China, People's Republic of : Dali-Lijiang Railway Project

Transport / Rail transport (non-urban)

The Project meets the railway sector operational strategy of the ADB for the PRC to reduce railway network constraints and to promote sustainable economic growth in poor areas not served by railways. The Project is also in line with the Government's development strategy to provide less developed regions with better infrastructure to facilitate economic growth thereby increasing the opportunity for people to improve their living standards. The poor interior regions in the PRC have not benefited as much from economic growth and reforms as have the east coast. The gap in economic and social development has increased. Transport constraints and high logistics costs are two of the factors contributing to regional economic disparities and are two of the constraints that prevent the western region from capitalizing on its comparative advantages. The Project will reduce transport constraints northwestern Yunnan province and provide connectivity to Kunming, Shanghai, and Beijing through 3 of the 16 east-west and north-south national railway corridors. This will provide accessibility to the ports of Fangcheng and Beihai in the PRC and Haipong in Vietnam. The Project will promote the regional cooperation in the Greater Mekong Subregion (GMS), of which the PRC is an active participant through Yunnan Province, which shares borders with other GMS countries. The Project, a joint venture railway between Ministry of Railways and Yunnan Provincial Government, will have substantial managerial and financial autonomy. The Project will contribute to changing the railway enterprises from a cost center in a planned economy to a profit center in increasing competitive transport market. The components are formulated in line with MOR's new railway development plan (2004).

As of end 2002, the PRC's railway system comprised 72,000 route-km of local railways including 26,700 route-km of railways in the western region. The railway system reached 75,000 route-km in 2005. Given the location of the population, natural resources, and industries in the PRC, the curent size of the railway network does not provide adequate coverage. there are vast inland areas in the central and western parts of the country that do not have any rail transport. The lack of railway capacity to meet the increasing demand for transportation services is constraining economic growth. The Government's Railway Development Plan for 1998-2004 gives priority to unserved areas, particularly railway lines that would imrpove links between the poor inland provnces in the western and central PRC and the more prosperous coastal areas. The Proposed Project is in the southwest and supports the Government's Western Region Development Strategy.

Sustainable economic growth and poverty reduction in poor northwestern part of Yunnan province

An efficient, safe, reliable, and affordable railway transport system is developed in the region

1. Dali-Lijiang railway line, including stations and access roads constructed

2. Employment opportunities generated for poor and vulnerable groups to raise incomes and living standards and reduce poverty

3. Insitutional capacity of WYRC strengthened

167 km of railway line and 11 stations completed.

Trial operation started in January 2010.

WYRC and their contractors have given priority to APs for construction employment and transport of local materials. Local government has provided livelihood training to APs; and compensation standards were raised, which was financed from local government; local government was very active to consult with local communities and find solutions to assist with the rehabilitation of affected persons.

The loan amount intended to finance 12 person-months of international consulting services for (i) strengthening marketing and business development functions of WYRC, and (ii) researching and strengthening the development, operations, and management of the joint venture railway systems in the PRC were already financed by the EA and no longer requires ADB financing. Reallocation of loan amount has been requested and approved from consulting services to civil works to meet cost overruns on other items resulting mainly from appreciation of the CNY against the US Dollar.

Potential adverse environmental impacts include: (i) clearing of vegetation, (ii) management of excavated rock and soil wastes, and (iii) induced impacts related to secondary tourism and industrial development. Institutional arrangements for environmental management, monitoring, reporting, and oversight are summarized in the summary EIA. The EIA concluded that the adverse environmental impacts can be successfully mitigated. Implementation of the environmental management, mitigation, and monitoring programs included in the EIA will ensure compliance with the environmental guidelines and procedures of ADB and the Government. MOR/WYRC agreed that the anticipated industrial development would be subject to a stringent environmental review and approval process, whereby a project normally approved at county level would be approved at city level, and a project normally approved at provincial level would be approved at state level.

A qualitative review of potential induced impacts in the project area and BOA was undertaken. The EIA included an evaluation of the impacts of tourism, urbanization, and industrial development. The evaluation noted that (i) the ongoing development activities are

adequately managed with respect to environmental protection, (ii) the institutional capacity for environmental protection is adequate, and (iii) the ongoing environmental protection programs are consistent with PRC and ADB requirements. Based on the analysis, ADB agreed with the Government that (i) the Project will be designed, constructed, operated, and maintained in accordance with the environmental laws and regulations of the PRC and the environmental policy of ADB; (ii) the environmental management and monitoring program (EMP) and the mitigation measures included therein, as specified in the EIA prepared for the Project, are properly implemented; (iii) any environmental permits, licenses, and clearances are obtained in a timely manner; (iv) any adverse impact on the environment that may arise from project implementation activities is promptly mitigated or minimized in accordance with the EMP; and (v) the implementation of the EMP, including any safety breaches, violation of environmental standards, and the necessary corrective measures are reported regularly to ADB. The evaluation also noted that there is substantial external assistance for environmental management efforts, particularly for environmental preservation, in northwestern Yunnan. An independent monitoring agency will be hired to carry out the external monitoring and evaluation work during project implementation.

In the project area, about 73% of the total population consists of ethnic minorities. Of

the total population, the largest ethnic group is the Bai (46.2%), followed by Han (26.7%), Naxi (18.3%), Yi (3.2%), Lisu (2.8%) and others (2.8%). The project will have potential adverse impacts in terms of resettlement, mainly on the Bai people (74.3%) and also some Han (16.8%), Naxi (6.2%), Yi (1.5%), and Lisu (0.4%) people. Specific provisions to address land acquisition and resettlement impacts are included in the resettlement plan. To assess the potential induced impacts, people and NGOs within the seven BOA counties have also been interviewed and consulted. These seven counties have many ethnic groups, including Tibetans in Xianggelila county (Zhongdian), Yi and Miao in Lijiang prefecture, and Pumi and Mosuo in Ninglang county. The results of these studies showed strong support for the railway and economic development in general. The local people believe that the DLR is an important project that will benefit the area. The evaluation also noted that there is substantial external assistance for poverty reduction, and social development in northwestern Yunnan, and saw the Project as a key development investment, the positive social impacts of which are expected to substantially outweigh the negative ones.