Ex-ante Evaluation
1. Name of the ProjectCountry: The People’s Republic of China
Project: Ningxia Water Environmental Improvement Project(Loan Agreement: March 30, 2007; Loan Amount: 8,432 million yen; Borrower: The Government ofthe People’s Republic of China)
2. Necessity and Relevance of JBIC’s Assistance
In China, the rate of water supply in urban areas reached 89% in 2004. However, given, among otherthings, the sharp increase in urban population and the fact that the clean water sources areconcentrated in the southwestern part of China, there are regional factors that cause water shortages.
Also, there are many cities beset with the problem of having their water supplied from deteriorating
sources.
The wastewater treatment rate in urban areas has leveled off at 48% (2005), while in rural areas
sewerage system itself has not spread very much. Consequently, the water pollution of rivers andcontamination of seawater as typified by the frequent outbreak of red tide, have become a serious
problem. In the 11th Five-Year Plan (2006–2010), to tackle the problem of water pollution, theGovernment of China has set the goal of raising the wastewater treatment rate to 70% in all principal
cities across the country. To achieve this goal, it is important to develop sewerage system.
In its 11th Five-Year Plan for Environmental Protection (2006–2010), the Government of China
designates river basins as prioritized conservation targets with the view to raising the water quality ofthe designated river basins to the required level through, among other things, prevention ofcontamination of the said rivers, which are also important sources of drinking water, and conversionof sources of clean water. Furthermore, the Government of China promotes the creation ofwater-saving cities by implementing administrative measures such as regulating the amount ofgroundwater that can be pumped up and introducing technologies for recycling treated wastewater.
Yinchuan City (population: 1.38 million [equivalent to the population of Shiga Prefecture]; land area:
approx. 9,170 km2 [equivalent to the land area of Kagoshima Prefecture]) and Shizuishan City
(population: 730,000 [equivalent to the population of Shimane Prefecture]; land area: 4,454 km2[equivalent to the land area of Yamanashi Prefecture]), the largest and second largest cities in theNingxia Hui Autonomous Region, are located in the upper reaches of the Yellow River in the Ningxia
Plain. In these cities, industrialization and urbanization have increased demand for water to a level
beyond their water supply capacities (Yinchuan City: water supply capacity of 200,000 m3/day
against water demand of 440,000 m3/day; Shizuishan City: water supply capacity of 96,000 m3/day
against water demand of 280,000 m3/day). While private wells, which are self-developed, arecurrently filling in the gap, the random digging of private wells has raised concern about thedepletion of groundwater. Concerns have also been raised about the deteriorating quality ofgroundwater as inadequate wastewater treatment capacities (Yinchuan City: wastewater volume of
288,000 m3/day against wastewater treatment capacity of 140,000 m3/day; Shizuishan:Citywastewater volume of 185,000 m3/day against wastewater treatment capacity of 30,000 m3/day)leave untreated wastewater seeping through soil into groundwater.
To cope with these problems affecting the water environment, the Government of the Ningxia Hui-1-Autonomous Region intends to improve the region’s water environment by (1) strengthening water
source management through tightening regulations on private wells, developing new sources ofgroundwater, and increasing the reuse of wastewater, and (2) implementing measures against waterpollution through improvement of the wastewater treatment capacity.
The project addresses environmental conservation, one of the priority areas designated in the
Economic Cooperation Program for China prepared by the Government of Japan and theMedium-Term Strategy for Overseas Economic Cooperation Operations of JBIC (FY2005–FY2007).
Thus, JBIC’s support for this project is highly necessary and relevant.
3. Project Objectives
The project aims to ensure stable and safe supplies of water and reduce discharge of polluted water in
the Yinchuan and Shizuishan Cities by constructing water supply facilities, sewerage system, andreclamation facilities. It will thereby help improve the living conditions of their populations.
4. Project Description(1) Target Area
Yinchuan and Shizuishan Cities, Ningxia Hui Autonomous Region(2) Project Outline
The project involves the construction of water supply facilities, sewerage system and reclamation
facilities, and procurement of materials and equipment in Yinchuan and Shizuishan Cities,as wellas implementation of an overseas training program .
(a) Yinchuan City(i) Construction of water supply facilities: No. 5 Purification Plant (additional construction:40,000 m3/day), No. 7 Purification Plant (new construction: 50,000 m3/day), No. 8Purification Plant (new construction: 50,000 m3/day), development of raw water transmission
and distribution pipes (121 km), construction of wells(ii) Construction of sewerage system: No. 5 Wastewater Treatment Plant (new construction:50,000 m3/day), No. 6 Wastewater Treatment Plant (new construction: 50,000 m3/day),development of sewer pipes and drainage canal (147 km), renovation of a pumping station (1location)(iii) Construction of reclamation facilities: Reclamation facilities of the No. 3 Wastewater
Treatment Plant (new construction: 30,000 m3/day), development of distribution pipes ofreclaimed wastewater (15 km)(b) Shizuishan(i) Construction of water supply facilities: Huinong Purification Plant (new construction:80,000 m3/day), Huinong Intake Facility (new construction: 180,00 m3/day), development ofraw water transmission and distribution pipes (53 km)(ii) Construction of sewerage system: No. 3 Wastewater Treatment Plant (new construction:40,000 m3/day), sewer pipes (76 km)(iii) Construction of reclamation facilities: Reclamation facilities of the No. 2 Wastewater
Treatment Plant (new construction: 30,000 m3/day), reclamation facilities of the No. 3
Wastewater Treatment Plant (new construction: 20,000 m3/day), development of distribution-2-pipes of reclaimed wastewater (38 km)(c) Training: Training for management and reclamation technology(3) Total Project Cost/Loan Amount
18,247 million yen (Yen Loan Amount: 8,432 million yen)
(4) Schedule
June 2007–July 2012 (62 months). The definition of project completion is “when the term ofwarranty expires.”(5) Implementation Structure(a) Borrower: The Government of the People’s Republic of China(b) Executing Agency: Ningxia Hui Autonomous Regional People’s Government(c) Operation and Maintenance System:(i) Yinchuan City
Water supply facilities: Yinchuan Water Supply Company
Sewerage system and reclamation facilities: Yinchuan Sewage Treatment Company(ii) Shizuishan CityWater supply facilities, sewerage system and reclamation facilities: Shizuishan XinghanGroup Company Runze Water Supply and Drainage Company(6) Environmental and Social Consideration(a) Environmental Effects/Land Acquisition and Resident Relocation(i) Category: B(ii) Reason for Categorization
This project is classified as Category B according to the “Japan Bank for International
Cooperation Guidelines for Confirmation of Environmental and Social Considerations”(established in April, 2002). This categorization is assigned because this project does notcorrespond to sectors and regions described in the said guidelines as being sensitive tonegative impact, and because it is not deemed to have a significant harmful impact on theenvironment.
(iii) Environmental Permit
The Environmental Impact Assessment (EIA) report related to the project was approved by
the Environmental Protection Bureau of the Ningxia Hui Autonomous Region in January,
2007.
(iv) Anti-Pollution Measures
Wastewater from sewerage system will be treated and released into the river in a state andmanner that meets the wastewater standards established in China. Thus, no significant
adverse impact is forseen. Additionally, sludge generated in wastewater treatment plants will
be appropriately disposed of in reclaimed repository sites.
(v) Natural Environment
The project site is not located in or around sensitive areas, such as national parks, and so-3-

adverse impact on the natural enivronment is assumed to be minimal. Additionally, while
groundwater is used as a clean water source in Yinchuan City, given the location of theaquifer, the planned water volume, and so on, the well construction is unlikely to have any
major adverse impact on the environment.
(vi) Social Environment
The project already owns the right to use the planned site of the project. Thus, it does notinvolve neither land acquisition nor resident relocation.
(vii) Other/Monitoring
In the project, the Environmental Protection Bureau of the Ningxia Hui Autonomous Region
will monitor water quality and the like.
(b) Promotion of Poverty Reduction
The poor make up 6.2% of the population in Yinchuan and 9.3% in Shizuishan Cities (based on
the family budget survey conducted in the two cities included in the target area). The poverty
rates in both cities exceed the national average of 2.8%. To help the poor, both cities introduce
lower fee for water supply., and it will be applied to this project as well.
(c) Promotion of Social Development (e.g. Gender Perspective, Measures for Infectious Diseases
Including AIDS, Participatory Development, Consideration for the Handicapped, etc.)
None(7) Other Important Issues
In the project, Shimane University provided expertise on conducting a survey to determine thecurrent situation regarding the use of reclaimed wastewater, and on formulating training programsand the like.
Additionally, regarding the training in Japan, training courses are being planned in Shimane
Prefecture, Fukuoka City, and Kitakyushu City with the cooperation of Shimane University. Thesecourses will draw on the experience and knowledge Japan has in the field of water conservation andthe use of reclaimed wastewater.
5. Outcome Targets(1) Evaluation Indicators (Operation and Effect Indicator)
Target (2014,
Baseline 2 years afterCity
Sub-Project
Indicator(2005)
projectcompletion)
Yinchuan
Water
Percentage of population served (%)
90.6
91.1
supplyPopulation served (10,000 persons)
71.6
101.2
3
facilities
Amount of water supply (10,000m /day)
2034-4-SeweragesystemPopulation treated (10,000 persons)
57.7
93.1
Amount of wastewater treated
13.232.13(10,000m /day)
Percentage of wastewater treatment (%)
087
Effluent quality (BOD concentration:180–200
30mg/L)
Effluent quality (COD concentration:350100mg/L)
Reclamation Amount of reclaimed water supplied
0.2
5.2
3
1.4
16.2
facilities(10,000m /day)
Ratio of amount treated (%)*
4583
Shizuishan Water
Percentage of population served (%)
12.5
34.4
supplyPopulation served (10,000 persons)
3
9.0
17.6
facilities
Amount of water supply (10,000m /day)
Sewerage
Population treated (10,000 persons)
12.5
34.4system
Amount of wastewater treated
2.7
17.1
3(10,000m /day)
Percentage of wastewater treatment (%)
038
Effluent quality (BOD concentration:20030mg/L)
Effluent quality (COD concentration:400100mg/L)
Reclamation Amount of reclaimed water supplied
0.2
93facilities(10,000m /day)
6.3
52.6
Ratio of reclaimed wastewater (%)*
*The ratio of reclaimed wastewater to wastewater treatment volume (= amount of reclaimed
wastewater / amount of wastewater treated)(2) Number of Beneficiaries(a) Development of water supply facilities: Approx. 1.36 million(b) Development of sewerage system: Approx. 1.28 million(2) Internal Rate of Return (Financial and Economic Internal Rate of Return)
Based on the conditions given below, the financial internal rate of return (FIRR) is as follows:(a) Yinchuan City
Water supply facilities: 11.3%; sewerage system: 5.8%; reclamation facilities: 7.1%(b) Shizuishan City
Water supply facilities: 8.3%; sewerage system: 6.4%; reclamation facilities: 7.4%
[FIRR](a) Cost: Project cost, operation and maintenance expenses(b) Benefit: Income from fees, subsidy(c) Project Life: 30 years-5-6. External Risk Factors
1. Delays in construction due to site changes caused by changes in road maintenance areas,development areas, etc. in urban planning
2. Impact on operation and maintenance due to shortages in financial funds or collected fees due tochanges in the policies relating to the fee sharing principle
7. Lessons Learned from Findings of Similar Projects Undertaken in the Past
From the ex-post evaluation of ODA loans granted in the past, it has been learned that it is important(1) to set an appropriate fee schedule that takes into consideration operation and maintenance costs,investment costs, payment ability of beneficial residents, and ability for financial burden, and (2) toformulate technical standards for maintenance frequency such as operation and maintenance, andevaluation of the necessity for the replacement of facilities. Based on this lesson, efforts will be madein the project, through interim monitoring and supervision, etc. to ensure the establishment of an
appropriate fee schedule and technical standards.
8. Plans for Future Evaluation(1) Indicators for Future Evaluation(a) Development of water supply facilities(i) Percentage of population served (%)(ii) Population served (10,000 persons)(iii) Amount of water supply (10,000m3/day)(iv) FIRR (%)(b) Sewerage system(i) Population treated (10,000 persons)(ii) Amount of wastewater treated (10,000 m3/day)(iii) Percentage of wastewater treatment (%)(iv) Effluent quality (BOD concentration: mg/L)(v) Effluent quality (COD concentration: mg/L)(vi) FIRR (%)(c) Reclamation facilities(i) Amount of reclaimed water supplied (10,000m3/day)(ii) Ratio of reclaimed wastewater (%) (= amount of reclaimed wastewater / amount ofwastewater treated)(iii) FIRR (%)(2) Timing of Next Evaluation
After project completion-6-