AAJ §7/63~ $7 /f -Documut of

The World Bank

FOR OMCAL USE ONLY

Report ND. P-6080-CH&

MEMORANDUM ATND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO $255 MILLION

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR A

SICHUAN GAS DEVELOPMENT AND CONSERvATION PROJECT

FEBRUARY 17, 1994

MICROGRAPHICS

Report No: P- 6080 CHAType: MOP

This document has a restricted distroution and may be used by ecipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bankl authorization.

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CURRENCY EOUIVALENiTS(as of January 1994)

Currency Name - Renminbi (RHB)Currency Unit - Yuan (Y)

1 Yuan - 100 fenY 1.00 - $0.11

$1.00 - Y 8.7

WEIGHTS AND MEASURES

1 meter (m) - 3.28 feet1 square meter (m2 ) - 10.76 square feet

1 cubic meter (m3 ) - 35.3 cubic feet1 kilometer (km) - 0.62 miles1 hectare (ha) - 10,000 square meters

ABBREVIATIONS AND ACRONYMS

bcm billion cubic metersCNPC China National Petroleum CorporationESMAP Energy Sector Management Assistance ProgramGEF Global Environment FacilityGET Global Environment Trust FundJGF Japanese Grant Facilitymcm thousand cubic metersMOPI Ministry of Petroleum IndustryPMO Project Management OfficePRIF Preinvestment FacilitySPA Sichuan Petroleum AdministrationUNDP United Nations Development Programme

FISCAL YEAR

January 1 - December 31

FOR OMCAL USE ONLY

CHINA

SICHUAN GAS DRVELOPHENT AND CONSERVATION PROJECT

Loan and Prolect Summarv

Borrowers People's Republic of China

Beneficiaries: China National Petroleum Corporation (CNPC) andSichuan Petroleum Administration (SPA)

Amount: $255 million equivalent

TenMjs 20 years, including 5 years of grace, at the Bank's stan-dard variable interest rate

Onlendint Terms: $250 million and $5 million would be relent to SPA andCNPC, respectively, on the some terms and conditions asthe Bank loan. SPA and CRPC would bear the commitmentcharges and foreign exchange risks.

Financina Plan: Local Foreign Total----- ($ million) --

Global EnvironmentTrust Fund 0.0 10.0 10.0

SPAICNPC 500.4 179.7 680.2IBRD 0.0 255.0 255.0

Total /a500.4 444.7 945.2

Economic Rateof Return: 24 percent

Poverty CategorY: Not applicable

Staff AnnraisalRetort: Report No. 12265-CHA

Haps: IBRD Nos. 25137 and 25138

.La Figures may not total exactly due to rounding.

This document has a restricted dist ibution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Ranlc authorization

MEMORANDUM AND RECOMMENDATION OF THEPRESIDENT

OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTTO THE EXECUTIVE DIRECTORS

ON A PROPOSED LOANTO THE PEOPLE'S REPUBLIC OF CHINA

FOR A SICHUAN GAS DEVELOPMENT AND CONSERVATION PROJECT

1. I submit for your approval the following memorandum and recommenda-tion on a proposed loan to the People's Republic of China for $255 millionequivalent to help finance a Sichuan Gas Development and Conservation Project.The proposed loan would be at the Bank's standard variable interest rate, witha maturity of 20 years, including 5 years of grace. An amount of $250 millionand $5 million would be relent to the Sichuan Petroleum Administration (SPA)and the China National Petroleum Corporation (CNPC), respectively, at theBank's standard variable interest rate; the maturity would be 20 years,including 5 years of g-ace. SPA and CNPC would bear the commitment chargesand foreign exchange risks. Separately, an amount of SDR 7.3 million($10 million equivalent) grant from the Global Environment Trust Fund (GET)has been approved, subject to the approval of the proposed Bank-financed proj-ect.

2. Background. Coal will inevitably continue to be the domiuant energysource for China, accounting for some 74 percent of its commercial energyconsumption. Nevertheless, at the margin, rational exploitation of naturalgas would provide a cleaner and more efficient fuel and feedstock option tomeet the growing needs of an industrial economy. However, despite China'shigh natural gas potential, the share of gas in its commercial energy hasremained very small (2 percent). Gas exploration and development have beeninadequate mainly due to past neglect, financing constraints, and limitedaccess to advanced technologies. About 44 percent of natural gas productionin China is nc-nassociated gas, 90 percent of which is located in SichuanProvince. Since the growth of gas supply has not kept pace with demand fueledby rapid econoJmic growth, gas shortages are acute in Sichuan. As part of acoherent energy and environmental strategy in China, the proposed operationwould support economic and %fficient supply and use of natural gas. Further,this operation is consistent with the government's regional development policyto redu:e the disparity of regional income by supporting sustainable economicdevelopment in Sichuan, one of the poorest provinces in the country. It is inthis context that the government has placed high priority on this operation.

3. China's energy consumption per capita is low, but consumption perunit of GNP is relatively high. Efforts to improve the efficiency of energyuse have been a cornerstone of the country's energy policy. During the lastdecade, China's energy intensity per unit of GNP fell by 30 percent in realterms, and the elasticity of growth in energy use relative to GNP growth wasabout 0.5. Nevertheless, further improvements in energy efficiencies arecrucial for sustaining both economic development and reduction of air pollu-tion and greenhouse gas emissions. This would require further improvements inboth technical energy efficiencies and the economic environment which defines

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enterprise incentives to use energy-efficient technology. In particular,rationalization of energy pricing policy and enterprise reform are essential.

4. As part of the latest reform initiatives to transform the countryinto a market-based economy, liberalization of both coal and oil prices isplanned to be completed within three years. Moreover, average levels of natu-ral gas well-head prices were increased by some 50 percent in 1992. However,to mobilize the necessary resources for sector development and to provide ade-quate incentives for efficient supply and consumption of gas, the averagelevels of well-head prices in Sichuan would have to be increased by at least20 percent. Further, the structure of gas pricing would need to be improvedthrough gradual reduction, if not removal, of cross subsidies between thedifferent categories of consumers.

5. Within the broad framework of economic and enterprise reform in thecountry, the government's inteution to carry out a restructuring program forthe oil and gas sector has been confirmed in a policy letter to the Bank fromthe Ministry of Finance. Tla China National Petroleum Corporation (CNPC) isresponsible for all the state-owned onshore petroleum exploration and develop-ment activities in China; it is faced vith the challenge to implement a far-reaching restructuring program. In this connection, CNPC has soaght out theadvice of the international community, notably the Bank, through such vehiclesas a workshop on petrolerum sector management and reform held in China in July1992 under the joint sponsorship of CNPC and the Bank/Energy Sector ManagementAssistance Program (ESMAP). Consistent with the recommendations of this work-shop, remarkable progress has recently been made in resolving key policyissues in the sector, including rationalization of energy pricing policy andfurther opening up of petroleum concessions (notably the promising TarimBasin) for foreign direct investment.

6. To build on knd accelerate the reform momentum, CNPC is in the pro-cess of preparing a comprehensive action plan within the broad framework ofthe sectoral restructuring program. A local study team (comprised of CNPC andothesr relevant government agencies) is collaborating with the Bank and inter-national consultants financed under the Japanese Grant Facility (JGP) to carryout a study which would provide an analytical framework for building consensuson the detailed reform program. This study, which is scheduled for completionby end-1994, would focus on the following aspects: (a) the establishment ofan appropriate legal and regulatory framework for the oil and gas sector;(b) competition policy and market development; (c) CNPC institutional restruc-turing, including commercialization and corporatization of CNPC entities, anddiversification of ownership and financing; and (d) training. The first phaseof the study would develop pilot reform programs for the restructuring of twoof CNPC's subsidiaries, the Sichuan Petroleum Administration (SPA) which isthe major beneficiary of the project, and Dagang Petroleum Administration.These pilot programs would be implemented during the second phase of thestudy, and the recommendations emerging from this study would take intoaccount the experience of the pilot programs.

7. Lessons from Previous Bank Operations. Bank participation in thegas sector in China has thus far included two operations which were completedrecently: Weiyuan Gas Field Technical Assistance Project (Loan 2580-CRA) andLiaodong Bay Petroleum Appraisal and Technical Assistance Project (Loan 2708-

- 3 -

CIA). The lessons learned from these projects include: (a) streamlined pro-curement arrangements would contribute to timely project implementation; (b)delays in the implementation of institution building components could be miti-gated through reaching agreements on the training ,rograsm and the Terms ofReference for consultant services no later than negotiationst and (c) strongproject management offices with adequate staff to provide requisite coordina-tion among multiple agencies are crucial for efficient project implementation.

8. In addition, "A Review of World Bank Lending for Natural Gas"(Report No. 10828) indicated the following principal lessons: (a) the Bank'sassistance has had most impact on improving the technical capacity of gasinstitutions, particularly where there were twinning arrangements with aninternationally experienced foreign operating company or gas utility; and (b)a major weakness of the Bank's institutional development apprcatch was itsstrategy of trying to do everything at once; a more long term view was needed,given that the goals of institutional development generally will not beachieved within the time span of one project. The design of the proposedproject has built on all of these lessons.

9. Rationale for Bank Involvement. Consistent with the Bank's CountryAssistance Strategy for CNIna, as presented to the Board in August 1993, theproposed project is part o the Bank's multidimensional assistance to Chinadesigned to promote efficiency gains and sustainable development through eco-nomic policy and enterprise reforms as well as alleviation of energy shortagesin an environmentally sound manner. During the course of project preparaticu,the Bank has engaged in an active policy dialogue with the Chinese authoritieswho are committed to a far-reaching reform program in the oil and gas sector.In particular, the Bank was instrumental in effecting up-front actions inimprovements of the sectoral policies for pricing and foreign direct invest-ment. Further, as a first step toward corporatization and transparency inseparation of ownership from management, a board of directors would be estab-lished in SPA. Moreover, Bank participation in the conceptualization of thisproject has contributed to growinig appreciation of the Chinese authorities foran increased emphasis on natural gas development and conservation on botheconomic and environmental grounds. The Bank has also contributed to improve-ments in the project design through the initiation and monitoring of variouspolicy and preinvestment studies. Finally, the proposed operation would sup-port the implementation of the first phase of restructuring the upstream oiland gas sector. The good practices learned under this project would have asignificant demonstration effect for the reforms of other public enterprisesin China.

10. Rationale for GEF Fundint. Based on the results of a recently com--pleted diagnostic study financed under the GEF (Global Environment Facility)Preinvestment Facility (PRI), an amount of SDR 7.3 million ($10 million equi-valent) grant from the Global Environment Trust Fund (GET) would help financethe much needed rehabilitation of SPA's transmission and distribution system.The environmental benefits of this project component are clear in that reduc-tions in natural gas leaks will reduce fugitive methane emission, a potentgreenhouse gas. Global warming concerns are directly addressed since fugitivemethane enters the atmosphere where its global warming potential is some 20times that of CO2. Successful implementation of this project component would

- 4 -

have a significant demonstration effect for other gas transmission and distri-bution systems In China and other developing countries.

11. Proiect Obiectives. The proposed project aims to: (a) support theimplementation of the upstream oil and gas sector restructuring; (b) ratio-nalize both the levels and structure of gas pricing; (c) promote rational gasallocationg (d) reduce acute gas shortages and eavironmental degradation inSichuan through increased gas production (and avoidance of coal consumption)and energy coaservation, including reduction of gas lea:ages (which would, inturn, reduce the emissions of methane and greenhouse gas effect); (e) improvethe officioeuy of gas production snd enhance the ultimate gas recovery andresources conservation through sound reservoir management and state-of-the-artenhanced gas recovery technologyt (f) enhance the safety, reliability andoperational efficiency of the gas transmission and distribution system; and(g) strengthen the institutional capabilities of CNPC and SPA.

12. Pro1ect Descriotion. The project would comprise three main compo-nentss (a) a resetructuring comoonent--implementation of the first phase ofrestructuring the upstream oil and gas sector, based on the recommendations ofan ongoitg restructuring study, including commercialization andcorporatizatiou of CNPCISPA through their transformation into joint-stockcompanies, Introduction of a commercial accounting system and Implementationof productivity enhancement and related human resources development programs;(b) an investment comgonent (98 percent of project cost)--including gas fielddevelopment in Bastern Sichuan through the drilling of about 100 wells, seis-mic survey and interpretation, and construction of related surface facilities(62 percent); gas field stimulation and rehabilitation of about 90 w.lls inEastern Sichuan and 100 wells in Central Sichuan (15 percent); and expansion(9 percent) as well as rehabilitation and environmental upgrade (12 percent)of SPA's gas transmission and distribution system; and (c) an institutionbuilding comnonent (2 percent)--technical assistance and training for theimplementation of the above two components as well as for national petroleumeducation to upgrade the teaching and research capabilities of the localpetroleum institutes and develop exchange programs between the local and for-eign institutes.

13. Pro1ect Im2lementation. SPA would be responsible for the implemen-tation of the gas field development and transmission components and CNPC forthe petroleum education component. SPA has e3tablished a Project ManagementOffice (PHO), including a procurement unit, to coordinate the various projectcomponents.

14. Prolect Sustainability. The sustainability of the proposed gassupply component is critically dependent on the quantities of gas reserves andrationalization of pricing policy. The quantities of commercially recoverablegas reserves expected to be derived from the project have been certified by anindependent international consultant under the gas reserve assessment study.Further, assurances have been obtained from the government on the implementa-tion of a reform action plan for the rationalization of gas pricing and allo-cation criteria. In addition, the Chinese authorities are committed to theimplementation of the restructuring component under the project. Finally, theproject vouli provide for technical assistance and training for project imple-

mentation. All these measures will contribute toward the project's sustain-ability.

15. Project Cost and Financing. The total project cost (excluding in-terest during construction) is estimated at $877.9 million equivalent, with aforeign exchange component of $377.& million equivalent (43 percent). Thetotal financing required, including interest during construction ($67.3 mil-lion), is $945.2 million equivalent. The total foreign exchange requirementsare estimated at $444.7 million, of which $255 million would be financed underthe proposed Bank loan and $10 million from the GET. The balance of the for-eign exchange requirements would be financed by CNPC's own resources. Localcounterpart funding would be financed by SPA's internal cash generation. Abreakdown of project cost end the financing plan are shown in Schedule A.Retroaetive financing of up to $10 million would be provided for expendituresincurred after September 30, 1993, covering urgently needed goods, technicalassistance and training required for detailed pro4ect design and implementa-tion. Amounts and methods of procurement and of disbursements, and the dis-bursement schedule are shown in Schedule B. A timetable of key project pro-cessing events and the status of Bank Group operations in China are given inSchedules C and D, respectively. Maps on China's oil and gas resources andthe project location (IBRD Nos. 25137 and 25138) are also attached. The StaffAppraisal Report, Report No. 12265-CHA, dated February 17, 1994, is beingdistributed separately.

16. Agreements Reached. During negotiations, assurances were obtainedfrom the borrower that it would. (a) implement an agreed gas allocation andpricing reform action plan, satisfactory to the Bank; (b) revise and adoptsector specific accounting standards for the oil and gas sector consistentwith international accounting standards; and (c) onlend the proceeds of theloan to CNPC and SPA under arrangements satisfactory to the Bank. In addi-tion, assurances were obtained from CNPC and SPA that they would carry outtraining in accordance with a progiam agreed with the Bank. Furtherassurances were obtained from SPA that it would: (a) maintain a rroject man-agement office with staffing and functions satisfactory to the Bank; (b) carryout an environmental managea4nt program satisaactory to the Bank, includingthe implementation of a regular gas leak detection and maintenance program;(c) furnish to the Bank an action plan to strengthen its internal audit func-tion and implement the plan thereafter, taking into account the Bank's com-ments; (d) annually furnish to the Bank the rolling long-term financial plansof SPA; (e) take all measures, including but not limited to price adjustments,to allow SPA to cover its full operating costs and debt service requirements;help finance a major porticn (no less than 50 percent) of its future invest-ment program; and achieve a financial rate of return of no less than 12 per-cent (in real terms) under the proposed project.

17. Execution of the subsidiary loan agreements between the Governmentand CNPCISPA, satisfactory to the Bank, would be a condition of loan effec-tiveness. In addition, arrangements to ensure the safety of the expansion ofthe gas transmission and distribution system, satisfactory to the Bank, wouldbe a condition of disbursement for this component.

18. Environmental Aspects. The proposed project would result in signif-icant enviromental benefits; increased gas supply and utilization would

- 6 -

reduce coal consumption, which would in turn reduce emissions of SO2, C02, sadparticulates. In addition, reduced gas leakages in the trLnsmission and dis-tribution systems would reduce emissions of methane, a potent greenhouse gas.Chinese regulation requires the preparation of an environmental assessment(EA) report at the time of project design. The EA report of the project,wbich was prepared with the assistance of TCC-financed international consul-tants, was satisfactory. As part of the environmental assessmunt process,mitigating measures for possible environmental impacts have been developed; acomprehensive program of environmental management would be implemented underthe project.

19. Project Benefits. The proposed project has been designed to promotesustainable development through institutional restructuring and alleviation ofenergy shortages in an environmentally sound manner. The investment componentwould result in incremental gas production which would help offset the naturaldecline of aging fields in Sichuan. The economic rate of return has beenconservatively estimated at 24 percent. In addition to quantifiable economicbenefits, the project wculd lend added momentum to policy and enterprisereforms as well as human resources development in the sector. Further, envi-ronmental degradation aid health concerns (notably respiratory diseases) wouldbe mitigated under the project througa the substitution of coal (2.9 milliontons per annum) by gas.

20. Risks. Gas field development in Sichuan faces relatively high geo-logical and technical risks mainly due to complex geology ard difficult oper-ating conditions. These risks would be mitigated by the provisions of appro-priate modern technology and equipment under the project. Further, to mini-mize the risks related to the uncertainties of economically recoverable gasreserves, a techno-economic preinvestment study on gas reserve assessment anddevelopment plan optimization has been undertaken with the assistance of in-ternational consultants. To reduce the riaks of delay in implementation ofthcs project, an agreement has been obtained from the Chinese authorities tomaintain satisfactory arrangements for project management. Moreover, therequisite technical assistance and training in project implementation would bepjrovided under the project.

21. 1 am satisfied that the proposed loan would comply with the Articlesof Agreement of the Bank and recommend that the Executive Directors approvethe proposed loan.

Lewis T. PrestonPresident

Attachments

Washington, D.C.February 17, 1994

- 7 - Schedule A

CHINS

SMCJfN GAS DEVELOPMENT AND CONSERVATION PROJET

Estimated Costs and Pinancing Plan($ tillion)

Local Foreign Total

Estimated Costs:

Gas field development- Drilling 195.4 130.6 326.0- Seismic surveys 19.4 11.1 30.5- Surface facilities 22.0 21.3 43.3

Gas dehydration & desulfurization 32.2 18.9 51.1Gas field stimulation & rehabilitation 68.1 24.1 92.2Gas transmission expansion 34.5 24.9 59.4Gas transmission rehabilitation 24.4 42.7 67.1Gas transmission environmental upgrade 3.5 16.1 19.6Technical assistance & training 0.7 13.8 14.5

Base Cost 400.2 303.5 703.7

Physical contingency 40.0 30.3 70.4Price contingency 60.2 43.6 103.8

Total Prolect Cost la 500.4 377.4 877.9

Interest during construction Lb_ 0.0 67.3 67.3

Total Financina Reguired 500.4 444.7 945.2

Financing Plan:

GET 0.0 10.0 10.0SPA/CNPC 500.4 179.7 680.2IBRD 0.0 255.0 255.0

Total La 500.4 444.7 945.2

/a Project-financed goods are exempt from import duties and taxes.lb Interest during construction (IDC) is based on onlending rates for pro-

jected disbursement of loan proceeds. Foreign exchange portion of IDC isbased on the Bank's standard variable interest rate.

Lc Figures may not total exactly due to rounding.

Schedule BPage 1

CHIIJ

SICIUAN GAS DEVELOPMENT AND CONSERVATION PROJECT

Procurement- Method and-Disbursemge_ts($millior.)

Procurement methodItem ICB other la NBF Lk Tota

Civil Works

Well access road & drilling sites - - 30.4 30.4Field surface facilities - - 38.2 38.2Gas transmission & distribution - - 63.3 63.3

Sgu±iment and Materials

Field development drilling& rehabilitation 102.1 18.7 145.8 266.6

(102.1) (18.7) (120.8)Seismic survey

8.0 5.8 2.0 15.8(8.0) (5.8) (13.8)

Gas treatment & surface facility19.5 - 82.2 101.7(19.5) (19.5)

Gas transmission & distribution76.3 - 36.0 112.3(76.3) (76.3)

Technical Services /¢- 7.0 224.2 231.2

(7.0) (7.0)Consultancv and Training

Capacity building- 4.3 0.3 4.6

(4.3) (4.3)Project implementation support

_ 0.5 0.2 0.7(0.5) (0.5)

Training- 12.8 0.3 13.1

(12.8) (12.8)Total

205.9 49.1 622.9 877.9(205.9) 49.1 (255.0)

Note: (1) Figures in parenthesis are amounts to be financed by the Bank.(2) Figures may not total exactly due to rounding.

la Other procurement methods include limited international bidding, directpurchase, shopping and consultant services (recruited in accordance viththe Bank's Guidelines) and training.E NBF denotes non-Bank financing.Technical Services include directional drilling, electric logging, wellconnecting, production and stimulation.

_ 9 _ Schedule BPage 2

DisbursementCategory Amount Expenditures to be financed

($ million)

Goods and technicalservices 214.8 100 percent of foreign expendi-

tures, 100 percent of localexpenditures (ex-factory) and75 percent of local expendi-tures for other items procuredlocally

Consultants' services andtraining 15.2 100 percent of expenditures

Unallocated 25.0

Total 255.0

'stimated disbursementsBank FY 1995 1996 1997 1998 1999 2000 2001

---------------------- ($ million) ----------------------

Annual 25.0 50.0 55.0 45.0 35.0 25.0 20.0Cumuletive 25.0 75.0 130.0 175.0 210.0 235.0 255.0

- 10 - Schedule C

CHINA

SICHUAN GAS DEVELOPMENT AND CONSERVATION PROJECT

Timetable of Key Proiect Processint Events

Time taken to prepare: 2 years

Prepared bys Sichuan Petroleum Admin -cration and ChinaNati anal Petroleum Corporation

First Bank mission: April 1991

Appraisal mission departure: June 1993

Negotiationst January 1994

Planned date of effectiveness: July 1994

List of relevant PCRs and PPARs: Liaodong Bay Petroleum Appraisal andTechnical Assistance Project (dated July27, 1990, Report No. 8938) and WeiyuanGas Field Technical Assictance Project(dated October 1993, Report No. 12413)

The project was prepared by the followings S. Shum (Senior Financial Analyst,Task Manager), J. Fritz (Environmental Engineer), S. Khvaja (Senior Gas Spe-cialist), B. Morali (Senior Petroleum Engineer), C. Amana (Young Profes-sional), D. Caplin (Energy Conservation Consultant) and J. Warren (GeophysicalCorsultant). The peer reviewers include: Messrs. R. Batstone (Principal Envi-ronmental Specialist), N. Berrah (Senior Energy Economist), R. Heath (Princi-pal Chemical Engineer), C. Rhelil (Petroleum Group Leader) and B. Svensson(Energy Economist). The Division Chief is R. Newfarmer and the Acting Depart-ment Director _8 Z. Ecevit.

Schedute 0'age I cf 3

STATUS OF SANK GROUP OPERATIONS IN THE PEOPLE'S REPUBLIC OF .H:NA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of December 31, 1993)

Loand Amount (USS million)Credit Bor- (net of cancellations)Number FY rower Purpose Bank IDA Undisb.(a)

21 Loans and 38 credits have been fully disbursed. 1950.4 2190.9 -Of which SECAL:2967/1932 88 PRC Rural Sector Adj. 200.0 93.2

2501 85 PRC Changcun (Luan) Coat Mining 79.5 10.62540 85 PRC Railway It 220.0 6.41664 86 PRC Technical Cooperation Credit It 20.0 4.2

2678/1680 86 PRC Third RaiLway 160.0 (70.0)(b) 34.62689 86 PRC Tianjin Port 130.0 - 11.02706 86 PRC Beilungang Thermal Power 225.0 6.12707 86 PRC Yantan Hydroelectric 52.0 - 0.5

2723/1713 86 PRC RuraL Health & Preventive Med. 15.0 65.0 28.82784 87 PRC Shanghai Machine Tools 100.9 - 3.81764 87 PRC Xinjiang Agricultural Dev. - 70.0 2.8

2794/1779 87 PRC Shanghai Sewerage 45.0 100.0 36.22811/1792 87 PRC Beijing-Tianjin-Tanggu Expressway 25.0 125.0 16.42812/1793 87 PRC Gansu ProvinciaL Dev. 20.0 150.5 40.71835 87 PRC Planning Support & Special Studies - 20.7 7.42838 87 PRC Fertilizer RationaLization 97.4 - 2.22852 87 PRC Wujing Thermal Power 190.0 - 24.91871 88 PRC Rural Credit III 170.0 2.0

2877/1845 88 PRC Huangpu Port 63.0 (25.0)(b) 30.42907/1875 88 PRC Dalian Port 71.0 (25.0)(b) 3.71885 88 PRC Northern Irrigation - 103.0 20.1

2924/1887 88 PRC Coastal Lands Dev. 40.0 (60.0)(b) 6.42943 88 PRC Pharmaceuticals 127.0 4.6

2951/1917 88 PRC Sichuan Highway 75.0 (50.0)(b) 48.42952 88 PRC Shaanxi Highway 50.0 - 1.11918 88 PRC Daxing An Ling Forestry - 56.2 3.12955 88 PRC BeiLungang It 165.0 25.62958 88 PRC Phosphate Dev. 62.7 13.22968 88 PRC Railway IV 200.0 - 50.51984 89 PRC Jiangxi Provincial Highway 61.0 7.01997 89 PRC Shaanxi Agricultural Dev. 106.0 35.22006 89 PRC Textbook Development - 57.0 2.02009 89 PRC Integrated Reg. Health 52.0 19.73006 89 PRC Ningbo & Shanghai Ports 76.4 - 21.23007 89 PRC Xiamen Port 36.0 13.63022 89 PRC Tianjin Light Industry 154.0 93.9

3060/2014 89 PRC Inner Mongolia Railway 70.0 (80.0)(b) 30.72097 89 PRC Shandong Agriculture Dev. 109.0 7.73066 89 PRC Hubei Phosphate 137.0 - 97.1

307312025 89 PRC Shandong Prov. Highway 60.0 (50.0)(b) 26.43075 89 PRC Fifth Industrial Credit 300.0 - 134.02097 90 PRC Jiangxi Agric. Dev. 60.0 19.72114 90 PRC Vocational & Tech. Educ. 50.0 11.52145 90 PRC National Afforestation - 300.0 133.52159 90 PRC Hebei Agricultural Dev. 150.0 72.42172 91 PRC Mid-Yangtze Agricultural Oev. . 64.0 24.1

3265/2182 91 PRC Rural Credit IV 75.0 200.0 81.03274/2186 91 PRC Rural Indust Tech (SPARK) 50.0 64.3 61.73286/2201 91 PRC Medium-Sized Cities Dev. 79.4 52.9 79.5

3288 91 PRC Shanghai Industrial Dev. 150.0 - 147.92210 91 PRC Key Studies Development 131.2 57.72219 91 PRC Liaoning Urban Infrastructure - 77.8 20.8

Schedule DPage 2 of 3

Loan/ Amount (USS million)Credit Bor- (net of cancellations)Number FY rower Purpose Bank IDA Undisb.(a)

3316/2226 91 PRC Jiangsu Provl. Transport 100.0 (53.6)(b) 54.72242 91 PRC Henan Agricul. Dev. - 110.0 79.7

3337/2256 91 PRC Irrig. Agricul. Intensif. 147.1 187.9 176.23387 92 PRC Ertan Hydroelectric 380.0 115.32294 92 PRC Tarim Basin 125.0 88.22296 92 PRC Shanghai Metro Transport 60.0 36.03406 92 PRC Railways V 330.0 238.7

3412/2305 92 PRC Daguangba Multipurpose 30.0 37.0 39.92307 92 PRC Guangdong ADP 162.0 129.5

3415/2312 92 PRC Beijing Envirormient 45.0 80.0 96.42317 92 PRC Infectious and Endemic Disease Cont - 129.6 103.13433 92 PRC Yanshi Thermal Power 180.0 - 104.02336 92 PRC Rural Water Supply and Sanitation - 110.0 78.52339 92 PRC Educ. Development in Poor Provs. 130.0 92.53443 92 PRC RegionaL Cement Industry 82.7 - 77.23462 92 PRC Zouxian Thermal Power 310.0 - ?83.23471 92 PRC Zhejiang Provincial Highway 220.0 - 1(8.82387 92 PRC Tianjin Urban Devt. & Envir. - 100.0 85.32391 92 PRC Ship Waste Disposal - 15.0 15.22411 93 PRC Sichuan Agricultural Devt. - 147.0 116.03515 93 PRC Shuikou Hydroelectric II 100.0 - 82.72423 93 PRC Financial Sector TA 60.0 54.13530 93 PRC Guangdong Provincial Transport 240.0 - 213.83531 93 PRC Henan Provincial Transport 120.0 - 100.5

2447 93 PRC Ref. Inst'l and Preinvest. - 50.0 45.13552 93 PRC Shanghai Port Rest. and Oevt. 150.0 - 147.02457 93 PRC Changchun Water Supply & Env. - 120.0 112.72462 93 PRC Agriculture Support Services - 115.0 110.4

3560/2463 93 PRC Taihu Basin Flood Control 100.0 100.0 171.12471 93 PRC Effective Teaching Services - 100.0 99.63572 93 PRC Tianjin Industry II (c) 150.0 150.03S82 93 PRC South Jiangsu Envir. Prot. cc) 250.0 - 250.02475 93 PRC Zhejiang Multicities Devt. - 110.0 102.53581 93 PRC Railway VI 420.0 420.03606 93 PRC Tianhuangping Hydroelectric 300.0 - 300.0

3624/2518 93 PRC Grain Distribution 325.0 165.0 489.22522 93 PRC Enviromental Tech. Assist. - 50.0 48.82539 94 PRC Rural Health Workers Devt. - 110.0 109.53652 94 PRC Shanghai Metro Transport II (c) 150.0 150.03681 94 PRC Fujian Provincial Highways (c) 140.0 - 140.03687 94 PRC Telecomiunications (c) 250.0 2500

Total 9870.6 6980.0 7378.9

of which has been repaid 790.2 5.6Total now hold by Bank and tDA 9080.4 6974.4

Amount sold: Of which repaid - - -

Total Undisbursed 4967.5 2411.4 7378.9

(a) As credits are denominated in SDRs (since IDA Replenishment VI), undisbursed SOR creditbalanc.-- are converted to dollars at the current exchange rate between the dollar and the SOR.In some cases, therefore, the undisbursed balance indicates a dollar amount greater than theoriginal principal credit amount expressed in dollars.(b) Credit fully disbursed.(c) Not yet effective.

Schedule DPage 3 of 3

B. STATEMENT Of IFC INVESTMENTS(As of December 31, 1993)

Invest- Type of Loan Equity Totalment No. fY Borrower Business ------ (USS Million) ......

813/2178 85/91 Guangzhou and Peugeot Automobile 15.0 4.5 19.5

974 88/93 China Investment Co. Investment 3.0 1.0 4.0

1020 88/92 Shenzhen China Bicycle 17.5 2.5 20.0Bicycles Co. Ltd. Manufacture

1066 89 Crown Electronics Electronics 15.0 15.0

1119 89/93 Shenzhen Chronar Solar Solar (a) 2.0 3.0 5.0Energy Energy

3423 93 Shenzhen PCCP Manufacturing 4.0 4.0

3150 93 Yantai Cement Cement 28.7 28.7

Not yet signed 93 JV Commercial Bank Banking 7.5 7.5

Not yet signed 94 China Walden Mgt. Capital Mkts. - 7.5 7.5

Not yet signed 94 Dalian Glass Manufacturing 61.0 2.4 63.4

Total Gross Commitments 85.2 11.0 96.2

Less cancellations, terminations 17.9 17.9repayment and sales

Total Commitments now Held by IFC 67.3 11.0 78.3

Total Undisbursed 28.7 2.0 30.7

(a) Loan subsequently cancelled.

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