INDONESIA INFRASTRUCTURE INITIATIVE

Transcription

1 INDONESIA INFRASTRUCTURE INITIATIVE FACILITY REVIEW AND PLANNING DOCUMENT (FRPD) July 2014 January 2016 i

2 ii Facility Review and Planning Document: July 2014 January 2016

3 INDONESIA INFRASTRUCTURE INITIATIVE FACILITY REVIEW AND PLANNING DOCUMENT (FRPD) July 2014 January 2016 iii

4 CONTENTS Acronyms & abbreviations... vi 1. EXECUTIVE SUMMARY Summary Key recommendation BOARD BRIEFING NOTE Overview Introduction Implementation Progress Technical Assistance Grants Key Achievements Proposed workplan Activities through to January Allocation of extension resources PROGRAM REVIEW AND PROPOSED WORKPLAN Introduction Water and Sanitation program Introduction and Overview Water Hibah Community Based Organisations performance grants Sanitation Hibah and saiigs Urban Wastewater Solid Waste Water Governance - WSSI NTT/NTB Water Governance Transport program Introduction and Overview Multimodal connectivity Urban mobility and congestion relief Life-cycle delivery Safety Policy and Investment program Overview of Policy and Investment program Infrastructure preparation and financing Infrastructure governance Other infrastructure programming INDII MANAGEMENT SYSTEMS Introduction IndII financial review Activity development and approvals Activity expenditure to June Monitoring and evaluation Current reporting period Future directions Communications Public outreach campaigns Cross-cutting and sector-specific events Website Quarterly Journal Prakarsa E-blasts Briefing Notes Collateral materials Weekly News Gender and disability Gender Mainstreaming Water and sanitation Transport Policy and Investment Communications Routine integration of gender and disability in IndII activities iv

5 4.6 Administration, management and procurement Procurement systems Activity governance Streamlining activity approval and management processes Table 1: Acronyms & abbreviations... vi Table 2: IndII expenditure; July 2013 June 2014 (in $A m.)... 2 Table 3: IndII grants program Table 4: Proposed allocation of extension resources... 5 Table 5: Water and sanitation program summary Table 6: Transport program summary Table 7: Policy and Investment program summary Table 8: Activity development, IndII Phase II Table 9: Approved activity budgets by component (Phase II) Table 10: Cumulative and planned expenditure, by IndII sector and sub-sector Table 11: IndII M&E Framework - Summary of Headline Results Figure 1: IndII monthly & cumulative expenditure; July 2013 June Figure 2: IndII monthly expenditure, Phase II Figure 3: Traffic lights: Activities by value (%) v

6 ACRONYMS & ABBREVIATIONS Table 1: Acronyms & abbreviations ADB Asian Development Bank ADD Activity Design Document AIIG Australia Indonesia Infrastructure Grant AIIRA Australia Indonesia Infrastructure Research Awards AIPCS Australia Indonesia Partnership Country Strategy AMDAL Analisis Mengenai Dampak Lingkungan AMPL Air Minum dan Penyehatan Lingkungan (Water supply and env. sanitation) Working ASEAN Group Association of South East Asian Nations AusAID Australian Agency for International Development (to late-2013) Bappeda Badan Perencanaan Pembangunan Daerah Bappenas Badan Perencanaan dan Pembangunan Nasional (National Development Planning BPP-SPAM Agency) Badan Pendukung Pengembangan Sistem Penyediaan Air Minum BRT Bus Rapid Transport BUMD Badan Usaha Milik Daerah BUMN Badan Usaha Milik Negara (State Owned Enterprise) CBO Community Based Organisation(s) CMEA Coordinating Ministry of Economic Affairs CPG Commonwealth Procurement Guidelines CPMU Central Project Management Unit (DGHS) CSS City Sanitation Strategy DAK Dana Alokasi Khusus (Special Purpose Grant) DED Detailed Engineering Design DFA Direct Funding Agreement DFAT Department of Foreign Affairs and Trade DG Directorate General DGCK Directorate General Cipta Karya DGH Directorate General of Highways (Bina Marga) DGHS Directorate General for Human Settlements (Cipta Karya) DGLT Directorate General of Land Transport DGST Directorate General of Sea Transport DGWR Directorate General Water Resources EIA Environmental Impact Assessment EINRIP Eastern Indonesia National Roads Improvement Program FOE Faculty Operating Expenses FRPD Facility Review and Planning Document GDMP Gas Development Master Plan G-G Government to Government GIA Grant Implementation Adviser GIZ Gesellschaft für Internationale Zusammenarbeit GOA Government of Australia GOI Government of the Republic of Indonesia gtkp Global Transport Knowledge Practice HHC Household Connections HRD Human Resource Development IAT Independent Impact Assessment Team IBRDICAO International Bank for Reconstruction and Development IE Impact Evaluation IEG Infrastructure Enhancement Grant IFGI Infrastructure for Growth Initiative IIAP Indonesia Infrastructure Assistance Program IIFF Indonesia Infrastructure Financing Facility IIGF Indonesia Infrastructure Guarantee Fund IndII Indonesia Infrastructure Initiative INP Indonesian National Police INTP Indonesian National Traffic Police INTP Indonesian National Traffic Police ISSDP Indonesia Sanitation Sector Development Program ITSAP Indonesia Transport Safety Assistance Package IURSP Integrated Urban Road Safety Program vi

7 JICA KPI KSAN LARP LASU LH M&E MDB MDG MIGAS MIS MoF MoHA MoT MPW MTDP MTEF NGO NORC NPMP NTB NTT OBA P&I PA PAMSIMAS PAU PBAS PBMC PMU PD PDAM PPP PRIM RBIA RENSTRA RFT RPJMN RSA RSEU RUNK saiig SOP SPD TA ToR UKP4 USAID VGF WASAP WASPOLA Watsan WB WSI WSP WSSI WWMP WWTP Japan International Cooperation Agency Key Performance Indicator(s) Konferensi Sanitasi dan Air Minum Nasional Land acquisition and Resettlement Plan Lead Advisory Support Unit Local Government Monitoring and Evaluation Multilateral Development Bank Millennium Development Goal(s) Ministry of Energy and Mineral Resources Management Information System Ministry of Finance Ministry of Home Affairs Ministry of Transportation Ministry of Public Works Medium Term Development Plan Medium Term Expenditure Framework Non-Government Organisation Independent research organisation at Univ. Chicago (National Opinion Research Center) National Ports Master Plan Nusa Tenggara Barat Nusa Tenggara Timur Ou[ut-based Aid Policy and Investment Port Authorities Penyediaan Air Minum dan Sanitasi Berbasis Masyarakat Policy Advisory Unit Performance-Base Annuity Scheme Performance Based Maintenance Contracts Port Management Units Public Diplomacy Perusahaan Daerah Air Minum (District Water Supply Company) Public Private Partnership Provincial Roads Improvement and Management Risk Based Internal Audit(ing) Rencana Strategis Request for Tender National Medium Term Development Plan Road Safety Audit Road Safety Engineering Unit National Road Safety Action Plan Australia Indonesia Infrastructure Grants for Sanitation Standard Operating Procedure(s) Sanitation Public Diplomacy Technical Assistance Terms of Reference President s Delivery Unit for Development Monitoring and Oversight United States Agency for International Development Viability Gap Fund/ing Water and Sanitation Sector Program (Trust Fund through EKN managed by WB) Water and Sanitation Policy Formulation and Action Planning Project Water and Sanitation World Bank Water and Sanitation Initiative Water and Sanitation Program (through World Bank) Water and Sanitation Index Wastewater Masterplan / Master Plan Wastewater Treatment Plant vii

8 1. EXECUTIVE SUMMARY 1.1 Summary IndII s Facility Review and Planning Document (FRPD) maps the achievements of the previous workplan period (July 2013 June 2014) and presents a forward workplan for the next period (July 2014 June 2015), and through the extension months to January Chapter 2 of the FRPD is a brief summary of the material presented at the IndII Board meeting in July 2014, covering implementation progress with technical assistance (TA) and grants, as well as options for committing an $A12.1 million in TA funds. As noted in this chapter, the focus of the extension is to ensure consolidation and finalisation of existing programming, and to ensure a smooth transition to the subsequent (post-2015) infrastructure program Chapter 3 provides the key substance of the FRPD, recording the main IndII achievements during the previous FRPD workplan period, and the planned program of activities for the next period. Chapter 4 completes the FRPD with a comprehensive analysis of IndII management issues, including finance, administration, procurement, monitoring and evaluation, cross-cutting issues, and communication. 1.2 Key recommendation The key recommendation to the Board is to approve the additional budget ceiling of $A12,100,000 for suggested priorities to address two categories of activities: (a) TA activities to ensure efficient delivery of existing AIIG commitments: Water Hibah and associated public diplomacy SAIIGs implementation PRIM implementation Palembang Sewerage oversight. (b) Other priorities for continued implementation or finalisation / activity completion: National Roads (Policy, planning and delivery) Road Safety PPP project preparation (new Makassar Port / Palu Water) Water and Sanitation Service Index (WSSI) NTT/NTB water governance Knowledge sector (AIIRA and IIIDE) PDAM Business Planning. Note also the recommendation to the Board to leave $500,000 unallocated for the present, to fund new and emerging opportunities, or to further support existing programming. 1

9 2. BOARD BRIEFING NOTE 2.1 Overview The July 2013-June 2014 period has been IndII s busiest year to date; expenditure has trebled to $45m, and activities under contract have doubled. IndII-managed grants implementation activities are progressing, although with delays in some programs; IndII expects to deliver grants totalling $138 million by the end of Phase II. IndII (Phase II) is to be to be extended by seven months, and will now conclude in January The final 18 months of IndII will focus on activity consolidation/ finalisation and ensuring continuity of programming through transition to the post-2015 DFAT infrastructure program. An additional $12.1 million is planned for extension TA funds, while $500,000 remains unallocated for new and emerging opportunities. 2.2 Introduction This Board briefing note reports on progress achieved over the past year, and maps out the program through to January 2016, which includes the expected seven-month extension, beginning July As per the FRPD update issued in early 2014, IndII has now fully committed the initial $67.8 million in technical assistance, for expenditure by June Board direction and approval is required for an additional $12.1 million in technical assistance activities associated with the program extension. As noted by DFAT, the rationale for the seven-month extension are twofold: (a) to ensure adequate time for a seamless transition to a new infrastructure program (post-indii Phase II); and (b) to allow the existing Phase II program more time to complete and finalise existing activities, in particular the Watsan grants. This briefing note and the larger FRPD document are thus crucial in articulating the entire roadmap for the remainder of the program; one that not only finalises and delivers on existing commitments but also sets the scene and lays the foundation for the future. As has always been the case, as a facility, IndII is required to retain a degree of flexibility: to explore, scope and possibly implement new ventures. This will continue to be the case, particularly given the installation of a new national GoI administration in October However, given the purposes of the extension, IndII expects that the primary focus in the remaining 18 months will be on consolidation and completion of the existing stable of programs, rather than exploring and scoping new engagements. 2.3 Implementation Progress Technical Assistance The previous FRPD period from July 2013 to June 2014, covers the third year of program implementation of IndII Phase II. The 12-month period to June 2014 clearly represents IndII s busiest and most productive year to date. Activities under contract almost doubled during the 12 months: from $A36.7 million in July 2013 to $A64.6 million at end-june 2014 (Table 2). In terms of expenditure, there has been even more dramatic growth, with a near trebling of expenditure from $A16.6 million in June 2013 to $A44.7 million by end-june 2014 (Figure 1). Table 2: IndII expenditure; July 2013 June 2014 (in $A m.) Status Last Board meeting This Board meeting End-June 2013 End-June 2014 Contracted In procurement (DFAT approved) Pending DFAT approval 0 0 TT approved (to be submitted to DFAT) In development (to be submitted to TT) Total TA Budget Expenditure

10 Figure 1: IndII monthly & cumulative expenditure; July 2013 June 2014 Facility Review and Planning Document: July 2014 January Grants IndII is committed to delivering a grant program of $A115.3 million by June 2015, and this is expected to increase to $A138.4 million with the planned extension of IndII to January Table 3 below outlines predicted implementation progress, based on construction/outputs delivered. IndII s largest grant program, the Water Hibah, has shown substantial progress recently, but with implementation at only 40% of the required 330,000 connections expected to be completed by June DGHS is currently implementing an average of 9100 connections per month. This will need to increase to 11,150 connections per month to complete the program by December This will also involve further effort to identify and award grants. As at end-june 2014, the GoI had identified around 269,000 connections, valued at $A65.5 million and representing 82% of the program. The SAIIG program has also progressed significantly in the previous FRPD period, but remains a challenging program to roll out due to the difficulties of gaining local government (LG) budget commitments for investments in sewerage (LGs are required to commit 60% of total investments). Despite these challenges, the SAIIG program is on track to expand rapidly the number of LGs with working sewerage systems by the end of the program, from 11 to 43. In the Transport sector, PRIM s progress was slowed slightly by delays in contractor procurement; however, these concerns were satisfactorily addressed by NTB, and the first independent verification mission was carried out successfully in July Table 3: IndII grants program Water Sanitation Palembang SAIIGs Hibah Hibah Sewerage PRIM TOTALS /16 Jan - Jun Jan - Jun Jan - Jun Jul - Dec Jul - Dec Jul - Jan TOTALS

11 2.3.3 Key Achievements 4 Facility Review and Planning Document: July 2014 January 2016 With a trebling of expenditure over the previous FRPD period, the focus of IndII activity has moved downstream, away from design, approval, procurement and mobilisation, to concentrate on implementation. While many activities continue to be rolled out, a number of important milestones or achievements can be clearly identified from progress to date. These milestones include those below: (a) Water and Sanitation: USAID Water Hibah: 38,288 household connections (HHCs) across 27 LGs since Sept Program now completed DFAT Water Hibah: 129,237 HHCs installed (as at end-june 2014) SAIIGs: Construction underway for 3646 household connections across 10 LGs; 1458 completed by June 2014 Urban wastewater implementation: first stage designs, topographic and bathymetric surveys completed for Palembang, Cimahi and Makassar Commencement of three DEDs for solid waste facilities: mobilisation, inception report completed Business and Good Corporate Governance Plans completed for an additional five PDAMs. (b) Transport IndII assisted the GoI with key messages for the transport components of crucial planning documents such as the RPJMN and the Renstra plans of MOT and MPW Currently assisting MPW in achieving a fundamental change in its strategy for national roads, from one relying on incremental improvements, to focus on long-term network development, optimum life-cycle asset management, and new incentive-based delivery modalities Building on earlier national master-planning work, including assistance with the preparation of a major port expansion project for Makassar, using private financing Prepared business, investment, operations, marketing and other plans for TransJakarta. Drafted regulations for BUMD and developed transition arrangements. (c) Other AIIRA Grants of up to $A150,000 were awarded to six Round 1 participants (February 2014) followed by an additional five Round 2 grants (each also up to $A150,000) in June 2014 The Gas Development Master Plan (GDMP) and accompanying draft policy notes have been completed IndII prepared the concept for the development of an independent, primarily private-funded Indonesian Institute for Infrastructure Development Effectiveness (IIDE). 2.4 Proposed workplan Activities through to January 2016 This FRPD maps the proposed plan for the next program year and the additional seven-month extension period. As noted earlier, the primary focus of the remaining year and one-half will be on program consolidation; to complete activities and maximise impact from the existing stable of activities; and to provide the necessary foundation and transition to subsequent DFAT infrastructure programming in Indonesia. Where strategic and timely, resources will also be allocated to explore and scope new activities, particularly those associated with emerging priorities from the next national administration A more detailed account of the planned workplan, with key expected outputs by June 2015 and January 2016, is provided in Chapter 3 of this FRPD. A summary of the planned program for each IndII sectoral component is provided below (a) Watsan The first priority of the Watsan program in the remaining months of IndII is to maximise the incentives for LGs to improve service coverage and quality. This will be achieved in the first place

12 by maximising the roll out of the output-based grants for water and sanitation HHCs. This will include local government, pre-financed extension of piped water connections to a planned 330,000 households across 130 LGs, and the provision of small-scale sewerage connections for more than 60,000 households, across 43 LGs. Additional incentives for improved service delivery are to be provided through the roll out of the WSSI, an innovative index to benchmark and compare LG Watsan service standards, and the NTB/NTT governance program, an activity to align incentives across key stakeholder groups for improved governance and pricing. Other important measures in the workplan to improve Watsan service coverage include the continued roll out of the successful 20 PDAM business planning activity, the continued preparation of wastewater and solid waste projects, and feasibility work for an emerging PPP opportunity in the water sector. (b) Transport IndII s Transport activities cover a broader range of policy, strategy, institutional, financing and delivery issues than the Watsan sector, thus reflecting the complexity of the sub-sector. Key drivers of private-sector-led competition, incentive and efficiency are common with other IndII sub-sectors. In transport, these are harnessed to address the alarming road capacity backlog, the need for competition in port services, reform of urban bus services, neglect of provincial road maintenance, and to implement a comprehensive approach to road safety. By early 2016, having already strengthened institutional capacities and introduced new planning and asset management tools, IndII will have established a solid foundation for implementing new ways of expressway and port delivery, performance-based asset management (both national and subnational), grant-incentivised urban road safety programs, and efficient bus service management. (c) Other In addition to the sector programs above, by end-2015 IndII will have rolled out an innovative new research program, partnering national with international researchers, the results of which will be broadly disseminated, and socialised with each respective sponsor GoI agency. IndII will have also scoped out the opportunities, and developed a proposed funding and governance modalities for an independent private-sector driven Institute for Indonesian Infrastructure Development Effectiveness (3IDE) Allocation of extension resources The extension of IndII to January 2016 is expected to involve the provision of an additional $A12.1 million in funding for technical assistance activities. The key criteria used to determine priorities among potential activities for possible extension funding are that they: maximise opportunities to meet existing AIIG (grant) commitments: e.g., Water Hibah, SAIIGs, Palembang Sewerage, PRIM; establish a strong foundation for on-going support under the post-2015 DFAT Infrastructure program: e.g., National Roads, PRIM, Palembang sewerage; strengthen the prospects for GoI implementation of reforms, plans and projects prepared earlier under IndII: e.g., Makassar Port, Palu Water, NTB/NTT Water, PDAM business planning, IIIDE, Road Safety, National Roads; or finalise activities, communicate results and assist with GoI mainstreaming and institutionalisation of IndII programming: e.g., WSSI, AIIRA, Water Hibah, Road Safety. 5

13 Table 4: Proposed allocation of extension resources Program streams Options Suggested Grant commitments Water Hibah SAIIGs Palembang Sewerage PRIM Other priorities National roads WSSI PPP project prep NTB/NTT Solid Waste Additional TA to cover fragmentation costs (IndII is now working with 121 LGs, not 90 as originally planned). Slower implementation by LGs requires additional resources (more return visits). Public diplomacy activity to socialise/disseminate program results and key lessons. Additional TA to accelerate implementation. The extension provides the opportunity for one additional, full fiscal year of implementation by LGs. This will require further TA support to maximise the benefit of the additional implementation time Construction management TA is expected to run for 5-6 years and will need to be novated to the subsequent DFAT infrastructure support program. Extending the TA to January 2016 will require an additional $750,000. Subject to adjustment following the 2015 M&E review, implementation of Stage 2 of the original PRIM design will begin in NTB; and preparation of a Concept Note on expansion of PRIM to up to four additional provinces. Policy: Preparation of PBAS demonstration project/s, including arrangements for procurement, performance verification, funding support and governance; further assistance with drafting regulatory changes and an institutional action plan for expressway program procurement. Planning: Calibration and finalisation of CUBE/IM models for all main islands; application of the models to confirm expressway and road renewal priorities and staging; confirmation of forecasts and standards for initial expressway/renewal projects; forecasting support for preparation of PBAS demonstration project/s. Delivery: Support and training for rolling out RAMS to all balais; assistance with asset management program budgeting; dissemination of new design and contract management guidelines; assistance with implementing reforms to satker/ppk structures; support for consultant/contractor improvement and accreditation program; finalisation of plans for implementing PBMCs, possibly with DFAT support. Additional support would assist GoI with the socialisation and public dissemination of the Water Supply and Sanitation Index to civil society, and to prepare for the transition of the WSSI to the GoI. Facilitate preparation of a Palu Water request for tender, draft contract and evaluation of responses. Provide other assistance leading to financial closure. Draft the Makassar New Port procurement plan, concession agreement, market sounding and documentation required for VGF approval. Extension will allow an additional fiscal year of implementation by participating LGs, and also provide opportunities for more comprehensive dissemination of lessons learned, and evaluation of social contract implementation through selected workshops. Possible need for additional funding to allow inclusion of components that would support GoI implementation of IndII 6 900, , , ,000 1,450,000 1,450, , ,000 1,250,000 1,250, , ,000 2,500,000 2,500,000 1,000,000 1,000, , , , , , , , , ,000 0

14 Urban congestion Road Safety Knowledge sector PDAM Business Plans design. Support for implementation of an action plan (currently under preparation) for reform of non-brt bus services (routes, industry consolidation, contracts, infrastructure, fares, ticketing, etc.) in one or more agreed corridors. Capacity-building support through implementation of agreed RUNK action plans by DGH; strengthening DGH capacity in road safety audits, black-spot treatments and planning/ budgeting for road safety programs; design of safety accreditation program. Assistance with implementation of approved IURSP schemes in four cities; preparation of a Concept Note for a conditional grant program. Finalise, edit and publish AIIRA research papers. Socialise results to GoI and the public through open forum discussion and direct consultation. Provide further assistance to establish the 3IDE institute, explore membership modalities and options, and commence initial tasks (tasks to be determined). Support for four additional PDAMs plus grandfathering of existing program PDAMs. Expand PMU's role to upstream, mid-stream and downstream activities. Greater focus on early planning, and capacity building and institutionalisation of the BPs. 800, , , , , , , ,000 Unallocated 500, ,000 Total ($A) 13,450,000 12,100,000 7

15 3. PROGRAM REVIEW AND PROPOSED WORKPLAN 3.1 Introduction This chapter provides the core content of the Facility Review and Planning Document in that it first reviews activities over the previous FRPD workplan period (the past 12 months), and maps the proposed forward workplan to January The implementation of the forward workplan will be contingent upon Board consideration and approval of the necessary funding envelopes, as proposed in the previous chapter. 3.2 Water and Sanitation program Introduction and Overview IndII s water and sanitation program continues to be strongly supported by GoI and is operating effectively across the sectors approved by DFAT. While progress in some individual activities has been delayed because of implementation challenges faced at the national, provincial and local government levels, much has already been achieved, and targets set for IndII s final year are, for the most part, on track: the USAID Water Hibah, completed in June 2014, resulted in almost 40,000 household connections (HHC) connections, across 27 local governments. The only outstanding tasks are to complete verification of the remaining 15% of the program, and to process grant payments; the $A80 million DFAT Water Hibah is delivering around 330,000 HHCs in 130 local governments. At end-june 2014, the GoI has identified 269,600 connections, valued at $A65.5 million. This represents 82% of the total planned program; at the halfway point, approximately 130,000 HHCs of the required 330,000 connections have been implemented by the GoI; although implementation of the $A5 million Sanitation Hibah in four local government areas is behind schedule, the GoI is confident of achieving its target of 9,000 connections by the completion of IndII Phase II; under the Australia Indonesia Infrastructure Grants for Sanitation (saiig) program, construction is underway for almost 4,000 HHCs, across 10 local governments. More than onethird of these connections have already been completed, and four more local governments are expected to start implementation before end-2014; First-stage designs, and topographic and bathymetric surveys have been completed for Palembang, Cimahi and Makassar, under the IndII urban wastewater program; Detailed Engineering Designs (DEDs) are currently being prepared for solid waste facilities, and the Inception Report complete. Project implementation is expected to begin in mid Water Hibah The USAID Water Hibah, which started in September 2012, was completed at the end of June Of the 38,998 household connections awarded as grants to 27 local governments, 98.2% or 38,288 HHCs were constructed, of which 31,750 had been verified by end-june The only outstanding tasks are to complete verification of the remaining 15% of the program, and to process the grant payments. However, because of the increase in the exchange rate from IDR 10,600 at the time of the last grant award, to IDR 11,265 at the end of June 2014, it is estimated that $A450,000 of the grant fund will remain. It is also estimated that up to 4% of the verifiable connections will fail to qualify, which will add another $A340,000 of undisbursed funds, resulting in a total of $A790,000 unutilised grant. The DFAT-funded Water Hibah is expected to deliver 330,000 connections in approximately 130 local governments, at a total cost of $A80 million. By the end of June 2014, GoI had awarded approximately 82% of the grant and constructed approximately 40% of the required 330,000 connections. During the current FRPD period, implementation of the DFAT-funded Water Hibah progressed from 74,771 household connections in January, to 129,237 at the end of June The MoF issued grant awards totalling 59,000 household connections during this period, bringing 8

16 the total grant awards to 269,600 (connections), valued at $A65.5 million at current and projected exchange rates. DGHS implemented an average of 9,100 connections per month during this period compared to an overall rate of 8,100 per month since the start of the project. During the remaining 18 months DGHS is expected to issue the remaining grant awards for approximately 60,000 connections. The rate of implementation will have to increase to approximately 11,150 connections per month to complete the program by December Community Based Organisations performance grants During the previous FRPD period, the oversight consultant together with IndII and in collaboration with the World Bank WSP, conducted several supervision and appraisal visits. A further four Community Based Organisations were verified as having successfully met targeted performance indicators, and were awarded grants that closed outstanding loans. This increased the total number of CBOs that have successfully met the project objectives to 19, of 22 participants. By end-june 2014, a total of IDR 972,339,000 (or approximately $A96,212) of performance grants were disbursed to the 19 CBOs through seven rural banks. Another bank (BPR UMKM) developed a loan product for community water and sanitation at more competitive interest rate than the Kabupaten banks which have been supporting the CBOs. As result of the project, one of the CBOs has taken a further loan, and a bank has provided loans to two new non-participating CBOs. The project is expected to be completed successfully by end-december Sanitation Hibah and saiigs (a) Sanitation Hibah The MoF has approved grant allocations for the Sanitation Hibah to four LGs, for 9,000 household connections - equivalent to $A4.5 million at the current exchange rate. Baseline surveys have been completed for 6,970 household connections in the four LGs. By the end of the current FRPD period, 1,174 household connections had been completed in three LGs. While this indicates a delay to the implementation schedule, the GoI is confident of achieving the target of 9,000 connections. (b) Australia Indonesia Infrastructure Grants for Sanitation (saiig) The saiig program was designed to provide $A40 million in grants to local governments for the construction of small-scale sewer systems to connect approximately 90,000 households. At end- June 2014, the GoI MoF issued grant awards to 43 LGs, totalling Rp238.9 billion ($A22.14 million) for 62,076 house connections. IndII and DGHS have appraised the programs in 25 LGs for 20,704 household connections. Construction is underway for 19 systems in 10 local governments, with a capacity of 3,636 household connections. Of these, 1,458 household connections have been completed during the previous FRPD period. During the remaining 18 months of IndII Phase II, local governments must complete the detailed design of the remaining systems and submit these for appraisal. DGHS and IndII expect to complete appraisal of the remaining systems by the end of 2014, and local government will implement these works in Approximately 12 local governments will need to provide budget revisions in 2014 to secure detailed designs which can be implemented in Formal information needs to be communicated to the GoI about the extension of the grant program to the end of 2015, so that budgets can be prepared for implementation in Urban Wastewater The detailed design consultant commenced work on the three selected cities - Palembang, Cimahi, and Makassar - and has completed topographic and bathymetric surveys. Geotechnical surveys are still in progress. The first stage design has been completed and the GoI and LG have accepted the design concept. The scope of work for Cimahi has been reduced because the land acquisition for the wastewater treatment plant has not been finalised. Individual Social Safeguards consultants have completed the Land Acquisition and Relocation Plan (LARP) for Palembang. Oversight of the LARP implementation has been included in the responsibilities of the 9

17 AMDAL consultants mobilised during the previous FRPD period. DFAT received approval of the Concept Design for the Palembang project, which is to be implemented through grant funding under joint co-financing with the ADB. In the next 18-month FRPD period, the DED consultants will complete the design, specification and tender documents. DFAT and IndII will prepare the Palembang Grant project design document and grant agreement, supported by IndII consultants. DFAT will prepare a joint cofinancing agreement with ADB which will define the roles and responsibilities of ADB and DFAT in the implementation of the project. The three local governments will need to complete the AMDAL process with assistance from the IndII-funded consultant. IndII will engage project management consultants to oversee the implementation of the project, which is expected to commence by the second half of The Project Management consultant will have novation provisions, to the following IndII Facility managing contractor Solid Waste The World Bank completed appraisal of the Regional Solid Waste Management project with assistance from IndII project preparation consultants. GoI and the World Bank selected Manado, Balikpapan and Tangerang as qualifying for implementation. IndII procured and mobilised consultants to prepare the engineering design, specifications, and tender documents - for implementation by GoI. The GoI subsequently informed DFAT that the IBRD loan was not included in the GoI list of approved loan programs, i.e. the Green Book. Alternative arrangements for funding the implementation of the project by GoI are still being considered. By March 2015, the DED consultants will complete the design and associated documentation. Apart from constraints associated with land acquisition procedures for Manado, and the resolution of funding for implementation by GoI, there are no difficulties anticipated Water Governance - WSSI The direct counterpart for the Water Supply and Sanitation Index (WSSI) activity is the BPPSPAM. The consultant for the WSSI rollout was procured and mobilised in May Initial meetings have been completed and the consultant has submitted an inception report. A draft selection of 50 cities has been agreed with BPPSPAM, and the consultant has re-engaged with universities that were involved in the Stage 2 Pilot conducted earlier; the same universities will be included in the roll out phase. During the next FRPD period, the consultant will conduct the household local government surveys, construct the index, and establish the website. These components are expected to be completed by March During the forthcoming FRPD period, IndII will also work with BPPSPAM and other GoI partners to establish transition of the Index to an agreed third party that will be able to continue its development in a sustainable manner NTT/NTB Water Governance The Phase 2 consultant mobilised in May 2014, and has since submitted an Inception Report outlining the workplan for the activity. Initial meetings have been conducted with the GoI (Bappenas and DGHS). The consultant has also conducted an initial field visit to assess the status of the Phase 1 local governments and to initiate updating of the social contract with new targets for each of the stakeholders. The consultant has also surveyed a shortlist of seven new local governments - to select up to four additional candidate kabupaten for the Phase 2 project. During the forthcoming FRPD period, the consultant will work with the selected LGs to define social contracts, in which the obligations of each of the stakeholders will be specified. The consultant, working with IndII and the GoI, will assist the local governments to execute their social contract agreements and, in the process, help to strengthen bonds and trust between the stakeholders. 10

18 Table 5: Water and sanitation program summary Component & Activity GoI Agency Achievements January June 2014 Workplan July 2014 June 2015 Workplan July 2015-January 2016 WATER Water Hibah The Water Hibah is an output-based program, which provides funding to LGs which commit to and achieve an agreed number of water supply connections. DGHS-MPW DGFB-MoF MoF issued grant notification to 12 new LGs valuing IDR26 billion ($A2.36 million at current exchange rate) for 12,000 households (3 LGs were ex-usaid), and additional grant to 18 LGs valuing IDR billion ($A11.35 million) for 40,100 households. To end-june 2014, MoF approved allocation of $A73.57 million Water Hibah grants to 133 LGs for 308,598 connections. To end-june ,525 households have been connected, 80,411 verified and 48,796 connections from 34 LGs, with a total of $A10.49 million paid. CPMU to identify more LGs to propose household connections (HHCs) for grant or additional HHCs from existing LGs - to approx. 60,000 HHCs. Accelerate the verification process (ideally, to 5,000 HHCs per week). Complete/d the verification process for all USAID HHCs by mid-july Final report and wrap-up conference: key lessons learnt, including opportunities for further development of the hibah mechanism with greater leverage and responsibility for GoI. Support GoI to implement pilot project to mainstream performance based grants to LGs Dissemination of Impact Evaluation studies for the hibah Community-managed Water Supply (CBOs) This joint IndII / World Bank Water and Sanitation Program supports Community based organisations to have access to commercial financing, or private sector contracts to complete physical works. BAPPENAS DGHS-MPW WSP-WB Four more CBOs were verified and successful in meeting the targeted performance indicators, To end-june 2014, 19 CBOs have been successful in achieving targeted performance indicators. To end of June 2014, a total of IDR 972,339,000 or about $A96,212 of performance grant were disbursed for 19 CBOs through seven rural banks. One CBO has made another loan, and a bank has provided loans to two non-participating CBOs. BPR UMKM developed a loan product for water and sanitation at a more competitive interest rate. The meter reading and recording by CBOs are in order and linked to water bills; financial reports are improved. Continue training on technical aspect including NRW; financial management and tariff review. Conduct real demand survey and customer satisfaction survey to selected CBOs. Identify exit strategy and plan options for transition programs. Implement exit strategy. Support GoI to identify follow-on programs. Water Governance WSSI Roll-out of Water Supply and Sanitation Index to 100 cities and integration with GoI BPPSPAM, BAPPENAS DGHS Consultants mobilised in May Several meetings with BPPSPAM, BAPPENAS, DGHS to produce revised questionnaires, revised hard data pointers and selection criteria for Implementation of the survey in the field. Workshop to disseminate results. Decision on the host of WSSI Support GoI to establish a sustainable institutional framework for WSSI. Series of diagnostic workshops with select cities keen to improve their 11

19 Component & Activity and LG monitoring initiatives GoI Agency Water Governance Support to NTT/NTB Implementation and Review of water governance program in NTT & NTB SANITATION DGHS BAPPENAS Achievements January June 2014 participating LGs. List of 50 LGs developed. Consultants mobilised in May Seven new locations (LGs) have been selected for further assessments. Workplan July 2014 June 2015 website Problem and need assessment on PDAM water services in all LGs. Water/ customer forum mapped. Status and roles of PDAM supervisory body evaluated. LGs and local stakeholders support identified (external environment). Social contracts signed and implemented. Workshops and training. Monitoring and Evaluation of WG activity. Workplan July 2015-January 2016 rankings Design of follow on WSSI index (for IIAP and beyond) Evaluation of social contract implementation through selected workshops. Coordination with AIIRA activity joint seminar Dissemination of findings to GoI. Sanitation Hibah and SAIIGs The Sanitation Hibah supports LGs through grants to construct sanitation infrastructure SAIIGs provide selected LGs with funds to complete additional sanitation works. DGHS-MPW DGFB-MOF LGs DGHS-MPW DGFB-MOF DGRD-MOHA LGs MoF approved grant allocations for Sanitation Hibah to four LGs totalling Rp45.0 billion ($A4.25 million), to provide 9,000 house connections (HHCs). Baseline surveys have been conducted in up to 6,970 HHCs in four LGs. Up to 1,174 HHCs constructed in three LGs. Up to 605 HHCs verified in one LG. No additional HHCs verified during past six months. MoF approved awards to 43 LGs, totalling Rp238.9 billion ($A22.14 million) for 62,076 house connections (HHC). Appraisal of 25 LGs with 20,704 HHCs. 3,636 HHCs under construction. 1,458 HHC connected. Baseline surveys in four LGs completed All HHCs verified in Kota Surakarta & Kota Jakarta, and minimum 50% HHCs verified in Kota Bandung & Kota Banjarmasin. Continue implementation of the program in up to 7,610 HHCs in four LGs. Continue verification process in up to 6,700 HHCs in four LGs, Expected Grant payment to four LGs totalling Rp billion (equivalent to $A2.97 million). Appraisal consultant continues assessment of the program in all 43 LGs Continue implementation of the system up to 39,842 HHCs saiig Verification Consultant will implement surveys Implementation of the Sanitation Hibah in up to 9,000 house connections in four LGs. Grant payment can be made totalling A$4.25M to four LGs Sewer systems constructed for up to 62,076 HCs in 43 LGs. Grant payment can be made totalling $A14.10M. Coordination and planning for possible novation of program. 12

20 Component & Activity Urban Wastewater Detailed Engineering Design (DED) design for collection and treatment, AMDALs, and social safeguards for selected city WWMP investments. Social Safeguards AMDAL (EIA) GoI Agency DGHS PPLP and Bina Program Local government of Palembang, Makassar, and Cimahi Achievements January June 2014 saiig Baseline Consultant mobilised and implemented surveys saiig Verification consultant mobilised. Basic design reports prepared and discussed among LGs and PPLP. Palembang has agreed on the pipeline route and treatment technology option. Topographic and bathymetric surveys completed (Cimahi topographic survey: to the lowest point in the network). Bathymetric survey reports submitted. Geotechnical surveys in progress in all cities. Concept designs for Palembang, Makassar and Cimahi collection systems prepared and discussed Concept design for Makassar and Cimahi treatment delayed. Land acquisition and resettlement plan for Palembang prepared and being reviewed and completed by LG. Submission and discussion of the Inception Report. EIA ToR for Palembang and Makassar are in progress. Workplan July 2014 June 2015 Parallel communication and public diplomacy activity in 8 LGs Completion of geotechnical survey in Palembang, Makassar and Cimahi and submission of geotechnical and topographic survey reports. Cimahi final decision for the proposed WWTP site. Makassar to decide the most appropriate WWTP technology. Preparation and agreement of the 50% detail design. Completion of EIA documents for three cities Study tour to Australia and New Zealand, followed by submission of study report. Preparation of tender documents for two packages. Preparation of contract documents LARP document completed and agreed by Palembang LG. Implementation of LARP by Palembang LG. Preparation of Palembang Grant program for co-financing between DFAT and ADB, including grant agreement. Submission of EIA ToR for Palembang and Makassar. Submission of draft ANDAL for Palembang and Makassar, and RKL- RPL for Cimahi. Completion of baseline water quality report. Completion of Final Environmental and Social safeguard reports. Workplan July 2015-January 2016 Wrap up / lessons learned workshop Mobilisation of construction management consultant. Procurement of goods and services oversight by CM consultant. Implementation of Palembang wastewater construction. [Scheduled to finish before extension] 13

21 Component & Activity Solid Waste Support the development of DEDs for three solid waste facilities. Originally the construction will be funded by the World Bank, however other funds may be utilised. GoI Agency DGHS Directorate of PPLP and Bina Program Local Government of Balikpapan, Manado, and Tangerang. Achievements January June 2014 Procurement process of DED consultant, and contract with winning tenderer signed. Initial field visits to Tangerang, Balikpapan and Manado. Submission of Inception Report. Workplan July 2014 June 2015 Environmental permit issued. Submission of preliminary design report. Submission of draft tender packages. Submission of the operation and maintenance manuals. Completion of DED reports and activity completion report. Workplan July 2015-January 2016 [DED Scheduled to finish before extension] Extension of support to facilitate WB Loan in 2016, or implementation by GoI / Donor. 14

22 3.3 Transport program Introduction and Overview Indonesia s transport sector faces very critical issues of policy, strategy, financing and delivery in dealing with rapidly growing demand, and a large and worsening supply backlog. Extensive traffic congestion in cities and along important inter-city corridors compromises prospects for rapid economic, trade and income growth. Accordingly, IndII s Transport-sector activities span a wide range of issues: not only in helping to roll out physical works efficiently, but also in helping to establish the necessary policy and legal environment, institutional capacity, and financing and delivery mechanisms to address the economy s needs over the next 20 to 30 years, and potentially up to 50 years. These activities continue to follow the objectives of multimodal connectivity, urban mobility, congestion relief, life-cycle program/project delivery, and safety. While IndII cannot resolve all shortcomings, it has structured its priorities to address the main issues, in many instances by providing a demonstration of the needed reforms. Thus: there has been a focus in the six months to June 2014 and beyond on capturing key messages in GoI s planning documents governing the transport sector over the next five years: RPJMN , issued by Bappenas, and the RENSTRA plans of MoT and MPW; a major effort has been devoted to achieving a fundamental change in strategy for national roads, from one relying on incremental improvements and rehabilitation, to a focus on longterm network development, optimum life-cycle asset management, and new incentive-based forms of project/ program delivery and maintenance, using private finance where appropriate; earlier assistance with strategic master-planning, such as support for drafting the National Ports Master Plan (NPMP) (now formally adopted by MoT), has been progressed with assistance to prepare a port expansion project for Makassar with private financing under the NPMP s new Port Administration regulatory regime; in addition to helping transform TransJakarta, Jakarta s BRT 1 operator, into a corporate entity, with (among other things) new contract arrangements for managing bus service suppliers, IndII is now helping to restructure the rest of the non-rail public transport system along similar lines; IndII s innovative PRIM 2 program, being piloted in NTB, uses conditional grants from central government, initially funded through DFAT s AIIG 3 program, to incentivise better maintenance of provincial roads; and a comprehensive IndII program is helping Bappenas, DGH, DGLT and the Traffic Police to address critical road safety needs in the context of a National Road Safety Master Plan (known as RUNK) that was itself recently updated with IndII assistance Multimodal connectivity (a) RPJMN In the period to June 2014, IndII fielded a team of national specialists to help Bappenas draft the transport-sector background paper for its strategic plan (RPJMN) for This has now been accepted - after extensive socialisation. For the period July 2014 to June 2015, IndII s RPJMN efforts will focus more on highlighting the critical messages that have emerged from IndII s transport activities over the years, aiming to have a set of focused briefing notes available for incoming ministers and high-level decision makers following the recent Presidential election. Any further assistance beyond mid-2015 will likely be taken up in the design of DFAT s new IIAP (b) MoT RENSTRA In parallel with the work on RPJMN for Bappenas, and under the direct leadership of the Vice Minister, IndII has been helping MoT to draft the technical background report for its five-year 1 Bus Rapid Transit 2 Provincial Road Improvement and Maintenance 3 Australia Indonesia Infrastructure Grants 15