ICRR 10030
                                                                                               Report Number : ICRR10030
                    ICR Review
                    Operations Evaluation Department




1. Project Data :
             OEDID :
             OEDID:     L3490
         Project ID :   P003949
      Project Name :    Third Kabupaten Roads Development Project
            Country :   Indonesia
             Sector :   Rural Roads
       L/C Number :     Loan 3490-IND
  Partners involved :
       Prepared by :    Binyam Reja, OEDST
      Reviewed by : Yves Albouy
    Group Manager : Roger H. Slade
       Date Posted : 04/22/1998

2. Project Objectives, Financing, Costs and Components :
Objectives : (i) to improve access to the main economic centers in 73 kabupatens in nine provinces, and (ii) to
increase the technical and institutional capability of all agencies in the country dealing with kabupaten roads .
Components : PART A: (i) rehabilitation and improvement of 4,200 km and maintenance of 25,000 km of roads; (ii)
upgrading and equipping of workshops and laboratories in selected kabupatens; (iii) provision of road construction
and maintenance equipment; and (iv) provision of construction supervision services . PART B: (i) development and
implementation of priority parts of a nationwide Kabupaten Roads Master Training Plan (KRMTP), and (ii) technical
assistance and studies for strengthening systems and procedures regarding planning, environmental analysis and
civic works implementation, and for helping central agencies in project monitoring . Costs : Total project cost was
US$ 498.2 million. Of this IBRD loan funded US$ 215 million. US$ 6 million was canceled.

3. Achievement of Relevant Objectives :
The project achieved its physical objectives . The targets set out in the SAR were achieved, but the quality of
construction was uneven . This has been a long standing problem in Indonesia, and the project made little progress
in alleviating it. On the institutional development side, training and technical assistance components were
successfully carried out; but these made little impact on the organizational capacity of the kabupaten public works
departments (DPUKs).

4. Significant Achievements :
The most significant achievement was the maintenance of kabupaten roads . By the end of the third year of the
project 100% of the maintenance needs in the targeted kabupatens was achieved; although this coverage declined
to 70 % after project support declined .

5. Significant Shortcomings :
The project came short of having a strategic approach to support the transfer of central government responsibilities
to kabupaten governments. The Bank took the decentralization process as given and designed the project
accordingly. But the process was fraught with difficulties and contradictions, requiring a much more focused
attention and intervention to correct its flaws . The contradiction between the devolution of technical responsibilities
and maintaining central control of the administrative and financial aspects of local agencies is but only one
inconsistency in the decentralization process that needed to be addressed.


6. Ratings :             ICR                       OED Review                Reason for Disagreement /Comments
               Outcome : Satisfactory              Satisfactory
     Institutional Dev .: Partial                  Modest                    Different OED ratings.
         Sustainability : Likely                   Uncertain                 Kabupaten officials have shown less
                                                                             incentive to continue maintaining their
                                                                             roads, unless there is a Bank loan with
                                                                             strict loan conditionality. The DPUKs are
                                                                          also still weak institutionally to carry out
                                                                          an effective road maintenance program .
   Bank Performance : Satisfactory              Satisfactory
      Borrower Perf .: Satisfactory             Satisfactory
       Quality of ICR :                         Satisfactory


7. Lessons of Broad Applicability :
The key lesson from this project is that before supporting institutional development effort for lower level
governments, the Bank needs to examine the decentralization process first and take measures to correct any
inconsistencies.

8. Audit Recommended?    Yes      No
         Why? The project is being audited with other five Indonesia transport project .

9. Comments on Quality of ICR :
The ICR is of satisfactory quality . It provides a very good account of project implementation experience and
achievement of projects. But it could have been improved by a better discussion on the issues concerning the
transfer of central government responsibilities to kabupaten governments .