Guizhou Shuibai Railway Project in the People's Republic of China (Loan 1626-PRC)

Date: May 2007
Type: Evaluation Reports
Country:
Subject:
Evaluation; Transport and ICT
Series: Project Performance Evaluation Reports
Project Number: 30066-013

Description

This report evaluates the performance of the Guizhou Shuibai Railway Project, which was provided by ADB to the Government of the People's Republic of China (PRC) in August 1998.

The Guizhou Shuibai Railway was a key element of the Guizhou Transportation Plan under the Ninth Five-Year Plan. The Guizhou Shuibai Railway Project was designed to help increase coal and other minerals and industrial outputs through the provision of a cost-effective mode of transport for mining output in the project area.

The Project aimed to promote economic growth in southwestern Guizhou province and was in line with ADB's strategic objective of promoting growth and reducing poverty. The Project was evaluated against the new project outcome as revised during project completion, which is to establish a cost-effective mode of transport for mining and other industrial outputs and for passengers in the Project area, bearing in mind four project outputs:

  • construction of a standard-gauge, single-track, electrified railway line
  • construction of service, access, and link roads
  • computerization of management information and financial accounting systems
  • institutional development

Summary of Findings

  • The Project was rated 'relevant'. The Project was a key element of the Guizhou Transportation Plan under the Ninth Five-Year Plan and in line with ADB's operational strategy for the PRC road sector.

  • The Project was assessed 'effective' in achieving its expected outcomes. The Project line has been instrumental in tapping the large coal reserves in the Project area, and achieved substantial freight and passenger traffic on the railway.

  • Although there were shortfalls in benefits from the coal traffic, this was positively compensated by the Project's substantial benefits from diverted transit traffic which relieved a highly-congested west-east route. The Project was rated 'efficient'.

The Project was assessed 'likely sustainable'. Although the reestimated financial internal rate of return (FIRR) fell below the real cost of capital, the Project's sustainability must be viewed in the light of other positive developments which outweighed the low reestimated FIRR. Commercial operations of the Guizhou Shuihong Railway Company, Ltd. (GSRC) has been improving steadily, working and debt-service ratios have been fully met, and strong ownership and commitment has been shown by GSRC.

Overall, the Project was rated 'successful'.

Lessons Identified

  • There is a need for greater attention to market and industry details if the viability of a project depends to a large extent on a single commodity. In this context, the report proposes for the close monitoring of developments in the mining industry in the Project's area over the next 6 years.

  • Large-size corporations have a financial advantage. GSRC's initial size was too small to be financially viable but with the acquisition of an additional line, the revenue base of GSRC increased and made the corporation viable.

  • Early review missions to projects with significant amounts of resettlement (as was the case with this Project whose number of resettled people increased eleven-fold above appraisal estimates) should include a resettlement specialist.

Contents

Executive Summary Maps Introduction Design and Implementation Performance Assessment Other Assessments Issues, Lessons, and Follow-up Actions Appendixes