Intensive coal production for local industrial and residential consumption as well as to generate electricity exports to other provinces has brought about severe air pollution in the Inner Mongolia Autonomous Region (IMAR) in the People’s Republic of China (PRC). For instance, in 2005, although its population was just 1.8% of the national total, IMAR discharged 1.46 million tons of sulfur dioxide (SO2), representing 5.7% of national emissions. Consequently, only 6 of IMAR’s 20 cities met the national air quality standards in 2005.
With growth in wastewater treatment facilities outstripped by the rising urban population and resultant increase in municipal wastewater, water pollution has also escalated. In 2005, only 45% of wastewater was treated. The untreated wastewater discharged into the rivers caused significant pollution, as evidenced by a disproportionately high annual chemical oxygen demand (COD) of 297,000 tons in IMAR, compared with 116,000 tons in Beijing.
To address the situation, the Government of IMAR (GIMAR) prioritized developing a modern and efficient district heating system, expanding the use of natural gas, and constructing wastewater treatment plants. These priorities accorded with the PRC’s national target of reducing SO2 emissions and COD by 10% in 2010. To help achieve the priorities, the Asian Development Bank approved a $120 million loan for the IMAR Urban Environment Improvement Project in September 2006. The project had 4 components: (i) an urban district heating system, (ii) natural gas transmission and distribution, (iii) wastewater treatment, and (iv) institutional reform and corporate governance improvement.
However, as the loan became effective only in September 2007 due to the need to prior on finalize onlending agreements between the national, provincial, and local governments, 5 of the planned 8 heating subprojects was excluded from the project scope. These subprojects had to be implemented in advance as the long harsh, winter season makes district heating a high priority that cannot be postponed by local governments. Similarly, 1 wastewater subproject was implemented without utilizing the ADB loan because of the need to earlier on meet the discharge reduction requirement of the local environment protection bureau. Another wastewater subproject also became obsolete with the closure of the wastewater source.
Nevertheless, a major change in scope approved by ADB in June 2010, which expanded the heating system in 1 district, enabled the project to substantially achieve its intended outputs and outcome. Most targets in district heating and natural gas transmission were surpassed. 98.17% of the ADB loan was utilized, comprising 34.5% of the actual total project cost. The project was rated successful despite an overall 5-year delay in project completion due to start-up delays, the additional time required to implement the major change in scope, and changes in the heat source location of 2 remaining original heating subprojects.
GIMAR was the executing agency. A project management office (PMO) supervised the various project implementing agencies that carried out most of the project components, except for the 2010 expansion works that came under the Bayannur Yangguang Energy Group and the governance improvement component directly managed by the PMO.
