Ex-ante Evaluation
1. Name of the ProjectCountry: People’s Republic of China
Project: Jilin Province Jilin City Comprehensive Environment Improvement Project(Loan Agreement: June 23, 2006; Loan Amount: 9,711 million yen; Borrower: The Government of thePeople’s Republic of China)
2. Necessity and Relevance of JBIC’s Assistance
About 68% (2004) of energy consumption in China relies on coal. Acid rain and smoke dust fromsulphur oxides (SOX) are creating serious impacts on people’s health condition and the nation’secosystem. The percent of sewage treated in urban areas is only 43% (2004), and sewerage facilities
have not been developed widely in rural areas, which comprise most of the population of over 1billion. As a result, pollution of rivers and fresh water lakes has become serious. In light of thisenvironment, the Chinese government set strengthening its efforts to comprehensively develop urban
environments as a priority issue in the “The State Tenth Five Year Plan for Environmental Protection(2001-2005).” This plan prohibited direct burning of coal and promoted centralized heat supply inurban areas as an air pollution countermeasure. It also proclaimed a goal of treating 60% of the sewage
in all major cities by 2005, and 70% in prioritized cities, as a water environmental countermeasure.
Jilin city in Jilin province is this project’s target area. It is the second largest city in Jilin province,
situated on the upper Songhua River in the center of northeast China. Typically, Jilin households use
small coal boilers to heat homes in winter, creating extremely bad air pollution. In 2003, Jilin wasranked 63rd worst of 113 prioritized cities designated as requiring state environmental protection fromair pollution. There are concerns that as the city develops rapidly, the degree of pollution will become
worse as a result of the installation of large volumes of small coal boilers every year, in addition to thepollution caused by the existing facilities. Against this backdrop, Jilin province announced objectives
for air pollution improvement, and 70% of population in the province served with centralized heat
supply by 2010, in the “The Tenth Five Year Plan for Environmental Protection in Jilin Province andPerspective Plan for 2010 (2001-2010).” Accordingly, Jilin city government is promoting centralizedheat supply in urban areas, along with prohibiting installations of small coal boilers. With regard to thewater pollution, sewage treatment facilities are not fully developed in Jilin city, despite the increased
sewage volume that city’s economic development has brought about. As such, the large volume ofuntreated sewage flowing into Songhua River is becoming one cause of worsening water quality inSonghua River. Based on this situation, “The Tenth Five Year Plan for Environmental Protection in
Jilin Province and Perspective Plan for 2010 (2001-2010)” set an objective of improving the water
quality in Songhua River, a resource of potable water for Jilin city, by 2010. The Jilin city governmentis developing sewage treatment plants and its sewage pipe network in order to raise the sewage
treatment rate in urban areas.
This project corresponds to the activity of environmental conservation, a priority area stipulated both inthe Economic Cooperation Program for China by the Japanese Government, and in the Medium-Term
Strategy for Overseas Economic Cooperation Operations by JBIC. Thus, JBIC’s assistance for thisproject is highly necessary and relevant.

3. Project Objectives
This project is to reduce the emissions volume of air and water pollutant, by developing centralizedheat supply facilities and the sewage pipe network in Jilin city, Jilin province, and thereby contributing
to improvement in people’s living environment.
4. Project Description(1) Target Area
Jilin City, Jilin Province(2) Project Outline
Develop centralized heat supply facilities and a sewage pipe network in Jilin city, purchase necessary
materials and equipment, and provide overseas training.
(a) Centralized heat supply facilities development: Construction of heat supply facilities, heat
supply piping, and heat exchange stations.
(b) Sewage pipe network development: Construction of sewage pipe network and pump stations,and reconstruction of rainwater spillway.
(c) Training: Training in Japan for operation and maintenance of centralized heat supply facilities
and sewerage facilities.
(3) Total Project Cost/Loan Amount
14,676 million yen (Yen Loan Amount: 9,711 million yen)
(4) Schedule
July 2006-end of March 2012 (69 months)(5) Implementation Structure(a) Borrower: The Government of the People’s Republic of China(b) Executing Agency: Jilin Municipal People’s Government(c) Operation and Maintenance System: Jilin Municipal People’s Government(6) Environmental and Social Considerations(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 April 2002). This categorization is assigned because this project does notcorrespond to sectors or regions described in said guidelines as being sensitive to negativeimpact, and because it is not deemed to have a significant harmful impact on theenvironment.
(iii) Environmental Permit
The Jilin Province Environmental Protection Office approved the following Environmental
Impact Assessment reports for this project: Centralized heat supply facilities development
project: July 2005; Sewage pipe network development project: August 2005.
(iv) Anti-Pollution Measures
Air pollution countermeasures will be carried out to meet national emissions standards for air
pollutants arising from centralized heat supply facilities. Existing sewage treatment facilities
will treat sewage collected via sewage pipes to meet emission standards. Treated sewage will
be discharged into the river, and is not foreseen to have special impacts.
(v) Natural Environment
The project target area does not correspond to a sensitive area or its surroundings, such as anational park. Undesirable impacts on the natural environment are assumed to be minimal.
(vi) Social Environment
The Jilin Municipal People’s Government has the usage rights for land planned for thisproject. There will be no site acquisition or resident relocation.
(vii) Other/Monitoring
The Jilin City Environmental Protection Office will monitor air and water quality.
(b) Promotion of Poverty Reduction
None(c) Promotion of Social Development (e.g. Gender Perspective)
None(7) Other Important Issues
None
5. Outcome Targets(1) Evaluation Indicator (Operation and Effect Indicator)
Indicators
BaselineTarget(2005)(2013, 1 year after completion of project)
Development of Centralized Heat
Supply Facilities
SO2 emissions reduction volume0
9,300(tons/year)
NO2 emissions reduction volume0
4,000(tons/year)
TSP emissions reduction volume043,000(tons/year)(2010, 1 year after completion of project)
Sewage Pipe Network Development
Population served with sewage

129144treatment(Unit: 10,000 people)
Volume of sewage treated(Unit: 10,000m3/day)
Percentage of population served withsewerage (%)
Quality of water discharged (BOD,mg/L)

2030

63

843030(2) Financial Internal Rate of Return (FIRR)
Development of centralized heat supply facilities: FIRR 7.1%, Development of sewage pipe network:
FIRR 6.6%(a) Costs: Project cost, operation and maintenance costs(b) Benefits: Revenue from fees(c) Project life: 30 years
6. External Risk Factors(1) Change in planned areas for road constructions or other developments under the current city
planning may require changes in target sites for the project and thus could cause delays in construction.
(2) Change in the policy of principles regarding bearing the burden of fees could cause a shortage offinancial funds or fees collected. This in turn could affect operation and maintenance.
(3) Risk of fluctuation in the price of coal used in the centralized heat supply.
7. Lessons Learned from Findings of Similar Projects Undertaken in the Past
From past ex-post evaluations of yen loan projects, the lesson has been learned that to ensuresustainability of project results, it is important to set an appropriate fee system, taking into
consideration the operation and maintenance cost, investment cost, ability of beneficiary residents topay, and their capacity for financial burden. It is also important to formulate technical standards forfrequency of operation and maintenance, and evaluation of the necessity for facility renewal.
Based on this, a request was made under this project to the executing agency that a system be createdto establish an appropriate fee system and formulate technical standards. This was approved by theexecuting agency.
8. Plans for Future Evaluation(1) Indicators for Future Evaluation(a) Central Heat Supply Facilities Development ProjectSO2 emissions reduction volume (tons/year), NO2 emissions reduction volume (tons/year), TSPemissions reduction volume (tons/year), FIRR (%)(b) Sewage Pipe Network Development Project
Population served with sewage treatment (unit: 10,000 people)
Volume of sewage treated (unit: 10,000 m3/day), percent of sewage treated (%)
Quality of water discharged (BOD, mg/L)
FIRR (%)

(2) Timing of Next Evaluation
After completion of project