People’s Republic of China: Guangxi Wuzhou Urban Development Project

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Lessons

Effective land acquisition and resettlement approaches are attuned to changes in development policies.

The recent emphasis in the People’s Republic of China (PRC) on people-centered policies has led to a more cautious approach by the government in implementing land acquisition and resettlement. Although negotiations with affected people are still considered the more suitable and sustainable approach, this project’s executing agency and Asian Development Bank (ADB) have agreed that the following additional approaches are also important to improve the design and implementation of future similar projects in the PRC: (i) where possible, minimize the need for land acquisition; (ii) carry out more thorough due diligence to enable better decision-making; (iii) look for proactive approaches to resolve land acquisition bottlenecks such as design amendments and alternative resettlement locations; (iv) coordinate better across township governments in implementing resettlement plans; and (v) consider alternative project components to use loan proceeds and loan extensions more efficiently.

Advance preparation of the bidding documents improve the reliability of cost estimates.

Low bid prices have been observed as a growing phenomenon in many ADB projects, as well as those funded by other donors, in the PRC. This phenomenon is a result of several issues, including overestimation during bid preparation, weak price analysis during bid evaluation, and low contract management capacity of the implementing agency. It also stems from reliance on cost estimates during feasibility studies that tend to put a high premium on risk. More advance preparation of the bidding documents will improve the accuracy of cost estimates. While a recent ADB procurement reform should help address this situation, certain additional measures may be considered to ensure more reliable cost estimates. Such measures could include using detailed designs as the basis for procurement plans and cost estimates, and a thorough price analysis during bid evaluation. ADB should also improve its efforts in strengthening the procurement and contract management capacity of the executing and implementing agencies. Enhancements in the PRC's tracking system for sanctioned local bidders would also be essential in addressing problems in procurement and bid prices.

Background

Located near the big rivers of Xunjiang and Guijiang, Wuzhou has served for centuries as a gateway city and a regional transportation hub. It connects, particularly by river transportation, the People’s Republic of China’s (PRC) Guangxi province on the border with Viet Nam, with national and international markets. But the rivers also separate this medium-sized city into three parts and, along with the poor mountainous geological and geographic conditions, provide limited flat lands for urban development. Residents thus had to build their houses on marginal lands, gradually expanding upward on major slopes, making them vulnerable to geological disasters such as landslides, slope collapse, and mud and debris flows.

Wuzhou used to address the disaster risks by repeatedly constructing retaining walls and other slope protection structures. But as these traditional erosion control measures proved ineffective and inadequate, the Wuzhou municipal government (WMG) decided to explore alternative solutions. With support from the central government, it accessed a $100 million loan from the Asian Development Bank (ADB) for the Guangxi Wuzhou Urban Development Project. Approved in December 2008, the project was designed to contribute to sustained urban development and improved quality of life in Wuzhou. Its intended outcome was reduced geohazard threats to life and property and reduced geohazard constraints on urban development. It had 3 planned outputs: (i) Pingminchong valley resettlement and geological disaster risk prevention, (ii) Hongling road network and related infrastructure, and (iii) capacity development and institution building.

The project delivered most of its outputs as envisaged. The Zaochong resettlement community was completed in March 2012, a year ahead of schedule. It accommodated evacuated families not only from Pingminchong but also from other adjacent geohazard-prone valleys. The rehabilitation of Pingminchong, completed in September 2015, readied 19.3 hectares (ha) of geohazard-free land for future urban growth. Mountain slopes were cut to make them safe and

free from landslides; the valley was filled and turned into carefully designed terraces; and a drainage system was built to divert storm water and protect the treated terraces from erosion. A 32.5 kilometer (km)-long Hongling road network was built. Wuzhou’s geohazard management capacity was strengthened through the provision of modern forecasting and early warning system equipment and technical support.

The success of Pingminchong resettlement and rehabilitation encouraged the WMG to replicate the model in 3 other adjacent geohazard-prone valleys. This resulted in the relocation of a total of 34,959 people from 7,419 households to safe urban areas; and a total of 631.4 ha geohazard-free land made available for urban development, including those in the WMG-funded replication sites, and the ADB loan-financed Zaochong resettlement community and Hongling urban area. For their part, improved transport and urban infrastructure helped develop Hongling into a thriving geohazard-free urban district.

ADB’s East Asia Department rated the project successful. Planned allocation for the ADB loan was followed. Completion was extended from December 2014 to December 2016, to allow the resolution of some resettlement issues. The WMG was the executing agency, and the Dongtai State Assets Operations Corporation, the implementing agency.

Project Information

Project Name:

Guangxi Wuzhou Urban Development Project

Report Date:

September, 2017

Main Sector:

Transport

Country:

China

Project Number:

40642-013

Project/Modality: