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Implementation Completion Report (ICR) Review - Third Jiangxi Highway Project

1. Project Data:   
ICR Review Date Posted:
Project Name:
Third Jiangxi Highway Project
Project Costs(US $M)
 711  737
L/C Number:
Loan/Credit (US $M)
 200  187.8
Sector Board:
Cofinancing (US $M)
 0  0
Board Approval Date
Closing Date
12/31/2010 12/31/2010
Roads and highways (97%), Sub-national government administration (3%)
Trade facilitation and market access (33% - P) Infrastructure services for private sector development (33% - P) Injuries and non-communicable diseases (17% - S) Rural services and infrastructure (17% - S)
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Kavita Mathur
Robert Mark Lacey Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
According to the Project Appraisal Document (PAD, page 2), the objective of the project was to improve east-west passenger and freight flows in Jiangxi province by investing in the construction of an expressway, enhancing local roads, and strengthening highway management.

The PDO in the PAD and the Loan Agreement are identical.

b. Were the project objectives/key associated outcome targets revised during implementation?

c. Components:
The were three Components
Component A: Ruijin-Ganzhou Expressway (RGE) (appraisal cost excluding contingencies US$550 million, actual cost US$715 million). Construction of the RGE in the southern part of Jiangxi Province, including: (a) construction of about 117 kilometer of a divided, two-by-two lane, access controlled expressway between the cities of Ganzhou and Ruijin, including bridges and tunnels; (b) supply and installation of electrical, electronic, and mechanical equipment for toll collection, traffic monitoring, lighting and emergency telecommunications facilities; and (c) construction of related toll stations, interchanges, service areas, as well as facilities for highway administration and maintenance of the expressway.
Component B: Local Roads Improvement Program (LRIP) (appraisal cost excluding contingencies US$66 million, actual cost US$17 million). Development and implementation of a Jiangxi Province Local Roads Improvement Program (LRIP) to improve access in selected poor areas of the province, including: (a) rehabilitation and upgrading of the Chongyi-Fengzhou Road (about 48.5 km) and the Meicun-Longbu Road (about 34.8 km); and (b) rehabilitation and upgrading of additional selected road sections.
Component C: Institutional Strengthening (appraisal cost excluding contingencies US$10 million, actual cost US$5 million). This component consisted of four technical assistance subcomponents, intended to (i) produce a tunnel safety management plan, (ii) improve safety conditions on expressways, (iii) support the implementation of electronic toll collection for expressways, and (iv) provide training and equipment for expressway management, maintenance and environmental monitoring.

On August 14, 2009 the Board approved the restructuring of the project to reduce the scope of the Local Road Improvement Program (LRIP) component and to make related adjustments in intermediate results and indicators. The PDOs were not changed. One road section was canceled from Phase I of the LRIP, and the four road sections originally planned under Phase II were reduced to one section. The main reason for the project restructuring was the change in the investment focus of Ganzhou prefecture to act upon the State directive (2006) to implement a significant Rural Roads Pavement Improvement Program (RRPIP). The RRPIP program covered about 15,000 kilometers of rural roads and was expected to link almost all villages of this prefecture by 2010 and serve about four million villagers.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Costs: The actual project cost was US$736 million, 3.6 percent above the appraisal estimate. There were substantial variations within specific components. The cost of RGE was 14 percent higher than the appraisal cost (US$715 million actual, versus US$627 million at appraisal), because of: (i) an increase in the price of steel and (ii) the depreciation of the US dollar vis--vis the Renmimbi. The LRIP program was completed at 25 percent of the appraisal estimate due to the reduction of scope.
Financing: US$12.2 million were cancelled from the Loan.
Borrower Contribution: The Borrower contribution was US$512 million, almost identical to the amount foreseen at appraisal.
Dates: The project closed on December 31, 2010 as scheduled.

3. Relevance of Objectives & Design:

a. Relevance of Objectives:
The project's objectives are highly relevant to China's transport needs and to the Government of China's priorities in the roads sub-sector. The Government has focused on the development of the highway network for better integration of the regions in China's national economy and to promote development. The construction of the National Trunk Highway System (NTHS), comprising 12 major expressways connecting all provincial capitals and main cities is at the core of the system. Jiangxi province, in south central China is one of the lagging regions in China. The construction of the Ruijin-Ganzhou Expressway (RGE), planned to link Guangzhou and the areas east to an expressway under construction in Fujian province, was to provide a high quality transport link to the coastal and international port at Xiamen (Fujian province).
The project objectives are also fully consistent with the Bank's Country Partnership Strategy (CPS) 2006-2010 (which was current at closure), particularly in two areas: (i) reducing internal and external barriers to trade; and (ii) promoting more efficient sector management support. A World Bank Report (Working Paper 13 "China's Expressways: Connecting People and Markets for Equitable Development", Report No. 36550, May 18, 2007 ) analyzed the major positive impacts that the program has brought to China. It emphasizes that decentralization has been a key factor in the successful delivery of road network improvements.
The relevance of the objectives is high.

b. Relevance of Design:
The project components were well selected to meet the objectives. Project design appropriately balanced the physical and institutional components and the physical components included both provincial and local roads. The Results Framework (PAD page 22) discussed the objectives and clearly identified intermediate outputs such as completion of 117 km of the Ruijin-Ganzhou Expressway; improvement of 83 km of local roads in the Ganzhou City Prefecture during phase I; and successful completion of the institutional strengthening studies and staff training. These outputs could be expected to support attainment of the PDO through achievement of the main outcome indicators.
The relevance of design is high.

4. Achievement of Objectives (Efficacy) :

Efficacy of the project development objective - to improve east-west passenger and freight flows in Jiangxi province by investing in the construction of an expressway, enhancing local roads, and strengthening highway management -- is assessed as substantial.
  • The Ruijin-Ganzhou Expressway has been completed.
  • The only road project that was implemented under the revised LRIP was the rehabilitation of 48.5 km of the Chongyi-Fengzhou road.
  • Tunnel and expressway safety manuals were prepared and implemented.
  • 100 Electronic Toll Collection (ETC) lanes covering over 3,000 kilometers of expressway have been constructed and put into operation.
  • The Public-Private Infrastructure Advisory Facility (PPIAF, a multi-donor technical assistance facility) provided a grant that focused on road maintenance by micro enterprises.
  • Technical staffs from JPTD were trained in highway management, highway design and planning, financial management, highway maintenance and traffic engineering. The program comprised 172.4 person-months of training courses (150 domestic and 22.4 overseas) and 33.0 person-months of overseas tours. The ICR reports that these trained staff played an active role during the implementation of the project.
  • Although the Ruijin-Ganzhou Expressway (RGE) was completed ahead of the original schedule, the actual daily traffic volume on RGE at project closure was below the target value as shown in the table below.
    Average Daily Traffic on four section of RGE (passenger cars per day per section)
    Appraisal Target
    Actual Value
  • The main reasons are: (a) the construction of the Ruijin-Fujian border expressway (ARE) -- a vital link of the RGE, but which was not part of the project -- was delayed. At appraisal, it was expected that a BOT concession contract signed with a Hong-Kong based company would allow this section to be completed early and feed traffic to Jiangxi’s expressways. However, the BOT contractor failed to reach financial closure, leading to contract cancellation. The Jiangxi Province Communications Department (JPCD) launched construction of the expressway under its own financing and execution, after rescinding the BOT contract. The ICR reports that ARE was expected to open by the end of 2011; and (b) National Highway 323 (the section from Ruijin to Ganzhou) was reconstructed in 2005 and the road condition is good. From February 21, 2009, vehicles on this road did not have to pay toll and as a result some potential RGE traffic was diverted to National Highway 323.
  • The Task Team subsequently informed IEG that the ARE successfully opened to traffic on August 12, 2011 and the appraisal targets for Average Daily Traffic on the RGE (set out in the above table) were achieved. This was despite the fact that National Highway 323 remains toll free, primarily because of the time saved through using the RGE. Travel time between Ruijin and Ganzhou has been halved from 150 to 75 minutes, in accordance with the target.
  • With the Local Roads Improvement Program (LRIP) being reduced to only one road after the project was restructured, the overall direct benefits from this program were lower than originally expected. The average daily traffic in 2010 on the Chongyi-Fengzhou road (the one road that was financed under the program) was 2,588 vehicles per day (vpd), substantially surpassing the 1,800 vpd target. The number of days the road was closed was zero in 2010 (versus a target of 10 days) and travel time was reduced to 50 minutes (versus a target of 60 minutes). Bus frequency improved with 45 buses per day, higher than the target of 40. The ICR reports that the reduction in the number of days closed and the lower travel time has led to a significant improvement in the accessibility for the population and in trade logistics for freight.
  • The RRPIP launched by the Jiangxi Government covers close to 15,000 kilometers of rural roads, and had objectives similar to those of the LRIP. All roads considered under the project were included in the RRPIP rural roads program.
  • The implementation of the tunnel and expressway safety manuals substantially improved the capacity of the Jiangxi Province Transportation Department (JPTD) to deal with safety issues. Accident rates fell on Jiangxi Province expressway network from 7.61 per 100 million vehicle kilometers in 2005 to 5.98 (target 6.15) in 2010. Over the same period, fatalities fell from 0.37 per 100 million vehicle-kilometers to 0.22 (target 0.24). The targets for reduced accident rates on National Highway 323 were partially met. The ICR reports that there were large yearly variances in accident and fatality rates which make the data difficult to interpret.
  • The ICR (page 9) reports JPTD as stating that the introduction of Electronic Toll Collection lanes has reduced corruption in toll collection, and has led to significant improvement in the management of Jiangxi’s road network. The ICR does not provide more precise information.
  • The PPIAF grant has raised awareness of the potential for the use of microenterprises in road maintenance. It resulted in the preparation of a compact disc with road maintenance data from Ganzhou County, and technical and managerial manuals for routine maintenance teams and a guide for implementing team-based routine maintenance.

5. Efficiency:

The overall ex-post Economic Rate of Return (ERR) was 14.4 percent, close to the appraisal estimate of 14.2%. The analysis assumes that full benefits started to accrue in 2010 for twenty years and uses a 12 percent discount rate. The ex-post economic analysis updated the main inputs of the appraisal model to reflect current status: (i) actual construction costs; (ii) actual construction cost distribution; (iii) actual traffic; and (iv) revised traffic growth rates. Project benefits consisted of savings in vehicle operating costs, travel time savings, and reduction in accident costs. The ERR of the Ruijin-Ganzhou Expressway (RGE) is 14.1 percent, close to the appraisal estimate of 14.2 percent. The RGE was completed ahead of the original schedule, though its cost was 14 percent higher than the appraisal estimate (US$715 million actual, versus US$627 million), because of: (i) an increase in the price of steel and (ii) the depreciation of the dollar vis--vis the Renmimbi.

The ERR of the Chongyi - Fengzhou LRIP road is 32.3 percent, which is considerably higher than the appraisal estimate (16.3 percent) due to lower construction costs and higher traffic.

The actual total project cost was US$736 million, 3.6 percent above the PAD estimate. The project closed on schedule.

Overall, efficiency is rated substantial.

a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:

Rate Available?
Point Value
ICR estimate:

* Refers to percent of total project cost for which ERR/FRR was calculated

6. Outcome:

The project substantially attained its objectives. The Ruijin-Ganzhou expressway met its targets in terms of both average daily traffic and reduced travel time, although this achievement was delayed by the late opening of the Ruijin-Fujian border expressway. The one road financed under the LRIP achieved its traffic and travel time targets. Data reflecting improved highway management (enhanced safety and higher toll collection) are generally positive, though accident rate information on National Highway 323 is difficult to interpret. Efficiency was substantial – the ERR exceeded that at appraisal, total project cost was close to the original estimate, and the project closed on schedule. With high relevance, overall outcome is assessed as satisfactory.

a. Outcome Rating: Satisfactory

7. Rationale for Risk to Development Outcome Rating:

The risk to development outcome is rated "negligible to low" for the following reasons:
  • A dedicated Maintenance Management Unit for the RGE Maintenance was established in March 2009. The Unit comprises several maintenance teams located near some of the interchanges and has the capacity to properly manage the RGE. The unit took over maintenance responsibilities in May 2009.
  • The Ganzhou city prefecture is responsible and has the necessary capacity for the maintenance of the LRIP Chongyi-Fengzhou road.
  • The sustained growth of the Chinese economy and the corresponding high growth in road transport further ensure that there is little risk to the project’s development outcome through reduced demand.

    a. Risk to Development Outcome Rating: Negligible to Low

8. Assessment of Bank Performance:

a. Quality at entry:
Project design benefited from the Bank's experience with the preceding Second Jiangxi Highway Project (JPH2) that was underway when the preparation of this project started. There was continuity in staffing, as most of the Bank team involved with the project had also been involved with JPH2. Bank performance during identification, preparation, and appraisal of the project was satisfactory. Safeguards were appropriately identified. The institutional strengthening component was built on the achievements of two previous Bank highway projects in Jiangxi Province. The lessons of other highway projects in China were incorporated in project design. The most important of these were: (i) the development plans of large urban centers should be incorporated early in the project design of national and provincial transportation links; (ii) early preparatory work, including land acquisition, resettlement, environmental impact and design studies contributes to project readiness; and (iii) it is important to ensure client ownership of the institutional components. The M&E framework was satisfactory, most indicators were measurable, had baseline values, and were based on data regularly collected by the JPTD. Most risks were adequately identified and mitigated. However, the risk that the construction of the Ruijin-Fujian border expressway (ARE) -- a vital link of the Ruijin-Ganzhou Expressway (RGE) - would be delayed was not fully analyzed at appraisal. Given the critical importance of the expressway in the realization of the project's outcomes, the case warranted more than the usual degree of due diligence. The BOT contract was signed but it failed to reach financial closure. The region clarified that: (a) With respect to financial due diligence, the Jiangxi government had conducted its own diligence and found the company capable of carrying out the contract; (b) the Bank has no authority to undertake forensic analyses of private companies, particularly those based outside of mainland China. The task team therefore limited to being able to confirm that there was an appropriate contract in place, signed and which the Government of Jiangxi confirmed was with a company with the fiscal and technical capacity to implement the BOT. The Bank had no reason to doubt the government’s due diligence; and (c) Implementation of key inter-provincial expressways plays a key role in the NTHS. The ARE link is monitored not only by the respective state government, but by the central government as well. The probability that such a link will not be completed, or will be severely delayed, is close to nil. This mean that the risks that the ARE, should the BOT contract fail, would be significantly affected, was very low."

The introduction of Jiangxi’s RRPIP program , which reduced the size of LRIP was not foreseen at appraisal. There was no information at the time about the Jiangxi-wide RRPIP program. The PAD notes that the LRIP was part of the five-year highway improvement program of Ganzhou City Prefecture. According to the Task Team, the RRPIP stemmed from a Central Government Directive, the detailed implementation plan of which had not yet been fully released and agreed upon with local governments at the time of negotiations.

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:
The project was adequately supervised with an average of two missions per year, plus short visits as required by specialists in the Country Office. The ICR reports that the Bank supervision team provided detailed recommendations in every aspect of the project, with a view to optimizing project outcome. On RGE, supervision missions provided detailed recommendations, especially on safety. On LRIP, the mission devoted considerable time to dealing with project restructuring and procurement issues. On the institutional strengthening program, the missions provided detailed comments that resulted in a substantial improvement in the initial orientation, scope and the method of analysis of the various activities (ICR, page 12). The missions emphasized the need for the studies to produce practical recommendations, and, recommended carrying out a stakeholders’ seminar, which was well attended and successful. The ICR reports that "the Bank team placed detailed attention to environmental and social safeguards issues".

Quality of Supervision Rating: Satisfactory

Overall Bank Performance Rating: Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
Jiangxi Government commitment towards the project was strong. It supported the objectives and the implementation of the components as well as provided adequate and timely funding for the preparatory activities. During preparation, stakeholders were involved and their views are reflected in the design.
Jiangxi government provided counterpart funding for the RGE as required, allowing this expressway to be implemented without delays and opening ahead of time. Jiangxi government was also instrumental in the support given to environmental protection by providing additional financing and the procedures developed during the project became standard practice for all future expressway development in the Province.

Government Performance Rating: Satisfactory

b. Implementing Agency Performance:
Jiangxi Province Transportation Department (JPTD) was responsible for implementation of the RGE and the Institutional Strengthening Program (ISP). JPTD management and staff were dedicated to the execution of the RGE, and their early preparation and bidding processes allowed the construction of the RGE to be started in May 2007, just three months after the project loan was declared effective, and to be completed six months ahead of schedule. Although there were delays in starting the institutional strengthening program, all activities under the program – training, tunnel safety, traffic safety, electronic toll collection, and equipment acquisition – were carried out. JPTD paid adequate attention on environmental concerns, implementation of resettlement, and HIV/AIDS prevention work.
The Ganzhou City Prefecture (GCP) was the implementing agency for the LRIP component. In one case it did not follow Bank guidelines, requiring the Bank to declare misprocurement and the cancellation of the Chongyi-Longgou road sub-component. The GCP was also erratic in the submission, and later replacement of candidate roads under the LRIP component. Because of the autonomous nature of the GCP, JPTD had little control power over its decisions.

Implementing Agency Performance Rating: Satisfactory

Overall Borrower Performance Rating: Satisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:
M&E design included appropriate outcome indicators for both the Ruijin-Ganzhou corridor and the road sections of the Local Roads Improvement Program. In the Ruijin-Ganzhou corridor, the outcome indicators were: (a) increased average daily traffic; (b) decreased accidents on the existing road G323; and (c) decreased travel time from Ruijin to Ganzhou. For Local Roads Improvement Program the outcome indicators were: (a) increased average daily traffic; (b) reduced number of days closed; (c) reduced travel times; and (d) increased bus services. Baseline values were established and targets were set at appraisal. Most indicators were measurable and were based on data regularly collected by the JPTD, which was responsible for implementing the M&E system.

b. M&E Implementation:
The ICR reports that all indicators were monitored during project implementation and periodic reports were provided by JPTD to the Bank.

a. M&E Utilization:
The ICR reports that JPTD utilized indicators to assess project progress and to keep provincial authorities informed of the results.

M&E Quality Rating: Substantial

11. Other Issues:

a. Safeguards:
The project was classified as "Category A" and triggered the Bank's safeguard policies for Environmental Assessment (OP 4.01) and Involuntary Resettlement (OP 4.12).

Environmental Safeguards: The Environmental Impact Assessment (EIA) and the Environmental Management Plan (EMP) were reviewed by the Bank at appraisal and found to be satisfactory. According to the EIA, the potential environmental impacts during the construction of the expressway and the other roads were: increase in noise, increase in soil erosion and generation of dust during construction and transportation of materials.
The ICR Reports that project implementation adhered to the requirements specified in the EMP and also adopted a number of measures to mitigate environmental impacts (e.g., slope protection and vegetation restoration, farmland protection and creation, ecology education, air pollution prevention, water and land pollution prevention).

Social Safeguards: According to the ICR, the Resettlement Action Plan (RAP) for the RGE complied with the Bank's on Involuntary Resettlement policies (including public consultation) and with the relevant Chinese laws. Land acquisition and resettlement were carried out without major issues. A special effort was made to reduce the amount of house demolition. Compensation was paid in a timely manner; the total amount paid was higher than anticipated, mainly because more land was reclassified as farmland than originally expected. The number of people affected by land acquisition and resettlement for RGE construction were 7,599 compared to the appraisal estimate of 7,826. The Center for Involuntary Resettlement Research at Wuhan University carried out surveys that showed that people affected by resettlement improved their standard of living. Persons affected by structure demolition were relocated to newly built houses. The average living area per household increased by 17 percent and the percentage of good quality houses (brick and concrete) increased by 38 percent. The ICR (page 7) reports that resettlement activity on the Chongyi-Fengzhou road was small, and was effectively carried out.

b. Fiduciary Compliance:
Fiduciary: The project had an adequate financial management system. Annual audits were carried out in a timely manner. The ICR reports that all audit reports were unqualified, reviewed and considered acceptable by the Bank.
Procurement: Procurement was mostly undertaken in accordance with Bank procurement guidelines. However, there was one irregularity. Award of a contract for construction of an LRIP road did not follow Bank guidelines. The Bank declared misprocurement and cancelled US$5 million of the loan that had been allocated for the road.

c. Unintended Impacts (positive or negative):
The ICR reports that the environmental protection practices promoted under this project were acknowledged by the provincial leaders and have been made "standard" for all future Jiangxi expressway development projects. The HIV/AIDS activities under the project covered over 20,000 construction workers and villagers, and led to a significant increase in the awareness of HIV/AIDS; reduced stigmatization of attitudes towards HIV-infected people; reduced risky behavior among non-marital relationships; and increased condom use amongst construction personnel by 100 percent.

d. Other:

12. Ratings:

IEG Review
Reason for Disagreement/Comments
Risk to Development Outcome:
Negligible to Low
Negligible to Low
Bank Performance:
Borrower Performance:
Highly Satisfactory
The Ganzhou City Prefecture (GCP) was the implementing agency for the LRIP component. In one case it did not follow Bank guidelines, requiring the Bank to declare misprocurement and the cancellation of the Chongyi-Longgou road sub-component. The GCP was also erratic in the submission, and later replacement of candidate roads under the LRIP component.  
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.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:
The following lessons have been taken from the ICR with some adaptation:
  • Implementation of rural roads components requires close cooperation between provincial and local government authorities. The problems experienced with the Ganzhou municipality in the design and implementation of the LRIP component suggests that the provincial highway agency did not have enough authority to ensure that the local government would comply with the requirements of the project, especially as regards to procurement.
  • Highway projects can, during implementation, generate important social benefits, through well designed and implemented social policies. Employment is a prime benefit for the population in the area during the construction of a highway or other civil works. Substantial additional benefits can also occur such as improved health from the HIV/AIDS focused intervention with construction workers and residents. Achieving such additional benefits requires well designed and implemented social policies.

14. Assessment Recommended?


15. Comments on Quality of ICR:

The ICR is written in a clear and balanced manner and provides appropriate evidence for its conclusions and ratings. The quality of the ICR is rated Satisfactory

a. Quality of ICR Rating: Satisfactory

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