People's Republic of China : Preparing the Songhua River Basin Water Pollution Control and Management Project

Technical Assistance Re

port













Project Number: 40665
September 2007






People’s Republic of China: Preparing the Songhua
River Basin Water Pollution Control and
Management Project
(Cofinanced by the Cooperation Fund for the Water Sector)

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CURRENCY EQUIVALENTS
(as of 29 August 2007)

Currency Unit
–
yuan (CNY)
CNY1.00
= $0.13
$1.00
= CNY7.56


ABBREVIATIONS


ADB
–
Asian Development Bank
EA
–
executing
agency
FYP
–
five-year
plan

HPG
–
Heilongjiang provincial government

JPG
–
Jilin provincial government

PRC
–
People’s Republic of China

SRB
–
Songhua River Basin

SRBPCP
–
Songhua River Basin Water Pollution Prevention and
Control Plan
TA
–
technical
assistance


TECHNICAL ASSISTANCE CLASSIFICATION

Targeting Classification
– Targeted
intervention
Sector
–
Water supply, sanitation, and waste management
Subsector
– Integrated
Themes
–
Environmental sustainability, inclusive social development, capacity
development
Subthemes
–
Urban environmental improvement, human development,
organizational development


NOTE

In this report, "$" refers to US dollars.









Vice President
C. Lawrence Greenwood, Jr., Operations Group 2
Director General
H. Satish Rao, East Asia Department (EARD)
Director
R. Wihtol, Social Sectors Division, EARD


Team leader
S. Penjor, Principal Financial Analysis Specialist, EARD

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118 00'E
o
130 00'E
o
SONGHUA RIVER BASIN
WATER POLLUTION CONTROL AND
MANAGEMENT PROJECT
N
IN THE
PEOPLE'S REPUBLIC OF CHINA
0
100 200 300 400

Kilometers
Songhua River Basin
National Capital
Provincial Capital
City/Town
Heil
River
ong R
Watershed Boundary
iv
52 00'N
o
52 00'N
o
er
X
Provincial Boundary
Yilehuli Mountain
I A O

International Boundary

S
Boundaries are not necessarily authoritative.
H I N G
Aihui
G
G
an

A
R
N
iv
T A I N
er
M
N
O U N
U
T
Manzhouli
A
er
I
O
i
ver
N
Riv

R
S
ong
Y
en
Heil
alu
N
Rive
M
r
A N
Qiqihar
HEILONGJIANG
Jiamusi
G
G
Tao
Sanjiang Plain
'er Ri
er
ver
I N
Songnen Plain
Songhua Riv
Harbin
Lalin R.
Hailin
Lake Tianchi
A H
S
D
o
Wuchang
ngh
Mudanjiang
ua River
Jilin
INNER MONGOLIA
Changchun
River
Liao
J I L I N
LIAONING
Changbai Mountain
Shenyang
H E B E I
Liaodong
BEIJING
Bay
40 00'N
o
40 00'N
o
S e a o f J a p a n
Tianjin
Korea Bay
Dalian
TIANJIN
Bohai Sea
130 00'E
o
118 00'E
o
07-3053 HR

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I. INTRODUCTION

1.
During the 2006 Country Programming Review Mission, the Government of the People’s
Republic of China (PRC) confirmed the request to the Asian Development Bank (ADB) for
technical assistance (TA) to prepare the Songhua River Basin Water Pollution Control and
Management Project. Fact-finding for the TA was undertaken in April 2007 and an
understanding was reached with the Government on the impact and outcome, scope, costs and
financing, implementation arrangements, and terms of reference for the TA.1

II. ISSUES

2.
Demand for urban infrastructure in the PRC is rising with increasing urbanization, and
more than half the population is expected to live in cities by 2030. The Government’s 11th Five-
Year Program (11th FYP), 2006–2010, focuses on continued urbanization and the development
of large, medium-sized, and small cities and towns. Rapid urbanization in the PRC has taken a
severe toll on the environment, and has also challenged the capacity of local governments to
promote good governance, effective planning and management, sustainable financing, and
timely delivery of public services. While significant progress has been made in building urban
infrastructure over the past two decades, such infrastructure tends to be concentrated in the
more highly developed eastern and southern coastal plains. The expansion and upgrading of
public services have not kept pace with rapid industrial growth. The rural migration to urban
centers currently taking place in the inland regions, in response to Government policies to
promote economic development and job creation in those areas, is putting a further strain on
urban infrastructure and services.

3.
Cities in the north and west and around the Songhua River basin (SRB) are
experiencing widespread pollution due to the discharge of untreated wastewater and improper
management of solid waste. Shortages of safe drinking water are also common, particularly in
the northern part of the PRC. The Government has classified more than 108 cities as having
serious water problems, and 60 as being critically short of water. Municipal wastewater is a
major contributor to the pollution of PRC’s rivers and lakes, with the most severe pollution
impacts in the northern region of the country. Currently, only about 40% of urban wastewater in
the PRC is treated and the rest is discharged untreated into rivers and lakes. Further, the
growing and uncontrolled disposal of solid waste contributes to increasing contamination of
groundwater supplies. Cities and towns in Heilongjiang and Jilin provinces must overcome
widespread environmental degradation and meet increasing demands for public services to
ensure that their economic development is sustainable.

4.
The SRB is the third largest river basin in the PRC after the Yangtze and Yellow rivers. It
has an area of 557,000 square kilometers and a population of 62 million. Major cities such as
Changchun, Harbin, Jiamusi, and Qiqihar are located in the SRB. Agriculture is well-developed
and there is a large industrial base. The Songhua River catchment area covers portions of three
provinces: Heilongjiang and Jilin provinces and the autonomous region of Inner Mongolia.
Changchun is located in the upstream part of the Songhua River, which flows through Harbin.
After Harbin, the river joins the Heilongjiang River, enters the Russian Federation, and
eventually discharges to the sea.

5.
The SRB is seriously polluted and is acknowledged by the State Environmental
Protection Administration (SEPA) as being one of the four most polluted river basins in the PRC.

1 The TA first appeared in ADB Business Opportunities on 13 April 2007.

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2

Water pollution issues in the SRB, especially in relation to the protection of drinking water
resources for the municipality of Harbin, have received increased national and international
attention due to a widely publicized pollution incident in the SRB in November–December 2005.
The Songhua River is contaminated with a number of known and suspected trace organic
chemicals, metals, and conventional pollutants. It is classified by the Government as Class IV2
(falling below Class V during the 6-month low flow winter season), and is considered unsuitable
for municipal domestic water use. In March 2003, ADB approved the Harbin Water Supply
Project ($100 million)3 to address the needs of Harbin City (population 3 million) for clean and
reliable drinking water from an alternative water source (Lalin River), since their existing source
from the Songhua River was highly polluted. Because of the deteriorating water quality in the
Songhua River, the Harbin municipal government expedited the construction of the Harbin
Water Supply Project, which was completed 1 year ahead of the original schedule.

6.
During the processing of the Harbin Water Supply Project, extensive dialogue was
conducted with the Government on addressing pollution control in the SRB. Consequently, in
2002, ADB provided a TA for the Songhua River Water Quality and Pollution Control
Management.4 The TA, which was considered highly successful,5 (i) addressed technical
knowledge gaps, (ii) strengthened the capacity of the Songhua Water Resources Protection
Bureau, and (iii) assisted the Government in developing a long-term water pollution control plan
for the SRB beyond 2010. The TA provided strategic policy inputs to the 11th FYP and the SRB
Water Pollution Prevention and Control Plan (SRBPCP).

7.
The Government is paying increasing attention to water resources management,
wastewater treatment and pollution control, and the formulation of investment plans to address
water supply shortages and wastewater treatment. The SRBPCP (2006–2010), approved in
principle by the State Council on 29 March 2006, is an action program to set pollution control
targets from 2006 to 2010, requiring that urban environmental pollution and ecological damage
be controlled by 2010. Large and medium-sized cities’ wastewater treatment rate should not be
less than 70% by 2010.

8.
The Jilin Water Supply and Sewerage Development Project ($100 million),6 approved in
2005, was the first major ADB investment directly addressing pollution control in the SRB. The
proposed Jilin Urban Environmental Improvement Project ($100 million), currently being
processed for approval in 2007, is the second, and follows the priority list of the SRBPCP. The
proposed project with an indicative ADB loan of $200 million will be the third major ADB
investment in the SRB, and also follows the priority list of the SRBPCP. This comprehensive
strategic approach to addressing pollution control in the SRB will serve as a good model for
replication elsewhere in the PRC.

9.
The proposed project municipalities are Baishan, Changbaishan, Changchun, Huinan,
Jilin, and Tonghua in Jilin Province; and Harbin, Heihe, Jiamusi, Qiqihar, Qitaihe, and

2 PRC water quality standards have five classes covering about 40 pollution parameters. Class I is pristine, while
class V is suitable only for industrial use.
3 ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the
People’s Republic of China for the Harbin Water Supply Project. Manila. Some districts are already receiving the
new high quality project water.
4 ADB. 2002. Technical Assistance to the People’s Republic of China for Songhua River Water Quality and Pollution
Control Management. Manila.
5 ADB. 2006. Technical Assistance Completion Report Songhua River Water Quality and Pollution Control
Management. Manila (TA 4061-PRC).
6 ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the
People’s Republic of China for the Jilin Water Supply and Sewerage Development Project. Manila.

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3
Shuangyanshan in Heilongjiang Province. Heilongjiang has identified 14 subprojects focusing
on wastewater treatment and water supply. Jilin has identified 15 subprojects focusing on water
supply, wastewater treatment, solid waste management, and river improvement. Sector and
project lending were thoroughly discussed and considered as alternative approaches. The
Government expressed its strong preference for the project lending approach because all
subprojects have been identified and feasibility study reports have been prepared. All
components of the proposed project have one common impact, to improve the urban
environment and enhance the quality of life in the above cities and contribute to pollution control
in the SRB.

10.
The project is consistent with ADB’s water policy7 and will help the PRC achieve
Millennium Development Goal (MDG) 7, target 10, which establishes the 2015 target of
reducing by 50% the proportion of people without sustainable access to safe drinking water and
improved sanitation. The project is also consistent with ADB’s strategic objectives in the PRC to
make markets work more efficiently through infrastructure development and to promote
environmental sustainability. Over the past decade, ADB has significantly increased its
involvement in urban development and water resource management in the PRC through its
lending and TA operations. The experience gained from similar projects in Changchun, Fuzhou,
Harbin, Hefei, Nanjing, Shandong, Shanghai, Tianjin, Wenzhou, and Wuhan has been
considered in the design of the proposed TA. Given the large financing needs of pollution
control in the SRB, during TA implementation innovative options for attracting private sector
participation will be explored and discussed, including the public–private participation model
developed under the Nanjing Qinhuai River Environmental Improvement Project.8 The
environmental aspects of the ensuing project will be assessed comprehensively, including
innovative approaches to addressing environmental issues.

III.
THE PROPOSED TECHNICAL ASSISTANCE

A.
Impact and Outcome

11.
The expected impact of the TA is an improved urban environment and enhanced quality
of life in the municipalities of Baishan, Changbaishan, Changchun, Huinan, Jilin, and Tonghua,
in Jilin Province; and Harbin, Heihe, Jiamusi, Qiqihar, Qitaihe, and Shuangyanshan in
Heilongjiang Province. The expected outcome is the agreed-upon design of the SRB Water
Pollution Control and Management Project. The design and monitoring framework is in
Appendix 1, and the initial poverty and social analysis is in Appendix 2.

B.
Methodology and Key Activities

12.
The TA will (i) evaluate the project in the context of strategic long-term development
plans, the 11th FYP, the SRBPCP, alternative strategies for wastewater management, water
supply capacity development, and solid waste management, to meet the project cities’
increasing demand; (ii) identify sector investment priorities in each city; (iii) review and assess
the feasibility of the selected subprojects based on technical, institutional, environmental, social,
economic, and financial assessments; (iv) develop an institutional strengthening component,
based on a needs assessment for the implementing agencies (IAs) of the subprojects in each
city; and (v) design a corporate development plan for the IAs, based on a financial management

7 ADB. 2001. Water for All: The Water Policy of the Asian Development Bank. Manila.
8 ADB. 2006. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the
People’s Republic of China for the Nanjing Qinhuai River Environmental Improvement Project. Manila.

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4

assessment. Household surveys will be conducted to address issues of public awareness and
preference, willingness to pay, and affordability. The TA will identify stakeholders and develop a
participatory strategy for project preparation, design, construction, and operation. Consultation
workshops and tripartite meetings will be scheduled strategically during the implementation of
the TA.

13.
The major assumptions and risks that need to be considered for successful TA
implementation include (i) inadequate counterpart support and performance, (ii) lack of
adequate and timely provision of necessary data, (iii) delay in submitting required studies, (iv)
delays in appointing and mobilizing consultants, and (v) inadequate performance of the
consultants. The Government has agreed to provide sufficient counterpart support, to provide all
necessary data when required, and to undertake and update all required studies according to a
timetable agreed on with ADB. Efforts will be made to ensure that consultants are recruited on
time and that their performance is closely monitored and reviewed. Close coordination among
ADB, the executing agencies (EAs) and IAs, and the consultants will further mitigate the
potential risks.

C.
Cost and Financing

14.
The total cost of the TA is estimated at $1,700,000 equivalent. The Government has
requested ADB to finance $1,300,000 equivalent.9 The TA will be financed on a grant basis by
ADB’s TA funding program ($1,104,000) and the Cooperation Fund for the Water Sector
($196,000). The Government has agreed to provide the balance of $400,000 in kind to cover
counterpart staff, office space, furniture, administrative support services, and local transport and
logistics. Details of the cost estimates and financing plan are in Appendix 3. The Government
has been advised that approval of the TA does not commit ADB to finance the ensuing project.

D. Implementation
Arrangements

15.
A project steering committee will be established at the central Government level to
coordinate project activities in Heilongjiang and Jilin. The Heilongjiang provincial government
(HPG) will be the EA for the Heilongjiang component, and the Jilin provincial government (JPG)
will be the EA for the Jilin component. A vice governor will chair the provincial-level TA steering
committee in each province, with members from the respective development and reform
commissions, and bureaus of construction, finance, environment protection, and water
resources.

16.
The TA offices in Heilongjiang and Jilin will be headed by the vice directors of the
development and reform commissions, and will include staff from the abovementioned bureaus
to ensure consultants’ access to relevant project information and data, and to liaise with ADB on
matters relating to TA implementation. HPG and JPG have agreed to provide 10 experienced
and qualified counterpart staff each to work with the consultants on a full-time basis. Prior to the
start of TA implementation, the concerned municipal governments in Heilongjiang and Jilin will
establish similar organization structures, chaired by their respective vice mayors, to implement
the TA. HPG and JPG will provide the consultants with a suitably furnished office with utilities,
telecommunication access, materials, maps, data, and all required project documents.


9 The TA budget will be $650,000 for Heilongjiang, and $650,000 for Jilin. Cost tables for Jilin and Heilongjiang
components have been prepared separately.

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5
17.
The TA will be implemented over a 6-month period. It is expected to start in January
2008 and be completed by July 2008. Total consultants’ inputs are estimated at 90 person-
months, 34 international and 56 national.10 The consultants will be engaged through a firm in
accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to
time). ADB will select and engage consultants on the basis of the quality of the proposal (90%)
and the cost (10%) of the services to be provided (the quality- and cost-based selection method)
using the full technical proposal procedures. The 90:10 weighting is considered appropriate
because the TA is a complex multidisciplinary assignment involving two provinces that requires
innovation and creativity, and the quality of the consulting services will have a high impact on
the ensuing loan. The TA will be conducted by a separate team for each province. The TA will
have one project team leader11 who will be responsible for coordinating the work among the two
separate teams of consultants and establishing synergies, particularly in terms of demonstration
effects and innovativeness among the two provinces; and two teams of international and
national consultants who will be stationed in the two provinces, respectively, to implement the
TA. The consultants will have expertise in water supply, wastewater treatment, domestic solid
waste management, river hydrology and flood control, financial and economic analyses,
institutional and regulatory development, social analysis, resettlement, and environment. The
outline terms of reference for the consultants are in Appendix 4. TA equipment will be procured
by the consultants in accordance with ADB’s Procurement Guidelines (2007, as amended from
time to time), and will be retained by the EAs upon completion of the TA.

18.
The consultants will submit to ADB and HPG and JPG, in English and in Chinese, the
inception, interim, draft final, and final reports; the summary environmental impact assessment
report; and an English translation of the Government’s resettlement plan and its summary. The
consultants will maintain close working relations with ADB, HPG, and JPG, and will regularly
discuss progress and findings. Tripartite meetings involving ADB staff, the consultants, and
HPG and JPG will be held in Harbin and Changchun cities, respectively, to provide guidance to
the consultants and to review their reports. Study findings on the project objectives and scope,
components, cost and financing plan, implementation arrangements, and main issues will be
presented in three workshops.

IV. THE
PRESIDENT’S
RECOMMENDATION

19.
The President recommends that the Board approve (i) ADB administering a portion of
technical assistance not exceeding the equivalent of $196,000 to be financed on a grant basis
by the Cooperation Fund for the Water Sector, and (ii) ADB providing the balance not exceeding
the equivalent of $1,104,000 on a grant basis, to the Government of the People’s Republic of
China for preparing the Songhua River Basin Water Pollution Control and Management Project.

10 17 person-months international consultants and 28 person-months national consultants, each for Jilin Province
and Heilongjiang Province, respectively.
11 The team leader will be in the field for 6 person-months. The team leader will be assisted by the institutional
specialist/deputy team leader, who will be in the field for 5 person-months.

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Appendix
1
6
DESIGN AND MONITORING FRAMEWORK

Data Sources/Reporting
Assumptions and
Design Summary
Performance Targets/Indicators
Mechanism
Risks
Impact


Assumptions
Improved urban
Water supply capacity increased
Monitoring reports of
• Jilin’s and
environment and
and vulnerability to drought ends
Heilongjiang and Jilin
Heilongjiang’s 11th
enhanced quality of life in
by 2016.
provinces, and their
Five-Year Program
the cities of Baishan,

respective environmental
and other medium-
Changbaishan,
Water quality of 40 drinking water
protection and water
to long-term
Changchun, Huinan,
sources including Songhua Lake
resource bureaus
development plans
Jilin, and Tonghua in Jilin
improves to Class III by 2018.

are implemented
Province; and Harbin,

Household surveys and
on time.
Heihe, Jiamusi, Qiqihar,
Water quality of Mudanjiang, Nen,
public feedback at public
• The concerned
Qitaihe, and
Second Songhua, and Songhua
hearing meetings for tariff
municipalities’
Shuangyanshan in
rivers improves to Class III by
adjustments
urban plans are
Heilongjiang Province
2018.

successfully
(contributing to the

implemented.

achievement of MDG 7,
Wastewater collection efficiency

target 10).
improves through service

Risks
extensions and separation of
• Urban growth,
combined sewers.

including influx of

migrants, in the
concerned
municipalities
exceeds forecasts
and exerts more
pressure on
available urban
infrastructure.
• Environmental
laws and
regulations are
weakly enforced.
• There is no
effective
environmental
quality monitoring.

Outcome


Assumptions
Agreed-upon design of
Project design is agreed upon by
PPTA report and RRP
• JPG and HPG
the Songhua River Basin
Government and ADB and
remain committed
MOU of loan Appraisal
Water Pollution Control
represents an investment project
to the project
Mission
and Management Project
that is suitable for ADB financing.
proposed for ADB
Loan documents
financing.
MOU is signed by the
• Priorities for public
Government and ADB during the
Record of loan
infrastructure
Appraisal Mission.
disbursements
investment do not
The loan is approved and signed.
change.


Loan disbursement Is timely, with
Risks
minimum of loan savings.
• Government plans
change.
• The Government
plans to seek
alternative funding.

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Appendix 1
7
Data Sources/Reporting
Assumptions and
Design Summary
Performance Targets/Indicators
Mechanism
Risks
Outputs


Assumptions
1. Analysis of SRB
Sector analysis is completed.
Inception report and first
• Community
Water Pollution
tripartite review meeting
ownership is
Prevention and Control
(2nd month)
developed through
Plan, urban
stakeholder
MTR (4th month)
development plans, and
participation.
policies and overall
•
justification of project
Support from
Changchun and
2. Technical peer
Technical review and redesign
MTR (4th month)
Yanji government
review of subproject
are completed. Least-cost
agencies is strong.
Second Tripartite Review
selection, design, costs,
analysis is completed. Feasibility
Meeting (5th month)
•
etc. Subprojects
study reports are finalized and
Domestic FSRs
revised and refined as
approved.
are translated and
DFR (5th month)
necessary
available early in
the PPTA.
3. Analysis of financing
Financial management
MTR (4th month)
needs, financial
assessment, financial
• Required data is
Second tripartite review
management, and
sustainability assessment, and
made available
meeting (5th month)
institutional capacities in
institutional assessment are
and social surveys
the concerned
completed.
are successfully
DFR (5th month)
municipalities
conducted.

4. Assessment of social
Household surveys and other
MTR (4th month)
Risks
and economic impacts
social impact analyses are
Second tripartite review

of subprojects on
completed.
meeting (5th month)
beneficiaries, affected
• Assigned
Detailed economic analyses
persons, poor and
consultants are not
DFR (5th month)
(willingness to pay, cost and
vulnerable persons
available due to
benefit assessment, EIRR, etc.)
scheduling
are completed.
conflicts.
5. Assessment of
Surveys in resettlement areas are
Completed RPs and
• Completion of the
involuntary resettlement
completed (4th month).
summary RP and draft RP
various TA tasks is
impacts and preparation
delayed because
RPs are developed and approved
of RP
of staffing, data,
(6th month).
and other
6. EIAs, SEIA, and EMP
Draft SEIA and EMP are
EIAs, SEIA, and EMP
problems.
submitted for review (5th month).
reports
• Coordination and
7. Institutional capacity
JPG, HPG, and municipal
Capacity building plan
support from the
building plan and
governments agree to include the
documented in the DFR
PMO of the EA are
corporate development
capacity building component in
weak.
plan
the project design and to improve

corporate governance in relevant
agencies.
8. Participatory planning
Stakeholder workshops are
Stakeholders’ workshops
process developed and
conducted at inception, midterm,
completed as planned
implemented
and final tripartite meetings.
Survey findings, public
Participatory methods are used in
meetings, and other
environmental, social, and
participatory methods
resettlement work.
documented in the DFR

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Document Outline

• Map
• I. Introduction
• II. Issues
• III. The Proposed Technical Assistance
• IV. The President's Recommendation
• Appendixes

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