IMPLEMENTATION COMPLETION REPORT CHINA ......This is the Implementation Completion Report (ICR) for the Earthquake Reconstruction Program portion of the Guangdong Agricultural Development

Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No. 19470

IMPLEMENTATION COMPLETION REPORT

CHINA

GUANGDONG AGRICULTURAL DEVELOPMENT PROJECT

AND

EARTHQUAKE RECONSTRUCTION PROGRAM

(PORTION OF CREDIT 2307-CHA)

June 28, 1999

Urban Development Sector UnitChina Country Management UnitEast Asia and Pacific Regional Office

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

Currency = RenminbiCurrency Unit = Yuan (Y)

Y 1.0 =100 fen$1.0=Y8.3

Appraisal: $1.0 = Y 8.3; SDR 1.0 = $1.44Completion: $1.0 = Y 8.3; SDR 1.0 = $1.33

FISCAL YEAR

January 1 - December 31

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

DCA - Development Credit AgreementEASUR - Urban Sector Development Unit, East Asia and Pacific RegionGOC - Government of ChinaICR - Implementation Completion ReportIDA - International Development AssociationIMAR - Inner Mongolia Autonomous RegionNSP - National Shopping ProceduresRS - Richter ScaleTA&T - Technical Assistance and TrainingYP - Yunnan ProvinceYPG - Yunnan Provincial Government

Vice President : Jean-Michel Severino, EAPVPCountry Director : Yukon Huang, EACCFSector Manager : Keshav Varma, EASURTask Manager : Geoffrey Read, EASUR

CONTENTS *FOR OFFICIAL USE ONLY

PREFACE ........................................................ III

EVALUATION SUMMARY ......................................................... V

PART I: PROGRAM IMPLEMENTATION ASSESSMENT ................................1A. Statement/Evaluation of Objectives ........................................................ 1lB. Achievement of Program Objectives ......................................................... 6C. Implementation Record and Major Factors Affecting the Project ................6D. Program Sustainability ......................................................... 7E. IDA Performance ......................................................... 8F. Borrower Performance ......................................................... 9G. Assessment of Outcome ........................................................ 10H. Future Operations ........................................................ 10I. Key Lessons Learned ......................................................... 1.1

PART II: STATISTICAL TABLES-INNER MONGOLIAAUTONOMOUS REGION ........................................................ 13

Table IMAR 1: Summary of Assessments ....................................................... 13Table IMAR 2: Related Bank Loans and IDA Credits .................................... 14Table IMAR 3: Program Timetable ........................................................ 14Table IMAR 4: Credit Disbursement: Cumulative Estimate and Actual ........ 14Table IMAR 5: Key Indicators for Program Implementation .......................... 15Table IMAR 6: Key Indicators For Program Operations ................................ 15Table IMAR 7: Studies included in Program .................................................. 15Table IMAR 8a-1: Program Cost Estimate ...................................................... 16Table IMAR 8a-2: Total Program Cost Estimate and Actual .......................... 17Table IMAR 8b: Program Financing ........................................................ 18Table IMAR 9: Economic Costs and Benefits ................................................. 18Table IMAR 10: Status of Legal Covenants .................................................... 19

* Reference should also be made to the primary ICR for Credit 2307-CHA-GuangdongAgricultural Development Project (GADP) and Earthquake Reconstruction Program(Report No. 19492); that report refers to the use of funds allocated to GuangdongProvince. This ICR is prepared in connection with the investments undertaken with aportion of the funds in Credit 2307, which arose following the reallocation of creditproceeds from the GADP to the Inner Mongolia and Yunnan Earthquake ReconstructionProgram, supported by the International Development Association as an emergencyoperation, using the latter procedures.

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

- ii -

Table IMAR 11: Compliance with Operational Manual Statements ............... 19Table IMAR 12: IDA Resources: Staff Inputs ................................................. 20Table IMAR 13: IDA Resources: Missions .................................................... 20

PART II: STATISTICAL TABLES-YUNNAN PROVINCE' ........................... 21Table YP 1: Summary of Assessments ........................................................... 21Table YP 2: Related Bank Loans and IDA Credits ......................................... 22Table YP 3: Program Timetable .............................. ............................. 22Table YP 4: Credit Disbursement: Cumulative Estimate and Actual .............. 22Table YP 5: Key Indicators for Program Implementation ............................... 23Table YP 6: Key Indicators For Program Operations ...................................... 23Table YP 7: Studies included in Program ........................................................ 24Table YP 8a-1: Program Cost Estimate ........................................................... 24Table YP 8a-2: Total Program Cost Estimate and Actual ............................... 25Table YP 8b: Program Financing ........................................................... 25Table YP 9: Economic Costs and Benefits ...................................................... 26Table YP 10: Status of Legal Covenants ......................................................... 26Table YP 11: Compliance with Operational Manual Statements .................... 26Table YP 12: IDA Resources: Staff Inputs ...................................................... 27Table YP 13: IDA Resources: Missions .......................................................... 27

APPENDIX A: ICR MISSION'S AIDE MEMOIRE-INNER MONGOLIA....29

APPENDIX B: ICR MISSION'S AIDE MEMOIRE-YUNNAN ....................... 36

APPENDIX C: BORROWER CONTRIBUTION TO THE ICR-INNERMONGOLIA .......................................................... 61

APPENDIX D: BORROWER CONTRIBUTION TO THE ICR-YUNNAN ... 73

APPENDIX E: CULTURAL HERITAGE ASSET RECONSTRUCTIONCOMPONENT-IMPLEMENTATION MISSION REVIEW ANDFINDINGS .......................................................... 85

MAPS

IBRD 30368-Inner Mongolia and Yunnan Earthquake Reconstruction ProgramIBRD 30369-Inner MongoliaIBRD 30193-Yunnan Province

Two sets of Statistical Annexes were prepared, since the two programs were managed by different ProvincialGovernments, the timing of the two earthquake events were also different, and specific funds were allocatedwithin the Credit to each Provincial Government.

- 1ii -

IMPLEMENTATION COMPLETION REPORT *

CHINA

GUANGDONG AGRICULTURAL DEVELOPMENT PROJECTAND EARTHQUAKE RECONSTRUCTION PROGRAM


PREFACE

This is the Implementation Completion Report (ICR) for the EarthquakeReconstruction Program portion of the Guangdong Agricultural Development Project andEarthquake Reconstruction Program in China for which SDR 41.61 million equivalent ofthe proceeds of Credit 2307-CHA was approved and made effective on October 16, 1996.In March 1998 a further reallocation of SDR 9.0228 million equivalent of the proceeds ofCredit 2307-CHA was approved. The total allocation for the Earthquake ReconstructionProgram (implemented in Inner Mongolia and Yunnan) was thus SDR 50.6328 million.Bank Group procedures for Emergency Recovery Assistance (OP 8.50) were followed.

The credit was closed on December 31, 1998, at which time the funds allocated tothe Earthquake Reconstruction Program were fully committed. The final disbursementtook place on December 30, 1998 for Yunnan Province, and on April 12, 1999 for InnerMongolia Autonomous Region.

Messrs. Geoffrey Read (Task Manager) and Terry Hall (Consultant) prepared theICR, with assistance by Yang Dawei (Procurement Specialist), Chen Feng (DisbursementSpecialist), in the Urban Development Sector Unit (EASUR) of the East Asia and PacificRegion, and Ken Rippin (Consultant). It was reviewed by Messrs. Keshav Varma, SectorManager, EASUR, and Yukon Huang, Country Director, China.

Preparation of this ICR was begun during the International DevelopmentAssociation's (IDA's) supervision missions in June 1998 (in the Inner MongoliaAutonomous Region) and in November 1998 (in Yunnan Province), and is based oninformation in the project file and mission reports prepared during supervision. Since thisprogram was rapidly implemented separately but simultaneously to the GuangdongAgricultural Development Project (GADP), progress reporting was undertaken through

* Reference should also be made to the primary ICR for Credit 2307-CHA-GuangdongAgricultural Development Project (GADP) and Earthquake Reconstruction Program(Report No. 19492); that report refers to the use of funds allocated to GuangdongProvince. This ICR is prepared in connection with the investments undertaken with aportion of the funds in Credit 2307, which arose following the reallocation of creditproceeds from the GADP to the Inner Mongolia and Yunnan Earthquake ReconstructionProgram, supported by the International Development Association as an emergencyoperation, using the latter procedures.

CHINA



EVALUATION SUMMARY

Introduction

1. This reconstruction program addressed the restoration of infrastructure, industrialand cultural heritage facilities in the Inner Mongolia Autonomous Region (IMAR) andYunnan Province (YP) that were damaged or destroyed due to seismic activities in 1996.

2. In IMAR, on May 3, 1996, an earthquake measuring 6.4 on the Richter Scale (RS)struck near the densely populated industrial city of Baotou in Baotou Municipality. Sevencounties in the nearby Yi and Ba Prefectures (populations of 1.3 million and 1.6 million,respectively) were also affected. There were 26 fatalities and some 450 people wereinjured, and the earthquake caused serious damage to buildings, industrial facilities, andurban and rural housing. Some 135,000 housing units were damaged or destroyed.Altogether, 580,000 households comprising some 2.1 million people were affected. Therewas urgent need to rehouse people before the onset of the winter of 1996 since in InnerMongolia, the winter effectively begins in October and the temperature drops to-45°Celsius.

3. In YP, an earthquake registering 7.0 RS struck in Dali, Diqing and LijiangPrefectures, north of Kunming (the provincial capital) on February 3, 1996. Casualtieswere heavy, with 309 fatalities and about 4,000 persons injured. Severe property damageoccurred involving some 410,000 housing units and affecting about I million people.Schools, hospitals and community facilities were also destroyed, together with localenterprises, infrastructure and cultural heritage facilities in Lijiang Old City.' There weremore than 2,000 aftershocks in the range of 4 to 6 RS, which contributed to thesubstantial damage. The most affected areas were Lijiang Prefecture and County, Heqingand Jianchuan Counties in Dali Prefecture, and Zhongdian County in Diqing Prefecture.Mostly the Naxi minority occupies the affected areas. Employment is mostly inagriculture, and in agricultural- and mining-related small industries.

4. The Government estimated direct losses at about $627 million equivalent inIMAR and $482 million equivalent in YP. The Government of China (GOC) requested

1 Lijiang Old City has been designated by UNESCO as a World Heritage site.

- vi -

support for Yunnan immediately after the earthquake struck Yunnan and, subsequently,shortly after the earthquake struck Inner Mongolia.

Program Objectives

5. The primary objective of the program was to assist in the restoration of economicand social activities in the earthquake-affected areas of IMAR and YP through therestoration of infrastructure and priority production facilities. A secondary objective wasto restore cultural heritage assets, particularly in minority areas, thereby assisting torestore living conditions and facilities to conditions comparable before the earthquakesstruck. The objectives were clear and realistic, focusing on the immediate needs to restoreeconomic capacity and those facilities essential to the damaged and shockedcommunities, namely housing, health and education, essential infrastructure services andmeans of production. These were consistent with the Country Assistance Strategy.

6. The objectives were straightforward, and involved no unreasonable risks, as theskills, services and materials needed to respond and implement the program were locallyavailable; the objectives met the agency needs since immediate short-term relief wasprovided by national and international authorities, but resources were limited for theprovision of longer-term assistance requiring investmnent. The above are confirmed by thesuccessful program outcomes. Program components included restoration of thefollowing: housing (through reconstruction of complex structures or loans to supplementhouseholder reconstruction efforts), schools and education facilities, clinics and hospitals,water/drainage/wastewater services, district heating (IMAR only), power, select roadreconstruction, restoration of priority production facilities (employment restoration), andlimited training and technical assistance.

7. The program included no special covenants. There was a requirement that anEnvironmental Assessment be prepared for investments to restore pulp and paperfacilities in Yunnan, as these could be polluting; the requirement was satisfactorily met.

Implementation Experience and Results

8. The achievements of the reconstruction programs in IMAR and YP weresubstantial. The rehabilitation components were carefully prepared by GOC experts fromthe Ministry of Construction (MOC), adopting standardized procedures for classifyingearthquake damage and repairs, in accordance with the 1978 antiseismic Building DesignCode for Industrial and Public Buildings and Infrastructure Facilities. Implementationwas expedited through properly structured management by government at all levels;simplified procurement procedures; ready availability of local funds; and "fast track" IDAprocessing. The restoration through the program of urban services, housing and publicbuildings in the Old City of Lijiang in Yunnan, which is a major heritage asset with afragile environment, was a major achievement by the Government and the community.

9. Sustainability of the reconstructed buildings and facilities is considered highlylikely since the programs were designed and implemented to restore the facilities to their

- vii -

original pre-earthquake situation, in line with budgets already existing for operation andmaintenance. In many cases, the authorities and benefiting communities also took theopportunity to improve the designs and layout of rehabilitated facilities while maintainingcompliance with Bank Group guidelines for emergency operations. Construction qualitywas reported to be consistently highly satisfactory, and the reconstruction was done inaccordance with the above-mentioned design code.

10. Program Costs and Financing. The total program cost estimate for IMAR andYP was Y 788.7 million ($95.0 million), including contingencies, and engineering andmanagement costs. A fixed exchange rate of Y 8.3 = $1.0 was adopted since a 24-monthimplementation period was planned. The actual total cost was $107.1 million, withexpenditures almost wholly (99.5 percent) in local currency. IDA financing totaledSDR 50.6328 million ($67.34 million equivalent at closing date) under Credit 2307-CHA. This is SDR 9.028 million ($12.0 million equivalent) more than at appraisal in1996, since supplementary fund allocations were provided in March 1998 to both InnerMongolia and Yunnan to enable additional urgent reconstruction to be completed.Second-level priority investments were identified during appraisal and negotiations thatcould not be financed at the time due to resource limitations but would be suitable forIDA support; these were financed once the supplementary funds became available. Thecredit closed on December 31, 1998.

Major Factors Affecting Program Implementation

11. The program was completed very successfully and within the time expected.

* Factors Outside Government Control

Procurement Arrangements. Simplified procurement procedures were adoptedby GOC and IDA for the reconstruction program: Civil works and goods weremainly procured through lump-sum fixed-price contracts based on NationalShopping Procedures (NSP) and output-based force account contracts (to a limitedextent). In IMAR, advertised competitive bidding was preferred for somecomponents to achieve lower costs (savings up to 10 percent were reported).Advance contracting up to $15 million (about 20 percent of the program) waspermitted starting from the dates of the earthquake occurrences. IDA supervisionmissions reported generally satisfactory compliance with procurement proceduresbased on selective post-review of documentation, although it seems in a few casesin YP, in order to achieve high-quality work, contract awards were based on ajudgmental marking system of bidders with prices nearest to the "Engineer'sEstimate," not necessarily the lowest responding bidder (ICR mission discussionswith executing agencies). Overall, the adoption of the simplified procedures wasentirely appropriate and had a very positive impact on the effectiveness of theprogram implementation; the program could almost certainly not have beenimplemented successfully using normal Bank Group procurement procedures.

- viii -

Response by Communities and Outside Donors/Contributors. Thecommunities responded to the crises very positively, as did outside relief givers.This enabled immediate relief to be effective, and created a synergistic effect onthe investment program, increasing the scope and impact of the restorationinvestments.

* Factors Within Government Control

* Funds Availability. In both IMAR and YP (after minor delays) local funds weremade readily available by the respective Finance Bureaus, which contributed tothe good all-round implementation experience. Both IMAR and YP were able toabsorb additional IDA funds to rehabilitate damaged facilities not covered in theoriginal appraisal, although in both IMAR and YP minor problems occurred withcounterpart funding at the closing stages of the programs. These problems weredue to insufficient contingency provisions in construction budgets and inadequatearrangements by executing agencies to accommodate exchange rate variations(SDR going down against the US dollar and the Yuan). Apart from some minorworks, all components were successfully implemented within the original creditclosing date (December 31, 1998).

* Rapid Response by State and Local Authorities. The ability of the stateauthorities, in particular China's Ministry of Finance, and of the YunnanProvincial authorities to respond rapidly to an emergency was impressive andcrucial to the effective provision of immediate-term and longer-term relief.Decisive responsiveness at the center enabled resources to be mobilized andutilized effectively.

* Factors Within Implementing Agency Control

* Program Management Arrangements. In both IMAR and YP, appropriate high-level program management arrangements were set up at the start of the program.In IMAR, a Leading Group was established, headed by a vice-governor, togetherwith about 39 project management offices for execution. In YP, Leading Groupswere set up at Provincial, Prefecture and County levels under the leadership ofvice-governors; and about 40 project offices were set up at the implementingagency level. Key participation by the respective Provincial Finance Bureaus andConstruction Commission (in YP) is noted.

* Procurement and Reporting. Both IMAR and Yunnan made specific efforts tofollow the agreed procurement and project reporting procedures. This enabledrapid implementation.

* Community and Minority Group Consultation and Participation. The localauthorities, with the support of the central authorities, made strong efforts tofacilitate the efforts of the local communities/beneficiaries at all stages. Theprogram could not have been undertaken so effectively without this deep

- ix -

involvement. The restoration of livelihoods and facilities for minority groups wasgiven particular attention in Yunnan.

12. IDA Performance. IDA performance in identification, preparation, appraisal andsupervision of both programs was fully satisfactory, and initial responses to GOCrequests for assistance were very prompt. Appraisal of both programs was satisfactory,although the study on a "Cultural Asset Construction Guide" could have been betterdefined at appraisal. Internal processing was prompt, although on a number of occasionsthe IMAR program office expressed concern at the length of time required to replenishthe Special Account.

13. Borrower Performance. The Borrower's performance at all levels in preparationand implementation was highly satisfactory. The project management arrangements atboth IMAR and YP incorporated the experiences gained in the earlier disaster-relief IDA-assisted projects. Strong central and local leadership, and local management,minimization of "cash flow" delays, community participation and IDA's "fast track"processing (as permitted under OP 8.50) all contributed to the successful and timelyimplementation of the reconstruction programs. The Borrower complied with theapplicable covenants under the legal agreements. This performance was especiallysatisfactory as both local governments were first-time participants with Bank Groupprocedures, and were responding to emergency situations with associated complications.

14. Program Outcome. The outcome of the reconstruction program was highlysatisfactory. Both IMAR and YP completed the works to high quality and addressed theprogram objectives satisfactorily. The effectiveness and robustness of IDA's "fast track"procedures for disaster relief were clearly demonstrated.

Summary of Findings, Future Operations, and Key Lessons Learned

15. Future Operations. The implementation of the relief programs in both IMARand YP could provide a good model for future similar operations. The Yunnan ProvincialGovernment (YPG) has proposed requesting further Bank Group support to assist indeveloping strategies and programs in the minority prefectures of Dali, Diqing andLijiang, based on the successful experience of the earthquake rehabilitation programn.

16. Key Lessons Learned from the implementation of this program include:

* Dedicated and sustained project management through high-level Leading Groups atthe Provincial, Prefecture and County levels, supported by properly staffed, full-timeproject management offices at all levels made a major contribution to project success;

* The in-depth involvement and in many cases financial commitment by the localcommunities at all stages of reconstruction was a major factor in success andsustainability of disaster-relief efforts;

Simplified procurement procedures clearly had a major impact on the speed andeffectiveness of implementation. Post-review of procurement documentation byvisiting IDA missions indicated generally satisfactory compliance, although it seemsthat in a few cases in YP the lowest responding bid was not always accepted. Theadoption of similar procedures could be considered for more widespread use inregular lending operations, in appropriate cases, subject to rigorous monitoring forcompliance;

. Appropriate financial and implementation tracking systems as part of projectmanagement should be put in place at the start of the project to avoid delays inimplementation and sanctioning of expenditures;

* In emergency projects, construction often begins before all design details arefinalized. In such cases it is important to allow generous contingency provisions toaddress unforeseen problems that may occur during construction;

* The methods successfully adopted for the reconstruction of urban services in animportant and fragile heritage environment clearly demonstrated communitycommitment and increased the likelihood of sustainability;

* An unusual feature of the program in Yunnan was that much reconstruction had to beundertaken in sites of unique cultural heritage value. This was done successfully,within the program time scale, restoring the assets to community use (schools,hospitals, urban fabric and public buildings);

* Substantial economic, environmental, financial and social indirect benefits can accrueto the disaster-affected areas through carefully designed rehabilitation and repairprograms; and

* Rapid and effective focused decisions by Bank Group and client country managementcan make a significant positive impact in improving the lives of lower-incomecommunities, especially in emergency situations; the participation by the affectedcommunity and their leaders however is central to this success.

- 1 -

CHINA



PART I: PROGRAM IMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

1. Background. China has experienced some of the most severe recordedearthquakes in the world. Since 1900, there have been 662 earthquakes with a magnitudeof over 6 on the Richter Scale (RS), of which 106 registered a magnitude of 7 or more,representing around 30 percent of world earthquakes of that severity. Some five years agoChinese earthquake specialists predicted that, after a decade of relative calm, China hasentered a period of high seismic activity. This prediction is certainly borne out by theearthquake events that occurred in the Inner Mongolia Autonomous Region (IMAR) andYunnan Province (YP) in 1996, and which are addressed in this Program, by the recentseismic activity (November 1998) in the northern area of YP, and an earthquake in Hebeiin January 1999, where the International Development Association (IDA) is supportingreconstruction in a very low-income area.

2. This reconstruction program addressed the restoration of infrastructure, essentialsocial services and facilities, industrial and cultural heritage facilities in IMAR and YPthat were damaged or destroyed resulting from seismic activities in 1996.

3. In IMAR, on May 3, 1996, an earthquake measuring 6.4 RS struck near thedensely populated (over 2 million) iron and steel-making industrial city of Baotou inBaotou Municipality. Seven counties in the nearby Yi and Ba Prefectures (populations of1.3 million and 1.6 million, respectively) were also affected. The epicenter of thisearthquake was about 10 kilometers (km) north of Baotou City. There were 26 fatalities;some 450 people were injured. The earthquake caused serious damage to buildings,industrial facilities, and urban and rural housing; some 135,000 housing units were eitherdamaged or destroyed. Altogether, 580,000 households, comprising some 2.1 millionpeople, were affected. There was urgent need to rehouse people before the onset of thewinter of 1996 since in Inner Mongolia winter starts in October and the temperatures dropto -45°Celsius. The affected rural areas support a population comprising mostlyminorities who practice low-input agriculture and animal husbandry activities.

4. In YP, an earthquake registering 7.0 RS struck in Dali, Diqing and LijiangPrefectures, north of Kunming (the provincial capital), on February 3, 1996. Theepicenter of this earthquake was some 60 km north of Lijiang. Casualties were heavy

- 2 -

with 309 fatalities and about 4,000 persons injured. Severe property damage occurredinvolving some 410,000 housing units and affecting about 1 million people. Schools,hospitals and community facilities were also destroyed, together with local enterprises,infrastructure facilities (bridges, power, water and telecommunications) and culturalheritage facilities in Lijiang Old City. There were more than 2,000 aftershocks in therange of 4 to 6 RS, which contributed to the substantial damage. The most affected areaswere Lijiang Prefecture and County, Heqing and Jianchuan Counties in Dali Prefecture,and Zhongdian County in Diqing Prefecture. The affected areas are poor rural areas some2,200 meters (m) above sea level, bordering on Myanmar in the west, and occupiedmostly by the Naxi minority. Employment is mostly in agriculture, and in agricultural-and mining-related small industries, including papermaking, timber and food processing.The area has a mostly mountain-region climate with cold winters and prolonged snowfall.

5. The Government estimated direct losses at about $627 million equivalent and$482 million equivalent in IMAR and YP, respectively. Assets were mostly uninsuredand both provinces received local and international support for immediate reliefexpenditures such as temporary housing and emergency medical facilities. TheGovernment of China (GOC) requested IDA assistance on February 4, 1996.

6. While not major disasters by Chinese or world standards, both the IMAR and YPearthquakes significantly affected the local economies. IDA involvement in thereconstruction programs, following requests by GOC for emergency assistance, focusedon: (a) the restoration of economic and social activities through the rebuilding of schools,health centers, infrastructure, housing, cultural heritage and selected enterprise facilities;(b) the use of cost-effective earthquake-resilient construction standards for housing,industry and infrastructure; and (c) modest institutional development in emergencyprogram management and implementation.

7. Program Objectives. The primary objective of the program was to assist in therestoration of economic and social activities in the earthquake-affected areas of IMARand YP through the restoration of economic and social infrastructure and priorityproduction facilities. A secondary objective was to restore cultural heritage assets,particularly in Naxi minority areas.

8. Program Description and Components. The program was designed to supportemergency reconstruction, repair and rehabilitation activities to be carried out in IMARand YP during the period mid-1996 through mid-1998. The program components, asidentified in 1996, indicated costs including physical and price contingencies, andengineering and management charges were defined as follows (from the OperationsImplementation Plans). Supplementary rehabilitation components, which were identifiedin both IMAR and YP in 1997/98, are also defined below:

- 3 -

Inner Mongolia Autonomous Region

* Health Care-Y 80.9 million ($9.7 million). Investments to support thereconstruction, repair and rehabilitation of about nine hospitals and healthcareinstitutions and other facilities in Baotou City and in Yi and Ba Prefectures, to restorethe existing inpatient, outpatient, and clinic facilities, totaling about 49,200 squaremeters (m2).

* Education-Y 88.8 million ($10.7 million). Investments to support thereconstruction, repair and rehabilitation of about 11 elementary and middle schools inBaotou City and in Yi and Ba Prefectures, and the rehabilitation, repair andreinforcement of teaching, library, laboratory, dormitory and other facilities, totalingabout 76,610 in2.

* Village and Urban Rehabilitation-Y 65.2 million ($7.9 million). Rehabilitationand reconstruction of about 83,500 housing units in about 351 villages in Yi and BaPrefectures, and in Baotou City.

- Power and Gas Sectors-Y 93.7 million ($11.3 million).

* Power: Construction of a reinforced concrete structure to "wrap" two existingswitchgear buildings; restoration of power transmission and distribution systemsin Yi and Ba Prefectures, and restoration of power supply in Baotou City; and

* Gas: construction of a gas tank of about 54,000 cubic meters (m3) capacity;repairs to an existing gas tank damaged in the earthquake; and repairs to the gasnetwork of Baotou City.

* Institutional Development-Y 0.8 million ($0.1 million). Investments to providetechnical assistance, training and support to provincial-, municipal-, prefectural- andcounty-level agencies.

* Supplementary Rehabilitation Components-Y 61.8 million ($7.5 million).Investments to support the reconstruction, repair and rehabilitation of additionalfacilities in schools, housing, infrastructure and heating plant in Bautou City, Ba andYi Prefectures totaling around 51,700 rn2 of building area.

Yunnan Province

* Education-Y 86.0 million ($10.4 million). Investments to support thereconstruction, repair and rehabilitation of about 10 primary and secondary schools inurban centers, in Lijiang, Heqing, Jianchuan and Zhongdian Counties, includingLijiang Health Care School, and about 35 primary and middle schools in county areasin Lijiang, Heqing, Jianchuan and Zhongdian Counties, including the rehabilitation,repair and reinforcement of about 110,000 M2 of teaching, library, laboratory anddormitory facilities.

-4-

* Health Centers-V 42.1 million ($5.1 million). Investments to support thereconstruction, repair and reinforcement of about six county- and city-level hospitalsin Lijiang, Dali and Diqing Prefectures, to restore the existing inpatient, outpatient,and clinic facilities, totaling about 25,000 M2 .

* Cultural Heritage-Y 65.9 million ($7.9 million). Investments to support urbanfabric renewal and infrastructure in:

* Lijiang Old City, including restoration of the Mu Minority Cultural Centertotaling about 20,000 m2 area and public buildings of some 2,100 ni2 area, andprovision of construction materials in support of property reconstruction of about2,400 family rooms for lower- and middle-income groups, thus benefiting about15,300 families (see also Appendix E).

* Jianchuan Hong Dynasty Museum Park and Dongba Cultural Art Museum.Investments to support the restoration and repair of damages to this national-levelMuseum Park and Dongba Cultural Art Museum, including repairs to pavilionsand exhibits (see also Appendix E).

* Infrastructure-Y 109.3 million ($13.2 million). Investments in water supply andtreatment, irrigation and drainage and roads in Lijiang City, Diqing, Heqing andJianchuan Counties of Dali, Diqing and Lijiang Prefectures including:

* Lijiang City Water Supply. Repair and replacement of water distribution mainsin range 25 to 150 millimeters (mm) diameter, in pipes of galvanized mild steel,cast iron or other materials to replace defective and broken pipes, of a total lengthof about 150 km. Repair and rehabilitation of water treatment works of about20,000 cubic meters per day (m3/d) capacity, and raw water headworks andtransmission culvert/pipeline totaling about 11.6 km.

* City Sanitation and Drainage. Reconstruction of drainage channels and culvertsof about 3.0 km length, repair and reconstruction of about 100 community toiletsand outlet sewers.

* Heqing County. Rehabilitation of existing water treatment and distributionsystem of about 6,000 m3/d capacity, including repair/replacement of brokenwater mains in sizes in the range 150 to 500 mm diameter, of about 10 km totallength.

* Jianchuan County. Rehabilitation, repair and replacement of (a) distributionsystem of pipes in sizes in the range 100 to 300 mm diameter of about 9 km totallength; and (b) raw water pipeline of about 5 km total length.

. Zhongdian Water Supply. Rehabilitation, repair and replacement of watersupply system comprising water treatment facilities of about 6,000 m3 /d capacity,replacement of leaking and defective concrete transmission and distribution pipes

-5 -

with cast iron, galvanized or other materials in sizes in the range 100 to 500 mmdiameter of about 25 km total length.

Jianchuan Irrigation System Conveyor. Rehabilitation, repair and replacementof irrigation water conveyor system comprising elevated and ground-levelchannels, of about 7 km total length to serve an area of about 2,000 hectares.

. Lijiang Spine Road Drainage System. Repairs to roadside drainage systemscomprising pipes in the range of 600 to 800 mm diameter of about 1,200 m totallength, and drain channel retaining walls.

* Lijiang Airport-Heqing Road Rehabilitation. Repairs to about 25 km of roadsurface and drain channel retaining walls.

* Industrial Enterprises-Y 97.3 million ($11.6 million). Investments to support therehabilitation, repair and replacement of buildings and equipment in about eightselected industrial enterprises in Lijiang, Dali and Diqing Prefectures, includingDiqing Pulp Works, Heqing Manganese Mine, Heqing Agriculture MachineryFactory, Heqing County Paper Mills, Lijiang Food Processing Factory, LijiangMachine Tool Factory, Lijiang Window Frame factory, and Lijiang County PaperMill, to restore their original pre-earthquake capacity.

* Power Sector-Y 57.0 million ($6.9 million). Investments to support therehabilitation and repair of about three hydropower stations including Xizhong, HeiBai Shui and Zhongdian stations, to restore their original pre-earthquake capacity.

- Institutional Development-Y 1.7 million ($0.2 million). Investments to providetechnical assistance, data management facilities, training and support to provincial,prefecture and county-level agencies.

* Supplementary Rehabilitation Components-Y 83.1 million ($10.0 million).Investments in Dali, Diqing and Lijiang Prefectures to support the reconstruction,repair and rehabilitation of about 13,700 rn2 area in 12 schools, 3,600 rn2 area andequipment in five hospitals, provision of construction materials in Zhongdian City,repair of the Confucius temple school in Heqing, Lijiang drainage and wastetreatment, additional repairs at the Lijiang airport road, repairs in four enterprises, andpower station building repairs of 3,000 rn2 area.

9. The total program cost estimate for IMAR and YP was Y 788.7 million ($95.0million), including contingencies, and engineering and management costs. The foreignexchange component was estimated at about Y 101.3 million ($12.2 million) or about 13percent of program costs. A fixed exchange rate of Y 8.3 = $1.0 was adopted since theimplementation period was planned for about 24 months. However, although the USdollar vs. Yuan exchange rate has remained around 1.0 to 8.3 throughout the projectperiod, the SDR vs. US dollar exchange rate has varied from SDR 1.0 = $1.44 atappraisal (1996) to SDR 1.0 = $1.33 in late 1998 (7.6 percent devaluation of SDR).

- 6 -

Expenditures were almost wholly in Yuan, and as a result, reimbursements from thecredit in Yuan are reduced. Overall in YP the impact of the SDR devaluation is around 3percent of total cost of the Yunnan program. Program engineering and management costsof 12 percent (except for Institutional Development) were included in the estimates.Interest during construction was estimated at Y 14.9 million ($1.8 million), with a totalresulting financing requirement of Y 803.6 million ($96.8 million). Details of theestimated and actual expenditures for both IMAR and YP are given in Part II.

10. Evaluation of Objectives. This was an emergency program to address disasterrelief. The objectives as defined above were entirely appropriate and realistic. Theseobjectives were consistent with the Bank Group's Country Assistance Strategy for China,which focused on poverty alleviation and the reconstruction of essential infrastructureand social sector support (in the case of YP).

B. ACHIEVEMENT OF PROGRAM OBJECTIVES

11. Restoration of Economic and Social Activities in Earthquake-Affected Areasof IMAR and YP. This objective was completely achieved through the restoration of theearthquake-affected facilities and infrastructure. Program implementation indicators arecompared in Tables IMAR and YP 5 in Part II of this report indicating that, in manyinstances, the actual restoration well exceeded the expectations at appraisal. In manycases in YP, while undertaking the rehabilitation and repairs within the IDA emergencyguidelines, the government, benefiting communities and enterprises took advantage ofimproved designs, modem equipment and layouts. This has achieved indirect benefitssuch as enhanced education successes, better medical facilities, improved tourism andcommercial benefits. Additional local and foreign investment has also accrued in theearthquake-affected areas (hotels, commercial, banking and industrial enterprises).

12. Restoration of Cultural Heritage Assets in Minority Areas. This objective wasalso achieved satisfactorily. See Table YP 5 for details. The involvement of the minoritycommunity at all stages of implementation was essential to ensure success.

C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT

Factors Not Generally Subject to Government Control

13. Procurement. This was done in accordance with simplified procedures. TheGovernment could not control the outcome of the bidding process. In any event, however,it appeared that bidders were responsive and a market-based pricing approach workedfully satisfactorily.

14. Community and Donor Relief Response. The communities' capacity to respondin crises proved to be much larger than expected. This enabled the expansion of theproject impact in a highly cost-effective manner. Donors (bilaterals, nongovernmentalorganizations, and private gift or grant givers to support the reconstruction) also made

-7 -

significant resources available for initial relief, which was instrumental in effective.implementation, as people's lives had been helped at this early stage of reconstruction.

Factors Generally Subject to Government Control

15. Funds Availability. This is an important issue, particularly when dealing withemergency reconstruction against tight time schedules. In both IMAR and YP (afterinitial delays) local funds were made readily available by the respective Finance Bureaus.This contributed to the good all-round implementation experience. It is also noted thatboth IMAR and YP were able to absorb additional IDA funds to rehabilitate damagedfacilities that were not covered in the original appraisal, although in YP (and to a lesserextent in IMAR) minor problems occurred at the end of the project due to a shortage ofcounterpart funds. This arose due to inadequate arrangements by executing agencies toaccommodate exchange rate risks (SDR vs. Yuan).

16. Procurement Arrangements. The following simplified procurement procedureswere adopted by GOC and IDA. Civil works were carried out mainly through: (a) lump-sum fixed-price contracts based on National Shopping Procedures (NSP) with at leastthree relevant quotations; and (b) output-based force account contracts (only used forabout 4 percent of the work). Goods were also procured mainly through NSP with at leastthree relevant quotations. In IMAR, although NSP was permitted, the agencies preferredto adopt advertised competitive bidding for two hospitals and a 50,000 m3 gas tank toachieve lower-cost bids (cost savings up to 10 percent were reported after awards to thelowest responding bidders). Advance contracting up to $15 million equivalent (about 20percent of the program) was permitted starting from the dates of the earthquakes in IMARand YP. Contracts above $1.0 million for civil works, $0.2 million for goods, andsubloans for paper mill reconstruction greater than $1.0 million were subject to priorreview by IDA. In any event, two civil works, two goods and no subloan documents weresubject to prior review by IDA (representing about 4 percent of total program cost).

Factors Within Implementing Agency Control

17. Program Management Arrangements. In both IMAR and YP, appropriateprogram management arrangements were set up at the start of the programs. In IMAR, aprovincial-level and five sector-level Leading Groups were established with theprovincial-level Leading Group headed by a vice-governor, together with about 30project management offices for execution of subcomponents. In YP, Leading Groupswere set up at the provincial, prefecture and county levels under leadership of vice-governors. Project offices were also established at provincial, prefecture and county leveland about 40 subproject offices were set up at the implementation agency level. Keyparticipation by the respective Provincial Finance Bureaus and Construction Commission(in YP) is noted. This allowed for efficient communications and rapid projectimplementation.

18. Asset and Facility Maintenance. Since this was a reconstruction program,existing arrangements were already largely in place for asset maintenance and operations.

- 8 -

D. PROGRAM SUSTAINABILITY

19. With the possible exception of Cultural Heritage repairs in YP, sustainability ofthe reconstructed buildings and facilities is considered highly likely since the programswere designed and implemented to restore the facilities to their original pre-earthquakestatus. The authorities and benefiting communities also took the opportunity to improvedesigns and layouts within the criteria set out by IDA for emergency operations. Existingbudgets for operation and maintenance were already in place; no additionality ofoperating budget was involved. Construction quality, based on IDA mission siteinspections, in both IMAR and YP was reported to be consistently highly satisfactory. In1978, China adopted a revised antiseismic Building Design Code for Industrial andPublic Buildings and Infrastructure facilities. Reconstruction was carried out inaccordance with the latest antiseismic code to level VIII of the modified New ChinaIntensity Scale (NCIS). The effect of this design code was evident in Yunnan sincerecently constructed buildings suffered only light damage in comparison with theextensive damage suffered by pre-1978 buildings. In addition, participation by Naximinorities during implementation strengthened the case for sustainability.

20. In the case of YP Cultural Heritage repairs (see Appendix E for a detaileddescription), although this work has been carried out to a consistently high quality inaccordance with emergency construction guidelines issued by the Yunnan ProvincialGovernment (YPG) in 1996, the concerned authorities acknowledge that a morecomprehensive "Construction Guide" is urgently needed to assist communities living in aheritage environment in upgrading and repairing properties and facilities. This subjectwas discussed extensively with YP authorities during visiting IDA missions throughoutthe implementation period. The Guide is expected to be prepared by December 1999.

21. Overall, YP and IMAR have made a major recovery in the earthquake-affectedareas, with significant benefits accruing to the local economy. Also, additional fundingand indirect benefits have resulted from the IDA-supported reconstruction program.Schools report improved education benefits (more pupils going for higher education) andhospitals have increased patient numbers. Infrastructure rehabilitation has impactedpositively on the tourism economy, and the rehabilitated Mu Family Complex in Lijiang,opening to visitors in May 1999, is expecting revenue from tourism of Y 35 million ayear ($4.2 million a year).

E. IDA PERFORMANCE

22. IDA's performance on the IMAR and YP programs was satisfactory. Initialresponses to GOC requests for assistance were very prompt. In the case of IMAR, an IDAreconnaissance/appraisal mission visited IMAR in June 1996, within two weeks of therequest from GOC for emergency assistance. Responding to a request from YPG, an IDAreconnaissance mission visited the affected area within 10 days of the earthquakeoccurrence, and an appraisal mission followed shortly after in March 1996. IDA appraisalof both programs was satisfactory, although in retrospect it may have been useful for the

-9-

study on "Cultural Asset Construction Guide" to have been better defined at appraisal.IDA's attempts to coordinate the work on the Construction Guide with activities underBank Group-supported cultural asset components in other provinces (Liaoning andNingbo) were not successful. During implementation of the IMAR program, substantialtime lags occurred between withdrawal applications and disbursement (despite IDAprocedures being more rapid than normal), requiring IMAR to seek short-term creditfrom other sources (suppliers and contractors). The procurement plan agreed to was foundto be effective, and the program did not include unacceptably risky elements, while it metthe most urgent needs of the unfortunate earthquake victims.

23. During implementation IDA carried out seven supervision missions (three inIMAR and four in YP) and two ICR missions. This was considered an appropriate levelof supervision, considering the scope and complexity of the program. The mix ofprofessional disciplines in the missions was appropriate, focusing on implementation,financial and program planning, procurement, disbursement and cultural asset repair (inYP), although in the case of YP, economies in the size of some mission teams may havebeen possible.

F. BORROWER PERFORMANCE

24. The Borrower's performance at all stages and levels was highly satisfactory. Theproject management arrangements in both IMAR and YP incorporated the experiencesgained in the earlier disaster-relief IDA-assisted projects (Da Xing An Ling Forest FireRehabilitation Program, FY88, $56.9 million; and the North China EarthquakeReconstruction Project, FY90, $30.0 million). The strong local leadership and localmanagement, minimization of "cash flow" delays, genuine community participation, andIDA's "fast track" processing all contributed to the successful and timely implementationof the reconstruction programs. Satisfactory progress reports were submitted in a timelymanner. Some contracts in IMAR overran the initial budgets due to inadequatecontingency provisions. In YP, the provincial government instructed the executingagencies to set aside contingency sums to cover the exchange rate variation. This was notalways done and in a number of supplementary components, contractors were not fullypaid initially; some minor works were completed later than planned due to a shortfall oflocal funds. The central authorities (led by the Ministry of Finance) were very effective inmobilizing IDA support and coordinating the relationship.

25. The Borrower maintained compliance with the covenants, as required under theDevelopment Credit Agreement (DCA).

26. Modest provisions for Technical Assistance and Training (TA&T) were includedin the IMAR and YP programs (0.3 percent of the total program cost), although specificstudies and training to be undertaken during the reconstruction programs were not definedat appraisal. Nominal amounts from the TA&T allocations were used by both IMAR andYP to provide support for project management offices and training of personnel in projectmanagement systems and operation. This was entirely appropriate. Other available TA&T

-10-

funds remained unused. YPG preferred to use local funds for an overseas cultural assetfamiliarization study tour. The need for a comprehensive "Construction Guide" for thereconstruction of cultural assets and facilities for national use was discussed throughoutthe project life without achieving any tangible outcome (terms of reference were notfinalized by the closing date). In retrospect: (a) this was a lost opportunity for YPG toestablish construction guidelines for cultural assets; (b) the study content, budget andtime schedule should have been defined during appraisal; and (c) IDA underestimated theadministrative difficulty and time required to coordinate the activities of a number ofcultural asset components in several Bank Group-supported projects (IMAR/YPEarthquake Reconstruction, Liaoning Environment Project, Ningbo Project).

27. IDA supervision missions reported generally satisfactory compliance withprocurement procedures based on selective post-review of documentation, although itseems in a few cases in YP, in order to achieve high-quality work, contract awards werebased on a judgmental marking system to bidders with prices nearest to the "Engineer'sEstimate," not necessarily the lowest responding bidder (ICR mission discussions withexecuting agencies). Overall, it is apparent that the adoption of the above simplifiedprocurement procedures was entirely appropriate for disaster-relief reconstruction andhad a major impact on the speed and effectiveness of the rehabilitation and repairprograms. In IMAR, the program management office has also incorporated the IDAguidelines into the Government Procurement Regulations to be implemented at theregional level from April 1999. Apart from a few minor works, all components weresuccessfully implemented within the credit closing date (December 31, 1998).

G. ASSESSMENT OF OUTCOME

28. The overall assessment of the project is highly satisfactory. The objectives werefully achieved within a reasonable time and cost. Economic activity has resumed;education, health and housing services were restored; and the communities were rapidlyable to resume their lives without apparent major unhealed stress. No shortcomings werefound in the program. Both programs were executed efficiently by the respective agenciesin IMAR and YP. The implementation organizations in both cases were based on thesuccessful model from the earlier IDA-funded North China Earthquake ReconstructionProject, which emphasized: (a) strong local leadership and program management; (b)attention to Borrower's priorities; (c) accelerated reconstruction activities; (d) benefits ofusing IDA's "fast track" processing; and (e) simplified procurement proceduresconsistent with the emergency nature of the reconstruction programs while maintainingIDA procurement principles.

H. FUTURE OPERATIONS

29. The implementation of the disaster relief programs in both IMAR and YP provedhighly successful and could provide a good model for future similar operations should theneed arise, which would hopefully not be soon. Indeed, YPG has proposed requestingfurther Bank Group support to assist in developing urban strategies and programs to

enhance economic growth in the Minority Prefectures of Dali, Diqing and Lijiang, basedon the successful experience of the earthquake rehabilitation and repair program in thoseprefectures. Assets reconstructed and rehabilitated through the program would beoperated and maintained by persons responsible for these activities before theearthquakes.

I. KEY LESSONS LEARNED

30. Key lessons learned from the implementation of this program include:

* Implementation of the program was greatly enhanced through dedicated and sustainedproject management through Leading Groups at the Provincial, Prefecture and Countylevel, supported by properly staffed, full-time project management offices at alllevels. This setup, which was modeled on implementation experience from an earlierIDA-assisted earthquake relief project, could usefully be adopted for future similarlending operations.

* The local communities have been consistently involved at all stages of reconstructionin IMAR and YP. In both cases Naxi minority groups were involved. Suchparticipation was important for satisfactory implementation and long-termsustainability.

* The adoption of simplified procurement procedures clearly had a major impact on thespeed and effectiveness of implementation. In IMAR the original program wascompleted well ahead of schedule (spurred on by the pending onset of severe winterweather). Post-review of procurement documentation by visiting IDA missions,indicated satisfactory compliance with the procurement procedures although it seemsthat in a few cases in YP the lowest responding bid was not always accepted (inattempts to obtain high-quality work). The adoption of similar procedures could beconsidered for more widespread use in regular investment lending operations inappropriate cases subject to rigorous monitoring for compliance.

* Appropriate financial and implementation-tracking systems should be put in place atthe start of the project to avoid delays in implementation and sanctioning ofexpenditures.

* In emergency reconstruction programs, early availability of funds or authorization,together with competent business procedures and record keeping are essential toaddress the disaster repairs in a timely manner. Dedicated high-level governmentmanagement and close interaction between Provincial, Prefecture and County-levelmanagement teams is essential to achieve success.

* In emergency projects, construction often begins before all design details arefinalized. In such cases it is important to allow generous contingency provisions forunforeseen problems that may occur during construction.

- 12-

* The methods successfully adopted for the reconstruction of urban services in animportant and fragile heritage environment clearly demonstrated communitycommitment and increased the likelihood of sustainability.

* An unusual feature of the program in Yunnan was that much reconstruction had to beundertaken in sites of unique cultural heritage value. This was done successfully,within the program time scale, restoring the assets to community use (schools,hospitals, urban fabric and public buildings) (see Appendix E for details).

* Substantial economic, enviromnental, financial and social indirect benefits can accrueto the disaster-affected areas through carefully designed rehabilitation and repairprograms; the Earthquake Reconstruction Program is a successful example of this.

* Rapid and effective focused decisions by Bank Group and client country managementcan make a significant positive impact in improving the lives of lower-incomecommunities, especially in emergency situations; the participation by the affectedcommunity and their leaders however is central to this success.

- 13 -

PART II: STATISTICAL TABLES-INNER MONGOLIA AUTONOMOUS REGION

TABLE IMAR 1: SUMMARY OF ASSESSMENTSA. Achievement of Objectives Substantial Partial Negligible Not ApplicableMacroeconomic policies xSector policies xFinancial objectives xInstitutional development xPhysical objectives xPoverty reduction xGender issues xOther social objectives-minority support xEnvironmental objectives xPublic sector management xPrivate sector development xEconomic benefits x

B. Project Sustainability Likely Unlikely Uncertainx

C. IDA Performance Highly Satisfactory Satisfactory DeficientIdentification xPreparation assistance xAppraisal xSupervision x

D. Borrower Performance Highly Satisfactory Satisfactory DeficientPreparation xImplementation xCovenant compliance xOperation (if applicable) x

E. Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactoryx

- 14-

TABLE IMAR 2: RELATED BANK LoANs AND IDA CREDITS

Loan/credit title Purpose Year of Approval StatusCr. 1918-CHA, Rehabilitation of damages due to forest fire FY88 CompleteDa Xing An Ling ForestFire Rehab

Cr. 2091-CHA, Rehabilitation of damages due to FY90 CompleteNorth China Earthquake earthquake occurrenceReconstructionLn. 3560-CHA Restoration and flood protection following FY90 CompleteTaihu Basin Flood major floods in lower Yangtze DeltaControlCr. 3078-CHA Rehabilitation of damages due to FY98 OngoingHebei Earthquake earthquake occurrenceRehabilitationCr. 3169-CHA Rehabilitation of damages due to flood FY99 OngoingLn. 3560-CHA occurrencesYangtze FloodEmergency Project

TABLE IMAR 3: PROGRAM TIMETABLE

Steps in project cycle Date planned Date actual/latest estimateIdentification Combined with appraisalPreparation Combined with appraisalAppraisal June 1996 June 1996Negotiations July 1996 July 1996Board presentation Amendment to

Cr. 2307-CHASigning October 16, 1996 October 16, 1996 /a /bEffectiveness October 16, 1996 October 16, 1996Program completion Mid-1998 December 31, 1998Loan closing December 31, 1998 December 31, 1998

/a Amendment to Credit 2307-CHA, Guangdong Agricultural Development Project./b Further reallocation to Credit 2307-CHA made in March 1998.

TABLE IMAR 4: CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL($ million)

Financial Year Appraisal Estimate Actual Actual as % of EstimateInitial Revised

FY97 1996 199817.8 17.80 11.90 67

FY98 6.9 12.04 15.50 129FY99 0.3 0.30 1.07 400Total 25.0 30.14 28.47 95/a

/a The total allocation of SDR 21.159 million to Inner Mongolia was not fully drawn down. At the close,SDR 20.89 million had been drawn.

- 15 -

TABLE IMAR 5: KEY INDICATORS FOR PROGRAM IMPLEMENTATION

Indicator Targeted AchievedHealth care restoration 49,200 m2 in Baotou City, and Yi & Ba 77,756 m2

PrefecturesEducation restoration 76,610 m2 in I I elementary & middle schools in 125,561 m 2

Baotou City, and Yi & Ba PrefecturesVillage & urban rehabilitation 83,500 housing units in 351 villages in Yi & Ba As appraised

PrefecturesPower and gas sectors RC structure round two existing switchgear As appraised

buildingsPower transmission & distribution lines Rehabilitation in Yi & Ba Prefectures & Baotou As appraised

CityGas tank construction 54,999 m3 capacity As appraised

TABLE IMAR 6: KEY INDICATORS FOR PROGRAM OPERATIONS

None relevant to this program

TABLE IMAR 7: STUDIES INCLUDED IN PROGRAM

Study Purpose as defined at Appraisal ImpactNone defined at appraisal.Office facility support & training of project management Very positive benefits for

personnel in management systems & procedures implementation success

- 16-

TABLE IMAR 8A-1: PROGRAM COST ESTIMATE

($million)

Item Estimate Supplementary Works EstimateLocal Foreign Total Local Foreign Total

1. Bautou MunicipalityHealth Care 7.7 0.9 8.6 1.1 0.2 1.3Education 8.1 0.7 8.8 2.1 - 2.1Power Sector 8.2 0.8 9.0 1.4 - 1.4Infrastructure 1.2 0.1 1.3 - -

Earthquake Monitor -- -- -- -- -- --

Subtotal 25.2 2.5 27.7 4.6 0.2 4.8

2. Ba PrefectureHealth Care 0.5 0.1 0.6 -- -- --

Education 0.9 0.1 1.0 0.7 -- 0.7Infrastructure 3.4 0.3 3.7 0.4 0.4Power Sector 1.4 0.2 1.6 -- --

Subtotal 6.2 0.6 6.8 1.1 -- 1.1

3. Yi PrefectureHealth Care 0.5 0.1 0.6 --Education 0.8 0.2 1.0 0.2 --0.2Infrastructure 2.6 0.3 2.9 1.3 --1.3Power Sector 0.6 0.1 0.7 -- -- --

Subtotal 4.6 0.5 5.1 1.5 -- 1.5

4. Institutional Development 0.1 -- 0.1 -- ----

Total Baseline Cost 36.1 3.6 39.7 7.2 0.2 7.4

Physical Contingencies Included abovePrice Contingencies Included above

TOTAL COSTS 36.1 3.6 39.7 7.2 0.2 7.4

- 17 -

TABLE IMAR 8A-2: TOTAL PROGRAM COST ESTIMATE AND ACTUAL($million)

Item Total Cost Estimate Actual CostLocal Foreign Total Local Foreign Total

1. Bautou MunicipalityHealth Care 8.8 1.1 9.9 6.2 0.6 6.8Education 10.2 0.7 10.9 9.0 - 9.0Power Sector 9.6 0.8 10.4 10.4 - 10.4Infrastructure 1.2 0.1 1.3 1.3 -- 1.3Earthquake Monitor -- -- -- 0.2 -- 0.2

Subtotal 29.8 2.7 32.5 27.1 0.6 27.7

2. Ba PrefectureHealth Care 0.5 0.1 0.6 1.2 -- 1.2Education 1.6 0.1 1.7 2.4 -- 2.4Infrastructure 3.8 0.3 4.1 3.3 -- 3.3Power Sector 1.4 0.2 1.6 0.6 -- 0.6

Subtotal 7.3 0.6 7.9 7.5 -- 7.5

3. Yi PrefectureHealth Care 0.5 0.1 0.6 0.9 -- 0.9Education 1.0 0.2 1.2 2.1 -- .2.1Infrastructure 3.9 0.3 4.2 4.3 -- 4.3Power Sector 0.6 0.1 0.7 1.4 -- 1.4

Subtotal 6.1 0.5 6.6 8.7 -- 8.7

4. Institutional Development 0.1 -- 0.1 0.1 -- 0.1

Total Baseline Cost 43.3 3.8 47.1 43.4 0.6 44.0


Total Costs 43.3 3.8 47.1 43.4 0.6 44.0

Note: Figures may not add due to rounding.

- 18-

TABLE IMAR 8B: PROGRAM FINANCING($ million)

Appraisal estimate Actual/late estimateSource Local Foreign Total Local Foreign Total

Bank GroupCr. 2307-CHAInitial allocation 21.4 3.6 25.0Additional allocation 1998 4.9 0.2 5.1

Total IDA 26.3 3.8 30.1 27.9 0.6 28.5

Domestic ContributionGOC, IMAR, EnterprisesInitial allocation 14.7 -- 14.7Additional allocation 1998 2.3 -- 2.3

Total Domestic 17.0 - 17.0 15.5 - 15.5

Total 43.3 3.8 47.1 43.4 0.6 44.0

TABLE IMAR 9: EcoNoMic COSTS AND BENEFITS

Not applied for the ICR as not appropriate

- 19-

TABLE IMAR 10: STATUS OF LEGAL COVENANTS(only covenants relevant to this program are mentioned)

Loan Original RevisedAgreement Covenant Present FulflUment Fulfillment Description of

Agreement Section Type Status Date Date Covenant CommentsDCA 3.01 (c) 3 C Borrower to make proceeds of

credit allocated to IMAR & YPas defined in Sch. 4 of DCA.

DCA 3.02 (b) 3 C _ Procurement to be in accordanceI_________ __________ with Schedule 5 of DCA. _

DCA 4.01 (a) 1 C Borrower to cause to bemaintained adequate records andaccounts.

DCA 4.01 (b) i, ii, 1 C _ Accounts to be audited byiii, & independent auditor acceptable to

Sch. 1, para Association. Audited reports to3,(d), & (e) be furnished to Association not

later than six months after eachyear-end.

DCA 4.01 (c) (i) to 3 C _ - For expenditures on basis of(iv) "Statements of Expenditures"

maintain records, retain at leastone year after audit reportsubmitted to Association forreview, & ensure recordsincluded in audit report.

Covenant Class: Status:1 = Accounts/audits 8 = Indigenous people C = covenant complied with2 = Financial performance/revenue 9 = Monitoring, review, and reporting CD = complied with after delay

generation from beneficiaries 10 = Project implementation not CP = complied with partially3 = Flow and utilization of project covered by categories 1-9

funds 11 = Sectoral or cross-sectoral4 = Counterpart funding budgetary or other resources5 = Management aspects of the allocation

project or executing agency 12 = Sectoral or cross-sectoral policy/6 = Environmental covenants regulatory/institutional action7 = Involuntary resettlement 13 = Other

TABLE IMAR 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS

There was no significant lack of compliance with an applicable Bank Group Operational Manual Statement(OD or OP/BP)

- 20 -

TABLE IMAR 12: IDA RESOURCES: STAFF INPUTS(aggregated for both IMAR and Yunnan)

Stage of Project Cycle Actual Actual(Weeks) ($'°°°)

Identification }Preappraisal } 14.7 61.6Appraisal & Negotiations }Supervision 50.4 142.1Completion Report 9.5 30.0

Total 74.6/a 233.7/a

/a Total for both IMAR and Yunnan programs.

TABLE IMAR 13: IDA RESOURCES: MISSIONSPerformance rating lb

Specialized staff Imple- Devel-Stage of project cycle Monthl No. of Days skills represented mentation opment Type of

year persons in field /a status objectives problem

Identification Included in appraisalPreparation Included in appraisalAppraisal 06/96 4 12 F, ME, CBoard approval throughEffectiveness 10/96 3 3 F, ME, 0

Supervision IB 02/97 3 4 0, P, C SSupervision 2B 10/97 3 4 ME, P, F SSupervision 3B 06/98 3 3 0, P, C SCompletion 04/99 3 2 P, F, C

/a F: Financial Analyst, ME: Municipal Engineer, C: Consultant, 0: Operations Expert, P: Procurement Expert.lb Regular Form 590 reporting not included in Credit 2307 Reporting, as Yunnan was a separate province and it is for a normal credit

operation; the IMYERP Program was an emergency operation and kept separate records.

- 21 -

PART II: STATISTICAL TABLES-YUNNAN PROVINCE

TABLE YP 1: SUMMARY OF ASSESSMENTSA. Achievement of Objectives Substantial Partial Negligible Not ApplicableMacroeconomic policies xSector policies xFinancial objectives xInstitutional development xPhysical objectives xPoverty reduction xGender issues xOther social objectives-minority support xEnvironmental objectives xPublic sector management xPrivate sector development xEconomic benefits x

B. Project Sustainability Likely Unlikely Uncertainx

C. IDA Performance Highly Satisfactory Satisfactory DeficientIdentification xPreparation assistance xAppraisal xSupervision x

D. Borrower Performance Highly Satisfactory Satisfactory DeficientPreparation xImplementation xCovenant compliance xOperation (if applicable) x

E. Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactoryx

- 22 -

TABLE YP 2: RELATED BANK LOANS AND IDA CREDITS

Loan/credit title Purpose Year of Approval StatusCr. 191 8-CHA, Rehabilitation of damages due to forest fire FY88 CompleteDa Xing An Ling ForestFire RehabCr. 2091-CHA, Rehabilitation of damages due to FY90 CompleteNorth China Earthquake earthquake occurrenceReconstructionLn. 3560-CHA Restoration and flood protection following FY90 CompleteTaihu Basin Flood major floods in lower Yangtze DeltaControlCr. 3078-CHA Rehabilitation of damnages due to FY98 OngoingHebei Earthquake earthquake occurrenceRehabilitation.

Cr. 3169-CHA Rehabilitation of damages due to flood FY99 OngoingLn. 3560-CHIA occurrencesYangtze FloodEmergency Project

TABLE YP 3: PROGRAM TIMETABLE

Steps in project cycle Date planned Date actual/latest estimateIdentification February 1996 February 1996Preparation Combined with appraisal Combined with appraisalAppraisal March 1996 March 1996Negotiations July 1996 July 1996Board presentation Amendment to

Cr. 2307-CHASigning October 16, 1996 /a /bEffectiveness October 16, 1996Program completion Mid-1998 December 31, 1998Loan closing December31, 1998 December31, 1998

/a Amendment to Credit 2307-CHA, Guangdong Agricultural Development Project./b Further reallocation to Credit 2307-CHA made in March 1998.

TABLE YP 4: CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL($ million)

Financial Year Appraisal Estimate Actual Actual as % of EstimateOrig. Suppl. Total

FY97 16.3 -- 16.3 11.71 71.8FY98 18.4 2.0 20.4 21.54 105.6FY99 0.3 5.0 5.3 6.84 129.8Total 35.0 7.0 42.0 40.10/a 95.6

/a Although the YP allocation was fully drawn down, the actual amount received was $40.1 millionequivalent due to SDR devaluation.

- 23 -

TABLE YP 5: KEY INDICATORS FOR PROGRAM IMPLEMENTATION

Indicator Targeted Targeted Achieved(As appraised, 1996) (Additional Works, 1998)

Education rehabilitation Rehabilitation of 1 10,00m2 in 45 Rehabilitation of 13,700 rn2 in 12 Rehabilitation of 125,000 mi2 andprimary & secondary schools in schools in four counties. equipment in 47 middle &four counties. primary schools in four counties.

Health Centers Rehabilitation of 25,000m2 area Rehabilitation of 3,600 m2 area & Rehabilitation of 30,000 m2 areain six hospitals. equipment. & equipment in eight hospitals.

Cultural Heritage Rehab. Confucius temple As appraised.repairs to school

Lijiang Old City Mu Cultural Center: 20,000 nm2

_5,000 M2 Mu House-25,000 m2-asPublic Buildings: 2,100 m2 appraised. 15,300 families.Families to benefit: 15,300.

Zhongdian City 500 houses As appraised.materials

Jianchuan Shi Baoshan Repairs to damages As appraisalDynasty Museum ParkInfrastructure Rehab.Lijiang Water Supply 150 km, pipes sizes: 25-150 mm As appraised.Rehabilitation dia.

WTW-20,000m3Transmission pipe 11 km.

Lijiang Sanitation & Culvert 3 km. 100 latrines. Drainage pipe 8.2 km. & STP of Culvert 4 km. 20 toilets./aDrainage Rehabilitation. 30,000 l3/d cap. Drainage pipe & STP as

appraised.Heqing County Water sup. - 6,000 m3/d. Water supply 9000 m3/d.

Mains 150-500 mm dia. Supply main 8 km length.10 km length.

Jianchuan County Pipeline rehab., 100-300 mm dia., Pipeline as appraised.14 km length. 6,000 m3/d water supply_____________________________ rehabilitated.

Zhongdian Water Supply Water sup.6,000 m3/d As appraised.pipeline 100-500 mm dia.25 km length.

Jianchuan Irrigation 7 km length of conveyor. As appraised.ConveyorLijiang Spine Road Roadside drainage 600-800 mm As appraised.| _________________ _ |dia. 1,200 m long. lLijiang Airport-Heqing 25 km. surfacing & retaining wall 25 km surfacing & retaining wall As appraised.Road repairs. repIndustry Rehabilitation in eight industrial Rehabilitation. in four Rehabilitation in 12 enterprises.

enterprises. enterprises.Power Rehabilitation in three Repair of further 3,000 m2 Rehabilitation in three power

hydropower plants. building plants

/a Balance of latrines built by local resources.

Note: About one third of housing units damaged by the earthquake were repaired under the project; the balance was done by localprograms, partly government assisted.

TABLE YP 6: KEY INDICATORS FOR PROGRAM OPERATIONS

Not relevant to this program and ICR

- 24 -

TABLE VP 7: STUDIES INCLUDED IN PROGRAM

Study Purpose as defined at Appraisal ImpactNone defied at appraisal.Office facility support & training of project management personnel in Highly effective

._____ management systems and procedures

Study tour of cultural heritage sites also undertaken, led by Vice Highly effectiveGovernor

TABLE YP 8A-1: PROGRAM COST ESTIMATE($million)

Item Estimate Supplementary Works EstimateLocal Foreign Total Local Foreign Total

Education 9.4 0.9 10.4 1.9 0.0 1.9Health 4.6 0.5 5.1 1.5 0.0 1.5Cultural Heritage 7.2 0.7 7.9 0.6 0.0 0.6Infrastructure 1.0 3.2 13.2 4.2 0.0 4.2Industry 9.9 1.7 11.6 1.3 0.0 1.3Power Sector 5.2 1.5 6.9 0.5 0.0 0.5Institutional Development 0.2 0.0 0.2 0.0 0.0 0.0

Total 46.7 8.6 55.3 10.0 0.0 10.0


Total Costs 46.7 8.6 55.3 10.0 0.0 10.0

- 25 -

TABLE YP 8A-2: TOTAL PROGRAM COST ESTIMATE AND ACTUAL($million)

Item Total Cost Estimate Actual CostLocal Foreign Total Local Foreign Total

Education 11.3 0.9 12.2 14.6 0.0 14.6Health 6.1 0.5 6.6 6.1 0.0 6.1Cultural Heritage 7.8 0.7 8.5 7.8 0.0 7.8Infiastructure 14.2 3.2 17.4 16.1 0.0 16.1Industry 11.2 1.7 12.9 11.8 0.0 11.8Power Sector 5.7 1.5 7.2 6.7 0.0 6.7Institutional Development 0.2 0.0 0.2 0.0 0.0 0.0/a

Total 56.7 8.6 65.3 63.1 0.0 63.1

Physical contingencies Included abovePrice contingencies Included above

Total Costs 56.7 8.6 65.3 63.1 0.0 63.1

/a $22,000 equivalent used for project office equipment and staff training.

Note: Figures may not add due to rounding.

TABLE YP 8B: PROGRAM FINANCING($ million)

Appraisal estimate Actual/late estimateSource Local Foreign Total Local Foreign Total

Bank GroupCr. 2307-CHAInitial allocation 26.4 8.6 35.0Additional allocation 1998 7.1 - 7.1

Total II)A 33.5 8.6 42.1 40.1 - 40.1/a

Domestic ContributionGOC, YP, EnterprisesInitial allocation 20.3 -- 203Additional allocation 1998 2.9 - 2.9

Total Domestic 23.2 - 23.2 23.0 - 23.0

Total 56.7 8.6 65.3 63.1 - 63.1

/a Although the credit allocation was fully drawn down in SDRs, the amount disbursed in US dollarequivalent was $40.1 million instead of $42.1 million, due to devaluation of the SDR vs. the US dollar andthe Yuan over the project period.

- 26 -

TABLE YP 9: EcONOMIC COSTS AND BENEFITS

Not applied for the ICR as not appropriate

TABLE YP 10: STATUS OF LEGAL COVENANTS(only covenants relevant to this program are mentioned)

Loan Original RevisedAgreement Covenant Present Fulfillment Fulfillment Description of

Agreement Section Type Status Date Date Covenant CommentsDCA 3.01 (c) 3 C Borrower to make proceeds of

credit allocated to IMAR & YPas defined in Sch. 4 of DCA.

DCA 3.02 (b) 3 C Procurement to be in accordancewith Schedule 5 of DCA.

DCA 4.01 (a) I C _ Borrower to cause to bemaintained adequate records andaccounts.

DCA 4.01 (b) i, ii, 1 C Accounts to be audited byiii, & independent auditor acceptable to

Sch. 1, para Association. Audited reports to3,(d), & (e) be fumished to Association not

later than six months after eachyear-end.

DCA 4.01 (c) (i) to 3 C For expenditures on basis of(iv) "Statements of Expenditures"

maintain records, retain at leastone year after audit reportsubmitted to Association forreview, & ensure recordsincluded in audit report.

Covenant Class: Status:1 = Accounts/audits 8 = Indigenous people C = covenant complied with2 = Financial performance/revenue 9 = Monitoring, review, and reporting CD = complied with after delay

generation from beneficiaries 10 = Project implementation not CP = complied with partially3 = Flow and utilization of project covered by categories 1-9

funds 11 = Sectoral or cross-sectoral4 = Counterpart funding budgetary or other resources5 = Management aspects of the allocation

project or executing agency 12 = Sectoral or cross-sectoral policy/6= Environmental covenants regulatory/institutional action7 = Involuntary resettlement 13 = Other

TABLE YP 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS

There was no significant lack of compliance with an applicable Bank Group Operational Manual Statement(OD or OP/BP)

- 27 -

TABLE YP 12: IDA RESOURCES: STAFF INPUTS(aggregated for both IMAR and Yunnan)

Stage of Project Cycle Actual Actual(Weeks) ($'000)

Identification }Preappraisal } 14.7 61.6Appraisal & Negotiations }Supervision 50.4 142.1Completion Report 9.5 30.0

Total 74.6/a 233.7/a

/a Total for both IMAR and Yunnan programs.

TABLE YP 13: IDA RESOURCES: MISSIONSPerformance rating /b

Specialized staff Imple- Devel-Stage of project cycle Month/ No. of Days skills represented mentation opment Type of

year persons in field /a status objectives problems

Identification 02/96 1 3 SEPreparation Included in appraisalAppraisal 03/96 3 14 F, ME, CBoard approval throughEffectiveness 10/96 3 3 F, ME, 0

Supervision IA 10196 7 4 0(2), P, CH, ME, SSE, F

Supervision 2A 07/97 3 5 0, CH, ME SSupervision 3A 12/97 2 5 0, CH SSupervision 4A 12/98 7 6 CH, F, ME, PH, IN, S

0Completion 04/99 2 5 P, SE -

/a SE: Sanitary Engineer, F: Financial Analyst, ME: Municipal Engineer, C: Consultant, 0: Operations Expert, P: ProcurementExpert, CH: Cultural Heritage Expert, PH: Photographer, IN: Institutional Specialist.

/b Regular Form 590 reporting not included in Credit 2307 Reporting, as Yunnan was a separate province and it is for a normal creditoperation; the IMYERP Program was an emergency operation and kept separate records.

- 29 - Appendix A

APPENDIX A: ICR MISSION'S AIDE MEMOIRE-INNERMONGOLIA

(April 9 to 12, 1999)AIDE-MEMOIRE

FINAL

ContentsMain TextAnnex 1 List of Persons MetAnnex 2 The Statistic Table Of The Implementation Status Of $30.14 Million IDA

Credited IMERP By TheEnd Of 1998 (Provided by PMO and available separately)

Main Text

1. A World Bank Implementation Completion Report Mission visited Baotou, InnerMongolia during April 9 to 12, 1999 to discuss the draft ICR Inner Mongolia earthquakecomponent of the Inner Mongolia/Yunnan Earthquake Reconstruction Program(IMYERP) with the project officials from Inner Mongolia Regional, Municipal andCounty Project offices. The mission comprised Messes Yang Dawei, Chen Fang and KenRippin (Consultant).

2. The mission expresses its appreciation for the support and hospitality receivedfrom the officials of Inner Mongolia Regional Government (IMRG), Baotou MunicipalGovernments and the various project offices at regional, municipal, prefecture and countylevel in Baotou City (Annex 1). The Bank received the Borrower's contribution to theICR in March, 1999. The mission congratulated the various project offices for thesuccessfully completion of the project.

3. The mission discussed with the various project executing agencies a draft ICR. Inaddition to the Statistical Table of the Implementation Status of $30.14 Million IDACredit IMERP By The End Of 1998 (Annex 2 ) provided by the regional Project Office,the mission has also received the completion report from project offices of BaotouMunicipality, Yi and Ba Leagues and IM Earthquake Bureau during the discussion. ThisAide-Memoire briefly describes the project completion status and addresses issuesneeded for ICR finalization. Major mission findings will be contained in the ICR.

- 30 - Appendix A

Completion Status

4. The mission found that since the previous mission 3B in June 1998 the authoritiesand the concerned communities had completed all the reconstruction of damaged ordestroyed facilities, with two minor exceptions. By the end of 1998 nearly all theconstruction of various projects and sub-projects had been completed except two sub-projects supported by supplement IDA Credit which will be completed in 1999 after1998-1999 winter. These two sub-projects are some minor works on the Baotou Industrialschool and the hospital attached to the Baotou Medical College.

5. Based on the information provided to the mission (Annex 2), it is understood thatthe following value of works was completed by the end of 1998:

Sub-projects supported by $25 million IDA CreditComponent Total Project Cost (US$,000) Percent CompletedEducation 9,975 98.1%Health 8,065 98%Housing 7,229 97.4%Public Utilities 10,903 100%Earthquake Monitoring 243 100%TA 107.5 83.7%Total 36,521 98.5%

Sub-projects supported by Supplement $5.14 million IDA CreditComponent Total Project Cost (US$,000) Percent CompletedBaotou 4,199.6 103.5%Yi League 1,543 100%Ba League 1,100 100%Regional Education Bureau 602.4 80.6%Total 7,445 99.9%

Total of all projects supported by $30.14 million IDA Credit

____=____ _ Total Project Cost (US$,000) J Percent CompletedTotal 43,966.3 98.7%

6. The mission was provided a statistical table of the implementation status of the$30.14 million IDA credited to IMERP by the end of 1998 (Annex 2) which presentedthe data on planned, contracted and completed investment amount and percentage interms of IDA credit, counter-part fund and total cost; planned, contracted and completedbuilding floor area (m2) and percentage; date of commencement and completion of eachsub-project and procurement arrangements.

7. The work completed to the end of 1998 is summarized below.

- 31 - Appendix A

Sub-projects supported by $25 million IDA CreditComponent Total Building Area (m2 ) Percent Completed compared

to contracted valueEducation 118,063 98.9%Health 77,765 100.2%Housing 166,547 100%Public Utilities 55,190 100.1%Earthquake Monitoring 770 100%TA 83.7 %Total 418,335 99.7%

Sub-projects supported by Supplement $5.14 million IDA CreditComponent Total Building Area (m2 ) Percent CompletedBaotou 8,180 39.5%Yi League 19,275 100%Ba League 17,960 100%Regional Education Bureau 6,278 80.6%Total 51,693 70.7%

Total of all projects supported by $30.14 million IDA Credit|_____________________________ T Total Building Area (m2) Percent CompletedTotal | 470,028 | 93.9

8. There are 56 sub-projects (47 sub-projects supported by $25 million IDA Creditand 9 sub-projects supported by supplement $5.14 million IDA Credit) in 6 sectors ofEducation, Health, Housing, Public Utilities, Earthquake Monitoring and TA. Of these,54 have been completed and put into operation. The main structures of Baotou MunicipalIndustrial School and the Affiliated Hospital of Baotou Medical College were completedat the end of 1998 but because of the coming of winter, the finishing, power supply, watersupply and equipment installation was postponed and will be completed in the spring,1999 using counterpart funds.

Project Management

9. Project leading groups and project offices have been successfully operated fornearly 3 years since being established at the beginning of the project. The project leadinggroups and the project offices at regional, municipal and county level will be disbandedafter internal account closing and approval of the Government.

10. The Provincial, municipal, prefecture and county Financial Bureaus will takeresponsibility together with the project beneficiaries for repayment of the IDA credit.

- 32 - Appendix A

Project Procurement

11. The project has been procured according to DCA Schedule 5 and benefited fromsimplified procurement procedures. The results of post review in previous supervisionmissions have demonstrated that the legal covenants on procurement stated in theSchedule 5 of the DCA have been fulfilled. The procurement of 50,000 m3 dry type gastank for Baotou Gas company and CT instruments for Baotou No. 4 hospital have beprior reviewed by the Bank and cleared from the Bank's HQ in Washington DC.

12. The advertisement of bidding for Baotou No.2 and No. 4 hospitals was appeared onBaotou Daily although Shopping is allowed in the legal documents. The procurement of50,000 cubic meter dry type gas tank was advertised on China Mechanical and ElectricalDaily by the procurement agent, International Tendering Corporation of China Machineand Equipment Import and Export Corp. The contract was awarded to a townshipenterprise of Jiangsu province in East China at the lowest bid price. The works wascompleted in time at high quality. By bidding Baotou gas company has saved the cost of10%. The project office of IMAR is established in No. 1 Division of RegionalGovernment Office which is in charge of preparation of Government ProcurementRegulations of IMAR. Since PMO has learned the Bank's procurement policy andguidelines by executing IMERP and the project has benefited a lot, they has incorporatedthe Bank's guidelines into their own Government Procurement Regulations which hasbeen approved by Regional Government. This regulations will be implemented atregional level from April 20, 1999. Then, after trial period, this regulations will bedisseminated to government of all level in IMAR. IMAR has been the one of a few earlyprovinces to draft government procurement regulations in China.

13. Construction of Baotou No.2 and No. 4 hospitals met foundation problem cursingestimated cost overrun. This has shown that enough contingency should be reserved foremergency recovery projects in case the time is urgent and design time is short.

Disbursement

14. The total credit allocated to the Project component has been SDR 21,117thousand, including the initial allocation of SDR17,370 thousand and the supplementaryallocation of SDR3,747 thousand. The special account set up for Inner Mongolia wasfully recovered on Feb 19, 1999. To date (within four months after Closing Date), 14withdrawal applications have been submitted to IDA. Among them, the No.1 to No.13withdrawal applications have a total reimbursement of SDR 20.01 million, equivalent toUSD 28.42 million. The final No. 14 withdrawal application of USD297,226 (equivalentto SDR 0.21 million) submitted on March 22, 1999, is claimed for direct payment oneligible expenditures incurred. This will need adjusting to avoid overdrawing. It is likelythat Inner Mongolia will draw down all the allocated credit proceeds of SDR 21,117thousand if their No. 14 withdrawal application is fully reimbursed by IDA. It is expectedthat this would be done to ensure the smooth completion of the Project.

- 33 - Appendix A

Category Authorized amount Disbursed amount(SDR thousand) (SDR thousand)

Civil Works 17,247 ?Goods 3,800Training and Consultants 70 60Total 21,117 ?

15. Actual contract payment under the project is in local currency at the exchange rateof 1 USD = 8.23 CNY. The procurement plan was in USD at the fixed exchange rate of 1USD = 8.3 CNY and IDA Credit is in SDR at the exchange rate of 1 SDR = 1.4393 USDin 1996 and I SDR = 1.3595 USD in 1998. Since the devaluation of USD to SDR, eventhe IDA credits are fully withdrawn, most executing agencies found difficulty to fulfillthe procurement plan in terms of USD.

Actions to be taken and Next Steps

16. Based on the various discussions and meetings with the concerned projectagencies, the mission draws attention to the following steps which should be addressed inorder to submit the Project Completion Report to the Bank Management before June 30,1999:

(a) Final Audit Report and audited financial statement for fiscal year 1998shall be provided for the Bank's review in May 1999 when it is due.

(b) Bank will provided its draft ICR to the Borrower for their commentsshortly after this mission concludes in both Inner Mongolia and Yunnan. Commentsshould be sent to the Bank within two weeks after receiving the Bank's draft.

- 34 - Appendix A

CHINAEARTHQUAKE RECONSTRUCTION PROGRAM

(Credit 2307-CHA)Inner Mongolia Earthquake Reconstruction Program

IMPLEMENTATION COMPLETION REPORT MISSION(April 9 to 12, 1999)

ANNEX 1. LIST OF PERSONS MET

Persons from Hohhot:Mr. Jia Feng: Division Chief of Foreign Economic Div. Regional Planning

CommitteeMr. Song Liang: Division Chief of No.1 Div. Office, Regional Government,

Regional PMOMr. Yu Xuezhong: Staff member of Regional Project OfficeMs. Xie Huiping Staff of Foreign Economic Div. Regional Finance BureauMr. Yang AiJun Staff of Foreign Economic Div. Regional Finance BureauMs. Wang Ping Interpreter, Regional Foreign Affairs OfficeMr. Chang Ming PMO of Regional Electric Power BureauMr. Li Xian: Chief of Planning Div., Regional Earthquake BureauMr. Chen JinLiang Chief of Science Research Div., Regional Earthquake Bureau

Persons from Baotou:Mr. Geng Zhixiang: Dep. Secretary General of Baotou GovernmentMr. Du Shougang: Director of Baotou Planning Committee

Director of Baotou Project OfficeMr. Liu Zhongbing: Div. Chief of Baotou Planning Committee

Dep. Director of Baotou Project OfficeMs. Zhang Yanming: Chief of Foreign Economic Div. Baotou Financial Bureau

From Dongsheng, Yi PrefectureMr. Zhao Hu: Deputy Chief of Prefecture Finance BureauMs. Yun Meiling Division Chief of Foreign Economic Div. Prefecture Finance

Bureau

From Dalate County:Mr. Sun Youshi: Director of Project Office, County Financial Bureau

From Wuladeqian County:Mr. Liu Junbi: Director of Project Office, Assistant to County Governor

- 35 - Appendix A

Annex 2CHINA

EARTHQUAKE RECONSTRUCTION PROGRAM(Credit 2307-CHA)

Inner Mongolia Earthquake Reconstruction Program


Annex 5. The Statistic Table of The Implementation Statusof $30.14 Million IDA Credit at the end of 1998

(Provided by PMO during the mission and contained in project files, available uponrequest.)

-36 - Appendix B

APPENDIX B: ICR MISSION'S AIDE MEMOIRE-YUNNAN

AIDE-MEMOIRE NO. SAFINAL

December 22, 1998

1. A World Bank mission visited Yunnan during November 18 to 24, 1998 in orderto supervise the Yunnan earthquake component of the Inner Mongolia/YunnanEarthquake Reconstruction Program (YERP). The mission comprised Messrs. DonaldHankey, Patrick McCarthy, Zhang Zhun, Curt Carnemark, Katrinka Ebbe, Dawei Yangand Geoffrey Read (mission leader).

2. The mission expresses its appreciation for the support and hospitality receivedfrom the Yunnan Provincial Government (YPG) officials and the officials of thePrefectural, municipal, and county governments of Lijiang, Dali and Diqing, officials ofthe project entities and members of the project communities, including those met at thevarious project sites. A list of persons met is shown in Annex 1.

3. The mission met with the various government entities and the executing agencies,to supervise the project. This Aide-Memoire provides a summary of mission findings andrecommendations, and is confirmed by World Bank management, following review inWashington. The mission sets out below the main findings and principal issues that needto be addressed.

Summary of Mission Findings

4. The mission found that, following an effective start providing immediate relief tothe effected communities, during the past year the authorities and the concernedcommunities had made impressive and significant progress by substantially completingimplementation of the entire reconstruction program identified at appraisal. Recoveryfrom many of the effects of the earthquake has been impressive, and a significant amountof reconstruction work has been fully completed. The communities impacted by theearthquake, appear to have substantially recovered from both the physical destruction andthe emotional trauma of the disaster. High credit is due to the management skills of theYunnan Provincial and Prefecture authorities, and to the local communities for theirresilience.

5. In addition, the mission found that the effectiveness of the IDA resources madeavailable for the program has been greatly enhanced from a normal IDA/Bank financedoperation due to the following:

- 37 - Appendix B

. Leadership. As mentioned above, the government ensured rapidly mobilized,dedicated, and sustained project management leadership, through a Provincial ViceGovernor-led Leading Group, and local-level prefecture government support at allstages of reconstruction;

* Community Involvement. This and previous Bank missions have found that there hasbeen all-encompassing community involvement at every stage of reconstruction - thisfinding is based both on mission observation and informal interviews with the projectparticipants. Yunnan is possibly unique in this aspect, being a province of minorities;

. Procurement. The Bank's agreement to using simplified procurement proceduresclearly had a major impact on the speed and effectiveness of implementation. TheBank's supervision missions have found that these procedures proved to be time andcost-effective, and did generate competition. The mission will recommend tomanagement that these simplified procedures should be considered for morewidespread use in regular investment lending operations;

• Obtaining Supplementary Resources. Considerable additional and supplementaryresources in cash and in kind were provided by the Provincial Government, localgovernment, the local communities, project beneficiaries (including those directlyimpacted by the earthquake) and outside donors (such as groups of overseas Chinese).This effectively leveraged the IDA funds by a factor of 2 to 3 (mission roughestimate) and also leveraged the non-IDA funds vice versa. All this was done in thecontext of Yunnan being a low income province;

* Funds availability. The Provincial Government either made funds readily available orgave authorization to incur expenditures as soon as the magnitude of the disaster wasrealized. In addition, competent business procedures and record keeping consistentwith good project management was implemented simultaneously. Credit for this goesto the Finance Bureau, the Construction Commission, and the PrefectureGovernments;

Creative Planning under Emergency Conditions. When facilities were rehabilitated/reconstructed, the authorities and beneficiary communities took advantage to improvedesigns, equipment and layouts, while remaining within the IDA/Bank criteria laiddown for emergency operations; IDA funds are intended to be applied to rehabilitateand reconstruct to a similar level of service as that which prevailed before theemergency - the various supervision missions were satisfied that this guideline hadbeen followed. This has meant that most of the replacement investments will provideincrementally improved long-term service. Since the items reconstructed weregenerally parts of existing infrastructure, budget provision for operations andmaintenance is generally included in the existing budgets.

- 38 - Appendix B

Mission Findings

Credit Amount

6. The total allocation made to Yunnan Province for completing its portion of theInner Mongolia and Yunnan Earthquake Reconstruction Program is SDR29.4297 million.This figure comprises an initial allocation (first phase) of SDR24.24 million, and asupplementary allocation (second phase) of SDR5. 1897 million.

Financing Plan

7. Yunnan's earthquake reconstruction program has been funded by IDA andYunnan Province in the following approximate proportions: IDA - 65 percent; Yunnan -35 percent.Funds Flow

8. The flow of funds (both IDA Credit proceeds and counterpart funding) has beenthrough established channels between higher and lower authorities, i.e., Province,Prefecture and Counties.

Disbursements

9. To date, 15 withdrawal applications have been submitted to IDA. 14 withdrawalapplications have been reimbursed for a total of SDR28.1 million, equivalent to US$38.2million, or Y316.8 million. About US$4.3 million of the Special Account has beenrecovered, leaving a balance of US$1.7 million. Depending on the rate of exchangeapplied, the reimbursement of Withdrawal Application No. 15, for US$1.8 million,submitted on October 30, 1998, could fully draw down the Credit and pay off the balanceof the Special Account. If that is not to be the case, the Yunnan Provincial FinanceBureau has pending a further Y15 million, or US$1.8 million equivalent, of eligibleexpenditures which it could claim the remaining balance of the Credit..

10. It is likely that Yunnan will draw down all the proceeds of the IDA Creditallocated to it by December 31, 1998, the Closing Date of the Credit. If necessary, IDAmay permit Yunnan to claim reimbursement of any eligible expenditures incurred prior tothe Closing Date up to four months after that date. It is expected this would be done.

11. The mission reviewed the procedures used to account for, record and claimreimbursement of eligible expenditures. It spot-checked the records and accounts,statements of expenditures (SOE) and supporting documentation held in (a) LijiangPrefecture Project Office, (b) Heqing No. 1 Middle School, and (c) Diqing Pulp Works.The relevant documentation was readily available and complete in every respect. Themission commends all parties on the excellent record keeping and accounting of projectexpenditures.

-39 - Appendix B

Status of Implementation

12. The status of implementation of the Program with respect to the financing ofagreed projects and subprojects is shown as Annex 2. This also shows the status ofimplementation of Lijiang Prefecture subprojects up to November 19, 1998.

13. In Lijiang Prefecture, there were 21 subprojects in the first phase and 11subprojects in the second phase, of which five subprojects were extensions of subprojectsin the first phase. There was therefore a total of 27 subprojects in Lijiang Prefecture, ofwhich 25 have been completed and 2 have some remaining work. The mission commendsall concerned on this excellent achievement. The projects in Diqing and Dali Prefectureshave been completed, except for minor tidying up of the construction sites in some cases.

14. Based on the information provided to the mission, it was found that that thefollowing works have been completed:

Works Contracted Project %Cost Complete

RMBY millionDali Prefecture 100% 113.1 99%

Lijiang Prefecture 100% 301.3 95%Diqing Prefecture 100% 42.1 99%

Total 100% 456.5 97%

15. Details are shown in Annex 2. The mission recommends that on completion of fulldisbursement of the Credit, Annex 2 be updated to reflect the final disbursement againsteach subproject.

16. The mission congratulated the Provincial, Prefecture and local level authorities,and the communities at the impressive progress made following the earthquake, inrestoring basic facilities, and meeting the needs of the people.

Project Management

17. The following arrangements were established for managing and implementing theproject:

Leading Groups: one leading group at the Provincial level, headed by a vice-governor; three leading groups at the Prefectural level (Dali, Lijiang and Diqing),underthe leadership of the Cormmissioners of the Prefectures; and four leading groups at theCounty level (Heqing and Jianchuan Counties in Dali Prefecture; Lijiang County inLijiang Prefecture, and Zhongdian County in Diqing Prefecture), under the leadership ofthe Vice Governors of the Counties;

- 40 - Appendix B

Project Offices: one Project Office at the Provincial level, located in Kunming;four project offices at the Prefectural level; four County project offices; and 40subproject offices, have been established at the implementing agency level.

18. All of the above project and subproject offices functioned satisfactorily duringimplementation. The small amount of remaining works to be completed will be theresponsibility of the Lijiang Project Office, under overall guidance of the Prefecturalleading group, and the Province.

19. Yunnan Province, the Prefectures and the participating counties are to becommended for this institutional framework. These arrangements enabled the project tobe implemented fully satisfactorily. However, appropriate financial and project progresstracking systems were put in place later than expected; this should be given attention onfuture projects of this kind. In this case, the delays did not hinder the emergencyresponse, since funds or the required authorizations to incur expenditures and enter intocontracts were provided rapidly by the relevant authorities. This rapid responsecompetence was in the view of the mission one of the main reasons for project success.

Procurement post review

20. The mission reviewed a portion of the procurement documents of Heqing No. 1Middle School at the office of the school, and found the records were in order; based onthe review of the available materials, the mission was satisfied that procurementprocedures agreed at negotiations had been followed. Based on several discussions heldby the mission, the mission concluded that the Bank's small works procurementprocedures set out in the Credit Development Agreement and the OperationsImplementation Plan (OIP) for this emergency project had been followed by the projectoffices. The adoption of these procedures, which are similar to the local procurementprocedures and easy to follow, have contributed heavily to the successful implementationof the project. In addition, the competent management, coordination and high level ofownership by the project offices in the provincial, prefectural and county level, have ledto achieving results on the ground.

Cultural Heritage, Urban Upgrading and Architectural Rehabilitation

21. There has been considerable progress in the project since the last mission. Theworks are well advanced and nearing completion on all cultural heritage and architecturalrehabilitation components of the Program. The mission was able to express itssatisfaction that the quality of the works on this project (with many diverse building typesneeding repair or renewal) that the management of the emergency construction works hasbeen very good. The Mu Dynasty complex and the principle areas of city renewal andrepair have been carried out efficiently. The schools and hospitals have been energeticallycompleted and the contribution from the Chinese Government has added significant valueand sustainability to the quality and service that the buildings and their functions can

- 41 - Appendix B

offer to the community. Detailed findings and recommendations for future considerationare shown on Annex 3.

22. The Mu dynasty complex would not be fully complete by the project closing date(December 1998) due to the scale of the works, and the need to give sufficient attentionto authentication and quality control; the importance of these two items was fullyrecognized by all concerned, in view of the pending application by Lijiang and China toobtain World Heritage status for Lijiang. It was agreed that a further visit will be neededwhen the works are finally complete in the Spring of 1999. The Lijiang administrationconfirmed that the execution of works had required research into the significance and thevalue of the original entailing an unusual time for project preparation.

23. The mission noted the following areas of improvement recommended for theexecution of future project planning and implementation arising out of observations madeduring the visit:-

Mu Dynasty complex* The final use for the buildings of the Mu Dynasty complex must be urgently

decided in relation to the market for tourism, education, employment andcommerce;

* The proposed future use of the buildings must determine the optimum supplyand location of services for lighting, power supply, drainage, sanitation, water,and other environmental controls;

* Should the storage of organic and other sensitive materials be requiredappropriate environmental controls must be installed. Also while the climate ofLijiang is mild, it is sufficiently cold in winter for some spaces being used forsedentary occupation to need adequate heating;

- The staffing, operation and management of the Complex must be worked out,and facilities for the training of staff must be selected;

3 The interpretation and presentation of the site for the benefit of the tourism,education and employment must be urgently evaluated and researched byacademics and specialists so that the marketing of this special tourist facilitycan successfully be undertaken; and

* The financial and economic sustainability and the target revenues that can begenerated by the project must be stated and costs of the operation andmaintenance agreed with the administration.

Old Lijiang - Dayan City. Dayan City upgrading requires further consideration in the light of its high

profile in the tourism market. Urban services of street lighting, soil drainageservices, fire fighting, electrical services distribution, and access needs to befurther improved in order to ensure the sustainability of the old City as a placefor safe and healthy tourism, commerce and habitation; and

- 42 - Appendix B

There is an urgent need for the research and publication of guidelines for theimprovement to the construction of traditional buildings in a manner thatretains their historical and cultural value and significance. The missionprovided a draft Terms of Reference (TOR) for the preparation of theseguidelines (see attachment to Annex 3).

He Qing No 1 Middle School* As for the Mu dynasty complex the No I Middle School requires the services to

be appropriately arranged for the required functions. Adaptation to completedworks will be required to install services after completion of the buildingworks; and

* The installation of toilets for the girls dormitories has been inadequatelyconsidered and adaptation to the site plan is advised by the mission.

Zhong Dian Hospital. The works to the hospital have been completed without the adequate

consideration of functional layouts so that the location of services as installedis inadequate and unrelated to the probable functions. The location of electricalservices too close to water services is a threat to health and safety.T The expenditure of money of high quality finishes in public and circulationareas is in contrast to the lack of thought given to the quality of services andthe environmnent in the functional areas.

Heritage Construction Manual & Guide

In order to ensure sustainability of the investments in the repairs of the Old Town,the mission agreed with the Lijiang authorities (as had been discussed during previousmissions) that a construction guide was still badly needed; this would assist communitiesliving in a heritage environment when undertaking upgrading and making improvementsto residential and institutional properties. These improvements relate to the installation ofservices, improvements to the insulation against wind and the cold, and help in planningfor safety, means of escape in case of fire and other desirable characteristics of a modernhousehold. It was recognized that if the properties are not improved there, is a risk thatDayan City would not remain attractive for domestic housing. A draft Terms ofReference for a group of local and international specialists to prepare the Manual isshown in Annex 3.

Provision for Future Maintenance.

24. The mission reminded all concerned of the need for making full and adequatebudget provision for the long term maintenance of the assets which had been financedthrough the project.

-43 - Appendix B

Implementation Completion Report (ICR)

25. The mission requested that the project authorities prepare an ICR, reflecting theirviews on implementation and completion of the project, and in particular, highlightlessons learned. Examples of typical ICRs were provided to the Provincial Project Office.YPG agreed to prepare a draft ICR and submit this for Bank review before the end ofFebruary, 1999.

Next Supervision Mission

26. The next supervision mission would be scheduled, depending of overall progress,to suite YPG and the IMYERP Yunnan Program Project Office. It is expected to takeplace early in 1999, and would focus on reviewing the draft ICR.

Agreed Actions/Recommendations Due Date

By Yunnan:

Prepare draft ICR March 1999

Prepare Construction Manual May 1999

By the BankReview draft ICR May 1999

- 44 - Appendix B

CHINACredit 2307-CHA

Yunnan Earthquake Reconstruction ProgramAIDE-MEMOIRE NO. 5A

FINAL22 December 1998

LIST OF PERSONS MET

Yunnan Provincial Government

Mr Niu Shao Yao, Vice Governor

Yunnan Provincial Construction CommissionMr Shi Xiao Ce, Senior Architect, Director of YERPO and Vice-Director ofYunnan Construction CommissionMr. Shao Jianguo, Vice Director; Deputy Chief of the Project Office, YPCBMr Wang Zhiyi, Manager

Yunan Earthquake Reconstruction Project OfficeMr Jiao Jun, Vice Director of YERPO and Senior EngineerMr Li Ji, Architect No 3 Construction Office

Yunnan Polytechnic University Research and Design Institute of Architecture andEngineering

Mr Gong Xin Jian EngineerMs. Xu Hua ArchitectMr Xie Jin Feng Architect

Yunnan Finance Bureau

Ms Sheng Fan Project Officer and Translator

Yunnan Urban and Rural planning Design and Research Institute

Mr Gu Qi Wei Senior Planner and technical Consultant - ChiefArchitectural Adviser - Mr. Fu P.......

Yunnan Construction Commission Urban Construction Training Centre

Mr Zhao Zhiyong Director

Yunnan Horticultural Exposition Bureau

Mr. Guo Fang Ming, Director,Mr Xia Jianfeng Director

- 45 - Appendix B

Lijiang Prefectural Project Office:Mr. Luo Xie Jun, Vice Governor of Lijiang PrefectureMr. Xie Yi, Vice Commissioner of Lijiang PrefectureMr. Nian Jiwei, Chief of the Project Office, Deputy Director of LijiangPrefectural Construction Bureau (LPCB)Mr. He Shangqin, Deputy Chief of the Project OfficeMs. Yang Yulin, Accountant, Project Office

Lijiang County Project Office:Mr. Sun Jiayi, Deputy County GovernorMr. Cai Hexi, Chief of the Project Office, Deputy Director of Lijiang CountyPlanning CommissionMr. Shi Jinyun, Deputy Chief of Lijiang County Construction Bureau

Li Jiang Educational CollegeMs Yang Li Ping, English Teacher and TranslatorMr Huang Bi De, Dean of the English Department and Translator

The Mu Dynasty Research and Construction TeamMr Huang Naizhen, Director of the Li Jiang Cultural BureauMr Chen Yao Dong, Research Fellow of the Institute of Architectural History and

the China Building Technology CentreInterpreter:

Mr. Huang Bide, teacher of Lijiang Education College

The People's Government of Dali Bai Ethnic Group Autonomous PrefectureMr. Li Ying De, GovernorMr. Liang xi Yong, Vice-Prefectural Governor

Earthquake Reconstruction Office of Dali Prefecture Urban & Rural ConstructionMr. Wang Yongyu, Project Administrative EngineerMr. Yang Ding Lhong, Secretary of the Party Committee

Dali prefectural Project Office:Mr. Shan Yuming , Chief of the Project Office, Director of Dali PrefecturalConstruction and Evironmental Protection Bureau (LPCB)Mr. Zao Hexin, officer of the Project Office

Heqing CountyMr Hong Shi Jiu, Vice GovernorMr Yang Jia He, Officer of Project Office

Heqing County Project Office:Mr. Wang Rongwei, officer of the Project Office

- 46 - Appendix B

Heqing Nol Middle School

Mr Li Zhi Kui, HeadmasterMr Hong Jie Qian, Vice Director

Diqing Autonomous PrefectureMr Luo Yong Xiang, Vice Governor

Diqing Prefectural Project Office:Mr. Luo Yongxiang, Deputy Governor of Diqing PrefectureMr Xiao Bang Ma, Vice directorMr Mu Hong Bin, Clerk

Zhongdian County Project Office:Mr. Xiao Banma, Chief of the Project OfficeMr. Mu Hongbin, Officer of Project Office

-47 - Appendix B

CHINACredit 2307-CHA

Yunnan Earthquake Reconstruction ProgramAIDE-MEMOIRE NO. 5A

FINAL22 December 1998

Detailed Project Costs and Completed Component Listing

Contained in the Project Files-in English and Chinese

- 48 - Appendix B

CHINAYUNNAN EARTHQUAKE RECONSTRUCTION PROJECT

CULTURAL HERITAGE COMPONENTAIDE-MEMOIRE NO 5A

FINALDecember 22, 1998

27. The mission wishes to thank the officials of the Yunnan Provincial Government(YPG) and the Prefectures and Counties of Lijiang, Dali, Heqing, and Zhong Dian and DiQing for their assistance during the days spent in Kunming and the above places. Themission focussing on a review of those project components of specific culturalsignificance was carried out by Mr Donald Hankey, Ms Katrinka Ebbe, Mr Zhang Zhun,and Mr Curt Carnemark, assisted by Mr Xin Gong Fu between the 18th and 24 " ofNovember 1998. A list of persons met during the mission is given in Annex 1.

Objectives

28. Following the field visits of December 1997, and with the substantial completionof the project due at the end of December 1998, the mission objectives were to:-

a) assess progress made in the rehabilitation, reconstruction and conservation worksto the Mu Dynasty properties;

b) assess the content of the construction manual for the repair and upgrading oftraditional buildings in Dayan City;

c) review planning and construction of project components, in particular thereconstruction and repair of the various buildings of Dayan and the Heqing No.1Middle School, as scheduled in the IDA and PRC agreements;

d) assess the effectiveness of administrative, institutional systems and controlsrequired to deliver the project as planned;

e) hear the opinions of the Yunnan and county teams as to the efficiency and impactof the project's cultural heritage component; and

f) ensure that the works undertaken represent a sustainable investment and benefit tothe community.

The Mu Dynasty Properties

29. Impressive progress had been made since the last mission. It was reported to themission that there were 3600 people working to complete the project. Some delay hadbeen incurred through the poor weather in 1998 and care was necessary with the intricatepainting for the works. Completion of most of the complex was expected during thespring of 1999. It had been found that care had to be taken to restore to the original styleand the work could not easily be researched adequately and carried out in the timeavailable for buildings of such importance for the future of Lijiang's economy.

30. The mission noted that the next essential steps were to finalize the detailed plansfor the use and furnishing of the buildings and that these studies were critical for the

- 49 - Appendix B

proper installation of services and working environments. Each building must be given aneffective use as noted previously in discussions with the Bank in order to ensuresustainability, maintenance and conservation, and the use must be supported by modemservices, to ensure the continued effectiveness of the buildings.

31. The mission noted that the interpretation of the historic sites and the presentationto the public and to the tourists will be essential for the generation of revenue, tourismand education, and to give benefit to the local community through increased awareness,employment and commerce. The appropriate form of presentation would need to beproved in relation to the expected market and the revenues calculated in relation to thetype and financial status of the visitors. The mission advised that the assessment ofappropriate functions for the buildings and the methods for presentation of the history andsignificance to the public needed to be studied and strengthened immediately. The Bankhereby requests that proposals for these matters are sent to the Bank in Washington assoon as they can be finalized.

32. The costs of operation and maintenance had still to be calculated in relation to theexpected staffing, and the intensity and type of use. This in turn must show theprofitability and the need for any permanent subsidy for the operation of the future use.The market for the future use must be analyzed, and the management staff and theirnecessary skills need to be urgently defined, selected and trained. (See Item 5f) of Annex2 Aide Memoire of December 1997). To carry out the work of items 4, 5 and 6 above,requires the assistance of experts in archaeology, history, architectural history and design,tourism, market analysis, economics and finance. It was agreed that a business plan forthe funding, operation and maintenance of the project would be prepared for presentationto the Bank by April 1999.

33. It was agreed that the construction detail at the base of the timber columns to allthe buildings could be improved; the present design being used showed lack of protectionagainst water penetration between the stone bases and the timber; the timber may rot anddecorations fail unless the joints are sealed with a modem flexible polysulfide sealantapplied in accordance with the manufacturer's instructions. The mission and the YPGteam noted that in historic buildings it was important to take advantage of modemconstruction techniques so long as the historic value is not reduced.

Lijiang Old City

34. Drainage systems were complete. Toilets were complete and in operation;maintenance could be improved however, as many were not cleaned regularly, and at riskof failing to provide an adequate and hygienic service. Earthquake damage to the privatehousing was still being repaired and techniques for reinforcing traditional constructionand upgrading the quality of the traditional environments was urgently required. There isstill great danger from fire with the electrical systems using the local standards ofinstallation; the lack of fire hydrants in the city also gives rise for concern. In time these

- 50 - Appendix B

problems must be addressed for the Old City to be a desirable, safe and sustainable placefor tourism, commerce and habitation.

He-Qing No 1 Middle School

35. Good progress had been made in completing the works, and in addition to therepair of earthquake damage, the support of additional local funding has addedconsiderable value and capacity to the school. The works were of good quality but themission noted the following important points:-

a) The restored Confucian Temple will be used for gatherings, exams,exhibitions. Provision has not as yet been made for the necessary electricalservices, power supply and lighting of the working or exhibition areas and thefine new roof. The mission advised strongly that the lighting be designed toshield the light source in order to avoid glare;

b) The Main Entrance Gate was being constructed off center to the access road.Careful design of roads and landscaping is required to overcome this problem;

c) The new toilets for the girls dormitory block are to be sited some 100 metersfrom the building, which is insensitive to the needs of teenage girls whorequire adequate privacy. The mission suggested that the toilets should belocated near to the dormitory block between the dormitory and the newclassroom block and attached at each floor level. The cleanliness of the toiletsand their maintenance, and the provision of adequate mains drainage will beessential;

d) The mission noted that the provision of soil water drainage was stillinadequate for the school site and that the consideration of services needed tobe taken into account earlier in the design process; and

e) Rainwater pipes to the historic teachers' offices building should be routedagainst the structure in the corner courtyards.

Zhong Dian Hospital

36. In Di Qing County, the Zhong Dian Outpatients clinic was a fine new building;more attention was now needed to make adjustments to the functional planning todetermine the final location of and any needed adjustments to services, the provision ofhot and cold water, power supply and lighting. These adjustments to services will bedifficult to add/adjust now that the building has been constructed. The mission suggestedthat the planning and administrative process for project preparation and design needed toaccount better for the future use, the adaptability of that use to anticipate changing marketrequirements, and the services required to provide the necessary functional environment.It was agreed that plans for the functional organisation of the hospital would be sent tothe World Bank in Washington for comment.

- 51 - Appendix B

Project Administration

37. The YERP directors and staff noted the lack of mission time to review design ofprojects. The mission took note and requested that in future information should bepresented earlier for the Bank staff to review.

Guidelines for the upgrading of historic environments

38. Draft Terms of Reference (TOR) for this Study were given to YERP in December1996 (This remains valid and is given again in the Attachment to this annex). The YERPresponded in October 1997 with a statement and TOR of their own. A further draft TORof the manual was available for comment in July 1997 and the Aide Memoire reportedthe Bank's conclusions. The final TOR for the manual was reviewed by the Bank inDecember 1997and agreement given to the Cost estimates of RMB590,000 for theproduction with 100% reimbursement from the project. YERP is hereby requested toformally confirm the funding and program requirement for the TOR and publications andthe World Bank will assess if the works can be funded out of the project budget or fromother funding sources. YERP are requested to note the comments of the December 1997Aide-Memoire, but the city of Ningbo and Liaoning Province cannot at this stage beincluded in the project.

39. The mission noted the great potential benefit to the people of Lijiang from theinvestment of the Chinese into the repair and improvement to their environment, Theinvestment has given added value if the management, operation, maintenance andcontinuous adjustment to the market and the user requirements is effectively carried out.There will be long term benefits to the community in education health and tourism.

- 52 - Appendix B

DRAFT TERMS OF REFERENCE FOR TECHNICAL STUDY INTOLIJIANG HOUSING

STRENGTHENING AND IMPROVEMENT

Introduction

1. The IMYERP Program (Credit 2307-CHA) to assist the Province of Yunnan in itsrepair of the Damage from the earthquake of 3 February 1996, involves the reconstructionof the traditional housing of Dayan (Lijiang Old City). The laws issued both pre- andpost-earthquake set out the standards and requirements for planning, design andconstruction. Various matters remain however to be resolved, and for the investment intorepair to be in support of sustainable quality of construction and a worthy asset, theavoidance of future damage as far as possible and the construction of repair whichincorporates the improvement in the environmental planning and construction must beachieved.

2. Debate continues on the question of the appropriate relationship between thetraditional earth brick structures at the rear and gable end walls, and the timber framingwhich has survived over the centuries through the heavier walls collapsing withoutbringing down the timber framing. The latter has often retained adequate flexibility toresist the shock of earthquakes. There are of course many instances of displacement andcollapse of timber frames, but for the most part evidence suggests that this collapse isalways associated with the collapse of masonry structures. Construction detail has insome instances not provided a key between components, such as between timber columnand stone base, leading to damage or displacement of the components.

3. The stability of timber frames is given by well tried systems of jointing andpaneling. But in the conditions of a serious earthquake as has recently occurred this hasproved to be potentially inadequate.

4. The modem recommendations require the introduction of concrete framing andbrick panels. This is not appropriate for the traditional historic environment of the City ofDayan, and alternate external construction materials must be used to conserve thetraditional architectural expression of the City. The scope of modem science andconstructional experience must be tapped to assess the potential for discrete andappropriate strengthening measures.

5. As a general rule, the properties of the Old City have some electricity, no drainageor sanitation, poor means of escape in case of fire, no means of fighting fires, sometelephones, a lack of fresh water supply, uninsulated timber panel walls and roofs, and anabsence of heating systems. What systems there are have been installed without adequatesafety and protection and without adequate consideration for the aesthetic and safetyrequirements for both the street scene and the interior of the buildings. There is muchgood experience that can be used to design methods of upgrading properties in wayswhich can be for the enjoyment of the inhabitants. The tourism industry, being seen as a

- 53 - Appendix B

principal generator of employment and trade in the future, also requires that thedistribution of services and the provision of safety and adequate access is carried out inways that are sensitive to the visual charm and historic quality of the urban and builtenvironments.

6. The Ministry of Construction in Beijing is understood to be studying a range ofproblems associated with the rehabilitation of buildings in Dayan, but the scope of thesestudies is not known as yet. Any study carried out for this project must be complementaryto any other study, and the knowledge thereby gained must be pooled for the benefit ofthe City as a whole. The means selected for improving planning and construction must bewithin the limits of affordability both for initial capital expenditure and for futuremaintenance. Solutions to the problems must therefore be set in the context of theeconomic and financial character of the City.

7. The present reconstruction and rehabilitation within the City is being carried outwithout always conforming to the recommendations correctly issued by the Province andthe Prefecture. Not unnaturally the emergency nature of the disaster has requiredimmediate action by any means possible. There is a problem of communicatingrequirements of the law and of design recommendations to the householders who areoften dependant upon their own initiatives but do not read sufficiently to understand therecommendations that are given. The means of communicating any requirementsbecomes an essential consideration in developing a sustainable and controlled urbanenvironment.

8. There is a need to develop literature in both written and graphic form that can beinterpreted by the householders and their builders, giving guidance on:-

* construction improvements, and the means of improving safety, thermal andsound insulation, safety in case of fire, the assurance of the means of escape incase of fire and the protection of escape routes by the use of non-combustiblematerials;

* safety and installation requirements to electrical, water supply, sanitation,drainage, telephone, television and services giving the typical solution toconcealment of pipes conduits and wiring, the prevention of damage from theuse of equipment to adjacent parts of the building;

* construction of traditional buildings and the use of traditional materials,decorative and construction detailing, and the means of improving theearthquake resistance of traditional buildings as found in the City;

. Planning improvements to the traditional layout of rooms to incorporate therequirements of modem lifestyles.

• planning and design solutions and the environmental requirements for lightingof streets, electrical, water, drainage, telephone and television servicesdistribution;

* design limitations for the placing of advertisements within the historic areas (ifnot already covered by the legislation)

- 54 - Appendix B

9. The above measures are potentially very useful to the people of the City to helpthem know of action that they could take to improve the enjoyment of their properties, todefend the use and values of traditional properties, and to demonstrate the qualities of thetraditional house over the mass housing solutions of blocks of flats now underconstruction in the new parts of the city. The support of the people is important to ensuremaintenance and upgrading of the traditional environment, and the historic environmentis the expression of the traditional minority Naxi culture and the principal lure for tourismand all its associated trade and economic benefits that are derived from it.

10. It is likely that most properties would be able to undertake only a part of therecommended works. The importance of the advice however is to give safety, qualitycontrol, construction and design information to all people concerned.

11. The following skills are required to carry out the study, to negotiate and adjust thedetails of the study in relation to the requirements of the administration of the Province ofYunnan, the Prefecture and City of Lijiang, and to produce reports and literature that maybe reviewed and adopted by the relevant departments of the administration:-

* architect and urban planner specialized in the design and construction oftraditional Chinese housing; this may be two people depending upon theavailability of skills;

* structural engineer specialized in the design of traditional Chinese houses and aservices engineer skilled in the routing of services in existing buildings; and

* architects and engineers from the administration to work with the appointedspecialists.

- 55 - Appendix B

CHINAYUNNAN EARTHQUAKE RECONSTRUCTION PROJECT

COMMENTS ON FIELD VISITSAIDE-MEMOIRE NO 5A

FINALDecember 22, 1998

40. The mission visited a number of the project sites. Comments on the individualsites are shown below.

41. Traditional Chinese Hospital of Lijiang County. Constructed from October, 1996to May 1997, the hospital has been fully rehabilitated and is provide services to patients.Located in old city of Dayuan Town, the hospital was built in traditional woodenstructure of Lijiang Naxi style compatible with old city surroundings. The constructionquality is satisfactory, but some improvement is needed in the longer term, such as thestairs are too steep for patients

42. Water Supply Factory of Lijiang County. Not visited on this mission. Work iscomplete, and the plant is reportedly functioning satisfactorily.

43. Reconstruction of Drainage Ditch of West Bypass Highway. Rehabilitation ofearthquake damaged conduits were completed in August 1996 by original contractor whogot the works through bidding before earthquake. Procurement documents and SOEsupport documents were provided to the mission for review and local bidding procedurewas followed.

44. Steel Window Manufacture Works. All work is complete, and factory back to fullemployment. During a field visit, the mission found that the reconstructed factoryappeared to have expanded since completion of the earthquake reconstruction work, andseemed to have more capacity than orders.

45. Other. The mission visited several of the schools supported through the project.The mission found that workmanship was generally of a high standard, work had beencompleted, and the facilities were being fully utilized.

46. Housing of Old Town Residents. This project-supported portion of the work hadbeen completed some while back. However, even though project funds were notsufficient to meet all reconstruction costs (it has been estimated that the Credit wouldhave provided some 25 to 35 % of the costs, the mission found that the majority of thehouses damaged had been repaired by this time, and possibly most houses had even beenimproved; the main improvements were that many of the walls which were formerly ofunbaked mud brick(with little resistance to earthquake damage) were now of sand/cementblock or burnt brick, and also it is understood had been constructed with reinforcing,which would improve the earthquake resistance.

- 56 - Appendix B

47. Mu Family House. Work in this area is very advanced, and substantiallycomplete. Details and recommendations are set out in Annex 3.

48. Wastewater and Drainage System Upgrading. Work on upgrading of the collectorsystem is substantially complete; the main item still to be completed is the treatmentplant. The mission found that additional attention was required in order to improve thequality of construction. It was reported that the plant would be substantially complete bythe end of 1998.

49. Lijiang Prefectural Hospital. As the largest pieces of contract, the procurementdocuments of the hospital has passed Banks prior review. Mission has requested thatalternative foundations be considered, including considering constructing a basement onraft, instead of individual pillars in present design. Particular attention to be given toconsidering earthquake conditions prevailing in Lijiang. These alternatives to be givenconsideration by PMO and concerned design Bureau. Bank to be advised.

50. Education College of Lijiang Prefecture. The Student Dormitory facilities and themain Teaching Building have been completed, equipment installed, and the facilities arefully operational. School management appears to be of a high quality, and the academicresults achieved by the pupils were reported to have improved significantly, as a result ofthe reconstruction of the facilities; even though the facilities were essentiallyreconstructed, in line with project goals and procedures for emergency operations, theopportunity was taken to improve while reconstruction gave a chance to innovate. Thishas according to the local authorities achieved academic results far greater than thosewhich could have been achieved previously.

51. Other Public Infrastructure and support to Industrial Enterprises. The missionvisited several of the other industrial facilities which had been reconstructed with projectsupport. Work was substantially complete, and the facilities functional in most cases; insome sub projects, additional counterpart funds were still needed in order to complete theworks to full functionality. YPG assured the mission that these funds would be provided.

- 57 - Appendix B


(CREDIT 2307-CHA)

YUNNAN EARTHQUAKE RECONSTRUCTION PROGRAM (YERP)


AIDE-MEMOIRE

DRAFT

June 24, 1999

Contents

Main Text

Annex I List of Persons Met

- 58 - Appendix B

Main Text

1. A World Bank Implementation Completion Report (ICR) mission visited Lijiangand Kunming, Yunnan during April 13 to 18, 1999 to discuss the Yunnan component ofdraft ICR for the Inner Mongolia/Yunnan Earthquake Reconstruction Program(IMYERP) with the project officials from Provincial, Prefecture and County Projectoffices. The mission comprised Messrs. Terry Hall and Yang Dawei.

2. The mission expresses its appreciation for the support and hospitality receivedfrom the officials of Yunnan Provincial Government (YPG), Lijiang PrefectureGovernments and the project offices of Yunnan Province, Lijiang Prefecture, LijiangCounty and Heqing County.

3. The mission discussed the draft ICR with the provincial project office andprovided the draft of the ICR to the provincial project office on April 14, 1999. themission has also received the Borrower's contribution to the completion report in Chinesefrom the project office. The mission received comments, issues, experiences and lessonsearned on the project by various project offices and executing agencies of Lijiang county(in the evening of April 14), Lijiang Prefecture (in the morning of April 15) and HeqingCounty (in the afternoon of April 15). The people met by the mission were listed in theAnnex 1 of this Aide-Memoire. The mission findings will be incorporated into the ICR.This Aide-Memoire is subject to review and confinnation by World Bank Management inWashington.

Completion Status

4. The implementation of the project was completed by the end of 1998. Themission found that the IDA Credit was fully withdrawn on December 31, 1998.

Actions to be taken and Next Steps

5. Based on the various discussions and meetings with the concerned projectagencies, the mission draws attention to the following steps which should be addressed inorder to submit the Project Completion Report to the Bank Management before June 30,1999:

(a) Final Audit Report and audited financial statement for fiscal year 1998shall be provided by Yunnan Provincial Government (YPG) for the Bank's review beforeJune 30, 1999.

(b) The comments on the draft ICR, and English version of the Borrower'scontribution to ICR shall be provided by YPG to the Bank by the end of April, 1999.

-59 - Appendix B


(CREDIT 2307-CHA)Yunnan Earthquake Reconstruction Program

IMPLEMENTATION COMPLETION REPORT MISSION(April 13 to 18,1999)

ANNEX 1. LIST OF PERSONS MET

Persons from Province:

Mr. Shi Xiaoze: Deputy Director of provincial construction bureauMr. Shao Jianguo: Division Chief of Planning and Finance Division, provincial

construction bureauMs. Chuan Zhiming: Staff member of provincial Project Office

Persons from Lijiang Prefecture:

Mr. Shi Weiqing Dep. Governor of Lijiang Prefecture GovernmentMr. He Shangqing Lijiang Prefecture Project OfficeMs. Yang Yulin Lijiang Prefecture Project OfficeMs. He Jiafeng Lijiang Prefecture Project OfficeMr. He Gang Lijiang Prefecture HospitalMr. Wang Guang Lijiang Prefecture Education CollegeMr. He Shangyou Lijiang Prefecture Education CollegeMr. He Wenxin Lijiang Prefecture Ethnic Teacher Training SchoolMr. He Kechun Lijiang Prefecture Ethnic Teacher Training SchoolMr. Tang Weixue Lijiang Prefecture Finance BureauMr. He Pinwen Lijiang Prefecture Power CompanyMr. Liu Daoxiang Lijiang Prefecture Middle SchoolMr. Zhu Feng Lijiang Prefecture Education CommissionMr. Li Chengwei Lijiang Prefecture Experiment SchoolMr. Li Xinming Lijiang Prefecture Health SchoolMs. Zhuang Lianmei Lijiang Prefecture Window Frame FactoryMr. Nian Jiansheng Lijiang Prefecture Window Frame Factory

Persons from Lijiang County:

Mr. Li Baotang Dep. Governor of Lijiang County GovernmentMr. Wang Chunhong Lijiang County Project OfficeMr. Xi Liwu Lijiang County Project OfficeMr. He Lisheng Lijiang County Traditional Chinese Medical HospitalMr. He Yixin Lijiang County Education BureauMr. Wu Lishen Lijiang County Urban Construction Bureau

- 60 - Appendix B

Mr. Su Jingfa Lijiang County Estate Management StationMr. Duang Wunhau Lijiang County Finance BureauMr. Yang Yugen Lijiang County Water Supply PlantMs. Ma Chixian Lijiang County Women and Children HospitalMr. Chen Yiaojun Lijiang County Paper MillMs. Huang Meixian Lijiang County Food Stuff Factory

- 61 - Appendix C

APPENDIX C: BORROWER CONTRIBUTION TO THE ICR-INNER MONGOLIA

IMPLEMENTATION COMPLETION REPORT

CHINA

INNER MONGOLIA EARTHQUAKE RECOVERY & RECONSTRUCTIONPROJECT

(CREDIT NO. 2307-CHA)

January 10, 1999CHINA INNER MONGOLIA EARTHQUAKE RECOVERY & RECONSTRUCTIONOFFICE

AVERAGE RATE VALUE OF DIFFERENT YEARS

1996 lUSD=8.30YUAN 1SDR(SPECIAL DRAWINGRIGHT)=1.4393USD1997 1USD=8.30YUAN 1SDR=1.3682USD1998 1USD=8.29YUAN ISDR=1.3595USD

- 62 - Appendix C

CONTENT

I. PROJECT TARGET---------------------------------------------------------------------------(4)II. PROJECT BACKGROUND-------------------------------------------------------------------(5)III. PROJECT ACTUAL EFFECT----------------------------------------------------------(6)IV. PROJECT APPRAISAL----------------------------------------------------------------------(8)V. MAIN ELEMENTS AFFECTING PROJECT--------------------------------------------(11)VI. ACHIEVEMENTS OF THE WORLD BANK-------------------------------------------(12)VII. ACHIEVEMENTS OF THE LOANER--------------------------------------------------(13)VIII. PROJECT FUTURE OPERATION------------------------------------------------------(14)IX. PROJECT MAIN EXPERIENCE----------------------------------------------------------(15)

APPENDIX

TABLE I: PROJECT APPRAISAL COLLECTON TABLETABLE II: PROJECT TIME TABLETABLE III: PROJECT RENDER TABLETABLE IV: PROJECT INVESTMENT COLLECTION TABLETABLE V: WORLD BANK INVOLVED GROUPS TABLEI. PROJECT TARGET

1.1 At 11:32 on May 3, 1996 a severe earthquake of 6.4 degree happened in BaoTou,Inner Mongolia, China, where most industries and population of Inner Mongolia areconcentrated. The epicenter is only 10 km away from the city. The highest earthquakeintensity is 8 degree. 6 counties and districts in Baotou city, YiKeZhao league andBaYanNaoEr league were affected. This earthquake has the characteristics of no signs,high degree and causing severe losses. It is another seriously destructive earthquakehappened in a city with over one million people following the TangShan Big Earthquakeof China. BaoTou is the largest industrial city of Inner Mongolia. The banners andcounties around it are dry and poor, mainly engaged in agriculture and animal husbandryand populated by minority nationalities. The earthquake caused serious inner destructionto different buildings, underground structures and industrial facilities. It laidunpredictable problems and caused severe losses to the life and work of fanners andherdsmen. Through careful investigation and collective appraisal made by the relevantnational and provincial departments, 580 thousand households and 2.1 million peoplesuffered from the earthquake. 26 people died and 454 people injured. The directeconomic losses reached 5.215 billion Yuan.

1.2 In order to do the work of anti-earthquake and disaster-relieving, recovering theproduction and reconstructing homeland well, the concerned national departments, otherprovinces and the international community have given great support and help. InnerMongolia government made overall plan for the reconstruction work, sticking to the

- 63 - Appendix C

principle of mainly self-reliance combining international and domestic aids. It wasplanned that all the reconstruction work would be finished step by step in two years.

1.3 Inner Mongolia is a minority nationality autonomous region. Her economy is stilllagging behind and the financial strength is still weak. Therefore, it is difficult for her tofinish all the reconstruction work only by herself. As a result, the aids of the World Bank( hereinafter referred as WB ) is needed.

1.4 The aids of the WB is mainly for solving the problems of housing, education,hygienic facilities and the repair and reconstruction of the urban public facilities for thepeople in disaster-stricken areas, so that the social order of living, working, educating andmedical care can be normalized and the economy in these areas can be continuouslydeveloped.

II. PROJECT BACKGROUND

2.1 This project is the urgent aiding project utilizing the largest foreign investmentand possessing the largest scale in the post-earthquake reconstruction work in BaoTou.

2.2 This project is comprised of 6 sub-projects of education, hygiene, public facilities,housing, earthquake observation and technical aids and is arranged to be implemented in6 counties of 3 leagues and cities.

2.3 From June 25 to 29, 1996, the WB Investigation Group headed by Mr. DaudAhmad made an on-the-spot investigation to Inner Mongolia. From July 18 to 21, 1996,through technical negotiations between the WB and the China Finance Ministry and theInner Mongolia Delegation, a loan of 25 million USD is officially approved to begranted.

2.4 The total investment of the project is 37.0914 million USD. Among this amountthe International Development Association (IDA) granted 17.37 million SDR, equal to 25million USD and accounting for 67.4% of the total contract amount.

2.5 The IDA credit is to be trans-granted from the Finance Ministry to the InnerMongolia People's Government. The annual rate is 2%. The promising fee annual rate is0.5%. The returning period is 15 years, including 5 years of grace period.

2.6 Project Implementation. On December 16, 1991, the WB and the ChineseGovernment signed the Development Credit Agreement and it shall become valid fromOctober 16, 1996.

- 64 - Appendix C

2.7 Project Mid-term Adjustment

2.7.1 IDA Credit Loan Re-allocation. In October of 1997 and June 1998 the WBDelegation twice came to Inner Mongolia and confirmed the project list of supplementing3.747 million SDR, so that the IDA credit loan finally reached 21.117 SDR.

III. PROJECT ACTUAL EFFECT

3.1 Project Implementation Progress

3.1.1 Project Total Investment. The actual completed investment is 43.9663 millionUSD which is 98.7% of the actual contract. Among this: IDA credit 30.0587 millionUSD, accounting for 99.7%; the domestic investment equal to 13.9076 million USD,accounting for 96.6%. For details, see Appendix 4.

3.1.2 The project was started from August 1996 and finished on Dec. 31, 1998. Theconstruction plan of the project was basically finished and the implementation was fine.

3.1.3 IDA Credit Payment: The actual payment is 2,013,2 million SDR ( equal to 27.5mnillion USD ) and the last payment was on ,1999. For details, see Appendix 3.

3.1.4 Purchase: The bidding and purchasing of the project were basically carried out asthe WB required. The contractor of the BaoTou Gas Project, Bao Tou No. 2 Hospital andBao Tou No. 4 Hospital was selected through competitive bidding. The housingconstruction in rural areas and some electrical facilities maintenance projects were self-managed. The contractor of the rural housing construction in Yi League was selectedthrough inquiry bidding. The rest projects all adopted the method of inquiry bidding andpurchasing through careful comparison. The documents and the process of the biddingand purchasing basically conform to the standard.

3.2 Project Actual Effect

3.2.1 Education

A. The reconstruction and maintenance of 22 rural and urban secondary professionalschools, special educational centers, middle and primary schools and kindergartens werefinished.

B. The reconstruction and maintenance of 75 rural middle and primary schools werefinished.

3.2.2 Hygiene

A. 15 urban hospitals and epidemic prevention stations were finished.

- 65 - Appendix C

B. 24 rural hygienic stations were finished.

3.2.3 Housing

A. 3 urban residential buildings with the area of 12,562 m2 were finished and 225 quake-stricken households moved into the new home by the end of 1996.

B. 191,481 m2 of rural housing were finished.

3.2.4 Public facilities

A. The Bao Tou Gas Project was finished. A new dry storage tank of 50,000 m3 wasconstructed. The former wet storage tank of 54,000 m3 and the pipes and other strike-destroyed facilities were repaired.

B. The boiler room and equipment purchase of the BaoTou Qing Shan Heating Plantwere finished.

C. The civil work and equipment repair of the Bao Tou No. I Power Plant, Bao TouPower Supply Bureau, Ba League Electric Administration Bureau and Yi League ElectricAdministration Bureau were finished.

D. The water supply project of DaLaTe Banner was finished.

3.2.5 Seismic Observation. The work of changing part of the observation equipmentsand meters and repair part of working and residential houses in 8 seismic observationstations were finished.

3.2.6 Technical Aids. The training of the finance and purchase management of theproject and the office equipment purchase were finished.

IV. PROJECT APPRAISAL

4.1 This project is the aiding project utilizing the biggest WB loan and occupying thelargest scale in the post-earthquake reconstruction work of Inner Mongolia. It covers thefields of education, hygiene, public facilities, housing, seismic observation and technicalaids, etc., involving 6 counties in 3 leagues and cities. It greatly helped the quake-strickenarea to formalize its working and living order, improved people's living, educating andmedical conditions and strengthened the infrastructure construction. This project will bevery important in keeping social stability and impeding economic development. It showfairly good social and economic benefit.

4.2 The implementation of the education project: The reconstruction of schools in anarea of 125,561 m was finished and large amount of teaching facilities were purchased.

- 66 - Appendix C

This guaranteed children's study in school, greatly bettered the educational condition inthese areas and helped to raise the educational level.

4.3 The implementation of the hygienic project: The hospitals in the quake-strickenarea were repaired and the medical condition was greatly improved. Number of patientsand the income of the hospital were increased. It helped to increase the medical capabilityand develop the hygienic undertaking, especially the medical condition in the local ruralarea. It is more convenient for farners and herdsmen to seek medical advice.

4.4 The implementation of the housing project: Homeless quake-stricken peoplemoved into the new houses and are able to lead a stable life. New villages wereconstructed with an entirely new look. It guides and drags the development of the localcountryside construction.

4.5 The implementation of the public facilities project: The hidden trouble in the BaoTou gas, heating and Da La Te banner hot water system was completely abolished. Itassured the safe utilization of gas for 120,000 people of 30,000 households in Bao TouQing Shan District. It guaranteed the winter warming of 11,800 households in Bao Touand the water supply for the residents in Shu Lin Zhao County of Da La Te Banner andgained a good social effect.

4.6 The implementation of the seismic observation project: It not only normalized theobservation and broadcasting work of the harmed observation stations, but also improvedthe observation, working and living conditions of these stations. The purchasing of thedigital seismic meter and the forewarning meter and the construction of the informationnet system greatly improved the seismic observation ability and the seismic analysis andbroadcasting level and will surely play a better role in the work of anti-quake anddisaster-relieve.

4.7 The implementation of the technical aids project: It guaranteed an effectivecarrying-out of the work of the Earthquake Project Office and a smooth going-on of theWB-loaned recovery and reconstruction work.

4.8 Through the implementation of this project we gained many beneficial experiencein improving and increasing investment and project management. What's more, a groupof project management officials of utilizing WB loan is trained.

4.9 Comparison of with this project and without this project: If there were no thisproject, the post-disaster construction work may still have achieved some progress.However, compared with having this project, the speed and effect of the reconstructionwork would be much worse and the people's life, social production and economicdevelopment would be seriously limited. This project not only made the destroyedschools, hospitals, houses and public facilities quickly reconstructed, but also greatlyimproved the condition in these systems so that the potential of development wasdeepened.

- 67 - Appendix C

V. MAIN ELEMENTS AFFECTING PROJECT

5.1 Governments at different levels have attached great attention to this project andstrengthened the leading and management of it which made this project a success.Governments at the provincial, city and county levels have all listed it into the VIPagenda. They made special researching and arrangement about this project anddetermined special officials to be in charge of it. They all set up the Project Office to bespecially responsible for managing this project.

5.2 All departments concerned closely coordinated with each other which made thisproject smoothly carried out. The Planning & Developing Commission, the FinanceDepartmnent, the Earthquake Bureau, the Electric Admninistration Bureau, the Education,Civil Construction, Hygienic and Audit Departments, etc. have all been involved in thisproject. During the implementation of this project the officials and specialists of theseDepartmnents all attend into this project actively and cooperated with each other closely.The Education Department, the Electric Administration Bureau and the EarthquakeBureau have set up Project Offices and determined special persons to be responsiblewhich guaranteed a smooth implementation of this project.

5.3 All project construction units are responsible and hardworking which laid a solidfoundation for the smooth implementation of the project. During the implementation, allthese units have determined special officials to be responsible for the project and savedno effort to finish it.

5.4 Due to the changing of the currency rate, an insufficiency of some projectinvestment was resulted in, which inserted heavy pressure onto the project units.

VI. ACHIEVEMENTS OF THE WORLD BANK

6.1 The WB has given great support to the project in supplying capital, information,technical guide and management, etc.. The governments and project units at differentlevels and residents in the quake-stricken area were very satisfied with the WB inselecting, preparing, guiding and supervising of the project and would like to extend themost sincere appreciation to the WB.

6.2 The WB did very well in implementing this project. During the rectification of theproject, the WB sent Delegations both headed by Mr. Daud Ahmad in June and July of1996 to rectify the projects.

6.3 After the project was started, each time when the WB Delegation camne to InnerMongolia, regardless of the tiredness, the WE officials all saved no effort in their workand were extremely careful and responsible and showed very good qualifications andhigh efficiency. We are deeply impressed by their high working-spirit and the warmfeelings that they hold toward people in quake-stricken areas. Inner Mongolia will neverforget the contributions that they made to this project.

- 68 - Appendix C

6.4 The officials from the WB Mr. Geoffrey Read, Mr. Bao TaiLi, Ms. Austin Hu,Mr. Daud Ahmad, Mr. Patrick McCarthy, Mr. Ken Rippin, Mr. Yang DaWei, Ms. YangXiaoHong, Mr. Zong Yan, Mr. Chen Xin, Mr. Chu JunXue and other official have kept aclose and harmonious relation with the Project Office and other departments. They gavegreat support to the Project Office which is an important reason for the success of theproject.

6.5 Since 1996 the WB have sent 5 groups of 21 officials to help and guide theproject in Inner Mongolia.

VII. ACHIEVEMENTS OF THE LOANER

7.1 Under the leadership of the Inner Mongolia Governmnent, the Inner MongoliaWorld Bank Anti-quake & Disaster-Relief Loan Project Leading Group was set up. ThisGroup is responsible for leading and coordinating in this project. A vice-governor wasappointed to be the chief of this Group. The leading officials of the General Office ofInner Mongolia People's Government, Planning & Developing Commission, Finance,Construction, Electric Administration, Education and other Departments and officialsfrom the Government of Bao Tou City, Yi League and Ba League are the members of theGroup. Under the Leading Group there exists the WB Loan Project Office. A vice-generalsecretary of the Inner Mongolia People's Government was appointed to be the director ofthe Office. A vice-general director of the Inner Mongolia Planning & DevelopingCommission and a vice-general director of the Inner Mongolia Finance Department wereappointed to be the vice-director of the Office. The Project Office have selected someengineers, technical and financial specialists to be in charge of the implementing,managing, training, supervising, observing, coordinating and serving of the project.

7.2 The Inner Mongolia Govermnent is responsible for bearing and transferring theIDA credit. The Foreign Economy Division of the Inner Mongolia Finance Department isresponsible for the financial management of the project, including drawing, rendering,reclamation and repay, and supervising the implementation situation in the leagues, citiesand counties concerned.

7.3 The Inner Mongolia Audit Department is responsible for auditing this project.Through auditing problems were found without delay and suggestions were raised whichguaranteed the smooth implementation of the project. Audit reports were supplied to theWB each year.

7.4 The Project Offices at the league ( city ) and county levels are responsible formanagement of the project all through its implementation under the direction of the InnerMongolia Project Office and local Government Project Leading Group. The ProjectOffices in Electric Administration Bureau and Earthquake Bureau are responsible for themanagement of the project belong to them all though its implementation.

- 69 - Appendix C

7.5 The project construction units selected the designing units and constructing unitsthrough bidding as was required by the WB and the domestic infrastructure managementregulations.

7.6 The domestic finance of all the sub-projects was raised by the FinanceDepartments of different levels and enterprises, units and farmers ( Some of them dolabor with the same value of the fund instead of paying the cash ) concerned. Biddingpurchase was used in WB loan and repay and render were all done as the W13 required.

7.7 The bidding purchase of goods: The construction units put forward a purchase listaccording to the bidding design documents to the Finance Departments of the same levelto be rectified. After all the lists were rectified the Inner Mongolia Project Office revisedand rectified them and raised them to the Inner Mongolia Finance Department forrectification. The Project Office is responsible for bidding.

7.8 The Project Offices at different levels are responsible for supervising the progressof the project. Each quarter of the year a completion table was applied to the upper-leveled Project Offices till the Inner Mongolia Project Office. Each quarter of the year theInner Mongolia Project Office applied a completion table to the WB. That the Officefrequently communicated with the WB for guidance and support is an importantguarantee for a smooth implementation of the project.

VIII. PROJECT FUTURE OPERATION

8.1 After the project was turned over to the departments responsible for the work theProject Offices at all levels would be removed. The Foreign Economy Division ( sector )of Planning & Developing Commissions and Finance Departments at different levels willbe responsible for operating and supervising the project, urging the repay and render ofthe WB loan and coordinating problems occurred during the operation.

8.2 Governments at different levels will take actions to strengthen the repay ability ofdifferent project units and to guarantee a timely and sufficient repay to the WB.

IX. PROJECT MAIN EXPERIENCE

9.1 That the governments at different levels paid great attention to the project is thekey to the success of the project. They have been giving care and support to the projectand solved problems without delay.

9.2 That the close cooperation between all departments concerned and the positiveefforts of all project units are the foundation of the success of the project.

9.3 The help from the WB and the effective management of all the Project Offices atdifferent levels is the key guarantee to the success of the project.

- 70 - Appendix C

TABLE I. PROJECT APPRAISAL COLLECTION TABLE

A.TARGET REALIZATION ALMOST PARTIALLY NOT NOTREALIZED REALIZED REALIZED PRACTICAL

MACRO-POLICYDEPARMENT POLICY _

FINANCIAL TARGETSYSTEM DEVELOPMENT /TARGET IN KINDRELIEVING POVERTY CARE ABOUT WOMENOT'HER SOCIAL TARGET ENVIRONMENTAL TARGETSTATE-OWNED DEPARTMENTMANAGEMENTPRIVATE-OWNED DEPARTMENTMANAGEMENTOTHERS

B. PROJECT ENDURENCE POSSIBLE NOT NOT SUREPOSSIBLE

C. WB ACHIEVEMENT EXCELLENCE GOOD BADPROJECT SELECTION _ ___ ____

PREPARE FOR AIDING ____

APPRAISAL __SUPERVISATION __I_ ___ __

D.LOANER ACHIEVEMENT EXCELLENCE GOOD BADPREPARATION /IMPLEMENTATION/SITUATION OF ABIDING BY THE /CONTRACTFUTURE OPERATION /

E. APPRAISAL RESULT EXCELLENCE GOOD BADV I_ _ _ _ _ _ _ _ _ _ _ _ _ _

- 71 - Appendix C

TABLE II.

PROJECT TIME TABLE

STEPS IN THE PROJECT PLANNED DATE ACTUAL DATE/FINALAPPRAISAL

PROJECT SELECTIONPEEPARATIONPRE-APPRAISALAPPRAISALPOST-APPRAISALPUT FORWAD TO BOARDNEGOCIATION 1996.7 1996.7.18-7.21SIGNING THE CONTRACT 1996.10.16START TO BE EFFECTIVE 1996. 10PROJECT COMPLETION 1998.12CLOSING ACCOUNT 1998.12

TABLE 3PROJECT RENDER TABLE

USDTIME 1997 1998 1999APPRAISALACTUAL 20,785 6,715

MILLION MILLIONACTUALLY TO BE APPRAISED FINAL RENDER DATE X X_L_X

- 72 - Appendix C

TABLE 4

PROJECT INVESTMENT COLLECTION TABLE

PROJECT APPRAISAL COMPLETION COMPLETION ACCOUNTING

FOR APPRAISAL %

DOMESTIC FOREIGN DI Fl T DI Fl T

INVEST- INVEST- TOTAL

MENT (DI) MENT (Fl) (T)

EDUCATION 1,273.64 2,697.17 1,316.16

HYGIENE 263.19 658.11 921.3

HOUSING 254.76 567.7 822.46

PUBLIC FACILITY 436.66 865 1,301.66

EARTHQUAKE 4.3 20 24.3

OBSERVATION

TECHNICAL AIDS 2.85 7.9 10.75 s

PROJECT TOTAL 1,390.76 3,005.87 4,396.63COST

TABLE 5.

WB INVOLVED GROUPS TABLE

NO. TIME HEAD NUMBER OF WORK CONTENTMEMBERS

1 96.6.25-30 Mr. Daud Ahmad 7 Project investigation2 96.7.26-31 Mr. Daud Ahmad 3 Project starting3 97.2.23-27 Mr. Ken Rippin 3 Checking the project4 97.10.27-30 Mr. Geoffrey Read 5 Checking the project5 98.6.14-16 Mr. Ken Rippin 3 Checking the project

- 73 - Appendix D

APPENDIX D: BORROWER CONTRIBUTION TO THE ICR-YUNNAN

CHINALIJIANG, YUNNAN EARTHQUAKE RECONSTRUCTION PROJECT

CREDIT NO. 2307 -- CHAOCT. 16, 1996 -- DEC. 12,1998

COMPLETION REPORT

LIJIANG, YUNNAN EARTHQUAKE RECONSTRUCTION PROJECTOFFICEMARCH 25, 1999

CONTENTS

1. PROJECT OBJECT2. PROJECT BACKGROUND3. THE FACE EFFECT OF THE PROJECT4. EVALUATION ON PROJECT IMPECTION5. MAIN FACT TO IMPACT THE PROJECT6. PROJEC CONTINUITY7. WB'S ACHIEVEMENTS8. BORROW'S ACHIEVEMENTS9. PROJECT EVALUATION10. PROJECT FUTUTE OPERATION11. MAIN EXPERANCE AND LESSON OF PROJECT12. ATTACHMENT12.1 THE SUM OF PROJECT EVALUATION12.2 PROJECT SCHEDULE12.3 PROJECT PAYMENT12.4 PROJECT PUECHASING12.5 THE SUM OF PROJECT INVESTMENT12.6 PROJECT FINANCING12.7 COMMISSION OF WB

Average exchange rate of each year1996 SDR1.00=US$1.44 US$1.00=RMB8.30 YUAN1997 SDR1.00=US$1.36 US$1.00=RMB8.30 YUAN1998 SDR1.00=US$1.33 US$1.00=RMB8.29 YUAN

- 74 - Appendix D

Lijiang, Yunnan Earthquake Reconstruction ProjectCompletion Report

1. Project object

1.1 An earthquake of magnitude 7.2 happened in Lijiang on Feb. 1996. Mostseriously destroyed area of Lijiang area, Dali Prefecture and Diqing prefecture aremountain area where there are three minorities inhabitant. These areas are backward ineconomy. The total GNP in 1995 was RMB 2,000 Yuan per Capital. It only possessed2/3 of Yunnan province and 1/2 of China. The fiscal revenue of Lijiang area is RMB 106million Yuan and the expenditure is RMB 31.7 million Yuan. The fiscal revenue of Daliprefecture is RMB 552 million Yuan and the expenditure is 1155 million Yuan. Thefiscal revenue of Diqing prefecture is RMB 52 million Yuan and the expenditure is 207million Yuan. The earthquake made a loss more than RMB 4000 million Yuan andimpact on the local social economy development and people's normal living greatly. Thevolume of reconstruction is considerable. It's very difficulty to complete only dependingon local fund in a short time. Therefore WB gives help.

1.2 This project is one of the important compositions of Lijiang earthquakereconstruction project. It focuses on supporting the reconstruction of destroyed area andimpacting on the main field to develop. The reconstruction will conduce to consolepeople lived in destroyed area, recovery the normal production and people's living,promote the ability of helping by engaging in production and do spade work for futuredevelopment. The direct beneficiary from the project is 100 thousand. Most of them get amiddle income or a low income. Project's social benefit will be outstanding. Having beencompleted, the project not only can solve the education and medicine problem for 50thousand people, and 12 factories' production problem, but also can supply 23 thousandton of water for 2500 houses. It can deal with 30 thousand ton of polluted water, and 57thousand kW of generated energy and a road for 50 km's long. It as well as contributes toreconstructing on Lijiang old city, Mu family and Jianchuan gem mountain which are ofprotected units at county level and province level. It not only protects the unsteadyheritage, but also benefits to the recovery and development of tourism.

2. Project background

2.1 The project is the Guangdong agricultural development project and YunnanEarthquake Reconstruction Project that is helped by IDA loan.

2.2 The project consists of seven classifications (They are education, medicine,cultural heritage, basic facility, industrial and mining enterprise, electric power andtechnology help.), 2 batches, 53 subprojects. The total credit is SDR 29429700 which isequal to US$40141900.23, RMB 332119005.30 Yuan. It was arranged in four areas(Lijiang, Heqing, Jianchuan and Zhongdian) which are counties of three prefectures(Lijiang, Dali, and Diqing).

- 75 - Appendix D

2.3 The earlier work of the project is divided into four stages.

2.3.1 Setting up: After being investigated by WB in March, 1996, it was confirmed andset up.

2.3.2 Preparation: It was prepared by Construction Department of Yunnan Province,Finance Department of Yunnan Province and Economic Planning Committee of YunnanProvince.

2.3.3 Evaluation: WB commission evaluated the project officially in May, 1996.

2.3.4 Executing: WB negotiated with the delegation of Chinese government inWashington, U.S.A and Beijing, China in May, 1996 and in July, 1996. The loanagreement was signed up by both and went into effect. The expense, which happenedsince Feb. 3, 1996, can be rendered an account. The closed date is Dec. 31, 1998 whenthe project end.

2.4 According to the project agreement, total investment is RMB 456500 thousandYuan. It includes SDR 24240 thousand units from IDA credit, which convert intoUS$35000 thousand, possessing 70% of total investment.

2.5 IDA loan is transferred to People's Government of Yunnan Province by financebureau. Its annual rate is 2% and promising expense rate is 0.5%. The payment time is 17years, including 5 years for extending.

2.6 Adjustment in project middle term

2.6.1 During the executing, WB commission gives inspection twice a year. Consideringsupplying equipment for reconstruction project in destroyed area, through thecompleteness agreement, WB commission increases SDR 518970 thousand units whichconvert into US$7000 thousand.

2.6.2 Adjustment of project middle term: Considering the necessity and investmenteffect of the reconstruction, we adjust the former evaluation for the investment of threeenterprises after WB agreed.

Heqing agricultural machinery enterprise:Evaluated investment is RMB 400 thousand Yuan.Adjusted investment is RMB 1150 thousand Yuan.

Heqing paper mill:Evaluated investment is RMB 5600 thousand Yuan.Adjusted investment is RMB 3160 thousand Yuan.

- 76 - Appendix D

Heqing manganese mine enterprise:Evaluated investment is RMB 1100 thousand Yuan.Adjusted investment is RMB 6890 thousand Yuan.

Total:Evaluated investment is RMB 11200 thousand Yuan.Adjusted investment is RMB 11200 thousand Yuan.

2.6.3 During the evaluation, we get a scale on civil works and goods investment.However, there is some difference between this scale and the fact executing. Having beenagreed by WB, the loan on goods was increased SDR 3293261 units and the loan on thecivil works was decreased SDR 3293261 units. There is no change in the total loan.

2.7 Last investment of project

Investment classified by the use of projectcurrency unit: RMB 10 thousand Yuan

Project Project Total WB Loan Domestic PayableClassification Unit Investment Matched Funds

Education 19 9455 5907 3548Medicine 8 5407 3234 2173Cultural Heritage 4 6507 4855 1652Basic Facility 6 13546 8476 5070Industrial and Mining Enterprise 13 10060 6658 3402Electronic Power 3 5495 4064 1431Consulting 384 18 366Project Management feeTotal 53 50854 33212 17642

Classified by investing areacurrency unit: RMB 10 thousand Yuan

Project Classification Project Total WB Loan Domestic PayableUnit Investment Matched Funds

Lijiang area 25 30846 20642 10204Dizhi 13 11103 7452 3651Lijiang prefecture 12 19743 13190 6553Dili prefecture 17 11736 7169 4567Heqing county 11 9753 6000 3753Jianchuan county 6 1983 1169 814Diqing prefecture 11 8272 5401 2871Zhouzhi 3 4897 3387 1510Zhongdian county 8 3375 2014 1361Total 53 50854 33212 17642

- 77 - Appendix D

3. Project fact effect

3.1 The executing progress: The project agreement is in valid from Oct. 16, 1996. Itdefines the expense, which happened from Feb. 3, 1996 (the date that Lijiang earthquakehappened) to the date that the agreement validated, can be rendered an accountantretroactively. Therefore, from Feb. 3, 1996 to Dec. 31, 1998 (the closed date), the totalworking time is tow years and eleven months, 1061 days in all. During the period, allprojects have been completed and the total investment is RMB 508540 thousand Yuan,possessing 100% in the hole evaluation report. It concludes WB loan RMB 332120thousand Yuan. Having been checked after they are completed, all the buildings havebeen put into use.

3.2 The payment of WB loan: This project gets SDR 29429700 units of WB loan,converting into US$40141900.23 or RMB 332119005.30 Yuan. From the first paymenton May 7, 1997 to the last payment on Dec. 31, 1998, the replenishment was paid for 12times in all.

4. Project evaluation

4.1 The project is the first one to use WB loan to relieve the destroyed area inYunnan. It includes three prefectures' (Lijiang, Dali and Diqing) and four counties'(Lijiang, Heqing, Dali and Zhongdian) education, medicine, basic facilities, culturalheritage, factories, electronic power and technology help. There are 53 subprojects andmore than 400 works.

4.2 47 middle schools and prime schools are reconstructed. They provide a goodenvironment for more than 50 thousand teenagers to study. They stimulate teachers' zealon teaching and make students study hard. All of these factors promote the quality ofeducation quickly. This year, students who graduated from each school make a historicrecord on the exam for entering a higher school. Many minority students entered thefamous university.

4.3 Having been reconstructed, eight hospitals at prefecture and county level improvetheir facilities, promote their ability, decrease the difficulty in sending patients to a farplace to cure and increase the ability of local cure.

4.4 After five factories for supplying water and dealing with polluted water arereconstructed and the drainage pipeline about 50 km's long is restored, drinking water for200 thousand people and four county's environment are improved.

4.5 After irrigation and water conservancy, three hydropower station, road about 50km's long, 12 enterprises are reconstructed, the production in destroyed area andresidents' living condition become convenient.

- 78 - Appendix D

4.6 After three cultural heritage are rebuilt, the result is outstanding and gets praisefrom local residents. Local residents have a deep impression on WB.

4.7 Purchasing, bidding, designing, working, checking quality, rendering anaccountant, auditing, replenishing, organizing and managing on the project are praised byWB.

5. Main fact to impact on the project

5.1 Because the earthquake reconstruction covers more widely than WB loan projectinvolves, time is tight and the traffic in destroyed area is inconvenient and the climateeffects the weather, also because it is the first time for destroyed area to use WB loan torecover, the procedure is unknown. All of these factors lead to finishing the project moreslowly.

5.2 Because of the exchange rate, the evaluated loan, which bases on RMB, isn'treplenished thoroughly. The rest of the loan about 3% must be raised by subproject units.It adds difficulty to each subproject unit.

6 Project continuity

6.1 This project is the earthquake reconstruction project. Every subproject begins towork one after another and is completed and put into use early or late. Its social efficiencybegins to form. In order to enhance and improve the project results, each project unit willgo on strengthening the later management and make the project having more strongability to continuously developing.

6.2 Some of the subprojects' continuously developing lie on the law of state, such asthe law on factory's dealing with the polluted water and supplying using water. Theircharge standard must be checked and confirmed by government. Now government ineach area are designing the relative policy so that these project' results can bestrengthened and improved.

6.3 Because some of the subprojects lack funds for reconstruction, hospital's andschool's civil work is done in order of importance and urgency. These subproject units goon raising funds for adding equipment. There is more potential for the project to develop.

6.4 The project investing the recovery of cultural heritage not only restores andprotects these unsteady historic and cultural heritage but also considerably improves therecovery development of local tourism. With the earthquake reconstructing and thetourism developing, the name of destroyed area will be more and more well-known,especially the success on applying world cultural heritage for Lijiang old city. There were1700 thousand people to visit Lijiang in 1998. From now on, more and more people willvisit there with the further improving on environment.

- 79 - Appendix D

7. WB's achievements

7.1 The project involves many prefectures and counties. Work of project is small andworking time is tight. WB commission conquers difficulty such as traffic and gives greathelp on fund, information, technology guiding, project managing and operating. Theyensure work to be done successfully. Governments at all levels and people in destroyedarea are satisfied with the work of project selection, preparation, evaluation, supervisionand replenishment which are done by WB.

7.2 WB is excellent on the project confirming, evaluating and supervising during theworking on project. It is not long after earthquake happened in Lijiang, a supervisioncommission of WB led by Mr. Read was sent for the project on March 10, 1996. Later adelegation of WB led by Mr. Read was sent for the project on April 10, 1996 again. Bothof them inspected, evaluated and confirmed the project and made an Evaluation Reportwhich is regarded as a basement for the work.

7.3 During the working, WB send 2 or 3 supervision commissions every year. Thereare 10 supervision commissions, 42 people to come to Yunnan till the project iscompleted. The schedule for supervision commission is intense. WB officials start towork without having a rest as soon as they get off plane. In the day time, they inspect andtalk with officials of project office, staffs and local residents. They look over thereference and master the practice working. At night, they often hold a meeting to discusswork late into the night. WB gives a valid guide on technology, economy andorganization in time. Their attitude on work, their management way and their spirit ofworking hard give us a deep impression. They set up a model for us to study. Theworking on project practices a group of staffs to be good at managing and to be moreability.

8. Borrower's achievements

8.1 Under the leading with Yunnan Province Government, Lijiang earthquakereconstruction project group takes the leader. The vice-governor of Yunnan Province, NiuShao Yao is the chairman of this project group. The vice-leader of this group are the mainresponders coming from Finance Department of Yunnan province, ConstructionDepartment of Yunnan province, Economic Planning Committee of Yunnan province,and Civil Administration of Yunnan province. The rest officers of this group come fromEducation Committee of Yunnan province, Public Health Department of Yunnanprovince, Cultural Department of Yunnan province, Communication Department ofYunnan province and Hydraulic and Hydropower Department of Yunnan province. Thegroup also includes the Department of Yunnan province which helps the distressed andsuccoring those in peril. The group takes responsibility for major things which runthrough the hole project. Under its leading, there is a project office at province levelsetting up in Construction Department of Yunnan province, as a permanent organization.It responses for project's carrying out, management, supervision, inspection,coordinating, service and association. Lijiang area, Dali prefecture and Diqing prefecture

- 80 - Appendix D

and Lijiang county, Heqing county, Jianchuan county and Zhongdian county set upadministrative organ at second level and third level basing on province level. Theyprovide the reliable guarantee for project to be carried out smoothly.

8.2 As a administration to organize funds, Finance Department of Yunnan provinceresponses for financial management of the project which includes contracting credit,transferring credit, rendering on account, replenishing, getting back loan, paying backloan and arranging the raise of domestic payable matching fund. At the same time, itsupervises and checks the work on project. It also takes part in other management ofproject office.

8.3 Economic Planning Committee of Yunnan province responses for the project'ssetting up, auditing, and authorizing for feasibility since it is a construction and planningadministration. It also takes part in other management of project office.

8.4 As a construction administration, Construction Department of Yunnan provinceresponses for the work of project office. Its relative units give an irregular check andguide on project's planning, designing, constructing, supervising, managing and costing.It responses for organizing the reconstruction of the whole earthquake area.

8.5 Audit Department of Yunnan province responses for auditing. Through auditingand advising, it ensures the project is carried out successfully. It sends audit report to WBevery year.

8.6 Project's guide and service are responded by Education Committee of Yunnanprovince, Public Health Department of Yunnan province, Hydraulic and HydropowerDepartment of Yunnan province, Light industrial Department of Yunnan province andother relative organizations.

8.7 Every project construction unit has its responders. According to the pOroject'scontent, which is discussed and agreed by WB, and the basic domestic constructionmanagement procedure, constructing plan of the project is drawn up and reported andadmitted by county project office level by level after we set up and get the feasibilityresearching report, planning license, construction license and the procedures of project'ssite selection letter. Designing unit, construction unit and supervision unit on work'squality is decided by bidding. With the constructing progress, we render an account andreplenish fund to county project office according to the legal receipt. It is checked byproject office at every level and WB.

8.8 WB requires the contract involving the purchasing price over U.S.$200 thousandand the civil work's price over U.S.$100 thousand can be carried out after WB auditedthe bidding document, the evaluating report on bidding and WE gives adviceinnegatively. In this project, the civil work of Lijiang hospital (its total investment isRMB 12400 thousand Yuan), the equipment purchasing of Chongjiang hydropowerstation construction (its total investment is RMB 5990 thousand Yuan) and the evaluation

- 81 - Appendix D

on enviromnent of the paper mill in Lijiang county and Heqing county are performing thepreauditing procedure strictly according to the requirement of WB.

8.9 Project's purchasing is decided by the simple tending through comparing withthree enterprises. It saves time and cost and promotes the project to be finished in time.

8.10 In order to start the project successfully and ensure the project operation having ahigh speed and high efficiency, Finance Department of Yunnan province and the projectoffice hold class twice for project's starting (August, 1996 and November, 1996). Theclass is for training relative officials coming from the unit of Finance Department ofYunnan province and the project office. It defines the procedure of WB loan project. Theprocedure covers the designing way of purchasing plan, the accounting way on theproject and finance system, the procedure of drawing up and the management way onconstruction project. Through training, officials' professional level gets the furtherimproving. The training makes the construction on using WB loan has rules to obey.

8.11 In order to improve the work efficiency according to the advice given by WBofficials, 568 computers are equipped for project offices. Relative officials are trained onmanagement procedure and get a good result.

8.12 An inspection will be given when the project is completed. Project office requiresevery project unit giving an initial check when the project is finished and reported toproject office at county level to be inspected after the reference on project constructing iscollected. Those projects, which aren't checked and accepted by project office, can'treplenish the rest cost of the work. Therefore, the work in each area is put into useaccording to the predesigned use after they are checked and accepted successfully. Thesework make the investment yield well in time.

9. Project evaluation

9.1 After these project is done, the main facilities for school, hospital, drainagesystem, traffic, cultural heritage, industrial and mining factory and hydropower station getreconstructed in time. When these facilities are put into use, people's productioncondition and living condition in destroyed area are improved and promoted well.Because of the reconstruction investment, it establishes the basement on applying worldcultural heritage successfully for Lijiang. The historic and cultural value of Lijiang oldcity will rise.

9.2 During the work, WB's attitude and ways on working impact all people who areinvolved in this project. It establishes the basement on strengthening the firthercooperation between Yunnan and WB.

-82 - Appendix D

10. Project future operation

10.1 Each subproject unit of this project is charge for this project. The reconstructedbuildings are use as the fixed asset when they are finished and given the unifiedmanagement by the subproject unit.

10.2 After they help to finished the project audit and the relative policy is laid down,the project office at each level ends its work. The loan to each subproject is responded byitself according to the contract about converting finance into credit. The credit is paidlevel by level after it is paid back to finance department.

10.3 Finance Department of Yunnan Province is the highest organ to representgovernment of Yunnan province to supervise and make a promise on payment of creditand pay off the credit.

11. The main experience and lesson of the project

11.1 There are four pieces of experiences which are worth summing up and using forreference.

11.1.1 The attention paid by leaders, the closed organization and the means ofmanagement ensured the working on project.

11.1.2 Requiring strictly, organizing actively and working coordinately are the strongbasement of project to be done successfully.

11.1.3 Designing elaborately, comparing with many plans and using in time are essentialto save the construction investment and improve the effect of project.

11.1.4 Catching the opportunity, guiding with typical case and holding competition onstudying are the good ways to accelerate the project's progress.

11.2 There are two pieces of lessons which are worth summing up and using forreference.

11.2.1 Because of the change of national policy, it's difficult to change their type ofindustry after these industrial factories on forest are reconstructed.

11.2.2 The reconstruction time is tight and some of the preparation of the earlier workisn't careful. All of these factors affect the investment to yield well.

- 83 - Appendix D

Attachment 1

(a) Summary of project evaluation

Object's Realization Realized Realized Unrealized UnaptMainly Partly

Macroscopic Policy *

Department Policy _Financial Object

System DepartmentMaterial Object

Poverty DecreasePay attention to Woman

Other Social ObjectEnvironment Object *

Public Department's ManagementPrivate Department's Management _

Others r2 Project's Lasting Possible Impossible Undefined

3 WB's Achievements Excellent Fine NilSelected Project Raising Support *

Evaluation *

Supervision *

4Borrow' Achievements Excellent Fine NilPreparation *

Carrying Out _

Obey the AgreementFuture Operating

5 Results of Evaluation Excellent Fine Nil

- 84 - Appendix D

Attachment 2

(b) Project Schedule

The procedure in the project period Planning date Practice date/ Last estimateSelected project Feb. 10, 1996 Feb. 13, 1996

Preparation Feb. 13, 1996 Feb. 13, 1996Advanced evaluation

Evaluation March 29, 1996 March 29, 1996Later evaluation

Hand in to board of directions June 25, 1996 June 25, 1996Negotiation June 17, 1996 June 17, 1996

Signing Oct. 16, 1996 Oct. 16, 1996Valid Oct. 16, 1996 Oct. 16, 1996

Project completing June 30, 1998 Sep. 30, 1998Accountant closed Dec. 31, 1998 Dec. 31, 1998

Attachment 3

(a) Project Payment

currency unit: US$1Time 1996 1997 1998 1990 Total

Evaluation 9160000.00 17320000.00 15390000.00 3630000.00 42000000.00Practice 0.00 26420838.83 13721061.40 0.00 40141900.23

Practice possess evaluation (%) 0 152 89 0 96The last date for payment Nov. 15,1997 Dec. 31,1998

Notice: Because the exchange rate changed between US dollar and RMB, the practicepayment in US dollar is below the evaluation.

- 85 - Appendix E

APPENDIX E: CULTURAL HERITAGE ASSETRECONSTRUCTION COMPONENT-IMPLEMENTATION

MISSION REVIEW AND FINDINGS

Response to Natural DisasterIn the early evening of February 3, 1996, an earthquake measuring 7.0 intensity on theRichter Scale struck Yunnan Province. Three hundred and nine people were killed andmore than 4,000 people were seriously injured in Lijiang, Dali and Di Qing Prefectures.Some 410,000 housing units collapsed or were severely damaged and rooms in schools,hospitals and community facilities were destroyed. Buildings of local enterprises as wellas infrastructure such as bridges, power, water and telecommunication lines were severelydamaged. As of mid March over 90 percent of the households (302,000 people) in theaffected areas were in temporary housing and 1,200 schools were operating in tents orother temporary facilities.

The cost for reconstruction was estimated at $482 million. While this earthquake was nota major disaster by Chinese or world standards in terms of value of physical assetsdestroyed, its effects seriously threatened the regional economy .

The World Bank mobilized a loan via the Yunnan Earthquake Reconstruction Program,in order to assist in getting children back to school, adults back to work and health centersback in operation. An existing Bank credit was amended to enable $30 million inreconstruction support, including a $7 million Cultural Heritage component. The purposeof the loan was to help normalize life and economic activity in a much shorter time thanwould be possible with the limited local financial and material resources. It was also tosupport the use of cost effective earthquake resilient construction standards for housing,industry and infrastructure and rehabilitate the culturally and economically valuablehistoric assets in the area.

One of the most dramatic of these cultural assets is the old city of Lijiang, which wasdesignated as a UNESCO World Heritage Site in 1997. Lijiang, also know as Dayan OldTown, is an exceptional ancient city which represents the harmonious fusion of differentcultural traditions and architectural styles and ingenious accommodation to its naturalsetting. The town's historic landscape is enhanced by the fact that the Old City issurrounded by hills which protect and separate it from most 20th century development.These factors combined with the vibrant ethnic culture of Lijiang's people today make ita city of immense cultural value.

- 86 - Appendix E

Lijiang's Historic DevelopmentThere has been a continuous human presence in the area of Lijiang since Paleolithictimes. Situated in the foothills of the Himalayas, Lijiang's location was probably firstchosen for its excellent water supply and proximity to a series of strategic passes whichgive access to the plains. It has been a major trading hub since early times when it was astaging point for caravans on their way to India.

In the late 13' century, the local ruling family established their administrative center atthe foot of Shizi (Lion) Mountain. When the region came under Ming rule in 1382, theprefect at the time was given the surname Mu, and made a hereditary ruler. This familycontrolled the area for the next 340 years until 1723, when the Qing dynasty changed thepolicy on local rule and the native prefect was replaced by an imperial appointee. The citycontinued to prosper, and over the course of the centuries, it has maintained its position asthe political, economic, educational and cultural center in north-western Yunnan. Today itis considered an unique and valuable representation of ancient Chinese urban form,architectural heritage and cultural development.

Lijiang TodayLijiang Naxi Autonomous County, incorporated in 1961, is located in the northwesterncorner of Yunnan Province, and covers an area of 7,648 square kilometers. Set against thedramatic backdrop of Yulong Snow Mountain (5,590 m above sea level) Lijiang isknown for its beautiful scenery and moderate climate. The county has a great wealth ofbotanical resources. In the 1800s botanists .and more than 600 species ofmedicinal plants have been identified in the area.

Liijiang county is home to more than ten distinct national minorities including the Naxi,Lisu, Pumi, Han, Bai, Yi and Zang. The Naxi are the most populous ethnic group in thecounty, accounting for 56 percent or 184,000 people. Today, the population of LijiangOld City is 25,500 with 67% (17,000) of Naxi origin. About 30% of the residents are stillengaged in the traditional handicraft occupations and commercial activities such asmaking utilitarian items from copper, silver, fur and leather. Local textiles and wine arealso produced.

Urban Landscapes: The Impact of Cultural History and Natural ConditionsLand Use Patterns: Lijiang has not developed according to the same traditional patternused by most older Chinese cities on the Central Plains - the strict rectilinear layout ofgrid-like streets along a north-south axis. It has neither the rigid street pattern nor theusual city walls. Instead, its mountainous setting and the presence of numerous streamshave shaped streets and lanes which hug the hills in natural topographical patterns andtake full advantage of the natural water source. Five major streets in L~iiang radiate outlike wheel spokes from the commercial heart of the city, Sifangjie Square.

The Old City in Lijiang has a remarkable water supply system which flows from BlackDragon Lake at the foot of Xianshan Mountain to the city's north. The Yu River bringswater to the Shuangshi Bridge at the edge of town where it branches into three tributaries,

- 87 - Appendix E

the Eastern, Central and Western Rivers. From these rivers the water divides into anetwork of streams and channels, providing fresh water to every part of town. The cityalso has several "three eyed" wells with separate openings for drinking, cleaningvegetables and washing. Another feature of the water system, almost unique in the world,is Dayan's street cleaning mechanism. When a floodgate across the Western River, at thehighest point in town is opened, water flows to the lower Central River, washing thestreets in the process.

Three hundred and fifty-four bridges have been built to accommodate this water supplysystem and given rise to Lijiang's nickname, "The City of Bridges." These structuresrange in style from elaborate covered bridges and carved stone arches, to simple woodenplanks and stone slabs. Many have evocative names such as the One Hundred ArchesBridge.

Architectural Style: Lijiang residents have developed their own unique style of housingin response to local conditions and tradition. While the local architecture incorporates thefine design traditions of Han houses on the Central Plains, it has been strongly influencedand adapted by Lijiang's predominant minority group, the Naxi. Over time, localarchitectural designs have also incorporated the best ideas of other local minority groups,especially the Bai and Zhang. Innovative adaptations for such needs as earthquakeresistance, protection from the sun and precautions against flooding are hallmarks of thelocal architecture. However, the most striking feature of Lijiang's domestic dwellings isthe lack of uniformity. Rather than following the exact prescriptions used by mosttraditional Han houses, the layout of each house in Lijiang is specially adapted to its ownterrain to take full advantage of its site.

Lijiang has always been prone to earthquakes - there have been 10 major earthquakesrecorded since the 15* century. To resist these shocks, Lijiang's basic timber-framedhouses are built to be flexible and the upright timbers are canted slightly inward toincrease stability. Special construction techniques have been developed for the load-bearing points and joints so as to ensure that the frame survives even if the walls collapse.The frames are filled in with adobe walls on the ground floor and wooden planks on theupper floors.

The basic layout of the dwellings is that of the four sided compound with a courtyard inthe center. Open air balconies overlook the central courtyard from the second stories.Exterior walls are plastered and the roofs consist of dark gray tiles. Houses are usuallytwo storied, a little more than 7 meters high.

Special attention is paid to the decoration of homes, especially to gateway arches, screenwalls, doors, windows, balconies and roof beams. Most wooden elements such as beams,pillars, railings and eaves are elaborately carved with representations of lions, musicalinstruments, flowers, birds, fish and vignettes from folktales. The courtyards are pavedwith colored stones depicting the same images in mosaic patterns.

-88 - Appendix E

Living Culture: Today, Lijiang is known, not only for its natural beauty and architecturalinterest, but also its vibrant living culture. For example, traditional Naxi orchestras playfor their own enjoyment and perform for tourists almost daily. Women weave andembroider the traditional clothing which is still widely worn. Shamen of the Dongba, anancient animistic religion's still read the ancient scriptures. Although it is notquantifiable, the inhabitants have an obvious and positive sense of community and strongidentity with their urban environment.

Protection of the Living Culture, Urban Landscape and Natural EnvironmentRecognizing its unique natural and architectural assets, the city has a long history ofhistoric and environmental protection. Early in the Qing Dynasty, imperialannouncements decreed "forever compliance" protection measures for Lijiang'senvironment and religious buildings. Annals of Lijiang compiled during the QingDynasty contained detailed descriptions and drawings of the town's layout, water systemand architectural styles. The local population itself erected stone tablets at key points bothinside and outside the town, specifying measures to protect the watershed from erosionand contamination. Local songs and poems with lyrics advocating protection of the OldCity's water resources, streets and landscapes can still be heard today.

(63 ancient historic trees that are protected).

Protect Lijiang which represents the achievements of urban construction in ancient China.

LegislationToday, laws and regulations at the national, provincial and local level are being used toprotect the historic properties, sites and landscapes of Liijiang.* Article 22 of the Constitution of the People's Republic of China sets out, at the

national level, the obligation to protect "scenic places and historical sites, valuablecultural relics and other important historical and cultural heritage".

* At the regional level, "The Planning and Management Regulations for Yunnan Cities,1992" lays out regulations for the management, organization of responsibilities andrules for the preparation and implementation of urban plans with references to bothnew and historic areas.

. At the municipal level the "Protection and Management Regulations for Lijiang,Historical and Cultural City of Yunnan Province, 1994" establishes three culturalheritage protection zones in the Old City. Regulations of varying stringency are laidout according to the importance of the zones and penalties for non-compliance areestablished.

These laws are good in theory, however, experience has shown in other parts of Chinathat enforcement of the laws and norms has not been adequate to control development.The pressure brought to bear through the rapid expansion of construction and growing

- 89 - Appendix E

liberalization of the market economy is showing that revision and strengthening of thelaws is necessary.

Administration and ManagementAdministrative and management mechanisms have been designed for protecting the OldCity as well.* The Municipal Master Plan for Lijiang stipulates that development in the new city

and surrounding area must give full consideration to the space, scale and function ofthe Old City. The master plan has been instrumental in routing major new roadsaround the Old City and directing new development to the west.

* The Old Town Protection Plan de.veloped in 1988 contains, identifies and definesregulations for three heritage protection zones. In Zone I there is an absolute ban onall development and in Zones II and III there are strict controls on height andappearance of new development. Demolition is allowed only with special permission.The Protection Plan stipulates that development of the new city should be separatedfrom that of the old city. It also indicates that functions in the new city should servethe old one and improve the economics and living standards of the Old City.

• A near term engineering plan has been established to address the city's most pressingproblems. This includes work on a new drainage and sewerage system, installation oftourist facilities (toilets and landscaping), restoration of several main streets, anddemolition of buildings whose size and appearance is not compatible with thehistorical and cultural character of the Old City.

World Bank ProjectThe earthquake caused significant damage to the old city's buildings, bridges, paving andservice infrastructure. Residents' low income levels and dislocation by the earthquake putat serious risk the local efforts to restore and maintain this historic and scenic center.

To speed the earthquake recovery, the Bank worked with Lijiang's administration toaddress the needs of the displaced and poor population by providing loans and subsidiesfor home repair; advice and recommendations on repair and construction techniques suchas reinforcement of walls and foundations. The work focused on improving livingstandards while preserving the World Heritage quality of the buildings. Infrastructurework addressed street lighting, improved sanitary facilities, pollution control and accessfor fire fighting and other service vehicles.

Lijiang Old City Property and Infrastructure Reconstruction ProgramDamage to StructuresAs a first step in project planning a cultural heritage assessment was undertaken inLijiang to:

* assess the extent of damage to the historic buildings* assess action being undertaken to repair the damage;

- 90 - Appendix E

* evaluate the appropriateness of these actions in relation to the historic importanceof the heritage, its conservation and potential use; and

* assess the effectiveness of current administrative, institutional and legal systemsand controls required to deliver the project.

Damage to buildings was severe in some places and lighter in others, depending on thedirection of the earthquake's impact, the quality of construction and amount of supportprovided by adjacent buildings. The nature of the damage can be described as:

* Severe damage to internal structures, finishes and wall paneling;* Displacement of columns on their stone bases;* Destruction of mud brick walls that were:

inadequately tied to the timber structures;constructed without adequate reinforcement in the brick courses;constructed without adequate bonding between inner and outer wall surfaces; orconstructed of poor materials.

* Collapse of entire timber framed structures or their loss of vertical integrity• Displacement of roofing tile and loss of bond between tiles which compromised their

weatherproofing capacity.

The mission noted that the loose attachment between walling and timber frameadvantageously allowed the frames to shake without collapsing, although the mud brickwalls often did collapse independently, resulting in some injuries and deaths. Thetraditional carved and turned joinery also survived the earthquake and is repairable.

The Housing Repair Loan ProgramAn immediate response put in place to ameliorate the housing problem was a HousingRepair Loan Program. With World Bank funds the administration made loans availablefor a interest rate 2% per year repayable over 15 years with a 5 year grace period. Toreinforce the use of funds for emergency repairs a commitment charge of 1/2 percent peryear on the amount of credit not used in a "timely" manner.

Box with 2 women interviewed?(Loan Program details coming)

Modernizing Historic CitiesThe Need for Repair and Modernization GuidelinesGuidelines for Earthquake Resistance: The emergency nature of the disaster requiredimmediate action by any means possible. Authorities responded quickly to the emergencyby issuing the "Design and Construction Technical Requirements for Houses in LijiangPrefecture" on February 20, 1996. This set of guidelines for repair and reconstructionexplains the reinforcing techniques that should be used to strengthen housing to resistfuture earthquakes. Such as vertical and horizontal bamboo reinforcement poles in themud brick walls. Since many homeowners in Lijiang do not read sufficiently to

- 91 - Appendix E

understand the recommendations that are given it is important, this document wouldbenefit from editing and simplifying with more diagrams. There should also be moreinformation on how to consult the administration on construction situations that do notconform to the models described.

Considering the predictions that China is entering a 10-15 year period of increasedseismic activity, it is gravely important that there be wide dissemination of thesetechniques, sufficient training for homeowners and construction workers, effectivesupervision and control over work done.

Guidelines for modernization of housing and infrastructure. Another set of guidelinesis urgently needed to assist the residents of Lijiang Old City to upgrade and modernizetheir housing in order to:* Maintain the Old City's current population and way of life while at the same time

promoting a higher standard of living;* Enable current residents to modernize their housing without compromising their most

significant cultural asset - the urban landscape; and- Enhance the potential for sustainable tourism that benefits local residents and

provides a meaningful experience for tourists.

To maintain the current population: It is important to note that the Old City's homeswere severely substandard before the earthquake by comparison with what is found inmodern housing in the newer parts of the city. Nearly all buildings lack sanitationfacilities, many lack electricity, there are few cooking facilities that are both modern andsafe and there is no thermal insulation.

There are several possible scenarios for urban areas when these conditions exist and at thesame time the population has expectations for improved standards of living, as is the casein China today.* There will be inevitable pressure to alter and improve the old buildings as work

becomes affordable to the existing residents. If improvements are done on an ad hocbasis by individual families without clear guidelines and requirements for maintainingthe historic nature of the environment, Lijiang's chief cultural asset, its uniformlyhistoric cityscape, will be lost.

* Residents in the Old City, who have the means, will move to more modern housing innew Lijiang. This population is likely to be replaced by a. poorer population whichwill be, either financially unable or uninterested in maintaining these properties. Atthis point decay sets in and the entire physical and social structure of the Old City isin danger of collapse. As for tourism potential, without the community, the streets andlanes of the town become an artificial construct with no intrinsic life of their own,providing visitors with little experience of true historic value.

The adaptability of architectural space is the key to its long term attractiveness to theuser. The challenge is to repair earthquake damaged homes and develop and promote

- 92 - Appendix E

options to improve the internal environment of the Old City's buildings whilemaintaining the World Heritage quality of their interior and exterior design. Inadequacyof the houses to support modem life

For instance, most of Lijiang's homes currently have no insulation. Interiors are finishedwith paper glued over cracks in the open joints between walls and windows. In an areawhere temperatures drop below 100 Centigrade during three or four months of the year,consideration should be given to acceptable methods of imnproving thermal insulation.Effective and fire resistant insulation materials are available and could be incorporatedinto designs that are compatible with the timber framed and panel systems of the historicconstruction. Other issues such as sanitation and safe cooking facilities are much moredifficult to solve. A design study to develop appropriate and cost effective means ofupgrading housing is urgently needed. Once established these guidelines should beactively publicized and disseminated in the form of easy to understand design guides onconstruction and improvements.

To enhance the potential for tourism: These issues apply equally to the broader urbanenvironment. The present, extremely dense city plan lacks adequate access for firefighting and other service vehicles. The service vehicles which are used at the edges ofthe Old City damage property and pollute the area. Small scale non-polluting optionsneed to be identified by city authorities. In addition, there is virtually no street lighting.The future viability of the city for both residents and visitors requires attention to theseissues of safety, pollution control and access.

Guidelines for housing should include:* Construction improvements to increase safety and provide thermal insulation and fire

escape routes;* Safety and installation requirements for electrical, water supply, sanitation, drainage

telephone and television service;* Suggestions for aesthetic installation and concealment of pipes, conduits and wiring,

and the prevention of damage to the building;* Adjustrnents to the traditional layout of rooms to incorporate the requirements of

modern lifestyles;* Suggestions for the use of traditional materials and construction techniques.

Guidelines for the exterior urban environment should include:. Planning and design solutions for installation of street lighting and service

distribution (telephone, electricity) compatible with historic streetscapes.* Limitations on signage and other advertisements.

- 93 - Appendix E

Mu Family CompoundMr. Huang Naizhen, Mr. Gu Qi Wei

In the late Southern Sung Dynasty (1127-1279), the local ruling family established theiradministrative center at the foot of Shizi Mountain in the area that was to become knownas Dayan and later Lijiang. When the region came under Ming rule in 1382, the prefect atthe time was given the honorific surname Mu, and made a hereditary ruler. The next yearthe family began building its administrative compound, known today as the Mu Fu or MuMansion.

For the next 340 years each successive Mu prefect enlarged and embellished the22,000 m2 administrative center. The rectilinear site included administrative, ceremonial,religious, business, entertainment and domestic structures which progressed up ShiziMountain, culminating in an elaborate temple at the top of the hill.

In 1723, the Qing dynasty changed the policy on local rule and the native prefect wasreplaced by an imperial appointee. While the family remained influential, over the courseof the next three centuries, the compound gradually deteriorated. Many buildings weredestroyed or damaged by earthquakes and fire. After the formation of the People'sRepublic of China, some contemporary buildings were added to the site, existingbuildings were converted to government offices for 500 workers and eighteen familiesbecame permanent residents in the compound. The earthquake of 1996 caused furtherdamage to the site and local officials decided to use some of the earthquakereconstruction loan to restore the complex and develop it as a tourist destination.

The World Bank cultural heritage advice on the Mu Fu work emphasized that the historicvalue of the reconstruction work depends upon the completeness and reliability of theevidence for the reconstruction. Reconstructions must be historically correct andauthentic in order to:* be historically significant and valuable;* meet UNESCO standards for a World Heritage Site; and* present the site to the public so that they understand the nature of past lifestyles.* carry out valuable archeological work before the site is finished and no longer

available for excavation.

Because of the UNESCO standards for authenticity in World Heritage Sites, it was ofcritical importance to ascertain as much information as possible on the compound'sbuilding layout, construction techniques and architectural details and decoration beforeany demolition or adaptation work was begun. The means of obtaining this informationinclude:* Measured surveys of existing buildings and site layout;* Archaeological and ground level investigation;• Research of historical records including family papers (wills, letters) photographic

collections, municipal surveys, newspapers and other public and private archives;

-94 - Appendix E

Recording and archiving of all available evidence to justify the work done.

Preservation ProcessThe Mu group is doing their own record of the process and keeping a record of thedifficulties they found and how they dealt with them.Research and Documentation Process(Lijiang to supply)One characteristic of Chinese architectural detail and form which greatly assists theprocess of research for preservation is the tradition of following strict precedent of designaccording the approved style of the period and the rank of the building's owner.Did Professor Zhang Xin Ling and Mr. Liu Jiang Hui from the Yunnan ProvincialInstitute of Archaeological Research work on the site?Bringing in old trees to duplicate the mature gardens that existed on the site.Spent one year researching and defining the plan for the site.Went to the descendants of the Mu family for information and collaboration of details.Used archaeologists to determine the location and size of buildings.

Implementation ProcessMr. Huang Naizhen reports that he has been coordinating a work force of 3,600 people(2,800 off-site working in rock quarries and factories and cutting timber) and 1,600 on-site. The number of workers has been employed in order to meet the time constraints forthe project requirements for disbursement or spending the money.

Labor ForceMs. Zhang Xiu Qiang is typical of the women who are working at the Mu compound onsite preparation, digging and carrying heavy loads of soil. She lives in a village some30 km from the site and is paid on a daily basis coming to the site when she is not neededat home. She usually works seven or eight hours a day and earns 30 Y per day. Woodcarvers have come from Dali, He Qing and Sichuan the most talented usually get about100 Y per day. Several older men are volunteering at the site carving motivated by thefact that they are helping to preserve their Naxi heritage. Li Gui Cheng is a painter whoapplies the elaborate decoration to the Chinese roofs. He also finishes and paints themassive columns which hold up the roofs. He leamed his skills from his father and hisNaxi family has been doing this work for several generations. He has been invited to asfar away as Burma to restore columns there.

The team found that determining the correct color schemes for buildings was only part oftheir difficulties. They had difficulty actually achieving the colors which were historicallycorrect. They made at least 20 attempts before in a lucky coincidence a worker removingpaint that had been unsatisfactory only partially removed the pigment. When they paintedagain they achieved the desired color and had their process defined.

- 95 - Appendix E

Plans for Adaptive Reuse

The plan in November of 1998 included far less adaptive reuse for the buildings thanoptimal. The building once known as Ten Thousand Volumes is to be a library again,housing as much of the original collection as still exists on the second floor. The firstfloor will be a reception area and the third floor will be for reading and quiet study. Onepavilion which was once used for formal ceremonial occasions such as "receiving" theimperial laws will be used for presentations of Naxi traditional music. The otherbuildings will be furnished with Ming Dynasty period furniture and hung with the Muprefect's portraits and family trees.

Interpretation

Lijiang will train guides to present the site and will have signage at the site as well.Mr. Huang Naizhen will develop a book and Mr. Gu Qi Wei the chief architect for thesite will prepare a video. Both will be in at least Chinese, English and Japanese.

He Qing, Dali Prefecture, Middle School No. 1

The historic He Qing Middle School No. 1, founded in 1926, suffered typical earthquakedamage to end-gable walls, loss of roof tiling and displacement of walls and columns.However, within a week of the disaster, the school was functioning with activities movedinto the less damaged buildings and temporary structures.

At appraisal, six buildings were identified for project assistance that were part of thehistoric composition and critical to the functions of the present school. These consisted ofa Confucian temple (focal point of the historic area), an exhibition hall, two blocks ofteachers' dormitories, a student dining room and meeting room. During implementationBank Group missions reviewed and suggested revisions to the school's site developmentplans and gave advice on historic design and construction details. The school reports thatthey received Y 13.95 million in Bank Group funding, Y 8 million from the nationalmatching fund and raised Y 1.50 million themselves for a total project cost of Y 23.45million.

Jianchuan, Dali Prefecture, Jing Fen Park

Jing Fen Park is a 4.5-hectare area that contains many historic structures dating from theYuan, Ming and Qing Dynasties. Over several centuries the park has drawn families withnew babies to two of its most outstanding temples, one dedicated to the scholar Confuciusand the other to the famous military hero, Guan Yu. Here families pray that their childrenwill excel at either one or both of these endeavors. The park is also a popular site forinformal relaxation and recreation. It is ideal for quiet reading as well as large familygatherings. Numerous concerts, theater performances and festivals are held here in goodweather. The park has been designated as a Kunming EXPO '99 site visit. In preparation,a guidebook explaining the park's history and architecture has been developed.

- 96 - Appendix E

The reconstruction and repair of earthquake damage to the buildings was done for a totalof Y 3.6 million, with Y 2.1 million coming through IDA funding and the remainder fromnational assistance. Bank Group missions gave advice on historic conservation standardsand techniques and emphasized the need for an informative explanation of the site eitherthrough guidebooks or trained guides.

Project Strengths

Private Initiative and Energy and DeterminationIn November of 1998, a World Bank supervision mission visited Lijiang, Dali and DiQing Prefectures to evaluate progress on all subprojects funded under the loan. Themission found that the local authorities have substantially completed the reconstructionprogram identified at appraisal. The communities affected by the earthquake appear tohave substantially recovered from both the physical destruction and the emotional traumaof the disaster. Much credit is due to the Yunnan Provincial and Prefecture authorities fortheir excellent management skills and to the local communities for their energy andresilience.

Future WorkBecause of its distinguished architectural and environmental legacy Lijiang Old City hasbeen identified by the National government as a future center for tourism in the region.Tourism and the related commerce would provide important employment and otherincome generating opportunities to the area's low-income population. However, thoughtneeds to be given to what will happen to Lijiang's social fabric when large numbers oftourists visit the town bringing with them lifestyles, behavior and material goods that arein sharp contrast with local norms. Special efforts must be made to assure that theeconomic benefits of tourism are captured at the local level in order to maintain positiveattitude on the part of residents.

MAP SECTION

7 o0' \ 0so' 90' 10 110' 120 130

50' RUSSIAN FEDERATION

yX f, . . 50'

KAZAKHSTAN f

\r I J 7 HEILONGJIANG

> MONGOLIA') >. .H earbinUZBEKISTAN -- '

5IEKSTA > -SpM O N G O L I Ar

-~_ G ~ChcrQhunXe, KYRGYZ Urumqie) r IL IN

-"REPUBLIC J .I_ ~~~ , Y / vt R g >~~~~~~K~ Sbon>4 pg r "- ""

-~~ -"- - B~~~IOU / K$'~ LIAONING ZDEM 40

0 , t K )(' I N 11 A N G , IBRD 30368 H oh REP aa

-~~~~~~~~~~~~~~ha ' HEBEI '/'~~ oh & <un , Sh1 ozhu 0 K- 4C RERE P. OF

ThNmp o-produced by * * Taiyuae - KREAthe Mp Desin Unit of The X ___ *E ' '. 4 SHANXIJcWorld Ban. Teb-edories, ina

l nosnotiosnd o IN aGH A I in-) i-ti- -d, SHANDON -a.

on thd-nfrstieopshoono tis1mop donot imply en GANSU J . W ' %> gg; s ;SO; :Qf;;a0:;0

tho port of The World Book (\, t:1

Gr-op, -ny jdgment on the L Iioozkrs t; ;

or -ny endorsement or tv,-. 2- v l.Ji )AN-ccpt-nce f s-h , NSH-AANXP 0 ~ < N U>

boondories. X I Z A N G >> ' _ >" I 4 "- ') -Z A N G He 0

SICHUAN JHUBEI ,L' hasa 0 Chengdu Z H I

CHINA N' 1HNN JAGX >

INNER MONGOLIA AND 0 T GUI; U<

YUNNAN EARTHQUAKE 1 >vng® , , A 'i

* PROJECT SITE LOCATIONS- Y NN - GANXRECONSTRUCTION PRORAM Kumi 9 KON 2

® PROVINCE CAPITALS "- *N 0 .® NATIONAL CAPITAL ~"$~"~ItN

PROVINCE BOUNDARIES Z

INTERNATIONAL BOUNDARIES -0 V VIETNAM .

LAO PEOPLE'S 20 100 200 300 400 500 MILES t rEP 'I" 'A'N'

-< 00 00 600 800 KI O f ETERS THAILAND' \ 9 5 t j4AIPHIL^.I^^P; ^t t;TAA 0ND,-a 0 ~~~~~~~20'0 40'0 60'0 800 KILOMETERS "-,NSU

-a 1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~00' /"' o

, , +,. CHINA

WULATE-ZHONG 0) DA 'ERHANMAOMINGAN INNER MONGOLIA EARTHQUAKE- 74 *ULIANHEGI RECONSTRUCTION PROGRAM

_,YUAN , 44% 0 PROJECT LOCATIONS

IW-' UYUAN48 <> * +^* ^*__> 4 EPICENTER

,- - -' - - - - - - - COUNTY BOUNDARIESI , GU YANG

WULATE-QIAN Ql Y C WUCHUAN'ss u Yfang County

\\ Wula Te Is t 5t RUSSIAN *E) Front Banner E FEDERATION !

EPICENTERi C ./.

I BAOTOU SHI MONGOLAKun Dulun 0D ®Q ingSWDs!t, -, O-.- -

' District. SubJlrlban Distrtl ..HANGJIN 01 4- 10 (D (D~~ Dong e DistAct 1 0p~o

HANGJINQl | X * ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~TU/AOTE- | | W < AN^)

Dala Te Banner T- UMOTE-YOU 0 ZUO at =

/ ~~(shu fin zhao town)

DALATE QI

XZANG \ S{C~~~~~~~~~~~~~~~~~HUBEI }

This ocp wIr podonod byThis pN,oosgo U,iiofo Th. 8,, HUNAN4World Book. Th' boondodes. P4ne UCol.or, deno-ointions rnd *oy other inlorronoi-n rom.4p 1* 4 ZHUNGE'ER Ql 4 NooonI Capitol X PACIFIC

on th5 osop do not ioply, ooNG E4 A4OCA

theport of Th. World Baok DONGSHENG - - louoories /

G< or any eodrsn,ot or I FltnorlO 000Mc kxgostu of any errifty, O*__ 20 40 60 suo;L O ;V p,f a

bound7es ofcC YIJINHUOLUO Ql # KILOMETERS Booodones 5 P.OtVI4 I 4osss lo~~~~~~~~~~~pp- -6oI) __H_PP_N___O

Thnoo 'o prooo h Mop Dognip T100, d ~~~~~~CHINAXIZA ~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~th. port of Th. Wol ok r .oo op

Moo teritryro odosoionYUNNAN EARTHQUAKET. X-qAg .- t.-d-hRECONSTRUCTION PROGRAM

CASE STUDY

SICHUAN lm ~~~~~~~~~~~PROJECT PREFECTURES

-- MAIN ROADS

o SELECTED TOWN

I I 0~~~~~~~~~ SELECTED COUNTY SEATS

KILOMETERS ~~ ~~~~~ SEAT OF PREFECTURES

28-- .......... PREFECTURE BOUNDARIES

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

RUSSIAN FEDERATION

t Leap ~~~~~~~~~~~~~~~~~~MONGOLIA0 LIJIAN~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~II

MYA MAR N IANG i3~~~~~~~~~~~~~~~~~~~~~~~~~~~r2 )A

Ho i ~~~~QINGH-AI 0

•G5,ANSUsIAA's- A

XIZANG AreaE~ ~ AGA Coc

main~~~~~~~~~~~~~~~~~~o

X ONG Naii

Province GUJANOIGJN CBouedories ;a

0 - ~~~~~~~~~~~~~~Intern.tional o IT

~AOSHAN a C0 0 caBudre THAILADlG)LP

IMPLEMENTATION COMPLETION REPORT CHINA ......This is the Implementation Completion Report (ICR) for the Earthquake Reconstruction Program portion of the Guangdong Agricultural Development

Documents