CONFORMED COPY

LOAN NUMBER 4830-CHA

Project Agreement

(Third Jiangxi Highway Project)

between

INTERNATIONAL BANK FOR RECONSTRUCTION

AND DEVELOPMENT

and

JIANGXI PROVINCE

Dated November 23, 2006

-10-

PROJECT AGREEMENT

Agreement dated November 23, 2006, entered into between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the “Bank”) and JIANGXI PROVINCE (the “Project Implementing Entity”) (the “Project Agreement”) in connection with the Loan Agreement of same date between PEOPLE’S REPUBLIC OF CHINA (the “Borrower”) and the Bank (the “Loan Agreement”). The Bank and the Project Implementing Entity hereby agree as follows:

ARTICLE I – GENERAL CONDITIONS; DEFINITIONS

1.01.  The General Conditions (as defined in the Appendix to the Loan Agreement) constitute an integral part of this Agreement.

1.02.  Unless the context requires otherwise, the capitalized terms used in the Project Agreement have the meanings ascribed to them in the Loan Agreement or the General Conditions.

ARTICLE II – PROJECT

2.01. The Project Implementing Entity declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall:

(a) carry out the Project in accordance with the provisions of Article V of the General Conditions; and

(b) provide promptly as needed, the funds, facilities, services and other resources required for the Project.

2.02. Without limitation upon the provisions of Section 2.01 of this Agreement, and except as the Bank and the Project Implementing Entity shall otherwise agree, the Project Implementing Entity shall carry out the Project in accordance with the provisions of the Schedule to this Agreement.

ARTICLE III – REPRESENTATIVE ADDRESSES

3.01. The Project Implementing Entity’s Representative is the Governor or Vice Governor of Jiangxi province or such other person or persons as the Governor or Vice Governor of Jiangxi province designate in writing, and the Project Implementing Entity shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person.

3.02. The Bank’s Address is:

International Bank for Reconstruction and Development

1818 H Street, NW

Washington, DC 20433

United States of America

Cable: Telex: Facsimile:

INTBAFRAD 248423(MCI) or 1-202-477-6391

Washington, D.C. 64145(MCI)

3.03. The Project Implementing Entity’s Address is:

People’s Government of Jiangxi Province

No. 69 Beijing Road 330046

Nanchang, Jiangxi

People’s Republic of China

Facsimile:

(86-791) 628-1344


AGREED at Beijing, People’s Republic of China, as of the day and year first above written.

INTERNATIONAL BANK FOR

RECONSTRUCITON AND DEVELOPMENT

By: /s/ Mr. David Dollar

Authorized Representative

JIANGXI PROVINCE

By: /s/ Mr. Zhu Guangyao

Authorized Representative


SCHEDULE

Execution of the Project

Section I. Institutional and Other Arrangements

Project Management

1. The Project Implementing Entity shall maintain throughout the period of implementation of the Project, the PMO responsible for the overall coordination and management of Project implementation, including activities related to environment, resettlement, finance, and administration, headed by a qualified and experienced manager who shall be the director of the PMO, and assigned with a Deputy Director, a Resettlement Specialist, an Environmental Specialist and a Procurement expert, and assigned with such powers, funds, staff in adequate numbers and other resources as shall be required to enable the PMO to achieve its purposes.

Social and Environment Protection

2. The Project Implementing Entity shall in the carrying out of Parts A and B of the Project and the construction of the BOT Expressway from Ailing to Ruijin, implement the Resettlement Action Plan, the Resettlement Policy Framework, the resettlement action plans prepared theafter, and the Environmental Management Plan, all in a manner and substance satisfactory to the Bank. In particular, the Project Implementing Entity shall:

(a) take, all necessary actions to minimize to the extent possible the acquisition of land or assets of people, any involuntary loss by persons of shelter, productive assets or access to productive assets or income or means of livelihood, temporarily or permanently, and the displacement of said people in the carrying out the Project or any Part thereof and in the construction of the BOT Expressway from Ailing to Ruijin or any part thereof;

(b) where the acquisition of land or assets or the displacement of people is unavoidable, make available to such people compensation in accordance with the Resettlement Action Plan and the Resettlement Policy Framework and before the carrying out of the works which would result in such acquisition or displacement, all in a manner satisfactory to the Bank;

(c) in the event that two hundred or more people are displaced by any given activity under Part B of the Project: (i) prepare a resettlement plan in accordance with the Resettlement Policy Framework and furnish such plan to the Bank for approval; and (ii) prior to the carrying out of the said activity, ensure that all Displaced Persons shall have been compensated in accordance with the provisions of said plan; and

(d) implement the Environmental Management Plan in a manner satisfactory to the Bank and designed to ensure that the Project, including the construction of the BOT Expressway from Ailing to Ruijin, is implemented in accordance with sound environmental practices and standards acceptable to the Bank.

3. The Project Implementing Entity shall not amend, suspend, or waive the Resettlement Action Plan, the Resettlement Policy Framework and the Environmental Management Plan or any provision thereof, without the prior concurrence of the Bank.

Project Implementation

4. For purposes of carrying out Part B(b) of the Project, the Project Implementing Entity shall prepare, under guidelines acceptable to the Bank, and furnish to the Bank not later than August 15 in each calendar year for the Bank’s review, beginning on August 15, 2007, an annual work program setting forth the activities proposed to be implemented under Part B(b) of the Project during the following calendar year.

5. The Project Implementing Entity shall select roads under Part B(b) of the Project in accordance with criteria satisfactory to the Bank, which shall include the following:

(a) the technical standard after construction for upgrading shall be Class III or Class IV road;

(b) minimum daily traffic volumes of 400 medium truck equivalent (MTE) for Class IV and 500 MTE for Class III roads;

(c) expected positive impact on population access to education, health and other production and/or commercialization of local products;

(d) contribution to Jiangxi province plan to improve the functional responsiveness of the highway network with good traffic growth potential;

(e) broad support by local government and residents; and

(f) an expected Economic Rate of Return higher than 12%.

6. For purposes of carrying out Part B(b) of the Project, the Project Implementing Entity shall, prior to commencing works on any local road section selected pursuant to paragraph 5 of this Schedule, prepare and furnish to the Bank for its prior approval:

(a) an economic and social benefits analysis and a technical analysis, including alternative engineering designs, proposed work plans and estimated costs;

(b) an environmental impact assessment and, if necessary, an EMP; and

(c) if necessary, and without limitation to the provisions of paragraph 2 of this Schedule:

(i) for any local road section which requires the acquisition of land, temporarily or permanently, prepare and implement a resettlement action plan satisfactory to the Bank, in accordance with the principles and procedures set forth in the Resettlement Policy Framework;

(ii) furnish the same to the Bank for its approval; and

(iii) furnish any proposed revision of the plans referred to in this paragraph to the Bank for its prior approval.

7. For purposes of carrying out Part C of the Project, the Project Implementing Entity shall, under terms of reference satisfactory to the Bank:

(a) carry out the study on traffic safety operations for tunnels by December 31, 2007, and, thereafter, furnish the recommendations of the study to the Bank for comments, if any;

(b) carry out the study on traffic safety improvement for expressways by December 31, 2008, and, thereafter, furnish the recommendations of the study to the Bank for comments, if any; and

(c) carry out the study on electrical toll collection traffic safety improvement for expressways by December 31, 2007, and, thereafter, furnish the recommendations of the study to the Bank for comments.

8. For purposes of carrying out Part C of the Project, the Project Implementing Entity shall carry out the training in accordance with annual programs acceptable to the Bank.

Section II. Project Monitoring, Reporting, Evaluation

A. Project Reports.

The Project Implementing Entity shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 5.08(b) of the General Conditions and on the basis of the indicators set forth in the Annex to this Schedule. Each such Project Report shall cover the period of one calendar semester, and shall be furnished to the Borrower not later than six weeks after the end of the period covered by such report for incorporation and forwarding by the Borrower to the Bank of the overall Project Report.

B. Financial Management, Financial Reports; Audits.

1. The Project Implementing Entity shall maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Bank, both in a manner adequate to reflect the operations and financial condition of the Project Implementing Entity, including the operations, resources and expenditures related to its Respective Part of the Project.

2. The Project Implementing Entity shall adopt and thereafter apply in the implementation of the Project, a financial manual, including financial management reports, satisfactory to the Bank. The Project Implementing Entity shall not amend, waive, suspend, abrogate or cancel the Project Financial Manual or any provision therein without the prior approval by the Bank.

3. The Project Implementing Entity shall have its financial statements referred to above audited by independent auditors acceptable to the Bank, in accordance with consistently applied auditing standards acceptable to the Bank. Each audit of these financial statements shall cover the period of one fiscal year of the Project Implementing Entity. The audited financial statements for each period shall be furnished to the Borrower and the Bank not later than six months after the end of the period.

Section III. Procurement

All goods, works and services required for the Project Implementing Entity’s Respective Part of the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 2 to the Loan Agreement.


ANNEX

Performance Indicators

The performance indicators referred to in paragraph A.1, Section II of this Schedule consist of the following:

PROJECT DEVELOPMENT OBJECTIVE / OUTCOME INDICATORS / USE OF RESULTS INFORMATION
Improving east-west passenger and freight flows in Jiangxi province by investing in the construction of an expressway, enhancing local roads, and strengthening highway management.
A. Supporting trade led growth in Jiangxi province through improved highway access to prosperous eastern region and export outlets
B. Reducing poverty by improving access to markets and services for poorer areas of Ganzhou City Prefecture
C. Improving highway sector management in Jiangxi province / A. In the Ganzhou-Ruijin Corridor:
A.1 Increased average daily traffic
A.2 Decreased accidents on the existing road G323
A.3 Decreased travel time
B. On the road sections of the Local Roads Improvement Program:
B.1 Increased average daily traffic
B.2 Reduced number of days closed
B.3 Reduced travel time
B.4 Increased daily bus service
C. Implementation of key recommendations from the institutional strengthening components / A. The development plans of the local governments are integrated with the national and provincial transportation links and the highway access to Xiamen in Fujian
B. The selection of the local road sections maximizes the benefits for the low income population in the Ganzhou City Prefecture
C. The policy-related studies, training and technical assistance are relevant and have an overall positive impact
INTERMEDIATE RESULTS / RESULTS INDICATORS / USE OF OUTCOME MONITORING
A. Approximately 117 km of the Ruijin-Ganzhou Expressway (RGE)
B. Local roads in the direct areas, area of influence of the project in Ganzhou City Prefecture
C. Staff of the JPCD and related agencies with improved technical and management capacity in the road sector. / A. Completion of 117 km of the Ruijin-Ganzhou Expressway
B. Successful improvement of local roads in the Ganzhou City Prefecture: Phase I = 83.3 km & Phase II to be determined
C. Successful completion of the institutional strengthening studies and staff trained / Monitoring of implementation progress and action plan to address possible delays