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Investing in the Future of Papua & West Papua

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Investing in the Future of Papua & West Papua October 2009 AAA42 Investing in the Future of Papua & West Papua Infrastructure for Sustainable Development Australian Indonesia Partnership Kemitraan Australia Indonesia THE WORLD BANK OFFICE JAKARTA Indonesia Stock Exchange Building, Tower II/12-13th Fl. Jl. Jend. Sudirman Kav. 52-53 Jakarta 12910 Tel: (6221) 5299-3000 Fax: (6221) 5299-3111 THE WORLD BANK 1818 H Street N.W. Washington, D.C. 20433 USA Tel: (202) 458-1876 Fax: (202) 522-1557/1560 Email : [email protected] Website : www.worldbank.org Printed in October 2009 Investing in the Future of Papua & West Papua: Infrastructure for Sustainable Development is a product of staff of the World Bank. The fi ndings, interpretation and conclusion expressed herein do not necessarily refl ect the views of the Board of Executive Directors of the World Bank or the government they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomination and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement of acceptance of such boundaries. Photos by: Haeyoung Lee, Muhammad Ryan Sanjaya and Bernard Wasow October 2009 Investing in the Future of Papua & West Papua Infrastructure for Sustainable Development Table of contents Abbreviations and Acronyms 7 Currency Equivalents 8 Acknowledgements 9 Preface 10 Executive Summary 11 Infrastructure Strategies for Papua and West Papua 15 1.1. Challenges for Development in Papua and West Papua 16 1.2. The Sustainability Challenge 17 1.3. The Infrastructure Development Challenge 20 1.4. Development Vision for Papua and West Papua 28 1.5. Commodity-based Development: The Role of Private Sector in Infrastructure 30 1.6. Community-based Development: Village-level Infrastructure Development 33 1.7. Finance: Sources and Uses 37 1.8. A Phased Strategy 41 1.9. Conclusion 48 Sectoral Annexes 51 Annex 1. Roads and Road Transport 52 1.1. Current Status of Sector 52 1.2. Recent Developments 55 1.3. Existing Plans for the Future 56 1.4. Recommendations 58 Annex 2. Ports and Waterborne Transport 64 2.1. Current Status of the Sector 64 2.2. Recent Developments 67 2.3. Existing Plans for the Future 68 2.4. Recommendations 69 Annex 3. Air Transport 73 3.1. Current Status of the Sector 73 3.2. Recent developments 75 3.3. Existing Plans for the Future 77 3.4. Recommendations 77 Annex 4. Power 80 4.1. Current Status of the Sector 80 4.2. Recent Developments 81 4.3. Existing Plans for the Future 82 4.4. Recommendations 83 Annex 5. Water Supply 86 5.1. Current Status of the Sector 86 Investing in the Future of Papua & West Papua 4 Infrastructure for Sustainable Development 5.2. Existing Plans for the Future 88 5.3. Recommendations 90 Annex 6. Sanitation 94 6.1. Current Status of the Sector 94 6.2. Existing Plans for the Future 94 6.3. Recommendations 95 Annex 7. Telecommunications 96 7.1. Current Status of the Sector 96 7.2. Recent Developments 98 7.3. Existing Plans for the Future 98 7.4. Recommendations 101 Appendix 1. Value of forests 104 References 106 Figures Figure 1: Cost of Construction in Papua and West Papua 21 Figure 2: Number of Provincial and Local Governments in Papua and West Papua 25 Figure 3: Central Government Transfers to Sub-National Governments 1997-2008 25 Figure 4: Ink-Spots Vision of Development for Papua and West Papua 28 Figure 5: Central Government Transfers to Sub-National Governments 1997-2008 37 Figure 6: Sources of Public Expenditures in Papua and West Papua 2005-2008 39 Figure 7: Projected Central Government Transfers to Papua and West Papua 2009-2027 39 Figure 8: Allocation of Development Expenditures 2004-2007 40 Figure 9: Proposed Palapa Ring Fiber-Optic Network 48 Figure 10: Proposed Nationwide Palapa Ring (initial design, 2006) 99 Figure 11: Eastern Palapa Ring (design as of mid-2008) 99 Tables Table 1: Cost of a Bag of Cement in November 2008 20 Table 2: International Aid per Capita 2007 38 Table 3: Total Expenditures and Expenditures in the Transport Sector (IDR billion) 41 Table 4: Road Network - Papua Province (km) 52 Table 5: Road Network - West Papua Province (km) 53 Table 6: Consolidated Road Network by Surface Type and Administrative Class (km) 53 Table 7: Condition of the Road Network 53 Table 8: Number of Motor Vehicles by Type 54 Table 9: Expenditures in Roads and Road Transport (IDR Billion) 55 Investing in the Future of Papua & West Papua Infrastructure for Sustainable Development 5 Table 10: Ports in Papua and West Papua 64 Table 11: Indicative freight rates between major cities in Papua and West Papua 65 Table 12: Expenditures on Waterborne Transport - Papua and West Papua (IDR Billion) 67 Table 13: Airports in Papua Province by Category, Runway Length and Surface - 2008 73 Table 14: Airports in West Papua Province by Category, Runway Length and Surface - 2008 73 Table 15: Expenditures in Aviation - Papua and West Papua (IDR Billion) 75 Table 16: Electrifi cation Targets for Papua and West Papua 80 Table 17: Primary Water Sources for Human Consumption, % total 86 Table 18: Water Utilities in Papua and West Papua 87 Table 19: Population and Household Connections, 2005 and 2020 (indicative) 91 Table 20: Papua & West Papua Telecommunications Demand Projection (Forecast 2020) 96 Table 21: Potential Investments in Kabupaten/Kota Backbone Networks 100 Table 1. Volume, Value, and Per unit value of log production in Papua and West Papua in 2006 104 Table 2. Realization area of annual work plan and log volume in Papua and West Papua in 2006 (commercial species) 104 Table 3. Trees potency per ha for all species in Papua and West Papua 104 Table 4. Weighted Average Timber Price in Papua and West Papua 105 Table 5: Total economic value of the forest (USD/ha/yr): adjusted for PWP 105 Boxes Box 1: Poor Planning Produces Poor Outcomes 23 Box 2: Infrastructure Projects that Need More Planning and Evaluation 23 Box 3: Allocation of Government Responsibilities 26 Box 4: Planning and coordination raise diffi cult issues without clear answers 27 Box 5: Private Sector Participation: Lessons from Freeport 32 Box 6: Infrastructure for the Highlands 36 Box 7: Comparison of “Best Practice” versus “Poor Practice” Road Works Policy 43 Box 8: Modal Coordination and Intermodal Transport 44 Box 9: Road Network Development in Exchange for Logging Concession 57 Box 10: Estimate of Road Maintenance Requirements for Papua and West Papua 62 Box 11: Small-Scale Shipping in Papua and West Papua 67 Box 12: Aircraft acquisition by local governments 76 Box 13: Micro Hydro for Off -Grid Solution 84 Box 14: Public-Private Partnerships hydropower project to supply power to Freeport 85 Box 15: The Need to Stop Defragmentation of the Municipal Water Sector 93 Box 16: Palapa Ring Sections 102 Investing in the Future of Papua & West Papua 6 Infrastructure for Sustainable Development Abbreviations and Acronyms ADB Asian Development Bank HIV/ Human Immunodefi ency Virus/ ADSL Asymmetric Digital Subscriber Line AIDS Acquired APBD Anggaran Pendapatan dan Belanjaan Immuno-Defi ciency Syndrome Daerah (Regional Budget of Revenues Hz Hertz (Revolutions per second) and Expenditures) ICT Information and Communications APBN Anggaran Pendapatan dan Belanjaan Technology Negara (National Budget of Revenues Inpres Instruksi Presiden (Presidential and Expenditures) Instruction) ASEAN Association of South-East Asian IP Internet Protocol Nation IPLT Instalasi Pengolahan Lumpur Tinja AusAID Australian Agency for International (Sewage Treatment plant Development IPP Independent Power Producer BAPPEDA Badan Perencanaan [Pengendalian] IRMS Indonesia Roads Management /BP3D Pembangunan Daerah (Regional System Body for Planning, Oversight and Kab. Kabupaten Development) km Kilometer BPDE Provincial Electronic Data Center KM Keputusan Menteri (Ministerial BTS Base Transceiver Station Decree) CBD Central Business District kV Kilovolt CDMA Code Division Multiple Access kWh Kilowatt Hours DAU Dana Alokasi Umum (General LPMAK Lembaga Pengembangan Masyarakat Allocation Fund) Amungme dan Kamoro (Organization DAK Dana Alokasi Khusus (Special for the Development of the Allocation Fund) Amungme and Kamoro People) DBH Dana Bagi Hasil (Shared Revenue Mbps Megabits per second Funds) MoEMR Ministry of Energy and Mineral DGAT Directorate General of Air Transport Resources DGLT Directorate General of Land Transport MoF Ministry of Finance DGST Directorate General of Sea Transport MoPW Ministry of Public Works DWT Dead-Weight Tonnage MoT Ministry of Transport EIRTP Eastern Indonesia Roads Transport MVA Millivolt Amperes Project MW Megawatts GDP Gross Domestic Product NGO Non-Governmental Organization GOI Government of Indonesia O&M Operations and Maintenance GSM Global System for Mobile Otsus Otonomi Khusus (Special Autonomy) communications PADU Papua Acclerated Development Unit gWh Gigawatt Hours PDAM Perusahaan Daerah Air Minum Ha Hectare PLN Perusahaan Listrik Negara (State- Owned Electricity Company) Investing in the Future of Papua & West Papua Infrastructure for Sustainable Development 7 PNPM- Program Nasional Pemberdayaan RPJP Recana Pembangunan Jangka RESPEK Masyarakat – Rencana Strategis Panjang (Long-Term Development Pembangunan Kampung Plan) (National Peoples’ Empowerment SMA Sekolah Menengah Atas (High Program – Strategic Plan for Village School) Development) SMK Sekolah Menengah Kejuruan PODES Statistik Potensi Desa (Village (Technical School) Potential Statistics) SMP Sekolah Menegah Pertama (Junior PP Peraturan Pemerintah
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