Completion Report

Project Number: 40625-013 Loan Number: 2601 December 2020

People’s Republic of China: Lanzhou Sustainable

Urban Transport Project

This document is being disclosed to the public in accordance with ADB's Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – yuan (CNY)

At Appraisal At Project Completion 10 November 2009 15 July 2019

CNY1.00 = $0.1465 $0.1453 $1.00 = CNY6.827 CNY6.881

ABBREVIATIONS ADB – Asian Development Bank ADG – Anning district government ATCS – advanced traffic control system BRT – bus rapid transit CDM – Clean Development Mechanism CO2 – carbon dioxide EIRR – economic internal rate of return EMP – environmental management plan ITDP – Institute for Transport and Development Policy km – kilometer km/h – kilometer per hour LAR – land acquisition and resettlement LMG – Lanzhou municipal government LRT – light rail transit MOT – Ministry of Transport NMT – non-motorized transport O&M – operation and maintenance PMO – project management office PRC – People’s Republic of China TDM – traffic demand management UNFCCC – United Nations Framework Convention on Climate Change

NOTE

In this report, “$” refers to United States dollars.

Vice-President Ahmed M. Saeed, Operations 2 Director General James P. Lynch, East Asia Department (EARD) Director Sujata Gupta, Sustainable Infrastructure Division (EASI), EARD Team leader Anders Pettersson, Principal Portfolio Management Specialist, Portfolio,

Results, Safeguards and Gender Unit, Central and West Asia Department

Team members Czareana M. Dello, Associate Project Analyst, EASI, EARD Gloria P. Gerilla-Teknomo, Senior Transport Sector Officer, EASI, EARD

Ma. Concepcion Jea D. Macrohon, Project Analyst, EASI, EARD Mark Allister U. Robis, Senior Financial Management Officer, Office of

the Director General, EARD Yun Zhou, Senior Environment Specialist, EASI, EARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

MAP v

I. PROJECT DESCRIPTION 1

II. DESIGN AND IMPLEMENTATION 2

A. Project Design and Formulation 2 B. Project Outputs 3 C. Project Costs and Financing 4 D. Disbursements 4 E. Project Schedule 4 F. Implementation Arrangements 5 G. Technical Assistance 5 H. Consultant Recruitment and Procurement 5 I. Safeguards 6 J. Monitoring and Reporting 7

III. EVALUATION OF PERFORMANCE 7

A. Relevance 7 B. Effectiveness 9 C. Efficiency 9 D. Sustainability 10 E. Development Impact 11 F. Performance of the Borrower and the Executing Agency 12 G. Performance of the Asian Development Bank 13 H. Overall Assessment 13

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14

A. Issues and Lessons 14 B. Recommendations 15

APPENDIXES 1. Design and Monitoring Framework 16 2. Project Cost at Appraisal and Actual / Financing Plan at Appraisal and Actual 19 3. Project Cost by Financier at Appraisal and Actual 20 4. Disbursement Of ADB Loan Proceeds 22 5. Chronology of Main Events 23 6. Implementation Schedule 26 7. Organization Structure 28 8. Contract Awards of ADB Loan 29 9. Contract Packages Financed by The Asian Development Bank 30 10. Status of Compliance with Loan Covenants 33 11. Amendment Agreement Relating to The Cerpa Agreement 40 12. Economic Reevaluation 45 13. Financial Reevaluation 50 14. Environmental Impact Analysis 53 15. Land Acquisition and Resettlement Analysis 58

BASIC DATA A. Loan Identification

1. Country People’s Republic of China 2. Loan number and financing source 2601, ordinary capital resources 3. Project title Lanzhou Sustainable Urban Transport

Project 4. Borrower People’s Republic of China 5. Executing agency Lanzhou Municipal Government 6. Amount of loan $150 million 7. Financing modality Project Loan

B. Loan Data

1. Appraisal – Date started – Date completed

6 July 2009 14 July 2009

2. Loan negotiations – Date started – Date completed

21 October 2009 22 October 2009

3. Date of Board approval 11 December 2009 4. Date of loan agreement 30 March 2010 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions

28 June 2010 14 July 2010 0

6. Project completion date – Appraisal – Actual

31 December 2014 31 December 2018

7. Loan closing date – In loan agreement – Actual – Number of extensions

30 June 2015 31 December 2018 3

8. Financial closing date – Actual

15 July 2019

9. Terms of loan – Interest rate – Maturity (number of years) – Grace period (number of years)

LIBOR + 0.6% less credit of 0.4% 25 5

10. Terms of relending (if any) – Interest rate

Not Applicable

– Maturity (number of years) – Grace period (number of years) – Second-step borrower

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11. Disbursements

a. Dates

Initial Disbursement 9 June 2011

Final Disbursement 29 November 2018

Time Interval 91 months

Effective Date 14 July 2010

Actual Closing Date 31 December 2018

Time Interval 103 months

b. Amount ($ million)

Category

Original Allocation

(1)

Increased during

Implementation (2)

Cancelled during

Implementation (3)

Last Revised Allocation (4=1+2–3)

Amount Disbursed

(5)

Undisbursed Balance (6 = 4–5)

01A (i) Works-New Roads (A01-A06)

51.18 0.00 20.65 30.53 29.47 1.06

01A(ii) Works-New Road (A07-A10)a

12.20 4.22 0.00 16.42 16.42 0.00

01C Works–Reconstructed Roads

55.22 0.00 15.78 39.44 39.37 0.07

02A Equipment-BRT Station & Onboard Equipment

11.10 28.41 0.00 39.51 39.50 0.01

02B Equipment-Advanced Traffic Control System

18.18 5.59 0.00 23.77 23.65 0.12

02C Equipment-Environmental Monitoring System

0.74 0.00 0.74 0.00 0.00 0.00

03 Consulting Services

1.00 0.00 0.84 0.16 0.16 0.00

04 Capacity Building

0.38 0.00 0.21 0.17 0.12 0.05

Total 150.00 38.22 38.22 150.00 148.69 1.31 a 01A(ii) was encoded as 01B in the Loan Financial Information System.

C. Project Data

1. Financing plan ($ million)

Cost Appraisal Estimate Actual

Implementation cost Borrower financed 40.52 239.71 ADB financed 150.00 148.68 Other external financing 240.31 0.00 Total implementation cost 430.83 388.39

Interest during construction costs Borrower financed 49.44 28.79 ADB financed 0.00 0.00 Other external financing 0.00 0.00 Total interest during construction cost 49.44 28.79

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2. Cost breakdown by project component ($ million)

Component Appraisal Estimate Actual

A. Base Cost 1. Civil Works Components 151.66 165.55

a. New Roads 96.44 119.58 b. Reconstructed Roads 55.22 45.96

2. Equipment 58.27 64.17 a. Bus Rapid Transit 11.10 39.76 b. Advanced Traffic Control System 18.18 23.65 c. Environmental Monitoring System 0.74 0.76 d. Utility Equipmenta 28.25 0.00

3. Consulting Services for Implementation 13.93 11.68 a. Design, Supervision, Monitoring 12.93 11.42 b. Technical Advisory Services 1.00 0.26

4. Capacity Building 0.50 0.21 5. Taxes and Duties 21.42 5.66 6. Resettlement and Compensation 138.32 139.31 7. Project Administration Cost 0.47 1.81

Subtotal (A) 384.57 388.39 B. Contingencies 46.26 0.00 C. Financing Charges During Implementation 49.44 28.79 Total 480.27 417.18

a Actual cost was included in the Category 1A-new roads component.

3. Project schedule

Item Appraisal Estimate Actual

Civil works contract Date of award 2010 20 Jan 2010 Completion of work 2015 31 Dec 2017 Equipment and supplies First procurement 2011 23 Dec 2011 Last procurement 2014 20 Dec 2014 Completion of equipment installation 2015 Nov 2018 Start of operations 2012 Jun 2017

4. Project performance report ratings

Implementation Period

Ratings

Impact and Outcome Implementation Progress

From 1 July 2010 to 31 December 2010 Satisfactory Satisfactory

Single Project Ratinga

From 1 April 2011 to 30 June 2011 Potential problem

From 1 July 2011 to 30 June 2015 On track

From 1 July 2015 to 30 September 2015 Potential problem

From 1 October 2015 to 30 September 2019 On track a Q1 2011 rating is not available in ADB’s eOperations System.

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D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of

Membersa

Fact-finding 27 Apr–7 May 2009 13 156 a1, b, c, d, e, f, g, h, i, j, k, l

Appraisal 6–14 July 2009 8 72 a1, b, d, h, i, j2, l, m Inception 30 Aug–3 Sep 2010 5 25 a1, g, l2, m, n Loan Review 1 13–15 Sep 2011 4 12 a1, l2 (2), o Loan Review 2 27–29 Nov 2012 4 12 a1, m, p, q Loan Review 3 4–6 Sep 2013 3 9 a2, p, q Midterm Review 25–26 Sep 2014 4 8 a1, n, p, q Loan Review 4 (consultation) 18–19 Oct 2015 2 3 n, o Loan Review 5 9–10 Dec 2015 4 8 a2, n, p, q Loan Review 6 12–13 Oct 2016 3 6 a1, n, q Loan Review 7 17–20 Jul 2017 3 12 n, o, v Loan Review 8 30 May–1 Jun 2018 3 9 n, o, r, Project completion review 8–15 Oct 2019 6 48 o, r, s, t, u, w

a a1 = transport specialist and mission leader; a2 = senior transport specialist and mission leader; b = lead professional (counsel); c = senior social development specialist (resettlement); d = senior transport economist; e = senior financial analysis specialist; f = transport specialist (road); g = transport specialist; h = young professional (transport); i = senior energy and carbon finance expert; j1 = procurement officer; j2 = procurement specialist; k = control officer; l1 = staff consultant; l2 = resettlement specialist (staff consultant); m = clean development mechanism specialist; n = associate project analyst; o = head, project administration unit; p = environment specialist; q = safeguards specialist; r = senior environment specialist; s = project analyst; t = senior financial officer; u = resettlement and social development specialist (staff consultant); v = principal transport specialist; w = translator.

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PROJECT LOCATION

I. PROJECT DESCRIPTION 1. Lanzhou, the capital of Gansu Province, is a regional hub between the eastern and western regions of the People’s Republic of China (PRC). The main city is located on the banks of the Yellow River and contained within a narrow east–west valley with steep terrain at both the north and south that effectively constrains further expansion of the city. At appraisal, the urban area stretched for almost 40 kilometers (km) along the river from west to east but extended only 8 km from north to south and, at its narrowest point, was less than 1 km wide. 2. The city had four distinct development zones. Three—Chengguan, Qilihe, and Xigu—were at the site of the original city on the south bank of the Yellow River and were the centers of business, commerce, and government. The fourth zone, on the north bank of the river at Anning, was a residential area and a center for education, including universities. Economic activity and population were heavily concentrated in the four urban districts, which occupied only 8.5% of Lanzhou’s land area but accounted for 62.9% of its population and 80.2% of its gross regional product. The potential for further growth of the city along the south bank was limited. In Chengguan, in particular, population density had reached 18,000 per square kilometer, bringing considerable congestion and pollution. There is good potential for developing the city in Anning, where 80% of the land is suitable for settlement and the population density was only 3,400/km2.

3. Future urban development will therefore require a second city center to be developed at Anning. To realize this opportunity, the Lanzhou municipal government (LMG) has adopted a strategy of "one river, two centers, seven groups" as the key concept of its urban master plan to optimize land use and the economic and social functions of the city. In support of this plan, the municipal government will relocate its offices from Chengguan district to the new center in Anning. As Anning will become the new political, administrative, economic, and cultural center of the city, there will be a significant increase in the demand for transport to, from, and within Anning.

4. Improved urban mass transport would need to play a critical role in the development of the new city center. Recent rapid increases in passenger vehicle ownership and the rapid decline of non-motorized transport (NMT) had caused congestion and adverse environmental impacts in Lanzhou. A good quality, high-capacity public transport system was needed to support high-density urban development, reduce the land needed for transport, and enable transit-oriented development.

5. To support the development of the new city center, the Asian Development Bank (ADB) has approved on 11 December 2009, a loan to (i) construct and reconstruct 33.8 km of urban roads including bus rapid transit (BRT) facilities and NMT lanes; (ii) install an advanced traffic management system; (iii) install an advanced environmental monitoring system, including air quality sensors; and (iv) conduct capacity building for relevant stakeholders. 6. The impact of the project was sustainable economic growth, effective environmental improvement, and improved quality of urban life in Anning. The outcome was an efficient, safe, and clean urban road transport system. The project was expected to (i) generate certified emission reductions, (ii) increase average bus speeds on the BRT corridor, (iii) increase the share of public transport, (iv) shorten the average travel time, and (v) lower accident rates for vehicles and NMT.

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II. DESIGN AND IMPLEMENTATION A. Project Design and Formulation 7. The Asian Development Bank (ADB) formulated the project1 during the PRC’s Eleventh Five-Year Plan (2006–2010), under which the government prioritized inclusive and balanced regional development, resource optimization, and environmental protection through policy reform, increased investment, and improved infrastructure management.2 These priorities were in line with ADB’s country partnership strategy for the PRC (2008–2010) of inclusive growth through balanced development; environmental sustainability; knowledge transfer; private sector development; and governance.3 8. The project was ADB’s first project to support urban mass transport in the PRC. Policy dialogue on sustainable urban transport helped the LMG to refine its approach to transportation in the Lanzhou City urban master plan,4 notably by incorporating BRT, advanced traffic management, information technology, and an application to the Clean Development Mechanism (CDM) of the Kyoto Protocol.5 The project was fully aligned with ADB and government priorities at appraisal and continues to be aligned at completion. The project was part of ADB’s initiative to support greener transport in the PRC. 9. The project design included several special features to support sustainable urban transport and enhance mobility, health, and economic development opportunities for local residents. These included (i) BRT, which would provide a cost-effective and flexible form of mass transport; (ii) greenhouse gas (GHG) emission reduction and an application to the CDM, which would help mitigate climate change through (a) improved fuel-use efficiency through the use of new and larger buses, (b) mode switching with the availability of an efficient and attractive public transport system, (c) increased load by having a coordinated system for dispatching buses, and (d) increased average speed for buses; (iii) an advanced traffic control system (ATCS), which would introduce advanced technology to replace obsolete signal equipment and significantly expand the geographic coverage of active traffic control on new and reconstructed roads; (iv) a traffic demand management strategy and policy reform, which would address traffic congestion by reducing or optimizing demand for transport and influencing user behavior at various levels; and (v) an NMT development plan, which would provide bicycle routes, pedestrian sidewalks, and crossings. 10. During implementation, the following changes were made to the original scope: (i) the construction of new roads was reduced by 3.8 km because of resettlement difficulties; and (ii) road reconstruction was reduced by a further 0.9 km because of difficulty in relocating three oil pipelines, a sanitorium, and a family dormitory along the original alignment.

1 ADB. 2009. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People’s Republic of China for the Lanzhou Sustainable Urban Transport Project. Manila. 2 Government of the People’s Republic of China. 2005. The Eleventh Five-Year Plan for National Economic and Social

Development of the People’s Republic of China. Beijing. 3 ADB. 2008. People’s Republic of China: Country Strategy and Program Update (2008–2010). Manila. 4 The project contributed to realizing the urban master plan by supporting the development of the urban road network

and the urban mass transport system serving the new city center. 5 The BRT clean development mechanism was successfully registered by United Nations Framework for Convention

on Climate Change Executive Board on 29 October 2012, and the Carbon Transaction Contract was signed by the Lanzhou Public Transport Company and ADB Future Carbon Fund.

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B. Project Outputs 11. Output 1: BRT construction, and construction and reconstruction of urban roads. In total, 17.6 km of new roads were constructed, compared with 21.4 km at appraisal. Two road sections, A04 at length of 800 m and A10 at length of 3,200 m were cancelled due to resettlement issues and 11.5 km of existing roads (as against 12.4 km at appraisal) were reconstructed. In addition, (i) 11.5 km of BRT lanes were constructed, compared with 13 km at appraisal, because of a realignment that was approved by ADB in 2017, and (ii) 19 BRT stations were constructed in the middle of the road sections, compared with 22 stations planned at appraisal. All 9 new roads constructed and 5 reconstructed urban roads, except 1.66 km of the Wanxing North Road, have NMT lanes 2.5–5.0 meters wide between sidewalks and carriageways, providing dedicated access for bicycles. 12. Output 2: Advanced traffic management. Installation of the equipment started in August 2015 and was completed in November 2018. The advanced traffic management component comprised (i) an ATCS (signal control); (ii) a traffic demand management (TDM) strategy and policy reform; and (iii) an NMT development plan. This output replaced obsolete signal equipment and significantly expanded the geographic coverage of active traffic control on new and reconstructed roads. This supports video and other monitoring systems for stoplight violations, traffic lane adherence, license plate identification, speed detection, and variable message signing. The data collected by the ATCS is shared for road maintenance, road and transport planning, and environmental and CDM monitoring. The project incorporated the provision of 27.48 km of NMT lanes and bicycle parking facilities in the new city center. It supported the creation of NMT development plan for Lanzhou, including an NMT development framework and recommendations. The NMT development framework included (i) a financing framework for NMT interventions, (ii) the introduction of transit-oriented development, (iii) an incentive scheme for shopkeepers and employers to support NMT, (iv) engineering normative designs for road networks, and (v) campaigns to promote NMT safety.

13. Output 3: Environmental monitoring system. The contract for the environmental monitoring system was already covered by the central government’s environmental monitoring initiatives led and financed by the Environmental Protection Bureau. In October 2016, ADB financing was cancelled and the allocated amount for this category was reallocated to the ATCS component. The LMG implemented this component using government counterpart funds.

14. Output 4: Capacity building. Starting in August 2010, specialists from the Institute for Transport and Development Policy (ITDP) and Guangzhou Municipal Engineering and Research Institute worked with the Lanzhou Municipal Design Institute in redesigning the BRT roads and stations. Since then, ITDP has been involved in the implementation of the BRT and NMT, and in organizing two study tours in August 2012 and February 2013.6 The trainings were related to project construction and implementation as well as financial procurement management. Several topics on BRT operation and management were presented. The study tours focused on road management, sustainable urban transport planning, parking management, non-motorized traffic, road safety, asset management, road maintenance, and environmental protection and monitoring as well as road safety procedures and NMT systems.

6 Senior officials from the LMG visited (i) New York, Boston, San Francisco, and Seoul, Republic of Korea, and (ii) Rio

de Janeiro and Curitiba, Brazil. Safety improvements for pedestrian and public space, and advanced NMT facilities and BRT were discussed.

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15. The project was implemented as originally designed except for the realignment of the BRT corridor for the final four stations because of persistent land acquisition and resettlement (LAR) issues. There was no major change in scope or implementation arrangements. The design and monitoring framework at appraisal and at completion is in Appendix 1. C. Project Costs and Financing 16. The overall project cost at completion was reduced mainly because of (i) procurement savings from the competitive bidding process, and (ii) reduced financial charges. The project cost at appraisal was estimated at $480.27 million while the actual project cost was $417.18 million, a 13.1% decrease in dollar terms (in CNY terms, the cost decrease was about 12.4%).7 The project costs at appraisal and at completion are in Appendix 2. 17. Originally, ADB planned to finance 27% of the new roads and 100% of the ATCS. However, ADB approved changes in these financing percentages for new roads to 80% and ATCS to 5% in April 2012 to ensure adequate financing of the BRT component. In August 2016, ADB approved the reallocation of loan proceeds from the civil works, environmental monitoring equipment, consulting services, and capacity building components to the ATCS; and increased the financing percentage of the ATCS to its original 100% financing. Further reallocation of savings was made in November 2017 to support the BRT realignment. In October 2018, ADB approved the last reallocation to fully utilize the loan savings.

18. At appraisal, the $150 million ADB loan was to finance 31.2% of the total project cost, Bank of China, 50% and LMG, 18.7%. Financing from the Bank of China was cancelled. At project completion, ADB’s financing represented 35.6% of the total project cost and the counterpart funds at completion were $268.50 million or 64.4%, coming from both LMG and Anning district government (ADG). Also, the environmental monitoring system which was to be financed by ADB at appraisal was financed by LMG at completion due to the national government’s environmental monitoring initiatives. The financing plan at appraisal and actual is also in Appendix 2 and the detailed project cost by financier is in Appendix 3. D. Disbursements 19. Retroactive financing was not used. By loan closure, $148.69 million of the $150.00 million loan was disbursed, with loan savings of $1.31 million cancelled at loan closing and returned to ADB. The LMG processed and prepared the withdrawal applications efficiently in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). The actual disbursements lagged behind the projected disbursements due to the delay in the project. When the resettlement issues were resolved, the disbursements came on track with the project schedule. The overall disbursement was satisfactory. The first disbursement was made on a reimbursement basis in June 2011 and the final disbursement was made in November 2018. The disbursement of loan proceeds is in Appendix 4. E. Project Schedule 20. The project was carried out from July 2010 to December 2018, with completion 4 years later than envisaged. The implementation was delayed due to difficulty in relocating three oil pipelines, a sanitorium, and a family dormitory. These required relocation costs over and above

7 Using the exchange rate of $1 = CNY6.83 (rate in the report and recommendation of the President) to convert the

costs at appraisal in dollars into CNY.

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the estimates, and approvals beyond the capacity of LMG (the executing agency). These resettlement issues contributed to the delay and subsequent realignment of the BRT corridor. 21. The ADB loan closing date was extended three times, closing on 31 December 2018 with financial closing on 15 July 2019. The chronological events are in Appendix 5, and the planned implementation schedule versus actual is in Appendix 6. F. Implementation Arrangements 22. LMG was the executing agency, responsible for the overall implementation of the project. LMG established a project steering committee chaired by the Deputy Mayor of Lanzhou, whose task was to review the project’s implementation, resolve coordination issues, and provide guidance for the timely completion of the project. A project management office (PMO), which acted as the implementing agency, was established and responsible for (i) project management; (ii) the supervision of the procurement of works, goods, and consulting services; (iii) the monitoring of the utilization of the ADB loan and government funding; and (iv) the submission of reports to ADB and the government. The implementation arrangements were adequate in delivering project outputs and achieving the project outcome. The organization structure is in Appendix 7. 23. In December 2014, the implementing responsibility was transferred from LMG to ADG to be able to closely monitor the project as most of the project components are located within Anning.

24. At project completion, the project facilities were transferred to the relevant government entities for operation and management: roads, bridges, and utilities to the Anning and Qilihe district urban infrastructure management service center; the ATCS to the Lanzhou Municipal Traffic Police Brigade; BRT stations and ticketing machines to the Lanzhou Public Transport Group 3rd Bus Company; platforms of the BRT stations and BRT lanes to the Anning district urban infrastructure management service center; street lights to the Lanzhou street lighting management section; and the advanced environmental monitoring system to the Anning district environmental protection bureau.

G. Technical Assistance 25. ADB financed a project preparatory technical assistance (TA) of $950,000 equivalent on a grant basis from ADB’s TA Special Fund to help the government assess the project’s technical, environmental, financial, economic, social, and institutional feasibility.8 The TA helped the government strengthen institutional reforms in the road sector. It also helped strengthen the soundness of the project design, both from a technical feasibility and a socioeconomic perspective, through dialogue with affected communities. The TA was approved in November 2007 and was completed in December 2012. The TA produced the required outcome, and the subsequent loan was based on the TA findings and recommendations. H. Consultant Recruitment and Procurement 26. The ADB loan financed an international consulting firm to design and plan improvements to the BRT operations, the infrastructure corridor, modal integration, and station area development. The international consultants were selected and engaged using the single source selection method, in accordance with ADB’s Guidelines on the Use of Consultants. The firm

8 ADB. 2007. Lanzhou Sustainable Urban Transport Project. Manila.

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provided services covering (i) the TDM strategy and policy reform, (ii) BRT operation and management planning, and (iii) the NMT development plan. Due to the change in the alignment of the BRT section, the project consulting services were extended till physical loan closing. 27. Consultants engaged under the project provided additional technical due diligence, strengthened compliance with safeguard policies, and supported the implementation of traffic demand management measures. In addition, the government financed domestic consultant contracts for resettlement and the environment to undertake the external monitoring of the environmental and social impacts. An international supervision consultant was also engaged for project management. These consultants were recruited in accordance with the PRC national procedures acceptable to ADB.

28. All ADB-financed procurement followed ADB’s Procurement Guidelines. ADB financed 14 civil works contracts (five contracts using international competitive bidding and the remaining nine using national competitive bidding). Two equipment contracts were procured using international competitive bidding. The review of the bidding documents for the first batch of ADB-financed civil works were under advance contracting and the first contracts were awarded in January 2010. All contracts were awarded by 2014. Two proposed civil works contract packages at appraisal were cancelled due to the resettlement issues and BRT realignment. 4 consultant packages at appraisal was combined into one package during implementation as one consulting firm can perform the requirements of the different packages. One contract for advanced environmental monitoring was cancelled from ADB financing and was fully funded by domestic financing and used domestic procurement procedures. The contract awards are in Appendix 8 and the contracts financed by ADB are in Appendix 9. I. Safeguards 29. The project was classified as environment and involuntary resettlement category A, and category C for indigenous peoples. 30. Environment. A summary environmental impact assessment including an environmental management plan (EMP) was prepared in accordance with ADB’s Environment Policy (2002) and Environmental Assessment Guidelines (2003) and disclosed on the ADB website in May 2009. Because of resettlement issues, the 3.9 km BRT corridor was realigned to 2.8 km, consisting of four stations including the terminal station. Accordingly, an environmental due diligence was conducted for the realignment, and the report was submitted and approved by ADB in December 2017. During project implementation, the PMO established an environmental management team and engaged qualified environment specialists to conduct environmental management activities for the effective implementation of the EMP. Detailed and site-specific plans to mitigate the potential impacts on water, soil, air quality, and acoustic environment were developed and implemented effectively, as were conservation plans. A range of good engineering practices, incorporating environmental protection measures, were also adopted. No unexpected adverse environmental impacts other than those predicted in the original EMP were identified. No environmental safeguard-related complaints were received during project implementation. An advanced environmental monitoring system with 54 air quality monitoring sensors, covering the project area in Anning district, has been established using counterpart funds, and this is providing real-time air quality data. Nine environmental monitoring reports have been prepared and disclosed on the ADB website. Overall implementation of the EMP appears satisfactory based on the monitoring results. At the time of the project completion review mission, there were no pending environmental safeguard-related noncompliance issues.

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31. Resettlement. The project was classified as involuntary resettlement category A. At appraisal, resettlement impacts were identified, and a resettlement plan was prepared in accordance with the PRC laws and regulations and ADB’s Involuntary Resettlement Policy (1995). The resettlement plan was approved by ADB and disclosed to the affected persons and on the ADB website in June 2009. Although the plan was not updated based on the final design and detailed measurement survey, the LAR changes were reflected in the semiannual resettlement monitoring reports as well as internal progress reports.

32. The project resettlement plan at appraisal was not able to foresee the difficulties encountered by the project during implementation. Two road sections were cancelled from ADB’s scope of project financing, during implementation, to avoid the relocation of residents of the whole village for one road section due to oil pipelines and relocation of a sanitorium and a family dormitory in another road section. The relocation costs for these exceeded the original estimate, there was lack of counterpart funds for relocation of non-residential entities, and relocation of pipelines required approval beyond the authority of the EA. J. Monitoring and Reporting 33. Of the 40 specific loan covenants, 39 were complied with and 1 is no longer relevant as the development of the Light Rail Transit (LRT) line 2 was cancelled in May 2018 by the decision of the National Development and Reform Commission. The status of compliance with the covenants in the loan and project agreements is in Appendix 10. 34. Annual audited project financial statements were submitted on time and the auditor raised no significant issues, while semi-annual safeguards monitoring reports and semi-annual project progress reports for the loan encountered submission delays. Audit reports were disclosed in the ADB website in compliance with the agreements.

III. EVALUATION OF PERFORMANCE A. Relevance 35. The project was fully aligned with the priorities of ADB and the government both at appraisal and at completion. LMG has adopted a strategy of "one river, two centers, seven groups" as the key concept of its urban master plan to optimize land use and the economic and social functions of the city. The project contributed to realizing this plan by supporting the development of the urban road network and mass transport system in the new city center of Anning. It has contributed to sustainable economic growth, effective environmental improvement, and improved quality of urban life in Anning district, while providing an efficient, safe, and clean urban transport system to the Anning district residents. 36. Despite a 4-year delay in implementation, the project has delivered its intended impact and outcome. The project is aligned with the ADB-PRC country partnership strategy (2016-2020), which promotes inclusive growth and environmental sustainability by helping to develop a more efficient, safe, green, and sustainable transport system.9 The project design integrated NMT facilities with the BRT system and included innovative features such as advanced on-board equipment and traffic control systems for efficient bus and traffic operations. With these features and the operation of the BRT which increased public transport ridership, fuel consumption in

9 ADB. 2016. Transforming Partnership: People’s Republic of China and Asian Development Bank (2016–2020).

Manila.

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transport per unit of GDP in Gansu province decreased by 27% and carbon emissions per passenger kilometer reduced by 59% from 2010. These support the effective environmental improvement resulting from the operation of the BRT.

37. BRT stations and onboard equipment. The BRT was designed after a careful study of demand and the infrastructure and operational requirements. It was constructed mainly in the new city center in Anning, although the BRT corridor crosses the Yellow River and connects with Lanzhou city center. To improve the quality of service, the BRT includes an intelligent bus stop system at BRT stations that uses global positioning system units on buses and an advanced information system on next bus arrival. The design of BRT stations allows for future increases in capacity, and space for bicycle parking is provided at all BRT stations to support and integrate NMT. 38. Advanced traffic control system. The project introduces advanced technology to replace obsolete signal equipment and significantly expand the geographic coverage of active traffic control on new and reconstructed roads. This supports surveillance for traffic flow and safety and monitoring. The data collected by the ATCS is shared with other departments in charge of road maintenance, road and transport planning, and environmental and CDM monitoring. 39. Advanced environmental monitoring system. The advanced environmental monitoring system consists of monitoring stations and a data-processing center that monitors such air pollutants as nitrogen dioxide, sulfur dioxide, and suspended particulate matter. The cost of the system was covered by the central government’s environmental monitoring initiatives, which are led and financed by the Environmental Protection Bureau. 40. Utility equipment. Several services in the utility corridors, such as communications hardware and power distribution, provide critical operational support to the intelligent transport system. 41. Full-scale public involvement program. The design and construction of the new BRT system involved the optimization of the bus routes, bus stop adjustments, new bus routes, and old bus route changes. To adjust to the new BRT system, bus riders required assistance and a detailed introduction to the system. Meanwhile, car drivers had to get familiar with the roadways with BRT buses and adjust their driving habits to fit the particular roadway setup and signal system designed for the BRT. One of the objectives of the BRT system was to attract more people to use it. A full-scale public involvement program was therefore implemented during project construction and the BRT bus trial operation period. This program included media coverage, public hearing and education programs, and a webpage to provide detailed information on BRT design, construction, operation, and how to use it. In addition, many volunteers helped BRT riders, especially during the early stage of the BRT operation. The public involvement program was a key element to ensure the successful implementation of the project. 42. Because of the project’s successful outcome, the Ministry of Transport (MOT) prepared a Lanzhou Public Transport Metropolis City Interim Evaluation in November 2017. In this plan, MOT recommended that BRT Line 1 (the project BRT) be expanded to the west in Anning district and four new BRT lines (126 km) in the Greater Lanzhou area be opened in the coming years with a target of 65% as the BRT mode share.10 The project is rated relevant, both at appraisal and at completion.

10 Lanzhou Public Transport Metropolis City Final Evaluation, Ministry of Transport, November 2017.

9

B. Effectiveness 43. The successful implementation of the BRT system in Lanzhou and the construction of urban roads have provided an efficient, safe, and clean urban transport system. The project was able to generate 9,176 tons of certified CO2 emission reductions for April–October 2014, higher than the target of approximately 5,000 Certified Emission Reductions (CERs) to be generated annually under the CDM after 2014. The CO2 savings are expected to increase continuously as the ridership of the BRT grows during the evaluation period. A copy of the Amendment Agreement relating to the CER purchase agreement between ADB and the Lanzhou Public Traffic Group, which was signed on 20 December 2019, is in Appendix 11. 44. The implementation of the BRT system has improved the average bus speed on the BRT corridor from 18 kilometers per hour (km/h) in 2010 to 25 km/h in 2015 but declined to 21 km/h by 2019, which is above the average for BRT systems in the PRC.11 Because of the travel demand measures implemented in the city together with the BRT system and road improvements, the average travel time in the Anning district project area decreased from 50 minutes in 2010 to 24 minutes in 2019, which meets the target of 25 minutes. Moreover, the share of public transport in the Anning district project area increased by 40% from 2010-2018, well above the target of a 15% increase by 2019.

45. Because of the increased shift to public transport, the vehicle fatality rates reported per 10,000 vehicles in Lanzhou decreased from 6.53 in 2010 to 1.44 in 2018, down by 78%, which is much higher than the 15% improvement target. The project is, therefore, rated effective in achieving its intended outcome and outputs. C. Efficiency 46. The project was efficient in achieving its intended outcome and outputs. Despite significant challenges in LAR, the 4-year delay in the BRT project output, and the loan being extended three times, the economic reevaluation indicates that the economic internal rate of return (EIRR) at completion is 16.48%, which is greater than the 12% benchmark used at the time of appraisal but slightly less than the estimate of 17.02% at appraisal. Despite the delays in project implementation, the project delivered the envisaged project outcome. 47. Investment Efficiency. Traffic counts were conducted on the project roads in 2019 and used in the economic reevaluation. Traffic accident statistics and bus operation surveys were also used in the reevaluation. The economic reevaluation compared the “without-project” and “with-project” scenarios. The costs included capital costs for physical networks and BRT works, LAR, project implementation environmental control and monitoring, detailed engineering design, and implementation supervision. Annualized recurring costs for road maintenance, environmental monitoring, and the opportunity cost of land were included in the reevaluation. The quantified network benefits included vehicle operating cost savings, generated traffic benefits, time saving benefits, avoided accident cost savings, and CO2 benefits. The EIRR under the most likely traffic growth scenario is 16.48% with a net present value of CNY716.14 million using a discount rate of 12%. Sensitivity tests were performed to examine the effect of likely cost overruns, likely benefit reductions, and combinations of these. The test results indicate that project economic viability is robust. Since the project is more sensitive to changes in benefits than costs, a further scenario analysis was conducted to test all the different benefit components when the growth rate of BRT ridership and traffic volume changes. In the extreme case, when there is no growth in traffic

11 BRT Impact Analysis Survey, ITDP, September 2019.

10

volume and BRT ridership, the calculated EIRR is 12.42%, still greater than 12%. Moreover, the review of benefit distribution among different income groups shows that public transport users, pedestrians, and cyclists will be the prime beneficiaries of the project. The economic reevaluation is in Appendix 12. 48. Efficiency of process. The organizational set-up management and processes of LMG, ADG, and the PMO were adequate and met the project’s requirements. The project has been effectively implemented. As of project completion, all contracts have been completed within the construction schedule, and all contracts had no major cost overruns. There are almost no problems in the construction, installation, and commissioning of the project facilities. The project establishment, management, and approval process of LMG and the IAs responded to the project requirements in a timely manner. The counterpart funds were sufficient and timely. ADB's internal processing and support during project implementation was effective and satisfactory. The organization and management of EA and IAs was effective and timely. The BRT facility was opened to the public on schedule. D. Sustainability 49. The project is rated likely sustainable. The BRT and other physical assets have been operated well by the relevant authorities of LMG and ADG. Future funding for the required operation and maintenance (O&M) and the subsidy to cover the operating gaps, due to the regulated bus fare of CNY1, is not expected to be a problem because adequate fiscal budget is being allocated annually. Through the institutional capacity building component and the TA project, LMG, ADG, PMO, and the 3rd Bus Company have received sufficient training to enable them to manage the O&M of project facilities. Beneficiary satisfaction among the resettlement community and BRT ridership was high, as expressed in consultations with affected people during project implementation. High beneficiary satisfaction provides positive support for sustainability. 50. Financial reevaluation. A financial reevaluation of the project was conducted to determine financial sustainability, including assessing the fiscal capacity of ADG and LMG after project completion. The financial reevaluation was conducted in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects12 and Financial Due Diligence – A Methodology Note.13 The reevaluation, which was based on information pertaining to ADG, LMG, and 3rd Bus Company, considered project asset transfers, actual fiscal data, bus fares and BRT operations, subsidies and transfers, and ADB loan debt servicing.14

51. The project, which does not have a revenue-generating component, was originally implemented by LMG, as the executing agency. In December 2014, it was transferred to ADG, the location where the project is situated, for closer and more hands-on implementation. The financial analysis therefore focused on assessing the financial impact and management of ADG and LMG. Fiscal impact and sustainability analyses were carried out by comparing the financing sources with the annual funds required for debt servicing during O&M. ADG is responsible for loan repayments, while O&M of the completed assets is the responsibility of the institutions to which the assets were transferred to, i.e. Lanzhou Public Transport Group 3rd Bus Company for BRT assets, Anning Environmental Bureau for streetlights and other road assets. Since budget transfers are coming from LMG, the overall O&M assessment is based on its financial status.

12 ADB. 2005. Financial Management and Analysis of Projects. Manila. 13 ADB. 2009. Financial Due Diligence: A Methodology Note. Manila. 14 The 3rd Bus Company is a subsidiary of Lanzhou Public Transport Group, which is wholly owned by LMG.

11

52. The financial reevaluation indicates the long-term sustainability of the project assets covered by the different stakeholders. These institutions have in-house capacity to operate and maintain the project assets effectively and efficiently. Hence, all the outputs are expected to be used optimally throughout the life of the assets. The project is also expected to remain financially sustainable as the reevaluation concluded that ADG has the financial capacity to service the debt and repay the ADB loan, while LMG has the fiscal stability to continuously provide the required subsidy and O&M of the project’s associated facilities. 53. Overall, the financial reevaluation found that the project is sustainable as it showed that the fiscal budget of ADG could service the debt repayments, and LMG could also provide the required subsidy and O&M budget, assuming that the projected economic outputs are maintained. The financial reevaluation is in Appendix 13. E. Development Impact 54. Socioeconomic impact. The project has made significant contributions to improved living conditions, environmental quality, and sustainable economic growth. The improved connectivity has provided better access to markets, employment opportunities, schools, hospitals, and social services. In addition, about CNY100 million has been invested in greening and landscaping, including eight public spaces. The BRT has contributed to a more vibrant economy in the city. The municipal government saw the increasing number of commuters, bikers, and pedestrians as an opportunity to stimulate business. Initial hesitation on the BRT was transformed into all-out support, as evidenced by the underground passageways and shopping malls developed along the BRT corridor. In addition, the BRT spurred greater local development, as new mixed-use buildings were built along the route. 55. Environmental impact. Air quality has improved in Anning since the completion of the project. Travelling on dedicated lanes reduces stop-and-go in congested traffic, allowing the buses to travel at faster and more constant speeds, resulting in less carbon emissions per vehicle per kilometer travelled, and reduced traffic noise because buses are travelling more smoothly along dedicated lanes in the center of the carriageway, instead of the in-and-out, stop-and-go conditions. Motor vehicles can travel at higher speeds on the project roads than on other roads. This also benefits the environment as the CO2 emission factor for both gasoline and diesel motor vehicles decreases from approximately 500 mg CO2 per mile to approximately 250 mg CO2 per mile when vehicle speed increases from 25 mph to 75 mph. The introduction of compressed natural gas buses also contributes to the reduced emissions of hydrocarbons, carbon monoxide, and nitrogen oxides. The project provided substantial climate change mitigation benefits with an annual CO2 emission reduction of 11,518 tons. The project also took care to preserve trees during construction. It was initially assessed that the BRT corridor could affect 280 trees along Gunhuang Road in Qilihe. Instead of cutting them down, the project integrated them into the corridor. They now line the separation belts dividing motorized from non-motorized traffic in Qilihe. The detailed environmental impact analysis is in Appendix 14. 56. Project operation impact. The project consists of 9 new roads and 5 reconstructed roads. All the roads have been completed and opened to traffic. They are classified as either main or secondary roads. The average speed on the main road is 50 km/h, and the average speed on the secondary roads is 40 km/h.15

15 Loan 2601-PRC: Quarterly Progress Report, January 2019.

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57. As of December 2018, the project had procured 70 CNG BRT buses, and installed an ATCS and an environment (air quality) monitoring system. During 2014–2018, the annual average BRT public transport capacity was 45.7 million passengers and the distance travelled was 4.2 million km.16

58. Lanzhou BRT is one of the most successful and effective BRT lines in the PRC. It won the Asia Pacific Sustainable Transport Award in 2014. After 7 years of operation, public satisfaction has exceeded 80%.17 The BRT system (Phase 1) was inaugurated in December 2012, and Phase 2 in December 2019. The BRT travel speed at rush hour has increased from 18 km/h before construction of the BRT lane to 21 km/h.

59. The urban traffic efficiency of Lanzhou City has greatly improved. According to the BRT Impact Analysis Survey conducted in September 2019, 10.3% of the BRT passengers changed transport mode from private cars to the BRT after the roads were completed and opened to traffic. Bike usage at stations also generally increased. In addition, 32% more pedestrians and 30% more cyclists said that they feel safer walking and biking along Anning Road after the BRT became operational.

60. In summary, the project has achieved its impact and outcome goals of promoting more efficient transport, making growth more inclusive, and improving environmental sustainability.

61. Land acquisition and resettlement impact. The earliest LAR started in 2010 and all the LARs were completed by 2018. All affected persons were compensated and resettled according to the resettlement plan. Furthermore, all the compensation standards implemented were equal to or higher than those in the plan. 62. As of 30 April 2019, according to the annual audit reports approved by the Gansu Provincial Audit Office, the resettlement cost was CNY958.6 million ($139.32 million equivalent),18 and 100% financed by LMG from government funds. All LAR compensation was comprehensive and was allocated to the affected households in a timely manner.

63. A grievance redress mechanism was set up and was publicized among affected persons. The project’s LAR arrangements complied fully with the resettlement plan.19 The gradually rising income levels of the affected households and improved housing quality and living environment of those affected by house demolition indicate that the affected persons are better off than they were before the project. No complaints, grievances, or other concerns were noted except some disputes arising from unclear communication. The detailed LAR and social impact analysis are discussed in Appendix 15. The development impact is rated satisfactory. F. Performance of the Borrower and the Executing Agency 64. The performance of the borrower (the Ministry of Finance) and the executing agencies (LMG and ADG) is rated satisfactory. Project management during the preparation and

16 Bus Rapid Transit Impact Analysis Survey, Institute for Transport and Development Policy, September 2019. 17 Loan 2601-PRC: Quarterly Progress Report, January 2019. 18 Exchange rate used: $1 = CNY6.8808 at completion date of 15 July 2019. 19 This conclusion is based on the review of documents, including the project completion report, external monitoring

reports, project completion review mission site visits; discussions with the PMO, subdistrict offices (Anningpu, Liujiapu, Kongjia’ai, Yintanlu), and related agencies; and interviews with the stakeholders during project implementation.

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implementation phases was effective. LMG and ADG followed ADB’s policies and procedures and implemented the project effectively. 65. Despite some delays, given the LAR issues, the project was implemented in accordance with the arrangements envisaged at appraisal. A systematic project management system was put in place to ensure the effective use of funds. Domestic funds were mobilized on time, withdrawal applications were submitted in a timely manner, and contractors were paid on time.

66. Counterpart financing was occasionally problematic after the implementing agency responsibility was transferred from Lanzhou city government to Anning district government in 2014 and was directly related to the much higher than expected LAR costs. Once agreement on LAR compensation had been reached, this was paid on time and to the satisfaction of the affected people. Although there were some minor disputes regarding land acquisition and house area, they were all resolved at the village or township level in a timely manner.

67. After construction, the semiannual progress reports were not always submitted on time and the quality of some reports was below standard. However, through close communication, ADB was able to obtain all the required information. Although LMG and ADG had strong technical capacity, their social safeguards consciousness could be further improved. Overall, LMG and ADG managed the project satisfactorily. G. Performance of the Asian Development Bank 68. ADB’s performance is rated satisfactory. The project was administered and supervised from ADB headquarters. During implementation, ADB fielded missions once a year, was in frequent communication with LMG and ADG, and helped identify potential problems and resolve issues. During the midterm review mission in September 2014 and throughout implementation, ADB provided useful guidance on environment and resettlement monitoring and reporting, procurement, and disbursement issues. ADB conducted 11 review missions during the implementation of the project from 2010 to 2019. ADB’s timely approval of bidding documents, bid evaluation reports, loan reallocation requests, and extensions of the completion date contributed to the smooth and successful implementation of the project. Withdrawal applications were processed efficiently, and loan funds were disbursed on time. LMG and ADG were satisfied with ADB’s performance. H. Overall Assessment 69. Overall, the project is rated successful. The project formulation and design were relevant to both the PRC government and ADB’s development strategies. The main infrastructure outputs were delivered effectively; the project outcome was achieved; and the roads, BRT, and advanced traffic management system contributed toward improved public transportation. Substantial greening and landscaping as well as NMT enhancements have been carried out, thereby improving livability for Anning district citizens. The success of the long-term impact of the project including CO2 emission reduction is already being seen and is likely to be achieved. The implementation arrangements were effective, environmental mitigation measures were implemented effectively, and the LAR was implemented to the satisfaction of the affected persons. The project facilities are likely to be effectively operated and adequately maintained, and therefore will be sustainable. The project effectively supported socioeconomic growth and the rapidly growing Anning district (the project area) through significant improvements to the road network and public transport system, and the introduction of an intelligent transport system, advanced traffic management, and environmental monitoring systems.

14

Overall Ratings

Criteria Rating

Relevance Relevant Effectiveness Effective Efficiency Efficient Sustainability Likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory

ADB = Asian Development Bank. Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS A. Issues and Lessons 70. BRT demonstration project. The project was the first ADB-financed BRT project in the PRC, and the many lessons learned have been successfully applied in the design of subsequent ADB-funded BRT projects such as Loan 3014-PRC: Hubei-Yichang Sustainable Urban Transport Project and Loan 3216-PRC: Jiangxi Ji’an Sustainable Urban Transport Project. The project also pioneered NMT improvement in the overall urban development plan of Anning district and was the first, and to date only, ADB transport project to apply for the CDM. 71. CDM continuation for Lanzhou Urban Transport. The project applied to and was registered under the CDM, with the CER purchase agreement being signed in 2012. The monitoring and evaluation of CERs worked well in 2013 but was unfortunately hampered after the implementing agency’s responsibility was transferred from Lanzhou City Government to Anning District Government in 2014. Coordination between the Lanzhou Bus Company and the Anning District Government could have been better with the benefits outlined in the CER purchase agreement unclear to the new implementing agency. The monitoring and evaluation of CERs was therefore discontinued, and the finalization of the CER purchase agreement with payments to the Lanzhou Bus Company for the CERs confirmed from 2013 could only take place in 2019 and early 2020. The new management in the Lanzhou Bus Company is very keen to continue to benefit from the CERs and sign a new CER purchase agreement for their new BRT corridors; ADB is looking into ways to facilitate this process. 72. Synergy benefits between urban transport subprojects. Better coordination between subprojects should be ensured to maximize synergy benefits. For example, the Liujiabao Urban Complex and the associated underground business street could have been pursued earlier, so that the income generated could have been used as construction funding for other subprojects.

73. The NMT benefits of the project have been significant and contributed to a greener, more livable city, and an efficient urban transport system in Lanzhou. Data collection for pedestrian and bicycle crashes and fatalities should be strengthened. 74. Similarly, impact and outcome indicators are supposed to have the current data for 2020, but as of end-August, the data is still unavailable. The complete set of indicators for 2020 could be collected in a year’s time to enable better evaluation of project impacts and outcomes.

15

B. Recommendations 75. Project Readiness. In the project preparatory phase, geological exploration, urban underground pipeline exploration, should be carefully carried out to avoid the issues that may be encountered during implementation. 76. Monitoring of data collection system during project implementation. To assess the effectiveness and efficiency of ADB project, the relevant economic, financial, social, and environmental data and information will need to be collected by PMO. Such a data and information collection system have to be established by PMO at the beginning of project implementation, but the system operations need to be improved since some required data and information were not timely provided. As a lesson, it is recommended that the data collection system should be periodically reviewed during the project implementation process to ensure the quality and completeness of collected data and information, and avoid the required key data and information missing. 77. Land acquisition and resettlement. The project was eventually able to achieve its intended impact, outcome, and outputs, but the project design was overly optimistic regarding the timeframe for LAR. Future projects should (i) be designed in a way that minimizes the need for LAR and its impacts, (ii) identify all non-residential entities at project design, and (iii) ensure that the executing and implementing agencies have the capacity to undertake and acquire appropriate approvals at different levels of government. Implementation-ready RPs should be acceptable to ADB by loan approval based on detailed/final design completed prior to Board circulation.

78. Timing of the project performance evaluation report. The project performance evaluation report may be prepared in three years’ time.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and Indicators

At Appraisal At Completion

Target/Indicators Data*

Impact Sustainable economic growth, effective environmental improvement, and improved quality of urban life in Anning will be achieved.

Fuel consumption by transport per unit of GDP decreased by 20% from 2010 to 2020

Achieved. 2010: transport and postal services sector’s energy consumption 4.6619 million tsce/1,573,100 million CNY GDP (Gansu province, no data available for Anning)

2017: 6.1322 million tsce/2,849,700 million CNY GDP, decreased by 27% vs 2010 baseline level (Gansu province, no data available for Anning)

CO2 emissions per passenger-km in Anning reduced by 20% from 2010 to 2020

Achieved. CO2 emissions per pass-km reduced by 59% from 2010 (6.16 tCO2e/pass-km) to 2019 (2.51 tCO2e/pass-km) (in Lanzhou)

Emissions of major pollutants per vehicle-km in Anning reduced by 20% from 2010 to 2020

Partly achieved

SOx pollutants reduced by 68% from 2010 to 2019 in Lanzhou

NOx pollutants increased by 4% from 2010 to 2019 in Lanzhou

Outcome An efficient, safe and clean urban transport system will be provided

Approximately 5,000 CERs generated annually with CDM after 2014

Achieved. The CERs generated annually with CDM: 2014: 9,176 tons certified emissions reduction for a half-year period

Average bus speed on BRT corridor increased from 18 km/h in 2010 to 25 km/h by 2015

Achieved. Average bus speed on BRT corridor: 2010: 18 km/h 2015: 25 km/h

Share of public transport in project area increased by 7% from 2010 to 2015 and by 15% by 2020

Achieved. Share of public transport in Lanzhou 2010: 23% 2015: 28% increased by 21.7% from 2010-2015 2018: 32.3% increased by 40.34% from 2010-2018 (no data available for 2020)

Shortened average travel time for a distance of 10 km in project area from 50 minutes in the business-as-usual scenario to 25 minutes by 2015

Achieved. The average travel time for a distance of 10 km in project area: 2010: 50 minutes 2015: 24 minutes

Appendix 1 17

Design Summary

Performance Targets and Indicators

At Appraisal At Completion

Target/Indicators Data*

Accident rates in the project area decreased by 15% from 2010 to 2020

Achieved. Fatalities per 10,000 vehicles in Lanzhou decreased by 83% from 2010 (6.53) to 2019 (1.12). (no data available for 2020)

NMT accident rate decreased by 20% from 2010 to 2020

Achieved. NMT Fatalities in Lanzhou decreased by 91% from 2007 (211) to 2019 (19); (no data available for 2020)

Outputs 1. BRT and NMT network

development will be constructed

13.0 km of BRT lanes and 21.4 km of new roads constructed, and 12.4 km of the existing roads reconstructed by 2014

Achieved. 11.505 km of BRT lanes, 17.629 km of new roads have been constructed, and 11.505 km of the existing roads have been reconstructed (note: new roads – 3.771 km reduced (A04 and A10).

33.8 km of NMT lanes constructed by 2014 Achieved. 27.479 km of NMT lanes have been constructed.

22 intelligent bus stops for the BRT with advance vehicle location and advanced transport information systems built by 2012

Achieved.19 intelligent bus stops for the BRT with advance vehicle location and advanced transport information systems have been built. Due to realignment, number of bus stops have been reduced.

BRT operation and management planning developed by 2011

Achieved. The BRT operation and management planning has been developed and implemented by the Lanzhou Public Transport Company (LPTC) since end 2012. LPTC has trained the BRT drivers, its operation staff for platform management and the control center.

2. Advanced traffic management Traffic control system with advanced technology, such as monitoring systems for traffic rules and variable message signing

Achieved. Traffic control system with advanced technology, such as monitoring systems for traffic rules and variable message signing has been procured, installed and applied in practice for phase 1 (with 15 stops and commissioned at end 2012) and phase 2 (with 4 stops and completed in June 2019).

LMG traffic management system improved by 2013 Achieved. LMG traffic management system for signal control, parking management has gradually improved through the implementation stage during 2010-2019.

Synchronized urban transport strategy, policy, and planning with the Lanzhou master plan: (i) TDM strategy and policy reform developed by 2011, and (ii) NMT strategy in Lanzhou developed in 2012

Achieved. Synchronized urban transport strategy, policy, and planning with the Lanzhou master plan: (i) TDM strategy and policy reform developed by 2011, and (ii) NMT strategy in Lanzhou was developed and implemented through the implementation stage during 2010-2019.

18 Appendix 1

Design Summary

Performance Targets and Indicators

At Appraisal At Completion

Target/Indicators Data*

3. Environmental monitoring system 13 environmental monitoring sensors for air quality data installed and a monitoring center built by 2014

Achieved. 553 city-wide environmental monitoring sensors for air quality data were installed and a monitoring center was built fully under the Central Government’s environmental monitoring initiatives from 2014-2017.

4. Institutional management capacity will be strengthened

300 staff trained and capacity for BRT operation and management improved by 2012 (currently no staff members have knowledge in this regard) The following are key indicators of the training: (i) On-time bus operation within 5 minutes’ delay, (ii) 80% lower accident rate compared with

conventional bus operation in Lanzhou, and (iii) Queuing time at ticket windows 2 minutes or

shorter

Achieved. 217 staff trainings were conducted and more than 2,000 staff (30% female) have been trained and capacities for BRT operation and management improved through the implementation stage during 2010-2019. Bus arrivals and departures were on time at stations with a delay of less than 5 minutes. Accident rates were 80% lower than conventional bus operation and queuing time at ticket windows are less than 2 minutes.

BRT = bus rapid transit, CDM = clean development mechanism, CER = certified emission reduction, CNY = Chinese yuan, CO2 = carbon dioxide, GDP = gross domestic product, km/h = kilometer per hour, NMT = non-motorized transport, TDM = traffic demand management, tsce = ton standard coal equivalent. Source: Asian Development Bank. * No data available for 2020

Appendix 2 19

PROJECT COST AT APPRAISAL AND ACTUAL / FINANCING PLAN AT APPRAISAL AND ACTUAL

Table A2.1: Project Cost at Appraisal and Actual

($ million)

Item

At Appraisal At Completion

CNY $ ($1=CNY6.83)a

CNY $ ($1=CNY6.88)b

A. Base Costs 1. Civil Works Components 1,036.52 151.66 1,138.98 165.55

a. New Roads 659.12 96.44 822.71 119.58 b. Reconstructed Roadsc 377.40 55.22 316.20 45.96

2. Equipment 398.24 58.27 441.49 64.17 a. Bus Rapid Transit 75.86 11.10 273.55 39.76 b. Advanced Traffic Control

System 124.25 18.18 162.71 23.65

c. Environment Monitoring System

5.06 0.74 5.23 0.76

d. Utility Equipmentd 193.07 28.25 0.00 0.00 3. Consulting Services for

Implementation 95.20 13.93 80.36 11.68

a. Design, Supervision, Monitoring

88.37 12.93 78.57 11.42

b. Technical Advisory Services

6.83 1.00 1.10 0.26

4. Capacity Building 3.42 0.50 1.44 0.21 5. Taxes and Duties 146.39 21.42 38.94 5.66

6. Resettlement and Compensation

945.35 138.32 958.45 139.31

7. Project Administration Cost 3.21 0.47 12.45 1.81 Subtotal (A) 2,628,34 384.57 2,672.12 388.39

B. Contingencies 1. Physical Contingencies 237.98 34.83 0.00 0.00 2. Price Contingencies 78.19 11.43 0.00 0.00

Subtotal (B) 316.16 46.26 0.00 0.00 C. Financing Charges During

Implementation 337.90 49.44 198.08 28.79

Total (A+B+C) 3,282.41 480.27 2,870.20 417.18 a At appraisal in RRP, $1 = CNY6.83. b At financial completion dated 15 July 2019, $1 = CNY6.88 c At completion, included costs for underground passage, utility tunnel, and overbridge. d Actual cost was included in the Category 1A- new roads component. Sources: Asian Development Bank and Lanzhou Municipal Government.

Table A2.2: Financing Plan at Appraisal and Actual ($ million)

Source At Appraisal At Completion

Amount % Amount ($) % Amount (CNY)a %

1. Asian Development Bank 150.00 31.23 148.69 35.64 1,022.99 35.64 2. Domestic Bank (Bank of China) 240.31 50.04 0.00 0.00 0.00 0.00 3. Lanzhou Municipal

Government/ Anning District Government

89.96 18.73 268.50 64.36 1,847.28 64.36

Total 480.27 100.00 417.18 100.00 2,870.27 100.00 a Numbers may not be consistent in Table 2.1 because of rounding. Sources: Asian Development Bank and Lanzhou Municipal Government.

20 Appendix 3

PROJECT COST BY FINANCIER AT APPRAISAL AND ACTUAL

Table A3.1: Project Cost at Appraisal by Financier ($ million)

Item ADBa Bank of China

Lanzhou Municipal

Government Total Cost

Amount % of Cost

Amount % of Cost

Amount % of Cost

A. Base Costb 1. Civil Works Components 118.60 78.20 26.17 17.26 6.89 4.54 151.66

a. New roadsc 63.38 65.72 26.17 27.14 6.89 7.14 96.44 b. Reconstructed roads 55.22 100.00 0.00 0.00 0.00 0.00 55.22

2. Equipment a. BRT station and onboard

equipment 11.10 100.00 0.00 0.00 0.00 0.00 11.10

b. Advanced traffic control system

18.18 100.00 0.00 0.00 0.00 0.00 18.18

c. Environmental monitoring system

0.74 100.00 0.00 0.00 0.00 0.00 0.74

d. Utility equipment 0.00 0.00 28.25 100.00 0.00 0.00 28.25 3. Consulting Services

a. Design supervision and monitoring

0.00 0.00 9.83 76.02 3.10 23.98 12.93

b. Technical advisory services 1.00 100.00 0.00 0.00 0.00 0.00 1.00 4. Capacity Building 0.38 76.00 0.00 0.00 0.12 24.00 0.50 5. Taxes and Duties 0.00 0.00 16.76 78.24 4.66 21.76 21.42 6. Resettlement and Compensation 0.00 0.00 121.93 88.15 16.39 11.85 138.32 7. Project Administration 0.00 0.00 0.00 0.00 0.47 100.00 0.47

Subtotal (A) 150.00 39.00 195.99 50.96 38.58 10.03 384.57 B. Contingencies

1. Physical contingencyd 0.00 0.00 34.82 100.00 0.00 0.00 34.82 2. Price contingencye 0.00 0.00 9.50 83.04 1.94 16.96 11.44

Subtotal (B) 0.00 0.00 44.32 95.81 1.94 4.19 46.26 C. Financing Charges During

Implementation

1. Interest during implementation 0.00 0.00 0.00 0.00 49.21 100.00 49.21 2. Commitment charges 0.00 0.00 0.00 0.00 0.23 100.00 0.23

Subtotal (C) 0.00 0.00 0.00 0.00 49.44 100.00 49.44

Total (A+B+C) 150.00 0.00 240.31 50.04 89.96 18.73 480.27

ADB = Asian Development Bank, BRT = bus rapid transit. a Bank charges will be financed from the loan amount, in line with ADB. 2008. Cost Sharing and Eligibility of

Expenditures for ADB Financing. Operations Manual. OM H3/BP and H3/OP requirements. b Base costs are in early 2009 market prices and exclude taxes of $21.42 million, listed separately. c New roads consists of two sub-components. The first component includes from A01 to A06 in the procurement plan

at 100% financing rate and the second sub-component includes from A07 to A10 at 27% financing rate. d Physical contingency is 10% of civil works base costs plus land acquisition and resettlement costs. e Price contingencies are computed at 1.9% for 2009, 1.0% for 2010, 0.0% for 2011, 0.3% for 2012, and 0.5%

thereafter on foreign exchange costs and at 0.8% for 2009, 1.0% for 2010, 1.5% for 2011, and 2.0% thereafter on local currency costs. Exchange rate used is as of 7 July 2009 during the Appraisal mission.

Source: Asian Development Bank.

Appendix 3 21

Table A3.2: Project Cost at Completion by Financier ($ million)

Item

ADB

Bank of China

Lanzhou Municipal Government /

Anning Government

Total Cost

Amount % of Cost

Amount % of Cost

Amount % of Cost

A. Base Cost 1. Civil Works Components 84.99 51.34 0.00 0.00 80.56 48.66 165.55

a. New roadsa 45.62 38.15 0.00 0.00 73.96 61.85 119.58 b. Reconstructed roadsb 39.37 85.66 0.00 0.00 6.59 14.34 45.96

2. Equipment 63.41 98.82 0.00 0.00 0.76 1.18 64.17 a. BRT station and onboard

equipment 39.76 100.00 0.00 0.00 0.00 0.00 39.76

b. Advanced traffic control system

23.65 100.00 0.00 0.00 0.00 0.00 23.65

c. Environmental monitoring systemc

0.00 0.00 0.00 0.00 0.76 100.00 0.76

d. Utility equipmentd 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3. Consulting Services 0.16 100.00 0.00 0.00 0.00 0.00 11.68

a. Design supervision and monitoring

0.00 0.00 0.00 0.00 11.42 100.00 11.42

b. Technical advisory services 0.16 61.54 0.00 0.00 0.10 38.46 0.26 4. Capacity Building 0.12 57.14 0.00 0.00 0.09 42.86 0.21 5. Taxes and Duties 0.00 0.00 0.00 0.00 5.66 100.00 5.66 6. Resettlement and

Compensation 0.00 0.00 0.00 0.00 139.31 100.00 139.31

7. Project Administration 0.00 0.00 0.00 0.00 1.81 100.00 1.81 Subtotal (A) 148.68 38.28 0.00 0.00 239.71 61.72 388.39

B. Contingencies 0.00 0.00 1. Physical contingency 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2. Price contingency 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Subtotal (B) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 C. Financing Charges During

Implementation

1. Interest during implementation

0.00 0.00 0.00 0.00 28.15 100.00 28.15

2. Commitment charges 0.00 0.00 0.00 0.00 0.65 100.00 0.65 Subtotal (C) 0.00 0.00 0.00 0.00 28.79 100.00 28.79

Total (A+B+C) 148.68 35.64 0.00 0.00 268.50 64.36 417.18

ADB = Asian Development Bank, BRT = bus rapid transit. Numbers may not sum precisely because of rounding. Note: Exchange rate used: $1 = CNY6.8808 at completion date of 15 July 2019. a Road section A04 of about 0.8 km was cancelled as the road alignment overlaps with the central plaza. b Road section A10 was cancelled from ADB financing and 100% financed by the Lanzhou Municipal Government. c ADB financing no longer required as the contract has already been covered by the central government’s

environmental monitoring initiatives led and financed by the Environmental Protection Bureau. d Actual cost was included in the Category 1A- new roads component. Source: Asian Development Bank.

22 Appendix 4

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A4: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million)

Year

Annual Disbursement Cumulative Disbursement

Amount ($ million)

% of Total Amount ($ million)

% of Total

2010 0.00 0.00 0.00 0.00 2011 37.77 25.40 37.77 25.40 2012 65.52 44.06 103.29 69.47 2013 8.53 5.74 111.82 75.20 2014 0.00 0.00 111.82 75.20 2015 1.85 1.24 113.67 76.45 2016 19.73 13.27 133.40 89.72 2017 13.36 8.98 146.76 98.70 2018 3.24 2.18 150.00 100.88 2019 (1.31) (0.88) 148.69 100.00

Total 148.69 ADB = Asian Development Bank. Source: Asian Development Bank.

Figure A4: Projection and Cumulative Disbursement of ADB Loan Proceeds ($ million)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Disbursement Projection Cumulative Disbursement

Appendix 5 23

CHRONOLOGY OF MAIN EVENTS

DATE EVENTS

A. GENERAL

2009 27 Apr–7 May Loan fact-finding mission fielded

4 Jun Advance contracting approved

25 Jun Management review meeting held with retroactive financing approved

6–14 Jul Loan appraisal mission fielded

28 Aug Staff review committee meeting held

21–22 Oct Loan negotiations

11 Dec Loan approved

2010 30 Mar Loan signing

Apr Clean Development Mechanism (CDM) baseline traffic survey completed

14 Jul Loan effectiveness

30 Aug–3 Sep Loan inception mission fielded

2011 13–15 Sep 1st Loan review mission fielded

2012 23 Apr Minor change memo approved — (i) 1st loan reallocation, (ii) increase in financing % for Cat 1A from 27% to 80%, (iii) decrease in financing % for Cat 2B from 100% to 5%, and (iv) minor change in scope (A04-removed from the project scope as the road alignment overlaps with the Central Plaza; and A10 removed from ADB financing, 100% government financing)

6–12 Sep Study tour to Republic of Korea and USA participated by government officials from the Lanzhou Municipal Government

27–29 Nov 2nd Loan review mission fielded

2013 4–6 Sep 3rd Loan review mission fielded

2014 25–26 Sep Midterm review mission fielded

2015 26 Jun 1st extension of loan closing date approved (from 30 Jun 2015 to 30 Jun 2016)

18–19 Oct 4th Loan review (consultation) fielded to discuss disbursement issues

9–10 Nov 5th Loan review mission fielded

2016 23 Jun 2nd extension of loan closing date approved (from 30 Jun 2016 to 31 Dec 2017)

1 Aug 2nd loan reallocation (from civil works, environmental monitoring equipment, consulting services, and capacity building components to the advanced traffic control system [ATCS]) and increase in financing % of ATCS from 5% to 100%.

12–13 Oct 6th Loan review mission fielded

2017 17–20 Jul 7th Loan review mission fielded

28 Nov 3rd extension of loan closing date approved (from 31 Dec 2017 to 31 Dec 2018) and 3rd reallocation of loan proceeds (from civil works, ATCS, consulting services and capacity building to the bus rapid transit [BRT] station component).

2018 30 May–1 Jun 8th Loan review mission fielded

15 Jun ADB approval of loan savings utilization

22 Oct Last reallocation of loan proceeds approved (from BRT station, ATCS, and consulting services to civil works)

24 Appendix 5

DATE EVENTS

27 Nov–3 Dec Domestic study tour (Yichang, Guangzhou, Shenzhen, and Xiamen) participated by government officials from the Lanzhou Municipal Government

31 Dec Loan closing

2019 June ADB Independent evaluation department mission fielded

15 Jul Financial closing of loan account

8–15 Oct Project completion review mission fielded

B. PROCUREMENT

1st bidding document

2010 13–28 Apr Circulation of draft bidding documents for A05, A07, A08, B01 (international competitive bidding, Single Stage Two Envelope) and B02 (national competitive bidding [NCB], Single Stage One Envelope) and comments received from Office of General Counsel (OGC) and Procurement, Portfolio and Financial Management Department (PPFD)

12 May ADB comments (first) on draft bidding documents for A05, A07, A08, B01 and B02 sent thru fax

22 Jun Revised draft bidding documents for A05, A07, A08, B01 and B02 submitted to ADB

1 Jul ADB comments (2nd) on revised draft bidding documents for A05, A07, A08, B01 and B02 sent thru fax

9 Jul Revised draft bidding documents for A05, A07, A08, B01 and B02 submitted to ADB

27 Jul ADB approval on bidding documents for A05, A07, A08, B01 and B02

28 Jul ADB fax explaining that bidding document for A05, A07, A08, B01 and B02 should not be issued until drawings are finalized and cleared by ADB.

25 Aug ADB fax explaining reason for delay in issuance of the bidding documents for A05, A07, A08, B01 and B02—quality of BRT design and relevant bidding documents’ drawings and technical specifications require careful attention.

30 Aug Workshop conducted to discuss major BRT designs and technical issues of the bidding documents for A05, A07, A08, B01 and B02 participated by ADB Inception Mission, International Transportation & Development Policy Specialists, and the project management unit (PMO).

17 Sep ADB sent no objection to issue the bidding documents for A05, A07, A08, B01 and B02.

2 Nov ADB received complaint from one of the bidders who submitted their bid for A07 and B01 explaining unfair rejection of their bid because the Bid Security Form provided did not conform to Section 4 of the bidding document. They further explained that the PMO allowed them to use the bank guarantee form of China Construction Bank but later rejected due to non-conformity.

8 Nov Bid evaluation report (BER) of Technical Proposals for A07, A08, B01 and B02 submitted to ADB.

15 Nov Procurement Committee (PC) paper on BER of technical proposals for A07, A08, B01 and B02 circulated for comments

2 Dec ADB comments on BER of Technical Proposal for A07, A08, B01 and B02; and BER of B04 (NCB) sent thru fax

2011 14 Jan Revised BER of Technical Proposals for A07, A08, B01 and B02 submitted to ADB.

17 Jan PC paper for A07, A08, B01 and B02 approved

27 Jan ADB approved contract award for B04

ADB approved technical evaluation for A07, A08, B01, and B02

31 Jan Draft PC paper for BER on evaluation of price proposals A07, A08, B01, and B02 circulated for comments

24 Feb PC paper for BER on evaluation of price proposals A07, A08, B01, and B02 approved

Appendix 5 25

DATE EVENTS

2 Mar ADB sent no objection fax to award the contracts B01 and B02.

6 Mar Contract signed for B01 and B02

8 Mar ADB sent no objection fax to award the contract for A08.

26 Mar Contract signed for A08.

30 Mar Signed contract for B01 received by ADB.

1 Apr BER for A10 (NCB) submitted to ADB.

4 Apr ADB sent no objection fax to award the contract for A07.

8 Apr Contract signed for A07.

27 Apr Revised BER for A10 submitted to ADB

Signed contract for A07, A08 received by ADB.

26 May ADB sent no objection fax to award the contract for A10.

30 May Signed contract for B02 received by ADB.

Last bidding document

2014 20 Nov ADB sent no objection fax to award the contract for the ATCS.

20 Dec Contract signed for ATCS.

2016 12 Aug Signed contract for ATCS received by ADB. The delay in submission was due to a previous advice from the EA that government will finance this package.

Source: Asian Development Bank.

26 Appendix 6

IMPLEMENTATION SCHEDULE

No. Item 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

A. Project Processing

1. Feasibility Study Approval

Projected

Actual

2. Retroactive Financing Approval

Projected

Actual

3. Loan Approval

Projected

Actual

4. Loan Signing

Projected

Actual

5. Loan Effectiveness Projected

Actual

B. Civil Works

1. S554 (A01) Projected

Actual

2. S583, T550 (A02) Projected

Actual

3. T571, Section 1 (A03) Projected

Actual

4. T560 (A04) Projected

Actual CANCELLED FROM ADB FINANCING

5. T577 (A05) Projected

Actual

6. T532 (A06) Projected

Actual

7. T571, Section 2 (A07) Projected

Actual

8. T580 (A08) Projected

Actual

9. S556, S568 (A09) Projected

Actual

10. S569 (A10) Projected

Actual CANCELLED FROM ADB FINANCING

11. T514 (B01) Projected

Actual

12. T514-1, T514-2 (B02( Projected

Actual

13. S554 (B03) Projected

Appendix 6 27

No. Item 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Actual

14. T112 Dunhuang Road (B04)

Projected

Actual

15. S578 Wanxin Beilu (B05) Projected

Actual

C. Equipment and Installation

1. BRT Station and Onboard Equipment (C01)

Projected

Actual

BRT realignment Actual

2. Advanced Traffic Control System (C02)

Projected

Actual

3. Advanced Environmental Monitoring

Projected

Actual COVERED BY THE CENTRAL GOVERNMENT’S ENVIRONMENTAL MONITORING INITIATIVES LED AND FINANCED BY THE ENVIRONMENTAL PROTECTION BUREAU

4. Utility Equipment Projected

Actual 100% GOVERNMENT FINANCED

D. Consulting Services

1. Detailed Design Projected

Actual

2. Construction Supervision and Monitoring

Projected

Actual

4. TDM Strategy and Policy Reform

Projected

Actual

5. BRT Operation and Management

Projected

Actual

6. NMT Development Plan Projected

Actual

7. Review of BRT Detailed Design

Projected

Actual

E. Capacity Building

1. BRT Operation and Management Training

Projected

Actual

2. Resettlement Monitoring and Management

Projected

Actual

3. Training Projected

Actual

F. Resettlement Activities

1. Land Acquisition and Resettlement

Projected

Actual

28 Appendix 7

ORGANIZATION STRUCTURE

ADB = Asian Development Bank, BRT = bus rapid transit, EPB = environmental protection bureau, IA = implementing agency, MOF = Ministry of Finance, NDRC = National Development and Reform Commission, PMO = project management office.

MOF /

NDRCADB

Lanzhou Municipal

Government and Anning District Government,

Executing Agency

PMO, IAs (bus company,

Traffic Police, EPB)

Strategic

Planning Department

Contract

Management and

Coordination

Construction

SupervisionDepartment

Land

Acquisition and

Resettlement

Social and

Environmental Monitoring Department

Traffic Signal

Control Department

BRT /

Transport Management Department

Financial

Management DEpartment

Procurement

and Recruitment Department

Administration

Department

Appendix 8 29

CONTRACT AWARDS OF ADB LOAN

Table A8: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Year

Annual Contract Awards Cumulative Contract Awards

Amount ($ million)

% of Total Amount ($ million)

% of Total

2010 17.42 11.72 17.42 11.72 2011 58.44 39.63 75.86 51.02 2012 48.65 32.61 124.51 83.74 2013 0.04 0.03 124.55 83.76 2014 0.00 0.00 124.55 83.76 2015 0.00 0.00 124.55 83.76 2016 24.14 15.90 148.69 100.00 2017 0.00 0.00 148.69 100.00 2018 0.00 0.00 148.69 100.00 2019 0.00 0.00 148.69 100.00

Total 148.69 ADB = Asian Development Bank. Source: Asian Development Bank.

Figure A8: Projection and Contract Awards of ADB Loan Proceeds ($ million)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Contract Awards Projection Cumulative Contract Awards

30 Appendix 9

CONTRACT PACKAGES FINANCED BY THE ASIAN DEVELOPMENT BANK

Contract No.

PCSS Nos.

Contract Description

Procure-ment Mode

Date Approved

Contract Date

Contractor/Supplier

Contract Value (CNY)

Contract Value ($)a

ADB Financing

(CNY)

ADB Financing

($)

01A Works – New Roads (A01 to A06)

A01 0001 571# Taolin Lu NCB 15 Jan 2010

20 Jan 2010

No.7 Construction Group Share Ltd. Gansu

21,014,678.40 3,078,171.73 20,317,895 3,191,336

A02 0002

518# Jianning Xilu, 570# Kongtongshan Lu

NCB 15 Jan 2010

28 Jan 2010

Wuxi Municipal Engineering Construction Group

15,889,873.99 2,327,504.61 13,909,831 2,192,711

A02 (middle section)

0004 518# Jianning Xilu

NCB 1 Jul 2010 9 Jul 2010

Gansu 6th Construction Group Co., Ltd.

18,534,184.00 2,714,835.80 17,911,264 2,852,539

A03 0003 502# Liusha Xilu NCB 15 Jan 2010

28 Jan 2010

Wuxi Municipal Engineering Construction

19,580,739.41 2,868,132.33 17,932,042 2,884,821

A05 0013 516# Fuxing Lu ICB 4 Aug 2011

12 Aug 2011

Luoyang Municipal Construction Group Co., Ltd.

106,071,667.97 5,537,083.34 62,754,187 9,426,888

A06 0015 530# NCB 11 May 2011

19 May 2011

Gansu 2nd Construction and Engineering Co., Ltd.

63,668,111.00 9,325,928.08 58,544,709 8,922,980

01B Works – New Roads (A07 to A10)

A07 0008 511# Jian’an Lu ICB 4 Apr 2011 8 Apr 2011

Gansu No. 4 Construction Group Co., Ltd.

101,665,033.96 14,891,611.83 69,259,237 11,173,400

A08 0009 580# Xuefu Lu ICB 22 Mar 2011

26 Mar 2011

Gansu No. 4 Construction Group Co., Ltd.

45,505,570.00 6,665,529.52 3,408,445 537,414

Appendix 9 31

Contract No.

PCSS Nos.

Contract Description

Procure-ment Mode

Date Approved

Contract Date

Contractor/Supplier

Contract Value (CNY)

Contract Value ($)a

ADB Financing

(CNY)

ADB Financing

($)

A09 0007 572# Yuanlin Lu, 576# Yintan Lu

NCB 1 Jul 2010 9 Jul 2010 8th Metallurgy Construction Group Co.

38,387,856.84 5,622,946.66 29,667,343 4,710,284

01C Works – Reconstructed Roads (B01 to B05)

B01 0010 514# Anning Xilu ICB 2 Mar 2011

6 Mar 2011

No. 5 Engineering Co., Ltd. of China Railway No. 13

129,866,515.00 19,022,486.45 125,494,899 19,678,348

B02 0011 514# Anning Donglu

ICB 2 Mar 2011

6 Mar 2011

Yuandong Urban Construction Investment Group Co.

90,315,166.00 13,229,114.69 87,272,209 13,737,176

B03 0005 571# Taolin Lu NCB 1 Jul 2010 9 Jul 2010

No. 7 Construction Group Share Ltd. Co. of Gansu

9,005,621.89 1,319,118.48 8,702,061 1,380,241

B04 0012 112# Dunhuang Lu

NCB 12 Jan 2011

9 Feb 2011

Gansu 2nd Construction and Engineering Co., Ltd.

28,961,176.41 4,242,152.69 27,989,471 4,361,693

B05 0006 578# Wanxin Lu NCB 1 Jul 2010 9 Jul 2010

Hubei Yitong Construction and Engineering Co.

13,391,433.23 1,961,539.95 1,339,143 211,354

02A Equipment – BRT Station and Onboard Equipment

C01 0014

Supply of BRT Station and Onboard Equipment and Related Services

ICB 6 Oct 2011 23 Dec 2011

China MCC17 Group Co., Ltd.

249,128,456.00 36,491,644.35 250,052,656 39,497,815

02B Equipment – Advanced Traffic Control System

C02 0018 Advanced Traffic Control System

ICB 20 Nov 2014

20 Dec 2014

JV of Qingdao

185,454,487.00 27,164,858.21 161,478,334 23,653,532

32 Appendix 9

Contract No.

PCSS Nos.

Contract Description

Procure-ment Mode

Date Approved

Contract Date

Contractor/Supplier

Contract Value (CNY)

Contract Value ($)a

ADB Financing

(CNY)

ADB Financing

($)

Hisense Trans Tech Co., Ltd. and Shenzhen Unihz Technologies Corporation

03 – Consulting Services

0019

Consulting Services for the Planning and Design Improvements of the BRT Operations, Infrastructure Corridor, Modal Integration, and Station Area Development

SSS 19 Jul 2018

31 Jul 2018

Institute for Transportation and Development Policy

0.00 0.00 159,720

0021 Bank charges 1 Jul 2019 5 Jul 2019 ADB 0.00 0.00 12.00

04 – Capacity Building

0016 Study tour – USA and Republic of Korea

6 Sep 2012

6 Sep 2012

Gansu Branch of China International Travel Agency

449,784.00 449,784 70,839

0017 Study tour – NMT

8 Nov 2010

4 Sep 2013

Gansu Branch of China International Travel Agency

223,044 223,044 36,405

0020 Domestic Study Tour

27 Nov 2018

3 Dec 2018

Lanzhou Municipal Government

96,454 96,454 14,363

a Using exchange rate at appraisal: $1 = CNY6.827. Source: Asian Development Bank.

Appendix 10 33

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Reference in Loan

Agreement Status of Compliance

LMG shall be the EA for the Project. The PSC set up in Lanzhou Municipality and chaired by a Deputy Mayor of Lanzhou Municipality shall meet regularly, or at least once every three months, to review implementation, resolve coordination issues, and to provide guidance for timely completion of the Project activities.

LA Schedule 5, para. 1 and PA Schedule, para. 1

Complied with. The PSC was set-up and was chaired by the deputy mayor. In 2014, the EA for the Project was changed to ADG for more efficient implementation at implementation stage. The PMO has been established in and under ADG.

Established, Staffed, and Operating PMO. The PMO set up by LMG and led a Project Manager appointed by LMG shall carry out detailed implementation of the Project, which include, among others, coordinating the Project management activities, supervising the procurement of the Works, Goods and consulting services to be financed under the Project, monitoring utilization of the Loan and counterpart funding, and preparing and reviewing the reports to be submitted to the Borrower and ADB.

LA Schedule 5, para. 2 Complied with.

Implementation Arrangements. The PMO set up by LMG and led a Project Manager appointed by LMG shall carry out detailed implementation of the Project, which include, among others, coordinating the Project management activities, supervising the procurement of the Works, Goods and consulting services to be financed under the Project, monitoring utilization of the Loan and counterpart funding, and preparing and reviewing the reports to be submitted to the Borrower and ADB.

PA Schedule, para. 2 Complied with. In 2014, the EA for the Project was changed to ADG for more efficient implementation. The PMO has been established in and under ADG.

Construction Quality. LMG shall (a) cause PMO to ensure that all the works of the Project be designed and constructed in accordance with national standards and specifications, and that the construction supervision, quality control, contract management, and completion inspection and acceptance follow applicable national laws and regulations.

PA Schedule, para. 3 Complied with.

Counterpart Funding. GPG and LMG shall ensure that (a) all local and foreign currency counterpart financing necessary for the Project be provided in time as required to enable completion of Project activities, and prompt debt repayment after Project completion; (b) additional counterpart funding be provided for any shortfall of funds or cost overruns; and (c) in each fiscal year adequate funds be allocated for operation and maintenance of the project facilities, and such facilities be operated and maintained according to sound engineering practices.

PA Schedule, para. 4 Complied with. GPG and LMG have committed to make timely provision of sufficient counterpart funds and staff to complete the project as scheduled.

Financial Management System. LMG shall ensure that PMO maintain a sound financial management system in accordance with ADB’s Guidelines for Governance and Financial Management of an ADB Investment Project, including the establishment of separate bank accounts and the maintenance of minimum balances to ensure smooth cash flow and the timely settlement of project construction liabilities and future debt servicing. The financial management system shall comprise (a) financial planning, budgeting, and budgetary control; (b) accounting consistent with applicable PRC standards; (c) internal control; (d) data processing; and (e) financial reports.

PA Schedule, para. 5 Complied with. The PMO received financial management training and their capacity was greatly enhanced and adhered to ADB’s Guidelines for Governance and Financial Management.

Bus Rapid Transit. LMG shall cause Lanzhou Public Transport Group to improve service quality, and increase the efficiency of BRT operation through maintaining and increasing the level of

PA Schedule, para. 6 Complied with.

34 Appendix 10

revenue and controlling and reducing maintenance and operation costs. For all purpose, LMG shall, not later than 3 years of successful operation of BRT bus line, cause Lanzhou Public Transport Group to consider participation and investment in BRT lane operation by those including the private sector.

Traffic Demand Management and Non-Motorized Transport. LMG shall establish a steering committee to implement TDM Strategy and Policy Reform and NMT Development Plan, which shall consist of high-level officials of LMG, including but not limited to Lanzhou Municipal Development and Reform Commission, Finance Bureau, Planning Bureau, Pricing Bureau, Construction Committee, Communications Bureau, Public Security Bureau and Traffic Police Brigade. The steering committee shall also ensure coordination of the relevant administrations and implementation of output of the TDM Strategy and Policy Reform and the NMT Development Plan.

PA Schedule, para. 7 Complied with. The steering committee was established in 2012.

Coordination between Light Rail Transit and Bus Rapid Transit. LMG shall ensure that the design and development of the LRT be fully coordinated with the BRT and not be done in a way that may detract from the BRT. LMG shall submit the LRT Project Proposal for ADB review as soon as it is completed.

PA Schedule, para. 8 Not applicable. By decision of National Development and Reform Commission, the plan LRT line 2 was cancelled in May 2018. .

Operations and Maintenance. LMG shall ensure that adequate funding, and human resources are allocated to ensure the Project roads, BRT lanes, bridges, utilities, street lights, advanced traffic control system, BRT stations and facilities and environmental facilities are maintained and operated in good condition.

PA Schedule, para. 9 Complied with. This was regularly monitored by the PMO.

Monitoring of Clean Development Mechanism. LMG shall ensure that the appointed government staff (a) coordinate within and outside LMG for CDM related issues; (b) carry out data collection and survey, set up and update database for CDM application, validation and monitoring; (c) support the PMO and the ADB for preparation of the CDM application; and (d) serve as CDM and climate change knowledge focal point for PMO and various government and/or non-government agencies in Gansu Province and Lanzhou Municipality.

PA Schedule, para. 10 Complied with. Lanzhou BRT CDM project was registered with UNFCC in May 2012.

Road Safety. Prior to operation of the Project roads, LMG shall (a) establish a road safety and traffic management inter agency committee to facilitate the Project implementation; and (b) ensure that the independent road safety audits be carried out and recommendations of these audits be taken into account during Project construction and operations. LMG shall utilize its traffic control and surveillance systems to implement road safety measures for the Project.

PA Schedule, para. 11 Complied with. The road safety and traffic management inter agency committee was established in 2012.

Social Aspects and Resettlement. LMG through PMO shall ensure that the construction contractors(a) provide timely payment of wages and safe working conditions to all workers and monitored by PMO; (b) provide women’s employment, where appropriate, and pay equal wages to the female and male employees for equivalent value; and (c) not employ child labor as required by the relevant laws and regulations of the Borrower.

PA Schedule, para. 12 Complied for (a) (b) (c)

LMG through PMO shall (a) ensure that the Project be designed and implemented in accordance with the Social Development Action and Monitoring Plan; and (b) monitor the effects of the Project on women and vulnerable groups through collection and compilation of gender-disaggregated data, where relevant.

PA Schedule, para. 13 Complied with. The project implemented the social development action and monitoring plan and data on women and vulnerable groups were collected.

LMG shall ensure that (a) prior to the commencement of construction works, all land and rights-of-way required by the

PA Schedule, para. 14 Complied for (a) (b) (c) (d) (e)

Appendix 10 35

Project be made promptly available in accordance with the Borrower's laws and regulations, land use approvals, and agreements specifying compensation, relocation, rehabilitation and assistance entitlements have been signed with affected persons, and compensation payments have been made to affected persons as specified in those agreements; (b) the RP's terms and provisions be implemented promptly and efficiently in accordance with all the Borrower's applicable laws and regulations, and ADB’s Policy on Involuntary Resettlement; (c) all affected persons be given adequate opportunity to participate in resettlement planning and implementation, and they be at least as well off as they would have been in the absence of the Project; (d) counterpart funds be provided in time for land acquisition and resettlement activities; and (e) any amounts in excess of the RP budget estimates be provided.

LMG shall ensure that (a) annual implementation plans based on the final design be submitted to ADB each December during Project implementation period for its concurrence prior to award of civil works contracts for the subsequent year; and (b) affected persons be notified, provided adequate information and consulted prior to signing compensation and/or house relocation agreements.

PA Schedule, para. 15 Complied with.

LMG through PMO shall ensure that (a) adequate staff and resources be committed to supervising and internally monitoring the RP implementation and provide ADB with Quarterly Progress Reports during resettlement implementation, and a resettlement completion report; (b) an independent institute acceptable to ADB be contracted to carry out monitoring and evaluation, including data disaggregated by gender where applicable, and forward reports to ADB semi-annually; (c) ADB be promptly advised of any substantial changes in the resettlement impacts and, if necessary, a revised RP be prepared, endorsed by the IA, disclosed to the affected persons, and submitted to ADB for approval; and (d) construction contract specifications include requirements to comply with the RP and to compensate affected persons for any temporary Project impacts.

PA Schedule, para. 16 Complied with. External monitors were engaged and had submitted 12 social monitoring reports on the resettlement plan. All of these reports were posted on the ADB website and were made publicly available to affected persons.

Environment. LMG through PMO shall ensure that (i) construction, operation, maintenance, and monitoring of the Project facilities be in strict conformity with (a) all the Borrower's applicable national and provincial environmental laws and regulations, ADB’s Environment Policy (2002), and other national, provincial, and local laws and regulations and standards on environmental protection, health, labor, and occupational safety; and (b) all environmental mitigation and monitoring measures detailed in the design and construction contracts, the operational guidelines, and the approved EIAs, SEIA, and EMP for the Project; (ii) Lanzhou Municipal Environmental Protection Bureau and PMO review any changes to the Project design that may have a potential for causing negative environmental impacts, so that environmental monitoring and mitigation measures are adjusted accordingly in consultation with ADB; and (iii) an adequate number of full–time personnel and sufficient resources be provided to monitor the implementation of the environmental monitoring program, under the guidance of the Gansu Provincial Environmental Protection Bureau, Lanzhou Municipal Environmental Protection Bureau or other environmental monitoring stations. LMG shall ensure that regular environmental monitoring reports be submitted to the PMO, who shall prepare and submit to ADB semi–annual environment report in a format acceptable to ADB, until the closing of the Loan Account. The semi–annual environment reports shall describe and assess compliance with the EMP and

PA Schedule, para. 17 Complied with. Independent environmental monitors were engaged and a total of 10 environmental monitoring reports were prepared and disclosed on ADB website during 2011–2019.

36 Appendix 10

any supplementary environmental requirements prescribed in the covenants of this Project Agreement.

Capacity Development. With the assistance of the implementation consultant funded by the Loan, LMG shall cause PMO to prepare and submit training plans to be implemented under the Project for ADB’s review and concurrence, and ensure that training institutes for such purpose be selected in accordance with procedures acceptable to ADB. Following each training event, the concerned training institutes shall submit a training completion report to the PMO for consolidation and transmission to ADB.

PA Schedule, para. 18 Complied with. Training programs were prepared and overseas and domestic study tours were conducted.

Anticorruption. LMG shall, and shall cause PMO to, comply with ADB’s Anticorruption Policy (1998, as amended from time to time). GPG and LMG agree (a) that ADB reserves the right to investigate any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project; and (b) to cooperate fully with, and to cause PMO, contractors and suppliers to cooperate fully with, any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation.

PA Schedule, para. 19 Complied with.

LMG through PMO shall (a) conduct periodic inspections on the contractor's activities related to fund withdrawals and settlements; and (b) ensure that all contracts financed by ADB in connection with the Project include relevant provisions of ADB’s Anticorruption Policy in all bidding documents for the Project specifying the right of ADB to audit and examine the records and accounts of PMO and all the contractors, suppliers, consultants, and other service providers as they relate to the Project.

PA Schedule, para. 20 Complied with.

LMG through PMO shall undertake the following anti–corruption actions: (a) involve the agencies concerned with oversight responsibility for bidding and construction to enhance construction quality control and supervise effective work; (b) introduce a dual–signing system, in which the Works contract winner signs an anticorruption contract with the employer when the civil works contract is executed; (c) periodically inspect the contractor’s activities related to fund withdrawals and settlements; (d) engage the Project management consultant to support the PMO to ensure good governance, accountability, and transparency in Project operation; (e) in consultation with relevant ministries of the Borrower update rules and regulations on local and corporate governance and anticorruption and enhance transparency of PMO’s operations; and (f) disclose a summary of the financial statements and Project accounts, and tracking of procurement contract awards on the official website of LMG.

PA Schedule, para. 21 Complied with.

Except as ADB may otherwise agree, all Goods, Works and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where Goods, Works or consulting services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not consistent with ADB's policies and guidelines.

PA Section 2.03 Complied with. Procurement of goods and works were consistent with ADB’s policies and guidelines.

LMG shall furnish to ADB semi-annual reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the six months under review, steps taken or proposed to be taken to remedy

PA Section 2.08 (b) Complied with. Quarterly progress reports were submitted and consolidated into semi-annual reports

Appendix 10 37

these problems, and proposed program of activities and expected progress during the following six months.

Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as ADB may agree for this purpose, LMG shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by LMG of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan.

PA Section 2.08 (c) Complied with.

LMG shall maintain records and accounts adequate to identify the goods, works and consulting services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition.

PA Section 2.06 Complied with.

Except as ADB may otherwise agree, LMG shall apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all goods, works and consulting services financed out of such proceeds are used exclusively in the carrying out of the Project.

PA Section 2.13 Complied with.

(a) LMG shall (i) maintain separate accounts for the Project and for its overall operations to the extent relevant to the Project; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than six (6) months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language. LMG shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

PA Section 2.09 Complied with. All audit reports were submitted on time and each report was issued with an unqualified opinion.

LMG shall make available, promptly as needed, the funds, facilities, services, equipment, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

PA Section 2.02 Complied with.

GPG shall cause LMG to carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental and urban transport practices.

LA Section 4.01 Complied with.

The Borrower shall cause GPG to make available to LMG, promptly as needed and on terms and conditions acceptable to ADB, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

LA Section 4.02 Complied with.

The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

LA Section 4.03 Complied with.

The Borrower shall take all action which shall be necessary on its part to enable GPG and LMG to perform their obligations

LA Section 4.04 Complied with.

38 Appendix 10

under the Project Agreement and shall not take or permit any action which would interfere with the performance of such obligations.

(a) GPG shall cause LMG to, and LMG shall, carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental and urban transport practices.

PA Section 2.01 Complied with.

(b) In the carrying out of the Project and operation of the Project facilities, GPG shall cause LMG to, and LMG shall, perform all obligations set forth in the Loan Agreement to the extent that they are applicable to GPG and LMG and all obligations set forth in the Schedule to this Project Agreement.

PA Section 2.01 Complied with.

Except as ADB may otherwise agree, LMG shall ensure that the relevant agencies under LMG with the responsibilities to implement the Project and operate and maintain the Project facilities not sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement.

PA Section 2.12 Complied with.

Without limiting the generality of the foregoing, LMG undertakes to insure, or cause to be insured, the Goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods. LMG shall take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance of the Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice.

PA Section 2.05 Complied with.

(a) ADB and LMG shall cooperate fully to ensure that the purposes of the Loan will be accomplished.

PA Section 2.07 Complied with.

(b) LMG shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan.

PA Section 2.07 Complied with.

(c) ADB and LMG shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, LMG and the Loan.

PA Section 2.07 Complied with.

(b) LMG shall enable ADB to discuss PMO's financial statements and its financial affairs from time to time with the auditors appointed by PMO pursuant to Section 2.09(a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of PMO unless PMO shall otherwise agree.

PA Section 2.09 Complied with. Annual audited project financial statements were submitted on time with no significant issues raised by the auditors.

LMG shall furnish to ADB all reports and information as ADB shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the Goods, Works and consulting services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations, and financial condition of LMG to the extent relevant to the Project; and (v) other matters relating to the purposes of the Loan.

PA Section 2.08 Complied with. Annual audited project financial statements were submitted on time.

Fielding of Consultants. In the carrying out of the Project, LMG shall employ competent and qualified consultants and contractors, acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB.

PA Section 2.03 Complied with.

Appendix 10 39

LMG shall enable ADB's representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, and to the extent directly relevant to the Project, all other plants, sites, properties and equipment of LMG, and records and documents.

PA Section 2.10 Complied with.

(a) LMG shall ensure that the agencies under LMG with responsibilities to implement the Project and operate and maintain the Project facilities at all times conduct their respective business in accordance with sound administrative, financial, environmental and urban transport practices, and under the supervision of competent and experienced management and personnel.

PA Section 2.11 Complied with. LMG has set up several agencies to implement the project and performances are satisfactory.

(b) LMG shall ensure that the relevant agencies under LMG to at all times operate and maintain their plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, urban transport, and maintenance and operational practices.

PA Section 2.11 Complied with.

LMG shall carry out the Project in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. LMG shall furnish to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.

PA Section 2.04 Complied with. The detailed design and specifications of procurement items were provided.

ADB = Asian Development Bank, ADG = Anning District Government, BRT = bus rapid transit, CDM = Clean Development Mechanism, EA = executing agency, EIA = environmental impact assessment, EMP = environmental management plan, GPG = Gansu Provincial Government, LA = loan agreement, LMG = Lanzhou municipal government, LRT = light rail transit, NMT = non-motorized transport, PA = project agreement, para = paragraph, PMO = project management office, PSC = project steering committee, RP = resettlement plan, SEIA = summary environmental impact assessment, TDM = traffic demand management. Source: Asian Development Bank.

40 Appendix 11

AMENDMENT AGREEMENT RELATING TO THE CERPA AGREEMENT

Appendix 11 41

42 Appendix 11

Appendix 11 43

44 Appendix 11

Appendix 12 45

ECONOMIC REEVALUATION A. Introduction

1. The economic re-evaluation conducted for the Lanzhou Sustainable Urban Transport Project (the Project) follows the Guidelines for the Economic Analysis of Project of the Asian Development Bank (ADB). The evaluation period is from 2010 to 2034, with the period from mid-2010 to mid-2019 being project implementation and the 15-year period from mid-2019 to 2034 being formal project operation. For all quantifiable project costs and benefits, the unit of account used is the domestic price expressed in the national currency of the People’s Republic of China, the Chinese Yuan (CNY). The USD to CNY exchange rate of 6.8969 is used in the calculation.

B. Economic Costs

2. Three types of economic costs were included in the evaluation: (i) initial investment, (ii) additional investment, and (iii) annual recurring costs.

3. The initial investment includes all construction costs and resettlement costs, exclude taxes and interests during construction. The opportunity cost of land is treated as an economic value not included as part of the initial investment schedule but as part of recurring costs. The equipment and traded material are converted to domestic price with a shadow exchange rate factor (SERF) of 1.023. All other cost items have been valued at domestic prices with exception of unskilled labor, which has been valued at a shadow wage rate of 0.67. The composite price conversion factor is calculated as 0.94 (Table A12.1). All costs are converted to economic costs.

4. Additional investment consists of periodic maintenance every 7 years, in 2020 and 2027, at a cost equal to two thirds of the initial economic cost for pavement and 20% of the initial economic costs for drainage and utilities, bridges and structures. The additional investment schedule includes the residual value of fixed assets estimated at a 30-year economic life with no scrap value and straight-line depreciation. The residual value is at 33% of the investment costs at the end of the evaluation period.

Table A12.1: Economic Price Conversion (domestic price numeraire)

5. Annual recurring costs is estimated at 10% of the total costs of initial civil works and equipment. This rate is increased annually at 3% to account for the increase in maintenance requirements caused by the traffic load. The opportunity cost of land is calculated based on the

Share within Category Share

(%) (%)

Materials 48

Material - traded 40 1.023 0.20

Material - nontraded 60 1 0.29

Labor 35

Skilled Workers 40 1 0.14

Unskilled Workers 60 0.67 0.14

Equipments 17

Tradable equipment 100 1.023 0.17

Non-tradable equipment 0 1

Composite Conversion Factor 0.94

Construction ItemsConversion

Factor

Weighted

Value

46 Appendix 12

final resettlement results, the crop value of CNY110,660 per mu of irrigated farmland and other land is used. The estimation assumes productivity increases of 4% per year during the evaluation period.

C. Economic Benefits

6. Project benefits are broken down into the following five categories: (i) vehicle operating cost (VOC) savings, (ii) generated traffic benefits, (iii) time savings benefits, (iv) avoided accidents costs savings, and (v) CO2 benefits.

7. Vehicle Operating Cost Savings. The project includes the construction and reconstruction of 29.134km of urban roads including BRT facilities and NMT lanes; and advanced traffic management system. The higher-class roads reduce the wear and tear and more frequent vehicle repairs. The advanced traffic management reduced congestion along the project road and nearby urban area, which leads higher operating speed and VOC savings on vehicle’s power train, braking system and other components. It is estimated that VOC savings per vehicle-km are CNY0.55 for passenger cars, CNY0.78 for buses, CNY1.16 for small trucks, and CNY6.34 for big trucks. The total VOC savings is calculated in VOC savings per vehicle-km for each type of vehicle multiplied by projected traffic volume during the evaluation period.

8. Generated Traffic Benefits. The Project’s components include 11 new roads with a total length of 17.629 km. New roads attract new residential units, commercial establishments, wholesale and retail businesses, street vendors, and other types of economic activity. These activities are attributable to the new roads, without which new commercial and residential units would not be built. Based on the estimated traffic by vehicle type, the generated traffic benefits are estimated at one-half the VOC savings of the new constructed roads.

9. Time Savings Benefits. Passengers’ travel time can be reduced due to faster travel speed and shorter mileage. The BRT bus travels at 25 km/h, while the bus before the project travels at only 18 km/h, the total running time is reduced by 38%. The average annual income per capita in Anning in 2019 was CNY32,574. Assuming a workforce participation ratio of 50%, the average annual income per worker is CNY65,148. The time savings benefits for passengers has been calculated at CNY7.44 per hour per passenger. The value of worker leisure time and non-working time is assumed to be zero. 10. Avoided Accident Costs. The avoided accident costs are from the modal shift for low -occupancy vehicles such as private cars to more efficient BRT buses, which offers better safety designs and more advanced traffic management. Estimates by ADB indicate the cost of road accidents in People’s Republic of China was $12.5 billion, or CNY98.7 billion during 2004. The estimate includes vehicle and property damage, medical costs, and the estimated loss of victims’ earning potential. Accident costs have been expressed in terms of passenger-kilometers at CNY0.068 per passenger-kilometer (pass-km) in 2004. The total pass-km reduction under the project was reinstated to CNY0.07667/pass-km at appraisal in 2009, and CNY0.15334/pass-km in constant 2019 price at project completion. The estimated accident cost savings are annual increase in BRT ridership multiplied by the accident cost per pass-km. 11. CO2 Savings. The CO2 savings is benefits from reduced pollution. The project incorporates several features to reduce greenhouse gas emissions, primarily by encouraging modal shifts away from private vehicles and toward public transport. The carbon emission factors for Lanzhou’s compressed natural gas vehicle fleets were derived from fuel efficiency surveys in Lanzhou at compressed gas stations and as reported by the public transit organization. In

Appendix 12 47

2014, Lanzhou BRT company has recorded 9,176 tons of CERs (Certified Emission Reduction). With unit price at $39.29 per ton of CO2, it is in equivalent to annual saving of $333,089. As more passengers start shifting from low-occupancy vehicles such as private cars to BRT buses, the CO2 savings are expected to increase continuously during the evaluation period.

D. Economic Evaluation and Sensitivity Analysis

12. The economic re-evaluation calculated the economic internal rate of return (EIRR) based on the information provided by the implementing agency. The following assumptions are used in the calculation: (i) The BRT ridership has been increased by more than 70% in 2019 compare to the ridership

of regular bus services in Anning in 2012 before the project (Table A12.2). It is an annual growth of 10% on average. With the phase 2 of the project been completed and operational in mid-2019, the ridership of BRT is expected to grow continuously. An increase in ridership of 10% per annum for the first 10 years after the phase I completion from 2014 to 2023, and 5% per annum for the remaining of the evaluation period is applied in the projection.

(ii) The savings on reduction of greenhouse emission is expected to grow as the BRT ridership increases. Assume 50% of the increased BRT ridership is from modal shifts from private vehicles toward the public transport. The savings on CO2 will be increased by 5% per annum from 2014 to 2023, and 2.5% per annum from 2024 to 2034.

(iii) The traffic survey shows the traffic volume along the reconstructed roads has been increased by 16.3% from 2013 before the project to 2018 after the project (Table A12.3). It is about 3% growth every year. The assessment assumes the traffic volume will continue to increase at the same rate for the remaining of the evaluation period. The new roads attract new residential units, commercial establishments, retail business and other types of economic activities. The traffic volume along the new constructed roads is expected to increase as the new economic activities materialize. The assessment assumes the traffic growth rate on the new constructed road will be twice as much as on the reconstructed road at 6% per year for the first 10 years after the project completion, and reduce to 3% per annuum for the remaining of the evaluation period. on both re-constructed road and new constructed road

Table A12.2: Survey of BRT Passengers (passenger per hour)

Source: Lanzhou BRT Company

S-N N-S S-N N-S

Sizhong BRT Station AM 436 808 - 4,126

PM 1,280 769 2,730 2,405

E-W W-E E-W W-E

Peiliguangchang BRT

Station AM 1,817 2,683 - 3,935

PM 3,395 1,835 5,665 4,556

13,023 23,417

100% 179.8%

2012 FEB (Before BRT) 2019 JUL (After BRT)

48 Appendix 12

Table A12.3: Average Daily Traffic on Re-constructed Road

13. The economic internal rate of return (EIRR) for the Project is 16.48% (Table A12.4), which is much higher than the economic opportunity cost of capital of 12%. Therefore, the project is economically feasible. 14. The sensitivity analysis considered operating and maintenance costs increase by 10%, 15% and total benefits decrease by 10%, 15% respectively (Table A12.5). In the worst scenario, with operating and maintenance costs increase by 15% and total benefits decrease by 15%, the EIRR is 12.29%, still higher than the ADB threshold of 12%. The sensitivity analysis results confirm the robustness of the project

15. While the project will continue to be economically viable under all scenarios, it is much more sensitive to changes in benefits than costs. The EIRR would be lower at 13.22% in the case of 15% decrease in benefits, as compared to an EIRR of 15.69% with 15% increase in O&M.

16. Since the project is more sensitive to changes in benefits than costs. A further scenario analysis was conducted to test on all different benefit components when the growth rate of BRT ridership and traffic volume changes (Table A12.6). In the extreme case when there is no growth in traffic volume and BRT ridership, the calculated EIRR is 12.42%, still greater than 12%.

2013

Total (PCU)Passenger

carsBuses Van

Trucks &

Trailer

Total

(PCU)Traffic Growth

Anningxi Rd 3,234 1,352 595 510 255 3,775 16.7%

Anningdong Rd 3,092 1,279 563 482 241 3,570 15.5%

Dunhuang Rd 2,722 1,090 480 411 206 3,044 11.8%

Taolin Rd 2,180 921 405 347 174 2,571 17.9%

Wanxinbei Rd 1,490 640 282 242 121 1,788 20.0%

Weighted Average Growth 16.3%

Road

2018

Source: Lanzhou Municipal Traffic Police Bureau

Appendix 12 49

Table A12.4: Economic Internal Rate of Return (CNY million)

Table A12.5: Sensitivity Analysis

Source: Asian Development Bank

Table A12.6: Scenario Analysis

Source: Asian Development Bank

Year

Initial

Capital

Additional

Investment

Annual

O&M

Costs

Total

Costs

VOC

Savings

Generate

d Traffic

Benefits

Accident

Savings

Time

Saving

Benefits -

BRT

Time

Saving

Benefits -

Reconstr

ucted Rd

Time

Saving

Benefits -

new

construc

ted Rd

CO2

Savings

Total

Benefits

Net

Benefits

2010 671.97 - - 671.97 - - - - - - - (671.97)

2011 403.17 - - 403.17 - - - - - - - (403.17)

2012 516.04 - - 516.04 - - - - - - - (516.04)

2013 72.44 - - 72.44 - - - 62.52 54.88 120.05 237.45 165.01

2014 128.33 - 38.17 166.50 104.16 76.51 10.92 70.15 57.66 129.79 2.33 451.51 285.01

2015 348.68 - 76.34 425.01 107.28 81.10 11.25 78.71 60.57 140.33 2.44 481.69 56.67

2016 227.08 - 114.51 341.58 110.50 85.96 11.59 88.31 63.64 151.73 2.57 514.30 172.71

2017 14.97 - 152.67 167.64 113.82 91.12 11.93 99.09 66.86 164.05 2.69 549.56 381.92

2018 89.03 - 190.84 279.87 117.23 96.59 12.29 111.18 70.24 177.37 2.83 587.73 307.86

2019 29.68 - 229.01 258.69 120.75 102.38 16.48 124.74 73.80 191.77 2.97 632.89 374.20

2020 - 510.91 236.87 747.78 124.37 108.52 16.97 139.96 77.53 207.34 3.12 677.82 (69.96)

2021 - 245.01 245.01 128.10 115.04 17.48 157.03 81.45 224.18 3.27 726.56 481.56

2022 - 253.43 253.43 131.95 121.94 18.01 176.19 85.57 242.38 3.44 779.48 526.05

2023 - 262.14 262.14 135.90 129.25 18.55 197.69 89.90 262.07 3.61 836.97 574.83

2024 - 271.17 271.17 139.98 133.13 19.10 211.72 94.45 275.33 3.70 877.42 606.25

2025 - 280.50 280.50 144.18 137.13 19.68 226.75 99.23 289.26 3.79 920.02 639.52

2026 - 290.17 290.17 148.51 141.24 20.27 242.85 104.25 303.89 3.89 964.90 674.73

2027 510.91 300.18 811.09 152.96 145.48 20.87 260.10 109.53 319.27 3.99 1,012.19 201.11

2028 - 310.54 310.54 157.55 149.84 21.50 278.56 115.07 335.43 4.08 1,062.04 751.50

2029 - 321.27 321.27 162.28 154.34 22.15 298.34 120.89 352.40 4.19 1,114.58 793.31

2030 - 332.37 332.37 167.14 158.97 22.81 319.52 127.01 370.23 4.29 1,169.98 837.61

2031 - 343.86 343.86 172.16 163.73 23.49 342.21 133.44 388.96 4.40 1,228.40 884.54

2032 - 355.76 355.76 177.32 168.65 24.20 366.51 140.19 408.65 4.51 1,290.02 934.26

2033 - 368.09 368.09 182.64 173.71 24.92 392.53 147.28 429.32 4.62 1,355.03 986.95

2034 (833.79) 380.84 (452.95) 188.12 178.92 25.67 420.40 154.74 451.05 4.74 1,423.63 1,876.58

EIRR 16.48%

ENPV @ 12% 716.14

( ) = negative, EIRR = Economic Internal Rate of Return, ENPV = Economic Net Present Value

VOC = Vehicle Operating Cost

Source: Asian Development Bank

Item Changes in ENPV EIRR

O&M Benefits (million CNY)

Base Case 0% 0% 716.14 16.48%

Changes 10% 622.43 15.95%

15% 575.57 15.69%

-10% 360.93 14.35%

-15% 183.32 13.22%

15% -15% 42.76 12.29%

EIRR

million

CNY %

Base Case: BRT ridership 10% /

5%, Reconstucted Rd 3%, New

Contrsucted Rd 6% / 3% 100% 100% 100% 100% 100% 100% 100% 716.14 100% 16.48%

Projected growth rate reduced

by 50% -4% -14% -14% -40% -10% -15% -20% 316.63 -56% 14.42%

No growth -7% -25% -26% -63% -18% -26% -35% 45.40 -94% 12.42%

Growth Rate of BRT Ridership

and Traffic Volume

VOC

Savings

Generated

Traffic

Benefits

Accident

Savings

Time Saving

Benefits -

BRT

Time Saving Benefits -

Reconstructed Rd

Time

Saving

Benefits -

new

CO2

Savings

ENPV

50 Appendix 13

FINANCIAL REEVALUATION

A. Introduction

1. The main activities of the Lanzhou Sustainable Urban Transport Project (the Project) are constructing, rehabilitating and operating urban roads and establishing bus rapid transit (BRT) facilities and non-motorized transport lanes. The Project will not earn any direct revenue from constructing urban roads or BRT facilities.

2. The Executing Agency for the Project was the Lanzhou Municipal Government (LMG) and changed to Anning District Government (ADG) for more efficient implementation at implementation stage in December 2014. The project management office (PMO) has been established in and under ADG.

3. The Project involved the construction of new roads, rehabilitation of existing roads, and creation of a BRT system, with 40.3% of the project cost for the construction and rehabilitation of roads and its ancillary facilities at PCR (vs 31.6% at appraisal), and 9.7% for BRT stations and equipment at PCR (vs 12.1% at appraisal). Land acquisition and resettlement amounts to 33.9% of the project cost at PCR (vs 28.8% at appraisal). Those are consistent with appraisal estimation. As a result, the base cost at PCR is 0.5% higher than at appraisal, while total project cost is reduced by 14.4% mainly due to much lower LIBOR rate at implementation (at PCR 5.9% vs at appraisal 10.3% of original total project cost) and contingencies no longer relevant (at appraisal 9.6% of original total project cost) than those estimated at appraisal.

B. Project Financing and Its Effects on Anning District Government’s Cash Flow

4. The Project was funded from two sources: the Asian Development Bank (ADB) loan, and the ADG annual budget. The original plan of a domestic bank loan from the Bank of China (BOC) was cancelled. The ADB loan has a term of 25 years, including a 5-year grace period. The interest rate for the ADB loan is determined in accordance with ADB’s London interbank offered rate–based lending facility plus a spread of 0.6%, and a commitment charge of 0.15% per annum.

5. As the Project does not earn any direct revenue, the debt service requirements of the ADB loan are the responsibility of ADG and are through the ADG annual budget. The additional cash flow requirements of ADG during project operation up to 2033 (consistent with the appraisal) were analyzed. Throughout the period, the additional financing needed each year for repaying the ADB loan will not exceed 4% of the total budget of ADG as shown in Tables A13.1 and A13.2.

6. The Project has developed infrastructure support for Lanzhou with a fast-growing population and rapidly increasing land prices. The post-project BRT impact survey shows land value increases after the implementation of the Project which ADG is expected to be benefiting from. Such land value increases took place so as to contribute positively to narrowing the budget deficit of ADG. As these possible sales of land are not part of the project scope, potential revenues from them have not been considered in evaluating the financial/fiscal capacity of ADG.

Appendix 13 51

Table A13.1: Actual Fiscal Impact of ADB Debt Repayments to Anning District Government (CNY billion)

Items 2015 2016 2017 2018 2019 2020 2021 2022 average

Actual ADB debt service 0.017 0.022 0.033 0.046 0.057 0.059 0.061 0.064

General Revenue 1.156 1.282 1.170 1.126 1.133 1.113 1.092 1.072

debt/gen revenue (%) 1.5% 1.7% 2.8% 4.1% 5.0% 5.3% 5.6% 5.9% 4.0%

Total revenue (including transfers) 3.297 4.036 4.483 5.125 5.718 6.311 6.904

debt/total revenue (%) 0.7% 0.8% 1.0% 1.1% 1.0% 1.0% 0.9% 0.9%

General Expenditures 1.449 2.068 1.763 1.538 1.695 1.691 1.687 1.684

debt/general expenditures (%) 1.2% 1.1% 1.9% 3.0% 3.4% 3.5% 3.6% 3.8% 2.7%

Source: Anning district statistical yearbook

Table A13.2: Forecasted Fiscal Impact of ADB Debt Repayments to Anning District Government (CNY billion)

Source: Asian Development Bank

C. Project Maintenance and Sustainability

7. The main responsibility for the sustainability of project assets rests with ADG. Details of maintenance arrangements are given below.

8. BRT stations including platforms and ticketing machines are operated and maintained by a public bus company, Lanzhou Public Transport Group (through its local subsidiary- the Third Bus Company –based in Anning), who is the sole public bus operator in Lanzhou and handles services in the BRT lanes. City buses operating on some designated routes have been moved to the newly established BRT lanes.

9. After the completion of the Project, BRT lanes themselves and roads/bridges as well as utilities are maintained by Lanzhou municipal service center. Advanced traffic control systems (ATCS) are maintained by the Lanzhou Municipal Traffic Police Brigade. And the advanced environmental monitoring systems are maintained by the Anning District Environmental Protection Bureau. This arrangement for operation and maintenance is practical and appropriate.

10. The funds to cover these costs come directly from the ADG annual operating budget through the above departments. The additional maintenance expenditures that are needed for maintaining this project will increase the annual maintenance budget. ADG has adequate funds allocated to maintain the project facilities.

Items 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Actual ADB debt service         0.064         0.064         0.064         0.064         0.064         0.064         0.064         0.064         0.064         0.064         0.064

General Revenue         1.052         1.031         1.011         0.991         0.971         0.950         0.930         0.910         0.889         0.869         0.849

debt/gen revenue (%) 6.00% 6.20% 6.30% 6.40% 6.60% 6.70% 6.80% 7.00% 7.20% 7.30% 7.50%

Total revenue (including transfers)         7.497         8.090         8.683         9.276         9.869      10.462      11.055      11.648      12.241      12.834      13.427

debt/total revenue (%) 0.80% 0.80% 0.70% 0.70% 0.60% 0.60% 0.60% 0.50% 0.50% 0.50% 0.50%

General Expenditures         1.680         1.676         1.672         1.668         1.665         1.661         1.657         1.653         1.649         1.646         1.642

debt/general expenditures (%) 3.80% 3.80% 3.80% 3.80% 3.80% 3.80% 3.80% 3.80% 3.90% 3.90% 3.90%

52 Appendix 13

D. Clean Development Mechanism (CDM)

11. The Carbon Market Initiative is a value-added service extended to ADB-supported projects for clean energy, energy efficiency, and greenhouse gases (GHGs) mitigation. The Project received support from the Carbon Market Initiative for an application to the Clean Development Mechanism to approve BRT for trading in certified emission reductions (CERs). The potential for CERs was accessed based on the reduction of carbon dioxide (CO2) emissions

resulting from BRT implementation. The reduction in carbon emissions is a direct result of the expected modal shift away from private vehicles and into public transit that is facilitated by this Project.

12. The number of passenger trips in Anning District is unaltered with the introduction of a BRT. However, passengers have been switching from one mode to another based on BRT impact assessment. The diverted traffic from all vehicles to the BRT reduces CO2 emissions in Anning.

Since the Project was registered under the Clean Development Mechanism (CDM) in May 2012, it received more than 5,000 CERs in the six-month monitoring period from 26 April to 25 October 2014. This additional income helped ADG meet part of its BRT operating and maintenance expenses.

Appendix 14 53

ENVIRONMENTAL IMPACT ANALYSIS

A. Introduction

1. The Project is classified as category A for environment. A summary environmental impact assessment, containing an environmental management plan (EMP) and an environmental monitoring plan (EMoP) in accordance with ADB’s Environment Policy (2002) and Environmental Assessment Guidelines (2003) was prepared and disclosed on ADB website in May 2009 for (i) BRT and non-motorized transport (NMT) network development, including 11 new roads with a total length of 17.6 kilometer (km), reconstruction of 5 existing roads with a total length of 11.5 km (BRT corridor including two phases); road ancillary works, three reconstructed and three new small and medium-size bridges over floodways; (ii) utility facilities and monitoring system; and (iii) advanced road user services consisting of public transport priority including BRT and clean development mechanism, an advanced traffic control system (signal control) and a study on an advanced traffic control system for Lanzhou city, environmental monitoring, and enhancement of institutional capacities.

2. The domestic environmental impact assessment (EIA) was prepared by the Gansu Environmental Science and Design Research Institute (GESDRI) and submitted to the Lanzhou Environmental Protection Bureau (EPB), which identified sensitive environmental receptors, including soil-erosion prone zone, Class II water source protection zone, trees, and numerous communities that were sensitive to noise, water and air pollution. A set of comprehensive mitigation measures included in the domestic EIA went through a series of government consultation processes. The final domestic EIA was approved by EPB in February 2009.

3. Project construction was completed in June 2019 and the initial test operation was carried out from late December 2012 (original 8.7 km of BRT corridor- Phase 1) to May 2019. The Project was completed as planned except for the remaining 3.9 km of BRT corridor (Phase 2) which was re-aligned to 2.8 km consisting of four stations including one terminal station due to resettlement issues. EPB confirmed no updated domestic EIA is required according to PRC’s environmental requirements. However, an updated domestic environmental assessment document was prepared by the PMO in February 2017. Accordingly, an environmental due diligence report was prepared and approved by ADB in December 2017.

4. ADB project completion review (PCR) mission was conducted during 8 to 15 October 2019. The mission visited the project sites and facilities, and the on-line environmental monitoring system in Anning EPB. Anning EPB confirmed with the PMO and the Mission that no domestic environmental completion checks and acceptance is required for this project. The mission had extensive discussions with representatives of relevant stakeholders. By the time of the ADB PCR mission, insufficient data and information were made available to enable a thorough evaluation to be conducted. This analysis was prepared based on information obtained during the mission and the records of environmental monitoring reports prepared during 2011 to 2019.

B. Institutional Arrangement

5. PMO was established by the Lanzhou Municipal Government (LMG), the project executing agency, with overall responsibility for the environmental management of the Project, including fulfilling EMP implementation and environmental monitoring and reporting requirements. Lanzhou Public Transport Group and Lanzhou Traffic Police Department, the

54 Appendix 14

implementing agencies were responsible for daily project environmental management. The institutional arrangements for the Project’s environmental management as agreed at appraisal and as implemented are shown in Table A14.

Table A14: EMP Responsibilities and Summary of Implementation Status

Duties and Responsibilities Agreed at Project Appraisal

Implementation status

Project Executing Agency: Lanzhou municipal government (in 2014 delegated to Anning District Government (ADG)) Overall responsibility of the project’ environmental management, including EMP and EMOP

Complied. Established PMO and ensured proper implementation of project environmental management plan and environmental monitoring plan.

Project Implementing Agency (PIA): PMO/ Lanzhou Public Transport Group/Lanzhou Traffic Police Department

1. Establishment of environmental

monitoring unit

Complied. Environmental management team was established with two staff. During project construction, the environment, health and safety was closely coordinated in EMP implementation, including supervision of contractors’ EMP performance and compliance. An environmental protection steering team, led by a deputy general manager of PIAs, was organized and provided close supervision for EMP implementation.

2. Environmental clauses and EMP provisions in all bidding documents

Complied. All the bidding documents and contracts had environmental clauses and EMP provisions.

3. Preparation of EMP execution schedule for contractors

Complied. Detailed site-specific EMP including soil and water conservation and air pollution and noise control measures were prepared and approved by local EPB.

4. Supervision of contractors to comply with the EMP provisions

Complied. Regular site visits, inspections, and supervision were carried out.

5. Implementation of operational phase EMP

Complied. Since BRT commercial operation began in late 2012, the PIAs have been implementing environmental safeguards measures (engineering management units of these bureaus are responsible).

6. Direct communication and cooperation with local government agencies for environmental protection and EMP and EMOP

Complied. There was close communication and cooperation in implementing mitigation measures with local EPB and other concerned bureaus.

7. Engagement of independent environmental monitors.

Complied. An independent environmental monitor was engaged beginning in 2010, and provided annual environmental monitoring reports which indicate full compliance with applicable standards and the EMP.

8. Supervision engineering companies Domestic construction supervision companies were involved in and closely supervised and managed construction. Supervision to ensure proper environmental management planning and execution was a priority concern and working area of those construction supervision companies.

9. Contractors Environmental management was taken seriously by contractors. Contractors implemented good environmental management practices, actively contacted relevant local authorities, and followed the agreed environmental management in their contracts.

EMP = environmental management plan, EMOP = environmental monitoring plan, EPB = environmental protection bureau. Source: Project management office.

C. Environmental Impacts and Mitigations

6. Water and soil Conservation. At construction stage, soil-related impacts mitigation measures included such preventive and mitigation construction practices as minimizing areas of soil clearance, selecting less erodible materials, planting vegetative cover immediately after fill placement, and finishing discharge zones from drainage structures and channel embankments with riprap. Rechanneling of the Da Sha (Qing Shi) Sloot was carried out only in dry season. A

Appendix 14 55

spill management plan for preventing contamination of soil from accidental spills of petroleum products and hazardous materials was developed and implemented. At operation stage, monitoring of stormwater runoff and soil is being carried out.

7. Solid Waste. At construction stage, Da Sha (Qing Shi) Sloot urban disposal site was used for dumping demolition waste. At operation stage, maintenance of the urban road is organized, including to clean the roads and drainage systems, and to collect solid waste, etc. 8. Surface and Groundwater. The 2009 and 2011 LMG’s rezoning of the Class II drinking water protection zone excluded the project area that is located 4km away. At construction stage, sewage and stormwater pipelines were designed to higher standards and ground sections under these pipeline networks were insulated. During construction of utility facilities, accumulated runoff or groundwater was pumped off the site and discharged into a permanent drainage system through silt traps. A groundwater channel was applied where the water table was expected to rise due to potential blocks in the groundwater flow. Water was regularly monitored during construction. During the operation stage, upgrading and construction of new roads with improved drainage systems reduce erosion from the roadway and result in water quality improvements.

9. Air Quality. At construction stage, mitigation measures included environmentally friendly construction practices and best available pollution control measures. At operation stage, aaccording to operational air quality monitoring through 2017~2019, the air quality levels at all representative receptors complied with national standards in corresponding functional areas.

10. Noise. At construction stage, a number of mitigation measures was applied including source controls, site controls, schedule of construction time, baseline and routine noise monitoring. At operation stage, according to operational noise monitoring in February 2016, the noise levels at all representative receptors complied with national standards in corresponding functional areas.

11. Trees. A tree management plan was developed and implemented by Lanzhou Gardening Bureau. It included a site-specific, detailed tree inventory, as well as procedures and schedule for tree relocation and conditions for felling. The old trees in good condition were relocated and unhealthy or dead trees felled. The plan also defined the location of the protection zone for the old trees, locations for other trees to be moved, as well as procedures and monitoring to increase the survivability rate. At construction stage, the PMO appointed professional landscaping companies to remove and replant the trees. All the replanted cedars are survived. Professional gardeners were hired to take care of these trees. In total, 13.93 ha of trees were planted under the Project. This includes 10.35 ha that were planted in patches of green land in scenic areas and 2.79 ha along the project roads. Some 0.79 ha were relocated trees. At operation stage, the trees have positive environmental impacts on urban landscapes, contributing to soil erosion control, improving air quality, and creating microclimate. To some extent, roadside trees also provide noise protection.

12. Social Issues and Urban Infrastructure. At construction stage, the impacts on urban traffic were temporary and managed, including close cooperation with the relevant urban infrastructure departments. Temporary electricity and water supply schemes were developed in coordination with relevant authorities to supply construction works with electricity and water. The PMO developed a traffic management plan to prevent congestion and traffic jams by consulting with the Traffic Police Department. Information on the urban construction status was provided through television, radio, and newspapers to the public. Bulletin boards were set up to publicize the objectives of the Project, construction timetable, and grievance hotline. Safety measures

56 Appendix 14

were adopted for pedestrians’ and residents’ safety and convenience. These included footbridges, fences, and appropriately situated lighting. In the operation stage, the Project is anticipated to have positive impacts on the social environment and urban infrastructure.

13. Cumulative and Induced Impacts. In the operation stage, traffic volume on the main roads between the city center and Anning District in the with-project case are about 20% greater than the traffic volume in the without-project case, while the speed of buses is increased and the percentage of bus users among commuters also increased. The BRT system also has positive impacts on traffic flow on the road and alleviates the adverse environmental impacts associated with increased traffic volume. In addition, LMG is carrying out citywide air pollution and noise monitoring. As a mitigation measure, a strategic approach aimed at reducing air pollution in Lanzhou is being implemented by LMG including shutting down several factories that emit large amounts of pollutants, clean energy action focused on reducing emissions from industrial and energy sources of air pollution, clean vehicle action focusing on the conversion of public transport vehicles and taxis to compressed natural gas, and a program for afforestation of the mountain slopes around the city.

14. Environmental benefits. The Project directly benefits those residing in the Anning District, and further benefits, indirectly, the remaining population in Lanzhou. Residents benefit from a sustainable transport system which supports the urban and economic developments. The Project also maximizes the benefits of improved infrastructure by encouraging behavioral change with respect to road safety and traffic management. Provision of dedicated lanes for public buses improves traffic flow since the buses do not have to fight for lanes with other motor vehicles when getting in and out of stops, resulting in better road safety and faster travel time for the passengers. Travelling on dedicated lanes reduces stop-and-go in congested traffic, allowing the buses to travel at faster and more constant speed, resulting in less carbon emissions per vehicle per mile travelled, and reduced traffic noise compared to the “no project” scenario due to buses travelling more smoothly on dedicated lanes in the center of the carriageway, instead of the in-and-out, stop-and-go conditions. Noise modeling data presented on operational stage impact and mitigation show improvements (reductions) in noise levels at sensitive receptors compared to the “no project” condition. CO2 emission factor for both gasoline and diesel motor vehicles would decrease from approximately 500 mg CO2/mi to approximately 250 mg CO2/mi when the vehicle speed increases from 25 mph to 75 mph, with diesel motors having a slightly lower emission factor than gasoline motors1. The introduction of compressed natural gas (CNG) buses also contributes to reduced emission loads. Motor vehicles travelling on the project roads are able to travel at higher speeds compared to travelling on other roads. Emissions of hydrocarbons, carbon monoxide and nitrogen oxides reduced as well. This will contribute to improving the air quality in Lanzhou as well as providing climate change mitigation benefits with annual CO2 emission reduction of 11,518 tons.2

D. Environmental Monitoring and Reporting

15. Independent environmental monitors were engaged throughout the project construction stage who conducted regular site visits, monitoring of performance of environmental mitigation measures, and prepared EMRs during 2010–2019. The EMRs recorded that the project implementing agencies also conducted regular site visits and inspections throughout construction stage, and closely cooperated with local environment protection bureau and other

1 Bai S., D. Eisinger and D. Niemeier. 2009. MOVES vs. EMFAC: a comparison of greenhouse gas emissions using

Los Angeles County. Transportation Research Board 2009 Annual Meeting. 15 pp. 2 Based on the semi-annual monitoring and validation data through 26 April to 25 October 2014.

Appendix 14 57

relevant authorities (such as landscaping bureau) for environmental monitoring, including water/air/acoustic quality, and soil erosion impact monitoring. A total of nine EMRs were prepared and disclosed on ADB website during 2011–2019, which contained data on engineering progress, and environmental management status including implementation of mitigation measures, with a focus on water and soil conservation, air quality and noise control, and supervision and inspection records. In addition, an advanced environmental monitoring system with 54 air quality sensors in Anning District has been established by counterpart funds, which is providing real time air quality monitoring data in Anning covering the project area.

E. Public Consultation and Grievance Addressed

16. During project implementation, extensive public consultations were carried out to discuss project impacts, including environmental impacts. This included public consultation meetings, targeted consultation meetings, surveys, interviews, and information disclosure and feedback. Over 1,800 individuals (also including passengers and drivers), 90 business enterprises, and 360 government officials were consulted or surveyed. During project construction and trial operation, the EMRs indicated that close dialogue and communication were carried out with local authorities and affected communities. As of September 2019, there was no record showing any pending grievance issues.

F. Conclusion

17. Overall implementation of the project environmental management plan is satisfactory. The institutional setting and arrangements followed the original project design. The EMRs were of good quality and provided sufficient information on the EMP implementation. No unexpected adverse environmental issue other than predicted in the original EMP was identified. A range of good engineering practices incorporating environmental protection measures were implemented. At the time of the project completion review mission, there were no pending environmental safeguards-related non-compliance issues.

58 Appendix 15

LAND ACQUISITION AND RESETTLEMENT ANALYSIS A. Background

1. The Lanzhou Sustainable Urban Transport Project (hereinafter, the “Project”), is the first municipal project funded by ADB in Lanzhou. The Project consists of 4 components under ADB financing in Lanzhou's Anning and Qilihe districts. Component A: Urban road network and related infrastructure, including (i) 21.4 km of 12 new road construction, (ii) 12.4km of reconstruction of 7 existing roads, (iii) 13.0 km of Bus Rapid Transit (BRT) lanes and 22 BRT stations in the middle of the road sections, and (iv) 3.5 m to 5.0 m width of non-motorized transport (NMT) lanes in the all constructed and reconstructed urban roads except 1.7 km of S578; Component B: Advanced traffic management, including (i) BRT operation and management planning, (ii) advanced traffic control system (signal control), (iii) Traffic Demand Management (TDM) strategy and policy reform, and (iv) NMT development plan; Component C: Advanced environmental monitoring system, including (i) monitoring stations, and (ii) a data-processing center; Component D: Capacity Building. The Loan and Project Agreements were signed on 30 March 2010 and became effective on 14 July 2010. In June 2012, ADB approved an extension of the loan closing date by 1 year to 30 June 2016; and in June 2016, ADB approved further extension of the loan closing date to 31 December 2018.

2. The project was categorized as category A for involuntary resettlement. According to land acquisition and resettlement (LAR) identification during the project preparatory technical assistance, LAR is only caused by the urban road construction and relative resettlement site construction in Component A, and the main types of resettlement impacts are the permanent land acquisition (PLA), temporary land occupation (TLO), house demolition (HD) of rural and urban residential houses, non-residential structures, attachments and special facilities removal. A resettlement plan (RP) was developed in accordance with ADB’s Involuntary Resettlement Policy (1995) and relevant PRC policies and regulations and based on a comprehensive impact survey in the Project area organized by the PMO and conducted by relevant subdistricts and two real estate appraisal, which covered affected population, houses, land areas, and other facilities. The survey was also part of Project preliminary design. The RP was approved by ADB and disclosed to the affected persons and on ADB website in June 2009. The RP was not updated based on the final design and detailed measurement survey (DMS). However, the LAR changes were reflected in the semi-annual resettlement monitoring reports as well as internal progress reports. 3. Original scope of the Project covers (i) construction of 12 roads with a total length of 21.4 km, (ii) improvement of 7 roads with a total length of 12.4 km, (iii) construction of the underground comprehensive pipe trench with a total length of nearly 16 km, (iv) construction of a Bus Rapid

Transit （BRT） corridor with a total length of 13.0 km, which starts from Renshoushan Park in

Anning District and ends at Lanzhou West Railway Station, (v) the construction of dedicated public transport lane. The original IR impacts of the project was significant, although IR impacts has been minimized during implementation, for example, the 580#(south) was cancelled from ADB’s scope of project financing to avoid the relocation of residents of whole village, unexpected difficulty in the negotiation and relocation with non-residential entities were the main impediment factors for the project implementation and reason for the delay. For example, the north section of road 530 (Road 516 to Renshoushan Terminal) affected 3 oil pipelines and the relocation scheme requested by the authorities was to relocate the utility tunnel works and the design need to be approved by the authorities which was beyond the capacity of the EA. The estimated relocation cost is also far beyond the original estimate. Finally, the section was cancelled from the ADB project. Another one is the design adjustment of Road 516, because of the resettlement difficulty

Appendix 15 59

for the relocation of “Gansu Disabled Soldier Sanitorium and the family dormitory”, as the same situation of road 530 for the oil pipelines, the relocation site and budget need to be approved by the authorities which was beyond the capacity of the EA. Finally, the design was adjusted to avoid the demolition of the non-residential entity. The resettlement difficulty, lack of counterpart funds refers to the resettlement of these non-residential entities. During the implementation, there were some changes on the design as follows:

• The new road 574# was no longer constructed due to road alignment issues and the new road 510# was removed from ADB financing, to 100% government financing. These changes were approved by ADB in April 2012.

• As of 31 December 2016, 7 reconstructed roads and 3 new roads (511#, 516#, 530#) were under construction. Due to project delays, ADB, EA, IA and the PMO agreed to change the civil work packages. Therefore, some sections of 511#, 530#, 580#(south) were cancelled from ADB’s scope of project financing, 516# referred to design change and BRT corridors realignment. The BRT corridors and 4 new stops followed road 516#, Mogao Avenue, road 502#, which did not incur any LAR impacts.

• As to April 2019, 0.895 km of existing roads reconstruction were reduced due to difficulty in resettlement of non-residential entities mentioned above.

B. Institutional Arrangements

4. The Lanzhou Municipality Government (LMG) is the executive agency (EA) and the Anning District is the implementing agency (IA). Several agencies include Anning Finance Bureau, Anning Development and Reform Commission, Anning Land Resources Bureau oversee the implementation of the project on behalf of IA. The Project Management Office (PMO) set up by LMG will be a permanent office responsible for coordination among various agencies and a contact point with ADB. The PMO consists of many divisions like social affairs division, engineering division, financial division are responsible for the Project implementation under the guide of consultant teams. There are 6 full-time staff in social affairs division take charge of land acquisition and resettlement. Most of the LAR implementation rely on the staffs in sub-districts, who is assisted to carry out the detailed measurement survey (DMS), negotiation and sign agreement with affected villages and APs, pay compensation as well.

60 Appendix 15

Figure A15: Organization Chart of the Relevant Resettlement Implementation Agencies

C. Land Acquisition, House Demolition, and Resettlement Impacts

5. According to the Resettlement Plan (RP) of the Project approved by the ADB in June 2009, the Project affects 25 villages or residential communities in 7 subdistricts in Anning District. Among the affected subdistricts, Anningxilu Subdistrict (2 communities) and Peili Subdistrict (1 community) were affected by state-owned land acquisition and non-residential structure demolition, where the remaining 22 villages in 5 subdistricts was affected by PLA and HD. 6. The earliest LAR was started in 2010 and all of the LARs have been completed in 2018. All affected persons were compensated and resettled according to the RP; however, as sub-districts government took charge of the construction of resettlement communities and carry out the relocation for AHs who chose property exchange. The resettlement communities’ construction were completed in stage, 3 resettlement communities were completed before 2014 and 1 was completed by the end of 2017. The sub-district government also increased the standard of transitional subsidy from CNY150 to CNY500 per capita per month and paid in quarter. All of the transitional subsidy have been paid in time and enough for the APs to rent houses nearby for transition.

7. Compared with RP, the total area of collectively-owned land actual acquired for the roads is reduced from 1560.48 mu to 768.19 mu, decreased by 50.78%, and the main cause for the decrease lies in that project design changed. The detailed comparison between the land area in the resettlement plan and the actual land area for roads is shown in the Table A15.1. Compared with RP, the total area of private residential housing affected by roads is increased from the planned 317,147m2 to the actual 320,657m2, increased by 1.1%. Especially, the greater increase in the quantity of demolition for roads completed is mainly due to a large number of color steel houses. For the details, refer to the Table A15.2. Compared with the RP, the total entities affected by roads with commenced demolition is decreased from the planned 74,539 m2 to the actual number 55,298 m2, and the main cause of the decrease lies in the fact that when preparing the

Lanzhou Municipality Government (EA)

Anning District (IA)

Project Management Office (PMO)

Affected Subdistricts

Affected Villages

Affected Persons

Affected Households

Affected Entities

Fianance Bureau

Development and Reform Commission

Land Resources Bureau

OthersConsultant Team

Appendix 15 61

resettlement plan, the data is accounted in accordance with the area of affected organizations within the red line, but during actual demolition, in most cases, compensation is done for entire housing area of affected entities.

Table A15.1: Detailed Comparisons between Land Area in Resettlement Plan and Actual Unit: mu

Package Road

Planned① Actual② Variation

③=②-① State-owned Collective Sub-total

State-owned Collective Sub-total

I. Road

A01 571# 45.51 19.64 65.15 50.11 15.04 65.15 0.00

A02 518# 22.06 99.70 121.76 63.29 113.35 176.64 54.88

570# 0 26.00 26.00 0.00 30.00 30.00 4.00

A03 502# 0 174.48 174.48 2.04 29.17 31.21 -143.27

A04 574# 0 0 0 0 0 0 0.00

A05 516# 30.99 273.85 304.84 0 68.91 68.91 -235.93

A06 530# 0.10 304.68 304.78 0 294.73 294.73 -10.05

A07 511# 102.85 224.89 327.74 102.85 129.55 232.40 -95.34

A08 580# 0 62.37 62.37 0 22.92 22.92 -39.45

A09 572# 34.42 18.95 53.37 34.42 4.23 38.65 -14.72

576# 2.00 93.00 95.00 2.00 25.29 27.29 -67.71

A10 510# 0 227.92 227.92 0 0 0.00

-227.92

II. Resettlement Site

Liujiabu 15.00 15.00 34.58 0.00 34.58 19.58

Yintanlu 15.00 15.00 15.30 0.00 15.30 0.30

Kongjia'ai 15.00 15.00 10.70 0.00 10.70 -4.30

Anningbu 0 35.00 35.00 0 35.00 35.00 0.00

Total 282.93 1,560.48 1,843.41 315.29 768.19 1,083.48 -759.93

Table A15.2: Detailed Comparison between Demolition Quantity in

Resettlement Plan and Actual Demolition Unit: m2

Package Road

①Planned ②Actual Variation ③=②-① residential

non-residential

subtotal residential non-

residential subtotal

A01 571# 10,415 5,287 15,702 15,629 12,000 27,629 11,927

A02 518# 54,782 452 55,234 60,024 1,151 61,174 5,941

570# 9,738 7,476 17,214 9,874 7,458 17,332 118

A03 502# 22,592 7,364 29,956 29,333 4,051 33,384 3,429

A04 574# 0 0 0 0 0 0 0

A05 516# 43,295 36,350 79,646 62,716 13,569 76,285 -3,360

A06 530# 41,967 1,157 43,124 35,264 433 35,698 -7,426

A07 511# 16,668 7,823 24,490 13,028 8,119 21,147 -3,343

A08 580# 55,583 2,581 58,164 25,328 0 25,328 -32,836

A09 572# 7,398 1,909 9,306 13,215 2,504 15,718 6,412

62 Appendix 15

576# 49,084 3,818 52,902 56,247 4,048 60,295 7,393

A10 510# 5,626 323 5,948 0 0 0 -5,948

B05 578# 0 0 0 1964 1964 1,964

Total 12 317,147 74,539 391,687 320,657 55,298 375,955 -15,731

8. The Project affected 6,565 persons in 1,751 households, while the estimates in the RP were 7,799 persons in 2,034 households. A total of 1,653 persons in 491 households affected by PLA, and 5,222 persons in 1,351 households affected by HD which is close to the APs in RP. Therefore, the APs decreased mainly for the less impact on land acquisition. For details, refer to Table 15.3.

Appendix 15 63

Table 15.3: Detailed Comparison between Resettlement Plan and Actual Affected Population for Roads with Commenced Land Acquisition and Demolition

Impact Item Package A01 A02 A03 A04 A05 A06 A07 A08 A09 A10

Sub-total Road 571# 518# 570# 502# 574# 516# 530# 511# 580# 572# 576# 510#

land acquisition

Household (HH)

Planned 0 81 9 41 0 119 123 167 35 0 0 204 779

Actual 6 70 17 2 0 41 198 157 - 491

Persons Planned 0 217 31 158 0 412 460 538 102 0 0 727 2,645

Actual 17 189 75 6 0 139 713 514 - 1,653

house demolition

Household (HH)

Planned 36 203 31 112 0 136 191 71 342 23 202 30 1,377

Actual 59 266 41 134 0 155 186 62 92 42 314 - 1,351

persons Planned 148 988 152 467 0 524 926 285 912 107 964 115 5,588

Actual 237 1000 159 518 0 758 599 225 548 212 966 - 5,222

Both PLA and HD

Household (HH)

Planned 0 18 0 21 0 0 8 29 14 0 0 32 122

Actual 18 2 0 42 29 0 - 91

persons Planned 0 56 0 72 0 0 41 93 52 0 0 120 434

Actual 56 6 0 155 93 0 - 310

Total

Household (HH)

Planned 36 266 40 132 0 255 306 209 363 23 202 202 2,034

Actual 65 318 58 134 0 196 342 190 92 42 314 0 1,751

persons Planned 148 1149 183 553 0 936 1345 730 962 107 964 722 7,799

Actual 254 1133 234 518 0 897 1157 646 548 212 966 0 6,565

Note: Something wrong exists in the road 510 that APs induced by both PLA and HD is more than that in HD. To keep the consistency with RP, the figure planned APs quoted from the Annex 1 in RP.

64 Appendix 15

D. Resettlement Policies and Compensation Rates

9. In response to provide better safeguards for the APs induced by land acquisition and house demolition, the local governments issued a number of regulations to improve the implementation on LAR. The land acquisition carried out the standards in Notice of the Gansu Provincial Government on Issuing the Location-based Integrated Land Prices and Uniform AAOV Rates for Land Compensation of Gansu Province (GPG [2009] No.88, revised in GPG [2012] No.151). The house demolition mainly refers to the regulations in Lanzhou Municipality and Anning District issued in 2006, 2010, 2011, and 2014. Therefore, some compensation standards increased with the new policy issued. For example, the transitional subsidy was CNY150 monthly per capita in 2009 to May 2013, CNY300 in June 2013 to August 2015, CNY400 after September 2015, CNY500 after January 2017. The moving allowance also increased from CNY400 per HH to CNY1,500 per HH. Furthermore, all the compensation standards actually implemented are equal or higher than those in RP. On 29 February 2017, the Gansu Provincial Government adjusted the Location-based Integrated Land Prices and Uniform AAOV Rates for Land Compensation (GPG [2017] No.17), which is adopted in the implementation at once. The details list in Table A15.4.

Table A15.4: Comparison of Planned and Actual Compensation Standards

Compensation Item Type Unit RP (CNY) Reality (CNY)

Land Acquisition

young crops mu 3,420 3,420

land compensation

Anningbu Sub-district mu

92,340 92,340/118,025/ 161,871/198,066

Other sub-districts mu

118,742 118,742/143,793/ 187,146/231,687

ground attachment

Anningbu Sub-district mu

30,000 30,000/60,000

Other sub-districts mu

30,000 30,000/80,000

Temporary land occupation mu*year 3,420 -

House Demolition

brick-concrete house m2 649 1178

brick-timber house m2 405 949

earth-timber house m2 145 558

moving allowance HH 400 400/1,000/1,500

transitional subsidy per capita month 150 150/300/400/500

business interruption

Tier A m2 8~32 8~32

Tier B m2 9~36 9~36

Tier C m2 10~40 10~40

transition compensation

Tier A m2 8 8

Tier B m2 9 9

Tier C m2 10 10

Appendix 15 65

E. Rehabilitation and Income Restoration

10. Based on monitoring and evaluation reports, project completion report mission site visits, interviews with affected persons, and interviews with sub-district government and land resource bureau, it is concluded that the LAR of the Project was satisfactory, the income of affected persons has been restored and even increased, living environment of affected persons has improved a lot. No complaints, grievances or other concerns were noted and affected persons are better off than before the project. Compensation was paid prior to land acquisition and house demolition, which greatly facilitated the LAR process. Prior payment reduced affected villagers’ doubts and provided them with the required funds to meet their resettlement needs. Compensation was mainly used to rebuild livelihoods, purchasing new houses, decorating new housing, make productive investments, and contribute to small savings.

11. For land losses, various possibilities were available to the affected persons to enable them to maintain their income. These included: (i) the Endowment Insurance System for Land Expropriated Farmers (LEF) – among the affected persons entitled to participate in the system, 100% participated, and APs who reached retirement age have begun to receive pensions monthly and the pension ranged from CNY1,000 to CNY2000 according to the ages; (ii) according to available data, about 364 people have got new jobs created by the project and provided by the sub-district office, i.e. property management, cleaner and security guard, etc.; (iii) various skill trainings, such as cooking, electrician, housekeeper service and beauty and hairdressing, etc. were provided by Anning District Labor and Social Security Bureau (ADLSSB) for APs for free. APs who joined the training could also got certificate after the training and increased their competitiveness in the labor market. According to the interview with director of Anningpu subdistrict office, there are many job opportunities inside their subdistrict, such as village tourist restaurants, building material market, High-tech Industrial Park and property companies. APs who worked in any of these industrial could get at least CNY2000 per month which is much higher than their agriculture income before. According to a sample social economic survey of APs during monitoring, compared with the year before relocation in 2010, the average of household annual net income increases from CNY27,352 to CNY51,875 in 2017. 12. After being transferred as urban residents, LEFs with income lower than the lowest living standard for local urban residents can enjoy minimum standard of living for city residents. Implementation authorities in each level shall fully consider demands of delicate groups involved and conduct minimum living standard for needy families complying with conditions. The existing urban minimum living standard pays allowance to families with income per capita per month lower than 407 Yuan to make the income per capita per month equal to 407 Yuan.

13. For collectively-owned land not contracted, all compensations are left in the village. For example, Liujiapu Community and Cuijiazhuang Community have established community enterprises: seeds market in Liujiapu Community and catering entertainment ecologically friendly parks in Cuijiazhuang Community. Manner of quantization of average shares and dividends by shares for all villagers is adopted. It is agreed by the villager meeting that all land acquisition compensations for the mass are used for investment of community enterprises. The APs were priority to hired in the collective enterprises, and got a wage at the average of CNY15,000 annually, which reached the average income of primary workers in Anning District. Besides, the APs are the member of the rural collective economy organization in respective villages or communities. The membership entitles the APs possess the shares of the collective assets and will get dividends in the future.

66 Appendix 15

14. For residential house demolition, cash compensation was paid based on the replacement price. All affected households were eligible to buy the resettlement housing in the resettlement communities, as this was a preferential policy. Among 1206 AHs, 145 AHs chose cash compensation and the other AHs chose resettlement housing during implementation. The sub-districts government took charge of the construction of resettlement communities and carry out the relocation for AHs who chose property exchange. Since 3 resettlement communities completed before 2014, 915 AHs had been relocated in the correspondingly resettlement communities in Liujiapu, Yintanlu, Kongjia’ai sub-districts. The APs are satisfied with the condition of the resettlement apartments, infrastructure, living environment and so on. The Anningbu Resettlement Communities commenced to construct in September 2011, and 2 buildings (5# and 6#) completed in December 2016 and transferred the keys to APs. The rest 2 buildings (1# and 2#) completed in July 2017 and relocate the APs into the resettlement site since August 2017. Up to 31 December 2018, 100% of the AHs have moved in the new resettlement apartments.

15. In terms of the transitional stage, the subsidies increased from CNY150 per capita to CNY500 per capita per month, which met the expenses on houses rental and were paid quarterly in time. Additionally, the moving allowance also increased from CNY400 per HH to CNY1,500 per HH and the AHs interviewed during the PCR mission expressed that the allowance is sufficient. The communities are located near the original houses of AHs. They are provided with central heating system, water supply, power supply, transportation, gas supply, communication and cable TV etc. Besides, the infrastructures such as school, elderly care center, market, commercial shops and community clinics are also inside the communities which could facilitate the daily life of AHs. The two young women interviewed during the PCR mission said that the living environment of their new houses improved a lot compared with original houses in the village, especially the use of central heating system and natural gas after moving to the new house which reduced the expenditure for domestic energy and more effective, cleaner, safer and convenient compared with using coal stoves in the village before. They got jobs in the property company and school in the resettlement community after moving into the resettlement community and could earn more than CNY2,000 per month. They could save more time and take care of their families. F. Resettlement Cost and Funding

16. The gross investment in the Project is $480.27 million, including an ADB loan of $150 million, accounting for 31.3%. The domestic Bank of China will finance $240.31 million, or 50.0% of the Project cost. Lanzhou Municipal Government will finance the remaining cost of $89.96 million, or 18.7% of the project cost. All the cost incurred during land acquisition, relocation, and resettlement is included in the total budget of the project. Based on the price in 2009, the total resettlement budget for the project is CNY1.195 billion in RP, including physical contingencies (10% of basic fee) and price contingencies (5% of basic fee). According to the annual audit reports approved by the Gansu Provincial Audit Office, the Project actual resettlement cost is CNY958.6 million ($139.32 million1), and 100% financed by LMG from government funds. The details list in Table A15.5.

1 Exchange rate used: $1 = CNY6.8808 at completion date of 15 July 2019.

Appendix 15 67

Table A15.5: Situation of the Compensation Disbursement Unit: million CNY

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annual plan 500 100 177.53 45 230 100 230 85 50

Annual finished 514.35 20.69 76.32 35.96 202.55 52.12 44.55 -0.5 12.5

Proportion (%) 102.80 20.70 43.00 79.90 88.10 52.10 19.40 -0.59 25.00

Cumulative (actual cost)

514.4 535 611.4 647.3 849.8 901.9 946.6 946.1 958.6

Source: 2010~2018 Annual Audit Reports.

17. Compensation paid to families are generally paid in full at one time to a dedicated account established by Lanzhou Bank for compensation in the Project after entry of the agreement, and the household relocated due to land acquisition or demolition can withdraw the cash with the deposit book at any time. Compensation paid to institution entities shall be paid in twice according to actual conditions after entry of the agreement. Till now, all compensation fees have been timely paid to affected families or organizations after entry of the agreement. G. Participation and Consultation, Complaints, and Grievance Redress

18. In order to carry out resettlement implementation efficiently, to guarantee the legal rights of APs, to decrease the incidence of grievances and conflicts and to fulfill the objective of improving the livelihood of all APs, in accordance to the resettlement policies and legal regulations adopted for the project, special attention has been paid to participation of and consultation with the APs throughout the project. During the resettlement policy development and during the implementation phase of the project, compilation of the RP, the opinions of APs were collected widely.

19. During the project preparation/feasibility study phase, the PMO consulted Lanzhou municipal and relevant district governments, People’s Congress, Political Consultant Committee, people’s groups, and representatives of APs from the affected institutions, Village Committees, enterprises and shops about land acquisition and house demolition. During the implementation stage, the PMO disclosed the project information and progress through newspaper, TV, websites, help the village committees hold meetings, distribute the updated project policies to the APs. Besides, the PMO accompanied by the external M&E team carried out the socio-economic survey and interviews. The field visit included land acquisition, house demolition, and group discussion by APs. The requests and advices of the APs were adopted fully in component design, resettlement plan, and compensation standards. A sound grievance redress mechanism was established and fully staffed, and the affected persons knew how to file an appeal when their rights were infringed.

20. The disputes arising from unclear communication for the understanding of resettlement policies, were addressed after clear explanation to affected people through several rounds of consultations and communications by resettlement agencies. Documentation of concerns and grievances were strengthened during implementation. There are no remaining or unresolved safeguard-related issues and complaints.

H. Monitoring and Evaluation

21. There are two kinds of monitoring carried out simultaneously by two separate organizations in the project implementation. The internal monitoring was conducted by PMO,

68 Appendix 15

while external monitoring by Lanzhou Western Investment Consultation Co., Ltd. The PMO established in April 2008, and the social consultant Dr. Zhang Weijian was engaged in 2010 to assist the PMO on internal monitoring. Mr. Yuemin and his team were engaged to conduct the external monitoring and evaluation in 2010. For the delay in implementation and absence of social consultant from 2014, a land acquisition and resettlement due diligence and a safeguard mission were conducted by the resettlement staff consultants and resettlement specialist of ADB in 2014 and 2015 respectively, to supervise resettlement implementation progress and accelerate monitoring report submission. The two due diligence reports were prepared in April 2014 and March 2015 and disclosed as a social monitoring report on ADB website in March 2015. According to the social monitoring report, 2 of 4 resettlement communities have been completed and APs who were resettled in the two resettlement communities have moved to new apartments, all compensation has been paid to them and living conditions have improved. The APs interviewed were satisfied with the Project and LAR implementation. Dr. Chen Xiaonan, a new social consultant was engaged in October 2015 by the PMO to assist the PMO on internal monitoring. PMO had submitted 10 internal progress reports on resettlement plan implementation. The external monitor had timely submitted 13 social monitoring reports on the resettlement plan, all of these reports were posted on the ADB website and were made publicly available to affected persons. I. Lessons Learned and Conclusion

22. The lessons learned from the complete LAR are as follows: (i) proper facilitation and coordination between the PMO and concerned agencies are critical to ensure that consultations, compensation, income restoration and relocation measures are implemented in a timely and satisfactory manner; (ii) while there are qualified staff in place, it should be supplemented with capacity building activities and engagement of specialized staff for additional support; (iii) development of resettlement communities with access to basic services and facilities and livelihood opportunities which are equal to or better than pre-project situation are critical in order to improve, if not restore the pre-project conditions of the affected households; and (iv) potential impacts or risks on non-residential entities be identified as early as project preparation to allow easier verification during project implementation to avoid project delays 23. Based on the review of documents, including the project completion report, external monitoring reports, project completion review mission site visits and discussions with PMO, sub-district offices (Anningpu, Liujiapu, Kongjia’ai, Yintanlu), and related agencies, interviews with the affected households during the project implementation, it is concluded that the LAR of the project complied with the resettlement plan. Gradually rising income levels of the affected households and improved housing quality and living environment of those affected by house demolition indicate that the affected persons are better off than they were before the project.