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Report No: 76227-ID

PROJECT PAPER ON A PROPOSED ADDITIONAL LOAN



IN THE AMOUNT OF US$99.90 MILLION TO THE REPUBLIC OF INDONESIA AND RESTRUCTURING FOR A THIRD WATER SUPPLY AND SANITATION FOR LOW INCOME COMMUNITIES (COMMUNITY BASED WATER SUPPLY / PAMSIMAS II) PROJECT

March 22, 2013

Indonesia Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region

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

CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2013) Currency Unit = Indonesian Rupiah (IDR) IDR9,638 = US$1.00 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AMDALs APBD APBN BAPPENAS BAPPEDA BPKP CAPs CDD CFs CFT CLTS CMAC CPMU DG RD DG DCEH DG PSE DG VCE DG Treasury DGHS DIPA DMAC DPMU DPRD EIA FIR FMR JMP KPPN MoF MoH MoNE MoHA MPW PCSC Pokja AMPL

Environmental Impact Assessment District Government Budget Central Government Budget National Planning Board Provincial/District/City Development Planning Board Financial and Development Supervision Board Community Action Plans Community Driven Development Community Facilitators Community Facilitator Teams Community-Led Total Sanitation Central Management Advisory Consultants Central Project Management Unit Directorate General of Regional Development Directorate General for Disease Control and Environmental Health Directorate General for Primary and Secondary Education Director General of Village and Community Empowerment Director General of Treasury Director General of Human Settlements Integrated Budget (Recurrent and Investment) District Management Advisory Consultants District Project Management Unit Regional Parliaments Environmental Impact Assessment Final Investigative Report Financial Monitoring Report Joint Monitoring Program Government Treasury Office Ministry of Finance Ministry of Health Ministry of National Education Ministry of Home Affairs Ministry of Public Works Program Coordination and Steering Committee Water and Sanitation Working Groups

Vice President: Country Director: Sector Director Sector Manager: Task Team Leader:

POM PP PPK Puskesmas PMAC

Project Operations Manual Government Regulation Authorized Budget Signatory Community Health Center Provincial Management Advisory Consultant

PPMU

Provincial Project Management Unit

ROMS

Regional Oversight Management Services

RWSS SATKER SOPs SPM SPP SPPB

Regional Water Sanitation Sector Task Entity Standard Operating Procedures Payment Order Payment Request Grant Authorization

SUSENAS

National Socio-Economic Survey

SWM

Solid Waste Management

STBM

Sanitasi Total Berbasis Masyarakat

TOT TDS TSSM UDKP UPC UPP USD VIT WASH WASPOLA

Training of Trainers Training Development Service Total Sanitation and Sanitation Marketing Sub-district Level Council of Village Heads A Financial Unit of the VIT Urban Poverty Project United States Dollar Village Implementation Team Water Sanitation and Hygiene Indonesia Water and Sanitation Policy Formulation and Action Planning Project World Bank Group Water Quality Monitoring Water Supply and Sanitation Water Supply and Environment Sanitation Water Sanitation and Hygiene (First) Water Supply and Sanitation for Low Income Communities (Second) Water and Sanitation for Low Income Communities

WBG WQM WSS WSES WSH WSSLIC-1 WSLIC-2

Axel van Trotsenburg Stefan G. Koeberle John Roome Charles M. Feinstein George Soraya

INDONESIA THIRD WATER SUPPLY AND SANITATION FOR LOW INCOME COMMUNITIES (COMMUNITY BASED WATER SUPPLY / PAMSIMAS II) PROJECT PROJECT PAPER FOR ADDITIONAL LOAN CONTENTS

Data Sheet I. Introduction ............................................................................................................. 1 II. Background and Rationale for Additional Financing ............................................. 1 III. Proposed Changes .................................................................................................. 5 IV. Appraisal Summary ............................................................................................... 9 Annex 1: Results Framework and Monitoring.......................................................... 13 Annex 2 Operational Risk Assessment Framework (ORAF) .................................... 19 Annex 3: Breakdown of PAMSIMAS II Financing by Funding Source ................... 22

INDONESIA THIRD WATER SUPPLY AND SANITATION FOR LOW INCOME COMMUNITIES (COMMUNITY BASED WATER SUPPLY / PAMSIMAS II) PROJECT ADDITIONAL LOAN DATA SHEET Basic Information - Additional Financing (AF) Country Director: Stefan G. Koeberle Sector Manager/Director: Charles M. Feinstein/John Roome Team Leader: George Soraya Project ID: P129486 Expected Effectiveness Date: May 31, 2013 Lending Instrument: Sector Investment Loan Additional Financing Type: IBRD loan

Sectors: Water Supply (34%); Sanitation (33%); Other Social Services (17%); Sub-national government administration (9%); Central government administration (7%) Themes: Rural services and infrastructure (25%); other human development (25%); participation and civic engagement (24%); other communicable diseases (13%); other social development (13%). Environmental Category: B Expected Closing Date: December 31, 2016

Basic Information - Original Project Project ID: P085375 Project Name: The Third Water Supply & Sanitation for Low Incomes Communities Project (PAMSIMAS) Lending Instrument: Sector Investment Loan

Environmental Category: B Expected Closing Date: December 31, 2014

AF Project Financing Data [X] Loan [ ] Credit [] Grant [ ] Guarantee [ ] Other: Proposed terms: Grant by GoA channeled through existing Bank-administered Trust Fund Standard IBRD Terms Project Financing Plan (US$ Million) Component

World Bank -IDA -IBRD AusAID Borrower/communities TOTAL Client Information

Current project

Proposed additional financing

137.50 46.40 137.60 321.50

99.90 44.001 114.132 258.03

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Total

137.50 99.90 90.40 186.60 579.53

Total indicative GoA contribution is AUD49.5 million. The US$44 million represents funds allocated to recipient executed activities. The remaining funds will support Bank executed activities and trust fund administration fees. Availability of these funds is subject to an amendment to the Administration Agreement with the Government of Australia (GoA), which is expected to be approved by May 2013. 2 GoI contribution subject to increase in accordance with increase of number of participating districts

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Borrower: Republic of Indonesia Responsible Agency: Ministry of Public Works (MPW) Contact Person: Imam S. Ernawi Telephone No.: +62-21 7279-6158 Fax No.: +62 21 7279-6155 AF Estimated Disbursements (Bank FY/US$m) FY 2013 2014 2015 2016 2017 Annual 0 17 36 39 7.9 Cumulative 0 17 53 92 99.9 Project Development Objective and Description Original project development objective: To increase the number of low-income rural and peri-urban populations accessing improved water and sanitation facilities and practicing improved hygiene behaviors as part of the Borrower’s efforts to achieve WSS-MDGs, through programmatic mainstreaming and scaling-up of a nationwide community-driven approach. Revised project development objective: To increase the number of under-served and low income rural and peri-urban populations accessing improved and sustained water and sanitation services and practicing improved hygiene behaviors as part of the Borrower’s efforts to achieve WSS-MDG Targets, through programmatic mainstreaming and scaling-up of a nationwide community-driven approach. Project Description Component 1: Community Empowerment and Local Institutional Development: 1. Provision of technical advisory services and training for both governmental and non-governmental organizations and low income communities to support the preparation and implementation of Community Action Plans (CAPs), focusing on informed choice, design and costs of community and school water supply and peri-urban sanitation services, community and school hygiene behavior change activities, school sanitation facilities and post-construction management and sustainability. 2. Provision of technical advisory services and training to strengthen inter-agency cooperation at the Province- and District-level and to develop the institutional capacity of the units, teams and related personnel involved in the implementation of the Project, including development and revision of guidelines and manuals, and training materials to ensure compliance with the relevant rules and procedures. 3. Provision of training, through the recruitment of a Training and Development Service (TDS) team at the national level, to provide support to PPMUs and DPMUs, including strategic planning, preparation and quality assurance for training and capacity building services. 4. Provision of training, through the recruitment of Community Facilitation Teams, to facilitate community empowerment and institution building at the Village level. 5. Implementation of a program of activities designed to support capacity building and advocacy activities for governments and civil society to improve overall WSS delivery, encourage increase or reallocations in overall local government budgets in favor of community-driven development WSS efforts, and promote post-construction innovations to enhance the sustainability of WSS services.

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Component 2: Improving Hygiene and Sanitation Behavior and Services: 1. Provision of technical advisory services and training to support implementation of a phased program of community behavior change, consisting of the promotion of the community-led total sanitation approach to safe excreta management, hand-washing and other locally relevant environmental sanitation practices, including water storing and handling, food hygiene, solid waste and wastewater management, and water quality surveillance. 2. Provision of technical advisory services and training, and carrying out of studies, to support a sanitation and hygiene marketing program designed to generate consumer demand for improved sanitation, facilitate the ability of local markets to respond to this demand, and promote improved hygiene behavior. 3. Provision of technical advisory services and training to support school-based hygiene promotion training and facilitation, and facilitate workshops designed to incorporate and integrate school-based hygiene promotion programs into routine curricula and health education programs. 4. Provision of technical advisory services and training to strengthen the capacity of the units responsible for environmental health and hygiene promotion in Participating Provinces and Participating Districts to monitor progress in meeting their WSS-MDG Targets, assess performance of their sanitation and hygiene programs and evaluate their impact on hygiene behavior. Component 3: Water Supply and Public Sanitation Infrastructure: 1. Provision of technical advisory services and training to support: (a) water supply systems for new villages; (b) the scaling up and expansion of existing village water supply systems; and (c) optimization of existing underperforming village water supply systems, through the design, construction and commissioning and operation of water supply infrastructure at the communitylevel, based on a menu of technical options, including: rapid technical assessments and community WSS situation analysis to determine water demand and system options; informed water system technology choice; technical surveys and development of the detailed engineering designs; construction, supervision and quality control; operations, maintenance and repair training. 2. Provision of grants to support activities under CAPs. Component 4: District and Village Incentives (DVI): 1. Provision of DVI Grants to Participating Districts that meet or exceed predetermined project performance criteria based on the Participating District’s achievement of WSS coverage, contribution to CAP Grants, and management information system performance, to support activities under CAPs. 2. Provision of DVI Grants to Participating Villages that meet or exceed predetermined project performance criteria based on the Participating Village’s achievement of component specific objectives of hygiene, community mobilization and contribution, and WSS coverage to support complementary activities in view of the scaling up and expansion of existing community WSS services. Component 5: Implementation Support and Project Management: 1. Provision of technical advisory services and training, through the recruitment of Central Management Advisory Consultants (CMAC), to provide support, for the benefit of CPMU, in terms of overall Project management, monitoring of implementation and outcomes, expansion of the national WSS program, and technical and financial reporting, as well as in the fields of sustainable iii

WSS, hygiene promotion, capacity building, institutional strengthening, social and environmental safeguards and community empowerment. 2. Provision of technical advisory services and training, through the recruitment of Regional Oversight Management Services (ROMS) teams, to provide support, for the benefit of PPMUs and DPMUs, in terms of day-to-day Project management, technical matters, implementation of community-driven processes, institutional capacity building, social inclusion and environmental safeguards, monitoring of implementation and sustainability of outcomes, and technical and financial reporting at the Province-, District- and Village-level. 3. Provision of technical advisory services and training, through the recruitment of independent Project evaluation consultants, to evaluate Project performance, having regard to the performance indicators 4. Provision of technical advisory services and training to support preparations for a sector-wide program for the WSS sector. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Is approval of any policy waiver sought from the Board (or MD if RETF operation is RVP approved)? Has this been endorsed by Bank Management? (Only applies to Board approved operations) Does the project require any exception to Bank policy? Has this been approved by Bank Management? Conditions and Legal Covenants: Loan Agreement Reference Description of Condition/Covenant Paragraph 2 (a) of Section The Borrower shall: (a) prior to the beginning I.B of Schedule 2 of each new Fiscal Year, provide to the Bank, for review and comments, a proposed annual work program for that Fiscal Year, consisting of detailed work plans and budget for that Fiscal Year for the CPMU and Participating Provinces and Participating Districts; (b) proceed thereafter to implement such annual work program and budget, taking into consideration any comments that may have been made thereon by the Bank. iv

[X]Yes [ ]Yes [ ]Yes [ ]Yes [ ]Yes [X]Yes [ ]Yes [ ]Yes [ ]Yes [ ]Yes

[ ] No [X]No [X]No [X]No [X]No [ ] No [X]No [X]No [X]No [X]No

[ ]Yes [X]No [ ]Yes [X]No [ ]Yes [X]No [ ]Yes [ ]No Date Due Annually

I.

INTRODUCTION

1. This Project Paper seeks the approval of the Executive Directors to provide an additional financing in an amount of US$99.90 million IBRD loan to IDA Credit 8295-IND to the Republic of Indonesia for the Third Water Supply and Sanitation for Low Income Communities (Community Based Water Supply/PAMSIMAS II) Project. Also, included for approval is a restructuring to amend the Project Development Objective and implementation arrangements of the Original Project to ensure consistencies with the Additional Loan. The proposed additional loan (PAMSIMAS II), grant and government contributions will scale up water supply implementation to an additional 5,000 new villages and extend sanitation interventions through district wide implementation of Community Based Total Sanitation (STBM) in 219 target districts, with provision for further geographic expansion. The scaling up of the water and sanitation interventions aligns with the Government of Indonesia’s (GoI) programs aimed at ensuring the achievement of MDG targets, specifically Goal 7 and Target 7C for reducing the numbers of people without access to safe drinking water and basic sanitation in rural areas. 2. Partnership arrangements. The Australian Government (GoA) is already providing USD$46.63 million to complement the original PAMSIMAS project. This partnership will be expanded through a proposed additional financing of USD$ 444 million, to TF0904792 for the period from 2013 to 2016. These funds are intended to support a number of project components and activities which were appraised jointly with the proposed additional Loan. The additional grant will be processed through an amendment to the existing Administration Agreement with GoA. II.

BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING

3. Background. The original PAMSIMAS IDA Credit for US$137.50 million was approved by the Bank on May 27, 2006 and became effective on June 6, 2008. The original Project closing date was June 30, 2013. The project closing date was extended to December 31, 2014 through a Level 2 restructuring on November 27, 2012. Following Credit Effectiveness, a trust fund to support the Project was approved through four separate GoA Grants5 totaling US$46.40 million equivalent. 4. The Project Development Objective of PAMSIMAS is to increase the number of lowincome rural and peri-urban populations using improved water and sanitation facilities and practicing improved hygiene behaviors as part of GoI's efforts to achieve WSS-MDGs through programmatic mainstreaming and scaling-up of a nationwide community-driven approach. 5.

Currently PAMSIMAS has five components, which are summarized below in Table 1.

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This trust fund has supported both Bank and recipient executed activities. Of the total AUD54.5 million, US46.4 million was placed in a child trust fund that supported the Government in recipient executed activities. The remaining funds supported Bank executed activities as well as trust fund administration fees. 4 Total indicative GoA contribution is AUD49.5 million. US$44 million represents funds allocated to recipient executed activities. $5.5 million will support Bank executed activities and trust fund administration costs. Availability of these funds is subject to an amendment to the Administration Agreement with the Government of Australia (GoA) which is expected to be signed by GOA and the Bank by May 2013.

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Table 1: PAMSIMAS Components Component

Description

1.

Community Empowerment and Local Institutional Development

Provision of technical advisory services and training for both governmental and non-governmental organizations and low income communities to support the preparation and implementation of Community Action Plans (CAPs), consisting of: (a) CAPs focusing on informed choice, design and costs of community and school water supply and peri-urban sanitation (CAP-1); and (b) CAPs focusing on community and school hygiene behavior change activities, school sanitation facilities and post-construction management and sustainability (CAP-2). Provision of technical advisory services and training to strengthen interagency cooperation at the Province and District level, and develop the institutional capacity of the units, teams and related personnel involved in the implementation of the Project, including development of guidelines and manuals, and training materials to ensure compliance with the relevant rules and procedures. Implementation of a program of activities designed to support capacity building and advocacy activities for local governments and civil society to improve overall WSS delivery, encourage increases or reallocations in overall local government budgets in favor of community-driven development WSS efforts, and promote post-construction innovations to enhance the sustainability of WSS services.

2.

Improving Sanitation and Hygiene Practices

Provision of technical advisory services and training to support implementation of a phased program of community behavior change, consisting of the promotion of the Community-Led Total Sanitation (CLTS) approach to safe excreta management, hand-washing and other locally relevant environment sanitation practices, including water storing and handling, food hygiene, solid waste and wastewater management, and water quality surveillance. Provision of technical advisory services and training, and carrying out studies, to support a sanitation and hygiene marketing program designed generate consumer demand for improved sanitation, facilitate the ability of local markets to respond to this demand, and promote improved hygiene behavior. Provision of technical advisory services and training to support school based hygiene promotion training and facilitation, and facilitate workshops designed to incorporate and integrate school-based hygiene promotion program into routine curricula and health education programs. Provision of technical advisory services and training to strengthen the capacity of the units responsible for Environmental Health and Hygiene Promotion in participating provinces and participating districts to monitor progress in meeting their WSS-MDG targets, assess performance of the sanitation and hygiene programs and evaluate their impact on hygiene behavior.

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Component

Description

3.

Water Supply and Public Sanitation Infrastructure

Provision of technical advisory services and training to support the design, construction, and commissioning and operation of water supply infrastructure at the community-level, based on a menu of technical options, including: rapid technical assessments and community WSS situation analysis to determine water demand and system options; informed water system technology choice; technical surveys and development of the detailed engineering designs; construction, supervision and quality control; operations, maintenance and repair training. Provision of grants to support: (a) activities under CAP-1; and (b) activities under CAP-2.

4.

District and Village Incentive Grants

Provision of grants to participating districts that meet or exceed predetermined project performance criteria under an agreed WSS replication program involving a predetermined number of participating villages, using their own funds and applying the same methodology and approach as under the Project, to be applied to support complementary activities in view of the scaling up and expansion of such replication program. Provision of grants to participating villages that meet or exceed predetermined project performance criteria based on the achievement of component specific objectives of hygiene, community mobilization and contribution, and WSS coverage under a replication program, to be applied to support complementary activities in view of the scaling up and expansion of such replication program.

5.

Implementation Support and Project Management

Provision of technical advisory services and training, through the recruitment of Central Management Advisory consultants (CMAC) to provide support, for the benefit of Central Project Management Unit (CPMU), in terms of overall Project management, monitoring of implementation and outcomes, expansion of the national WSS program, and technical and financial reporting, as well as in the fields of sustainable WSS, hygiene promotion, capacity building, institutional strengthening, social and environmental safeguards and community empowerment. Provision of technical advisory services and training, through the recruitment of Provincial Management Advisory Consultants (PMAC) to provide support, for the benefit of PPMU, in terms of day-to-day Project management, technical support, implementation of community-driven processes, institutional capacity building, social inclusion and environmental safeguards, monitoring of implementation and sustainability of outcomes, and technical and financial reporting at the Province and District level. Provision of technical advisory services and training, through the recruitment of District Management Advisory Consultants (DMAC) to provide support DPMU in terms of day-to-day Project management support, technical support, monitoring of implementation, technical and financial reporting at the District level, and, through the recruitment of Community Facilitator Teams, to facilitate community empowerment and institution building at the Villagelevel. Provision of technical advisory services and training, through the recruitment of Independent Project Evaluation Consultants, to evaluate Project performance, having regard to the performance indicators in the Credit Financing Agreement. Provision of technical advisory services and training to support preparations for a sector-wide program for the WSS sector.

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6. PAMSIMAS became effective two years after Board approval. Implementation was slow initially and was constrained by procurement delays resulting in lack of technical assistance support at various levels. The additional grant funding from GoA has strengthened the capacity building (Component 1) and project management aspects (Component 5). It has also contributed to core water supply and public sanitation infrastructure outcomes through the addition of 1,191 villages under Component 3. 7. The project is currently rated as satisfactory on both the likelihood of achieving the development objectives and on implementation progress. The weak areas in the early stages of implementation (procurement, financial management, Component 2 and Component 5) have improved. Following the mid-term review (in November 2010) a project restructuring was completed in October 19, 2011 with the following changes: (i) minor reallocation of proceeds between expenditure categories to make more effective use of the total proceeds; (ii) revision to the financing for expenditure under the Consultant Services expenditure category; and (iii) scaling down targets for Component 2 PDO indicators (Improving Hygiene and Sanitation Behavior and Services) to better reflect the reality of the implementation approach (original and revised targets outlined in Table 3). 8. The changes to PDO indicator for Component 2 were prompted by the development of a national program targeting sanitation. PAMSIMAS was designed prior to the evolution of a national program, Sanitasi Total Berbasis Masyarakat (STBM)6, which integrates Community Led Total Sanitation approach with 5 other environmental health/behavior change pillars. This approach aims to integrate provision of adequate sanitation with water and health-related interventions that includes the whole community. The project’s narrow focus on target villages hampered district wide implementation of STBM in accordance with the program's intent of large scale district wide programmatic implementation. There is potential to revise the design and significantly increase the outcomes from Component 2 going forward. 9. Lessons Learned. During the course of implementation the following lessons were learned: (i) nation-wide standardized village targeting mechanisms led to selection of some villages without adequate demand; (ii) specific implementation mechanisms are needed to provide additional support to regions with weaker implementation capacities, such as the Eastern Region and the outer islands; (iii) limited incentives for local governments to promote operation and maintenance capacity of village level infrastructure; (iv) over reliance on project-hired community facilitators at the village level; and (v) provision of the same grant amount to each village limited district governments’ abilities to meet needs and in some cases skewed cost per capita as villages with small populations received same amount of funding as densely populated villages. These lessons have been reflected in the improved project design as outlined in Table 2. 10. Rationale for Additional Financing. GoI aims to achieve MDG targets as well as national coverage goals of 85% by 2020 and 100% by 2025. Successful implementation of PAMSIMAS has encouraged the government to use it as a national platform for the provision of 6

Sanitasi Total Berbasis Masyarakat (STBM) program was developed in accordance with the Ministerial Decree of the Minister of Health, Republic of Indonesia No 852/Menkes/SK/IX/2008, dated 9 September 2008. This program is comprised of five pillars that aim to: (i) end Open Defecation; (ii) promote hand washing with Soap; (iii) address household safe water management; (iv) address household wastewater management; and (v) address solid waste management.

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rural water supply and sanitation supporting delivery of two national programs, namely Water for All Program7 and STBM. GoI has asked the Bank to continue its engagement and is requesting the proposed AF to support government efforts to meet financial and capacity gaps to expand the program nationally. 11. Country Partnership Strategy. The new Country Partnership Strategy (CPS) for Indonesia (CPS issued in December 2012 for FY 2013 - 2015) calls for World Bank Group support through a lens that is pro-growth, pro-jobs, pro-poor and pro-environment. The CPS is aligned with the country’s Master Plan for “Acceleration and Expansion of Indonesia’s Economic Development 2011-2025”, which seeks to accelerate development through progrowth, pro-jobs, pro-poor and pro-green strategy. 12. The original PAMSIMAS project was closely aligned with the previous CPS (2008 – 2012) and PAMSIMAS II is closely aligned with the current CPS. In particular improved access to water and sanitation, Community-Driven Development (CDD), and poverty inclusive implementation approaches are strongly aligned with the Pro-Poor pillar. Improvement in water and sanitation infrastructure and support to strengthening local government in WSS sector management are aligned with the Pro-Growth pillar. PAMSIMAS II’s gender and governance approach will contribute significantly to the Bank’s cross cutting engagements. III.

PROPOSED CHANGES

13. The proposed changes include: (i) additional loan of US$99.90 million; (ii) minor revision to the project development objective; and (iii) enhancements to implementation arrangements. 14. Project Development Objective. The wording of the project development objective will change slightly to better align with the GoI national program objectives and to increase the focus on sustained services. These minor changes were recommended to align objectives of current project to PAMSIMAS II (Additional Financing), which aims to expand the scope of beneficiaries beyond poor communities to include under-served populations as well. The revised PDO will also reflect the increased emphasis on sustainability. The proposed PDO is: To increase the number of under-served and low income rural and peri-urban populations accessing improved and sustained water and sanitation services and practicing improved hygiene behaviors as part of the Recipient’s efforts to achieve WSS-MDG Targets, through programmatic mainstreaming and scaling-up of a nationwide community-driven approach. 15. Implementation Arrangements. Several enhancements to the current Financing Agreement are proposed to ensure consistency of implementations arrangements with proposed structures under the Additional Financing. These changes encompass: (i) establishment of a TDS to support strategic planning of capacity development, delivery of training and capacity building 7

Program Air Bersih Untuk Rakyat (Water for All Program) of the Ministry of Public Works is one of six new programs introduced in early 2011 under an overarching program of interventions focused on poor and disadvantaged sectors of the population. The overall program (Program Pro Rakyat) is being implemented under the guidance of the Vice President, and the overall management of the Coordinating Minister for the Economy. The Minister of Public Works has direct responsibility for Program Air Bersih Untuk Rakyat but is supported by other relevant Ministers.

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events at the central level; (ii) establishment of 7 regional ROMS in lieu of PMAC/DMAC structures to provide support for overall coordination, day to day management, budgeting, financial administration, monitoring and reporting of the project at province and district level; and (iii) The reduction of Community Facilitator teams at the village level to two teams of twos (previously three) and the addition of one senior facilitator who will mentor and provide on the job training to other CFs. 16.

The principal changes are summarized in the following tables:  Table 2 – Overall scope and project components  Table 3 – Outcome indicators  Table 4 – Proposed cost estimates and financing

Table 2: Overall Scope and Project Components Item

Original Project

Revised Project Scope

Scope

PAD – 5,000 villages. Expected outcome approximately 6,833 villages in 110 districts in 15 provinces.

Component 1

Community Empowerment and Local Institutional Development Separate CAPs (CAPs-1 and CAP2), essentially covering the village plans related to Component 3 and Component 2 respectively.

5,000 new villages in 219 districts, with the provision of further geographic expansion across 32 provinces.

Components Community Empowerment and Local Institutional Development A single CAP will be required for target villages covering all activities funded under the village grant. Community facilitators will be engaged and trained under this component. Training and Development Service team to be provided at the central level to provide strategic planning, preparation and quality assurance for training and capacity building services nationally.

Component 2

Improving Hygiene and Sanitation Behavior and Services CLTS approach to sanitation in target villages

Supported by IBRD loan, AusAID grant and APBN (MoHA/MPW) funds Improving Hygiene and Sanitation Behavior and Services Sanitation implementation will be undertaken on a district wide basis under the STBM program approach but will be coordinated with CAP implementation in target villages. 1 Provincial Health Coordinator per province and 1 District Level STBM Facilitator per district will be recruited to provide implementation and capacity building support for District STBM implementation Supported by AusAID grant and APBN (MoH) funds.

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Item Component 3

Original Project

Revised Project Scope

Water Supply and Public Sanitation Infrastructure Focus on new village water supply systems.

Water Supply and Public Sanitation Infrastructure Two additional “windows” for accessing village grants: (a) expansion of existing village systems; and (b) optimization of existing underperforming systems.

Component 4

District and Village Incentives Grants Special incentive grants for good performing villages and districts.

Component 5

Implementation Support and Project Management Separate provincial and district level implementation management support technical assistance teams (PMAC, DMAC) supporting the PPMU and DPMU respectively.

Supported by IBRD loan, and AusAID grant and APBD II funds District and Village Incentives Incentives to Participating Districts and Villages that have met or exceeded predetermined project performance criteria to support complementary activities of expansion and/or optimization of existing community water supply schemes. Supported by APBN (MPW) funds. Implementation Support and Project Management Regional Oversight Management Services contracts, as a replacement of PMAC and DMAC, are located in 7 regions to provided support and capacity building for PPMUs and DPMUs in their respective regions. Supported by IBRD loan, AusAID grant and APBN (MPW) funds

Table 3: Outcome Indicators Item Number of additional people with sustainable access to improved water facilities differentiated by socioeconomic status Number of additional people with sustainable access to improved sanitation facilities differentiated by socioeconomic status.

Original Targets

Achieved[2]

Revised Targets

6 million [1]

4.2 million

11.6 million

3.4 million Originally 6-10 million beneficiaries; scaled down in the October 2011 restructuring

4.9 million

7.4 million direct beneficiaries in target villages.

[1] Includes increase from 5,000 to 6,180 target villages. [2] As of January 2013. This figure does not capture achievements in 2012 village CAPs. The targeted beneficiaries will likely rise after the inclusion of ongoing work, which is due to be completed in March 2013.

17. District and Village Incentives. Incentives for Participating District and Villages will be financed under component 4 from government contributions (MPW). These incentives are part of an on-going effort to encourage community-led operation and maintenance activities. They are disbursed based on meeting or exceeding pre-determined criteria outlined in the POM.

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Table 4: Proposed Cost Estimate and Financing Proposed Cost Estimates Component

Original cost

Revised Project Cost Cost estimate (US$ million)

Total Cost

1. Community Empowerment and Local Institutional Development

20.30

43.44

63.74

2. Improving Sanitation and Hygiene Practices

25.20

15.14

40.34

3. Water Supply and Public Sanitation Infrastructure

208.30

143.16

351.46

4. District and Village Incentive Grants

7.50

21.05

28.55

5. Implementation Support and Project Management

58.90

35.24

94.14

1.30

0

1.30

321.50

258.03

579.53

Unallocated Total

Financing (US$ million) World Bank



IDA



IBRD

137.50

137.50 99.90

99.90

AusAID

46.40

44.008

90.40

Government of Indonesia

101.10

85.50

186.60

Communities

36.50

28.63

65.13

321.50

258.03

579.53

Total

Detailed breakdown of financing sources can be found in Annex 3.

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Total indicative GoA contribution is AUD49.5 million. The US$44 million represents funds allocated to recipient executed activities. The remaining funds will support Bank executed activities and trust fund administration fees. Availability of these funds is subject to an amendment to the Administration Agreement with the Government of Australia (GoA), which is expected to be approved by May 2013.

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IV.

APPRAISAL SUMMARY

18. Economic Analysis. The Project has adopted a pro-poor and underserved formula for targeting eligible districts and communities. Community mapping of poor households to be carried out in relation to water service improvements will enhance the effectiveness of existing social mechanisms for fee exemption and cross-subsidization. The core component of the additional financing is a scaling up of the original PAMSIMAS project and as such the economic benefits as assessed in the PAD remain valid. Analysis of the completed activities and the key assumptions underpinning the PAD analysis (number of beneficiaries, investment cost) indicate that in overall the project is on track and has shown substantial improvement since the first year of implementation. During project preparation in 2006, provision of water supply was estimated at US$36 per capita. Currently, the Project provides access to water at an average cost of US$31 per capita. This cost of coverage is significantly lower than government implemented programs. The proposed improvements to the sanitation and hygiene component are anticipated to increase the economic benefits. 19. Available data indicates that community participation and good quality facilitation are cost-effective financially and economically and provide an efficient option for achieving WSS MDGs. The beneficiary communities also contribute at least 20 percent of the investment cost of their community action plans. They bear the cost of maintaining constructed water systems. The project will also impact health outcomes, which may be harder to quantify but nevertheless will make important contributions. 20. Fiduciary Aspects. Procurement and Financial Management (FM) arrangements under the on-going project will continue to apply to the additional financing. The design of the additional financing will continue to provide substantial technical assistance support in these areas. The CPMU will increase oversight by enforcing the chain of monitoring and spot checks of FM performance from the provincial level down to district and Community Facilitators. The CPMU will further improve payment verification processes by developing guidelines for the verification team, including random third party confirmation, and by improving accountability of the verification team through official appointment of the team members and ensuring that a verification report is produced for every consultant invoice. The CPMU will assign additional verification staff to accommodate the increase in centralized consultant contracts. Consultant contracts will be streamlined to reduce the ambiguity around reimbursable expenditures. The number of consultant packages will be reduced and new non-consulting service contracts will be used. 21. Procurement. Procurement for this project will be undertaken in accordance with the methods and procedures set out in: (i) the Loan Agreement and the agreed Procurement Plan; (ii) Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants, January 2011; and or (iii) Guidelines: Selection and Employment of Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers, January 2011. Procurement under the National Competitive Bidding (NCB) method may be carried out following GoI’s procurement regulations under Presidential Decree 54/2010 and amended through Presidential Decree 70/2012 subject to the improvements listed in the NCB-Annex to the

9

Loan Agreement. A Procurement Plan acceptable to the Bank has been prepared and will be posted on the project and Bank websites. 22. Procurement of works and goods (materials) for small infrastructure to be carried out by the community will follow Community Participation in procurement method, using forms and procedures as defined in the updated Project Operation Manual. Minor revisions to the Operations Manual, acceptable to the Bank include the updated procedures for further enhancing competitiveness, transparency, and accountability of procurement at the community level. 23. The current CMAC and PMACs contracts will expire in March 2013 while the selection process of new CMAC contract and Oversight Management Services (OMS) is underway. There will be a gap after the expiration of the current CMAC and PMAC contracts until new CMAC and OMSs contract are awarded. Based on past experience there is a potential risk of delay in selection of CMAC. To mitigate against potential disruptions the CPMU will hire some individual consultants to undertake the key CMAC functions during this gap. The current contract of the CMAC cannot be extended because the firms in the joint venture are currently included in the Bank’s debarred list. However, the current contracts of PMACs are expected to be extended for a reasonable period until the new OMSs are mobilized. 24. The current Procurement Committee will continue to be responsible for carrying out procurement under this project. Some of the committee members have experience of procurement under Bank-financed projects (through loans or grants), while others are new members to the committee. The Bank will provide training in order to enhance the capacity and understanding of the CPMU and the procurement committee on Bank procedures and guidelines. 25. Safeguards. There is no change to the safeguard category of the original project and the updated safeguards framework of PAMSIMAS will apply to the proposed additional financing. The project will continue to be classified as Category B. The project triggers Environmental Assessment and Indigenous Peoples policies. Safeguard instruments were disclosed in country on December 19, 2012 and sent to InfoShop on December 28, 2012. Following negotiations, the project Integrated Safeguard Data Sheet was updated and sent to InfoShop for disclosure on March 27, 2013. 26. Gender. As women are the primary handlers of water at home, time savings due to improved access to safe water and sanitation will provide them additional time to engage in income generation activities. The PAMSIMAS II implementation process engages women (and men) in CAP activities during planning and implementation. The project Operations Manual includes minimum requirements for women’s participation in key decision making and training activities, their representation in the Village Implementation Teams (VITs) and the Village Water Board Management. Women are and will continue to be well represented in the project implementation support teams, particularly in community facilitator teams. The Gender Action Plan from the parent project will be updated for PAMSIMAS II based on implementation experience and the results of the impact evaluation currently underway. 27. Disability. PAMSIMAS II implementation aims to strengthen sensitization efforts toward disability issues related to provision and access to water supply and sanitation facilities. 10

Discussions regarding disability related issues have been initiated. Incorporation of sensitization activities into the Project Operations Manual and Facilitator training will be accommodated at a later stage once there is consensus on types of activities to be included. 28. Governance. A Final Investigative Report was issued by INT on March 29, 2011 on a case pertaining to the Water Resources and Irrigation Sector Management Project (WISMP), which closed on December 31, 2010. The investigation substantiated the allegations that the firm C. Lotti and Associati S.p.A (known as Lotti) had systemically fabricated, falsified and inflated the amounts of receipts in support of its invoices submitted to the Client. The INT investigation led to 27 months debarment of the firm, and a payment of restitution to the Government of Indonesia. An on-going contract with the firm was also terminated and the Government replaced WISMP project staff involved with the Lotti case. 29. As a result of the investigation and findings, the Bank and the Government introduced additional steps to mitigate the risks of such occurrences, which have been working effectively. These included a strengthened review of invoices received from consulting and non-consulting services on reimbursable expenditures, requirements for the project verification team to carry out third party verifications on a sample when they carry out a review of the invoices, and new Standard Operating Procedures. In addition the Bank has agreed with BPKP that they will strengthen their review of such expenditure during audits. BPKP has also included third party verification on a sample of invoices as a part of their standard audit to ensure authenticity. 30. The Lotti FIR relates to a different project and different Directorate General within the Ministry of Settlements and Regional Infrastructure (now Ministry of Public Works) and no new red flags for fraudulent practices were identified during the implementation of this Project, However, lessons learnt from the investigation have been incorporated into PAMSIMAS to mitigate the risks of fraudulent invoicing. These mitigation measures include the use a new standard operating procedure for invoicing, the use of ICT for monitoring and transparency of contract management through a public website, and establishment of a robust complaint handling mechanism under the parent project. 31. Implementation Management/Institutional Arrangements. Institutional arrangements for PAMSIMAS II will generally follow those established for the original project but will incorporate changes to improve governance, increase the focus on sustainability, and support the expansion of PAMSIMAS nationwide. 32. At the central government, the Executing Agency (EA) is the Directorate General of Human Settlements, MPW. The EA has established a Program Coordination and Steering Committee (PCSC) consisting of Echelon 1 representatives of the implementing agencies, and a PCSC Secretariat/Technical Team consisting of Echelon 2 representatives from the implementing agencies. The PCSC and the Technical Team is chaired by Bappenas. The EA has established a CPMU with responsibility for overall project coordination, day-to-day management, budgeting, financial administration, monitoring, and reporting. The CPMU is made up of delegated representative responsible for management of contracts established under the project.

11

33. A key change under the AF includes a transition from the Provincial and District Coordination Committees to the POKJA AMPL (Water and Sanitation working groups), which are multi-agency working groups responsible for water supply and sanitation at the respective levels, and are already established in many provinces and districts. This change combines the project management and sector management responsibilities within a single organization. An additional change at the district level is the mandatory establishment of a stakeholder committee within or under the POKJA, which will include civil society representatives and will be empowered to make many of the key project decisions including the selection of participating villages, evaluation of CAPS, allocation of funds to villages, and the appointment of facilitators, thereby improving transparency and governance. 34. Changes in technical assistance arrangements include the following: (i) a Training and Development Services (TDS) will be appointed at the central level with overall responsibility for the planning, design, and implementation of training and capacity building activities across the project as a whole. The TDS will also be directly responsible for delivery of training and capacity building events at the central level. This change is a continuation of improvements made during implementation of the original project; (ii) at the provincial and district levels the technical assistance support has been restructured into 7 Regional Oversight Management Services teams covering the national project footprint. The OMS teams will support implementation at the provincial, district and village levels with appropriate support from the central level CMAC and TDS teams; (iii) district community facilitator teams will be appointed as teams of 2 (previously 3) covering technical and community empowerment skills. Additionally there will be a senior facilitator who will support the other community facilitators in their tasks providing mentoring and on the job training. He/she will also have an increased responsibility for strengthening district stakeholder capacity to support sustainable management of community based WSS facilities and services; (iv) technical assistance support for sanitation and hygiene will be provided through district STBM facilitators who will work with the district health offices (DinKes) to support and build capacity for district wide STBM implementation coordinating with the DPMUs through the OMS District Coordinator. 35. Risks. An Operational Risk Assessment Framework (ORAF) has been prepared for the proposed additional financing (see Annex 2). The overall project risk is assessed as Moderate. Mitigation measures have been agreed with GoI and the implementing agencies to address the identified risks.

12

ANNEX 1 RESULTS FRAMEWORK AND MONITORING INDONESIA: Additional Loan for the Third Water Supply and Sanitation for Low Income Communities Project (Community Based Water Supply/PAMSIMAS II) Project

Revisions to the Results Framework

Comments/ Rationale for Change

PDO Current (PAD) To increase the low-income rural and peri-urban populations using improved water and sanitation facilities and practicing improved hygiene behaviors in the project areas as part of GoI efforts to achieve WSS-MDGs. This will be achieved through programmatic mainstreaming and scaling-up of a nationwide community-driven approach.

Proposed To increase the number of under-served and low income rural and peri-urban populations accessing improved and sustained water and sanitation services and practicing improved hygiene behaviors as part of the Borrower’s efforts to achieve WSS-MDG Targets, through programmatic mainstreaming and scaling-up of a nationwide community-driven approach

Realignment with the two key government programs in Air Bersih Untuk Rakyat (Water for All) and Sanitasi Total Berbasis Masyarakat (or Community Led Total Sanitation – STBM). These programs will be the foundation that underpins the project. The national footprint and support for these two programs enable PAMSIMAS develop into a truly national community based WSS program addressing both capital investment and sustainable management

PDO indicators Current (PAD)  Number of additional people with sustainable access to improved water facilities, differentiated by socio-economic status  Number of additional people with sustainable access to improved sanitation facilities, differentiated by socio-economic status.

Proposed change No change in indicator. End of project value to change

No change in indicator. Data to be disaggregated into target villages and the district wide program outside the target villages. End of project value to change

13

11.6 million beneficiaries (cumulative target)

7.4 million direct beneficiaries in target villages (cumulative target)


Revisions to the Results Framework Intermediate Results indicators Current (PAD)  Number of villages developing community action plans

 % of districts Capacity building plan to support the adoption and mainstreaming of the PAMSIMAS approach, and progress towards achieving its objectives  Actual Project district WSS expenditure as a % of the budget needed to achieve MDGs

 % of districts that are replicating the PAMSIMAS approach outside targeted communities

 % of villages with improved water supply systems that are effectively managed and financed  % of villages with improved water supply systems that are functioning to the satisfaction of the majority of targeted community  Number of villages exceeding project performance criteria and receiving supplementary grants  Number of districts exceeding project performance criteria and receiving supplementary grants  % of target communities free of open defecation

Proposed change No change in indicator. Data to be disaggregated into the number of villages under the three proposed funding windows. End of project value to change. No change in indicator

% of Districts that has an increased budget towards meeting the requirements to maintain existing WSS systems and achievement of MDG Targets No change in indicator but expressed as a % rather than absolute number. End of project value to be revised to suit change from absolute number to %. No change in indicator or end of project value.

5,000 new villages.

80% of end value is calculated based on number of additional participating districts.

To clarify wording of existing indicator. 80% of end value is calculated based on number of additional participating districts

Number of districts has changed from PAD and will change further for PAMSIMAS II.

No change in indicator or end of project value.

No change in End of project change. New indicator

indicator. value to

% of triggered dusun (hamlet) free of open defecation (ODF).

This indicator is relevant to Component 4. This indicator is relevant to Component 4. Number of end value is changed to 50% based on lesson learned of Pamsimas I, experience from similar WSS projects, and indicative result of the global initiative of total sanitation. The key community level for this indicator is the hamlet or dusun. However the % of ODF villages is very important to the STBM process and should be measured.

 % of target communities adopting hand washing

No change to indicator

14

Revisions to the Results Framework  % of target schools that have improved water supply and sanitation facilities and hygiene programs  % of districts that have project monitoring structure and tools provides regular information on project implementation quality



15


PDO Level Results Indicators

Core

REVISED PROJECT RESULTS FRAMEWORK (ORIGINAL PAMSIMAS AND PAMSIMAS AF)

1. Number of additional people with sustainable access to improved water facilities, differentiated by socioeconomic status 2. Number of additional people with sustainable access to improved sanitation facilities, differentiated by socioeconomic status.

UOM

Progress To Date (Jan. 14, 2013) [1]

Cumulative Target Values [1] 2013

2015

2017

Frequency

Data Source/ Methodology

Responsibility for Data Collection

persons

4.2 million

6.0 million

9.0 million

11.6 million

Monthly

MIS data

CPMU

persons

4.9 million

5.4 million

6.4 million

7.4 million

Monthly

MIS data

CPMU

4.2 million 2.1 million

6.0 million 3 million



Monthly

MIS data

CPMU

Monthly

MIS data

CPMU

Comments

Beneficiaries Project beneficiaries

Number

Of which female (beneficiaries)

Number

Intermediate Results Indicators

Core

Intermediate Results and Indicators [2] UOM

Progress To Date (Jan. 14, 2013)*

Target Values Frequency 2013

2015

2017



Comments

Intermediate Result 1: District governments will have coherent institutional arrangements to support the scaling up of improved water use, sanitation, and hygiene behaviors in rural and peri-urban communities 1. Number of villages developing community action plans 2. % of districts preparing capacity building plan to support the adoption and mainstreaming of the PAMSIMAS approach, and progress towards achieving its objectives

Village

6,833

7,833

10,833

11,833

Monthly

MIS data

CPMU

%

78%

40%

60%

80%

Monthly

MIS data

CPMU

16

Intermediate Results Indicators 3. % of Districts that has an increased budget towards meeting the requirements to maintain existing WSS systems and achievement of MDG Targets 4. % of districts that are replicating the PAMSIMAS approach outside target communities

Core



Target Values 2013

2015

2017

Frequency



%

51.42%

30%

50%

80%

Annually

MIS data

CPMU

%

91%

50%

75%

95%

Annually

MIS data

CPMU

Comments

Intermediate Result 2: Targeted communities gain access to improved rural water supply and communal sanitation services, and use, manage and sustain them effectively. 5. % of villages with improved water supply systems that are effectively managed and financed 6. % of villages with improved water supply systems that are functioning to the satisfaction of the majority of targeted community 7. Number of villages exceeding project performance criteria and receiving supplementary grants 8. Number of districts exceeding project performance criteria and receiving supplementary grants 9. % of target dusun free of open defecation 10. % of target communities adopting handwashing 11. % of target schools that have improved water supply and sanitation facilities and hygiene programs

%

73%

70%

75%

90%

Monthly

MIS data

CPMU

%

NA

90%

90%

90%

Annually

Survey

CPMU

Village

566

566

750

1000

Monthly

MIS data

CPMU

District

28

28

48

68

Annually

MIS data

CPMU

%

46%

50%

50%

50%

Monthly

MIS data

CPMU

%

56%

40%

50%

60%

Monthly

MIS data

CPMU

%

92%

60%

80%

95%

Monthly

Survey

CPMU

17

Intermediate Results Indicators

Core



Target Values Frequency 2013

2015

2017



MIS data

CPMU

Intermediate Result 3: Project Management Units are able to support the program 12. % of districts that have project monitoring structure and tools provides regular information on project implementation quality

%

82.11

60%

80%

90%

Monthly

[1]Percentage of target value is lower than current achievements due to increase number of participating districts from 109 to 219. [2] The Target values are for the original IDA project plus AusAID TF (4 tranches) plus the proposed project (IBRD & AusAID TF).

18

Comments

ANNEX 2 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Stage: Board

1. Project Stakeholder Risks Description : PAMSIMAS has demonstrated a high level of demand for participation by both districts and villages

Implementing Agency Risks (including fiduciary) 2.1. Capacity Description : The proposed project will essentially extend the implementation of a current project at a similar rate of investment and capacity requirements. A key risk associated with the proposed project is start up delay as was experienced during the early stages of the original PAMSIMAS, in particular the delayed mobilization of technical assistance resources.

Rating Low Risk Management: Road-shows have already been undertaken as part of the process to select districts and assess village demand for 2013 and beyond. These have confirmed the high level of demand. Project locations (provinces and districts) and allocation of villages will be finalized with GoI during appraisal.

2.

Weaknesses in public procurement regulatory and management resulting in delays, especially of selection of consulting services, inefficiency and low quality of public procurement. Preparation of bidding documents and terms of reference is underway. A procurement plan covering key technical assistance packages has been prepared. A procurement consultant and technical advisors will be engaged to support the CPMU in selecting CMAC and OMSs. Inadequate local capacity in the new districts and villages (especially for financial management) included in the project. The project will continue to provide technical assistance to CPMU, PPMUs, DPMUs, and community

Rating: Moderate Risk Management : Start-up of the proposed project will be carefully managed, in particular advance action on the recruitment of technical assistance resources at all level. Further procurement training will be provided by the Bank in order to enhance capacity and understanding of CPMU and procurement committee on the Bank’s procurement guidelines. The Project Operational Manual will be updated from time to time to further enhance competitiveness, transparency and accountability in the procurement processes particularly at the community level.

Responsibility: Executing Agency and Bank

Stage: Implementation

Due Date : Continuous

Status: Ongoing

Risk Management : The PMU needs to enhance quality of monitoring chain. Some of the designs of the existing project have been changed to improve project performance and capacity of local governments and community groups, including funding for 100% of Community

19

groups. FM consultants are now available at district as well as provincial level to monitor individual consultants at community level and conduct regular spot checks

Delays and/or shortfalls in annual budget issuance have occurred during the implementation of PAMSIMAS and other similar projects. There are frequently quality impacts as a consequence of communities, consultants etc., having to make up for time lost as a result of the budget delays.

Facilitator (CF) salaries, operational costs and training is now included under IBRD and/or AusAID funding. A single external funding source will be used for each village to simplify budget disbursement and minimize the impact of delays with local government budgets. Multi-year contracts for community facilitators are proposed to improve continuity and effectiveness. The First year implementation will have an increased focus on districts from PAMSIMAS I to allow time for socialization, preparation and capacity building for new districts. Responsibility: Executing Agency and Stage: Implementation Due Date : Continuous Status: Ongoing Bank Risk Management : Budget preparation is well defined, but there are frequent delays in execution. Some decrees on budget execution should be issued right after budget documents issued such as decree on CPMU/PPMUs, tender committee and project manual. Unless DGHS can speed up the budget effectiveness, the budget delay risk may remain. Variable village allocations process based on set criteria at district level may cause further delays of budget effectiveness. This will be mitigated by setting the planning process at district level for sites survey and selection earlier with technical assistance from the project consultants. Responsibility: Client

2.2. Governance Description : PAMSIMAS experience to date has revealed a number of governance issues that required attention, e.g., procurement irregularities, lack of transparency in village selection and appointment of CFs. PAMSIMAS has a highly transparent complaints system which allows project stakeholders and others to expose potential and/or actual governance issues, which will be further refined for PAMSIMAS II. 3. Project Risks 3.1. Design Description : The proposed additional financing will be based on the current PAMSIMAS, which is being implemented satisfactorily. Lessons learned from the current project have been incorporated in the design of the proposed AF project.



Status: Ongoing

Rating: Moderate Risk Management: The improved complaints system will be used to promote and improve governance generally. Project implementation arrangements are now integrated with the sector management arrangements through multi sector working groups (POKJAs). Civil society will be engaged through a stakeholder committee (PAKEM) with responsibility for key project decisions, including village selection, allocation of funds and appointment of facilitators. Responsibility: Client Stage: Implementation Due Date : Continuous Status: Ongoing and Bank Rating:

Low

Risk Management : The PCSC and the Bank will monitor implementation of the agreed revised project design, and provide guidance to address implementation issues. Responsibility: Client and Bank

20


Due Date: Continuous

Status: Ongoing

3.2. Social & Environmental Description : PAMSIMAS has put in place a comprehensive safeguards framework. Technical assistance resources within the current Provincial Management & Advisory Consultant (PMAC) have been increased to enable closer monitoring and to build capacity to effectively address safeguards issues at the district level. 3.3. Program & Donor Description : GoI commitment to PAMSIMAS is demonstrated by its request for a substantial scaling up and extension through the proposed AF project

Rating: Low Risk Management : Implementation of the safeguards arrangements will be monitored by the CPMU and the Bank.

AusAID support for PAMSIMAS has been on-going since the early stages of the project. AusAID will provide support for the AF as well. 3.4. Delivery Monitoring and Sustainability Description : Delivery monitoring and sustainability have improved steadily during PAMSIMAS. PAMSIMAS MIS has brought increased GOI attention and ownership of this issue.

Responsibility: Bank & Client

Responsibility: Client Stage: Implementation Due Date : Continuous Status: Ongoing and Bank Rating: Low Risk Management : The Bank will continue the dialogue with Government and AusAID on the rural water supply and sanitation sector, in particular regarding implementation of PAMSIMAS and PAMSIMAS II.

Stage: Preparation & Implementation.


Status: In progress

Rating: High Risk Management : Close monitoring of project delivery quality by both the CPMU and the Bank will continue. Sustainability measures introduced in PAMSIMAS I will be continued and strengthened through: (a) supporting GoI to strengthen the national framework for rural WSS management through the implementation of pilots in PAMSIMAS districts; (b) improved monitoring of the sustainability of outcomes and improved access to the results through the MIS; (c) providing targeted capacity building at village and district levels; and (d) mainstreaming incentives and increasing accountability for sustainable outcomes at the district level. The Bank will monitor the implementation of the improved measures for sustainability. Responsibility: Client Stage: Implementation Due Date : Continuous Status: Not yet due and Bank

4. Overall Implementation Risk Rating: Moderate Comments: Implementation risks for original PAMSIMAS also apply to this additional financing. Expansion to national footprint poses some risks. These risks have been discussed and measures for mitigation are currently being incorporated in the Project Operations Manual

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ANNEX 3 BREAKDOWN OF PAMSIMAS II PROJECT FINANCING BY FUNDING SOURCE Financing Component

Total

IBRD

Grant

APBN

APBD II

Community


7.69

7.33

28.42

-

-

43.44


0.00

9.09

6.05

-

-

15.14


65.09

26.53

0.00

22.91

28.63

143.16

0.00

0.00

21.05

-

-

21.05

27.12

1.05

7.07

-

-

35.24

99.90

44.009

62.59

22.91

28.63

258.03

4. District and Village Incentive 5. Implementation Support and Project Management TOTAL

9

Total indicative GoA contribution is AUD49.5 million. US$44 million represents funds allocated to recipient executed activities. $5.5 million will support Bank executed activities and trust fund administration costs. Availability of these funds is subject to an amendment to the Administration Agreement with the Government of Australia (GoA) which is expected to be signed by GOA and the Bank by May 2013.

22

Financing Distribution by Ministries FINANCING AND FUNDING SOURCE MPW

Component

MOH

MOHA PMD

TOTAL

MOHA BANGDA

L

G

RM

L

G

RM

L

G

RM

L

G

RM

L

G

RM


7.69

0.12

27.63

-

-

-

-

5.09

0.54

-

2.12

0.25

7.69

7.33

28.42


-

-

-

-

9.09

6.05

-

-

-

-

-

-

-

9.09

6.05


65.09

26.53

-

-

-

-

-

-

-

-

-

-

65.09

26.53

-

-

-

21.05

-

-

-

-

-

-

-

-

-

-

-

21.05

27.12

1.05

7.07

-

-

-

-

-

-

-

-

-

27.12

1.05

7.07

99.9

27.70

55.75

-

9.09

6.05

-

5.09

0.54

-

2.12

0.25

99.90

44.00

62.59

4. District and Village Incentive

5. Implementation Support and Project Management TOTAL

Remarks: L=Loan, G=AusAID Grant, and RM=National Budget (APBN, Rupiah Murni).

23