China - Hubei Guangrun Hydropower Development Project

Ratings for the Hubei Guangrun Hydropower Project for China were as follows: outcomes were unsatisfactory, the Bank performance was moderately satisfactory, and the project entity performance was moderately unsatisfactory. Some lessons learned included: an implementing agency with good financial, technical, and managerial capacity. An assessment of the proposed implementing agency’s capacity on these three points at the appraisal stage is crucial. Financial capacity and interest in the project alone are not enough. If a new component is to be carried out by an implementing agency with weak technical and managerial capacity, a TA program should be included to address these weaknesses. Enough geological investigations should be carried out during the preparation stage to ensure proper site selection. The two sites in this project experienced such significant geological issues that the success of the outcomes was considerably lowered. Proper geological investigations and inclusion of technical experts could help determine better site selection. Inclusion of neighboring counties in the design of the project to ensure their collaboration on water rights. The water disputes with neighboring counties in this project had a major impact on the water level of the Hongwawu reservoir and thereby significantly affected the generation of electricity. If proper investigation is done on water resources before site selection, an agreement could be reached during project design. The rigorous quality and depth of appraisal for implementing agencies needs to be maintained throughout the project cycle, including project components that are added later. In this project, it soon became clear that the Guoxin Company, which joined the project in 2005 (four years after appraisal), did not have adequate technical and managerial capacity to undertake the technically more complex Guangrun component compared to the four original sponsors. This appears to have contributed to the inadequate geological investigations for the Hongwawu reservoir and the insufficient early-stage assessment of technical issues faced by the Zhamushui dam.