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TRANSCRIPT
Document of
The World Bank
Report No: ICR00003806
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-78490)
ON A
LOAN
IN THE AMOUNT OF US$50 MILLION
TO THE
PEOPLE’S REPUBLIC OF CHINA
FOR A
NINGBO NEW COUNTRYSIDE DEVELOPMENT PROJECT
October 20, 2016
Social, Urban, Rural and Resilience Global Practice
China and Mongolia Country Management Unit
East Asia and Pacific Region
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CURRENCY EQUIVALENTS
Appraisal Completion
Effective January 25, 2010 Effective December 1, 2015
RMB1.00 = US$ 0.146 RMB1.00=US$0.154
US$ 1.00 = RMB6.8 US$1.00=RMB6.5
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AM Aide Memoire
BCR Benefit Cost Ratio
BOD2 Biochemical Oxygen Demand
CAST Cyclic Activated Sludge Technology
CEA Consolidated Environment Assessment
CODCR Chemical Oxygen Demand
CPH Community Participation Handbook
CPS Country Partnership Strategy
CPC Communist Party of China
DI Design Institute
DRC Development & Reform Commission
EA Environmental Assessment
EIA Environmental Impact Assessment
EIRR Economic Internal Rate of Return
EMP Environmental Management Plan
EMF Environmental Management Framework
EPB Environmental Protection Bureau
ESMAP Energy Sector Management Assistance Programme
FCIC Fenghua City Investment Company
FM Financial Management
FYP Five-Year Plan
GEF Global Environment Facility
HH Households
IBRD International Bank for Reconstruction and Development
ICR Implementation and Completion Report
IFRs Interim Financial Reports
IOI Intermediate Outcome Indicators
KPIs Key Performance Indicators
M&E Monitoring and Evaluation
MEP M&E Program
MOF Ministry of Finance
MTR Mid-Term Review
Mu Chinese unit of land area (1mu = 666m2 or 0.0666 hectare)
NCD New Countryside Development
NCB National Competitive Bidding
NH3N Ammoniacal Nitrogen
NMG Ningbo Municipal Government
NMPMO Ningbo Municipal Project Management Office
NMFB Ningbo Municipal Finance Bureau
NNCD Ningbo New Countryside Development
NPV Net Present Value
NRCR National Research Center for Resettlement
NRWTPMO Ningbo Rural Wastewater Treatment Project Management Office
O&M Operations & Maintenance
OP Operations Policy
PAD Project Appraisal Document
PCN Project Concept Note
PDO Project Development Objective
PIU Project Implementing Unit
PLG Project Leading Group
PMO Project Management Office
QAG Quality Assurance Group
QEA Quality at Entry
QSA Quality of Supervision
RAO Rural Affairs Office
RAP Resettlement Action Plan
RMB Renminbi = Yuan (Chinese currency)
RPF Resettlement Policy Framework
SBR Sequencing Batch Reactor
SS Suspended Solids
TA Technical Assistance
TP Total Phosphorus
TTL Task Team Leader
WWTP Wastewater Treatment Plant
Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez
Country Director: Bert Hofman
Practice Manager: Abhas K. Jha
Project Team Leader: Ximing Zhang
ICR Team Leader: Ximing Zhang
PEOPLE’S REPUBLIC OF CHINA
Ningbo New Countryside Development
CONTENTS
Data Sheet
A. Basic Information
B. Key Dates
C. Ratings Summary
D. Sector and Theme Codes
E. Bank Staff
F. Results Framework Analysis
G. Ratings of Project Performance in ISRs
H. Restructuring
I. Disbursement Graph
1. Project Context, Development Objectives and Design ............................................... 1
2. Key Factors Affecting Implementation and Outcomes .............................................. 5
3. Assessment of Outcomes .......................................................................................... 14
4. Assessment of Risk to Development Outcome ......................................................... 22
5. Assessment of Bank and Borrower Performance ..................................................... 23
6. Lessons Learned ....................................................................................................... 27
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 28
Annex 1. Project Costs and Financing .......................................................................... 29
Annex 2. Outputs by Component ................................................................................. 30
Annex 3. Economic and Financial Analysis ................................................................. 47
Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 56
Annex 5. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 57
Annex 6. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 64
Annex 7. Social Safeguards .......................................................................................... 67
Annex 8. List of Supporting Documents ...................................................................... 68
Annex 9. Map…………………………………………………………………………69
A. Basic Information
Country: China Project Name:
Ningbo New
Countryside
Development Project
Project ID: P106956 L/C/TF Number(s): IBRD-78490
ICR Date: 07/15/2016 ICR Type: Core ICR
Lending Instrument: SIL Borrower: PEOPLES REPUBLIC
OF CHINA
Original Total
Commitment: USD 50.00M Disbursed Amount: USD 50.00M
Revised Amount: USD 50.00M
Environmental Category: B
Implementing Agencies:
Ningbo Municipality Development and Reform Committee
Cofinanciers and Other External Partners: NA
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 12/18/2008 Effectiveness: 07/16/2010 NA
Appraisal: 08/17/2009 Restructuring(s): NA NA
Approval: 02/25/2010 Mid-term Review: NA NA
Closing: 03/31/2016 03/31/2016
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank
Performance: Satisfactory
Overall Borrower
Performance: Satisfactory
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating
Potential Problem
Project at any time
(Yes/No):
No Quality at Entry
(QEA): None
Problem Project at any
time (Yes/No): Yes
Quality of
Supervision (QSA): None
DO rating before
Closing/Inactive status: Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General water, sanitation and flood protection sector 56 56
Public administration- Water, sanitation and flood
protection 1 1
Rural and Inter-Urban Roads 41 41
Sub-National Government 2 2
Theme Code (as % of total Bank financing)
City-wide Infrastructure and Service Delivery 52 52
Municipal governance and institution building 1 1
Other public sector governance 1 1
Rural services and infrastructure 40 40
Water resource management 6 6
E. Bank Staff
Positions At ICR At Approval
Vice President: Victoria Kwakwa James W. Adams
Country Director: Bert Hofman Hsiao-Yun Elaine Sun
Practice
Manager/Manager: Abhas K. Jha Ede Jorge Ijjasz-Vasquez
Project Team Leader: Ximing Zhang Shenhua Wang
ICR Team Leader: Ximing Zhang -
ICR Primary Author: Sarah Xinyuan Lin -
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) The project development objective is to improve rural wastewater management in selected
villages and enhance infrastructure and township management in a small town, in support
of the New Countryside Development (NCD) Program in Ningbo Municipality.
Revised Project Development Objectives (as approved by original approving authority)
NA
(a) PDO Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Number of households with appropriate rural wastewater management services
in project area (Number, Custom)
Value
quantitative or
Qualitative)
0.00 41000.00 NA 45500.00
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Achieved. At loan closing, the number of households with project-funded rural
wastewater management services had exceeded the target figure by
approximately 11%.
Indicator 2 : Fenghua # Chunhu traffic using new access road (car equivalent) (Number,
Custom)
Value
quantitative or
Qualitative)
0.00 13000.00 NA 13,933.00
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Achieved. The Chunhu-Fenghua access road (Jinhai Road) opened to traffic six
months ahead of schedule on February 7, 2013. The target of 13,000 car
equivalent units was exceeded by approximately 7%.
Indicator 3 : Chunhu population served from a reliable and higher-quality water supply
(Number, Custom)
Value
quantitative or
Qualitative)
0.00 76000.00 NA 76500.00
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Achieved. Water meeting national quality standards is now available 24 hours
daily to about 76,500 people, slightly over the target value.
Indicator 4 : Wastewater treatment rate in Chunhu Town (Percentage, Custom)
Value
quantitative or 0.00 70.00 NA 84.00
Qualitative)
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Achieved. The wastewater treatment rate in Chunhu Town exceeded the target
amount, with 84% of wastewater treated compared to the 70% target.
Indicator 5 : Adoption of energy efficiency guidelines by NMG (Text, Custom)
Value
quantitative or
Qualitative)
0.00 Completed NA Completed
Date achieved 12/31/2009 03/31/2016 NA 01/13/2015
Comments
(incl. %
achievement)
Achieved. Energy efficiency and construction guidelines for rural housing
projects were developed and implemented in Silian and Xixie Villages in
Chunhu. The Chunhu Middle School had an assessment plan and guidelines
drawn up for developing a green campus, and has implemented
recommendations that were feasible within budget constraints.
Indicator 6 : Proposal for Ningbo Countryside Development Plan for upcoming 12th Five
Year Plan (2011-2015) and Chunhu Town planning completed (Text, Custom)
Value
quantitative or
Qualitative)
0.00 Completed NA Completed
Date achieved 12/31/2009 03/31/2016 NA 09/26/2015
Comments
(incl. %
achievement)
Achieved. Through a series of workshops and trainings, consultants worked with
staff from the Chunhu Town government, Fenghua DRC, Fenghua Planning
Bureau and Fenghua planning institutions to assess current plans and formulate
the NCD strategy for the 12th Five-Year Plan, as well as the Chunhu Town
Master Plan
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Number of villages with completed project-financed wastewater treatment
infrastructure (Number, Custom)
Value
(quantitative
or Qualitative)
0.00 150.00 NA 144.00
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Partially achieved. The actual achievement is 96% of the target, but the number
of HH with improved wastewater was exceeded, as shown in PDO Indicator 1
above.
Indicator 2 : Implementation progress of the access road (%) (Percentage, Custom)
Value
(quantitative
or Qualitative)
0.00 100.00 NA 100.00
Date achieved 12/31/2009 03/31/2016 NA 01/25/2013
Comments
(incl. %
achievement)
Construction began on March 31, 2011 and was completed half a year earlier on
January 25, 2013. The road was opened to traffic on February 7, 2013.
Indicator 3 : Length of Water Main built (km) (Kilometers, Custom)
Value
(quantitative
or Qualitative)
0.00 15.00 NA 15.00
Date achieved 12/31/2009 03/31/2016 NA 03/16/2015
Comments
(incl. %
achievement)
Construction of water supply mains began on July 20, 2012 and was completed
on March 16, 2015.
Indicator 4 : Length of newly built and rehabilitated water distribution network (km)
(Kilometers, Custom)
Value
(quantitative
or Qualitative)
0.00 13.00 NA 14.50
Date achieved 12/31/2009 03/31/2016 NA 03/25/2016
Comments
(incl. %
achievement)
Construction and rehabilitation of the water distribution network began on
October 13, 2014 and was completed on March 25, 2016.
Indicator 5 : Length of sewage main built (Kilometers, Custom)
Value
(quantitative
or Qualitative)
0.00 10.00 NA 10.00
Date achieved 12/31/2009 03/31/2016 NA 12/31/2015
Comments
(incl. %
achievement)
Construction of the Chunhu Town Sewage Network began on April 15, 2011 and
was completed on August 28, 2013.
Indicator 6 : Completion of the wastewater treatment plant (Percentage, Custom)
Value
(quantitative
or Qualitative)
0.00 100.00 NA 100.00
Date achieved 12/31/2009 03/31/2016 NA 11/30/2011
Comments
(incl. %
achievement)
Construction of the Chunhu WWTP, with a treatment capacity of 10,000 m3/day,
began on November 8, 2010 and was completed ahead of schedule on November
30, 2011.
Indicator 7 : People provided with access to "improved sanitation facilities" under the proj.
(Number, Core)
Value
(quantitative
or Qualitative)
0.00 164000.00 NA 166000.00
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Achieved, with 2000 more people provided access than targeted.
Indicator 8 : People provided with access to "improved sanitation facilities" - urban (Number,
Core Breakdown)
Value 0.00 0.00 NA 0.00
(quantitative
or Qualitative)
Date achieved 12/31/2009 03/31/2016 NA 12/31/2015
Comments
(incl. %
achievement)
NA
Indicator 9 : People provided with access to "improved sanitation facilities" - rural (Number,
Core Breakdown)
Value
(quantitative
or Qualitative)
0.00 164000.00 NA 166000.00
Date achieved 12/31/2009 03/31/2016 NA 03/31/2016
Comments
(incl. %
achievement)
Achieved.
Indicator 10 : Direct project beneficiaries (Number, Core)
Value
(quantitative
or Qualitative)
0.00 292000.00 295000.00
Date achieved 12/31/2009 03/31/2016 12/31/2015
Comments
(incl. %
achievement)
Achieved.
Indicator 11 : Female beneficiaries (Percentage, Core Supplement)
Value
(quantitative
or Qualitative)
0.00 50.00 50.00
Date achieved 12/31/2009 03/31/2016 12/31/2015
Comments
(incl. %
achievement)
Achieved.
G. Ratings of Project Performance in ISRs
No. Date ISR
Archived DO IP
Actual
Disbursements
(USD millions)
1 03/03/2011 Satisfactory Satisfactory 1.50
2 04/10/2012 Moderately Satisfactory Moderately Satisfactory 15.53
3 03/17/2013 Moderately
Unsatisfactory
Moderately
Unsatisfactory 28.73
4 10/26/2013 Moderately Satisfactory Moderately Satisfactory 30.73
5 04/12/2014 Moderately Satisfactory Moderately Satisfactory 36.13
6 07/12/2014 Moderately Satisfactory Moderately Satisfactory 36.81
7 12/06/2014 Satisfactory Moderately Satisfactory 39.17
8 06/21/2015 Satisfactory Satisfactory 44.05
9 12/01/2015 Satisfactory Satisfactory 47.82
H. Restructuring (if any)
Not Applicable
I. Disbursement Profile
1
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Country and Sector Background
1. At appraisal in 2009, approximately 55% of China’s total population lived in rural
areas. Despite significant economic development following economic reforms introduced
in 1978, the countryside continued to lag behind urban areas. Rural areas were
characterized by underdeveloped basic infrastructure and generally poor standards of living,
and the rural population earned less than one-third the income of their urban counterparts.
Some 50% of administrative villages had no access to tap water, and 60% of the rural
population had no access to sanitary toilets. The institutional and regulatory framework
for rural infrastructure was also lacking. These factors strained the rural environment,
particularly the lack of wastewater treatment that adversely affected the quality of drinking
water sources and the population’s health.
2. To tackle the growing urban-rural disparity, China’s New Countryside
Development (NCD) program was developed in 2003, based on the principle that
industrialized, developed urban areas should be responsible for committing resources to
the development of the countryside. The NCD program targeted several aspects of growth,
including balancing the social and economic development of cities and the countryside,
promoting modern agriculture, promoting sustainable increases in rural incomes and
improving the basic infrastructure in villages and raising the standards of living. The
program also emphasized town development as a strategy for creating local engines of
growth and overall rural development. A well-planned, well-developed town was seen as
being able to demonstrate a model of efficient, ecologically friendly, sustainable growth.
3. China’s 11th Five Year Plan (2006 to 2010) further established the NCD program
as one of the country’s key development strategies, and both central and local governments
subsequently emphasized countryside development as a priority area. When the Ningbo
New Countryside Development Project (NNCDP) was conceptualized in 2008, the central
government was allocating over US$44 billion of its annual budget to support new
countryside development activities. However, despite the considerable emphasis placed on
it, the program was still in its infancy and lacked well-defined implementation principles
and experience.
4. The NNCDP was designed to fit into the overall NCD plan. Ningbo Municipality,
a major city in the southeastern coastal zone, recognized the importance of implementing
the NCD program in order to support more sustainable development in its hinterlands. As
a key commercial center with extensive international trade links, Ningbo had experienced
rapid economic growth, but its rural areas lagged behind. Agricultural output accounted
for only 5.7% of GDP, and rural residents had only 45% of the average annual disposable
income of urban dwellers.
2
5. The Ningbo Municipal Government (NMG) identified three key aspects of the
NCD that required focus. Firstly, as rural areas were characterized by a lack of wastewater
collection and treatment, as well as poor sanitation, the potential adverse impact on rural
and urban water sources necessitated an effective system of rural wastewater management.
Protection of drinking water sources was a high priority for the Municipality. Secondly,
small towns had inadequate basic infrastructure and lacked financial resources and
management capacity to improve it. Thirdly, local institutional capacity to implement the
NCD program was weak. These three areas subsequently became the main focus of
NNCDP.
Rationale for Bank assistance
6. The Bank had worked successfully with NMG on several projects, including ones
focused on water and environmental issues, such as the Ningbo Water and Environment
Management Project (Ln. 4770). NNCDP provided the Bank with an opportunity to
partner with Ningbo again to work on a new urban/rural integration initiative that would
assist the Municipality to reduce disparities in growth and living standards between its
urban and rural areas. The Bank could draw on its international experience in effective
rural wastewater projects, basic urban infrastructure and small town management to
support implementation of the national NCD program, not only in Ningbo but potentially
in other similar parts of China.
Higher level objectives to which the project contributes
7. With its focus on balancing urban-rural development, improving rural
infrastructure and improving institutional capacity to support sustainable development, the
NNCDP was consistent with the “Reducing Poverty, Inequality and Social Exclusion”
pillar of the Bank’s 2006-2010 Country Partnership Strategy (CPS) for China. The project
was also consistent with China’s 11th Five-Year Plan (2006-2010), particularly the high
priority placed by the central government on reducing urban-rural disparities in growth and
development.
1.2 Original Project Development Objectives (PDO) and Key Indicators (KPI)
8. The original PDO, as stated in the Project Appraisal Document (PAD), was “to
improve rural wastewater management in selected villages and enhance infrastructure and
township management in a small town, in support of the NCD Program in Ningbo
Municipality.” The PDO in the Loan Agreement had slight differences in phrasing – “to
support Ningbo Municipality in the implementation of its New Countryside Development
Program by improving rural wastewater management in selected villages and enhancing
infrastructure and township management in small towns.”
9. KPI were as follows:
(a) The number of households with appropriate rural wastewater management
services in operation;
(b) Fenghua-Chunhu traffic using new access road;
3
(c) The Chunhu population served from a reliable and higher-quality water supply;
(d) The wastewater treatment rate in Chunhu Town;
(e) NMG adoption of energy efficiency guidelines for rural housing construction;
and
(f) Proposal for NCD plan for upcoming 12th Five Year Plan (2011-2015) and
Chunhu Town planning completed.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification (N.A.)
1.4 Main Beneficiaries
10. The project benefited several groups. First, 45,500 households in 144 villages
would benefit from the provision of wastewater management services in rural Ningbo.
Second, residents of Chunhu Town (76,500 at project completion) would benefit from the
new Chunhu Access Road, which would provide a faster, more direct connection to
Fenghua City as compared to two existing bypass roads. Around Fenghua city, the towns
of Chunhu, Song’ao and Qiucun, as well as the Hongsheng Haitang Development Zone,
with a total 2015 population of 121,300 would benefit from the Fenghua Coastal Water
Supply, Phase 1. Finally, Chunhu Town residents would additionally benefit from new
wastewater management services.
11. Other beneficiaries included officials and villagers who received capacity-building
and implementation support for both the rural wastewater management component and the
development of infrastructure in Chunhu Town. These included staff of the Project
Management Office (PMO) and Project Implementation Units (PIUs), including the
Fenghua City Investment Company (FCIC), the designated PIU for all infrastructure
components except rural wastewater facilities. Village-level training was also undertaken
to raise awareness of the rural wastewater infrastructure component and equip villagers
with decision-making abilities as part of the participatory approach. Selected villagers also
underwent training to carry out routine maintenance upon completion of the infrastructure.
Additionally, under the Technical Assistance (TA) component, beneficiaries included
government officials and local Design Institutes (DIs) who received training and capacity-
building as part of the e-government, energy efficiency and master planning sub-
components.
1.5 Original Components
12. Component 1. Rural Wastewater Management (US$47.96 million, IBRD
US$19.42 million): About 150 rural villages in six counties, cities, districts in Ningbo
Municipality, would receive appropriate, sustainable wastewater treatment technologies.
Villages would be targeted and prioritized based on their location near water surface
protection areas, their ability and willingness to pay for wastewater services, and their
overall poverty levels. A program-based participatory approach would be used to identify
and select villages where at least 80% of the villagers would agree to the project’s
principles, particularly concerning operation and maintenance (O&M) of the systems once
installed.
4
13. Component 2. Chunhu Town Infrastructure Development (US$78.49 million,
IBRD US$28.67 million):
(a) Chunhu access road, for construction of a four lane, Class I road between
Chunhu Town and Fenghua City with a length of 6.2km, including a tunnel of
3.26km, to meet the needs for improved connectivity under the NCD program;
(b) Fenghua coastal water supply, including (i) construction of a 15.8km long
transmission pipeline from the Qiujiushan Water Supply Works to Chunhu
Town and Hongsheng Haitang; and (ii) renovation and expansion of the Chunhu
Town water distribution network, comprising 12.9km of distribution pipelines;
(c) Chunhu Town wastewater management, including (i) a wastewater collection
network 19km in length; and (ii) a wastewater treatment plant (WWTP) with a
capacity of 10,000m3 per day.
14. Component 3. Capacity Building and Implementation Support (US$1.96 million,
IBRD US$1.96 million):
(a) Capacity building and implementation support for rural wastewater
management, including: (i) technical assistance (TA) for project management
and implementation support to PMOs in the Ningbo Municipality Rural Affairs
Office (RAO) and each project County/District; (ii) village-level education and
awareness raising; (iii) training and study tours (domestic and foreign); and (iv)
miscellaneous equipment.
(b) Chunhu Township management enhancement, capacity building and energy-
efficiency demonstration, including TA for: (i) business promotion activities –
business promotion strategy, web page and brochure development, skills
training and marketing; (ii) town governance enhancement, including e-
government system, improvement of government reporting and information in
disclosure procedures, support for activities promoting public awareness and
participation in planning and decision-making, and enhancement of official
performance evaluation; and (iii) promotion of energy-efficient township,
supported by ESMAP (US$250,000), consisting of the development of energy
efficient building designs and renovation guidelines, a demonstration rural
collective housing project, as well as development of sustainable energy action
guidance and pilots.
(c) Support for preparation of the 12th Five-Year Plan on NCD in Fenghua City,
including (i) specialist support to Fenghua DRC to study and draft the 12th Five-
Year Plan (2011-2015) for NCD of Fenghua City, to prioritize various
institutional strengthening and investment activities, and to guide Fenghua
City’s NCD in 2011-2015; (ii) Chunhu Town NCD Strategy and Township
Master Plan; (iii) village level NCD planning – spatial and sectoral development
plans and detailed design of two selected villages in Chunhu Town.
1.6 Revised Components
15. There were no formal revisions made to the components over the project period.
1.7 Other significant changes
5
16. No significant changes were made over the project period.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
Soundness of Background Analysis
17. The Bank’s background analysis demonstrated an adequate understanding of the
rural development challenges that Ningbo faced, specifically the need for basic rural
infrastructure in order to sustainably develop rural areas and, in the case of rural wastewater
treatment, to protect drinking water sources. Sound consideration of key government
strategies, as well as NMG’s commitment to the NCD program, benefited project
preparation and design. The ongoing relationship with the Bank in implementing projects
in similar sectors, such as the Zhejiang Urban Environment Project (Ln 4724-CHA) and
the Ningbo Water and Environment Project, ensured that the Bank was familiar with the
local context and could continue to build on its strong relationship with NMG.
18. Chunhu town was selected based on the town government’s own development of,
and commitment to, a detailed NCD plan. Given the proximity of Chunhu to the
Hongsheng Haitang Development Zone, it was also anticipated that the growth of the
economic zone would in future increase demand for Chunhu as a place to live, therefore
necessitating adequate infrastructure development, including wastewater treatment, a
reliable water supply and road connectivity to the nearby city of Fenghua and its regional
railway station. There thus appeared to be a strong rationale for selecting Chunhu as a
demonstration NCD site.
19. The Bank’s experience and lessons learned from rural infrastructure projects in
China and other countries influenced design in three ways. Firstly, previous experience
demonstrated that beneficiary participation during planning and implementation was
essential to ensuring sustainability of community-level infrastructure. Secondly, rural
wastewater management systems had to be designed specifically to suit the rural context,
i.e. to function successfully at lower cost, while being suitable for both individual homes
and communities as a whole, at times over a wide geographical area. Thirdly, infrastructure
designs need to be based on realistic demand projections to avoid over-design, wasting
resources and burdening users with higher-than-necessary charges and tariffs.
Assessment of Project Design
20. The design of NNCDP was generally sound. The PDO had three parts, with
reasonably clear linkages between the project components and the results framework. (See
Sections 2.3 and 3.1 below.) The results framework was straight-forward, with well-
established roles and responsibilities for collecting data for reporting, but with weaknesses
in monitoring the outcomes of the TAs linked to enhancing small town management.
6
21. The project duration and budget were appropriate to carry out the participatory
aspects, infrastructure works and TA. The institutional structure for implementation
involved entities at several levels, from the Project Leading Group (PLG) chaired by NMG,
to the main PMO, sub-PMOs and various PIUs. This multi-tiered structure was necessary
given the various components involved, as well as the dispersed nature of villages in the
rural wastewater component.
22. The rural wastewater component was somewhat complex given its wide
geographical coverage (spanning across five districts/counties with a total area of 6,202 sq.
km) and the adoption of a community participation approach, which was novel in this
sector in China. A comprehensive Framework for Implementation of the Rural Wastewater
Management Component was developed to guide implementation. The use of a
programmatic approach, with works divided into batches, was wise as it allowed
implementation guidelines to be refined incrementally based on lessons learned.
23. Villages were categorized and prioritized as follows: (a) those within water surface
protection areas, often in remote, undeveloped and mountainous areas; (b) relatively
wealthy villages outside of water protection areas, often on plains, close to population
centers, with better ability and willingness to pay for wastewater services; and (c) relatively
poor villages outside of water protection areas. This categorization of villages also
facilitated the setting of wastewater tariffs upon completion of the rural wastewater
infrastructure, with government support calibrated according to the socio-economic
conditions of the different villages.
24. The Chunhu Town infrastructure component focused on developing basic
infrastructure in road transportation, water supply and wastewater. Investments in these
three sub-components were clearly linked to the second objective of “enhancing
infrastructure in small towns”. The access road between Chunhu Town and Fenghua City
was proposed to improve connectivity between the two, based on a steadily increasing
average daily traffic volume in preceding years, and in anticipation of further growth in
Chunhu Town. For the Fenghua coastal water supply works, the demand for water in the
long-term could not be assessed with certainty, so the investment supported only a first
phase; however, the transmission mains were designed such that they could be extended as
demand warranted in the future.
25. The project included two financial covenants, one each for the Fenghua coastal
water supply and Chunhu wastewater treatment sub-components, stipulating that tariffs for
water and wastewater treatment should be established in order to achieve O&M cost
coverage/ full cost recovery within specific timeframes. Given the difficulties of
implementing such tariffs in China, and the effectiveness of such covenants in other Bank
projects, their inclusion as part of project design warranted deeper consideration.
26. The capacity building and implementation support component consisted of
three separate sub-components. First, capacity-building for the rural wastewater
component was integral to its implementation by building management capacity and
helping the PIUs with the participatory aspect of the component. The second sub-
7
component consisted of a mix of small individual activities, which were broadly aimed at
improving Chunhu township management. Finally, the third sub-component provided
training and support for the development of an NCD strategy and master planning for
Chunhu Town, which helped build local capacity, and facilitated continued implementation
of NCD principles.
27. The lack of KPIs and IOIs to measure the extent to which township management
had been improved was an issue with project design. The sub-components on business
promotion and introduction of an e-government system, for example, were not monitored
in the RF, making their contribution to the overall PDO difficult to discern. Rather than
having several small sub-components that were not all monitored, NNCDP could have
focused on a more selective number of targeted township management initiatives, with
clear intended outcomes and an appropriate accompanying RF. Additionally, the
component was designed specifically for enhancement of management in Chunhu town,
with no indication of how the activities or results could enhancement management of other
“small towns”, as worded in the PDO.
Adequacy of Government Commitment
28. Commitment by NMG for NNCDP was high, with the project being in line with
the NMG’s own commitment to improving rural standards of living and narrowing the
rural-urban gap. Support from the NMG was also evidenced in the provision of financing,
which included full subsidies for rural households to provide indoor connections to the
rural wastewater treatment infrastructure, as well as to cover O&M costs of various
infrastructure components.
Assessment of Risks
29. The project was given an overall risk rating of “Modest”, and most risks were
correctly identified and had mitigation measures put in place. In the rural wastewater
component, the extensive involvement of local communities in the selection and design of
wastewater infrastructure helped to ensure that the systems implemented were appropriate
for each context. The provision of full financial subsidies by municipal and country
governments was important in mitigating against low household connection rates, which
are often a barrier to effective wastewater treatment implementation in rural China.
30. However, several risks were either not identified or not adequately mitigated
against. In the rural wastewater component, the lack of experience in implementing a
community participation approach as well as lack of capacity in various aspects of technical
design, project and financial management among PIUs, was under-estimated, resulting in
significant initial delays. The lack of interest among local design institutes (DI), as well as
the poor quality of schemes submitted by DIs, were also unforeseen risks that led to delays.
31. In the Chunhu Town infrastructure component, the decision to build only the first
phase of the Fenghua coastal water supply but design the infrastructure for future expansion
mitigated against uncertainty over future population growth. One area that may not have
8
been foreseeable was that of the economic slowdown in China, which impacted the pace
of development in Hongsheng Haitang, the economic zone close to Chunhu Town. With
less development in that economic zone, wastewater output is not reaching projections, so
the project’s WWTP is currently functioning below capacity.
32. In terms of the capacity-building and implementation support component, the risk
of not delivering on the various small sub-components was not considered. In the ESMAP-
supported energy efficiency sub-component, for instance, several recommendations on
were eventually not adopted because of high costs, e.g. the use of solar lighting in school
buildings. Cost was likely a deterring factor in having the energy efficiency guidelines
more widely adopted, and could have been better mitigated against had the risk been
identified upfront.
33. Overall, quality at entry is rated satisfactory. Although design of the capacity-
building and implementation support component could have been improved with a more
focused set of sub-components and closer monitoring of outcomes, thorough preparation
work was carried out for the rural wastewater and Chunhu Town infrastructure components,
particularly for the former given the novelty of the community participation approach.
Some risks could have been better identified, but as whole the major risks were adequately
mitigated against.
2.2 Implementation
34. NNCDP was completed on schedule and slightly over budget. Infrastructure-related
targets were met and in some cases exceeded, but implementation progress among the
different components was uneven, as discussed in this section.
35. The rural wastewater component was implemented in five batches using the
programmatic approach discussed above and in Annex 2. However, the component
encountered significant delays early on, and half way through implementation, the
component had only achieved 25% of its PAD targets. This led to the project being
downgraded to “Moderately Unsatisfactory” in the March 2013 Implementation Status
Report (ISR). The main causes for these delays are detailed below.
36. Lack of Experience with Community Participation Approach. A lack of experience
with the community participation approach, not only from implementing agencies but also
among communities involved, resulted in slow village selection and slow implementation
of works, particularly in the first two batches of villages. The NRWTPMO and county
PIUs stepped up efforts to inform and involve villages in the selection process using
brochures and cartoons to disseminate information on the project’s benefits and the
requirements for selection. To tighten the implementation process, additional village
selection criteria and additional conditions for the commencement of works were added to
the Rural Wastewater Management Framework, emphasizing aspects such as the need to
have DIs work with villagers during the design stage.
37. Low Capacity of Implementing Agencies. Initial delays also resulted from low
management capacity and frequent staff changes in the PMOs and PIUs. The Bank
9
intensified training to improve the capacity of PMO and PIUs, covering areas such as
contract management, monitoring and evaluation, procurement management, financial
management, and participatory management. The NRWTPMO organized domestic study
tours for PMO and PIU staff to Beijing, Tianjin, Weihai and Yunnan to understand best
practices in rural wastewater construction.
38. Lack of Experience among DIs and Frequent Design Changes. The project called
for the PIUs to employ experienced DIs to prepare detailed plans and bidding documents.
However, the local DIs showed little interest in bidding due to the small size of the works
and the rural site locations. In addition, numerous design changes were required during
implementation because the inexperienced PIUs carried out poor quality preparatory field
work and surveys, which provided erroneous levels and alignments.
39. Chunhu Town infrastructure and township enhancement component. These
works progressed steadily with all three sub-components completed on schedule. For the
Chunhu Town Wastewater Management sub-component, one issue that arose was a lag
between the completion of the WWTP and the accompanying collection network, resulting
in the WWTP resting idle for over a year. This suggests the need for better timing and
coordination in the construction of linked assets, as discussed further in Section 5.2.
40. The three sub-components of the capacity-building and implementation support
component progressed at different rates. In particular, the ESMAP-supported sub-
component on energy efficiency guidelines encountered delays. Firstly, the PIU faced
challenges in identifying appropriate DIs due to the relatively small contract values and a
lack of qualified firms. Secondly, while the rural housing project in Dongxie Village had
been identified at appraisal as the demonstration site for energy efficient guidelines and
improvements, the site had to be changed during implementation to Silian Village, as
villagers were no longer willing to participate in the pilot. A lack of related KPI and IOIs
for the various TAs meant that they were not closely monitored during implementation,
and, with the exception of the energy efficiency component, results were not disseminated
to other small towns.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
41. Design. The project’s M&E design was straightforward, and took advantage of
existing reporting systems to streamline data collection. The principal tool for M&E was
the results framework, which included six KPIs – one to measure the number of households
with appropriate rural wastewater services in operation, three to measure the outcomes of
the three sub-components of the Chunhu Town infrastructure development component, and
two related to improving town management. The number of KPIs was reasonable
considering the breadth of the NNCDP components.
42. There were also six intermediate outcome indicators (IOI): one to track the
increasing number of villages with wastewater treatment, and five for Chunhu Town
infrastructure development. While the IOI for the Chunhu-Fenghua access road was
improved road accessibility, the IOI measured only physical progress of road construction,
instead of access improvement. More suitable IOIs might have been an access indicator
10
such as increase in the number of villages within a certain distance from a main road, or
one such as reduced time between Chunhu and Fenghua. Likewise, for the outcome of
improved reliability and quality of drinking water, the related IOIs measured only physical
progress of the related assets, instead of actual progress in water reliability or quality.
43. One strength of the project’s M&E design was that it included a specific monitoring
and evaluation program (MEP) for the rural wastewater component, designed to evaluate
nine different areas of performance after the first batch of villages had been implemented.
Key objectives of the MEP were to recommend modifications to the design and approach
as required, and identify key factors that would ensure the program’s replicability and
sustainability. The need to have DIs work in closer consultation with villagers during the
design stage, for example, was one such MEP finding. The Rural Wastewater component
also included a monitoring program for treated water quality, which was made available in
semi-annual progress reports. The results of the monitoring show that water quality has
improved, though results were not included in the project’s RF, as this was not the main
focus of the PDO.
44. However, a weakness of the M&E design was that it contained no IOIs pertaining
to improving the management of small towns, making the contribution of the various
individual sub-components to the overall objective difficult to quantify. Some IOIs might
have quantified, for instance, improved energy efficiency in pilot sites, governance
efficiency gains due to the e-government system, or milestones in planning outputs to
reflect improving township management. This is discussed further in Section 3.2.
45. Implementation and utilization. Data for results monitoring was collected by
various implementing agencies, and was incorporated into semi-annual progress reports as
well as the borrower’s ICR report. The NMPMO was responsible for coordinating and
presenting the required data from multiple PIUs, and it performed this task effectively. No
major issues with this aspect of M&E were encountered over the course of the project.
46. The M&E system was generally effective for monitoring implementation progress
of the rural wastewater infrastructure components, having identified shortcomings in the
first batch of works and made recommendations to improve various procedures in the
subsequent batches. For example, the MEP identified that irregular, inconsistent
monitoring of the performance of the wastewater infrastructure was being carried out by
contractors, and that a lack of training for local villagers had also resulted in inadequate
monitoring by the community. To address this, a set of O&M management rules –
Operation and Maintenance Management Rules for Rural Wastewater Treatment
Facilities for World Bank Project in Ningbo Municipality – were issued by NMG, in
consultation with the World Bank, in February 2013. These formed the basis for a more
consistent approach to O&M.
47. In terms of the Chunhu Town infrastructure component, one area of weakness was
that M&E did not pick up on the mismatch in construction timing between the WWTP and
its accompanying collection network, which led to the WWTP sitting idle for over one year.
The individual IOIs measuring the progress of the WWTP and collection network
11
construction could have been more closely linked to one another, as opposed to being
considered separately. As discussed above and in Section 2.1, the lack of related KPI and
IOI in the RF meant that the smaller TA sub-components under the implementation support
and capacity-building component (e-government system and business promotion strategy)
were not monitored.
2.4 Safeguard and Fiduciary Compliance
Safeguards Compliance
48. The NNCDP was rightly classified as a Category B project because the components
were not large in size or scope, and were not situated in areas likely to be negatively
impacted by construction or eventual operation of the planned infrastructure. In addition,
all environmental issues associated with the construction of the project components could
be well-managed with adequate planning, monitoring and adoption of proper engineering
and construction standards. Three safeguards policies were triggered: OP 4.01:
Environmental Assessment (EA), OP 4.37: Safety of Dams and OP/BP 4.12: Involuntary
Resettlement.
49. Environmental Safeguards. An Environmental Impact Assessment (EIA) was
carried out for each project component, and an associated Environmental Management
Plan (EMP) was also developed as part of the EIA report. A Consolidated Environment
Assessment (CEA) report was also compiled. As only the first batch of villages in the rural
wastewater component could be prepared during appraisal, an Environmental Management
Framework (EMF) was prepared to guide implementing agencies on safeguards-related
matters for the four remaining batches. The EIA report in Chinese was disclosed on May
22 and May 26, 2009 through different websites, while the English language CEA was
disclosed through the Bank’s InfoShop on July 20, 2009.
50. The NMPMO was responsible for monitoring compliance with and reporting on
environmental safeguards through the project’s semi-annual project reports, and was
critical in providing guidance to implementing agencies on safeguards-related matters.
Overall, the project complied with the Bank’s Environmental safeguards satisfactorily, and
the environmental impacts were well anticipated during project preparation. Proposed
mitigation measures were implemented by contractors and PIUs satisfactorily, with no
complaints received from affected parties. The Ningbo Water Conservation Bureau carried
out the necessary strengthening and renovation works required for the Hengshan Reservoir
dam in accordance with the Bank’s requirements under OP 4.37..
51. Social Safeguards. Efforts were made to minimize resettlement impacts during
project planning and design. A Resettlement Action Plan (RAP) was prepared for the
Chunhu town infrastructure development component (in both English and Chinese), while
a Resettlement Policy Framework (RPF) was prepared for the rural wastewater component.
As a linkage issue was identified in the Fenghua coastal water supply component, a
retroactive resettlement review was prepared as an annex to the RAP. All resettlement
preparations complied satisfactorily with OP 4.12, as well as the relevant domestic laws
and regulations. The RAP in Chinese was disclosed through local media on July 21, 2009
12
and was made available at the NMPMO, PIUs, public libraries and on websites. The RAP
in English was disclosed in the InfoShop on July 21, 2009.
52. All necessary resettlement-related activities required in the RAP and RPF were
carried out as required with issues resolved in a timely manner. Regular internal monitoring
by the PMO, as well as feedback from three external reviews over a two-year period, helped
to ensure that any issues were proactively addressed. Implementing agencies kept the
communities informed on progress throughout the land acquisition and resettlement
process. A transparent grievance redress system was established, and no complaints were
received over the course of the project. A Resettlement Post-Evaluation report was carried
out by an external monitor at completion. The report found that all requirements in terms
of the Bank’s social safeguards policy had been satisfactorily met.
53. Adverse impacts of land acquisition and demolition of houses on the incomes and
livelihoods of project affected persons (PAP) were mitigated against, and all property
losses were adequately compensated. The resettlement of PAPs proceeded smoothly, and
improvements in their living conditions were noted (See Annex 7). Comparing the annual
income and expenditure of affected households in 2009 and 2015, a survey conducted by
external monitors found that per capita net income had risen significantly, from
approximately CNY 40,000 to CNY 58,600. Some 44% of PAPs were very satisfied with
current living conditions, 50% were somewhat satisfied, and just under 6% were neither
satisfied nor dissatisfied. All PAPs agreed that their lawful rights and interests had not been
infringed on.
54. Land acquisition and resettlement for all three subcomponents were conducted in
accordance with project construction schedules. In terms of land acquisition, actual figures
for permanent acquisition and demolition of houses were higher than planned. (See Annex
7, Table 7.1). A total of 325mu of land were acquired, or a 24% increase over the planned
amount, and housing demolition doubled due to unforeseen requirements for the Chunhu-
Fenghua Access Road. Land originally thought to only require temporary occupation had
to be acquired, as it was unusable on its own when adjacent parcels had been acquired.
Resettlement and acquisition of the additional land were carried out satisfactorily in
accordance with the RAP.
Fiduciary Compliance
55. Financial Management. Overall, Financial Management (FM) was satisfactory.
The Ningbo Municipal Finance Bureau (NMFB) and NMPMO both had extensive
experience in FM prior to NNCDP, which enabled them to provide training and build the
capacity of the less experienced PIUs. A well-prepared FM manual proved effective in
this regard. Interim Financial Reports (IFRs) and audit reports were submitted in
accordance with the Loan Agreement, and all audits were carried out by independent
auditors, were produced on time and received unqualified (clean) opinions. The project
was given a FM risk rating of “moderate” at appraisal, and the mitigating measures
implemented (i.e. training for all project finance staff, most of whom were new to Bank-
financed projects) were effective.
13
56. Procurement and Contract Management. Procurement was done satisfactorily in
accordance with Bank procedures. In the rural wastewater component, procurement
suffered delays early on largely due to the PIUs’ unfamiliarity with Bank policies and
procedures. As difficulties were encountered in identifying appropriate DIs and
accommodating numerous changes between preparatory and detailed design stages, the
Bank showed flexibility in allowing, for instance, reducing the contract scales and
combining survey and detailed design into one contract. Procurement and contract
management were generally satisfactorily managed.
2.5 Post-completion Operation/Next Phase
Rural Wastewater Management Component
57. Before hand-over of the rural wastewater infrastructure to individual Village
Committees, O&M was to be managed by contractors for an 18-month period following
completion of works. At closing, 96 out of 144 villages remained in the 18-month handover
period. Of the 48 villages with O&M handed over, 10 villages had O&M managed by the
local town government, while 38 had engaged third-party providers. Each village has
members who have undergone training to carry out simple, regular maintenance.
58. Site visits to Fenghua and Ninghai counties were carried out to observe O&M
procedures put in place by external companies. While the monitoring platforms had their
merits, including the use of technology to remotely monitor physical conditions, the
systems were not standardized, with variations on how data was collected and assessed.
Based on observations of these O&M systems, the PMO noted that the technical capacity
of firms with regard to rural wastewater infrastructure, varies considerably. Closer
monitoring and coordination among PIUs and the PMO are necessary to ensure consistency
in monitoring and measurement of results, and in the systems’ overall sustainability. To
this end, the PMO prepared a set of guidelines – Zhejiang Rural Wastewater Treatment
Facilities Operation and Maintenance Management Assessment Methods – in March 2016.
These should tighten the process of appointing external companies, by more clearly
specifying the standards and requirements for O&M systems at the bidding stage.
59. O&M funding policies, as well as longer-term infrastructure replacement policies,
were determined at the county level, with cost subsidies determined in line with the socio-
economic status of villages, as designed. In Fenghua and Ninghai Counties, where
approximately half of the villages were categorized as relatively poor, 100% of O&M costs
and infrastructure replacement costs will be covered by county governments. In Yuyao
County, with around 3% of villages considered relatively poor and more than half of
villages relatively wealthy, the county will cover O&M costs, but villages are fully
responsible for electricity and equipment upgrading. A wastewater treatment tariff of
between 0.45 – 0.8 CNY/m3 of water or RMB 2.67 – 4.75/month has been introduced in 55
of the 144 villages, the majority of which fall in the relatively wealthy category.
Wastewater tariffs are collected every two months by the county government. The amount
charged is reasonable considering that the average amount households were willing to pay
when surveyed at appraisal was RMB 3.98/month.
14
Chunhu Town Infrastructure Development Component
60. Fenghua City assumed responsibility for O&M of the assets on behalf of FCIC, and
has outsourced this to different external companies. The City is also responsible for
providing budget appropriations to meet O&M requirements and payments to the
management companies, which it has expressed commitment to continuing.
61. Chunhu-Fenghua Access Road. Following completion of check-and-acceptance
procedures, the road was handed over to the Tunnel Management Office and Road
Construction Management Office (part of the Fenghua Road Management Division under
the Fenghua Transport Bureau) in January 2013, and was assessed as being in good
condition at acceptance. The road belongs to the national Class I Highway Network and
follows the standard O&M procedures, as laid out by the National Highway Management
Department. The project relies entirely on government support for funding O&M.
62. Fenghua Coastal Water Supply. The water supply system was handed over to the
Fenghua Xinyuan Water Company in phases upon completion of separate components
between September 2014 and March 2016. The Fenghua Xinyuan Water Company is
responsible for O&M of the infrastructure, as well as collecting a water tariff. A charge of
RMB 2.05/m3 of water was introduced in 2015 and will increase by 25% every three years,
beginning in 2018. Based on the company’s financial projections, this water tariff will be
sufficient to cover O&M costs by end-2016, and full cost-recovery will be achieved by
end-2022, in line with the project’s financial covenant for this component. Other costs are
being met by subsidies Fenghua City. (Details are presented in Annex 3, Table 3.4).
63. Chunhu Town Wastewater Treatment. The Chunhu town WWTP was handed over
to a company called the Chunhu WWTP upon completion in November 2011, while the
sewage network was handed over in August 2013. The company is responsible for
operating and maintaining the infrastructure, as well as collecting a wastewater tariff,
which is not currently being levied. The company intends to levy a tariff of 0.4 CNY/m3 of
wastewater together with a water tariff starting in 2017. It is projected that the tariff itself
will only be able to cover the cost of O&M from 2022 onwards, meaning that the project’s
financial covenant requiring wastewater user charges to cover O&M expenses by end-2016
will not be met. Similar to the coast water supply component, other costs are being met by
subsidies from Fenghua City (Details are presented in Annex 3, Table 3.5).
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
Relevance of Objectives: High
64. The PDO remained highly relevant to priorities of both the national and municipal
governments. Rural issues have remained a national priority since the NCD strategy was
first put forward in the Communist Party of China’s 2006 No. 1 Central Document; the
annual report is typically taken as an indicator of the strategic priorities for the year. In
15
China’s 13th Five-Year Plan (2016-2020), emphasis is placed on well-managed urban
growth, balancing growth with ecological and environmental concerns, the provision of
quality infrastructure in rural areas and the narrowing of the urban-rural divide. The
objectives of the NNCDP remain well-aligned to these national priorities. NMG’s own
commitment to the NCD strategy remains strong, as evidenced by the estimated RMB 7
billion spent by end-2016 to complete wastewater treatment infrastructure in
approximately 1,469 villages, benefitting 720,000 households.
65. The project also remains relevant to the World Bank’s FY 2013 – 2016 China CPSP,
particularly the pillars of “Supporting greener growth” and “Promoting more inclusive
development”. NNCDP’s program-based approach and emphasis on community
involvement as a success factor for rural infrastructure remain highly relevant given the
continued focus on inclusive development and bridging the urban-rural gap. Protecting
local water sources through the implementation of proper wastewater management systems,
as well as TA on developing energy efficiency guidelines and sustainable town planning,
are also aligned with the green growth focus.
Relevance of Design and Implementation: Substantial
66. As a whole, NNCDP components were relevant and clearly linked to achieving the
PDO, and were well-designed to enable Ningbo to implement its NCD strategy. A
combination of infrastructure investments and TA targeted the development of improved
rural wastewater management systems, as well as the development of Chunhu as a
demonstration prototype for small towns. However, the inclusion of a number of other
small TA sub-components was overly ambitious.
67. Rural Wastewater Component. Given NMG’s strategic goal of protecting both rural
and urban local water sources, the construction of rural wastewater treatment infrastructure
to prevent toxic wastewater from seeping into municipal water bodies was critical to
protecting water quality. Targeting and prioritizing villages in water protection zones
ensured that this goal would be achieved more quickly and efficiently than selecting
villages at random. In all, 54 out of 144 villages, or 35% in total, were within water
protection zones. By adopting a community participation approach, the project addressed
the need for appropriate, context-specific infrastructure solutions for each village and
ensured the sustainability of the schemes. Thus the links between the PDO, outputs and
outcomes were strong.
68. Chunhu Town Infrastructure Development Component and Township Management.
The three infrastructure sub-components were clearly linked to the PDO of enhancing
small town infrastructure, with infrastructure works on roads, water and wastewater. One
minor issue is that the KPI for roads measured cars using the new access road, whereas the
NCD model sought to enhance connectivity. Reduced time travel between Chunhu and
Fenghua might have been more appropriate. For the capacity-building and implementation
support component, while capacity-building to support implementation of the rural
wastewater component was essential, the anticipated results of the numerous other small
TAs were not well-articulated, and the results framework did not capture their impact.
16
Given the broad nature of the NCD program, a small number of TA components could still
have been designed to enhance township management in line with NCD principles, rather
than including several. This is further discussed in Section 3.2. Nevertheless, for the vast
majority of the project, the design was substantially relevant.
3.2 Achievement of Project Development Objectives
Rating: Substantial
69. The core of the PDO in both the PAD and Loan Agreement consisted of two
elements: (a) to improve rural wastewater management in selected villages and (b) to
enhance infrastructure and township management in support of the NCD Program in small
towns. Part (b) is further broken down into two sub-sections in the discussion below. Based
on this, the PDO rating is determined on a weightage of 50% for (a), and 25% each for
(b)(i) and (b)(ii) below.
(a) Improving Rural Wastewater Management: High
70. At appraisal, households in Ningbo’s rural areas had no wastewater infrastructure
or services. The NNCDP successfully implemented appropriate rural wastewater
technology in 144 villages, and the total number of households served by the new
infrastructure was 45,500, exceeding the target of 41,000 households under KPI #1. The
connection rate of households to the new systems was high, at 85%. In response to various
context-specific factors, including local topographic conditions, cost and ease of O&M,
different types of treatment options were implemented in the project villages. The majority
of villages (over 90%) adopted a piped sewer system with different treatment options,
while a number opted for shared septic tanks, the two main options offered. In addition,
the physical infrastructure was complemented by TA under Component 3a to improve local
technical and management capacity, providing training to implementing agencies in areas
that were otherwise unfamiliar, such as the community participation approach, project
management, financial management and O&M. In the interest of space, further details on
how the project worked are presented in Annex 2.
71. Prior to implementation, wastewater from village industries and households was
often discharged into open drains before leaking into the ground, adversely affecting
drinking water sources such as reservoirs. PAD-stage design criteria for rural wastewater
treatment outlined control parameters to be met in order to reduce levels of pollutants.
However, given that this was not a pollution reduction project, pollutant discharge testing
results were not captured by the results framework. Regular environmental monitoring
reports conducted by external environmental monitoring firms have nonetheless shown that
the pollution reduction rate has been significant (See Annex 2, Table 2.3 for further details).
In Jiangbei County, for example, the average pollution reduction rate across five main
pollutant measures – chemical oxygen demand (CODCR), suspended solids (SS), total
phosphorus (TP), ammoniacal nitrogen (NH3N) and biochemical oxygen demand (BOD)
– was between 90 to 99%. Finally, the standards for rural wastewater treatment devised
under NNCDP have been adopted, not only in Ningbo Municipality, but across all of
17
Zhejiang Province, which is a major unanticipated outcome and a demonstration of the
effectiveness of these standards.
(b) (i)Enhancing Infrastructure: Substantial
72. Chunhu Access Road. The project constructed a four-lane, Class I road connecting
Chunhu town to Fenghua City, shortening the travel distance by 10km, and reducing
traveling time from 40 to 15 minutes. In line with NMG’s NCD objectives, the road has
met the growing demand for faster connectivity between Chunhu town and Fenghua City,
which had otherwise been served by bypass roads that on more circuitous routes. At closing,
new Jinhai Road had exceeded the target for KPI #2 by approximately 7%, serving 13,933
car equivalent units per day, compared to the target of 13,000.
73. Fenghua Coastal Water Supply. Chunhu town had previously relied on local natural
reservoirs for its drinking water supply, but these had proven an unreliable source as
capacity was low, supply was inconsistent and water quality was diminished by pollution.
The project built a new 15.8km-long transmission pipeline from the town to the Qiujiushan
WTP, and replaced and expanded 12.9km of the Chunhu Town water distribution network.
The supply network now provides water 24 hours a day, seven days a week, benefiting a
total of 76,500 residents in 25,500 households, slightly exceeding the 76,000 residents
targeted under KPI #3. Water quality also meets National Standards for Drinking Water
Quality GB 5749-2006. By providing a consistent supply of water that meets national
drinking water standards, this component has enhanced essential basic infrastructure in
Chunhu Town. The transmission pipelines were also built to allow for future connections
in a second phase of the coastal water supply network, to serve other small towns and
villages in the area. This second phase, serving the towns of Qiucun and Song’ao, is under
construction and is expected to be completed by end-2017.
74. Chunhu Wastewater Management. Chunhu Town had no wastewater collection or
treatment facilities at appraisal. Demand for wastewater treatment was projected to grow,
both from the town’s population as well as the development of the Hongsheng Haitang
development zone, with wastewater generation expected to reach 10,000 m3/day by 2015
and 25,000 m3/day by 2025. To treat the additional wastewater generated, the project
financed a 19km-long wastewater collection network and a WWTP with a daily capacity
of 10,000m3. KPI #4 set a target of having 70% of wastewater treated in Chunhu. This
target was exceeded, with 84% of Chunhu wastewater being treated at closing. Water
discharged from the WWTP also meets Municipal Wastewater Treatment Plant Discharge
Standards (GB 18918 2002).
75. While the KPI was achieved, the WWTP is currently functioning at about 60% of
design capacity, or 6,000 m3/day. The reason for this is the slowdown in China’s economy,
which resulted in a slower-than-anticipated pace of growth in Hongsheng Haitang, the new
development zone close to Chunhu Town. The lower volume of industrial wastewater has
reduced the quantity of influent while at the same time increasing the quality of influent,
resulting in lower pollution reduction quantities. This issue is, however, out of the project’s
18
span of control, and the component has still contributed to the overall objective of
improving basic infrastructure in the town.
(b) (ii) Enhancing Township Management: Moderate
76. While there was strong support for the NCD program by NMG when the project
was developed, NMG also recognized its lack of experience in small town development.
The project therefore provided TA support for institutional development in line with NCD
principles, including energy efficiency, strategic and spatial planning and improved
government administration. As raised in Sections 2.1 and 2.3, an issue with the design of
this component was the lack of suitable KPI and IOI to sufficiently monitor progress and
achievements. KPI #5 and KPI #6 measured only whether specific activities (adoption of
energy efficiency guidelines and completion of NCD plans for Chunhu town) were
completed. While these were met, and the activities specified under the remaining TA sub-
components were also completed, largely as they had been designed, it is difficult to
ascertain the degree of enhancement of township management in absence of a robust RF.
It should also be noted that the PDO in the LA made reference to improving management
in “small towns”, indicating that a demonstration effect was likely intended. However,
there were no deliberate efforts made to ensure that this would take place. (Detailed
information is presented in Annex 2).
77. Based on information obtained at the ICR stage, the different TA components
appear to have had varying levels of effectiveness in enhancing township management.
Firstly, under business promotion, activities were intended to enable the Chunhu Town
government to promote the town as a desirable location for commercial activity and other
complementary services close to the Hongsheng Haitang area. Deliverables included a
website to promote investment in Chunhu Town and organizing seminars and business
fairs to market investment opportunities and sound out investor demand. The town
government has committed to ensuring business promotion remains a priority, and have
attributed the successful relocation of four manufacturing businesses to Chunhu Town.
Secondly, under e-governance enhancement, an online platform for information sharing
among government agencies was created. However, no details were available in terms of
how widely this is used, or how it has improved government efficiency.
78. The third TA on energy efficiency, supported by ESMAP, faced some limitations
in its effectiveness as a result of cost constraints. Guidelines for rural housing sites and a
school site were developed (KPI #5 was met), but could not be implemented fully because
of cost – suggested efficiency measures such as the installation of solar panels, and the
renovation of buildings using more energy efficient materials, were not implemented. At
the same time, the guidelines were utilized in rural housing projects in two villages beyond
the demonstration sites, indicating a small degree of dissemination. Finally, for the TA on
preparing strategic and master plans, feedback has indicated that the way in which the TA
was conducted – the process of developing plans was iterative, and involved several rounds
of consultations and discussions between consultants, government officials and local DIs
– helped to build capacity among local institutions. The proposals required for plans under
KPI#6 were also completed.
19
3.3 Efficiency
Rating: Substantial
79. An economic analysis was conducted covering the rural wastewater component
and the Chunhu Town infrastructure component (i.e. the Fenghua-Chunhu access road,
Fenghua Coastal Water Supply and Chunhu Wastewater Treatment sub-components).
Together, these accounted for 99% of total project costs. The project was expected to
generate a variety of economic benefits to Ningbo Municipality, including improved public
health and quality of life in villages and Chunhu Town, improved quality of waterbodies
and soil in the project area, as well as saved travel time and cost and increased productivity.
80. Given the challenges of quantifying the economic benefits related to water quality
improvement, and in determining the causal link between the benefits realized and the
improvements made, a cost-effectiveness approach for evaluating the rural wastewater
component, as well as the Fenghua coastal water supply and Chunhu Town wastewater
treatment investments was adopted, which allowed effective, low-cost solutions for each
component to be selected. The table below compares appraisal and completion indicators
for components assessed using the cost effectiveness approach.
Table 3.3.1: Comparison of Indicators at Appraisal and Completion
Component/ Sub-Component PAD ICR
1. Rural Wastewater Component
No. of beneficiary villages 150 144
Beneficiary households (Target/ Actual) 41,000 45,500
Investment (Million RMB) 327.4 394.8
Beneficiary households per RMB 10,000
investment
1.3 1.2
2. Chunhu Town Infrastructure Development
(i) Fenghua Coastal Water Supply
Water supply capacity (tons per day, 2015) 26,000 26,000
Beneficiary population (Target/ Actual) 76,000 76,500
Investment (Million RMB) 107.4 131
Beneficiary population per RMB 10,000
investment
7.1 5.8
(ii) Chunhu Town Wastewater Management
Water treatment capacity (tons per day, 2015) 10,000 10,000
Wastewater Treatment Rate (Target/ Actual) 70% 84%
Investment (Million RMB) 55.5 59.6
81. Actual project investment costs exceeded estimates across all components by a total
of 17%, as shown in Annex 1, largely due to exchange rate fluctuations, as well as increased
costs associated with resettlement and land acquisition, particularly for the Chunhu-
Fenghua access road. The Fenghua Coastal Water Supply component also saw an increase
in costs associated with water conveyance tunnels, as these were found to require a deeper
20
depth than anticipated for operational safety reasons. The comparison above shows that the
project achieved levels of efficiency that were fairly close to, or in some cases better, than
what had been estimated at appraisal.
82. Comparisons were also made with other projects as appropriate. For the rural
wastewater component, NNCDP costs were compared with those of NMG’s own, more
widespread project to provide rural wastewater services to more than 720,000 households
elsewhere in the Municipality. NNCDP provided rural wastewater infrastructure at an
average cost of 8,000CNY/household, while NMG’s own project did so at a significantly
higher cost of between 10,000 – 15,000CNY/ household. The Chunhu Town WWTP, with
a capacity of 10,000m3/day, was constructed at a total cost of 27.04 million CNY. In
comparison, a WWTP with half the capacity (5,000m3/day) constructed as part of the
Zhejiang Qiantang River Basin Small Town Environment Project was constructed at a cost
of 24.53 million CNY, a difference of less than 10%. Both plants were designed to meet
the same national Class 1B treatment standards. As construction methods and local
topographical conditions were unique to the NNCDP, a suitable comparison was not made
for the Fenghua Coastal Water Supply system.
83. A cost-benefit analysis was conducted for the Fenghua-Chunhu access road.
Sensitivity analysis (assuming a 20% increase in capital costs and 20% decrease in
economic benefits) showed that the access road investment will provide an EIRR of 12.1%
or 10.2%, with and without the increase in land value respectively. Despite the EIRR being
lower at completion than at appraisal, it still exceeds the 10% generally accepted by both
the Bank and the Government. Full details are presented in Annex 3.
84. In terms of administrative efficiency, the project was prepared in 14 months from
concept review to approval by the Board, at a cost of US$380,000. A comparison with
other NCD, rural wastewater and small town development projects revealed that the NNCD
project took the average length of time for project preparation (14 months), but was
prepared at a cost that was approximately 14% higher than average, possibly because of
the extensive preparation involved in the community participation approach. At the
implementation stage, all components progressed smoothly with the exception of the rural
wastewater management component, which encountered early delays but which was
completed before the original closing date. No extension was necessary.
85. A financial analysis for the Fenghua coastal water supply and Chunhu wastewater
treatment components was also conducted, as detailed in Annex 3. Revised financial
projections for the water supply network show performance to be slightly better at project
closure than at the appraisal stage, with the debt service coverage ratio in 2021 at 1.31 as
compared to 0.97 (See Annex 3, Table 3.4 for details). This is in spite of a more cautious
water demand projection from Hongsheng Haitang and the Zhejiang Shipyard, both of
which have been affected by economic slowdowns. The Fenghua City government has
implemented a Three-Year Action Plan to build a water distribution network covering 51
villages around Chunhu Town by 2018, thereby increasing the demand for water from the
completed water supply network.
21
86. Financial performance for the Chunhu wastewater treatment component was better
at appraisal than at project close. Projections indicate that O&M costs will only be fully
covered by tariffs in 2022, seven years later than foreseen at appraisal. The debt service
coverage ratio will exceed 1 in 2025, a year later than calculated at appraisal stage. While
the financial performance covenant for Chunhu Town to be able to cover O&M expenses
with wastewater tariff charges by end-2016 will not be met, the township is committed to
covering all subsidies as needed until such time that O&M cost recovery can be achieved
(See Annex 3, Table 3.5 for details).
3.4 Justification of Overall Outcome Rating
Rating: Satisfactory
87. The project’s overall outcome is satisfactory. The PDO remained highly relevant
to both the government’s strategies and to the Bank’s CPS in terms of inclusive, sustainable
development and narrowing the urban-rural divide. The design relevance was substantial,
and efficacy is high for reaching the rural wastewater management PDO, and substantial
for the small town infrastructure enhancement PDO. Efficiency was assessed as also being
substantial. In addition, as raised in Section 3.5(c), the project helped to establish province-
wide standards for rural wastewater discharge, which did not exist when the project was
implemented. However, the PDO on enhancing the management of small towns was only
modestly achieved, with a lack of KPI and IOIs to adequately track progress and
achievement of objectives.
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
88. Community participation played an integral role in the rural wastewater component.
Through a comprehensive framework for community participation, the project ensured that
only villages with at least 80% of buy-in from residents were included, and that the rural
wastewater works were tailored made for each village’s particular circumstances. The
provision of financial incentives for households to connect to the wastewater treatment
infrastructure was important in ensuring that households connected, as a common issue in
the provision of wastewater treatment facilities in rural China is that household connection
rates tend to be low. Overall, an 85% connection rate was achieved.
(b) Institutional Change/Strengthening
89. While the NMFB and NMPMO had already accumulated significant project
implementation experience from working on other Bank-funded projects, many sub-PMO
and PIU staff were new to Bank operations. The combination of the capacity building
support offered under Component 3(a) and the extensive training carried out by the Bank,
covering procurement, FM, safeguards and operationalizing community participation for
village selection, as well as technical aspects including rural wastewater management
techniques, helped to build capacity among the PIU personnel at county and district
governments. Similarly, the capacity of the DIs was strengthened through thorough
22
reviews by the Bank, which also helped to address the issue of poor capacity in the project’s
early stages. Together, these efforts to improve capacity-building were essential in enabling
the project to overcome initial implementation delays, and equipped staff with the
necessary skills to manage the project and similar projects in future.
90. In terms of the TA activities implemented, the involvement of various government
planning departments and officials in the activity for development of Fenghua’s 12th Five-
Year Plan and Chunhu Town’s Master Plan contributed to capacity-building among
participants. The TA was carried out through a series of workshops, training sessions and
site visits and was implemented by an international planning consultancy. Exposure to
international best practices in urban planning, as well as the iterative nature of the plan-
formulation process, were important elements in strengthening capacity in the local
planning departments and DIs.
(c) Other Unintended Outcomes and Impacts (positive or negative)
91. The standards for rural wastewater treatment devised for NNCDP have been
adopted across Zhejiang Province. Prior to the project, no technical standards existed for
rural wastewater discharge in China. Standards for city and town wastewater treatment
were unsuitable in the rural context. The standards for the rural wastewater component
were approved for use by the Ningbo Environmental Protection Bureau (EPB) during
project preparation, forming the foundation for design work. These standards were later
accepted by the Zhejiang Provincial EPB, resulting in the issuance of a province-level
standard for rural wastewater treatment – DB33/973-2015, Water Pollutants Discharge
Standards for Rural Sewage Treatment Facilities. Standards were released on June 29,
2015 and became effective on July 1, 2015.
92. In addition to the establishment of province-level wastewater treatment standards,
NMG estimates it will have invested about RMB 7 billion by end-2016 to complete
wastewater treatment infrastructure in approximately 1,469 villages, benefitting 720,000
households. This widespread expansion of rural wastewater infrastructure was enabled in
part by the project’s managerial and technical capacity-building.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
93. No beneficiary surveys of stakeholder workshops were conducted.
4. Assessment of Risk to Development Outcome
94. The overall risk rating is moderate based on the risks described below.
95. Risk that village wastewater treatment systems will not be properly maintained,
resulting in environmental degradation. Rating: Moderate. While the design of the rural
wastewater component included important mitigation measures to better ensure
sustainability, O&M remains a concern. Capacity of Village Committees and third-party
providers in this regard is limited. The borrower’s ICR has noted, for example, cases in
which broken sewer connections, unprotected treatment terminals and malfunctioning
23
electrical equipment have hampered the effectiveness of the treatment facilities. As
discussed in Section 2.5, O&M procedures will require close supervision to ensure the
guidelines established by NMPMO are followed. Regular inspections by Village
Committees, in close cooperation with PIUs, are needed to prevent wastewater treatment
infrastructure from being compromised.
96. Risk of damage to infrastructure due to natural hazards. Rating: Moderate.
Zhejiang Province experiences the heaviest economic losses from tropical cyclones in all
of China, with six of the top ten costliest tropical cyclones during the period 1983-2006
affecting the province1. Given the location of the project (see Map), there is a moderate
risk of damage to the completed infrastructure as a result of typhoons and flooding. To
mitigate against unexpected costs of damage repair, O&M budgeting factored in the
damage repair costs due to by natural hazards. Still, project design could have been
strengthened by factoring in the need for resilience of infrastructure to natural hazards.
97. Risk of continued slow pace of economic growth, impacting demand for water and
wastewater treatment and resultant low operating capacity of related infrastructure.
Rating: Moderate. The economic slowdown in China has resulted in lower-than-
anticipated growth in the Hongsheng Haitang economic zone, which has in turn impacted
the daily volume of wastewater being treated by the Chunhu WWTP. Given the current
economic climate and projections for slower, but more sustainable, economic growth in
China, the operating efficacy of the completed infrastructure could continue to be impacted.
98. Risk to sustainability of O&M financing for Chunhu Town wastewater treatment
component. Rating: Low. The sustainability of O&M for the Chunhu Town wastewater
sub-component is contingent in part on the water tariff levied on residents. Challenges in
levying tariffs for wastewater treatment are not unusual in China, where wastewater
treatment is often viewed as the responsibility of the government. The sustainability of
O&M in the interim will be dependent on government subsidies; that said, the government
is committed to providing support for wastewater treatment in Chunhu, and NMG’s current
financial status appears to allow this to continue. As such, the risk to development outcome
is considered low.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
1 Zhai Panmao, Wang Cuicui and Li Wei, 2007. “A Survey of the Research on Changes in Extreme Precipiation
Events”. Advances in Climate Change Research 3(3): 144-148. Zhai Panmao, Xuebin Zhang, Hui Wan and Xiaohua
Pan. 2005. “Trends in Total Precipitation and Frequency of Daily Precipitation Extremes over China.” Journal of Climate 18: 1096-1108.
24
99. The NNCDP was conceived and designed to be highly relevant to both the national
NCD strategy as well as the Bank’s strategic engagement with China. The task team at
preparation comprised members with appropriate specializations given the focus of the
project, such as water resources, transport, urban development, social development and
financial analysis. Alternatives for implementation were duly considered during the
preparation stage, and institutional arrangements were appropriate given the decentralized
nature of the project area. Major risks were identified and adequately mitigated against.
100. The rural wastewater component in particular introduced a novel community
participation approach to the sector in China. The component also prioritized water source
areas and poorer villages in its selection of sites, in line with the strategic imperatives of
the NCD program. At the same time, acknowledging that the participatory approach was
unfamiliar to communities and implementing agencies, and that implementation of the
component in geographically scattered villages would be challenging, preparation was
thorough, drawing on lessons from similar rural infrastructure projects both in China and
internationally. A comprehensive Framework for Implementation of the Rural Wastewater
Component established clear policies and procedures for implementing the rural
wastewater component. The inclusion of an MEP was also significant in ensuring that the
program-based approach was effective. However, an area that could have been
strengthened during project preparation was the assessment of the client’s institutional
capacity, where weak capacity of the PIUs and the DIs slowed implementation.
101. In terms of the Chunhu Town infrastructure component, Chunhu was selected based
on careful consideration of the town government’s commitment to implementing the
national NCD strategy, as well as its anticipated future growth and potential to serve as a
demonstration site for NCD principles. The decision to finance only Phase 1 of the Fenghua
Coastal Water Supply network proved to be prudent as expansion of the Zhejiang Shipyard
has been considerably slowed in light of the general slowing of the shipbuilding industry.
102. As described in Sections 2.1 and 2.3, the capacity-building and implementation
support component was not as well-designed as the rest of the components, although their
inclusion was in line with broader NCD principles. As a whole, the TAs were fairly
ambitious in scope, targeting several different aspects of township management
enhancement, but without enough suitable KPI or any IOIs to measure progress and
achievement. The component also did not touch on how to operationalize the
demonstration effect of enhanced township management in other small towns.
(b) Quality of Supervision
Rating: Satisfactory
103. Overall, the quality of Bank supervision was satisfactory. The Bank helped the
borrower overcome initial delays in the rural wastewater component with close monitoring,
supervision and provision of training. In light of the slow overall implementation progress
observed in early 2013, the team exercised candor in downgrading the project to
“Moderately Unsatisfactory” status. At the same time, Bank management topped up the
supervision budget with an additional US$20,000 to conduct extensive training on project
25
management, procurement, FM, social and environmental safeguards and contract
management, which were acknowledged by the borrower as having built capacity among
implementing agencies. The task team was also able to build on the already strong working
relationship with NMG, ensuring close communication and supervision throughout the
implementation process.
104. A total of twelve full supervision missions (excluding the ICR mission) were
conducted, and the supervision task teams largely comprised members with an adequate
skill mix given the scope of the project. Site visits to monitor the status and operation of
completed project-funded infrastructure were carried out as part of each mission.
Supervision of the safeguards and fiduciary aspects of the project was effective. The
change in task team leader in 2012 also did not impact implementation progress. The team
was proactive in addressing issues that arose, and gave clear, effective guidance to
overcome delays and issues faced. In the Chunhu wastewater treatment system, for
example, the WWTP was completed on schedule in April 2012, but lay idle or functioned
at a low daily capacity because the necessary secondary and tertiary networks were not
built. By stressing the importance of a time-bound action plan for construction of these
networks and closely supervising implementation progress, the team worked closely with
the borrower to increase the utilization of the WWTP.
105. The task team generally placed more emphasis on the various infrastructure
components of the project during supervision as compared to the TA sub-components,
especially given the delays encountered in the rural wastewater components. As the TA
component also lacked IOIs, closer monitoring of the capacity building and
implementation support component was also somewhat limited by the RF design. A mid-
term review was not required for the project and one was thus not carried out, though it
may have been useful in terms of identifying shortcomings in the TA components.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
106. On the basis of the above assessments, the Bank’s performance is rated Satisfactory.
It should also be highlighted that the borrower widely acknowledged the Bank’s support
during the implementation phase, noting that the task team’s close supervision,
responsiveness and practical advice enabled PMOs and PIUs to enhance their capacity to
implement the project.
5.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
107. This rating considers the performance of the Ningbo Municipal Government
(NMG). NMG remained a committed partner in the NNCD project, working closely with
both the Bank and implementing agencies to ensure successful preparation and
26
implementation. The project triggered three safeguard policies, which NMG had the
experience and capacity to address. Counterpart funds were sufficient and allocated in a
timely manner, and no major issues with requesting funds or processing reimbursements
were encountered. One particular area in which the NMG was actively involved was in the
promotion of O&M guidelines for the rural wastewater component. The O&M
management rules issued in March 2013 were the first of their kind for NMG, and helped
to provide a set of standards for all villages to follow, which was necessary given the large
number of villages involves as well as challenges faced with high staffing turnover and
poor capacity among PIUs.
108. In addition, NMG provided considerable financial subsidies for the various project
components, fully covering the costs of indoor household connections and some O&M in
the rural wastewater component, as well as contributing to O&M for the Chunhu-Fenghua
access road and the Chunhu Town wastewater treatment components. The high connection
rate of 85% for the rural wastewater treatment component is attributable to the full coverage
of connection costs in each county, of which NMG made partial contributions.
(b) Implementing Agency or Agencies’ Performance
Rating: Satisfactory
109. The project was implemented by several implementing agencies, including an
overall municipal PMO, PMOs at the city and county levels, as well as PIUs in each
participating country/ district. The rating in this section considers the performance of the
key implementing agencies.
110. Ningbo Municipal Project Management Office (NMPMO). NMPMO was able to
build on its prior experience of working on other Bank-funded projects to provide support
and guidance to sub-PMOs and PIUs. NMPMO’s role as overall coordinator was
significantly strengthened when a new Deputy Director was hired to oversee the project in
2012, in response to the initial delays encountered in implementation and the need for
greater coordination and training among other implementing agencies. Overall, NMPMO
played a critical role in institutional coordination, organizing trainings and monthly
progress meetings among the various implementing agencies.
111. Ningbo Rural Wastewater Treatment Project Management Office (NRWTPMO).
Low capacity among PMO staff resulted in initial delays, as staff were not familiar with
project management and Bank procedures. This was eventually addressed through
extensive training organized by the task team and the NMPMO, including domestic study
tours to understand best practices. The NRWTPMO played a central role in obtaining
approval from the Ningbo EPB for the project’s proposed standard for rural wastewater
discharge, which went on to form the basis of a new province-wide standard. In addition,
NRWTPMO was instrumental in ensuring that the community participation approach was
better-understood and implemented by PIUs following initial delays.
112. Fenghua City Investment Company, Ltd (FCIC). FCIC was the PIU for all
infrastructure and TA under the Chunhu Town development component. The PIU
27
performed satisfactorily as the implementing agency for this component, ensuring that
implementation was completed according to schedule, and that required M&E reporting
was carried out in a timely manner. In terms of the TA components, FCIC was pro-active
in addressing delays in implementation, such as the lack of interest from local DIs in
bidding for advertised projects and the need to identify an alternative demonstration site
for the energy efficiency component.
113. However, an area that could have been more closely managed by FCIC was the
coordination of Bank-funded infrastructure with other connecting infrastructure. The
Chunhu WWTP, for example, was completed on schedule, but was unused for a period of
one year as the secondary and tertiary collection networks were not planned for completion
at the same time. One area that could have been strengthened was in sharing knowledge or
best practices of the various township enhancement measures with other small towns, in
line with the objective of the component. However, this may be more of an issue to do with
the original project design, which did not require such steps to be taken.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
114. Based on the assessment of performance by both the Government and
implementing agencies, the overall borrower performance is rated Satisfactory.
6. Lessons Learned
115. A participatory approach is an effective and efficient way to solve otherwise
complex issues in construction and O&M of rural wastewater facilities, but requires
sufficient time for familiarization and capacity-building in new environments. A challenge
in implementing rural wastewater facilities is the scattered, varying nature of the locations
involved, with each requiring a degree of adaptation of the infrastructure and O&M to suit
the local context. NNCDP involved villagers in all stages of the process, from village
selection to design and O&M, and took into account villagers’ priorities and concerns
through well-designed and participatory procedures. The amount of time required, however,
to get the first batch of villages implemented was under-estimated in terms of the need for
awareness raising among communities as well as the training of staff in implementing
agencies in the community participation approach. Project complexity and implementation
capacity need to be properly matched during project design.
116. The provision of financial subsidies, in combination with awareness-raising of
wastewater treatment services among communities, is necessary to achieve a high rate of
individual household connections to rural wastewater treatment infrastructure. NMG
provided full subsidies to households to cover the costs of indoor connections. This, along
with the awareness raising on the need for and benefits of rural wastewater infrastructure,
were key elements in enabling the project to achieve a high rate of indoor household
connections (85%).
28
117. Implementing wastewater tariffs remains a challenge to self-sufficiency in covering
O&M costs, and the role of financial covenants in ensuring tariff implementation appears
limited. The treatment of wastewater has traditionally been viewed as the responsibility of
the government in China, leading to challenges in levying charges for wastewater treatment
services. One of the financial covenants for the NNCDP required O&M costs of the
Chunhu Town Wastewater Management investment to be fully covered by wastewater
tariffs by 2016, but based on projections at project close, this would only be achieved in
2022, assuming the tariff is increased at a steady rate every three years. O&M expenditures
still require government subsidies, and this may continue for longer than planned given the
general sentiment towards paying for wastewater treatment. That said, NMG remains
committed to covering the shortfall in meeting O&M costs. This raises the question of
whether more realistic assumptions and requirements for covering O&M costs should be
used in such projects, given the limited effectiveness of financial covenants and the
willingness and ability of some governments to contribute to covering O&M costs. A
combination of tariffs, transfers and taxes, for example, can also be considered as means
to cover O&M costs.
118. TA components to enhance township management should be designed in a targeted
manner, with well-established links to the overall project objective and appropriate
indicators to demonstrate effectiveness. NNCDP included several TA sub-components,
which were all aimed at broadly improving township management. Without clear desired
results, the contribution of the various sub-components to the overall PDO is hard to
discern. The KPI for the TA component captured the completion of discrete tasks (e.g. the
completion of a revised NCD plan, and the completion of energy efficiency guidelines),
but did not measure the extent to which these activities improved township management,
whether in Chunhu Town or in other surrounding areas. A more measured approach with
fewer sub-components, together with appropriately designed output and outcome
indicators, would have been more effective.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
119. A summary of the Borrower’s ICR is presented in Annex 5. Overall, the Borrower
has found the NNCD project to be successfully completed, and highlighted the guidance
and support from the World Bank task team as having contributed significantly to the
project’s success.
(b) Cofinanciers
Not applicable.
(c) Other partners and stakeholders
Not applicable.
29
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Components
Appraisal
Estimate (USD
millions)
Actual/Latest
Estimate (USD
millions)
Percentage of
Appraisal
Component1: Rural Wastewater
Management 47.96 60.80 127%
Component2: Chunhu Town
Infrastructure Development 78.49 103.36 132%
(a) Chunhu Access Road 55.45 74.00 133%
(b) Fenghua Coastal Water Supply: (i)
Transmission Pipeline (US $12.60m); (ii)
Chunhu Town Distribution Network
Renovation and Expansion (US $3.13m)
15.73 20.18 128%
(c) Chunhu Wastewater Management 7.31 9.18 126%
Component3: Capacity Building and
Implementation Support 1.96 1.53 78%
(a) Rural wastewater management
component capacity building and
implementation support
0.71 0.53 75%
(b) Chunhu Town capacity building and
energy efficiency demonstration 0.60 0.41 68%
(c) 12th 5-Year Plan preparation support to
Fenghua Development Reform
Commission
0.35 0.35 100%
(d) Project Management and Business
Development Support for FCIC 0.30 0.24 80%
Total Baseline Cost 128.41 165.69 129%
Physical Contingencies 11.74 0.00 0%
Price Contingencies 2.04 0.00 0%
Total Project Costs 142.19 165.69 117%
Interest During Construction 14.77 4.51 31%
Front-end fee 0.13 0.13 100%
Total Financing Required 157.09 170.33 108%
(b) Financing
Source of Funds
Appraisal
Estimate
(USD millions)
Actual/Latest
Estimate
(USD millions)
Percentage of
Appraisal
Borrower 107.09 120.33 112%
International Bank for Reconstruction and
Development 50.00 50.00 100%
Total 157.09 170.33 108%
30
Annex 2. Outputs by Component Project Outputs Plan at Appraisal Actual Completed
Component 1: Rural Wastewater Management
Service district 6 1. The rural wastewater management component was implemented in 144
villages across 5 districts, serving a total of 45,500 households and benefitting
approximately 141,000 rural residents. Using a program-based approach, the
component was implemented in five separate batches, with each batch adopting a
community participation methodology to select villages and appropriate treatment
technologies for each context. Municipal and county governments covered the cost
of indoor sewage connections as a means of encouraging participation in the rural
wastewater management scheme, which helped to achieve an average indoor
connection ratio of 85%. Table 2.1: Beneficiary Villages, Households and Population
Batch No. of participating
villages
No. of beneficiary HH No. of beneficiaries
1 14 3,048 9,448
2 28 7,135 22,118
3 29 9,748 30,219
4 23 8,695 26,955
5 50 16,875 52,260
Total 144 45,500 141,000
2. The project worked in the following manner, according to the Framework for
Implementation. Rural villages were identified in three broad categories: (i) those
within water surface protection areas, often in remote, undeveloped and mountainous
areas; (ii) relatively wealthy villages outside of water protection areas, often on
plains, close to population centers, with better ability and willingness to pay for
wastewater services; and (iii) relatively poor villages outside of water protection
areas. Those in water surface protection areas were generally given priority for
participation in the program, as was the case in the first batch of villages, where 13
out of 14 villages were in such areas. In total, villages in surface protection areas
Service villages About 150
Service households 41,000
31
Project Outputs Plan at Appraisal Actual Completed
accounted for over one-third of all villages in the project at completion. The project
also provided TA to assist the PIUs to educate and raise villager awareness of the
importance of wastewater treatment, including consideration of technology choices,
benefits and responsibilities of asset ownership, O&M, revenue mobilization, and
hygiene education. As an incentive to connect, the project offered grants, financed
through counterpart funds, to make up for the cost of connecting to the sewer system.
A participatory approach to confirm villages for participation was adopted to ensure
that the villages were committed and suitable for inclusion in the scheme.
Table 2.2: Villages by Category
Category No. of Villages Proportion
1. Within water surface
protection areas
50 34.7%
2. Relatively wealthy
villages close to
population centers
51 35.4%
3. Relatively poor villages
outside of water
protection areas
43 29.9%
Total 144 100%
3. When villages signaled their agreement to participate in the project, the PIUs
undertook village topographical and soil investigations, prepared feasibility studies,
preliminary designs, cost estimates and financing plans, procurement plans, and the
necessary safeguard documents, and then recommended the most suitable technology
option to the villages. To build capacity, the project provided TA to support these
tasks under Component 3(a)(i), as well as office equipment. Two basic technology
options were offered: a piped sewer system or a septic tank system. The most
appropriate option was based on affordability, O&M sustainability, and the ability to
meet discharge requirements agreed on with the Environmental Protection Bureau
(EPB). Financing of the program was split between the NMG, the county
governments and the Village Committees. NMG provided a capital cost subsidy of
32
Project Outputs Plan at Appraisal Actual Completed
50% from the Loan proceeds, and the county governments provided the balance from
their own revenues, including contributions from villages. Contributions from
villages were in the form of land – a total of 205 mu of land was donated for the 242
treatment terminals in 144 villages.
4. In response to various factors, including local topographic conditions, cost
and ease of O&M, different types of treatment termination options were implemented
in the project villages. The majority of villages (over 90%) adopted a piped sewer
system but utilized different treatment processes, at times in different combinations.
A total of 1,217km of pipework was laid as part of this component. Pipes were
generally UPVC wall pipes and HDPE double-wall corrugated pipes varying sizes
(DN150, DN200 AND DN300), depending on requirements set out in technical
specifications. A trickling filter system was adopted in 31% of villages, while 29%
had a combination of anaerobic treatment tanks and constructed wetlands. 23% of
villages used prefabricated advanced oxidation (AO) treatment facilities, while 9%
had wastewater collected and channeled to treatment plants. Close to 5% utilized
biological rotating contractors and the remaining 1% used sequencing batch reactor
(SBR) technology. The exact combination of technologies used was heavily
dependent on the local context. In villages that did not opt for a piped sewer system,
142 septic tanks on a two family-sharing basis and 223 community septic tanks were
also built. Tanks were built of high-quality, fiberglass-reinforced plastic.
5. The design criteria for rural water treatment outlined control parameters to
be met by the rural wastewater management systems in order to reduce levels of
pollutants discharged into bodies of water in rural Ningbo, which was important given
the municipality’s focus on protecting local water sources. While project design had
stipulated that two boreholes be drilled in each village to allow villagers to monitor
their scheme’s efficiency and assess potential contamination of surface water, this
was not implemented due to various challenges on the ground, including resistance
from villagers and unsuitable terrain. Instead, monitoring was carried out at effluent
discharge points. Although the pollutant discharge level testing results were not
captured by the results framework, regular environmental monitoring reports
33
Project Outputs Plan at Appraisal Actual Completed
conducted by external environmental monitoring firms have shown that the pollution
reduction rate has been significant. In Jiangbei County, for example, the average
pollution reduction rate across five main pollutant types was between 90 to 99%.
Monitoring is carried out once every three months, and results are monitored by the
NRWPMO, NMPMO and Ningbo EPB. Table 2.3 contains further information.
Table 2.3: Pollutant Reduction Rates (December 2015)
County CODcr
(mg/l)
SS
(mg/l)
TP
(mg/l)
NH3-N
(mg/l)
BOD
(mg/l)
Xiangshan
Influent 181.8 41.2 7.1 25.5 54.8
Effluent 43.9 14.0 0.6 10.7 13.9
Pollutant
reduction
rate
76% 66% 91% 58% 75%
Jiangbei
Influent 522.3 333.3 9.1 82.4 250.4
Effluent 30.0 12.3 0.1 6.4 2.8
Pollutant
reduction
rate
94% 96% 99% 92% 99%
Fenghua
Influent 45.0 19.2 2.0 14.3 -
Effluent 22.5 9.4 1.4 7.7 -
Pollutant
reduction
rate
50% 51% 32% 46% -
Yuyao
Influent 273.9 75.7 11.8 52.8 108.2
Effluent 47.7 20.7 1.0 10.3 13.5
Pollutant
reduction
rate
83% 73% 91% 80% 88%
Ninghai Influent 196.0 87.7 1.7 16.0 76.9
Effluent 78.3 23.3 0.3 5.7 21.6
34
Project Outputs Plan at Appraisal Actual Completed
Pollutant
reduction
rate
60% 72% 81% 64% 72%
Component 2: Chunhu Town Infrastructure Development
a) Chunhu Access Road
Construction contents
road specification
Build an access road between
Fenghua City and Chunhu
Town. This road has a total
width of 24.5m with four lanes
and a length of 6.2km
including a tunnel of 3.26km.
It is designed for an average
vehicle speed of 80km/h.
1. The Chunhu-Fenghua access road – named Jinhai Road – was implemented
as planned. It is a 6.2km-long, four-lane road, 24.5m in width, with a 3.26km-long
tunnel section, beginning at the end point of the planned Chunhu west Ring Road and
ending at the access road to Fenghua Railway Station. Construction began on 31
March, 2011 and was completed half a year earlier than planned on 25 January, 2013.
The road was opened to traffic on 7 February, 2013.
2. With the construction of the road, the distance from Chunhu Town to the
center of Fenghua City has been shortened from 24km to 14.2km, fulfilling the
intention of constructing a quicker access road as an alternative to the two bypass
roads (Chunhu-Abide Road and Chunhu-Lichen Road) that existed at the time of
appraisal. Travel time was shortened from 40 minutes to 15 minutes, and the daily
car equivalent volume of traffic as at project close was 13,933, which exceeded the
target of 13,000 by around 7%. Jinhai Road has helped to facilitate access to the
Hongsheng Haitang economic development area, a coastal development zone which
is planned as the largest industrial area in Fenghua. Residents of Chunhu and other
neighboring villages and towns such as Qiu Village and Song’ao Town, are able to
enjoy easier access to Fenghua, from which highway access also allows quick access
to Ningbo city.
3. The road was designed and constructed as a Class I standard road according
to specifications in Road Engineering Technical Standards (JTC B01-2003). In terms
of construction materials, the road was made of base layers of cement stabilized
crushed stone, and topped with layers of asphalt. The road belongs to the national
Class I Highway Network and follows the standard O&M procedures, as laid out by
the National Highway Management Department.
Road connection
function
The road section will connect
the northwestern part of the
corridor with the roads that
will eventually lead to the
Ningbo, Taizhou, and
Wenzhou railway stations. The
proposed road section will also
provide further access to
downtown Fenghua City. The
road will improve access from
Fenghua City to Chunhu
Township and shortens the
total travel distance by 10km.
Car equivalent The car equivalent in 2016 is
expected to achieve 13000.
35
Project Outputs Plan at Appraisal Actual Completed
b) Fenghua Coastal Water Supply
Pipeline laying Build water supply
transmission mains from
Fenghua City to Chunhu
Town, including renovation
and expansion of the Chunhu
Town water distribution
network.
1. 15km of water supply transmission mains from the Qiujiushan Water Supply
Works
in Fenghua City to Chunhu Town were built, together with a booster pump station
and a 13km-long water distribution network. As at project close, a population of
76,500 in Chunhu (around 25,500 households) benefitted from the new water supply,
slightly exceeding the target of 76,000. As intended at project design, the mains were
constructed to allow future expansion of the water supply service to the towns of
Qiucun and Song’ao, as well as the Zhejiang Shipyard, as and when population
growth necessitated the extension (construction of the second phase, not financed by
the project, began in May 2015 and is expected to be completed by end-2017).
2. Construction of water supply mains began on 20 July, 2012 and was
completed on 16 March, 2015. Construction and rehabilitation of the water
distribution network began on 13 October, 2014 and was completed on 25 March,
2016. The completed booster pump station has a capacity of 20,000m3. Water quality
is in line with the National Standards for Drinking Water Quality (GB 5749-2006),
and water supply is available 24 hours a day, 7 days a week.
3. The pipes consisted of nodular cast iron pipes, steel pipes and HDPE pipes of
varying diameters. All pipe material used are in accordance with the relevant national
standards - GB/T13295-2003 for nodular cast iron pipes, GB/T13633-2000 for PE
pipes and GB/T13793-1992 for steel pipes. All construction processes were in
accordance with the GB50268-2008 standard for water and wastewater pipe
construction engineering and acceptance.
Pipeline scale
population
Build 15km new water main
and 13km water distribution
network, it is expected that
76000 Chunhu population
served from a reliable and
high-quality water supply by
the end of 2015.
c) Chunhu Wastewater Management
36
Project Outputs Plan at Appraisal Actual Completed
Pipeline construction Build a 19km Chunhu
wastewater collection main
and branch pipeline
1. The completed wastewater infrastructure achieved a wastewater treatment
rate of 84% at project close. 10km of the 19km-long network was financed by the
World Bank loan, while the remaining 9km was funded by domestic counterpart
funds. Construction of the sewage pipe network began on 15 April, 2011 and was
completed on 28 August, 2013.
2. Construction of the WWTP began on 8 November, 2010 and was completed
on 30 November, 2011. However, as secondary and tertiary collection networks had
not been constructed at the time that the WWTP was completed, the plant lay idle for
over a year. The WWTP was built with a capacity of 10,000 m³/day, but was treating
a volume of 6,000 m³/day at project close due to the lower-than-anticipated capacity
from the Hongsheng Haitang new development zone. Table 2.4 below shows the
annual and daily treatment volume of water, which has steadily increased over the
last four years.
Table 2.4: Annual/ Daily Wastewater Treatment Volume
Year Annual treated WW volume(m3) Daily treatment volume (m3)
2013 1,319,543 3615
2014 1,982,245 5430
2015 2,134,420 5848
2016 11,459,912 5983
3. Water discharge standards must meet Class B-1 requirements of Municipal
Wastewater Treatment Plant Discharge Standards (GB18918-2002). Based on
monitoring data obtained at end-August 2016, the national standards for effluent
quality had been met. Table 2.5 shows pollution reduction rates as at end-August
2016.
Table 2.5: Pollution Reduction Rate COD NH3-N TP
Inflow (mg/L) 86.8 8.65 0.65
Wastewater treatment
plant capacity and
wastewater treatment
rate
Build a wastewater treatment
plant with a capacity of 10,000
m³/d in order to help Chunhu
achieve a wastewater
treatment rate of 70% in 2015.
37
Project Outputs Plan at Appraisal Actual Completed
Outflow (mg/L) 27.5 2.43 0.43
Reduction (%) 68.3 71.9 33.8
Component 3: Capacity Building and Implementation Support
a) Capacity Building
and Implementation
Support for Rural
Wastewater
Management
Project management and
capacity building for rural
wastewater management,
including (i) consulting
services for project
management and
implementation support to
PMOs in the Ningbo
Municipality Rural Affairs
Office (RAO) and each project
County/District, comprising
design review, bid document
review and project supervision
and reporting; (ii) village-level
education and awareness
raising to help empower
villages with decision-making
abilities, consider options
including participation in the
program, technology choice,
1. Attachment 1 below contains detailed information on the training sessions
organized as part of this sub-component. Intended to complement the rural
wastewater infrastructure component, training sessions focused on various areas,
including financial management, project management, procurement etc., as well as
on the community participation approach.
2. A key takeaway from the rural wastewater MEP was that dissemination of
information among villagers needed to be improved, in order to secure the support
and participation of more villagers. To encourage more villages to be involved in the
NNCD projects, the NRWTPMO organized training sessions by sub-PMO staff to
villagers in different counties. The sessions were designed to share information on
the significance of rural wastewater treatment projects, in a bid to have villagers
understand the benefits of participating in the NNCD project. Brochures and posters
were produced and disseminated, complementing the information shared in more
traditional village meetings. Capacity-building for the second to fifth batches of the
rural wastewater component involved 726 attendees. 54000 brochures and 430
posters were produced and shared.
3. Two domestic study trips were arranged in July 2012 and October 2012 to
Beijing/Tianjin/Weihai and Hainan to learn applied treatment technologies and
38
Project Outputs Plan at Appraisal Actual Completed
benefits and responsibilities of
asset ownership, routine
operation and maintenance
functions; (iii) training and
study tours (domestic and
foreign); and (iv)
miscellaneous equipment
comprising hardware, office
equipment, vehicle, digital
camera etc.
advanced methods in rural wastewater treatment project. Staff from sub-PMOs in
Xiangshan, Ninghai, Yuyao and Fenhua participated in these site visits. They went to
some villages and communicate with local staffs in meetings. They exchanged ideas
in project design and issues in project implementation, such as discharge standards,
designs on treatment terminals, pipeline network distributions and community
participation. In June, 2015, 20 staff from sub-PMOs in Xiangshan, Ninghai, Yuyao
and Fenhua also went to Dali, Yunnan Province for site visits and discussions with
local staff on the construction of rural wastewater facilities.
b) Chunhu Township
Management
Enhancement, Capacity
Building, and Energy
Efficiency
Demonstration
Chunhu Town capacity
building and energy efficiency
demonstration, including (i)
business promotion activities –
business promotion strategy,
web page and brochure
development, skills training
and marketing activities; (ii)
town governance
enhancement, including e-
government system installed
and updated, improvement of
government reporting and
information in disclosure
procedure, support for
activities promoting public
awareness and participation in
planning and decision-making,
and enhancement of official
performance evaluation; and
(iii) promotion of energy-
efficient township, supported
1. Consulting services for business promotion activities and the development
of an e-government system were carried out between May 2013 and June 2014.
2. Given the proximity of Chunhu Town to the Hongsheng Haitang Economic
Zone, it was envisaged that Chunhu could attract investors looking to establish
supporting industries or services. The intention of the business promotion activities
was to provide capacity-building in business/ investment promotion among Chunhu
township management. As part of the business promotion sub-component, four
small-scale investment seminars and training sessions were organized, as follows:
(a) May 2013: Seminar on Chunhu Government Capacity Enhancement and
Business Promotion activities with NMPMO, Chunhu Government,
Yangzhou University and Tongji Planning Institute. The seminar had more
than 20 participants exchanging their experiences in promoting business
activities.
(b) November 2013: A 2-day training session by Hong Kong SAR, China-
based businessman to share international perspectives on business
development.
(c) November 2013: Study trip to Shanghai, focusing specifically on the
fishery industry (e.g. low-carbon aquatic feeding systems).
(d) June 2014: Seminar conducted by Taiwan Fishery Feeding Association on
the application of grouper feeding technologies.
39
Project Outputs Plan at Appraisal Actual Completed
by ESMAP, consisting of the
development of energy
efficient building designs and
renovation guidelines, a
demonstration rural collective
housing project, as well as
development of sustainable
energy action guidance and
pilots.
There were no KPI or IOIs to measure the achievements under this TA activity.
However, it is reported to have contributed to a more systematic mode of business
promotion and investment attraction by Chunhu township, and has been credited
with attracting four new manufacturing businesses to set up operations in the town.
3. In terms of the e-government system, consultants designed and implemented
an online information sharing platform for agencies to share information, documents
and administrative services. The intention behind this system was to allow for quicker
sharing of information and subsequent follow-up on items requiring attention, e.g.
the need for municipal infrastructure such as roads or reservoirs to be maintained or
fixed. The system was designed both for use on PCs and on mobile phones, and was
used by senior Chunhu Town government officials as well as staff in several
departments, including the Industry and Trade office, Agriculture and Fisheries
Department and the Urban Construction Office, and over 100 village cadres.
However, without KPI or IOIs, the outcomes of this initiative are not clear, and its
contribution to improving township management cannot be quantified. There is also
no evidence that such a system has been implemented in other small towns.
4. The energy-efficiency township component was supported by ESMAP, and
was intended to improve the capacity of Chunhu Town to pursue energy efficiency
buildings. Consulting services began in June 2012, and were completed in January
2015. Delays were caused initially due to the lack of interest among local DIs, as well
as the need to identify an alternative demonstration site after the original village
identified, Dongxie Village, decided to no longer participate in the scheme.
Deliverables for this sub-component were as follows:
(a) Research reports on status of energy efficiency of rural housing in Silian
Village;
(b) Guidelines for rural housing energy efficiency design and retrofitting of
existing buildings (including sample construction drawings) in Xixie
Village;
(c) Guidelines on energy efficiency buildings and construction guidelines for
solar water heating systems;
40
Project Outputs Plan at Appraisal Actual Completed
(d) Assessment and action plan for “green renovation” at Chunhu Middle
School; and
(e) Chunhu Town sustainable energy action plan.
5. Guidelines for rural housing energy efficiency were implemented in Silian
Village with the construction of two residential buildings, each with three storeys
above-ground, one basement and two homes of about 100m2 on each floor. However,
due to budgetary constraints, not all measures could be adopted, particularly the
installation of solar panels. Even without solar panels, the completed homes were still
significantly more expensive than those normally built by villagers, averaging 2,000
– 3,000CNY/m2. The homes were reported to all have been sold, but no land was
subsequently made available for other similar developments given the high cost.
While not adopted beyond the two demonstration buildings in Silian Village, the
villages of Hongxi and Jiaotongsi were reported to have adopted the guidelines in the
construction of new residential buildings, constructing 102 and 48 homes
respectively. However, no follow-up studies were conducted to measure the energy
efficiency of the completed homes as compared to more traditional homes.
6. Similarly, while the Chunhu Middle School implemented certain
recommendations to develop the campus as a green development, such as introducing
energy-saving and water-saving campaigns, adopting other measures such as the
renovation of buildings with more efficient building materials was not possible due
to prohibitive costs. Nonetheless, the energy efficiency guidelines resulted in the
following modifications being made to the existing school site:
a) Containment Structure Reform – addition of thermal insulation materials and
replacement of windows
b) Replacement of indoor lights with energy-saving lights
c) Replacement of water taps with water-saving taps, and replacement of iron
pipes with UPVC pipes
d) Add water permeable bricks and grass-planting ground to enhance rainwater
permeability
e) Improve campus environment
41
Project Outputs Plan at Appraisal Actual Completed
i. Increase green areas on campus by about 910 m2, from 4,736.3m to
5,646.3m2.The greening ratio increased from 14.3% to 17.1%.
ii. Replace regular dustbins with recyclable/ non-recyclable bins.
c) Support for
preparation of the 12th
Five-Year-Plan on
NCD in Fenghua City
Support for preparation of the
12th Five Year-Plan on NCD in
Fenghua City, including (i) the
12th Five-Year Plan on NCD in
Fenghua City – specialist
support to Fenghua DRC to
study and draft the 12th Five-
Year Plan (2011-2015) for
NCD of Fenghua City, to
prioritize various institutional
strengthening and investment
activities, and to guide
Fenghua City’s NCD in 2011-
2015; (ii) Chunhu Town NCD
Strategy and Township Master
Plan – update of Chunhu
Township NCD strategy and
completion of the township
master plan; (iii) village level
NCD planning – spatial and
sectoral development plans
and detailed design of two
selected villages in Chunhu
Town.
1. Working with the governments of both Fenghua City and Chunhu Town, the
activity was designed to strengthen Fenghua’s integrated planning management as
well as Chunhu Town’s institutional capacity in strategic and master planning. In
terms of project KPIs, KPI #5 was directly related to this sub-component.
Consultancy services began on 8 January, 2013 and were concluded on 26 September,
2014.
2. The consultants worked with Chunhu Town government officials, Fenghua
DRC, Fenghua Planning Bureau and Fenghua planning institutions to deliver the
following:
(a) An inception report, covering the deliverables and schedules for the entire
consultancy;
(b) Fenghua City 12th Five-Year Plan (2011 – 2015) for NCD;
(c) Suggestions for improvement of the Chunhu Town Master Plan, as well as
the Chunhu Town Regulatory Control Plan;
(d) Village Construction Plans for two demonstration towns
(e) Capacity-building for Fenghua planning institutes in urban planning
concepts, and national and international best practices, as well as design
concepts and technical skills for village construction plans.
3. An iterative, participatory approach was adopted to deliver the components
above. Three workshops, four training sessions and two site visits were conducted by
the consultants and government participants, in order to build an understanding of
site conditions as well as to have more in-depth discussions regarding the plans and
42
Project Outputs Plan at Appraisal Actual Completed
priorities of Fenghua and Chunhu. The village construction plans were implemented
in Tangtouzhou and Zhujiadian villages. Based on the recommendations of the NCD
plan for Fenghua, Fenghua City has also begun to focus on smart city development
and eco-tourism villages as priorities for future growth.
43
Attachment 1 to Annex 2: Training Sessions Conducted Under Component 3a)
No. Training
Course Duration Organizer Trainer Trainees
Core Content and Skills
Developed Activities
Cost
(RMB)
A: Domestic Training
1 Project
construction
management,
Project
Management of
Bank financed
projects, Rural
wastewater
treatment
techniques.
2009.7.7-
11（1st ）
2009.8.10-
14（2nd)
NRWTPMO
/Munical
Constructio
n
Committee
Ningbo
University/P
MO/
Hydrochina
Huadong
Engineering
Corporation:
Yan
Yonghong,
Yang
Xiaoming,
Wei Jun
Responsible person
of the first-batch 16
villages /
Townership Leader
/ Responsible
person of Sub-PMO
and business header
Laws, policies and regulations
related with new countryside
development; intergration
construction for urban and rural
areas; engineering construction
management and procedures, land
acquisition and house demolition;
introduction to ningbo rural
wastewater treatment planning;
management procedures for WB
projects, rural wastewater collection
and treatment technologies.
Disseminate 3000 brochures and 30
posters.
Lectures
and group
discussion
50000
2 Procurement 2009.7.29 PMO LIU Xujun NNCD staffs/
Tendering
Agency/Sub-PMO
Procurement procedures,
introduction to procurement plan
Lectures
and group
discussion
5000
44
3 Procurement
and Payment
2010.3.4-5 NRWTPMO
/ Ningbo
Financial
Bureau
Li Dejian,
Yang
Jintian,
Yang
Xiaoming
Responsible person
of four counties,
business header,
accounter and
responsible person
of county financial
bureau
Introduction to WB project process,
financial management, and discuss
on household connection
technologies.
Lectures
and group
discussion
54800
4 Second-batch
village
selection
2010.10.8-
11.6
Sub-PMOs NRWTPMO Responsible person
of 60 candidate
villages/ for the
second batch/part of
village
representatives
introduction on the significance of
rural wastewater treatment,
technologies, and key issues during
project implementation.Disseminate
8000 brochures and 120 posters
Lectures
and group
discussion
28700
5 Third-batch
village
selection
2011.7.6-
27
Sub-PMOs NRWTPMO Responsible person
of 40 candidate
villages for the third
batch/ part of
village
representatives
introduction on the significance of
rural wastewater treatment,
technologies, and key issues during
project implementation.Disseminate
10000 brochures and 80 posters
Lectures
and group
discussion
16100
6 Contract
Management,
Construction
Supervision
Management
2011.11.21 ESD ESD: Zhao
Qihong
Responsible person
of the 4 Sub-PMO,
business header /3
design institutes/3
construction
supervisor
Explanations on standard contract
template, project construction
engineering supervision, project
working process and procedures
Lectures
and group
discussion
5000
7 Project
Management,
Attest Audit,
Project O&M
2012.1.5-6 NRWTPMO
/ Ningbo
Financial
Bureau
NRWTPMO
/ Ningbo
Financial
Bureau
Responsible person
of four counties,
business header,
accounter and
responsible person
of county financial
bureau
Trainings on project management,
auditing, discussion on O&M
mechanism
Lectures
and group
discussion
50000
45
8 Fourth-batch
village
selection
2012.8.10-
9.19
Sub-PMOs Sub-PMOs Responsible person
of 39 candidate
villages for the
fourth batch/ part of
village
representatives
introduction on the significance of
rural wastewater treatment,
technologies, and key issues during
project implementation.Disseminate
9000 brochures and 80 posters
Lectures
and group
discussion
15000
9 Project
Management
2012.10.23 Easen Easen：Han
Xiaowei, Li
Wenhua,
Wang Zikai,
Cheng Yijun
Responsible persons
for all components;
Designer;
Construction
Supervisors,
Contractor; Staffs
on Procurement,
Payment, and File
Management
Trainings on procurement
management, financial management,
construction management and
environment management
Lectures
and group
discussion
13700
10 Procurement
management,
capacity
building,
implementation
management,
environmental
management,
resettlement
management
2013.4.22-
24
WB WB Expert:
Wang Yuan,
Yan
Guangmin,
Yuan Jinmu,
Xie Qingtao
Government
bureaus in the
municipal level,
FCIC and
NWRTPMO, four
sub-PMOs, 2
consultant firms,
construction
supervisor
Trainings on procurement
management, capabilities
management, implementation
procedures management,
environment management
Lectures
and group
discussion
50600
11 Fifth-batch
village
selection
2013.7-8 Sub-PMOs NRWTPMO Responsible person
of 33 candidate
villages for the fifth
batch/ part of
village
representatives
introduction on the significance of
rural wastewater treatment,
technologies, and key issues during
project implementation.Disseminate
14000 brochures and 70 posters
Lectures
and group
discussion
15000
46
12 Project contract
management
2014.4.17 PMO WB Expert:
Hu Shunong
Government bureau
in the municipal
level, FCIC and
NWRTPMO, four
sub-PMOs, 3
consultant firms,
construction
supervisor
introduction on contract, contract
management
Lectures
and group
discussion
2200
13 Fifth-batch
supplementary
village
selection
2014.5 Sub-PMOs NRWTPMO Responsible person
of 24 candidate
villages for the fifth
batch/ part of
village
representatives
introduction on the significance of
rural wastewater treatment,
technologies, and key issues during
project implementation.Disseminate
10000 brochures and 50 posters
Lectures
and group
discussion
10000
14 Fifth-batch
village site
training
(Fenghua)
2015.1.12-
13
Sub-PMOs NRWTPMO Responsible person
of Fenghua Ninghai
and Jiangbei Sub-
PMO and business
header, 33 village
representatives and
villager supervisor,
township
responsible person
and business person,
contractor and
construction
supervisor
How to handle policy issues, and
how to coordinate all stakeholders.
Key treatment technologies in rural
wastewater treatment, key issues in
construction, quality testing in
treatment terminals and piplelines
Lectures
and group
discussion
51000
47
15 Fifth-batch
village site
training
(Yuyao)
2015.2.3 Sub-PMOs NRWTPMO Responsible person
of Fenghua Yuyao
Sub-PMO and
business header,17
village
representatives and
villager supervisor,
township
responsible person
and business person,
contractor and
construction
supervisor
Project organization and
implementation procedures, key
issues in site construction
Lectures
and group
discussion
23600
16 Fifth-batch
village staff
training
(Yuyao)
2015.6.18 Sub-PMOs NRWTPMO Villager manager
from 17 villages and
related staffs and
liason man
project construction requirement and
key points in project construction
Lectures
and group
discussion
8500
17 O&M training 2015.9.1 NRWTPMO NRWTPMO Director of Village
Committee from 91
villages in
operation, main
responsible person
from sub-PMOs
Introduction on O&M and
experience, disseminate 100 O&M
brochures
Lectures
and group
discussion
36400
B: Domestic Study Tour
1 Rural
Wastewater
construction
site study tour
(Beijing,
Tianjin,
Weihai)
2012.7.16-
21
NRWTPMO Sub-PMOs in
Xiangshan, Ninghai,
Yuyao and Fenhua
and related staffs
Learn successful experiences from
other areas on rural wastewater and
advanced technologies
Site
investigati
on and
group
meeting
and
discussion
136684
48
2 Rural
Wastewater
construction
site study tour
(Hainan)
2012.10.25
-30
NRWTPMO Sub-PMOs in
Xiangshan, Ninghai,
Yuyao, Fenghua
and Jiangbei and
construction
supervision
Learn successful experiences from
other areas on rural wastewater and
advanced technologies
Site
investigati
on and
group
meeting
and
discussion
62800
3 Rural
Wastewater
construction
site study tour
(Yunnan)
2015.6.30
－7.3
NRWTPMO Sub-PMOs in
Xiangshan, Ninghai,
Yuyao, Fenghua
and Jiangbei and
construction
supervision
Explore WB project management
experience and effective ways in
rural wastewater facilities operation
Site
investigati
on and
group
meeting
and
discussion
68071
49
Annex 3. Economic and Financial Analysis
Economic Analysis
Economic Benefits and Costs, General Assumptions and Valuation Methods
1. When assessed during project appraisal, the Ningbo New Countryside
Development (NNCD) project was expected to generate a variety of economic benefits to
Ningbo Municipality, particularly to the rural population in project areas. These benefits
included improvement of quality of soil and waterbodies, increases in productivity and
livelihood, increases in land and property values, improvements to health and living
standards, reduced cost of water treatment in poorer communities, improved long-term
security of drinking water sources, improved access to better public services and energy
savings and pollution reduction. The project would also bring about longer term benefits
in small town development and rural wastewater management in Ningbo and similar
regions through its small town development demonstration pilots, as well as energy
efficiency improvements.
2. While it was acknowledged at appraisal that the improvement of water supply
services and wastewater treatment services had significant long-term environmental and
health benefits, it was also difficult to quantify the causal link between the two.
Environmental and health benefits observed would ultimately be attributable to various
efforts, and not solely to the project. A cost effectiveness analysis was thus adopted for the
following components: (i) Rural Wastewater Management; (ii) Fenghua Coastal Water
Supply; (iii) Chunhu Town Wastewater Management. A cost-benefit analysis was used to
examine the economic feasibility of the Fenghua-Chunhu access road component.
3. The main economic costs for each component were identified as capital investments,
including associated resettlement and environmental mitigation costs of the investments
identified in the safeguards analysis, as well as O&M. It was assumed that market prices
for most elements would not vary much from their economic value, therefore market prices
were applied directly without conversion in most cases. Economic benefits and costs were
valued at the price levels of the base year 2008, net of inflation, duties and taxes. The
project duration would be 20 years, and different construction periods were used depending
on components. A discount rate of 8% was applied; this was the rate generally accepted by
the Chinese government for most of its projects.
Cost-Effectiveness Analysis
Rural Wastewater Component
4. The objective of this component was to improve wastewater management and the
environment by building wastewater collection and treatment systems in about 150 villages
in six counties/ districts of Ningbo Municipality. A cost-effectiveness analysis was
conducted in order to select the least-cost option, considering that the full benefits and costs
of implementing this component would be difficult to quantify or monetize. A design
50
framework and guidelines for low-cost design were adopted for the first batch of villages,
and a program-based approach was adopted for the remaining batches of villages. The total
estimated investment for this component was US$47.96 million.
5. A survey was also carried out to gauge the willingness and ability of local residents
to pay for rural wastewater treatment. Results showed that 94% of the 401 respondents
were willing to participate in daily O&M of the project, and 70% were willing to pay a fee
for the wastewater treatment service. The average amount that rural households were
willing to pay for wastewater treatment was RMB 3.98/month. Based on the analysis of
projects in the first batch of villages, the annual O&M cost ranged from RMB 6.97/person
to RMB 38.5/person. Even at the higher end of the spectrum, the annual O&M cost
accounted to only about 0.34% of the average net income of rural residents of Ningbo
Municipality. NMG was committed to providing adequate income support to low-income
households under the government’s social protection program, in order to protect against
the project negatively affecting these households’ income levels
Fenghua Coastal Water Supply Component
6. The purpose of this component was to help overcome seasonal water shortages,
which were a constraint to local economic development in Chunhu town and nearby coastal
areas in southeastern Fenghua. Based on the projected water demand of the project area,
the component was projected to increase the area’s water supply capacity to 26,000m3 /
day by 2015, and 60,000 m3 / day by 2025. Two alternatives were considered in the cost-
effectiveness approach. The first was to convey water from the Fenghua City network to
three coastal towns and neighboring areas through the construction of pipelines and a
pumping station, and the second was to divert water from the Baixi Water Diversion Canal
through the construction of a water plant and pipelines to distribute water to the three
coastal towns and neighboring areas. The first option was found to be more cost-effective,
and was subsequently the option implemented in this component. The estimated total
investment for this component was US$15.73 million.
7. A willingness-to-pay survey was conducted for this component. It was found that
the average price that the survey respondents were willing to pay for water supply was
RMB 8.73/household per month. To achieve financial viability with an acceptable financial
internal rate of return of above 6%, it was noted at appraisal that a tariff of RMB 1.6/m3
for domestic water use was recommended. Given the average annual income of local
residents of over RMB 10,000 at appraisal, increasing the tariff from RMB 0.80/m3 (the
prevailing tariff at the time) to RMB 1.6/m3 was considered affordable for the majority of
local residents. Assuming an average consumption level of 100 liters/ day, the total annual
expense of a rural household on water usage would account for less than 1% of income.
Chunhu Wastewater Treatment Component
8. The Chunhu Wastewater Treatment component was intended to provide
wastewater collection and treatment services in Chunhu Town through the construction of
a WWTP and sewage networks for both domestic and industrial sources in the town. Based
51
on the projected water demands and wastewater discharge in the project area, the
wastewater collection and treatment component was designed with a treatment capacity of
10,000m3/ day by 2015, 20,000m3/ day by 2025 and 40,000m3/ day by 2030. Two
alternatives in terms of wastewater treatment processes were considered in the cost-
effectiveness approach: the first was cyclic activated sludge technology and the second was
A/A/oxidation ditch. Option 2 was found to be more cost effective, and was applied to the
Chunhu Wastewater Treatment component. The estimated total investment at appraisal
was US$8.17 million.
9. An analysis of wastewater treatment affordability was carried out, based on
payment of O&M costs only, i.e., excluding capital costs for construction of the wastewater
treatment plant and pipelines. The analysis showed that O&M costs for wastewater
treatment would amount to RMB 0.69/m3. It was assumed that the charge levied on
domestic users would be low, given the cost distribution between industrial and domestic
uses and the commitment of the local government to rural development. With a tariff set
based on the O&M cost of RMB 0.69/m3, the total expense of a local household on
wastewater treatment would account for only about 0.02% of income.
Cost-Effectiveness at Completion
10. A simple comparison of indicators at appraisal and at completion was carried out
to assess efficiency, as shown in the table below. Across the board, investment costs were
higher than estimated at appraisal, largely because of exchange rate fluctuations. The
number of beneficiaries per RMB 10,000 of investment for the first two components was
lower on completion that at appraisal. For the rural wastewater component this was an
insignificant difference of 0.1 per RMB 10,000 in investment, but for the Fenghua Coastal
Water Supply the difference was 1.3 per RMB 10,000.
Table 3.1: Comparison of Indicators at Appraisal and Completion
Component/ Sub-Component PAD ICR
Rural Wastewater Component
No. of beneficiary villages 150 144
Beneficiary households (Target/ Actual) 41,000 45,500
Investment (Million RMB) 327.4 394.8
Beneficiary households per RMB 10,000
investment
1.3 1.2
Chunhu Town Infrastructure Development
Fenghua Coastal Water Supply
Water supply capacity (tons per day, 2015) 26,000 26,000
Beneficiary population (Target/ Actual) 76,000 76,500
Investment (Million RMB) 107.4 131
Beneficiary population per RMB 10,000
investment
7.1 5.8
Chunhu Town Wastewater Management
Water treatment capacity (tons per day, 2015) 10,000 6,000
52
Wastewater Treatment Rate (Target/ Actual) 70% 84%
Investment (Million RMB) 55.5 59.6
11. Comparisons were also made with other projects as appropriate. For the rural
wastewater component, NNCDP costs were compared with those of NMG’s own, more
widespread project to provide rural wastewater services to more than 720,000 households
elsewhere in the Municipality. NNCDP provided rural wastewater infrastructure at an
average cost of 8,000CNY/household, while NMG’s own project did so at a significantly
higher cost of between 10,000 – 15,000CNY/ household. The Chunhu Town WWTP, with
a capacity of 10,000m3/day, was constructed at a total cost of 27.04 million CNY. In
comparison, a WWTP with half the capacity (5,000m3/day) constructed as part of the
Zhejiang Qiantang River Basin Small Town Environment Project was constructed at a cost
of 24.53 million CNY, a difference of less than 10%. Both plants were designed to meet
the same national Class 1B treatment standards. As construction methods and local
topographical conditions were unique to the NNCDP, a suitable comparison was not made
for the Fenghua Coastal Water Supply system.
Cost Benefit Analysis
Fenghua-Chunhu Access Road
12. The objective of this component was to improve road accessibility between
Fenghua City Center and Chunhu Town. The road would provide fast access between the
two areas by shortening the existing travel distance by approximately 10km, meeting the
demand for fast transportation in Chunhu Town by providing a quicker alternative
compared to the existing bypass roads. Benefits such as saved time and transport costs,
reduced traffic jams, less frequent traffic accidents and increased value of land close to the
road were included and calculated. Other benefits such as increased productivity, better
accessibility to public services in Fenghua, and reduced air pollution emissions, were not
included due to difficulties in quantifying such benefits.
13. Land value increase was factored into the analysis as it was believed that the
completion of the access road would increase the value of the undeveloped land along the
new road. The aggregated results of the analysis showed that the economic internal rate of
return (EIRR) of the road was 16.96%, and net present value (NPV) was RMB 450.89
million, including land value increase. Excluding land value increase, EIRR was 14.18%,
and NPV was RMB 331.04 million. The Benefit Cost Ratio (BCR) was 2.4 and 3.3
respectively.
14. Economic analysis carried out at the ICR stage showed that the EIRR is 16.7% and
NPV RMB 443 million including increased land value, and 13.7%/ RMB 319 million with
increase land value excluded. The BCR was 2.3 and 3.2 respectively, which is marginally
lower than the case presented at appraisal. Sensitivity analysis (assuming a 20% increase
in capital costs and 20% decrease in economic benefits) further showed that the access road
investment will provide an EIRR of 12.1% or 10.2%, with and without the increase in land
53
value respectively. Despite the EIRR being lower at completion than at appraisal, it is still
significantly better than the 10% generally accepted by both the Bank and the Government.
Table 3.2: Sensitivity Analysis of Chunhu-Fenghua Access Road
Base Case
EIRR
20% increase in
capital
investment
20% decrease
in main
benefits
Combined
Case
Increased land
value included
16.7% 14.3% 14.0% 12.1%
Increased land
value excluded
13.7% 12.1% 11.9% 10.2%
The lower EIRR, NPV and BCR figures compared to the figures at appraisal can be
attributed to higher-than-planned actual investment, which, in turn is attributable to
exchange rate fluctuations and higher resettlement-related costs). The actual traffic flow
along the completed road was, however, found to be higher than the estimated figures
adopted during appraisal.
Financial Analysis
15. A project-level financial analysis was carried out at appraisal and at project
completion to ascertain the financial viability of the project during the implementation and
operation period.
Project Level Analysis
Rural Wastewater Component
16. The rural wastewater component was planned to be implemented on a cost sharing
basis, with Ningbo Municipality providing a capital grant of USD 40 million, including
USD 20 million of loan proceeds, and County and District Governments as well as Village
Committees contributing the remaining capital requirements. Communities were expected
to contribute some capital costs and all O&M costs. Upon completion of the rural
wastewater facilities, assets would be transferred to Village Communities, who would be
responsible for O&M. At appraisal, it was assessed that because appropriate technological
solutions would be adopted in this component – based on a community participation
approach – maintenance requirements and costs would be considered affordable to all
villages. In addition, maintenance tasks would be fairly straightforward and could be
carried out by trained village operators.
17. At project close, the majority of villages (96 out of 144) remained within the 18-
month handover period, meaning O&M had not yet been handed over to local Village
Committees or third-party management companies. Of the 48 villages with O&M handed
over, 10 villages had O&M managed by the local town government, while 38 had engaged
third-party providers. In line with the project’s focus on community participation as an
54
essential element in ensuring project sustainability, each village has villagers who have
undergone training to be able to carry out simple, regular maintenance.
18. O&M funding policies were determined at the county level, with cost subsidies
determined in line with the socio-economic status of villages, as designed. In Fenghua and
Ninghai Counties, where approximately half of the villages were categorized as relatively
poor, 100% of O&M costs were covered by county governments. In Xiangshan, with 25%
of villages considered relatively poor, the county government funded O&M costs fully, but
villages were responsible for 30% of electricity charges and the cost of upgrading
equipment. In Yuyao, with around 3% of villages considered relatively poor and more than
half of villages relatively wealthy, the county covered O&M costs while villages were fully
responsible for electricity and equipment upgrading. A wastewater treatment tariff of
between 0.45 – 0.8 CNY/m3 has been introduced in 55 of the 144 villages, the majority of
which fall in the relatively wealthy category. The tariffs and subsidies in combination are
sufficient to cover the O&M costs.
Chunhu-Fenghua Access Road
19. The Chunhu-Fenghua access road was not designed as a toll road, so its
maintenance is carried out with city government support. Fenghua City is responsible for
providing annual budget appropriations to meet the O&M requirements, and make
payments to the management contractor that has assumed O&M responsibilities. In
addition, the City is also providing budgetary support for road resurfacing at least once
every eight to ten years.
Fenghua Coastal Water Supply
20. Similar to the Chunhu-Fenghua Access Road, Fenghua City has outsourced O&M
functions for this component to an external company, in this case, the Fenghua Xinyuan
Water Company. The company is responsible for operating and maintaining the pipes,
pumping stations and other assets under this component, as well as for collecting water
tariffs, which would be used to buy raw water and pay O&M fees. O&M fees included
salaries and welfare payments of staff and workers, power for pumping stations, chemicals
for further water treatment, maintenance and management fees.
21. At appraisal, the average water tariff in Chunhu Town was RMB 0.80/m3. To meet
the requirements of cost recovery as laid out in the Bank’s financial covenant for the project,
Fenghua City agreed to increase the average water tariff in Chunhu Town to RMB 2.00/m3
in 2013 (when transmission mains and distribution networks were planned for completion
and operation), with a further increase to RMB 2.50/m3 in 2018, when the second phase of
the overall coastal water supply network to serving Qiucun Town and Song’ao Town was
planned to be in place. The water tariff would increase 10% every three years thereafter,
and would be applied in Qiucun Town, Song’ao Town and Zhejiang Shipyard. Based on
these assumptions, the financial projections showed that O&M cost coverage would be
achieved in 2013, and that the debt service coverage ratio would be 1.10 in 2022.
55
22. Table 3. 3 below reflects the population and water demand projections utilized by
the Fenghua Xinyuan Water Company. In comparison to the appraisal stage, demand
projections for the Hongsheng Haitang Development Zone have been lowered, reflecting
a more cautious outlook on the development of the economic zone. Similarly, the Zhejiang
Shipyard is also projected to have far lower demand for water compared to the current
scenario. Once a key enterprise in Ningbo, the shipyard has been affected by the global
slowdown in the shipping industry, and water demand is expected to fall in the medium
term. While the demand for water from industrial sources is lower than projected at the
appraisal stage, the Fenghua City government has introduced a Three-Year Action Plan,
which aims to build a water distribution network covering 51 villages around Chunhu
Town by 2018, thereby increasing the demand for water from the Fenghua Coastal Water
Supply. By the end of 2016, 27 villages will be covered by the distribution network.
Table 3.3: Population and Water Demand Projections
Town or
Development Zone
Population Water Demand（m3/day）
2006 2015 2025 2006 2015 2025
Chunhu Town 28,000 65,000 90,200 7,000 17,000 27,000
Hongsheng Haitang
Development Zone - 3,000 20,000 - 1,000 11,000
Qiucun Town 10,000 29,000 80,000 1,500 6,700 18,000
Song’ao Town 15,000 12,800 10,498 3,000 3,500 3,200
Zhejiang Shipyard - - - 5,000 12,000 2,500
Total 53,000 109,800 200,698 16,500 40,200 59,200
23. According to the new water tariff policy in place, a charge of RMB 2.05/m3 was
introduced in 2015, and will increase by 25% every three years beginning in 2018. This
was slightly higher than the tariff of RMB 2.00/m3 planned at project appraisal. The revised
financial projections for the Fenghua Coastal Water Supply are shown in the table below.
Financial performance is assessed to be slightly better at project closure than at the
appraisal stage, with the debt service coverage ratio in 2021 higher than calculated (1.31
as compared to 0.97).
Table 3.4: Financial Projections for Fenghua Coastal Water Supply (Unit: RMB 1,000)
Component/ Year 2016 2017 2018 2019 2020 2021
Water sold (1,000m3) 5,664 5,960 10,298 10,825 11,379 11,962
Water tariff (RMB/m3) 2.05 2.05 2.56 2.56 2.56 3.20
Increase in rate of tariff - - 25% - - 25%
Tariff collection rate 90% 90% 90% 90% 90% 90%
Revenue 10,450 10,996 23,750 24,966 26,244 34,484
Water purchase cost 4,867 5,275 9,569 10,361 11,217 12,760
O&M costs 3,140 3,284 5,485 5,749 6,028 6,452
VAT 612 644 1,393 1,464 1,539 1,861
56
Interest 4,746 4,305 3,864 3,423 2,981 2,540
Principal Repayment 7,721 7,721 7,721 7,721 7,721 7,721
Depreciation 4,795 8,026 8,026 8,026 8,026 8,026
Financial Indicators
O&M cost coverage 1.21 1.19 1.44 1.42 1.40 1.64
Debt service coverage
ratio
0.15 0.15 0.63 0.66 0.70 1.31
Chunhu Wastewater Management
24. The management and operation of the assets created under the Chunhu Wastewater
Management component would be handed over to Fenghua City. Following completion of
construction and quality verification, Fenghua City outsourced O&M functions to a
competent company - in this case, the Chunhu WWTP Company. The cost of O&M is
being funded by wastewater tariffs and subsidies from Fenghua City, as the initial
wastewater tariff was acknowledged to be insufficient to cover the cost of O&M (which
included salaries and welfare payments of staff and workers, power, chemicals for
treatment, maintenance and management).
25. At appraisal, there was no wastewater tariff collected in Chunhu Town, as was the
case throughout rural China. Fenghua City agreed to begin levying wastewater treatment
tariffs using a “one bill, two tariffs” system, collecting wastewater charges together with
water supply charges. Fenghua City intended to begin charging a wastewater tariff that
covered only half of O&M costs in the first year (RMB 0.31/m3 in 2013), before increasing
the tariff to RMB 0.69/m3 to fully meet the O&M costs within three years. The tariff would
then increase 10% every three years. The financial projections for this component at
appraisal indicated that the cumulative income of the wastewater tariff over the project
lifespan would cover the full cost of operating the Chunhu Wastewater assets. O&M costs
would be fully covered in 2015, and the debt service coverage ratio would be 1.22 in 2024.
26. Revised financial projections for this component are found in the table below. The
current wastewater tariff is RMB 0.40/m3, RMB 0.29/m3 lower than what had been
proposed during appraisal. The projections indicate that O&M costs will only be fully
covered by tariffs in 2022, seven years later than foreseen at appraisal. The debt service
coverage ratio will exceed 1 in 2025, a year later than calculated at appraisal stage. While
the financial performance covenant for Chunhu Town to be able to cover O&M expenses
with wastewater tariff charges by end-2016 will not be met, the township is committed to
covering all subsidies as needed until such time that O&M cost recovery can be achieved.
Table 3.5: Financial Projections for Chunhu Wastewater Management (Unit: RMB 1,000)
Component/
Year
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Water
treated (per
1,000m3)
5,664 5,960 6,272 6,600 6,945 7,308 7,690 8,093 8,516 9,430
57
Wastewater
tariff
(RMB/m3)
0.40 0.40 0.40 0.52 0.52 0.52 0.68 0.68 0.68 0.68
Increase in
rate of tariff
- - - 30% - - 30% - - 30%
Tariff
collection
rate
90% 90% 90% 90% 90% 90% 90% 90% 90% 90%
Revenue 2,039 2,146 2,258 3,089 3,250 3,420 4,679 4,924 5,181 7,459
O&M costs 3,454 3,557 3,664 3,774 3,887 4,004 4,124 4,248 4,375 4,506
Interest 1,738 1,565 1,391 1,217 1,044 870 761 718 674 631
Principal
Repayment
3,040 3,040 3,040 3,040 3,040 3,040 870 870 870 870
Depreciation 2,190 2,190 2,190 2,190 2,190 2,190 2,190 2,190 2,190 2,190 Financial Indicators
O&M cost
coverage
0.59 0.60 0.62 0.82 0.84 0.85 1.13 1.16 1.18 1.66
Debt service
coverage
ratio
-0.30 -0.31 -0.32 -0.16 -0.16 -0.15 0.25 0.31 0.37 1.35
58
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Project Preparation
Greg J. Browder Lead Water Resource Management Specialist GWADR
Shenhua Wang Sr Urban Specialist GSURR
Zhentu Liu Senior Procurement Specialist GGODR
Yi Dong Senior Financial Management Specialist GGODR
A. D. C. Godavitarne Consultant GSURR
Chaogang Wang Senior Social Development Specialist GSURR
Chongwu Sun Senior Environmental Specialist GENDR
Fang Zhang Financial Management Specialist GGODR
Guangming Yan Senior Urban Development Specialist GSURR
Hongwei Zhao Program Assistant EACCF
Jun Zeng Senior Social Development Specialist GSURR
Ximing Zhang Senior Water Resources Specialist GWADR
Xuemei Guo Country Program Assistant EACPQ
Yuan Wang Procurement Specialist GGODR
Project Supervision/ICR
Ximing Zhang Senior Water Resources Specialist GWADR
Yuan Wang Procurement Specialist GGODR
Fang Zhang Financial Management Specialist GGODR
Chaogang Wang Senior Social Development Specialist GSURR
Chongwu Sun Senior Environmental Specialist GENDR
Sarah Xinyuan Lin Operations Analyst/ ICR Author GSURR
(b) Staff Time and Cost
Stage of Project Cycle
Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY2008 8.46 60.30
FY2009 26.53 227.77
FY2010 10.70 100.82
Total: 45.69 388.88
Supervision/ICR
FY2010 1.00 5.14
FY2011 12.75 58.04
FY2012 13.07 77.91
FY2013 13.42 63.39
FY2014 10.18 45.85
FY2015 11.00 44.16
FY2016 13.00 51.28
FY2017 3.65 6.75
Total: 78.87 352.52
59
Annex 5. Summary of Borrower's ICR and/or Comments on Draft ICR
Section 1: Project Context, Objectives and Design
Original Project Development Objective and Project Components
27. The original PDO was to “Improve rural wastewater management in selected
villages and enhance infrastructure and township management in a small town, in support
of the New Countryside Development (NCD) Program in Ningbo Municipality”.
28. The project includes the three components as follows:
Component 1: Rural Wastewater Management: Implementation of rural wastewater
management in about 150 selected villages in six Counties/ Cities/ Districts in Ningbo
Municipality using appropriate and sustainable technology and a program-based approach
in participation with village communities.
Component 2: Chunhu Town Infrastructure Development: Chunhu-Fenghua Access Road:
Construction of a four-lane Class I road connecting Fenghua City with Chunhu Town;
Fenghua Coast Water Supply: Construction of transmission mains from Fenghua City to
Chunhu Town; including renovation and expansion of the Chunhu Town water distribution
network; Chunhu Town Wastewater Management: Construction of trunk and collection
sewers and a wastewater treatment plant to serve Chunhu Town.
Component 3: Capacity Building and Implementation Support: Capacity Building and
Implementation Support for Rural Wastewater Management; Chunhu Town Capacity
Building and Energy-Efficiency Demonstration Support for preparation of the 12th Five-
Year Plan on NCD in Fenghua City; capacity Building and Implementation Support to
FCIC.
Section 2: Key Factors Affecting Implementation and Outcomes
Project Preparation, Design and Identification Quality
29. The Project Objective is the summary of all Components’ objectives:
Rural Wastewater Management: Its objective is to support Ningbo Government as
it improves rural sanitation and protects surface drinking water resources of Ningbo
Municipality. These goals could be accomplished by providing wastewater
collection and treatment facilities in rural communities, and by using technologies
that are appropriate, low-cost and easily maintainable by rural artisans.
Chunhu Town Infrastructure Development: Its objective is to improve the road
accessibility between Fenghua City Center and Chunhu Town, helping Chunhu
Town to overcome the seasonal water shortage; and, to provide wastewater
collection and treatment service in Chunhu Town by building a wastewater
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treatment plant and sewage networks for both domestic and industrial sources in
Chunhu Town.
Capacity Building and Implementation Support: Its target is to provide capacity-
building and implementation support for Rural Wastewater Management
Component implementation and FCIC; promote Chunhu Town capacity building
and energy-efficiency demonstration; and support for preparation of the 12th Five-
Year-Plan on NCD in Fenghua City.
30. Thus by realization of the design targets and the contents of three components, the
total target of the NNCD can be reached, that is to improve rural wastewater management
in selected villages and enhance infrastructure and township management in a small town,
in support of the New Countryside Development (NCD) Program in Ningbo Municipality.
31. Project Institutional and Implementation Support. A three-level project institution
was established in this project, with a Project Leading Group, chaired by the Vice Mayor
of the Municipality, providing policy direction and guidance for project implementation.
The Ningbo Municipal Project Management Office (NMPMO) has been designated by the
municipal-level PLG as the primary office for the preparation and implementation of the
proposed project. A sub-PMO, the Ningbo Rural Water Treatment Project Management
Office (NRWTPMO), was established to guide the implementation of the Rural
Wastewater Management component. NRWTPMO coordinated preparation of the first
batch of villages. County-level rural wastewater treatment PIUs are responsible for the
implementation of the Rural Wastewater Management component. A comprehensive TA
package (including facilitators) are provided to train the village communities and the
village operators. The FCIC is the PIU for the Chunhu Town Infrastructure Development
component and is responsible for the design and construction of the infrastructure, and the
servicing of debt using asset management fees that will be paid by Fenghua City.
32. All PIUs and sub-PMOs are well established with the requirements of Bank-
financed projects. PIUs and sub-PMOs had their own clear responsibilities and effective
institutions. Complete communication channels were made among all levels of PIUs and
sub-PMOs with government agencies, like monthly meetings were regularly held, to ensure
the contracts implementation. During the construction period, each party plays its own role
to finish the project target.
33. Foresight of the Bank’s Decision. The Rural Wastewater Management component
under NNCD is the first rural wastewater management project in China, which was
approved and started its construction in 2010. It is totally corresponded with the
background of the domestic largely promoted new countryside construction and the “Five
Water Works” Projects, thus it has the function of foresight and guidelines.
34. Flexibility in Procurement. Most of the contracts in the two components of NNCD
were NCB contracts, and most of them were in the Rural Wastewater Component. In the
early stage of the construction, according to the usual practices and experiences from Bank
financed projects, proper scale of one single contract was required, but the work amount of
each village was limited except for a large village, thus requires several village combined
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in one NCB contract (in most cases there should be 4 more villages). This caused some
troubles in bidding document preparation, as the issuing of bidding document required all
villages to be read for construction. Thus the beginning implementation of the Rural
Wastewater Management component was slow. When looking back, it is a main factor for
slow progress. As the construction moved forward, the PIUs became aware that it was not
necessary to maintain a proper scale of a NCB contract, flexibility was needed to accelerate
implementation. For villages ready for construction, they should be gathered to form a
contract and go into bidding procedure. This helped to quicken the procurement process.
35. Community Participation. A community participation mechanism was established
in this project. During the project preparation, community participation guidelines were
prepared to define the community participation measures in periods of project preparation,
implementation and operation.
36. First standardization of rural wastewater discharge. Before the implementation of
the NNCD, there was no technical standard and discharge standard for rural wastewater in
China. Existing technical measurements recommended are too high for rural wastewater
discharge, and the project would not conform to requirements for economic efficiency if
subject to these standards. Based on this, the NRWTPMO applied for approval from the
Ningbo EPB for an additional standard for rural wastewater discharge in May 2009. With
sound preparation of information submitted to the EPB for consideration, the Rural
Wastewater Discharge Standard was officially issued by Ningbo EPB and formed the
foundation of design works. This standard was also accepted by Zhejiang Provincial EPB,
and based on it, a provincial level standard DB33/973-2015 “Water Pollutants Discharge
Standards for Rural Sewage Treatment Facilities” was prepared and issued on July 1, 2015.
Bank’s Safeguard Policy
37. Environment Management. Environmental Assessment was triggered and the
project was classified as Category B. A comprehensive EIA was conducted during project
preparation stage, analyzing and evaluating the negative environmental impact from the
project and benefits after completion. An Environmental Management Plan (EMP) was
prepared to mitigate against the negative impacts identified. In general, the EMP was
comprehensive and detailed, providing practical monitoring standards and an effective and
reasonable communication and reporting mechanism.
38. Involuntary Resettlement and Land Acquisition. Efforts have been made to
minimize resettlement impacts during project planning and design. However, some
resettlement impact cannot be avoided. Final results were: land acquisition of 270.67mu,
5.61mu more than planned; demolition areas totaled 7647.62m2, which was 4.168.62 m2
more than the planned 3,479 m2. Sophisticated and effective fund management systems in
PIUs were in place for appropriation and payment of resettlement funds. The disbursement
procedure was transparent, clear and effective. Resettlement funds were paid to affected
persons in time. During construction, no appeals were received on the grievance redress
system.
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39. Safety of Dams. Safety of Dams was triggered because the Hengshan Reservoir is
the main water source for Qiujiushan Water Works, which provided water for the proposed
Fenghua Coastal Water Supply component. The Ningbo Water Conservation Bureau
implemented the required strengthening and renovation works.
Main Reasons of Success and Failure during Project Implementation
40. Long design duration and frequent variations. The isolated location of villages and
large coverage areas, and designers’ lack of experience in rural wastewater treatment,
resulted in a long 4-month period for the design work of each batch. Insufficient survey
work also resulted in frequent design variations during construction. As designers also did
not communicate sufficiently with villagers, villagers were not satisfied with the initial
design work, leading to even more design variations. Faced with these challenges, changes
were made. These included the combination of survey/ measurement and design work, and
the requirement that villagers’ opinions be sought in the preliminary design stage.
NRWTPMO strengthened the supervision and management of design institutes.
41. Lack of standards and regulations for the project design. There were no standards
for rural wastewater discharge. NRWTPMO successfully sought approval from the Ningbo
EPB to establish a new set of standards for rural wastewater discharge.
42. Trouble in village selection, lack of participation and support from villagers.
Insufficient dissemination of information and awareness of the project benefits led to a low
participation rate in early stages of village selection. The dissemination of information in
brochures and in cartoon form helped to raise awareness of the project and its benefits,
which helped to increase the participation of villages.
43. Slow procurement process in the early stage. Procurement for one contract often
lasted 3 months in the early stage of project implementation. Ningbo PMO strengthened
the review process of bidding documents and design papers, and provided training to PIUs.
Revisions to the procurement plan were also made, with the contract scale for villages in
batches 4 and 5 not required to be as large as in earlier batches.
Other Significant Measures Taken
44. Significant Support from WB and Borrower. To strengthen the capacity of PIUs,
leaders from Ningbo PMO proactively took measures to enhance supervision. World Bank
also provided strong support in project management, procurement, financial management,
technical and contract management through intensive training seminars. These improved
the capacity of Ningbo PMO, NRWTPMO and all PIUs.
45. Enhance regulation and institutional development. Recommended by the World
Bank, the Ningbo PMO, NRWTPMO and all PIUs came up with consolidated regulations
to form the basis of project management. These included “Contract Variation Rules for
Rural Wastewater Treatment Facilities for World Bank Project in Ningbo Municipality”,
“Final Acceptance Test Rules for Rural Wastewater Treatment Facilities for World Bank
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Project in Ningbo Municipality” and “Operation and Maintenance Management Rules for
Rural Wastewater Treatment Facilities for World Bank Project in Ningbo Municipality”.
Section 3: Project Results Assessment
46. The project design and implementation are fully in compliance with the PDO.
Although the project experienced slow implementation in early stages, the results achieved
were in line with the PDO. The results indicators are evaluated as follows, and the overall
project assessment result is considered Satisfactory.
KPI 0.1: Number of households with appropriate wastewater management
service in project area; the target value is 41,000, actual figure achieved was
45,000, which is 10.96% higher.
KPI 0.2: Fenghua-Chunhu traffic using new access road (car equivalent);
The target value is 13,000 in 2016; at project close the car equivalent will
be 13,933, which exceeds the target by 7.18%.
KPI 0.3: Chunhu population served from a reliable and higher-quality water
supply; the target value is 76,000; the actual value achieved is 76,500.
KPI 0.4: Wastewater treatment rate in Chunhu Town; the rate achieved was
84% compared to the target of 70%.
KPI 0.5: Adoption of energy efficiency guidelines by NMG; completed.
KPI 0.6: Proposal for NCD plan for upcoming 12th Five Year Plan (2011-
2015) for Chunhu Town; completed.
47. The actual project investments (US$170.33m) exceeded the planned investment
(US$157.09m) by 8.4%. The main reason for this was the change in the USD exchange
rate, from 6.827 during project appraisal to 6.4927 during project implementation, an
increase of approximately 5%.
48. Economic Analysis. The economic benefits by component are described below:
Rural Wastewater Component: Benefits mainly include i) improvements to
the health and quality of life of local populations; ii) improvements to the
water system and quality of soil; iii) decreased water treatment costs in
lower reach communities; (iv) protection of water environment and
improved long-term security of drinking water sources in Ningbo.
Chunhu Access Road Component: Economic analysis shows that the ERR
is 11.25% excluding the increase in value of land.
Chunhu Wastewater Treatment Component: At present the treatment
capacity of the Chunhu WWTP is 6,000 cubic meters per day.
Fenghua Coastal Water Supply Component: although the economic benefits
of water supply and wastewater management components cannot be directly
calculated, it has a significant impact on improving the health of the general
population, improving quality of life and production efficiency.
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49. Financial Analysis. In the initial stages, all sub-components will rely on
government support from general budgets for capital and operational costs. Given FCIC’s
experience in project management and operations experience, together with the training
provided to strengthen the capacity of FCIC in business planning, asset management and
risk analysis, it is taken as guaranteed that it can achieve the objective of cost recovery. It
is expected that both Ningbo and Fenghua governments can manage the counterpart
financing and loan repayment amounts required.
Overall Assessment of Project Achievements
50. All three components of the NNCD have been achieved. The project has also
provided training to a batch of project implementation personnel who will be able to
provide good management and guidance for other infrastructure projects in future. The
environment of villages in the rural wastewater component have been greatly improved. In
addition, by the end of 2016, it is estimated that Ningbo City will invest CNY 7 billion in
completing decentralized wastewater treatment projects for about 1,469 villages,
benefitting 720,000 households.
Section 4: Assessment of Risk to Development Outcome
51. For the Rural Wastewater Management component, the risk rating is considered
low. The sustainable development of O&M is guaranteed with the commitments in policy,
administration, technology and funding. The involvement of villagers to participate in
O&M works will ensure project sustainability. The project also applied affordable, low-
maintenance wastewater treatment technologies and adopted solutions suited to each
context.
52. The risk rating is negligible for the Chunhu Town Infrastructure Component.
Fenghua and Ningbo governments have ensured that there is sufficient funding to support
O&M of the different sub-components, aside from the tariffs that have been introduced.
Section 5: Assessment of Bank and Borrower Performance
Bank Performance
53. In the project preparation and implementation stages, World Bank provided great
support and guidance. Leaders in NMG, PMO, sub-PMOs and PIUs feel that the
performance of the Bank has been highly satisfactory. The adoption of a program-based
approach, the promotion of a new discharge standard for rural wastewater treatment,
flexible procurement, strong technical support and enhanced guidance and monitoring to
solve issues were specific areas that the Bank performed well.
Borrower Performance
54. To ensure project preparation and implementation quality, NMG, PMOs, sub-
PMOs and PIUs all made strong contributions. All departments cooperated proactively
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with the World Bank and provided the necessary resources to ensure project success. The
NMPMO in particular played a significant role in institutional coordination, organizing
trainings and monthly meetings to monitor project progress and pro-actively identify
problems. They were the main communication bridge between the World Bank and other
implementing agencies.
55. Strong government support was also provided in terms of land acquisition, house
demolition and resettlement. NRWTPMO and PIUs in different counties were the first
implementation agencies in China to carry out a rural wastewater treatment project. The
agencies put in significant effort to develop their capabilities in implementing such a
project.
Section 6: Experience and Lessons
Lessons
56. Keep team stable. During the 7-year period from project preparation to project close,
the team has witnessed one variation of WB Task Team Leader, three changes in PMO
Project Manager and frequent staff variations at the PIU level, which has led to difficulties
in project implementation. Although the progress has caught up and obtained “Twin
Satisfactory” ratings, due to extensive training provided by the WB and significant effort
put in by the PMO and all PIUs, the stability of the team should be emphasized as an
important factor in ensuring that technical competencies are retained, and that the project
can proceed smoothly.
57. Enhance knowledge of World Bank processes. A lack of familiarity with certain
WB processes led to initial project delays. Ensuring that the implementing agencies have
capabilities in terms of procurement processes is essential. Training in such areas should
be provided before the bidding process begins, so that both bidding firms and implementing
agencies are familiar with Bank processes.
58. Enhance O&M management. Apart from maintaining infrastructure, O&M should
also focus on the following aspects. Firstly, ensure the surrounding environment is also
well-maintained. Secondly, the inflow quantity needs to be monitored such that the
intended treatment capacity is not exceeded. Health education should also be carried out to
raise awareness among villagers in aspects such as environmental and water pollution.
Effort should also be made to monitor the management of O&M by external companies
and village committees.
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Annex 6. Comments of Cofinanciers and Other Partners/ Stakeholders
Not applicable.
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Annex 7. Social Safeguards
1. Social Safeguards. Efforts were made to minimize resettlement impacts during
project planning and design. A Resettlement Action Plan (RAP) was prepared for the
Chunhu town infrastructure development component (in both English and Chinese), while
a Resettlement Policy Framework (RPF) was prepared for the rural wastewater component.
As a linkage issue was identified in the Fenghua coastal water supply component, a
retroactive resettlement review was also prepared as an annex to the RAP. All resettlement
preparations were made in compliance with OP 4.12: Involuntary Resettlement, as well as
the relevant domestic laws and regulations. The RAP in Chinese was disclosed through
local media on July 21, 2009 and was made available at the NMPMO, PIUs, public libraries
and on websites. The RAP in English was disclosed through InfoShop on July 21, 2009.
2. Resettlement Post-Evaluation Report. A Resettlement Post-Evaluation Report was
prepared by external monitors – the National Research Center for Resettlement (NRCR) –
after the project had closed. The report was based on both desk work and fieldwork, and
included focus group discussions with affected households, a follow-up survey with 20
sample households as well as interviews with key agencies involved in the implementation
and monitoring of resettlement processes. The report found that all requirements in terms
of the Bank’s social safeguards policy as well as the RAP had been well met. Adverse
impacts of land acquisition and demolitions of houses on affected persons’ incomes and
livelihoods had been mitigated against, and all property losses were adequately
compensated. The resettlement of affected persons had proceeded smoothly, and
improvements in their living conditions were noted.
3. Institutional Arrangements. The Fenghua City Investment Company Ltd. (FCIC),
as the PIU for the Chunhu Town Infrastructure Development component, was primarily
responsible for the implementation of the RAP, including supervision, management and
coordination of resettlement activities. FCIC established two separate offices to oversee
different aspects of resettlement – the Fenghua Tongyi Land Acquisition office
implemented land acquisition activities, while the Fenghua House Demolition office
implemented those relating to demolition of houses. The Fenghua PMO, working closely
with the FCIC, was responsible for monitoring overall progress, preparing M&E reports
and reporting results to the overall project implementing agency – the Ningbo Municipal
Project Management Office – as well as the Bank task team. Resettlement training
activities were also carried out to improve the capacity of local staff in the resettlement
agencies. The NRCR had also been appointed by FCIC to conduct regular reviews of
progress on resettlement, and provided a total of three external monitoring reports between
August 2010 and August 2012.
4. Land Acquisition and Resettlement Results. Land acquisition and resettlement
activities for all three subcomponents were conducted in a timely manner, in accordance
with the actual project construction schedule. In terms of land acquisition numbers, actual
figures for permanent acquisition and demolition of houses were higher than planned, as
shown in Table 8.1 below. A total of 325mu of land was acquired, as compared to the 262
mu planned. Demolition of houses was double the planned amount, totaling 7,647m2 as
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compared to 3,479 m2. The differences in these figures are attributed to additional land
acquisition and demolition of houses in the Chunhu Access Road component. Land
originally thought to only require temporary land occupation had to be acquired, as it was
unusable on its own when adjacent land had also undergone acquisition. As resettlement
and acquisition of the additional land was carried out in accordance with policies in the
RAP, it was considered acceptable and reasonable. The actual amount of land occupied
temporarily was 35.15mu, which was 119.39mu less than the 154.54mu planned.
Table 7.1: Comparison of Planned and Actual Resettlement Impact
Component Permanent Land
Acquisition (mu)
Demolition of
Houses (m2)
Temporary Land
Occupation (mu)
Planned Actual Planned Actual Planned Actual
1. Fenghua-Chunhu
Access Road
208.3 260.9 3,027 7,647.6 0 8
2. Fenghua Coastal
Water Supply
6.8 13.97 - - 111.5 8.8
3. Chunhu Town
Wastewater
Management
49.96 50.7 452 0 42.9 18.3
Total 265.06 325.63 3,479 7,647.6 154.5 35.1
5. Given the increases in land acquisition and demolition of houses, the associated
costs have correspondingly increased, totaling CNY 99.35million, a 34% increase over the
planned cost of CNY74.03 million. As the largest increase in land acquisition and
demolition of houses was attributed to the Chunhu-Fenghua Access Road component, costs
for this component also saw the largest increase, from CNY 60.81million to CNY
84.01million, a difference of 40%. The Fenghua coastal water supply acquisition and
housing demolition costs saw an increase of just over CNY 3 million.
Table 7.2: Comparison of Planned and Actual Resettlement Costs
Component Permanent Land
Acquisition (CNY million)
Planned Actual
1. Fenghua-Chunhu
Access Road
60.81 84.01
2. Fenghua Coastal
Water Supply
5.21 8.34
3. Chunhu Town
Wastewater
Management
8.01 6.99
Total 74.03 99.35
6. Impacts. No adverse impacts on persons affected by the project were found. A
transparent grievance redress channel was established during the planning and
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implementation of each of the three subcomponents, and these were publicized to affected
persons using local channels such as newspapers and through focus group discussions. No
appeals were received through the grievance redress systems. In addition, a sample survey
of 20 affected households conducted as part of the post-evaluation report also found that
44% were very satisfied with present living conditions, and 50% were somewhat satisfied.
None of the households surveyed felt that their lawful rights and interests had been
infringed on. Some 72% of those surveyed indicated that they had been made aware of
acquisition through meetings or publicity materials distributed by Village Committees,
indicating that there had been effective disclosure of information.
Table 7.3: Comparison of Planned and Actual PAPs
Component PAPs (Households) PAPs (Individuals)
Planned Actual Planned Actual
1. Fenghua-Chunhu
Access Road
70 114 201 355
2. Fenghua Coastal
Water Supply
10 11 29 32
3. Chunhu Town
Wastewater
Management
15 20 57 63
Total 95 145 287 450
7. Key Lessons. The post-evaluation report also noted key lessons to be drawn from
the NNCD project, as follows:
a) A sound organizational structure is essential for successful implementation
of resettlement activities, with clearly-defined responsibilities to ensure that
all the necessary actions are carried out in line with the RAP.
b) Resettlement policies and activities should be communicated clearly and
extensively to affected communities.
c) Frequent internal supervision and external M&E are critical in ensuring that
any issues encountered are addressed in a timely manner.
d) A clear and accessible grievance redress channel should be established to
facilitate communication with affected persons.
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Annex 8. List of Supporting Documents
1) Project Concept Note
2) Project Appraisal Document (Report No. 48663-CN)
3) Loan Agreement and Project Agreement
4) Aide Memoires
5) Implementation Status Reports
6) Environmental and Social Safeguards Documents (Environmental Impact
Assessment, Social Assessment Report, Resettlement Policy Framework and
Resettlement Action Plan)
7) Resettlement Post-Evaluation Report
8) Community Participation Post-Evaluation Report
9) Ningbo Municipal Government Operation & Maintenance Rules for Rural
Wastewater Treatment
10) Borrower’s ICR and Annexes
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Annex 9. Map