TACR: Indonesia: Regional Roads

Technical Assistance Consultant’s Report Project Number: 38479 April 2010 Republic of Indonesia: Regional Roads Development Project (Financed by the Japan Special Fund) Main Report Prepared by MMM Group Ltd, Canada In association with Pt Guteg Harindo & Pt Bina Karya (Persero), Indonesia This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. All the views expressed herein may not be incorporated into the proposed project’s design. The contents of this report reflect the project design from early 2010, under a multitranche finance facility lending modality. The project design has been subsequently amended in 2011 and converted to a single project loan lending modality. Therefore the reader should be aware that the report contents and the final design of the Regional Roads Development Project do not directly correlate. CURRENCY EQUIVALENTS (as of 26 April 2009) Currency Unit – Rupiah (Rp) Rp 1.00 = $0.000110497 $1.00 = Rp 9,050 ABBREVIATIONS ACAP - Anti-Corruption Action Plan ADB - Asian Development Bank AMDAL - Analisis Mengenai Dampak Lingkungan (see EIA) AP - Affected Persons AusAID - Australian Agency for International Development BIMP-EAGA - Brunei Darussalam-Indonesia-Malaysia-Philippines – East Asia Growth Area Summit CIQS - Customs, Immigration, Quarantine and Security CTC - Core Team Consultant DGH - Directorate General of Highways DOP - Subdirectorate of Planning DSC - Design and Supervision Consultant EA - Executing Agency EIA - environmental impact assessment EINRIP - Eastern Indonesia National Roads Improvement Project EIRR - economic internal rate of return EIRTP - East Indonesian Road Transport Project EMDP - Ethnic Minorities Development Plan EMP - Environmental Management Plan (cf UKL) EMoP - Environmental Monitoring Plan (cf UPL) FDI - Foreign Direct Investment FFA - Framework Financing Agreement FIRR - Financial Internal Rate of Return FMAP - Financial Management Action Plan GDP - Gross Domestic Product GoI - Government of Indonesia HDM4 - highway design and maintenance 4 HAHTP - HIV/AIDS and Human Trafficking Prevention Plan IEE - Initial Environmental Examination IHCM - Indonesian Highway Capacity Manual IRI - international roughness index (IRI m/km) JBIC - Japan Bank for International Cooperation JTS - Java Transport Study (proposed by this study) LARAP - Land Acquisition and Resettlement Action Plan MFF - multitranche financing facility MPW - Ministry of Public Works NGO - Non Government Organization NRSC - National Road Safety Council P2JJ - Perencanaan Pengawasan Jalan dan Jembatan PIU - project implementation unit PMM - Project Management Manual PMU - Project Management Unit PPJJM - Pembinaan Jalan dan Jembatan Metropolitan PPTA - Project Preparation Technical Assistance PRS - Poverty Reduction Strategy ROW - right-of-way RSAP - Road Safety Action Plan SDEA - Subdirectorate of Environmental Affairs SRIP - Strategic Road Improvement Project SRRP - Sumatera Regional Road Project UKL - Upaya Pengelolaan Lingkungan – Environmental Management UPL - Upaya Pemantauan Lingkungan – Environmental Monitoring NOTES (i) The fiscal year (FY) of the Government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars. Preparing the Regional Roads Development Project – Final Report 2 CONTENTS I. BACKGROUND 5 A. Background to the Study 5 B. Description of Project Corridors 7 C. Conduct of the Study 9 D. Contents of the Report 11 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS AND OPPORTUNITIES 13 A. Performance Indicators and Analysis 13 B. Analysis of Key Problems and Opportunities 14 III. THE PROPOSED PROJECT 18 A. Impact and Outcome 18 B. Outputs 18 C. Special Features 20 D. Cost Estimates 20 E. Financing Plan 23 F. Implementation Arrangements 24 IV. PROJECT BENEFITS, IMPACTS AND RISKS 28 A. Economic Benefits 28 B. Social Dimensions and Poverty Reduction Impacts 29 C. Environmental Impacts and Mitigation Measures 31 D. Project Risks 32 V. ASSURANCES 32 Preparing the Regional Roads Development Project – Final Report 3 Tables Table 1 List of Subcomponent 2 Links 12 Table 2 Cost Estimates – Tranche 1 21 Table 3 Cost Estimates – Tranche 2 22 Table 4 Cost Estimates – MFF 22 Table 5 Financing Plans for MFF, Tranche 1 and Tranche 2 23 Table 6 Perceived Risks and Mitigation Measures 32 Table 7 Road Network Length 36 Table 8 Indonesian Roads Network Condition 2008 37 Table 9 Project Area: Road Network Condition 2008 39 Table 10 Roads Agency/Authority staff involved in National Road Management 45 Table 11 ADB Road Sector Loans 46 Table 12 Detailed Cost Estimate - Tranche 1 47 Table 13 Detailed Cost Estimate - Tranche 2 48 Table 14 Detailed Cost Estimate – MFF 48 Table 15 Detailed Cost Estimate - Tranche 1 - IsDB 48 Maps Project Area Appendices APPENDIX 1: DESIGN AND MONITORING FRAMEWORK 34 APPENDIX 2: ROAD SECTOR ANALYSIS 36 APPENDIX 3: COST ESTIMATES 47 APPENDIX 4: CONTRACT PACKAGES TRANCHE 1 50 APPENDIX 5: SUMMARY OF PROPOSED CIVIL WORKS 52 APPENDIX 6: SUMMARY RESETTLEMENT PLAN 54 APPENDIX 7: SUMMARY ETHNIC MINORITY DEVELOPMENT PLAN 58 APPENDIX 8: IMPLEMENTATION SCHEDULE 62 APPENDIX 9: ECONOMIC ANALYSIS 63 APPENDIX 10: SUMMARY INITIAL ENVIRONMENTAL ANALYSIS 72 APPENDIX 11: SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY 80 Preparing the Regional Roads Development Project – Final Report 4 Annexes 1. Project Performance Monitoring 2. Project Implementation Plan and Financial Management Assessment 3. Technical and Design Summary 4. Comparison of HDM4 & IRMS 5. Assessment of Road Safety 6. Assessment of Vehicle Overloading 7. Poverty and Social Analysis 8. Draft Resettlement Framework 9a. Initial Environmental Examination 9b. Summary Initial Environmental Examination 10. Environmental Assessment and Review Framework 11. Economic Analysis 12. Generalized Scope of Consulting Services 13. Short Land Acquisition and Resettlement Plans and Due Diligence Preparing the Regional Roads Development Project – Final Report 5 I. BACKGROUND A. Background to the Study 1. During the 2006 country programming mission, the Government of Indonesia (Government) requested technical assistance (TA) to prepare the proposed Regional Roads Development Project for possible Asian Development Bank (ADB) financing. This project preparatory technical assistance (PPTA) was included in ADB’s Country Strategy and Program 2006-2009 for Indonesia1. The Government’s medium-term strategy for the Ministry of Public Works (MPW) identified road development in less-developed regions, including northern Kalimantan and southern Java, as a priority. After several missions to Indonesia2, the Government agreed to the impact, outcome, outputs, implementation arrangements, cost, financing arrangements, and terms of reference (TOR) for the TA. The design and monitoring framework is in Appendix 1. 2. Indonesia is a middle-income country, with carried development across its provinces and islands. Access to roads is key to the country’s poverty reduction strategy, as improved transport accessibility reduces poverty both directly and indirectly, e.g. through better access education and health facilities. 3. For medium-term developmental goals, the Government has committed to raising levels of sustainable economic growth, creating jobs, and accelerating achievement of its millennium development goals. It identifies infrastructure development and investment – including that related to road transport – as critical to meeting these objectives. Improved access to markets strengthened intermodal integration, enhanced transport networks in less developed and border regions and advanced regional integration and trade opportunities will result from this Government emphasis on road transport. The Government, through MPW, has given high priority to improving the road system through: • Removal of capacity constraints • Rehabilitation of substandard highways • Development of a sustainable maintenance system to preserve the country’s road system, including increase expenditure • Investment in less developed area road networks, and • Improved border area connections 4. Road transport is the dominant mode in Indonesia, meeting 83% of passenger and 70% of freight demand. In recent years, MPW has concentrated major maintenance and rehabilitation on key highways in Java, Sumatra, Kalimantan, and Sulawesi3. While about 45% of the road network is paved – including more than 75% of the national road system – non-national road network coverage is poor. Road network density is already low nationally at about .4 kilometer (km) per 1,000 square kilometers (km2), but is significantly lower in less developed regions4. There are good road networks in northern Java and in parts of Sumatra, but road conditions in the rest of the country are fair to poor, especially in less developed provinces and border regions. Outside Java and Sumatra, traffic is generally low on national and provincial roads. 1 The TA concept paper was included as Appendix A8.5, and it first appeared in ADB Business Opportunities on 30 October 2007. 2 Separate missions were fielded between 1 July and 29 August 2007 and 2-13 October 2007 to visit proposed project areas, hold preliminary discussions with the Government, and define the overall scope of the proposed project. 3 Several years of minimal maintenance expenditure after the Asian financial crisis in 1997 caused a major repair backlog, resulting in large neglected sections of the national road network. 4 The road density for Kalimantan is only 0.19

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