The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) REPORT NO.: RES37020 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ANHUI YELLOW MOUNTAIN NEW COUNTRYSIDE DEMONSTRATION PROJECT APPROVED ON DECEMBER 27, 2013 TO PEOPLE'S REPUBLIC OF CHINA SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Francis Ghesquiere Task Team Leader: Ahmed A. R. Eiweida, Minghe Tao The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) ABBREVIATIONS AND ACRONYMS CNCS China New Countryside Scheme CPS Country Partnership Strategy DA Designated Account EA Environmental Assessment EIRR Economic Internal Rate of Return EMP Environmental Management Plan FM Financial Management FSR Feasibility Study Report M&E Monitoring and Evaluation MOF Ministry of Finance O&M Operation and Maintenance PDO Project Development Objective PIU Project Implementing Unit PMO Project Management Office MPMO Municipal Project Management Office RAP Resettlement Action Plan RMB Renminbi The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) BASIC DATA Product Information Project ID Financing Instrument P129563 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 27-Dec-2013 30-Jun-2019 Organizations Borrower Responsible Agency Huangshan Municipality development and Reform People's Republic of China Commission Project Development Objective (PDO) Original PDO The project development objective (PDO) is to improve the quality of services and income generating opportunities available to rural households in selected villages of Huangshan municipality. This would be achieved by investing in: (i) upgrading infrastructure services, (ii) restoring and preserving the existing cultural heritage assets, and (iii) promoting high value-added agriculture and countryside tourism. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-83090 27-Dec-2013 21-Mar-2014 30-May-2014 30-Jun-2019 100.00 76.55 23.45 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) Note to Task Teams: End of system generated content, document is editable from here. The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Loan became effective in May 2014. Implementation pace gained a great momentum since the 1st restructuring was approved in December 2016. The project is progressing satisfactorily to achieve the PDO. The PDO remains relevant to the borrower’s goals as stated in the CPS pillar and in line with the objectives of the 12th FYP of Huangshan Municipality, which contributes to improving the quality of life, raising farmers’ incomes, and revitalizing the countryside. Implementation progress is rated "moderately satisfactory" due lagged disbursement and the need to extend the loan closing date by twelve months. 2. For PDO (a), improving the quality of services, the number of beneficiaries with improved infrastructures and services is currently 136,677; exceeding the end target of 127,131 by 8 percent. The number of beneficiaries with access to all-season roads with 500m range, improved water sources, and improved sanitation are currently 127,455, 32,011 and 20,675, representing 100 percent, 112 percent, and 106 percent of the end targets respectively. For PDO (b), improving income generating opportunity available to rural households, the number of tourists visiting project villages and number of created jobs are currently 3,669,000 and 4,402, exceeding the targets by 2 percent and 10 percent respectively. Most of intermediary indicators are on track to be fully achieved or exceed the end target with details below. a. Component 1: 369 km rural roads built/reconstructed (119 percent of the target); over 50 km of river dykes reinforced/rehabilitated, meeting 100 percent of the target of land (4,065 ha.) with improved irrigation and flood control; 232km of water supply pipeline rehabilitated (106 percent of the target); and 95km sewer network built (105 percent of the target). b. Component 2: 65 ancient buildings restored with floor area of 42,512m2 (102 percent of the target); 54,284 people (101 percent of the target) attended tangible cultural heritage performance shows; and 1,365 people (152 percent of the target) received training on traditional skills. c. Component 3: 634 hectares of specially-featured agricultural bases (105 percent of the target) established; 3,268 (71 percent of the target) farmers received training on agricultural skills; 2,187 (91 percent of the target) received tourist service related training; and 203 tourist facilities (116 percent of the target) were established. d. Component 4: 1,247 functional line staff (48 percent of the target) received training; 1,548 PMO/PIUs staff (103 percent of the target) received training on project management; and 95 operational agencies (140 percent of the target) received rural infrastructural asset management training. 3. Overall investment completed is around 84 percent in 68 administrative villages located in 7 counties/districts, with variation between components 1, 2, 3 and 4 standing at 84 percent, 85 percent, 79 percent, and 86 percent of the planned after restructuring respectively. 4. Disbursement rate stands at 77 percent, which is significantly higher than the 25 percent before the first restructuring but is still behind projection. Lagged disbursement is largely due to the ongoing technical audit of some completed contracts by beneficial districts and counties. The technical audit is holding up final The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) payments to contractors and loan withdrawal requests for about one-third of the completed contracts to be audited. B. Rationale for Restructuring 5. The Project Management Office (PMO) forecasted in 2017 that there could be around 17 percent or US$17 million of loan savings upon completion of all proposed activities. Loan savings continued to occur during 2017-2018 bidding processes and became about US$30 million. The loan savings mainly came from the a) change in currency exchange rate of RMB to US$ (US$:RMB from 6.12 at appraisal to 6.90 in mid-2017); and b) effective competitive bidding. It was agreed to use such savings to scale-up some existing subprojects and finance complementary small-scale infrastructure and services to enhance project's impacts. The task team reviewed the feasibility study reports of new subprojects and safeguards documents. Supplementary resettlements action plans (RAPs) were cleared by the Bank and an updated consolidated RAP was disclosed in local governmental media on May 30, 2018. 6. Due the wide geographic coverage of the activities and complexity, together with an unusually inclement weather condition in the past six months, the project progress has been greatly hindered. It is forecasted that by the current loan closing date of June 30, 2019, seventeen civil works contracts, in a total value of about US$18 million, will not be completed. In addition, the ongoing end-of-project's socioeconomic impact evaluation and beneficiary feedback survey needs additional nine months to yield real and creditable results about the project impacts. It is important that this impact evaluation produces credible data and analysis since the project was designed as a demonstration one. To ensure sustainability of the project’s impacts, technical assistance is provided to institutional owners and operators of the assets created under the project to prepare assets management plans. 7. Government counterparts in Huangshan initiated the proposed extension of the current loan closing date by 12 months from June 30, 2019 to June 30, 2020 in order to complete all construction activities with high quality and conclude the socioeconomic impact evaluation and beneficiary feedback survey. The government’s request letter of loan extension was received on June 24, 2019. Utilization of loan savings during the extension period will scale up the achieved outcomes, maximize the long-term project, and curate knowledge about the project's socioeconomic impacts. 8. There are no outstanding financial audit reports or significant outstanding audit, financial management, safeguards or any other fiduciary related issues to prevent the extension of loan closing date. The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) II. DESCRIPTION OF PROPOSED CHANGES C. Additional Activities for Utilization of US$30 million of Loan Saving 9. The activities for loan saving utilization were packaged in 22 new contracts in total contract values of CNY185 million (US$27 million equivalent), including one for the socioeconomic survey, eleven for rural infrastructure, one for ancient building restoration and two for specifically-featured agriculture sitting in the initially appraised 68 project villages. All construction contracts started their implementation from mid to late 2018, which were initially expected to be completed by the existing loan closing date June 30, 2019. However, mainly due to the unusually inclement weather since late 2018, construction progress was greatly hindered. 10. The use of savings will slightly change components cost as shown in section IV. Disbursement allocation to category 2 (goods, consulting services and training) will be reduced from US$ 9,460,000 to US$ about 5,368,170 and allocation to category 3 (subgrants) will be reduced from US$110,000 to US$86,000. Reduced amounts of categories 2 and 3 will be used for category 1, increasing its allocation 5 percent, which does not require legal amendment since it is within the 15 percent limit. The disbursement forecast has been updated and shown in section IV. An updated procurement plan has been prepared and approved by the Bank team. 11. It is expected by the end of March 2020, all contracts will be fully completed and technical audits conducted. The socioeconomic survey will continue for additional 3 months upon completion of all physical construction. The Borrower’s ICR will also be prepared during the last 6 months of loan extension. The total number of beneficiaries will not increase significantly as all new activities remain in the initial 68 project villages. D. Revised Results Frameworks 12. Project impact will be enhanced through incremental output indicators, such as 61.27km of new/rehabilitated rural roads, 21.83km of water supply network, 6,461m3/d of water supply capacity, 588m3/d of wastewater treatment capacity, 16,373.88m2 floor areas of ancient building restoration, 47 hectare of agricultural base, 40 new tourist facilities, 86 hectares of agricultural land with improved irrigation and flood control, and 550 jobs created for specially-featured agriculture and tourist facilities. See updated results framework in annex. E. Extension of loan closing date by 12 months 13. The 12-month extension of loan closing date will allow all existing and ongoing contracts to be completed at high quality. This will also help to enhance future assets management through a series of trainings and improved asset management practice. I. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) Components and Cost ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Infrastructure Improvement 70.91 Revised Infrastructure Improvement 71.59 Cultural Heritage Conservation 15.24 Revised Cultural Heritage Conservation 18.31 The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) Enhanced Economic Enhanced Economic 18.01 Revised 10.61 Opportunities Opportunities Institutional Support 3.79 Revised Institutional Support 2.51 TOTAL 107.95 103.02 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-83090 Effective 30-Jun-2019 30-Jun-2020 30-Oct-2020 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2014 0.00 0.00 2015 7,000,000.00 6,713,290.00 2016 12,000,000.00 12,225,146.00 2017 15,000,000.00 11,010,932.00 2018 38,000,000.00 18,255,217.00 2019 28,000,000.00 28,345,415.00 2020 0.00 23,450,000.00 . The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) . Results framework COUNTRY: China Anhui Yellow Mountain New Countryside Demonstration Project Project Development Objectives(s) The project development objective (PDO) is to improve the quality of services and income generating opportunities available to rural households in selected villages of Huangshan municipality. This would be achieved by investing in: (i) upgrading infrastructure services, (ii) restoring and preserving the existing cultural heritage assets, and (iii) promoting high value-added agriculture and countryside tourism. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Improve the quality of infrastructure services to rural households in the project regions (Action: This Objective has been Revised) Indicator One: Number of beneficiaries with access to improved 0.00 37,793.00 69,771.00 95,936.00 122,100.00 140,000.00 145,357.00 145,400.00 infrastructure services in project villages (Number) Action: This indicator has been Revised Indicator one (i): Number of beneficiaries with 0.00 0.00 12,000.00 30,000.00 50,000.00 80,000.00 100,000.00 127,131.00 access to an all season road within 500m range (Number) The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Action: This indicator has been Revised Indicator one (ii): Number of beneficiaries with 0.00 0.00 18,000.00 20,000.00 25,000.00 28,530.00 32,011.00 32,011.00 access to improved water sources. (Number) Action: This indicator has been Revised Indicator one (iii): Number of beneficiaries with 0.00 0.00 12,000.00 15,000.00 18,000.00 19,450.00 20,100.00 21,000.00 access to improved sanitation. (Number) Action: This indicator has been Revised Indicator One: (0) Number of beneficiaries with access to improved 0.00 0.00 30,000.00 45,000.00 50,100.00 61,023.00 66,972.00 66,972.00 infrastructure services in project villages of which women (Number) Action: This indicator has been Revised Improve the income generating opportunities available to rural households in project villages The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Indicator Two: Number of Tourists visiting project villages which have implemented the cultural 2,580.00 0.00 0.00 2,860.00 3,520.00 3,610.00 3,630.00 3,669.00 heritage conservation component of the project. ('000) (Number (Thousand)) Action: This indicator has been Revised Indicator three : Number of enhanced economic 0.00 0.00 0.00 500.00 2,000.00 4,000.00 4,200.00 4,550.00 opportunities related jobs created (Number) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Component 1 Infrastructure Improvement IOI 1-1: Increased length of roads constructed/rehabilitated 0.00 60.40 173.00 240.00 267.00 308.60 370.00 370.00 under the project (Kilometers) The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Action: This indicator has been Revised IOI 1-2: Length of water supply pipeline installed 0.00 0.00 20.00 65.00 125.00 219.00 241.00 241.00 under the project. (Kilometers) Action: This indicator has been Revised IOI 1-3 :Increased in daily production of quality water supply under the 0.00 0.00 0.00 120.00 890.00 3,805.00 10,226.00 10,226.00 project (Cubic Meter(m3)) Action: This indicator has been Revised IOI 1-4: Increased daily capacity of wastewater treatment and disposal 0.00 0.00 0.00 220.00 420.00 1,075.00 1,663.00 1,663.00 facilities under the project (Cubic Meter(m3)) Action: This indicator has been Revised IOI 1-5: Land area with improved access to 0.00 224.00 717.00 2,165.00 3,516.00 4,065.00 4,151.00 4,151.00 irrigation and flood control with improved The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 irrigation and drainage services (Hectare(Ha)) Action: This indicator has been Revised Component 2 Cultural Heritage Conservation IOI 2-1: Area of historic buildings restored 0.00 0.00 0.00 800.00 12,326.00 41,561.00 57,953.00 57,935.00 (Square Meter(m2)) Action: This indicator has been Revised IOI 2-2: Increase in number of audience 0.00 1,000.00 3,600.00 14,200.00 20,200.00 24,600.00 35,000.00 54,000.00 attending exhibitions and performanes (Number) Action: This indicator has been Revised IOI 2-3: number of successors trained for 0.00 144.00 432.00 570.00 653.00 900.00 900.00 900.00 traditional arts and techniques (Number) Action: This indicator has been Revised Component 3 Enhanced Economic Opportunities IOI 3-1: Area of production bases 0.00 93.00 154.00 352.00 473.00 510.00 600.00 649.00 developed in project villages (Hectare(Ha)) The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Action: This indicator has been Revised IOI 3-2: Farmers trained in new agriculture 0.00 0.00 409.00 900.00 1,800.00 4,600.00 4,600.00 4,600.00 technologies (Number) Action: This indicator has been Revised IOI 3-2: (i) Farmers trained in new agriculture 0.00 0.00 133.00 240.00 680.00 2,180.00 2,180.00 2,180.00 technologies of which women (Number) Action: This indicator has been Revised IOI 3-3: Rural residents trained in provision of 0.00 370.00 610.00 841.00 1,480.00 2,400.00 2,400.00 2,400.00 tourism services (Number) Action: This indicator has been Revised IOI 3-3: (i) Rural residents trained in provision of tourism 0.00 160.00 269.00 480.00 725.00 1,350.00 1,350.00 1,350.00 services of which women (Number) The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 Action: This indicator has been Revised IOI 3-4: Increase in number of tourism 0.00 30.00 63.00 118.00 164.00 175.00 215.00 215.00 facilities (Number) Action: This indicator has been Revised Component 4 Institutional Support IOI 4-1: Staff from various line departments trained 0.00 256.00 328.00 340.00 1,000.00 2,600.00 2,600.00 2,600.00 - men and women (Number) Action: This indicator has been Revised IOI 4-1 (i): Staff from various line departments trained - 0.00 173.00 223.00 230.00 480.00 1,080.00 1,080.00 1,080.00 of which women (Number) Action: This indicator has been Revised IOI 4-2: PMO and PIU 0.00 0.00 157.00 620.00 980.00 1,400.00 1,500.00 1,500.00 Staff trained (Number) Action: This indicator has been Revised The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 IOI 4-3: Number of units trained in O&M 0.00 18.00 28.00 48.00 58.00 65.00 68.00 68.00 (Number) Action: This indicator has been Revised IO Table SPACE The World Bank Anhui Yellow Mountain New Countryside Demonstration Project (P129563) Note to Task Teams: End of system generated content, document is editable from here. 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