China, People's Republic of: Railway Energy Efficiency and Safety Enhancement Investment Program - Tranche I

Sovereign Project | 43332-023

Summary

The first financing tranche of the Investment Program comprises (i) introduction of (a) energy-efficient technologies, (b) environmentally friendly equipment, and (c) safety

equipment; (ii) a review of the existing institutional arrangements for integrating energy efficiency and environmental issues in railway management; (iii) conducting safety and energy

audits of a nominated railway administration; and (iv) providing capacity building support. ADB will finance (i) procurement of more energy-efficient equipment and material than that is currently in use; (ii) procurement of modern environmental equipment; (iii) procurement of equipment that will enhance maintenance and safety and can respond to emergencies more quickly, efficiently, and effectively; and (iv) capacity building, including staff training.

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Project Name Railway Energy Efficiency and Safety Enhancement Investment Program - Tranche I
Project Number 43332-023
Country China, People's Republic of
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2605-PRC: Railway Energy Efficiency and Safety Enhancement Investment Program - Tranche I
Ordinary capital resources US$ 300.00 million
TA 7403-PRC: Institutional and Capacity Development
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Transport - Rail transport (non-urban)

Gender Equity and Mainstreaming No gender elements
Description

The first financing tranche of the Investment Program comprises (i) introduction of (a) energy-efficient technologies, (b) environmentally friendly equipment, and (c) safety

equipment; (ii) a review of the existing institutional arrangements for integrating energy efficiency and environmental issues in railway management; (iii) conducting safety and energy

audits of a nominated railway administration; and (iv) providing capacity building support. ADB will finance (i) procurement of more energy-efficient equipment and material than that is currently in use; (ii) procurement of modern environmental equipment; (iii) procurement of equipment that will enhance maintenance and safety and can respond to emergencies more quickly, efficiently, and effectively; and (iv) capacity building, including staff training.

The first tranche's physical components are (i) energy efficiency component: (a) electric power supply system, and (b) railway electrification equipment; (ii) environmental protection

component: noise barrier; and (iii) railway safety enhancement component: (a) anti-seismic bridge bearing, (b) enhanced railway fastener, (c) railway telecommunication system, (d) railway signal system, and (e) operation maintenance and safety equipment. Examples of the kind of equipment proposed to be financed under the IP are single phase transformers instead of the conventional transformers, vacuum circuit breakers instead of oil circuit breakers, and infrared hot box detection system instead of the manual system of checking hot axle-boxes. These equipments have significant energy efficiency and safety benefits compared to what is used currently on the PRC railways. Integrating these equipments in the PRC railways would help optimize performance, ensure reliability, and enhance safety. The technologies will be compatible and adaptable to existing systems; and will be proven and scalable. A key aspect of their adoption will be having an adequate trial and testing period, to ensure their successful operation. Adequate maintenance spares will be provided to ensure their sustainability. A number of these technologies will be sourced from advanced countries, which will influence integration of advance technology in the railway system and offer opportunities for private sector. At an institutional level, ADB will work with MOR to study the international best practices and integrate energy efficiency, and environmental sustainability in its operations and management. The key inputs needed for the first tranche implementation include equipment,

installation, and MOR staff.

Project Rationale and Linkage to Country/Regional Strategy

Ministry of Railways will implement a plan for railway development (2009-2016) at a cost of about $25 billion for capacity expansion over the southwestern region of the PRC. This includes activities such as new construction, double tracking, electrification, and rehabilitation. Within this plan, one option was to support railway construction or capacity expansion as has been done in the past and another option was to support targeted areas such as energy efficiency, environmental sustainability, and safety, where ADB's contribution could be clearly distinguished. Within this plan, ADB identified an IP of $3.24 billion to support these three areas, for which it will provide a support of $1 billion through the proposed MFF. The cost of the equipment is small compared to the cost of other capital assets or construction of a railway line but their benefits are significant; and it is easy to integrate them when the Government is implementing the development plan. This would have high value added with a smaller investment leveraging much more value added.

The proposed IP is consistent with two of the four pillars of ADB's Country Partnership Strategy of the PRC: (i) inclusive growth and balanced development, and (ii) resource efficiency and environmental sustainability. The IP encompasses (i) network development, which will enhance capacity and reduce bottlenecks; (ii) improved energy efficiency and environmental sustainability by providing a more efficient and environment-friendly mode of transport in the region; (iii) enhanced safety through the provision of a reliable and safe mode of transport; (iv) support for the PRC railway development plan and the Western Region Development Strategy; and (v) promotion of pro-poor economic growth in the region, thereby reducing poverty.

Impact

Improved transport system in the region that supports sustainable socioeconomic development and the

western region development strategy

Project Outcome
Description of Outcome An energy-efficient, safe, reliable, affordable, and environment-friendly railway transport system is developed in the region
Progress Toward Outcome To be assessed at project completion.
Implementation Progress
Description of Project Outputs

1. Investment program implemented by installing energy-efficient technologies, environment-friendly, and safety equipment

2. Energy efficiency and environmental issues in railway management are integrated and institutionalized.

3. Safety and energy audits of a nominated railway administration

4. Capacity building support is provided.

Status of Implementation Progress (Outputs, Activities, and Issues) As of February 2015, project progress achieved is about 70% Guangxi section, about 55% for Yunan section. The project''s Guangxi section is expected to be completed by the end of 2015 and project's Yunan section is expected to be completed by mid 2016. Contracts for Guangxi section has been awarded except for one lot which is under bidding. Procurement for remaining lots of Yunnan section will commence in mid-2015.
Geographical Location Southwestern PRC
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Classified as category C for Environment. Because the investment program deals with the procurement of energy-efficient, environment-friendly, and safety equipment, no potential safeguard impacts are envisaged.
Involuntary Resettlement Classified as category C for Involuntary Resettlement. Because the investment program deals with the procurement of energy-efficient, environment-friendly, and safety equipment, no potential safeguard impacts are envisaged.
Indigenous Peoples Classified as category C for all Indigenous People. Because the investment program deals with the procurement of energy-efficient, environment-friendly, and safety equipment, no potential safeguard impacts are envisaged.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations were held with the National Development and Reform Commission (NDRC), Ministry of Finance (MOF), and MOR on structuring the proposed IP. MOF and NDRC have expressed support for the use of the MFF modality. MOF also noted that the framework approach may provide an opportunity for streamlining domestic procedures. Consultations were held with MOR, the Second Survey Design Institute and Chengdu Railway Administration on designing the technical features of the IP and the selection criteria for investments. A steering committee for selecting the investments for ADB-financing has been set up by MOR.
During Project Implementation The consultation process will be continued to select the projects, as per the agreed selection criteria, to be financed under the IP. Consultations will involve the design institutes, MOR, and the railway administrations. A steering committee established by MOR will help coordinate the selection of subsequent projects for ADB-financing.
Business Opportunities
Consulting Services No consulting services.
Procurement All procurement to be financed under the MFF ADB loan will be carried out in accordance with ADB's Procurement Guidelines (2007, as amended from time to time). ADB will finance procurement of materials and equipment . Contracts valued equal or greater than $1 million will be procured through international competitive bidding. Contracts valued at less than $1 million will be procured through national competitive bidding, in accordance with the PRC Tendering and Bidding Law (1999), subject to modifications agreed with ADB as determined by the particular circumstances of the contract package. Below $100,000, procurement will follow the shopping procedure. MOR will select tendering companies on a competitive basis to handle international bidding.
Responsible ADB Officer Chenglong Chu
Responsible ADB Department East Asia Department
Responsible ADB Division PRC Resident Mission
Executing Agencies
China Railway Corporation (Formerly MOR)Mr. Liu JunfuMinistry of Railways, Beijing PRC
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 15 Dec 2009
Last Review Mission -
PDS Creation Date 26 Aug 2009
Last PDS Update 13 Mar 2015

Loan 2605-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
15 Dec 2009 08 Jun 2010 26 Oct 2010 30 Jun 2016 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 967.34 Cumulative Contract Awards
ADB 300.00 15 Dec 2009 205.33 0.00 68%
Counterpart 667.34 Cumulative Disbursements
Cofinancing 0.00 15 Dec 2009 48.49 0.00 16%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

TA 7403-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
08 Dec 2009 27 Jan 2010 27 Jan 2010 30 Jun 2012 31 May 2013 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 0.00 120,000.00 0.00 0.00 0.00 720,000.00 08 Dec 2009 585,641.96
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

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