Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 12671-IND

STAFF APPRAISAL REPORT

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

APRIL 19, 1994

Infrastructure Operations DivisionCountry Department IIIEast Asia and Pacific Regional Office

This document has a restricted distribution and may be used by recipients only in the perfornance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS(As of April 1994)

Currency Unit =Rupiah (Rp)Rp 1 million =US$475US$1.00 =Rp 2105

GOVERNMENT OF INDONESIAFISCAL YEAR

April 1 - March 31

UNITS OF MEASURES

1 meter (m) = 39.37 inches1 kilometer (km) = 0.62 miles1 hectare (ha) = 2.47 acres

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

ADB - Asian Development BankAADT or ADT - Average Annual Daily TrafficAMDAL - Analysis of Environment ImpactsBappeda I and II - Provincial and Kabupaten Development Planning AgencyBappenas - National Development Planning AgencyBPJD II - Bantuan Peningatan Jalan Daerah II (earmarked grants for

kabupaten roads betterment and maintenance)CTC - Central Technical ConsultantsDGH - Directorate General of Highways (MPW)DGLC - Directorate General of Land Communications (MOC)DGRD - Directorate General of Regional Development (MHA)Diklat - Training Division, DGHDPUK - Kabupaten Office of Public WorksDPUP - Provincial Office of Public WorksEA - Environmental AnalysisETG - Environmental Task GroupFCI - Field Consultants for ImplementationGOI - Government of IndonesiaInpres - Instruksi President (in project context, a central government

grant program to local governments)IPJK - Inpres Peningkatan Jalan Kabupaten (central governrnent

grants for betterment of kabupaten roads)IRI - International (road) roughness indexKR3 - Third Kabupaten Roads Development ProjectKREI - Eastern Indonesia Kabupaten Roads ProjectKR5 - Flfth Kabupaten Roads ProjectKRUA - Kabupaten Roads Quality Assurance ProgramP.T. Jasa Marga - Indonesia Toll Road Corporation

FOR OFFICIAL USE ONLY

MHA - Ministry of Home AffairsMOC - Ministry of CommunicationsMOF - Ministry of FinanceMPW - Ministry of Public WorksOECF - Overseas Economic Cooperation Fund of JapanPBPJK - Proyek Bantuan Penanganan Jalan Kabupaten (special

provincial road units for assistance to local governments)PCR - Project Completion ReportPPAR - Project Performance Audit ReportREPELITA - Indonesia National Five Year Development PlanREPPPROT - Regional Physical Planning Program for TransmigrationRR2 - Second Rural Roads ProjectRUT - Road User TaxSOE - Statement of ExpenditureUSAID - U.S. Agency for International DevelopmentVOC - Vehicle operating cost

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

I

FIFH KABUPATEN ROADS PROJECT

LOAN AND PRoJEcr SUMMARY

Borrower: Republic of Indonesia

Amount: US$101.5 million equivalent

Lending Terms: Twenty years repayment, including five years of grace, at thestandard variable interest rate.

Project Objectivesand Description: The principal objectives of the project are to improve access to the

main economic centers for the agriculture dependent ruralpopulation in project kabupatens located in Central, East and SouthKalimantan, Maluku, and Riau, and to consolidate the currentefforts to strengthen all agencies in the country dealing withkabupaten roads. The project includes the following maincomponents: (a) a road network improvement component,subdivided into three subcomponents: (i) road works andsupervision for the maintenance of an increasing share of themaintainable part of the kabupaten road network as well asrehabilitation of selected roads in project kabupatens over threefiscal years starting in 1994/95; (ii) workshops and laboratoriesupgrading and equipping; (iii) provision of equipment, spare partsand supplies; and (b) technical assistance and studies forstrengthening systems and procedures for planning, environmentalanalysis, qualaity assurance, and for helping GOI agencies in theimplementation and monitoring of the project.

Project Benefitsand Risks: Rehabilitation and better maintenance of roads will lead to

significant reduction of vehicle operating costs in the kabupatens.In addition, the project will increase GOI's capability to plan andimplement kabupaten road works programs efficiently in the entirecountry thereby reducing the costs of road provision. Over time,lower road transport costs will translate into lower agriculturalcosts and higher rural incomes. The main risks are related toimplementation of the planning procedures, the funding ofmaintenance and the quality of works. To reduce the risks, GOI'sNational Development Planning Agency, Bappenas, has alreadyagreed to the use of Inpres funds for maintenance and will continueto play a strong coordinating role in project planning andimplementation. Also, the maintenance targets have been carefullydesigned and adequacy of maintenance will be for each kabupatena condition of participation in the project's subsequent annualrehabilitation/improvement programs. The risk of poor qualityworks is reduced by the extensive technical assistance forimplementation support provided under the project.

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Estimated Costs: L& Local Foreign Total----------- US$ million ----------

A. Road network improvement1. Road works 94.9 54.2 149.22. Workshops, laboratories 0.7 1.8 2.53. Equipment 1.6 15.8 17.4

Subtotal 97.2 71.8 169.0

B. Institutional and 3.2 3.9 7.0Technical Development

Total Baseline Costs 100.3 75.7 176.0Physical Contingencies 10.0 7.6 17.6Price Contingencies 9.6 3.5 13.1

Total Project Costs 120.0 86.8

Financing Plan:

GOI 105.3 0.0 105.3IBRD 14.7 86.8 101.5

Total Financing 120.0 S 06.8

Estimated Disbursements:

Bank FY FY95 FY96 FY97 FY98 FY99-------------------- US$ million ------------------

Annual 12.0 22.0 32.5 27.0 8.0Cumulative 12.0 34.0 66.5 93.5 101.5

Economic Rateof Return: 29%

Poverty Category: N.A.

Map: IBRD No. 25538

Lg Inclusive of taxes and duties amounting to US$18.8 million equivalent.

Note: Due to rounding, totals may not add.

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INDONESIA

FIFTH KABlPATEN ROADS PROJECT

TABLE OF CONTENTS

Page No.

1 THE TRANSPORT SECTOR ................... . 1A. Background and Economic Setting .... ........... 1B. The Transport System ........ 1........ C. Objectives and Strategy ......... ....... 2

2 THE ROAD SUBSECTOR ....... ......... 2A. Introduction ................ 2B. Kabupaten Roads ...... ........... 3C. Administrative Structure ........... ..... 3D. Road Transport ........................... 4E. Financing ................... 5F. Planning and Budgeting ............. 6G. Expenditures. 7H. Technical Aspects ......... ................ 7I. Construction Industry ........ ............... 8J. Environmental Aspects ....... ............... 8

3 PAST BANK INVOLVEMENT IN THE ROAD SUBSECTORAND LESSONS LEARNED ............. 9 A. Past Bank Involvement ....... ............... 9B. Main Lessons Learned ....................... 9

4 THE PROJECT ........... .......... 10A. Objectives ........ ............. 10B. Rationale for Bank Involvement ................. 11C. Project Description ................... .. 11D. Road Network Improvement and Maintenance .... .... 11

This report is based on the findings of an appraisal mission which visited Indonesia inOctober 1993 comprising Messrs. Emmanuel James (Task Manager), Jacques Tollie(Senior Highway Engineer) and Mr. W. Hardi (Operations Officer). Peer Reviewerswere Messrs. Parthasarathi (economic aspects), Gaviria (institutional aspects) andSigfusson (technical aspects). Ms. Haug, Director, EA3, and Mr. Khanna, DivisionChief, EA3IN, have endorsed the project.

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E. Technical Assistance for Institutionaland Technical Development ......... . . .. . . . . 15

F. Cost Estimates ........................ . . 15G. Financing .............................. 16H. Implementation and Monitoring ................. 17I. Procurement ............................. 18J. Disbursements .21K. Accounts and Audits .22L. Retroactive Financing .22M. Environmental Impact .22N. Social Impact .23.0. Sustainability .25

5 ECONOMIC EVALUATION . .25A. Subprojects Selection .25B. Benefits and Beneficiaries .26C. Economic Returns and Sensitivity Tests .26D. Risks .27

6 AGREEMENTS REACHED AND RECOMMENDATION 28

ANNEXES

1. Technical Assistance2. Project Implementation Schedule3. Reporting Requirements4. Bank Supervision Plan5. Documents and Data Available in the Project File

TABLES

1.1 Statistical Overview1.2 GRDP per Capita1.3 Population and Land Area1.4 Land Use by Region1.5 Summary of Land Use1.6 Forest Function Areas2.1 Road Network Length2.2 Road Pavement Classifications2.3 Road Network by Category2.4 Road Network Condition2.5 Kabupaten Roads Condition2.6 Project Kabupatens' Road Networks2.7 Registered Motor Vehicles2.8 Registered Motor Vehicles by Region2.9 Kabupatens Road Budgets

4.1 Design Standards for Kabupaten Roads4.2 Equipment Required4.3 Project Cost Estimates4.4 Estimated Disbursements5.1 Vehicle Operating Costs5.2 ERR and Sensitivity Analysis5.3 Rehabilitation Program5.4 Maintenance Program

CHARTS

1. Organizational Structure of Central and Local Government2. Directorate General of Highways3. Directorate General of Regional Development4. Provincial Public Works Offices5. Kabupaten Public Works Offices

MAP IBRD No. 25538

I

CHAPTER I

THE TRANSPORT SECTOR

A. BACKGROUND AND ECONOMIC SmING

1.1 Indonesia has a land area of 1.9 million km2 and a population of about 180million. Its economy has grown consistently at about 6 percent per annum during the pastdecade; this is expected to continue during the 1990s. The impetus for growth has comefrom the non-oil sector. Agriculture remains a key sector in the Indonesian economy; itaccounts for about 20 percent of non-oil exports (including timber) and providesemployment to more than 50 percent of the population.

1.2 The five provinces comprising this Fifth Kabupaten Roads (KR5)project-namely Central, East and South Kalimantan, Maluku, and Riau-have about29 percent of the country's land area. They include about 6 percent (8.9 million) of thetotal population and have relatively low average densities of 40 persons/km2 . About36 percent of the nation's forest cover is located in these provinces, with most of it beingin the more remote parts of Central and East Kalimantan that are typically not in theproject area. About 39 percent of the total land area is potentially cultivable but onlyabout 3 percent is cultivated currently.

1.3 Although there is extensive oil and gas production in Riau and E.Kalimantan, the project area has a predominantly agricultural economy. The averageGRDP per capita of the project provinces is more than twice the national average solelybecause of the oil producing provinces. The provinces of Maluku, Central and SouthKalimantan are considerably poorer with per capita GRDP about 19 percent below thenational average. Further details are in tables 1.1-1.6.

B. THE TRANSPORT SYSrEM

1.4 In general, the transport system has coped well with the rapidly growingdemands of a fast expanding and diversifying economy. Because of the vast size of thecountry and the uneven distribution of population, natural resources and economic activity,transport is of special importance to the Indonesian economy and an extensive transportsystem has been developed over time. All transport modes - road, rail, shipping, civilaviation, inland waterways, and pipelines - are represented in this system but road is thedominant mode accounting for an estimated 53 percent of medium- and long-distancefreight transport and 88 percent of passenger traffic. The modes tend to complement oneanother; only in Java and in a few corridors in other regions is there intermodalcompetition.

1.5 There is scope for improvement in the performance of the Indonesiantransportation sector. In the near future this, together with a minimum of improvements

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to access, will be the sector's main challenges if it is to satisfy the rapidly growing anddiversifying demands of the Indonesian economy.

C. OBJECrIVES AND STRATEGY

1.6 For the 1990s, the key elements of GOI's development strategy are(i) maintaining growth and macroeconomic stability; (ii) improving public sectormanagement; (iii) enhancing private sector development; (iv) reducing poverty andenhancing human resource development; and (v) improving environmental management.Investment in transport is a part of the GOI strategy to help foster the attainment of itsobjectives by providing adequate infrastructure. In its successive 5-year development plans(Repelita), the GOI has devoted significant resources to improving transport infrastructure.Public sector transport spending during the last five years has averaged about 2.3 percentof GDP. Outlays for maintenance were also increased in order to sustain the quality andproductivity of the transport system.

CHAPTER II

THE ROAD SUBSECTOR

A. INTRODUCTION

2.1 In recent years, GOI has consistently placed importance on the transportationsector as a key means of promoting economic growth and regional development.Emphasis within the sector has in turn been placed on road transport. Illustrative of thisis the fact that in Repelita IV, 1984/85 - 1988/89, some 60 percent of the total transportsector investment budget of Rp 7.1 trillion was directed to road and bridge programs.This has led to major improvements in the quality of the road network and in roadtransport services, albeit with some significant problems. A fuller account of the overallroad subsector performance is detailed in Staff Appraisal Reports No. 10551-IND of May1992 for the Third Kabupaten Roads (KR3) project, Loan 3490-IND and also in No.11385-IND of March 1993 for the Eastern Indonesia Kabupaten Roads (KREI) Project,Loan 3579-IND. This report focuses on the extension of the kabupaten roads programdescribed in the KR3 and KREI SARs to the 27 kabupatens comprising the KR5 project.

2.2 In view of the assignment of sector management responsibilities inIndonesia, Bank strategy in the road sector makes a distinction in the focus of lendingoperations for the primary network (national and provincial roads) and those for thekabupaten roads. Projects that support development of the primary network attempt toimprove road transport incentives and regulations as well as address the more complextechnical issues. The focus under kabupaten roads projects is more on institutionaldevelopment, maintenance, and resource allocation at the local levels.

B. KAB3UPATEN ROADS

2.3 Indonesia has a total of 243 kabupatens or rural districts. They vary greatlyin size and resource endowment, but the average kabupaten has a population of 0.7 millionand a land area of 4,000 km2. These kabupatens are served by a road network that hasthree main administrative classifications-national, provincial, and kabupaten. Kabupatenroads, at a total of 181,000 km, represent the largest segment of the overall 260,000 kmroad network. Although there is a wide degree of variation, on average the kabupatenroads are of poorer quality than the national and provincial roads with only 46 percent instable (good and fair) condition as opposed to 60 percent for the latter road classes.

2.4 Specifically, in the project area, only 37 percent of the kabupaten roads arein good and fair condition, a figure somewhat below the national average. The reasonsfor the majority of the kabupaten network having deteriorated are poor maintenancepractices, weak institutional capabilities, and limited budgets. Tables 2.1-2.6 have furtherdetails on the lengths and condition of the overall road network and on the kabupaten roadsin the project area.

C. ADmINISTRATIVE STRUCTURE

2.5 Indonesia has a three-tier regional administrative system. The first level,referred to as Daerah Tingat I, consists of 24 provinces and three special districts (Jakarta,Yogyakarta, and Aceh), each headed by a Governor. Each province is subdivided at thesecond level, or Daerah Tingat II, into Kabupatens (rural districts) that are headed by aBupati, and into Kotamadyas (municipalities) that are similarly headed by a Walikota.These second level units in theory have autonomous budgets and taxation powers but inpractice function as extensions of the central or provincial governments. Furtheradministrative subdivision continues along the two streams, urban and rural. Thekabupatens are subdivided into kecamatans, or district administrative units, headed by aCarnat. The kecamatans are in turn further divided into Desas, which are basically villagesand form the third administrative level, headed by a Kepala Desa.

2.6 Most central government ministries have branch offices at the provinciallevel (Kantor Wilayah Propinsi, KANWIL). The KANWILs are staffed by centralgovernment officers and their operations are financed by the central government budget.There is also the Proyek Bantuan Penanganan Jalan Kabupaten (PBPJK) in most provinces,which is a special unit for providing assistance to local governments on roads. Chart 1illustrates this relationship.

2.7 The Directorate General of Highways (DGH) of the Ministry of PublicWorks (MPW) is the road agency at the central level (Chart 2), while agencies at lowerlevels are the Provincial Public Works Office (DPUP - Chart 4) and the Kabupaten PublicWorks Office (DPUK - Chart 5). In principle, DGH, DPUPs and DPUKs are responsiblefor national, provincial, and kabupaten roads, respectively. However, the planning andimplementation of maintenance of national roads is now delegated to the DPUPs. DGHretains responsibility for setting policies, procedures and guidelines concerning the

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planning and implementation of all road programs and assisting and supervising provincialand local agencies in their use.

2.8 The Directorate General of Regional Development (DGRD - Chart 3) andthe Directorate General of General Administration and Regional Autonomy (PUOD) of theMinistry of Home Affairs (MHA) also play a substantial role in the road sector. Withtheir corresponding agencies at provincial and kabupaten levels, DGRD and PUOD are,in particular, responsible for regulating and monitoring the nontechnical aspects of centralgovernment's grant programs (Inpres) to lower level governments. They are alsoresponsible for regulating staffing and salaries, and for the appointment and supervisionof provincial and local governments' senior officials.

2.9 Staffing. DGH has about 5,000 permanent and temporary staff, about1,200 of whom are engineers. Traditionally, many have been seconded to DPUPs. Thereis no reliable estimate of the number of staff working at DPUP and DPUK level on roadworks programs, but it is likely to be well above 15,000.

2.10 Training. Technical training of roads staff is mainly the responsibility ofMPW's specialized roads training section, Diklat DGH, that has a close technicalrelationship with DGH and from which it receives part of its budget. Implementation ofa five-year Kabupaten Road Master Training Plan (KRMTP) under the KR3 Project hasstarted recently; this plan will help to address some of Diklat's key manpower needs.

D. STATUS OF ROAD TRANSPORT AND ISSUES

2.11 Vehicle Fleet. There were about 8.5 million motor vehicles registered bythe end of 1990 and about 32 percent (2.8 million) were four-wheel vehicles. Commercialvehicles-buses and trucks-accounted for 53 percent of four-wheel motor vehicles withcars and pickups making up the remainder. The fleet has grown rapidly in the last 15years, averaging around 11 percent growth between 1980 and 1990, however at 14.5 four-wheel vehicles per 1,000 population, it is still in the low range. There were also some 5.7million motorcycles, as well as a large number of three-wheel vehicles. The use ofmotorcycles is widespread at about 32 per 1,000 population. Further details are in Tables2.7 and 2.8.

2.12 Traffic. During 1980-90, road traffic, excluding motorcycles, on nationaland provincial roads grew by an average of six to seven percent per annum. Growth rateswere lowest in Java and Bali (6.5 percent) with higher rates in Sumatra (11 percent) andin parts of the outer islands. Traffic levels on most national roads are between 3,000 and10,000 vehicles per day (vpd) while the majority of provincial roads carry less than 3,000vpd. Available data on traffic on kabupaten roads suggest great variability in the easternregion, with averages ranging by province from 50 to 200 vpd. In addition, the share ofmotorcycle and non-motorized traffic is higher than in other regions.

2.13 Trucking. Road transport consists of public carrier 'for hire' services(30 percent) and own-account operations by private sector firms (45 percent) andGovernment corporations (25 percent). Trucks dominate freight transport in the project

areas. The ease of entry into the trucking market, the relatively flexible enforcement ofregulations, and the relaxation of tariff restrictions a few years ago have generatedconditions (in particular competition) such that the service to users is perceived as goodand responsive.

2.14 Bus Services. Interurban bus services are mainly operated by the privatesector and are reasonably efficient. On the trunk routes, services are frequent and as fastas road conditions permit. There is justified concern, however, over safety standards.Tariffs are regulated but this has generally not been a major problem and companiescompete on quality of service. Bus services on kabupaten roads are provided by privatelyowned minibuses.

2.15 Traffic Safety. Road traffic accidents are a serious socioeconomic problemin Indonesia. The limited data available indicate about 11,000 fatalities annually andnearly 50,000 people seriously injured. Although fatality rates seem to have beendeclining recently, they are still much higher than in most industrialized countries andwithin the high range for developing countries. Studies financed under previous Bankhighway projects have identified the major causes as: inadequacies in laws and regulationsregarding vehicle standards and traffic, and deficiencies in the standards and condition ofroads. These problems are recognized and GOI will continue to address the most criticalroad safety issues under the Second Highway Sector Project.

2.16 Subsector Issues. Indonesia has made considerable progress in recent yearsin the development and management of its road system but some technical and institutionalweaknesses remain. The main issues concerning the kabupaten roads program as a wholecan be summarized as (a) inadequate road maintenance and insufficient funding;(b) inefficient practices in preparation and implementation that lead to a product of poorquality and short economic life; (c) shortages of skilled technical staff and inadequatetraining programs; (d) insufficient use of modern road technologies and weak institutions,especially at kabupaten and province levels; and (e) inadequate attention being paid toenvironmental impacts of projects in the planning and implementation of road works. TheProject is designed to address these issues.

E. FINANCING

2.17 The improvement of kabupaten roads, including rehabilitation and bettermentworks, is financed mostly from the Central Government grants earmarked for roadrehabilitation (BPJD II). Currently BPJD II, which is allocated by the Deputy V Office(Regional Development) of Bappenas, is the only development fund that can be provided(a) in adequate amounts and (b) with the year-to-year stability that kabupatens can dependon. Part of the consideration in allocating the funds is to give a higher amount to the outerisland kabupatens to compensate to some extent for their low entitlement from their percapita block grants (Inpres Dati II).

2.18 The funding of maintenance requirements, especially for routine maintenanceof kabupaten roads, is supposed to be met entirely from local government's own resources(mostly Inpres Dati II). Starting in FY1994/95, Inpres Dati II will also include funds

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earmarked for road betterment (BPJD II) and for four other sectors (schools, reforestation,municipal markets, and spatial planning). However, the traditional portion of InpresDati 1I will remain an entitlement grant (set now at Rp 5,000 per capita) that can in theorybe allocated by kabupaten governments to any item in their budget. Typically, about70 percent of Inpres Dati II is allocated to the road sector for maintenance and forbetterment projects. However, maintenance funding tends to be inadequate; this isprobably due to the fact that allocations for it seem to be more often based on historictrends rather than on the needs of a rapidly growing network.

2.19 GOI has recognized this issue and has taken initiatives that are intended toincrease the funding, and improve the implementation of road maintenance. CurrentlyBappenas has permitted the use of BPJD 1I for periodic maintenance. During projectpreparation it was found that most kabupatens needed to use about nine percent of BPJD lIfunds to meet their maintenance targets in 1994/95. This is a sustainable level of BPJD IIusage for maintenance.

F. PLANNIG AND BuDGETING

2.20 The main characteristic of the planning, programming and budgeting processin Indonesia is its consensus building approach. The budgeting process consists of a setof bottom-up and top-down, inter/intra government conferences (RAKORBAN,RAKORNAS, and RATEK). Annual road works programs and budgets are preparedthrough a series of meetings from about June to November each year at village, kabupaten,provincial, and national levels to review budget proposals. On this basis, the roadcomponents of the national development budget are prepared and budget envelopes areannounced early January for each of the main funding programs and subsequently for eachprovince and kabupaten. Coordination meetings are then held to firm up lists of approvedroad works.

2.21 On kabupaten roads, systematic programming methods are in place only forrehabilitation works. DGH, with Bank's assistance, has developed a rural road planning-programming-budgeting system to accommodate the current GOI annual planning andbudgeting cycle. Road links are evaluated by local kabupaten planning teams in accordanceto standard guidelines and methodologies issued by DGH. This system was designed foruse by kabupaten staff and has sufficient analytical rigor to ensure that projects selectedare justified economically. It was first applied (starting 1988) to the 75 kabupatensincluded under the Bank-assisted Second Rural Roads Development Project and wassubsequently applied (in 1990) to the entire country.

2.22 Until recently, methods used for preparing maintenance programns onkabupaten roads were incomplete and, in any case, often not applied systematically. Partlyfor this reason, the funding of maintenance has generally been inadequate. These methodshave been improved under Rural Roads II (Loan 2881-IND) and their application showedthat improvements in both the planning and implementation of maintenance can berealized. Under the project, refinements will be introduced to evaluate life-cyclemaintenance strategies and to select the best alternatives.

G. EXPENDrrURES

2.23 The expenditure program for the road subsector is about 20 percent of thetotal national development budget. Starting from about Rp 827 billion I/ in 1984/85,expenditures rose to about Rp 4,400 billion in 1992/93, an increase of about 20 percentper annum over the period in nominal terms. Expenditures on national and provincialroads have mainly been for rehabilitation and improvement of the existing network and formaintenance. Table 2.9 has further details on budgets and expenditures.

2.24 During this period, the expenditures on kabupaten roads have increasedfrom about Rp 267 billion in 1984/85 to about Rp 1.5 trillion in 1992/93, making up aboutone-third of the total road expenditure. For kabupaten roads, most of the expenditureshave been for improvement of the network, including upgrading village roads and roadsbuilt under area development schemes (such as transmigration projects) into the kabupatenroad network. The expenditure program for kabupaten roads is driven by the statedobjective of Bappenas to have 60 percent of the network in stable condition (defined as kmof roads in good and fair condition) by the end of Repelita VI. However, the country-wide average is now 46 percent and hence substantial achievements will be required if thestated objective is to be attained.

2.25 Kabupatens are now beginning to appreciate the economic role ofmaintenance and under the ongoing projects, are increasing their provisions for it. Byfollowing this maintenance first approach, the growth in the length of the stable roadnetwork should be much greater than in the past. This is because leakages from thesystem, in terms of the rapid deterioration of newly rehabilitated roads, would be reducedsignificantly.

H. TECIINICAL ASPECTS

2.26 In some kabupatens, certain aspects of road works implementation haveserious weaknesses that too often result in a product of poor quality and short economiclife. Tender packaging is not efficient: contracts are often for very small works (with acost below US$250,000) and of a short duration (three to nine months in most cases).Also contractors are still too dependent on poor quality equipment supplied by the publicsector. Finally, supervision is inadequate and contract specifications are often notadequately enforced.

2.27 These problems are now being recognized, especially since DGH and theDPUPs have begun to play a more substantial role in the preparation and implementationof kabupaten road works programs. As a result, improvements in human resources andorganization at kabupaten level are beginning to be a priority, and the need for assistanceand supervision by DPUPs and DGH is now acknowledged. Better procedures forcontracting road works (including better contractor prequalification procedures, use ofstandard bidding documents, and more systematic involvement of supervision consultants

1/ Excluding expenditures on toll roads.

at the bid evaluation and works certification stage) have also been formulated. One of themain objectives of the project is to introduce these improvements in the project kabupatens.

I. CONSTRUCTION INDUSTRY

2.28 Although local capability has developed significantly in recent years, theindustry is on the whole weak at the kabupaten level. GOI has long recognized the needto improve the capabilities of domestic contractors. Several studies carried out in recentyears have highlighted the sector's main weaknesses and GOI has taken actions to addresssome of these problems such as setting up and delivering some training programs for thepersonnel of contractors and supervision consultants, providing technical assistance tocontractors under several foreign funded projects, including road projects, and improvingthe system for licensing contractors. A more comprehensive approach is needed, however,and this has been the subject of a regular dialogue between GOI and the Bank, to whichthe associations of contractors have also contributed. In the short to medium term, step-by-step improvements should be sought in the context of specific sectors. The proposedproject includes such improvements (para. 4.22).

J. ENV1RONMENTAL ASPECTS

2.29 Indonesia has established a significant body of laws and regulations for theprotection of the environment which provides a framework for specific guidelines andinstitutional development measures now being implemented by sector ministries. Ofparticular importance for the infrastructure sectors are the regulations on the analysis ofenvironmental impacts (AMDAL). In recent years, MPW has much developed itscapability to implement AMDAL regulations with substantial assistance from the AsianDevelopment Bank (ADB) in particular. In 1989 and 1990, a series of guidelines anddirectives on the environmental evaluation and control of all types of public works projectswere developed in MPW. In 1991, detailed draft manuals for implementing theseguidelines, covering all phases of the project cycle, were prepared for the road subsector.In addition, substantial training of staff has been provided to MPW and DGH. As a result,a sound basis is now available to MPW and DGH for assessing and controlling theenvironmental impacts of road works. Technical assistance will be provided under theproject to help DGH strengthen further its section for managing environrmentalassessments. Paras. 4.31-4.39 have further details on the environmental assessmentprocess followed in this project.

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CHAPTER III

PAST BANK INVOLVEMENT IN THEROAD SUBSECTOR AND LESSONS LEARNED

A. PAST BANK INVOLVEMENT

3.1 The Bank has had a substantial involvement in the transport sector ofIndonesia over the past two decades. It has financed four maritime transport projects (twoshipping and two ports projects), two railway projects, two fertilizer distribution projects,and thirteen road projects. Bank involvement has been particularly important in the roadsubsector, with a total lending of about US$2,000 million since 1969, corresponding, inparticular, to disbursements of about US$1,260 million since the early 1980s or about12 percent of all GOI expenditures (from local and foreign sources) on the road network.Nine of the road projects have been completed. The Highway Sector Project (FY90) andthe Second Rural Roads Development Project (FY88) are nearing completion, while themost recent projects, KR3 and KREI, are underway. PPARs have been issued for theSecond and Third Highway Projects in 1980 and for the Fifth Highway Project in 1989.PCRs have also been issued for the Fourth Highway Project in 1985 and for the FirstRural Roads Development, Highway Betterment, Jakarta-Cikampek, and HighwayMaintenance and Betterment Projects between 1989 and 1991.

3.2 All road projects have had broadly similar objectives. They aimed at:(i) improving the quality of the network through road construction, improvement,rehabilitation, and maintenance, with the emphasis during the past ten years being to avery large extent on the last two; (ii) developing the capability of road agencies throughtechnical support and training of staff as well as through improvements in planning andprogramming systems, in technologies, and in procedures and guidelines for preparing,implementing and monitoring road works; and (iii) improving the incentives andregulations for road transport and their enforcement. The experience under the roadprojects is briefly reviewed in the following paragraphs.

B. MAiN LESSONS LEARNED

3.3 Civil Works. In general, civil works programs have been implementedsatisfactorily in terms of timeliness but with uneven results in terms of quality ofconstruction. An obvious lesson has been that projects with road works well prepared andwith implementation initiated by the time of loan approval have gone ahead about onschedule. On the whole, for kabupaten roads the major reason for implementation delayshas been the weak planning/programming and engineering capability at the local level.

3.4 Through civil works programs as well as loan conditions for the projects thatit supports, the Bank has also tried to steer GOI towards a greater funding and betterexecution of maintenance. Experience has shown that conditionality by itself cannot work

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mainly because of entrenched habits, especially among provincial and local governments.The Second Rural Roads Development Project has shown that procedures for preparingand supervising maintenance programs adequately also need to be in place and maintenancemust be a priority of supervisory and kabupaten staff. The proposed project takes accountof this experience.

3.5 Institutional and Technical Developments. Though progress has beenslower than expected, most sector agencies are much more capable today than they werein the early 1980s. The main lesson of experience has been that major improvements ofan institutional or technical nature require (a) considerable staff resources over a longperiod of time (from GOI and their consultants as well as Bank staff), (b) the preparationof detailed implementation arrangements, (c) continuous attention by decision makers, and(d) a flexible approach so that improvements take account of and are well integrated intoGOI's normal systems and procedures. Only a limited number of objectives can andshould therefore be pursued at any time and the Bank should select very carefully the fewinstitutional objectives under any single project. The design of the proposed project aswell as that of the recent KREI and KR3 projects was therefore kept simple and the mainfocus was on planning and programming.

3.6 Improvements in the Efficiency of Road Transport. There are manyparties and interests involved in and concerned with the required improvement measures.Progress is probably in part being slowed by the need for extensive consensus building.In view of this, there is a clear need for (a) one agency, probably the Ministry ofCommunications, to take a lead role in preparing for and advocating change, incoordination and consultation with other GOI agencies; (b) continued and focussedattention on the subject from the Bank's side; and (c) clear understandings between theBank and GOI as to the long term objectives in this area and as to indicators of progressin attaining these objectives. The Bank intends to focus on these issues during theimplementation of the Second Highway Sector Investment Project which include specificmeasures to enable the Ministry of Communications to play such a role.

CHAPTER IV

THE PROJECT

A. OBJECTIVES

4.1 The principal objectives of the project are to improve the access to the maineconomic centers for the agriculture dependent rural population in project kabupatens andto consolidate the current efforts to strengthen agencies in the country dealing withkabupaten roads. More specifically, the project would improve the quality of the

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kabupaten networks by: (a) improving systems and procedures for road maintenance andensuring that the maintainable network of all project-assisted kabupatens (about 6,000 km)is satisfactorily maintained; (b) rehabilitating/improving some of the existing roads (about1,620 km); (c) improving the capability of staff involved in the subsector at all levels; and(d) strengthening institutional arrangements and improving the technical environment forplanning and implementing kabupaten road works programs. The list of 27 project-assisted kabupatens is in Table 2.6, with some basic data on their road network.

B. RATIONALE FOR BANK INVOLVEMENT

4.2 Continued Bank support to the kabupaten road subsector is needed for thefollowing reasons: (a) good access is a requisite for most development activities in ruralareas and is important to reduce rural poverty; and (b) a sizable part of GOI's developmentbudget is now aimed at improving kabupaten roads and it is important that these funds beused as efficiently as possible and that the environmental impacts be addressedsystematically. These objectives are fully consistent with the Bank's Country AssistanceStrategy for Indonesia which was discussed by the Executive Directors on April 12, 1994.In addition (a) the Bank would provide key assistance to GOI in the formulation andimplementation of institutional and technical improvements at subsector level, especiallyin view of GOI's shortage of expertise; and (b) Bank involvement would help GOI givehigh priority to road maintenance and more emphasis to meeting the physical targets setin REPELITA VI for sustainable improvement of the kabupaten road network.

C. PROJECT DESCRIPTION

4.3 The project will have the following main components:

(a) a road network improvement and maintenance component, comprising:(i) routine and periodic maintenance of the kabupaten road network as wellas rehabilitation/improvement of selected roads in the 27 project-assistedkabupatens over three GOI fiscal years starting in 1994/95; (ii) constructionof, and equipment for, workshops and laboratories; (iii) provision ofequipment, spare parts, and supplies; and (iv) supervision of works;

(b) technical assistance and studies for strengthening further the systems andprocedures nationwide regarding planning, environmental analysis, andimplementation of kabupaten road works, and for helping GOI centralagencies in monitoring project execution.

D. ROAD NETWORK MpRovEMENT AND MAINTENANCE

4.4 Maintenance. Road maintenance in most of the project kabupatens isinadequate due to insufficient planning and implementation capacity at local level, and thepoor overall technical framework. It has been assessed during appraisal that the currentlevel of effort is only about 20-25 percent of what would ideally be necessary to maintainthe network adequately. Therefore, the project's civil works program gives priority to

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maintenance in order to: (i) ensure that the better procedures and guidelines which havebeen developed under the RR2, KR3 and KREI Projects, are used early on a large scaleand are well monitored; (ii) encourage kabupatens to increase funding of maintenance; and(iii) concentrate the attention and support of the project's GOI staff and supervisionconsultants on maintenance. This priority can be measured in terms of the significantincrease in the level of effort required from GOI for maintenance activities (paras. 4.5 and4.28). In order to meet these targets, road maintenance expenditures are expected toincrease from 5 percent (compared to 11 percent nationwide) of road expenditures in1991/92 to 20-25 percent at the end of the project.

4.5 The road maintenance component will comprise the entire annual kabupatenroad maintenance programs in the 27 kabupatens over the years 1994/95 to 1996/97. Itwill be carried out in accordance with the road maintenance strategy developed under RR2(para. 2.21), which calls for intervention on the "good" and "fair" portion of the network,termed as maintainable. The target to be reached by the third year of the project is that90 percent of the maintainable network, i.e., about 6,000 km, should be maintained. Thistarget will be met gradually, by 50 percent for the first year and 70 percent for the secondyear. However, for three kabupatens (Tanah Laut and Tabalong in KALSEL, and Berauin KALTIM), meeting these targets would mean using more than 30 percent of both theirInpres Dati II and BPJD II funds for road maintenance. For these kabupatens, lowertargets have been agreed (respectively 35, 50, and 65 percent of total needs). Draft firstyear maintenance programs for each project kabupaten were reviewed at appraisal; theyare now further developed on the basis of the methodology presented in Chapter V andwith reference to the above targets. At negotiations, agreement was reached with GOI thatit would cause each project kabupaten to (a) prepare its annual road maintenance programfor the fiscal years 1995/96 and 1996/97 in accordance with a methodology and criteriaagreed to by the Bank (Chapter V), (b) submit this program for the Bank's review andcomments before December 31, 1994, and December 31, 1995, respectively, and(c) finalize and implement this program taking into account the comments, if any, by theBank. Agreement was also reached that GOI would select subprojects for the maintenancecomponent of the project in accordance with criteria and procedures satisfactory to theBank. In particular, subprojects to be included in a kabupaten's road maintenance programwould be prepared and designed in accordance with DGH's technical guidelines. Inaddition, in order to give a strong incentive to project kabupatens to meet the abovemaintenance targets, satisfactory preparation and implementation of annual maintenanceprograms will be a condition of each kabupaten's eligibility for disbursements under theproject's rehabilitation/improvement component (para. 4.7). Implementation of themaintenance programs would be monitored through periodic reports on the basis ofprogress certification issued by the supervision consultants (para. 4.8).

4.6 Road Rehabilitation/Improvement. This component is limited to therehabilitation/improvement of about 1,620 km of roads in poor or bad condition. Thisamounts to about 20 km of major works per year per kabupaten, representing about one-third of their rehabilitation program. The roads will be brought up to minimum standardsbased on projected traffic volumes and topography (Table 4.1); existing alignments willbe retained to the extent possible. Works will be designed for a ten year lifetime and willinclude, as required, rehabilitation of pavement layers, shoulders, side and cross drainage

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and bridges. Draft first year rehabilitation/improvement programs for each kabupaten,prepared on the basis of the methodology presented in Chapter V were reviewed atappraisal. About 20 percent of works in the first year are expected to be rehabilitation ofsealed roads. The balance are existing gravel, stone or earth roads requiring betterment/upgrading to seal or gravel standards. A sealed surface is proposed for about 60 percentof the program, the rest are mainly earth/gravel roads with estimated traffic potential ofless than 100 ADT recommended for graveling. Less than 5 percent of the program wouldbe built to pavement widths of 4.5 m or more representing usually widening projects forroads with more than 500 ADT. Pavement width of 3.0 or 3.5 m are proposed for otherprojects based on minimum standards for roads with projected traffic below 500 ADT.Implementation is expected to start in June 1994 (Annex 2).

4.7 At negotiations, agreement was reached with GOI that it would cause eachproject kabupaten to (a) prepare its annual rehabilitation and improvement works programin respect of the project for the fiscal years 1995/96 and 1996/97 in accordance with amethodology and criteria agreed to by the Bank, (b) submit this program for the Bank'sreview and comments before December 31, 1994, and December 31, 1995, respectively,and (c) finalize and implement this program taking into account thle comments, if any, bythe Bank. Agreement was also reached that GOI would select subprojects for therehabilitation/improvement component of the project in accordance with criteria andprocedures (including environmental assessment and procedures for consulting with projectbeneficiaries and indigenous peoples - para. 4.37) satisfactory to the Bank. The followingrequirements would apply: (a) the kabupaten in which the subproject is located needs tohave submitted an acceptable annual maintenance program for the corresponding fiscalyear, and implemented satisfactorily its maintenance program in the previous fiscal year;(b) the subproject is included in an annual road rehabilitation/improvement programprepared as agreed, and has been designed in accordance with DGH's technical guidelines;(c) the subproject economic rate of return is at least 10 percent; and (d) the subproject hasbeen submitted to an environmental screening, assessment and review process, includingconsultation with the affected peoples for relevant subprojects, satisfactory to GOI and theBank.

4.8 Road Works Programs Supervision. Technical quality of workimplementation remains a serious concern. The project will provide full support to thedecentralized units (27 DPUKs and 5 DPUP/PBPJKs) for the implementation of the annualprograms of maintenance and rehabilitation of kabupaten roads, including engineeringpreparation, contractor prequalification and tender evaluation, quality control andmonitoring, and on-the-job training of DPUK/DPUP staff in these fields. GOI will employforeign and local consultants for this purpose, some of whom will be stationed in theprovincial centers and others in the kabupaten centers to work with DPUP and DPUKcounterpart staff on a daily basis. To facilitate administration and coordination, theservices will be divided into Field Consultants for Implementation (FCI) teams for theRiau, the Kalimantan, and the Maluku parts, which will act as the "engineer" fullyempowered to supervise the contracts, including certification of works. The schedule ofconsultants services is based on (i) detailed estimates of annual workload (on average 500contracts per year based on a length of 6 km per periodic maintenance or bettermentcontract, and 10 km per routine maintenance contract), and (ii) staffing requirements by

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type of works, including site inspection, travel time and office work. Based on the above,the services would include about 240 staff-months of foreign and 6,600 staff-months oflocal consultants (of which 55 percent for site inspectors), and their costs would be about10 percent of the total civil works cost. These consultants should mobilize no later thanat the time of signing of the first civil works contracts. Therefore, the terms of referencewere agreed during project preparation so that contracts could be awarded and started inJune 1994 (Annex 2).

4.9 Workshops and Laboratories. New guidelines for workshop andequipment management call for major repair, servicing and preventive maintenance to becarried out in kabupaten workshops facilities. Such facilities, including laboratories forbasic testing of soils and materials, already exist in most of the project kabupatens, butthey need to be repaired and/or upgraded by the kabupatens. Only then will they receiveadditional equipment and tools under the project. In addition, 4 new workshops (inMaluku) and 5 new laboratories (1 in Riau, 4 in Maluku) will be provided in kabupatenswhere no such facilities exist, and they will be fully equipped as summarized in Table 4.2.

4.10 Road Construction and Maintenance Equipment. Kabupaten equipmentfleets are used partly to carry out road works by force account and partly to lease out tocontractors who lack certain essential equipment. Performance of these fleets has beenunsatisfactory, mainly due to weak management. A set of guidelines for workshop andequipment management was prepared under the Second Rural Roads Development Project,providing a practical framework for more efficient management, including measures toensure that rental rates of kabupaten equipment fully reflect ownership and maintenancecosts. DGRD is now fully committed to implement these guidelines in all kabupatens andensure that kabupatens provide sufficient funding for the operation and maintenance oftheir equipment.

4.11 As an alternative to continue providing equipment to the kabupatens, theProject attempts to create the conditions for a larger involvement of the private sector,e.g., larger contract packages, multi-year contracts, improved procedures forprequalification and for enforcement of contract obligations, etc. However, this will notbe possible or sufficient in all the kabupatens, and some equipment is still needed forcarrying out expected works (in particular routine maintenance). Table 4.2 shows thepriority equipment and spare parts required for some kabupatens, which will be procuredunder the project. This list was confirmed at negotiations. However, renewing financialassistance at a substantial scale for procuring equipment, without ensuring improvementin workshop management and fleet operation and maintenance, would be inefficient.Therefore concrete actions to enforce the DPUK Equipment Management Guidelines andrelated recommendations already disseminated under KR3 would be taken by GOI, so thatthe improved conditions would be fully operational for FY95/96. The first action alreadytaken was the recent transfer of ownership of equipment to the DPUKs. The other specificactions are (a) the preparation of a detailed action plan for establishing the workshops asautonomous plant-hire units, (b) the provision of more adequate funding for O&M, and(c) the charging of economic hire rates in accordance with a formula agreed to by theBank. At negotiations assurances were obtained that the GOI will implement action (a)by September 15, 1994 and actions (b) and (c) by January 15, 1995. GOI also assured

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the Bank that the ownership of equipment to be purchased under the project will betransferred to the DPUKs.

E. TECBNICAL ASSISTANCE FOR INSTITUTIONAL ANDTECBNiCAL DEVELOPMENT

4.12 Concerned GOI central agencies need support to continue improving theinstitutional and technical framework for preparation and implementation of kabupaten roadworks programs as well as to guide and monitor project execution. Accordingly, theproject would include: (a) technical support and liaison for engineering aspects, includingevaluation of implementation of technical guidelines and specifications, and for technicalaudits; (b) general assistance in planning, including further development of the planningmethodologies, carrying out special studies of road works needs in underdeveloped areas,analyzing the current situation and issues regarding village roads, assessing the size of theroad network that kabupatens can economically and financially maintain and rehabilitate,and assessing the long-term indirect impact of road rehabilitation/improvement on theenvironment (for example, through land development and deforestation); (c) assistance inthe monitoring and coordination of project activities, including the coordination of theseparate teams of FCI and training consultants, the monitoring of project environmentalimpact, and the preparation of project implementation reports; (d) support in thepreparation of annual road works programs including, inter alia, the environmentalscreening of proposed subprojects, the carrying out of site-specific environmentalassessments when required, the systematic review of subprojects' economic viability, andthe extension of planning methodologies to non-project kabupatens.

4.13 For the above purpose, GOI has appointed foreign and local consultantsunder a Central Technical Consultants (CTC) team, and assigned counterpart staff (asdescribed in the Terms of Reference) as an essential component of staffing to enableachievement of project objectives. The services, covering simultaneously RR2, KR3,KREI, and KR5, would be financed under the following scheme: 92/94 program underKR3, 95/96 program under KREI and finally 96/97 program under KR5. The KR5portion would start about December 1995 and would require about 90 staff-month offoreign and 300 staff-month of local consultants. The CTC services were awarded underKR3 to the consortium formed by Hoff & Overgaard A/S (Denmark) and the Indonesianfirms PT Multi Phi Beta, PT Amythas, PT Delta Marga Kreasi, PT Sigma Penta, and PTYodya Karya. In addition the project will include technical assistance for continuing theenvironmental institutional strengthening begun under Ln. 3579, in DGH and Biro KLHand at the provincial Bappedas (para. 4.38).

F. COST ESTIMATES

4.14 The total project cost is estimated at US$206.8 million, including taxes andduties of US$18.8 million equivalent. It includes: (a) physical contingencies of 10 percenton the base cost of all expenditure accounts; and (b) price contingencies of 2.5 percent onthe foreign component and of 5.5 percent on the local component each year throughoutproject implementation. The foreign exchange component is estimated at US$86.8 million

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or 42 percent of total costs. The project costs by component are summarized in the tablebelow.

Project Cost Summary

% % TotalRupiah (million) US$ (million) Foreign base

Local Foreign Total Local Foreign Total exchange costS

Road network improvementRoad Works 199,794 114,181 313,975 94.9 54.2 149.1 36 85Workshops, laboratories 1,420 3,808 5,228 0.7 1.8 2.5 73 1Equipment program 3,322 33,217 36,539 1.6 15.8 17.4 91 10

Subtotal 204,535 151,206 355.742 97.2 71.8 169.0 43 96

Institutional and technicaldevelopment 6,660 8,140 14,800 3.2 3.9 7.0 55 4

Total BASELINE COSI'S 211.195 159,346 370.542 100.3 75.7 176.0 43 100Physical contingencies 21,120 15,935 37,054 10.0 7.6 17 6 43 10Price contingencies 20,284 7,389 27,673 9.6 3.5 13.1 27 7

Total PROJECTS COSTS 252,599 182,670 435.269 120.0 86.8 206.8 42 117

4.15 The base costs including taxes are estimated as of January 1994. In the caseof civil works, estimates are based on updated and adjusted recent unit prices for similarworks. Rehabilitation/improvement works are estimated to cost about US$57,000 per km.Routine maintenance is estimated to cost about US$1,200 per km. Periodic maintenanceis estimated to cost US$15,200 per km for sealed roads and US$6,200 for gravel roads.A new workshop is estimated to cost US$150,000, and a new laboratory US$18,000. Thecosts of equipment for construction and maintenance operations for workshops, forvehicles, and for laboratories is based on recent bids. The cost of consultant services isbased on recent contracts. Further details on expenditures by component are in Table 4.3.

G. FINANCING

4.16 The proposed Bank loan of US$101.5 million would finance about49 percent of total project cost, or about 54 percent net of taxes and duties, representing100 percent of foreign cost and 19.5 percent of local cost. GOI would finance theremaining US$105.3 million equivalent, or about 51 percent of the total estimated projectcost, mainly through annual budgetary allocations from the central government grantprograms, BPJD II and Inpres Dati II. The financing of the proposed project is shown inthe table overleaf.

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PROJECT FINANCING PLAN(US$ million)

Source of Finance Local Foreign Taxes Total

GOI 86.5 0.0 18.8 105.3

Bank 14.7 86.8 - 101.5

Total 101.2 86.8 18.8 206.8

H. IMPLEMENTATION AND MoNrroRING

4.17 The project's civil works will be implemented by the DPUKs in the 27project kabupatens, assisted by DPUP technical staff and technical assistance consultants.The other project components (provision of equipment, supervision of works, and technicalassistance) will be implemented by DGH. The project is expected to become effective inJuly 1994. Execution would be completed by December 31, 1998, about 4.5 years afterstart-up. The loan closing date is scheduled for June 30, 1999. The implementationschedule, as shown in Annex 2, was confirmed by GOI during negotiations.

4.18 In addition to the direct implementation responsibilities mentioned above,the main agencies involved in the project are MPW for technical aspects, MHA foradministrative aspects, Bappenas for development planning aspects, and MOF for financialaspects. The detailed responsibilities of these agencies and corresponding offices atkabupaten, provincial, and central levels have been defined (paras. 2.5 - 2.8). Theagencies would be coordinated by a committee at Director General level chaired byBappenas. This committee would be assisted by a Project Secretariat in coordinating thepreparation of actions to be taken by the agencies as part of project implementation andin monitoring the execution of these actions. The Project Secretariat would includeDirector level representatives of Bappenas, MPW, MHA, and MOF. At negotiations, GOIagreed to maintain the secretariat for the duration of the project.

4.19 A Project Implementation Unit (PIU), located in DGH and supported byMHA (DGRD) for administrative and institutional aspects, would also be needed to assist,and monitor progress, in project implementation, including preparation of annualprograms, procurement, physical achievements, and expenditures. Monthly reportsprovided by the DPUKs through the FCI teams and the CTC's and training consultants'monthly reports will provide the basis for monitoring. Progress on the project will becommunicated to the Bank by means of periodic progress reports, the first one to be dueby October 1994. These reports will include both consolidated information for the totalproject and individual reports for each province, to meet the reporting requirements.Annex 3 has further details on reporting. At negotiations GOI agreed to maintain the PIUfor the duration of the project. The PIU will prepare a detailed project completion report

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and submit it to the Bank not later than six months after the loan closing date. Supervisionplans showing Bank staff inputs as well as GOI contributions are summarized in Annex4. These plans were agreed at negotiations. Also effective supervision of the civil worksis essential to improving implementation quality. Therefore, at negotiations agreement wasreached with GOI that initial disbursements for betterment subprojects will be subject tothe provision of (a) evidence that the FCI have been engaged, and (b) adequate vehicles(Table 4.2) for use by kabupaten staff.

4.20 Quality Assurance. This project, like its predecessors KR3 and KREI,features comprehensive steps to ensure that inputs (budgeting, road link selection, contractpackaging, contractor selection, supervision, administration, technical assistance, etc.) willbe timely and appropriate. However, this may not always be enough to ensure thatimplementation quality will be acceptable. Hence GOI has prepared terms of referencefor a program to help assure the quality (KRQA) of works as well as the institutional andtechnical development of the kabupatens. The program includes technical audits focussingon the quality and cost of the completed works be carried out. The findings andrecommendation of the quality assurance program will be shared periodically with theBank. It was agreed at negotiations that the CTC will assist DGH with this qualityassurance program as they are arguably in a good position to identify problems promptly.

1. PROCUREMENT

4.21 The project civil works are scattered over vast areas and although works willbe packaged as explained below, the size of contracts is expected to be too small (aboutUS$300,000 on average for rehabilitation/improvement works, which are the mostimportant) to attract foreign contractors. Civil works will therefore be carried out bycontracts awarded under local competitive bidding (LCB) procedures acceptable to theBank and open for participation by foreign contractors. All contractors will be subjectedto prequalification under procedures satisfactory to the Bank. Standard bidding documentsfor civil works acceptable to the Bank will be used.

4.22 One of the means to improve quality of works is to increase the efficiencyof the contracting process. At negotiations it was agreed that civil works contracts wouldbe packaged in accordance with criteria satisfactory to the Bank. Arrangements describedhere below would be used in order to (i) attract a maximum of Class A and Class Bicontractors, and (ii) give contractors an incentive to invest in new equipment through theaward of contracts of a longer duration (para. 4.11):

(a) for rehabilitation/improvement works, a minimum number of all contractswould be of a size of Rp 500 million (about US$250,000) or more (so thatthey can be carried out by Class A contractors); a minimum would also beof contracts with a construction period over one fiscal year. Specifics areshown in the table above which defines the minimum proportion of thevalue of all contracts each year in a kabupaten to be made of larger and oflonger contracts. All other rehabilitation/improvement contracts will becarried out by Class B1 contractors.

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CONTRACT PACKAGING FOR REHABILITATION/IMPROVEMENT WORCS

Minimum Proportion of Contracts(expressed as a percentage of

the value of all contracts)Year 1 Year 2 Year 3

All Kabupatens (i) Contracts above 30% 50% 50%Rp 500 million

All Kabupatens (ii) Contracts with 0% 50% 50%construction overone fiscal year

Note: Categories (i) and (ii) above are not exclusive.

(b) for periodic maintenance works, packages will be valued above Rp 200million (about US$100,000), so that they are carried out by class B1contractors; tendering would be open province-wide; and

(c) a maximum of 50 percent of all routine maintenance will be carried outby force account, up to a maximum aggregate amount of US$8.2 million.The balance will be done by small private contractors, using simplified LCBdocuments that were agreed upon at negotiations. Payments will be madeagainst output of routine maintenance works, whether carried out by forceaccount or by contractor.

4.23 Equipment will be procured on the basis of ICB (using the Bank's StandardBidding Documents), except for minor items or groups of items estimated to cost less thanUS$200,000 per contract, up to an aggregate amount for all contracts not to exceedUS$800,000, which may be procured on the basis of LCB acceptable to the Bank. Itemsestimated to cost less than US$50,000 per contract may be procured on the basis ofinternational and local shopping by obtaining at least three quotations from foreign and/orlocal suppliers, up to an aggregated value of US$200,000. Contracts for spare parts, upto an aggregate amount of US$200,000, may be awarded after direct negotiations withsuppliers. Items should be grouped to the extent possible. In bid comparison andevaluation under ICB, domestic manufacturers may be granted a margin of preference of15 percent or the prevailing import duty, whichever is lower. Consultants will beappointed in accordance with the Bank's 'Guidelines for the Use of Consultants" ofAugust 1981, and on terms and conditions acceptable to the Bank. For complex, time-based assignments, the Bank's standard form of contract would be used.

4.24 Bank prior review will apply to the following contracts: (i) civil worksabove US$1.5 million, (ii) equipment above US$200,000, and (iii) all contracts for

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consultants' services above US$100,000 for a firm or US$50,000 for individuals. Othercontracts will be submitted to post-review. This will result in a prior review of about 25percent of all contracts in value or 43 percent of the amounts financed by the Bank. Tocompensate for this relatively low level of prior review, project preparation has putemphasis on improving the quality of the prequalification procedures and standard biddingdocuments to be used for civil works. A systematic post-review of civil works will alsobe carried out on a random basis during supervision. In addition, terms of reference forField Consultants for Implementation (para. 4.8) include certification of tender documentsand technical advice to the Kabupaten Tender Evaluation Committees.

4.25 Procurement administration will mainly be the responsibility of the DPUKsfor civil works, and DGH for equipment and consultancy services. Final decisions onawards will rest with the authority designated in the procurement regulations which definedifferent levels depending on the contract value. DPUKs have shown under the SecondRural Roads Development Project their capability to carry out satisfactorily theprocurement of works. They will also be assisted by the FCI and the procurement processwill be monitored by DGH and DGRD. During negotiations, GOI's agreement wasobtained on all of the above procurement arrangements. The table below gives abreakdown of procurement methods under the project.

PROCUREMENT ARRANGEMENTS(US$ million)

Procurement method /a TotalProject element ICB LCB Other cost

Betterment - 108.4 - 108.4(40.1) (40.1)

Maintenance - 43.0 8.2/b 51.2(15.9) (3.0) (19.0)

Workshops and laboratories - 0.8 - 0.8(0.3) (0.3)

Equipment 20.8 0.8 0.4 22.0(18.9) (0.7) (0.4)/c (20.0)

Consultancy services:/dCapacity building - 8.3 8.3

(7.6) (7.6)Implementation support - - 16.0 16.0

(14.5) (14.5)

Total 20.8 153.0 32.9 206.8(TO) _(57.1) (B)- (Tf )

/a Figures in parentheses are the respective amounts financed by the Bank loan and includecontingencies.

/b Force account./c International and local shopping and, for spare parts, direct contracting.ad In accordance with Bank's Guidelines for use of Consultants.

Note: Due to rounding, totals may not add.

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J. DISBURSEMEs

4.26 Loan funds will be disbursed on the following basis:

(a) Civil Works: 37 percent of expenditures;(b) Vehides, Equipment, Spare Parts, Supplies, and Inland Transportation:

100 percent of foreign expenditures for directly imported items; or100 percent of local expenditures (ex-factory) of locally manufactureditems, or 65 percent of total expenditures for other locally procured items;or 65 percent of other local expenditures;

(c) Consultancy Services: 100 percent of expenditures.

Disbursements under the project will be made against full documentation of expenditureexcept for the following items, for which disbursements would be on the basis ofStatements of Expenditures (SOEs): (i) civil works contracts under US$1.5 million,(ii) equipment, spare parts, and supplies under US$200,000, and (iii) consultants contracts,estimated to cost less than US$100,000 equivalent, for firms and less than US$50,000equivalent for individuals. SOE records would be made available to Bank staff as requiredfor inspection during supervision. The schedule of estimated disbursements is shown inTable 4.4. Although the project has been designed for implementation in 3-4 years, thestandard disbursement profile for the country sector (Indonesia/Transportation) indicatesthat the loan can be expected to be fully disbursed in 6 1/2 years. Based on the projectedwork program, the disbursements are proposed to be completed in 5 years. The proposedprofile does not follow exactly the standard profile of Indonesia transportation sector buthas been slightly modified by assuming a proportionately accelerated period fordisbursements. Considering the project will cover three consecutive annual programs ofroad works in the project kabupatens without any complex issues of environment,resettlement or land acquisition, the proposed disbursement schedule is considered realistic.

4.27 Bank disbursements for road maintenance expenditures would be at aconstant percentage (37 percent) rather than on a declining basis, mainly for administrativesimplicity in a decentralized environment. However, because of the increasing annualtargets for maintenance (para. 4.5), GOI's required funding of maintenance will more thandouble from about 20 percent of total needs in the project's first year to 55 percent in itslast. Because of the project's short duration, and the current neglect of maintenance onthese kabupaten roads, it would not be realistic to aim at higher percentages. The Bank'sdisbursement share has in fact been set at the minimum value expected to give an incentiveto the kabupatens to increase considerably their own allocation of funds for maintenanceas well as adopt better planning, programming and implementation methods, therebycreating the conditions for a sustainable effort.

4.28 In order to expedite and facilitate disbursements, a Special Account with aninitial deposit of $5 million would be established in Bank Indonesia. This account shouldbe maintained by the Director General of Budget (DG Budget) in the Ministry of Finance.The Special Account would be used for all eligible foreign and local expenditures.Replenishments to the Special Account would be made on a monthly basis or when20 percent of the initial deposit has been used, whichever occurs first.

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K. AccouNTs AND AuDIs

4.29 The PIU will have overall responsibility for establishing and monitoring theuse of a uniform project accounting system. Financial records and accounts by subprojectswill be retained by the DPUKs based on copies of financial and supporting documentsobtained from project managers and relevant agencies concerned with project funding,payment and reimbursement. The PIU will maintain accounts for equipment procured onbehalf of the project and for training and technical assistance. The DPUKs through theField Consultants for Implementation will transmit up-to-date project accounts to the PIUon a regular basis. The PIU comptroller will consolidate all accounts from the 27kabupatens into a single project account on a quarterly basis for monitoring purposes, andannually for audit purposes. During negotiations, agreement was reached with GOI that:(a) the project's records and accounts, including for the SOEs and the Special Account,will be audited annually in a timely fashion by independent auditors acceptable to theBank; and (b) it will submit to the Bank certified copies of the consolidated audit reportsstarting December 31, 1995 for fiscal year 1994/95, and subsequently no later than sixmonths after the end of each fiscal year. In the case of SOEs, the audit report will containa separate opinion as to whether the SOEs submitted during each fiscal year, together withthe procedures and internal controls involved in their preparation, can be relied upon tosupport the related withdrawals.

L. RETROACTIVE FINANCING

4.30 Retroactive financing for essential consulting services and some civil works,not to exceed US$5 million, would be provided under the project for expenditures incurredafter January 1, 1994, and before the date of the loan agreement. This advanceprocurement is considered necessary for the completion of the first year program.

M. ENVERONMENTAL IMPACT

4.31 Background. The GOI has an environmental impact assessment procedureknown as the AMDAL process that is embodied in Presidential Regulation No. 51 of1993. This law mandates that an environmental assessment information report is requiredfor all new projects that would have an impact on the environment. The initial stage ofthis procedure includes a screening process that places projects into two categories.Category 1 projects, e.g. toll expressways, or new roads, require a full assessment; thisis known as an Andal. Category 2 is intended for projects that have little or noenvironmental impact and require mainly the adherence to environmentally acceptableprocedures during implementation. Road and bridge maintenance works are exempt fromthe process. The screening procedures also try to cater for indirect impacts, but given thatroad sections to be improved under the project are in general less than ten kilometers long,the areas where indirect impacts may be felt are limited.

4.32 The large number of similar projects and their very small scale should beborne in mind when considering the nature of potential environmental impacts. For KR5,a large number of subprojects fall into category 2. The typical subproject proposal issmall, averaging about 6 km, and is primarily for qualitative improvements to existingpavements and will be of short duration.

- 23 -

4.33 Impact Assessment. The procedure followed was similar to that of theKR3 and KREI projects (see annex 11 of SAR #1 1385-IND). Due to the number of roadsections involved, GOI decided to prepare a sectoral environmental impact assessment(EA) for the project. This approach to screening and assessment was considered the mostefficient way to (i) concentrate project assessment resources on the most environmentallysensitive, or fragile, project areas; and (ii) help develop sector wide procedures andcriteria to be adhered to for EA purposes. The EA included a review of the principles forenvironmental assessment in Indonesia and also an analysis of the major impacts to beexpected from project works. It was concluded that the area and extent of impacts willbe limited and that on balance, the overall effect on the environment for projects notaffecting "fragile areas" would be of minor significance. Fragile areas are defined on thebasis of the REPPPROT maps, which are maps prepared between 1982 and 1988, for theplanning of transmigration projects. These maps cover all of Indonesia and are widelyrecognized as one of the best data sources on the natural environment of Indonesia.Fragile areas include in particular conservation areas, forest reserves, wetlands, coastalzones, and any area with potential erosion problems.

4.34 For any specific element of the environmental assessment in which somepotential for an impact was identified (< 15 percent of projects), management and ormonitoring measures were included in the project design and specification documents. Forthose works, the EA recommends that site specific environmental assessments be preparedin accordance with GOI's environmental regulations. This would help to ensure the useof sound environmental practices at design and works implementation stages.

N. SOCIAL IMPACT

4.35 The project does not involve any resettlement or the building of newdevelopment roads. The local governments would, in keeping with MHA guidelines, beresponsible for compensating people for the minor bits of land that may be acquired if theneed arises; based on the first year program these instances will be rare. However, as partof the preparation of the EA, GOI has carried out a program of public consultations withthe people likely to be affected by the project. The consultation process involved thedesign and implementation of a series of public meetings in project kabupatens. Theformat of each meeting involved an outline of the project scope and objectives, using anappropriate link included in the project as an example in most cases. The meetings werearranged through the kabupatens and chaired by their senior staff. NGOs and local townand village peoples were invited to all meetings and attendance and participation in themeetings was good; minutes of the meeting were made and a record of attendance waskept. The responses at the meetings were documented and are set out in the EA report.The consultations were well received by the local people and their questions wereconcerned mostly with direct benefits under the project, such as employment and thepotential for improving the marketing of surplus agriculture production. There was strongsupport expressed for the project as people felt that it would be beneficial to them.

4.36 In addition, the Bank funded a study which reviewed the consultationexercises carried out by DGH. The study concurred with DGH's conclusions andrecommended that an additional consultation meeting be held during project preparation.The study recommended also that a film, that would help to foster good consultation

- 24 -

practices, be made for distribution to the kabupatens. The GOI's provisions for landacquisition and resettlement were found in general to be consistent with ODs 4.20 and 4.30in the context of kabupaten roads projects. DGH is considering these recommendations.Also, it was decided during project preparation that there was no need for an action planfor "indigenous peoples" who in the Indonesian context can be defined as isolated andpotentially disadvantaged peoples. However, it was still considered opportune to includefunds under this project for the conduct of socio-economic studies and the subsequentpreparation of two such pilot plans that could serve as models, if and when they might berequired in the future. At negotiations, the GOI gave assurances that, consistent with thespirit of OD 4.20, it will continue protect the rights of indigenous peoples affected by theproject. GOI also agreed at negotiations to expand the scope of the independent team tobe financed under Ln. 3579 and under this project, that will monitor the effects of theproject on the indigenous people, to all Bank-financed kabupatens.

4.37 As for resettlement, since there is none under the project and given DGH'sagreement to a framework under the Second Highway Sector Investment project, nofurther action is warranted now. However, during negotiations, agreement was reachedthat the Bank would (a) be kept informed continuously on the social aspects of the projectas part of the normal reporting on subproject preparation (paras. 4.5 and 4.7) and(b) review and comment periodically on the designs and results of public consultationmeetings to be held in project kabupatens. The objective will be to monitor the socialimpacts of the project and make recommendations for improvement.

4.38 Emphasis was placed under the KREI project on strengthening theprocedures for EA, including consultation and the development of Action Plans, both inDGH and in the provincial Bappedas. The recent reorganization of DGH, including theestablishment of an environmental section, has increased the importance of theimplementation of this program of strengthening. The conduct of environmental screeninghas not been affected because DGH used consultants as well as its own staff members tocomplete the annual program. The project however includes additional funds for extendingthis KREI-funded program to all Bank-financed kabupatens.

4.39 Finally, under the KR3 and KREI projects, agreement was reached onseveral environmental actions that were repeated and consolidated under this project atnegotiations. These include agreement that the criteria and procedures on the basis ofwhich rehabilitation subprojects would be selected would include the following: (a) roadworks in the draft program submitted annually to the Bank will be screened so as toidentify those on road sections not previously open to four-wheel traffic and providingaccess to fragile areas; (b) such road works will be submitted to a site specificenvironmental assessment in accordance with GOI's environmental procedures; (c) onlyroad works whose EAs have been found acceptable by both GOI and the Bank will beeligible for financing; (d) any road works financed by the Bank will be designed andimplemented in accordance with agreed environmental codes of practice and this will beregularly monitored; (e) no road works will be eligible for Bank financing if they provideaccess to conservation or forest reserve areas 2/ in any project-assisted kabupaten, or to

2/ As defined by the REPPPROT maps.

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protected forest areas in the 4 kabupatens where induced development may have significantindirect impacts; such road works will be screened out as part of the annual programpreparation procedures.

0. SUSTAINABLrry

4.40 The project represents an attempt to utilize the resources available tokabupatens more efficiently and effectively. It pursues difficult objectives such asdeveloping the planning and institutional capability in kabupatens so as to enable them tomaintain viable road networks. It will also try to encourage the use of more appropriateroad rehabilitation and maintenance technologies, and improve the quality of road works.Taken together, this is a sustainable package as over time it will increasingly be the moreeconomically justified investments that are completed, and the appropriate conditions foradequate maintenance of the network fostered. Implementation of this project willtherefore lead to more kabupatens practicing better road maintenance and managementtechniques.

CHAPTER V

ECONOMIC EVALUATION

A. SUBPROJECTS SELECTION

5.1 The KR5 project kabupatens completed planning studies of about 350 roadlinks, totalling 2,500 km, that comprise the 1994/95 program. The methodologies andprocedures used in selecting subprojects are the same as those used for KR3 and KREI.In accordance with these established methodologies and procedures, roadworks programswill be prepared annually by kabupaten governments and coincident with GOI's budgetpreparation process.

5.2 These selection methodologies and procedures are sound. The proceduresare laid out well enough for satisfactory and consistent application by kabupaten staff butretain analytical rigor in ensuring that selected projects are economically justified. Mostkabupatens have been able to follow the procedures and complete physical surveys on asubstantial part of their networks and prepare annual investment programs to a generallyacceptable standard, though they have been supplemented by Consultants mainly to monitorthe process and audit the data.

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B. BENEFr AND BENEFICIARIES

5.3 The main sources of benefit from improvement of roads are savings invehicle operating costs (VOC). VOC estimates used for KR5 kabupatens are summarizedin Table 5.1.

5.4 Road roughness is assessed by a combination of visual road surveys, photointerpretation and speed surveys. Project roads are expected to attain after betterment, andwith planned maintenance, an average lifetime roughness of IRI 8 for seal and 10 forgravel. VOC reductions assumed from improvements of poor gravel/earth or stone roadswould typically be in the range of 40-60 percent. Passenger time savings representtypically about 15 percent of benefits for motorized traffic. Values are based on unskilledwage rates reported by DPUK.

5.5 The project would also continue to support GOI's decentralization effortsby strengthening the in-house planning and implementation capacities of the kabupatens,and of central and provincial agencies to assist and supervise kabupatens. The projectwill, in particular, (a) reinforce the planning-programming-budgeting system that has beeninstalled after RR2; (b) introduce measures to improve construction quality; and(c) institute road maintenance on a sustainable basis.

C. ECONOMIC RETURNS AND SENSITIV TESTS

5.6 The Major Works Component. The overall ERR for the project pool for1994/95 implementation is 20 percent with an average NPV/km of Rp 63 million. Abouta third of the projects by length have an ERR above 20 percent; a further quarter haveERRs between 15 percent and 20 percent.

5.7 Sensitivity analysis illustrates the effect of raising costs or reducing benefitsby 20 percent or of excluding from the analysis specified benefit components. Theprojects are fairly robust as even under the extreme scenario the ERRs remain around10 percent. The results are summarized in Tables 5.2 - 5.3.

5.8 The Maintenance Component. An analysis of the KR5 maintenanceprogram has been undertaken, identifying the cost and benefit streams starting with IBRD-funded works in the three project years and assuming continuation of improvedmaintenance practices of the same roads throughout a ten-year analysis period (Table 5.4).Target kilometers and expenditures are as proposed for the project, with a progressivebuildup of maintenance coverage from 50 percent of needs in the first year to 90 percentin the third. The entire project network is assumed to continue to receive routinemaintenance. Periodic overlays and regraveling are assumed to be undertaken annuallyon a fifth and a third of the project network, respectively, in accordance with current needsassumptions. The cost stream includes equipment and supervision costs apportionedbetween maintenance and betterment in accordance with the civil works value. The trafficgrowth rate is expected to remain at 7.5 percent per annum.

- 27 -

5.9 The maintenance program is assumed to keep the project network in goodto fair condition throughout the analysis period. Without the program, it is assumed thatmaintenance expenditures would remain at their present low level representing only about25 percent of needs and channeled mainly to periodic rehabilitation works. In thissituation roads would tend to deteriorate rapidly to a poor average state of IRI 15 for sealand IRI 20 for gravel. This would imply average VOC reductions of about 30 percentattributable to the maintenance program.

5.10 Traffic levels on the maintainable part of the network are generally higherthan those existing or predicted for betterment projects. They are estimated on the basisof the existing planning study evidence to average almost 200 ADT for sealed roads and100 ADT for gravel roads. The resulting maintenance program ERR is 49 percent. TheERR would fall to 24 percent with a reduction in benefits of 25 percent, resulting, forexample, from lower traffic levels or a more limited change in road state and associatedVOC savings.

D. RISKS

5.11 The main project risks are related to the implementation of the planningprocedures, the funding of maintenance and construction quality. Based on experiencefrom the ongoing projects, the conversion of kabupatens to a maintenance first approachis a gradual process. Also, due to limited institutional capacity, the implementation of theplanning procedures is inconsistent in some kabupatens and road investments are notproperly prioritized. To reduce the risk, Bappenas would continue to play a strongcoordinating role and project implementation reviews would be held at regular intervals.As for maintenance, some project kabupatens may be reluctant to increase their allocationsof funds for maintenance as much as needed to fulfil project targets. In response to this,Bappenas has agreed to the use of Inpres funds (BPJD II) for road maintenance if neededto meet a kabupaten's target. Also, project maintenance targets have been carefullydesigned and annual eligibility conditions established for individual kabupatens. Theincreased supervision under the project is expected to lead to better quality works bycontractors.

- 28 -

CHAPTER VI

AGREEMENTS REACHED AND RECOMMENDATION

6.1 Agreement was reached with the Borrower during negotiations that it will:

(a) cause each project kabupaten to (i) prepare its annual road maintenanceprogram for the fiscal years 1995/96 and 1996/97 in accordance withmethodology and criteria agreed to by the Bank; (ii) submit this program forthe Bank's review and comments by December 31, 1994 and December 31,1995, respectively; and (iii) finalize and implement this program taking intoaccount the comments, if any, by the Bank (para. 4.5);

(b) cause each project kabupaten to (i) prepare its annual rehabilitation andimprovement works program in respect of the project for the fiscal years1995/96 and 1996/97 in accordance with methodology and criteria agreedto by the Bank; (ii) submit this program for the Bank's review andcomments by December 31, 1994 and December 31, 1995, respectively;and (iii) finalize and implement this program taking into account thecomments, if any, by the Bank (para. 4.7);

(c) select subprojects for the maintenance and rehabilitation/ improvementcomponents of the project in accordance with criteria and procedures(including those for the environmental assessment and public consultation)satisfactory to the Bank (paras. 4.5, 4.6, 4.7 and 4.37);

(d) prepare action plans for workshops by September 15, 1994, and alsoprovide adequate O&M funding and charge economic hire rates by January15, 1995; (para. 4.11);

(e) maintain the project secretariat, established in Bappenas for the duration ofthe project; (para. 4.18);

(f) maintain the Project Implementation Unit, established in DGH, to assist,and monitor progress in project implementation including preparation ofannual programs, procurement, physical achievements, and expenditures(para. 4.19);

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(g) carry out a program of quality assurance, including technical audits of thecivil works implementation and costs, and inform the Bank periodically ofthe results (para. 4.20);

(h) package civil works contracts in accordance with criteria satisfactory to theBank (para. 4.25);

(i) protect the rights of indigenous peoples, and extend the scope of theindependent monitoring team (para. 4.36);

6.2 Prior to the initial disbursement for works completed under the projectsrehabilitation component, GOI will provide (a) evidence that the consultants forconstruction supervision (FCI) have been engaged, and (b) adequate vehicles have beenprovided for kabupaten staff supervising the project (para 4.19). In addition, thesatisfactory preparation and implementation of maintenance programs will be a conditionof each kabupaten's eligibility for reimbursements under the project's rehabilitationcomponent (para. 4.5).

6.3 Based on the above agreements, the project is suitable for a Bank loan ofUS$101.5 million equivalent to the Republic of Indonesia for 20 years, including 5 yearsof grace, at the Bank's standard variable interest rate.

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

TECINICAL ASSISTANCE

Status Stndard Contract Responsibility

List of TA Implement-4 Estated Cost of TOR (Date) Short List (Date) Prepard for Supervision

Contc/Activity Purpose/Objective Agencis Total /s Person/Month Prepared Expected Prepared Expected (Y/N) RSI HQ

(Uss'oOw)

A. Lnplantntion Suppost1. Field Consubts for Assitance for design Kabupatens, 240F

inmpnptao (2 team) and supervision Bins Marga 12,400 6,600L 12/93 12/93 Y X X

B. I titutional Capme ty Building1. Centl Technical Cons/b . Incttutional, envir- Bins Mama, 120F

mtntl technical Bangda 3,350 340L 10/92 Y X

development, andquality assuance

2. Environmental Consulbant /c Continue insitutio- Bins Marga, 50F

nal strengthening Kabupten 1,400 i1OL 10/93 08/94 N X X

3. Environmental Consulant Continue ocio-econ. Universities,

(Socisl Aspects) /c monitoring. Bina Mrga. 40F

Strengthen conaua- Bangda 1,600 240L 10/93 05/94 N X X

tion techniques

Totals 12.850 76810

F = Foreign ProfesinalL = Local Profesional

/a Edet_ are ant of oont _aies.

/b Comanlao dd or to be awred under KREi. Esthzmted cost resrntb KRS contribution.

/b FCosedeos undor to XREI dedR5 projerK. EAinlmed cost Kv R5 co_tribon.

ANNEX 2FIFMI KABUPAITEN ROADS PROJECT

Project Inplementation Schedule

93 _ 1994 199 199 19 97 | 8 1999 | 2000ID Name Start 191 FIFTH KABUPATEN ROADS PROJECT 8/15/932 Bank Project Processing 10/11/933 Appraisal 1/19

4 Negotiations 4/11/94

5 Board5179

6 Loan Signing6179

7 Loan Effectivea 7/1/948 GOI Project Steart-Up Activities 119 p

9 Approval of Standard Bidding Document 1/1/94

o10 Appoint Project Coordinator 3/1/9411 Project Launch Workshop 5/15/9412 Project Implementation8159 P

13 Component A. Road Network Improvement 8/1519314 (a) Road Works 8/15/9315 Selection of Consultants 1120/94

34 Identification of Sub-project (94/95) 8/1519340 Design and tendering document preparation( 94/951 11/8/93 IF:45 Release of SPABP Budget(94/95) 6/1/94

46 Tendering for works (94/95) 211/9455 Construction of Works (94/951 6/28/9460 Supervision of 194/95) by Consultants /28/94

64 Review of 194/951 Maintenance Works 4/1195

P'rojm Fifth Kabupaten Roads Projwc Crilical Progress Summary Date: 4/13194 |Noncritical _ _ Milestone *Rolled UpO

Page: XIr3

ANNEX 2FIFTH KABUPATEN ROADS PROJECT

Project Implementation Schcdule

93 1994 1995 1996 1997 1998 1999 2000 ID Name Start68 Identification of Sub-project 195196) 7118194

74 Design and tendering document preparationl 96/961 10/10/94 I

79 Release of SPABP Budget (95/96) 5/1/95

80 Tendating for works 195/96) 1/7/95

89 ConstructIon of Work. 195/96) 5/27/95

94 Supervision of (95/96) by Consultants 5/27/95

98 Review of 95/96 Maintenance Works 3/1/96

102 Identification of Sub-project (96/97) 6/15/95

108 Design and tendeting document preparationl 96197) 9/10/95

113 Release of SPABP Budget (96/97) 4/15/96

114 Tendering for works 196/971 12/1/95

123 Construcdon ot Works 196/97) 4/26/96

128 Supervision of 196/971 by Consultants 4/26196

132 (b)Workahops and Labs 211/94

133 Repairs and/or upgrade to existing workshops & Labs 3/1/94

138 Construcdon of 4 new workshops 31I94

148 Construction of 5 Now Laboratories 311194

158 Equipment for Workshop & Labs. 211194

159 Tender Process 21194

167 Delivery of Goods 8/30/94

168 lc1Equlpment for Road Construction and Maintenance 41194

169 Improving Workshop Management & fleet operatlon 411/94

Ptoje: FdifthKabupaten Road Prjea| Critical _ Pagre: Sumnu2yDate:U413194 |NontWitc l Miletotic Rolled UpO-t

* h~~~~Pge: 2X

ANNEX 211FIH KABUPATEN ROADS PROJECr

Project Implementation Schedule

93 1994 1995 1996 1997 1998 1999 2000ID Name Start _

170 Transfer of ownership to DPUK 4/1/94

171 Provision of adequate funding for O/M 4/1/94

172 Charging Economic Hire Rates 4/1/94

173 Action Plan for autonomous Plant -hire unit. 4/1/94

174 Identification of Equipment 7/1/94

179 Tender Process 8/20/94

187 Delivery of Goods 1/9/95

188 Component B. Institutional & Technical Development 4/1/94 _ _ _ U _ _ _ _ .189 (leTech./Institutional Capecity Building 9/20/96

190 On-going CTC contract terrminatese1l9

191 Prepare TOR for Addenda to the ongoing CTC services 9/20/95

192 Confirmation of DGH 1014195

193 Bank review and Approval 10118

194 On going CTC services continues 1111/95

195 (blEnvironment Inctitutional Capacity BuDiding 4/1/94 _ _196 Selection of Consultants 4/11/94

215 TA Services 309

216 Supervision and Reporting 61/94

217 Disbursements 6/l/94 V V/11 1 W l

218 Reporting on 3-year Program, Budget, Action Plan 6/15/94

219 Annual Review 12/15194

223 Mid term Review 6/15/95

Projett Flflh labupaten Roads Projed | Crilic-al ~9Pfogress Summary Do=t 4/113/94 Noncritical Milestone *-Rolled Up O

Page: 3X

ANNEX 2FWIl KABUPATEN ROADS PROJECT

Project ImplemetaUtion Schedule

93N 1994 _ 1996 _ 1996 1997 1998 1999 2000

224 Supervsion 6115194 " '

239 Project Completion 12/31/98

240 Project Closure 6/30/99

241 Project Completion Reporting 9/30/99

wLa

Pnojea: FifthKabupaten Roads Ptje| Critical _-P'rogg Suaag 4

Dat U4/13194 Nonk Miye 4n Rolled UpO|

- 36 - ANNEX 3

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

REPORTING REQunREMENTS

1. Various types of reports will be generated under the project to meet GOI's reportingrequirements and feed into its monitoring system:

- monthly reports produced by the Field Consultants for Implementation (FCIs), and theCentral Technical Consultants (CTC), providing details on the project, the contracts,implementation progress, and payments.

- quarterly reports prepared by the same consultants and giving, in addition to a progresssummary, an evaluation of problems encountered and proposed solutions.

2. The Bank's reporting requirements will be a subset of the above information, in the formof a quarterly package to be assembled by the Project Implementation Unit (PIU) and including: (i)the CTC quarterly report prepared in accordance with the sub-paras below, and (ii) the other quarterlyreports as annexes to the CTC's one. This package should be sent to the Bank by the last day of themonth following the concerned quarter. The specific requirements are as follows:

(a) Each report should not only record progress in project implementation, but also identifyemerging problems and suggest solutions to achieve project objectives. Special attentionshould be devoted to the aspects of construction quality.

(b) The CTC report should cover all aspects of project components. It should consolidateand summarize the FCIs and Training reports, and elaborate more on the other aspects:engineering, planning, environmnent, and special studies. The information should begiven in such detail as to permit an assessment of the performance of each kabupaten.

(c) The basic data for the project, contracts, implementation progress and payments detailsare the same as the ones used for reporting on on-going projects.

(d) The consolidation of the FCIs reports will be done easily if all consultants are using thesame formats. It is proposed that the formats defined under KR3 and KREI become thenorm. This will facilitate the timely release of the periodic reports.

3. In addition to the above reporting requirements, a set of performance indicators has beendefined as follows:

- amount budgeted for roadworks annually broken down into (i) construc-tion/improvementand (ii) maintenance, per kabupaten and per province;

- 37 - ANNEX 3

- amount budgeted annually for operation and maintenance of kabupaten equipment andworkshops;

- date of release of annual budget allocations for maintenance;

- number of training packages developed;

- annual number of trainees, training sessions, and trainee days under the training program.

These indicators, together with the physical achievements compared to the targets, will be monitoredthroughout project supervision to allow for a periodic assessment of project performance.

- 38 - ANNEX 4

INDONESIA

IFlTH KABUPATEN ROADS PROJECT

SUPERVISION PLAN

1. Bank Supervision Input into Key Activities

(a) The staff input indicated in the table below is in addition to regular supervision needsfor the review of progress reports, procurement actions, correspondence, etc. (estimatedfor this project to require four staff weeks per year).

(b) Each of the seven provinces should be visited at least once during project supervisionand two or three selected provinces should be visited twice. Given the geographicdispersion of the provinces, supervision missions should focus in each field visit on onlya few kabupatens which would be deemed typical because of their geographicalcharacteristics and their performance, as shown by the progress reports.

(c) Staff from the Resident Mission will be involved to a large extent in the supervision ofthis project, in particular (i) in the EA reviews and (ii) in the random ex-post reviewof the large amount of LCB-procured civil works contracts and SOE documentation.

(d) Most of GOI's work for improving systems and procedures will be carried out inJakarta, and will therefore be supervised there by Bank missions. Close coordinationwith KR3 supervision activities is warranted, in view of the numerous commonobjectives of both projects.

2. Borrower's Contribution to Supervision

(a) A Project Launch Workshop is to be organized by GOI. In relation with the advancecontracting authorized under this project, this Workshop should be held early enoughto coincide with detailed preparation of the first year program, i.e. around March 1993.

(b) Project coordination will be the responsibility of the Project Secretariat (PS). Inparticular the PS will be responsible for coordinating arrangements for Bank supervisionmissions. The Project Implementation Unit will be responsible for providing informationrequired by missions.

(c) Review meetings with the participation of the various project agencies will be heldnormally in February of each year, to discuss the previous year's performance and thecurrent year program. A mid-term Project Implementation Review would be held inSeptember/October 1994.

(d) Progress reports are to be submitted quarterly, and their content should meet therequirements set forth in Annex 8.

- 39 - ANNEX 4

BANK SUPERVISION INPUT INTO KEY ACTIVITIES

Dates Skill Staff Input(month/year) Activity Needs (staff-weeks)

06-07/93 Supervision Mission(to review initial project arrangements, HE, TE 3first year works contracts, andbriefing of consultants)

09-10/93 Supervision mission HE, TE 4(to review start-up of civil works ENVand consultancy services, organizationalarrangements, progress in planningand environmental studies for 1994/95program)

11-12/93 Assist in preparation of 1994/95 HE, TE) 2program on the basis of experience ENV, TR)of 1993/94 program.

01-02/94 Supervision Mission HE, TE) 8(to discuss 1994/95 program proposals, ENV, TR)evaluation of performance of kabupatensin carrying out maintenance, environ-mental screening and EIAs)

05-06/94 Supervision Mission HE, TE 4(to review, inter alia, second yearworks contracts and progress in programof studies)

09-10/94 Supervision Mission HE, TE) 8(mid-term PIR to review all aspects of ENV, TR)the project, especially performanceunder loan conditions, adequacy of projectorganizational arrangements, quality ofconsultancy services and impact of theproject on the performance of road agencies)

11-12/94 Assist in preparation of 1995/96 id. 2program

1995 Three Supervision Missions id. 16

1996 Three Supervision Missions id. 12

1997 Two Supervision Missions id. 8

1998 One Supervision Mission HE, TE 5(preparation of PCR)

HE=Highway Engineering, TE=Transport Economics, ENV=Environment, TR=Training

-40- ANNEX S

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

DOCUMENTs AND DATA IN THE PROJEcT FILE

1. General Reports and Studies

Key Issues, Current Practices and Guidelines for Community Participation, PTIntersys, October 1993.

2. Project related documents

(a) First year civil works program:-Draft Maintenace Program (P1)-Major works longlist (P2)-Major works shortlist (p3.1).

(b) Environmental Assessment Report, Vols. 1 - 4, Feburary 1993.

(c) Kabupaten Roads Program: environmental and social aspects, January 1994.

(d) Estimated Requirements for Roadworks Equipment, Workshops and Laboratories,PMU, October 1993.

(e) Note on Revised Assessment of Maintenance Needs and Proposed Targets, PMU,October 31, 1993.

(f) Review of civil works unit costs in 1993 and KR5 cost levels (November 1993).

(g) Notes on the economic analysis of the project.

(h) Technical guidelines for the preparation and implementation of kabupaten road worksand for the management of equipment, GOI, 1991 and 1992.

(i) Detailed project implementation schedule (January 1994).

3. Terms of Reference

(a) Central Technical Consultants, July, 1992.

(b) Field Consultants for Implementation, January 1994.

(c) Kabupaten Roads Quality Assurance, February 1994.

(d) Social and Economic Studies of Indigenous Peoples, February 1994.

- 41 - Table 1.1

INDONESIA

FIFrH KABUPATEN ROADS PROJECT

STATISTICAL OVERVIEW

Kabusaten Roads (1991) Popu- 1990 93194Kabu- 4-wheel Good & Fair Surface type lation Land GRDP/cap Rds.Budgetpatens vehicles Length condition 1 Sealed Gravel (1990) Aea LULvable am index Rp bn.(No.) (1990) km km % km km '000 1,000 km2 % Pop/km2

KR5Riau 5 41,845 5,780 1,608 28 827 1,399 2,776 98.6 53 53 367 50C. Kalimantan 5 8,129 2,889 447 15 310 254 1,283 153.6 44 19 90 35E Kalimantan 4 43,464 2,400 1,101 46 373 1,214 1,124 197.2 31 18 527 41S. Kalimantan 9 36,187 3,897 1,622 42 917 1,255 2,116 37.5 72 78 82 35Maluku 4 9,393 2,390 1,622 68 922 968 1,575 78.0 14 144 73 28

Total KRS 27 139,018 17,356 6,400 37 3,349 5,090 8,874 564.9 39 40 242 189

KREISubwesi 26 135,229 22,888 9,743 43 5,993 6,461 9,076 174.2 29 180 55 171Nuss Tenggara 16 37,966 10,513 3,774 36 2,104 3,592 5,898 58.2 30 338 34 88Irbanlaya 9 15,978 3,071 772 25 603 361 1,629 414.8 23 17 114 77

Totl KREI 51 189,173 36,472 14,289 39 8,700 10,414 16,603 647.2 26 95 53 336

KR3Sumatra

(excl. Riau) 47 491,149 49,003 20,918 43 15,148 13,436 27,199 376.7 51 142 99 383W. Java 20 340,778 15,180 9,402 62 9,097 4,436 32,676 46.5 76 925 81 183W. Kalimantan 6 22,049 6,924 1,167 17 748 594 2,838 147.5 44 44 77 59

Total KR3 73 853,976 71,107 31,487 44 24,993 18,466 62,713 570.7 S3 207 91 625

ADBCentral Java 29 268,403 15,315 10,885 71 9,810 3,792 26,070 34.1 90 849 69 151East ava 29 408,431 17,042 11,844 69 10,461 4,204 28,352 48.2 81 727 81 177Yogyakarta 4 37,713 3,178 1,916 60 1,424 833 2,501 3.1 90 884 59 20Bali 8 57,514 3,475 2,416 70 2,432 452 2,777 5.6 72 685 99 23

Total ADB 70 772,061 39,010 27,061 69 24,127 9,281 59,700 91.1 84 780 89 371

USAIDS. Sulawesi 7 /b 3,340 1,848 55 1,182 1,399 1,951 11.9 29 566 /b /bNusa Tenggara 2 /b 1,592 300 19 84 397 739 7.7 30 319 lb b

Total USAID 9 - 4,932 2,149 44 1,266 1,795 2,690 19.6 29 473 - -

OtherEast Timor 13 6,977 2,328 539 23 419 246 748 14.9 21 239 33 28

Kotamadyas:KR5 /b 1,619 840 52 868 101 2,126 b lb k k KREI /b 1,429 1,009 71 933 106 1,484 k k k &b)R3 /b 4,938 3,464 70 3,563 636 9,039 k h k hb k

ADB lb 2,075 1,684 81 1,851 68 6,994 /b /b lb &Jakarta 844,851 - - - - - 8,223 0.7 - - 253 33

Total Indoesia 243 2,806,056 181,266 88,922 49 70,068 46,203 179,193 1,909 41 231 100 1,583

/a As reported in Bins Marga inventory, excluding earth roads.lb Included in provincial data.

- 42 - Table 1.2

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

GROSS REGIONAL DOMESTIC PRoDucT PER CAPITA 1990(Rp 000, current prices)

Region/Province Oil Non-oil Total Index(Ind=100)

Riau 3,238 819 4,058 367C. Kalimantan 0 998 998 90E. Kalimantan 3,438 2,383 5,821 527S. Kalimantan 16 887 902 82Maluku 6 795 802 73

Subtotal KR5 1,556 1,119 2,675 242

N. Sulawesi 0 611 611 55C. Sulawesi 0 580 580 52S. Sulawesi 0 610 610 55S.E. Sulawesi 0 616 616 56NTB 0 385 385 35NTT 0 361 361 33Irian Jaya 278 983 1,261 114

Subtotal KREI 22 562 584 53

East Timor 0 364 364 33

Sumatra (excl.Riau) 234 864 1,098 99Jakarta 0 2,791 2,791 253Java/Bali (excl.Jkt) 55 803 858 78W. Kalimantan 0 854 854 77

INDONESIA 168 937 1,105 100

Source: BPS.

- 43 - Table 1.3

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

POPULATION, LAND AREA, AND INDICATORS OF POPULATION DENSITy

Population PopulationEstimated density on Estimated density on

Population Population % of area land under % of area cultivable1990 Land area density under 40% 40% slope cultivable area

Region (No. '000) (sq khn) (no/sq km) slope La (no/sq km) lb (no/sq hin)

Riau 3,281 98,597 33 89 37 53 63C. Kalimantan 1,395 153,604 9 76 12 44 20E. Kalimantan 1,875 197,210 10 49 19 31 30S. Kalimantan 2,596 37,490 69 72 96 72 97Maluku 1,851 78,019 24 43 55 14 173

Subtotal KR5 10,999 564,920 19 64 30 39 50

N. Sulawesi 2,478 26,555 93 22 424 34 273C. Sulawesi 1,703 60,329 28 18 157 17 165S. Sulawesi 6,980 62,451 112 33 339 39 289S.E. Sulawesi 1,349 36,810 37 36 102 31 120NTB 3,368 19,537 172 41 421 34 507NTT 3,268 46,325 71 55 128 28 253Irian Jaya 1,629 414,800 4 57 7 23 17KREI Provinces 20,776 666,807 31 48 65 26 121

Subtotal E. Indonesia 23,375 759,804 31 48 64 24 126

East Timor 747 14,978 50 56 89 21 235Sumatra (excl. Riau) 33,139 376,712 88 63 140 50 174Jakarta 8,222 656 12,534 100 12,534 n.a. n.a.Java/Bali 102,073 137,539 742 83 894 81/ 890W. Kalimantan 3,235 147,530 22 68 32 53 41

INDONESIA 179,194 1,909,142 94 60 157 41 231

/a RePPProT data in Dick J., Forest Land Use Zonation and Deforestation, Indonesia, 1991./b Based on RePPProT recommendations for TGHK' forest function areas for convertible forest and unclssified

land (includes existing uncultivated areas)./c Existing cultivated areas from BPS and estimate of cultivable area not in use from National Urban

Development Strategy (NUDS).

Source: BPS, RePPProT, NUDS.

- 44 - Table 1.4

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

LAND USE BY REGION(square kilometers)

Bush/scrub Shifting Culti- Tree Settle- Misc/noRegion/Province Forest grassland cult. vated La crops L ment data IS Total

Riau 59,365 14,922 4,905 4,561 5,566 1,494 7,784 98,597C. Kalimantan 116,144 7,759 24,860 2,270 418 17 2,136 153,604E. Kaimantan 178,751 6,740 6,520 1,346 522 363 2,968 197,210S. Kalimantan 17,959 11,111 2,369 4,255 876 608 311 37,489Maluku 63,480 7,076 2,164 666 183 21 4,429 78,019

Subtotal KRS 435,699 47,608 40,818 13,098 7,565 2,503 17,628 564,919

N. Sulawesi 15,536 2,972 352 2,149 3,054 535 1,957 26,555C. Sulawesi 43,591 6,616 1,569 2,489 1,677 431 3,956 60,329S. Sulawesi 28,792 15,712 2,161 9,389 2,889 1,462 2,046 62,451S.E. Sulawesi 24,775 7,628 1,187 1,862 198 628 532 36,810NTB 9,326 4,231 636 3,621 328 930 455 19,527NTr 9,794 25,147 3,235 3,823 349 724 3,256 46,328Irian Jaya 349,583 34,911 12,873 782 145 794 14,712 414,800

Subtotal KREIprovinces 481,397 98,217 22,013 24,115 8,640 5,504 26,914 666,800

Sumatra (excl. Riau) 173,870 89,421 29,381 34,070 29,938 12,098 7,939 376,717Java/Bali 13,459 16,976 2,943 56,734 26,106 17,974 4,012 138,204W. Kalimantan 87,006 31,861 20,847 1,464 4,374 300 1,683 147,535

Subtotal 274,335 138,258 59,171 92,268 60,418 30,372 13,634 C62,456

East Timor 5,574 7,419 986 398 259 36 206 14,878

NDONESIA 1,197,005 291,502 116,988 129,879 76,882 38,415 58,382 1,909,053

La Wetland and dryland crops excluding tree crops.Lb Including agro-forestry and reforestation./c Including unvegotated land, water and fishponds.

Source: RePPProT Reports based mainly on 1982/83 aerial photography.

- 45 - Table 1.5

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

SUMMARY OF BROAD LAND USE BY REGION(% of total area)

Cultivated/ OtherForest Settled La Uses Lb Total

Sumatra 49 18 32 100Java/Bali 10 73 17 100Kalimantan 75 3 22 100

Sulawesi 61 14 25 100Nusa Tenggara 29 15 56 100Irian Jaya 84 1 15 100Maluku/East Timor 74 2 24 100

Eastern Indonesia 72 5 22 100

Indonesia 63 13 24 100

/a Includes wetland and dryland crops, tree crops and settlement areas.Ib Includes bush, grassland, shifting cultivation and miscellaneous uses.

Source: RePPProT Reports.

- 46 - Table 1.6

INDONESIA

FWFTH KABUPATEN ROADS PROJECT

SUMMARY OF PRESENT FoREsT FuNcUXoN AREAS(sq km)

Pro- Ltd. Normal Con-Nature tection Prod. Prod. version Unclass-

Province/ Reserve Forest Forest Forest Forest ifed L TotalRegion (PPA/HSA) (HL) (HPT) (HPBIHP) (HPK)

Sumatra 41,414 64,121 66,576 69,319 86,760 146,929 475,119Java/Bali n.a. n.a. n.a. n.a. n.a. n.a. n.a.Kalimantan 36,386 65,471 118,266 132,246 115,316 68,591 537,276

Sulawesi 14,126 43,202 45,877 15,222 16,241 52,177 185,845Nusa Tenggara lb 3,499 16,372 7,913 5,527 17,144 30,315 80,770Irian Jaya 73,700 105,000 46,300 80,300 97,600 11,900 414,800

Krei Provinces lb 91,325 164,574 100,090 100,049 130,986 94,392 681,415

Maluku 4,534 13,309 16,426 8,524 34,638 504 77,935

Eastern Idonesia 95,859 177,883 116,516 108,573 165,623 24,896 759,350

Indonesia 173,659 307,475 301,358 310,123 367,699 310,416 1,770,745

/a Includes 5,617 sq km state free forest (HNB) in Sumatra./b Includes Timor Timur.

Note: Includes some designated forest function areas not actually under forest.

Source: RePPProT Reports.

- 47 - Table 2.1

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ROAD NETWORK LENGTH BY ROAD CLASS AND PROVINCE GROUP(kilometers)

Eastern Total forRoad Class Sumatra Java/ Kalbar Riau Kalteng Kalsel Kaltim Maluku Total Indonesia Indonesia

(ex. Riau) Bali KR5 (ex Maluku)

National: Arterial 4,528 3,094 615 373 250 567 498 35 1,723 4,467 14,427Collector 1,047 223 0 477 140 0 0 358 975 1,046 3,291Local 0 0 0 0 0 0 0 0 0 0 0

Subtotal 5,575 3,317 615 850 390 567 498 393 2,698 5,513 17,718

Provincial: Arterial 120 11 0 0 15 0 0 22 37 367 535Provincial 8,970 7,083 1,655 1,253 786 540 773 1,073 4,425 9,534 31,667Local 511 445 0 0 0 0 100 181 281 626 1,863

Subtotal 9,601 7,539 1,655 1,253 801 540 873 1,276 4,743 10,527 34,065

Toll Roads 35 339 0 0 0 0 0 0 0 0 374

KabupatenRoads /a 52,984 57,019 7,126 6,408 3,103 4,323 2,619 2,522 18,975 45,162 181,265

Urbanroads 4,826 14,001 423 511 302 346 431 579 2,169 4,012 25,431

Total 73,021 82,215 9,819 9,022 4,596 5,776 4,421 4,770 28,585 65,214 258,853

/a Including kotamadya roads.

Source: DGH: 1991/92, excluding transmigration roads.

- 48 - Table 2.2

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ROAD PAVEMENT BY ROAD CLASS AND PROVINCE GROUP(kilometers)

Sumatra Java/ Total Eastern Total forRoad Class (ex. Riau) Bali Kalbar Riau Kalteng Kalsel Kaltim Maluku RR5 Indonesia Indonesia

National: sealed 5,353 3,318 579 594 231 567 419 189 2,000 4,731 15,981unsealed 222 0 36 256 159 0 79 204 698 785 1,741

Total 5,575 3,318 615 850 390 567 498 393 2,698 5,516 17,722

Provincial: sealed 8,123 7,461 776 699 351 406 299 824 2,579 6,571 25,510unsealed 1,479 77 878 554 450 135 574 451 2,164 3,955 8,552

Total 9,602 7,538 1,654 1,253 801 541 873 1,275 4,743 10,526 34,062

Kabupaten: sealed 17,901 35,692 940 1,109 451 1,100 509 1,630 4,800 11,188 70,067unsealed 34,993 21,327 6,186 5,299 2,652 3,223 2,111 892 14,175 33,974 111,199

Total 52,894 57,019 7,126 6,408 3,103 4,323 2,619 2,522 18,975 45,162 181,266

Total sealed 31,377 46,471 2,295 2,402 1,033 2,073 1,227 2,643 9,379 22,490 111,558unsealed 36,694 21,404 7,100 6,109 3,261 3,358 2,764 1,547 17,037 38,714 121,492

Total 68,071 67,875 9,395 8,511 4,294 5,431 3,990 4,190 26,416 61,204 233,050

Source: DGH: 1991/92.

Table 2.3INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ROAD PAVEMENT BY ROAD CLASS AND PROVINCE GROUP(% of the network in each category)

Sumnatra Java/ Total Eastern Total forRoad Class (ex. Riau) Bali Kalbar Riau Kalteng Kalsel Kaltim Maluku RR5 Indonesia Indonesia

National: sealed 96 100 94 70 59 100 84 48 74 86 90unsealed 4 0 6 30 41 0 16 52 26 14 10

Provincial: sealed 85 97 47 56 44 75 34 65 54 62 75unsealed 15 3 53 44 56 25 66 35 46 38 25

Kabupaten: sealed 34 64 13 17 15 25 19 65 25 25 39unsealed 66 36 87 83 85 75 81 35 75 75 61

Total: sealed 46 68 24 28 24 38 31 63 36 37 48unsealed 54 32 76 72 76 62 69 37 64 86 52

Source: DGH 1991/92.

- 49 - Table 2.4

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

CONDITION OF THE NATIONAL, PROVINCIAL AND KABUPATEN ROAD NETWORKS (1990)

Island Group: Percentage of the Road Network in Indicated Condition

National and Provincial RoadsGood Fair Poor Bad

IRI IRI IRI IRI<6 6-8 8-12 > 12

Sumatra 50 10 22 18Java/Bali 65 19 14 2Kalimantan 32 8 16 44Other Islands (E. Indonesia) 32 14 28 26

Indonesia 45 13 22 20

Kabupaten RoadsGood Fair Poor Bad

Indonesia 27 19 33 21

Source: DGH, 1990 kabupaten roads inventory (adjusted on basis of planning surveys). 1991national and provincial roads condition survey.

-50 - Table 2.5

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

1991 NATIONWIDE KABUPATEN ROAD INVENTORYSUM OF ROAD LENGTHS (KM) BY SURFACE TYPE

FOR IBRD PROJECT KABUPATEN GROUPS

Project Kab Sealed S% Gravel G% Earth E% Total

KR3 73 24,993 35 18,466 26 27,648 39 71,107KREI 51 8,700 24 10,414 28 17,358 48 36,472KR5 27 3,349 19 5,091 29 8,916 51 17,356

Total 151 37,042 30 33,971 7 53.922 43 124.935

1991 NATIONWIDE KABUPATEN ROAD INVENTORYSUM OF ROAD LENGTHS (KM) BY SURFACE CONDITION

FOR IBRD PROJECT KABUPATEN GROUPS

Project Kab Good/Fair % Poor/Bad % Earth % Total

KR3 73 31,487 44 11,972 17 27,648 39 71,107KREI 51 14,289 39 4,825 13 17,358 48 36,472KR5 27 6,400 37 2,040 12 8,916 51 17,356

Total 151 524176 2 18837 15 3,22 43 124.935

Source: DGH 1991, excluding kotamadyas.

- 51 - Table 2.6

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

PRoJECT KABUPATENS AND THEIR ROAD NETWORKS

Length of Roads According to Condition % of total(kilometers) roads in

SEAL SEAL GRAVEL GRAVEL good/fairGood/ Poor/ Good/ Poor/ EARTH condition

Kabupaten fair bad fair bad Total TOTAL seal gravel

Riau:Indragiri Hulu 162 31 242 177 723 1,335 12 18Indragiri Hilir 17 23 3 5 313 361 5 1Kepuluauan Riau 298 29 31 61 1,017 1,435 21 2Kampar 125 47 617 238 814 1,841 7 34Bengkalis 92 4 22 4 687 810 11 3

Total 693 134 915 484 3,553 5,780 12 16

Kalteng:Kotawaringan Barat 130 5 53 7 474 669 19 8Kotawaringan Timur 11 0 20 0 490 521 2 4Kapuas 46 1 21 68 879 1,014 5 2Barito Selatan 65 9 14 5 296 379 17 4Barito Utara 42 1 46 22 197 306 14 15

Total 294 16 153 101 2,325 2,889 10 5

Kalsel:Tanah Laut 95 9 47 40 285 475 20 10Kota Baru 63 7 51 5 278 403 16 13Banjar 119 16 43 17 222 417 29 10Barito Kuala 88 0 23 14 296 420 21 5Tapin 134 9 60 5 142 350 38 17Hulu Sei Selatan 95 21 105 135 108 464 20 23Hulu Sei Tengah 63 41 172 95 47 414 15 42Hulu Sei Utara 72 8 70 96 182 428 17 16Tabalung 73 4 251 28 171 527 14 48

Total 801 116 821 434 1,726 3,897 21 21

Kaltim:Pasir 71 6 179 130 158 543 13 33Kutai 135 53 179 255 71 694 20 26Berau 27 4 291 21 85 427 6 68Bulongan 72 7 147 12 500 737 10 20

Total 304 69 797 417 814 2,400 13 33

Maluku:M. Tenggara 163 37 60 38 183 481 34 12M. Tengah 264 95 479 60 102 1,000 26 48Halmahera Tengah 128 7 157 1 76 369 35 42M. Utara 211 17 161 13 139 539 39 30

Total 766 156 856 112 499 2,390 32 36

Total KR5 (27) 2,858 491 3,542 1,549 8,916 17,356 16 20

- 52 - Table 2.7

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

REGISTERED MOrOR VEHICLES (1980-1990)

Cars &Year Pickups Buses Trucks Total

(number of vehicles)

1980 639,464 86,284 473,832 1,199,5791981 710,937 110,103 575,426 1,396,4661982 791,019 134,430 657,104 1,582,5531983 865,940 160,260 713,873 1,740;0731984 927,148 191,654 790,881 1,909,6831985 989,158 227,304 845,338 2,061,8001986 1,063,958 256,574 882,331 2,202,8631987 1,170,103 303,378 953,694 2,427,1751988 1,073,106 385,731 892,581 2,351,4181989 1,182,253 434,903 952,461 2,569,6171990 1,313,210 468,550 1,024,296 2,806,0561991 - -

Growth Rate (%)

1980/81 11.2 27.6 21.4 16.41981/82 11.3 22.1 14.2 13.31982/83 9.5 19.2 8.6 9.91983/84 7.1 19.6 10.8 9.71984/85 6.7 18.6 6.9 8.01985/86 7.6 12.9 4.4 6.81986/87 10.0 18.2 8.1 10.21987/88 -8.3 27.1 -6.4 -3.11988/89 10.2 12.7 6.7 9.21989/90 11.1 7.7 7.5 9.21990/91 - -

Source:Biro Pusat Statistics--Figures are based on new vehicle registration (withoutadequate allowance for scrappings).

- 53 - Table 2.8

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

NUMBER OF REGISTERED MOTOR VEHICLES 1990 BY REGION

Cars & Total MotorRegion/Province Pick-ups Buses Trucks (4-whl) cycles

KR5Riau 17,854 4,354 19,637 41,845 130,361C. Kalimantan 2,762 85 5,282 8,129 27,314E. Kalimantan 17,413 6,452 19,599 43,464 96,943S. Kalimantan 22,217 1,098 12,872 36,187 118,133Maluku 3,006 1,110 5,277 9,393 16,808

Subtotal KR5 63,252 13,099 62,667 139,018 389,559

KREIN. Sulawesi 18,191 8,702 16,705 43,598 41,649C. Sulawesi 3,946 1,701 7,847 13,494 43,074S. Sulawesi 23,473 10,114 38,928 72,515 232,605S.E. Sulawesi 1,428 701 3,493 5,622 19,819NTB 8,266 1,329 11,206 20,801 56,146NTT 8,106 3,436 5,623 17,165 32,246Irian Jaya 7,122 4,127 4,729 15,978 29,226

Subtotal KREI 70,532 30,110 88,531 189,173 454,765

KR3Sumatra (excl. Riau) 182,601 80,887 227,661 491,149 1,186,949W. Java 170,873 49,295 120,610 340,778 405,322W. Kalimantan 10,209 2,310 9,530 22,049 97,564

Subtotal KR3 363,683 132,492 357,801 853,976 1,790,835

ADBCentral Java 127,330 17,908 123,165 268,403 900,203East Java 149,940 100,062 158,429 408,431 1,30,182Yogyakarta 21,529 2,227 13,957 37,713 189,048Bali 26,800 2,449 28,265 57,514 232,359

Subtotal ADB 325,599 122,646 323,816 772,061 2,624,792

East Timor 4,300 1,176 1,501 6,977 18,829Jakarta 485,844 169,027 189,980 844,851 804,186

INDONESIA 1,313,210 468,550 1,024,296 2,806,056 6,082,966

Source: State Police of Indonesia.

- 54 - Table 2.9

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

KABUrATEN ROADS BuDGErs, 1993/94

Inpres Total expenditureProvince/Region IPJK Dati II Total per capita per km /b

Rp bn Rp bnLa Rp bn Rupiah Rp mn

Riau 38 11 50 15,137 7.8C. Kalimantan 30 5 35 25,225 12.3E. Kalimantan 32 9 41 15,807 9.5S. Kalimantan 29 7 35 18,715 13.4Maluku 23 6 28 17,410 11.2

Subtotal KR5 152 38 189 17,571 10.1

Sulut 27 9 36 14,429 7.0Sulteng 23 6 28 16,722 7.2Sulsel 55 24 79 11,342 6.2Sultra 23 5 28 20,615 5.2NTB 22 12 34 10,093 11.7NTr 42 11 54 16,379 5.7Irian Jaya 71 6 77 47,044 32.5

Subtotal KREI 263 73 335 16,142 8.0

Sumatra (excl. Riau) 267 116 383 11,558 7.5Java/Bali 197 357 555 5,435 10.0W. Kalimantan 47 11 59 18,109 8.2Jakarta 5 28 33 4,013 n.a.

INDONESIA 957 626 1,583 8,841 9.0

La Assumes, for illustrative purposes that Rp 3,500/cap (equivalent to about 70% of total93/94 allocation) is assigned to roads.

Lb Kabupaten roads including kotamadya roads, as in DGH inventory.

DESIGN STANDARDS FOR KABUPATEN ROADS AND BRIDGES

Road Classification Class III A Class III B 1 Class III B2 Class III C

Surface Type Asphalt Surface Asphalt Seal Gravel Gravel/AWCAS

Traffic Volume: ADT(rraffic Design Class) >500 500-201 200-50 < 50

(4) (3) (2) (1)

Flat to Mount- Flat to Mount- Flat to Mount- Flat to Mount-Terrain Rolling Hilly ainous Rolling Hilly ainous Rolling Hilly ainous Rolling Hilly ainous

Traffic Lanes 2 2 2 1+ 1+ 1+ 1+ 1+ 1+ 1 1 1

Design k l/h Desirable 80 60 40 60 40 30 60 40 30 50 30 25Speed (km/hr) Minimum 50 40 30 40 30 30 40 30 30 30 50 20

Gradient Maximum 6 8 10 8 10 12 8 10 12 9 12 14(Limiting) M Design 3 6 8 6 8 10 6 8 10 7 10 12

Pavement Desimable 5.5 5.5 5.5 5.0 5.0 5.0 4.5 4.5 4.5 4.5 4.5 4.5 iWidth Minimum 4.5 4.5 4.5 3.5 3.5 3.5 3.5 3.5 3.5 3.0 3.0 3.0

Shoulder Desirable 2.0 1.5 1.5 1.5 1.25 1.0 1.5 1.0 1.0 1.0 1.0 0.75 0Width (M) Minimum 1.5 1.25 1.25 1.25 1.0 1.0 1.0 1.0 1.0 0.75 0.75 0.75 j

Road Bed Desirable 9.5 8.5 8.5 8.0 7.0 7.0 7.5 6.5 6.5 6.5 6.5 6.0Width (M) Minimum 7.5 7.0 7.0 6.0 6.0 5.5 5.5 5.5 5.5 4.5 4.5 4.5

Right (FLOW) Desirable 18M 16M 16M 16M Oof Way Minimum 16M 12M 12M 12M

Road * Pavenent 3 % 3 % 4%-6% 4%-6%C ~amaximum) Shoulder 4%-5% 5%-6% 6%-7% 6%-7%

BR 30M Target Standard Overall Width 7.OM 7.OM 7.OM 5.5MID < 30M Without Side Walk (min) 6.OM 6.OM 6.OM 4.5MGEST > 30M Target Standard Overall Width 7.OM 7.OM 7.OM 5.5MAN VWithout side walk (min) 6.OM 6.OM 6.OM 4.5M

DA Temporary Bridge (Minimum) 3.OM 3.0M 3.OM 3.OMRDS Bridge Design Loading Minimum) 70%BM 70%BM 70%BM 70%BM (50% Temporary)

Source: DGH - Technical Guidelines for Engineering Survey and Design of Kabupaten Roads, December 1991.

- 56 - Table 4.2

INDONESIA

Ffili KABUPATEN ROADS PROJECT

EQUIPMENT REQuIMENS

Basic Price TotalUnit Price Quantity Cost

(US$) (US$)

(a) Roadwork EquipmentBulldozer + Ripper 110 HP 120,000 17 2,040,000Motor Grader + Sarifier 110HP 85,000 26 2,210,000Wheel Loader 1.2 m3 65,000 16 1,040,0003 Wheel Roller 10 Ton 42,000 38 1,596,000Pedestrian Roller 250 Kg 11,500 16 184,000Stone Crusher 30 TPH 150,000 18 2,700,000Dump Trucks 3.5 Ton 22,000 68 1,496,000Generator 30 KVA 15,000 26 390,000Air Compressor 125 CFM 12,000 22 264,000Radio SSB Equipment 1 set 9,200 6 55,200

Subtotal 11,975,200Spare parts (15%) 1,795,880

Total Roadwork Equipment 13.771.080

(b) Workshop EquipmentKalteng 123,500Kalsel 221,985Kaltim 97,900Riau 123,926Maluku 171,476

Total Workshop Equipment & Tools 738.837

(c) Laboratory EquipmentKalteng 171,420Kalsel 313,596Kaltim 133,826Riau 140,507Maluku 144,401

Total Labaoratory Equipment 903.75

(d) VehiclesPick Up 4x2 I Ton 11,000 10 110,000Motor Cycle 125 CC 1,700 54 91,800Service Pick Up 4x4 1 Ton 19,000 27 513,000

Total Vehicles (including spare parts) 822.000

(e) Distribution Costs (est.) 1,114,333

Grand Total 17,350,

INDONESIAFIFTH KABUPATEN ROADS PROJECT

EXPENDITURE ACCOUNTS BY COMPONENTS(Rupiah million)

Road Network Improvement InstitutionalRoad Workshops Equipment and technical Physical Contingencies

Works & Labs Program Development Total % Amount

Investment CostsA. Civil Works

Road Betterment 194,400 - - - 194,400 10.0 19,440Periodic Maint. Sealed 45,760 - - - 45,760 10.0 4,576Periodic Maint. Gravel 16,055 - - - 16,055 10.0 1,606Routine Maintenance 29,160 - - - 29,160 10.0 2,916Workshops Constsruction - 1,248 - - 1,248 10.0 125Laboratories Construction - 185 - 185 10.0 19

Subtotal 285,375 1,433 - - 286,808 10.0 28,681

B. Equipment - 3,795 34,501 0 38,296 10.0 3,830

C. Consulting ServicesCapacity Building - - - 14,800 14,800 10.0 1,480Supervision Tech. Ass. 28,600 - - 28,600 10.0 2,860

Subtotal 28,600 - - 14,800 43,400 10.0 4,340

D. Vehicles - - 2,038 - 2,038 10.0 204

Total Baseline Costs 313,975 5,228 36,539 14,800 370,542 10.0 37,054Physical Contingencies 31,398 523 3,654 1,480 37,054 -

Pnce Contingencies 24,308 270 1,844 1,251 27,673 9.1 2,516

Total Project Costs 369.680 0242036 17.531 435.269 91 2.516

Taxes 33,604 547 3,821 1,594 39,566 9.1 3,597Foreign Exchange 130,692 4,347 38,215 9,415 182,670 9.1 16,606

- 58 - Table 4.4

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ESTIMATED DISBURSEMENT SCHEDULE /a(US$ million)

IBRD fiscal year Cumulative Cumulativeand semester Disbursements disbursements percentage

1995

December 31, 1994 2 2 2

June 30, 1995 10 12 12

1996

December 31, 1995 10 22 22

June 30, 1996 12 34 34

1997

December 31, 1996 16 50 49

June 30, 1997 16.5 66.5 66

1998

December 31, 1997 15 81.5 80

June 30, 1998 12 93.5 92

1999

December 31, 1998 6 99.5 98

June 30, 1999 2 101.5 100

/a Assumes loan effectiveness in July 1994.

-59- Table 5.1

INDONESIA

FIFHI KABUPATEN ROADS PROJECT

(a) VEHIcLE OPERATING COSrS(Excluding Passenger Time Costs)

(Rp/km)

Road Condition Good Fair Poor BadIRI 3 4 6 8 10 12 15 18 21 25 30 35

Speed (kph) 60 55 50 45 40 35 30 25 20 15 12.5 10

Motorcycle 28.4 30.1 33.7 36.3 41.3 46.4 49.9 57.5 67.7 75.0 80.9 91.1

Pick-up (pass) 174.7 185.4 206.7 220.6 248.9 282.6 309.4 357.1 521.9 485.1 532.5 619.3Pick-up (freight) 154.8 163.6 181.9 193.4 217.7 246.2 268.5 308.2 362.6 414.0 451.1 527.3Bus 214.7 233.1 263.1 281.7 320.9 362.9 401.0 454.4 543.9 636.0 693.8 863.5

Light truck 225.3 245.1 278.1 297.9 340.7 388.0 427.6 487.2 582.3 671.5 729.0 886.7Medium truck 308.2 338.2 389.1 415.9 478.1 545.3 599.0 681.9 811.0 919.3 999.9 1,175.9Heavy truck 422.4 466.2 536.8 573.3 660.2 750.9 822.6 934.0 1,108.6 1,249.8 1,357.4 1,581.5

Car/jeep 203.0 220.5 252.6 272.0 311.9 361.5 394.8 461.5 545.1 608.7 672.7 721.6

(b) VEHICLE OPERATING COSTS(Including Passenger Time costs)

(Rp/km)

Motorcycle 33.7 35.8 40.0 43.3 49.2 55.4 60.4 70.1 83.4 96.0 106.1 122.6

Pick-up (pass) 199.2 212.1 236.1 253.2 285.6 324.6 358.4 415.9 495.4 583.1 650.1 766.3Pick-up (freight) 165.3 175.0 194.5 207.4 233.4 264.2 289.5 333.4 394.1 456.0 501.5 590.3Bus 279.5 303.7 340.8 368.0 418.1 473.9 530.5 609.8 738.2 895.0 1,004.6 1,252.0

Lighttruck 235.8 256.5 290.7 311.9 356.5 406.0 448.6 512.4 613.8 713.5 779.4 949.7Medium truck 318.7 349.6 401.7 429.9 493.9 563.3 620.0 707.1 842.5 961.3 1,050.3 1,238.9Heavy truck 432.9 477.7 549.4 587.3 675.9 768.9 843.6 959.2 1,140.1 1,291.8 1,407.8 1,644.5

Car/jeep 215.3 233.9 267.3 288.4 330.3 382.5 419.3 490.9 581.8 657.7 731.5 795.1

- 60 - Table 5.2

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

CHARAcTERISTICS AND ECONOMIC ANALYSIS OF SAMPLE PROJECTS

Province: Kalsel Kalsel Kalsel Riau Kalsel KaltimKabupaten: HSU T.Laut Banjar Inhul Tapin KutaiLink No.: 118 26 12 60 60 111

IRR 23.5% 15.8% 41.7% 20.8% 45.0% 38.1%NPV/km Rp mn +58 +23 +134 +64 +230 +133

Surface type/conditionExisting (Poor/Bad) P.Earth B.Seal P.Stone P.Gravel P.Earth P.SealProposed (good) G.Gravel G.Seal G.Seal G.Seal G.Seal G.SealAccess constraint None None None None None None

Traffic rangeExisting ADT 4-whl vehicle 26 42 74 106 145 333

motorcycles 249 176 538 76 249 314Population

Length km 2.2 12.6 3.2 14.2 11.3 13.0Costs/km Rp mn 71 83 66 104 105 80

Main Sources of Benefits

VOC/pass time savings- 4-wheel 20% 33% 37% 74% 55% 72%- m/cycle 32% 23% 37% 6% 14% 10%- non-motorized 19% 15% 17% 9% 13% 1%

Generated 15% 15% 20% 19% 21% 11%

Sensitivity IRR

Base-case 23.6% 15.8% 41.7% 20.8% 45.0% 38.1%Costs +20% 19.1% 11.7% 34.7% 16.5% 37.5% 31.3%Normal VOC - 20% 19.6% 12.0% 33.8% 15.9% 37.4% 31.4%Exclude time 7.8% 7.4% 26.2% 17.4% 32.7% 34.0%Exclude non-motorized 17.0% 11.0% 32.9% 17.9% 37.6% 37.6%Exclude generated 19.3% 11.0% 33.3% 15.6% 35.3% 33.9%

- 61 - Table 5.3

INDONESIA

FIFrH KABUPATEN ROADS PROJECT

ERR SUMMARY(Rehabilitation Program)

Number of Length Average NPV/kmprojects km % ERR (Rp mn)

Total 344 2,394 100 20 63Paved 239 1,540 64 23 86Gravel 111 854 36 14 21

Base ERR Distribution10-12% 81 597 25 11 513-15% 60 459 19 14 1716-20% 82 577 24 18 4521-30% 67 441 18 25 10131-40% 28 196 8 35 16841-50% 14 69 3 45 208> 50% 12 54 2 68 399

Traffic Design Class(projected 4-wheel veh. ADT)

>500 5 29 1 29 118200-500 (heavy) 13 96 4 32 134200-500 (light) 72 490 20 28 15950-200 (heavy) 29 224 9 16 2450-200 (light) 195 1,434 60 16 34<50 30 120 5 16 22

Proposed change in surface typeseal - seal 35 211 9 24 64gravel - seal 84 556 23 20 45stone - seal 14 70 3 31 120earth - seal 80 601 25 25 120gravel - gravel 23 110 5 15 19stone - gravel 21 94 4 20 30earth - gravel 67 649 27 14 20other 20 103 4 24 128

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ECONOMIC ANALYSIS OF THE MAINTENANCE PROGRAM

Length of Roads Maintained Maintenance Cost Net Program BenefitsRoutine Periodic Program Cost without Program Net VOC Saving

Years Seal Gravel Seal Gravel Routine Periodic Total Program Cost Seal Gravel Total Netkm km km km Rp mn Rp mn Rp mn Rp mn Rp mn Rp mn Rp mn Rp mn Rp mn

94/95 1,686 885 340 295 9,773 20,732 30,505 5,415 25,090 14,122 5,860 9,991 -15,09995/96 2,360 1,240 476 413 12,550 26,619 39,169 7,581 31,588 21,254 8,819 25,027 -6,58096/97 3,035 1,594 612 531 13,375 28,358 41,734 9,747 31,986 29,376 12,189 35,819 3,83397/98 - - - - 12,497 26,492 38,990 9,747 29,242 31,579 13,104 43,124 13,88298/99 - - - - 12,497 26,492 38,990 9,747 29,242 33,947 14,086 46,358 17,11699/00 - - - - 12,497 26,492 38,990 9,747 29,242 36,493 15,143 49,835 20,59300/01 - - - - 12,497 26,492 38,990 9,747 29,242 39,230 16,278 53,572 24,33001/02 - - - - 12,497 26,492 38,990 9,747 29,242 42,173 17,499 57,590 28,34802/03 - - - - 12,497 26,492 38,990 9,747 29,242 45,336 18,812 61,910 32,66803/04 - - - - 12,497 26,492 38,990 9,747 29,242 48,736 20,223 66,553 37,311

Notes:1. Length maintained = (90% of 93/94 needs) NPV ERR2. Equipment/FC1 supervisiom cost assigned to maintenance Rp mn

in proportion to civil works value Base-case 69,414 47%3. Cost without program assumes maintenance covers Costs +25% 24,438 20%

only 25% of estimated needs Benefits -25 % 7,084 14%4. Traffic growth rate: 7.5% per annum5. VOC savings are lagged by 6 months relative to costs cs

-63- Chart 1

INDONESIA

FIFTH KABUPATEN ROADS

ORGANIZATIONAL STRUCTURE OF CENTRAL AND LOCAL GOVERNMENT

NATIONALLvel 1

PRESIDENT

.Funiuni l R.St t PltningeP Ministrt of stot oPblrrykSturu turald (Be pplaatHns.. Af. *ir

| Othor State Board oc Ca Lis Nina t try

I I 1

PROVINC IAL CVROLoWve S D

| Sp:cial | | Inspectorge6. |ot b e ve opsent Technical echbn calBoarda | | SucratFryl Pl nnn FBoard Offices Depurtznts

BAPPDA (DIMAS) XAMIWL)

DISrRICT BUPATI Level I .. . . . . i . .... .... ...

I I I I --- ~~~~--------i---l--------------

|D;velopment | Technic:1 Brnc SC TcbaI lnig l District Office I (Cabang D*rtoic | Bord npetrt| Scaar (DINAS) h IDINASJ h =EP

( <BAPPEDA ) j 1~ I

SUBDISTRICT SUBDISTRICTLevel i HEAD (CAH1AT}

|VILLAGE HEAD|(It.p.l. Des&)

..... unctional Relstionship I Minismoyof Public Works2: Public Wrke

Structural Relationship 3.DPUP4: Biz& Marta Braneb tDBI{)5 DPUR6 Not Applicable in Public Works Deprtimn

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ORGANIZATION OF THEDIRECTORATE GENERAL OF HIGHWAYS (DGH)

r CETRL GOVERIfTINllISTER OF PUBLIC

(lalitbang) ~ ~ (Pengaran (Bn Kaga G evslo e

l~ ~ ~ ~ ~ ~ ~ ~ ~~~ea Seto Adiitain Amnsrto rgesCnrl AmnsrtoWIECORKOSIETO PDRETRO

Directorte S Rrl Ditretor Directr Director Generalof le earch Go nr.l of General of of Houln *ndPr l ning VRd Rte rcRa Highgys URoeis en t Roaln(B litb-ug) *Pngairan) (Bim x^ Dovt!toM t

Director |G ur asl

E Gieri al Per ngnee Progriingt FinA tra e tion | | nS*trationl Pr°S58Cnrl Admiint tr tion

Regi=|Kond 2 Region I || Region IS Region ISet Reogn Sc Region IS ectt Region Rad forPlaing |andudgeting |Eg Aneri r99g Egineri4g |Erginooritg

X Ev lu tlon | |Rgion I |- -i Rtlon III | Region II F|- -| l lion II i| g| i .io II |- -Re| 111 tI||$$ @iol a o

Sources DGB, A,pril 1994

INDONESIA

FIFTI KABUPATEN ROADS PROJECT

ORGANIZATION OF TIHE

DIRECTORArE GENERAI Oi REGIONAL DEVELOPMENr (DGRD)

CENrRAL GoVERNMENTMINISTER OF PUBLIC

HOME AFFAIRS

Secretary InspectorGeneral _ -- _ _ General

D-rctr enra Director General D General Director General Director General of General Admrinistrationof Social & of Lands ofVllgDe Reo Devel and RegIonal Autonomy (PUOD)

PolItical AffaIrs _ L an

SecretarynoflDirector GeOeral

Docu- .. t 1 tFinae FGeneral AdministratIon Planning

B Repair A,fflrs

Director of Director of Director of Director of EnvironmentRegioll l Development Regional Development Urban Development & Development

Planning Progra-ming Affairs Affaitr Admi i6tration

Secretariate Regioa Secretariate Secretarlate c rtart

r Econott | Soci.l E | Development | ack,ard 1 Environiental Developracnt _ Cultural Corporation - & I UranUrban., AnalysIs 1 Man Made

P nI ... Ing Dev't lulni.g id n | ~i CrItical AreasJ PlannIng PotentIal Identication Environent

IEconoic |Infrastructure Analyis * Remote I Urban Urban Natural Development' D en Planning | |Identification Bo Ar Environment Infrastructure Environment Administration

Sourcer Minister of Home Affairs' Decree No. 22 of 1986.

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ORGANIZATION OF THEPROVINCIAL PUBLIC WORKS AGENCIES (DPUP)

HEAD O1 ^ DPUP P

~~~L L

IRRIGATION ~ ~ ~ ~ ~ ~ ~ PRSOADIRIATO

PROGRAMME IRRIGATION CONSTRUCTION~~~~~~~~~~~~~~~~~~~~~~~ REGIONTRAL n EQIIN

L-~~ Et~~~~~~~~~~~~~~~~~

l 1 l l l l 1 1~~~r EQUIPMENTPLANNING IRRGTO RO<ADS _ BUILDINGS | UPISC

SUPPLIES

IRRIGATION ROA |IRRIGATION

PROGRAMME IRIATOQCNTUCIPMf EGINTL&SPLE

ROADS RIVERS BRIDGE BUILDINGS ROADS__ PROGRAMME & CONSTRUCTION & EQUIPMENT

SWAMPS HOUSING & SUPPLIES

BUILDINGS OPERATIONS ROADPROGRAMME & NANCEMAINTENANCE SANITATION WORKSHOPS

i 1 | [ ~~~MAINTENANCE i

DESIGNDESIGN & ROAD

INVENTORY

Source: Minister of Home Affairs InstructionNo. 14 of 1986, Dated 20 October 1986

INDONESIA

FIFTH KABUPATEN ROADS PROJECT

ORGANIZATION OF THEKABUPATEN PUBLIC WORKS AGENCY (DPUK)

HiEAD OF DPUK

ADMINISTRATION

LEGAL r PERSONNEL | FINANCE GENERAL| PLANNING [ t I I I L AFFAIRS

BUILDING F TOWN AND r EQUIFMENT 1ROADS REGULATIONS SANITATION 1 REGIONAL I AND SUPPLIESPLANNING

'~~~~~~~~~~~~~~ IiCONSTRUCTION BUILDINGS WATER SUPPLY TOWN PLANNING EQUIPMENT

* RESIDENTIAL REGIONALS | MAINTENANCE | | HOUSING ENVIRONMENT PLANNING ' WORESHOP

_ DESIGN AND SUPPLIESINVENTORY

Source: Minister of Home Affairs InstructionNo. 14 of 1986. Dated 20 October 1986

IBRD 25538

Tk-MLANO 'AeIW Q0 ES.W. A-l"47

f'! p I Em `4b�'PROJECTSOUTH

MALAYSIA N THE EASTERN INDONESIA_jnKa!U�3179-IND)V

IN THE THIRD,

A

IL' A�SINGAPOKE

NrA NCEAN4:4

1. DIC2. JAWA= , BEUMNG J A T AL JAWA

DI YOGYAKAUA>

7.6- L SUMNTERA SELAIM

32. s, 'J �q, A-, -2%

14. KMIMAWM IAAAT - >S. KUWAMM TENGAH 3 Z

2C�SULAV0"SELAlAN--_,,

INDIAN

21. 0- (hi. W d. ii.,JI, KLO2�. 11r.- .v h4r=4" 5

J�UARY 1191