China

Novel approach to managing floods on People's Republic of China's Yellow River

Format
News and Press Release
Source
Posted
Originally published
News Release No. 091/01

MANILA, PHILIPPINES (28 August 2001) - The Asian Development Bank today approved a US$150 million loan to the People's Republic of China to manage floods along the lower reaches of the Yellow River. The Yellow River Flood Management Project brings a novel approach to an age-old problem as the river's inundations have caused massive loss of life and economic devastation for centuries.

In addition, ADB will provide a US$970,000 technical assistance grant for a study to improve water resources management -- and promoting socioeconomic development -- in the Yellow River Basin, home to over 100 million people.

"This is the first time we are adopting an integrated basin approach and it is a shift from traditional flood control initiatives," says Tetsuro Miyazato, ADB's senior project engineer. The comprehensive flood management approach includes strengthening the capacity of the Yellow River Conservancy Commission and various government agencies to manage water resources effectively. The project will build and rehabilitate river embankments and other flood control works, plant trees along embankments, and construct elevated earth platforms near flood-prone villages. In addition, it will improve flood forecasting and early warning systems.

The last major floods in 1998 killed more than 3,500 people, damaged over 7 million houses, submerged 25 million hectares of farmlands and caused US$30 billion of damage. The project will directly benefit some 12 million poor people, nearly a third of whom live below the poverty line.

The project will reduce both the incidence and impact of flooding in two populous provinces, Henan and Shandong. While Shandong is highly industrialized, Henan is a major producer of wheat, corn, and cotton.

The total cost of the project is US$404.7 million. The ADB loan will come from its ordinary capital resources under its new LIBOR-based facility. It will be repayable over 25 years, including a grace period of five years. ADB will also administer a US$300,000 technical assistance grant from the Danish Government for a flood forecasting and early warning system. The PRC Government will provide financing of US$224.3 million. The project is expected to be completed by December 2005.

Project Information

The following provides prospective suppliers, contractors, consultants, and others with general information about the Project. Detailed information may be obtained from the Executing Agency indicated below. Particulars given with respect to "consultants" and "procurement" are based on present planning and may change in the course of Project Implementation.

Yellow River Flood Management (Sector) Project

Country

People's Republic of China

Borrower

People's Republic of China

Date

28 August 2001

Project Description

The Project will reduce the incidence of flooding in the lower Yellow River Basin through improved flood management, and thereby improve environmental quality and promote economic growth.

Loan Amount

$150 million from ADB's ordinary capital resources.

Loan Terms

A loan of $150 million from ADB's ordinary capital resources will be provided under ADB's LIBOR-based lending facility. The loan will have 25-year term, including a grace period of 5 years, with interest to be determined in accordance with ADB's LIBOR-based lending facility, a commitment charge of 0.75 percent per annum, a front end fee of 1.0 percent, conversion options that may be exercised in accordance with the terms of the draft Loan Agreement, the Loan Regulations on ADB's Conversion Guidelines, and such other terms and conditions set forth in the draft Loan Agreement.

Total Cost

$404.70 million equivalent
Foreign Exchange Cost: $150.27 million
Local Currency Cost: $254.43 million equivalent

Period of Utilization

Until 30 June 2006

Cofinancing

The Government of Denmark has agreed to provide $300,000 as an untied grant for the flood forecasting and early warning system.

Executing Agency

Ministry of Water Resources (MWR)

Procurement

ADB-financed equipment and materials will be procured in accordance with ADB's Guidelines for Procurement. Major contracts for equipment and materials will be tendered through international competitive bidding or international shopping procedures. Procurement for civil works contracts up to $5 million equivalent will be carried out under local competitive bidding procedures acceptable to ADB. Advance action for procurement of equipment and vehicles and civil works for three core subprojects has been approved. Force Account will be used for village flood protection component.

Technical Assistance

In conjunction with the proposed loan, technical assistance (TA) for Strategic Planning Study for the Preparation of the Yellow River Law is proposed to assist the Government in setting out the principles and procedures for the comprehensive management of water resources in the Yellow River Basin. The preparation of the Yellow River Law is critical for the promotion of a unified administration for the Yellow River Basin, since YRCC does not have presently a separate governing board or corporate status for the administration of the Basin. The TA will, inter alia, make recommendation of strategic basin-wide plan and policy directions to be reflected in the Yellow River Law. The TA will provide about 17 person-months of international and 63 person-months of domestic consulting services.

The TA costs are estimated at $1.27 million equivalent, comprising $562,000 equivalent for foreign exchange costs and $708,000 equivalent for local currency costs. ADB will provide $970,000 to cover the entire foreign exchange cost and part of the local currency cost, equivalent to $408,000. The balance of the local currency cost, equivalent to $300,000 will be met by MWR. Consultants will be selected in accordance with ADB's Guidelines on the Use of Consultants.

Estimated Date of Completion

31 December 2005

Contacts

Press Inquiries Only
Contact: Pamposh Dhar
Tel: (632) 632-5937
E-mail: pdhar@adb.org

Asian Development Bank
6 ADB Avenue, Mandaluyong
PO Box 789
0980 Metro Manila, Philippines
Tel: (63-2) 632-4444
Fax: (63-2) 636-2444
Telex: 63587 ADB PN/29066 ADB PH

=A9 2001 Asian Development Bank

Asian Development Bank
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