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Implementation Completion Report (ICR) Review - Anhui Provincial Highway Project

1. Project Data:   
ICR Review Date Posted:
Project Name:
Anhui Provincial Highway Project
Project Costs(US $M)
 453.9  486.9
Loan/Credit (US $M)
 200.0  170.6
Sector, Major Sect.:
Sub-national government administration, Roads and highways,
Law and justice and public administration; Transportation
Cofinancing (US $M)
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
08/31/2004 08/31/2005
Evaluator: Panel Reviewer: Division Manager: Division:  
Antti P. Talvitie
Roy Gilbert Alain A. Barbu IEGSG

2. Project Objectives and Components:

a. Objectives
1. To relieve traffic congestion and improve mobility and integration of inter-provincial trade, commerce and tourism between Anhui and the coastal region;

2. To improve and rehabilitate the existing national and provincial highways;
3. To improve the safety of road transport; and
4. To strengthen the institutional capacity of the Anhui Provincial Communications Department (APCD) and its related sector institutions.

b. Components (or Key Conditions in the case of Adjustment Loans):
1. Construction of the Hefei-Anqing Expressway (HAE). This component included (i) construction of a high-grade highway between Hefei and Anqing (152 km); (ii) construction of toll stations and auxiliary service and office buildings along the highway; and (iii) supply of installations of electrical, electronic, and mechanical equipment for toll collection, monitoring, telecommunications and lighting systems. USD272.7 million (74.4%) at appraisal, USD336.1 million (69.0%) at completion. [Note: the percentages in this section pertain to total project costs, excluding contingencies].
2. Highway maintenance program (HMP). This component consisted of the improvement and rehabilitation of provincial highways in Anhui as part of a program to strengthen the condition of critical road segments and promote the upkeep of the existing highway network. USD50.5 million (13.8%) at appraisal, USD108.1 million (22.2%) at completion.
3. Highway safety component for carrying out a program of improvement in highway safety in Anhui consisting of a traffic accident study and a pilot program to eliminate accident black spots. USD3.1 million (0.8%) at appraisal, USD2.84 million (0.6%) at completion.
4. Institutional strengthening through training, equipment and consultant service. This component included (i) improving capacity in APCD in highway planning and design, construction management and supervision; operations and maintenance; traffic safety; financial planning; project implementation management; and environmental protection and monitoring; and (ii) carrying out a study to improve planning, financing, management and operation of expressways and other tollways in Anhui. USD11.9 million (3.2%) at appraisal, USD8.1 million (2.2%) at completion.

In addition the project included counterpart funds for land acquisition, resettlement and retraining of persons affected by the construction of HAE; USD26.6 million (7.3%) at appraisal, USD27.2 million (5.6%) at completion. The project had a high allocation to price and physical contingencies, USD87.4 million (19%) because of the uncertainties involved in the construction of the HAE.

c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The Borrower contribution was substantial, the appraisal percentage of 56% increased to 65% at completion. But the amounts for training and studies were low. The project closed one year later than planned, mainly for difficulties in equipment procurement which the Borrower ended up self-financing.

3. Relevance of Objectives & Design:

The objectives support government objectives for the transport sector and economic development. They also were in line with 1997 and 2003 CASs, in which reducing infrastructure bottlenecks to foster economic development in interior provinces was --and remains-- an important priority. The project supported that objective through the provision of inter-provincial highway, providing access to ports and major cities in the eastern seaboard.

4. Achievement of Objectives (Efficacy) :

Objective 1, To relieve traffic congestion and improve mobility and integration of inter-provincial trade, commerce and tourism between Anhui and the coastal region was achieved at high level. A demanding and large highway project was completed on time and with good quality. The total value of goods transported to coastal provinces with deep-water ports was, in 2004, 20% higher than the appraisal estimate; also the economic rate of return is high, and the road is also financially viable.
Objective 2, To improve and rehabilitate the existing national and provincial highways was achieved at high level. The HMP program was roughly doubled because the large unallocated funds for HAE were not needed. The success of this program enticed the APCD, in departure from the practice in China, to process another loan for the rehabilitation of national and provincial highways.
Objective 3, To improve the safety of road transport was achieved at high level. The program was small, and apparently reluctantly agreed to, but the black spot improvements program resulted in halving the crash rate on the targeted road sections. The associated studies and intergovernmental work with the police led to better information base on traffic crashes and an expanded program road traffic safety in the follow-on project.
Objective 4, To strengthen the institutional capacity of the Anhui Provincial Communications Department (APCD) and its related sector institutions was substantially achieved. Again, the institutional capacity program was small, but it was completed as planned and used in the project implementation. About 1100 man-months of training was provided as planned at appraisal.

5. Efficiency:

The project is economically efficient, although the ERR for HAE at completion, 22.2%, is lower than estimated in the PAD, 25.6%. The ERR for the HMP component is also less at completion than at appraisal, 31.4% (10 road segments) vs. 37.6% (6 road segments). The reasons for slightly lower ERRs at completion were due to cost increases (for HAE) and lower than anticipated traffic growth in some road segments. Monte Carlo analyses in the ICR show that the ERRs are robust against unpredictable events. Analyses in the ICR also show that the Anhui province's highway plan is financially sound with projected increased maintenance expenditures greater than increases in network length.
6. M&E Design, Implementation, & Utilization:

The M&E design was straightforward and directly project related. There was a monitoring plan for air and water quality, noise, lead content in soil, and crops; it was carried out as planned and no violations to standards were observed. Resettlement was also monitored in accordance with RAP. Formal monitoring indicators were established for traffic volume, speeds, accidents, and training. The M&E system was utilized, as indicated. It had more value in monitoring the project performance than in implementing the project.
7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):

The project had well-managed and extensive environmental analysis and monitoring program and an extensive participatory program in resettlement and land acquisition, as explained in section 6. In procurement there were some delays. For example, due to a delay and a complaint by a losing bidder in an Electrical and Mechanical works for expressway, and further delays in resolving the issue, APCD asked the Bank to cancel the E&M works from Bank financing and decided to finance the component from its own sources.

8. Ratings:
ICR Review
Reason for Disagreement/Comments
Institutional Dev.: 
Highly LikelyHighly Likely
Bank Perf.: 
Borrower Perf.: 
Quality of ICR: 

- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.

9. Lessons:

1. A better understanding of the country's decision-making procedures concerning procurement especially will enable the project team to assess the risks better. In this project a major delay occurred in the procurement of the E&M works, which the Borrower finally asked the Bank to cancel and completed the E&M works at its own expense 10 months after opening of the expressway itself.

2. Concurrent investments in "high-class" roads, such as the HAE, and in "lower-class" roads, such as the provincial roads in the HMP, helps achieve a broader mix of benefits and a better promotion of road sector programs. This lesson is not peculiar only to China. There are several countries that favor "high-class" roads over "lower-class" roads, probably because of their importance to long distance traffic, (political) visibility, and, in some cases, difficulty to lend local governments that maybe the owners of "lower-class" roads. By experience, the documentation of high ERRs from rehabilitation and maintenance, as in the present project, while important, does not seem sufficient to gain support for lower class roads. Apparently, the APCD professionals became convinced of the value of investments in lower class roads by positive experience. The ICR indicates that the reasons were alleviation of congestion and arresting road deterioration on the lower class roads, and tolls on the high class roads. This would imply that road and traffic information is of great value in designing projects.
3. Overcoming barriers to intergovernmental cooperation, mandatory in traffic safety projects/components, yields large benefits. This lesson was clearly demonstrated by the success of the small traffic safety component, which required cooperation of the Traffic Police with APCD and support from the higher levels of Provincial Government, and reduced the crash rates by half on the target road and led to a larger component in the follow-on project. Also this lessons is not peculiar to China although intergovernmental barriers in China can be high.

10. Assessment Recommended?  No


11. Comments on Quality of ICR:

The ICR is informative, comprehensive and thorough. Its economic and financial analysis annex is exemplary.

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