Project Document (December 7, 2018)
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PD000069-IDN Dec. 7, 2018 Project Document of the Asian Infrastructure Investment Bank The Republic of Indonesia Mandalika Urban and Tourism Infrastructure Project This document has a restricted distribution and may be used by recipients only in performance of their official duties. Its contents may not otherwise be disclosed without AIIB authorization. Currency Equivalents (Exchange Rate Effective Aug. 8, 2018) Currency Unit – Indonesian Rupiah (IDR) USD1.0 = IDR14,500 Fiscal Year Jan. 1 – Dec. 31 Abbreviations ADB Asian Development Bank AIIB Asian Infrastructure Investment Bank BAPPEDA Badan Perencanaan Pembangunan Daerah (Regional Development Planning Agency) BNPB Badan Nasional Penanggulangan Bencana (National Agency for Disaster Management) BPN Badan Pertanahan Nasional (National Land Agency) BPS Badan Pusat Statistik (Central Agency on Statistics) BTDC Bali Tourism Development Corporation BWS Balai Wilayah Sungai (River Basin Office) CMC Construction Management Consultant DED Detailed Engineering Design DRM Disaster Risk Management EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan ESP Environmental and Social Policy EWS Early Warning System FIRR Financial Internal Rate of Return FM Financial Management GDP gross domestic product GoI Government of Indonesia GWT Ground Water Tank HPL Hak Pengelolaan (Land Management Right) IPDP Indigenous Peoples Development Plan ITDC Indonesia Tourism Development Corporation ITMP Integrated Tourism Master Plans LTDC Lombok Tourism Development Corporation LUDA Land Utilization and Development Agreement MICE Meetings, Incentives, Conferencing, Exhibitions MPC Main Panel Control MoPWH Ministry of Public Works and Housing MoSOE Ministry of State-Owned Enterprises NPV Net Present Value NTB Provinsi Nusa Tenggara Barat (West Nusa Tenggara Province) ii PDAM Perusahaan Daerah Air Minum (Regional Water Supply Company) PDS Project Delivery Strategy PLN Perusahaan Listrik Negara (National Power Company) PMC Project Management Consultant PMU Project Management Unit PPNPPI Program Prioritas Nasional Pembangunan Parawisata Indonesia (Indonesia Tourism Development Priority Program) PV Photovoltaic ROW Right of Way RPF Resettlement Planning Framework RPJMN Rencana Pembangunan Jangka Menengah Nasional (Medium-Term Development Plan) SEZ Special Economic Zone SLS Sewage Lift Station SOE State-Owned Enterprise SWRO Sea Water Reverse Osmosis SWM Solid Waste Management TA Technical Assistance ToR Terms of Reference TES Temporary Evacuation Shelter UNWTO United Nations World Tourism Organization WACC Weighted Average Cost of Capital WB World Bank WEF World Economic Forum WTTC World Travel and Tourism Council WWTP Waste Water Treatment Plant iii Contents 1. Project Summary Sheet ............................................................................................... I 2. Strategic Context ......................................................................................................... 1 A. Country Context ........................................................................................................ 1 B. Sectoral and Institutional Context .............................................................................. 1 3. The Project................................................................................................................... 5 A. Rationale ................................................................................................................... 5 B. Objective ................................................................................................................... 7 C. Project Description and Components......................................................................... 8 D. Cost and Financing.................................................................................................... 9 E. Implementation Arrangement .................................................................................. 10 4. Project Assessment .................................................................................................. 14 A. Technical ................................................................................................................. 14 B. Economic and Financial .......................................................................................... 15 C. Fiduciary and Governance ....................................................................................... 17 D. Environmental and Social ........................................................................................ 19 E. Risks and Mitigation Measures ................................................................................ 26 5. Next Steps.................................................................................................................. 28 Annexes Annex 1: Results Framework and Monitoring ...................................................................... 29 Annex 2: Strategic Context and Mandalika Masterplan ................................................... 3131 Annex 3: Detailed Project Description ................................................................................. 51 Annex 4: Implementation Arrangements ............................................................................. 59 Annex 5: Economic and Financial Analysis ......................................................................... 66 Annex 6: Credit and Investment Analysis ............................................................................ 75 Annex 7: Sovereign Credit Fact Sheet ................................................................................ 79 Annex 8: Risks and Mitigation Measures............................................................................. 80 Annex 9: Implementation Support Plan ............................................................................... 86 iv Project Summary Sheet Indonesia: Mandalika Urban and Tourism Infrastructure Project Project No. 000069 Client Guarantor Republic of Indonesia Borrower PT Pengembangan Pariwisata Indonesia (Persero) / Indonesia Tourism Development Corporation (ITDC) Implementation Agency ITDC Sector(s) Multisectoral infrastructure Subsector(s) Project The objective of the proposed project is to provide Objectives / Brief Project sustainable core infrastructure for the development of a Description new tourism destination in the Mandalika region of Lombok. The Project consists of two components. Component 1: Provision of Basic Services and Infrastructure. This supports construction and improvement of road infrastructure and drainage, water supply, waste water management and sanitation, solid waste management, electricity distribution, disaster risk management, landscaping and community facilities. Component 2: Technical Assistance and Capacity Building. This provides support to project and construction management, institutional development, training, sector studies and destination management. Project Implementation Indicative Start Date: March 1, 2019 Period Indicative End Date: March 31, 2024 Expected Loan Closing Date September 30, 2024 Project cost and Project Cost: USD316.5 million Financing Plan Financing Plan (i) Asian Infrastructure Investment Bank (AIIB) Loan: USD248.4 million (78.5 percent) (ii) Government of Indonesia / ITDC: USD68.1 million (21.5 percent) AIIB Loan USD248.4 million (Size and Terms) A sovereign-backed loan with the loan tenor up to 35 years, and a grace period of 10 years, at AIIB’s standard interest rate for sovereign-backed loans. Cofinancing No Environmental Category A and Social Category Project Risk High (Low/Medium/High) Conditions for Effectiveness For Effectiveness, ITDC shall prepare and adopt an and Disbursement (if any) acceptable project operational manual. For Disbursement, ITDC shall: (i) Procure or acquire the land required for the construction of proposed infrastructure under the Project (Sub-component 1.1) in a manner acceptable to AIIB. (ii) Have entered into a contractual agreement for the design, construction, and operation of sea water reverse osmosis (SWRO) plants with selected operator(s), satisfactory to AIIB (for Sub-component 1.1 - for disbursement related to the construction of pipeline for potable waters, etc.). (iii) engage consultants, satisfactory to AIIB, for project management and construction supervision. Key Covenants ITDC shall: (i) Maintain, until the completion of the Project, a Project Management Unit (PMU) with terms of reference, functions and resources acceptable to AIIB. (ii) Ensure that the implementation of all project activities comply with AIIB’s Environmental and Social Policy and Standards, Prohibited Practices Policy, Procurement Policy and the Procurement Directive. (iii) Carry out all project activities in accordance with the environmental and social safeguard instruments acceptable to AIIB, including the Environmental and Social Management Plan (ESMP), to Resettlement Planning Framework (RPF) and to Indigenous Peoples Development Plan (IPDP). (iv) Monitor and evaluate the progress of the Project and prepare project progress reports, which cover the period of one calendar year and shall be submitted to AIIB within 45 days after the end of the period covered by such report. (v) Prepare and furnish to AIIB interim unaudited financial reports for the Project covering the preceding quarter, in form and substance satisfactory to AIIB no later than 45 days after the end of each calendar quarter. ii (vi)