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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8005-IND Public Disclosure Authorized STAFF APPRAISALREPORT INDONESIA Public Disclosure Authorized HIGHWAYSECTOR PROJECT OCTOBER23, 1989 Public Disclosure Authorized InfrastructureOperations Divisicn CountryDepartment V Asia Region Public Disclosure Authorized Thisdocument has a restricted distibufion and may be used by recipients only in the performance of their officiauduties. Its contents may not otherwise be disdosed without WorldBank aouthorization. CURRENCY EQUIVALENTS (As of July 1989) Currency Unit - Rupiah (Rp) US$1.00 = Rp 1,770 'p 100 = US$0.05 Rp 1 million 8 US$565 GOVERNMENTOF INDONESIA FISCAL YEAR April 1 - March 31 UNITS AND MEASURES 1 meter (M) = 39.37 inches 1 kilometer (km) 0.62 miles 1 hectare (ha) 3 2.47 acres PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ADB - Asian Development Bank AADT - Average Annual Daily Traffic BAPPEDA I and II - Provincial and District Development Planning Board BAPPI!AS - National Planning Agency DBM - Dinas Bina Marga; Provincial Roads Department DGH - Directorate General of Highways (MPW) DGLC - Directorate General of Land Communications (MOC) DGRD - Directorate General of Regional Development (MHRA) DPUK - Local Government Department of Public Works DPUP - Provincial Government Department of Public Works GOI - Government of Indonesia IGGI - Intergovernmental Group on Indonesia INPRES - Central Government Grant to Local Governments IRE - Institute of Road Engineering in Bandung ITB - Institute of Technology, Bandung P.T. Jasa Marga - Indonesian Toll Road Corporation MHA - Ministry of Home Affairs MOC - Ministry of Communication MOF - Ministry of Finance MPW - Ministry of Public Works OECF - Overseas Economic Cooperation Fund of Japan PPB - DGH's Planning, Programming and Budgeting System PS&AP - Policy Statement and Action Plan RBO - Regional Betterment Office (of DGH) Repelita - Indonesian National Five Year Development Plan RMS - DGH's Road Management System SOE - Statement of Expenditures VOC - Vehicle Operating Cost Vpd - Vehicles per day VWD - Vehicle Weights and Dimensions AL l INDONESIA HIGHWAY SECTOR PROJECT Loan and Project Summary Borrower: The Republic of Indonesia Amount: US$350.0 million equivalent Terms: Repayable in 20 years including five years of grace, at the l ~~~~~~standardvariable interest rate. Project The main objective of the project is to assist the Objectives Government in improving the overall efficiency of the road l ~~~and subsector by supporting its Policy Statement and Action Plan Description: (PS&AP) for road transport and road use and comprehensive 1989/90 to 1991/92 expenditure plan for inter-urban national and t ~~~~~~provincialroads which together aim at: (i) consolidating recent improvements in the formulation and implementation of highway sector expenditures; (ii) instituting improved policies on road use; (iii) strengthening the institutions involved in the subsector; and (iv) improving the quality of the road net- work by focussing on maintenance and rehabilitation/betterment | ~~~~~~works.The project includes: (i) technical assistance, studies and training to assist in the implementation of the PS&AP and the expenditure plan; and (ii) specific subprojects of the expenditure plan selected annually on the basis of agreed pro- cedures and economic and technical criteria. Major components for which loan proceeds will be used are road and bridge improvement and maintenance programs but other components would include road safety, technical assistance and training. Benefits The main benefits expected from the project are lower ; ~~andRisks: road transport costs and time savings for all road users. Bene- fits accruing to truck and bus companies will be passed on to producers and consumers through lower prices of goods and ser- vices. The main risks are delays in: (i) improving transport policies and strengthening of institutions because of political sensitivities and bureaucratic inertia; and (ii) in maintaining and improving the infrastructure because of lack of funds or insufficient implementation capacity. The risk of delays in policy improvement have been limited through careful prepara- tion and formulation of the Actit-iPlan resulting in well defined and staged activities. The risk of delays in implementing civil works are also limited because the three- year expenditure plan is based on firm indications of foreign funding and moderate growth of local funding and GOI's imple- mentation capacity has increased rapidly in recent years and will receive continued support under the project. |This documnenthas a restricted distribution and may be used by recipients only in the peronac |of their official dutie,s. Its contents iray not otherwise be disclosed without World Bank atoiain - ii - Estimated Costt la Local Foreign Total ------(USS million)------- DGH's 1989/90-1991/92 Expenditure Plan Maintenai.ce 296.3 296.4 592.7 Rehabilitation/betterment 489.5 622.9 1,112.4 Bridge replacement 76.1 177.6 253.7 New construction/upgrading 36.2 54.2 90.4 Administration 255.8 109.7 365.5 Total Cost 1,153.9 1,260.8 2,414.7 Financing Plan: Local Funds: Central and Provincial Governments la 896.6 - 896.6 Ongoing and committed foreign loans Lb 78.1 684.5 762.6 New Loans: ADB Tenth Loan /c 17.3 42.7 60.0 OECF Loans {c 84.9 112.3 197.2 EXIM Bank of Japan Loans /c 51.4 - 51.4 IBRD Highway Sector Loan 25.6 324.4 350.0 To be determined - 96.9 96.9 Total Financing Required 1,153.9 1,260.8 2,414.7 Estimated Disbursements: FY 1990 19.11 1992 1993 ----- (US$Sillion)------- Annual 60.0 90.0 100.0 100.0 Cumulative 60.0 150.0 250.0 350.0 Economic Rate of Return: Over 15Z Mapss Nos. IBRD 21746, 21747, 21748, 21749 and 21750 La Includes taxes and duties estimated at US$208.5 million. lb Including US$56.0 million for IBRD loans made between 1981 and 1986. /c Either already signed or in final proce.ssing stage. -iL - INDONESIA HIGHWAY SECTOR PROJECT STAFF APPRAISAL REPORT table of Contents Page No. Loan snd Project Summary ..................... i I. THE TRANSPORT SECTOR ............... 1. A. Eco.,omic and Sector Setting . 1 B. Secvor Organization. 2 C. Goverrment Objectiveb and Policies . 3 D. Sector Performance .5 E. Experience Under Previous Bank-Financed Projects . 5 F. Role of the Bank and Lending Strategy . 6 II. THE ROAD SUBSECTOR .... 7 A. The Network .... 7 B. Road Transport ........... ... ..... 7 C. Highway Administration . 11 D. Highway Planning and Financing . 13 E. Highway Design and Construction . 14 F. Highway Maintenance .16 G. Staff and Training .17 H. Environmental Aspects .17 I. Overall Efficiency in the Road Subsector . 18 III. ROAD SUBSECTOR POLICIES AND THE ROAD EXPENDITURE PROGRAM . 19 A. Objectives and Scope . 19 B. Principal Policies .19 C. Three-Year Expenditure Plan for National and Provincial Roads .. 22 D. Annual Work Programs and Budgets .. 25 E. Toll Roads . 26 IV. BANK PARTICIPATION ................. ... 27 A. Project Background and Formula.ion .27 B. Objectives . 27 C. Description of Bank Financed Subprojects .27 D. Cost Estimates and Financing . 34 E. Implementation of Bank-Financed Subprojects .35 F. Procurement of Bank Financed Suborojects . 36 G. Disbursements .37 H. Retroactive Financing .38 I. Monitoring and Auditing .38 J. Project Environmental Impact .39 This report was prepared by Mr. Sigfus 0. Sigfusson (Principal Highway Engineer), Mr. Jean-Charles Crochet (Senior Transport Economist), Mr. Joris Van der Ven (Senior Transport Economist), and Mr. David Hawes (Transport Economist, Consultant) following appraisal in June 1989. - iv - Page No. V. JUSTIFICATION AND RISKS .. ....... *.......... 40 A. General .... ...... 40 B. Evaluationof MethodologiesUsed for Preparingthe ExpenditurePlan and the Budget ... .... 40 C. Risks . 43 VI. AGREEMENTS REACHED AND RECOMMENDATIONS . 45 ANNEXES 1. Policy Statement and Action Plan . 47 2. Agreed Methodologyfor Three-YearExpenditure Plan and Economic Criteria for Annual Work Program and Budget . 63 3. DocumentsAvailable in the Project File .65 TABLES 1.1 Domestic FreightMovements ... 67 1.2 Domestic PassengerTraffic ... 68 2.1 Road Network Length by Road Class and Island Group . 69 2.2 Road Network Density .70 2.3 Road Pavementsby Road Class and Island Group . 71 2.4 Condition of the National and ProvincialRoad Network 1988 . 72 2.5 RegisteredMotor Vehicles, 1974-86 ... .. 73 2.6 Distributionof Annual Vehicle Kilometersby Road Class and IslandGroup .74 2.7 Mean Traffic Levels by Road Class and Island Group .75 2.8 Expenditures in Highway Sector (1984/85 to 1988/89) . 76 2.9 DGH Geometric Standards . i . 77 3.1 Three-YearExpenditure Plan for National and ProvincialRoads 79 3.2 Main Ongoing and CommittedForeign Loans . 81 3.3 Three-YearExpenditure Plan: Breakdownof Expendituresin Accordancewith Availabilityof Foreign Funds . 82 4.1 First List of Bank Financed Subprojects . 83 4.2 Summary of ConsultancyServices . 84 4.3 List of Equipment . 85 4.4 Summary of Costs by Component . 87 4.5 Summary of Costs by Type of Expenditure . 88 4.6 EstimatedDisbursement Schedule . 89 5.1 SummarizedDescription of Standard Segments . 90 5.2 Optimum Initial Treatmentsand IERR for Each StandardSegment .91 CHARTS 2.1 Organizationof the DirectorateGeneral of Highways 2.2 Organizationof the ProvincialPublic Works Agency 2.3 Organizationof the DirectorateGeneral of Regional Development MAPS IBRD 21746 National and ProvincialRoads Network ir Sumatra IBRD 21747 National and ProvincialRoads Network in Java and Bali IBRD 21748 National and ProvincialRoads Network in Kalimantan
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