Document of The World Bank Report No: 75709-CN RESTRUCTURING PAPER ON A PROPOSED LOAN EXTENSION OF FUZHOU NANTAI ISLAND PERI-URBAN DEVELOPMENT PROJECT LOAN NUMBER 48120 –CHA {December 15 2005} TO THE PEOPLE’S REPUBLIC OF CHINA March 18, 2013 ABBREVIATIONS AND ACRONYMS ISDS Integrated Safeguard Data Sheet MTR Mid-Term Review PDO Project Development Objective PMO Project Management Office TA Technical Assistance Regional Vice President: Axel van Trotsenburg, EAPVP Country Director: Klaus Rohland, EACCF Sector Manager / Director: Mark R. Lundell, EASCS and John Roome, EASSD Task Team Leader: Ke Fang, EASIN 2 A. Project Data Sheet 1. Basic Information Project ID & Name P070519: CN-Fuzhou Nantai Island Peri-Urban Development Project Country China Task Team Leader Ke Fang Sector Manager/Director Mark R. Lundell/John A. Roome Country Director Klaus Rohland Original Board Approval Date 12/15/2005 Original Closing Date: 06/30/2011 Current Closing Date 03/31/2013 Proposed Closing Date [if 05/31/2013 applicable] EA Category A-Full Assessment Revised EA Category EA Completion Date 02/22/2005 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 224.46 224.46 IBRD 100.00 93.67 Total 324.46 318.13 3. Borrower Organization Department Location People's Republic of China China 4. Implementing Agency Organization Department Location Fuzhou Municipal Government Fuzhou, Fujian Province, China 5. Disbursement Estimates (US$m) Actual amount disbursed as of 11/29/2012 89.45 Fiscal Year Annual Cumulative 2013 4.22 93.67 Total 93.67 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please N select from the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The objective of the project is to support sustainable peri-urban development in Fuzhou (as it expands to include Nantai Island) with the provision of strategic transport infrastructure and by strengthening the city's decision support system on land development and management. 3 Specifically, the project supports peri-urban development in Nantai Island with: (a) investments in transport access to Nantai Island (road and public transport); and (b) TA that would help the city to strengthen the manner in which the development is planned (to encourage development patterns that promote public transport while integrating environmental concerns upstream in the planning process), and the manner in which the development is implemented (to improve urban design, preservation of sensitive and historic neighborhoods, and to increase the city's capacity to phase and stage development in a market environment while increasing the quality and competitiveness of public transport). 7b. Revised Project Development Objectives/Outcomes [if applicable]: N/A B. Project Implementation Status and Reasons for Restructuring 1. The project includes three components: (i) a strategic road infrastructure (RI) component (US$248.64 million); (ii) a public transport (PT) component (US$20.50 million); and an institutional development (ID) and TA component (US$2.90 million). 2. Despite delays occurred, implementation of the project is currently progressing towards achievement of the project development objectives. The latest status of PMIs indicates most of the outcome indicators have been achieved.1 3. As of February 15, 2013, 89.45% of the Loan has been disbursed. Implementation status of all project components is summarized in Table 1 below. Table 1: Summary of Implementation Status of All Components Component Subcomponent Status Remarks RI Nan Jiang Bin Lu Phase I and Phase II Phase III was dropped completed. during MTR as the section Phase III dropped. was no longer necessary for Entire road was open the function of Nan Jiang Bin to traffic in May Lu. 2010 3rd Ring Road Phase I and Phase II Construction of eight ramps completed. Entire to connect the Third Ring road (except the Road to Fu-Xia Expressway ramps connecting to at Fu-Xia Interchange was Fu-Xia Expressway) delayed due to land was open to traffic in acquisition and other issues. January 2012. It is expected to be completed by end of May 2013. Kuiqi Bridge Completed. The Construction of four small- bridge was open to size ramps (for pedestrians 1 The PDO was rated Moderately Unsatisfactory and IP was Unsatisfactory in the ISR dated December 2012. Based on the latest status of PMIs, the PDO and IP ratings will be updated in the final ISR to be completed by closing of the project. 4 traffic in January and bicycle users) was 2012. delayed due to land acquisition and other issues. It is expected to be completed by end of May 2013. PT Bus Priority [PT] Bus priority This activity was funded implemented on entirely by local funds. Wuyi/Wusi Road in June, 2007. Jinshan Depot Contract signed in Delayed due to resettlement, October 2012, and procurement, and other construction started issues. Fuzhou Municipal in February 2013 and Government has committed is expected to that it will continue financing complete by March construction of the depot 2014. with its own funds after the Loan is closed. ITS applications to Dropped Dropped by the city due to bus operation prolonged and complicated procurement process. ID Strategic Planning Completed Scope of the TA was TA modified to focus on development of the city’s ports. ID Public Transport Completed Scope of the TA was fine- Planning TA tuned to focus on (i) Long Range Public Transport Development Plan, (ii) Transit Oriented Design, and (iii) Bus Priority Assessment. Strategic Dropped Dropped as the city decided Environmental to use its own funds to Assessment (SEA) finance the SEA as part of the city’s new master plan. Training Completed Training was planned and implemented annually based on needs identified by the city. 4. As of February 15, 2013, only the following project activities are still on-going and have not yet been completed: (i) Construction of Jinshan Bus Depot; (ii) Construction of eight ramps connecting the third ring road to Fu-xia Expressway; and (iii) Construction of four ramps for pedestrians and bicycle users at two ends of Kuiqi Bridge. 5 5. According to the current implementation plan prepared by the PMO, it will take another 13 months to complete the above activity (i), and the activities (ii) and (iii) will be completed by the end of May, 2013. 6. Fuzhou Municipal Government requested for an extension of the Loan for two months untill May 31, 2013, in order to complete the activities (ii) and (iii) mentioned above and thus complete the entire Road Infrastructure Component. Fuzhou Municipal Government also requested for another four months as grace period. For Jinshan Bus Depot, the city government decided that it would continue financing the construction after the Bank loan is closed. 7. To better utilize the Bank Loan before it is closed, Fuzhou Municipal Government also requested the following reallocation of proceeds: (i) to cancel US$6.33 million of loan proceeds in the Jinshan Bus Depot construction and related technical assistance activities; (ii) to transfer US$2,465,267 of loan proceeds from Nan Jiang Bin Lu Road to Phase 2 of the 3rd Ring Road and increase the percentage of expenditure to be financed from 59.95% to 60.14%; and (iii) to create a new expenditure Category 1(c) for Civil Works of Jinshan Bus Depot and set the percentage of expenditure under the new category at 100%. C. Proposed Changes 8. Based on the request from the Borrower, the following project restructuring is proposed: (i) Extension of the Loan. The closing date for China, Fuzhou Nantai Island Peri- Urban Development Project, [Loan No 48120], P070519 will be extended from March 31, 2011 till May 31, 2013. (ii) Cancellation of the Bank loan. US$6.33 million of the loan will be cancelled. The proposed cancellation includes US$4.16 million under Category (2), originally for ITS system procurement; and US$2.17 million under Category (3), which contains US$0.32 million for a construction supervision fee for Jinshan Bus Depot and US$1.85 million for Technical Assistance expenditures. (iii)Categories of Expenditure. Category 1 Civil Works of items to be financed out of the proceeds of the Loan is revised to include three sub-categories: (a) Part A of the Project – Nan Jiang Bin Lu Road; (b) Part B of the Project – Phase 2 of the 3rd Ring Road and Kuiqi Bridge; and (c) Jinshan Bus Depot (a new category). The percentage of expenditure of Civil Works under Category 1(c) is set at 100%. (iv) Reallocation of loan proceeds. Following transfers are proposed: (1) US$2,465,267 of loan proceeds will be transferred from loan disbursement Category 1(a) for Nan Jiang Bin Lu Road to Category 1 (b) for Phase 2 of the 3rd 6 Ring Road;2 and (2) US$3.65 million will be transferred from Category 1(b) to Category 1(c) of Civil Works for the Jinshan Bus Depot. 9. The table below shows the allocation of loans after the proposed changes. Amount of the Loan Allocated % of (Expressed in Expenditures Category US Dollars) to be financed (1) Civil Works (a) Under Part A of the Project 2,894,733 59.95% (b) Under Part B of the Project 83,985,267 60.14% (c) Under Part C of the Project 3,650,000 100% (2) Goods 730,000 100% of foreign expenditures, 100 % of local expenditures (ex-factory cost) and 75% of local expenditures for other items procured locally (3) Consultants’ 2,160,000 100% Services and training (4) Front-end fee 250,000 100% Cancellation made on Feb. 6, 2013 6,330,000 TOTAL 100,000,000 2 The transfer of US$2,465,267 of loan proceeds from Nan Jiang Bin Lu to Phase 2 of the 3rd Ring Road will not affect the percentage of expenditure under Nan Jiang Bin Lu Road to be financed. 7 Annex 1: Extension of the Loan CHINA — FUZHOU NANTAI ISLAND PERI-URBAN DEVELOPMENT PROJECT P070519 {LOAN NO.48120} Restructuring Paper 1. The closing date for China, Fuzhou Nantai Island Peri-Urban Development Project, [Loan No 48120], P070519 will be extended from March 31, 2011 till May 31, 2013. 2. The Loan became effective on February 16, 2007, and disbursement of the Loan experienced significant delays during the early stage of project implementation, primarily related to resettlement. However, the project implementation started progressing well after mid-2009. As of February 15, 2013, 89.45% of the Loan has been disbursed. 3. Implementation Status of Major Project Activities. All investments under the Strategic Road Infrastructure Component are either completed or close to completion. Remaining civil works of Kuiqi Bridge and the Third Ring Road will be completed by the end of May 2013. Construction of Jinshan Bus Depot, which is the remaining activity under the Public Transport Component, started recently after a lengthy delay due to various issues related to land acquisition. As the planned construction period for the Depot is 15 months, the Depot will not be constructed before the project closing date. But Fuzhou Municipal Government has committed that it would continue financing construction of the Depot after the Loan is closed. 4. Justification for 2 Months of Extension. The Borrower has requested for an extension of two months to the closing date of the loan. The proposed extension is necessary to ensure completion of the remaining project activities under the Strategic Road Infrastructure Component, which accounts for 76.63% of the total original project investment and is critical to achieving the development objectives of the Project. 5. The PMO has prepared an implementation plan which sets up milestones for monitoring completion of all remaining project activities within the extension. The task team reviewed the action plan and found it acceptable. 6. This will be the second extension of the project. The first extension occurred in June 2011. The first extension period is 21 months, from June 30, 2011 to March 31, 2013. 8 Annex 2: Reallocation of Proceeds CHINA: FUZHOU NANTAI ISLAND PERI-URBAN DEVELOPMENT PROJECT P070519 {LOAN NO.48120} Restructuring Paper 1. Proceeds for China, Fuzhou Nantai Island Peri-Urban Development Project, [Loan No 48120], P070519 will be reallocated as follow: Category of Expenditure Allocation % of Financing Current Revised Current Revised Current Revised Civil Works Civil Works 90.53 90.53 Under Part A Under Part A 5.36 2.89 59.95% of the Project of the Project - -Nanjiangbin Nanjiangbin Road Road Under the Under Part B 85.17 83.99 60.14% other Parts of of the project – the Project 3rd Ring Road and Kuiqi Bridge Under Part C 3.65 N/A 100% of the project – Jinshan Bus Depot Goods and 4.89 0.73 100% of foreign Equipment expenditures, 100% of local expenditures (ex factory cost) and 75% of local expenditures for other items procured locally Consultant 4.33 2.16 100% Services and Training Total project 99.75 93.42 costs Front-end fee 0.25 0.25 Cancellation made on Feb.6, 6.33 2013 Total 100.00 100.00 9 2. Category 1 Civil Works of items to be financed out of the proceeds of the Loan is revised to include three sub-categories: (a) Part A of the Project – Nan Jiang Bin Lu Road; (b) Part B of the Project – Phase 2 of the 3rd Ring Road and Kuiqi Bridge; and (c) the Jinshan Bus Depot (a new category). The percentage of expenditure of Civil Works under Category 1(c) is set at 100%. 3. The Loan became effective on February 16, 2007, and disbursement of the Loan experienced significant delays during the early stage of project implementation, primarily related to resettlement. However, the project implementation started progressing well after mid-2009. November 29, 2012, 89% of the Loan has been disbursed. 4. Implementation Status of Major Project Activities. All investments under the Strategic Road Infrastructure Component are either completed or close to completion. Remaining civil works of Kuiqi Bridge and the Third Ring Road will be completed by end of May 2013. The Public Transport component, which is the construction of Jinshan Bus Depot, has been long delayed because of very difficult and slow land acquisition process. Given the planned construction period for the Depot is 15 months and thus the Depot will not be built before the project closing date. 5. The construction Nan Jiang Bin Road is already finished. The remaining loan proceeds under this subcomponent (Category 1a), around US$ 2.47 million, will be transferred to Phase 2 of 3rd Ring Road (Category 1b). This transfer will not affect the percentage of expenditure under Nan Jiang Bin Lu Road to be financed. 6. Cancellation of the Bank loan. Due to the delay of Jinshan Bus Depot construction, Fuzhou Municipal Government proposed to cancel US$ 6.33 million bank loan to reduce the expenditure of commitment fee. The proposed cancellation of US$ 6.33 million bank loan includes US$4.16 million under Category (2), originally for ITS system procurement; and US$2.17 million under Category (3), which contains US$0.32 million construction supervision fee for Jinshan Bus Depot and US$1.85 million Technical Assistance expenditure. 7. The proposed reallocation and cancellation is necessary to better utilize Bank Loan and reduce Fuzhou Municipal Government’s financing cost. 10