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Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No. 47007-ID
PROJECT PAPER
ON A
PROPOSED ADDITIONAL FINANCING LOAN
IN THE AMOUNT OF
US%115 MILLION
TO THE
REPUBLIC OF INDONESIA
FOR THE
NATIONAL PROGRAM FOR COMMUNITY EMPOWERMENT IN URBAN AREAS
March 19,2009
Urban Development Sector Indonesia Sustainable Deve1,opment East Asia and Pacific Region
This document has a restricted distribution and maybe used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without Wor ld Bank authorization
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CURRENCY EQUIVALENTS (EXCHANGE RATE EFFECTIVE FEBRUARY 13,2009)
Currency Unit = Indonesian Rupiah IDR 1,000 = US$0.08440
US$ 1 = IDR 11,919
GO1 FISCAL YEAR
January 1 - December 31
World Bank FISCAL YEAR*
July 1 - June 30 All Fiscal Years in this document refer to World Bank defmitions unless otherwise stipulated. Where years are not labeled as
FY, they refer to calendar year (which i s the same as the GO1 FY).
ABBREVIATIONS AND ACRONYMS
BAPPENAS Bawasda BGAP BKM BP BPKP
CCT CDD CDP Dirjen Cipta Karya COSU CPS DA DFID DIPA
DSF EC FBS FM FSL FY GO1 H HH IBRD ICB ICR IDA IDB IDR
National Development Planning Board Local Supervisory Board Better Governance Action Plan Badan Keswadayan Masyarakat (Community Board o f Trustees) Bank Procedure Badan Pengawas Keuangan Pem bangunan (Development Finance Controller) Conditional Cash Transfer Program Community-Driven Development Community Development Plan Directorate General for Human Settlements Central Operational Services Unit Country Partnership Strategy Designated Account UK’s Department for International Development Daftar Isian Proyek Pusat (Approved Central Government Detailed Project Budget) Decentralization Support Facility Evaluation Consultants Fixed Based Selection Financial Management Fixed Spread Loan Fiscal Year Government o f Indonesia High Risk Households International Bank for Reconstruction and Development International Competitive Bidding Implementation Completion Report International Development Association Islamic Development Bank Indonesian Rupiah
FOR OFFICIAL USE ONLY
IFAD IFB ILGR IP ISR IVP JICA JRF KDP Kecamatan Kelurahan KPPN KSM L LAR LG LIBOR M MDF MIS MOF MPW MS N NCEP NGO N M C OP oc PAD PDO PIPP PNPM
PNPM-Urban POM QAG RFP RISE RLF
S Satker S IL SME SOE SOP SPADA T A
RP
International Fund for Agricultural Development Invitation for Bids Initiatives for Local Governance Reform Implementation Progress Plan Implementation Status Report Isolated Vulnerable People Japanese International Cooperation Agency Java Reconstruction Fund Kecamatan Development Project Sub-district Urban ward State Treasury Office Community groups Low Risk Loans At-Risk (ratio) Local Government London Interbank Offered Rate Moderate Risk Multi-Donor Trust Fund for Aceh and North Sumatra Management Information System Ministry o f Finance Ministry o f Public Works Moderately Satisfactory Negligible Risk National Program for Community Empowerment (see PNPM below) Non-Governmental Organization National Management Consultant Operational Policy Oversight Consultant Project Appraisal Document Project Development Objectives Rural Infrastructure Program Program National Pemberdayaan Masyarakat (National Program for Community Empowerment - see NCEP above) National Program for Community Empowerment in Urban Areas Project Operations Manual Quality and Assurance Group (the World Bank) Request for Proposal Regional Infrastructure, Social and Economic Project Revolving Loan Fund Rupiah Satisfactory Administrative Units Specific Investment Loan Small and Medium Enterprise Statement o f Expenditures Standard Operating Procedure Support for Poor and Disadvantaged Areas Technical Assistance
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.
TKPK
TORS UK UPK UPP US$ USDRP
Tim Koordinasi Penanggulangan Kemiskinan (National Government Poverty Coordination Committee) Terms o f Reference United Kingdom Financial Management Unit Urban Poverty Project United States Dollar Urban Sector Development and Reform Project
Vice President: James W. Adams Country Director: Joachim von Amsberg
Sector Director / Manager: Sonia Hammam Task Team Leader: George Soraya
This document has a restricted distribution and maybe used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization
I . I1 .
I11 .
IV .
V . V I . VI1 . VI11 .
INDONESIA NATIONAL PROGRAM FOR COMMUNITY EMPOWERMENT IN URBAN AREAS
(Ln.7504-INDKr 4384-IND) PROJECT PAPER FOR PROPOSED ADDITIONAL FINANCING (US$115 million)
CONTENTS
INTRODUCTION ............................................................................................................................................................... 2
BACKGROUND AND RATIONALE OF ADDITIONAL FINANCING .......................................................................... 2
PROPOSED CHANGES ..................................................................................................................................................... 8
CONSISTENCY WITH COUTRY PARTNERSHIP STRATEGY .................................................................................. 11
APPRAISAL OF SCALED-UP PROJECT ACTIVITIES ................................................................................................ 11
EXPECTED OUTCOMES ................................................................................................................................................ 12
BENEFITS AND RISKS ................................................................................................................................................... 13
FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING ................................................... 14
ANNEXES
ANNEX 1: DETAILED PROJECT DESCRIPTION .................................................................................................................. 15
ANNEX 2: PROJECT RESULTS FRAMEWORK AND MONITORING ................................................................................ 18
ANNEX 3 : PROJECT COSTS .................................................................................................................................................... 25
ANNEX 4: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS ..................................................... 26
ANNEX 5: PROCUREMENT ARRANGEMENTS ................................................................................................................... 29
ANNEX 6: IMPLEMENTATION OF REVOLVING FUND (RLF) STRATEGY: .................................................................... 33
ANNEX 7: PROGRESS FOR BETTER GOVERNANCE ACTION PLAN ............................................................................... 35
ANNEX 8: PROJECT PROCESSING ........................................................................................................................................ 40
ANNEX 9 : DOCUMENTS IN THE PROJECT FILE ................................................................................................................. 41
ANNEX 10: MAP IBRD 35898 .................................................................................................................................................. 42
PROJECT PAPER DATA SHEET
Project Name: National Program for Country Director: Joachim von Amsberg
Borrower: Republic o f Indonesia Responsible agency: Ministry o f Public Works (MPW) Revised estimated disbursements (Bank FY/US$m)* - FY 2008 2009 2010 201 1 2012 Annual 16 115 110 5 1.68 0 Cumulative 16 131 24 1 292.68 292.68 * Figures for FY09-12 are projections. In FY08, about US$16 million was disbursed, through retroactive b e c t loan was disbursed. Current closing date: March 3 1 , 20 1 1
Bank policies?
Revised project development objectives/outcomes: The project development objectives remain the same. The project development objective i s to ensure that the urban poor in PNPM-Urban locations benefit f rom improved socio-economic and local governance conditions. Does the scaled-up or restructured Droiect trigger any new safeguard Dolicies? No .
For Additional Financing [XI Loan [ ] Credit [ ] Grant For Loans/Credits/Grants:
Total Bank financing (US$m.): 1 15 Proposed terms: Standard. The additional financing will be an IBRD Fixed Spread Loan with annuity based repayment o f principal, with interest rate and currency conversion options. The loan maturity is 24.5 years, including 9 years grace. The front-end fee o f 0.25% is to be paid out o f the GO1 own proceeds.
s (Islamic Development Bank)
I. INTRODUCTION
1. This Project Paper seeks the approval o f the Executive Directors to provide an additional loan in an amount o f US$ l l 5 million to the Indonesia National Program for Community Empowerment in Urban Areas Project (PNPM-Urban, PO9692 I/ Cr4384-IND/ Ln7504-IND). The original project i s a Specific Investment Loan with an IDNIBRD blend. The additional financing i s 100% IBRD and will bring total financing up to US$292.68 million.
2. The proposed additional loan wi l l help finance the costs associated with scaled-up activities to enhance the impact o f a well-performing project. The project scope will be expanded to: (a) provide supplemental block grants to approximately 4,593 existing PNPM- Urban wards to accelerate the implementation o f ongoing mid-term village poverty alleviation programs; (b) finance a full community development cycle o f PNPM-Urban in about 1,575 additional wards to prepare them to participate in the PNPM beginning in FY09 (GO1 FY 2010); (c) incorporate awareness o f disaster risk management and emergency preparedness in the community socialization process and; (d) institute enhancements to the revolving funds component to make it more sustainable. These revisions are consistent with the project’s objectives, and will improve the effectiveness o f project implementation.
3. Partnership arrangements: In addition to World Bank financing, this project i s being co-financed by the Government o f Indonesia, through the Ministry Public Works (Directorate General o f Human Settlements) as the responsible implementing agency, as well as contributions from communities benefiting under this project. Financing for the overall PNPM urban program i s also being provided by the Islamic Development Bank (IDB).
11. BACKGROUND AND RATIONALE OF ADDITIONAL FINANCING
4. Original Credithoan. The original amount o f the PNPM-Urban i s US$177.68 mill ion (IBRD loan US$52.68 million, IDA credit SDR 78.6milliod US$125 million). The loan/ credit agreements were signed on June 6,2008 and the project became effective on July 22, 2008. The initial project was to be implemented from March 2008 with a closing date o f March 3 1, 20 1 1. With additional financing, the closing date will be extended to December 31,201 1.
5. Government Strategy. Despite impressive macro-economic growth rates over the past several years, poverty remains high in Indonesia with 3 5 million people, or 15.4 percent, below the national poverty l ine (US$1.55/day) as o f March 2008. Many households are clustered just above the poverty line, making large numbers o f Indonesians vulnerable to poverty. Non-income poverty remains a serious problem in terms o f high malnutrition and maternal mortality rates, inadequate access to safe water and sanitation, and education outcomes. Furthermore, inequality i s increasing and disparities between regions remain high. To accelerate the Government’s efforts to reduce poverty and ensure inclusiveness, on August 16, 2006, President Yudhoyono o f Indonesia announced PNPM as the policy and operational umbrella for all community empowerment programs in the country. PNPM
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builds primarily upon the previous ten years o f successful experience with the Kecamatan Development Program (KDP) and the Urban Poverty Program (UPP). The Government expects that PNPM will be the flagship poverty reduction program at the community level.
6. Progress o f PNPM roadmap. The Government has made steady progress on i ts PNPM roadmap plan, issued in early 2008. As originally planned, progress over this past year focused upon two main areas: PNPM scale-up and consolidation, and integration of other technical support programs aimed at harmonizing development support to urban and rural communities. Sub-district coverage has expanded by 172%, from 2,361 total sub districts in 2007 to the entire country (6,408 subdistricts) in 2009. Plans are to continue PNPM through 2015. The scale-up will rely on increased management capacity o f the programs under the PNPM umbrella. Four operational guidelines have been issued on general principles and operations, communication strategy, complaints handling and monitoring and evaluation, including management information systems. A national PNPM Congress was held in April 2008 followed by regional coordination meetings across the country. Administrative units (satkers) are in place at the national, provincial and districts levels and plans are to increase the capacity o f these units through additional funds, staff, training and auditing.
7. Coordination and harmonization of PNPM with other programs. The Government i s making efforts to coordinate other poverty alleviation programs through the creation o f three program clusters. The f i rs t cluster i s for individual social welfare programs, the second cluster for community-based programs such as PNPM, and the third cluster for small and medium enterprise (SME) programs. These clusters are coordinated under the National Government Poverty Coordination Committee or TKPK. A Presidential decree i s in draft form awaiting the President's signature in order to formalize the TKPK structure and functions at the national and local levels and to establish these three poverty clusters. The decree i s expected to be issued by April 2009. In addition, the Government has plans to integrate other technical programs so that kecamatan that have received three or more cycles o f PNPM can be phased into other technical support programs such as with agriculture, etc. This integration i s just starting and requires further coordination to make it effective.
8. World Bank Support. The current proposed additional financing for PNPM-Urban i s part o f a series o f urban poverty interventions supported by the Bank, beginning with UPP 1 , which was approved in 1999, followed by UPP2 in 2002 (UPP2 additional financing in 2007), UPP 3 in 2005, and PNPM-Urban in 2008. Total IBRD/IDA financing that has been approved for these operations i s about US$65 1.88 million; with the proposed additional financing to PNPM-Urban, this would increase to US$766.88 mill ion (Table 1) and the program would cover all urban wards in the country - about 13,000. The program i s one o f the largest urban poverty reduction projects in the world, with an established record o f community engagement, participation, and service delivery.
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Table 1: UPP Program - Approved & Proposed World Bank Financing
Project Phase # of New # of Existing IBRDDDA Closing Date Balance (US$rnl) (US$ml)* Period Kelurahans Kelurahans
UPP 1 1 1999-2004 I 2,621 I 0 100.00 I Jun30,2004 I UPP 2 2002-2008 2,059 0 100.00 Dec 3 1,2009 3.5
9. Project Objectives. PNPM-Urban's overall objective is to ensure that the urban poor in participating kelurahans benefit f rom improved socio-economic and local governance conditions. This i s being achieved through: (a) the formation and institutionalization o f elected representative organizations that are accountable to communities; (b) provision o f grants to communities directly and transparently to finance an open menu o f poverty alleviation activities; and (c) enhancing the capacity o f central and local governments to partner with community organizations in service provision.
UPP 3 I 2005-2011 I 1,726 I 0
10. PNPM-Urban project components, which include:
Project Components. The proposed additional financing would help support the
138.70 I Mar31,2011 I 24
i. Community and Local Government Capacity Building. This component funds the cost o f facilitators to carry out social intermediation activities and community training. I t also supports the training o f local government staff on the PNPM and leverages support f rom local governments to share costs o f sub-projects.
Financing
PNPM-Urban PNPM-Urban Additional Financing TOTAL with proposed Additional Financing
ii. Keluruhun Grants. This component supports block grants for kelurahans to execute the sub-projects identified in the community development plans (CDPs), covering an open menu o f poverty alleviation activities. Typical activities for this component fal l into three categories: infrastructure, revolving loan funds, and social assistance.
2007-2008 2,911 2,636 135.50 Dec 31,2009 1.6
2008-201 1 2,090 2,868 177.68 Mar31,2011 93
2009-2012 1,575 4,593 115.00 Mar 31,2012
12,982l 766.88
iii. Implementation and Technical Assistance. The Project Management Unit (PMU) hires consultants and facilitators to assist in project implementation. This arrangement will be evaluated and expanded to deal with the scaling up o f PNPM.
These figures include some o f the wards in small towns that are now administratively categorized as rural areas. For the purpose o f scale-up, the Government has streamlined the demarcation between these rural and urban areas. With the new demarcation, there are a total o f 11,039 urban wards in Indonesia, o f which 70% are covered by PNPM -Urban.
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11. Project Scope and Design. The structure o f the project components remains the same, but the scope will be expanded as mentioned above (see Table 1). Since the IDB i s also providing financing to the scale-up activities, for practical purposes, the Government has indicated that the Bank funds will cover 19 provinces o f the total 33 provinces. The rest w i l l be covered by IDB. Because o f IDB’s involvement, the geographic coverage under the additional financing from the Bank i s actually less than what was covered in the original project.
12. Project Implementation Arrangements. The Coordinating Ministry o f People’s Welfare chairs the PNPM Program Steering Committee (an inter-ministerial coordination committee), which consists o f representatives from the Ministries o f Public Works, Finance, Home Affairs, People’s Welfare, Cooperation and Small Medium Enterprises, and Industry and Trade. The Coordinating Ministry o f People’s Welfare also chairs the Government’s National Poverty Reduction Coordination Committee. Overall project oversight i s the responsibility o f the Ministry o f Public Works (MPW), while the day-to-day coordination i s undertaken by a PMU, assisted by satkers at central, provincial, and local government levels.
13. Project Performance to Date. Since the f i r s t UPP project that was operational from 1999-2004, several successor projects have been approved by the Board (see Table 1 above) and are under implementation. The UPP approach has reached over 7,800 wards, 70% o f the total number o f urban wards, and 8.6 million beneficiaries. The majority o f funds have supported small-scale infrastructure construction and maintenance and revolving funds schemes. As o f September 2008, the program has financed over 22,000 km o f small roads, 5,000 km o f drainage, rehabilitation o f 80,000 houses o f the poorest, 105,000 units o f solid waste and sanitation facilities, and 10,500 community health facilities. I t also financed 107,000 economic activities through the revolving funds (see Annex 6 on RLF).
14. In general ratings for UPP projects are “satisfactory.” The ICR o f UPPl was also rated satisfactory. QAG gave satisfactory ratings in i ts “quality-at-entry” assessments for the additional financing for UPP2. For PNPM-Urban, PDO and IP are also rated as satisfactory, and the legal covenants have been met.
Table 2: PNPM-Urban ISR Ranking
Summary Development Objective Rating S Overall Implementation Progress (IP) S
Project Management S Counterpart Funding S
Monitoring and Evaluation S
Current ISR Ranking
Financial Management MS
Procurement MS
15. The project i s designed with strong monitoring mechanisms to reduce the risk o f misuse o f funds and to increase transparency in decision-making at the community and local government levels.
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16. Evaluations indicate that institutional development impact has been achieved at the national, local government, and community levels. The project monitoring and evaluation system i s functional and i s tracking progress on the key project performance indicators and milestones, many o f which have been met, such as over 40% participation o f female and vulnerable groups in community meetings, more than 30% adult voters during BKM election, 22% women elected as BKM members, and over 95% CDPs completed and ratified.
17. According to the Management Information System (MIS) o f PNPM, as o f September 2008 close to 100 percent o f target areas had completed all cycles o f UPP community preparation, and most o f the funds had been disbursed to the villages. About 6.7 million people participated in the election o f the Boards o f Trustees, o f which 44 percent o f the voters were women. A total o f 7,2002 elected community organizations (BKMs) had been established, consisting o f 78,000 members who voluntarily work for the poor. A supervision mission in October 2008 noted that about 7,000 Community Development Plans have been completed and more than 40,000 sub-project proposals are being funded, mostly small-scale infrastructure. The sub-projects range from village roads, drainage schemes, housing rehabilitation, and small canals to social funds and revolving funds.
18. Technical quality o f infrastructure - roads, bridges, water, sanitation - constructed under UPP has been found to be satisfactory in over 85 percent o f sub-projects. GOI’s evaluation also concluded that infrastructure financed through UPP using a participatory approach produced savings o f more than 35 percent o f the total cost o f using contractors.
19. The UPP, as a program, has also proven to be an effective mechanism for post- disaster recovery. In response to the 2004 tsunami, the project has successfully supported the Government in quick response for a community recovery program through an MDF grant o f US$l8 million, establishing a platform for community-based housing reconstruction in Aceh and has attracted US$85 million in grant funding. Another grant o f US$60 mill ion has supported the multi-donor Java Reconstruction Fund (JRF) for a UPP-based housing reconstruction project for Yogyakarta and Java.
20. Sustainability. The Government’s PNPM, which has an estimated allocation o f US$1.7 billion per year, will be executed through 2015. Most o f this funding will be provided from the national and district governments’ budgets and community contributions, complemented by loans from the World Bank, IDB, ADB, IFAD, and JICA. A PNPM Support Facility was also established in December 2007 with contributions from the Netherlands, Danish, Australia, and the U.K (DFID).
21. The PNPM program will be implemented in two phases. The current phase, 2007 - 2009, will scale up the program to achieve full national coverage o f all 70,000 villages and wards in Indonesia. The second phase o f PNPM wi l l move toward greater sustainability with local governments taking on greater responsibility for financing and implementation. Over time, small poverty reduction initiatives *ill be folded into PNPM in order to make programming at the community level more streamlined, coordinated, and responsive to community needs.
This excludes about 2,000 BKMs that are now administratively included in rural areas.
6
22. As PNPM-Urban i s an ongoing program that receives both Government and community support, it i s highly likely it will be sustainable over the long term. Reliability o f the program has already been proven through expansion to new areas under UPP3, UPP2 Additional Financing and PNPM Urban 2008. Further, the Government has leveraged UPP to deliver other programs, such as the Neighborhood Upgrading and Shelter Sector Project funded through Asian Development Bank, for s l u m upgrading and post-disaster community- based housing reconstruction programs. The high level o f involvement o f communities and volunteers, local government participation, and continued central government support will support the sustainability o f the program. The Boards o f Trustees established under the project are collaborating with various non-governmental organizations and social organizations to channel funds to the poor. In certain places where UPP has been phased out, local governments and BKMs have chosen to work together using local governments' own resources. This demonstrates both a fiscal and an accountability relationship between local governments and communities - both integral elements in achieving better governance.
23. Rationale for Additional Financing. GO1 initially requested the Bank to provide bridge financing o f about US$177.68 million through PNPM-Urban to help launch the f i rs t phase o f PNPM in urban areas for improved access to tertiary infrastructure and core social and financial services by the poor. GO1 had indicated that, should there be a financing gap for 2009 and subsequent years, further funding would be requested from the World Bank. GOI, through BAPPENAS, has now confirmed their request for additional financing o f US$115 million to further scale-up the PNPM-Urban program.
24. As o f December 2008, US$80 million o f the original PNPM-Urban project financing had been disbursed; this figure i s expected to reach US$lOO mill ion by the end of March 2009, and most o f the community grants are expected to be disbursed by end-April 2009, at which time additional financing will be needed.
25. Total financing required for the PNPM-Urban for 2009 i s about US$268.7 million. US$79 million i s budgeted from IDB, and $75 million from Government domestic funding and community contributions. This leaves a financing gap o f US$115 million, for which GO1 has requested World Bank financing. To fit the GO1 budgeting cycle, the Government has requested that the additional financing loan be effective by end-April 2009. If the loan i s not available by then, GO1 will fail to deliver the program in about 50% o f selected wards.
26. Table 3 below shows the sources o f financing for the project, taking into account the proposed additional financing. Under the original PNPM-Urban financing, the share o f World Bank financing o f the total amount i s 55%; with additional financing, the share actually decreases to 50% given the increase in contributions from other sources.
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Source:
Borrower (and Community Contribution) International Bank for Reconstruction
(US% millions)
201.19
PNPM-Urban Additional (original) Financing
(US% millions) (US% millions) 126.50 74.69
52.68 115.00 and Development International Development Association 1 125.00 I 0.00 I 125.00 (IDA) Others (Islamic Development Bank) Total
78.98 78.98 304.18 268.67 572.85
27. Given the successful track record o f past UPP projects and the need for rapid processing o f the operation, the team has chosen to process the Government's request using OP 13.20, Additional Financing for Investment Lending. The team sees no advantage in processing a new investment operation, as it would increase borrower transaction costs without bringing substantive benefits to the project design, and may not meet the requirement o f the client for speedy operations. Without timely additional financing to PNPM-Urban, there will be a financing shortfall in the overall program, with severe consequences on PNPM.
111. PROPOSED CHANGES
28. PNPM-Urban additional financing will be consistent with current project objectives and design. The additional financing will:
Provide supplemental block grants to 4,593 kelurahans supported by UPP2, UPP3 , and PNPM-Urban projects; Add 1,575 new kelurahans (not previously covered by earlier UPP projects) to prepare them to participate in PNPM - this will mean that the project will provide financing to a total o f 6,168 new and existing urban wards; Provide basic technical assistance to wards that were covered by earlier UPPs projects to enhance their sustainability after project closure; Provide further support for community preparation for subsequent years o f PNPM; Streamline the management o f PNPM-Urban operations by integrating all National Management Consultants (NMCs) into a single N M C which will be financed by the Bank, and will provide management support for overall PNPM-Urban. IDB will finance all operations in their areas, including for community grants, OCs and facilitators; Decentralize operations to 19 provincial satkers in charge o f overseeing project implementation and managing the 4,500 kelurahan facilitators; Extend 4,500 o f 7,000 contracts for individual kelurahan facilitators; Improve protocols for disbursement o f block grants to the BKMs' bank accounts; Build the capacity o f the PMU;
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0 Improve the training program for consultants and facilitators, including modules on community-based disaster risk management;
Total Project Size
(SUSMillion) 304.18
268.67
572.85
0
0
Mainstream tools for reducing vulnerabilities against disaster risk, including climate risks; Continue the anti-corruption action plan - the Better Governance Action Plan (BGAP) - for details, see Annex 15 o f PNPM-Urban PAD; Improve the Project MIS; and Continue to implement measures to strengthen the RLF repayment systems and sustainability based on the agreed strategy under PNPM-Urban (see Annex 6).
Loan/ Credit Disbursement Estimate Size (World Bank FY)
(USSMillion) 2008 2009 2010 2011 177.68 16.00 100.00 50.00 11.68
115.00 15.00 60.00 40.00
292.68 16.00 131.00 241.00 292.68
27. Revised project costs and financing plan. PNPM-Urban i s a S I L with an initial IDAABRD blend o f about 70% and 30% respectively - IBRD loan US$52.68 million, IDA credit SDR 78.61 US$125 million. The US$115 mill ion in proposed additional financing from the World Bank will be 100% IBRD and will bring the total financing up to a 43% IDA and 57% IBRD - US$292.68 million (IBRD loan US$167.68mlY IDA credit US$125ml). Details o f project costs and financing are in Annex 3.
28. loan/ credit, given the proposed additional financing.
Disbursement arrangements. Table 4 details expected disbursements and size o f the
Approved Original
Proposed Additional Financing
Cumulative
29. Financial management. All project risks and mitigation for PNPM-Urban, are applied to the proposed PNPM additional financing. As with PNPM-Urban, the overall financial management risk rating for this financing i s assessed as “substantial” before mitigation and “moderate” after mitigation. BPKP audits for FY 2007 have been completed for UPP/PNPM- Urban with “unqualified clean” opinions. The implementing agencies and the World Bank are now in discussions with BPKP to prepare for the 2008 audits which will use agreed audit terms o f reference and include expanded coverage o f areas in light o f the scale-up next year.
30. Procurement. The overall project risk for procurement i s “moderate,” considering that major new contracts are not being undertaken; instead, the proposed additional financing will support the extension o f consulting contracts (six contracts for f i r m s and 4,500 individual consultants for facilitators) under PNPM. Procurement wi l l consist o f extending the consulting contracts for the national management consultant, oversight consultants and individual facilitators. Because o f the Government’s decision to work with IDB in certain areas, 16 existing OC contracts need to be extended by 3-4 months to completed the works under the original project. Details o f these extensions have been agreed upon during
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appraisal. Additionally, about US$2.7 million wi l l be used for procurement o f training and socialization materials by amending the ICB contracts under PNPM, and additional NCB contracts. The remaining funds will be allocated for community grants. Procurement under the community grants will follow community participation, using forms and procedures as defined in the existing Project Operational Manual o f PNPM.
31. GO1 will adopt a strategy for rapid recruitment and training o f new facilitators and consultants through extension o f existing consultants’ contracts, phased recruitment, and enhanced training programs utilized under previous UPP programs. All procurement will be handled through transparent mechanisms in l ine with World Bank consultant and procurement guidelines o f 2004, as revised in October 2006. Procurement arrangements are in Annex 5.
32. Project institutional arrangements and implementation schedule. Donors, the Bank, and other development partners have been working closely with the Government on the design o f the national program. Donors are coordinated through the Decentralization Support Facility (DSF), a multi-donor trust fund managed by the Bank. DSF has provided US$3.8 mill ion to support the design o f the PNPM.
33. In addition, a new multi-donor trust fund has been established to finance PNPM activities. The objective o f the trust fund i s to support implementation o f the PNPM through partnerships with civil society and donors, according to their comparative advantages in a transparent manner. The MDF consists o f four windows for (i) co-financing; (ii) strategic coordination and monitoring; (iii) civil society support; and (iv) donor-executed activities. About US$60 million has been pledged to date by the Governments o f the Netherlands, Denmark (DANIDA), and Australia. GO1 i s chairing the MDF, with the Bank as co-chair and trustee o f the fund. The trust fund wi l l be administered through the Inter-Ministerial Steering Committee, with support from a corresponding Executive Committee, Advisory Panel and Technical Secretariat.
34. The existing project implementation arrangements will be applied to the additional financing. The Ministry o f Public Works wi l l continue to be the executing agency. A PMU already exists at the central level that i s currently managing active UPP operations. The same PMU wi l l manage this additional financing, including project monitoring and reporting. In consolidating i t s vision o f PNPM as a national program, the administrative status o f the PMU had been raised to report directly to the Director General o f Human Settlements, and arrangements have been made to allow decentralization o f routine works to the provincial and local government level. This strategy will significantly increase overall capacity o f the PMU. In addition, the P M U will be reinforced with additional staff/ consultants to manage the additional financing.
35. While the division between IDB and World Bank funds and supervision will be geographical, an overall N M C under World Bank contract will provide management on the full program to ensure a coordinated approach. In addition, the supervision strategy will be continued including annual World Bank team visits to at least two percent o f the villages covered under World Bank financing, 15 percent o f the local governments, and 100 percent
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o f the provinces per year. In addition, the website management system will continue to be a vehicle for oversight and accountability.
36. Revised closing date. The loadcredit closing date will be extended by nine months, from March 201 1 to December 201 1. Main reasons for this extension are the need for continuation in community preparation for subsequent years and the completion o f impact evaluation, which will be conducted in 20 1 1. All o f the community grant allocation will be disbursed in FY 2009 and FY 2010. However, facilitation in the villages, especially in the new areas, will continue in the targeted areas up to FY 201 1. In addition the impact evaluation component will also continue until FY 201 1.
IV. CONSISTENCY WITH COUTRY PARTNERSHIP STRATEGY
37. The recently approved Country Partnership Strategy (CPS) emphasizes engagements with Government counterparts and other stakeholders who are committed to addressing critical governance and institutional challenges. In addition to i t s cross-cutting engagements to strengthen central and sub-national government institutions and systems, the CPS identifies five thematic areas for engagement: (i) private sector development; (ii) infrastructure; (iii) community development and social protection; (iv) education; and (v) environmental sustainability and disaster mitigation. The proposed additional financing o f PNPM-Urban supports both the approach suggested under the CPS as well as thematic areas o f engagement related to infrastructure and community development. The PNPM program forms the Bank’s operational centerpiece for the core engagement area o f community development, social protection, and poverty reduction in Indonesia.
V. APPRAISAL OF SCALED-UP PROJECT ACTIVITIES
38. A World Bank mission team appraised the Government o f Indonesia’s (GOI) request for US$115 million as additional financing for the PNPM-Urban during December 16, 2008 - January 9,2009. The main objective o f the mission was to assess the capacity o f PNPM-Urban to absorb the additional financing in an efficient manner with adequate measures in place for consultant mobilization and capacity building, financial management and disbursement, procurement, safeguards compliance, transparency and accountability, and disaster management. During appraisal, the task team agreed with GO1 on the following key issues:
Disbursements mechanism for the Additional Financing would remain an advance method to the same Designated Account (DA) in Bank Indonesia for the PNPM-Urban loan. Initially the Government was considering the use o f the reimbursement (refinancing) mechanism whereby expenditures for kelurahan grants are to be budgeted under the Rupiah financing. However, due to the lack o f time remaining for i t s preparation, and clarity o f the mechanisms, this arrangement has been postponed. Future projects will continue to consider refinancing as a disbursement option. Procurement plan for additional financing, and transitional arrangements before mobilization o f new consultants.
11
Principles and steps for strengthening the MPW capacity and satkers. These include appointment o f new satkers, project managers at the local governments, and program for their capacity building. This will significantly increase the capacity for management supervision o f MPW. Policy and requirements o f local government contributions. Distribution o f working areas between IDB and the World Bank. Ministry o f People’s Welfare wi l l establish a regular joint meeting with IDB to discuss various issues o f common interest, and Standard Operating Procedures will be established for coordination among the donors by June 2009. Adjustment o f PNPM results frameworks to accommodate additional f inan~ ing .~ Withdrawal o f the community grant under the additional financing i s subjected to utilization and documentation o f the advance to the designated account o f the original project of, at least, $70 million. To expedite project start up, retroactive financing up to US$ll .5 mill ion will be available through the project to cover project implementation costs incurred from February 1,2009, applicable to all project components.
39. Safeguards. The proposed additional financing will not pose a substantial change in the overall project risks or environmental categorization. The proposed project will remain as a “Category B” project and the original safeguards frameworks will be applied (see Annex 10 o f original PNPM-Urban PAD). N o exceptions to Bank policies are needed for the additional financing. The additional financing does not trigger any new safeguard policies. They remain the same as those under the original PNPM-Urban approved project:
0 Environmental Assessment (OP/ BP 4.01) Indigenous Peoples (OP/ BP 4.10) Involuntary Resettlement (OP/ BP 4.12)
VI. EXPECTED OUTCOMES
40. Expected outcomes o f the additional financing include: (a) targeted poor urban households receive improved services; (b) infrastructure i s o f high quality and i s less costly than non-community based construction; and (c) beneficiaries are satisfied with the improved services and infrastructure.
41. Monitoring. A comprehensive monitoring system has been set up for the implementation o f previous UPP projects. The additional financing will operate under the enhanced PNPM-Urban system and the Operational Guidelines for Monitoring and Evaluation o f PNPM developed by the Government. Monitoring has been done through the web based MIS and Complaints Handling Mechanism. Monitoring i s also conducted through spot checks by National and Regional Management Consultants.
42. Performance indicators. The original performance indicators have been adjusted to accommodate the additional financing. These include increase in the target number o f
A minor adjustment was also made to one o f the outcome indicators to make it consistent with the rest o f the indicators.
12
villages covered under project, and adjustment to the outcome indicators related to improve household expenditure rate and access to economic and social services (see Annex 2).
43. Evaluation. In addition to the studies conducted under UPP 2 and UPP 3 and a major ongoing impact evaluation, the project will benefit from the evaluation study supported under UPP 2 additional financing, which wi l l be completed in May 2009. The study comprises six evaluation studies, two assessment studies, ,one baseline study and one desk review. In addition, a comprehensive panel-based quantitative and qualitative impact evaluation i s currently underway, covering over 15,000 respondents, and 255 treatment and control wards.
VII. BENEFITS AND R I S K S
45. The project will have a positive impact on the development and execution o f PNPM. Specifically, the project will benefit poor urban communities in Indonesia through geographic expansion o f PNPM to new urban areas and the provision o f supplemental kelurahan grants to existing areas.
46. Risks. Overall risk i s considered low to moderate given that the additional financing scales up a project modeled on nearly a decade o f successful operations o f the UPP approach. There are six main risks related to the scale up o f PNPM-Urban: (a) the management capacity o f MPW to implement the project; (b) delays in selection and quality o f consultants; (c) selection for phasing in o f new sites; (d) delay in budget authorization and disbursement at the Ministry o f Finance (MoF), (e) lack o f coordination between donors, (0 risk of providing N M C for the full program and not just for activities financed by the Bank (g) political risk associated with the 2009 presidential election. During project appraisal, the Task Team has addressed these issues and proposed mitigation measures to reduce the risks.
47. The first risk i s management capacity. In 2007, UPP disbursed US$l50 million (US$20 million under UPP2, US$SO mill ion under UPP2 additional financing, and US$50 million under UPP3). PNPM-Urban i s expected to disburse US$lOO mill ion by March 2009 and complete most o f kelurahan grants from the initial funding by April 2009. MPW i s s t i l l operating UPP2, UPP3, and PNPM-Urban, and will have to manage two donors (World Bank and IDB) for the additional financing, which may stretch i t s capacity. This risk i s moderate. The second risk i s delays in selection o f additional consultants. This risk i s moderate. The third risk i s the selection o f project sites. Consensus has been reached between BAPPENAS and MPW and criteria for scaling up in a phased manner will need to be established. This risk'is low. The fourth risk i s the continuous delay in the authorization o f the budget and slow processing through the regional treasury office. This risk i s substantial and structural. Mitigation measures discussed includes agreement to issue early budget authorization for 2009. Several measures to expedite budget releases have also been incorporated into the Fifth Development Policy Loan and Deferred Drawdown Option (DDO) which has recently been approved. The fifth and sixth risks relate to donor coordination and o f providing N M C for the full program. These risks are moderate and the Government has agreed to prepare special operating procedures to coordinate donors. The seventh risk relates to 2009 presidential election. This risk i s moderate. The project has already survived three national and presidential elections, by adjusting the timing o f certain disbursements, and community
13
education to ensure that funds are not used for electioneering and political purposes. Similar approach will be used under this additional financing.
VII I . FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING
48. The additional financing will be an IBRD Fixed Spread Loan (FSL) in US$ currency with annuity based repayment o f principal, with interest rate and currency conversion options. The loan maturity i s 24.5 years, including 9 years grace. The front-end fee o f 0.25% is to be paid out o f the GO1 own proceeds. GO1 had elected to borrow a U S dollar- denominated LIBOR-based Fixed Spread Loan (FSL). FSL offers a fixed spread over LIBOR, flexible repayment terms and embedded conversion options to change the loan currency and fix the interest rate. GO1 wishes to use the flexibility which FSL offers to borrow in U S dollars and subsequently undertake swap transactions in order to repay the loan in Rupiah.
14
Annex 1: Detailed Project Description
Name of Project Number of Subdistricts
Covered 1. PNPM Rural 4,371 Executing Agency: Ministry o f Home Affairs 2. PNPMUrban 1,145 Executing Agency: Ministry o f Public Works 3. Regional Infrastructure, Social and Economic Project 23 7 WSE) Executing Agency: Ministry o f Public Works 4. Rural Infrastructure Program (PPIP) 479
1. PNPM program. The Government’s aim i s for PNPM to cover all areas o f the country by 2009. PNPM-Urban will support approximately 18 percent o f the total or 1,145 subdistricts (1 1,039 urban wards) next year. Other areas o f the country will be covered by PNPM-rural and three other projects (see Table 1.1).
YO of Total Subdistricts
Covered 68%
18%
4%
7% Executing Agency: Ministry Gf Public works 5. Support for Poor and Disadvantaged Areas (SPADA) Executing Agency: Ministry o f Less Developed Areas Total Subdistricts in Indonesia
186 3%
6,408 100%
2. Project Design. There are no changes to the original project objective or design as a result o f this additional financing. The program’s core design follows closely i ts predecessor, The Urban Poverty Project (UPP). UPP have scaled up geographically every year, thus systems and mechanisms were designed for future scale-up. After more than nine years, UPP have demonstrated their ability to adjust to an increased scope.
3. The overall project’s objectives and components will remain the same. The proposed additional financing will provide funding for three main components: (a) community and local government capacity building; (b) kelurahan block grants, and (c) implementation support. Details on each component are provided below.
Component 1: Community and Local Government Capacity Building (US$ 44.44 million). This component funds the cost o f facilitators to carry out social intermediation activities and community training. I t also supports the training o f local government staff on the PNPM and leverages support from local governments to share costs o f sub-projects. This component will component will include the following activities:
a) An extended awareness raising or socialization process that will encourage communities to discuss, through a series o f focus group discussions, the nature o f poverty in their kelurahan, how it should be addressed, and what i s
15
required to deal adequately with poverty (in the form o f individual commitment, organization, resources, skills, etc).
b) Assistance to the community to carry out a Community Sel f Survey (CSS) on poverty
c) The formatiordconfirmation o f an elected body o f representatives (Badan Keswadayan Masyarakat or BKM) that i s accountable to the community at large and which will act on behalf o f the community for poverty reduction
d) Preparation o f new, and review o f the existing poverty oriented Community Development Plan (CDP) for the kelurahan using a participatory process and based on the results o f the CSS
e) Organizing and assisting community groups (Kelompok Swadaya Masyarakat or KSM) who will submit proposals to the BKM to utilize project resources and implement the programs identified in the CDP
f) Assistance to BKMs to form associations (BKM Forums at the kecamatan and city level) and work collectively
g) Building local government capacity to work with BKMs and the BKM Forum
Component 2: Kelurahan Grants (US$ 205.17 million). This component supports block grants for kelurahans to execute the sub-projects identified in the community development plans (CDPs), covering an open menu o f poverty alleviation activities with a short negative list. Typical activities for this component fall into three categories: infrastructure, revolving loan funds, and social assistance. (a) Specific infrastructure investments are pre-identified by communities and
consist o f bridges, roads, public toilets, drainage, health facility repair, disaster risk management programs, etc. Most o f these sub-projects focus on the improvement or repair o f infrastructure. Community-managed RLFs are designed to target the poor who do not have access to other lending sources to support microenterprise activities and to foster local economic development. Direct assistance i s also provided through social programs for the poorest or most vulnerable individuals to pay for scholarships, health care, etc.
(b)
(c)
Each participating kelurahan will be allocated a grant, the value o f which depends on the size o f the population and the frequency o f the Kelurahan Grant allocation (see table 1.2 below). This will be used to finance poverty alleviation activities as defined in the CDPs. Those BKMs that perform particularly well may receive additional grants to carry out additional activities under the CDP once their f i rs t or second allocation has been disbursed. This subsequent allocation will only be provided to those BKM that meet certain “maturity criteria” that have been established in the project manual.
16
YO o f Poor Households
in Kelurahan
210% I allocation 1 (US$29,167) I ( US$ 16,667) I ( US$ 12,500) I Rp. 200 mi l l ion I Rp. 150 mill ion I Rp. 100 mill ion
Size o f Allocation Large Medium
kelurahan kelurahan Small (>10,000 (3,000 - 10,000 kelurahan
Kelurahan Category people) people) (<3,000 people) Kelurahan receives 1'' or 2"d RD. 350 mi l l ion Rp. 200 mill ion RD. 150 mill ion
<lo%
Component 3: Implementation and Technical Assistance (US$ 19.06 million). The P M U will hire consultants and facilitators to assist in project and overall P N P M urban implementation. This arrangement would be evaluated and expanded to deal with the scaling up o f the PNPM. Technical assistance would be provided through an N M C at the central level, and OC teams at the provincial level, with offices in the participating districts. An MIS, project website, and complaints handling mechanism have also been established. This arrangement would be evaluated and expanded to deal with the scaling up o f the PNPM.
Kelurahan receives 3rd allocation (US$ 16,667) (US$ 12,500) (US$8,333) 2 50 HH
Rp. 100 mi l l ion < 50 HH
Rp. 50 mill ion General (US$8,333) (US$4,167)
17
Annex 2: Project Results Framework and Monitoring
Table 2.1: Performance against Key Project Indicators for Original Project
Urban poor in PNPM-Urban locations benefit f iom improved socio-economic and local governance conditions
Organized community groups increasingly voice demands
Local governments deliver improved services to the urban poor
BKMs deliver
omic and social
Min. 40% participation rate o f the poorest and vulnerable community members in planning
Min 40%
and decision making meetings ~ I Min. 40% participation rate o f I Min 40%
voting in BKM elections at the neighborhood level
90% o f kelurahans
Community Development Plans (CDPs) completed and ratified
Min. 80% o f local governments provide cost-sharing: 20% cost- sharing for local governments wi th low fiscal capacity, and 50% co-sharing for local governments wi th high fiscal capacity Number o f each type o f
Min 50%
5500
Baseline survey completed in 2007 so that HH expenditure or access to economic and social services can be evaluated. A complementary study w i l l be conducted in 2009
Too early to report, w i l l be evaluated by June 2009
Participation rate o f the poorest and vulnerable community members was about 35% Participation rate o f women 45 % (source: MIS) On average more than 30% adult population voting in BKM elections in existing kelurahans. In new kelurahans, the cycle was just completed in Nodearly Dec 2008. BKMs formed in more than 90% kelurahans (in existing kel). In new kelurahans, the cycle was just completed in Nodearly Dec 2008. In existing kelurahans, more than 90% kelurahans with CDP completed and ratified; in new kelurahans, preparation o f the CDP i s on going By end o f December 2008~80% ofLoca1 Governments have provided cost-sharing
The project activities just
On track
On track
On track
The 40% target - w i l l be achieved;activities i s s t i l l on-going Exceeded the target
Exceeded the target (in existing kelurahans), and the data i s being collected (in new kelurahans)
Exceeded target in existing kelurahans, but in new kelurahans the data i s being collected Exceeded target in existing kelurahans, but not yet due for new kelurahans
Exceeded target for 2008
Not yet due; to be
18
evaluated as o f good quality Min. 70% o f kelurahans with revolving loan hnds (RLFs) having a loans at risk (LAR) ratio greater than three months wi l l be less than 10% Min. 90% o f kelurahans with RLFs have a cost coverage ratio greater than 125% Min. 90% o f kelurahans with RLFs have annualized return on
Consultants provide technical assistance and implementation support to the project
Min 50%
Min 50%
Min 50%
women as member o f community groups (KSMs) year 2008 90% o f OCs providing timely & accurate data through MIS 70% o f BKh4s with completed - Not yet due annual financial audits
by the end o f calendar
About 80% OCs provides timely and accurate data
Min 70%
y e t been completed 2008 RLF just started by the end o f calendar year 2008
. Urban poor in PNPM- Urban locations benefit from improved socio- economic and local governance conditions
2008 RLF just started by the end o f calendar year 2008 2008 RLF just started by the end o f calendar year
. Improved household expenditure rates or . Determine if P N P M i s improved access to economic and social services in 80% participating kelurahans (wards) by 201 1
having i t s desired effects o n socio- economic welfare . Infrastructure built i s 20% less expensive than
that built by non community based approaches in 80% o f participating kelurahans
. 80% satisfaction levels f rom beneficiaries regarding improved services and local level
investment o f greater than 10% I I2008 Min. 30% participation rate o f I Min 30% I The activities just began
completed
Not yet due; to be completed Not yet due; to be completed
Not yet due; to be completed
Not yet due; to be completed
Not yet due; to be completed
Exceeded the target Not yet due
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Table 2.3: Results Indicators
Component 1
. Organized community groups increasingly voice demands
. Local governments deliver improved services to the urban poor
. BKMs deliver improved services to the poor
. Min. 40% participation rate o f the poorest and vulnerable community members in planning and decision making meetings
. Min. 40% participation rate of women in planning and decision making meetings
. Min. 30% of the adult population voting in BKM elections at the neighborhood level
. BKMs formed in minimum of 90% o f kelurahans
. Min. 90% o f kelurahans with Community Development Plans (CDPs) completed and ratified
' Min. 80% of local governments provide cost- sharing: 20% cost-sharing for local governments with low fiscal capacity, and 50% co-sharing for local governments with high fiscal capacity
Component 2
. Number of each type o f infrastructure, economic, and social activities completed in 80% participating kelurahans (wards)
. Min. 70% o f infrastructure works evaluated as o f good quality
. Min. 70% o f kelurahans with revolving loan funds (RLFs) having a loans at risk (LAR) ratio greater than three months wil l be less than 10%
. Min. 90% of kelurahans with RLFs have a cost coverage ratio greater than 125%
. Min. 90% o f kelurahans with RLFs have annualized return on investment o f greater than 10%
. Min. 30% participation rate o f women as member of community groups (KSMs)
. Assess whether the design of BKM formation and CDP arrangements need adjustment
. Determine whether the socialization and election processes need to be improved
Determine if additional technical assistance i s required in specific areas
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Component 3
. Consultants provide technical assistance and implementation support to the project
. 90% o f OCs providing timely & accurate data through MIS
. 70% o f BKMs with completed annual financial audits
. Gauge whether technical assistance and implementation support needs to be improved or increased
. Provide timely & accurate data to inform management decisions
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Annex 3: Project Costs
ORIGINAL PROJECT COMPONENT
Table 3.1: World Bank Financing by Component (US% Million) P N P M Urban
Original Additional Project Financing Total
A. COMMUNITY & LG CAPACITY BUILDING B. KELURAHAN GRANT
3 1.62 26.50 58.12 130.22 8 1.83 212.05
C. IMPLEMENTATION SUPPORT Front end fee
T O T A L
Table 3.2: Program Cost and Financing Plan (US$ Million)
15.71 6.67 22.38 0.13 0 0.13
177.68 115.00 292.68
BUILDING B. KELURAHAN GRANT C. IMPLEMENTATION SUPPORT Front end fee
3 1.62 0.00 31.62 0.00 31.62 130.22 38.62 91.60 118.70 248.92 15.71 13.93 1.78 7.80 23.51 0.13 0.13 0.00 0.00 0.13
BUILDING B. KELURAHAN GRANT
26.50 26.50 0.00 0.00 17.94 I 44.44 81.83 81.83 0.00 66.45 56.89 I 205.17
25
C. IMPLEMENTATION SUPPORT Front end fee
6.67 6.67 0.00 8.24 4.15 19.06 0.00 0.00 0.00 0.00 0.00 0.00
BUILDING B. KELURAHAN GRANT C. IMPLEMENTATION SUPPORT Front end fee
T O T A L PROJECT COST
58.12 26.50 31.62 0.00 17.94 76.06 212.05 120.45 91.60 185.15 56.89 454.09 22.38 20.60 1.78 16.04 4.15 42.57 0.13 0.13 0.00 0.00 0.00 0.13
292.68 167.68 125.00 201.19 78.98 572.85
Annex 4: Financial Management and Disbursement Arrangements
1. The project wi l l be financed through use o f additional financing instrument under OP 13.20. The Government o f Indonesia has requested additional financing of $1 15 million to further scale-up the PNPM-Urban. The original project became effective on July 22, 2008 with the approved amount o f US$177.68 million. The original project was to be implemented from 2008-2010, with a closing date of March 31, 2011. With additional financing, project implementation wil l be extended to December 3 1 , 20 1 1
2. An FM assessment dated January 22, 2008 for PNPM-Urban i s applied to the proposed additional financing, including all project risk and mitigation. As with PNPM- Urban, the overall financial management risk rating for the proposed additional financing i s assessed as “substantial” before mitigation and “moderate” after mitigation.
3. As confirmed during PNPM-Urban supervision, there are two major risks in the project. The first risk i s the capacity o f community groups to manage the block grants, particularly with respect to how effectively BKM/UPK use and account for the funds. The second major risk i s the capacity o f the field consultants who are responsible for monitoring implementation o f sub-projects to assist the BKM/UPK on financial management. The proposed additional financing may also stretch the capacity o f the implementing agency further.
4. Under the existing PNPM-Urban, there are several mechanisms to mitigate these risks, including the provision o f financial management training to community groups as well as field consultants. There i s a provision to recruit additional FM consultants at central as well as local levels. In addition, the project auditor has agreed to increase the audit sample size and involve the local auditor (Bawasda) on the audit assignment. The audit will be conducted using a risk-based system.
5. Budgeting. The annual budget document (DIPA) for the on-going PNPM-Urban was issued in a timely manner in January 2008. However, the DIPA only become effective after all supporting documents were available, i.e. working unit (Satker) decree. These documents were available in February 2008 and the DIPA become effective in March 2008. As there are some procedures to be undertaken at the community level prior to expenditure, the realization o f the actual budget took place in October 2008.
6. There i s another budget risk related to the availability o f local government counterpart funds. The team does not anticipate significant delay on the availability o f the local government budget for existing PNPM. However, unless the central and local governments can speed up the budget process, the additional financing may retain the substantial risk in the budgeting area.
7. FM Implementation. A financial management manual was issued for the existing PNPM-Urban project. However, i ts implementation depends on the capacity o f community groups as well as facilitators. The Bank FM supervision noted some weaknesses during project implementation, i.e. weaknesses related to accounting and reporting - financial control. Major weaknesses were also noted in the revolving fund,
26
i.e. mismanagement leading to depletion o f the init ial capital. These include high turn over and weak performance o f facilitators in providing technical assistance to UPK to manage the revolving fund.
8. The project will provide more FM training program to community groups as wel l as to the facilitators prior to the f ield assignment. The FM consultants and facilitators, especially economic facilitators, should provide continued hands-on FM training program to the community groups (BKM and UPK). In addition, the consultant and facilitator will monitor the fol low up action o f the audit findings, report o n actions taken, and results achieved.
9. The project will improve the community’s supervisory role by establishing Community Supervisory Boards at the community level (Badan Pengawas UPK). Local auditors will involve these Boards in auditing the implementation o f block grants at the community level. In addition, the complaints handling system will be strengthened and will include external audit findings and additional information on misused funds.
10. Audit Arrangements. Since PNPM-Urban became effective in July 2008, there is no audit report yet. The latest audit report for ongoing UPP projects hasanqualified clean opinion. The first audit report for PNPM will be due on June 30,2009. The existing PMU is responsible for preparing the project financial statements that includes financial resources from additional financing. The audit o f these statements will be carried out by government auditors acceptable to the Bank.
11. Urban. The auditor will retain 20% as the audit sample size for PNPM Urban.
The audit assignment will be in accordance with the agreed TOR for PNPM-
12. The auditor will work together with local auditor (Bawasda) as far as possible to have more coverage areas. Bawasda will fo l low the same audit TOR and submit the report to BSKP for consolidation.
13. Disbursement Arrangements. As o f December 2008 total disbursement for on going PNPM-Urban amounted to US$SO million. Actual expenditures that have taken place amounted to US$90 million. The Government i s in the process o f replenishment for the Special Account. I t is expected that, by end-March 2009, the disbursement will reach $100 million.
14. Unless there is a change in disbursement arrangements, the proposed additional financing will fo l low the “Advance” disbursement method as done with the ongoing PNPM-Urban project. The project will use an existing Designated Account (DA) for PNPM-Urban. Applications for advance payment to the DA shall be submitted together with the reports on use o f DA funds, consisting of: (i) list payments for contracts under Bank’s prior-review and records evidencing such expenditures, or (ii) statement o f expenditures (SOEs) for al l other expenses, and (iii) the DA reconciliation statement.
15. The disbursement arrangements will fo l low PNPM-Urban arrangements where DG Treasury will authorize its relevant Treasury Offices (KPPNs) located near the implementation units to authorize payments o f eligible project expenditures. DG
27
Treasury will send a circular to the relevant KPPN Offices setting out guidelines and criteria for eligible project expenditures in accordance with the loan agreements.
Disbursement Category
1. Block Grants 2. Consultant Services*
16. PMU at DG Cipta Karya level will be responsible for reconciling the DA and preparing separate applications for the withdrawal o f advances and reports on DA transactions. Copies o f DA bank statements will be provided to the PMU by DG Treasury, MOF.
Amount Disbursement Percentage Million US$
81.83 100% 33.17 100%
Table 4.1: Loan Allocation and Disbursement
3. Frontbend fee Total
0.00 115.00
I I I I * This category includes $26.5 mil l ion in financing o f facilitators as part o f the community and local government capacity building efforts, and $6.67 mil l ion in financing o f consultants to assist the PMU and overall project implementation.
28
Annex 5: Procurement Arrangements
A. General
1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits,” dated May 2004 (revised October 2006), and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers,” dated May 2004 (revised October 2006), and the provisions stipulated in the Legal Agreements. The general description o f various items under different expenditure categories i s below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and timeframe are agreed between the Borrower and the Bank project team in the Procurement Plan. The Procurement Plan wi l l be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
2. This project i s basically a scaling up o f the National Program for Community Empowerment in Urban Areas Project (PNPM), which will be implemented in all provinces during GO1 FY2009 and 2010. The Bank has previously financed UPP 1-3, UPP 2 Additional Financing and PNPM to cover similar operations. This new project i s expected to be implemented in the f i rst half o f 2009 to cover Government’s implementation in GO1 FY2009 and 201 0. Therefore, the expedited procurement process and arrangement will be key factors. The existing P M U will remain the executing agency for this project.
3. Procurement will follow the on-going PNPM arrangements which mainly consist o f hiring o f one National Management Consultant (NMC), nine Oversight Consultants (OCs, OC1 - 4 will be financed by the Islamic Development Bank), an Evaluation Consultant, procurement o f training and socialization materials, hiring o f individuals (including city coordinators and facilitators), and procurement under community grants. The hiring o f city coordinators and facilitators, and their respective contract administration, will be done by the Provincial Satkers, while procurement under community grants will be done by respective communities following the agreed procedures as described in the Project Operations Manual (POM). The rest o f the procurement will be done by the PMU at the central level.
4. Because selection o f N M C and nine OCs was delayed under PNPM, all o f 36 contracts under UPP2 and UPP3 have been extended to the end o f December 2008, and will be further extended to the end o f March 2009, even May 2009 for some o f them depending on the progress o f consultants selection. Currently, the selection o f N M C and three OCs (OC6, 7, and 8) i s in the stage o f technical evaluation, and the other two OCs (OC5 and 9) are in proposal process. The other four OCs (OC1,2,3 and 4 to be financed by the Is lamic Development Bank) contracts will be signed between March to May 2009. I t i s expected that the contracts o f N M C and three OCs will be signed by January 2009, and the other two OCs contracts in April or May 2009. The N M C and five OCs contracts will be extended each by about 50% in value to cover the project scope under the proposed additional financing.
29
5. With regard to the facilitator composition, the arrangement for PNPM will be followed.
6. Kelurahan Grants and Sub-loans: The additional financing for the kelurahan grants (US$82 million equivalent) will be disbursed in various kelurahans in all provinces. Procurement under community grants will follow the existing Project Operation Manual o f PNPM.
7. Consulting Services: Contract arrangements wi l l include extension o f N M C and five OCs contracts by 50% each, and extension o f 4,500 out o f the existing 7,000 individual consultant contracts for facilitators by 100% each. New contracts will not be issued. The estimated total o f extension will be about US$33.1 million.
8. The extension was originally envisaged under PNPM-Urban as the FWPs included provisions to allow extensions o f contracts (subject to satisfactory performance) in case GOI. decided to further extend the program, either through i t s own financing or joint financing with the Bank.
9. Goods and Non-Consulting Services: Under the proposed additional financing, printing and socialization materials o f about US$2.7 mill ion will be required. This will be procured by expanding one o f the existing ICB contracts under PNPM by an amount o f US$170,000 (original contract value i s US$ 650,000), and using shopping for one urgently needed package o f value less then US$50,000. As for the remaining packages, and due to the nature o f the services and the requirement o f local knowledge and logistics, these contracts will likely to attract only local companies. Hence procurement o f these contracts may follow NCB procedures on an exceptional basis using bidding documents that are acceptable to the Bank.
10. Additionally, if for any reason any o f the ongoing selection process for the OCs fai l or a need arises to launch a new selection process; the scope o f work will be modified to launch a new selection process under non-consulting services instead o f consulting services. The reason i s that the majority o f the scope o f works for OCs can be fitted under this type o f service and would expedite and facilitate any new procurement process.
11. Other methods of procurement: to provide more flexibility in the procurement management o f this project, additional procurement methods that were not reflected in the current PNPM legal agreement will be added. For goods, works and services these will be National Competitive Bidding and Direct Contracting. While for procurement o f consultants this will be Selection Based on Consultants Qualifications.
B. Assessment of the agency’s capacity to implement procurement
12. The assessment o f the agency’s capacity has been already addressed under the existing PNPM. It will be further strengthened by the recruitment o f a procurement advisor under this additional loan related to the project. Considering the majority o f procurement will be extension o f existing contracts, the procurement risk i s rated as moderate.
30
C. Procurement Plan
Ref. No.
13. The Borrower has developed a procurement plan for project implementation. This plan has been reviewed and agreed between the Borrower and the project team. It i s expected that the extension o f contracts will be completed by the end o f April 2009. The approved procurement plan will be available on the PNPM website (www.p2kp.org). It will also be available in the Bank’s projects database and on the Bank’s external website.
Contract Estimated Procure- Expansion Review Expected (Description) Cost (US$) ment (US%) by Bank Date of
Method (Prior / Amendment Post)
D. Frequency o f Procurement Supervision
IFB-PNPM- Urban 2008-
11 Lot 2
14. The project under the additional financing will fo l low the recommendations for PNPM:
posters, flip charts, stickers, leaflets 650,000 ICB 170,000 Prior March 2009
Procurement requiring international competition:
1
2
3
4
Table 5.1: Procurement o f Non Consulting Services
National Management Consultant 2,80 1,0 18 1,400,509 OC5-Oversight Consultant Central Java, DIY (2 prop, 40 KotaKab, 2 182 KeVds) 2,923,180 1,461,950 OC6-Oversight Consultant East Java, East Kal., Central Kal, South Kal., (4 prop, 44 KotaKab, 2343 KeVds) 2,444,776 1,222,388 OC7-Oversight Consultant BALI, NTB, NTT 1,368,826 684,413
Ref. Description of Assignment Estimated No. 1 Cost under 1 PNPM
Expected Amount of Extension
(US$)
Date of Extension
May2009 I
31
Ref. No.
Expected Amount of Extension
(US$)
5
Date of Extension
6
Description of Assignment Estimated Cost under
PNPM
(3 prop, 20 KotaKab, 456 Kel/ds) OC8-Oversight Consultant Nth Sulaweisi, Sth Sul., central Sul, Soth East Sul., West Sul, Gorontalo (6 prop, 30 Kota/Kab, 893 KeWds) OC9-Oversight Consultant Maluku, Nth Maluku, Papua, West Irian (4 prop, 8 KotaKab, 294 KeWds)
2,337,712
1,328,929
1,168,856 May 2009
664,465
32
May 2009
Annex 6: Implementation o f Revolving Fund (RLF) Strategy:
1. During PNPM-Urban appraisal, a review o f the overall UPP RLF was carried out by a Micro Credit Specialist, as part o f Bank task team. Based on this review a short and long te rm strategy for RLF for Urban-PNPM was adopted. In addition to this review, a rapid assessment o f the UPP and KDP revolving fund programs was also carried from January - March 2008. Results o f this assessment confirmed the recommendations and strategy adopted by the PNPM-Urban. Detailed description o f the strategy i s available in the Annex 15 o f the original PNPM-Urban Project Appraisal Document.
2. Overall, only 10% o f the total community grants (or about 4% o f total loan) i s being utilized o f the revolving funds, covering 3,000 villages. The significant reduction o f the revolving fund utilization i s due to stringent requirements under RLF strategy that have been applied under PNPM-Urban, to ensure sustainability o f the revolving funds. These requirements include among others: establishment o f supervisory board in each o f the BKM, and only those BKM with repayment rate o f >go% are allowed access to the funds. New RLF technical guidelines, based on the agreed strategy under PNPM-Urban, have been distributed to all BKMs. The official UPP web-site continues to publish various best practices in the revolving funds that could be accessed by all BKMs and facilitators. The performance o f the BKMs in revolving funds i s being monitored on a quarterly basis. The new indicators, based on the strategy, have been disseminated to all BKMs. By March 2009, all BKMs performance, based on new indicators, wi l l be published in the UPP web-site on a regular basis.
3. Overall progress o f the strategy implementation i s satisfactory. More than 1,000 out o f 3,000 villages have RLF that i s performing satisfactorily (repayment rate 2 90%). Under the new strategy it i s expected that more kelurahans will improve their RLF performance. Revolving funds specialists and about 500 facilitators for RLF funds have been mobilized to assist in implementation o f the strategy.
4. Some key recommendations have been followed up including: 86% o f RLF kelurahans have applied market interest rate with range 1.5% - 3% per month, a simple grading system has been developed based on financial performance management, governance and social performance, and on l ine monitoring has started in 48% of the RLF. The application and SOP (Standard Operating Procedures) for the exit strategy i s being designed and will be applied in 2009.
5. The RLF additional activity w i l l be minimized under the additional financing, and it will only be available to those kelurahans with satisfactory performance based on the new indicators. New Kelurahans will only be allowed to use the block grants for revolving funds, if the community agrees to the requirements for establishing the RLF. As o f December 2008, it was anticipated that only 45% o f the villages would be qualified for the RLF in this additional loan, based on their current performance.
6. The RLF provides an important vehicle for poverty alleviation and community empowerment in Indonesia’s urban areas as it allows access to capital to those who may
33
not otherwise be eligible for loans through the mainstream commercial banks. In the kelurahans where it has been successful, it has allowed beneficiaries to access much needed seed capital to finance micro business enterprise. The revolving funds have financed a total o f 107,000 economic activities. It is important to continue implementing measures to strengthen repayment and sustainability o f the system. Cross-learning of experiences from villages that have successful RLF programs to other villages will be important. Similarly, assessing successful global experiences will allow the development o f a more robust system in PNPM. Further streamlining o f a l l RLFs under P N P M would be facilitated under the P N P M support facility.
34
Annex 7: Progress for Better Governance Action Plan
PROCURE- MENT [of Consultant] Short list preparation
Capacity of the Project Manager and TenderEva1 uation Committee
Proposal evaluation
MEDIUM
MEDIUM (Central)
MEDIUM
Opportunity for Corruption
Manipulation of the shortlisting process to exclude firms that may compete with a predetermined winner, and include firms known not to bid low to buffer the preferred bid [for contract firm above
The Capacity of the Consultant Selection Committee [SC] to make free and independent decisions i s still limited. There i s opportunity for influence by other parties within or outside the Ex.A. especially influential superiors.
us$200,000].
Prolonged evaluation process to ensure the desired evaluation result and hence the manipulation of the bid outcome.
Proposals are rejected due to reasons unrelated to the capacity o f consultants in carrying out of the contracts/services.
Large [unjustified] disparity in assigning final scores with large differences between the ranked bids, thereby manipulating the QCBS
Mitigation Action
Evaluation criteria for shortlisting should be as objective and numeric as possible - taking out subjectivity in the evaluation.
A procurement adviser funded by the loan to provide oversight of the procurement process.
Bank makes the summary Evaluation Report public - this allows the other bidders and other interested parties to make their own judgment. Risk of exposing poor evaluation may curb potential collusion within or between the Evaluation Committees and bidders.
Capacity building for all actors involved in procurement, including certification o f staff in accordance with Keppres 80/2003.
Development of project management manual to streamline all procedures and sanctiodcomplaint handling mechanisms.
The procurement plan, with detailed timeline, will be binding in the legal agreement, and will be used as the basis for any procurement actions. The Bank would declare misprocurement for any unjustified extension of validity of proposals.
RFP should state that incomplete documentation and other minor administrative discrepancies shall not be used as a basis for rejection of the Bids.
Procedures for contract firm above US$ 200,000. The estimated budget for each contract package will be based on actual experience determined through the extensive survey of similar packages that are currently underway in UPP 1 and 2.
Public posting o f the summary evaluation scores.
Apply or threaten to apply severe punitive
Progress to date
Done
Done
Done
Done
Done
Done
Done
Done
Done
35
Award of Contract
Quality of delivered services
Oversight of material Inputs
MEDIUM
MEDIUM
MEDIUM
Opportunity for Corruption
process.
False information provided by the consultants, and not challenged by the SC.
For contract firm above US$200,000, the committee may manipulate the final bid price by tampering with the cost proposal in collusion with the bidder.
The services provided are of lower quality than specified in the TOR, and no punitive action taken against the consultant.
Significant changes of key staff of consultants at the early stage of the assignment
Intentionally low quality of supervision of contracts, and kickback from the consultants
Overstating o f reimbursable expenses.
Mitigation Action * ‘
action. Consultant can be blacklisted for deliberately misleading information. SCEA should be reprimanded for not checking.
Security of the cost proposals through a trusted intermediary.
Mandatory disclosure of contract awards.
Enforce punishment as defined in Keppres 80/2003, and report lack of response of supervising authority.
Withhold payments for unauthorized staff changes. Only allow staff changes through amendments to the contract requiring Bank NOL.
Involvement of supervisory consultants (for example: NMC in the case of OC, and EC in the case of NMC) in the inspection of the delivered services.
Enhanced complaint handling mechanism.
Involvement of civil society or community groups in monitoring the quality of the consultants’ deliverables.
Conduct spot checks on the validity o f receipts.
Air fares to be claimed with ticket and boarding pass.
More frequent spot checks to verify large cost items such as rented vehicles.
Utilize recipient community groups to verify Faskel inputs.
To publicize the update invoices of
Progress to date
Done
Done;
Done
Done
Done
Partially Done. Community involvement in monitoring i s done but the planned NGO i s not fully implemented yet. Done
Done
Done
Partially done. In some areas this has not been fully effective; a new mechanism of using an accountability matrix has been added, coupled with spot checks by higher level consultants
36
Procurement Planning, including sub-projects
Overall Procurement
PROJECT MANAGE MENT The final list of CPMU, PMU and PIU staff with their (a) experiences in handling donor fin an c i n g project and (b) history o f project management and or treasury training taken
Audit Report Publication
MEDIUM
MEDIUM
MEDIUM
MEDIUM
Opportunity for Corruption
Risk of budget markup to allow opportunity for bid manipulation.
Risk of collusive practices to "award" the contract to "preferred" consultants, and accept lower quality of services at higher prices.
Insufficient experience and capacity of CPMU, PMU and PIU staff to resist or identify collusive practice by colleagues.
Insufficient capacity and experience of CPMU, PMU and PIU staff to identify and respond to corrupt practice by contractors.
Collusion between the EA and the Audit Agency on what i s reported. Risk of nondisclosure of sensitive information on the result of project implementation, use of funds (including misuse, collusion and
Mitigation Action :
consultants on the UPP website and the information board at each korkot office. Mandatory review by the Bank of procurement planning and disclosure of procurement plan in public domain, including disclosing the contract amount.
Disclosure of summary technical evaluation of bids. May extend that to disclosure of shortlist evaluation.
Enhanced disclosure, complaint handling, and sanctions as defined in Keppres 80l2003. Enhanced capacity for the officials involved in procurement decision, including hiring of consultants.
Enhanced control system (internal and external) including involvement o f professional members o f civil society in the procurement decision actions.
Development of Project Manuals.
Tighten Bank supervision.
The criteria and performance indicators o f Project Manager, Treasurer, planning staff, procurement staff, financial staff and monev. Staff o f CPMU, PMU and PIU agreed by the Bank have been incorporated in the PMM and will be used as the basis of the annual performance review of the relevant staff.
Requirement of POM as a guideline for project implementation.
Requirement of Government Project Management, Treasury and POM training for CPMU, PMU and PIU staff.
Annual Training agreed by the Bank on CPMU, PMU and PIU staff.
The implementing agency will (and the Bank can) make final audit reports publicly available, along with formal government response, promptly after receipt.
Progress to date
Done
Done
Done
Done
Partially done
Partially done
Done
Done
Partially done
Done
Done
Partially done
On track, financial audit for FY 2008 PNPM Urban will be available on June 2008
37
Local Accountabili ty Mechanisms
COMMU- NITY
PATION Limited disseminatio n of information related to the Program
PARTICI-
Selection of B K M nembers
Zhanneling i f funds
MEDIUM
LOW
LOW
MEDIUM
Opportunity ’ ~
for Corruption
nepotism, if any). Lack of local experience may result in communities missing cases of abuse.
Information i s kept limited to certain circulation or group o f people only such that non-qualified proposals could be expected
Non-transparent process 3 f BKM members selection resulting in low integrity
Kickbacks for [local ;ovemment] officials
Mitigation Action , d
The project design includes oversight and supervision to minimize risks.
BKMs will meet regularly to make collective decisions on strategic issues, and to review the UPK’s accounts regarding the use of funds. The BKM will also hold annual meetings with the general community to account for its activities during the year.
BKM finances will be audited each year by local accountants. Audit results will be reported to the community at the end-of- year BKM accountability meeting. Ideally, each BKM should be visited at least twice per annum by the NMC.
In order to enhance the quality of consultants’ supervision under the project, facilitators are required to regularly check the BKM and UPK books. They will also need to sign and f i l e a “representation statement” regularly, confirming that they have checked the books and found them satisfactory. The OCs at higher level would randomly check the facilitators’ statements and will also be required to sign and f i l e similar representation statements. A mechanism for checking and applying sanctions will be developed for those filing false statements (sanctions may include job separation).
Socialization will be carried out through meetings, workshops and focus group discussions at the kelurahan, kecamatan, kota and provincial levels. I t will also include a campaign through newspaper spots and radio programs. The socialization strategy i s geared towards making communities aware of the project’s goals, and its rules and regulations. These are aimed to ensure that stakeholders know what their respective roles and responsibilities are, and how to hold each other accountable for their actions. The selection process o f BKM members will be conducted through a transparent and fair election process, with significant participation from the members of the community. PNPM-Urban funds go directly to communities, i.e. to the BKM account. Once the beneficiaries fulfill the drawdown
Progress to date
On going
On going, it will be reported on MIS
On going,
On track, it i s stipulated in consultants/facilitator s’ accountability matrix
On going, but slightly delay in the availability o f socialization materials
On track, exceeded the target of minimum 30% adult voters during BKM’s member election On track. In existing kelurahans, disbursement o f
38
Implementati on o f the sub-project investments
MEDIUM
Opportunity for Corruption
Misuse of funds by the BKM and KSM
. . Mitigation Action ‘
conditions, following a request from the PJOK (after verification by the Oversight Consultants), the funds are remitted from the Special Account within a few days.
The procedures, size and criteria for defining grants, eligibility criteria for beneficiaries, and conditions for drawdown are all simplified and defined upfront to ensure easy understanding for stakeholders. For the Kelurahan Grants, conditions for drawdown of funds to BKM are linked to performance rather than inputs, with the first drawdown of 20% based on satisfactory completion o f the BKM’s Community Development Plan; the second 50% based on indicators o f satisfactory utilization of funds and financial management, and the third 30% based on indicators o f BKM sustainability. Since communities know how much they should be receiving, i t should be harder for officials to engage in rent seeking behavior.
KSMs are required to prepare and submit reports on progress and their use of project funds to the BKMs.
A l l financial information i s made public and displayed in the kelurahans. Minutes o f meetings, BKMs’ monthly financial status, and names and amounts for funded proposals are posted on signboards that are displayed around the kelurahan. Discretion of actors i s limited by setting rules that all financial transactions require at least three signatures, two from the elected BKM members and one from the project’s OC. For purchases above Rp. 15 million each, the project requires the BKM to conduct a limited bid whereby quotations must be read out in public. For smaller purchases, local shopping must be carried out by two persons seeking quotations from local suppliers.
BKM finances will be audited each year by local accountants. Audit results will be reported to the community at the end-of- year BKM accountability meeting.
Progress to date
BLM to communities has been completed. In new kelurahan, 1‘ tranche has been disbursed.
On track, it i s stipulated in the technical guidelines o f kelurahan grants
On track, it i s stipulated in the guidelines and closely supervised by facilitators
On track, i t i s mentioned in financial management and community procurement guidelines
On track, the status o f completion and audit’s result will be reported through MIS
39
Annex 8: Project Processing
Table 8.1: Project Processing Schedule
Planned Actual Concept review September 2008 October 14,2008 Initial PID to PIC December 2008 December 24,2008 Initial ISDS to PIC January 2009 January 29,2009 Appraisal December 2008 January 9,2009 Negotiations February 2009 February 12,2009 Board/RVP approval April 2009 Planned date of effectiveness June 2009 Planned date of mid-term review Jan 2010 Planned closing date December ,20 1 1
Key institutions responsible for preparation o f the project: Ministry o f Public Works (Directorate General o f Human Settlements)
Table 8.2: Project T e a m Name Title Unit George Soraya TTL, Lead Municipal Engineer EASIS Evi Hermirasari Project Management and Monitoring Specialist and EASIS
Fatima Shah EASUR
Melinda Good Senior Counsel LEGES
CO-TTL Urban Economist, Urban PNPM lead person in HQ
Yogana Prasta Operations Adviser, Disbursement Officer COSU
R. Kumala Sari Community Development and Training Specialist EASIS Parwoto Sugianto Community Development Specialist EASIS Jana H. Uno Poverty and Evaluation Specialist EASIS Andrew Sembel Environmental Specialist EASES
Dayu Indira Dharmapatni Sr. Safeguard (social) Specialist, Urban Planner EASIS Unggul Suprayitno Financial Management Specialist COSU Zhentu Liu Procurement Snecialist COSU Sajjad Al i Shah Senior Operations Officer COSU Yuli Safitri Widyawati Management Information System Consultant COSU L i l i s Suharti FM & RLF Consultant COSU Isabel Mutambe Program Assistant EASUR
Bank funds expended to date on project preparation: 1. Bank resources: $100,000 2. Trustfimds: $ 0 3. Total: $100,000
Estimated Approval and Supervision costs: 1. Remaining costs to approval: $80,000 2. Estimated annual supervision cost: $125,000
40
Annex 9: Documents in the Project File
Project-related documents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Project Concept Note (PCN) Integrated Safeguard Data Sheet (ISDS) Project Preparation Aide Memoire Letter o f Intention Letter o f Approval Overview o f Local Government Engagement Issues Project Implementation Plan (PIP) Draft Operational Guidelines Project Appraisal Aide Memoire Draft Presidential Regulation on PNPM
Background o r linked studies
a
a
a
a
a
a
a
a
a
a
a a
a
a
Mid Term Evaluation o f UPP 1 phase 1 (MPW, March 2001) Evaluation Study on Post Project UPP 1 phase 1 (MPW, Dec 2002) Impact Study on Post UPP 1 phase 2 (ASEM Grant, April 2005) Impact Qualitative Study -Baseline, Midterm 1 & 2, Impact (ASEM Grant, June 2003 -June 2008) Impact Quantitative Study - Baseline, Midterm 1 & 2, Impact (MPW, January 2004 -February 2008) Finding o f Post Construction Economic Impact Analysis Study for CDD Programs (Bappenas, October 2005) Local Development & Elite Capture: Community Based Poverty Alleviation in Indonesia (World Bank, September 2003) Local Democracy Matters: Leadership, Accountability and Community Development in Indonesia (World Bank, December 2004) Designing the System to Find the Right People: the Integrity Strategy o f the Second Urban Poverty Project, A Case Study (World Bank, September 2005) Assessment o f capacity and role o f local government (MPW-national budget, 2006) Assessment o f Local Community Institution (MP W-national budget, 2006?) Gender in Community Driven Development Project: Implication for PNPM strategy (DSF, December 2006) Community Driven Development and Elite Capture: Micro credit and Community Board Participation in Indonesia (World Bank, August 2007) Microcredit Strategy Formulation Mission (DSF, 2008)
41
MAP SECTION
Puncak JayaPuncak Jaya(5030 m
)(5030 m
)
Obi
ObiC
eramC
eram
BuruBuru
SULAW
ESISU
LAWESI
SUM
ATERASU
MATERA
BaliBali
KA
LIMA
NTA
NK
ALIM
AN
TAN
RabaRaba
Pematangsiantar
Pematangsiantar
SorongSorong
Timika
Timika
FakfakFakfak
Am
ahaiA
mahai
PaluPalu
Jambi
Jambi
Mataram
Mataram
BandungBandung
SurabayaSurabaya
Semarang
Semarang
Palembang
Palembang
PekanbaruPekanbaru
PalangkarayaPalangkaraya
Bandar Bandar
Lampung
Lampung
SerangSerang
PAPU
APA
PUA
19
19
21
21
22
22
26
26
29
29
20
20
23
23
25
25
24
24
28
28
27
27
30
30
32
32
31
31
33
33
12
12
11
11
13
13
14
14
15
15
8
67
3
54
2
1
16
16
17
17
18
18
10
10
9
PAPUAPAPUANEW GUINEANEW GUINEA
AU
ST
RA
LIAA
US
TR
ALIA
THA
ILAN
DTH
AILA
ND
MYA
NM
AR
MYA
NM
AR
19
21
22
26
29
20
23
25
24
28
27
30
32
31
33
12
11
13
14
15
8
67
3
54
2
1
16
17
18
10
9
Balikpapan
Parepare
Baubau
TarakanRaba
Ende
Waingapu
Pematangsiantar
Sorong
Merauke
Timika
FakfakA
mahai
Palu
Am
bon
Gorontalo
Jambi
Medan
Kupang
Padang
Manado
Mataram
Bandung
Kendari
Denpasar
Surabaya
Semarang
Bengkulu
Jayapura
Palembang
Samarinda
PontianakPekanbaru
Yogyakarta
Banda Aceh
Bandjarmasin
PalangkarayaPangkalpinang
Makassar
Ternate
Bandar Lam
pungSerang
Manokw
ari
Mam
uju
Tanjungpinang
JAKA
RTA
PAPUANEW GUINEA
AU
ST
RA
LIA
SING
APO
RE
VIETN
AM
THA
ILAN
D
MYA
NM
AR
TIMO
R-LESTE
BRUN
EI
PHILIPPIN
ES
MA
LA
YS
I
A
CelebesSea
Java SeaBanda
Sea
Arafura Sea
SuluSea
PAC
IFIC
OC
EAN
IND
IAN
OC
EA
N
PAPU
A
Aru
Is.
KaiIs.
Tanimbar
Is.
Halm
ahera
Biak
Yapen
Morotai
Misool
Waigeo
PelengO
bi
Muna
Ceram
Buru
SULAW
ESISula Is.
Timor
FloresA
lorW
etarM
oaBabar
Sumba
Sumbaw
aLom
bokJAW
A
Natuna
Besar
Belitung
Madura
SUM
ATERABangka
Lingga
Nias
Siberut
Enggano
Simeulue
TalaudIs.
Bali
KA
LIMA
NTA
N
Mentawai Is.
Puncak Jaya(5030 m
)
0° 5°5°
10°
10°
15°
0° 5°
10°
15°
15°
10°
95°100°
105°
115°120°
125°
95°100°
105°110°
115°120°
125°
130°135°
140°
135°140°
IND
ON
ESIA
NA
NG
GRO
E AC
EH D
ARU
SSALA
MSU
MATERA
UTA
RARIA
USU
MATERA
BARAT
JAM
BIBEN
GKU
LUSU
MATERA
SELATAN
LAM
PUN
GBA
NG
KA-BELITU
NG
BAN
TEND
.K.I. JAKA
RTA
1234567891
01
1 PRO
VIN
CES:
12
13
14
15
16
17
18
19
20
21
22
JAWA
BARAT
JAWA
TENG
AH
D.I. YO
GYA
KARTA
JAWA
TIMU
RBA
LIN
USA
TENG
GA
RA BA
RATN
USA
TENG
GA
RA TIM
UR
RIAU
KEPULA
UA
NKA
LIMA
NTA
N BA
RATKA
LIMA
NTA
N TEN
GA
HKA
LIMA
NTA
N SELATA
N
KALIM
AN
TAN
TIMU
RSU
LAWESI U
TARA
GO
RON
TALO
SULAW
ESI TENG
AH
SULAW
ESI BARAT
SULAW
ESI SELATAN
SULAW
ESI TENG
GA
RAM
ALU
KU U
TARA
MA
LUKU
PAPU
A BA
RATPA
PUA
23
24
25
26
27
28
29
30
31
32
33
0200
0100
200300
400 Miles
400 Kilometers
IBRD 33420R2
AUGUST 2008
IND
ON
ESIA
SELECTED
CITIES A
ND
TOW
NS
PROV
INC
E CA
PITALS
NATIO
NA
L CA
PITAL
RIVERS
MA
IN RO
AD
S
RAILRO
AD
S
PROV
INC
E BOU
ND
ARIES
INTERN
ATION
AL BO
UN
DA
RIES
This map w
as produced by the M
ap Design U
nit of The W
orld Bank. The boundaries, colors, denom
inations and any other inform
ation shown
on this map do not im
ply, on the part of The W
orld Bank G
roup, any judgment on the
legal status of any territory, o
r an
y end
orsem
ent o
r a
cc
ep
tan
ce
of
suc
h boundaries.
