Document of

The World Bank

FOR OFFICIAL USE ONLY

/ A/ V -Y ' -)

Report No. 6813-IND

STAFF APPRAISAL REPORT

INDONESIA

IRRIGATION SUBSECTOR PROJECT

October 15, 1987

Asi;a Regional Office

This document has a resicted distibution and may be used by redpients only In the perfonnance oftheir official duties. Its contents way not othewise be disclosed without World Bank authoriatin.

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CURRENCY EQUIVALENT(As of September 1987)

Currency Unit Rupiah (Rp)US$ 1.00 Rp 1,650Rp 1 million = US$606.06

!NDONESIAN FISCAL YEAR

April 1 - March 31

WEIGHTS AND MEASURES

I millimeter (mm) - 0.039 inches1 meter (m) - 39.37 inches1 kilometer (km) - 0.62 miles1 square kilometer (km2) - 0.386 square miles1 hectare (ha) - 2.47 acres1 cubic meter (m3 ) - 35.31 cubic feet1 million cubic meters (MCM) - 811 acre-feet1 liter (1) = 1.06 quarts - 0.264 ga lons (US)1 liter/second (1/sec) - 0.035 fti per second1 kilogram (kg) - 2.2 pounds1 metric ton (ton) - 2,205 pounds

FOR OMCIL USE ONLY

ABBREVIATIONS, ACRONYM3 AND INDONESIAN TERMINOLOGY

ADB - Asian Development BankAPBN - Central Government BudgetBAPPEDA - Provincial Development Planning AgencyBAPPENAS - National Development Planning AgencyBDP - Bidank Diklat Pengairan (in DCGRD - Representative office of

Pusdiklat)BIE - Bachelor of EngineeringBIPOWERED Bandung International Professional Training Program for Water

Resources DevelopmentBPKP - Financial and Development Supervisory BoardCABANG DINAS - Irrigation SectionDAAD - Directorate of Agriculture Area Development (in DCFCA)DGFCA - Directorate General of Food Crops AgricultureDGWRD - Directorate Gene-al of Water Resources Development (in MPW)DIK - Daftar Isian Kegiatan (routine budget allocation)DIP - Daftar Islan Pr" .k (development budget allocatitn)DIPERTA - Provincial Agricultural ServiceDOI-I&II - Directorates of Irrigation I and II (in DGWRD)DOR - Directorate of Rivers (in DGWRD)DOS - Directorate of Swamps (in DGWRD)DPP - Directorate of Planning and Programming (in DGWRD)DPU - Provincial Public WorksGOI - Government of IndonesiaINPRES - Revenue sharing grant programs from GOI to provincial,

district and village authoritiesIPEDA - Iuran Pembangunan Daerah - Land TaxISF - Irrigation Service FeeJuru - Irrigation OverseerKabupaten - Administrative DistrictMOA - Ministry of AgricultureMHA - Ministry of Home AffairsMPW - Ministry of Public WorksO&M - Operation and MaintenanceOECF - Overseas Economic Cooperation Fund (Japan)Palawija - Secondary food crops (grown mainly in dry season)Pengamat - Irrigation inspector, head of subsection (Ranting Dinas)PBB - Property and Building TaxP2AT - Sub-directorate (within DOI-II) responsible for groundwater

developmentPPL - Village level agricultural extension workerPPM - Mid-level agricultural extension workerPPS - Subject matter specialistPRIS - Provincial Irrigation ServicePusdiklat - Education and Training Division (in MPW)Repelita - National Five-Year Development Plan (Repelita IV, 1984-89)Seksi - Irrigation Section OfficeSTM - Technical & High School level staffUlu-Ulu - Irrigation water masterWilayah - Irrigation District OfficeWUA - Water Users' Association

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

LOAN AND PROJECT SUMMARY .................. vi

I. PROJECT AND SECTOR BACKGROUND .................... . ...... ... .. 1

A. Project Background.c k gr.... ......... ou nd.... . . ... 1B. The Agriculture Sec t or 2

- Background.s c k g r ou nt......... **,.... 2- Objectives... ........... ,.....e...................... 2- Performance ....................... 9 ........ 2

C. The Irrigation Subsectorb s e ct..o o......o.........o...or.. 3- Surface Irri g a t i o n 3- Srunwamp.,...........,. . *............... 3

- Small River M o uths 4

D. Institutional Framework and Supporting Servicesv...ces0.09 . 5- Irrigation Services for O&. 5- Water Users' Associationso.......................... .O 6- O&M Practices ............. p 7- Staffing and Fa ii l i t i e s 8- Staff Tra i n i n g 8

E. O&M Funding and Cost Recovery.........................o.. 9- O&M Funding............................... 99

- Cost R er .99r 9 10- Irrigation Service Fee 10- Land Tax 11

F. Irrigation Development Strategy, Issues and InvestmentPrograms ................................ 99999 e 1 11

- Subsector Issues andStrategy........................... 11- Investment P rag r a m . 12

G. Bank Role and Subsector Lending Strategy.r.ateg...*.,..... 15- Seneral ~~~~~~~~~~~~~~15

- Experience under Previous Projectso.... 04....9*....... 9 15

This report is based on the findings of an appraisal mission to Indonesia inFebruary/March 1987 comprising Messrs. A. Zulfiqar, E. Kramer, Ho Eisa,M. Mian, P. Sun, and Ms. S. Ganguly (Bank) and E. Greenshields, G. Cazaux andW. David (Consultants). Mr. T. Bertrand (Bank) participated part time.

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Page No.

II. THE PROJECT ........................ 16

A. Rationale for Banklnvolvement............................. 16B. Project Objectives and Description ......................... 17

- Project Objectives. ... **..*.*o*** * .................... , 17- Project Descriptions c r i p ti.....o............on..... o.... 17

C. Detailed Features ..... ....... .. ..... e 18- Special Maintenance.................* **c*4G*oci.. 18

- Surface Irrigation Systems...........................O 18- Swamp Sys t e m s 19- Small River Mouthse..............e....,.....o........ 19

- Efficient O&M ............... ............. 20- Surface Irrigation Systems...e....c......c......... 20- Swamp Systems ... .e.........a....... c c CC....., .... e.a.a.. e.e.c 20

- Completion of Ongoing Projects......................o.. 21- Pilot Groundwater Development............cc.c.e.c.e.c.. 23- Turnover of Small Irrigation Systems,,,#o,.os........ 24- Irrigation Service Fee....................... ........ 26- Land Valuetion and Strengthening of P8 B 27- Institutional Strengthening and Training... ............ 28- Technical Assistance and Studies... 30

D. Cost Estimates* .... c33

E. Financing.. c e ece s c.c cc. sc. c. c e..... o..... 34F. Preparation Status and Implementation Schedule......... cc. 35Go Procurement 36H. Disbursement..... 40Is Environmental Effects 41J. Role of Women...e 42

III. PROJECT IMPLEMENTATION..... 42

A. Organization and Management.cc.cc.c....cc..e..o.ceccc.c..c 42- National Level Organization and Management .......... 42- Provincial and Field Level Organization and Management.. 44

B. O&M Funding ............... ...... ........ * ccc...... cc 45C. Accounts and Audits. ceccee .......... e.c.e...... .......c.. 45D. Monitoring and Evaluation. c.....e......c... e e oee *...... c c.. 46

IV. CROPPING PATTERNS, YIELDS AND PRODUCTIONODUCTI.O.....e.cce. 47

A. Present and Future Cropping Pat terrn...o............... 47B. Yields, Production and Markets...rk................ets.... 48

V. PRICES, FARM INCOMES AND COST RECOVERY ........... c.... 49

A. Prices 49B. Farm Incomes and Payment Capacityp... 49C. Cost Recovery and Operations and Maintenance Funding.......O 50D. Cost Recovery Indices.....ecc. e c..... 51

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Page No.

VI. BENEFITS, ECONOMIC JUSTIFICATION AND RISKS ........ sesse........ 52

A. Benefits and Beneficiaries................................. 52B. Economic Analysis5..................... .. ........... *6e****. 53C. Risks and Uncertainties..e........... ... * . . ... .... .... ... 54

VII. AGREEMENTS REACHED AND RECOMMENDATION ................... ,.. 56

TABLES IN TEXT

1.1 Subsector Injestment in Relation to O&M Expenditures.... 131.2 GOI's Commitments for Externally Financed Projects...... 141.3 Ongoing (Partially Externally Financed) Projects........ 14

2.1 Turnover of Small Irrigation Sy s t e m s 252.2 Pilot Areas for the Introduction of Irrigation

Service Fee9,o ........... J-X****---**¢* 262.3 Project Cost Sumayr y 342.4 Project Financing Plan...... . * e . . .......... ... 352.5 Procurement Plan... 392.6 Disbursement Schedulec hd..... ... l e.o.... o... ...... l..e 40

5.1 Net Farm Incomes . ............. , .. 505.2 Cost Recovery Ind 52

6.1 Summary of Major Benefits and Beneficiaries.......... 536.2 Economic Rate of Return and Sensitivity Analysis........ 55

ANNEXESAnnex 1: GOI's Policy Statem- ... and Action PlanAnnex 2: Cost Estimates and Implementation SchedulesTable 1: Project Cost Summary (By Expenditure Categories)Table 2: COI's Financing Plan (by fiscal year)Table 3: Irrigation-Implementation ScheduleTable 4: Swamps - Implementation ScheduleTable 5: Schedule for Handing Over Swamps Projects to Provincial Organ-

izationsTable 6: Selected Ongoing ProjectsTable 7: Groundwater Component - East Java and Sulawesi - Implementation

ScheduleTeble 8: Groundwater Component - Lombok - Implementation Schedule'table 9: Land Reclassification, Valuation and Strengthening of IPEDA/PBB

Directorate - Implementation ScheduleTable 10: A Pilot Scheme of Mapping - Implementation ScheduleTable 11: Ongoing Land Reclassification ProgramTable 12: Ten-Year Land Reclassification ProgramTable 13: Introduction of Irrigation Service Fee - Implementation

Schedule

Annex 3: Institutional Development and TrainingTable 1: Proposed Approach to O&M ProceduresTable 2: Training and Related Activities

Annex 4: Consultancy ServicesTable 1: Consultancy Services for Project ImplementationTable 2: Consultancy Services for Institutional Development

Annex 5 O&M FundingTable 1: Central Government Funding of O&M (1979/80 - 1987/88)Table 2: Funding of O&M in Selected Provinces (1986/87)Table 3: Funding of O&M in Rest of the Provinces (1986/87)Table 4: Incremental Funding Requirements for Efficient O&M - IrrigationTable 5: Incremental Funding Requirements for Efficient O&M - SwampsTable 6: Projection of Rural PBBTable 7: Projected Sources uf Incremental Financing for Efficient O&M

Annex 6 Investment ExpendituresTable 1: Realization of Physical Targets - Actual and Projected for

Repelita IVTable 2: Actual and Planned Investment ExpendituresTable 3s Central Government Investment (DIP) Expenditures - 1984/85 -

1988/89Table 4: Allocations of Loans and Disbursements up to January 1, 1987 -

Bank-financed ProjectsTable 5: Allocations of Loans and Disbursements - ADB-Financed ProjectsTable 6: Allocations of Loans and Disbursements - OECF-Financed ProjectsTable 7: Estimated GOI Funding of Foreign Financed Projects

Annex 7: Cropping Patterns, Yields and ProductionTable 1: Yields - Present Situation and Future with ProjectTable 2: Crop Areas - Present Situation and Future with ProjectTable 3: Incremental Crop Production at Full Development

Annex 8: Repayment Capacity of Water UsersTable 1: Java Farm Models - Using Actual Farmgate PricesTable 2: Outside Ja-a Models - Using Actual Farmgate PricesTable 3: Java Farm Models - Using Government Support Level PricesTable 4: Outside Java Farm Models - Using Government Support Level

Prices

Annex 9: Economic AnalysisTable 1: Derivation of Economic PricesTable 2: Financial and Economic Prices

Annex 10: Selected Documents and Data Available in Files

CHARTS:

1. Organizational Arrangements for Project Implementation2. Organizational Arrangements for the Implementation of Training Activities3. Approach to Strengthening Irrigation Management at the Tertiary and

Quarternary Levels4. Organizational Setup for the Pilot Scheme for Irrigatiorv Service Fee

MIAP

--BRD 20240

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INDONESIA

IRRIGATION SUBSECTOR PROJECT

Loen and Projec:t Suumary

Borrower: Republic of Indonesia

Amount: US$234 million equivalent.

Terms: Repayable in 20 y'ears, including 5 years of grace, at thestandard variable interest rate.

ProjectDescription: The project would be the first phase of a long-term program

aimed at supporting the Government of Indonesia's (GOI)efforts to: (a) improve operations and maintenance (O&M) tosustain the effectiveness of all irrigation systems, throughadequate levels of funding, and strengtheving ofinstituEions and proceduree for O&M planning andimplementation; (b) introduce direct cost recovery fromirrigation beneficiaries and increase local revenuegeneration to reduce the burden of O&M expenditures oncentral and provincial budgets; and (c) rationalize existingand programed investments in the subsector.

Predicated upon, and within the framework of, an agreedmedium-term Policy Statement and an Action Plan of specificmeasures to be taken over the three year projectimplementation period, the project would consist of thefollowing: (a) special maintenance works (i.e. deferredmaintenance and minor systems upgrading) on about 400,000 haof irrigated land, about 106,000 ha of reclaimed swamp land,and five river mouths, so that these can sustain efficientO&M in future. Detailed preparation and design work wouldbe underzaken for about 200,000 ha of irrigated areas and55,500 ha of swamps requiring special maintenance to becovered in the first year of a follow-up project;(b) systematic introduction of efficient O&M on about700,000 ha of irrigated land and 87,000 ha of swamp land;(c) completion of about 40 priority, GOI-funded on-goingprojects, selected on the basis of agreed technical andeconomic criteria; (d) pilot groundwater development throughconstruction of some 900 tubewells for small farmers inprimarily rainfed areas; (e) support for policy reforms andinstitutional strengthening and training, includingprivatization of small public irrigation systems, a pilotscheme for introduction of direct irrigation service fees,improving local reverue generation via land reclassificationand valuation, O&M manpower planning and development, andstrengthening of the central, provincial and district levelinstitutions responsible for irrigation O&M, and of water

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users' associations; and (f) technical assistance andstudies (institutional strengthening study, investmentstrategy study, and environmental impact studies) in supportof the above components.

An efficient operation of the existing capital stock (inirrigation infrastructure), expediting the completion ofpriority ongoing projects, striking an appropriate balancebetween expenditures on new investments and O&M of theexisting investments, and reducing the dependence on centralgovernment budgets for O&M funding via improved costrecovery and local revenue generation, would all contributetowards sustained development of the irrigation subsector.

Risks: The principal risks are that: (a) the implementation of thepolicy framework, and measures in the Action Plan in supportthereof, may be prolonged or deferred, despite GOI'scommitment as reflected in the Policy Statement and ActionPlan; (b) implementation of physical works may be delayed;and (c) the level of funding allocated for efficient O&M maybe inadequate or the funds provided may be inefficientlyutilized. These risks are expected to be minimized by theproposed long-term program approach, the provision forsubstantial technical assistance, and by the steps alreadytaken by the Government to appoint key consultants and tohave the salient organizational arrangements for projectimplementation in place.

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Estimated Costs: Local Foreign Total---- US$ million -----

Special Maintenance 45.2 27.7 72.9Incremental O&M 9.5 6.1 15.6Recurrent O&M /a 44.1 34.9 79.0Ongoing GOI-funded Projects 60.9 42.5 103.4Groundwater Development 6.6 6.0 12.6Institutional Development 6.9 12.4 19.3Turnover of Small Systems, IrrigationService Fee - Pilot Schemes, LandReclassification and Valuation 6.2 3.0 9.2

Base Cost lb 179.4 132.6 312.0

Physical Contingencies 15.6 12.4 28.0Price Contingencies 16.1 3.0 19.1

Total Project Costs 211.1 148.0 359.1

Financing Plan:

GOI 109.7 - 109.7Bank 94.4 139.6 234.0Government of Netherlands 6.4 5.4 11.8Government of Italy 0.3 2.7 3.0Ford Foundation 0.3 0.3 0.6

Total 211.1 148.0 359.1

Disbursements:Bank FY 1988 1989 1990 1991

Annual 30.0 80.0 80.0 44.0Cumulative 30.0 110.0 190.0 234.0

Rate of Return: 21%

t:E': IBRD No. 20240

/a Present level of O&M expenditures.

/b Including taxes amounting to about US$18.5 million equivalent.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

STAFF APPRAISAL REPORT

I. PROSECT AND SECTOR BACKGROUND

A. Project Background

1.1 The large expansion of irrigation infrastructute in Indonesia overthe last two decades has been impressive and has made a major contribution tobringing the economy to self-sufficiency in rice. However, this successfulexpansion was not accompanied by a country-wide effort to maintain and operateefficiently much of the 4.8 million ha of the irrigation systems.Consequently many systems are poorly maintained. Unless there is a radicalshift of national focus towards operations and maintenance (O&M), a massiveand much more costly expenditure, in both financial and economic terms, onrehabilitation in the neAt 10-15 years, would become inevitable. Therecognition of the importance of O&M, coming at the same time as Indonesia isreaching the threshold of rice self-sufficiency and facing severe resourceconstraints, is leading to a sharp redirection of GOI's priorities away fromexpansion and modernization of specific irrigation systems, towardsefficiently operating and maintaining existing systems and the completion ofonly priority ongoing projects. Recognizing that this shift in focus iscritical to optimizing the returns from investments in irrigation andpreventing a decline in agricultural yields from current levels, GOI hasenunciated and evolved new policies and concerted medium-term actions onsubsector-wide O&M funding, institutional strengthening and cost recovery.

1.2 The proposed project would be the first phase of a program aimed atsupporting these policy and institutional reforms as well as appropriatelevels of O&M expenditures and development of new sources of financing fromprovincial authorities and beneficiaries. The project was identified by aBank mission during discussions with the Government in February/March 1986,and prepared by the Directorate General of Water Resources Development (DGWRD)in the Ministry of Public Works (MPW) with the assistance of consultantsfinanced under Irrigation XIV (Loan 1811-IND). Concurrently, a draftSubsector Policy Statement and detailed Action Plan to provide theunderpinnings for ihe program, were prepared by a working group includingrepresentatives from BAPPENAS, the Ministries of Finance (MOF), Home Affairs(MHA) and Agriculture (MOA), and DGWRD. Following preparation mi. ,ions thatvisited Indoneaia during June through November 1986 and an appraisal missionin February/March 1987, broad agreement was reached with Government on theoverall project concept and scope, as well as on the draft Subsector PolicyStatement and Action Plan covering related policy issues in the irrigationsubsector. Following technical discussions held in Jakarta during June/July1987, negotiations were held in Washington, D.C., during September 1987. TheGovernment delegation was led by Mr. Soebandi, the Director General of WaterResources Development.

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B. The Agriculture Sector

Background

1.3 Agricultuve remains a key sector of the Indonesian economy,contributing about one-fourth of GDP and providing employment to 55% of thelabor force. The sector has an important role in non-oil merchandise trade,with major agricultural exports accounting for 33% of the value of non-oilexports, and food for 7% of imports. Of the country's cropped area of 24million ha, about 8 million ha are under perennial crops, 9 million ha are indryland farms, and 7 million ha in wetlands suitable for rice cultivation.Rice occupies about 38% (9 million ha) of the total cropped area, corn 13%(3 million ha), cassava 7% (1.6 million ha), and soybean 3% (0.8 millionha). Food crops account for 63% of agricultural GDP, with rice aloneaccounting for a 30% share in 1985. Areas well endowed with rainfall andirrigation facilities usually grow two to three crops a year: rice followedby soybean or corn in the second and third cultivation cycles. Farm holdingsare predominantly small--34% of all household lots are less than 0.25 ha, andabout 29% are between 0.25 and 0.5 ha. It is estimated that 44% of the ruralpopulation lives below the absolute poverty income level of US$106 per capita.

Objectives

1.4 The Government's major objectives for the agriculture sector duringRepelica IV are to: (a) increase production to meet domestic requirements forfood while meeting the needs of industry and expanding agricultural exports;(b) increase farmers' incomes and generate employment; (c) promote a morebalanced distribution of economic opportunities, regional development and landsettlement through transmigration; and (d) contribute to the health and betternutritional status of the population.

Performance

1.5 Since 1969, agricultural growth has averaged about 4% p.a. andoutpaced population growth by a significant margin. Rice output, which hasgrown a,: 5% p.a. since 1969 (6.3% p.a. since 1975), has made a solidcontribution to the sector's impressive performance. The dramatic increase inrice production from 17.4 million tons in 1979/80 to about 26.6 million tonsin 1985 essentially transformed the country from one of the world's largestimporters of rice (about 2.6 million tons in 1979/80) to one with surpluses in1985/86. Other food crops (particularly corn) and cash crops (such as rubber,palm oil, coconuts and spices) have also shown impressive growth and added tothe significant gains registered in rural welfare in the past several years.This performance is the result of sustained Government support to theagriculture (especially rice) sector through heavy investments in ruralinfrastructure, particularly irrigation systems, research and extension, andinput subsidies combined with technological breakthroughs achieved in highyielding rice varieties (HYVs). The past performance of the sector cannot,however, be sustained if operations and maintenance of the large irrigationinfrastructure continues to be neglected. In the future, a growth in riceoutput of about 2.5-3% p.a. will have to be maintained to meet domestic

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demand. The strategic imperative is to reduce costs and increase efficiencyof Government interventions to encourage efficient rice production, and tofully exploit the potential for agricultural diversification by (i) addressingtechnical problems in field crops through research and extension;(ii) encouraging adequate input supplies and related services such as creditand marketing; and (iii) improving the planning and implementation of Lreecrops programs.

C. The Irrigation Subsector

Surface Irrigation

1.6 The total irrigated area in Indonesia of 4.8 million ha includes 2.6million ha of technical irrigated area, 1.3 million ha of semi-technicalirrigated area, and 0.9 million ha of simple irrigated area. The technicalareas have permanent canals7 control structures and measuring devices, and allthe water allocation and distribution up to the tertiary head is controlled bythe Government. The semi-technical areas have permanent canals but fewcontrol and measuring structures. The source, and sometimes the primarycanal, is controlled by the Government but distribution is left to thefarmers. The simple or non-technical areas generally have few permanentintakes or distribution structures, and water is used by farmers without anycontrol by the Government. Nearly 19% of the irrigated area is covered bysystems smaller than 500 ha in size and most of these systems are either semi-technical or simple irrigation systems. As enunciated in the Policy Statement(Annex 1), the Government policy is to efficiently operate and maintaintechnical systems larger than 500 ha, and to privatize (i.e. turn over towater users' associations) smaller systems, which are generally semi-technicalor simple. The growth rate in irrigated area harvested has been 1.6% p.a.between 1969 and 1985 (0.5% p.a. on Java, and 3.8% p.a. on outer islands whereit started from a low base). Virtually all this growth is attributable toincrease in technical irrigation svstems, which grew at 2.5% p.a., largely dueto the rehabilitation and upgrading of existing semi-technical systems. Over.he firet three Repelitas, rehabilitation and flood control/conservation eachaccounted for about 27-28% of total Government investment in the subsector.The expansion of the irrigation network accounted for the largest share ofinvestment in the subsector (35%), and this share increased from 22% inRepelita I to 39% in Repelita III (1979/80 to 1984/85). However, themaintetnance of the existing capital stock in irrigation netwnrk wasincreasingly neglected due to an inadequate allocation of funds for O&M, andan ineffective utilization of the limited available funds (para. 1.24). As aresult, a large number of weirs and intakes require structural repairs, manygates need replacement, and most canals suffer from excessive silt depositionand loss of capacity. Besides contributing to significant reduction in theefficiency of the irrigation systems, a continuation of this state of affairscould lead to substantial degradation of the capital stock in irrigationfacilities, and an enormous expense in rehabilitating it in future.

Swamps

1.7 Indonesia has an estimated 35 million ha of inland and coastalswamps, mostly with medium to heavy textured clay and silty clay soils

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ovetlaid with surface peat. About 5.5 million ha of coastal swamps have beenidentified as havuing agricultural potential (1.4 million ha in Sumatra,1.4 million ha in Kalimantan, and 2.7 million ha in Irian Jaya), butconservation of primary forests and land rights are likely to constrain thearea that can be developed. About 600,000 ha have been reclaimed throughGovernment sponsored schemes during the period 1969/70 to 1985/86, involvingconstruction of several thousand kilometers of large irrigation and primarydrainage canals and a multiple length of smaller drains. The potential foragricultural development is affected by the relatively low first phaseinvestments in basic infrastructure, and considerable improvements incontrolling drainage and on-farm water management are possible. About 80% ofthese reclaimed areas are dependent on tidal effects for flood irrigation anddrainage of land along major rivers. Almost all schemes are classed as non-technical, with no water control structures and only very limited monitoringof water levels. As in the case of surface irrigation systems, themaintenance of the main drainage systems in reclaimed swamps was to be donethrough the Provincial Public Works, and farm.ers, through the establishment ofwater users' groups, were to operate and maintain tertiary systems. Inpractice, however, not much is done, because the responsibility for O&M ofmain and secondary systems has not yet been formally transferred from DGWRD tothe provincial authorities. Furthermore, prior to 1984, swamp schemesreceived no regular allocations for maintenance funds, and as a result nowsuffer from reduced canal sections, silted beds, unstable banks, and brokenand settled flood bunds. Where control structures have been built, many havesettled and cracked, and these are in urgent need of repairs. If furtherdeterioration is allowed, rehabilitation would prove very costly.

Groundwater

1.8 Public sector groundwater activities have been concentrated in EastJava. Up to about a decade ago, there was little private participation exceptthrough hand-dug and manually operated wells and minor developments on thesugar estates. In the mid-1970s, the private sector in East Java developed atechnology for construction of low-cost shallow tubewells in the shallow watertable areas of flurio-volcanic aquifer systems, but this technology has notyet been exported to any of the other islands. A subdirectorate within DGWRDretains O&M responsibility for groundwater facilities for at least two yearsafter commissioning of a public system. During this period, a weter users'group is set up within the tubewell command area, and training is 2rovided tothe participants to operate the facility. Subsequently, part of theresponsibilities for the salary of the operator, payment for fuel, minormaintenance of the canal system, arrangement for water del.iveries toindividual farmers, and recovery of O&M costs are handed over to the waterus* 's group. DGWRD retains responsibility for fuel supply and delivery, formaj maintenance (particularly of pump units), and for replacement of wellsand pump units. This turnover of part of the responsibilities to the waterusers' groups has been generally functioning satisfactorily.

Small River Mouths

1.9 There are about 170 major river basins and about 228 sub-basins inIndonesia, over 90% of which are on the islands of Sumatra, Java, Kalimantan

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and Sulawesi. High population pressure on agricultural land and rapiddeforestation have led to soil erosion, sedimentation and flood peaks in theriver enUironment. Most of the 90 or so smaller rivers in the northern partof Java and the eastern and western seab_ards of Sumatra are also affected bypronounced littoral drift and barrier beach formation in the dry season, whencompensation flows are inadequate to keep the mouths open. The consequentflooding of low-lying agricultural lands causes major delays in planting datesand lower yields, and also seriously interferes with the navigation of fishingvessels serving poor isolated communities. The economic losses resulting fromperiodic flooding of both agricultural and other lands are signicicant.Raising of river banks and installation of flood control gates have been triedin some of these areas, while in others a minimum of dredging or other repairsare carried out by local irrigation officials to prevent flood damage or tokeep lines of communication open. However, the recurrent choking of rivermouths continues to be a problem.

D. Institutional Framework and Supporting Servi ces

Irrigation Services for O&M

1.10 The MPW, MOA and MBA are involved in providing irrigation andrelated services including technical guidance to farmers on water use,planning of cropping systems in irrigated areas, timely injection of inputs,and assistance in the organization of wate, users' groups. Within theProvincial Public Works (DPU), the Provincial Irrigation Service (PRIS) isresponsible for operating and maintaining the public irrigation systems. Thechief of the PRIS is administratively responsible to the Provincial Governorthrough the Chief of DPU, but for all technical and personnel matters, thePRIS chief comes under the jurisdiction of DGWRD. Each PRIS, at itsprovincial headquarters, includes sections for planning and design, irrigationconstruction, rivers and swamps, operation and maintenance, and logistics.The O&M section is involved in preparing operation plans and guidelines andO&M budgets, and in ensuring adequate O&M in the province. While severalrecent Bank-assisted projects have focussed on building up the capacity ofPRIS in design and construction supervision of small systems and to improveO&M performance, more institutional strengthening is needed to enable betterplanning, organization, budgeting and control of O&M activities.

1.11 The O&M for the main irrigation system is carried out mostly by theirrigation section (cabang dinas) and subsection (rai.ing dinas) staff. Asection usually covers from 20,000 to 40,000 ha. Each section consists ofabout 5 subsections, which are headed by inspectors (pengemats). A subsectionoffice covers an area of 4,000-6,000 ha, and has about 6 irrigation overseers(jurus). As the junior-most member of the PRIS field staff, the juru isresponsible for about 1,000 ha, setting 6 or more gates, recording hydrologicand cropping pattern data, arranging the emergency maintenance of main andsecondary canals within his jurisdiction, and persuading farmers throughi theirvillage headmen and irrigation water master (ulu-ulu) to maintain tertiary andquaternary canals, and to agree on planting dates for rational waterdistribution and management. Each juru is assisted by gate-keepers and a fewlaborers. The section and subsection staff are required, as part of theguidelines for operation, to estimate crop areas, stages of crop growth, crop

water requirements, field application and conveyance losses, and water inflowsand outflows in offtakes and structures that usually have adjustable gates.These activities require higher technical capabilities and numbers of staffthan are usually available at present.

1.12 The Provinciai Agricultural Service (DIPERTA) has six subservices,including agricultural area development. This subservice has a watermanagement section which deals primarily with irrigation system development,on-farm water management, and water users' associations (WUAs). At thedistrict and subdistrict levels, the agricultural services are organized intofewer subservices, and water management is placed under the plant protectionsubservice. At the agricultural service level, there are water management(Tata Guna Air) staff, whose duties include the provision of on-farm watermanagement guidance to WUAs, help in establishing WUAs, and training of fieldextension workers (PPL) in on-farm water management. As in the case of thePRIS, the main weakness of the water management units at the provincial,district and subdistrict levels is the lack of staff both in numbers and intechnical capabilities.

1.13 The MHA through the various levels of administrative services andthe agricultural development committees is supposed to coordinate irrigationwater distribution (through the various Irrigation Committees at theProvincial and Kabupaten levels) and the formation of viable WUAs. Since theIrrigation Committees (comprising representatives from the Public Works,provincial/local, governments, and agricultural services) do not have anycontrol over funds or a working secretariat, coordination is generally weakand most Irrigation Committees are virtually inactive. While their main taskis to determine cropping plans, in practice, this generally gets decided bythe Governor by official decree.

Water Users' Associations

1.14 Experience in Indonesia has pointed to the need to consult farmersduring the design phase of irrigation systems and, particularly for tertiarynetworks, to ensure that they understand and agree with the purpose andprocedures, and afterwards operate and maintain them properly. Recognizingthe importance of efficient water management at the farm level, GOI in 1975decreed the establishment of WaAs at the village level. The PresidentialInstruction No. 2 in 1984 set out the organizational structure of the WUAs.WUA management consists of a Chairman, Deputy Chairman, Secretary, Treasurerand Irrigation Water Master (Ulu-Ulu). Committee members are elected by WUAmembers who own or rent irrigated paddy within the tertiary unit. A typicalWUA would operate an area of about 70-100 ha, and have a membership of 100-200farmers. The members are divided into farm groups by sub-tertiary andquarternary blocks. Most of the WUAs have been established alongadministrative boundaries. As tertiary boundaries do not necessarily coincidewith village boundaries, this has often led to inadequate coverage by WUAs oftertiary systems. The task of reorganizing WUAs along hydrologic boundariesis being undertaken in some areas.

1.15 As a matter of policy, a WUA should be operational in each tertiarysystem. In practice, however, only about 15% of the existing WUAs are active,

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20% semi-active, and the rest are inactive. TVi lack or inactivity of WUAsmay be due to poor tertiary system development. About 35% of the number oftertiaries in the areas identified for special maintenance have yet to bedeveloped. While the development of tertiary systems is the responsibility ofthe farmers and local committees, the MPW is supposed to provide technicalassistance and in some cases construct the tertiaries.

1.16 Recent Government policies to support O&M and cost recoverystipulate that WUAs should be given responsibilities for O&M, subject toconstraints imposed by systems' technical characteristics and administrativeboundaries. These policies imply that in addition to the WUAs' primaryresponsibility of taking care of O&M of tertiary systems, farmer beneficiariesthrough their WUAs share the costs and responsibilities for O&M of the mainsystems, and that simple and smaller systems be turned over to WUAs for O&M.The effective implementation of these policies calls for the execution of asound policy for developing WUAs, increased farmers' participation in thedecision-making process involving design, special maintenance and O&M resourceallocation, effective coordination mechanisms among WUAs and field staff ofconcerned agencies, as well as strengthening of O&M field staff and IrrigationCommittees, and these would be supported by the proposed project.

O&M Practices

1.17 Some of the minor maintenance needs can be met by regular weeding orgrass cutting, greasing or lubrication, and some removal of sediment upstreamof measuring structures. Other maintenance work involves repair of major bankfailures, removal of accumulation of sediment in large canals and in beds andsand traps which are not easily removed by flushing, and reconstruction ofcivil works and equipment damaged by chemical action, volcanic or seismicactivity, and major floods. This category of works needs systematic surveys,investigations, planning and design before reconstruction can be implemented,and is considered as heavy maintenance. When some deterioration has occurredand repairs are required to bring systems up to full effectiveness, a specialmaintenance program is required before an efficient maintenance program can beimplemented.

1.18 There are widely differing O&M practices among and within provinces,rcflecting differences in pressure on available water supplies,infrastructure, staffing levels and quality, and facilities. While individualschemes vary widely in physical condition and operational capability, mostweirs and intakes require structural repairs, many gates need replacement,most canals suffer from excessive silt deposition and loss of capacity, andtertiary systems are generally inadequate to achieve the full benefits ofirrigation. Some areas have no O&M manuals and no discernible guidelines orunderstanding of water management. At the most basic *vel, there is nomeasurement of discharges in rivers or canals, collect in of rainfall or cropdata, or attempt to match tertiary unit water supply crop waterrequirements. There is need to standardize at least ta collection and waterscheduling practices among provinces for efficient 0. and equitable waterdistribution. Additional training of section O&M ant design staff is alsoneeded to improve their appreciation and capability tor tertiary networkdesign and water management at subsection and juru level.

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Staffing and Facilities

1.19 Most PRIS headquarters appear to be overstaffed compared to theestimated requirements, though some have less than the required engineer-le;elsenior staff. On the other hand, there is inadequacy of staff members andquality, particularly at the district and lower levels. Additional pengamatsand *urus, who play a crucial role in the case of O&M activities, areneeded. A program of construction of pengamat offices was implemented in the1970s, and a large number of juru and gate operator housing has beenconstructed in many provinces. There are, however, still many shortcomingswith respect to housing for field level staff and also facilities such as gateshelters, storage areas for stoplogs, and handling gear. Lack of transportfor irrigation staff is also a serious impediment to the introduction ofefficient O&M procedures. Jurus use bicycles as their day-to-day mode oftransportation and pengamats are generally provided with motorcycles, buttheir staff usually lack any form of transport to carry out regular checkingof system maps and inventories for operation and maintenance. These problemsare even more severe at section level. There is also a need for more radioand telecommunication equipment to speed up efficient operation and reducedamage to canals and structures during floods.

Staff Training

1.20 Training for all Public Works staff is coordinated by PUSDIKLAT(Center for Training and Education) within MPW. In DGWRD, the BDP is therepresentative office of the PUSDIKLAT. The BDP is responsible forcoordinating the training of kanwil (regional office of MPW) and PRIS staff.The BDP is also supposed to coordinate the training of water user groups andfarmers, through other directorates. Recently concluded and on-going trainingprograms have included training of middle level and lower level officials fromthe MPW, MOA and MHA, as well as key members of WUAs and selected key farmers,and have comprised degree and non-degree programs, short training couirses, andin-service and on-the-job project specific training. The Bank-financedIrrigation XVI Project (Loan 2118-IND) assisted with the establishment in 1983of a water users training project to improve the tertiary and quaternary levelof management. Other projects (including Irrigation XVII - Ln. 2119-IND andSecond Provincial Irrigation - Ln. 2375-IND) have provided training for mainsystems O&M. However, some of the constraints which persist are: (a) lack offollow-up training and feedback on the impact of training; (b) inadequateemphasis on the details of training modules (e.g. farmers' training modulesinclude too many topics, ranging from soil erosion and environmental aspectsto post-harvest technology); and (c) lack of focus in training co facilitateproper organization and strengthening of water users' associations. Inaddition to addressing these constraints, programs need to be implemented toprovide training in basic O&M procedures (Annex 3, Table 1) along the lines ofa program currently under way in East Java, with emphasis on mobile teams oftrainers rather than on bringing the trainees to a central training location.

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E. O&M Funding and Cost Recovery

O&M Funding

1.21 The section heads of the Provincial Public Works (DPU) within eachof the provinces prepare annually a budget request for O&M by January 1 forthe following fiscal year beginning April 1. The estimated budgetary require-ments are based upon the section engineer's survey of the condition of allirrigation works and his judgement of what he considers is needed for adequateO&M of the irrigation systems within his section. The total of all O&M budgetrequests for the province, along with the budget requests for about 18 publicsectors, are reviewed by provincial officials. In practice, the O&Mallocation to each section is decided by the Provincial Development PlanningAgency (BAPPEDAS) in each province largely on the basis of funds available,rather than on estimated reluirements.

1.22 Two major channels for GOI funding of irrigation O&M are:(i) INPRES-APBD funds, which are allocated from Central Government through theMHA to the Provincial Covernorrs, who decide on the allocations for O&M;(ii) DIP-APBN, which are for similar purposes as INPRES-APBD funds, i.e.,office running costs, transport costs, material costs, and annual maintenancework, but are allocated from Central Government funds, earmarked for the MPW,to the district or section offices. Provincial governments also allocatetheir own funds (DIK) to cover the routine salaries of province-based civilservants (para. 1.24). Direct DIP-APBN funding for O&M of irrigation systemswas introduced in 1984/85 for some projects which had undergonerehabilitation, As a result, the development budget, which should normally befor financing investment expenditures, also provides financing for recurrentexpenditures such as O&M. Thus the major issues to be addressed in fundingmechanisms are concerned with simplifying and rationalizing the O&Mprogramming and budgeting procedures, whereby needs-based allocations for O&Mcan be made and the different channels of funding rationalized.

1.23 Since 1976, the level of funding for O&M (from Central Government)has increased in nominal terms from an average of about Rp 2,000/ha to aboucRp 9,000/ha in 1985/86, equivalent to a real increase of about 20% during thisperiod. The peak level of support for O&M was in 1985/86, when Rp 46.4 billion(APBD-Rp 32.4 billion and APBN-Rp 14 billion) was provided for O&M. This wasfollowed by a curtailment of O&M funding to Rp 39.9 billion (APBD-Rp 31.8billion and APBN-Rp 8.1 billion) in 1986/87, due to severe budgetaryconstraints (Annex 5, Table 1). The average of APBD and APBN funding in1986/87 for the provinces selected for efficient O&M (Annex 5, Table 2) underthe proposed project was only about Rp 10,000/ha, and the level of allocationvaried considerably among the provinces. For example, Yogyakarta wasallocated an average of Rp 13,338/ha, while South Sumatra was allocated onlyRp 5,848/ha. These wide differences reflect the availability of resources andvarying provincial priorities rather than the actual requirements forefficient O&M.

1.24 Another source of funding for O&M is DIK, which are allocations byprovincial governments from their own funds purely to cover the routinesalaries of province-based civil servants. However, the precise amount of DIK

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used fur O&14 is not clear. Based on data gathered from a few provinces, it isestimated that an average of about Rp 3,700/ha is used for O&M (Annex 5,Table 2). Thus, the overall level of funding from all three sources in theselected provinces was about Rp 13,000/ha in 1986/87 which was less than halfthe estimated expenditure of Rp 25,000-30,000/ha required for efficient O&M.This estimate of the expenditure level required for efficient O&M is based onstudies by Gadjah Mada University (1980), West Cirebon study (1983), andestimates made under the Bank-financed East Java Irrigation Project (1986).These studies also indicate that between 45 and 50% of O&M funds should beused for construction, compared to only about 25% of actual O&M expendituresbeing presently used for construction work. Most available O&M funds are usedto cover administrative expenses, which is not an effective utilization ofthese funds.

Cost Reco vety

1.25 Irrigation Service Fee. Farmers are responsible for the O&M of onlythe tertiary systems, and they contribute to O&M in part through their ownwork and mostly through payment in kind. To date, cost recovery for main andsecondary systems has been through the system of land tax (para. 1.27). Witha tight budgetary situation, which makes it difficult even to maintain thepresent level of Central Government budgetary support for O&M, and a growingawareness and need for O&M funding, attention is increasingly being given tothe introduction of an irrigation service fee. Such a fee would offer manyadvantages. It can be geared to the actual financial requirements for O&M inspecific irrigation systems and be implemented in such a way that there is adirect connection between payment of the fee and the provision of the O&Mservice. Indonesian farmers seem willing to pay increased fees if thebenefits of the work being finai.ced are clearly visible to them. Theestablishment of such fees would further be an important factor in encouragingfarmers to get more involved in the O&M process for their systems. In future,water users might be willing to take much greater responsibility for theirsystems if this would allow them to avoid externally imposed service fees infavor of inte.~nal fees levied by WUAs to finance operations decided on by theWUAs themselves.

1.26 There have already been some initiatives towards collectingirrigation service fees. In South Sulawesi province, a fee has been collectedin the Sadang irrigation area (25,000 ha) for tha last five years. Recently,the provincial government in S-ath Sulawesi has formulated an ordinance tointroduce the fee on a province-wide basis. A small fee (aboutRp 1,000/ha/year) has been collected, together with other village taxes andcontributions, in the Simulungan irrigation system in North Sumatra. A feehas also been collected in Bali. However, these limited initiatives do notprovide an adequate basis for an immediate launching of a nationwide system ofirrigation service fees. The concept, whether it should be a per hectarecharge or explicit water charges on bulk sales to water users, the farmers'payment capacity to determine the appropriate level of fee, and theorganizational arrangements needed for collection of the fee, all would beworked out and implemented on a pilot scale under the proposed project.

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1.27 Land Tax. In the past, GOI has not pursued a policy of having anirrigation service fee, because of its (a) reluctance to tax overtly a ruralsector considered (particularly in the 1970s) to be extremely poor, i.e. areluctance to go beyond the taxation already implicit in the low administeredrice price during that period; and (b) sensitivity to certain traditionalsentiments that water provided by nature should be free. Cost recovery fromthe farmers has been through the land tax (IPEDA), which is assessed on thebasis of land classification. Its structure and categories have disitinguishedbetween farmers in irrigated and non-irrigated areas, and hence betweenbeneficiaries and non-beneficiaries of irrigation services. However, theIPEDA revenues have not matched O&M costs because of low land valuations, lowtax rates, and imperfect collection rates. Moreover, the IPEDA is a majorrevenue source for local governments and is used to fund many localactivities. Therefore, only a small portion of it was, in any event, to beused for O&M of irrigation facilities. The Bank through its various lendingoperations to the irrigation subsector has supported an improvement in costrecovery through reclassification of irrigated lands to reflect their higherpotential productivity. An allocation of the additional amounts collected forO&M of the irrigation systems was first made under the Bank-financed WestTarum Canal Improvement Project (Ln. 2560-IND).

1.28 ln 1986, GOI introduced a tax for land and buildings, the PBB (basedon the actual market value of land), which replaced the IPEDA (based on theproductivity of land), and also the wealth tax and the urban household tax.At present, the rural PBB is estimated to be about Rp 60 billion, of whichless than 15% is allocated towards O&M. The objectives of the tax reform areto strengthen the revenue base of the provincial and local governments and toimprove the overall equity of property taxation. To implement this taxreform, land reclassification and valuation are needed, and the tax collectionmechanisms have to be in place and strengthened. The proposed project wouldsupport these, whereby the incremental revenues from the increased valuationof land would help reduce the dependence of the provincial and localgovernments on financial transfers from the central government, and contributetowards generation of local revenues which are at least somewhat related tothe magnitude of the O&M responsibilities of the provincial and localgovernments. However, the PBB would not be a fee for specific servicesrendered, and it would continue to be regarded as a general source of revenueof local governments for development purposes, but not as a routine O&Mfund.

F. Irrigation Development Strategy, Issues and Investment Programs

Subsector Issues and Strategy

1.29 In the last couple of years, Government has been taking stepstowards scaling back major expansions in the irrigation subsector, directingincreased resourcea towards O&M, and expediting the completion of priority andviable ongoing project3. The Bank and Asian Development Bank (ADB) have alsobeen restructuring their ongoing projects to protect activities of highestpriority. These are steps in the right direction which should help Covernmentcope with the budgetary crisis. However, a sustained development of theirrigation subsector requires a medium-term strategy which will entail

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addressing some of the underlying issues in the sector. First, there is needfor an in-depth review of the technical and economic viability of all existingand proposed irrigation investment programs. The purpose of this review wouldbe to restructure and rationalize projects as necessary, establish prioritiesfor irrigation investment, and finalize preparation of a realiotic subsectorstrategy for Repelita V (1988/89-1993/94), taking into account the likelyavailability of funds from different sources, as well as implementationcapacity. While there seems little prospect of major increase in riceproduction on the 1.2 million ha of recently rehabilitated large systems onJava, four potential sources of growth in the medium to long term could be:(a) technical systems on Java not yet rehabilitated and upgraded; (b) existingsemi-technical and simple systems on Java; (c) existing systems on the OuterIslands, including upgrading and further development of irrigation commandareas, and reclaimed swamps; and (d) possible new systems on the Outer Islands(prospects for which are mixed). Second, as indicated earlier in paras.1.18-1,20 and 1.24, widespread deficiencies in system operation andmaintenance (O&M) are major constraints to irrigation development. This issueis related to inadequate O&M funding levels and to the capacity of theirrigation services to use efficiently the funds provided. Most available O&Mfunds are used now to cover administrative expenses, with only a quarter ofactual expenditures being used for construction work. Increased budgetallocations thus need to be accompanied by progressive system-by-systemformulation of detailed O&M work plans, training of irrigation staff, andregular supervision and control of administrative costs. Third, as pointedout in paras. 1.15 and 1.25-1.28, inactive and weak WUAs which are unable toassun.e responsibility for O&M, inadequate cost recovery and low levels oflocal revenue generation for financing O&M are constraints that have becomemore important with the rapid deterioration in GOI's financial situation.Fourth, the water balance in Java, with competing demands from agricultural,municipal and industrial users, is becoming critical, which highlights theneed for increased emphasis on multi-purpone management of water resources,increased irrigation efficiencies, And appropriate allocation of supplies.

Investment Programs

1.30 The ongoing public sector investment in irrigation includes newirrigation works, rehabilitation of old projects, groundwater development tofacilitate crop diversification and to provide rural domestic water supplies,and river control works to provide water supplies for irrigation and municipaluses and for flood control and hydropower generation. Public investment alsoincludes rehabilitation and reclamation of swamps (tidal and non-tidal), andplanning, training and research for all subsector activities. The indicativeinvestment program under Repelita IV (1984/85 to 1988/89) was to 'indertakerehabilitation of old irrigation systems commanding a total area of 360,000 ha,undertake new irrigation construction to provide water to 600,000 ha, carryout new construction and rehabilitation works on swamps benefitting 460,000 ha,and a program of flood protection and conservation on 500,000 ha. Theseprogram targets have turned out to be ambitious. On the basis of workscompleted thus far and the current cutbacks in the program due to budgetaryconstraints, it appears that only 40% of the target for rehabilitation, 30% ofnew irrigation development, 25% of swamp development and about 50% of theflood protection and conservation targets will be achieved by the end of the

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plan period (Annex 6, Table 1). The financial performance has more or lessparalleled the physical performance (Annex 6, Table 2). For all subsectors,the anticipated shortfall in investment expenditures from that originallyplanned for Repelita IV will be about Rp 4,200 billion or 67%. The shortfallin GOI expenditures will be 77%, while the shortfall in expenditures financedby external loans will be much less at 43%. In other words, the Governmenthas not been able to keep up with its planned share of financing of theirrigation subsector investment program.

1.31 In view of its budgetary constraints, the Goverriment has not onlybeen unable to maintain its planned sharing of the cost of projects beingfinanced in part by external borrowing, but has also not been able to financeon an adequate basis the expanding O&M requirements. OEM expenditures areonly about one-third to one-half of those required. Nevertheless, theGovernment has been taking significant steps towards allocating an increasingshare of its limited available resources in the subsector for O&M and (until1986/87) providing increasing allocations for O&M, as shown below:

Table 1.1: SUBSECTOR INVESTMENT IN RELATION TO O&M EXPENDITURES(Rp billion)

3&M as0&M Expenditures percent of

Year Investment Index APBD APBN Total Index Investment

1984/85 644.7 100 30.7 13.4 44.1 100 6.81985/86 584.5 91 32.4 14.0 46.4 105 7.91986/87 386.1 60 31.8 8.1 39.9 90 10.3

1.32 While the need for increased funding for O&M is fully recognized,the Covernment, nevertheless, has continued to make further commitments forexternally financed projects. Since the beginning of Repelita IV (1984/85),the Government has commenced 21 new projects, partially funded by its threemajor lenders (World Bank, ADB and Overseas Economic Cooperation Fund (OECF))for a total of US$936 million, which carry a GOI financial commitmentequivalent to US$506 million. The breakdown of these commitments by majorlending agencies is shown in the following table:

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Table 1.2: 0O0's COMMITMENTS FOR EXTERNALLY FINANCED PROJECTS(commencing 1984/85)

No. of Loan Local fundsLending Agency Projects amounts t lquirements

- (US$ million)

World Bank 5 475 293Other major externalfinanciers 16 461 213

Total 21 936 506

1.33 A list of all ongoing externally financed projects is given inAnnex 6, Tables 4-7. As will be noted, seven of these projects were to havebeen completed in 1985 and 1986. The total loan amount on these sevenprojects was US$345.7 million, of which US$248.3 million had been spent up toJanuary 1, 1987, leaving a balance of US$97.4 million (28Z of the originalloan amount). A summary of all ongoing external loans is given below:

Table 1.3. ONGOING (PARTIALLY EXTERNALLY FINANCED) PROJECTS

Total loan Spent to BalanceLending Agency No. of projects amounts 1/1/87 of loans

(US$ million) …

World Bank 12 1,025.4 432.4 593.0Other major externalfinanciers 37 1,156.2 289.3 866.9

Total 49 2,181.6 721.7 1,459.9

1.34 An examination of investment expenditures realized and budgeted forRepelita IV clearly illustrates the growing magnitude of the Government'sproblem in meeting its commitments for the financing of irrigation development(see Annex 6, Table 2 for breakdown of expenditure by major category ofinvestment). As a result, the Government has reduced its total irrigationdevelopment program, relied more heavily on foreign borrowings, anddrastically reduced the number of projects under execution with solely GOIfinancing. In 1985/86, DGWRD was implementing 202 projects. This number wasreduced to 177 in 1986/87, and further reduced to 130 in 1987/88. However,under the proposed project, only about 40 priority on-going projects would be

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completed, and the others would be further reviewed by GOI to evaluate the.1technical and economic viability. Most of the projects removed from theprogram have been placed on a 'hold' basis, with continuing expenditures onl.for personnel. In short, GOI hat begun to cake steps toWards puttinig theirrigationl subsector on a sounder footing. This is evident from ils:(a) reorientation of priorities away from large-scale new investmerlts itnirrigatioti towards increased expenditures on O&M; (b) focus on the completiollof technically and economically viable ongoing projects; and (c) rephasin,- am,restructuring of ongoing projects (including partially externally-financedprojects) to protect high priority activities whilr accommodating reducedbudgetary resources over the medium term.

C. Bank Role and Subsector Lendiu_St rateS

General

1.35 The irrigation subsector has received a major part of Bank lendingfor Indonesian agriculture over the past two decades, and the Bank has beenthe largest external financier of Indonesia's irrigation program, providing atotal of some $1.5 billion for 23 projects since 1968. The Asian DevelopmenwBank, Japan, Netherlands, USA, UK and EEC have been other importantL doniors.The earliest Bank-assisted projects were designed to repair major systems toincrease rice output quickly. The Bank's strategy in Repelita IV, however,was redirected to emphasize institution-building, with lending being focusedon: new irrigation projects outside Java; flood control and drainage works;groundwater development in areas with limited dry season water supplies; andinvestments for multi-stage swamp reclamation and development in support ofCOI's transmigration program. The most recent projects include measures testrengthen planning, programmiag, budgeting and management informationsystems, and to build up the capacity of provincial irrigation services indesign and construction supervision of small systems and to improve O&Mperformance. A further redirection of the Bank's role is required to support,OI's efforts to concentrate its resources on completing high-priority andviable on-going projects and undertaking only selecti.e new investments, tomake adequate provision for operation and maintenance throughout thesubsector, to promote farmers' participation in rehabilitation and O&M ofsmall systems, and to reduce GOI's fiscal burden through appropriate costrecovery measures. A project-by-project approach by the Bank on these issuesis no longer considered adequate, and it is time to address policy issuessystematically on a subsector-wide basis, complemented by specific involverfrexitin projects as warranted.

Experience Under Previous Projects

1.36 The first 11 Bank-assisted irrigation projects have beencompleted. Project Performance Audit Reports (PPARs) have been issued for sixof them, and a follow-up Impact Evaluation Report on the first project (Cr. J27-IND, Report No. 4575) was released in July 1983. improvements to irrigationwater supplies and drainage introduced through the projects had a substantialpositive impact on paddy technoLogy, cropping intensities and yields, andthereby favorably affected incomes of the vast majority of farmers within the

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irrigation command areas. The projects have been economically viable, withERRs at completion ranging from 11% to 37%. There were some implementationdelays and cost overruns, caused by protracted procurement procedures, delaysin channelling of local funds, higher than expected inflation, designdeficiencies, and poor contractor performance. More recently, the delayedapproval and reduced size of budgets have further contributed to projectimplementation delays and slow disbursement of Bank loans. The earlierperformance audits highlighted the need to improve O&M services, providetechnical and administrative support to water users' associations, and promoteefficient water use. In the past, the Bank-financed irrigation projects havesupported cost recovery through collertion of adjusted land tax based on theincreased productivity of all irrigated land served by the systemsrehabilitated and constructed under these projects. Actual cost recoverythrough land tax has not satisfied the intentions of the various covenantsinsofer as the amounts collected have continued to fall short of O&M costs,and only a small fraction of these amounts has actually been allocated tof½nance irrigation-related C " activities. The most recent audits haveemphasized the need for more -ction on the cost recovery front (particularlythrough direct charges) and betLer analysis of the viability of investmentsand farmers' ability to pay, both of which have been affected by falling worldmarket prices for rice. These problems are recognized in the strategy adoptedfor Bank assistance and have been addressed in the planning and design of theproposed project.

11. THE PROJECT

A. Rationale for Bank Involvement

2.1 The Bank, through ongoing projects and a continuing dialogue withthe Government in the subsector, has been playing a key role in supportingdecentralization of responsibilities to provincial irrigation services, and inresolving difficult institutional issues such as water management; projectpreparation, implementation and O&M capabilities; and funding at provinciallevels. The subsector approach proposed under the project, supported by GOI'senunciation of policies aimed at improving O&M of irrigation systems, reducingthe burden of O&M expenditures on the Central Government, and consolidatinginvestments in the subsector would reinforce and provide a much-deferred andcritically needed national approach to O&Mo This would help widen thedevelopment impact of the Bank's assistance by reinforcing the shift inresponsibility for O&M funding and implementation from central to provincialauthorities and to ultimate beneficiaries, further strengthen the institutionsresponsible for irrigation policy and resource allocation, preventdeterioration of the substantial irrigation infrastructure, increase theproductivity of completed investments, and help develop a future investmentstrategy in the subsector. In view of its past and ongoing involvement in thesubsector and GOI's readiness now to tackle significant subsector issues, theBank is well placed to help GOT implement relevant subsector policy andinstitutional adjustments.

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B. Project Objectives and Description

Objectives

2.2 The project would be the f rst phase of a program aimed atsupporting the six basic goals outlined in GOI's Statement on IrrigationSubsector Policy (Annex 1) which are to: (a) ensure adequate and timelyfunding for efficient O&M, with expenditures in line with actual needs of eachirrigation system; (b) simplify O&M programming, monitoring and budgetplanning; (c) introduce direct cost recovery for O&M expenditures fromirrigation beneficiaries; (d) increase local revenue generation through landreclassification, valuation, and training of assessors; (e) supportinstitutional development, particularly by strengthening provincial irrigationagencies, WUAs and farmers' groups to enable a greater transfer ofresponsibility for O&M of main and secondary systems to provincial authoritiesand of smaller systems to WUAs; and (f) formulate a realistic irrigationinvestment strategy for Repelita V. Detailed policies have been formulatedfor each of these goals, and a monitorable Action Plan (Annex 1) designed toimplement the steps necessary to achieve them. The Action Plan would set inmotion a process of improvement in the areas of O&M funding, rationalizationof budgeting/programming procedures and investment strategy, cost recovery,and institutional strengthening, which once instituted would involve policydecisions and commitments that are unlikely to be reversed.

2.3 The project has high priority in GOI's development plans and is inline with the Bank's strategy for assisting agricultural development inIndonesia.

Project Description

2.4 The project, to be implemented over the 3-year period from October 1987to September 1990, would consist of the following components:

(a) The implementation of special maintenance works, comprising deferredmaintenance and minor systems upgrading, on about 400,000 ha ofirrigated land and about 106,000 ha of reclaimed swamp land, whereO&M has been so badly neglected that this must be done as a stepprior to intzoducing efficient O&M on these areas. About five rivermouths would also be included for special maintenance, on a pilotbasis. Detailed preparation and design work would be carried outfor about 200,000 ha of irrigated areas and 55,500 ha of swampsrequiring special maintenance to be covered in the first year of asubsequent project;

(b) Systematic introduction of efficient O&M on about 7009000 ha ofirrigated land, and 87,000 ha of swamp land;

(c) Completion of about 40 high-prio 'ty ongoing projects selected onthe basis of agreed technical a economic criteria;

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(d) Pilot groundwater development through construction of some 900tubewells for small farmers in primarily rainfed areas;

(e) Support for COI's policy reforms in the subsector, includingprivatization of small public irrigation systems, a pilot scheme forintroduction of direct irrigation service fees, and augmenting theprovincial/local revenues in lieu of continued central governmentsubsidies via land reclassification and valuation needed for large-scale introduction of the new property tax (PBB) in rural areas;

(f) Support for institutional strengthening and training, including O&Mmanpower planning and developmentt strengthening of the central,provincial and district level institutions responsible forirrigation O&M, and of water users' associations; and

(g) Technical assistance and studies in support of the above components.

The underpinning for the proposed project is provided by an agreed:Xi) Subsector Policy Statement (Annex 1) defining GOT's new policy objectivesand approaches; and (ii) Action Plan (Annex 1) of measures to be taken duringthe project period to initiate longer-term reforms a1id improvements in supportof the policy objectives. Some of the key actions to be taken over the three-year period are: (a) the present level of nation-wide irrigation O&M financingwould be at least maintained in real terms during the project period, andincremental financing for O&M (of at least US$1.6 million equivalent, asincluded in GOI's financing plan) would be provided by GOI (para. 3.14);(c) small systems of less than 150 ha in size, covering an area of 20,400 hawould be privatized (turned over to WUAs) over the three-year period, at leasttwo systems of about 500 ha size would be turned over, and a nationwideprogram prepared by September 30, 1990 for turnover of systems larger than 150ha (paras. 2.19 and 2.20); (c) collection of irrigation service fee in thepilot areas (a total of 125,000 ha) would commence in December 31, 1988, andagreed administrative and judicial arrangements (as found to be workable inpilot areas) wo-.d be established by January 31, 1990, for its extension toother areas (para. 2.22); (d) budgetary procedures and accounts would besimplified by June 30, 1988, and new systems and procedures for O&Mprogramming and budget planning implemented from FY89/90 onwards (para. 3.13);and (e) investments in the irrigation subsector would be rationalized and astrategy for Repelita V prepared (para. 2.11). GOI has recently issued theSubsector Policy Statement and Action Plan, approved by all the concernedministries (Agriculture, Finance, Home Affairs, Public Works and BAPPENAS).The project would be implemented in accordance with this Policy Statment andthe Action Plan reviewed and agreed with the Bank (Para 7.1 (a)).

C. Detailed Features

Special Maintenance

2.5 Surface Irrigation Systems. The project would carry out specialmaintenance works on selected surface irrigation systems to bring thesesystems up to the technical standards for which an efficient maintenanceprogram can be designed and implemented. This would include completion of thesystem maps of irrigation canals, updating of the structures' inventories,elimination or regularization of any water outlet not borne on the original

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inventory, repairing water control structures and their regulating mechanisms,and improving structures such as bridges, cross drains and silt controlfacilities which need repairs. It would also involve functional improvementssuch as discharge measuring structures where required for improving waterdistribution control and efficiency, and repairing canal prisms andembankments to ensure smooth flow and adequate free boards. The project wouldalso provide housing for operational staff and transport for sectionoffices. Criteria for selection of schemes included for special maintenancehave been based on size, rehabilitation and tertiary development status, andavailability of mapping and records. In general, rehabilitated technicalsystems larger than 500 ha, which have deteriorated due to lack ofmaintenance, would be included under special maintenance. About 400,000 ha ofirrigation systems in the nine provinces of West and South Sumatra, Lampung,West, Central and East Java, Yogyakarta, South Sulawesi and West Nusa Tenggarawould be covered under the project, with a phasing of 75,000 ha in Year 1(October 1, 1987 - September 30, 1988) 175,000 ha in Year 2 (October 1, 1988 -September 30, 1989) and 150,000 ha in Year 3 (October 1, 1989 - September 30,1990). The project would alao provide technical assistance to supportimplementation of this component (para. 2.12).

2.6 Saamp Systems, The project would assist in carrying out specialmaintenance works on selected swamp schemes. These works would includeadditional canal structures, desilting of drainage canals, flood protectionworks, access improvement, and construction of additional flushing canalswhere necessary for reclaiming acidic soils. Since the normal development ofswamp areas involves a gradual process of improvement and upgrading over theyears, the special maintenance program would be tailored to each scheme andinvolve both maintenance and upgrading activities. The project would ensurethat there is a systematic planning at each stage so that the organization,methods and expenditures on O&M are geared to meeting the performancestandards specified for the systems as they are developed. The schemesproposed for inclusion in the project would be in the five provinces of West,North and South Sumatra, Lampung, and South Kalimantan, which include some ofthe earliest reclaimed areas. About 21,800 ha in Year 1, 43,800 ha in Year 2,and 39,950 ha in Year 3 would be brought under special maintenance.Feasibility studies would be carried out to establish the technical andeconomic viabil-ty of constructing a 40 km long flushing canal in SouthKalimantan to inrprove the water control and agricultural potential of theBelawang, Seluang and Muhur schemes. The project would also provide technicalassistance in support of this component (para. 2.13).

2.7 Small River Mouths. The project would test alternative andeffective measures to replace the traditional dredging methods used to controlsiltation and littoral drift, which choke and obstruct navigation of smallfishing vessels and cause flooding of agricultural lands and coastalsettlements near river mouths. To explore the most cost-effective technicalsolution, five river mouths in North and West Sumatra, West, Central and EastJava would be included on a pilot basis under the project for protection byexperimental training walls. Studies have been made during the projectpreparation stage to evaluate the choking process from littoral drift. Thedesign of the training walls and the ancillary works including guide banks andapproach channels would incorporate the knowledge gained from these

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observations. Further observations on the performance of training walls andthe ancillary works in the prevention of choking river mouths would becontinued for about two years after construction of the proposed works. Thiswould help gauge their effectiveness before their application to other sitesin future progrdms.

Efficient O&M

2.8 Surface Irrigation Systems. The objectives of special maintenanceare to facilitate t,ie introduction of efficient O&M. General procedures forefficient O&M have already been developed for a number of systems inIndonesia, but their application is hampered by lack of up-to-date inventoriesand specific O&M guidelines, system shortcomings, and continuingorganizational and funding constraints. The project would address theseconstraints systematically on 200,000 ha of irrigation systems in Year 1,400,000 ha in Year 2 and 700,000 ha in Year 3. The areas covered underspecial maintenance each year under the project would be included underefficient O&M in the subsequent year. Also, some areas currently beingrehabilitated under ongoing Bank and ADB-financed projects would be includedin the second and third years. The physical repair and maintenance work to beregularly carried out by provincial authorities under efficient O&M wouldinclude weed clearance from canal prisms and embankments, trimming overgrowncanal berms, repairing potholes in canal roads, damages to masonry structuresand leakag.'s through canal banks, lubrication and repairing of regulationgates, and painting of steel work. Repair work of periodic nature wouldinclude silt clearance of canals, regrading of canal profiles, and repairs tocanal surface roads damaged by heavy rains and regular heavy traffic.Laboratory and field equipment for provincial irrigation offices, for testingappropriateness of construction materials and standards would be providedunder the project. The efficient O&M procedures to be followed are outlinedin Annex 3, Table 1. These procedures would be supported by ensuring adequacyof staff responsible for O&M at section and subsection levels, cleardefinition of their duties and responsibilities, and their training inmaintenance work identification, water scheduling, discharge measurements, anddata collection and reporting.

2.9 Swamp Systems. About 9,000 ha of swamps in South Sumatra in Year 1,another 33,200 ha in South Sumatra and Lampung in Year 2, and an additional44,600 ha in South Sumatra, Lampung, South Kalimantan, North and West Sumatrain Year 3 (a cumulative area of 86,800 ha) would be covered by efficient O&Munder the project. These areas include the Karang Agung I scheme (9,000 ha)in the first year of the project, the construction of which is currently beingcompleted with Bank assistance (Ln. 1958-IND), and also the completed units ofKarang Aguwg II scheme (Ln. 1431-IND), i.e. about 5,000 ha in the second yearand another 5,000 ha in the third year of the project. About 6,500 ha inBarambai and Rantau Rassu would be reviewed by DGWRD to confirm that theseschemes, which are currently being upgraded, are suitable for introduction ofefficient O&M. If found suitable, these could be included under a possiblefuture Bank operation. Immediately after the completion of specialmaintenance, the schemes would be formally handed over to the provincialauthorities for the introduction of efficient O&M. A schedule for handingover the projects to the provincial authorities is included in Annex 2,

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Table 5. The provincial authorities would be assisted by DCWRD during a1-2 year transition period in organizing the technical aspects andestablishing a sound institutional framework for O&M. DCWRD would also reviewthe existing categorization of the drainage canals in each scheme, on thebasis of which a more uniform nomenclature would be applied to all theexisting and new swamp schemes.

2.10 The O&M requirements for swamp systems include monitoring,evaluation, data collection and analysis, and regular or periodic maintenanceof infrastructure for drainage, flood protection, irrigation and waterconservation, control of soil conditions through water management, and on-farmwater management. As in the case of surface irrigation systems, technicalassistance and advisory services (paras. 2.12 and 2.13) would be providedunder the project to DGWRD and provincial authorities for planning andconstruction of special maintenance works and for Lhe introduction ofefficient O&M on swamps. These services would be integrated with the ongoingprogram in South Sumatra, which the Bank is supporting under the Swamps II Project(Ln. 2431-IND) and for which consultants have been hired to define O&Mrequirements, specifications, organizational arrangements, procedures, plansof operation, and O&M budgets. The consultants to be employed under theproposed project would build on the work undertaken under the Swamps IIproject to ensure that uniform O&M strategies would be developed for allswamps projects.

Completion of Ongoing Projects

2.11 The proposed project would support the completion of only priorityon-going projects which are viable and have so far been wholly funded by GOIbut are now held up for lack of funds. These projects would be selected froma list of more than 100 ongoing projects and would have high priority in aresource-constrained situation. The selection criteria for these projectshave included the status of project completion (at least 30%), adequate wateravailability and quality, minimal land clearing required, contribution totransmigration and settlement plans, adequacy of planning and design, lengthof construction period, and technical and economic feasibility. Of the 16projects selected for implementation commencing in Year 1, 12 are irrigationprojects, 3 are rivers projects, and I swamps project. Details of theseprojects are included in Annex 2, Table 6. Another 20-25 ongoing projectswould be selected for completion in the second year of the project. Someongoing projects have been under implementation since 1976, while others havebeen started only in Repelita IV. Construction on most of these projects hasproceeded on a piecemeal basis, using annual budget allocations. Headworkshave usually been completed and since many of the ongoing proiects havealready incurred substantial costs, there can be tremendous economic benefitsin completing them with a relatively small incremental investment, providedthey are technically sound. The selected projects are mostly run-of-riverschemes with a weir for headworks and conventional canal systems. In some ofthe schemes, the weirs need substaitial closure embankments to encompass flatoverflow areas before the water can be headed up for irrigation. In allcases, it is necessary to review the planning and design of the schemes,including drawings, bills of quantities and engineering estimates, beforecontinuing with construction, This could lead to some revisions or additions

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in some cases because of changes in concept to suit revised water availabilityor requirements. Detailed preparatory work, including review of engineering,planning and design, and preparation of tender documents and revised costestimates, have been completed for the 16 projects to be undertaken in thefirst year of implementation. Upon completion of the on-going projects, DGWRDstaff presently assigned to these projects would be transferred to PRIS tostrengthen the provincial engineering services. The existing projectselection criteria would be reviewed and improved upon, and an assessment maseof all the existing and proposed investment projects in the irrigationsubsector, as a part of the Investment Strategy study, to be carried out underthe project (para. 2.35 (b)). During the implementation of this study, theBank would review and comment on the acceptability of the criteria and theinvestment strategy. It has been agreed that GOI would submit to the Bank ina timely manner, its annual investment program for the FY88/89, FY89/90 andFY90/91.

2.12 Consultancy services in support of the above components (specialanaintenance, efficient O&M, and completion of ongoing projects) would beprovided under the project to upgrade and strengthen provincial capabilities.n: (a) preparation of sample designs, guidelines and criteria for specialuaintenance and efficient O&M; (b) prequalification, selection and supervisionof local subconsultants who will be assigned to prepare other specialmaintenance surveys and designs, after the sample designs have been preparedby the consultants; and (c) supervision of construction. To assist inimplementing the special maintenance and efficient 3&M program for theirrigation systems in nine provinces, Jatiluhur authority and district ofJogyakarta, one internationally recruited and two local consultants, would beattached with each of them. Their specializations would be in constructionand operation of canal irrigation and drainage, with a good knowledge of soilengineering, materials specifications, concrete and masonry structures,quality control measures, laboratory field tests and contract administration.In addition, a team of four internationally recruited and eight localconsultants would assist the provinces in reviewing designs produced by thesubconsultants for special maintenance and upgrading the capability ofprovincial staff in water distribution and regulation. A total of 324manmonths of internationally recruited consultancy (11 experts) and 756manmonths of local consultancy (26 experts) would thus be provided for theabove purposes. In addition, for the small river mouths works, the projectwould provide 21 manmonths of internationally recruited consultants (2 expertswith knowledge of river morphology particularly in estuary areas, andspecialization in river training work) and 72 manmonths (5 experts) of localconsultancy services. For the completion of ongoing projects (irrigation andrivers), the project would provide 312 manmonths of internationally recruited(15 experts) and 875 manmonths (35 experts) of local consultancy services.These would include expertise in planning, design and construction. Anadditional 48 manmonths of internationally recruited consultancy (2 experts)and 48 manrmonths of local consultancy would also be provided for the trainingof design staff in the provinces of South Sulawesi and Lampung.

2.13 Services of local and internationally recruited consultants withexperience in planning, design, construction, management and implementation ofswamp schemes would be provided to assist DGWRD and the provincial agencies.

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The consultants' inputs will be required for: (a) the completion of ongoingprojects (54 manmonths of 2 internationally recruited experts and 51 manmonthsof 2 local experts); and (b) special maintenance and efficient O&M (47manmonths of 2 internationally recruited experts and 165 manmonths of 7 localexperts). All the consultants would be appointed no later than January 31,1988.

Pilot Groundwater Development

2.14 The project would provide funds for civil works, equipment andrelated facilities to carry out pilot groundwater development, including theconstruction of: (a) 80 tubewell irrigation systems in the tail end of theSampean Baru surface water command area in East Java, serving areas of about25 ha each; (b) 500 shallow, hand drilled tubewell irrigation facilities inthe Madiun - Magaatan - Ponorogo area of East Java, with each tubewell servingan area of about 3 ha of land owned by small farmers; (c) 100 shallow tubewellirrigation systems in Nganjuk-Pace, Sidayu and Palang areas of East Javadesigned to serve command areas of about 8 ha each; (d) 40 tubewell irrigationsystems in the eastern part of Lombok serving command areas of about 7-10 haeach; (e) 100 tubewell irrigation systems in eastern and northern areas ofLombok serving command areas of about 10-14 ha each; and (f) 45 tubewellirrigation systems in Central Sulawesi (Palu area - 20) and South Sulawesi(Kalara area - 20; Maros north area - 5) serving command areas of about 6 haeach. The project would finance the first three year slice of a 5-yearprogram for East Java and Sulawesi, and a three year slice of a 4-year programfor groundwater development in Lombok,

2.15 To assist with the preparation of the groundwater subcomponent inEast Java and Sulawesi, DGWRD has engaged consultants required for survey anddesign work during 1987, under the existing consultant contract underLoan 2119-IND, and would recruit qualified consultants for a pericd of abouttwo years starting in early 1988 to assist with the implementation of thegroundwater component. The consultants' input for implementation, withspecialization in groundwater hydrology, drilling, engineering, watermanagement and irrigation agronomv, is estimated to amount to about 35 (5experts) and 120 manmonths (6 experts) of internationally recruited and localinputs respectively (Annex 4, Table 1). The groundwater subcomponent inLombok would also require technical assistance, particularly for pipedistribution system design, tender document preparation and bid evaluation,drilling, and most importantly, for water management and irrigationagronomy. For this purpose, the project would provide 100 manmonths ofinternationally recruited (9 experts) and 130 manmonths of local (7 experts)consultancy services (Annex 4, Table 1). Their expertise would be in theareas of irrigation engineering, geohydrology, drilling, agronomy, ruraldevelopment, and agricultural economics. These services would be spread overabout 30 months. The foreign consultancy would be financed by Government ofItaly. To assist with the preparation of the Lombok subcomponent, DGWRD wouldengage consultants to be financed from Loan 2119-IND. Aerial photomapping ofabout 31,000 ha and orthophoto mapping covering about 2,650 ha would becarried out during 1987, with funding from Loan 2119-IND.

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2.16 Prior to starting any implementation activities, DGWRD staff,assisted by agricultural extension service staff and village leaders, wouldmeet with potential beneficiaries, who would need to agree to form a waterusers' association for the O&M of the tubewell system to be constructed underthe project. After the tubewell systems are put in place, DGWRD would testrun all installations and establish task forces to provide advice and guidanceto the water users' associations on efficient O&M of the tubewell system. Atthe same time, the agricultural extension service would establish specialunits at all kabupaten offices where groundwater schemes are beingconstructed, to advise and guide farmers on what crops to grow, theapplication of rotational irrigation, and on water management practices.Funding for this as well as strengthening of agricultural support services forirrigated agriculture in the tubewell areas in Lombok would be provided underthe ongoing Bank-financed Nusa Tenggara Agricultural Support Services Project(Loan 2638-IND) and for the other tubewell areas under the NationalAgricultural Extension III Project (Loan 2748-IND). This would include thecost for establishing demonstration plots for irrigated agriculture. With theexception of the tubewell schemes to be constructed in Sampean Baru andLombok, WUAs would assume fulL responsibility for O&M upon completion of thetubewell scheme installation and testing by DGWRD. Completed installationswould be turned over to the WUAs. For the Sampean Baru and Lombolk wells,DGWRD would contribute in the first two years to the operation and mainteranceof the installations, in accordance with procedures established for similarfacilities under Loan 2119-IND. It is expected that for the necessary repairof relatively simple pumps, motors and distribution systems, WUAs would beable to call upon private entrepreneurs, suppliers and contractors, who areincreasingly operating in rural areas.

Turnover of Small Irrigation Systems

2.17 The proposed project would support the turnover (or privatization)of small irrigation systems to WUAs. The Government has developed a total of6,731 irrigation systems, which have an average size of about 700 ha each.The number of systems under 500 ha in size is 4,717 and these cover about 19%of the total design irrigable area but only about 6% of the area undertechnical level of development. Most of the small irrigation systems (lessthan 500 ha) are either semi-technical or simple irrigation systems. It isgenerally believed that the farmers through their WUAs are capable of managingthese small and simple irrigation systems if the WUAs are active and if theconditions of the systems are upgraded. The WUAs would also need to bestrengthened through a process of organizational development and provided on acontinuing basis with technical guidance (para. 2.32). As the systems areupgraded and WUAs strengthened, the major criteria for selecting systems to beturned over to farmers would be their size, technical complexity, andinstitutional capacity of their WUAs. At present, WUAs are mostly organizedon a tertiary block basis, which has an average size of about 150 ha. Thereis no federation of WUAs above the tertiary level. However, with theprovision of institutional support to develop system-wide f!JAs that encompassthe village associations, even the systems of up to 500 ha or larger could beturned over to WUAs. While the Ministry of Public Works could continue toprovide construction services or technical advice and the GOI could continueto support, guide and regulate such larger associations, there would be much

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greater scope for local control and much greater reliance on locally generatedO&M resources.

2.18 The project would support a series of activities to be carried outto hand over small systems to WUAs. These would include: (a) an inventoryand selection of small systems less than 150 ha in size and having perennialwater supplies; (b) selection and training of WUA staff to implement theturnover program; (c) designing and implementing special maintenance works onselected systems; (d) institutional strengthening of WUAs and specializedtraining in O&M and handing over; and (e) routine monitoring. The projectwould finance about 60 manmonths of local O&M engineering expertise to assistwith engineering elements of the turnover program, the costs of conductingsurveys and inventories of WUAs, and special maintenance works, if any. TheFord Foundation would provide funds for a consulting team with specializationsin community organization/institutional development and knowledge of farmers'approaches to irrigation management in small irrigation schemes. These funds(para. 2.37) would cover the costs of about 60 man-months of local consultancyat the center, about 180 man-months of local consultancy in the provinces, and24 man-months of an international institutional advisor. The consultantswould assist DGWRD and PRIS with the implementation of the turnover programfor small irrigation systems.

2.19 The following are the annual target for the turnover of systemsless than 150 ha each, and the project would support turnover of these systemson about 20,400 ha in three years.

Table 2.1: TURNOVER OF SMALL IRRIGATION SYSTEMS

Project Number ofYear /a Provinces Districts Systems Areas (ha)

1987/88 2 2 12 1,2001988/89 4 6 48 4,8001989/90 10 16 140 14,4001990/91 17 - 604 44,9091991/92 25 - 750 60,0001992/93 27 - 750 60,000

Total - - 2,304 185,309

/a October 1 - September 30.

During the project year 1987/88, the two provinces selected for the turnoverof small systems are West Java and West Sumatra, where a larger proportion ofthe irrigation systems are less than 150 ha in size.

2e20 The pilot areas for the introduction of irrigation service fee(para. 2.21), where WUAs would be established at the system/district level,

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would also serve as pilot areas for turning over larger systems. Based on theexperience of these pilot areas (20,400 ha), and a turnover of two systems ofabout 500 ha each to WUAs, a nation-wide program would be prepared by COI bySeptember 30, 1990 for turning over systems larger than 150 ha.

Ir.iritiouL Service Fee

2.21 The proposed project would support the introduction of irrigationservice fee in selected pilot areas, and lay the basis for its nationwideextension. The fee can be geared to the actual financial requirements for O&Min specific irrigation systems and be implemented in such a way that there isa direct connection between payment of the fee and the provision of the O&Mservice. In view of an inadequate experience with the variations needed, ifany, across regions, in the concept, collection mechanisms and institutionalarrangements for an irrigation service fee, a pilot approach to itsintroduction is proposed under this project. Such a pilot approach wouldfocus on: (a) the farmers' payment capacity in order to determine theappropriate levels of the fee; (b) the variations in the application of thefee, ranging from a per hectare charge to explicit water charges on bulk salesto water users in different parts of the system; and (c) the organizationalarrangements needed for the collection of the fee. The pilot approach wouldalso lay the basis for institutionalizing the payment for services delivered,and the retention of the revenues from this fee within the section/kabupatenfor O&M purposes. The criteria for the selection of the pilot areas havebeen: (a) tne areas are scheduled for efficient O&M and cover at least oneirrigation section or system; (b) the chief of the district (Bupati), who willbe the key person in the pilot operation, is supportive of the ISF concept;and (c) conditions of the irrigation services and WUAs are generallyrepresentative of a larger area of the region. The following areas would beincluded for the introduction of ISF:

Table 2.2: PILOT AREAS FOR THE INTRODUCTION OF IRRIGATION SERVICE FEE

Province Pilot areas Size (ha)

East Java Pekalen Sampeyan 25,000Central Java Wonogiri/Sukoharjo/Sr&gen 25,000West Java Subang 25,000South Sulawesi Sidenreng Rappang 50,000

Total 125,000

In addition, the Simulungan irrigation system in North Sumatra is alsorecommended for a similar pilot operation, which would be a component of aproposed ADB-assisted project.

2.22 The proposed project would finance the services of consultants(including per diems and costs of travel) and equipment and materials. A

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consultant team at the central level (43 manmonths of internationallyrecruited consultancy, i.e., 2 specialists with expertise in the fields ofinstitutior. building, public finance, and 'raining, and 34 man-months of localconsultancy, i.e., 2 experts with experience in technical, social, legal andfinancial aspects) and a team in each pilot area (comprising a total of 26manmonths of internationally recruited consultancy and 124 manmonths of localconsultancy, with same expertise as the team at the central level) would workwith the district level irrigation committee to implement the introduction ofirrigation service fee. The implementation of the steps needed for theintroduction of the irrigation service fee (including formulation ofimplementation plans, and monitoring and evaluation) would proceed along theschedule outlined in Annex 2, Table 13. The collection of ISF in the pilotareas (125,000 ha) would commence by December 31, 1988 and the administrativeand judicial arrangements (as found to be workable in pilot areas) would beestablished by January 31, 1990 for its extension to other areas.

Land Valuation and Strengthening of PBB

2.23 The project would support the introduction of the new PBB system,l/which would include the following: (a) implementing the new landreclassification and valuation system recently adopted by GOI, based on themarket value of the land; (b) an inventory of land holdirigs based on aerialphotography; (c) installing a computerized management information system tohelp improve tax administration; (d) developing an efficient and effective taxmanagement and collection system; and (e) strengthening of the Directorate ofIPEDA/PBB and its regional offices.

2.24 The reclassification and assessment of land holdings would entailthe production of rectified photos and maps at suitable scales, identificationof property boundaries and land holders, valuation, establishment of PBB taxclassification, and development of effective procedures enabling taxcollection. The areas to be covered would overlap with the areas receivingspeciai maintenance and efficient O&M under the project. The project wouldfinance the costs of survey and mapping, and all the training and consultancyper diems and fees. About 40 manmonths of internationally recruitedconsultancy (3 experts in survey/mapping, land classification/valuation andinstitutional development/training) and 120 manmonths of local consultancyservices (3 experts with similar expertise as the internationally recruitedconsultants, and a data processing specialist) would be needed to implementthe components of land valuation and strengthening of PBB. During the firstyear of the project, a pilot scheme of survey and mapping for landreclassification and registration would be established (on an area of 5,000ha) to develop simplified procedures for mapping which would use all theexisting reliable data. Considerable time and cost savings could be obtainedif the existing irrigation photomaps and IPEDA maps are found reliable, and

1/ The recently approved Urban Sector Loan (Ln 2816-IND) would supporttechnical assistance, training, and property valuations for the urban PBBimprovement program, providing the complementarity needed for Lheimprovement of both urban and rural PBB.

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this would be verified in the pilot scheme. The implementation schedule(covering the October 1987-January 1988 period) for this pilot scheme isincluded in Annex 2, Table 10. About 100,000 ha in Year 2 and about 300,000in Year 3 would be covered for land reclassification/valuation under theproject. These targets are additional to the ongoing land reclassificationprogram being supported by Bank- and ADB-assisted projects.

2.25 The IPEDA/PBB directorate and its regional offices would requireadditional staff, comprising at least six geodetic engineers and twogeographers in 1987 and another five geodetic engineers in 1988. A number oftechnicians and surveyors also need to upgrade their skills (para. 2.31). Aspart of institutional development, there is also a need to review the existingorganizational structure of the IPEDA/PBB directorate and its regionaloffices, including its key functions, staffing levels, information flows, andspecialization requirements. The Bank-supported Urban Sector Loan(Ln 2816-IND) would assist with the preparation and implementation of actionplans needed to strengthen the organizations involved in land valuation andtax collection. Under the proposed project, two tax advisors for rural PBBwould be appointed by April 30, 1988 to help improve tax administrationthrough computerization and better procedures.

Institutional Strengthening and Training

2.26 Manpower Development for Systems 0&M. To strengthen O&Mcapabilities, the staffing (pengamats, jurus and water regulation personnel)in district and lower level units in the districts would be increased to meetthe requirements, as assessed by DGWRD and PRIS. The swamp areas to becovered by efficient 0&M under the project are also estimated to require about30 incremental pengamats and about 90 jurus. Adequate provisions would bemade for fulfilling the additional staffing requirements (Action Plan:Annex 1).

2.27 Details of the training programs were reviewed at a?praisal and aregiven in Annex 3, Table 2. Assurances were obtained at negotiations that thetraining programs would be carried out in accordance with the timetable andterms of reference satisfactory to the Bank (para. 7.1 (b)). The proposedproject would finance trainers' fees and per diems, classroom rental,furniture and equipment, supplies and materials, local travel, salaries ofsupport staff, and consultancy fees (paras. 2.32 and 2.33). About 3,000middle and lower lower level O&M staff in irrigated and swamp areas wouldundergo training in basic O&M duties and practical skills. These wouldinclude maintenance of basic irrigation records, principles of water controland operation, discharge measurement, maintenance requirements and theestimation of associated costs. Some 110 trainers in both irrigated and swampareas would also be trained in O&M procedures. About 420 technical highschool level staff (usually pengamats) would be trained in O&M courses offeredat the PUSDIKLAT regional training centers. In addition, some 275 BIE levelengineers would undergo specialized training courses in O&M. Thesubdirectorate of DOI-II responsible foi the groundwater component, togetherwith staff of the agricultural extension service, would develop trainingprograms for WUA leaders and pump operators. The training would focus on theoperation and maintenance of pumps, engines and PVC pipe distribution systems,

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efficient use of pumped water, rotational irrigation, crop selection and watermanagement practices. Training practices and materials developed ongroundwater projects elsewhere in Indonesia would be utilized to the extentpossible. It was agreed that the Government would arrange for alternativefinancing to provide for a study tour to areas outside Indonesia where theexploitation of low-lift tubewells for irrigation development by smallholderstakes place extensively, using shallow groundwater resources, and where modernpublic tubewell sysce.ms with looped pipe distribution and automated pumpingsystems have been introduced. Staff of BAPPENAS, DGWRD and ProvincialIrrigation Services would participate in the study tour to benefit from recentinnovations in tubewell technology.

2.28 Since most provinces lack senior-level staff, and a seksi headshould be at least of Bachelor of Engineering (BIE) level, some 72 PRIS staffwould undertake the diploma/degree oriented BIPOWERED training in Bandung. Inaddition, about 26 senior level staff would undergo Master's degree leveloverseas training courses. These training courses would include variousspecializations such as water resources engineering, management and hydraulicengineering. The representative office (within DGWRD) of the Education andTraining division (BDP) would also establish, by February 29, 1988, a databank for the effective dissemination of training needs of PRIS.

2.29 Strengthening of WUAs and Irrigation Committees. Chart 3 presentsthe scheme for developing WUAs and strengthening the Irrigation Committees atthe provincial and lower levels under the project. The institutionalstrengthening would include the aspects of organization/coordination,regulation/administration, budgeting and financing, and other supportingelements needed by the institutions involved in irrigation management. At thedistrict and lower levels, the priority activities would be the collection ofbenchmark information on WUAs and the setting up of WUA Action Groups, whichwould serve as catalysts of WUA developmert. These Action Groups would drawtheir membership from the more senior level staff of the district units ofPublic Works, Agriculture and Home Affairs. Depending on the size of theirrigable area in each district, one to four action groups would beestablished in each district. A quick inventory of WUAs to establish,benchmark information on activity status, organizational boundaries, awarenessof duties and responsibilities and developmental problems and constraints,would be carried out by the district and subdistrict s.aff of Public Works,Agriculture and Home Affairs. The project would finance the costs ofconducting surveys, including travel, salaries, supplies and materials. TheAction Groups would be established by January 31, 1988 and the inventory of atleast 10 WUAs would be completed by April 30, 1988. By September 30, 1990, atleast 20 new WUAs would be established and 200 existing WUAs strengthened.

2.30 About 200 Action Group members would undergo a 2-month training oncommunity organization under the project. To reach the large number of targetWUAs, the Directorate of Agriculture Area Development (DAAD) in cooperationwith Action Groups, Home Affairs and DOI-II would also train some 1,020 seksi,subsection and village level staff of the departments of Agriculture and HomeAffairs on WUA organization and development. The target participants wouldinclude PPLs or extension workers who will devote 30-50% of their time to WUAdevelopment. The project would also provide funds and technical assistance

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(para. 2.32) to train 1,500 middle level provincial and district staff, 4,040subdistrict and village level staff, 360 instructors and 8,800 WUA members andkey farmers. In addition, there would be a follow-up training for about 6,700WUA members.

2.31 During the 3-year project implementation, about 175 staff would betrained in the fields of cartography, specialized surveying land valuation,tax management and administration, mapping, and in evaluation/assessmentcriteria for PBB. The project wo'ld also provide about 10 man-months ofoverseas training for PBB staff, including short-term (3-6 month) scholarshipsto overseas universities/technical institutes.

2.32 A total of 90 and 192 manmonths of internationally recruited andlocal consultancy services respectively, comprising 5 internationallyrecruited and 9 local O&M experts and training specialists, would be providedto DOI-I for on-the-job training of staff for main systems O&M. Another 27manmonths of internationally recruited and 30 of local consultancy(1 internationally recruited and 1 local training specialist) would beprovided to Directorate of Swamps (DOS) for on-the-job training of staff inO&M in swamp areas. The project would provide 126 manmonths ofinternationally recruited and 210 manmonths of local consultancy to DOI-II forcoordinating training and organizing workshops for provincial staff and WUAs,in the fields of tertiary systems O&M and on-farm water management. Theirexpertise would be in the fields of O&M and on-farm water management(3 internationally recruited and 5 local experts), training (1 internationallyrecruited and 1 local expert), and audio-visual material production(1 internationally recruited and 1 local). This would be complemented by 90manmonths of internationally recruited and 300 manmonths of local consultancyservices to DAAD, mostly in the fields of community organization and ruralinstitutional development (3 internationally recruited and 10 local experts).

2.33 Under the project, BDP would be strengthened in order to improve itscapabilities to coordinate, monitor, evaluate, as well as plan and conductshort training courses, help analyze training needs, manage training programsand disseminate essential training materials and information. The BDP andPersonnel Division would be provided with 114 manmonths of internationallyrecruited and 180 manmonths of local consultancy (4 internationally recruitedand 6 local experts) with expertise in the fields of training --nagement,monitoring and evaluation (M&E) and manpower planning. Another 12 manmonthsof internationally recruited consultancy (M&E experts) would be provided tothe Directorate of Planning and Programming for monitoring and evaluatingphysical progress of the project. Funds to cover operating costs, consultancycosts (42 manmonths of local M&E expertise and 24 manmonths of local MISexpertise) and the purchase of additional micro computers to meet themonitoring and evaluation (M&E) and management information systems (MIS) needsfor O&M at the PRIS level would be provided under the project.

Technical Assistance and Studies

2.34 The project would provide technical assistance amounting to$45 million (as indicated earlier in paras. 2.12, 2.13, 2.15, 2.18, 2.22,

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2.24, 2.32, 2.33) for planning, programming, designs and specifications,institutional strengthening, turnover of small irrigatiOn systems,introduction of irrigation service fee and land reclassification/valuation,The estimated cost of $45 million for technical assistance includescontingencies of about $5 million, internationally recruited consultancy ofabout $19 million (of which $4 million would be be grant-financed), and localconsultancy of about $21 million. Of the local consultancy costs of $21million, about $10-12 million is the estimated cost for local subcontracts fordetailed designs. This large technical assistance is needed beca,ise theproject is spread over 16 provinces, involves the departments of Public Works(including a number of directorates within DGWRD), Agriculture, Home Affairs,BAPPENAS and Finance, not only at the central and PRIS level, but also at thedistrict and section/subsection level, and entails apart from physicalimplementation of the project, institutional strengthening, particularly atlower levels, various studies, and initiation of several policies. The termsof reference for all the consultants and the invitation documents have beenfinalized, and assurances obtained that the eonsultants would be selected byJanuary 31, 1988 (para. 7.1(c)). The selection of consultants would be inaccordance with Bank guidelines. Details of the consultancy services (about1,671 manmonths of internationally recruited consultancy and 3,944 manmonthsof local consultancy services), which are the minimum needed to implement allthe components of the project, are contained in Annex 4, Tables 1 and 2. Theconsultancy services would be provided at three levels. At the central level,there would be technical assistance to the Project Coordinating wit NithinDGWRD) and to the inter-agency coordination group (para. 3.8). Advisory teamswould also assist the PRIS and the districts or sections in the technicalaspects of implementation, the introduction of efficient O&M procedures, andin the preparation of annual budgets needed for efficient O&M. Some of theconsultancy inputs, particularly for the provincial design units, studies,policy initiatives, introduction of efficient O&M procedures, and someelements of institutional strengthening/training would no longer be requiredduring the subsequent Bank operations in the irrigation subsector. It wasagreed during negotiations, that any subsequent operation of a similar naturewould require smaller scale of technical assistance than envisaged under thisproject.

2.35 Studies

(a) Institutional Strengthening Study. In view of the changing natureand direction of irrigation expenditures increasingly towards O&M, areview and reassessment of the roles of the various organizationsinvolved in planning, organizing, directing and controlling O&Mactivities, is needed. In the case of provincial irrigationauthorities, this implies a greater autonomy in planning, budgetingand upgrading of their staff and facilities. In the case of DGWRD,its envisaged role could be more of a planner of new systemsdevelopment. This changing role, in turn, could require areorganization within DGWRD entailing a shift of manpower and otherresources to PRIS, more DGWRD attention to the development ofpolicies and procedures to be adopted at the provincial level rstherthan a central control of O&M activities, as well as greater role inmonitoring PRISo In view of the interlocking technical, managerial,

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administrative, institutional and financial issues that would have abearing on such an alignment of institutional responsibilities, astudy to define the necessary changes and adjustments would beinitiated. The study would require the services of 4internationally recruited consultants (6 manmonths each) withexpertise in the areas of irrigation, institutional development,management systems and financial systems, and 3 local consultants(22 manmonths) with expertise in institutional development,management systems and legal aspects. The study would be completedby September 30, 1988, and upon taking the Bank's comments intoaccount, the recommendations of the study would be implementedcommencing January 1989 (Action Plan: Annex 1).

(b) Investment Strategy Study. An indepth review is needed to developand improve upon the existing criteria for project selection and toassess the viability of all existing and proposed irrigationinvestment programs, and prioritize these investments, with a viewto dropping the non-viable investments and restructuring projects toprotect high-priority activities while accommodating reducedbudgetary resources. The purpose of the investment expendituresreview would be to rationalize the existing portfolio of projectsbeing implemented and to formulate an appropriate developmentstrategy and investment programs for Repelita V. A study would needto be made of both the physical and expenditure status of eachongoing project. Only a project-by-project assessment can helpdetermine the projects which should be given priority in theallocation of funds at sufficient levels to maintain efficientimplementation schedules. The study would provide the basis formaking the right choices on continuing or discontinuing ongoingprojects, the adding of new projects to the portfolio, andmaintaining the proper balance between investment and recurrent O&Mexpenditures. The study would require the services of 3internationally recruited consultants (18 manmonths), with expertisein fiscal economics/public finance and engineering, and 6 localconsultants (36 manmonths), with expertise in general economics andirrigation background. This study would be completed by July 31,1988, to enable an input into the Repelita V strategy and investmentprograms (Action Plan: Annex 1).

(c) Environmental Impact Studies. To address environmental concerns ofthe project, particularly for ongoing projects, five environmentalstudies would be included under the project. These studies wouldmainly focus on the impact of irrigation on the population, health,malaria control programs, and introduction of safeguards to protectirrigation and groundwater supply from contamination. Previousenvironmental studies commissioned by DGWRD were satisfactorilycarried out by local universities with minimal assistance frominternational consultants. The selection and number of consultantswould be in accordance with issues to be studied under each selectedongoing project. The studies are estimated to require the servicesof one internationally recruited consultant (6 manmonths) and aboutsix local consultants (82 manmonths) with expertise in the areas of

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irrigation, sea water encroachment (in groundwater areas), malariacontrol, use of agrochemicals, pollution control and ecology. DWWRDwould inform the Bank by January 31, 1988 about the selected ongoingprojects for which the environmental studies would be undertaken.Assurances were obtained during negotiations that these studieswould be completed by March 31, 1990 (para. 7.1(d)).

D. Cost Estimates

2.36 Total cost of the project, including physical contingencies andexpected price increases, is estimated at about Rp 592.4 billion(US$359.1 million), with a foreign exchange component of US$ 148 million, or41%. The cost estimate is based on September 1987 prices and includes taxesand duties computed at Rp 30.6 billion (US$18.5 million). Civil worksestimates are derived from costs of projects already under execution, as wellas detailed estimates for 13 sample areas in six provinces. The average costof civil works for 16 ongoing projects already selected (the construction ofwhich will commence in Year 1) has been used as a basis for estimating thecosts of additional ongoing projects to be selected in the second year of theproject. Equipment and vehicle cost estimates are based on price quotationsfrom suppliers, cross-checked with the prices of comparable units recentlypurchased or curr..Atly being procured by various agencies. Foreignconsultants' average base costs have been estimated at US$12,000 per manmonth,including professional fees, overheads, travel and overseas allowances. Localconsultants' costs have been taken at US$2,500 per manmonth. These costs arebased on experience with recent consultancy contracts in Indonesia. Physicalcontingencies (to allow for possible design variations) have been assessed at15% of the cos. of civil works, 10 of the cost of equipment and vehiclest and5% of the cost of consultancy services. Price contingency estimates assumeincreases in local currency costs of 10% in 1987, 5% in 1988, and 3.5% perannum thereafter (based on expected domestic inflation), and in foreignexchange costs of 3% in 1987, and 1% per annum thereafter. Project costestimates are summarized in Table 2.3 below and detailed in Annex 2, Table 1.

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Table 2.3: PROJECT COST SUMMARY

Local Foreign Total Local Foreign Total Foreign as---(Rupiah billion)--- ----(US$'million)---- X of total

Special Maintenance 74.5 45.7 120.2 45.2 27.7 72.9 38Incremental Operationsand Maintenance 15.7 10.0 25.7 9.5 6.1 15.6 39

Recurrent Operations andMaintenance /a 72.8 57.6 130.4 44.1 34.9 79.0 44

Ongoing Projects 100.4 70.2 170.6 60.9 42.5 103.4 41Groundwater Development 10.8 9.9 20.7 6.6 6.0 12.6 48Institutional Development 11.4 20.4 31.8 6.9 12.4 19.3 64Turnover of Small Systems 3.5 1.1 4.6 2,1 0.7 2.8 24Introduction of Irriga-tion Service Fee - PilotSchemes 3.0 1.6 4.6 1.8 1.0 2.8 36

Land Reclassification andValuation 3.9 2.2 6.1 2.3 1.3 3.6 36

Total Baseline Costs /b 296.0 218.7 514.7 179.4 132.6 312.0 43

Physical Contingencies 25.7 20.5 46.2 15.6 12.4 28.0 44Price Contingencies 26.6 4.9 31.5 16.1 3.0 19.1 16

Total Project Costs 348.3 244.1 592.4 211.1 148.0 359.1 41

/a Present levels of O&M expenditures.Th Includes taxes and duties amounting to US$18.5 million equivalent.

L. Financing

2.37 The proposed Bank loan of US$234 million would finance 94% of theforeign exchange costs and 45% of the local currency costs of the project.This represents 69% of total project costs, exclusive of taxes(US$ 18.5 million). Provision for retroactive financing of US$5 million hasbeen included to cover eligible expenditures under the 1987/88 budget startingfrom September 1, 1987. This would enable the project momentum gained duringthe preparation period to be maintained. The Governments of Italy and theNetherlands, and the Ford Foundation are expected to provide $15.4 million,bringing total external financing to $249.4 million, or 69% of total costs,covering 100% of foreign exchange costs (US$ 148 million) and 48% of localcosts. The Government of Italy is expected to provide about $1.6 million forequipment and $1.4 million for technical assistance for the Lombok groundwatercomponent, and the Government of Netherlands is expected to provide about $2million for training, $0.4 million for the institutional strengthening study,and $9.4 million of joint financing with the Bank for civil works to beundertaken for special maintenance and efficient O&M. The Ford Foundationwould provide about $0.6 million for consultant teams needed to assist with

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the implementation of the turnover of small irrigation systems. GOI wouldfinance the remaining project cost of $109.7 million from its developmentbudget (or a net contribution of $91.2 million after taxes and duties). Thiscontribution would require GOI to maintain the present level of O&Mexpenditures in real terms, amounting to $83.2 million over the three yearproject period. The Bank would finance part of incremental O&M costs for eacharea coming on stream under the project on a declining basis. Over theproject implementation period, GOI would meet a progressively larger share ofincremental O&M expenditures in project areas, increasing from about 10% in?roject Year 2 to 17% in Year 3. This contribution of GOI would amount to$1.6 million over the three years. Costs of land acquisition (about US$6million) and a part of the costs of the investment strategy study (US$0.4million) would also be financed by GOI. The financing plan for the project,including specific expenditures to be financed by GOI, was agreed duringnegotiations. The project financing plan is set out in Table 2.4 below, andthe phasing of GOI contributions (by GOI fiscal year) is contained in Annex 2,Table 2.

Table 2.4: PROJECT FINANCING PLAN(US$ m.llion)

Total ProjectFunding source Local Foreign cost Percent

Bank 94.4 139.6 234.0 65.2 /aGovernment ofNetherlands 6.4 5.4 11.8 3.3

Government of Italy 0.3 2.7 3.0 0.8GOI 109.7 - 109.7 30.5Ford Foundation 0.3 0.3 0.6 0.2

Total 211.1 148.0 359.1 100.0

Ia 69% of project costs, excluding taxes.

F. Preparation Status and Implementation Schedule

Irrigation

2.38 Sample designs for special maintenance of irrigation systems serving50,000 ha are completed. This work was begun in September 1986 by DGWRD,assisted by the consultants (MacDonalds/Indah Kary-) responsible for projectpreparation. It included updating of systems maps, reviewing specialmaintenance requirements and preparing detailed designs for specialmaintenance work on 50,000 ha. Contracts for preparing detailed designs for75,000 ha to be covered in Year 1 have also been made by GOI with localcunsulting firms. These detailed designs have been substantially completed.Designs for 175,000 ha to be covered in the sEcond year is nearing

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completion. March 1988, and for the remaining 150,000 ha by March 1989.Technical and economic viability of sixteen on-going projects to beimplemented in Year 1 has been evaluated, and contracts for additional surveyand design work required for completing these on-going projects have beensigned. The remaining design work of these projects is nearing completion.Designs for small river mouths were completed in August 1987. Theimplementation schedule (including necessary procurement actions) forirrigation works is included in Annex 2, Table 3.

Swamps

2.39 Preparatory designs are in progress for special maintenanceconstruction in the first year of the project. Designs for specialmaintenance of the drainage canals serving 43,400 ha are completed, foranother 38,800 ha would be completed by March 1988, and for the balance of23,350 ha by December 1988. Detailed designs for the completion of an ongoingproject (Mesuji schemes) were prepared by the Technical Institute in Bandung,and reviewed by consultants engaged under the Bank-supported Swamps I Project(Ln. 1958-IND). Most of the excavation works for drainage canals on about12,400 ha in Mesuji schemes have been completed. The designs for remaining7,600 ha would be completed by March 31, 1988. The detailed designs for thesecond ongoing project to be implemented in Year 3 would be completed by March1989.

Groundwater Development

2.40 Field surveys (topography and soils) for 480 ha in Madiun aresubstantially completed, and for 500 ha in Sampean Baru would be completed byFebruary 1988. Detailed designs for 270 ha in Sulawesi are nearingcompletion, and for 740 ha in Madiun and Sampean Baru would be completed byMarch 1988. Surveys on the remaining area in Madiun and Sampean Baru(1,920 ha), and detailed designs on about 1,600 ha in Sampean Baru, would becompleted by December 1988. Designs for 560 ha in Madiun would be completedby March 1989. Construction of tubewell irrigation systems would commence in1988. During 1984-86, the Government of Italy provided DGWRD with consultancyservices for groundwater investigation in Lombok. In addition to carrying outsurveys and feasibility studies, the consultants (Electro Consult) trainedDGWRD personnel in drilling, logistic support, hydrogeology, irrigationdesign, and agroeconomic data collection, as well as conducting short trainingcourses. The construction of tubewells in Lombok would commence in 1988, withthe exception of 4 wells which have already been drilled and are ready to beequipped and put in operation. The phasing of the construction of thetubewell irrigation systems is contained in Annex 2, Tables 7 and 8.

G. ProcurementCivil Works

2.41 Civil works for special maintenance and completion of ongoingprojects are estimated to cost about US$148 million. Of these, works costingabout US$89 million would be small in scal^, dispersed over 16 provinces, andrequire close interaction with iillagers both as beneficiaries and aslaborers. They are thus unlikely to attract foreign competition, and would be

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largely tendered on the basis of competitive bidding advertised locally inaccordance with GOI procedures acceptable to the Bank. Civil works packageslarger than US$3 million would be procured through international competitivebidding (ICB). Such packages are not expected to exceed six in number, and tototal about US$30 million in value. These would include about six ongoingGOI-funded projects (including two in the first year of the project: Sanregoand Tulan Mas). Efficient maintenance works ($13.1 million), a part of thespecial maint 7ance works ($28.9 million) and other maintenance works($25 million)- would be largely carried out under force account by thePRIS. This would be the most economical and efficient method in Indonesia forcivil, works that cannot be fully defined in advance and for activities thatneed to be carried out with least disruption to ongoing operations. Civilworks for the groundwater component costing approximately US$2.5 millionequivalent would be procured through LCB using GOI procedures acceptable tothe Bank. Well drilling would be undertaken by local contractors, with DGWRDproviding drilling rigs, well materials, and skilled supervisory staff. Theforeign contractors would not be interested in such drilling work, in view ofthe small size of contracts. Furthermore, equipment currently lying idle withDGWRD would be utilized for drilling.

Equipment and Materials

2.42 Equipment and materials totalling US$15.3 million, includingprocurement of vehicles ($800,000) would be bulked to the extent possible intolots for procurement under ICB procedures in accordance with Bank guidelinesfor procurement. In bid comparison, local manufacturers would be allowed a15% margin of preference or the applicable customs duty, whichever is lower.Equipment which cannot be suitably bulked and other packages of small itemscosting less than US$200,000 equivalent each, up to a total limit of US$5million, may be procured by DCWRD's Directorate of Logistics through GOIprocurement procedures acceptable to the Bank. Procurement of materials andequipment ($6.5 million) for groundwater tubewell systems would be dividedinto two packages. The first package, which is to be procured during thefirst project year, would provide materials and equipment for the schemes tobe installed under this project. The second package would provide formaterials and equipment to be installed under a possible future project.Procurement and Bank financing of the second package (valued at about $2.5million), which would be carried out during the third year of the project,would be subject to satisfactory progress on arrangements made by GOI toensure that financing for installation would be provided. This would be acondition of loan disbursements (para. 7.2(a)), against the second package ofmaterials and equipment for groundwater tubewell systems.

2/ About 30% of the present level of O&M expenditures would be for civilworksp and the balance for O&M staff salaries.

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Cotsultancy Services

2.43 The consultancy services ($45 million), with the exception of thoseneeded for detailed designs of special maintenance works and ongoing projects,and those grant-financed by cofinanciers, would be procured internationally,in accordance with Bank guidelines. GOI envisages use of joint venturesbetween foreign and local firms for this purpose under arrangements acceptableto the Bank. The detailed designs of special maintenance works and ongoingprojects would be carried out through local .ubcontracts under the supervisionof the consultants recruited internationally. The consultancy services wouldbe packaged for procurement as follows: (a) one pac4.age for special andefficient O&M on irrigated areas and related training in all provinces; (b)one package for ongoing irrigation projects; (c) one package for ongoingswamps projects, and special and efficient O&M on swamps, including training;(d) one package for small river mouths and ongoing river projects; (e) apackage for each study; and (f) two packages for training of water users' andone package for training of provincial design units.

Review of Procurement

2.44 ICB procedures would be used for civil works contracts exceeding thevalue of US$3.0 million, and for equipment and supplies contracts exceedingthe value of US$200,000. Civil works and equipment would be procured by theresponsible implementing agency, using contract documents acceptable to theBank. An independent but internal control of all procurement is made by theDGWRD Secretariat, and larger contracts (Rp 500 million and above) would becleared by the State Secretariat Procurement Control Unit (SEKNEG). It isestimated that about 50 civil works contracts, in addition to five consultancypackages, would be reviewed by SEKNEG. These procurement controls appear tobe working satisfactorily. For civil works contracts, the Bank would reviewprior to tendering and award about 40 contracts ($85 million), each overUS$1.5 million, covering in aggregate about 50% of the value of civil works.The remaining civil works contracts would be reviewed by the Bank on a post-award sample basis. Equipment contracts to be procured through ICB($15.3 million) would be reviewed by the Bank prior to tendering and award;small equipment contracts not exceeding $200,000 (with an aggregate value of$5 million) for local procurement would not be reviewed by the Bank because oftheir simple nature and small value. All consultant invitation documents,proposed awards, and contracts would be reviewed by the Bank. Procurementarrangements are summarized in Table 2.5 below.

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Table 2.5: PROCUREMENT PLAN

Procurement method TotalICB LCB Other N.A. /b cost

- (US$ million)…

Civil Works- Special Maintenance - 28.9 28.9 /a - 57.8

(24.5) (23.9) (48.4)- Ongoing Projects 30.0 60.5 - 90.5

(30.0) (60.5) (90.5)- Groundwater 2.5 -- 2.5

(2.5) (2.5)- Efficient O&M 13.1 /a - 13.1

(11.5) (11.5)- Recurrent O&M /c 25.0 /a 58.2 83.2

(0) (0) (0)Equipment & supplies 15.3 5.0 20.3

(15.3) (3.4) (18.7)Consultants 45.2 45.2

(42.8) (42.8)Training, mapping andsurveys includingmaterials and travel 22.0 22.0

(19.6) (19.6)Land Acquisition 6.0 6.0

(0) (0)Taxes and Duties 18.5 18.5

(0) (0)

Total 45.3 96.9 112.2 104.7 359.1(45.3) (90.9) (78.2) (19.6) (234.0)

Note: Figures include contingencies; figures in parentheses represent Bank loan.

/a No competitive bidding is involved for the civil works, since these might be carriedout on force account basis.

/b Not applicable, because no procurement is involved for the items listed in thiscolumn.

/c Present level of O&M expenditures. About 30% (US$25 million) would be for civilworks, and the balance for O&M staff salaries.

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H. Disbursements

2.45 The Bank loan would be disbursed as follows:

(a) About $11.5 million to be disbursed against incremental (efficient)O&M expenditures on civil works, would be on a declining scale asfollows: 91% of total expenditures on civil works in project year 1($2 million), 80% in year 2 ($4 million), and 73% in year 3 ($5.5million);

(b) 911 of total expenditures on all other civil works (except coveredunder (a)), (US$125.8 million);

(c) 1001 of foreign expenditures for directly imported equipment, 95% oflocal expenditures (ex-factory prices) for locally manufacturedequipment, and 65% of locally procured off-the-shelf items(US$17.3 million);

(d) 100% of expenditures on consultant services (US$40.7 million);

(e) 100% of expenditures on training, mapping, surveys, includingmaterials and travel (US$18.7 million); and

(f) Unallocated (US$20 million).

2.46 Disbursements would be made against contracts, except for worksexecuted on force account basis, small civil works contracts valued at lessthan US$300,000, and the cost of training, which would be disbursed againststatements of expenditure (SOEs). In the case of efficient O&M, Bank loandisbursements would be for civil works, materials and equipment.Documentation for SOE expenditures would not be submitted for review, butwould be retained by the project implementation units, and made available forinspection by the Bank during the course of project supervision. Totaldisbursements against SOE would amount to about US$55 million, or 24% of theBank loan amount. While the disbursement profile for past investment projectsin the irrigation subsector in Indonesia has stretched over about 10 years, itis not applicable to the proposed project, which constitutes a 3-year timeslice of an investment program. The schedule of disbursements is estimated asfollows:

Table 2.6: DISBURSEMENT SCHEDULE

Bank FY FY88 FY89 FY90 FY91US$ million --

Annual 30.0 80.0 80.0 44.0Cumulative 30.0 110.0 190e0 234.0

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The detailed implementation schedules (Annex 2) indicate that thisdisbursement schedule is feasible. The target areas to be covered underspecial maintenance, efficient O&M, and ongoing projects are feasible withinthe 3-year time slice operation. In the case of the groundwater component,the project would finance the first 3-year slice of a 4-5 year program. Thetargets of (a) 125,000 ha for introduction of irrigation service fee;(b) turnover of systems (less than 150 ha in size) covering 20,400 ha; (c) thepreparation of plans for extension of irrigation service fee to other areas,and for turnover of larger systems; (d) land reclassificaton/valuation ofabout 400,000 ha; (e) completion of various studies; and (f) institutionalstrengthening/training, are feasible. Action Plan (Annex 1) outlines thesetargets. Loan closing is expected by March 31, 1991.

2.47 In order to avoid requiring GOI to pre-finance expendituresreimbursable by the Bank and to simplify and expedite disbursementadministration, GOI would establish a Special Account in Bank Indonesia to bemaintained by DG Budget and implement new procedures for faster processing ofdisbursements and withdrawals. The Special Account would be used for all localcurrency payments made against all disbursement categories. However, thecontracts procured under ICB would be paid at the option of GOI, either fromthe Special Account or by normal disbursement procedures (direct payments,reimbursements and special commitment). The Bank would make an initialdeposit equivalent to an estimated four months' disbursement (US$10 million)into the Special Account. The Account would be replenished every month orwhen payments reach one-half of the initial deposit. A. monthly statement onthe Special Account would be submitted by DG Budget to the Bank.

I. Environmental Effects

2.48 Irrigated paddy is ecologically the most stable and non-erosive formof land use in Indonesia, and the project would have a very positiveenvironmental impact through its support for improved resource use andproductivity. In new irrigated areas, particularly outside Java, farmers'increased incomes from irrigated crops would help reduce the pressure on land,allowing Indonesia to preserve more of its rain forests. In addition, aquiferlevels in areas under the groundwater component would continue to be closelymonitored to ensure that groundwater resources are not over-exploited in anytubewell area. Since the ongoing projects are relatively small in size(average of 2,000 ha) and include areas, part of which is irrigated and theremaining is rainfed, no issues related to land clearing and resettlement ofpopulation would be encountered. The implementation of the project would notinvolve an increase in the use of agrochemicals, and the Government has takensteps to promote the integrated pest management approach and to allow onlysoft or degradable pesticides into the country. GOI environmental policystipulates that environmental impact studies should be undertaken for projectswhere environmental aspects need to be assessed (para. 2.35(c)). Assuranceswere obtained at negotiations that public health authorities, with thecooperation of each Provincial Irrigation Service, would take appropriatemeasures for malaria control (para. 7.1(e)) as the irrigation and croppingpatterns intensify, since some of the vectors are present and there is some

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incidence of malaria in the project areas. GOI's ongoing malaria controlprogram would follow an approach which integrates nonchemical and chemicalmethods, and minimizes the environmental and health impacts of chemical use.

J. Role of Women

2.49 The role of women is important in irrigated agriculture,particularly in rice transplanting, crop harvesting and drying operations.Water collection for household use is also undertaken by women. The householduses of irrigation water would be taken into account, particularly indesigning the groundwater component of the project. In the case of both theturnover of small schemes to WUAs, and the strengthening of the WUAs, anactive participation of women would be supported. Similarly, the trainingcomponent of the project would focus on upgrading the skills of women,particularly in the O&M procedures and guidelines. Data collection andanalysis for the purposes of monitoring and evaluation would focus ondisaggregated (by gender) breakdown of employment benefits that are generatedby the project. This information would include different employment optionsfor men and women, wage rates and training requirements. The participation ofwomen in WUAs and in training programs would also be monitored and evaluated.

III. PROJECT IMPLEMENTATION

A. Organization and Management

National LevelOrganization and Management

3.1 DGWRD, through its Directorates and each PRIS would be responsiblefor project implementation. Overall coordination ai.d review of projectimplementation would be provided by a Project Coordinating Unit, under theAssistant Director General, DGWRD, who would be designated ProjectCoordinator, and assisted by three internationally recruited consultants withexperience in O&M, design, and planning and budgeting, respectively, and onelocal consultant. Each international consultant would have a localcounterpart from DGWRD's staff. This group would advise and assist DCWRD inoverall planning and programming, standardizing O&M procedures, review of on-going projects, and prequalification, selecEion and supervision of the work oflocal sub-contractors who will prepare the designs and tender documents. Itsoverall responsibilities would include supervision of project implementation,and monitoring of all procurement actions.

3.2 The main executing bodies within DGWRD would be DOI-I, DOI-II, DOS,Directorate of Rivers (DOR) and BDP. The designated staff from each of theDirectorates would meet regularly with the Project Coordinating Unit, toinform the Unit of the progress made in project implementation, and theproblems if any that need to be resolved. Such meetings would also bringabout the coordination needed between the various Directorates. DOI-I wouldprovide technical guidance and administrative support to the PRIS for the

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implementation of special maintenance and efficient O&M of irrigation areas.It would also be responsible for the completion of ongoing projects, andtogether with PRIS implement on-the-job training of main systems O&M staff.

3.3 DOI-I1 through its subdirectorate of groundwater development wouldimplement the groundwater component. The East Java and Sulawesi g;.undwatercomponent would be implemented through the subdirectorate's existing officesat Surabaya, Madiun, Kederi, Jember, Sampean Baru, Ujung, Pandang and Palu.The East Java groundwater project office in Surabaya would have overallmanagement responsibilities. The Lombok groundwater component would beimplemented through subdirectorate's existing office in Mataram, which wasestablished during the investigatio.' phase of the project. DOI-II would alsobe responsible for the training on tertiary systems O&M and on-farm watermanagement for the middle and lower level administrative officials, staff ofagricultural and irrigation services, and members of the IrrigationCommittees, as well as the key members of WUAs. It would closely coordinatethese activities with the Directorate of Food Crops Agriculture (DGFCA).

3.4 DOS would have the overall responsibility for implementing theswamps component (ongoing projects and special maintenance works) of theproject, including on-the-job training of middle and lower level swamps O&'istaff. However, the provincial organizations would assume full responsibilityfor efficient O&M of infrastructure, i.e. drainage canals, embankments, dikes,roads, water control structures, bridges and jetties. The organizationalstructure for O&M would be on a district basis, with centralized managementand administration at the provincial level. Similarly, DOR would have overallresponsibility for implementing all river-related components of the project.

3.5 BDP would coordinate the planning of all training activities carriedout by DGWRD. Chart 2 presents the organizational arrangements for theimplementation of training activities under the project. BDP would alsomonitor and evaluate all training programs, conduct short training courses forthe provincial O&M staff, and administer the in-country and overseas degree-oriented training programs. BDP would establish a data bank of the needs,availability, and completion of training programs for PRIS. It would alsoliaise with DAAD and the Directorate of IPEDA/PBB in matters involvingprogramming of training activities and joint use of facilities for training,such as the agricultural training centers, rural extension centers, andPUSDIKLAT regional training centers.

3.6 MOAp through DAAD, would be the executing agency for training theaction groups and the middle and lower level staff on WUA organization anddevelopment. It would also coordinate the surveys, and conduct an inventoryand evaluation of WUAs. It would, in coordination with MHA, have overallresponsibility for organizing, reorganizing and developing WUAs.

3.7 The Directorate General of Taxation, through its Directorate ofProperty Tax (IPEDA/PBB), within the MOF would be responsible for the mapping,reclassification and reassessment activities related to PBB, including thetraining of personnel. While the reclassification would be carried out by theIPEDA/PBB Directorate personnel (from the regional inspection offices), theinventory of land holdings and land holders would be carried out through

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contract work by mapping contractors. Current PBB staff are handling similaractivities for the ongoing Bank-financed Kedung Ombo Dam, West Tarum Canal,and Central and West Java Irrigation Projects. At the national level, acoordination committee established under the Central and West Java IrrigationProject (Ln 2649-IND) would also be responsible for the coordination of allPBB-related activities under the project. The committee is chaired by theDirector of IPEDA/PBB with members representing DOI-I and DOI-II of DGWRD, andDGFCA.

3.8 The BAPPENAS would coordinate monitoring and reporting progress onthe Policy Statement and Action Plan through the coordination at thedirectorate or equivalent level of DGWRD, DGFCA, Directorate of IPEDA/PBB,Directorate General of Public Affairs of Ministry of Home Affair., and otherrelevant agencies when required. This inter-agency group, which has alreadybeen established, in addition to providing overall policy guidance andcoordination would also be respcnsible for the supervision of the investmentstrategy study and the institutional strengthening study (para. 2.35). Thisgroup would meet at least once in every three months to evaluate the progress,and resolve problems if any.

Provincial and Field Level Organization and Management

3.9 Chart 1 presents the proposed organizational chart for the projectcomponents which would be integrated into the activities of the provincialorganizations. For each province, the PRIS would establish a projectmanagement and implementation unit. The unit would have the PRIS chief as theproject manager, and its own support staff.

3.10 At the provincial level, the BAPPEDAS would coordinate projectimplementation monitoring and progress, through coordination of PRIS, DIPERTAand field inspection offices of IPEDA. This provincial level group wouldreceive technical guidance from the inter-agency group at the national level,as well as from the consultants of the agencies concerned.

3.11 At the district level, the coordination and overseeing of projectimplementation would be through the district Irrigation Committee, which isrepresented by cabang dinas irrigation, kabupaten agricultural service andother related services, and headed by Bupati. The Bupati, as chairman of thiscommittee, would get technical guidance from the provincial level projectimplementation units, and the district services of the concerned agencies.Under the guidance of the district level Irrigation Committee, a projectimplementation unit would be established in each of the pilot areas forirrigation service fee. This unit would be assisted by consultants, who wouldcarry out socio-economic surveys, formulate implementation plans, analyzeresults, and make recommendations on ISF. In addition, a WUA at the districtlevel would be created in the pilot areas to assist in the assessment andcollection of ISF, and system-wide O&M planning and implementation.

3.12 Assurances were obtained during negotiations that the aboveorganizational arrangements for project implementation at national andprovincial levels would be maintained and strengthened (para. 7.1 (f)). Theseand the district level organizational arrangements would be in place tofacilitate timely project implementation.

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B. O&M Funding

3.13 Under the project, the budget for efficient O&M would be built upevery year on the basis of agreed guidelines and actual needs as determinedsection by section of the provincial irrigation department. The budgets forefficient O&M would be developed on the basis of actual needs at each cabangdinas level. The budgetary procedures and accounts of O&M would be simplifiedno later than June 30, 1988, with the aim of: (a) rationalizing differentchannels of funding; (b) conforming to needs-based allocations; and(c) expediting releases. This new system of procedures for O&M programmingand budget planning would be implemented from FY1989/90 onwards. Theconsultant teams attached to the PRIS and the districts or sections wouldassist in the preparation of annual budgets needed for efficient O&M, and theO&M/planning and budgeting experts attached to the Project Coordinating Unit(within DGWRD) would assist with setting up new procedures for O&M programmingand budget planning.

3414 Annex 5, Tables 4, 5 and 7 illustrate how Bank funding forincremental O&M expenditures would be phased out, with GOI being expected toincrease its contributions correspondingly. These projections asqume that GOIwould introduce direct cost recovery from beneficiaries to enable theGovernment to introduce and sustain efficient O&M on the entire public sectorirrigation network. As a condition of continued loan disbursements, GOI wouldmake annual budgetary allocations (for fiscal years 1987/88, 1988/89, 1989/90and 1990/91), which at least maintain the fiscal year 1986/87 level of totalcountry-wide irrigation O&M financing under the Central Government budget(APBN and APBD) in real terms, furnish evidence that satisfactory actualexpenditures for country-wide O&M were made during the previous fiscal year,and provide a progressively larger share of incremental financing for effi-cient O&M (in each of the fiscal years 1988/89, 1989/90 and 1990/91)(para. 7.2(b)). GOI has already furnished the Bank with evidence that the1987/88 budget maintains the 1986/87 budget level for O&M in real terms forthe entire irrigated area in Indonesia.

C. Accounts and Audits

3.15 Detailed accounts and records would be kept by DGWRD, the PBBDirectorate and each Provincial Irrigation Service for each budget item bybudget year. Each accounting section is headed by a certified publicaccountant who reports monthly on budget and financial status. Internal auditsections are responsible for visiting project sites quarterly and examininglocal accounting records. Accounting procedures currently in use are adequateto support SOE applications. Final accounts, including balance sheets andconsolidated receipts and expenditure statements, are prepared at year end tomeet Bank requirements. Project accounts are subject to two audits: (a) bythe Inspector General of the concerned ministry; and (b) by the Financial andDevelopment Supervisory Board (BPKP). The work of both auditors has beenfound to be generally satisfactory on Bank-assisted irrigation projects.Adequate and separate accounts would be maintained for the project; allproject-related contracts, documents related to statements of expenditure, andorders and receipts would be kept for at 'east one year after the Bank has

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received the audit report for the fiscal year in which the last withdrawalfrom the Special Account was made; and independent audits of each year'saccounts, incl.ding audits of SOEs, would be submitted to the Bank within ninemonths of the close of each GOI fiscal year.

D. Monitoring and Evaluation

3.16 The following agencies would be responsible for monitoring andevaluation: physical and financial progress (Level A of M&E) would becoordinated by INTAL, the Secretariat to the Director General of DGWRD. INTALdoes this by sending standard questionnaires to all PRIS concerned. Theprovincial or project officials concerned would complete the forms with thehelp o: their consultants. Socio-economic impacts, crop incomes and margins,crop production and support services and water management practices (Levels BC, D and E) would be monitored by DGWRD's Directorate of Planning andProgramming, based on methods and criteria previously agreed with the Bank.The M&E of water management practices would, however, be modified to includecriteria such as water use efficiencies and field staff understanding ofnormal O&M procedures, such as operation of gates, estimation of inflows andwater charges, and maintenance of canal specifications. The physical impactsof the project on O&M, such as percentage of the water demand that was met,fluctuations in water use efficiencies and farmers' contributions (in cash orlabor) to tertiary systems management would also be monitored. The criteriafor e aluating these physical or real impacts on the O&M of sample systemswould be developed in consultation among concerned agencies, PRIS staff andconsultants.

3.17 There is a continuing program of strengthening the M&E capability ofthe DPP. Most of its staff have been trained and M&E implementation systemsdeveloped. The concerned PRIS staff would obtain technical guidance from DPPand the consultants (para. 2.33) in implementing the M&E activities.

3.18 In the case of the groundwater component, a sub-directorate withinDGWRD (P2AT), with assistance from DPP in DGWRD, would expand the existingmonitoring and evaluation (M&E) activities with the objective of carrying outbaseline studies in each group of typical tubewell systems to enable projectimpact to be evaluated. This work would be undertaken in stages. First, aninitial baseline study of the present situation would be made for selectedsample areas to be developed for each type of technology undir the project.Second, the same areas would then be monitored on a regular and routine basisby the M&E staff. The data would be collected on geological survey and pumpcosts, as wells are constructed, followed by data collection on water qualityand well performance once the systems become operational. Finally, 3-5 rearsafter the installation of the sample tubewell systems, the initial baselinesurvey would be repeated to evaluate the impact. The data resulting fromagro-socio-economic surveys carried out during the investigation phase of theLombok subproject would be used as benchmarks for assessing the impact of theproject. ,

3.19 Training. To overcome the present constraint of lack of follow-uptraining and an evaluation of the impact of training, BDP would evaluate thetraining programs. The evaluation of O&M training would entail assessments of

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the individual or collective impacts on the efficiency of irrigation O&M inselected sample systems, as well as feedback from interviews and question-naires. The BDP would coordinate its M&E activities closely with the DPP.The implementation of the training in M&E would be done by BDP in coordinationwith other directorates and PRIS concerned.

3.20 The M&E reports would be submitted to the Bank by December 31, 1988,December 31, 1989, and December 31, 1990, and a Project Completion Reportsubmitted no later than September 30, 1991. These reports would focus on:(a) physical and financial summary indicators measuring performance againstagreed targets, including expenditures on efficient maintenance, and operatingand water management standards; (b) impact upon project beneficiaries throughindicators such as cropping intensity, crop yields and net farm income; and(c) impact of training provided under the project, including training for thestrengthening of WUAs.

Management Information System (MIS)

3.21 The requirements for improving the existing MIS are mostly coveredby ongoing foreign assisted projects. For DGWRD, funds amounting to aboutUS$1 million have been earmarked for che acquisition of a central computer,software and operating costs under the ongoing Bank-assisted Irrigation XVIProject. These funds would enable INTAL to install at least two on-lineterminals in all the DGWRD Directorates. The improved MIS would assist inmeeting the word processing requirements of DGWRD, monitoring of physical andfinancial progress of ongoing projects, data banking on manpower developmentand training needs, inventories of irrigation systems and facilities, andplanning and programming of DGWRD projects.

3.22 DOI-I at present has considerable computational facilities. It iscurrently computerizing irrigation system inventories for the entirecountry. Micro-computers would be provided under the project to meet themonitoring and evaluation and management information systems' needs for O&M atthe PRIS level (para. 2.33).

3.23 The improved M&E and MIS systems would be implemented by PRUS,assisted by DGWRD, from December 31, 1989 onward.

IV. CROPPING PATTERNS, YIELDS AND PRODUCTION

A. Present and Future Cropping Patterns

4.1 Annex 7, Table 1 presents yields for major crops in the projectareas. Total crop areas, crop intensities, yields and production for thepresent (without project) and the future (with project) situations have beenestimated for the different project components (Annex 7, Table 2). Futurecropping patterns with the project for surface irrigation and swamps (whichare already irrigated and only need mainter.ance) would not change, andcropping intensity would remain at 175% and 150%, respectively. For ongoingprojects, the cropping pattern would include increased secondary foods crops,

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and cropping intensity would increase from the present 125% to 175% at fulldevelopment. The cropping intensity in the future for groundwater areas wouldon the average increase from about 120% to 285%. These increased croppingintensities would be possible because of increased extension efforts, betteruse of inputs, improved cultural practices, and availablility of irrigationwater for growing crops, mainly secondary food crops during the dry season.Some farmers also tend to grow a second rice crop depending on wateravailability and market conditions. With GOI's thrust toward cropdiversification, farmers are expected to respond to market signals and producemore horticultural and secondary food crops.

B, Yields, Production and Markets

4.2 Crop production intensification methods with the use of HYVs andfertilizer inputs are well established in the project area, and farm surveysindicate that improved technology has been adopted on more than 90% of thearea planted with rice in Java. The present 1985 average yield of irrigatedHYV rice in Indonesia is 4 t/ha (dry unhusked rice), while the average yieldfor the project area is 4.5 t/ha for irrigated areas in Java, 3.7 t/ha in theOuter Islands and 2.5 t/ha for rainfed rice. The project would increase theaverage yields of irrigated HYV rice to 5 t/ha at full development, which hasbeen achieved under similar irrigated conditions in the country. The yieldsof palawija crops under irrigated conditions (using ,roundwater) wouldincrease significantly by full development: ground-iuts from 0.8 to 1.5 t/ha,maize from 1,2 to 3.3 t/ha, and soybean from 0.8 to 1.2 t/ha. Similarly,under swamps and surface irrigation, yields of soybeans would increase from0.8 t/ha to 1 and 1.2 t/ha respectively, while maize yields would increasefrom 1.4 t/ha to 2 and 3 t/ha, respectively. Such yield increases arefeasible in view of improved O&M which would ensure more adequate availabilityof water and a more efficient application of farm inputs. The main benefit ofthe groundwater component (in Madiun area) would be the inclusion of a secondrice crop by some farmers and the increase in secondary food crops as a directresult of increased dry season water supplies. Progressive farmers are alsoexpected to grow some horticultural crops (e.g., citrus, onions, garlic andpotato), where markets are available. Yield improvements for rice andpalawija crops occur because of the interaction of several factors such asbetter extension, improved seeds, and the provision of a reliable and timelysupply of adequate irrigation water. The latter is critical because itreduces the risk of crop failuress and induces the farmer to apply esentialinputs. Seeds, fertilizer and pesticides are readily available in the projectareas, and no supply constraint is expected under the project. Activitiesunder the ongoing Bank-assisted National Agricultural Extension II and III andSeeds II Projects (Cr. 996, Ln. 2748 and Ln. 2066-IND) within the project areawould provide the necessary linkages.

4.3 The estimated annual incremental production generated by the projectat full development is given in para. 6.1. Details are given in Annex 7,Table 3. About 90% of the marketable surplus of rice in the project area issold by farmers as paddy to private traders or millers. The numerous privatetraders operating in villages in the area provide competition and offerservices such as collection and drying of produce. Milling capacity isexpected to be adequate for incremental rice production under the project.

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Marketing of palawija crops is handled almost entirely by private traders, andwell established marketing channels exist, especially for soybean, maize andgroundnuts. Sale prices for seed cotton are fixed by PTP XXVII which collectsall produce and extends credit to the farmers.

V. PRICES, FARM INCOMES AND RECOVERY OF PROJECT COSTS

A. Prices

5.1 Economic prices for major agricultural inputs and outputs arepresented in Annex 9, Table 1. Farm inputs and outputs have been valued inconstant 1987 prices. For the economic analysis, with the exception of someconstruction costs and all labor and internal transportation costs (whereconversion factors have been used), all inputs and outputs are priced astradables based on their border equivalent values, with adjustment for qualitydifferentials and transportation as appropriate. Economic prices for paddy,maize, groundnut, soyabeans, urea and triple superphosphate are based on theBank's Commodities and Export Projections Division forecasts made in January 1987.Financial analysis has been done for the groundwater component of theproject. The financial rates of return for the three groundwater modelsare: Lombok 18Z. Madiun and Surabaya 15%, and Sampean Baru 11%. Financialprices for all commodities (Annex 9, Table 2) are based on the farm surveysconducted by the M&E unit within DGWRD, and have been adjusted as necessary tothe farmgate prices observed during appraisal.

B. Farm Incomes and Payment Capacity

5.2 Farm incomes in the irrigated areas, where paddy is the dominantcrop, often planted in two seasons and sometimes even the third season, arelargely determined by the farmgate price of rice relative to input costs. In1986/87 when production of rice exceeded domestic demand, the Governmentenforced support prices rigorously by assigning greater weightage to theimpurity and moisture content, which allowed farmgate prices to fall below thesupport level.

5.3 The payment capacity of irrigation beneficiaries has been tested bythe preparation of farm models representative of conditions within Java andoutside Java for 3 size groups (Annex 8, Tables 1 and 2). Farm holdings of1 ha, 0.5 ha and 0.33 ha were tested in Java, and holdings of 1.5 ha, 1.0 haand 0.5 ha outside Java. The farm costs and returns were estimated at currentfarmgate prices for these farm size holdings. In Java, the 1 ha size farmwould produce enough income to provide for the family's living costs and havesufficient savings to pay additional O&M costs. The same situation existsoutside Java. Farmers with less than 1 ha earning extra income from off-farmwork would have sufficient income to maintain a minimum standard of living andhave savings to cover an irrigation service fee. In the farm models, theminimum living cost assumed for a farm family is Rp 50,000 per month, orRp 600,000 per year.

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5.4 Another set of farm models was prepared to show the effect on netincomes, if farmers were to receive prices at government support levels(Annex 8, Tables 3 and 4). If farmers could be guaranteed the full governmentsupport level of prices, their net farm incomes would be improved as follows:

Table 5.1: NET FARM INCOMES(Rp '000)

Price Basis Farms by Size in Java1 ha 0.5 ha 0.33 ha

Living costs and otherobligatory outgoings 751 686 664

Net farm income at currentfarmgate prices 985 526 369

Net savings 234 -160 -295Net farm income at governmentsupport prices 1,561 814 559

Net savings 810 128 -105

Farms by Size Outside Java1.5 ha 1 ha 0.5 ha

Living costs and otherobligatory outgoings 815 748 685

Net farm income at currentfarmgate prices 1,371 914 487

Net savings 556 166 -198Net farm income at governmentsupport prices 1,622 1,081 571

Net savings 807 333 -114

5.5 As can be seen from the above, farmers with less than 1 ha wouldacquire payment capacity by working off-farm to help defray their minimumliving costs. If farmgate rice prices could be raised to the government pricesupport levels, it would enable the farmer with a 0.5 ha holding in Java tomeet minimum living costs and taxes and other obligatory expenses and have aslight surplus of earnings to pay irrigation service fees. The farmer with0.33 ha farm in Java and 0.5 ha farm outside Java would, with governmentsupport prices, be able to maintain minimum living standards and have asurplus to pay for O&M costs if his farm income is supplemented with off-farmearnings (Annex 8, Tables 3 and 4).

C. Cost Recovery and Operations and Maintenance Funding

5.6 The Government's objective is to completely eliminate centralgovernment subsidies for O&M within a 15-year period. To do this, thegovernment should recover all the O&M costs through a water user's fee.

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However, to assess possible future sources of funding and in view of theoverall payment capacity of farmers which is still to be assessed in each ofthe pilot areas for irrigation service fee, the potential PBB revenue has beenincluded in the projections.

5.7 Actual details on levels of irrigation service fees and mechanismsfor collection would be worked out in the pilot areas. The projections onpossible funding sources (Annex 5, Table 7) are based on rough assumptions toarrive at some broad indicative apportionment of O&M costs to the provincialgovernments and the beneficiaries. These projections are in constant 1987prices.

5.8 At the start, the Government is faced with O&M on 4.8 million ha ofirrigated lands and 600,000 ha of reclaimed swamp lands. This area would begradually reduced by the turnover of the smaller irrigation systems to waterusers' associations. In the projections, it is assumed that 900,000 ha wouldbe turned over to WUAs by the end of the 12th year. By the 15th year, theproposed irrigation service fee (even based on conservative estimates) couldproduce an annual revenue of Rp 45 billion. The underlying assumption is thatonly as areas are brought under efficient O&M, would they be considered forlevying irrigation service fee.

5.9 The projected phasing-out of APBD and APBN subsidies and thecombined increased funding of O&M from PBB and an irrigation service fee isgiven in Annex 5, Table 7. As will be noted, it is expected that only DIKfunding would continue for salaries and related cost of personnel engaged inO&M operations in the amount of Rp 5 to 6 billion, and the APBD and APBNsubsidies would be reduced to zero by the 15th year. Additional funding fromthe irrigation service fee (Rp 45 billion) and possibly from PBB (Rp 40billion) at 1987 constant prices could be in the order of Rp 85 billion peryear, covering almost the entire funding requirements for efficient O&M on allthe irrigated areas by the 15th year.

D. Cost Recovery Indices

5.10 Cost recovery indices have been adapted to the objectives of theirrigation subsector project, which are primarily to improve the presentinadequate standards of O&M to efficient levels, and to recover these O&Mcosts for the main and secondary systems from the ultimate beneficiaries viathe irrigation service fee. Consequently, the indices are estimated to showthe extent to which an irrigation service fee limited to only Rp 10,000 per hawould recover the efficient O&M costs, and an index showing the extent towhich this minimum service fee plus any reasonable allocation of PBB for O&Mexpenditures would recover the cost of efficient O&M and the investment costof special maintenance. The relevant data are given below.

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Table 5.2: COST RECOVERY INDICESBased on Discounted per ha Values (10X) over Project Life

(Rp '000 per ha)

For Efficient O&M

Project costs for efficient O&M 93.88Project chargesService fees 65.41PBB share allocation 29.57Total 94.98

Direct cost recovery index (X) 101

For Special Maintenance and Efficient O&M

Costs for special maintenance and efficient O&M 219.34Project chargesService fee 65.41PBB share allocation 29.57Total 94.98

Direct cost recovery index (M) 43

5.11 As will be noted, the limited irrigation service fee alone wouldrecover 70% of the cost of efficient O&M. The service fee and the projectedshare of PBB would recover 101% of the cost of efficient O&M and 43% ofproject expenditures for special maintenance and efficient O&M. Over time, asthe appropriate levels of irrigation service fee are determined, and theinstitutional mechanisms for its collection developed, nearly 100% of O&Mcosts could be recovered by irrigation service fee.

VI. BENEFITS, ECONOMIC JUSTIFICATION AND RISKS

A. Benefits and Beneficiaries

6.1 The proposed project complements previous Bank support to waterresources development in several provinces. Investments aimed at expeditingthe completion of high priority ongoing projects and improving the efficiencyof O&M of existing facilities would have high economic returns, given that aconsiderable part of the investment cost has already been sunk. In addition,policy reforms introduced under the project, including improved O&M fundingand cost recovery from beneficiaries, strengthening of provincial irrigationservices, improving their coordination with agricultural and local governmentservices, and development of staff skills, should lead to better resourcemobilization and utilization, improved efficiency in selection, design and

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construction of irrigation systems, and improved operation and maintenance tothe farm level. Major quantifiable benefits and beneficiaries are summarizedin Table 6.1 below. At full development an incremental quantity of about650,000 tons of paddy, about 140,000 tons of maize, 100,000 tons of soyabeans,20,000 tons of groundnuts and 385 tons of cotton would be produced annually.About 1.6 million rural families would benefit directly from the project,about half of whom have current incomes below the absolute poverty line, andan equi ')lent of 0.5 million full-time farm jobs would be created as a resultof crop intensification.

Table 6.1: SUMMARY OF MAJOR BENEFITS AND BENEFICIARIES

Benefits/Beneficiaries Incremental production (in tons)

Production (in tons)Paddy 653,068Maize 143,595Soyabeans 106,331Croundnuts 21,189Cotton 387

Number of Farms inProject Area 1,582,000

Employment (million man-days) 135

B. Economic Analysis

Benefit and Cost Streams

6.2 Economic evaluation of the project has been carried out using bothinternal Economic Rate of Return and Net Present Value (NPV) estimations. Thederivation of economic prices is contained in Annex 9, Table 1. Analyses of atypical ongoing project, and of the economic effects of special maintenanceand efficient O&M for irrigation and swamps (in Java and outside Java-essentially using different economic price of labor), and of the groundwatercomponent have been made. Economic analysis of the effects of improvement ofsmall river mouths, to be carried out on a pilot basis, has not been madebecause of insufficient data particularly on the quantification of benefits.Agricultural benefits resulting from special maintenance and improved OEM havebeen evaluated on a per hectare basis, taking into account increased riceyields and intensities and/or a prevention of decline in yields (with improvedwater distribution). Benefits from the institutional strengthening componentincluding technical assistance were not quantified directly, but would accrueto the project. Hence the cost of this component has been included in thetotal economic cost of the project. Costs quantified include all capital andoperating costs, excluding price contingencies and transfer payments such astaxes and subsidies, but including physical contingencies.

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6.3 A sensitivity analysis has also been undertaken to test the effectsof the decline in benefits, higher investment costs and delays inimplementation. This analysis has been done for individual project componentsand for the total project.

6.4 ERR and NPV for the project components and the total project,including the switching values on costs and benefits, are presented inTable 6.2. The aggregate ERR for the project, estimated at 21%, is robust.The project is relatively insensitive to cost overruns and to reduced benefitsfrom both lower production and rice prices. A 20% reduction in the benefitswould lower the ERR from 21% to 18%, and 40% cost overrun on all projectcomponents would lower the ERR to 17%. The project is sensitive to delays inimplementation: a two year de'ay in the project benefits would reduce the ERRto 17%.

6.5 Switching values were calculated for key parameters and indicatethat a decrease in benefits by 56%, and increase in investment costs by 177%,would reduce the ERR to 10% i.e. equal to the opportunity cost of capital.Based on two test cases, it is estimated that (a) if the projected rice priceduring the 1990-2000 period were to decline by 20%, the ERR would fall by fourpercentage points, and (b) if the recurrent O&M costs, in the case of ongoingprojects, were reduced by 50%, with a corresponding reduction in economiclife, the ERR would fall from 23% to 19%, and this combined with a two-yeardelay in implementation would result in an ERR of 14%.

Risks and Uncertainties

6.6 As discussed above, the project is not excessively sensitive tochange in the main variables and its overall risk level is acceptable.Several elements could, however, contribute to a lower than expected ERR forthe project. Among them, two can be controlled by the GOI and provincialirrigation services: the timeliness of construction, and adequate O&Mfunding. The risk of inadequate O&M funding has been gradually reduced in thelast three Bank irrigation loans to Indonesia (Lns. 2543, 2560-IND and 2649-IND)by financing the mapping and reclassification of the project areas in order toincrease the PBB collection, and by obtaining GOI agreement to allocate ashare of the incremental PBB revenues to the 0&M of main and secondarycanals. While the proposed project continues to support a detailed programfor land reclassification and valuation in the project areas to generateadditional revenues at the local level, it also requires the introduction ofan irrigation service fee, which would contribute towards O&M costs, and aturnover of small systems to WUAs which would also entail handing over of O&Mresponsibility to WUAs. Moreover, the GOI's Policy Statement and Action Planaimed at addressing the O&M problem of the existing infrastructure, for thefirst time on a country-wide basis, should help minimize the risks ofinadequate funding for O&M.

6.7 Delays in putting in place the organizational arrangements for theproject, inadequate staffing and delays in the award of consultant contracts,and thereby delays in training, constitute additional risks. These risks areexpected to be minimized by the steps already taken by the Government toappoint key consultants and to have the salient organizational arrangements

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Table 6.2: ECONOMIC RATE OF RETURN (ERR) AND SENSITIVITY ANALYSIS

ERR SwitchingBene- Investment values /c

NPV /a Base fits /b costs Lag Bene- Investment

Component (Rp bin) case -10% -20% +20% +40% 2 years fits costs

IrrigationSpecial maintenance andefficient O&M /dJava 285 31 29 27 28 26 23 -74 498

Outside Java 85 26 24 22 23 21 20 -66 333

SwampsSpecial maintenance andefficient O&M /e 19 20 19 17 18 17 16 -52 180

Typical Cngoing Project 83 23 21 19 20 18 17 -58 168

GroundwaterLombok 4 23 21 18 20 17 16 -43 124

Madiun, Surabaya 2 18 17 15 16 14 14 -40 93

Sampean Baru 3 22 20 17 19 16 16 -44 110

Overall ProjectCase A 481 27 25 23 24 22 20 -67 310

Case B /f 407 21 20 18 19 17 17 -56 177

/a Based on opportunity cost of capital of 10%.7b Benefits minus operating/production costs.7e Percentage change which reduces the NPV to zero.7T ERR for efficient O&M alone (i.e., without special maintenance) is 117% in Java and 90%

off-Java./e Assuming shadow wage rate of Rp 965/day in Java. ERR, if shadow wage rate is assumed to

be Rp 2,000/day (off-Java), is 13%. Since the labor is expected to migrate from Java to

outer islands, the ERR of 20% (as shown in the table) is included in the estimation ofoverall project ERR.

/f Includes costs of institutional strengthening and technical assistance.

- 56 -

for project implementation in place. More generally on the policy front, inlight of GOI's record in responsible economic management and demonstratedwillingness to carry out difficult reforms, the Policy Statement associatedwith the project is a sound basis to believe that GOI is fully committed tocarrying out the necessary steps to bring about the desired changes in thesubsector. However, there is still a risk that implementation of some of theshort-term measures incorporated in the Action Plan may be prolonged by thedifficulties of policy and institutional change which involve severaldifferent GOI ministries and organizations. The provision for substantialtechnical assistance, and the proposed long-term program approach, in view ofthe project being a 3-year time slice operation, should increase the chancesof success in implementing these reforms over a number of years.

VII, AGREEMENTS REACHED AND RECOMMENDATION

7.1 Assurances were obtained at negotiations from 00I that:

(a) the project would be implemented in accordance with the PolicyStatement and the Action Plan reviewed and agreed with the Bank(para 2.4);

(b) training programs would be carried out in accordance with thetimetable and terms of reference satisfactory to the Bank (para.2e27);

(c) consultants would be selected by January 31, 1988 (para. 2.34);

(d) the environmental impact studies would be completed by March 31,1990 (para. 2.35(c));

(e) appropriate measures for malaria control would be taken and thesemeasures would take environmental and health aspects intoconsideration (para. 2.48); and

(f) organizational arrangements for project implementation at nationaland provincial levels would be maintained and strengthened(para. 3.12).

7J2 As conditions of loan disbursement, GOI would take the followingactions:

(a) make arrangements to ensure the availability of financing forinstallation of the second package of materials and equipment forgroundwater tubewell systems to be procured in the third year of theproject (para. 2.42); and

(b) make annual budgetary allocations (for fiscal years 1987/88,1988/89, 1989/90 and 1990/91) which at least maintain the 1986/87level of total country-wide irrigation O&M financing under APBN andAPBD in real terms, furnish evidence that satisfactory actual

- 57 -

expenditures for country-wide O&M were made during the previousfiscal year, and provide a progressively larger share of incrementalfinancing for efficient O&M in each of the fiscal years 1988/89,1989/90 and 1990/91 (para. 3.14).

7.3 With the above agreements and assurances, the project would besuitable for a Bank loan of $234 million with a 20 year maturity at thestandard variable rate, including a grace period of 5 years. The Borrowerwould be the Republic of Indonesia.

- 58 - Annex IPage 1 of 12

GOVERNMENT OF INDONESIA

STATEMENT OF POLICIES FOR IRRIGATION OPERATION AND MAINTENANCE

I. BACKGROUND

1. Rice is the staple diet of the Indonesian population, and a largeproportion of the country's production of rice comes from irrigatedsawah areas. With a population growth rate of 2% per annum andincreasing per capita incomes, the demand for rice as a primary foodcrop is expected to rise in the future.

2. Concerted efforts have been made on a continuous basis from thebeginning of the first five year plan (Pelita I) to meet the increasingnational requirements of food. Since 1985, these efforts havedecreased the dependency on food crop imports, especially rice.

The nation's production of rice comes from 5 million hectares ofirrigated fields, which grow two crops per year on average, and from2 million hectares of rainfed land, on which rice is generally plantedonce each year.

The increase in production has been achieved as a result of investmentsin agriculture such as the adoption of modern varieties; use offertilizers; weed and pest control; adoption of appropriate croppingcalendars; and investments in irrigation such as rehabilitation ofexisting irrigation systems and construction of new schemes.

3. Water resources development by the Government especially in the fieldof irrigation, both new construction and rehabilitation, within thecontext of increasing food production, has already been carried outwith satisfactory results. Such investments have primarily beenfinanced from the Government's rupiah budget and foreign assistance.

The completion of construction is followed by the next stage ofmanagement and care of the irrigation systems through what is commonlyknown as operation and maintenance (O&M).

Operation consists of activities to optimize the utilization ofthe irrigation infrastructure.

Maintenance consists of activities to care for the infratructure,so that it can function as designed, thereby sustainingthe effectiveness of the irrigation systems.

Both activities should be carried out continuously, and supported by anadequate budget, skilled personnel, appropriate procedures for planningand implementation and proper facilities for their efficientimplementation, as well as to aim for increased quality of intensifiedagricultural food production.

- 59 - Annex IPage 2 of 12

Irrigation development during Pelitas I to IV concentrated onrehabilitation (repairs and improvements) of existing systems andconstruction of new schemes.

During this latter part of Pelita IV and approaching the beginning ofRepelita V, the time has come to give greater emphasis to O&Mactivities.

4. According to Water Law No. 11/1974, Section 12 and GovernmentRegulation (PP) No. 23/1982, Section 35, para. (2), the budget for O&Mof irrigation networks and related structures and facilities should beborne by the Provincial Government. These laws also set out theintention of asking beneficiary farmers to participate in O&M for mainsystems and have overall responsibility for tertiary systems.

Recognizing that Provincial Governments were still unable to providethe required budget for O&M, the Central Government has, since thefiscal year 1974/75 provided subsidies for irrigation O&M throughINPRES DATI I (APBD); since 1984/85 such subsidies have been increasedthrough project funding for O&M (APBN). Maintenance of O&M budgetlevels in the last two years, despite major cuts in total investmentexpenditures, reflects the Government's new policy approach andrecogn:.tion of the importance of O&M, and its commitment to increasedexpenditures on efficient and adequate levels of O&M in the future.Nevertheless, the average allocation per annum is well below actualrequirements.

The inadequate O&M Budget, personnel, equipment and facilities willlead to rapid deterioration of the condition of the irrigation systemsand affect their performance thus reducing food production, especiallyrice, and this is of increasing concern to the Government.

5. The problem which is now encountered is how to provide an adequate O&Mbudget in accordance with actual needs of each irrigation system; thiswill necessitate an increase in the budget to be provided for O&M.

It is necessary to mobilize new sources other than the present CentralGovernment allocation, in the efforts to increase the O&M budget andeventually to reduce dependence upon Central Government budgetarysupport, namely:

5.1 From Land and Building Tax (PBB)This may not be a dependable source, because the revenues from PBBare required for regional and local development, especially inDaerah Tingkat II (level of Kabupaten).

5.2 From the beneficiaries of irrigation development in the form of an"Irrigation Service Fee," which should be related to the qualityof service provided. The imposition of such a fee is in keepingwith Water Law No. 11/1974, Section 12 and Government RegulationNo. 23/1982, Section 35, para. (3). This is a more appropriateand dependable source since it will be collected solely formeeting the O&M budget.

Annex 1-60- Page 3 of 12

6. Besides mobilizing the sources mentioned in Section 5 above, especiallyfor smaller systems with an area of less than 500 ha, theresponsibility for O&M will be entrusted to the Water User'sAssociation.

This is possible, because there are already a large number of suchschemes managed by the villagers, designated as village irrigation orcommunal irrigation systems (INPRES 1/1969). In this way, theresponsibility assumed by the beneficiaries can be further developed,while reducing the number of schemes managed by the Government and moreattention can be paid to large and medium scale systems which cannot bemanaged by the beneficiaries.

7. The Government has formulated a set of policies which address sixfundamental issues related to the financing of O&M and otherexpenditure in the irrigation subsector, under the following topics:

1. Funding of Operation and Maintenance2. Cost Recovery3.. Irrigation Service Fee4. Institutional Development5. Programming and Budgeting for O&M6. Rationalization of Investment Expenditures

B. STATEMENT OF POLICIES

Policy 1: Funding of Operation and Maintenance

After completing irrigation systems, Government recognizes that inorder to realize the full potential of irrigation systems and tomaximize the contribution of existing investments to agriculturalproduction goals, future policy should ensure expenditure on O&M thatshould be applied in line with the actual needs of irrigation systems.

Objectives:

1,1 To provide adequate and timely funding of O&M on all governmentcontrolled schemes throughout Indonesia at a level sufficient toensure efficient O&M, and the introduction of efficient operationand maintenance on the entire Public Works irrigation systemwithin about 15 years. In order to accomplish this, the CentralGovernment will initiate a gradual increase in O&M funding throughmore allocation from the INPRES and DGWRD development budget.This increase in funding is required during the early years butwill decline as Provincial Government revenues and irrigationservice fees assume a larger percentage of the total O&M costs.

1.2 To establish an agreed mechanism for ensuring that ProvincialGovernments take a gradually increasing financial responsibilityfor the 0&M budget of main irrigation systems from their ownrevenuese

1.3 To ensure that adequate funding is applied in line with the actualneeds of the systems in areas which have already been upgraded and

- 61 - Annex 1Page 4 of 12

efficient O&M has been introduced, an increase of the presentlevels of O&M funding would be required. Also, that fundscurrently expended on areas on which efficient O&M has not beenintroduced will have their present allocations at least maintainedin real terms.

1.4 To give Water Users Association (WUAs) maximum responsibilitiesfor O&M, subject to the constraints imposed by their institutionalcapacities and the technical characteristics, size andadministrative boundaries in which irrigation systems are located.

1.5 Within about 15 years, to gradually turn over the Governmentirrigation systems of less than 500 ha each to the WUAs. As afirst step, over the period of Repelita V, most of the Governmentirrigation systems less than 150 ha in size would be turned overto WUAs. This figure is in line with the size of tertiary unitswhich, according to Government Regulation No. 23/1982, is nowlegally the responsibility of the WUAs.

Policy 2: Cost Recovery for Irrigation O&M

The Government policy is that the beneficiaries will eventually financeO&M costs of main irrigation systems.

Objectives:

2.1 To implement a cost recovery system which will eventually financeall costs of efficient O&M of irrigation systems through increasedcontributions from irrigation beneficiaries.

2.2 To improve indirect cost recovery and increase local governmentrevenue generation and their capacity for O&M funding, through along-term program to raise PBB revenues on irrigated areas in allprovinces.

2.3 To expedite the conversion of the Land Tax (IPEDA) system to thenew PBB system through reclassification and reassessment of themarket value of irrigated properties, and to ensure that thesystem is implemented effectively and yields the expectedrevenues.

Policy 3: Irrigation Service Fees

In order to directly recover the O&M costs from irrigationbeneficiaries in relation to the benefits they receive from a regularand assured supply of water, Government will extend the collection ofirrigation service fees from the beneficiaries in other areas after thePilot Scheme period. Since PBB may not be a dependable source, theimplementation of direct cost recovery system, which eventuallyfinances all costs of efficient O&M of irrigation systems, should applyirrigation service fee. These fees are expected to gradually reducethe need for Government funding subsidies and become the main source ofefficient O&M budget for main irrigation systems.

Annex 1-62 - Page 5 of 12

Objectives:

3.1 Starting from fiscal year 1988/1989, to introduce an irrigationservice fee (ISF) related to cropping patterns/systems in severalselected pilot scheme areas being taken up for efficient O&M. Theimplementation of the pilot scheme will also enable theestablishment and refinement of the necessary administrative andjudicial arrangements as well as institutional aspects, collectionmechanism and level of fees to be collected.

3.2 Based on the results of the pilot scheme, to gradually extend ISFto all provinces for irrigation systems where efficient O&M hasalready been introduced.

Policy 4: Institutional Development

Government recognizes the critical importance of effectively carryingout irrigation O&M, and will implement effective measures and reformsto strengthen O&M institutions at all levels. This will be done tocreate adequate institutional capacity for improving the performance ofthe existing irrigation infrastructure and efficient utilization ofincreased O&M allocations, in order to continue to provide adequateirrigation service and reliable water supplies to farmers.

Objectives:

4.1 To strengthen and where necessary to restructure theorganizational set-up of Provincial Irrigation Services (PRIS)dealing with O&M of irrigation systems, down to Ranting Dinas foruniformity, efficiency and effectiveness.

4.2 To clarify the roles and responsibilities of institutions dealingwith O&M by the end of fiscal year 1988/89. This would includethe redefinition of roles of DGWRD and PRIS in planning,organization, directing and controlling O&M activities, anddefining the organizational structure and staffing needs atvarious levels.

4.3 To design and implement a manpower development and trainingprogram for provincial O&M staff and other agencies' staff atvarious levels involved in implementing O&M policies and programs.It is anticipated that this activity will be implemented by theend of fiscal year 1989/90.

4.4 To strengthen the function of PRIS with regard to the managementof O&M through improved personnel management, and the developmentof appropriate management information systems (MIS) and monitoringand evaluation (M&E) systems.

4.5 To further develop and execute an integrated policy for thefunctioning and strengthening of WUAs following guidelinesestablished in INPRES No. 2/1984, and functioning of IrrigationCommittees in line with PP. No. 23/1982.

~ 63 Annex 1-63- Page 6 of 12

Policy 5: Budgeting and Programming for O&M

Government will simplify and rationalize the present budget mechanismsfor O&M funding by reducing the number of funding channels andimproving O&M budget planning administration.

Objectives:

5.1 To introduce improved systems and procedures for O&M programming,monitoring and budget planning, by simplifying the present systemof allocations through both INPRES DATI I and DGWRD developmentbudget, changing to a needs-based system of allocation of O&Mfunds.

5.2 To establish sound criteria and procedures for allocation andmonitoring of funds to meet the actual needs for O&M of eachirrigation system, starting at each Ranting Dinas level.

Policy 6: Rationalization of Investment Expenditures

Government will rationalize expenditure programs in the irrigationsubsector, and formulate and implement a more realistic irrigationinvestment strategy for Repelita V0

Objectives:

6.1 To improve project selection criteria to be used and review thetechnical and economic viability, in the assessment of the totalexisting and proposed irrigation investment programs, with a viewto rationalize investments.

6.2 To improve the formulation of priorities for irrigationinvestments and finalize preparation of a more realistic irriga-tion subsector strategy and investment program for Repelita V bythe end of fiscal year 1988/89, taking into account the likelyavailability of funds from different sources as well asimplementation capacity.

FTot t2

Metton P0*

?iletabatcgo. Policy title Policy atre .dlmt re= obj]cttis l.ttio Prtoposed By Say stap. (t00 PT) initottog ldtaotot

t. ftudtas of (a) Tutu.t oItcy to entire tt) Roaot that tha ftwling (I) Mitnuto 1986/817 lev1l tep..n. Prowioions ed* 87/88. kwdqat.vy *llocattorOperotton 4 404u*t* fouwinS tor tot Ol0 on all of 041 toodiog tn teat MA for 0O* fou4tolg *8/89. am roIe*$"

etoteconre etficient at" tn lIne dith tooertmn t cootrolted teto tot alL Wm. on *onal 89/9V *the aetutl ."d4 Of atch.ms to at a vtonoant cootrolled MY budgpta 90/91tttlatipo system sftfictent 11,t tin stha.a tram Intnn a

ttne glth act,-I otnds 0=x d4othlopinttor affictent0*9 *todgt oatavtFg PT11188

(it) tofu... tht la"l of ttp t. tProvtions _ad S R8 /89 8dgtary alloatton

0oa funoing froo thO mu for tos founding A9/90 * and tele.n.oattooal budget, NW to budptary 90/9l

ptotloniel teat. MT atlocAtionssodlor irtr4ittoncoto fesa t aor onon ohtih afftetat 0n91ts pro*vcactvol,inttodued

(b) turt ot ft aaoll orstai (C) cti. WAs _xsne (i) lowntory and *4*titton WV Ptcpst tOtt tot fnon Agreed TORto W A'. rcoronsbitltti.a tor of ceII Irtlaitoo mu Coouotiog

O*0, and ara4oalty toum systew wtth a actyic MU0 icroiccrvet omll Itig tton are. of lose tbe.cyitaca lea* than tS0 hb, *ntd cYt,t. Apwtnt_nt of 011/8500 ha to ater 'aost* oath a setovce *atr of Coneultonte,Associattos. toe less thae 100 ha. bIplxnt coo- 98/99.atr xoat trtigatioo tial olt.- 89/90ovatca. sarvnig laeos oAf,?I tn *e-than 110 ha to WUA,.* laicd cia?..ctthio lapaltta (pilot rat..)

as agtccdb.tva n Nd,

111* and N'o,,Ger-tnea,'to

Si.) *a eact cyct*l tor NM 88/Rt Stntco end detric, at..turnitng roa covr- MtA transfettrd. l.tgtt

tog at Itast MA1 aceoctettons of WA.10,400 ha *stabhtlehd

b. Catrry ot *patia WV 8tt/l9 Special m_nt. nob.asntotenoc eovh on coopletedselected syatam

c. todn WA'- and am Sr?tatg 688/89 No. of WA'a traondco ixunty orgfaoirc MA

MA

d. tu ovetr of smil Wu tutnt v_r 09/90 lgo. of WA'., "Stem andyastam 1aa than mu sotoia at.a to ba trta-

(up to) ISO ho A Cttednicoq,lct*d

(Itt) Inotmpl nt tosto r of WV P?I. end 89/90 Syatem and ctrvte *tes041 of irrigaticon a- WA sonttor tiople- tranctfterd. LartEN with tutra At. mu gest aton a*uoctations of WJ.of about 500 ha o0 2 astabitschdpilot eea

(tv) otltor cod evaloats WV ita n alectto, 09/90 RaCOmnodtioto torall Ptlot $cheas to MA awl pta tiou nationwide toplamotettiopooitda haes tot tA of a nationeldetvo.tet of tttigtiton prostr totS" taS, 1atgar than trotetg oatt150 ha aatm ad

eatvoae ata.larger than110 h

ffi~~~~~~~~~~~T tab4

go. oltto title Policy areas Idt-tere objOedtoc Action propMd my WbY OtY (002 IT) Critctortns tidIcetors

2. Cost i cotrty gor (a) oeflestcetote Wil1 (4) Etutblish tedrct C_t (U) iorov provincial lop eltd te - gvenasse1trrtptien fAN *osntocl ly fince alt ccosctt) y Olsten to o tteteo g*oteet- tMA rvnue.aA

coots of OmA of Metn tftn'eA tohr rearems through Coetvtborednl WtLrttgatloneysot ave SetSeartCtc broqb nld trw bettonerteto s

fros_ ot Crr4sd areas

(it) inpedit. coerseeon of (ii feecbop a pilot se) NOT prodection And 03154 A report indicattag theIptiA to the sn sI (1,000 ha) of SUreY solacgcine ot C1opitti(Cd proc*dnce ofa7stes chraon roist- 0.1 gepii fo ld and (dam- aootmsifiteeto Mod tees- registration itficetton Ofeseme of irrigated Plaot, hounMs-areas rtee aed Crete

(ii) tiproe revene Oetfos NMt VApptng, Te- 57/84 Aseae_nnct emomlted, aret"moce of no ttro*th classttteatin tt9/vO ceed, and revenueVcllSttctotto snd n Vd ftesse.- Increaees telh veerrAe _esomot ot Ott _nt of ahoutirripted eto" to 400nn ha oftodoests trr4tgted csre

by 14s9I90

(tti) tows tee eddttttr- lot Appoint too tee 04/P8 Adrsors appointedtion through comPotert- advisors en

cti od better reral noPttoceuSOs

(tv) ftAigt eed IteP_not 1W? training of at 8t/89 tNober of trdned * esorstrdntog Program for Icett t71 s*- p9/90 god tecticitens , tnechS) Stftt nd aemtors end vesr

tschotccaee techotiient

1. strsttoon cr Direcs t c -o*oso ot _A eoete (t) t_trodors cc icrigatioo (t) Select four Ptlot cres MA, NIV Agree in One- DOe Alinist riet Agrosmdtfees fre tirnigticn ohetefiiartee serICc fe for fAN in Soth flesi sod MA. otP cipet to ibe obtet1d

btsroochtretstton sevic foadieg to selected jays far destigocr tetrsdoctton offees 'Ohich gredoclit reduce erec being upgraded t trodetotis of irnige- co IS? en athe need for jie'eraet for efficiIent A& I, ted t too serci cc fees en e voehil forfunding Subeidies sod fisello soslosto the rueslie total of St leest fending eff i-.iii becoy the mi. sonrce of il.lOhe cisni fAN.

tffittent inK boet tor st. Prepere 105 cod 03/AS A"oointant otf teoltesteIrrcictton Statoe" oppott t0a&,l-

tents to intdyjsSie cOd So-

Sist to the i-ptemstettiq ofItS

WV. SA c eiV d retn d- /SR IAtectoe on chtt; e And-.-o op cropped in dif- sting autherity with_lret estem collection ogete of the

crop Oatld lo ocel govefesesto tm and Oe-

ippleetten.plans. teilectand trein per-

topiseinretion. 12/3A Collecion of then.. issocitocing and oeasrde pilot are"e

Prepare plan 01/Nf0 Agreed &edeisstrettve Andf or seteoeia, Judiciel sOreogeemai forof foo to other extenson to other creast

.. ~ ~ -4 . .............. . .. . . ...

IIo. Poltey TitIe Polity at" bdt-terst objoettrvo Aettin PoptOud by UV tops Tt.tobW montlotonto indtettor.(GOt t't)

(it) Grodoult .tt0td thb (0) I plemt wnsion MA.4 lUl sIeect Art. 1t2/00 Act" selectedIrrigation s*""ic too starting ho. MO/M 10. Mr tot atboslon onvordeto Irtrigted or.. to *od on * csn,trpvtd.*al provines., sod bWit by 1996/92? I^lw nt tsa t9s9/9t Coiloctios t c%armscos..qontlW r,'.dn Collection otCortrO Ia*nd rovlOtail irrigationGovetrmnt funding fr service fooirrigott io 0414 f hom kn.-

fictorie.

oteod on 1 t996191 Cotletttn of thartosnoItonoide

4. loasttotinnul (a) Strengthentnin 04 1n0itt- () DeCtin responsibtilttts (t) Carry nor ao ta ttu- VWl tpepare TO nd Ol/8R G.nSntt.nt ppointedOowls.enc tion. at all 10e1t. to of inoitutoton dealing tioal. trengtbhniog appoint Consul-

toProve usage ot irrtig- tith Otih btwonn DOM stUd to terift Vtl.. tints.tton *tnrt#traCtor* od 4od PMl (and tbair md responitblity of Coniult "I"Aofltint nttibsttnn Of lnak sIth 9RA &nd MA) Institutions daltnog OSIlAR sd MA0414 alitattoOs w11tth OM41 4nd to T*Vtow duting study.

and spetity otaffloag C0 etod stadv 10/89 Recomtondattons agreed bynd*l4 at 6ll lena). otlitrte. coocerned

(it) Implemaet re,- WV, lOla kgroa_nt by 12/09 Intordopt. 0 Itnstruettonn_ndactions MtEOW lotordopt.

FtDA

l550 in.tr e-tins

Uli) 1tt*nnthbn orgasino- (t) Vo6rmato no. orgt nw- tp, 'MA 0vt0 vOltlng 02/R9 AArod nev org.ntsottion*tionol setup at Pits at Lional otop to t tt8ttAII organizattonal torwl,tio

Il levels d4sulig with tO4uir.nts 5(A setop040 of trrtqitton

totem

(it) Dise.. at Prointnlol PPk, PC Rearting .th 08/90 Nt PITS organisattonIh.-I and obtain *P- FL Pronteetil .t.blitswd (P 0A)rroval tro& Provinctil LtgislatourstLOiOl.turs *n04 Isue on

tnstruet ton.

(tit) Fulfill dditional wrPv, KRA Frond1 *ddi- W0/89 6 Staff to plotestaftgng retqntesntos ban, tiontl ntting R9/90at distritt and lower- mop r*q4ir.nsntnlhql units (tecludino tofr IprovadPete nts and Juro.) PRtS portor-

so-ot tor otfi-

ciat A606.teIlodin real-

location of

otaff tot

DCv11 to PR15

"a me .s.r

(tit) Besns Ond tuplotnt a (t) Carr" ut a srt.v nn NhW Prop.? tOR for 11/5t TOM eo"PIetndonvomer d.veloornt _r_rows dealomant eonsulttetsVnd tratiIng progrst noodo for 01 at &11for 06t taift at o*11 PUS lbol Appoint Consul-(steln tsots to 2/SS Consultanto appointed

propirt rtetmsndation

Ag4red rtac-

asodat 10 Wa/88 fpleantation Of traintgs

ntordint Sote- progrs.

grated mnnpoetrdtv loppenc

AgeU IOtI- t Vaiiiii of 12

TI(:,*ball,go. Polit Trile Policy aras kdtui-tiar objectives Artloa prooed Bp say stops IOOl TV Ifonltorlng indicatore

(it) Oas. S taff cepabill- MOU, fA Prepare train- 04/O0 Areed ttatning curriculsttie of MIS In pian- IDA RSo currtculatog s4d Impleetnttonot 05ft, vlth training teplsesut,of at lest 3,000 monttor and 1988/8§- wubar of atolt triosd

iddle Rnd lfsoe-le"l *valuste 1949/t0field staff. and S00 trltnintStaff (at le"at 110trlnera, 225 all ieav1e.andeer, and 6'degree-level onglnsore)by 19g4/90. Trviningof snother 420 techit-cal high *chool lewlStaff (Ipngasats) nd1,02n sctlmo, ubse.etion and villag. levelstall, Traains of1,300 staff (roup Al,4,000n (roup 0), 8.600(Group C) and 360tn*truct"rs.

(itt) strengthenintl of *udio- NtW Procursesnt of 06/4/ Purchase of requiredvisual program to additt. 1 eqotpntsupport staff tratniag qui*.tf *,t

autarial *odOupplias

Tr4itnini of AV 0/SO9 !bnshr of trained stdflstaff

(tv) tWoVs personoal unwna- it) lov-lop psrsonnel wAn- D005D Prare TOR for Rose Agrood tORt_Sont and introdura agasest eyetwn to aup- rPS con nltaotsoproprst0 K6( snd RAE port 04K * provesotsystoan at PRIS Appoint ronsul- 06/8§ Pinn report and agreed

tants to na- recoond.tion. by O1lyne & provarar comondat tu.ne

TIptseat sn 03/v 0 Corner planing .stabitshadpersonnel nn- oneurds lot PitS 0414 sttff

ogeanot systet

(it) Carry ot survey on 1HiS Of Prpare TnOR for Done hgread TOPaod 49t noeds for 046m POs consulttntat PalS leval

Appoint consul- 0/S8 nPol report and reco_,trats to "ao- sndations aec ptad byIva 4 prepare 0050 mad PRUSrvco=undettone

lepleont 1IS 12/89 Taproved 3I6S end '64 atand gli syatens oaerds PMIS level.

-8 - $ of I

Itastabaf aNo. PolLty Titte litcy erye l1d1u ttre objectives Atto proposed or tey stes (Cot FT) t ottofvtg oditeatore

(itl) Lvaluaete ietlop led 1WV, KR3A tatbitoh 01/8S1 Ogred rtItertPerforwaca of et leat dnA fetlon grouPs10 eistting Alls cod erterIa

for ev*lugtion

Carrr tot 0418 Nuaber of VUlAn *valtad

(tv) Strengthen Irrigation 11W, '0l1 eteoitoh cork- 17)16 Avreed curricula *odComttees (fasl nd ItA tea group to coordtiation _echantamstoter-agency coordits- reet_ qatotInatien at arO toiat,l WPY? trattotgYAbopateo *nd taeCtafn programlevels through appro-pritst tratnoto pro-gro

fDplnusot 198lO/t9 Ober trtnod tn varousagreed trdnattg 109/v00 ajbuoates *nd KacceatanProgram tn atleast 10 pro-votcec for 20n

ct ton, GrUoecebeo cod_n0,000 SIPA ves-bert. fetch-lioh Hisblqtoordtost ton

(t) Str egthon at lacit 200 1W, tlOA totohItch cork- 12/87 AIreed recomodstoadeedttot Iin WAod c- m1m Ing grrup totabilsh nw SPA. as prepare trato-ro`cdir4d. with a sot- tIg ond axten-_ of 20 et"n prolr*s

taplawct, 1901t4 Iaber of VlAs estabtlshedmtittr aod 19S9/90 aod h bara tratiad

prograoc

". tigettcg D.i (a) ttaltttcatita rod rattoo- t) totroadkcton of ia- (t) Prepare atwltfted hod- IAPPVIAr atobti,tJop r,- 06nd 1 Arted recoamewlcttoasProgr.ammig for aleltioat of oarebejee proeed eyctasscod gattng arreoamwnotancd WA1, 1109 to group cod04 tor MIt uaFlttgtrogrn_ roerfor 0N fotlo, prasr- vroeadurcfr fil 0C-ounts of 0411, alfed IIW prepare rocea

cing aod budgat pinoS programig,a wattorton at rattionalizng dit- tndcttonecnd budget plensing, ferest channels ofchonsing to a tawde- tbodtice etaditaoghoSed *yete of ratisoo of funds. andatlocattoas contorato to Mde*-

bsed altorttoo

(it) islpecent ne $yetee SdPTIIiJ Prepare bkdget 1980/90 ippitcatton of sodfted6ad procedures for 066 MA, Ml' for 4b t bated opuar4e procedurespregrsavtog and btdget 417 on no *tapi-planitoo tied procedures

(tt) tbtbih dac ted onto- (t) Cloaetftcetton of Ogg DOW Cooplete t.wo- 0n/87 to d4red mpg "od tIveotoryrt od procedures for ced., bnoed or direct tory of ttrigs- 09/89olorattoon attitattton OAN cnd overhead cato, tton yttowcod onttorttg oet tufds or ath ttrtiatton for ofttktiotto "St ectI Made ,"tal Nrt on at leostfor 041 of trrtgetton 2S0.000 he byactns atd-19°2 and a

forther406,0o ha byaid-lP910

_~~~~~~~~~~~~~~~~~~~~~~nT yf of 1 2

. _ _ . .. . . _ . _ . ..-_ .._8 _ _1 _ _ 1.

no. Politcy fit. Poltr* Are& Nadiw-tots obje0tts action pteoced b nines (Got t) MonitortingI tAdte*to

4alyo. cost 01/0I Seeardod nl&N tost .0 aetrottore for onMwrda M*t/Is*tto bdot*, st.rt-rteuired 064 tt At marh "thmt askotnd prepa r lasat

budget roqstaetordtwly

teplount ra- 1980/49 Provist" of tfn0 oee2edc4mm_ndd am onamrd t,o ctAr 0o0t .fftelont 0)1costs for each

(ill) ProineLal romponst- (0) I0bnr of $v,op* prol- pr %wado4wer to be 191URI/I Ibudt And wtoft tronbtit,t for wome* 001 Otte bo4ed oert to ceplated for I pro%lnoneO (for projoect

pro,'tiotal atbortttts projto od honded over)eonced foranothsr proj0eto

6. RAt0o04i1attoo of (a) Ibttoonlt.attoo of (6) Xmrov, prTarlct .010- (t) Carry nat SO tovaotoeot SAP.la Appotnt cn00- 01/6t CowOultanto 0*1o0nt0dIOottweu0nt 6oPodttare progra and ction citteria tetov *xeondtturo t,otw 0nd Mrw tont0 wtthoxpenditoreo tmplemenoation of a Mor the ttbiltty of io- atroteoi stody. ahith Agreed tOb

r91i6tlth tn"o twnt vestdent prograe and tclu40 a 4#tw1Ie4stratogy for RIoeptta V rottonlitsm project As rayvto of il1 00ter- Couplte the 071811 a4re0d raCoV*Io tt-oo

"eoomary nail .0.o6t.d And COt- oto4fundod prolects (bothOSo0inS 0a proposed)

(ta) ltabish bLvestnot (2) ptparb strategy cod SAutfs n lot. rero* lOeA/S ProotF And tevs,teatprlorIttes and imple- *t tasst ptogro. by km. "W A anodntSons for attety for topeItto Vmnt a Mor re.Istic the .nd ot oga atote*e And preparedstrategy And iovet_nt l"oettotprogra for lpepit. V 0r101tr

(6ff) tIprove the priority (t) ReVI.. of lo,oot.et ApfOtq lhvata of so- 12114 List of priority proactsranking rIterit cod AM ado fo or otgolag tWv cl. *conodc eoaplat*d

t" ri plementatton *tche. *n4 priorttv And tecetmttlerhedule* for oo-goto* ronking for copletlo, vrlbtitty otprojectt high o*1torty

0on-SOhnsheh,

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Project Cost Summary (by Expenditure Categories)

Rp million US$ million % foreign % total

Local Foreign Total Local Foreign TotaI exchange base costs

Investment CostsCivil works 143,733.7 107,427.1 251,160.8 87.1 65.1 152.2 43 49

Equipment and supplies 14,591.7 13,156.4 27,748.0 8.8 8.0 16.8 47 5

ConsultantsForeign 4,386.7 28,939.7 33,326.4 2.7 17.5 20.2 87 6

Local 30,238.5 3,172.3 33,410.8 18.3 1.9 20.2 9 6

Subtotal consultants 34,625.2 32,112.0 66,737.2 21.0 19.5 40.4 48 13

Training 5,118.6 6,242.6 11,361.2 3.1 3.8 6.9 55 2

Studies and surveys 808.1 1,171.8 1,979.9 0.5 0.7 1.2 59 0

Administration 14,487.3 419.5 14,906.8 8.8 0.3 9.0 3 3

Vehicles 713.0 647.8 1,360.8 0.4 0.4 0.8 48 0

Land acquisition 9,054.0 - 9,054.0 5.5 - 5.5 - 2

Total Investment Costs 223,131.6 161,177.1 384,308.8 135.2 97.7 232.9 42 75

Recurrent CostsEstablishment costs 72,811.8 57,587.5 130,399.3 44.1 34.9 79.0 44 25

Total Recurrent Costs 72,811.8 57,587.5 130,399.3 44.1 34.9 79.0 44 25

Total Baseline Costs 295,943.4 218,764.6 514,708.0 179.4 132.6 311.9 43 100

Physical contingencies 25,728.3 20,489.5 46,217.8 15.6 12.4 28.0 44 9

Price contingencies 26,595.4 4,944.9 31,540.3 16.1 3.0 19.1 16 6

Total Project Costs 348,267.1 244,199.0 592,466.1 211.1 148.0 359.1 41 115

- 71 -ANNEX 2Table 2

INDONESIA

IRRIGATION SUBSECTOR PROJECT

GOI's Financing Plan (by Fiscal Year)(US$ million)

Expenditure items 1987/88 1988/89 1989/90 1990/91 Total

Recurrent O&M /a 13.5 27.3 28.1 14.3 83.2

Incremental O&M - 0.3 0.6 0.7 1.6

Land acquisition 0.6 2.0 2.4 1.0 6.0

Taxes and duties 1.4 5.4 7.9 3.8 18.5

Study (InvestmentStrategy) /b 0.2 0.2 - - 0.4

Total 15.7 35.2 39.0 19.8 109.7

/a 1986/87 levels of country-wide irrigation O&M expenditures to be main-tained in real terms. Figures for 1987/88 and 1990/91 given here are for6 months each. Minimum recurrent O&M budget allocations needed in theseyears would be $26.4 million and $30.0 million, respectively.

/b About US$400,000 is expected to be utilized from a USAID grant for finan-cing the local costs for carrying out this study.

INDONESIA

Irrigation Subsector Project

Ilplementation Schedule

Irrigation iorks

1586ie7 il Year 1 /2 Year 2 Year 3

JFNAMJJAS ONDJFtANJJAS ONDJFMAWJJ AS ONDJFAhJJ AS

Special Maintenance (ha)75,000

175,000

....... = -…2.=2=.

150,000

Efficient O&f (ha) ---- --------200,000

400,000

700,000

Small River Mouths (No.) ..'5)

On-going Projects (No.) . ---------…-…_…

(22)

Design ..... PrccuresentImplesentation

/1 Preparation Activities/2 Project Year 1 (October 1987 - Septeeber 1988)

I1DONESIA

Irrigation Subsector Project

Implementation Schedule

Irrigation Works

Design Procurement ImplementationExecuting Starting Completion Contract

Agency Activity Date Date Invitation Award Start Completion

PRIS Special Maintenance

75,000 ha 03/01/87 08/31/87 09/01/87 12/30/87 01115/88 06/31/88

175,000 ha 11/01/87 03/31/88 04/01/88 06115/88 07/01/88 03/31/89

150,000 ha 10/15/88 03/31/89 04/01/89 06/15/89 07/01/89 03/31/90

PRIS Efficient Operationand Maintenance

200,000 ha Being mostly repair work Work will be done 10/15/67 03/31/88very little design work either on force account

400,000 ha will be involved which basis or under petty 04/01/88 03/31/89will be handled by PRIS local contracts pro-

700,000 ha staff. cured as and when 04/01/89 03/31/90required.

DOR Small river mouths 06/01/87 08/31/87 09/01/87 12/30/87 04/01/88 03/31/90

PRIS and On-going projects 03/15/87 08/15/87 09/01/87 12/01/87 12/15/87 06/30/89DOR 1st package of

sixteen projects -V

PRIS and On-going projects 12/01/87 04/30/88 05/15/88 08/30/88 09/30/88 08/30/90 , "DOR 2nd package of 0 X

twenty two projects. m 03

1/ Two ongoing projects requiring ICB would have contracts awarded by July 1, 1988,and works completed by June 30, 1990.

- 74 - ANNEX 2

Table 4

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Swamps: Implementation Schedule(gross areas in ha)

Province Scheme Year 1 Year 2 Year 3 Total

Completion of Ongoing Projects

Lampung Mesuji Telang Bawang T 6,000 6,000Mesuji Telang Bawang II 6,400 6,400Mesuji Telang Bawang IV 3,800 3,800 7,600

North Sumatra Sei Kualsa 8,200 8,200

Total 6,400 9,800 12,000 28,200

Special Maintenance

Lampung Rawa Sragi 15,000 15,000South Sumatra Delta Saleh 6,800 11,800 18,600

Delta Upang !0,000 10,000Sugihan Kiri 16,000 16,000

South Kalimantan Seluang 3,500 3,500Balawang 5,700 5,700Muhuc F.C. 2,600 2,600Tabungan 5,200 5,200Puntik Terentang 3,200 3,200Puntik Denela Benar 2,900 2,900SeKalugah 3,400 3,400

North Sumatra Percut 2,100 2,100Sei Tuan 300 300Bandar Khalipah 650 650Scanggang 550 550Pulai Kampai 850 850

West Sumatra Lumang 4,500 4,500Lasi 500 500Silaut 5,000 5,000Anai _

Total 21,800 43,800 39,950 105,550

Efficient O&MSouth Sumatra Karang Agung I 9,000 9,000

Karang Agung II 5,000 5,000 10,000Delta Saleh 6,800 11,800 18,600Delta Upang 5,000 5,000

Lampung Rawa Sragi 15,000 15,000Mesuji-TB I 6,000 6,000Mesuji-TB IT 6,400 6,400

South Kalimantan Seluang 3,500 3,500Balawang 5,700 5,700

North Sumatra Percut 2,100 2,100West Sumatra Lasi 500 500

Silaut 5,000 5,000

Total 9,000 33,200 44,600 86,800

Cumulative 9,000 4'.,200 86,800

- 75 - ANNEX 2Table 5

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Schedule for Handing Over Swamps Projects to Provincial Organizations

Province Project Year 1 Year 2 Year 3

Lampung Rawa Sragi H85 -- …- PSMesuji TB II ST -------------------- PSMesuji TB I --------------------- PS

South Sumatra Karang Agung I ST -------------------- PSKarang Agung II ST ------------Delta Saleh ST --------------------…Delta Upang ST ------------

South Kalimantan Seluang ST ------… ----Belawang ST ------------

North Sumatra Percut ST ------------West Sumatra Lasi ST ------------

Silaut ST ------------

H85 - Handed over to Province in 1985ST - Start transition periodPS - Permanent Status. Budget and staff fron Province.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Selected Ongoing Projects for First-Year Impleimentation

CostsCivil Incre- (Rp mln, constant 1996)

Present Future Incremental works mental Vehi- Land Admin-irrigated irrigated irr4gated sunk civil Total cle and pur- istra-

Province Project Agency area (ha) area (ha) area (ha) cost works cost equip. chase tion

Aceh Alue Ubai DOI 1 2,641 2,785 144 1,219 3,020 4,239 127 72 95Irienggading DOI I 1,909 1,909 0 2,227 4,497 6,724 182 383 139Pandrah DOI 1 1,002 1,002 0 1,305 1,479 2,784 85 479 74

North Sumatra Wampu Rivez R /a DOR 0 1,398 1,398 39,840 3,168 43,008 40 1,674 285

Bengkulu Air Musi Kejalo DOI 1 236 1,180 944 2,346 3,488 5,834 58 0 28

South Sumatra Air Gegas I DOI 1 587 2,670 2,083 9,100 2,147 11,247 97 0 63

Lampung Tulong Mas DOT 1 0 3,200 3,200 2,068 9,041 11,109 235 392 195Way Curup I DOI 1 1,420 2,220 800 3,241 695 3,936 20 0 35Mesuji I, II & IIIA /b DOS 12,400 20,000 7,600 3,055 6,911 9,966 20 0 44

West Kalimantan Sanggau Ledo DOI 1 0 555 555 1,573 605 2,178 76 8 51

South Splawesi Sanrego DOI 1 0 6,394 6,394 14,530 9,015 23,545 412 484 380Pamukulu DOT 1 3,000 4,400 1,400 8,800 1,423 10,223 60 28 83

Central Sulawesi Parigi Poso (part) DOI 2 1,122 3,398 2,276 0 5,898 5,898 240 156 240

North Sulawesi Marissa DOT 1 1,200 2,576 1,376 2,655 1,902 4,557 88 22 50

West Java Cesanggarung R /a DOR 6,040 10,608 4,568 10,350 3,138 13,488 24 288 204

East Java Gondang R /a DOR 3,678 4,325 647 25,353 1,617 26,970 64 0 32

/a River projects.71 Swamps projects.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Groundwater Component - East Java and SulawesJ

Implementation Schedule

UnitQuantity cost Area Y(sr ' Year 3 Total Year 4 Year 5

Description (no.) (Rp M) (ha) Year 1/a No.-P t No./Rp M No./Rp M No./Rp M No./Rv M

Sampean BaruTubewell systems 80 2,000 20 20 40 20 20

(25 ha/18-23 hp) 84.0 1,680 1,680 3,360 1,680 1,680

East Javatntermediate Technology 100 Poo 30 30 60 30 10(8 ha/5-7 hp) 13.3 399 399 798 399 133

Hand drilled systems 500 1,500 150 150 300 150 50(3 ha/3.5 hp) 0.7 105 105 210 105 35

Central Sulawesi (Palu)Intermediate Tecinology 20 120 5 1' 20(6 ha/5-7 bp) 14.8 74 222 296

South SulawesiIntermediate Technology 25 150 10 15 25(6 ha/5-7 hp) 13.8 138 207 345

Total 725 4.570 215 / 2,396 230 /2.613 445 / 5.009 200 / 2.184 80 / 1,848<-- - ---- --- 1st time slice - -- -- -- >--

/a Preparation activities.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Groundwater Component - Lombok

Implementation Schedule

Quantity cost Area Year I/a Year 2 Year 3 Total Year 4 Year 5Description (no.) (Rp M) (ha) No.tRp M No./Rp M No./RV M No./Rp M No./Rp M No./Rp K

Intermediate TechnologyWithout sump 15 16.8 105 5 84.0 5 84.0 10 168.0 5 84.0 15 252.0

(12 1/s, 5 hp)7 ha

With sump 25 22.8 250 7 159.6 9 205.2 16 364.8 9 2^5.2 25 570.0(12 1/, 8 hp)

10 ha

Turbine Pump Systems15 1/s, 10 ho, 10 ha 50 38.9 S00 15 583.5 20 778.0 35 1,361.5 15 583.5 50 1,945.020 l/s, 15 hp, 14 ha 50' 45.5 700 15 682.5 20 9C1e.0 35 1,592.5 15 682.5 50 2,275.0Pilot schemes /b 4 29.7 60 4 118.8 4 118.8 4 118.8

Well Drilling (1OZ failures) 14 15.8 4 632 5 79.0 9 142.2 5 79.0 14 221.2

Total 1,615 4 118.8 46 1,572.8 39 2,056.2 109 3,747.8 49 1,634.2 158 5,382.0< ----------- - --- - lst time slice ------ >

/a Preparation work._ Wells already drilled.

- 79 - ANNEX 2Table 9

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Land Reclassification, Valuation and Strengthening of Directorate of IPEDA

Implementation Schedule

FY Year 1 Year 2 Year 3I II III IV I II III IV I II III IV

Consultants -----------------------

Aerial photos

Pilot scneme

Mapping ----------------------------------------

Development of reclassi-fication + revaluation -

system

Reclassification -------------------------------

Training --------------------------------

Institution Strengthening --------Plan

Implementation of Institu-tional Strengthening Plan -------------------------------

- 80 - ANNEX 2Table 10

INDONESIA

IRRIGATION SUBSECTOR PR.OECT

A Pilot Scheme of Mapping for Land Reclassification(5,000 ha)

Implementation Schedule

Months October November December JanuaryActivities 1987 1988

Production of line-map

Production of village map

Enlargement of photos

Enlargement of photomaps

Updating village map

Production of rincikan maps

Field measurements ofparcels and plots __ _______

Identification of plotsboituLdaries & owners

Report

81 ANNEX 2Table 11

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Ongoing Land Reclassification Program(-000 ha)

FY 0 FY 1 FY 2 FY 3 FY 4Area (ha) 1986/87 1987/88 1988/89 1989/90 1990/91

WTC I /a 233.500

WTC II /a 266,500

KDO /b 103,000

C&W /c 699,000 (8 packages)

ADB /d 80,000

/a The first and second mapping contract under the West Tarum CanalImprovement Project (Ln 2560-IND).

/b The Kedung Ombo M. Dam and Irrigation Project (Ln 2543-IND).

/c The Central & West Java Provincial Irrigation Project (Ln 2649-IND).

/d The third irrigation package financed by the Asian Development Bank.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Ten-Year Land Reclassification Program(area in '000 ha)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

W. Java 0 0 0 20 35 100 232 287 342 397

Jatiluhur 0 0 0 20 30 70 131 166 201 236

C. Java 0 0 0 20 80 220 305 338 381 436

Yogyakarta 0 0 0 10 28 28 33 48 67 67

E. Java 0 100 179 214 279 344 454 509 564 626

N. Sumatra n 0 37 57 69 69 79 104 129 154

W. Sumatra 0 0 15 35 43 43 53 81 109 137 s

S. Sumatra 0 0 15 31 31 31 36 55 55 55

Lampung 0 0 15 35 70 ,0 75 85 95 105

S. Sulawesi 0 0 15 32 32 32 42 62 82 102

NIB 0 0 20 55 103 103 108 113 123 133

New projects 0 0 0 0 50 100 140 160 180 200

Total 0 100 296 529 850 1,210 1,68b 2,008 2,328 2,648

Cumulative area 0 100 396 925 1,775 2,985 4,673 6,681 9,009 11,657

Note: In Year 1, a pilot area of about 5,000 ha will be established to assess the current mapping procedures and to

develop a simplified procedure for mapping.

- 83 - ANNEX 2Table 13

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Introduction of Irrigation Service Fee (ISF)

Implementation Schedule

Recruitment of consultants 01/31/88

Establishment of provincial- and district-levelimplementation units 12/31/87

Completion of village socioeconomic profile survey }

Formulation of implementation plan for ISF }

Review of implementation plans and legal implications } 07/31/88

Selection and training of personnel }

Extension work }

ISF collection 12/88 onwards

Monitoring and avaluation 12/88-11/89

Final report including the plan for extension of ISF toother areas 01/90

- 84 -

ANNEX 3Table 1

PROPOSED APPROACH TO O&K PROCEDURES

Select areas suitabl Select areas requiringfor direct O& special maintenance

t Carry out survey, designand construction, untilareas ready for efficient

06K

Analyze at section and subsection level:- staffing levels and structure- staff duties and responsibilities- staff education and training background* existing O&H facilities* existing O&N procedures

- scheduling- data collection* reporting periods- division of responsibilities for system control- maintenance work identification reporting and repair

- existing and historic levels of O&N fundingIdentify suitable personnel to be trained as trainers.

Make recommendations to facilitate the introduction of efficient O&H pro-cedures. Areas where changes/adjustments may be required are:

- Staffing - levels, structure, duties and responsibilities- O&K procedures* O&H budget allocations

Implement agreed changes/adjustments and prepare material and equipmentfor introducing efficient O&M procedures.Prepare training program details and material.

Train selected staff as trainers to assist in introducing efficient O&0procedures.

Introduce efficient 06M procedures in order to familiarize 06M staff withchanges/amendments (if any).Commence training program in section office followed by each subsection i4turn.

Monitor introduction of efficient O0m procedures and training program.

Evaluate implementation of efficient O&K procedures. Make consideredchanges/a.endments if required. Reinforce OK procedures by additionaltraining.Evaluate training program, make changes/amendments as required. Repeattraining lf required in selected locations.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Training and Related Activities

Target Leadparti- implementing Cooperating

Brief description Type of training cipants Location agency agencies

Overall coordination in planning - - BDP DOI-I, DOt-II,programming and training modules DAAD, DOSpreparation

Data banking services for timely and - - BDP DOI-I, DOI-II,effective dissemination of training INTAL DAAD, DOS,material and information; coordination, DOR, Division ofmonitoring and evaluation of training Personnelactivittes and analysis of traiuing needs I

Monitoring and evaluation of DSWRD - - BDP PRIS, DOI-I,training activities including individual DOI-II, DOSand collective impacts of training

Manpower planning to identify training - - Division of Per- BDP, DOI-I,needs for PRIS staff sonnel, DGWRD DOI-IT, PRIS

Short-Term BDP Courses(a) O&M for Ir and BE level engineers Formal lectures with 150 PUSDIKLAT BDP PRIS, DOI-I,

one month duration, 25 participants field practice RTCs DOI-ITper batch, regularly offered Diklatcourse

Target Leadparti- implementing Cooperating

Brief description Type of training cipants Location agency agencies

Short-Term BDP Courses (cont-d)(b) O&M for STM (Technical High School) Formal lectures with 425 PUSDIKLAT BDP PRIS, DOI-I,

level staff, one month duration, field demonstrations RTCs DOI-II

25 participants per batch, regularlyoffered Diklat course intended formiddle and lower levels main systemsO&M staff

(c) O&M for Swamp Irrigation, for Ir and BE Formal lectures with 100 PUSDIKLAT BDP DOS, PRIS

level staff, one month duration with field practice RTCs

25 participants per batch, regularlyoffered Diklat course

(d) Groundwater Planning, Constrlction and Formal lectures with 25 DIKLAT BDP DOI-II, PRIS

O&M for Ir and BE level staff, one month field demonstration RTCs

duration, 25 participants per batch,regularly offered Diklat course

Di loma or Degree-Oriented CoursesTa) Bipowered (in-country), diploma oriented Formal diploma or 72 Bandung BDP PRIS, DOI-I,

course started with Dutch government degree course works DOI-II, DOS, DOR

assistance and pattern after the 11 monthDiploma Training Courses offered by theInstitute of Hydraulic Engineering,Delft. Specializations are in the fieldsof irrigation and drainage, developmentof swamps and coastal areas and rivers I'4I

and river structures

0 I

VW

Target Leadparti- implementing- Cooperating

Brief descript'in Type of training cipants Location agency agencies

Diploma or Degree-Oriented Course (cont-d)(b) overseas training ror MSc level degrees Formal degree course 26 Overseas BDP DOI-I, DOI-II,

for Ir and BE level staff, examples are works DOS, DOR, PRISthe Master of Engineering Courses for17 to 21 months at the Roorkee and AnnaUniversities in India.

Main System O&M Staff Training for Surface Irrigation Areas(a) In-service training for section and lower Lectures and in- 3,050 for On-the- DOI-I PRIS, DOI-II,

level main systems O&M staff. Initial field practice and initial & job DOS, DORtraining of 6-day duration (broken by demonstration 4,310 fortwo-day rotations) and with follow-up follow-upon-the-job training of similar duration training

(b) Trainers for in-service training. Senior Lectures and in- 100 PRIS, DOI-I PRIS, DOI-TI -level O&M staff of the PRIS and DOI-I. field practice and JakartaOne to two months duration demonstration

(c) Workshop for middle-level provincial, dis- Workshop 1,500 Province, DOI II DOI I, DAAD,trict staff (Group A) District MOH, PRIS,

DIPERTA, localgovernment

(d) Training for lower-level staff at subdis- Lectures, field de- 4,040 Subdis- DOI TI DOI T, PRIS,trict and village level (Group B) monstration, dis- trict, DIPERTA, local

cussion Village government

(e) Training instructors (Group I) Lectures, discussion 360 Province DOI II DOI I, PRIS,DIPERTA, localgovernment

A!!O "

0

Target Leadparti- implementing Cooperating

Brief description Type of training - cipants Location agency agencies

Main System O&M Staff Training for Surface Irrigation Areas (cont'd)(f) WUA members training, intended for WUA key 30? lecture; 30% 8,810 Subdis- DOI-II DAAD, District

members and jurus. The training will be audiovisual presen- tricts and subdistrictfor about 15 days (broken down with 2-3 day tation; 40% field and farmers authorities,rotations). The focus will be mainly on demonstration and fields DOI-I, DORconstraints to tertiary systems O&M; inter- discussionactions among design philosophy, main systemoperation and tertiary O&M; water use anddistribution, simplification of tertiarysystems, operation including gates andother control structures, duties and respon-sibilities of WUA in irrigation O&M; OEMpractices and cropping systems inter-actions, canal maintenance and integratedapproach to WUA formation and functioning;so-called Grour C training.

(g) Follow-up of WUA members training for Mainly on-the-job. 6,710 RECs and DOI-II DAAD, Districtabout the same duration Include field farmers and subdistrict

demonstration, audio- fields officials,visual presentation DOI-1, DOSand discussions.

Production of Audiovisual MaterialsProduction of audiovisual materials PPAV DOI-II, DAAD,relevant to main and tertiary systems DOI-I, PRISO&M for training purposes and generalpublic information

a

9

Target Lead _parti- impletentinj Cooperating

Brief description Type of training cipants Location agency agencies

Main System O&M Middle and Lower Level Main System DOI-I, DAAD,DOI-II, PRIS

(a) O&M for middle and lower levels staff On-the-job 152 Job sites DOS DOI I, DAADin irrigated swamp areas. Initial PRIS, DOI-1110-12 day training broken down into3 to 4 day duration intervals

(b) Follow-up training at yearly intervals On-the-job 242 Job sites DOS DOI-I, DAAD,PRIS, DOI-II

(c) Trainers Training for 6-week duration Lectures, audiovisual 10 Provinces, DOS DOI-I, DAAD, @and field visits Jakarta PRIS, DOI--II

Training of Community Or;anizers(a) Training of Action Group on WUA Lectures for 4 weeki. 201 Agric. DAAD Local govern-

Organization and Development for 3 weeks for field training mental institu-2 months practice and 1-2 weeks centers, tions, DOI-II,

for wrap-up and eva- job sites DOI-I, DOSluation

(b) Training of section, subsection Lectures and field 1,020 Agric. DAAD Local govern-and village staff for WUA organi- practice with 2-3 days training mental institu-zation, reorganization and wrav-up session centers, tion, DOI-It,strengthening for one month job sites DOI-I, DOS

Training of IPEDA Field Staff. Four month Lectures and exercises. 360 Regional Directorate of BDP D ztraining consisting of 3 modules each on Training for 4 months for field IPEDA ground survey, use of aerial photos and the regional and field officesdata processing office staff. Formal co. Jakarta 9 . w

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Consultancy Services for Project Implementation(Man-months)

Foreign consultants Local consultantsYear 1 Year 2 Year 3 Total Year 1 Year 2 Year 3 Total

Special maintenance and efficient OEM forirrigated areas 84 150 90 324 153 324 279 756

Special maintenance and efficient O&M for swamps 12 17 18 47 48 66 51 165Ongoing projects (supervision of detailed design) - - 11 10 - - 35 35Core design units (South Sulawesi and Lampuutg) 6 24 18 48 6 24 18 48Ongoing projects (construction supervision)Irrigation 63 130 40 233 97 331 262 690Swamps 12 24 18 54 9 24 18 51Rivers 18 36 15 61 t-8 92 40 150

Small river mouthsIdentification, study and design - - 9 9 - - 18 18Construction supervision 12 - - 12 30 - - 30Efficient O&M - - - - - 12 12 24

Groundwater developmentEast Java 5 15 15 35 20 50 50 120Lombok 15 45 40 100 5 65 100 130

Turnover of small systemsCentral level 6 12 6 24 13 23 11 47Regional level - - - - 36 116 102 254

Land reclassification and valuation 10 20 10 40 24 48 48 120Irrigation service feeCentral level 11 22 10 43 6 18 10 34Regional level 12 14 - 26 34 58 32 124

- 91 - ANNEX 4Table 2

INDONESIA

IRRIGATION SUB'vCTOR PROJECT

Consultancy Services for Institutional Development

Foreign LocalTotal man-months Total man-months

No. Year 1 Year 2 Year 3 Total No. Year 1 Year 2 Year 3 Total

Diklat and Personnel DivisionTraining management expert 1 6 12 12 30 1 6 12 12 30Monitoring and evaluation expert 1 6 12 12 30 3 18 36 o6 90Traintag expert 1 6 12 6 24 1 6 12 .2 30Manpower planning expert 1 6 12 12 30 1 6 12 12 30

Directorate of Irrigation (1 for on-the-job traintng of staff for main systents 0&M)

O&M experts and trainingspecialist 5 24 48 18 90 9 54 108 30 192

Directorate of Irrigation (2 coordination training and workshop for Provincial Staff and W;A Training)

O&M and on-farm with 3 18 36 36 90 5 30 60 60 150management soecialist

Training speciallst 1 6 12 8 26 1 6 12 12 30Audio-visual material

production expert 1 6 4 - 10 1 6 12 12 30

Directorate of Swamps for On-the-Job Training Coordination in Swamp Areas

Training specialist 1 6 12 9 27 1 6 12 12 30

Directorate of Planning and Programming PSME and PCR

PBMR expert 1 6 6 - 12 7 42 - - 42

Directorate of tAricultural Area Development (DAAD), Ministry of 4griculture for WUA Organization and Screngtbening

Community organization expert 2 12 24 24 60 5 30 60 60 150On-farm water manageaent expert 1 6 12 12 30 3 18 36 36 90Training specialist - - - - - 2 12 24 24 60

Institutional Organization Study

Irrigation and drainage engineer 1 6 - - 6 - - - - -Institutional developmeat expert 1 6 - - 6 1 6 - - 6Management systems analyst 1 6 - - 6 1 6 - _ 6Financial systems analyst 1 6 - - 6 - - - - -Legal, water resources legislation - - - - - 1 10 - - 10

Investment Review/Strategy Study

Economists 3 18 - - 18 - - - - -Economists with irrigation and

drainage background - - - - - 6 36 - - 36

Environmental Study 1 6 - - 6 6 32 38 12 82

Management Information System - - - - - 2 12 12 - 24

General Coordiration 3 24 36 10 90 1 8 12 10 30

- 92 - ANNEX 5

Table 1

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Central Government Funding of O&M(Current terms)

Fiscal APBD APBN Total Area Ave./hayear --- Rp mln -------- (ha) (Rp)

1979/80 13,267 0 13,267 4,474,706 2,965

1980/81 19,971 0 19,971 4,541,186 4,398

1981/82 26,009 0 26,009 4,574,776 5,635

1982/83 31,235 0 31,235 4,573,577 6,829

1983/84 32,895 0 32,895 4,637,625 7,093

1984/85 30,732 13,438 44,170 5,202,842 8,490

1985/86 32,424 13,999 44,423 5,184,025 8,955

1986/87 31,846 8,131 39,977 4,799,333 8,330

1987/88/a 31,846 11,700 43,546 4,859,333 8,961

/a Includes additional APBN allocation of Rp 4.5 billion approved by BAPPENASon March 18, 1987.

Source: DGWRD, March 1987.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Funding of O&M in the Selected Provinces, 1986/87

From APBD From APBN APBD4-APBN Estimated DIK Total all sourcesHa Rp mln Ha Rp mln Ha Rp mln Rp/ha Rpiha Rp mln Rp/ha Rp mln

Jawa Barat + Jatiluhur 897,125 15,628 0 0 897,125 15,628 17,423 3,200 2,871 10,757 18,499

Jawa Tengah 491,773 3,776 265,136 2,197 756,909 5,973 7,891 3,760 2,846 11,651 8,819

D.I. Yogyakarta 65,377 872 0 0 65,377 872 13,338 10,250 670 23,588 1,542

Jawa Timur 681,965 4,500 286,282 2,732 968,247 7,232 7,469 6,080 5,887 13,549 13,119

Sumatera Utara 263,846 2,450 0 0 263,846 2,450 9,286 1,820 480 11,106 2,930

Sumatera Barat 217,443 1,400 0 0 217,443 1,400 6,438 1,140 248 7,678 1,648

Sumatera Selatan 338,331 1,697 67,993 679 406,324 2,376 5,848 1,090 443 6,937 2,819

Lampung 106,868 1,312 44,809 448 151,677 1,760 11,604 2,390 363 13,997 2,123

Sulavesi Selatan 150,046 1,750 72,911 704 222,957 2,454 11,007 4,550 1,014 15,557 3,468

Nusa Tenggara Barat 141,901 1,415 0 0 141,901 1,415 9,972 1,290 183 11,262 1,598

Total 3,354,675 34,800 737,131 62760 4,091,806 41,560 10,157 3,667 15,005 13,824 56,565

.~~~~~~~~~~~~~~~H

- 94 -

ANNEX 5Table 3

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Funding of O&M in the Rest of the Provinces, 1986/87

APBD+APBN Estimated DIK APBD+APBN+DIKArea Rp per Total Rp per Total Rp per Total

Provinces for O&M ha Rp bln ha Rp bln ha Rp bln

Riau 124,379 10,372 1.29 2,390 0.30 12,762 1.59

Jambi 52,610 14,406 0.76 1,625 0.09 16,031 0.84

D.I. Aceh 154,233 6,613 1.02 3,390 0.52 10,003 1.54

D.K.I. Jakarta 20,202 13,365 0.27 1,625 '.03 14,990 0.30

Kalimantan Barat 88,217 9,071 0.80 1,625 0.14 10,696 0.94

Kalimantan Tengah 115,223 6,418 0.74 2,390 0.28 8,080 1.01

Kalimantan Selatan 188,472 3,429 0.65 2,390 0.45 5,819 1.10

Kalimantan Timur 57,015 7,080 0.40 1,625 0.09 8,705 0.50

Sulawesi Utara 51,827 13,506 0.70 1,625 0.08 15,131 0.78

Sulawesi Tengah 45,949 15,692 0.72 1,625 0.07 17,317 0.80

Sulawesi Tenggara 24,859 10,057 0.25 1,625 0.04 11,682 0.29

Bali 59,922 17,523 1.05 1,615 0.10 19,138 1.15

?Iusa Tenggara Timur 31,430 15,224 0.48 1,625 0.05 16,849 0.53

Maluku 11,633 15,473 0.18 1,625 0.02 17,098 0.20

Irian Jaya 6,825 8,791 0.06 1,625 0.01 10,416 0.07

Timor Timur 2,097 23,844 0.05 1,625 0.00 25,469 0.05

Total 11034,893 9,099 9.42 2,204 2.28 11,303 11.70

Note: DIK contribution assessed at about 70% of PRIS routine budget in selectedprovinces. DIK in these provinces based on averages established for selectedprovinces.

ISDON1ESIA

IRRIGATION SV85ECTOR PROJECT

Increunt-1 Yundinz Reul.rernti for Effticent 04M - rrrig-ton(area in ha and funding in Rp aillton)

World Bank SliceSlice Year 1987188 1988/89 1989/90 199n/91 199l192 1992193 1993/94 1994/95 1995/96 1996197 1997/98 19q8/99 1999/on 2(10(1/01 20nl/02 2002/03 Total

Batk 1 1 200,000 160,000 120.000 8O,O0 40.r00 0 200.0002 200.000 160.000 120,000 80,000 40,000 n 200,0003 300.00() 240.000 180.000 120.000 60,000 0 300,Oo0

Bank 2 4 300,000 240,000 180,000 90,000 60,nno 0 300.0005 300,000 240,000 280,0700 90.0on 60,noo 0 300,noo6 300.000 240,000 180,000 90,000 60,000 0 300.000

Bank 3 7 350.00 280.000 21(,000 140.no0 7n,non 0 350.0008 350,000 280,O0 210,00 -140.000 70,000 0 350,0009 400.00(0 1420,000 240,q00( 160).000 80,000 0 400,000

aank 4 10 400,000 320.noo 240,00t, 160.000 80.000 0 600.000it 400.000 32n.000 240,000 160 C000 80 000 0 400,00012 400.000 320.000 240D000 160.000 0 400.000

Area of eff. O0t to be fundedby antk on a declining basis 20n.000 360,000 580.000 740,G00 840.0no 880,000 920,000 960,000 1,040,000 1.130,000 1,177n(nOO 1,190,000 800,000 429O.00 240,n00 0 3,00O,000

Area of eaf. O&4 to be assumed 0 40,000 1;0,000 260,000 460,000 720,000 1,030,000 1.340,000 1.660,000 t,970,00n 2.330,000 2,710.000 3,100.000 3,420,000 3.60.00oo 3.°00.000 3,900,000by OI on a ohased btais

Bank funding required /a 2,400 4.320 6.960 8,880 10,080 10,560 11,040 11.520 12,480 13.560 14,040 14.280 9.600 5,760 2,880 0

001 funding required /a 0 480 1,440 3.120 5.520 8,640 12,360 16,080 19,920 23,64( 27,960 32.520 37,200 41,04n 43,920 46,600

/a Increenotal funding is based on on average of Rp 12,000 per ha.

Note: Funding by the Bank would be 1002 the ftrst Year. 802 the second, 602 the third. 402 the fnurth, 202 the fifth year and 02 the sixth Year, except that tn the fourth Bank slice, the funding would bephased to 02 in the fifth year.

1k

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Incremental Funding Requirements for Efficient O&M - Svamps(area tn ha and funding In Rp million)

World Bank Slic.Slice Year 1987188 1988/89 1989/90 1990/91 1991/92 1992/93 1993(94 1994195 1995196 1996197 1997/98 1998199 1999100 2000101 2001/02 2002/03 Total

Bank I I 9,>00 7,200 5,400 3,600 1,800 0 9.0002 25,000 20,000 15,000 10,000 5,000 0 25,0003 56,0M 44,800 33,600 22,400 11.200 0 56,000

Bank 2 4 50.000 40,000 30,000 13,000 10.000 0 50,0005 50.000 40.000 30.000 15,000 10.000 0 50,0006 50.000 40,000 30.000 15,000 10,000 0 50.000

Bank 3 7 55.000 44.000 33,000 22,00o 11,000 0 55.0008 60,000 48,000 36,000 24,000 12.000 0 60,0009 60.000 48,000 36,000 24.000 12.000 0 40,000

Bank 4 10 60,0G0 48,000 36,000 24,000 12.000 0 60,00011 60,000 48,00. 36.000 24,000 12,000 0 65,00012 65,000 5z.Oo 39,000 26,000 0 65.000

Area of off. '1%& to be funded 9.000 32,200 81,400 113,400 135,400 147.400 151,200 159,000 166,000 176,000 179.000 185,000 124,000 75,000 38,000 0by Baok on a -. l.ining basai

Area of eff. 06M to be assumed 0 7.son 8,600 26,600 S4,600 92.600 141,800 196,000 249,000 299,000 356,000 415,000 4715.000 525,000 56..000 600,000 600,000by GOT on a phaaed basas

Bank funding required /a 108 386.4 976.* 1,360.8 1,624.8 1,768.8 1,814.4 1,908 1,992 2,112 2,148 2,220 1,488 900 456 0

D01 funding required /s 0 93.6 1i3.2 319.2 655.2 1,111.2 1,725.6 2,352 2,988 3,588 4,272 4,980 5,712 6,300 6,744 7,200

/a Incremental funding is based on an average of Rp 12.000 per ha.

Note: Funding by the BLnk would be 1002 the first year, 80t the second, 401 the third, 402 the fourth, 202 the fifth year and 02 the saxth year, extept that in the fourtb Bank slice, thefunding would be pbased to 02 In the fifth year.

-97- ANNEX 5Table 6

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Projection of Rural PBB and Proposed Allocation for Irrigation O&M(Rp billion)

Proposed allocation of PBBFiscal PBB tax Collection Taxable Total PBB to 06M /ayear assessed efficiency rates revenue Ootion 1 Option 2 Option 3

1987/88 75.0 80 20 60.0 0.0 0.0 0.01988/89 78.8 81 20 63.8 5.2 8.4 9.31989/90 82.7 82 20 67.3 5.5 8.9 9.91990/91 86.8 83 20 72.1 5.8 9.4 10.51991/92 91.2 84 25 95.7 7.8 12.5 14.01992/93 95.' 85 25 101.7 8.2 13.3 14.81993/94 100.5 87 25 109.3 8.9 14.3 15.91994/95 105.5 89 30 140.9 11.4 18.5 20.51995/96 110.8 90 30 149.6 12.1 19.6 21.81996/97 116.3 90 30 157.1 12.7 20.6 22.91997/98 122.2 90 30 164.9 13.4 21.6 24.01998/99 128.3 90 30 173.2 14.0 22.7 25.21999/2000 134.7 91 35 214.5 17.4 28.1 31.32000/01 141.4 92 35 227.7 18.4 29.8 33.22001/02 148.5 93 35 241.7 19.6 31.7 35.22002/03 155.9 94 35 256.5 20.8 33.6 37.42003/04 163.7 95 35 272.2 22.0 35.7 39.72004/05 171.9 96 40 330.1 26.7 43.2 48.12005/06 180.5 97 40 350.2 28.4 45.9 51.1

/a PBB is now divided as follows: 10% to central government16.2% to the provincial governments64.8% to local governments9% to collectors

Option 1: 50% of the provincial share of rural PBB would be allocated to 06M (8.1%).Option 2: 50% of the central and provincial government's share of rural PBB would be

allocated to O&M (13.1).Option 3: 50% )f the provincial and 10% of the district government's share of rural

PBB would be allocated to 06M (14.58%).

Note: Projection is based on increase in assessment of 5% per year and collectionefficiencies and taxable rates as shown in the table.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Projected Sources of Incremental financing for Efficient 061

(Rp million)

Projected sources of fundsFunds required for all O&M World Bank Ic

Total design Areas to be Remaining Phasing Remaining To main- Additional Irri- APBD +Fiscal irr. & swamp turned over areas for of effi- under tain pre- tional for gation Swamp APBN Service

year areas /a to WUAs eff. O&M cient O&M other 06M sent 0EM lb O&M Total areas areas Total + DIK PBB /d fee le Total-- - -- _-_-- (ha) …

1987/88 5,400,000 0 5,400,000 209,000 5,191,000 43,546 2,508 46,054 2,400 108 2,508 34,246 9,300 0 46,0541988/89 5,400,000 7,000 5,393,000 434,000 4,959,000 43,489 5,208 48,697 4,320 386 4,706 34,091 9,900 0 48,097

1989/90 5,400,000 14,000 5,379,000 790,000 4,589,000 43,376 9,480 52,856 6,960 977 7,937 34,419 10,500 0 52,256

1990/91 5,400,000 44,000 5,335,000_ 1,140,000 4,i95,000 43,021 13,680 56,701 8,880 1,361 10,241 31,460 14,000 1,000 53,201

1991/92 5,400,000 60,000 5,275,000 1,490,000 3,785,000 42,538 17,880 60,418 10,080 1,625 11,705 30,313 14,800 3,600 59,618

1992/93 5,400,000 60,000 5,215,000 2,245,000 2,970,000 42,054 26,940 68,994 10,560 1,769 12,329 35,855 15,900 6,400 59.3841993/94 5,400,000 65,000 5,150,000 2,655,000 2,495,000 41,530 31,860 73,390 11,040 1,814 12,854 31,236 20,500 8,800 68,7901994/95 5,400,000 70,000 5,0o0,000 3,115,000 1,965,00 40,965 37,380 78,345 11,520 1,908 13,428 30,817 21,800 12,300 77,045

1995/96 5,400,000 75,000 5,005,000 3,575,000 1,430,000 40,360 42,900 83,260 12,480 1,992 14,472 29,988 22,900 15,900 82,160

1996/97 5,400,000 80,000 4,925,000 4,035,000 890,000 39,715 48,420 88,135 13,560 2,112 15,672 28,563 24,000 19,900 87,0351997/98 5,400,000 80,000 4,845,000 4,500,000 345,000 39,070 54,000 93,070 14,040 2,148 16,188 26,882 25,200 24,800 91,870

1998/99 5,400,000 80,000 4,765,000 4,500,000 265,000 38,425 54,000 92,425 14,280 ),2.0 16,500 15,425 31,300 29,200 86,325

1999/2000 5,400,000 85,000 4,680,000 4,500,000 180,000 37,740 54,000 91,740 9,600 1,488 11,088 12,752 33,200 34,700 89,840

2000/01 5,400,000 90,000 4,590,000 4,500,000 90,000 37,014 54,000 91,014 5,760 900 6,660 7,554 35,200 41,600 89,0142001/02 5,400,000 90,000 4,500,000 4,500,000 0 36,288 54,000 90,288 2,880 456 3,336 4,552 37,400 45,000 88,0882002/03 5,400,000 90.000 4,500,000 4,500,000 0 36,288 54,000 90,288 0 0 0 5,588 39,700 45,000 87,988

/a Present design area of 4,800,000 ha in Public Works irrigation and 600,000 ha of reclaimed swamp areas.

7T Budgeted APBD and APBN for 1987/88 of Rp 43.546 billion.E Based on World Bank initially assumtng full financing of efficient 06M and then Phasing down.

7d Based on IPEDA-s most conservative estimate of increase in PEB rural collections and Option 3 of cost sharing for O&M.

We Assumes that after a three-year pilot introduction of water service fees, such fees wtll be assessed in step with the completion of efficient 06M. Alsoassumed that Rp 2,500/ha would be levied in the first year of collection, Rp 5,000/ha in the second year, Rp 7,500/ha in the third vear and Rp 10,000/hain the fourth year.

/f Remaining subsidy for O&M would be only that by DIK, subsidies from AP80 and APBN would no longer be required.

1ui

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Realization of Physical Targets - Actual and Projected for Repelita IV(ha)

RealizedRepelita IV 1984/85 Projected for: Shortall of target

Program target & 1985/86 1986/87 1987/88 1988/89 Total ha %

Rehabilitation of irrigation 360.0 72.6 24.7 34.4 20.0 151.7 208.3 57.86project

New irrigation construction 600.0 92.1 43.7 40.1 22.0 197.9 402.1 67.02

Swamps new construction and 460.0 93.9 4.8 16.6 5.0 120.3 339.7 73.85rehabilitation

Flood control & other conservation 500.0 115.7 34.1 72.2 34.0 256.0 244.0 48.80works

Source: BINA of DGWRD.

- 100 - ANNEX 6Table 2

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Actual and Planned Investment Expenditures for the Remainder of Repelita IV(Rp billion)

Repelita IV Total ShortfallProgram plan 1984/85 1985/86 1986/87 198 7/88/a 1988/89 1984/89 Amount %

RehabilitationGOI 956.6 81,6 77.5 31.1 15.2 33.7 239.1 717.5 75.0External loan 308.4 95.7 71.7 39.8 68.5 35.7 311.4 -3.0 -1.0

Subtotal 1,265.0 177.3 149.2 70.9 83.7 69.4 550.5 714.5 56.5

New ConstructionGOI 2,261.7 50.4 163.5 69.1 46.2 69.6 398.8 1,862.9 82.4External loan 869.7 90.8 76.8 121.6 188,2 91.4 568.8 470.9 54.1

Subtotal 3,131.4 141.2 240.3 190.7 234.4 161.0 967.6 2,163.8 69.1

SwampaGOT 225.9 23.7 22.3 7.9 6.5 8.0 68.4 157.5 69.7External loan 45.6 11.1 5.2 8.5 17.2 4.8 46.8 -1.2 -2.6

Subtotal 271.5 34.8 27.5 16.4 23.7 12.8 115.2 156.3 57.6

RiversGOI 992.6 92.0 98.4 46.2 33.6 42.1 312.3 680.3 68.5Externl loan 673.0 71.6 46.8 48.0 129.6 53.0 349.0 324.0 48.1

Subtotal 1665.6 163.6 145.2 94.2 163.2 95.1 661.3 1,004.3 60.3

All SubsectorsGOI 4,436.8 247.7 361.7 154.3 101.5 153.4 1,018.6 3,418.2 77.0External loan 1,851.1 258.1 195.3 209.4 386.3 180.1 1,229.2 791.9 42.8

Total 6,287.9 505.8 557.0 363.7 487.8 333.5 2,247.8 4,218.1 67.0

/a Additional budget allocations for investment of Rp 59.5 billion approved March 18, 1987 distributedto subsectors on same proportionate basis as Bina planned for the initially proposed allocation ofRp 42 billion.

Source: Bina, DGWRD.

- 101 - AN!EX 6Table 3

lNDONESIA

IRRIGATION SU8SECTOR PROJECT

Central Governmant (DIP) Investment Exw nditures

Actual Expenditures 1984/85 and 1985/86. Estimate for 1986/87 and Proposed for 1988/89

1984/85 1985/86 1986/87 1987/88 1988/89Exter- Exter- Exter- Exter- Exter-nal nal nal nal nal

GO0 loan Total GOt loan Total GOI loan Total GOI loan Total GOI loan Total

IrrigattonSmall + medium 51.9 22.2 74.1 66.1 24.9 91.0 21.8 21.9 46.7 5.8 44.4 50.2 19.5 24.6 44.1Large 92.1 64.8 156.9 90.9 50.1 141.0 44.1 94.1 138.2 37.3 140.6 177.9 46.6 64.3 110.9Ground water 6.4 3.8 10.2 6.5 1.8 8.3 3.2 5.6 8.8 3.1 3.2 6.3 3.5 2.5 6.0Rehabilitation 81.6 95.7 177.3 77.5 71.7 149.2 31.1 39.8 70.9 15.2 68.5 83.7 33.7 35.7 69.4O04 /a 13.4 0.0 13.4 14.0 0.0 14.0 8.1 0.0 8.1 11.7 0.0 11.7 8.2 0.0 8.2

Subtotal 245.4 186.5 431.9 255.0 148.5 403.5 108.3 161.4 272.7 73.1 256.7 329.8 111.5 127.1 238.6

RiversRiver improvement 27.2 42.1 69.3 16.1 2.3 18.4 15.4 8.0 23.4 2.4 11.4 13.8 23.9 20.3 44.2Flood control 64.8 29.5 94.4 82.3 44.5 126.8 30.8 40.0 69.8 31.2 118.2 149.4 18.2 32.7 50.9

Subtotal 92.0 71,6 163.7 98.4 46.8 145.2 46.2 48.0 93.2 33.6 129.6 163.2 42.1 53.0 95.1

SwampsTidal 12.4 4.4 16.8 11.7 1.1 12.8 3.5 4.5 8.0 3.1 9.8 12.9 3.4 4.5 7.9Inland .11.3 6.7 18.0 10.6 4.1 14.7 4.4 4.0 8.4 3.4 7.7 10.8 4.6 0.3 4.9

Subtotal 23.7 11.1 34.8 22.3 5.2 27.5 7.9 8.5 16.4 6.5 17.2 23.7 8.0 4.8 12.8

Planning 5.1 11.8 16.9 6.3 8.6 14.9 1.7 8.3 10.0 1.1 1.0 2.1 1.6 6.0 7.6

Training 1.6 1.6 3.2 1.5 0.0 1.5 0.5 1.4 1.9 0.3 0.n 0.3 0.6 0.0 0.6

Research 4.4 3.2 7.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total 372.2 285.8 658.1 383.5 209.1 592.6 164.6 227.6 394.2 114.6 404.5 519.1 163.8 190.9 354.7

/a DIP only.

Note: Tertiary developmaent include in Small + Medium and Large.

Source: UWna, D¢WRD, March 1987.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Allocations of Loans and Disbursement to January 1, 1987

IBRD Financed Projects(US$000)

Credit/ Starting Closing Loan Spent to Balance of

Loan No. Project date date amount Allocated 01/01/87 Allocated Loan

Cr. 995 Irrigation XV Mar 80 Jan 87 45,000 43,880 32,374 11,506 - 12,626

1578 Irrigation X Jun 78 Dec 86 140,000 141,000 97,004 43,996 42,996

1645 Irrigation XII May 79 Mar 86 77,000 77,000 66,507 10,493 10,493

1811 Irrigation XIV Apr 80 Jan 87 116,000 117,900 97,545 20,355 18,455

1958 Swamp Reclamation I Mar 81 Dec 87 - 22,000 17,500 - 12,287 5,213 9,713 .

2118 Irrigation XVI Apr 82 Dec 87 37,000 37,000 - 25,643 11,357 11,357

2119 Irrigation XVII Apr 82 Mar 88 70,000 70,000 35,548 34,452 34,452

2375 Provincial Irrigation II Nov 84 Dec 87 89,000 88,274 52,620 35,654 36,380

2431 Swamp Reclamation Project II Sep 84 Jun 91 64,000 35,000 5,934 29,066 58,066

2543 Kedung Ombo Dam Jun 85 Dec 91 156,000 145,600 6,718 138,882 149,282

2560 West Tarum Canal Jun 85 Dec 91 43,400 43,400 184 43,216 43,216

2649 Central and West Java Prov. Irrig. Mar 86 Dec 92 166,000 166,000 0 166,00 166,000

Total 1,025,400 982,554 432,364 550,190 593,036

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Allocations of Loans and Disbursement to January 1, 1987

ADB Financed Projects(US$'000)

Credit/ Starting Closing Loan Spent to Balance of

Loan No. Project date date amount Allocated 01/01/87 Allocated Loan

Cr. 399 Wawotobi Dec 78 End 87 34,300 21,026 14,858 6,168 19,442

434 Sungai Brantas Dec 79 End 86 39,000 39,000 35,538 3,462 3,462

475 Teluk Lada Nov 80 Mar 88 35,000 24,209 18,886 5,323 16,114

479 Citanduy Nov 80 Dec 87 55,200 55,200 33,763 21,437 21,437

480 Jambu Aye Lagkahan Nov 80 Feb 87 5,700 3,190 2,079 1,111 3,621

518 Irigasi Kedu Selatan Jul 81 Jun 88 87,700 78,250 51,969 26,281 35,731

522 Irigasi Bali (EEC) Jan 82 Jun 88 33,600 33,600 12,334 21,266 21,266

581 Waru-Turi (1645-IND) Dec 82 Dec 88 77,000 77,000 14,059 62,941 62,941

582 P.I. Baro Raya Oct 82 Dec 86 4,500 4,500 1,628 2,872 2,872

627 Batang Ilung May 83 Dec 90 52,000 52,000 2,229 49,7i1 49,771

638 Simalungan Aug 83 Jul 91 85,000 85,000 19,774 65,226 65,226

639 Lombok Sumbawa Aug 83 Jun 87 3,450 3,450 2,151 1,299 1,299

685 Jambu Aye Langkahan Jul 84 Jul 91 68,000 68,000 3,045 64,955 64,955

769 P2AT Central Java Jan 86 Jun 91 12,200 12,200 0 12,200 12,200

725 T.A. Program Loan Dec 84 Jun 90 25,000 0 25,000

799 Irrigation Pack* e III Dec 86 Mar 93 120,700 0 120,700

Total 738.350 556,625 212,313 344.312 526.037

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Allocations of Loans and Disbursement to January 1, 1987

OECF Financed Projects(US 'OO0)

Credit/ Starting Closing Loan Spent to Balance ofLoan No. Project date date amount Allocated 01/01/87 Allocated Loan

Cr. 194 Wonogiri Feb 79 Aug 86 40,033 36,200 8,592 27,608 31,441219 Way Rarem Abung (639-IND/CIDA) May 80 May 85 41,850 41,850 35,410 6,440 6,440236 Sungai Ular May 81 May 88 33,252 35,400 21,069 14,331 12,183240 Upper Solo Madiun Dec 82 Sep 86 3,288 3,288 2,642 646 646247 Langkene Dec 85 Apr 87 1,307 1,307 1,013 294 294260 Komering Ulu Dec 83 Sep 88 4,820 4,820 3,175 1,645 1,645263 Gunung Semeru Oct 83 Oct 88 11,471 12,200 1,014 11,186 10,457 -264 Jakarta Flood Protection Oct 83 Oct 88 21,548 22,930 - 1,987 20,943 19,561 4

265 Sungal Kru3ng Aceh Oct 83 Oct 88 19,032 21,256 1,258 18,998 17,774273 Jakarta Flood Protection Jun 84 Jun 89 23,587 23,587 0 23,587 23,587274 Sungai Krueng Aceh Jun 84 Jun 90 36,573 38,400 0 38,400 36,573278 Riam Kanan Jun 84 Jun 90 35,278 33,096 53 33,043 35,225279 Sungai Jeneberang Jun 84 Jun 89 3,587 3,512 819 2,693 2,768281 Bila Jun 84 Jun 89 2,247 2,247 0 2,247 2,247283 Sungai Jeneberang Feb 85 Feb 91 22,890 22,890 0 22,890 22,890284 Irigasi Madiun (1811-IND) Feb 85 Feb 90 27,234 27,234 0 27,234 27,234285 Sungai Brantas (434-IND) Feb 85 Feb 91 25,532 25,532 0 25,532 25,532292 Padang Flood Control Feb 85 Feb 91 2,460 2,460 0 2,460 2,460300 Upper Solo Improvement Dec 85 End 90 20,635 20,695 0 20,695 20,635302 Merapi Dec 85 End 90 20,313 20,313 0 20,313 20,313308 Surabaya River Dec 85 End 90 20,900 2,499 0 2,499 20,900

Total 417,837 400,716 77,032 323,684 340,805

-105 - ANNEX 6

Table 7Page 1 of 2

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Estimated GOI Funding of Foreign Financed Projects(US$1000)

% ofCredit/ No. of Loan project GOILoan No. projects amount cost funding Total

Ongoing World Bank Financed Projects

995 3 45,000 69.0 20,217 65,2171578 1 140,000 66.8 69,581 209,5811645 1 77,000 65.4 40,737 117,7371811 9 116,000 72.0 45,111 161,1111958 1 22,000 50.0 22,000 44,0002118 5 37,000 52.0 34,154 71,1542119 3 70,000 70.0 30,000 100,0002375 14 89,000 61.0 56,902 145,9022431 3 64,000 60.6 41,611 105,6112543 2 156,000 66.0 80,364 236,3642560 1 43,400 59.6 29,419 72,8192649 2 166,000 66.21 84,755 250,755

Subtotal 45 1,025,400 554,850 1,580,250

Ongoing ADB Financed Projects

389 1 34,300 58.0 24,838 59,138434 1 39,000 58.0 28,241 67,241475 1 35,000, 58.0 25,345 60,345479 2 55,200 58.0 39,972 95,172480 1 5,700 58.0 4,128 9,828518 2 87,700 58.0 63,507 151,207522 1 33,600 58.0 24,331 57,931581 2 77,000 58.0 55,759 132,759582 1 4,500 58.0 3,259 7,759627 3 52,000 58.0 37,655 89,655639 2 3,450 58.0 2,498 5,948685 1 85,000 58.0 61,552 146,552769/729 1 12,200 80.0 3,050 15,250725 2 25,000 80.0 6,250 31,250799 ? 120,700 80.0 30,175 150,875

Subtotal 670,350 410,559 1,080,909

- 106 -

ANNEX 6Table 7Page 2 of 2

Ongoing OECF-Financed Projects

% ofCredit/ No. of Loan project GOILoan No. projects amount Cvit funding Total

194 1 40,033 70.0 17,157 57,190219 1 41,850 82.2 9,062 50,912236 1 33,252 70.0 14,251 47,503240 1 3,288 70.0 1,409 4,697247 1 1,307 70.0 560 1,867260 1 4,820 70.0 2,066 6,886263 1 11,471 70.0 4,916 16,387264 1 21,548 70.0 9,235 30,783265 1 19,032 70.0 8,157 27,189273 1 23,587 70.0 10,109 33,696274 1 36,573 70.0 15,674 52,247278 1 35,278 70.0 15,119 50,397279 1 3,587 70.0 1,537 5,124281 1 2,247 70.0 963 3,210283 1 22,890 70.0. 9,810 32,700284 1 27,234 70.0 11,672 38,906285 1 25,532 70.0 10,942 36,474292 1 2,460 70.0 1,054 3,514300 1 20,635 70.0 8,844 29,479301 1 45,821 70.0 19,638 65,459302 1 20,313 70.0 8,706 29,019308 1 20,900 70.0 8,957 29,857

Subtotal 22 463,658 189,837 653,495

Total 2,159,408 1,155,247 3,314,655

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Yields - Present Situation and Future with Project(T/ha)

Surface irrigation /a Swamps /a GroundwaterPresent Future /b Present Future /b Present Future /bsitua- with Incre- situa- with Incre- situa- with Incre-

Crop tion project mental tion project mental tion project mental

PaddyHYV (Java) 4.5 5.0 0.5 - - - 3.0 5.0 2.0

HYV (outside Java) 4.0 4.5 0.5 2.5 2.5 - - -

Rainfed (outside Java) 2.5 4.5 2.0 - - - - - -

Maize 1.4 3.0 1.6 1.4 2.0 0.6 1.2 3.3 1.1 -

Soybeans 0.8 1.2 0.4 0.8 1.0 0.2 0.8 1.2 0.4

Groundnuts 0.8 1.0 0.2 0.8 1.0 0.2 0.8 1.5 0.7

_otton - - - - - - 0.5 1.5 1.0

/a Includes special maintenance, efficient O&M and ongoing projects.

/b With-project yields are based on efficient levels of operation and maintenance of systems.

1F'

- 108 - ANE 7

Table 2

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Crop Areas - Present Situation and Future with Prolct(ha)

Surface irrigation Ongoing projects/a Swamps /b Groundwater /cPresent Future Present Future Present Future Present Futuresitua- with situa- with situa- with situa- with

Crop tion project tion project tion project tion project

Paddy 875,000 875,000 70,000 175,000 106,000 106,000 1,044 1,740

Maize 70,000 70,000 3,500 14,000 10,600 10,600 1,804 3,212

Soybeans 210,000 210,000 10,500 42,000 31,800 31,800 696 3,273

Groundnuts 70,000 70,000 3,500 14,000 10,600 10,600 348 2,165

Cotton - - - - - - 552 442

Total Cropped Area 1,225.000 1,225000 87,500 245.000 159.000 159.000 4,444 10.832

Total Command Area 700.000 700.000 70.000 140,000 106,000 106.000 3j795 3.795

Crop intensity (X) 175 175 125 175 150 150 117 285

/a For ongoing projects, crop intensity will increase from 125X to 1752 due to increase In irrigatedarea. Therefore, yields will increase due to: (l) incremental increase in yields on presently croppedarea during the wet season; and (il) iacrease in irrigable area particularly during the dry season.Area under 16 selected ongoi'g projects is assumed to be doubled when another 20 projects will beselected in the second yvoar. Although irrigation Infrastructure is at different stages of construction,a reliable supply of irrgation water ts not available. Rence, present situation assumes all areas areunder rainfed condition.

/b Present and future cropped areas are the same under surface Irrigation and swamps as no additional irri-gable areas will result from special maintenance or efficient 0&M. It is also assumed that present andfuture crop intensities under surface irrigation and swamps are 175Z and that yields will increase dueto availability of trained extension staff, assurance of water availability, and use of recommendedinputs and cultural practices. It is further assumed that one crop of paddy will be grown in the wetseason. In the dry season, in addition to planting a second rice crop on 251 of the area, the followingcrops will be planted in the following percentages: (i) maize 102; (ii) soybeans 302; and (iii) ground-nuts 102. With increased demand for legumes and GOI emphasis on crop diversification, no futherincrease in paddy area during dry season is assumed. However, some farmers in some areas tend to plantpaddy whenever water supply is assured. In swamps, only one peddy crop is planted In the wet season.

tc Cotton area using groundwater it Lombe will decrease gradually as farmers will shift to more renumera-tive crops with groundwater development. Less perishable fruits and vegetables (citrus, onions, garlicand potatoes) will be cropped depending on market conditions and farmers' experience. The extensionservice should carry out trials and demonstrations of horticultural crops in contact farmers' fields andorganize sLpply of fruit seedlings and vegetable seeds. Cotton will remain as a rainfed crop tn the wetseason.

- 109 - ANNEX 7Table 3

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Incremental Crop Production - At Full Development(tons)

Surface Ongoing Ground-Crop irrigation projects Swamps water Total

Paddy 437,500 210,000 - 5,568 653,068

Maize 112,000 16,800 6,360 8,435 143,595

Soybeans 84,000 12,600 6,360 3,371 106,331

Groundnuts 14,000 2,100 2,120 2,969 21,189

Cotton - - - 387 387

- 110 - ANX ITable 1I

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Analysis of Repayment Capacity of Water Users(Java farm models using 1986/87 actual farmgate prices)

Return/ha Return per Return per Return perReturn/ha Crop farm farm farm farm(Rp '000) intensity (Rp '000) (Rp '000) (Rp '000) (Rp '000)

Fart size (ha) 1.00 0.50 0.33

Wet SeasonRice 401.90 1.00 401.90 401.90 200.95 132.63

Dry SeasonRice 384.42 I.n0 384.42 384.42 192.21 126.86Maize 411.75 0.30 123.53 123.53 61.76 40.76Sovabeans 560.60 0.1S 84.09 84.09 42.05 27.75Groundnuts 520.00 0.05 26.00 26.00 13.00 8.58

Total 2,278.67 2.50 1,019.Q4 1,019.94 509.97 336.58

Miscellaneous costs 35.00 17.50 11.67Additional family labor allowance 0.00 33.50 44.30

Farm income 984.94 525.97 369.21Off-farm income / 0.00 240.00 360.00

Total Family I eome 984.94 765.97 729.21

Estimated OutgoingsLiving costs 600.00 600.00 600.00Ipeda/PBB 15.00 7.50 5.00National rent 100.00 50.00 33.33House tax 20.00 20.00 20.00Religious contributions 10.00 5.00 3.33Water Users Association (50 kg) 6.00 3.00 2.00

Total Outgoing. 751.00 685.50 663.67

Possible savings/repayment capacity 233.93 80.47 65.55

/a Assumes that a farm family with I ha will not work nff farm; a farm family with 0.5 ha will have on averageI member working full time off farm; and farm family with 0.33 ha will have 1.5 members working off farm atwages of Rp 20,000 per month.

- 111 - ANNEX 8Table 2

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Analysis of Repavr-sit'Capacity of Water Users(Outside Java farm model using actual 1986/87 farmgate prices)

Return/ha Return per Return per Return perReturn/ha Crop farm farm farm farm(Rp 000) intensity (Rp '000) (Rp 000) (Rp 000) (Rp 000)

Farm size (ha) 1.50 1.00 0.50

Wet SeasonRice 566.2n 1.00 566.20 849.30 566.20 283.10

Dry SeasonRice 481.20 0.50 240.60 360.90 240.60 120.30Maize 284.30 0.30 85.29 127.94 85.29 42.65Soyabeans 302.40 0.15 45.36 68.04 45.36 22.68Groundnuts 337.80 0.05 16.89 25.34 16.89 8.45

Total 1,971.90 2.00 954.34 1,431.51 954.34 477.17

Miscellaneous costs 60.00 4n.00 20.00Additional family labor allowance 0.00 0.00 30.00

Farm income 1,371.51 914.34 487.17Off-farm income /a 0.00 120.00 24n.00

Total Income 1,371.51 1,034.34 727.17

Possible OutgoingsLiving costs 600.00 600.00 600.00Ipeda/PBB 22.50 15.00 7.50National rent 150.00 100.00 50.00House tax 20.00 20.00 20.00Religious contributions 10.00 5.no 3.33Water Users Association (50 kg) 12.75 8.50 4.25

Total Outgoings 815.25 748.50 685.08

Possible savings/repayment capacity 556.26 285.84 42.09

/a Assumes that a farm family with 1.5 ha will not work off farm; a farm family with I ha will have a memberworking off farm half time: and a farm family with 0.5 ha will have a member working off farm full time atwages of Rp 20,000 per month.

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Analysis of Repayment Capacity of Water Users(Java tarm models using government support-level. prices)

Return/ha Return per Return per Return perReturn/ha Crop farm farm farm farm(Rp -000) intensity (RP '000) (Rp '000) (RP '000) (Rp -000)

Farm size (ha) 1.00 0.50 0.33

Wet SeasonRIce 729.90 1.00 729.90 729.90 364.95 240.87

Drv SeasonKLce 642.50 1.00 642.50 642.50 321.25 212.03Maize 413.30 0.30 123.99 123.99 62.00 40.92Soyabeans 560.11 0.15 84.02 84.02 42.01 27.73Groundnuts 305.50 0.05 15.28 15.28 7.64 5.04

Total 2,651.31 2.50 1,595.68 1,595.68 797.84 526.57

1iscellaneouug costs 35.00 17.50 11.67Additional family labor allowance 0.00 33.50 44.30

Farm income 1,560.68 813.84 559.21Off-farm income 240.00 240.00

Total Income 1,560.68 1,053.84 799.21

Possible Outgo_ng&sLI lng costs 600.00 600.00 600.00Ipeda 15.00 7.50 5.00National rent 100.00 50.00 33.33House tax 20.00 20.00 20.00Religious contributions 10.00 5.00 3.33Water Users Association (50 kg) 6.00 3.00 2.00

Total Outgoings 751.00 685.50 663.67

Savings 809.68 368.34 135.54

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Analyi of Repament Capacity of Water Users(Outside Java tarm models using government support level prices)

Return/ha Return per Return per Return perReturn/ha Crop farm farm farm farm(Rp '000) intensity (Rp '000) (Rp -000) (Rp '000) (Rp '0Q0)

Farm size (ha) 1.50 1.00 0.50

Wet SeasonU~lErce 664.80 1.00 664.80 997.20 664.80 332.40

DU Seasonxice 664.80 0.50 332.40 498.60 332.40 li-,.20Maize 312.43 0.30 93.73 140.59 93.73 46.86Soyabeans 144.86 0.15 21.73 32.59 21.73 10.86Groundnuts 169.25 0.05 8.46 12.69 8.46 4.23

Total 1,956.13 2.00 1,121.12 1,681.68 1,121.12 560.56

Miscellaneous costs 60.00 40.00 20.00Additional family labor allowance 0.00 0.00 30.00

Farm iie:ome 1,621.68 1,081.12 570.56Off-farm income 3.00 240.00

Total Family Income 621.68 1,081.12 810.56

Possible OutgoingsLisvng costs 750.00 750.00 750.00Ipeda 22.50 15.00 7.50Natior.al rent 150.00 100.00 50.00House tax 20.00 20.00 20.00Religious contributions 10.00 5.00 3.33Water Users Association (50 kg) 12.75 8.50 4.25

Total Outgoings 965.25 898.50 835.08

Savings 656.43 182.67 -24.52

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Derivation of Economic Prices(Constant 1987 prices)

Import Parity Export ParityItems Unit 1987 1990 1995 2000 1987 1990 1995 2000

RiceThai 5% brokens, FOB Bangkok $/tonne 210 249 255 260 210 249 255 260Quality adjustment 10% 189 224 230 234 15% 179 212 217 221

Rp/kg 295 350 358 365Freight + insurance + 30 30 30 30 0 0 0 0CIF/FOB price 219 254 260 264 0 0 0 0

Rp/kg 361 419 428 436 0 0 0 0Port handling, storage, losses 5% + 18 21 21 22 5% - 15 18 18 18Transport port to wholesaler + 5 5 5 5 - 5 5 5 5Transport mill to wholesaler - 3 3 3 3 - 3 3 3 3Traders margins - 10 10 10 10 - 10 10 10 10Ex-mill price 371 432 442 450 262 314 322 329Conversion to paddy 65% 241 281 287 293 65% 170 204 209 214Milling cost - 10 10 10 10 - 10 10 10 10Transport farm to mill - 12 12 12 12 - 12 12 12 12

Economic farm gate price Rp/kg 219 259 265 271 148 182 187 192Average import/export Rp/kg 184 220 226 232

Maize'OB US Gulf Port $/tonne $/tonne 72 112 114 118 $/tonne 72 112 114 118Quality adjustment 15% 11 17 17 18 0 & Freight + insurance 20 20 20 20

Ol

Import Parity Export ParityItems Unit 1987 1990 1995 2000 1987 1990 1995 2000

Maize (cont-d)CIF Indonesia $/tonne 92 132 134 138 $/tonne 61 95 97 100

Rp/kg 152 218 221 228 Rp/kg 101 157 160 165Port handling, storage, losses + 8 11 11 11 - 5 5 5 5Transport to wholesaler + 5 5 5 5 - 5 5 5 5Traders margin - 10 10 10 10 - 10 10 10 10Transport farm to wholesaler - 12 12 12 12 - 12 12 12 12

Economic farm gate price Rp/kg 143 212 215 222 69 125 128 133Average import/export Rp/kg 106 168 172 178

Soya BeansCIF Rotterdam $/tonne 200 233 246 240 >Freight + insurance + 35 35 35 35 £CIF Indonesia $/tonne 235 268 281 275

Rp/kg 388 442 464 454Port handling, storage, losses + 19 22 23 23Transport to wholesaler + 5 5 S 5Traders margin - 10 10 10 10Transport farm to wholesaler - 12 12 12 12

Economic farm gate price Rp/kg 390 447 470 460

GroundnutsGroundnuts oil price $/tonne 560 652 720 636Ratio IndonesianImport/groundnuts oil price 0.72

(1982-84)CIF Indonesia shelled groundnuts $/tonne 403 469 518 458

Rp/kg 665 774 855 7560

Import Parity Export ParityItems Unit 1987 1990 1995 2000 1987 1990 1995 2000

Groundauts (cont'd)Port handling, storage, losses 5% + 33 39 43 38Transport to wholesaler + 5 5 5 5Traders margins - 10 10 10 10Transport farm to wholesaler - 12 12 12 12

Economic farm gate price Rp/kg 681 796 881 777

Urea (46% N)FOB Europe $/tonne $Itonne 115 214 200 215Freight & insurance + 15 15 15 15Ex faztory Palembang, Indonesia $/tonne $/tonne 130 229 215 230

Rp/kg Rp/kg 215 378 355 380Transtport to wholesaler + 20 20 20 20Storage and wholesalers' margin + 15 15 15 15Transport to farm + 10 10 10 10

Economic farm gate price Rp/kg 260 423 400 425

Triple Super Phosphate(TSP, 46% P205)FOB Florida $/tonne 118 149 175 185Freight + insurance 55 55 55 55CIF Indonesia $/tonne 173 204 230 240

Rp/kg 285 337 380 396Transport to wholesaler + 20 20 20 20Storage and wholesalers' margin + 15 15 15 15Transport to farm + 10 10 10 10

Economic farm gate price Rp/kg 330 382 425 441

0h

- 117- ANNEX 9Table 2

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Financial and Economic Prices(Rp/kg)

Financialprices Economic prices1987 1987 1995/a

Outputs

Paddy 150 184 226

Maize (shelled) 130 106 172

Soybeans 525 390 470

Groundnuts (shelled) 750 681 881

Cotton 400 598 973

Inputs

Seeds: Paddy 350 230 283

Maize /b 250 133 215

Soybeans 750 488 588

Groundnuts 1,000 851 1,101

Cotton 125 125 125

Urea 125 260 400

TSP 125 330 425

Pesticides (liter) 2,500 10,000 10,000

Labor (man-days): Java 1,500 965 965

Off-Java 2,800 2,000 2,000

/a In constant 1987 prices.b Seeds of improved HYV, e.g., Arjuna, may cost up to Rp 750/kg and hybrids

up to Rp 19500/kg.

- 118 -

ANNE 10Page 1 of 1

INDONESIA

IRRIGATION SUBSECTOR PROJECT

Selected Documents and Data Available in Project File

Background Reports

1. Project PreparaLion Reports, DGWRD assisted by Sir M. MacDonald and

Partners and P.T. Indah Karya, August 1986 and January 1987.

2. Preparatory Designs: Review Reports for the ongoing projects, DGWRD

assisted by Sir M. MacDonald and Partners and P.T. Indah Karya, February 1987.

3. Preparatory Designs: Draft Provincial Summaries, DGWRD assisted by

Sir M. MacDonald and Partners and P.T. Indah Karya, March 1987.

4. Lombok Island: Groundwater Investigation, DGWRD assistec, by ELC -

Electroconsult, October 1986.

5. Institutional Strengthening Study in Water Management at Tertiary

System and in Irrigation O&M at Main System, DGWRD assisted by DHV and PT

Deserco, June 1986.

Staff Working Papers

1. Cost Tables

2. Tables Related to Financial and Economic Analysis

3. Charts of various organizations

Chart 1

I I I 2 XtZj~I

F0!1Lii~~~~~~~~L-

I i ~ - - - - -- - - - - -

15~~~~~~~~~~~~~L

INDONESIAIRRIGATION SUBSECTOR PROJECT

Organizational Arrangements for the Implementation of Training Activities

Mln| of %"tslMr | l OfMnl, OfPUblc Wolk Rnanqce

sec,tam! c

rl I' '…OMIO G"etr of Coordiatorl ureaul of DCFC 0i t| tor Genera

D(;rD_ (DGSWD) m|E_

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tf IDO <'1ffice---Of Dmeorate of Nda~~~~~~~~~~~~~~~~~~~~~~~g Penonnel -~~~~~~~~~~ar.ngOfAc,o Ta,mgO

(DO-10xac;&l¢>c ! Mers,( , I-orms POnoM sro,DWMz M . &

CT ACTAMTES Ptonnng &~~~~~~~~~~~~~~~Teh~ctCotO ~ee~t~ ee~~

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I F,ncl I Polrnco I I -m Pr I Icral I I 01 II ll P IOC Fei *omce

I , a t ~~~~NON .REEr4 TPZIN.G I

O&M1o 1tc bE clanstmtl n [ 9go l TIon TranWUt Acto atM8

O& .c STK De .odnn .o i ,w for $Wrv CatsCOP lW eoa m

| Sfflems CSkM | } M Tlanr10 | | ms CtkM § | | I Ik P I~~~~~~~~~~~~~~~~~~~~~~~~~~(TC L"WCffdlls& wi Saf

I ~ ~ ~ ~ ~ ~~ ~~~ I I I S = vff*v

Wa1lBn - 31144t 13

- 121 -

Chart 3

INDONESEIAIRRIGATION SUBSECTOR PROJECT

Approoch to Strengthening lnigatlon Managementat the Terinary and Quartemary Levels

lechnical C n =l1 i = 1

Government Grouts(MOA MPI) Counterparts(MQA MpU)

Provincial _iProvin cial l InterDr Provicial

Irrigaton I_-_ coordination ¢ _Pof .*

Comnmitees iGroup Mnaigers(PU MOA)

DistrictIrrlation _G,.-rrr.nt

Committees (Bupot,)

|UJA Action Groups Quick Inventory(AG) 3-9 pe, of WAAs bv Seksi _

OsStin (MOA, MPUJ& MiLA) & Su:ks, Level Staff

Training of AG Ben _-marMembers 2-Month Intomotion

by MCA MPU NGO s Son VAS& Consultants

Training of Sub-District n StudyStaff on Community Contiuln Studty

Orgonimthon MNU. MIA Of & SamluaionMOA Staff Including PPts

i l Sr ~~~~~~~~~~~~~~Outpuht$

| Organi|n Lr Level. MOA MRU hHAeorganIzatron I Officials Inluding _T r

I ~~~~~~Irrgraotion Comrmitree

Cimbursi(GroupAj )¶| Cord,nungMnitorigA

SterofohentnV)A MembomoTraining Modu l3s

Deeope t G!ip A. oue

WIJA ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~" Banker - 3114412rdle

- 122 -

Chart 4

INDONESIAIRRIGATION SUBSECTOR PROJECT

Organizational Set up for ISF Pilot Scheme

Inter-agency Coordination Group-BAPPENAS (Chalrman)-Dte. of IPEDA (Finance)-DG of Public Affairs (Home Affairs)-DGWRID (Public Works)-DGFCA (Agriculture)

| Provincial Inter-agency Coordination GroupCoslat

__________ _ District Irrigation Committeef I Chaired by Bupati

I eSystem-wide or!s Distnct Level Pilot Implementation Unit Consultants

8.0 Sub-District U . Office

E Agriculture Village lriationCu Extension Chiefs SekI

I Water Users Associations

Irrigation Beneficiary Farmers JWorld Bank-40485

96* 104 1124

THAILAND

I.

A a o AJto Ubai

* UPundrnh

D.I. ACEH MALAYSIA

Mndon,UAA*M~~~~~~On k~~~~~~IIUMALA

SUMATERA ; 4UTARA

L- SINGAPORE .

Pkcmbarue.4tMATE' A~ ,,AJ ~ .KALIMANTAN

4 j sSU~~~~~~.~MATERA ,/ .8ARATf RIAU Po

0 ~ ~~~~~BARAT .

oPod"ng ).../ . KALIA

.JAM31 obm TE1

tf' SUMATERA\ I KMuW; C 4., ._- _ .

BENr SELTAN-j B.Ebkulu o Ai E

/ L4MPUUNG

I N D O N E S I A a M 0 o a

IRRIGATION SUBSECTOR PROJECT ' - JAKARA

JAWA BARAT GOSandimg ( oSIm.I;

SPECIAL MAINTENANCE AND ,' J *EFFICIENT O&M IRRIGATION JAWA TENGAH o' 0 & Sun

SPECIAL MAINTENANCE AND W ° MEFFICIENT OSM SWAMPS Yogwoae ' JAWA TMU,R

O ON-GOING PROJECTS

* GROUNDWATER SUB-PROJECTS

RIVER MOUTH

- -- PROVINCE BOUNDARIES

-. - INTERNATIONAL BOUNDARIES

9o 1°40 112

IBRD 20240120- 128-

PHILIPPINES

BRUNEI

11 (r_ /

kLAYSIA /

KALIMANTAN TIMUR ! SLnaSo

[ ' / / SULAWESI UTARA

( S~~amorido

ANTAN Pelu P-

GAH aI PIMnGkAH ya ' SULAWESI

o ?,..4GAH i

f v-~%,~~% SULAWESI 'MWU%,ofALIMANTAN SELATAN

fo.; SELATAN-SULAWESI °Ambo

TENGGARA o 0 h

POmuMIJV? 3 Snem.\

Ulung Pandang

I NUSA TENGGARA BARATB ALI .

0Mat / NUSA TENGGARA TIMUR v! i > 4 b It

TIMOR TIMUR r IN

K°p0 C_WM Trh

100 200 300 400 SW0 woIef nWU* ovtt

KILOMETERS pwlwL

120_ 1280

JUNE 1987