Public Disclosure Authorized

Documentof
The World Bank

Report No. 13154-IND

Public Disclosure Authorized

STAFF APPRAISAL REPORT

INDONESIA

KALIMANTANURBAN DEVELOPMENTPROJECT
Public Disclosure Authorized

FEBRUARY 24, 1995

Public Disclosure Authorized

Infrastructure Operations Division

Country Department III
East Asia and Pacific Region
 -2-

CURRENCY EQUIVALENTS
(As of May 1994)

Currency Unit = IndonesianRupiah(Rp)

$1.00 = Rp 2,154
Rp 1 million = $464

WEIGHTS AND MEASURES

Metric Units

FISCAL YEAR

Governmentof Indonesia: April I - March 31

Provincialand Local Governments: April I - March 31
Water Enterprises: January I - December 31
 -3-

ACRONYMS USED

AMDAL - GOI environmental assessment process

ANDAL - GOI detailed environment impact assessment study
APBD 1/11 - Annual provincial/local govemment development budget
APBN - Annual central government development budget
BANGDA - Directorate General for Regional Development, MHA
BAPPENAS - National Development Planning Agency
BAPPEDA I/11 - Provincial/Local Development Planning Agency
BPKP - Central Audit Bureau
BPD - Regional Development Bank (Provincial Level)
CPMO/FO - Central Project Management Office/Finance Office
DATI 1/11 - Provincial/local level government
DGCK - Directorate General Cipta Karya (Human Settlements), MPW
DGBM - Directorate General Bina Marga (Roads and Bridges), MPW
DGM - Directorate General Monetary Affairs. MOF
DGWRD - Directorate General for Water Resource Development, MPW
DPUK - Kabupaten/Kotamadya department of public works
DIP/DIPDA - Central/regional project budget
GOI - Government of Indonesia
IDC - Interest during construction
IKK - Kecamatan headquarter town
[MG - ItJIDP Implementation Management Group. BAPPENAS
INPRES - Presidential Instruction, including a class of GOI grants
IUIDP - Integrated UIrban Infrastructure Development Program
Kabupaten - Local (Level 11)district
Kampung - Urban neighborhood
KIP - Kampung Improvement Program
Kotamadya - Incorporated municipality/city (Level 11)
Kecamatan - Kabupaten or kotamadya administrative district
l,IDAP - Local Institutional Development Action Program
MCK - Communal lavatory and toilet facility
MIP - Market Improvemcnt Program
MHA - Ministry of Home Affairs
MOF - Ministry of Finance
MPW - Ministry of Public Works
Murni - Rupiah murni, or money from "pure" domestic sources
NGO - Non-governmental organization
O&M - Operations and maintenance
PADS - Pendaliatan Asli Daerah (local government taxes and charges)
PBB - National land and buildings tax
PDAM - Local government water enterprise
PIA - Program Implementation Agreement
PIL - Preliminary environmental assessment
Pimpro - Project manager
PIU - Project Implementation Unit
PJM - Medium-Term Expenditure Program
PMDU - Provincial Management and Development Unit (for water enterprises)
PMO/FO - Local Project Monitoring Office/Finance Office
PMU - Project Management Unit
PPF - Project Preparation Facility
PUtOD - Directorate General for Public Administration and Regional Autonomy, MHA
RAKORBANG 1/11 - Provincial/local annual budget coordination meeting
Repelita - Five-year Development Plan
RIAP - Revenue Improvement Action Plan
RKL - Environmental Management Plan
RPL - Environmental Monitoring Plan
SDO - Routine central GOI grant, primarily for salaries
SLA - Subsidiary Loan Agreement
SK - Surat Keputusan. decree of a senior official
SPABP - Special grants to lower level governments
TKPP - Urban Development Coordination Team
UNDP - United Nations Development Programme
Walikota - Kotamadya chief executive (mayor)
 - i -

INDONESIA

KALIMIANTAN URBAN DEVELOPMENT PROJECT (KUDP)

STAFF APPRAISAL REPORT

LoAN ANDPROJECTSUMMARY

Borrower: The Republicof Indonesia

Beneficiaries: The Cities of Banjarmasin, Balikpapan, Palangkaraya, Pontianak,

Samarindaand their respectiveWater Enterprises(PDAMs).

Amount: US$136million equivalent

Terms: Repayablein 20 years including five years of grace, at the Bank's

standardvariable interestrate

OnlendingTerms: Out of the loan proceeds, US$33.5 millionequivalentwould be onlent

by the Central Governmentto the five municipalitiesand their Water
Enterprises(PDAMs)at an annualinterestrate of 11.5%,,theprevailing
6 monthaverage of the 3-monthSertifikatBank Indonesia(SBI)rate at
the time of appraisal for a term of 20 years, including5 years grace.
BothMunicipalGovernmentsand their PDAMsare fully responsiblefor
the interest during construction. The Central Governmentbears the
foreign exchangerisk.

ProjectObjectives
and Description: The main objectivesof the project are to (a) increase the provision of
urban infrastructure and services and the efficiency of urban
investments,(b) promote stronger, more autonomous,and financially
more independentmunicipalgovernments,and (c) contributetowards
urban poverty alleviation, mainly through better access to essential
servicesand an improvedurban environment.

The projectwouldfinancepriority investmentsin the five municipalities

in: (a) urban roads; (b) water supply and distribution systems;
(c) storm drainage and flood control; (d) solid waste collection and
disposal; (e) human waste disposal (sewerage and on-site sanitation
facilities); (f) multi-sectoral programs for kampung (low income
neighborhood)improvements,market improvements,and infrastructure
for urban renewalpilot projectsand for low cost housingdevelopments,
(g) programsfor thedevelopmentand strengtheningof local institutions,
(h) programs to increase local revenue generation, and (i) technical
assistancefor implementation.
 - ii -

Benefits and Risks: The project would benefit the urban populations in the five cities
through provision of better quality and more reliable and accessible
urban infrastructure and services. The water supply, drainage, and
human and solid waste disposal investments would greatly improve the
living environment by providing safe and reliable water, reducing
property damage and productivity losses, and decreasing pollution and
the incidence of diseases. The urban road investments would assist the
local economies by lowering transport costs and travel times. Kampung
and market improvement investments would help low income
populations by bettering living conditions and local commercial
facilities. The main risks are the limited capabilities at the local level
to manage and implement investment programs. In order to mitigate
these risks, appropriate measures have been taken, such as the use ot
standardized procurement documents, increased involvement of the
private sector in O&M delivery, training of staff, introduction of an
MIS system and employment of consultants, managed at the local level,
to assist with implementation. Another positive factor is the strong
ownership of the proposed program by the five municipalities developed
through their close involvement in the preparation process.

Estimated Costs: Local Foreign Total % of

------------- (US$ million) ------------ Base Cost

Water Supply 24.8 19.2 44.0 21

Drainage 16.2 7.6 23.8 11
Urban Roads 38.1 17.8 55.9 26
Solid Waste Management 5.7 2.6 8.3 4
Human Waste Disposal 9.0 2.8 11.8 6
KIP and Other Infrastructure 14.4 6.7 21.1 10
Subtotal 108.1 56.7 164.9 77

Incremental O&M (all sectors) 13.6 7.3 20.9 10

Implementation Support TA 8.0 2.3 10.3 5
Institutional Development TA 6.8 4.9 11.7 5
Administration 5.2 0.0 5.2 2

Total Base Cost 141.8 71.2 213.0 100

Physical Contingencies 10.5 5.7 16.2 8

Price Contingencies 16.4 4.0 20.4 9
PPF Repayment 0.0 1.7 1.7 1

Total Project Cost /a 168.7 82.6 251.3 118

/a Includes taxes and duties of US$21 million equivalent.

Note: Due to rounding, totals may not add up.
Financing Plan: Own IBRD % of
Sources Loan Total Cost
--------------------- (US$ mil!ion)/a---------------------

Local Governments 41.0 13.0 54.0 22

Water Enterprises 28.2 20.5 48.7 19
Provincial Government 3.2 - 3.2 1
Central Government 42.9 100.8 143.7 b/ 58

Total 115.3 134.3 249.6 100

shares 46% 54% 100%

PPF repayment - 1.7 1.7
Int. During Construction 10.7 - 10.7
Total Financing Required 126.0 136.0 262.0

/a Due to rounding, totals may not add up.

/b Includes amounts to be transferred as grants to lower level governments.

Loan Disbursements:
----------------------US$million-----------------

Bank FY 1995 1996 1997 1998 1999 2000

Annual 3 32 42 42 14 3
Cumulative 3 35 77 119 133 136

Poverty Category: Targeted intervention: the KIP/MIP component (20 percent of project
cost) will favor the poorer neighborhoods and all the other components
will also, directly or indirectly, benefit the urban poor more than the
non-poor, except probably tor the road component.

Estimated Economic
Rate of Return: 15% to 40% for roads, minimum 12% for water supply, not quantified
for other components for which however benefits have been estimated
and are expected to cover or exceed costs.

Maps: IBRD No. 26065: Key Map - Indonesia and Kalimantan

IBRD No. 26066: Project Cities - Water and Drainage/Flood Control
IBRD No. 26113: Project Cities - Urban Roads, KIP/MIP
IBRD No. 26114: Project Cities - Solid Waste and Sanitation
 - iv -

INDONESIA

KALMIANTAN URBAN DEVELOPMENT PROJECT (KUDP)

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page

1 THE URBAN SECTOR ................................ I

A. Sector Overview .................................. 1

B. Government Strategy ................................ 3
C. Bank Experience .................................. 4
D. Bank Sector Strategy ................................ 5

2 URBAN DEVELOPMENT IN KALIMANTAN ................ 6

A. Population and Urban Services..................... ..... 6

B. Urban Planning and Financing .......................... 8
C. Water Enterprises (PDAMs)............................ 9

3 THE PROJECT ..................................... 10

A. Project Origin and Formulation ......................... 10

B. Project Objectives .................................. 11
C. Project Description ................................. 11
D. Project Costs ..................................... 13
E. Financing Plan .................................... 13

4 PROJECT IMPLEMENTATION ......................... 16

A. Implementation Agencies ............................. 16

B. Project Coordination and Monitoring ...................... 17
C. Implementation Schedule ............................. 18
D. Procurement and Disbursements ......................... 18
E. Project Accounts and Audits ........................... 21
F. Project Reporting, Monitoring and Bank Supervision .... ........ 21
G. Operations and Maintenance ........................... 22
H. Land Acquisition, Resettlement and Compensation ............. 22
1. Environmental Impacts .............................. 23

5 FINANCIAL ASPECTS ................................ 24

A. Local Governments ................................. 24

B. Water Enterprises (PDAMs) ........................... 25
 v

Page

6 PROJECT JUSTIFICATION AND RISKS ................... 26

A. Economic Justification ............................... 26

B. Poverty Impacts ................................... 28
C. Environmental Improvements ........................... 29
D. Risks ......................................... 30

7 AGREEMENTS REACHED AND RECOMMENDATION ........ 30

TABLES IN TEXT

Table 2.1: Kalimantan's Five Project Cities ..................... 7

Table 2.2: Local Taxes and Charges, 1992 ...................... 10
Table 3.1: Project Cost Summary ........................... 14
Table 3.2: Financing Plan ................................ 15
Table 4.1: Procurement Arrangements ........................ 19
Table 4.2: Expected Number of ICB and LCB Packages by Sector ...... 20
Table 4.3: Disbursements ................................ 20

ANNEXES

1. Previous Urban Infrastructure Projects

2. Project Descriptions by City
3. Documents in Project File
4. Summary Cost Table
5. Financing Plan
6. Implementation Responsibilities
7. Technical Assistance
8. Implementation Schedule
9. Disbursements by City and Category
10. Estimated Schedule of Disbursements
11. Supervision Staffing and Schedule
12. Land Acquisition, Resettlement and Compensation
13. Mitigation of Negative Environmental Impacts
14. Financial Projections: Kotamadyas
15. Financial Projections: PDAMs
16. Summary of Project Indicators

CHARTS

MAPS

The report is based on the findings of preappraisal mission in November 1993 and an appraisal
mission in May 1994. The appraisal mission comprised Mmes/Messrs June Bsaies (Road
Engineer), John Darmody (Water Sector Engineer), Dianne Hughes (Sanitation Engineer),
Frida Johansen (Principal Economist), Safari O'Humay (Financial Analyst), Bob Scouller
(Engineer), George Soraya (IUIDP Specialist), and Keiichi Tamaki (Financial Analyst).
Anupam Khanna (Chief EA31N) and Marianne Haug (Director EA3) have endorsed the
project.
 1.URBANSECTOR

A. SECTOROVERVIEW

1. 1 DemographicTrends. The urban population in Indonesia exceeds 55 million and is

growing at over 5 percent per year, more than twice the overallnationalpopulationgrowth rate. About
80 million or 40 percent of Indonesianswill be city dwellers by the year 2000. Indonesia's urban
settlementsinclude 15 metropolitanand large cities of more than half a million people, 40 secondary
citiesof over 100,000(provincialheadquartersand incorporatedmunicipalities),200 smalltowns(district
headquarters)over 20,000 and about3,200 servicecenters(subdistrictheadquarters)with 3,000 to 20,000
people. Seven out of the ten largest metropolitanareas are in Java.

1.2 InstitutionalFramework. At the nationallevel, there is no single ministry for urban

development. The National DevelopmentPlanningAgency, BAPPENAS, is responsible for overall
planning and allocationof resources, focussedon Five-YearDevelopmentPlans (Repelita)and Annual
National DevelopmentBudgets (APBN). Within BAPPENAS,the Bureau for Urban Development,
Settlementand Public Housing,under DeputyV (Regionaland ProvincialDevelopment),is responsible
for oversightand coordinationof urban infrastructuredevelopment.All key agencieswith responsibilities
in the urban sector are represented in the Inter-agencyCoordinatingTeam for Urban Development(Tim
Koordinasior TKPP) chaired by BAPPENAS.

1.3 The principalcentralministriesinvolvedin urban issuesarethe Ministryof Home Affairs,

the Ministry of Public Works, and the Ministry of Finance. The Ministry of Home Affairs (MHA) is
responsiblefor oversight of the regional governments, primarily through its Directorate General for
Public Administration and Regional Autonomy (PUOD) and Directorate General for Regional
Development(BANGDA). The Ministryof PublicWorks (MPW or DPU) is responsiblefor oversight
of most infrastructure. Within MPW, the following directorates-generalare responsible for urban
infrastructure: the DirectorateGeneral for Human Settlements(Cipta Karya or DGCK) is responsible
for oversightof city and regionalplanning,water supply,urban drainage, sanitationand sewerage, solid
waste management,kampungimprovementprograms (KIP), and market improvementprograms (MIP);
the Directorate General for Roads (BinaMarga or DGBM)is responsiblefor oversightof urban roads
and bridges; and the Directorate Generalfor Water ResourceDevelopment(Pengairanor DGWRD)is
responsiblefor urban flood controland bulk water supply. The Ministryof Finance(MOF) is responsible
for central and local finance through its Directorate General for Monetary Affairs (DGM), while the
DirectorateGeneral for Budget(Anggaranor DGA) administersbudget transfers.

1.4 At the regionallevels, provincial(LevelI) and local (Level II) governmentsoperate with
increasing responsibilitiesand delegated authority. In all, there are 27 provinces and 301 local
governments,including54 kotamadyas(urban municipalities)and 247 kabupatens(districts). Legislative
powers at both provincial and local levels are held by People's Representative Councils (Dewan
PerwakilanRakyatDaerah or DPRD).

1.5 Provincialgovernmentsare headed by appointedgovernorswho represent the President

and the central government;the governors also head the semi-autonomousprovincialadministrations.
Bupatis(district heads) and Walikotas(municipalmayors) representprovincialgovernments, and head
their own local governments. Regional DevelopmentPlanningAgencies (BAPPEDAI and II) report
directly to their respectivegovernors, district heads or mayors, and are responsiblefor planning and
resource allocation. Regionalgovernmentservices are providedby separate departments(Dinas I and
II) analogousto line ministriesof the centralgovernment.
 -2-

1.6 Sectoral Coordination and Local Participation. Due to the hierarchical administrative
system, coordination of the urban sector has been difficult and local participation in the decision-making
process has been limited. The large size and diversity of the country, the rapid pace of urbanization, the
number of concerned agencies, the lack of effective management information systems and, perhaps,
cultural constraints to communication within and among agencies, have led to a somewhat fragmented
approach to urban development. In order to improve coordination, especially at the local level, GOI's
policy of decentralization needs to be pursued more effectively.

1.7 Sector Constraints and Priorities. Average incomes in urban areas have risen
substantially over the past decade; however, income distribution remains relatively unequal and in 1990,
over 17 percent of urban dwellers were estimated to be "absolute" poor based on their expenditure levels.
The problems of low income are exacerbated by deficiencies in basic services and degraded environmental
conditions causing health risks among the low income population. Country-wide, only about 20-
25 percent of urban households have direct access to piped water supply, another 15 percent buy drinking
water from vendors or standposts, and the rest rely on shallow wells and sometimes on surface water
courses. Surface water courses in urban areas are frequently polluted due to discharge of inadequately
treated wastewater. Only about 40 percent of urban households have access to adequate sanitation
facilities. In the larger cities, inadequate industrial water supply, and liquid and solid waste disposal are
serious problems. To meet GOI's service and equity objectives, more investment is needed in local or
tertiary systems in poorly served urban areas. The Bank's 1993 Urban Public Infrastructure Services
Report (No. 12154-IND) estimated that the 1990 infrastructure investment backlog was at least some
US$5 billion for the main four subsectors (piped water, sewerage, urban roads, and drainage). Further,
a substantial backlog prevails in the maintenance of facilities, which has resulted in decreased productivity
of the infrastructure.

1.8 Sector Finances. Finances of provincial and local governments have long been dominated
by central government transfers and are characterized by weak local resource mobilization, low per-capita
budgets and limited use of credit for capital investment. The dominant role of central government grants
for financing local government services is partly due to the limited local authority for levying taxes.
Grants are a way to resolve the disparity between local needs and local resource mobilization. Although
grant allocation criteria have been modified to respond better to local needs and shortfalls (compared to
minimum standards), there is a need to relate grant allocations more to performance and productivity.
The larger infrastructure projects are financed directly from the national budget (APBN/DIP) and are
executed by the regional offices of central government agencies. These projects sometimes lead to
operations and maintenance (O&M) obligations which the local governments are not fully capable of
taking on.

1.9 Urban Infrastructure Issues. The main problems and issues faced by cities are: (a) large
infrastructure deficiencies and O&M backlogs; (b) lack of coordination in integrating infrastructure
investments with land management and transport objectives; (c) weak management of water enterprises
and municipalities, as evidenced by deficient accounting practices, the lack of adequate cost recovery,
revenue generation, and little use of credit as well as poor information systems; (d) inefficient
programming of the design and construction cycles, often compressed into single fiscal years; (e) complex
relationships among local, provincial and central agencies with respect to responsibilities for project and
program preparation, appraisal, financing, implementation, and O&M; (f) shortage of trained and
experienced managerial and technical personnel at all levels; and (g) limited involvement of the private
sector in urban service provision.
 -3 -
B. GOVERNMENTSTRATEGY

1.10 IUIDP Approach. With large deficienciesin urban infrastructureand a fast-growing

urban population, GOI's strategy in the past has emphasizedphysical infrastructuretargets: length of
roads to be built, percentage of populationto be suppliedwith piped water, sanitationservices, etc.
These targets have a prominentplace in the five year nationaldevelopmentplans (Repelitas). In 1987,
GOI issued a Statementof Policies,representinga consolidatedview of developmentin the sector. This
PolicyStatementfor Urban Development,incorporatedin RepelitaV (for the period 1989-94)includes:
(a) strengthening local governmentsto build, operate and maintain local services; (b) improving the
planning and programmingof urban infrastructureinvestments;(c) mobilizationof local revenuesand
the optimizationof their use; (d) implementingcoordinatedfinancingand administrationsystemsfor local
services; and (e) strengtheningconsultativeprocesses at various levels of government, particularly the
participationof municipalitiesand districts.

1.11 GOI's PolicyStatementcalledfor IntegratedUrbanInfrastructureDevelopmentPrograms

(IUIDP)as the operationalapproachfor achievingthe above objectives. The policy was translatedinto
action plans for local institutionalreforms (Local InstitutionalDevelopmentActionPlan or LIDAP)and
improvementsin local resource mobilization(Revenue ImprovementAction Plans or RIAP), sector
planning, and financing arrangements. GOI is providing (with domestic funds) further support to the
reform effort of the local governmentrevenuedepartments(DISPENDA),initiated under the Urban V
project. GOI has continuedto develop the IUIDP process to emphasizethe followingpriorities: (a)
expanding the scope of the IUIDP process to include additional subsectors which are important in
promoting the economic development of cities; (b) strengthening local government institutional
capabilities;(c) improvingO&Mof urban infrastructure;(d) improvingcost recoveryand implementation
of a more fully integratedsystem for the financingof urban infrastructureservices; and (e) increasing
attentionto urban land and environmentalmanagement.

1.12 GOI has issued regulationsand policy clarificationsto operationalizeurban sector policy
and the IUIDP approach; with World Bank, Asian DevelopmentBank (ADB) and bilateral assistance,
GOI has undertaken a nation-wideprogramfor IUIDP preparationand implementationsince 1987; and
UNDP and UNCHShave supported a centralassistanceteam to the IUIDP ManagementGroup (IMG).
More than 50 percent of local governmentshave so far adopted IUIDP planning.

1.13 Local Borrowing. Under Repelita V, GOI has also given priority to the expansionof
borrowingby localgovernmentsand their waterenterprises. To inducea higherlevel of credit financing,
GOI has adoptedless conservativefinancialcriteria for borrowingby localentities(debtservice coverage
ratio of not less than 1.5 for local governmentgeneral fund operationsand not less than 1.3 for local
enterprises like water supply PDAMs). This has brought the legal borrowing capacity of local
governments,particularly the larger municipalities,more in line with their considerablyunderutilized
financialcapacity. GOI's strategyis to move interestrates toward market rates over the mediumto long
term, but suitable referencerates reflectingmarket ratesfor long-termborrowingstill needto be defined.

1.14 RepelitaVI. RepelitaVI and the 25 Year Plan II, both of which started in April 1994,
emphasizesustainableurbandevelopmentthrough improvementin the quality of the livingenvironment,
support for economic growth, reduction in regional imbalances, and poverty alleviation. While
continuingthe basic premisesof RepelitaV and the National Policy Statementfor Urban Development
mentionedabove,RepelitaVI takes a broaderapproachby expandingthe IUIDP into an IntegratedUrban
DevelopmentProgram(IUDP)that includes: (a) a larger numberof smallercities and towns; (b) broader
spatial planning and urban planning in addition to public works infrastructuredevelopmentplans; (c)
expandingthe scope to cover low income and rental housing, infrastructureprovision for low-income
 -4-

areas, and urban renewal; (d) involving the private sector and communities to a greater extent; and (e)
strengthening environmental sustainability. To accelerate decentralization and implementation of plans,
emphasis will be placed on better use of resources, mobilization of local revenues, developing financing
mechanisms, and increasing cost recovery by municipalities and their agencies. Better coordination and
strengthening of local agencies will also be sought.

1.15 Environment and Resettlement. In late 1993 the GOT enacted Law 51/93 on
environmental impact assessment and mitigation and monitoring measures, and Presidential Decree,
Kepres 55, on land acquisition for public facilities, to improve on earlier decrees and their application.
Law 51 makes further refinements to GOI's environmental assessment procedures, which were already
in line with Bank policies and consistent with best practices under Bank-financed projects. Decree 55
seeks to ensure adequate access to information, fair negotiations, compensation awards based on market
values, and rights of appeal to the courts. A first tier of implementing regulations and guidelines was
issued in March 1994 for Law 51. Kepres 55 still has gaps primarily in the areas of entitlement
eligibility and funding sources, and time will be required to develop implementation capacities based on
local experiences.

C. BANK EXPERIENCE

1.16 Overall Sector Experience. The Bank has been involved in the urban water supply sector
since the 1960s, with relatively little change in approach. While many projects have provided substantial
economic and health benefits, the experience indicates: (a) supply of water has lagged behind increasing
demand; (b) delays in project implementation are common; (c) improving institutions and achieving cost-
recovery have been slow and difficult; (d) water quality is a persistent problem; and (e) disposal of waste
water in densely populated areas has been difficult.

1.17 Bank involvement in the urban sector started in the early 1970s with low cost investment
projects in shelter, water supply, sanitation, and urban transport, aimed at alleviating urban poverty.
Sites and services and slum upgrading projects were to demonstrate replicable approaches benefitting the
poor, while recovering costs and reducing the financial burden on the public sector. Many of these
projects succeeded in physical terms, but had little impact on the policies of national and local
governments and on urban management. The Bank had not paid adequate attention to the policy and
institutional requirements for improving the productivity of the urban economy and reducing urban
poverty, and improving management of the urban environment. Further, as many of the urban programs
did not achieve sustainable policy reform and institutional development, project approaches were generally
not replicable outside the framework of Bank financial support.

.18 By the mid-1980s the experience of donor-assisted projects had led to shifts in approaches
to the urban sector. It was recognized that central governments alone were unable to meet the increasing
needs for infrastructure services of rapidly growing urban populations and greater efforts had to be
devoted to: (a) improving the management capability of urban institutions and inter-governmental fiscal
relations; (b) improving local resource mobilization; (c) enhancing the management and quality of urban
infrastructure, particularly with regard to maintenance; (d) establishing enabling rather than constraining
regulatory frameworks; (e) expanding financial services for urban development; and (f) promoting private
sector participation in urban service delivery. Recent initiatives by governments and donors in these areas
reflect a growing appreciation of the importance of policies, institutions, and regulations in formulating
effective strategies to manage urban growth.
 1.19 Experience in Indonesia. The Bank has financed 12 completed and 8 ongoing urban and
water supply projects in Indonesia since 1974, for more than fifty local governments and many of their
water enterprises (see Annex 1). Urban lending operations in Indonesia have progressed from
demonstration projects in Jakarta through more programmatic investments in selected other large cities,
to sector lending within an agreed policy and institutional framework (although still limited in terms of
area and subsectoral scope). Water supply projects initially covered only a few cities at a time, but later,
like Bank projects in other countries, assisted a large number of urban settlements under one operation.
Details concerning Bank-funded water and urban infrastructure projects are available on file. In urban
transport projects, or the transport components of urban development projects attention has focussed on
road construction and maintenance. Even so, implementation of road schemes has been slower than
expected, quality of construction was frequently an issue related to reduced facility lifespan. Inadequate
attention has been given to traffic management, to improvement of public transport services and facilities
for pedestrians.

1.20 Bank experience confirms that: (a) limited planning and implementation capacity at the
central government level, and the difficulties inherent in providing essentially local services by central
government departments, reduces the efficiency of mass delivery programs; (b) capacity building at the
local level is a long-term process that needs to be accompanied by training to achieve an increase in local
responsibility and accountability; and (c) to develop such responsibility and accountability, central-local
financial relations need to provide more local government autonomy and enable private sector
involvement. The proposed project design takes into account these lessons. Significant responsibility
in project implementation will be handled by the local governments and their water enterprises; suitable
training in project management, local revenue administration, and improvements in operations and
maintenance will be provided; and management advisory services will be provided to the water
enterprises.

D. BANK SECTOR STRATEGY

1.21 The Bank has oriented its overall sector lending to assist the Government to deliver
adequate urban infrastructure services in cost-effective ways. GOI and the Bank emphasize improvements
in: (a) service levels, in a regionally balanced fashion, and particularly for the poor; (b) urban
productivity and the effectiveness of investments through better infrastructure planning and programming,
especially at the city level, and through enhanced local government capacity for fiscal management,
revenue mobilization, project implementation and O&M; and (c) the urban environment by enhancing
local government capacity to plan, build and operate infrastructure in an environmentally sound fashion
and also by enhancing community participation.

1.22 In promoting efficient urban development, the Bank's strategy supports the expanded IUDP
approach; however, implementation should include both sectoral and integrated approaches as
appropriate. While all plans should be integrated, in some cases, implementation could be handled
through separate sectoral projects. For example, in smaller municipalities multisectoral projects are
generally of manageable size and complexity; an integrated investment approach would, therefore, be
more appropriate. In other cases, where the requirements of a particular sector are sufficiently large and
complex, both in technical terms as well as on policy, institutional and financial matters, sectoral projects
within the framework of an integrated plan may be better.

1.23 Improving local management capacity is another area where the Bank's strategy is aligned
with that of GOI. Local governments and local institutions such as PDAMs should have well qualified
and well trained staff. In addition, local resource mobilization and retention should be increased. These
 -6-
issues could be addressed through revenue improvement programs, greater attention to tax collections,
pricing policies to effect cost recovery (O&M costs and a portion of or full investment costs), flexibility
to use funds as needed in priority areas, and increased local borrowing at market interest rates. The Bank
also recognizes that the infrastructure deficiencies are large and that the financial capabilities of local
institutions are limited in the short run; GOI has most tax bases and transfer grants will therefore continue
to be an important source of local financing. In order to optimize their use, grants should be allocated
on an incentive basis.

1.24 The Bank's strategy also promotes establishing an enabling regulatory and planning
framework for urban land management. A key focus of the Bank's strategy will be to support GOI
efforts to establish an effective land management system and simplify other regulations to facilitate more
efficient and environmentally sound urban land use and strengthen land tenure. The Bank is helping the
Government develop improved implementation frameworks for addressing environmental and social
impacts of urban projects.

2. URBANDEVELOPMENT
IN KALIMANTAN

A. POPULATIONANDURBANSERVICES

2.1 Population. The Indonesian region of Kalimantan covers the southern three-quarters of
the island of Borneo that is located north of Java. It comprises some 30 percent of Indonesia's total land
area, but no more than 5 percent of the country's population, and even less of its urban population. The
region is divided into the four provinces of West, Central, South and East Kalimantan.

2.2 Kalimantan's most developed urban areas are the three coastal cities and old trading ports
of Pontianak (West Kalimantan), Banjarmasin (South Kalimantan) and Balikpapan (East Kalimantan) and
the inland cities of Samarinda (old center of East Kalimantan) and Palangkaraya (new capital of Central
Kalimantan). Except for Balikpapan, the cities are provincial capitals. Palangkaraya is located some 60
km inland, accessible only by water and air. All five cities are located on at least one major river that
provides them with access to their extensive hinterlands; navigable waterways are the transportation
backbone in Kalimantan. Roads have been developed in and around the major cities but interurban roads
are few, the main ones lying between Balikpapan and Samarinda and in the valley northeast of
Banjarmasin.

2.3 In 1990, about 28 percent or 2.5 million people of Kalimantan's 9.1 million population
lived in urban areas. East Kalimantan contained more than one third of Kalimantan's urban population,
slightly less than one third lived in South Kalimantan, one quarter in West Kalimantan, and less than 10
percent in Central Kalimantan. East Kalimantan has the highest ratio of urban to rural population of
Kalimantan's provinces, followed by South Kalimantan (about one quarter), West Kalimantan (one fifth)
and Central Kalimantan (slightly more than 15 percent). The five largest cities comprised 1.9 million
persons by 1993.

2.4 During the 1980s, Kalimantan's population grew on average at 3.1 percent per annum,
compared to an urban population growth rate of 5.7 percent. Most of the urban population increase in
the decade was absorbed by Kalimantan's five major cities; on average, the increase was 60 percent
(ranging from 35 percent in Banjarmasin to 100 percent in Palangkaraya). During its rapid expansion
in the 1970s and for the most part of the 1980s, Kalimantan's economy attracted labor from other islands,
with in-migration occurring in particular in the industrializing cities of Samarinda and Balikpapan, where
oil, gas and timber dominate the economy, and Banjarmasin, the center of plywood and rubber processing
industries. Kalimantan's rural populations decreased-except for Palangkaraya where rural population
almost doubled (although from a relatively low base). Between 1980 and 1990, rural populations shrunk
on average by nearly 40 percent.

TABLE2.1: KALIMANTAN'S FIVE PROJECT CITIES

Total Pontianak Banjarmasin Balikpapan Samarinda Palangkaraya

1993Population 1,911,600 436,000 515,600 386,000 464,000 110,000

% of provincial
population 19 13 20 18 21 7
1980-90growth
% p.a./a 3.5 3.0 2.4 3.9 5.7 6.7
Built-uparea, kin2 127.1 33.0 22.3 34.0 26.4 11.4
Averagedensity
persons/ha 150 132 231 114 176 96

1990prov. GDP West K. SouthK. East K. East K. Central K.

$/capita 425 460 1,670Lb 1,670Lb 490

Sources: BPS; Project PreparationReport.

/a For the kotas; growth in suburbs was normallyhigher, with average urban populationgrowth of 5.7% in
Kalimantanin the 1980-90decade.
/b Excludingdirect oil and gas revenues,most of whichaccrue elsewhere.

2.5 In 1990, regional GDPs varied markedly among the provinces; from Rp 1.4 trillion in
Central Kalimantan to Rp 10.8 trillion in East Kalimantan, of which about Rp 6.4 trillion due to oil, gas
and related products. Likewise, per capita regional GDPs varied greatly, from about Rp 850,000 ($425)
in West Kalimantan to Rp 3.3 million ($1,670) without direct oil, gas and related product revenues that
accrue only in part to the local populations, in East Kalimantan. Despite these relatively high average
GDPs per capita, Kalimantan's provinces still have considerable poverty: some 30 percent of the
population in West Kalimantan, 20 percent in Central Kalimantan, and some 15 percent in South and East
Kalimantan, are estimated to be "absolute" poor.

2.6 Urban Services. There are significant backlogs in urban infrastructure services. In the
five cities, between one quarter and less than half of the population is supplied with water by local
PDAMs, either in the form of house connections (20-38 percent) or public taps (2-8 percent). In 1993,
the five water enterprises sold piped water at average tariffs between Rp 415 (Palangkaraya) and Rp 681
(Balikpapan) per m3 , and minimum tariffs between Rp 230 and Rp 421 per rn3 . Per capita water
consumption from house connections varied from less than 80 liters per day in Pontianak and
Palangkaraya to 140 liters in Samarinda- and 20-30 liters per capita per day from public taps. Service
tends to be rather unreliable, in particular during dry seasons. Most people depend on low-quality water
from shallow wells, rivers and canals as well as rain water, and on high-priced water bought from
vendors or neighbors.
2.7 Between half (Banjarmasin) and more than three quarters (Balikpapan) of the households
are equipped with on-site sanitation facilities, either in the lorm of septic tanks or pit latrines. The
remainder of the population uses public sanitation facilities or open places and rivers for their toilet needs.
In addition, the cities have few desludging facilities and disposal sites, and public as well as private
sanitary facilities are poorly maintained. In particular, overflowing septic tanks result in fecal
contamination of ground (shallow well) water and thus cause water-borne diseases like diarrhea and skin
diseases. High water tables make standard on-site sanitation technologies ineffective and alternative
solutions are required.

2.8 Only 50-60 percent of the population has solid waste collection in the five cities. While
in Samarinda about three-quarters of domestic waste gets collected, it is only one-third in Pontianak.
Frequently, households dispose of their waste by either burning it in their yards, or by dumping it near
their homes or into the nearest river. Burning waste contributes to air pollution; waste accumulation in
rivers and canals reduces the capacity of the drainage system, and contaminates river and coastal waters.
Service levels for non-domestic waste collection tend to be relatively high, varying between 75 and 100
percent. However, municipalities lack environmentally-sound final disposal sites, and adequate collection
and transfer facilities.

2.9 Flooding is a major environmental problem in the five low lying cities covered by KUDP.
Along the rivers, land is often below the high tide water level. Due to insufficient drainage and flood
control capacities, which are at least partly attributable to poor maintenance, floods bring contaminated
water into direct contact with mostly lower income people. Floods also affect buildings and disrupt
traffic.

2. i0 Rapid growth in motorized urban traffic--about one motorized vehicle every 10 persons
in 1990--narrow roads, rights-of-way encroachment, and inadequate traffic management measures, have
resulted in frequent traffic congestion, in particular in the central business districts. In the absence of
effective pollution control measures by central government (e.g., by requiring emission standards and
cleaner engines and enforcement strategies and measures), as well as of local measures to reduce
congestion, air pollution affects the health of urban populations. It is in particular the poor who are more
exposed to detrimental environmental conditions and, thus, to health risks.

2.11 Deficiencies remain both in coverage and quality of services as in Indonesian cities
elsewhere, specifically in or related to: (a) transport infrastructure and planning capability to guide urban
growth and traffic engineering and management to make the most of existing facilities; (b) water
distribution and/or bulk water supply; (c) micro-infrastructure and services and effective and safe low-cost
sanitation techniques in the kampungs, where most low income people live; (d) policies and operational
programs for: (i) O&M of infrastructure and utility services; (ii) revenue generation and the use of
municipal borrowing; (iii) private sector participation in delivery of municipal services; and (e) complex
relationships between municipal and central government authorities with respect to preparation, appraisal,
financing and implementation and O&M of infrastructure services.

B. URBANPLANNINGANDFINANCING

2.12 Development Planning Framework. The problems call for an efficient metropolitan
development strategy matched with a balanced intersectoral investment program using low-cost
technologies where practicable. The poorer communities can participate in upgrading their infrastructure,
without moving out. Much of the growth will continue to take place at the cities' peripheries and the
need to expand investments there, particularly in basic services, is high. Without adequate spatial
 -9 -

planning, the cost of providing these services rises rapidly and unnecessarily over time, and
environmental resources are lost or degraded.

2.13 Each of the five kotamadyas has prepared a master plan containing the main planning
guidelines for urban development, in accordance with central government guidelines. The master plans,
which cover 20 years, were officially approved around 1986; detailed spatial plans were ratified in 1987
by Local Government Regulation No. 8. The broad nature of the master plans as well as changing
socioeconomic factors justify the preparation of more detailed 5-year plans (PJMs); PJMs have been
prepared in the cities since about 1990.

2.14 Central Grant Dependency. Infrastructure investments in Kalimantan cities have not
matched the rapid growth of the five urban areas. Like other Indonesian local governments, the five
municipalities under the KUDP are dependent on central transfers to a considerable extent because of the
prevailing centralized tax structure.

2.15 Local Revenues. Local governments' main non-grant revenue sources fall into three
categories: local government taxes; local service charges; and assigned central government revenue.
Growth in local revenues has been fairly good overall in recent years with Palangkaraya and Samarinda
doing better than the others. PBB (land and building tax) is the largest of these sources in East
Kalimantan and the lowest in South Kalimantan (Table 2.2). Registration, valuation and assessment duties
tor this centrally administered tax are performed by local offices of the Directorate General of Taxation
of MOF. However, major parts of the collection work relating to PBB are performed by, or under the
supervision of, the local governments; 64.8 percent of the gross proceeds, irrespective of the collecting
agency accrues to local government.

2.16 Borrowing. Local governments, apart from their own enterprises, have not made much
use of borrowing for capital projects. Savings after routine expenditures are generally too low to cover
any level of debt service. Until recently local governments were required to restrict the levels of their
borrowing by reference to the "debt service ratio" criterion, broadly defined as the ratio of debt service
(principal repayments plus interest charges) payable in a year, to total revenues available for development
in that year. However, the application of that criterion was unclear and open to varying interpretations.
The maximum permitted ratio was 0.15, which was very conservative. GOI has recently decided to
replace it with one based on a more closely defined minimum "debt service coverage ratio" (DSCR).
This has been stipulated for any given year as: [projected grant and local revenues for the year in question
less projected routine account expenditure on staff, administration and O&M needs] divided by [total
estimated loan charge obligations (interest charges plus principal repayment) arising in that year from
currently outstanding loans and future proposed borrowing]). The minimum ratio required is 1.5.

C. WATERENTERPRISES
(PDAMs)

2.17 The five largest PDAMs of Kalimantan are located in the five project cities. All PDAMs
suffer from weak management and shortage of skilled personnel partly due to the less attractive conditions
of employment the local governments offer and the limited training the staff receive. The management
is normally appointed by the mayor and does not have operational autonomy. All PDAMs are organized
and managed according to national guidelines for water enterprises, which stipulate ownership and
operation by local governments, establishment as a local enterprise, the use of the accrual accounting
convention, and adoption of the National Standard Water Rate Structure (NSWRS) for tariffs. Tariff rates
vary depending on the cost structure of the enterprise and the make-up of its commercial base. The
authority to set the tariff rates sits with the local parliament, as does the distribution of profits.
 - 10 -

Table 2.2: LOCAI, TAXES AND CHARGES, 1992

(In Rupiah million)

% annual % annual % annual Rupiah

Local growth growth overall per
taxes/charges 1986/92 PBB 1986/92 Other Total growth capita

Palangkaraya 587 12 240 19 457 1,284 31 11,672

Banjarmasin 4,318 15 616 18 170 5,104 16 9,891
Pontianak 5,224 21 1,499 41 118 6,841 24 15,690
Balikpapan 6,033 14 4,900 37 325 11,258 22 29,165
Samarinda 4,980 22 5,306 43 80 10,366 31 22,340

Source: Project Preparation Report.

2.18 All PDAMs are required to prepare annual financial reports for audit either by the BPKP
or public accountants. Financial reports to 1993 have been audited. The financial reports of the last four
years indicate a range of performances from very weak to generally sound. Of the five PDAMs, only
Palangkaraya has growing operating deficits, and it also has the lowest tariffs. PDAM Balikpapan was
able to cover its O&M expenses except for 1992 partly due to an expansion in the distribution system,
and a new treatment plant of 250 I/s which were completed in 1989 and 1991 respectively. PDAMs
Banjarmasin, Samarinda and Pontianak showed relatively stable financial results, Samarinda showing
better performance; however the PDAM Banjamasin recently received an Italian loan to expand its supply
capacity that will strain its finances.

3. THE PROJECT

A. PROJECT ORIGIN AND FORMULATION

3.1 In Kalimantan, the IUIDP process began in 1988 when a decision was made to assist the
four provincial governments prepare multi-year expenditure programs based on priority infrastructure
needs, and related financing packages, for the five largest cities on the island, including their water
enterprises. The preparation process itself is seen as a first phase of the project. The assistance for
preparation was provided through consultant services funded initially under the Urban Sector Loan (No.
2816-IND) and subsequently supplemented by a PPF; the technical assistance services were managed
overall by DG Cipta Karya. A first full project preparation report (30 volumes) was completed in August
1992. This report required some revisions, and an in-house team of staft drawn from IMG, Bina Marga,
and Cipta Karya in collaboration with local governments, was set up in May 1993 to finalize the
preparation of the project. A revised report became available in October 1993, and a final report was
completed in May 1994. The preparation phase has been long for a variety of reasons, some with
positive effects on the design and ownership of the project in each city. First, there was a question of
the novelty to the local and provincial staff and their authorities, of the concept of integrated multi-year
programming embodied in the IUIDP process; consultants had to work hand in hand with the local teams,
who were being exposed to new planning approaches; second, Cipta Karya could not adequately supervise
the preparation work of the consultant and local teams due to staff constraints; third, there was lack of
clarity concerniiig the size and both sectoral and geographic scope. However, the efforts have paid off;
 - I1 -

the cities have been following the IUIDP approach for their own expenditure planning since about 1990
and have been closely involved in completing project preparation, and the in-house effort, assisted by a
minimum of consultants, was a learning-by-doing exercise that has increased Cipta Karya's capability.

B. PROJECT OBJECTIVES

3.2 The 1994 Bank Group's Country Assistance Strategy for Indonesia, presented to the Board
shortly before the proposed project was appraised, highlighted the need to focus on interregional equity,
delivery of higher quality services and enhanced competitiveness in a climate of macroeconomic stability.
The 1995 CAS further endorses the Government strategy of outward-oriented, labor-intensive growth,
more targeted delivery of social services, and more region-specific interventions. This will be addressed
through a lending program of smaller, regional and more locally managed investments to overcome
bottlenecks in infrastructure services and human resource development; decentralizing responsibilities and
increasing community participation are also part of the objectives, as is reducing pollution and
environmental sustainability. This project is part of a series of urban development projects supported by
the Bank under the IUIDP framework in line with the above objectives. It will make a contribution in
these areas in the five largest cities in Kalimantan and has the following principal objectives: (a) improve
the provision of urban infrastructure services and the efficiency of urban investments, (b) promote
stronger, more autonomous, and financially more independent municipal governments and PDAMs,
(c) contribute towards poverty reduction, mainly through better access to essential services for the urban
poor, and (d) improve the urban environment.

C. PROJECT DESCRIPTION

3.3 The project will support a 5 year program of high priority expenditures in the five cities
(Banjarmasin, Balikpapan, Palangkaraya, Pontianak and Samarinda) in roads, water supply, drainage and
flood control, human waste management, solid waste management, and KIP/MIP and infrastructure for
pilot urban renewal schemes, complemented by local institutional development action programs to
increase the capacity of implementing agencies and revenue improvement action plans to improve weak
management and revenue generation and collection. The project is summarized below and is described
by city in Annex 2. The detailed plans, by year and financial source by component (the PJMs) are in
separate reports in project files (Annex 3).

3.4 Water Supply. The proposed project component includes in the five cities, investments
in water treatment plants and transmissions and distribution networks, to increase and balance the
systems' capacities; also, investment in rehabilitation and leakage control, to reduce the high proportion
of non-revenue water; and increased operations and maintenance. In all, the expenditures will allow some
105,000 new connections to the piped water system, more reliable services, and better quality water.
Feasibility studies and systems' optimisation studies have identified the exact sizes and lengths of pipes,
reservoirs and booster pumps needed and their location in the cities for increased piped water distribution
in accordance with estimated demand; preliminary engineering studies have been prepared defining the
size, type and location of new water treatment plants and their intakes; programs for leakage control,
house and bulk water meter replacement and new installation are planned early under the project. While
the distribution systems will be laid in rights of way of roads, some land acquisition is necessary for 5
new water reservoirs--a total of about I hectare--affecting, but not displacing, 5 families. Detailed
engineering and procurement documents will be prepared under the project. The project will also assist
in financing supervision of the works.
 - 12 -

3.5 The project also includes a) studies to identify future raw water sources; the current
sources in some cities are river locations subject to tidal variation and sea water intrusion; b) advisory
services to improve management, operations and finances of the PDAMs.

3.6 Urban Roads: The five cities have an urban road network of some 1000 km including
national, provincial and local roads. The project would improve its routine maintenance, contribute to
periodic overlays/rehabilitation of some 125 km and improve (widen, upgrade or other works) some 280
km. In addition, the project would assist in constructing 30 km of new major roads needed to
accommodate traffic flows. Traffic management programs would be implemented in four cities.

3.7 Routine and periodic maintenance needs have been identified with the assistance of
consultants and DGBM/Binkot, following accepted standards in the road administration. Costs have been
based on standard material volumes and unit rates from previous contracts. Road improvementshavebeen
prepared to preliminary design stage, in accordance with the function/traffic on the road. Final designs
and procurement documents will be prepared as needed under the project. The new major roads--dualling
the airport access road in Pontianak, a new ring road/airport access road in Balikpapan and a new ring
road in Banjarmasin--require detailed designs, that will also be done under the project. The final design
of the Banjarmasin ring road will include an environmental study to protect the wetland the road will
traverse.

3.8 Solid Waste Management: The component consists of construction of new final disposal
sites for each city, procurement of bulldozers, dump trucks and containers and construction of transfer
stations. Some 32 ha have to be acquired for landfills, transfer depots and interim disposal sites in the
five cities. The identified landfill sites are on vacant land in low density suburbs. Care will be taken
in not disrupting recycling activities currently undertaken by private operators.

3.9 Sanitation/Human Waste Disposal: The component includes construction of on-site

facilities, including pilot schemes, of pilot sewerage/interceptor schemes and of septic sludge disposal
sites, within the solid waste disposal sites, and procurement of septic sludge disposal trucks. The high
water tables of the project cities make technically ineffective standard on-site sanitation solutions. The
project will try to identify more appropriate and cost-effective technologies through collaboration of the
central and local public work agencies and communities in Banjarmasin, in a pilot effort. The results will
be used in the other cities, and education campaigns, especially targeted at women, will be undertaken
to improve sanitation.

3.10 KIP/MIP/Infrastructure for Low-cost Housing: This component aims at improving all
poor kampungs by 1999: 64 kampungs with an area of about 1000 ha would be upgraded through
provision of roads/paths, drainage, sanitation and water supply, with community participation. The
project would also provide infrastructure, mainly roads, for new low-cost housing developments covering
a total area of about 100 ha, and roads for 3 pilot urban renewal programs, covering 64 ha in down-town
areas. And, the project would improve the infrastructure of 29 markets, with an area of 134 ha in very
poor condition.

3.11 Preliminary surveys and estimates have been made of the KIP/MIP needs by local and
central agencies; consultants under the project will help in finalizing consultations with beneficiaries, final
designs/preparation and procurement documents either for small local contractors or for material
purchases for self-help works. Preliminary designs have been prepared for the pilot urban renewal
programs, that will be undertaken with private participation outside the scope of the project; the project
will assist with final design preparation of roads/paths and their construction. The new low cost housing
 - 13 -

developments are being built by GOI's housing agency, and the project will assist with the needed roads
and water supply. No land acquisition is required for these components.

3.12 Drainage: This component includes rehabilitation and improvement of primary and
secondary drains, normalization of river banks and deferred and incremental O&M. The final designs
for the drainage components will incorporate flood control system needs and will review the usefulness
of hydraulic flushing gates for selected locations.

3.13 Project Implementation Support TA: As described above, the project provides
engineering services to help with final designs of works in the program and supervision of their
construction to be done by contractors. The administrative budget to handle the increased workload, 2
percent of the base costs for water supply and 4 percent for other sub-sectors, has been included in the
project cost and will be provided domestically.

3.14 Institutional Development TA and Training: This component consists of assistance for
program management and monitoring, municipal management, improved environmental and resettlement
practices, institutional capacity-building for each of the agencies and technical and management training
for the water enterprises. The project also includes assistance to Bappenas to further, country-wide, the
IUDP concept and practice. The project includes the preparation of strategic urban plans and of medium-
term expenditure programs (PJMs) to follow the proposed project period, but envisages that alternative
sources of finance will be found later, when needed. Annex 7 provides a summary of the proposed TA.

D. PROJECTCOSTS

3.15 The total cost of the project, as summarized in Table 3.1 is estimated at Rp 541.2 billion
(US$251.3 million equivalent) including contingencies of Rp 78.8 billion (US$36.6 million) over the
project period, and taxes and duties of approximately Rp 45 billion (US$21 million). Direct and indirect
foreign costs are estimated Rp 177.9 billion (US$82.6 million or about 33 percent of the total project
costs). Base costs have been estimated as of appraisal date. Physical contingencies for civil works and
equipment are estimated at 8 percent and price contingencies are estimated at 9 percent of the base cost
over the implementation period; physical contingencies are lower than average in other projects due to
the program nature of this project; cost of subprojects reflect preliminary estimates but the global
envelopes are relatively firm, under the PJMs. Price contingencies reflect current Bank estimates of
domestic (5 percent) and foreign (2.5 percent) inflation until 2001 and front loading of implementation.
Interest during construction is estimated at US$11 million equivalent. The base cost of implementation
support, engineering and supervision, is US$10.3 million (5 percent) and that of technical assistance and
training, is US$1 1.7 million (5 percent). The share of total costs by city is as follows: Balikpapan 19
percent, Banjarmasin 28 percent, Palangkaraya 11 percent, Pontianak 25 percent, and Samarinda 16
percent. Details are in Annex 4.

E. FINANCINGPLAN

3.16 The proposed Bank loan of US$136 million equivalent would repay the PPF of US$1.45
million (plus accrued charges and interest) and finance 54 percent of total project costs, or about
67 percent of the project costs net of identifiable taxes, increased administration budget costs and
incremental O&M expenditures. The loan would cover foreign exchange costs of investment estimated
at US$75 million equivalent and local investment costs of US$61 million equivalent. Counterpart funding
would be provided by the central government (US$42.9 million equivalent), provincial governments
(US$3.2 million equivalent), local governments (US$41.0 million equivalent), and water enterprises
(US$28.2 million equivalent). Further, the central and local agencies will fully fund current O&M for
 - 14 -

Table 3.1: PROJECTCOST SUMMARY

Rp billion $ million % of
Local Foreign Total Local Foreign Total Total

1. Water supply 53.5 41.4 94.8 24.8 19.2 44.0 21

2. Drainage 34.8 16.4 51.2 16.2 7.6 23.8 11
3. Urban roads 82.0 38.4 120.4 38.1 17.8 55.9 26
4. Solid waste 12.2 5.5 17.8 5.7 2.6 8.3 4
5. Human waste 19.5 5.9 25.4 9.0 2.8 11.8 6
6. KIP/MIP/Other 31.0 14.5 45.5 14.4 6.7 21.1 10
Subtotal 233.0 122.2 355.2 108.2 56.7 164.9 76

7. Incremental O&M 29.2 15.7 44.9 13.6 7.3 20.9 10

8. Imple. Support TA 17.3 5.0 22.3 8.0 2.3 10.3 5
9. Instit. Development TA14.7 10.6 25.3 6.8 4.9 11.7 5
10. Administration 11.2 0.0 11.2 5.2 0.0 5.2 2
Total Base Cost 305.4 153.4 458.7 141.8 71.2 213.0 100

Physical Contingencies 22.6 12.2 34.8 10.5 5.7 16.2 8

Price Contingencies 35.3 8.7 44.0 16.4 4.0 20.4 9
PPF Repayment - 3.7 3.7 0.0 1.7 1.7 1

Total Project Cost 363.3 177.9 541.2 168.7 82.6 251.3 118

Note: Due to rounding, totals may not add up.

Base costs are in May 1994 prices.

infrastructure and interest during construction on subloans under their respective responsibilities estimated
to add US$48 million to the project cost. Annex 5 provides details of the financing plan; a summary is
provided in Table 3.2 below. Final financing plans for the central and local governments and PDAMs
were confirmed during negotiations, and assurances were obtained regarding timely provision of
counterpart funds. Budget approvals will be issued each project year by January 15 for PDAMs and May
I for other agencies.

3.17 On-lending. Of the Bank loan to the GOI, Rp 28 billion and Rp 44 billion (US$13
million and US$20.5 million equivalent) are to be on-lent by the central government to the kotamadyas
and to the water enterprises. The amount of borrowing was determined on the basis of the willingness
and financial capability of local governments and water enterprises to borrow under subsidiary loan
agreements (SLAs) satisfactory to the Bank. Proceeds of the subloans would cover 91 percent of the
costs (excluding administration costs) to the kotamadyas and water enterprises under the project. Central
government will bear the foreign exchange risk and the risk of interest rate variation. The lending terms
of funds onlent through SLAs are for 20 years, including five years of grace and will carry a fixed
interest rate. The interest and commitment charges would be paid during the grace period. The interest
rate for subloans is 11.5% p. a., the six-month average of the three month Sertifikat Bank Indonesia (SBI)
rate prevailing at the time of appraisal. The onlending rate and amounts and draft SLAs were agreed at
negotiations. Final SLAs acceptable to the Bank should be completed for loan effectiveness and the
 - 15 -

Table 3.2: FINANCINGPLAN

Local Foreign Total Local Foreign Total Percentage

------- (Rp billion) ------- ------ (US$ million) ------

Central Government 87.2 5.2 92.4 40.5 2.4 a/ 42.9 17

Provincial Government 6.9 - 6.9 3.2 - 3.2 1

Local Government 84.0 4.3 88.3 39.0 2.0 a/ 41.0 16

PDAMs 53.2 7.5 60.7 24.7 3.5 a/ 28.2 11

IBRD 132.0 160.9 292.9 61.3 74.7 136.0 54

Total Financing 363.3 177.9 541.2 168.7 82.6 251.3 100

Interest During Construction (municipal & PDAM) 10.7 - 10.7

Current O&M (municipal & PDAM) 27.6 9.2 36.9
38.3 9.2 47.6

a/ On incremental O&M, fully financed domestically.

overall SLA mechanism will also be discussed in the framework of a sectoral dialogue, as recorded in
minutes of negotiations.

3.18 Central Government Non-Repayable Financing. Of the total central financing of project
costs which are non-repayable by the local agencies, one part, Rp 44.2 billion (US$20.6 million
equivalent) consists of the formula driven and ad-hoc development grants (INPRES Dati II and INPRES
Jalan) that provide cash supplements to regional budgets (Annex 5). The other part, Rp 309.5 billion
(US$143.7 million equivalent), consists of central government development budget (APBN) funds, which
can also be divided into two parts. One part, about Rp 221.5 billion is for infrastructure and technical
assistance and is classified as central government responsibility. These are APBN DIP (national project)
funds and would be distinguished in practical terms by having central government staff as project
managers (Pimpros) and assistant managers (Pimbagpros) responsible for signing contracts. The other
part (Rp 88 billion) is central government grants to local and provincial governments on the basis of an
approved multi-year expenditure program (SPABP) for infrastructure and TA classified as provincial or
local responsibility. Typically the projects financed under the SPABP are implemented and managed by
the staff or project managers of the local governments.

3.19 Regional Financing. About Rp 156.0 billion (US$72.4 million equivalent) or 28 percent
of the total project costs would be financed from regional level resources. These resources include water
enterprise operating revenues (Rp 60.7 billion), second level regional government taxes, assigned
revenues, service charges and other local revenues (Rp 88.3 billion), and contributions from the
provincial government budgets (Rp 6.9 billion).
 - 16 -

3.20 Retroactive Financing. Retroactive financing for project expenditures started after May
1994 hut before loan signing, could facilitate project implementation. Expenditure incurred for civil
works contracts and technical assistance and engineering services, would be eligible tor up to US$5
million. Procurement should be in accordance with Bank procurement guidelines and procedures
("Guidelines for Procurement under World Bank Loans and IDA Credits" of May 1992, as amended, and
"Guidelines for the Use of Consultants by World Bank Borrowers and by World Bank as Executing
Agency" of August 1981). A Project Preparation Facility in the amoupt of US$1.45 million had been
granted by the Bank and was used to finance part of the preparation services. The PPF, charges and
accrued interest will be repaid from the loan after its effectiveness.

4. PROJ.ECTIMPLEMENTATION

A. IMPLEMENTATION
AGENCIES

4.1 Implementation of the project will follow standard IUDP procedures being applied under
3 ongoing IUIDP Bank projects and one approved in FY94, although increasing attention is given to
environmental and resettlement aspects. Existing organizations at the municipal level will be responsible
for implementation of the project as mentioned below and schematized in Annex 6:

(a) Urban Roads and Traffic Management. The Roads and Bridges Section of the
Municipal Public Works Agency (DPU 11) is responsible for the construction, maintenance and
supervision of local roads and bridges. Provincial and national roads are the responsibility of the
Directorate of Urban Roads (BINKOT) in D.G. Bina Marga and its provincial offices (DPU 1).
IEngineeringconsulting support is being provided under the project to assist the agencies.

(h) Water Supply. The PDAMs are responsible for implementing their respective programs.
Consultants will be appointed by each PDAM under general guidance from Cipta Karya to help them
implement the programs. A project implementation unit will be set up in each PDAM.

(c) Solid Waste Management. Dinas Kebersihan (Cleansing Agency) in the municipalities
will be responsible for solid waste management activities. It will be supported by technical assistance
to be managed under the PMU.

(d) Human Waste Disposal/Drainage. Dinas PU TkIl will be responsible for on-site
sanitation system activities and drainage improvements at the local government level. Implementation
of pilot off-site systems will be the responsibility of DGCK.

(e) KIP/Infrastructure for Low-cost Housing. The municipal housing agency (Dinas
Perumahan) in each city will be responsible for the implementation of the KIP components. Consultant
teams, providing assistance on the technical, financial, economic, institutional and environmental aspects,
will be located in the Dinas Perumahan, but will be responsible to the Directorate of Housing, DGCK.

(t) MIP. The market agency in each city (Dinas Pengelola Pasar) prepares the plans and the
DPU will be responsible for implementation of the MIP component of the project.

4.2 Provincial Agencies. Provincial governments of Kalimantan will have direct

implementation responsibility for subprojects financed from INPRES I and APBD I funds, that are a
relatively small share of the project funding. The provincial planning agencies (BAPPEDA I) assist local
governments in the normal preparation of funding requests for approval by the central government.
 - 17 -

4.3 In order to ensure the availability of full-time staff in the implementation units, the
municipal governments will issue special Letters of Assignment to release staff from their regular duties.
An IMG-approved draft of the official Instruction (SK) on Implementation Arrangements and a final draft
of the Instructions from the city mayors on the establishment of the implementation units were available
for negotiations. Staff for the units have been selected and will be trained prior to loan effectiveness.

4.4 In order to improve project implementation, the GOI will prepare and agree with the Bank
on a training program within 6 months of loan effectiveness, aimed at development of local institutional
capability more broadly (identifying who will provide each of the courses, the duration of each course,
and the prior academic requirements of trainee applicants; and a detailed statement of how the local
governments can access the training program for their staft).

4.5 Project Implementation Agreements (PIA). Project Implementation Agreements (PIA)

have been drawn up between GOI. the five Kotamadyas, and their PDAMs confirming essential
understandings and commitments based upon the medium-term expenditure programs (PJM), financing
plans, Revenue Improvement Action Plans (RIAP), Local Institutional Development Action Plans
(LIDAP), and sound criteria for land acquisition and resettlement. Through the PlAs, Kotamadyas and
their PDAMs commit themselves to comprehensive sectoral expenditure programs (including O&M
budgets), specific revenue targets and measures to strengthen the institutional capabilities of urban
managements as included in this project. The investment and sector plans can be amended annually to
reflect changing conditions during project implementation, as is the IUDP approach. Amendment
proposals, if necessary, should include an environmental assessment, a resettlement plan, and a
management and monitoring plan. Draft PlAs acceptable to the Bank between GOI and the Kotamadyas
Banjarmasin, Balikpapan, Pontianak, Samarinda and Palangkaraya and their PDAMs were available at
negotiations and will be finalized by loan effectiveness.

B. PROJECT COORDINATION AND MONITORING

4.6 Central Agencies. Coordination and guidance for the project will be provided by the
Urban Development Coordination Team (TKPP, composed of director-general level officials), with the
assistance of the IUDP Implementation Management Group (IMG, composed of directorate-chief level
officials). BAPPENAS chairs TKPP and IMG, and is responsible for daily management of the IUDP
Implementation Support Unit. Overall responsibility for technical supervision and management of the
proposed project in the central government will be assumed by DGCK and DGBM of MPW. DGCK and
DGBM will also be responsible for direct implementation of infrastructure programs classified as central
responsibility, assisted by the DGCK-based Central Project Management Office (CPMO) and Central
Project Finance Office (CPFO). Established under earlier urban projects financed by the Bank and other
donors, the CPMO would be responsible for monitoring all program and subproject implementation. The
CPFO, similarly, was established under past projects and would be responsible for oversight, monitoring,
consolidation, and preparation of all project accounts. It would also be responsible for preparing annual
project accounts for audits (see para 4.16) with the help of core consultants/staff resident in each of the
five cities assisting with technical auditing of the projects physical works.

4.7 Municipal Governments. Each municipal government will have primary responsibility
for project coordination and monitoring at the local level. A Steering Committee (SC) and a Technical
Team (Tim Teknis) established at the local level planning board (BAPPEDA 11),functioning as a Project
Monitoring Office (PMO), will provide overall guidance. A Project Management Unit (PMU) will be
established under the Dinas PU by the city mayor to coordinate the activities of the units implementing
the various sector programs. Local Project Finance Offices (PFO) will be established under the
 - 18 -

jurisdiction of the finance section of each Mayor Secretary's Department for financial monitoring of the
project. The project will provide technical assistance to the municipal IUDP teams.

C. IMPLEMENTATIONSCHEDULE

4.8 Project implementation is expected to commence in GOI's FY1995/96 and be completed

over a five-year period ending FY2000/2001. The technical teams at the local level which will be
responsible tor implementation were involved during the preparation phase. The first year program will
concentrate on a) implementing relatively standard components that require little technical preparation,
such as road overlays, KIP/MIPs, pipe and meter installations for water supply components; and b) in
preparing other components that require more detailed technical preparation, resettlement and land
acquisition, and terms of reference for more detailed studies and follow up assistance. The
implementation schedule is included in Annex 8.

4.9 In order to facilitate project implementation to start early a high priority technical
assistance and engineering services package has been identified for the required first year activities.
Terms of reference, a shortlist of consultants and a letter of invitation were approved by the Bank and
are in project files. A tirm had been preselected by negotiations; the selected firm is to start work before
loan effectiveness with financing from another Bank loan.

D. PROCUREMENTAND DISBURSEMENTS

4.10 Procurement of civil works, goods and consultant services will follow Bank guidelines.
Large civil works contracts costing US$3 million or more and goods contracts costing US$200,000 or
more will be procured following International Competitive Bidding (ICB) procedures, using the Bank's
standard bidding documents (SBD). A General Procurement Notice would be issued in advance to
encourage participation of eligible parties. Smaller civil works contracts, valued at less than US$3
million up to an aggregate amount of US$113 million and goods contracts valued at less than US$200,000
up to an aggregate amount of US$6 million would be procured under Local Competitive Bidding (LCB)
procedures acceptable to the Bank (Table 4.1). Goods contracts for less than US$20,000 each up to an
aggregate total of US$2 million, may be procured through prudent international and/or local shopping
under procedures satisfactory to the Bank. All consulting services under the Bank loan would be
procured in accordance with the Bank guidelines for the use of consultants (para. 3.20). Domestic
preference would be provided during bid evaluation at a rate of 15 percent of the CIF price or the
applicable customs duty, whichever is lower for local manufacturers participating in the ICB procurement
of goods.

4.11 Procurement Review. Civil works contracts exceeding US$I million equivalent in value,
goods contracts exceeding US$200,000 equivalent in value, and consultant contracts with an estimated
value of US$100,000 or more for engagement of firms (US$50,000 or more tor the engagement of
individuals) would be subject to prior review by the Bank. The balance of contracts for goods and civil
works, including those reimbursed under Statement of Expenditures (SOE), will be subject to selective
post-review by the Bank. Contractors tor civil works exceeding US$1 million in value would be pre-
qualified in accordance with procedures satisfactory to the Bank. Terms of reference for all consultant
services, including detailed engineering design and supervision, studies and other technical assistance,
would also be subject to prior Bank review. The use of standardized bidding documents by the borrower
will facilitate Bank review.
 - 19 -

Table 4.1: PROCUREMENTARRANGEMENTS

(US$ million)/a

ExpenditureCategory ICB LCB Other /b NBF /c Total Cost

Civil works 37.3 113.0 150.3

(25.0) (74.7) (99.7)
Goods 10.0 6.0 2.0 12.0 30.0
(10.0) (4.0) (1.0) (15.0)
ConsultantServices:
Engineering&
Supervision 10.4 10.4
(9.0) (9.0)
TechnicalAssistance
and Training 11.8 11.8
(10.6) (10.6)

Land, taxes and duties 21.0 21.0

IncrementalO&M and Administration 26.1 26.1

Total 47.3 119.0 24.2 59.1 249.6

(35.0) (78.7) (20.6) - (134.3)
(PPF) (1.7)

/a Figures in parenthesesare the respectiveamountsfinancedby the Bank.

/b Includeslocal and internationalshopping,and selectionof consultantsfollowingBank guidelinesfor
the use of consultants.
/c Not Bank financed.

4.12 ProcurementPackaging. Where technicallyfeasible and administrativelypractical,

subprojectshavebeen/willbe packagedtogetherfor tendering. Procurementof physicalcomponentswill
be kept separatefor each agency(centraland local governments,PDAMs)to avoid administrativedelays
and complexpaymentprocedures. Similarly,procurementwill be kept separatefor each sector (roads,
drainage, etc.) as each contractwill be administeredby a different agency. However,consultantservices
will be combinedwhereverfeasible, e.g., supportpackagesfor studies, institutionalstrengtheningfor all
cities, etc. Table 4.2 summarizesthe numberof ICB and LCB contracts expectedby sector.

4.13 Disbursements.Loandisbursementswouldbe made at the followingrates for the various

expenditurecategories: (a) civil works, 60 percent; (b) 100percent of CIF costs of directly imported
goods (ICB), and 100 percent of ex-factory costs, for goods supplied by local manufacturers, and
65 percent of the costs of other locallyprocuredgoods; (c) subprojectsunder SLAsto local governments
and water enterprises- 91 percent; and (d) consultancyservicesand training- 91 percent of the costs of
contractsmanaged by the municipalitiesand PDAMs, and 80 percent of the costs of contracts managed
by centralgovernmentagenciesexcept for the contractssigned beforeJune 1, 1995for which 91 percent
applies(Table 4.3). Domesticfundingwill be used for procurementof vehicles. No taxes will be paid
 - 20 -

Table 4.2: EXPECTED NUMBER OF ICB AND LCB PACKAGES BY SECTOR

Sector ICB LCB

Water 6 85
Drainage 0 45
Roads 6 45
Solid Waste 5 45
Human Waste 0 30
KIP/MIP/renewal 0 70
Total 17 320

with loan proceeds. Disbursements by category by city are shown in Annex 9.

Table 4.3: DISBURSEMENTS

Category Amount Disbursement Rate

(US$ equivalent)

(1) Civil Works 69,300,000 60%

(2) Equip. & Supplies 5,400,000 100% of foreign expenditures
(excl. vehicles) 100% of local expenditures,
ex-factory costs and 65% of
other items procured locally
(3) Goods and Works 33,500,000 91%
under SLAs
(4) Consultants' Services
& Training 19,600,000 80% (central) and 91 % (local) /a
(5) Refunding of PPF 1,700,000 100%
(6) Unallocated 6.500.00

Total 136,000,000

Estimated IBRD Disbursements

IBRD FY 1995 1996 1997 1998 1999 2000
----------------------------- US$ million--------------------------
Annual 3 32 42 42 14 3
Cumulative 3 35 77 119 133 136

/a 91 % also applies for services contracted by the Central government prior to June 1, 1995.
 - 21 -

4.14 To facilitate loan disbursements,a Special Accountwill be opened by the Ministry of

Finance in Bank Indonesiafor withdrawals against all eligible foreign and local expenditures. The
authorizedamount of the Special Accountis US$5 million. This account would be maintainedin US
dollars,with an initial depositof US$3.5 million. When disbursementwill havereached US$7 million,
the SpecialAccountdeposit can be increasedto US$5 million. Withdrawalapplicationswould be fully
documented,except for civil works contractsbelow US$1 millionequivalent and equipmentcontracts
below US$200,000equivalent,and consultingfirms valued below US$100,000equivalentand individual
consultantsvalued below US$50,000equivalent,and all the training, for which the use of Statementof
Expenditures(SOEs) would be required. Replenishmentof the Special Account would be made on a
monthlybasis or when 20 percent of the initial deposithas been used, whichevercomes first. Detailed
supportingdocumentationfor SOEs wouldbe retainedby DG TUA and the implementingagencies and
made available to the Bank for review on request. Assuranceswere provided at negotiationsthat
paymentsto local contractorsincludingcontractsunder SLAs, wouldbe made from the KPKNTreasury
offices in the respectiveprovincialcapitals(as is being done normallywith SPABPpayments).

4.15 The proposed disbursementperiod of five years is somewhatless than the disbursement
profile for IUIDP projectsin Indonesia. However,as this project has been prepared taking into account
the start up problems encounteredin the earlier projects, and thus steps taken to (a) mobilize early the
consultingservices,(b) use up to US$400,000from the JakartaUrban DevelopmentProjectII for starting
some project activitiesprior to loan effectiveness;and (c) assure availabilityof counterpartfundsfor the
first year, it is consideredachievable. The project completionand loan closingdates are December31,
2000 and June 30, 2001 respectively. The estimated schedule of disbursementsand the related
disbursementprofile are shown in Annex 10.

E. PROJECT ACCOUNTS AND AUDITS

4.16 The finance offices of each implementingagency are responsiblefor project accounting
and audit arrangements.At the local level the Finance Offices(FOs) in each city will maintainaccounts
for project related expendituresfinanced by all sources of funds for all project components,including
those relating to the PDAMs. Each PDAM will maintain a separate account for the project. At the
nationallevel, the Central Project FinanceOffice(CPFO) in Cipta Karya will prepare project accounts
of all componentsimplementeddirectly by the central agencies. CPFO will also be responsiblefor
consolidatingquarterly project accountsfor the entire project and submittingthem annuallyfor audit by
the government auditors, Badan PengawasanKeuangandan Pembangunan(BPKP). CPFO will also
coordinateseparate auditsof the SOEswith the DirectorateGeneralfor Budget,Bank Indonesia,and the
central office of the State Audit Board.

4.17 Assuranceswere provided during negotiationsthat the consolidatedproject accounts,

includingthe SpecialAccountand SOEs, as well as the overall accountsof the PDAMs, will be audited
annually by independentauditors in a manner satisfactory to the Bank and that the audited project
accountswould be submittedto the Bank no later than six months after the end of each fiscal year,
commencingFY95/96. Auditsof PDAMs overallfinancialstatementsshouldbe retainedat each PDAM
for review by Bank missions. In addition to financialaudits, assuranceswere obtained at negotiations
that GOI will also appointthe InspectorateGeneral of the Ministry of Public Works and the provincial
level Inspectoratesas auditors for technical audit of project implementationincluding, inter alia, civil
work contracts, procurementof goods and training programs, in a manner satisfactory to the Bank.
Domesticsources will fund the audits. The first technicalaudit will be discussedwith the Bank no later
than I year after loan effectiveness;and at regular I year intervals thereafter. Terms of reference for
both financialand technicalaudits will be finalizedby GOI in consultationwith the Bank.
 - 22 -

F. PROJECT REPORTING, MONITORINGAND BANK SUPERVISION

4. 18 DGCK, with assistance from its CPMO and CPFO, will prepare and submit to the Bank
quarterly progress reports (QPR) on the basis of inputs from the five cities and implementing agencies
of the central government, with an overall summary and covering the progress on: (a) physical aspects
of each component; (b) institutional development (LIDAP) and revenue improvement (RIAP) actions; (c)
consulting services; (d) compliance with loan agreement covenants; (e) administration and finance,
including project cost, commitment and disbursement schedule; and (f) a list of actions to be taken by
the various parties. The progress reports substance including performance indicators, and the format will
be discussed at the workshop for the project launch scheduled for April 1995 (as recorded in the minutes
of negotiations). QPRs would be submitted within 45 days from the end of each quarter, starting with
the quarter ending December 31, 1995. On completion of the KUDP, the DGCK, assisted by the five
cities, would prepare a Implementation Completion Report within 6 months after the loan closing date,
for review by GOI and the Bank.

4.19 The project would require some 30 staff weeks of Bank supervision each year during the
first two years and 20-25 staff weeks annually in the subsequent years of the project (Annex 11).
Supervision missions would include engineering, institutional, financial and environmental expertise. The
missions will review the yearly plans and budget proposals not later than November 30 each project year.
After completion of two project years, not later than June 30, 1998, a mid-term review would take place.
The proposed arrangements and schedule for project supervision were agreed with GOI at negotiations.

G. OPERATIONSANDMAINTENANCE

4.20 Expenditure programs for the municipalities and PDAMs include O&M budgets in every
subsector in accordance with IUIDP guidelines. MHA Ministerial Decree No. 5 of 1990 promulgated
Performance-oriented Operations and Maintenance Management Systems (POMMS) and revised local
budgeting procedures to encourage O&M. Current O&M expenditures and incremental O&M
expenditures (to reach necessary levels and expand coverage) are clearly separated. Adequate budgeting
for current and incremental O&M is an important objective of KUDP; domestic sources will fully fund
O&M to ensure sustainability of the increased level under the project. Advisory and training assistance
would be provided under the project to improve maintenance practices. During negotiations the Borrower
agreed to review annually with the Bank the operation and maintenance expenditures of the previous year
as well as the budget for the following year.

H. LAND ACQUISITION,RESETTLEMENTANDCOMPENSATION

4.21 The project minimizes resettlement through design alternatives that reduce land acquisition
needs. KIP programs improve on-site poor neighborhoods through community participation in
identification, planning and implementation of upgrading community infrastructure. Most other civil
works are of a rehabilitation/upgrading nature that do not require land acquisition. Pipes for expansion
of the water transmission and distribution systems will be laid in existing rights of way of roads,
including sidewalks where applicable. Where subprojects require new land, the extent is generally small
and in most instances has been acquired during the long project preparation process. Nevertheless, as
of September 30, 1994, some 39 hectares still had to be acquired under the project (20 of them are
government-owned vacant land to be acquired by an agency). Only 57 families would be affected and
39 families would be displaced in all 5 cities. Two settlement action plans have been prepared and found
satisfactory by the Bank. Details are in Annex 12.
 - 23 -

4.22 Presidential Decree 55/93 on land acquisition for public facilities will be applied to all
resettlement financed by Bank-assisted components (para. 1. 15). Unlike cities in Java, where land and
financial resource constraints inhibit resettlement, site-specific factors that favor successful resettlement
in KUDP include the fact that land is not in short supply, making it possible both to adjust civil works
to reduce resettlement needs, and to find alternative housing sites that do not pose significant transport
costs on resettled families. The cities already have large affordable housing programs operating under
other urban investment programs that have been used for successful resettlement; Samarinda has received
the Aga Khan award for a central business district redevelopment. The cities have sufficient funds at
hand to pay adequate compensation. Managing resettlement for the proposed project will only involve
introducing some refinements to familiar procedures.

4.23 Project Resettlement and Rehabilitation Action Plans. The municipal government of
each city is responsible for managing land acquisition and resettlement, with technical support provided
by DG Cipta Karya or DG Bina Marga. Only 2 project components displace more than 10 families. One
is the ring-road in Banjarmasin (19 families displaced and 37 families affected; a number of families were
moved prior to the inclusion of the road in the proposed project and were compensated adequately). The
other project component displacing more than 10 families--20 families--is the wastewater/interceptor
aeration pond in Samarinda. Resettlement Action Plans have been prepared and found satisfactory; they
are in the project file. Sites have been individually surveyed. The core of each resettlement plan consists
of providing resettlers with the option to accept cash compensation at replacement value, or serviced plots
or serviced plots with a core house in larger resettlement and affordable housing programs being
developed by each city. None of the resettlement sites is more than 7 kilometers (most are closer) from
current sites, and the project will provide moving assistance to families that elect to move. Affordable
transportation to work is already available at new sites. Where only a few families are affected or
displaced, the local governments are applying the same compensation criteria, as expressed in the Project
Implementation Agreements, although detailed plans will not be prepared. For subprojects that need land
acquisition and resettlement, the related costs are included in the project budget keyed to civil works
timetable for each sub-project. The Government has agreed to resettle affected people according to the
plans agreed with the Bank. A resettlement specialist will be included in the project's technical assistance
program under TORs agreed with the Bank, to assist municipal governments with implementation,
preparation of monitoring reports and development of improved guidelines for resettlement under future
programs.

L. ENVIRONMENTAI,
IMPACTS

4.24 The project will have a positive impact on the human and natural environment in all five
cities through improvements in waste disposal, drainage and flood control. Most negative impacts will
be minor, corridor impacts associated with construction, rehabilitation or upgrading of urban roads,
drainage systems and flood control. However, the project includes a small number of sub-projects,
including new solid waste disposal sites in all five cities and possibly sewerage treatment plants in 2
cities, that could have significant though localized negative impacts. The project was labelled "Category
A" early on. The Environmental Assessment Summary was distributed to the Executive Directors on
May 11, 1994.

4.25 Under GOI regulations (PP 29/1986) Preliminary Environmental Assessments (PILs) were
undertaken for each of five sectors (water supply, solid waste, drainage, roads and sanitation) for each
of the five cities in 1992. Based on these assessments, environmental management and monitoring plans
(RKL/RPL) were prepared. The central commission of the Ministry of Public Works approved the PILs
 - 24 -

in 1993, and the relevant commissions approved the environmental impact analyses (ANDAL) prepared
for the solid waste sector, and RKLs and RPLs, in January 1994.

4.26 The major areas for attention are: a) the proposed Banjarmasin ring road, whose alignment
traverses a wetland area. The engineering design will have to minimize any disruption to the wetland
system; the Bank will want to review the design before the start of procurement. As the road would
likely induce settlement within the wetland, the city land use plan to he prepared under the project will
include measures to protect the wetland, in particular its function in controlling tlooding; b) supervision
will be required to oversee transport and disposal of material dredged from drains and canals during
upgrading; c) supervision will be required to minimise traffic disruption during construction of road sub-
projects; d) design and post-construction monitoring will be required for solid waste disposal sites and
for the eventual sewerage treatment plants/waste water systems. Criteria for mitigation of environmental
impacts that will be provided as guidelines for contractors are detailed in Annex 13.

4.27 The review of RKL/RPLs identified the need tor improved inter-agency coordination to
manage and minimise impacts during construction. In all five cities institutional capacity for
environmental management requires strengthening with regard to staff numbers, skills and experience.
Within about the next five years, other donor-funded projects will provide laboratory facilities and trained
technical staff at the provincial-level for air and water quality monitoring; these will he readily available
to the city administrations. Thus, TA under KUDP will develop and deliver on-the-job training programs
for Dinas Cipta Karya and Dinas Bina Marga staff, for improving each city's capacity to effectively direct
environmental planning, assessment and management processes. In addition, funds will also be used to
prepare and deliver public awareness campaigns on proper methods of domestic waste disposal, to
complement the work being undertaken to improve solid waste collection and urban drainage.

4.28 If any new major component were to be added later to the project, environmental
screening and/or assessment and a resettlement plan, as may be appropriate, would be required prior to
Bank approval for funding.

5. FINANCIAI. ASPECTS

A. LoCAL GOVFRNMENTS

5.1 Most local governments will continue to receive substantial grant funding in the
toreseeable future. Non-grant revenue forecasts under the RIAP process project a somewhat higher
average real growth than in the recent past for all five cities; the projections are reasonable and within
the local governments' power to achieve. Revenues are expected to double by the year 2000. (Annex
14).

5.2 RIAP/LIDAP Process. Although annual growth in local revenues has generally been
steady, studies undertaken during preparation of the Revenue Improvement Action Programs (RIAPs)
indicate that current levels of revenue from major sources are considerably below their potentials.
Deficiencies are often found in local administrations: a significant number of potential tax payers go
unregistered, taxes are under-assessed, and revenues, under-collected. The project seeks to address these
deficiencies. RIAPs and LIDAPs introduced during the project preparation phase, and to be refined
during project implementation, seek to identify steps to achieve improvements in the planning and
administration of local taxes and service charges. Such steps typically include collection of data on the
revenue bases including proper identification of tax objects and subjects, tax assessment approaches,
review of tariffs, and establishment of annual revenue targets for progressively narrowing of the gap
 - 25 -

betweenperformance and identifiedpotentials. The local governmentshave committed themselvesto

implementingthe RIAPs/LIDAPswith technical assistanceand necessaryequipmentprovidedunder the
project.

5.3 Cost Recovery. The cities charge for solid waste disposal and sanitation (including on-site
sanitationand sludge removal). The level of O&Mcost recoveryvaries amongcities, with Samarinda,
Pontianak and Balikpapancovering up to 80-100 percent. Because of low rates and low collection
efficiencies,the 1993 revenuefrom solid waste charges in Banjarmasinand Palangkarayacovered only
40-70 percent of O&M costs, with no contribution being made towards capital costs. All five local
governments have agreed to increase periodically solid waste tariffs to at least cover O&M. They have
also agreed to implement sanitation tariff increases resulting from the RIAPs.

5.4 Borrowing. Estimates of maximum borrowing capacity for each local government have
been prepared by making revenue and expenditure projections for the program period and a number of
subsequent years sufficient to establish that the savings from locally generated revenues, after deducting
routine expenditures, can service debt. The total borrowing capacities are small. All local governments
have nevertheless made commitments to borrow small amounts in consultation with central and provinciai
governments. A total of about US$13 million out of the Loan is expected to become subsidiary loans to
the local governments; the local government proposals are generally satisfactory. Draft sub-loan
agreements for the local governments were reviewed during negotiations and the specific amounts were
confirmed. Local governments eligible for borrowing under this project agreed to maintain minimum
debt service coverage ratios of 1.5, based on locally generated revenues.

B. WATER ENTERPRISES

5.5 Financial Management. Given that PDAMs' accounting, reporting, billing, accounts
receivable, and controls are generally weak, partly due to shortages of skilled personnel and relaxed
requirement by the authorities, technical assistance and training will be provided for: (a) improving the
financial reporting systems to suit a timely annual audit cycle; (b) setting up accounting and reporting of
accounts receivable to monitor aging debts and prepare action plans for collection; and (c) organizing the
meter reading and billing functions with effective controls.

5.6 Tariffs. The tariff structure is progressive with quantity consumed and is higher for non-
domesticusers. Tariff increases rangingfrom 33 percent to 60 percent were implementedin 1993 for
all except PDAM Banjarmasin and Palangkaraya. Palangkaraya's new rate became effective January 1994
and Banjarmasin's, in July 1994. Tariffs will be increased every other year in order to ensure that at
least cost escalationsdue to intlationare coveredand the foreseencapitalself generationis achieved. In
current prices, average tariff per m3 are expected to increase from 1994 to 1999 as follows: Rp 649 to
1030 in Pontianak, Rp 540 to 983 in Palangkaraya, Rp 628 to 1212 in Banjarmasin, Rp 757 to 1251 in
Balikpapan, Rp 729 to 1056 in Samarinda (Annex 15). Tariff increases will be implemented every two
years startingJanuary 1, 1996to enablePDAMsto fullycoverO&M after FY1995and fully cover O&M
and depreciationby FY1999, while incorporatingefficiencyimprovementsthat should reduce costs.

5.7 Financial Projections. The financing plans maximize self financing first, from revenues;
then include borrowing as possible, and residually, equity contributions. Only Samarinda does not count
on new equity. Key financialindicatorsare shownin Annex 14. They are based on a list of assumptions
for each PDAM,the most importantof which include:(a) numberof existingand additionalconnections;
(b) minimalcapacityutilizationto be attained; (c) reducedlevels of non-revenuewater; (d) level of new
investmentsand subloans; (e) agreed periodictariff increases;and (t) PDAMs will be allowedto retain
 - 26 -

profits and required to use them towards financing their programs during the project period, as needed.
Detailed financial projections are in project files; they indicate that all PDAMs will cover the cost of their
O&M by 1995 and will achieve a three year average debt service ratio of at least 1.5 by the end of the
grace period. Any PDAM investment additional to the PJM exceeding Rp. 2 billion would require prior
Bank consultation. Draft sub-loan agreements for the PDAMs were reviewed during negotiations;
specific amounts were confirmed. PDAMs eligible for borrowing under this project agreed to maintain
minimum debt service coverage ratios of 1.5, based on locally generated revenues. More generally, to
enhance the self-financing capacity of PDAMs, the GOI agreed to take measures such as instructing
PDAMs by September 1995 to deduct depreciation from their estimated profits available for distribution
to local government (as recorded in minutes of negotiations).

6. PROJECTJUSTIFICATION
ANDRISKS

A. ECONOMICJUSTIFICATION

6.1 Each of the investments planned for funding under the project have been subject to
economic analysis by consultants. As the cities had relatively low service levels in 1993, and their
populations are expected to grow by almost 500,000 persons by the year 2000, the investments are highly
justified. Below are some of the main features; some details are provided in Annex 15, and hill reports
are on file.

6.2 Water Supply. The proposed project component includes investments in water treatment
plants and distribution networks, to increase and balance the systems' capacities; investments in
rehabilitation including leakage control; and it emphasizes O&M. In selecting the individual schemes,
least cost investment schemes were determined by comparing alternative solutions in terms of their long-
term economic and operational performance. Specifically, larger conventional custom designed concrete
water treatment plants were found to be superior to smaller steel package plants, and a network analysis
helped define optimal distribution system expansions. Also, water resource studies will be undertaken
in preparation for the next capacity expansions.

6.3 Some half the populations depend on unreliable and poor quality water sources, in
particular during dry seasons when salinity levels are high. Demand surveys and analyses have been done
in every city. The project is expected to provide piped water through house connections to 600,000
persons in the five cities. Credit schemes will be available for low income households that otherwise
would not be able to afford the connection charge. Including users of public taps, the PDAM coverage
would increase from 30-40 to 60 percent average of the population in the 5 cities. The main benefits are
increased availability of piped water at reduced costs; water tariffs from house connections are generally
less than 10 percent those from vendors, so that the proposed tariff increases do not compromise
affordability. As overall benefits from the better water supply, including reduced morbidity, are not
easily quantifiable no economic rates of return have been calculated. However, analyses have estimated
that the willingness to pay for the water exceeds the costs and tariffs. Cost recovery is an indication of
minimum economic returns; the PDAMs are expected to fully recover costs including financial costs and
depreciation, by the end of the project period.

6.4 Drainage and Flood Control. The cities are low-lying and subject to tidal flooding along
their water courses. While flooding may not be eliminated from some areas, the frequency and duration
can be mitigated. Existing deficiencies in drainage and flood control are mainly attributable to inadequate
maintenance; capacity can be increased by cleaning drains and canals currently clogged with solid waste,
sediment, and vegetation. The lowest cost solution among various technical solutions usually corresponds
 - 27 -

to undertaking regular maintenance. Nevertheless, rehabilitation and realignment have also been
identified as necessary for some canals/drains;and flood control studies are needed for a few larger
problemareas. The proposedinvestmentswill benefit a total of some 940 ha, between3 and 15 percent
of the city areas, by reducing: (a) flood-relatedphysicaldamage, buildingdamageand break-upof roads;
(b) traffic disruptions causedby flooding and damaged roads; (c) health problems--especiallyof poor
people living in low-lyingand hence flood-proneareas. The benefits are not easily quantifiableand no
ERR has beencalculated. However,the cost has been verifiedto be less than that of relocatingresidents,
and a cost-benefitratio has been calculatedfor each componentby dividingexpectedincreases in land
values (which have been used as a proxy for economicbenefits)by investmentand O&M costs of the
proposeddrainage and flood control schemes.For the componentto be economicallyjustified, land value
increasesof 0.3-29.5 percent for the regularlyfloodedareas wouldbe required;the increasesare feasible
in light of prices in similar, but non-flooded,areas. Studiesfor wetlandprotectionwill be undertaken,
as necessary,as part of land developmentplans.

6.5 Sanitation. In general, regularlydesludgedseptictanks representan adequatesanitation

solution in low population density areas. However, the high water tables in the project cities make
conventionalseptic tanks to be technicallyinefficient;further, desludgingis rarely done becauseof high
cost and unawarenessof the benefits. Alternativetechnologieswill be tested, and the most appropriate
will be adoptedunder the project. A credit schemewill be availableto allow low-incomehouseholdsto
install on-sitesanitationfacilities. Investmentsin sewerage systemsare justified, in life cycle terms, in
areaswith higherpopulationdensities--suchas Banjarmasin'sBanjarBaratsubdistrictwith more than 250
personsper ha. In all, it is expectedthat an additional25 percent of the populationswill have improved
sanitation. This project component generates benefits in terms of health and avoided ground water
contaminationwhich are not easily quantifiable;thus, no ERR has been calculated. However, cost
recovery is expectedover time for the on-site installationsand partial cost recovery from the sewerage
systems (the benefits from reduced negativeexternalitiesmay not be tapped for cost-recovery).

6.6 Solid WasteManagement. Solid waste is being generatedat a rate of 3 liters per capita
per day--between1,160 m3 and 1,500 m3 per day in the four larger cities. Only between 50 and 60
percent is beingcollected. The proposedinvestmentsin solid waste managementwill increasesolid waste
collectionlevelsto some 80 percent,benefittingthe majorityof the residents. Environmentaldegradation
causedby burning or dumpingof uncollectedsolid waste into rivers and drains wouldbe reducedthrough
environmentallysafe collection services and operation of new and improved landfill sites. The cost
recovery for the mostly publicly provided garbage removal will gradually increase under the project
accordingto the RIAPs. It is also expectedthat the project will attract private sector participation,for
improvedservice and cost recovery. However, lesser cost recovery will be possible at landfills.

6.7 Kampung/MarketImprovementPrograms.The KIP componentprovidespublictoilets,

solid waste collection, foot paths and drainage. The program is expectedto be able to upgrade all the
low incomekampungsand benefit some 500,000 persons. At aboutRp 50 billion or 10 percent of total
project costs, investmentsunder this componentare relatively low; capital expendituresper beneficiary
(Rp.100,000) are low and far exceeded by benefits. KIPs tend to substantiallyimprove the living
conditionsof the residentsand mobilizecommunityresources. Beneficiaryhouseholdsand communities
will be involvedin the identification,planning,preparationand implementationof the works, as well as
the operationand maintenance;some training will be providedfor self-helpworks but larger works will
be contractedout. Some infrastructure,mainly roads, will also be providedunder the project in 3 poor
areas totalling64 ha where urban renewal is plannedwith private sector participationand funding, and
for 6 new low-incomehousingdevelopmentstotallingsome 100ha, mainlyto be builtby Perumnas. The
houseswould have 18 m2 on 60 m2 to 200 m2 lots, and cost $2000and upwards; credit will be available
from provincialbanks for mortgages. The housesare in high demand becausethey are one of the few
 - 28 -

ways of acquiring land, and their low initial cost allows buyers to upgrade them progressively with their
own work. And, the infrastructure of 24 markets with an area of 134 ha will be improved, including
improvements to superstructures; the improvements are very much needed and their costs are more than
recovered from municipal fees on the vendors, who participate in deciding the improvements.

6.8 Roads. The five cities total some 1000 km of roads, and a majority of the 500,000 motor
vehicles registered in the four provinces are located in these cities. Given high motorized traffic growth,
down-town roads tend to carry traffic volumes exceeding design capacity. The road agencies will
undertake improved road maintenance with budget increases from domestic sources, to ensure their
sustainability. Maintenance strategies have been developed by the central government's road agency and
are followed by the local agencies; in accordance with the strategy, roads should be resurfaced every 5
or 6 years. Returns on good maintenance are high, typically over 30 percent. Under the project some
125 km of roads will receive periodic overlay -- 77 km of them in Pontianak but much shorter lengths
in the other cities, that have preferred to include road upgrading under the project. In all, some 280 km
of roads, mainly "local" roads, will be improved/upgraded through widening, new drains, sidewalks, etc.
Each of the planned improvements has passed the test of an economic analysis that required a minimum
expected rate of return of 10 percent; average returns are much higher. In all, about one third of the
urban road length will be improved under the project. Furthermore, the project includes 30 km of new
road construction (dualling the airport road in Pontianak, a new alternative airport road in Balikpapan;
a new ring road in Banjarmasin). Benefits of works include savings in vehicle operating costs due to
reduced congestion and in some cases, reduced travel distances. Savings in travel times are also
estimated. All rates of return exceed 10 percent without travel time savings. Finally, traffic management
studies will be undertaken in some of the cities with a view of implementing their recommendations under
the project.

B. POVERTYIMPACTS

6.9 The project is expected to substantially alleviate poverty as many components are targeted
at improving the quality of life and environment in the poorer kampungs. The population with access
to piped water could about double while reducing the cost for many consumers. An instalment payment
plan would be provided for house connections for consumers who would otherwise not aftfrd them.
Monthly water bills would be less than 5 percent of the expenditures of low-income (assumed Rp
150,000) households. The drainage and flood control component would reduce the frequency and
duration of the floods in the low lying areas where many of the urban poor have settled. It would reduce
property damage and health impacts associated with stagnant polluted water in the neighborhoods, and
reduce access disruptions. The human and solid waste disposal components will reduce morbidity (or
medical expenditures) by expanding the coverage and using better ways for disposal. In particular, the
pilot studies on new sanitation technologies and public education campaigns should lead to greatly
improved services and reduced morbidity and environmental contamination. Care will be taken to allow
continued recycling by scavengers at the new landfills. The traffic management programs, that would
improve conditions for non-motorized vehicles and pedestrians, would also benefit the poor. The KIP
and MIP programs to improve micro-infrastructure are targeted on densely populated poor neighborhoods,
they would benefit some 500,000 persons, or 25 percent of the urban populations--it is expected that by
the end of the project all poor kampungs will have been improved, in line with a renewed anti-poverty
campaign by the Government (the INPRES Desa Tertinggal). Community participation at all stages and
training are added benefits of the project. Likewise, downtown urban renewals will benefit the poor and
revitalize business; one of these areas include a riverside community that had an outbreak of cholera a
few years ago, in Samarinda. The project avoids resettling people by upgrading their neighborhoods.
But at the same time, the new low-income housing developments allow an affordable alternative to those
 - 29 -

who want to move--although demand tends to exceed supply, and non-poor are also interested in the
schemes.

C. ENVIRONMENTAL IMPROVEMENTS

6.10 The project will have a positive impact on the environment in the five cities through
improvements solid and human waste disposal, drainage and flood control, and supporting the kampung
to
improvement program. Environmental management and mitigation measures have been built into the
design and cost of subprojects, and institutional arrangements have been made for monitoring impacts on
the environment.

6.11 All the subprojects are within the existing city boundaries. A majority of the subprojects
will be improvements on site: (a) for roads, all the periodic maintenance works, the upgrading and
widening on existing alignments, the improvement of side drains will have a beneficiary environmental
impact; fuel consumption per kilometer by motorized vehicles will be reduced, reducing air pollution,
through improved road capacities, surfaces and traffic management, where applicable; (b) for drainage,
improved maintenance of drains will reduce flooding and disposal methods for the sludge are to be
improved; the justification of small scale hydraulic gates for flushing in Pontianak and Banjarmasin on
a pilot basis will be reviewed; and flood control studies will be undertaken in 4 of the 5 cities.

6. 12 Unsanitary human waste disposal will be improved with a beneficial environmental impact.
While vertical septic tanks had been installed on a pilot basis and proposed as a new on-site technical
solution for these cities with high water tables, from new impact data the appraisal concluded that they
would not achieve the intended objectives despite their high cost. The project thus includes the
development and monitoring of other on-site prototype solutions during its first year, for implementation
of the successful ones on a wider scale during subsequent years. The monitoring is to include health
surveys, chemical contents (TKN, SS, TOC, DO, etc), social acceptability, cost and ease of operations
and maintenance, and environmental impacts. Subsequently, training and education programs will ensure
that women, in particular, will understand the benefits of the new systems and will know how to use and
maintain them properly; also, credit schemes will be available to ensure the affordability of the systems.
Overall these improvements will reduce ground water contamination. The project also includes studies
for small scale sewerage/waste water schemes and their implementation in dense business districts where
on-site solutions are technically unviable, and their monitoring for subsequent improvement or replication.

6.13 The landfill operations would satisfy the Bank's environmental requirements--they will be
operated on a sanitary basis, will include a composting area and continue to support recycling by private
operators. The existing inadequate landfills will be closed and thereby soil and water contamination will
be reduced. Increased availability of solid waste collection trucks at affordable fees will reduce the
amount of waste that currently goes uncollected--burned or dumped in drains or empty lots--from some
50 percent to some 20 percent average (Annex 16).

6.14 The three new road construction subprojects were added at appraisal. In Pontianak, the
airport road will be dualled on an existing, fully cleared right of way, and the detailed design will include
appropriate cross and side drains, to be approved by the Bank for final subproject approval. The new
airport access road in Balikpapan, that will also serve as a city ring road, is to be built by upgrading an
existing road on its right of way; appropriate drainage will be included in the design and an
environmental review will be made for Bank approval. The new ring road in Banjarmasin, highly
justified to reroute polluting heavy traffic from densely populated downtown areas, has been proceeding
 - 30 -

graduallywith the appropriationsthe municipalitycouldsecurefrom yearlybudgetsand willbe completed

under the project, pendingfinal engineeringincludingan environmentalanalysis.

6.15 For developmentof the cities beyond the project period, the project includes technical
assistanceto help prepare land use developmentplans taking into accountenvironmentalconsiderations.
Financingfor the studies, however, is not includedin the project cost estimates. Studies on raw water
sources will help select the best future sources.

D. RISKS

6.16 The major risksof the projectare: limitedinstitutionalcapacityto manageimplementation,

delays in counterpartfunds for the project due to budget constraints, inabilityof local governmentsto
meet their revenue targets, and delays caused by protracted procurement procedures for works,
materials/equipmentand consultants. To minimizethe risks, and as part of start-upactivities and under
a scheduleagreed uponwith the Bank, the citieswill train their project managersand appointconsultants
to help with design, implementationand supervision. The financingplans have been endorsed by the
agenciesthat will providethe domesticfunding. Standardbiddingdocumentsand procedureshave been
discussed,with the local agenciesand to the extent possible works have been packagedto attract larger
contractorswho normally deliver better quality works. Project implementationplans will be agreed at
negotiations,the programs will allow flexibilityin adaptinglater year componentsto changingneeds, as
appropriate. The Bankhas plannedwhat is consideredsufficientsupervisionresources, especiallyin the
early years, for early detectionand solutionof problems.

7. AGREEMENTS REACHED AND RECOMMENDATION

7.1 At negotiationsthe Borroweragreed inter alia to the following(recorded in Schedule5,

Parts A ((a) and (b) below)) and C ((c) to (h) below)) of the Loan Agreement):

(a) local governmentcommitmentto implementthe agreed PJMs/LIDAPs/RIAPsincluding

increases in fees for solid waste and sanitation(paras. 5.2, 5.3);

(b) PDAMswill implementtariff increasesby no later than January I of 1996,1998and 2000

as necessaryto fully cover O&M as of FY1996and O&M and depreciationby FY1999
(para. 5.6); PDAMs will consultthe Bank, for any additionalinvestmentexceedingRp
2 billion; and to enhancethe self-financingcapacityof PDAMs, PDAMswill be allowed
to retain profits and use them for their project investments(para. 5.7);

(c) to prepare and agree with the Bank on a revisedtraining programno later than 6 months
after loan effectiveness(para. 4.4);

(d) paymentsto local contractorswould be made from the KPKN provincialoffices (para.
4.14);

(e) to review with the Bank, not later than November30 each project year, (i) the proposed
budgetsfor the followingyear, includingany proposalto includea new project component
and (ii) the O&Mexpendituresfor the previousyear (paras. 4.19, 4.20, 4.28) and to issue
the respectivebudgetapprovalsby January 15 for PDAMs and May I for other agencies,
each project year (para. 3.16);
 - 31 -

(f) to carry out yearly technical audits and discuss the audit recommendations with the Bank
(para. 4.17);

(g) a mid-term review with the Bank not later than June 30, 1998 (para. 4.19); and

(h) to resettle affected people according to the Resettlement and Rehabilitation Action Plans
agreed with the Bank (para. 4.23).

7.2 The condition for loan effectiveness is that the Project Implementation Agreements and
the Subsidiary Loan Agreements under the Project have been executed, ratified, and are legally binding
(paras. 3.17, 4.5).

7.3 The PPF including charges and accrued interest will be repaid from the loan upon
effectiveness (para. 3.20).

7.4 With the above agreements and assurances, the project would be suitable for a Bank loan
of $136 million equivalent with a 20 year maturity including a 5 year grace period, at the standard Bank's
variable interest rate. The Borrower would be the Republic of Indonesia.
 - 33 -
Annex 1

INDONESIA.

KALIMANTAN URBAN DEVELOPMENT PROJECT

URBAN INFRAsTUCTURE PROJECTS'

Fiscal PPAR
Loan Year/ Closed/ Original PCR
No. Effective Closing Project Name Loan Rep. No. Year

1 1040 1975 1981 Jakarta Urban Development 25.00 4620 1983

2 1049 1975 1982 Five CitiesWater Supply 14.50 6256 1986
3 1336 1977 1984 Second UrbanDevelopment 52.50 6329 1986
4 1653 1979 1987 Third UrbanDevelopment 54.00 8583 1990
5 1709 1981 1987 Second Water Supply 36.00 8622 1990
6 1972 1982 1988 Fourth Urban Development 43.00 8583 1990
7 2236 1983 1991 Jakarta Sewerage/Sanitation 22.40 12150 1993
8 2275 1983 1990 East Java Water Supply 30.60 10853 1992
9 2408 1984 1991 Fifth Urban Development 39.25 11501 1992
10 2632 1986 1993 Second E. Java Water Supply 43.30
11 2725 1986 1992 HousingSectorLoan 200.00 13296 1994
12 2816 1987 1991 Urban SectorLoan 270.00 10388 1992
13 2817 1987 Oct 94 Reg. Cities Urban Transport 51.00
14 2932 1988 Mar 95 JabotabekUrban Development 150.00
15 3219 1990 Dec 96 SecondJabotabekUrban Dev. 190.00
16 3246 1991 Dec 96 Third JabotabekUrban Dev. 61.00
17 3304 1991 Dec 96 East Java-BaliUrban Dev. 180.30
18 3340 1991 Dec 96 Sulawesi-IrianJaya Urban Dev. 100.00
19 3726 1995 Sept 99 SurabayaUrban Development 175.00
20 3749 1995 Sept 99 Semarang/SurakartaUrban Dev. 174.00

Total 1,911.85
 r' Jy 1. 1995 - 34 -

Annex 2.1 Main Project Components KUDP

SECTOR PROGRAM FOR BALIKPAPAN

1. Water Supply * Jpgrade existing headworks at Gunung Sari and Kampung Dawai to 500 I/s
* Install 133 km of distribution, secondary and tertiary pipeworks (350 mm - 50 mm)
2
* Install distribution pumping stations: acquire 2500 m of land.
* Provide 20.800 house connections and 350 public hydrants
* Coistruct 2 distribution reservoirs of 500 m' capacity and 3 reservoirs of 1000 m" capacity
* Training t;r PDAM staff to optimize the level of service from the facilities provided
* Public educationi campaign

2. Sanitation a Construct 20 MCK as part of KIP

* Construct 16 public toilets as part of KIP
* Construct grey water leeching pits (60 units in KIP area)
* Construct disposal site for septic tank waste
* Procure septic tank desludging trucks (8)
* Construct pilot sewerage system: 9.5km of sewer, treatment 611/s, 6000 connections
* O&M of pilot system
* Informationi campaign for 14500 households
* Water quality monitoring management/reporting
* Training tor 25 staff of 'Tk If
* Sanitattioniprogram based oni results of mnoitoring & evaluation of the pilot sewerage scheme

3. Solid Waste 0 Acquire 8 hal lor linial disposal site aiid 500 m2 for transfer depot
* Procure 40 conitainers, 276 hand carts.
* Procure 15 dump trucks, 8 arm roll trucks 16 light trucks
* Procure otne bulidozer, and ofie excavator
* Construct final disposal site, 60 temporary disposal units, 32 container bases and 3 transfer
statiolns.
* (Ofice anid worksholp equipment

4. Drainage * Rehabilitate and improve 5.8 km of primary, 16.6 km of secondary, and 18 km of tertiary drain
* Ilrocure 2 dump trucks
* Construct 5 km new primary drainage for low cost housing development.
* (O&M for 6.33 km of primary. 15.7 km of secondary, and 56.4 km of tertiary drain)

S. Flood Control * Chaninel iormalizatioti and improvements to 3050 m of Klandasan Besar

Cost included in the
drainage component

6. Urban Roads TVPe New Improv. Rehab/Overlav Total

.......... ............... km.

Primary art. 4.0 13.2 2.3 19.5

Secoind art. 1.0 1.0
Second coll. 11.8 0.7 12.5
Second local _ 58.8 58.8
4.0 83.8 4.0 91.8

* Routine O&M
* rraffic managementstudy

7. KIP, MIP * KIP for 9 Kelurahatn 232 tia

2
* MIP for 3 markets 12 ha, 2250 m supserstructure
* Construct infrastructure for urban renewal, 20 ha (Gunung Sari Ilir)

8. Other/Supporting * Improvement Operation and Maintenance for all infrastructure sectors

Program * Institutional improvement and human resources development
* Local revenue improvement action plan
* Project preparation for future sectoral development

tp_
le:munnproJ.
NU. Ff- IS.15, _ 35 -

Annex 2.2 Main Project Components KUDP

SECTOR PROGRAM FOR PONTIANAK

I. Water Supply * Replace 7.85 km of defectivesecondary and tertiary pipework (generally in South Pontianak)
* Replace4900 defective consumermeters
* Leak detection program
* Construct 260 km of secondary and tertiary pipework (SOmm- 300mm)
* Construct 25515 connections: 17640 house connections, 407 public hydrants,
and 7468 non domesticconnections
* Construct WTP extensionat Imam Bonjol 300 I/s
* Construct 4 distributionsystem booster pump stations
* Constructionof workshop, main office and laboratory for the PDAM
* Undertake water resources study
* Conduct training for PDAM staff
* Conduct public informationand education campaign

2. Sanitation * Construct septic sludgedisposal site

* Procure 6 desludgingtrucks
* Rehabilitate 5600 m of open sanitary drains
* Rehabilitate 12 MCK (as part of the KIP program)
* Sanitationprogram based on results of monitoringand evaluationof pilots

3. Solid Waste * Land acquisitionof 850 n9 for transfer stations and 20 ha for final disposal sites
* Construct 52 interim disposal sites, 7 transfer depots, 30 container bases and final disposal site
* Procure 6 light trucks, 26 dump trucks, 7 arm roll trucks and 36 arm roll containers
* Procure one excavator, one bulldozer
* Study of alternativedisposaltechnologies

4. Drainage * Widening of main channels, within rights of way

* Procure 3 dump trucks for O&M service and I mobile pump
* Rehabilitate 14.9 km of primary, 7.8 km of secondary, and 18 km of tertiary draiis
* Construct 4 hydraulicgates
* (O&M for 16.6 km of primary, 8.2 km of secondary, and 26.0 km of tertiary drains)

5. Flood Control a Channel improvements(includinglining and dredging)of 5.2 km of Raya river, 7.6 km of Jawi
Cost included in the river, and 4.6 km of the Tokaya river
drainage component.

6. Urban Roads Tlye New Improv. Rehab/overlay Total

.............................. km.

Primary 12.0 17.1 29.1

Second art. 1.8 11.2 13.0
Second coll. 5.7 15.5 21.2
Second local _ 5.2 33.0 38.2
12.0 12.7 76.8 101.5

* Routine O&M
* Traffic managementstudy

7. KIP, MIP 0 KIP for 13 Kelurahan, 204 ha

* MIIP for 8 markets, 40 ha, 3445 m' superstructure
* Infrastructureto supportlow cost housing Siantar Hulu 6.5 ha
* Public informationcampaign

8. Other/Supporting * ImprovementOperation and Maintenancefor all infrastructuresectors

Program 0 Institutionalimprovementand human resources development
* Local revenue improvement action plan
* Project preparation for future sectoral development

ile:sasnproj.ptk
 Fr I'. 1155 - 36 -

Ainex 2.3 Main Project Components KUDP

SECTOR P'ROGRAM FOR PAI-ANGKA RAYA

1. Water Supply * Rehabilitate the existing treatment plant filters

* Replace 2 backwash pumps and intake pump and pipeline
* Replace 2 distribution pumps withi higher capacity units
* Install secondary and tertiary pipework 11.9 km t) utilize increased capacity
* Install new bulk water meter
* Replace 3500 consumer meters
* Replace approximately 3.4 km ot existing pipe-work
* Procure and install 3x70 I/s new intake pumps and raw water pipes
* Construct I x200 I/s treatment plant
* Construct 212 kin ol distribution network pipeworks (50mm - 400(mm)
3
* Construct 2500m distribution reservoir
* Procure and install 3 distributioni network booster pumps
* Construct 11.432 house coniectionis. 170 public hydrants, 2426 nion domestic conmections
* Construct olfice and workshop facilities
* Provide training and public iniformation campaigns
* Undertake water sources study

2. Sanitation * Construct 12 MCKs as part of KilP

* Procure 2 septic tanik trucks
* Construct septic sludge disposal site 0.5 ha at the TPA
* Provide f)&M for the septic sludge disposal site
* Informationi campaign for 2800 households
* Sanitation program based on results of monitoring and evaluation of pilot.

3. Solid Waste 0 IProcure 60x120L bins. 10 container. 87 handcarts, 3 dump trucks. 2

arm roll trucks. 4 light trucks
* Procure office equipment
* Purchase I bulldozer and I excavator
* Acquire land for transfer depot. 750(mZ
* Construct a final disposal site. 2 transfer stations type 1, access road 300m.
70 interim disposal sites

4 I)rainage 0 Rehabilitate aind improve 24.9 kn of primary, 16.5 km of secondary,

anid 19 kin of tertiary drain
* Rehabilitate 25 primary culverts anid 25 tertiary culverts
(O&M for 24 km of primary, 16 kin of secondary. and 51 km of tertiary drains)

5. Urban Roads Road New Improv. Rehab/overlay Total

n............................
h
Primary art. 4.4 7.0 11.4
Secondary art. 2.8 2.8
Secondary coll. 5.7 7.1 12.8
Secondary local 12.0 6.0 18.0
24.9 20.1 45.0

* Routine O&M

6. KIP. MIP 0 KIP for 3 Kelurahaii 90 ha

2
* MIP for 4 markets 25 ha, 2250 in of superstructure
* Low cost housing infrastructure 30 ha

7. Other/Supporting * Improvement Operatiots and NMaintenancefor all infrastructure sectors

Program * Institutional improvement and human resources development
* Local revenue improvement action plans
* Project preparation for future sectoral development

ie:mainproj.pTg
Dr5 May 26, 1996 - 37 -

Annex 2.4 Main Project Components KUDP

SECTOR PROGRAM FOR SAMARINDA

l IWater Supply * Replace 19 kn of tertiary service pipework, 8000 consumer meters (including purchase of
4000 new meters), 5 hulk meters
* Procure leak detection equipment
* Procure workshop equipment
L*
eak detection program
* Construct 200 I/s plant to be financed through KUDP
* Procure aiid install 3xl00 I/s raw water intake pumps
* Construct 700in of 400mm diameter transmission pipe.
* 10 deep bores at 10 I/s each (altemative supply during dry season)
* Extend the secondary and tertiary distribution system (50-350mm) by 77 km
* Construct 3x1000m' service reservoirs.
* Construct 17400 service connections and 420 public hydrants
* Training: for PDAM contractors: for PDAM staff on public informationl
* Water resource study

2. Sanitation * Acquire 0.2 ha interceptiots

* Construct 10 public toilets (KIP)
* Construct drainage interception to septic tanks
* Construct septic sludge disposal site
* Procure 6 septic tank trucks
* Sanitation program based on results of monitoring and evaluation of pilots
* O&M

3 Solid Waste * Acquire 5 lia for final disposal site, 100 nm for collection facilities
* Procure 16 dump truck. 6 arm roll truck, 7 light truck, 35 container
* Procure one excavator
* Construct 130 interim disposal site. 16 container bases, 2 transfer stationi (type 11. 111)
* Construct TPA and access road

4. Dramiiage 0 Reliabilitate aind improve 4.6 km of primary, 5.8 km of secondary, 3.2 km of tcrtiary drain
* Rehabilitate 6 primnary channel culverts and 6 secondary channel culverts
* (O&M for 11.6 km of primary, 18 km of secondary, and 57.4 km of tertiary chaninel)

5. Flood Conitrol * Chanisel normalization and improvements for 6 km of the Karang Asem
Cost included in the 0 O&M provisiol for 6 km of the Karang Asem
drainage component.

6. Urbani Roads Roads New Impro. Rehab/overlav Total

............................... km.
Primary art. 8.3 8.3
Primary coll. 3.8 3.8
Secondary art. 1.3 2.2 3.5
Secondary coil. 6.9 6.9
Secondary local 40.0 40.0
60.3 2.2 62.5
* Routine O&M provision

7. KIP. MIP * KIP for 13 Kelurahan 232 ha

* MIP for 6 markets 12 ha, 3455 m2 superstructure
* Low cost housing infrastructure 60 ha (Sempaja, Sambutan, Pandans Wangi)
* Infrastructure for urban renewal 20 ha (Karang Mumus)

8. Other/Supporting * Improvement Operation and Maintenance for all infrastructure sectors

Program * Institutional improvement and human resources development
* Local revenue improvement action plan
* Project preparation for future sectoral development

iri:mairiproj.smd
 - 38 -

Annex 2.5 Main ProjectComponentsKUDP

SECTOR PROGRAMFORBANJARMASIN

(UNDER ITALIANLOANPROGRAM,NOT IN KUDP)

1. WaterSupply Waterlosses (UFW)program
Extensionof productioncapacity
Expansionof the storagecapacity
KUDP PROGRAM
Procure7 distributionsystem/Wastepump
Install6,715m transmissionpipe400 mm- 650 mmdia
Install15,910m primarymains200 - 500 mmdia
Install67,178m of tertiarypipe 50- 75 mmdia
Install33,500propertyconnectionsand250 publictaps
Extensionand in fill of the distributionnetwork

2. Sanitation Provisionof 7 desludgingtrucks

Pilot individualsanitationsystem( 30 units)
Pilot communalsanitationsystems(4 systems)
Pilot seweragesystem:sewersandtreatmentfacilityfor commercialarea
TA for monitonngandevaluationof pilots
Publicinformationcampaigns(38000families)
Sanitationprogrambasedon resultsof monitoringandevaluationof pilots
O&M

3. SolidWasteManagement Closureworksat the old disposalsite

Construct142 temporarydisposals,8 transferstations,27 containerbases
and new disposalsite 20ha
Provisionof 6 light trucks,25 dumptrucks,6 armrolls and 33containers
Provisionof 2 bulldozer(D3,D6)and 1 excavator

4 Drainage Improve7.9 km primarydrains,4.6 km secondary,and 15.6 km tertiarydrains

Maintainof 11.9km primary,7.8 km secondaryand 15.6km tertiary drains
Publiccampaign
Procure2 mobilepumpsand 2 dumptrucks
. Construct3 hydraulicgates

5. FloodControl 300 m Steelsheetpilingat Martapura

(cost in 4 above)

Type New Improvement Rehablovearly ItI

6. Urban Roads ................................ ......
. km ............... ..............
Primaryarteral 14.4 1/ 12.4 7.5 34.3
Primarycollector 2.9 2.9
Secondaryarteral 5.3 1.4 6.7
Secondarycollector 8.8 11.8 20.6
Secondarylocal 69 0
Total 14.4 98.4 207 133.5

1/ Including400 m brdge; needs4.4 ha landacquisition

2/ Widening,drainsor sidewalks(plusoverdaysin some cases)

7. KIP, MIP KIPfor 26 locations258 ha

MIPfor 8 markets40 ha, 4500m2 superstructure
Infrastructuredevelopmentfor 20ha of pilot urban & housingrenewal
Infrastructuredevelopmentfor 5 haof new lowcost housingarea

8. Other/Supporting
Program ImprovementOperationand Maintenancefor all infrastructuresectors
Institutionalimprovement
and humanresourcesdevelopment
Localrevenueimprovementactionplan
Futureprojectpreparationfor sectoraldevelopment

L \FRI1A\XUDP\MAN1-BJM XLS
 - 39 -

Annex 3

KALIMANTANURBANDEVELOPMENTPROJECT
SelectedDocumentsin the Project File

DocumentName Source Date Language

Project PreparationReport(30 volumes) P.T. Virama Karya Aug. 1992 English
Project PreparationReport P.T. Virama Karya Dec. 1993 English
Project PreparationReport CKIMPW May, 1994 English

Balikpapan: SummaryReport P.T. Virama Karya Oct. 1993 English

SummaryReport CK/MPW May, 1994 English
Banjarmarsin: SummaryReport P.T. Virama Karya Oct. 1993 English
SummaryReport CKIMPW May, 1994 English
Palangkaraya: SummaryReport P.T. Virama Karya Oct. 1993 English
SummaryReport CKIMPW May, 1994 English
Pontianak: SummaryReport P.T. ViramaKarya Oct. 1993 English
SummaryReport CK/MPW May, 1994 English
Samarinda:SummaryReport P.T. Virama Karya Oct. 1993 English
SummaryReport CK/MPW May, 1994 English

MediumTerm DevelopmentProgram (PJM) P.T. ViramaKarya Aug. 1992 Indonesian

(All 5 cities)
Revenue ImprovementAction Plans (RIAP) P.T. ViramaKarya Oct. 1993 Indonesian
(All 5 cities)
Local InstitutionalDevelopmentAction Plans (LIDAP) P.T. ViramaKarya Oct. 1993 Indonesian
(All 5 cities)

UpdatedMemorandumTeknik P.T. ViramaKarya Oct. 1993 English

Urban Roads English
Drainage and Flood Control English
Public Housing(PerumahanRakyat) English
Solid Waste(Persampahan) English
Housing RenewalReport C. Karya May, 1994 English

EnvironmentalAssessmentSummaryReport (draft) P.T. ViramaKarya March, 1994 English

EnvironmentalAssessmentSummaryReport (Final) P.T. ViramaKarya April, 1994 English
Detailed EnvironmentalReports(All 5 Cities) P.T. ViramaKarya April, 1995 English
EnvironmentalDocument Review P.T. Bita Bina Semesta 1994 English
ResettlementPlan - BanjarmasinRing Road BanjarmasinCity Aug. 1994 Indonesian
Review of Resettlementand EnvironmentIssues World Bank Sept. 1994 English

Terms of reference, letter of invitationfor proposals, C. Karya May, 1994 English

for I st year TA and engineeringservices.
 KUDP Project Cost Summary
Kalimantan Urban DevelopmentProject (KUDP) Costing and Financial Model L _______ IANNEX 4
Summar b C (excluding PPF US 1 7 milihon) _ _ _ - _ i o t

Banjarmasin % oftotal Balikpapan % of total Palangka % of total Ponbanak % of-total Samarinda % of total Total
. . _ ~~~base
cost _.base cost Raa base cost, base cost _.base cost
Water Supply (PDAM) BASE COST 19_,752 20.6% 12,298 21.4% 15,123_ 43.4% 25,862, 32.5%° _ __13,024 26.5% 86,059
Physical Contingencies 1,975 2.1% 1,230 2.1% 1,512 43%1 2,586 3.2% 1,302 2.6% 8,606
Engineering Services 1,501 1.6% 1,217 2.1% 1,158 3.3% 1,949 2.4%1 1,289 2.6% __ 7,115
Technical Assistance 682 0.7%? 682 1.2h 62 2.0% ! 682 0 9% 682 1.4% 3,409
PPN (Tax) 2,513 2.6%1 1,6641 2.9%° 1.954 5.6% 3,242 4.1% 1,759 3.6% _ 11,132
Household Loan Program __ 0 00% !0 0.0% 0 0.0% ot 0.0% 0 o 0.0% 0
Overheads 3951 0.4%, 2461 04% 302 09% 517, 0.6% 2601 0.5% 1,721
IncrementalO&M 3,549[_ 3.7% 7,548 13 1% 2,500 712%9 7,391 9.3% 1,632| 3.7°h 22,820
Price Contingencies 2,609 2.7% 2,272 3.9%. 1,899; 5.5%1 3,050 3.8%i 2,049; 4.2h% 11,878
TOTAL PROJECT COST(PDAMbOnl 32,975i 34.3%1 27,157! 47.2%, 25,131 72.2% _ 4_5,278 56.8%j 22,1991 45.1%T 152,740

RoutineO&M(PDAMOnly,incl.PPN,constantprices) 17,6241 18.3%? 8,963 15.6% 1,774 5.1% 11,3631 14.3%h_ 1776866 35.9% 57,410
Price Contingencieson RoutineO&M 1,520 16% 773 1 3% 153 0.4% 1,4931 1 9% 1,526 3.1% 5,466
Routine O&M (PAMOnl nc. PPN, current rices 19,144 199% 9,736 16.9% 1,928 5.5 12855 16 1% 19.212F 390% _ 62,875

Drainage&FloodControl 11.7121 12.2% 7,227! 12 6%° 5,509 15.8% 19,507 24.5 2,7861 5.7% 46,739
Urban Roads 45,296 47.1% 19.684! 34.2%o 6,535 18.8% 23,797 29.9% 14,5421 29.5% 109,854
Solid WasteManagement 4,6011 48% 3,221 56%l 1,4651 4.2% 4,622 58% 2,284 1 4.6% 16,194
Sanitabon _ 4,549 4 7% 5,304 9.2% 1,163 3.3%j 2,492 31% 3,4791 7.1% 16,987
Urban Renewal (KIP/MIP/Housing) L 10,189 106% 9,823 17.1% 5,028 14.4%1 3,377 42% 13,100 26.6% 41,517
TOTAL BASE COST (KotamadyaOnly) 76,346 79.4% 45,259 78.6%| 19,700 56.6%' 53,795 675% 36,191 73.5% 231,291
PhysicalContingencies ! 7,632 7.9% 4,515 7.8%j _ 1,970: 5.7% 5,372!
2,9511
6.7%j
3.7%1
3,614
1,985
7.3%
4.0%
23,104
12,698 ~
.I-
Engineerng Services 4,196 4.4% 2,482 4.3% 1,083 3.1%
Technical Assistance(Manage at Local Level) 594 0.6% _904 1.6% 245 0.7% 594 0.7%1 245 0.5% 2,583
Technical Assistance(Manage at Central Level) 3,384 3.5% 3,384 5.9%! 3,384, 9.7% 3,384! 4.2% 3,384 6.9% 16,919
PPN (Tax) , _ _ 9,210 9.6% 5,737 10.0% 2,638 7.6% 6,594 8.3% 4,532 9.2% 28,711
Household Loan Program 1,520 1.6% 952 1.7% 747 2.1% 1,252 1.6% 1,438 2.9% 5,909
Overheads 3,115 3.2% 1,848 3.2% 818 2.3% 2,202 2.8% 1,505 3.1% 9,488
Incremental O&M 5,132 5.3% 4,4443 7.7% 2,957 8.5%j 5,387 6.8% 4,177 8.5% 22,097
PriceContin9encies 9,817 10.2% 6,214 10.8% 2,795 8.0%1 7,645 9.6% 5,613 11.4% 32,084
TOTAL PROJECTCOST (KotamadyaOnly) 120,945 125.9% 75,739 131.6% 36,337 104.3% 89,176 111.9% 62,686 127.4% 384,883

Routine O&M_(KotamadyaOnly, ncl. PPN,constantpnces) 3,711 3.9% 2,231 3.9% 1,342 3.9% 4,701 5.9% 3,097 6.3% 15,083
Price Contingencieson Routine O&M 351 0.4% 207 0.4% 113 0.3% 435 0.5% 316| 0.6% 1,421
Routine O&M (Kotamadya Only, incl. PPN, current prices) 4,062 4.2% 2,438 4.2% 1,455 4.2% 5,136 6.4% 3,4141 6.9% 16,504

TOTAL BASE COST (PDAM & KotamadyaCombined) 96,097 100.0% 57,556 100.0% 34,823 100.0% 79,657 100.0% 49,216 100.0% 317,349
TOTAL PROJECTCOST (PDAM&Kotamadya Combined) 153,921 160.2% 102,896 178.8% 61,469 176.5% 134,454 168.8% 84,884 172.5% 537,618

RoutineO&M(Kotamadya&PDAM,incl.PPN,constant pnces) 21,335 22.2%j 11,193 19.4% 3.117 8.9% 16,0641 20.2% 20,784 42.2% 72,492
Price Contingencies on Roubne O&M 1,872 1.9%1 980 1.7% 266 0.8% 1,9271 2.4% 1,842 3.7% 6,887
RoutineO&M(Kotamadva&PDAM,incl.PPN,currentprices) | 23,206 24.1%| 12173 21.2% 3,382 9.7% 117.99111 2222,626 46.0% 79,379

(b>
 KUDP Proiect Cost Summar o
BanjarmasinI % of total Balikpapan ° oftotal langka R I % oftotal Pontianak % oftotal Samarinda % of total Total
SummaryBy Ci basecost basecost basecost basecost basecost..

(Excluding U$ 1.7 million PPF) -- ----

Water Supply _ ___ 19,752 20.6% 12,298 21.4% 15,123 43.4% 25,862 32.5% 13,024 26.5% 86,059

Drainage & Flood Control 111,712 12.2% 7,227 12.6% 5,509 15.8% _ 19,507' 24.5% 2,786 5.7% 46,739

Urban Roads 45,296 47.1% 19,684 34.2% 6,535 18.8%_ 23,797 29.9% 14,542 29.5% 109,854

Solid Waste Management 4,601 4.8% 3,221 5.6% 1,465 4.2% 4,622 5.8% 2,284 4.6% 16,194

Sanitabon 4,549 477% 5,304 9.2% 1,163 3.3% 2,492, 3.1% _3,479 7.1% 16,987

Urban Renewal (KIP/MIP/Housing) | 10189 10.6%_ 9,823 17.1% 5,028 14.4% 3,377 4.2% 13,100 26.6% 41,517

1
TOTAL BASE COST tKotamadya Only) 96,097 100.0% 57,556 100.0% 34,823 100.0% 79,657 ooo0t 49,216 100.0%1 317,349

Physical Contngencies 9,607 10.0% 5,745' 10.0% 3,482 10.0% 7959 100%| 4,917- 10.0%| 31,710

Engineenng Services 5,697 5.9% 3,700 6.4% 2,242 6.4% 4,899 6.2%j 3,275 6.7% 19,813 t

Technical Assistance (Manage at Local Level) 1,276 1.3%1 1,586, 2.8% 927 2.7% 1,276 1.6% 927 1.9% 5,992

Technical Assistance (Manage at Central Level) 3,384 3.5% 3,384 5.9% 3,384 9.7% 33384 4.2% 3,384 6.9% 16,919

PPN (Tax) 11,723 12.2% 7,402 12.9% 4,592 13.2% 9,836 12.3% 6,291 12.8% 39,843

Household Loan Program 1,520 1.6% 952 1.7% 747 2.1% 1,252 1.6% 1,438 2.9% 5,909

Overheads 3,510 3.7% 2,094 3.6% 1,120 3.2% 2,719 3.4% 1,766 3.6% 11,209

IncrementalO&M 8,681 9.0% 11,991 20.8% 5,458 15.7% 12,778 16.0% 6,0101 12.2% 44,917

Prce Contngencies 12,426 12.9% 8,486 14.7% 4,694 13.5% 10,694 13.4% 7,662 15.6% 43,962

TOTAL PROJECT COST (Kotamadya Only) 153,921 160.2% 102,896 178.8% 61,469 176.5% 134,4541 168.8% 84,884 172.5% 537,618

___ _ _1 _1 0 I 0 0
Routne O&M ( incl. PPN, constant pnces) 21,335 22.2% 11,193 19.4% 3,117 8.9% 16,064 20.2% 20,784 42.2% 72,492

Price Contngencies on Routne O&M 1,872 1.9% 980 1.7% 266 0.8% 1,927 2.4% 1,842 3.7%1 6,887

Routne O&M (incl. PPN, current pnces) 23,206 24.1%| 12,173 21.2% 3,382 9.7% 17,991 22.6% 22,626 46.0%1 79,379

,
 KUDPProjectCost Summary
Summaryby Subsector l lANNEX 4
(excuding PPF US 1.7 million, including FEI bPV) Rp. million (Current Prices)
Banjarmasin % of total Balikpapan % of total l2ngka Ra % of total Pontianak % of total Samarinda % of total Total
__ _ _ __ _ _ _ program program _ro_r
___M__ program
Water Supply (PDALM)
Investffment 28,37t 18,019 , 21,53 36.217 19,343 123,480
Incrementalt_M 3,855 8,388 2,851 8,311 2,106 25,511
Total Program 32.225 20.9% 26,4071 25.7% 24,381 39.7%1 44,528 33.1% 21,449 25.3% 148,990
_____________________ of____city total _ 21.6% 17.7%1__ _ ____416__ _ __ _ 29.9% 14.4% 100.0%
Routine O&M 19,144 9___7361___ 1,___28__ 12,855_ 19.212 62,875

Drainagea Flood Control

Investment
DrainageFloo l 16,733 10,235 7,905 27,901 3,970 66,744
ncreffentaloav 900 845 951 1,329 1,094 5,120
Total Program 17,633 11.5% 11,080 10.8% 8,856 14.4% 29,231 21.7% 5,063 6.0% 71.863
% of 5 citytotal 24.5% 15.4ff 12.3% 40.7% 7.0% 100.0%
Rouine __M86 43502,645 _____ 1,238 ____ 5,889

Urban Roads
______________________ nves_n___ 64__456_ 28 __095 __ 346 34,515 __ _ _ _ 20,963 _ ___ 157,376
Incremental O&M 1,961 _ 1,032 1,328 _ 1,829 1,300 7,450
Total Program 66,418 43.2% 29,128 28.3% 10,674 17.4% 36,344 27.0% 22,263 26.2% 164,826
% of 5city total 40.3% 17 __7 _ ___5_ 22.0% ___ 13.5% _____100.0%

Routine 0 1 _M
_16
_ 411 509 1.492 4531 4,031

Solid Waste Management

Investimen 6,367 4,4511 _ 2,027 6,417 3,158 22.421
IncrementalO&M 2,537 2,7461 9052,8871 _____ 183 ____ 10,685
Total Program 8,904 5.8% 7,197 7.0% 2,933 4.8% 9,083 6.8% 4.988 5.9% 3,0
% of 5 city tota 26.9% 21.7% 8.9% 27.4% 15.1% 100.0%
RoutineO&M 1.978 1 613 435 929 1651 6607

Sanitation L

rIncremfentalOLU 400 373 140 262 436 1,610

Total Program 8.826 5.7% 9,3541 9.1% 2,670 4.3% 5,292 3.9% 7,444 8.8% 33.587
% of 5 city tot 26.3% _ 279sf 7.9% 15.8% 221% 100.0%
Rotuline oau 57 a O 69 71 197

UrbanRenewal(aP#AP/H-oumng)
lngenr 1 4,7sf 14,264 7,212 2- 4,851 18B,934 60,049
Increfmenbl oaM C O O ol O
Total Program 14,788 9.6% 14,264 13.9% 7,212 11.7% 4,851 3.6% 18,934 22.3% 60,049
% of 5 city total 24.6% 23.8% 12.0% 8.1% 31.5% 100.0%
RoutineOUv C a o o O o

TA
Investment(PDAM Only) 750 750 750 750 750 3,750
Investment(KotamadyaOnb) 4,376 4,717 3,992 4,376 3,992 21,452
Investmnent
(PDAM& KotamadyaCombined) 5,1261 3.3% 5,467 5.3% 4,742 7.7% 5,126 3.8% 4,742 5.6% 25,202
% of citytotal 20.3% 21.7Y 18.B% 203% 18.8% 100.0%

Total
Investment 144,2679,512 5,294 120,56 78,119 487,248
IncrementalO&M 9,654 13,384 6,175 14,398 6,765150 _ s375s_>
Total Program 153,921 100.0% 102,896 100.0% 61,469 100.0% 134,454 100.0%1 84,884 100.0% 537,618
% of 5city total 28.6%11.1 11.4% ____ 25.0% 15.8%1_______
RoutineO&W 23,206 12,173 22,
4_.
 SUMKUDPXLS

cinF&SPV&A ub~sector 4 R o.mo. C,rn P c...)

FINACNLN LEXL.PPF;
Fundingsure
- nIot oIoVP mr Gono MuGan TOTAL Total1 ot T..
_______
___L-I___G._City
IPJK Povt. SDO PDAhI APBD I SLA ISLA SAP SRP APBN APBN RpPM S ith--- nd
PADS U.er INPRES
It, II Smane. Tk I cot t DIA ii TrI LN DI
PRO Charge.

Investment 2,79 35,366 212 439060 0900 14 625 123,480 57,326 21

Water
I DAM
Su
25,511 18~ 5 0%
IncrementralO&M ____ _____________25,511

____________________Total Program 2.179 60,877 212 __ 43,990 ___ 6,007 20,900 14 8251148.99 gg69,169291%

___ ___ Routine O&M 6287___85_9_9

____ ______ ___

"4 ,12 2377 10

IncrementalO&M 903 3,773
6,975 6,163 __ 6,337 5,004 22.950 17,392 71,663 33,363 14 0%
____________________Total Program 2,470 ____ ___4,574

2,3
___________________Routine O&M425147569

283 17,494 __________ 2,060 12,803 __ 2,881 24,540 _57,153 39,46 157,376 7Z3,062 30N7% Z
Urban Roads _____ Investment 68
1.335 _____ _______ 4,975 7,450 3,459 1 5% -
Incrmntal Q&M 1,140 ___

____________________Toal rogam 1,823 1,618 17.494 ___ __ __ 2.080 12,803 __ 2.881 24,540 57.153 44,435 164,826 76,52-1 32.2%

1,224 299 93 1,87

__________________Routine O&M 241

402 7,080 468 1,603 22.421 10.409 4 4% g~Z

Solid Waste Manageen neten 1924 10,943
1,8 ,6 1
IncrementalO&M 10.685
[Toal
rogam 1,924 10.685 10.943 ___ __ 402 _ _ __ 7,080 468 1,603 33,106 15,389 _6.5%

0
1.839 3.718 __ ___ 5.906 7.367 5,319 31,977 14.645 65.2%
S anrtation Investmvent 7.828 __

1__10 747___3_
IncreimentalO&M 1.526 84

~~ ~7,828 1.526 1,839 ____ 3,802 ___ ___ 596 737 5.319 33.587 15,593 66%

197 92
RoutineG&Mr 197

9.970 5,376 1,098.__ 8,721 21,367 7_917 5,599 60,049 27878 11 7%

Urban Renemral(KIPIMIP/Houwpjl)_-lvebe
incrementalO&M
5.376 1.098 .721.
8__ ___ 21,367 7,917 5,599 60,049 27,878 11,7%
Total Program ,,,,%70

Routine O&M ___

21,643 17,494 4,816 35,366 6.665 28,069 43,990 9,218 69,903 116.755 83,756 462,046 214,506 90 2%
Total Investment 24,152 ____

12,212 5,115,1_5037 2_3__

Incrmntal O&M 2,043 5,18 4

Program 26,194 12,212 26,751 17494 490 60,877 66865 28.069 43,990 9,218 6990 116,755 89,175 512,421 237,893 100,0%1
__________________Total

51% 2 4% 5 2% 3 4% 10D% _ 11 9% 13% 5 5% 8r6%161% 13 6% 22,8% 17 4% 100.0%____

5,476 3.467 62.875 93 ___ 2,175 793579 346852 >4
RoutirrO&M 5.097 197

568 5,682 15.570 3,376 25.196 11,697 __

Technical Assistance(extuding DetailedEng & Sp ____ _______ _

26,7621 12.212 26,751 17,494 4,900 60,877 6,885128,069 43990 9,218 7,81332 9.5'37.618124951 __
GRAND TOTAL(Ilnvestrnent, Inorm O&M. TA , encd __

1
St,MKUDP XLS
 IMPRESP.XLS

_-
.~~~~~~E
. IMPLEMENTATION
RESPONSIBILITIES
I ,
CentralGovoinmont ProvincialGovernment LocalGovernment
MOF. BAPPEDATK DPUP PPSAB BAPPEDATKII PFO DPUK PDAM
TKPP& MPW, DGCKDGM h MHA, PUOD
Responsibility IM( & DGBM DGB & BANGDA

OverallCoord. andGuidance.Grant Approval X X

OverellTech. Sup. and Supervision X _
Overag ProjectMoritoring andReporting X
Overall Fin. Mgt. ISpeclal
Acct andonlending_ x
Overall Institution andHumanResourceDevit x
ProjectCompletionReport X X X x x x

Implementatlonof InlrastiruCtureInvestments X X X X
MajorConsultantSelection i X X X X
_ X
SpecializedSupport Itech, financIal& trainingl X X X X
ExpenditureProgramsand Annual Budgets X X X X X
Procurementof Goods, Wotks end Local Cons. X x x x
Supervision,Certification & ProgressReporting X x x x
DisbuxsementandreImbunsementrequests | _ X X X
Prolectand annualaccountsfin.prog. reporting X X X

a,.
X
o
Kalimantan Urban Development Project (KUP)_
Consultants Services
_. ~~~~ ~_ ._. _ _ __ I_ 1. _ _ __ _,
_ _ _ Funding Source
No COMPONENTNAME IMPLEMENTING STAFFMONTHS PAC- Total Cost
AGENCY Junior senior KAGE PADS PDAM SPABP APBN APBN
_I_ __ PBB Tk. II BLN DIP

IDETAIL ENGINEERINGAND SUPERVISION =_-_=_=_==-

1 LOCALDRAINAGE,ROADS,ON-SITESANITATION,SOLIDWASTE 5 _
a. - Banrmasin 2nd-5th year Dinas PU Tk. II Banjarmasin 200 0 1 173 0 1,730 1,903
b - PalangkaRaya 2nd-5th year Dinas PU Tk. II PalangkaRay 110 0 1 66 0 655 721
c - Balikpapan2nd-5th year Dinas PU Tk. II Balikpapan 185 0 1 154 0 1,538 1,692
d - Samarinda2nd-5th year DinasPU Tk. IISamannda 190 0 1 144 0 1,440 1,584
_ - Pontianak2nd-Sthyear - DinasPU Tk. II Pontianak 205 0 1 105 0 1,0451 1150

2 WATERSUPPLY _
a -Banjarmasin2nd-Sthyear Bintek,DG Cipta Karya 224 17 1 0 0 ____0 1.428 357 1,785
b - Palnagk.sRaya2nd-Shyear PDAMPalangkaRaya 192 14 1 0 124 1,242 1,366
c - Balikpapan2nd-Sthyear PDAM Balikpapan 124 9 1 0 131 1,309 1,440
d - Samannda2nd-5th ye PDAMSamannda 136 10 1 0 140 1,402 1.542
_ - Pontianak2nd-Sthyear PDAM Pontianak 320 20 1 0 205 2,054 _ 2,259

3 NATIONALROADS(PRIMARY ROADS) _
- 2nd-5th year (inclSupplementary FS, FED & Supervision for
MartapuraBridge) Binkot,Binamarga 270 10 1 I I 2.905 726 3,632

4 PRIMARYDRAINAGE
- FED& Supion majordrainagein 5 toNns and flood controlworks i s
Pontianak,Balikpapan& Samarinda DJCK& relatedDinas PU Tk. 370 0 1 _ 1539
, 385 1,924 o

5 RIVERPROTECTION Dit. Sungai,Pengairan _ 396 99 495

6 LRGENT FIRSTYEARDED & SUPERVISION(COMBINEDIN 11.1.a)

_ DJCK 210 50 |Combinedin 1 0 0 0 2.896 724 3,620

SUBTOTAL I 12 641 601 12,415 9,165 2,291 25,113

_ INSTITUTIONALBULDING/MANAGEMENT

AdvisorySerVices(for loal evel)PMO/PFO/PMU

saProject iManagement DJCK 53 25 1 0 0 0 1.024 256 1.280
AdvisoryServices(for local level) PMO/PFO/PMU
1b Project Managwment DJCK 216 170 1 0 0 0 5,808 1,452 7,260

2 PDAMADVISORYASSISTANCE
a|PAU Management(Banjarmasin) PDAMBanjarmasin 39 12 | 1 | 68 0 682 0 °0 750
_ b PDAMManagement(PalangkaRaya) PDAMPalangkaRaya 39 12 1 68 0 682 0 l0 750
c PDAMManagement(Balikpapan) PDAMBalikpapan 39 12 1 68 0 682 0 0l 750
d PDAMMbnagement(Samarinda) PDAMSamarinda 39 12 1_ 68 0 682 0 °0 750
_ PDAMManagement
e (Pontianak) PDAMPontianak 39 121
2 ' 68 0 682 0 l0 750

3 POMMS(mprovement O&MManagementSystemforclal Infrastruct PUOD 120 32 1 | O 0 0 1,728 432 2,160

4 RWAP IMPLEMENTATIONASSISTANCE __I_I_I_I_._I

a - Banjarmasin DispendaTk. II Banjarnmasin
- 27 l 1 1 25 0 245 0 0 270
b - Palngkarang _Dispenda Tk. 1 PalangkaRay 27 Or 1 25 0 245 0 270 -1
c - Bblikpapan | DispendaikpapanBalikpapan| 27 0 1 | 25 0 2450 °0 270
d - Samanda - DispendaTk.llSamarinda
Sa27 '
1 25 0 245o 0 0 270 n
ePontianak ___ DispendaTk. II Pontanak 27 01_ 1 251 0 270
_- *1 2/710 5,x
O
 S:PROJECT MANAGEMENTTRAINING _ f 18 9 1 0 0 0 1,515 379 1,893

-bDLLAJR Tk I and DG Land '

6 TRAFFICMANAGEMENTPROGRAMFOR B.MASIN,8.PAPAN,PONTTransport 701 15 1 105| 0 1,045 0 0 1.150

Low Cost Housing & Urban Renewal Sector: Project Preparabon&

7!DevelopmentActionPlanforHousing&UrbanRenewal __ JCK & relatedDinasPU Tk. 70 12. 1 o 0 o0 848 212 1,060

;uslitbarngtan & relatedDinas,

DEVELOPMENTof AppropriateWaste DisposalSystem For PontianaR
8 & Samarindaincluding impo_fPilot Project PU Tk. II 1161 0_ 1 _01 0L 0 9261 232 1,158

. 1WATER SUPPLY DEVT. STUDY FOR PONTIANAKBALIKPAPAN| - - I _______

91AND BANJARMASIN(Focussedon Water ResourceManagement) DJCK 90 30 1 0 0 0 1,440 360 1,800

1011MG
SUPPORT BAPPENAS 80 . 40 1 0 0 0 1,600 400 2,000

SUB TOTAL 11 - _ ' 568 0, 5,682 15,370i 3,56 25,196

TOTAL(1+2) 1209 601 18097 24,535 5,8671 50,309

.n

OQ

_, x

2
 KALIMANTAN URBAN DEVELOPMENT PROJECT
Five Kotamadyas

BUuIjiFt 1996 1997 1999 Responsible

Name (Rp billion) Ql JQ2 I I2Q3 I I IQZ IQJ
2Q3
IQlIQ41 I IQZ I3 JQ4 Ql JQ2 IQ3 JQ4 Agencies
TECHNICALASSISTANCE 49.3 __ __ - .> DOCK.
DG MunicipalAgencies

WATERSUPPLY 948X _ _ ____ - PDAM

DetailedDesign and Supervision _ __ __
Land Acquisition
- Pontianak
-Balikppan
Procurementof Goods
Civil Works Construction ___ _ _ _ _

DRAINAGEh FLOODCONTROI 51.2

Detaled Design and Supervision DPU 11,DPU 1.DGCK
Procuremnt of Goods _
Civil Works Construction

H 25.4 _ _ _ 3 DPU II,DGCK

DetailedDesign andSupervision _ _ __- _ _
Land Acquisition
- Smarinda
Procurementof Goods
Civil Works Construction ___ _ ___ =_
SQL WASTEDISPOSAL 17.8 _ _ _ ___ _ _ Dinas Kebersihan
Detailed
Design mnd
Supervision _ ___ __ _ ____ -
LandAcquisition -- >
- Balikpqpn
Pot_a-k
- Samarinda
Procurementof Goods _ _
Civil Works Construction ____
KIPtMLP 45.5 _ _ - - Dinas Perumahan/
Dinas PengelolaPasar & DPU 11
DetailedDesign and Supervision _ _ _ _ _ ___
Civil Works Construction _ __ __ _ _ __

Land Acquisition
- Balikpapn
URBANL ROADS120.4 ___ __ ___ DPU 11DPUI & BINKOT
DetailedDesign andSupervision _ _ _ _ _ _ -
Land Acquisition
- Banjamasin
Civil WorksConstruction __ _ _ _

x
 KALIMANTAN URBAN DEVELOPMENT PROJECT
Disbursement by Category by City

ROUNDED
CURRENT PRICES (USMillion)______
(Loan Agreement Format) by negoffaton

By Disbursement Category(excl. Physical Cont) Banjarmasin Balipapan Palangkaraya Pontianak Samarinda Central Total
CivilWorks 25,550 11,640 6,830 15,250 9,990 69,260
Goods 3,380 220 690 1,020 100 5,410
SubProjects UnderSLA (includingPhysicalContigencies) t_n
- Kotamadya 1,950 4,290 1,560 3,080 2,160 13,040 L
- PDAM 3,870 2,830 9,070 4,690 20,460
TechnicalAssistanceConsultantServices
- LocallyManaged 1,400 2,060 1,310 2,020 1,750 8,540
- CentrallyManaged 10,300 10,300
Training 160 160 160 160 160 800
RefuncingPPF 1,700 1,700
Unalocated 2,710 1,000 690 1,280 810 6,490
TotalDisbursenent 35,150 23,240 14,070 31,880 19,660 12,000 136,000
 - 55 -

Annex 10
KALIMANTAN URBAN DEVELOPMENT PROJECT
Estimate Schedule of Disbursements

Fiscal Year Quarter Ending Profile Cum % Quarterly Cumulative Cumulative

(c) Loan (a) (US$ m) (US$ m) % of Loan (b)

1995 June 30, 1995 3 3 2%

1996 Sep 30, 1995 6% 6 9 6%

Dec 31, 1995 8 17 12%
Mar 31, 1996 9 26 19%
Jun 30, 1996 9 35 26%

1997 Sep30, 1996 26% 10 45 33%

Dec 31, 1996 10 55 40%
Mar 31, 1997 11 66 48%
Jun 30, 1997 11 77 56%

1998 Sep30, 1997 50% 11 88 65%

Dec 31, 1997 11 99 72%
Mar 31, 1998 10 109 80%
Jun 30, 1998 10 119 87%

1999 Sep 30, 1998 74% 5 124 91%

Dec31, 1998 4 128 94%
Mar31, 1999 3 131 96%
Jun 30,1999 1 132 97%

2000 Sep 30, 1999 90% 1 133 98%

Dec 31, 1999 1 134 98%
Mar 31, 2000 0.5 135 98%
Jun 30, 2000 0.5 135 99%

2001 Sep 30, 2000 0.5 135 100%

Dec 30, 2000 100% 0.5 136
(a) Standarddisbursementprofile for Asia,urbanprojects,from Boardapproval.
(b) Disbursementsexpectedto be fasterthan standardprofilein earlyyears due to longprojectpreparationperiod.
(c) Loaneffectivenessdate assumedas June, 1995;Loan closingdate: June 30, 2001.
file:\excel\frida\kudp\annexl O.xis
 Kalimantan Urban Development Project
Supervision Staffing and Schedule
Mission FY Mission Mission Task Task Civil/ Civil/ Water& Water& R&Env. R&Env. Pcmt Pcmt Fin Fin Total Total GRAND
N StartDate Duration Mgr (S) Mgr (S) Road Road SanEng SanEng Spec Spec (RSI) (RSI) Anal Anal TOTAL
(Weeks) Eng Eng (C) (C) (RSI) (RSI) (C) (C)
(S) (S)
M H M H M H M H M H M H M H M+H
1 95 5 H/95 2.0 2.0 2.0 2.0 0.5 1.5 0.5 2.0 1.0 2.0 1.5 2.0 1.0 11.5 6.5 18.0
2 96 9/95 2.0 2.0 2.0 2.0 . 0.5 2.0 2.0 1.0 1.0 2.0 1.5 1.0 0.5 10.0 7.5 17.5
3 96 3/96 2.0 2.0 2.0 2.0 0.5 1.5 0.5 10 1.0 2.0 1.5 2.0 10.5 5.5 16.0
4 97 9/96 2.0 2.0 2.0 2.0 0.5 1.5 0.5 1.0 1.0 2.0 1.0 1.5 0.5 10.0 5.5 15.5
5 97 3/97 2.0 2.0 2.0 2.0 0.5 2.0 0.5 1.0 - 2.0 0.5 1.5 0.5 10.5 4.0 14.5
6 98 9/97 1.5 1.5 2.0 2.0 0.5 1.5 0.5 1.0 - 1.5 0.5 1.0 0.5 8.5 4.0 12.5
7 98 3/98 2.0 2.0 2.0 2.0 0.5 1.5 0.5 - 2.0 0.5 1.5 0.5 9.0 4.0 13.0
8 99 9/98 1.5 1.5 2.0 2.0 0.5 1.5 - 1.0 - 1.5 0.5 1.0 - 8.5 3.0 11.5
9 99 3/99 2.0 2.0 2.0 1.0 - 1.5 0.5 - 2.0 0.5 L5 0.5 8.0 3.5 11.5
10 00 9/99 1.5 1.5 2.0 1.0 - 1.0 - 1.0 - 1.0 0.5 1.0 - 6.5 2.5 9.0
I1 00 3/00 1.5

Note:
M Mission
H - HomeOffice
S = Bank Staff
C - Consullant
TD - TechnicalDepartment
RSI- Resident
MissionIndonesia
 Annex 12
Page I

KALIMANTAN URBAN DEVELOPMENT PROJECT

Land Acquisition, Resettlement and Compensation

1. The table below details the land acquisition and resettlement under the project.
LAND ACOUISITION AND RESETTLEMENT
AS OF SEPTEMBER 1994

LAND AFFECTED DISPLACE) PIM ALLOCA1ON

CITY/SECTOR ACQUISMON PAMILIES PAMILIES RAP
M2

(1994 BASE PRICE)

YEAR p.MULLION

SAMARINDA
TPA 40,000 1 95/96 52
TRANSFER SITE 100 2 - IN 95/96 2
AERATION POND 2,000 0 20 PREP. 94/95 43

SUB TOTAL 42,1000 3 20 97

BALIKPAPAN /1l
TPA 80,000 4 - 94/95 160
TRANSFER SITE 500 1 95/96 8
1 MARKET 10,000 I 96/97 40
2 WATER 2,500 2 95/96 105
RESERVOIRS

SUB TOTAL 92,500 8 - 313

BANJARMASIN /I
NEW RING-ROAD 44,000 37 19 AVAIL 94/95 31
TRANSFER SITE 500 2 - . 95/96-96/97 16

SUB TOTAL 44,500 39 19 47

PONTIANAK /2
TPA 200,000 0 /3 - 95/96 120
3 TRANSFER SITES 850 3 95/96 18
3 WATER 6,250 3 94/95 0.4
RESERVOIRS

SUB TOTAL 207,100 6 138_4

PALANGKARAYA
TRANSFER SITE 750 1 - 95/96 3

SUB TOTAL 750 1 95/96 3

TOTAL 386,950 57 39 598.4

(39 ha) .

Source: Local Governments, Bank Staff

Note: /1 Waste water/sewerage systems will be proposed following studies to be made under the project. Land & resettlement implications
will be known when decisions are made.
/2 Study will determine whether land is needed for flood control.
/3 Vacant, govemment-owned land, but agency needs to acquire.
 - 60 -

Annex 12
Page 2

2. The Project Implementation Agreements with the local governments include the following criteria for
Resettlement Plans in line with GOI policy under KEPPRES 55/1993:

(a) Displaced households will have an option between cash compensation and moving to a resettlement
site. Households left with less than 60 m2 following acquisition will also be eligible for resettlment benefits.

(b) Cash compensation will reflect at least the NJOP level.

(c) The compensation value for land taken by the project will be sufficient to pay for an area of land at
the new site with at least the same area.

(d) Compensation for the building at the old site will be sufficient to build a new house of the same
quality. Displaced families will also be allowed to take the old building materials from the previous site.

(e) Displaced families will have the option between buying standard houses built by a developer at a new
site, or building their own houses of suitable size and quality.

(t) At the resettlement site, the Government will provide reasonable infrastructure levels, such as
footpaths, roads, drainage, water, electricity, and public facilities such as schools, health services,
transportation, etc., if not already available.

(g) People will be given assistance to restart and develop at the new site any small businesses displaced
from the previous site.
 - 61 -

Annex 13
Page 1

KALIMANTAN URBAN DEVELOPMENT PROJECT

Mitigation of Negative Environmental Impacts

1. The following criteria will be provided to consultants preparing designs and to

contractors executing works under the proposed project, to mitigate potential negative
environmental impacts.

Dredging of Drains and Floodways

2. All of the rehabilitation and up-grading work of drains in each city will involve
preparatory dredging. The spoil is probably severely contaminated with human waste,
industrial wastes, and lead benzene from storm water runoff. Care must be taken in the
dredging and disposal of the spoil. Prior to dredging, a plan of action to mitigate potential
environmental damage will be prepared by the consultant and submitted to the Bank for
technical review and approval prior to contracting this work. The plan should take into
account the following criteria:

i) the method of dredging should ensure minimal dispersal of pollutants both

during the dredging when metals can become resuspended in the water and
during hauling when the wet sludge can slosh onto the road. Possible options
may include;

a) using temporary suspended platforms during dredging and construction for

de-watering sludge prior to transport,

b) using boats for transport of sludge and drying before off loading to a truck
for final disposal, and

c) providing by-pass pumping (where feasible) of up stream flow to dewater

and isolate an area thus preventing resuspension of pollutants in the water.

ii) the final disposal site(s) at the TPAs should be selected to ensure that the spoil
do not enter and pollute local watercourses. The spoil could also be considered
as capping material for existing landfills which are scheduled to close.

iii) the spoil should not be composted with sludge or organic wastes unless they
have been tested and shown not to contain heavy metals or other toxics.

In all locations, construction should adhere to MPW Construction SOPs for urban drainage
(Petunjuk Teknis, Proyek Drainase Perkotaan 1990). Where there is a possibility of landslips
occurring during construction, shoring will be required to prevent damage to adjacent
properties and/or infrastructure.
 - 62 -

Annex 13
Page 2

Road Widening and Upgrading

3. In some locations construction of new roads could lead to induced development,

particularly the ring-road in Banjarmasin. Local BAPPEDAs will prepare land use and zoning
plans under the project that take into account such potential development. In addition, road
construction in wetland areas can affect the cross drainage of surface & ground water severely
daminising the quality of the environment. All road design & construction should mitigate
such negative impacts by providing adequate cross drainage. In a number of cities, road
improvement may entail disruption of traffic, especially on smaller collector roads which will
need to be managed. The following conditions should be part of contracts let for road
widening or upgrading.

i) In all locations construction should adhere to MPW Construction SOPs for

roads (Petunjuk Teknis, Proyek Jalan dan Jembatan 1990).

ii) In locations where severe and/or prolonged disruption of traffic will occur
during construction, alternative routes should be selected in advance and
coordinated with local police and traffic authorities.

iii) All construction sites should have traffic signs and safety barriers erected
throughout the construction period, construction materials should be stored in
a manner that does not impede traffic flow, and the adjacent road should be
maintained free of spoil and other waste materials during construction.

Solid Waste Disposal Sites (TPA)

4. In all five cities the construction and operation of the solid waste disposal sites should
adhere to MPW Solid Waste Disposal SOPs (Petunjuk Teknis Proyek Persampahan, 1990/92).
Toxic substance disposal should be coordinated with the industrial, hazardous, and toxic waste
program through the Ministry of Industry and Bappedal including provision or toxic substance
disposal at the TPA.

5. Because of the possibility of ground water pollution by uncontrolled runoff and plans
to use the TPAs for sludge disposal (from dredging and sewerage treatment), particular care
is required in the design and construction of these facilities. It is recommended the following
contractual arrangements for engineering design and construction be required:

i) Prior to initiation of detailed engineering design, the preliminary technical plans

and drawings for each TPA must be submitted to the Bank for technical review
and approval by a waste disposal and sanitation expert of the Bank.

ii) Prior to finalisation of detailed engineering designs the plans, drawings and
specifications for each TPA must be submitted to the Bank for review and
approval by a waste disposal and sanitation expert of the Bank.
 - 63 -

Annex 13
Page 3

iii) Prior to completionof constructionor commissioningof each TPA, each of the

municipalauthoritiesbe requiredto submitto the Bank a detailedstaffingand
technicalplan for operationof the TPA, includingthe leachatetreatmentplant.

6. The design of TPAs should take into accountthe followingcriteria:

i) each TPA will have an area for sludge and composting/organicrecycling.

ii) scavengerswill be allowedto recycle waste.

iii) provision of a ground-watercut-off barrier, together with leachate treatment

facilitiesto prevent contaminationof the surroundingground-watertable, may
be needed.

iv) compactingmay be acceptableif adequatesoils are not availablefor "sanitary"

operation.

v) considerationshould be given to capping the existing landfills scheduled for

closurewith the drainage spoils and then with a top layer of dewatered sludge
which has been compostedwith organicsolid waste. The top layer shouldthen
be planted with cover reducedthe amountof precipitationentering the landfill.
Any precipitationwhich managesto flow through the organiczonewill become
anoxic thus preventingthe resuspensionof metals in the seepage water. This
couldprovideand excellentmethodof both sludge, drainagespoils, and organic
solid waste disposal.
 - 65 - Annex 14
LocalGovernmentFlnsnce: Banjaqiasin Page 1 of 3
92193 93194 94195 95/98 96197 97/98 98/99 99/00 Total
1 995/6-1 999/00

Local revenue:
Properly tax tP6BW 1.0 1.6 1.7 2.1 2.4 2.8 3.8 5.3 16.4
Other taxes and feea (PADS) 5.5 7.2 8.6 9.9 10.6 11.5 13,9 16.9 62.8
Total local revenues 6.5 8.8 10.3 12.0 13.0 14.3 17.7 22.1 79.1
Central grants not of slarie/penaions 0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.4 9.6

7.4 9.9 11.6 13.5 14.6 16.1 19.9 24.5 88.7

Routine expenditure/i 5.1 7.6 9.2 11.2 12.1 13.0 16.0 19.5 71.8

Gross Public savings 2.3 2.3 2.4 2.3 2.6 3.1 3.9 5.0 16.9
less:
Debt service 0.6 0.5 0.8 0.8 0.8 0.8 0.6 0.5 3.4
Net public savings 1.7 1.8 1.7 1.6 1.8 2.4 3.3 4.5 13.5

add allocations for IUIDP

From public saving /2 - - 1.1 1.1 1.4 1.8 2.4 3.2 11.0
Percapita block grants ltnpres li - 2.1 2.3 2.5 2.8 2.8 2.8 15.3
Provincial grants tSD8/2.P.0.AI - - 0.4 0.4 0.4 0.4 0.4 0.4 2.6
Central government routine grant (SDOI * - 0.1 0.1 0.1 0.1 0.1 0.1 0.6
Central government road grants IPJKI - - 1.8 1.9 2.0 2.1 2.2 2.4 12.4
Sub-loan financed by IBRO tSLAI - - 0.4 0.5 1.0 1.3 0.5 0.2 3.9
Grants tSPA8P/RK) 1.0 4.0 2.0 3.0 3.0 3.0 16.0

Total available for IUIOP /3 1.7 1.8 6.8 10.3 9.4 11.5 11.5 12.2 61.7

\1 Includes non-IUIOPincremental O&M

\2 Including allocation for tax on projects financed by SLA
\3 Excludes private contributions
\4 Not equal to nmplementationtotal in Table 4.2 because some land acquisition financed by local government is Included
with central government projects.

1::
LocalGovernmentFinance: Balikpapan
92193 93/94 94/95 95/96 96/97 97/98 98/99 99/00 Total
1995/6-99/00

Local revenue:
Property tax P88t 8.2 8.0 10.5 11.6 12.5 13.5 17.3 22.3 77.3
Other taxes and fees (PADSi 7.7 6.6 9.3 11.3 12.9 14.7 18.2 22.5 79.6
Total local revenues 15.9 14.6 19.8 22.9 25.5 28.2 35.5 44.7 156.9
Central grants net of salariespensilona 1.9 1.4 1.7 2.1 2.2 2.4 3.1 4.0 13.7

17.8 16.0 21.5 25.0 27.7 30.6 38.6 48.7 170.6

Routine expenditure /i 14.1 12.5 18.6 18.9 20.6 22.4 28.5 36.4 126.8

Gross Public savings 3.7 3.5 5.9 6.1 7.1 8.2 10.1 12.3 43.7
less:
Debt service 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 1.7
Net public savings 3.3 3.1 5.5 5.7 6.7 7.9 9.7 12.0 42.0

add allocations for IUIDP

From public saving /2 - - 2.9 3.0 3.6 4.1 5.0 6.1 24.8
Per capita block grants llnpres ItII 1.4 1.5 1.7 1.9 2.0 2.0 10.5
Provincial grants (SD8/2.P.0.AI - - - - - - - 00 0.0
Central government routine grant (SDO - - 0.5 0.6 0.6 0.7 0.8 1.1 4.2
Central government road grants (IPJKI - - 1.4 1.5 1.6 1.7 1.8 1.9 9.9
Sub-loan financed by ISRD iSLAI 1.5 1.7 2.1 2.5 1.4 0.8 10.0
Grants (SPA8P/RKI 1.0 2.0 3.0 2.0 2.0 1.0 11.0

Total avadlablefor lUIDP/3 3.3 3.1 8.6 10.3 12.6 12.9 13.1 12.9 70.4

\1 Includes non-IUIDPincremental O&M

\2 Including allocation for tax on projects finenced by SLA
\3 Excludesprivate contributions
\4 Not equal to implementation total in Table 4.2 becausesome lendacquisition financed by local government Is Included
with central government projects.

1::
 - 66 - Annex 14
Page 2 of 3
LcalS Oovarea Fhnnc: Paaga Raya
92/93 93UI4 S41S5 95/13 96/97 97/96 98/99 93/00 Totu
1995/8-99/00

Local revenue:
Property tax (PUB) 0.6 0.7 1.1 1.4 1.5 1.7 2.4 3.2 10.2
Other taxes and ftee (PADS) 1.1 0.8 1.6 2.0 2.3 2.7 3.4 4.4 14.8
Total local revenues 1.7 1.5 2.7 3.3 3.8 4.5 5.8 7.5 25.0
Central grants net of selerie/pensions 0.9 0.8 1.4 1.7 2.0 2.4 2.9 3.5 12.5

2.8 2.4 4.1 5.0 5.9 6.9 8.7 11.0 37.5

Routine expenditure /I 2.2 1.9 2.6 3.8 4.4 5.1 6.7 8.8 28.7

Gross Public savings 0.4 0.5 1.3 1.2 1.4 1.8 2.0 8.8
less:
DObt service 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net public savings 0.4 0.5 1.3 1.2 1.4 1.8 2.0 0.0 8.7

add allocations for IUIOP

From public saving 12 - - 1.0 1.0 1.1 1.5 1.5 1.6 7.8
Per capita block grants tinpree 11) - - 0.5 0.5 0.5 0.6 0.6 0.6 3.3
Provincial grants ISDB/2.P.O.A) - * - - * - - 0.0
Central government routin grant (SOO) - - 0.1 0.2 0.2 0.2 0.3 0.4 1.4
Central governrnent road grants IIPJK . * 1.8 1.9 2.0 2.2 2.3 2.4 12.7
Sub-loan financed by 1BRD(SLAI
Grants (SPASP/RKI 0.2 1.8 2.0 1.8 1.0 1.2 10.0

Total available for IUIDP/3 0.4 0.5 3.7 5.4 5.9 0.2 5.7 6.2 35.2
\1 Includes non-IUIDP incremental O&vM
\2 Including allocation for tax on projects financed by SLA
\3 Excludes private contributions
\4 Not equal to implementation total in Table 4.2 bcaue acmeIand equlaltion financed by local governernnt is included
with central government projects.

Local Govwrwnmt Fiawnce: Pontlanwk

92/93 U3/94 94/95 95896 96/97 97198 38/99 99/00 Total

1995/6-99/00

Local revenue:
Property tax (P881 1.8 1.3 2.1 3.1 4.1 5.3 6.8 8.7 28.0
Other taxes and fees (PADS) 5.1 6.4 9.1 10.9 12.2 13.3 15.5 20.4 73.3
Total local revenues 6.9 7.7 11.3 14.0 16.3 18.6 23.3 29.0 101.2
Central grants net of selaries/pensions 0.8 0.7 0.8 1.0 1.1 1.2 1.4 1.6 5.3

7.7 8.3 12.1 15.0 17.4 19.9 24.7 30.6 107.6

Routine expenditure I 8.4 8.7 11.3 13.1 15.0 17.2 19.6 22.3 87.1

Gross Public savings .0.6 -0.3 0.8 1.9 2.4 2.7 5.1 8.4 20.5
les:
Debt service 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net public savings -0.6 -0.3 0.8 1.9 2.4 2.7 5.1 8.4 20.5

add allocations for IUIDP

From public saving /2 - 0.7 1.6 2.0 2.3 4.1 7.2 18.0
Per capita block grants (Inpre I0 . . 1.7 1.8 2.2 2.6 2.6 2.6 13.5
Provincial grants (SDB/2.P,0.A) - 0.2 0.2 0.2 0.2 0.3 0.3 1.4
Central government routine grant (SDO) . . 0.1 0.1 0.1 0.1 0.2 0.2 0.8
Central government road grants IIPJK) - 1.7 1.8 1.9 2.1 2.2 2.3 12.0
Sub-loan financed by IRD ISLA) - 1.1 1.0 1.0 1.9 5.0
Grants ISPABPIRKI 0.2 2.0 2.0 2.0 1.8 2.0 10.0

Total available for IUIDP 13 -0.6 -0.3 5.7 8.8 9.5 11.3 11.1 14.6 50.O

\1 Includes norl-ILDP incremental O&M

\2 Including allocation for tax on projects financed by SLA
\3 Excludes private contributions
\4 Not equal to impleernntation total in Table 4.2 bcatuS aomeInd acquisition financed by local government is included
with central governmnent projects.

1::
 -67 - Annex 14
Page 3 of 3
Local GovernrnentFinance: Samarinde

92t93 93/94 94/95 95/96 96/97 97198 98/99 99t00 Total

1995/6-99/00

Local revenue:
Property tax (P8B1 6.3 6.5 7.4 8.6 9.4 10.3 13.5 17.6 59.4
Other taxes and fees (PADS) 5.7 6.5 8.6 10.2 11.7 13.4 16.4 20.0 71.7
Total local revenues 12.0 13.3 16.0 18.8 21.1 23.7 29.9 37.6 131.0
Central grants net of salaries/pensions 1.3 1.2 1.2 1.4 1.7 1.9 2.2 2.6 9.8

13.3 14.6 17.2 20.2 22.8 25.7 32.1 40.2 140.9

Routine expenditure /1 8.0 8.9 12.3 14.3 16.8 19.3 22.5 26.2 99.2

GrossPublic savings 5.2 5.7 4.9 5.9 5.9 6.4 9.6 13.9 41.7
less:
Debt service 0.2 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.7

Not public savings 6.1 5.4 4.7 6.6 6.8 6.2 9.5 13.8 40.9 0.0

add allocations for IUIDP

From public saving /2 - 2.4 3.0 3.1 3.2 4.9 7.3 23.9
Per capita block grants (Inpres 11) - 1.8 2.0 2.3 2.6 2.8 2.7 14.0
Provincial grants tSDB/2.P.O.A) - 0.5 0.5 0.5 0.5 0.5 0.5 3.0
Central government routine grant tSD0) 0.3 0.4 0.5 0.5 0.6 0.7 3.1
Central government road grants (IPJKI - 2.2 2.3 2.5 2.6 2.8 2.9 15.3
Sub-loan financed by IBRD iSLAI * 0.0 1.4 1.6 1.0 0.5 0.5 5.0
Grants ISPABP/RK) 0.5 1.5 2.0 1.0 0.5 0.5 6.0

Total available for IUIDP 13 0.0 0.0 7.7 11.2 12.4 11.5 12.4 15.2 70.3
\1 Includes non-IUIDP incremental O&M
\2 Including allocation for tax on projects financed by SLA
\3 Excludes private contributions
\4 Not eual to implementation total in Table 4.2 because some land acquisition financed by local government is included
with central government prolects.

1::
 IPDAM FINANCIAL AND OPERATING INDICATORS

Sold(3 Mi6. le199 _1996 1997 1996 1999 2000

g6o~-4.too*.
9428 14238 15790 17748 19127 209891
BMPW,. 11969 13643 11690 17170 17170 17170 IWalew Wod(000m3l) RevsnuesiFtps.mMeon)
PabNg&. 1191 1797 2946 4281 6310 57691
Pootlono 7056 9420 11400 lJ1230 1 5950 17713 25000 35000
Swnodnds 12902 15019 17170 19354 21302 222691

Total,eNoavmtslll.064 I" 1996¶9 1997 1999 1999 2000 00

Bw4v.mos* 6759 13299 14716 21503 23173 33067 20000 3¶9 1996 ls
ftaP.P.n 12342 14097 168512 19664 21466 21466250
POL9.08k
Pontihoo
708 1440
5793 7734
2360 4630 6743 7463
10763 12491 17957 16265 16000 U I 9720000
996 0is"9
U1997
S-.o.dn. 11267 13139 17273 19470 22602 23512 1996 60 19
op.6.slIngR..tl 1995 1996 1997 1999 1999 2000 10000 Ige10019
6.-Io-v..o 239% i43% 142% 102% 105% 72% 0999 01998
ea6.r.k
o,v 66% 64% 71% 14% 66% 70%100
Pulo-Og6. 232% 19S% 155% 109% 93% 73%20 020
Poot-1n. 109% 114% 93% 91% 76% 81% 6000
S.,Oo$o. 70% 73% 61% 61% 66% 69% f0
Not PtOIlfflp ) 1996 1996 1997 1998 1999 20000
flon1.rnallo
-9376 -5764 -616 .483 -lOSS 4999
BlM,oP.Po 441 3761 4619 4116 6696 4264
Pawanoa -934 -11367 -1303 -246 390 -24
Sownd .70 1498 3094 3662 6246 32608 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

"wnt..e CashIo .i. ¶96 I1999 1997 16968 1999 2000

6.nt.nna. 740 1416 5493 10901 10868 14458
816~popn 3166 3761 7098 6666 916 646 DabI serAvlafts. mIUon) Not Proflt(Rps.mNlIon)
Pahng&e -66, 1 326 1906 2664 409
Pontlenot ~2372300 4359 3967 79~43 352190
Sam.4na
277 2899 6396 6974 766 47361 8000I

D.bt~lcatpoe.
195
1996-
997
1998
1999
200
~ ~~~~~~~~71
8.4-W. 67 6000
3199
40
b&1pep.n 3234 3016 2796 2690 3119 3684 01996 1096

Pootl.n.
poll.00
1667 643 138 1822 1616
~~~~~~~~~123
61866
6000 20
20
9 1778
163WWO 1714 2022 2074 4433 4000 fI 1997 01698e
19
otnIce
[Debt1996 I ¶996
Polio.¶997 1998 1999 2000 3000~ ~~~~~~~~~~~~~~~~~~~~~~ige0 A E' 0 99
88Sa-aosit imvoi ItWVR 2.02 i !19*20
sampollo 0.99 1.24 2.64 2.59 2 96 1.75 200.0 m i 02000

43
1.i" 3668 3205 2.49 492 05S2 l i0 2000

16000~~~~~Ooslnwm
0,0m
9 Intern36
cas

as
2_5_ 111115 00
__64_ __7_ _ _ __0

14000
1200 1996

liii 0199 OpbradflRartlo

8000 I III 3~~~~~~~~~~~~~~~~~1997 250%&
5000 31996~~~~~~~~~~~~~~~~~~Is 200% IZ7 ~- -6*nah

~ ~~
4000 ~~~~~f 1 9 160% -X646&Pt- ltn

-2000 10% - - so&

L u A_ ~ ~ ~ ~
o L~~~~~~~~~~~~~~~~~~~r~~~~~~~~~~~~~J~~~~~~~~~~~~~N ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~ _
No ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ -h~~D;
 - 70 -

Am2ex 15
Page 2 of 2

PDAM-AVERAGE WATER TARIFFS AND INCREASES

CITY | 1994 1995 1996 | 1997 i 1 i 199 2000 _

BALIKPAPAN
Increase L/ 30% 10% 10% L 45% in 1993
To average Rp.681 Rp.931 Rp.1066 Rp.1173
"A" factor Rp.421 Rp.547 Rp. 601 Rp. 661

PALANGKARAYA
Increase 50% LS 30% 20% 20% /c Jan. 1994
To average Rp.630 Rp.844 Rp.1028 Rp.1239
"A" factor Rp.327 Rp.449 Rp. 538 Rp. 646

PONTIANAK
Increase Ld 20% 20% 10% /d 60%, 1993
To average Rp.682 Rp.818 Rp.982 Rp.1080
"A" factor Rp.320 Rp.384 Rp.461 Rp. 507

SAMARINDA
Increase /e 20% 10% 10% L 50%, 1993
To average Rp.729 Rp.871 Rp.946 Rp.1.038
"A" factor Rp.330 Rp.396 Rp.436 Rp. 479

BANJARMASIN
Increase 33% 25% 20%
To average Rp.710 Rp.894 Rp.1077
"A" factor Rp.400 Rp.500 Rp. 600

Water cost Less than 4% of incomes of low-incomehousehold (at Rp.150,000/month)

Source: PDAMs; Project PreparationReport.

 - 71 - Annex 16
Page 1 of 3

KALIMANTAN URBAN DEVELOPMENT PROJECT

Summary of Project Indicators
Table 1 - Water Supply

Connections under PDAM PDAM Users'000 |

City Connections, 1993 Project by 2000 Population Coverage Project
House Other Public House I/ Other Public 1993 2000 1993 2000 Benefic.

Pontianak 16,385 2,729 150 17,640 7,468 400 25% 50% 113 258 145
Banjarmasin 18,271 4,118 318 33,500 n.a. 250 28% 62% 141 367 226
Balikpapan 24,610 2,030 40 20,800 n.a. 350 40% 62% 152 312 160
Samarinda 22,970 2,430- 370 17,400 n.a. 420 38% 53% 176 321 145
Palangkaraya 3,570 229 50 11,430 2,420 170 24% 80% 26 112 85
Total 85,806 11,536 928 100,770 n.a. 1,590 1.55 3.07 608 1,370 761
1/About6 personsper houseconnectionsand some 120lcd; and about 100personspertap, and some30 lcd.

Table 2 - Drainage and Flood Control

City Drainage Improvement km Affected Area

New Primary Secondary Terts. Total ha % of city area

Pontianak 14.9 7.8 18.0 40.7 160.0 5%

Banjarnasin 7.9 4.7 15.6 28.2 330.0 15%
Balikpapan 5 5.8 16.6 18.0 40.4 214.0 10%
Samarinda 4.6 5.8 3.2 13.6 78.0 3%
Palangkaraya 24.9 16.5 19.0 60.4 160.0 14%
Total 5 58.1 51.4 73.8 183.3 942.0 8%

Table 3 - Solid Waste

City Solid Waste, 1993 % collected

ml/day lcd % collected by 2000

Pontianak 1,317 3.0 47 80%

Banjarmasin 1,319 2.6 58 60%
Balikpapan 1,159 3.0 56 80%
Samarinda 1,483 3.2 62 80%
Palangkaraya 333 3.0 56 80%
 - 72 - Annex 16
Page 2 of 3

Table 4 - Infrastructure for Kampungs, Low Cost Housing and Urban Renewal 1/

KIPs Infaucre for Totals

City 000 low cost housing umbanrenewal 000 % city
__ #l~~~~ocatsha pop a/ ha 000 pop 21 ha 000 pop a/ ha pop area pop

Pontiaak 20 204 100 6.5 31 1.8 211 102 7 23

Banjarmiasin 26 258 130 5 41 1.4 20 4 283 135 11 26
Balikpapan 23 232 108 24 5/ 4.8 256 113 12 29
Samarinda 27 232 100 60 6/ 16.5 20 7/ 4 312 120 12 26
Palangkaraya 3 90 19 30 8.3 120 27 11 17
Total 99 1,016 457 101.5 27.9 64 12.8 1,182 497 12 26
1/ Pathways/access roads, solid waste collection, drainage and sanitation. (Cost of water supply and the sanitationprogram are included in
the respective sector programs).
2155 units per ha; assumed an average 5 personsper unit, or 275 persons/ha
3/ Sianar Hulu, 4/ Sungai Tinga; 51Gunung SariIlir, 6/ Senpaja, Sambutan,Pandan Wangi; 7/ Karang Mumus
a/ Estimated

Table 5 - Market Improvements

city MIPS
#Markets ha Superstructures

Pontianak 6 40 3,445 m2
Banjarmasin 8 40 4,500 rnl
Balikpapan 3 17 2,250 m2
Samarinda 4 12 3,455 m2
Palangkaraya 3 25 2,250 mi2
Total 24 134 15,900 m2
 - 73 -
Annex 16
Page 3 of 3

Table 6 - Roads Works, km

City Primary Primarv Secondary Secondary Local Total

arterial collector arterial collector Roads
Pontianak
p in. 1991lenigth 24.5 12.4 34.2 22.4 71.3 164.8
Improvement 1.8 5.7 5.2 12.7
Rehab/oxerlay 17.1 11.2 15.5 33.0 76.8
Ncx 12.0 12.0
Subtotal KUDP 29.1 0 13.0 21.2 38.2 1()1.5
Banjarmiasin
p.m. 1991length 190.5
Improvement 12.4 2.9 5.3 8.8 69.0 98.4
Rchab/overlav 7.5 1.4 11.8 20.7
NcX- 14.4 14.4
Subtotal KUDP 34.3 2.9 6.7 20.6 69,0 133.5
Balikpapan
pin. /991 length 25.0 36.8 81.4 143.2
Improvement 13.2 11.8 58.8 83.8
Rehab/overlav 2.3 1.0 0.7 4.0
NeW 4.0 4.0
Subtotal KUDP 19.5 1.0 0 12.5 58.8 91.8
Sainarinda
pin. 1991 e1,'gth 35.7 18.7 20.2 37.0 72.5 184.1
Improvement 8.3 3.8 1.3 6.9 40.0 60.3
Rchab/overlay 2.2 2.2
Subtotal KUDP 8.3 3.8 3.5 6.9 40.() 62.5
Pala ngkarava
pZi. 1991leingth 3.3 11.8 27.5 25.5 240.0 308.1
Improvement 4.4 2.8 5.7 12.0) 24.9
Rchab/ovcrlav 7.0 7.1 6.0 20.1
Subtotal KUDP 11.4 0 2.8 12.8 18.0 45.0
Fivc Cities
p.m. 1991lenigth 88.5 42.9 118.7 84.9 465.2 990.7
Improvcnient 38.3 8.5 11.2 38.9 185.0 280.1
Rehab/overlav 33.9 12.2 14.8 35.1 39.0 123.8
New 30.4 0 0 0 0 3(0.4
Total KUDP 102.6 7.7 26 74 224 434.3

City Road condition, 1991 Densities

% good % average % poor m road/ha persons/ha m road/personl
Ponfimank 77 12 11 5() 132 0).38
Banjarmnasin 53 3 44 76 2()0 ().38
Balikpapan 81 13 6 64 173 0).37
Sainarinda 51 3 44 92 175 ().53
Palangkarava 20 21 59 270 I(t) 2.7
lile ex'e! fridt kudp tahle6.xIs
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i \ \ 4 _i\ >g ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~K!LOD.ETERS
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PROJEC-
KALIMANTANURBAN DEVELOPMENT
BALIKPAPAN
N I 2 3 PROJECTCITIES: URBAN ROADS AND KIP/MIP

INDICATIVEURBAN ROAD PROGRAM

--- ROADIMPROVEMENTS
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