 Not less than 6.5 and not more than 8.5 22 Aluminum / (mg/L) ＜0.02 ＜0.02 0.2 23 Iron / (mg/L) ＜0.05 ＜0.05 0.3 24 Manganese / (mg/L) ＜0.05 ＜0.05 0.1 25 Copper / (mg/L) ＜0.02 ＜0.02 1.0 26 Zinc / (mg/L) ＜0.08 ＜0.08 1.0 27 Chloride / (mg/L) 14.36 9.93 250 28 Sulfate / (mg/L) 96.64 23.35 250 29 Total dissolved solids / (mg/L) 274 114 1,000 30 Total hardness (calculated as CaCO 3) / 220.20 90.08 450 (mg/L) Page 49 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 31 Oxygen consumption (CODMn method, in 2.24 1.36 3 terms of O 2)/(mg/L) 5 when raw water oxygen consumption> 6 mg/L with limitation of water source 32 Volatile phenols (in terms of phenol) / ＜0.001 ＜0.001 0.002 (mg/L) 33 Anionic synthetic detergent / (mg/L) ＜0.01 ＜0.03 0.3 34 Total α radioactivity / (Bq /L) 0 0 0.5 35 Total β radioactivity / (Bq /L) 0.081 0.082 1 36 Chlorine gas and free chlorine 0.5 0.24 ≥0.05 preparations /(mg/L) (b) The energy consumption of secondary water supply has been greatly reduced, secondary pollution has been eliminated, and the stability and safety of secondary water supply have been improved. Through the rehabilitation of the secondary booster pump station, the long-standing problems of poor management in the water supply system of the abandoned community, rust and aging of the secondary booster pump station, difficulty in ensuring the water quality of the pool, and aging of the power supply system have been solved. (c) The routine monitoring of water quality in accordance with national regulations has been realized. Through relevant instruments, water quality testing equipment, and relevant personnel training, the number of water quality indicators tested by Gaizhou WSC increased from 9 to 42, ensuring the safety of water supply quality. Relevant Photos The treatment improvements of the WTPs and rehabilitation of clear water tank ensured the water quality during the raw water treatment process 24. Anshan, Fushun, and Gaizhou Water Companies carried out different rehabilitations on 10 WTPs, updated old equipment, improved automatic control systems, rebuilt clear water tanks, and adopted sodium hypochlorite disinfection technology. These rehabilitation measures ensured the water quality from raw water treatment to factory water. Table A6.4.2. Photos for Water Treatment Improvements New water plant control room Electrical control system rehabilitation Page 50 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT New room for sodium hypochlorite disinfection Upgrade of motors, pumps and control valves Valves replaced during the rehabilitation Replaced waste valves and pipe fittings Increased water quality testing equipment and the resulting expansion of the scope of water quality testing indicators. 25. The water quality testing capability of Anshan WSC has reached all 106 indicators required by the country. Fushun WSC and Gaizhou WSC purchased laboratory water quality testing instruments through this project, which improved their water quality testing capabilities, from 35 and 9 indicators to 47 and 42 indicators, respectively, fully meeting the routine water quality testing requirements and ensuring the quality of the water leaving the factory. Anshan, Fushun, and Gaizhou WSCs have purchased and installed online water quality testing equipment, which not only realizes real-time monitoring of the water quality of factory water but also monitors the water quality of pipeline water, mainly the water quality at secondary booster pump stations, to ensure the safety of water delivered to users. Table A6.4.3 Photos for Water Monitoring and Test Instruments Water quality analysis instrument for laboratory 1 Water quality analysis instrument in laboratory 2 Page 51 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Water quality online monitoring1 Water quality online monitoring2 The secondary booster pump station was rehabilitated, with old water tanks replaced, and water quality guaranteed. 26. Anshan, Fushun and Gaizhou Water Companies have renovated old water tank pumping stations, replaced old booster pumps and motors, and added remote monitoring systems or control systems to avoid potential water quality pollution in old water tanks. Table A6.4.4 Photos for rehabilitation of secondary booster pump stations. Old secondary booster pump and motor before Secondary booster pump station equipment after rehabilitation rehabilitation Old secondary pump with water pollution risks New secondary pressurization equipment Page 52 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 6.4.2 Customer satisfaction survey on water quality and overall water service. 27. In 2019, the project had not yet been fully implemented, and the first satisfaction survey was conducted at that time. Comparing the results with those in 2019, the 2024 satisfaction survey showed that all water companies have made great improvements in comprehensive satisfaction (Figures A6.4.1-A6.4.3). The overall satisfaction rate in Anshan increased from 80.68% to 94.61%, an increase of 17.27%; Fushun increased from 89.24% to 95.64%, an increase of 7.17%; Gaizhou increased from 78.41% to 88.43%, an increase of 12.78%. 28. The improvement in satisfaction in Anshan is quite obvious. In terms of turbidity (water quality), the satisfaction in Anshan has increased from 81.3% to 96.49%, an increase of 18.68%; the satisfaction with water pressure has increased from 89.19% to 94.87%; the satisfaction with safety has increased from 68.24% to 94.29%, an increase of 38.17%; the satisfaction with water supply service continuity has increased from 80.79% to 94.54%, an increase of 17%; the satisfaction with customer service has increased from 83.42% to 92.68%, an increase of 11.1%. 29. The water supply safety, water supply service continuity and customer service satisfaction of Fushun and Gaizhou have improved significantly. The water supply safety satisfaction of Gaizhou has increased by 38.97%, the water supply service continuity satisfaction has increased by 27.7%, and the customer service satisfaction has increased by 17.77%; the water supply safety satisfaction of Fushun has increased by 11.07%, the water supply service continuity satisfaction has increased by 11.95%, and the customer service satisfaction has increased by 6.87%. Figure A6.4.1 Comparison of Anshan’s Customer Satisfaction Survey Report Between 2019 And 2024 Figure A6.4.2 Comparison of Fushun’s Customer Satisfaction Survey Report Between 2019 And 2024 Page 53 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Figure A6.4.3 Comparison of Gaizhou’s Customer Satisfaction Survey Report Between 2019 And 2024 6.4.3 Further Notes regarding the water quality standards 30. The quality of drinking water in China is tested in accordance with the "Drinking water standards". Before and after the project implementation, two versions of the "Drinking water standards" were implemented successively, namely the GB5749-2006 was implemented before the end of March 2023, and the GB5749-2022 was implemented in April 2023. The main technical changes between the two versions are that the water quality indicators have been adjusted from 106 in 2006 to 97 now, including 43 conventional indicators and 54 extended indicators; the water quality reference indicators have been adjusted from 28 to 55. 31. Water quality testing is the responsibility of local health departments, such as Gaizhou, and can also be carried out by qualified specialized institutions, such as Anshan and Fushun. The water quality indicators tested are mainly routine indicators, and the water sampling points include the water plant outlet and the end-user water. Which routine water quality indicators each water plant needs to test also depends on the water treatment process and disinfection process. The WSC is responsible for the water quality, mainly by controlling the quality of the water leaving the factory to ensure that the end-user water quality meets the standards, but end-user water from different locations is also selected for testing at ordinary times. The water quality test results of the three WSCs in the urban area before (2018 and 2019) and after (2023 and 2024) the project implementation all met the standards, as summarized below. 32. Anshan WSC. Taking the water quality of Wangjiayu WTP before and after the rehabilitation as an example, the water quality test data for the two quarters of 2018 and the first half of 2019 before the rehabilitation and the same period in 2023 and 2024 after the rehabilitation are shown in the following table. Table A6.4.5 Water quality of Wangjiayu WTP in Anshan before and after rehabilitation 2018 2019 2023 2024 Test items unit First Second First Second First Second First Second Quarter quarter Quarter quarter Quarter quarter Quarter quarter PH -- 8.03 7.5 8.04 7.95 7.51 7.56 7.62 7.55 Chroma Spend <5 <5 <5 <5 <5 <5 <5 <5 Turbidity NTU 0.73 0.47 0.76 0.47 0.60 0.42 0.37 0.30 Smell and taste -- None None None None None None None None Visible to the naked eye -- None None None None None None None None Iron mg/L <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 Manganese mg/L <0.03 <0.03 <0.03 <0.03 <0.03 <0.03 <0.03 <0.03 Copper mg/L <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 Zinc mg/L <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 Page 54 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT Fluoride mg/L 0.18 0.20 0.19 0.20 0.20 0.21 0.18 0.18 Chloride mg/L 10.5 10.7 10.3 12.4 11.2 11.0 10.8 11.5 Nitrates mg/L 0.70 0.49 1.23 1.07 2.36 2.47 1.22 1.29 Sulfate mg/L 55.3 56.1 50.0 58.6 42.2 45.9 41.6 46.0 Total dissolved solids mg/L 206 211 233 236 207 215 212 220 Total hardness mg/L 187 190 200 200 177 184 182 184 Oxygen consumption mg/L 1.48 1.56 1.54 1.46 1.54 1.47 1.56 1.54 Chromium (hexavalent) mg/L <0.004 <0.004 <0.004 <0.004 <0.004 <0.004 <0.004 <0.004 Cyanide mg/L -- <0.002 <0.002 <0.002 <0.002 <0.002 <0.002 <0.002 Anionic synthetic mg/L <0.050 <0.100 <0.050 <0.050 <0.050 -- -- -- detergent Arsenic mg/L 0.00503 0.00343 0.00434 0.00202 0.00094 0.00101 0.00246 0.00217 Selenium mg/L 0.00142 0.00239 0.00141 0.00110 0.0017 -- -- -- Cadmium mg/L <0.00006 <0.00006 <0.00006 <0.00006 <0.00006 0.00018 <0.00006 <0.00006 Lead mg/L <0.00007 <0.00007 <0.00007 <0.00007 <0.0025 <0.0025 <0.0025 <0.0025 Aluminum mg/L 0.0380 0.0136 0.1307 0.0250 <0.0294 0.0384 0.0309 <0.0012 Mercury mg/L <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 Total colony count CFU/ml 1 4 2 3 6 4 12 7 Total coliform bacteria CFU/100ml Not Not Not Not Not Not Not Not detected detected detected detected detected detected detected detected Thermotolerant CFU/100ml Not Not Not Not Not -- -- -- coliform bacteria detected detected detected detected detected Escherichia coli CFU/100ml Not Not Not Not Not Not Not Not detected detected detected detected detected detected detected detected Dichloroacetic acid mg/L -- -- -- -- -- <0.0010 0.0076 <0.0037 Trichloroacetic acid mg/L -- -- -- -- -- <0.0021 <0.0044 0.0044 Chloroform mg/L 0.003 0.01612 0.00276 0.02373 0.01050 0.01789 0.006425 0.017097 Carbon tetrachloride mg/L <0.0001 0.000118 0.00024 <0.00004 0.00012 -- -- -- Bromodichloromethane mg/L -- -- -- -- -- 0.00503 0.00157 0.011035 Dibromochloromethane mg/L -- -- -- -- -- 0.00091 0.000175 <0.000028 Bromoform mg/L -- -- -- -- -- <0.00052 <0.000065 <0.000065 Trihalomethanes --- -- -- -- -- -- 0.41710 0.135325 0.469332 Total alpha radioactivity Bq /L 0.060 0.111 0.060 0.054 <0.016 0.019 <0.02 ± <0.12 ± 0.04 0.11 Total beta radioactivity Bq /L 0.160 0.124 0.157 0.116 0.101 0.104 <0.03 ± <0.06 ± 0.02 0.01 Free Chlorine mg/L 0.51 0.50 0.51 0.41 0.42 0.55 0.36 0.42 Ammonia nitrogen mg/L <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 Nitrite mg/L <0.004 <0.004 <0.004 <0.004 <0.001 <0.001 <0.001 <0.001 Note: 1. Starting from the second quarter of 2023, the required indicators have changed; 2. “ --” indicates not detected. Page 55 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 33. Fushun WSC. Fushun WSC monitored the quality of the treated water and selected different numbers of tap water monitoring points (total number of cases) in the urban area of the city. The monitoring focused on key parameters such as microbiological indicators, toxicological indicators, sensory characteristics, general chemical indicators, disinfectant indicators, and an unconventional parameter (ammonia nitrogen). The qualified rate for all samples of municipal tap water was 100%. The Table A6.4.6 below shows the test results of treated water from Hebei WTP before and after the renovation. Table A6.4.6 Total number of water samples from end-user water monitoring points within Fushun urban area 2018 2019 2023 2024 Item Unit Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2 PH -- 7.56 7.70 7.76 7.45 7.27 7.23 7.11 7.12 Color (°H) °H 5 5 5 5 5 5 5 5 Turbidity NTU 0.4 0.5 0.4 0.3 0.4 0.3 0.3 0.3 Odor and Taste -- None None None None None None None None Visible Matter -- None None None None None None None None Fe mg/L <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 Mn mg/L <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 Cu mg/L <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 Zn mg/L <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 F⁻ mg/L 0.20 0.20 0.20 0.20 0.20 0.20 --- --- Cl⁻ mg/L 10.0 12.0 11.0 11.0 11.0 10.0 12.0 12.0 NO₃⁻ mg/L 1.68 1.91 1.71 2.28 2.00 3.16 2.56 2.79 SO₄²⁻ mg/L 28.2 29.2 25.3 26.49 27.15 23.26 18.15 14.95 Total Dissolved mg/L 143 192 154 155 109 165 131 124 Solids (TDS) Total Hardness mg/L 112.10 114.10 108.10 110.10 94.08 90.08 100.09 98.09 COD mg/L 1.68 1.44 1.84 1.76 2.16 1.84 1.60 2.00 Cr⁶⁺ mg/L <0.004 <0.004 <0.004 <0.004 <0.004 <0.004 <0.004 <0.004 CN⁻ mg/L <0.002 <0.002 <0.002 <0.002 <0.002 <0.002 <0.002 <0.002 Anionic Synthetic mg/L <0.01 <0.01 <0.01 <0.01 <0.01 --- --- --- Detergents As mg/L <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 Se mg/L <0.005 <0.005 <0.005 <0.005 <0.005 --- --- --- Cd mg/L <0.0005 <0.0005 <0.0005 <0.0005 <0.0005 <0.0005 <0.0005 <0.0005 Pb mg/L <0.0025 <0.0025 <0.0025 <0.0025 <0.0025 <0.0025 <0.0025 <0.0025 Al mg/L 0.042 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 0.0108 Hg mg/L <0.0002 <0.0002 <0.0002 <0.0002 <0.0002 <0.0002 <0.0002 <0.0002 Total Bacterial Not Not CFU/ml 3 5 2 1 5 1 Count Detected Detected Total Coliform CFU/100 Not Not Not Not Not Not Not Not Bacteria ml Detected Detected Detected Detected Detected Detected Detected Detected CHCl₃ mg/L <0.0002 0.007 0.050 0.028 0.051 0.045 0.011 0.0071 CCl₄ mg/L <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 --- --- CHBrCl₂ mg/L --- --- --- --- --- 0.006 0.0024 0.002 CHBr₂Cl mg/L --- --- --- --- --- 0.002 0.0016 0.0016 CHBr₃ mg/L --- --- --- --- --- <0.006 <0.006 <0.006 THMs --- --- --- --- --- --- 0.88 0.275 0.20 Cl⁻ mg/L 0.50 0.60 0.50 0.50 0.50 0.45 0.40 0.45 NH₄⁺-N mg/L <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 <0.02 Page 56 The World Bank China: Liaoning Safe and Sustainable Urban Water Supply Project (P158713) ICR DOCUMENT 34. Gaizhou WSC: Water quality monitoring points include factory water and end-user water. The number of samples taken each quarter varies. The quality of all water samples meets the drinking water standards. Taking the factory water of Tashan WTP as an example, the water quality test results are shown in the following table. Table 6.4.7 Water quality test results before and after the rehabilitation of Gaizhou Tashan WTP. ("—"means no data) 2019 2023 2024 Test items Unit Second quarter First Quarter Second quarter First Quarter Total colony count CFU/100ml 13 11 11 -- Total coliform bacteria MPN/100ml <2.2 <2.2 Not detected -- Chroma Spend 5 5 5 5 Turbidity Spend 1 1 1 <1 Smell and taste - 0 0 0 None Visible to the naked eye - None None None None pH 6.85 6.85 6.88 6.87 Iron mg/L <0.05 <0.05 <0.05 -- Manganese mg/L <0.05 <0.05 <0.05 -- Copper mg/L <0.02 <0.02 <0.02 -- Zinc mg/L <0.05 <0.05 <0.05 -- Chloride mg/L 56 54 52 47 Sulfate mg/L 43 48 43 -- Total dissolved solids mg/L 382 370 398 430 Total hardness (calculated as caco3) mg/L 265 249 272 307 Oxygen consumption (measured in O2) mg/L - 0.5 0.5 0.5 Volatile phenols (measured in phenol) mg/L <0.002 <0.002 <0.002 -- Anionic synthetic detergent mg/L <0.050 <0.050 <0.050 -- Arsenic mg/L <0.01 <0.01 <0.01 -- Cadmium mg/L <0.005 <0.005 <0.005 -- Chromium (hexavalent) mg/L <0.004 <0.004 <0.004 -- Lead mg/L <0.005 <0.005 <0.005 -- Mercury mg/L <0.001 <0.001 <0.001 -- Selenium mg/L <0.005 <0.005 <0.005 -- Cyanide mg/L <0.002 <0.002 <0.002 -- Fluoride mg/L 0.1 0.1 0.1 -- Nitrate (as N) mg/L 7.4 12.3 13.3 -- Ammonia nitrogen mg/L 0.01 0.01 0.01 0.01 Remark Qualified Qualified Qualified Qualified Page 57