People's Republic of China: Tianjin Wastewater Treatment and Water Resources Protection Project [Loan 1797-PRC]

Date: December 2010
Type: Evaluation Reports
Country:
Subject:
Evaluation; Water
Series: Project Performance Evaluation Reports
Project Number: 31190-013

Description

Background

Tianjin is PRC's fourth-largest city and a municipality with the status of a province (similar to Beijing, Chongqing, and Shanghai). A high priority in Tianjin's development as a major industrial center has been to improve the urban environment, including developing a clean, high-technology industry. However, more than half of Tianjin's wastewater is discharged untreated into canals, rivers, and Bohai Bay. All major urban areas of Tianjin are served almost exclusively by a single raw water supply source, the Luan-Tianjin water diversion system. However, high-risk pollution, arising from various locations, threaten this water source and risk Tianjin's image as a modern, thriving metropolis that can effectively manage its water supply system and provide safe, clean water.

In December 2000, the Tianjin Wastewater Treatment and Water Resources Protection Project was approved by the Asian Development Bank (ADB). It aims to improve (i) the urban environment by reducing environmental contamination through improved wastewater management, and (ii) the quality of raw water supply in Tianjin. Secondary objectives include (i) strengthening the capacity of the raw water supply and wastewater operations to be more efficient and managed on commercial principles, (ii) introducing comprehensive watershed management approaches, and (iii) improving cost recovery from users through an improved tariff structure. The loan approved was for $340.7 million, comprising $169.2 million in foreign exchange costs and $171.5 million in local currency, with 76% of foreign currency and 122% of local funding disbursed. The total project cost after completion was $337.3 million, with local financing of $208.9 million, through the government's equity and a loan from the China Development Bank.

This report presents the findings of the performance evaluation of the project, which also contributed to broader studies on the multisector approach, and a special evaluation study on water policy.

Summary of Assessment

The project is rated successful. The project is rated relevant since it is in line with the government's plan as stated in the Hai River Pollution Prevention and Control Plan of enhancing environmental and public health conditions through wastewater treatment, and the protection of a single raw water source through ecological improvements. The project is rated effective since it has achieved its intended outcomes, and the technical options adopted during implementation were largely on a least-cost basis with most outputs attained. The project complied with the loan covenants stipulated, although there are still areas in the financial covenant, which need to be closely monitored. The project is rated efficient, with both components hurdling the economic cost of capital of 12%. However, the efficiency of the implementation process was somewhat compromised due to about a year delay in the implementation of the Yuqiao Reservoir subcomponent, owing to land acquisition and resettlement problems. The project is rated most likely sustainable as the resulting financial internal rate of return for each component surpasses the weighted average cost of capital.

Key Issues

A number of issues related to the project operations remain: (i) a need to explore new technology for sludge disposal; (ii) a pending contract signing between the Tianjin municipal government and Tianjin Sewerage Company which involves compliance with performance measures, such as treated water capacity level and sewer discharge standard; (iii) monitoring and evaluation of outcomes; and (iv) overlap in project implementation across agencies.

Lessons

The project points to a number of lessons regarding wastewater and water supply operations:

  • Adequate consultation and better communication with affected people for projects experiencing resettlement issues can reduce implementation delays.
  • Involving communities in environmental improvements increases their sustainability.
  • Bringing in private sector experience yields efficiency.
  • Receptiveness for gender development is context specific.
  • Complementarity of projects and donor coordination would improve operational efficiency.
  • A two-pronged approach focusing on developing institutions and training is needed to strengthen agencies.

Recommendations

No further follow-up actions are required following the suggestions made during the independent evaluation mission on compensation to affected peoples and monitoring of income restoration. There were steps reportedly taken by the executing agencies to comply with these suggestions, as per the resettlement livelihood restoration report for the Yuqiao Reservoir subcomponent, given by the executing agencies to the People's Republic of China Resident Mission in August 2010.

Contents

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