PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name Region Country Sector(s) Theme(s) Lending Instrument Project ID Borrower(s) Implementing Agency Environmental Category Date PID Prepared/ Updated Date PID Approved/ Disclosed Estimated Date of Appraisal Completion Estimated Date of Board Approval Concept Review Decision PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Guilin Integrated Environment Management (P133017) EAST ASIA AND PACIFIC China Report No.: PIDC991 Wastewater Treatment and Disposal (35%), General water, sanitation and flood protection sector (25%), Water supply (20%), Wastewater Collection and Transportation (20%) Pollution management and environmental health (55%), Water resource management (45%) Investment Project Financing P People's Republic of China Guilin PMO A-Full Assessment 02-Aug Aug Feb Jul-2014 Track I - The review did authorize the preparation to continue I. Introduction and Context Country Context As China s economy is undergoing historic transition from a rural base to an urban base, its cities and towns now generate over 60% of GDP. Over the next 10 years, over half of its population is expected to live in urban areas. For China to achieve its medium term objectives of rapid and sustainable development with poverty reduction, much will depend upon the performance of its cities and towns. China s environmental program has had notable success, in the reduction of industrial air and water pollutant emissions and reversing deforestation, but much more needs to be done to remedy the serious environmental toll that two decades of very high growth took on the urban environment. Sectoral and Institutional Context Page 1 of 7

2 Guilin is located in Guangxi Autonomous Region, one of 12 provinces in the Western Region. Despite impressive advances in recent years, average income levels in Guangxi are only about a third of the national average income, and there is a high incidence of poverty. Recognizing the growing disparity between Guangxi and other regions, the Government is placing major emphasis on promoting economic and social development, alleviating poverty, and supporting infrastructure investments in Guangxi. The city of Guilin, with a population of 0.9 million, is the most famous tourist destination in China. Its population is expected to reach 1.2 million by In 2011, the GDP of Guilin Municipality was USD 21.5 billion, with an annual growth rate of 20.5% which was the highest of the period from 2005 to Its GDP per capita was 25,675 Yuan (US$4,141) in In line with its continuously strong economic development and mandate to protect Lijiang River, the Guilin Municipal Government (GMG) intends to escalate promoting environmental protection and developing low carbon and circular economy. In December 2012 State Council passed its Outline of the Plan for Constructing the International Destination Guilin. The Government has allocated the responsibility for economic development and protecting the water environment of Lijiang River, to GMG at various levels and the performance of local government officials will be evaluated by new management systems including target accountability. One of the most important environmental agendas in Guilin is water quality of the Lijiang River. In 2011, Guangxi Zhuang Autonomous Region (GZAR) enacted the Lijiang River Catchment Ecological Environment Protection Regulation (the Regulation), which has been effective since January 1, It mandates the GMG to protect the Lijiang River through the zoning of protection area, developing an ecological compensation mechanism, establishing synergy between the ecological protection and the city development master plan and enforcement, conservation of water resources (including control the industrial development, shutdown the self-supplied water sources, rehabilitate the water supply network, implement the surface water resource allocation for different users, and promote water saving ), strengthening water quality monitoring, expanding wastewater treatment and collection service areas, and protecting nature resources (including biodiversity). GMG also put high attention in the 12th Five Year Plan of Guilin on the promotion of reclaimed water, establishing an incentive program for using reclaimed water, and increasing the wastewater recycling rate. Its drainage system is a combined sewage system (84.9% coverage in 2012) discharge into the Lijiang River. It is also the main source of drinking water for Guilin, and the key attraction to international tourists. It originates from Maoer Mountain in Xingn County of Guilin and flows through the city center with total stretch length of 49.3km, leaving the city with a Class III/IV water quality. The rapid urbanization process has resulted in the designation of the Lingui District (previously the Linqui county) officially into an urban area in January Given this rapid population growth and densification trend, an additional 200,000 m3/d of water supply demand and associated wastewater discharge to the Lijiang River is projected by In November 1998 the World Bank through the Guangxi Urban Environment Project (GUEP), began investments in Guilin (one of the project cities) to improve the water environmental quality of the Lijiang River and its tributaries in Guilin. The GUEP was launched with a development objective to improve the quality of water of the Lijiang River, which was closed on December 31, The GUEP focused on improvement of the environmental conditions in Guilin s core urban Page 2 of 7

3 area through improved wastewater collection and treatment, flow regulation, solid waste management, and technical assistance. The project impact significantly increased wastewater collection and treatment from approximately 49% in 1998 to 81% by 2007, as well as maintaining the water quality objectives in Guilin despite the increasing urban population. Rationale for Bank Involvement. As the city s population and tourism are growing rapidly, improving water supply, expanding wastewater collection and disposal services, and reclaiming water will contribute to the protection of local water resources, especially related to the use and quality of water from the Lijiang River, which is highlighted in both the Regulation and the 12th Five Year Plan of Guilin. This new proposed project will be prepared following on from the achievements attained under the GUEP and will continue to deepen the partnership between the Bank and the GMG through an innovative project design which fully embraces and advances the urban green development agenda spelled out in both the Country Strategic Partnership and the 12th Five Year Plan, and support the GMG to fulfill its mandate under the Regulation through improved water resource management, expanding the water supply and upgrading wastewater service. The project will increase the collection and treatment of wastewater in order to accommodate the target of 95% in the entire urban area, and explore the use of reclaimed water to makes waterefficient practices affordable and contributes toward a more sustainable economy. The Bank s involvement will assist the GMG to provide a more efficient water supply and wastewater treatment service delivery and provide the GMG with technical guidance on how to best reform their WSS sector policies in line with the global and national united push for greener urban growth principles such as a more rational approach to design standards with the environment in mind and wastewater reuse. The project therefore addresses the improvement of the water supply and wastewater service in Guilin in the context of urbanization as water supply for the increasing population will be invested in, necessitating a corresponding investment in wastewater collection and treatment, which is directly linked to improvement of environmental quality of the Lijiang River, despite of limitation of the project, as its extent will largely depend on several factors that are exogenous to the project, such as the protection of the Upper Lijiang River Catchment Area located at the Maoershan Natural Protection Zone in Linchuan County. International Experience and Lessons Learned. The Bank has significant experience in assisting medium-sized cities in developing urban infrastructure in China and in other rapidly urbanizing countries. For the water supply and sanitation sub-sectors, a recent Bank China Country Water Resources Partnership Strategy (2012) highlights, in particular, the strategy on the improved control of water pollution, completely in harmony with the 12th Five Year Plan. In addition, and more specifically, the ICR of the GUEP and the Guangdong Pearl River Delta Urban Environment Project point out that only through holistic technological and institutional approaches and reforms can the urban environment be improved in a sustainable manner. The successful experience gained from the Nanning Industrial Pollution Control component of GUEP reflected the strong time-bound measures and increased monitoring of the industries undertaken by EPB, and support from GZAR environmental protection fund to finance pretreatment facility of the industries leads to high compliance rate of industrial discharge in Nanning. International experience in the WSS sector is rich with successful investments by urban governments making decisions to reform their policies and service delivery options making the service to the urban populations more efficient and sustainable. The World Bank has significant experience to draw upon and to discuss with the GMG in order to come up with the most Page 3 of 7

4 appropriate blend of private and public sector involvement in order to develop the best technological and institutional solutions to bring about sustainable WSS services to the urban population. The project preparation team will work very closely with the GMG in reviewing the international experiences gained over the past decade in reforming urban water supply and wastewater utilities in order to come with the best investment and operations and maintenance scenario. Relationship to CAS The proposed project is consistent with the city s master plan, the 12th Five Year Plan, and with the Bank s Country Partnership Strategy (CPS) for (Report No CN) dated October 11, 2012, and is in line with the Strategic Theme One of the CPS, Supporting Greener Growth. The proposed project could contribute to several outcomes under this theme: enhancing urban environmental services, and demonstrating pollution management measures. It is also expected that the project will contribute to China s efforts to better management the water environment of Lijiang River as stipulated in the State Council approved Outline of the Plan for Constructing the International Destination Guilin. II. Proposed Development Objective(s) Proposed Development Objective(s) (From PCN) The proposed project objective is to improve the water and sanitation services in Guilin Key Results (From PCN) The key outcome indicators are likely to include: (a) People provided with access to improved water supply sources and services under the project (number); (b) Increase in the BOD removed from the wastewater (tons/year); (c) Increase in the volume of wastewater recycled (tons/year); and (d) improvement of monitoring capacity through increase in the number of monitoring locations. III. Preliminary Description Concept Description While the water quality of Lijiang River within the urban area boundary of Guilin Municipality is greatly improved through investment of the GUEP, there is only limited wastewater collection and treatment plants infrastructure in Linqui District and Balijie sub-district; located at the western and upper stream of Guilin urban core area, respectively. The Guilin Municipality Government (GMG) had fully recognized these limitations and challenges, and allocated the responsibility for their target of at least 90% wastewater collection and treatment for the entire Guilin urban area by the end of 2012 as one of the key initiatives to enforcing the Lijiang River Catchment Area Ecological Environment Protection Regulation to safeguard the water quality of Lijiang River. This target was not met, and today it is estimated that only 81% of the wastewater is collected and adequately treated. The existing five municipal wastewater treatment plants (WWTPs) of total capacity of 285,000 m3/ day (to be expanded to 415,000 m3/day) produces about 160 t/d of dewatered sludge of 83% moisture content, and are transported to the private operator in Shangyao WWTP for composting which has been operated since With the current sludge generation rate and the forecasted increase of wastewater collection from new urban areas, the current capacity for composting will no longer be sufficient. In order to fully dispose the dewatered sludge, GMG is planning to seek viable options of disposing dewatered sludge in safe and cost-effective ways. Page 4 of 7

5 The project includes investments in water supply and wastewater systems in new urban areas located up-stream of Guilin Municipality, further wastewater (drainage) system investments in the urban area of Guilin Municipality, water quality monitoring and industrial pollution control, as well as institutional development and capacity building of the PIUs: Guilin Water Company/Guilin Sewerage Company/Environmental Protection Bureau. Given the nature and history of the infrastructure in the built up urban areas, the sewers are combined wastewater and drainage. The project will therefore also improve the drainage within the core urban area. The corresponding total estimated project cost is RMB 940 million (US$ 162 million) and the agreed Bank loan is US$ 100 million, with a targeted World Bank financing percentage of about 60 %. The proposed project has the following five components: Component 1: Water Supply. Install about 37 km of drinking water distribution network (transmission main) linking the expanded Chengbai WTP (increased from 100,000 m3/day to 300,000 m3/day) to Linqui District and Balijie Area. The water supply will be further secured thru the formation of ring-main supply network. The existing drinking water distribution network is supplying around 330,000 m3/d drinking water from four existing WTPs with a total capacity of 340,000 m3/day to nearly 900,000 urban residents in Guilin urban area, as well as business and industries The proposed expansion of Chengbai WTP which will be financed locally and the proposed drinking water distribution network financed by the project will expand the coverage to an additional 255,000 urban residents, as well as public institutions (GMG is moving all their offices to the new urban area), business and industries in new urban area by Provision of a ring-main type of water distribution network will ensure the security of the entire water supply system, so that the system can be protected and provided a more flexible operation mode, in order to ensure water supply in case of WTP or major pipe incident. Component 2: Wastewater and Sludge Management. Upgrade the existing five WWTPs, namely Shanyao WWTP, Qilidian WWTP I/II, Beichong WWTP, Lingui WWTP and Yanshan WWTP tomeet enhanced discharge standards. Improve sludge dewatering and odor removal equipment in WWTPs, and replace and rehabilitate the aged equipment, including sewerage and storm water pump stations and 41km of sewers. No further expansion of WWTPs under the project is needed after thorough review ofcurrent and future water demand and taking account of the current expansion of Qilidan and Lingui WWTPs financed locally to be completed by end of Component 3: Wastewater Reclamation. Construction of a 32,000 m3/day reclaimed water treatment units (polishing and pumping units) developed by phasing approach and associated pipes to key consumers in Linqui District. The main market for the initial phase is for replenishing the water courses and landscaping (public parks) purpose, and institutional usages (street cleansing and toilet flushing of public buildings), which will be funded by the government until more users (public and private) are added into the entire system. The phasing of the wastewater recycling capacity will be determined during project preparation as the supply of recycled water has to match the demand and has to be transferred through infrastructure that needs to be built. Component 4: Water Environment Monitoring and Pollution Control Capacity Building. Upgrade the automatic monitoring stations including real- time data collection and processing, database development, and strengthen the capacity of EPB to implements its industrial pollution source control scheme of upstream of Lijiang River in the Guilin Urban Area. Page 5 of 7

6 Component 5: Project Management and Implementation Support. Provide project management and, external monitoring assistance, training and study tours, and improve urban management in Guilin. The capacity building for PIUs may focus on training components for monitoring, operation & maintenance of WTPs/WWTPs and sludge treatment, benchmarking of utilities operation performance and NRW reduction, as well as a study tour to anaerobic digesters, to solar drying facilities and to any other installations of particular interest. IV. Safeguard Policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 4.01 Natural Habitats OP/BP 4.04 Forests OP/BP 4.36 Pest Management OP 4.09 Physical Cultural Resources OP/BP 4.11 Indigenous Peoples OP/BP 4.10 Involuntary Resettlement OP/BP 4.12 Safety of Dams OP/BP 4.37 Projects on International Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP 7.60 V. Financing (in USD Million) Total Project Cost: Total Bank Financing: Total Cofinancing: Financing Gap: 0.00 Financing Source Amount Borrower International Bank for Reconstruction and Development Total VI. Contact point World Bank Contact: Sing Cho Title: Urban Specialist Tel: scho1@worldbank.org Borrower/Client/Recipient Name: People's Republic of China Contact: Yao Licheng Title: Director Tel: Page 6 of 7

7 Implementing Agencies Name: Guilin PMO Contact: Ms. Wang Chunhui Title: Division Chief Tel: VII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: Page 7 of 7