Ex-ante Evaluation
1. Name of the ProjectCountry: The People’s Republic of China
Project: Anhui Water Environmental Improvement Project(Loan Agreement: March 30, 2007; Loan Amount: 8,400 million yen; Borrower: The Government of
the People’s Republic of China)
2. Necessity and Relevance of JBIC’s Assistance
In China, the sewage treatment rate in urban areas has leveled off at 48% (2005), while in rural areas
sewerage facilities themselves have not spread very much. Consequently, the water pollution of riversand contamination 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 sewage treatment rate to 70% in all principal
cities across the country. To achieve this goal, it is important to develop sewage treatment facilities.
The rate of water supply in urban areas reached 89% in 2004. However, since the clean water sources
are concentrated in the southwestern part of China, other areas are frequently hit by water shortages.
Also, there are many cities beset with the problem of having their water supplied from deteriorating
sources. In its 11th Five-Year Plan for Environmental Protection (2006–2010), the Government ofChina designates river basins as prioritized conservation targets with the view to raising the water
quality of the 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 sewage.
In the Huai River basin where Bengbu City (population: 3.49 million; land area: 5,917 km2), Anhui
Province, is located, recent efforts to construct sewage treatment facilities are not catching up with
the increasing volume of sewage generated as a result of rapid economic development. Even inBengbu City, a major industrial town, the volume of sewage (350,000 m3/day) exceeds the sewage
treatment capacity (155,000 m3/day), and considering the expected increase in the volume of sewage
that will be generated in the days to come, it is feared that the deterioration of the water quality of theHuai River will become even more serious than it is now. Thus, improving the water environment in
the area concerned is a challenge that must be addressed immediately.
Furthermore, the proportion of households having access to a water supply service is low in Bengbu
City, and inferior groundwater is widely used. Given the prospect of the growing demand for water intandem with further economic development, to improve the living conditions of Bengbu residents, itis crucial to develop water supply infrastructure for which water is sourced from rivers having abetter quality of water.
In response to this situation, in 2004, the Government of China (State Council Project Office) issued
a “Notice concerning Measures against Water Pollution in the Huai River Basin.” The notice called
for further construction of sewage treatment facilities including pipes and drains, and declared thatthe water quality of the Huai River basin and the source of drinking water for the city should beraised to the level of water applied to general fish reserves and swimming areas. In response to this-1-

message, the Bengbu Municipal People’s Government also laid down the 11th Five-Year Plan forEnvironmental Protection in Bengbu City, in which it declared that top priority should be given to thedevelopment of sewerage facilities and to the improvement of the quality of the source of drinking
water.
The project addresses environmental conservation, one of the priority areas designated in theEconomic 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 reduce polluted water discharged into the Huai River and ensure a stable supplyof safe drinking water to Bengbu City, Anhui Province, by developing its water supply and sewerage
infrastructure. It will thereby help improve the living conditions of its population.
4. Project Description(1) Target Area
Bengbu City, Anhui Province (urban area, Huaiyuan County, Wuhe County, and Guzhen County)(2) Project Outline
The project involves the procurement of materials and equipment, civil works, and training necessary
for developing sewerage facilities and water supply facilities in the aforesaid target area.
(a) Urban area
- Sewerage facilities (sewage pipes and drains: 158 km, sewage treatment plants [newconstruction: 200,000 m3/day], pumping stations: 2 locations)(b) Huaiyuan County- Sewerage facilities (sewage pipes and drains: 169 km, sewage treatment plants [newconstruction: 20,000 m3/day], pumping stations: 2 locations)- Water supply facilities (water supply pipes and drains: 75 km, purification plants [additional
construction: 30,000 m3/day], pumping station: 1 location)(c) Wuhe County- Sewerage facilities (sewage pipes and drains: 48 km)- Water supply facilities (water supply pipes and drains: 43 km)(d) Guzhen County- Sewerage facilities (In industrial park – sewage pipes and drains: 15 km, sewage treatment
plants [new construction: 20,000 m3/day])- Water supply facilities (In industrial park – water supply pipes and drains: 22 km,
purification plants [new construction: 20,000 m3/day], pumping station: 1 location)- Water supply facilities (In county capital – water supply pipes and drains: 39 km, purification
plant [additional installation: 10,000m3/day], pumping station: 1 location)(e) Training: Training for sewerage and water supply projects(3) Total Project Cost/Loan Amount
17,036 million yen (Yen Loan Amount: 8,400 million yen)

-2-(4) Schedule
April 2007–December 2010 (45 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: Bengbu Municipal People’s Government(c) Operation and Maintenance System: State-run enterprises owned by the Bengbu Municipal
People’s Government and by the People’s Government of each county under municipal
jurisdiction.
(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 or regions described in said guidelines as being sensitive to negative
impact, because it is not deemed to have a significant harmful impact on the environment..
(iii) Environmental Permit
The Environmental Impact Assessment (EIA) report related to the project will be approved by
the Anhui Environmental Protection Bureau in April, 2007.
(iv) Anti-Pollution Measures
Wastewater from sewerage facilities will be treated and released into the river in a state andmanner that meets the wastewater standards established in China. Thus, no significantadverse impact is forseen. Additionally, sludge generated in sewage treatment plants will beappropriately 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 soadverse impact on the natural enivronment is assumed to be minimal.
(vi) Social Environment
The project involves land acquisition of about 30 ha and the acquisition will be implemented
in accordance with the domestic procedures of China. The project does not involve resident
relocation.
(vii) Other/Monitoring
In the project, the Bengbu Environmental Protection Bureau will monitor water quality andthe like.
(b) Promotion of Poverty Reduction
A subsidy for water fee is available for the poor, and it will be applied to this project as well.
(c) Promotion of Social Development (e.g. Gender Perspective)
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None
(7) Other Important Issues
None
5. Outcome Targets(1) Evaluation Indicators (Operation and Effect Indicator)(a) Sewerage ProjectIndicator
Population treated (10,000 persons)Amount of wastewater treated (10,000 m3/day)
Percentage of wastewater treatment (%)
Effluent quality (BOD concentration: mg/L)
Effluent quality (COD concentration: mg/L)

Baseline(2005 actualperformance)
61.4
15.5
40
2060

Target (2012, 2 years
after projectcompletion)
127.4
49.5
74
1050

Baseline(2005 actualperformance)

Target (2012, 2 years
after projectcompletion)
95
131.3
47.5

(b) Water Supply Project
Indicator
Percentage of population served (%)
Population served (10,000 persons)Amount of water supply (10,000m3/day)

80
86.6
33.2

(2) Number of Beneficiaries(a) Development of sewerage facilities: Approx. 600,000(b) Development of water supply facilities: Approx. 200,000(3) Internal Rate of Return
Based on the conditions given below, the financial internal rate of return (FIRR) is as follows:
Water supply
Sewerage facilities
facilities
development
development
Urban area (Yangtaizi sewage treatment plant)
4.77%−
Huaiyuan County
4.04%
6.08%
Wuhe County
4.37%
6.15%
County capital
6.10%−
Guzhen County
Industrial park
4.10%
6.46%
[FIRR](a) Cost: Project cost, operation and maintenance expenses-4-(b) Benefit: Income from fees(c) Project Life: 30 years
6. External Risk FactorsImpact on operation and maintenance due to shortages of collected fees caused by delays in thedevelopment of the target area
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
Population treated (10,000 persons), amount of wastewater treated (10,000 m3/day), percentage ofwastewater treatment (%), effluent quality (BOD concentration: mg/L), effluent quality (COD
concentration: mg/L), percentage of population served (%), population served (10,000 persons),
amount of water supply (10,000m3/day), financial internal rate of return(FIRR) (%)(2) Timing of Next Evaluation
After project completion-5-