Document of The World Bank FOR OFFICIAL USE ONLY / A/ V -Y ' -) Report No. 6813-IND STAFF APPRAISAL REPORT INDONESIA IRRIGATION SUBSECTOR PROJECT October 15, 1987 Asi;a Regional Office This document has a resicted distibution and may be used by redpients only In the perfonnance of their official duties. Its contents way not othewise be disclosed without World Bank authoriatin. CURRENCY EQUIVALENT (As of September 1987) Currency Unit Rupiah (Rp) US$ 1.00 Rp 1,650 Rp 1 million = US$606.06 !NDONESIAN FISCAL YEAR April 1 - March 31 WEIGHTS AND MEASURES I millimeter (mm) - 0.039 inches 1 meter (m) - 39.37 inches 1 kilometer (km) - 0.62 miles 1 square kilometer (km2) - 0.386 square miles 1 hectare (ha) - 2.47 acres 1 cubic meter (m3) - 35.31 cubic feet 1 million cubic meters (MCM) - 811 acre-feet 1 liter (1) = 1.06 quarts - 0.264 ga lons (US) 1 liter/second (1/sec) - 0.035 fti per second 1 kilogram (kg) - 2.2 pounds 1 metric ton (ton) - 2,205 pounds FOR OMCIL USE ONLY ABBREVIATIONS, ACRONYM3 AND INDONESIAN TERMINOLOGY ADB - Asian Development Bank APBN - Central Government Budget BAPPEDA - Provincial Development Planning Agency BAPPENAS - National Development Planning Agency BDP - Bidank Diklat Pengairan (in DCGRD - Representative office of Pusdiklat) BIE - Bachelor of Engineering BIPOWERED Bandung International Professional Training Program for Water Resources Development BPKP - Financial and Development Supervisory Board CABANG DINAS - Irrigation Section DAAD - Directorate of Agriculture Area Development (in DCFCA) DGFCA - Directorate General of Food Crops Agriculture DGWRD - Directorate Gene-al of Water Resources Development (in MPW) DIK - Daftar Isian Kegiatan (routine budget allocation) DIP - Daftar Islan Pr" .k (development budget allocatitn) DIPERTA - Provincial Agricultural Service DOI-I&II - Directorates of Irrigation I and II (in DGWRD) DOR - Directorate of Rivers (in DGWRD) DOS - Directorate of Swamps (in DGWRD) DPP - Directorate of Planning and Programming (in DGWRD) DPU - Provincial Public Works GOI - Government of Indonesia INPRES - Revenue sharing grant programs from GOI to provincial, district and village authorities IPEDA - Iuran Pembangunan Daerah - Land Tax ISF - Irrigation Service Fee Juru - Irrigation Overseer Kabupaten - Administrative District MOA - Ministry of Agriculture MHA - Ministry of Home Affairs MPW - Ministry of Public Works O&M - Operation and Maintenance OECF - Overseas Economic Cooperation Fund (Japan) Palawija - Secondary food crops (grown mainly in dry season) Pengamat - Irrigation inspector, head of subsection (Ranting Dinas) PBB - Property and Building Tax P2AT - Sub-directorate (within DOI-II) responsible for groundwater development PPL - Village level agricultural extension worker PPM - Mid-level agricultural extension worker PPS - Subject matter specialist PRIS - Provincial Irrigation Service Pusdiklat - Education and Training Division (in MPW) Repelita - National Five-Year Development Plan (Repelita IV, 1984-89) Seksi - Irrigation Section Office STM - Technical & High School level staff Ulu-Ulu - Irrigation water master Wilayah - Irrigation District Office WUA - Water Users' Association This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. INDONESIA IRRIGATION SUBSECTOR PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. LOAN AND PROJECT SUMMARY .................. vi I. PROJECT AND SECTOR BACKGROUND .................... . ...... ... .. 1 A. Project Background.c k gr.... .........ou nd.... . . ... 1 B. The Agriculture Sec t or 2 - Background.s c k g r ou nt......... **,.... 2 - Objectives... ...........,.....e...................... 2 - Performance .......................9........ 2 C. The Irrigation Subsectorb s e ct..o o......o.........o...or.. 3 - Surface Irri g a t i o n 3 - Srunwamp.,...........,. . *............... 3 - Small River M o uths 4 D. Institutional Framework and Supporting Servicesv...ces0.09. 5 - Irrigation Services for O&. 5 - Water Users' Associationso.......................... .O 6 - O&M Practices ............. p 7 - Staffing and Fa ii l i t i e s 8 - Staff Tra i n i n g 8 E. O&M Funding and Cost Recovery.........................o.. 9 - O&M Funding............................... 99 - Cost R er .99r 9 10 - Irrigation Service Fee 10 - Land Tax 11 F. Irrigation Development Strategy, Issues and Investment Programs ................................ 99999 e 1 11 - Subsector Issues andStrategy........................... 11 - Investment P rag r a m . 12 G. Bank Role and Subsector Lending Strategy.r.ateg...*.,..... 15 - Seneral ~~~~~~~~~~~~~~15 - Experience under Previous Projectso.... 04....9*.......9 15 This report is based on the findings of an appraisal mission to Indonesia in February/March 1987 comprising Messrs. A. Zulfiqar, E. Kramer, Ho Eisa, M. Mian, P. Sun, and Ms. S. Ganguly (Bank) and E. Greenshields, G. Cazaux and W. David (Consultants). Mr. T. Bertrand (Bank) participated part time. - ii - Page No. II. THE PROJECT ........................ 16 A. Rationale for Banklnvolvement............................. 16 B. Project Objectives and Description ......................... 17 - Project Objectives. ...**..*.*o*** * ...................., 17 - Project Descriptions c r i p ti.....o............on..... o.... 17 C. Detailed Features ..... ....... .. ..... e 18 - Special Maintenance.................* **c*4G*oci.. 18 - Surface Irrigation Systems...........................O 18 - Swamp Sys t e m s 19 - Small River Mouthse..............e....,.....o........ 19 - Efficient O&M ............... . ............ 20 - Surface Irrigation Systems...e....c......c......... 20 - Swamp Systems ... .e.........a....... c c CC....., .... e.a.a.. e.e.c 20 - Completion of Ongoing Projects......................o.. 21 - Pilot Groundwater Development............cc.c.e.c.e.c.. 23 - Turnover of Small Irrigation Systems,,,#o,.os........ 24 - Irrigation Service Fee....................... ........ 26 - Land Valuetion and Strengthening of P8 B 27 - Institutional Strengthening and Training... ............ 28 - Technical Assistance and Studies... 30 D. Cost Estimates* ....c33 E. Financing.. c e ece s c.c cc. sc. c. c e..... o..... 34 F. Preparation Status and Implementation Schedule......... cc. 35 Go Procurement 36 H. Disbursement..... 40 Is Environmental Effects 41 J. Role of Women...e 42 III. PROJECT IMPLEMENTATION..... 42 A. Organization and Management.cc.cc.c....cc..e..o.ceccc.c..c 42 - National Level Organization and Management .......... 42 - Provincial and Field Level Organization and Management.. 44 B. O&M Funding ............... ...... ........ * ccc...... cc 45 C. Accounts and Audits. ceccee ..........e.c.e...... .......c.. 45 D. Monitoring and Evaluation. c.....e......c... e e oee *...... c c.. 46 IV. CROPPING PATTERNS, YIELDS AND PRODUCTIONODUCTI.O.....e.cce. 47 A. Present and Future Cropping Pat terrn...o............... 47 B. Yields, Production and Markets...rk................ets.... 48 V. PRICES, FARM INCOMES AND COST RECOVERY ...........c.... 49 A. Prices 49 B. Farm Incomes and Payment Capacityp... 49 C. Cost Recovery and Operations and Maintenance Funding.......O 50 D. Cost Recovery Indices.....ecc. e c..... 51 - lli - Page No. VI. BENEFITS, ECONOMIC JUSTIFICATION AND RISKS ........ sesse........ 52 A. Benefits and Beneficiaries................................. 52 B. Economic Analysis5..................... .. ........... *6e****. 53 C. Risks and Uncertainties..e........... ... * . . ... .... .... ... 54 VII. AGREEMENTS REACHED AND RECOMMENDATION ...................,.. 56 TABLES IN TEXT 1.1 Subsector Injestment in Relation to O&M Expenditures.... 13 1.2 GOI's Commitments for Externally Financed Projects...... 14 1.3 Ongoing (Partially Externally Financed) Projects........ 14 2.1 Turnover of Small Irrigation Sy s t e m s 25 2.2 Pilot Areas for the Introduction of Irrigation Service Fee9,o ...........J-X****---**¢* 26 2.3 Project Cost Sumayr y 34 2.4 Project Financing Plan...... . * e . . .......... ... 35 2.5 Procurement Plan... 39 2.6 Disbursement Schedulec hd..... ...l e.o.... o... ......l..e 40 5.1 Net Farm Incomes . ............. , .. 50 5.2 Cost Recovery Ind 52 6.1 Summary of Major Benefits and Beneficiaries.......... 53 6.2 Economic Rate of Return and Sensitivity Analysis........ 55 ANNEXES Annex 1: GOI's Policy Statem- ... and Action Plan Annex 2: Cost Estimates and Implementation Schedules Table 1: Project Cost Summary (By Expenditure Categories) Table 2: COI's Financing Plan (by fiscal year) Table 3: Irrigation-Implementation Schedule Table 4: Swamps - Implementation Schedule Table 5: Schedule for Handing Over Swamps Projects to Provincial Organ- izations Table 6: Selected Ongoing Projects Table 7: Groundwater Component - East Java and Sulawesi - Implementation Schedule Teble 8: Groundwater Component - Lombok - Implementation Schedule 'table 9: Land Reclassification, Valuation and Strengthening of IPEDA/PBB Directorate - Implementation Schedule Table 10: A Pilot Scheme of Mapping - Implementation Schedule Table 11: Ongoing Land Reclassification Program Table 12: Ten-Year Land Reclassification Program Table 13: Introduction of Irrigation Service Fee - Implementation Schedule Annex 3: Institutional Development and Training Table 1: Proposed Approach to O&M Procedures Table 2: Training and Related Activities Annex 4: Consultancy Services Table 1: Consultancy Services for Project Implementation Table 2: Consultancy Services for Institutional Development Annex 5 O&M Funding Table 1: Central Government Funding of O&M (1979/80 - 1987/88) Table 2: Funding of O&M in Selected Provinces (1986/87) Table 3: Funding of O&M in Rest of the Provinces (1986/87) Table 4: Incremental Funding Requirements for Efficient O&M - Irrigation Table 5: Incremental Funding Requirements for Efficient O&M - Swamps Table 6: Projection of Rural PBB Table 7: Projected Sources uf Incremental Financing for Efficient O&M Annex 6 Investment Expenditures Table 1: Realization of Physical Targets - Actual and Projected for Repelita IV Table 2: Actual and Planned Investment Expenditures Table 3s Central Government Investment (DIP) Expenditures - 1984/85 - 1988/89 Table 4: Allocations of Loans and Disbursements up to January 1, 1987 - Bank-financed Projects Table 5: Allocations of Loans and Disbursements - ADB-Financed Projects Table 6: Allocations of Loans and Disbursements - OECF-Financed Projects Table 7: Estimated GOI Funding of Foreign Financed Projects Annex 7: Cropping Patterns, Yields and Production Table 1: Yields - Present Situation and Future with Project Table 2: Crop Areas - Present Situation and Future with Project Table 3: Incremental Crop Production at Full Development Annex 8: Repayment Capacity of Water Users Table 1: Java Farm Models - Using Actual Farmgate Prices Table 2: Outside Ja-a Models - Using Actual Farmgate Prices Table 3: Java Farm Models - Using Government Support Level Prices Table 4: Outside Java Farm Models - Using Government Support Level Prices Annex 9: Economic Analysis Table 1: Derivation of Economic Prices Table 2: Financial and Economic Prices Annex 10: Selected Documents and Data Available in Files CHARTS: 1. Organizational Arrangements for Project Implementation 2. Organizational Arrangements for the Implementation of Training Activities 3. Approach to Strengthening Irrigation Management at the Tertiary and Quarternary Levels 4. Organizational Setup for the Pilot Scheme for Irrigatiorv Service Fee MIAP --BRD 20240 - vi - INDONESIA IRRIGATION SUBSECTOR PROJECT Loen and Projec:t Suumary Borrower: Republic of Indonesia Amount: US$234 million equivalent. Terms: Repayable in 20 y'ears, including 5 years of grace, at the standard variable interest rate. Project Description: The project would be the first phase of a long-term program aimed at supporting the Government of Indonesia's (GOI) efforts to: (a) improve operations and maintenance (O&M) to sustain the effectiveness of all irrigation systems, through adequate levels of funding, and strengtheving of instituEions and proceduree for O&M planning and implementation; (b) introduce direct cost recovery from irrigation beneficiaries and increase local revenue generation to reduce the burden of O&M expenditures on central and provincial budgets; and (c) rationalize existing and programed investments in the subsector. Predicated upon, and within the framework of, an agreed medium-term Policy Statement and an Action Plan of specific measures to be taken over the three year project implementation period, the project would consist of the following: (a) special maintenance works (i.e. deferred maintenance and minor systems upgrading) on about 400,000 ha of irrigated land, about 106,000 ha of reclaimed swamp land, and five river mouths, so that these can sustain efficient O&M in future. Detailed preparation and design work would be underzaken for about 200,000 ha of irrigated areas and 55,500 ha of swamps requiring special maintenance to be covered in the first year of a follow-up project; (b) systematic introduction of efficient O&M on about 700,000 ha of irrigated land and 87,000 ha of swamp land; (c) completion of about 40 priority, GOI-funded on-going projects, selected on the basis of agreed technical and economic criteria; (d) pilot groundwater development through construction of some 900 tubewells for small farmers in primarily rainfed areas; (e) support for policy reforms and institutional strengthening and training, including privatization of small public irrigation systems, a pilot scheme for introduction of direct irrigation service fees, improving local reverue generation via land reclassification and valuation, O&M manpower planning and development, and strengthening of the central, provincial and district level institutions responsible for irrigation O&M, and of water - vii - users' associations; and (f) technical assistance and studies (institutional strengthening study, investment strategy study, and environmental impact studies) in support of the above components. An efficient operation of the existing capital stock (in irrigation infrastructure), expediting the completion of priority ongoing projects, striking an appropriate balance between expenditures on new investments and O&M of the existing investments, and reducing the dependence on central government budgets for O&M funding via improved cost recovery and local revenue generation, would all contribute towards sustained development of the irrigation subsector. Risks: The principal risks are that: (a) the implementation of the policy framework, and measures in the Action Plan in support thereof, may be prolonged or deferred, despite GOI's commitment as reflected in the Policy Statement and Action Plan; (b) implementation of physical works may be delayed; and (c) the level of funding allocated for efficient O&M may be inadequate or the funds provided may be inefficiently utilized. These risks are expected to be minimized by the proposed long-term program approach, the provision for substantial technical assistance, and by the steps already taken by the Government to appoint key consultants and to have the salient organizational arrangements for project implementation in place. - viii - Estimated Costs: Local Foreign Total ---- US$ million ----- Special Maintenance 45.2 27.7 72.9 Incremental O&M 9.5 6.1 15.6 Recurrent O&M /a 44.1 34.9 79.0 Ongoing GOI-funded Projects 60.9 42.5 103.4 Groundwater Development 6.6 6.0 12.6 Institutional Development 6.9 12.4 19.3 Turnover of Small Systems, Irrigation Service Fee - Pilot Schemes, Land Reclassification and Valuation 6.2 3.0 9.2 Base Cost lb 179.4 132.6 312.0 Physical Contingencies 15.6 12.4 28.0 Price Contingencies 16.1 3.0 19.1 Total Project Costs 211.1 148.0 359.1 Financing Plan: GOI 109.7 - 109.7 Bank 94.4 139.6 234.0 Government of Netherlands 6.4 5.4 11.8 Government of Italy 0.3 2.7 3.0 Ford Foundation 0.3 0.3 0.6 Total 211.1 148.0 359.1 Disbursements: Bank FY 1988 1989 1990 1991 Annual 30.0 80.0 80.0 44.0 Cumulative 30.0 110.0 190.0 234.0 Rate of Return: 21% t:E': IBRD No. 20240 /a Present level of O&M expenditures. /b Including taxes amounting to about US$18.5 million equivalent. INDONESIA IRRIGATION SUBSECTOR PROJECT STAFF APPRAISAL REPORT I. PROSECT AND SECTOR BACKGROUND A. Project Background 1.1 The large expansion of irrigation infrastructute in Indonesia over the last two decades has been impressive and has made a major contribution to bringing the economy to self-sufficiency in rice. However, this successful expansion was not accompanied by a country-wide effort to maintain and operate efficiently much of the 4.8 million ha of the irrigation systems. Consequently many systems are poorly maintained. Unless there is a radical shift of national focus towards operations and maintenance (O&M), a massive and much more costly expenditure, in both financial and economic terms, on rehabilitation in the neAt 10-15 years, would become inevitable. The recognition of the importance of O&M, coming at the same time as Indonesia is reaching the threshold of rice self-sufficiency and facing severe resource constraints, is leading to a sharp redirection of GOI's priorities away from expansion and modernization of specific irrigation systems, towards efficiently operating and maintaining existing systems and the completion of only priority ongoing projects. Recognizing that this shift in focus is critical to optimizing the returns from investments in irrigation and preventing a decline in agricultural yields from current levels, GOI has enunciated and evolved new policies and concerted medium-term actions on subsector-wide O&M funding, institutional strengthening and cost recovery. 1.2 The proposed project would be the first phase of a program aimed at supporting these policy and institutional reforms as well as appropriate levels of O&M expenditures and development of new sources of financing from provincial authorities and beneficiaries. The project was identified by a Bank mission during discussions with the Government in February/March 1986, and prepared by the Directorate General of Water Resources Development (DGWRD) in the Ministry of Public Works (MPW) with the assistance of consultants financed under Irrigation XIV (Loan 1811-IND). Concurrently, a draft Subsector Policy Statement and detailed Action Plan to provide the underpinnings for ihe program, were prepared by a working group including representatives from BAPPENAS, the Ministries of Finance (MOF), Home Affairs (MHA) and Agriculture (MOA), and DGWRD. Following preparation mi. ,ions that visited Indoneaia during June through November 1986 and an appraisal mission in February/March 1987, broad agreement was reached with Government on the overall project concept and scope, as well as on the draft Subsector Policy Statement and Action Plan covering related policy issues in the irrigation subsector. Following technical discussions held in Jakarta during June/July 1987, negotiations were held in Washington, D.C., during September 1987. The Government delegation was led by Mr. Soebandi, the Director General of Water Resources Development. -2- B. The Agriculture Sector Background 1.3 Agricultuve remains a key sector of the Indonesian economy, contributing about one-fourth of GDP and providing employment to 55% of the labor force. The sector has an important role in non-oil merchandise trade, with major agricultural exports accounting for 33% of the value of non-oil exports, and food for 7% of imports. Of the country's cropped area of 24 million ha, about 8 million ha are under perennial crops, 9 million ha are in dryland farms, and 7 million ha in wetlands suitable for rice cultivation. Rice occupies about 38% (9 million ha) of the total cropped area, corn 13% (3 million ha), cassava 7% (1.6 million ha), and soybean 3% (0.8 million ha). Food crops account for 63% of agricultural GDP, with rice alone accounting for a 30% share in 1985. Areas well endowed with rainfall and irrigation facilities usually grow two to three crops a year: rice followed by soybean or corn in the second and third cultivation cycles. Farm holdings are predominantly small--34% of all household lots are less than 0.25 ha, and about 29% are between 0.25 and 0.5 ha. It is estimated that 44% of the rural population lives below the absolute poverty income level of US$106 per capita. Objectives 1.4 The Government's major objectives for the agriculture sector during Repelica IV are to: (a) increase production to meet domestic requirements for food while meeting the needs of industry and expanding agricultural exports; (b) increase farmers' incomes and generate employment; (c) promote a more balanced distribution of economic opportunities, regional development and land settlement through transmigration; and (d) contribute to the health and better nutritional status of the population. Performance 1.5 Since 1969, agricultural growth has averaged about 4% p.a. and outpaced population growth by a significant margin. Rice output, which has grown a,: 5% p.a. since 1969 (6.3% p.a. since 1975), has made a solid contribution to the sector's impressive performance. The dramatic increase in rice production from 17.4 million tons in 1979/80 to about 26.6 million tons in 1985 essentially transformed the country from one of the world's largest importers of rice (about 2.6 million tons in 1979/80) to one with surpluses in 1985/86. Other food crops (particularly corn) and cash crops (such as rubber, palm oil, coconuts and spices) have also shown impressive growth and added to the significant gains registered in rural welfare in the past several years. This performance is the result of sustained Government support to the agriculture (especially rice) sector through heavy investments in rural infrastructure, particularly irrigation systems, research and extension, and input subsidies combined with technological breakthroughs achieved in high yielding rice varieties (HYVs). The past performance of the sector cannot, however, be sustained if operations and maintenance of the large irrigation infrastructure continues to be neglected. In the future, a growth in rice output of about 2.5-3% p.a. will have to be maintained to meet domestic - 3 - demand. The strategic imperative is to reduce costs and increase efficiency of Government interventions to encourage efficient rice production, and to fully exploit the potential for agricultural diversification by (i) addressing technical problems in field crops through research and extension; (ii) encouraging adequate input supplies and related services such as credit and marketing; and (iii) improving the planning and implementation of Lree crops programs. C. The Irrigation Subsector Surface Irrigation 1.6 The total irrigated area in Indonesia of 4.8 million ha includes 2.6 million ha of technical irrigated area, 1.3 million ha of semi-technical irrigated area, and 0.9 million ha of simple irrigated area. The technical areas have permanent canals7 control structures and measuring devices, and all the water allocation and distribution up to the tertiary head is controlled by the Government. The semi-technical areas have permanent canals but few control and measuring structures. The source, and sometimes the primary canal, is controlled by the Government but distribution is left to the farmers. The simple or non-technical areas generally have few permanent intakes or distribution structures, and water is used by farmers without any control by the Government. Nearly 19% of the irrigated area is covered by systems smaller than 500 ha in size and most of these systems are either semi- technical or simple irrigation systems. As enunciated in the Policy Statement (Annex 1), the Government policy is to efficiently operate and maintain technical systems larger than 500 ha, and to privatize (i.e. turn over to water users' associations) smaller systems, which are generally semi-technical or simple. The growth rate in irrigated area harvested has been 1.6% p.a. between 1969 and 1985 (0.5% p.a. on Java, and 3.8% p.a. on outer islands where it started from a low base). Virtually all this growth is attributable to increase in technical irrigation svstems, which grew at 2.5% p.a., largely due to the rehabilitation and upgrading of existing semi-technical systems. Over .he firet three Repelitas, rehabilitation and flood control/conservation each accounted for about 27-28% of total Government investment in the subsector. The expansion of the irrigation network accounted for the largest share of investment in the subsector (35%), and this share increased from 22% in Repelita I to 39% in Repelita III (1979/80 to 1984/85). However, the maintetnance of the existing capital stock in irrigation netwnrk was increasingly neglected due to an inadequate allocation of funds for O&M, and an ineffective utilization of the limited available funds (para. 1.24). As a result, a large number of weirs and intakes require structural repairs, many gates need replacement, and most canals suffer from excessive silt deposition and loss of capacity. Besides contributing to significant reduction in the efficiency of the irrigation systems, a continuation of this state of affairs could lead to substantial degradation of the capital stock in irrigation facilities, and an enormous expense in rehabilitating it in future. Swamps 1.7 Indonesia has an estimated 35 million ha of inland and coastal swamps, mostly with medium to heavy textured clay and silty clay soils - 4 - ovetlaid with surface peat. About 5.5 million ha of coastal swamps have been identified as havuing agricultural potential (1.4 million ha in Sumatra, 1.4 million ha in Kalimantan, and 2.7 million ha in Irian Jaya), but conservation of primary forests and land rights are likely to constrain the area that can be developed. About 600,000 ha have been reclaimed through Government sponsored schemes during the period 1969/70 to 1985/86, involving construction of several thousand kilometers of large irrigation and primary drainage canals and a multiple length of smaller drains. The potential for agricultural development is affected by the relatively low first phase investments in basic infrastructure, and considerable improvements in controlling drainage and on-farm water management are possible. About 80% of these reclaimed areas are dependent on tidal effects for flood irrigation and drainage of land along major rivers. Almost all schemes are classed as non- technical, with no water control structures and only very limited monitoring of water levels. As in the case of surface irrigation systems, the maintenance of the main drainage systems in reclaimed swamps was to be done through the Provincial Public Works, and farm.ers, through the establishment of water users' groups, were to operate and maintain tertiary systems. In practice, however, not much is done, because the responsibility for O&M of main and secondary systems has not yet been formally transferred from DGWRD to the provincial authorities. Furthermore, prior to 1984, swamp schemes received no regular allocations for maintenance funds, and as a result now suffer from reduced canal sections, silted beds, unstable banks, and broken and settled flood bunds. Where control structures have been built, many have settled and cracked, and these are in urgent need of repairs. If further deterioration is allowed, rehabilitation would prove very costly. Groundwater 1.8 Public sector groundwater activities have been concentrated in East Java. Up to about a decade ago, there was little private participation except through hand-dug and manually operated wells and minor developments on the sugar estates. In the mid-1970s, the private sector in East Java developed a technology for construction of low-cost shallow tubewells in the shallow water table areas of flurio-volcanic aquifer systems, but this technology has not yet been exported to any of the other islands. A subdirectorate within DGWRD retains O&M responsibility for groundwater facilities for at least two years after commissioning of a public system. During this period, a weter users' group is set up within the tubewell command area, and training is 2rovided to the participants to operate the facility. Subsequently, part of the responsibilities for the salary of the operator, payment for fuel, minor maintenance of the canal system, arrangement for water del.iveries to individual farmers, and recovery of O&M costs are handed over to the water us* 's group. DGWRD retains responsibility for fuel supply and delivery, for maj maintenance (particularly of pump units), and for replacement of wells and pump units. This turnover of part of the responsibilities to the water users' groups has been generally functioning satisfactorily. Small River Mouths 1.9 There are about 170 major river basins and about 228 sub-basins in Indonesia, over 90% of which are on the islands of Sumatra, Java, Kalimantan - 5 - and Sulawesi. High population pressure on agricultural land and rapid deforestation have led to soil erosion, sedimentation and flood peaks in the river enUironment. Most of the 90 or so smaller rivers in the northern part of Java and the eastern and western seab_ards of Sumatra are also affected by pronounced littoral drift and barrier beach formation in the dry season, when compensation flows are inadequate to keep the mouths open. The consequent flooding of low-lying agricultural lands causes major delays in planting dates and lower yields, and also seriously interferes with the navigation of fishing vessels serving poor isolated communities. The economic losses resulting from periodic flooding of both agricultural and other lands are signicicant. Raising of river banks and installation of flood control gates have been tried in some of these areas, while in others a minimum of dredging or other repairs are carried out by local irrigation officials to prevent flood damage or to keep lines of communication open. However, the recurrent choking of river mouths continues to be a problem. D. Institutional Framework and Supporting Servi ces Irrigation Services for O&M 1.10 The MPW, MOA and MBA are involved in providing irrigation and related services including technical guidance to farmers on water use, planning of cropping systems in irrigated areas, timely injection of inputs, and assistance in the organization of wate, users' groups. Within the Provincial Public Works (DPU), the Provincial Irrigation Service (PRIS) is responsible for operating and maintaining the public irrigation systems. The chief of the PRIS is administratively responsible to the Provincial Governor through the Chief of DPU, but for all technical and personnel matters, the PRIS chief comes under the jurisdiction of DGWRD. Each PRIS, at its provincial headquarters, includes sections for planning and design, irrigation construction, rivers and swamps, operation and maintenance, and logistics. The O&M section is involved in preparing operation plans and guidelines and O&M budgets, and in ensuring adequate O&M in the province. While several recent Bank-assisted projects have focussed on building up the capacity of PRIS in design and construction supervision of small systems and to improve O&M performance, more institutional strengthening is needed to enable better planning, organization, budgeting and control of O&M activities. 1.11 The O&M for the main irrigation system is carried out mostly by the irrigation section (cabang dinas) and subsection (rai.ing dinas) staff. A section usually covers from 20,000 to 40,000 ha. Each section consists of about 5 subsections, which are headed by inspectors (pengemats). A subsection office covers an area of 4,000-6,000 ha, and has about 6 irrigation overseers (jurus). As the junior-most member of the PRIS field staff, the juru is responsible for about 1,000 ha, setting 6 or more gates, recording hydrologic and cropping pattern data, arranging the emergency maintenance of main and secondary canals within his jurisdiction, and persuading farmers throughi their village headmen and irrigation water master (ulu-ulu) to maintain tertiary and quaternary canals, and to agree on planting dates for rational water distribution and management. Each juru is assisted by gate-keepers and a few laborers. The section and subsection staff are required, as part of the guidelines for operation, to estimate crop areas, stages of crop growth, crop water requirements, field application and conveyance losses, and water inflows and outflows in offtakes and structures that usually have adjustable gates. These activities require higher technical capabilities and numbers of staff than are usually available at present. 1.12 The Provinciai Agricultural Service (DIPERTA) has six subservices, including agricultural area development. This subservice has a water management section which deals primarily with irrigation system development, on-farm water management, and water users' associations (WUAs). At the district and subdistrict levels, the agricultural services are organized into fewer subservices, and water management is placed under the plant protection subservice. At the agricultural service level, there are water management (Tata Guna Air) staff, whose duties include the provision of on-farm water management guidance to WUAs, help in establishing WUAs, and training of field extension workers (PPL) in on-farm water management. As in the case of the PRIS, the main weakness of the water management units at the provincial, district and subdistrict levels is the lack of staff both in numbers and in technical capabilities. 1.13 The MHA through the various levels of administrative services and the agricultural development committees is supposed to coordinate irrigation water distribution (through the various Irrigation Committees at the Provincial and Kabupaten levels) and the formation of viable WUAs. Since the Irrigation Committees (comprising representatives from the Public Works, provincial/local, governments, and agricultural services) do not have any control over funds or a working secretariat, coordination is generally weak and most Irrigation Committees are virtually inactive. While their main task is to determine cropping plans, in practice, this generally gets decided by the Governor by official decree. Water Users' Associations 1.14 Experience in Indonesia has pointed to the need to consult farmers during the design phase of irrigation systems and, particularly for tertiary networks, to ensure that they understand and agree with the purpose and procedures, and afterwards operate and maintain them properly. Recognizing the importance of efficient water management at the farm level, GOI in 1975 decreed the establishment of WaAs at the village level. The Presidential Instruction No. 2 in 1984 set out the organizational structure of the WUAs. WUA management consists of a Chairman, Deputy Chairman, Secretary, Treasurer and Irrigation Water Master (Ulu-Ulu). Committee members are elected by WUA members who own or rent irrigated paddy within the tertiary unit. A typical WUA would operate an area of about 70-100 ha, and have a membership of 100-200 farmers. The members are divided into farm groups by sub-tertiary and quarternary blocks. Most of the WUAs have been established along administrative boundaries. As tertiary boundaries do not necessarily coincide with village boundaries, this has often led to inadequate coverage by WUAs of tertiary systems. The task of reorganizing WUAs along hydrologic boundaries is being undertaken in some areas. 1.15 As a matter of policy, a WUA should be operational in each tertiary system. In practice, however, only about 15% of the existing WUAs are active, - 7 - 20% semi-active, and the rest are inactive. TVi lack or inactivity of WUAs may be due to poor tertiary system development. About 35% of the number of tertiaries in the areas identified for special maintenance have yet to be developed. While the development of tertiary systems is the responsibility of the farmers and local committees, the MPW is supposed to provide technical assistance and in some cases construct the tertiaries. 1.16 Recent Government policies to support O&M and cost recovery stipulate that WUAs should be given responsibilities for O&M, subject to constraints imposed by systems' technical characteristics and administrative boundaries. These policies imply that in addition to the WUAs' primary responsibility of taking care of O&M of tertiary systems, farmer beneficiaries through their WUAs share the costs and responsibilities for O&M of the main systems, and that simple and smaller systems be turned over to WUAs for O&M. The effective implementation of these policies calls for the execution of a sound policy for developing WUAs, increased farmers' participation in the decision-making process involving design, special maintenance and O&M resource allocation, effective coordination mechanisms among WUAs and field staff of concerned agencies, as well as strengthening of O&M field staff and Irrigation Committees, and these would be supported by the proposed project. O&M Practices 1.17 Some of the minor maintenance needs can be met by regular weeding or grass cutting, greasing or lubrication, and some removal of sediment upstream of measuring structures. Other maintenance work involves repair of major bank failures, removal of accumulation of sediment in large canals and in beds and sand traps which are not easily removed by flushing, and reconstruction of civil works and equipment damaged by chemical action, volcanic or seismic activity, and major floods. This category of works needs systematic surveys, investigations, planning and design before reconstruction can be implemented, and is considered as heavy maintenance. When some deterioration has occurred and repairs are required to bring systems up to full effectiveness, a special maintenance program is required before an efficient maintenance program can be implemented. 1.18 There are widely differing O&M practices among and within provinces, rcflecting differences in pressure on available water supplies, infrastructure, staffing levels and quality, and facilities. While individual schemes vary widely in physical condition and operational capability, most weirs and intakes require structural repairs, many gates need replacement, most canals suffer from excessive silt deposition and loss of capacity, and tertiary systems are generally inadequate to achieve the full benefits of irrigation. Some areas have no O&M manuals and no discernible guidelines or understanding of water management. At the most basic *vel, there is no measurement of discharges in rivers or canals, collect in of rainfall or crop data, or attempt to match tertiary unit water supply crop water requirements. There is need to standardize at least ta collection and water scheduling practices among provinces for efficient 0. and equitable water distribution. Additional training of section O&M ant design staff is also needed to improve their appreciation and capability tor tertiary network design and water management at subsection and juru level. -8- Staffing and Facilities 1.19 Most PRIS headquarters appear to be overstaffed compared to the estimated requirements, though some have less than the required engineer-le;el senior staff. On the other hand, there is inadequacy of staff members and quality, particularly at the district and lower levels. Additional pengamats and *urus, who play a crucial role in the case of O&M activities, are needed. A program of construction of pengamat offices was implemented in the 1970s, and a large number of juru and gate operator housing has been constructed in many provinces. There are, however, still many shortcomings with respect to housing for field level staff and also facilities such as gate shelters, storage areas for stoplogs, and handling gear. Lack of transport for irrigation staff is also a serious impediment to the introduction of efficient O&M procedures. Jurus use bicycles as their day-to-day mode of transportation and pengamats are generally provided with motorcycles, but their staff usually lack any form of transport to carry out regular checking of system maps and inventories for operation and maintenance. These problems are even more severe at section level. There is also a need for more radio and telecommunication equipment to speed up efficient operation and reduce damage to canals and structures during floods. Staff Training 1.20 Training for all Public Works staff is coordinated by PUSDIKLAT (Center for Training and Education) within MPW. In DGWRD, the BDP is the representative office of the PUSDIKLAT. The BDP is responsible for coordinating the training of kanwil (regional office of MPW) and PRIS staff. The BDP is also supposed to coordinate the training of water user groups and farmers, through other directorates. Recently concluded and on-going training programs have included training of middle level and lower level officials from the MPW, MOA and MHA, as well as key members of WUAs and selected key farmers, and have comprised degree and non-degree programs, short training couirses, and in-service and on-the-job project specific training. The Bank-financed Irrigation XVI Project (Loan 2118-IND) assisted with the establishment in 1983 of a water users training project to improve the tertiary and quaternary level of management. Other projects (including Irrigation XVII - Ln. 2119-IND and Second Provincial Irrigation - Ln. 2375-IND) have provided training for main systems O&M. However, some of the constraints which persist are: (a) lack of follow-up training and feedback on the impact of training; (b) inadequate emphasis on the details of training modules (e.g. farmers' training modules include too many topics, ranging from soil erosion and environmental aspects to post-harvest technology); and (c) lack of focus in training co facilitate proper organization and strengthening of water users' associations. In addition to addressing these constraints, programs need to be implemented to provide training in basic O&M procedures (Annex 3, Table 1) along the lines of a program currently under way in East Java, with emphasis on mobile teams of trainers rather than on bringing the trainees to a central training location. - 9 - E. O&M Funding and Cost Recovery O&M Funding 1.21 The section heads of the Provincial Public Works (DPU) within each of the provinces prepare annually a budget request for O&M by January 1 for the following fiscal year beginning April 1. The estimated budgetary require- ments are based upon the section engineer's survey of the condition of all irrigation works and his judgement of what he considers is needed for adequate O&M of the irrigation systems within his section. The total of all O&M budget requests for the province, along with the budget requests for about 18 public sectors, are reviewed by provincial officials. In practice, the O&M allocation to each section is decided by the Provincial Development Planning Agency (BAPPEDAS) in each province largely on the basis of funds available, rather than on estimated reluirements. 1.22 Two major channels for GOI funding of irrigation O&M are: (i) INPRES-APBD funds, which are allocated from Central Government through the MHA to the Provincial Covernorrs, who decide on the allocations for O&M; (ii) DIP-APBN, which are for similar purposes as INPRES-APBD funds, i.e., office running costs, transport costs, material costs, and annual maintenance work, but are allocated from Central Government funds, earmarked for the MPW, to the district or section offices. Provincial governments also allocate their own funds (DIK) to cover the routine salaries of province-based civil servants (para. 1.24). Direct DIP-APBN funding for O&M of irrigation systems was introduced in 1984/85 for some projects which had undergone rehabilitation, As a result, the development budget, which should normally be for financing investment expenditures, also provides financing for recurrent expenditures such as O&M. Thus the major issues to be addressed in funding mechanisms are concerned with simplifying and rationalizing the O&M programming and budgeting procedures, whereby needs-based allocations for O&M can be made and the different channels of funding rationalized. 1.23 Since 1976, the level of funding for O&M (from Central Government) has increased in nominal terms from an average of about Rp 2,000/ha to abouc Rp 9,000/ha in 1985/86, equivalent to a real increase of about 20% during this period. The peak level of support for O&M was in 1985/86, when Rp 46.4 billion (APBD-Rp 32.4 billion and APBN-Rp 14 billion) was provided for O&M. This was followed by a curtailment of O&M funding to Rp 39.9 billion (APBD-Rp 31.8 billion and APBN-Rp 8.1 billion) in 1986/87, due to severe budgetary constraints (Annex 5, Table 1). The average of APBD and APBN funding in 1986/87 for the provinces selected for efficient O&M (Annex 5, Table 2) under the proposed project was only about Rp 10,000/ha, and the level of allocation varied considerably among the provinces. For example, Yogyakarta was allocated an average of Rp 13,338/ha, while South Sumatra was allocated only Rp 5,848/ha. These wide differences reflect the availability of resources and varying provincial priorities rather than the actual requirements for efficient O&M. 1.24 Another source of funding for O&M is DIK, which are allocations by provincial governments from their own funds purely to cover the routine salaries of province-based civil servants. However, the precise amount of DIK - 10 - used fur O&14 is not clear. Based on data gathered from a few provinces, it is estimated that an average of about Rp 3,700/ha is used for O&M (Annex 5, Table 2). Thus, the overall level of funding from all three sources in the selected provinces was about Rp 13,000/ha in 1986/87 which was less than half the estimated expenditure of Rp 25,000-30,000/ha required for efficient O&M. This estimate of the expenditure level required for efficient O&M is based on studies by Gadjah Mada University (1980), West Cirebon study (1983), and estimates made under the Bank-financed East Java Irrigation Project (1986). These studies also indicate that between 45 and 50% of O&M funds should be used for construction, compared to only about 25% of actual O&M expenditures being presently used for construction work. Most available O&M funds are used to cover administrative expenses, which is not an effective utilization of these funds. Cost Reco vety 1.25 Irrigation Service Fee. Farmers are responsible for the O&M of only the tertiary systems, and they contribute to O&M in part through their own work and mostly through payment in kind. To date, cost recovery for main and secondary systems has been through the system of land tax (para. 1.27). With a tight budgetary situation, which makes it difficult even to maintain the present level of Central Government budgetary support for O&M, and a growing awareness and need for O&M funding, attention is increasingly being given to the introduction of an irrigation service fee. Such a fee would offer many advantages. It can be geared to the actual financial requirements for O&M in specific irrigation systems and be implemented in such a way that there is a direct connection between payment of the fee and the provision of the O&M service. Indonesian farmers seem willing to pay increased fees if the benefits of the work being finai.ced are clearly visible to them. The establishment of such fees would further be an important factor in encouraging farmers to get more involved in the O&M process for their systems. In future, water users might be willing to take much greater responsibility for their systems if this would allow them to avoid externally imposed service fees in favor of inte.~nal fees levied by WUAs to finance operations decided on by the WUAs themselves. 1.26 There have already been some initiatives towards collecting irrigation service fees. In South Sulawesi province, a fee has been collected in the Sadang irrigation area (25,000 ha) for tha last five years. Recently, the provincial government in S-ath Sulawesi has formulated an ordinance to introduce the fee on a province-wide basis. A small fee (about Rp 1,000/ha/year) has been collected, together with other village taxes and contributions, in the Simulungan irrigation system in North Sumatra. A fee has also been collected in Bali. However, these limited initiatives do not provide an adequate basis for an immediate launching of a nationwide system of irrigation service fees. The concept, whether it should be a per hectare charge or explicit water charges on bulk sales to water users, the farmers' payment capacity to determine the appropriate level of fee, and the organizational arrangements needed for collection of the fee, all would be worked out and implemented on a pilot scale under the proposed project. - 11 - 1.27 Land Tax. In the past, GOI has not pursued a policy of having an irrigation service fee, because of its (a) reluctance to tax overtly a rural sector considered (particularly in the 1970s) to be extremely poor, i.e. a reluctance to go beyond the taxation already implicit in the low administered rice price during that period; and (b) sensitivity to certain traditional sentiments that water provided by nature should be free. Cost recovery from the farmers has been through the land tax (IPEDA), which is assessed on the basis of land classification. Its structure and categories have disitinguished between farmers in irrigated and non-irrigated areas, and hence between beneficiaries and non-beneficiaries of irrigation services. However, the IPEDA revenues have not matched O&M costs because of low land valuations, low tax rates, and imperfect collection rates. Moreover, the IPEDA is a major revenue source for local governments and is used to fund many local activities. Therefore, only a small portion of it was, in any event, to be used for O&M of irrigation facilities. The Bank through its various lending operations to the irrigation subsector has supported an improvement in cost recovery through reclassification of irrigated lands to reflect their higher potential productivity. An allocation of the additional amounts collected for O&M of the irrigation systems was first made under the Bank-financed West Tarum Canal Improvement Project (Ln. 2560-IND). 1.28 ln 1986, GOI introduced a tax for land and buildings, the PBB (based on the actual market value of land), which replaced the IPEDA (based on the productivity of land), and also the wealth tax and the urban household tax. At present, the rural PBB is estimated to be about Rp 60 billion, of which less than 15% is allocated towards O&M. The objectives of the tax reform are to strengthen the revenue base of the provincial and local governments and to improve the overall equity of property taxation. To implement this tax reform, land reclassification and valuation are needed, and the tax collection mechanisms have to be in place and strengthened. The proposed project would support these, whereby the incremental revenues from the increased valuation of land would help reduce the dependence of the provincial and local governments on financial transfers from the central government, and contribute towards generation of local revenues which are at least somewhat related to the magnitude of the O&M responsibilities of the provincial and local governments. However, the PBB would not be a fee for specific services rendered, and it would continue to be regarded as a general source of revenue of local governments for development purposes, but not as a routine O&M fund. F. Irrigation Development Strategy, Issues and Investment Programs Subsector Issues and Strategy 1.29 In the last couple of years, Government has been taking steps towards scaling back major expansions in the irrigation subsector, directing increased resourcea towards O&M, and expediting the completion of priority and viable ongoing project3. The Bank and Asian Development Bank (ADB) have also been restructuring their ongoing projects to protect activities of highest priority. These are steps in the right direction which should help Covernment cope with the budgetary crisis. However, a sustained development of the irrigation subsector requires a medium-term strategy which will entail - 12 - addressing some of the underlying issues in the sector. First, there is need for an in-depth review of the technical and economic viability of all existing and proposed irrigation investment programs. The purpose of this review would be to restructure and rationalize projects as necessary, establish priorities for irrigation investment, and finalize preparation of a realiotic subsector strategy for Repelita V (1988/89-1993/94), taking into account the likely availability of funds from different sources, as well as implementation capacity. While there seems little prospect of major increase in rice production on the 1.2 million ha of recently rehabilitated large systems on Java, four potential sources of growth in the medium to long term could be: (a) technical systems on Java not yet rehabilitated and upgraded; (b) existing semi-technical and simple systems on Java; (c) existing systems on the Outer Islands, including upgrading and further development of irrigation command areas, and reclaimed swamps; and (d) possible new systems on the Outer Islands (prospects for which are mixed). Second, as indicated earlier in paras. 1.18-1,20 and 1.24, widespread deficiencies in system operation and maintenance (O&M) are major constraints to irrigation development. This issue is related to inadequate O&M funding levels and to the capacity of the irrigation services to use efficiently the funds provided. Most available O&M funds are used now to cover administrative expenses, with only a quarter of actual expenditures being used for construction work. Increased budget allocations thus need to be accompanied by progressive system-by-system formulation of detailed O&M work plans, training of irrigation staff, and regular supervision and control of administrative costs. Third, as pointed out in paras. 1.15 and 1.25-1.28, inactive and weak WUAs which are unable to assun.e responsibility for O&M, inadequate cost recovery and low levels of local revenue generation for financing O&M are constraints that have become more important with the rapid deterioration in GOI's financial situation. Fourth, the water balance in Java, with competing demands from agricultural, municipal and industrial users, is becoming critical, which highlights the need for increased emphasis on multi-purpone management of water resources, increased irrigation efficiencies, And appropriate allocation of supplies. Investment Programs 1.30 The ongoing public sector investment in irrigation includes new irrigation works, rehabilitation of old projects, groundwater development to facilitate crop diversification and to provide rural domestic water supplies, and river control works to provide water supplies for irrigation and municipal uses and for flood control and hydropower generation. Public investment also includes rehabilitation and reclamation of swamps (tidal and non-tidal), and planning, training and research for all subsector activities. The indicative investment program under Repelita IV (1984/85 to 1988/89) was to 'indertake rehabilitation of old irrigation systems commanding a total area of 360,000 ha, undertake new irrigation construction to provide water to 600,000 ha, carry out new construction and rehabilitation works on swamps benefitting 460,000 ha, and a program of flood protection and conservation on 500,000 ha. These program targets have turned out to be ambitious. On the basis of works completed thus far and the current cutbacks in the program due to budgetary constraints, it appears that only 40% of the target for rehabilitation, 30% of new irrigation development, 25% of swamp development and about 50% of the flood protection and conservation targets will be achieved by the end of the - 13 - plan period (Annex 6, Table 1). The financial performance has more or less paralleled the physical performance (Annex 6, Table 2). For all subsectors, the anticipated shortfall in investment expenditures from that originally planned for Repelita IV will be about Rp 4,200 billion or 67%. The shortfall in GOI expenditures will be 77%, while the shortfall in expenditures financed by external loans will be much less at 43%. In other words, the Government has not been able to keep up with its planned share of financing of the irrigation subsector investment program. 1.31 In view of its budgetary constraints, the Goverriment has not only been unable to maintain its planned sharing of the cost of projects being financed in part by external borrowing, but has also not been able to finance on an adequate basis the expanding O&M requirements. OEM expenditures are only about one-third to one-half of those required. Nevertheless, the Government has been taking significant steps towards allocating an increasing share of its limited available resources in the subsector for O&M and (until 1986/87) providing increasing allocations for O&M, as shown below: Table 1.1: SUBSECTOR INVESTMENT IN RELATION TO O&M EXPENDITURES (Rp billion) 3&M as 0&M Expenditures percent of Year Investment Index APBD APBN Total Index Investment 1984/85 644.7 100 30.7 13.4 44.1 100 6.8 1985/86 584.5 91 32.4 14.0 46.4 105 7.9 1986/87 386.1 60 31.8 8.1 39.9 90 10.3 1.32 While the need for increased funding for O&M is fully recognized, the Covernment, nevertheless, has continued to make further commitments for externally financed projects. Since the beginning of Repelita IV (1984/85), the Government has commenced 21 new projects, partially funded by its three major lenders (World Bank, ADB and Overseas Economic Cooperation Fund (OECF)) for a total of US$936 million, which carry a GOI financial commitment equivalent to US$506 million. The breakdown of these commitments by major lending agencies is shown in the following table: - 14 - Table 1.2: 0O0's COMMITMENTS FOR EXTERNALLY FINANCED PROJECTS (commencing 1984/85) No. of Loan Local funds Lending Agency Projects amounts t lquirements - (US$ million) World Bank 5 475 293 Other major external financiers 16 461 213 Total 21 936 506 1.33 A list of all ongoing externally financed projects is given in Annex 6, Tables 4-7. As will be noted, seven of these projects were to have been completed in 1985 and 1986. The total loan amount on these seven projects was US$345.7 million, of which US$248.3 million had been spent up to January 1, 1987, leaving a balance of US$97.4 million (28Z of the original loan amount). A summary of all ongoing external loans is given below: Table 1.3. ONGOING (PARTIALLY EXTERNALLY FINANCED) PROJECTS Total loan Spent to Balance Lending Agency No. of projects amounts 1/1/87 of loans (US$ million) … World Bank 12 1,025.4 432.4 593.0 Other major external financiers 37 1,156.2 289.3 866.9 Total 49 2,181.6 721.7 1,459.9 1.34 An examination of investment expenditures realized and budgeted for Repelita IV clearly illustrates the growing magnitude of the Government's problem in meeting its commitments for the financing of irrigation development (see Annex 6, Table 2 for breakdown of expenditure by major category of investment). As a result, the Government has reduced its total irrigation development program, relied more heavily on foreign borrowings, and drastically reduced the number of projects under execution with solely GOI financing. In 1985/86, DGWRD was implementing 202 projects. This number was reduced to 177 in 1986/87, and further reduced to 130 in 1987/88. However, under the proposed project, only about 40 priority on-going projects would be - 15 - completed, and the others would be further reviewed by GOI to evaluate the.1 technical and economic viability. Most of the projects removed from the program have been placed on a 'hold' basis, with continuing expenditures onl. for personnel. In short, GOI hat begun to cake steps toWards puttinig the irrigationl subsector on a sounder footing. This is evident from ils: (a) reorientation of priorities away from large-scale new investmerlts itn irrigatioti towards increased expenditures on O&M; (b) focus on the completioll of technically and economically viable ongoing projects; and (c) rephasin,- am, restructuring of ongoing projects (including partially externally-financed projects) to protect high priority activities whilr accommodating reduced budgetary resources over the medium term. C. Bank Role and Subsector Lendiu_St rateS General 1.35 The irrigation subsector has received a major part of Bank lending for Indonesian agriculture over the past two decades, and the Bank has been the largest external financier of Indonesia's irrigation program, providing a total of some $1.5 billion for 23 projects since 1968. The Asian Developmenw Bank, Japan, Netherlands, USA, UK and EEC have been other importantL doniors. The earliest Bank-assisted projects were designed to repair major systems to increase rice output quickly. The Bank's strategy in Repelita IV, however, was redirected to emphasize institution-building, with lending being focused on: new irrigation projects outside Java; flood control and drainage works; groundwater development in areas with limited dry season water supplies; and investments for multi-stage swamp reclamation and development in support of COI's transmigration program. The most recent projects include measures te strengthen planning, programmiag, budgeting and management information systems, and to build up the capacity of provincial irrigation services in design and construction supervision of small systems and to improve O&M performance. A further redirection of the Bank's role is required to support ,OI's efforts to concentrate its resources on completing high-priority and viable on-going projects and undertaking only selecti.e new investments, to make adequate provision for operation and maintenance throughout the subsector, to promote farmers' participation in rehabilitation and O&M of small systems, and to reduce GOI's fiscal burden through appropriate cost recovery measures. A project-by-project approach by the Bank on these issues is no longer considered adequate, and it is time to address policy issues systematically on a subsector-wide basis, complemented by specific involverfrexit in projects as warranted. Experience Under Previous Projects 1.36 The first 11 Bank-assisted irrigation projects have been completed. Project Performance Audit Reports (PPARs) have been issued for six of them, and a follow-up Impact Evaluation Report on the first project (Cr. J27- IND, Report No. 4575) was released in July 1983. improvements to irrigation water supplies and drainage introduced through the projects had a substantial positive impact on paddy technoLogy, cropping intensities and yields, and thereby favorably affected incomes of the vast majority of farmers within the - 16 - irrigation command areas. The projects have been economically viable, with ERRs at completion ranging from 11% to 37%. There were some implementation delays and cost overruns, caused by protracted procurement procedures, delays in channelling of local funds, higher than expected inflation, design deficiencies, and poor contractor performance. More recently, the delayed approval and reduced size of budgets have further contributed to project implementation delays and slow disbursement of Bank loans. The earlier performance audits highlighted the need to improve O&M services, provide technical and administrative support to water users' associations, and promote efficient water use. In the past, the Bank-financed irrigation projects have supported cost recovery through collertion of adjusted land tax based on the increased productivity of all irrigated land served by the systems rehabilitated and constructed under these projects. Actual cost recovery through land tax has not satisfied the intentions of the various covenants insofer as the amounts collected have continued to fall short of O&M costs, and only a small fraction of these amounts has actually been allocated to f½nance irrigation-related C " activities. The most recent audits have emphasized the need for more -ction on the cost recovery front (particularly through direct charges) and betLer analysis of the viability of investments and farmers' ability to pay, both of which have been affected by falling world market prices for rice. These problems are recognized in the strategy adopted for Bank assistance and have been addressed in the planning and design of the proposed project. 11. THE PROJECT A. Rationale for Bank Involvement 2.1 The Bank, through ongoing projects and a continuing dialogue with the Government in the subsector, has been playing a key role in supporting decentralization of responsibilities to provincial irrigation services, and in resolving difficult institutional issues such as water management; project preparation, implementation and O&M capabilities; and funding at provincial levels. The subsector approach proposed under the project, supported by GOI's enunciation of policies aimed at improving O&M of irrigation systems, reducing the burden of O&M expenditures on the Central Government, and consolidating investments in the subsector would reinforce and provide a much-deferred and critically needed national approach to O&Mo This would help widen the development impact of the Bank's assistance by reinforcing the shift in responsibility for O&M funding and implementation from central to provincial authorities and to ultimate beneficiaries, further strengthen the institutions responsible for irrigation policy and resource allocation, prevent deterioration of the substantial irrigation infrastructure, increase the productivity of completed investments, and help develop a future investment strategy in the subsector. In view of its past and ongoing involvement in the subsector and GOI's readiness now to tackle significant subsector issues, the Bank is well placed to help GOT implement relevant subsector policy and institutional adjustments. - 17 - B. Project Objectives and Description Objectives 2.2 The project would be the f rst phase of a program aimed at supporting the six basic goals outlined in GOI's Statement on Irrigation Subsector Policy (Annex 1) which are to: (a) ensure adequate and timely funding for efficient O&M, with expenditures in line with actual needs of each irrigation system; (b) simplify O&M programming, monitoring and budget planning; (c) introduce direct cost recovery for O&M expenditures from irrigation beneficiaries; (d) increase local revenue generation through land reclassification, valuation, and training of assessors; (e) support institutional development, particularly by strengthening provincial irrigation agencies, WUAs and farmers' groups to enable a greater transfer of responsibility for O&M of main and secondary systems to provincial authorities and of smaller systems to WUAs; and (f) formulate a realistic irrigation investment strategy for Repelita V. Detailed policies have been formulated for each of these goals, and a monitorable Action Plan (Annex 1) designed to implement the steps necessary to achieve them. The Action Plan would set in motion a process of improvement in the areas of O&M funding, rationalization of budgeting/programming procedures and investment strategy, cost recovery, and institutional strengthening, which once instituted would involve policy decisions and commitments that are unlikely to be reversed. 2.3 The project has high priority in GOI's development plans and is in line with the Bank's strategy for assisting agricultural development in Indonesia. Project Description 2.4 The project, to be implemented over the 3-year period from October 1987 to September 1990, would consist of the following components: (a) The implementation of special maintenance works, comprising deferred maintenance and minor systems upgrading, on about 400,000 ha of irrigated land and about 106,000 ha of reclaimed swamp land, where O&M has been so badly neglected that this must be done as a step prior to intzoducing efficient O&M on these areas. About five river mouths would also be included for special maintenance, on a pilot basis. Detailed preparation and design work would be carried out for about 200,000 ha of irrigated areas and 55,500 ha of swamps requiring special maintenance to be covered in the first year of a subsequent project; (b) Systematic introduction of efficient O&M on about 7009000 ha of irrigated land, and 87,000 ha of swamp land; (c) Completion of about 40 high-prio 'ty ongoing projects selected on the basis of agreed technical a economic criteria; - 18 - (d) Pilot groundwater development through construction of some 900 tubewells for small farmers in primarily rainfed areas; (e) Support for COI's policy reforms in the subsector, including privatization of small public irrigation systems, a pilot scheme for introduction of direct irrigation service fees, and augmenting the provincial/local revenues in lieu of continued central government subsidies via land reclassification and valuation needed for large- scale introduction of the new property tax (PBB) in rural areas; (f) Support for institutional strengthening and training, including O&M manpower planning and developmentt strengthening of the central, provincial and district level institutions responsible for irrigation O&M, and of water users' associations; and (g) Technical assistance and studies in support of the above components. The underpinning for the proposed project is provided by an agreed: Xi) Subsector Policy Statement (Annex 1) defining GOT's new policy objectives and approaches; and (ii) Action Plan (Annex 1) of measures to be taken during the project period to initiate longer-term reforms a1id improvements in support of the policy objectives. Some of the key actions to be taken over the three- year period are: (a) the present level of nation-wide irrigation O&M financing would be at least maintained in real terms during the project period, and incremental financing for O&M (of at least US$1.6 million equivalent, as included in GOI's financing plan) would be provided by GOI (para. 3.14); (c) small systems of less than 150 ha in size, covering an area of 20,400 ha would be privatized (turned over to WUAs) over the three-year period, at least two systems of about 500 ha size would be turned over, and a nationwide program prepared by September 30, 1990 for turnover of systems larger than 150 ha (paras. 2.19 and 2.20); (c) collection of irrigation service fee in the pilot areas (a total of 125,000 ha) would commence in December 31, 1988, and agreed administrative and judicial arrangements (as found to be workable in pilot areas) wo-.d be established by January 31, 1990, for its extension to other areas (para. 2.22); (d) budgetary procedures and accounts would be simplified by June 30, 1988, and new systems and procedures for O&M programming and budget planning implemented from FY89/90 onwards (para. 3.13); and (e) investments in the irrigation subsector would be rationalized and a strategy for Repelita V prepared (para. 2.11). GOI has recently issued the Subsector Policy Statement and Action Plan, approved by all the concerned ministries (Agriculture, Finance, Home Affairs, Public Works and BAPPENAS). The project would be implemented in accordance with this Policy Statment and the Action Plan reviewed and agreed with the Bank (Para 7.1 (a)). C. Detailed Features Special Maintenance 2.5 Surface Irrigation Systems. The project would carry out special maintenance works on selected surface irrigation systems to bring these systems up to the technical standards for which an efficient maintenance program can be designed and implemented. This would include completion of the system maps of irrigation canals, updating of the structures' inventories, elimination or regularization of any water outlet not borne on the original - 19 - inventory, repairing water control structures and their regulating mechanisms, and improving structures such as bridges, cross drains and silt control facilities which need repairs. It would also involve functional improvements such as discharge measuring structures where required for improving water distribution control and efficiency, and repairing canal prisms and embankments to ensure smooth flow and adequate free boards. The project would also provide housing for operational staff and transport for section offices. Criteria for selection of schemes included for special maintenance have been based on size, rehabilitation and tertiary development status, and availability of mapping and records. In general, rehabilitated technical systems larger than 500 ha, which have deteriorated due to lack of maintenance, would be included under special maintenance. About 400,000 ha of irrigation systems in the nine provinces of West and South Sumatra, Lampung, West, Central and East Java, Yogyakarta, South Sulawesi and West Nusa Tenggara would be covered under the project, with a phasing of 75,000 ha in Year 1 (October 1, 1987 - September 30, 1988) 175,000 ha in Year 2 (October 1, 1988 - September 30, 1989) and 150,000 ha in Year 3 (October 1, 1989 - September 30, 1990). The project would alao provide technical assistance to support implementation of this component (para. 2.12). 2.6 Saamp Systems, The project would assist in carrying out special maintenance works on selected swamp schemes. These works would include additional canal structures, desilting of drainage canals, flood protection works, access improvement, and construction of additional flushing canals where necessary for reclaiming acidic soils. Since the normal development of swamp areas involves a gradual process of improvement and upgrading over the years, the special maintenance program would be tailored to each scheme and involve both maintenance and upgrading activities. The project would ensure that there is a systematic planning at each stage so that the organization, methods and expenditures on O&M are geared to meeting the performance standards specified for the systems as they are developed. The schemes proposed for inclusion in the project would be in the five provinces of West, North and South Sumatra, Lampung, and South Kalimantan, which include some of the earliest reclaimed areas. About 21,800 ha in Year 1, 43,800 ha in Year 2, and 39,950 ha in Year 3 would be brought under special maintenance. Feasibility studies would be carried out to establish the technical and economic viabil-ty of constructing a 40 km long flushing canal in South Kalimantan to inrprove the water control and agricultural potential of the Belawang, Seluang and Muhur schemes. The project would also provide technical assistance in support of this component (para. 2.13). 2.7 Small River Mouths. The project would test alternative and effective measures to replace the traditional dredging methods used to control siltation and littoral drift, which choke and obstruct navigation of small fishing vessels and cause flooding of agricultural lands and coastal settlements near river mouths. To explore the most cost-effective technical solution, five river mouths in North and West Sumatra, West, Central and East Java would be included on a pilot basis under the project for protection by experimental training walls. Studies have been made during the project preparation stage to evaluate the choking process from littoral drift. The design of the training walls and the ancillary works including guide banks and approach channels would incorporate the knowledge gained from these - 20 - observations. Further observations on the performance of training walls and the ancillary works in the prevention of choking river mouths would be continued for about two years after construction of the proposed works. This would help gauge their effectiveness before their application to other sites in future progrdms. Efficient O&M 2.8 Surface Irrigation Systems. The objectives of special maintenance are to facilitate t,ie introduction of efficient O&M. General procedures for efficient O&M have already been developed for a number of systems in Indonesia, but their application is hampered by lack of up-to-date inventories and specific O&M guidelines, system shortcomings, and continuing organizational and funding constraints. The project would address these constraints systematically on 200,000 ha of irrigation systems in Year 1, 400,000 ha in Year 2 and 700,000 ha in Year 3. The areas covered under special maintenance each year under the project would be included under efficient O&M in the subsequent year. Also, some areas currently being rehabilitated under ongoing Bank and ADB-financed projects would be included in the second and third years. The physical repair and maintenance work to be regularly carried out by provincial authorities under efficient O&M would include weed clearance from canal prisms and embankments, trimming overgrown canal berms, repairing potholes in canal roads, damages to masonry structures and leakag.'s through canal banks, lubrication and repairing of regulation gates, and painting of steel work. Repair work of periodic nature would include silt clearance of canals, regrading of canal profiles, and repairs to canal surface roads damaged by heavy rains and regular heavy traffic. Laboratory and field equipment for provincial irrigation offices, for testing appropriateness of construction materials and standards would be provided under the project. The efficient O&M procedures to be followed are outlined in Annex 3, Table 1. These procedures would be supported by ensuring adequacy of staff responsible for O&M at section and subsection levels, clear definition of their duties and responsibilities, and their training in maintenance work identification, water scheduling, discharge measurements, and data collection and reporting. 2.9 Swamp Systems. About 9,000 ha of swamps in South Sumatra in Year 1, another 33,200 ha in South Sumatra and Lampung in Year 2, and an additional 44,600 ha in South Sumatra, Lampung, South Kalimantan, North and West Sumatra in Year 3 (a cumulative area of 86,800 ha) would be covered by efficient O&M under the project. These areas include the Karang Agung I scheme (9,000 ha) in the first year of the project, the construction of which is currently being completed with Bank assistance (Ln. 1958-IND), and also the completed units of Karang Aguwg II scheme (Ln. 1431-IND), i.e. about 5,000 ha in the second year and another 5,000 ha in the third year of the project. About 6,500 ha in Barambai and Rantau Rassu would be reviewed by DGWRD to confirm that these schemes, which are currently being upgraded, are suitable for introduction of efficient O&M. If found suitable, these could be included under a possible future Bank operation. Immediately after the completion of special maintenance, the schemes would be formally handed over to the provincial authorities for the introduction of efficient O&M. A schedule for handing over the projects to the provincial authorities is included in Annex 2, - 21 - Table 5. The provincial authorities would be assisted by DCWRD during a 1-2 year transition period in organizing the technical aspects and establishing a sound institutional framework for O&M. DCWRD would also review the existing categorization of the drainage canals in each scheme, on the basis of which a more uniform nomenclature would be applied to all the existing and new swamp schemes. 2.10 The O&M requirements for swamp systems include monitoring, evaluation, data collection and analysis, and regular or periodic maintenance of infrastructure for drainage, flood protection, irrigation and water conservation, control of soil conditions through water management, and on-farm water management. As in the case of surface irrigation systems, technical assistance and advisory services (paras. 2.12 and 2.13) would be provided under the project to DGWRD and provincial authorities for planning and construction of special maintenance works and for Lhe introduction of efficient O&M on swamps. These services would be integrated with the ongoing program in South Sumatra, which the Bank is supporting under the Swamps II Project (Ln. 2431-IND) and for which consultants have been hired to define O&M requirements, specifications, organizational arrangements, procedures, plans of operation, and O&M budgets. The consultants to be employed under the proposed project would build on the work undertaken under the Swamps II project to ensure that uniform O&M strategies would be developed for all swamps projects. Completion of Ongoing Projects 2.11 The proposed project would support the completion of only priority on-going projects which are viable and have so far been wholly funded by GOI but are now held up for lack of funds. These projects would be selected from a list of more than 100 ongoing projects and would have high priority in a resource-constrained situation. The selection criteria for these projects have included the status of project completion (at least 30%), adequate water availability and quality, minimal land clearing required, contribution to transmigration and settlement plans, adequacy of planning and design, length of construction period, and technical and economic feasibility. Of the 16 projects selected for implementation commencing in Year 1, 12 are irrigation projects, 3 are rivers projects, and I swamps project. Details of these projects are included in Annex 2, Table 6. Another 20-25 ongoing projects would be selected for completion in the second year of the project. Some ongoing projects have been under implementation since 1976, while others have been started only in Repelita IV. Construction on most of these projects has proceeded on a piecemeal basis, using annual budget allocations. Headworks have usually been completed and since many of the ongoing proiects have already incurred substantial costs, there can be tremendous economic benefits in completing them with a relatively small incremental investment, provided they are technically sound. The selected projects are mostly run-of-river schemes with a weir for headworks and conventional canal systems. In some of the schemes, the weirs need substaitial closure embankments to encompass flat overflow areas before the water can be headed up for irrigation. In all cases, it is necessary to review the planning and design of the schemes, including drawings, bills of quantities and engineering estimates, before continuing with construction, This could lead to some revisions or additions - 22 - in some cases because of changes in concept to suit revised water availability or requirements. Detailed preparatory work, including review of engineering, planning and design, and preparation of tender documents and revised cost estimates, have been completed for the 16 projects to be undertaken in the first year of implementation. Upon completion of the on-going projects, DGWRD staff presently assigned to these projects would be transferred to PRIS to strengthen the provincial engineering services. The existing project selection criteria would be reviewed and improved upon, and an assessment mase of all the existing and proposed investment projects in the irrigation subsector, as a part of the Investment Strategy study, to be carried out under the project (para. 2.35 (b)). During the implementation of this study, the Bank would review and comment on the acceptability of the criteria and the investment strategy. It has been agreed that GOI would submit to the Bank in a timely manner, its annual investment program for the FY88/89, FY89/90 and FY90/91. 2.12 Consultancy services in support of the above components (special anaintenance, efficient O&M, and completion of ongoing projects) would be provided under the project to upgrade and strengthen provincial capabilities .n: (a) preparation of sample designs, guidelines and criteria for special uaintenance and efficient O&M; (b) prequalification, selection and supervision of local subconsultants who will be assigned to prepare other special maintenance surveys and designs, after the sample designs have been prepared by the consultants; and (c) supervision of construction. To assist in implementing the special maintenance and efficient 3&M program for the irrigation systems in nine provinces, Jatiluhur authority and district of Jogyakarta, one internationally recruited and two local consultants, would be attached with each of them. Their specializations would be in construction and operation of canal irrigation and drainage, with a good knowledge of soil engineering, materials specifications, concrete and masonry structures, quality control measures, laboratory field tests and contract administration. In addition, a team of four internationally recruited and eight local consultants would assist the provinces in reviewing designs produced by the subconsultants for special maintenance and upgrading the capability of provincial staff in water distribution and regulation. A total of 324 manmonths of internationally recruited consultancy (11 experts) and 756 manmonths of local consultancy (26 experts) would thus be provided for the above purposes. In addition, for the small river mouths works, the project would provide 21 manmonths of internationally recruited consultants (2 experts with knowledge of river morphology particularly in estuary areas, and specialization in river training work) and 72 manmonths (5 experts) of local consultancy services. For the completion of ongoing projects (irrigation and rivers), the project would provide 312 manmonths of internationally recruited (15 experts) and 875 manmonths (35 experts) of local consultancy services. These would include expertise in planning, design and construction. An additional 48 manmonths of internationally recruited consultancy (2 experts) and 48 manrmonths of local consultancy would also be provided for the training of design staff in the provinces of South Sulawesi and Lampung. 2.13 Services of local and internationally recruited consultants with experience in planning, design, construction, management and implementation of swamp schemes would be provided to assist DGWRD and the provincial agencies. - 23 - The consultants' inputs will be required for: (a) the completion of ongoing projects (54 manmonths of 2 internationally recruited experts and 51 manmonths of 2 local experts); and (b) special maintenance and efficient O&M (47 manmonths of 2 internationally recruited experts and 165 manmonths of 7 local experts). All the consultants would be appointed no later than January 31, 1988. Pilot Groundwater Development 2.14 The project would provide funds for civil works, equipment and related facilities to carry out pilot groundwater development, including the construction of: (a) 80 tubewell irrigation systems in the tail end of the Sampean Baru surface water command area in East Java, serving areas of about 25 ha each; (b) 500 shallow, hand drilled tubewell irrigation facilities in the Madiun - Magaatan - Ponorogo area of East Java, with each tubewell serving an area of about 3 ha of land owned by small farmers; (c) 100 shallow tubewell irrigation systems in Nganjuk-Pace, Sidayu and Palang areas of East Java designed to serve command areas of about 8 ha each; (d) 40 tubewell irrigation systems in the eastern part of Lombok serving command areas of about 7-10 ha each; (e) 100 tubewell irrigation systems in eastern and northern areas of Lombok serving command areas of about 10-14 ha each; and (f) 45 tubewell irrigation systems in Central Sulawesi (Palu area - 20) and South Sulawesi (Kalara area - 20; Maros north area - 5) serving command areas of about 6 ha each. The project would finance the first three year slice of a 5-year program for East Java and Sulawesi, and a three year slice of a 4-year program for groundwater development in Lombok, 2.15 To assist with the preparation of the groundwater subcomponent in East Java and Sulawesi, DGWRD has engaged consultants required for survey and design work during 1987, under the existing consultant contract under Loan 2119-IND, and would recruit qualified consultants for a pericd of about two years starting in early 1988 to assist with the implementation of the groundwater component. The consultants' input for implementation, with specialization in groundwater hydrology, drilling, engineering, water management and irrigation agronomv, is estimated to amount to about 35 (5 experts) and 120 manmonths (6 experts) of internationally recruited and local inputs respectively (Annex 4, Table 1). The groundwater subcomponent in Lombok would also require technical assistance, particularly for pipe distribution system design, tender document preparation and bid evaluation, drilling, and most importantly, for water management and irrigation agronomy. For this purpose, the project would provide 100 manmonths of internationally recruited (9 experts) and 130 manmonths of local (7 experts) consultancy services (Annex 4, Table 1). Their expertise would be in the areas of irrigation engineering, geohydrology, drilling, agronomy, rural development, and agricultural economics. These services would be spread over about 30 months. The foreign consultancy would be financed by Government of Italy. To assist with the preparation of the Lombok subcomponent, DGWRD would engage consultants to be financed from Loan 2119-IND. Aerial photomapping of about 31,000 ha and orthophoto mapping covering about 2,650 ha would be carried out during 1987, with funding from Loan 2119-IND. - 24 - 2.16 Prior to starting any implementation activities, DGWRD staff, assisted by agricultural extension service staff and village leaders, would meet with potential beneficiaries, who would need to agree to form a water users' association for the O&M of the tubewell system to be constructed under the project. After the tubewell systems are put in place, DGWRD would test run all installations and establish task forces to provide advice and guidance to the water users' associations on efficient O&M of the tubewell system. At the same time, the agricultural extension service would establish special units at all kabupaten offices where groundwater schemes are being constructed, to advise and guide farmers on what crops to grow, the application of rotational irrigation, and on water management practices. Funding for this as well as strengthening of agricultural support services for irrigated agriculture in the tubewell areas in Lombok would be provided under the ongoing Bank-financed Nusa Tenggara Agricultural Support Services Project (Loan 2638-IND) and for the other tubewell areas under the National Agricultural Extension III Project (Loan 2748-IND). This would include the cost for establishing demonstration plots for irrigated agriculture. With the exception of the tubewell schemes to be constructed in Sampean Baru and Lombok, WUAs would assume fulL responsibility for O&M upon completion of the tubewell scheme installation and testing by DGWRD. Completed installations would be turned over to the WUAs. For the Sampean Baru and Lombolk wells, DGWRD would contribute in the first two years to the operation and mainterance of the installations, in accordance with procedures established for similar facilities under Loan 2119-IND. It is expected that for the necessary repair of relatively simple pumps, motors and distribution systems, WUAs would be able to call upon private entrepreneurs, suppliers and contractors, who are increasingly operating in rural areas. Turnover of Small Irrigation Systems 2.17 The proposed project would support the turnover (or privatization) of small irrigation systems to WUAs. The Government has developed a total of 6,731 irrigation systems, which have an average size of about 700 ha each. The number of systems under 500 ha in size is 4,717 and these cover about 19% of the total design irrigable area but only about 6% of the area under technical level of development. Most of the small irrigation systems (less than 500 ha) are either semi-technical or simple irrigation systems. It is generally believed that the farmers through their WUAs are capable of managing these small and simple irrigation systems if the WUAs are active and if the conditions of the systems are upgraded. The WUAs would also need to be strengthened through a process of organizational development and provided on a continuing basis with technical guidance (para. 2.32). As the systems are upgraded and WUAs strengthened, the major criteria for selecting systems to be turned over to farmers would be their size, technical complexity, and institutional capacity of their WUAs. At present, WUAs are mostly organized on a tertiary block basis, which has an average size of about 150 ha. There is no federation of WUAs above the tertiary level. However, with the provision of institutional support to develop system-wide f!JAs that encompass the village associations, even the systems of up to 500 ha or larger could be turned over to WUAs. While the Ministry of Public Works could continue to provide construction services or technical advice and the GOI could continue to support, guide and regulate such larger associations, there would be much - 25 - greater scope for local control and much greater reliance on locally generated O&M resources. 2.18 The project would support a series of activities to be carried out to hand over small systems to WUAs. These would include: (a) an inventory and selection of small systems less than 150 ha in size and having perennial water supplies; (b) selection and training of WUA staff to implement the turnover program; (c) designing and implementing special maintenance works on selected systems; (d) institutional strengthening of WUAs and specialized training in O&M and handing over; and (e) routine monitoring. The project would finance about 60 manmonths of local O&M engineering expertise to assist with engineering elements of the turnover program, the costs of conducting surveys and inventories of WUAs, and special maintenance works, if any. The Ford Foundation would provide funds for a consulting team with specializations in community organization/institutional development and knowledge of farmers' approaches to irrigation management in small irrigation schemes. These funds (para. 2.37) would cover the costs of about 60 man-months of local consultancy at the center, about 180 man-months of local consultancy in the provinces, and 24 man-months of an international institutional advisor. The consultants would assist DGWRD and PRIS with the implementation of the turnover program for small irrigation systems. 2.19 The following are the annual target for the turnover of systems less than 150 ha each, and the project would support turnover of these systems on about 20,400 ha in three years. Table 2.1: TURNOVER OF SMALL IRRIGATION SYSTEMS Project Number of Year /a Provinces Districts Systems Areas (ha) 1987/88 2 2 12 1,200 1988/89 4 6 48 4,800 1989/90 10 16 140 14,400 1990/91 17 - 604 44,909 1991/92 25 - 750 60,000 1992/93 27 - 750 60,000 Total - - 2,304 185,309 /a October 1 - September 30. During the project year 1987/88, the two provinces selected for the turnover of small systems are West Java and West Sumatra, where a larger proportion of the irrigation systems are less than 150 ha in size. 2e20 The pilot areas for the introduction of irrigation service fee (para. 2.21), where WUAs would be established at the system/district level, - 26 - would also serve as pilot areas for turning over larger systems. Based on the experience of these pilot areas (20,400 ha), and a turnover of two systems of about 500 ha each to WUAs, a nation-wide program would be prepared by COI by September 30, 1990 for turning over systems larger than 150 ha. Ir.iritiouL Service Fee 2.21 The proposed project would support the introduction of irrigation service fee in selected pilot areas, and lay the basis for its nationwide extension. The fee can be geared to the actual financial requirements for O&M in specific irrigation systems and be implemented in such a way that there is a direct connection between payment of the fee and the provision of the O&M service. In view of an inadequate experience with the variations needed, if any, across regions, in the concept, collection mechanisms and institutional arrangements for an irrigation service fee, a pilot approach to its introduction is proposed under this project. Such a pilot approach would focus on: (a) the farmers' payment capacity in order to determine the appropriate levels of the fee; (b) the variations in the application of the fee, ranging from a per hectare charge to explicit water charges on bulk sales to water users in different parts of the system; and (c) the organizational arrangements needed for the collection of the fee. The pilot approach would also lay the basis for institutionalizing the payment for services delivered, and the retention of the revenues from this fee within the section/kabupaten for O&M purposes. The criteria for the selection of the pilot areas have been: (a) tne areas are scheduled for efficient O&M and cover at least one irrigation section or system; (b) the chief of the district (Bupati), who will be the key person in the pilot operation, is supportive of the ISF concept; and (c) conditions of the irrigation services and WUAs are generally representative of a larger area of the region. The following areas would be included for the introduction of ISF: Table 2.2: PILOT AREAS FOR THE INTRODUCTION OF IRRIGATION SERVICE FEE Province Pilot areas Size (ha) East Java Pekalen Sampeyan 25,000 Central Java Wonogiri/Sukoharjo/Sr&gen 25,000 West Java Subang 25,000 South Sulawesi Sidenreng Rappang 50,000 Total 125,000 In addition, the Simulungan irrigation system in North Sumatra is also recommended for a similar pilot operation, which would be a component of a proposed ADB-assisted project. 2.22 The proposed project would finance the services of consultants (including per diems and costs of travel) and equipment and materials. A - 27 - consultant team at the central level (43 manmonths of internationally recruited consultancy, i.e., 2 specialists with expertise in the fields of institutior. building, public finance, and 'raining, and 34 man-months of local consultancy, i.e., 2 experts with experience in technical, social, legal and financial aspects) and a team in each pilot area (comprising a total of 26 manmonths of internationally recruited consultancy and 124 manmonths of local consultancy, with same expertise as the team at the central level) would work with the district level irrigation committee to implement the introduction of irrigation service fee. The implementation of the steps needed for the introduction of the irrigation service fee (including formulation of implementation plans, and monitoring and evaluation) would proceed along the schedule outlined in Annex 2, Table 13. The collection of ISF in the pilot areas (125,000 ha) would commence by December 31, 1988 and the administrative and judicial arrangements (as found to be workable in pilot areas) would be established by January 31, 1990 for its extension to other areas. Land Valuation and Strengthening of PBB 2.23 The project would support the introduction of the new PBB system,l/ which would include the following: (a) implementing the new land reclassification and valuation system recently adopted by GOI, based on the market value of the land; (b) an inventory of land holdirigs based on aerial photography; (c) installing a computerized management information system to help improve tax administration; (d) developing an efficient and effective tax management and collection system; and (e) strengthening of the Directorate of IPEDA/PBB and its regional offices. 2.24 The reclassification and assessment of land holdings would entail the production of rectified photos and maps at suitable scales, identification of property boundaries and land holders, valuation, establishment of PBB tax classification, and development of effective procedures enabling tax collection. The areas to be covered would overlap with the areas receiving speciai maintenance and efficient O&M under the project. The project would finance the costs of survey and mapping, and all the training and consultancy per diems and fees. About 40 manmonths of internationally recruited consultancy (3 experts in survey/mapping, land classification/valuation and institutional development/training) and 120 manmonths of local consultancy services (3 experts with similar expertise as the internationally recruited consultants, and a data processing specialist) would be needed to implement the components of land valuation and strengthening of PBB. During the first year of the project, a pilot scheme of survey and mapping for land reclassification and registration would be established (on an area of 5,000 ha) to develop simplified procedures for mapping which would use all the existing reliable data. Considerable time and cost savings could be obtained if the existing irrigation photomaps and IPEDA maps are found reliable, and 1/ The recently approved Urban Sector Loan (Ln 2816-IND) would support technical assistance, training, and property valuations for the urban PBB improvement program, providing the complementarity needed for Lhe improvement of both urban and rural PBB. - 28 - this would be verified in the pilot scheme. The implementation schedule (covering the October 1987-January 1988 period) for this pilot scheme is included in Annex 2, Table 10. About 100,000 ha in Year 2 and about 300,000 in Year 3 would be covered for land reclassification/valuation under the project. These targets are additional to the ongoing land reclassification program being supported by Bank- and ADB-assisted projects. 2.25 The IPEDA/PBB directorate and its regional offices would require additional staff, comprising at least six geodetic engineers and two geographers in 1987 and another five geodetic engineers in 1988. A number of technicians and surveyors also need to upgrade their skills (para. 2.31). As part of institutional development, there is also a need to review the existing organizational structure of the IPEDA/PBB directorate and its regional offices, including its key functions, staffing levels, information flows, and specialization requirements. The Bank-supported Urban Sector Loan (Ln 2816-IND) would assist with the preparation and implementation of action plans needed to strengthen the organizations involved in land valuation and tax collection. Under the proposed project, two tax advisors for rural PBB would be appointed by April 30, 1988 to help improve tax administration through computerization and better procedures. Institutional Strengthening and Training 2.26 Manpower Development for Systems 0&M. To strengthen O&M capabilities, the staffing (pengamats, jurus and water regulation personnel) in district and lower level units in the districts would be increased to meet the requirements, as assessed by DGWRD and PRIS. The swamp areas to be covered by efficient 0&M under the project are also estimated to require about 30 incremental pengamats and about 90 jurus. Adequate provisions would be made for fulfilling the additional staffing requirements (Action Plan: Annex 1). 2.27 Details of the training programs were reviewed at a?praisal and are given in Annex 3, Table 2. Assurances were obtained at negotiations that the training programs would be carried out in accordance with the timetable and terms of reference satisfactory to the Bank (para. 7.1 (b)). The proposed project would finance trainers' fees and per diems, classroom rental, furniture and equipment, supplies and materials, local travel, salaries of support staff, and consultancy fees (paras. 2.32 and 2.33). About 3,000 middle and lower lower level O&M staff in irrigated and swamp areas would undergo training in basic O&M duties and practical skills. These would include maintenance of basic irrigation records, principles of water control and operation, discharge measurement, maintenance requirements and the estimation of associated costs. Some 110 trainers in both irrigated and swamp areas would also be trained in O&M procedures. About 420 technical high school level staff (usually pengamats) would be trained in O&M courses offered at the PUSDIKLAT regional training centers. In addition, some 275 BIE level engineers would undergo specialized training courses in O&M. The subdirectorate of DOI-II responsible foi the groundwater component, together with staff of the agricultural extension service, would develop training programs for WUA leaders and pump operators. The training would focus on the operation and maintenance of pumps, engines and PVC pipe distribution systems, - 29 - efficient use of pumped water, rotational irrigation, crop selection and water management practices. Training practices and materials developed on groundwater projects elsewhere in Indonesia would be utilized to the extent possible. It was agreed that the Government would arrange for alternative financing to provide for a study tour to areas outside Indonesia where the exploitation of low-lift tubewells for irrigation development by smallholders takes place extensively, using shallow groundwater resources, and where modern public tubewell sysce.ms with looped pipe distribution and automated pumping systems have been introduced. Staff of BAPPENAS, DGWRD and Provincial Irrigation Services would participate in the study tour to benefit from recent innovations in tubewell technology. 2.28 Since most provinces lack senior-level staff, and a seksi head should be at least of Bachelor of Engineering (BIE) level, some 72 PRIS staff would undertake the diploma/degree oriented BIPOWERED training in Bandung. In addition, about 26 senior level staff would undergo Master's degree level overseas training courses. These training courses would include various specializations such as water resources engineering, management and hydraulic engineering. The representative office (within DGWRD) of the Education and Training division (BDP) would also establish, by February 29, 1988, a data bank for the effective dissemination of training needs of PRIS. 2.29 Strengthening of WUAs and Irrigation Committees. Chart 3 presents the scheme for developing WUAs and strengthening the Irrigation Committees at the provincial and lower levels under the project. The institutional strengthening would include the aspects of organization/coordination, regulation/administration, budgeting and financing, and other supporting elements needed by the institutions involved in irrigation management. At the district and lower levels, the priority activities would be the collection of benchmark information on WUAs and the setting up of WUA Action Groups, which would serve as catalysts of WUA developmert. These Action Groups would draw their membership from the more senior level staff of the district units of Public Works, Agriculture and Home Affairs. Depending on the size of the irrigable area in each district, one to four action groups would be established in each district. A quick inventory of WUAs to establish, benchmark information on activity status, organizational boundaries, awareness of duties and responsibilities and developmental problems and constraints, would be carried out by the district and subdistrict s.aff of Public Works, Agriculture and Home Affairs. The project would finance the costs of conducting surveys, including travel, salaries, supplies and materials. The Action Groups would be established by January 31, 1988 and the inventory of at least 10 WUAs would be completed by April 30, 1988. By September 30, 1990, at least 20 new WUAs would be established and 200 existing WUAs strengthened. 2.30 About 200 Action Group members would undergo a 2-month training on community organization under the project. To reach the large number of target WUAs, the Directorate of Agriculture Area Development (DAAD) in cooperation with Action Groups, Home Affairs and DOI-II would also train some 1,020 seksi, subsection and village level staff of the departments of Agriculture and Home Affairs on WUA organization and development. The target participants would include PPLs or extension workers who will devote 30-50% of their time to WUA development. The project would also provide funds and technical assistance - 30 - (para. 2.32) to train 1,500 middle level provincial and district staff, 4,040 subdistrict and village level staff, 360 instructors and 8,800 WUA members and key farmers. In addition, there would be a follow-up training for about 6,700 WUA members. 2.31 During the 3-year project implementation, about 175 staff would be trained in the fields of cartography, specialized surveying land valuation, tax management and administration, mapping, and in evaluation/assessment criteria for PBB. The project wo'ld also provide about 10 man-months of overseas training for PBB staff, including short-term (3-6 month) scholarships to overseas universities/technical institutes. 2.32 A total of 90 and 192 manmonths of internationally recruited and local consultancy services respectively, comprising 5 internationally recruited and 9 local O&M experts and training specialists, would be provided to DOI-I for on-the-job training of staff for main systems O&M. Another 27 manmonths of internationally recruited and 30 of local consultancy (1 internationally recruited and 1 local training specialist) would be provided to Directorate of Swamps (DOS) for on-the-job training of staff in O&M in swamp areas. The project would provide 126 manmonths of internationally recruited and 210 manmonths of local consultancy to DOI-II for coordinating training and organizing workshops for provincial staff and WUAs, in the fields of tertiary systems O&M and on-farm water management. Their expertise would be in the fields of O&M and on-farm water management (3 internationally recruited and 5 local experts), training (1 internationally recruited and 1 local expert), and audio-visual material production (1 internationally recruited and 1 local). This would be complemented by 90 manmonths of internationally recruited and 300 manmonths of local consultancy services to DAAD, mostly in the fields of community organization and rural institutional development (3 internationally recruited and 10 local experts). 2.33 Under the project, BDP would be strengthened in order to improve its capabilities to coordinate, monitor, evaluate, as well as plan and conduct short training courses, help analyze training needs, manage training programs and disseminate essential training materials and information. The BDP and Personnel Division would be provided with 114 manmonths of internationally recruited and 180 manmonths of local consultancy (4 internationally recruited and 6 local experts) with expertise in the fields of training --nagement, monitoring and evaluation (M&E) and manpower planning. Another 12 manmonths of internationally recruited consultancy (M&E experts) would be provided to the Directorate of Planning and Programming for monitoring and evaluating physical progress of the project. Funds to cover operating costs, consultancy costs (42 manmonths of local M&E expertise and 24 manmonths of local MIS expertise) and the purchase of additional micro computers to meet the monitoring and evaluation (M&E) and management information systems (MIS) needs for O&M at the PRIS level would be provided under the project. Technical Assistance and Studies 2.34 The project would provide technical assistance amounting to $45 million (as indicated earlier in paras. 2.12, 2.13, 2.15, 2.18, 2.22, - 31 - 2.24, 2.32, 2.33) for planning, programming, designs and specifications, institutional strengthening, turnover of small irrigatiOn systems, introduction of irrigation service fee and land reclassification/valuation, The estimated cost of $45 million for technical assistance includes contingencies of about $5 million, internationally recruited consultancy of about $19 million (of which $4 million would be be grant-financed), and local consultancy of about $21 million. Of the local consultancy costs of $21 million, about $10-12 million is the estimated cost for local subcontracts for detailed designs. This large technical assistance is needed beca,ise the project is spread over 16 provinces, involves the departments of Public Works (including a number of directorates within DGWRD), Agriculture, Home Affairs, BAPPENAS and Finance, not only at the central and PRIS level, but also at the district and section/subsection level, and entails apart from physical implementation of the project, institutional strengthening, particularly at lower levels, various studies, and initiation of several policies. The terms of reference for all the consultants and the invitation documents have been finalized, and assurances obtained that the eonsultants would be selected by January 31, 1988 (para. 7.1(c)). The selection of consultants would be in accordance with Bank guidelines. Details of the consultancy services (about 1,671 manmonths of internationally recruited consultancy and 3,944 manmonths of local consultancy services), which are the minimum needed to implement all the components of the project, are contained in Annex 4, Tables 1 and 2. The consultancy services would be provided at three levels. At the central level, there would be technical assistance to the Project Coordinating wit Nithin DGWRD) and to the inter-agency coordination group (para. 3.8). Advisory teams would also assist the PRIS and the districts or sections in the technical aspects of implementation, the introduction of efficient O&M procedures, and in the preparation of annual budgets needed for efficient O&M. Some of the consultancy inputs, particularly for the provincial design units, studies, policy initiatives, introduction of efficient O&M procedures, and some elements of institutional strengthening/training would no longer be required during the subsequent Bank operations in the irrigation subsector. It was agreed during negotiations, that any subsequent operation of a similar nature would require smaller scale of technical assistance than envisaged under this project. 2.35 Studies (a) Institutional Strengthening Study. In view of the changing nature and direction of irrigation expenditures increasingly towards O&M, a review and reassessment of the roles of the various organizations involved in planning, organizing, directing and controlling O&M activities, is needed. In the case of provincial irrigation authorities, this implies a greater autonomy in planning, budgeting and upgrading of their staff and facilities. In the case of DGWRD, its envisaged role could be more of a planner of new systems development. This changing role, in turn, could require a reorganization within DGWRD entailing a shift of manpower and other resources to PRIS, more DGWRD attention to the development of policies and procedures to be adopted at the provincial level rsther than a central control of O&M activities, as well as greater role in monitoring PRISo In view of the interlocking technical, managerial, - 32 - administrative, institutional and financial issues that would have a bearing on such an alignment of institutional responsibilities, a study to define the necessary changes and adjustments would be initiated. The study would require the services of 4 internationally recruited consultants (6 manmonths each) with expertise in the areas of irrigation, institutional development, management systems and financial systems, and 3 local consultants (22 manmonths) with expertise in institutional development, management systems and legal aspects. The study would be completed by September 30, 1988, and upon taking the Bank's comments into account, the recommendations of the study would be implemented commencing January 1989 (Action Plan: Annex 1). (b) Investment Strategy Study. An indepth review is needed to develop and improve upon the existing criteria for project selection and to assess the viability of all existing and proposed irrigation investment programs, and prioritize these investments, with a view to dropping the non-viable investments and restructuring projects to protect high-priority activities while accommodating reduced budgetary resources. The purpose of the investment expenditures review would be to rationalize the existing portfolio of projects being implemented and to formulate an appropriate development strategy and investment programs for Repelita V. A study would need to be made of both the physical and expenditure status of each ongoing project. Only a project-by-project assessment can help determine the projects which should be given priority in the allocation of funds at sufficient levels to maintain efficient implementation schedules. The study would provide the basis for making the right choices on continuing or discontinuing ongoing projects, the adding of new projects to the portfolio, and maintaining the proper balance between investment and recurrent O&M expenditures. The study would require the services of 3 internationally recruited consultants (18 manmonths), with expertise in fiscal economics/public finance and engineering, and 6 local consultants (36 manmonths), with expertise in general economics and irrigation background. This study would be completed by July 31, 1988, to enable an input into the Repelita V strategy and investment programs (Action Plan: Annex 1). (c) Environmental Impact Studies. To address environmental concerns of the project, particularly for ongoing projects, five environmental studies would be included under the project. These studies would mainly focus on the impact of irrigation on the population, health, malaria control programs, and introduction of safeguards to protect irrigation and groundwater supply from contamination. Previous environmental studies commissioned by DGWRD were satisfactorily carried out by local universities with minimal assistance from international consultants. The selection and number of consultants would be in accordance with issues to be studied under each selected ongoing project. The studies are estimated to require the services of one internationally recruited consultant (6 manmonths) and about six local consultants (82 manmonths) with expertise in the areas of - 33 - irrigation, sea water encroachment (in groundwater areas), malaria control, use of agrochemicals, pollution control and ecology. DWWRD would inform the Bank by January 31, 1988 about the selected ongoing projects for which the environmental studies would be undertaken. Assurances were obtained during negotiations that these studies would be completed by March 31, 1990 (para. 7.1(d)). D. Cost Estimates 2.36 Total cost of the project, including physical contingencies and expected price increases, is estimated at about Rp 592.4 billion (US$359.1 million), with a foreign exchange component of US$ 148 million, or 41%. The cost estimate is based on September 1987 prices and includes taxes and duties computed at Rp 30.6 billion (US$18.5 million). Civil works estimates are derived from costs of projects already under execution, as well as detailed estimates for 13 sample areas in six provinces. The average cost of civil works for 16 ongoing projects already selected (the construction of which will commence in Year 1) has been used as a basis for estimating the costs of additional ongoing projects to be selected in the second year of the project. Equipment and vehicle cost estimates are based on price quotations from suppliers, cross-checked with the prices of comparable units recently purchased or curr..Atly being procured by various agencies. Foreign consultants' average base costs have been estimated at US$12,000 per manmonth, including professional fees, overheads, travel and overseas allowances. Local consultants' costs have been taken at US$2,500 per manmonth. These costs are based on experience with recent consultancy contracts in Indonesia. Physical contingencies (to allow for possible design variations) have been assessed at 15% of the cos. of civil works, 10 of the cost of equipment and vehiclest and 5% of the cost of consultancy services. Price contingency estimates assume increases in local currency costs of 10% in 1987, 5% in 1988, and 3.5% per annum thereafter (based on expected domestic inflation), and in foreign exchange costs of 3% in 1987, and 1% per annum thereafter. Project cost estimates are summarized in Table 2.3 below and detailed in Annex 2, Table 1. - 34 - Table 2.3: PROJECT COST SUMMARY Local Foreign Total Local Foreign Total Foreign as ---(Rupiah billion)--- ----(US$'million)---- X of total Special Maintenance 74.5 45.7 120.2 45.2 27.7 72.9 38 Incremental Operations and Maintenance 15.7 10.0 25.7 9.5 6.1 15.6 39 Recurrent Operations and Maintenance /a 72.8 57.6 130.4 44.1 34.9 79.0 44 Ongoing Projects 100.4 70.2 170.6 60.9 42.5 103.4 41 Groundwater Development 10.8 9.9 20.7 6.6 6.0 12.6 48 Institutional Development 11.4 20.4 31.8 6.9 12.4 19.3 64 Turnover of Small Systems 3.5 1.1 4.6 2,1 0.7 2.8 24 Introduction of Irriga- tion Service Fee - Pilot Schemes 3.0 1.6 4.6 1.8 1.0 2.8 36 Land Reclassification and Valuation 3.9 2.2 6.1 2.3 1.3 3.6 36 Total Baseline Costs /b 296.0 218.7 514.7 179.4 132.6 312.0 43 Physical Contingencies 25.7 20.5 46.2 15.6 12.4 28.0 44 Price Contingencies 26.6 4.9 31.5 16.1 3.0 19.1 16 Total Project Costs 348.3 244.1 592.4 211.1 148.0 359.1 41 /a Present levels of O&M expenditures. Th Includes taxes and duties amounting to US$18.5 million equivalent. L. Financing 2.37 The proposed Bank loan of US$234 million would finance 94% of the foreign exchange costs and 45% of the local currency costs of the project. This represents 69% of total project costs, exclusive of taxes (US$ 18.5 million). Provision for retroactive financing of US$5 million has been included to cover eligible expenditures under the 1987/88 budget starting from September 1, 1987. This would enable the project momentum gained during the preparation period to be maintained. The Governments of Italy and the Netherlands, and the Ford Foundation are expected to provide $15.4 million, bringing total external financing to $249.4 million, or 69% of total costs, covering 100% of foreign exchange costs (US$ 148 million) and 48% of local costs. The Government of Italy is expected to provide about $1.6 million for equipment and $1.4 million for technical assistance for the Lombok groundwater component, and the Government of Netherlands is expected to provide about $2 million for training, $0.4 million for the institutional strengthening study, and $9.4 million of joint financing with the Bank for civil works to be undertaken for special maintenance and efficient O&M. The Ford Foundation would provide about $0.6 million for consultant teams needed to assist with - 35 - the implementation of the turnover of small irrigation systems. GOI would finance the remaining project cost of $109.7 million from its development budget (or a net contribution of $91.2 million after taxes and duties). This contribution would require GOI to maintain the present level of O&M expenditures in real terms, amounting to $83.2 million over the three year project period. The Bank would finance part of incremental O&M costs for each area coming on stream under the project on a declining basis. Over the project implementation period, GOI would meet a progressively larger share of incremental O&M expenditures in project areas, increasing from about 10% in ?roject Year 2 to 17% in Year 3. This contribution of GOI would amount to $1.6 million over the three years. Costs of land acquisition (about US$6 million) and a part of the costs of the investment strategy study (US$0.4 million) would also be financed by GOI. The financing plan for the project, including specific expenditures to be financed by GOI, was agreed during negotiations. The project financing plan is set out in Table 2.4 below, and the phasing of GOI contributions (by GOI fiscal year) is contained in Annex 2, Table 2. Table 2.4: PROJECT FINANCING PLAN (US$ m.llion) Total Project Funding source Local Foreign cost Percent Bank 94.4 139.6 234.0 65.2 /a Government of Netherlands 6.4 5.4 11.8 3.3 Government of Italy 0.3 2.7 3.0 0.8 GOI 109.7 - 109.7 30.5 Ford Foundation 0.3 0.3 0.6 0.2 Total 211.1 148.0 359.1 100.0 Ia 69% of project costs, excluding taxes. F. Preparation Status and Implementation Schedule Irrigation 2.38 Sample designs for special maintenance of irrigation systems serving 50,000 ha are completed. This work was begun in September 1986 by DGWRD, assisted by the consultants (MacDonalds/Indah Kary-) responsible for project preparation. It included updating of systems maps, reviewing special maintenance requirements and preparing detailed designs for special maintenance work on 50,000 ha. Contracts for preparing detailed designs for 75,000 ha to be covered in Year 1 have also been made by GOI with local cunsulting firms. These detailed designs have been substantially completed. Designs for 175,000 ha to be covered in the sEcond year is nearing - 36 - completion. March 1988, and for the remaining 150,000 ha by March 1989. Technical and economic viability of sixteen on-going projects to be implemented in Year 1 has been evaluated, and contracts for additional survey and design work required for completing these on-going projects have been signed. The remaining design work of these projects is nearing completion. Designs for small river mouths were completed in August 1987. The implementation schedule (including necessary procurement actions) for irrigation works is included in Annex 2, Table 3. Swamps 2.39 Preparatory designs are in progress for special maintenance construction in the first year of the project. Designs for special maintenance of the drainage canals serving 43,400 ha are completed, for another 38,800 ha would be completed by March 1988, and for the balance of 23,350 ha by December 1988. Detailed designs for the completion of an ongoing project (Mesuji schemes) were prepared by the Technical Institute in Bandung, and reviewed by consultants engaged under the Bank-supported Swamps I Project (Ln. 1958-IND). Most of the excavation works for drainage canals on about 12,400 ha in Mesuji schemes have been completed. The designs for remaining 7,600 ha would be completed by March 31, 1988. The detailed designs for the second ongoing project to be implemented in Year 3 would be completed by March 1989. Groundwater Development 2.40 Field surveys (topography and soils) for 480 ha in Madiun are substantially completed, and for 500 ha in Sampean Baru would be completed by February 1988. Detailed designs for 270 ha in Sulawesi are nearing completion, and for 740 ha in Madiun and Sampean Baru would be completed by March 1988. Surveys on the remaining area in Madiun and Sampean Baru (1,920 ha), and detailed designs on about 1,600 ha in Sampean Baru, would be completed by December 1988. Designs for 560 ha in Madiun would be completed by March 1989. Construction of tubewell irrigation systems would commence in 1988. During 1984-86, the Government of Italy provided DGWRD with consultancy services for groundwater investigation in Lombok. In addition to carrying out surveys and feasibility studies, the consultants (Electro Consult) trained DGWRD personnel in drilling, logistic support, hydrogeology, irrigation design, and agroeconomic data collection, as well as conducting short training courses. The construction of tubewells in Lombok would commence in 1988, with the exception of 4 wells which have already been drilled and are ready to be equipped and put in operation. The phasing of the construction of the tubewell irrigation systems is contained in Annex 2, Tables 7 and 8. G. Procurement Civil Works 2.41 Civil works for special maintenance and completion of ongoing projects are estimated to cost about US$148 million. Of these, works costing about US$89 million would be small in scal^, dispersed over 16 provinces, and require close interaction with iillagers both as beneficiaries and as laborers. They are thus unlikely to attract foreign competition, and would be - 37 - largely tendered on the basis of competitive bidding advertised locally in accordance with GOI procedures acceptable to the Bank. Civil works packages larger than US$3 million would be procured through international competitive bidding (ICB). Such packages are not expected to exceed six in number, and to total about US$30 million in value. These would include about six ongoing GOI-funded projects (including two in the first year of the project: Sanrego and Tulan Mas). Efficient maintenance works ($13.1 million), a part of the special maint 7ance works ($28.9 million) and other maintenance works ($25 million)- would be largely carried out under force account by the PRIS. This would be the most economical and efficient method in Indonesia for civil, works that cannot be fully defined in advance and for activities that need to be carried out with least disruption to ongoing operations. Civil works for the groundwater component costing approximately US$2.5 million equivalent would be procured through LCB using GOI procedures acceptable to the Bank. Well drilling would be undertaken by local contractors, with DGWRD providing drilling rigs, well materials, and skilled supervisory staff. The foreign contractors would not be interested in such drilling work, in view of the small size of contracts. Furthermore, equipment currently lying idle with DGWRD would be utilized for drilling. Equipment and Materials 2.42 Equipment and materials totalling US$15.3 million, including procurement of vehicles ($800,000) would be bulked to the extent possible into lots for procurement under ICB procedures in accordance with Bank guidelines for procurement. In bid comparison, local manufacturers would be allowed a 15% margin of preference or the applicable customs duty, whichever is lower. Equipment which cannot be suitably bulked and other packages of small items costing less than US$200,000 equivalent each, up to a total limit of US$5 million, may be procured by DCWRD's Directorate of Logistics through GOI procurement procedures acceptable to the Bank. Procurement of materials and equipment ($6.5 million) for groundwater tubewell systems would be divided into two packages. The first package, which is to be procured during the first project year, would provide materials and equipment for the schemes to be installed under this project. The second package would provide for materials and equipment to be installed under a possible future project. Procurement and Bank financing of the second package (valued at about $2.5 million), which would be carried out during the third year of the project, would be subject to satisfactory progress on arrangements made by GOI to ensure that financing for installation would be provided. This would be a condition of loan disbursements (para. 7.2(a)), against the second package of materials and equipment for groundwater tubewell systems. 2/ About 30% of the present level of O&M expenditures would be for civil worksp and the balance for O&M staff salaries. - 38 - Cotsultancy Services 2.43 The consultancy services ($45 million), with the exception of those needed for detailed designs of special maintenance works and ongoing projects, and those grant-financed by cofinanciers, would be procured internationally, in accordance with Bank guidelines. GOI envisages use of joint ventures between foreign and local firms for this purpose under arrangements acceptable to the Bank. The detailed designs of special maintenance works and ongoing projects would be carried out through local .ubcontracts under the supervision of the consultants recruited internationally. The consultancy services would be packaged for procurement as follows: (a) one pac4.age for special and efficient O&M on irrigated areas and related training in all provinces; (b) one package for ongoing irrigation projects; (c) one package for ongoing swamps projects, and special and efficient O&M on swamps, including training; (d) one package for small river mouths and ongoing river projects; (e) a package for each study; and (f) two packages for training of water users' and one package for training of provincial design units. Review of Procurement 2.44 ICB procedures would be used for civil works contracts exceeding the value of US$3.0 million, and for equipment and supplies contracts exceeding the value of US$200,000. Civil works and equipment would be procured by the responsible implementing agency, using contract documents acceptable to the Bank. An independent but internal control of all procurement is made by the DGWRD Secretariat, and larger contracts (Rp 500 million and above) would be cleared by the State Secretariat Procurement Control Unit (SEKNEG). It is estimated that about 50 civil works contracts, in addition to five consultancy packages, would be reviewed by SEKNEG. These procurement controls appear to be working satisfactorily. For civil works contracts, the Bank would review prior to tendering and award about 40 contracts ($85 million), each over US$1.5 million, covering in aggregate about 50% of the value of civil works. The remaining civil works contracts would be reviewed by the Bank on a post- award sample basis. Equipment contracts to be procured through ICB ($15.3 million) would be reviewed by the Bank prior to tendering and award; small equipment contracts not exceeding $200,000 (with an aggregate value of $5 million) for local procurement would not be reviewed by the Bank because of their simple nature and small value. All consultant invitation documents, proposed awards, and contracts would be reviewed by the Bank. Procurement arrangements are summarized in Table 2.5 below. - 39 - Table 2.5: PROCUREMENT PLAN Procurement method Total ICB LCB Other N.A. /b cost - (US$ million)… Civil Works - Special Maintenance - 28.9 28.9 /a - 57.8 (24.5) (23.9) (48.4) - Ongoing Projects 30.0 60.5 - 90.5 (30.0) (60.5) (90.5) - Groundwater 2.5 - - 2.5 (2.5) (2.5) - Efficient O&M 13.1 /a - 13.1 (11.5) (11.5) - Recurrent O&M /c 25.0 /a 58.2 83.2 (0) (0) (0) Equipment & supplies 15.3 5.0 20.3 (15.3) (3.4) (18.7) Consultants 45.2 45.2 (42.8) (42.8) Training, mapping and surveys including materials and travel 22.0 22.0 (19.6) (19.6) Land Acquisition 6.0 6.0 (0) (0) Taxes and Duties 18.5 18.5 (0) (0) Total 45.3 96.9 112.2 104.7 359.1 (45.3) (90.9) (78.2) (19.6) (234.0) Note: Figures include contingencies; figures in parentheses represent Bank loan. /a No competitive bidding is involved for the civil works, since these might be carried out on force account basis. /b Not applicable, because no procurement is involved for the items listed in this column. /c Present level of O&M expenditures. About 30% (US$25 million) would be for civil works, and the balance for O&M staff salaries. - 40 - H. Disbursements 2.45 The Bank loan would be disbursed as follows: (a) About $11.5 million to be disbursed against incremental (efficient) O&M expenditures on civil works, would be on a declining scale as follows: 91% of total expenditures on civil works in project year 1 ($2 million), 80% in year 2 ($4 million), and 73% in year 3 ($5.5 million); (b) 911 of total expenditures on all other civil works (except covered under (a)), (US$125.8 million); (c) 1001 of foreign expenditures for directly imported equipment, 95% of local expenditures (ex-factory prices) for locally manufactured equipment, and 65% of locally procured off-the-shelf items (US$17.3 million); (d) 100% of expenditures on consultant services (US$40.7 million); (e) 100% of expenditures on training, mapping, surveys, including materials and travel (US$18.7 million); and (f) Unallocated (US$20 million). 2.46 Disbursements would be made against contracts, except for works executed on force account basis, small civil works contracts valued at less than US$300,000, and the cost of training, which would be disbursed against statements of expenditure (SOEs). In the case of efficient O&M, Bank loan disbursements would be for civil works, materials and equipment. Documentation for SOE expenditures would not be submitted for review, but would be retained by the project implementation units, and made available for inspection by the Bank during the course of project supervision. Total disbursements against SOE would amount to about US$55 million, or 24% of the Bank loan amount. While the disbursement profile for past investment projects in the irrigation subsector in Indonesia has stretched over about 10 years, it is not applicable to the proposed project, which constitutes a 3-year time slice of an investment program. The schedule of disbursements is estimated as follows: Table 2.6: DISBURSEMENT SCHEDULE Bank FY FY88 FY89 FY90 FY91 US$ million -- Annual 30.0 80.0 80.0 44.0 Cumulative 30.0 110.0 190e0 234.0 - 41 - The detailed implementation schedules (Annex 2) indicate that this disbursement schedule is feasible. The target areas to be covered under special maintenance, efficient O&M, and ongoing projects are feasible within the 3-year time slice operation. In the case of the groundwater component, the project would finance the first 3-year slice of a 4-5 year program. The targets of (a) 125,000 ha for introduction of irrigation service fee; (b) turnover of systems (less than 150 ha in size) covering 20,400 ha; (c) the preparation of plans for extension of irrigation service fee to other areas, and for turnover of larger systems; (d) land reclassificaton/valuation of about 400,000 ha; (e) completion of various studies; and (f) institutional strengthening/training, are feasible. Action Plan (Annex 1) outlines these targets. Loan closing is expected by March 31, 1991. 2.47 In order to avoid requiring GOI to pre-finance expenditures reimbursable by the Bank and to simplify and expedite disbursement administration, GOI would establish a Special Account in Bank Indonesia to be maintained by DG Budget and implement new procedures for faster processing of disbursements and withdrawals. The Special Account would be used for all local currency payments made against all disbursement categories. However, the contracts procured under ICB would be paid at the option of GOI, either from the Special Account or by normal disbursement procedures (direct payments, reimbursements and special commitment). The Bank would make an initial deposit equivalent to an estimated four months' disbursement (US$10 million) into the Special Account. The Account would be replenished every month or when payments reach one-half of the initial deposit. A. monthly statement on the Special Account would be submitted by DG Budget to the Bank. I. Environmental Effects 2.48 Irrigated paddy is ecologically the most stable and non-erosive form of land use in Indonesia, and the project would have a very positive environmental impact through its support for improved resource use and productivity. In new irrigated areas, particularly outside Java, farmers' increased incomes from irrigated crops would help reduce the pressure on land, allowing Indonesia to preserve more of its rain forests. In addition, aquifer levels in areas under the groundwater component would continue to be closely monitored to ensure that groundwater resources are not over-exploited in any tubewell area. Since the ongoing projects are relatively small in size (average of 2,000 ha) and include areas, part of which is irrigated and the remaining is rainfed, no issues related to land clearing and resettlement of population would be encountered. The implementation of the project would not involve an increase in the use of agrochemicals, and the Government has taken steps to promote the integrated pest management approach and to allow only soft or degradable pesticides into the country. GOI environmental policy stipulates that environmental impact studies should be undertaken for projects where environmental aspects need to be assessed (para. 2.35(c)). Assurances were obtained at negotiations that public health authorities, with the cooperation of each Provincial Irrigation Service, would take appropriate measures for malaria control (para. 7.1(e)) as the irrigation and cropping patterns intensify, since some of the vectors are present and there is some - 42 - incidence of malaria in the project areas. GOI's ongoing malaria control program would follow an approach which integrates nonchemical and chemical methods, and minimizes the environmental and health impacts of chemical use. J. Role of Women 2.49 The role of women is important in irrigated agriculture, particularly in rice transplanting, crop harvesting and drying operations. Water collection for household use is also undertaken by women. The household uses of irrigation water would be taken into account, particularly in designing the groundwater component of the project. In the case of both the turnover of small schemes to WUAs, and the strengthening of the WUAs, an active participation of women would be supported. Similarly, the training component of the project would focus on upgrading the skills of women, particularly in the O&M procedures and guidelines. Data collection and analysis for the purposes of monitoring and evaluation would focus on disaggregated (by gender) breakdown of employment benefits that are generated by the project. This information would include different employment options for men and women, wage rates and training requirements. The participation of women in WUAs and in training programs would also be monitored and evaluated. III. PROJECT IMPLEMENTATION A. Organization and Management National LevelOrganization and Management 3.1 DGWRD, through its Directorates and each PRIS would be responsible for project implementation. Overall coordination ai.d review of project implementation would be provided by a Project Coordinating Unit, under the Assistant Director General, DGWRD, who would be designated Project Coordinator, and assisted by three internationally recruited consultants with experience in O&M, design, and planning and budgeting, respectively, and one local consultant. Each international consultant would have a local counterpart from DGWRD's staff. This group would advise and assist DCWRD in overall planning and programming, standardizing O&M procedures, review of on- going projects, and prequalification, selecEion and supervision of the work of local sub-contractors who will prepare the designs and tender documents. Its overall responsibilities would include supervision of project implementation, and monitoring of all procurement actions. 3.2 The main executing bodies within DGWRD would be DOI-I, DOI-II, DOS, Directorate of Rivers (DOR) and BDP. The designated staff from each of the Directorates would meet regularly with the Project Coordinating Unit, to inform the Unit of the progress made in project implementation, and the problems if any that need to be resolved. Such meetings would also bring about the coordination needed between the various Directorates. DOI-I would provide technical guidance and administrative support to the PRIS for the - 43 - implementation of special maintenance and efficient O&M of irrigation areas. It would also be responsible for the completion of ongoing projects, and together with PRIS implement on-the-job training of main systems O&M staff. 3.3 DOI-I1 through its subdirectorate of groundwater development would implement the groundwater component. The East Java and Sulawesi g;.undwater component would be implemented through the subdirectorate's existing offices at Surabaya, Madiun, Kederi, Jember, Sampean Baru, Ujung, Pandang and Palu. The East Java groundwater project office in Surabaya would have overall management responsibilities. The Lombok groundwater component would be implemented through subdirectorate's existing office in Mataram, which was established during the investigatio.' phase of the project. DOI-II would also be responsible for the training on tertiary systems O&M and on-farm water management for the middle and lower level administrative officials, staff of agricultural and irrigation services, and members of the Irrigation Committees, as well as the key members of WUAs. It would closely coordinate these activities with the Directorate of Food Crops Agriculture (DGFCA). 3.4 DOS would have the overall responsibility for implementing the swamps component (ongoing projects and special maintenance works) of the project, including on-the-job training of middle and lower level swamps O&'i staff. However, the provincial organizations would assume full responsibility for efficient O&M of infrastructure, i.e. drainage canals, embankments, dikes, roads, water control structures, bridges and jetties. The organizational structure for O&M would be on a district basis, with centralized management and administration at the provincial level. Similarly, DOR would have overall responsibility for implementing all river-related components of the project. 3.5 BDP would coordinate the planning of all training activities carried out by DGWRD. Chart 2 presents the organizational arrangements for the implementation of training activities under the project. BDP would also monitor and evaluate all training programs, conduct short training courses for the provincial O&M staff, and administer the in-country and overseas degree- oriented training programs. BDP would establish a data bank of the needs, availability, and completion of training programs for PRIS. It would also liaise with DAAD and the Directorate of IPEDA/PBB in matters involving programming of training activities and joint use of facilities for training, such as the agricultural training centers, rural extension centers, and PUSDIKLAT regional training centers. 3.6 MOAp through DAAD, would be the executing agency for training the action groups and the middle and lower level staff on WUA organization and development. It would also coordinate the surveys, and conduct an inventory and evaluation of WUAs. It would, in coordination with MHA, have overall responsibility for organizing, reorganizing and developing WUAs. 3.7 The Directorate General of Taxation, through its Directorate of Property Tax (IPEDA/PBB), within the MOF would be responsible for the mapping, reclassification and reassessment activities related to PBB, including the training of personnel. While the reclassification would be carried out by the IPEDA/PBB Directorate personnel (from the regional inspection offices), the inventory of land holdings and land holders would be carried out through - 44 - contract work by mapping contractors. Current PBB staff are handling similar activities for the ongoing Bank-financed Kedung Ombo Dam, West Tarum Canal, and Central and West Java Irrigation Projects. At the national level, a coordination committee established under the Central and West Java Irrigation Project (Ln 2649-IND) would also be responsible for the coordination of all PBB-related activities under the project. The committee is chaired by the Director of IPEDA/PBB with members representing DOI-I and DOI-II of DGWRD, and DGFCA. 3.8 The BAPPENAS would coordinate monitoring and reporting progress on the Policy Statement and Action Plan through the coordination at the directorate or equivalent level of DGWRD, DGFCA, Directorate of IPEDA/PBB, Directorate General of Public Affairs of Ministry of Home Affair., and other relevant agencies when required. This inter-agency group, which has already been established, in addition to providing overall policy guidance and coordination would also be respcnsible for the supervision of the investment strategy study and the institutional strengthening study (para. 2.35). This group would meet at least once in every three months to evaluate the progress, and resolve problems if any. Provincial and Field Level Organization and Management 3.9 Chart 1 presents the proposed organizational chart for the project components which would be integrated into the activities of the provincial organizations. For each province, the PRIS would establish a project management and implementation unit. The unit would have the PRIS chief as the project manager, and its own support staff. 3.10 At the provincial level, the BAPPEDAS would coordinate project implementation monitoring and progress, through coordination of PRIS, DIPERTA and field inspection offices of IPEDA. This provincial level group would receive technical guidance from the inter-agency group at the national level, as well as from the consultants of the agencies concerned. 3.11 At the district level, the coordination and overseeing of project implementation would be through the district Irrigation Committee, which is represented by cabang dinas irrigation, kabupaten agricultural service and other related services, and headed by Bupati. The Bupati, as chairman of this committee, would get technical guidance from the provincial level project implementation units, and the district services of the concerned agencies. Under the guidance of the district level Irrigation Committee, a project implementation unit would be established in each of the pilot areas for irrigation service fee. This unit would be assisted by consultants, who would carry out socio-economic surveys, formulate implementation plans, analyze results, and make recommendations on ISF. In addition, a WUA at the district level would be created in the pilot areas to assist in the assessment and collection of ISF, and system-wide O&M planning and implementation. 3.12 Assurances were obtained during negotiations that the above organizational arrangements for project implementation at national and provincial levels would be maintained and strengthened (para. 7.1 (f)). These and the district level organizational arrangements would be in place to facilitate timely project implementation. - 45 - B. O&M Funding 3.13 Under the project, the budget for efficient O&M would be built up every year on the basis of agreed guidelines and actual needs as determined section by section of the provincial irrigation department. The budgets for efficient O&M would be developed on the basis of actual needs at each cabang dinas level. The budgetary procedures and accounts of O&M would be simplified no later than June 30, 1988, with the aim of: (a) rationalizing different channels of funding; (b) conforming to needs-based allocations; and (c) expediting releases. This new system of procedures for O&M programming and budget planning would be implemented from FY1989/90 onwards. The consultant teams attached to the PRIS and the districts or sections would assist in the preparation of annual budgets needed for efficient O&M, and the O&M/planning and budgeting experts attached to the Project Coordinating Unit (within DGWRD) would assist with setting up new procedures for O&M programming and budget planning. 3414 Annex 5, Tables 4, 5 and 7 illustrate how Bank funding for incremental O&M expenditures would be phased out, with GOI being expected to increase its contributions correspondingly. These projections asqume that GOI would introduce direct cost recovery from beneficiaries to enable the Government to introduce and sustain efficient O&M on the entire public sector irrigation network. As a condition of continued loan disbursements, GOI would make annual budgetary allocations (for fiscal years 1987/88, 1988/89, 1989/90 and 1990/91), which at least maintain the fiscal year 1986/87 level of total country-wide irrigation O&M financing under the Central Government budget (APBN and APBD) in real terms, furnish evidence that satisfactory actual expenditures for country-wide O&M were made during the previous fiscal year, and provide a progressively larger share of incremental financing for effi- cient O&M (in each of the fiscal years 1988/89, 1989/90 and 1990/91) (para. 7.2(b)). GOI has already furnished the Bank with evidence that the 1987/88 budget maintains the 1986/87 budget level for O&M in real terms for the entire irrigated area in Indonesia. C. Accounts and Audits 3.15 Detailed accounts and records would be kept by DGWRD, the PBB Directorate and each Provincial Irrigation Service for each budget item by budget year. Each accounting section is headed by a certified public accountant who reports monthly on budget and financial status. Internal audit sections are responsible for visiting project sites quarterly and examining local accounting records. Accounting procedures currently in use are adequate to support SOE applications. Final accounts, including balance sheets and consolidated receipts and expenditure statements, are prepared at year end to meet Bank requirements. Project accounts are subject to two audits: (a) by the Inspector General of the concerned ministry; and (b) by the Financial and Development Supervisory Board (BPKP). The work of both auditors has been found to be generally satisfactory on Bank-assisted irrigation projects. Adequate and separate accounts would be maintained for the project; all project-related contracts, documents related to statements of expenditure, and orders and receipts would be kept for at 'east one year after the Bank has - 46 - received the audit report for the fiscal year in which the last withdrawal from the Special Account was made; and independent audits of each year's accounts, incl.ding audits of SOEs, would be submitted to the Bank within nine months of the close of each GOI fiscal year. D. Monitoring and Evaluation 3.16 The following agencies would be responsible for monitoring and evaluation: physical and financial progress (Level A of M&E) would be coordinated by INTAL, the Secretariat to the Director General of DGWRD. INTAL does this by sending standard questionnaires to all PRIS concerned. The provincial or project officials concerned would complete the forms with the help o: their consultants. Socio-economic impacts, crop incomes and margins, crop production and support services and water management practices (Levels B C, D and E) would be monitored by DGWRD's Directorate of Planning and Programming, based on methods and criteria previously agreed with the Bank. The M&E of water management practices would, however, be modified to include criteria such as water use efficiencies and field staff understanding of normal O&M procedures, such as operation of gates, estimation of inflows and water charges, and maintenance of canal specifications. The physical impacts of the project on O&M, such as percentage of the water demand that was met, fluctuations in water use efficiencies and farmers' contributions (in cash or labor) to tertiary systems management would also be monitored. The criteria for e aluating these physical or real impacts on the O&M of sample systems would be developed in consultation among concerned agencies, PRIS staff and consultants. 3.17 There is a continuing program of strengthening the M&E capability of the DPP. Most of its staff have been trained and M&E implementation systems developed. The concerned PRIS staff would obtain technical guidance from DPP and the consultants (para. 2.33) in implementing the M&E activities. 3.18 In the case of the groundwater component, a sub-directorate within DGWRD (P2AT), with assistance from DPP in DGWRD, would expand the existing monitoring and evaluation (M&E) activities with the objective of carrying out baseline studies in each group of typical tubewell systems to enable project impact to be evaluated. This work would be undertaken in stages. First, an initial baseline study of the present situation would be made for selected sample areas to be developed for each type of technology undir the project. Second, the same areas would then be monitored on a regular and routine basis by the M&E staff. The data would be collected on geological survey and pump costs, as wells are constructed, followed by data collection on water quality and well performance once the systems become operational. Finally, 3-5 rears after the installation of the sample tubewell systems, the initial baseline survey would be repeated to evaluate the impact. The data resulting from agro-socio-economic surveys carried out during the investigation phase of the Lombok subproject would be used as benchmarks for assessing the impact of the project. , 3.19 Training. To overcome the present constraint of lack of follow-up training and an evaluation of the impact of training, BDP would evaluate the training programs. The evaluation of O&M training would entail assessments of - 47 - the individual or collective impacts on the efficiency of irrigation O&M in selected sample systems, as well as feedback from interviews and question- naires. The BDP would coordinate its M&E activities closely with the DPP. The implementation of the training in M&E would be done by BDP in coordination with other directorates and PRIS concerned. 3.20 The M&E reports would be submitted to the Bank by December 31, 1988, December 31, 1989, and December 31, 1990, and a Project Completion Report submitted no later than September 30, 1991. These reports would focus on: (a) physical and financial summary indicators measuring performance against agreed targets, including expenditures on efficient maintenance, and operating and water management standards; (b) impact upon project beneficiaries through indicators such as cropping intensity, crop yields and net farm income; and (c) impact of training provided under the project, including training for the strengthening of WUAs. Management Information System (MIS) 3.21 The requirements for improving the existing MIS are mostly covered by ongoing foreign assisted projects. For DGWRD, funds amounting to about US$1 million have been earmarked for che acquisition of a central computer, software and operating costs under the ongoing Bank-assisted Irrigation XVI Project. These funds would enable INTAL to install at least two on-line terminals in all the DGWRD Directorates. The improved MIS would assist in meeting the word processing requirements of DGWRD, monitoring of physical and financial progress of ongoing projects, data banking on manpower development and training needs, inventories of irrigation systems and facilities, and planning and programming of DGWRD projects. 3.22 DOI-I at present has considerable computational facilities. It is currently computerizing irrigation system inventories for the entire country. Micro-computers would be provided under the project to meet the monitoring and evaluation and management information systems' needs for O&M at the PRIS level (para. 2.33). 3.23 The improved M&E and MIS systems would be implemented by PRUS, assisted by DGWRD, from December 31, 1989 onward. IV. CROPPING PATTERNS, YIELDS AND PRODUCTION A. Present and Future Cropping Patterns 4.1 Annex 7, Table 1 presents yields for major crops in the project areas. Total crop areas, crop intensities, yields and production for the present (without project) and the future (with project) situations have been estimated for the different project components (Annex 7, Table 2). Future cropping patterns with the project for surface irrigation and swamps (which are already irrigated and only need mainter.ance) would not change, and cropping intensity would remain at 175% and 150%, respectively. For ongoing projects, the cropping pattern would include increased secondary foods crops, - 48 - and cropping intensity would increase from the present 125% to 175% at full development. The cropping intensity in the future for groundwater areas would on the average increase from about 120% to 285%. These increased cropping intensities would be possible because of increased extension efforts, better use of inputs, improved cultural practices, and availablility of irrigation water for growing crops, mainly secondary food crops during the dry season. Some farmers also tend to grow a second rice crop depending on water availability and market conditions. With GOI's thrust toward crop diversification, farmers are expected to respond to market signals and produce more horticultural and secondary food crops. B, Yields, Production and Markets 4.2 Crop production intensification methods with the use of HYVs and fertilizer inputs are well established in the project area, and farm surveys indicate that improved technology has been adopted on more than 90% of the area planted with rice in Java. The present 1985 average yield of irrigated HYV rice in Indonesia is 4 t/ha (dry unhusked rice), while the average yield for the project area is 4.5 t/ha for irrigated areas in Java, 3.7 t/ha in the Outer Islands and 2.5 t/ha for rainfed rice. The project would increase the average yields of irrigated HYV rice to 5 t/ha at full development, which has been achieved under similar irrigated conditions in the country. The yields of palawija crops under irrigated conditions (using ,roundwater) would increase significantly by full development: ground-iuts from 0.8 to 1.5 t/ha, maize from 1,2 to 3.3 t/ha, and soybean from 0.8 to 1.2 t/ha. Similarly, under swamps and surface irrigation, yields of soybeans would increase from 0.8 t/ha to 1 and 1.2 t/ha respectively, while maize yields would increase from 1.4 t/ha to 2 and 3 t/ha, respectively. Such yield increases are feasible in view of improved O&M which would ensure more adequate availability of water and a more efficient application of farm inputs. The main benefit of the groundwater component (in Madiun area) would be the inclusion of a second rice crop by some farmers and the increase in secondary food crops as a direct result of increased dry season water supplies. Progressive farmers are also expected to grow some horticultural crops (e.g., citrus, onions, garlic and potato), where markets are available. Yield improvements for rice and palawija crops occur because of the interaction of several factors such as better extension, improved seeds, and the provision of a reliable and timely supply of adequate irrigation water. The latter is critical because it reduces the risk of crop failuress and induces the farmer to apply esential inputs. Seeds, fertilizer and pesticides are readily available in the project areas, and no supply constraint is expected under the project. Activities under the ongoing Bank-assisted National Agricultural Extension II and III and Seeds II Projects (Cr. 996, Ln. 2748 and Ln. 2066-IND) within the project area would provide the necessary linkages. 4.3 The estimated annual incremental production generated by the project at full development is given in para. 6.1. Details are given in Annex 7, Table 3. About 90% of the marketable surplus of rice in the project area is sold by farmers as paddy to private traders or millers. The numerous private traders operating in villages in the area provide competition and offer services such as collection and drying of produce. Milling capacity is expected to be adequate for incremental rice production under the project. - 49 - Marketing of palawija crops is handled almost entirely by private traders, and well established marketing channels exist, especially for soybean, maize and groundnuts. Sale prices for seed cotton are fixed by PTP XXVII which collects all produce and extends credit to the farmers. V. PRICES, FARM INCOMES AND RECOVERY OF PROJECT COSTS A. Prices 5.1 Economic prices for major agricultural inputs and outputs are presented in Annex 9, Table 1. Farm inputs and outputs have been valued in constant 1987 prices. For the economic analysis, with the exception of some construction costs and all labor and internal transportation costs (where conversion factors have been used), all inputs and outputs are priced as tradables based on their border equivalent values, with adjustment for quality differentials and transportation as appropriate. Economic prices for paddy, maize, groundnut, soyabeans, urea and triple superphosphate are based on the Bank's Commodities and Export Projections Division forecasts made in January 1987. Financial analysis has been done for the groundwater component of the project. The financial rates of return for the three groundwater models are: Lombok 18Z. Madiun and Surabaya 15%, and Sampean Baru 11%. Financial prices for all commodities (Annex 9, Table 2) are based on the farm surveys conducted by the M&E unit within DGWRD, and have been adjusted as necessary to the farmgate prices observed during appraisal. B. Farm Incomes and Payment Capacity 5.2 Farm incomes in the irrigated areas, where paddy is the dominant crop, often planted in two seasons and sometimes even the third season, are largely determined by the farmgate price of rice relative to input costs. In 1986/87 when production of rice exceeded domestic demand, the Government enforced support prices rigorously by assigning greater weightage to the impurity and moisture content, which allowed farmgate prices to fall below the support level. 5.3 The payment capacity of irrigation beneficiaries has been tested by the preparation of farm models representative of conditions within Java and outside Java for 3 size groups (Annex 8, Tables 1 and 2). Farm holdings of 1 ha, 0.5 ha and 0.33 ha were tested in Java, and holdings of 1.5 ha, 1.0 ha and 0.5 ha outside Java. The farm costs and returns were estimated at current farmgate prices for these farm size holdings. In Java, the 1 ha size farm would produce enough income to provide for the family's living costs and have sufficient savings to pay additional O&M costs. The same situation exists outside Java. Farmers with less than 1 ha earning extra income from off-farm work would have sufficient income to maintain a minimum standard of living and have savings to cover an irrigation service fee. In the farm models, the minimum living cost assumed for a farm family is Rp 50,000 per month, or Rp 600,000 per year. - 50 - 5.4 Another set of farm models was prepared to show the effect on net incomes, if farmers were to receive prices at government support levels (Annex 8, Tables 3 and 4). If farmers could be guaranteed the full government support level of prices, their net farm incomes would be improved as follows: Table 5.1: NET FARM INCOMES (Rp '000) Price Basis Farms by Size in Java 1 ha 0.5 ha 0.33 ha Living costs and other obligatory outgoings 751 686 664 Net farm income at current farmgate prices 985 526 369 Net savings 234 -160 -295 Net farm income at government support prices 1,561 814 559 Net savings 810 128 -105 Farms by Size Outside Java 1.5 ha 1 ha 0.5 ha Living costs and other obligatory outgoings 815 748 685 Net farm income at current farmgate prices 1,371 914 487 Net savings 556 166 -198 Net farm income at government support prices 1,622 1,081 571 Net savings 807 333 -114 5.5 As can be seen from the above, farmers with less than 1 ha would acquire payment capacity by working off-farm to help defray their minimum living costs. If farmgate rice prices could be raised to the government price support levels, it would enable the farmer with a 0.5 ha holding in Java to meet minimum living costs and taxes and other obligatory expenses and have a slight surplus of earnings to pay irrigation service fees. The farmer with 0.33 ha farm in Java and 0.5 ha farm outside Java would, with government support prices, be able to maintain minimum living standards and have a surplus to pay for O&M costs if his farm income is supplemented with off-farm earnings (Annex 8, Tables 3 and 4). C. Cost Recovery and Operations and Maintenance Funding 5.6 The Government's objective is to completely eliminate central government subsidies for O&M within a 15-year period. To do this, the government should recover all the O&M costs through a water user's fee. - 51 - However, to assess possible future sources of funding and in view of the overall payment capacity of farmers which is still to be assessed in each of the pilot areas for irrigation service fee, the potential PBB revenue has been included in the projections. 5.7 Actual details on levels of irrigation service fees and mechanisms for collection would be worked out in the pilot areas. The projections on possible funding sources (Annex 5, Table 7) are based on rough assumptions to arrive at some broad indicative apportionment of O&M costs to the provincial governments and the beneficiaries. These projections are in constant 1987 prices. 5.8 At the start, the Government is faced with O&M on 4.8 million ha of irrigated lands and 600,000 ha of reclaimed swamp lands. This area would be gradually reduced by the turnover of the smaller irrigation systems to water users' associations. In the projections, it is assumed that 900,000 ha would be turned over to WUAs by the end of the 12th year. By the 15th year, the proposed irrigation service fee (even based on conservative estimates) could produce an annual revenue of Rp 45 billion. The underlying assumption is that only as areas are brought under efficient O&M, would they be considered for levying irrigation service fee. 5.9 The projected phasing-out of APBD and APBN subsidies and the combined increased funding of O&M from PBB and an irrigation service fee is given in Annex 5, Table 7. As will be noted, it is expected that only DIK funding would continue for salaries and related cost of personnel engaged in O&M operations in the amount of Rp 5 to 6 billion, and the APBD and APBN subsidies would be reduced to zero by the 15th year. Additional funding from the irrigation service fee (Rp 45 billion) and possibly from PBB (Rp 40 billion) at 1987 constant prices could be in the order of Rp 85 billion per year, covering almost the entire funding requirements for efficient O&M on all the irrigated areas by the 15th year. D. Cost Recovery Indices 5.10 Cost recovery indices have been adapted to the objectives of the irrigation subsector project, which are primarily to improve the present inadequate standards of O&M to efficient levels, and to recover these O&M costs for the main and secondary systems from the ultimate beneficiaries via the irrigation service fee. Consequently, the indices are estimated to show the extent to which an irrigation service fee limited to only Rp 10,000 per ha would recover the efficient O&M costs, and an index showing the extent to which this minimum service fee plus any reasonable allocation of PBB for O&M expenditures would recover the cost of efficient O&M and the investment cost of special maintenance. The relevant data are given below. - 52 - Table 5.2: COST RECOVERY INDICES Based on Discounted per ha Values (10X) over Project Life (Rp '000 per ha) For Efficient O&M Project costs for efficient O&M 93.88 Project charges Service fees 65.41 PBB share allocation 29.57 Total 94.98 Direct cost recovery index (X) 101 For Special Maintenance and Efficient O&M Costs for special maintenance and efficient O&M 219.34 Project charges Service fee 65.41 PBB share allocation 29.57 Total 94.98 Direct cost recovery index (M) 43 5.11 As will be noted, the limited irrigation service fee alone would recover 70% of the cost of efficient O&M. The service fee and the projected share of PBB would recover 101% of the cost of efficient O&M and 43% of project expenditures for special maintenance and efficient O&M. Over time, as the appropriate levels of irrigation service fee are determined, and the institutional mechanisms for its collection developed, nearly 100% of O&M costs could be recovered by irrigation service fee. VI. BENEFITS, ECONOMIC JUSTIFICATION AND RISKS A. Benefits and Beneficiaries 6.1 The proposed project complements previous Bank support to water resources development in several provinces. Investments aimed at expediting the completion of high priority ongoing projects and improving the efficiency of O&M of existing facilities would have high economic returns, given that a considerable part of the investment cost has already been sunk. In addition, policy reforms introduced under the project, including improved O&M funding and cost recovery from beneficiaries, strengthening of provincial irrigation services, improving their coordination with agricultural and local government services, and development of staff skills, should lead to better resource mobilization and utilization, improved efficiency in selection, design and - 53 - construction of irrigation systems, and improved operation and maintenance to the farm level. Major quantifiable benefits and beneficiaries are summarized in Table 6.1 below. At full development an incremental quantity of about 650,000 tons of paddy, about 140,000 tons of maize, 100,000 tons of soyabeans, 20,000 tons of groundnuts and 385 tons of cotton would be produced annually. About 1.6 million rural families would benefit directly from the project, about half of whom have current incomes below the absolute poverty line, and an equi ')lent of 0.5 million full-time farm jobs would be created as a result of crop intensification. Table 6.1: SUMMARY OF MAJOR BENEFITS AND BENEFICIARIES Benefits/Beneficiaries Incremental production (in tons) Production (in tons) Paddy 653,068 Maize 143,595 Soyabeans 106,331 Croundnuts 21,189 Cotton 387 Number of Farms in Project Area 1,582,000 Employment (million man-days) 135 B. Economic Analysis Benefit and Cost Streams 6.2 Economic evaluation of the project has been carried out using both internal Economic Rate of Return and Net Present Value (NPV) estimations. The derivation of economic prices is contained in Annex 9, Table 1. Analyses of a typical ongoing project, and of the economic effects of special maintenance and efficient O&M for irrigation and swamps (in Java and outside Java- essentially using different economic price of labor), and of the groundwater component have been made. Economic analysis of the effects of improvement of small river mouths, to be carried out on a pilot basis, has not been made because of insufficient data particularly on the quantification of benefits. Agricultural benefits resulting from special maintenance and improved OEM have been evaluated on a per hectare basis, taking into account increased rice yields and intensities and/or a prevention of decline in yields (with improved water distribution). Benefits from the institutional strengthening component including technical assistance were not quantified directly, but would accrue to the project. Hence the cost of this component has been included in the total economic cost of the project. Costs quantified include all capital and operating costs, excluding price contingencies and transfer payments such as taxes and subsidies, but including physical contingencies. - 54 - 6.3 A sensitivity analysis has also been undertaken to test the effects of the decline in benefits, higher investment costs and delays in implementation. This analysis has been done for individual project components and for the total project. 6.4 ERR and NPV for the project components and the total project, including the switching values on costs and benefits, are presented in Table 6.2. The aggregate ERR for the project, estimated at 21%, is robust. The project is relatively insensitive to cost overruns and to reduced benefits from both lower production and rice prices. A 20% reduction in the benefits would lower the ERR from 21% to 18%, and 40% cost overrun on all project components would lower the ERR to 17%. The project is sensitive to delays in implementation: a two year de'ay in the project benefits would reduce the ERR to 17%. 6.5 Switching values were calculated for key parameters and indicate that a decrease in benefits by 56%, and increase in investment costs by 177%, would reduce the ERR to 10% i.e. equal to the opportunity cost of capital. Based on two test cases, it is estimated that (a) if the projected rice price during the 1990-2000 period were to decline by 20%, the ERR would fall by four percentage points, and (b) if the recurrent O&M costs, in the case of ongoing projects, were reduced by 50%, with a corresponding reduction in economic life, the ERR would fall from 23% to 19%, and this combined with a two-year delay in implementation would result in an ERR of 14%. Risks and Uncertainties 6.6 As discussed above, the project is not excessively sensitive to change in the main variables and its overall risk level is acceptable. Several elements could, however, contribute to a lower than expected ERR for the project. Among them, two can be controlled by the GOI and provincial irrigation services: the timeliness of construction, and adequate O&M funding. The risk of inadequate O&M funding has been gradually reduced in the last three Bank irrigation loans to Indonesia (Lns. 2543, 2560-IND and 2649-IND) by financing the mapping and reclassification of the project areas in order to increase the PBB collection, and by obtaining GOI agreement to allocate a share of the incremental PBB revenues to the 0&M of main and secondary canals. While the proposed project continues to support a detailed program for land reclassification and valuation in the project areas to generate additional revenues at the local level, it also requires the introduction of an irrigation service fee, which would contribute towards O&M costs, and a turnover of small systems to WUAs which would also entail handing over of O&M responsibility to WUAs. Moreover, the GOI's Policy Statement and Action Plan aimed at addressing the O&M problem of the existing infrastructure, for the first time on a country-wide basis, should help minimize the risks of inadequate funding for O&M. 6.7 Delays in putting in place the organizational arrangements for the project, inadequate staffing and delays in the award of consultant contracts, and thereby delays in training, constitute additional risks. These risks are expected to be minimized by the steps already taken by the Government to appoint key consultants and to have the salient organizational arrangements - 55 - Table 6.2: ECONOMIC RATE OF RETURN (ERR) AND SENSITIVITY ANALYSIS ERR Switching Bene- Investment values /c NPV /a Base fits /b costs Lag Bene- Investment Component (Rp bin) case -10% -20% +20% +40% 2 years fits costs Irrigation Special maintenance and efficient O&M /d Java 285 31 29 27 28 26 23 -74 498 Outside Java 85 26 24 22 23 21 20 -66 333 Swamps Special maintenance and efficient O&M /e 19 20 19 17 18 17 16 -52 180 Typical Cngoing Project 83 23 21 19 20 18 17 -58 168 Groundwater Lombok 4 23 21 18 20 17 16 -43 124 Madiun, Surabaya 2 18 17 15 16 14 14 -40 93 Sampean Baru 3 22 20 17 19 16 16 -44 110 Overall Project Case A 481 27 25 23 24 22 20 -67 310 Case B /f 407 21 20 18 19 17 17 -56 177 /a Based on opportunity cost of capital of 10%. 7b Benefits minus operating/production costs. 7e Percentage change which reduces the NPV to zero. 7T ERR for efficient O&M alone (i.e., without special maintenance) is 117% in Java and 90% off-Java. /e Assuming shadow wage rate of Rp 965/day in Java. ERR, if shadow wage rate is assumed to be Rp 2,000/day (off-Java), is 13%. Since the labor is expected to migrate from Java to outer islands, the ERR of 20% (as shown in the table) is included in the estimation of overall project ERR. /f Includes costs of institutional strengthening and technical assistance. - 56 - for project implementation in place. More generally on the policy front, in light of GOI's record in responsible economic management and demonstrated willingness to carry out difficult reforms, the Policy Statement associated with the project is a sound basis to believe that GOI is fully committed to carrying out the necessary steps to bring about the desired changes in the subsector. However, there is still a risk that implementation of some of the short-term measures incorporated in the Action Plan may be prolonged by the difficulties of policy and institutional change which involve several different GOI ministries and organizations. The provision for substantial technical assistance, and the proposed long-term program approach, in view of the project being a 3-year time slice operation, should increase the chances of success in implementing these reforms over a number of years. VII, AGREEMENTS REACHED AND RECOMMENDATION 7.1 Assurances were obtained at negotiations from 00I that: (a) the project would be implemented in accordance with the Policy Statement and the Action Plan reviewed and agreed with the Bank (para 2.4); (b) training programs would be carried out in accordance with the timetable and terms of reference satisfactory to the Bank (para. 2e27); (c) consultants would be selected by January 31, 1988 (para. 2.34); (d) the environmental impact studies would be completed by March 31, 1990 (para. 2.35(c)); (e) appropriate measures for malaria control would be taken and these measures would take environmental and health aspects into consideration (para. 2.48); and (f) organizational arrangements for project implementation at national and provincial levels would be maintained and strengthened (para. 3.12). 7J2 As conditions of loan disbursement, GOI would take the following actions: (a) make arrangements to ensure the availability of financing for installation of the second package of materials and equipment for groundwater tubewell systems to be procured in the third year of the project (para. 2.42); and (b) make annual budgetary allocations (for fiscal years 1987/88, 1988/89, 1989/90 and 1990/91) which at least maintain the 1986/87 level of total country-wide irrigation O&M financing under APBN and APBD in real terms, furnish evidence that satisfactory actual - 57 - expenditures for country-wide O&M were made during the previous fiscal year, and provide a progressively larger share of incremental financing for efficient O&M in each of the fiscal years 1988/89, 1989/90 and 1990/91 (para. 3.14). 7.3 With the above agreements and assurances, the project would be suitable for a Bank loan of $234 million with a 20 year maturity at the standard variable rate, including a grace period of 5 years. The Borrower would be the Republic of Indonesia. - 58 - Annex I Page 1 of 12 GOVERNMENT OF INDONESIA STATEMENT OF POLICIES FOR IRRIGATION OPERATION AND MAINTENANCE I. BACKGROUND 1. Rice is the staple diet of the Indonesian population, and a large proportion of the country's production of rice comes from irrigated sawah areas. With a population growth rate of 2% per annum and increasing per capita incomes, the demand for rice as a primary food crop is expected to rise in the future. 2. Concerted efforts have been made on a continuous basis from the beginning of the first five year plan (Pelita I) to meet the increasing national requirements of food. Since 1985, these efforts have decreased the dependency on food crop imports, especially rice. The nation's production of rice comes from 5 million hectares of irrigated fields, which grow two crops per year on average, and from 2 million hectares of rainfed land, on which rice is generally planted once each year. The increase in production has been achieved as a result of investments in agriculture such as the adoption of modern varieties; use of fertilizers; weed and pest control; adoption of appropriate cropping calendars; and investments in irrigation such as rehabilitation of existing irrigation systems and construction of new schemes. 3. Water resources development by the Government especially in the field of irrigation, both new construction and rehabilitation, within the context of increasing food production, has already been carried out with satisfactory results. Such investments have primarily been financed from the Government's rupiah budget and foreign assistance. The completion of construction is followed by the next stage of management and care of the irrigation systems through what is commonly known as operation and maintenance (O&M). Operation consists of activities to optimize the utilization of the irrigation infrastructure. Maintenance consists of activities to care for the infratructure, so that it can function as designed, thereby sustaining the effectiveness of the irrigation systems. Both activities should be carried out continuously, and supported by an adequate budget, skilled personnel, appropriate procedures for planning and implementation and proper facilities for their efficient implementation, as well as to aim for increased quality of intensified agricultural food production. - 59 - Annex I Page 2 of 12 Irrigation development during Pelitas I to IV concentrated on rehabilitation (repairs and improvements) of existing systems and construction of new schemes. During this latter part of Pelita IV and approaching the beginning of Repelita V, the time has come to give greater emphasis to O&M activities. 4. According to Water Law No. 11/1974, Section 12 and Government Regulation (PP) No. 23/1982, Section 35, para. (2), the budget for O&M of irrigation networks and related structures and facilities should be borne by the Provincial Government. These laws also set out the intention of asking beneficiary farmers to participate in O&M for main systems and have overall responsibility for tertiary systems. Recognizing that Provincial Governments were still unable to provide the required budget for O&M, the Central Government has, since the fiscal year 1974/75 provided subsidies for irrigation O&M through INPRES DATI I (APBD); since 1984/85 such subsidies have been increased through project funding for O&M (APBN). Maintenance of O&M budget levels in the last two years, despite major cuts in total investment expenditures, reflects the Government's new policy approach and recogn:.tion of the importance of O&M, and its commitment to increased expenditures on efficient and adequate levels of O&M in the future. Nevertheless, the average allocation per annum is well below actual requirements. The inadequate O&M Budget, personnel, equipment and facilities will lead to rapid deterioration of the condition of the irrigation systems and affect their performance thus reducing food production, especially rice, and this is of increasing concern to the Government. 5. The problem which is now encountered is how to provide an adequate O&M budget in accordance with actual needs of each irrigation system; this will necessitate an increase in the budget to be provided for O&M. It is necessary to mobilize new sources other than the present Central Government allocation, in the efforts to increase the O&M budget and eventually to reduce dependence upon Central Government budgetary support, namely: 5.1 From Land and Building Tax (PBB) This may not be a dependable source, because the revenues from PBB are required for regional and local development, especially in Daerah Tingkat II (level of Kabupaten). 5.2 From the beneficiaries of irrigation development in the form of an "Irrigation Service Fee," which should be related to the quality of service provided. The imposition of such a fee is in keeping with Water Law No. 11/1974, Section 12 and Government Regulation No. 23/1982, Section 35, para. (3). This is a more appropriate and dependable source since it will be collected solely for meeting the O&M budget. Annex 1 -60- Page 3 of 12 6. Besides mobilizing the sources mentioned in Section 5 above, especially for smaller systems with an area of less than 500 ha, the responsibility for O&M will be entrusted to the Water User's Association. This is possible, because there are already a large number of such schemes managed by the villagers, designated as village irrigation or communal irrigation systems (INPRES 1/1969). In this way, the responsibility assumed by the beneficiaries can be further developed, while reducing the number of schemes managed by the Government and more attention can be paid to large and medium scale systems which cannot be managed by the beneficiaries. 7. The Government has formulated a set of policies which address six fundamental issues related to the financing of O&M and other expenditure in the irrigation subsector, under the following topics: 1. Funding of Operation and Maintenance 2. Cost Recovery 3.. Irrigation Service Fee 4. Institutional Development 5. Programming and Budgeting for O&M 6. Rationalization of Investment Expenditures B. STATEMENT OF POLICIES Policy 1: Funding of Operation and Maintenance After completing irrigation systems, Government recognizes that in order to realize the full potential of irrigation systems and to maximize the contribution of existing investments to agricultural production goals, future policy should ensure expenditure on O&M that should be applied in line with the actual needs of irrigation systems. Objectives: 1,1 To provide adequate and timely funding of O&M on all government controlled schemes throughout Indonesia at a level sufficient to ensure efficient O&M, and the introduction of efficient operation and maintenance on the entire Public Works irrigation system within about 15 years. In order to accomplish this, the Central Government will initiate a gradual increase in O&M funding through more allocation from the INPRES and DGWRD development budget. This increase in funding is required during the early years but will decline as Provincial Government revenues and irrigation service fees assume a larger percentage of the total O&M costs. 1.2 To establish an agreed mechanism for ensuring that Provincial Governments take a gradually increasing financial responsibility for the 0&M budget of main irrigation systems from their own revenuese 1.3 To ensure that adequate funding is applied in line with the actual needs of the systems in areas which have already been upgraded and - 61 - Annex 1 Page 4 of 12 efficient O&M has been introduced, an increase of the present levels of O&M funding would be required. Also, that funds currently expended on areas on which efficient O&M has not been introduced will have their present allocations at least maintained in real terms. 1.4 To give Water Users Association (WUAs) maximum responsibilities for O&M, subject to the constraints imposed by their institutional capacities and the technical characteristics, size and administrative boundaries in which irrigation systems are located. 1.5 Within about 15 years, to gradually turn over the Government irrigation systems of less than 500 ha each to the WUAs. As a first step, over the period of Repelita V, most of the Government irrigation systems less than 150 ha in size would be turned over to WUAs. This figure is in line with the size of tertiary units which, according to Government Regulation No. 23/1982, is now legally the responsibility of the WUAs. Policy 2: Cost Recovery for Irrigation O&M The Government policy is that the beneficiaries will eventually finance O&M costs of main irrigation systems. Objectives: 2.1 To implement a cost recovery system which will eventually finance all costs of efficient O&M of irrigation systems through increased contributions from irrigation beneficiaries. 2.2 To improve indirect cost recovery and increase local government revenue generation and their capacity for O&M funding, through a long-term program to raise PBB revenues on irrigated areas in all provinces. 2.3 To expedite the conversion of the Land Tax (IPEDA) system to the new PBB system through reclassification and reassessment of the market value of irrigated properties, and to ensure that the system is implemented effectively and yields the expected revenues. Policy 3: Irrigation Service Fees In order to directly recover the O&M costs from irrigation beneficiaries in relation to the benefits they receive from a regular and assured supply of water, Government will extend the collection of irrigation service fees from the beneficiaries in other areas after the Pilot Scheme period. Since PBB may not be a dependable source, the implementation of direct cost recovery system, which eventually finances all costs of efficient O&M of irrigation systems, should apply irrigation service fee. These fees are expected to gradually reduce the need for Government funding subsidies and become the main source of efficient O&M budget for main irrigation systems. Annex 1 - 62 - Page 5 of 12 Objectives: 3.1 Starting from fiscal year 1988/1989, to introduce an irrigation service fee (ISF) related to cropping patterns/systems in several selected pilot scheme areas being taken up for efficient O&M. The implementation of the pilot scheme will also enable the establishment and refinement of the necessary administrative and judicial arrangements as well as institutional aspects, collection mechanism and level of fees to be collected. 3.2 Based on the results of the pilot scheme, to gradually extend ISF to all provinces for irrigation systems where efficient O&M has already been introduced. Policy 4: Institutional Development Government recognizes the critical importance of effectively carrying out irrigation O&M, and will implement effective measures and reforms to strengthen O&M institutions at all levels. This will be done to create adequate institutional capacity for improving the performance of the existing irrigation infrastructure and efficient utilization of increased O&M allocations, in order to continue to provide adequate irrigation service and reliable water supplies to farmers. Objectives: 4.1 To strengthen and where necessary to restructure the organizational set-up of Provincial Irrigation Services (PRIS) dealing with O&M of irrigation systems, down to Ranting Dinas for uniformity, efficiency and effectiveness. 4.2 To clarify the roles and responsibilities of institutions dealing with O&M by the end of fiscal year 1988/89. This would include the redefinition of roles of DGWRD and PRIS in planning, organization, directing and controlling O&M activities, and defining the organizational structure and staffing needs at various levels. 4.3 To design and implement a manpower development and training program for provincial O&M staff and other agencies' staff at various levels involved in implementing O&M policies and programs. It is anticipated that this activity will be implemented by the end of fiscal year 1989/90. 4.4 To strengthen the function of PRIS with regard to the management of O&M through improved personnel management, and the development of appropriate management information systems (MIS) and monitoring and evaluation (M&E) systems. 4.5 To further develop and execute an integrated policy for the functioning and strengthening of WUAs following guidelines established in INPRES No. 2/1984, and functioning of Irrigation Committees in line with PP. No. 23/1982. ~ 63 Annex 1 -63- Page 6 of 12 Policy 5: Budgeting and Programming for O&M Government will simplify and rationalize the present budget mechanisms for O&M funding by reducing the number of funding channels and improving O&M budget planning administration. Objectives: 5.1 To introduce improved systems and procedures for O&M programming, monitoring and budget planning, by simplifying the present system of allocations through both INPRES DATI I and DGWRD development budget, changing to a needs-based system of allocation of O&M funds. 5.2 To establish sound criteria and procedures for allocation and monitoring of funds to meet the actual needs for O&M of each irrigation system, starting at each Ranting Dinas level. Policy 6: Rationalization of Investment Expenditures Government will rationalize expenditure programs in the irrigation subsector, and formulate and implement a more realistic irrigation investment strategy for Repelita V0 Objectives: 6.1 To improve project selection criteria to be used and review the technical and economic viability, in the assessment of the total existing and proposed irrigation investment programs, with a view to rationalize investments. 6.2 To improve the formulation of priorities for irrigation investments and finalize preparation of a more realistic irriga- tion subsector strategy and investment program for Repelita V by the end of fiscal year 1988/89, taking into account the likely availability of funds from different sources as well as implementation capacity. FTot t2 Metton P0* ?iletabatc go. Policy title Policy atre .dlmt re= obj]cttis l.ttio Prtoposed By Say stap. (t00 PT) initottog ldtaotot t. ftudtas of (a) Tutu.t oItcy to entire tt) Roaot that tha ftwling (I) Mitnuto 1986/817 lev1l tep..n. Prowioions ed* 87/88. kwdqat.vy *llocattor Operotton 4 404u*t* fouwinS tor tot Ol0 on all of 041 toodiog tn teat MA for 0O* fou4tolg *8/89. am roIe*$" etoteconre etficient at" tn lIne dith tooertmn t cootrolted teto tot alL Wm. on *onal 89/9V * the aetutl ."d4 Of atch.ms to at a vtonoant cootrolled MY budgpta 90/91 tttlatipo system sftfictent 11,t tin stha.a tram Intnn a ttne glth act,-I otnds 0=x d4othlopint tor affictent0*9 *todgt oatavtFg PT11188 (it) tofu... tht la"l of ttp t. tProvtions _ad S R8 /89 8dgtary alloatton 0oa funoing froo thO mu for tos founding A9/90 * and tele.n. oattooal budget, NW to budptary 90/9l ptotloniel teat. MT atlocAtions sodlor irtr4itton coto fesa t aor on on ohtih afftetat 0n91 ts pro*vcactvol, inttodued (b) turt ot ft aaoll orstai (C) cti. WAs _xsne (i) lowntory and *4*titton WV Ptcpst tOtt tot fnon Agreed TOR to W A'. rcoronsbitltti.a tor of ceII Irtlaitoo mu Coouotiog O*0, and ara4oalty toum systew wtth a actyic MU0 icroicc rvet omll Itig tton are. of lose tbe. cyitaca lea* than tS0 hb, *ntd cYt,t. Apwtnt_nt of 011/8 500 ha to ater 'aost* oath a setovce *atr of Coneultonte, Associattos. toe less thae 100 ha. bIplxnt coo- 98/99 .atr xoat trtigatioo tial olt.- 89/90 ovatca. sarvnig laeos oAf,?I tn *e- than 110 ha to WUA,.* laicd cia?.. ctthio lapaltta (pilot rat..) as agtccd b.tva n Nd, 111* and N'o,, Ger-tnea,'to Si.) *a eact cyct*l tor NM 88/Rt Stntco end detric, at.. turnitng roa covr- MtA transfettrd. l.tgtt tog at Itast MA1 aceoctettons of WA. 10,400 ha *stabhtlehd b. Catrry ot *patia WV 8tt/l9 Special m_nt. nob. asntotenoc eovh on coopleted selected syatam c. todn WA'- and am Sr?tatg 688/89 No. of WA'a traond co ixunty orgfaoirc MA MA d. tu ovetr of smil Wu tutnt v_r 09/90 lgo. of WA'., "Stem and yastam 1aa than mu sotoia at.a to ba trta- (up to) ISO ho A Cttedni coq,lct*d (Itt) Inotmpl nt tosto r of WV P?I. end 89/90 Syatem and ctrvte *tes 041 of irrigaticon a- WA sonttor tiople- tranctfterd. Lar tEN with tutra At. mu gest aton a*uoctations of WJ. of about 500 ha o0 2 astabitschd pilot eea (tv) otltor cod evaloats WV ita n alectto, 09/90 RaCOmnodtioto tor all Ptlot $cheas to MA awl pta tiou nationwide toplamotettio pooitda haes tot tA of a nationelde tvo.tet of tttigtiton prostr tot S" taS, 1atgar than trotetg oatt 150 ha aatm ad eatvoae ata. larger than 110 h ffi~~~~~~~~~~~T tab4 go. oltto title Policy areas Idt-tere objOedtoc Action propMd my WbY OtY (002 IT) Critctortns tidIcetors 2. Cost i cotrty gor (a) oeflestcetote Wil1 (4) Etutblish tedrct C_t (U) iorov provincial lop eltd te - gvenasse 1trrtptien fAN *osntocl ly fince alt ccosctt) y Olsten to o tteteo g*oteet- tMA rvnue.aA coots of OmA of Metn tftn'eA tohr rearems through Coetvtborednl Wt Lrttgatloneysot ave SetSeartCtc broqb nld trw bettonerteto s fros_ ot Crr4sd areas (it) inpedit. coerseeon of (ii feecbop a pilot se) NOT prodection And 03154 A report indicattag the IptiA to the sn sI (1,000 ha) of SUreY solacgcine ot C1opitti(Cd proc*dnce of a7stes chraon roist- 0.1 gepii fo ld and (dam- aootm sifiteeto Mod tees- registration itficetton Of eseme of irrigated Plaot, hounMs- areas rtee aed Crete (ii) tiproe revene Oetfos NMt VApptng, Te- 57/84 Aseae_nnct emomlted, aret" moce of no ttro*th classttteatin tt9/vO ceed, and revenue VcllSttctotto snd n Vd ftesse.- Increaees telh veer rAe _esomot ot Ott _nt of ahout irripted eto" to 400nn ha of todoests trr4tgted csre by 14s9I90 (tti) tows tee eddttttr- lot Appoint too tee 04/P8 Adrsors appointed tion through comPotert- advisors en cti od better reral no PttoceuSOs (tv) ftAigt eed IteP_not 1W? training of at 8t/89 tNober of trdned * esors trdntog Program for Icett t71 s*- p9/90 god tecticitens , tnech S) Stftt nd aemtors end vesr tschotccaee techotiient 1. strsttoon cr Direcs t c -o*oso ot _A eoete (t) t_trodors cc icrigatioo (t) Select four Ptlot cres MA, NIV Agree in One- DOe Alinist riet Agrosmdt fees fre tirnigticn ohetefiiartee serICc fe for fAN in Soth flesi sod MA. otP cipet to ibe obtet1d btsroochtretstton sevic foadieg to selected jays far destigocr tetrsdoctton of fees 'Ohich gredoclit reduce erec being upgraded t trodetotis of irnige- co IS? en a the need for jie'eraet for efficiIent A& I, ted t too serci cc fees en e voehil for funding Subeidies sod fisello soslosto the rueslie total of St leest fending eff i- .iii becoy the mi. sonrce of il.lOhe cisni fAN. tffittent inK boet tor st. Prepere 105 cod 03/AS A"oointant otf teolteste Irrcictton Statoe" oppott t0a&,l- tents to intdy jsSie cOd So- Sist to the i- ptemstettiq of ItS WV. SA c eiV d retn d- /SR IAtectoe on chtt; e And -.-o op cropped in dif- sting autherity with _lret estem collection ogete of the crop Oatld lo ocel govefeses to tm and Oe- ippleetten. plans. teilect and trein per- topiseinretion. 12/3A Collecion of then.. is socitocing and oeasrde pilot are"e Prepare plan 01/Nf0 Agreed &edeisstrettve And f or seteoeia, Judiciel sOreogeemai for of foo to other extenson to other creast .. ~ ~ -4 . . ............. . .. . . ... IIo. Poltey TitIe Polity at" bdt-terst objoettrvo Aettin PoptOud by UV tops Tt.tobW montlotonto indtettor. (GOt t't) (it) Grodoult .tt0td thb (0) I plemt wnsion MA.4 lUl sIeect Art. 1t2/00 Act" selected Irrigation s*""ic too starting ho. MO/M 10. Mr tot atboslon onvorde to Irtrigted or.. to *od on * csn,trpvtd. *al provines., sod bWit by 1996/92? I^lw nt tsa t9s9/9t Coiloctios t c%arms cos..qontlW r,'.dn Collection ot CortrO Ia*nd rovlOtail irrigation Govetrmnt funding fr service foo irrigott io 0414 f hom kn.- fictorie. oteod on 1 t996191 Cotletttn of thartos noItonoide 4. loasttotinnul (a) Strengthentnin 04 1n0itt- () DeCtin responsibtilttts (t) Carry nor ao ta ttu- VWl tpepare TO nd Ol/8R G.nSntt.nt ppointed Oowls.enc tion. at all 10e1t. to of inoitutoton dealing tioal. trengtbhniog appoint Consul- toProve usage ot irrtig- tith Otih btwonn DOM stUd to terift Vtl.. tints. tton *tnrt#traCtor* od 4od PMl (and tbair md responitblity of Coniult "I"A ofltint nttibsttnn Of lnak sIth 9RA &nd MA) Institutions daltnog OSIlAR sd MA 0414 alitattoOs w11tth OM41 4nd to T*Vtow duting study. and spetity otaffloag C0 etod stadv 10/89 Recomtondattons agreed by nd*l4 at 6ll lena). otlitrte. coocerned (it) Implemaet re,- WV, lOla kgroa_nt by 12/09 Intordopt. 0 Itnstruettonn _ndactions MtEOW lotordopt. FtDA l550 in.tr e- tins Uli) 1tt*nnthbn orgasino- (t) Vo6rmato no. orgt nw- tp, 'MA 0vt0 vOltlng 02/R9 AArod nev org.ntsottion* tionol setup at Pits at Lional otop to t tt8ttAII organizattonal torwl,tio Il levels d4sulig with tO4uir.nts 5(A setop 040 of trrtqitton totem (it) Dise.. at Prointnlol PPk, PC Rearting .th 08/90 Nt PITS organisatton Ih.-I and obtain *P- FL Pronteetil .t.blitswd (P 0A) rroval tro& Provinctil Ltgislatours tLOiOl.turs *n04 Isue on tnstruet ton. (tit) Fulfill dditional wrPv, KRA Frond1 *ddi- W0/89 6 Staff to plote staftgng retqntesntos ban, tiontl ntting R9/90 at distritt and lower- mop r*q4ir.nsntn lhql units (tecludino tofr Iprovad Pete nts and Juro.) PRtS portor- so-ot tor otfi- ciat A606. teIlodin real- location of otaff tot DCv11 to PR15 "a me .s.r (tit) Besns Ond tuplotnt a (t) Carr" ut a srt.v nn NhW Prop.? tOR for 11/5t TOM eo"PIetnd onvomer d.veloornt _r_rows dealomant eonsulttets Vnd tratiIng progrst noodo for 01 at &11 for 06t taift at o*11 PUS lbol Appoint Consul- (steln tsots to 2/SS Consultanto appointed propirt rtet msndation Ag4red rtac- asodat 10 Wa/88 fpleantation Of traintgs ntordint Sote- progrs. grated mnnpoetr dtv loppenc AgeU IOtI - t Vaiiiii of 12 TI(:,*ball, go. Polit Trile Policy aras kdtui-tiar objectives Artloa prooed Bp say stops IOOl TV Ifonltorlng indicatore (it) Oas. S taff cepabill- MOU, fA Prepare train- 04/O0 Areed ttatning curriculs ttie of MIS In pian- IDA RSo currtcula tog s4d Impleetntton ot 05ft, vlth training teplsesut, of at lest 3,000 monttor and 1988/8§- wubar of atolt triosd iddle Rnd lfsoe-le"l *valuste 1949/t0 field staff. and S00 trltnint Staff (at le"at 110 trlnera, 225 all ieav1 e.andeer, and 6' degree-level onglnsore) by 19g4/90. Trvining of snother 420 techit- cal high *chool lewl Staff (Ipngasats) nd 1,02n sctlmo, ubse.e tion and villag. level stall, Traains of 1,300 staff (roup Al, 4,000n (roup 0), 8.600 (Group C) and 360 tn*truct"rs. (itt) strengthenintl of *udio- NtW Procursesnt of 06/4/ Purchase of required visual program to additt. 1 eqotpnt support staff tratniag qui*.tf *,t autarial *od Oupplias Tr4itnini of AV 0/SO9 !bnshr of trained stdfl staff (tv) tWoVs personoal unwna- it) lov-lop psrsonnel wAn- D005D Prare TOR for Rose Agrood tOR t_Sont and introdura agasest eyetwn to aup- rPS con nltaot soproprst0 K6( snd RAE port 04K * provesot systoan at PRIS Appoint ronsul- 06/8§ Pinn report and agreed tants to na- recoond.tion. by O1 lyne & provara r comondat tu.ne TIptseat sn 03/v 0 Corner planing .stabitshad personnel nn- oneurds lot PitS 0414 sttff ogeanot systet (it) Carry ot survey on 1HiS Of Prpare TnOR for Done hgread TOP aod 49t noeds for 046m POs consulttnt at PalS leval Appoint consul- 0/S8 nPol report and reco_, trats to "ao- sndations aec ptad by Iva 4 prepare 0050 mad PRUS rvco=undettone lepleont 1IS 12/89 Taproved 3I6S end '64 at and gli syatens oaerds PMIS level. -8 - $ of I Itastabaf a No. PolLty Titte litcy erye l1d1u ttre objectives Atto proposed or tey stes (Cot FT) t ottofvtg oditeatore (itl) Lvaluaete ietlop led 1WV, KR3A tatbitoh 01/8S1 Ogred rtItert Perforwaca of et leat dnA fetlon grouPs 10 eistting Alls cod erterIa for ev*lugtion Carrr tot 0418 Nuaber of VUlAn *valtad (tv) Strengthen Irrigation 11W, '0l1 eteoitoh cork- 17)16 Avreed curricula *od Comttees (fasl nd ItA tea group to coordtiation _echantams toter-agency coordits- reet_ qatotIna tien at arO toiat,l WPY? trattotg YAbopateo *nd taeCtafn program levels through appro- pritst tratnoto pro- gro fDplnusot 198lO/t9 Ober trtnod tn varous agreed trdnattg 109/v00 ajbuoates *nd Kacceatan Program tn at least 10 pro- votcec for 20n ct ton, GrUo ecebeo cod_n 0,000 SIPA ves- bert. fetch- lioh Hisblq toordtost ton (t) Str egthon at lacit 200 1W, tlOA totohItch cork- 12/87 AIreed recomodstoade edttot Iin WAod c- m1m Ing grrup to tabilsh nw SPA. as prepare trato- ro`cdir4d. with a sot- tIg ond axten- _ of 20 et"n prolr*s taplawct, 1901t4 Iaber of VlAs estabtlshed mtittr aod 19S9/90 aod h bara tratiad prograoc ". tigettcg D.i (a) ttaltttcatita rod rattoo- t) totroadkcton of ia- (t) Prepare atwltfted hod- IAPPVIAr atobti,tJop r,- 06nd 1 Arted recoamewlcttoas Progr.ammig for aleltioat of oarebejee proeed eyctasscod gattng arreoamwnotancd WA1, 1109 to group cod 04 tor MIt uaFlttgtrogrn_ roerfor 0N fotlo, prasr- vroeadurcfr fil 0C-ounts of 0411, alfed IIW prepare rocea cing aod budgat pinoS programig,a wattorton at rattionalizng dit- tndcttone cnd budget plensing, ferest channels of chonsing to a tawde- tbodtice etaditaog hoSed *yete of ratisoo of funds. and atlocattoas contorato to Mde*- bsed altorttoo (it) islpecent ne $yetee SdPTIIiJ Prepare bkdget 1980/90 ippitcatton of sodfted 6ad procedures for 066 MA, Ml' for 4b t bated opuar4e procedures pregrsavtog and btdget 417 on no *tapi- planitoo tied procedures (tt) tbtbih dac ted onto- (t) Cloaetftcetton of Ogg DOW Cooplete t.wo- 0n/87 to d4red mpg "od tIveotory rt od procedures for ced., bnoed or direct tory of ttrigs- 09/89 olorattoon attitattton OAN cnd overhead cato, tton yttow cod onttorttg oet tufds or ath ttrtiatton for ofttktiot to "St ectI Made ,"tal Nrt on at leost for 041 of trrtgetton 2S0.000 he by actns atd-19°2 and a forther 406,0o ha by aid-lP910 _~~~~~~~~~~~~~~~~~~~~~~nT yf of 1 2 . _ _ . .. . . _ . _ . ..-_ .._8 _ _1 _ _ 1. no. Politcy fit. Poltr* Are& Nadiw-tots obje0tts action pteoced b nines (Got t) MonitortingI tAdte*to 4alyo. cost 01/0I Seeardod nl&N tost .0 a etrottore for onMwrda M*t/Is*tto bdot*, st.rt- rteuired 064 tt At marh "thmt askot nd prepa r lasat budget roqst aetordtwly teplount ra- 1980/49 Provist" of tfn0 oee2ed c4mm_ndd am onamrd t,o ctAr 0o0t .fftelont 0)1 costs for each (ill) ProineLal romponst- (0) I0bnr of $v,op* prol- pr %wado4wer to be 191URI/I Ibudt And wtoft tron btit,t for wome* 001 Otte bo4ed oert to ceplated for I pro%lnoneO (for projoect pro,'tiotal atbortttts projto od honded over) eonced for anothsr proj0eto 6. RAt0o04i1attoo of (a) Ibttoonlt.attoo of (6) Xmrov, prTarlct .010- (t) Carry nat SO tovaotoeot SAP.la Appotnt cn00- 01/6t CowOultanto 0*1o0nt0d IOottweu0nt 6oPodttare progra and ction citteria tetov *xeondtturo t,otw 0nd Mrw tont0 wtth oxpenditoreo tmplemenoation of a Mor the ttbiltty of io- atroteoi stody. ahith Agreed tOb r91i6tlth tn"o twnt vestdent prograe and tclu40 a 4#tw1Ie4 stratogy for RIoeptta V rottonlitsm project As rayvto of il1 00ter- Couplte the 071811 a4re0d raCoV*Io tt-oo "eoomary nail .0.o6t.d And COt- oto4 fundod prolects (both OSo0inS 0a proposed) (ta) ltabish bLvestnot (2) ptparb strategy cod SAutfs n lot. rero* lOeA/S ProotF And tevs,teat prlorIttes and imple- *t tasst ptogro. by km. "W A anodntSons for attety for topeItto V mnt a Mor re.Istic the .nd ot oga atote*e And prepared strategy And iovet_nt l"oettot progra for lpepit. V 0r101tr (6ff) tIprove the priority (t) ReVI.. of lo,oot.et ApfOtq lhvata of so- 12114 List of priority proacts ranking rIterit cod AM ado fo or otgolag tWv cl. *conodc eoaplat*d t" ri plementatton *tche. *n4 priorttv And tecetmttl erhedule* for oo-goto* ronking for copletlo, vrlbtitty ot projectt high o*1torty 0on-SOhn sheh, INDONESIA IRRIGATION SUBSECTOR PROJECT Project Cost Summary (by Expenditure Categories) Rp million US$ million % foreign % total Local Foreign Total Local Foreign TotaI exchange base costs Investment Costs Civil works 143,733.7 107,427.1 251,160.8 87.1 65.1 152.2 43 49 Equipment and supplies 14,591.7 13,156.4 27,748.0 8.8 8.0 16.8 47 5 Consultants Foreign 4,386.7 28,939.7 33,326.4 2.7 17.5 20.2 87 6 Local 30,238.5 3,172.3 33,410.8 18.3 1.9 20.2 9 6 Subtotal consultants 34,625.2 32,112.0 66,737.2 21.0 19.5 40.4 48 13 Training 5,118.6 6,242.6 11,361.2 3.1 3.8 6.9 55 2 Studies and surveys 808.1 1,171.8 1,979.9 0.5 0.7 1.2 59 0 Administration 14,487.3 419.5 14,906.8 8.8 0.3 9.0 3 3 Vehicles 713.0 647.8 1,360.8 0.4 0.4 0.8 48 0 Land acquisition 9,054.0 - 9,054.0 5.5 - 5.5 - 2 Total Investment Costs 223,131.6 161,177.1 384,308.8 135.2 97.7 232.9 42 75 Recurrent Costs Establishment costs 72,811.8 57,587.5 130,399.3 44.1 34.9 79.0 44 25 Total Recurrent Costs 72,811.8 57,587.5 130,399.3 44.1 34.9 79.0 44 25 Total Baseline Costs 295,943.4 218,764.6 514,708.0 179.4 132.6 311.9 43 100 Physical contingencies 25,728.3 20,489.5 46,217.8 15.6 12.4 28.0 44 9 Price contingencies 26,595.4 4,944.9 31,540.3 16.1 3.0 19.1 16 6 Total Project Costs 348,267.1 244,199.0 592,466.1 211.1 148.0 359.1 41 115 - 71 - ANNEX 2 Table 2 INDONESIA IRRIGATION SUBSECTOR PROJECT GOI's Financing Plan (by Fiscal Year) (US$ million) Expenditure items 1987/88 1988/89 1989/90 1990/91 Total Recurrent O&M /a 13.5 27.3 28.1 14.3 83.2 Incremental O&M - 0.3 0.6 0.7 1.6 Land acquisition 0.6 2.0 2.4 1.0 6.0 Taxes and duties 1.4 5.4 7.9 3.8 18.5 Study (Investment Strategy) /b 0.2 0.2 - - 0.4 Total 15.7 35.2 39.0 19.8 109.7 /a 1986/87 levels of country-wide irrigation O&M expenditures to be main- tained in real terms. Figures for 1987/88 and 1990/91 given here are for 6 months each. Minimum recurrent O&M budget allocations needed in these years would be $26.4 million and $30.0 million, respectively. /b About US$400,000 is expected to be utilized from a USAID grant for finan- cing the local costs for carrying out this study. INDONESIA Irrigation Subsector Project Ilplementation Schedule Irrigation iorks 1586ie7 il Year 1 /2 Year 2 Year 3 JFNAMJJAS ONDJFtANJJAS ONDJFMAWJJ AS ONDJFAhJJ AS Special Maintenance (ha) 75,000 175,000 .......= -…2.=2=. 150,000 Efficient O&f (ha) ---- -------- 200,000 400,000 700,000 Small River Mouths (No.) .. '5) On-going Projects (No.) . --------- …-…_… (22) Design ..... Prccuresent Implesentation /1 Preparation Activities /2 Project Year 1 (October 1987 - Septeeber 1988) I1DONESIA Irrigation Subsector Project Implementation Schedule Irrigation Works Design Procurement Implementation Executing Starting Completion Contract Agency Activity Date Date Invitation Award Start Completion PRIS Special Maintenance 75,000 ha 03/01/87 08/31/87 09/01/87 12/30/87 01115/88 06/31/88 175,000 ha 11/01/87 03/31/88 04/01/88 06115/88 07/01/88 03/31/89 150,000 ha 10/15/88 03/31/89 04/01/89 06/15/89 07/01/89 03/31/90 PRIS Efficient Operation and Maintenance 200,000 ha Being mostly repair work Work will be done 10/15/67 03/31/88 very little design work either on force account 400,000 ha will be involved which basis or under petty 04/01/88 03/31/89 will be handled by PRIS local contracts pro- 700,000 ha staff. cured as and when 04/01/89 03/31/90 required. DOR Small river mouths 06/01/87 08/31/87 09/01/87 12/30/87 04/01/88 03/31/90 PRIS and On-going projects 03/15/87 08/15/87 09/01/87 12/01/87 12/15/87 06/30/89 DOR 1st package of sixteen projects -V PRIS and On-going projects 12/01/87 04/30/88 05/15/88 08/30/88 09/30/88 08/30/90 , " DOR 2nd package of 0 X twenty two projects. m 03 1/ Two ongoing projects requiring ICB would have contracts awarded by July 1, 1988, and works completed by June 30, 1990. - 74 - ANNEX 2 Table 4 INDONESIA IRRIGATION SUBSECTOR PROJECT Swamps: Implementation Schedule (gross areas in ha) Province Scheme Year 1 Year 2 Year 3 Total Completion of Ongoing Projects Lampung Mesuji Telang Bawang T 6,000 6,000 Mesuji Telang Bawang II 6,400 6,400 Mesuji Telang Bawang IV 3,800 3,800 7,600 North Sumatra Sei Kualsa 8,200 8,200 Total 6,400 9,800 12,000 28,200 Special Maintenance Lampung Rawa Sragi 15,000 15,000 South Sumatra Delta Saleh 6,800 11,800 18,600 Delta Upang !0,000 10,000 Sugihan Kiri 16,000 16,000 South Kalimantan Seluang 3,500 3,500 Balawang 5,700 5,700 Muhuc F.C. 2,600 2,600 Tabungan 5,200 5,200 Puntik Terentang 3,200 3,200 Puntik Denela Benar 2,900 2,900 SeKalugah 3,400 3,400 North Sumatra Percut 2,100 2,100 Sei Tuan 300 300 Bandar Khalipah 650 650 Scanggang 550 550 Pulai Kampai 850 850 West Sumatra Lumang 4,500 4,500 Lasi 500 500 Silaut 5,000 5,000 Anai _ Total 21,800 43,800 39,950 105,550 Efficient O&M South Sumatra Karang Agung I 9,000 9,000 Karang Agung II 5,000 5,000 10,000 Delta Saleh 6,800 11,800 18,600 Delta Upang 5,000 5,000 Lampung Rawa Sragi 15,000 15,000 Mesuji-TB I 6,000 6,000 Mesuji-TB IT 6,400 6,400 South Kalimantan Seluang 3,500 3,500 Balawang 5,700 5,700 North Sumatra Percut 2,100 2,100 West Sumatra Lasi 500 500 Silaut 5,000 5,000 Total 9,000 33,200 44,600 86,800 Cumulative 9,000 4'.,200 86,800 - 75 - ANNEX 2 Table 5 INDONESIA IRRIGATION SUBSECTOR PROJECT Schedule for Handing Over Swamps Projects to Provincial Organizations Province Project Year 1 Year 2 Year 3 Lampung Rawa Sragi H85 --…- PS Mesuji TB II ST -------------------- PS Mesuji TB I --------------------- PS South Sumatra Karang Agung I ST -------------------- PS Karang Agung II ST ------------ Delta Saleh ST --------------------… Delta Upang ST ------------ South Kalimantan Seluang ST ------… ---- Belawang ST ------------ North Sumatra Percut ST ------------ West Sumatra Lasi ST ------------ Silaut ST ------------ H85 - Handed over to Province in 1985 ST - Start transition period PS - Permanent Status. Budget and staff fron Province. INDONESIA IRRIGATION SUBSECTOR PROJECT Selected Ongoing Projects for First-Year Impleimentation Costs Civil Incre- (Rp mln, constant 1996) Present Future Incremental works mental Vehi- Land Admin- irrigated irrigated irr4gated sunk civil Total cle and pur- istra- Province Project Agency area (ha) area (ha) area (ha) cost works cost equip. chase tion Aceh Alue Ubai DOI 1 2,641 2,785 144 1,219 3,020 4,239 127 72 95 Irienggading DOI I 1,909 1,909 0 2,227 4,497 6,724 182 383 139 Pandrah DOI 1 1,002 1,002 0 1,305 1,479 2,784 85 479 74 North Sumatra Wampu Rivez R /a DOR 0 1,398 1,398 39,840 3,168 43,008 40 1,674 285 Bengkulu Air Musi Kejalo DOI 1 236 1,180 944 2,346 3,488 5,834 58 0 28 South Sumatra Air Gegas I DOI 1 587 2,670 2,083 9,100 2,147 11,247 97 0 63 Lampung Tulong Mas DOT 1 0 3,200 3,200 2,068 9,041 11,109 235 392 195 Way Curup I DOI 1 1,420 2,220 800 3,241 695 3,936 20 0 35 Mesuji I, II & IIIA /b DOS 12,400 20,000 7,600 3,055 6,911 9,966 20 0 44 West Kalimantan Sanggau Ledo DOI 1 0 555 555 1,573 605 2,178 76 8 51 South Splawesi Sanrego DOI 1 0 6,394 6,394 14,530 9,015 23,545 412 484 380 Pamukulu DOT 1 3,000 4,400 1,400 8,800 1,423 10,223 60 28 83 Central Sulawesi Parigi Poso (part) DOI 2 1,122 3,398 2,276 0 5,898 5,898 240 156 240 North Sulawesi Marissa DOT 1 1,200 2,576 1,376 2,655 1,902 4,557 88 22 50 West Java Cesanggarung R /a DOR 6,040 10,608 4,568 10,350 3,138 13,488 24 288 204 East Java Gondang R /a DOR 3,678 4,325 647 25,353 1,617 26,970 64 0 32 /a River projects. 71 Swamps projects. INDONESIA IRRIGATION SUBSECTOR PROJECT Groundwater Component - East Java and SulawesJ Implementation Schedule Unit Quantity cost Area Y(sr ' Year 3 Total Year 4 Year 5 Description (no.) (Rp M) (ha) Year 1/a No.-P t No./Rp M No./Rp M No./Rp M No./Rv M Sampean Baru Tubewell systems 80 2,000 20 20 40 20 20 (25 ha/18-23 hp) 84.0 1,680 1,680 3,360 1,680 1,680 East Java tntermediate Technology 100 Poo 30 30 60 30 10 (8 ha/5-7 hp) 13.3 399 399 798 399 133 Hand drilled systems 500 1,500 150 150 300 150 50 (3 ha/3.5 hp) 0.7 105 105 210 105 35 Central Sulawesi (Palu) Intermediate Tecinology 20 120 5 1' 20 (6 ha/5-7 bp) 14.8 74 222 296 South Sulawesi Intermediate Technology 25 150 10 15 25 (6 ha/5-7 hp) 13.8 138 207 345 Total 725 4.570 215 / 2,396 230 /2.613 445 / 5.009 200 / 2.184 80 / 1,848 <-- - ---- --- 1st time slice - - - - - -->-- /a Preparation activities. INDONESIA IRRIGATION SUBSECTOR PROJECT Groundwater Component - Lombok Implementation Schedule Quantity cost Area Year I/a Year 2 Year 3 Total Year 4 Year 5 Description (no.) (Rp M) (ha) No.tRp M No./Rp M No./RV M No./Rp M No./Rp M No./Rp K Intermediate Technology Without sump 15 16.8 105 5 84.0 5 84.0 10 168.0 5 84.0 15 252.0 (12 1/s, 5 hp) 7 ha With sump 25 22.8 250 7 159.6 9 205.2 16 364.8 9 2^5.2 25 570.0 (12 1/, 8 hp) 10 ha Turbine Pump Systems 15 1/s, 10 ho, 10 ha 50 38.9 S00 15 583.5 20 778.0 35 1,361.5 15 583.5 50 1,945.0 20 l/s, 15 hp, 14 ha 50' 45.5 700 15 682.5 20 9C1e.0 35 1,592.5 15 682.5 50 2,275.0 Pilot schemes /b 4 29.7 60 4 118.8 4 118.8 4 118.8 Well Drilling (1OZ failures) 14 15.8 4 632 5 79.0 9 142.2 5 79.0 14 221.2 Total 1,615 4 118.8 46 1,572.8 39 2,056.2 109 3,747.8 49 1,634.2 158 5,382.0 < ----------- - --- - lst time slice ------> /a Preparation work. _ Wells already drilled. - 79 - ANNEX 2 Table 9 INDONESIA IRRIGATION SUBSECTOR PROJECT Land Reclassification, Valuation and Strengthening of Directorate of IPEDA Implementation Schedule FY Year 1 Year 2 Year 3 I II III IV I II III IV I II III IV Consultants ----------------------- Aerial photos Pilot scneme Mapping ---------------------------------------- Development of reclassi- fication + revaluation - system Reclassification ------------------------------- Training -------------------------------- Institution Strengthening -------- Plan Implementation of Institu- tional Strengthening Plan ------------------------------- - 80 - ANNEX 2 Table 10 INDONESIA IRRIGATION SUBSECTOR PR.OECT A Pilot Scheme of Mapping for Land Reclassification (5,000 ha) Implementation Schedule Months October November December January Activities 1987 1988 Production of line-map Production of village map Enlargement of photos Enlargement of photomaps Updating village map Production of rincikan maps Field measurements of parcels and plots __ _______ Identification of plots boituLdaries & owners Report 81 ANNEX 2 Table 11 INDONESIA IRRIGATION SUBSECTOR PROJECT Ongoing Land Reclassification Program (-000 ha) FY 0 FY 1 FY 2 FY 3 FY 4 Area (ha) 1986/87 1987/88 1988/89 1989/90 1990/91 WTC I /a 233.500 WTC II /a 266,500 KDO /b 103,000 C&W /c 699,000 (8 packages) ADB /d 80,000 /a The first and second mapping contract under the West Tarum Canal Improvement Project (Ln 2560-IND). /b The Kedung Ombo M. Dam and Irrigation Project (Ln 2543-IND). /c The Central & West Java Provincial Irrigation Project (Ln 2649-IND). /d The third irrigation package financed by the Asian Development Bank. INDONESIA IRRIGATION SUBSECTOR PROJECT Ten-Year Land Reclassification Program (area in '000 ha) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 W. Java 0 0 0 20 35 100 232 287 342 397 Jatiluhur 0 0 0 20 30 70 131 166 201 236 C. Java 0 0 0 20 80 220 305 338 381 436 Yogyakarta 0 0 0 10 28 28 33 48 67 67 E. Java 0 100 179 214 279 344 454 509 564 626 N. Sumatra n 0 37 57 69 69 79 104 129 154 W. Sumatra 0 0 15 35 43 43 53 81 109 137 s S. Sumatra 0 0 15 31 31 31 36 55 55 55 Lampung 0 0 15 35 70 ,0 75 85 95 105 S. Sulawesi 0 0 15 32 32 32 42 62 82 102 NIB 0 0 20 55 103 103 108 113 123 133 New projects 0 0 0 0 50 100 140 160 180 200 Total 0 100 296 529 850 1,210 1,68b 2,008 2,328 2,648 Cumulative area 0 100 396 925 1,775 2,985 4,673 6,681 9,009 11,657 Note: In Year 1, a pilot area of about 5,000 ha will be established to assess the current mapping procedures and to develop a simplified procedure for mapping. - 83 - ANNEX 2 Table 13 INDONESIA IRRIGATION SUBSECTOR PROJECT Introduction of Irrigation Service Fee (ISF) Implementation Schedule Recruitment of consultants 01/31/88 Establishment of provincial- and district-level implementation units 12/31/87 Completion of village socioeconomic profile survey } Formulation of implementation plan for ISF } Review of implementation plans and legal implications } 07/31/88 Selection and training of personnel } Extension work } ISF collection 12/88 onwards Monitoring and avaluation 12/88-11/89 Final report including the plan for extension of ISF to other areas 01/90 - 84 - ANNEX 3 Table 1 PROPOSED APPROACH TO O&K PROCEDURES Select areas suitabl Select areas requiring for direct O& special maintenance t Carry out survey, design and construction, until areas ready for efficient 06K Analyze at section and subsection level: - staffing levels and structure - staff duties and responsibilities - staff education and training background * existing O&H facilities * existing O&N procedures - scheduling - data collection * reporting periods - division of responsibilities for system control - maintenance work identification reporting and repair - existing and historic levels of O&N funding Identify suitable personnel to be trained as trainers. Make recommendations to facilitate the introduction of efficient O&H pro- cedures. Areas where changes/adjustments may be required are: - Staffing - levels, structure, duties and responsibilities - O&K procedures * O&H budget allocations Implement agreed changes/adjustments and prepare material and equipment for introducing efficient O&M procedures. Prepare training program details and material. Train selected staff as trainers to assist in introducing efficient O&0 procedures. Introduce efficient 06M procedures in order to familiarize 06M staff with changes/amendments (if any). Commence training program in section office followed by each subsection i4 turn. Monitor introduction of efficient O0m procedures and training program. Evaluate implementation of efficient O&K procedures. Make considered changes/a.endments if required. Reinforce OK procedures by additional training. Evaluate training program, make changes/amendments as required. Repeat training lf required in selected locations. INDONESIA IRRIGATION SUBSECTOR PROJECT Training and Related Activities Target Lead parti- implementing Cooperating Brief description Type of training cipants Location agency agencies Overall coordination in planning - - BDP DOI-I, DOt-II, programming and training modules DAAD, DOS preparation Data banking services for timely and - - BDP DOI-I, DOI-II, effective dissemination of training INTAL DAAD, DOS, material and information; coordination, DOR, Division of monitoring and evaluation of training Personnel activittes and analysis of traiuing needs I Monitoring and evaluation of DSWRD - - BDP PRIS, DOI-I, training activities including individual DOI-II, DOS and collective impacts of training Manpower planning to identify training - - Division of Per- BDP, DOI-I, needs for PRIS staff sonnel, DGWRD DOI-IT, PRIS Short-Term BDP Courses (a) O&M for Ir and BE level engineers Formal lectures with 150 PUSDIKLAT BDP PRIS, DOI-I, one month duration, 25 participants field practice RTCs DOI-IT per batch, regularly offered Diklat course Target Lead parti- implementing Cooperating Brief description Type of training cipants Location agency agencies Short-Term BDP Courses (cont-d) (b) O&M for STM (Technical High School) Formal lectures with 425 PUSDIKLAT BDP PRIS, DOI-I, level staff, one month duration, field demonstrations RTCs DOI-II 25 participants per batch, regularly offered Diklat course intended for middle and lower levels main systems O&M staff (c) O&M for Swamp Irrigation, for Ir and BE Formal lectures with 100 PUSDIKLAT BDP DOS, PRIS level staff, one month duration with field practice RTCs 25 participants per batch, regularly offered Diklat course (d) Groundwater Planning, Constrlction and Formal lectures with 25 DIKLAT BDP DOI-II, PRIS O&M for Ir and BE level staff, one month field demonstration RTCs duration, 25 participants per batch, regularly offered Diklat course Di loma or Degree-Oriented Courses Ta) Bipowered (in-country), diploma oriented Formal diploma or 72 Bandung BDP PRIS, DOI-I, course started with Dutch government degree course works DOI-II, DOS, DOR assistance and pattern after the 11 month Diploma Training Courses offered by the Institute of Hydraulic Engineering, Delft. Specializations are in the fields of irrigation and drainage, development of swamps and coastal areas and rivers I'4I and river structures 0 I VW Target Lead parti- implementing- Cooperating Brief descript'in Type of training cipants Location agency agencies Diploma or Degree-Oriented Course (cont-d) (b) overseas training ror MSc level degrees Formal degree course 26 Overseas BDP DOI-I, DOI-II, for Ir and BE level staff, examples are works DOS, DOR, PRIS the Master of Engineering Courses for 17 to 21 months at the Roorkee and Anna Universities in India. Main System O&M Staff Training for Surface Irrigation Areas (a) In-service training for section and lower Lectures and in- 3,050 for On-the- DOI-I PRIS, DOI-II, level main systems O&M staff. Initial field practice and initial & job DOS, DOR training of 6-day duration (broken by demonstration 4,310 for two-day rotations) and with follow-up follow-up on-the-job training of similar duration training (b) Trainers for in-service training. Senior Lectures and in- 100 PRIS, DOI-I PRIS, DOI-TI - level O&M staff of the PRIS and DOI-I. field practice and Jakarta One to two months duration demonstration (c) Workshop for middle-level provincial, dis- Workshop 1,500 Province, DOI II DOI I, DAAD, trict staff (Group A) District MOH, PRIS, DIPERTA, local government (d) Training for lower-level staff at subdis- Lectures, field de- 4,040 Subdis- DOI TI DOI T, PRIS, trict and village level (Group B) monstration, dis- trict, DIPERTA, local cussion Village government (e) Training instructors (Group I) Lectures, discussion 360 Province DOI II DOI I, PRIS, DIPERTA, local government A!! O " 0 Target Lead parti- implementing Cooperating Brief description Type of training - cipants Location agency agencies Main System O&M Staff Training for Surface Irrigation Areas (cont'd) (f) WUA members training, intended for WUA key 30? lecture; 30% 8,810 Subdis- DOI-II DAAD, District members and jurus. The training will be audiovisual presen- tricts and subdistrict for about 15 days (broken down with 2-3 day tation; 40% field and farmers authorities, rotations). The focus will be mainly on demonstration and fields DOI-I, DOR constraints to tertiary systems O&M; inter- discussion actions among design philosophy, main system operation and tertiary O&M; water use and distribution, simplification of tertiary systems, operation including gates and other control structures, duties and respon- sibilities of WUA in irrigation O&M; OEM practices and cropping systems inter- actions, canal maintenance and integrated approach to WUA formation and functioning; so-called Grour C training. (g) Follow-up of WUA members training for Mainly on-the-job. 6,710 RECs and DOI-II DAAD, District about the same duration Include field farmers and subdistrict demonstration, audio- fields officials, visual presentation DOI-1, DOS and discussions. Production of Audiovisual Materials Production of audiovisual materials PPAV DOI-II, DAAD, relevant to main and tertiary systems DOI-I, PRIS O&M for training purposes and general public information a 9 Target Lead _ parti- impletentinj Cooperating Brief description Type of training cipants Location agency agencies Main System O&M Middle and Lower Level Main System DOI-I, DAAD, DOI-II, PRIS (a) O&M for middle and lower levels staff On-the-job 152 Job sites DOS DOI I, DAAD in irrigated swamp areas. Initial PRIS, DOI-11 10-12 day training broken down into 3 to 4 day duration intervals (b) Follow-up training at yearly intervals On-the-job 242 Job sites DOS DOI-I, DAAD, PRIS, DOI-II (c) Trainers Training for 6-week duration Lectures, audiovisual 10 Provinces, DOS DOI-I, DAAD, @ and field visits Jakarta PRIS, DOI--II Training of Community Or;anizers (a) Training of Action Group on WUA Lectures for 4 weeki. 201 Agric. DAAD Local govern- Organization and Development for 3 weeks for field training mental institu- 2 months practice and 1-2 weeks centers, tions, DOI-II, for wrap-up and eva- job sites DOI-I, DOS luation (b) Training of section, subsection Lectures and field 1,020 Agric. DAAD Local govern- and village staff for WUA organi- practice with 2-3 days training mental institu- zation, reorganization and wrav-up session centers, tion, DOI-It, strengthening for one month job sites DOI-I, DOS Training of IPEDA Field Staff. Four month Lectures and exercises. 360 Regional Directorate of BDP D z training consisting of 3 modules each on Training for 4 months for field IPEDA ground survey, use of aerial photos and the regional and field offices data processing office staff. Formal co. Jakarta 9 . w INDONESIA IRRIGATION SUBSECTOR PROJECT Consultancy Services for Project Implementation (Man-months) Foreign consultants Local consultants Year 1 Year 2 Year 3 Total Year 1 Year 2 Year 3 Total Special maintenance and efficient OEM for irrigated areas 84 150 90 324 153 324 279 756 Special maintenance and efficient O&M for swamps 12 17 18 47 48 66 51 165 Ongoing projects (supervision of detailed design) - - 11 10 - - 35 35 Core design units (South Sulawesi and Lampuutg) 6 24 18 48 6 24 18 48 Ongoing projects (construction supervision) Irrigation 63 130 40 233 97 331 262 690 Swamps 12 24 18 54 9 24 18 51 Rivers 18 36 15 61 t-8 92 40 150 Small river mouths Identification, study and design - - 9 9 - - 18 18 Construction supervision 12 - - 12 30 - - 30 Efficient O&M - - - - - 12 12 24 Groundwater development East Java 5 15 15 35 20 50 50 120 Lombok 15 45 40 100 5 65 100 130 Turnover of small systems Central level 6 12 6 24 13 23 11 47 Regional level - - - - 36 116 102 254 Land reclassification and valuation 10 20 10 40 24 48 48 120 Irrigation service fee Central level 11 22 10 43 6 18 10 34 Regional level 12 14 - 26 34 58 32 124 - 91 - ANNEX 4 Table 2 INDONESIA IRRIGATION SUB'vCTOR PROJECT Consultancy Services for Institutional Development Foreign Local Total man-months Total man-months No. Year 1 Year 2 Year 3 Total No. Year 1 Year 2 Year 3 Total Diklat and Personnel Division Training management expert 1 6 12 12 30 1 6 12 12 30 Monitoring and evaluation expert 1 6 12 12 30 3 18 36 o6 90 Traintag expert 1 6 12 6 24 1 6 12 .2 30 Manpower planning expert 1 6 12 12 30 1 6 12 12 30 Directorate of Irrigation (1 for on-the-job traintng of staff for main systents 0&M) O&M experts and training specialist 5 24 48 18 90 9 54 108 30 192 Directorate of Irrigation (2 coordination training and workshop for Provincial Staff and W;A Training) O&M and on-farm with 3 18 36 36 90 5 30 60 60 150 management soecialist Training speciallst 1 6 12 8 26 1 6 12 12 30 Audio-visual material production expert 1 6 4 - 10 1 6 12 12 30 Directorate of Swamps for On-the-Job Training Coordination in Swamp Areas Training specialist 1 6 12 9 27 1 6 12 12 30 Directorate of Planning and Programming PSME and PCR PBMR expert 1 6 6 - 12 7 42 - - 42 Directorate of tAricultural Area Development (DAAD), Ministry of 4griculture for WUA Organization and Screngtbening Community organization expert 2 12 24 24 60 5 30 60 60 150 On-farm water manageaent expert 1 6 12 12 30 3 18 36 36 90 Training specialist - - - - - 2 12 24 24 60 Institutional Organization Study Irrigation and drainage engineer 1 6 - - 6 - - - - - Institutional developmeat expert 1 6 - - 6 1 6 - - 6 Management systems analyst 1 6 - - 6 1 6 - _ 6 Financial systems analyst 1 6 - - 6 - - - - - Legal, water resources legislation - - - - - 1 10 - - 10 Investment Review/Strategy Study Economists 3 18 - - 18 - - - - - Economists with irrigation and drainage background - - - - - 6 36 - - 36 Environmental Study 1 6 - - 6 6 32 38 12 82 Management Information System - - - - - 2 12 12 - 24 General Coordiration 3 24 36 10 90 1 8 12 10 30 - 92 - ANNEX 5 Table 1 INDONESIA IRRIGATION SUBSECTOR PROJECT Central Government Funding of O&M (Current terms) Fiscal APBD APBN Total Area Ave./ha year --- Rp mln -------- (ha) (Rp) 1979/80 13,267 0 13,267 4,474,706 2,965 1980/81 19,971 0 19,971 4,541,186 4,398 1981/82 26,009 0 26,009 4,574,776 5,635 1982/83 31,235 0 31,235 4,573,577 6,829 1983/84 32,895 0 32,895 4,637,625 7,093 1984/85 30,732 13,438 44,170 5,202,842 8,490 1985/86 32,424 13,999 44,423 5,184,025 8,955 1986/87 31,846 8,131 39,977 4,799,333 8,330 1987/88/a 31,846 11,700 43,546 4,859,333 8,961 /a Includes additional APBN allocation of Rp 4.5 billion approved by BAPPENAS on March 18, 1987. Source: DGWRD, March 1987. INDONESIA IRRIGATION SUBSECTOR PROJECT Funding of O&M in the Selected Provinces, 1986/87 From APBD From APBN APBD4-APBN Estimated DIK Total all sources Ha Rp mln Ha Rp mln Ha Rp mln Rp/ha Rpiha Rp mln Rp/ha Rp mln Jawa Barat + Jatiluhur 897,125 15,628 0 0 897,125 15,628 17,423 3,200 2,871 10,757 18,499 Jawa Tengah 491,773 3,776 265,136 2,197 756,909 5,973 7,891 3,760 2,846 11,651 8,819 D.I. Yogyakarta 65,377 872 0 0 65,377 872 13,338 10,250 670 23,588 1,542 Jawa Timur 681,965 4,500 286,282 2,732 968,247 7,232 7,469 6,080 5,887 13,549 13,119 Sumatera Utara 263,846 2,450 0 0 263,846 2,450 9,286 1,820 480 11,106 2,930 Sumatera Barat 217,443 1,400 0 0 217,443 1,400 6,438 1,140 248 7,678 1,648 Sumatera Selatan 338,331 1,697 67,993 679 406,324 2,376 5,848 1,090 443 6,937 2,819 Lampung 106,868 1,312 44,809 448 151,677 1,760 11,604 2,390 363 13,997 2,123 Sulavesi Selatan 150,046 1,750 72,911 704 222,957 2,454 11,007 4,550 1,014 15,557 3,468 Nusa Tenggara Barat 141,901 1,415 0 0 141,901 1,415 9,972 1,290 183 11,262 1,598 Total 3,354,675 34,800 737,131 62760 4,091,806 41,560 10,157 3,667 15,005 13,824 56,565 .~~~~~~~~~~~~~~~H - 94 - ANNEX 5 Table 3 INDONESIA IRRIGATION SUBSECTOR PROJECT Funding of O&M in the Rest of the Provinces, 1986/87 APBD+APBN Estimated DIK APBD+APBN+DIK Area Rp per Total Rp per Total Rp per Total Provinces for O&M ha Rp bln ha Rp bln ha Rp bln Riau 124,379 10,372 1.29 2,390 0.30 12,762 1.59 Jambi 52,610 14,406 0.76 1,625 0.09 16,031 0.84 D.I. Aceh 154,233 6,613 1.02 3,390 0.52 10,003 1.54 D.K.I. Jakarta 20,202 13,365 0.27 1,625 '.03 14,990 0.30 Kalimantan Barat 88,217 9,071 0.80 1,625 0.14 10,696 0.94 Kalimantan Tengah 115,223 6,418 0.74 2,390 0.28 8,080 1.01 Kalimantan Selatan 188,472 3,429 0.65 2,390 0.45 5,819 1.10 Kalimantan Timur 57,015 7,080 0.40 1,625 0.09 8,705 0.50 Sulawesi Utara 51,827 13,506 0.70 1,625 0.08 15,131 0.78 Sulawesi Tengah 45,949 15,692 0.72 1,625 0.07 17,317 0.80 Sulawesi Tenggara 24,859 10,057 0.25 1,625 0.04 11,682 0.29 Bali 59,922 17,523 1.05 1,615 0.10 19,138 1.15 ?Iusa Tenggara Timur 31,430 15,224 0.48 1,625 0.05 16,849 0.53 Maluku 11,633 15,473 0.18 1,625 0.02 17,098 0.20 Irian Jaya 6,825 8,791 0.06 1,625 0.01 10,416 0.07 Timor Timur 2,097 23,844 0.05 1,625 0.00 25,469 0.05 Total 11034,893 9,099 9.42 2,204 2.28 11,303 11.70 Note: DIK contribution assessed at about 70% of PRIS routine budget in selected provinces. DIK in these provinces based on averages established for selected provinces. ISDON1ESIA IRRIGATION SV85ECTOR PROJECT Increunt-1 Yundinz Reul.rernti for Effticent 04M - rrrig-ton (area in ha and funding in Rp aillton) World Bank Slice Slice Year 1987188 1988/89 1989/90 199n/91 199l192 1992193 1993/94 1994/95 1995/96 1996197 1997/98 19q8/99 1999/on 2(10(1/01 20nl/02 2002/03 Total Batk 1 1 200,000 160,000 120.000 8O,O0 40.r00 0 200.000 2 200.000 160.000 120,000 80,000 40,000 n 200,000 3 300.00() 240.000 180.000 120.000 60,000 0 300,Oo0 Bank 2 4 300,000 240,000 180,000 90,000 60,nno 0 300.000 5 300,000 240,000 280,0700 90.0on 60,noo 0 300,noo 6 300.000 240,000 180,000 90,000 60,000 0 300.000 Bank 3 7 350.00 280.000 21(,000 140.no0 7n,non 0 350.000 8 350,000 280,O0 210,00 -140.000 70,000 0 350,000 9 400.00(0 1420,000 240,q00( 160).000 80,000 0 400,000 aank 4 10 400,000 320.noo 240,00t, 160.000 80.000 0 600.000 it 400.000 32n.000 240,000 160 C000 80 000 0 400,000 12 400.000 320.000 240D000 160.000 0 400.000 Area of eff. O0t to be funded by antk on a declining basis 20n.000 360,000 580.000 740,G00 840.0no 880,000 920,000 960,000 1,040,000 1.130,000 1,177n(nOO 1,190,000 800,000 429O.00 240,n00 0 3,00O,000 Area of eaf. O&4 to be assumed 0 40,000 1;0,000 260,000 460,000 720,000 1,030,000 1.340,000 1.660,000 t,970,00n 2.330,000 2,710.000 3,100.000 3,420,000 3.60.00oo 3.°00.000 3,900,000 by OI on a ohased btais Bank funding required /a 2,400 4.320 6.960 8,880 10,080 10,560 11,040 11.520 12,480 13.560 14,040 14.280 9.600 5,760 2,880 0 001 funding required /a 0 480 1,440 3.120 5.520 8,640 12,360 16,080 19,920 23,64( 27,960 32.520 37,200 41,04n 43,920 46,600 /a Increenotal funding is based on on average of Rp 12,000 per ha. Note: Funding by the Bank would be 1002 the ftrst Year. 802 the second, 602 the third. 402 the fnurth, 202 the fifth year and 02 the sixth Year, except that tn the fourth Bank slice, the funding would be phased to 02 in the fifth year. 1k INDONESIA IRRIGATION SUBSECTOR PROJECT Incremental Funding Requirements for Efficient O&M - Svamps (area tn ha and funding In Rp million) World Bank Slic. Slice Year 1987188 1988/89 1989/90 1990/91 1991/92 1992/93 1993(94 1994195 1995196 1996197 1997/98 1998199 1999100 2000101 2001/02 2002/03 Total Bank I I 9,>00 7,200 5,400 3,600 1,800 0 9.000 2 25,000 20,000 15,000 10,000 5,000 0 25,000 3 56,0M 44,800 33,600 22,400 11.200 0 56,000 Bank 2 4 50.000 40,000 30,000 13,000 10.000 0 50,000 5 50.000 40.000 30.000 15,000 10.000 0 50,000 6 50.000 40,000 30.000 15,000 10,000 0 50.000 Bank 3 7 55.000 44.000 33,000 22,00o 11,000 0 55.000 8 60,000 48,000 36,000 24,000 12.000 0 60,000 9 60.000 48,000 36,000 24.000 12.000 0 40,000 Bank 4 10 60,0G0 48,000 36,000 24,000 12.000 0 60,000 11 60,000 48,00. 36.000 24,000 12,000 0 65,000 12 65,000 5z.Oo 39,000 26,000 0 65.000 Area of off. '1%& to be funded 9.000 32,200 81,400 113,400 135,400 147.400 151,200 159,000 166,000 176,000 179.000 185,000 124,000 75,000 38,000 0 by Baok on a -.l.ining basai Area of eff. 06M to be assumed 0 7.son 8,600 26,600 S4,600 92.600 141,800 196,000 249,000 299,000 356,000 415,000 4715.000 525,000 56..000 600,000 600,000 by GOT on a phaaed basas Bank funding required /a 108 386.4 976.* 1,360.8 1,624.8 1,768.8 1,814.4 1,908 1,992 2,112 2,148 2,220 1,488 900 456 0 D01 funding required /s 0 93.6 1i3.2 319.2 655.2 1,111.2 1,725.6 2,352 2,988 3,588 4,272 4,980 5,712 6,300 6,744 7,200 /a Incremental funding is based on an average of Rp 12.000 per ha. Note: Funding by the BLnk would be 1002 the first year, 80t the second, 401 the third, 402 the fourth, 202 the fifth year and 02 the saxth year, extept that in the fourtb Bank slice, the funding would be pbased to 02 In the fifth year. -97- ANNEX 5 Table 6 INDONESIA IRRIGATION SUBSECTOR PROJECT Projection of Rural PBB and Proposed Allocation for Irrigation O&M (Rp billion) Proposed allocation of PBB Fiscal PBB tax Collection Taxable Total PBB to 06M /a year assessed efficiency rates revenue Ootion 1 Option 2 Option 3 1987/88 75.0 80 20 60.0 0.0 0.0 0.0 1988/89 78.8 81 20 63.8 5.2 8.4 9.3 1989/90 82.7 82 20 67.3 5.5 8.9 9.9 1990/91 86.8 83 20 72.1 5.8 9.4 10.5 1991/92 91.2 84 25 95.7 7.8 12.5 14.0 1992/93 95.' 85 25 101.7 8.2 13.3 14.8 1993/94 100.5 87 25 109.3 8.9 14.3 15.9 1994/95 105.5 89 30 140.9 11.4 18.5 20.5 1995/96 110.8 90 30 149.6 12.1 19.6 21.8 1996/97 116.3 90 30 157.1 12.7 20.6 22.9 1997/98 122.2 90 30 164.9 13.4 21.6 24.0 1998/99 128.3 90 30 173.2 14.0 22.7 25.2 1999/2000 134.7 91 35 214.5 17.4 28.1 31.3 2000/01 141.4 92 35 227.7 18.4 29.8 33.2 2001/02 148.5 93 35 241.7 19.6 31.7 35.2 2002/03 155.9 94 35 256.5 20.8 33.6 37.4 2003/04 163.7 95 35 272.2 22.0 35.7 39.7 2004/05 171.9 96 40 330.1 26.7 43.2 48.1 2005/06 180.5 97 40 350.2 28.4 45.9 51.1 /a PBB is now divided as follows: 10% to central government 16.2% to the provincial governments 64.8% to local governments 9% to collectors Option 1: 50% of the provincial share of rural PBB would be allocated to 06M (8.1%). Option 2: 50% of the central and provincial government's share of rural PBB would be allocated to O&M (13.1). Option 3: 50% )f the provincial and 10% of the district government's share of rural PBB would be allocated to 06M (14.58%). Note: Projection is based on increase in assessment of 5% per year and collection efficiencies and taxable rates as shown in the table. INDONESIA IRRIGATION SUBSECTOR PROJECT Projected Sources of Incremental financing for Efficient 061 (Rp million) Projected sources of funds Funds required for all O&M World Bank Ic Total design Areas to be Remaining Phasing Remaining To main- Additional Irri- APBD + Fiscal irr. & swamp turned over areas for of effi- under tain pre- tional for gation Swamp APBN Service year areas /a to WUAs eff. O&M cient O&M other 06M sent 0EM lb O&M Total areas areas Total + DIK PBB /d fee le Total -- - --_-_-- (ha) … 1987/88 5,400,000 0 5,400,000 209,000 5,191,000 43,546 2,508 46,054 2,400 108 2,508 34,246 9,300 0 46,054 1988/89 5,400,000 7,000 5,393,000 434,000 4,959,000 43,489 5,208 48,697 4,320 386 4,706 34,091 9,900 0 48,097 1989/90 5,400,000 14,000 5,379,000 790,000 4,589,000 43,376 9,480 52,856 6,960 977 7,937 34,419 10,500 0 52,256 1990/91 5,400,000 44,000 5,335,000_ 1,140,000 4,i95,000 43,021 13,680 56,701 8,880 1,361 10,241 31,460 14,000 1,000 53,201 1991/92 5,400,000 60,000 5,275,000 1,490,000 3,785,000 42,538 17,880 60,418 10,080 1,625 11,705 30,313 14,800 3,600 59,618 1992/93 5,400,000 60,000 5,215,000 2,245,000 2,970,000 42,054 26,940 68,994 10,560 1,769 12,329 35,855 15,900 6,400 59.384 1993/94 5,400,000 65,000 5,150,000 2,655,000 2,495,000 41,530 31,860 73,390 11,040 1,814 12,854 31,236 20,500 8,800 68,790 1994/95 5,400,000 70,000 5,0o0,000 3,115,000 1,965,00 40,965 37,380 78,345 11,520 1,908 13,428 30,817 21,800 12,300 77,045 1995/96 5,400,000 75,000 5,005,000 3,575,000 1,430,000 40,360 42,900 83,260 12,480 1,992 14,472 29,988 22,900 15,900 82,160 1996/97 5,400,000 80,000 4,925,000 4,035,000 890,000 39,715 48,420 88,135 13,560 2,112 15,672 28,563 24,000 19,900 87,035 1997/98 5,400,000 80,000 4,845,000 4,500,000 345,000 39,070 54,000 93,070 14,040 2,148 16,188 26,882 25,200 24,800 91,870 1998/99 5,400,000 80,000 4,765,000 4,500,000 265,000 38,425 54,000 92,425 14,280 ),2.0 16,500 15,425 31,300 29,200 86,325 1999/2000 5,400,000 85,000 4,680,000 4,500,000 180,000 37,740 54,000 91,740 9,600 1,488 11,088 12,752 33,200 34,700 89,840 2000/01 5,400,000 90,000 4,590,000 4,500,000 90,000 37,014 54,000 91,014 5,760 900 6,660 7,554 35,200 41,600 89,014 2001/02 5,400,000 90,000 4,500,000 4,500,000 0 36,288 54,000 90,288 2,880 456 3,336 4,552 37,400 45,000 88,088 2002/03 5,400,000 90.000 4,500,000 4,500,000 0 36,288 54,000 90,288 0 0 0 5,588 39,700 45,000 87,988 /a Present design area of 4,800,000 ha in Public Works irrigation and 600,000 ha of reclaimed swamp areas. 7T Budgeted APBD and APBN for 1987/88 of Rp 43.546 billion. E Based on World Bank initially assumtng full financing of efficient 06M and then Phasing down. 7d Based on IPEDA-s most conservative estimate of increase in PEB rural collections and Option 3 of cost sharing for O&M. We Assumes that after a three-year pilot introduction of water service fees, such fees wtll be assessed in step with the completion of efficient 06M. Also assumed that Rp 2,500/ha would be levied in the first year of collection, Rp 5,000/ha in the second year, Rp 7,500/ha in the third vear and Rp 10,000/ha in the fourth year. /f Remaining subsidy for O&M would be only that by DIK, subsidies from AP80 and APBN would no longer be required. 1ui INDONESIA IRRIGATION SUBSECTOR PROJECT Realization of Physical Targets - Actual and Projected for Repelita IV (ha) Realized Repelita IV 1984/85 Projected for: Shortall of target Program target & 1985/86 1986/87 1987/88 1988/89 Total ha % Rehabilitation of irrigation 360.0 72.6 24.7 34.4 20.0 151.7 208.3 57.86 project New irrigation construction 600.0 92.1 43.7 40.1 22.0 197.9 402.1 67.02 Swamps new construction and 460.0 93.9 4.8 16.6 5.0 120.3 339.7 73.85 rehabilitation Flood control & other conservation 500.0 115.7 34.1 72.2 34.0 256.0 244.0 48.80 works Source: BINA of DGWRD. - 100 - ANNEX 6 Table 2 INDONESIA IRRIGATION SUBSECTOR PROJECT Actual and Planned Investment Expenditures for the Remainder of Repelita IV (Rp billion) Repelita IV Total Shortfall Program plan 1984/85 1985/86 1986/87 1987/88/a 1988/89 1984/89 Amount % Rehabilitation GOI 956.6 81,6 77.5 31.1 15.2 33.7 239.1 717.5 75.0 External loan 308.4 95.7 71.7 39.8 68.5 35.7 311.4 -3.0 -1.0 Subtotal 1,265.0 177.3 149.2 70.9 83.7 69.4 550.5 714.5 56.5 New Construction GOI 2,261.7 50.4 163.5 69.1 46.2 69.6 398.8 1,862.9 82.4 External loan 869.7 90.8 76.8 121.6 188,2 91.4 568.8 470.9 54.1 Subtotal 3,131.4 141.2 240.3 190.7 234.4 161.0 967.6 2,163.8 69.1 Swampa GOT 225.9 23.7 22.3 7.9 6.5 8.0 68.4 157.5 69.7 External loan 45.6 11.1 5.2 8.5 17.2 4.8 46.8 -1.2 -2.6 Subtotal 271.5 34.8 27.5 16.4 23.7 12.8 115.2 156.3 57.6 Rivers GOI 992.6 92.0 98.4 46.2 33.6 42.1 312.3 680.3 68.5 Externl loan 673.0 71.6 46.8 48.0 129.6 53.0 349.0 324.0 48.1 Subtotal 1665.6 163.6 145.2 94.2 163.2 95.1 661.3 1,004.3 60.3 All Subsectors GOI 4,436.8 247.7 361.7 154.3 101.5 153.4 1,018.6 3,418.2 77.0 External loan 1,851.1 258.1 195.3 209.4 386.3 180.1 1,229.2 791.9 42.8 Total 6,287.9 505.8 557.0 363.7 487.8 333.5 2,247.8 4,218.1 67.0 /a Additional budget allocations for investment of Rp 59.5 billion approved March 18, 1987 distributed to subsectors on same proportionate basis as Bina planned for the initially proposed allocation of Rp 42 billion. Source: Bina, DGWRD. - 101 - AN!EX 6 Table 3 lNDONESIA IRRIGATION SU8SECTOR PROJECT Central Governmant (DIP) Investment Exw nditures Actual Expenditures 1984/85 and 1985/86. Estimate for 1986/87 and Proposed for 1988/89 1984/85 1985/86 1986/87 1987/88 1988/89 Exter- Exter- Exter- Exter- Exter- nal nal nal nal nal GO0 loan Total GOt loan Total GOI loan Total GOI loan Total GOI loan Total Irrigatton Small + medium 51.9 22.2 74.1 66.1 24.9 91.0 21.8 21.9 46.7 5.8 44.4 50.2 19.5 24.6 44.1 Large 92.1 64.8 156.9 90.9 50.1 141.0 44.1 94.1 138.2 37.3 140.6 177.9 46.6 64.3 110.9 Ground water 6.4 3.8 10.2 6.5 1.8 8.3 3.2 5.6 8.8 3.1 3.2 6.3 3.5 2.5 6.0 Rehabilitation 81.6 95.7 177.3 77.5 71.7 149.2 31.1 39.8 70.9 15.2 68.5 83.7 33.7 35.7 69.4 O04 /a 13.4 0.0 13.4 14.0 0.0 14.0 8.1 0.0 8.1 11.7 0.0 11.7 8.2 0.0 8.2 Subtotal 245.4 186.5 431.9 255.0 148.5 403.5 108.3 161.4 272.7 73.1 256.7 329.8 111.5 127.1 238.6 Rivers River improvement 27.2 42.1 69.3 16.1 2.3 18.4 15.4 8.0 23.4 2.4 11.4 13.8 23.9 20.3 44.2 Flood control 64.8 29.5 94.4 82.3 44.5 126.8 30.8 40.0 69.8 31.2 118.2 149.4 18.2 32.7 50.9 Subtotal 92.0 71,6 163.7 98.4 46.8 145.2 46.2 48.0 93.2 33.6 129.6 163.2 42.1 53.0 95.1 Swamps Tidal 12.4 4.4 16.8 11.7 1.1 12.8 3.5 4.5 8.0 3.1 9.8 12.9 3.4 4.5 7.9 Inland .11.3 6.7 18.0 10.6 4.1 14.7 4.4 4.0 8.4 3.4 7.7 10.8 4.6 0.3 4.9 Subtotal 23.7 11.1 34.8 22.3 5.2 27.5 7.9 8.5 16.4 6.5 17.2 23.7 8.0 4.8 12.8 Planning 5.1 11.8 16.9 6.3 8.6 14.9 1.7 8.3 10.0 1.1 1.0 2.1 1.6 6.0 7.6 Training 1.6 1.6 3.2 1.5 0.0 1.5 0.5 1.4 1.9 0.3 0.n 0.3 0.6 0.0 0.6 Research 4.4 3.2 7.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 372.2 285.8 658.1 383.5 209.1 592.6 164.6 227.6 394.2 114.6 404.5 519.1 163.8 190.9 354.7 /a DIP only. Note: Tertiary developmaent include in Small + Medium and Large. Source: UWna, D¢WRD, March 1987. INDONESIA IRRIGATION SUBSECTOR PROJECT Allocations of Loans and Disbursement to January 1, 1987 IBRD Financed Projects (US$000) Credit/ Starting Closing Loan Spent to Balance of Loan No. Project date date amount Allocated 01/01/87 Allocated Loan Cr. 995 Irrigation XV Mar 80 Jan 87 45,000 43,880 32,374 11,506 - 12,626 1578 Irrigation X Jun 78 Dec 86 140,000 141,000 97,004 43,996 42,996 1645 Irrigation XII May 79 Mar 86 77,000 77,000 66,507 10,493 10,493 1811 Irrigation XIV Apr 80 Jan 87 116,000 117,900 97,545 20,355 18,455 1958 Swamp Reclamation I Mar 81 Dec 87 - 22,000 17,500 - 12,287 5,213 9,713 . 2118 Irrigation XVI Apr 82 Dec 87 37,000 37,000 - 25,643 11,357 11,357 2119 Irrigation XVII Apr 82 Mar 88 70,000 70,000 35,548 34,452 34,452 2375 Provincial Irrigation II Nov 84 Dec 87 89,000 88,274 52,620 35,654 36,380 2431 Swamp Reclamation Project II Sep 84 Jun 91 64,000 35,000 5,934 29,066 58,066 2543 Kedung Ombo Dam Jun 85 Dec 91 156,000 145,600 6,718 138,882 149,282 2560 West Tarum Canal Jun 85 Dec 91 43,400 43,400 184 43,216 43,216 2649 Central and West Java Prov. Irrig. Mar 86 Dec 92 166,000 166,000 0 166,00 166,000 Total 1,025,400 982,554 432,364 550,190 593,036 INDONESIA IRRIGATION SUBSECTOR PROJECT Allocations of Loans and Disbursement to January 1, 1987 ADB Financed Projects (US$'000) Credit/ Starting Closing Loan Spent to Balance of Loan No. Project date date amount Allocated 01/01/87 Allocated Loan Cr. 399 Wawotobi Dec 78 End 87 34,300 21,026 14,858 6,168 19,442 434 Sungai Brantas Dec 79 End 86 39,000 39,000 35,538 3,462 3,462 475 Teluk Lada Nov 80 Mar 88 35,000 24,209 18,886 5,323 16,114 479 Citanduy Nov 80 Dec 87 55,200 55,200 33,763 21,437 21,437 480 Jambu Aye Lagkahan Nov 80 Feb 87 5,700 3,190 2,079 1,111 3,621 518 Irigasi Kedu Selatan Jul 81 Jun 88 87,700 78,250 51,969 26,281 35,731 522 Irigasi Bali (EEC) Jan 82 Jun 88 33,600 33,600 12,334 21,266 21,266 581 Waru-Turi (1645-IND) Dec 82 Dec 88 77,000 77,000 14,059 62,941 62,941 582 P.I. Baro Raya Oct 82 Dec 86 4,500 4,500 1,628 2,872 2,872 627 Batang Ilung May 83 Dec 90 52,000 52,000 2,229 49,7i1 49,771 638 Simalungan Aug 83 Jul 91 85,000 85,000 19,774 65,226 65,226 639 Lombok Sumbawa Aug 83 Jun 87 3,450 3,450 2,151 1,299 1,299 685 Jambu Aye Langkahan Jul 84 Jul 91 68,000 68,000 3,045 64,955 64,955 769 P2AT Central Java Jan 86 Jun 91 12,200 12,200 0 12,200 12,200 725 T.A. Program Loan Dec 84 Jun 90 25,000 0 25,000 799 Irrigation Pack* e III Dec 86 Mar 93 120,700 0 120,700 Total 738.350 556,625 212,313 344.312 526.037 INDONESIA IRRIGATION SUBSECTOR PROJECT Allocations of Loans and Disbursement to January 1, 1987 OECF Financed Projects (US 'OO0) Credit/ Starting Closing Loan Spent to Balance of Loan No. Project date date amount Allocated 01/01/87 Allocated Loan Cr. 194 Wonogiri Feb 79 Aug 86 40,033 36,200 8,592 27,608 31,441 219 Way Rarem Abung (639-IND/CIDA) May 80 May 85 41,850 41,850 35,410 6,440 6,440 236 Sungai Ular May 81 May 88 33,252 35,400 21,069 14,331 12,183 240 Upper Solo Madiun Dec 82 Sep 86 3,288 3,288 2,642 646 646 247 Langkene Dec 85 Apr 87 1,307 1,307 1,013 294 294 260 Komering Ulu Dec 83 Sep 88 4,820 4,820 3,175 1,645 1,645 263 Gunung Semeru Oct 83 Oct 88 11,471 12,200 1,014 11,186 10,457 - 264 Jakarta Flood Protection Oct 83 Oct 88 21,548 22,930 - 1,987 20,943 19,561 4 265 Sungal Kru3ng Aceh Oct 83 Oct 88 19,032 21,256 1,258 18,998 17,774 273 Jakarta Flood Protection Jun 84 Jun 89 23,587 23,587 0 23,587 23,587 274 Sungai Krueng Aceh Jun 84 Jun 90 36,573 38,400 0 38,400 36,573 278 Riam Kanan Jun 84 Jun 90 35,278 33,096 53 33,043 35,225 279 Sungai Jeneberang Jun 84 Jun 89 3,587 3,512 819 2,693 2,768 281 Bila Jun 84 Jun 89 2,247 2,247 0 2,247 2,247 283 Sungai Jeneberang Feb 85 Feb 91 22,890 22,890 0 22,890 22,890 284 Irigasi Madiun (1811-IND) Feb 85 Feb 90 27,234 27,234 0 27,234 27,234 285 Sungai Brantas (434-IND) Feb 85 Feb 91 25,532 25,532 0 25,532 25,532 292 Padang Flood Control Feb 85 Feb 91 2,460 2,460 0 2,460 2,460 300 Upper Solo Improvement Dec 85 End 90 20,635 20,695 0 20,695 20,635 302 Merapi Dec 85 End 90 20,313 20,313 0 20,313 20,313 308 Surabaya River Dec 85 End 90 20,900 2,499 0 2,499 20,900 Total 417,837 400,716 77,032 323,684 340,805 -105 - ANNEX 6 Table 7 Page 1 of 2 INDONESIA IRRIGATION SUBSECTOR PROJECT Estimated GOI Funding of Foreign Financed Projects (US$1000) % of Credit/ No. of Loan project GOI Loan No. projects amount cost funding Total Ongoing World Bank Financed Projects 995 3 45,000 69.0 20,217 65,217 1578 1 140,000 66.8 69,581 209,581 1645 1 77,000 65.4 40,737 117,737 1811 9 116,000 72.0 45,111 161,111 1958 1 22,000 50.0 22,000 44,000 2118 5 37,000 52.0 34,154 71,154 2119 3 70,000 70.0 30,000 100,000 2375 14 89,000 61.0 56,902 145,902 2431 3 64,000 60.6 41,611 105,611 2543 2 156,000 66.0 80,364 236,364 2560 1 43,400 59.6 29,419 72,819 2649 2 166,000 66.21 84,755 250,755 Subtotal 45 1,025,400 554,850 1,580,250 Ongoing ADB Financed Projects 389 1 34,300 58.0 24,838 59,138 434 1 39,000 58.0 28,241 67,241 475 1 35,000, 58.0 25,345 60,345 479 2 55,200 58.0 39,972 95,172 480 1 5,700 58.0 4,128 9,828 518 2 87,700 58.0 63,507 151,207 522 1 33,600 58.0 24,331 57,931 581 2 77,000 58.0 55,759 132,759 582 1 4,500 58.0 3,259 7,759 627 3 52,000 58.0 37,655 89,655 639 2 3,450 58.0 2,498 5,948 685 1 85,000 58.0 61,552 146,552 769/729 1 12,200 80.0 3,050 15,250 725 2 25,000 80.0 6,250 31,250 799 ? 120,700 80.0 30,175 150,875 Subtotal 670,350 410,559 1,080,909 - 106 - ANNEX 6 Table 7 Page 2 of 2 Ongoing OECF-Financed Projects % of Credit/ No. of Loan project GOI Loan No. projects amount Cvit funding Total 194 1 40,033 70.0 17,157 57,190 219 1 41,850 82.2 9,062 50,912 236 1 33,252 70.0 14,251 47,503 240 1 3,288 70.0 1,409 4,697 247 1 1,307 70.0 560 1,867 260 1 4,820 70.0 2,066 6,886 263 1 11,471 70.0 4,916 16,387 264 1 21,548 70.0 9,235 30,783 265 1 19,032 70.0 8,157 27,189 273 1 23,587 70.0 10,109 33,696 274 1 36,573 70.0 15,674 52,247 278 1 35,278 70.0 15,119 50,397 279 1 3,587 70.0 1,537 5,124 281 1 2,247 70.0 963 3,210 283 1 22,890 70.0. 9,810 32,700 284 1 27,234 70.0 11,672 38,906 285 1 25,532 70.0 10,942 36,474 292 1 2,460 70.0 1,054 3,514 300 1 20,635 70.0 8,844 29,479 301 1 45,821 70.0 19,638 65,459 302 1 20,313 70.0 8,706 29,019 308 1 20,900 70.0 8,957 29,857 Subtotal 22 463,658 189,837 653,495 Total 2,159,408 1,155,247 3,314,655 INDONESIA IRRIGATION SUBSECTOR PROJECT Yields - Present Situation and Future with Project (T/ha) Surface irrigation /a Swamps /a Groundwater Present Future /b Present Future /b Present Future /b situa- with Incre- situa- with Incre- situa- with Incre- Crop tion project mental tion project mental tion project mental Paddy HYV (Java) 4.5 5.0 0.5 - - - 3.0 5.0 2.0 HYV (outside Java) 4.0 4.5 0.5 2.5 2.5 - - - Rainfed (outside Java) 2.5 4.5 2.0 - - - - - - Maize 1.4 3.0 1.6 1.4 2.0 0.6 1.2 3.3 1.1 - Soybeans 0.8 1.2 0.4 0.8 1.0 0.2 0.8 1.2 0.4 Groundnuts 0.8 1.0 0.2 0.8 1.0 0.2 0.8 1.5 0.7 _otton - - - - - - 0.5 1.5 1.0 /a Includes special maintenance, efficient O&M and ongoing projects. /b With-project yields are based on efficient levels of operation and maintenance of systems. 1F' - 108 - ANE 7 Table 2 INDONESIA IRRIGATION SUBSECTOR PROJECT Crop Areas - Present Situation and Future with Prolct (ha) Surface irrigation Ongoing projects/a Swamps /b Groundwater /c Present Future Present Future Present Future Present Future situa- with situa- with situa- with situa- with Crop tion project tion project tion project tion project Paddy 875,000 875,000 70,000 175,000 106,000 106,000 1,044 1,740 Maize 70,000 70,000 3,500 14,000 10,600 10,600 1,804 3,212 Soybeans 210,000 210,000 10,500 42,000 31,800 31,800 696 3,273 Groundnuts 70,000 70,000 3,500 14,000 10,600 10,600 348 2,165 Cotton - - - - - - 552 442 Total Cropped Area 1,225.000 1,225000 87,500 245.000 159.000 159.000 4,444 10.832 Total Command Area 700.000 700.000 70.000 140,000 106,000 106.000 3j795 3.795 Crop intensity (X) 175 175 125 175 150 150 117 285 /a For ongoing projects, crop intensity will increase from 125X to 1752 due to increase In irrigated area. Therefore, yields will increase due to: (l) incremental increase in yields on presently cropped area during the wet season; and (il) iacrease in irrigable area particularly during the dry season. Area under 16 selected ongoi'g projects is assumed to be doubled when another 20 projects will be selected in the second yvoar. Although irrigation Infrastructure is at different stages of construction, a reliable supply of irrgation water ts not available. Rence, present situation assumes all areas are under rainfed condition. /b Present and future cropped areas are the same under surface Irrigation and swamps as no additional irri- gable areas will result from special maintenance or efficient 0&M. It is also assumed that present and future crop intensities under surface irrigation and swamps are 175Z and that yields will increase due to availability of trained extension staff, assurance of water availability, and use of recommended inputs and cultural practices. It is further assumed that one crop of paddy will be grown in the wet season. In the dry season, in addition to planting a second rice crop on 251 of the area, the following crops will be planted in the following percentages: (i) maize 102; (ii) soybeans 302; and (iii) ground- nuts 102. With increased demand for legumes and GOI emphasis on crop diversification, no futher increase in paddy area during dry season is assumed. However, some farmers in some areas tend to plant paddy whenever water supply is assured. In swamps, only one peddy crop is planted In the wet season. tc Cotton area using groundwater it Lombe will decrease gradually as farmers will shift to more renumera- tive crops with groundwater development. Less perishable fruits and vegetables (citrus, onions, garlic and potatoes) will be cropped depending on market conditions and farmers' experience. The extension service should carry out trials and demonstrations of horticultural crops in contact farmers' fields and organize sLpply of fruit seedlings and vegetable seeds. Cotton will remain as a rainfed crop tn the wet season. - 109 - ANNEX 7 Table 3 INDONESIA IRRIGATION SUBSECTOR PROJECT Incremental Crop Production - At Full Development (tons) Surface Ongoing Ground- Crop irrigation projects Swamps water Total Paddy 437,500 210,000 - 5,568 653,068 Maize 112,000 16,800 6,360 8,435 143,595 Soybeans 84,000 12,600 6,360 3,371 106,331 Groundnuts 14,000 2,100 2,120 2,969 21,189 Cotton - - - 387 387 - 110 - ANX I Table 1I INDONESIA IRRIGATION SUBSECTOR PROJECT Analysis of Repayment Capacity of Water Users (Java farm models using 1986/87 actual farmgate prices) Return/ha Return per Return per Return per Return/ha Crop farm farm farm farm (Rp '000) intensity (Rp '000) (Rp '000) (Rp '000) (Rp '000) Fart size (ha) 1.00 0.50 0.33 Wet Season Rice 401.90 1.00 401.90 401.90 200.95 132.63 Dry Season Rice 384.42 I.n0 384.42 384.42 192.21 126.86 Maize 411.75 0.30 123.53 123.53 61.76 40.76 Sovabeans 560.60 0.1S 84.09 84.09 42.05 27.75 Groundnuts 520.00 0.05 26.00 26.00 13.00 8.58 Total 2,278.67 2.50 1,019.Q4 1,019.94 509.97 336.58 Miscellaneous costs 35.00 17.50 11.67 Additional family labor allowance 0.00 33.50 44.30 Farm income 984.94 525.97 369.21 Off-farm income / 0.00 240.00 360.00 Total Family I eome 984.94 765.97 729.21 Estimated Outgoings Living costs 600.00 600.00 600.00 Ipeda/PBB 15.00 7.50 5.00 National rent 100.00 50.00 33.33 House tax 20.00 20.00 20.00 Religious contributions 10.00 5.00 3.33 Water Users Association (50 kg) 6.00 3.00 2.00 Total Outgoing. 751.00 685.50 663.67 Possible savings/repayment capacity 233.93 80.47 65.55 /a Assumes that a farm family with I ha will not work nff farm; a farm family with 0.5 ha will have on average I member working full time off farm; and farm family with 0.33 ha will have 1.5 members working off farm at wages of Rp 20,000 per month. - 111 - ANNEX 8 Table 2 INDONESIA IRRIGATION SUBSECTOR PROJECT Analysis of Repavr-sit'Capacity of Water Users (Outside Java farm model using actual 1986/87 farmgate prices) Return/ha Return per Return per Return per Return/ha Crop farm farm farm farm (Rp 000) intensity (Rp '000) (Rp 000) (Rp 000) (Rp 000) Farm size (ha) 1.50 1.00 0.50 Wet Season Rice 566.2n 1.00 566.20 849.30 566.20 283.10 Dry Season Rice 481.20 0.50 240.60 360.90 240.60 120.30 Maize 284.30 0.30 85.29 127.94 85.29 42.65 Soyabeans 302.40 0.15 45.36 68.04 45.36 22.68 Groundnuts 337.80 0.05 16.89 25.34 16.89 8.45 Total 1,971.90 2.00 954.34 1,431.51 954.34 477.17 Miscellaneous costs 60.00 4n.00 20.00 Additional family labor allowance 0.00 0.00 30.00 Farm income 1,371.51 914.34 487.17 Off-farm income /a 0.00 120.00 24n.00 Total Income 1,371.51 1,034.34 727.17 Possible Outgoings Living costs 600.00 600.00 600.00 Ipeda/PBB 22.50 15.00 7.50 National rent 150.00 100.00 50.00 House tax 20.00 20.00 20.00 Religious contributions 10.00 5.no 3.33 Water Users Association (50 kg) 12.75 8.50 4.25 Total Outgoings 815.25 748.50 685.08 Possible savings/repayment capacity 556.26 285.84 42.09 /a Assumes that a farm family with 1.5 ha will not work off farm; a farm family with I ha will have a member working off farm half time: and a farm family with 0.5 ha will have a member working off farm full time at wages of Rp 20,000 per month. INDONESIA IRRIGATION SUBSECTOR PROJECT Analysis of Repayment Capacity of Water Users (Java tarm models using government support-level. prices) Return/ha Return per Return per Return per Return/ha Crop farm farm farm farm (Rp -000) intensity (RP '000) (Rp '000) (RP '000) (Rp -000) Farm size (ha) 1.00 0.50 0.33 Wet Season RIce 729.90 1.00 729.90 729.90 364.95 240.87 Drv Season KLce 642.50 1.00 642.50 642.50 321.25 212.03 Maize 413.30 0.30 123.99 123.99 62.00 40.92 Soyabeans 560.11 0.15 84.02 84.02 42.01 27.73 Groundnuts 305.50 0.05 15.28 15.28 7.64 5.04 Total 2,651.31 2.50 1,595.68 1,595.68 797.84 526.57 1iscellaneouug costs 35.00 17.50 11.67 Additional family labor allowance 0.00 33.50 44.30 Farm income 1,560.68 813.84 559.21 Off-farm income 240.00 240.00 Total Income 1,560.68 1,053.84 799.21 Possible Outgo_ng&s LI lng costs 600.00 600.00 600.00 Ipeda 15.00 7.50 5.00 National rent 100.00 50.00 33.33 House tax 20.00 20.00 20.00 Religious contributions 10.00 5.00 3.33 Water Users Association (50 kg) 6.00 3.00 2.00 Total Outgoings 751.00 685.50 663.67 Savings 809.68 368.34 135.54 INDONESIA IRRIGATION SUBSECTOR PROJECT Analyi of Repament Capacity of Water Users (Outside Java tarm models using government support level prices) Return/ha Return per Return per Return per Return/ha Crop farm farm farm farm (Rp '000) intensity (Rp '000) (Rp -000) (Rp '000) (Rp '0Q0) Farm size (ha) 1.50 1.00 0.50 Wet Season U~lErce 664.80 1.00 664.80 997.20 664.80 332.40 DU Season xice 664.80 0.50 332.40 498.60 332.40 li-,.20 Maize 312.43 0.30 93.73 140.59 93.73 46.86 Soyabeans 144.86 0.15 21.73 32.59 21.73 10.86 Groundnuts 169.25 0.05 8.46 12.69 8.46 4.23 Total 1,956.13 2.00 1,121.12 1,681.68 1,121.12 560.56 Miscellaneous costs 60.00 40.00 20.00 Additional family labor allowance 0.00 0.00 30.00 Farm iie:ome 1,621.68 1,081.12 570.56 Off-farm income 3.00 240.00 Total Family Income 621.68 1,081.12 810.56 Possible Outgoings Lisvng costs 750.00 750.00 750.00 Ipeda 22.50 15.00 7.50 Natior.al rent 150.00 100.00 50.00 House tax 20.00 20.00 20.00 Religious contributions 10.00 5.00 3.33 Water Users Association (50 kg) 12.75 8.50 4.25 Total Outgoings 965.25 898.50 835.08 Savings 656.43 182.67 -24.52 INDONESIA IRRIGATION SUBSECTOR PROJECT Derivation of Economic Prices (Constant 1987 prices) Import Parity Export Parity Items Unit 1987 1990 1995 2000 1987 1990 1995 2000 Rice Thai 5% brokens, FOB Bangkok $/tonne 210 249 255 260 210 249 255 260 Quality adjustment 10% 189 224 230 234 15% 179 212 217 221 Rp/kg 295 350 358 365 Freight + insurance + 30 30 30 30 0 0 0 0 CIF/FOB price 219 254 260 264 0 0 0 0 Rp/kg 361 419 428 436 0 0 0 0 Port handling, storage, losses 5% + 18 21 21 22 5% - 15 18 18 18 Transport port to wholesaler + 5 5 5 5 - 5 5 5 5 Transport mill to wholesaler - 3 3 3 3 - 3 3 3 3 Traders margins - 10 10 10 10 - 10 10 10 10 Ex-mill price 371 432 442 450 262 314 322 329 Conversion to paddy 65% 241 281 287 293 65% 170 204 209 214 Milling cost - 10 10 10 10 - 10 10 10 10 Transport farm to mill - 12 12 12 12 - 12 12 12 12 Economic farm gate price Rp/kg 219 259 265 271 148 182 187 192 Average import/export Rp/kg 184 220 226 232 Maize 'OB US Gulf Port $/tonne $/tonne 72 112 114 118 $/tonne 72 112 114 118 Quality adjustment 15% 11 17 17 18 0 & Freight + insurance 20 20 20 20 Ol Import Parity Export Parity Items Unit 1987 1990 1995 2000 1987 1990 1995 2000 Maize (cont-d) CIF Indonesia $/tonne 92 132 134 138 $/tonne 61 95 97 100 Rp/kg 152 218 221 228 Rp/kg 101 157 160 165 Port handling, storage, losses + 8 11 11 11 - 5 5 5 5 Transport to wholesaler + 5 5 5 5 - 5 5 5 5 Traders margin - 10 10 10 10 - 10 10 10 10 Transport farm to wholesaler - 12 12 12 12 - 12 12 12 12 Economic farm gate price Rp/kg 143 212 215 222 69 125 128 133 Average import/export Rp/kg 106 168 172 178 Soya Beans CIF Rotterdam $/tonne 200 233 246 240 > Freight + insurance + 35 35 35 35 £ CIF Indonesia $/tonne 235 268 281 275 Rp/kg 388 442 464 454 Port handling, storage, losses + 19 22 23 23 Transport to wholesaler + 5 5 S 5 Traders margin - 10 10 10 10 Transport farm to wholesaler - 12 12 12 12 Economic farm gate price Rp/kg 390 447 470 460 Groundnuts Groundnuts oil price $/tonne 560 652 720 636 Ratio Indonesian Import/groundnuts oil price 0.72 (1982-84) CIF Indonesia shelled groundnuts $/tonne 403 469 518 458 Rp/kg 665 774 855 756 0 Import Parity Export Parity Items Unit 1987 1990 1995 2000 1987 1990 1995 2000 Groundauts (cont'd) Port handling, storage, losses 5% + 33 39 43 38 Transport to wholesaler + 5 5 5 5 Traders margins - 10 10 10 10 Transport farm to wholesaler - 12 12 12 12 Economic farm gate price Rp/kg 681 796 881 777 Urea (46% N) FOB Europe $/tonne $Itonne 115 214 200 215 Freight & insurance + 15 15 15 15 Ex faztory Palembang, Indonesia $/tonne $/tonne 130 229 215 230 Rp/kg Rp/kg 215 378 355 380 Transtport to wholesaler + 20 20 20 20 Storage and wholesalers' margin + 15 15 15 15 Transport to farm + 10 10 10 10 Economic farm gate price Rp/kg 260 423 400 425 Triple Super Phosphate (TSP, 46% P205) FOB Florida $/tonne 118 149 175 185 Freight + insurance 55 55 55 55 CIF Indonesia $/tonne 173 204 230 240 Rp/kg 285 337 380 396 Transport to wholesaler + 20 20 20 20 Storage and wholesalers' margin + 15 15 15 15 Transport to farm + 10 10 10 10 Economic farm gate price Rp/kg 330 382 425 441 0h - 117- ANNEX 9 Table 2 INDONESIA IRRIGATION SUBSECTOR PROJECT Financial and Economic Prices (Rp/kg) Financial prices Economic prices 1987 1987 1995/a Outputs Paddy 150 184 226 Maize (shelled) 130 106 172 Soybeans 525 390 470 Groundnuts (shelled) 750 681 881 Cotton 400 598 973 Inputs Seeds: Paddy 350 230 283 Maize /b 250 133 215 Soybeans 750 488 588 Groundnuts 1,000 851 1,101 Cotton 125 125 125 Urea 125 260 400 TSP 125 330 425 Pesticides (liter) 2,500 10,000 10,000 Labor (man-days): Java 1,500 965 965 Off-Java 2,800 2,000 2,000 /a In constant 1987 prices. b Seeds of improved HYV, e.g., Arjuna, may cost up to Rp 750/kg and hybrids up to Rp 19500/kg. - 118 - ANNE 10 Page 1 of 1 INDONESIA IRRIGATION SUBSECTOR PROJECT Selected Documents and Data Available in Project File Background Reports 1. Project PreparaLion Reports, DGWRD assisted by Sir M. MacDonald and Partners and P.T. Indah Karya, August 1986 and January 1987. 2. Preparatory Designs: Review Reports for the ongoing projects, DGWRD assisted by Sir M. MacDonald and Partners and P.T. Indah Karya, February 1987. 3. Preparatory Designs: Draft Provincial Summaries, DGWRD assisted by Sir M. MacDonald and Partners and P.T. Indah Karya, March 1987. 4. Lombok Island: Groundwater Investigation, DGWRD assistec, by ELC - Electroconsult, October 1986. 5. Institutional Strengthening Study in Water Management at Tertiary System and in Irrigation O&M at Main System, DGWRD assisted by DHV and PT Deserco, June 1986. Staff Working Papers 1. Cost Tables 2. Tables Related to Financial and Economic Analysis 3. Charts of various organizations Chart 1 I I I 2 XtZj~I F0!1 Lii~~~~~~~~L- I i ~ - - - - -- - - - - - 15~~~~~~~~~~~~~L INDONESIA IRRIGATION SUBSECTOR PROJECT Organizational Arrangements for the Implementation of Training Activities Mln| of %"tslMr | l OfMnl, Of PUblc Wolk Rnanqce sec,tam! c rl I' '… OMIO G"etr of Coordiatorl ureaul of DCFC 0i t| tor Genera D(;rD_ (DGSWD) m|E_ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tf IDO <'1ffice--- Of Dmeorate of Nda~~~~~~~~~~~~~~~~~~~~~~~g Penonnel -~~~~~~~~~~ar.ngOfAc,o Ta,mgO (DO-10xac;&l¢>c ! Mers,( , I-orms POnoM sro,DWMz M . & CT ACTAMTES Ptonnng &~~~~~~~~~~~~~~~Teh~ctCotO ~ee~t~ ee~~ ---___; o-_"-mito3 t _-3--- _------ - - 3 I F,ncl I Polrnco I I -m Pr I Icral I I 01 II ll P IOC Fei *omce I , a t ~~~~NON .REEr4 TPZIN.G I O&M1o 1tc bE clanstmtl n [ 9go l TIon TranWUt Acto atM8 O& .c STK De .odnn . o i ,w for $Wrv CatsCOP lW eoa m | Sfflems CSkM | } M Tlanr10 | | ms CtkM § | | I Ik P I~~~~~~~~~~~~~~~~~~~~~~~~~~(TC L"WCffdlls& wi Saf I ~ ~ ~ ~ ~ ~~ ~~~ I I I S = vff*v Wa1lBn - 31144t 13 - 121 - Chart 3 INDONESEIA IRRIGATION SUBSECTOR PROJECT Approoch to Strengthening lnigatlon Management at the Terinary and Quartemary Levels lechnical C n =l1 i = 1 Government Grouts(MOA MPI) Counterparts(MQA MpU) Provincial _i Provin cial l InterDr Provicial Irrigaton I_-_ coordination ¢ _Pof .* Comnmitees iGroup Mnaigers(PU MOA) District Irrlation _G,.-rrr.nt Committees (Bupot,) |UJA Action Groups Quick Inventory (AG) 3-9 pe, of WAAs bv Seksi _ OsStin (MOA, MPUJ& MiLA) & Su:ks, Level Staff Training of AG Ben _-mar Members 2-Month Intomotion by MCA MPU NGO s Son VAS & Consultants Training of Sub-District n Study Staff on Community Contiuln Studty Orgonimthon MNU. MIA Of & Samluaion MOA Staff Including PPts i l Sr ~~~~~~~~~~~~~~Outpuht$ | Organi|n Lr Level. MOA MRU hHA eorganIzatron I Officials Inluding _T r I ~~~~~~Irrgraotion Comrmitree Cimbursi(GroupAj )¶| Cord,nungMnitorigA Sterofohentn V)A MembomoTraining Modu l3s Deeope t G!ip A. oue WIJA ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~" Banker - 3114412rdle - 122 - Chart 4 INDONESIA IRRIGATION SUBSECTOR PROJECT Organizational Set up for ISF Pilot Scheme Inter-agency Coordination Group -BAPPENAS (Chalrman) -Dte. of IPEDA (Finance) -DG of Public Affairs (Home Affairs) -DGWRID (Public Works) -DGFCA (Agriculture) | Provincial Inter-agency Coordination GroupCoslat __________ _ District Irrigation Committee f I Chaired by Bupati I eSystem-wide or !s Distnct Level Pilot Implementation Unit Consultants 8.0 Sub-District U . Office E Agriculture Village lriation Cu Extension Chiefs SekI I Water Users Associations Irrigation Beneficiary Farmers J World Bank-40485 96* 104 1124 THAILAND I. A a o AJto Ubai * U Pundrnh D.I. ACEH MALAYSIA Mndon,UAA* M~~~~~~On k~~~~~~IIUMALA SUMATERA ; 4 UTARA L- SINGAPORE . Pkcmbaru e.4tMATE' A~ ,,AJ ~ .KALIMANTAN 4 j sSU~~~~~~.~MATERA ,/ .8ARATf RIAU Po 0 ~ ~~~~~BARAT . oPod"ng ).../ . KALIA .JAM31 obm TE1 tf' SUMATERA\ I KMuW; C 4., ._- _ . BENr SELTAN- j B.Ebkulu o Ai E / L4MPUUNG I N D O N E S I A a M 0 o a IRRIGATION SUBSECTOR PROJECT ' - JAKARA JAWA BARAT G OSandimg ( oSIm.I; SPECIAL MAINTENANCE AND ,' J * EFFICIENT O&M IRRIGATION JAWA TENGAH o' 0 & Sun SPECIAL MAINTENANCE AND W ° M EFFICIENT OSM SWAMPS Yogwoae ' JAWA TMU,R O ON-GOING PROJECTS * GROUNDWATER SUB-PROJECTS RIVER MOUTH - -- PROVINCE BOUNDARIES -. - INTERNATIONAL BOUNDARIES 9o 1°40 112 IBRD 20240 120- 128- PHILIPPINES BRUNEI 11 (r_ / kLAYSIA / KALIMANTAN TIMUR ! SLnaSo [ ' / / SULAWESI UTARA ( S~~amorido ANTAN Pelu P- GAH aI PI MnGkAH ya ' SULAWESI o ?,..4GAH i f v-~%,~~% SULAWESI 'MWU% ,ofALIMANTAN SELATAN fo.; SELATAN -SULAWESI °Ambo TENGGARA o 0h POmuMIJV? 3 Snem.\ Ulung Pandang I NUSA TENGGARA BARAT B ALI . 0Mat / NUSA TENGGARA TIMUR v! i > 4 b It TIMOR TIMUR r IN K°p0 C_WM Trh 100 200 300 400 SW0 woIef nWU* ovtt KILOMETERS pwlwL 120_ 1280 JUNE 1987