Project Number: 33062 Loan Number: 1798-INO August 2008

Completion Report

Indonesia: Road Rehabilitation (Sector) Project

CURRENCY EQUIVALENTS

Currency Unit – rupiah (Rp)

At Appraisal At Project Completion 2 October 2000 31 July 2007 Rp1.00 = $0.000114 $0.000109 $1.00 = Rp8,770 Rp9,167

ABBREVIATIONS

AADT – average annual daily traffic ADB – Asian Development Bank BAPPENAS – Badan Perencanaan Pembangunan Nasional (National Development Planning Agency) DGH – Directorate General for Highways DGLT – Directorate General for Land Transportation DGRID – Directorate General for Regional Infrastructure Development EA – executing agency EIRR – economic internal rate of return EMMP – environmental mitigation management plan ERM – Economic Review Module IA – implementing agency ICB – international competitive bidding IRI – international roughness index IRMS – Integrated Road Management System LARP – land acquisition and resettlement plans MOT – Ministry of Transportation MSRI – Ministry of Settlements and Regional Infrastructure PMU – project management unit SEMEP – Socioeconomic Monitoring and Evaluation Program TA – technical assistance

NOTE

In this report, “$” refers to US dollars.

Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General A. Thapan, Southeast Asia Department (SERD) Country Director J. A. Nugent, Indonesia Resident Mission, SERD

Team leader R. Kausar, Infrastructure Specialist, SERD Team member H.S. Soewartono, Senior Project Implementation Officer, SERD

CONTENTS

Page

BASIC DATA ii MAP v I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 7 G. Conditions and Covenants 8 H. Consultant Recruitment and Procurement 8 I. Performance of Consultants, Contractors, and Suppliers 9 J. Performance of the Borrower and the Executing Agency 9 K. Performance of the Asian Development Bank 10 III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 11 E. Impact 12 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 13 C. Recommendations 14

APPENDIXES

1. Project Framework 2. Project Outputs – Road and Bridge Component 3. Outputs under Road Sector Policies Component 4. Project Cost 5. Utilization of Loan Proceeds 6. Project Implementation Schedule 7. Project Organization 8. List of Loan Covenants 9. Economic Justification and Reevaluation

BASIC DATA

A. Loan Identification

1. Country Indonesia 2. Loan Number 1798 3. Project Title Road Rehabilitation (Sector) Project 4. Borrower Republic of Indonesia 5. Executing Agency Directorate General for Highways 6. Amount of Loan $190,000,000 7. Project Completion Report Number PCR: INO 1050

B. Loan Data 1. Appraisal – Date Started 12 June 2000 – Date Completed 22 June 2000

2. Loan Negotiations – Date Started 26 October 2000 – Date Completed 27 October 2000

3. Date of Board Approval 11 December 2000

4. Date of Loan Agreement 27 March 2001

5. Date of Loan Effectiveness – In Loan Agreement 28 June 2001 – Actual 28 September 2001 – Number of Extensions 1

6. Closing Date – In Loan Agreement 31 March 2005 – Actual 31 July 2007 – Number of Extensions 2

7. Terms of Loan – Interest Rate Variable – Maturity (number of years) 24 years – Grace Period (number of years) 4 years

8. Disbursements a. Dates

Initial Disbursement Final Disbursement Time Interval

15 November 2001 21 December 2007 74 months

Effective Date Original Closing Date Time Interval

28 September 2001 31 March 2005 43 months

iii

b. Amount ($million) Category Original Last Amount Net Amount Undisbursed Allocation Revised Canceled Amount Disbursed Balance Allocation Available 01A Civil Works, Roads and Bridges 138.50 137.61 4.31 137.61 133.30 4.31 01B Civil Works, Road Sector Policies 2.70 2.04 0.00 2.04 2.04 0.00 02 Equipment 1.80 0.72 0.03 0.72 0.69 0.03 03A Consultants, Core Team 7.50 8.34 0.07 8.34 8.27 0.07 03B Consultants, Field Teams 10.70 13.85 0.27 13.85 13.58 0.27 03C Consultants, Road Sector Policies 1.80 3.39 0.25 3.39 3.14 0.25 03D Capacity Building 1.80 1.77 0.09 1.77 1.68 0.09 4 Front-end Fee 1.90 1.90 0.00 1.90 1.90 0.00 5 IDC 23.30 16.63 0.52 16.63 16.11 0.52 Total 190.00 186.25 5.54 186.25 180.72 5.54

IDC = interest during construction.

9. Local Costs (Financed) - Amount ($million) 82.20 - Percent of Local Costs 50.00 - Percent of Total Cost 31.00

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 110.00 98.51 Local Currency Cost 140.00 162.53 Total 250.00 261.04

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 60.00 80.32 ADB Financed 164.80 162.71 Other External Financing 0.00 0.00 Total 224.80 243.03 IDC Costs Borrower Financed 0.00 0.00 ADB Financed 25.20 18.01 Other External Financing 0.00 0.00 Total 25.20 18.01 ADB = Asian Development Bank, IDC = interest during construction.

3. Cost Breakdown by Project Component ($million) Component Appraisal Estimate Actual Part A: Road and Bridge Works - Civil Works 195.80 209.47 - Core Team Consultants 8.20 10.11 - Field Team Consultants 11.80 15.09 Part B: Road Sector Policies - Consulting Services 2.00 3.45 - Equipment 2.00 0.77 - Minor Civil Works 3.00 2.27 Part C: Capacity Building in Road and Bridge Works - Consulting Services and Training 2.00 1.87 Total 224.80 243.03

4. Project Schedule Item Appraisal Estimate Actual Part A: Road and Bridge Works Date of Contract with Consultants 31 April 2001 22 November 2002 Completion of Engineering Designs for Batch 1 30 November 2000 15 October 2002 Civil Works Contract (Batch 1) Date of Award 30 May 2001 13 December 2002 Completion of Work 30 July 2002 17 July 2004 Civil Works Contract (Batch 2) Date of Award 1 March 2002 15 June 2004 Completion of Work 30 March 2004 6 January 2007 Civil Works Contract (Batch 3) Date of Award 1 March 2003 15 November 2005 Completion of Work 30 September 2004 25 July 2007

Part B: Road Sector Policies Date of Contract with Consultants May 2001 1 March 2004 Civil Works and Supplies Date of First Procurement  14 December 2005 Date of Last Procurement  21 June 2006 Date of Completion of Weighbridge Installation  31 August 2007 Completion of Tests and Commissioning  15 October 2007 Beginning of Start-Up  15 December 2007

Part C: Capacity Building in Road and Bridge Works Date of Contract with Consultants May 2001 21 December 2005

5. Project Performance Report Ratings Ratings

Development Implementation Implementation Period Objectives Progress From 1 January to 31 December 2001 Satisfactory Satisfactory From 1 January to 31 December 2002 Satisfactory Satisfactory From 1 January to 31 December 2003 Satisfactory Satisfactory From 1 January to 31 December 2004 Satisfactory Satisfactory From 1 January to 31 December 2005 Satisfactory Satisfactory From 1 January to 31 December 2006 Satisfactory Satisfactory From 1 January to 21 December 2007 Satisfactory Satisfactory

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Appraisal Mission 12 to 22 June 2000 6 60 a, a, b, h, d, c Inception Mission 22 to 30 Nov 2001 1 9 a Loan Review Mission 28 Jan to 2 Feb 2002 1 4 a Loan Review Mission 9 to 14 March 2002 1 6 a Loan Review Mission 14 to 22 August 2002 1 8 a Loan Review Mission 30 Nov to 4 Dec 2002 1 4 a Loan Review Mission 28 Jan to 7 Feb 2003 1 11 a Loan Review Mission 23 to 29 May 2003 1 6 a Loan Review Mission 11 to 21 May 2004 3 19 a, a, i Special Project Administration 9 to 10 Feb 2005 2 10 a, a Mission Loan Review Mission 4 to 12 July 2005 3 12 a, a, i,f Loan Review Mission 10 to 12 August 2005 3 12 a, a, i Midterm Review Mission 21 Nov to 5 Dec 2005 5 22 a, a, a, h, g Special Project Administration 30 May to 1 June 2006 2 6 a, a Mission Loan Review Mission 20 Nov to 21 Dec 2006 2 14 a, a Special Project Administration 9 to 18 April 2007 1 8 a Mission Project Completion Review 10 to 19 March 2008 3 21 a, a, e a a - engineer, b – program officer, c - counsel, d - economist, e - consultant, f - control officer, g - social development specialist, h - poverty reduction specialist, i - procurement officer.-.

Project Map

I. PROJECT DESCRIPTION

1. On 11 December 2000, the Asian Development Bank (ADB) approved a loan of $190 million to the Government of Indonesia to finance 76% of the total project cost of $250 million for the Road Rehabilitation (Sector) Project1 from the ordinary capital resources fund. The aim of the Project was to support the Government’s road sector programs by (i) funding a time slice of civil works on priority roads; (ii) helping the Government in implementing its road sector policies, and particularly those related to road user charges, vehicle overloading, and road safety; and (iii) assisting with institutional capacity building in road and bridge works.

2. The Project covered three major components, with civil works representing about 80% of the total cost that included periodic maintenance on about 2,500 kilometers (km) of roads, road betterment on about 500 km, and some 3,000 linear meters of bridge rehabilitation or replacement in 15 provinces2 in Java, Kalimantan, Sulawesi, and Sumatra. The first batch of civil works had been prepared under ADB-financed technical assistance (TA)3 while subsequent batches were prepared under the Project. To assist in implementing the civil works, the Project included consulting services for selection, design, and supervision. The second component was to help in the Government’s road sector policies and included (i) consulting services to assist in monitoring progress of the action plan for Reformulation and Implementation of Road Traffic and Transport Policies including the policies on road user charges, vehicle overloading, road safety, and road planning and management; (ii) equipment to support enforcement of vehicle overloading laws; and (iii) materials, supplies, and civil works to remedy accident blackspots. T`he capacity building component for road and bridge works involved consulting services, training equipment, and training support to enhance local staffs’ capacity to plan, program, budget, design, and supervise road and bridge works.

3. The Directorate General of Regional Infrastructure Development (DGRID) of the Ministry of Settlements and Regional Infrastructure (MSRI) was the Project’s Executing Agency (EA) with overall responsibility for project implementation and coordination with other agencies involved. This had been established in March 2000, following the Government’s decentralization policy initiated in 1999. For highways, it was the successor agency to the Directorate General of Highways (DGH) under the Ministry of Public Works. A further restructuring of MSRI took place in January 2001, and in June 2005 responsibility for highways was again brought under the umbrella of a recreated DGH as part of a reestablished Ministry of Public Works. Considering that DGH was the EA at the time of project completion, in this report the EA will be referred to as DGH. The Directorate General of Land Transportation (DGLT) of the Ministry of Transportation (MOT) was the implementing agency (IA) for the road sector policy component.

4. The Loan was declared effective on 28 September 2001 and was closed on 31 July 2007.4 The final loan amount was $180.7 million, and the Government’s contribution amounted to $80.3 million. The Government requested two loan extensions totaling 28 months. During project implementation, at the Government’s request, a partial loan cancellation amounting to $3.75 million was made. At project closing, $5.5 million of unused loan was also cancelled.

1 ADB. 2000. Report and Recommendations of the President to the Board of Directors on a Proposed Loan to the Republic of Indonesia for the Road Rehabilitation Sector Project. Manila. 2 As a result of splitting up of two provinces, the number of participating provinces eventually rose from 15 to 17. 3 ADB.1999. Technical Assistance to the Republic of Indonesia for the Road Rehabilitation (Sector) Project. Manila. 4 The final disbursement was made on 21 December 2007.`

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

5. The Project was prepared at the end of the economic crisis (1997–2000), when ADB’s strategy focused on supporting the Government’s recovery effort and its transition to decentralization while emphasizing poverty reduction. The project design was relevant to this strategy. During the crisis years, road expenditures had declined significantly in real terms and as a percentage of total government development expenditures. Lack of adequate maintenance was beginning to affect road conditions and, if not addressed soon, rapid deterioration of the road infrastructure would have resulted in substantial increases in road user costs on the one hand and road reconstruction costs on the other. On both counts, a deteriorated road infrastructure would have seriously hampered economic recovery and so the Project provided timely resources to help reverse the road deterioration. 6. The Project supported the decentralization process through the institutional capacity building component aimed at training staff in the regions in planning, programming and budgeting procedures, and in supervising road and bridge works. 7. In addition to indirectly supporting poverty reduction by facilitating economic recovery, an attempt at directly reducing poverty was built into the project design through the selection criteria for individual subprojects. This ensured priority was to be given to road sections located in areas where the poverty reduction impact would be greatest. 8. The Project was formulated as a sector operation and consisted of three batches of road works. Only the first batch was identified at negotiations. This was justified on the grounds that the implementing agency had established sound procedures for annual programming and budgeting of road works and had performed satisfactorily under previous road projects. 9. The project design was also consistent with the Government’s objective to focus road infrastructure expenditures on rehabilitation, betterment, and maintenance of the existing network and to reformulate and implement its policies on road user charges and cost recovery, vehicle weight and dimensions, and road safety in line with the new decentralization policy. Support for implementation of the Government’s road sector priorities was particularly relevant at a time when such support was phasing out under World Bank projects. 10. Except for extensions to the loan closing date to allow the civil works to be completed, only minor changes were made to the overall project design. The mix of outputs under the civil works category in terms of lengths of betterment and periodic maintenance differed from initial targets. Such modifications in the targets, however, are compatible with the sector approach, which allows for scope of work to be adjusted in light of changing circumstances. 11. While the economic condition and outlook for the country has improved since project formulation, several design features of the Project remain fully relevant to ADB and Government objectives and strategy. The emphasis the Project placed on road preservation is still highly relevant to the goal of achieving low cost road transport services across the country and, hence, to that of reducing poverty. Moreover, the challenges posed by decentralization for efficient road works implementation remain as daunting as ever. Finally, the project approach of considering the efficiency of the transport sector in an integrated fashion comprising road infrastructure works with the responsibility of DGH, on the one hand, and road traffic and transport policies responsibility under MOT, on the other, remains particularly and highly relevant today, when soaring world fuel prices are requiring unsustainable Government subsidies.

12. The first year’s batch of road works was prepared under project preparatory TA (footnote 3). It included preparing a short list of subprojects, reviewing field investigations and the designs prepared by DGH, preparing prequalification and tender documents and terms of references for consultant services to assist with project implementation, and making recommendations. The TA did not, however, include the initial environmental evaluation reports required as part of the proposal submission to ADB. Given the delays in recruiting the supervision consultants, this critical gap in the preparation work contributed to the significant delay in project start-up. 13. The decentralization was in process and perhaps posed some risks for project implementation. This was recognized in the report and recommendation to the President, and some aspects of the implementation arrangements were thus considered tentative. Appropriate risk mitigation measures, however, were not reflected in project design in terms of, for example, provisions for a possible hands-on supervision on the part of ADB. B. Project Outputs

14. The Project was implemented substantially in accordance with the scope envisaged at appraisal. The project framework and achievements are shown in Appendix 1. The project outputs as outlined in the loan agreement and the achievements are summarized below.

1. Part A: Road and Bridge Works

15. The works comprised (i) civil works for periodic maintenance consisting of single or double asphalt concrete overlays, reshaping of shoulders, pavement markings, and drainage works; (ii) road betterment consisting of improvements and additions to surface and subsurface drainage, strengthening and minor widening of pavement and shoulders, resurfacing, pavement marking and signs for safety improvement; and (iii) bridge works comprising replacement or rehabilitation of deficient bridge structures on the road sections selected for betterment or periodic maintenance. 16. The works were implemented under 112 contracts in three batches. Batch 1 included 12 contracts, Batch 2 comprised 65 contracts, and Batch 3 had 35 contracts. Subprojects were prepared in accordance with criteria agreed under the Project and submitted for ADB approval. Overall achievement of Part A component is summarized in Table 1 below, and further details on road and bridge works under Part A are given in Appendix 2.

Table 1: Target and Achievement of Part A Component

Description Target Achievement (km) (km) (%) Road Betterment 500 955.2 191 Period Road Maintenance 2,500 1,466.3 59 Bridge Works 3 1.216 41 Bridge Rehabilitation 0.148 Bridge Replacement 1.068 Source: Project Completion Report of Directorate General of Highways. 17. Given the tight budgetary situation and deteriorating road conditions, it was anticipated that not all road sections selected under the Project would require treatment over their entire lengths (the functional lengths of the road sections) on a high priority basis. That part of a road section that was identified as needing priority treatment was termed the effective length. Furthermore, it was envisaged that each such section would entail either betterment or periodic

4 maintenance along the effective length. This approach was implemented for most subprojects, but in a number of cases, owing to cost increases resulting from progressive road deterioration, it proved more beneficial to treat part of the effective length as betterment and part as periodic maintenance because part of the effective length initially needing periodic maintenance required betterment by the time the works actually started. As a result, the achievement of road length for betterment is considerably higher than the target, and this is due to road deterioration between the time the proposal was prepared and the time of contractor mobilization (during which period the road sections did not receive adequate maintenance). In respect of the remaining part of a road section where the effective length was less than the functional length, the scope of the civil works contract required the contractor to carry out spot treatments such as spot overlays, patching, drainage improvement, crack filling and road markings so that the contractor would deliver the entire functional length to a minimum standard at contract completion. 18. For bridgeworks, the total length of improvements amounted to 1,216 meters (m), comprising 148 m of rehabilitation on three bridges and 1,068 m of replacement in respect of four bridges. The lower achievement compared to the target results mainly from there being more bridge replacement works—which have much higher unit costs—than assumed at appraisal. The Government took over financing most of the remaining bridges along the rehabilitated roads that were not covered by the Project. 19. The quality of the works is generally acceptable. Very few construction contracts were completed to a high standard, and in a few cases quality was substandard. There were outstanding issues of implementation quality in respect of two contracts5 where final handover had not yet taken place. These issues are being handled adequately in accordance with general government guidelines and contract clauses relating to warranties. Under Batch 1 civil works, 10 of the 12 contracts recorded the provisional handover in accordance with the contract schedule and two incurred minor delays. Of the 65 Batch 2 civil works contracts, 54 were completed on time. Eight experienced minor to major delays. Another three contracts6 were terminated prior to completion. Of the 35 Batch 3 projects, 31 were completed on time, one was completed with minor delays and two were completed more than 3 months late while one was terminated.7

2. Part B: Road Sector Policies

20. This component was also formulated under a sector approach to assist the Government in implementing its road sector policies, with specific outputs to be defined during project implementation. It included two subcomponents: (i) consulting services to assist in monitoring progress of the Action Plan for Road Traffic and Transport Policies and in reformulating and implementing road sector policies, particularly those on road user charges, cost recovery, earmarking of funds for road maintenance, vehicle overloading, and road safety; and (ii) equipment, supplies, and minor civil works to support the policies enforcing the regulations on vehicle overloading and to make improvements at accident blackspots. 21. The monitoring and assistance to implementing the Action Plan was severely hampered by the fact that the consultants only came on board in March 2004 under a 12-month contract. Because of project extensions to accommodate completing the civil works, it was possible to also extend the policy consultancy services and accomplish more than would have been feasible under the original 1-year assignment. The consultants produced a series of policy and

5 Subproject AK-05A in Banten Province and AS-11 in South Sumatra Province. 6 Subproject AS-02 in South Sumatra Province was terminated at 29% completion, AR-03 in Bengkulu Province at 30%, and AT-05 in Lampung Province at 10%. 7 Terminated was Subproject AZ-04 in South Sulawesi Province at 45% completion.

5 guidance papers and recommendations on road user charges, road safety, and vehicle overloading. Other outputs in respect of enforcing vehicle weights and dimensions and traffic safety included (i) regulations on vehicle overloading concepts and preparation of tender documents for two weighbridge stations that were eventually financed under the Project; (ii) identification of accident blackspots and remedial works at two locations;8 and (iii) strengthening the road safety capacity of DGLT staff, including to supply the Accident Blackspot Investigation Units with equipment and software and provide training during road safety campaigns. In addition, the consultants assisted DGLT to design and construct a public driver certification facility and purchase related equipment not originally envisaged under the Project. 22. Nevertheless, outputs fell below what could reasonably have been expected from the funds made available under the Project and those outputs that were delivered are not being used to best possible effect. In particular, the regulations and guidelines in respect of vehicle weights and dimensions have not been updated to reflect changes in vehicle technology or the Government’s decentralization policy. Furthermore, enforcement of the vehicle axle load and vehicle safety regulations is totally ineffective because facilities, such as weighbridges and vehicle inspection centers, and regulations related to road traffic and transport are not being used to control road damage or enhance road safety. Rather, they become a means of collecting legal and illegal levies and retributions. The public driver certification facility also is not being used effectively, because the related regulations have not yet been issued and operating funds are lacking. As to the civil works for road safety, the quality of the works is substandard.

3. Part C: Capacity Building

23. This component provided for (i) government staff to complete higher level studies in road engineering and transport subjects, and (ii) capacity building in road and bridge works. Initially, the first subcomponent was planned as a series of in-country master’s degree courses with some overseas studies. It was contracted to Bandung Institute of Technology in association with University of Diponegoro and the University of Gadjah Mada. The overseas study program was canceled to allow an increase in the number of in-country students. Six MOT students were also included in the program. From a total intake of 76 students, 73 completed their studies. The subcomponent also financed three staff from the Institute of Road Engineering Bandung to complete their PhD degrees. 24. The capacity building for roads and bridge works was formulated to build on earlier DGH training programs (the National and Provincial and Kabupaten Roads Master Training programs), which use competency based methods. Training materials were developed and a series of training courses in various technical fields was implemented in 13 provinces. To ensure sustainability, it also included training of trainers.

C. Project Costs

25. At appraisal, the project cost was estimated at $250.0 million equivalent, comprising $110.0 million in foreign costs and $140.0 million in local costs. ADB was to finance the entire foreign cost and $80.0 million of the local cost, while the Government was to finance the remaining local cost of $60.0 million. At completion, the actual project cost was $261.04 million, consisting of $98.5 million of foreign costs and $162.5 million of local costs. ADB financed the entire foreign cost and $82.2 million of local costs, while the Government financed the remaining local cost of $80.3 million. Details on project costs are given in Appendix 4.

8 In Jambi and South Sumatra provinces.

26. The total costs at completion were greater than estimated at appraisal because of higher costs under the civil works component following delays and increases in input prices.9 Because of the flexibility provided by the sectoral approach and small size of the individual subprojects, it was possible to maintain the overall cost reasonably in check by applying the constraint of the total funding available. 27. In response to excessive input price increases, the Government took two options: (i) the scope of a contract was maintained and the associated cost increase was financed by ADB and the Government proportionally, or (ii) the contract cost was held constant but the contract scope was reduced. Because of the limited budget, the second option was mostly adopted. Scope reductions were reviewed by the core team consultants to ensure that the works quality and expected benefits were not negatively affected. 28. Total expenditures under the road policy component were less than foreseen at appraisal ($6.49 million versus $7 million). Consulting services costs were significantly above appraisal estimates due to a number of contract addenda for design and supervision services. Savings under equipment and minor civil works were $1.23 million and $0.63 million, respectively. The capacity building component for road and bridge works had savings of $0.13 million. D. Disbursements

29. Total ADB disbursements were $180.7 million, or 97% of the revised loan amount of $186.3 million after cancellation of $3.7 million in March 2007. Disbursements during the first 3 years were well below projections due to the slow implementation start-up. They gradually picked up in 2004 after project supervision and administration were transferred to Indonesia Resident Mission. Utilization of loan proceeds is detailed in Appendix 5.

E. Project Schedule 30. The Project was planned to commence in April 2001 and be completed in September 2004. Significant start-up delays occurred, mainly resulting from lack of readiness of the first batch of subprojects, owing in turn to delays in recruiting the consultants.10 Thereafter, batches 2 and 3 were also delayed due to recruiting both the core and field team consultants which affected preparation of these two batches. Issues regarding variability in the quality of engineering designs prepared by the regional and provincial road offices caused further delays in approving and contracting these batches, and there were construction delays in some of the civil works contracts due to late release of the 2005 budget. The fuel price increase in March 2005 affected the cash flow of many contractors, further exacerbating the delays. For example, while the core team consultants were scheduled to mobilize at loan signing (March 2001), they only mobilized in November 2002 at the time of the start of Batch 1 civil works. The design and field team consultants not on board until early 2004. 31. While the original project implementation schedule provided for 10 months to recruit the supervision consultants (from June 2000 to March 2001), this may not have been realistic given the numerous steps, actions, and approvals required from both the Government and ADB and the track record in this area. In the case of the core team consultants, this can be illustrated by noting that the ADB Consultants Selection Committee met on 14 March 2001 to review DGH’s

9 By October 2005, the fuel and asphalt prices increased by more than 100%. 10 Although the 3-month delay in loan effectiveness did not materially affect implementation progress, it was symptomatic of the somewhat confused situation prevailing at the time of project start-up. The confusion was due to organizational changes in government departments and agencies following the decentralization policy and other changes in government structure which had been initiated in 1999 and 2000.

7 proposed shortlist and draft invitation documents that had been submitted on 2 February 2001. The elapsed time for just this one step in the recruitment process was almost 1-1/2 months. 32. The loan closing date was originally set at 31 March 2005. In May 2004, it was recognized that an extension would be required to allow the project objectives to be achieved. In early 2005 the closing date was extended to 28 February 2007 to allow for completing the civil works contracts that were on a critical path. In November 2006, it was realized that a number of ongoing projects would not be completed in time and a second extension of the closing date, to 31 July 2007, was agreed. Appendix 6 gives the project schedule as planned versus the actual. F. Implementation Arrangements 33. The Project’s implementation arrangements were defined at a time when the Government’s decentralization policies were in the early stages of implementation and the precise distribution of road sector responsibilities between the three levels of government11 was still being prepared. Given this institutional uncertainty, the implementation arrangements were modeled on those that had been used for externally funded road projects in the past. It was recognized, however, that these might have to be modified to reflect decentralization. From June 2005, DGH of the Ministry of Public Works took over as EA from DGRID of MSRI and took responsibility for overall coordination of the Project. DGH was also the implementing agency for parts A and C. A consultant team assisted the EA in overall coordination, monitoring, and quality control. Design works and construction supervision were undertaken at the provincial level by the existing roads and bridges development agency. Its units in each of the provinces were assisted by design and field team consultants. For general guidance and project coordination matters, these offices would refer to DGH’s central office, and for daily issues of construction implementation they were under the direct supervision of the regional governments via their highway services agencies. DGH maintained a project management unit (PMU) in Jakarta to provide overall coordination and serve as focal point for communicating with other government agencies and ADB. Considering that intergovernmental functional and fiscal relations were already quite complex prior to decentralization, its ongoing implementation would only add to the complexity. 34. While three major organizational changes affecting the EA and implementing agency were implemented during the course of the Project (para. 3),12 at working level the changes were less dramatic than had been anticipated. There is no doubt, however, that even if there was no direct impact on the project implementation arrangements, there was a pervasive indirect impact on account of the general level of uncertainty and anxiety prevailing among staff. This was a time when responsibilities and reporting lines for many middle and high level staff were reallocated, staff reassignments were being made at a much greater frequency than in the past, and funding sources—including for salaries of affected staff—were being redirected. 35. In respect of Part B, dealing with implementing road sector policies, DGLT of MOT was the IA. This agency was assisted by an international consultant team. For implementing road sector policies, a steering committee was established comprising DGH, DGLT, National Development Planning Agency, the Ministry of Home Affairs, and other relevant agencies. The project organization chart is shown in Appendix 7.

11 Central, provincial, and district governments. 12 In July 2006, the Minister of Public Works established a de-concentrated organization in the field for national roads, consisting of 10 regional offices. Each office covered three to five provinces and had responsibility for planning, design, monitoring, implementation, and quality control of road works.

G. Conditions and Covenants 36. The loan agreement included 38 covenants, of which 22 were project specific. Most applicable covenants were complied with except three critical covenants: (i) several of the contractors and field team consultants did not meet the required standards of competency, (ii) the requirement was not met that actions and target dates established in the policy action plan be fulfilled as a condition for submission and approval of successive groups of civil works subprojects and procuring vehicle overloading measures, and (iii) there was improper operation of road sector policy equipment and facilities. Although delays in providing counterpart funds during 2004 and 2005 were noted, the provision of the Government’s counterpart was adequate overall. 37. The covenanted evaluation and monitoring of the results of the vehicle overloading control measures and impacts of the civil works 4 years after completion of these measures are not yet due. Compliance with the loan covenants is detailed in Appendix 8. H. Consultant Recruitment and Procurement 38. The Project financed three internationally recruited and 17 national consulting firms. A total of 388 person-months of international consultants and 6,006 person-months of national consultants were fielded during the project period. Two of the international firms for core team and capacity building consultants were recruited by DGH and one for road traffic and transport policy consultants by DGLT in accordance with ADB’s guidelines. Seventeen national consulting firms for design and field teams (one in each province) were recruited by the provincial highway offices in accordance with the Government’s procedures acceptable to ADB. The recruitment of consultants had significant delays: almost 20 months for the internationally recruited core team consultants, about 31 months for the road traffic and transport policy consultants, approximately 50 months for capacity building for road and bridge works, and on the order of 30 to 33 months for the 17 national consultant field teams. The start of the single source selection contract with Bandung Institute of Technology for the master’s degree program was delayed almost 19 months. 39. The civil works under Part A were executed through 112 contract packages. Four contracts valued at more than $3,000,000 were procured through international competitive bidding (ICB) in accordance with ADB’s procurement guidelines and with prior review of prequalification invitations and invitations to bid. Other contracts estimated to cost less than the equivalent of $3,000,000 but equal to or more than $500,000 were executed in accordance with the Government’s standard procurement procedures acceptable to ADB and based on prior review of prequalification documents and contract awards. The average elapsed time from prequalification to contract signature was 7 months under national procedures and 10 to 12 months under ICB. 40. Under the road sector policy component, 12 contracts were awarded consisting of seven for equipment and goods and five for civil works. One contract for civil works was awarded on the basis of ICB in accordance with ADB’s procurement guidelines and others based upon local competitive bidding among prequalified contractors. All procurement for equipment and goods was conducted through international shopping.13

13 Since renamed as Limited International Bidding.

I. Performance of Consultants, Contractors, and Suppliers 1. Consultants’ Performance 41. Performance of the core team of consultants assisting with civil works preparation and implementation was satisfactory and in accordance with the terms of reference. Performance of the 17 design and field team consultants in the provinces was generally less than satisfactory. Recurring problems were lack of the supervising engineer’s full-time presence on site during critical stages of construction and inadequate experience of some of the other staff. 42. Performance of the consultant recruited to assist DGLT in implementing road sector policies was satisfactory for aspects of policy development but less than satisfactory in developing implementation schemes for weighbridge stations and blackspot improvements and supervising their related works. 43. Performance of the consultants for the capacity building was satisfactory in terms of training module development, training programs delivery, and training of trainers. 2. Contractors’ and Suppliers’ Performance 44. All the road works contractors under the Project were national contractors. In all, 73 contractors were employed. Several experienced cash flow problems, mainly as a result of payment delays and hefty increases in the prices of fuel and asphalt that were not fully compensated for. When price adjustments were finally authorized, they came late. Four civil works contracts were terminated. Overall, the performance of contractors was satisfactory. 45. Performance of the civil works contractors employed by DGLT for blackspot remedial measures cannot be rated as satisfactory considering the issues that arose during implementation and poor quality of the civil works. 46. Performance of suppliers of equipment for the road policy component was satisfactory in terms of timely delivery and responsiveness to client needs. J. Performance of the Borrower and the Executing Agency 47. Performance of the Borrower was satisfactory in respect of providing counterpart funding. The delays that were encountered were not specific to the Project and affected all government programs. The Borrower also acted in a timely and effective manner in administering the loan with regard to extensions and cancellation of unused funds. 48. As EA and the institution responsible for the road and bridge works (including capacity building), DGH carried out its tasks in a satisfactory manner, when viewed in the context of the organizational changes taking place at the ministerial, directorate general, and directorate levels. The considerable delays compared to the implementation schedule should be considered from this perspective and while factoring in this schedule’s optimistic nature. Owing to successive organizational changes since the Project’s inception, DGH’s institutional situation has not fully stabilized and there remains a critical need to ensure that important functions in the planning, programming, budgeting, and implementation processes are conducted in accordance with adequate standards. 49. The performance of DGLT, the IA for the Project responsible for the road sector policies component, was only partly satisfactory when considering that the resources provided under the Project have not been effectively used to date. In particular, little progress has been made in developing and issuing the regulations and other details required to implement the

Government’s decentralization policies in the sphere of road transport and traffic and to modernize the role, responsibilities, and functions of DGLT in general. This, among other things, is impacting upon the effectiveness of the physical investments provided under the Project. Also, the inter-ministerial steering committee established to guide and promote the development and implementation of improved road traffic and transport policies did not play a sufficiently proactive role. K. Performance of the Asian Development Bank 50. In examining ADB’s performance, it is important to distinguish between the period from early 2001 to May 2004, when supervisory responsibility for the Project was with headquarters in Manila, and that after May 2004 until project completion, when the Project was administered by the Indonesia Resident Mission. During the first period, the arrangements for supervision by ADB, including staff backup, were inadequate relative to the review and approval requirements arising from the 125 contracts for civil works and equipment and the 21 contracts for consultancy services. These requirements covering selection of subprojects, prequalification of contractors, tender documents, awards of contract, design reviews, and contract addenda engendered a quite inordinate workload, which was compounded by time for the transit of bulky documents, first from the project offices to Jakarta and subsequently from there onward to Manila. The resulting turnaround time for correspondence was not compatible with effective project implementation. On average, turnaround times were long. For certain packages, moreover, ADB’s response to proposals forwarded by DGH came piecemeal and with new issues and comments being raised in successive letters. ADB was considered too slow in taking decisions, and its performance was only partly satisfactory. 51. While the workload for review and approval remained largely unchanged during the second period, after administration and supervision were transferred to Indonesia Resident Mission, communication turnaround times improved significantly and responses to the EA’s inquiries were made very efficiently. In general, ADB also showed responsiveness to the Borrower in administering the Project by adjusting the contents of the components in line with changing circumstances, as may occur during the lifetime of a sector project. On average, ADB’s performance is rated satisfactory. III. EVALUATION OF PERFORMANCE A. Relevance 52. The Project was relevant in terms of its consistency with ADB’s country strategy and the Government’s development objectives and challenges, and it remains so to date. First, the Project aimed at helping the Government to address the issue of fuel subsidies by establishing a regime of appropriate road user charges. In light of the recent rise in world oil prices, that is still very relevant. Second, to preserve existing assets remains the best strategy now that budgetary resources are again very tight. Lastly, support for road policies is designed so that total road transport system costs are minimized. Nevertheless, coordination still needs to be improved between DGH (which is responsible for road construction and rehabilitation) and DGLT (which is responsible for road policies). B. Effectiveness in Achieving Outcome 53. In respect of the road works, the Project generally achieved the outcome of improving road condition standards in the participating provinces even though the quality of works was variable. The different outcome as measured by the proportions of periodic maintenance versus betterment resulted from the fact that, with the passage of time, the final designs had to account

11 for the extended deterioration the roads suffered during the design period (and thus since the original needs assessment). 54. The Project also achieved its outcome in terms of capacity building for road and bridge works by developing training materials in accordance with DGH’s competency based training approach and carrying out training courses in 13 provinces. Owing to delays, the training did not have the intended impact during project implementation. 55. While the road traffic and transport policy component has produced relevant outputs in terms of recommendations on policies, road safety awareness campaigns, implementation of accident blackspot remedial works, and the installation of two weighbridges, it has not had the intended impact on implementing improved policies and effective use of the facilities. C. Efficiency in Achieving Outcome and Outputs 56. The civil works were selected based on agreed procedures and requirements to ensure that economic internal rates of return (EIRRs) would be at least 15% at the stage of initial screening using DGH’s Integrated Road Management System and at least 12% at the stage of final selection when designs had been prepared and revised based on field investigations of road condition and traffic data. At the stage of subproject selection, none of the 112 subprojects had an EIRR below 15% and only 18 subprojects had EIRRs of less than 20%. 57. To assess efficiency of the investment, EIRRs were reevaluated on a sample of 25 subprojects using the actual construction costs, updated traffic data, type of construction, and roughness index. The traffic data and road roughness index were surveyed at the end of 2007. The sample was taken across all 17 project provinces. This evaluation indicates that most subprojects reached higher EIRRs than anticipated at subproject selection. The average EIRR of the sample subprojects was 65%. The higher subproject EIRRs were found in the northern Java road corridor in East Java, Central Java, and the East Sumatra Highway Corridor. The lower EIRRs, of about 28%, were found in North Sulawesi Province. Detailed analysis of the EIRRs is provided in Appendix 9. 58. The shift in funds from periodic maintenance to betterment did not materially affect the economic return of the investment, as this shift was motivated by the higher benefits obtained from rehabilitating badly deteriorated road sections. 59. Although the capacity building in road and bridge works was hampered by the late start of the consultancy services (with the result that the works implemented under the Project could not benefit from the training), this component has clearly improved the DGH’s staff skills and in the long term will generally benefit those staff members. Many of them have now been promoted to higher positions. The capacity building is considered as effectively implemented. 60. The efficiency under the road traffic and transport policies component was severely hampered by the delays in starting up the consultancy services and the successive ad hoc extensions of the services that were not part of an overall revised implementation plan. As a result, some elements of this component were not efficient. D. Preliminary Assessment of Sustainability 61. The outlook for sustainability of the civil works component is generally good, as the majority of the subprojects were implemented to adequate standards and the Government’s road expenditure policies emphasize road preservation. The key questions are, however,

12 whether (i) adequate funds will effectively be budgeted for road maintenance,14 and (ii) the funds allocated are used to best possible effect. For those links that encountered quality issues during construction, sustainability will depend on timely interventions to arrest premature deterioration. The ability to achieve this will depend on the quality of the road monitoring system, and that itself needs further strengthening. 62. Sustainability of the capacity building in road and bridge works is also likely. The 73 students who were able to participate in the master’s degree program are progressing in their careers within government. The training modules that were developed are expected to be more widely used under DGH’s work force development plan. 63. Sustainability of several of the initiatives under the road traffic and transport policies component is questionable. The two weighbridges are not being used as part of an effective enforcement program of vehicle weights and dimensions, and the investments in driver certification have not yet become operational. Various items financed as part of the accident investigation activities have also yet to start. 64. Considering that more than 95% of the project funds were allocated to road and bridge works, and that these are likely sustainable, the Project is expected to be sustainable overall. E. Impact 1. Environmental Impact 65. The road works were carried out on existing alignments and as a rule did not have any significant adverse environmental or social impacts. This was documented in the initial environmental examination report submitted as part of each subproject proposal. 66. Environmental mitigation management plans (EMMPs) and guidance for contractors were prepared to ensure the necessary mitigation measures were included in all Batch 2 and Batch 3 contracts. Contractors had responsibility for day-to-day implementation of EMMPs, as specified in the construction contracts, while project managers were responsible for compliance supervision. Although the latter had been given training related to EMMP implementation, this proved insufficient because, among other reasons, they generally had no background in environmental aspects. 2. Socioeconomic Impact 67. While in principle subprojects were selected on the basis that no land acquisition would be required, it was inevitable in four cases. These related to the need to acquire land for weighbridge and bridge construction. Two tracer studies were required for the land that had already been acquired for weighbridge works in Losarang in West Java Province and Pelawan in Jambi Province. In the two instances 15 where land still needed to be acquired, land acquisition and resettlement plans (LARPs) were prepared in accordance with ADB’s involuntary resettlement policy. DGH prepared short LARPs because the number of affected persons was fewer than 200. These people were fully informed and consulted regarding the compensation options. DGH also conducted monitoring of the social impact after completion of the works. It was reported that all affected persons were satisfied with the compensation provided by the Project, as it helped them to improve their livelihoods.

14 In those subprojects visited, available budget for routine maintenance ranged from Rp20 million to 30 million, while the average requirement was Rp 40 million. 15 Construction of a prestressed concrete bridge under subproject BN-01, Daerah Istimewa Yogyakarta Province, and of Gadon Bridge under subproject AO-01 in East Java Province.

68. The Project also implemented the Socioeconomic Monitoring and Evaluation Program (SEMEP). The SEMEP methodology was designed to capture any impacts that could be expected from the individual subprojects, which typically ranged from 10–25 km. Considering that the benefits would likely be modest, they were difficult to measure and attribute with certainty to the road works. In the event, few or no direct benefits to poverty reduction from the construction activities were recorded under the SEMEP. 69. The monitoring program was, however, able to record other significant developments. For example, it found that the large fuel price increase in 2005 had a severe dampening effect (a reduction of between 10% and 27%) on the amount of travel undertaken by villagers in the three villages where the amount of road improvement had been lowest. In contrast, in one village where most of the local road network used by the residents had been improved, there was a significant (79%) increase in travel. IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 70. Considering that this was a sector project, which provides some flexibility in defining the work programs, it was implemented as conceived and substantially achieved its immediate objectives, albeit within a much longer implementation period than planned. This was the result of considerable start-up delays and successive additional delays. These should be viewed in the context of significant organizational change taking place both at the center and in the regions. 71. Based on ADB’s project performance rating assessment criteria, the Project is rated successful. B. Lessons 72. Providing Adequate Supervision Resources. The elaborate review and approval requirements were possibly inspired by concerns of the appraisal team about capacity of the regional entities following the decentralization ongoing at that time. When ADB cannot provide matching supervision resources, however, different arrangements should be considered, including, for example, a greater role for the supervision consultant in the review and approval process, a redesign of the project resulting in fewer contracts requiring review and approval, or supervision of the project from the field office as was decided in this case. 73. Ensuring Critical Mass in Project Geographic Scope. Several aspects of the project design—the large number of participating provinces in different islands, the large number of field team consultants, and the dispersed nature of subprojects in each of the provinces—contributed to the logistical complexity of managing the Project. While the reasons underlying this design (a concern of the Government for geographic equity combined with the poverty focus of the Project) are understandable, the cost increases and inefficiencies that such approach entails should be carefully weighed against any benefits. In designing a project’s geographic scope, there should be a critical mass of work in a given geographic area in order to keep logistics costs within reasonable bounds. 74. Designing Effective Conditionality Related to Road Traffic and Transport Policies. Under the conditionality of the Project, one agency could be penalized for inaction by another. While this was designed to underline the importance of an integrated approach between road use and road infrastructure expenditure policies, it is risky for the timely implementation of the main project component.

75. Formalizing a Process to Incorporate Lessons Learned in DGH’s Procedures. DGH staff and its consultants involved in the Project have developed recommendations aimed at further improving DGH’s procedures, and particularly in the area of contracting. These relate to more stringent prequalification of contractors, bid evaluation, advance payment security, contractor mobilization, compensation for input cost increases, work planning by contractors, quality assurance of works, quality of bridge designs, quality of supervision staff, road marking, minimum payment thresholds, termination of contract clauses, and inclusion of contingencies in cost estimates. Although, some measures have already been implemented, in the absence of a formal mechanism to review and internalize lessons from different projects, there is a risk that many valuable lessons and recommendations will not be acted upon. 76. Land Acquisition and Resettlement Plan. Since the Project was expected to be located in the existing road alignments, no land acquisition or resettlement was anticipated. During project implementation, a concrete bridge in a subproject in East Java was broken and needed relocation. Also, a bridge in Daerah Istimewa Yogyakarta province required a larger roundabout for traffic management purposes. These two bridges required additional land, and DGH was not prepared to initiate LARPs. Although, intensive consultations with ADB were conducted, DGH required an average 8 months to prepare a LARP. Substantially contributing to the delays were the facts that stakeholders did not understand ADB’s involuntary resettlement policy plus a lack of coordination between DGH (as the EA responsible for LARP preparation) and the provincial or regional government that is responsible for dealing with data of affected people, land costs and status of land ownership. C. Recommendations 1. Project Related 77. Socioeconomic Impacts of Road Improvement. The Loan Agreement provides for monitoring and evaluating 10% of the subprojects 1 year and 4 years after construction. Monitoring was conducted on six subprojects 1 year after completion. No resources have been set aside for the monitoring 4 years after completion, and it is recommended that such monitoring be carried out. The findings of the socioeconomic monitoring and evaluation program indicate that relatively minor improvements on short road sections (typically 10–25 km) are unlikely to yield measurable changes in poverty and travel patterns. If subprojects are to provide benefits to the poorest, more effort needs to be given to targeting these groups. The monitoring did, however, reveal that the greater the proportion of a village’s road network improved, the more benefits that will flow in terms of improved mobility, increased business activity, and improved services. Rather than to focus on monitoring a small sample of project roads that are unlikely to provide additional meaningful insights, therefore, it is preferable to devote resources to improving the arrangements and capability in Indonesia to monitor and evaluate on a more systematic basis the impact of improvements in road conditions. Such monitoring and evaluation should be designed based on a more diverse sample of conditions and improvements than is available under a single project. This could be carried out more cost effectively by universities over a time span and with funding which is consistent with the evaluation objectives. 78. Action Plan for Reformulation and Implementation of Road Traffic and Transport Policies. Successive versions and updates of the Action Plan should be kept on the DGLT website so that it is easy for all concerned parties to verify what has been undertaken and accomplished and what are the current objectives and targets.

79. Covenants. The covenants under the loan can be maintained in their existing form. Key covenants under the Project (e.g., on adequate funding for road maintenance and on environmental safeguards) are also included in ongoing projects. It is more effective to focus on such issues under active projects than for partially completed projects. 2. General 80. Developing Realistic Implementation Schedules. Much more detailed and realistic implementation schedules should be prepared for all components and subcomponents mapping out all the steps and actions from start to contract signature, including all consultations, clearances and approvals, and associated elapsed times. This may require appointing a capable point person in the EA much earlier than is currently the practice. 81. Financing of Equipment, Goods, and Works for Road Traffic and Transport. Considering that past investments in equipment, goods, and civil works benefiting DGLT are not being used to good effect (mainly because weighbridges and public driver certification facilities, as well as regulations related to road traffic and transport, are not being used to control road damage or enhance road safety), ADB should reconsider financing for such items until an appropriate legal and regulatory regime for road traffic and transport has been established and the arrangements for operating the facilities and enforcing the regulations have been modified to provide for effective enforcement. Until such requirements are fulfilled, ADB financing should be limited to establishing road signage and to road safety campaigns. 82. Land Acquisition: Training about LARP on projects with or without anticipated land acquisition is required. Involving regional or provincial government staffs as part of the LARP team, instead of regarding them only as data resources, would be important to reduce delay in LARP preparation.

16 Appendix 1

PROJECT FRAMEWORK

Design Performance Achievement Summary Indicators/Targets Impact Reduce poverty by facilitating Improvement of Because of the nature of the economic recovery in selected socioeconomic indicators in subprojects (short road sections parts of Indonesia the project areas dispersed over a large area), direct impacts in reducing poverty were negligible. By reducing transport costs, the project contributed indirectly to poverty reduction. Purpose 1. Rehabilitate priority road Construction standards 2,421.5 km of road received road sections to facilitate upgraded on 3,000 betterment or periodic road movement of freight and kilometers (km) of roads maintenance. An additional 1,465.3 km passengers received spot treatments

2. Assist the Government in Timely revision of the Action Plan was updated with significant revising and monitoring the Government’s Action Plan delay and draft of a recommended Action Plan for Road Traffic (actions and target dates revised action plan was prepared and Transport Policies, as included in the revised (including start and finish dates). well as in reformulating and plan) Assistance was provided for implementing selected reformulating and implementing policies (especially on road selected policies, but with limited effect user charges, cost recovery, in terms of effective implementation. fund earmarking for road maintenance, vehicle overloading, road safety, and road planning and management)

Outputs 1. Civil Works 1.1. Periodic maintenance Pavement roughness Roughness was reduced to less than 8 on about 2,500 km of lowered to less than 8 m/km on all roads treated. paved roads meters (m) per km

1.2. Betterment on about Road betterment completed 955.2 km completed 500 km of paved roads

1.3. Rehabilitation or Bridge rehabilitated or 1,216 m completed, including 1,068 m replacement of about replaced of bridge replacement 3,000 m of bridges

2. Consulting and Training Services 2.1. Assist the Government Adoption of international Progress in adopting international to select, design, and practices in contract practices is ongoing in selected areas supervise civil works management and and is slow in other areas. construction supervision, materials testing, quality control, traffic engineering and enhancing road safety

Appendix 1 17

Design Performance Achievement Summary Indicators/Targets 2.2. Assist the Government Action Plan is revised and Updating of Action Plan was delayed to revise and monitor regularly updated due to delays in recruiting consultant. A the Action Plan, then recommended revised action plan was reformulate and prepared upon completion of services. implement selected policies

2.3. Train regional Development of a Training modules using competency government staff in comprehensive training based training methods and which will road and bridge works program form an integral part of DGH’s overall training program were developed.

3. Equipment and minor civil works 3.1. Provide equipment to Enforcement campaigns Two weighbridge stations were enforce the vehicle are efficiently concluded for commissioned but enforcement of weight limit policy vehicle weight limits vehicle weight is not yet effective.

3.2. Provide minor civil Blackspots are improved Remedial works were carried out at two works to improve blackspot locations. Evidence of results traffic accident is not yet available. blackspots

Activities 1. Provide adequate Funds allocated from each Counterpart funds were generally counterpart funds fiscal year budget adequate, but disbursements were frequently delayed.

2. Recruit international and Consultants recruited in first Consultants were recruited with very national consultants quarter (Q1) 2001 long delays of 30–33 months.

3. Select batches of First batch selected during First batch confirmation suffered delays subprojects project preparation on the order of 6–10 months. technical assistance and confirmed during Q1 2001

Second batch selected Second batch confirmation suffered during Q2 2001 delays on the order of 24–27 months.

Third batch selected during Third batch confirmation suffered delays Q2 2002 on the order of 20 months.

4. Contract awards First batch contracts First batch contract awards were awarded in Q1 2001 delayed by about 16 months.

Second batch contracts Second batch contract awards were awarded in Q1 2002 delayed by about 26–30 months.

Third batch contracts Third batch contract awards were awarded in Q1 2003 delayed by about 20 months.

18 Appendix 1

Design Performance Achievement Summary Indicators/Targets 5. Rehabilitate selected road Construction of first batch First batch was completed in Q3 2004. sections completed in Q3 2002

Construction of second Second batch was completed in Q4 batch completed in Q1 2006. 2004

Construction of third batch Third batch was completed in Q2 2007. completed in Q3 2004

6. Revise and monitor the Action Plan revision and First draft revision of Action Plan was Action Plan for Road Traffic updates prepared in July 2004 and amended and Transport Policies draft revision in August 2004. Status update was prepared in March 2005, and final recommended revision in June 2005

7. Implement selected road Activities and target dates Two weighbridge stations policies in the Action Plan commissioned

Motorcycle helmet campaigns in April and August 2005

Road accident mitigation schemes designed for 4 locations and implemented in 2 locations

Accident Blackspot Investigation Units equipped

8. Train staff in road and Regional government staff 73 staff completed master’s degree bridge works are trained in planning, program programming, budgeting, engineering, and 3 staff completed PhD studies construction supervision of road and bridge works Materials for new training modules developed

Training courses given in 13 provinces

PROJECT OUTPUT− ROAD AND BRIDGE COMPONENT

Original Final Contract Revised Final Bridge Package Duration Functional Effective No. Package Name Contract Price Price (including Starting Date Duration Completion Treatment Lengh Code (days) Length (km) Length (km) (including VAT) VAT) (days) date (km)

Batch 1 1Province : Jambi Muara Tebo - Muara Bungo AQ-01 40,883,000,000 43,390,600,030 13-Dec-02 720 840 31-Mar-05 PM 134.90 102.10 Batas Sumbar - Muara Bungo Batas Kodya (Mandalo) - Muara Bulian AQ-03 27,860,073,400 29,596,024,793 17-Dec-02 540 540 8-Jun-04 PM 59.30 59.30 Jambi - Talang Duku 2 Province : South Sumatra Tebing Tinggi - Muara Beliti AS-01 12,530,037,786 13,713,281,493 26-Nov-02 365 365 25-Nov-03 PM 52.00 10.00 3 Province : Lampung Sp. Kalianda - Bakahuni AT-01 16,067,251,059 17,061,971,434 28-Nov-02 540 540 20-May-04 PM 29.95 29.95 4 Province : West Kalimantan Sebadu - Sidas AU-02 19,293,029,284 20,460,376,284 20-Nov-02 540 540 12-May-04 PM 57.50 57.50 5 Province : Central Kalimantan Km 35 - Pulang Pisau AV-01 16,931,640,000 16,931,640,900 7-Nov-02 365 365 6-Nov-03 PM 42.70 31.20 6 Province : South Kalimantan Pleihari - Kp. Asam Asam AX-01 20,299,972,198 21,400,285,759 25-Nov-02 540 590 6-Jul-04 PM 52.05 31.00 Amuntai - Kalua - Tanjung AX-02 14,452,199,957 15,080,364,192 25-Nov-02 540 590 6-Jul-04 PM 43.55 29.70 Batu Licin - Sei Kupang AX-03 16,062,472,954 17,000,480,383 25-Nov-02 540 540 17-May-04 PM 46.00 39.70 7 Province : East Kalimantan Loajanan - Tenggarong AW-01 10,636,844,500 10,636,844,500 26-Nov-02 360 360 20-Nov-03 PM 26.68 23.47 Sp. 3 Senoni - Kota Bangun - Damai AW-02 16,367,238,477 17,457,625,022 25-Nov-02 720 720 13-Nov-04 PM 97.50 55.40 Sp. 3 Sambera - Santan AW-03 14,195,527,227 15,112,346,574 25-Nov-02 600 600 16-Jul-04 PM 31.80 31.80

Batch 2 1Province : Riau Bts. Kampar-Bangkinang-Rt.Brangin AI-01 17,925,112,935 19,297,524,509 15-Jun-04 365 365 14-Jun-05 PM 58.40 20.00 Kandis-Duri-Simpang Batang AI-02 14,120,073,428 14,120,073,428 15-Jun-04 365 365 14-Jun-05 PM 60.00 15.00 Sikijang Mati-Simpang Lago AI-03 17,370,456,001 17,370,456,001 15-Jun-04 365 365 14-Jun-05 B 25.32 14.00 Simpang Lago-Sorek I AI-04 14,886,299,605 16,313,976,205 15-Jun-04 365 365 14-Jun-05 B 49.82 13.00 2 Province : Bangka Belitung Koba-Air Bara-Toboali AJ-01 11,560,263,177 12,133,200,906 21-Jun-04 365 400 25-Jul-05 PM 63.75 48.40 Pangkal Pinang-Puding Besar-Kelapa AJ-02 14,678,472,705 14,693,497,825 21-Jun-04 365 383 8-Jul-05 B 64.70 20.00 3Province : Jambi Jambi-Pal Sepuluh-Tempino-Bts.Sumsel AQ-02 10,202,620,600 11,459,040,707 22-Nov-04 365 365 21-Nov-05 PM 40.80 15.00 B

Bts. Sarko-Pauh AQ-04 15,323,887,964 18,647,372,883 22-Nov-04 455 605 19-Jul-06 39.98 20.00 2 Appendix Pauh-Sarolangon AQ-05 13,464,356,732 15,436,695,676 22-Nov-04 455 455 19-Feb-06 B 23.40 20.00 4 Province : Bengkulu Manna-Tanjung Kemuning - Linau AR-01 10,087,683,992 11,031,307,600 23-Jun-04 360 360 17-Jun-05 PM 30.00 20.00 Ketahun-Seblat-Ipuh AR-02 11,339,983,167 12,510,892,170 23-Jun-04 360 615 27-Feb-06 PM 25.00 20.00 Girimulya-Atas Tebing AR-03 9,609,225,000 3,298,000,000 27-Aug-04 360 450 Terminated B 23.00 13.00 Tj.Iman-Ma.Sahung-Bts.Sumsel AR-04 12,107,065,175 12,571,569,463 26-Jun-04 360 422 21-Aug-05 B 37.40 20.00 19

Appendix 2 Appendix

5 Province : South Sumatra

Lahat-KM 256-Tebing Tinggi AS-02 55,962,999,000 9,400,372,443 13-Oct-05 540 540 Terminated PM 74.95 58.25 20 Tebing Tinggi-MA.Beliti AS-03 17,588,241,792 21,235,975,767 28-Sep-04 365 365 27-Sep-05 PM 42.15 20.30 Prabumulih-Blimbing-Muara Enim AS-05 19,380,000,000 21,187,598,485 26-Jun-04 365 365 25-Jun-05 PM 76.50 20.00 6 Province : Lampung

Bukit Kemuning-Sp.Empat AT-02 5,339,238,778 6,496,040,146 1-Oct-04 365 365 30-Sep-05 PM 19.45 17.00 Kotabumi-Bukit Kemuning AT-03 14,671,000,940 18,172,088,273 6-Dec-04 365 365 5-Dec-05 PM 34.55 20.00 Bujung Tenuk-Sp.Pematang-PMT.Panggang AT-04 22,396,206,136 46,841,838,277 12-Oct-04 456 576 10-May-06 B 20.30 20.30 Kota Gajah-Seputih Surabaya AT-05 4,177,211,460 1,502,954,176 9-Nov-04 365 425 Terminated PM 15.45 15.00 Negararatu-Sp.Tujok AT-06 5,256,608,821 5,256,608,821 23-Aug-04 365 365 22-Aug-05 B 36.02 12.00 7 Province : Banten Simpang - Bayah AK-01 7,084,013,000 7,084,013,000 1-Oct-04 300 360 25-Sep-05 PM 22.20 19.90 Simpang - Muara Binuanguen AK-02 5,478,063,000 5,478,063,000 1-Oct-04 300 360 25-Sep-05 PM 20.05 17.55 Bayah - Cibarenok AK-03 15,751,363,000 21,475,445,000 19-May-05 365 425 17-Jul-06 B 19.03 19.03 Cibaliung - Cikeusik AK-05 23,684,548,000 32,454,925,000 19-May-05 365 545 14-Nov-06 B 23.24 23.24 8 Province: West Java Cianjur - Padalarang AL-01 26,311,032,000 26,467,360,000 24-Sep-04 365 365 23-Sep-05 B 35.20 30.84 Kadipaten - Palimanan AL-02 18,473,225,000 21,500,346,186 23-Sep-04 365 440 6-Dec-05 PM 27.42 27.42 50.0 Purwakarta - Cisomang-Padalarang AL-03 26,209,049,000 27,548,520,000 23-Sep-04 365 425 21-Nov-05 PM 30.11 28.70 Sumedang - Cijelang - Kadipaten AL-04 25,559,999,000 30,175,803,000 27-Sep-04 365 485 24-Jan-06 B 26.00 21.00 Cikampek - Sadang - Purwakarta AL-05 26,144,200,000 27,332,695,000 27-Sep-04 365 425 25-Nov-05 B 15.54 14.64 9 Province : Central Java Bawen - Bts. Kota - Pringsurat - AM-01 19,845,690,356 24,811,346,174 1-Dec-04 365 539 23-May-06 PM 36.25 28.54 Secang - Magelang Pati - Rembang AM-02 15,978,593,081 16,100,769,081 1-Dec-04 365 365 30-Nov-05 PM 35.02 25.75 Semarang - Godong AM-03 25,223,818,000 28,677,574,600 12-Jan-05 365 391 6-Feb-06 B 33.30 9.00 Pejagan - Ketanggungan - Prupuk AM-04 19,382,999,479 21,749,066,400 5-Oct-04 365 440 18-Dec-05 B 36.00 21.20 61.5 Ajibarang - Bts. PKL Brt AM-05 10,704,981,583 13,632,107,815 1-Dec-04 365 470 15-Mar-06 PM 44.96 20.60 Rawalo - Sampang - Buntu AM-06 6,400,859,454 6,572,580,454 1-Dec-04 365 380 15-Dec-05 PM 12.83 12.83 10 Province : D.I. Yogjakarta Prambanan - Pakem AN-01 6,700,057,000 6,700,057,000 14-Oct-04 365 365 13-Oct-05 PM 20.41 15.60 Piyungan - Gading AN-02 12,850,000,000 13,254,950,000 2-Oct-04 365 365 1-Oct-05 PM 17.99 17.99 Srandakan Bridge BN-01 29,880,000,000 38,994,941,518 1-Mar-05 730 730 28-Feb-07 0.72 0.72 626.75 11 Province : East Java Tuban - Bulu AO-01 19,238,956,000 30,999,498,529 28-Sep-04 365 868 12-Feb-07 PM 39.67 34.47 58.6 Temangkar - Pakah - Tuban AO-02 16,089,680,000 18,172,438,000 30-Sep-04 365 493 4-Feb-06 B 19.39 15.52 Bts. Kab. Bangkalan - Torjun AO-03 19,033,200,000 23,587,002,000 15-Sep-04 365 530 26-Feb-06 PM 53.80 24.80 Nganjuk - Kediri - Bts.Kab. Blitar AO-04 7,030,020,000 7,030,020,000 15-Sep-04 365 365 14-Sep-05 PM 35.34 18.88 Caruban - Madiun - Nganjuk AO-06 15,265,644,000 23,197,001,169 7-Mar-05 365 515 3-Aug-06 B 36.15 30.55 Pacitan - Panggul AO-07 17,509,555,000 18,286,753,145 15-Sep-04 365 554 22-Mar-06 PM 56.95 15.00

12 Province : West Kalimantan Sintang - Sp. Nangasilat (Bongkong) AU-03 25,380,000,000 39,365,686,000 14-Mar-05 540 624 27-Nov-06 PM 45.00 45.00 109.0 Anjungan - Karangan -Bengkayang AU-11 13,106,000,000 13,344,633,000 30-Aug-04 365 473 15-Dec-05 PM 88.22 34.23 Bengkayang - Sanggauledo - Seluas - AU-12 17,203,998,000 18,399,333,215 23-Aug-04 365 580 25-Mar-06 PM 98.82 32.39 Bts. Serawak 13 Province : Central Kalimantan Pangkalan Lada - Pangkalan Bun AV-02 17,760,929,670 19,547,734,025 14-May-04 420 420 7-Jul-05 B 63.90 25.00 Sp Sei Asem - Talaken AV-04 14,323,000,000 14,323,000,000 18-May-04 365 365 17-May-05 B 68.00 11.80 14 Province : South Kalimantan Mabuun - Batubabi AX-04 16,523,976,400 19,521,079,301 2-May-05 365 515 28-Sep-06 B 25.00 25.00 Lumpangi - Batu Licin AX-05 17,798,592,779 27,724,721,896 25-Apr-05 395 571 16-Nov-06 B 24.00 24.00 15 Province : East Kalimantan Bontang - Sangata AW-04 8,465,546,000 12,132,404,555 2-May-05 365 445 20-Jul-06 PM 23.19 12.51 Sangata - Perdau AW-05 13,985,574,000 21,694,534,711 18-Aug-04 390 713 31-Jul-06 PM 32.33 20.61 Km38 - Semoy Sepaku AW-06 12,890,875,704 13,381,335,273 28-Jul-04 395 515 24-Dec-05 B 20.00 20.00 Semoy Sepaku - Petung AW-07 13,798,837,746 14,255,497,093 28-Jul-04 395 395 26-Aug-05 B 25.80 20.18 16 Province : North Sulawesi Girian - Kema AY-01 9,216,328,576 11,155,975,000 9-Aug-04 360 465 16-Nov-05 B 24.00 17.00 Kema Bumbia AY-02 8,546,940,287 10,217,520,842 9-Aug-04 360 570 1-Mar-06 B 70.30 16.00 Rumbia - Buyat AY-03 9,696,749,836 11,462,972,445 23-Aug-04 360 501 5-Jan-06 B 48.00 20.00 Buyat - Molobog AY-04 10,074,697,985 10,605,935,828 23-Aug-04 360 450 15-Nov-05 B 41.20 20.00 40.0 Molobog - Onggune AY-05 9,939,194,060 11,485,659,551 2-Aug-04 360 559 11-Feb-06 B 46.00 20.00 Onggune - Pinolosia - Molibagu AY-06 10,756,739,802 11,390,110,536 2-Aug-04 360 549 1-Feb-06 B 44.00 20.00 17 Province : South East Sulawesi Wolo Lasusua AZ-02 8,779,178,000 9,930,950,000 2-Jul-04 360 445 19-Sep-05 PM 71.00 18.00 Pomala - Wolulu - Toari AZ-03 14,576,434,000 15,298,990,556 16-Aug-04 540 540 6-Feb-06 PM 51.15 33.60 Lebo Bridge BZ-01 21,888,518,874 26,956,577,021 14-Jul-05 540 540 4-Jan-07 270.0

Batch 3 1 Province : Riau KotaTengah - Rangau AI - 05 8,819,010,006 11,064,959,250 15-Nov-05 365 365 14-Nov-06 PM 9.70 8.40 Siak-Indrapura - Mangkapan AI - 06 8,852,142,000 10,720,519,862 2-Dec-05 365 393 29-Dec-06 PM 32.31 6.80 Simpang Tanah Putih - Bagan Siapiapi AI - 07 9,835,338,076 13,100,924,314 2-Feb-06 365 442 19-Apr-07 PM 9.23 9.23 Dumai - Pelintung - Sepahat AI - 08 14,676,472,666 17,896,313,182 2-Feb-06 365 472 19-May-07 B 10.00 10.00 Sp Kulim - Dumai AI - 11 11,078,736,584 11,078,736,584 20-Mar-07 123 123 20-Jul-07 B 9.00 9.00 2 Province : Jambi Tempino - Muara Bulan AQ - 06 11,070,531,000 15,714,678,988 26-Sep-05 365 407 6-Nov-06 PM 26.00 12.73 Simpang Lagan - Muara Sabak AQ - 07 10,853,511,200 15,247,805,335 26-Sep-05 365 407 6-Nov-06 PM 23.64 9.18 Appendix 2 Appendix Simpang Pulau Rengas - Jangkat AQ - 08 13,263,939,000 16,020,776,303 26-Sep-05 365 607 25-May-07 B 34.47 14.50 Batas Kelinci - Sanggaran Agung AQ - 09 10,301,302,000 13,984,903,154 26-Sep-05 365 407 6-Nov-06 B 22.74 17.50

Appendix 2 Appendix

3 Province : Bengkulu

Tais - Maras AR - 05 9,344,668,164 11,196,761,432 26-Dec-05 360 480 19-Apr-07 B 10.37 10.37 22 Sungai Hitam - Kerlap - Lais AR - 06 10,590,430,476 12,524,538,000 7-Jan-06 360 360 1-Jan-07 B 37.70 20.17

Ipuh - Bantal - Muko - Batas Sumbar AR - 07 12,950,716,291 15,501,100,000 19-Jan-06 360 480 13-May-07 B 20.14 20.00 4 Province : South Sumatera Muara Beliti - Lubuk Linggau AS - 06 25,447,762,737 29,836,034,739 25-Mar-06 270 313 31-Jan-07 B 18.44 17.59 Terawas - Maur AS - 07 22,424,999,402 22,424,999,402 7-Apr-06 270 309 9-Feb-07 B 38.05 21.30 Muara Enim - Lahat AS - 08 22,668,558,000 22,668,558,000 28-Dec-05 365 428 28-Feb-07 B 13.10 13.10 Muara Enim - Lahat AS - 09 19,014,050,000 19,014,050,000 28-Dec-05 365 443 15-Mar-07 B 14.16 14.16 Sp Indralaya - Bts Kodya Sumsel AS - 10 22,398,460,466 22,398,460,466 22-Mar-07 126 126 25-Jul-07 PM 17.81 17.81 Bayung Lincir - Bts Jambi AS - 11 22,313,404,000 33,289,383,000 22-Mar-07 126 131 30-Jul-07 PM 15.83 15.83 5 Province : Lampung Sukadana - Jabung AT - 07 7,362,535,284 5,914,262,401 27-Mar-06 310 310 30-Jan-07 B 16.00 10.71 Simpang Empat - Batas Sumsel AT - 08 8,213,124,778 9,362,441,320 4-Apr-06 365 365 3-Apr-07 PM 20.05 20.05 Sanggi - Bengkunat - Biha AT - 09 21,643,343,027 26,684,429,632 30-Sep-05 365 365 29-Sep-06 B 31.30 27.30 6 Province : Banten Cikeusik-MA.Binuangen AK-04A 14,337,339,000 17,121,482,000 3-Mar-06 365 365 2-Mar-07 B 13.93 13.93 Bayah-Cibarenok-Bts.Prop.Jabar AK-06A 9,112,252,000 10,857,310,000 3-Mar-06 365 365 2-Mar-07 B 15.20 15.20 7 Province: West Java Ciawi-Cibadak AL-06 26,880,300,000 27,198,027,647 1-Jun-06 270 313 9-Apr-07 PM 27.10 27.10 Rajapolah-Ancol-Ciamis-Banjar AL-07 22,487,779,000 33,788,478,573 16-Aug-06 270 335 16-Jul-07 PM 29.30 29.30 8 Province : Central Java Purwodadi-Wirosari AM-07 19,707,190,000 23,386,044,800 15-Dec-05 365 365 14-Dec-06 B 21.30 6.45 9 Province : D.I. Yogjakarta Wates-Toyan-Krg.Nongko AN-03 3,372,034,000 4,109,662,000 25-Aug-05 210 210 22-Mar-06 PM 14.70 6.32 10 Province : East Java Probolinggo-Maladingan AO-05A 8,677,560,000 10,444,790,000 27-Feb-06 365 365 26-Feb-07 PM 20.96 14.95 Batch 3 (continued) 11 Province : Central Kalimantan Kandui-Muara Teweh AV-03 11,224,999,400 13,438,306,757 19-Oct-05 365 365 18-Oct-06 PM 27.50 17.46 Asam Baru-P.Lada AV-05 19,800,000,000 23,969,236,779 19-Oct-05 365 365 18-Oct-06 PM 31.84 24.94 12 Province : South Kalimantan Dahai-Mabuun-Tanjung AX-06 5,663,720,000 6,786,532,529 9-Nov-05 365 365 8-Nov-06 PM 25.70 10.00 Rantau-Kandangan AX-07 16,033,017,000 19,266,539,000 9-Nov-05 365 365 8-Nov-06 B 20.00 20.00 13 Province : South East Sulawesi Lepo-lepo-Ambesia AZ-01 10,050,549,000 - 6-Feb-06 360 360 31-Jan-07 PM 25.00 20.66 Balalo-Tinobu-Andowito AZ-04 14,324,897,436 4,529,665,997 11-Feb-06 365 365 Terminated B 20.60 16.70 Toari-Boepinang-Bambuya AZ-05 18,482,897,000 - 17-Feb-06 365 365 16-Feb-07 B 28.65 27.65

Note: B=betterment; km=kilometer; m=meter; PM=periodic maintenance; VAT=value-added tax.

Appendix 3 23

OUTPUTS UNDER ROAD SECTOR POLICIES COMPONENT

1. Main Reports on Implementation of the Action Plan for Reformulation and Implementation of Road Traffic and Transport Policies (RIRTTP)

1. The main reports address (i) action plan status, (ii) legal and institutional, (iii) road planning and management tools, (iv) road funding, (v) vehicle weight and dimension, and (vi) road safety. Detailed main reports under the Action Plan for Road Traffic and Transport Policies are as follow:

(i) Action Plan Status Reports

• Action Plan for Road Traffic and Transport Policies, January 2001–December 2005: First Preliminary Revision • Action Plan for Road Traffic and Transport Policies, January 2001–December 2005: Amended First Preliminary Draft Revision • Action Plan Status Reporting • Action Plan Status Report – Section D • Action Plan Status Report – Sections A and B • Action Plan Status Report – Sections E, H, and J • Action Plan Status Report – Section C • Action Plan Status Report – Section G • Action Plan Status Report – Section I • Action Plan Status Report –Section F • Status of Implementation of Action Plan for Road Traffic and Transport Policies • Final Recommended Revision of Action Plan for Road Traffic and Transport Policies

(ii) Legal and Institutional Reports

• Legislation Proposals: Vehicle Weight and Dimension Limits • Discussion Paper: Roles & Responsibilities for Vehicle Weight and Dimension Management • Legislation Proposal: Traffic and Road Safety • Discussion and Implementation Papers on Road Traffic and Transportation Law • Legal and Institutional Papers: Draft Discussion Paper on the Revised Road Traffic and Transportation Law • Draft Discussion Paper: ASEAN Requirements in Relation to Road Transport and Dangerous Goods • Draft Discussion Paper: Freight Issues and Dangerous Goods Management • Review Paper: Draft Revised Road Traffic and Transport Law – Draft Law, dated 23 August 2004 • Decision Paper: DGLC Decisions Required on Road Traffic and Transport Law (Review) • Discussion Paper: Driving School Legislation • A Review of the Technical and Procedural Provisions of KM 36/a1994 • Draft for Discussion Paper: National Transport Strategy and the Draft Law on Road Traffic & Transport • Final Report: Legal & Institutional Component

(iii) Road Planning and Management Tools

• Draft Discussion Paper: Planning and Management Tools for RIRTTP

24 Appendix 3

• Consolidation Report • Draft Discussion Paper: Training Institutes, Training Capability

(iv) Road Funding Reports

• Draft Status Report on Reform of Road User Tariffs and Taxation System • Draft Discussion Paper on Proposals for Reform of Road User Tariffs, Taxes, and Subsidies • Draft Report: Action Plan for Road Traffic and Transport Policies, Recommended Revision • Draft Final Report Proposals for Reform of Road User Tariffs, Taxes, and Subsidies

(v) Vehicle Weight and Dimension

• Vehicle Weight in Indonesia, Preliminary Discussion Paper • Vehicle Weight Enforcement, Draft Discussion Paper • Revised Vehicle Weight Enforcement Discussion Paper • Discussion Paper: Effect of Decentralization on Vehicle Weight and Dimension Enforcement • Discussion Paper: Future Development of Vehicle Weight and Dimension Control In Indonesia • Brief Synopsis of Vehicle Weight and Dimension Enforcement Pilot Project SRRP • Discussion Paper: Vehicle Weight and Dimension Control in Java Timur • Discussion Paper: Vehicle Plating for Vehicle Weight and Dimension Control • Weight Station Procurement Report on Site Visit to Lampung Province • Weight Station Procurement Report on Site Visit to Jambi Province • Weigh Station Layout • Weigh Station Inspection West Java Province • Proposed Draft Standard Operating Procedure of New Model Weigh Station • Final Weigh Station Management and Standard Operating Procedures

(vi) Road Safety

• Draft Report: Proposal for Best Practice Road Safety Campaigns • Draft Discussion Paper: A Framework for Reformulation of Road Safety Activities • Proposal for Motorcycle Safety Research Study • Draft Discussion Paper: Certification for Public Bus Drivers Certification • Implementation of Motorcycle Safety Research • Motorcycle Helmet Wearing Campaign • Motorcycle Safety Qualitative Research • Updated Draft Discussion Paper on Public Transport Drivers Certification • The Traffic Accident Information System • Draft Discussion Paper 3: Guidelines for Traffic Accident Information System Reporting • Motorcycle Safety Qualitative Research • Motorcycle Helmet Wearing Campaign • Management and Standard Operating Procedure for Accident Blackspots Investigation Unit • Draft Public Driver Certification Unit Organization, Procedures and Curriculum

2. Action Plan Revision and Implementation

2. The review of the status of the fourth action plan was presented to the Ministry of Transportation as a series of separate documents, each pertaining to a specific policy area.

Appendix 3 25

Thereafter, a recommended revised action plan was prepared based on the draft of the National Transport Strategy. It included a section on sector performance monitoring.

3. Two reports were prepared on road user tariffs, taxation, and motor fuel subsidies. They also presented an overview of road funding and earmarking of certain revenues for funding road maintenance.

3. Institutional Development

4. Management and planning tools available to the Directorate General for Land Transportation (DGLT) for planning, economic evaluation, and operations were reviewed in relation to requirements and to availability at training institutions in Indonesia. Recommendations were presented on the functioning of DGLT, with particular attention given to developing databases, procedures, guidelines, and management tools. Other recommendations referred to driving license processing responsibility, training driving instructors, standards for training and testing of drivers and driving instructors, and changes to legislation on driving schools

4. Vehicle Weight Control

5. With respect to vehicle weight and dimensions, the following were produced:

• Suggested measures to achieve better and more uniform control of vehicle weights and dimensions. • Recommendations on reforms to the heavy vehicle weights plating system. • Review of the system of road classification and signage. • Recommendations on the operation of vehicle weight control mechanisms.

5. Road Traffic Safety

6. A motorcycle helmet wearing campaign was launched in two stages in April and August 2005

7. Road accident mitigation schemes were designed for four locations in Jambi and South Sumatra. Recommendations were prepared on the Traffic Accident Information System and on institutional changes needed within the Police Department and DGLT that should be embodied in the new decrees for sustainable operation of the Traffic Accident Information System. Workshops were held to train central and provincial staff in managing road safety campaigns. Six campaigns were implemented.

6. Civil Works and Equipment

8. The equipment and civil works were designed in support of the policy elements outlined above, and these involved providing weigh stations, road blackspot improvement works, and road signage; constructing a new public drivers certification facility; and purchasing equipment for the public drivers certification facility. Civil works and equipment are detailed in Table A3.1.

26 Appendix 3

Table A3: Civil Works and Equipment Under Directorate General of Land Transportation

Package Description Contract Amount Mode of Code Rp $ Procurement

CP-01 Procurement of motorcycles 920,975,000 Shopping

CP-02 Procurement of ABIU and MAAP equipment 1,025,000 LIB

CP-3A Procurement of ABIU survey equipment 25,542,600 Shopping

CP-3B Procurement of ABIU office equipment 80,636,800 Shopping

CP-3C Procurement of ABIU Triple Forms 77,000,000 Shopping

CP-3D Procurement of ABIU Rraffic Counters 55,105 Shopping

CP-4 Installation of Blackspot Signage 1,028,325,870 NCB

CP-7 Civil Works for Blackspot 2,463,489,021 NCB in Jambi

CP-8 Civil Works for Blackspot 4,093,280,774 NCB in South Sumatra

CP-9 Construction of Weighbridges 12,896,867,724 ICB

CP-10a Construction of Public Driver's Certification Building 1,017,634,200 NCB

CP-10B Procurement of Public Drivers 334,000,000 LIB Certification Equipment

ABIU = accident blackspot investigation unit; ICB = international competitive bidding; LIB = limited international bidding; MAAP = microcomputer accident analysis package; NCB = national competitive bidding. Source: Directorate General for Highways Final Report .

PROJECT COST ($ million)

Original Revised Item Foreign Local Total ADB Government Foreign Local Total ADB Government Exchange Currency Exchange Currency

A. Road and Bridge

1. Civil Works 73.40 122.40 195.80 138.50 57.30 68.55 140.92 209.47 133.30 76.17 2. Consulting Services a. Core Team Consultants 6.30 1.90 8.20 7.50 0.70 6.89 3.22 10.11 8.27 1.84 b. Design and Field Team Consultants — 11.80 11.80 10.70 1.10 — 15.09 15.09 13.58 1.51

Subtotal (A) 79.70 136.10 215.80 156.70 59.10 75.45 159.23 234.67 155.15 79.52

B. Road Sector Policies

1. Consulting Services 1.80 0.20 2.00 1.80 0.20 3.14 0.31 3.45 3.14 0.31 2. Equipment 1.80 0.20 2.00 1.80 0.20 0.70 0.07 0.77 0.70 0.07 3. Minor Civil Works 1.00 2.00 3.00 2.70 0.30 0.75 1.52 2.27 2.04 0.23

Subtotal (B) 4.60 2.40 7.00 6.30 0.70 4.59 1.90 6.49 5.88 0.61

C. Capacity Building in Road and Bridge Works

Consulting Services, Equipment and Training 0.50 1.50 2.00 1.80 0.20 0.47 1.40 1.87 1.68 0.19

Subtotal (C) 0.50 1.50 2.00 1.80 0.20 0.47 1.40 1.87 1.68 0.19

D. Interest During Construction and Other Charges 25.20 — 25.20 25.20 — 18.01 — 18.01 18.01 —

Appendix 4 Appendix Total 110.00 140.00 250.00 190.00 60.00 98.51 162.53 261.04 180.72 80.32 — = not applicable. Source: Project completion review mission's estimate.

28 Appendix 5

UTILIZATION OF LOAN PROCEEDS Annual Disbursement ($)

Year Actual Actual Percentage of Actual Disbursement Cumulative Disbursement

2002 762,255 762,255 0.42

2003 14,909,097 15,671,352 8.25

2004 20,930,874 36,602,226 11.58

2005 46,849,167 83,451,393 25.93

2006 57,150,307 140,601,700 31.63

2007 40,106,168 180,707,868 22.19

Total 180,707,868 180,707,868 100.00

Source: Asian Development Bank.

PROJECT IMPLEMENTATION SCHEDULE

2000 2001 2002 2003 2004 2005 2006 2007 I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I. Advance Procurement Action 1 Design of Batch 1 Subprojects 31 March 2006, Original Closing Date 2 Recruitment of a. Core Team Consultant

28 February 2007, b. Design and Field Team 1st Loan Extension c. Road Policies 31 July 2007, II Project Implementation Actual Closing Date 1 Consulting Services a. Core Team Consultants

b. Design Field Team Consultants

c. Reformulation of Road Policies

d. Capacity Building

2 Civil Works a. Batch 1 Subprojects

b. Batch 2 Sub Projects

c. Batch 3 Subprojects

3 Road Policy Reformulation 6 Appendix a. Civil Works

b. Equipment 29

Plan Actual

7 Appendix PROJECT ORGANIZATION

STEERING COMMITTEE ASIAN DEVELOPMENT BAPPENAS BANK DIRECTORATE GENERAL FOR HIGHWAYS MINISTRY OF FINANCE

MINISTRY OF HOME AFFAIRS 30 MINISTRY OF TRANSPORTATION AND TELECOMMUNICATION

DIRECTORAGE GENERAL OF HIGHWAY GOVERNOR

OTHER TECHNICAL ASSISTANCE PROJECT 1. IMPLEMENTATION OF ROAD TRAFFIC AND DIRECTOR OF DIRECTOR OF BALAI BESAR KA DINAS PROVINCIAL TRANSPORT POLICIES TECHNICAL PLANNING AND PU/BM/ BAPPEDA 2. CAPACITY BUILDING DIRECTOR OF AFFAIRS PROGRAMMING ROAD AND KIMPRASIWIL BRIDGES

PROJECT MANAGER PROJECT PROJECT MANAGER OF MANAGER OF DESIGN AND SUPERVISION CIVIL WORKS WORKS (P2JJ) PROJECT MANAGEMENT UNIT CORE TEAM TEAM OFFICER- LEADER IN-CHARGE FIELD TEAM TEAM LEADER DESIGN FIELD TEAM OTHER PROFESSIONAL WEST AND Assis Assis Assis Assis STAFF tant 1 tant 2 tant 3 tant 4 EAST TEAM

DESIGN WORK SUPERVISION ENGINEER CONSULTANTS FIELD TEAM

Legend: QUALITY CHIEF QUALITY Command Line ENGINNER INSPECTOR ENGINEER

Coordination Line

Assignment Assistance FIELD/LAB CONTRACTORS SUPERVISOR INSPECTORS TECHNICIAN

Appendix 8 31

LIST OF LOAN COVENANTS

No Covenants Reference Status of Compliance 1 The Borrower shall cause the Project to be LA, Article 4 Complied with. The carried out with due diligence and efficiency Section 4.01 (a) subprojects were designed and and in conformity with sound administrative, implemented in accordance financial, engineering, environmental and road with sound administrative, rehabilitation practices financial, and engineering practices. 2 In the carrying out of the Project and operation LA, Article 4 Complied with. All obligations of the Project facilities, the Borrower shall Section 4.01 (b) set forth in Schedule 5 were perform, or cause to be performed, all fully fulfilled. obligations set forth in Schedule 5 to this Loan Agreement. 3 The Borrower shall make available, promptly LA, Article 4 Complied with. Adequate as needed, the funds, facilities, services, land Section 4.02 counterpart funds were and other resources which are required, in provided. Delays in providing addition to the proceeds of the Loan, for the counterpart funds in 2004- carrying out of the Project and for the 2005 are noted. operation and maintenance of the Project facilities. 4 In the carrying out of the Project, the Borrower LA, Article 4 Partly complied with. shall cause competent and qualified Section 4.03 (a) Several design and consultants and contractors, acceptable to the construction supervision Borrower and the Bank, to be employed to an consultants and contractors did extent and upon terms and conditions not perform well. satisfactory to the Borrower and the Bank. 5 The Borrower shall cause the Project to be LA, Article 4 Complied with. Bidding carried out in accordance with plans, design Section 4.03 (b) documents and technical standards, specifications, work schedules and specifications were supplied to construction methods acceptable to the ADB for review and approval Borrower and the Bank. The Borrower shall prior to the implementation. furnish, or cause to be furnished, to the Bank, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as the Bank shall reasonably request. 6 The Borrower shall ensure that the activities of LA, Article 4 Complied with. its departments and agencies with respect to Section 4.04 Despite significant start-up the carrying out of the Project and operation of delays, the concerned the Project facilities are conducted and government agencies were coordinated in accordance with sound managing the Project administrative policies and procedures. efficiently in accordance with sound administrative practices. 7 The Borrower shall make arrangements LA, Article 4 Complied with. Insurance satisfactory to the Bank for insurance of the Section 4.05 (a) provided by the contractors or project facilities to such extent and against suppliers to project facilities such risks and in such amounts as shall be during warranty period. consistent with sound practice.

32 Appendix 8

No Covenants Reference Status of Compliance 8 Without limiting the generality of the foregoing, LA, Article 4 Complied with. All imported the Borrower undertakes to insure, or cause to Section 4.05 (b) equipment and goods were be insured, the goods to be imported for the covered by insurance. Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. 9 The Borrower shall maintain, or cause to be LA, Article 4 Complied with. maintained, records and accounts adequate to Section 4.06 (a) A financial management identify the goods and services and other system was well set up. items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of the Directorate General for Regional Infrastructure Development (DGRID) to the extent relevant to the Project and other agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities or any part thereof. 10 The Borrower shall (i) maintain, or cause to be LA, Article 4 Complied with. maintained, separate accounts for the Project, Section 4.06 (b) All audited project accounts (ii) have such accounts and related financial were submitted timely. statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the covenants of this Loan Agreement as well as on the use of the procedures for force account works), all in the English language; and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

Appendix 8 33

No Covenants Reference Status of Compliance 11 The Borrower shall enable the Bank, upon the LA, Article 4 Complied with. The Bank’s request, to discuss the Borrower’s Section 4.06 (c) discussions were conducted financial statements for the Project and its with the EA, Borrower, and financial affairs related to the Project from time auditors on the project related to time with the Borrower’s auditors, and shall expenditures, before and after authorize and require any representative of submission of audited project such auditors to participate in any such accounts to ADB. discussions requested by the Bank, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree.

12 The Borrower shall furnish, or cause to be LA, Article 4 Complied with. The reports furnished, to the Bank all such reports and Section 4.07 (a) were provided timely. information as the Bank shall reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of DGRID and other agencies for the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance-of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan. 13 Without limiting the generality of the foregoing, LA, Article 4 Complied with. Monthly the Borrower shall furnish, or cause to be Section 4.07 (b) reports on the progress of the furnished, to the Bank monthly progress road works were submitted to reports on the carrying out of the Project ADB on timely basis during the including progress on the Action Plan and on services of the consultants. the operation and management of the Project Reporting on road sector facilities. Such reports shall be submitted in policies was only provided such form and in such detail and within such a during the first one year term period as the bank shall reasonably request, of the road policy consultants and shall indicate, among other things, progress made and problems encountered during the period under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following period.

34 Appendix 8

No Covenants Reference Status of Compliance 14 Promptly after physical completion of the LA, Article 4 Complied with. The project Project, but in any event not later than six (6) Section 4.07 (c) completion report was months after the date referred to in Section submitted on time. 3.05 of this Agreement or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under this Loan Agreement and the accomplishment of the purposes of the Loan. 15 The Borrower shall enable the Bank’s LA, Article 4 Complied with. representatives to inspect the Project, the Section 4.08 ADB review Missions were goods financed out of the proceeds of the always accommodated. Loan, and any relevant records and documents. 16 The Borrower shall ensure that the Project LA, Article 4 Complied with. Most of the facilities are operated, maintained and repaired Section 4.09 project facilities related with in accordance with sound administrative, roads is well operated and financial, engineering, environmental, road maintained. However, most rehabilitation and maintenance and operational facilities procured for road practices. policy have not yet been operated. 17 It is the mutual intention of the Borrower and LA, Article 4 Complied with. No other the Bank that no other external debt owed a Section 4.10 (a) external debts were in place in creditor other than the Bank shall have any the Project. priority undertakes (i) that, except as the Bank may otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect. 20 DGRID shall be the Project executing Agency LA, Schedule 5 Complied with. and shall be responsible for overall supervision Para 1 DGRID (now is renamed to and coordination of the Project. Directorate for Highways – DGH) was the executing agency. 21 A Project Management Unit (PMU) shall be LA, Schedule 5 Complied with. established within DGRID for overall Para 2 PMU was set up in November coordination of the Project’s planning, 2001 and was adequately budgeting, and design and supervision. The staffed. Project Management Unit shall serve as the focal point for communications with other agencies involved in the Project and the Bank.

Appendix 8 35

No Covenants Reference Status of Compliance 22 Design works and day-to-day management LA, Schedule 5 Complied with. and supervision of construction shall be Para 3 Design works and construction undertaken at the provincial level by the supervision were done by the existing DGRID provincial offices. Daily respective regional offices with construction implementation issues shall be the assistance from the design under the direct supervision of the regional and field team consultants government through their respective highways (DFT). departments. 23 A Steering Committee comprising senior LA, Schedule 5 Complied with. officials of Directorate General for Land Para 4 The Steering Committee (SC) Communication (DGLC), DGRID, BAPPENAS, was established in July 2002. the Ministry of Home Affairs and Regional It comprised staff of Autonomy and any other agencies involved in BAPPENAS (chair), secretariat the implementation of road Sector Policies from DGRI, Ministry of Finance shall be created to oversee implementation of (MOF), and DGLC. Regular Part B of the Project. meetings involving concerned agencies were held. 24 The Borrower shall ensure that each LA, Schedule 5 Complied with. ADB approved Subproject to be financed out of the proceeds Para 5 all subprojects based on of the Loan shall be submitted to the Bank for appropriate data and approval in accordance with detailed criteria information. and procedures to be agreed between the Borrower and the Bank, including those specified in paragraphs 6 to 8 of this Schedule. 25 The Borrower shall ensure that the LA, Schedule 5 Complied with. Delays in implementation arrangements of the Project, Para 9 providing counterpart funds in the provision of funds from the proceeds of the 2004 and 2005 were noted. Loan, and the corresponding counterpart These, however, affected all contributions of the Borrower necessary for government projects. financing Project activities, shall continue throughout the period of project implementation in the manner agreed with the Bank, notwithstanding any reallocation of authority or responsibility for (a) implementing the Project, (b) channeling of external assistance, and (c) provision of corresponding counterpart contributions between the Borrower, the participating provinces and the participating districts arising out of implementation of the provisions of Laws 22 and 25, unless otherwise agreed with the Bank. The Borrower shall provide regular updates to the Bank on the process of decentralization undertaken in accordance with the provisions of Laws 22 and 25, and any implementing regulations issued there under, and take into account any views expressed by the Bank thereon.

36 Appendix 8

No Covenants Reference Status of Compliance 26 In addition to the monthly progress reporting LA, Schedule 5 Partly complied with. DGLT referred to in Section 4.07(b) of this Loan Para 10 submitted quarterly reports Agreement, the Borrower shall provide with delay. Further road sector quarterly reports to the Bank on the progress policy measures were never in implementing the Action Plan, and shall reported. consult with the Bank on further road sector policy measures beyond the proposed time frame of the Action Plan. 27 The Borrower shall keep the Bank informed LA, Schedule 5 Complied With. Directorate about other significant programs and studies Para 11 General for Highways (DGH) pertinent to road transport sector development, kept ADB informed about other and shall take into consideration the Bank’s programs and studies related comments concerning measures to be taken with road and transport sector. on the basis of such programs and studies. 28 Compliance with the actions and target dates LA, Schedule 5 Not complied with. established in the Action Plan in respect of the Para 12 Implementation of road user implementation of road user taxation and the taxation and earmarking of earmarking of road maintenance funds shall be road maintenance funds were a condition for approval of successive groups hampered; it will take longer of Subprojects. time to implement since it involved political issues. The implementation of civil works for the subprojects could not wait for it because the roads under the subprojects had severely deteriorated. 29 Compliance with the actions and target dates LA, Schedule 5 Not complied with. Compliance established in the Action Plan in respect of Para 13 with the actions and target enforcement measures and regulations to dates established in the Action reduce vehicle overloading on the road Plan will take longer time. The network shall be a condition for approval of roads under the subprojects successive groups of subprojects, and for have further deteriorated, and approval of procurement of equipment to need urgent rehabilitation. enforce vehicle overloading measures in the provinces where Subprojects are implemented. 30 The Borrower shall take suitable enforcement LA, Schedule 5 Complied with. measures to reduce the incidence of Para 14 Two weighbridge stations have overloading on the roads rehabilitated under been established to reduce the the Project. Upon completion of each group of incidence of overloading. Subproject, and one year and four year after Enforcement of policy on completion, the Borrower shall submit to the overloading is ineffective. Bank statements describing these enforcement measures on the sample road sections selected for monitoring and evaluation, indicating in particular the legal axle load limits, testing methods, the levels of the penalties for infringement, frequency and number of penalties issued, the amounts collected, and any companies identified as repeat offenders.

Appendix 8 37

No Covenants Reference Status of Compliance 31 The Borrower shall ensure that road safety LA, Schedule 5 Complied with. enhancement measures identified by the Para 15 Road safety campaigns have consultants engaged under the Loan and been conducted and road incorporated in the design of the Subprojects signage was installed. are implemented. Such enhancements shall include adequate road signs and marking guardrails, and staff training in road safety and traffic engineering. 32 For each subproject, the environmental impact LA, Schedule 5 Complied with. screening and assessment referred in Para 16 Government’s regulation and paragraphs 6 and 7 of this Schedule shall ADB safeguard policies have comply with the laws and regulations of the been considered in the Borrower as well as the Bank’s environmental subproject design and impacts Assessment Requirements (1998) and were mitigated during Environmental Guidelines for Selected implementation. Infrastructure Projects (1993). 33 For each Subproject, the social impact LA, Schedule 5 Complied with. screening and assessment referred to in Para 17 Government’s regulation and paragraphs 6 and 7 of this Schedule shall ADB safeguard policies have comply with related laws and regulations of the been considered in the Borrower as well as the Bank’s Guidelines for subproject design and impacts Incorporation of Social Dimensions in Bank were mitigated during Operations (1993). implementation. 34 The Borrower shall ensure that adequate LA, Schedule 5 Complied with. measures to mitigate the effects of landslides Para 18 Adequate environmental and erosion are included in the design, mitigation measures have construction, operation, and maintenance of been incorporated in the facilities provided by the Project. subproject design and monitored during implementation. 35 During construction, DGRID shall establish a LA, Schedule 5 Complied with. Environmental field monitoring program to ensure that the Para 19 Management Monitoring Plan proposed environmental mitigation measures (EMMP) has been prepared, contained in the bidding documents for the civil and field supervision teams works under the Project are implemented as monitored the contractors to planned and have the desired mitigate effects. comply with the EMMP. Appropriate arrangements shall be made for independent third party monitoring. 36 DGRID shall ensure that proper drainage of LA, Schedule V Complied with. Project Roads is provided, specifically through No. VI. 20 It was noted that, although grading of the shoulders and provision of cross included in the design, the drains and parallel ditches. drainage works were regarded as secondary works. 37 DGRID shall ensure that, upon completion of LA, Schedule 5 Complied with. However, DGH the Project, the road sections rehabilitated Para 21 needs to give greater attention under the Project shall be adequately operated to effective routine and maintained, and that pavements shall be maintenance. maintained at an international roughness index level not more than 8 meters per km.

38 Appendix 8

No Covenants Reference Status of Compliance 38 The Borrower shall ensure that DGRID, with LA, Schedule 5 Partly complied with. the assistance of the consultants for the design Para 22 Traffic data and road condition and supervision of civil works under Part A of surveys are part of the routine the Project, shall make arrangements for tasks of the provincial road monitoring and evaluating benefit and activities agencies. These activities are under the Project to ensure that Subprojects conducted annually. The social are efficiently managed and regularly economic surveys (Socio maintained and that expected Project benefits Economic Monitoring and are attained. The information shall be collected Evaluation Plan/SEMEP) was on a sample of about 10 percent of subprojects conducted on 6 sub-projects of and shall include road sections and bridges in batch 2 only. each of the Project Provinces. For each of the selected Subprojects, the field information to be collected prior to construction, and one year and four years after completion of construction, shall include inter alia, a road condition survey, surveys of road roughness and traffic volumes, road maintenance performance and expenditure, road freight rates, passenger fares, and any other information, including adequate socioeconomic indicators, that may be required to undertake a proper evaluation of the performance of the selected Subprojects.

Appendix 9 39

ECONOMIC JUSTIFICATION AND REEVALUATION

1. Approach to Economic Analysis under the Project

1. The Project was designed as a sector project, under which not all of the components are fully defined at the time of a project’s approval by the Board, individual subprojects are to be prepared in accordance with agreed procedures, and these are to be presented to Asian Development Bank (ADB) for approval. Subprojects are eligible for ADB financing when they meet the agreed criteria. In this case, subprojects were to consist of either periodic maintenance or betterment works and were to be grouped into three batches.

2. Preparation of the three batches was carried out using the screening and economic analysis and selection procedures of the Directorate General for Highways (DGH), which form part of its Integrated Road Management System (IRMS). This is an automated system for planning and implementing road works and expenditures in a way that maximizes the economic benefits to the country by defining optimal treatments, strategies, and priorities. It does so on the basis of economic criteria that consider the costs borne by the road user as well as those incurred by the highway agency.

3. At the screening stage of the IRMS process, automated economic and engineering analyses are undertaken for individual road links to ascertain the optimal timing of required periodic maintenance or betterment works over a 5-year planning horizon. During the programming phase, these individual projects are grouped into contract packages and allocated to DGH’s maintenance and betterment programs in accordance with budget availability and programming criteria. Preliminary designs are prepared using the Road Design Model based on more precise road condition data.

4. Following preparation of preliminary designs, the Economic Review Module (ERM) of the IRMS is used to reappraise the selected projects or groups of projects to ensure that the economic internal rate of return (EIRR) is still above 15%. A main function of the ERM is to reappraise the economic viability of periodic maintenance and betterment both before and after the design and bid preparation stage of project implementation. The ERM performs a conventional economic analysis under “with-project” and “without–project” assumptions, based on road user cost savings and over a 20-year period. It uses predictions of the following: road characteristics based upon, among other things, the roughness prediction model; engineering costs; road user costs; and traffic. For investment in bridges, a similar process based on economic screening and evaluation criteria is carried out under the Bridge Management System.

5. In addition to the aforementioned initial economic screening criteria following DGH procedures, development of the proposed subprojects was also to take into account (i) inputs from the regions as to local priorities, and (ii) the subprojects’ potential for poverty alleviation. Final selection was to be based on a number of geographic, environmental, and poverty reduction criteria or thresholds. The economic threshold was an EIRR of at least 15% based on detailed engineering designs and using one of the economic analysis tools available in the IRMS.

2. Subproject Selection under the Three Batches

6. The first batch of subprojects was prepared under TA 3334-INO: Road Rehabilitation (Sector) Project16 using the screening and selection approach outlined above based on DGH’s IRMS and other criteria. A short list of 20 subprojects was identified from an initial long list of

16 ADB.1999. Technical Assistance to the Republic of Indonesia for the Road Rehabilitation (Sector) Project. Manila.

40 Appendix 9 about 90. This short list of subprojects was subsequently evaluated in greater detail based on final designs and updated costs using the Highway Design and Maintenance Standard (HDM-III) model for economic evaluation of road investments. The EIRRs of these subprojects were found to range from 12% to 60%. Fourteen subprojects were proposed and approved for financing under the Project and were implemented in the form of 12 packages. All the approved subprojects had EIRRs of more than 15%.

7. Screening and selection of the second and third batches of subprojects were carried out by the regional staff of DGH. As needed, the core team consultants provided review and revisions before submission to ADB for approval. The screening and selection followed the DGH process under the IRMS and with consideration of other factors, as described above. The potential for poverty alleviation was considered in the selection process by giving higher priority to subprojects in regions with high incidence of poverty. Final selection was made after completing field surveys, final engineering designs, and calculating EIRR using the ERM with input of updated cost estimates. After detailed design and design review, the treatments and costs sometimes had to be revised. The ERM allows reestimation of economic viability based on revised data.

8. Following this approach, 65 subprojects were approved in the second batch and 35 in the third batch. The EIRRs as reported in the subproject selection documentation submitted to ADB ranged from 15% to 100%, and 18 had EIRRs of less than 20%.

3. Reevaluation of EIRRs

9. A reevaluation of the EIRRs was undertaken for a representative sample of 25 subprojects using the same methodology as during the selection and economic analysis process described. This allowed a proper assessment of the efficiency of the outputs that were achieved compared with the estimates prepared at the time of the subproject proposals. Thus, the EIRRs were recalculated for this sample of subprojects with the ERM using the actual construction costs and, to the extent that this was relevant, new traffic and road condition information.

10. DGH conducted through its provincial offices an annual survey of the average annual daily traffic and the international roughness index. The survey was based on road link number and kilometer markers. The reevaluation was becoming complex, inasmuch as one subproject could have more than one type of road improvement (road betterment, periodic maintenance, or just patching works), each with a different cost of improvement. Where major improvement and costs were involved, therefore, the reevaluation considered only the effective length rehabilitated. The functional road length that involved only minor works and costs was not considered.

11. It was revealed that all sample subprojects have EIRRs above 15%. Eleven percent of the sample subprojects have EIRRs from 15% to 30%; 38% from 31% to 60%; and 51% of the sample subprojects have EIRRs above 60%. The EIRRs of the sample subprojects are summarized in Table A9.

TABLE A9: ECONOMIC INTERNAL RATE OF RETURN (EIRR) OF SAMPLE SUBPROJECTS

Package Subproject Name Functional Effective Cost Cost Distribution After the Project EIRR Code Length Length (Rp million) Year1 Year2 Year3AADT IRI Yearf o % (km) (km) (Rp. million) (Rp. million) (Rp. million) Survey

West Java Province AL-02 Palimanan-Bts Majalengka 20.6 20.6 21,500 12,900 8,600 — 10,975 4.0 2007 68 AL-07 Rajapolah - Ciamis - Banjar 29.3 29.3 33,788 20,273 13,515 — 15,099 5.2 2007 173 East Java Province

AO-01 Tuban - Bulu 39.7 34.5 30,999 9,300 12,400 9,300 9,545 5.6 2007 129 AO-03 Bangkalan - Torjun 53.8 24.8 25,587 15,352 10,235 — 8,384 4.9 2007 66 CentralAO-04 Java Nganjuk Province - Bts Blitar 35.3 18.8 7,030 7,030 — — 3,989 3.1 2007 88

AM-03 Semarang - Godong 33.3 9 28,677 17,206 11,471 — 3.5 22,583 2007 89 DIYAM-04 Province Pejagan - Prupuk 36.0 21.2 21,749 13,049 8,700 — 3.0 6,329 2007 58

Lampung Province AN-02 Piyungan - Gading 18.0 18.0 13,256 13,256 — — 10,327 3.5 2007 82

AT-02 Bkt Kemuning - Simpang 19.5 17.0 6,496 6,496 — — 2,314 6.6 2007 108 AT-04 Bj Tenuk - Panggang 20.3 20.3 46,841 28,105 18,736 — 3,618 8.0 2007 60 North Sulawesi Province AY-03 Rumbia - Buyat 41.2 20.0 11,462 3,439 4,585 3,439 219 8.3 2007 28 AY-06 Onggune-Molibagu 44.0 20.0 11,390 3,417 4,556 3,417 2,251 4.7 2007 41 Banten Province AK-03 Bayah - Cibarenok 19.0 19.0 21,475 12,885 8,590 — 1,452 8.4 2007 49

AK-04A Cikusek - Binuangem 13.9 13.9 17,121 10,273 6,848 — 832 8.09 Appendix 2007 44

Appendix 9 Appendix Package Subproject Name Functional Effective Cost Cost Distribution After the Project EIRR Code Length Length (Rp million) Year1 Year2 Year3 AADT IRI Year of % (km) (km) (Rp. million) (Rp. million) (Rp. million) Survey AS-10 Sp Indralaya - Bts Sumsel 17.8 17.8 19,014 19,014 — — 13,251 4 2007 118 42 Jambi Province AQ-06 Tempino-Muara Bulian 26.0 12.7 15,714 9,428 6,286 — 4,315 4.9 2007 46 Riau Province AI-07 Sp Tanah Putih-Bgn Siapi 9.23 9.23 13,100 7,860 5,240 — 4,355 7.3 2007 79 Bengkulu Province AR-07 Ipuh-Bantal-Muko2 20.0 20.0 15,501 9,301 6,200 — 2,949 5.5 2007 32 South Kalimantan Province AX-04 Mabuun-Babubabi 25.0 25.0 19,521 11,713 7,808 — 4,274 4.4 2007 44 AX-07 Rantau-Kandangan 20.0 20.0 19,266 11,560 7,706 — 2007 73 West Kalimantan Province AU-03 Sintang - Sp. Nangasilat (Bong 45.0 45.0 39,365 23,619 15,746 — 690 7.4 2007 30 AU-12 Bengkayang - Seluas 98.8 32.4 18,399 5,520 7,360 5,520 770 4.9 2007 41 Central Kalimantan Province AV-04 Sp. Sei Asam - Takaras 68.0 11.8 14,323 14,323 — — 2,601 4.6 2007 22 East Kalimantan Province AW-03 Sp.3 Sambera - Santan 31.8 31.8 15,112 10,000 5,112 — 1,020 5.9 2007 38 South East Sulawesi Province AZ-03 Pomala-Wolulu-Toari 71.0 18.0 15,298 4,589 6,119 4,589 756 5.3 2007 80 AZ-05 Toari-Boepinang-Bambuya 28.6 27.6 18,482 11,089 — — 838 6.0 2007 74

— = not applicable; AADT = annual average daily traffic; EIRR = economic internal rate of return; IRI = international roughness index; SSP = summary subproject proposal. Source: Directorate General for Highways.