Document of The World Bank Report No: ICR2158 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46950) ON A LOAN IN THE AMOUNT OF US$150 MILLION TO THE PEOPLE’S REPUBLIC OF CHINA FOR A SECOND TIANJIN URBAN DEVELOPMENT AND ENVIRONMENT PROJECT December 18, 2012 Sustainable Development Department China and Mongolia East Asia and Pacific CURRENCY EQUIVALENTS (Exchange Rate Effective July 31, 2012) Currency Unit=RMB 1.00 RMB = USD 0.16 USD 1.00 = 6.24 RMB FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank APL Adaptable Program Loan ATC Area Traffic Control BCR Benefit-Cost Ratio CPS Country Partnership Strategy DBO Design-Build-Operate EA Environmental Assessment EMP Environmental Monitoring Plan IRR Internal Rate of Return ISR Implementation Completion and Results Report JBIC Japan Bank for International Cooperation KPI Key Performance Indicator M&E Monitoring and Evaluation MEB Municipal Engineering Bureau MTR Mid-Term Review PAD Project Appraisal Document PDO Project Development Objectives QER Quality Enhancement Review TA Technical Assistance TMG Tianjin Municipal Government TUDEP1 Tianjin Urban Development and Environment Project TUDEP2 Second Tianjin Urban Development and Environment Project TUDIG Tianjin Urban Development Investment Group Corporation WWTP Wastewater Treatment Plant Vice President: Pamela Cox, EAPVO Country Director: Klaus Rohland, EACCF Sector Manager: Mark Lundell, EASCS Project Team Leader: Suhail Jme’an, EASWE ICR Team Leader: Suhail Jme’an. EASWE ICR Primary Author: Songsu Choi, Consultant CHINA Second Tianjin Urban Development and Environment Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 3. Assessment of Outcomes .......................................................................................... 12 4. Assessment of Risk to Development Outcome......................................................... 16 5. Assessment of Bank and Borrower Performance ..................................................... 16 6. Lessons Learned ....................................................................................................... 20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 21 Annex 1. Project Costs and Financing .......................................................................... 22 Annex 2. Outputs by Component ................................................................................. 23 Annex 3. Economic and Financial Analysis ................................................................. 24 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 26 Annex 5. Review of the Preparation of the Resettlement Action Plan ......................... 28 Annex 6. Summary of Borrower’s ICR ........................................................................ 30 Annex 7. List of Supporting Documents ...................................................................... 35 Annex 8. Project Photos................................................................................................ 36 MAP: IBRD 39681 A. Basic Information Second Tianjin Urban Country: China Project Name: Development and Environment Project Project ID: P040599 L/C/TF Number(s): IBRD-46950 ICR Date: 12/04/2012 ICR Type: Core ICR PEOPLE'S REPUBLIC OF Lending Instrument: SIL Borrower: CHINA Original Total USD 150.00M Disbursed Amount: USD 147.25M Commitment: Revised Amount: USD 150.00M Environmental Category: A Implementing Agency: Tianjin Municipal Urban Rural Construction and Transportation Commission Co-financiers and Other External Partners: Not Applicable B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept 04/16/2002 Effectiveness: 03/10/2004 03/10/2004 Review: 05/11/2007 Appraisal: 12/23/2002 Restructuring(s): 04/14/2011 Mid-term Approval: 05/20/2003 08/11/2006 Review: Closing: 06/30/2010 06/30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Low Risk Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Satisfactory Satisfactory Quality of Implementing Moderately Satisfactory Supervision: Agency/Agencies: Satisfactory i Overall Bank Moderately Overall Borrower Moderately Performance: Satisfactory Performance: Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Quality at Entry Project at any time No None (QEA): (Yes/No): Problem Project at Quality of Yes None any time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive Satisfactory status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Flood protection 10 13 General transportation sector 20 35 Sewerage 45 50 Sub-national government administration 25 2 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 14 10 Municipal governance and institution building 14 10 Pollution management and environmental health 29 30 Urban services and housing for the poor 29 45 Water resource management 14 5 E. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox Jemal-ud-din Kassum Country Director: Klaus Rohland Yukon Huang Sector Manager: Mark R. Lundell Keshav Varma Project Team Leader: Suhail J. S. Jme'an Songsu Choi ICR Team Leader: Suhail J. S. Jme'an ICR Primary Author: Songsu Choi ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) Enhance the efficiency and equity of urban wastewater management and transportation systems, and thus facilitate the sustainable development of Tianjin and serve as a model for other cities in China. Revised Project Development Objectives (as approved by original approving authority) N/A Revised Project Development Objectives (as approved by original approving authority) There was no change to the PDO during project implementation. (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Indicator 1 : Increase in overall percentage of wastewater collected and treated in Tianjin city proper. Value quantitative or 25% 75% 75% 80% Qualitative) Date achieved April 2003 May 2003 May 2007 June 2012 Comments (incl. % Target slightly exceeded. achievement) Indicator 2 : Increase in traffic mode sharing for bus system. Value quantitative or 6% 12% 18% 21% Qualitative) Date achieved April 2003 May 2003 May 2007 June 2012 Comments (incl. % Target exceeded. achievement) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Achieved Values (from Indicator Baseline Value Revised at Completion or approval Target Values Target Years documents) Tianjin Drainage Sector: Improve drainage system and wastewater treatment facilities. Improvement of drainage collection systems in Nanjiaowai, Fukanlu, and Nanbeicang Indicator 1 : areas Value Drainage systems in Drainage Works (quantitative N/A designated areas have Completed or Qualitative) been completed. Date achieved April 2003 May 2003 June 2012 Comments (incl. % achievement) iii Indicator 2 : Construction of Shuanglin Wastewater Treatment. Shuanglin Value Shuanglin WWTP was (quantitative N/A WWTP Meeting cancelled in the N/A or Qualitative) Discharge Standards 2011 restructuring. Date achieved April 2003 May 2003 April 2011 June 2006 Comments (incl. % achievement) Indicator 3 : Rehabilitation of Dagu Canal Dagu Canal Value Rehabilitated with The canal was dredged Dagu canal filled with (quantitative Landfill meeting and sediment safely sediment or Qualitative) Environmental disposed Standards Date achieved April 2003 May 2003 June 2012 Comments Water and sediment quality monitoring for Dagu Canal is ongoing periodically. Monitoring (incl. % results show substantial achievement of applicable national standards. achievement) Tianjin Transportation Sector: Improve traffic flow, pedestrian safety, and public transport facilities. Indicator 4 : Construction of Jinzhonghe Interchange Value Jinzhonghe No interchange, Traffic (quantitative Interchange Targets Achieved bottleneck or Qualitative) completed Date achieved April 2003 May 2003 June 2012 Comments (incl. % achievement) Indicator 5 : Improvement of 300 intersections with an Area Traffic Control (ATC) System 200 ATC Value ATC was Intersections (quantitative Slow Bus Speeds: 15 km/hr. cancelled from N/A Functioning or Qualitative) the loan Properly Date achieved April 2003 May 2003 April 2011 June 2012 Comments Although the ATC contract was cancelled, Tianjin through its own funding completed (incl. % improvements to over 300 intersections. achievement) Indicator 6 : Development of Bus Priority Corridors Bus Priority Value Corridors (quantitative Slow Bus Speeds: 15 km/hr. Target Achieved Functional: Average or Qualitative) Speed 25 km/hr Date achieved April 2003 May 2003 June 2012 Comments (incl. % achievement) iv Suburban Sewerage: Hangu Wastewater Management: Improve the collection and treatment of industrial and municipal wastewater in Hangu City. Indicator 7 : Construction of Hangu Drainage Collection Collection and Target was Value Collection System in pumping system dropped in the (quantitative N/A Disrepair works completed second or Qualitative) (self-financed); restructuring Date achieved April 2003 May 2003 April 2011 June 2012 Comments (incl. % achievement) Indicator 8 : Construction of Hangu Wastewater Treatment Plant Plant Wastewater treatment operating Value plant completed and as planned (quantitative No wastewater treatment plant plant is under or Qualitative) commissioning with Class I-B. Date achieved April 2003 May 2003 June 2012 The Hangu WWTP has been upgraded to meet class 1B standards to meet the higher Comments output demands of the ECO-City. Daily flow is 50,000m3/day on average. (incl. % achievement) Institutional Development: Improve the transportation and wastewater sector structure to promote greater efficiency. Indicator 9 : Drainage Sector Study Value Incoherent structure and Institutional reforms (quantitative regulation for wastewater Targets Achieved in wastewater sector or Qualitative) sector Date achieved January 2003 May 2003 June 2012 Comments (incl. % achievement) Indicator 10 : Transportation Sector Study Bus Network Plan Value Inefficient public bus Optimized: Routes, (quantitative Targets Achieved management system Terminal, and or Qualitative) Depots Date achieved January 2003 May 2003 June 2012 Comments (incl. % achievement) v G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/10/2003 Satisfactory Satisfactory 0.00 2 12/30/2003 Satisfactory Satisfactory 0.00 3 06/29/2004 Satisfactory Satisfactory 1.50 4 12/30/2004 Satisfactory Satisfactory 6.18 5 06/21/2005 Satisfactory Satisfactory 6.49 6 05/11/2006 Moderately Satisfactory Moderately Satisfactory 15.20 Moderately 7 01/16/2007 Moderately Satisfactory 17.96 Unsatisfactory Moderately 8 06/27/2007 Moderately Satisfactory 21.24 Unsatisfactory Moderately Moderately 9 12/20/2007 23.83 Unsatisfactory Unsatisfactory 10 03/13/2009 Moderately Satisfactory Moderately Satisfactory 41.97 Moderately Moderately 11 04/27/2010 67.49 Unsatisfactory Unsatisfactory 12 02/12/2011 Moderately Satisfactory Moderately Satisfactory 98.89 13 03/24/2012 Moderately Satisfactory Moderately Satisfactory 127.50 H. Restructuring (if any) Board ISR Ratings at Amount Restructuring Disbursed at Restructuring Approved Reason for Restructuring & Restructuring Date(s) PDO in USD Key Changes Made DO IP Change millions Made changes to project scope to accommodate changed Moderately Moderately 05/11/2007 N/A Satisfactory Unsatisfactory 17.96 priorities; reallocated loan proceeds; and extended closing date by 12 months. Made changes to project scope; reallocate Loan proceeds; Moderately Moderately update name of project 04/14/2011 N/A 98.89 Unsatisfactory Unsatisfactory implementing agency; and extend closing date by 12 months. vi I. Disbursement Profile vii 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. Cities in China have been undergoing rapid growth since the start of the 1980s, driving the country’s economic growth. Chinese cities’ economies have been growing consistently over 10% per year in real terms. This facilitated, and was in turn supported by massive infrastructure and housing investments allowing most Chinese cities to reverse the physical deterioration suffered during preceding decades of urban neglect, and attain an adequate level of overall urban infrastructure and housing by the late 1990s. In contrast to the general improvements, a few urban issues have grown or newly emerged: environmental pollution, traffic congestion, and inequity. 2. Tianjin, the fourth largest city in China, is a good representation of the achievements and issues of other large and growing cities in the country. Tianjin’s GDP grew by about 15% in 2003, and has since accelerated to an average growth of 17% per year from 2001-2010, with the economy of the Coastal District, the new growth area, growing by an average 24% during the same decade. The built-up area of the city expanded from 487 km2 in 2003 to 687 km2 in 2010. Along with it the urban road surface increased from 55 km2 in 2003 to 92 km2 in 2010, but it was far outpaced by the increase in the number of motor vehicles, which increased more than two-fold from 540,000 in 2003 to 1.6 million in 2010. 3. Urban transportation and water pollution had been emerging as major issues, alongside others, from the late 1980s. In fact, they were among the main focus of the predecessor project, Tianjin Urban Development and Environment Project (TUDEP1). The project, which was implemented from 1993 to 2001with an IDA Credit (#23870) of US$100 million, was rated highly satisfactory partly due to the high quality of implementation and its innovations introducing a market-based resettlement system, competitive and autonomous public bus system, and modern landfill – which were successfully introduced under the project and became national models for other cities. 4. Being an industrial center in a water-scarce region, Tianjin has been leading the way for China in wastewater management, and had set a goal of treating 85% of wastewater within Tianjin city proper by 2010. At the time of appraisal the water treatment rate was barely 50%, but Tianjin had obtained financing from the Japan Bank for International Cooperation (JBIC) and the Asian Development Bank (ADB) to expand an existing wastewater treatment plant (WWTP) and build two new ones to reach their goal. Sewers to collect the wastewater and one additional WWTP to complete the sewerage master plan at time of appraisal were remaining to be built. 5. The major part of untreated wastewater not only from Tianjin, but also from Beijing and intervening locations in the Hai River basin was released into the Dagu Canal, which flowed through Tianjin and then discharged into Bohai Bay. A Bank loan approved in 2001 for the Second Beijing Environment Project whose major component 1 was wastewater management, and the commitment of GEF financing of a proposed Hai Basin Integrated Water and Environment Management project, presented an opportunity to clean up and reclaim the Dagu Canal. 6. Urban traffic volume and congestion have been growing rapidly as a result of increasing economic activities and personal incomes along with resulting expansion of urban areas and automobile fleets. Environmental pollution has been an inevitable byproduct of rapid industrial growth that was the principal component of the country’s economic development. While the growth of air pollution has been arrested or reversed in many cities, water pollution remains a serious and growing issue and its control has been moving higher up China’s national policy agenda. Among the growing inequity issues, a visible aspect was the contrast between the fast improving urban infrastructure in the central city areas and the slow-improving or even deteriorating services in outlying formerly rural or semi-urban areas which are developing as they host the major part of industrial expansion and burgeoning migrant population. 7. Rationale for Bank Involvement. These major urban issues and opportunities at the time of preparation and appraisal of the project (2001-2002) presented an acute need as well as an opportunity to build upon the successful interventions under TUDEP1. Hence the project was considered a potentially effective element to showcase and implement the overarching theme of the Country Partnership Strategy (CPS) for 2003- 2006, which was to “facilitate rural-to-urban transition and sustainable development.� 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 8. The project development objective as stated in the project appraisal document (PAD) is: “The project will help develop and carry out physical and institutional measures that would enhance the efficiency and equity of urban wastewater management and transportation systems, and thus facilitate the sustainable development of Tianjin and serve as a model for other cities in China.� 9. Key performance indicators as stated in the PAD are:  Urban Wastewater Management Coverage: Collection and treatment of wastewater from 80% of the central city and first 150,000 m3/day of wastewater in suburban towns; average income in districts served 15% lower than areas already served at the project start;  Water Reuse: Use of about 20,000 m3/day of reclaimed wastewater for urban uses, and 600,000 m3/day for agricultural purposes;  Road Transportation: Travel time to cross selected points;  Public Transportation: Increase in the modal share of buses. 2 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification 10. The project was restructured twice, once in May 2007 and again in April 2011. The original PDO remained unchanged through both restructurings. In the first restructuring, Tianjin and the Bank agreed that the original key indicators were unwieldy and difficult to monitor. This referred mainly to the difficulty of obtaining data on per capita incomes of beneficiaries and on the travel time to cross selected spots. The key indicators were thus simplified into two, and remained unchanged in the second restructuring:  Percentage of wastewater collected and treated: 2010 target 75%;  Modal share of passenger traffic for public transportation (bus and metro): 18% in 2010. 11. As a result of the second restructuring, the following changes were made to the project: (i) changes to the scope, description and location for some components; (ii) extending the closing date of the project by 12 months to June 30, 2012; (iii) reallocating Loan proceeds among various categories; (iv) increasing the disbursement percentage for the Works categories to 100% retroactive to June 1, 2010; and, (v) changing the project implementing agency to reflect organizational changes within the Tianjin Municipal government. The changes did not have an impact on achievement of the PDO, but they did increase the total project cost from US$303.1 million to US$371.4 million. 1.4 Main Beneficiaries 12. The project was intended to improve the overall wastewater management and transportation system effectiveness with broad benefits for Tianjin’s residents and businesses. Wastewater management was also expected to benefit downstream farmers and fisheries, and innovations under the project were expected to serve as models for other cities of China. 13. The benefits were expected to impact lower income groups more because a larger part of the wastewater and storm water drainage improvements would be located in suburban areas with a higher percentage of low income residents. Likewise, the improved bus services would principally benefit low- and middle-income groups because they tended to comprise a larger percentage of the ridership. 1.5 Original Components (as approved) 14. The nine components of the project were divided into three categories: environmental, transportation, and technical assistance, as follows: Environmental Components A) City Drainage and Sewerage. Total cost: US$77.6 million or 23.1% of the total project cost. This component included construction of storm water drains, sanitary 3 sewers, and pumping stations in Nanbeicang and Fukangnanlu areas, complementing the wastewater treatment plant (WWTP) being financed by JBIC and ADB; drains and sewers in the South Suburb (Nanjiaowai) district of Tianjin. These facilities would complete the drainage system envisioned under the Tianjin drainage master plan. The original loan amount allocated was US$32.1 million. B) Shuanglin WWTP. Total cost: US$55.4 million or 16.5% of the total project cost. This component included construction of a WWTP with a capacity of 200,000m3/day. The original loan amount allocated was US$29.33 million. C) Urban Wastewater Reuse. Total cost: US$16.7 million or 5% of the total project cost. This component included construction of water reclamation plants of 12,500-15,000 m3/day capacity each, attached to the Dongjiao and Shuanglin WWTPs; and reclaimed water distribution systems mainly for industrial and landscape uses. The original loan amount allocated was US$10.4 million. D) Dagu Canal Rehabilitation. Total cost: US$55.2 million or 16.4% of the total project cost. The component included dredging of sediment and rehabilitation of cross-sections, bridges and culverts and three pump stations for Dagu Canal and its associated tributaries. The original loan amount allocated was US$21.15 million. E) Suburban Sewerage. Total cost: US$43.1 million or 12.8% of the total project cost. This component included creation of municipal wastewater collection and treatment systems in about two suburban towns of Tianjin Municipality on a programmatic basis, to initiate and set models for wastewater management in suburban areas. The original loan amount allocated was US$19.7 million. Transportation Components F) Urban Roads. Total cost: US$62.3 million or 18.6% of the total project cost. This component includes construction of interchanges at two major intersections of the Middle Ring Road (MRR) and low cost traffic engineering improvements on selected locations along the Inner Ring Road and the Eastern and Southwestern parts of the MRR. The original loan amount allocated was US$22.9 million. G) Traffic Management. Total cost: US$4.1 million or 1.2% of the total project cost. This component included extension of the existing Area Traffic Control System to 300 new intersections with channelization and often in connection with bus priority measures. The original loan amount allocated was US$3.1 million. H) Bus Priority Measures. Total cost: US$15.2 million or 4.5% of the total project cost. This component includes preparation and implementation of bus priority measures on selected corridors, including bus ways and traffic engineering measures, to increase the efficiency of bus operations and to contribute to increasing the modal share of the bus system. The original loan amount allocated was US$6.0 million. 4 Technical Assistance I) Technical Assistance and Training. Total cost: US$4.6 million or 1.4% of total project cost. This included (i) development of infrastructure information systems; (ii) reform and development of sewerage institutions and finance; (iii) improvement of traffic forecast model; and (iv) bus routes restructuring and design of bus priority measures. The original loan amount allocated was US$3.8 million. 1.6 Revised Components 15. This project underwent two Level II restructurings – once in May 2007 and once in April 2011 – which did not involve changes to the PDO. The components and revisions are highlighted in the table below. Table 1. Project Restructuring Component May 2007 Restructuring April 2011 Restructuring A. City This component was expanded to The scope is increased to include Drainage and include upgrading road surfaces as well additional roads in the rapidly Sewerage as subsurface infrastructure including developing north western and south storm drainage and wastewater. eastern parts of Tianjin city to improve storm water and wastewater collections networks as well as improve traffic flow and pedestrian safety. B. Shuanglin Scope unchanged. This component was canceled from the WWTP loan due to changes in the regional master plan. C. Wastewater Feasibility studies showed this Reclamation and component had high safety and Reuse financial risks. This component was cancelled in the May 2007 restructuring. D. Dagu Canal Scope unchanged. To accelerate the process of coordinating with districts outside the outer ring road, four packages were carried out with the client’s funding. The remaining contracts included rehabilitation of cross-sections, bridges, culverts and pump stations and dredging and disposal of sediment were completed by the loan. E. Suburban The scope of this component was The scope was revised to construct a Sewerage reduced since Tangu used its own funds 100,000 m3/d wastewater treatment for building a WWTP. plant in the Binhai New area serving Hangu and the new “ECO City.� 5 Component May 2007 Restructuring April 2011 Restructuring F. Urban Roads The construction of Daguanlu The scope of this component was interchange, the largest interchange, reduced because many road sections was canceled when a study determined were completed as part of the city that a lower cost improvement would drainage component as described in suffice. Another road expansion Part A above. investment was canceled when sufficient road capacity became available outside the project. G. Traffic Scope unchanged. This component was canceled, and Management implemented with own funds when the winning bidder was disqualified by the Bank for corrupt practices elsewhere. H. Bus Priority This component was expanded to Engineering and traffic management Measures and include Lingbin Bus Parking Depot, measures on selected bus corridors Garage close to planned bus priority corridors. were carried out with own funds and canceled from loan financing. The location of the bus parking depot was changed from “Lingbin Road� to “Longzhou Road� and the name of the PIU has also changed. I. Technical Scope unchanged. This component’s scope was reduced. Assistance and Development of a management Training information system was canceled as a stand-alone activity and some elements were merged into other parts of the TA. 1.7 Other Significant Changes 16. Soon after project implementation started, the implementation arrangement changed significantly. Traditionally, in Tianjin, the Municipal Engineering Bureau (MEB), equivalent to the public works department in other countries, was responsible for building and maintaining roads, bridges, drainage, and sewers. It was therefore responsible for implementing most of TUDEP1 as well as TUDEP2 city sewerage and roads with the funding coming from the city Treasury. As a part of broader fiscal and organizational reform, however, MEB’s role was drastically reduced. An important element of reform was the establishment of the Tianjin Urban Development Investment Group Corporation (TUDIG) which would raise commercial financing for urban development on the basis of assets granted by the municipal government. It was made responsible for managing the investment projects as well. TUDIG began operations in 2003, and starting from 2005 it took over the responsibility of implementing the city’s roads and sewerage components from MEB. 17. Implementation as well as management arrangements for the suburban sewerage in Hangu District were also changed during the course of the WWTP construction. In view of the weak financial and technical capacity of the Hangu District, the municipal government decided to turn the WWTP over to the new Ecological City, a public-private joint venture development in the adjoining area. 6 18. Under the second restructuring, the disbursement percentages for works and locally produced equipment were raised to 100%. However, as the restructured project included additional costs borne by Tianjin related to land acquisition and equipment, the overall financing by the Bank did not increase but declined, from the original estimate of 45% to 40%. 19. The project closing date was extended by a year at each of the two restructuring events, first to June 30, 2011 and then to June 30, 2012 to accommodate the delays encountered by the project. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 20. The project incorporated lessons from TUDEP 1 by narrowing the focus to the wastewater and transportation sectors. However, the project still had too many components involving many implementing agencies, making implementation and coordination complex. The lack of clear alignment between the funding categories in the Loan Agreement and the components added another dimension of complexity to project monitoring and proved to be a big hurdle during project restructuring. Furthermore, at the time of appraisal, there remained a large degree of uncertainty with regard to the design of several components. As a result, several studies had to be carried out during the initial phase of implementation, and findings from these studies then served as the basis for the first project restructuring. 21. A case in point is the cancellation of the water reuse component. While the project was being prepared, Tianjin completed installing a pilot wastewater reuse system consisting of a tertiary effluent treatment facility at an existing WWTP and a model apartment complex fitted with additional pipes for the treated wastewater for toilet usage. Tianjin requested the Bank to finance a more advanced system to produce and distribute treated wastewater for a variety of uses. While identifying risks, the Bank team agreed to include the component, limited mainly to industrial and landscape uses, but also made it a condition that demand be confirmed by survey and risks further analyzed. (The market survey found insufficient demand as the industries were moving out of the city, and the existing pilot revealed considerable health risk. Thus the survey led to cancellation of the component and averted significant financial and health risks. ) 22. Another example is the originally proposed flyover at an estimated cost of over US$20 million at a central city junction of five roads, called Dagunanlu junction. At the time, a large number of multi-level flyovers were being built in large cities of China. The Bank team agreed to include the proposal in the project, but required a study of alternatives. The study found that a set of simple road modification and traffic management measures would suffice for the medium term. Traffic conditions at the junction today justify the study conclusion, again averting a premature costly investment. 7 23. In the case of bus priority corridors, Tianjin was reluctant to agree to the Bank recommendation. Again the compromise was to review the plan with the help of a consultant study. The study result led to a broader pilot and the development of a large scale plan of bus priority measures. 24. In the case of Shuanglin WWTP, the investment was deemed premature. In this case the issue was not feasibility, but local capacity constraints due to the ongoing construction of two other WWTPs. Therefore, during preparation, it was agreed to do the final design later. Before the bidding process could begin, the newly expanded WWTP nearby turned out to have excess capacity as the wastewater volume of the city had grown less than projected, making Shuanglin WWTP largely superfluous. The flexible design approach then allowed this investment to be cancelled without controversy. 25. The above review indicates that the deferrals and revisions to the components in general led to better outcomes than would have been the case if the components had been implemented as originally designed. Nevertheless, if there had been more thorough upfront preparation, many of these risks would have been identified early on and subsequent delays may have been averted. 26. The feasibility risks and countermeasures discussed above were identified under the individual component description; not in the overall Risk Assessment section, except for water reuse. The overall probability of negative study results for many different investments apparently was not identified. This raises the question whether the uncertainty would have been better handled by a longer preparation period or by a multi- staged approach through an Adaptable Program Loan (APL). Neither of these, however, would have been easily accommodated in the overall loan program by the government. 27. The risk assessment was adequate, except for the seriousness of attention to be given to the environmental risks associated with the Dagu Canal rehabilitation. It was an important yet difficult pilot for dredging and subsequently disposing of toxic sediment with no successful examples in China or other parts of the world. The component therefore received extensive and high-level international expertise during preparation with detailed analysis conducted for each segment during implementation. 28. The selection and design of urban and city road sections did not adequately consider the risks of land acquisition and resettlement. As such, the project later faced delays and many urban road packages were subsequently cancelled and replaced. Other identified risks related mainly to factors outside the project’s control fortunately did not materialize. A thorough and meaningful Quality Enhancement Review (QER) at appraisal could have flagged these issues. 2.2 Implementation 29. The project suffered a major delay in implementation during the first four years as the loan disbursement reached only US$18 million by June 2006, and US$25 million by June 2007. There were two main causes for the delay. One was the cancellation of a number of investments described above, and the consequent time needed to identify 8 substitute components with the formal agreement of the Bank, and to design and contract the new components. 30. Another cause for delay was the shift of implementation responsibility from MEB to TUDIG, and the resultant shift of counterpart funding from the municipal budget to local bank financing, as described in Section 1.7. Having been responsible for the preparation and implementation of the major part of TUDEP 1 as well as the preparation of most of TUDEP 2 at its early implementation, MEB had relevant experience, knowledge, and systems in place to implement the project. It took considerable time to develop an adequate replacement system. It also involved more time and uncertainly to arrange for commercial financing than receive a budgetary allocation as was happening earlier. 31. The Mid-Term Review (MTR) took place in August 2006 when the new implementation system was about a year old and studies had been conducted recommending against the implementation of three major investments (water reuse, Dagunanlu interchange, and bus corridors). The first restructuring was approved in May 2007. Loan disbursement had reached only 24% at the time, and did not accelerate until 2008 after TUDIG became fully functional and the construction under new components started. The second restructuring took place in April 2011 after it was confirmed that Shuanglin WWTP would not be needed and that the new plan for bus priority measures would not be ready for implementation under the project. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 32. M&E design and utilization was among the weakest aspect of the project. There was no separate M&E section or annex in the PAD beyond the log-frame project summary focusing mainly on implementation monitoring indicators rather than results. Its design, implementation, and use were consistent with the Bank practice at the time of appraisal, but would rate mediocre at the standard prevailing currently. 33. The key performance indicators (KPI) for the PDO established at appraisal covered all aspects of the PDO. Still, they can be faulted for an inaccurate identification of cause-effect relationships. For example, the public transportation modal share is a key sector indicator, but the contributions of planned project components – 10 km of bus lanes and technical assistance –cleared interacted with other factors in leading to the increase in the modal share. 34. A more serious issue was the difficulty of quantitative monitoring. The baseline values were not established, and efforts to establish the quantitative values would have revealed the difficulty of monitoring some of the KPIs. For monitoring the equity effect, personal incomes of the residents in the areas of project investments were to be monitored. Determining the personal incomes for small local areas remains difficult in China as in most countries, and requires detailed household surveys which are costly as well as technically complex. TMG was not willing to incur these costs. 9 35. To monitor the efficiency impact of road improvements, reduction of time of motor vehicles to traverse selected road segments was identified as the KPI. Although speeds were identified for a few segments as part of the road component design, similar monitoring could not be done extensively. Further, the effect of the project intervention would have been one of many variables affecting the travel time. 36. At the time of the first restructuring, these two indicators were dropped and baseline data were set for the remaining KPIs. The baseline values obtained then from relevant consultant studies, which in turn were sourced from relevant sector departments of TMG, are at odds with some of the values obtained at project completion. The more recently compiled data indicate that the true baseline for the wastewater treatment rate was 48% instead of 25% reported at restructuring, and that the baseline for the public transportation modal share was nearer 10% rather than 6%. 37. Consistent with the prevailing practice at the time, the project’s M&E system focused mainly on process, input and output indictors. These were reasonably monitored, but not so punctually reported. Overall, the M&E framework was not an effective tool in managing project implementation. 2.4 Safeguard and Fiduciary Compliance 38. The environmental assessment, environmental management plan, and resettlement framework prepared were satisfactory. Experienced safeguard specialists of the Bank monitored and supported safeguard implementation closely throughout the project. Some components proposed to be added at the first restructuring could not proceed as compliance with the resettlement guidelines could not be ensured. After the project started implementation, two additional environmental assessments were conducted; one for the bus parking garage component in June 2009, and one for the Baidilu drainage area rehabilitation work in May 2010. 39. The financial management plan for the project was satisfactory and its implementation was supported by the financial management team at the Bank’s Beijing office. Financial audits of project accounts were timely and satisfactory. 40. Lengthy procurement processes especially for two contracts caused significant difficulties for project implementation. For the Hangu wastewater management system, a design-build-operate (DBO) method of contracting was adopted in view of the weak technical capacity of Hangu District. This method represents a useful innovation in China as the smaller and weaker local governments are being asked to take on wastewater management requiring substantial technical capacity. Its procurement turned out to be relatively novel also for the Bank, although sector professionals had been well aware of the substance of the method and its merits in appropriate circumstances. As a result, it took about two years to complete the bidding process despite significant efforts from both Hangu and the Bank to resolve the issues. The resulting documents and the outcome provide a good model for Bank clients in China and elsewhere, but they came at a considerable cost to the project. 10 41. For the area traffic control system, there were a small number of precedents under Bank-financed projects worldwide, and completion of the bidding document and establishment of bidding and evaluation processes took some time. Once the bids were evaluated, the disqualification of the lowest bidder due to corrupt practices forced the contract to be dropped from the project. 42. In general, the client reviewed the Bank’s procurement rules as overly complicated and unresponsive to the pace of ongoing development. As a result, some local districts opted to implement some packages out of the loan financing. For example, Hangu District opted to finance the sewer construction and pumping with its own funds; five packages under the Dagu Canal rehabilitation component were also completed outside of the loan financing. 2.5 Post-Completion Operation/Next Phase 43. Tianjin’s infrastructure is satisfactorily maintained following a fixed schedule of periodic inspection and minor and major repairs. While the fiscal situation occasionally limits the extent of major repairs, it is less likely to be a concern in the future for two reasons. First, the yield of the municipal revenue dedicated to infrastructure, Urban Maintenance and Construction Tax, increased nearly seven fold between 2001 and 2010 while the road surface and sewers increased by about 100%. In addition, the fiscal and organizational restructuring discussed above has increased the infrastructure operation and maintenance budget as infrastructure investments which used to make the major part of the total infrastructure budget are now financed by borrowing through TUDIG. Furthermore, the responsibility for road maintenance rests with MEB, and the Drainage Department moved to the new Water Business Bureau in 2009. Their technical capacity and maintenance systems have not changed through the reorganization. As a result, the budget allocation for environmental protection and improvement has increased by over 20 times between 2001 and 2010. This provides supplemental funds to the wastewater operation which relies mainly on the water and sewerage tariff revenues, which more than doubled between 2002 and 2011. 44. A significant risk exists, however, of recontamination of the rehabilitated Dagu Canal and tributaries. While the existing effluent discharges had been intercepted as part of the rehabilitation, new potential discharge points are being added as the rehabilitated canals have become attractive features. As a result residential and commercial complexes are being developed along the canals. Their monitoring and control is the jurisdiction of the Environmental Protection Bureau system which tends to focus mainly on industrial discharges. Traditionally, the Water Business Bureau has been responsible for the drainage channels but focusing mainly on their structures and volume of the flow rather than water quality. Measures to bridge this potential gap are being discussed between the two Bureaus. 45. The bus garage operation and maintenance is the responsibility of the public bus company which is well-funded and managed. There appears to be little risk for the maintenance of the bus garage which is located next to the bus company group headquarters and will be in constant use. 11 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 46. The emphasis on growth, sustainability, and equity was reflected in this project through the focus on the national priorities of urban development. Urban development issues such as: urban efficiency, water pollution, and migrant population, are highly important for Tianjin as the city has been undergoing rapid industrial development which attracted about 2.5 million migrants between 2001 and 2010. 47. At the time of approval, China was beginning to address challenges of urbanization, as identified in the national 10th Five Year Plan (FYP 2001-2005), with urbanization predicted to reach 50% of the population by 2020. The project was designed to address the overarching CPS theme of “ facilitating rural-urban transition and Sustainable Development by aiming at four specific goals under it: improving public sector management and public service provision, assisting the less advantaged population and areas, strengthening environmental protection, and improving natural resource management.� The PDO was designed to be general and hence remained relevant through project completion. Design of the physical components and the supporting TA and training proved effective in focusing on the PDO even though there were many changes to the original project scope description. Although hard to quantify, Component design was consistent with the targeting of urban service upgrades in the more poorly served suburban areas of a rapidly growing city. 48. In 2012, the provision of urban services and equity is still a priority. Based on the lessons learned from the large scale urbanization process, the 12th Five Year Plan (FYP 2011-2016) calls for the development of smaller cities and the delivery of more balanced, innovative, greener, and comprehensive development outcomes. In fact, at completion, this project still indirectly supports two themes in the latest CPS for FY2013-2016 which are: (i) supporting greener and comprehensive growth; and (ii) promoting more inclusive development. 49. Although the objectives remained relevant, the design of the project, which began in essence response to as a programmatic engagement, evolved into a specified set of investments in a rapidly evolving city. Though this shifted the strategic focus of the project to some degree, the overall rating on relevance is deemed moderately satisfactory. 3.2 Achievement of Project Development Objectives 50. The achievement of aspects of the PDO is assessed as follows:  Enhancing the efficiency of the urban wastewater management system: 85% of the city proper wastewater is collected and treated as of now, against the revised target KPI of 75%, from 49% in 2003. The project focused its investment on building collection sewers in addition to a small (100,000 m3/day) WWTP in Hangu. Together these investments contribute to 12 exceeding the KPI target. Dagu Canal was also successfully rehabilitated, and TMG expanded the scope to more drainage channels. On the institutional side, the study carried out under the project recommended integration of the sewerage management with water supply and water resources, which was consistent with the decision eventually taken by TMG. The project study also helped introduce an improved system of selecting WWTP operators and setting their fees, which will be useful when the current WWTP operation contracts come due for replacement.  Enhancing the efficiency of the urban transportation system. The public transportation modal share increased from about 10% in 2002 to 21% in 2012; again exceeding the target KPI of 18%. But the project’s contribution to the achievement is difficult to evaluate as the project’s main contribution came in the form of “software� improvements in bus routing and bus company operations. The growth in the modal share is probably equally due to the expanding urban area that makes bicycle trips difficult, and to the competition introduced under TUDEP1 which started the improved bus operations and consequent climb of the modal share which is continuing today. Still, problems generated by the competitive bus operations set up (chaotic bus routes and unsystematic operations of the competing bus operating companies). Still, have been improved under the current project.  Road improvements under the project were mostly for small specific parts of the large urban road network. Although specific impacts of project investments were hard to quantify, key traffic bottlenecks along the busy Nanjing Road were addressed. The replacement of the expensive flyover at Dagunanlu with much cheaper traffic and small engineering improvements provided an invaluable demonstration effect on showing how inexpensive management solutions can be as effective and much less costly than engineering solutions. The study recommendation to integrate the urban transportation management and road infrastructure planning will help improve optimized road use, traffic flows and overall efficiencies of the urban transport system.  Enhancing equity of the urban wastewater management and transport systems. As discussed in Section 2.3, personal income distribution of the project’s direct beneficiaries could not be determined. However, the project was designed to benefit poorer areas of the city, and nearly 58% of the project’s investments were spent in Beicheng, Jinnan, Xiqing, and Hangu Districts. Over 10% of the population in these districts does not have an urban “hukou�, compared with less than 5% in central Districts, which is a good indicator of the project’s impact on relatively less well-off urban districts.  It should be noted that the project restructuring increased the efficiency and equity of investments compared with the original design. Water reuse and 13 Shuanglin WWTP components, which would have been inefficient investments, were replaced by increasing sewers in poorer outlying districts. Investment allocated to the Dagunanlu interchange in the central city was reallocated to road improvements in the outlying Districts. The bus priority corridors proposed for two central city locations were cancelled in favor of broader bus priority measures including outlying Districts now under piloting and planning.  Demonstration for other cities of China. The project generated experiences that can serve as effective models for other cities of China. Dagu Canal rehabilitation in particular attracted many study visits from other cities. The DBO contract and procurement process for Hangu WWTP are a good example for similar contracts elsewhere. 51. Overall, the achievement of the development objectives can be rated moderately satisfactory upon consideration of the KPIs rated above and the qualitative evaluation of the equity achievements against the stated PDO also as discussed above. The rating is not considered fully satisfactory because many changes happened during project implementation and, while the project provided an important contribution to equity and efficiency, the actual impacts of the project in this regard are hard to quantify. 3.3 Efficiency 52. Efficiency is rated satisfactory. Apart from the efficiency enhancement of wastewater and transportation systems achieved under the project as discussed above, the efficiency of investments for specific road components has been high, as shown by the benefit-cost ratios recalculated in 2012 for the following three components:  Nanjinglu works: 58 (original estimate > 50)  Jinzhonghe interchange: 9.1 (original estimate 10.6)  Beicheng roads: 3.7 (feasibility study estimate, 3.1) 3.4 Justification of Overall Outcome Rating 53. Rating: Moderately Satisfactory. Given the moderately satisfactory ratings of relevance and achievement of development objectives, and the satisfactory rating of efficiency, as discussed above, the overall outcome ratings is deemed moderately satisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 54. One of the project objectives was to enhance the equity of the wastewater management and transportation systems of Tianjin. Toward this objective, the project was designed to allocate a significant part of investment to outlying areas which have a larger proportion of poorer residents compared with the central city districts that usually 14 receive most infrastructure and public transportation improvement investments. As discussed in 3.2 above, about 58% of investments were directed to four Districts where more than 10% of the population does not have urban “hukou�, a proxy for lower average income. 55. Public transportation is becoming more critical especially for low and middle income residents of Tianjin as the city’s physical expansion reduces the modal share of bicycles (though still a major mode for personal trips) and housing near work and commercial centers has become unaffordable to the poor, especially to newer residents. The increase in the modal share of the public transportation occurred during the project period especially benefitted the low and middle income residents. The construction of the main bus garage late in the project period will add to the improvement of the bus system operations and further amplify this impact. (b) Institutional Change/Strengthening 56. A study was carried out under the project to recommend improvements to the wastewater management operations, organization, and finance. One of the study recommendations was to integrate the sewerage management with water supply and water resources. TMG accepted the recommendation, partly also in view of experiences with similar integration in other cities of China. The study also recommended improvements in the system of selecting private WWTP operators and their fees, which was newly introduced by the time of project appraisal. This is likely to provide financial and technical improvements when the current WWTP operation contracts come up for replacement. 57. The transportation study had more immediate and strong impacts. For public transportation, the study helped develop an improved bus deployment system of the Public Transportation Company. For TMG the study helped establish a model to evaluate trip demand by route and a system to allocate and manage bus routes on that basis. The bus operations were growing fast on the strength of competition among the semi-autonomous bus operating companies but the competition under weak management by TMG resulted in chaotic routes, a major weakness that needed to be resolved. For broader urban transportation, the analysis of problems of the then fragmented transportation management and a review of international models apparently influenced TMG’s decision to integrate the urban transportation management function with urban infrastructure construction and management, expanding the jurisdiction of Tianjin Construction Administration Commission now renamed the Urban and Rural Construction and Transportation Commission. (c) Other Unintended Outcomes and Impacts (positive or negative) 58. Three unforeseen impacts of the project are worth particular note. The rehabilitated Dagu Canal is attracting residential and commercial developments along its flow, which is a welcome unintended benefit, but also has raised risks of recontamination by surface runoff and potential illegal effluent overflows from the new developments. Hangu WWTP acted as one of the positive factors for the establishment of the new 15 Ecological City, which it is now expected to serve in addition to the main town of Hangu (Yingchen). On the transportation side, the good effect and cost savings gained by a set of low-cost improvements at the Dagunanlu junction, instead of the originally planned construction of a flyover, apparently have had an effect of reducing the bias toward multi-level urban interchanges which used to be preferred options in large cities of China. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 59. N/A 4. Assessment of Risk to Development Outcome Rating: Low Risk 60. As discussed in Section 2.5, there is little financial or technical risk of inadequate operation and maintenance of assets created under the project. Other risks to the development outcomes would come from the growth of issues outside the control of the implementing or management agencies. For the wastewater management system, the main risk is the generation of more water pollution than can be managed by the system now established. The risk, however, is judged low in view of the fact that recent increase in effluent discharge has been smaller than anticipated, and in view of TMG’s continuing drive to control discharges through high water-sewerage tariffs, now the highest in China, and a ban on highly polluting industries, especially chemical industries. Should further capacity expansion be needed, TMG has a strong fiscal base as well as an effective system of mobilizing market resources. 61. For the urban transportation system, the main risk would be growing traffic congestion caused by traffic growth outpacing the growth of the transportation capacity. Travel demand is almost certain to grow at a high rate, and increased traffic congestion would be expected. However, the growth of vehicular traffic would be controlled by the ongoing expansion of the subway system and improved bus operations to be partly aided by the planned broad adoption of bus priority measures. While the traffic and congestion would remain growing issues, the project has made a useful contribution in initiating improvements in these areas. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 62. The Bank team effectively assisted the clients in TMG to develop relevant project objectives to be addressed under project components for wastewater management and urban transportation. The emphasis on equity was an important element of project design consistent with the then current (and still remaining today) national government policy 16 focus on building a harmonious society (Xiaokang). The Bank team’s clear emphasis of these directions helped keep the project flexible but focused on the agreed development objectives despite many revisions in components forced by further review of initial investments’ approaches and designs and changing circumstances. (A case in point was that of the bus priority corridor investment advocated by the Bank, about which the TMG was skeptical, but which after further review during implementation resulted in the preparation of a broader plan for bus priority and a desirable albeit delayed effect.) However, this response of accepting only preliminary closure when facing a significant lack of sufficient information may have been overdone. 63. Investments identified were often reappraised during project implementation (and in some cases dropped). While this approach made use of additional information obtainable later and led to cost savings in implementation (and reportedly in the design of investments outside of the project as well) it inherently involved higher transactions costs for the client, delays in implementation, and a constant pressure to try to handle costly reappraisal challenges operating with the funding of a normal supervision effort. Thus the design aspect of quality at entry is rated moderately satisfactory. 64. The Bank’s performance on designing the monitoring and evaluation system was moderately unsatisfactory. The original key performance indicators were comprehensive and logically sound, but the M&E system contained indicators that could not be easily monitored and that had no baseline values. (The simplification of the indicators at the first restructuring resolved the data issues and generally produced indicators that were measurable and reflective of the project’s contribution to the development objective, albeit without fully resolving the attribution issue.) 65. Key policy and institutional issues were well identified and addressed through the preparation dialogue, and consultant studies during preparation (and later implementation) resulted in considerable positive institutional development influence when TMG was undergoing institutional restructuring. 66. The design of environmental and social safeguards was also satisfactory, especially with the exemplary environmental assessment and management of the Dagu Canal rehabilitation. However, the client could have paid more attention to the selection of sites that require large resettlement activities. 67. Considering the moderately satisfactory Bank performance on design, moderately unsatisfactory performance on the M&E framework, and satisfactory preparation on fiduciary aspects, the overall rating of Bank performance on Quality at Entry is Moderately Satisfactory. Other fiduciary arrangements are also considered to have been prepared in a satisfactory manner. 17 (b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Satisfactory 68. A key to assessing the Bank’s supervision performance is the evaluation of the changes of project components during implementation. For the water reuse and Dagunanlu flyover investments, the Bank team’s skepticism and caution have been justified by the further review and consequent cancellation of these investments. Despite the adjustment problems it caused, the original alternatives would have been inferior. If the investments had been implemented, they would have been highly inefficient. Had the Bank refused to include the investments outright, it is likely that TMG would have implemented them on its own, leading to inefficiency. Thus, the due diligence by the Bank during implementation led to prevention of inefficient investments (and perhaps a broader retrenchment from similar practices by TMG). 69. More generally, the Bank supervision team had to manage two major difficulties. One was the need to adjust to the cancellation of many components. This was handled satisfactorily by relatively prompt restructuring and identification of appropriate replacement components within the project framework. Another was the change in project implementation and counterpart financing arrangements. The Bank team made many appeals to TMG for resolution of consequent difficulties, but they were largely outside the control of the Bank team. The difficulties were exacerbated by the newly prepared components which required large land acquisition and hence more counterpart financing. 70. At the second restructuring, the Bank made an appropriate adjustment to financing arrangements to ease the difficulties while keeping the proportion of the Bank financing of the overall project below the original proportion. In addition, overall project procurement was managed adequately though plagued for a few components (discussed in Section 2.4) by excessive delays. 71. Given the efficient management of a high degree of flexibility in project implementation that was built into project design, and supervision that managed to secure two project restructurings that eventually facilitated the use of virtually all loan funds, the overall rating of Quality of Supervision is deemed Satisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 72. This rating was established by combining the moderately satisfactory rating for the performance for ensuring quality at entry and the satisfactory rating for supervision performance. 18 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 73. Herein, the Government refers to TMG, represented by the Project Management Office under the Urban and Rural Construction and Transportation Commission. The Government maintained strong commitment to the project development objectives and strong and genuine partnership with the Bank valuing its intellectual input. The Government adopted the approaches introduced under the project and expanded them – by developing a plan for broader bus priority measures and for the cleaning of several additional waterways. The Government also found an adequate solution to the issue of weak capacity of the Hangu District. Lastly, the Government also fulfilled its monitoring and reporting requirements punctually. 74. A Government action that had negative impacts on the project was the change in the project implementation and counterpart financing arrangements resulting in significant delays in project implementation. It is difficult to fault the Government’s commitment to the project for this because it would not have been appropriate for the Government to make an exception to normal approval processes for the project to overcome the initial difficulties of establishing the broad new infrastructure financing and management regime. Still the changes to these arrangements could have been made in a timelier manner. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 75. The performance of MEB which was responsible for preparation and implementation of city sewer and road components until 2005 was highly satisfactory owing to its well-established expertise and system of infrastructure design and construction. The performance of the Traffic Management Department, Public Transportation Company, and Hangu District was satisfactory, although slow at times because of separation of budgets. 76. TUDIG which took over implementation of the city sewer and road components experienced and caused difficulties in managing the project in the initial two years. The difficulties included establishing a complex system to work with the Bank procedures and requirements, but more importantly, the delay in raising counterpart funds for the project. These led to a substantial delay in project implementation although the technical quality of the works remained high. These are understandable given the newness of the institution and the management and financing arrangements, and they were overcome after about two years. Overall, given the transient nature of the issues and the context of broad government restructuring, the implementing agency’s performances is deemed Moderately Satisfactory. 19 (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 77. This rating was established in view of the Government performance being rated satisfactory and the implementing agency performance being rated moderately satisfactory. 6. Lessons Learned 78. The project offers two broad related lessons regarding innovations and programmatic approaches. 79. Risk and Value of Innovations. The project involved adopting approaches and technologies which had been practiced relatively infrequently around the world, and of which there were no or few successful experiences in China. These were: polluted/toxic sediment disposal (in Dagu Canal), small town urban sewerage (including the DBO method), wastewater reuse, and bus priority corridors. The first two were successfully implemented as originally planned, but at considerable costs. Both required a large amount of high-level input for preparation and implementation, and the DBO for Hangu sewerage incurred a major delay. The wastewater reuse component was cancelled, and the bus priority corridors are still at an experiment and planning stage. They therefore cost the project considerable delay and difficult adjustment efforts. 80. Nevertheless, these innovations had a positive overall impact. Dagu Canal rehabilitation and Hangu sewerage set valuable models for China on issues that are becoming more important. The DBO bidding document for Hangu also served as an important model for the Bank in other developing countries. Even the cancelled components had positive developmental impacts. The findings of the studies that eventually stopped the wastewater reuse component has helped set the limits and key considerations for similar investments of which rapid expansion had been planned in Tianjin and elsewhere in China. The bus priority experiment is leading to a broader adoption of the approach. These experiences hence help to underline the value of innovations, but raise the question how best their cost and risk should be managed. 81. Value of Programmatic Approaches. In hindsight, an Adaptable Program Loan (APL) would have been a more suitable instrument for the project given the high degree of technical uncertainty present at the time of appraisal, not only for the above four components but also for the large flyover proposed in the central city. It would have provided time to resolve uncertainties, allowing identification of an alternative project scope and smoother implementation of the second stage. This is especially true in hindsight because urban growth and municipal capacity in Tianjin were evolving so quickly that it was not practical to carry out implementation in the same way it was envisaged at design. An APL approach would also have allowed a new implementation arrangement consistent with the new organizational and financing set-up introduced in the middle of project implementation (although this could not have been foreseen). 20 82. In fact, it was the programmatic element of the project – city sewer and road component which consisted of small and medium-size subcomponents – that allowed an effective adjustment to the cancellations while keeping the project consistent with the original objectives and framework. APL is an instrument that explicitly supports innovations. The experience of this project suggests that a combination of programmatic and specific investment components could be a valid option, while challenge funds or a similar mechanism included in programmatic types of projects could be another. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 83. A separate borrower ICR has been prepared. A summary is attached under Annex 6. The full report (in Mandarin) and an unofficial English translation have been saved within the Project files. (b) Cofinanciers 84. N/A (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) 85. N/A 21 Annex 1. Project Costs and Financing Projects by Component (in USD Million equivalent) Second Appraisal Actual/Latest Percentage of Restructuring Components Estimate (USD Estimate (USD Second Estimate (USD millions) millions) Restructuring millions) A. City Drainage & Sewerage 77.60 212.10 165.92 78 B. Shuanglin WWTP 55.36 26.50 Cancelled - C. Wastewater Reclamation and Re- 16.65 Cancelled Cancelled - use D. Dagu Canal Rehabilitation 55.15 64.80 72.07 111 E. Suburban Sewerage 43.10 24.30 26.95 111 F. Urban Roads 62.26 24.50 36.84 150 G. Traffic Management 15.16 4.40 0 100 H. Bus Priority Measures and Garage 4.09 9.50 6.95 65 I. Technical Assistance, Study and 4.63 3.70 4.17 113 Training Total Project Costs 334.00 369.80 312.90 85 Front-end fee IBRD 1.50 1.50 1.50 100 Total Financing Required 335.50 371.40 314.40 85 Financing Source Borrower 185.50 221.40 167.15 75 International Bank for 150.00 150.00 147.25 98 Reconstruction and Development Total Financing Required 335.50 371.40 314.40 85 Project Components and Financing Loan Amount (US$ million) First Second Actual Loan as Component Original Restructuring Restructuring of 30 October May 11, 2007 April 7, 2011 2012 A. City Drainage & Sewerage 32.2 34.0 115.9 95.98 B. Shuanglin WWTP 29.3 30.0 - - C. Wastewater Reclamation and Re-use 10.4 - - - D. Dagu Canal Rehabilitation 21.2 27.0 6.5 18.75 E. Suburban Sewerage 19.7 20.1 12.5 12.50 F. Urban Roads 22.9 11.0 2.7 8.29 G. Traffic Management 6.0 18.0 0 0 H. Bus Priority Measures and Garage 3.1 4.0 6.5 6.43 I. Technical Assistance, Study and Training 3.8 4.4 4.4 3.80 Front-end Fee 1.5 1.5 1.5 1.50 Total 150.0 150.0 150.0 147.25 22 Annex 2. Outputs by Component Component Target Output Output Quantity Unit Quantity Achieved Wastewater collected and 80 75 % treated in Tianjin City. Increase in traffic mode 1.8 21 % sharing for bus system. City Drainage and Sewerage: Storm water drains 51 52 Km Wastewater sewers 54 52 Km Improvement of drainage No drainage Completed - collection in Nanjiaowai, Fukanlu, and Nanbeicang areas Shuanglin WWTP 200,000 Cancelled m3/day capacity Wastewater Reclamation and 620,000 Cancelled m3/day capacity Reuse Dagu Canal Rehabilitation 84 81 Km Suburban Sewerage 150,000 100,000 m3/day capacity Improvement of traffic flow Average bus speed = Average speed (on Km/h 20 on urban road, all roads) = 25 and 30 on expressway. Urban Roads 9 26 Km Bus Priority Measures 65 60 Km Bus Garage 1 1 Number Traffic Management 300 300 Number Technical Assistance 4 7 Number 23 Annex 3. Economic and Financial Analysis 1. At appraisal, a cost-benefit analysis was carried-out to assess the economic return of several project subcomponents. The same methodology was applied at project completion to reassess the economic return of three project subcomponents including the: (i) reconstruction of Nanjing Road; (ii) construction of the Jinzhonghe Flyover; and (iii) improvement of Beicang Street. 2. The table below provides a summary of the results. The economic returns of the three subcomponents are on par with estimates at appraisal. The minor differences are primarily driven by the difference between the actual transportation demand and the estimates. In the case of the Jinzhonghe Flyer subcomponent, the difference in economic return is in part due to the increased scope of the subcomponent. Benefit-Cost Ratio (BCR) Economic Internal Rate of Return At Appraisal At Completion At Appraisal At Completion Nanjing Road 64.7 58.2 302.0% 243.0% Reconstruction Jinzhonghe Flyover 9.7 – 11.0 9.1 46%– 50% 42.0% Construction Beicang Street 1.6 3.4 17.4% 13.5% Improvement Methodology 3. All three components involved the construction of roadways. The benefits of which include: (i) reduction of transportation cost, and (ii) benefits of reduction from vehicle running time. The economic costs of the components include: (i) the investment cost of the project excluding taxes, and (ii) the ongoing cost of operations and maintenance. The social discount rate was 12% over a 20 year period for the project. Reconstruction of Nanjing Road 4. Nanjing Road is the main thoroughfare in Tianjin extending east-west across much of the city's main areas. It handles a significant volume of both vehicle and pedestrian traffic flow. There were six lanes for motor vehicles prior to this project's reconstruction, which proved to be insufficient for Tianjin's growing transport demands. In order to alleviate congestion and improve traffic flow, the project planned to add two additional lanes including building special dedicated lanes for public buses in some sections of the road. 5. At a discount rate of 12%, the project economic return was 243%, which although favorable was lower than the initial estimate of 302%. Likewise, the benefit-cost ratio (BCR) was also slightly lower at 58.2 than initial estimates of 64.7. 6. The main reason for the shortfall was attributed to lower road saturation estimates used at the time of appraisal than what was later realized because Tianjin experienced 24 much higher growth in vehicles over the duration of the project. Secondly, the anticipated widening of the roads appears to have made some appreciable difference, but because of the increased volume, the road is still too narrow for adequate bus and car separation as was anticipated by creating dedicated bus lanes. As a result, the project did return favorable gains, but not to its expected levels. Construction of Jinzhonghe Flyover 7. The newly constructed Jinzhonghe Flyover is a traffic center connecting the inner and outer parts of the north of the city. The road experiences significant motor, pedestrian, and non-motor traffic, especially with each mixing into the others' lanes. In order to improve congestion and reduce mixing of vehicle and non-vehicle traffic, it was decided to build a three-layered flyover connecting Hongxing Road and Jinzhonge Street. 8. At a social discount rate of 12%, the project economic return was 42%, which although favorable was just slightly lower than the initial estimate of a 46-50% return. The benefit-cost BCR was also slightly lower at 9.1 versus the initial average estimate of 11.0. After project completion, motor vehicles and non-motor vehicles were using separate lanes, which reduced mutual interference and the number of accidents. However, the main reason for the shortfall was because capital investment increased, but higher transport demand estimates did not materialize as expected. Improvement of Beicang Street 9. Beicang Street is a major freight corridor that runs in an east-west direction through Tianjin. Its traffic flow is made up of large transportation vehicles. There is heavy traffic congestion due to this large vehicle traffic flow that traverses the road. In order to reduce congestion and improve traffic flow, the project expanded Beicang Avenue by adding additional lanes in each direction. 10. At a social discount rate of 12%, the economic rate of return was 13.5% while the BCR exceeded expectations. It was estimated that the BCR would be 1.59. However, the BCR was 3.4 based on actual data collected after project completion. 11. The main reason for a higher BCR than expected has to do with additional truck flow that used Beicang Street upon completion of the project. Trucks have a higher value-added coefficient than passenger cars, and because more trucks used the road than expected, the benefits stream was higher than initially valued, raising the BCR. However, the EIRR was slightly lower than estimated because a greater volume of truck flow reduced the overall speed and travel time on Beicang Road than was expected at appraisal. 25 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Songsu Choi Task Team Leader (2004 2008) EASIN Suhail Jme’an Task Team Leader/Senior Financial Analyst (2008-2012) EASIN Greg J. Browder Lead Water and Sanitation Specialist (2004-2008) LCSUW Vellet E. Fernandes Program Assistant EASIN Boping Gao Roads Engineer/Consultant EASIN Jianjun Guo Senior Procurement Specialist EAPPR Anne K. Harrison Temporary ISGPS Shunong Hu Senior Water Engineer EASCS Eddie Ke-Siong Hum Infrastructure Engineer/Consultant EASIN Urvaksh D. Patel Operations Specialist/Consultant EASIN David I Sr. Financial Management Specialist EAPFM Haixia Li Sr. Financial Management Specialist EAPFM Xiaoping Li Senior Procurement Specialist AFTPC Zhefu Liu Senior Social Development Spec EASCS Shomik Raj Mehndiratta Lead Urban Transport Specialist LCSTR Edouard Henri Motte Wastewater Engineer/Consultant EASCS Xin Ren Environmental Specialist EASCS Jiang Ru Senior Environmental Specialist EASER John Smithson Institutional Specialist/Consultant EASCS Chongwu Sun Senior Environmental Specialist EASCS Hardy M. Wong Solid Waste Engineer/Consultant EASCS Guangming Yan Urban Specialist EASCS Yan Zong Transport Specialist EASCS Youlan Zou Consultant EASCS Mariana Montiel Legal Counsel Zhuo Yu Financial Management Specialist Bekir Onursal Environmental Specialist Hubert Nove-Josserand Rodney Strickland Hoi-Chan Nguyen Richard Scurfield Peer Reviewer: Transportation David Hanrahan Peer Reviewer: Environment Alex McPhail Peer Review: Sewerage and Finance 26 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY98 0 15.40 FY99 0 22.66 FY00 5.14 18.59 FY01 13.49 59.59 FY02 51.59 237.60 FY03 52.02 223.85 FY04 0.20 1.41 Total: 572.04 Supervision/ICR FY04 18.20 105.25 FY05 15.17 57.78 FY06 16.21 60.80 FY07 22.43 74.78 FY08 19.70 81.06 FY09 16.08 78.39 FY10 14.41 82.86 FY11 16.69 74.88 FY12 9.11 80.61 FY13 by date of Nov. 21 2.83 13.44 Total: 379.67 27 Annex 5. Review of the preparation of the Resettlement Action Plan (RAP) 1. The World Bank approved this project in 2004 with conditional clearance because the project components were not fixed. The Project Agreement emphasized that Tianjin shall ensure that displacement or restriction of access does not occur before necessary measures for resettlement are in place, including the provision of compensation and other assistance required for relocation prior to displacement. A resettlement policy framework was prepared to guide the RAP if the project affected any displaced families or required any collective land. 2. A RAP was prepared and sent to the Bank for review in 2006. The project, consisting of an environment subproject and urban road subproject would require 27.2 hectares of collective land permanently, and use 3.2 hectares of collective land temporarily. As a result, five villages and nine households with 37 persons would be affected by the project’s land acquisition. Review of resettlement progress before the project’s mid- term review 3. Due to rapid economic growth and fast development of real estate in Tianjin since 2005, land became more valuable. Villages preferred to sell their land to real estate developers rather than for purposes of public interest such as landfill development. The development of real estate on village land brought more benefits to villagers and increased the value of the existing land. Villagers did not welcome the building of a landfill to be built on their site. The project entity spent years trying to negotiate with the villagers but did not reach any agreement. Finally, the project entity had to cancel the landfill project component if any collective land was required. Project restructuring at the mid-term review 4. The project accumulated experience through learning by doing. The proposed project components at the project mid-term review focused on the improvement of urban road networks and approached to optimize the road design so as to avoid land acquisition and resettlement relocation. Lessons learned from the project 5. The project entity learned that resettlement work is more challenging than the civil work of the project. The selection and design of subprojects should be considered fully, especially on how to avoid involuntary resettlement caused by any permanent land acquisition and temporary land occupation and structure demolition. It is important to hire an experienced consulting firm to identify the reality of resettlement impacts, examine resettlement investment. The resettlement socioeconomic survey in the affected area could bring displaced persons’ feedback to the project entity to assess the challenges of future resettlement work in advance 28 Expenses on Land Acquisition and Situations in Land Acquisition and Demolition Demolition Infrastructure Item Amount Land Commercial Residential Public Compensation Planned Enterprises Incurred Acquisition Land Land Institution for temporary Land Use Square Square Square Square Square (Ten Thousand Yuan) Square meters meters meters meters meters meters Nancang and 1,340.31 14,974.88 212,023.59 0 3,036.00 11,388.00 0 43,292.00 Beicang Drainage Kangfu Road 1,264.51 0 0 0 0 0 0 0 Drainage Nanjiaowai 2,784.96 0 0 0 0 0 0 0 Drainage Dagu River 764.57 3,602.00 66,600.00 0 0 0 0 Transportation 4248.47 5,161.88 0 2,439.00 663.00 634.00 290.00 0 Total 10,402.82 23,738.76 278,623.59 2,439.00 3,699.00 12,022.00 290.00 43,292.00 29 Annex 6. Summary of Borrower's ICR and Comments to the Bank’s ICR I. The following summary was received from the Borrower via email on November 28, 2012, and has been included below in its entirety without any content or editorial changes. The full report (in Mandarin) and an unofficial English translation have been saved within the Project files. 1. Overview 1. The second phase of Tianjin’s WB-loaned Urban Development and Environmental Protection Projects which include three parts of transportation, drainage and technical assistance serve as the continuation of the First Projects in the fields of traffic and drainage infrastructure construction. The Projects are designed to enhance the city’s rain and waste water management and its efficiency of transportation system, strengthen the environmental protection and the natural resources management, promote the reform of public service organizations and commercial operation, improve urban management and public service functions, and promote sustainable development of Tianjin. The second phase of Tianjin’s WB-loaned Urban Development and Environmental Protection Projects (Loan No. 4695CHA) came into effect in August 2004 and the accounting closing took place on June 31, 2012. 2. The total investment of the Projects was USD314 million. Under the loan agreement, the loan of USD150 million from the World Bank (about RMB 1.242 billion at the exchange rate of 8.28 in 2004 when the loan entered into force) was used. As at October 31, 2012, the actually used loan from the World Bank reached USD 147 million (accounted based on the actual reimbursement fund). The self-raised fund in domestic market amounted to USD167 million and the proportion of loan was 46.81%. 2. Completion of KPIs 3. During the projects implementation period, the KPIs were not modified and all of the project’s KPIs were completed. 4. The KPIs of the second phase of Tianjin’s WB-loaned Urban Development and Environmental Protection Projects are to improve the coverage and efficiency of the urban infrastructure and public service facilities. The completion of key performance indicators are listed below: 2.1 Urban Drainage  Performance Indicators: the drainage covering area at the central urban area shall achieve 80% and the sewage treatment capacity of small towns shall achieve 150,000 m3/day.  Completion: fully completed. (By the end of 2011, the service area of the pipeworks at the central urban area was 244.02 square kilometers with coverage rate of 89.71%; a total of 13 WWTPs were built in small towns 30 with total handling capacity of 446,500 m3/day). 2.2 Reclaimed Water  Performance Indicators: 20,000 m3 reclaimed water shall be recycled for urban use and 600,000 m3 treated water shall be used for agriculture every day. 5. Completion: fully completed. (By 2011, the total handling capacity of the recycling water plants in Tianjin achieved 320,000 m3/day, serving as residents’ nonpotable water and water for municipal landscape and greening; Tianjin has a total of 33 WWTPs, with handling capacity of 2,296,000 m3/day, and the water quality reached Level I A or Level I B standards, so all water can be used for agriculture.) 2.3 Road Traffic  Performance Indicators: the traffic capacity of existing roads shall be to improved; the traffic flow and traffic speed shall be enhanced; the traffic flow of 18 main roads shall be increased by 10%; the time for vehicles to pass the sampling crossing shall be decreased by 15%; and great efforts shall be made to achieve Tianjin’s targets in the “Eleventh Five-Year Plan�.  Completion: fully completed. (By the end of 2011, the length of paved road was 5991 km, and the road area was 104.92 million square meters with the road area of 17.05 square meters per capita. There were 584 bridges at the end of the period so targets in the “Eleventh Five-Year Plan� were fully completed) 2.4 Public Transportation  Performance Indicators: the traffic speed on public transport corridors shall be improved; the travel time by bus shall be reduced; the proportion of taking bus shall be increased among travel modes, and great efforts shall be made to increase the proportion of taking public transport means (including subway) to 34% as specified in the “Eleventh Five-Year Plan� of Tianjin.  Completion: fully completed. (In 2012, Tianjin’s 50 bus routes and networks have been optimized and 2000 buses have been updated. Line 1, 2 and 3 as well as the second phase of Line 9 has come into use. The sharing percentage of public transport has reached 36.2%.) 31 3. Implementation of Projects 6. The drainage projects constructed as part of the Projects include: one WWTP (100,000 tons/day), five drainage pumping stations, drainage network about 78.50 km, treated river way about 16.71 km, and one sludge landfill; the transportation projects constructed as part of the Projects include: the constructions of one three-tire overpass, one bus parking building and new roads about 31.93 km. 7. The technical assistance projects include technical assistance for transportation, contract management for Hangu Wastewater Treatment Plant, research on drainage industry, procurement plans of Shuanglin Sewage Treatment Plant, technical assistance for Dagu River, environmental supervision for Dagu River project, study on implementation program of Tianjin’s drainage reform, and eight studies for the Completion Report of the second phase of Tianjin’s Urban Development and Environmental Protection Projects. 8. Due to the rapid development of Tianjin as well as the adjustment in urban planning, the specific implementation and design of the Projects have been changed to some extent, but the Projects have completed the scheduled targets of increasing traffic capacity and drainage capacity. 4. Evaluation of Executing Agency Very Satisfied 9. Tianjin established the World Bank Projects Management Team, which was led by Vice Mayor in charge of urban construction work. The deputy team leader was the director of Tianjin Urban Construction and Communications Commission and the Deputy Secretary-General of Municipal Government. The chief coordinator was the Deputy Director of Tianjin Urban Construction and Communications Commission in charge of urban construction. The team members included: the major leaders of Tianjin Urban Construction and Communications Commission, Tianjin Planning Commission, Tianjin Finance Bureau, Tianjin Planning Bureau, Tianjin Water Conservancy Bureau, Tianjin Environmental Protection Bureau, Tianjin Housing Management Bureau, Tianjin Urban Council, Tianjin Traffic Management Bureau, and Tianjin Public Transportation Corporation, etc. 10. The executing agency of the Projects was the World Bank Office of Tianjin Municipal Commission of Housing and Urban-Rural Development, which is an independent department for the management of the WB-loaned Projects. The Office is a standing body responsible for planning, organization and coordination of the Projects and it is communication between the World Bank and Tianjin’s local departments at different levels. 11. The leadership group and executing agency of the Projects have successfully completed the project management and the expenditure of funds. 32 5. Evaluation of the World Bank Very Satisfied 12. In the implementation process, the World Bank raised a variety of problems effectively, discussed over them, and, ultimately, resolved these problems. The contents of every memorandum and report of inspection team were all full and thorough, and the items to check and process were also reasonable and effective. The interim inspections were fully prepared, and the arrangement of inspection team members was reasonable. 13. In the inspection and supervision process, the World Bank team played a decisive role in ensuring project quality, solving various problems and identifying different opportunities. The made World Bank has made significant and decisive contribution to the success of the Projects. 14. In the Projects, a number of important innovations were introduced for the continuous improvement of Tianjin drainage and traffic conditions. But for the efforts of the World Bank as well as its cooperation with and support for the government departments, it would be impossible to realize these innovations achievements of the Projects. 6. Conclusion 15. The second phase of Tianjin’s WB-loaned Urban Development and Environmental Protection Projects focused on improving the level of transport facilities and drainage capacity of Tianjin. The advanced experience and methods of the World Bank have guided and promoted the development of a high-level infrastructure construction in Tianjin so that the construction plan and the consulting services plan of the Projects have been completed successfully. The loan of USD 147 million from the World Bank was used in the Projects, and the loan utilization rate reached 98%, so the fund utilization plan has been basically completely. The Projects have been assisted and supported by the World Bank, the Central Government, the Tianjin Municipal Government and the Government of Binhai New Area, and set a good example for large cities in terms of infrastructure construction and construction of environmental protection facilities. 33 II. The following e-mail comments were received from the Borrower via email on December 10, 2012, and have been included below in its entirety without any content or editorial changes. Dear Mr. Suhail J. S. Jme'an, We have reviewed the Final Draft of Implementation Completion Report (ICR) for the Second Tianjin Urban Development and Environment Project (Loan 4695-CHA) and found it satisfactory, without any further comments on our side. I would like to express my gratitude to all the efforts you and your team have made for the success of this project, which is a great contribution to Tianjin development, especially after so many unexpected changes we experienced during the rapid progress of Tianjin in the past few years. We appreciate your suggestion to add new and innovative contents in the preparation of our third loan project preparation and are doing accordingly. We hope to continue enjoying your further support and guidance in our preparation. Please bring my regard to all WB friends who have worked with you in Tianjin. Looking forward to welcoming you in Tianjin or meeting you in Washington DC. All the best regards Zheng Yuxin Deputy Director Tianjin Urban and Rural Construction and Transportation Commission 34 Annex 7. List of Supporting Documents 1. Project Appraisal Document 2. Project legal documents including the Project and Loan Agreements 3. Restructuring proposals and resulting Restructuring Papers, letters to the Government of China and amendments to the legal documents 4. Project file containing records of project preparation and appraisal 5. Supervision aide-memoires, management letters, and Implementation Status and Results reports 6. Project Feasibility Studies 7. Semi-annual Project Progress Reports 8. The Borrower’s full ICR report (in Mandarin) and an unofficial English translation. 35 Annex 8. Project Photos Nanjing Road after modification 36 37 Jinzhonghe Flyer after modification 38 Beicang Avenue after modification 39 Dagu Canal before rehabilitation Dagu Canal after rehabilitation 40 CHINA SECOND TIANJIN URBAN DEVELOPMENT AND ENVIRONMENT PROJECT COMPLETED INVESTMENTS: FREEWAYS/EXPRESSWAYS TOWNS REHABILITATED CITY AND URBAN ROADS WITH DRAINAGE MAIN HIGHWAYS COUNTY (XIAN) CAPITALS WASTEWATER TREATMENT PLANT RAILROADS PROVINCE CAPITAL I I I I I DAGU CANAL COMPONENT RIVERS COUNTY (XIAN) BOUNDARIES HAZARDOUS WASTE LANDFILL TRAFFIC INTERCHANGE PROVINCE BOUNDARIES Xiaodian he Yanji Street Rain Water Pump Station Nancang and Beicang Drainage Chadian Roads and Drainage Component: Nancang and Beicang area Hangu WWTP Longzhou Road Bus BEICHENG Parking Building Jingzhonghe TIANJIN Overpass Guang Kai Si Road DONGLI Nanjing Road Outer Ring QU I I I I Road I Bai Di Road I I I I I TIANJIN ZHANGGUIZHUANG I Fu Kang Road I I I I I I I I I I I TANGGU QU I I I I I Junliangcheng I Nanjiaowai I I I I I I I I I Drainage I I I Shuanggang I I I I I I Roads Component: TANGGU I I Nanjiaowai area Wuxia I I I I XIQING QU I I Dasi I I I I I I D canal I I agu XIANSHUIGU I I I I I I Ca I Du Dagu River I I I Dagu I I I I na l canal I I I I I I I I I I I I I I I I I I I I I I iu I I I I I I I I I I I I I I I I I I I I I l I I I I I I I I Jia I I I I I I I I I I I I I I Beizhakou I nh e Yadian DECEMBER 2012 Shuiku IBRD 39681 This map was produced by the Map Design Unit of The World Bank. 0 5 10 The boundaries, colors, denominations and any other information Tuanbowa shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any Shuiku KILOMETERS endorsement or acceptance of such boundaries.