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XINJIANG REGIONAL ROAD IMPROVEMENT PROJECT TA No. 4773-PRC FINAL REPORT NOVEMBER 2006 Volume VI Appendix 26 Draft MOU SMEC ASIA LTD, Hong Kong in association with Winlot Consulting Ltd XINJIANG REGIONAL ROAD IMPROVEMENT PROJECT TA No. 4773-PRC FINAL REPORT NOVEMBER 2006 Appendix 26 Draft MOU SMEC ASIA LTD, Hong Kong in association with Winlot Consulting Ltd Asian Development Bank Proposed Loan for Xinjiang Regional Road Improvement Project For the People’s Republic of China (PRC) Fact-Finding Mission (10-25 October 2006) Memorandum of Understanding I. INTRODUCTION 1. An ADB Fact-Finding Mission1 (the Mission) visited PRC during 10-25 October 2006 to prepare a detailed proposal for the Xinjiang Regional Road Improvement Project (the Project) in the Xinjiang Uygur Autonomous Region (Xinjiang). The Mission met with senior officials of the Xinjiang Communications Department (XCD), Ministry of Communications (MOC), Ministry of Finance (MOF), and National Development Reform Commission (NDRC) of the Government of PRC (the Government). The Mission visited the Korla-Kuqa road and one of the local roads included under the Project, and participated in a stakeholder consultation meeting in Kuqa. The Mission held detailed discussions with the bureaus and offices under XCD, and other agencies responsible for various components under the Project. 2. The consultants have been working on the project preparatory technical assistance2 for the Project since mid-July 2006. A draft final TA report was completed on 9 October 2006 and submitted to XCD and the Mission on arrival on 10 October 2006. A tripartite meeting with XCD and consultants was held on 13 October 2006 during which an understanding was reached with XCD regarding the details of the Project components and the implementation arrangements. 3. This Memorandum of Understanding (MOU) presents the findings of the Mission and the agreements reached with XCD and the Government regarding the proposed Project. The MOU was discussed in (i) the 23 October 2006 initial wrap-up meeting in Urumqi with XCD, and (ii) the 25 October 2006 final wrap-up meeting in Beijing with MOF, NDRC, XCD and MOC. A list of people met by the Mission is attached as Appendix 1. The MOU is subject to approval of the higher authorities of the Government and ADB. 4. The Mission wishes to express its appreciation for the excellent support and kind courtesies extended by XCD during its stay in Xinjiang. II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES A. Performance Indicators and Analysis 5. Recognizing the need for rapid development of the transport sector to meet the demands of high economic growth of PRC over the last two decades, the Government has invested heavily in transport infrastructure and services. In particular, since late 1990s the average annual investment was over CNY350 billion, reaching over CNY650 billion by 2005 and accounting for 3.5% of the GDP. 6. The economic growth also led to an increase in the modal share of roads. As the preferred mode of inland and regional transport, roads now account for 92% of passenger 1 2 The Mission comprised Hasan Masood, Sr. Transport Specialist and Mission Leader; Lakshman Authokorala, Financial Specialist; Oyunchimeg Erdene, Transport Specialist; Scott Ferguson, Sr. Resettlement Specialist; Tokoyoshi Yokota, Transport Specialist; Seok Yoon, Project Economist; and Shu Mingxin, Staff Consultant. Anthony Maxwell, Environment Specialist, provided support from the Headquarters. TA 4733-PRC: Xinjiang Regional Road Improvement Project. 1 transport and 72% of freight transport.3 By end 2005, the road network in PRC has grown to 1.93 million-km, of which 41,000 km are expressways, 38,380 km class I roads, 246,440 km class II roads, 344,670 km class III roads, 921,290 km class IV roads, and 338,750 km of unclassified roads. In 2005, the total annual investment in road development reached CNY548.5 billion, which is an increase of 16.6% compared with 2004. During the Government’s eleventh five-year plan (11FYP, 2006-2010), 24,000 km of expressway will be built taking the total to 65,000 km which is 65-70% of the planned expressway network. In addition, 46,000 km of county roads and 130,000 of paved roads will be constructed in the counties, and 280,000 km of rural roads and 540,000 km of paved roads will be developed in the villages. The total investment during 11FYP will be CNY385.2 billion and road network will reach 2.3 million km. 7. As the economic growth largely concentrated in the eastern region of PRC, the Government initiated a Western Region Development Plan (WRDP) involving 12 provinces/regions (including Xinjiang) in 1999 to address the needs of the less developed western region. In addition to promoting a more balanced economic development for both the eastern and western regions, WDRP also plays an important role in regional cooperation and integration. Among others, WDRP addresses the need for development of the road network in the western region and to provide stronger links with the rest of the country and accessibility to the population spread over its large area. Road development under WDRP included improving (i) 8 road corridors totaling 180,000 km linking to the eastern region; (ii) 180,000 km class inter- and intra-provincial roads; and (iii) 150,000 km local roads. Implementation of WRDP continues under the eleventh five-year plan (2006-2010), and all 8 corridors are planned to be completed by 2010. 8. Situated in the northwestern corner of PRC, the Xinjiang covers one-sixth the area of PRC, and is farthest from the economically developed eastern provinces. By end 2005, the total road network in Xinjiang was 89,530 km, which included 541 km expressways, 883 km class I roads, 6,993 km class II roads, 23,880 km class III roads and 57,233 km class IV and unclassified roads. There are eight national highways connecting Xinjiang with Gansu, Qinghai, Tibet, and the Central Asian countries. During 2001-2005 (10FYP), a total of 35,319 km new roads were constructed. This included 259 km of expressways, 885 km of class I roads, 4,898 km of class II roads, and 29,277 km of class III and unclassified roads. The total investment in road development during 2001-2005 was CNY32.9 billion, which was 3 times that of investment during 1996-2000.4 9. Xinjiang also shares 5,600 km border with eight neighboring countries that are mostly CAREC5 members. As a gateway of PRC to the Central Asian countries, Xinjiang is considered an important section of the land bridge linking Asia and Europe. There are a total of 15 cross-border ports along the border area. So far a total of 101 international passenger and freight transport routes by road have been established between Xinjiang and its 8 neighboring countries, including 51 passenger routes and 50 freight routes, of which 33 passenger routes and 31 freight routes are between China and Kazakhstan. By the end of 2005, there are 166 trade markets in the capital city of Urumqi, with annual trade transaction valuing over CNY27 billion, and one class I and 6 class II inland ports for import and export. 10. The total international trade values in 2005 reached $7,942 million, 40.9% more than that of the previous year. Of this, the export value of $5,040 million was 65.5% more than 3 4 5 The percentage shares of transport volume by road were 91.9% for passenger, 53.2% for passenger-km; and 72.3% for freight (ton), and 10.9% for ton-km. Xinjiang has also received assistance of $600 million from the World Bank under three loans for improving over 800 km of expressways and highways. These projects also included local roads. The Central Asian regional Economic Cooperation (CAREC) Program, Initiated by ADB in 1997, aims to strengthen economic linkages among Afghanistan, Azerbaijan, PRC (with focus on Xinjiang), Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan and Uzbekistan. 2 that of the previous year, and import value of $2,902 million was 12.1% more than that of the previous year. In the first ten months of 2005, total import and export goods by road transport reached 1.67 million-ton, 16% over the same period of the previous year; and total number of passengers reached 0.214 million, 15% over the same period of the previous year. B. Analysis of Key problems and Opportunities 1. Xinjiang Road Network Challenges 11. The Maintenance systems and institutional capacity of XCD are in place to maintain the expressways, highways and the secondary road network.6 However, adequate financing is lacking. In 2005, the funding for maintenance was CNY1,529 million, which was far short of the annual maintenance funding requirements.7 There is a need to improve maintenance planning to efficiently and effectively utilize the available financial resources through prioritization of the road network. Extreme weather conditions are a major cause of pavement deterioration, and winter maintenance is lacking due to non-availability of specialized equipment. Moreover capacity building need to continue and expanded to all levels to ensure adequate maintenance of the entire road network. 12. In particular, the maintenance of the local roads suffers most due to inadequate financing. The institutional capacity at local and county government levels needs improvement to meet the expansion of the rural roads envisaged under the 11FYP. The maintenance systems and practices need to be upgraded to sustain the local roads in maintainable condition. Funding for local road maintenance is raised by XCD in collaboration with local governments, and is not adequate. Currently there are few local governments that use maintenance prioritization. Most of them plan the next year’s program based on a subjective assessment and administrative direction. 13. Vehicle overloading is a problem in PRC. XCD is addressing the issue in accordance with the directives and guidance provided by MOC and other relevant ministries and committees. The vehicle weighing stations were installed throughout the highway network and regular checks are carried out. However, there is overloading in Xinjiang and XCD is making efforts to curb it through effective enforcement. 14. The Government is focusing on rural development in an effort to reduce poverty as poverty incidence is higher in rural areas. This is more so in the case of Xinjiang. The Government has prepared a National Rural Road Development Program involving construction and improvement of rural roads and expansion of transport services in stages. Under the 11th Five Year Plan (FYP), 2006-2010, the Government targets to link with the paved road network 90% townships and 50% villages in the western region. Accordingly, the Xinjiang Government has prepared plans for development of rural roads. 15. By the end of 2005, all 85 counties in Xinjiang were connected by roads. Under the 11th Five-Year Program (2006-2010), Xinjiang provincial and local governments have embarked on a large local roads development program. This involves building 32,000 km of rural roads to ensure that 100% % of townships are connected by roads, of which 90% are connected by paved roads, and 100% of villages are connected by roads, of which 60% are by paved roads. 6 7 Maintenance management system and capacity building was carried out under the World Bank financed projects. Estimated by the TA consultant based on unit rates and condition information provided by XCD. 3 2. Cross-Border Facilities and Operations 16. By 2002, Xinjiang’s border trade value was the second largest among the nine provinces having borders with neighboring countries of the PRC.8 Although the performance of Xinjiang’s border trade is currently linked most closely to the Kazakhstan, Kyrgyzstan and Russia, as well as other countries such as Uzbekistan, Tajikistan and Pakistan, the crossborder transport sector in Xinjiang faces several issues. These are (i) inefficient cross-border and transit movement of people and goods due to poorly equipped border roads, (ii) lack of unified transport regulations among Xinjiang and neighboring CAREC countries, (iii) inadequate regional transport network; and (iv) limited institutional and human resource capacities in the transport sector. According to the Xinjiang’s 11th Five Year Plan, foreign trade is projected to reach $1.8 billion with an annual increase of 18% until 2010. Improvement of cross-border transport will help achieve this goal. In this context, the Xinjiang Government is considering (i) expeditious upgrading of the road network, (ii) harmonization and simplification of cross-border transport procedures among Xinjiang and the neighboring countries; and (iii) development of Urumqi as a transport hub and logistics center. 3. Passenger and Freight Logistic Complexes 17. Based on the General Layout of Urumqi Road Transport Hub Terminal Development Program approved by the MOC and the Xinjiang Government in November 1997, 14 terminal facilities are planned for construction in Xinjiang and the work is ongoing. However, there is a growing need to improve the efficiency of terminal operations and management through integrating the individual terminals. This will address the issues of freight volume imbalance between Xinjiang and neighboring countries, and cyclicality of agricultural produce in Xinjiang that reduces the efficiency of freight terminal operations. The TA consultant report indicates that trucks wait up to 10 to 15 days on average for backloads, thereby increasing the unit freight cost. Improvement of efficiency in terminal operation will economize the vehicle operating costs and will increase vehicle utilization, thus helping management of freight and passenger traffic and contributing to economic growth of the region as well as facilitating cross-border transportation. 4. Road Transport Services 18. Buses now run to all cities, prefectures, counties and townships in the Xinjiang region. Under the 11th Five-Year Plan, the Xinjiang Government aims to establish a high quality passenger transport service network connecting the cities, townships and villages, A total of 14 terminals are planned for Urumqi, and 649 terminals are to be built in the rural areas. Of this, 269 are class IV and V passenger terminals, and 380 simple bus stations and stops. Road passenger and freight transport terminals are planned and constructed by the Provincial Governments with subsidies from the MOC and are managed by terminal operators who are responsible for setting departure schedules, selling passenger tickets and inspecting vehicles. Currently, bus routes are graded (A-D); A the highest, is for services between prefectures or bus lines longer then 800 km, and D wholly within one county. Only the highest grade enterprises may operate the highest grade routes. In addition, while there are no restrictions on the length of route which may be operated by Grade I and II operators, those in Grade III, IV and V are limited to route of shorter lengths. 5. Road Safety 19. Road safety is a major issue in PRC. The rapid economic development, accompanied by increasing vehicular growth, has resulted in rising level of traffic and 8 Second only to Heilongjiang. 4 increased pressure on the road system. This has led to a substantial number of road accidents and loss of life of a large number of people. Over 60% of the victims are pedestrians or non-motorized transport and public bus users. In 2005, there were 450,000 road accidents involving 99,000 fatalities and 470,000 injuries. One road accident death every 6 minutes is the highest such rate in the world. 20. Accidents in Xinjiang have been rising significantly due to the growth in road users and motor vehicles. In the last ten years, there have been 25,000 fatalities and over 75,000 injuries in road accidents. The fatalities have increased from 1,863 in 1996 to 2,491 in 2000 and to 3,111 in 2005. The same year there was an increase of (i) 13.8% in road accidents that reached 9,527, (ii) 7.6% in fatalities that reached 3,111, and (iii) 17.0% in injuries that reached 10,437, compared to 2004. The estimated economic losses from road accidents and fatalities in 2005 amounted to more than CNY28.4million, or over 1% of the GDP. 21. The total number of vehicles owned in Xinjiang in 2005 was 1.45 million with a yearly increase of 21.3%.9 The 20.1 million population of Xinjiang in 2005 is growing 2.40% annually. Thus, the fatality rate in 2005 has been 22 per 10,000 vehicles and 15.48 per 100,000 people, which are higher than the rates of PRC and many other countries. C. Lessons Learned 22. Review of performances of past road sector projects in other provinces of PRC have shown that the use of loans and technical assistance from ADB and other international financial institutions to build capacities of the provincial communication departments/executing agencies has contributed significantly to improved project quality. However, there are areas where improvements can be achieved, as described below. 23. There have been instances where to meet implementation schedules the bidding process and quality of construction have sometimes been compromised due to (i) insufficient time allowed for geological investigations that has led to a few problems with tunnel construction in some provinces and (ii) a lack of sub-grade investigations that may well have contributed in some cases to later soil settlement and poor pavement quality. This has also led to contractors’ claims. XCD believes that more investigation should be carried out at the design stage to reduce the contractor risk and the potential for cost variations. 24. The methods adopted for pavement design need clearer identification to allow easy verification of the adequacy of designs. More emphasis is still required on the importance of conducting more intensive site investigations prior to finalizing designs. The need for more detailed site investigations has also been noted in reviews of projects in other provinces. III. THE PROPOSED PROJECT A. Impacts and Outcome 25. The Project will strengthen Xinjiang’s road transport link to eastern China and with neighboring countries in the west, contributing to economic development and regional cooperation. Improvement of local roads will strengthen the rural road network carrying Project benefits to the poorer and remote areas of Xinjiang. The Project will (i) reduce transport costs, (ii) facilitate movement of international cross-border traffic, (iii) improve freight transport system, (iv) lessen traffic accidents, (v) improve road transport services, and (vi) enhance capacity of the road agencies in Xinjiang to manage road maintenance. 9 The information was provided by the Traffic Management Bureau of the Xinjiang Department of Public Security based on the data collected by them. According to the Xinjiang Statistical Yearbook (2006), the civilian vehicle ownership in 2005 was 0.6 million. 5 B. Components and Outputs 26. The Project improves the east-west road transport corridor, as well as the local road network and road connection to neighboring countries. The Project will comprise of the following components: (i) Highway Improvement. Upgrading the 296.5 km Korla-Kuqa section of the existing two-lane class II national highway (G314) to four-lane access-controlled tolled expressway, including interchanges, bridges, underpasses, tolling infrastructure and arrangements, service areas and other facilities; (ii) Local Roads Improvement. Rehabilitation of priority local roads (193 km) providing accessibility to remote and poorer areas of Xinjiang to meet class III and IV standards. A network approach has been adopted whereby roads are selected for improvement based on poverty and accessibility, The local roads selected are (a) Wuqia Township-Dunkuotan Township (30 km), (b) G315 at New Long March BridgeAqiang Township (73 km), and (c) G315 of Suntang Maintenance Office-Aoyiyalake Township (90 km); (iii) Cross-Border Transport Facilitation. (a) Rehabilitation of the existing 110 km class III border road from Wuqia County (near Kashgar) to the Torugurt border of Kyrgyz Republic; and (b) facilitate implementation of harmonized cross-border procedures and documentation, as agreed in the sixth Transport Sector Coordination Meeting under CAREC in Urumqi in August 2006; (iv) Logistic Terminals Efficiency. Provision of information and communications technology to improve operational efficiency of the 14 passenger and freight terminals being developed/upgraded in Urumqi and other major cities under the Xinjiang Transport Terminal Development Program approved by the Xinjiang Government and MOC in November 1997; (v) Road Transport Services. Pilot implementation of policy reforms to improve road transport services10 in a city to be selected later on trial basis to monitor impacts. Successful implementation will lead to replication in other areas; (vi) Road Safety. Improving road safety on (a) the Project roads through provision of modern traffic safety devices, and undertaking road safety audits, and (b) increasing awareness and training of drivers, and developing capacity of XCD; through provision of equipment and training; and (vii) Road Maintenance Management. Provision of equipment and training to enhance capacity of XCD to effectively manage and carry out road maintenance, particularly (a) winter maintenance, and (b) maintenance of local roads. C. Special Features 1. Cross-Border Transport Improvement 27. The two major impediments to cross-border transport are poor infrastructure and lack of harmonized procedures and documentation leading to long delays and transport costs. The Project addresses these issues through upgrading the existing largely gravel-surfaced 110 km border road from Wuqia County to the Torugurt border with the Kyrgyz Republic. 10 The policy reforms were developed under TA 4351-PRC: Policy Reform in Road Transport. 6 This will enable the traffic to travel at reasonable speeds compared to the present 15-25 km/hr, thereby reducing vehicle operating costs and time. The Project will also provide assistance to the Xinjiang Government in implementing the action plan agreed at the 6th Transport Sector Coordination Committee Meeting under CAREC in Urumqi in August 2006 to harmonize cross-border procedures and documentation. The Project will facilitate in implementing the agreed measures for harmonized cross-border procedures and documentation are taken to significantly improve movement of vehicles crossing the border. These include consideration to adopt international standards for harmonizing weights and dimensions of vehicles, and development of a plan for harmonizing regulations on vehicle emissions (Appendix 2). 2. Improving Efficiency of Logistic Terminals 28. Efficient transport services, including passenger transport terminals and logistics centers, are important components of a well-functioning transportation system. To accommodate the need to improve the efficiency of local and international passenger and freight terminal operations and to integrate individual terminals for better administration, web-based transport logistics system is proposed under the Project so that Urumqi can be developed as a transport hub not only for Xinjiang, but also for the exchanges between the PRC and the CAREC countries.11 The Project will assist XCD in improving the operational efficiency of transport terminal through introduction of information and communication technology (ICT). Grant assistance is available for this type of activity under the ADB managed “e-Asia and Knowledge Partnership Fund”. The Mission will seek financing from this fund and will inform XCD of its availability prior to Loan appraisal. (Appendix 3). 3. Improvement of Road Transport Services 29. ADB provided assistance to the Ministry of Communications for a TA on policy reforms in the road transport services. The TA reviewed the current status and issues in road freight and passenger transport and prepared an action plan of policy reform, recommending policy and regulatory measures to improve efficiency. To demonstrate the potential improvements of implementing the policy reforms, the Project will implement a pilot activity to be setup based on a large town or small city. The key benefits to be derived from the policy reforms includes (i) lowering operating costs through improved utilization of buses; (ii) providing wider range of departure and arrival schedules for passengers; and (iii) improved terminal facilities to meet passenger and operator needs. (Appendix 4). 4. Road Safety Improvements 30. Road safety is given high priority in Xinjiang, but there is still a lot of work required to achieve safe road travel. The Project supports XCD efforts in increasing road safety through (i) safety audit for the proposed expressway and similar safety evaluation in the other Project roads, (ii) enhancing institutional capacity of XCD, (iii) improving public awareness, particularly in rural areas, and (iv) introducing intelligent transport systems for ensuring road safety during winter conditions and for speed warning. (Appendix 5) 5. Road Maintenance Management 31. Under three World Bank projects, XCD has received equipment, systems and training to develop its capacity for road maintenance. However, there is a need to sustain this effort as there is a gap between the road network needs and institutional capacity of XCD. The Project proposes to continue the XCD capacity building efforts through provision 11 This is recommended under ADB’s TA6203-REG: Regional Trade Facilitation and Customs Cooperation Program (Phase II) for Xinjiang Uygur Autonomous Region Trade Facilitation and Logistics Development Research Project, June 2006 7 of modern equipment, information technology and training. For the local roads, in addition to XCD efforts, the Project will explore the possibility of community involvement in maintenance of remotely located roads. (Appendix 6) D. Cost Estimate 32. The total cost of the Project is estimated at $612.00 million equivalent inclusive of civil works, consulting services, equipment, Project administration, land acquisition and resettlement, taxes and duties, interest and other charges on the loan during construction (Table 1). The foreign exchange cost is estimated as $279.20 million (46%). The local currency cost (including taxes and duties) is estimated as $330.80 million equivalent (53%). A detailed cost estimate is in Appendix 7. Table 1: Cost Estimate (million USD) Items A. Base Cost a 1. Civil Works Expressway Sub-grade Pavement Bridges Interchanges Foreign Cost Local Cost Total Other b Local Roads Border Road 2. Equipment Expressway Equipment 34.66 63.28 28.66 57.61 15.35 5.12 7.91 0.05 1.16 0.50 2.01 216.31 10.82 12.26 Subtotal (B) 23.07 40.84 280.22 37.55 68.55 31.05 63.63 16.62 8.76 13.46 1.16 5.00 15.96 5.49 21.76 288.99 14.45 28.60 43.05 72.21 131.84 59.71 121.23 31.97 13.88 21.37 1.21 5.00 1.16 0.50 15.96 7.50 21.76 505.30 25.26 40.85 66.11 40.84 Maintenance Equipment Road Safety Equipment ITC Logistic Terminals 3. Land Acquisition and Resettlement c 4. Consulting Services and Training 5. Project Administration Subtotal (A) B. Contingencies 1. Physical Contingencies 2. Price Escalation Interest and Fees during Construction Total (A+B+C) Note: a b C. 332.04 612.25 At 2006 prices Includes cost of survey, design, environment protection, equipment, contractor’s profit, and taxes and duties. c Includes EMDP cost. 8 E. Financing Plan 33. The Government has requested a $150 million loan from ADB’s ordinary capital resources to help finance the Project. The loan terms are to be agreed but would likely involve a term of 25 years including a grace period of 5 years, an interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, a commitment charge, and such other terms and conditions to be indicated in the draft loan and project agreements. The loan will finance about 24.6% of the total cost of the Project. The remaining financing will be provided by the MOC, XCD, and possibly through loan from a domestic commercial bank. Details of the financing will be provided to ADB as soon as it is finalized. 34. XCD has requested MOF to allow an additional $10 million loan from ADB’s ordinary capital resources to help finance the border road. A decision from MOF is awaited. The financing plan will be finalized once this information and the financing in para 33 are finalized. F. Implementation Arrangements 1. Project Management 35. XCD will be the Executing Agency (EA), and will appoint a project director for the overall implementation of the Project. The Xinjiang Communications Construction Administration Bureau (XCCAB) will be the Implementing Agency for the expressway, border road, and local roads. XCCAB has implemented three similar projects financed by the World Bank, and thus have the technical, management and staff capacity to undertake this Project. The road safety component will also be implemented by XCCAB, though coordination will be needed with the Traffic Police Authority under the Xinjiang Public Security Department, and the local counties where public awareness activities are implemented. XCCAB will appoint a project manager for the day-to-day management of these activities. 36. The Xinjiang Transport Administration Bureau (XTAB) will be responsible for the (i) cross-border harmonization, (ii) logistic terminals efficiency, and (iii) road transport services components. XTAB will appoint a project manager to implement these activities. 37. The road maintenance management components will be managed by the Xinjiang Highway Administration Bureau (XHAB). XHAB will appoint a project manager for implementation of this component. 38. The expressway operation and management are not yet finalized. However, XCD advises that after completion, XCCAB would hand over the expressway to XHAB for toll collection and maintenance. 39. The XCD will establish a Project Steering Committee (PSC), chaired by the Director General or the Chief Engineer, to provide overall guidance and monitor progress to ensure smooth and timely implementation of the Project. The PSC will comprise of representatives of XCCAB, XHAB, XTAB and the Finance Department. The XCD project director and all project managers for the Project will be responsible for reporting progress to the PSC. The PSC will meet at least quarterly to review implementation, provide necessary approval and resolve coordination issues. 2. Period of Implementation 40. NDRC approval of the feasibility study for expressway is expected in December 2006. The preliminary design is being prepared by Xinjiang Highway Planning Survey and 9 Design Institute, and will be submitted to MOC for review by December 2006, with expected approval in March 2007. Detailed design will start from March with completion expected in June 2007. 41. The Project will be implemented over a period of 5 years, from July 2007 to June 2012. Based on the loan processing schedule in para 82, the expressway construction contracts can be awarded and construction can commence by August 2007. An implementation schedule is in Appendix 8. 3. Procurement 42. All ADB-financed procurement will be carried out in accordance with the ADB Guidelines for Procurement. Expressway civil works contracts will be divided into 11 packages, which will be procured using international competitive bidding (ICB) with prequalification. The traffic engineering, building and ancillary facilities and landscaping will be procured through national competitive bidding (NCB). For the local roads component, three ADB-financed packages will be procured through NCB acceptable to ADB. For the border road component, 2 ADB-financed packages will also be procured through NCB acceptable to ABD. The proposed contract packages for civil works are given in Appendix 9. Expressway maintenance equipment contracts will be divided into 35 packages, 5 of them will be procured using ICB, 23 through NCB, and 7 through government procurement procedure. Laboratory testing equipment consists of 9 packages, all contracts will be procured through NCB. A detailed list of equipment packages is also in Appendix 9. All procurement activities including prequalification, tendering, and bid evaluation will be handled by XCCAB. To facilitate efficient procurement and increase levels of transparency, the Mission prepared a draft procurement plan (Appendix 10) detailing the contracts to be bid, methods of procurement, and review procedures with a timeframe. XCD will review and finalize the procurement plan, taking into consideration the financing arrangement that will be determined later, and will send it to ADB prior to appraisal. The Mission also advised XCCAB on the ADB’s procurement guidelines and procedures. 4. Consulting services 43. About 5,510 person-months of consulting services for construction supervision will be undertaken by domestic consulting teams under government financing, headed by a chief supervision engineer. The domestic consulting firm will be recruited in accordance with government procedures acceptable to ADB. Beside construction supervision of expressway, local and border roads, the domestic consultants will also assist in (i) monitoring environmental and resettlement activities, social and poverty impacts under Project Performance Management System (PPMS), (ii) assisting in implementation of harmonized cross-border procedures and documentation, (iii) ITC for logistic terminals, (iv) pilot project for road transport policy reforms, and (v) road safety awareness and capacity building. 44. The Project will finance 24 person-months of international consultants. Of this, 21 person-months will be used for the expressway involving (i) deputy chief supervision engineer/international team leader (3 person-months) will assist in administration of construction contracts and establishing a contract management system, (ii) road safety audits (2 person-months), and (iii) helping establish a PPMS (1 person-month). The remaining 7 person-months will be used for (i) ITC for logistic terminals (3 person-months), and (ii) pilot project for road transport policy reforms (4 person-months). All consultants to be financed under the ADB loan will be selected and engaged based on the quality- and costbased selection method in accordance with ADB’s Guidelines on the Use of Consultants by the Asian Development Bank and its Borrowers. 10 45. The Mission explained to XCCAB the ADB’s Consultant Recruitment Activity Monitoring (CRAM), and XCCAB agreed to appoint a person to monitor and update CRAM during the recruitment of international consultants. The Mission also provided to XCCAB sample CRAM sheet, sample request for proposal including narrative evaluation criteria for technical proposals, sample contract conditions, and Guidelines on the Use of Consultants by the Asian Development Bank and Its Borrowers. 5. Advance Action 46. Given the high priority accorded to the Project, the XCD has requested ADB’s approval of advance procurement action for civil works and international consulting services. This covers the recruitment of international consulting services, prequalification of contractors, bidding, and bid evaluation, but does not include signing of contracts. The advance action will be undertaken in accordance with ADB’s Guidelines for Procurement. The Government has been advised that approval of the advance action, if granted, does not commit ADB to financing the Project. The Mission will convey the XCD request to the ADB’s Management upon return to the headquarters. 6. Disbursement Arrangements 47. The ADB loan will be disbursed according to ADB’s Loan Disbursement Handbook (January 2001). Since most payments will be made for contracts well above $100,000, direct payment procedures will be used to withdraw the loan funds. If government funds are first used for eligible expenditures, ADB's reimbursement procedures will be applied. To expedite loan disbursement, the Government will open after loan effectiveness an imprest account at a commercial bank acceptable to ADB, with an initial deposit of $100,000 equivalent. The imprest account will be managed and liquidated according to ADB’s Loan Disbursement Handbook and other arrangements satisfactory to ADB. ADB’s statement of expenditures (SOE) procedure may be used for reimbursing eligible expenses and liquidating advances from the imprest account. Any individual payment to be reimbursed or liquidated under the SOE procedure will not exceed $100,000 equivalent. 7. Accounting, Auditing, and Reporting 48. XCD and XCCAB will maintain separate records and accounts for the Project related financial statements such as balance sheet and Project expenditure statements. XCCAB will prepare separate sets of financial statements12 for the expressway, border road, and local road components and have a consolidated financial statement for the entire Project. EA will follow ADB procedures detailed in the “Handbook for Borrowers on Governance and Management of Investment Projects Financed by ADB” and the Project Accounts and Financial Statements of the XCD will be prepared in accordance with the International Accounting Standards. 49. Project Accounts and Financial Statements of EA will be annually audited by independent external auditors with appropriate standards, experience and terms of reference acceptable to ADB.13 The English translations of such audit reports together with the Project Accounts, Financial Statements and the Management Letter will be submitted to ADB within 6 months following the end of each fiscal year. 12 XCD proposed that a consolidated financial statement for the Project will be adequate. The will be finalized during the loan appraisal. 13 XCD advised that external audit for the World Bank’s projects were done by the Central Audit Administration Bureau. 11 50. To ensure that internal controls and checks on the project construction cost and operations are effective, XCCAB will staff the internal audit unit adequately and continue to maintain it during implementation and operation of the Project. The unit, composed of fulltime accountants, will undertake independent tests on day-to-day transactions, prior to reference to external auditors. 51. XCCAB will make satisfactory arrangements for reporting implementation progress through quarterly progress reports. Within 3 months of Project completion, XCCAB will submit a project completion report to ADB. 8. Project Performance Management System 52. A design and monitoring framework for the Project is under preparation to enable a quantifiable assessment of the Project impacts. The framework will be finalized in consultation with XCD during appraisal. Based on preliminary estimates, about 24 personmonths of domestic consultants input will be needed to establish the necessary baseline values for impact indicators, and for monitoring and reporting project performance against project impacts, outcomes and outputs. Baseline values will be updated during the project implementation. Specific indicators will be measured, with the necessary frequency, during project construction, and comments and findings will be reported through every second quarterly report. Indicators for project evaluation will be measured at project completion and annually for 3 years after completion. The proposed indicators for monitoring economic, poverty, and socioeconomic impacts of the project will be based on the following criteria: (i) economic development and poverty indicators; (ii) transport costs and time for trips; (iii) transport services and charges; (iv) road accident rates; (v) access to infrastructure; (vi) access to social services; (vii) per capita cash income; (viii) jobs created during construction and maintenance; and (ix) air quality. Where relevant, indicators will be disaggregated by gender, and ethnic groups. Environmental monitoring, and resettlement monitoring and evaluation will be conducted independently by qualified domestic consultants. 9. Project Review 53. ADB and XCD will undertake a midterm review of the Project two years after commencement of project activities. The review will focus on all aspects of the Project that may have an impact on its performance and continuing viability. The review will examine the progress in implementing the various components, policy reforms, progress in social and environmental safeguard compliance, and compliance with assurances in the Loan Agreement. 10. Anticorruption Measures 54. ADB’s Anticorruption Policy (as amended) was explained to XCD. Consistent with its commitment to good governance, accountability and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy will be included in the loan regulations and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of the Executing Agency and all contractors, suppliers, consultants, and other service providers as they relate to the Project. 12 IV. PROJECTS BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS A. Project Benefits 55. The Project will foster trade, economic development, growth and incomes in the broader region. In doing so, it will also help reduce the prices of daily necessities in local markets and villages served by the expressway, border and local roads and will improve access to external markets, information, services and income-earning opportunities for the people living there. The Project will contribute to poverty reduction by improving access to markets and services. It is estimated that in the project area most of the people (1,060,000)14 will benefit from the Project either directly or indirectly as it is the only through road corridor. About 63% of these people are ethnic minorities. 56. These benefits will be greater, more widely distributed and more directly supportive of the project’s poverty-reduction objectives since the project includes 193 km of local road improvements that extend these cost and travel time reductions to benefit the poor areas. Better connectivity between the expressway and local roads will help rural agricultural products reach markets and allow farmers to upgrade farming practices. As reliable transport to markets becomes more readily available, cash-crop farming in remote and isolated areas will be stimulated and access to off-farm employment opportunities will be broadened. B. Economic Analysis 57. Traffic Forecast. The Project will increase the corridor’s capacity to meet the demand for transport and reduce transport costs, travel time, and accident rates. It will provide employment opportunities both during and after construction and will be a conduit for increased economic growth and higher incomes. Annual average daily traffic (AADT) on the proposed expressway between Korla and Kuqa is projected to grow from 8,327 in 2010 to 16,926 in 2020 with an average annual increase of 8.0%. After 2020, growth of AADT is expected to slow down to 5% per year, reaching 27,820 by 2030. The traffic projections consider (i) the growth in traffic during the past 10 years, (ii) the traffic generated by expanded economic activities, (iii) the likelihood that existing traffic from other congested roads will be diverted to the expressway, and (iv) the traffic survey results. 58. Economic Internal Rate of Return. The Project’s economic internal rate of return (EIRR) was estimated by comparing the project case with a base case. Without the Project, congestion will worsen, increasing delays, vehicle operating costs, accidents and deaths. The Project, with the shorter distance and travel time, safer design, and better road conditions, will reduce vehicle operating costs and accident risks along the corridor. The economic costs are the cost of capital, which includes physical contingencies, land acquisition, and resettlement, and the costs of operating and maintaining the Project roads, which include replacing depreciated equipment. The economic benefits are (i) savings in vehicle operating costs resulting from the shorter distance and improved road conditions, (ii) time savings for road users, and (iii) savings in road accident costs. The costs and benefits of the Project were valued at 2006 economic prices. At 19.7% per year, the EIRR demonstrates the Project’s economic viability, with vehicle operating cost savings accounting for most of the benefits (53%). The benefits of the border road component, while extremely important to the cross-border facilitation, constitute a small percentage of the overall project benefits, reflecting the modest traffic levels on this border road. The results of the sensitivity analysis confirmed the robustness of the Project’s economic viability. Changes in the key variables – construction costs, construction delay and benefits – did not significantly affect its viability, and the EIRR remained above the threshold of 12% per year. 14 Source: Xinjiang Statistical year Book 2006 13 C. Financial Analysis 59. The weighted average cost of capital (WACC), after tax, in real terms was calculated at 2.98% using (i) the estimated costs of capital, (ii) the proposed financing plan, (iii) 3% average domestic inflation rate, (iv) 1.2% average international inflation rate, and (v) 33% corporate tax. The assumed costs of capital were (i) the applicable 5-year fixed swap rate plus a provision for ADB’s spread of 0.40% and standard loan fees was used for ADB debt; (ii) interest costs of 6.84% per annum for the domestic loan; and (iii) the cost of equity of 8.00%. The FIRR, computed after tax, is calculated at 5.00%, which is higher than the WACC of 2.98%. Therefore the Project is considered financially viable and sustainable. Sensitivity tests indicate that conditions causing the Project’s viability to fall below WACC would only occur in the unlikely scenario that capital and operating costs of the project escalate by 20% and traffic is 20% below forecast. D. Project Impacts 1. Social and Poverty Reduction Impacts 60. Xinjiang is one of the less-developed provinces, with per capita GDP at CNY11,199 in 2004. Although GDP in Xinjiang has grown rapidly since 2000, economic growth has not proportionally improved rural life. The per capita rural income in 2004 amounted to CNY2,245 or 76% of the national average. In 2004, about 2.4 million rural people lived below the official poverty line, and the poverty incidence was 18%, higher than the national average of about 10%. About 80% of the poor in Xinjiang live in the southern part of the region where the Project is located. The Project will benefit 1,060,000 people, of whom 585,000 live in rural areas where poverty incidence is 16%. 61. The project will directly contribute to poverty reduction where local roads are improved because it will enable people living in poverty to access basic facilities such as health and education. The local roads will also facilitate easier access to local markets to sell surplus agricultural products and purchase basic necessities. If improved local roads lead to improved agricultural productivity for agricultural products that are in high demand on the market or are required to meet food security demands the project will also be of benefit to the poor. Improved access to inter-regional cotton markets coupled with productivity increases from improved cropping technologies could double the net income per hectare (ha). Better local roads will lower transport costs, and should reduce the costs of traded farm inputs, as farmers who do not have to worry about food security are able to shift to highvalue crops because of better access to markets and newer farming technologies. Rural households living in poverty do not necessarily benefit from such developments but they can benefit from improved access to cheaper goods and services and from economic opportunities facilitated by the local roads and expressway. 2. Resettlement Impacts 62. The project expressway will cross 29 villages in Korla city, Luntai county and Kuqa city. Although 1,145 ha of land will be permanently acquired, only 8 ha (0.7%) is farmland; the number of people affected by partial land loss is 283. An estimated 35,300 m2 houses will be demolished, which requires 124 households with 559 persons to be relocated. No factories or school buildings will be affected. The Project will also have very minor resettlement impacts from upgrading 110 km of the Turgurt border road and 193 km of local roads; it is estimated that 11 household would be relocated and 150 persons would be partially affected by land acquisition. XCD has prepared a Resettlement Plan (RP) for the expressway component and 3 short RPs to cover the border road and the local road rehabilitation in Kuqa. The local roads in Qiemo county do not require any land acquisition and resettlement. 14 63. The XCCAB in conjunction with the local land administration bureaus, will be responsible for implementing resettlement for the expressway and local roads. The estimated resettlement cost for the expressway is CNY124 million ($15.5 million) including taxes and contingencies. The resettlement cost for the border road and local roads is about CNY7 million (US$0.85 million). During project implementation, XCCAB will be responsible for internal supervision and monitoring. Progress reports will be prepared and submitted to ADB on a quarterly basis, until resettlement is completed. XCCAB will then prepare a resettlement completion report. In addition, an independent monitor will be contracted by XCCAB to carry out the external monitoring and evaluation, and prepare monitoring reports for submission to XCD and ADB every 6 months until the completion of resettlement activities. Thereafter, annual evaluation investigations will be conducted for at least 2 years and reported to XCD and ADB. XCCAB informed the Mission that it intends to engage the local National Research Center for Resettlement (NRCR) as an external monitor. 3. Ethnic Minority Impacts 64. Three Ethnic Minority Development Plans have been prepared by XCD, covering the expressway, border road and local road project areas. These documents include assessments of project impacts and have formulated measures to mitigate potential adverse impacts and to enhance the Project’s benefits to ethnic minorities, especially the poor and women. The adverse impact on the ethnic minorities (mainly Uygur and Kirgiz along the border road) is not severe and can be mitigated. Measures to reduce poverty and improve livelihoods have been developed in a manner that is compatible with local cultural traditions. The cost of these measures is included in the Project civil works, EMDP and RP. Further enhancement measures have been recommended for the local governments to implement. XCCAB agreed to discuss these further and seek commitments from the local governments prior to Loan appraisal. 65. The Project should give women greater access to information and income-generation opportunities. Female migrant workers will find it easier to travel to urban centers. Households with marketable agricultural surpluses will benefit from increased marketing opportunities and from better access to senior middle school education at the county level. Women will be encouraged to participate in project implementation and monitoring and in resettlement and social development. Women are entitled to equal opportunity and pay in jobs under the PRC Labor Law and will receive preferential treatment in being employed on project-related activities. 4. Control and Mitigation of Epidemic Diseases 66. Improved transport and greater population mobility might put the local residents at higher risk of acquiring sexually transmitted infections, including HIV/AIDS. Currently, few (less than 50) HIV/AIDS cases are reported in the project area. The Xinjiang Center for Disease Control (CDC) implements preventive measures and adopts tight health and hygiene standards. Such measures include providing education programs, distributing condoms to local residents, monitoring any outbreaks and spread of disease, regular inspections on construction sites advocacy and awareness programs, voluntary counseling, testing kits and education. The civil works must comply15 with the Law on the Prevention and Treatment of Epidemic Disease. 15 XCCAB will ensure that contractors disseminate information on the risks of sexually transmitted infections and HIV/AIDS to their employees. Local public health offices will disseminate similar information to transport operators and local communities, especially women, and ethnic minorities in the Project area. 15 5. Environmental Impacts 67. The Project is classified as ADB environmental Category A. The Draft Summary Environmental Impact Assessment (SEIA) is being finalized. There are no environmentally protected areas along the alignment and the Environmental Protection Bureau reports that there are no protected flora/fauna along the alignment. Detailed environmental impacts and proposed mitigation measures are in the Summary Environmental Management Plan of the SEIA. The major potential environmental impacts identified include: (i) noise and dust during construction which may impact adjacent residential areas, and is mitigated through restricted working hours, noise barriers, dust suppression, and prevention activities; (ii) three designated county level historic protection sites on the Korla-Kuqa expressway that will require close construction supervision and barriers to mitigate impacts; and (iii) possible soil erosion during construction, particularly at the active earthworks areas and borrow pits, requiring mitigation through standard engineering erosion control measures. 68. The temporary environmental protection measures, permanent environmental protection measures, environmental monitoring, and environmental management costs is estimated as CNY202 million (or $25.5 million), and is included in the civil works estimates. Implementation of the environmental management plan and monitoring plan included in the EIA and SEIA will ensure compliance with the environmental guidelines and procedures of ADB and the Government. V. ASSURANCES 1. Specific Assurances 69. Construction Quality. The XCD will ensure that (i) the Project is constructed in accordance with the Ministry of Communication’s technical standards of highway engineering; (ii) the rural roads under the Project are upgraded and constructed in accordance with the national standards, and maintained in accordance with standards satisfactory to ADB; and (iii) project highway construction supervision, quality control, and contract management are conducted in accordance with national standards and internationally accepted practices. 70. Counterpart Funds. The XCD will provide, on a timely basis, all funds and resources necessary for upgrading, rehabilitation, maintenance, and management of the Project Facilities financed under the Project. 71. Operation and Maintenance. The XCD will ensure that (i) sufficient funds are allocated for the maintenance of the roads financed under the Project and (ii) contracts out routine and periodic road maintenance with local communities and other contractors. 72. Environment. The XCD will ensure that (i) the Project is constructed and operated in accordance with national and local environmental laws, ADB’s Environment Policy, (2002), Environmental Assessment Guidelines (2003), the Project Environmental Impact Assessment (EIA), and the Summary Environmental Impact Assessment (SEIA), (iii) any adverse environmental impacts arising from the construction and operation of the project facilities will be minimized through implementation of the environmental management plan, environmental monitoring program, and other recommendations presented in the EIA, and (iv) environmental monitoring reports will be submitted to ADB twice annually during the construction period. ADB Public Communication Policy requires that all environmental monitoring reports be uploaded onto the ADB website for public disclosure. 73. Land Acquisition and Resettlement. The XCD shall ensure that: (a) the RP is updated based on detailed measurement survey, disclosed to affected persons and 16 submitted to ADB for approval prior to commencement of civil works; (b) all land and rightsof-way required by the Project are made available in a timely manner in accordance with domestic regulations, including land use approvals and agreements with affected persons; (c) the RP is implemented promptly and efficiently in accordance with their terms, all applicable laws and regulations of the Borrower, and ADB’s Policy on Involuntary Resettlement; (d) all affected persons are given adequate opportunity to participate in resettlement planning and implementation; (e) sufficient and timely provision of counterpart funds will be paid for land acquisition and resettlement activities and disbursed to affected persons prior to dispossession of housing, land and assets; (f) any obligations in excess of the RP budget estimates are met; and (g) the affected persons shall be at least as well off as they would have been in the absence of the Project. 74. Monitoring and Evaluation. The XCD will monitor project impacts, as specified in the PPMS, to ensure that the project facilities are implemented and managed effectively and the economic benefits are maximized, especially for the poor, women and ethnic minorities. 75. Gender and Development. The XRG through XCD will follow ADB’s Policy on Gender and Development (2003) during project implementation and will take necessary steps to encourage women living in the project area to participate in implementing the Project, including causing the contractors on maximizing their employment of women in connection with the Project. The XCD will monitor the Project’s effects on women during project implementation. 76. Ethnic Minority Development. XRG through the XCD will ensure that (a) the EMDPs are implemented in accordance with their terms and ADB’s Policy on Indigenous Peoples (1998); (b) EMDPs are disclosed to APs, (c) ethnic minorities in the Project areas are consulted and provided with an opportunity to participate in the implementation of the EMDPs; and (d) sufficient budget for implementation and monitoring of each EMDP will be made available in a timely manner; and any obligations in excess of the EMDP budget estimates are met. 77. Poverty Reduction. XRG through XCD will cause the contractors involved in the project implementation to maximize the employment of local poor people, including ethnic minorities, who can meet the job and efficiency requirements for construction and maintenance of the project roads. Such workers will be provided with adequate on-the-job training. XCD will (i) implement the Project; and (ii) monitor the Project impact on poverty in accordance with the EMDP and PPMS. 78. Labor Standards. XCD and the XCCAB will ensure that all the employment and labor standards are provided in the applicable laws and regulations of PRC be complied with, and in particular, that all civil works contractors engaged under the Project (i) provide timing payment of wages on at least a monthly basis and safe working conditions to all workers including male and female workers, with such requirements being included in the civil works contracts and monitored by the construction supervision consultants; (ii) provide employment opportunity to women and ethnic minorities , where appropriate, and pay equal wages to the male and female employees for equivalent works; and (iii) not employ child labor in the project works. 79. Health Risks. XCD, in coordination with the appropriate agencies identified by the Government and the Center for Disease Control of the XRG, will cause the contractors to disseminate information on the risks of socially and sexually transmitted diseases, including HIV/AIDS, to their employees and contract workers during project implementation. XCD will cause the appropriate agencies to disseminate similar information to transport operators and to local communities living in the project area during project implementation and operation of 17 the project facilities. XRG, through XCD, will cause contractors to monitor health risk control according to the Implementation Methods of Epidemic Prevention Law of the PRC (1991). 80. Toll Rates. Toll rates will be reviewed from time to time, and will be set at levels that are sufficient to cover debt servicing, operations and maintenance. VI. FOLLOW-UP ACTIONS 81. The following follow up actions are necessary to ensure timely processing of the ADB loan and commencement of Project activities: (i) XCD will send to ADB (a) the draft prequalification documents for the expressway civil works by 5 January 2007; and (b) the draft request for proposal (RFP) and consultants’ short-list by 15 February 2007; (ii) XCD will submit the application for pre-examination of land use to the Ministry of Land and Resources by end October 2006; (iii) XCD will send for ADB review (a) the revised resettlement plans (RPs) by 25 October 2006; and (b) the revised ethnic minority development plans (EMDPs) by 31 October 2006; (iv) The resettlement information booklets will be distributed to the affected village committees and affected households and the draft RPs will also be circulated to the relevant county and township governments by 31 October 2006; (v) The draft EMDPs should be circulated to the relevant county and township governments for review and comment by 31 October 2006; and (vi) XCD will provide to ADB as soon as available: (i) the Government’s decision regarding the additional $10 million ADB financing, and (ii) details of financing from the Government, XCD and domestic commercial bank. VII. LOAN PROCESSING SCHEDULE 82. Further processing of the proposed loan will proceed according to the following schedule: Management Review Meeting Appraisal Loan Negotiations Board Consideration IV Nov 2006 I-II February 2007 II March 2007 IV May 2007 18 Signed in Beijing on 25 October 2006, For the Ministry of Finance, ______________________ Chen Huan, Director IFI III Division, International Finance For the Xinjiang Communications Department, ____________________________ Li Zhinong, Chief Engineer For the Asian Development Bank, ____________ Hasan Masood Senior Transport Specialist/Mission Leader APPENDIXES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. List of Persons Met in Xinjiang Harmonization of Cross-Border Procedures and Documentation Improving Operational Efficiency of Transport Terminals using ICT Pilot Project for Improving Road Transport Services through Policy Reforms Road Safety Improvements Road Maintenance Management Project Cost Estimates Implementation Schedule Contract Packages Procurement Plan 19 Appendix 1 Proposed Loan for Xinjiang Regional Road Improvement Project ADB Fact-Finding Mission (10-25 October 2006) List of Key Persons Met in Xinjiang Xinjiang Communications Department Mr. Muttellip Kasim, Director General Mr. Li Zhinong, Deputy Director General/Chief Engineer Mr. Ye Tao, Deputy Director, Planning Division Mr. Li Xuehui, Planning Division Mr. Mi Xiati, Deputy Director, Planning Division Ms. Pan Linge, Planning Division Xinjiang Communications Construction Administration Bureau Mr. Yan Xianguo, Director Mr. Wang Cheng, Director, Office of Chief Engineer Mr. Liu Ruyin, Chief, Planning Division Mr. Chang Jiangong, Chief Accountant Mr. Li Xingwen, Senior Engineer Ms. Wang Ling, Senior Engineer, Environment Section Mr. Cheng Gang, Deputy Director, Traffic Engineering Division Mr. Li Xin, Chief, Land Acquisition/Resettlement Division Mr. Jia Hegang, Section Chief, Land Acquisition/Resettlement Division Mr. Wang Zhenhong, Engineer, Planning Division Mr. Li Kang, Accountant, Financial Division Mr. Zhang Yi, Deputy Director, Construction and Administration Division Mr. Zhang Yan, Secretary, General Office Mr. Wang Zhenhong, Engineer, Planning Division Mr. Wumair, Senior Translator Highway Planning and Design Institute Mr. Li Jianxin, Senior Engineer Mr. Zhou Jun, Senior Economist Transport Administration Bureau Mr. Alken Abudureyimu, Director, International Transport Mr. Zhang Nan, Deputy Director, International Transport Mr. Wang Jianjun, Engineer, Road Transport Xinjiang Highway Administration Bureau Mr. Xu Yuchun, Deputy Director, Maintenance and Administration Division Kuche County, Xinjiang Mr. Tang Renjun, Deputy Governor Mr. Wang Lichun, Director, Agriculture Mr. Hu Yongbin, Director, Finance Mr. Li Yancheng, Deputy Director, Planning Committee Mr. Qing Shiwu, Secretary, Communications Department Mr. Ali Abay, Deputy Director, Communications Mr. Anniwar Jurupu, State Land Department Mr. Zhao Shijiang, Ethnic and Religious Affairs Mr. Aireti Maimaiti, Poverty Alleviation Office 1 Mr. Zhaoqun Hui, Environment Mr. Tian Guangli, Deputy Director, Water Department Mr. Tei Shan, Deputy Director, Forest Department Mr. Aibibula Simaya, Director, Animal Husbandry Department Ms. Risalaiti Amuti, Women Association Mr. Yimiti Amuti, Officer, Yahya Township Mr. Liu Chunguang, Deputy Officer, Dunkuotang Township Residents of Yahya Township, Mazarbagh Village, and Dunkuotang Township 2 Appendix 2 Harmonization of Cross-Border Procedures and Documentation 1 The 6th Meeting of the Transport Sector Coordination Committee (TSCC) on Central Asia Regional Economic Cooperation (CAREC) was held on 24-25 August 2006 in Urumqi, PRC. Delegations from all eight CAREC countries and representatives of ADB and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) attended the Meeting. EBRD, Islamic Development Bank, and the World Bank provided inputs to the Meeting. Action Plan on Harmonizing Regional Transport Regulations and Cross-Border Agreements was endorsed at the Meeting. The Action Plan is shown at Table 2 below. 2. Among six key result areas (KRA) of the Action Plan, KRA 3 and 4 (Harmonized weights and dimensions of vehicles, Harmonized regulations on vehicle emissions), which is to be possibly and immediately done in the provincial level, are mainly focused and will be implemented by hiring consultants. 3. The consultants’ tasks will include, but will not be limited to: (i) undertaking a comprehensive and analytical overview of the current situation on weights and dimensions of vehicles and regulations on vehicle emissions, (ii) conducting consultations on the formulation of the harmonized strategy on weights and dimensions of vehicles and regulations on vehicle emissions, (iii) preparing a time-bound detailed action plan for implementation. 4. An estimate of the cost to establish a suitable logistics information exchange with ICT for Xinjiang is estimated at $22,750 equivalent. The team of consultants comprises four domestic consultants: (i) team leader/policy reform specialist (3.0 person-months), (ii) vehicle weights/dimensions specialist (2.0 person-months), (iii) vehicle emissions specialist (2.0 person-months), and (iv) cross-border facilitation specialist (1.0 person month). Table 1: Summary of Cost Estimates ($’000) Item 1. Consulting Services 2. Local Travel, Reports and Communication 3. Seminar and Miscellaneous Total Total Cost 12.75 7.00 3.00 22.75 Table 2: Central Asia Regional Economic Cooperation (CAREC) Action Plan for Harmonizing Regional Transport Regulations and Cross-Border Agreements Objectives: Promotion of sustainable economic growth in CAREC countries by facilitating crossborder and transit transport by roads, railways, and civil aviation Principles: (i) strong leadership and active participation of CAREC countries; (ii) outputs focused with support of implementation and monitoring mechanisms; and (iii) coordinated and complimentary approach with trade facilitation activities in CAREC Key Results Actions Responsibility TM, MOC Target for Completion Aug. 2006 1. Rationalized 1.1 Confirm that multilateral agreements are the regional road primary engagements in CAREC countries for transport regional road transport. agreement 1.2 Review and prioritize the multilateral agreements relating to road transport, and prepare a list of regional road transport agreements for consolidation. TM, MOC, TSCC Apr. 2007 Secretariat TM, MOC 1.3 Develop a plan for implementing prioritized multilateral agreements, making amendments to existing agreements, and reconsidering superfluous agreements. 1.4 Submit the plan to the Ministerial Conference (via Senior Official’s Meeting). 1.5 Develop country specific action plans for implementation. 1.6 Review implementation progress. TSCC Apr. 2008 Oct/Nov 2008 Apr. 2009 TM, MOC TM, MOC, TSCC Sep. 2009 2. Streamlined Roads TM, MOC tariff and fee 1.1 Develop principles and specific measures for fees and user charges on cross-border and transit road framework transport on regional road and TSCC 1.2 Submit proposed framework on fee and user railway charges on cross-border and transit transport to the support Ministerial Conference (via Senior Official’s Meeting), after preliminary endorsement of CAREC member countries 1.3 Develop country specific action plans for implementation. 1.4 Review implementation progress. Railways 1.5 Review existing railway tariffs and make possible recommendations on harmonization of tariff-setting principles. TM, MOC Sep. 2007 Oct/Nov 2007 Apr. 2008 TM, MOC, TSCC Sep. 2009 TM, MOR Apr. 2008 3. Harmonized 3.1 Confirm the weights and dimensions of vehicles in TM, MOC weights and the Minsk Agreement of 1999 as the ruling dimensions standards for CAREC countries, except for the PRC Aug. 2006 Key Results of vehicles and UZB. Actions Responsibility Target for Completion 3.2 Consider the possibility to adopt the EU standards TM, MOC on weights and dimensions of vehicles (EC96/53) in CAREC countries. TM, MOC 3.3 Consider the possibility to adopt the Cholpon-Ata Agreement on weights and dimensions certification. 3.4 Submit the agreed standards to the Ministerial Conference for approval (via Senior Official’s Meeting). 3.5 Develop country specific action plans for implementation. TSCC Apr. 2007 Sep. 2007 Oct/Nov 2007 TM, MOC Apr. 2008 TM, MOC, TSCC Sep. 2009 3.6 Review implementation progress. Aug. 2006 4. Harmonized 4.1 Confirm that EURO standards are the ultimate goal TM, MOC regulations of regulation on vehicle emissions in CAREC on vehicle countries. emissions Sep. 2007 TM, MOC 4.2 Develop a plan for implementing harmonized regulations on vehicle emissions, including staged adoption of EURO standards for cross-border and transit traffic. 3.3 Submit the plan to the Ministerial Conference for approval (via Senior Official’s Meeting). 3.4 Develop country specific action plans for implementation. 3.5 Review implementation progress. 5.1 Review the status of regional road, railway, and air transport safety. TSCC Oct/Nov 2007 Mar/Apr 2008 TM, MOC 5. Improved regional transport safety TM, MOC, TSCC Sep. 2009 TM, MOC, MOR, Sep. 2007 civil aviation authorities TM, MOC, MOR, Apr. 2008 5.2 Develop a plan of improving road, railway, and air transport safety (including accession to international civil aviation authorities conventions). 5.3 Submit the plan to the Ministerial Conference (via Senior Official’s Meeting). 5.4 Develop country specific action plans for implementation. TSCC Oct/Nov 2008 TM, MOC, MOR, Apr. 2009 civil aviation authorities TM, MOC, MOR, Sep. 2009 civil aviation authorities, TSCC TM, MOC, MOR Apr. 2008 5.5 Review implementation progress. 6. Reduced delays at border crossings 6.1 Identify the barriers (physical, administrative, and logistical) for road and railway border crossings, and make recommendations for improvement. 6.2 Based on the review, develop a plan to improve TM, MOC, MOR Sep. 2008 Key Results Actions border crossing for road and railway transport. 6.3 Submit the plan to the Ministerial Conference (via Senior Official’s Meeting). 6.4 Develop country specific action plans for implementations. 6.5 Review implementation progress. Responsibility Target for Completion TSCC Oct/Nov 2008 TM, MOC, MOR Apr. 2009 TM, MOC, MOR, Sep. 2009 TSCC MOC = Ministry of Communications in the PRC; MOR = Ministry of Railways in the PRC; TM = Transport Ministries or equivalent agencies in AFG, AZE, KAZ, KYR, MON, TAJ, and UZB; TSCC = Transport Sector Coordinating Committee. Appendix 3 Improving Operational Efficiency of Transport Terminal Using ICT 1. Current Situation. Since 1995, Urumqi’s GDP has grown annually at an average of 21.5 percent. Accordingly the freight distribution and logistics has expanded significantly. To accommodate the surging logistics demand, the MOC and the XCD approved the General Layout of Urumqi Road Transport Hub Terminal Development Program (the Program) in November 1997. Based on the Program, 14 terminal facilities are planned to be constructed in Xinjiang provincial area. 14 terminal facilities consist of 6 passenger terminals, 6 freight terminals, 1 administration center, and 1 international passenger and freight terminal. So far 3 passenger terminals and 1 administration facility have been built, while 2 freight terminals are under construction. Detailed program on other 8 planned terminals is shown at Table 1. Table 1: Urumqi Road Transport Hub Terminal Development Program Terminal Administration Center Urumqi Freight Center Hetan Road LTL South Suburb Freight Dawan Freight Erguan Freight Wenguang Freight Urumqi International Passenger & Freight Total Capacity (1,000 person or 1,000 ton) 1,200 800 600 800 600 1,000 500 Floor space (m2) 1,500 31,920 26,600 22,000 16,000 22,000 26,600 13,320 152,440 Cost estimation (CNY million) 20.7 119.6 96.6 52 87.4 63 109 47 574.6 2. Issues. According to consultant’s survey, trucks looking for backloads wait up to 10 to 15 days on average, thereby increasing the unit freight cost. Even up to 50~70 percent of trucks return empty due to lack of information and coordination. Although the Program include a plan to establish the integrated transport terminal system by connecting government administration center, passenger and freight terminals, the shortage of funds prohibits its operation. This lack of logistics platform/management information system and poor technology makes the efficiency of road transport system low. 3. Proposed Solution. The establishment of integrated logistics information exchange system with information and communication technology (ICT) may improve the efficiency of terminal operation and management, further reducing transportation logistics costs. The establishment of a logistics information exchange with ICT would give freight forwarders the ability to provide a secure intra-city pickup and delivery service to their customers in a costeffective, flexible and efficient manner. This web-based secure system will authenticate third party delivery agents, would enable lower cost intra-city pick up and delivery for the transport industry. This system would increase efficiency in the industry by providing road transport operators with real time information to help truckers search for freight as well as giving cargo owners not only the ability to locate suitable truckers but also the ability to track their consignment to the point of delivery that includes international destinations. 4. Expected Benefit. Improvements of efficiency in inter-regional/international terminals can generate substantial long-term economic returns across the regional economy. Reduced distribution costs and improved logistics permit reductions in the cost of final products and provide more reliable access to supplier markets, boosting competitive opportunities. The direct benefits from improved operational efficiency are (i) improved visibility over the transportation network; (ii) significant vehicle operation cost savings; and 1 (iii) standardization of processes especially for international freight. This integrated terminal system may also have the ability to become key pivotal points in the regional transport network as a hub of freight logistics centers, which will create levels and types of employment previously not available in regional areas, and facilitate cross-border trades. 5. Cost Estimation. An estimate of the cost to establish a suitable logistics information exchange with ICT for Xinjiang is estimated at $850,000 equivalent. The team of consultants comprises five international and domestic consultants: (i) international team leader (3.0 person-months), (ii) domestic co-team leader (6.0 person-months), (iii) information management specialist (6.0 person-months), (iv) database management specialist (1.0 person-month), and (v) international training specialist (2.0 person-months) Table 2: Summary of Cost Estimates ($’000) Item 1. 2. 3. 4. 5. Logistics Information System Training Program Consulting Services Seminars and Conferences Contingencies Total Foreign Exchange 500.0 125.0 100.0 50.0 64.5 839.5 Local Currency Total Cost 500.0 125.0 110.5 50.0 64.5 850.0 10.5 10.5 6. e-Asia and Knowledge Partnership Fund. The main goal of this fund is to contribute to poverty reduction and economic and social development in DMCs by reducing the digital divide. The e-Asia program includes: (i) financing ICT-related activities, including TA; (ii) studies, research, and analytical work; (iii) capacity building and developing human resources through education and training; (iv) disseminating, networking, and cross-learning (e.g., policy consultations, seminars and workshops, conferences, publications, and websites); and (v) piloting innovative approaches to promote ICT. Projects to be financed under the Fund will be exempt from the ADB’s overall resource planning limit. The maximum size of any individual grant to be supported by the Fund will be US$500,000. The Fund will not be used for (i) civil works, (ii) procurement of large scale equipment (no more than 30% of the total grant for a project may be used for the purchase of ICT equipment only for e-Asia Program), (iii) permanent staffing costs, or (iv) the hiring of staff consultants. 2 Appendix 4 Proposal for Pilot Project to Improve Road Transport Services for Passengers Background Buses now run to all cities, prefectures, counties and townships in the Xinjiang region. There are currently 485 passenger terminals of different categories, including 2 class I, 29 class II, 98 class III, 98 class IV and 267 bus stops. Under the 11th Five-Year Plan, the Xinjiang Government aims to establish a high quality passenger transport service network connecting the cities, townships and villages, with rational layout of terminals and stops and advanced management technology, with wide range of choices to meet people’s needs, and with priority given to development of rural passenger terminals. However, major hub terminals will be constructed and old terminals will be improved in cities and densely populated areas. A total of 14 terminals are planned for Urumqi and other large cities, and 649 terminals are to be built in the rural areas. Of this, 269 are class IV and V passenger terminals, and 380 simple bus stations and stops are to be built. Road passenger and freight transport terminals are planned and build by Provincial Governments with subsidies from the MOC and are managed by terminal operators who are responsible for setting departure schedules, selling passenger tickets and inspecting vehicles. In order to better plan the development of bus terminals the Road Transport Administration Bureau (RTAB) of the XCD will introduce two transport database systems, (i) an Administrative System to assist in managing quality based contracts and (ii) a bus passenger system that collects passenger volume and ticket sales on a daily basis. It is the intention of the RTAB to eventually integrate these two systems with a freight logistics information system that includes all cross-border ports in the near future when funds become available. Currently, bus routes are graded (A-D) with sub-categories (1-4); A1, the highest, is for services between provincial capitals, and D wholly within one county. Only the highest grade enterprises may operate the highest grade routes. In addition, while there are no restrictions on the length of route which may be operated by Grade I and II operators, those in Grade III, IV and V are limited to route of 800, 400 and 150 kms. ADB TA for Policy Reform in Road Transport ADB provided assistance to the Ministry of Communications for a TA on policy reforms in the transport sector. The TA reviewed the current status and issues in road freight and passenger transport and prepared an action plan of policy reform, recommending policy and regulatory measures to improve efficiency. The following is a summary of the study recommendations: Bus operators • • Encourage the development of integrated national networks of services by eliminating unnecessary restrictions on market entry by operators from other areas Permit a greater range of services tailored to the needs of the market, including services which improve the accessibility of isolated communities by regularizing any informal services that have developed in response to transport needs 1 • • • • • • • • Allow operators to determine bus schedules to maximize productivity of vehicles All operators to move buses between different routes to meet changes in demand All operators to operate buses with different capacity/seating configurations that better meet passenger needs Introduction of best practices through international training components in business, planning and human resource management Operators can plan and operate their services with minimum intervention from authorities Bus operators should be permitted to operate private terminals and should not be required to permit other operators to use them Bus transport quality regulation should focus on setting, encouraging and enforcing safety standards in terms of vehicle condition and driver behavior Introduce more effective systems of on-road inspections including installing automatic tamper proof equipment at inspection stations Terminals • • Operators should be able to divert themselves of terminals and workshop facilities to concentrate on operating bus services Terminal operators should be able to determine charges for their services to operators but would be overseen by Provincial Pricing Agencies Government • Strengthen terminals, bus operation and driver safety standards The key benefits to be derived from the policy reforms included (i) lowering operating costs through improved utilization of buses; (ii) providing wider range of departure and arrival schedules and fares for passengers; and (iii) establishing improved terminal facilities to meet passenger and operator needs. Proposed Pilot Project To demonstrate the potential improvements of implementing the policy reforms, it is suggested that a pilot project be setup based on a large town or small city. A city such as Korla would be a possible candidate as it has reasonably large population and supports a large number of operators offering a wide range of destinations. Korla will also benefit substantially from the Korla-Kuqa expressway project where operators will benefit from lower operating costs and reduced travel time that will add to the benefits expected from the pilot project.1 1 Instead of Korla, XCD proposes to select a town/or township along the Project expressway with large population. 2 The specific activities under the pilot project may include: (i) identifying affected provincial regulations/institutions, affected bus routes, all participating operators and terminals, and other cities/provinces affected by the pilot project;(ii) rationalizing vehicle inspection requirements and enforcement procedures; (iii) determining the degree of deregulation of bus operators, bus fares, bus routes, and vehicles; (iv) training bus and terminal operators in business, planning and human resource development; (v) publicizing the pilot project; (vi) establishing trial monitoring and review procedures; (vii) designing procedures and criteria for operator licenses, route licenses, vehicle licenses; (viii) introducing new operator and route permits and new bus licenses; (ix) encouraging formation of area-based operator associations for small operators to enter lower volume markets; (x) relaxing categorization for existing operators; (xi) allowing existing operators to divest or rationalize terminal ownership; (xii) easing restrictions on bus allocation to routes to improve vehicle and driver productivity; and (xiii) easing market entry conditions when market has stabilized. Implementation It is recommended that the initial project should be commenced in one city only to minimize the number of consultants needed to setup and monitor the project. The project should be implemented for at least one year, after which time it will be reviewed and if found successful, may be extended to other cities. The project will be coordinated by the XCD but supervised on a day-to-day basis on its behalf by the Xinjiang Transportation Administration Bureau (XTAB). A team of domestic consultants led by an international expert will develop and implement the pilot project. The consultants will keep XCD and XTAB informed of the progress and will prepare a detailed report of its finding at the end of the project. The report will include the impact of the policy reforms, problems encountered and how these were overcome. The consultants input will include 4 person-months of international and 20 person-months of domestic consultants. The pilot project will also involve capacity building. The total estimated cost is about $500,000. 3 Appendix 5 Road Safety Improvements 1. Current Status 1. Accidents in XUAR have been rising significantly due to the growth in road users and motor vehicles. In the last ten years, (1996 to 2005), over 25,000 people have been killed and over 75,000 people have been injured in road accidents. Fatalities have increased from 1863 in 1996 to 2491 in 2000 and to 3111 in 2005. Table 1 shows the number of road accidents has been an increase of 13.8% to 9527 in 2005, 7.6% in fatalities to 3111 and 17.0% in injuries to 10437. In 2005, the estimated economic losses from road accidents and fatalities amounted to more than CNY 28.4million, which was more than 1% of XUAR GDP. 2. In XUAR, the total number of vehicles owned in 2005 was 1.45million with a yearly increase of 21.3%, and the total population of XUAR in 2005 was 20.1million with a yearly increase of 2.40%. Thus, the fatality rate in 2005 has been 22 per 10,000 vehicles and 15.48 per 100,000 people, which are higher than the rates of PRC and many other countries. Table 1: Road Accidents in XUAR (2000 to 2005) 2000 2001 2002 2003 2004 2005 Accidents Fatalities Injuries 10,048 2,491 7,976 10,519 2,539 9,295 10,095 2,563 9,199 10,269 2,643 10,044 8,374 2,892 8,918 Change 2004-05 9,527 +13.8% 3,111 +07.6% 10,437 +17.0% Source: Statistical Year Book of XUAR (2006) and Traffic Police XUAR 2. Issues 3. In XUAR, rapid economic development accompanied by increasing vehicular growth has resulted in rising level of traffic, increased pressure on the road system, a substantial number of road accidents and loss of life of a large number of people. In 2005, the estimated economic losses from road accidents and fatalities amounted to more than CNY 28.4million, which was more than 1% of XUAR GDP. 4. In rural area, particularly the poor people come to be victims as pedestrians or non-motorized transport and public bus users. When rural roads were upgraded, the number of traffic accidents is increasing. The fatality rate on Class I highways in Xinjiang is 37.5 percent higher than on Class II highways. Local people have to be aware that speed of traffic will be faster and the amount traffic increases when local roads are improved. To provide benefit to the local people and minimize negative impact, all road users and administrators need to raise their level of awareness and knowledge to improve safety. 1 5. On the existing expressways in XUAR in 2005, 65% of deaths and 62% of accidents occurred in the rear-end collision type accidents. A common factor in rear-end accidents has been the rear vehicle driver's inability to see or accurately determine traffic conditions ahead (degraded perception). Harsh whether condition like snow, fog, rain and ice is clearly increasing risk of the rear-end collision type accidents. The average of the highest temperature in Korle is 33-34 degree and possible highest temperature is 40 degree and 42-43 degree in the center of the city and the southwest area respectively between June and August. The average of the lowest temperature in Korle is minus 12 - minus 13 degree and possible lowest temperature is below than minus 30 degree in winter. This harsh weather is strongly related to risk of traffic accidents and risk of breakdown of vehicles. The risks can be reduced the risk of harsh weather condition by providing necessary and timely information to derivers 3. Program for Improvement 6. Road safety has been given high priority but there is still a lot of work required to achieve safety environment. The Road Safety Component supports XUAR to increase road safety. The component includes the safety audit for the proposed expressway, institutional capacity and public awareness, and Utilizing Information Technology for Road Safety. a. Road Safety Audit 7. A road safety audit is a formal examination of an existing or future road and the main objective of a road safety audit is to ensure a high level of safety for all new highway schemes- before the projects are implemented, and before any accidents happen. A qualified team reports on the accident potential and safety performance. Since the G314’s proposed section is a part of the National Expressway Network Plan, road safety audits at the detailed design stage and pre-opening stages should be undertaken. b. Institutional Capacity and Public Awareness 8. The sustainability of the highway sector greatly depends on the strength of its provincial and local government staff, and drivers to address the growing challenges of road safety. To improve institutional capacity and to increase public awareness, the following activities need to be carried out: a) Capacity building on design, safety audit and maintenance for safety b) Capacity building on enforcement of traffic law c) Drivers Awareness d) Community Awareness (Community-based road safety program) c. 9. Utilizing Information Technology for Road Safety The application of IT to surface transportation is called “Intelligent Transport 2 Systems” (ITS). ITS improves efficiency, safety, security and mitigate the environmental impacts of road transport. The range of ITS technologies available, as a part of traffic surveillance and management, will help improve traffic safety, security, access and mobility. 10. The Road Weather Information and Management system (RWIM) provides vehicles for necessary and timely information on weather such as air temperature, humidity, wind speed, wind direction, fog, rainfall, snowfall, and any other information related to road safety such as road surface condition and surface/subsurface temperature. RWM consists of Road Weather Measuring Equipments (RWME) along the expressway, a Weather Station (WS) where information collects, analyzes, provides, and stores, information provision devises such as Variable Message Sings (VMS) along the proposed expressway and the interchanges, radio, internet, cell phones, etc.. RMW collects data by RWME automatically, analyzes data, and sends real time information/message automatically or manually to road users for their preparation against foreseen snow, rain, ice and heated surface of roads. RWM also provides effective information for road management. The organization managing the expressway can dispatch maintenance vehicles for defrosting ice by salt, snow removal, repair, etc. according to the real time information. This real-time information will be useful to reduce not only risk of road transport but also life-cycle costs of roads. 11. Since the high speed traffic on expressway, accidents tune out to be devastating events. Because of favorable condition of expressways for drivers, driving tends to be over speeding. To realize drivers their speed, Speed Warning System (SWS) is effective tool. SWS consist of a speed radar/camera and display which shows speed of vehicles and message to drivers. For the expressway, the SWS should be installed before sharp curves, slopes, and points where drivers tend to drive over speed. 4. Implementation a. Road Safety Audit 12. Road safety audit for Expressway will be carried out within the process of designing of the Expressway and construction of Expressway. The implementation agency will be the Xinjiang Communication Construction Administration Bureau (XCCAB) under XCD. b. Institutional Capacity and Public Awareness 13. This component will be executed by the partnership between XCCAB, XCD, Traffic Police Agency of the Xinjiang Public Security Department, the local governments of Korle, Luntai, and Kuqa, and other organizations. The proposed activities will include: a) Capacity building on design, safety audit and maintenance for safety Methods: Seminars on design, safety audit and maintenance for safety in 3 cities (Korla, Luntai, 3 Expected audiences: Material: and Kuqa) People who are involved in road design, safety audit, and maintenance of expressways and rural roads. To be established based on existing texts b) Capacity building on enforcement of traffic law Methods: Seminars on standardizing traffic policing and law enforcement in 3 cities (Korla, Luntai, and Kuqa) Expected audiences: People who are in charge of enforcement of traffic law Material: Materials for the workshop will be developed by the Traffic Management Research Institute for the Ministry of Public Security under a ADB technical assistance, People’s Republic China: Road Safety Improvement c) Drivers Awareness Methods: Expected audiences: Seminars on safety driving and safety law for drivers in 3 cities (Korle, Luntai, and Kuqa) People who are in charge of road safety in public transport enterprises and freight companies, and professional drivers for taxis, buses, trucks, etc. To be established based on existing texts Material: d) Community Awareness: Methods: Community-based road safety program a. 10 Lectures in each citiy (Korle, Luntai, and Kuqa) b. Providing materials to all necessary schools in 3 cities. c. TV broadcasting Expected audiences: People who are at risk for traffic accidents and necessary school students Material: To be established based on existing texts c. Utilizing Information Technology for Road Safety Preliminary design, detail design, and construction of WIMS and SWS will be carried out together with the monitoring centre, based on actual field conditions. (Costs for WIMS and SWS is the following but the costs need to be incorporated with the package for the monitoring centre once those were finalized.) 4 5. Cost Estimate a. Institutional Capacity and Public Awareness The following is budget provided by XCCAB, XCD. The fund from other organizations for this component will be determined but the fund from the other organization does not included in the Xinjiang Regional Road Improvement Project. Consultant services (15 person-months) Materials (US$ 0.05 mln *4) Video Assistance for Seminars, lectures, etc. Printing Broadcasting Miscellaneous (transport, communication, etc.) Total b. Utilizing Information Technology for Road Safety US$ 0.06 mln US$ 0.03 mln US$ 0.02 mln US$ 0.01 mln US$ 0.05 mln US$ 0.01 mln US$ 0.01 mln US$ 0.19 mln Estimated cost for WIMS and SWS is about 1.16 mln but this is subject to cost estimate to be done by the Design Institute of XCD. 5 Appendix 6 Road Maintenance Management A. Current Situation and Issues. 1. The XCD is responsible managing bulk (64,818 km)1 of the Xinjiang’s road network of 89,530 km. This involves all the expressways, class I and II roads, and a large proportion of class III, IV and unclassified roads. The remaining network is managed by the local governments. Road maintenance is carried out by the Xinjiang Communication Construction Administration Bureau (XCCAB) and the Xinjiang Highway Administration Bureau (XHAB) through contracts, and in some instances through force account. XCD estimates that about 17% of the network is in poor condition requiring rehabilitation. The financing is provided by XCD through its own resources and the maintenance fees and toll revenues. In 2005, the funding for maintenance was CNY1,529 million2, which was far short of the maintenance funding need of CNY3,112 million.3 2. The road maintenance budget is prepared based on the road maintenance standards for each class of road, and is submitted for approval in November each year. During implementation it is adjusted according to the field conditions. China Pavement Management System (CPMS) and China Bridge Management System (CBMS) developed by the Highway Research Institute have been introduced in Xinjiang for provincial and national roads. Under the three World Bank (WB) financed projects, HDM-4 was introduced and trainings on pavement management systems (PMS) were done. Although XCD advises that it is calibrating the HDM program to reflect the local condition and collecting data for PMS, the work is moving at a very slow pace, reportedly due to shortage of required funds and equipment. 3. According to XCD, road maintenance, including winter maintenance for national and provincial roads, is being implemented in line with MOC regulations/standards. XCCAB and XHAB has established maintenance crews along the expressways to check the road condition regularly, carry out snow clearing, and spreading snow dissolving chemicals on the slippery roads. Information related weather situation is collected by meteorological stations which are established along the road. Emergency fund is budgeted and available in the beginning of each year. However, driving conditions are not safe in extreme winter conditions leading to a high number of accidents. Due to lack of modern weather monitoring systems, the snow cleaning works are not undertaken on time. Moreover, the more snow cleaning equipment needs to be procured to keep pace with the rapidly expanding expressway and highway network. 4. XCD has installed weighbridges at several key locations to control overloading, and fines are collected for excessive overloading. However, the TA consultants report that the whole vehicle weight is recorded rather than axle loads, which does not give adequate information to assess overloading impact on pavements. Under the WB financed projects, the training program included road safety, management and maintenance of equipment, and winter road maintenance. XCD considered the training very useful and intends to continue the program under this Project. In addition, there is a need to build XCD’s capacity in maintenance planning, planning and optimization of available resources. 1 2 3 This includes 541 km expressways, 878 km class I roads, 6,674 km class II roads, 17,148 km class III roads, 25,960 km class IV roads and 13, 617 unclassified roads. XCCAB informs that CNY2 billion was collected in maintenance fee in 2005. Estimated by the TA consultant based on unit rates and condition information provided by XCD. 1 5. The county and rural road maintenance is undertaken by the respective local governments, who received financial subsidies from XCD. However, the condition of local roads indicates that there are problems in maintaining the local roads network due to the current maintenance practices that lacks adequate planning, financing, and execution. As a result, the pavements have deteriorated, and this condition has exacerbated due to overloading. At present, there are only few local government units that are using maintenance prioritization. Most undertake planning for the following year’s program based on a subjective assessment and administrative direction. B. Proposal for Improving Maintenance Management. 6. The capacity building program initiated under the WB financed projects was considered effective in improving maintenance capacity of XCD and other agencies and is also supported by XCD. Hence, the Project will include a comprehensive capacity development program based on a detailed assessment of the needs of XCD as well as the local government agencies responsible for the local roads. This is also important as the Government plans to improve and expand the rural road network. Some of the key elements of the capacity building program will be (i) maintenance planning using state-of-the-art software; (ii) communication technology for integrating maintenance data from the various local governments; and (iii) implementation of maintenance plans through, among others, performance based maintenance. In addition, based on a needs assessment, the Project will include relevant maintenance equipment for (i) assessing maintenance needs and condition surveys, and (ii) specialized needs such as winter maintenance. The estimated cost of the capacity building/training is $400,000, and maintenance equipment is $5.0 million 2 Appendix 7 Project Cost Estimate CNY million Items A. Base Cost a 1. Civil Works Expressway Sub-grade Pavement Bridges Intersections & Road Facilities Other Civil Works b $ million Total Foreign Cost Local Cost Total Foreign Cost Local Cost 277.29 506.26 229.28 460.67 122.76 1,596.26 40.86 63.25 subtotal 1,700.37 300.40 548.44 248.38 509.17 133.00 1,739.39 70.18 107.71 1,917.28 577.69 1,054.70 477.66 969.84 255.76 3,335.65 111.04 170.96 3,617.65 34.66 63.28 28.66 57.58 15.35 199.53 5.11 7.91 212.55 37.55 68.56 31.05 63.65 16.63 217.42 8.77 13.46 239.66 72.21 131.84 59.71 121.23 31.97 416.96 13.88 21.37 452.21 subtotal: Local Roads Border Road 2. Equipment Expressway Equipment & Facilities Maintenance Equipment Road Safety Equipment ITC Logistic Terminals subtotal 3. Land Acquisition and Resettlement 0.42 0.00 9.28 4.00 13.70 0.00 9.29 40.00 0.00 0.00 49.29 127.68 9.71 40.00 9.28 4.00 62.99 127.68 0.05 1.16 0.50 1.71 1.16 5.00 6.16 15.96 1.21 5.00 1.16 0.50 7.87 15.96 4. Consulting Services and Training 16.07 43.92 59.99 2.01 5.49 7.50 5. Project Administration Subtotal (A) B. Contingencies 1. Physical Contingencies 2. Price Escalation Subtotal (B) 0.00 1,730.14 174.08 2,312.25 174.08 4,042.39 216.27 21.76 289.03 21.76 505.30 86.89 97.71 184.60 115.19 229.09 344.28 202.08 326.80 528.88 10.86 12.21 23.08 14.40 28.64 43.04 25.26 40.85 66.11 C. Interest & Other Charges during Construction 326.72 0.00 326.72 40.84 40.84 Total Notes: a) b) c) At 2006 prices 2,241.46 2,656.53 4,897.99 280.18 332.07 612.25 Includes cost of survey, design, environment protection, equipment, contractor's profit, and taxes and duties. Exchange Rate $1.00 = 8.00 PROJECT IMPLEMENTATION SCHEDULE Item 2006 2007 2008 2009 2010 2011 Appendix 8 2012 M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J I Project Processing Feasibiliity Approval Preliminary Design Approval Detailed design Approval Advanced Action Approval Loan Negotiation Loan Effectiveness Loan Account Closing II Land Acquisition for Expressway Resettlement Plan and Disclosure Detailed Measurement Survey and Agreement Land Application and Approval Land Acquisition and Resettlement III Expressway (i) Civil Works Prequalification and Approval Prequalification Evaluation Approval Draft Bid Documents Prep. and Approval Bidding and Bid Evaluation and Approval Negotiation and Contract Award Mobilisation Construction (ii) Traffic Engineering (Tolls, communications and Monitoring Detailed Bid Documents Prep. and Approval Bidding Bid Evaluation and Contract Award Construction (iv) Buildings and Ancilliary Facilities Detailed Bid Documents Prep. and Approval Bidding Bid Evaluation and Contract Award Construction (v) Landscaping Detailed Bid Documents Prep. and Approval Bidding and Contract Award Construction (vi) Equipment (i) For Expressway Maintenance Detailed Bid Documents Prep. and Approval Bidding and Approval Purchase and Commissioning (ii) For Laboratory Equipment Project Bid Documents Prep. and Approval Bidding and Approval Purchase and Commissioning PROJECT IMPLEMENTATION SCHEDULE Item 2006 2007 2008 2009 2010 2011 Appendix 8 2012 M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J IV Local Roads Resettlement Plan and Disclosure Land Application and Approval Land Acquisition and Resettlement Detailed Design and Approval Detailed Bid Documents Prep. and Approval Bidding and Contract Award Construction V Border Road Resettlement Plan and Disclosure Land Application and Approval Land Acquisition and Resettlement Detailed Design and Approval Detailed Bid Documents Prep. and Approval Bidding and Contract Award Construction VI Consulting Services (i) International Consultants Short Listing RFP Preparation and Approval Issuance of RFP and Proposal Submission Technical Evaluation and Approval Financial Evaluation and Approval Negotiations and Contract Award Consulting Services International Training (ii) Domestic Consultants (a) For Expressway Bidding and Contract Award Consulting Services (b) For Local Roads Bidding and Contract Award Consulting Services (b) For Border Road Bidding and Contract Award Consulting Services Defects liability Period CONTRACT PACKAGES Civil Works for the Expressway, Local and Border Roads Package Number Description A. Civil Works A01 K457+500~K480+000 A02 K480+000~K519+000 A03 K519+000~K547+076 A04 K547+076~K566+200 A05 K566+000~K590+000 A06 K590+000~K610+000 A07 K610+000~K635+200 A08 K635+200~K654+717 A09 K654+717~K684+000 A10 K684+000~K721+000 A11 K721+000~K754+000 Subtotal (A) B. B01 B02 Traffic Engineering Toll Plazas Communication, Telephones, Monitor Safety Facilities (Guardrail, Signing and Road Markings Subtotal (B) Service Building Administration and Maintenance Administration, Maintenance, and Toll Station Administration and Maintenance Administration and Maintenance Administration, Maintenance, and Monitoring Subtotal (C) Virescence and Landscape Virescence and Landscape Subtotal (D) Equipment Road Safety Equipment Winter Road Maintenance Equipment Subtotal (E) Local Roads Kuqa Local Road Qiemo Local Road Qiemo Local Road Subtotal (F) G. Border Road Wugia to K59.0 K59+0 toTorugart Total 30 90 73 166 15.0 45.0 51.1 116.2 1.88 5.62 6.39 13.89 Length (km) 22.50 39.00 28.08 19.12 23.80 20.00 25.20 19.52 29.54 37.00 33.40 296.90 Cost (million) CNY USD 33.97 35.62 30.52 34.79 36.61 38.28 38.81 35.50 32.27 31.44 33.32 381.12 Appendix 9 Procurement Mode PQ ICB ICB ICB ICB ICB ICB ICB ICB ICB ICB ICB Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 7.61 44.38 51.99 NCB NCB No No C. C01 C02 C03 C04 C05 6.63 6.18 5.14 6.11 6.79 30.85 NCB NCB NCB NCB No No No No No D. D01 1.69 1.69 GP No E. E01 E02 1.93 7.12 9.05 NCB No F. NCB NCB NCB No No No 59 51 92.34 78.66 11.54 9.83 511.03 ICB No ICB = international competitive bidding, LCB = local competitive bidding, NCB = national competitive bidding, PQ = prequalification. Exchange rate for CNY and USD 1 USD = 7.92 CNY Source: fact-finding mission estimates. Appendix 9 CONTRACT PACKAGES Equipment for Expressway Maintenance and Laboratory Testing Package Number Description A. Expressway Equipment A01 Multi-functional excavator A02 Wheel Excavator (1 m3) A03 Multifunctional Operation Car A04 Pavement Miller (1 m) A05 Filling and Sealing Machine A06 Crane (25 t) A07 High-altitude Operation Car A08 Loader (3m3) A09 Self Dumping Car (+snow grader) 13t A10 Loading Truck (with crane) 5t A11 Self Dumping Truck (5t) A12 Piling Machine A13 Guardrail Straightener A14 Self-propelled Line Marking Car A15 Moveable Lighter (illuminating > 200m) A16 Moveable Marking Car (3kw) A17 Asphalt Mixture Mixing Machine 4t/h A18 Asphalt Storage Heating Tank 50t A19 Rubber Tyre Roller YL 20 A20 Double Steel Tyre Roller 12 t A21 A22 A23 A24 A25 A26 A27 A28 A29 A30 A31 A32 A33 A34 A35 Roller 3t Road Cleaning Car 4m Pavement Comprehensive Maintenance Car 8t/h Dir Absorption Car 8t/h Obstacles Removing Car 50t Obstacles Removing Car 30t Obstacles Removing Car 5t, Slab type Weighbridge 50t Service Car Service Bus Production Command Car 4-wheel driv Road Inspection Car Bus Nissan Pick-up Truck Bus 25-seats Daily Use Car Wushiling double seat Subtotal (A) B. B01 B02 Laboratory Testing Equipment Retro-reflective coefficient measure meter ZRS Digital thermo marking thickness measure meter ZMM 5000 Road marking reflectivity measure Meter ZRM 6013 Supersonic waive ,metal thickness measure meter DAKOTAMVX Brush plating coat thickness measure meter QuaNix 7500 JG Automatic Deflection measure vehicle 0 – 10mm SCRIM2001 Lateral Force Coefficient Test Vehicle CPMS Digital Display Electronic Resilient Cost (CNY million) Unit Total 0.7 1 2 2 0.55 0.8 0.35 0.35 0.35 0.2 0.09 0.15 0.16 0.25 0.05 0.08 0.7 0.1 0.25 0.5 0.3 0.6 0.45 0.25 1.8 1 0.25 0.2 0.5 0.15 0.3 0.15 0.13 0.17 0.13 2.1 2.0 6.0 4.0 1.7 0.8 0.4 1.8 1.1 0.6 0.5 0.5 0.2 0.3 0.3 0.8 1.4 0.5 0.5 1.0 1.5 1.8 1.4 0.3 1.8 2.0 0.8 0.2 1.0 0.6 0.9 1.1 0.7 0.9 0.3 41.4 Procurement Mode PQ ICB ICB ICB ICB ICB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB GP GP GP GP GP GP GP NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO Quantity 3 2 3 2 3 1 1 5 3 3 5 3 1 1 5 10 2 5 2 2 5 3 3 1 1 2 3 1 2 4 3 7 5 7 2 1 1 1 1 1 1 1 1 0.075 0.075 0.013 0.013 0.17 0.17 0.03 0.03 0.015 0.015 1.74 1.74 1.41 1.41 0.1 NCB NCB NCB NCB NCB NO NO NO B03 B04 B05 NO NCB NCB NCB NO NO NO NO B06 B07 B08 B09 Meter Steel Twist Cable Slacken Tester Subtotal （B） 1 9 0.8 0.8 4.353 NCB NO Total 45.75 ICB = International competitive bidding, NCB = National competitive bidding, GP=Government Procurement PQ = prequalification. Source: ADB Mission Estimates. Appendix 10 PROCUREMENT PLAN (Draft) Civil Works Contract Packages (ADB Financing) No. A. A01 A02 A03 A04 A05 A06 A07 A08 A09 A10 A11 Description Expressway K457+500~K480+000 K480+000~K519+000 K519+000~K547+076 K547+076~K566+200 K566+000~K590+000 K590+000~K610+000 K610+000~K635+200 K635+200~K654+717 K654+717~K684+000 K684+000~K721+000 K721+000~K754+000 Subtotal (A) Local Roads Kuqa Local Road Qiemo Local Road Qiemo Local Road Subtotal (B) Border Roads Length (km) $ (million) Procurement Mode Bidding Procedure ADB Review Advertisement 22.50 39.00 28.08 19.12 23.80 20.00 25.20 15.57 5.40 0.00 0.00 298.90 33.97 35.62 30.52 34.79 36.61 38.28 38.81 35.50 32.27 31.44 33.32 381.12 ICB ICB ICB ICB ICB ICB ICB ICB ICB ICB ICB 1S2E 1S2E 1S2E 1S2E 1S2E 1S2E 1S2E 1S2E 1S2E 1S2E 1S2E Prior Prior Prior Prior Prior Prior Prior Prior Prior Prior Prior 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 20 Dec. 2006 B. B01 B02 B03 C. C01 C02 0.96 5.8 5.47 NCB NCB NCB ICB = international competitive bidding, km=kilometer, Source: ADB mission estimates. Contract Packages for Facilities, Maintenance and Road Safety (Government Financing) Package Description B. Traffic Engineering B01 Toll Plazas Communication, Telephones, Monitor Subtotal (B) C. C01 C02 C03 C04 C05 Service Building Administration and Maintenance Administration, Maintenance, and Toll Station Administration and Maintenance Administration and Maintenance Administration, Maintenance, and Monitoring Subtotal (C) Virescence and Landscape Virescence and Landscape Equipment Road Safety Equipment/Weighbridges, Safety Devices Winter Maintenance Equipment Total $ (million) 7.61 51.99 Procurement Mode NCB 6.63 6.18 5.14 6.11 6.79 30.85 NCB NCB NCB NCB NCB D. D01 E. E01 E02 1.69 5.3 GP NCB NCB 471.88 NCB = local competitive bidding, GP=government Procedure Source: Fact-finding mission estimates 1 International Consulting Services (ADB Financing) Package Description A. International Consulting Services A01 Construction Supervision and Related Services $ (million) 1.06 Mode QCBS ADB Review Prior RFP Issuance QCBS = quality- and cost-based selection, RFP = request for proposal. Source: ADB mission Threshold for Procurement Procurement Method ICB Works NCB Works Shopping Works ICB Goods NCB Goods Shopping Goods Exceptional Methods Threshold ($) Equal or more than 10 million Equal or more than 0.1 million and less than 10 million Less than 0.1 million Equal or more than 1 million Equal or more than 0.1 million and less than 1 million Less than 0.1 million N/A ICB = international competitive bidding, NCB = national competitive bidding. Threshold for Recruitment of International Consulting Services Procurement Method Quality- and Cost-Based Selection Consultants Qualifications Selection Least Cost Selection Threshold ($) Equal or more than 0.2 million Equal or more than 0.1 million and less than 0.2 million Less than 0.1 million 2