Ex-ante Evaluation
1. Name of the ProjectCountry: People’s Republic of China
Project: Heilongjiang Province Harbin City Water Environment Improvement Project,(Loan Agreement: June 23, 2006; Loan Amount: 7,398 million yen; Borrower: The Government of thePeople’s Republic of China)
2. Necessity and Relevance of JBIC’s AssistanceThis project will take place in Harbin City, the provincial capital of Heilongjiang Province. Harbin hasa population of approximately 9.5 million people (roughly equivalent to 80% of the population ofTokyo), and a surface area of 53,000 km2 (70% of that of Hokkaido). With a population of roughly
3.94 million (equivalent to that of Shizuoka Prefecture) and a surface area of 4,200 km2 (equivalent tothat of Yamanashi Prefecture), the town district straddles both banks of the mid-stream portion of theSonghua River, China’s seventh largest river. In Harbin’s urban district, thanks to the rapid pace ofindustrialization and urbanization, as well as the rapid increase in population in recent years, thevolume of industrial waste water and domestic sewage has likewise risen. As only 60% of water istreated, large quantities of polluted water flow untreated directly into the Songhua river. As a result, thewater in Songhua river areas downstream of Harbin as well as in tributaries within the city limits has
become of such poor quality that it does not satisfy the requirement of being suitable for use as a water
resource for drinking water, as stipulated in China’s national water quality environmental standards.
Moreover, even if one looks at the entire Songhua river, it is one of the most polluted rivers in all ofChina; according to a water quality study conducted in FY2004, in only 20% of all the observation
points was the water clean enough to serve as a water resource for drinking water.
Under these circumstances, when the Chinese government enacted its The Tenth Five Year Plan forEnvironmental Protection, it established a goal of having 70% of polluted water in major cities treated.
In the wake of this, the Harbin City government adopted the The Tenth Five Year Plan forEnvironmental Protection and Perspective Plan for 2010 in Harbin City (encompassing the years
2001-2010). These plans contained directives to strive to improve the water environment. Specifically,they established as their target a sewage treatment rate of 90% within the urban district by 2010, andfurther stipulated that the Songhua River’s water quality be maintained to such a level that it would besuitable for use as a source of drinking water.
In order to attain these objectives, in March 2004 Harbin City adopted a master plan for the provisionof sewerage facilities by the year 2020. As part of that master plan, the present project is positioned asa project of great importance and high priority.
The Japanese government announced the Economic Cooperation Program for China in October 2001,and set out a policy placing more emphasis on areas such as conservation of environments andeco-systems, improvement of living standards and social development in the inland regions, humanresources development, institution building, and technology transfer. Moreover, the reduction of waterpollution/pollution control and the development of human resources are also established as priority
areas in JBIC’s Medium-Term Strategy for Overseas Economic Cooperation Operations. Thus, JBIC’sassistance for this project is highly necessary and relevant.
3. Project Objectives
This project aims to improve the sewerage treatment capacity in Harbin City, Heilongjiang Province,by providing sewerage facilities in that city. In so doing, the projects hopes to help improve the living
environment of the local residents by reducing the pollution load in the river running through the city.
4. Project Description(1) Target Area
Harbin City, Heilongjiang Province(2) Project Outline
The provision of machinery and materials for, and the construction of, sewerage facilities in Harbin
City of Heilongjiang Province, together with training for people to oversee the work.
(a) Develop sewage pipe system(b) Construct a new sewage treatment plant(c) Provide training(3) Total Project Cost/Loan Amount
14,893 million yen/7,398 million yen(4) Schedule
July 2006-April 2011 (58 months).
(5) Implementation Structure(a) Borrower: The Government of the People’s Republic of China(b) Executing Agency: Harbin Municipal People’s Government(c) Operation and Maintenance System: Harbin Inland River Construction and Development Co.,Ltd
(6) Environmental and Social Consideration(a) Environmental Effects/Land Acquisition and Resident Relocation(i) Category: B(ii) Reason for Categorization
This project does not correspond to sensitive sectors, characteristics, or areas sensitive to impact as
stipulated in the “Japan Bank for International Cooperation Guidelines for Confirmation ofEnvironmental and Social Considerations” (established April 2002) or the surroundings of suchareas, and as such is not judged to have serious undesirable environmental impacts. For thisreason, the project is classified as Category B.

(iii) Environmental Permit
The Environmental Impact Assessment (EIA) for this project was approved by the Helongjiang
Province Environment Protection Bureau in November 2002.
(iv) Anti-Pollution Measures
Final effluent leaving sewerage facilities will be treated to meet Chinese domestic water emissions
standards before being discharged into the river, where it is not foreseen to have any particularimpacts. Also, sludge created at sewage treatment plants is planned to be appropriately disposed of
at existing landfill disposal sites.
(v) Natural Environment
The project target area does not correspond to an area sensitive to impact or the surroundings ofsuch areas, such as a national park. Undesirable impacts on the natural environment are assumed
to be minimal.
(vi) Social Environment
Because the rights of use of the land reserved for this project belong to the Harbin Municipal
People’s Government, there is no need to acquire land or relocate residents.
(vii) Others/Monitoring
The Harbin City Environmental Protection Bureau will monitor the quality of drainage water forthe project.
(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 Indicators (Operation and Effect Indicator)
Indicator
Baseline(2004)
Population served with sewage treatment 260(10,000 people)
Sewage treatment volume (10,000t/day) 65
Percentage of sewage treated (%)
60
Final effluent water quality (BOD) 200(mg/l)(2) Financial Internal Rate of Return (FIRR): 5.7%(a) Cost: Project costs, operation and maintenance cost(b) Benefit: Revenue from fees(c) Project life: 30 years

Target (2010, 1 year after
completion of project)
317
90
67
20

6. External Risk Factors(1) Current city planning may change planned areas for roads or other developments, causing
construction site changes and delays.
(2) Change in the policy of principle of fee burden could cause a shortage of fiscal funds or feescollected. This in turn could affect operation and maintenance.
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, considering operationand maintenance costs, investment cost, ability of beneficiary residents to pay, and the capacity forfiscal burden. It is also important to formulate technical standards for maintenance frequency, such asof operation and maintenance, and evaluation of the necessity for facility renewal. Thus, bearing this inmind, the project will confirm through interim supervision and other means that a system will becreated to establish an appropriate fee system and formulate technical standards.
8. Plans for Future Evaluation(1) Indicators for Future Evaluation(a) Population served with sewage treatment services (10,000 people)(b) Volume of sewage treated (10,000m3/day)(c) Percentage of sewage treated (%)(d) Final effluent water quality (BOD) (mg/l)(e) FIRR (%)(2) Timing of Next Evaluation
After ompletion of project