China - Nanning Urban Environment Project - Implementation ...



Document ofThe World BankReport No:?ICR00003842IMPLEMENTATION COMPLETION AND RESULTS REPORT(IBRD-78980)?ON ALOAN IN THE AMOUNT OF US$100 MILLIONTO THEPEOPLE’S REPUBLIC OF CHINAFOR ANANNING URBAN ENVIRONMENT PROJECTApril 11, 2017Water Global PracticeChina and Mongolia County Management UnitEast Asia and Pacific RegionCURRENCY EQUIVALENTS(Exchange Rate Effective September 20, 2016)Currency Unit=Chinese Yuan (CNY)CNY 1.00=US$0.149US$1.00=CNY 6.672FISCAL YEARJanuary 1–December 31ABBREVIATIONS AND ACRONYMS LINK Excel.Sheet.12 C:\\Users\\wb328749\\Desktop\\Nanning\\ICR\\Abbreviation.xlsx Sheet1!R2C2:R28C3 \a \f 4 \h \* MERGEFORMAT ASEANAssociation of Southeast Asian NationsBODBiochemical Oxygen DemandCASTConventional Activated Sludge Treatment CODChemical Oxygen DemandCPSCountry Partnership StrategyDRCDevelopment and Reform CommissionEAEnvironmental AssessmentEIRREconomic Internal Rate of ReturnEMPEnvironmental Management PlanEPBEnvironmental Protection BureauFIRRFinancial Internal Rate of ReturnGDPGross Domestic ProductGNWCGuangxi Nanning Water Company Ltd.GUEPGuangxi Urban Environment ProjectICRImplementation Completion and Results ReportIRBMIntegrated River Basin ManagementISRImplementation Status and Results ReportM&EMonitoring and EvaluationMLASMinimum Living Allowance SubsidyMSBRModified Sequencing Batch Reactor O&MOperation and MaintenancePADProject Appraisal DocumentPAPProject-Affected PeoplePDOProject Development ObjectivePIUProject Implementing UnitPMOProject Management OfficeRAPResettlement Action PlanSBRSequencing Batch ReactorTATechnical AssistanceTNTotal NitrogenTPTotal PhosphorusWWTPWastewater Treatment PlantSenior Global Practice Director:Guang Zhe ChenPractice Manager:Sudipto SarkarProject Team Leader:Victor VazquezICR Team Leader:Toyoko KodamaCHINANanning Urban Environment ProjectTable of ContentsData Sheet TOC \h \z \c "Data Sheet" A. Basic Information PAGEREF _Toc479687576 \h iB. Key Dates PAGEREF _Toc479687577 \h iC. Ratings Summary PAGEREF _Toc479687578 \h iD. Sector and Theme Codes PAGEREF _Toc479687579 \h iiE. Bank Staff PAGEREF _Toc479687580 \h iiF. Results Framework Analysis PAGEREF _Toc479687581 \h iiiG. Ratings of Project Performance in ISRs PAGEREF _Toc479687582 \h xiH. Restructuring (if any) PAGEREF _Toc479687583 \h xiI. Disbursement Profile PAGEREF _Toc479687584 \h xii TOC \o "1-1" \h \z \u 1. Project Context, Development Objectives, and Design PAGEREF _Toc479698243 \h 12. Key Factors Affecting Implementation and Outcomes PAGEREF _Toc479698244 \h 43. Assessment of Outcomes PAGEREF _Toc479698245 \h 114. Assessment of Risk to Development Outcome PAGEREF _Toc479698246 \h 195. Assessment of Bank and Borrower Performance PAGEREF _Toc479698247 \h 206. Lessons Learned PAGEREF _Toc479698248 \h 227. Comments on Issues Raised by Borrower/Implementing Agencies/Partners PAGEREF _Toc479698249 \h 23Annex 1. Project Costs and Financing PAGEREF _Toc479698250 \h 24Annex 2. Outputs by Component PAGEREF _Toc479698251 \h 25Annex 3. Economic and Financial Analysis PAGEREF _Toc479698252 \h 30Annex 4. Bank Lending and Implementation Support/Supervision Processes PAGEREF _Toc479698253 \h 36Annex 5. Stakeholder Workshop Report and Results PAGEREF _Toc479698254 \h 38Annex 6. Summary of Borrower’s ICR and/or Comments on Draft ICR PAGEREF _Toc479698255 \h 39Annex 7. List of Supporting Documents PAGEREF _Toc479698256 \h 48Maps CHN36710, CHN36711, CHN37067 SEQ Data_Sheet \* ALPHABETIC A. Basic Information Country:ChinaProject Name:Nanning Urban EnvironmentProject ID:P108627L/C/TF Number(s):IBRD-78980ICR Date:12/19/2016ICR Type:Core ICRLending Instrument:SILBorrower:GUANGXI PROVINCIAL GOVERNMENTOriginal Total Commitment:USD 100.00MDisbursed Amount:USD 97.51MRevised Amount:USD 100.00MEnvironmental Category: AImplementing Agencies: NANNING PMO Cofinanciers and Other External Partners: n.a. SEQ Data_Sheet \* ALPHABETIC B. Key Dates ProcessDateProcessOriginal DateRevised / Actual Date(s) Concept Review:11/25/2008Effectiveness:10/22/201010/18/2010 Appraisal:06/01/2009Restructuring(s):09/27/2015 Approval:06/01/2010Mid-term Review:11/15/201311/25/2013 Closing:12/31/201506/30/2016 SEQ Data_Sheet \* ALPHABETIC C. Ratings Summary C.1 Performance Rating by ICR Outcomes:Moderately Satisfactory Risk to Development Outcome:Moderate Bank Performance:Moderately Satisfactory Borrower Performance:Moderately SatisfactoryC.2 Detailed Ratings of Bank and Borrower Performance (by ICR)BankRatingsBorrowerRatingsQuality at Entry:Moderately SatisfactoryGovernment:SatisfactoryQuality of Supervision:Moderately SatisfactoryImplementing Agency/Agencies:Moderately SatisfactoryOverall Bank Performance:Moderately SatisfactoryOverall Borrower Performance:Moderately SatisfactoryC.3 Quality at Entry and Implementation Performance IndicatorsImplementation PerformanceIndicatorsQAG Assessments (if any)Rating Potential Problem Project at any time (Yes/No):NoQuality at Entry (QEA):None Problem Project at any time (Yes/No):NoQuality of Supervision (QSA):None DO rating before Closing/Inactive status:Satisfactory SEQ Data_Sheet \* ALPHABETIC D. Sector and Theme Codes OriginalActualSector Code (as % of total Bank financing) Public administration - Water, sanitation and flood protection33 Other Water Supply, Sanitation and Waste Management3333 Wastewater Collection and Transportation3232 Sanitation3232 Theme Code (as % of total Bank financing) Environmental policies and institutions55 Pollution management and environmental health9090 Water resource management55 SEQ Data_Sheet \* ALPHABETIC E. Bank Staff PositionsAt ICRAt Approval Vice President:Victoria KwakwaJames W. Adams Country Director:Bert HofmanKlaus Rohland Practice Manager/Manager:Sudipto SarkarEde Jorge Ijjasz-Vasquez Project Team Leader:Victor Vazquez AlvarezTakuya Kamata ICR Team Leader:Toyoko Kodama ICR Primary Author:Toyoko Kodama SEQ Data_Sheet \* ALPHABETIC F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document)The project development objective is to assist Nanning Municipality, in Guangxi Zhuang Autonomous Region, in arresting further?deterioration of surface water quality in selected urban centers by expanding the coverage of wastewater treatment services,?carrying out environmental rehabilitation of rivers, and improving the institutional and regulatory capacities of the municipal?agencies.?Revised Project Development Objectives (as approved by original approving authority)The PDO was not revised.? (a) PDO Indicator(s)IndicatorBaseline ValueOriginal Target Values (from approval documents)Formally Revised Target ValuesActual Value Achieved at Completion or Target YearsIndicator 1: Direct project beneficiaries (number)Value (Quantitative or Qualitative) 02,500,0002,955,755Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 118% achieved. The indicator was added at the project restructuring in September 2015. Indicator 2: Percentage of female beneficiaries (%) Value (Quantitative or Qualitative) 04848.49Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 101% achieved. The indicator was added at the project restructuring.Indicator 3: Percentage of population in participating areas of Nanning Municipality served by wastewater collection?and treatment services (%) Value (Quantitative or Qualitative) 36.6077.175.589.19Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 118% achieved. The baseline and target values were also revised in the project restructuring. Indicator 4: Volume (mass) of BOD pollution loads removed by the treatment plants supported under the project (tons/year)Value (Quantitative or Qualitative) 6,4479,71510,305Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 106% achieved. The indicator was added at the project restructuring to (a) add up all the targets of?all the plants of the project and (b) account for more realistic influent wastewater characteristics. Indicator 5: Length of urban rivers in the project area rehabilitated (km) Value (Quantitative or Qualitative) 010.36610.366Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 100% achieved. The indicator was added at the project restructuring. Indicator 6: Improvement of institutional and regulatory capacities for environmental management Value (Quantitative or Qualitative) NoYesYesDate achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) Fully achieved. This includes modification of regulations on pollution control, preparation of a?strategic study, establishment of a monitoring system, and preparation of action plans. Indicator 7: Cost recovery of wastewater collection and treatment operations in Nanning Districts and County Seats?served by Guangxi Nanning Water Company (%) Value (Quantitative or Qualitative) 85100112Date achieved01/01/201006/30/201606/30/2016Comments (incl. % achievement) 112% achieved. The indicator was added at the project restructuring. It represents total revenue over operating cost and debt service. (b) Intermediate Outcome Indicator(s)IndicatorBaseline ValueOriginal Target Values (from approval documents)Formally Revised Target ValuesActual Value Achieved at Completion or Target YearsIndicator 1: Percentage of population in Jiangnan WWTP service area served by wastewater collection and treatment services (%)Value (Quantitative or Qualitative) 52.1077.1095.78Date achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) 124% achieved. Wording was revised in restructuring. Indicator 2: Removal of BOD by Jiangnan WTTP - Phases I and II (tons/year) Value (Quantitative or Qualitative) 6,44031,4518,221.88,558.5Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 104% achieved. The baseline and target values were revised in the project restructuring?to be more realistic for the characteristics of receiving wastewater. Indicator 3: Removal of COD by Jiangnan WTTP - Phases I and II (tons/year) Value (Quantitative or Qualitative) 12,39366,44516,17424,214.2Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (inclu. % achievement) Revised target 149% achieved. The baseline and target values were revised in the project restructuring to be more realistic for the characteristics of receiving wastewater. Indicator 4: Removal of TP by Jiangnan WTTP - Phases I and II (tons/year) Value (Quantitative or Qualitative) n.a.775202.2364.1Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 180% achieved. The baseline and target values were revised in the project restructuring to be more realistic for the characteristics of receiving wastewater. Indicator 5: Removal of TN by Jiangnan WTTP - Phases I and II (tons/year) Value (Quantitative or Qualitative) 7923,5441,887.02,242.1Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 118% achieved. The baseline and target values were revised in the project restructuring?to be more realistic for the characteristics of receiving wastewater. Indicator 6: Percentage of population in Wuming WWTP service area serviced by wastewater collection and treatments services (%) Value (Quantitative or Qualitative) 07583.42Date achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) 111% achieved. Wording was revised in restructuring. Indicator 7: Removal of BOD by Wuming WTTP (tons/year) Value (Quantitative or Qualitative) 02,816665.5894.5Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 134% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 8: Removal of COD by Wuming WTTP (tons/year) Value (Quantitative or Qualitative) 04,3891,275.51,774.3Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (inclu. % achievement) Revised target 139% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 9: Removal of TP by Wuming WTTP (tons/year) Value (Quantitative or Qualitative) 05132.861.4Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 187% achieved. The target value was revised in the project restructuring, but the?original target was also achieved by 120%. Indicator 10: Removal of TN by Wuming WTTP (tons/year) Value (Quantitative or Qualitative) 0273166.4198.1Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 119% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 11: Percentage of population in Binyang WWTP service area serviced by wastewater collection and treatments?services (%) Value (Quantitative or Qualitative) 07062.01Date achieved12/31/200812/31/201506/30/2016Comments (including % achievement) 88% achieved. Wording was revised in restructuring. Indicator 12: Removal of BOD by Binyang WWTP (tons/year) Value (Quantitative or Qualitative) 0715416.3417.3Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 100.2% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 13: Removal of COD by Binyang WWTP (tons/year) Value (Quantitative or Qualitative) 01,3051,021.8623.0Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 60% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater, but it was still too ambitious. Indicator 14: Removal of TP by Binyang WWTP (tons/year)Value (Quantitative or Qualitative) 01622.79.4Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 41% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater, but it was still too ambitious. Indicator 15: Removal of TN by Binyang WWTP (tons/year) Value (Quantitative or Qualitative) 015575.766.8Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 88% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 16: Percentage of population in Hengxian WWTP service area serviced by wastewater collection and treatments services (%) Value (Quantitative or Qualitative) 07077.24Date achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) 110% achieved. Wording was revised in project restructuring. Indicator 17: Removal of BOD by Hengxian WWTP (tons/year) Value (Quantitative or Qualitative) 0840293.9352.6Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 119% achieved. The target value was revised in the project restructuring to be more realistic for the characteristics of receiving wastewater. Indicator 18: Removal of COD by Hengxian WWTP (tons/year)Value (Quantitative or Qualitative) 01,205547.8808.9Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 147% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 19: Removal of TP by Hengxian WWTP (tons/year)Value (Quantitative or Qualitative) 01210.78.7Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 81% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 20: Removal of TN by Hengxian WWTP (tons/year) Value (Quantitative or Qualitative) 011753.487.5Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 163% achieved. The target value was revised in the project restructuring to be more realistic for the characteristics of receiving wastewater. Indicator 21: Percentage of population in Mashan WWTP service area serviced by wastewater collection and treatments services (%) Value (Quantitative or Qualitative) 06561.73Date achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) 94% achieved. Wording was revised in project restructuring. Indicator 22: Removal of BOD by Mashan WWTP (tons/year)Value (Quantitative or Qualitative) 019463.658.6Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 92% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 23: Removal of COD by Mashan WWTP (tons/year) Value (Quantitative or Qualitative) 0344163.5164.5Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 100.6% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater. Indicator 24: Removal of TP by Mashan WWTP (tons/year) Value (Quantitative or Qualitative) 043.21.7Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 53% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater, but it was still too ambitious. Indicator 25: Removal of TN by Mashan WWTP (tons/year) Value (Quantitative or Qualitative) 03527.212.2Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 44% achieved. The target value was revised in the project restructuring to be more?realistic for the characteristics of receiving wastewater, but it was still too ambitious. Indicator 26: Percentage of population in Shanglin WWTP service area serviced by wastewater collection and treatments services (%)Value (Quantitative or Qualitative) 06531.68Date achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) 48% achieved. Wording was revised in project restructuring. Water supply had expanded much faster than?wastewater services in the past five years (see para. 70). Indicator 27: Removal of BOD by Shanglin WWTP (tons/year)Value (Quantitative or Qualitative) 019253.623.9Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 44% achieved. Although the target value was revised in the project restructuring, the?volume of wastewater Shanglin WWTP receives is less than 50 percent of its capacity. Indicator 28: Removal of COD by Shanglin WWTP (tons/year) Value (Quantitative or Qualitative) 0340137.941.4Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 30% achieved. Although the target value was revised in the project restructuring, the?volume of wastewater Shanglin WWTP receives is less than 50 percent of its capacity. Indicator 29: Removal of TP by Shanglin WWTP (tons/year) Value (Quantitative or Qualitative) 042.71.8Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 66% achieved. Although the target value was revised in the project restructuring, the?volume of wastewater Shanglin WWTP receives is less than 50 percent of its capacity. Indicator 30: Removal of TN by Shanglin WWTP (tons/year) Value (Quantitative or Qualitative) 0352313.4Date achieved12/31/200812/31/201506/30/201606/30/2016Comments (incl. % achievement) Revised target 58% achieved. Although the target value was revised in the project restructuring, the?volume of wastewater Shanglin WWTP receives is less than 50 percent of its capacity. Indicator 31: Annual Net Revenue (after tax) of wastewater operations of the Guangxi Green City (Nanning) Water?Affairs Company (CNY million) Value (Quantitative or Qualitative) 134.1377.1424Date achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) 112% achieved.Indicator 32: Length of Fenghuang river rehabilitated (km) Value (Quantitative or Qualitative)03.213.21Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 100% achieved. This indicator was added at the project restructuring. Indicator 33: Pollution in Fenghuang River of COD (tons/year) Value (Quantitative or Qualitative) 1,000800695Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 152% more pollutant removed. This indicator was replaced with TP reduction, as it is more appropriate?to monitor for the characteristics of domestic wastewater. Indicator 34: Pollution in Fenghuang river of NH3-N (tons/year) Value (Quantitative or Qualitative) 300240175.6Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 207% more pollutant removed. This indicator was replaced with TN reduction, as it is more appropriate?to monitor for the characteristics of domestic wastewater. Indicator 35: Length of Lianqin and Lengtang rivers rehabilitated (km) Value (Quantitative or Qualitative) 07.1567.156Date achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) 100% achieved. This indicator was added at the project restructuring. Indicator 36: Revision of laws and regulations for river pollution control. Value (Quantitative or Qualitative) InitiatedCompletedCompletedDate achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) Achieved. The pollution regulations for the Yongjiang River Reach Basin were revised and approved on July 24, 2014. The client decided to prepare the detailed regulations on pollution control after the National Water Pollution Control Law was updated.Indicator 37: Development of strategic study on improving water ecological environment of the Yongjiang River reachValue (Quantitative or Qualitative) InitiatedCompletedCompletedDate achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) Achieved. Indicator 38: Development of pollution control action plans for Fenghuang River, Liangqing River and Lengtang River. Value (Quantitative or Qualitative) InitiatedCompletedCompletedDate achieved12/31/200812/31/201506/30/2016Comments (incl. % achievement) Achieved. Indicator 39: Establishment of a water monitoring system for the Yongjiang River Value (Quantitative or Qualitative) InitiatedYesYesDate achieved12/31/200806/30/201606/30/2016Comments (incl. % achievement) Achieved. This indicator was added at the project restructuring. SEQ Data_Sheet \* ALPHABETIC G. Ratings of Project Performance in ISRsNo.Date ISR ArchivedDOIPActual Disbursements(USD millions) 106/27/2011SatisfactorySatisfactory10.00 204/08/2012SatisfactorySatisfactory44.40 304/22/2013Moderately SatisfactorySatisfactory67.66 410/28/2013Moderately SatisfactoryModerately Satisfactory75.06 506/14/2014Moderately SatisfactoryModerately Satisfactory75.06 612/10/2014Moderately SatisfactoryModerately Satisfactory78.94 706/13/2015Moderately SatisfactoryModerately Satisfactory89.40 812/14/2015Moderately SatisfactoryModerately Satisfactory93.56 905/26/2016SatisfactorySatisfactory97.24 SEQ Data_Sheet \* ALPHABETIC H. Restructuring (if any) Restructuring Date(s)Board Approved PDO ChangeISR Ratings at RestructuringAmount Disbursed at Restructuring in USD millionsReason for Restructuring & Key Changes MadeDOIP 09/27/2015NMSMS89.40Restructuring included the following changes (a) revising the project scope, particularly in Component?2 which reduced the length of the Fenghuang River rehabilitation by 1.63 km or 14% due to a significant delay in construction, caused by complex resettlement and land acquisition process; (b) updating project costs and financing plan; (c) reallocating loan proceeds?among disbursement categories, particularly from the categories of ‘goods’ and ‘consulting services’ to the category of ‘works’?due to some variation orders during construction in the wastewater management component; (d) extending the loan closing date by six?months to complete the remaining work under the river rehabilitation component; and (e) revising the Results Framework and?singling it out from the Project Agreement and converting it into a stand-alone document. SEQ Data_Sheet \* ALPHABETIC I. Disbursement Profile1. Project Context, Development Objectives, and Design 1.1 Context at AppraisalGuangxi Zhuang Autonomous Region (Guangxi) is located in the south of China, bordered by Guangdong, Guizhou, Hunan, and Yunnan Provinces, as well as Vietnam. Surrounded by Karst Hills, the region has suffered from infertile land and low levels of infrastructure. Guangxi is home to 14 million Zhuang people, the largest minority ethnic group in China. It has enjoyed rapid economic growth in the last 20 years, driven by investment in and development of the manufacturing sector in neighboring Guangdong Province, growing trade with Association of Southeast Asian Nations (ASEAN) countries, and a strong emphasis by the National Government on developing Guangxi, as well as the growth of tourism industries in the northern part of the province. As the capital of Guangxi, Nanning has been the most prosperous city in the province. The Nanning City jurisdiction consists of six urban districts and six counties, with a total area of 22,180 km2, including 6,500 km2 of urban area. Nanning’s population grew from 2.7 million in 1995 to 6.8 million in 2007, and its main industries were agriculture, food processing, electronics, machinery, chemicals and paper, and construction supplies. The average gross domestic product (GDP) per capita rose from CNY 6,331 in 1995 to CNY 15,685 in 2007. Nanning is rich in water resources. Located in the subtropical monsoon zone, its average annual precipitation is between 1,240 and 1,750 mm. The central urban districts are situated in a basin of the Yongjiang River, with annual average flow of 1,290 m3 per second. Together with 18 tributaries in urban areas, these waterways form the Yongjiang River Network, which is an important source of drinking water for Nanning. However, the recent economic development and population growth have produced over time an increase in the wastewater that is generated and discharged without treatment. At the time of project appraisal, two existing wastewater treatment plants (WWTPs)—Longdong WWTP and Jiangnan WWTP—in the central urban areas collected and treated only about 44 percent of the total sewage volume of 643,000 m3 generated daily in the urban areas. As most of the wastewater was not treated, the surface water quality of the Yongjiang River was Class IV, which is the second lowest in the scale. The situation was even worse in county-seat townships. All, except Long’an County, lacked wastewater collection or treatment systems, and it led to degradation of water quality in local rivers. About 51 percent of pollution in the central urban districts of Nanning and over 90 percent in the county-seat towns originated from domestic wastewater. Expanding the coverage of wastewater treatment services and carrying out environmental rehabilitation of rivers was, therefore, a sound and acutely needed approach to addressing the water quality issue at appraisal.Nanning also needed to strengthen the registry, coordination, and management capacities of its local institutions in charge of river management by establishing or revising regulations, strategies, action plans, and a monitoring system based on an integrated river basin management (IRBM) approach for the Yongjiang River Network. Before the project, the institutional management system was fragmented, with no clear responsibilities or accountabilities for the pollution control of the 18-tributary river basin. Hence, the City Government sought support from the World Bank to finance the Nanning Urban Environment Project.The project was aligned with the World Bank’s Country Partnership Strategy (2006–2012), particularly with respect to its objective of ‘improved natural resource management, to reduce degradation and depletion’ under ‘Pillar 3: Managing Resource Scarcity and Environmental Challenges’. The objective aimed to promote the provision of more efficient water and energy supply systems by expanding urban wastewater collection and treatment facilities and to improve land and water resource management.The World Bank’s long engagement with Guangxi, as well as its experience in and knowledge of urban environmental management in China, positioned it well to support Guangxi in tackling its urban environmental challenges. Previously, the World Bank had financed the Guangxi Urban Environment Project (GUEP, IBRD-4348-CN and IDA-3097-CN), which was implemented from 1998 to 2007 to support water resources, waterways, and pollution management, and environmental health. The project that is the subject of this report was a continuation of the GUEP. 1.2 Original Project Development Objective (PDO) and Key Indicators (as approved)The Project Development Objective (PDO) was to assist the Nanning Municipality, in Guangxi Zhuang Autonomous Region, in arresting further deterioration of surface water quality in selected urban centers by expanding the coverage of wastewater treatment services, carrying out environmental rehabilitation of rivers, and improving the institutional and regulatory capacities of the municipal agencies.Key indicators in the Project Appraisal Document (PAD) were (a) reduction of pollution discharge into surface water, (b) percentage of the population in participating areas of the Nanning Municipality served by wastewater collection and treatment services, and (c) development of a strategic study on the ecological water environment and the implementation of pollution control action plans. The Results Framework also included surface water quality of the Yongjiang River at upstream and downstream boundaries of the municipality, for reference.1.3 Revised PDO (as approved by original approving authority) and Key Indicators and Reasons/JustificationThe PDO was not revised but the Results Framework was. The intermediate outcome indicators were revised to incorporate core sector indicators and to make the targets for pollutant reduction more realistic for the characteristics of the wastewater received at each WWTP. All the changes were included in a project restructuring undertaken in September 2015 toward the end of the implementation of the project (see section 1.7 for details). 1.4. Main Beneficiaries The primary beneficiaries were people living in the service areas of the six WWTPs and along the three rivers to be rehabilitated—namely, the Fenghuang River, the Liangqing River, and the Lengtang River. At the project restructuring in September 2015, the number of direct project beneficiaries was calculated as 2.5 million, 48 percent of whom were female. At project closing, they numbered about 2.96 million, with 48.5 percent female. Secondary beneficiaries were agencies and government institutions that implemented the project and benefited from project activities, such as capacity building and policy support. They included Guangxi Nanning Water Company Ltd. (GNWC), Nanning Xiangsihu Investment and Constructions Company Ltd., Nanning Communication and Water Conservancy Investment Company Ltd., the Nanning Environmental Protection Bureau (EPB), the Nanning Water Resource Bureau, and the Nanning Municipal Government.1.5 Original Components (as approved)The project consisted of three components, with an estimated total cost of US$235.33 million, including an IBRD loan of US$100 million, at the time of ponent 1: Wastewater Management (estimated cost US$90.64 million, of which IBRD financing provided US$64.93 million) This component had two parts:Expanding the treatment capacity of the existing Jiangnan WWTP from 240,000 m3 per day to 480,000 m3 per day (Jiangnan Phase 2) to reduce the discharge of untreated sewage into the Yongjiang River.Establishing wastewater collection and treatment facilities in Binyang, Hengxian, Manshan, Shanglin, and Wuming Counties, including rehabilitation and/or installation of 84.9 km of primary and secondary sewers with diameters ranging from 300 to 1,650 mm; installation of eight sewage lift pump stations; and construction of five WWTPs, with a total treatment capacity of 102,000 m3 per ponent 2: River Rehabilitation (estimated cost US$105.71 million, of which IBRD financing provided US$32.77 million)This component had one part: improving the storm water drainage capacities and the environments of the Fenghuang River, the Liangqing River, and the Lengtang River through various river improvement measures, including cleaning up river courses (totaling 14.245 km), restoring retention ponds, enhancing embankments, and providing sewer ponent 3: Technical Assistance (estimated cost US$2.05 million, of which IBRD financing provided US$2.05 million) This component had two parts:Establishing an integrated mini-river basin management system for a section of the Yongjiang River Basin within the Nanning Municipality.Strengthening the project management capacity of the Nanning Project Management Office (PMO), located in the Nanning Development and Reform Commission (DRC), and the project companies through the provision of technical assistance (TA), training, and study tours.1.6 Revised ComponentsThe following changes were made to the scope of the project during implementation (see annex 2 for details):Under Component 1, the total length of sewers and the number of lift pump stations were reduced to 56.46 km (66.5 percent of that originally planned at appraisal) and five pump stations (62.5 percent), respectively, due to optimization of designs and changes in urban development plans of counties and geological conditions.Under Component 2, the total length of rivers to be rehabilitated was reduced to 10.36 km (72.7 percent of that originally planned), due to changes in designs and difficulties in land acquisition. In particular, rehabilitation of 1.63 km of the lower stream of the Fenghuang River was canceled due to significant delay caused by a complex resettlement and land acquisition process. The PMO and the Nanning DRC requested the cancelation through an official letter dated August 11, 2015. The canceled parts would be rehabilitated by the client, using own resources, beyond the project period. Rehabilitation of 2.17 km of the Liangqing River was also canceled because of changes to the engineering design of the river. Instead, Wuxiang Lake was constructed. The change was requested by the PMO during the supervision mission of November 2011. Under Component 3, the preparation of detailed regulations on pollution control was canceled because the National Water Pollution Control Law had not yet been updated. The Nanning EPB decided to wait for the updated law to be issued because it would serve as the basis for the detailed regulations.1.7 Other Significant ChangesThe project had a level II restructuring approved in September 2015 to accommodate the changes in project components, as described above. The restructuring also included the following:Loan proceeds were reallocated. In particular, about US$13.4 million from the category of ‘goods’ and US$0.7 million from the category of ‘consulting services’ were reallocated to the category of ‘works’ to cover higher construction costs under Component 1.Changes were made to project costs and the financing plan to reflect revisions in scope and outputs for some subcomponents. The Results Framework was updated with four changes: The addition of PDO indicators and their targets to reflect better the outcomes of project activities and comply with core sector indicators The updating of targets corresponding to wastewater-related indicators for all six WWTPs funded under the project, as the original targets overestimated pollutant loads in the inflow wastewater The modification of indicators related to Component 2 at the intermediate indicator level to reflect better the outputs from project activities The singling out of the Results Framework from the Project Agreement to be a stand-alone document The closing date was extended by six months to complete the remaining activities under Component 2. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at EntrySoundness of background analysis. Deterioration of water quality has been one of the biggest environmental problems affecting many fast-growing urban areas in China, particularly in county-seat towns where basic urban infrastructure is lacking. The World Bank worked on the issue of degradation of water quality in the GUEP, which preceded this project and provided substantive information on the sector, the project areas, and the stakeholders. The information served as background analysis for this project to build upon. This project, especially the river rehabilitation component, also drew upon the ‘Planning Report for the River Course Improvement of Rivers inside Nanning City of Guangxi Zhuang Autonomous Region’, which was prepared jointly by the Nanning Renaissance and Design Institute and the Pearl River Commission to define urban development principles in line with the Nanning City Development Master Plan (2008–2020). The project also established a platform for applying an IRBM approach—a new concept for Nanning—for the Yongjiang River Network under Component 3. Before the project, the institutional management system of the Yongjiang River Network was fragmented and poorly coordinated. To support the city, the project drew on good practices and approaches from other countries that were illustrated in external and internal World Bank reports, such as ‘Managing Lakes and their Basins for Sustainable Use’, published by the International Lake Environment Committee in 2005, and ‘Lessons for Managing Lake Basins for Sustainable Use’ (Report No. 32877), published by the World Bank. These good practices included having institutional information management and monitoring systems, strengthening coordination and having clear responsibilities and accountabilities among different stakeholders and governmental agencies, and enforcing regulations and laws in basin-wide areas.Implementation readiness. The project considered some key lessons learned from the GUEP, as well as other sector works, at appraisal. The main lesson from the GUEP was to avoid initial delays incurred by a detailed design and procurement process. Under this project, the client streamlined the design processes and agreed with the World Bank on key design parameters for the WWTPs before project approval so a design institute could start detailed design after the Government approved feasibility studies. Moreover, the PMO decided not to have any turnkey contracts under the project to avoid delays in the preparation and approval processes.On technical and design aspects, the PMO and the World Bank team followed the recommendations of sector works included in the ‘China Urban Portfolio Review’ (2010), reviewing design parameters for the wastewater treatment facilities thoroughly. Particular attention was paid to hydraulic load to avoid overestimation of demand and excess design capacity of treatment plants, which would lead to underutilization of facilities and higher costs for construction and operation and maintenance (O&M). As a result, the capacity of Shanglin WWTP was reduced from 10,000 m3 per day to 6,000 m3 per day and that of Binyang WWTP from 30,000 m3 per day to 20,000 m3 per day. Nevertheless, the biological load of inflow wastewater should have been more carefully examined, so the design parameters and targets in the Results Framework could have been more realistically set (see sections 2.3 and 3.1 for details). With regard to its components, the project emphasized wastewater management, which seemed appropriate given that domestic wastewater was the major source of surface water pollution and managing it directly contributed to the achievement of the PDO. On the other hand, the river rehabilitation component was less pertinent because only the Fenghuang River had intercepting sewers, while the other two rivers did not. This made contributions to pollution removal from the two rivers difficult to measure (see section 3.2).Assessment of risks. The overall project risk was rated as Modest at appraisal, which seemed appropriate, and these risks were successfully addressed. The risk from the complexity of resettlement related to river rehabilitation was rated as Modest, which turned out to be an underestimation, given the magnitude and complexity of the issues (see sections 2.4 and 2.5 for details). Other risks identified were ‘low sustainability of wastewater treatment operations due to compromises in construction quality’ (Low risk) and ‘lack of improvement in water quality due to weak control of nonpoint source pollution and industrial pollution’ (Modest risk). Indeed, the construction quality of the WWTPs was satisfactory, with no major technical or operational issues. One of the contributions of the TA component was to establish a clear strategy and action plan that allowed the Nanning Municipal Government to control nonpoint source pollution. These risks, therefore, were successfully mitigated under the project.2.2 ImplementationOverall implementation. The project had an efficient start due to upfront preparation of the physical components, particularly under the wastewater management component. Most physical activities under this component were completed within the first 15 months, and more than 75 percent of the loan was disbursed by the midterm review, conducted in November 2013. During implementation, design optimization and adjustment in urban development planning brought about several changes to the outputs of the wastewater management component. As a result, three pumping stations were optimized, and sewer pipeline was reduced by 28.44 km (or 33.5 percent). No loan savings derived from these changes because the actual construction costs for Component 1 were 11 percent higher than the estimates made at project appraisal (see annex 1). The rest of the activities were also implemented successfully but with some delays due to some complex resettlement and land acquisition issues under the river rehabilitation component. Most of the resettlement issues were resolved by June 2015, and the project restructuring was approved. The restructuring also triggered reallocation of loan proceeds among different disbursement categories, which unlocked some of the pending actions and helped the project to get back on track (see Project Restructuring section for details). The integrated mini–river basin management subcomponent under the TA component had a slow start, but it quickly progressed successfully once the consultants were hired, and all the planned activities were completed by December 2015 with satisfactory results. Overall, the project closing date was extended by six months to complete the river rehabilitation component. All the physical and institutional planned activities were completed by the end of June 2016.Implementation arrangements. The implementation arrangement for the project was established at appraisal, and it worked efficiently throughout the implementation. Each component had a different Project Implementing Unit (PIU): GNWC for Component 1; the Nanning Xingsihu Investment and Constructions Company Ltd. and the Nanning Communication and Water Conservancy Investment Company Ltd. for Component 2; and the Nanning EPB for Component 3. Fee collection. At appraisal and up until 2015, GNWC collected and retained all wastewater fees in Nanning. During the period, GNWC made agreements with the local governments of individual county towns to provide further compensation for collection and treatment costs to the company, as the full cost of wastewater treatment could not be recovered through the collection of fees in these small towns. In 2015, GNWC made the latest agreements with the local governments, in which all wastewater fees collected by GNWC should be turned over to the Government, and the Government will pay ‘treatment fees’ to the company based on the volume of wastewater treated. This change worked in favor of GNWC and the overall project because the company could negotiate to increase the fees with the local governments and keep the Wastewater Division profitable, even though the service was expanded to smaller county-seat townships (see section 3.3 for details).Listing of GNWC. Besides the change in fee collection, another change was the listing of GNWC on the Shanghai Stock Exchange in 2015, partly to increase the company’s capital base. Before the listing, the Nanning Jianning Water Group, a wholly state-owned company, held 75 percent of the company’s shares. Currently, it owns 58 percent. Other shareholders include private investment funds that own a total of 20 percent of the shares, while smaller investors own the remaining 22 percent. Due to the public listing, detailed financial information is not provided in this report.Midterm review. The midterm review, conducted in November 2013 as planned, highlighted two critical issues. First, the resettlement and land acquisition issues became complex due to the concurrent activities of the Bank funded project and domestic projects under the urban master plan which led to delays. At the time of the midterm review, there were six main factors causing these delays: A lengthy compensation process from a previous project implemented by the Government Slow construction of resettlement houses The need for restoration of livelihoods The question of compensation for illegal structures Slow land acquisition from state institutions Frequent changes in local city planning and government public infrastructure programsAt the time of the midterm review, the physical progress was about 20 percent for the Liangqing and Lengtang Rivers and 3 percent for the Fenghuang River. The World Bank team called for better collaboration and coordination among the different organizations regarding resettlement and land acquisition issues under the river rehabilitation component. The PIU and the World Bank team therefore discussed and agreed on an action plan to overcome most of the issues above, as well as closely monitor and accelerate the resettlement process. The second critical issue highlighted by the midterm review was the compliance of sludge management with environmental safeguards. Of particular concern were the discharge of wastewater from a dewatering plant, and groundwater infiltration and leakages in the final sludge processing plant. Previous missions had identified these issues and discussed recommendations and an action plan. Based on this information, the World Bank team reviewed the progress toward the agreed-upon actions, provided further recommendations and next steps. All the issues were resolved by the project closing.What the midterm review did not discuss was the excessively high targets for pollution reduction in the six WWTPs and the need for project restructuring. The question of high targets arose from a low concentration of pollutants in inflow wastewater. The PIU could not define the revised targets by themselves due to lack of in-house capacity, although the issue of unrealistic targets was pointed out during the November 2011 mission, the matter was not addressed immediately. In October 2014, the Bank mobilized a technical expert to study the issue in more detail and help the client to calculate reasonable targets.Project restructuring. Although the discussion on restructuring started as early as June 2014, it was delayed until the realistic targets were determined for the WWTPs, as mentioned above, and due to the need to resolve pending resettlement and land acquisition issues identified by the World Bank mission in January 2015. The January 2015 mission revealed a series of unresolved issues related to land acquisition and resettlement under the river rehabilitation component that had been inaccurately reported by the PMO in previous missions, as well as in reports from independent monitoring consultants hired by the PMO. The World Bank requested the client to resolve these issues, based on an agreed action plan, before considering a project restructuring. With the World Bank’s close support and intensive supervision, the client resolved most of the pending safeguards issues by June 2015. As part of the restructuring, in addition to the revision of the targets in the Results Framework, the client requested reallocation of the loan proceeds, loan closing date extension by six months, and the cancelation of 1.63 km of the Fenghuang River rehabilitation through official letters dated June 15, 2015, and August 11, 2015, respectively. The project restructuring was approved shortly after the official request, in September 2015. 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and UtilizationDesign. The project had an extensive Results Framework. While most indicators were appropriate for measuring performance and achievements toward intermediate outcomes, some were not so appropriate. For example, Targets for pollution reduction in the wastewater management components were set very high, as mentioned previously. Intermediate indicators for the river rehabilitation component—that is, reduction of total nitrogen (TN) and total phosphorus (TP)—were not appropriate for measuring pollution from domestic wastewater, which was the major source of pollution.The Lengtang and Liangqing Rivers did not have any intercepting sewers installed, which made it difficult to quantify their contribution toward reducing pollution discharged to the rivers.There was no indicator to measure the length of river rehabilitation or cost recovery of wastewater collection and treatment operations in project areas.Implementation. During the implementation, the Results Framework was revised in three ways: To modify or add indicators and set targets at the PDO level To update targets corresponding to wastewater-related indicators for all six WWTPs To modify indicators related to river rehabilitation to reflect better the outputs from project activities Utilization. With the revisions made to the PDO level indicators during the project restructuring, the Results Framework could capture the performance and achievements toward the PDO more holistically. The client also used the Results Framework to measure the progress and outcomes of the project. The Results Framework was, therefore, used effectively during project implementation by both the World Bank team and the client. Moreover, the real-time water quality monitoring system that was established under the project provides essential information for the Nanning EPB to carry out its mandate and make decisions in case of emergency. 2.4 Safeguard and Fiduciary ComplianceFinancial management and procurement arrangements were established based on assessments conducted during project preparation. On safeguards, the project was classified as Category A. At appraisal, it triggered three safeguard policies: Environmental Assessment (OP 4.01), Involuntary Resettlement (OP 4.12), and Indigenous People (OP 4.10). Environmental safeguards. An Environmental Assessment (EA) summary, a consolidated EA, and a consolidated Environmental Management Plan (EMP) were prepared. The English versions of environmental safeguard documents were disclosed in the InfoShop on April 23, 2009, and the Chinese versions were disclosed locally on March 16, 2009. During project implementation, an external party carried out environmental monitoring independently. It found implementation of the EMP and compliance achieved both Satisfactory and in line with World Bank policies. Besides mitigating negative but limited impacts on soil, ambient air quality, acoustic environment, and surface water quality during construction, the project contributed significantly to management of sludge generated from WWTPs. Social safeguards. The number of project-affected peoples (PAPs) totaled about 8,000. Separate Resettlement Action Plans (RAPs) for the project counties and Nanning City, as well as a consolidated RAP and a Resettlement Policy Framework, were prepared. The RAPs were disclosed locally on January 17, 2009, and at InfoShop on April 28, 2009. In addition to the PMO’s internal monitoring, an independent external resettlement monitoring agent was hired by the PMO to regularly monitor the implementation of the RAPs. All resettlement activities followed the Chinese regulations and the World Bank policies.Although land acquisition and resettlement for the entire wastewater management component was completed by the end of June 2013, delays occurred under the river rehabilitation component, particularly with regard to land reallocation for Nanxiang Village and resettlement site construction in Wuxiang New District. The main causes for the delays were those listed in Section 2.2 above, and they constituted parts of the reasons for cancelation of part of the river rehabilitation component because they would have extended the work beyond the project period. The PMO asked, therefore, for the project to be restructured, as well as for a six-month extension of the closing date to complete all the remaining tasks. At the same time, the local government was committed to carrying out the rest of the resettlement based on the RAP. The municipal government and the PMO paid attention to addressing resettlement issues and cooperated closely with the World Bank. The World Bank team conducted regular supervision mission and had various meetings with government agencies in order to provide compensation for affected people in accordance to the RAP.Table 1 shows planned and actual land acquisition, ground structure demolition, and number of affected people under the project. All compensation required for the Project was provided for the affected communities and people during project implementation. At the project completion, a few issues remain pending, such as the issuance of land certificates for three village groups (see section 2.5 for details).PAPs experienced no significant adverse impacts. Resettled individuals who met the landless farmer’s criteria were entitled to social insurance, including pensions and unemployment allowances and job training. Completion and monitoring surveys confirmed that livelihoods were successfully restored and related compensation was paid in full to PAPs.Table SEQ Table \* ARABIC 1. Land Acquisition, Ground Structure Demolition, and Affected PeopleLand Acquisition (mua)Ground Structure Demolition (m2)Affected PeoplePlannedPermanentTemporaryHousesOther StructuresHouseholdsPeople2,175.19733.134,8711,5777,130Actual2,687.0734,428.8689,696.841,9047,968Note: a. ‘Mu’ is a unit for land used in China. 1 mu is 0.067 ha. Indigenous peoples. A Social Assessment was carried out during project preparation. The aim was to obtain an understanding of project impacts on minority communities, as China’s Zhuang minority community represents a majority of the population in the project areas. The assessment concluded that the Zhuang people were mostly economically integrated and culturally assimilated and therefore unlikely to be adversely affected by the project. Moreover, before implementation, open consultation ascertained that the Zhuang people were supportive of the project activities. No Indigenous Peoples’ Plan was therefore prepared for the project.Fiduciary. No significant issue related to financial management arose throughout project implementation. The project had an adequate financial management system that could provide, with reasonable assurance, accurate and timely information on the progress of the implementation and determine that the loan proceeds were used for the intended purposes. Project audit reports provided for the entire implementation period raised issues related to financial management from time to time, but these were properly addressed by the PMO and PIUs. Unaudited interim financial reports were submitted mostly on time, with only occasional delays. Financial management was, therefore, rated Satisfactory throughout project implementation.No major issue arose regarding procurement, but two incidents are worth mentioning. One concerned the project management and contract administration. The PMO originally intended to conclude a consulting contract with a particular firm. However, it was delayed for more than 14 months because of the firm’s possible connection with a debarred firm. After several consultations with the World Bank team, the PMO decided to terminate the contract because the firm’s services were no longer needed. The unallocated funds were finally put toward works after project restructuring. The second incident concerned the handling of some variation orders the PMO proposed to be financed through counterpart funding, though the contract was financed by the World Bank, and the contractor was selected through World Bank procurement procedures. According to the agreed procurement guidelines under the project, the PMO always seeks World Bank’s technical review and clearance before implementing a variation order of substantial value (that is, above 15 percent of original contract value) regardless of the source of funds. When determining the unit price for items included in variation orders, the PMO should ensure price economy by referring to the same or similar items in a recent similar contract of the same area or other market references.2.5 Post-Completion Operation/Next PhaseResettlement and land acquisition issue. Although all the activities under the project were completed, two issues in resettlement and land acquisition under the river rehabilitation component were unresolved at the time of project completion. First, four village groups in Nanxiang Village (Village Groups Nos. 1, 2, 9, and 11) had not yet received the official certificate for commercial land they had been granted. Village Group No. 1 received the certificate by December 2016. Village Groups No. 2 and 9 are expected to receive the certificates by December 2017, and Village Group No. 11 by December 2018. The issuance of the certificate for these groups was delayed because of the incomplete documentations that they submitted. The PMO agreed, in an official letter dated April 10, 2017, that it would closely coordinate with the Jiangnan District Government to follow-up on the issuance of land certificates to Village Groups 2, 9 and 11. Once the certificates are issued, the PMO will send the World Bank team photocopies of the certificates. Moreover, the PMO will report to the World Bank every six months on the progress from June 2017 until the certificates are issued. After all the certificates are delivered to the related village groups, the PMO will submit the final progress report together with the photocopies of the certificates to the World Bank team.Second, under the Liangqing and Lengtang Rivers rehabilitation, 10 households in the residential area of Tianyu were planned to be resettled by the end of 2016. However, after the project closing, these households decided to receive full monetary compensation and build new houses in the village, instead of relocating to apartments in Tianyu Huayuan. Therefore, all the 10 households were fully compensated by December 2016.O&M arrangement. All the facilities and systems constructed or installed under the project have O&M arrangements adequate for guaranteeing the sustainability of the project assets. In this regard, key points are: GNWC is responsible for O&M for all six WWTPs constructed under the project and has financial resources to carry out the tasks. Each WWTP is adequately staffed and has sufficient technical capacity. Second, the Inner River Management Office in the Nanning municipal government is in charge of O&M for the three rehabilitated rivers, together with thirteen tributaries of the Yongjiang River. The office receives an annual budget from the municipal government to satisfactorily carry out the tasks. Last, the Nanning EPB is responsible for O&M for the real-time monitoring system installed under the project. Its staff has received training to operate the system and maintain the database by themselves.3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and ImplementationRelevance of Objectives: High (Pre-restructuring)/High (Post-restructuring). The objectives set for helping the Nanning Municipality arrest deterioration of surface water quality in selected urban centers remained highly relevant to the regional macro economy and the country’s policies at project closing. Rapid development of Guangxi’s tourism sector, support from the Central Government, and growing trade with ASEAN countries contributed to the continued brisk expansion of its economy during the project implementation period. The average GDP per capita in 2015 was CNY 35,190, which was more than double the figure in 2007. Population in urban areas also continued to grow over the project time. To keep up with this rapid economic development and urbanization, the city needs to make continuous efforts to extend urban services to its citizens. With regard to local policies and plans, the project-financed activities were consistent with those of the Nanning Municipality at project closing. For the wastewater sector, they were in line with the Master Plan for Wastewater Service (2008–2020), which was revised in 2014. The plan covered the total area of Nanning City (429 km2), including urban areas (298 km2), and the scope of the wastewater coverage was to be 100 percent by 2020. As of 2016, four WWTPs—Jiangnan, Langdong, Santang, and Wuxiang—served the city. According to the plan, their treatment capacities would expand from 850,000 m3 per day to 2,090,000 m3 per day by 2020. The investments financed under the project were part of the master plan, and they would support the current and future growth of Nanning.With regard to the World Bank, the project remained consistent with the current China Country Partnership Strategy (CPS, FY13–16). In particular, it directly supported the objective of ‘enhancing urban environmental services’ under Strategic Theme 1, ‘supporting greener growth’. The project was also in line with the World Bank’s twin goals of shared prosperity and elimination of extreme poverty because it helped the wastewater utilities to provide services to unserved areas in county-seat townships while improving the urban environment. The project’s objectives, therefore, remained highly relevant both before and after its restructuring, as well as at its closing.Relevance of Design and Implementation: Modest (Pre-restructuring)/Substantial (Post restructuring). The planned activities of the project—namely, expansion of wastewater treatment coverage, environmental rehabilitation of the three rivers, and building of institutional and regulatory capacity—were consistent with the stated objectives and along the lines of the current CPS. The project was infrastructure-heavy, which was necessary for Guangxi Province in terms of its socioeconomic conditions. Causal chains between the outputs and outcomes were clearly defined. Also noteworthy is that TA and the concept of IRBM implemented under the project interlinked well with the other activities. Moreover, the TA component strengthened the city’s overall river management capacity. The project benefited from having a well-thought-out implementation arrangement and readiness of activities, particularly for Component 1. Having GNWC as the PIU for not just core urban areas of Nanning City but other county-seat townships as well has brought many benefits from both technical and financial points of view, ensuring high construction quality and sustainability of operation.On the other hand, the project design had some shortcomings. Two out of three rivers under the river rehabilitation did not have interceptor sewers. Issues of resettlement and land acquisition, particularly in the river rehabilitation component, were underestimated at the design stage. With regard to the wastewater component, the biological load capacities of the WWTPs were set too high for the characteristics of receiving wastewater. Table 2 compares the design parameters with the actual characteristics of wastewater received at the six WWTPs in terms of chemical oxygen demand (COD) at project closing. These estimated pollution loads were high, which resulted in high pollution reduction targets that were not possible to achieve. These unrealistic targets were revised at project restructuring. At project closing, most of the revised PDO-level and intermediate outcome indicators were achieved or exceeded.Table SEQ Table \* ARABIC 2. Biological Load Capacity (mg/l)COD Concentration in InflowCounty WWTPDesign (in PAD)Actual (average over 12 months)Jiangnan 400153.7Wuming 350174.1Binyang 300 78.6Hengxian 250165.4Shanglin 240 79.0Mashan 240 53.73.2 Achievement of Project Development ObjectiveAchievement toward the PDO, to assist the Nanning Municipality in arresting further deterioration of surface water quality in selected urban centers, was measured based on the original three PDO indicators, which were (a) reduction of pollution discharge into surface water; (b) percentage of the population in participating areas of the Nanning Municipality served by wastewater collection and treatment services; and (c) development of a strategic study on the ecological water environment and the implementation of pollution control action plans. Three more PDO indicators were added at the project restructuring: (a) number of direct project beneficiaries, with percentage of female beneficiaries; (b) length of urban rivers in the project area rehabilitated; and (c) cost recovery of wastewater collection and treatment operations in Nanning districts and county seats served by the Guangxi Nanning Water Company. Below is the assessment of efficacy based on these indicators.Reduction of Pollution Discharge into Surface WaterSurface water quality of the Yongjiang River. Figure 1 shows the water quality monitoring data taken at three different locations of the Yongjiang River, based on the national surface water quality standard (Class 1 to Class 5). The data show that the water quality did not deteriorate and in some instances, the quality improved (in the downstream (Pumiao), the water quality improved from Class 4 to Class 2 between 2006 and 2015). Surface water quality is dependent on many factors, including the pollution discharged through wastewater. Even though the quality of the surface water shown in the figure cannot be totally attributed to the project, the new WWTPs would have contributed towards reducing pollution being discharged to the water bodies.Figure SEQ Figure \* ARABIC 1. Surface Water Quality of Yongjiang River (2006–2015)Contribution of wastewater management component. Six WWTPs with a total capacity of 342,000 m3 per day, 56.42 km of primary and secondary sewers, and five pump stations were constructed under the wastewater management component. All five WWTPs in county-seat towns were operationalized in September 2010 and the Jiangnan WWTP was operationalized in December 2011 and started delivering environmental benefits to communities in the service areas more than 12 months earlier than originally planned. During the last 12 months of implementation (from July 2015 to June 2016), the six WWTPs together removed 10,305 tons of biochemical exchange demand (BOD), exceeding the revised target by 6 percent. Moreover, all six WWTPs now complied with the respective national discharge standards, which is Class 1A for Wuming WWTP and Class 1B for the other five WWTPs. The reason Wuming has a higher standard than the others is because a discharge point of the WWTP is located in the upstream of a river. The quality of influent and effluent is monitored every two hours, and the monitoring data are transmitted and published on the EPB website. Performance of each WWTP. Although the overall pollution reduction exceeded the target at the PDO level and met the discharge standards, the performance of individual WWTPs varied. At project closing, two large WWTPs—Jiangnan WWTP (240,000 m3 per day) and Wuming WWTP (50,000 m3 per day)—were performing much better than originally anticipated (service coverage, and removal of BOD, COD, TP, and TN exceeded the revised targets by 104 percent to 187 percent). The performance of Hengxian (20,000 m3 per day) and Mashan (6,000 m3 per day) WWTPs was also satisfactory, with minor shortcomings in some pollution indicators and service coverage. Binyang (20,000 m3 per day) and Shanglin (6,000 m3 per day) WWTPs lagged behind the others in performance. Although almost none of the WWTPs met the original targets that were agreed on at appraisal (achievement was between 30 percent and 78 percent), as mentioned in section 2.3, these targets were based on an overestimation of biological load at design. Moreover, as mentioned above, the WWTPs started operation at the early stages of the implementation, delivering the environmental benefits to about 3 million people in Nanning, and continued to satisfy the national discharge standards. This operation of the plants are in line with the objective of pollution reduction. Contribution of the river rehabilitation component. A total of 10.36 km of urban rivers was rehabilitated. The rehabilitation included riverbed cleanup, embankment improvement, and the construction of access roads and walking paths along the riverbanks. The Fenghuang River had 9.6 km of intercepting sewers and 1.5 km of storm water drainage along the banks, but the other two rivers did not have any intercepting sewers. Besides the river rehabilitation, the project supported the construction of two small concrete dams, the installation of water outlets, and greening along the river. The dams were 6.4 m and 9.0 m high, respectively. The construction was completed in June 2016. The contribution of the river rehabilitation was measured by the reduction of pollutant through interception. Two intermediate outcome indicators—reduction of TP and TN—were meant to measure the performance, but they were not suitable for domestic wastewater. They were replaced, therefore, with COD and ammonia (NH3-N) during the project restructuring. Based on the revised indicators, on the other hand, the Fenghuang River subcomponent reduced COD by 270 tons and NH3-N by 67.4 tons per year, exceeding the targets by 35 percent and 12 percent, respectively. Since the intercepting sewer was installed only in the Fenghuang River, contributions from the other two rivers were not measurable. The indicators for these two rivers were, therefore, removed in the project restructuring. Moreover, the river rehabilitation also brought a lot of benefits with regard to cleaning up solid waste dumps along the river system which contribute to the clean-up of the river.Finally, a PDO indicator was added to measure the total length of river rehabilitated under the project at the project restructuring. The total length rehabilitated for three rivers was reduced by 3.88 km, or 27 percent, from the original length at appraisal, but the assessment conducted by the World Bank team during implementation confirmed that the reduction did not affect the overall effectiveness of the investment. In fact, changes in engineering design for the Liangqing River (canceling Lot III and constructing a lake in Wuxiang District) actually brought more positive impacts with regard to flood protection, water quality, and other ecosystem services.Percentage of Population Served by Wastewater CollectionThe indicator ‘percentage of population served’ applies to the wastewater management component. To capture the contribution of the entire project, an indicator of direct project beneficiaries was added at the project appraisal.Overall, the coverage by wastewater services in the project areas increased from 36.6 percent to 89.19 percent, exceeding both the original and revised targets; and direct beneficiaries of the project, another additional indicator, numbered close to 3 million, which was 20 percent more than the revised target. Among the six urban centers the project covered, some, however, had a lower coverage than planned. For example, for Shanglin WWTP, the smallest one, the percentage of service coverage decreased during the implementation because the population and the water supply network were expanded such faster than the sewer network in the county’s urban areas during the past five years, so that wastewater flow was lower than water sold. Improving the Institutional and Regulatory Capacities of the Municipal AgenciesUnder the TA component, the following four subcomponents were implemented:Modification of regulations on pollution control for the Yongjiang River Reach Basin Preparation of a strategic study on improving the water ecological environment of the Yongjiang River Reach Basin to support sustainable social and economic development of Nanning Establishment of a complete monitoring system to monitor the changes in water quality and quantity for the Yongjiang River Reach Basin and its 18 tributaries and preparation of water quantity and quality models as a tool to support the preparation of the strategic studies and routine management Preparation and implementation of the participatory pollution control action plans as a pilot for integrated mini-river basin management for the Fenghuand, Lengtang, and Liangqing Rivers.Achievements of each subcomponent are assessed below.Modifications of regulations on pollution control of the Yongjiang River Reach Basin. On July 24, 2014, the pollution regulations for the Yongjiang River Reach Basin were revised and approved by the Twelfth Provincial People’s Congress, and they became effective on the same day. The major contribution of the modification was to allow the Nanning Municipality to apply IRBM to the Yongjaing River and to regulate the development and conservation of water, land, and related resources in the catchment area. In particular, the revised regulations defined clearer roles and responsibilities for the different agencies, controlled nonpoint source pollution effectively, and set a standard for water intake. The Nanning Municipality applied them to controlling activities that could cause deterioration in the water quality.As mentioned in section 1.6, detailed regulations on pollution control were not prepared under the project. Nevertheless, it is highly likely that the detailed regulations will be prepared by the EPB, once the National Water Pollution Control Law is updated. The national law was under revision at the project closing. Delaying of issuance of the detailed regulations did not affect the outcome of the regulations on pollution control of the Yongjiang River Reach Basin, however, which were modified under the project, as mentioned above.Preparation of a strategic study on improving the water ecological environment. The strategic study was prepared, focusing on the following four areas: Identifying and analyzing constraints placed on the social and economic development of Nanning by the ecological and environmental protection of the Yongjiang River Basin Analyzing the water and environmental carrying capacity of the Yongjiang River Reach relative to scales of social and economic development in Nanning Determining objectives of ecological and environmental protection in water environment function zones in the river reach basin Prioritizing the structural and nonstructural measures of ecological and environmental protection to support sustainable socioeconomic development The report was finalized in December 2015. However, some of the key ideas and recommendations from the study had already been included for implementation in the 13th Five-Year Plan for Water Pollution Control in Nanning City, such as control of nonpoint source pollution, principles of total pollution control based on the environmental carrying capacities of the Yongjiang River, and measures to increase the efficiency of WWTPs. Based on the 13th Five-Year Plan, 754 rural wastewater facilities will be built and operationalized by the end of 2020. Establishing a complete monitoring system and models. The water quality and quantity monitoring system was established and operationalized at the Nanning EPB. The EPB staff received intensive training and was subjected to examinations on its utilization. The system could not only display real-time modeling results on water quantity and quality changes; it could simulate a water pollution emergency to observe how the pollution spread over time. It enabled the determination of maximum allowable pollution loads for discharge into the rivers based on the environmental carrying capacity. Finally, the system empowered the EPB staff to take the leadership role in water pollution control, and it stimulated cross-agency coordination. Preparation of action plans. Three action plans were prepared, corresponding to the three rivers rehabilitated under the project, to improve the environmental quality of water. These plans were approved by the EPB, with some actions already implemented under this project or other city-financed projects. They were used to demonstrate (a) river cleanup and (b) actions taken to reduce pollution in water where water quality is below Class V. They were also used as examples of pollution control for the other 15 tributaries in the upstream of the Yongjiang River.Additional Indicator-Cost Recovery of Wastewater OperationsThis indicator, which aimed to measure the financial sustainability of wastewater services by monitoring the annual net income from GNWC’s wastewater operations, was originally an intermediate outcome indicator. It also had a financial covenant of cost recovery ratio, which was the ratio between total revenues and operating cost and debt service. At project restructuring, this intermediate outcome indicator was replaced with the cost recovery covenant and elevated to be a PDO-level indicator. It exceeded the revised target by 12 percent. The result confirmed that the wastewater services were being provided in a sustainable manner. The recent listing of GNWC on the Shanghai Stock Exchange will likely intensify the focus on financial results, and forecasts show the wastewater operations will remain financially sustainable. Based on the above assessment, the project has demonstrated its achievement toward the PDO. Assessing the efficacy based on the original indicators and targets, it significantly achieved or exceeded the targets for two out of three indicators (percentage of population served by wastewater collection, and improving the institutional and regulatory capacities of the municipal agencies) but fell short in the third (reduction of pollution discharge into surface water). After the project restructuring the project substantially achieved the third indicator, as well as other additional indicators. Judging the PDO achievement only from the perspective of pollution reduction (the third indicator), the pre-restructuring rating would be ‘modest’. However, as indicated in previous sections, the pollution reduction targets were unrealistically set given the characteristics of receiving wastewater, which is a weakness of the design and M&E of the project, it will be unfair to rate the PDO achievement against the unrealistic targets. Although the project was restructured late in the implementation, other fundamental elements of the project, such as the choice of WWTP technology and priority activities for intervention and balance of focus on infrastructure in relation to institutional and regulatory capacity of government agencies, contributed to the achievement toward the PDO. Therefore, the achievement toward the PDO is rated ‘Substantial’ for both pre-restructuring and post-restructuring. 3.3 Efficiency Rating: Substantial/SubstantialEconomic efficiency. At appraisal, economic analysis was carried out to justify the implementation of the proposed wastewater management and river rehabilitation components. The basic justification was made through the application of least-cost analysis to identify priority interventions for project implementation; the quantification of economic benefits for the river rehabilitation component; and the use of a benefit transfer approach to compare the project subcomponents with those of similar projects in South West China. At project closing, the economic analysis, including the least-cost analysis and the benefit estimation of the river rehabilitation component, was updated where possible with actual results and costs. The increase in the land value cannot be fully attributed to the river rehabilitation component. It is also difficult to quantify the increase in the land value due to the project. However, the increase in the land value was significant and this ICR estimates that project cost corresponded to 17 percent of the increase in land value for the Fenghuang River subcomponent. For the Liangqing and Lengtang Rivers, the ICR analysis estimates that the project cost corresponded to an 8 percent increase in land value. The project costs were also compared against benefits because of reduced flooding, justifying the project economically, both at appraisal and closing.Financial analysis was carried out at appraisal to demonstrate financial sustainability of the wastewater component. Specifically, financial forecasts demonstrated that the project was affordable to GNWC and that the company will be financially sound. At appraisal, the financial internal rate of return (FIRR) was estimated to be above 6 percent. At project completion, GNWC demonstrated financial viability as it was able to recover costs. Based on the actual performance, the FIRR was estimated to be above 10 percent. Other analysis conducted at appraisal and at the end of the project showed that the project was fiscally affordable to the Nanning Municipality. Furthermore, the tariffs were affordable to low-income households, at appraisal and project closing. Annex 3 discusses financial efficiency of the project in more detail.Implementation efficiency. The project was successfully implemented, although there was a six-month delay. The project began efficiently and the wastewater management component was completed within the first 12 months. The river rehabilitation component took a long time to implement because of resettlement and land acquisition issues, but construction was completed successfully by the revised closing date. Under the project, the design was optimized and changed to adjust geological conditions of the project sites, which led to rationalizing infrastructure investments and cost saving. The total project cost was US$217.66 million, which was 7.5 percent less than the estimated cost at appraisal.3.4 Justification of Overall Outcome RatingRating: Moderately SatisfactoryThe project has met the PDO objective of arresting further deterioration of surface water quality in selected urban centers. Both achievements toward the PDO and the efficiency are rated Substantial. As mentioned in section 3.2, it is important to emphasize that to measure against the original targets would not be a fair assessment because they were not set up according to the pollution expected to be received by the WWTPs in the influent wastewater. For the six WWTPs, for example, the load capacity envisaged was higher than the actual pollution loads. This issue of unrealistic targets was fixed at the project restructuring. Therefore, the assessment of the overall outcomes at pre-restructuring is Moderately Satisfactory, while it is Satisfactory for post-restructuring. Considering the project was restructured at a late stage of implementation, the overall outcome of the project becomes Moderately Satisfactory, using the split evaluation methodology according to OPCS guidelines. Table SEQ Table \* ARABIC 3. Outcome RatingPre-Restructuring RatingPost-Restructuring RatingOverallRelevance of objectivesHighHighRelevance of design/implementationModestSubstantialEfficacySubstantialSubstantialEfficiencySubstantialSubstantialRatingModerately SatisfactorySatisfactoryRating value45Weight (% disbursed before and after restructuring)91.9%8.1%Weighted value3.70.44.1Final ratingModerately Satisfactory3.5 Overarching Themes, Other Outcomes, and Impacts(a) Poverty Impacts, Gender Aspects, and Social DevelopmentAt appraisal, the project did not consider any poverty or social development issues in project areas, and there were no specific activities or monitoring indicators to measure its impacts in these respects. No measurement was needed, however, to establish that Guangxi is one of the poorest provinces of the country, and its county-seat townships are especially poor. The project supported the expansion of wastewater services to county towns that had no service at all before it was implemented. It also made a contribution toward shared economic prosperity, as the investments under it brought positive impacts on the urban environment and water quality in selected urban areas, particularly those where the three rehabilitated rivers were located, and supported the economic growth of Nanning.With regard to gender, the project brought positive environmental impacts for about 1.43 million women, or 48.5 percent of its beneficiaries. (b) Institutional Change/Strengthening88.The project helped strengthen institutions, particularly the Nanning EPB responsible for water quality issues. As a result of it, the EPB now has the capacity (such as equipment, real-time data and database, and trained staff) to carry out its mandate as a leading organization for water quality issues in Nanning. In particular, it is equipped with trained staff and tools to coordinate effectively among different agencies in case of emergency. The project also supported GNWC in expanding its services to more challenging, less affluent county towns, while maintaining financial sustainability. The fact that GNWC is now listed on the Shanghai Stock Exchange is an indication that the company will have to maintain its financial soundness to be attractive to investors. (c) Other Unintended Outcomes and Impacts (Positive or Negative)Sludge management. As mentioned in section 2.4, the establishment of a comprehensive sludge management system by the Nanning Municipal Government (outside the activities carried out under the project) was a major contribution toward improving the municipality’s environment. The central sludge processing facility is located in Shuangding Town, and it is operated by the Jingdi Microorganism Fertilizer Company Ltd. In June 2016, it was operationalized, and it receives about 400 tons of sludge per day, including sludge from the six World Bank-financed WWTPs, and produces 120 tons of fertilizer per day. The fertilizer is used for landscaping and soil improvement for the planting of eucalyptus trees. At the time of project closing, it was distributed for free, but the company intends to sell it in the future. The external environmental monitoring report of December 2015 showed that all the sludge generated in the six World Bank-financed WWTPs was disposed of at the central processing facility. This confirms that sludge generated from the six plants is treated and disposed of in an environmentally safe way. Although it was not funded by the project, the World Bank team provided recommendation to improve sludge manage during the project implementation (see paragraph 29).3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder WorkshopsAs part of engaging with stakeholders, the Nanning EPB organized a public open day on June 5, 2016. The objectives were to raise awareness of environmental protection and showcase the achievements the EPB had made so far. About 200 citizens participated in the event and visited the facilities. The EPB used the occasion to demonstrate the water monitoring system it developed through the project. In particular, it showed how the system could help the bureau monitor water pollution in real time and enhance its capacity to coordinate and collaborate among different government agencies in water pollution prevention and management (see annex 5 for details). 4. Assessment of Risk to Development Outcome Rating: ModerateCountry and sector risks: Low. The project was in line with the current government’s development strategy to support green growth. The Central Government continues to support the economic growth of Guangxi Province where the project sites were located. Improving the quality of surface water and managing flood risks in the Yongjiang River Basin remain important for Nanning City because it has been selected as a pilot ‘sponge city’ (retain the surface water run-off but use it later when needed) in China. The project was also in line with sector strategies and policies. First, the Master Plan for Wastewater Service in Nanning (2008–2020) dictates the continuous expansion of wastewater service coverage to support the economic growth and urbanization of Nanning City. The three rehabilitated rivers are part of the Nanning Flood Control Plan (2016–2020). And the project-financed TA components laid the foundation for and recommendations from the studies were adopted as part of the 13th Five-Year Plan for Water Pollution Control in Nanning City (2016–2020). Operational and institutional risks: Low. Operational skills and resources as well as institutional arrangements for O&M were well established under all three components. GNWC, which is responsible for O&M for all six WWTPs, has adequate staff with the technical skills and financial resources to carry out the tasks. Listing of GNWC has also brought positive impacts to the company in terms of financial sustainability and accountability. Although two WWTPs were not meeting some targets at project closing, all comply with the respective discharge standards. The Inner River Management Office in the Nanning Municipal Government is in charge of O&M for the eighteen tributaries of the Yongjiang River Basin, including the three rivers that were rehabilitated under the project, and it receives adequate annual budget to carry out the tasks. The two rivers without interceptor sewers remain concerning for the future. Nevertheless, the surrounding area is dedicated to new urban development, with apartments and commercial buildings with sewer connections, so a huge amount of runoff is unlikely. On the IRBM front, the Nanning EPB is responsible for emergencies related to water contamination in the city, and its staff receives adequate training to use fully and update the data and the water quality monitoring system. Environmental and social safeguards risks: Moderate. The contributions of the project to improving the urban environment in selected cities in the Nanning Municipality are obvious, and the environmental risk is minimal. The project continues to have social safeguards risks at project closing. However, all the compensation is completed and the issuance of remaining land certificate is a matter of time, as the necessary documents have been submitted by village groups. The Nanning DRC and the PMO also renewed their commitments to following up on the remaining tasks, in close coordination with the Jiangnan District Government, even after the project closing and to completing the remaining task. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately SatisfactoryFollowing the successful implementation of the GUEP, the project aimed to advance the efforts of wastewater management and river rehabilitation and further strengthen the urban environment management capacities of Nanning. The World Bank team incorporated lessons learned from the previous project in design, preparation, and implementation arrangements, which brought positive impacts to this one. Owing to upfront preparation, the project made remarkable early progress and delivered the biggest component in the first two years. One innovative part of the project scope was the application of IRBM to the Yongjiang River Basin, which was a new concept for China and Guangxi. The TA activities focused on creating a fundamental regulatory framework for more effective and coordinated water resource management, setting a strategic direction, establishing a monitoring system for water quality, and coming up with a clear action plan. The component also defined clear standards, roles, and responsibilities for water resource management for key agencies to act upon. The World Bank performance in ensuring quality at entry did have some shortcomings. Although the team paid considerable attention to the design parameters to avoid overestimation of demand, capacity, and costs, it underestimated the implications of the combined systems and septic tanks present in old neighborhoods in the project areas. Thus, the biological design load capacities that were applied to the WWTPs were much higher than the actual pollution concentrations. Moreover, the team underestimated the complexity of land acquisition and resettlement challenges in the project areas.(b) Quality of Supervision Rating: Moderately SatisfactoryThe World Bank supervised the project twice a year, covering implementation, safeguards, procurement, and financial management aspects. Toward the end of the implementation, the World Bank’s support efforts intensified, particularly with regard to following up on the land acquisition and resettlement issues that were delaying the implementation of the river rehabilitation component. Some smaller missions were also carried out to follow up on the emerging safeguards and technical issues. Moreover, the World Bank used the supervision budget to mobilize the technical expert to help the client carry out a thorough analysis of pollution load to update the targets for pollution reduction. As a result of persistent efforts from the World Bank team to support the client, all the activities were implemented successfully, although an extension of six months was required. The team diligently supported the client in overcoming implementation difficulties. Having said that, some shortcomings in supervision did arise, particularly with regard to inconsistent documentation at the early stage of project implementation. The World Bank team did not document the discussion on the dam safety issue thoroughly, and no record clearly indicates that the design change for the Liangqing River included canceling the rehabilitation of 2.17 km of the river rehabilitation. Although these issues did not affect the overall project outcomes, they should have been handled earlier and carefully. The World Bank team also could have initiated the discussion on project restructuring much earlier. However, it was true that not all the process was under the control of the World Bank’s team, such as the on-the-ground actions to address the complex resettlement issues.Turning to fiduciary and safeguards compliance, procurement and financial management specialists based in the Beijing office supervised implementation of all fiduciary aspects of the project specified in the legal agreement and carried out adequate field visits to review physical progress. No substantive deviation from the guidelines was observed, although variation orders were not handled as stipulated in the World Bank’s Procurement Guidelines. Environmental and social safeguards specialists, also based in the Beijing office, supervised implementation of all safeguards issues in the legal agreement. The implementation of the EMP and RAP was reviewed in each mission. Although no major complaints arose regarding environmental safeguards, social safeguards remained a difficult point throughout the project implementation. Because the reporting by external monitoring consultants, hired by the PMO, was not accurate, the World Bank team discovered new issues related to land acquisition in the January 2015 mission, which led to the cancelation, mentioned above, of the rehabilitation of part of the Fenghuang River. There was also weak supervision from the World Bank team on this matter, which led to inadequate handling and reporting on land acquisition in the last ISRs, while the issue was already resolved. (c) Justification of Rating for Overall Bank PerformanceRating: Moderately SatisfactoryBased on the Moderately Satisfactory rating for both World Bank performance at entry and during supervision, overall World Bank performance is rated Moderately Satisfactory.5.2 Borrower Performance(a) Government PerformanceRating: SatisfactoryThe Nanning Municipal Government and the Nanning Finance Bureau were supportive of the project and committed to the PDO of arresting the deterioration of surface water quality in selected urban centers. They had some experience with the World Bank’s procedures through previous projects, and they incorporated the lessons learned in the preparation of this one. They supported the implementing agencies, particularly the PMO, to ensure the quality of implementation throughout the project period. The counterpart fund was allocated on time most of the time, and they communicated with the World Bank team effectively.(b) Implementing Agency or Agencies PerformanceRating: Moderately SatisfactoryThe PMO and four PIUs were responsible for day-to-day management of project activities. The PMO functioned as a contact for the World Bank team and coordinated the efforts of different agencies and PIUs. Its staff was committed and efficient in their responses. They prepared semiannual progress reports and submitted them to the World Bank team on time. GNWC, the PIU for the wastewater management component, was also efficient, technically competent, and responsive to the World Bank’s requests. Though not familiar with the World Bank’s procedures and guidelines, it completed the implementation quickly. The Nanning Xinghu Investment and Constructions Company and the Nanning Communication and Water Conservancy Investment Company, and the PIUs for the river rehabilitation component, were also committed to the project. The Nanning EPB, the PIU for the TA component, was fully engaged with the project, and it communicated with the World Bank team effectively. One shortcoming was the handling of resettlement and land acquisition. The PMO faced difficulties in handling land acquisition and resettlement issues because of lack of experience, and they relied on reporting from resettlement offices and external monitoring consultants. The external monitoring consultants hired by the PMO did not report the issues accurately enough for the PMO to take timely action. In addition, after agreeing on the need for project restructuring, it took the PMO about a year to request the project restructuring, which contributed to the delayed restructuring of the project. Moreover, variation orders under Components 1 and 2 were not handled properly, despite advice from the World Bank team. (c) Justification of Rating for Overall Borrower PerformanceRating: Moderately SatisfactoryBased on the Satisfactory rating for Government performance and Moderately Satisfactory rating for implementing agencies performance, overall borrower performance is rated Moderately Satisfactory.6. Lessons Learned Restructuring. Timely restructuring is a good practice in project implementation. Hence it is important to process it as soon as the needs are discovered to ensure proper accounting of project activities, performance, and objectives. Implementation. Early training of project implementing entities about certain fiduciary and safeguards requirements can go a long way in making project implementation faster. For example, rules related to handling variation orders should be shared with the client at the early stage of project implementation, or even before the project becomes effective. The project included relatively large variation orders—accounting for more than 15 percent of the original contract price—for some contracts in the wastewater management component due to changes in urban planning, design, and geological conditions, and they were not reported to the World Bank team before the implementation. This should be avoided for future projects. Regarding resettlement and land acquisition, it is important to have well-trained PMO staff to control the quality and accuracy of the information reported from resettlement offices and external monitoring consultants, to proactively handle any related issue and ensure coordination with other agencies as needed. Design. Infrastructure optimization, which takes into account of municipal infrastructure planning, is important and beneficial for a project because it yields savings in capital expenditure and O&M costs. To ensure the design and size for WWTPs are optimal, design parameters need to be examined carefully to align them with the reality of influent wastewater characteristics and with existing facilities in service areas. If the wastewater management facilities are located in tropical areas, samples need to be taken in both dry and rainy seasons to account for the fluctuation of wastewater constituent concentrations. The design parameters also need to take into account whether service areas have septic tanks or combined sewer systems, the height of the water table, and the overall estimation of infiltration in the network. Furthermore, it is important to maintain the balance between infrastructure investments and institutional or regulatory capacity building to support new ideas and recommendations as part of the project design. Under this project, the TA to work on the innovative ideas was used in a timely fashion to lay a foundation for the 13th Five-Year Plan for Water Pollution Control in Nanning City, which was strategic and is expected to support a larger development of the city. Single utility. Having a single utility responsible for the O&M of WWTPs in both big cities and smaller county-seat townships is effective to ensure technical competencies and financial sustainability. It is also efficient from a project management point of view. Under the project, GNWC was responsible for Jiangnan WWTP as well as five smaller WWTPs in the counties. The company was highly competent and technically capable of managing these WWTPs, and it could generate enough revenue to cover the operation costs in smaller towns.Innovation. The innovative management mechanism for IRBM in dealing with municipal water environment and pollution control, which is relatively a new concept in China, provides a good example for other cities. It not only takes a comprehensive approach that ranges from modification and enforcement of laws to capacity building of local government departments in pollution control and real-time monitoring data for decision making, but it also defines roles and responsibilities of various agencies that are otherwise involved in uncoordinated and fragmented activities. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing AgenciesBesides the borrower’s ICR, which is attached in annex 6, the PMO reviewed the draft ICR report and provided detailed comments. Their comments were incorporated in this ICR report. (b) CofinanciersNot applicable.(c) Other Partners and Stakeholders Not applicable.Annex 1. Project Costs and Financing(a) Project Cost by Component (in US$, millions equivalent)ComponentsAppraisal Estimate (US$, millions)Actual/Latest Estimate (US$, millions)Percentage of AppraisalI. Wastewater Management Component 90.64 91.29 100.72I-1. Jiangnan WWTP, Phase 2 39.57 43.94 111.04I-2. Wuming County 21.12 17.27 81.77I-3. Binyang County 10.03 11.28 112.46I-4. Hengxian County 10.31 8.39 81.38I-5. Shanglin County 4.69 6.02 128.36I-6. Mashan County 4.92 4.39 89.23II. River Rehabilitation Component 105.71 32.44 30.6II-1. Fenghuang River 40.04 10.54 26.32II-2. Lengtang and Liangqing Rivers 65.67 21.90 33.35III. TA Component 2.05 0.94 45.83III-1. Integrated River Management 1.05 0.92 87.60III-2. Project Design Review and Project Management Support 1.00 0.02 1.97Total Baseline Cost 198.40124.6767.84Physical Contingencies 11.44 0.00—Price Contingencies 14.36 0.00—Other Costs a—85.44Total Project Costs?224.20210.1193.71Interest during Construction10.887.3067.11Commitment Fee———Front-End Fee IBRD0.250.25240.69Total Financing Required 235.33217.6692.64Note: a. Other costs include land acquisition costs, exchange rate gains (or losses), survey and design costs, farming land occupation tax, and hydrodynamic model costs.(b) FinancingSource of FundsType of CofinancingAppraisal Estimate(US$, millions)Actual/Latest Estimate(US$, millions)Percentage of Appraisal Borrower135.33120.1288.76 International Bank for Reconstruction and Development100.0097.5497.54Annex 2. Outputs by Component Table 2. SEQ Table_2. \* ARABIC 1. Planned and Actual OutputsComponentPlannedActualRemarksComponent 1: Wastewater ManagementJiangnan WWTPIncrease in existing WWTP capacity from 240,000 m3/d to 480,000 m3/dIncrease in existing WWTP capacity from 240,000 m3/d to 480,000 m3/dNo changeWuming County23 km intercepting sewer and secondary sewer network (300–1,650 mm diameter)5 lift pump stations New WWTP with a capacity of 50,000 m3/d15.5 km intercepting sewer and secondary sewer network3 lift pump stations with an installed capacity of 49,000 m3/dNew WWTP with a capacity of 50,000 m3/dDue to geological conditions in the proposed sites, the remaining 7.5 km of sewer and 2 pumping stations were removed from the project, but they are to be implemented with the counterpart funding under the framework of a new county master plan. Binyang County22 km intercepting sewer and secondary sewer network (300–500 mm diameter)1 lift pump station New WWTP with a capacity of 20,000 m3/d18.26 km intercepting sewer and secondary sewer networkNew WWTP with a capacity of 20,000 m3/dThe scope of the project was reduced due to optimization of the design. The pumping station was removed at the preliminary design stage and was not included in the bidding document. Hengxian County22 km intercepting sewer and secondary sewer network (300–1,000 mm)1 lift pump station New WWTP with a capacity of 20,000 m3/d7.9 km intercepting sewer and secondary sewer network1 lift pump station with an installed capacity of 8,000 m3/dNew WWTP with a capacity of 20,000 m3/dThe scope of the project was reduced due to optimization of the design and adjustment in urban development planning. Shanglin County8.7 km intercepting sewer and secondary sewer network (400–800 mm)New WWTP with a capacity of 6,000 m3/d7.9 km intercepting sewer and secondary sewer networkNew WWTP with a capacity of 6,000 m3/dThe scope of the project was reduced due to optimization of the design.Mashan County9.2 km intercepting sewer and secondary sewer network (400–800 mm)1 lift pump station with an installed capacity of 6,000 m3/dNew WWTP (Chengbei WWTP) with a capacity of 6,000 m3/d6.9 km intercepting sewer and secondary sewer network1 lift pump station with an installed capacity of 6,000 m3/dNew WWTP with a capacity of 6,000 m3/dThe scope of the project was reduced due to optimization of the ponent 2: River RehabilitationFenghuang River RehabilitationRehabilitation of 4.84 km of the river course by means of riverbed cleanup and embankment enhancement with masonry or gabion at selected sectionsConstruction of water retention ponds with a total storage capacity of 1.14 million m3, two gate structures, and two weirs to regulate the waterConstruction of about 9.37 km of sewer interceptors and about 5.32 km of storm water drainage pipelines, with 23 drainage outlets along both banks of the riversPlanting of about 84,000 m2 of vegetation along the riverRehabilitation of 3.207 km of the river course by means of riverbed cleanup and embankment enhancement with masonry or gabion at selected sectionsConstruction of 1 reservoir lake, with a total regulation and storage capacity of 1.14 million m3, and 1 concrete dam, 6.4 m highLaid about 9.6 km intercepting sewers and 1.5 km of storm water drainage along banks, with 23 drainage outlets along both banks of the river120,000 m2 of vegetation planted along the riverDue to multiple resettlement issues, the length of the river rehabilitated was reduced at project restructuring, approved by the World Bank in September 2015.Lengtang and Liangqing Rivers RehabilitationRehabilitation of 6.901 km of Liangqing River and 2.504 km of Lengtang River by means of riverbed cleanup, embankment enhancement with geo-textile bags and concrete bricks at selected sections, and construction of access roads along the riverbanksRestoration of 3 regulating ponds (total storage of 1.62 million m3) with 2 concrete weirsConstruction of a total of 76 water outlet structures for the storm-water drainage systemPlantation and greening along the river4.731 km of Liangqing River and 2.425 km of Lengtang River were rehabilitated by means of riverbed cleanup, embankment enhancement with geo-textile bags and concrete bricks at selected sections, and construction of access roads along the riverbanks1 concrete dam, 9 m high76 water outletsPlantation and greening along the riverDue to engineering design change for Liangqing River, Lot III of the contract was canceled and replaced with the construction of Wuxiang Lake. Consequently, the length of the river to be rehabilitated was reduced by 2.17 km from appraisal (1.993 km from the preliminary design), and the number of dams was reduced to ponent 3: Technical AssistanceIntegrated River ManagementEstablish an integrated mini-river basin management (IMRBM) system for a section of the Yongjiang River Basin within the Nanning Municipality:1. Modification of regulations on pollution control of the Yangjiang River Reach Basin and preparation of the detailed rules for implementing regulationsRevision of regulations to include the following areas: (a) extension of the pollution control area to cover the entire river basin of the Yongjiang River Reach, including river basin areas of the 18 mini-river tributaries; (b) inclusion of the leadership role and responsibilities of the existing Pollution Control Committee of Nanning for pollution control; and (c) definition of the responsibilities and accountabilities of the municipal and district governments and government line bureaus for pollution control.Preparation of the detailed rules for implementing the regulationsThe regulations were revised and key points for revision included in the revised regulations.The regulations were reviewed and approved by the Twelfth Provincial People’s Congress on July 24, 2014, and became effective on the same date.The regulations have been implemented since going into effect.The detailed rules for implementation of the regulations were not prepared, and the planned contract was canceled in agreement with the World Bank’s supervision mission, for the following reasons: (a) The National Water Pollution Control Law had not been updated and would be updated soon. It will be used as a guidance for preparation of the detailed rules for the implementation of the regulations. The EPB decided not to prepare the detailed rules until the National Law on Water Pollution Control was updated. (b) The detailed rules can be prepared effectively only after the regulations have been implemented for a few years to determine what issues and problems may be outstanding and devise appropriate solutions for them.(c) The EPB plans to start preparing detailed rules once the national laws on water pollution control have been updated. 2. Preparation of the strategic study on improving the waste ecological environment of the Yongjiang River Reach Basin The strategic study would include the following areas: (a) identify and analyze constraints of ecological and environmental protection of the Yongjiang River Reach Basin on the social and economic development of Nanning; (b) analyze water and environment carrying capacity of the Yongjiang River Reach relative to scales of social and economic development of Nanning; (c) determine the objectives of ecological and environmental protection in water environment function zones in the river reach basin; and (d) prioritize the structural and nonstructural measures on ecological and environmental protection to support sustainable social and economic development.The strategic study report was prepared based on the revised regulations and completed in both Chinese and English.The report included all key areas as identified at project appraisal.The report has been an important reference for the EPB for preparation of the 13th Five-Year Plan for pollution control in Nanning City. 3. Establishment of a complete system to monitor the changes of water quality and quantity for the Yongjiang River Reach and its 18 tributaries and preparation of the water quality and quantity models as a tool to support the preparation of the strategic studies and routine managementA complete monitoring system will be established, which will include the following key points: (a) analyze the existing hydrological stations and water quality monitoring stations, and propose the new stations to be added to the monitoring networks; (b) develop the hydrological and environmental database to be shared by both water and environment departments of Nanning; (c) develop water quality and quantity models to evaluate the total pollution discharge to the Yongjiang River and the water environment carrying capacity of the river reach, using the data from the database established; and (d) display onscreen real-time modeling results on water quantity and quality changes to facilitate the decision-making process. As planned, the complete monitoring system, including database and models, was developed and completed.The models with database were made operational at the EPB, with intensive training on using of models provided to the EPB staff. A strict test was conducted for each of the trainees, and all trainees passed the test.The system developed was used to help the study teams prepare the strategic study and action plans to simulate situations during the project implementation period. Rehearsals for using the model to handle accidental water pollution discharges into rivers showed the developed system is ready and effective and could be important in handling real accidents. The system developed has been used in the planning of pollution control works and measures for the 13th Five-Year Plan.The data and information in the database could be shared with water and related departments through coordination with the Municipal Environment Protection Committee, and special software was developed to obtain hydrological data and information online from the water department for future sustainable use of the system. 4. Pollution control action plans as pilots for integrated mini–river basin management in Fenghuang, Liaogqing and Lengtang Rivers tributaries.The three action plans will be prepared to do the following: (a) analyze the direct and indirect factors that contribute to polluting the mini-rivers, in accordance with the principles of integrated mini-river basin management; (b) carry out field visits to the mini-river basin area to interview farmers and water users as well as other stakeholders to gain an understanding of the real situations; and (c) propose feasible actions in accordance with the legal provisions of the regulations, including who will take actions and where and when the actions will be taken.Three action plans were prepared and completed as planned for the three demonstration tributaries, respectively, based on the revised regulations and the strategic study. All action plans were reviewed and approved by the EPB for implementation as planned. The EPB recommended the three action plans as examples for future action plans for pollution control for the other 15 tributaries upstream. Project Design Review and Project SupervisionHiring project management consultant to support Nanning PMO, implementing agencies, and disbursement Carrying out study tours and training for the PMO and PIUsStudy tours and trainingTechnical assistanceThe study tours and trainings were conducted in October 2015. A consultant was hired to assist the preparation of ICR. Annex 3. Economic and Financial Analysis 1. Economic AnalysisAt appraisal, an economic analysis was carried out to justify the implementation of the proposed wastewater management and river rehabilitation components. The basic justification was made through the application of least-cost analysis to identify priority interventions for project implementation, the quantification of economic benefits for the river rehabilitation component, and the use of a benefit transfer approach to compare the project subcomponents with those of similar projects in South West China. At project closing, the economic analysis, including the least-cost analysis and the benefit estimation of the river rehabilitation component, was updated where possible with actual results and costs. 1.1 Cost-Effectiveness AnalysisWastewater Management ComponentAt appraisal, the least-cost methodology was adopted for the wastewater management component—specifically, to select the most appropriate wastewater treatment process for the wastewater components in the towns of Mashan and Wuming. For the treatment of 6,000 m3 of wastewater per day in Mashan, the conventional activated sludge treatment (CAST) process was selected over an anaerobic-aerobic process. Similarly, for the treatment of 50,000 m3 of wastewater per day in Wuming, the sequencing batch reactor (SBR) process was selected over an anaerobic/aerobic process. This analysis was based on design parameters, such as pollutant content and volume of influent. As the actual pollutant content was lower than estimated at appraisal, it cannot be ruled out that the analysis could have identified a different solution had the actual pollutant content been better investigated. With a further separation of the wastewater and rainwater systems likely in the future, however, the pollutant content could increase over time. The technical alternatives considered in the least-cost analysis at appraisal had more or less the same total costs, within 5 percent of each other (combined capital and operational expenditures). The wastewater treatment processes implemented at the WWTPs are, however, all working well and meeting the effluent standard. The least-cost analysis of the wastewater component has not been redone at project closing as the baseline condition had changed—the actual pollution situation at project closing differed from the pollution assumptions at appraisal.River Rehabilitation ComponentAt appraisal, the least-cost methodology was adopted for the river rehabilitation component—specifically, to select between the alternatives of forced drainage with pump stations and increased regulating capacity along the rivers. As the two subcomponents were slightly revised during project implementation to cover shorter stretches of the rivers, reliable comparison of cost estimates at appraisal to actual costs at closing was not fully possible. For O&M, specifically, the cost at project closing was estimated. The Nanning Municipal Government accounts do not show the costs of O&M allocated to the three rivers rehabilitated in the project—Fenghuang, Liangqing, and Lengtang Rivers. A total of around CNY 12 million annually is, however, held by the Nanning Inner Rivers Administration Office for O&M purposes for all 18 inner rivers in Nanning. By weighting with the length and catchment areas of the rivers, the share of the total O&M costs related to the rehabilitated rivers was established. Table 3. SEQ Table_3. \* ARABIC 1. Cost Comparison for the Fenghuang River SubcomponentEstimation of Costs at Appraisal (CNY)Actual Costs atClosing (CNY)Construction and equipment145,700,00092,460,000Land acquisition and resettlement154,730,000148,050,000Total investment300,430,000240,510,000Annualized capital costs—40 years 7,510,750 6,012,750Annual costs of O&M 3,330,000 256,150Annual costs (excluding financial) 10,840,750 6,268,900Table 3. SEQ Table_3. \* ARABIC 2. Cost Comparison for the Liangqing and Lengtang Rivers SubcomponentEstimation of Costs at Appraisal (CNY)Actual Costs atClosing (CNY)Construction and equipment314,290,000200,850,000Land acquisition and resettlement244,500,000114,870,000Total investment558,790,000315,720,000Annualized capital costs - 40 years13,969,7507,893,000Annual costs of O&M5,200,0001,967,651Annual costs (excluding financial)19,169,7509,860,651As indicated in tables 3.1 and 3.2, the actual costs at project closing for the river rehabilitation component were lower than estimated at appraisal, leading to savings. However, lower O&M costs compared to appraisal can also suggest inadequate maintenance. 1.2 Cost-Benefit Analysis Economic cost-benefit analysis of the project at appraisal relied on quantification of selected economic benefits for the river rehabilitation component and comparison to other similar projects. Quantification of Economic Benefits related to the River Rehabilitation ComponentTo support the economic justification of the river rehabilitation component at appraisal, the direct economic benefits of flood control and land appreciation were quantified. Valuable indirect economic benefits from implementing the river rehabilitation component, such as the economic value of reducing pollution discharged into the rivers, were not quantified. Estimations at appraisal showed significant appreciation in land values as a result of implementing the river rehabilitation component. The land appreciation benefits arise from implementing flood protection and thereby upgrading the land for residential and commercial development. The increase in the land value, however, cannot be fully attributed to the river rehabilitation component. It is also difficult to quantify the increase in the land value due to the project. However, the increase in the land value in the project area was significant. For the Fenghuang River subcomponent, the current analysis estimates that the project cost corresponded to 17 percent of the increase in land value and for the Liangqing and Lengtang Rivers subcomponents, it is estimated that the project costs accounted for 8 percent of the total increase in land value. At appraisal, the flood control benefits due to the river rehabilitation were estimated. Those benefits were reassessed at project closing and they were higher mainly due to the increased value of property. The benefit of reduced flood damage is compared with the actual costs in table 3.3 (at appraisal and closing).Table 3. SEQ Table_3. \* ARABIC 3. Economic Benefits from the Fenghuang River SubcomponentEstimation of Benefits at Appraisal (CNY)Estimation of Benefits atClosing (CNY)Annual flood control benefits-losses from 4-10-20-50 years flooding10,680,00013,650,000Land appreciation benefits—land for real estate Land appreciation benefits—land for other purposes483,760,00020,700,0001,035,000,00037,260,000Table 3. SEQ Table_3. \* ARABIC 4. Economic Benefits from the Liangqing and Lengtang Rivers SubcomponentChinese yuanEstimation of Benefits at AppraisalEstimation of Benefits atClosingAnnual flood control benefits-losses from 4-10-20-50 years flooding 2,600,000 4,200,000Land appreciation benefits – land for real estate 584,800,0002,368,350,000The flood control benefits shown in tables 3.3 and 3.4 derive from eliminated damages and losses from floods that occur every 4, 10, 20, or 50 years. The land value appreciation benefits presented are the net appreciations from implementing the project. Comparison to other ProjectsAt appraisal, a cost-benefit transfer approach was applied to illustrate the magnitude of economic internal rate of return (EIRR) achievable from implementing the wastewater management and river rehabilitation components of the project. The comparison was made to a World Bank project in the Yunnan Province with similar components, also covering wastewater management and river rehabilitation. The compared project carried out surveys of affected households, and the size of economic benefits was estimated based on willingness-to-pay for the improved services and environment. The EIRR for the compared project was estimated to be 18 percent for the river rehabilitation project and 20 percent for the wastewater project. At project closing, a detailed analysis on the benefit transfer was not carried out. However, because the actual costs and the benefits assumed at appraisal are similar, the assessment should be that the project is economically viable. 2. Wastewater Tariffs and Affordability for ResidentsAfter appraisal, the residents’ wastewater tariff increased, from CNY 0.80 per m3 in 2009 to CNY 1.17 per m3 in 2015, for Nanning districts and counties. At appraisal an affordability analysis was prepared to determine the ability of low-income families to afford the wastewater service to be implemented. The analysis showed the wastewater service would be fully affordable for urban families in the lowest income bracket, Minimum Living Allowance Subsidy (MLAS). The combined water and wastewater bill was forecast at typically less than 3 percent of the families’ income, which lay within an acceptable norm.At project closing, a similar analysis showed increased affordability for families in Nanning’s urban districts, as tariffs since entry had not increased at the same rate as family incomes. The ability of families in towns to afford water tariffs was generally slightly less, but the cost of water and wastewater services was less than 3 percent of income in all areas of the project. Table 3. SEQ Table_3. \* ARABIC 5. Scheme Selection for the Fenghuang River ComponentForecastActuals at Closingat AppraisalNanning Districts’ HouseholdsMashan Town’s Households2013201320142015201320142015Water supply tariff (CNY/m3)1.051.401.541.562.783.153.15Wastewater tariff (CNY/m3)1.051.171.171.170.801.151.15Total tariff (CNY/m3)2.102.572.712.733.584.304.30Water fee172204225228406459459Wastewater fee172171171171117168168Total fees payable307375396399523627627Urban MLAS253400400500320320400Low-income family12,16719,20019,20024,00015,36015,36019,200Water fee of income (%)1.41.11.20.2.12.41.9Wastewater fee of income (%)1.40.90.90.70.60.90.7Total fees of income (%)2.52.02.11.72.73.32.63. Fiscal Analysis OverviewThe affordability to the Nanning Municipal Government of implementing the project was analyzed at appraisal. The analysis showed that the cost of the project would be fully manageable, because its counterpart funding will be a small portion of the municipality’s annual budget and its total infrastructure expenses. An analysis at project closing showed that the municipality’s budget and infrastructure expenses had both increased since project appraisal, but funding the project remained manageable. The Nanning Municipal Government counterpart funding accounted for less than 1 percent of the municipality’s total infrastructure expenditures from 2010 to 2015.4. Financial Analysis OverviewA financial analysis was conducted at project appraisal to review the financial sustainability of the wastewater component operations—in particular, the repayment capacity of the GNWC. The financial analysis showed steady financial sustainability and adequate repayment capacity relative to the funding provided.Table 3.6 summarizes the basic operational information for the six WWTPs, based on 2015 yearly data. As the table shows, the volume of wastewater received at each WWTP fluctuates over the 12 months of the year because the region has dry and rainy seasons. The capacity utilization for almost all the plants is high, reaching close to 100 percent. Binyang, Mashan, and Shanglin WWTPs receive much thinner wastewater with regard to pollutant concentration than the others do because septic tanks and combined sewer systems are still in use in many old neighborhoods. At the time of project closing, county governments were financing the expansion of sewer networks with the separate system in urban areas of Henxian, Mashan, and Shanglin. It is highly likely, therefore, that these WWTPs will receive more wastewater with higher concentrations of pollutants in the future. The table also shows that larger WWTPs have lower O&M unit costs than smaller ones because they have economy of scale, but the treatment fee GNWC negotiated with local governments can cover the O&M costs for all six WWTPs. The financial analysis conducted at project closing showed positive performance of GNWC in general and of its Wastewater Division in particular. The division remained profitable during the first years of operation of the implemented assets, and financial forecast showed it would continue so in the coming years. The company will, moreover, be in compliance with the covenanted ratio of cost recovery, indicating that its repayment capacity will remain adequate.Table 3. SEQ Table_3. \* ARABIC 7. GNWC Water Supply and Wastewater Service Financial Results in Brief for Recent Years201320142015CNY, thousandsActualActualActualTotal revenue879,259999,2741,126,826Operating costs–318,038–411,926–389,982Other costs–85,420–104,702–109,264Earnings before interest, tax, depreciation, and amortization475,801482,646627,580Depreciation and amortization–146,708–86,555–158,541Earnings before interest and tax329,094396,091469,039Financial charges –84,362–116,181–184,480Earnings before tax244,732279,910284,559Income tax–36,498–41,678–43,052Earnings after tax208,234238,231241,507The FIRR for the wastewater management component was estimated to be 6 percent at appraisal. At project closing, the FIRR was estimated at above 10 percent, partly because the compensation mechanisms for financing and operating the wastewater facilities had changed from user fees to government compensation to cover costs. 5. Conclusion on Economic and Financial AnalysesUpdating the economic analysis at project closing supported the overall economic justification provided at project appraisal. The river rehabilitation component saw increased economic benefits related to land appreciation and flood control from implementing the project. The actual financial results of implementing and operating the wastewater management component were, overall, in line with the financial analysis prepared at project appraisal. The project remained financially sustainable, and at closing was forecast to continue being sustainable for the near future. The FIRR analysis at project closing found levels above 10 percent—slightly higher than what was estimated at project appraisal. Table 3. SEQ Table_3. \* ARABIC 6. Operational Data of WWTPs for 2015WWTPsUnitJiangnan IIWWTPBinyangWWTPHengxianWWTPMashanWWTPShanglinWWTPWumingWWTPStart of operationDateSeptember 2010September 2010September 2010September 2010September 2010September 2010Treatment process aNameMSBRMSBRMSBRCASTCASTMSBRWWTP design capacitym3/day240,00020,00020,0006,0006,00050,000Wastewater volume treatedm3/day230,71017,70716,4705,7272,86030,000Highest monthly averagem3/day257,23521,02717,9355,9064,33236,800Lowest monthly averagem3/day163,17614,07313,7685,2031,32519,562Plant utilization rate%968982954860COD in inflowmg/l154791657954174Highest monthly averagemg/l17912426412295334Lowest monthly averagemg/l124481155134122COD in effluentmg/l191111122013Highest monthly averagemg/l221615154016Lowest monthly averagemg/l1589101310Discharge standardClass 1BClass 1BClass 1BClass 1BClass 1BClass 1AWater supply tariffCNY/m31.562.952.693.152.212.74Wastewater tariffCNY/m31.171.151.051.151.051.15Treatment fee bCNY/m31.782.302.493.635.292.16Number of staff at WWTP#342622222526Cost of O&M cCNY155,842,7005,380,8005,602,5004,087,2003,844,7009,348,000O&M unit cost dCNY/m30.560.840.941.983.730.87Depreciation cost cCNY87,103,2003,361,4002,979,4001,716,6002,036,8005,692,900Note: a. MSBR = Modified Sequencing Batch Reactor. b. Fee for treatment of wastewater paid by local governments to GNWC. c. For Jiangnan II WWTP: Cost for wastewater operations in Nanning urban districts. d. For Jiangnan II WWTP: O&M unit cost for wastewater operations in Nanning urban districts. Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team MembersNamesTitleUnitResponsibility/SpecialtyLendingTakuya Kamata Sr. Financial AnalystEASINTask Team LeaderShunong HuSr. Water EngineerEASCSEngineerLiping JiangSr. Irrigation EngineerEASCSEngineerChaogang WangSr. Social ScientistEASCSSocial SafeguardsYiren FengEnvironmental SpecialistEASCSEnvironmental SafeguardsHaixia LiFinancial Management SpecialistEASCOFinancial ManagementJingrong HeProcurement SpecialistEASCOProcurementXujun LiuProcurement SpecialistEASCOProcurementBrett SedgewickJunior Professional AssociateEASINOperational supportVellet FernandesProgram AssistantEASINProgram AssistantXin ChenProgram AssistantEACCFProgram AssistantXuemei GuoProgram AssistantEACCFProgram AssistantDan XieProgram AssistantEACCFProgram AssistantClaudio PurificatoWater and Sanitation EngineerConsultantEngineerKnud LauritzenFinancial AnalystConsultantFinancial AnalystSupervision/ICRVictor Vazquez Alvarez Sr. Water and Sanitation SpecialistGWA04Task Team LeaderPaul ProceeProgram LeaderLCC5CFormer Task Team LeaderLiping JiangSr. Irrigation EngineerGWA02EngineerGang QinSr. Water and Sanitation SpecialistGWA02EngineerYiren FengSr. Environmental SpecialistGEN2AEnvironmental SafeguardsMeixiang ZhouSocial Development SpecialistGSU02Social SafeguardsHaixia LiSr. Financial Management SpecialistGGO20Financial ManagementJingrong HeProcurement SpecialistGGO08ProcurementHuiying GuoProgram AssistantEACCFProgram AssistantDan XieProgram AssistantEACCFProgram AssistantIsabel Duarte A. JuniorProgram AssistantGWA02Program AssistantKnud LauritzenFinancial AnalystConsultantFinancial AnalystChi Rong HuangWastewater ExpertConsultantEngineerLin ZhongchengSocial Safeguards SpecialistConsultantSocial SafeguardsToyoko KodamaUrban SpecialistGWASOICR Author(b) Staff Time and CostStage of Project CycleStaff Time and Cost (Bank Budget Only)No. of Staff WeeksUSD Thousands (including travel and consultant costs)LendingFY083.1117.71FY0949.7250.92FY1013.6555.75Total:66.46324.38Supervision/ICRFY1118.3674.56FY1216.2869.50FY1312.0261.33FY1412.1875.52FY1523.3115.16FY1620.06109.43Total:102.2505.50 Annex 5. Stakeholder Workshop Report and ResultsPublic Open Day on Environmental Protection AwarenessDuring the 45th World Environment Day on June 5, 2016, Nanning EPB invited about 200 people including community residents and college students to witness environmental protection achievements and arouse their awareness on environmental protection. The participants visited the Environmental Emergency Command Center, automatic air quality monitoring locations, vehicle exhaust mobile-measuring truck, and the environmental protection awareness and education demonstration center located in Qingxiushan Tourist Resort. At the Environmental Emergency Command Center, the work staff introduced the functions and applications of their equipment and emergency command system, including its application of water environment decision support system during the water pollution incidents. This system will help improve the management of environmental protection departments in addressing water pollution incidents, and enhance coordination and collaboration among different government departments in pollution prevention and management. During the visit at the air quality monitoring station located in the Senior Petrochemical Technician School of Guangxi, one of 11 air quality monitoring stations in Nanning City, the participants showed great interests in the monitoring and detecting equipment for air quality and how they their function. The equipment is able to carry out real-time monitoring on six types of pollutant concentration, including sulfur dioxide, PM10, PM2.5, among others. It helps improve air quality forecast and early warning for poor visibility and dust-haze, which provides great technical support for relevant authorities to address environmental challenges. China sets the theme of 45th World Environment Day as ‘Improving Environment Quality and Promoting Green Development’. Public participation helps to arouse awareness in environmental protection and green development in Nanning City. During the month-long awareness education campaign for the World Environment Day, EPB organized extensive events to arouse public awareness in environmental protection, including giving lectures in communities and schools, popularizing knowledge in prevention and control of water and air pollution, competitive answer to environmental protection questions on the online platform - Wechat, those who correctly answer the questions are offered incentives. It also organized 10 artistic performance shows under the theme of environmental protection in the communities and squares. By working with the Nanning Digital Office, it sent mass text messages containing environmental protection knowledge and green concepts to arouse public awareness and participations in environmental protection. Annex 6. Summary of Borrower’s ICR and/or Comments on Draft ICR I. Project Context, Development Objective and Design (I) Project ContextSince China’s reform and opening up, Nanning has maintained fast economic development over last three decades, in particular over last 10 years. With fast pace of urbanization in China, the population of Nanning City also kept rapid growth. There are 18 inland rivers in Nanning City. With the economic development and rapid population growth, domestic and industrial wastewater increases fast and is discharged into the inland rivers and then into Yongjiang River, which flows through the city. The drainage systems in 6 counties or districts under jurisdiction of Nanning City are combined systems. The drainage facilities are in a state of disrepair and have low coverage. There were no wastewater treatment plants in all the 6 counties or districts before the implementation of this project. Untreated wastewater is directly discharged into the streams, canals and ditches, which poses health risks to the surrounding residents. Given all these environmental problems, Nanning City faces the challenges of keeping economic growth while maintaining long-term sustainable development and environmental protection. What measures will Nanning City take to rehabilitate its inland rivers, improve drainage facilities, improve flood control capacity, prevent deterioration of water quality, improve urban environment, support sustainable economic development and maintain favorable living environment? Nanning Urban Environment Project is a continuing project after the successful implementation of Guangxi Urban Environment Project (Loan No.: 4348-CN, the project supports the development of wastewater treatment facilities and integrated rehabilitation of Chaoyang stream in Nanning City). As the Phase II of urban environment management, the implementation of this project helps greatly improve the experiences and project benefits of the Phase I investment. In addition, to address the problems in the management of mini-rivers, the project develops a creative mini-river management mechanism, which greatly improves the law enforcement and management capacities of local governmental regulatory departments. (II) Development Objective The project development objective is to assist the Nanning Municipality in arresting further deterioration of surface water quality in selected urban centers by expanding coverage of wastewater treatment services, carrying out environmental rehabilitation of rivers, and developing institutional and regulatory capacity.(III) Project ComponentsThe project consists of 3 components, including: (1) Wastewater Management; (2) River Rehabilitation; and (3) Technical Assistance. (Please refer to project appraisal document for details). (IV) Project Restructuring and Disbursement Categories AdjustmentDue to a number of issues related to land acquisition and resettlement, the rehabilitation of 1.633 km section of Fenghuang River at its lower reach will not be completed before the closing date. For this reason, Nanning applied to the World Bank to remove it from the protect scopes. The river course will continue to be rehabilitated with domestic counterpart funding and is expected to complete by the end of 2016.As the equipment installation costs are included into the equipment costs for the wastewater management component, after the installation costs were reimbursed from the category of civil works, there were surplus of funding for the categories of equipment and consulting services, while civil works category faces insufficient load proceeds. Therefore, Nanning Urban Environment Project Management Office (The PMO) has applied to the World Bank to make appropriate adjustment for the disbursement categories.The preparation of Implementation Rules of Management Regulations for Yongjiang River Water Pollution Control of Nanning (Contract No.: RBMC-A-02) was cancelled with the consent from the World Bank on 22 July 2014 due to the change in the condition of contract implementation.(All the above three restructuring or adjustments have been approved by the World Bank. Please refer to the Aide Memoire of the World Bank Mission on 8-11 June 2015 for details.)The third Guangxi Landscape and Horticulture Expo was held in Wuxiang Lake Garden in September 2013, making it difficult to complete the rehabilitation for 1.993 km river section of Liangqing River from Pingle Avenue to Yudong Avenue before the expo. Therefore, Nanning Municipal Government applied to remove this river section from this project and the application was approved by the World Bank.The disbursement categories before and after the adjustment are as follows:CategoryApproved loan commitment(USD)Adjusted loan commitment(USD)Variations (USD)1. Civil works60,070,00074,256,300+14,195,3002. Goods 37,630,00024,205,400-13,424,6003. Consulting services, training and study tour 2,050,0001,288,300-761,700Front-end fee250,000250,0000Total100,000,000100,000,000(V) Project ExtensionComplicated land acquisition and resettlement process and stormy weather make it difficult to complete Fenghuang River rehabilitation component before the closing date. For this reason, the PMO requested to extend the closing date for half a year to 30 June 2016. The World Bank approved the extension on 28 September 2015. Please refer to the amendment to Loan Agreement for Nanning Urban Environment Project (Loan No.: 7898-CN) on 28 September 2015.II. Key Factors Affecting Project Implementation and Outcomes(I) Project Preparation, Design and Quality at EntryThe preparation, design and proposal of this project are to meet the urgent need of a medium size city to improve urbanization and water environment. It is consistent with the national policies for urban development and water environment rehabilitation and China’s urban planning program. The government commitments, particularly the project organizations and financial counterpart funding, cater to actual project needs. The project risk assessment takes into full account the national industrial policies as well as the changes in domestic and international economic environment and gives full consideration to project risks. All these help lay solid ground for the successful project implementation. (II) Project Performance After the implementation for nearly 6 years, all project activities have completed and expected objectives outlined in the project appraisal document have been achieved.1. Policies and Institutional Capacity BuildingThe project helps to address a major strategic issue in the World Bank’s Country Partnership Strategy for China (Report No.: No.35435, Disclosure date: 23 May 2006): managing resource scarcity and environmental challenges by expanding urban wastewater collection and treatment facilities and increasing the coverage of waste disposal services (the coverage increased to 95.78% in 2015 from 41.5% in 2010); managing natural resources through piloted new approaches. This project is also consistent with China’s national development program.The project helps to build an integrated management system for mini-river basins of Yongjiang River in Nanning City;With the implementation of this project, a mini-river basin management mechanism has been established. The Management Regulations for Yongjiang River Water Pollution Control of Nanning is modified and approved by the legislative sessions of People’s Congress at Guangxi provincial and Nanning municipal level. The Strategic Study on Improving Water Ecological Environment of the Yongjiang River Basin to Support Sustainable Social and Economic Development of Nanning is carried out. The Pollution Control Action Plan for Fenghuang, Liangqing and Lengtang Rivers is prepared. And the capacity for water quality monitoring in river basin of Nanning has been improved. All these measures further improve Nanning’s capacity of integrated management on its river basins and water quality monitoring, and they also greatly improve the capacity of local governmental departments in law enforcement and management. 2. Completed Project Activities/Scopes (1) Wastewater ManagementWastewater treatment facilities were built in Jiangnan Wastewater Treatment Plant (Phase II), with a capacity of 240,000 m3/d and improved SBR technology. Currently, the treatment rate of wastewater reaches 95.78 % in Nanning urban area. 56.46 km (86 km at project appraisal) of Class I and Class II sewage pipes were newly built or expanded in Wuming, Binyang, Hengxian, Shanglin and Mashan Counties. 5 wastewater pumping stations (8 at project appraisal) were built. Five wastewater treatment plants with a total capacity of 102,000 m3/d were built. With the completion and operations of this project, the treatment rate of wastewater in the 5 counties increases to currently 83.42%, 62.01%, 77.24%, 61.73% and 31.68% respectively from zero. (2) Rehabilitation of 10.366 km RiversRehabilitation of Fenghuang River: 3.207km (4.84km at project appraisal and 1.633km at the river downstream was removed from the project scopes with the approval from the World Bank). The construction scope includes river bed clean-up, embankment improvement, a regulating lake with a total capacity of 1.14 million m3, about 9.6km wastewater intercepting pipes (9.37km at project appraisal) and 1.5km storm sewers (5.32km at project appraisal) laid along both banks of the river, 23 water outlets and 120,000 m2 of vegetation plantation along the river. Rehabilitation of Liangqing and Lengtang Rivers: 7.156 km (9.41km at project appraisal), including 4.731km for Liangqing River (6.901km at project appraisal and 6.724 km at preliminary design, 1.993 km removed at river section from Pingle Avenue to Yudong Avenue after approval from the Bank) and 2.425 km for Lengtang River (2.504km at project appraisal and 2.425 km at preliminary design). The construction scopes include river bed clean-up, embankment improvement, 3 regulating lakes with a total capacity of 1.62 million m3, 1 concrete dam (2 at project appraisal and 1 remained after 1.993 km removed at river section from Pingle Avenue to Yudong Avenue with approval from the Bank), 76 water outlets vegetation plantation along the river banks. (3) Technical assistanceA. Integrated Mini-river ManagementThe Management Regulations for Yongjiang River Water Pollution Control of Nanning is modified and approved by the legislative sessions of People’s Congress at Guangxi provincial and Nanning municipal level, with an investment of RMB 288,000. The Strategic Study on Improving Water Ecological Environment of the Yongjiang River Basin to Support Sustainable Social and Economic Development of Nanning is carried out, with an investment of RMB 379,000.The water quality monitoring system for the river basin of Nanning City is established to promote the strategic study and improve daily management, with an investment of RMB 4,691,647.The Pollution Control Action Plan for Fenghuang, Liangqing and Lengtang Rivers is prepared, with an investment of RMB 270,000.B. Project Management, Construction Drawings and Design Review The study tours and trainings were conducted for relevant project staff in 3 separate batches. The project has completed a cumulative investment of RMB 1.461107 billion, including RMB 609.143 million World Bank loans and RMB 851.964 million domestic counterpart funding. Among counterpart funding, RMB 553.836 million is from the government and RMB 298.128 million is self-raised by the implementing agencies. (III) Key Factors Affecting Implementation of the Project1. Influencing factors out of control of the government and implementing agencies (1) Cumulative delay in construction due to floods exceeds 4 months. (2) Changes in geological conditions, including changes in underground water level and drift sand cause further delay in construction and increased costs. 2. Influencing factors under the control of governmentMacro policies: The policies at national and World Bank level: The State Council promulgated the Action Plan for Prevention and Control of Water Pollution in April 2015, which proposed to take 238 specific measures to prevent and control water pollution. And the World Bank put forward afterward additional technical proposals in response to the action plan. The policies at local level: Nanning modified the Management Regulations for Yongjiang River Water Pollution Control of Nanning, which has been approved by the legislative sessions of People’s Congress at Guangxi provincial and Nanning municipal level. In addition, Nanning prepared the Thirteenth Five-Year Plan for Environmental Protection, which put forward specific requirements on the prevention and control of water pollution. To adapt to these changes, it is required to modify and improve the Strategic Study on Improving Water Ecological Environment of the Yongjiang River Basin to Support Sustainable Social and Economic Development of Nanning, the Pollution Control Action Plan for Fenghuang, Liangqing and Lengtang Rivers, as well as the Water Quality Monitoring System for River Basin of Nanning.Departmental Policies: Relevant government departments at various levels provide great assistance and policy supports for the construction and operations of this project. Counterpart funding: The government provided counterpart funding in an adequate and timely manner.Inter-departmental coordination: Multiple departments are involved in the project management and there may be not enough coordination among different departments, which also pose some impacts on the smooth implementation of this project.3. Influencing factors under the control of project agenciesProject management agencies: The PMO staffs at Guangxi provincial and, Nanning municipal level as well as the implementing agencies remain relatively stable during the project implementation. There were adjustments for partial PMO staff, but project management has been carried out smoothly. Project participants: All participants play their corresponding roles during the project construction.(IV) Monitoring and Evaluation (M&E) Design, Implementation and UtilizationMonitoring and evaluation design: Please refer to the Project Appraisal Document for details. Implementation and utilization: The project agencies carry out the monitoring and evaluation according to the requirements of Project Appraisal Document and summarize and analyze the monitoring and evaluation data every half a year. The monitoring on key performance indictors helps to understand the implementation schedule, changes and outcomes, which provides support for necessary and timey adjustment and ensures the project construction as scheduled. The constant monitoring data also provide support to evaluate project design, analyze project results and sum up experiences and lessons. They play important roles for not only the project construction but also effective operation after project completion. (V) Policy Safeguards, Financial and Procurement ComplianceNational policy safeguards: China provides great support for the implementation of World Bank project. Chinese commitments in the loan agreement and project appraisal report are basically fulfilled. Financial activities: Based on the requirements of Management Regulations on Financial Accounting for World Bank Loan Projects issued by the Ministry of Finance, the project agencies are required to deploy qualified financial accounting staff and open special account for independent accounting. They should follow unified approaches on financial management, accounting and reimbursement and keep unified and complete records and account files. Procurement activities: The procurement activities are carried out on the basis of Guidelines Procurement under IBRD Loans and IDA Credits.(VI) Post-completion Operation/Next PhaseAdministrative agencies: All existing administrative agencies will remain operating as a transition after project completion. The financial departments and project agencies at various levels will also provide a certain amount of funding to maintain continuing operation and management of the project. Support services: After project completion, the governments and relevant regulatory departments at various levels will continue to back the support service system and provide technical training and oversights with regard to project operation so as to provide all-round services for the people in the project areas. Loan repayment: A repayment mechanism is established for maturity loans to ensure the efficiency of capital use. III. Assessment of Outcomes(I) Relevance of Objectives, Design and ImplementationThe project is designed to meet the development objectives. The investment in wastewater management, river rehabilitation and technical assistance are consistent with the project development objectives. And the project is implemented by strictly following the project designs. (II) Achievement of Project Development ObjectivesThe wastewater management component started in January 2010 and was completed and put into operation in 2012 after the environmental acceptance. As of the end of 2015, all WWTPs have been operating close to their full capacities. Remarkable achievements were made for the wastewater management component. The coverage of wastewater collection and treatment services in the project area increased to 89.19% (75.5% in the Results Framework), and the population in participating areas of Nanning Municipality served by wastewater collection and treatment services increased to 2.9557 million (2.5 million in the Results Framework), which greatly prevent further deterioration of surface water in the project area of Nanning City. The project helps to remove 10,305 tons of BOD pollution loads annually (9,715 tons in the Results Framework). The details of 6 newly built WWTPs in Nanning City, Wuming, Hengxian, Binyang, Shanglin and Mashan Counties are listed in Annex 3. The river rehabilitation component started in November 2012. 10.366 km rivers are rehabilitated (14.25 km at project appraisal and 3.626 km removed with approval from the Bank). The completion and operation of the project greatly improve the flood control and drainage capacity for Fenghuang, Liangqing and Lengtang Rivers. It also helps to control soil erosion, restore and protect ecosystem and water quality of river and improve landscape along the river banks. All these contribute to coordinated and sustainable economic and social development in Nanning City. All the consulting services for integrated mini river basin management are completed. It greatly improves the legislation and law enforcement in pollution control in the basin and provides great technical support for the protection of water resources and monitoring of pollution control of inland rivers in Nanning City, which further improves Nanning’s capacity of integrated management on its river basins and water quality monitoring.(III) Implementation of Resettlement Policies to Alleviate Social Risks The land acquisition and resettlement were conducted according to the consolidated Resettlement Plan of Nanning Urban Environment Project. There are some social risks during the process of project implementation, but the issues related to land acquisition and resettlements have been properly addressed. The PMO recruited the Resettlement Research Center of Hohai University to carry out external resettlement monitoring. The monitoring reports show that, good progress was made in resettlement works and compensation. All the affected persons have been reasonably resettled and compensated in full amount. External monitoring shows that the affected persons have lived better lives compared with that before the project. Their livelihoods have been recovered or improved. (IV) Implementation of Environmental Management Plan to Mitigate Negative ImpactsBased on the Environmental Impact Assessment Consolidated Report and the Environmental Management Plan (EMP) for Nanning Urban Environment Project, environmental management and supervision entities are set up, and proper mitigation measures have been taken during the project construction and operations. Independent environmental monitoring agency was hired to monitor atmospheric environment, water environment, acoustic environment, solid waste and neighboring environment during the project implementation. During the project construction and operations, no obvious environmental issue was reported and no complaint was received from the public regarding the environmental management.This project has brought significant positive impacts on the environment, such as improved wastewater collection system, reduced pollution to the environment and rivers, improved storm water collection system, rehabilitated inland rivers and noticeable improvement in flood control and drainage capacity. The positive impacts also contribute to the public health and better urban life.(V) SustainabilityNanning Urban Environment Project was designed based on latest urban planning of the city. All the basic data with relevant to water supply, wastewater volume and hydrology have been strictly reviewed and are based on latest market prices. Therefore, the project is consistent with urban planning and is regarded as a sustainable project. Nanning City has defines the principles for its urban development as “taking Yongjiang River as the axis, developing the western and expanding toward eastern, improving both the north and the south with the priority on the south”. This project helps to improve river environment, manage resources scarcity and address environmental challenges by improving the coverage of wastewater collection and treatment services and rehabilitation of Fenghuang, Liangqing and Lengtang Rivers. It also helps to improve the quality of urban life, attract new investors and promote local economic development. Continuing efforts of Nanning government show the sustainability of this project and its outcomes.Constant improvement in finance performance of Nanning City and the efficiency and effectiveness of its urban environmental services are critical for the success of this project. The implementation of re-loaning agreement with Nanning Government and the project implementing agencies will help to improve the operation and management of implementing agencies so as to achieve long term sustainability. The implementing agency of wastewater management component is Guangxi Nanning Water Co. Ltd. (GNWC), who is also the implementing agency of Jiangnan Wastewater Treatment Plant (Phase I). The company operation is always supported by a strong cash flow. The increase in the tariff for wastewater treatment service will ensure the financial sustainability of the wastewater management component. The new Regulations on Collection and Use of Wastewater Treatment Fee, which was jointly promulgated by the Ministry of Finance, the National Development and Reform Commission and the Ministry of Housing and Urban-rural Development, became effective on 1 March 2015. The company is paid by the government through the purchase of its services, which is an incentive mechanism for the implementing agency to improve the quality and quantity of its wastewater treatment services and ensures its financial sustainability over long term. The implementing agencies of river rehabilitation component are Nanning Xiangsihu Investment & Constructions Development Company Ltd. (NXIC) and Nanning Communication and Water Conservancy Investment Company Ltd. (NCWIC). After its completion, the project will be transferred to Nanning Inland River Administration, a fully financed public institution with government budget. The annual operation and maintenance costs will be paid by the financial budget of Nanning Municipality. The river rehabilitation component is also financially sustainable. Therefore, the project is considered to maintain good sustainability. The project greatly improves the environment of Nanning City and relevant counties and makes the land appreciate. It brings new opportunities for the city by increasing its attractiveness for investment. For example, it has attracted continuing investment of Top 500 enterprises in China such as Wanda Group and Vanke Group in the urban area and Wuxiang New District. Multiple trainings are provided for staff of relevant organizations, which in turn improves the company management and enhance mutual understanding. Overall, the project is rated as very satisfactory.IV. Assessment of Risk to Development Objective and Outcome(I) Assessment of Risk to Development ObjectiveAssessment of risk to development objective is accurate and consistent with reality. During the project implementation, a series of measures are taken to improve project management. For example, consensus was made regarding the main design parameters for wastewater treatment to reduce the design capacity of 3 wastewater treatment plants. The detailed designs were carried out soon after the feasibility study report completed the domestic procedures, and the implementing agencies have allocated sufficient capital as the design costs. To prevent the delay in project implementation, this project did not adopt the turn-key contract. The land acquisition and demolition were reduced through optimal design. Proper contract period and types of contracts were chosen for components with large civil works. Except for few impacts on project implementation due to natural disaster such as typhoon in limited project areas, the potential risks of project development objectives are within expected range.(II) Assessment of Risk to Development OutcomeAssessment of risk to development outcome is accurate and consistent with reality. Measures are taken to improve project outcomes. The Management Regulations for Yongjiang River Water Pollution Control of Nanning is modified and approved by the legislative sessions of People’s Congress at Guangxi provincial and Nanning municipal level. The Strategic Study on Improving Water Ecological Environment of the Yongjiang River Basin to Support Sustainable Social and Economic Development of Nanning is carried out. The Pollution Control Action Plan for Fenghuang, Liangqing and Lengtang Rivers is prepared. The legislation and law enforcement for pollution control greatly improved. The non-point source pollution and industrial pollution are well controlled and the water quality has been improved. The potential risks of development outcome are within expected range. Overall, the potential risks of development objectives and outcome are within expected range.V. Assessment of Bank and Borrower Performance(I) Bank Performance1. Adequate project identification;2. Reasonable project design;3. Rigorous and scientific project assessment;4. High quality of supervision.The team leaders, officials and experts of the Bank are impressive for their effective work style, responsible attitude, full understanding of polices and flexibility in work. (II) Borrower Performance1. Performance of government: The governments at various levels attach great importance to this project from proposal, approval, evaluation and implementation. They set up the project leading group and the PMOs and equipped with qualified personnel. Sufficient and timely provisions of credit funding and domestic counterpart funding ensure smooth project implementation.2. Implementing Agencies PerformanceUnder the leadership of governments at various levels, all project implementing agencies contributions to project design and construction, timely inspection and monitoring on the project, reasonable arrangement in implementation progress and on-site supervision, which ensures the completion of project construction with quality and quantity guaranteed and achievement of expected outcomes. VI. Good Experiences and Lessons Learned(I) Good experiencesStrong government ownership and close coordination among relevant departments guarantee the project success. The municipal government and implementing agencies set up the project leading groups to enhance the organization, coordination and leadership for the project. Their contributions are conducive to project implementation at different phases.Feasible project design and scientific implementation are prerequisite for project success. The project requirements and procedures are strictly followed during the project implementation to ensure the completion of project with quantity and quality guaranteed. Good supervision mechanism and smooth project management information network are basis of project success.Stability in project management institutions and hard work of staff guarantee the project success.Timely project restructuring according to the changes in macroeconomic environment and project implementation is the key to project success.The project provides a pilot model of upgrading environment before urban construction. Previously, the environmental pollution was controlled after years’ urban development, which is time-consuming and costly. This project is a good example for urban development by rehabilitating two important rivers and their surrounding environments before further urban construction. Innovative management mechanism for mini rivers provides a successful example for improving the law enforcement and management capacity of local government departments. The integrated mini river management system and mechanism developed under this project provide good examples for other cities in the management of mini rivers.(II) Lessons Learned1. Project preparationsUnderestimate of extreme natural disasters such as typhoon cause impacts on partial construction schedule.Underestimate of geographical conditions variations add to increased investments in some project components. 2. Project managementDuring the project implementation, the variations are relatively large for some contracts in the wastewater management component due to changes in urban planning and design, geological conditions and delayed construction and were not reported to the World Bank for prior review, which should be avoided for future project. For the river rehabilitation component, the land acquisition and resettlement lagged behind the schedule of Resettlement Plan due to complicated land acquisition and resettlement process and caused delay in construction. By the time of project completion, the land certificates for commercial land have not been issued for Nanxiang Village and 10 affected households have not been resettled as scheduled and require the PMO to continue to coordinate for their full solution after the project completion. The change in staff during the government institutional restructuring and long project implementation process pose some impacts on the consistency of project work. VII. Comments on Issues Raised by BorrowerProject preparations: The project preparations covered more than 1 year after industrial investigation, pre-appraisal, appraisal, negotiation and loan effectiveness, which may cause misjudgment of implementing agencies on the market and project cost and thus pose direct impacts on project outcomes.VIII. ConclusionsIt takes nearly 6 years for Nanning Urban Environment Project to complete construction. The project preparation, identification and design are scientific and reasonable. The construction scopes are consistent with national urban environmental protection policies. The project is organized and constructed with noticeable advancement and feasibility. It brings significant economic, social and ecological benefits as a result of strong government ownership and participations of beneficiaries. The project construction and operation lay a solid foundation for sustainable resources development in the project areas and their surrounding areas. The expected development objectives are achieved with satisfactory outcomes. Annex 7. List of Supporting Documents Project Appraisal DocumentLoan Agreement and Project Agreement, and their amendmentsMission aide memoirs and back-to-office reportsImplementation Status and Results ReportsRestructuring paper and its memorandum to County DirectorCountry Partnership Strategy for China (FY2013–16)Borrower’s Implementation Completion and Results Report (attached in annex 6)Capacity Building for Water Quality and Quantity Monitoring in River Basin of Nanning: Project Completion Assessment Report (June 2015)Strategy Research of Coordination between Water Ecological Environment Protection and Sustainable Social& Economic Development in Yongjiang Basin, Nanning City (December 2015)Comprehensive Improvement and the Pollution Control Action Plan of Lengtongchong in Nanning City (December 2015)Comprehensive Improvement and the Pollution Control Action Plan of Liangqing River in Nanning City (December 2015)Comprehensive Improvement and the Pollution Control Action Plan of Fenghuang River in Nanning City (December 2015) ................
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