BLANK TEMPLATE FOR FULL RESTRUCTURING · Web viewBaseline value was based on the overly optimistic assumption that the project would cover all villages in the country (to date, PNPM-Rural

BLANK TEMPLATE FOR FULL RESTRUCTURING

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: RES18443

Restructuring PAPER

ON A

PROPOSED Project restructuring

of

NATIONAL PROGRAM FOR COMMUNITY EMPOWERMENT IN

RURAL AREAS (PNPM RURAL 2012-2015)

IBRD 82170-ID

BOARD APPROVAL DATE: DECEMBER 11, 2012

TO THE

REPUBLIC OF INDONESIA

JUNE 9, 2015

Global Practice for Social, Urban, Rural Resilience

Indonesia Country Management Unit

East Asia and Pacific Region

ABBREVIATIONS AND ACRONYMS

AAA

Analytic and Advisory Activities

ASF

Administrative Service Firms

BAPPENAS

Badan Perencanaan dan Pembangunan Nasional (National Development Planning Agency)

Bina Pemdes

Bina Pemerintahan Desa (Village Government)

BKAD

Badan Koordinasi Antar Desa (Inter-Village Cooperation Board)

BLM

Bantuan Langsung Masyarakat (Block Grant)

BPD

Badan Permusyawaratan Desa (Elected Village Representative Council)

BP-UPK

Badan Pengawas – Unit Pengelola Kegiatan (Community-Appointed Oversight Body of the Sub-district Management Unit)

Bupati

Head of District

Camat

Head of Sub-District

CHS

Complaint Handling System

DFAT

Department of Foreign Affairs and Trade

DIPA

DG

Government Budget

Directorate General

DPR

Dewan Perwakilan Rakyat (The People's Representative Council)

EIRR

Economic Internal Rate of Return

FM

Financial Management

GOI

Government of Indonesia

IRI

Intermediary Results Indicators

IT

Information Technology

Kabupaten

District

Kecamatan

Sub-District

M&E

MIS

Monitoring and Evaluation

Management Information System

MOF

Ministry of Finance

MOHA

Ministry of Home Affairs

MOV

Ministry of Village, Disadvantaged Areas and Transmigration

NMC

National Management Consultant

O&M

Operations and Maintenance

OM

Operations Manual

PDO

Project Development Objective

PjOK

Penanggung-jawab Operasional Kegiatan (Local Government Project Officer at the Sub-District Level)

PjOKab

Penanggung-jawab Operasional Kabupaten (Local Government Project Officer at the District Level)

PjOProv

Penanggung-jawab Operasional Provinsi (Local Government Project Officer at the Provincial Level)

POKJA

Kelompok Kerja (Working Group)

PMD

Pemberdayaan Masyarakat dan Desa (Directorate for Community and Village Empowerment)

PMK

Pembangunan Manusia dan Kebudayaan (Coordinating Ministry for Human Development and Cultural Affairs)

PNPM

Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment)

PPMD

Pembangunan dan Pemberdayaan Masyarakat Desa (Village Development and Empowerment)

PTO

Operations Manual

QPR

Quarterly Progress Report

RBM

Ruang Belajar Masyarakat (Community Learning Forum)

RLF

Revolving Loan Fund

RMC

Regional Management Consultant

Satker

Satuan Kerja (Project Management Unit)

SPP

Surat Permintaan Pembayaran (Payment Request)

SPP

Simpan Pinjam Perempuan (Women Saving and Loan Activities)

TA

Technical Assistance

TOR

Tim Koordinasi

Term of Reference

Tim Percepatan Pengalihan PNPM Mandiri Perdesaan dan Persiapan Pelaksanaan UU No. 6 Tahun 2014

Kelompok Kerja Pengendali (National-level oversight body for the acceleration of PNPM Mandiri Transition and the preparation of the implementation of Law No. 6/2014)

TPK

Tim Pengelola Kegiatan (Village Implementation Team)

ULP

Unit Layanan Pengadaan (Procurement Services Unit)

UPK

Unit Pengelola Kegiatan (Sub-district Financial Management Unit)

VL

Village Law

Regional Vice President:

Axel van Trotsenburg

Country Director:

Rodrigo A. Chaves

Senior Global Practice Director:

Ede Jorge Ijjasz-Vasquez

Acting Practice Manager:

Kevin Tomlinson

Task Team Leader:

Sonya Woo

INDONESIA

NATIONAL PROGRAM FOR COMMUNITY EMPOWERMENT IN

RURAL AREAS 2012-2015

Contents

ANNEX 118Results Framework and Monitoring18

DATA SHEET

Indonesia

NATIONAL PROGRAM FOR COMMUNITY EMPOWERMENT IN RURAL AREA (PNPM RURAL 2012-2015 (P128832)

EAST ASIA AND PACIFIC

Social, Urban, Rural and Resilience Global Practice

.

Report No:

RES18443

.

Basic Information

Project ID:

P128832

Lending Instrument:

Specific Investment Loan

Regional Vice President:

Axel van Trotsenburg

Original EA Category:

Partial Assessment (B)

Country Director:

Rodrigo A. Chaves

Current EA Category:

Partial Assessment (B)

Senior Global Practice Director:

Maninder S. Gill

Original Approval Date:

11-Dec-2012

Practice Manager/Manager:

Kevin A Tomlinson

Current Closing Date:

31-Dec-2015

Team Leader(s):

Sonya Woo

.

Borrower:

TNP2K, BAPPENAS, MOHA PMD, Ministry of Finance

Responsible Agency:

Menko Kesra, Ministry of Village, Disadvantaged Areas and Transmigration

.

Restructuring Type

Form Type:

Full Restructuring Paper

Decision Authority:

Country Director Approval

Restructuring Level:

Level 2

.

Financing ( as of 12-Mar-2015 )

Key Dates

Project

Ln/Cr/TF

Status

Approval Date

Signing Date

Effectiveness Date

Original Closing Date

Revised Closing Date

P128832

IBRD-82170

Effective

11-Dec-2012

22-Jan-2013

25-Mar-2013

31-Dec-2015

31-Dec-2015

Disbursements (in Millions)

Project

Ln/Cr/TF

Status

Currency

Original

Revised

Cancelled

Disbursed

Undisbursed

% Disbursed

P128832

IBRD-82170

Effective

USD

650.00

650.00

0.00

396.57

253.43

61

.

Policy Waivers

Does the project depart from the CAS/CPF in content or in other significant respects?

Yes [ ]

No [ X ]

Does the project require any policy waiver(s)?

Yes [ ]

No [ X ]

.

A. Summary of Proposed Changes

Modifications include: (a) Changing the implementing agency from the Ministry of Home Affairs (MoHA) to the new Ministry of Village, Disadvantaged Areas and Transmigration (MoV); (b) Amending select intermediary results indicators in the results framework (RF); and (c) Extending the Loan Closing Date from December 31, 2015 to December 31, 2016 and updating the implementation schedule accordingly.

Change in Implementing Agency

Yes [ X ]

No [ ]

Change in Project's Development Objectives

Yes [ ]

No [ X ]

Change in Results Framework

Yes [ X ]

No [ ]

Change in Safeguard Policies Triggered

Yes [ ]

No [ X ]

Change of EA category

Yes [ ]

No [ X ]

Other Changes to Safeguards

Yes [ ]

No [ X ]

Change in Legal Covenants

Yes [ X ]

No [ ]

Change in Loan Closing Date(s)

Yes [ X ]

No [ ]

Cancellations Proposed

Yes [ ]

No [ X ]

Change to Financing Plan

Yes [ ]

No [ X ]

Change in Disbursement Arrangements

Yes [ ]

No [ X ]

Reallocation between Disbursement Categories

Yes [ ]

No [ X ]

Change in Disbursement Estimates

Yes [ X ]

No [ ]

Change to Components and Cost

Yes [ X ]

No [ ]

Change in Institutional Arrangements

Yes [ X ]

No [ ]

Change in Financial Management

Yes [ X ]

No [ ]

Change in Procurement

Yes [ X ]

No [ ]

Change in Implementation Schedule

Yes [ X ]

No [ ]

Other Change(s)

Yes [ ]

No [ X ]

Appraisal Summary Change in Economic and Financial Analysis

Yes [ X ]

No [ ]

Appraisal Summary Change in Technical Analysis

Yes [ X ]

No [ ]

Appraisal Summary Change in Social Analysis

Yes [ ]

No [ X ]

Appraisal Summary Change in Environmental Analysis

Yes [ ]

No [ X ]

Appraisal Summary Change in Risk Assessment

Yes [ X ]

No [ ]

.

B. Project Status

Overall, the Project continues to achieve tangible results and is highly valued by communities and local governments. At least two of the Project’s outcome indicators have already been exceeded: (i) reports on public participation confirm that approximately 3.6 million communities have participated in democratic forums for planning, implementing and overseeing initiatives that directly address local development priorities; and (ii) more than 50% of beneficiaries are females. While a number of surveys to verify the Project’s outcome values are yet to be carried out (planned for early 2015), given that the Project is making good progress towards meeting the majority of its intermediary results indicators (IRIs), and based on its overall implementation progress as well as the performance of the Project’s predecessor (PNPM IV), it would be reasonable to assume that the Project is making good progress towards reaching its objectives.

In terms of implementation progress, as of December 2014, more than 93 percent of the total Block Grant budget for FY2014 was disbursed from the Treasury Office to the PNPM Sub-District Financial Management Units (UPKs). For the most part, the Bank’s supervision and evaluation studies confirm the economic efficiency of the infrastructure implemented under this component and beneficiary satisfaction levels with regard to the prioritization and quality of infrastructure. Activities under Components 2 (Community Empowerment and Facilitation) and 3 (Implementation Support and Technical Assistance) are also underway. Key achievements include the engagement of more than 14,000 facilitators in 2014; and geographic coverage of supervision, which reached 70% of 391 Districts (carried out by the National Management Consultant) and an average of 75% of 5,146 Sub-Districts (carried out by the Regional Management Consultants).

However, more recently, the Project’s Mid-Term Review, conducted in November 2014, and a technical mission, conducted in January 2015, found that the Project’s performance had weakened in some areas. To this end, the Project was significantly impacted by the Village Law No. 6/2014 (VL). The passing of the VL prompted key institutional and sectoral changes, which in turn, affected the portfolios of certain ministries and resulted in delays in the GOI’s approval of the Project’s budget for 2015. Key activities such as facilitation and consultant supervision were subsequently suspended as their contracts expired on December 31, 2014. GOI is now taking decisive action to address these issues and recommence Project implementation. Therefore, despite these challenges, and given the progress made in the earlier part of the Project, it is expected that the Project's development objectives will still be achieved.

.

C. Proposed Changes

.

Change in Implementing Agency

Implementing Agency Name

Type

Action

Menko Kesra

Implementing Agency

Marked for Deletion

Ministry of Village, Disadvantaged Areas and Transmigration

Implementing Agency

New

.

Development Objectives/Results

Project Development Objectives

Original PDO

The PDO of the Project is for villagers in PNPM-Rural locations to benefit from improved local governance and socio-economic conditions.

Change in Project's Development Objectives

Change in Results Framework

Explanation:

The following changes will align the RF with the Project’s emerging results and will ensure that the new implementing agency can focus on fewer but clearer, measurable indicators: (a) a modification to the baseline and target values of the total number of beneficiaries and its related baseline measurement and target values from 40 to 30 million; (b) amending the language associated with three IRIs relating to the completion of work plans, the Revolving Loan Fund (RLF), and the UPK (PNPM Sub-District Financial Management Units) management of the RLF; (c) deleting two IRIs that monitor annual coordination meetings and the economic empowerment stakeholder fora, which do not feature in the Project's implementing or monitoring arrangements and do not provide any measurable insights on performance; and (d) the end-of-project dates will change to December 31, 2016 to reflect the new loan closing date.

.

Change in Legal Covenants

Explanation:

The language used under the existing legal covenant on institutional arrangements will be amended to reflect the new implementing agency and the need to establish a new Secretariat by July 31, 2015. The following covenants will be added: (1) the Borrower, through MoV, shall develop terms of reference (TORs) and confirm the appointments of the following consultants in a manner satisfactory to the Borrower and the Bank not later than July 31, 2015: (a) Team Leader; (b) Two Senior Financial Management Officers; (c) Senior Procurement Officer; and (d) Senior MIS Specialist; (2) the Borrower, through MoV, shall ensure the issuance of TORs and standard operating procedures for the in a manner satisfactory to the Borrower and the Bank not later than by June 30, 2015; and (3) the Borrower, through MoV, shall develop guidelines for facilitation, the closure of PNPM Rural, the transfer of assets and the management of revolving funds by December 31, 2015.

Ln/Cr/TF

Finance Agreement Reference

Description of Covenant

Date Due

Status

Recurrent

Frequency

Action

IBRD-82170

Schedule 2, Section I.A.1(c)(v)

The Borrower, through PMD, shall establish the Joint Secretariat comprised of representatives of the relevant directorates in PMD to improve coordination and programming, including budgeting, of PNPM activities by July 1, 2013.

01-Jul-2013

Not complied with

Revised

IBRD-82170

Schedule 2, Section I.A.1(c)(v)

The Borrower, through MoV, shall establish and maintain, until the completion of the Project, the Secretariat, with a mandate, staff composition, filled staff positions, and TORs acceptable to the Bank and the Borrower, to be responsible for improving general coordination, coherence and budgeting; and ensure that it shall be provided with adequate resources, supported by qualified personnel comprising of relevant directorates from within MoV including legal, technical, procurement and financial consultant specialists in adequate numbers as needed to accomplish the objectives of the Project.

31-Jul-2015

Not yet due

Proposed

IBRD-82170

Schedule 2, Section II.B 8

The Borrower, through PMD, shall ensure that the relevant Camat and Bupati in each Project Kecamatan and Project Kabupaten shall make publicly available, in a manner acceptable to the Borrower and the Bank, a report on the results of Project implementation and accounts for funds used during each year of Project implementation, by no later than May 15 of each subsequent year.

Complied with

Yearly

No Change

IBRD-82170

Schedule 2, Section II.B 9

The Borrower, through PMD, shall ensure that all annual audit reports referred to in Section II.B of this Schedule 2, including Kabupaten audit reports, shall be published on the PNPM Website by no later than September 30 in each year of Project implementation.

After delay complied with

Yearly

No Change

IBRD-82170

Schedule 2, Section II, B (c)

No withdrawal shall be made under

category (1) in the table in SectionI.A of this Schedule 2 for

Kecamatan Grants unless the Borrower has adopted a revision to the Operations Manual satisfactory to the Borrower and the Bank.

31-Mar-2013

Complied with

No Change

IBRD-82170

Schedule 2, Section I.A 1 (c) (i)

The Borrower, through MoV, shall ensure the issuance of terms of reference and standard operating procedures for the Facilitators in a manner satisfactory to the Borrower and the Bank.

30-Jun-2015

Not yet due

New

IBRD-82170


The Borrower, through MoV, shall finalize the terms of reference and confirm the appointments of: (a) a Team Leader; (b) two senior financial management officers; (c) a senior procurement officer; and (iv) a senior management information system specialist.

31-Jul-2015

Not yet due

New

IBRD-82170


The Borrower, through MoV, shall develop guidelines for facilitation, the closure of PNPM Rural, the transfer of assets and the management of revolving funds in a manner satisfactory to the Borrower and the Bank.

31-Dec-2015

Not yet due

New

.

Financing

Change in Loan Closing Date(s)

Explanation:

A 12 month extension of the Loan closing date is proposed to compensate for the delays associated with the change in institutional arrangements and delayed budget availability; and to facilitate the successful completion and handover of project activities and assets and achieve the PDO. This will be the first extension of the closing date.

Ln/Cr/TF

Status

Original Closing Date

Current Closing Date

Proposed Closing Date

Previous Closing Date(s)

IBRD-82170

Effective

31-Dec-2015

31-Dec-2015

31-Dec-2016

31-Dec-2015

Disbursement Estimates

Change in Disbursement Estimates

Explanation:

The Project has disbursed more slowly than projected due to implementation delays associated with project management start-up issues and delayed provision of counterpart funds (DIPA). It is unlikely that MoV will be able to utilize the remaining loan funds before the end of FY2015 given the delays in providing DIPA, which are not anticipated to be provided again until September 2015. The disbursement estimates are therefore realigned with the new Loan closing date of December 31, 2016.

Fiscal Year

Current (USD)

Proposed (USD)

2013

333,000,000.00

50,000,000.00

2014

125,000,000.00

300,000,000.00

2015

150,000,000.00

50,000,000.00

2016

42,000,000.00

210,000,000.00

2017

0.00

40,000,000.00

Total

650,000,000.00

650,000,000.00

.

Components

Change to Components and Cost

Explanation:

Component 3 provides oversight, technical advisory services, training and other support for: (a) PNPM at the national and sub-national levels; (b) strengthening of the implementing agency; and (c) incremental activities generated by the Project. It focuses on strengthening the overall delivery system to ensure that it can respond effectively to emerging demands. There are no significant changes to the Component’s overall objectives and costs. However, the changes will introduce a new sub-components in the Project's description: "Part 3a" of the Project will be implemented by MoV. However, the Project's overall disbursement arrangements remain unchanged.

Current Component Name

Proposed Component Name

Current Cost (US$M)

Proposed Cost (US$M)

Action

Kecamatan Grants

3,723.77

3,723.77

No Change

Community Empowerment and Facilitation

496.21

496.21

No Change

Implementation Support and Technical Assistance

280.03

280.03

No Change

Total:

4,500.01

4,500.01

.

Other Change(s)

Change in Institutional Arrangements

Explanation:

The Implementing Agency will change from MoHA to MoV in accordance with Presidential Regulation 12/2015 and 13/2015. The Project will be implemented by the Directorate General (DG) for Village Development and Empowerment at MoV.

The new structure will consist of six DG offices, one of which is the DG of Village Development and Empowerment (“PPMD.”) This DG will be comprised of five Directorates, one of which will be the Directorate for Village and Community Empowerment. This DG will be responsible for the completion of PNPM Rural and also contain the Central Satker (National Project Management Unit), which will be headed by the Director. To ensure coherence in the implementation of policy and programming, a Secretariat consisting of representatives from MoHA, MoV and key specialists will be established. This will help to ensure continuity and coordination in programming as well as provide additional management and technical capacity to support MoV in the finalization and handover of tasks anticipated under PNPM Rural and planning under the implementation of VL.

The Project's institutional arrangements and technical assistance structure (TA) under the DG for Village and Community Empowerment will replicate the national structure that was established under MoHA with some minor modifications:

(i) The DG of Village Development and Empowerment is responsible for the finalization and closure of PNPM as well as the implementation of VL. In accordance with Presidential Regulation 12/2015, the DG is responsible for village development and empowerment. Its main duties will focus on organizing and formulating the implementation of policies in the field, including those that relate to the: (a) management of basic social services; (b) business development of rural economy; (c) utilization of natural resources and appropriate technology; (d) development of rural infrastructure; and (e) empowerment of rural communities.

(ii) The DG for Village and Community Empowerment (and Central Satker/National Project Management Unit) serves as the national program management unit and functions under the DG for Village and Community Empowerment. The Central Satker: (a) is responsible for the overall management and general administration of the PNPM and VL technical planning; (b) administers regulations and implements policies relating to the closure and handover of PNPM assets to local governments; (c) is responsible for managing the budget for the PNPM, including contracting of consultants and Administrative Service Firms (ASFs); and (d) instructs Provincial Governments to establish PNPM Provincial Satkers to manage facilitators and PNPM District Satkers to assist and coordinate project activities as well as prepare for VL implementation at the District level and below.

(iii) The Secretariat: (a) provides national level support and assistance to the Central Satker on the development of operational guidelines, standard operating procedures and provides technical, administrative and fiduciary support for both the PNPM and VL planning; and (b) is comprised of government officers from MoV and MOHA as well as key consultant specialists and supporting staff.

(iv) The Head of the Secretariat will be appointed by the Director of the Central Satker. The position will manage day-to-day activities of the Secretariat. A key function of this role will be liaising with other GOI agencies and development partners.

(v) Additional coordination will be provided by the Team for Acceleration on PNPM Mandiri Transition and the Preparation of the Implementation of Law No. 6 ("Tim Percepatan Pengalihan PNPM Mandiri Perdesaan dan Persiapan Pelaksanaan UU No. 6 Tahun 2014") chaired by Menko Bidang PMK, with representatives of relevant ministries, including BAPPENAS (National Development Planning Agency), MOHA, Ministry of Finance, MOV and Ministry of Communication and Information.

In addition, the implementing arrangements at the sub-national level, for the most part, will remain intact with the exception of the following key changes: (a) the Activity Management Units (UPK) may be transitioned into a unit under the Inter-Village Cooperation Board (BKAD); (b) Village Governments will assume a stronger role in determining and managing empowerment and development activities; and (c) the Activity Implementation Teams will be replaced by Village Implementation Teams.

Change in Financial Management

Explanation:

A financial management (FM) assessment of MoV was undertaken to determine whether the MoV’s FM system has the capacity to produce timely, relevant and reliable financial information to support the closing process of Project and transition arrangements for the implementation of the VL; and if the FM arrangement for the Project’s expenditures and underlying internal controls are adequate to meet the Project’s fiduciary needs and satisfy the Bank’s OP/BP 10. It was concluded that the Project’s funds flow arrangements, FM systems and organization at the local level will remain the same. Therefore, the FM assessment dated September 21, 2012 (last revision) for the Project is applied, including all risks (fiduciary risk is rated as Substantial) and mitigation measures. However, the recent delays in approving the DIPA, which resulted in the suspension of field supervision activities, may warrant the need for a higher FM risk. Furthermore, changing the Central Satker, creates three additional risks. The first risk is the FM capacity of the national staff, since MoV has limited experience in managing the Project. The second risk is the internal control on transferring PNPM assets, especially the RLF Capital, in the absence of consultants and facilitators. The third risk is the ability to manage the Complaints Handling System (CHS) and resolve the back-log of outstanding cases. To partially mitigate these risks, it was agreed that the Secretariat will: (i) include a minimum of two FM consultants; (ii) re-engage the Project’s consultants and facilitators as soon as the DIPA is approved; and (iii) transfer the CHS server from MoHA, appoint a Legal Advisor in the Secretariat who will backstop the District Governments and Complaints Handling Specialists based at in Provincial Coordinators Office, and support the Senior Micro Finance Specialist on the RLF. In addition, the Bank through its “Programmatic-AAA” facility will provide technical assistance to help GOI strengthen certain aspects of the Village Law Public Financial Management System. Another FM assessment will be completed after the establishment of the Project Management Unit and Secretariat.

Change in Procurement

Explanation:

An assessment of MoV’s procurement systems and capacities was carried out. It concluded that procurement under the Project will continue to be carried out following applicable Bank’s Procurement and Consultant Guidelines in accordance with Loan agreement. MoV confirmed that a Procurement Services Unit (ULP) is already established in MoV and the procurement under the Project is expected to be carried out by the Procurement Committee (POKJA) under the same ULP. In addition, as part of the transfer of staff from MoHA’s PMD to MoV, it was expected that some members of the current Procurement Committee (POKJA) under the ULP of PMD/MOHA (responsible for procurement under the PNPM-Rural Project) would also be transferred. MoV requested that the Bank conduct the first procurement training immediately after the Satker and Secretariat are established. It was also agreed that MoV would immediately recruit a Senior Procurement Officer within the Secretariat. In the interim, the Bank will continue to provide technical support as needed.

While no significant changes are envisages, the main risk from a procurement perspective during the transition from MoHA to MoV, is to ensure that the Project handover included a comprehensive stocktaking and inventory of contracts certified by MoHA. To this end, the Bank was informed that the contracts for the NMC and ASFs for seven regions and other contracts executed under the current Project have been terminated. To this end, the contracts in terms of physical progress, actual payments, pending claims/disputes, will need to be reconciled. MoV agreed that such reconciled statement information will be provided to the Bank upon issuance of the official note for transferring the Project. The Bank informed MoV that in order to ensure continuity of services under the Project, MoV should finalize the TORs/Bill of Quantities and related specifications consider contracting the same firms on a Direct Contracting basis using the same unit rates subject to their satisfactory performance. For the ASFs, MoV confirmed that it will re-engage the firms for a further four to nine months, subject to the availability of the funds. It was informed that the contracts are expected to be financed by both the Loan and Government funds. The Bank agreed to re-procure the firms through single-source selection/direct contracting and/or consider other firms selected by MoV as well as use other applicable competitive methods. These proposed scenarios could be applied for the partial or full duration of the Project but were subject to the submission of the updated contract status. MoV will prepare a draft Procurement Plan by June 30, 2015.

In addition, it was agreed that the same scheme for selection and hiring of facilitators (as individual consultants) on the basis of single-source selection with the previous facilitators will be applied. MoV informed that based on the current circumstances of the Project, some of the previous facilitators may no longer available in view of their other contractual commitments, and that in such cases, selection of new facilitators will be carried out through competitive selection (i.e. comparison of 3 CVs) and/or single-source selection if more than one qualified candidate is not available, which was agreed to by the Bank. It was further agreed that based on the availability of funds in the DIPA, the contractual scheme would be the same (hired by Provincial Satker). MoV further confirmed that the Procurement at the community level shall be carried out following a revised Project Operations Manual. However, since all loan funding has already been expended, reimbursed and accounted for under the block grant (BLM), these new arrangements would not have an impact on Loan financing as the remaining funds would be utilized for facilitation, capacity development and consultant support.

Change in Implementation Schedule

Explanation:

The Project's implementation schedule will be realigned with the extension of the Closing Date to December 31, 2016. The main focus during the remaining Project period will be on reactivating the facilitation and technical assistance structure to support closing out activities, which will involve, inter alia, ensuring that all assets financed by the Project are handed over to the village governments in accordance with Village Law 6/2014; that an inventory of all assets (both physical and financial) is carried out, valued and certified by respective government authorities; and that the financial closing of project books and accounts as well as the monitoring and information system is completed. In addition, further resources will be made available to support GOI’s first year planning for Village Law implementation. A revised work plan and budget for 2015-2016 are currently being prepared and will be submitted to the Bank for prior review by June 30, 2015.

.

Appraisal Summary

Appraisal Summary Change in Economic and Financial Analysis

Explanation:

An updated Economic Internal Rate of Return (EIRR) survey to verify the Project’s economic value, economic impacts from cost-savings, higher productivity/lower cost to access, and local level multipliers will be carried out in mid-2015. However, it is reasonable to assume that the economic impacts of subprojects financed by the Project would remain consistent with previous estimations. At the same time, the economic value could be lower than EIRRs of subprojects presented in the 2012 study because the study: (i) assumed a low shadow wage rate factor for unskilled labor; and (ii) assumed that benefits generated by a subproject remained constant over time until the end of its service life, even though benefits should in practice gradually decline because of maintenance—in addition to the fact that most Sub-Districts in the country have by now received several rounds of block grants, and may well have used the first rounds to finance the most economically viable subprojects. The economic impact of most subprojects will, in all likelihood, remain above the economic opportunity cost of capital. Taking into account these qualifications, and the fact that the majority of the intended infrastructure subprojects have already been completed within the existing time frame, the proposed changes are unlikely to significantly affect the Project’s overall economic impact.

A financial analysis is only applicable for the use of the RLF. While up to 20 percent of the BLM is eligible for reimbursement under block grants for RLFs and training, in 2013 and 2014, percentages reimbursed are estimated to have only amounted to 6% and 9%, respectively. Given that the RLF remains a small portion of the loan amount, impact evaluations have not included the RLF, and as such, the overall financial efficacy of the program and its development impact on beneficiaries remains unclear. However, almost 40% households in a 2012 beneficiary survey claimed to have benefited from the RLF and other economic-related activities. At the same time, the information reported by the NMC points to the fact that certain aspects of the RLF’s overall performance have deteriorated over time. As of September 2014, the percentage of Non-Performing Loans constituted about 34 percent of RLF portfolio (compared with a target of 18 percent for 2014); and 57 percent of UPKs are evaluated as administratively and financially healthy (compared with a target of 70 percent for 2014).

Appraisal Summary Change in Technical Analysis

Explanation:

The Project’s technical approach and structure will largely remain the same, including the role of technical assistance in the delivery system. The contracts for the six Regional Management Consultants (RMCs), which were suspended on December 31, 2014, will be retendered by MoV with some modifications to their scope of works. Funds have been made available in the national budget for the Provincial Satkers to be re-established in order to re-engage the 14,000+ District and Sub-District facilitators and hire additional facilitators to meet the growing planning needs under VL implementation. However, some modification to the scope of consultant support will be required in order to strengthen the integration of national consultants within the Secretariat and implementation of reforms to the facilitation and training system. Given the former implementing agency’s past experience, and in view of the changing institutional context, MoV will hire consultants, as needed, on an individual basis and at the same time, retender a new National Management Consultant (firm) contract, to support the additional oversight needed for VL implementation.

In view of the winding down of the PNPM Rural program and commencement of the VL, TORs for consultants and facilitators will be revised to focus on the completion of the PNPM Rural and safeguarding of assets, while at the same time, beginning to support planning needs under VL implementation. Revised TORs for both the technical and social facilitators will be prior reviewed by the Bank. The curriculum for the facilitators’ refresher training will be realigned with new tasks, and discussions are underway about the need to establish a national facilitation certification program. The training reforms will provide a good opportunity to bring attention and awareness to critical technical and practical issues such as the design, construction, maintenance and sustainability of sub-projects; and occupational health and safety as well as the facilitation of voluntary land donation. In addition, the Project Operations Manual (PTO) will be revised to reflect changes to implementation with the commencement of the VL, which involve the application of new government regulations and guidelines.

Although more than 100 staff will be transferred over from MoHA’s PMD to MoV, MoV is currently limited in the skills of available personnel to manage the technical functions and day-to-day responsibilities of the Project. As such, key technical and fiduciary personnel will be required to oversee and implement the Project. To mitigate these risks, additional staff in the Secretariat have been agreed to, and they will either be nominated from within MoV or recruited as consultants over the coming months. The early mobilization of key TA (five key specialists) to support the inventory and handover of materials and assets from MoHA, prepare work plans, implementation procedures and provide short-term support on project management (team leader/project management officer), financial Management (two accountants), procurement (procurement/contracts officer) and on the Project’s Monitoring Information Systems (MIS Specialist), will be a critical factor in reactivating the Project.

In addition, a number of existing and new firms will be contracted to provide specialized IT and database services and carry out certain activities, such as the refresher training for facilitators under Component 2 and the validation and inventory of all infrastructure and financial assets accrued under the PNPM Rural portfolio as MoV has limited relevant experience in these areas. Where possible, existing consultant contracts will be amended to ensure Project activities can resume quickly. However, in some cases, new contracts may need to be procured. A revised Procurement Plan will be submitted to the Bank by June 30, 2015.

Appraisal Summary Change in Risk Assessment

Explanation:

In view of these implementation delays and other factors related to the transition of the Project, the Project’s overall Risk Rating was increased from Moderate to Substantial.

.

Systematic Operations Risk-Rating Tool (SORT)

Risk Category

Rating

1. Political and Governance

Substantial

2. Macroeconomic

Low

3. Sector Strategies and Policies

Substantial

4. Technical Design of Project or Program

Moderate

5. Institutional Capacity for Implementation and Sustainability

Substantial

6. Fiduciary

Substantial

7. Environment and Social

Low

8. Stakeholders

Moderate

9. Other

N/A

OVERALL

Substantial

Explanation

19

ANNEX 1

Results Framework and Monitoring

INDONESIA: RURAL 2012-2015 (P128832)

Project Development Objectives

Original Project Development Objective:

The PDO is for villagers in PNPM-Rural locations to benefit from improved local governance and socio-economic conditions.

Results

Core sector indicators are considered: Yes

Results reporting level: Project Level

.

Project Development Objective Indicators

Status

Indicator Name

Core

Unit of Measure

Baseline

Actual(Current)

End Target

Revised

Households have low-cost access to infrastructure or services selected by the community.

Percentage

Value

0.00

0.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2015

Comment

Baseline not previously tracked systematically and not previously compiled.

Incidents of Benefits Survey data collected. Analysis to be completed in mid-2015.

Households have low-cost access to infrastructure or services selected by the community.

Percentage

Value

0.00

0.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Incidents of Benefits Survey data collected. Analysis to be completed in early 2015.

Revised

Communities are involved in participatory and democratic forums for planning, implementing and overseeing initiatives that directly address local development priorities

Number

Value

2270000.00

3600000.00

3000000.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2015

Comment

2.27 million participating in hamlet-level consultative meetings (2011)

Based on NMC QPR for end June 2014. Result exceeds 2014 target of 3 million. The previous result was provided on the basis of reporting by the implementing agency. However, upon further investigation by the task team, it was determined that the previous result (14.2 million) was incorrectly reported as the implementing agency had been double counting beneficiaries across the planning and decision meetings.

Communities are involved in participatory and democratic forums for planning, implementing and overseeing initiatives that directly address local development priorities

Number

Value

2270000.00

3600000.00

3000000.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

2.27 million participating in hamlet-level consultative meetings (2011)

Based on NMC QPR for end June 2014. Result exceeds 2014 target of 3 million. The previous result was provided on the basis of reporting by the implementing agency. However, upon further investigation by the task team it was determined that the previous result (14.2 million) was incorrectly reported as the implementing agency had been double counting beneficiaries across the planning and decision meetings.

Revised

Projects funded by PNPM provide economic benefits (direct and indirect) for community members.

Amount(USD)

Value

0.00

0.00

10.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2015

Comment


Data collected for sub-indicators

2012/2013 Economic Analysis to be carried out in early 2015.

10% percentage increase expected at the end of project. (Unit measure not in USD).

Projects funded by PNPM provide economic benefits (direct and indirect) for community members.

Amount(USD)

Value

0.00

0.00

10.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Data collected for sub-indicators

2012/2013 Economic Analysis to be carried out in early 2015.

10% percentage increase expected at the end of project. (Unit measure not in USD).

No Change

Change in productivity and/or lower cost of access

Percentage

Value

0.00

0.00

10.00

Sub Type

Supplemental

No Change

Local-level multipliers

Number

Value

1.17

0.00

1.20

Sub Type

Supplemental

No Change

Cost savings over regular procurement

Percentage

Value

56.00

20.00

35.00

Sub Type

Supplemental

Revised

Beneficiaries feel project investments reflect their needs

Percentage

Value

0.00

0.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2015

Comment

Baseline not previously tracked systematically and not previously compiled

Incidents of Benefits Survey data collected. Analysis to be completed in mid-2015.

Beneficiaries feel project investments reflect their needs

Percentage

Value

0.00

0.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

Baseline not previously tracked systematically and not previously compiled

Incidents of Benefits Survey data collected. Analysis to be completed in early 2015.

Revised

Direct project beneficiaries

Number

Value

30000000.00

2500000.00

30000000.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2016

Comment

Baseline value was based on the overly optimistic assumption that the project would cover all villages in the country (to date, PNPM-Rural has covered about 60,000 of Indonesia’s 73,000 villages).

As per NMC QPR for end September 2014. Part of the shortfall may be explained by a reduction in the average block grant (BLM) amount per Kecamatan, which decreased by about 25% from 2010 to 2013. Target not achieved. The previous result included a typo and should have reported 27 million.

Direct project beneficiaries

Number

Value

40000000.00

2500000.00

40000000.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

Baseline value was based on the overly optimistic assumption that the project would cover all villages in the country (to date, PNPM-Rural has covered about 60,000 of Indonesia’s 73,000 villages).

As per NMC QPR for end September 2014. Part of the shortfall may be explained by a reduction in the average block grant (BLM) amount per Kecamatan, which decreased by about 25% from 2010 to 2013. Target not achieved. The previous result included a typo and should have reported 27 million.

No Change

Female beneficiaries

Percentage

Value

48.00

50.40

50.00

Sub Type

Supplemental

Intermediate Results Indicators

Status

Indicator Name

Core

Unit of Measure

Baseline

Actual(Current)

End Target

Revised

% of poor community members who participate in planning, decision-making

Percentage

Value

45.00

50.00

45.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

The baseline remains at 45% throughout the lifespan of the project because based on previous experience, the task team projected that this would be the highest estimation that could be reached given the national scale up of the project and efforts are instead focused on ensuring that the target would be maintained.

As per NMC QPR for end September 2014. Target of 45% exceeded.

% of poor community members who participate in planning, decision-making

Percentage

Value

45.00

50.00

45.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


As per NMC QPR for end September 2014. Target of 45% exceeded.

Revised

% of participants in planning and decision-making meetings who are women

Percentage

Value

50.00

45.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


As per NMC QPR for end September 2014. Target for 2014 (45%) achieved.

% of participants in planning and decision-making meetings who are women

Percentage

Value

50.00

45.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


As per NMC QPR for end September 2014. Target for 2014 (45%) achieved.

Revised

Percentage of work plans completed in one program cycle (18 months)

Percentage

Value

85.00

4.50

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. The target for 2014 (90%) has not been achieved. According to the report, 1,591 of 35,688 villages have completed their work plans. This figure is considerably lower than last year because it is calculated on a yearly basis (through an 18 month cycle that completes in June 2015). At the time of the QPR submission (a third of the way through the project cycle), the NMC had not received all results from the field.

> 85% of work plans completed in one program cycle (18 months

Percentage

Value

85.00

4.50

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. The target for 2014 (90%) has not been achieved. According to the report, 1,591 of 35,688 villages have completed their work plans. This figure is considerably lower than last year because it is calculated on a yearly basis (through an 18 month cycle that completes in June 2015). At the time of the QPR submission (a third of the way through the project cycle), the NMC had not received all results from the field.

Revised

% of infrastructure works of high quality

Percentage

Value

67.00

79.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. The result is within the range of the target value for 2014 (80%).

% of infrastructure works of high quality

Percentage

Value

67.00

79.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of infrastructure works utilized by community members.

Percentage

Value

0.00

96.00

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. Result exceeds target of 90%.

% of infrastructure works utilized by community members.

Percentage

Value

0.00

96.00

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Result exceeds target of 90%.

Revised

Sub-projects for which O&M arrangements involving community members are established and functional.

Percentage

Value

85.00

84.00

85.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


Sub-projects for which O&M arrangements involving community members are established and functional.

Percentage

Value

85.00

84.00

85.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of RLF groups that are evaluated as mature/ready to be channeled to regular financial institutions.

Percentage

Value

5.00

9.10

10.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Target for 2014 of 7.5% exceeded.

% of RLF groups that are evaluated as mature/ready to be channeled to regular financial institutions.

Percentage

Value

5.00

9.10

10.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Target for 2014 of 7.5% exceeded.

Marked for Deletion

% of districts that conduct annual coordination meetings between PNPM-Rural (Satker) and other GOI teams to discuss PNPM-Rural activities.

Percentage

Value

80.00

34.00

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Target for2014 (90%) not achieved.

Revised

% of district that link the district‘s progress report into the local government‘s website.

Percentage

Value

0.00

50.00

30.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. Target for 2014 of 20% exceeded.

% of district that link the district‘s progress report into the local government‘s website.

Percentage

Value

0.00

50.00

30.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of villages which are assisted to review their mid-term village development plans.

Percentage

Value

60.00

3.00

70.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. Target for 2014 of 70% not achieved. Of a total of 67,100 villages, only 1,818 have reported to have had their mid-term plans reviewed. This figure is considerably lower than last year because it is calculated on a yearly basis (through an 18 month cycle). At the time of the QPR submission, the NMC had not received all results from the field.

% of villages which are assisted to review their mid-term village development plans.

Percentage

Value

60.00

3.00

70.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Target for 2014 of 70% not achieved. Of a total of 67,100 villages, only 1,818 have reported to have had their mid-term plans reviewed. This figure is considerably lower than last year because it is calculated on a yearly basis (through an 18 month cycle). At the time of the QPR submission, the NMC had not received all results from the field.

Revised

% of BP-UPK that conducted audit minimum once a year.

Percentage

Value

60.00

73.00

65.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

estimated


% of BP-UPK that conducted audit minimum once a year.

Percentage

Value

60.00

73.00

65.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

estimated


Revised

% of BKAD that conduct supervision and M+E

Percentage

Value

40.00

88.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


% of BKAD that conduct supervision and M+E

Percentage

Value

40.00

88.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of villages with a functional community oversight team.

Percentage

Value

50.00

72.00

60.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. Target for 2014 of 60% exceeded. Villages have reported to have established 49,988 oversight teams, of which 35,979 are reported to be active and functioning well.

% of villages with a functional community oversight team.

Percentage

Value

50.00

72.00

60.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Target for 2014 of 60% exceeded. Villages have reported to have established 49,988 oversight teams, of which 35,979 are reported to be active and functioning well.

Revised

% of members of the community oversight team who are women.

Percentage

Value

30.00

32.00

30.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


% of members of the community oversight team who are women.

Percentage

Value

30.00

32.00

30.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of villages with updated information board.

Percentage

Value

70.00

87.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


% of villages with updated information board.

Percentage

Value

70.00

87.00

80.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Marked for Deletion

# of districts which establish Economic Empowerment Stakeholder Fora.

Percentage

Value

50.00

23.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

The baseline was not established during preparation. However, was subsequently set by the implementing agency.

As per NMC QPR for end September 2014. Target of 50% not achieved.

Revised

# of SPP groups funded

Number

Value

0.00

9206.00

13400.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2016

Comment

Baseline value not provided.

As per NMC QPR for end September 2014. No baseline or target values provided in the PAD to compare with. However, a target of 13,400 has been set by the implementing agency.

# of business proposals funded

Number

Value

0.00

9206.00

13400.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

Baseline value not provided.

As per NMC QPR for end September 2014. No baseline or target values provided in the PAD to compare with. However, a target of 13,400 has been set by the implementing agency.

Revised

Percentage of UPKs that are evaluated as healthy administratively and financially healthy

Percentage

Value

60.00

53.00

70.00

Date

08-Nov-2012

30-Sep-2014

31-Dec-2016

Comment

Data collected in four provinces of RLF Sustainability Pilot

As per NMC QPR for end September 2014. Target for 2014 of 70% not achieved.

% of UPKs that are evaluated as healthy administrative and financially for RLF

Percentage

Value

60.00

53.00

70.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

Data collected in four provinces of RLF Sustainability Pilot


Revised

% of Non-Performing Loans (Collectability 2-5).

Percentage

Value

23.00

25.00

12.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


% of Non-Performing Loans (Collectability 2-5).

Percentage

Value

23.00

25.00

12.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of corruption cases that are resolved

Percentage

Value

40.00

28.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


% of corruption cases that are resolved

Percentage

Value

40.00

28.00

50.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


Revised

% of sub-districts audited each year and for which the results are published.

Percentage

Value

20.00

10.00

20.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment

As per NMC QPR for end September 2014. Target for 2014 of 20% not achieved. However, based on the project's previous experience, the target is expected to be achieved.

% of sub-districts audited each year and for which the results are published.

Percentage

Value

20.00

10.00

20.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment

As per NMC QPR for end September 2014. Target for 2014 of 20% not achieved but as with the project's previous experience is expected to be achieved by the end of the calendar year.

Revised

% of province that provide complete monthly report in timely manner.

Percentage

Value

70.00

100.00

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2016

Comment


% of province that provide complete monthly report in timely manner.

Percentage

Value

70.00

100.00

90.00

Date

08-Nov-2012

30-Sep-2014

31-Aug-2015

Comment


.

Documents

BLANK TEMPLATE FOR FULL RESTRUCTURING · Web viewBaseline value was based on the overly optimistic assumption that the project would cover all villages in the country (to date, PNPM-Rural