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49154-001: Sewerage System Development Project Technical Assistance Consultant’s Report Project Number: 49154-001 August 2018 Indonesia: Sewerage System Development Project Part 1: Main Report Prepared by Finnish Consulting Group-Asia Pte Ltd in Joint venture with FCG International Ltd and SCE and in association with OSANA International Indonesia For Asian Development Bank This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design). ADB TRTA-9198 INO: Sewerage System Development Project for the Cities of Banda Aceh, Bekasi and Mataram TA Consultants (49154-001) FINAL REPORT Volume 1 – Main Report August 2018 TRTA-9198 INO - Sewerage System Development Project – TA Consultants CLIENT NAME Asian Development Bank Asian Development Bank Bldg, 6 ADB Avenue, ADDRESS Mandaluyong City, 1550 Metro Manila, Philippines CONTACT PERSON Joris van Etten FCG Finnish Consulting Group Asia Pte Ltd 1 North Bridge Road ADDRESS 12-01 High Street Center, Singapore 179094 Tel. +65 96390540 Samuli Leminen Regional Manager, Business Development [email protected] CONTACT PERSON Auli Keinänen Regional Director [email protected] REPORT Final Report ADB TA-9198 INO: Sewerage System Development Sub-Project Appraisal Project Report Mataram TA Consultants (49154-001) CONTRACT NUMBER 134628-S53101 SIGNATORY REASON FOR REF. DATE DOCUMENT AUTHOR APPROVAL UPDATE 28 September Lutz Samuli Final 2018 Kleeberg Leminen Finnish Consulting Group Asia Pte Ltd in Joint Venture with FCG International Ltd and SCE and in association with OSANA International Indonesia P a g e | i TRTA-9198 INO - Sewerage System Development Project – TA Consultants TABLE OF CONTENTS I. SUMMARY ......................................................................................................................... 1 A. Development Context .................................................................................................. 1 B. Project Outline and Challenges ................................................................................... 3 C. Capacity Development Plan ........................................................................................ 7 II. THE PROJECT................................................................................................................... 7 A. RATIONALE ................................................................................................................ 7 1. National Development Targets and Plans ........................................................... 7 2. City Selection Criteria ........................................................................................... 8 3. Community Awareness and Socio-economic Context ........................................ 9 B. IMPACT AND OUTCOME ......................................................................................... 10 C. OUTPUTS .................................................................................................................. 11 Output 1: Wastewater and sludge management capacity increased ....................... 11 Output 2: Service Delivery System in Place ............................................................. 25 1. Public Awareness Campaigns ........................................................................... 32 2. Organization and staffing ................................................................................... 38 D. INVESTMENT PROGRAM........................................................................................ 39 1. Cost Estimate ..................................................................................................... 39 2. Financing Plan .................................................................................................... 44 3. Independency, Effectiveness and Efficiency Ratios .......................................... 50 4. Real Financing Capacity .................................................................................... 53 5. Debt Service Coverage Ratio and Net Borrowing Capacity .............................. 55 E. IMPLEMENTATION ARRANGEMENTS................................................................... 60 1. Project Organization ........................................................................................... 60 2. Procurement Plan ............................................................................................... 62 3. Implementation Schedule................................................................................... 63 4. Capacity Development Plan ............................................................................... 65 III. DUE DILIGENCE ............................................................................................................. 72 A. FINANCE AND ECONOMICS ................................................................................... 72 1. Financial Analysis ............................................................................................... 72 2. Economic Analysis ............................................................................................. 74 3. Affordability and Tariff Analysis .......................................................................... 76 B. GOVERNANCE ......................................................................................................... 81 C. STAKEHOLDER COMMUNICATION STRATEGY AND PARTICIPATION PLAN .. 85 1. Stakeholder Communication Strategy ............................................................... 85 Finnish Consulting Group Asia Pte Ltd in Joint Venture with FCG International Ltd and SCE and in association with OSANA International Indonesia P a g e | ii TRTA-9198 INO - Sewerage System Development Project – TA Consultants 2. Stakeholder Participation Plan ........................................................................... 86 D. POVERTY, SOCIAL AND GENDER ISSUES .......................................................... 87 1. Socio-economic Assessment ............................................................................. 87 2. Design of the Poverty Reduction and Social Strategy and Gender Action Plan ..................................................................................................................... 88 3. Main Findings of the Socio-economic Survey ................................................... 91 4. Gender Aspects of Staffing of Local Government Institutions......................... 103 5. Basic Considerations for Poverty Reduction and Social Strategy and Gender Action Plan ....................................................................................................... 104 E. ENVIRONMENTAL SAFEGUARDS ....................................................................... 106 F. SOCIAL SAFEGUARDS ......................................................................................... 110 1. Mataram City .................................................................................................... 111 2. Bekasi City ........................................................................................................ 113 3. Banda Aceh City ............................................................................................... 114 IV. Conclusion and recommendations................................................................................. 117 A. Technical Concepts ................................................................................................. 117 B. Planning and Land Availability ................................................................................ 117 C. Local Government Readiness ................................................................................. 118 D. Grants and Subsidies .............................................................................................. 118 E. Local Government CAPEX Funding ....................................................................... 119 F. Financial Management and On-Granting ................................................................ 119 G. Approach to procurement ........................................................................................ 120 H. Tariff Options and Affordability ................................................................................ 120 I. Financial Management Covenants ......................................................................... 121 J. Institutionalization .................................................................................................... 122 K. Operational Sustainability........................................................................................ 124 LIST OF TABLES Table 1: City Profiles under SSDP Investments for all Stages .......................................... 4 Table 2: Level of Community Awareness on Key Sanitation Issues ................................. 9 Table 3: Official Government Poverty Data ..................................................................... 10 Table 4: City Profiles under SSDP Investments for all Stages ........................................ 11 Table 5: Existing Wastewater Infrastructures in Mataram (2016) ................................... 12 Table 6: Proposed Sewerage Staging for Mataram ........................................................ 14 Table 7: Existing Wastewater Infrastructures in Bekasi (2016) ......................................
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