southern gansu roads development project

Project Administration Memorandum __________________________________________________________

Project Number: 38174

Loan Number: 2295-PRC

PRC: Southern Gansu Roads Development Project

Asian Development Bank This project administration memorandum (PAM) is an active document, progressively updated and revised as necessary, particularly following any changes in project costs, scope, or implementation arrangements. This PAM shall be read along with the Report and Recommendations of the President, Loan and Project Agreements and relevant ADB publications (Appendix 23). This PAM incorporates agreements reached between EATC and Executing Agency as of 15 July 2007. In case of discrepancy, the Loan and Project Agreements shall prevail.

CURRENCY EQUIVALENTS (as of 20 October 2006)

Currency Unit – yuan (CNY)

CNY1.00 = $0.1264 $1.00 = CNY7.9102

The exchange rate of the yuan is determined under a floating exchange rate system. In this report, a rate of $1.00 = CNY8.02, the rate prevailing at project appraisal, was used.

ABBREVIATIONS

ADB – Asian Development Bank EIA – Environmental impact assessment EIRR – economic internal rate of return EMP – Environmental management plan FIRR – financial internal rate of return FYP – five-year program GCHC – Gansu Changda Highway Company Limited GEPB – Gansu Environmental Protection Bureau GPCD – Gansu Provincial Communications Department GPG – Gansu provincial government ITS – intelligent transport system LIBOR – London interbank offered rate MOC – Ministry of Communications NH – national highway NTHS – national trunk highway system O&M – operation and maintenance PCU – passenger car unit PPMS – project performance management system PRC – People’s Republic of China RP – Resettlement plan SDAP – Social Development Action Plan TA – technical assistance VOC – Vehicle operating cost WACC – weighted average cost of capital

NOTES

(i) The fiscal year of the Government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars.

TABLE OF CONTENTS Page

Project Design and Monitoring Framework (i)Loan Processing History

(ii)

I. PROJECT DESCRIPTION 1 A. Project Area and Location 1 B. Impact and Outcome 1 C. Outputs 1 D. Special Features II. COST ESTIMATES AND FINANCING PLAN 3 A. Detailed Cost Estimates 3 B. Financing Plan 3 C. Allocation of Loan Proceeds 4 III. IMPLEMENTATION ARRANGEMENTS 5 A. Executing Agency and Implementing Agencies 5 B. Project Management Organization 5 IV. IMPLEMENTATION SCHEDULE 5 V. CONSULTANT RECRUITMENT 5 VI. PROCUREMENT 6 VII. DISBURSEMENT PROCEDURES 6 VIII. PROJECT MONITORING EVALUATION 7 IX. LAND ACQUISITION AND RESETTLEMENT PLAN 7 X. ENVIRONMENT ASSESSMENT AND MANAGEMENT PLAN 8 XI. REPORTING REQUIREMENTS 8 A. Quarterly Progress Report 8 B Project Monitoring Evaluation Report 9 C. Land Acquisition and Resettlement Report 9 D. Environmental Impact Assessment Report 9 E. Project Completion Report 9 XII. CONTRACT AWARDS AND DISBURSEMENT PROJECTIONS 9 XIII. ACCOUNTING AND AUDITING REQUIREMENTS 9 XIV. MAJOR LOAN COVENANTS 10 XV. KEY PERSONS INVOLVED IN THE PROJECT 10 XVI. ANTICORRUPTION 12

APPENDIXES 1. Rural Road Improvement Program 132. Rural Transport Services and Policy Reform 143. Rural Road Maintenance 184. Intelligent Transport System and Asset Management 205. Detailed Cost Estimate by Financier 226. Organizational Chart of Gansu Provincial Communications Department and Changda Highway Company Ltd.

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7. Implementation Schedule 258. Outline Terms of Reference for Consulting Services 269. Checklist of Activities for Recruitment of Consulting Firms 3210. ADB-Financed Contract Packages 3311. Procurement Plan 3412. Procurement procedures for ICB and NCB 3713. Disbursement Procedures 4014. Monitoring of Socio-Economic and Poverty Impacts 4415. Summary Resettlement Plan 4716. Project Performance Report 4917. Suggested Format for Quarterly Progress Report 6318. Calculation of Project Progress 6519. Format for Project Completion Report 6820. Financial and Auditing Requirements 7021. Checklist for Assessment of Accounting System and Internal Control 7322. List of Major Loan Covenants 7623. ADB Publications Related to Project Implementation 94

i

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets/Indicators Data Sources/Reporting Mechanisms

Assumptions and Risks

Impact Sustainable economic growth and poverty reduction in Gansu province and the project area

• GDP is forecast to increase per annum by 7% to 8% for Gansu and 8% to 9% for the project area during 2010–2020.

Gansu Statistics Yearbook

Assumptions • Government investment projects

are implemented as planned.

• Per capita rural income in the project area will increase from CNY1,300 in 2005 to CNY2,500 in 2015.

• Poverty incidence in the project area is reduced from 37% in 2005 to 16% in 2015.

Gansu Statistics Yearbook Provincial and county statistics offices

• Complementary activities are implemented.

• Trade within and between Gansu and Sichuan is forecast to increase by 10% during 2010–2015.

Provincial and county statistics offices

• The Government is committed to reducing poverty in the western region based on the Western Development Strategy.

Outcome 1. An efficient, safe,

and reliable road transport system is developed in the project area.

1.1 Traffic volume on the expressway increased from 5,500 passenger car units (pcu) in 2012 to 11,200 pcu in 2022 and 22,500 pcu in 2032

Actual traffic data on the expressway through its auto-monitoring system

Assumptions • Assumed economic growth rates

materialize. • Passenger and freight operators

realize the benefits of using the expressway.

1.2 Travel time reduced from 6.5–9.0 hours to 1.5–2.0 hours

1.3 Travel distance reduced by 50% (from

270 km to 134 km) 1.4 Road accidents and fatalities in the project

area reduced by 20% by 2015

Traffic counts and travel time survey. PCR Accident statistics from the Public Security Bureau and the expressway traffic police.

• The contiguous section of expressway in Sichuan is completed in 2011.

• GPCD demonstrates its capacity to implement the Project.

Risks • The nationwide road safety

program may not be implemented effectively.

1.5 Emissions from vehicles estimated to reduce by 20% on the project roads

1.6 Townships with all weather roads access

increased from current 57% to 90% of the total by 2015

Measurements by PEPB Provincial and county statistics offices

Assumptions • New standards are enforced on

Gansu roads. Assumptions • Government investment projects

are implemented as planned.

2. Rural people will have improved access to markets, income-earning opportunities, education and health services, and social activities.

2.1 Bus service becomes available to 90% of villages by 2015, from 75% in 2005.

2.2 The number of vehicles in Longnan

prefecture increases by 30% over the next 5 years.

Monitoring of accessibility by local transport administration bureaus and GPCD Prefecture and county statistics offices

Assumptions • Transport services improve

shortly after road access and township bus stations are improved, and transport policy reform is pilot-tested.

• Assumed economic growth rates materialize.

2.3 Reduced transport fares with better quality

of transport services Household survey by consultants

2.4 The number of small businesses grows by 25% by 2015.

2.5 Cash crop area increases from 0.1 mu (0.067 hectare)/person in 2005 to 0.2 mu in 2015 in villages

2.6 An additional 10% of middle-school-age children will benefit from improved access to schools.

2.7. 30% more tourists visit the area by 2015.

Township and county statistics offices, village surveys by consultants

Assumption • Government investment projects

are implemented as planned. Assumption • The Government’s “new

countryside development” initiative is effectively implemented.

ii

Design Summary



Outputs 1. Road infrastructure

and associated facilities improved along the expressway

1.1 Road capacity is increased from 25,000 to 55,000 pcu per day at expressway opening in 2012 by building a 134 km expressway

1.2 Vehicle operating costs for a car are reduced from CNY2.70 per vehicle-km without the Project to CNY1.93 with the Project in 2012

PAMs, and PCR Measurement of vehicle operating costs by GPCD

Risk • Construction of bridges and

tunnels may be delayed because of their technical and engineering complexity.

1.3 Road safety enhanced through improved surface quality, and provision of shoulders, signs, markings, and black spots. Safety awareness is increased

PRs and PCR

Assumption • MOC technical standards on the

expressway are followed. • Safety audit recommendations

are implemented. 1.4 Equipment is procured and installed for

road safety, toll collection, communications, traffic management, vehicle weigh bridges, and office administration.

1.5 The welfare of those affected by land acquisition and resettlement is restored to at least the same level as before land acquisition.

PAMs, PRs, and PCR RP will be updated Regular monitoring by an independent institute

Assumption • All equipment is procured and

installed before the Project is opened to traffic.

Assumption • Affected people are able to

restore their living standards.

1.6 The project site environment is protected and adverse environmental impacts are minimized by mitigation measures.

SEIA, environmental monitoring reports, PAMs, and PCR

• Supervision consultants, contractors and operators are committed to implementing mitigation measures.

1.7 HIV/AIDS and health risks for construction workers and service providers are mitigated.

Monitoring by the health bureau

Risk • Health bureaus may not have the

resources to implement mitigation measures.

2. Rural road infrastructure improved in the project area

2.1 357 km of rural roads are upgraded 2.2 Road safety signs and markings are

displayed and safety awareness is increased

2.3 Road capacity increases to 400–2,000 pcu per day for class-IV, and to 2,000–6,000 pcu per day for class-III when the rural roads open to traffic

2.4 Rural roads in the project area are effectively maintained.

2.5 Social and environmental safeguards for rural roads are complied with.

PAMs, PRs, and PCR PAMs, PRs, and PCR PAMs, PRs, and PCR RP, IEEs, and PAMs

Assumption • GPCD can plan and coordinate

with local governments to timely implement the rural roads.

• Facilities are of good quality and completed on time.

Risk • Funding for rural road

maintenance is not sufficient.

3. Additional rural bus service made available in the project area.

3.1 Township bus stations are built. 3.2 Inter-provincial bus routes increase by 1.5

times, and inter-county bus routes increase by 2 times by 2015.

PAMs, PRs, and PCR Assumption • GPCD has the capacity to plan

and coordinate with local governments to operate the township bus stations.

4. Transport services improved in the project area

4.1 Implementation of bus route licensing reforms under the pilot road transport action plan in Longnan prefecture.

4.2 Average daily bus utilization in kms per day increased by 30%

4.3 Expansion of Longnan experience to other areas in southern Gansu.

Approved action plan Annual statistics, Action plan baseline surveys, and monitoring reports by Gansu Transport Administration Bureau

• GPCD will implement the action plan.

• GPCD approves implementation of route licensing changes.

5. Corporate governance promoted in expressway operations.

5.1 Governance and efficiency are improved by separating the policy and planning functions from the construction and O&M functions.

5.2 Private sector participation is introduced through tendering of highway maintenance.

PAMs, and PCR PAMs, and PCR

Assumption • The provincial government will

promote corporate governance. Risk • Few private firms are interested

in expressway maintenance.

iii

Design Summary



6. The capacity of local transport authorities and national consultants strengthened in construction, supervision, project management, road safety, monitoring and evaluation.

6.1 35 person-months of international training will be provided for GPCD staff. On-the-job training of national consultants will be provided by the international consultants.

6.2 At least 200 person-months training

program will be provided for local transport authorities at county and township levels.

6.3 Survey techniques are adopted to

assess changes in work practices and behavior to measure the effectiveness of the capacity-building component.

Midterm review mission, and PCR, A report by consultants on the capacity-building component, including participants, subject areas, feedback from participants, and new skills applied by trainees

Assumption • Consultants are recruited on time

and provide good training to local transport authorities.

• Local transport authorities at provincial and subprovincial levels are committed to implementing human resource development plan to be prepared by 2008.

• Trainees apply in their daily work what they have learned.

Activities with Milestones Inputs 1. Expressway civil works 2. Equipment 3. Resettlement 4. EIA and SDAP 5. Strengthening rural road

maintenance 6. Consulting and training services 7. Rural roads 8. Township bus stations and pilot-

testing policy reform in transport service action plan

Civil works contracts awarded by 2007 and completed by 2011 Equipment procured by 2011 Land acquisition and relocation commenced by October 2007 and rehabilitation measures completed by December 2008 Implementation of EIA and SDAP Implement rural road maintenance regulation as approved by GPG Consultants recruited by 2007 and completed by 2011 Civil works contracts awarded by 2007 and completed by 2011 Township bus stations completed and open to operator and road users by 2011 An action plan prepared by June 2008 and implemented according to the plan

• Asian Development Bank:

$300 million • MOC: $332 million • GPG: $315.4 million • Bank of Communications:

$712.6 million

EIA = environmental impact assessment, GDP = gross domestic product, GPCD = Gansu Provincial Communications Department, GPG = Gansu provincial government, HIV/AIDS = Human immunodeficiency virus/acquired immunodeficiency syndrome, IEE = initial environmental examination, km = kilometer, MOC = Ministry of Communications, O&M = operation and maintenance, PAM = project administration missions, PCR = project completion report, PEPB = Provincial Environmental Protection Bureau, PR = progress report, RP = resettlement plan, SDAP = social development action plan.

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LOAN PROCESSING HISTORY

Approval of PPTA : 30 August 2005 Fact-Finding Mission : 6 March – 17 March 2006 Management Review Meeting : 24 May 2006 Appraisal Mission : 6 – 14 June 2006 Staff Review Committee Meeting : 20 July 2006 LTACC/MRM II : Not Required Loan Negotiations : 14-16 November 2006 Board Circulation : 27 November 2006 Board Consideration and Approval : 18 December 2006 Loan Agreement Signing : 30 April 2007 (planned) Loan Effectiveness : 31 July 2007 (planned) Loan Closing Date1 : 30 June 2012

1 This date will be the closing date for withdrawals from the loan account. Goods must have been delivered and

services rendered on or before this date to be eligible for payment by the Bank. No payments from the loan can be made after the loan closing date. However, when there is no formal request for extension of the loan closing date, the loan account may still be kept open for a period of three months beyond the loan closing date in order to complete disbursement of outstanding contracts under the loan. This would also allow the EA.time to collect and submit documentation and invoices pertaining to expenditures incurred before the loan closing date.

I. PROJECT DESCRIPTION

A. Project Area and Location

1. The Project is located in southern Gansu province, one of the poorest areas in the PRC. With a per capita gross domestic product 45% of the national average, Gansu ranks 30th among the 31 administrative areas. The Project is designed to promote sustainable economic growth by constructing an important section of the high-priority Lanzhou–Haikou corridor and improving the local road transport system. The Project will (i) provide an integrated road transport network in southern Gansu by constructing the 134 kilometer (km) Wudu–Guanzigou expressway and upgrading its associated 357 km rural roads, (ii) improve road transport services by constructing 200 township bus stations and pilot-testing the road transport action plan, and (iii) improve corporate governance and strengthen institutional capacity through providing consulting services and training.. B. Impact and Outcome

2. The Project will promote sustainable economic growth and reduce poverty in southern Gansu. It will develop an efficient, safe, and reliable road transport system. The proposed expressway with the total length of 134 km will reduce the trip length from Wudu to Guanzigou by 136 km, and resulting of time savings of at least 5 to 7 hours. It will also improve rural access to markets, income-earning opportunities, education and health services, and social activities.

C. Outputs

3. The Project will (i) build a 134-km four-lane access-controlled toll expressway between Wudu and Guanzigou, and its tunnels (including one that is 8 km), bridges, interchanges with toll stations, connector roads, administrative stations, and service areas; (ii) upgrade 357 km of rural roads to improve access to 27 townships and 275 villages in poor areas; (iii) build 200 township bus stations to provide new bus services; (iv) improve transport services by pilot-testing a road transport action plan in Longnan; (v) promote corporate governance; and (vi) strengthen local transport authorities in construction supervision, road safety, asset management, and project management by providing consulting services and training D. Special Features 4. Enhancing Accessibility to Low-Income Areas. Lack of roads feeding into the main road networks has been identified as a serious constraint on economic development and poverty reduction in the project area. The Project includes a rural road improvement program, comprising seven road sections totaling 357 km, linking 27 townships and 275 villages. Rural roads were selected on the basis of road network efficiency, economic potential, and the surrounding poverty incidence and population density. These roads will connect to the expressway through the road network system. About 763,000 rural people, of whom 52% are poor, will directly benefit. 5. The rural roads will (i) be upgraded to classes-III–IV; (ii) use the MOC technical standards and follow national competitive bidding procedures that are acceptable to ADB; (iii) follow ADB’s social safeguard policies; and (iv) be monitored and evaluated to ensure proper design, supervision, and impact monitoring. Planning, improvement, and maintenance will be highly consultative. Of the ADB loan, $15 million will finance the

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upgrading of the Wudu–Lixian section from unclassified or earth track to class-III or class-IV. The upgrading will include improved road subgrade, sealed pavement and improved drainage, rehabilitation of bridges, culverts, and traffic safety facilities. The improved road will reduce the distance from Wudu to Lixian by 23 km (from 164 km to 141 km), not only providing the shortest route for traffic from Tianshui, the second largest city in Gansu, to Wudu and beyond, but also improving transport services and stimulating other socioeconomic activities (Appendix 1). 6. Improving Rural Transport Service. Rural transport services are underdeveloped in Gansu. In Longnan, 129 townships do not have any bus stations. Currently, passengers board buses on roadsides or at temporary stops which is highly unsafe. The bus service is informal, charges are irregular and sometimes exorbitant, and the frequency is uncertain. The Project will build 200 township bus stations: 100 in Longnan, 50 in Tianshui, and 50 in Dingxi. The total investment is estimated at $10 million, of which $5 million will be funded from the ADB loan. The improved bus stations and rural roads will provide a more reliable, safe, convenient and regular bus service to the local residents. New and improved rural transport services will help the rural people raise their income (Appendix 2). 7. Sustaining Rural Road Maintenance. Building on new national policy for funding and managing rural road maintenance announced by the State Council in October 2005, GPCD has prepared a provincial regulation and submitted it to the Gansu provincial government (GPG) for approval. Under the Project, a rural road maintenance plan was prepared and agreed with GPCD to strengthen the sustainability of the rural network in the project area by (i) developing a functional core rural road network as a base for establishing a road maintenance management system and assigning priorities and budgets; (ii) compiling road inventories and basic-condition data, and assigning a sub-network manager for each road; (iii) enhancing rural road safety facilities in the mountainous region; (iv) preparing a rural road maintenance manual by the international consultant and providing on-the-job training to sub-network managers, small maintenance companies, and communities; (v) conducting a 200 person-months training program for sub-network managers during project implementation; (vi) improving the efficiency of use of existing funds; and (vii) promoting preventive maintenance, including control of overloading vehicles and timely maintenance during the rainy and winter seasons (Appendix 3). 8. Tendering for Road Maintenance. The Project will improve road maintenance operations by conducting competitive bidding for road maintenance with private sector participation. Maintenance works were previously done by GPCD through force account. For the sake of efficiency, the Project will develop standard bidding documents for procurement of performance-based road maintenance contracts with the help of international consultants. Private sector participation in bidding for road maintenance will enhance competition and improve quality (Appendix 3). 9. Adopting an Intelligent Transport System. An intelligent transport system (ITS)2 on expressways is being introduced in accordance with the national ITS architecture prepared by the National ITS Center. ITS objectives in Gansu during the 11th FYP are to (i) introduce a network-wide expressway tolling system; (ii) reduce toll payment delay; (iii) improve safety through better monitoring; (iv) improve traveler information; (v) assist in emergencies; and (vi) improve traffic enforcement, infrastructure

2 The application of information technology to transport is referred to as ITS, which provides the ability to gather,

organize, analyze, use, and share information about transport systems and their efficient use.

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maintenance, and computerized management of serious incidents. ITS equipment and training will be provided under the Project with the help of consulting services, including (i) integrated traffic control centers; (ii) advanced toll payment; (iii) variable message displays; (iv) use of surveillance technology; (v) detection of blackspot locations and weather conditions; and (vi) monitoring of speed limit, overloaded vehicles, toll payment, and road safety. The ITS will produce key monitoring reports, such as traffic composition and number of road accidents (Appendix 4). 10. Developing Asset Management. Proper asset management is fundamental to ensure road sustainability. During the project implementation, GPCD will prepare an asset management development plan, which will establish a computerized database system and promote the use of modern equipment, and provide a training program for provincial, county, and township employees. GPCD will assign the Gansu Communications Technical Vocational College to develop a training program to improve road asset management skills with the help of international consultants. Equipment for the computerized system is included in the project scope and will be financed by the Project (Appendix 4).

II. COST ESTIMATES AND FINANCING PLAN A. Detailed Cost Estimates

11. The project investment cost is estimated at $1,660 million equivalent, including contingencies, interest, and other charges during construction (Appendix 5).

Table 1: Project Investment Plan

($ million) Item Amountsa A. Base Costsb 1. Expressway Civil Works 1,047.90 2. Equipment 26.7 3. Land Acquisition and Resettlement 48.3

4. Consulting Services, Training, and Project Management 78.4

5. Rural Roads and Township Bus Stations 39.2 Subtotal (A) 1,240.5 B. Contingenciesc 221.9 C. Financing Charges during Constructiond 197.6 Total (A+B+C) 1,660.0

a Includes taxes. b In 2006 prices. c Physical contingencies are computed at 10.0%. Price contingencies computed at 1.9% per year for foreign exchange

costs, and at 3% per year for local currency costs. d Includes interest, commitment charges. Interest during construction has been computed at the 5-year forward London

interbank offered rate plus a spread of 0.6%. Source: Asian Development Bank estimates. B. Financing Plan 12. The Government has received a loan of $300 million from ADB’s ordinary capital resources to help finance the Project. The Borrower of the loan is PRC. The loan will have a 25-year term, including a grace period of 5 years, an interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, a commitment charge of 0.75% per annum, and such other terms and conditions set forth

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in the draft Loan and Project Agreements. The Government has provided ADB with (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility on the basis of these terms and conditions, and (ii) an undertaking that these choices were its own independent decision and not made in reliance on any communication or advice from ADB. 13. The ADB loan will finance 18% of the total project cost. The remaining cost will be financed by MOC and GPG, and cofinancing through a loan from Bank of Communications (Table 2). MOC and GPG have made budgetary provisions for the counterpart funds. The ADB loan proceeds will be made available to GPG, which will, through GPCD, onlend the proceeds of the loan to GCHC under an onlending agreement on the same financial terms and conditions as those of the ADB loan, with the GCHC bearing the exchange rate and interest rate variation risks and performing the obligations applicable to it in the Project Agreement which were made an integral part of the onlending agreement.

Table 2: Financing Plan ($ million)

Source Total % Asian Development Bank 300.00 18 Bank of Communications 712.60 43 Ministry of Communications 332.00 20 Gansu Provincial Government 315.40 19 Total 1,660.00 100

Source: Asian Development Bank estimates. C. Allocation of Loan Proceeds

14. The categories of goods, services and other items to be financed out of the proceeds of the loan and the allocation of amounts to each category are shown in Table 3 below.

Table 3: Allocation and Withdrawal of Loan Proceeds

Category ADB Financing Number

Item

Amount Allocated $

Category/Subcategory

Percentage and Basis for

Withdrawal from the Loan

Account 1 Works 295,100,000 1A Expressway 275,100,000 28 percent of total

expenditure 1B Rural Roads 15,000,000 93 percent of total

expenditure 1C Township Bus

Stations 5,000,000 50 percent of total

expenditure 2 Equipment 3,100,000 100 percent of total

expenditure 3 Consulting Services 1,800,000 100 percent of total

expenditure Total 300,000,00

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15. Notwithstanding the allocation of loan proceeds and withdrawal percentages in Table 3, (a) if the amount of the Loan allocated to any category appears to be insufficient to finance all the agreed expenditures in that category, ADB may, by notice to the Borrower, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Loan which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and b) if the amount of the Loan then allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, by notice to the Borrower, reallocate such excess amount to any other Category.

III. IMPLEMENTATION ARRANGEMENTS

A. Executing and Implementing Agencies 16. GPCD will be the Executing Agency and responsible for the overall implementation of the Project. GCHC, the Implementing Agency responsible for the ongoing ADB-financed Gansu Roads Development Project,3 will also be the Implementing Agency for the proposed expressway under the Project. B. Project Management Organization 17. GCHC’s general manager, acting as the project director, will be responsible for construction and operation of the expressway. GPCD will implement the rural road component through the Gansu Provincial Highway Administration Bureau and the transport service component through the Gansu Provincial Transport Administration Bureau. A project implementation unit established within GCHC will monitor and follow up implementation; facilitate land acquisition, resettlement, and environmental protection; and ensure that local concerns are addressed adequately. The unit will be headed by a project manager, who will oversee day-to-day physical implementation. Organization charts for GPCD and GCHC are in Appendix 6.

IV. IMPLEMENTATION SCHEDULE 18. The Project will be implemented over 5 years, from January 2007 to December 2011. The implementation schedule is in Appendix 7

V. CONSULTANT RECRUITMENT

19. The Project will finance 56 person-months of international consulting services: 40 for supervision of the civil works, 6 each for bridge construction and tunnel construction, and 2 each for road safety and road maintenance. GPCD will engage and finance 7,600 person-months of national consultants, 350 of which will be allocated for rural roads and transport services, 320 for environmental protection, and 30 to monitor the socioeconomic and poverty impacts. The international consultants will be financed by the ADB loan and selected and engaged based on a full technical proposal using the quality- and cost-based selection (QCBS) method in accordance with ADB's Guidelines

3 ADB. 2004. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People’s Republic of China for the Gansu Roads Development Project. Manila.

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on the Use of Consultants.4 .The national consultants will be financed from domestic resources and will be recruited in accordance with Government procedures acceptable to ADB. GCHC will establish two resident supervision engineer offices. The chief supervision engineer’s office will be responsible for overall project supervision. The chief supervision engineer will be assisted by two deputies, one of whom will be the team leader of the international consultants. The team leader will help the chief supervision engineer with project and contract management activities during project implementation. Outline terms of references for consultants are in Appendix 8.

20. The complete set of ADB’s standard request for proposal (RFP) for the recruitment of consulting firms under ADB-financed loan projects can be downloaded from ADB website: http://www.adb.org/Consulting/documents.asp. The checklist of activities for the recruitment of consulting firm is given in Appendix 9.

VI. PROCUREMENT

21. Procurement of goods and services to be financed out of the proceeds of the loan shall be subject to provisions of Schedule 4 of the Loan Agreement. All ADB-financed procurement will follow ADB’s Procurement Guidelines.5 A list of ADB-financed contract packages is in Appendix 10. The main civil works contracts will be divided into 24 packages, which will be procured using international competitive bidding (ICB). The four pavement packages and two equipment packages will also be procured through ICB. All other packages—four traffic management facilities; four afforestation and landscaping works; six building and ancillary facilities; and four tolling, monitoring, and communication systems—will be financed by the Government and procured under national competitive bidding (NCB) acceptable to ADB. The Wudu–Lixian section financed by ADB will be procured through NCB, for which ADB will require prior review of the bid evaluation report and award of contracts. The other sections financed by GPCD will be procured through Government procedures acceptable to ADB. Township bus stations financed by ADB will be procured through shopping. International bidding will be handled by a tendering company that is well qualified to perform these tasks. The relevant sections of ADB’s anticorruption policy will be included in all documents and contracts related to project bidding and implementation. The Environmental Management Plan (EMP) will be incorporated in the bidding documents and contracts for civil works. A procurement plan is in Appendix 11. 22. ADB’s Guidelines for Procurement require the use of appropriate Standard Bidding Document (SBD) issued by ADB for the procurement of ADB-financed civil works, goods and related services. These SBDs and other procurement documents are posted in the internet http://www.adb.org/Procurement/prequalification-bid-documents.asp. The procurement procedures for ICB, and NCB are shown in Appendix 12.

VII. DISBURSEMENT PROCEDURES

23. The loan will be disbursed in accordance with ADB’s Loan Disbursement Handbook and provisions of Schedule 3 of the Loan Agreement. ADB agreed to retroactive financing of expenditures incurred for the Project before the Effective Date, but not earlier than 12 months before the date of the Loan Agreement in connection with items to be retroactively financed, subject to maximum amount equivalent to $30million.

4 ADB. 2006. Guidelines on Use of Consultants. Manila (as amended from time to time). 5 ADB. 2006. Procurement Guidelines. Manila (as amended from time to time).

http://www.adb.org/Consulting/documents.asp

http://www.adb.org/Procurement/prequalification-bid-documents.asp


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Because most of the payments will be made for large contracts, direct payments, reimbursements, and commitment procedures will be used to withdraw loan funds. The procedures for these disbursement modalities are given in Appendix 13. To expedite the flow of funds, the statement of expenditures procedure may be used to reimburse eligible expenditures for any individual payment not exceeding $100,000 equivalent. Before disbursement, the Borrower shall have certified to ADB that the onlending agreement, which shall include the terms and conditions required under the loan agreement, shall have been duly executed and delivered on behalf of GPG and the GCHC, and shall have become fully effective and binding upon the parties thereto in accordance with its terms. Withdrawal applications and other loan disbursement information are available at ADB Controller’s Department’s website, http://lfis.adb.org.

VIII. PROJECT MONITORING AND EVALUATION

24. To demonstrate the effectiveness of its operations and to be accountable for its performance to stakeholders, ADB uses the project performance management system (PPMS). The monitoring will use a combined macro and micro approach, the latter focusing on a few key representative communities. A basic monitoring framework was constructed for the Project to permit a more definitive assessment of the actual benefits. GPCD and GCHC have agreed with the (i) monitoring framework, (ii) set of indicators to be used to monitor and evaluate the project’s impacts, and (iii) representative villages. Indicators were selected based on the findings of the ADB-financed TA for the socioeconomic assessment of road projects6 and project preparatory TA findings. The baseline values for the indicators were established, where available, during project preparation, and will be updated prior to and during project implementation, at project completion, and annually for 3 years thereafter. By 30 September 2007, GPCD will recruit an independent local institute to provide 30 person-months for surveys, analyses, and reporting. Reports summarizing the key findings will be submitted to ADB. GPCD, GCHC, and local governments have assured ADB that monitoring will be adequate in the project area and in selected communities (Appendix 14).

IX. LAND ACQUISITION AND RESETTLEMENT

25. GPCD has prepared a resettlement plan for the project expressway and a resettlement plan for the rural roads and township bus stations (Appendix 15). The project expressway will cross 83 villages in Wudu district and Wenxian county in Longnan. An estimated 681 ha will be permanently acquired. Based on the PRC standard for impact assessment, 2,834 people will lose all their land and agricultural livelihood; since the actual impact will be about one-third loss, an estimated number affected is 8,500 people. About 15,130 square meters of houses will be demolished, requiring the relocation of 151 households with 621 people. No factories or school buildings will be affected. The upgrading of 357 km of rural roads will require relocating about 100 households with 400 people, and another 500 people will be partly affected by land acquisition. The 200 township bus stations do not require land acquisition but will obtain land-use rights for existing construction land in each town. 26. GCHC, in conjunction with the local government land administration bureaus, will be responsible for resettlement for the project expressway. The estimated resettlement cost is CNY387 million ($48.3 million equivalent), including taxes and contingencies. The resettlement cost for the rural roads and township bus stations is CNY12.4 million

6 ADB. 2002. Technical Assistance to the People’s Republic of China for Socioeconomic Assessment of Road

Projects. Manila.

http://lfis.adb.org/

8

($1.55 million equivalent). Since both resettlement plans are based on feasibility studies, GPCD and GCHC must prepare and submit updated resettlement plans to ADB for approval before land acquisition and civil works. The resettlement budgets will be adjusted based on the actual measurement of physical losses and approved compensation rates. Affected persons (AP) were consulted during the preparation of feasibility studies, and resettlement information was disclosed to them by the media in April and May 2006. GPCD and GCHC will be responsible for internal supervision and monitoring. Progress reports will be prepared and submitted to ADB quarterly until resettlement is completed. GCHC will then prepare a resettlement completion report. GCHC will contract an independent agency for external monitoring and evaluation, and to prepare monitoring reports for submission to GPCD and ADB every 6 months until resettlement is completed. Thereafter, annual evaluation investigations will be conducted for at least 2 years and reported to GPCD and ADB.

X. ENVIRONMENTAL ASSESSMENT AND MANAGEMENT PLAN 27. The environmental impact assessment (EIA) was prepared by GPCD and approved by the State Environmental Protection Administration on 3 July 2006. Initial environmental examinations (IEEs) for rural road and bus stations were also prepared. A summary EIA for the Project was prepared and circulated to the ADB Board and made public through ADB's website on 31 May 2006. The EIA and IEEs assessed the environmental impact of the selected alignments of the expressway, the rural roads and the bus stations, and prescribed environmental protection and mitigation measures, which cost $85.6 million. The proposed alignment, rural roads, and bus stations do not cross or are not in any protected areas; there are no known rare or endangered species in the project areas. To ensure that all potential adverse environmental impacts are mitigated, GPCD will implement the environmental management plans (EMP) as specified in the EIA. The ‘EA will submit a report on environmental impact mitigating measures semi-annually. The EMP will be incorporated in the bidding documents and contracts for civil works.

XI. REPORTING REQUIREMENTS

28. Prior to loan effectiveness, the EA will submit monthly reports to ADB on the actions taken or being taken towards loan signing and subsequent loan effectiveness. After the Project becomes effective, The EA will submit the following reports to ADB in a timely manner:

A. Quarterly Progress Report (QPR) 29. The EA shall submit to ADB within 15 days after each quarter quarterly progress reports (QPR) on project implementation summarizing: (i) progress made against established targets; (i) delays and problems encountered during the quarter, (iii) problems encountered during the quarter, and steps taken or proposed to be taken to solve the problems; and (iv) program activities proposed for the succeeding quarter. The format and content of the progress report should permit ADB staff to readily capture key information for inputting into the project performance report (PPR), the main tool for monitoring project implementation performance within ADB. The PPR format is shown is Appendix 16. Start date and completion date of each major activity under each component shall be indicated in the QPR complemented by simple charts such as a bar or milestone charts to illustrate implementation progress. Detailed information such as background to a particular problem and percentage calculation of project progress should also be attached as appendixes to QPR. Appendix 17 shows the suggested

9

QPR format while Appendix 18 shows the suggested format for calculating Project progress. B. Project Monitoring and Evaluation Report 30.. EA shall submit to ADB, every 15 of December during project implementation and for 3 years after project completion, a project monitoring and evaluation report (see para. 24 above). C. Land Acquisition and Resettlement Report 31. EA shall submit to ADB within 15 days after the end of each quarter a land acquisition and resettlement report until resettlement is completed. The external monitoring agent to be recruited by the EA will prepare semi-annual report on land acquisition until 2 years after completion of resettlement and submit these reports simultaneously to EA and ADB (para. 26 above) D. Environmental Impact Assessment Report 32. EA shall prepare an environmental impact assessment report semi-annually. This report shall be submitted to within 30 days after the end of each 6-month period (para. 27) E. Project Completion Report 33. The main objective of a project completion report (PCR) is to learn from the experiences of borrowers, executing agencies (EAs), and ADB in implementing projects, and to use the lessons to improve the performance of ongoing and future ADB-financed projects. The PCR will also be used as a measure of ADB’s development effectiveness and as an input to country strategy formulation. The EA shall prepare a project completion report (PCR) and submit this to ADB not later than three months following the physical completion of the Project. The PCR will highlight the development impacts achieved by the Project, details of project implementation, costs, benefit monitoring and evaluation activities, and other relevant information. A PCR format and outline of suggested topics for this report are given in Appendix 19. The PCR with the associated financial accounts and data will be presented to ADB in English language.

XII. CONTRACT AWARDS AND DISBURSEMENT PROJECTIONS 34. To effectively monitor Project implementation, it is necessary to have accurate projections of contract awards/commitments and disbursements. Accurate disbursement projection also helps ADB in its cash flow and portfolio management. A comparison of such projections with the actual achievements will reveal impediments to smooth implementation and help determine the remedial measures. For this purpose, annual projections of contract awards and disbursements with quarterly breakdowns for each contract for the entire project period shall be prepared and submitted every 15 December during project implementation.

XIII. ACCOUNTING AND AUDITING REQUIREMENTS

35. GPCD and GCHC will maintain separate accounts for the Project and related financial statements, and will have them audited annually in accordance with auditing

10

standards consistently applied by independent auditors, whose qualifications, experience, and terms of reference are acceptable to ADB. GPCD and GCHC will submit to ADB within 6 months of the end of each related fiscal year, certified copies of audited project accounts and financial statements and an auditor’s report on the Project, all in English. A separate audit opinion on the use of the statement of expenditures, if any, will be included as part of the auditor’s report.

36. ADB’s requirements and procedures for the financial management of ADB-financed projects are set out in the Guidelines for the Financial Governance and Management of Investment Projects (the Guidelines).The financial and auditing requirements are summarized in Appendix 20. The checklist for assessing the adequacy of the accounting system is given in Appendix 21. The Project records should be periodically reconciled with ADB records (i.e, ADB’s advice of withdrawals), which are available in the website: https://lfis.adb.org/reports/reports.asp.

XIV. MAJOR LOAN COVENANTS

37. The major loan covenants for this Project are detailed in Schedule 6 of the Loan Agreement. The list of major loan covenants is given in Appendix 22. The status of compliance including actions taken to comply with the covenants should be indicated in the appropriate column. These should also be updated and appended to the QPR.

XV. KEY PERSONS INVOLVED IN THE PROJECT

A. Asian Development Bank 38. The Department responsible for the implementation of the Project is the East Asia Department (EARD), represented by the Transport Division (EATC). EATC has the overall responsibility for the implementation of the Project in ADB. A. ADB Staff

Transport Division (EATC) East Asia Department (EARD)

Mr. Niger Rayner Director, EATC Tel No. (632) 632 6376 e-mail: [email protected]

Mr. Chwoon Sam Chin

PAU Head, EATC Tel No. (632) 632 6168 e-mail: [email protected]

Ms. Xiaohong Yang Sr. Financial Analysis Specialist, EATC Tel.No. (632) 632 5738 e-mail: [email protected]

Ms. Marissa P. Espiritu

Associate Project Analyst, EATC Tel. No. (632) 632 6890 e-mail: [email protected]

https://lfis.adb.org/reports/reports.asp

mailto:[email protected]




11

Office of the General Counsel Mr. Xiahua Peng Principal Counsel Tel No. + 86 10 6642 6601 local 224 e-mail: [email protected] Controller’s Department Loan Administration Division (CTLA-4)

Ms. Oksana Namizmieva Financial Control Specialist, CTLA2 Tel. No. (632) 632 4545 e-mail: [email protected]

Central Operations Services Office Consulting Operations Services Division 2 (COS2)

Mr. Chong Chi Nai Principal Procurement Specialist Tel. No.: (63-2) 632-5411 E-mail: [email protected]

Address: Asian Development Bank

No. 6 ADB Avenue, Mandaluyong City 1550 Metro Metro Manila P.O. Box 789 0980 Manila, Philippines Tel No. (632) 632 4444

Facsimile (EATC): (632) 636-2426 Website Address: http://www.adb.org

B. Executing Agency

Gansu Provincial Communications Department (GPCD)

Mr. Wang Huaping Director, OFA

Tel. No: +86 931 8483776 +8481000 ext. 2107 Mobile: 13893266189 Fax No. +86 931 848 3303 e-mail: [email protected] [email protected] [email protected] Address: Room 2107, Communications

Mansion 213 Jingquan Road, Lanzhou, PRC Gansu Provincial Transport Administration Bureau (GTAB)

Mr. Liu Junxun Chief of the Administration

Tel. No: +86 931 8599096 Fax No +86 931 8599087 e-mail: [email protected] Address: No. 277 Donggang East Road Lanzhou, PRC


mailto:@adb.org


http://www.adb.org/




12

Gansu Provincial Highway

Administration Bureau (GHAB) Mr. Li XingNin

Deputy Director Tel. No: +86 931-8401712 Fax No: +86 931 8432 673 e-mail: [email protected] Address: No. 43 No. Binhedonglu, Lanzhou,

PRC

C. Implementing Agency

Gansu Changda Highway Company. Ltd.

Mr. Zhao Hongde Board Chairman

Tel. No: +86 931 8481000 Fax No: +86 931 8484600 e-mail: [email protected] Address: 213 Jingquan Road, Lanzhou, PRC

XVI. ANTICORRUPTION

39. ADB’s Anticorruption Policy 7 was explained to and discussed with the local and central governments. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the loan regulations and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of GPCD, GCHC, and all contractors, suppliers, consultants, and other service providers as they relate to the Project. 40. GPCD will (i) establish a supervisory body to prevent undue interference in business practices and to ensure that adequate resources are made available for its effective operation; (ii) involve a leading group of officials from the Supervision Division of GPCD, located in GCHC, involved in bidding, construction, and other operational activities; (iii) hold regular briefings with GPCD, GCHC, and the prosecutor’s office to share information on or warnings about corrupt practices; (iv) periodically inspect contractors’ fund withdrawals and settlement activities; and (v) adopt a two-contract system whereby the winner of a civil works contract must also sign an anticorruption contract with the employer. 41. The ADB Office of the General Auditor is the point of contact to report allegations of fraud and corruption against ADB-financed projects or its staff. Within that office, the Anticorruption Unit is responsible for dealing with all matters related to allegations of fraud and corruption. Please refer to the ADB’s Anticorruption Policy handbook posted in

7 ADB. 1998. Anticorruption. Manila (as amended to date).



13

the ADB website: www.adb.org/integrity/default.asp.Anyone coming across evidence of corruption associated with the Project may contact the Anticorruption Unit, as follows: Anticorruption Unit Office of the General Auditor Asian Development Bank 6 ADB Avenue, Mandaluyong City 0401 Metro Manila, Philippines Telephone: (632) 6325004 Facsimile: (632) 2152 Email: [email protected]

http://www.adb.org/integrity/default.asp


Appendix 1

13

RURAL ROADS IMPROVEMENT PROGRAM 1. Overview. The road network in Longnan prefecture has a total length of 11,297 kilometer (km), mostly in poor condition; of this, 8,893 km (or 80%) is unclassified. There are no class-I and above roads and class-II roads account for only 3% of the total length. In Longnan, 787 villages are not connected with roads. Many villages rely on earth tracks that are unsuitable for motorized traffic due to poor riding quality, and which become impassable during the rainy and winter seasons. Bridges are of poor quality and take only light loads. Many smaller rivers are crossed by fording. Some sections of county roads are currently impassible because of landslides or mudflows. Where they are passable, vehicle operation costs tend to be high. Agricultural tractors and motor tricycles are the main form of motorized transport for both goods and people. It is estimated that the lack of roads has resulted in 10–20% of agricultural produce being wasted because of inability to transport it to markets and processing centers. 2. Paving the Unpaved Roads for the Poor. It is important to focus on the improvement of a core rural road network that would ensure a minimum connectivity for each township to a nearby main road. Gansu Provincial Communications Department agreed to integrate a local road component, comprising seven roads in total 357 km to be upgraded from unclassified to class-III or IV (Table A6). They were selected on the basis of road network efficiency from the provincial Rural Road Development Plan, economic development potential, and poverty incidence and population density. The existing roads are in very poor condition, sections are unpaved, and traffic on these roads has reached a certain level, so it is more economical to upgrade and pave them than maintain the unpaved roads to all weather condition. The total cost of the program is CNY233.8 million ($29.2 million), of which Asian Development Bank will finance $15 million of Wudu–Lixian road. The rest will be financed by the Government in conjunction of implementation of its Rural Road Development Plan by 2011. 3. Benefits. The rural roads have been evaluated. The major cost savings will be in the form of reduced vehicle operating costs which will ultimately convert to lower agricultural input costs and higher margins for agricultural output. The economic internal rate of return of rural roads network was satisfactory with an overall economic internal rate of return of 23% and a net present value of CNY285.6 million. Gansu Provincial Communications Department will start the construction of the project rural roads concurrently with the project expressway and be completed by 2011. The Program will directly benefit 763,000 people, about 52% of whom are poor beneficiaries, living below the Government low-income of CNY852 per capita per year.

Table A6: Rural Roads Improvement Program

Road Name Length (km)

Cost (CNY million

Towns Served

Population Served

Traffic (AADT) in pcu

Improvement

1. Wudu–Lixian 141 128.7 10 300,000 1,020 Upgrade to class-III (101 km) Upgrade to class-IV (40 km)

2. Sijiaba–Changheba 47 28.2 4 150,000 364 Upgrade to class-IV (47 km) 3. Baihegou–Wangguan 49 25.6 4 105,000 978 Upgrade to class-III (41 km)

Upgrade to class-V (8 km) 4. Zhaojiaba–Tianchi 28 12.6 2 28,000 350 Upgrade to class-IV 5. Chengxian–Er'lang 23 9.2 3 68,000 400 Upgrade to class-IV 6. Honghe–Kuanchuan 36 16.2 3 100,000 350 Upgrade to class-IV 7. Yangba–Ganjiangba 33 13.3 1 12,000 450 Upgrade to class-IV

Total 357 233.8 27 763,000 AADT = average annual daily traffic, km = kilometer, NPV = net present value, pcu = passenger car unit. Sources: Gansu Provincial Communications Department and technical assistance consultants.

Appendix 2

14

RURAL TRANSPORT SERVICES AND POLICY REFORM A. Nature of Transport Service 1. General. Rural roads and rural transport services form a rural transport system. In southern Gansu, rural roads are poor and transport services are inadequate. Passengers board buses on roadsides, which is dangerous, or at temporary bus stops. In Longnan, 129 townships do not have the lowest-class rural bus station, 820 villages have no direct access to a formal bus services as bus operators are unwilling to provide them because of poor roads, resulting in high operating costs and safety concerns. Transport demand is met by various informal transport services, typically motor-tricycles, agriculture tractors, and dual-purpose pickups. They provide local services between villages and townships for the villagers, and are more expensive than the regulated fare.8 2. Transport Demand. Social surveys reveal that the average household makes 48 trips per year, of which 56% were motorized for journey length over 6 km. More than 60% of trips take place close to the nearest town or markets. External trips are fewer. Vehicle ownership is low in the project area.9 Walking and bicycling are the major modes of transport for short trips. As the distance increases, so does the number of motorized trips. 3. Passenger Services. Bus fares and routes of the formal bus system are regulated, often resulting in inefficient services and low vehicle utilization. Bus fares depend on the type of bus and road conditions, with an increase of 20% allowed during holidays. The regulations provide a small variation between different road classes, e.g., an increase of 5% of base fare is allowed for classes-II–III roads and an increase of 8% of base fare for class-IV and unclassified roads, as against base fares set on class-I and expressways. Rural bus fares do not reflect opportunities for improving vehicle utilization and lowering unit operating costs through a relaxation of regulatory restrictions on operations and schedules. Average bus occupancy of around 65% for inter-prefecture and inter-county routes. 4. Importance of Rural Transport System. Improved rural roads provide the physical link from villages to the higher levels of the road network and hence to the regional and national economy. Since few rural farmers own motor vehicles and rural roads are the only means of transport in the project area, rural transport is the only way that rural households are linked to the wider economy. In Suzhou prefecture in Gansu, seven township bus stations were built in 2003. This resulted in: (i) per capita annual income increase of CNY100 in 2004, (ii) total freight traffic increased by 300,000 tons and passenger traffic increased by 200,000 people, and (iii) average daily passenger traffic per township bus station reached 300. Other social benefits are summarized in Table A4.1, which indicates strong empirical evidence to support the social and economic justifications for the provision of an efficient rural transport system.

8 Based on the social surveys, an average unit cost of CNY0.30 per kilometer (km) is paid for trips from a

village to a township center (roughly about 15–20 km), which is much higher than regular bus fare for the same distance in periurban areas in Gansu (CNY0.20 and less per km).

9 Nearly 40% of households have bicycles, 23% of families own one motorcycle, 20% of families have one animal cart, and only 11% of households have one agricultural vehicle.

Appendix 2

15

Table A4.1: Benefits Resulting from Improved Transport Services A. Short-Term Economic Benefits 1. Travel time savings (particularly during the rainy and winter seasons) 2. Improved traffic safety (buses will not block the main roads to pick up and unload passengers) 3. Generated more traffic (travel demands was suppressed because of unpredictable bus schedules) 4. Improved rural mobility and life quality (to access markets, schools, clinics, jobs, and service centers, etc.) 5. Convenient to sell agriculture products in the markets near to bus stations without the need for traders 6. More jobs (50 workers for 6 months to build a station and 4 regular staff members to work in each station during operation) 7. Improved access to health (most women travel into the townships to give birth) 8. Improved information exchange (a kiosk is provided in each bus station) B. Long-Term Economic Benefits 1. Training farmers to adhere to bus service timetables 2. Increasing access to information and marketing opportunities 3. Allocating time savings to agriculture and other activities 4. Increasing level of middle school attendance (middle schools are only located at the township level) 5. Increasing trade and investment opportunities

Sources: Gansu Transport Administration Bureau and Asian Development Bank estimates. B. Proposed Transport Service Component 5. Rationale. The Project focuses on improvement of township-level transport services in southern Gansu where people lack mobility and have poor accessibility. The basic conditions for township bus station development are in place in the project area: relatively high population density (an average 20,000 people for each township), medium distance between townships (about 20 km away in the project area), irrigated agriculture, cash crops, and non-agriculture employment. The Project will (i) provide reliable, safe and more efficient bus services; (ii) promote an efficient marketing system—the township bus stations will be close enough to township markets that rural people can sell their products directly and in a timely manner in markets without the need for traders and wholesalers; (iii) improve information exchange by providing a kiosk in each station; and (iv) improve access to socioeconomic activities (education, health care, employment, and income generation). Local communities are enthusiastic about investing in bus stations because of their positive impacts on rural development, accessibility, and poverty reduction.

6. Township Bus Stations. The Project will include the construction of 200 class-V township bus stations,10 with 100 in Longnan, 50 in Tianshui, and 50 in Dingxi. This component will benefit 3.9 million people living in the 200 townships (1.96 million people in Longnan, 0.99 million in Tianshui, and 0.95 million in Dingxi). The unit cost of a class-V township station is estimated at CNY400,000 ($50,000 equivalent). The total cost of the transport service component would be CNY80 million ($10 million), of which $5 million will be financed by Asian Development Bank loan. The Project will encourage the

10 Bus centers are classified by design capacity into class-I–V bus stations and bus stops. The design capacity of a

class-V station is less than 300 passengers daily with the average construction area of 250 square meters.

Appendix 2

16

active participation of local communities in planning, implementation, and monitoring. Local communities that invest in the bus stations will have priority in running the business and getting its profits. Gansu Provincial Communications Department (GPCD) agreed to ensure the bus stations construction are completed in tandem with the project local roads to ensure the efficient provision of services when the local roads are built. 7. Improve Rural Transport Service. Expanding rural transport services is an integral part of Gansu’s plan for improving rural transport system. A total of 318 township bus stations had been constructed and were being operated in Gansu by 31 May 2006: 157 are in southern Gansu, with 40 out of 169 townships in Longnan, 69 out of 119 townships in Dingxi, and 48 out of 113 townships in Tianshui. GPCD agreed to build all remaining township bus stations by 2010. 8. Pilot Policy Reform. Asian Development Bank provided assistance for a technical assistance on policy reform in road transport.11 The technical assistance reviewed the current status and issues in road freight and passenger transport, and prepared an action plan of policy reform, recommending policy and regulatory measures to improve its efficiency, such as easing the rules that confine buses to individual routes and fixed schedules, thereby reducing the potential for improved productivity, and allowing cost savings to be passed on to road users as lower fares. In Longnan, which is in difficult mountainous terrain, roads are the only means of transport. Main constraints facing Longnan includes low vehicle use rates and high vehicle operating costs. GPCD has agreed to pilot-test some recommendations listed in the action plan (Table A4.2). Experiences gained in Longnan will be expanded to other areas.

Table A4.2: Action Plan of Pilot Transport Policy Reform in Longnan Prefecture No. Action By Whom Comments/Requirements

1 Form PPIC and assess the possible consequences of policy reform

GPCD/GTAB

Explain why Longnan was chosen and delivery of initial program

2 Identify affected provincial regulations/institutions Identify bus routes affected Identify all participating operators and terminals Identify other cities/provinces affected

GPCD/ GTAB/ Local

government

Determination of more detailed regulations Operators serving the prefecture, whether based there or not Destinations of routes from Longnan and terminals used by these routes

3 Rationalize vehicle inspection requirements and enforcement procedures

PPIC Incorporating with technical improvements

4 Determine the degree of deregulation of bus operators, bus fares, bus routes, and vehicles

PPIC To be determined based on results of 2, and 3.

5 Publicize pilot project PPIC Media announcements, presentations, workshops, etc.

11 ADB. 2004. Technical Assistance to the People’s Republic of China for Policy Reform in Road Transport. Manila.

Appendix 2

17

No. Action By Whom Comments/Requirements 6 Design procedures and criteria for

operator licenses, route licenses, vehicle licenses, Introduce new operator and route permits and new bus licenses

GPCD Ensure disadvantageous groups, such as poor residents in remote areas, are taken care of with at least minimum-level services, subsidized by the government, if necessary

7 Encourage formation of area-based operator associations for small operators

GPCD Media announcement, presentations, workshops, etc.

8 Ease existing fare restriction Introduce measures to prevent predatory undercutting

GPCD Ensure market competition is fair and negative externalities, such as environmental pollution are minimized or internalized by taxes and fees.

9 Relax categorization for existing operators Ease restrictions on bus allocation to routes to improve vehicle and staff productivity

GPCD Measures needed to prevent under-supply of bus service at ”cold” hours Operators must obtain licenses for new routes

10 Ease market entry conditions GPCD Low fare rates are more likely to result from a competitive market, efficient operation, and pressure from users on local service operators.

GPCD = Gansu Provincial Communications Department, GTAB = Gansu Transport Administration Bureau, No. = number, PPIC = pilot project implementation committee. Sources: Asian Development Bank estimates and technical assistance consultants.

Appendix 3

18

RURAL ROAD MAINTENANCE 1. Existing Situation. Adequate and timely maintenance is important to ensure the sustainability of rural roads. With the increasing length of the road network, rapid increase in traffic volumes, and the trend toward using larger trucks with heavier axle loads, there is a growing concern about the accelerating maintenance requirements in the future. Road sector funding is still insufficient to meet demand of both construction and maintenance, particularly for the rural roads in the west region. In Gansu, local road administrative units in county governments are responsible for rural roads maintenance, and the quality of rural roads is periodically monitored by prefecture and provincial highway administration bureau. Main issues associated with rural road maintenance are: (i) insufficient funding, (ii) inadequate planning, (iii) limited implementation capacity, and (iv) lack of market-oriented approach and framework. Rural road maintenance is generally done by the road administrations, although it starts to experiment with maintenance by contracting out progressively. 2. Overall Road Maintenance Expenditure. In Gansu, the need for maintenance is increasingly recognized by various levels of the government. In terms of sustainability of overall road maintenance with the resource allocated, about 81–85% of the road maintenance fee was spent for road maintenance during 2001–2005, which met the standards in Box A7. The maintenance expenditures exceeded the growth rate of the road network and the road maintenance fee revenue, which means a net increase in the average maintenance expenditure per kilometer. In Gansu, roads with heavy traffic are receiving priorities for maintenance.

Table A7.1: Existing Road Network and Road Maintenance Financing in Gansu

Indicator 2001 2002 2003 2004 2005 1. Total Road Network (km) 39,844.0 40,224.0 40,293.0 40,751.0 41,330.0 Average annual increase (%) 1.0 0.2 1.1 1.4 2. Road Maintenance Fee Collected 838.0 966.0 1,027.0 1,048.0 1,063.0 Average annual increase (%) 15.0 6.0 2.0 1.0 3. Road Maintenance Expenditure (CNY million) 715.0 780.0 850.0 879.0 900.0 Average annual increase (%) 9.1 9.0 3.4 2.4 4. Expenditure Out of Fee Collection (%) 81.0 83.0 84.0 85.0 5. Average Unit Maintenance Cost (CNY1,000/km) 18.0 19.0 21.0 22.0 22.0 6. Average Annual Increase in Road Maintenance (%) 8.1 8.8 2.2 1.0

km = kilometer. Sources: Gansu Provincial Communications Department and Asian Development Bank estimates. 3. Rural Road Maintenance. The road maintenance fee is the main dedicated channel to core road network maintenance. Although maintenance is generally adequate for highways, there is an overall shortage of maintenance funds in Gansu, particularly for the lower class roads (class-IV and below). It is important to (i) get a strong commitment from provincial and local governments, (ii) ensure the timely and adequate fund allocation for rural road maintenance, and (iii) utilize the limited funds more effectively by adopting competitive approaches to reduce the whole life-cycle cost of rural road maintenance. The Project will (i) strengthen local road authorities’ capacity by developing rural road maintenance manual and providing on-the-job training, and (ii) encourage contracting out rural road maintenance to small-scale or community contractors through clear and transparent procurement procedures and a good monitoring system. Standard bidding documents will be developed under the Project. 4. Policy Framework. In 2005, the People’s Republic of China State Council launched the Policy Reform for Rural Road Maintenance. Under the new policy, construction and maintenance of rural roads will be of equal importance. Key points are summarized in Box A7.

Appendix 3

19

Box A7: State Council Rural Road Policy Framework (issued on 22 October 2005) • Defining the roles and major responsibilities. County governments are responsible for rural road development and maintenance. Provincial governments will be mainly responsible for funding and supervision. • Providing adequate funding for the rural roads maintenance. Road maintenance shall receive a major share (typically not less than 80%) of the annual “road maintenance

fee”. The central government funds will be allocated to prop the funding ability of local governments in the west.

• Imposing a minimum level of funding for rural road maintenance. The allocation level shall not be lower than CNY7,000 per km per annum for county roads, CNY3,500 per km

per annum for township roads, and CNY1,000 per km per annum for village roads. • Introducing “rewarding instead of subsidizing” criteria for funding allocation. Central government will allocate funds on the need-based (towards the west region). Performance indicators

and proper conditionalities will be adopted. • Adopting more rigorous financial discipline. Using reimbursement procedure in lieu of biannual appropriation to provinces. Promote community consultations and disclosure of monitoring results to communities. • Introducing market-oriented mechanism. Introduce public bidding system, and cross-border participation is encouraged. km = kilometer. Source: Ministry of Communications.

5. Rural Road Maintenance Plan. There is a need to turn the State Council policy into official regulations to provide a firm basis for their adoption. The policy dialogue about maintenance with Gansu Provincial Communications Department (GPCD) during project preparation helped raise awareness, and GPCD has prepared a rural road maintenance regulation and submitted to Gansu provincial government for approval. In addition, GPCD agreed to implement a rural road maintenance plan prepared during project preparation to strengthen rural road maintenance (Table A7.2).

Table A7.2: Rural Road Maintenance Plan

Activities Requirements and Current Progress Core rural road network

Develop a functional core rural road network plan (started and work is ongoing). Establish a maintenance management system (work is ongoing). Conduct road condition survey and traffic counts to prepare cost (work is ongoing). Prepare maintenance master plan and assign a sub-network manager per each road. Prioritize and bring core network to all weather standards. Carry out preventive maintenance according to annual maintenance plan. Strengthen contract administration, quality assurance, monitoring and supervision Strengthen road safety and auditing.

Non-core rural road network

Develop a sustainable framework for non-core rural road network. Provide technical advice to local communities and small maintenance companies. Provide basic materials and equipment to local communities and companies. Introduce preventive maintenance mechanism.

Capacity Building Assign a communications college to carry out and conduct on-the-job training.

Develop rural road maintenance manual and on-the-job training by small contractors.

Financing Promulgate rural road maintenance regulation in line with the national policy. Adopt appropriate rules for access to and use of the maintenance funds. Tap nongovernment sources and local community participation. Improve the efficiency of use of funds and effective monitoring and auditing.

Source: Asian Development Bank estimates.

Appendix 4

20

INTELLIGENT TRANSPORT SYSTEM AND ASSET MANAGEMENT A. Intelligent Transport System 1. The intelligent transport system (ITS) is a term that is widely used to refer to a wide range of technological solutions applied to the transport sector to optimize safety and efficiency. The solutions include safety and traveler information, enforcement, monitoring, and toll and revenue collection. An action plan was developed for the Project (Table 1) and will be implemented with the help of consultants. The ITS features of the Project include (i) one traffic control subcenter connected to the main provincial traffic control center for all expressways; (ii) advanced toll payment system; (iii) variable message displays to provide road users with information about speeding, and enforcement; (iv) emergency telephones and surveillance technology; (v) detection of black spot locations and property damage; (vi) monitoring of speed limits, congestion, and overloaded vehicles; and (vii) coordination of emergency service agencies. ITS equipment and training in its use will be provided with the help of consulting services.1

Table 1: ITS Action Plan for the Project

Item Recommendation Comment Road Safety and Emergency Services Targeted traffic

enforcement 24-hour enforcement program Integrated communications system

and activities for all road safety and emergency amenities of the expressway

Road accident prevention measures

Accident investigation system using modern technology

Integrated activities of emergency service agencies

24-hour emergency service facilities

Emergency Telephones In immediate vicinity of

major infrastructure Provide telephones at key

locations To complement mobile phone communications

In areas of poor mobile phone reception

Provide telephones at 2-kilometer intervals along the expressway

To replace mobile phone communications

Other areas As required Surveillance Fixed location video

surveillance Cameras with variable focal

lengths; cameras that can be rotated, raised, and lowered; cameras to provide full coverage within tunnels, on bridges, and at intersections

To cover the various expressway operations and facilities; could also be integrated with vehicle speed, weight, and toll payment monitoring and enforcement at selected locations

Wind speed and direction In location where roads are subject to high winds, particularly cross-winds

Speed Monitoring Fixed location Video monitors on gantries to

photograph speeding vehicles

Overloaded Vehicle Control Fixed location Vehicles weighed at each

expressway entrance point; overweight vehicles photographed

Fine or penalty options to be determined

Item Recommendation Comment Toll Payment Monitoring

1 The ITS under the Project includes a traffic control center, toll revenue management centers, toll system,

communications system, traffic surveillance system, overloaded vehicle checking system, tunnel ventilation and safety, emergency service facilities, and so on.

Appendix 4

21

Fixed location Vehicles not paying appropriate toll photographed

Fine or penalty options to be determined.

Incident Management System At high-risk locations,

such as large tunnels To interface with the general ITS

Source: TA consultants estimates. B. Asset Management 2. Asset management must be developed to ensure the sustainability of the expressway and local road operations. During project implementation, Gansu Provincial Communications Department (GPCD) will prepare an asset management development plan, which will establish a computerized database system and promote the use of modern equipment, and provide a training program to enhance employees’ skills at the provincial, county, and township levels. To facilitate the implementation of the plan, consultants will be hired to formulate an action plan comprising immediate, short-term, and medium-term measures (Table 2). GPCD will assign the Gansu Communications Technical Vocational College to develop a training program to enhance the skills of provincial and local government staff to ensure sustainability of the operation of the expressway and local roads.

Table 2: Asset Management Development Action Plan

Item Recommended Measures 1. Immediate (upon company formation) To commit to introducing an asset management system that will achieve asset management

outcomes equal to world best practice. To develop an organizational structure that recognizes the importance of high-quality asset

management practices and skill levels. To introduce ongoing staff training program(s) in asset management. To assist in this, an amount

has been included in the provisions for maintenance equipment and services to be procured under the Project to obtain suitable training aids.

To procure (or develop), in conjunction with other expressway companies, an appropriate asset management database and asset management system (software and hardware) capable of recording key data, comparing asset conditions with asset trigger points, and providing high-quality information for effective management of maintenance activities.

To define the expressway in terms of asset classes and asset types for data analysis and reporting purposes.

2. Short Term (before project completion) To develop and introduce a systematic and dynamic asset monitoring regime, consistent with the

data storage capability of the asset database and management information needs, taking into account national requirements and standards.

To seek relaxation of or exemption from the restriction on employing contractors with less than 5 years’ experience.

To seek relaxation of or exemption from the technical specifications of maintenance for highways, subject to the company having in place an appropriate asset management system.

3. Medium Term (within 2–3 years of project completion) To incorporate preventative maintenance plans within the overall asset management system. To use an optimum maintenance regime, rather than the current formula method, for the project

company’s maintenance budget. To share data with other expressway companies and organizations responsible for highway and

road maintenance to further improve maintenance practices. Source: TA consultants estimates.

Appendix 5

22 DETAILED COST ESTIMATE BY FINANCIER

($ million) Asian Development

Item Cost Bank (ADB)

Bank of Communications

(BOC) Government

$a % of Cost Categoryb $

% of Cost Category $

% of Cost Category

A. Base Costc 1. Earthwork 72.8 18.9 26 27.7 38 26.2 36 2. Pavement 32.3 8.4 26 12.3 38 11.6 36 3. Structures 470.7 122.4 26 178.9 38 169.4 36 4. Tunnels 385.7 100.3 26 146.6 38 138.8 36 5. Interchanges 32.2 8.4 26 12.2 38 11.6 36 6. Buildings and Roadside Facilities 31.3 0.0 0 11.9 38 19.4 62 7. Environmental Protection and Landscaping 22.9 0.0 0 8.7 38 14.2 62 Expressway Civil Works 1,047.9 275.1 26 395.2 38 377.6 36 8. Tunnel Equipment 23.6 0.0 0 11.8 50 11.8 50 9. Safety and Maintenance Equipment 3.1 3.1 100 0.0 0 0.0 0 10. Land Acquisition and Resettlement 48.3 0.0 0 0.0 0 48.3 100 11. Consulting Services and Training 1.8 1.8 100 0.0 0 0.0 0 12. Project Design and Supervisiond 58.5 0.0 0 0.0 0 58.5 100 13. Local Roads Financed by Asian Development Bank 16.1 15.0 93 0.0 0 1.1 7 14. Local Roads Financed by the Government 13.1 0.0 0 0.0 0 13.1 100 15. Township Bus Stations 10.0 5.0 50 0.0 0 5.0 50 16. Project Managemente 18.1 0.0 0 0.0 0 18.1 100 Subtotal (A) 1,240.5 300.0 24 407.0 33 533.5 43 B. Contingencies 1. Physical Contingencyf 118.6 0.0 0 60.7 51 57.9 49 2. Price Contingencyg 103.3 0.0 0 47.3 46 56.0 54 Subtotal (B) 221.9 0.0 0 108.0 49 113.9 51 C. Interesth and Other Charges During Implementation 197.6 0.0 0 197.6 100 0.0 0 Total Project Costs 1,660.0 300.0 18 712.6 43 647.4 39

% Total Project Cost 100% 18% ADB's share 43%

BOC's sharei 39% Government's share

a Amount of Asian Development Bank (ADB) loan proceeds allocated to the cost category. b The amounts disbursed by ADB for eligible expenditures under a cost category will be subject to the ceiling set by the allocation of loan proceeds for such cost category. c In 2006 prices, including taxes. Environmental protection included under civil works as $80.1 million, and costs for monitoring $5.5 million. d Includes $26.7 design cost. e Includes $11.3 research, testing, and quality control cost. f At 10% of base cost. g At 3% per annum for 2007–2011 for local currency costs and 1.9% per annum for foreign exchange cost during 2007–2011. h This is based on the prevailing United States dollar 5-year swap rate plus a spread for the ADB loan and prevailing interest rate for the China Construction Bank. i BOC = Bank of Communications in PRC. Source: Asian Development Bank estimates.

Appendix 6

23

* Internal Audit Funtion is currently not seperated from finance division. It should be seperated, and to be reported to the Audit Committee of the Board of Director by December 2007.

Project Construction Office for the Project (to be Established)

Internal Organizaions and Offices

General Manager

General Affairs Office

Personnel Division

Planning and Construction Plan

Figure 2: Organization Chart of Changda Highway Company Limited (GCHC)

Liubai Expressway Construction Office

Shuxu Expressway Construction Office

Hetun Class II Construction Office

Dingxi Expressway Construction Office

Liugu Toll Administration Office

Liubai Toll Administration Office

External Offices for Operation

External Offices for Construction

General Affair Section: 4 staff

Project Management Section: 6 staff

Land Acquisition Section: 5 staff

Supervision Section: 5 stff

Laboratory Center: 15 staff

Board of DirectorFinancial Division*

Deputy Supervisor: 1 Outside Supervisor: 3 staff

One-site Supervision Team Number 1(for 2 Contracts)

Measure Group: 1 staff

Bridge Group: 2 staff

Subgrade Group: 1 Staff

Survey 2 and Testing 2

Inspectors: 10 staff

Tunnel Group 2 staff

Operation & Maintenance Division

Engineering Division

Project Construction Office for the Project (to be Established)

GCHC Headquarters Head of Officeand

Deputies

Chief: 1 Deputies: 3Supervisor:1

Chief Supervision Engineering Office

1 Leader,and

1 Deputy

One-site Supervision Team Number 2 (for 2 Contracts)




Tunnel Group 3 staff1 Leader,

and 1 Deputy

One-site Supervision Team Number 12 (for 2 Contracts)




Tunnel Group 2 staff1 Leader,and

1 Deputy

Contrat Management 1staff

Chief Supervision

Engineer

Deputy Chief Engineer

(Domestic)

Deputy Chief Engineer (International)

Measurement and Payment 4 staff


Measure Group: 1 staff Measure Group: 1 staff


InternationalConsultatns forEnvirinment & SocialBridgeTunnel

Domestic Consultant forEnvironment & SocialLand Acquisition

Appendix 6

24

Total 86 counties, 1,227 township

Legend: * Implementing Agency for the Wudu-Guanzigou Expressway Project** Implementing Agency for the Local Roads Component*** Implementing Agency for the Township Transport Center Component

Gansu Provincial Government

Reform and Development Committee

Communications Department

3 committees, 21 Departments, and 15 BureausLanzhou Prefecture Government

Tianshui Prefecture Government

Longnan Prefecture Government

Total 14 Prefecutures

Communications Bureau



County Governments

Transport Bureau

County Governments

County Governments

Transport Bureau

County Governments

County Governments

Transport Bureau

County Governments

Environmental Protection Bureau

Gansu Communications Department

Administration Office

Finance & Audit Division

Planning Division

Construction Division

Science & Technology Divsion

DirectorGeneral

9 internal Divisions Design Institute

Transport Research Institute

Overseas Funding Administration Office

Transportation Management Bureau***

Communications Techinical Vocational Colleague

Gansu Provincial HighwayAdministration Bureau**

Gansu Provincial Highway Traffic Monitoring and Control Centre

External Institute and Bureau of Gansu Communications Department

Gansu Highway Development Company Limited

Gansu Road & Bridge Investment Company Limited

Changda Road Development Company Limited*SOEs under Gansu Communications Dapartment

Public Security Department

Figure 1: Organization Chart of Gansu Provincial Government and Its Communications Department

Appendix 7

25 IMPLEMENTATION SCHEDULE

Content 2006 2007 2008 2009 2010 20111 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

A. Project Processing 1. Feasibility Study and Approval 2. Preliminary and Approval 3. Detailed Design and Approval 4. Advance Action Approval 5. Loan Approval 6. Loan Signing 7. Loan EffectivenessB. Land Acquisition 1. RP Preparation 2. RP Distribution 3. Preparation of Land Acquisition and ML&R Approval 4. Land Acquisition ActivitiesC. International Consultants 1. RFP Preparation and Approval 2. RFP Issuance and Proposals Submission 3. Technical Evaluation and Approval 4. Financial Evaluation and Approval 5. Negotiation and Contract Award 6. Mobilization and ServiceD. Expressway Subgrade Contracts 1. BD Preparation and Approval 2. BD Issuance and Submission 3. Qualification Evaluation and Approval 4. Bid Evaluation and Approval 5. Negotiation and Contract Award 6. Preparation Works 7. ConstructionE. Expressway Pavement and Traffic Control 1. BD Preparation and Approval 2. BD Issuance and Submission 3. Qualification Evaluation and Approval 4. Bid Evaluation and Approval 5. Negotiation and Contract Award 6. Preparation Works 7. ConstructionF. Expressway Planting, Building 1. BD Preparation and Issuance 2. Bid Evaluation and Contract Award 3. ConstructionG. Expressway Equipment 1. BD Preparation and Issuance 2. Bid Evaluation and Contract Award 3. InstallingH. Local Roads 1. BD Preparation 2. Bid Issuance and Submission 3. Bid Evaluation and Contract Award 4. ConstructionI. Township Bus Station 1. ImplementationBD = bidding document, ML&R = Ministry of Land and Resources, RFP = request for proposal, RP = resettlement plan.Sources: Asian Development Bank estimates.

Appendix 8

26

OUTLINE TERMS OF REFERENCE FOR CONSULTING SERVICES

A. Objectives 1. International and domestic consultants will assist Gansu Changda Highway Company Limited (GCHC) in ensuring that (i) designs are carried out to the appropriate engineering standards; (ii) all work associated with the project are carried out in full compliance with the designs and specifications; (iii) Gansu Provincial Communications Department (GPCD), GCHC, associated agency and domestic consultant engineers receive the relevant training in selected areas of expressway engineering and management; (iv) resettlement, social, environmental, road safety, maintenance, and monitoring are implemented in accordance with the recommendations of various studies, plans, and analysis of the project. A total of 56 person months are required for international consultants and an estimated about 7,598 person months for domestic consultants. The international consultants will be financed under the ADB loan.

B. Scope of Services and Staffing Requirements

1. Domestic Consultants (government financing) 2. Domestic consultants will be recruited to prepare procurement, supervise construction activities, develop and implement a project performance management system (PPMS), and monitor environmental protection. Domestic consulting services will serve for expressway component, local road component, and transport center component. The domestic consultants service will be financed under the government financing:

3. About 50 person-months of domestic consultants will be required for procurement. The consultants will be recruited in accordance with the government procedures acceptable to ADB. Procurement preparation activities will include the following:

(i) Compile qualification and bidding document for international competitive bidding (ICB)

and national competitive bidding (NCB) in accordance of related guidelines. (ii) Assist the GCHC with conducting qualification and bidding documents distributing to the

applicants. (iii) Assist the GCHC with handling the submitted qualification and bidding document and

evaluate the applications.

4. About 6,850 person-months of domestic consultants will be required for construction, supervision and monitoring for expressway component. About 280 person-months of domestic consultants will be employed for local roads component. About 70 person-months will be engaged for transport service component. The consultant team, headed by the Chief Engineer, will be composed of graduate engineers, with at least 5 years of practical experience in supervision and administration of road, bridge, and tunnel contracts. The consultants will be recruited in accordance with the government procedures acceptable to ADB. For the domestic consultant team for construction supervision, guidance will be provided by the international consultant team. Construction supervision activities will include the following:

(i) Assist in reviewing contractors’ applications for subcontracting parts of the contract

works, by identifying ambiguities and discrepancies in contract documents, and in settling disputes with contractors.

(ii) Ensure that all required data for setting out the civil works are provided. (iii) Help with drawings quality, and advise on further drawing or instructions to the

contractors. (iv) Assist GCHC to review the contractors’ organizational arrangements, key personnel and

construction programs, materials, and sources of materials.

Appendix 8

27

(v) Monitor the progress of the works against programmed targets, advise the GCHC on measures to be taken to improve progress and quality, review and advocate proposed variation orders, determine rates for works, and decide on alternatives.

(vi) Inspect the quality of the works in terms of workmanship and compliance with specifications; order, supervise, or perform tests on materials and civil works; advise on approval or disapproval of the contractors’ plan and equipment; propose, if required, the uncovering of completed civil works and the removal and replacement of improper material and works.

(vii) Check the progress of civil works, examine and review sampling measurements of any work that is about to be covered or put out of view before permanent work is placed thereon, examine the measurements of the completed civil works, and (as directed by GCHC) order the initiation of additional civil works that are part of the contract.

(viii) Supervise the contractors in all matters concerning safety and care of civil works including the provision of necessary lights, guardrails, fencing, and security.

(ix) Examine the contractors’ accounts, invoices, claims, and other statements for errors in complying with the contract, and suggest and make corrections.

(x) Advise the Chief Engineer on how and when to issue certificates of payment to the contractors and certify the completion of the civil works or parts thereof.

(xi) Provide advice and help for the local government authorities to facilitate implementation of the local roads program.

5. About 30 person-months of domestic consultants will be required for the PPMS. The consultants will be recruited in accordance with the government procedures acceptable to ADB. The domestic consultants recruited to develop and implement the PPMS will collect and analyze a set of indicators for evaluating project performance against project objectives, purposes, and outputs. A baseline survey will be conducted at the beginning of project implementation, and follow-up surveys at project completion, and one year and three years after completion. Data collected during and after implementation will be compared with the baseline data and the target values to be established by GPCD and GCHC and agreed upon with the Asian Development Bank (ADB) before the works start. The main indicators to be monitored include (i) economic development and poverty indicators at the municipality level and for each county in the project area; (ii) transport costs and time for specific types of vehicles and trips; (iii) transport services and charges; (iv) accident rates; (v) air quality; (vi) financial indicators of the expressway operating company; (vii) township incomes per capita; (viii) access to social services, and (ix) jobs created during construction and maintenance. Where relevant, indicators will be differentiated by gender and main minority groups. The data collection method will consist of (i) reviewing secondary data from local government statistics; (ii) conducting household socioeconomic sample surveys; and (iii) developing participatory rural appraisal methods among communities affected by the expressway and the feeder roads. 6. About 320 person-months of domestic consultants will be required for environmental protection. The consultants will be recruited in accordance with the government procedures acceptable to ADB. Procurement preparation activities will include the following:

(i) Review environmental monitoring plan described in environmental assessment (EIA) report and summary environmental assessment (SEIA).

(ii) Develop detailed environmental monitoring plan during the construction in accordance with the EIA and SEIA.

(iii) Conduct the monitoring during the construction and report the result to the GPCD, GCHC and environmental protection bureau in the counties.

(iv) Compile semi annual report of environment for ADB. (v) Develop a training program of environmental protection for construction supervision

personnel. And execute the training program.

Appendix 8

28

7. Domestic specialists will also be recruited for special topics to be included in domestic training. The topics can include workshops on quality assurance principles and procedures, training courses in financial accounting and financial management business planning and corporate development. The appropriate topics will be identified in the human resources development plan to be prepared with the assistance of the international consultants. The total cost of domestic consultants is $31.8 million, under government financing.

2. International Consultants (ADB financing) 8. The international consultants will act as advisers to the GCHC, and support and assist staff and domestic consultants in the performance of their duties. 56 person-months of international consulting services will be required to provide advisory services in construction supervision and expressway management, as per Table 1. The team of international consultants will comprise a (i) highway engineer cum contract management specialist as a team leader and Deputy Chief Engineer for 40 person-months; (ii) tunnel specialist for 6 person-months; (iii) bridge specialist for 6 person-months; (iv) road maintenance specialist for 2 person-months; and (v) road safety and traffic engineering specialists for 2 person-months. 9. The team leader will be qualified highway engineer with over 15 years’ experience. The team leader will develop the team’s work plan immediately after the fielding. The team schedule will be arranged in accordance with the needs of the construction activities so that either the team leader or an engineer is fielded throughout the construction period. The tunnel specialist and the bridge specialist can act for the team leader. The team leader, acting as the deputy chief supervision engineer, will be responsible for coordinating the inputs and the activities of the international short-term specialists, and will assist the EA in:

(i) developing and implementing a computer-aided contract management system for monitoring the civil works contracts and overall project implementation, and generating monthly and quarterly progress reports;

(ii) organizing, coordinating, and monitoring the construction supervision activities in

accordance with the principles and guidelines of the Federation International des Ingenieurs-conseils (FIDIC);

(iii) reviewing and certifying contract variations, contractor’s applications for subcontracting

parts of the works, and monthly interim payment certificates.

(iv) settling contractors’ claims and disputes with contractors; (v) preparing documents, progress reports and other reports covering all project

components; (vi) monitoring performance, deadlines, project progress and identifying issues and report to

the EA;

(vii) monitoring the progress of the transport policy reform program and results report to the

EA and ADB; (viii) adopting contact management system, intelligent transport system (ITS) and road

maintenance management system; and

(ix) assessing training needs and conduct seminars and on-the-job trainings, with particular attention to contract management system;

Appendix 8

29

10. The tunnel specialist with over 15 years experience, will be fielded for a period of 6 person months to help the construction supervision consultants implement quality control procedures, improve construction methods, and to train the site engineers on tunnel construction, maintenance, control and monitoring systems. The specialist will be fielded immediately after the contract and will provide a report on tunnel design, construction method, risk of the construction, and measures for the risks within seven months after the commencement of the contract. 11. The bridge specialist will be fielded intermittently and will provide a report on design, construction method, risk of the construction, and measures for the risks within two months after the commencement of the contract. The specialist will be fielded for total 6 person months over the construction period to help the construction supervision consultants implement quality control procedures and improved construction methods, and to:

(i) Assist the Chief Supervision engineer in implementing quality control of bridge construction, particularly in foundation treatment and construction, tall pile casting, and other related engineering technical aspects;

(ii) Provide training to the site engineers on material testing and erection of structures such

as beam laying and concrete rigid beam casting; and

(iii) train the site engineers on material testing, erection of structures, and bridge inspection and maintenance.

12. The road maintenance specialist will be recruited for 2 person months to develop (i) a rural road maintenance manual, and (ii) standard bidding documents and procurement of road maintenance contracts. The rural road maintenance manual will be prepared for use of rural road maintenance in the project area as well as other areas in Gansu with similar topographic and climate conditions. The manual should also include a plan for monitoring and addressing impacts of such natural events as landslides and floods. The specialist will evaluate cases of tendering highway maintenance activities in Gansu and provide recommendations for institutionalizing commercial practices to increase the effectiveness of the tendering of road maintenance method. The specialist will be fielded in accordance with the work plan to be provided by the team leader. 13. The road safety specialist will be fielded for a period of 2 person months, and the specialist will be a qualified road safety engineer with over 10 years in road safety design and road safety audit. The specialist will conduct a road safety audit and develop a risk management plan to cover areas of safety concern during construction, especially construction of bridges and tunnels, and develop a risk management plan to cover safety concern prior to opening of the expressway, and recommend additional traffic engineering, particularly for lighting, hazard barriers, signage, and marking. The specialist will be fielded in accordance with the work plan to be provided by the team leader and will provide a report on the road safety to cover all project components. The timing of the report will be specified in the work plan so that the advice in the report will be applied for the project expressway, local roads and transport center components.

Table 1: Summary of International Consulting Services Consultant No. Person Months 1. Deputy Chief Engineer 1 40 2. Tunnel Specialist 1 6 3. Bridge Specialist 1 6 4. Road Maintenance Specialist 1 2 5. Road Safety Specialist 1 2

Total 5 56 C. International Training

Appendix 8

30

14. International training programs will be submitted to ADB for review and concurrence for the whole period of the Project. Details of the international training programs, including procedures for selecting candidates, will be determined by the GPCD and GCHC in consultation with the international and domestic consultants. Candidates trained abroad will be required to submit to the GPCD, GCHC and ADB in a report on the training received. On their return, the trainees will serve as resource persons in training seminars to disseminate knowledge learned. ADB will finance about 35 person-months of international training for 26 staff in the areas listed in Table 2. Detailed program will be provided by the work plan to be provided by the team leader.

Table 2: Proposed International Training Program

Training Item No. of Trainees Months Person-

Months Cost US$ 1 HIGHWAY AND LOCAL ROAD MAINTENANCE 5 1.0 5 55,000 2 Construction Management and Quality Control 6 1.5 9 99,000 3 Expressway Operation and Private Sector

Participation 6 1.0 6 66,000 4 Intelligent transport system 6 1.0 6 66,000 5 Project Management and Transport Service

Management 6 1.5 9 99,000

Total 26 6.0 35 385,000

D. In-Country Training

15. The international and domestic consultants will develop a detailed in-country training program for the whole period of the project, to enhance capacity of GPCD, GCHC, local governments and domestic engineer skills. The program will be submitted to ADB for review. The consultants also will conduct workshops in their fields of expertise. An external expert will be invited to expand knowledge.

E. Records and Reports

16. The construction supervision consultants will maintain records of implementation progress, contract variations, and final design and other Project related documents. They will also (i) assist in preparing progress and financial status reports, and a final project completion report; (ii) certify, where required by the GPCD and GCHC, interim and final payments; (iii) provide technical and engineering advice on the day-to-day project activities; (iv) keep records of all works done, and prepare monthly and quarterly progress reports; (v) maintain a project implementation schedule based on the contractors’ work programs; and (vi) keep records of all payments approved and report the same in the monthly progress reports. The monthly reports will cover a description of the activities, the progress charts, the expenditure records, and implementation-related issues and the suggested remedial actions. The monthly reports will be consolidated into quarterly reports comparing the actual and originally anticipated work program. 17. Upon completion of their short-term inputs, the international consultants will prepare for each relevant technical area, progress reports giving intermediate findings and recommendations. Upon completion of their services, the international consultants will submit a final report covering the work performed, and highlighting findings and recommendations to the GPCD and GCHC. Copies of these reports and actions taken should be provided to ADB.

Appendix 8

31

18. A strategic plan regarding performance measures, effectiveness, training, and various activities of the Deputy Chief Engineer should be developed during the first two months of the duty commencement, and ADB should be informed.

F. Support Services for the International Consultants 19. The GPCD and GCHC will make the following available to the international consultants: (i) administrative assistance in obtaining visas, customs clearance, and any other administrative permits required to perform their duties; (ii) all relevant reports; documents relating to the assignment; (iii) appropriate and suitably qualified counterpart staff; (iv) suitable office accommodations, and secretarial and clerical support; and (v) local transportation, including a driver, at the various project sites. Counterpart staff and the number of vehicles will be agreed upon with the GPCD and GCHC before the services start.

G. Consulting Services Cost 20. Cost estimates of international consulting services are summarized in Table 3. Domestic consultants will be engaged under the government financing, and separate contract. The ADB-financing covers international consulting services and overseas training only.

Table 3: Cost Estimates of Consulting Services Program

Item Person-month

Unit Cost

Cost in $ million

A. ADB Financing 1. Consultants International Consultants 56 25,000 1.4 2. Overseas Training 35 11,000 0.4

Subtotal (A) 56 1.8 B. Government Financing 1. Procurement 50 4,000 0.2 1. Domestic Consultants for Expressway 6,850 4,000 27.4 2. Domestic Consultants for Local Roads 280 4,000 1.1 3. Domestic Consultants for Transport Center 70 4,000 0.3 4. Project Management Monitoring System 30 4,000 0.1 4. Domestic Consultants for Environment 320 4,000 1.3 5. Domestic Training 1.4

Subtotal (B) 7,598 31.8 Total 33.6

Appendix 9

32

CHECKLIST OF ACTIVITIES FOR RECRUITMENT OF CONSULTING FIRMS (QCBS)

Step Activity RESPONSIBILITY TIMEFRAME

1 ADB post a notice in the ADB website The EA may advertise the same in the local newspaper and international publications (minimum posting time prior to shorlisting is 30 days)

ADB/EA

2 Reviews ADBBO or advertisement and sends expression of interest Consultant

3 Prepares long list of consultants EA 1 week

4 Prepares shortlist, RFP, and evaluation criteria, and submits to ADB The shortlist should consist of 6 qualified firms representing the Bank’s member countries in a reasonably balanced way. (FIRST SUBMISSION)

EA

2 weeks

5 Reviews and approves shortlist and RFP

6 Sends comments/approval to EA

ADB

2-3 weeks

7 Issues RFP to shortlisted firms EA 1 week

8 Receives RFP and prepares technical and financial proposals and submits to EA (minimum of 45 days)

Consultant 6-7 weeks

9 Receives proposals, stores unopened financial proposals

10 Evaluate technical proposals based on agreed criteria, including approach, methodology, experience and capability of nominated personnel, especially Team Leader, and support facilities by Home Office and others

11 Ranks technical proposals, prepares evaluation report and submits to ADB. The evaluation report should include (i) a summary of evaluation sheet, (ii) a personnel evaluation sheet for each proposal, and (iii) comments on strengths and weaknesses of each proposal. (SECOND SUBMISSION)

EA

3-4 weeks

12 Reviews and approves evaluation report and sends comments/approval to EA

ADB 2 weeks

13 Advises technically qualified consultants of the time, date, and place for opening financial proposals

EA

14 Arranges to attend opening or nominates a representative (attendance is optional)

Consultant

15 Advises consultants whose proposals did not meet minimum technical requirement

EA

16 Receives EA’s advice Consultant 17 Receives copy of notification ADB 18 Publicly open financial proposals EA

2 weeks

19 Evaluate financial proposals 20 Ranks proposals, prepares ranking report, and submits the report to ADB

together with the minutes of the public opening and minutes of financial evaluation meetings. (THIRD SUBMISSION)

EA

3 weeks

21 Reviews and approves ranking and sends approval to EA ADB 2 weeks

22 Invites first-ranked consultant to contract negotiations EA 23 Sends representative to contract negotiations First-ranked

Consultant

1 week

24 Negotiates contract, submits to ADB minutes of negotiations and draft contract. (FOURTH SUBMISSION)

EA 2-3 weeks

25 Reviews and comments and sends approval to EA ADB 1-2 weeks 26 Finalizes and signs contract with consultant EA/selected

consultant 27 Submits signed contract to ADB (FIFTH SUBMISSION) EA

1 week

28 Advises unsuccessful consultants, returns unopened financial proposals, issues notice to proceed to selected consultant

EA

29 Receive advice and unopened financial proposals Unsuccessful Consultants

1 week

30 Starts work Selected Consultant

Appendix 10

33

ASIAN DEVELOPMENT BANK-FINANCED CONTRACT PACKAGES

No.

Description

Length

(km)

Procurement Mode

Bidding

Procedure

ADB

Review

Advertise-

ment A. Expressway Earthworks, Bridges, and Tunnels A01 K0+000~ K4+500 4.5 ICB 1S 2E Prior May-07 A02 K4+500~K13+500 9.0 ICB 1S 2E Prior May-07 A03 K13+500~K22+000 8.5 ICB 1S 2E Prior May-07 A04 K22+000~ K33+000 11.0 ICB 1S 2E Prior May-07 A05 K33+000~K40+000 7.0 ICB 1S 2E Prior May-07 A06 K40+000~K44+500 4.5 ICB 1S 2E Prior May-07 A07 K44+500~K51+000 6.5 ICB 1S 2E Prior May-07 A08 K51+000~K57+000 6.0 ICB 1S 2E Prior May-07 A09 K57+000~K61+200 4.2 ICB 1S 2E Prior May-07 A10 K61+200~K65+400 4.2 ICB 1S 2E Prior May-07 A11 K65+400~K71+000 5.6 ICB 1S 2E Prior May-07 A12 K71+000~K76+500 5.5 ICB 1S 2E Prior May-07 A13 K76+500~K82+000 5.5 ICB 1S 2E Prior May-07 A14 K82+000~K88+000 6.0 ICB 1S 2E Prior May-07 A15 K88+000~K93+000 5.0 ICB 1S 2E Prior May-07 A16 K93+000~K98+000 5.0 ICB 1S 2E Prior May-07 A17 K98+000~K102+000 4.0 ICB 1S 2E Prior May-07 A18 K102+000~K105+700 3.7 ICB 1S 2E Prior May-07 A19 K105+700~K110+000 4.3 ICB 1S 2E Prior May-07 A20 K110+000~K115+600 5.6 ICB 1S 2E Prior May-07 A21 K115+600~K120+000 4.4 ICB 1S 2E Prior May-07 A22 K120+000~K124+500 4.5 ICB 1S 2E Prior May-07 A23 K124+500~K129+000 4.5 ICB 1S 2E Prior May-07 A24 K129+000~K133+970 5.0 ICB 1S 2E Prior May-07 Subtotal (A) 134.0 B. Expressway Pavement B01 K0+000~K34+500 34.5 ICB 1S 2E Prior May-09 B02 K34+500~+K73+000 38.5 ICB 1S 2E Prior May-09 B03 K73+000~K107+500 34.5 ICB 1S 2E Prior May-09 B04 K107+500~K133+970 26.5 ICB 1S 2E Prior May-09 Subtotal (B) 134.0 C. Local Roads Financed by ADB (Wudu–Lixian) C01 K00+00~K50+00 50.0 NCB 1S 1E Prior Jan-07 C02 K50+00~K72+00 22.0 NCB 1S 1E Prior Jan-07 C03 K72+00~K105+00 33.0 NCB 1S 1E Prior Jan-07 C04 K105+00~K141+00 36.0 NCB 1S 1E Prior Jan-07 Subtotal (C) 141.0

D. Township Bus Stations No. No. of Stations Class Procurement Mode ADB Review T01 50 in Tianshui prefecture Class-V Shopping Post T02 50 in Dingxi prefecture Class-V Shopping Post T03 100 in Longnan prefecture Class-V Shopping Post

E. Testing, Training, Laboratory, and Maintenance Equipment No. Description Procurement Mode Bidding Procedure ADB Review M01 Testing Equipment ICB 1S 1E Prior M02 Training and laboratory ICB 1S 1E Prior

F. International Consulting Services No. Description Selection Method Type of Proposal ADB Review

S01 Supervision and training QCBS FTP Prior ICB = international competitive bidding, km = kilometer, No. = number, 1S 1E = single stage one envelope, 1S 2E = single stage two envelopes, FTP = full technical proposal, QCBS = quality- and cost-based selection method. Source: Gansu Provincial Communications Department and Asian Development Bank estimates.

Appendix 11

34

PROCUREMENT PLAN

Table 1: Project Information

Item Information Country People’s Republic of China Name of Borrower People’s Republic of China Project Name Southern Gansu Road Development Project Loan Reference To be advised once the loan is approved by the ADB Date of Effectiveness Expected to be August 2007 ADB's Financing Amount US$ US$ 300 million Executing Agency Gansu Provincial Communications Department Approval Date of Initial Procurement Plan Expected to be by September 2006 Approval Date of Most Recent Procurement Plan Expected to be by October 2006 Media of Publication of Local Advertisements* To be determined (Newspaper or Website) Period Covered by this Plan July 2006 to December 2011

* General procurement notice, invitations to prequalify and to bid, calls for expressions of interest.

Table 2: Threshold for Procurement

Procurement Method Threshold (US$) ICB Works Equal or more than 10 million NCB Works Equal or more than 0.1 million and less than 10 million Shopping Works Less than $100,000 ICB Goods Equal or more than 1 million NCB Goods Equal or more than 0.1 million and less than 1 million Shopping Goods Less than $100,000

Table 3: List of Contract Packages Financed by ADB

No.

Description

Length (km)

CNY

million

$

million

Procure- ment Mode

Bidding

Procedure

ADB

Review

Advertise-

ment A. Expressway Earthworks, Bridges and Tunnels A01 K0+000~ K4+500 4.5 200.0 24.9 ICB 1S 2E Prior May-07 A02 K4+500~K13+500 9.0 305.0 38.0 ICB 1S 2E Prior May-07 A03 K13+500~K22+000 8.5 376.0 46.9 ICB 1S 2E Prior May-07 A04 K22+000~ K33+000 11.0 386.0 48.1 ICB 1S 2E Prior May-07 A05 K33+000~K40+000 7.0 379.0 47.3 ICB 1S 2E Prior May-07 A06 K40+000~K44+500 4.5 264.0 32.9 ICB 1S 2E Prior May-07 A07 K44+500~K51+000 6.5 387.0 48.3 ICB 1S 2E Prior May-07 A08 K51+000~K57+000 6.0 167.0 20.8 ICB 1S 2E Prior May-07 A09 K57+000~K65+400 4.2 420.0 52.4 ICB 1S 2E Prior May-07 A10 K57+000~K65+400 4.2 379.0 47.3 ICB 1S 2E Prior May-07 A11 K65+400~K71+000 5.6 401.0 50.0 ICB 1S 2E Prior May-07 A12 K71+000~K76+500 5.5 404.0 50.4 ICB 1S 2E Prior May-07 A13 K76+500~K82+000 5.5 390.0 48.6 ICB 1S 2E Prior May-07 A14 K82+000~K88+000 6.0 469.0 58.5 ICB 1S 2E Prior May-07 A15 K88+000~K93+000 5.0 325.0 40.5 ICB 1S 2E Prior May-07 A16 K93+000~K98+000 5.0 250.0 31.2 ICB 1S 2E Prior May-07 A17 K98+000~K102+000 4.0 204.0 25.4 ICB 1S 2E Prior May-07 A18 K102+000~K105+700 3.7 276.0 34.4 ICB 1S 2E Prior May-07 A19 K105+700~K110+000 4.3 213.0 26.6 ICB 1S 2E Prior May-07 A20 K110+000~K115+600 5.6 259.0 32.3 ICB 1S 2E Prior May-07 A21 K115+600~K120+000 4.4 297.0 37.0 ICB 1S 2E Prior May-07 A22 K120+000~K124+500 4.5 329.0 41.0 ICB 1S 2E Prior May-07 A23 K124+500~K129+000 4.5 208.0 25.9 ICB 1S 2E Prior May-07 A24 K129+000~K133+970 5.0 422.0 52.6 ICB 1S 2E Prior May-07

Appendix 11

35

No.

Description

Length (km)

CNY

million

$

million

Procure- ment Mode

Bidding

Procedure

ADB

Review

Advertise-

ment Subtotal (A) 134.0 7,710.0 961.3 B. Expressway Pavement B01 K0+000~K34+500 34.5 67.0 8.4 ICB 1S 2E Prior May-09 B02 K34+500~+K73+000 38.5 74.0 9.2 ICB 1S 2E Prior May-09 B03 K73+000~K107+500 34.5 67.0 8.4 ICB 1S 2E Prior May-09 B04 K107+500~K133+970 26.5 51.0 6.4 ICB 1S 2E Prior May-09 Subtotal (B) 134.0 259.0 32.4 C. Local Roads Financed by ADB (Wudu-Lixian) C01 K00+00~K50+00 50.0 53.7 6.8 NCB 1S 1E Prior Jan-07 C02 K50+00~K72+00 22.0 25.0 3.1 NCB 1S 1E Prior Jan-07 C03 K72+00~K105+00 33.0 28.0 3.5 NCB 1S 1E Prior Jan-07 C04 K105+00~K141+00 36.0 22.0 2.7 NCB 1S 1E Prior Jan-07 Subtotal (C) 141.0 128.7 16.1

D. Township Bus Stations

No.

No. of Stations

Class

Amount per

Station in $ million

Value in each

Prefecture in $ milion

Procure-

ment Mode

Bidding Procedure

ADB Review

T01 50 in Tianshui prefecture Class V 0.05 2.5 Shopping N/A Post T02 50 in Dingxi prefecture Class V 0.05 2.5 Shopping N/A Post T03 100 in Longnan prefecture Class V 0.05 5.0 Shopping N/A Post Subtotal (D) 10.0

E. Testing, Training, Laboratory and Maintenance Equipment **

No.

Description

CNY million

$ million

Procurement Mode

Bidding Procedure

ADB Review

M01 Testing Equipment 16.2 2.0 ICB 1S 1E Prior M02 Training and laboratory 8.6 1.1 ICB 1S 1E Prior Subtotal (E) 24.8.0 3.1

**A list of equipment will be provided in the Project Administration Memorandum (PAM). F. International Consulting Services

No.

Description

$ million

Selection Method

Type of Proposal

ADB Review

Advertisement

S01 Supervision and training 1.8 QCBS FTP Prior Feb-07 ICB: International Competitive Bidding, NCB = National Competitive Bidding, km=kilometer, STP: Simplified Technical Proposal, 1S 2E = single stage two envelopes. A rate of $1.00 = CNY8.02, the rate of prevailing at project appraisal was used.

Table 4: List of Contract Packages Financed by the Government

No.

Description

Length (km)

CNY million

$ million

Mode

Bidding Procedure

ADB Review

A. Afforestation and Landscaping Works D01 Afforestation Works K0+000~K34+500 36.1 4.5 NCB 1S 1E N/A D02 Afforestation Works K34+500~+K73+000 40.2 5.0 NCB 1S 1E N/A D03 Afforestation Works K73+000~K107+500 36.1 4.5 NCB 1S 1E N/A D04 Afforestation Works K107+500~K133+970 27.5 3.4 NCB 1S 1E N/A Subtotal (A) 139.9 17.4

B. Traffic Management Facilities E01 Traffic eng facilities K0+000~K34+500 32.7 4.1 NCB 1S 1E N/A E02 Traffic eng facilities K34+500~+K73+000 36.5 4.6 NCB 1S 1E N/A E03 Traffic eng facilities K73+000~K107+500 32.7 4.1 NCB 1S 1E N/A E04 Traffic eng facilities K107+500~K133+970 24.9 3.1 NCB 1S 1E N/A

Appendix 11

36

No.

Description

Length (km)

CNY million

$ million

Mode

Bidding Procedure

ADB Review

Subtotal (B) 126.8 15.9

C. Toll Collection, Monitoring and Communication Systems F01 Toll, Monitoring K0+000~K34+500 44.7 5.6 NCB 1S 1E N/A F02 Toll, Monitoring K34+500~+K73+000 49.9 6.2 NCB 1S 1E N/A F03 Toll, Monitoring K73+000~K107+500 44.7 5.6 NCB 1S 1E N/A F04 Toll, Monitoring K107+500~K133+970 34.1 4.3 NCB 1S 1E N/A Subtotal (C) 173.4 21.7

D. Buildings and Ancillary Facilities G01 Building Works K0+000~K30+000 28.0 3.5 NCB 1S 1E N/A G02 Building Works K30+000~K55+000 23.4 2.9 NCB 1S 1E N/A G03 Building Works K55+000~K73+000 15.9 2.0 NCB 1S 1E N/A G04 Building Works K73+000~K93+500 19.2 2.4 NCB 1S 1E N/A G05 Building Works K93+500~K113+500 18.7 2.3 NCB 1S 1E N/A G06 Building Works K113+500~ K133+970 18.9 2.4 NCB 1S 1E N/A Subtotal (D) 124.1 15.5

ICB: International Competitive Bidding, N/A = not applicable, NCB = National Competitive Bidding, km=kilometer. 1S 1E = single stage one envelope.

Appendix 12

37

Procurement under International Competitive Bidding(with no prequalification)

Executing Agency

ADB Suppliers/

Contractors Loan/advance contracting approved

Finalize list of goods/ works to bid (from procurement plan)

ADB review and Approval a

Prepare draft invitation for bids and bidding

documents ADB review and approval a

Advertise invitation for Advertise invitation for bids bids in www.adb

Locally in English and issue bidding

documents; inform ADB of the advertisement; Purchase bidding

(minimum bidding period documents from EA 6 weeks) and submit bid

Public opening of bids Prepare record of public

opening of bids

Evaluate bids and ADB review and recommend contract Approval a

award

Prepare contract Sign contract agreement agreement and send and return to EA

to supplier Provide performance Security (if required)

Send 3 copies of signed contract to ADB

Signed contract received Deliver the goods and Prepare PCSS for payment related services and purposes works to the EA

Goods inspected and received

Payment received (from supplier’s bank under L/C procedures)

a Approval not required under post review

Appendix 12

38

Procurement under International Competitive Bidding(with prequalification)

Executing Agency

ADB

Suppliers/ Contractors

Review list of goods or Loan or advance contracting

works to bid (from procurement plan) approved ADB review and approval a

Prepare draft PQ documents and draft bidding documents b ADB review and approval a

Advertise the invitation for PQ in www.adb

Advertise in locally in English and issue the PQ documents; submit

to ADB a report on advertising (minimum 6 week period given for Purchase PQ documents from EA

submission of PQ applications) and submit PQ application

PQ applications received

Evaluate PQ applications Recommend prequalified firms ADB review and approval a

EA Notifies prequalified and ADB approval received disqualified firms

Issue bidding documents to

prequalified firms (minimum bidding period 6 weeks)

Purchase bidding documents from EA and submit bid

Public bid opening

Prepare record of public bid Opening

Evaluate bids and recommend

contract award ADB review and approval a Sign contract agreement and

Prepare contract agreement return to EA, and send to suppl ier Provide performance security

Send 3 copies of signed contract

to ADB Review signed contract; Prepare PCSS for payment purposes Contract implementation

a Approval not required under post review b The draft bidding documents can be prepared at a later stage provided that ADB approval is obtained before issuance o

bidding documents to prequalified firms.

Appendix 12

39

Procurement under National Competitive Bidding1

Executing Agency ADB Suppliers/

Contractors

Prepare list of goods/ Loan/advance contracting works to bid approved

(For contracts over $0.5M in goods and related services or $1.0M in civil works)

Prepare draft PQ documents 2 Advertise LCB contract packages and bid documents Concurrently with GPN in adb.org

ADB review, first contract only

Advertise locally and issue PQ documents2;

Inform ADB of advertisement (4 weeks notice to suppliers is Purchase PQ documents

acceptable) from EA; submit PQ application

Evaluate PQ applications and select and/or recommend

prequalified firms 2 EA notifies ADB of PQ results. 3 EA notification to prequalified

Issue bidding documents to and disquali fied firms prequalified suppliers

(4-week bidding period is acceptable) Purchase bidding documents and submit bids

Public bid opening; prepare record of public bid opening

Evaluate bids; prepare bid evaluation

report; proceed to and or recommend contract award.3

Prepare Contract Agreement and Return signed contract to EA;

send to supplier. Provide performance security

Send at least one English version of ADB post review, salient features of signed contract if approved, prepare PCSS. 3

to ADB Execute contract

Supervise and monitor contract 1 While NCB procedures are not required to be identical with ADB’s ICB procedures, they must reflect the underlying

principles and not contravene ADB’s Procurement Guidelines. 2 Prequalification is discouraged for NCB. DMCs may have a register of suppliers. The processing mission should

ensure that the registration system is acceptable to ADB (e.g., it reflects the underlying principles of ADB’s Procurement Guidelines); and where acceptable, a PQ may not be required.

3 If the prequalifcation or procurement requires prior consideration of the procurement committee, in accordance with PAI 3.11, the EA must be advised not to notify prequalified firms or award contract prior to the committee’s deliberations and subsequent ADB approval.

Appendix 13

40

DISBURSEMENT PROCEDURES A. Direct Payment Procedure (page 24 of the Handbook) 1. ADB pays the designated beneficiary, at the request of the Recipient, from the grant funds. 1. Supporting Documents for Direct Payment

(i) Signed Withdrawal Application (ADB-DRP/RMP, Appendix 3 of Handbook);

(ii) Summary Sheet (ADB-DRP-SS, Appendix 4 of Handbook); (iii) Contract or confirmed purchase order, indicating amount and due date; (iv) For payment of goods: supplier's invoice and bill of lading or other similar

documents; and (v) For payment of services: consultants’ claim or invoice

B. Commitment Procedure (page 26 of Handbook) 2. This procedure is used for financing import of goods. A letter of credit is usually opened by a commercial bank. The negotiating bank is authorized to seek payment from ADB under the grant. 3. ADB issues a Commitment Letter against a letter of credit (L/C), and agrees to pay (on behalf of the Recipient and out of grant funds) the negotiating bank for the payments made or to be made to the supplier in accordance with the terms of the L/C. 1. Supporting Documents for Issuing Commitment Letter

(i) Signed Application for Commitment Letter (ADB-CL, Appendix 5 of Handbook);

(ii) Summary Sheet (Appendix 6) (iii) Contract or confirmed Purchase Order; (iv) Two signed copies of L/C.

4. ADB issues a Commitment Letter to the designated commercial bank (usually advising bank) as shown in Appendix 7 of Handbook. A copy of ADB’s commitment letter is also sent to the EA for information. 2. ADB’s Payment to the Negotiating Bank 5. The Commitment Letter provides for ADB’s payment to the negotiating bank upon receipt of the reimbursement claim confirming that negotiation has been done in full compliance with the letter of credit terms. Such reimbursement claim is usually made by tested telex or authenticated SWIFT message. 3. Amendment to the Letter of Credit 6. ADB’s approval is required for amendment to the letter of credit (L/C) involving:

(i) terms of payment including currency and amount of L/C;

Appendix 13

ANNEX 1

41

(ii) the description or quantity of goods; (iii) beneficiary; (iv) country if origin; and (v) extension of the expiry date of L/C beyond the grant closing date.

7. Amendments not mentioned above do not require ADB’s approval. For example, extension of L/C expiry date within grant closing date does not require ADB’s approval, but simply inform ADB of such extension by filling out the form shown as Appendix 11 of Handbook and attaching one copy of the amendment. C. Reimbursement Procedure (page 30 of Handbook) 8. ADB pays to the project account for eligible expenditures which have been incurred and paid for by the Government out of its budget allocation or its own resources (page 30 of Handbook). 1. Supporting Documents for Reimbursement Procedure

(i) Signed Withdrawal Application (ADB-DRP/RMP, Appendix 3 of Handbook);

(ii) Summary Sheet (ADB-RMP-SS, Appendix 4 of Handbook); (iii) Contract or confirmed Purchase order, if not yet submitted earlier to ADB;

and (iv) Evidence or receipt of payment showing the amount paid, the date of

receipt and the payee. D. Statement of Expenditure (SOE) Procedure 9. This is a procedure requiring no submission of supporting documents. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed $100,000 (including counterpart fund). The procedure derives its name from the Statement of Expenditure (SOE) form, which is submitted with the Withdrawal Application (W/A). The SOE is used in lieu of the usual supporting documents and the Summary Sheet. It may also be used in connection with the liquidation or replenishment of the Imprest Account (page 31 of Handbook). 10. Three types of SOE are available:

(i) SOE form for contract items, mostly related to civil works (Appendix 12 and 13 of Handbook);

(ii) SOE form for noncontract items, mostly related to operating expenses and overhead (Appendix 14 of Handbook); and

(iii) SOE form (free format) for items not provided in the other SOE forms (Appendix 15 of Handbook).

E. Instructions for Withdrawal 11. Before the first W/A is submitted to ADB, the name of the authorized representative(s) must be provided to ADB, through the Authorized Representatives of the Recipients, including the authenticated specimen signatures of the representative(s).

Appendix 13

42

12. The W/A should be signed by the authorized representative(s), sequentially numbered and should not exceed five digits (00001, 00002, etc.) 13. The cover letter of the W/A should include a sentence reconfirming that the contracts were awarded on the basis of tax exemption to ensure expeditious loan disbursement by ADB. 14. The W/A forms and summary sheets to be used vary for the different procedures. A separate W/A for each currency requested should be submitted. 15. The W/A to be submitted to ADB must be the signed original copy. However, supporting documents may be in photocopies. 16. Before a disbursement is made for any contract issued by the Recipient, ADB has to prepare a Procurement Contract Summary Sheet (PCSS). Copies of all signed contracts should be submitted to ADB as soon as available. To facilitate the preparation of PCSS at ADB, the EA is requested to prepare a Contract Summary Sheet (ANNEX 1), and submit this together with each signed contract. A PCSS number will be assigned by ADB for each contract received and these data will be relayed to EA. The PCSS serves as an acknowledgment by ADB that the award of a contract has been checked and has been found to comply with ADB’s procurement guidelines. It also serves as a basis for disbursement. The PCSS is also numbered sequentially, not exceeding four digits, i.e. 0001, 0002, etc. The PCSS consists of following basic information:

(i) ADB Contract No. or the PCSS No. (ii) Date of ADB approval of the Award of Contract (iii) Date of Contract Approval by the EA (iv) Mode of Procurement (v) Name of contractor or supplier (vi) Terms of payment and currency of contract (vii) Component to which the expenditures will be charged

17. Without the PCSS, ADB’s Controller's Department could not proceed with the processing of payment for the W/A. 18. When an amendment or a variation of a contract is made, a copy of the variation order should also be sent to ADB, for updating of the PCSS. 19. To avoid delay in the processing of payment, the PCSS No. should be indicated in the W/A to be submitted by the EA. The PCSS No. should be shown in the summary sheet.

Appendix 13

ANNEX 1

43

CONTRACT SUMMARY SHEET

I. PROJECT DATA

A. Loan No. B. Executing Agency II. OUTLINE OF CONTRACT A. Contract No.

B. Bidder/Consultant/ Supplier’s Name and Address

C. Description of Contract D Loan Category to be charged E. Mode of Procurement

F. Country of Origin of goods and Equipment

III. SUMMARY OF CONTRACT AGREEMENT

A. Contract Amount (including contingencies)

B. Amount of VAT C. Contract Period D. Date of Contract Signing E. Commencement Date F. Completion Date IV. RESULT OF TECHNICAL and FINANCIAL EVALUATION

Bid no. Name of Bidders Bid Price Rank Nationality of Bidder

1

2

3

4

(Note: If contract was not signed with first-ranked firm/bidder or supplier, please state the reason)

Appendix 14

44

MONITORING OF SOCIOECONOMIC AND POVERTY IMPACTS A. Flow of Project Benefits 1. The Project will benefit road users and the rural poor. Together with other development interventions in the project area, the Project will contribute to the overall economic growth, social development, and poverty reduction. B. Monitoring Framework 2. During project preparation, a standard monitoring framework and a set of monitoring indicators were designed to measure the actual benefits definitely (Table A11.1).

Table A11.1: Monitoring Framework: Indicators and Mechanism

Item Monitoring Indicators Monitoring Mechanism A. During Project Construction 1. Employment of local labors

(included in SDAP) 2. Use of local construction

materials (included in SDAP) 3. Taxes to local government 4. Implementation of SDAP 5. Implementation of RP

Number of local labors Number of person-years Value of construction materials Tax A set is included in SDAP A set is included in RP

Contractor’s records Household survey Contractor’s records Contractor’ and government’s records Progress report Resettlement monitoring

B. Immediately Upon Project Completion Reduced travel time

Travel time to county center

Village survey

C. Short-Term (within 1-3 years) 1. Lower transport costs 2. Improved transport services 3. Changes in producer prices 4. Increased economic activities 5. Increased access to social

services

Increased traffic volumes along the corridor Bus and freight fares Villages with bus services Bus frequency to villages Fertilizer prices Vehicle ownership Transport expenses (of the total expense) Frequency of visits to markets Increased trade in the region Travel time to the nearest school and clinic Middle school dropout rates (boys, girls) Frequency of visits by doctors

Local statistics Village survey Village survey Village survey Household survey Village survey Household survey Household survey Local statistics Village survey Village survey Village survey

D. Medium-Term (within 3–5 years) 1. Developed non-farm sector 2. Increased agricultural extension

services 3. Increased rural incomes 4. Reduced poverty incidence

Income from non-farm sector Number of small business enterprises Number of tourists in the area Cash crops (percentage of total crops) Frequency of visits by agricultural technicians Number of new or renovated houses Rural income Rural poverty incidence

Household survey Village survey County statistics Household survey Village survey Village survey Village Survey

RP = resettlement plan, SDAP = social development action plan. Source: ADB. 2002. Technical Assistance for Socioeconomic Assessment of Road Projects. Manila.

Appendix 14

45

3. Monitoring will focus on a few representative communities in the project area, a useful exercise in accumulating knowledge on how benefits flow to local people. Because this pilot approach will greatly narrow down the scope of monitoring, local authorities are expected to undertake adequate monitoring more readily. During project preparation, three villages in three townships in Longnan prefecture were selected as the pilot sites: Dujialing (Anhua township), Loufang (Loutang township), and Jiudan (Pingya township). C. Implementation of Monitoring 4. The Gansu Provincial Communications Department (GPCD) concurred with the monitoring framework and the set of indicators for monitoring the project’s performance. During project preparation, the baseline values for the indicators were specified to the extent available (Table A11.2) and will be further updated by GPCD, where necessary. GPCD will measure the indicators for project evaluation prior to and during project implementation at completion, and annually 3 years after project completion. GPCD will hire an independent, qualified institute for 30 person-months for surveys, analysis, and reporting. Reports will be submitted to the GPCD and Asian Development Bank.

Table A11.2: Baseline Data of Micro-Level Impact (2004)

Anhua Township

Luotang Township

Pingya Township

Indicator TS DV HH TS LV HH TS JV HH Distance to township center 15 3 2.5 Villages with road access (%) 98 94 44 Villages with tap water (%) 83 91 22 Villages with access to telephone (%) 36 53 11 Number of telephones 795 10 423 18 8 0 Villages with bus services (%) 20 30 0 Bus frequency to county center (buses/day)

2

3

0

Fertilizer input (%) 6.7 8.2 7 Number of vehicles 6 15 6 Transport expenses (%) 7.4 5.6 8.2 Frequency of visits to county marketsa 0.5 1 0.5 Frequency of visits to township marketsa

3

4

2

Frequency of visits by doctors (number per 6 months)

1

1

0

Income from non-farm sector (%) 14 32 16 HH selling surplus grain (%) 14 0 60 HH selling animal products (%) 34 0 9 Frequency of visits by agricultural technicians (no. per 6 months)

1

1

1

Number of new or renovated houses 7 2 30 Number of long-term migrants (greater than 6 months)

60

30

60

Number of HH without large animals 6 9 10 Rural income (CNY) per year 1,450 550 1,190 850 821 770 Rural poverty incidence (%) 80 65 90

DV = Dujialing village, JV = Jiudun village, HH = household, LV = Loufang village, No. = number, TS = township. a time/household/month. Sources: Asian Development Bank and technical assistance consultants’ surveys. 5. Background macro-level baseline indicators were also collected to evaluate the overall economic growth and poverty reduction impact of the Project (Table A11.3).

Appendix 14

46

Table A11.3: Baseline Data of Macro-Level Impacts in 2004

Project Road Impact Area (County)

Broad Project Impact Area (Prefecture)

Category Indicators Wudu Wenxian Kangxian Longnan Tianshui Dingxi Economic GDP (million CNY) 919 542 369 6,338 7,629 6,323.6 Per capita GDP (CNY) 1,823 2,158 1,839 2,339 3,619 2,126 • Primary industry GDP

(%)

36

28

40 34

19

35

• Secondary industry GDP (%)

18

37

19

31

47

27 • Tertiary industry GDP

(%)

46

35

41 35

44

38

Poverty Rural income

(CNY/capita/year)

1,209

1,036

1,209

1,252

1,326

1,590 Villages 768 303 350 3,237 3,011 2,025 Designated poverty

villages

561

212

238

2,433

1,619

989 Rural population 446,000 214,000 180,000 2,363,000 2,659,100 2,703,700 Population in poverty a 166,800 94,700 75,900 996,700 771,139 1,027,406 Poverty ratio (%) 37 44 42 42 29 38 Education Middle school enrollment

rate (%)

62

68

61

67

95

69 Middle school dropout rate

(%)

2

1.3

2.1

2.04

2.59

3.1 Health Reported HIV/AIDS cases 0 0 0 0 0 0 Transport National roads (km) 96 205 0 562 383 601 Provincial roads 212 15 82 720 318 593 County roads 205 226 298 1,620 1,233 1,508 Township roads 199 64 124 1,005 848 784 Village roads 2,041 595 579 7,127 4,459 5,465 Density (km/100 km2) 59 22 38 20 19 17 Villages with road access 650 187 280 2,460 2,050 1,828 Transport Passenger-km (million) 106 41 29 408 740 690 Services Passengers (million) 2 0.7 0.5 7.5 14 15 Average journey (km) 53 58 58 54.3 53 46 Inter-provincial bus routes 0 9 4 13 19 15 Inter-prefecture bus routes 7 2 2 45 99 90 Inter-county bus routes 31 25 29 85 180 147 Townships served by bus 35 20 27 169 113 119 Villages served by bus 562 202 245 2,602 1,434 1,693 Total registered trucks 555 285 193 2,382 4,421 5,420 Ton-km (million) 145 75.7 25.2 630.5 1,004 1,054 Average haul (km) 73.2 73.5 74.2 73.2 71 65

GDP = gross domestic product, km = kilometer. a People who live below the Government low-income line of CNY852 per capita per year (which is below the

international poverty line of $1 per person per day. Sources: Gansu prefecture and county statistic yearbooks (2005), Gansu Yearbook 2005.

Appendix 15

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SUMMARY RESETTLEMENT PLAN 1. One resettlement plan addresses impacts caused by the expressway component, including connector roads, based on the project feasibility study. Another resettlement plan addresses the relatively small impacts caused by the rural road upgrading program and the construction of 200 township bus stations. Prior to commencement of land acquisition, Gansu Provincial Communications Department (GPCD) will update both resettlement plans based on detailed measurement survey and submit them to Asian Development Bank (ADB) for approval. During project construction, if there is significant material change in project scope or other causes, the resettlement plans will be revised, disclosed to affected persons (APs) and submitted to ADB for approval prior to commencement of such changes.

2. The proposed expressway will permanently require 681 hectares (ha) of land of which 12% is non-irrigated farmland, 30% is irrigated farmland, 12% is orchard, 6% is housing plots, and 40% is floodplain, shrub forest, grassland and wasteland. Another 33 ha of land is estimated to be occupied temporarily during the construction phase. Based on the Chinese standard for impact assessment, the equivalent of 2,834 persons would lose all their land and agricultural livelihoods. Since the expressway will actually cross many parcels of scattered farmland, it is estimated that the average loss of land per household would be 33%, which means the number of partially affected people would be in the order of 8,500 persons (or about 2,070 households). Along with land acquisition, 15,130 square meters of houses will be demolished, necessitating relocation of 151 rural households (621 persons), which is an average of 2 houses per village.

3. For the upgrading of seven rural roads, it is estimated that about 100 households with 400 persons would be relocated and another 500 persons would be partially affected by land acquisition. The 200 township transport centers do not require land acquisition; instead they obtain land use rights for existing state-owned construction land in each town. Each center will require 1,000–1,500 m2 of land, for a total of 26.6 ha; these sites have been selected and agreements have been signed between the Gansu Transport Administration Bureau and each township government.

4. For people unavoidably affected, the resettlement objective is to achieve equal or better income and living standards in line with the People’s Republic of China Land Administration Law (1998), State Council Document No. 28, and the ADB’s Policy on Involuntary Resettlement. The GPCD will ensure that any people losing land, housing, other assets or income sources will be assisted to fully restore their income and living standards. In July 2005, the Gansu provincial government issued Decree No. 48 which stipulates the regulations for land compensation, resettlement subsidies, young crop compensation, and other measures to carry out resettlement. According to the policy and basic socioeconomic conditions among project counties, land compensation standards have been established based on 16 times the average annual output value (AAOV). However, the AAOV are going to be updated based on detailed survey, so the actual compensation rates are not yet finalized. The estimated compensation rates in Wudu District and Wenxian County are estimated to range from CNY13,000 to 22,300 per mu for irrigated farmland; CNY8,300 to 15,500 per mu for dryland, cash forest, floodplain and house plots, CNY17,600 to 32,700 per mu for vegetable land, CNY5,000 to 9,300 per mu for shrub forest, CNY4,200 to 7,700 per mu for grassland and CNY1,000 for wasteland. If basic farmland is acquired, compensation will be calculated on the basis of 30 times AAOV. The land compensation rates for the rural roads will follow the same compensation principles. Green crops will be compensated based on 0.5 times AAOV. Those people losing land temporarily during construction will receive a payment equivalent to production value foregone for the period of loss, which is expected to be 2 years. The land used temporarily will also be restored by the contractor to the original condition; the contractors will deposit funds with Longnan Land and Resources Office to ensure this restoration is completed properly.

Appendix 15

48

5. For structures to be demolished, replacement value will be provided to the affected households based on compensation rates adopted in Longnan which range from CNY350 to CNY450 per square meter for brick-concrete structure, CNY250 to CNY350 per square meter for brick-wood structure, and CNY150 to 250 per square meter for earth-wood structure. The relocation will provide an opportunity to improve current housing conditions for relocated households. Most of these households will be moved a short distance to another site within their original group or village. Rural housing will either be built (i) in a scattered manner beside roadways, or (ii) in a clustered manner close to existing settlements; all sites will be provided with water supply, electricity, telephone, and TV cable. There will be no reduction in house compensation for depreciation, and people can salvage materials from their old houses.

6. GPCD will assume the overall responsibility for implementing resettlement according to the approved resettlement plans. For the expressway component, a Resettlement Division within the Gansu Changda Highway Company Limited (GCHC) will be directly responsible to coordinate the planning, implementation, financing and reporting of land acquisition and resettlement for the expressway and connector roads. A resettlement leading group and resettlement office was established in Longnan prefecture on 21 February 2006. Offices will also be set up in Wudu District and Wenxian County, and staff will be assigned in all affected townships and villages to implement resettlement. The county land and resources offices will take the primary responsibility for the resettlement consultation, implementation and timely delivery of entitlements, with assistance from townships and villages concerned.

7. The 1998 Land Administration Law requires disclosure and consultation with APs. Affected villages have been notified about the key elements of the resettlement plan during meetings and interviews. Resettlement information was disclosed through newspapers to all affected persons in April and May 2006. During detailed resettlement planning, there will be further notifications and consultations to discuss specific impacts and how they will be addressed. The county, township and village officials have ensured that any concerns raised by the people affected will be quickly addressed.

8. The plan for internal and external monitoring and evaluation is included in both resettlement plans. The GCHC will engage a qualified domestic monitor to carry out independent resettlement monitoring and evaluation. The monitor will ascertain whether APs have (i) received their full entitlements on time; and (ii) fully restored their livelihoods, income levels, and living standards. The monitor will conduct a baseline survey prior to resettlement, semi-annual investigations during resettlement and annual survey updates for two years after the completion of resettlement. The household survey will include a representative number of those severely affected by loss of land, those losing housing, and those classified as economically vulnerable. The monitor will provide ADB and GPCD with copies of the monitoring and evaluation reports twice a year during resettlement implementation, and once a year after resettlement completion for at least 2 years. For the expressway component, an internal monitoring and reporting system will be established in the Resettlement Division of GCHC and report to ADB on the progress of land acquisition and resettlement through quarterly progress reports and a resettlement completion report. For the other project components, internal monitoring will be done by GPCD and the land and resources bureaus; progress will be reported to ADB every 6 months.

Appendix 16

49

Appendix 16

50

Appendix 16

51

Appendix 16

52

Appendix 16

53

Appendix 16

54

Appendix 16

55

Appendix 16

56

Appendix 16

57

Appendix 16

58

Appendix 16

59

Appendix 16

60

Appendix 16

61

Appendix 16

62

Appendix 17

63

PROGRESS REPORT FOR THE QUARTER ENDING_____________

A. INTRODUCTION AND BASIC DATA (Provide the following)

1. Loan Number: 2. Project Title: 3. Executing Agency: 4. Implementing Agency: 5. Original and revised (if applicable) loan closing date B. UTILIZATION OF FUNDS (Provide the following)

6. total counterpart committed for the year 7. cumulative contract awards financed by the ADB loan 8. cumulative contract awards financed by counterpart funds 9. cumulative disbursements from the ADB loan 10. cumulative disbursements from counterpart fund 11. comparison of contract awards and disbursement achievement with time- bound projections 12. re-estimated costs to completion, need for reallocation within ADB loan categories, and whether an overall project cost overrun is likely C. PROJECT PURPOSE (Provide the following)

13. Status of project scope/implementation arrangements compared with those in the report and recommendation of the President (RRP), and whether major changes have occurred or will need to be made; 14. An assessment of the likelihood that the immediate development objectives (project purpose) will be met in part or in full, and whether remedial measures are required based on the current project scope and implementation arrangements. 15. Other project developments, including monitoring and reporting on environmental social requirements that might adversely affect the project's viability of the Project. D. IMPLEMENTATION PROGRESS (Provide the following)

16. Progress or achievements in implementation since the last progress report 17. Information relating to other aspects of the EA’s internal operations that may impact on the implementation arrangements or project progress 18. Assessment of project implementation arrangements such as establishment, staffing, procurement of equipment and vehicles. 19. Assessment of progress in implementing the overall project to date in comparison with the original implementation schedule—quantifiable and monitorable target, (include simple charts such as bar or milestone to illustrate progress, a chart showing actual versus planned expenditure, S-curve graph showing the relationship between physical and financial performance, and actual progress in comparison with the original schedules and budgets). 20. Calculation of physical progress (see Appendix 18 of PAM for suggested format for calculating Project progress) 21. Assessment of the progress of each the following:

- recruitment of consultants and their performance; - procurement of goods and works (from preparation of detailed designs and bidding

documents to contract awards); and - the performance of suppliers, manufacturers, and contractors for goods and works contracts.

Appendix 17

64

22 An assessment of implementation progress of the following project components:

Project Outputs (Indicators/Targets)

Assessment of Progress to date

1. construction of a 134-km four-lane access-controlled toll expressway between Wudu and Guansigou, and its tunnels (including one that is 8 km), bridges, interchanges with toll stations, connector roads, administrative stations and service areas;

2. upgrading of 357 km of rural roads to improve access to 27 townships and 275 villages in poor areas;

3. building 200 townships bus stations to provide new services 4. improvement of transport services by pilot testing a road

transport action in plan in Longnan;

5. promoting corporate governance; and 6. strengthening of local transport authorities in construction

supervision, road safety, asset management, and project management by providing consulting services and training.

E. COMPLIANCE WITH LOAN COVENANTS

23. Update the status column of Appendix 22 of the PAM and submit as Appendix to the quarterly progress report. F. MAJOR ISSUES AND PROBLEMS

24. Summarize the major problems and issues affecting or likely to affect implementation progress, compliance with covenants, and achievement of immediate development objectives Recommend actions to overcome these problems and issues (e.g., changes in scope, changes in implementation arrangements, and reallocation of loan proceeds).

Appendix 18

65

FRAMEWORK AND GUIDELINES IN CALCULATING PROJECT PROGRESS

A. Introduction 1. To ensure that all implementation activities are reflected in measuring implementation progress against the project implementation schedule, the term "physical completion” in the PPR has been changed to "project progress.” 2. Physical and pre-commencement activities are considered in calculating project implementation progress. These activities, which may include recruitment of consultants, capacity building, detailed design, preparation of bid and prequalification documents, etc., could constitute a significant proportion of overall implementation and therefore should be counted. 3. Each activity in the implementation schedule will be weighted according to its overall contribution (using time as a reference) to progress of project implementation. These weights will then be used to calculate the percentage of project progress along the entire time span of the project. This is to provide a holistic view of the pace of implementation. B. Framework for Compiling Activity List and Assigning Weights 4. As implementation activities (with corresponding weights) will vary in terms of project, sector, and country, EATC will be responsible for incorporating them in the project administration memorandum. The actual project implementation progress of these activities should be reported regularly through the EA’s quarterly project progress report. To ensure ADB-wide consistency, the following framework has been established. The application of this framework will be monitored through the PPR. 1. Compilation of Activity List 5. EATC will identify and include major implementation activities in the implementation schedule which is attached as an appendix in the report and recommendation of the President (RRP). The implementation schedule should follow the critical path of the project’s major activities in project implementation taking account of various country, sector, and project constraints. 2. Assignment of Weights 6. Corresponding weights for each activity should be assigned to ensure that “project progress" measures the percentage of achievement (nonfinancial except when the project has credit components) for all events during the entire duration of the implementation schedule. To avoid disproportionate assignment of weights, to the extent possible these should be evenly distributed along the implementation schedule. When activities are concurrent, avoid “double counting.” 3. Computation of Project Progress 7. Once all activities are identified and corresponding weights assigned, project progress should be calculated using the following steps:

(i) Determine the actual percentage progress (non-financial) of each activity. (ii) Multiply these percentages by the assigned weight of each activity to arrive at the

weighted progress. (iii) Add up the resulting weighted progress of all activities to determine the project

progress.

Appendix 18

66

The second page of this Appendix provides an illustration of this calculation using a generic sample implementation schedule, and the third page shows a specific schedule for this Project.

Appendix 18

67

Implementation Schedule with Activities and Weights

Yr1 Yr2 Yr3 Yr4 Yr5

A

a

B

b

Cd

c

De f

E

A C

T I

V I T

I E

S

1. Sum of all weights should equal 100 percent (a+b+c+d+e+f+g = 100%)2. When calculating the percentage of “project progress,” all completed activities should be counted as accomplished, regardless of when they

were scheduled to be completed. For example, when calculating the percentage of “project progress” after year 3, if activity D is completed inyear 3 rather than in year 2, it should still be included in the computation.

3. Total weight of each activity is as follows: Activity A–a; Activity B–b; Activity C–c; Activity D–d; and Activity E–e + f +g4. Project progress of a project is the summation of the actual percentage of progress for each activity multiplied by the total weight of each

activity.

Appendix 18

67

SUGGESTED COMPUTATION OF PROJECT PROGRESS

(a) (b) (a) x (b) ACTIVITIES Assigned Actual Weighted

Weight (points) % Progress % Progress

I. Detailed design and approval 10

II. . Land Acquisition 10

1. RP Preparation, distribution and approval 3

2. Land acquisition activities 7

III.. International consultants 5

1. Recruitment 1

2. Mobilization and services 4

IV. Expressway subgrade contracts 20

1. Bidding, negotiation and contract award 2

2. Construction 18

V. Expressway Pavement and Traffic Control 15 15


2. Construction. 13

VI. Expressway planting, building 10


2. Construction 8

VII. Expressway Equipment 10


2. Installation 8

VIII. Local Roads 10

1. Bidding, negotiation, and contract award 2

2. Construction 8

IX. Township bus station implementation 10 Implementation Progress 100

Appendix 19

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Suggested Topics for Project Completion Reports to be Prepared by Borrowers

I. PROJECT DESCRIPTION A. Objectives B. Components C. Implementation methods D. Description and justification of changes in components or implementation methods

II. PROJECT IMPLEMENTATION A. Compare original and actual implementation schedules. Indicate delays, length and causes of delays, and remedial action taken. B. Compare cost estimates made during appraisal and actual costs (foreign and local). Local currency costs incurred, appropriate exchange rates for their conversion into US dollars, and the foreign exchange costs financed by cofinanciers must be compiled correctly with reference to audited project accounts. Indicate factors that contributed to any significant overruns or underruns. C. State problems or difficulties in recruiting consultants, with reference to ADB procedures. Assess the consultant's work and the working relationship between the executing agency (EA) and the consultant. Use of a logical framework is strongly recommended. D. State problems or difficulties encountered in procuring goods and services (including civil works) with reference to ADB procedures. Assess the supplier's or contractor's performance under the contract. E. Give the extent of compliance of the borrower and EA with loan covenants, with reasons for noncompliance or delays in compliance and the remedial actions taken. F. State reasons for any delays in loan utilization. Evaluate the appropriateness of the disbursement methods used. Justify the reallocation of loan proceeds. G. State problems or difficulties with subproject appraisal. Evaluate the EA’s performance and capacity to appraise subprojects.

III. INITIAL OPERATIONS

A. Describe initial operations of the project and transitional problems encountered from project completion to initial operations. B. Describe measures taken to ensure continued smooth operation of the project relative to management, staffing, funding, and maintenance of project facilities. C. Analyze the prospects of the project benefits being realized.

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IV. EVALUATION OF THE ASIAN DEVELOPMENT BANK’S PERFORMANCE

A. Assess ADB's performance in supervising project implementation. Include comments on the adequacy of the consultants’ terms of reference and appropriateness of specifications in tender documents. Evaluate the effectiveness and timeliness of assistance extended by ADB to solve implementation problems. B. Comment on problems encountered with ADB's procedures. Note the measures taken to resolve these problems and suggest changes in procedures and requirements.

Appendix 20

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FINANCIAL REPORTING AND AUDITING REQUIREMENTS 1. ADB's Handbook for Borrowers on the Financial Governance and Management of Investment Projects Financed by the ADB (the Booklet) provides guidelines to ensure timely compliance with the grant covenants and the quality of financial information as required by ADB. 2. ADB, by its Charter, is required to ensure that the proceeds of any loan/grant made, guaranteed, or participated in by ADB are used for the purposes for which the loan/grant was approved. ADB requires accurate and timely financial information from its borrowers/recipients to be assured that expenditure was for the purposes stated in the loan/grant agreement. 3. The following are the main requirements:

(i) ADB requires the EA to maintain separate project accounts and records exclusively for the Project to ensure that the grant funds were used only for the objectives set out in the Grant Agreements.

The first set of project accounts to be submitted to ADB covers the fiscal year ending 31 December _______. As stipulated in the Grant or Project Agreements, they are to be submitted up to six months after the end of the fiscal year. For this grant, the deadline is by 30 June ______. A sample report format with explanatory notes is attached as Annex A.

(ii) The accounts and records for the project are to be consistently

maintained by using sound accounting principles. The external auditor is to express an opinion on whether the financial report has been prepared using international or local generally accepted accounting standards and whether they have been applied consistently.

ADB prefers project accounts to use international accounting standards prescribed by the International Accounting Standards Committee. The name of external auditor is to comment on the impact of any deviations, by the Executing Agency from international accounting standards.

(iii) The external auditor specifies in the Auditor's Report the appropriate

auditing standards they used, and direct them to expand the scope of the paragraph in the Auditor's Report by disclosing the key audit procedures followed. The external auditor is also to state whether the same audit procedures were followed for all supplementary financial statements submitted.

ADB wishes that auditors conform to the international auditing standards issued by the International Federation of Accountants. In cases where other auditing standards are used, the external auditor is requested to indicate in the Auditor's Report the extent of any differences and their impact on the audit.

(iv) The external auditor's opinion is also required on whether

Appendix 20

71

� the proceeds of the ADB's grant have been utilized only for the project as stated in the Grant Agreement;

� the financial information contains data specifically agreed upon between the Recipient or EA and ADB to be included in the financial statements;

� the financial information complies with relevant regulations and statutory requirements; and

� compliance has been met with all the financial covenants contained in the Grant or Project Agreements.

(v) The Auditor's Report is to clearly state the reasons for any opinions that

are qualified, adverse, or disclaimers. (vi) Actions on deficiencies disclosed by the external auditor in its report are

to be resolved by the Recipient or Executing Agency within a reasonable time. The external auditor is to comment in the subsequent Auditor’s Report on the adequacy of the corrective measures taken by the Recipient or EA.

4. Compliance with these ADB requirements will be monitored by review missions and during normal project supervision, and followed up regularly with all concerned, including the external auditor.

ANNEX A: SAMPLE FORM OF AUDITOR’S OPINION

Imprest Account

We have examined the Statement of Imprest Account of Loan 2295-PRC for the period 1 January to 31 December ______, pursuant to the Agreement signed between the Government and the Asian Development Bank on ___________.

Our examination was made in accordance with generally accepted auditing

standards emphasizing on the adequacy and completeness of the supporting documents of the Imprest Account and other auditing procedures as we considered necessary in the circumstances;

In our opinion, the Statement of Imprest Account and supporting documents and information submitted with them (can/ cannot) be fairly relied on to support the applications for reimbursement/payment in accordance with ADB’s requirements as set out in the Grant Agreement.

STATEMENT OF EXPENDITURE

We have also examined the Statements of Expenditure submitted to ADB during the period in support of applications for liquidation of the Imprest, pursuant to the above-mentioned Grant Agreement. Our examination was made in accordance with generally accepted auditing standards, and, accordingly included such tests of the accounting records, verification of assets and other such auditing procedures as we considered necessary in the circumstances.

Appendix 20

72

In our opinion, the Statement of Expenditures submitted, together with the internal control and procedures involved in their preparation, (can/cannot) be relied on to support the applications for liquidations in accordance with the requirements of the above mentioned Grant Agreement.

Appendix 21

73

Checklist for Assessing the Adequacy of Accounting System and Internal Control

1. Accounting System

A. Funds Inflows

Sources of project funding Government or counterpart funds ADB fund The above funds are kept in separate accounts The check books are reconciled with Depository Bank

Statement once a month

B. Voucher approval and record keeping system

Vouchers are prepared for all expenses incurred 2 or more people authorize payment vouchers 2 officials authorizing payment are from different sections Vouchers are kept in logical sequence for easy retrieval by

Bank staff

C. Check books and Cash Books

Check books are kept in a safe place and signed by 2 officials

Cashier’s and Project Accountant’s functions are handled by two different persons

Checks are kept in a sequential order Records of cancelled or missing checks are made The Project Director acknowledges any missing or cancelled

check Cash books are kept-up-to-date Cash books are reconciled with last month’s Bank

statements The Project Manager signs all Bank reconciliation

statements In-depth investigation is made to ensure the authencity of

reconciling items Posting of transaction in ledger is shown in the check/cash

books Posting is done clearly and systematically

D. Contract Ledger System

Contract ledger system is established and regularly

maintained

Contract Ledger contains the following information

Appendix 21

74

Relevant details of the contract e.g. terms of payment, completion date, etc

details of individual payments e.g. invoice no., check no., voucher no

running totals of payments contract balance ADB’s Procurement Contract Summary Scheet (PCSS) Periodic reconciliation with ADB’s Report on Contract Leger

(ALS720)

E. Subsidiary ledger for all other major expenses

Subsidiary ledgers are maintained for major expenditures (e.g., salary and wages, electricity, etc.)

Subsidiary ledgers are regularly updated

F. Fixed Asset Register Fixed Asset Register for the Project is maintained for the following:

Motor Vehicles Land and Building Equipment

The Register shows the following information

Date of acquisition Supplier Purchase Order Purchase Price Payments made to date for the asset Current location of the asset for inspection/verification

Fixed Asset Register is regularly updated

Reconciliation between the Fixed Asset Register and annual

report on project expenditures is made

G. Withdrawal Application preparation procedure

A Register is maintained for all withdrawal applications Submitted to ADB

Withdrawal applications are number in sequential and logical order

ADB’s Semi-monthly Listing of Loan Disbursements Report (ALR967), which can be downloaded from ADB website, is reconciled with EA’s Check/cash books

Appendix 21

75

Appropriate actions are taken by the EA with ADB whenever there is discrepancy between ADB’s ALR967 reports and its Withdrawal Application Register.

H. Financial Statement and Accounting Reports

Monthly cash flow statement is prepared by the EA for the

project EA prepares a monthly report on project expenditures with the following details

Monthly expenditures Year-to-date expenditures Beginning of project to date expenditures

Reconciliation upon receipt of the ADB’s Annual Statement

of Withdrawal Vouchers (ALR903) with the EA’s annual report on Project expenditures

Appendix 22

76

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Reference Status of Compliance

Sector 1. The Borrower shall cause GPG, and

through GPCD, cause GCHC, to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental, road and expressway construction, operation and maintenance practices.

LA, Section 4.01 (a)

2. In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement, and the Schedule to the Project Agreement and the Onlending Agreement.

LA, Section 4.01 (b)

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

LA, Section 4.03

4. The Borrower shall take all action which shall be necessary on its part to enable GPG to perform their respective obligations under the Project Agreement, including the establishment and maintenance of tolls as stipulated in paragraph 10 of the Schedule to the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations.

LA, Section 4.04

5. The Borrower shall cause GPCD to exercise its rights under the Onlending Agreement in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan.

LA, Section 4.05 (a)

6. GPCD shall be the Project Executing LA, Schedule 5, para. 1

Appendix 22

77


Agency responsible for the overall implementation of the Project, and shall implement the rural roads component of the Project through Gansu Provincial Highways Administration Bureau and the transport service component through Gansu Provincial Transport Administration Bureau.

7. GCHC shall be the Project Implementing

Agency for the Project expressway. GCHC’s general manager, acting as the project director, shall be responsible for construction and operation of the Project expressway. The project implementation unit (PIU) established within GCHC shall monitor and follow up implementation and facilitate land acquisition, resettlement, and environmental protection measures and shall ensure that local concerns are addressed adequately. The PIU shall be headed by a project director, who shall oversee day-to-day physical implementation or Project activities and prepare progress reports. The project director shall be assisted by a team of qualified technical and administrative staff.

LA, Schedule 5, para. 2

8. In the event that (i) any change in ownership of the Project facilities, Project expressway, rural roads or township bus stations constructed under the Project, or (ii) any sale, transfer or assignment of the Borrower’s and GPG’s shares or interest, or GCHC’s interest in the Project expressway is anticipated, the Borrower shall, and shall ensure that GPG and GCHC, consult with ADB at least six months prior to the implementation of such change. The Borrower shall ensure, and cause GPG and GCHC to ensure, that such change be carried out in a lawful and transparent manner.


9. GPG through GPCD shall enable GCHC

that, promptly as required, take all action PA, Section 2.11 (a)

Appendix 22

78


within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of its business.

10. GPG through GPCD shall, and shall cause

GCHC to, at all times conduct their respective business in accordance with sound administrative, financial, environmental, roads and expressway construction, operation and maintenance practices, and under the supervision of competent and experienced management and personnel.

PA, Section 2.11 (b)

11. GCHC shall be the Project Implementing Agency for the Project expressway. GCHC’s general manager, acting as the project director, shall be responsible for construction and operation of the Project expressway. The project implementation unit (PIU) established within GCHC shall monitor and follow up implementation and facilitate land

PA, Schedule, para. 2

acquisition, resettlement, and environmental protection measures and shall ensure that local concerns are addressed adequately. The PIU shall be headed by a project director, who shall oversee day-to-day physical implementation or Project activities and prepare progress reports. The project director shall be assisted by a team of qualified technical and administrative staff.

12. GPG shall cause GPCD to, take all necessary measures, including the provision of funds to relevant prefecture and county communications bureaus, to ensure that the rural roads improvements, implementation and the township bus stations construction be completed before opening of the Project expressway. GPG through GPCD shall cause the local


Appendix 22

79


governments to be responsible for improvement and maintenance of the local roads developed or upgraded under the Project.

13. GPG, through GPCD, shall, and shall

cause GCHC to, enter into the Concession Framework Agreement not later than 30 September 2007, covering both ADB financed Gansu Roads Development Project (Loan No. 2125 -PRC) and this Project, in a form and substance satisfactory to ADB to ensure autonomy of operations, encourage the establishment of road performance indicators, and facilitate refinancing of road sector assets. GPG shall ensure through GPCD that GCHC follow the Concession Framework Agreement during the operation and maintenance, and management of the Project expressway. GPG shall not revoke, repeal, suspend or withdrew, or transfer or assign to any third party the rights of GCHC pursuant to the Concession Frame-


work Agreement with respect to operation and maintenance, management of Project expressway, and collection of tolls on the Project expressway without ADB’s prior agreement. GPG, through GPCD, shall ensure that GCHC prepare a corporate development plan by 31 December 2008 to assure high standards of corporate governance, management practice, and financing reporting.

14. GPG through GPCD shall ensure that (i) the Project be constructed in accordance with the Borrower’s Ministry of Communication’s technical standards of highway engineering; (ii) the rural roads and township bus stations under the Project be upgraded and maintained in accordance with the national standards; and (iii) the Project construction supervision, quality control, and contract management be conducted in accordance


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80


with national standards and internationally accepted practices.

15. GPG through GPCD shall ensure that

adequate transport services be in place so that the Project’s benefits will filter down to the rural poor in the Project area. GPG shall ensure that GPCD coordinate with other agencies to implement the rural transport services development plan. In particular, GPG through GPCD shall implement the planned public transport facilities in tandem with the Project.


16. GPG through GPCD shall ensure that a road transport action plan prepared under ADB-financed TA (PRC 4351) for Policy Reform in Road Transport be implemented in Longnan prefecture, if necessary with suitable amendments in consultation with ADB, to improve the road transport efficiency.


17. Prior to construction and operation of the

Project expressway and rural roads, GPG shall cause GPCD to (i) establish a road safety inter agency committee to facilitate the Project implementation and (ii) ensure that the independent road safety audits be carried out and recommendations of these audits are taken into account during Project construction and operations. At least 6 months prior to the opening of the Project expressway, GPG through GPCD shall, (i) in coordination with an international consultant, develop and implement a plan, acceptable to GPG and ADB, to ensure safe operation of road infrastructure facilities; and (ii) establish a sufficient number of teams of traffic police personnel, in accordance with national and GPG standards, to patrol the Project expressway and rural roads and enforce the national laws and regulations. GPG through GPCD shall utilize its traffic control and surveillance systems to implement road safety measures for the Project.


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Before the Project expressway opens, GPG shall through GPCD submit a report on an operation risk management plan to ADB for review.

18. GPG shall ensure that GPCD (i) implement

the rural roads maintenance regulation as approved by GPG; (ii) establish an efficient prioritization and monitoring system for road maintenance; and (iii) provide a training program under the Project to strengthen the capacity of local government maintenance units and local communities. GPG shall cause the local governments to ensure adequate funding and effective management of the Project rural roads.


19. GPG (i) shall through GPCD provide to ADB the national emission standards and the penalties for infringement of such standards, and (ii) shall ensure that Gansu


Provincial Environmental Bureau, Gansu Public Security Bureau, and other agencies enforce the national vehicle emission standards, and fulfill the requirements of the government strategies, at least 6 months prior to the opening of the Project expressway.

20. GPG through GPCD shall install vehicle axle-weighing equipment at selected entry points of the Project expressway for the operation of such equipment. Before opening the Project expressway, GPG through GCHC shall submit to ADB the plan for operation of the vehicle weigh stations, including the prescribed axle-load limits and penalties for infringement.


21. GPG through GPCD shall (i) prepare an asset management plan, with the assistance of consultants engaged under the Project, which will establish a computerized database system and promote the use of modern equipment;


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and (ii) provide a training program to enhance staff skills at provincial, county and township levels.

22. In the event that (i) any change in

ownership of the Project facilities, Project expressway, rural roads or township bus stations constructed under the Project, or (ii) any sale, transfer or assignment of GPG’s shares or interest or GCHC’s interest in the Project expressway is anticipated, GPG through GPCD shall, and shall ensure that GCHC, consult with ADB at least six months prior to the implementation of such change. GPG shall ensure, and cause GCHC to ensure, that such change be carried out in a lawful and transparent manner.


Financial 23. Without limiting the generality of Section

4.02 of this Loan Agreement, the Borrower shall ensure provision of, and cause GPG to, and through GPG cause GPCD to, provide, on a timely basis, all funds and resources necessary for construction, operation and maintenance, and management of the Project expressway, rural roads and township bus stations and shall take all necessary measures, including the provision of additional funds, to ensure that the GCHC can successfully construct the project expressway, rural roads and township bus stations and operate and manage them after completion. Without limiting the generality of Section 4.02 of this Loan Agreement, the Borrower shall, and shall cause GPG to, and through GPG cause GPCD to, provide additional counterpart funding for any shortfalls of funds or cost overruns.


24. GPG shall, and shall , through GPCD, cause GCHC to, make available, promptly as needed, the funds, facilities, services, equipment, land and other resources which are required, in addition to the proceeds of

PA, Section 2.02

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the Loan, for the carrying out of the Project.

25. Except as ADB may otherwise agree, all

goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where


goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB.

26. GPG through GPCD shall cause GCHC to take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance of the Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice.

PA, Section 2.05 (a)

27. Without limiting the generality of the foregoing, GPG through GPCD shall cause GCHC to insure, or cause to be insured, the goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods.


28. GPG through GPCD shall, to the extent relevant to the Project, and cause GCHC to, maintain records and accounts, adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect,

PA, Section 2.06

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in accordance with consistently maintained sound accounting principles, its operations and financial condition.

29. GPG through GPCD shall, to the extent

relevant to the Project, and shall cause GCHC to, (i) maintain separate accounts for the Project and for its overall operations; (ii) have such accounts and related financial statements (balance sheet,


statement of income and expenses, cash flow statements, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than 6 months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement), all in the English language. GPG through GPCD shall, and shall cause GCHC to, furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

30. GPG shall enable ADB, upon ADB's request, to discuss GPCD financial statements and its financial affairs, to the extent relevant to the Project, and GCHC’s financial statements and its financial affairs, from time to time, with the auditors appointed by GPG or GCHC pursuant to Section 2.09(a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be


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conducted only in the presence of an authorized officer of GPCD or GCHC unless GPCD or GCHC shall otherwise agree.

31. Except as ADB may otherwise agree, GPG

shall, and shall ensure that GCHC, not sell, lease or otherwise dispose of any of GPCD’s or GCHC’s assets which shall be required for the efficient carrying on of either

PA, Section 2.12

of their operations or the disposal of which may prejudice either of their ability to perform satisfactorily any of GPG’s obligations under this Project Agreement or any of GCHC’s obligations under the Onlending Agreement and the Concession Framework Agreement.

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

PA, Section 2.13

33. Except as ADB may otherwise agree, GPG, through GPCD, shall, and shall cause GCHC to, duly perform all their respective obligations under the Onlending Agreement, and shall ensure that GCHC not, take, or concur in, any action which would have the effect of assigning, amending, abrogating or waiving any rights or obligations of the parties under the Onlending Agreement.

PA, Section 2.14

34. GPG shall, and shall through GPCD cause GCHC to, provide, on a timely basis, all funds and resources necessary for construction, operation and maintenance of the Project expressway, local roads and township bus stations and shall take all


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necessary measures, including the provision of additional funds, to ensure that GCHC can successfully construct the Project expressway, and GPCD can successfully construct the rural roads and township bus stations, and to ensure GPCD and GCHC operate and manage them after completion. GPG shall, and shall cause GCHC to, provide additional counterpart funding for any shortfalls of funds or cost overruns

35. Except as ADB shall otherwise agree,

GPG shall ensure that GCHC maintain, for each fiscal year commencing from the sixth year of the full operation of the Project expressway, a ratio of total working expenses to total working revenue not higher than 15 percent.

PA, Schedule, para. 11 (a)

36. Except as ADB shall otherwise agree, GPG shall ensure that GCHC not incur, for each fiscal year commencing from the sixth year of the full operation of the Project expressway, any debt unless reasonable forecast of the revenues and the expenditures of GCHC shows that the estimated net revenues of GCHC for each fiscal year during the term of the debt to be incurred shall be at least 1.2 times the estimated maximum debt service requirements of GCHC for any succeeding fiscal year on all debt of GCHC, including the debt to be incurred.

PA, Schedule, para. 12 (a)

Social 37. GPG shall cause GCHC to, in consultation

with GPCD, prepare a human resource development plan. Before undertaking international training, GPG shall cause GCHC to prepare for ADB’s concurrence a training plan, a program of workshops to be delivered at GCHC by the people trained internationally, and a list of training equipment and aids to strengthen GCHC’s domestic training programs.


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GCHC to, ensure that (i) the RP for the Project expressway and connecting roads and the RP for the rural roads and township bus stations be implemented in accordance with their terms, (ii) all land and


and rights–of–way required by the Project be made available in a timely manner, (iii) the provisions of the RPs, including compensation and entitlements for affected persons (APs), be implemented in accordance with all the Borrower’s applicable laws and regulations and ADB’s Policy on Involuntary Resettlement, (iv) compensation and resettlement assistance be given to the APs prior to dispossession and displacement, (v) the timely provision of counterpart funds be made for land acquisition and resettlement activities, (vi) any obligations in excess of the RP budget estimates be met, and (vii) the APs be at least as well off as they would have been in the absence of the Project.

39. GPG shall ensure that GPCD and GCHC (i) update the two RPs upon the completion of the Project detailed design and detailed measurement survey and obtain ADB approval prior to commencement of land acquisition and/or house demolition and as necessary to reflect any significant material changes in the Project scope or other causes, and (ii) submit any such changes to ADB for its approval. With respect to any updated RPs, GPG shall ensure that GPCD discloses such updated RPs to APs. GPG shall cause GPCD and GCHC to (i) ensure that civil works contractor specifications include requirements to comply with the RPs and entitlements for permanent and temporary impacts to APs, (ii) supervise the contractors to ensure compliance with requirements of the RPs, the Borrower’s


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applicable laws and regulations, and ADB’s Policy on Involuntary Resettlement, and (iii) ensure that contractors be required as a priority to provide employment to affected people with equal access to women and the afore said requirement be monitored and reported to ADB.

40. GPG shall cause GPCD and GCHC also to

ensure that (i) adequate staff and resources be committed to supervising and monitoring the implementation of the RPs and providing to ADB quarterly reports on implementation and a resettlement completion report, (ii) an independent agency acceptable to ADB be engaged by GCHC to carry out investigations to monitor progress semi-annually and to evaluate results through annual survey updates for two years after completion of resettlement, and forward reports to ADB and GPCD simultaneously, (iii) data be disaggregated by gender, and monitoring includes gender impacts and vulnerable groups, and (iv) a summary of the final government audit of resettlement disbursements and expenditures be provided to ADB.


41. GPG through GPCD shall, and shall ensure that GCHC, cause the contractors involved in the Project implementation to maximize the employment of local poor people, including the ethnic minorities, who meet the job and efficiency requirements for construction and maintenance of the project roads. Such workers shall be provided with adequate on-the-job training. GPG shall through GPCD (i) implement the Project in accordance with the social development action plan (SDAP); and (ii) monitor the Project impact on poverty in accordance with guidelines set forth in Project Performance Management System (PPMS).


GPCD shall cause the concerned local PA, Schedule, para. 23

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communications bureaus and GCHC to ensure that under the Project all the employment and labor standards provided in the applicable laws and regulations of the Borrower be complied with, and in particular, that all civil works contractors engaged under the Project (i) provide timely payment of wages on at least a monthly basis and safe working conditions to all workers including male and female workers, with such requirements being included in the civil works contracts and monitored by the construction supervision consultants; (ii) provide employment opportunity to women and ethnic minorities, where appropriate, and pay equal wages to the male and female employees for equivalent works; and (iii) not employ child labor in the Project works.

42. GPG through GPCD shall and shall cause

GCH to, follow ADB’s Policy on Gender and Development during Project implementation and take necessary steps to encourage women living in the Project area to participate in planning and implementing the Project, including causing the contractors on maximizing their employment of women in connection with the Project. GPG through GPCD shall monitor the Project’s effects on women during Project implementation.


43. GPG through GPCD shall, and shall ensure that GCHC, in coordination with the appropriate agencies identified by the Borrower and the Center for Disease Control of GPG, cause the contractors to disseminate information on the risks of socially and sexually transmitted diseases, including HIV/AIDS, to their employees during Project implementation. GPG through GPCD shall, and shall cause GCHC to, cause the appropriate agencies to disseminate similar information to transport operators and to local


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communities living in the Project area during Project implementation and operation of the Project facilities. GPG through GPCD shall, and shall cause GCHC

GCHC to, cause the contractors to monitor health risk control according to the Implementation Methods of Epidemic Prevention Law of the Borrower (1991).

Economic 44. Six months prior to the opening of the

Project facilities, GPG through the GCHC shall analyze the feasibility of attracting private sector investment funds for future road sector investment, including possible private sector participation in operation and maintenance of the Project expressway, and report its conclusions to ADB.


45. GPG, through GPCD, shall, and shall cause GCHC to, with the help of the consultants engaged under the Project, monitor and evaluate Project impacts through the PPMS to ensure that the Project facilities are managed effectively and the benefits, particular to the poor, are maximized. GPG, through GPCD, shall, and shall cause GCHC to, (i) hire a qualified domestic institute to carry out the monitoring activities through a competitive bidding prior to Project implementation; (ii) ensure that the relevant local government agencies, including local statistics offices, collect the data to measure the indicators contained in the PPMS prior to, and during, implementation of the Project, at completion of the Project, and annually for 3 years thereafter: and (iii) submit to ADB the reports summarizing the key findings of monitoring.


Environment 45. Six months prior to the opening of the

Project facilities, GPG through the GCHC shall analyze the feasibility of attracting


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private sector investment funds for future road sector investment, including possible private sector participation in operation and maintenance of the Project expressway, and report its conclusions to ADB.

Others 46 GPG, through GPCD, shall, and shall

cause GCHC to, carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental, roads and expressway construction, operation and maintenance practices.


47. In the carrying out of the Project and operation of the Project facilities, GPG, through GPCD, shall, and shall cause GCHC to, perform all obligations set forth in the Loan Agreement to the extent that they are applicable to GPG and GCHC and all obligations set forth in the Schedule to this Project Agreement.


48. In the carrying out of the Project, GPG, through GPCD, shall, and shall ensure that GCHC, employ competent and qualified consultants and contractors, acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB.


49. GPG through GPCD shall, and shall cause GCHC to, carry out the Project in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. GPG through GPCD shall, and shall cause GCHC to, furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.

PA, Section 2.04

GPG through GPCD shall, and shall cause PA, Section 2.07

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GCHC to, promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement or the Onlending Agreement, or the accomplishment of the purposes of the Loan.


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


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

PA, Section 2.08 (c)

52. GPG through GPCD shall, and shall cause GCHC to, enable ADB's representatives to inspect the Project, the goods financed out of the proceeds of the Loan, all other plants, sites, works, properties and equipment of GPCD and of GCHC, to the extent relevant to the Project, and any relevant records and documents.

PA, Section 2.10

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53. GPG through GPCD shall ensure that

ADB’s and the Borrower’s anticorruption policy be followed. GPG shall also ensure that GCHC ensure, in accordance with the


54. Borrower’s regulations and requirements, during Project implementation that (i) officials from the Discipline and Inspection Bureau be resident in Project offices for bidding, construction, and operations; (ii) an internal audit unit be established in GCHC; (iii) a two-contract system be adopted where the winner of a civil works contract must also sign an anticorruption contract with the employer; and (iv) periodic inspection of contractors be undertaken to ensure that fund withdrawal and settlement procedures be followed. GPG shall ensure that GPCD initiate liaison meetings with the Prosecutor's Office, on a needed basis, to discuss warnings about or information on corrupt practices.

55. GPG shall, and shall cause GCHC to, comply with ADB’s Anticorruption Policy. GPG agree, and shall ensure GPCD and GCHC agree, (a) that ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project and (b) to cooperate fully with and to cause GCHC to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation. In particular, GPG shall (a) conduct periodic inspections on the contractors’ activities related to fund withdrawals and settlements and (b) ensure that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of GCHC and all contractors, suppliers, consultants and other service providers as they relate to the Project.


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LIST OF ADB REFERENCE MATERIALS

A. Project Related 1. Report and Recommendation of the President to the Board of Directors 2. Loan and Project Agreements B. Consultants. May be downloaded from the following website: http://www.adb.org/Consulting/Documents.asp 3. Guidelines on the Use of Consultants by ADB and Its Borrowers 4. Handbook for Users of Consulting Services C. Procurement. May be downloaded from the following website:


5. Guidelines on Procurement under ADB Loans 6. Guide on Bid Evaluation 7. Prequalification of Bidders- User’s Guide 8. Handbook on Problems in Procurement for Projects Financed by ADB 9. Standard Bidding Documents: Procurement of Goods (including related services Single-stage: One-Envelope Single-stage: Two-Envelope Two-stage: Two-Envelope Two-stage User’s Guide 10. Guide on Prequalification of Civil Works Contractors 11. Sample Bidding Documents – Procurement of Civil Works 12. Sample Bidding Documents – Procurement of Civil Works (Small Contracts) 13. Guide on Community Participation in Procurement D. Disbursement 14. Disbursement Letter issued by Controller’s Department 15. Loan Disbursement Handbook. May be downloaded from the following website: https://lfis.adb.org/home.asp D. General. May be downloaded from the following website: http://www.adb.org

16. Anticorruption Policy (http://www.adb.org/integrity/default.asp) 17. Anticorruption Policy: Description and Answers to Frequently Asked Questions 18. Guidelines for Economic Analysis of Projects 19. Ethnic Group Development Plan Framework 20. Environmental Assessment and Review Procedure 21. Handbook on Management of Project Implementation

http://www.adb.org/Procurement/prequalification

https://lfis.adb.org/home.asp

http://www.adb.org/

http://www.adb.org/integrity/default.asp

95

ADDENDUM NO. 1 TO PAM (14 July 2007)

After detailed discussions of the PAM during the Inception Mission (9-14 July 2007), agreement has been reached that the following revisions to the PAM are necessary to reflect the current situation:

Design and Monitoring Framework 1. Second column under Activities with Milestones should be replaced by:

Civil works contract awarded by August 2008 and completed by 2012 Equipment procured by 2011 Land acquisition and relocation commenced by March 2008 and rehabilitation measures completed by December 2009 Implementation of EIA and SDAP Implement rural road maintenance regulation as approved by GPCD Consultant recruited by 2007 and completed by 2012 Civil works contracts awarded by 2008 and completed by 2012 Township bus stations completed and open to operator and road users by 2012 An action plan prepared by June 2008 and implemented according to plan

Loan Processing History 2. Target date for Loan Agreement signing should be changed from “30 April 2007” to “November 2007”. 3. Planned loan effectiveness date of “31 July 2007”, should be replaced by “February 2008” A. Project Area and Location 4 Para. 1(i): “134 kilometers” should be replaced by “130.4 kilometers” 5. Para 1(ii): “200 township” should be preceded by “about”. C. Outputs 6. In para. 3(i): “134.4 km” should be replaced by “130.4 km”’ and“8 km” should be replaced by “9 km”. 7. In para. 3 (iii): “200 townships” should be preceded by “about”. D: Special Features 8. Para. 5(i): “classes III –IV” should be replaced by “class IV” 9. Para. 7: “200 townships” should be preceded by “about” IV. Implementation Schedule 10. Para 18: “January 2007” should be replaced by “August 2008” and “2011”

by “2012”. The revised Project implementation schedule is attached.

96

V. Consultant Recruitment 11. Para 19: In the first line, “40” should be replaced by 42”. 12. Para 19: In the 3rd line “2” should be replaced by “1”. VIII. Project Monitoring and Evaluation 13. Para 24: In second to last sentence “30 September 2007” should be replaced by “31 July 2008”.

IX. Land Acquisition and Resettlement

14. Para 25: The last sentence should be replaced by, “The construction of about 200 townships bus stations will require land acquisition totaling 53 ha.”

Appendix 1-Rural Roads Improvement Program

15. Para. 2: Insert “inclusive of land acquisition and design fee”after “($29.2 million)” 16. Table A6: “class III” in item no. 1-Wudu-Lixian should be replaced by “class

IV”. Following footnote should be added,”The ADB-approved bidding documents for local roads under Gansu 1 will be used.”

Appendix 2 – Rural Transport Services and Policy Reform 17. Para 6: The following should be preceded by “about” (i) 200 class-V, 100 in Longnan, 50 in Tianshui, and 50 in Dinxi”. In the third sentence, insert “average” before the word unit. 18. Para 6: “inclusive of land acquisition costs and design fee” should be inserted after “($10 million)” Appendix 6: Organization Chart of Changda Highway Company Ltd. (GCHC) 19. Figure 2: Attached is the updated Organizational chart of GCHC Appendix 8-Outline Terms of Reference for Consulting Services 20. Para. 1: “7,598 person-months” should be replaced by “7,600 person-

months”

21. Table 1: Summary of International Consulting Services: The “40” person-months (p-m) inputs of the Deputy Chief Engineer should be increased to “42”. While the 2 p-m inputs of Road Maintenance and Road Safety Specialists should be reduced to “1 p-m” for each.

22. Para. 14: After “knowledge learned”, insert “The staff to be nominated for training under the Project should be staff who are involved in the implementation of the Project. Staff who received training under the Project should not be transferred to other Government office within a period of 1 year after receiving the training. Furthermore,

97

he/she should conduct workshop to transfer the knowledge learned in the training to other project staff.” Appendix 10- ADB-Financed Contract Packages 23. Appendix 10- ADB-financed Contract Packages and Appendix 11-Procurement Plan have been revised (see attached revised Appendix 10 and 11). Appendix 12- Procurement under National Competitive Bidding 24. “ADB post review, if approved, prepare PCSS” should be replaced by “ADB’s review and approval of the Bid Evaluation Report is required before awarding of contracts”. Appendix 15 – Summary Resettlement Plan 25. Para 3: Second sentence should be replaced by “About 200 townships requires land acquisition of about 53 ha.”

98 Appendix 6

* Internal Audit Funtion is currently not seperated from finance division. It should be seperated, and to be reported to the Audit Committee of the Board of Director by December 2007.

Wuguan Expressway Project Office (to be Established)

Internal Organizaions and Offices

General Manager

Displinary Inspection Office

Human Rescource Department

Chief Engineer Office

Figure 2: Organization Chart of Changda Highway Company Limited (GCHC)

Liubai Expressway Project Office

Shuxu Expressway Project Office

Hetun Class II Highway Project Office

Luoding Expressway Project Office

Liugu Highway Toll Administration Office

Liubai Expressway Toll Administration Office

External Offices for Operation

External Offices for Construction

General Affair Section

Engineering Section

Land Acquisition Section

General Supervision Office

Displinary Inspection Office

Board of DirectorFinancial & Assets Department*

One-site Supervision Team Number 1

Measure Group

Bridge Group

Subgrade Group

Survey and Testing

Inspectors

Tunnel Group

Operation & Maintenance Department

Engineering Construction Department

Wuguan Expressway Project Office (to be Established)

GCHC Headquarters

Project Office

Chief Supervision Engineering Office

Leader,and

Deputy

On-site Supervion Team 2

Bridge Group

Subgrade Group

Inspectors

Tunnel Group Leader,

and Deputy

On-site Supervision Team 12

Bridge Group

Subgrade Group

Inspectors

Tunnel Group Leader,and

Deputy

Contrat Management

Chief Supervision

Engineer

Deputy Chief Engineer

(Domestic)

Deputy Chief Engineer (International)

Measurement and Payment

Survey and Testing

Measure Group Measure Group

Survey and Testing

InternationalConsultants forEnvirinment & SocialBridgeTunnel

Administration Office

Wudu On-site Office

Luotang On-site Office

99

Revised Appendix 10 ASIAN DEVELOPMENT BANK-FINANCED CONTRACT PACKAGES

No.

Description

Length

(km)

Procurement Mode

Bidding

Procedure

ADB

Review

Advertise-

ment A. Expressway Earthworks, Bridges, and Tunnels A01 K0+000~ K4+500 4.5 ICB 1S 2E Prior Feb 08 A02 K4+500~K13+500 9.0 ICB 1S 2E Prior Feb 08 A03 K13+500~K22+000 8.5 ICB 1S 2E Prior Feb 08 A04 K22+000~ K33+000 11.0 ICB 1S 2E Prior Feb 08 A05 K33+000~K40+000 7.0 ICB 1S 2E Prior Feb 08 A06 K40+000~K44+500 4.5 ICB 1S 2E Prior Feb 08 A07 K44+500~K51+000 6.5 ICB 1S 2E Prior Feb 08 A08 K51+000~K57+000 6.0 ICB 1S 2E Prior Feb 08 A09 K57+000~K61+200 4.2 ICB 1S 2E Prior Feb 08 A10 K61+200~K65+400 4.2 ICB 1S 2E Prior Feb 08 A11 K65+400~K71+000 5.6 ICB 1S 2E Prior Feb 08 A12 K71+000~K76+500 5.5 ICB 1S 2E Prior Feb 08 A13 K76+500~K82+000 5.5 ICB 1S 2E Prior Feb 08 A14 K82+000~K88+000 6.0 ICB 1S 2E Prior Feb 08 A15 K88+000~K93+000 5.0 ICB 1S 2E Prior Feb 08 A16 K93+000~K98+000 5.0 ICB 1S 2E Prior Feb 08 A17 K98+000~K102+000 4.0 ICB 1S 2E Prior Feb 08 A18 K102+000~K105+700 3.7 ICB 1S 2E Prior Feb 08 A19 K105+700~K110+000 4.3 ICB 1S 2E Prior Feb 08 A20 K110+000~K115+600 5.6 ICB 1S 2E Prior Feb 08 A21 K115+600~K120+000 4.4 ICB 1S 2E Prior Feb 08 A22 K120+000~K124+500 4.5 ICB 1S 2E Prior Feb 08 A23 K124+500~K129+000 4.5 ICB 1S 2E Prior Feb 08 A24 K129+000~K133+970 5.0 ICB 1S 2E Prior Feb 08 Subtotal (A) 134.0 B. Expressway Pavement B01 K0+000~K34+500 34.5 ICB 1S 2E Prior Feb 10 B02 K34+500~+K73+000 38.5 ICB 1S 2E Prior Feb 10 B03 K73+000~K107+500 34.5 ICB 1S 2E Prior Feb 10 B04 K107+500~K133+970 26.5 ICB 1S 2E Prior Feb 10 Subtotal (B) 134.0 C. Local Roads Financed by ADB (Wudu–Lixian) C01 K00+00~K29+00 29.0 NCB 1S 2E Prior Nov-07 C02 K29+00- K50+00 29.0 NCB 1S 2E Prior Nov-0 C03 K58+00~K87+00 29.0 NCB 1S 2E Prior Nov-07 C04 K87+00-K116+00 29.0 NCB 1S 2E Prior Nov-07 C05 K116+00-K141-00 25.0 NCB 1S.2E Prior Nov 07 Subtotal (C) 141.0 Nov-07

D. Township Bus Stations No. No. of Stations Class Procurement Mode ADB Review T01 50 in Tianshui prefecture Class-V Shopping/NCB Post T02 50 in Dingxi prefecture Class-V Shopping/NCB Post T03 100 in Longnan prefecture Class-V Shopping/NCB Post

E. Testing, Training, Laboratory, and Maintenance Equipment No. Description Procurement Mode Bidding Procedure ADB Review M01 Testing Equipment ICB 1S 1E Prior M02 Training and laboratory ICB 1S 1E Prior

F. International Consulting Services

No. Description Selection Method Type of Proposal ADB Review

S01 Supervision and training QCBS FTP Prior ICB = international competitive bidding, km = kilometer, No. = number, 1S 1E = single stage one envelope, 1S 2E = single stage two envelopes, FTP = full technical proposal, QCBS = quality- and cost-based selection method. Note for NCB- Will use standard bidding documents used for Gansu I previously approved by ADB. Bidding Document for the first batch will be submitted to ADB in Chinese language.Will use ADB-approved bidding documents under Gansu 1 for rural roads in Chinese language.

100

(Revised Appendix 11) PROCUREMENT PLAN

Table 1: Project Information

Item Information Country People’s Republic of China Name of Borrower People’s Republic of China Project Name Southern Gansu Road Development Project Loan Reference To be advised once the loan is approved by the ADB Date of Effectiveness Expected to be Feb 2008 ADB's Financing Amount US$ US$ 300 million Executing Agency Gansu Provincial Communications Department Approval Date of Initial Procurement Plan September 2006 Approval Date of Most Recent Procurement Plan July 2007 Media of Publication of Local Advertisements* To be determined (Newspaper or Website) Period Covered by this Plan July 2006 to December 2012

* General procurement notice, invitations to prequalify and to bid, calls for expressions of interest.

Table 2: Threshold for Procurement

Procurement Method Threshold (US$) ICB Works Equal or more than 10 million NCB Works Equal or more than 0.1 million and less than 10 million Shopping Works Less than $100,000 ICB Goods Equal or more than 1 million NCB Goods Equal or more than 0.1 million and less than 1 million Shopping Goods Less than $100,000

Table 3: List of Contract Packages Financed by ADB

No.

Description

Length (km)

CNY

million

$

million

Procure- ment Mode

Bidding

Procedure

ADB

Review

Advertise-

ment A. Expressway Earthworks, Bridges and Tunnels A01 K0+000~ K4+500 4.5 200.0 24.9 ICB 1S 2E Prior Feb 08 A02 K4+500~K13+500 9.0 305.0 38.0 ICB 1S 2E Prior Feb 08 A03 K13+500~K22+000 8.5 376.0 46.9 ICB 1S 2E Prior Feb 08 A04 K22+000~ K33+000 11.0 386.0 48.1 ICB 1S 2E Prior Feb 08 A05 K33+000~K40+000 7.0 379.0 47.3 ICB 1S 2E Prior Feb 08 A06 K40+000~K44+500 4.5 264.0 32.9 ICB 1S 2E Prior Feb 08 A07 K44+500~K51+000 6.5 387.0 48.3 ICB 1S 2E Prior Feb 08 A08 K51+000~K57+000 6.0 167.0 20.8 ICB 1S 2E Prior Feb 08 A09 K57+000~K65+400 4.2 420.0 52.4 ICB 1S 2E Prior Feb 08 A10 K57+000~K65+400 4.2 379.0 47.3 ICB 1S 2E Prior Feb 08 A11 K65+400~K71+000 5.6 401.0 50.0 ICB 1S 2E Prior Feb 08 A12 K71+000~K76+500 5.5 404.0 50.4 ICB 1S 2E Prior Feb 08 A13 K76+500~K82+000 5.5 390.0 48.6 ICB 1S 2E Prior Feb 08 A14 K82+000~K88+000 6.0 469.0 58.5 ICB 1S 2E Prior Feb 08 A15 K88+000~K93+000 5.0 325.0 40.5 ICB 1S 2E Prior Feb 08 A16 K93+000~K98+000 5.0 250.0 31.2 ICB 1S 2E Prior Feb 08 A17 K98+000~K102+000 4.0 204.0 25.4 ICB 1S 2E Prior Feb 08 A18 K102+000~K105+700 3.7 276.0 34.4 ICB 1S 2E Prior Feb 08 A19 K105+700~K110+000 4.3 213.0 26.6 ICB 1S 2E Prior Feb 08 A20 K110+000~K115+600 5.6 259.0 32.3 ICB 1S 2E Prior Feb 08 A21 K115+600~K120+000 4.4 297.0 37.0 ICB 1S 2E Prior Feb 08 A22 K120+000~K124+500 4.5 329.0 41.0 ICB 1S 2E Prior Feb 08 A23 K124+500~K129+000 4.5 208.0 25.9 ICB 1S 2E Prior Feb 08 A24 K129+000~K133+970 5.0 422.0 52.6 ICB 1S 2E Prior Feb 08 Subtotal (A) 134.0 7,710.0 961.3 B. Expressway Pavement B01 K0+000~K34+500 34.5 67.0 8.4 ICB 1S 2E Prior Feb 10 B02 K34+500~+K73+000 38.5 74.0 9.2 ICB 1S 2E Prior Feb 10

101

No.

Description

Length (km)

CNY

million

$

million

Procure- ment Mode

Bidding

Procedure

ADB

Review

Advertise-

ment B03 K73+000~K107+500 34.5 67.0 8.4 ICB 1S 2E Prior Feb 10 B04 K107+500~K133+970 26.3 51.0 6.4 ICB 1S 2E Prior Feb 10 Subtotal (B) 133.8 259.0 32.4

C. Local Roads Financed by ADB (Wudu-Lixian) C01 K00+00~K29+00 29.0 26 3.5 NCB 1S 2E Prior Nov-07 C02 K29+00- K50+00 29.0 28 3.5 NCB 1S 2E Prior Nov-0 C03 K58+00~K87+00 29.0 28 3.5 NCB 1S 2E Prior Nov-07 C04 K87+00-K116+00 29.0 27 3.4 NCB 1S 2E Prior Nov-07 C05 K116+00-K141-00 25.0 19 2.4 NCB 1S 2E Prior Nov 07 Subtotal (C) 141.0 128.7 16.1

D. Township Bus Stations

No.

No. of Stations

Class

Amount per

Station in $ million

Value in each

Prefecture in $ milion

Procure-

ment Mode

Bidding Procedure

ADB Review

T01 50 in Tianshui prefecture Class V 0.05 2.5 Shopping/NCB N/A Post T02 50 in Dingxi prefecture Class V 0.05 2.5 Shopping/NCB N/A Post T03 100 in Longnan prefecture Class V 0.05 5.0 Shopping/ N/A Post Subtotal (D) 10.0

E. Testing, Training, Laboratory and Maintenance Equipment **

No.

Description

CNY million

$ million

Procurement Mode

Bidding Procedure

ADB Review

M01 Testing Equipment 16.2 2.0 ICB 1S 1E Prior M02 Training and laboratory 8.6 1.1 ICB 1S 1E Prior Subtotal (E) 24.8.0 3.1

**A list of equipment will be provided in the Project Administration Memorandum (PAM). F. International Consulting Services

No.

Description

$ million

Selection Method

Type of Proposal

ADB Review

Advertisement

S01 Supervision and training 1.8 QCBS STP Prior Feb-07 ICB: International Competitive Bidding, NCB = National Competitive Bidding, km=kilometer, STP: Simplified Technical Proposal, 1S 2E = single stage two envelopes. A rate of $1.00 = CNY8.02, the rate of prevailing at project appraisal was used.

Table 4: List of Contract Packages Financed by the Government

No.

Description

Length (km)

CNY million

$ million

Mode

Bidding Procedure

ADB Review

A. Afforestation and Landscaping Works D01 Afforestation Works K0+000~K34+500 36.1 4.5 NCB 1S 1E N/A D02 Afforestation Works K34+500~+K73+000 40.2 5.0 NCB 1S 1E N/A D03 Afforestation Works K73+000~K107+500 36.1 4.5 NCB 1S 1E N/A D04 Afforestation Works K107+500~K133+970 27.5 3.4 NCB 1S 1E N/A Subtotal (A) 139.9 17.4

B. Traffic Management Facilities E01 Traffic eng facilities K0+000~K34+500 32.7 4.1 NCB 1S 1E N/A E02 Traffic eng facilities K34+500~+K73+000 36.5 4.6 NCB 1S 1E N/A E03 Traffic eng facilities K73+000~K107+500 32.7 4.1 NCB 1S 1E N/A E04 Traffic eng facilities K107+500~K133+970 24.9 3.1 NCB 1S 1E N/A Subtotal (B) 126.8 15.9

C. Toll Collection, Monitoring and Communication Systems F01 Toll, Monitoring K0+000~K34+500 44.7 5.6 NCB 1S 1E N/A F02 Toll, Monitoring K34+500~+K73+000 49.9 6.2 NCB 1S 1E N/A F03 Toll, Monitoring K73+000~K107+500 44.7 5.6 NCB 1S 1E N/A

102

No.

Description

Length (km)

CNY million

$ million

Mode

Bidding Procedure

ADB Review

F04 Toll, Monitoring K107+500~K133+970 34.1 4.3 NCB 1S 1E N/A Subtotal (C) 173.4 21.7

D. Buildings and Ancillary Facilities G01 Building Works K0+000~K30+000 28.0 3.5 NCB 1S 1E N/A G02 Building Works K30+000~K55+000 23.4 2.9 NCB 1S 1E N/A G03 Building Works K55+000~K73+000 15.9 2.0 NCB 1S 1E N/A G04 Building Works K73+000~K93+500 19.2 2.4 NCB 1S 1E N/A G05 Building Works K93+500~K113+500 18.7 2.3 NCB 1S 1E N/A G06 Building Works K113+500~ K133+970 18.9 2.4 NCB 1S 1E N/A Subtotal (D) 124.1 15.5

ICB: International Competitive Bidding, N/A = not applicable, NCB = National Competitive Bidding, km=kilometer. 1S 1E = single stage one envelope.