Documentof The World Bank

FOR OFFICIAL USE ONLY

/ I/2 / '' ._ /t 4 _ ) Public Disclosure Authorized

Report No.9155-IND

STAFF APPRAISAL REPORT

INDONESIA Public Disclosure Authorized

SULAWESI- IRIAN JAYA URBANDEVELOPMENT PROJECT

MAY 20, 1991 Public Disclosure Authorized Public Disclosure Authorized Asia Country DepartmentV InfrastructureDivision

This documenthas a resudicteddbtribution and may be usedby recipientsonly in the performanceof their officiiddutes Its conteh may not otherwisebe disclosedwithout World Bank autborization. CURRENCY EOUIVALENTS (As of October 1990)

Currency unit - Indonesian Rupiah (Rp) - Rp 1,845 Rp 1 million - $542

WEIGHTS AND MEASURES

Metric Units

FISCAL YEAR

Government of Indonesia: April 1 - March 31 Provincial and Local Governments and Enterprises: April 1 - March 31 FOROFFICIAL USE ONLY

rRINCIPAL ABBREVI TIONS AND ACRONYMSUSED

AMDAL - COI onvironmental assessment procesc ANDAL - OI detailed environmental impact assessment study APBD I/1I * Annual provincial/local government development budget APBN - Annual central government development budget BANGDA - Directorate General for Regional Development, MHA BAPPENAS - National Development Planning Agency BAPPEDA I/II - Provincial/Local Development Planning Agency BPAM - Transitional (pre-PDAM) water supply enterprise owned and operated by DGCK, MPW BPKP - Central Audic Bureau BPD * Regional Development Bank Bupati - Kabupaten chief executive (district head) CPMO/FO - Central Project Management Office/Finance Office DATI I/II - Provincial/local level government DGCK - Directorate General Cipta Karya (Human Settlements), MPW DGBM - Directorate General Bina Marga (Roads and Bridges), MPW DCM - Directorate General Monetary Affairs, MOF DGWRD - Directorate General for Water Resource Development, MPW DLA - Domestic Lending Arrangement DPRD I/II - Provincial/Local People's Representate Councils DPUK - Kabupaten/Kotamadya department of public works DPUP - Provincial depaitment of public works Dinas I/II - Provincial/local government departments DIP/DIPDA - Central/regional project budget GOI - Government of Indonesia IDC Interest during construction IKK - Kecamatin headquarter town 1MG - IUIDP IL.plementationManagement Group, BAPPENAS INPRES - Presidental Instruction, including a class of GOI grants IUIDP - Integrated Urban Infrastructure Development Program Kabupaten - Local (Level II) district government Kampung - Urban neighborhood KANWIL - Provincial branch of central GOI department KIP - Kampung Improvement Program Komisi Daerah - Provincial Commission for Environmental Management Kotamadya - Local (Level II) city government (incorporated municipality) Kotip - Kota administratip, large kabupaten town designated as kotamadya for administrative purposes only Kecamatan - Kabupaten or kotamadya administrative district LIDAP - Local Institutional Development Action Program MCK - Communal lavatory and toilet facility MIIP - Market InfrastructurA Improvement Program MHA - Ministry of Home Affairs MOF - Ministry of Finance MPW - Ministry of Public Works Murni - Rupiah murni, or money from "pure" domestic sources NGO - Non-governmental organization NUDS - National Urban Development S.udy O&M - Operations and maintenance PADS - Pendapatan Asli Daerah (local Ljvernment taxes and charges) PbB - National land and bu,ldings tax PDAM - Local government water enterprise PIA - Project Implementation Agreement PIL - Preliminary environmental assessment PIU - Project Implementation Unit

This document has a restricteddistribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwise be disclosedwithouit World Bank authorization. PMDU - Provincial Management and DevelopmentUnit for water enterprises PMO/FO - Local Project Management Office/FinanceOffice PMU - Project Management Unit PP - Government regulation PPSAB - Water supply project implementationbranch of DGCK, MPW PUOD - Directorate General for Public Administrationand Regional Autonomy, MHA RAKORBANG I/II - Provincial/localannual budget coordinationmeeting Repelita - Five-year DevelopmentPlan RIAP - Revenue ImprovementAction Program RKL - EnvironmentalManagement Plan RPL - EnvironmentalMonitoring Plan SDB - Subsidi Daerah Bawahan (provincialdevelopment grant) SDO - Routine central GOI grant, primarily for salaries SEKWILDA I/II - Provincial/localgovernment chief administrativeofficer SK - Surat Keputusan, decree of a senior official TKPP - Urban DevelopmentCoordination Team TUA - Directorate of Budget Administration,MOF UNDP - United Nations DevelopmentProgram USL - Urban Sector Loan (2816-IND) Walikota - Kotamadya chief executive (mayor) INDONESIA

SULAWESI. IRIAN JAYA URBAN DEVELOPMENT PROJECT

Loan and Project Summary

Borrower: The Republic of Indonesia

Beneficiaries: Nine local governments of Sulawesi and eight water enterprises in Irian Jaya

Amount: $100 million equivalent

Terms Repayable in 20 years includingfive years of grace, at the Bank's standard variable interest rate

Onlending terms: Part of the proceeds of the loan, equivalent to $27.2 million, would be onlent by the Central Government to local governments and their water enterprises in Sulawesi and Irian Jaya for 20 years including five years of grace at 10.5 percent per annum interest. Interest and commitment charges would be payable during the grace period. The Central Government would bear the foreign exchange risk.

Project Objectives and Description: The proposed projectwould (a) provideurban infra-structure with emphasis on increased access of households to water supply, solid waste management and sanitation services; (b) support improvedinfrastructure expenditure programming and financial planning, including the strengthening of local government capacity to prepare and execute annual O&M programs; (c) encourage local government and enterprise revenue generation,improve financialmanagement. In order to achieve these objectives,the project would include (a) investments in water supply, drainage, solid waste management,sanitation and roads and improvementof kampung (low-incomeurban neighborhood)and market infrastructurein nine cities in Sulawesi; (b) water supply system rehabilitationand investments in eight cities 'n Irian Jaya; (c) project implementationrupport and engineering services; (d) municipal management and water enterprise institutionalstrengthening.

Benefits and Risks: Benefits would flow from more efficientuse of resources in the urban infrastructuresector through improveddelivery of servicesby increasinglycapable local governmentsand their enterprises. The water supply, drainage and road investments would provide important economic and social benefits while the solid and human waste management components would substantially improve the living environment in the urban areas covered by the project. Provision of public water taps and improvementof kampungs - ii -

would help the urban poor. Because of the low aLsorptive capacity of local governments in East Indonesia, the institutionalcapacity building effort under the projecthas to be limited. The chief risk is therefore that the project will not achieve all institutionaldevelopment objectives. However, the prioritygiven to implementationassistance and O&M capacitybuilding activitiesshould ensure that the flow of benefits frowuthe implemer~-edphysical investmentswould be sustained.

Estimated Cost:/a Local Foreilnotal ------($ million) ------

Urban Infrastructure 73.2 47.1 120.3 Technical Assistance 11.8 7.5 19.3

Total Base Costs 85.0 54.6 139.6

Physical Contingencies 6.e 5.2 12.0 Price Contingencies 8.4 8.9 17.3

Total Project Cost 100.2 8.7L 168.9

Interest during construction (IDC) 2.2 17.1 19.3

Total Financing Required 102.4 85.8 188.2

tLa Includes taxes and duties estimated at $9.6 million equivalent, land acquisition at $4.8 million equivalent and current O&M in the non-water supply sectors at $9.2 million equivalent.

Financing Plan: Local Foreign Total ------($ million) ------

Local governments 18.1 - 18.1 Water enterprises 5.1 - 5.1 Provincial governments 10.4 - 10.4 Private contributions 1.2 - 1.2 Central government 33.4 - 33.4 Japanese grant 0.4 0.3 0.7 IBRD 31.6 68.4 100.0

,Subtotal 100.2 68.7 ,168.9

Local governments and water 2.2 4.7 6.9 enterprises (IDC) Central Government (IDC) - 12.4 12.4

Total Financing Recuired 102.4 85.8 188. - iii -

,IBRDFiscal Year ------($ million) ------1997 Egtijated Disbursements: 12 1993 1994 1995 1996

Annual 19.1 27.6 21.2 16.4 12.0 3.7 Cumulative 19.1 46.7 67.9 84.3 96.3 100.0

Economic Rate of Return: 10 percent or more for water supply, roads and drainage investments (f,7percent of project costs)

HOibR: IBRD No. 22798 - iv -

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENTPROJECT

Table of Contents Wae No. I. Ilj URBAN SECTOR ...... 1 A. Sector Overview ...... 1 B. Urban Development in Sulawesi and Irian Jaya ...... 5

II. JECTOR STRATEGYAND BANKEXPERIENCE ...... 6 A. Government Strategy...... 7 B. Bank Experience ...... 7 C. Bank Strategy ...... 13

III. THE PROJECT ...... 15 A. Project Origin and Formulation ...... 15 B. Project Objectives ...... 16 C. Project Description ...... 16 D. Project Costs ...... 17 E. Financing Plan ...... 20

IV. PROJECT IMPLEMENTATION...... 22 A. Responsibilities...... 22 B. Project ImplementationAgreements ...... 25 C. ImplementationSchedule .25 D. Procurement.26 E. Disbursement ...... 27 F. Project Accounts and Audits ...... 29 G. Project Reporting, Monitoring and Bank Supervision . . . 29 H. Operations and Maintenance ...... 30

V. FINANCIALASPECTS .. 30 A. Local Governments .30 B. Water Enterprises ...... 33

VI. PROJECT JUSTIFICATIONAND RISKS ...... 34 A. Project Beneficiariesand Poverty Impact ...... 34 B. Economic Analysis .35 C. EnvironmentalImpact .36 D. Risks ...... 37

VII. AGREEMENTSTO BE REACHEDAND RECOMMENDATION...... 37

The report is based on the findings of an appraisal mission which visited Indonesia during October/November 1990. The miss:on consisted of L. Lovei (economist/leader),H. Unger (municipal engineer), A. Velderman (sanitary engineer) and W. Lane, D. Martin, E. V. Pol (consultants). The peer review team comprised of Messrs. J. Kozel (municipalengineer), D. Butcher (anthropologist) and R. V. Pulley (economist). The report was endorsed by L. Jeurling, Sector Operations Division Chief and R. Cheetham, Country Director. ANNEXES

1. Detailed Project Cost Estimates . . . . 39 2. Financing Plan Tables ...... 41 3. Summary of Technical Assistance ...... 44 4. Implementation ArrangementE .. 59 A. Schedule ...... 59 B. Responsibilities and Organization ...... 61 C. Contracts and Procurement Method ...... 70 D. Disbursement Arrangements and Schedule ...... 78 E. Key Implenentation and Performance Indicators and Reporting Systems .85 F. Supervision Plan ...... 86 C. Operation and Maincenance ...... 88 5. Local Government/City Profiles ...... 93 6. Technical Assessment ...... 94 7. Fconomic Analysis ...... 108 8. Water Enterprise Financial Tables ...... 112 9. Local Government Financial Tables ...... 127 10. Environmental Assessment ...... 136 11. Key Documents in the Project File ...... 174

MAP

IBRD No.: 22798 Project Cities - 1 -

STAFF APPRAISAL REPORT

INDON4ESIA

SULAWESI - TRIAN JAYA URBAN DEVELOPMENT PROJECT

I. THE URBAN SECTOR

A. Sector Overview

1.1 Demographic Trends. The urban population in Indonesia exceeds 50 millionl/ and is growing at a rate of over 5 percent per year, more than double the overall national population growth rate. By the year 20CO, about 90 million or 43 percent of Indonesianswill be city dwellers. Urban employment has also grown at about 5 percent per year, much more rapidly than the national rate and offering hope for absorption of surplus rural labor. Indonesia'surban settlements include ten metropolitanand large cities of more than 500,000, forty secondary cities of over 100,000 (provincial headquartersand incorporatedmunicipalities), two hundred small towns (districtheadquarters) over 20,000 and about 3,200 service centers (sub- district headquarters)with populationsof 3,000 to 20,000. While changes in urban boundaries and census definitionsmake inter-city comparisonsdifficult, it appears that metropolitancities over one million and secondary cities between 100,000 and 500,000 have grown most rapidly since 1970. Service centers under 20,000 have grown most slowly.2/

1.2 InstitvtionalFramework: National Administration. The National Development Planning Agency (BAPPENAS) is responsiblefor overall planning and the allocation of resources,with focus on Five-Year Devel- ent Plans (Repelita)and Annual National DevelopmentBudgets (APBN). The Ministry of Home Affairs (MHA) is responsiblefor ove,sight of the regional governments, primarily through its DirectorateGene,.al for Public Administrationand Regional Autonomy (PUOD) and DirectorateGeneral for Regional Development (BANGDA). The Ministry of Public Works (MPW) is responsiblefor oversight of most infrastructure.Within MPW, the DirectorateGeneral for Human Settlements (Cipta Karya or DGCK) is responsible for oversight of city and regional planning, water supply, urban drainage, sanitation and sewerage, solid waste management, kampung neighborhoodimprovement (KIP) and market infrastructure improvement (MIIP). Also within MPW, the DirectorateGeneral for Roads (Bina Marga or DGBM) is responsiblefor oversight of urban roads and bridges and the Directorate General for Water Resou:ce Development (DGWRD) is reeponsible for

1/ 1990 Census, Biro Pusat Statistik.

2/ Cipta Karya, National Urban DevelopmentStrategy Final Report. September 1985, page 3, and Biro Pusat Statistik, IntercensalPopulation Survey (SUPAS 85). - 2 -

oversight of urban f,ood control and ulk water supply. The Ministry of Finance (MOF) is responsible for central and local finance through its DirectorateGeneral for Monetary Affairs (DGM), though the Directorate General for Budget (DGA - Angaran) actually administers grant transfers; property tax administrationthrough its DirectorateGeneral for Taxation (DGP - Pajak); and dnalysis of regional finance through its Agency for Financial Analysis (BAK - Badan Analisa Keuangan). Other concerned central agencies include tne National Land Agency, the Ministry of State for AdministrativeReform, Directorate General for Land Transport of the Ministrv of Communications,the Ministry of State for Environment and Population,the Ministry of State for Housing, the Ministry of Education and Culture and the Ministry of Health. All key rgencies are represented in the InteragencyCoordinating Team for Urban Development (Tim Koordinasior TKPP) chaired by BAPPENAS.

1.3 Regional Administration. .ndonesiahas a highly centralized unitary government in which all powers are held by the center that are not specificallyassigned to lower levels. Since 1974, however, the provincial (Level I) and local (Level II) governmentshave been given increasing responsibilitiesand delegated authority. in all there are 27 provinces and 301 local governments,including 54 kotamadyas (municipalities)and 247 A%abupatens(districts). Legislativepowers at both provincial and local levels are held by People's RepresentativeCouncils (Dewan PerwakilanRakyat Daerah or DPRD) consistingof mostly elected representatives.

1.4 The executive branches of prou"incialgovernments are headed by governors who serve as representativesof the President and the overall central government (GOI), and also as head of the semi-autonomousprovincial administrations. Bupatis (kabupatenheads) and walikotas (kotamadyamayors) have parallel roles in representingthe governors and provincial governments, and in heading their own local governments. Regional Development Planning Agencies (BAP'EDA I and II) report directly to their respective governorL, district heads or mayors, and have planning and resource allocation respon- sibilities. Regional government services are provided by separate departmentc (Dinas I and II) analogous to line ministriesof the central government and routine administrationis provided by bureaus under the regional secretaries (SEKWILDAT and II). Most central line agencies are representedat the provincial level by their KA!NWIL(Kantor Wilayah or regional offices). KANWIL of MPW are located in all provinces and their primary role in the urban sector has been the execution of infrastructureprojects financed from central government sources. Their secondary role, the provision of technical guidance and assistanceto the concerned provincialand local Dinas I and II public works denartments (DPUP and DPUK), is becoming increasinglyimpo,tant. GovernmentRegulation PP14 of 1987 significantlyexpanded urban infrastructure respor,ibilitiesassigned to DPUPs and DPUKs, and provided guidelines for clas .ficationof public works infrastructureresponsibilities for the central, provincialand lccal levels. PP6 of June 1988 clarified relations between regional offices (KANWILs)of MPW and provincialpublic works departments (Dinas) under the authority of the provincial governors. MPW announced its intention that the KANWILs responsibilityfor project implementationwould be confined to responsibilitiesthat are purely national (e.g., national roads) in accordancewith the functionalclassification system defined under PP14. - 3 -

1.5 Sector Constraintsand Priorities. While average incomes in urban areas have risen substantiallyover the past eight year", distributionof income remains unequal and in 1987, over 20 percent of urban dwellers were estimated 3/ still to be poor. The problems of income distributionare exacerbatedby deficienciesin basic services and degradation of environmental condit.ons leading to poor health among the lod-inco.epopulation in particular. Current estimates indicate that about 75 percent of the urban population does not have direct access to piped water supply. Almost two thirds of all urban households still rely on wells, and about 11 percent are dependent on a system of water vendors. About 65 percent of low-income groups share toilets and use of canals for sanitation purposes remains common. In the larger cities, inadequate industrialwater supply and liquid and solid waste disposal is a serious proolem. In terms of GOI's service and equity objectives,more low-cost, local or tertiary systems investment are needed in existing under-servedurban areas.

1.6 The Bank's 1984 Urban Services Sector Report (No. 4800-IND) estimated that total expendituresby central and local government on urban services inveitment4/,operation and maintenance (O&M) during Repelita IV (1984-89) should be increased to 0.7? of GDP in order to reduce the backlog and keep up with increased demand for urban services. For a brief period in 1987-89 expenditureswere approachingthis level aided by the Urban Sector Lozn (2816-IND)and other donor financing and drawing down a pipeline of projects prepared in the mid 1980s. However, by 1989 this pipeline had been substarntiallyreduced and expendituresfell back to previous levels (0.4? of GDP). This is substantiallybelow the level required to address existing deficienciesand deal with the growth in urban population and industry.

1.7 Sector Finan:es. The finances of provincial and local governments have long been dominated Dy central government transfersand characterizedby weak local resource mobilization, low per-capita budgets and very limited use of credit for capital investment. In 1983/84, cer,tralgovernment transfers 5/ financed over three quarters of aggregate recurrent expendituresand almost 80 percent of capital investments. By 1986/87, central government budgetary constraintscaused by fallitrgoil revenues led to a severe curtailment of local investment programs which were reduced from almost half of local budgets in 1983/84 to less than one qu&rter in 1986/87. The high level of growth (18.5 percent ner year) in loca'llygenerated reienues failed to significantlyclose the gap. Borrowings,at about 4 percent of

3/ Central Bureau of Statistics as reviewed in the Bank's Poverty Report (Report No. 8034-IND).

4/ Water supply, roads, draine, human and solid waste management.

5/ Including SDO central routine grants and INPRES central development grants, but not includingAPBN DIPs (central GOI budget grants-in-kind). Some of these grants are formula based, some are ad hoe. Tbere are grants which can be used for several kinds of expendituresand grants which have a more restricteduse. - 4 -

total local receipts, continue to be an insignificantfeature of the financing system for most local services.

1.8 The dominant role of grants in the system of financing local government services is the result of very limited local taxing authority. For example, the potentiallymost promising local revenue source, the property tax, has an effective rate of 0.1 percent set by the central government. Since the central governmenL is reluctantto delegate substantial taxing authority to local governments,grants are a way to resolve the conflict between local governments'taxing authority and expenditure responsibility.

1.9 Inter-goverDnenttransfers are not the only contribution from the central government to the urban infrastructuresector. As it was mentioned in paragraph 1.4 above, the regional offices of central government agencies execute a large number of infrastructureprojects financed from the national budget (APBN DIP). While the classificationof urban infrastructure responsibilitiesis still an ongoing exercise, it is clear that several of these projects create infrastructurewhich, according to PP14, is local responsibility. These central government grants-in-kindcontributions are justified on the basis of weak institutionalcapabilities and lack of financial resources at the local government level. In the past, however, these projects frequently led to operation and maintenance responsibilities which the local governmentswere not able to fulfill or, since the infrastructurecreated was of low priority for them, did not want to fulfill.

1.10 Sector coordinationand local participation. Due to the steeply hierarchicaldecision systems, coordinationof the urban sector has been poor, and locpl participation in the decision processes has been limited. The sheer size and diversity of the country, the rapid pace of urbanization,the number of concerned agencies, the lack of effective management information systems and, perhaps most importantly,cultural constraintsupon horizontal communicationwithin and among agencies, have led to a fragmented approach to urban development. As national attention to urban problems increases, so too is the real potential for further fragmentationand inefficiency. Improvementsmust begin at the local government and community level, where effective coordinationis much easier to sustain than in the large central government.

1.11 Urban infrastructureissues. Major issues faced in the sector by cities of medium size are: (a) large infrastructuredeficiencies and O&M backlogs; (b) lack of coordinationin planning, in particular of transportationand land use; (c) weak financialmanagement as evidenced by deficient accounting practices and tle lack of adequate cost recovery, revenue generation,use of credit and considerationof private sector options; (d) weak management of water enterprisesand municipal improvementprograms includingdrainage, solid waste disposal, and kampung micro-infrastructure; (e) inefficientcompression of the design and constructioncycles into single fiscal years; (f) poor informationsystems, and (g) complex and changing relationshipsamong local, provincial and central agencies with rospect to assignment of responsibilitiesfor project and program preparation,appraisal, financing, implementationand O&M; (h) lack of trained and experienced managerial and technical personnel at all levels. While the scales of these problems are smaller in the cities targeted in the proposed project than in the large metropolitancities such as Jakarta and Surabaya, so too are the resources available for their solution.

B. Urban Development in Sulawesi and Irian Jaya

1.12 Sulawesi has an urban population of about 2.5 million, almost half of them living in the two largest cities, Ujung Pandang and Manado, at opposite ends of the island. The total population of the island is about 12.5 million, growing at an annual rate of about 2 percent. The share of the urban population (20 percent) is lower than the nationwide average, which suggests that the island is somewhat less urbanized than the rest of the country. However, on the basis of the 1987 national socioeconomicsurvey, the incidence of urban poverty was substantiallyhigher in Sulawesi than the nationwide average. According to the government'sregional developmentplan, Ujung Pandang (a city of 800,000) is the designated socio-economiccenter of East Indonesia.

1.13 Irian Jaya is best described as an extensive area of underdeveloped hinterland populated by a large number of subsistencecommunities, poorly linked to coastal urban areas. The urban areas are the centers of public services and also increasinglyimportant centers of trade, transportationand secondary industries. In many cases, these cities are characterizedby the nature of their primary hinterland resource base (oil, mining, fisheries, logging). Irian Jaya has an urban population of about 350,000 people out of a total population of 1.6 million. Seventy five percent of the urban population are transmigrantsor are born to parents who migrated from other provinces and are considered to be non-Irianese. The urban incidenceof poverty, although increasing,was still lower than the nationwide average in 1987. Fast population growth in the cities is primarily due to migration from other provinces, but rural Irianese have also been moving into the urban areas. Many of the newcomers settle down in low income areas where high population density puts increasing pressure on infrastructureservices.

1.14 The key issues in the urban sector in Sulawesi and Irian Jaya are reflectionsof national problems. High growth in urban population resulted in rubstantialbacklogs in the provision of urban infrastructureservices. The weak urban planning and programmingcapabilities of local governmentsare making it difficult to achieve improved effectivenessof investments, elimination of imbalances in the urban expenditurepatterns and adequate maintenance of existing city infrastructure. While the provincial governments,due to the generally small size and dispersed location of urban centers in the two islands, are the natural intermediariesfor the preparation and implementationof both centrally and foreign aid financed operations, provincial intermediationcapabilities are almost non-existent. Water enterprises,with the exception of che ones in the large cities, depend on capital subsidies frcm the central government. The poor cost recovery performance is a reflection of low quality of service provided (usually intermittentsupply) and low efficiency of operations. More generally, the level of local resource mobilizationin Sulawesi and Irian Jaya (on a per capita basis including both local taxes and user charges) is substantially below the nationwide average. - 6 -

II. SECTOR STRATEGY AND BANK EXPERIENCE

A. Government Strategy

2.1 Faced with large deficienciesin urban infrastructureservices and fast growing urban populations,GOI's strategy emphasizes physical infrastructureprovision targets. These targets, describing the capacity of water supply systems to be constructed,length of roads to be built, percentage of population to be supplied with safe water, sanitation services, etc., usually have a prominent place in the medium-term national development plans. For example, in connectionwith the UN Drinking Water and Sanitation Decade, GOI set the target of providing safe water supply to 75 percent of the urban and 60 percent of the rural population by 1990 and asked for the help of mnulti-and bilateral donor agencies. The latest estimates indicate that 36 percent of the rural and 46 percent of the urban population had access to clean water in 1988, compared to 26 percent and 38 percent, respectively,in 1980.6/ Even though targets were not achieved, this is still an impressive performance in view of the almost 40 percent increase in the urban population in that period. The main constrainthas not been the availabilityof funds but the capacity to prepare and implementprojects. The government'sresponse to that has been (a) to develop standardized,mass delivery programs planned and executed by the central government (but with operation and maintenance responsibilityat the local level) in order to reduce service deficienciesin the short-run,and (b) to build-up implementationcapacity through local government institutionalstrenghtening, reinforced through decentralization, as an important element of GOI's strategy in the long-run.

2.2 GOI has taken important strides toward establishinga basis for improved sectoral management at the national level. BAPPENAS has been designated to lead a high-level inter-agencyteam (Tim Koordinasi - TKPP) representingthe concerned agencies and charged with responsibilityfor overall urban sector policy developmentand coordination. The policy priorities for urban development in Indonesiawere articulated in the 1984 Urban Services Report (4800-IND)and the 1987 Public Resource Management Report (7007-IND),in patticular on O&M and local government finance. To address these priorities, the government issued a Statement of Policies for Urban Development in 1987 which representeda consolidatedview of development in the sector. This Policy Statement,which is incorporatedin Repelita V ani was supported by the Urban Sector Loan (2816-IND),includes: (a) strengthening local governments to assume the leading role in developing,operating and maintaining local services on a sustainablebasis over the long-term; (b) improving the planning and programmingof urban infrastructureinvestments; (c) mobilizing local revenues and optimizing their use; (d) implementinga coordinated financing system for the development and administrationof local services; and (e) strengtheningthe consultativeprocess at various lev3ls of government,with emphasis on upgrading participationof local municipalities and districts. These objectives are now being fine-tuned to emphasize the

6/ See Indonesia Urban Services Sector Report, No. 4800-IND and Indonesia Poverty Assessment and Strategy Report, No. 8034-IND. - 7 - following priorities for the near-to-mid term: (a) expansion of the scope of the Integrated Urban InfrastructureDevelopment Programming (IUIDP) process to selectively include additional subsectorswhich play a critical role in the economic role of major towns and cities, in particular; (b) strengtheningof local government institutionaldevelopment and training; (c) improved infrastructureO&M; (d) improved cost recovery and implementationof a more fully integrated system for the financingof urban services; and (e) increased attention to urban land and environmentalmanagement.

2.3 Poverty reduction and regional balance in development are prominent objectives of the current national medium term developmentplan (RepelitaV). High levels of poverty exist in East Indonesia (especiallyin South-East Sulawesi, Maluku, NusL Tenggara and Irian Jaya) and the strong emphasis given in Repelita V to infrastructuredevelopment in the outer islands is a natural consequenceof GOI's recognitionof the problem. Overall GOI strategy for regional development is still evolving but specific investment programs targeted to backward areas and increase in general resource availabilityin such areas through the INPRES grant transfer system are the key building blocks.

2.4 Also under Repelita V, GOI has targeted the expansion of borrowing by local water enterprisesas a special priority. Recognizing the need for operational guidelines to induce a higher level of credit financing, GOI is planning to adopt less conservativefinancial criteria for borrowing by local governments and their enterprises (debt service coverage ratio of not less than 1.5 for local government general fund operations and not less than 1.3 for local enterprises such as water supply PDAMs). This would bring the legal borrowing capacity for local governments,particularly the large cities, more in line with their considerablyunused paying capacity.

2.5 The government'sstrategy is to move interest rates towards market rates over the medium to long term. Given the substantialgrant element in the financing system for local services in Indonesia, the question of interest rate must be viewed in the context of overall sector finances. Many local governmentshave little or no experiencewith loan financing,having preferred instead to rely on central government transfers in spite of the very low (two to four percent) or, in some cases zero, interest rate on domestic loans for the vast majority of governments. Only the nation's largest cities have significant experiencewith interest rates in the range of nine-twelve percent. There is a widespread concern in GOI that, unless the interest rate applied is low, it will not be possible to induce local governments and their enterprises to adopt a more active borrowing posture, within prudent limits.

B. Bank Experience

2.6 Worldwide experience in water supply.7/ The Bank has been involved in this sector since the 1960s. There has been relatively little

7/ Based on OED "Annual Review of Evaluation Results' in 1987, 1988, 1989 (Report Nos. 7404, 8164, 8970) and several project audit reports. evolution in the Bank's approach. The scale of projects became larger and many involved assistance to a number of smaller entities under one operation. Some operations relied on intermediariesto exercise control over implementationand to provide assistance to the beneficiary entities. Many operations aimed at the consolidationof water entities. While the majority of projects provided substantialeconomic and health benefits, experience shows.that (a) the achievementof institutionaland cost recovery objectives has been slow and difficult; (b) there are persistentlyhigh levels of unaccounted-for-water;(c) there are delays in project implementationdue to inadequate project preparation,slow land acquisition,cumbersome procurement procedures; (d) inadequate attention is paid to the disposal of wastewater in densely populated areas.

2.7 Worldwide experience in the urbar.sector.8/ Bank involvement in the urban sector started in tha early 1970s with low cost investment projects in shelter, water supply, sanitation and urban transport aimed at alleviating urban poverty. Sites-and-servicesand slum upgrading projects were intended to demonstrate replicableapproaches that could provide benefits to the poor while recovering costs and reducing the financial burden on the public sector. Many of these projects have been reasonably successful in meeting physical objectives, but they have not had an impact on the policies of national and local governmentsand on the issues of managing the urban economy. The policy dialogue between the Bank and governments focussed on physical aspects and some institutionalissues but there was insufficientattention to the broader policy framework such as intergovernmentalfiscal relations. More importantly,because many urban programs did not achieve sustainablepolicy reform and institutionaldevelopment, the projects were generally not replicable. In only a few cases, such as the Kampung ImprovementProgram in Jakarta, have citywide impacts been achieved. Like water supply, urban operations also experiencedsubstantial implementationdelays due to insufficientproject preparationand very ambitious implementationtimetables. Government efforts have not mobilized the private sector and community initiative,but in many cases have increased the cost of private solutions through overregulationand rationing of scarce capital for investment.

2.8 By the mid-1980s the experiences of donor-assistedprojects had led to shifts in external approaches to the urban sector. The central premise of these shifts was the recognitionthat governmentswere unable to provide the shelter, infrastructure,and services needed by rapidly growing urban populations. Instead, a more realisticassessment of the capacities of the public sector had led to the conclusion that greater efforts had to be devoted to (i) improving the management of urban institutionsand intergovernmental fiscal relations; (ii) improving local resource mobilization; (iii) strengtheningthe management of urban infrastructure,particularly with regard to maintenance; (iv) establishingregulatory frameworks that were enabling, rather than constraining;and (v) strengtheningfinancial services for urban

8/ Based on OED reports mentioned above, on draft PRE Report "Urban Policy and Economic Development:an Agenda for the 1990s", dated November 30, 1990 and also on PRE Report "FY89 Sector Review Urban Development Operations",Report No. INU-OR3. - 9 - development,and, where feasible, (vi) reducing the public role in urban service delivery.

2.9 Recent initiativesby governments and donors in these areas reflect a growing appreciationof the importance of policies, institutions,and regulations in formulatingeffective strategies to manage urban growth. By assuming that government--firstcentral and now local--couldprovide the investment needed to serve the majority of the urban population,both governmentsand donors have given little attention to the important role of private households, communities,and firms in providing for their own needs. A new policy framework is needed that truly enables nonpublic actors and is realistic in appreciatingthe relative roles and importance of the public and private sectors. The policy framework must also link the management and productivityof the urban economy to the broader objectives of economic growth and developmentpolicy.

2.10 Experience in Indonesia. Generally, Bank experienceconfirms that (a) the combination of limited planning and implementationcapacity at the central level and the difficulties inherent in providing essentially local services by central government departmentsdecreases the efficiency of mass delivery programs; (b) capacity building at the local level is a long-run process that needs to be accompaniedby an increase in local responsibility and accountability;and to develop such responsibilityand accountability(c) central-localfinancial relationsneed to develop in the direction of more local government autonomy. As summarized in Table 1 elow, the Bank has financed eight completed and eight ongoing urban and water supply projects in Indonesia since 1974, touching more than fifty local governments and many of their water enterprises. Urban lending operations in Indonesia have progressed from demonstrationprojects in Jakarta through more programmatic investments in selected other large cities, still limited in geographic and subsectoral scepe, to sector lending within an agreed policy and institutional framework. Water supply projects initiallycovered only a few cities, but later, like Bank projects in other countries, assisted a large number of urban settlementsunder one operation. - 10 -

Table 1. URBAN AND WATER SUPPLY PROJECTS IN INDONESIA

Loan Fiscal Year Project Name Original PPAR/PCR No. Effective Closed Loan Rep. No. Year

1040 1975 1981 Jakarta Urban Development 25.00 4620 1983 1049 1975 1982 Five Cities Water Supply 14.50 6256 1986 1336 1977 1984 Second Urban Development 52.50 6329 1986 1653 1979 1987 Third Urban Development 54.00 8583 1990 1709 1981 1987 Second Water Supply 36.00 8622 1990 1972 1982 1988 Fourth Urban Development 43.00 8583 1990 2236 1983 1991 Jakarta Sewerage/Sanitation 22.40 2275 1983 1990 East Java Water Supply 30.60 2408 1984 Fifth Urban Development 39.25 2632 1986 Second E. Java Water Supply 43.30 2725 1986 Housing Sector Loan 200.00 2816 1987 Urban Sector Loan 270.00 2817 1987 Reg. Citieq Urban Transport 51.00 2932 1988 Jabotabek Urban Development 150.00 3219 1990 Se-ond Jabotabek Urban Dev. 190.00 3246 1991 Third Jabotabek Urban Dev. 61.00 3304 1991 East Java - Bali Urban Dev. 180.30* 1,462.85

* not yet effective as of April 30, 1991.

2.11 Multi-subsectorurban developmentprojects, Urban I-V (Loans 1040, 1336, 1653, .972 and 2408-IND), provided substantialassistance for deconcentratedprograms of low-cost micro-infrastructure(KIP), city-wide drainage and solid waste management in eleven major cities. They also assisted development of GOI's low-incomehousing program, now supported under the Housing Sector Loan (2725-IND),and several important institutional initiatives,including local government finance, planning and programming, O&M, and land information. Separate sub-sectoralprograms in water supply, sewerage and urban transport have been supportedby seven loans to date. The first two such loans (1049 and 1709-IND)helped in the development of water sector organizationand financing policies. Under subsequent projects in East Java (Loans 2275 and 2632-IND)water sector developmentwas emphasized and deconcentrationof implementationcapacity was introduced to increase the program scale and pace. Loan 2236-IND (Jakarta Sewerage and Sanitation)has sought to implement pilot human waste disposal projects and strengthen waste disposal institutionsin Jakarta. Two recent loans (2817 and 2932-IND) focus on urban transport sector development in Indonesia's five largest cities, emphasizing least-cost traffic and public transport solutions and local institutionaldevelopment. The combined experience of these projects is reflected in the Urban Sector Loan (2816-IND)and also in the Second and Third JABOTABEK Urban DevelopmentProjects which focus, respectively,on water resources and kampung improvementin the Jakarta metropolitan area. - 11 -

2.12 Completed ProJects. Of the eight loans closed to date, four have been evaluated by the Bank's Operation Evaluation Department. Urban III and IV were combined in one project completion report. The issues and lessons from these reports are discussed below.

2.13 Water supply. While about one million people received improved water supply due to the two projects, the project performance audit reports (No. 6256 and 8622) emphasized the followingproblems: (a) substantialdelays in project implementationwere caused by inadequatepreparation, especially by the late preparation of detailed designs (after the loans became effective); (b) over-optimisticwater demand and unaccounted-for-waterprojections and underestimatedproduction costs led to the inability of the water enterprises to fulfill (too ambitious) financial covenants and difficultiesin servicing debt; (c) inadequateattention was given to institutionaldevelopment and management of technical assistance. For the proposed project, detailed designs have been prepared in advance, the availabilityof alternativewater sources and the forecast levels of water tariffs have been taken into account in water demand projections. Also, technicalassistance will be managed on a regional basis, close to the sites where the project is implemented.

2.14 Urban projects. According to the project performance audit reports (No. 4620 and 6329), the civil works included in the first two urban projects were completed according to appraisal schedules. However, considerabledelays were experienced in the selection and appointmentof consultants,therefore the loan closing dates had to be extended by three years to complete the technical assistancecomponents (for institutionaldevelopment on the national level and preparationof subsequentprojects). Water supply componentsunder the kampung improvementprograms experienced the same problem as the free standing water supply projects, that is, the water demand projectionswere over-optimisticand willingness to pay for the piped water was less than expected where alternativegroundwater sources existed. The need fcr formal .naintenancearrangements was noted and it was proposed that the maintenace issue should be addressed more carefully in future projects. The proposed project includes both maintenance expendituresand institutioncapacity building for O&M.

2.15 The combined Project CompletionReport (PCR) for the most recenitly completed urban projects (Urban III, 1653-IND; and Urban IV, 1972-IND) highlighted the following issues and prioritiesof urban development in Indonesia: (a) successfulproject implementationrequires local participation and visible leadershipby the chief executive (bupati or mayor) of the local government; (b) operations and maintenance budgets and institutional capacities are inadequateat all levels; (c) coordinatedplanning and programming of urban infrastructureis essential; (d) improved local resource mobilization is necessary for sustainingurban developmentprograms; and (e) decentralizationof urban developmentprogram implementationrequires strengthenedmunicipal management, technical staff capacitiesand operational systems. Some of the functionalrequirements and policy reform options to address these issues are now being explored under the ongoing Urban V project (Loan 2408-IND) and the USL (Toan 2816-IND)on a national basis (see below). The need for coordinated infrastructureplanning was the key to the - 12 - development of the IUIDP concept, which will be implementedunder the currently approved East Java - Bali Urban Development Project (Loan 3304-IND).

2.16 Beneficiaryhouseholds and communitiesare involved routinely in the identification,preparation and implementationof KIP neighborhood improvement programs that have been supported under Bank loans for more than ten years. Market neighborinoodimprovement (MIIP) programs have a similar participatory base. C)I's successful solid waste management and sanitation programs also rely on participationof beneficiaryhouseholds and communities,and have received increasing support under the Urban III, IV and V projects. On-site sanitation schemes introduced under the Urban V project, for example, emphasize household financing and the use of NGOs for communitymanagement of implementation. Water supply investmentssupported by the Bank now require assessment of cost recovery potential from the beneficiary households; road investmentsmust be based upon specific road-userneeds; drainage investments emphasize needs expressed by communities subject to flooding. Most importantly,the overall infrastructureplanning (IUIDP) process supported by GOI and the Bank is designed to upgrade the effective role of local participation: (a) to start planning and decision processes at a level low enough in government so that beneficiariescan participate directly; (b) to start early enough in the budget process so that adequate attention can be provided ta subproject design in meeting beneficiaryneeds; (c) to place increased emphasis on local responsibilityfor O&M, and (d) to take advantage of local human resource and institutionalcapacities through the entire project cycle.

2.17 The Sector Loan. The recent Urban Sector Loan (2816-IND)was an attempt to put institutionsand policies in place to carry out the urban program more effectively in a decentralizedfashion. Steady progress has been made in introducinga number of administrativeimprovements including local resource mobilization, infrastructureO&M, etc. and a more structured approach to further institutionaland human resource development is now also being developed. However, changes in key policy makers have eroded the consensus within the government over the urgency of a number of structural reforms including grant reform and introductionof a local government loan fund. In retrospect, it is clear that the Government was unprepared for these reforms within the timeframe of the Urban Sector Loan; central government executed and grant financed projects will continue to play a role in providing urgently needed urban services even as the long-term reform program to strengthen management capability and financialautonomy at the local government level is being put in place. Performanceof the Urban Sector Loan in supporting priority expendituresand increasingdisbursements in the sector has been satisfactory. Provision of counterpart financing through the Urban Sector Loan enabled Indonesia to expand sector expendituresin keeping with (if not yet achieving) the recommendationsof the Bank's Urban Services Sector Report.

2.18 Sulawesi. The Bank's direct project experience in the urban sector in Sulawesi was limited to two cities, Pare Pare and Ujung Pandang. The Second Water Supply Project financed piped water supply system development in Pare Pare with a total cost of US$3.5 million. Implementationof the Pare Pare sub-project suffered a two year delay and neither the technical targets - 13 -

(provisionof safe water, lower unaccounted-for-water),nor the financial targets (rate of return on assets, accounts receivable)were met. The Urban III project financed kampung improvement in Ujung Pandang with a total cost of US$7 million. This sub-projectalso suffered a two year implementationdelay but otherwisewas considered quite successfulwith an estimated ERR of 41Z. The Urban V project financed kampung improvement,solid waste management and drainage improvement in Ujung Pandang. The total estimated cost of the Ujung Pandang program was US$12 million at appraisal. According to recent estimates, Ujung Pandang will complete its program in the final project year without serious difficultyand achieve all physical targets. Modest institutionalimprovement targets were also achieved, but the city revenue forecasts proved to be too optimistic.

2.19 Irian Jaya. The Bank has no direct project experience in Irian Jaya. Several nationwide sector operations (Third Agriculture Extension, Forestry Institutionsand Conservation,Urban Sector Loan, Highway Sector Loan) financed expendituresin the island, but that coverage was very broad and perfunctory. In addition, the TransmigrationV project (Loan 2578-IND) financed transmigrationsettlement planning studies directed at the southern part of the island, however, the Bank was not involved in the implementation of the studies.

C. Bank Strategy

2.20 The Bank strategy mirrors the government strategy with emphasis on (a) improving service levels in a regionallybalanced fashion and particularly for the poor; (b) improvingurban productivityand the effectiveness of investmentsthrough better infrastructureplanning and programming,especially at the city level and through enhanced local governmentcapacity for fiscal management, revenue mobilization,project implementationand O&M; (c) improving the urban environmentby enhancing local government capacity to plan, implement and operate infrastructurein an environmeintallysound fashion and also by enhancing community participation. Recognizing the limitationsof central planning and administrationof local services, the Bank gcnirally supports the decentralizedapproach implied by GOI's long-term development objectives for the sector. Bank-wide experience suggests that decentralizationcombined with strong efforts to increase local government capacity offers the best prospects for dealing with urban management constraints includingproject preparation,implementation and O&M and for improving the efficiencyof resource allocation.

2.21 Improving service levels. The Bank agrees with GOI that increased access to infrastructureservices, especially for the poor, is an important objective. However, there is no simple solution to the problem of institutionalcapacity constraintsand attempts to mass deliver standardized systems are fraught with problems. Inflexibilityin design leads to solutions ill adapted to local circumstances,low willingness to pay by the consumers and lack of funds and institutionalcapability for maintenance. This is a very high price to pay and may hinder the achievement of another equally important objective, the maximum contributionfrom urban infrastructureto the economic development of the cities. Therefore,while the Bank strategy supports targeted interventionsto increase access for the poor (e.g., - 14 -

subsidizedwater standpipe and kampung improvement programs), it also emphasizes the importanceof long-termprograms to enhance the capacity of local governmentsand comm%itniiesto implement infrastructureprojects and maintain the assets created. Provision of financial and managerial incentives through a properly designed planning and regulatory framework for the local governmentsand the pr±vate sector is another equally important aspect of the strategy.

2.22 Improvingurban management capacity. The Bank's strategy increasinglyemphasizes city-wide management, particularly in the large cities to improve coordination,accounting, tax and land administration, environmentalmanagement, private sector participation,project preparation, implementationand O&M and ultimatelyurban productivity. Based on experience gained under the six completed and eight ongoing urban projects, the Bank strategy recognizesthat implementationof GOI's strategy as operationalized through IUIDP (para 2.2) depends on the institutionalcapacity of individual local governmentsand local water enterprises. In parts of the country where institutionalconstraints are less pronounced it is possible to establish provincial intermediationcapacities, programmatic Bank lending and high levels of cost recovery. In other less developed parts of the country such as East Indonesia,where local capacity is less developed, regular project lending is more appropriateand cost recovery is more difficult. The Bank strategy recognizesthat regionallybalanced development is a legitimate concern of GOI and developmentof urban areas in the Eastern part of the country is necessary to achieve that. The Second Water Supply, Urban III and Urban V projects demonstratedthat well prepared, traditionalproject type interventionsrestricted to a few urban areas could help GOI improve delivery of urban infrastructureservices. The rationale for the proposed project is based on this experience.

2.23 Improving the planning and regulatory framework. The Bank's strategy also promotes the establishmentof an enabling regulatoryand planning framework for urban land management. A large technical assistance program funded under a series of Bank loans has assisted the Government in improving its mapping, land registration,tax administrationand land management in general. A national commission for land has now been established and a key focus of the Bank's strategywill be to support the Government, under coordinatedarrangements between urban and housing sector operations, in order to simplify its zoning and other regulationsto facilitatemore efficient urban land use and, thereby, manage urban growth more effectively.

2.24 Financing of urban development. Based on the Bank's experience that local services are most effectivelyprovided when responsibilityand accountabilitylies with competent local governments,Bank strategy aims at increasingthe importanceof local government resources in financing urban infrastructureservices. Therefore, the Bank supports measures that increase local revenues, especially the reform of the system of local government taxes and charges, and increase prudent borrowing by local governments. The system of a multitude of local government taxec with very limited revenue base and yield should be overhauled. Also, local governments should be encouraged to establish pricing policies on an increasinglycost recoverable basis, thereby - 15 - enabling available grants to be targeted to the neediest regions with less potential for local resource mobilization,thus supporting the Government's regional equity objectives. If GOI's Repelita V strategy of increasing the relative importanceof credit in the sector succeeds, it will help encourage mote efficient allocation of resourceswithin the sector. However, an interest rate which is well below market rates (currently 18 - 20 percent annually)maintains a degree of interest rate segmentationwhich could inhibit the ability of the sector to mobilize loan funds from domestic savings in the long-run. The Bank therefore supports a program geared to measured progress towards market-relatedrates of lending to local governmentsand enterprises.

2.25 The Bank also recognizesthat infrastructuredeficiencies are large and the financialcapability of local governments is limited, so central government grants will continue to be an important source of financing for urban infrastructure. In order to avoid inefficienciesexperienced in the past, improvementof the grant system is desirable by making it less fragmentedand more equalizing,predictable and discretionaryfor the recipient local governments. The superior financial resources of the central government coupled with superior implementationcapacity naturally led to the important role played by the grants-in-kindsupport. For the medium term, in view of the pressing urban infrastructureneeds, there is no real alternative to that solution. However, it is important to avoid the problems experienced in the past by ensuring that (a) only those projects are implemented,which have a high priority for both the central and local governmentsand (b) the financialand institutionalresources to operate and maintain the infrastructurecreated are available at the local government level.

III. THE PROJECT

A. Project Origin and Formulation

3.1 Preparation of the Irian Jaya water supply component started in December 1983 financed partly by the Government of Australia and partly under Loan 2275-IND. Preparationof the Sulawesi urban component started in April 1986 with funds from Loans 1653-IND and 1972-IND. The two preparation efforts were merged by GOI in June 1987, with agreement from the Bank. Further preparationwork was funded from Loan 2932-IND and the proceeds of Project PreparationFacility 142, requested by GOI and approved by the Bank in September 1989.

3.2 In Irian Jaya, the project was prepared to cover kabupaten capitaa. cities only, while in Sulawesi the project was intended to cover all utrban areaq and was prepared as a programmaticoperation. However, difficulties were encounteredduring preparation in Sulawesi which led to substantial delays. It became apparent that the scope should be reduced and the preparation should concentrate only on a selected number of cities in Sulawesi in order to use available resources effectively. Accordingly,the scope of the project was reduced to cover nine cities in Sulawesi in June 1989. TX.ose larger cities were selected,where the preparation reached an advanced stage. It became also clear that Sulawesi provincial and local gi.ernments were not ready for a programmaticoperation, i.e., the capability of local governments t i - 16 -

to prepare second and third "batch* investmentsand provincial governments to appraise those investmentswas not satisfactory. Therefore a decision was made to redirect the preparationeffort towards a one "batch" traditional project-typeintervention. The list of the project cities can be found in Annex 5.

3.3 Despite these reductionsconcerning Lh;escope, the proposed project is still quite large. The size also reflects GOI's intention to provide urban services to as many people as possible during the current five year planning period. In terms of previous water and urban operations in Indonesia (see Table 1 above), the proposed project is equivalentto the combination of three projects: a water supply project covering fourteen water enterprises ir Irian Jaya and Sulavesi (similar to East Java Water Supply - Loan No. 2275), an urban roads project in nine cities in Sulawesi (similar to Regional Cities Urban Transport - Loan No. 2817) and an urban drainage, solid waste, kampung improvementproject also in nine cities in Sulawesi (similar to Urban V - Loan No. 2408). Given the experience gained by governmentagencies under previous projects and the advanced and detailed implementationarrangements (para. 3.4 and Chapter IV), the project agencies should be able to implement the project as designed. As for the Bank, while there are economies of scale in processing these components together, the size of the project will undoubtedly lead to a higher than average supervisionworkload (see para. 4.21 below).

3.4 By appraisal all feasibilitystudies and preliminary design work have been completed. For water supply subprojects,detailed designs had been prepared two years ago and have to be updated. Detailed design and tender documents for first year implementationare under preparation and will be ready by loan effectiveness. Contract packaging for all procurement has been carried out and outline TORs for all technical assistanceare available.

B. Project Objectives

3.5 Project objectives are (a) to provide urban infrastructurein selected cities in Sulawesi and Irian Jaya with emphasis on increased access of households to water supply and sanitation services; (b) support improved infrastructureprogramming and financialplanning in these cities, especially support the developmentof local governmentcapacity to prepare and execute annual O&M programs and (c) encourage local governmentand enterprise revenue generationand improve financialmanagement.

C. Project Description

3.6 There would be three principal components:

(a) InfrastructuredeveloPment, rehabilita.ion and O&M in Sulawesi. This component representsRp. 217.9 billion ($118.2 million equivalent) or 70.0 percent of total project costs, providing civil works and equipment for water supply, urban roads, kampung improve- ment, market infrastructureimprovement, solid waste management, drainage and sanitation in nine cities in Sulawesi. Non-water supply O&M expendituresof Rp 35.9 billion ($19.5 million equivalent) and in-house design and constructionsupervision - 17 -

overheads of Rp. 4.9 billion ($2.7 million equivalent) are also included in the component (but would not be financed by the Loan).

(b) Water supply system rehabilitationand development in Irian Jaya. This component r presents Rp. 51.7 billion ($28.0 million equivalent) or :6.6 percetitof total project costs, pro-iding civil works and equipment for the rehabilitationand expansion of eight piped water supply systems in the kabupaten capital cities of Irian Jaya.

ic) TechnicalAssistance. This component represents 13.4 percent of total project costs and would include the following sub-components:

(i) Project implementationsupport. This sub-componentrepresents Rp. 28.6 billion ($15.5 million equivalent)or 9.1 percent of project costs. The project would be implementedby existing agencies at central and local government level. In order to achieve project objectives,however, several of these agencies will require assistance. The sub-componentconsists of contracted-outengineering services (design and construction supervision),project management,monitoring and evaluation assistance, including financialand environmentalaspects.

(ii) Institutioncapacity building. This sub-componentrepresents Rp. 7.8 billion ($4.2 million equivalent) or 2.5 percent of project costs. It would provide consultant services for the implementationof local government revenue improvementaction plans, revenue administrationreforms and O&M management systems in nine cities in Sulawesi. It would also provide assistance to provincial level water enterprise support units and training to both local government and water enterprise staff in the project cities in Sulawesi and Irian Jaya.

(iii) Project preparation. This sub-componentrepresents Rp. 5.5 billion ($3.0 million equivalent)or 1.8 percent of project costs and includes the repayment of the Rp. 2.8 billion ($1.5 million) advance from the Project PreparationFacility (PPF- 142) and the preparationof a follow-up urban development project at an estimated cost of Rp. 2.7 billion ($1.5 million equivalent). The follow-upproject is intended to cover those urban areas in Sulawesi,which are not included under the proposed project. One part of the follow-up project preparationcosts ($0.5 million equivalent)will finance urban strategy development for new, fast growing urban centers in the project provinces.

D. ProJect Costs

3.7 The total project cost, as summarized in Table 2 below, is estimated at Rp 311.5 billion ($168.9 million equivalent) including contingenciesof Rp 53.4 billion ($29.3 million equivalent),taxes and duties of Rp 17.7 billion ($9.6 million fquivalent),and land acquisitionof Rp 8.9 billion ($4.8 - 18 - million equivalent). Direct and indirect foreign exchange costs are estimated at Rp 126.7 billion ($68.7 million) or about 41 percent of total project costF. Base costs are estimated as of October 1990. Quantitieshave been based on completed preliminarydesigns and detailed designs where available. Latest contract informationhave been used to arrive at current unit cost estimates. Physical contingenciesfor civil works and equipment are estimated at 10 percent in Sulawesi and 15 percent in Irian Jaya; the latter because of the anticipateddifficulties of implementingtechnical works i. the remote towns of Irian Jaya. Price contingenciesare estimated at 6.5 percent for 1990 and 1991 and 6.0 percent thereafter for domestic costs and at 3.6 percent for foreign costs throughoutthe implementationperiod. Price contingencies total Rp 31.9 billion ($17.3 million equivalent)or 11.4 percent of base costs plus physical contingencies. Interest during construction (IDC) on the Bank Loan would be about Rp 35.6 billion ($19.3 million equivalent),of which Rp. 31.7 billion is foreign cost (intereston the disbursed Loan amount during the grace period) and Rp. 3.9 billion is domestic cost (due to the higher interest rate charged by the central governmenton the onlent portion). Land acquisi- tion costs are included in the base costs. Detailed cost estimates are provided in Annex 1. Table 2 below summarizesproject costs by component and subcomponent. - 19 -

Table 2: PROJECT COST SUMMARY

Rp billion _ million Z of Local Foreign Total Local Foreign Total total

A. Infrastructure Sulawesi 1. Water Supply 18.7 15.1 33.8 10.1 8.2 18.3 10.9 2. Drainage 23.9 14.0 37.9 13.0 7.6 20.6 12.2 3. Urban Roads 55.5 28.5 84.0 30.1 15.4 45.5 27.0 4. Solid Waste 6.6 3.8 10.4 3.6 2.1 5.7 3.3 5. Human Waste 2.7 1.6 4.3 1.5 0.8 2.3 1.4 6. Kampung Improvement 7.0 3.7 10.7 3.8 2.0 5.8 3.4 7. Market Infrastructure 0.6 0.3 0.9 0.3 0.2 0.5 0.3

Subtotal Infrastructure Investment 115.0 67.0 182.0 62.4 36.3 98.7 58.5

8. Current O&M /a 11.6 5.3 16.9 6.3 2.9 9.2 5.4 9. Incremental O&M /a 12.0 7.0 19.0 6.5 3.8 10.3 6.1

Subtotal O&M 23.6 12.3 35.9 12.8 6.7 19.5 11.5

Subtotal Investment and O&M 138.6 79.3 217.9 75.2 43.0 118.2 70.0

B. Water Supply Irian Jaya 20.5 31.2 51.7 11.1 16.9 28.0 16.6

C. Technical Assistance 1. Project Implementation Support 18.4 10.2 28.6 10.0 5.5 15.5 9.1 2. Institution Capacity Building 4.3 3.5 7.8 2.3 1.9 4.2 2.5 3. Project Preparation 3.0 2.5 5.5 1.6 1.4 3.0 1.8

Subtotal Technical Assistance 25.7 16.2 41.9 13.9 8.8 22.7 13.4

Total Project Cost 184.8 126.7 311.5 100.2 68.7 168.9 100.0

Interest During Construction 4.1 31.6 35.7 2.2 17.1 19.3

Total Financing Required 188.9 158.3 347.2 102.4 85.8 188.2

/a Non-water supply only

Base costs are in October 1990 prices. - 20 -

E. Financing Plan

3.8 The proposed Bank loan of $100 million equivalentwould finance 59 percent of total project costs, or about 70 percent of the project cost net of identifiabletaxes, duties, land acquisition costs and current O&M expenditures. The loan and a Japanese grant of $0.7 million equivalentwould cover all foreign exchange costs estimated at $68.7 million equivalent and local costs of $32.0 million equivalent. Counterpart funding, excluding interest during construction,would be provided by the central government ($33.4 million equivalent),provincial governments ($10.4 million equivalent), local governments ($18.1 million equivalent),water enterprises ($5.1 million equivalent)and private sector contributions [$1.2 million equivalent, (see para 3.11)]. Annex 2 provides city by city details of the financingplan. A summary of the financing plan is provided in Table 3. Assurances were obtained during negotiationsregarding timely provision of counterpart funds.

Table : PROJECT FINANCINIC PLAN SLf~RY (Rp billion)

Central 2caxrnment P,Rivt Lonal° rop!ncl IR 5 Japan.es Total Patp Loc. P,n,c,I ~ oest,c !m Domestic iBm &oetic Grant

Infrastructure

1. Water supply La 0.0 13,0 0.0 26.7 3.0 0.0 0.0 31.4 11.4 85.5 2. Drainage 0.0 3.0 2.3 0.3 0.0 2.9 1.5 21.0 6.8 37.9 3. Solid wast-e 0.0 0.2 0 0 6.7 0.8 01 0.0 1.9 0.6 10.4 4. Hu_n *aste 1.0 0.2 0.0 1.5 0.2 0.3 0.1 0.8 0.3 4.3 i. Roads 1.2 2.2 6.2 10.9 1.3 22.0 8.3 24 2 7.8 8.1 R.Kamung iaronamnt 0.0 3.0 0.1 0.0 0.0 3.7 1.2 2.1 0.7 10.7 7. Market infrastructure 0.0 0.7 0.0 0.0 0.0 0.0 0.0. 0.1 0.0 0.9 Subtotal Investment . Zi L7 46.0 5 29.0 I" 2 LI LE 233.

H. Current 04 AM 0 0 9.7 5.1 0.0 0 0 0.0 2.7 0.0 1.5 19.0 9. Incremental 0 b 0.0 8.4 5.0 0.0 0.0 0.0 2.2 0.0 1.3 16.9 Subtotal Infrastructure 22 Q404 ILA 46 0I 2t0 81 SLI 3 269,7 Technical Assistanca 0.0 2.4 0.5 4.2 0.3 1.6 0.6 21.9 8.6 1.8 41,9 Total Proiect Cost La _ 4. 19i. 50 2 Li am IL.Z 103.4 39 1 LI 3116 Percent 0.7 13.7 6.2 16.1 1.8 9.8 5.4 33.2 12.5 0.6 100.0 Interest during construction 12.7 23.0 S5.7 Total Financing L/c 2-2 55 4 19 3 2 56 30A ILI 103I4 L.1 L_ 3472.

Local includes Rp 9.5 milllion user charges. Non-atr. supply only. Totals y not add up due a.e rounding.

3.9 Cofinancing. Cofinancingof Yen 103.6 million (Rp 1.4 billion or $0.74 million equivalent)has been provided by a grant of Japan for consultancy services required during the final stages of project preparation and during the early years of project implementation. The grant agreement was signed on February 26, 1991.

3.10 On-lending. Of the Bank loan of $100 million equivalent to the central goverrment,Rp. 23.5 and Rp. 26.7 billion ($12.7 and $14.5 million equivalentor 27.2 percent) would be on-lent by the central government to local governmentsand their water enterprises,respectively, under domestic lending arrangements (DLAs) satisfactoryto the Bank. Proceeds of the Bank loan would cover 90 percent of the funds borrowed by local governments and water enterprises under the project. The amount of total borrowing was - 21 - determined on the basis of the willingness and capability of local governments and water enterprises to borrow. Central government would bear the foreign exchange risk and the risk of interest rate variation. The funds onlent through DLAs would carry an interest rate of 10.5 percent per annum over 20 years including five years of grace. Interest and commitment charges would be payable during the grace period. Interest during constructionon onlent funds would be Rp. 12.7 billion ($6.9 million equivalent),of which Rp. 8.7 billion ($4.7 million) would be in foreign exchange.9/ The loans would mainly finance water supply, urban roads and solid waste management subprojects. Signing of a domestic lending arrangementacceptable to the Bank will be a condition of disbursementof onlent funds for each local government.

3.11 Regional Financing. About Rp. 64.3 billion ($34.8 million equivalent) or 20.6 percent of the total project costs would be financed from regional level resources. These resources include water enterprise charges to consumers, second level regional government taxes, assigned revenues, service charges and other local revenues, contributionsfrom the provincial government budgets, and private sector-sourcedfunding (principallyrelating to contributionsof land and repayments to the proposed local small credit schemes for the financing of on-site sanitation infrastructure).

3.12 Central Government Non-RepayableFinancing. Of the total central non-repayable financing of project costs, one part, Rp. 47.3 billion ($25.6 million equivalent) consists of the formula driven and ad hoc development grants (INPRES Dati I and II and INPRES Jalan) that provide cash supplements to regional budgets. The other part, Rp. 142.5 billion ($77.2 million equivalent),consists of central government developmentbudget (APBN) funds, which can also be divided into two parts. One part, about Rp. 85.3 billion is for infrastructureand technical assistancewhich is classified as central government responsibility. These are APBN DIP (nationalproject) funds and would be distinguishedin practical terms by having central government staff as project managers (PIMPROs)and assistantmanagers (PIMBAGPROs)responsible for signing contracts. The other part, about Rp. 57.2 billion, is the grants- in-kind type of central contributionwhich supports regional government responsibilities(see para. 1.9 above). These are APBN Daerah DIP (national/regionalproject) funds for which regional government staff would serve as project managers and/or assistant project managers. Of the total non-repayable (APBN and INPRES) financing of Rp. 189.8 billion ($102.9million equivalent),the Bank loan would finance 71 percent or Rp. 134.0 billion ($72.6 million equivalent) and central GOI counterpart financingwould provide 21 percent or Rp. 55.8 billion ($30.2 million equivalent). j.13 Rationale for grants-in-kindcentral government contribution. The water supply, drainage and road sub-sectorsare the main beneficiariesof the central government'sgrants-in-kind support. Seven water supply subprojects in Irian Jaya would be grant financed. Also, the rehabilitationcomponent of the subproject in the provincial capital, Jayapura, would be financed from

9/ An additional Rp. 23.0 billion ($12.4 million equivalent)would be the interest during constructionon the balance of the Bank Loan, which would be born by the central government. - 22 -

grants, while system expansionwould be financed from internally generated and borrowed funds. (All water supply subprojectsin Sulawesi would be financed from internallygenerated and borrowed funds.) The beneficiarywater enterprises in Irian Jaya have been recently established,are still managed by the central government and, with the exception of the Jayapura enterprise, are not mature enough to borrow. The proposed investmentsare necessary to improve the viability of these relativelysmall schemes. A timetable for transferringthe water enterprises to the local governments during the proiect implementationperiod was agreed during negotiations.

3.14 The local governments in Sulawesi would borrow from the central government substantiallymore under the project than in the past. However, their revenue generation capacity to service debt is limited, while the infrastructuredeficiencies are large. As it was mentioned in para. 1.8 above, there is an apparent conflict between the expenditure responsibilities and the taxing authority of the local governments. Property and road user taxes have the potential to recover the cost of local government drainage and road improvements,but the maximum rate of the property tax is extremely low and all road user taxes accrue to the central and provincial level of government. Therefore under this project (and for the medium term) the only way to finance even a modest program of infrastructureimprovements in the drainage and road subsectors is to continue to rely on central government resources. The extent of the grants-in-kindsupport in the non-water supply subsectorswas determined on the basis of the gap between the local governmentsability to finance infrastructureinvestments (O&M was given priority in the use of local government resources)and the total cost of well- prepared, viable subprojects. In addition, a formula (based on city size) e' ermining the maximum share of grants-in-kindsupport from the central ..overnment was also used.

IV. PROJECT IMPLEMENTATION

A. Responsibilities

4.1 Central Agencies. Coordinationand guidance for the project would be provided by The Urban DevelopmentCoordination Team (TKPP, composed of director-generallevel officials),with the assistanceof the IUIDP ImplementationManagement Group (IMG, composed of directorate-chieflevel officials) and its UNCHS-executedIUIDP ImplementationSupport Project (INS/89/014). BAPPENAS chairs TKPP and IMG, and is responsiblefor daily management of INS/89/014. Key members of TKPP and IMG are MPW, MHA and MOF.

4.2 Overall responsibilityfor technical supervisionand management of the proposed project in the central governmentwould be assumed by DGCK (MPW), which would take the lead role in managementof componentsand subcomponents - 23 -

under its own specific responsibility(as would DGBM) 10/ and in ensuring (through TKPP and IMG) that other agencies at all levels perform their own roles adequately. DGCK would be assisted in carrying out this responsibility by the IMG-based INS/89/014 Project and by the DGCK-based Central Project Management Office (CPMO) and Central Project Finance Office (CPFO). Established under earlier urban projects financed by the Bank and other donors, the CPMO would be responsible for monitoring all program and subproject implementationand for arranging most technical assistance and training. The CPFO, similarly,was establishedunder past projects and would be responsible for oversight of all project accounting and auditing and for monitoring of Loan disbursement.

4.3 Regional Agencies. Provincial governmentsof Sulawesi would have direct implementationresponsibility for subprojects financed from INPRES I and APBD I funds. The provincial planning agencies (BAPPEDA I) would assist local governments in preparation of funding requests, and monitor and evaluate overall progress of project implementationin local governments. The project in Irian Jaya will be managed by a Project Management Unit (PMU) under PPSAB (the central governmentwater supply project implementationagency under DGCK).

4.4 Local Agencies in Sulawesi. Coordinationand guidance would be provided by BAPPEDA II. reporting to the bupati for kabupaten districts or walikota for kotamadya cities. Project Management Offices (PMOs) would be established in local governmentsunder BAPPEDA II and headed by a senior BAPPEDA II officer. Project Finance Offices (PFOs) would also be established in each local government,usually in associationwith the Finance Division. Each PMO and PFO would include a local consultant shared with neighboring local governmentsand could include seconded regular staff of the concerned local agencies (DISPENDA II, Bagian Keuangan II, etc). Most APBD II project managers (PIMPROS)would be local Dinas PU (DPUK) staff.

4.5 Local Agencies in Irian Jaya. Project implementationunits in the eight cities would be formed from water company and PPSAB staff and would report to the PMU in the PPSAB office.

4.6 Summary. Implementationarrangements are summarized in Table 4 below. The responsibilitiesfor implementingcomponents and subcomponentsof the proposed project are in general assigned to different agencies and levels of government according to current GOI policies and practices, which provide for increasing local participation. No new structural entities would be required, though several would be strengthenedunder the project. Key staff to the central and local Project Management, Implementationand Finance Offices and Units were appointed at the beginning of FY 92. A more detailed description of responsibilitiesby project component is provided in Annex 4.

10/ DGCK and DGBM would be responsiblefor direct implementationof central government infrastructureinvestments in addition to being responsible for oversight and supervisionof all infrastructureexpenditures, including that implementedby the regional governments. - 24 -

Confirmation of implementation responsibilities of participating agencies was obtained at negotiations.

Table 4: IMPLEMENTATIONRESPONSIBILITIES

Central Government Local Government MPW MOF MHA PDAM/ TKPP DGCKA DCGM PUOD A OAPPEDA DPUP PPSA8 BAPPEDA PFO DPUK BPAM Responsibility A IMG DGBM DOB BANGDA TK I (PMU) TK II (PMO)

Overall Coord. and Guidance X Overall Tech. Supervision and Management X Overall Project Monitoring and Reporting X Overall FinancialMgt. (SpecialAccount and onlending) X Overall Institutionand and Human Resource Dev't X Project CompletionReport X X X X X X SulawesiCom onent Tmplemntation of infrastructureinvestments X X X Vajor ConsultantSelection and ICB Procuremnt X X SpecialisodSupport (tech, financialA training) X ExpenditurePrograms and Annual Budgets X X X Coordinationand Supervision X X X Procuroment of Goods, Works and Local Consultants X X X X Supervision,Certification A Progress Reporting X X X Oisbursementand reimbursementrequests X X X Project and annual accounts financial progress reporting X X X

Irian Jaxa Component WatershedManangment X X BPAM - PDAM Conversion X X X X Major Consult.Selection A IC8 Procurement X Implement.Mgt. A Coord./Supportto PIUs X Packaged LCB Goods Procurement X Project Implementation, Procuremnt of Works A Local Consultants X Supervisionof Works, Certifi- cation and Progress Reports X X Budget and Annual Accounts X X Disbursementand reimburosmnt requests X X X - 25 -

B. Project ImplementationAgreements

4.7 While all authorities required for successful implementationof the proposed project are already held by existing structural agencies and each level of government, Project ImplementationAgreements (PIAs) were prepared and will be signed for each of the nine cities in Sulawesi to confirm essential understandingsand commitmentsbased upon preparation documentation. The PIAs have five attachments:

- Attachment I presents the multi-year project and the financial plan;

- Attachment II lists the specific subprojectsto be implemented;

- Attachment III describes the identified revenue improvementactions and the local government commitment to implement the revenue administrationreform system (MAPATDA);

- Attachment IV describes institutionaldevelopment actions in water enterprises and local governmentsand the commitment to implement the new O&M management system (POMMS);

- Attachment V lists actions and procedures to be followed during implementationin order to ensure that the project has a positive environmental impact.

PIAs specify that substantial changes in the local government expenditure programs (revisionof subprojectscosting more than US$1.1 million equivalent) will be made with prior Bank consultation. PIAs for the nine local governmentswere finalized at negotiations. PIAs acceptable to the Bank would be signed as a condition of disbursementfor the concerned local governments.

C. ImplementationSchedule

4.8 Project implementationis expected to commence in July, 1991, and would be completed over a five year period. The proposed disbursementperiod of five and a half years is shorter than the disbursementprofile for the urban sector in Indonesia, and is adopted for the following reasons. The proposed loan includes no new or complex kinds of sub,rojectsand is not appreciably larger in real terms than programs that have already been implemented in the same provinces. The technical teams at the local level which will be responsible for implementationwere fully involved during the preparation phase. Land acquisition recquirementsare minor and unlikely to cause delays. There is no national level technical assistance in the project which in the past tended to lengthen the loan disbursementperiod. Also, while earlier it was standard practice in Indonesia to prepare detailed design after loan effectiveness,under this project detailed designs and bidding documents for the first year subprojectswill be completed before loan effectivenesswith funding from the Japanese Grant Facility. The implementationschedule is attached as Annex 4A. - 26 -

D. Procurement

4.9 Civil Works. The estimated total value of civil works to be procured for this project is about $96 million equivalent including contingencies. Contracts will be spread over 17 project towns in Sulawesi and Irian Jaya, covering up to seven subsectorsof urban infrastructureand spanning over a five-year implementationperiod. The resulting, relatively minor works are not suitable for packaging into contracts larger than about $1 million equivalent. Approximately800 separate contracts are expected to be awarded ranging in value from about $25,000 to $900,000. These contracts are unlikely to be of interest to large, internationalcontractors; local competitivebidding (LCB) procedures acceptable to the Bank would be used for procurement. Acceptable LCB procedures have been developed and applied during the implementationof the Urban V (Ln. 2408-IND) in Ujung Pandang and local contractorshave proven to be capable of carrying out the works. Approximately $2.3 million equivalent worth of civil works would be executed by force account (direct labor) mainly using water enterprise staff for network rehabilitationand installationof service connections.

4.10 Goods. Approximately $36 million equivalentworth of materials and equipmentwould be procured for this project. To the extent possible, the procurement of goods would be grouped into packages larger than $200,000 to be suitable for internationalcompetitive bidding (ICB). Pipes and mechanical and electrical equipment for water supply systems and facilities,about $19 million equivalent,would be procured using ICB procedures in accordance with Bank guidelines. Local suppliers in Indonesia are expected to compete for ICB contracts and, in bid comparisonwith fureign bidders, will be granted a margin of preference equal to 15 percent of the CIF price of imported goods or the actual custom duties and import taxes, whichever is less. Supply contracts for various materials and equipment valued at less than $200,000 equivalent would be awarded through LCB procedures acceptable to the Bank up to an aggregate limit of $12.7 million. Miscellaneousminor goods costing less than $50,000 per contract and up to an aggregate limit of $700,000 would be procured through local or internationalshopping.

4.11 Procurement of consultants services and technical assistance would be carried out in accordancewith the Guidelines for the Use of Consultants by World Bank Borrowers.

4.12 ProcurementReview. Bidding documents and bid awards for all civil works contracts larger than $0.5 million and for all goods supply contracts larger than $200,000 equivalent (representingabout 60 percent of the total value of procurement)would be subject to prior review by the Bank. This review limit is thought to be appropriatebecause there are numerous groups of contracts of similar nature. The first set of documents for each type of procurement (e.g., road works, drainage construction,pipe supply, etc.) will be reviewed by the Bank. The balance of contracts would be subject to selectivepost-review by Bank staff. The procurement arrangementsare summarized in Table 5. Details of the proposed contract packaging are given in Annex 4C. - 27 -

Table 5: PROCUREMENTARRANGEMENTS (all amounts in $ million)

Procurement Procedure /a Expenditure Category ICB LCB Other lb N.A./c Total

Civil works - 74.1 2.3 19.8 96.2 (55.4) (1.1) (0.0) (56.5)

Goods /d 19.2 15.7 0.7 - 35.6 (15.8) (12.0) (0.5) (28.3)

Consulting services, technical - - 22.0 0.7 22.7 assistance and training (15.2) (0.0) (15.2)

Land, taxes and duties - - - 14.4 14.4 (0.0) (0.0)

Total 19.2 89.8 25.0 34.9 168.9 (15.8) (67.4) (16.8) (0.0) (100.0)

/a Figures in parenthesesare the amounts financed from Bank loan. /b Includes force account (direct laboc) work, local/internationalshopping, selection of consultants following Bank guidelines and repayment of PPF advance. /c Includes expenditures for O&M activities and $0.7 million TA cofinanced by the Japanese Grant Facility. Id Includes $2.5 million in respect of vehicle purchases against which IBRD will not disburse.

E. Disbursement

4.13 Proceeds of the loan which would finance about 59.2 percent of the total project cost, would be disbursed as follows:

(a) under DLA funded expendituresof local governmentsand their water enterprises 90 percent of expenditures;

(b) under central government (APBN and INPRES) funded expenditures (i) 85 percent of expendituresfor civil works by contract; (ii) 60 percent of expendituresfor civil works under force account (water system rehabilitationand service connections)on the basis of fixed unit rates for these works; (iii) 100 percent of foreign (CIF) costs of directly imported goods, 100 percent of ex-factory costs (net of taxes) of locally manufacturedgoods and 65 percent of the costs of all other locally procured goods; (iv) 100 percent of net-of-tax expendituresfor consultancy services. - 28 -

No disbursementswould be made for land acquisition,project overheads, operation and maintenance.

4.14 Direct payments. In appropriate circumstancescontractors requiring payment in foreign currency can be paid through ,BRD direct payment procedures. Such payments would be made on the application of implementing agencies against contracts involving foreign currency paymenitsand are subject to a minimum of $50,000 equivalent per application.

4.15 Special Account. Except in the case where paymentb are made through direct payment procedures (see above), the IBRD loan proceeds would be disbursed through a Special Account established by MOF's DG Budget at Bank Indonesia (BI). This Special Account would be maintained in US dollars with an initial deposit of $3 million from IBRD equal to anticipated ave7.ge disbursements over a four month period. Upon request by GOI, replenishmentof the Special Account would be made quarterly or when the balance reaches 50 percent of the initial deposit amount, whichever occurs earlier. Drawings from t1 e Special Account would directly meet contract payments under 4.13. (b) above. Disbursementsfor subloans to local governments and enterpriseswould be made through an account of MOF's DG Monetary Affairs (DGM) in Bank Indonesia, the Rekening PembangunanDaerah, which has already financed a number of domestic loans and has access to sufficient domestically-sourced funds to prefinance a tranche of loan advances to be deposited with designated local banks for use by the borrowers (local governments and enterprises)for making eligible payments on subprojects. Through the Special Account, reimbursementwould be made for the advances on the basis of appropriate documentation for actual payments made by local borrowers from the advances.

4.16 Disbursements for civil works contracts and force account valued less than $500,000 equivalent and goods supply contracts with a value of less than $200,000 equivalent would be on the basis of Statements of Expenditures (SOEs). Detailed supporting documentationwould be re>tainedby MOF's Directoratc of Budget Administration(TUA) and implementingagencies, and be made available for review by IBRD on request. All other disbursements for civil works would be made on the basis of supporting documentation (a) payment orders issued by the State Treasury offices or by local banks administering projects; (b) certificatesof work performance issued by implementing agencies; and (c) "No Objection" letter from IBRD regarding the award of the contract. Documentation in support of contracts requiring direct payments would be sent to IBRD. The disbursementschedule is attached in Annex 4D.

4.17 Retroactive financing. Retroactive financing of not more than $1 million (one percent of the Loan amount) would be provided for financing of expenditures for works, goods and services incurred after March 31, 1991 (the beginning of GOI's 1991/92 fiscal year). In order to meet eligibility criteria for disbursementunder retroactive finarcing, implementingagencies would be required to conform to Bank procurementguidelines and to maintain adequate records and accounts. - 29 -

F. Project Accounts and Audits

4.18 Arrangementswould be required: (a) to prepare regular consolidated statementsof expenditureby financing source for the whole project (project memorandum accounts) as a basis for financialmonitoring and for financial audits; and (b) to collect documentationand prepare reimbursement applications.

4.19 At the local level in Sulawesi, Project Finance Offices (PFOs) will be set up which will maintain complete and accurate records of all project related expendituresfinanced by all sources of funds for all project components including those of the water enterprises. These will be submitted annually for audit by the State Audit Board (BPKP) oi each province.

4.20 At the central level, the Central Project Finance Office (CPFO) will prepare project accounts of all components implementeddirectly by the central agencies, includingall water supply projects in Irian Jaya. CPFO will also be responsible for consolidatingquarterly project accounts from the PFOs and submittingthem annually for consolidatedaudit purposes by the BPKP Central Office. CPFO will also coordinate statements-of-expenditure(SOE) and Special Account audits with the DirectorateGeneral for the Budget, Bank Indonesia and the State Audit Boards's Central Office. The combined audit report will be submitted to the Bank for review no later than nine months after the end of GOI's fiscal year. Assurances and confirmationof accounting and auditing arrangementswere obtained at negotiations.

G. Project Reporting,Monitoring and Bank Supervision

4.21 The Central Project Management Office (CPMO) would be responsible for preparationof quarterly progress reports covering all project components implemented,including institutionaldevelopment and municipal management improvement. These qaarterly reports would include sunmaries of progress at the local level prepared by the local Project ManagementOffices (PMOs) in Sulawesi, and by the Project ManagementUnit (PMU) in Irian Jaya 411.A submitted to DGCK/CPMO not later than one month following completion of the quarter concerned. CPMO would submit the overall progress report to TKPP, BAPPENAS, MHA, MOF, MPW and the Bank not later than two months following completion of the quarter concerned. In addition, annual progress reports would cover (a) conformity of annual budget allocationwith the expenditureprograms the project is based on; (b) conformityof actual expenditures (includingO&M) with budget allocations;(c) environmentalmanagement plan implementationand results of environmentalmonitoring; (d) achievementof water enterprise and local government financial and revenue improvementtargets. These reperts would form the basis for monitoring of progress. Upon completionof the project, a Project Completion Report will be prepared by CPMO for submission to GOI and the Bank. Categories of key implementationand reporting indicators and responsibilitiesfor their reporting are summarized in Annex 4E. Assarances and confirmationof reporting and monitoring arrangementswere obtained at negotiations.

4.22 Bank SupervisionPlan. In view of the project's scope and location, it would be prudent to plan on an intensive level of supervision of about 20 - 30 -

staff weeks per year for the first two years of project implementationand about 15 staff weeks per year after that. Supervisionmissions would be scheduled on a semi-annualbasis, one in mid-year and the other around November. Only the November mission would include extensive field visits. The mid-year missions would consist of a municipal engineer, a water supply engineer and a financial analyst/economist,the November mission would also include an environmentalist. The mid-year 1994 mission woultdmost likely be designated as a mid-term review of the project that would, in addition to carrying out normal supervisiontasks, have the primary objective of working with GOI to formulate a project completion plan. Detailed supervisionplan can be found in Annex 4F.

H. Operations and Maintenance

4.23 The project includes O&Min the non-water supply sub-sectors.O&M will be the responsibilityof local governments. Expendituresare clearly distinguishedbetween current O&M(e.g., level of current expenditure for O&H of existing facilities and services in the subsector) and incrementalO&M defined as the agreed additional expendituresto (a) improve O&M of existtng facilities or services, and (b) initiate necessary O&M for new and rehabilitatedinfrastructure and services developed during the implementation period of the proposed project. These additional O&M expenditures,with the associated local capacities to execute improved O&M, represent one of the most important project implementationtargets. Assistance will be provided under the Loan to install in all local governmentsa simplified version of the Performance-basedOperations and MaintenanceManagement System (POMMS), developed for large cities under Urban V and USL, and to strengthen the capacity of the existing PMDUs (createdwith USL assistance)and to set up a new PMDU in Irian Jaya to advise and assist local water enterprises to improve O&M performance in that subsector. O&M expenditureswould also be monitored by CPMO for review by semi-annualBank supervisionmissions and detailed physical assessment in the mid-term review. Detailed O&M arrangementsfor Sulawesi are described in Annex 4G.

V. FINANCIALASPECTS

A. Local Governments

5.1 Central Grant Dependency. Most Indonesian local governments, including all the nine in Sulawesi included in the project, are dependent on central grants for the bulk of their revenues. Even in the largest project city, Ujung Pandang, central routine and developmentgrants in recent years represented two third of total revenues. Grant dependency is high both for developmentexpenditures and for financing routine administration,operational and mairtenance needs (see Annex 9). It is expected that, at least in the next five to six years, local governmentswill continue to receive substantial grant funding from the central government.

5.2 Non-grant Revenues. Local governments'main non-grant revenue sources fall into three categories: local government taxes; local service - 31 -

charges; and assigned central government revenue, principally the PBB (propertytax). In most of the local governmentshalf of non-grant revenues comes from service charges. In Ujung Pandang, Manado and Gorontalo, local taxes are the second most important revenue source, representingapproximately 3w percent of total non-grant revenues. Property tax receipts are more important and represent 30 to 40 percenv of revenues in the other citie., but only 10 to 20 percent in Ujung Pandang, Manado and Gorontalo.

5.3 Growth in non-grant revenue has been fairly good overall in recent years. Analysis over the 1983/84 to 1989/90 period indicates an overall average growth rate of about 15 to 20 percent annually in nominal terms or about 8 to 13 percent in real terms (see Annex 9). Within these aggregated figures growth rates for the property tax were generally higher and for local taxes lower. There were surprisinglylittle variations from local government to local government. Future non-grant revenue forecasts prepared under the project predict overall average real growth similar to the one in the recent past

5.4 Borrowing. Local governments,apart from their older enterprises, have not on the whole made great use of borrowing in the financing of capital projects. Five have borrowed only for market constructionunder the central government'sheavily subsidized INPRES Pasar program, which has been disbanded. The only exception is Ujung Pandang, which has borrowed substantialsums in recent years under the Urban III and V projects with interest rates of 7.25 and 10.25 percent, respectively,and also from Bank PembangunanDaerah (a government bank for regional development)and the INPRES Pasar program with no interest charged.

5.5 Until recently local governmentswere required to restrict the levels of their borrowing by the "debt service ratio" criterion broadly defined as the ratio of total loan charges payable in a year to total revenues available for development in that year. However, the application of that criterion has been unclear and open to varying interpretations. The maximum permitted ratio was prescribed at 15 percent, which, on the stricter interpretationsof how to define the ratio, was very conservative. Confusion about the former criterion may have been a contributoryfactor in local governmentspast reluctance to borrow in any substantialway. GO' has now decided to replace it with one based on a more closely defined minimum "debt service coverage rat4 i" (DSCR). This has been stipulated for any given year as:

(projectednon-grant and local revenues for the year in question less projected routine account expenditure on staff, administrationand operat'onal and everyday maintenanceneeds) + (total estimated loan charge obligations arising in that year from currently outstanding loans and future proposed borrowing).

5.6 The minimum value of the DSCR ratio has been set at 1.5 by GOI for borrowing by local governments. Estimates of maximum borrowing capacity for each of the local governments in the project have been prepared by making forward projections of the elements in the above formula for the program period and for a number of years following sufficient to establish a clear - 32 -

trend indicating that the minimum ratio will be safely achieved. The total capacities are small, however, and some local governments have indicated a preference to finance their investmentdirectly. All local governments,with the exception of Kendari, have neverthelessmade commitments to borrow at least smail amounts after consultationwith central and provincial officials. Giveiithe low use of borrowing in the past, the newness of the debt service coverage ratio criterion, and the likelihood that regional governmentswill have to finance developmentexpenditures in a number of sectors not covered by the project from their own resources, the local government proposals can generally be regarded as satisfactory. Assurances and confirmationswere obtained at negotiationsthat local governmentseligible for borrowing under this project will maintain minimum debt service coverage ratios of 1.5.

5.7 Local Revenue Adiinistration. Although annual growth in local revenues has generally been steady, studies undertaken during preparation of the revenue projections provide evidence that current levels of major revenue sources are considerablybelow their real potentials. Deficienciesare often found in local government administrationwhich lead to under-assessmentand under-collectionof tax revenues. The project seeks to address these deficienciesby continuing to support on-going efforts which were initiated under previous Bank loans and to expand the scope of the work as described below.

5.8 Revenue improvementand related institutionalactions prepared during the project preparation phase, and to be refined during project implementation,seek to identify practical steps needed to achieve improvementsin the planning and administrationof local taxes and service charges. Such steps typically include collection of data on the revenue bases includingproper identificationof tax objects and tax subjects, analyses of revenue potentials, review of tariffs, and establishmentof annual revenue targets representinga progressivenarrowing of the gap between performance and identified potentials. As specifiedunder the Project Implementation Agreements, local governmentswill comnit themselves to implementingthese with technical assistance provided under the project. In this connection, the project will provide further support to the reform effort of the local government revenue departments (DISPENDA). The MAPATDA reform program 11/ initiated under Urban V project, was first introducedand tested in six cities, then expanded to 100 other cities, and is now in the process of nationwide implementation. The proposed project would complete the implementationprocess in the nine Sulawesi local governments.

11/ The main highlights of MAPATDA include a reorganizationof the local government revenue department (DISPENDA)to reorient the focus on taxpayer information,an important stage of the tax administration process (e.g., assessment,billing, collaction) in contrast to the existing structurewhere the focus is on the tax type which does not put taxpayer records in one field. The new system will centralize personal record6 for each identified taxpayer and provide a complete assessment of taxpayer's liabilitiesfrom all kinds of taxes. - 33 -

B. Water Enterprises

5.9 There are fourteen water enterprisesunder this project, six in Sulawesi and eight in Irian Jayal2/. Three enterprises in Sulawesi are PDAMs (Manado, Bitung and Palu), but all the others are still BPAMs. The PDAMs are owned and operated by their respective local governments,while the BPAMs are operated on a temporary arrangementunder the Ministry of Public Works. The more mature three Sulawesi BPAMs (Gorontalo,Luwu, Bone) are scheduled to become PDAMs during the current calendar year. The BPAMs in Irian Jaya would become PDAMs during project implementation.

5.10 Financial Performance. All PDAMs and BPAMs are required to prepare annual financial reports which are audited by the State Audit Board (BPKP). Income statements for the past years are presented in Annex 8 (except for the just establishedBPAMs in Wamena and Serui in Irian Jaya). While all enterpriseswere able to cover their O&M expenses (some only in the last year), only six were able to achieve operating surpluses after depreciation. Substantialnet income (after tax) was generated in Manado only. None of the water enterprises has notable experiencewith long term borrowing.

5.11 Water EnterprisesManagement. Key managerial and skilled/technical personnel are lacking, particularlyin the areas of financial accounting, billing and collection, inventory control, O&M and constructionmanagement. The prospects of making improvementthrough recruitmentappear to be bleak, as better job opportunitiesand employment incentives elsewhere make it difficult in most cases for WEs to attract fully qualified staff. Provincial Monitoring and DevelopmentUnits (PMDUs)modeled on the successful experience in East Java were set up in Sulawesi 'o provide technical and managerial services to the PDAMs to help fill these gaps. In Irian Jaya, the same kind of services to the BPAMs are presently provided by PPSAB, the water supply project implementationunit of the provincial office (KANWIL) of MPW. During project implementation,however, the water enterpriseswill be turned over to the local governments (i.e., will become PDAMs) and PPSAB assistance will be phased out. Therefore, under the proposed project, technical assistance will be extended to strengthen the existing PMDU in Sulawesi and to establish a similar PMDU in Irian Jaya. Assurances were obtained during negotiationsthat properly staffed and organized PMDUs for the principal purpose of providing technical and managerial services to PDAMs will be established in Irian Jaya by July 1, 1992.

12/ The Ujung Pandang, Kendari and Pare Pare water enterprises are not included in the project. Ujung Pandang is already implementinga multi- year project financed under a loan from Japan. A fully prepared subproject for PDAM Kendari had to be dropped because the local government decided against borrowing. PDAM Pare Pare has large arrears in the repayment of a loan it received under the Second Water Supply Project. - 34 -

5.12 Financial Projections. Financial projections for each water enterprise have been prepared based on several assumptions,of which the key ones include: (a) existing and new water connections; (b) average consumption per connection based on tariff levels, real income of consumers, price elasticity of -0.2 and income elasticityof 0.6; (c) assumed water tariff rates; (d) increasingwater sales resulting from new connections ar-dreduced unaccounted-for-water(UFW); (e) rates of inflation for local and foreign costs; and (f) a financing plan, investment levels and operating parameters. The projection exercise involved income statements,sources and applications of funds, balance sheets, financingplans, and monitoring indicators. Projected income statements for each enterprise, including real tariff increases ranging from zero to one hundred percent, are provided in Annex 8.

5.13 It is expected that seven water enterprises,six in Sulawesi and one in Irian Jaya, will borrow Rp. 29.7 billion ($lC.l million equivalent)under the proposed project, of which Rp. 26.7 billion would be financed under the Bank loan. Among these, the Jayapura water enterprisewill also receive a grant to finance the rehabilitationof the water supply system. Other enterprises in Irian Jaya, which are not mature enough to borrow, will receive grants only. Assurances were obtained during negotiationsthat:

(a) all PDAMs will maintain a maximum debt-equity ratio of 70/30 and a minimum debt service coverage ratio (DSCR) of 1.3 (the Jayapura enterprise 1.5) on a three-year rolling average during the project implementationperiod;

(b) all water enterprises (includingBPAMs) will maintain revenues which cover at least O&M costs during the first three years of project implamentationand both O&M costs and depreciationafter that;

(c) to meet the above financialperformance criteria, all water enterpriseswill adjust their tariffs, starting with April 1, 1992 and thereafter on January 1, 1994 and January 1, 1996, after reviewing the adequacy of their tariffs and furnishing a copy of these reviews to the Bank.

VI. PROJECT JUSTIFICATIONAND RISKS

A. Project Beneficiariesand Poverty Impact

6.1 In Sulawesi, the whole urban population in the project cities (about 1.5 million people) would benefit from the urban road and drainage improvement component of the project. About 250,000 people would directly benefit from kampung improvements. About 900,000 people live in those areas which would be served by the solid waste management component. About 157,000 people would receive house connections to the water supply systems and 34,000 would be served by the newly constructed430 public water taps. In addition, 240,000 already connected people would benefit from improved service (24 hour supply and better water quality). In Irian Jaya, about 133,000 people would receive house connectionsand 56,000 would be served by 560 public taps. The 150,000 - 35 - already connected people would also benefit from improved water supply service (currentlynone of the systems in Irian Jaya operate on a 24 hour basis).

6.2 According to the Indonesia Poverty Assessment and Strategy Report (ReportNo. 8034-IND), 28.4 percent of the urban population in the Eastern Islands of Indonesia lived in poverty in 1987. Drainage, kampung improvement and public water tap constructionunder the proposed project would be especially beneficial for this populatior in Sulawesi and Irian Jaya. Experience has shown that it is mainly the urban poor who are affected by frequent flooding, because they must settle in the most marginal, low-lying areas or along drains and river banks that often overflow. These services would be provided under the proposed project as freestandingdrainage subprojectsand as part of the nation-wide kampung improvementprogram (KIP) for upgrading informal,unplanned and unserviced urban settlements, particularlywith low-income residents. Public taps would provide safe water that is readily accessible to poor families lacking house connections and living in water-stressedareas. Easily accessible, low-cost drinking water can substantiallyimprove the life of these people.

6.3 The proposed project strengthenslocal participationin the project cycle. Beneficiaryhouseholds and communitiesare involved in the identification,preparation and implementationof neighborhood (kampung)and market improvementprograms (KIP and MIIP). Similar local involvement continues for solid waste management and sanitation programs, which also emphasize household financing and the use of community groups. Water supply, drainage and road investmentprograms emphasize increasing participationof community groups in program and subproject planning, and local government responsibilityfor O&M are stressed.

6.4 Large numbers of women will benefit from the project. Particularly improved access to and quality of water supply and better environmental sanitation resulting from the solid waste management, low-cost sanitation and drainage programs will provide importantbenefits to several thousands of women and children. Women play an important role in those community groups and organizations,which will participate in the implementationof low-cost sanitation and kampung improvementprograms and other investmentsdirectly affecting their neighborhoods.

B. Economic Analysis

6.5 Since the project covers seven sectors of urban infrastructure services (water supply, drainage,human waste management, solid waste management, road improvement,kampung improvement,marketplace infrastructure improvement)and a large number of urbar areas, it was necessary to develop a structured approach to economic analysir. Subprojectswere classified according to investment costs, i.e. small (less than Rp 400 million in constant 1990 prices), medium (Rp 400 million to Rp 2 billion) and large (over Rp 2 billion). A subprojectwas defined as a logical unit of investment in one of the subsectorswhich must be implementedas one activity to obtain the planned benefits. Economic viability of small subprojects,provided that these adhere to agreed planning and design criteria,was presumed. Medium size subprojectswere subject to a simplified economic analysis. Large - 36 -

subprojectshad to go through a more detailed analysis and the applied assumptions and methodologywas subject to a Bank review on a case by case basis.

6.6 Economic rate of return (ERR) or net present value (NPV) calculationswere required for medium and large subprojects in the water supply, road and drainage sectors. Quantificationof economic benefits was based on (a) consumers'willingness to pay for water supply (the methodology is described in Annex 7); (b) expected savings in vehicle operation costs and time savings for road improvements;and (c) either avoided flood damage or increase in land values plus reduction in the expected level of road maintenance costs for drainage improvements. An ERR of 10 percent was used as the cut-off rate.

6.7 Economic benefit of human and solid waste management and kampung improvementsubprojects was not quantified. Both the human and solid waste management subprojectsrepresent least cost solutions to the problem of providing a basic level of service that was adapted to local needs and traditions. Economic viability of similar kampung improvementactivities was demonstratedunder a series of World Bank assisted projects in Indonesia.

6.8 During preparation,all identified subprojectswere analyzed ac- cording to these criteria. Some water supply subprojectsproved to be non- economic and were substantiallymodified or eliminated from the project. ERRs or NPVs of identified road and drainage improvementswere calculated in each kabupaten and, within the constraintsset by fund availabilityand local government implementationcapacity, the most attractive ones were proposed for implementation. A large majority of the subprojectsfell into the 10 to 15 percent ERR range. Due to very high traffic densities, several road improvementshad an estimated ERR of 25 percent or more.

C. EnvironmentalImpact

6.9 The project is expected to have a positive overall impact on the environment. It would reduce the noni-sanitarydisposal of human and solid waste and decrease flooding. Environmentalscreening and preliminary environmentalassessment have been carried out in accordancewith GOI procedures,which are satisfactoryto the Bank. More detailed environmental assessments (calledANDALs in Indonesia) were recommendedfor a few subprojectsand those will be carried out during April - June 1991, financed from the Japanese grant. The potential negative impacts are the following: (a) overabstractionof river water for the piped systems causing water resource utilization conflicts; (b) air and water pollution at the final solid and human waste disposal sites; (c) soil pollution caused by sediments removed from drains; (d) resettlementin Ujung Pandang, Sulawesi, due to widening of a road (there is no resettlementexpected in Irian Jaya).

6.10 Environmentalmanagement and monitoring plans (RKLs and RPLs, respectively)have been prepared which prescribe strategiesand measures to minimize the negative environmentalimpacts during implementation. The detailed design revisions, also financed from the Japanese Grant, will ensure that mitigatory measures are included in the final design. The local - 37 -

government in Ujung Pandang prepared a resettlementplan which was reviewed by the Bank during negotiationsand was found acceptable. Local governments would agree to follow the RKLs by signing the Project Implementation Agreements (PIAs). AttachmentV of the PIAs lists the environmentally sensitive subprojects for each local governmentand, on the basis of the RKL/RPL, specifies actions to be taken during implementation. The PIAs would be legally binding documents and the Bank would have the option to suspend disbursementto a particular local government if those actions were not taken. Physical contingenciesinclude funds available for additionalmitigation works if found necessary through environmentalmontoring. As described among the monitoring arrangements,CPMO would prepar nnually a report on the complianceof actual implementationwith the RKLs (see para. 4.20).

6.'1 The Irian Jaya water supply subprojectswould rely on surface and groundwater sources which are of very good quality. Some sources would be abstracted for the first time while others have been used for several years. Uncontrolled developmentin the water catchment area of these sources could cause deteriorationof water quality and reduction of natural water discharge. Therefore control needs to be exercised over land use (urban, industrial, agriculturaldevelopment), illegal activities (logging and slash-and-burn farming) and infrastructuredevelopment in the catchment areas. In order to achieve effective administration,planning and protection of water catchments, a decree by the Governor of Irian Jaya (SK Governor) was issued which defines: (a) responsibilitiesof central, provincialand local agencies; (b) organisationof watershed management committees to be formed in each of the eight kabupatens; (c) specific watershed managementactivities to form the basis of a management plan; (d) identificationof the area to be included in the watershed mnanagementactivities (see Annex 10 for further details).

D. Risks

6.12 The chief risk is that the pace of institutionaldevelopment is hard to predict and may not be substantialduring the period of project implementation. This risk is difficult to avoid, since, in view of the absorptivecapacity of local governments in East Indonesia, the institutional capacity building effort under the project has to be limited. However, the priority given to implementationassistance and O&M capacity building and to the availabilityof adequate resources to finance O&M expenses should ensure that the flow of benefits from the implementedphysical investmentswill be sustained.

VII. AGREEMENTS REACHED AND RECOMMENDATION

7.1 During negotiations,assurances and confirmationswere obtained from GOI on the following principal points:

(a) timely provision of counterpart funds (para. 3.8);

(b) BPAM/PDAM conversion schedule (para. 3.13); - 38 -

(c) project implementationresponsibilities of participatingagencies (para. 4.6)

(d) establishmentand maintenance of arrangementsfor: (i) procurement (paras. 4.9 to 4.12); (i') accounts and audits (paras. 4.18 to 4.20); and (iii) reporting and monitoring (para. 4.21);

(e) local governments eligible for borrowing under the Bank loan will maintain minimum debt service coverage ratios of 1.5 (para. 5.6);

(f) staffing and organizationof PHDUs (para. 5.11);

(g) PDAM debt-equity ratio, debt service coverage (para. 5.13); and

(h) water enterprise OE& and depreciationcoverage (para. 5.13).

7.2 The followingwill be conditions of disbursementfor each local government:

(a) signing of PIA acceptable to the Bank for disbursementof central government contributions(para. 4.7); and

(b) signing of a domestic lending arrangementacceptable to the Bank for disbursementof on-lent funds (para. 3.10).

Recommendation

7.3 Subject to the above agreements and conditions, the proposed project is suitable for a Bank Loan of $100 million to the Republic of Indonesia for 20 years, including five years grace at the Bank's standard variable interest rate. IMNDONESIA IMDONESIA ~~~~~~PageANNEX I Iof 2 SlAWESI-I RrAN .JAYA IIRBAN 1WVFT.OPMF.NT PROJFCT

souNsI - COS?m ansup hSIscl1ilio. lapiu

h& Cuot iNKial lear il12!12 IlIKial Iter 1112/93 Iioa iol Year 1113/9H !iwclal Ter I99419S 7imiatl I 1990 ow Iw # To"alProjt Pries I Catet pricecost Corretprite coat CBrreatprice cot Correatprice coot Cemt pricecost owut prirecut Lacalfac7ip Total Locallarmip total localSoreip Tota Loal 0rein Total Lcal hnipi otal Lol Fesip Tstal Lacl 1g toLkl I miwnsonu scm I Lo kAcimitij I I 0 01 0 1 00 o1l I 0.0 0.0 0. 00 0 I0 l 01 .00 0.6 I I 1 0* 2 Ciul lark 6.8 36 10H4 10 0o. 1-6 2 1 1 2 3.2 01 3Iquiwet AOsteriala 4.0 2.3 652 1.3 01. 2.1 0.1 *.4 1.1 911 S.2 14.2 l. 11*Ie2 3.3 3.5 e0 I s 1.01.1 12 I.2 0.e 0.71 0 1.0 01 06 0.0 -La 6 5 0.1 0.1 02 41 4.1 31. 10. I.6 0.9 2.5 4i. 2 7 1.l 1.1 0.1 2.5 0.9 0.S 14 0.2 1.1 0.3 1*1 Sl 1.1 Is barn 03 0.1 01.4 0.1 0.0 0.1 0.1 0.0 0.1 0.1 0.0 #.I 0.0 0.0 0.1 0.0 0.0 0.0 -1 0.2 0.1 S1-total Iulomtt Iuoitwoa 14.2 11.1 25.1 2.1 3.0 5.0 7.0 5.0 12.0 5.7 4.0 1.1 2.3 1.0 4.3 0.8 1.1 2.0 18.1 I1.1 33.0 S. U at ~oootLeve 0.0 0.0 6.0 0.0 01.0 0.0 0.0 0.01 0.0 0.0 0.0 0.0 I IcummatalU I.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 00 - 0.. 0.0 0.0 I I .0 0.0 0.0 0.0 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0. 06total Opeaos I Uiaitomo 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 I00 0.0 0.0 0.0 0.0 01.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 fotl War mplplatt 14.2 If a . I 2.1 3.0 5.0 7.0 5.0 12.0 S.? 4.0 9.7 2. 0.0 4.3 0.1 1.1 2.0 3.1 151 33.0 aiam L.Lit"ioitim 0.1 0.0 0.1 7.1 0.0 2.1 1.5 0.0 1.5 01. 0.0 1.1 1.1 0.0 1.1 0.1 0. 0.1 0.0 0.0 0.0 2 civil 66.2 31.6 11.0 Ia.7 10. 22.8 11.5 9.0 3 Opig.aota bteriala 27.4 16.6 1.5 2C.1 IS_.I .8 23n. IS.$ 1.3 24.1 1.A 6.4 1200 05 0.1 1.1 1.6 0.0 0.0 0.0 #.I 1.2 1.3 0. 0 0.0 0.0 0.0 0.1 0.7 0.0 0.0 0.0 .1 I .1 2 0 -LO 4.7 2.5 7.2 1.5 1.0 2.3 1.5 0.8 2.3 1.0 0.6 0.C 0.6 0.0 2.0 0.1 0.0 1.5 5 6 3 1 0 I Im19-Ii 2, 1.3 1.6 103 0.0 0.4 0.7 0.4 1.0 0.0 0.3 0.5 0.5 0.3 0 .1 0 .3 01 20 15 00 " 0.C 3.?7 00S 2.1 1.1 3.3 I.7 1.1 2.? 1.7 1.0 2.4 0.9 01- 1.5 I1 1 20 I 2 44 12 wtotl Iook"t h llwa 6.3 44.6 13;. 21.5 0.2 31.6 23.0 13.2 S.0 21.51 il.3 32.0 I1. 1.17 29.0 I. 11.2 327 14 0 Ws ml I S. USat "tut WWl 0.6 4.6 IS.2 2.3 1.0 3.3 2.4 1.1 3.4 0 lcnrumal 1 2.2 1.0 3.2 2.3 1.1 3.4 2.4 1.1 I.S 11.6 53 1s !0.01 .0 M6 1.1 0.6 1.11 1. 10 2t.7 2.4 1.4 3.0 3.1 1.0 4.1 3.1 2.2 s1. 12. 1.0 19.0 6l-totaloportma I hirtiac 21.i 1.0 31.1 3.0 I.C 5. 4.1 2.0 1 4.1 2.4 7.1 1.4 2.9 0.3 6.0 3.3 1.4 23.1 12.2 5.1 Wtotl Otor Setor 10.7 -11 164.17 24.1 11.1 366 27.0n 15.2 422 2C.1 13.1 J5.1 24.5 13.1 J.1 25.0 1.S i1 1.2 U11 116.1 lOIILM1 124.0 6S.1 10.1 27. 14.1 42.5 34.0 20.2 542 31.1 11.7 4.6 0.0 IS 4.4 2a.4 15.4 12.1 1.5 3.5 23.7 C.11ICIL AIST110 16.1 10.6 26.0 6.5 3.9 10.4 5.3 3.4 1.1 3.0 1.1 4.1 2.0 1.3 3.3 2.7 1.0 4.5 19.6 12.3 31.9 1011.IcoM 1 16.1 76.4 216.5 341.2 1.6 2.9 J5.4 23.6 3.0 34.9 19.4 1.S 1.5 16.9 47 21.1 17.4 6.S tt.5 K.1 202.0

ilcala tilueies 2.1 1.3 - Peacecostiygeais 3.4 2.6 1.6 4.2 2.2 1.2 3.4 1.6 0.9 2.S 1.S 0.1 ?.3 10. 5.9 15.9 0.0 0.7 1.6 2.1 2.0 41t 2.8 2.6 5.4 3.3 3.0 6.2 4.0 3.7 1.1 U3.1 12.0 25 I # 14-4t 04:33u L pricesof Oct-10 INDONESIA ANNEX 1 SULAWFESl-TRIAN jAYA URBAN DEVELIOPME:NT PROJECT Page 2 of 2 IIIU JIll C0 eSTIoTliSIDRlSIlC (lillior hlpist

hep Cot lincial Tear1991/92 liuKill fear 1992/93 luaacll TIerlciel 1993/ feur 14 FUImial yew I Is ices I Crrt pricecost Carrestpric coat lox1W TO*lh t Comretprice cut reratprice cast ere"t pricecut bmdt pricecat locSl Fortip Total local oretigo Total lacFoelp total Woal ereipgl Total Local amip Totl hee ferig Ta Local hetig Tsul

I LaWkrpimitij C 0 0.0 0.0 1- 0.1 so 0.0 0.0 0.0 00 0.0 0.0 tO OS 00 60 2. Cii!l beta 116 3.6 is1. 4.2 1.3 5.4 49 1.5 I.S 0-0 00 0. 0 O 0.6 3. haiupwutI ateriall_ 3.5 1.1 4.7 256 L. 3.3 1.0 6.3 1.3 11. S.1 21.2 - 11 1564 16.2 0O4 eS 7.5 7U e.4 7.5 7.U 0.2 4.2 4.4 0.I 2. 2.1 0.0 6.0 01 22.2 -to 1.9 2.6 4.4 01 12 2.0 01 13 22 0.5 1- 23.3 4- iltal aw Swrwlsi llwriu4 .7 1.2 2 6.3 0t 0.I Li2 0.3 2.s 3.1 0.3 4 ai i S l a.7 e.2 0.9 0.2 0.1 0.3 9.2 LI1 0.3 0.1 0.0 0.2 0.1 0.0 6.1 0.0 0. 0.6 0.?7 .2 1.0 btotaI lbnmouat lpwidirw 15.0 21. 35.0 5.2 10.1 is.?7 4 105 1U.I 4.4 0.1 N05 2.9 3.2 6.1 1.2 1.4 2.6 2.5 31.2 51. 6. U at earmotLevel 0.0 0.0 0.6 0.0 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 I0 0.0 0.0 0.0 0.0 0.0 0.0 0. 6. lKcreutall 040 0.0 0.0 00I 0.0 0.0 00 00 00I 0.0 0 I0 00 .0 00a 0.0 0.0 0.0 0.0 0.0 . . kb-total ilpentionI blalesace 006 0.0 0.0 #.0 0.0 0.0 0.0 0.0 0.0 0. 0.10 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.01 Tsualaster SeI Sodar 15.0 21.6 3.6 56. 10.1 15.7 6.4 10.6 U.116.0 4.4 10.6 2.0 3.2 6.1 1.2 1.4 2.0 2.5 31.2 SlT . enuelm 1. Lid iquaiia 2. CivilNMa 1.0 0.0 0.0 0 0.0 60 . 0.0 0.0 0.0 0.0 0. 0. 0 0 . 0 0.0 6 0.0 0.0 0 0 0 0.0 3. Ijipwst I lteriala -l0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 01.0 0.0 00 6.* 00 . 0.0 00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0. -10 0.0~~1-001 00 0.0 0.0 0.0 00 0 0 0..0 0 ..0 0 0.0 4. busaidSuosoiale.0ri:I±. 00 00 00 00 *.*6 10. 0.0 0. 0.0 10. 0.0 0.0 0.0 00 00 4.siop ad sl.ffimi e*tb 0.I.I00 00 0.0 . . 0 .0 0.0 0.0 I.0 0.6 I.0 001 - lu1-ve 0.0 0 0.0 I.0 0. 0.0 0.0 0.0 0. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 00 I 00 Wtou Imtant llibm 1.0 0.1 O.C 0.6 1.1 9.6 9.1 0.0D . 1.1 0.0 11 1- #.I te. § c 6- UafMtCartIl 0.0 0.0 00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 00 0.0 0.0 £ lactematalU 0~~~ ~~.000 0.0 0.0 0.0 0.0 0.0 0.0 6 I I 6 C.) 0.0 0.0 0.0 00I 0.0 0.0 0.0 I I. 0.0 0.0 0.0 0I 0.0 I00 ti-tetalpntieaaAhlat.e,egee 0.0 0 0.0- 0.0 0 0 0.0 I0 0.0 00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 00 0.0 0.0 So-ttal OtherSecteca 0.0 0.0 0.0 0.0 0 0 0.0 0 0 00 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10. 00 00 00 00 lOALMLE Wm10 S 21.6 56 5-6 10.1 15.7 4.4t 0.S 16.9 4.4 60 10.5 2.1 3.2 6.1 1.2 1.4 2.6 1.6 3J.2 5II C TIUlOlLL3A555T 4.9 314 03 1.9 1.3 3.2 2.0 1.4 3.3 0.9 0s 1.4 107 0.6 1.1 1.1 104 1.0 6.0 4.1 10.0 MILLC l iL 19Dl61 25.0 44.9 7.5 114 1.9 0.4 11.6 20.2 5.2 4.61 . . 3.7 7.2 1.1 1.1 3.6 20. 25.3 U InKiod 11: - aIcalcostliuaas 0.7 1.2 2.0 0.0 1.2 2e. 0.6 0.7 1.2 0.3 Pnicecatiboies 0.4 0.0 1.2 0.3 0.7 01. 0.1 1.3 2.6 36 6.2 7 1.4 2.1 0.6 1.1 1.6 0.6 0.7 1.2 1.3 0.4 0. 2.4 4 . 14-pr4 A141 U pricesf Bet-% ANNEX2 Page 1 of 3

INDONESIA SULAWESI-IRIAN JAYA bIRiAN DEVELOPMENTPROJECT

FiuKing pli Sillie hpiah

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Tobl bclWili Owmt U 222.9 to.. 13.3 2.2 30.6 12.6 1.9 8.6 5.1 25.5 0.3 4.1 43.0 232. 13.6 Fceatop distvhtiss: 100f 7.11 6.01 0.31 13.11 5.4 0.0 3.7 2.4 ------11.1 2.51 21. US.E 1.n u.5 ------_ _

rmt ON1 16.3 4.1 4.3 0.0 0.0 2.2 0.0 0.1 4.3 1.3 0.0 0.0 0.0 16.3 0.0

TotalIKlludlg Ceg IO 243.0 22.1 18.2 2.2 30.6 14.0 1.9 8.1 10.6 26.1 66.3 4.0 43.0 2.1 13.1 Curnmtprie: SIA..- l. IN 13 total Is t!is table iselliu 0.74 B. Japau'. kut 14-hp03:21 ANNEX 2 Page 2 of 3 INDXNESIA

SULAWFSI-IRIAN JAVA URBANDEVELOPMENT PROJECT

liscaiegPlan Billie mpish SimTi Project(------Level 11------(------lpql------el0?Mst … SuUIIS O PAD/PuOuer Private IiPUS lion A AU 1 - ChargesSource. IjO Doeesticbti P I Sl II31I mL MI'_ i 1otal1 e later Sepply 33.3 3.6 7.1 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 2.2 11.? 33.3 19.? hraimge 37.9 3.0 0.0 0.0 2.9 0.9 0.6 2.3 0.0 6.3 21.0 0.0 0.3 37.9 24.2 Solid last. 10.4 0.2 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.6 1.I 0.Q 6.1 10.4 11 Irns Uante 4.3 0.2 0.0 1.0 0.3 0.1 0.0 0.0 0.0 0.3 0.3 0.2 1.5 4.3 2.4 loas 34.1 2.2 0.0 1.2 22.0 7.1 1.2 5.6 0.6 1.8 24.2 1.3 10.9 34.1 57.0 liP 10.7 3.0 0.0 0.0 3.7 1.2 0.0 0.1 0.0 0.7 2.1 0.0 0.0 1071 111p 0.9 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0 9 0 Imeresental0113 19.0 4.5 5.2 0.0 0.0 2.7 0.0 0.0 5.1 1.5 0.0 0.0 0.0 190 oO ' TecbnielAsslutance 31.9 0.6 1.6 0.0 1.6 0.5 0.1 0.4 0.0 6.5 16.3 0.3 3.9 319 I

TotalIxclWdig Current 013: 232.9 16.0 13.9 2.2 30.6 12.6 1.9 8.6 5.7 25.5 U.3 4.8 43.0 232.9 13.3 PerceutagedistriititIO: 100.01 7.11 6.01 0.91 13.11 5.41 0.11 3.71 2.41 10.91 23.51 2.11 1U.5 10.OS 46.9 ImelWes JapaneseCrat $ 0.74. W (milie.) 75.3 Crnent 01o 16.9 4.1 4.3 0.0 0.0 2.2 0.0 0.1 4.1 1.3 0.0 0.0 0.0 16.9 0.0

TotalIKcludiWg Current 0N: 249.8 22.1 18.2 2.2 30.6 14.8 1.9 6.t 10.6 26.3 66.3 4.3 43.0 249. 13.3 (CurrentPrices; U1. 1,645 - - - - 14--- - 14-Apt 10:531 I

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1LJAfO~11dIWAMAdOIAW NVR!fl VWXf WI'JI-I SMYMVfS C JO £ ave VIS34OaNII _ __ __ - 44 -

ANNEX 3 Page 1 of 1S

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

TECHNICAL ASSISTANCE

Following summarizes agreed technical assistance to support the execution of the project. The first package of bridging consultancy, covers both the Irian Jaya and the Sulawesi components and is summarized under A. After that, the Sulawesi TA program is summarized under B followed by the Irian Jaya TA program sammarized under C.

A. BRIDGING CONSULTANCY

PACKAGE I.

OUTLINE TERMS OF REFERENCE

Assignment Title: Bridging Consultancy Services

ImplementingAgency: Ministry of Public Works

Objectives: Ensure further preparation of the project in Sulawesi and Irian Jaya until loan effectiveness

Main Tasks: Support to GOI through Negotiationsand Board presentationof the Project, including coordination of inputs from the local and provincial governments

- Prepare selection of consultants to provide implementationservices for the project;

- Supervise establishment of implementation arrangements prior to loan effec.iveness;

- Prepare detailed design and bidding document of first year sub-projects;

- Prepare PIL and ANDAL studies where required:

- Develop provincial environmentalassessment capacity in Sulawesi and Irian Jaya.

Qualifications required: A team of local and expatriate consultant3 including the following: - team leader (engineer/urbanplanner) - financial experts - environmentalexperts - institutionalexperts - water supply and municipal engineers - 45 -

ANNEX 3 Page 2 of 15

Duration: About 12 months: January - December 1991

Staffinig: Consultancy:about 90 manmonths (60 local, 29 foreign)

Costs: US $ 740,000

Financing of the bridging support would be provided from the Japanese Grant Facility (JGF).

B. TECHNICAL ASSISTANCE - SULAWESI COMPONENT

The main packages of implementationsupport are as follows:

II. Engineering,design and supervisionof all physical subprojects III. Support for RIAP preparation and MAPATDA installation IV. Support for POHKS installation V. PMDU (Water Enterprise) advisory support VI. Advisory services to Bappeda Tk II for project monitoring and evaluation VII. Training identification,design and management VIII.Supportto Batch II and III Local Governments for PJM preparation.

Two main categories can be distinguished. Packages II and VI are engineering/implementationsupport services,while Packages III, IV, V, VII are mainly finAncial and institutionaldevelopment support services.

Two separate groups of censultants,specialized in there respectiveareas, could be appointed to provide the requi'-d services. However, all RISOS activities should be managed by one team lead . Outline TOR, staffmonths requirementsand cost estimates for Packages II to VIII are attached.

Any engineering services needed for sub-projtectsnot financed by RDA and APBN funds will be provided in-house (assistedby local consultantswhere needed) by the agencies concerned and costs therefore have been included in the non-water supply sub-projectcosts as design and supervisionoverheads.

PACKAGE II.

OUTLINE TERMS OF REFERENCE

Assignment Title: Engineering,Design and Supervision Services

ImplementingAgency: Ministry of Public Works

Objectives: To execute engineeringdesign and supervisionof projects for the four provincial and nine local governments and PDAMs in Sulawesi Provinces.

Main Tasks: Design and supervisewater supply subprojects:

- Soil investigationsatd topographicsurveys;

- Preparation of lay-out plans for civil works; - 46 -

ANNE% 3 Page 3 of 15

- Determinationof pipe alignrments,pumping stations and connectionq for water supply;

- Calculat±u. and preparation of technical drawings;

- Preparation of detailed design specifications bidding documents and technical specificationsfor procurement;

- Preparation of detailed cost estimate and impleoentationschedules;

- Supervision of execution.

Design and supervision of non-water supply subprojects:

- Supervisionof preparationof detailed design and tender documents;

- Assist in preparing of ICB contracts;

- Assist in bid evaluation;

- Supervision of execution;

Qualifications required: A team of lecal and foreign engineerAngconsultants.

Duration: About 48 months: December 1991 - January 1996

Staffing: About 600 person-months (400 local and 200 foreign)

Costs: US$ 4.98 million

PACKAGES III/A and III/B.

OUTLINE TERMS OF REFERENCE

Assignment Title: Advisory Services for RIAP and LIDAP Preparation and Implementation

Implementing Agency: Ministry of Rome Affairs (PUOD and Bangda)

Objectivess Prepare and implement RIAP and LIDAP action plans and expand installation of the MAPATDAsystem in the Sulawesi Provinces.

Mtain Tasks: II/A: ^ - Assist local governments in implemnting the MAPATDA system( the system has already been installed in Ujung Pandaig and Manado);

Assist local governments in implementing revenue improvementactions; - 47 -

ANNEX 3 Page 4 of 15

Ill/B:

- Assist local governments in preparing and implementing institutionaldevelopment aLtion plans (LIDAPs);

Qualifications required: A team of local and foreign consultants vith relevant experience in municipal finance and public administration.

Durationt About 18 months: November 1991 - July 1992

Staffing: Consultancy, about 130 person-months (100 local, 30 foreigp)

Costs: US $ 1,000,000 (III/A US$ 400,000 and III/B USS 600,000)

PACKAGE IV.

OUTLINE TERMS OF REFERENCE

Assignrmnt Title: Operation and Maintenance Management Support (POIMS)

Implementing Agency: Ministry of Home Affairs

Objectives: Expand installation of the POMMS system in Sulawesi Provinces.

MainrTasks: Installation of POMKSin 8 local governments (the system has already been installed in Ujung Pandang);

Assist local government staff in performing adequate O&M (management,progranming, budgeting);

Qualifications requireds A teas of local and foreign consultants including mnicipal engineers and management consultants.

Durations About 18 onths (November 1991 - July 1993)

Staffing: Cousultancy, about 140 person-months (128 local and 12 foreipg).

Costs US $ 760,000

PACKAGE V.

OUTLINETEMS OF UFmNCZ

Assignment Titles Advisory Services Provincial Monitoring and Development UnLts (PHU).

Implel nting Agencys Ministry of Public Works - 48 -

AMNES 3 Page 5 of 15

Objectives: Develop and strengthen the recently established PMDU in Sulavesi provinces and guide local water enterprises of the project towns to improve O&M and management.

Main Tasks: To further develop the recently established PMDU in Sulawesi Provinces;

To provide training in network analysis and eakage control;

To assess maintenance needs of water enterprises involved in the Project;

To develop 'on the jobs training capabilities in PMDU;

To train PMDU staff in financial analysis, financial management and tariff analysis.

Qualifications required: A team of local and foreign consultants including the followings - water supply engineers - leakage control experts - financial experts

Duration: 24 months (November 1991 - July 1992)

Staffing: About 130 person-months (96 local, 34 foreign)

Costst US$ 990.000 (US $ 410,000 from loan, US$580,000 from domestic funds) PACKAGEVI.

OUTLINE TERMS OF REFERENCE

Assignment Title: Implementationassistance to Tingkat I and II to Monitor and Evaluate IUIDP Sub-projects.

Impleenting Agency: Ministry of Public Works.

Objectives: Implementationof a Monitoring and Evaluation System at local level.

Main Taskst To implement the monitoring system at the moment being developed for East Java - Bali UDP;

To assist the Bappeda Tingkat I and II in performing the required M&E tasks:

To assist local governments in the annual updating of the PJM (expenditure program), financing plan and RIAP). - 49 -

ANNEX3 Page 6 of 15

Qualifications required: A team of local and foreign consultants including: - Project Support Manager - Project Support Co-managers

Duration: 60 months (November1991 - October 1996)

Staffing: Consultancy,145 person-months (100 local, 45 foreign)

Costs: US $ 1,200,000

PACKAGE VII/A

OUTLINE TERMSOF REFERENCE

Assignment Title: Consultancy Services for the Preparation of IUIDP for Batch II and III Local Governments in Sulawesi Provinces.

Implementing Agency: Ministry of Public Works

Objectiv~es: IUIDP Preparation for Batches II and III Local Governments.

Main Tasks: Assist in preparationof PJM and financingplans for Batch II and III local governments

Qualifications required: A team of local and foreign consultants with the following expertise: - municipal engineering - water supply engineering - municipal finance - water enterprise finance - urban economics - urban planning

Duration: About 12 months (November 1991 - October 1992)

Staffing: Consultancy services:about 135 person-months (100 local, 35 foreign)

Costs: US $ 1,000,000

PACKAGE VIIB.

OUTLINE TERMSOF REFERENCE

AssigDnmentTitle and Objective: Development of urban strategies for fast growing areas of Sulawesi and Irian Jaya

ImplementingAgency: Ministry of Public Works 50

ANNEX 3 Page 7 of 15

Qualifications required: A team of local and foreign consultants with expertise in regional urban planning, urban economics and land use management

Duration: About 12 months (November1991 - October 1992)

Staffing: Consultancyabout 75 person-months (63 local, 12 foreign)

Cost: US$ 500,000

PACKAGE VIII.

TECHNICALASSISTANCE - OUTLINE TERMSOF REFERENCE

Assignment Title: Training Identification, Design and Management

Executing Agency: Ministry of Public Works

Objectives: Identificationof training needs of the 9 Local Governments involved in the Project. Preparation of outline TOR for the design of training courses and materials.

Main Tasks: Identificationof training needs

- Preparationof outline TOR for the design of training;

- Assistance to the IUIDP Training Project to design the required training program;

- Management of the training delivery.

Qualifications required: A team of local training experts

Duration: About 12 months (November 1991 - October 1992)

Staffing: Consultancy,about 90 person-months.

Costs: US $ 500,000 &NNIX 3 rage A of 15

- IRIAN JAYA WATER SUPPLY COMPONENT

SUISEARYOF TECHNICAL ASSISTANCE REQUIREMENTS "here are Sour nac'-.aeesrroposec

Project Management Unit/ProjectIeplesentation Unit Support

The project will include technical assistance for proJect implementation. This will primarily include the provision of local and foreign consultant assistanie to the Project Management Unit (PMIJ)which will be established within the Provincial Water Supply Project Offtce (PPSAB) Jayapura. The advisers to the PMU will also support and assist the Project Implemenitation Untts (PIU) to be established In the project towns.

ObJectives

The assistaniceto the PMIUwill cover two ain areas.

(a) Overall project manigement,organisation and coordinationto be carried out on a province wide basis from Jayapura.

(b) More direct inputs to the PIUs within the sub-projecttowns related to the effictent.execution of physicalworks and associatedadministration and support functions. Staffing for this work will be based in .avaptirabut will involve extended periods in the other sub-project townis- particularly the major towns of Sorong. Manokwari and Blak.

The key objectives for Part (a) above are to assist the PMU with:

o Overall project implementationplanning and technical coordination:

o Financial monitoring, review and problem solving covering budg'evting. expenditure and reimbursement:

o Monitoring, review and problem solving in the areas of procurement. constructionand handover;

o Coordinationof PIU reporting and operations;

o Liaison with the World Bank and Cipta Karya.

The key objectives for Part (b) above are to assist the PlUs wlth:

o Management of physical and financial progress including monitoring. review and problem solving;

o Review and evaluation of contractor's tenders and design detaila;

o Training In contract administrationIncluding quality control. contract coor,iination.work schedullng, establishment and maintenance of "as- constriucted"documentation systems:

o Training in syRtem testing and commissioning: - 52 - ANNEX 3 Page 9 of 15

oI ,II- t i0 l t ;1i inci t)f B4P\Nm PIDA! s tla tf '110 fp)Crait orI,

1n,nI§ ,t j ) I

.1imentI '3- to) I'ui t' 1') ' No(l-p t hnt tIh P>M Ii I I Iront, i ne at V r t hi q t I me hilt. hi t IIOLI t t l1t' PM 'Il ;V, i -;L. I

Perann-Mnnth P

Ille t'sl ithi Ied R! 8It M '.5 rI mit iII the *5i ttihe'-d Tablit A1. 1 . lI summarv

*o |"X*)sl 70 person-months O'.1, 170 person-months

1 hli' t1s lfIlati'd *si 1t1h1. thiti- of tti thi'A (in current prices i is io 4,151 or US$ 2.25 rvillion.

EAI'i -i_. .,''i i-lll!ti?S pi,l ,, rl plVOe''''t Ti"J1efl'zt!'lt''it 011

Tiht ahthiv, eftin%.itv.s for TA incliide the provision of support personnel I i1 .jt iSI . h lrou' mi opetjl orIiS e tr f or thie consuil tauit personnAel , andi xli, i ii ttitiRi lellit ;II( Ii 1iXiil tmPn s Speci.7list eiui pment for pro ject i j 1') .n1)ill 1 t ,!l)) i iII,' 1H I ne I iidtt il7 tho ye)I vant pr'ortUrenipit and 'uP1 i t iVii:t i ( iol t I eli I s it Ir a-ziimeri that GtlI will IItiR oXiS1 inq of ficosi f'or acc mmoi(ating the PMUandi .Jiis". i rA II. Il' ,.l f i 1.l( i I ieI are il,emrnti to hpe ihnt:luded in Part A of the

PACKAGEX UPWTask Force

Il ,1;41, 1w ii ! .b-uv i ic'nIh -i-*I is pi needt for extensive day labour works fo I-iji s to) ox isl il' 1ii'el iunes and servtce connections to reduce leakage Nid( iviwo-o-*- cniOl!ii'r rArvIrp, .\ttontinn will also be paid to moeter reading ai,,l 1 jell ,,e*ede. Th i.s work. which will he concentrated In the first {' v't'.iu'' 1he pt-ci Ied mho(itid prneeted in p)irall1 with thet constricttion of new works.

tilhill iplicitV of t;Isks a1id1the difficuiltv in precise scope definition mean that t?e'soe woi't's dtie not 9uitet1 to exeoution bv contract. It is proposed that each W,5At' entt, lpris wi l establish a separate task force Including ;Mop x!ltrVoisae(i tiadeuxi-i,a. Thpse plers-onnlp]will in the longer term become the wiilotfioan. Rtoiff of the t7xnanded WEs. The Wrs wouild he paid for work Uli1 t'Ci atkt'I IIV' he Task Forpe oll an agrreed sohedule of rates basis. The Hc?ie,lm -eS rll,piIs woild t ntedi to he strurti repd to provided an incentive for the WFs to i!nrlertnke the wnrk bhv dav labotir rather than by contract. The 3)ll.1 ij 'is unil eqjili pmelit Ior0'4e by 1 hf Task Force will be procurred under the fPlI4,lXn peurcelremientpackeu;les. A separate LCR package Is proposed earlv in the propct tto ensure that kep materials are available as soon as possible aftpr commPncmerntof Implementatlon. -53 -

AWINKXI Page 10 of 15

Oh i vctoi.s

T'Ii It jh r i i vs tit hisli TA apo to IassiSt the WFs with the estah Iishment and i'lit'i dli ol o-if r,ask Frote itct ivities including the following:

iPit I i f i -t i,zl 11iii olt'oaramifi t uif of iorks: I-i-I mvid II,im iv'ilp iiud advice on uiaintenn.nce anid repair techniques;

,, I , II, AI 1silliljt. j in tillest ti 1ando ek diete.etlo

I \ Il tI p I l jfI it' I0jlil iI)l-l''it-dtl metor' rui,linf' and hiling procedures: S)%,! l tltI I'I1IJF ll.ic(t! 11mil)i tur. ilile

1 h en ,tv. I - "; i ('1p ol 11 iOli -illtd,iOntpniace- slal I he dir?ctetd towards short I't 1) Viiil tii j wl;i11Its tsIIlre t I n improvetld standards of service it@'li ' 1-l9.'i'-.91 l)i-(ms,iitt_' iuifid(,pnc viAter sales anid collectJon itfit-fiqnit s: *IS uossible after commenicement of project

'l itj SPI ... ..-. ivmllti is pin. jis-l il) a]l towns blut th lemplhasis would be In those tohliS ti w Whi1m t1lt'O *uta siviiificant rehabilitation components. These ii' iWi, .I'.I-ii ; HiiI ke.. N;jhiHre. Fik Fak anti Wamena. For Serui and i Ii'1 ni) -pio io, ! )lse j are fr()essential Iv new water supp]y

.I.. N.nsi-,tI, .s htsl,v wsill II1 sone rehabil l tation of existing

i : , i 1 nn:- oll t.n- - iJIJ tl :i inmlL Wi II he provided with a view to establishing ,n *--+t) II47l i h rOti H? iI ' intl I intttIr iljpoe'afliS.

1 2 ,, .. >, t~Is r i,l lln.r11t.\ is 2 Fowllw-p)FeiI I. assIsta(ce aind support

':. j t 4 ¢ )ti I\ il ii.'1 t IPI WI[

Person-MonthRequirements

10wis i iii I'l. l ni.in-nion ihs are sot onil. iii tlie attached table. ln s wiumarv tho 'Il i )lti& z it.tiii s ?t I'zt

bov I-iv 17 person-months

Os 1.0*f4 52 person-months

(uwSt Fst Wllch-

1h,e t-!1 I,l ;ilI Ic sisI I this eoipn,Iiln orf I1h l'A (in current prrices is Hp 1,033 million or US$ 560,000.

11 iN ds-slih-d 'I Ii.1 Ilit T.'-iik IItinF ssln l ants will USe1 the same offices as the PM1Pas/i wi?i i , l k Iiini trl,eW 's offices.

Eqil Thili I i.i I h,, I]FW Task Forrp wi l l he provided tinder an LCB procurement paik*Afe toI be 1lil iuimedilteiv fol Iowing loan effectiveness. Computers and other siupport equipmPent shall he provided inder the TA. 54 -

ANNEX3 Page 11 of 15

PACKAGEXI Provincial Monitoring and DevelopmentUnit

A PMOIt I iid lit- em-Iib ish#,ill iniT'ian Java in accordanee with the established I; O it lni I II i i t'I.o fu.! s:t to IeIpvfa Io[ment

Thv it iotc ixvw- nif tile I-MIh mi-e nis follows.

n Pin iw ,,f ini,tt i il. , tim tiisttat.iveand technical coidiition of WEs by cm' ,!,i'I i,vs Iit") tho mttonihiv reports Aul)mittedby tlhem.

O x p1,. iStJ'if Wi- prrm tcnm.rune atl(ithe iflenttificationnof shortcomings and

Pr ro'I, isiot, fii Iei?11,Ia .il inistrat IIe teehn ical and managerlal. and firvf !imil i,i,dJ px!t-tt ist in *i-der to assist the d,evelopmentof WEs.

O Ait;11'1!\'i .if f i lolloia I d I peleni Ic iiformat ionirpeeived with regard to 1i1;t,iilp,! tillP.sL. hnfl .1t WE and proviriciii level. and reporting to the P,r'.il-ioln an1 C6-11',;1 oiv'1mnrientsn) progress in relation to targets cif,t;wl!t' t' Wi l 11 1tI1 ii-in of ic,t Jion plans as rpquiired. o) ?Pi < iwt Im1I let Iiv rfm')Its anti stat ist iral information to Provtncial ,,,,( 1it ;Ti t; t hi 1 iti a1siliutit I he keyv slpecttS of the provincial urban vistm i.icpn-i 9',1- aRmi the performacllep of individual WEs.

* s& it .g.: ! e. ist mice. it, prtpmr iny necessarv i1hantgrein tariff levels .wd Il 1:wi-t,1M.rse,n. h\, I h wali>r Pni Pi-prisps.

ro 1 iIt orvo.0i'tJ, nrin itivoeI rn'r:t iaroposals and appraisal of same. not *,)1k. leit! I1tt it)Iritoia of terchnl"al an,t financial soundness. but

li , It .,I i nw natiomal and provincial targtetsand priorities.

'tl ,,,I is ;it inflorno;itillntentrte and(an intermediatorv for the exchanf'e ,itil d is4sni I otmliof rnew/Imirovpoved niet liods, svstenis and procedures ciIv' 'ii\; if) Il'hdnil W; 'j slipt!)lv. o) I.iiu to nu"l ti.'ol.tlifatiol with the reP,ionia trainilng centre In I fi-!r I I fvv I1f li i nv imeeds. overitt s i nq training events and monitoringiq !,t'i r t1.1u'mrd(it t ra i Iitg objiel ives.

ProOi I)ii utf iss i t alnep in organi sat ion, coordinlation and iti.:t.1i':t. 111 otoPf cotmtniunitvinforniat In progiramsand improvementof h, IfVI ",II I ti-I Ii i)IIS.

IProv i; i on uf I pchn i a l cuipcport to WF in areas where kabupaten based Pxptorl ise ta^ntiot he-prvided eoonomitcall]V. for example electrica'land mehAnicaiiFl ntiIinn nino and specialist proccrrlelnnt. 55 ANNEX 3 PFage12 of Y5

I t is Fiv,-mn#-tl I itat ;irrmnopomtnts for pst Ail)wi slimeiit of t he PMDIJ wi Il Ibe tndtr.rtlikon dUi incy tho,' f i'st \'eoir u,f tl ie llroj(et. Thp TA comjponnnt of prolect wi I I fiiil(i I hte I )I i,wi II,

( ) I t li ,11\ t i i- iiI lIIe (ii' t ' i lt i F, 2 y peirl's of PMI)UD ) peYat i on :

(Ii I linni ,rcIt ttfor the ti rst, 'I Vefarl,' ouperatinn inc ldiding salaries for 111ifit Sl ;1l I off le iIimiTi) rosts :ilind tt'ave1.

tar -ili i o', I' OliWhMI il,o lq I in'y l)'ii (iti vptri% es awrll eqtiipment will be 0l't1' 1t4}l,1X114 P;ill s I-if lIn-F,-l(i,,.

Person-MonthRequir-ements

It is estimated that 24 person-monthsof foreign consultancyassistance is required. This wouildbe provided by a senior adviser in water enterprise operation and managem.ent,18 person-months,and other (unallocated)technical specialists,6 person-months.

i Ii , t-I 11iIl (i tI, u Ii i xs t-willmilfiel)l of the TA (in current prices) is set (ut Itf if1w 1 *i~~~~~~~~ it iw~~~~~itR

PNIl I i' 793

(ThIl ;i ,,1v't !IlIS I

;g ())*' *t,1 Oin\i-1ii'i f lJ v,,, ,I)FF.I I' II

[Ia'.| I rugSts til s irt f 4:32 1.124

l()iAI, 6is I h } ~~~~~~~~~~1.917 or US$ 1,!39,n2O

(If I he I -. It r itii 1 i, is itidii1 fr,im thte IBRI) loan. l'he esentliJlv 'e'Y +lt r'. titi M11i operXil ion are fiNndold from Oi6 sotirtes IDIP Murlit). PACr(AGE YTT Water mntetprise Staff Training

I i, pl' i-' Itk I I1 ,I)II Ii Iht - to I 1lhIj seelor wide HRlDUsiiiF trutrilln iup resoures fii *ve b tOil ;'iile1 1ciI Hefiilai Rs otirces Development Project (HRDPI. The stub- pri if'cl wi I I foll thf di iert traininFi o costs of recipients fromn the Iiian .Ja,a

Oh (',t (Vc.i

7 o p,midv 1r.i0nino to some400 Trian .Java WE staff to he rondiuctedi undor the huspiclees of tl(p HRIIP. Traini iwr wonild hp inc I dle-d for o DIrectors of WEs and other pprsonnel requilring special facilitits at the National Training Centre in Jakarta: - 56 -

.UNEX 3 "'aae 3!o 1is

S*11iOIOt eiStUIi'e it I It) li U oi(thA1i't;t in I jL ( iet ve in (iTl n Pandang: o Mll;id'et'sN¶0~~ii 1 S aiii admilnistrat ve. ;l- rica1 stat ff in .i,,iV1b1'IId A II., IIIs (r m I, Ii it?S I)'E)ViIf- (I as4Ila t of t lie PM)U

Thle'e:i iIll.te*'I i '4I':. ni tim, iiiIt^:. Itiii liiv cwsts are set out below in current

M_il wr

rglb1,1111 I 1 1 ,1t ti4) II . t||( h'; is I e II (c f ,ta II(I 1230

A iIv i t 1t. .i It ii i MIs i ont

iti11i t 1',t i bIwrs 190

OoI 1:I"l Ii R 370

or US$ 200,500 - 7 - - - - -' - -- D .

en 0.' c'J

-4 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

'Icr-_ _ + __ 4|

- 0..~ ~ ~ ~ ----

------l | ------C'------'

I- 2 _- __' U- - * f _-tLggE_e_

* n 8 5 ;X! *

I *~~~~~~~~~~~~~~~~~~~~~~I

S ~_s_I -_-_ ------…-___ ° e-- gI _ --- S------f~~~~~ Xt Zw owfg9 ge Sg!gg_ IS Aew rD 9 WI ;- I|\ ii 5 * - KXjwI

| co ! c !! - '-4 -_

iA ______------44y 1lti it l0i! i 1 i111i; i °

I------

------

------S------. -- -a - .0 - - - - -. - - -a --- - 59 - INDONESIA ANNEX 4 SULAWESI-IRIAN JAYA URBAN DEVELOPMENT PROJECT Page 1 IDmplementation Arrangements

IMPLEMENTATIONSCHEDULE SULAWESI COMPONENT PROGRAMEM.ENT 1992 1992 199 94 1995 196

1. P,-Pi --- -

1. Pr,pm PhymiuilImplm..eeatise- - - 1.1 W - - - - d.am d &4,u xx m xx x

-_k d.wexiepma sea 3x X- - lad isio xe_ - p_awineM ofeq*"*. xx _e n M x - xxx - _ivilOO&Anmw6So _ xx xxxxua xu. - Dmu,in sa xxx- m _xxx = | L& - m le -o - - 1,2 S*W~Wus" Diqoml

D tared -~~ efsige ep xx X= -iA =x - -_xm xx - x -_ - DwiAX dOf. . x xxx m m xx

1.3 DUtia-_ -Civa WerE Ce L-Molie m _ cxmx xs xxxxn xxx0 xxxxm - DaaWi ma xxUx xx xxx - Civi Wotb C eniu 3rn ex xxxx = xxx xxxmXmx 1.4 Uuba RweD. - Debiladds m xx 3- xx - Civi Wodo C@oa i., _= _m xx xmm xxx Wm m 1.5 HRusesWasoDiapml - Dowaoid mmgax mm mm xmm - Ci4i Wogimcoewiuwtiom mmX mm 3mm mm MM 3= mm 1.6n KW d MM… - Dowled Wmn xxx xxx 3=_ -x - Civi Woda Ceausaew. mm ex mm mxxxum xxm xxx xx xxx

2. _uaationof MAPATOA m

S. 1AU0606OfPOWS x xm

4. T.-saidlA__ w

A.1 Daidsia. C* Svi x-x - -= A.2 fEiwa. DD A Suvasee intWw aply sxm x z x x x A.S E _imio DD vS m - bi w_uI sW * 3s s x x x x x A.4 Adwvay &Simm MAPATOA x x A.S Adviey Smwam POIS x xx A.6 dvemy Slvam PMDU xm.-

A.7 Advi_w w to TX D - oneMgiwgimg & Ev,haai. xx xxm x x x x x x A.S PpWustift ofswboo madW L.oa vsw X. m__

A.9 Tnie*iaW06.2iSm~e Desigm - I a Mmus.ep xi x - 60 - ANNEX 4A Page 2 of 2

INDONESIA

SULAWESI- IRIAN JAYA URBANDEVELOPMENT PROJECT

Implementation Arrangements

Implementation Schedule Irian Java Component

1990 1991 1992 1993 1994 1995 1996

Source development xx xxix

Treatment facilities xx XXss xxix xxr;

Pumping stations sx xxxi

Transmission mains xx sxss ----

Distributon mains sxs xxx xxxrss

Service reservoirs xx xxxs xxxs mx

Service connections xxxi xxx- xXxi xxxi xx

Other facilities xx xxxs xxx xxxs xxx x

Land acquisition xxx xs

Note: Schedule is indicative only for all eight project towns and shows generalized start, length and sequence of program elements. Activities in specific towns may vary up to 18 months from above schedule. - 61 - ANNEX 4B Page 1 of 9

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

I. Project ImplementationArrangements SULAWESI Component

A. ImplementationArrangements

Introduction

1. In accordance with Law Nr. 5/1974, Law Nr 13/1980 and Government Regulationsnrs 26/1985, 1411987 and 6/1988, specific implementation responsibilities for the infrastructure sub-sectors covered by the Project in the Sulawesi provinces have been assigned to the three tiers of Government.

2. At local and provincial government level project implementation responsibilitiesand arrangementshave been further defined based on the principle that existing structural agencies are assigned specific responsibilitiesfor implementationtasks, where necessary assisted by specific units to be establishedsupporting these organizationsand by consultantsattached to these organizations.

3. The establishmentof new functional units separate from the struc- tural organizationshas been avoided. Similarly,project implementation will utilise existing processes and procedures to the maximum extent possible, adding only coordinationmechanisms where these are as yet insufficiently developed for the purpose of effectively implementingthe project within the above legal and institutionalframework. It is considered that in tnis way, project implementationwill make a maximum cont ibution to strengtheningthe institutionalcapability of Tk I and Tk II organizations.

4. The proposed implementationarrangements as set out below have to be considered as a general model to be modified according to local conditions. The proposed organizationalstructure and arrangementsare shown on Figure 4.A.

B. ImplementationResponsibilities of Local Governments

5. The IUIDP Steering Committee, as a non-structuralbody, is positioned directly under the Kepala Daerah. This Committee will be responsiblefor the overall coordinationand suP-tvisionof project implementation. The chairman would be the Mayot .r Sekwilda. Vice chairman and secretary are proposed to be respectivelythe Sekwilda or Head of Bappeda and the Head of Bappeda or Fispra of Bappeda. Members are the heads of the departments involved in IUIDP. Steering Committees have been established in all 9 TK II covered by the Sulawesi Component.

6. The Regional Development Planning Board (Bappeda)within each Tk II government will be responsiblefor day-to-day program management. Main - 62 - ANNEX 4B Figuro 4a ~~~~rage2 of SULAWESWIRIANJAYA URBANDEVELOPMENT PROJECT IMPLEMENTATIONARRANGEMENTS (SULAWESICOMPONENT) Organzation Structure

Mco PUOD AM BAENS DOBWU

...... I~~~~~~~~~~~~~~~~KI...... ,.

L_ C^OX

* ~~~~~cr a~Dr

= nuCTURtAL

- W6TRUCTON

TEN K I TKP -U' M - 63 -

ANNEX 4B Page 3 of 9

functions are the preparationof a multi-year IUIDP Program and coordination and monitoring of implementationas well as annual budget preparation. For this purpose a small local Project Monitoring Office (PMO) will be established directly under Bappeda.

7. A Local IUIDP Team (Tim Teknis P3KT Tk II) under the authority of the Bappeda is to assist to carry out this responsibility. This local IUIDP Team will have representationfrom all concerned Tk II departments responsible for elements of IUIDP implementation. Due to the nature and periodicityof coordinationactivities, this Team will function as a working group and meet on an ad hoc basis only. Tim Teknis P3KT TK II have been established in all 9 TK II.

8. A small Project Finance Office (PFO) will be establishedunder the authority of the Finance Division in the Sekwilda's Office, which will disburse project funds, prepare reimbursementrequests, maintain expenditure accounts and prepare financial progress reports and annual statements of accounts.

9. Non-water supply projects will be implementedby the Dinas PU and Dinas Kebersihan (if any). The Local Water Supply Enterprise (Perusahaan Daerah Air Minum, PDAM) will be responsible for the water supply sub-sector.

10. The Revenue Office (Dinas Pendapatan)will be responsiblefor reaching the targets for local revenue generation set in the financingplan under the overall supervisionof the Local Government Secretary (Sekwilda). The Legal (Bagian Hukum) and Administrative(Bagian Ortala) Divisions of the Sekwilda Office will be responsiblefor the institutionalarrangements required for Project implementation.

11. The procurementwill be carried out under the authority of the Development Division (Biro Bangda) of the Sekwilda Office.

12. Provincial and national subprojects (if any) are carried out by deconcentratedagencies from higher levels of government.

C. ImplementationResponsibilities of Provincial Governments

13. An IUIDP Steering Committee, as a non-structuralunit, is positioned directly under the Governor. The Committee's tasks and responsibilitieswould be to manage, coordinate and superviseProject implementation and to provide policy guidance. The chairman would be the (Vice) Governor, Sekwilda or Head of Bappeda Vice chairman and secretary are proposed to be respectivelythe Sekwilda, head of Bappeda or Fispra of Bappeda. ?lembersare the heads of the departments involved in the IUIDP program.

14. The Bappeda will be responsiblefor day-to-day management of project implementationwith the following functions:

- to assist local governments in IUIDP implementationincluding preparation of related funding requests; - 64 -

ANNEX 4B Page 4 of 9

to monitor and evaluate overall progress of project implementation of all local governments;

to coordinate all IUIDP activities at provincial level.

15. A Provincial IUIDP Team (Tim Teknis P3KT Tk I) will be established under the authority of the Bappeda to assist to carry out this responsibility. This IUIDP Team will have representationfrom all concerned Tk I departments involved in IUIDP implementation. Due to the nature and periodicity of its coordinationactivities, this Unit will function as a working group and meet on an ad hoc basis.

D. ImplementationArrangements at Central Government Level

16. At Central Government level Project speci.ficresponsihilities have been defined in line with structural responsibilitiesof the Departments concerned as described below.

17. BAPPENAS will assist in synchronizingIUIDP, as part of Repelita V, with other national developmentprogrammes. It also plays a major role in the annual budgeting process and will assist in ensuring the Central Government contribution (APBN) for the IUIDP Program. BAPPENAS chairs the Inter- departmentalCoordination Team for Urban Development (Tim Koordinasi Pembangunan Perkotaan - TKPP) which has been established under its authority in early 1987 to ensure a smooth, well coordinated,planning, programmingand implementationof urban infrastructureprogrammes. BAPPENAS also supervises the IUIDP Management Group (IMG).

18. The Directorate GeneLal of Public Administrationand Regional Autonomy (PUOD) within the Ministry of Home Affairs (Depdagri)will provide general supervisory support ior the Project with respect to adequacy of local government staffing, budgeting, financial capability and execution of Project responsibilities.

19. The Directorate General of Regional Development (BANGDA), particularly its Directorate of Urban Development (DirektoratBina Pembangunan Perkotaan)will provide supervisorysupport with respect to the planning, programming and implementationof local developmentprojects. More speci- fically, DirectorateGeneral Bangda will be responsiblefor the administration,supervision and support of INPRES-fundedproject components.

20. The Directorate General of Budget of the Ministry of Finance approves and provides all central government (AFJ'!)budget allocations for IUIDP through its Directorate of Development BudLct and Directoratecf State Wealth Development and Other Budgets, which administers the routine SDO (Subsidi Daerah Otonom) grants to local governments.

21. The DirectorateGeneral of Monetary Affairs through its Directorate of Investment Funds (DDI) will develop and administer the subsidiary loan agreements (SLA) with local governments and enterprises. - G' -

ANNEX 4B Page 5 of 9

22. The Centre for Financial Analysis ot Local Government assists in formulatingpolicies and guidelines on matters related to local government finance. The Directorate General of Taxation administersnational taxes. Of major importance to the Project is the Directorate for Property Tax (PBB), which sets policy and manages the tax-object identification,assessment, collection and revenue sharing of the property tax.

23. The Ministry of Public Works is the technical department responsible for the developmentof the Urban InfrastructureSector. Its Directorate General of Human Settlements (Cipta Karya) is responsible for the development of Water Supply, Drainage, Sanitation,Solid Waste Disposal, KIP and Market InfrastructureImprovement. The Directorateof Urban Roads Development (Binkot) in the Directorate General of Highways (Bina Marga) is responsible for the development of urban roads. These agencies, through their provincial offices (KANWIL),will provide technical guidance to lower levels of government regarding the subsectorwithin their area of competence in the Project, will administer the sectoral grant budget (APBN-DIP)for those subsectors and will implement subsectoralProject components considered a Central Government responsibilitywithin the framework of Government Regula- tion 14/1987.

24. The directorategeneral of Human Settlements (Cipta Karya) in the Ministry of Public Works will be designated as the Project Executing Agency, supported by the other central government agencies exercising their structural responsibilitiesas described above. the local governmentsand local government enterprises involved in the Project will be designated as the Project ImplementationAgencies.

25. At central government level, policy guidance and coordinationwill be provided by TKPP which will act as the central interdepartmentalsteering Committee for the implementationof the project. as Executing Agency Capita Karya will arrange for overall coordinationand monitoring through its Central Project Monitoring Office (CPMO) and Central Project Finance Office (CPFO).

26. At provincial government level policy guidance and coordinationwill be provided by the Provincial Steering Committee. As noted above, the necessary coordinationand monitoring will be carried out by the Bapenda Tk I and by the IUIDP Team Tk I.

27. At local government level policy guidance and coordinationwill be provided by the Local Steering Committee chaired by the Mayor/SekwildaTk II, while day-to-day coordinationand monitoring will be the responsibilityof Bappenda Tk II and by the IUIDP technical team supported by PMO and PFO. - 66 - ANNEX 4B Page 6 of 9

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

II. Proposed ImplementationArrangement. Irian Jaya Water Supply Component

A. OrganizationalStructure for Implementation

1. The proposed organizationalstructure for implementationof the component is shown outlined in Figure 4.B.

2. Responsibilityfor the management of the project rests with the Ministry of Public Works (MPW) through the DirectorateGeneral of Human Settlements (Cipta Karya), and specificallythe Directorate of Water Supply (DAB). Within the Province of Irian Jaya, DAB is representedby the ProvincialWater Supply Project Office (PPSAB)which has been established in Jayapura for several years. A Project ManagementUnit (PMU) would be established under PPSAB and this PHU would be directly responsible for day-to- day management of project implementation.

3. The Ministry of Home Affairs through the Directorate General of Public Administrationand Regional Autonomy (PUOD)would play a role with respect to policy matters and in dealing with local governments.

4. Liaison and coordinationwould be maintained at provincial level with the ProvincialPublic Works Department (Dinas PU Tk.I) via the Provincial Offices of MPW (Kanwil). In Irian Jaya, as in several other provinces, the Kepala Dinas PU Tk.I is also the Kanwil PU.

5.- The establishmentof the PMU will require the appointmentor transfer of additional staff as it is not possible for the existing PPSAB staff to handle the additional responsibilities. In addition to the appointment of government staff, a small team of consultantswill be provided. The PHU staffing requirements (both governmentand consultant) are detailed in Annex 3 - Technical Assistance. It is expected that many of the required government staff will be appointed and/or seconded from central governmentas there are inadequatehuman resources in Irian Jaya.

6. Day-to-day implementationwill be handled by Project Implementation Units (PIU) to be formed in each project town. Each PIU will have a manager appointed from within the kabupaten Dinas PU or the water enterprise (BPAM/PDAM)who will be directly responsiblefor all works within the kabupaten. The PIU will be responsiblefor all civil works including construction supervision,progress certificationand reporting, and disbursementapplication. At kabupaten level there will be close liaison between the PIUs and the water enterprises;the PIU staff should ultimately become core staff for the expanded water enterprises. - 67 -

Page 7 of 9

INDONESIA VAWESI - IRIANJAYA ~UANDEVEOPMENT P3tECT

Flure 43 -Iusl_ant.tion Arrangemente Irian Jay$Waetr SyseDv C _rut OrmenizatieonlStructure

Ministry Ministry of o NaeHAffairs Puic Works

DilrectorateGOeral Divoc rat O el of Public of Hu_n Settl_nts A4inistration and (C lKKe) RegionelAutonomy

Irian Joye Provir lei Directortet Provincial -____-__-__ Off i ce of Wi of Oov-rnnt ettr (KenwIe) Sup 'ly (TX 1) (DUAB)

Public Work I (DinesPU TX 1)

|s lpet n Provincial Provincial Oovern_ente Mronitoringend Watr Supply (I INe) D veole_t ____ ProJ et (TX II) (PMDU) (PPSMtUU) Joyspur Other Towns

(DinoesPU TKII)

Projc Project

I Ipl_wnt tlen I Ipl_wntetlen |Unit (Flu) tUito (PIU3)|

L_Ks ~~Instruction --- CerlSintotl and Svpport - 68 - ANNEX 4B Page 8 of 9

7. Some aspects of project implementationwill remain with DAB including:

* Recruitment of conr;ultants; * ICB procurement; and * Establishmentof the ProvincialMonitoring and DevelopmentUnit.

LCB equipment procurement,which is proposed to be packaged for the province as a whole, will be managed by the PMU.

B. Particular Irian Jaya Considerations

8. The efficient implementationof viable water eupply systems in Irian Jaya will require greater external support than is normal in provinces with more highly developed public works infrastructure. The Irian Jaya situation is characterizedby:

(a) Limited availabilityof experiencedcontractors;

(b) A shortage of experiencedand qualified supervisory staff;

(c) Logistical difficultieswhich affect both materials deliveries and the management of construction;

(d) Past experiencesof high water losses and poor construction practices.

9. Well organized technical assistancewould contribute significantly to the development of local resourceswhile at the same time helping to maintain technical standards.

10. The constructionsupervision and management will be a training ground for the future water enterprise staff at all levels. A team of experienced consultantswill provide support to both the PMU and the PIUs. The on-the-job training provided during constructionwill be integratedwith the training to be provided under the InstitutionalDevelopment and Training subcomponent.

11. The consultants to be provided under ImplementationAssistance will be attached to the PMU; however, they will spend a substantial amount of time in the subproject towns providing support, assistance and on-the-job training to the PIUs.

C. ProvincialMonitoring and DevelopmentUnit

12. The organizationalstructure also shows the ProvincialMonitoring and Development Unit (PMDU). The role of the PMDU relates more to longer-term support for water enterprise operation. It does not relate specificallyto project implementation.

13. The establishmentof the PMDU will be initiated under the project but not during the first year. In accordancewith National policy the PMDU - 69- ANNEX4B Page 9 of 9

will be formed within the Provincial Public Works Office (Dinas PU Tk.I). However, it is noted that there are currently very limited water enterprise related skills available within the Dinas PU Tk.I and accordingly it will be essential to support the PMDU by the secondment of staff from organizations with the required skill from DAB and PPSAB.

14. Direct involvementfrom DAB and particularlythe Subdirectorateof Technical Development (Subdit Pengaturan) is essential to ensure that the PMDU is adequately resourced. Only limited consultant input in the form of one senior advisor and short-term specialists (total of 24 manmonths) is proposed. - 70 - ANNFX 4 C Daae 1 of 8 INDONESIA

SULAWESI-IRIAN JAYA URBAN DEVELOPMENTPROJECT SUMMARY0O PROCUREMENT ARMANOENENTS (Current Cost in Rp. million) SULAWES! COMPONENT NON-WATZRSUPPLY

Contract Details Total value for Number of Contract CatsaaOr lRD. mi1lion) ICa LC8 Other lcs LCB Othw

UJUNG PANDANG

Civil Works Urban roads - 28,019 - - 96 - Drainage - 15,971 - - 6 - Solid Waste/sanitation - 2,563 - - 18 - KIP C MIIP - 5,24S - - 14 - Goods :rucks _ 3 t 11 - - In - Constr. quipment - '314 3 - 2 1 Motorbikes - - 10 - - 2 Handearts - - 36 - - 5 PVC Pipe - - 3 - - 2

Engineering services - - 5,218 - - 50

SUB TOTAL U. PANDANG 55,2P3 5,270 - 146 63

GORONSALO Civll Works Urban roads - 9,311 - - 60 - Drainage - 4,801 - - 39 - Solid Waste/sanitation - 372 - - 8 - KIP & MZIP - 777 - - 21 - Goods Trucks - - 55 _- 4 Constr. Zquipment - - 18 - - 1 Sludge Disposal (Zqp) - - 4 _ 1I Motorbikes - - 2 - - 2 Handcarts - - 5 - - 4 PVC Pipe - - 2 - - 1 Trash 8lne - - 3 - - 4 Trafflc lights - 20 - - 1

Engineering services - - 804 - - 34

SUB TOTAL GORONTALO - 15,261 913 - 120 52 - 71- ANNEX 4C Page 2 of 8

Contract Details Total value for Number of Contract Category (Ro. millianr iCe LC8 Other Ica LCB Other

Civil Works Urban roads - 11.283 - - 41 - Drainage - 2,303 ; - 27 - Solid Waste/sanitation - 625 - - 9 - KIP L MIIP - 1,624 - - 22 - Goods Trucks - 40 78 - 1 4 Constr. Equipment - - 28 - - 2 Sludge Disposal (Eqp) - - 1 - - 2 Handcarts - - 9 - - 5 PVC Pip- - - 3 - - 1 Trash Bins - - 1S - - 4

rngineering services - - 843 - - 37 ------SUB TOTAL PALU - 15,875 977 - 99 55

KZNDKRj Civil Works Urban roads - 2,304 - - 14 - Drainage - 2,057 - - 12 - Solid Waste/sanitation - 691 - - 15 - KIP 6 MI1P - 321 - - 4 - Goods Trucks - 108 21 - 2 1 Constr. Equipment - 149 14 - 1 1 Generators - - S - - 1 Sludge Disposal Eq. - - 5 - - 1 Motorbikes - - 4 - - 2 Hand carts - - 4 - - 2 PVC P.pe - - 1 - - 1

Engineering services - - 813 - - 37 SUB----TOT------.-30--867----48-_46 SUB TOTAL [ENDAM SI 5.630 867 - 48 46 - 72 - ANIEX 4C Page 3 of 8

Contract Details Total value for Number of Contract CAteoorv tRp. millioni iCe LCB Other CIC LCB Othwr

SITUNO

Civil Works Urban roads - 1,784 - - 14 - Drainage - 1,768 - - 12 - Solid Waste/sanitation - 131 - - 1S - KIP & MIIP - 732 - - 2 -

Goods Trucks - 46 14 - 1 1 Constr. Equipmient - 149 30 - 1 2 Sludge Disposal Eqp. - - 4 - - 1 Motorbikes - - 2 - - 2 Hand carts - - 1 - - 1 PVC Pipe - - 1 - - 1

Engineering services - - 210 - - 19 …-___---_------SUB TC-TAL BITUNG - 4,610 262 - 45 27

Civil Works Urban roads - 8,396 - - 36 - Drainage - 707 - - 3 - Solid Waste/sanitation - 234 - - 10 - K1P & MIIP - 256 - - 6 -

Goods Trucks - - 47 - 1 3 Sludge Disposal Eqp. - - 5 - - 1 Motorbikes - - 3 - _ 3 Hand carts - - 1 - - 2 PVC PlpO - - 1 - - 1

Engineering services - - 576 - - 11

SUB TOTAL BONE - 9,593 633 - 55 21 - 73 - ANNEX 4C Page 4 of 8

Contract Detalli Total valua for Number of Contract Cateaory LRo. million ICa LCB Other ICB LCB otLar

PALOPO Clvil Works Urban roads - 3,153 - - 54 - Drainage - 2,516 - - 25 - Solid Waste/sanitation - 491 - - a - KIP & MIIP - 652 - - 5 - Goods Trucks - 50 41 - 1 2 Constr. Equipment - - 15 - - 1 Motorbikes - 1 - - 1 Hand carts - 4 - - 5

Engineering services - 506 - - 28 ------SUB TOTAL PALOPO - 6,862 567 - 93 37

MANADO Civil Works Urban roads - 16,973 - - 34 - Drainage - 4,108 - - 22 - Solid Waite/sanitation - 2,456 - - 14 - KIP & M$IP - 2,158 - - 21 - Goods Trucks 1,003 - 12 - Constr. EquipmQnt - - 114 - - 2 Generators - - 11 - - 2 Sludge Disposal Eqp. - - 11 - - 3 Motorbikes - - 9 - - 3 Hand carts - - 14 - - 5 PVC Pipe - - 5 - - 2 Trash Bins - - a - - 2

Engineering services - 2,765 - - 37 ------SUB TOTAL MANADO 26,698 2,937 103 56

PAREPARE 2) Civil Works Urban roads - 4,909 - - 10 - Drainage - 777 - 4 Sanitation - 409 - - 30 - KIP & MIIP - 310 - - 4 -

Goods Sludge Disposal Eqp. - 75 - - 1 - Excavator - 170 - - 1 -

Engineering services - - 384 - - 5

SUB TOTAL PAREPARE - 6,650 384 - 50 5 TOTAL NON WATER SUPPLY 3,781 142,673 12,810 12 75S 362 74 - ANNEX4C Page 5 of P

TABLEAS.1 - PROCUREMENTARRANGEMENTS SULAWESISUB-PROJE '.- WATER SUPPLYSECTOR CONTRACTLISTING BY SUPPR0JECT AND CATEGORY

I _ _I.. . . _ ETq 0DESCRIPTION VEAR(Sl NUMBER OF TYPE APPROlXIMATE CONTRACTS VALUE I1] 1_ ILLiOh RUPIAh.4j

A *UFW Camoangn reoairg antdserv'ce 91,95 I NA FA and Shopoing 2,000

o Manado 'o Kem1ar I1 I o Gorontalt I ~I II , Watarrpone i 0 Palu o 98it'd mg ci Paiopo I I

;9t ISupply and imstaltution of rrec'hanrcal 91194 11 ICS I 4, 50 ,and electr,cal equ1pment

o M3nado I 1 o Kcndari I o Gorontalo | i Watampone I I 'o Palu I I o Bitung i 0 Palopo . , ! I i I D ISjppIy of ,pes watves and meters 91!94 30 LC8 is CO

o Mar2do I I o Kenrdar I i o Coror taio I Watamponlev. to PitluIiI o Bturrgg 1 to Palopo

'D ICrvilworka 91/95 30 LCB 14500

i o Manado ! | i Kendari i 0o Gorontioj I , Watampone io Palu X 0 situng 1 Palopo I

36,000~ jOTAL FOR SUB-PROJECT AND SECTOR 71 |

tl~ C&wr.ontpnene ificiding te nctaRCefltng nelcI. ANNEX4C Page 6 of P

TABLE AB.2 - PROCUREMENTARFNOEMENTS IRAN JAYA SUB-PROJECT- PART A. TOWN WATER SUPPflES CONTRACTLISTING BY SUBPROJECTAND CATEGORY

______~~~~~~~~~31-0.0-W

ITEM DESCRIPTION YEAR(S I NUMBER OF TYPE APPROXIMATE

,I CONTRACTS VALUE [1)1 -. - ______.---- ~,______(MILLiO ARUPAU)

Al CIVIL WORKS BY CONTRACT (LCBI I

I IIIi 'Al 1 I AYAPURA I

'1 Inmtkiworks 91NQ I LCB 300 2 Chlor;nstion fcilitis 94I I LCt WI 3 r7fmfissionmains 92/93 93S4 21 LCt 1,430 4 DLitribution mains 92)9.9394.94)15 3 LC8 1,560 , Service reservoirs 929, 93/94 2 LC8 1.260 6. Now ewrvic connoetions 92,93,9US4, 94i 31 LC3Don 1 7 Buildings,offices, storef, workshop 1 33d4,94M5 !2___ LC8 270 i I Subtotal i141 | 5.8COi

Al 2 SORPNNG ; | ~~ ~~~~~IiII 1i Rvor intaoe and pumpfng srtation 91A92 I1 LC 310 2. Rrnu treatment plant 91/92,9 /94 21 LCB 1.200 .3 Pumpmngequiprment nstallation gmA I LC 70!I 4 Trsntmlsston mnans 9112 62/93 i 2 I LCB 3b0 I 3 O stribution rainsg 9?193 93/4 904AI 3 LC I9 6 Se.v-ee reservoirs 93/94 t LCB 90 7 New service conn.ctionrs 934 94/5 95616 3 LC8 8 9.ildio19gsufces stores worishop 91/92. 93)94 2 LCD 400 Subtotci I 1 15 I 4,070

A13 FAK FAK I

¶ Terstosnf plant upgrading and I I LCB 130 ck orlatlon facility 2 ,ansmibsionrnains 92/93 I LCB 200 3 Cistribution mains i 92/93,93A4 2' LC8 170 .4. Serviceremrvoirs 92g3 1I LCD U I

.5 Suildings offices.bores, workshop 91/2192/ - 2 LC ' 270 * Subtotal 7----~

Al 4 'NABIRE

,1 Wellf,eld deiopmpfen, pump abtionetc 91/92 LCB 301 2. Pumping and chiFinatwon eqipment '91 1 1¶ LC j 40 insttbUon I '3 Storageand associtted 92At3 93 I LC4 ! tratnsmission/dlstributfonmains 4 Distribution mc'ins 9 ens49?5 5M/96 3 $ LC ¶76 5 New service connections 'S74 W95 95Al6 3 | LC 170 *6 Buildingt, offices, storee,workthop i S1333/94 2 Ci lt330 Subtotia Ill 1,670

-... _ _ _ --- ______I - 76 - ANNEX4C Page 7 of '?

TABLE A8.2 - PROCUREMENTARRANGEMEN4TS RiANJAVA SUB-PROJECT- PART A. TOVWIWATER SUJPPLIES CONTRACTLISTING BY SUBPROJECTAND CATEGORY 31-Oct-GO

ITEM ~DESCRIPTION YEAR(S) NUMBER OF I TYPE IAPPROXIMATE CONTRACTS VALUE [II

- ~~~~~~~~~~~~~~~~~~(MILLION4RUPIAH) Al 5 MANOKiWARI

WaltDimgtm mtal,e and oum'p station' 92193 I LCD 160 2 0-urp:rq cHof-matiomequjipmenmt 92113 ¶ I-Cs 40 -,ifitallation, 3 , rrnsso mants 9 1)9292193 2! LCD 5101

'4 Qlstribui~ton 'rQti' 93194,94M, 19 3 I LCD 1,040 5 Seri'ce reseryoirs gm/9 I LCD 100 .5 Nwwservice connections 93#94 94/95 9519 31 LCD 330

6 Suildimqs officeostores. workshop 23A94 I LCD ___ 40 Subtotal 12'24

Al 6 BIAi'

I SnarbiouwPump Station buildings 92PV3 11 LCD 200 2 Pumpminoand chlorination 92193 I LCD o equipment installattion 3 Distribution and trarsmissonmmains 92/9 73)9 94M 3 LCB 'I 13D 4 Service reservoirs 92/.19394)95 21 LCD 70 5 Now.serv,ce connectionis 93/94. 941,95A9116 3 LCD3 270) 6 Buddrrgs otfices, stores workshop 91/92, 92)93 94(9 3 LCDB. 450 Subtotal 1 2240

Al 7 SERUI

Seadirmentationtsnks and 91/92 1 LCD 30 1:`nc'rnat.on,Isclity 2 Distribution maoins 142)9 93/4.94, 3 LCD 630 3 Service reservoir g2m I LCD 60 I 4 New serviceconnections 93194 94095,95iW 6 3 I LCD 1001 5 Buildings otfices stores, workshop gm. 93414 2 LCDO- 2510 Subtotal ¶0] ~~-

Al 8 WNAMENA

I1 upgading of treatenwt p4ant 1991/92 II LCD 30. including chiorinatmantactiity 3 Oitptibujtionmaman 91/92 92193 i2 I LCD 270 4 New sevice connections P3194 94195 9519 3 LCD 40 5 9tuildings,offices, stores. workshop 92,93 93/94 2 LCD 3____20- Subtotal 660,

,Al 9 PMOU FACILITIES

I Duvilinq andsassociatedcivilworl, s 92413 LCD 410 Subtotal I410,

TOTAL FOR PARTAl 9 I 19,220 ANNEX 4C - 77 - Page 8 of 8

TABLE A8.2 - PROCURfEMENT ARRANGEMENTS IRFANJAYA SUB-PROJECT- PART A: TOWN WATERSUPPULES CONTRACT LISTING BY SUBPROJECT AND CATEGC RY _ _~ ______j___ ,__ _O 1-NfilO0

TfM DOESCRIPTION YEARtSl NUMBER OF TYPE APPROXIMATE CONTRACTS VALUE11 ______I (MILL1ON RUPIAH)

A2 C!9.! .'NC-S BY DAY LASOUR I

__ _; ~ - ______IIi A2 1 '@pigl.crnont and rpair of ewtimg ervic ! I conMoct onsIf

,I Jcpypra 9i 2, 92i MA j DL. 680

2. Sarong g91A2, ju NA OL. 70 3. FatF.k 1 1Af2, 2m I NA i DL! 20

i4 Nabors 9s1t2. 929 I fA DL I 20 5 m.,okgri g91A2. 92 1 NA ODL 20 S Risk , 9 2jwt NA OL t10 . Srul 911S2. 92J93 NA DL 20 a Wamenua G 192, 920`111 NA DL 30 Sujb-ramI I I 4 $ , ~ ~ ~I ~ ~~II I iA2 2 I Rehuabiittimon o existing trnBniSoeis I ,and distribtion ystimfs by Task Force

1 .syapura 1t92, 92j i NA DL 40 2 Sofong f 91g OM2. NA DL 320 .3 Fa. Fak j 19tA2,92A3 i NA DL fO ; 4. fab.r- 1:i2, t3 MAN DL aO S. Manfkvru I 91A1,92I3 NA DL f0 6 Btofk g!i91/9, m MA DL. 160 7 S.ru I W1921SO N4A DL 30 WeWmeno I 91,92. O NA | fL 30 Sub-ota

TOTAL FOR PARr A2 NA 2,210

s~~~~~~~~~~~~~T I T - ~--- -+---T-- -T-- -- -___ ,A3 EQUIPMENT PROCUREMENT I I

I UFWTask Force,equipment g00S1 1I SW 2. MSCLpipesmndfttngs2 11 1 2 1 ICO , . 3 PVC,GiandOt.A pop"u nd fttitlng21131 i gC901 1 3 1 ICe 6,570 4 Sve's osndafl ukeek rl2l I 0Si I 21 IC 1 150 5 Mhchin and ' - a Iquipment 91 i 2 1 IC It 3 8 IPvgf^bnrS bnka i 901 1¶iI IIce 4 'VeIicbs7 , As required I 2 LCB SIt a 3 iAAienelbe equiprnt As s.uur.d MA Shrp 2eY10g

TOTAL FOR PARTA3 I 13 1 _690_1 2i

;GAMC)i TOTAL FOR PART A 104 012

11i CurrontprboeclQuding tax andeontingnce (21 nitialcontracts wil include say 70 of requirementsfor tirettwo yers. (31 Serviceconrection materiale. except for .nitlal rehabilitation, wil be procured later. - 78 -

ANNEX 4D Page 1 of 7

INDONESIA

SULAWESI-IRIANJAYA URBAN DEVELOPMENT PROJECT (SIJUDP)

DisbursementArrangements and Schedule for the IBRD Loan

Funding Channels for the SIJUDP

The IBRD Loan proceeds would be channeled to the SIJUDP Project through the following four methods:

1. IBRD-financedportions of Public Works Department DIPs, to be paid from the SIJUDP Special Account (wDIP Rupiah Rekening Ehususw, usually abbreviated to 'DIP Rp RRK). These could consist nf both amounts to be paid in Rupiah and amounts to be paid in foreign currencies,but DIP documents do not distinguish between these two categories (the division may not indeed be clear at the time of DIP preparation);

2. IBRD-financedINPRES grant transfers for direct use by local governments ("SPABP')also to be paid from the SIJUDP Special Account;

3. IBRD-reimbursementof Central GovernmentLoans to local governments and local governmententerprises, through the SIJUDP Special Account;

4. Direct Payments in foreign currency by IBRD to contractors (where deemed appropriate). These could relate both to Public Works Department DIP budgetary allocations ("DIP Pembayaran Langsungs, usually abbreviatedto 'DIP PL') and to on-lendingallocations.

The domestically-sourcedcounterpart funding by governmentagencies of developmentexpenditure within the Project would be channelled through:

5. domestically-financedportions of Public Works Department DIPs ('DIP Rp APBN', sometimes also referred to as 'DIP Murni');

6. local governmentand local government enterprisecontr'butions from:

(a) local governments'own revenues and revenues assigned to local governments from higher levels ('PADS/PBBI);

(b) Inpres L2ti II grant from central to local governments;

(c) Inpres Jalan grant from central to local governments;

(d) province governmentgrant to local governments (OSBDw);

(e) internal funds of local governmententerprises. - 79 -

ANNEX 4D Page 2 of 7

(f) provincial government budgets;

(g) private sector contributions.

Payments Made in Rupiah

DIP Channel Financing - Central Government Sub-projectComponents

In the case of components of sub-projects for which central government agencies have sole implementationresponsibility, procedures would largely follow those established for previous IBRD-financedurban projects. The DIP document would specify the IBRD-financedshare of the sub-projectcomponent as Rp RK funding together with the domestically-financedcounterpart sha!e as Rp APBN funding in accordancewith the specified IBRD disbursementpercentages. For example, for a DIP relating to one or more civil works contracts,85 percent of each civil works contract sum would be specified as funded from Rp RK funds and the balance of the contract amounts, together with all ineligible expenditure (for taxes, etc.) would be specified as financed from Rp APBN funds.

Payments to local contractorswould be made through the State Treasury offices in the relevant capital (KPKN) - the contractorswould not have to go to Jakarta to be paid.

INPRES Grant (SPABP) Channel Financing

Sub-projectcomponents to be financed by IBRD loan proceeds passed as grants to local level through the SPABP channel could also have a counterpart financing amount from the local governments'own revenue sources (PADS, normal Inpres grants, etc.) or from INPRES Rp KHurni'funds.

Local governmentswill prepare each year a draft SIJUDP budget submissions representingtheir implementationplans for sub-projectsto be financed from INPRES grant in the forthcomingbudget year of their approved medium-term programs (PJMs). These draft SIJUDP budgets would be submitted through the Provinces (vith review by the provincial 'TechnicalTeam) to central government. After central review by Bappenas, Ministry of Finance and Ministry of Home Affairs, D-G Budget of the Hinistry of Finance would issue an authority (SKO) to KPKN in the provincial capitals to disburse up to specified bumL., to be drawn on the SIJUDP Special Account, for each relevant local government in respect of contract payments properly authorizedunder local government DIPDA budgetary procedures.

Local governments would then prepare draft development budget authorizations (DUPDA) for the relevant sub-projects,specifying, as Rp RX, the amount of funding to be provided by IBRD through the SIJUDP Sptcial Account, in accordance with the specified disbursement percenta&es on eligible expenditure. The DUPDA would also show the counterpart funding amount(s) and sources(s). In case contributionsare to be provided from the local government'sown normal revenue sources, the local governmentswould make appropriateprovisions in their draft developmentbudgets (APBD Pembangunan) - 80 -

ANNEX 4D Page 3 of 7

for these expendituresand their funding sources. Following APBD approval by the local RepresentativeCouncils (DPRD) and ratificationby provincial governors, DUPDAs would be approved by Governorswith the advice of the pirovincialTechnical Teams, and thence by local government mayors/regents, thereby becoming DIPDAs authorizingthe implementationof the relevant sub- projects. These procedures are standard in local governments.

Each implementationcontract would be written specifying one funding source as being from KPKN, representingthe IBRD funding share, and one supplementary fundinp source.

Examples:

1. A civil works contract could specify funding of 70 percent from KPKNas the IBRD share, plus 30 percent from Bank Rakyat Indonesia re. Inpres Dati II.

2. An equipment supply contract Lwarded to a domestic contractor could specify funding of lOO percent of the ex-factory prices from KPKN as the IBRD share, plus the balance of the contract sum, representinglocal transport overheads and taxes, from Kas Daerah Dati II (PADS/PBB)a': the local counterpart source.

For each stage payment the contractor would be paid through the issue of two payment orders: one drawn on the appropriatetreasurer for local counterpart funding source, and one issued by the KPKN in the relevant provincial capital. Before certifying the latter payment order, KPKN would verify that the counterpartpayment order(s) had been drawn for the correct amount in accordancewith the specified IBRD financingproportion. DG Budget of the Ministry of Finance would issue a Circular Letter to KPKN in the provincial capitals instructingthem to undertake this duty of verifying that the counterpart funding contributionhas been made. Again, local contractors would not have to gc to Jakarta to be paid.

Central Government Domestic Lending Arrangements

It is agreed that these loans would be made using the Domestic Lending Arrangements (DLA) of the Ministry of Finance Directorate of Investment Funds (MOF-DPI). DDI would advance an initial tranche of money for sub-project payments and be 90 percent reimbursed from the Special Account on the basis of the requisite payment evidences and supportingdocumentation (see 'reimbursementfrom, and replenishmentof, the Special Account' on page 6).

Budgetary authorizationfor the Special Account drawdowns would be provided through the Rencana Anggaran Tahunan (RAT) proeedure. DJB would order advances of monies from RDA to a designated Sub-projectAccount in a local bank, on which payment orders would be drawn in favor of contractors/suppliers by the sub-project implementingagency (Pimpro/BendaharawanProyek). The latter would then submit copies of the payment orders and other supporting documentationto DJB (DDI) for further advances and for DLA reinabursementfrom the Special Account. - 81 -

ANNEX 4D Page 4 of 7

(Note: DJB (DDI) are urwilling to agree to loans for projects which would finance procurementmade under bulk purchase contracts covering a number of borrowers in which those borrowers are not directly-contractingprincipals. DDI also has reservationsabout an arrangementunder which each borrowing regional government or regional enterprise concludes a separate procurement contract with a single nominated supplier selected on their behalf under open competition).

Maintenance of PFAMSRecords

Implementingagencies (Pimpros)would be responsible for notifying PFOs in the relevant local governmentsof all payments made - through the provision of copies of certified payment orders (SPM) - so that the payments can be recorded in the Project Memorandum Accounts (PFAMS). These copy payment orders must be provided individuallyat the time the transactionstake place.

Payments Made in Foreign Currencies

Where deemed appropriate,certain technical assistance, training and ICB procurement contracts would be paid in foreign currency. In certain circumstancesthe payments would be made directly by IBRD; in other cases they would be made from the SIJUDP Special Account.

Where the foreign currency payments relate to Department of Public Works DIP budgetary allocations,the DIPs would be drawn up in an analogousway to the procedures described above under wpaymentsmade in Rupiah'. In some cases it could happen that a single DIP document specified funding from all modes, namely:

DIP Rp RK (denominatedin Rupiah, but including the estimated Rupiah equivalent of possible foreign currency payments made from the SIJUDP Special Account);

DIP Devisa Pembayaran LangsuA.g(denominated in US Dollars, irrespectiveof the actual currency of payment); these together representingthe IBRD funding share in accordance with the specified IBRD disbursementpercentages, plus

DIP RP APBN, representingthe central government domestic counterpart share.

Where the foreign currency payments relate to sub-projectcomponents financed under the envisaged central government on-lending scheme described above, the RAT budgetary authorizationdocuments would be drawn up in a manner analogous to that just described for DIP documents. The RATs would be drafted by project implementingagencies of the borrowers (Pemda Tk II or BUMD) and submitted in the first instance to DDI. - 82 -

ANNEX4D Page 5 of 7

Direct Payment Arrangements

Established standard procedureswould be followed whereby IBRD makes the payments to the contractor on the applicationof the relevant SIJUDP implementingagencies through Bank Indonesia. In the case of direct payments relating to contracts financed under on-lendingagreements, implementing agencies would submit the payment applicationsto Direktorat Dana Investasi (DDI) in the Ministry of Finance, who would pass them on to Bank Indonesia.

IBRD (RSI) would periodicallynotify CPFO of all direct payments thus made. CPFO would in turn be responsiblefor notifying PFOs in each local government of the relevant direct payments made in relation to their local government's PJM, so that the payments can be recorded in the Project MemorandumAccounts (PFAMS). In the case of direct payments relating to contracts financed under on-lendingagreements, CPFO would also notify DDI in order that the payments can be recorded in the borrowers' loan accounts.

Payments from the Special Account

Payments for eligible expenditureswould, on applicationby the relevant SIJUDP implementingagencies, be ordered by DG Budget (TUA) directly from the SIJUDP Special Account. For such payments relating to contracts financed under on-lendingagreements, implementingagencies would submit the payment applicationsto DDI, who would in turn forward them to TUA. The process normally involves the issue by TUA of two payment orders (SPM): the first SPM specifies the payment amount in the relevant currency, together with the estimated Rupiah equivalent;a later, supplementarySPM is issued to adjust the Rupiah equiv2ient to the actual figure notified by Bank Indonesia at the time of payment. (This latter SPM shows the Rupiah adjustment only, and can, of course, be for a positive or negative amount). In the case of such payments relating to DIP authorizations,the official copies of these two SPM intended for the Ministry of Public Works would be sent by TUA to the CPFO/i, which would be responsiblefor (a) sending photocopies to the PFO in the relevant local government so that the transactioncan be recorded in the PFAMS, and (b) sending on the official copies to the relevant DG in the Ministry of Public Works. In the case of such payments relating to RAT authorizationsin respect of the envisaged on-lending arrangement,the official copies of the two SPMs would be sent by TUA to DG for Monetary Affairs (DDI) who wculd record the payment in the appropriate borrower's account and also send photocopies of the SPMs to the PFO in the relevant local government.

/1 Authority for TUA to do this, and for the role of the CPFO in this respect, will have to be provided by the Ministry of Public Works, either through an SK of the Secretary-General,or through a joint SX of Dir-Jen Cipta Karya, Bina Marga and Pengairan. - R3 -

ANNEX 4D Page 6 of 7

Reimbursementfrom and Replenishmentof the Special Account

KPRN, through the local branch of Bank Indonesiawould directly draw on the SIJUDP Special Account in respect of payments made under the DIP (Rp RK) channel.

Reimbursementsfrom the Special Account to the DLA in respect of payments made under the envisaged central governmenton-lending arrangementwould be ordered by DG Budget (TUA) on applicationof DDI supportedby the following documentation:

(i) the payment orders (SPMU) drawn by implementingagencies (namely, Pemda Tingkat II and PDAM) on the local sub-project on-lending bank accounts;

(ii) certificatesof Performance (Berita Acara) issued by implementingagencies;

(iii) copy of IBRD No Objection Letter, in the case of civil works contractswith a value of US$ 500,000 equivalent and over, and goods supply contracts with a value of US$ 200,000 and over.

On the application of D-G Budget (TUA), IBRD would replenish the Special Account quarterly or when the balance in the Special Account becomes 50 percent of the initial deposit, whichever occurs sooner in respect of these drawings. In the c^se of civil works contracts with a value of US$ 500,000 equivalentand over and goods supply contracts with a value of USS 200,000 equivalent and over, and all contracts for consultancy services and training, the replenishmentapplications would be supported by the followinE documentation:

(i) the payment orders (SPM or SPMU) issued by KPKN offices, or drawn on local sub-projecton-lending bank accounts, or issued by TUA in respect of foreign currency payments from the Special Account;

(ii) certificatesof Performance (BeritaAcara) issued by implementingagencies;

(iii) copy of IBRD 'No Objection Letter'.

In the case of civil works and goods supply contracts/order3with values below these limits, the replenishmentapplications would be supported by Statements of Expenditure (SOE). The detailed supportingdocumentation in respect of SOEs would be retained by TUA and implementingagencies, mnd made available for review by IBRD on request. - 84 _ ANNEX 4D Page 7 of 7

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

Disbursement Schedule (S million)

Estimated Disbursements Semester Cumulative Profiles /a Semester ending Amount Amount 2 (Cum. 2) (1) (2)

1 06/91 0.0 0.0 0.0 0 0 2 12/91 6.3 6.3 6.3 3 2

3 06/92 12.8 19.1 19.1 10 7 4 12/92 13.6 32.7 32.7 18 14

5 06/93 14.0 46.7 46.7 26 26 6 12/93 11.5 58.2 58.2 34 37

7 06/94 9.7 67.9 67.9 46 46 8 12/94 8.8 76.7 76.7 58 52

9 06/95 7.6 84.3 84.3 70 58 10 12/95 7.0 91.3 91.3 82 64

11 06/96 5.0 96.3 96.3 90 70 12 12/96 /b 3.7 100.0 100.0 94 76

13 98 81 14 100 85

15 90 16 96

17 100

/a (1) Urban sector profile for Asia. (2) Urban sector profile for Indonesia. /b Loan closing date.

Notet The project disbursement schedule is sherter than the standard profile due to a number of features which have been incorporated into this project to accelerate loan disbursements: (i) first year detailed designs and tender documents will be completed before loan effectiveness with funding for this work trom the Japanese Grant Facility; (ii) the technical teams at the local government level which will be responsible for implementation,were fully involved during the preparation phase; (iii) local counterpart funds are being included in the annual government expenditure budgets; and (iv) there is no national-level TA which in the past tended to lengthen the loan disbursement period. - 85 - ANNEX 4R rageI of 1 INDONESIA

SJLAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

Key Implementation ar.d Performance Indicators ard Reporting Systems

Rep.:ting la frequency and Indicators responsibility Reporting to:

1. Conformity of annual budget allocation with annua. approved expenditure programs and financing (1) PFO (1) CPFO plans (2) CPFO (2) TKPP/IMG and IBRD

2. Conformity of actual expenditures with annual budget allocations (1) PFO (1) CPFO (2) CPF (2) TKPP/IMG and IBRD

3. Physical progress per local government and quarterly water enterprise (1) PMO/PHU CPMO (2) CPMO TKPP/IMG and IBRD

4. RKL/RPL Implementation annual (1) PMO/PHU (1) CPMO (2) CPMO (2) TKPP/IHG and IBRD

5. Water enterprise financial targets annual (1) PMO/PHU (1) CPHO (2) CPMO (2) TKPP/IHG and IBRD

6. Local government revenue improvement annual targets and achievements (1) PMO (1) CPMO (2) CPMO (2) TKPP/IHG

7. Loan disbursement targets quarterly CPFC TKPP/IHG and IBRD

d. Consulting services implementation quarterly schedules, particularly assignment starts CPMO TKPP/IMG and IBRD

9. Procurement schedules quarterly (1) PMO/PHU (1) CPMO (2) CPHO (2) TKPP/IMG and IBRD

/a PMO refers to the Project Monitoring Offices at the local government level in Sulawesi PHU refers to the Project Management Unit in Irian Jaya. - 86 -

AANN.P4 Page 1 of 2

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

SUPERVISIONPLAN

Bank Supervision Input

1. The staff inputs indicatedin the table below are in addition to regular supervision needs for the review of quarterly progress reports. procurement documents and actions, correspondence, etc. These routine requirements at Bank headquarters are estimated to be about six staff weeks during PY92 and FY93 and approximatelyfour staff weeks per year thereafter. Staff input during the field supervisionis indicated in Table 1. Accordingly, the total Bank supervision input is estimated at about 20 staff weeks annually during FY92 and FY93, and about 15 staff weeks during FY94 and FY96.

GOI's Contributionto Supervision

2. Progress reports will be submitted as follows:

(a) generally following the format being used for Loan 2932-IND (First Jabotabek Urban DevelopmentProject - JUDP I);

(b) on a quarterlybasis and within 45 days of the end of each quarter, with the first report for the period of July through September 1991 due by November 15, 1991.

(c) prepared by CPMO using inputs from all implementingagencies.

3. Overall project monitoring and coordination will be the responsibilityof CPMO in DGCK. Review meetingswith key representativesof the main implementationagencies will be beld semi-annuallyin May/June (in Jakarta) and in November in the field. The meetings in Jakarta would be chaired by the Secretary of TKPP; all meetings would be attended by a serior representativeof DGCK, which Is responsible for overall project supervision by the Central Government.

4. DGCK, assisted as necessary by TKPP, will also be responsible for coordinatingarrangements for Bank supervisionmissions and for providing support required by Bank missions. - 87 - ANNEX4F Page 2 of 2

Table 1: BANK SUPERVISIONINPUT

Approximate Expected Skill Staff dates Activity Requirements Inputs (SW)

11/91 First SupervisionMission FinancialAnalyst 8.0 (Project launch and extensive Municipal Engineer field visits) Sanitary Engineer Environmentalist

5-6/92 SupervisionMission Financia' Analyst 6.0 Municipal Engineer Sanitary Engineer

FY92 Headquarters 6.0

11/92 SupervisionMission (with Financial Analyst 8.0 extensive field visits) Municipal Engineer Saaitary Engineer Environmentalist

5-6/93 SupervisionMission FinancialAnalyst 6.0 Municipal Engineer Sanitary Engineer Environmentalist

FY93 Headquarters 6.0

11/93 SupervisionMission Financial Analyst 3.0 Municipal Engineer Sanitary Engineer

FY94 Headquarters 4.0

5-6/94 Mid-term Review Mission FinancialAnalyst 8.0 (includingplans for prepara- Municipal Engineer tion of PCR) Sanitary Engineer Envirormentalist

FY95-96 SupervisionMission and 15.0 Headquarters - 88 -

ANNEX 4G Page 1 of 5

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENTPROJECT

SULAWESI COMPONENT

Operations and Maintenance of Urban Infrastructureand Services

1. Key facets of the agreed approach to strengtheningoperations and maintenance (O&M) activities for infrastructureand services covered by the SIJtUDPexpenditure programs in each local government include: (&) Estimates of required O&M expenditures (by subsector); (b) Analysis of current capabilitiesfor O&M; (c) Installationof POMMS in local governments; (d) PMDU strengtheningfor water enterprise O&M improvement;(e) Development of provincial public works capacities to assist O&M; (f) Development of annual O&M programs (with appropriate links to institutionaland revenue improvement plans); (g) Revision of Local O&M budgets and financing (MNA-KEPMINNo. 5/1990); and (h) Recommended monitoring and supervision indicators.

Estimates of Required O&M Expenditures (by subsector)

2. Project preparationefforts for O&M elements in each subsectorbegan with the review of technical memoranda (prepared for EJBUDP) describing unit costs for O&M activities for existing and new infrastructure. Preliminary inventoriesof existing infrastructure,the functionalclassification of these systems to assign O&M responsibilitiesamong central, provincial and local government units, and estimation of curLent conditions and deferred maintenance needs were all undertaken in the initial preparation stages. Four subsectors (of the seven covered by IUIDP guidelines)emerged as the focal points of O&M efforts: water supply, roads, drainage and solid waste. Within the sanitation subsector, the empty:.ngof septic tanks and disposal of sludge (by public or private operators) is the principal O&M issue. On-site sanitation is the preferred approach in almost all localities (except for Manado, where a detailed study for a sewerage system including O&ir5 requirementsis proposed). For KIP/MIIP subsectors O&M is generally presumed to be a 'communityft responsibility,though care must be taken to ensure that provision is made for operatingwater taps, public toilets (MCK) and other KIP/MIIP facilities,and to confirm that local governmentswill assist in establishing 'merchants'associations, or provide other specific arrangements for MIIP O&M.

Analysis of Current Capabilitiesfor O&M

3. The estimated requirementsfor O&M (from paragraph 1 above) were then compared to current O&M practices and capabilitiesin four basic respects: (a) manpower available with the responsibleagency (as part of institutionalassessment); (b) budget levels provided for O&M activities during the past five-year period; (c) equipment and facilities available versus needs; and (d) preliminary identificationof the potential for contracting OWH activities in each subsector. - 89 -

ANNEX4G Page 2 of 5

4. This analysis is summarized as follows:

(a) for subsectors other than water supply, the local governmentswere generally providing between 20 percent and 40 percent of the estimated O&M requirements,and had substantiallyimpaired capabilitiesdue to shortage of trained manpower, adequate equipment and spare parts, etc.;

(b) water supply enterpriseswere highly variable in their O&H performance,but generally provided 50 percent to 80 percent of needed O&M for their systems, with inability to raise tariff levels and shortage of trained manpower citek'as the key obstacles; and

(c) most local governmentshad not seriouslyexplored the option of contracting for O&M, as GOI regulationsprohibit contracting from the "rout3ne"component of GOI budgets (as opposed to the "development"component from which contracts are normally financed). (However,a few local governmentswere contractingroad maintenance and some were willing to consider solid waste collection on a "franchise'basis covering designated urban communities (typically upper income areas), following the success experienced by the City of Surabaya with this approach.) Drainage channel cleaning was another area of O&M discussed for potential contracting,with a mixed response by local governments.

5. The analysis resulted in the definition of current levels of O&M expenditure for each local government ("currentO&M' in the expenditure program), and two types of proposed additions or 'incremental'O&M expenditures: (a) a graduated increase of O&M budget to reach estimated requirementsfor current infrastructuresystems and (b) O&M expenses necessary for newly constructed and rehabilitatedfacilities. Responsibilityfor budgeting the required O&M expenditurewas assigned based on the functional classificationof facilities (particularlyfor roads and drainage) between central, provincial and local governments. However, both central (especially DGBM) and provincial agencies frequently arrange for lower level units to execute O&M budgets, and execution responsibilitiesfor budget allocations in these cases must be agreed annually.

Installationof POMMs in Local Governments

6. The Performance-OrientedMaintenance Management System (POMMS) was originally developedwith Bank assistance for the Urban V project cities; USLI assistance was used to refine and extend POMMS to additional cities (eight are now covered) and develop improved local government budgeting procedures associated with POMMS implementation. Ujung Padang is the only SIJUDP project town included among the initial POMMS cities.

7. Further progress in fully developing the POMMS approach e.san O&M programming and management technique for all non-water supply infrastructure has recently taken two major steps forward: - 90 -

ANNEX 40 Page 3 of 5

(a) The USL and Urban V p,iject supporteda 'simplifioedversion of POMMS for application in medium-to-smallurban areas, simplifying inventory procedures and applying uniform performance standards, rather than the case-by-casemethods used in the large cities.

(b) The Minister of Home Affairs in January 1990, issued a Decree (KKEPMIN No. 5/1990) instructingthe fully implementationof POMMS in the eight pilot cities and the preparation of budget documents in revised formats which explicitly identify O&M expendituresfor the first time in Indonesia. The KEPMIN alsL commends the POMMS approach for considerationby other local governmentsand provides guidelines for its implementationand associated budgeting procedures.

The proposed project would install the simplified version of POMS in all nine project towns, and utilize these local government systems as training opportunitiesfor officials of other local governmentsand provincial officials.

PMDU Strengthening for Water Enterprise O&M Improvement

8. Within the water supply subsector,which is not covered by POMMS, the focal point of GOI-Bank efforts to improve water enterprise O&W has been the Provincial Monitoring and DerelopmentUnits (PMDU). The PMDUs are establishedwithin the provincial public works departments (DPUPs)with responsibilityto monitor the full range of water supply service provision by all local enterprises,with particular attention to those in transition from the status of BPAM. The PMDUs will assist water enterprises in evaluating staffing, training and other strengtheningrequirements (e.g., budgeting procedures, chemical and supplies management, etc.) to improve operational effectivenessand efficiency. The PMDU is also charged with assisting PDAM units with calculation and justificationof appropriateuser tariffs to assure adequate financirg of system operations and orderly expansion, and to assist in making appropriate arra..gementsfor operation of public water taps in low- income areas (e.g., under the KIP program) which has been typically troublesome for many enterprises. PMDU also serves to coordinate local staff participation in training programs for operationaland management personnel of the water enterprises. The proposed project includes technical assistance to strengthen the capacity of PMDU units to perform these central activities during the project implementationperiod.

Development of Provincial Public Works Capacity to Assist O&M Programs

9. The DPUPs have staff on branch offices (cabang dinas) in each local government. The increasing role of local governments in implementing infrastructureprograms, and the announced intentionof the Ministry of Public Works to second substantialnumbers of their current staff for provincial service, creates an opportunityto revise and strengthen the role of the DPUP in assisting local government O&M program development. The heads of DPUP units have agreed to assign members of the branch-officestaff to receive training in POMMS and PMDU O&M procedures, to create the capacity to support - 91 -

ANNEX 4G Page 4 of 5

local governments in preparing and executing O&H activities, the primary need is to strengthen the O&H management assistance capacity for the PLP subsectors (i.e., d;ainage, solid waste management and sanitation). DGCK has agreed to assist in the creation of this capacity.

Development of Annual O&H Programs for Each Local Government

10. The preceding activities are necessary preparatory steps to provide local governmentswith the background and resources to develop annual O&M programs covering all infrastructuiresubsectors, within the constraintsof current manpower and budget resources. The provincial DPUPs and PMDUs would assist the local governmentsto prepare annual O&M programs, and to monitor and support their execution. The POMHs consultantswould review and assist DPUP to establish the format the orocedures for preparation and monitoring of the annual programs. One of the most significantaspects of this initiative would be the opportunity to discuss manpower and financial planning for OLM in each subsector with every active local government in the program.

11. Shortages of trained manpower will create opportunitiesto discuss contract O&M schemes with the local governments. The recent revision of INPRES Data II (block grant) regulationsto allow up to 25 percent of these transfers to be used for maintenance and rehabilitationcontracts should also provide flexibilityin constructingthe annual programs. The linkages with institutionalrevenue improvementplans to increase local manpower and revenue will also be specifiLallydiscussed in this annual review to assure consistency and improve local government management of the O&M agenda.

Revision of Local Government O&M Budget Procedures

12. Within the context of the above-notedMHA KEPHIN No. 5/1990 (see para. no. 3) the framework has been proposed for a revised format and classificationof local government annual budgets. The instructionrequires the eight pilot local governments (and encourages other) to prepare "parallel' budgets in addition to "basic' (traditional)local budget. This new parallel budget has three major categories: (a) administrativeoverhead (salaries, administration,etc ); (b) O&M of public facilities and service systems; and (c) development projects (includingdesign and supervisionoverheads).

13. This structure represents a major step in making O&M budgeting transparentand monitorable,as opposed to the current general 'routine' category (combining wa' and 'b' above) in which line items contain a mixture of funds and functions. MHA/PUOD staff indicate that it is the intention of GOI to convert the entire local government budget systehmto this new format after a period ef parallel operation. Project support for municipal financial management would assist in this parallel budgeting and accounting process in local governments and provide appropr'.ateformats and instructionsfor use by other local governments with the guidance of provincial SEKWILDAs.

O&M Monitoring Indicators

14. Monitoring indicatorswould include the following: - 92 -

ANNE: 4G Page 5 of S

(a) preparation of annual maintenanceprogram and budget per MAM Kepu'n No. 5/1990;

(b) actual O&M expendituresper subsectorversus target in expenditure program;

(c) installationof POMMS - Portion of O&M expendituresbased on POHKS;

(d) level of deferred maintenance and rehabilitationcontracts Expendituresv. Level of Routine O&M Expenditures;

(e) portion of routine O&M performed under contracts (by subsector);

(f) increase in O&M expenditures (total compared to increase in TK It PADS; and

(g) actual measurably improved O&M of infrastructure. - 93 -

ANNEX5 Page 1 of 1

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

Local Government/CityProfiles

Urban Population (thousand) City AdministrativeStatus 1990 1995 (est.)

in Sulawesi

Gorontalo Kotamadya 54 60 Bitung Kotamadya 35 39 Manado Kotamadya 237 253 Palu Kota Administratip 107 128 Kendari Kota Administratip 68 84 Ujung Pandang Kotamadya 764 849 Watampone Kecamatan 29 30 Palopo Kota Administratip 58 70 Pare Pare Kotamadya 79 81

in Irian Jaya

Biak Kecamatan 40 49 Jayapura Kabupaten 120 165 Sorong Kecamatan 80 107 Fak Fak Kecamatan 21 /6 Nabire Kecamatan 20 26 ManolXvari Kecamatan 53 86 Wamena Kecamatan 7 9 Serui Kecamatan 16 19 - 94 - ANNEX 6 Page 1 of 14

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT

TECHNICALASSESSMENT

A. General Technical Standards and Criteria for Subproject Selection, Planning and Design (adapted to suit local conditionsaccording to MPW guidelines)l/

1) Sector Selection Criteria

Water Supply : Demand, water stress area, industrial development,tourism

Drainage : Flooding, deferred maintenance, increased runoff, inadequatecapacity

Solid Waste : National guidelines regarding coverage for high densities,environmental and health considerations

Sanitation : National guidelines regarding coverage for high densities,environmental and health considerations

Roads : Average daily traffic, congestion, traffic flow constraints,road condition, accidents, new land developments

KIP : National policy for basic services, local government initiatives,poor environmental conditions,community willingness to operate and maintain infrastructure

MIIP : Service deficiencies,local government initiatives,environmental anid health consid- erations

1/ All standards and criteria follow MPW guidelineswhich have been reviewed and found acceptableby the Bank. Details are provided in the Project File. - 95 -

ANNEX 6 Page 2 of 14

2) Subproject Design Criteria

(a) Water Suppl1

Planning:

- Priority for rehabilitationand optimum use of existing systems - Priority for reduction of water losses and leakages - Ability and willingness to pay for water supply - Ad3quate income for piped water supply - Demand for special areas (e.g., tourism needs) - Planning period of 10 years - Optimum system selected on basis of minimum present value of total costs over project life taking a discount rate of 10 percent - Environmental impact assessments,as appropriate.

Engineering Design:

Vater- quality - Indonesia and WHO permissible standards

Maximum pressure - 7.5 bar in the distribution system

Minimum pressure - 1.0 bar in the distributionsystem over a 24 hour period

- Peak day demands - 1.15 x average day demand

- Peak hour demands - 2.00 x peak day demand

(b) Drainage

Planning:

City drainage planning focuses initiallyon primary and secondary drainage, and local flooding. Major flood control works are the responsibilityof central or provincial authorities. Urban drainage coverage target is 60 percent in Repelita V. with 100 percent coverage by primary and secondary systems. Optimizat.onof existing drainage systems. Major drainage works to be undertaken on the basis of drainage masterplans

Design:

Q - F x C x I x A, where Q - discharge, C-coefficientof roughness, I - rainfall intensity and A - catchment area

Return period of design stotm - 5 years Minimum velocity of flow in channels - 0.5 meters/second m4nimum Hydraulic design - Manning's Formula -96 -

ANNEX 6 Page 3 of 14

(c) Solid Waste Services

Planning:

Based on environmentaland health considerations,demand and willingness to pay. High priority for communitieswith densities over 200 person/hectare.

Design standard:

Population density greater than 200 persons/ha, 100 percent service; population density between 100 person/ha and 200 person/ha, 75 percent service; no service yet for density less than 50 person/ha; and 100 percent service for commercial areas and markets.

Refuse generation: 3.15 liters/capita/dayfor medium towns; 1.85 liters/capita/dayfor small towns

Disposal by sanitary landfill: environmentalimpact assessments required.

Design:

Modular system as per DG Cipta Kary. guidelines.

(d) Sanitation

.lanning:

Eighty percent coverage of urban population by 1995 (RepelitaV).

- Sewer systems may be considered for densities in excess of 200 person per hectare. Systems include conventionalsewers, small bore sewers or shallow sewers.

- All other areas to have on-site systems.

Criteria:

1. Areas with ground water table less than 1.5 meters

a. Population density greater than 150 persons/ha - 100 percent service level, using type Al (MK-5 KK + septic tank and anaerobic filter) or type Bl (WC/JK + septic tank and anaerobic filter)

b. Population density less than 150 person/ha - 80 percent service, type Al or Bl facility. - 97 -

ANNEX 6 Page 4 of 14

2. Are2s with ground water table between 1.5 m and 5 m

a. Population aensity greater than 200 persons/ha - 100 percent service level, type A (MK-5 KK + septic tank and anaerobic filter) or type Bl (WC/JK + septic tank and anaerobic filter)

b. Populationidensity 150 - 200 person/ha - 80 percent service level type B (WC/JK + septic tank and soakaway trench)

c. Population density less than 150 person/ha - 60 percent service level using type B facility

3. Areas with ground water table greater than 5 meters

S. Population density greater than 200 person/ha - 100 percent service level using type A and type B2 facility

b. Population density 150-200 person/ha - 80 percent service level using type B facility

c. Population density less than 150 person/ha - 60 percent service level using type C facility (soak pit with leaching pit)

4. Water consumption for pour flush latrines taken as 5 lpd. Sludge generation in pour flush latrines is 30 led.

All according to DG Cipta Karya Guidelines.

B. Technical Description1Hon-Water Supply Subprojects (SULAWESIComponent)

1. General

1.1 The non-water supply physical infrastructureinvestments constitute a well balanced and fully integrated program of infrastructureimprovements, covering - in accordance with national IUIDP objectives and guidelines-the urban roads, drainage, solid waste, sanitation,Kampung ImprovementProgram (KIP) and Market InfrastructureImprovement Program (MIIP) subsectors. The scope of the subprojectshas been determined by the amcunt of capital investment funds available after covering essential O&M expenditures. The relative priorities between subsectorshave been establishedbased on the severity of infrastructuredeficiencies and the magnitude of the expected benefits; special priority has been accorded to support of economic activities and poverty alleviation. Improvementof environmentalconditions was also given high priority. Subprojectswere conceived as logical units of investmentswhich will yield benefits when implementedas one activity. Details on each of the six subsector are given below. - 98 -

ANNEX 6 Page 5 of 14

2. Urban Roads

2.1 In determiningpriorities in the urban roads subsector the following guidelineshave been used:

(a) first priority is given to upgrading and improvementof existing main road sections; artery and collector roads rather than local roads (RepelitaV priority).

(b) high priority is also given to preventionof immediate damage to installationsad network sections and making up for deferred maintenance.

(c) expendituresrelated to expansion of the existing road network have received second priority.

(d) funds requirementsfor adequate annual O&M expendituresrank above new capital expenditures;only if funds for recurrentexpenditures are assured, have investmentsin network improvementsbeen considered.

2.2 Planning criteria, design standardsand unit costs are generally based on National IUIDP and DG Bina Marga guidelines. Detailed documentation is provided in th rZJjBUDP TechnicalMemorandum Urban Roads, November 1988.

3. Drainage

3.1 The drainage system comprisesmain rivers, primary drainage channels, secondary and tertiary drainage. Emphasis is on rehabilitationand cleaning of the existing network, with extensionsprimarily serving to increase the effectivenessof the existing system. (Primary drainage flood control works in Ujung Pandang are covered under on-going OECF assistance).

3.2 Planning criteria, design standards and unit costs are generally based on national IUIDP and DG Cipta Karya guidelines. Detailed information is provided in the EJ/B UDP TechnicalMemorandum City-Wide Drainage, November 1988.

4. Solid Waste

4.1 Solid waste disposal subprojectsfocus on the most densely population areas of the towns concerned: areas with a density of over 20' persons/ha have priority in the program, which tries to ameliorate deficienciesin the existing solid waste collectionand disposal service, based on an assessmentof demand. The solid waste ccllection system is based on an approach adopted nation-wide in accordancewith the National Solid Waste Management Strategy (March 1989). Priority is given to the improved operations of available equipment,and only essential investments in new vehicles are proposed. Developmentof new waste disposal sites (landfills) with adequate capacity is also given high priority. - 99 -

ANNEX 6 Page 6 of 14

4.2 Plan..ingcriteria, design standards and unit cos:s which are based on national IUIDP and DG Cipta Karya guidel nes. , 7etailed information is provided in the EJ/B Technical Memorandum Solid Waste Disposal Management System, November 1989.

5. Sanitation

5.1 Similar to the solid waste programme the sanitationprogram gives priority to densely populated areas with densities of over 200 people/ha. The programme aims to upgrade existing,multi and single family sanitation facilities (MCKs, multi-family latrines, septic tanks), provides new facilities of a similar nature, equipment to empty and clean the facilities, disposal sites, supporting feEsibilitystudies for sewer schemes, and operation and maintenance expenditureand informationcampaign expenditure. The recommendationsof the National Strategic Plan for the Human Waste and Waste Water Disposal subsector for Urban Areas (January 1989) have been taken into consideration. Planning criteria, design standards and unit costs are generally based on IUIDP and DG Karya guidelines, detailed information is provided in the EJ/B Technical Memorandum Human Waste Disposal Management System, November 1989.

6. KIP

6.1 The Kampung ImprovementProgram (KIP) provides micro-infrastructure at kampung neighborhood level, including access roads, footpaths, smrall drains, MCKs, water stand pipes and solid waste handcarts and transfer stations. For several TK II re-KIP is provided for kampungs that had a KIP program implementedmore than 10 years ago.

6.2 Planning criteria, design standards and unit costs are based cn IUIDP and DG Cipta Karya guidelines.

7. MIIP

7.1 The Market InfrastructureImprovement Programme (MIIP) provides micro infrastructure(similar to K'P) in the market areas. Planning criteria, design standards and unit costs are based on IUIDP and DG Cipta Karya guidelines.

C. Technical Description of Water Supply Subprojects (SulawesiComponent)

8.1 Water supply sector reports hal been prepared for the towns of (1) Bitung; (2) Watampone (Bone); (3) Palu (Donggala); (4) Gorontalo; (5) Palopo (Luwu); and (6) Manado.

Review of Water Demand Projections

8.2 In all above project towns available project documents and executed additional surveys were reviewed to assess present service levels, management capacity, status of water supply facilities,desire and willingness to pay for water svpply and per capita demand. The proposed projects based on the - 100 -

ANNEX 6 Page 7 of 14

reviews aze technically sound and would provide the least cost solution to satisfy future water demand. As most of tie towns have high unaccounted for water, special attention has been paid to design leakage reduction campaigns on n case by case basis in relat.on to systems operation, design, age and facilities and maintenance practices. Earlier proposals for the water supply of the above towns which had been prepared for DAB were extensivelymodified to incorporate the effects of now capital works installea, and revised water consumption and population projections.

8.3 A description of the technical proposals for water supply based on the above reviews is given further below.

Detailed Design and Bidding Documents

8.4 These technical proposalswould result in a first year program of actions which includes in order of priority (i) carrying out leak detection programs in all cities except Palu and Palopo where these programs would not have any economic benefits; (ii) rehabilitationof water treatment plant in Manado; and (iii) implementationof some distributionextensions where water demand should be urgently met. On the basis of the above priorities, the following documents would be prepared: (i) extended terms of reference including draft contract and invitatiorndocuments for unaccotuntedfor water studies; (ii) detailed design and bidding cocuments for treatmentworks; (iii) terms of reference for detailed design of project components; (iv) bidding documents for supply and installationof consumer ,,.ers, pipes and bulkmeters; and (v) transfer of background d3cuments.

Procurement

8.5 Land acquisition for all subprojectswould not p'se any problems and would take place before negotiations. Procurementof civil works and goods would be carried out in accordance with World Bank Guidelines and GOI regulations. It is expected that all civil works would be awarded on the basis of Local Competitive Bidding (LCB),materials and equipment contracts which are generally less than $200,000 equivalentwould be procured on the basis of LCB. Only supply and installationof specific mechanical and electrical equipment for treatment plants and pumping stations would be procured under InternationalCompetitive Bidding (ICB). Materials and equipment of less than $50,000 equivalent would be procured on the basis of prudent shorping. In line with presenitpractice, it is expected to execute part of the house connectionsar.i repairs under Force Account up to a total of $1,ooo, or v.

Project Implementation

8.6 Before project implenmentationspecial attentionwould be paid to an aggregate limited of $300,000 establish abstraction rights for the water resources of Palopo and Watampone which are also ubed for irrigation purposes. lecause of the still unsatisfactorylevel of development of the water enterprises, significanttechnical assistance is essential to achieve institutionalstrengthening and satisfactoryproject implementation. It is therefore, proposed to establish PMU's in each of the project provinces which - 101 -

ANNEX 6 Page 8 of 14 would be responsible for the above mentioned activities. As all water enterprises in Sulawesi are expected to be transferred into PDAM's before project implementation,it is proposed that each PDAM wil be responsible for its own procurement and project implementation.

InstitutionalDevelopment

8.7 Except Manado and Palu which have a PDAM, the cities of Gorontalo, Palopo and Watampone are served by APAM's. The three BPAM's are expected to be transferred into PDAM's ty April 1, 1991.

Project Beneficiaries

8.8 The proposed projects would extend incrementalwater supply to the following population:

Incremental Population Served

Number of Population Number of Population Hse. Connections (HC) with H.C. Standpipes (SP) with S.P.

Bitu:ig 2,231 13,286 43 3,870 Watampone 1,556 9,553 9 8i0 Palu 9,182 55,092 73 7,300 Goprontalo 3,C91 22,100 263/a 13,150 Palopo 3,674 20,243 25 6,925 Manado 5,105 36,348 19 1,425

Total 24,839 156,722 432 33,840

/a Mix of group connectionsand public taps.

8.9 It is clear that in Sulawesi imprcved customer relationswould be necessary to increase the number of house connections and public taps, and the detrimental effect on potential customers of the present high connection charges should be mitigated through one or more of the following options:

(a) Charging only the actual margindl cost; (b) deferred payment of connection fees by installmentsover a period of five years; (c) building coanection cost into tariffs; (d) laying service mains to plot boundaries; (e) introductionof a by-law requiringconnection of properties within a certain distance of a distributionmain, and (f) the promotion of the installationof group connections. - 102 - ANNEX 6 Page 9 of 14

Proposed Water Supply facilities in Sulawesi

8.10 The works agreed with BPAM's and PDAM's would include:

Bitung: creation of distributionzoning, installationof pressure reducing valves and bulle flow meters, installationof chlorination dosing equipment and soda ash dosing equipment at dahowudu for a capacity of 150 l/sec, constructionof a 500 m3 capacity reservoir, layir.gof about 24 km of distributionpipes; constructionof about 2,400 service connectionsand 40 standpipes,and acquisitionof laboratory equipment and vehicles.

(Bone) Watampone, execution of an unaccounted for water reduction and repair program. Installationof chlorinationfacilities for a capacity of 100 1/sec at Walangi spring; installationof a pumping station at Walangi spring equipped with two pumps of each 60 1/sec; laying of about 35 km of distributionpipes; constructionof about 1,700 service connectionsand 10 standpipes;conscruction of additional stores and workshop, supply of maintenance equipment and vehicles.

(Donggala)Palu, execution of an unaccounted for water reduction and repair program laying of about 114 km of distributionpipes; rehabilitationof civil and electro-mechanicalworks; replacementof pum,)s,acquisition of laboratoryequipment, constructionof about 7,000 .ervice connectionsand 65 standpipes.

Gorontalo, execution of an unaccounted for water reduction and repair program; study and improvementof existing intake at Bone river for a capacity of 200 1/sec; rehabilitationof bulk meters, laying of about 46 km of distributionpipes, constructionof about 4,000 service connectionsand about 280 group connectionsand standpipes;construction of a 1,000 m3 capacity reservoir, constructionof new 300 KVA PLN connection to PLN; constructionof office building, storage and workshop, and acquisitionof laboratory,maintenance equipment and vehicles.

(Luwu) Palopo, installationof new river intake for a capacity of 154 1/sec; laying of a transmissionpipe of 300 nmndiameter and 500 m length extension of treatment plant for a total capacity of 120 1/sec,construction of a 1,000 m3 capacity reservoirwith a 250 mm diameter and 1,205 m long transmissionpipe; installationof two pumps of 16 1/sec 56 m head, laying of about 48,5 km of distribution pipe; constructionof about 5,500 service connections and 25 public taps.

Manado, execution of an unaccounted for water reduction and repair program, rehabilitationcf Paal Dua treatment plant for a capacity of 350 1/sec; installationof chlorinationfacilities at Malayang pumpstation 200 1/sec; Pantchuran 15 1/sec,. Teling borehole 20 1/sec, Airport borehole 20 1/sec, Kumahakar spring 130 1/sec, rehabilitationof Panairan treatmentworks, Teling borehole and - 103 -

ANNEX 6 Page 10 of 14

rehabilitationof Panairan treatmentworks, Teling borehole and Airport borehole; constructionof a new 40 1/sec borehole at Pineleng; rehabilitationof Bahandyang pump station, installationof a 100 1/sec 60 m head pump with 80 1/sec and 50 l/sec standby pumps; Paniki borehole relocation for a capacity of 40 1/sec, construction of a 500 ma capacity reservoirat BPT IV and a 2,000 ms capacity reservoir at Paal Dua; replacementof about 3,5 km of distribution pipes; laying of about 15 km transmissionmains and of about 71 km of distributionmains; installationof about 5,500 service connections and 20 public taps; constructionof offices and laboratory;and acquisition of maintenance equipment and vehicles.

D. Technical Assessment of Water Supply Projects (Irian Jaya Component)

Review of Water Demand Projections

9.1 The original masterplans and designs prepared for water supply in Irian Jaya in 1985-1987were reviewed and updated. The review was based on (i) physical changes of water supply systems which were recently implemented; (ii) additional surveys to assess water demand; and (iii) modified population projections taking into account the results of recently executed IUIDP studies. In all towns considerableimprovement of service levels through repairs, rehabilitationand metering had been executed by the management of the BPAM's. Based on sound design criteria and least cost approaches to satisfy future water demand, the following amendments to the original designs were proposed:

(i) Jayapura, based on a new assessment of water demand, developing the Kujabu river source in accordance with the existing detailed design. This would provide adequate headwork capacity which would be adequate in the long-term. No other major changes are proposed.

(ii) Sorong, based on the results of water demand assessment reduce per capita demand from 150 l/c/d to 90 l/c/d and reduce the percentage of water users supplied from public stendpipes from 25 to 15 percent. As a result of the reduction in the demand, develop a staged constructionof the earlier proposed treatment plant (50 percent of the original capacity). The majority of the scheme elements remain essentiallyunchanged. However, the operational complexity of the plump system may dictate the need for additioral storage to increase service reliability.

(iii) Fak-Fak, no changes.

(iv) Nabire, no changes.

(v) Manokwari, there are no changes in per capita water demands. However, population projections are reduced from 73,000 in 1995 to 43,000. Based on revised population projections demand has - 104 - ANNEX 6 Page l. of 14

proposed. In addition, less connections,distribution net work extensions and storage will be needed.

(vi) B.ak, no changes.

(vii) Serui, no changes.

(viii) Wamena, the existing Wamena water supply includes a treatment plant which is poorly designed. 1PPSAB has proposed low cost modifications to existing filters to increase depth and fit back wash facilities. This work is understood to be part of the 1990/1991 works program and is not included in the project. However because of recent increases in population development of a new intake at Kali Walesi will be implementedunder the project.

Review of Technical Design

9.2 Although the overall recommendationsare acceptable and offer an appropriate approach to development of improved service levels, the detailed technical design prepared for the project towns would be reviewed and modified to guarantee the safety of operation of the proposed works. Moreover, the agreed modifications of the water supply schemes need additional detailed design of intakes, storage, distributionsystems, pumping stations and chlorinationfacilities in several towns. It is estimated that review and modification of available detailed design and preparationof additional detailed design would require the input of local and foreign consultants.

Review of Bidding Documents

9.3 All draft bidding documents pertaining to the original detailed design for civil works and related supplies were prepared by Consultants. However, these bioding documentsneed to be completedwith bills of quantities. It is expected that the inputs needed for (i) modifying the detailed designs; (ii) preparation of additional detailed design and bidding documents; (iii) optimal packaging of works and supplies;and (iv) completion of the bills of quantities,will be provided by a team of local and foreign consultants.

Procurement

9.4 Land acquisition for all projects would not pose any problems and will take place before negotiations. It is expected that all civil works are small and would be awarded to prequalifiedcontractors under local competitive bidding (LCB). It is not expected that significantamounts of materials and equipment can be supplied from within Irian Jaya. The contracts for supply of pipes, fittings,water meters and steel reservoirswhich are in excess of $200,000 equivalent would therefore, be tendered under the international competitive bidding (ICB). It is proposed that mechanical equipment (pumps, motors, generators and chlorinators)which need maintenance services from companies with established agents within Indonesia are procured on the basis - 105 - ANNEX 6 Page 12 of 14 of local competitive bidding. These contracts for the equipment will be less than $200,000 equivalent. Miscellaneous goods costing less than $50,000 equivalent up to an aggregate limit of $400,000 may be procured by prudent shopping. In line with present practice many house connections are carried out by the BPAM's themselves. Therefore part of the house connections and repairs would be carried out under Force Account.

9.5 The efficient implementation of the proposed water supply systems in Irian Jaya will pose a serious challenge, because of the lack of experienced contractors and the logistical difficulties created by the large distances between relatively isolated water supply companies which require important external support. Therefore, a project management unit which provides training for the enterprise staff at all levels is proposed to be established in Jayapura. Although the BPAM Jayapura will soon be transferred to a PDAM, it is proposed that the PDAM would delegate all responsibility for management of procurenment and project implementation to the above mentioned unit.

Institutional Development

9.6 The transfer of responsibilities from BPAM to PDAM will take place by April 1991, but no information on the expected dates for the other BPAM's is available.

Project Beneficiaries

9.7 The proposed projects would extend incremental water supply to the following population:

Incremental Population Served

Number of Population Number of Population Hse. Connections (HC) with H.C. Standpipes (SP) with S.P.

Jayapura 6,125 42,875 202 20,200 Sorong 5,802 40,614 88 8,800 Fak Fak 179 1,432 24 2,400 Nabire 1,272 8,804 37 3,700 Manokwari 2,350 16,450 80 8,000 Biak 1,930 14,450 78 7,800 Serui 667 5,336 43 4,300 Wamena 400 2,800 11 1,100

Total 18,725 132,886 563 56,300

E. Detailed Description of Water Supply Facilities in Irian Ja - 106 - ANNEX6 Page 13 of 14

10.1 The project components which have been discussed and agreed with PPSAB/BPAM'swould provide for the following facilities in addition to unaccounted for water reduction and repair programs:

Javapura: Development of a new intake at high level on Kali Kujabu with a usable yield for 270 1/sec chlorinationfacilities with a total capacity of about 300 1/sec, laying of a 500 mm diameter transmissionmain of about 25 km length of Kali Jujabu to Jayapura and replacementof the minor transmissionremains by mains of higher replacement of other minor transmissionmaintains by mains of higher capacity, rehabilitatior/replacementof about 30 km of distribution mains and laying of about 38 km of new distributionmains, constructionof storage reservoirs of approximately6,000 m' capacity, rehabilitationof about 2,000 connections,installation of about 5,000 water meters in unmetered connectionsand construction of about 6,000 new connections and 200 standpipes. Other facilities includingworkshops, pipe storage areas, offices maintenance equipment etc.

Sorong: Development of a new intake weir and pumping station on the existing Sungai Remu Source for a capacity of about 130 l/sec and a pumping head of about 20 m, constructionof a 60 1/sec capacity slow sand filter treatmentplant with chlorinationfacilities at Remu, laying of about 9.5 km 150 to 300 mm diameter transmissionmains; laying of about 39 km of distributionmains; constructionof 2 storage reservoirs of 500 and 750 ms capacity; rehabilitationof 1,500 connections,including installationof about 500 meters in unmneteredconnections, including installationof about 500 meters in unmetered connectionsand constructionof about 5,000 new connections and 80 standpipes.

Other facilities includingworkshops, pipe storage areas, offices maintenance equipments etc.

Fak-Fak, rehabilitationof the existing treatment plant for a capacity of 20 1/sec, laying of about 4 km 80 to 150 mm diameter transmissionmains rehabilitationof storage and constructionof 2 reservoirs of 100 ms capacity. laying of about 2.5 km of distributionmains, rehabilitationof 135 connections installation of meters in ... unmetered connections and installation of about 130 new connections and 20 standpipes.

Other facilities includingworkshops, pipe storage areas, offices maintenance equipment etc.

Nabire, development of a new groundwater source and chlorination facility for a capacity of 27 1/sec, constructionof a pumping station with a capacity of 27 1/sec and a head of about 25 m, laying of about 1.5 km 150 to 200 mm diameter transmissionmain laying of about 1.5 km 150 to 200 mm diameter transmissionmain laying of about 32 km distributionmains, constructionox a 500 ms reservoir - 107 -

ANNEX 6 Page 14 of 14 about 1.5 km 150 to 200 mm diameter transmissionmain laying of about 32 km distributionmains, constructionof a 500 ma reservoir on Bukit Meriam; constructionof about 1,150 connections and 35 standpipes.

Other facilities includingworkshops, pipe storage areas, offices maintenance equipment etc.

Manokwari, development of a new intake at Kali Dingin with a capacity of 400 1/sec, constructionof a pumping station with chlorinationfacilities with a capacity of 40 1/sec and a head of 100 m, laying of 14 km 50 to 250 mm diameter transmissionmains, laying of about 46 km new distributionmains, constructionof 4 reservoirs of 100 to 300 ma capacity; and constructionof about 2,300 connections and 80 standpipes. Other facilities including workshops, pipe storage areas, offices, maintenance equipment etc.

Biak, development of additional pump facilities at Snerbouw in a capacity of 50 1/sec and a head of 60 m and 13 1/sec and a head of 90 m; chlorinationfacilities for a capacity of 60 1/sec; laying of 45 km 200 to 350 mm diameter transmissionmains; lay'ng of 49 km new distributionmains, rehabilitationof 400 m8 storage facilities and constructionof 2 reservoirs of 500 and 300 mJ capacity, rehabilitationof 1,600 connections,installation of meters in 800 unmetered connections and constructionof about 1,800 new connectionsand 80 standpipes.

Other facilities includingworkshops, pipe storage areas offices maintenance equipment etc.

Serui, incorporationof recently constructed intake of 20 1/sec capacity on tributary of Kali Matuembo, screening sedimentationfor a capacity of 20 1/sec; chlorinationfacilities for a capacity of 20 1/sec, laying of about 30 km of distributionmains; constructionof a reservoirwith a capacity of 500 m3; rehabilitationof 60 connections; installationof 75 meters in unmetered connectionsand constructionof about 700 service connectionsand 40 standpipes.

Wamena, developmentand constructionof intakes at Kali Walesi and Blaget constructionof clorination facilities, laying of about 10 km, 200 mm diameter transmissionpipe and constructionof 500 ma of storage capacity improvementof treatment and constructionof chlorinationfacilities for a capacity of 12 1/sec laying of about 9 km of distributionmains; constructionof about 460 service connections and 60 standpipes. Other facilities including workshops, pipe storage areas, offices, maintenance equipment etc. - 108 - ATEX 7 Page 1 of 4

INDONESIA

SULAWESI - IRIAN JAYA URBAN DEVELOPMENT PROJECT ECONOMIC ANALYSIS

A. WATER SUPPLY 1. Net present value (NPV) and economic rate of return (ERR) were estimated for each water supply subproject. In order to cope with the large number of (relatively small) subprojects, Bank staff proposed the application of a simplified methodology.

2. Economic benefits of water supply projects are equal to the consumers' willingness to pay for water plus external health benefits, i.e. prevention of infections caused to others (outside of someone's own household). The external health benefits, since are intangible, formally don't enter the economic analysis. In large cities with well functioning water supply systems there are usually enough information to obtain a reasonably good estimate of the consumers' demand function. The water demand function, in turn, can be used to estimate willingness to pay.

3. Lack of data and expertise and the proliferation of intermittent water supply systems generally made the application of this "traditional" method impossible in Sulawesi and Irian Jaya. The proposed simplified methodology divides piped water consumption into two parts: the first part replaces the previous source (e.g. wells, rivers, vendors) of water use, while the second part is a net increase in water consumption. Benefit of the first part is equal to the cost savings (actual payments plus own labor) of consumers who no more need to use other sources of water supply (this is the so-called alternative cost valuation method). Benefit of the second part, i.e., of incremental water use, is still has to be estimated using the concept of willingness to pay and that way depends on how accurately the demand function was estimated. However, the share of total benefits due to incremental water use is usually small and the information collected in order to estimate the benefit of the first part can be used to estimate one point on the demand curve. The full demand function is estimated by providing the coordinates of a fictitious low price - high quantity point on the demand curve and assuming a linear relationship between price and water demand (the method is not very sensitive to the assumption regarding the shape of the water demand curve and to small perturbations in the coordinates of the low price - high quantity point).

4. Two simple, user friendly software programs were developed along these lines to assist the project preparation teams with economic analysis. The programs compare subproject costs and benefits and calculate NPV and ERR estimates (the pi7ograms use a discount rate of 10% for NPV calculations). The programs are also useful for sensitivity analysis. A more detailed desc,iption of the programs (one for small projects and one for larger ones) with the - 109 - ANNEX 7 Page 2of 4

mathematical formulas can be found in the project files. 5. Further simplification in the applied methodology was allowed by the possibility of estimating a lower bound for the ERR. The method relies on the financial internal rate of return (FIRR) calculated with constant prices to obtain the lower bound estimate. When an expansion/rehabilitation of an already existing system is proposed and (a) there is no real water price increase projected; (b) changes in water consumption per connection are fully explained by projected changes in the real income and composition of customers, then the FIRR can be used as a proxy for the lower bound of ERR. 6. The estimated piped water consumption levels, which served as input to both the economic and financial analysis programs, took into account both consumer wealth (income growth) effects and price effects. Demand analysis carried out in Jakarta, Bogor and Surabaya found a 0.6 elasticity of water demand with respect to income and a -0.1 to -0.5 elasticity with respect to price. For the purpose of this project, income elasticity of 0.6 and price elasticity of -0.2 were used to estimate per connection consumption levels for all water supply systems. 7. The main results from the economic analysis of water supply subprojects are summarized below: City (local gov.) NPV ERR AIC Present tariff (Rp. bill) (%) (RpTcum) (Rp/cum) Watampone (Bone) 0.5 12.8 486 302 Palopo (Luwu) 0.1 10.4 361 230 Manado 4.4 14.0 333 357 Gorontalo 0.0 9.7 456 330 Donggala (Palu) 4.7 14.6 410 363 Jayapura 12.5 16.8 677 370 Biak 2.5 16.2 710 792 Sorong 10.6 22.0 694 450 Fak Fak 0.4 13.4 935 303 Nabire 1.4 16.6 802 458 Serui 0.0 10.0 1057 290 Wamena 0.1 11.0 1004 290 Manokwari 0.1 10.3 1132 261

B. DRAINAGE 7. The overwhelming major_.iy of drainage subprojects are very small, i.e. cost less than Rp 400 million (about US$ 0.2 million). Case by case economic analysis (i.e. calculation of ERR and NPV) was required only for the larger ones which typically cost Rp 600 - 1500 million. The benefits of these drainage subprojects were estimated either i) on the basis of avoided flood damages or ii) ANNEX 7 - 110 - Page 3 of 4

land value increases and road maintenance cost reductions. Since estimation of the cost of flood damages requires very detailed surveys and the analysis of several type of costs, preparation preferred the second, less time consuming approach. The advantage of this approach is obvious: land value increase, if land markets function properly, is an indicator which can reflect the present value of the future benefit stream accruing to the owners of the land in the project area. The projected increases in land values were based on comparison of land values in the project area to land values in similar, but less frequently flooded neighborhoods. Information on land values were collected during interviews with kelurahan (sub-district) staff handling land transactions and with informal real estate brokers. Reductions in road maintenance costs were estimated on the basis of local experience. Only those drainage projects are included in the proposed project which have a positive NPV. C. URBAN ROADS

8. The Urban Road Directorate of the Ministry of Public Works issued an "Urban Road Planning and Programming Manual" to guide the preparation of all IUIDP projects. Preparation of the manual was partly financed from the technical assistance components of the Regional Cities Urban Transport Project (Loan no. 2817-IND) and the Urban Sector Loan (Loan no. 2816-IND). Economic analysis of all road subprojects were based on the application of this manual. Using information obtained from site specific traffic and road condition surveys, the manual is an easy to use tool to estimate the benefits of urban road rehabilitation, betterment, widening and new urban road projects. Two kinds of benefits were estimated: vehicle operation cost savings and time benefits, which, if compared to the costs, made it possible to calculate ERR or NPV of the subprojects. Further simplification was allowed for subprojects with a cost below Rp 2 billion (about US$ 1.1 million). For each class of road and type of road improvement, the manual also calculates the minimum traffic level which makes the improvement economically viable (detailed description of the methodology and assumptions used in the manual is available in the project files). A proposed road improvement was considered acceptable if the average daily traffic on the road was higher than the cut-off level determined that way. D. OTHER SUBSECTORS

9. A high portion of the benefits of human and solid waste management and market infrastructure improvement subprojects are intangible and accrue to the local community as a whole and not only to the direct recipients of these services. Therefore, there was no requirement to carry out a formal comparison of costs and benefits, however, for subprojects with a cost of more than Rp 400 million, it had to be demonstrated that the proposal was the least cost solution which achieves the desired environmental impact. -1ill1- ANNEX7 Page4 of4

Kampung improvement subprojects deliver a standard package of infrastructureservices which was proven to be economically viable in several Bank financed projects before. Since the economic analysis of that kind of investments is very costly and the concentration of expenditures is low, the economic viability of proposed kampung improvements,as long as those are following the agreed standards, was presumed. INDONESIA ANNEX 8 SULAWESI-IRIAN JAYA URBAN DEVELOPMENTPROJECT Page 1 of 15 BPAM Sorong 231 111 C.1 2" IKH SAlTOE 2" 111U1" wits

__------___ 1519__* 9im 91I"- 9319 "IN6 Islet 292W ------of"9191 "I191 91192 92113 13114 14195 3,470 03,960 01,600 91,39 95,30 n ,410 103,0 34023 112,16 117,30 122,96 294Sevic. am hpu atim 14,1136 77,60 n 29 fpl.ti So Ned 35? 371 sit 40! 421 52? 2I 69? 76 77? 2W m 29 13.4 21 Dete Cuuucuu I 360) 2.267 L.22 4.223 4.720 5.223 6.532 7.4 9.346 10.463 11.110 1M.76 12.412 22.16, 22.353 22.358 2.5s0 22.7e 22.C2 22.6 23.310 23.n3 24.377 24.602 23 CMe tim 13UMulhlO tiu.2 29.934 30.177 3.95 29 %s1.. s1od ilillim i3) 0.313 1.216 3.123 1.266 1.401 1.176 2.136 2.039 2.073 3.315 3.314 L.654 in 20 20 20t 1 20 20? 301I MOKcE tt*Ifr later 1 22? 40? 3 33? 2? 23? . 1.S55 1.372 2.042 2.092 2.493 2.J74 3.129 3.m L.9 4.21 ;.Sj 4.94S 32 lter PreKt. gilla 11 am 919 90 303 rsp lrtwif (4M1 311 421 449 416 505 535 5617 60 3 353 304 504.46 602.67 707.09 14.71 1,210.79 1,104.3 2,31.52 2,6.06 2,. 3,35317.13 3,63.3 M0 Vurfldao M (lillim Ipi 25Y.21 511.57 1ot.6 37.06 I C_etinm li. 33.01 I0.9 172.99 223.02 21?.ff 17m.f5 mwld bbts 97.00 87.07 01.74 91.56 117.56 146.3 231.73 250.6 290.0 32.16 353.06 307Less Allsmut. -- 3__ ------_------3,40.23 3,323.01 30 TMAL1 TIS KhEIS 25.21 511.57 407.37 5152. 625.35 617.24 1,194.20 2,530.96 2351.04 2,606.45 2,317.79 320 302.7n 32l Prmml n9.s6 303.24 90.29 201.96 174.49 247.51 323.64 433.62 507.70 567.33 42.32 733.9 n1.31 165.71 131.64 200.6U 260.2 39.33 370.24 453.3' 517.62 594.24 612.20 773.49 322Pow 45.14 11.93 313Cseacal, 9.22 23.96 29.9 23.71 29.03 35.21 42.03 52.2t 36.03 67.53 71.52 49.3s 44.56 47.25 6.34 33.14 93.53 103.72 114.20 122.; 129.06 137.65 145.91 314lAIGtI.We N1tetialS 47.29 23.04 25.73 3135ramn4srtts 33.44 23.22 14.45 15.32 16.24 37.21 1.25 29.34 20.30 23.73 24.42 19.31 25.15 23.41 32.14 56.16 42.41 46.16 52.1 31.44 63.1 316Adesstratiml6ugral 49.02 72.25 22.10 23.41 Il il 9.U3 10.84 13.63 16.41 I3." 21.06 23.59 ;:.Is 23.24 35.14 310su1 1339.24 J3 Nl.I IPf3016EIMSES 259.29 315.32 U4.13 417.11 533.12 613.54 343.07 102.51 1217.61 139.03 U47.24 170.44 40.07) 126.25 43.24 97.71 92.23 213.70 351.24 520.45 1,2".23 1,23.62 1 323.55 1,399.78 I,413.n 322 2K EFOKPECITIU 1323.35 1,39.71 1,4U3.77 M W.Ut SS 394.13 41.62 451.25 430.51 369.36 776.95 924.45 1,032.06 1,140.23 1,230.62 EmpraUt 32 In-ca rn 0.00 0.40 In I 12UIK 1394.11 32901.373I40.012 3332.72) 3496.13) 3573.25) 1573.31) 4322.611 0.36 0.40 326 321brti.ll btrnt 22.61 33 Other aWo Jot) 3.34 10.33 12.31 33.51 14.39 15.26 16.17 17.14 13.1i 19.26 20.42 21.64 235.842 (27t.541(395.202 (36.If) 3482.541 (562.9) (557.141 (304.41) 13.17 39.26 20.42 21.64 22.31 329i1 INm ibl.wt tIax) 3.54 3.32 4.10 4.41 4.70 33 Ig uTM 13.10 33 I IElT (alter tag) 1305.041 (279.541 1395.201 (S69.141 0482.541 1562.993 1557.141 3304.462 146 15.45 16.33 17.23 332

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VI S3MOUZI INDONESIA SUIAWESI-IRIAN JAYA URBAANDFVELOPMENT PROJECT ANNEX 9 Page 1 of 9 UJUNG PANDANG

VI TOrAL A NW 1TEl UiRPfLnr I REPELITA IV REPELTA V IREPEUTA 63134 SW.4/.6 S66 66137 67186 *It 6930 6011 91092 9WM2Mb -11016S4 1-6119 _ o_Ill poo: SOURCE OF FUNDS-ROUTINE POWECTIOS 2 Tans 136A.4 1606.0 2013.7 20963 2667.2 2606.S 30440 3609.2 . 45. . 09 -'26T 24693.6 9-9% 3 s5baMoChgu9 1512.1 2176.4 2672.6 2996.7 2760.0 278a.0 3117.8 3667.6 4174.2 4506.3 47765 565. 0 607. 26026-1 II_I 4 Ohnaso.ntarprts.ctc.fcidF.. on Lem 601.4 367.7 400.5 367.4 839.0 99e.6 1466.4 19500 2081.0 2209.0 2346.0 2491.0 2046-0 1172.0 602' 6 FEDAJPN3 046.6 1017.7 1036.4 1208.6 15230 1566.9 1768.6 21104 24269 2791.0 3209.6 3601.1 4244.7 163633 E.0 6 800 66.0 7971.1 10912.4 11617.9 12132.0 13629.0 16564.6 10796.9 18641.8 21135t6 23706.7 2596.1 262.6 120114.2 12.2t 7 5an tatmn on * TOTAL ROUTINE REVENUE 11101.6 13157.0 1700.6 1206.6 19611.2 21660.9 26360.3 27z3.3 31046.4 35176.1 36046.b 43637.1 46366.2 197671.3 11.F 4m louU Exponldts 10 C0me Chietfxcutlve and stals 3607.2 4221.2 8316.6 11 Olnm.PU 606.4A 1261.1 1047.1 3042.2 4456.7 636. 12 Dinam-dinm An o0mrs _ 13 oCs 666. 1366,1 1462.6 14 TOTAL ROUTINEEXPENDf mo.3 . 1471.1 e1se.0 161o0.0 17667.0 20797.1 22.0 26160.1 23366.0 32126.6 30b?.7 41434.6 40476.9 1 ROltINE SURPLUS 1611.2 IM.S 206. 21616 3661.2 4013.9 5,103.2 4604.3 6476.2 5621.1 6117.7 _666.4 6331.6 31046.1 6.6 16 Local DMl Income 0.0 0.0 70.2 7.4 10 TOTAL boLOCALIESOUICES 1611.2 160.6 2372.) 2624.2 3661.2 4013.9 6163.2 4604.3 6476.2 6621 1 6117.7 6e964 69316 31046A1 66 6376.2 6. bus Dow Sa4ma 11113.2 tI0.9 31.1* 666.7 603 1660.1 1676.0 13616.6 1602.6 2034.1 1671.3 1918.6 161.4 S 9.e C RNWTION to DEVELOPMENT 616.0 OM 2U7.e 196.6 3046.1 213.6 3566.2 320r.7 3663.3 3767.0 4146.4 4760.6 6070.2 2167 OTHER INCOME 10064 1 - is Cantei-9ran,s 0.0 0.0 0.0 332.4 646.4 1773.3 1900.9 2014.0 22607 24863 1700? 23120 13i24 1 9536 9973 11438 49026 6. le Procncia - grants 37.6 324.9 0.0 309.3 71.1 6e3.0 790.0 s643 6600 1156 20 Loans. Locli (ROI.inpws-pasar. other 246.7 0.0 500.0 960.0 0.0 1064.0 2201.0 66.9 2160 0 6960 0 1. 21 Lome. ODMtbanE IUV.IOP 2.7 140.0 66.o 1164.0 1100.0 1119.3 73.1 2666.3 6000 2700.0 20000 9000 2971 3 31495 33385 3S386 1S6013 -6_ 22 pigso (Geneal 243.7 2147.3 3363.1 276M.6 3031.2 2412.7 2636.7 6637 2603.1 3193.6 3365.4 15116.4 0o topieIOWP 0.0 0.0 0.0 2661.6 2642.6 3k . o 632.0 1375.0 1567.0 s29.0 o0. Oierelewaiaya 0.0 0.0 0.0 1290.0 1446.0 16697.6 16667.7 601.3 4.4 29 TOTALDEVELOPMENT FUNDS 3401.6 2M5. 610.3 746.8 7666.6 9142.1 11196.9 16196.9 1406.7 1739261 16766.3 DEVELOPMENT EXPENCITURE 2971 3 3149.6 3336S 36366 156011 4. 24 htpe-aEpndlhu.e(nonMOP) 2403.7 2147.3 2063.1 2766.6 3031.2 2412.7 2636.7 66.- 2031 26 Economfi 236.5 164.0 40l6 469.0 2094.6 916 s 3195-4 3367.1 360 3 16031-2 31e 26 Seuos 66.1 163.4 167.4 2466.5 2222.6 2291.0 2004.5 2661.0 2643.9 30145 27 aGeneal 670.4 662.0 1106.9 26 UubSn 171.7 3. I 1967.6 2471.6 2621.0 3?1S.6 4271.0 627.6 9S0359 9673.4 11437.6 6070.6 o.o0 26 PMP 8343 1 161606 1l506 16669.0 1666. 62713L 4.1 36 TOTAL DEVELOPMENT 3129.4 3166 0462. 7666.7 774.6 6912.6 11066.7 16156.7 1300.1 17666.4 1 RFKOUOH FW11 Mf 162.0 64.2 109.6 303.0 66.1 210 1 439.7 529.9 5W.1 634.7 460 4 374.9 673.5 s6. 5t3.6 894 4 =94 41 9t J CAMSRlIE3DFOpR"W6qD S4.2 109.6 303.0 u6.1 210.1 439.7 U29.9 eo.l 1 34.7 4eo.4 374.9 UERMICECOVERAGE RATI 1.0 1.6 7.3 3.3 6.1 2.1 3.3 3.3 3.4 2.9 3.1 3.6 3.7 16.6 2. 5. 64 64 _p 54.2 0. 363 61 101 43.7 529.9 r 1 6 4. 34 INDONESIA ANNFX 9

SULAWESI-IRIAN JAVA IRBAN DEVELOPMENTPROJECT Page 2 of 9

BITUNG MUNdKWALCIFY .E ITEM IREPELITAIII REPELITAIV REPELITAV |REPEUA Vl TOTAL 4.- SOURCEOF FUNDS-ROUTINE 1o 6t 2Tans -: PrAma~~~~~~~~~~~~~~~~~~80cTUpEw0O 2 TaICs 102.4 88.0 609.8 63.1 58.1 66.0 77r9 109.4 191.1 175.3 195 2051 2140 941.7 44 3 rie. scarge. 1464 131.8 134 9 134.0 166.7 168.7 233 1 301.6 437.3 60.4 560.1 574.2 6695 2e66.4 un 4 De'am.in.4.- nee.etc 12.8 7.1 11.0 10.3 2.9 13.7 4.7 6.1 64 6.7 6.0 6.4 of 30.2 0. 6 4PEDANB9 14.6 84.4 89.9 167.7 196.1 196.1 183.9 296.6 366.9 427.1 612.6 6150 7380 264J6 20. O So0 469.6 534.8 769.6 769.9 774.7 845.0 1022.4 1136.0 1193.6 1286.1 1341.0 142115 1607 1 6726 ' 6. 7 Sht teWm kas _ TOTALROUTINE REVENUE 79o 6464i1 1086.2 1146.6 1196.6 1218.6 18220 1644.6 2143. 2361.6 200S4 2022.1 3064.3 13017.0 10.f kma Rouum Exp adwuaw 10 CouncIl Chie enowliv. and stal 710.4 733.1 930.1 I1 OI na. PU 6.2 12.3 12.8 12 0b1n-d,nas AN othe 20.4 24.0 24.7 i3 Other 549 62.7 tO.0 14 TOTAL ROUTINE EXPENDITURE 793.9 632.1 1067.4 1070.1 1131.8 1196.6 1469.6 1732.2 1861 194663 2001 2186.9 2318.6 10361.0 6 ROUTINE SURPLUS 1.7 14.0 7.8 76.6 00.7 09.9 62A4 11l3 307A 436.3 6423 636.3 746.7 2666.o 45. 15 Local Devhl Ime 36.9 16.6 44.4 26.3 2.6 0.0 0.0 0.0 0.0 Oft 0.0 0.0 00 0-0 13 TOTAL bom LdAL IESCUACES 38.6 30.8 52.2 100.6 69 3 09 62.4 116.3 307.4 436.3 642.3 63S3 745 7 26660 45 bee ODeb ServIce 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.8 19.2 1902 16.6 16.6 166 79.4 16 CONTRIBUTIONoIDEVELOPMENT30.6 30.6 62.2 100.8 09.3 09.9 62.4 108.6 288.2 416.1 6267 61s7 7291 2617.8 46.4 O OTHER INCOME 1 Centsrai ants 620 40.6 26.4 30 1 37,C 30.9 00 0.0 230.7 480.0 11183 6320 2606 2753.6 19 LrWo.Lcaal D In 0.1 67.6 26.0 96.4 67.3 152.0 133.0 330 20 Loas. Local .presa.oha) 470.7 2. 21 L2 n MOP 126.0 160.0 1760 2000 2260 6750 22 hpa (Genea 2.3 754.7 1208.0 499.4 476.3 27607 200.0 1405.8 1286.2 1362.3 1444.0 1530 7 1622 5 7244 6 2 hp" kg IonOP 0.0 0 0 0.0 23062 217. 230.6 244.4 2590 1166 5 Oteshw adya 0.0 0.0 0.0 80,0 80.0 49.0 50.0 59 0 316 0 23 TOTALDEVELOPMENFUNDS 122,9 826.1 1254.0 030.3 662.0 317.6 320.0 16433 2396.7 27M9.2 364.6 340.7 32143 16386 16l DEVELOPUENT EXPENDITURE| 24 DEVELOEEnd TeXnPNDI E I 0.0 764.7 1206.0 499.4 476.3 276.7 200.0 1406.6 1266.2 1362.3 14440 15307 16225 72446 27 25 Economc 26 Socil 49 S 23.9 31.9 I 27 G.m.a. 1.5 2.9 1.0 128.7 105.0 99.6 117.2 142.1 176.0 220.0 320.0 3800 40.0 1508.0 226 26 Ukban 79.8 44 4 43.3 29R J 851.6 11572 1935.1 i5068 1-i.-3 6605C' _ I 30 TOTAL DEVELOPMENT 130.6 826.9 1262.2 62,.1 681.3 370.3 317.2 1647.9 2314.6 2736.5 369.1 3417.5 318668 I357 1585i SALANcE .0IjGHUFOF.M_ 9.2 13 IS 39 o0 74 37 116 0.9 18 31 5 269 l6l 69F 967 9AL.ENcECAIVIEDF a ,,~1.3 I.S 3.9 6.0 7.4 87 11t5 6.9 1.8 31.5 26.9 1a 1 456 456 460*a DEHT SERVICECOVERAGERATIO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14. 16.0 22.7 327 36.3 44 9 336 I 6j4 S.owc.'s Hmsoi,~ DiL..jt.pe~ FY hI rm'. he.u b~,~g ,eahnon rtpf .wcu12 Je b IUIDP' r.p.m 2nj INDONESIA SiLAWESI-IRIAN JAYA URBAN DEVELOPMENTPROJECT ANNEX 9 Page 3 of 9

MANADO MUNICIPALITY

INi ITEM |REPELITAIII J REPELITA IV REPELITAV REPELITA VI iO.TAI Anu 1 ______83/84 84/85 a6/se 86187 87188 88189 89/90 90191 91192 92/93 63/94 94196 96/96 91 96 Growth SOURCEOF FUNDS-ROIJTINE PIoJECToN0PERIO 2 Taxes 706.4 687.6 658.5 7130 902 9 16830 1459 7 16878 17900 1879.6 1992.2 21122 223-9 100135 58% 3 SeiviceCharge 948 4 1060 7 1054 1 1122.9 17614 2263 2 2818.1 3484,2 3892.0 4209 8 4710 4 4989 3 5282 s 23083 68 7s 4 mnas.enteipseeS. eic 51 2 59 4 160 6 144.0 170 8 400 4 172.6 1850 1960 208 0 220 0 233 0 247 0 12040 6 0os 5 IPEDaPsB i758 e47 1 1695 269.0 613.2 412.8 540.4 9694 11734 1244.1 1318.4 13972 14808 66837 48t 6 SDO 1263.6 14235 1878.2 1918.4 1979.3 2071.1 24289 28766 2876.3 4147.9 45419 49734 5445 9 21I854 23 6 7 Shot term loans S TOTAL ROUTINE REVENUE _.-- 6 3478s3 320.9 4167.3 6327.8 68306 7419.7 9203.3 927.1 11689.1 12782-9 1370AI 146956 628004 98s less oloio EWendelu? 10 Coucid. Chwf execultwe d slall 1633.2 1917.4 2J86.4 I Onas. PU 272 2 198.4 238-2 12 Dmas-denasAM others 122 7 137 6 156 6 Q3 Other 388 4 338 1 375.2

14 TOTALROUTINEEXPENDITURE 2416.5 2591.6 3156.4 3420.0 4202.6 6143.6 5484.9 7380.4 806a.6 662-3 9o63.7 10s587 116870 l871?4 96 ROUTINESURPLUS 1735. 886.8 764.6 747.3 1125.1 1687.0 1934.8 184Z9 1868.1 2663.8 31192 3123.4 31088 140831 II 15 LocalDevel Incorm 113.1 24b4 116.8 60.6 60.6 44.9 0.0 0.0 70.0 700 16 TOTAl bhm LOCAL RE'sOURCtLS 482 1132.2 a86 3 807.9 118S.7 1731.9 1934.8 1842.9 1938.1 2863.8 3119 2 3121 4 3108 6 14253 1 1100 . bee Debtswlae 36.0 34.3 29.8 38.8 38.8 40.1 37.0 136.3 227.8 m.o mo 322.0 3220 1315.8 I&9. CONTRBUUTIONtoDEVELOPMENT 8132 1097.9 861.6 769.1 11469 1691.6 1897.7 1707.6 1719.3 2941.6 28972 28014 278 1 128373 103 OTHER INCOME l8 Cenkal - grants 960.1 1737.7 23278 19959 14743 95l58 19 PEovir-cial- grant 502.0 745 0 1096.0 1047 0 1013 0 4403 0 20 Loans LocalM(R0I.knpts-pasar.olhe.; 126.0 66 21 Loans. IUIOP 600.0 1200.0 27C0.0 2100.0 2800 0 9300 0 22 Inpres(Genecul) 4938 606.7 2219.3 4448.4 1911.8 82P6 1130.0 2599.1 11939 1266.6 1341.4 14219 15072 67300 -1031 hnprs Ir ittlOP 1661.2 1654.9 1754.2 18659.4 1971.0 88J0 a Olhe,shwadaya ._ _ __ 220.0 2610 342.0 577.0 611 0 2011 o 23 TOTAL DEVELOPMENT FUNDS 1436.0 1711.2 3070.11 6217.6 3058.7 2621.4 3027.7 4306.7 7667.6 906.9 12468.7 11802.6 12163.1 636S78 231S DEVELOPMENTEXPENDITURE 24 inpresExpetdWities(nn ImUIp) 493.8 606.7 2219.3 4448.4 19118 829.6 11300 25991 1193.9 1265.6 1341.4 14219 15072 67300 103 25 Econovnwc 317.2 S18.7 402.7 390.0 26 Social 63.4 133.8 115.8 325.0 27 Gensral 492.4 421.3 230.8 175.0 1038.6 1534.9 2151.6 1404 5 1123 6 1191.0 1262.5 1338 2 141865 6333 8 0 28 krban 29 iUIP . 5618.6 6919.5 968 6 89800 9262.6 40449 2

30 TOTAL DEVELOPMENT 1356.8 178056 k9811-4 5a38.4 2948.4 2364-5 3281.6 40036 7936.0 9376.0 12272.6 11740.1 12188-4 536130 249S BALANCE: 9BOUG FORWARDg 1-2 79.4 IC. I 112.5 -8.4 101 9 2588 4 9 308.0 396 16095 355 6 4101 3e0 tALANCECARREDFORWARD 79.4 10.1 112.5 -84 1019 2588 49 3080 396 169.6 355.6 4181 3928 3928 DEBT SERVICECOVERAGE RATIO 21.0 25.9 25.7 19.3 29.0 42.1 62.2 13.6 8.2 12.9 14.1 9.7 9.7 107 -67S __ic. .brIihan,pi/VI-trr ~I-IeuI.PeeShu(.._a YreI?__e~ ,d yMEO,Y e .. INDONESIA ANNEX 9

atT17.AU-TRTAU TAVA *TDAN nW1?T RPNT PROJECT PLge 4 of 9

PALU-DONGGALA REGENCY Loa ITEM IREPELI I I REPELITAIV 1 REPELUTAV IREPELITAVI TOTALH 83104 8486 J5m6 887 87/0 eUt9 80tS0 90191 91192 02163 M0M4 94195 SOURCE OF FUNDS-ROUTINE 96108 01-4S ____ CnPAGFOWIEFOO 2 Tans 316.9 336.2 319.6 343.3 613.3 614.1 676.8 602.3 3 SeniveChrgne 716.0 804.0 81.0 944.7 1049.0 £404.7 10. 300.8 3S.4 321.3 623.4 449.9 501.3 64908 1004.7 4 Ohnm. 1102.0 1253.0 1386.0 1486.9 1623.1 0849.1 10.1 rnuqs".b ne 94.7 146.6 120.8 136.0 83.8 128.0 136.0 206.8 210.0 232.0 246.0 261.0 277.0 1236.0 a. 5 UEDArSM 196.0 203.3 m.6 267.A 457.0 386.4 826.6 1409.8 1864.0 2034.0 2229.0 2630.0 2787.0 * SDO 11434.0 14. 1607.6 1704.9 2218.3 2482.0 2730.2 2616.9 2965.8 2374.9 2681.1 7 Shof lenn erk 2831.5 3106.2 3407.6 3738.0 18664.4 0. a TOTALROUTINE FIVENUE 251. 2774.4 3202C6 3741.6 4234.2 4306.7 6062f9 6648.6 6472.1 7164.6 78W7 *.2 02 474.1 39687.1 10% beg RAuth. Eupendha, 10 Cagascg.Cah e*xcmae*Nd elan 1391.6 1662.0 1771.4 11 DCmn. PU 68.6 73.2 90.0 12 Das-dw,a Aso89m 360.3 418.4 468.1 13 OUe 6164 664.2 661.2 ___ 1 TOTAL ROUTINEEXPENDITURI 2 2U07. 3179. 3400.0 3740.0 4213. 4662.6 4439.4 4870.1 6342z6 687 642.2 7062.P 296.4 FRUTINE SURPLUS 161A -3.4 22.0 341.6 494.2 29.1 600.3 126.1 1602. 1812.0 16 2190.9 2421.3 10031.7 16 LocaIDmvu*boxms 242.6 334.1 179.6 6.1 14 66o 664.6 631.4 467.0 464.0 613.0 644. 677.0 612.0 2730.0 16 TOTAL be LOCAL 423.6*WAGMAX8 300.7 202.1 306.6 609.2 509 1031.7 1686.0 208.1 2326.0 2540.6 2776.0 3033.3 127e617 kem Dom amih 32.5 70.6 70.0 70.0 62S 1 70.0 2.3 60.0 2B7.5 297.6 207.6 27.5 297.6 16660_ COONfFWTRI to DEVElOPM 31"1 230.7 1326 =L. 506.7 8z. 1006.6 1181.0 178.6 2007. 225&0 2469.4 2746.6 11324.2 1c OTHEROINOME 16 C -- a 2032.3 19* - 1480.4 133. 701.1 1767.0 7834.6 666.6 669.9 0263 "6Zs6 702.6 3137.0 S.em, Lee_ Om . ee-P lIme 447.7 1 L . RNDP 6eo0.0 300.o0 oo.o 200.0 eo.o 20oo.o O2*me Pfa8me 7066A 10003.4 4761.3 6620.0 7020.6 6772 3734.3 9164.1 6324.0 8623.56 930 99i4.0 10606.9 hree kwi MP 40923.3 2. 1019.0 1060.2 114L0 12137 1266.5 6744.3 Omam10wemaalz _ 90.0 66.0 100.0 106.0 160.0 640.0 23 TOTALDEVELOPME1T FUNDS 74U 1CiIo 6331.6 647.2 7527.3 720.6 4730.6 10326.1 14320.4 14406L6 18600A 1629L0 17600.7 776001 IIA DEVELOPMENTEXNURE 2t pr"e E pemdImwej 'wm M 7066U 10003.4 4761.3 6620.6 7020.6 6776 3734.3 9164.1 6324.0 82,3.6 066;L9 9914.0 10606.9 489M33 2.

so" bchS14.5 72.2 46.3 Ike hnn 30.0 37.6 66.1 216.0 337.0 421.6 1202.0 1200.0 1336.6 1416.7 1600.7 2701.0 2010.0 10241.6 17.4 8Urbn 166J 196.7 694.0 RONP 4377.7 3749.2 4429.4 3131.6 4700.6 20366A 2L8. TOTAL DEVELOPMENT 7271. 180311A 6446.7 676. 7367.6 7194.2 60163 10424.1 14037.3 13966.4 15283.6 16746.5 10010.6 7774.6 11 mOUWiff IFOPCWW 71.2 262.0 174.2 89.0 170.8 340.3 442.6 100.0 07.0 350.1 706.2 1296.2 6M4.6 67.0 covom UWCECED 22. 174.2 69.0 170.6 340.3 442.0 10.0 67.0 380.1 70.2 1296.2 34.0 466 466. SERVICECOVER E RATO e -0.s 03 4.9 0.4 OA A 10. 24 66 63 7.7 0A - _ _ r _ ~ _ rr ~ ~~~~~_ ____ -r INDONESIA SUILAWESI-IRIANJAYA URBAN DEVELOPMENTPROJECT ANNEX 9 PARr'DAM Page 5 of 9 MUhICIPALITi

Llt sitE a7/8 Be.*S 8990 190/9l 1*192 12i93 13/Il I4,gs 16,li S71?W 9011 1. 20M

I raTes in 178 215 252 214 344 30 41S 434 4*0 e 517 2 Servic* Charges 3S2 400 582 S23 1.116 1.15? 1.45, 1.630 3.12, 1.6f5 1.810 1.879 I,.S 3 Dines. enterprises. *tc 43 7S 91 341 103 109 115 122 130 130 116 ISS 61S 4 NO*s Shar* in wehicle tam 13 109 226 252 315 472 503 533 565 51S 635 673 713

S FetalPDS S SP 161 63 .113 1.147 1.627 2.062 2.4S1 2.714 2. 91 2.61S 3.051 3,194 3.360 _IIIE ElUlNDTUltS 6 C.mcil. Chief ewecutive and staff 1.020 r Sitn. PU nS * fines-dine, All ethers 1.682 I Other 143 * Tetal Awtine E_p -e ture 2.4W2 3.231 3.932 4.527 5.028 5.31 5.611 6.04 6.403 6.93 7.1ff 7.633 8.063 ElaM 2.314 2.571 3.121 3.311 3.113 3.2 4.058 4.301 4.S51 4.833 5.123 5.430 5.S7S * Hot _stine Ependitrten (nt of S00) 516 446 611 1,136 1.41 I.S51I1.64 17.45 1.04 1.410 2.012 2.202 2.327 a Oet Seutiue Funds Av ailable for Debt Service (liew S - lane 12) 6 16 302 530 11 531 620 16 1.042 905 191 12 3.053 14 SERI CE 20 20 20 7 9 71 11 11 391 44 404 403 403 402 is "t Asutine funds Available for Developnt (Ian 13 - line 14) (A 76 292 459 332 4S2 741 512 30 S01 67S St09 650 UEWELUMNT FUIIDIh N Local Oe,l . Incom 11 0 0 0 0 0 0 0 0 0 0 0 n Nt dew. income - local sorces (lanes 15 a 16) 11 10 262 41" 332 452 741 572 630 501 576 509 650 W c-ance carried foruwd (line 36. previous y ear) 144 16 4* 66 60 0 0 0 11" 202 202 202 201 31 rWO 1K I 0 30 s6 132 140 a4" IS 177 11? 3*1 119 211 224 80 Provincial yants (Inpres OfI4 S1) 0 120 240 320 341 311 303 401 130 456 463 512 543 21 Leans. .- IUIS3P 0 0 0 0 300 460 420 0 0 0 U 0 0 E2 Las. UlIUp 0 0 0 0 653 4SS 0 0 0 0 0 0 0 3 Inpree (Genral- - educetin. health. tc.) S30 227 153 476 50? 530 S70 60" 14 6S79 7Z0 763 609 *4 Ipr*9 11K It 0 170 200 500 533 5ss 60o 645 6S? 133 761 032 661 S Inpres Jaian 0 100 300 617 671 1.06 1.117 1.317 1. 44 1.593 1.753 I.12 2.121

36 fetal Funds Availabl* for Dee1lopment Ewpd. 76S 6113 1.30? 2.6S0 3.756 4.090 4.0or 3.712 4.220 4.352 4.?11 5.03? 5.435 I? iEm.uP,Mu OE)U3St eES * Imps, Empedttwures (mc. IUIIP) s3 49 651 1.13 1.113 2.1W 2.3?2 2.566 2.M 3.005 3.253 3.523 3.016 1 TI Ir- financed Enpenmtiss (ici. IUlIOP) 0 IS0 326 452 463 510 541 513 "W l14 683 724 71? se - com s Social 145 62 I64 341 506 70S no s? 317 251 26 2m 32S S3 Sham 3 3 IwSp "A 4 71 124 6o GM0 370 1o? 31? 251 26 28 5 325 U fetalt 1 e Iep_nt E_peituwr 683 7SS 1.221 2.510 3.756 4.010 4.074 3.53 4.016 4.151 4.512 4.03S 5.234

J6 .UItUS(DEFICIT) (line 26 - lin 35) n1 47 66 s0 0 0 0 1" 202 202 202 201 201 DM COlfAIMMElUlGl W PfOSOP Alec.to Dew.Expd(lines 136 If -line 3) 145 109 243 465 412 452 41 314 634 502 SS6 s5 650 M PNSSvM Allocated to IUZIP (line 3? m SOX),5 47 n 124 206 22S 30 Is? 313 251 26 21 325 91 Mt PISPM Avail. for Debt Ser.(lin 134 1.5)3 20 20 20 7n ? 71 ? 56 60S 606 605 60 604 U9 Debt Coverase tatie ai.. St divided by Aine 14) 1.0 3.0 '.0 1.0 1.0 1.0 1.0 1.5 1.5 1.S 1.5 1.5 3.5

Maist lbsterical data Cup to fy IN1 r) were taken fren budgt realization report; forecasts by IUIOP rWTskFarce and K II. * *Pl0icabl startin FV 139944 hwa.... o. th . nr re a.mw,...i 114T'ONP.SIA INT"ESIA ~~~~ANNEX9 SULAYTESI-IRIAN JAVA URBAN DEVELOPMENTPROJECT Page 6 of 9

GORONTALO MUNICIPALITY

LIN ITEB IREPE ITAIII I REPELITA IV 1 REPELUrAV _ REPELITA VI ToTA.L ______30134 8413 sune am?6 aiiaa owns am 9013 90!12 OM am g 6 9696KM 14S wl )UWRCEOF FUNOS-PROUTINE ~-'. r t ; 2 Tax.. 064 109.3 132.7 106.2 199.3 230.2 279.1 261.9 h 1976.1 12.6 3 Ssbo CherCg 142.2 211.7 276.3 402.1 4064 494.3 62.4 6S3.8 641. M29 1020.3 1061.6 1146.4 4062.8 14.5 4 fnas.enlprulm. goo 91.2 '97.6 106.6 17.6 8.2 67.3 42.6 64.4 67.7 61.1 648 68.7 72.6 325.1 6. S FE0iP4SU 46.1 66.1 62.1 60.3 113.3 119.6 161.4 224.$ 360.3 402.0 442.6 483.8 610.8 2190.3 17.U a SW 724.1 673.6 1170.0 1236.0 1189.6 1342.6 1612.6 1741.0 1840.6 2015.7 2207.2 2416.9 264.6. 11127.1 . 7 Shal">Om n .mn . e TOTAL ROUTINE REVENUE 10".9 1347.1 1742.6 l"18. 1916.6 2253.7 2e48.3 2666.8 3176. 360.3 4160.0 4501.7 4654.7 20301.3 11.1% ha Rou,n E%wmdha 10 C;o_s Chhl .mj*x Wmd lN 67a.5 8a58.0 10903.4 * 1 Oh_. PU 44.2 42.0 48.4 12 Ohn-dtnm AN ol 272.2 264. 30901 13 oo. 74.2 72.3 142.2 _ U TOTAL ROUTINEEXPENDITU 1069.1 127.2 1693.1 160.o0 1769.0 1961.2 2320.9 2467.9 2111.4 2547.0 3227.0 3533.0 360. 16263 9. ROUTINESURPLUS 30.6 109.9 14s.6 191.2 127.8 302.6 267.4 407.9 4862 661.3 9030 9662 s0654 4033.1 I19. 16 Loeal Dwvgioom. 231.6 241.7 160.9 76.3 70.6 32.0 38.9 31.0 32.9 34.8 36.9 391 415 165.2 60 16 TOTALbm LOCAL LE9OtNWS 2e2.0 361.6 20A.4 286.4 198.6 334.6 290.3 436.9 616.1 . 6061 9s9 1007.3 1026.9 4216.3 Il6. ism Dhb4Uvio_ 0.0 0.0 16.0 .0 1.0 12.6 20.0 339 33.9 31.1 19.6 16.6 11.3 112.6 -19. NTRUTInON toDEVELOPME 28z 361.6 2064 261.4 163.6 3ZC1 2763 406,1 464.2 6661 690.3 090.? 1016.6 4106.8 26. OTHER 40OME tS O - gm 263 13Ow.l 920.9 1142.9 609.7 6407.9 0.0 20- PLowOwid- UM p w 2039.4 342.5 624.2 361-a 311.6 3880.0 0.0o

21 Lo_. llDP ,160.0 76.0 300.0 226.0 260.0 1000.0 0. 22 Sarl(Oso 601.2 e66.6 729.2 1066.3 508.2 sa6.3 772.9 193.3 1032.4 1126.1 1193.7 1266.3 1341.2 6068.7 S. hpm. W.UDP 991.2 1060.7 1113.7 1180.6 1261.4 6687.6 _ o.qJwa '220.03 230.2 247.2 262.0 277.7 1240.2 0.0 23 TOTAL DEVELOPMUNTFUN 663.0 1017.2 94.6 3006.6 691.7 1207.4 1040.2 2542.4 7602.4 4801.9 6660.0 6425.3 6017.4 23030.1 16.H DEVELOPMENT EPEDITURF 24 . EpenduEI*W WM 601.2 08. 729.2 1066.3 60.2 686.3 772.9 1937.3 1002.4 16.1 1193.7 1266.3 1341.2 6986.7 -7I.1 F2Eee_ n 72.2 6&1 40.3 Sucil 13.3 56.9 46.6 27 i11 167.9 102.4 116.4 210.0 218.6 471.0 260.6 301.4 319.6 336.7 360.0 380.6 403.4 '601 0 601

29 MIJIOP ______.______6173.7 3310.0 3830.7 3616.1 S117.6 20053.1 0.0 TOTAL DEVELOMENT 84 938.0 9064 13063 72L. 13663 1023.7 2.3 76661 4774.6 664 6280.9 462.2 27842.9 16.81 MAAMCEUaUt 4TFOBj 35.0 64.3 133.6 191.7 193.1 167.0 0.0 34.6 136.2 680 112.1 276.6 440.1 138.2 00.4 NANlCECA F IW , 64.3 133.6 191.7 193.1 167.9 9.0 34.6 130.2 &.0 112.1 276.8 440.1 606.4 696.4 33. D BnCSERVE COVERAGE RATI 0.0 O0 10.0 12.7 8.6 24.2 12.9 12.0 14. 21.3 47.6 6I.L 67.1 Z.S 48.6 _ . _S a #!_r ~- -___, 0,-_ li_ _ INT)ONESIA ANNEX 9 SITLAWJESI-TRIANJAVA URBAN PFVFLOPMFNT PROJECT Page 7 of 9

PALOPO - LUWU REGENCY .~~~~~~~~~~~~~~~~~~~~ - - . EPEL _ LINE ITEM IREPELITAIII I REPELITAIV I REPELITAV |EPELITA VI TOTAL 63134 s41S6 S" semye Se7 a set.9 eos9 90ltl 9112 92103 931s4 0416 914_im SOURCEOF FUNDS-ROUTINE PROJECTIONPEJOD 2 laxes 120.@ 140.0 143.2 94.6 216.3 133.0 129.0 226.4 258.0 310 5 340 3966.0 42. 15.6 3 3 Service Charges. 1J1111.10 636 1 682.8 644.6 703.2 8270 123e.3 1414.0 153S 1 1678.0 1606.0 1907.0 1401.1 0. 4 Om", ntetpnes.elc 134.1 11.8 60.7 76.4 123.1 3446 1426 372.9 396.0 4190 444.0 471.0 490.0 2221.0 6. S PEODAIPOB 100.0 230.8 367.2 2ZJ.9 266.9 220.4 632.9 762. I 1100 12060 1407.0 1511.0 1619.0 6161.0 16. 6 SW0 4046.5 763 7214.0 6246.6 S782.2 9460.6 11306.7 12864.4 14617.7 162606 18211.0 20316.3 22643. 02226.6 1 7 Short Wm loans a TOTALROUTINE REVENUE 4861.4 166.7 0341.2 9241.2 9604.1 10661.8 13038.2 16462.0 17720.7 19731.3 22064.0 24670.3 27367.8 111464.1 12.1 lae Routne Expondture 10 Council. Chief axeculvs and staaff 117.6 736.4 1666.2 2064.8 2176.8 1 1 ines. PU 6es. 16.0 81.9 666 960 12 O.aS-dinas All others 3173.3 619.3 58762 6347 6 7231 2 13 Olher 392.3 90.6 426 4 421.9 464.6 14 TOTAL ROUTINE EXPENDITURE 4803.0 1400.6 8061.7 6912.9 0061e8 10666.3 13127.4 16249.7 17079.6 19129.2 21424.7 23696.6 26675. IOS604.2 12.0

ROUTINESURPLUS U.4 1UL2 2610.5 1. -44. 5 -101.2 202.6 041.1 602.2 m.a 574.7 462.7 211WI0 ISI 15 LocalDevel. Income 66.3 110.1 707.4 122.1 674.9 323.6 1260.9 1766.1 731.6 776.4 622.0 671.3 0236 4123.5 -12.3 16 TOTAL rotmLOCAL IE9ORCES 717.7 6.3 0s6.9 460.4 620.3 297.0 1171.7 1067.4 1372.6 13776 1481.3 14459 14063 70837 -67 lefs Debi Service 0.0 10.0 361.9 82.2 36.0 7.2 171.7 64 . 40.0 63.6 40.0 221.0 2210 0.6 21. NTRIBUTONto DEVELOPM"-X 717.7 3163 616.0 366.3 7663 260.8 1000.1 1002.9 1332.6 1294.0 1441.3 12Z4.9 1e16.3 6476.1 OTHERINCOME 1e C.nVal-gant 794.3 6I.7 821.6 772.6 6424 36127 19 Povincda - grena 161.7 164.2 200.0 196.3 22.6 9s667 20 Loans. Local (RI. Inpres-paa. o, et) 630.0 977.1 200.0 21 Loas. IOP 160.0 171.0 200.0 226.0 260.0 1000.0 22 Inpr (Qeneal 4264.2 3007.7 4330.6 36e.0 2462.0 2966.1 3734.3 4776.1 4640.0 4919.0 .6214.2 6627.0 581.7 2P;50.6 4 kw"m br MOP 424.1 449.6 476.6 606.2 636. 230.9 Onhwtdai 60.0 00.0 100.0 110.0 120.0 600.0 23 TOTALDEVELOPMENT FUNDS 6011., 4221.0 4946.6 6004.4 3447.3 3244.9 4734.4 61.0 7603.3 773.6 64836 862 6004.4 41287.0 IL DEVELOPMENTEXPENDITURE 24 lnp5 EsxpendwtuesinonRAM 4264 2 3907.7 4330.6 3660 0 24C2.0 2965.1 3734.3 4778.1 4640 6 4919 0 6214.2 6527.0 S8SO 7 26169.5 4. 26 Economic 6.7 62.0 119.1 116.6 110.7 26 SOCia 41.6 66.1 81.1 124.9 62.0 27 tGal 1073.1 20.1 272.1 1140.3 643.0 372.8 70 1970.0 678.1 930.8 9.S 104.6 I106.6 4940.8 -10. 26 Urban 29 MOP _ 1616.7 1641.6 1009.1 1062.7 2126.4 9667.2 0.0 30TOTAL DEVELOPMENT 137'.6 4230.9 4602s A062.0 3607.6 3327.6 4616.3 6746.1 7336.4 7491.4 6200. 6666.6 90060 4067.6 6.10 BALANC UROUGHT FO OA1U) 33.9 461.3 463.4 S5. 1 648 5 - 961 153 231.4 164 3 4323 614I3 6672 674. 16643 LML4CECAFEDFORWAR 481.3 463.4 6.1 648.6 9861 153 231.4 164.3 4323 614.3 667.2 874.8 78s6 7s5.6 DEBT SERVICECOVERAGE RATIO 0.0 0.0 0.8 4.0 -1.6 -3.7 -0.6 2.4 16.0 7.2 le6. 2.6 2.2 4.89

bwce H~rcHwDom lgme. FI job fre ei.* im_A r4pri hrinb Oak by _P Teem INMDNESIA

SULAWESI-IRIAN JAYA URBAN DEVE.LOPMENTPROJECT ANNEX 9 Page 8 of 9 V'tIjART PFrvCrV

LZF ITEM LEPELITA 1117|REPELITA IV REPELITAV IREPELITAVI ho'Ad 83164 84185 85t86 6t87 87186 88189 89190 90191 9_192 92193 90t94 94195 95796 1-98 towt SOURCE OF FUNDS-ROUTINE PJECTION PEaOO 2 Taes 995 1076 IlS8 943 131.7 :S87 1574 113.7 210.0 239.0 2S8.0 2720 2880 1267.0 lC.6 3 SivinceChages 1908 3374 3472 3369 3114 3672 4940 5030 6180 720.0 786.0 8320 8820 30360 Iv. 4 D.n*5.eene.pr.ses.cIC 2234 274 1 1562 1273 1173 2290 1426 1826 1940 2060 2180 2310 2450 10Y4.0 6.1 S IPEDAIPB 662 68.2 892 855 2290 2445 6329 7010 8230 938.0 9950 10850 1188.0 5029.0 I1l1 6 SOO 41820 47680 73516 81282 8755.1 9S342 115591 137697 iSid?2 16655.3 18320.9 201530 22168.3 02437 I Shotl wim loasnI 10.0 8 TOTAL ROUTINE REVENUE 4761-9 55.9 80o60 8772.2 9544.5 10833.5 12985.9 15329 9 16986.2 18158.3 20577.9 22s73.0 24771.3 1031.1 10.1 Itss Routene Expenditure 10 Council. Chwft executve and staff 1371 5 1470 7 1916 9 2029.6 2160 7 11 Dmas.PU 74 5 70.6 901 929 97.7 12 Dinas-dnas Al others 3208.7 3664 5 5907.9 6528.7 7072 3 13 Other 36 9 54 9 88.8 49 1 8333 14 TOTAL ROUTINE EXPENDITUR 4891 6 5260 8003.6 8700.3 9414.0 10814 5 12918.3 15294.2 16823.6 18505.9 20365f. 22302.2 24831.4 27094.5 10.01 ROUTINESURPLUS 703 295.1 S6t4 71.9 1305 19.1 67-6 35.7 102.6 252.4 221.3 110.8 13099 957.0 314 IS localDevel Income 13 1394 2336 1220 131.8 1164 196.3 240.2 254.6 209.9 286.1 3032 3214 14353 60#1 18 TOTAL from tOCAL ffSOUFCIES 84 I 434 5 290 0 193 9 262 3 135 4 265.9 275.9 417 3 522.3 507 4 484 0 481 3 2392 3 10 80 Iss Debt Serfce 283 111 7 8.0 4.5 33 7.2 10.3 81.3 ONTRIBUTIONIoDEVELOPMENT 81.3 11.0 91.0 910 910 4m30 231 55.6 322.8 2840 189.4 250.0 126.2 256.6 194.7 336.0 4405 4164 3930 3703 19b63 OTHER INCOME 18 Cenral - gfants 426 2 1075 3 64 6 1i6 19 Cncial -grants 9 9r6 44331 124 8 272 226 2 300 1 200 120S3 20 Loans. Local(PDAN Inpres-pasr. 0oth.,) 4611 38 9 21 Loans. kttOP 00 00 00 00 00 0.0 22 tnpres (General) 7065.6 10003 4 4751 3 6520.6 7020.6 6772 6 3734 3 477A 1 4676 1 4574 3 4848 7 5139 6 5448 0 24686.8 2 7% Inpres forHIOP 388 6 794-4 842.0 892 6 946-1 383.7 Oth.rsswadaya .0 60.0 70 0 800 90 0 3500 23 TOTALDEVELOPMENT FUNDS 7582.5 103661 5035.3 6710.0 72798 690008 39699 4972.8 6001.7 7216.6 70880 1974.2 6113.2 3m0.7 10.31 DEVELOPMENT EXPENDITURE . Inpres Expondilurs(non SlOP) 7065.6 10003.4 4751.3 6520 6 7020.6 6772 6 3734 3 4778.1 4676 1 4574.3 4848.7 6139 6 54.480 24686 8 278 Economnc 4 4 294 1.3 S 2 Social 4 0 14 3 22 0 3 General 5350 3698 281 5 1400 220.0 113 1 2160 2060 2700 2862 303.4 3216S 340.9 S122.0 104% 4 Urbarn 5 SlOP. 1040 0 2267 9 1U85.3 2500.5 2350.4 10044.1 0.01 6 TOTAL DEVELOPMENT __ 70m.6 10373.2 5041 2 6704.3 7283.9 6885.7 4010.3 4986.1 ______. . . . 59861t 712S.4 7037.4 7961.? 8130.3 :_5Z9 10. ___ ...... __ - MiAh, UAROUWT FOfWIm 339 1S 6 _ 7.7 I8 7.5 232 38.3 17 9 4 6 202 106.5 *59.1 1716 4.6 71 BALANCECAIVEDFOfMDU 1518 18 7. 75 23.2 383 17.9 46 202 108.S 1591 1716 14S.4 144 99S DEBTSERVICE COVERAGE RATIO 2.6 2.6 9.4 16.0 3.3 ZsO 6.6 0.4 20 3. 2.4 2*0 1 1. 2084 _ _*__t_S_f_.__ _w___ _ m bf ulN PFl * . g tIome 8 LUPYm INDONESIA ANNEX 9 SULAWESI-IRIAN JAYA URBAN DEVELOPMENTPROJECT Page 9 of 9 BONE MUNICIPALITY

LINE ITEM IREPELITAIIIlREPELIT IREPELITAIIV IlREPELTAV 831U4 84s86 861 8a7 ails. aas sOo w90 92103 9219 SOURCE OF FUNDS-ROUTINE 041 * 19 9s-96 ( - 2 ae. 170.7 188.9 292.9 108 7 160.3 188.4 244.9 266.1 A ".2 3 *s7 401. 4324 3SrvlC Charges 286.9 382., 462.6 432.7 473.8 074.3 1161.3 1260.0 1474.7 1610.1 176.6 1919.0 2161 4 as. nterpries,.etc 141.4 238.0 1830 449.1 7 6921 114 3630 368.4 333.9 676.4 011.0 648.0 "7.0 726.0 S DPoS 771 0 3443.0 8. 3709 4*4.7 603.6 668o0 696.6 86 I a 1120.3 1000.0 1260.0 1326.0 406.0 1480 1788 0 r2.0 12. 4630.5 6700.6 81643 7896.0 8869 2 10398.4 12421.1 7 Shortterm loans i374S.6 16204.0 16724.4 18306.9 20236.6 22200.2 92622.1 10. s TOTALROUTINE REVENUE 6799.4 0904.S 906.6 043.4 106P2.9 12086.6 16271.6 1687l. I 174.7 20663.7 22612.1 Routie Expenditure 24770.4 27413.3 114324.2 00.21 10 fIcit. Chief execuiveand staf 10060 1239.7 1117.0 11 Dlnaa.PU 64.9 69.8 77.2 12 D -dinas ANothers 41360 4766.7 6910.0 13 ' 196.8 196.0 410.0 14 TOTALROUTINE EXPENDITUR 6404.7 292.2 9214.2 9183.1 10100.8 1180.2 14318.8 16201.0 187.1 1976.8 21634 23807.7 2a18.6 ROUTINE 101D2.6 10. SURPLUS 394-7 702.0 482.4 360.3 472.1 619.3 962.6 010.1 907.6 977. M6.7 062 1224.8 16 Dave# ncunw 4 2 6121.7 16. 16 0.0 hOaLIaomLOCAL8.SOURCWES 396 9 702.6 482.4 360.3 472,1 819.3 962.6 610.1 967.6 977.9 966.7 962.7 12246 6121.7 17 ee Debi Se9rvIo 0 0 0.0 0.0 0.0 16.0 20.0 90.0 90.0 90.0 90.0 90.0 90.0 40.0 40.0 CTRIBIIONUtoDEVELOPUENI 400.0 -16. F- 391.9 702.6 482.4 360.3 462.1 729.3 86r.6 80.1 807.6 187.0 878.7 9Q.7 11848. 4771.7 17.9 THER INCOIAE IS C al -grant. to Ptetal-grants 014.9 1071.6 1302.0 1048.6 823.9 5121.6 11.6 9.6 103.0 20 Loan. ocal IF.L weoe-pasa. Omher) 367.0 123.0 230.0 264 0 1147.0 21 Lou iuuJP 200.0 760.0 600.0 100.0 0.0 1650 0 22 pC leneal) 780.7 3631.8 1386.7 3663.4 2497.2 3663.4 2746.2 6623.7 6297.8 6016.0 6962.0 p kwkx sJuP 6309.7 6666.3 298640 3.1 0.0 0 0 0.0 167.4 690.8 ChhluWadays 626.2 603. 703-7 3141.9 0.0 0.0 0.0 32.0 33.0 36.0 39.0 41.0 181.0 23 OTALDEVELOPMENTFUNDS 111U.0 4234.4 1819.1 4036.6 2949.3 4402.3 3007.8 004J. 7S60 9018. 678110 93136 *706.7 EVELOPMENTEXPENDITURE 46877.0 9.9 24 knrExpendhwaenon SIJROP 788.7 3631.6 1313.3 3603.4 2497.2 3663.4 2745.2 6623.7 6297.8 6016.6 6962.6 6309.7 66s 3 29604.0 3 9% 26 Economic 26.8 77.9 126.4 26 SocIa 46.1 66.3 61.6 27 General 371.3 264.0 304.1 605.0 376.2 694.8 816.1 617.8 679.0 747.0 801.0 26 Urban 610.0 620.0 3868t2 6.8 29 RUJ)P 1901.9 2946.6 2679.6 22198 2010.3 11957 1 30 OTAL DEVELOPMENT 1229.9 3929.0 1606.4 4268.4 2673.4 436 2 3681.3 6141.6 7679.3 9308.7 9633.2 0.6 96104 46679.3 9 3EROUGNTFORU1ARD 110.i 66.6 3714 376.1 142.2 218.1 262.2 308.7 211.0 294.4 301.6 247.4 221.6 2110 CAAIED FOVAH -64 66.6 371.4 376.1 142 2 2186 262 2 308.7 211.0 294.4 301.6 247.4 2216 408 7 408.7 14 1 STSERVICECOEAATIO 0.0 0.0 0.0 0.0 23.6 9A 10.8 6.8 11.0 10.9 10.8 24 1 30.61 128 spuailaffwofy "lftx taAmpIAMbuwA" taktnnrepd "64woaua by luoTeam, 35 - 136 -

Annex 10 Page 1 of 38

INDONESIA

SULMWESI-IRIAN JATA URBAN DEVELOPMENT PROJECT ENVIRONMENTAL ASSESSMENT PART I: SULAWESI 1.0 INTRODUCTION

This EnvironmentalAssessment of the Sulawesi component of SIJUDP was carried out by the environmental specialist attached to the project appraisal mission completed in October 1990. The assessment has considered each of the nine cities in the project and has concentratedon those sub-projectswhich raised significant environmental issues. In general terms, the environmental impacts of the project are positive as all of the proposals involve a significantupgrading in the physical infrastructureof the existing urban environment and in some cases also involve significantupgrading and rehabilitation of the municipal water supply. Due to the small size of many of the cities (excluding Ujung Padang and Manado) the existing environment of the downtown areas is characterized by reasonable levels of amenity and do not experience the same level of existing environmental problems which are readily apparent in the bigger cities of Ujung Pandang and Manado or those in the provinces of Java. After a brief description of the generic environmental problems encounteredduring appraisal the larger cities (i.e. Ujung Pandang, Manado, Palu and Kendari) are assessed using IB.R.D. OD 4 (Oct, 1989) Palopo was assessed in more detail due to a potential environmentalconcerning conflicts over water resources. Pare Pare was not addressed in detail due to the minor nature of the new project proposals. The smaller cities have been grouped together as similar issues reoccur. 2.0 GENERIC ISSUES It can be seen in the Figure 1, there are considerable differences in the population of many of the cities. For example, compare Ujung Pandang with a population of 750,000 and high growth rate to that of Gorontalo, a small provincial city and a stable rate of growth. The existing environment of these cities reflect these population differences. Consequently, the priority of the environment assessment and field inspection was to concentrate on the larger cities where the need for an inteorated approach to urban development is most apparent. A brief inspection was carried out in the small cities of Bitung and Gorontalo where a significantly higher level of service in urban infrastructure was observed. In general terms the most common environmental problem in all of the cities was the need for change in the management practices - 137 -

Annex 10 Page 2 of 38 presently utilized in the solid waste sector. This issue is closely related to the second most common existing environmental problem - the maintenance of existing Municipal drainage systems. A substantial part of the latter problem is due to the present practice of placing solid waste into the drainage system. Annex 10 Page 3 of 38

SULAWESI - Fig 1

1990 Population Estimate (thousands)

800 - --

600

400

200

U.P. Manado Palu Pare PareKendari Palopo Gorontalo Bitung Bone City

_ Series 1 - 139 -

Annox 10 Page 4 of 38

Therefore, addressing the problems associated with solid waste collection will have a substantial impact on those in the drainage sector. Also in the drainage subsector, there is a continuing problem in a number of cities caused by increases in the sediment load, which are a result of poor land management practices in the rural-urban fringe. This problem requires a regional planning approach and increasing coordination between provincial and local governments responsible for management of land and water resources. There are also a number of site-specific issues which have been addressed in the assessment of each of the individual cities. Each of these cities is now discussed using the format established for assessment by the IBRD Operational Directive concerning Environmental Appraisal O.D. 4 October 1989. 3.0 KANADO 3.1 Project Description Drainage

* Major cleaning operation of the drains especially the closed ones in the central business district. This is proposed in the first year.

* Proposals for study and improvement by Pengairan Tk I for the main rivers also to be implemented in year one and following years. Pengairan Tk I estimates the implementation of works for river improvement in Manado town as Rp. 1.7 billion.

* Improvement of main and secondary drains will be an ongoing activity throughout all project years. This includes culverts (box and pipe) as well.

* New drains mainly tertiary type drains will be built as suggested by local officials to improve storm water discharge in adjacent areas. Roads Rehabilitation of 60% of local roads and coordinated investments for future development of an outer ring road. This subproject is not subject to IBRD environmental requirements as there is only minor involvement in the subproject. Solid Waste The proposal is to design and construct a new T.P.A. (sanitary land fill) and provide adequate 0 & M funding over the life of the loan. The loan provides for the purchase of new equipment including Trucks, Gerobaks and workshop tools. - 140 -

Annex 10 Page 5 of 38

Sanitation

a. The provision of clean-out services for septic tanks and the promotion of septic tank construction through awareness and promotion campaigns. b. Construction of a sewerage pilot scheme and promotional campaigns.

Water Supply - physical improvement projects include: a. Extensive rehabilitation of water treatment works and installations. b. Development of a new groundwater source at Pinaleng, a new production well at Paniki, and a 2000 m reservoir at Paal Dua.

3.2 Baseline conditions Kotamadya Manado lies on the coast at the North Eastern part of the Province of North Sulawesi (Sulawesi Utara). The urban area of Manado lays on the Eastern shore of Manado Bay. To the North is a hilly coastal plain; East and South are hills and mountainous areas separated by two main valleys, South East of the urban area: Manado - Tondano river valley and Tikala - Sawanga river valley. The island group of Manado Tua, Bunaken and Siladen North East of the urban area form part of the Kotamadya.

Manado the capital city of the Province of North Sulawesi, is the largest city of the province. It is the main commercial and government centre. The kotamadya consists of 67 kelurahans divided over five kecamatan. In 1995 the total Kotamadya population is forecasted to be 308,555 inhabitants of which 153,039 inhabitants will live in the urban area.

The terrain of the Manado urban area is generally hilly; land is sloping towards the sea and the main rivers. Slopes are reaching in many kelurahan 40 percent and the maximum elevation in the city is about 120 m. The city is drained by the main regional rivers; the Manado Tondano River and the Tikala - Sawanga River, and by several local rivers. A constraint on future development of Mtanado is the hilly topography, particularly the land to the East and South. Future development will therefore be mainly towards the lowlands in the North, towards the North East influenced by the access to the airport and the Bitung Seaport and towards the lowlands in the South. These growth trends have been recognized by the government, leading to the decision in 1989 to enlarge the - 141 -

Annex 10 Page 6 of 38

administrative area of Manado in order to improve control un development. A master plan for the former administrative area was prepared in 1984/85, a zoning plan in 1986. A master plan for the extended administrative area is under preparation in 1990. Bappeda Tk I and Team Teknis working on the Urban Infrastructure Inl%stment Programme and the Master Plan exchanged data ^ the synchronization of both proposals. The largest proportion of land in the urban area is residential. The original harbour at the main river mounth is now suitable for small fishing craft only; the bulk of commercial shipping is relocated to the harbour of Bitung. An important commercial area is located in the centre of town South of the old harbour. At present commercial development extends towards the North East along the road leading to the Airport in the North East and Bitung Seaport. The remainder of the administrative area is presently covered with agricultural estates and some low density housing. The master plan strategy is to continue the expansion of Manado as the centre for regional development. This *ncludes improving its functions as the centre of government, commerce, education, culture and tourism activities to serve North Sulawesi. The land use projected for 2005 as compared to the land use in 1983 is presented below. The large portion of open land reflects an already anticipated expansion of the administrative area. The actual expansion of 1988 was 25% larger. Existing industry is based on agricultural - local timber processing and a growir' tourism industry.

Land Use Area (ha) Land Use 1983 2005 Housing 1,404 2,726 Commercial/trading 39 75 Governments 74 164 Industries/Warehouses 20 304 Social Facilities 165 305 Sport Recreation 15 47 Roads/Terminals 252 257 Open Spaces 700 8,992 Total 2,369 12,870

Source: Master Plan for Manado, 1984

3.3 Environmental Impacts - 142 -

Annex 10 Page 7 of 38

Drainage The most significant environmental impacts identified have been the potential for the uncontrolled use of drainage spoil from the cleaning and rehabilitation of drains and the potential for displacement of resident(s) (probably of non-legal status) alongside major drains. In Manado, the potential for toxic or hazardous waste is considered to be low due to the nature of industry in the town, (i.e. mainly agricultural processing). However, the common practice of using drains for the placement of solid waste constitutes a potential for the build-up of pathogens within the layers of mixed sediment and solid waste. As in the larger population centers in the cities of Java and in Ujung Pandang there is an observed tendency for non-legal residents (squatters) to set up temporary housing on the area reserved for access to major drains. For rehabilitation and cleaning of drains it will be necessary to clear squatter housing. The extent to which this will be necessary is minor but will constitute a social impact of the proposal. Roads There is no significant impact anticipated. Solid Waste The existing disposal site in Manado is presently operating on an uncontrolled basis. This site is operating at the base of a steep valley which is drained by a small creek. Run off and leachate is presently flowing to this stream which is being used downstream for fish ponds and bathing by local village people. The potential for surface water pollution is high and the potential for affecting the health of the downstream villages is also considered a serious problem. Water Supply As the majority of the works to be carried out are extensive rehabilitAtion of the system only positive environmental impacts are anticipated. However, the need for a new production well at Paniki has been identified due to pollution of the existing borehole. It is also indicated that the river water near this source is also polluted. Sources of contamination of this supply should be identified and mitigating measures implemented. There is also some potential for localized impacts (mainly soil erosion due - 143 - Annex 10 Page 8 of 38 to vegetation removal) for the access road to the new 2000 m3 reservoir at Paal Dua. 3.4 Alternatives Drainace There are no feasible alternatives. Solid Waste Part of the first year program will include an analysis of three possible sites for the new land fill area. No other approach to solid waste disposal is considered feasible. Sanitation Apart from improving the disposal of sludges from septic tankq, there is also a feasibility study to investigate a pilot sewerage scheme is included in the project. Water SuDply A feasible alternative to the existing PDAM system would be on-site collection using household tanks. Costs and benefits of this approach have been evaluated as part of the program. 3.5 Mitigation Plan Drainage The responsible GOI agency (Cipta Karya) carried out a preliminary environmental assessment report (P.I.L.) in order to identify the poter'ial for uncontrolled use of contaminated spoil and involuntary resettlement. Based on the report, there is no need for resettlement. Solid Waste & Sanitation Satisfactory site selection and management planning for now land- fill and sludge facility would be made part of the project imp13mentation agreement. Satisfactory performance would be measured by indicators set out as attachment to the agreement. To check compliance an environmental review will be carried out annually as part of project supervision. Sanitation

- Provisionof suitable facility to deal with anticipatedB.O.D. loadings as discussed in the paper on "the disposal of Septic Tank Sludge" prepared by GOI consultant. - 144 - Annex 10 Page 9 of 38

Provision of satisfactory completion of monitoring reports to be set out in Monitoring Plan (RKL) & Management Plan (RPL) required under Indonesian Environmental Regulations. Compliance with the plan should be checked during project supervision.

Water SupplY

- Provision of satisfactory RKL and RPL to demonstrate that site specific aspects of construction of access road to new reservoir and water quality monitoring of new production well at Paniki. Compliance with '.he plans would be checked during project supervision.

4.0 PALU 4.1 Project Description Drainage After analyzing the existing conditions and problems and setting priorities and financial capabilities, the following programmes are proposed for the drainage sector for the coming five year of 1991/92 - 1995/96. - the dredging/cleaning, lining and rehabilitation (for parts which are damaged) of the primary drains (I) at Kelurahan Baru.

- the dredging/cleaning and lining of secondary drains (II) at Kelurahan Baru.

- the demolition/replacement of pipes in J1. Iman Bonjol. - the construction of new secondary drains in Kelurahan Lerei, Kelurahan Kamonji and Kelurahan Bayaoge.

- the construction of new tertiary drains and culverts in places which are considered necessary.

- the rehabilitation of damaged tertiary drains. Urban Roads The urban road system is in relatively good condition compared to both U.J. ai.dManado. There are no major investment proposals for either arterial or collector roads. There are some new roads proposed but these are local roads. However, the amount of investment listed for new roads constitutes almost 70% of expenditure and 50% of the proposed 0 & M budget. - 145 - Annex 10 Page 10 of 38

Solid Waste The main proposal relates to rationalisation of the existing disposal area which is an uncontrolled landfill of over 23 ha. Waste is presently dumped alaong the network of roads which criss- cross the site. There are also small equipment purchases planned. Sanitation Purchase of a vacuum truck for septic tank pump out and the implementation of a credit self-help scheme for installation of septic tanks combines with soak pits. Also included would be the acquisition of 3000m of land for disposal of sludge from septic tanks. 4.2 Baseline Conditions Palu at present still has the status of a Kota Administratif or Kotip, under the Kabupaten Donggala as from 1978. At the same time it functions as the capital seat of the government of level I, Province of Central Sulawesi and Kabupaten Donggala. A conversion to full Kotamadya status is not yet planned. Many of the future Kotamadya tasks are being implemented by an active Kotip Palu. Most of the municipal services are still under the responsibility of Kabupaten Donggala. Kotip Palu is located at the western central part of the province of Central Sulawesi (Sulawesi Tengah). The urban area of Palu borders the coast of the Donggala bay; to the east is the central mountain range of the Central Sulawesi area. The town is still part of the vast ri±onal Local government of Kabupaten Donggala.

Palu is the largest town in the province of Central Sulawesi. Its port (located outside the urban area) is the principal port for the West part of the province. The Kotip consists of two Kecamatans, Palu Barat and Timur and covers 10,238 ha total of which 1,431 ha urban. In 1995 the total Kotip population is expected to be 194,000 inhabitants of which 127,000 inhabitants will live in the urbanized areas. The terrain of the Palu urban area is generally hilly. The terrain slopes toward the bay and Palu river which crosses the town to the north and ends in the bay. Slopes in the inner urbanized area vary between 2 and 8 percent, while those in the outer urbanized area vary between 2 and 15 percent. The highest elevation in the urbanized area is about 80 meter above mean sea level. The town is drained by two rivers and their contributories, Palu river and Pondo river. The largest proportion of land in the urban area is residential. The remainder of the administrative area consists of agricultural - 146 - Annex 10 Page 11 of 38

lands, estates and partly deforested mountainous land. Little or no industrial development takes place. The administrative function of the town is its main income source (civil service and military, 53%).

A town master plan was developed in 1978 and in 1986 a further development of a zoning plan took place by PUOD/Ministry of Home Affairs.

The projected land use 2004 for the administrative area as compared to 1983 is shown below:

Area ha Land Use type 1983 2004 Housing 1,520 5,432 Commercial/trading 112 253 Governments 304 324 Industry/Warehouses 122 760 Social Facilities 375 436 Agriculture/Estate 6,904 2,038 Others 801 902 Totals 10,138 10,138

Source: Palu master plan, 1978 Drainage outline plan, 1984

Development is taking place in the direction of Kelurahan Tondo North East, where a new university complex has been established and housing estates by government and others are developed. However, these are still located separate from the town on the west side of town and act as constraint on development. South East the airport is present and restrains housing development in that direction. The urban master plan emphasizes the development of the commercial area in the town center and the housing areas towards the north- east. The land use control agency Suku Dinas Tata Kota is in control and recommendations from the master plan are generally followed.

In fill development rather than expansion has been preferred in order to make more efficient use of available infrastructure.

Projected growth rates of the Kotip Palu appear unrealistic since the growth rate for the period 1971 - 1980 was 0.4% per year. Use of a more realistic growth rate of 1% leads to a projected population in 1995 of 101.400 which is substantially below the reported figure of 127.600 in the preparation report. 4.3 Environmental Impacts - 147 - Annex 10 Page 12 of 38

Drainale Due to the type of industry in Palu, the potential for adverse impacts from the rehabilitation of the drainage system is not considered significant. There are minor purchases of land required for the proposals but these do not require displacement of residents. Roads

The present road system is operating at a high level of service with virtually no traffic problems and a well designed network of arterial roads. No significant negative effects of the proposal are anticipated. Solid Waste Palu has an existing landfill site of some 23 ha which is presently operating in an uncontrolled fashion. Waste is being deposited in a random fashion along an equally random system of roads & trucks that criss-cross the site. Consequently the environmental impact of the proposal will be positive as the site will be managed as a sanitary landfill. It is recommended that the site for operation of the new landfill will be located as far as possible from the town arboretum which is being developed adjacent to the site (see Photos 1 & 2). Sanitation It is anticipated that the proposed sludge disposal facility will also be located within the existing 23 ha solid waste land;ill area. With careful site selection of this facility (only 3000m is required) environmental controls can be integrated with those for the operation of the sanitary landfill.

4.4 Mitigations Operation of the sanitary landfill and sludge disposal facility will require compliance with the RKL, RPL management and monitoring plans prepared under the requirements of Indonesian legislation. Satisfactory performance of environmental objectives for operation of these facilities is part of the project implementation agreement between three levels of government. Adequate supervision of performance is considered to be a priority task for IBRD follow-up.

5.0 UJUNG PANDANG 5.1 Project Description The program that is subject to environmental requirements includess - 148 - Annex 10 Page 13 of 38

Drainage - completion of urban drainage in the "old" town (1,000 ha) - the establishment of sound O&M services - all flood control works under the Lower Jeneberang Scheme - completion of Urban drainage in two areas in the "old" town (400 ha) - all studies and works, related to secondary drainage in the new urban development area (1,000 ha)

Roads - implementation of a small part of the road rehabilitation works, which were identified during the RCUTP Study (1990) - rehabilitation works on local roads - works on the artery road system, as identified by JICA (1988) and already committed at present, i.e. construction of the inner ring road Solid waste - maintaining the stock of rolling equipment (trucks) at its present level and providing additional equipment, with the aim to expand the collection service from the present 46% to 67% of the population in 1995 - the establishment of a solid waste discharge site Sanitation - the execution of a low-cost sanitation program - the expansion of septic tank clean-out services KIP - the execution of Kampung Improvement Programs over a total area of 250 ha

5.2 Baseline Conditions Kotamadya Ujung Pandang is located in the South West of the province of South Sulawesi (Sulawesi Selatan). The urban area of Ujung Pandang lays on the Eastern shore of Strait Makassar. The entire city is built in the coastal plain; the mountain range of South Sulawesi starts ablut ten kilometres East of the city's administrative boundary. Several tiny islands off shore form part of the kotamadya.

Ujung Pandang is the capital of the Province of South Sulawesi. It i_ the largest city and the main commercial and government centre of East Indonesia. Ujung Pandang is to serve as its main gateway ANNEX 10

- 149 - Page 14 of

Photo1 ExistingDisposal Area (Palu) looking into the 23ha site. RandomDumping and Burningalong all tracks

ExistingDisposal Area (Palu) looking towardsthe Bayarea & city. NoteArboretum on immnediateright. - 150 - Annex 10 Page 15 of 38

and major growth centre for the accelerated development of Eastern Indonesia. The kotamadya consists of 62 kelurahan divided over eleven kecamatan. In 1955, the total kotamadya will have 973,000 inhabitants of which 849,500 will live in the urban area.

The terrain of the Ujung Pandang urban area is generally flat. The old part of the city (old Makassar) is built on a sandy ridge at 2 to 3m above mean sea level. Two regional rivers are flowing north and south of the old town into the sea: the Tallo and the Jeneberang river. Other local rivers are the Sinrijala and the Sinassara. The alluvial plains around the old city are low.

Two rivers play a dominant role in the hydrology of the Kotamadya Ujung Pandang; the Jeneberang and the Tallo rivers. The Jeneberang drains a catchment area of approximately 730km2 which extends into the mountains of this couthern part of the province. The river borders the south of the Kotamadya. At high river flows, water from the river used to spill over the north bank into the watershed of the Tallo river, inundating flood plains of tributaries of the Tallo (i.e. of the Pampang river). The Tallo river 2itself has a smaller catchment area than the Jeneberang (420km ), which borders the latter to the north. In its lower regions, the Tallo river has tidal characters; the tide enters deep into the forementioned flood plain. The combination of overflows from the Jeneberang, high rainfalls, low elevation, flatness and proximity to the sea, makes the area extremely sensitive to flooding. The old town of Ujung Pandang is located west of the flood plains of the Tallo river, on a slightly elevated mount. Natural drainage conditions on this mount are in principle good: water can drain of to all sides. An urban drainage system has gradually been development with the growth of the town over the past centuries. The most recent improvements are being realised under the so-called URBAN V DRIP (Drainage Improvement Program). Urban drainage in the eastern parts of the Kotamadya, especially in areas located in the flood plain of the Tallo c.q. Pampang rivers, is bad. Urban development is growing fast here; many housing esates and government offices have been, and still are being, built in the area. Tertiary drainage is being provided with most of these developments, but as long as primary and secondary drainage is not taken care of, regular flood problems will continue to exist. - 151 - Annex 10 Page 16 of 38

Land Use and Urban Development, Ujung Pandang The largest proportion of land in the urban area is residential. Wet-lands, ponds and agriculture form the main land use in the remainder of the administrative area. The harbor complex is located in the north-western part of the urban area; it is the largest harbor of Sulawesi serving both foreign and Indonesian vessels. Hasanuddin Airport, which provides links with the main cities of Indonesia, is located north east of the administrative area. It is connected to the city by the old Maros road and the new toll-bridge road. The large Hasanuddin University complex is located in the eastern part of the administrative area. Industrial areas exist, and are planned to be further developed, in the north east. A master plan was prepared in 1984/1985 for a planning period up to 2004. (For the purpose of the 1988 highway study the master plan was extended over a larger region for a period up to 2009). Zoning plans and detailed plans are being prepared. Population, Densities, Urban Area Zrowth rates used previously were based on an average of registration data, master plan rate, and NUDS rate. The result was considered too high. Available census data for 1971 and 1980 present a high population growth (5.59%) reflecting the 1971 expansion of the urban area. Next to the 1980 census data, registration data were available for the Kotamadya for 1983 through 1986 and 1988. For projections, growth in recent years was averaged with growth over the total period, leading to 2.16% growth for the Kotamadya. Through previous studies detailed data of 1986 were available for the 62 kelurahan that form Ujung Pandang. These survey data per kelurahan covered population size and areas for both built-up and rural ares. The total population in 1986 was 803,294 inhabitants, of which 674,845 were living in the urban area. The urban area is defined here as the area with densities of over 50 inhabitants per hectare. The growth rate of 2.16% was applied to the total population of Ujung Panda-e to make projections for 1990 and 1995. A gravity model was used under previous studies for the distribution of population growth over the kelurahans. It weighs for relative growth and physical development per kelurahan the location, existing infrastructure and physical conditions against existing densities. Through the gravity model the total population growth was distributed over the 62 kelurahan for the years 1990 and 1995.

The total population of the Ujung Pandang at the end of 1990 is 875,000 people, of which 762,300 will live in the urban area. The total population at the end of 1995 is projected to be 973,700, of which 853,700 will live in the urban area. During the planning - 152 - Annez 10 Page 17 of 38 period the average population density in the urban area is expected to grow from 170 to 185 people per hectare. 5.3 Environaental Impact Drainace As the proposals require the cleaning and maintenance of primary drains in Ujung Pandang it is anticipated that there is potential for the need to selectively handle drainage spoil. Field inspection of industry in Ujung Pandang showed significant metal processing, engineering, paper production, timber and agricultural processing. Sampling of drainage spoil would be advisable in order to establish the risk of the presence of toxic and/or harzardous material. There was also evidence from field inspection that there is potential for significant displacement of legal residents to gain access to major drains. The potential for significant displacement is considered to be moderate. A P.I.L. study is required to address the above potential environmental effects (see Photo 3). Roads One component of the road proposals involves the extension of a north-southarterial connection between the airport toll-bridgeand the outer Southern suburbs of t;e city. This proposal will involve the need to displace approximately 300 lower middle and middle class households which are presently located within the proposed right of way. Alternative corridors would be possible but the density of housing in this area will mean that some displacement is also necessary. The benefits of this connection are considerable as an alternative North-South route is considered a high priority to complete a basic arterial network (see Photo 4). Solid Waste An existing landfill is presently located some 17kms to the immediate west of the main town and is operated with poor management practices. As the proposal will lead to the development of a properly managed sanitary landfill the effect of the proposal will have a significant positive impact on the environment in the security of the landfill. Sanitation A sludge disposal facility has been recently completed and been in operation since Sept. 1990. Inspection of this facility showed that it was being operated with poor management practice. The monitoring of effluent discharge to the nearby river was limited to only one parameter (i.e. pH). Improvemants to the access road which is presently in poor condition is part of the project proposal. This improvementwill considerably increase the level of service of the facility and will have substantial positive impacts on the environment as the expansion in the use of septic task systems Present round trip travelling time is approximately 3 hours per each truck. - 153 - Annex 10 Page 18 of 38

There is heavy dependence on the use of on-site sanitation for the majority of households in Utjung Pandang. Also there is heavy reliance on the use of shallow groundwater wells for water supply. From an environmental and public health perspective this situation is not satisfactory especially in light of projected growth rates. Consequently, improvements in the efficiency of the sludge disposal facility has the potential for significant improvement and protection of ground water resources.

5.4 Mitigation Drainage Sampling of drainage spoil was carried out as part of the preparation of the P.I.L. document. It is anticipated that this material will require selective handling during drain rehabilitation. More detailed A.N.D.A.L. study is required before implementation. Roads A resettlement plan according to the IBRD O.D. (June 1990) was submitted before loan negotiation. The plan offers several options for the 300 households to be resettled: (a) housing in a government-sponsored new housing development; (b) provision of plots fully serviced with infrastructure for housing; (c) cash compensation. In addition the plan offers assistance for moving up cost of living support during the transition period and assistance to find equal standard employment, if necessary. During negotiations, it was agreed that the plan will include a budget indicating the expected cost of resettlement and the financing sources. Solid Waste

A set of performance indicators to measure satisfactory progress of environmental objectives for operation of the new sanitary land fill has been included in the project preparation agreement. These indicators have been included in order to assess progress of local government operation of the landfill during supervision of the loan.

Sanitation Performance indicators have been included in order to assess the satisfactory progress on environmental objectives during project supervision. A study of other sanitation options (including sewerage) for Ujung Pandang has been dropped from the project. It is recommended that an alternative funding source be identified as soon as possible in order to minimize any further degradation of groundwater resources in Ujung Fandang. - 154 - ANNEX 10 Fage 19 of "r

Photo 3' - * Ujung Pandang - Panning for Gold - _ from Drainage Sediments - _ 2,

- ~aS ~ ~ _ -

F.

a~~~~~~~~~

Photo 4 Ujung Pandang- Alignmentof rew arterialroad with potentialfor displacementof residents - 155 - Annex 10 Page 20 of 38

26.0 KENDARI

6.1 Project Decription The elements of the program subject to IBRD environmental requirements are: Drainage

As the town of Kendari faces serious flood problems, a town wide drainage study is required, which will result in recommendations for expensive capital works. The drainage and flood control plans need to be complemented with land use plans, both for the town and the surrounding areas. Maintenance and regular cleaning of the existing drainage system will be upgraded in importance. It is anticipated that the construction works will total Rp. 1,315m. In Unaaha, the neighbouring smaller centre, no large investments are needed. Only a drainage outline plan will be required. Roads

No investments on new arterial roads are necessary during the coming 5 years. There will be a program of relabilitating the other roads in the town. A collector road will be widened and improved as will local roads. Solid Waste Solid waste collection services will be expanded drastically during the coming five years. Equipment will be purchased. An environmentally acceptable alternative for the present solid waste discharge site is to be located. A small solid waste management program for Unaaha has been included in the urban investment plan: the procurement of a truck and the development of an acceptable final disposal site.

Sanitation The town pians to set up a pilot credit scheme for the construction of 450 on-site sanitary latrines. The scheme is aimed at the middle income classes of the town's citizens.

6.2 Baseline Conditions

Kendari Kendari at present has the status of a Kota administratip. At the same time it functions as the center of this south-east part of the - 156 - Annex 10 Page 21 of 38

vast island of Sulawesi, ebing the largest town on this side of the island and the cpaital of the South-East Sulawesi province. Kota admin'stratip Kendari is located at the South-East part of the province of South-East Sulawesi. The urban area of Kendari borders the coast by the bay of Kendari, horseshoe shaped; to the West and North is the central mountain range of the South-East Sulawesi area. The south side is more flat and swampy. Unaaha

Unaaha is the capital of the Kabupaten Kendari. Because small projects in the capital town of Kabupaten Kendari, Unaaha, are included in this report as well, a smali description is given about the geographical facts of this town.

Unaaha is located in the hinterland of Kendari town, some 70km west of it, on the left bank of the Kanaweha river, where the main road from Kendari to Kolaka crosses this reiver. The administrative area comprises two centers; the old market town of Wawotobim and, at a distance of 8km, the new kabupaten capital of Unaaha. Between these two centers the area has a rural character. Inhabitants total approximately 8,000 in about 750 ha of planned urban area, while in total there are 32,000 inhabitants in about 4,230 ha total. Kendari is the largest town of the province of South-East Sulawesi. Its port (located just in the urban area at the most north-eastern end) is the principal port. The kota administratip consists of three Kecamatans, Mandongan, Kendari and Poasia and covers 17,673 ha, of which 916 ha is urban. In 1995 the total population is expected to be 166,590 inhabitants of which 84,233 inhabitants will live in the planned urban areas.

The terrain of the Kendari urban area is hilly except for the western part adjacent to the bay, which is generally flat. The northern part has steep slopes varying between 16 and 26% while the outlying area of the western part has slopes varying between 9 and 16%. The highest elevation in the urbanized area is about 50 metres above sea level. The town is drained by one regional river (Lepo) and its tributaries, three local rivers and several creeks, all of which flow into the Kendari bay.

Land use and Urban development Kendari

The largest proportion of land in the administrative area is agriculturally used. The remainder of the administrative area consists of residential land. Little industrial development takes place and provides employment for only a minor part of the workforce (less than 0.2%). Agriculture (53%), government, transport and commerce services (22%) form the main source of income. Employment reached 46% in 1984. - 157 - Annex 10 Page 22 of 38

A town master plan and zoning plan were developed for Kendari town in 1985 by PUOD/Ministry of Home Affairs and for Unaaha by BPPT of the ministry of Science and Technology. The projected land use 2004 for the administrative area as compared to 1983 is shown below:

Land Use Area (ha) Land Use 1983 2004 Housing 1,409 2,890 Commercial/trading 110 329 Government 274 310 Industries/warehouses 56 69 Social Fac;.lities 286 624 Agricultural/Estate 14,837 12,669 Others 789 866 Total 17,760 17,760

Source: Master Plan for Kendari, 1984

Actual development takes place in the west part of the town Kecamatan Mandonga, Kelurahan Mandonga and Wua Wua, development Zone II. Here government functions prevail while housing development is initiated even more to the south (flat, swamp area) and Kecamatan Kendari, development Zone I, where the harbor (Kelurahan Kendai) and the older town are located. Constraints are formed by the hills on the north and east side of town, while swamps are located at the south-east part in the Lepo catchment.

6.3 E!lvironaental Impact

Drainage The focus of this subproject will concentrate on rehabilitation and cleaning of the centre Municipal drainage system. In Kendari the steeply sloping land in close proximity has been intensively cleared for agricultural purposes. These practices have led to a high rate of sedimentation in the drainage system. As well, there is a substantial component of solid waste being placed in these drains. Consequently, the impact of the project will be beneficial. The integrated approach addresses both the physical environmental issue of sedimentation with construction of sand detention traps on the fringes of the Municipal drainage system and on the existing practice of dumping Municipal solid waste into the drainage system. - 158 - Annez 10 Page 23 of 38

Roads The main focus of che loan program is on rehabilitation of the ex .sting system so the significant environment problems are anticipated.

Water SupplY The principal activity will be rehabilitation of the existing system to secure an all-day abstraction of raw water and to upgrade the existing treatment works. No significant environmental problems are anticipated as no new supply capacity is required until at least the year 2000. Solid Waste The present location of the Municipal landfill site is a significant environmental problem. Not only are current management practices less than satisfactory the location is exposed and causing air quality and odour problems for the surrounding population. Relocation of this landfill site is considered to be a priority for improvement of the amenity. This issue has been addressed in the P.I.L. document prepared for the subproject and additional A.N.D.A.L. studies will be carried out as part of project implementation. Sanitation This subproject will significantly improve sanitation conditijns of the local residents which to date have relied on on-site sanitation. Either pit latrines and septic tanks have been utilised in close proximity to groundwater wells. The scheme will lead to 450 sanitary latrines and the provision of pumpout facilities. The location of the sludge facility will require a siting study as part of the program. A P.I.L. for this subproject is not required until the year before implementation (i.e. 1992-93).

6.4 Mitigation For bot'- solid waste and sanitatijn projects supervision of the implementation of the construction of a suitable sanitary landfill and de-sludging facility is considered critical for satisfying environmental objectives. The measurement of satisfactory progress on meeting objectives has been specified in the project implementation agreement between the levels of government.

7. 0 KABUPATENLUWU (PALC4 -' - 159 - Annex 10 Page 24 of 38

7.1 Project rescription

Drainaae The majority of the works are improvement and rehabilitation of the existing system. Some new construction is proposed and involves the strengthening and widening of the Amassangan River. Also allowed for in the program is the creation of an agency which would carry out regular maintenance services.

Roads The main thrust of this progra«i is rehabilitation of the existing system. The reconstruction of two bridges is part of the proposal. Solid Waste This subproject involves the expansion of collection services and the acquisition and preparation of an environmentally acceptable final disposal site. Sanitation This subproject involves the provision of a credit scheme for low cost sanitary latrines and the provision of pump out services for existing septic tanks. Public toilets will also be increased in poorer areas.

Water SupplY The most controversial subproject for Palapj from an environmental perspective is the expansion of the drinking water supply. A new river intake would be built, the treatment plant enlarged and the distribution system is to be expanded. From a present population being served of 58,000 there will be an increase to 81,000 or 96% of the projected population.

7.Z: Baseline Conditions Palopo at present has the status of a Kota Administratip. At the same time it functions as the center of this North-East part of the vast Province of South Sulawesi, being the largest town on this side of the province. The location of Palopo is indicated on Map 0.1. The urban area of Palopo borders the coast of the Bone Bay, to the west is the central mountain range of the South Sulawesi area. The administrative area is depicted on map 0.2. - 160 - Annex 10 Page 25 of 38

The scope of the IUIDP project preparation for Kota Administratip Palopo covers proposals for the urban area of Palopo for the development of 7 subsectors of infrastructure, including water supply. Palopo is the largest town in this part of the province of South Sulawesi. Its port (located just in the urban area at the most eastern end) is the principal port for the Central part of the province. The kota administratip consists of two Kecamatans, Wara and Wara Utara and covers 23,324 ha total of which 687 ha urban. In 1995 the total popultaion is expected to be 105,958 of which 69,770 inhabitants will live in the urbanized areas.

The terrain of the Palopo urban area is generally flat. The terrain slopes moderately (<8%) towards he Bone Bay. Two rivers cross the town at the north and south side and discharge in to the Bone Bay. Slopes in the inner urbanized area vary between 2 and 8 percent, while those in the outer urbanized area vary between 2 and 15 percent. The highest elevation in the urbanized area is about 20 meters above mean sea level (MSL). The town is drained by two rivers and their contributories, Amassangan and Boting river. Map 0.3 represents the (1986) land use in Palopo. The largest proportion of land in the administrative area is used for agriculture. The remainder consists of residential land. Little industrial development takes place and provides employment for only a minor part of the work force (<8%). The agriculture (71%), government, transit and commerce functions (12%) of the town form its main source of income.

A town maste. plan and zoning plan were developed in 1985 by PUOD/Ministry of Home Affairs. The projected land use till 2005, is depicted in map 0.4. The projected land use 2005 for the administrative area as compared to 1986 is shown below;

Area ha Land Use type 1986 2004 Housing 477 1,610 Commercial/trading 30 30 Governments 22 25 Industry/Warehouses 40 52 Social Facilities 127 215 Agriculture/Estate 3,426 5,782 Others 15,038 11,446 Totals 19,160 19,160

Source: Palopo master plan, 1986 - 161 - Annex 1 0 Page 26 of 38

The actual development takes place in the south part of the town in Kecamatan Wara, Kelurahan Tompotika, Amassangan and Boting. Constraints are formed by the hills on the west side of town. The urban master plan emphasizes the development of the commercial area in the town center and the housing areas towards the south- east and north along the Trans-Sulawesi highway. The land use control agency Dinas PU Kabupaten Luwu seems to be in control and recommendations from the master plan are generally followed, till now. Infill rather than expansion should be sought, in order to make more efficient use of the expensive infrastructure which is already available.

7.3 Environmental Impact

Drainage & Roads

No significant impacts are anticipated. Solid Waste and Sanitation Both of these subprojects require the location of a new sanitary landfill site and a new sludge treatment facility for septic tank pumpouts. Both facilities have potential for significant impact on the environment. Preliminary environmental reports (P.I.L.'s) on these aspects are required by loan negotiations. Also, these facilities shall be subject to project supervision using preference indicates outlined in the project preparation agreement. Water Supply As the scale of the increase of water requirements for this proposal was considered to have potential environmental impact a P.I.L. report has been prepared as part of project preparation. This report distinguishes the kinds of impacts that could be anticipated. Given the level of detail of this P.I.L. report it is considered that its recommendations have made a fair assessment of the existing situation. On the first issue it is recommended that agricultural development in the proposed catchment area be limited especially on the steep slopes. This recommendation will require coordination between a number of Level I departments and the preparation of a catchment protection plan. On the second issue it is clear that there is a need to carry out an additional investigation of the downstream effects of abstraction of water from the Latupa and Kangkaluku Rivers. Such an investigation will probably demonstrate that additional irrigation - 162 - Annex 10 Page 27 of 38

work will be necessary to ensure continued supply to the sawahs presently fed by the Amassangan River. An irrigation scheme known as the Mawa irrigation scheme has already been planned to increase irrigation efficiency in this area. However a careful investigation of the social, financial and economic costs of increased water abstraction should be carried out. Such an investigation should be completed before loan negotiations. This study should be carried out as an A.N.D.A.L. as the social and economic impacts of abstraction may be outweighed by the positive impacts of improving the existing water supply to the township of Palapo.

On the third issue, concerning the effects of construction of the scheme in Palapo there is no need for additional A.N.D.A.L. investigation. However, the environmental management issues raised by the construction and rehabilitation of a city water supply should be addressed in implementation level - RKL and RPL management and monitoring plan for the first stage by loan negotiation. An example of this staged type of managmeent approach is the water supply component of the JUDPII project. 7.4 Mitigation

The results of the A.N.D.A.L. investigation should result in a series of mitigating measures to offset the effects of river abstraction of downstream users. The main strategy will be to increase the efficiency of the existing system through improvement in the irrigation canal system. However, a thorough investigation of any such scheme should be included in the scope of the A.N.D.A.L. study. Smaller Cities (Pare Pare, Bitung, Garantalo, Watampone) The other four cities in the IUIDP program foL Sulawesi are small regional cities of less than 100,000 population. The proposals for funding by the IBRD are small in relative terms and involve mainly rehabilitation and minor extensions to existing systems. The significance of these projects from an environmental perspective is considered minor and more detailed consideration was not considered necessary. Field inspection of two of the cities (Bitung and Gorontalo) confirmed this view. The most significant general issue raised by these towns was the need to locate both final disposal sites for both solid waste and human sanitation (septic tank) waste. As described in the other cities, the project implementation agreement has specified specific indicators so that the ongoing management of these facilities (once located) can be monitored through project supervision. The nature of the type of proposals which are proposed in the smaller cities are summarised in Table 1. ANNEX10 Page 28 of 18 TABLE1: SUMMARYOF PROPOSALSFOR SMALL CITIES LESS THAN 100,000 POPULATION

Eevuatd PopuJdon Wtr LUrtnRoad UrbanDrainage SolidWaste Sanibtion Supply

P.re P*r 0Z5 hncas exiin 0 & h Incrsd 0 a Mi Purchse 3 itm equlpment Increasein public tieb. pit Improvementin water Compee sm_ setios P habiltein f two maor Constructminor facii. og. lamrins nd sptie tan" ditubution and pressur maIn drve Trsnsir Sttion Purchae septictank Complktes1 secion of AddWiorna10 Sand Tra Rehbioita PA pumpoutequipmert Pwumes Vwn Road Purchse ofI excavator Mw wors an secondaryan lcal road eung 356wo Smeltimprovent and hncras 0 & M Purchas of smallCollection Soeleon dOwte sudge Rehabilition o fxldling rshub.Mahonof bcal rods Clean-upand rehabilitationof equipment dipea 00m) o septictan system ine cily pnm ernd Select o nofw n disposl pumpoutsrvic Newresrvoir requiredP50m w secondeydrains sit 6 ha requred) Someinstalation of sandtra a, Wlanwpone 0.,700 Workan secton di souEem Rehabilitatonof primay drain Selectonof new final dsposa Purchas of onetuck for Extnion of exising sistm K(bupstn gioni rungroa cut rconstructionend sil p2.25hectere) pumpouiof epticts No bnd ecq"isitionreqid Bone) 2P,700 reiobewoks on C ctor wnd rcontucton of scondsy Purchaseof smellequimdt Seectionof siteicr sludge exceptin two Ud-* I the mer localtoads drln c unprovd collectionsystem disposal cnir ncreased0 & A

orvt0ilo 3900 _caos a rehebion Ceoaing and rehabilitationof Soelcbondl nowfinal disposal Creditschome to encourag Exnson ondimvemn of of prlmy textey drins pimay n terty drain ail (1 ha) use of septic systm nd soak- exing system Purchae of 2 trucksan smal pitb No list acquition noosewy colectionequipmet Selecionod o disposalsit br - 164 -

ANNEX 10 Page 29 of 38

Sulawesi - Irian Jaya Urban Development Project Environmental Assessment

Part II: Irian Java Water Supply Prolects

1.0 Executive Summary The water supply sub-projects of the SIJUDP could cause minor impacts on the environment. There is also potential for environmental degradation, not associated with the SIJUDP, to affect medium to long-term project benefits expected from the eight water supply sub-projects of this loan. It is expected that any negative impacts would be small and easily controllable through minor alterations/additions to the sub-project design. Environmental impacts on the sub-projects are somewhat more serious. If volume and water quality of the sources supplying the Irian Jaya water supply sub-projects are not protected, the investment proposed may not result in the expected benefits to the local urban population. It is therefore necessary for the Government of Indonesia to institute, through its local government network, a catchment protection and erosion control program. 2.0 Policy, Legal, and Administrative Framework The Sulawesi/Irian Jaya Urban Development Project (SIJUDP) must be assessed for possible environmental impacts that may be associated with construction and/or operational activities. The requirement for environmental assessment comes from both the Government of Indonesia (GOI) and from the World Bank.

2.1 GOI Framework for Environmental Assessment The GOI requirements for environmental assessment of development projects derive from Law No.4/1982 and Regulations PP29/1986 (implemented in 1987). The environmental regulations of 1986 were explained in a series of Decrees issued through the Ministry of Population and Environment (KEP 49-53/MENKLH/6/1987). The Ministry of Public Works, acting through the authority of PP29/1986, is in the process of developing operational procedures and project specific environmental guidelines for assessment of public works projects. Decrees by the Minister of Public Works have now been issued for operational procedures (Number 557/KPTS/1989) and project environmental screening (Number 531/KPTS/1989). - 165 -

ANNEX 10 Page3O of 38 Most recently, national guidelines (PP 20/1990) have been issued that cover control of pollution in national waterways. These regulations directly affect water resource development activities of the Ministry of Public Works. 2.2 World Bank EnvironmentalAssessment Requirements Projects undertaken with the assistance of World Bank Loans must meet environmental as well as economic and engineering "feasibility"criteria. The Tsanklsenvironmental regulations now come under a single, unifying, Operational Directive (OD). This directive is OD 4.0, which became effective in October, 1989. The environmental assessment for the Irian Jaya sub-projects of SIJUDP that follows also addressed the possibility of resettlement and land compensation. These issues are covered by a separate Bank directive (OD 4.30: Involuntary Resettlement, dated 29 June, 1990). 3.0 Project Description The Irian Jaya water supply sub-projects include new, expansion and/or rehabilitation of existing water supply systems in the cities of Sorong, Fak Fak, Nabire, Manokawari, Biak, Jayapura, Wamena and Serui. Each sub-project also includes technical assistance for project implementation and institutional development and training. These last two project components do not require environmental assessment (both logically and according to both Bank and GOI project screening guidelines).

4.0 Baseline Data The description of baseline conditions presented below is at best very general. It is based on personal visits to Sorong, Biak and Jayapura, and discussions with the project preparation consultant (Scott & Furphy Engineering) about the other 5 cities involved in the Irian Jaya water supply sub-projects.

Fresh water resources of the areas in and around the 8 targeted cities are, surprisingly, quite limited. This is unusual because: 1) The population density of Irian Jaya is very low. This is true of both the rural and urban areas; 2) The catchments of and around the 8 cities for which water supply sub-projects are planned are relatively undisturbed (by Indonesian standards).

Specifically, permanent surface drainage lines tend to be small, hydrogeologic conditions limit the size of extractable aquifers, and water quality of both surface and ground waters can often be - 166 -

ANNEX 10 Page3l of 38 unsuitable for water supply because of turbidity or because they are contaminated by chemical and biological pollutants (both naturally and as a result of human activity). The vegetation cover of the river catchments are, for most cities, still heavily forested, although the lower part of the watershed of the Kali Remu which flows through Sorong has been adversely affected by slash and burn agriculture and artisanal logging.

The second commonality between the 8 water supply sub-projects is that all (with the exception of Jayapura) are supplying very small numbers of people. As a result, storage facilities and transmission mains also tend to be small. The demographic trend in Irian Jaya, according to Tk I and II level local government officials, is for rural people to migrate to the cities. Migration into the cities does not appear to be a short to medium term problem (with the exception of Jayapura) because of the small size of the cities in Irian Jaya and the limited number of people living in the rural areas of the Province. However, this trend may, if uncontrolled, increase the pressure on in-stream resources (the water flowing naturally in the drainage line), as poorer people tend to settle near the best available source of fresh water. Direct use of surface and ground waters (ground waters tapped by dug wells) was obvious, but not extensive, in Sorong (river) and Biak (dug wells). 5.0 Environmental Impacts When talking about environmental impacts, it is important to realise that there can be project impacts on the environment, and impacts of the environment on the project. The Irian Jaya water supply projects contain elements of each of these impacts.

First, there is a possibility that water abstraction required for the operation of one or more of the eight water supply projects might negatively impact on existing and future in-stream uses and users of the natural surface and groundwaters. Secondly, it is also possible that deterioration of the watersheds controlling volume and quality of the source water feeding the 8 targeted cities could affect the medium to long- term viability of these projects. This would be an example of an environmental impact on a project.

5.1 Project Impacts on the Environment

Of the three Irian Jaya water supply sub-projects visited, conflict between in-stream users of the resource (including use of groundwater from dug wells) and project demand for water only appeared possible in Sorong. However, conflict between existing users of the water and the water demand of the various sub- - 167 -

ANNEX 10 Page 32 of 38 projects cannot be discounted in the other 5 cities not visited. The potential for sub-project impact on in-stream users could result in a lessening of expected project benefits because the people affected are likely to be those least able to afford water supplied by the sub-projects. Water is the most basic requirement of life. Where water is free and of useable quality, the likelihood of direct use by poorer members of the community is very high. So, reduction in volume and/or quality of shallow aquifers, and water in surface drainage lines, can seriously affect those individuals least able to compensate for the loss through purchase of reticulated water. A second potential project impact on the environment also relates to the availability of water. There are some areas, such as Biak, where expansion of the urban zone appears to be, to a large extent, controlled by availability of water. If permanent rivers or streams, or shallow groundwater resources are not available, urban growth is often limited by the distance people are willing to carry water from the available source. In this case, care must be taken that the reticulated system does not encourage urban development to move into forested areas of the water supply watershed. The final potential impact that might result from implementation of one or more of the eight water supply projects relates to disposal of waste water. As only 3 cities were visited, Biak will be used as a case study example of the potential for impact.

The consultant s socio-economic and demographic survey indicates that more than 80% if the population of Biak live in the service area of the proposed water supply improvement scheme. Public health statistics presented in this report also indicated a very rapid growth in the incidence of malaria, a water borne disease, from 1981 to 1985 (the time of publication). These statistics go on to suggest that 25% of the population (223 cases per 1000 people) attended medical facilities for the treatment of malaria during 1984, and 95% of these cases were in the urban centre of Biak. The improvement in existing water service and an increase in the number of connections proposed in the project will result in an increase in water consumption and a subsequent increase in the volume of waste water produced. This may not be much of a problem in the less populated areas of Biak where water will be likely to seep quickly into the ground. However, in the urban areas where house density and urban infrastructure is greatest, there is an increased probably that waste water will pool and become stagnant. Describing the drainage system of the urban centre of Biak as very poor would be an understatement. In fact, drainage in this area would probably not be significantly - 168 -

ANNEX 10 Page 33 of 38 different even if the drainage system did not exist at all.

Additional waste water from an improved water reticulation system is likely to increase the amount of standing water in the town center and this could increase the incidence of malaria and gastrointestinal diseases. This issue was considered important enough for the Bank (co-financed by the Australian International Development Assistance Bureau, AIDAB) to commission a Sanitation Report for Irian Jaya that was published in 1985. This report highlighted the connection between water supply, disposal of human wastes and public health. The concern expressed in the Bank's sanitation report was supported by observations made during the Pre-appraisal Mission to Biak. 5.2 Environmental Impacts on the Project As previously mentioned, abstractable water resources economically available are very limited in and near the eight target cities. Both surface and ground water resources are to be involved in the Bank supported water supply projects for the 8 Irian Jaya cities. Some sources will be abstracted for the first time, while others have been used as water supply sources for many years. All, however, require some measure of protection. The concern is that uncontrolled development near or in the watershed of these water sources could cause:

- Deterioration of water quality which would require expensive treatment of the water to ensure potability. This could change the economic viability of some schemes;

- Reduction of water volume which may require other, more difficult and expensive development works, to be undertaken.

Specifically, there appears to be strong justification to exercise control over land use (urban, industrial and agricultural development), illegal activity (logging and slash- dnd-burn farming), and infrastructure development in the water supply catchments. This control should include:

- Effort to convert land uses in the targeted watersheds from those that are not compatible with the need to ensure a stable discharge with good water quality to more acceptable uses;

- Control of urban and industrial development in the catchment to prevent biological and chemical pollution of these water supply sub-projects. - 169 -

ANNEX 10 Page 34 of 38 Rehabilitation of watersheds through afforestation programs, soil conservation works and river bank stabilization.

6.0 Analysis of Alternatives Review of the project preparation consultant's reports, including a review of water resources in and around the eight targeted cities, indicates that the sources chosen for development are the best ones. Water 7-esourcesof sufficient discharge and quality that can be econon.icallydeveloped, considering the small number of consumerp, are so limited that the only alternative development strategy would appear to be the "no development" option. This option would result in a degradation of the urban environment, ultimately resulting in sever urban environmental problems. 7.0 Mitigative Plan Generally, there are three methods of dealing with environmental problems. These are:

- Elimination of the problem; - Minimisation of the problem; - Mitigation of the problem. The objective of environmental impact assessment is to identify potential environmental issues early enough in the project development cycle to allow the problems to be designed out of the project. Elimination of the impact is the best solution, but if the problem is too great or has its origin in the nature of the project itself, it is often possible to design the project in such a way that the impact is minimised to a level acceptable to the those affected. Where an impact can neither be eliminated or minimised, the only remaining option is to physically compensate through outlay of money. This method of dealing with impacts is defined in this environmental assessment as "mitigation". As mitigation is an environmental management tool, and as the potential impacts identified in these water supply sub-projects do not appear to be major, the "mitigative plan" will be included in the discussion of environmental management (see Section 8.0). 8.0 EnvironmentalManagement and Training 8.1 Management of Potential Negative Impacts

The possible management provisions that could be included in the Irian Jaya sub-projects to remove the negative effects of - 170 -

ANNEX 10 Page35 of 38 environmental issues identified above are:

ISSUE - Potential resource conflicts between abstraction for water supply and in-stream users of the rebource;

MANAGEMENT - Conduct PIL (preliminaryenvironmental impact assessment, on those sub-projects that screening in icates could cause environmental impacts, including resource conflicts to determine likelihood of impact and to identify any local residents that would be impacted by reduce surface discharge or ground water level; = If in-stream users will be negatively affected, the project should include provision for construction of public standpipes at strategic locations to supply water without charge to those residents that are unable to pay for regular reticulated supply

ISSUE - Water supply expansion into sensitive environmental areas;

MANAGEMENT: - Conduct PIL (preliminaryenvironmental impact assessment) on those sub-projects that screening indicates could cause environmental impacts, identifying any sensitive areas that might be negatively affected through expansion of water supply into or near those sensitive environmental areas;

- Redesign reticulated networks that impinge into sensitive environmental areas or that might encourage population increase in sensitive areas;

ISSUE: - Waste water from increase in water supply sub- projects may cause public health problems if urban drainage is unable to cope with the extra water;

MANAGEMENT - Conduct PIL (preliminaryenvironmental impact assessment) on those sub-projects that screening indicates could cause environmental impacts, including assessment of the likelihood that waste water from water supply sub-projects will tend to accumulate causing potential public health problems; - 171 -

ANNEX 10 Page 360f 38

- Include minimum needed urban drainage works before water supply expansion is undertaken in areas that have been identified in PIL studies as having potential public health problems associated with excessive standing water.

8.2 Management of Environmental Aspects that could Minimise Project Benefits Control of degradation and development in the watersheds of the eight water supply sub-projects in Irian Jaya must be included in provisions of the SIJUDP loan if project benefits are to be maximised over the medium to long-term. The responsible groups that should be involved in an integrated action plan to manage the targeted watersheds is not clear. This confusion must be eliminated, and management strategies prepared for discussion at loan negotiation. Watershed management plans agreed to during loan negotiations should be in place by loan effectiveness. A "Surat Keputusan" (SK) was issued by the Governor of Irian Jaya Province that covers all of the 8 cities involved in this water supply project. As implementation of watershed management policy will be implemented at the Kabupaten level, the Governor appointed the Bupatis to action the SK. The Watershed Management plans should include the following elements:

Administration, * Organisation of roles for the Government organisations involved in watershed management, under the direction of the Bupati, * Organisation of a regular meeting schedule, * Estimation of physical and financial resources to be mobilised (including any technical assistance that may be required in the loan for the water supply projects),

Planning * Development of a review process for assessing proposed development activities in the watersheds; * Developmeuit of a watershed improvement plan including reforestation and reeducation/extension services to change existing agricultural practices harmful to the watershed into more acceptable methods of farming,

Protection * Development of a watershed protection plan to - 172 -

ANNEX 10 Page 37 of 38

prevent illegal logging and new slash-and-burn farming; * Identification of soil conservation problems and cost-effective actions to be taken to reduce soil erosion in the watershed.

To achieve effective administration, planning and protection of watersheds, th- SK should include the following specific elements: List of the Central and Local (primarily Tk 2, assisted where necessary by Tk 1) Government organisations that should be included in an integrated watershed management plan, and their specific responsibilities in that watershed plan; Identification, for each of the 8 cities, of the area to be included in watershed management activities. This should be done on topographical maps; Recommends the structural organisation of Watershed Management Committee to be formed in each Kabupaten (it is anticipated that the Watershed Committee would have the following positions and possible representatives), * Committee Chairman (Bappeda); * Committee Secretary (KANWIL); * Protection and Enforcement Officer (Kehutanan) * ^AgriculturalExtension Officer (Pertanian) * Water Supply Authority (BPAM/PDAM) * Others as deemed necessary, Specific witershed management activities to form the basis of d management plan, including; * activities to prevent, and where necessary control soil erosion (including such things as reforestation, and toil conservetion engineering workb);

* activities to improve catchment quality by encouraging changes in damaging agricultural practices (social forestry programs, intercropping techniques, technical agricultural extension services, etc);

* forest protection services, including numbers of forest guards, estimate of the frequency of needed forest patrols on a monthly basis, and export control of illegally cut logs and timber through the Kabupaten

* iand use planning which would lead to control of - 173 -

ANNEX 10 Page38 of 38

the type of industry and urban infrastructure that could be built in the controlled catchment area

9.0 Monitoring Plan Monitoring of the Irian Jaya water supply sub-projects would be the responsibility of Central Project Management Office. The annual monitoring report should assess:

- whether public standpipes required to compensate for loss of in-stream flow have indeed been constructed;

- whether the public standpipas constructed to compensate for loss of in-stream flow are correctly positioned in regard to demand placed upon them (ie are people required to walk too far to reach the public standpipes);

- whether waste water from expanded water supply systems is accumulating in drains rather than running off to proper disposal;

- whether standing water attributable to waste water from the water supply sub-projects is causing a significant increase in public health problems (cases of malaria and gastroenteritis could be used as indicators);

- whether the catchment protection strategies are being implemented, and if so, whether the strategies are having the desired effect on water source volume and quality. - 174 -

ANNEX 11 Page 1 of 4

INDONESIA

SULAWESI-IRIANJAYA URBAN DEVELOPMENT PROJECT

Key Documents In Project File

A. Irian Jaya

1. Draft Inception Report: Scott and Furphy Engineers, Pty, Ltd.; December 1983.

2. Draft Report on Design Criteria and Standards; Scott and Furphy Engineers Pty, Ltd., PT Unisystem Utama, PT Arkonin Engineering;September 1985.

3. Draft Final Report on Water Resources Technical Notes; Scott and Furphy Engineers Pty, Ltd., PT Unisystem Utama, PT Arkonin Engineering; June 1986.

4. Draft Project PreparationReport on Sulawesi-IrianJaya Secondary Cities IUIDP Project, Irian Jaya Water Supply Subproject; Scott and Furphy Engineers Pty Ltd., Dwyer Leslie Pty Ltd, PT Unisystem Utama, PT Arkonin Engineering;December 1987.

5. Draft Financial, Institutional and Socio-EconomicReport: Overview and Summary; Scott & Furphy Engineers Pty Ltd., Dwyer Leslie Pty Ltd., PT Unisystem Utama, PT Arkonin Engineering;June 1987.

6. Draft Sanitation Report: Scott and Furphy Engineers, Pty, Ltd; PT Unisystem Utama, PT Arkonin Engineering;March 198?.

7. Manokwari Project Update for Appraisal: Scott and Furphy Engineers,Pty, Ltd.; PT Unisystem Utama; October 13, 1990.

8. Wamena Project Update for Appraisal; Scott & Furphy Pty Ltd.; PT Unisystem Utama, October 13, 1990.

9. Serui Project Update for Appraisalt Scott and Furphy Engineers,Pty, Ltd.; PT Unisystem Utama; October 13, 1990.

10. Nabire Project Update for Appraisal;Scott & Furphy Pty Ltd.; PT Unisystem Utama, October 13, 1990.

11. Fak Fak Project Update for Appraisal: Scott and Furphy Engineers, Pty, Ltd.; PT Unisystem Utama; October 13, 1990.

12. Sorong Project Update for Appraisal; Scott & Furphy Pty Ltd.; PT Unisystem Utama, October 13, 1990. - 175 -

ANNEX11 Page 2 of 4

13. Jayapura Project Update for Appraisal: Scott and Furphy Engineers, Pty, Ltd.; PT Unisystem Utama; October 13, 1990.

14. Biak Project Update for Appraisal; Scott & Furphy Pty Ltd.; PT Unisystem Utama, October 13, 1990.

B. Sulavesi

IUIDP Sulawesi Preparation of Integrated Urban Infrastructure Development Projects for Sulawesi Region: DHV ConsultingEngineers; PT Dacrea; PT Bina Asih; PT Alfacon; Sir M. MacDonald & Partners,October 1S90.

Part I: Non-Water Supply Sector Urban Investment Programe

1. Kotamadya Ujung Pandang 2. Kotamadya Gorontalo 3. Kabupaten Luwu 4. Kabupaten/KotifKendari 5. Kotamadya Manado 6. Kabupaten Bone 7. Kotamadya Bitung 8. Kotif Palu 9. Kotamadya Pare Pare

Part II: Water Supply Sector Urban Investment Programme

10. Kotamadya Gorontalo 11. Kabupaten Luwu 12. Kabupaten/KotifKendari 13. Kotamadya Hanado 14. Kabupaten Bane 15. Kotamadya Bitung 16. Kotif Palu

Part III: Municipal and PDAM Financing Plan

18. Kotamadya Ujung Pandang 19. Kotamadya Gorontalo 20. Kabupaten Luwu 21. Kabupaten/KotifKendari 22. Kotamadya Manado 23. Kabupaten Bone 24. Kotamadya Bitung 25. Kotif Palu 26. Kotamadya Pare Pare

Special Reports:

27. Water Supply Sector: Overview and Errata all towns - 176 -

ANNEX 11 Page 3 of 4

28. Economic Evaluation - Sulawesi Region.

29. FeasibilityStudy - TransportReport II ProjectAssessment and Evaluation; Project Management Unit (PMU), INDEC and Associates Ltd; Biec Int. Inc., Indah Karya and Rennie Park, June 1990.

30. FeasibilityStudy - Ujung Pandang Transport Report I Transport Review and Forecasts; Project Management Unit (PMU), INDEC and Associates Ltd; Biec Int. Inc., Indah Karya and Rennie Park, June 1990.

31. Feasibility Study - Ujung Pandang Road Maintenance; PMU, INDEC and Associates Ltd; Biec Int. Inc., Indah Karya and Rennie Park, June 1990.

32. FeasibilityStudy - Ujung Pandang Highway Engineering;Project Management Unit (PMU), INDEC and Associates Ltd; Biec Int. Inc., Indah Karya and Rennie Park, June 1990.

C. Technical Memoranda (in the East Java-Bali UDP Files)

1. Technical Memorandum, Water Supply, November, 1989. Directorate General Cipta Karya, MPW.

2. Technical Memorandum, City-Wide Drainage. November 1989. Directorate General Cipta Karya., MPW.

3. Technical Memorandum,Cost Estimating.December 1988. DirectorateGeneral Cipta Karya, MPW.

4. Technical Memorandum, Solid Waste Disposal, November, 1989. Directorate General Cipta Karya, MPW.

5. Technical Memorandum, Human Waste Disposal. November 1989. Directorate General Cipta Karya., MPW.

6. Technical Memorandum, Urban Roads. November 1989. Directorate General Cipta Karya, MPW.

7. Real DemaiilAssessment Guidelines. June 1988. Directorate General Cipta Karya, MPW.

8. East Java IUIDP Appraisal Process. February, 1989. Directorate General Cipta Karya., MPW.

9. Institutional Development Strategy for IUIDP Program Implementation. November 1987. Directorate General Cipta Karya, MPW.

10. IUIDP Appraisal Manual. October 1989. Directorate General Cipta Karya, MPW. - 177 -

ANNEX 11 Page 4 of 4

11. Economic Appraisal of Water Supply Projects, ECOWAT. April 1989. World Bank InfrastructureDivision, Country DepartmentV, Asia Region.

12. Urban Roads Planning and Programming Manual. June 1989, Directorate General Bina Marga, MPW.

D. Key Aide-Memoires

13. Sulawesi-IrianJaya Urban Development Project, Preparation Missior Aide Memoire. April 19, 1990, World Bank Mission

14. Sulawesi-IrianJaya Urban DevelopmentProject, PreappraisalAide-Memoire. July 1, 1990, World Bank Mission.

15. Sulawesi-IrianJaya Urban Development Project, Appraisal Aide-Memoire. November 1990, World Bank Mission.

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