ASIAN DEVELOPMENT BANK PPA:INO 17164

PROJECT PERFORMANCE AUDIT REPORT

ON THE

INTEGRATED IRRIGATION SECTOR PROJECT (Loans 1017-INO/1018-INO[SF])

IN

INDONESIA

December 2001

CURRENCY EQUIVALENTS

Currency Unit – Indonesian Rupiah (Rp)

At Appraisal (August 1989)

At Project Completion (April 1999)

At Operations Evaluation (May 2001)

Rp1.00 = $0.00055096 $0.00012121 $0.0000907 $1.00 = Rp1,815 Rp8,250 Rp11,025

ABBREVIATIONS

ADB – Asian Development Bank BAPPEDA – Badan Perencanaan Pembangunan Daerah (Regional Development Planning Agency) DGFCH – Directorate General of Food Crops and Horticulture DGRD – Directorate General of Regional Development DGRLR – Directorate General of Reforestation and Land Rehabilitation DGWRD – Directorate General of Water Resources Development DI – Daerah Istimewa (special region) EIRR – economic internal rate of return EOM – efficient operation and maintenance ha – hectare IOMP – irrigation operation and maintenance ISF – irrigation service fee M&E – monitoring and evaluation O&M – operation and maintenance OEM – Operations Evaluation Mission PBB – pajak bumi dan bangunan (land and building tax) PCR – project completion report PPAR – project performance audit report PRAS – provincial agricultural service PRIS – provincial irrigation service PTGA – Indonesian On-Farm Water Management Project PWRS – provincial water resources service R&U – rehabilitation and upgrading Repelita – Five-Year Development Plan SJFC – South Java Flood Control TA – technical assistance TDU – tertiary development unit VO – variation order WATSAL – Water Sector Adjustment Loan WID – women in development WOC – Water Operations Center WUA – water users association

NOTES

(i) The fiscal year (FY) of the Government ends on 31 March. (ii) In this report, “$” refers to US dollars.

Operations Evaluation Department, PE-586

CONTENTS Page BASIC DATA ii EXECUTIVE SUMMARY iv MAP vii I. BACKGROUND 1

A. Rationale 1 B. Formulation 1 C. Purpose and Outputs 1 D. Cost, Financing, and Executing Arrangements 3 E. Completion and Self-Evaluation 3 F. Operations Evaluation 4

II. PLANNING AND IMPLEMENTATION PERFORMANCE 4 A. Formulation and Design 4 B. Achievement of Outputs 5 C. Cost and Scheduling 5 D. Procurement and Construction 6 E. Organization and Management 6

III. ACHIEVEMENT OF PROJECT PURPOSE 7 A. Operational Performance 7 B. Performance of the Operating Entity 10 C. Economic Reevaluation 11 D. Sustainability 11

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS 12

A. Socioeconomic Impact 12 B. Environmental Impact 13 C. Impact on Institutions and Policy 13

V. OVERALL ASSESSMENT 14

A. Relevance 14 B. Efficacy 14 C. Efficiency 15 D. Sustainability 15 E. Institutional Development and Other Impacts 16 F. Overall Project Rating 16 G. Assessment of ADB and Borrower Performance 16

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 16

A. Key Issues for the Future 16 B. Lessons Identified 18 C. Follow-Up Actions 22

APPENDIXES 23

vii BASIC DATA

Integrated Irrigation Sector Project (Loans 1017/1018-INO[SF]) PROJECT PREPARATION Technical Assistance

Title Type No. of Person-months

Amount ($ million)

Approval Date

TA 857 Telang and Saleh Drainage Improvement Project

PPTA 43 0.65 23 Feb 1987

Loansa Loan 479 Lower Citanduy Irrigation Project 55.20 13 Nov 1980Loan 518 Wadaslintang Multipurpose Project 87.70 23 Jun 1981 Loan 522 Bali Irrigation Sector 33.60 17 Sep 1983Loan 638 Second Irrigation Sector 85.00 22 Sep 1983Loan 725 Technical Assistance Program

Loan 25.00 18 Dec 1984

Loans 860(SF)/861 Third Irrigation Sector Project

120.00 17 Nov 1987

KEY PROJECT DATA ($ million)

Per ADB Documents

Actual

Total Project Cost 264.0 250.1 Foreign Exchange Cost 103.0 110.6 Local Currency Cost 161.0 139.5 ADB Loan Amount/Utilization 200.0 198.0 ADB Loan Amount/Cancellation 5.2 KEY DATES Expected Actual Appraisal 1-18 Aug 1989 Loan Negotiations 13-15 Nov 1989 Board Approval 17 Apr 1990 Loan Agreement 27 Jun 1990 Loan Effectiveness 25 Sep 1990 10 Aug 1990 Initial Disbursement 22 Apr 1991 Project Completion 31 Mar 1995 31 Mar 1997 Loan Closing 30 Sep 1995 29 Jan 1999 Months (effectiveness to completion) 54 79 ECONOMIC AND FINANCIAL INTERNAL RATE OF RETURN (%)

Appraisal PCR PPAR

Economic Internal Rate of Return 15.9 13.4 8.3 Financial Internal Rate of Return — — — BORROWER Government of Indonesia EXECUTING AGENCIES Part A: Directorate General of Water Resources Development Part B: Directorate General of Public Administration and Regional Autonomy Parts C & E: Directorate General of Food Crops and Horticulture Part D: Directorate General of Reforestation and Land Rehabilitation Part F: Directorate General of Regional Development — = not calculated, ADB = Asian Development Bank, PCR = project completion report, PPAR = project performance audit report, PPTA = project preparatory technical assistance. a The number of person-months spent for preparatory work for the Project under various loans cannot be

determined.

iii MISSION DATA Type of Mission No. of Missions No. of Person-Days Appraisalb 1 126 Inception 1 10 Project Administration Review 14 313 Midterm Review 1 40 Project Completion 1 84 Operations Evaluationc 1 42

b No formal loan fact-finding mission was undertaken. Preparatory work was carried out under various ADB-supported loans and TAs prior to appraisal.

c The Operations Evaluation Mission comprised C.B. Amerling, Senior Evaluation Specialist (Mission Leader); and C. Morris, Consultant.

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EXECUTIVE SUMMARY

The Project was designed to support the Government’s development goals in the agriculture sector, which included consolidating rice productivity gains, broadening the agriculture base, creating rural employment opportunities, and achieving balanced regional development. The Project was specifically aimed to accelerate agricultural development in the major rice producing provinces of Central Java, Daerah Istimewa (DI) Yogyakarta, Southeast Sulawesi, South Sumatra, and West Sumatra. The Project consisted of six components: (i) irrigation development, including rehabilitation and upgrading of irrigation and drainage schemes; introduction of efficient operation and maintenance (O&M); transfer of O&M responsibilities from central to provincial agencies and water users associations (WUAs); and institutional strengthening; (ii) introduction of an irrigation service fee (ISF); (iii) agricultural development through tertiary development units (TDUs) for testing water management techniques, improvement of seed farms, land development, and strengthening of WUAs; (iv) soil and water conservation; (v) women in development; and (vi) strengthening of coordination and monitoring.

Project relevance has changed considerably from the time of approval to evaluation. The

objectives of increasing farm productivity, creating new employment opportunities, and improving the living standards of farmers remain highly relevant. However, the highly top-down centralized approach of project design and implementation, and lack of public consultation on policy reforms are now outdated. Major investments in isolated transmigration areas for transforming fragile swampland into irrigated rice areas have also been largely curtailed as they have generally been shown to be economically, ecologically, and technically unsound.

In general, the Project achieved its physical targets and improved the welfare of poor families in its area of influence. The higher cropping intensities and rice yields generated resulted in substantial incremental output of rice, increased farmer incomes, and job creation, though at levels below the optimistic appraisal expectations. Physical completion of rehabilitation and upgrading, which dominated project expenditures, was significantly delayed, and in most cases, did not achieve full restoration of irrigation systems’ capacities or efficiencies. Project funding was inadequate to fully address all system needs, while funding supported works that, in some cases, may not have been technically or economically justified. The overall impact of the agricultural development component was marginal. Most TDU programs were carried out before irrigation systems were upgraded. This aggravated field operation problems and precluded most water management extension activities (often due to lack of water control structures and/or lack of water). Deterioration in most systems started soon after project completion due to less than adequate O&M funding and management. Progress on ISF has not been significant, and development of self-sustaining WUAs was largely not achieved. Sustainability of irrigation systems operations and project incremental outputs is assessed as less likely than anticipated. The unabated deterioration of project watersheds is expected to continue to accentuate flooding and drainage problems in the wet season, reduce water availability in the dry season, exacerbate the problems associated with increased sedimentation, and reduce water quality over time.

Overall, the Project is rated only partly successful owing largely to (i) substantive shortfalls on O&M, WUA development, and cost recovery targets; (ii) significant shortfalls in improvements of women in development activities and executing agencies’ institutional capacity; (iii) accelerated deterioration of subprojects’ watersheds and resultant problems of sedimentation, drainage, and flooding in a number of subproject areas; (iv) insufficient attention to tertiary irrigation and drainage canal development; (v) negligible long-term impact of the TDU

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and seed production components; (vi) substantial noncompliance with major loan covenants for irrigation policy reforms; and (vii) questionable selection of some subprojects for investment. The evaluation has identified important issues for the future, among which are (i) sector approach to irrigation development and firm commitment to institutional development and capacity building; (ii) beneficiary and WUA participation, including delegation of responsibility for irrigation O&M to WUAs; and (iii) simplification of scope and involvement of fewer agencies.

A stop-start approach to irrigation development reduces opportunities for institutional capacity building, leads to an inefficient deferred maintenance regime, and raises false hopes with water users and government agencies that development will continue in a well-planned long-term manner. A long-term commitment to irrigation sector development is required with major sectoral institutional changes addressed by using other loan modalities such as combining a sectoral investment and program modality within a long-term framework.

In general, farmers, and collectively WUAs, were not involved in a participatory manner in project activities. Paternal, top-down attitudes of all executing agencies together with (i) inappropriate funding mechanisms, (ii) less than satisfactory institutional project design, and (iii) less than optimum use of consultants and nongovernment organizations all contributed to a lack of beneficiary participation. Tertiary designs and water management without WUA participation led to incomplete development of tertiary systems. The Project paid less attention to determining the readiness of WUAs to undertake O&M of tertiary systems. Difficulties in transferring O&M responsibilities were due to farmers’ inadequate knowledge of operational responsibilities, lack of skills for managing the schemes, insufficient involvement of WUAs, and inadequate extension services.

Under the complex project design, resources of the Asian Development Bank and the Government, required to ensure efficient and effective implementation, were severely stretched. The Project, executed through six government agencies, was geographically diverse and included three unusual subprojects: (i) Batang Anai in West Sumatra with peat soils; (ii) Wawotobi in Southeast Sulawesi with high land development needs; and (iii) the core subproject Telang-Saleh in South Sumatra, a major swamp pilot project, accounting for about 25 percent of the total project area. These subprojects were not representative of the irrigation sector in Indonesia and had major technical differences from the Java irrigation subprojects. Limiting the Project to Java subprojects only, which were more homogeneous, contiguous in area, and similar in development requirements, would have significantly simplified implementation and allowed major works and activities (drains, flood prevention, tertiary development, and institutional support) to be finished.

Among the lessons learned are the following:

(i) Nationally managed provincial irrigation project activities need to be transferred to local provincial and district water resource services. The pressure to retain control at the center (national and provincial) rather than to delegate and decentralize continues to decrease institutional and project implementation efficiency. During project design, institutionalization of project activities needs to be given priority.

(ii) The participation of beneficiaries is critical if they are to feel a sense of ownership

and responsibility; this will also affect their attitudes to ISF and O&M. WUA establishment and strengthening should be accelerated with a focus on

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(a) quality organizations, (b) involvement in tertiary and main system O&M, and (c) a clear linkage between irrigation service and irrigation fees.

(iii) Regular coordination meetings within the Regional Development Planning

Agency (BAPPEDA) are important and should concentrate on the needs for interagency planning; identification of planning priorities; and assessment of proposals for scheme, subproject, and sector monitoring and evaluation, and institutional development coordination. To carry out such a program, the provincial water resources services need to strengthen their technical departments for irrigation planning and design, BAPPEDA needs to allocate regular funding (routine budgets) for funding such meetings, and beneficiaries need incentives and assistance to participate in bottom-up planning and implementation activities.

(iv) Strengthening of administrative sections of provincial and district water resources

services is required through the focused training of administrative staff and streamlining of procedures. The proposed introduction of efficient management information systems could also be very effective in more efficient utilization of staff time.

(v) More involvement of provincial and district authorities and beneficiaries in key

policy directives is essential. Implementation of government O&M policy should be formulated, explained, and discussed jointly in a participatory manner with managers of the provincial and district water resources services, BAPPEDA officials (provincial and district levels), and other senior provincial government officials.

(vi) A two-year commissioning period is generally required for adequate development

programs for medium-sized schemes (1,000–5,000 hectares) with a four-year period for large and major schemes (larger than 5,000 hectares). Programs should include training, improvements in infrastructure, development of information techniques for crop planting reporting, adjustments in water allocation systems, optimization of budgets, and purchase and commissioning of equipment.

(vii) A human resources development program should be the basis of the training

program. Training units need to be incorporated into the structural organization. All staff holding positions should be compelled to carry out a fixed number of training days each year as instructors. A training monitoring system and information system should be established to provide feedback for future courses

(viii) Community organizers are required to ensure beneficiaries participate in

government-led activities. However, a sustainable mechanism should be introduced, whereby project beneficiaries are not dependent on project community organizers. Farmers need to participate and be organized into WUAs (or other suitable institutions) at the earliest possible stage of system planning. Ensuring farmer involvement in tertiary system construction and main system design, prior to agreement on the modality of subproject development and O&M, is essential. For farmers to be available for participation in planning and design activities, field motivators must be active and in place in a timely manner, coinciding with the fielding of the survey, investigation, and design consultants.

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I. BACKGROUND

A. Rationale

1. In early 1989, the Government of Indonesia asked the Asian Development Bank (ADB) to finance part of its irrigation subsector investment program under the Rencana Pembangunan Lima Tahun (Repelita) V (1989/90–1993/94). The loan would support the rehabilitation and upgrading (R&U) of existing irrigation and drainage schemes, and the improvement of operation and maintenance (O&M) in the key rice-growing province of Central Java, and the provinces of Daerah Istimewa (DI) Yogyakarta, South Sumatra, Southeast Sulawesi, and West Sumatra. The Project1 was designed to support the Government’s development goals in the agriculture sector at that time, which included consolidating rice productivity gains, broadening the agriculture base, creating rural employment opportunities, and achieving balanced regional development.2 Repelita V also placed increased emphasis on promoting diversified cropping systems and improving sector efficiency. B. Formulation

2. Appraised in August 1989, the Project was prepared without a project preparatory technical assistance (TA). However, all seven subprojects,3 including four core subprojects and three noncore subprojects, had existing preparatory studies, including feasibility studies and detailed designs, financed primarily by ADB under earlier loans and TAs, as well as by the World Bank and the governments of Italy and the Netherlands.4 Institutional issues of the Project were also well supported by earlier ADB loans and TAs.5

C. Purpose and Outputs

3. The Project aimed to accelerate agricultural development in the major rice-producing provinces to increase farm productivity, create employment opportunities, and improve the living standards of poor farmers. The Project was expected to have considerable impact on poverty

1 Loans 1017/1018(SF)-INO: Integrated Irrigation Sector Project, for $200 million, approved on 17 April 1990. 2 The Project was preceded by three ADB-financed irrigation sector projects including Loan 522-INO: Bali Irrigation

Sector Project, for $33.6 million, approved on 17 September 1983; Loan 638-INO: Second Irrigation Sector Project, for $85 million, approved on 22 September 1983; and Loans 860(SF)/861-INO: Third Irrigation Sector Project, for $120 million, approved on 17 November 1987.

3 Core subprojects, evaluated and approved in the appraisal report, included South Kedu irrigation, Serayu barrage and Ijo Tipar drainage, and Lower Citanduy irrigation subprojects in Central Java; and Telang and Saleh agricultural development in South Sumatra. Noncore subprojects, subject to final approval during project implementation, included Kulon Progo (Opak-Serang) irrigation subproject in DI Yogyakarta, Batang Anai irrigation subproject in West Sumatra, and Wawotobi irrigation subproject in Southeast Sulawesi (see Map).

4 Preparatory works were financed under Loan 518-INO: Wadaslintang Multipurpose Project, for $87.7 million, approved on 23 June 1981; Loan 725-INO: Technical Assistance Program Loan, for $25.0 million, approved on 18 December 1984; TA 857-INO: Telang and Saleh Drainage Improvement Project, for $350,000 from ADB and $300,000 from the Government of the Netherlands, approved on 23 February 1987; Loan 479-INO: Lower Citanduy Irrigation Project, for $55.2 million, approved on 13 November 1980; 1980 feasibility study of Sermo Dam, 1983 hydrological study of Sermo Dam, and 1985 detailed design of Sermo Dam financed by the World Bank; 1986 Dataran Anai feasibility study for the development of water resources financed by the Government of Italy; and 1989 detailed design study of Batang Anai financed by the Government of Indonesia.

5 TA 5160-REG: Study of Food Demand and Supply and Related Strategies for Developing Member Countries (Phase II), for $500,000, approved on 23 October 1984; TA 673-INO: Study of Irrigation Management, for $350,000, approved on 27 March 1985; TA 937-INO: Efficient Irrigation Management and System Transfer, for $600,000, cofinanced by the Ford Foundation for $300,000, approved on 17 December 1987; Loan 860(SF)/861-INO: Third Irrigation Sector Project, for $60 million, approved on 17 November 1987; and Loans 1014/1015-INO(SF): Food Crop Sector Program, for $250 million, approved on 13 March 1990.

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reduction in its area of influence as it would directly benefit about 260,000 poor and near-poor farm families. Average per capita income was anticipated to increase, at full development, from $55 to $125 per annum, which would then be above the projected poverty level. Increased farm income would be generated by expanding the irrigated rice area, and increasing cropping intensities and yields per hectare (ha). Construction activity was expected to generate additional employment opportunities: 6,500 person-years for skilled labor and 39,000 person-years for unskilled labor. The Project was also designed to provide institution building to strengthen the technical, management, and coordination capabilities of government agencies for planning and coordination, and for irrigation and agricultural development, as well as of irrigation committees and water users associations (WUAs). The project components included the following.

1. Part A: Irrigation Development

4. R&U of irrigation and drainage facilities. This included tertiary systems and other related infrastructure covering an aggregate area of 110,000 ha; and surveys and mapping, planning and detailed designs, and civil works. 5. Introduction of efficient O&M (EOM)6 in irrigation and drainage schemes. Covering an aggregate area of about 132,000 ha, this component included (i) review of existing staffing levels and O&M systems, procedures, and practices; (ii) determination of O&M requirements and preparation of manuals and training materials; (iii) training of O&M staff and WUAs; (iv) provision of equipment; and (v) introduction of EOM. The transfer of O&M responsibilities from the central Government to provincial irrigation services (PRIS) required project financing of incremental O&M costs, equipment, buildings, and training of irrigation service personnel; and the transfer of irrigation schemes with areas of less than 500 ha to WUAs. 6. Institutional strengthening. Focusing on provincial, district, and subdistrict irrigation services, district irrigation committees, and WUAs, the scope included establishing a project monitoring and evaluation unit in each PRIS, redeploying staff; and providing training (including specialized training overseas), equipment, and facilities.

2. Part B: Irrigation Service Fee

7. Introduction of an irrigation service fee (ISF). The Project provided consulting services, equipment, and facilities for introducing ISF for about 129,000 ha of the project area with the aim of achieving full recovery of O&M costs by fiscal year 1999/2000.

3. Part C: Agricultural Development

8. Strengthening of existing agricultural services. The scope included (i) establishing and operating tertiary demonstration units (TDUs); (ii) improving seed production; (iii) developing land, including clearing and leveling; and (iv) providing institutional strengthening. The activities included establishing about 22 TDUs, with each intended to (i) demonstrate proper on-farm water management techniques and related organizational arrangements at the tertiary level; (ii) serve as a field training ground for extension staff, local officials, and farmers; (iii) improve three existing seed farms and other facilities; and (iv) develop 4,000 ha into rice fields. 6 Defined as (i) the level of operation required to ensure the delivery of the right amount of irrigation water to the

crop or the removal of excess water at the right time so as to make possible optimum crop production in an irrigation scheme; and (ii) the level of regular and periodic maintenance required to keep the system facilities and equipment in such condition that efficient operation can be achieved.

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4. Part D: Soil and Water Conservation

9. Establishment of soil erosion control measures. To safeguard the existing Wadaslintang reservoir in South Kedu, Central Java, project-specific interventions included (i) implementation of erosion control measures, such as terraces and waterways on 4,500 ha of critical land, and the construction of check dams; (ii) establishment of soil conservation demonstration farms; and (iii) training of farmers in erosion control techniques.

5. Part E: Women in Development

10. Support of the contribution of women farmers. Focusing on contributions to agricultural development and family welfare, a pilot subproject in Telang and Saleh was designed to encompass (i) inclusion of women in workshops, demonstration, training, and extension related to the O&M of improved drainage systems; (ii) strengthening of agricultural extension services to women farmers; (iii) establishment and strengthening of women’s farmer groups; (iv) provision of assistance to setting up home industries; and (v) training of women village leaders and key women farmers.

6. Part F: Strengthening of Coordination and Monitoring

11. Strengthening of coordination and monitoring capability of development agencies. Focusing on regional development planning agencies (BAPPEDAs) at the provincial and district levels, the Project was to provide office buildings, equipment, other facilities, training, and consulting services. D. Cost, Financing, and Executing Arrangements

12. The total estimated project cost at appraisal was $264 million, including a $103 million foreign exchange component (Appendix 1). ADB financing of $200 million equivalent was provided through loan 1017 for $170 million from ADB’s ordinary capital resources, and loan 1018 for $30 million equivalent from ADB’s Special Funds resources. The ADB loans represented about 76 percent of total project costs and were to provide financing for 97 percent ($100 million) of the estimated foreign exchange costs, and 62 percent of the local currency costs ($100 million). The Government of the Netherlands was expected to make available about $8.0 million in cofinancing (half grant and half loan) for the Telang and Saleh core subproject. The Government of Indonesia was to finance the remaining local currency costs of $56 million. The loans were approved by ADB on 17 April 1990 and became effective on 10 August 1990. The Directorate General of Water Resources Development (DGWRD) was the principal executing agency.

E. Completion and Self-Evaluation

13. The Project was completed in March 1997, about two years later than envisaged at appraisal. The project completion report (PCR),7 circulated to the Board in October 1999, rated the Project partly successful. It concluded that the physical targets of rehabilitating and upgrading irrigation and drainage schemes were essentially met. However, problems relating to inadequate O&M were experienced. The Project paid less attention to determining the readiness of WUAs to undertake O&M of tertiary systems. Difficulties in transferring O&M responsibilities related to

7 ADB. 1999. Indonesia. Integrated Irrigation Sector Project, Project Completion Report. Manila.

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inadequate farmers’ knowledge of operational responsibilities, lack of skills for managing the schemes, insufficient involvement of the WUAs, and inadequate extension services. Capacity building to institutionalize ISFs and thus reach full cost recovery for O&M was not successful. The ISF program experienced operational and administrative difficulties. Procedures for ISF collection were complicated and time-consuming for the Government and WUAs involved. Despite the involvement of BAPPEDAS, effective monitoring and coordination of project implementation was difficult. Coordination was complex and multisectored across three levels of government. The economic benefits of the Project would be sustained only when EOM mechanisms were in place, supported by well-functioning WUAs and attainment of full cost recovery for O&M. While the estimated economic internal rates of return (EIRRs) of the subprojects and the Project were acceptable, continuing problems related to O&M, if not rectified, would likely curtail or substantially reduce future project benefits. F. Operations Evaluation

14. The project performance audit report (PPAR) focuses on pertinent aspects of the Project and presents the findings of the Operations Evaluation Mission (OEM), which visited Jakarta and the project areas in May 2001. The PPAR includes an assessment of the effectiveness of the Project in achieving its objectives, generating and maintaining benefits, and sustaining the operations of subproject irrigation systems and support services. It also deals with other important issues related to the results of the Project. The PPAR is based on (i) a review of project files and related documents; (ii) discussions with the staff of executing and implementing agencies at the central, provincial, and district levels including staff from the project monitoring and evaluation unit established under each PRIS; (iii) interviews with farmer stakeholders, spouses, WUA members, landless field workers, and key informants; and (iv) physical inspection of all subproject sites and major civil works. The PPAR also took into consideration the data and analysis presented in the PCR. Copies of the draft PPAR were submitted for review to the executing and implementing agencies, as well as to ADB staff concerned. Comments received were taken into consideration in finalizing the PPAR.

II. PLANNING AND IMPLEMENTATION PERFORMANCE

A. Formulation and Design

15. The Project’s goals and purpose were consistent with the Government’s development needs and ADB’s operational strategy for Indonesia at the time of approval and remained relevant at the time of evaluation. The Project followed the sector loan approach, which was considered the most appropriate and cost-effective method of ADB assistance in view of the number of subprojects. In addition, Repelita V was generally considered to be well conceived and appropriately formulated to meet the development needs of the irrigation subsector. DGWRD had been the executing agency for 28 loans and TAs from ADB, three under the sector lending modality, and as such was judged to have the necessary experience and capability to implement a sector loan. However, a detailed institutional assessment of DGWRD was not undertaken.

16. Project design strengths included the involvement of BAPPEDAs and the introduction of O&M as a project-supported activity. A project weakness was the inappropriate use of ADB’s sector loan modality, due to the limited number (seven) of very large, geographically dispersed subprojects already identified and appraised (including feasibility studies and detailed designs) before project implementation. The methodology and selection criteria established for approval of noncore subprojects were sound and comprehensive. However, approval of the Batang Anai,

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and Telang and Saleh subprojects should have been withheld based on technical and economic considerations. Less investment in large civil works, and more emphasis on investments in institutional aspects of O&M, would have likely resulted in better and more sustainable gains in O&M efficiencies and crop yields. A design limited to the three large contiguous subprojects in Central Java province alone, which accounted for about 75 percent of the project area, would have been simpler and more effective. Pressures to add seemingly small subcomponents (i.e., additional projects, pilot women in development [WID] activities, paddy seed production farms, and pilot watershed protection) disproportionately diverted limited resources from primary project activities. B. Achievement of Outputs

17. The physical targets were essentially met for R&U, EOM, TDU development, and watershed improvement works; and exceeded appraisal targets for the technical transfer of O&M for small-scale irrigation systems to WUAs. A list of physical achievements is detailed in Appendix 2. In general, tertiary infrastructure (farmer responsibility) and drainage and flood protection works were not fully completed. Land development fell significantly short of targets, primarily due to shortfalls in the Batang Anai subproject as a result of large areas of deep peat soils unsuitable for rice production. Training programs were partially successful, although more practical courses with field-level, on-the-job follow-up would have been more effective. The minor project components were too small to have a measurable impact and did not yield replicable models for the future. Details of project outputs are included in paras. 26–44. C. Cost and Scheduling

18. Actual project cost was about $250 million, 5.3 percent below the appraisal estimate of $264 million. Differences were primarily due to (i) cancellation of the cofinancing arrangement of $8 million with the Government of Netherlands for the Telang and Saleh subproject,8 (ii) cancellation of various other project infrastructure works (particularly drainage), and (iii) depreciation of the rupiah from Rp1,815 to the dollar at appraisal to Rp2,342 in 1996. In addition, most civil works contracts contained no price escalation clauses. ADB financed all foreign exchange costs of $110.6 million (appraisal estimate $103 million), including $23.8 million in interest during construction and related charges, and about 63 percent ($87.3 million equivalent) of total local costs of $139.5 million (appraisal estimate $161 million). Government funding amounted to an estimated $52.1 million equivalent, or about 21 percent of total project costs. However, neither the PCR nor OEM could confirm the $16.3 million in Government project expenditures for administration and land acquisition because accounts were consolidated with other projects.

19. Compared with the original five-year project implementation schedule, actual physical completion was delayed by about two years, necessitating two loan extensions. Loan accounts were kept open for delayed payments until March 1998, and accounts were not officially closed until January 1999 (a total delay of 40 months). Delays in recruiting consultants, adverse weather (particularly major floods in 1992), and slow action by ADB (based on agency staff views) in issuing no-objection letters on award of many civil works contracts all contributed to lengthening implementation. Serious difficulties were experienced in sequencing and coordinating interrelated activities. In general, agricultural development activities preceded R&U works and adversely affected this project subcomponent. In the Serayu core subproject, canal

8 The Netherlands development assistance program for Indonesia was temporarily suspended shortly after the

Project was approved by the ADB Board.

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R&U works were completed well before the commissioning of the new Serayu barrage. Upon commissioning, new canal works suffered significant damage, as conveyance tests at full capacity were not completed. Additionally, following the cancellation of funding from the Netherlands, the recruitment of consultants and, therefore, the civil works for the Telang and Saleh subproject, were delayed for two years.

D. Procurement and Construction

20. Procurement of consultants and contractors was overly complex because of the large number of packages used by the executing agencies. Bidding implementation was generally satisfactory. A number of executing agencies raised concerns regarding the length of time required to obtain ADB’s no-objection letters for several civil works contracts. However, many of these delays resulted from (i) the executing agencies’ failure to adequately comply with ADB guidelines; (ii) inadequately prepared summary subproject reports9 in some cases; and (iii) legitimate technical engineering issues (i.e., design aspects of Sermo Dam in the Yogyakarta subproject). 21. Delays in the completion of subprojects and several cases of low standards of construction were generally attributable to weak supervision and poor organization of work by contractors. High construction contract cost overruns were not uncommon, and while they did not necessarily mean poor value for money, they could be indicative of (i) inadequate or inaccurate initial design surveys; (ii) poor design based on inadequate or inaccurate surveys; (iii) inaccuracies in taking-off of quantities, bills of quantities, and contract preparation; (iv) poor unit rate engineering estimates; (v) no mutual check zero10 carried out after the start of construction; (vi) inadequate site survey capabilities and use of day works measurement and routine certification procedures by site staff; (vii) variation orders (VOs) due to poor design/survey, contractor suggestions, local farmer requests, site staff proposals, and changes in specifications; (viii) excessive cost estimates in VOs or lack of preparation of VOs (inadequate or no design section in VO preparation); (ix) lack of willingness or technical ability of site supervisors to make obvious cost saving adjustments on-site; (x) poor management and site staff control of volume of work in the contract, in particular contractor manipulation of earthwork import, disposal, and transport items; (xi) the ability of experienced, well-managed contractors to dominate site construction and administrative procedures; and (xii) unrealistic bid prices leading to contractor ‘claw back’ during construction. 22. Cost overruns on individual civil works contracts could have been significantly reduced within the existing procedural framework if staff resources and implementation techniques employed had strictly followed contractual procedures and routine information system maintenance. E. Organization and Management

23. Project components required implementation through six central Government agencies, five provincial offices, and dozens of district and subdistrict offices of each agency (Appendix 3).

9 Feasibility studies produced by the executing agency with assistance from project consultants. Government and

ADB approval of the report was required for noncore subprojects to be formally included for financing under the Project.

10 A joint review by the contractor and the owner of quantities of work required at the beginning of a contract.

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This, combined with a large number of contracts11 and a wide geographic spread (see Map), effectively made the Project unmanageable within Indonesia’s centralized framework. ADB fielded 16 review missions over the seven years of project implementation. Continuity from ADB was maintained because an experienced project engineer administered the Project for most of that period. However, while reviews were substantive and intensive, they could not adequately cover all components of all subproject areas.

24. Although the extent of possible corrupt practices cannot be known with any degree of certainty, the Project operated under conditions that would create an environment conducive for corruption. ADB review missions could not possibly oversee the award or construction supervision of the hundreds of large and small contracts dispersed over such a large geographic area. Implementation consultants had no role in overseeing contract awards and also lacked direct construction supervision control. Lack of accountability, poor record keeping, and highly underpaid agency staff with little linkage of performance to promotion persist in the Project’s implementing agencies. Circumstantial evidence, based on a review of EOM contracts awarded under local competitive bidding procedures, indicates that collusion in bidding may have occurred, such that competing firms each received a “fair share” of the tendered civil works. Conducting the mutual check zero to determine agreed quantities of work on individual civil works contracts after the contractor had already started work was reported to be a common practice. Similarly, major contract variations occurred frequently.12 25. Overall compliance by the Government with loan covenants was generally unsatisfactory (Appendix 4). Of the 30 major loan covenants, 14 were fully complied with. Partial or noncompliance was noted for major covenants including (i) submission of audited accounts and progress reports, (ii) recruitment of additional staffing, (iii) strengthening of the South Kedu Water Operations Center, (iv) issuance of land titles and transfer of ownership to farmers, (vi) O&M funding, (vii) ISFs, and (viii) establishment of viable WUAs.

III. ACHIEVEMENT OF PROJECT PURPOSE

A. Operational Performance

1. Part A: Irrigation Development

26. Physical targets of the R&U of irrigation and drainage schemes were generally met and exceeded appraisal estimates for the transfer of O&M responsibility to WUAs on schemes of less than 500 ha. Construction quality varied among subprojects with good results noticeable on Sermo dam, Serayu barrage, and some Wawatobi schemes. The irrigation development component suffered from implementation shortcomings due to inadequate project planning and design. These included (i) critical water shortages experienced in a number of subprojects; (ii) inadequate drainage and flood prevention facilities; and (iii) reduction in scope of some R&U works due to expensive design options, insufficient funds, or lack of time. 27. Inadequate procedures for system commissioning and handover to operational staff resulted in some systems operating below the design level. While EOM programs were

11 The PCR (footnote 7) Appendix 1, Table A1.6 lists a total of 893 contracts, including 303 civil works, 100 O&M, 221

equipment/vehicles, 63 consulting services, and 27 overseas and 179 local training contracts. Contract files, reports, and other loan documentation fill 52 boxes.

12 Although occurring after the fact, three civil works contractors who participated under the Project have been subsequently sanctioned by ADB’s Office of the General Auditor as a result of corrupt or fraudulent acts on a succeeding project also located in one of the subproject areas.

8

introduced under the Project, most of the subprojects did not have O&M budget allocations. This led to infrastructure deterioration such as rusting gates, broken parts, siltation, and heavy weed growths on main canals. The impact of the institutional strengthening component and performance of the WUAs varied among the subprojects. Field-level institutions were established in most Central Java and West Sumatra subproject areas, and most of the training programs provided field staff with technical knowledge on infrastructure and O&M. Appendix 5 presents a detailed discussion of the achievements and performance of the seven subprojects.

2. Part B: Irrigation Service Fees

28. This component comprised introducing ISF for about 129,000 ha of the project area with the aim of full cost recovery of O&M by fiscal year 1999/2000. ISF for main system O&M was introduced under the Project in Central Java and Southeast Sulawesi.13 However, collection rates were not set to recover full O&M costs and typically Rp15,000–Rp20,000/ha, less than 10 percent of O&M needs, was collected. ISF funds during the Project were collected by local government and were not linked to the provision of O&M services in the area where the funds were collected. WUAs had no control over the use of ISF collected from members. ISF was generally perceived as an additional government tax. 29. The OEM noted that in areas where WUAs were active, 100–150 kilograms of paddy per crop (in addition to the above ISF) were contributed by WUA members to WUA funds for internal operations and tertiary O&M.

3. Part C: Agricultural Development

30. This component comprised (i) establishing and operating TDUs, (ii) improving seed production, (iii) developing 4,000 ha of rice fields, and (iv) providing institutional strengthening. A total of 22 TDUs and 14 satellite TDUs were established, meeting appraisal targets. Seed farms were rehabilitated in Tegalgondo and Serayu in Central Java, Telang and Saleh in South Sumatra, and Wawotobi in Southeast Sulawesi. At the tertiary level, the main agencies involved in irrigation development have key functions, working closely with the WUAs. TDUs generally were able to demonstrate significantly higher yields that were mainly attributed to improved agricultural inputs and practices rather than to improved water management techniques. Constraints to TDU activities included (i) timing of TDU implementation vis-a-vis main system activities, (ii) farmer resistance to construct new tertiary infrastructure, (iii) lack of quality topographic and soil data, and (iv) lack of trained water management extension workers. 31. Only 1,638 ha were developed compared with the appraisal target of 4,000 ha: 1,400 ha in four Wawotobi subprojects and 238 ha in Serayu. Development of a further 1,929 ha postproject in Batang Anai was stated to be complete, but this could not be demonstrated to the OEM. All project land development areas visited by the OEM appeared appropriate and utilized. However, some areas in the downstream reaches of Wawotobi were suffering from water shortages, double cropping was not practiced, and available labor was sometimes constrained for these subprojects. In addition, major secondary swamp forest was visible in areas reportedly cleared under the Project on Batang Anai.

13 Central Java has one of the most successful collection areas in the country. Recent regulations in Central Java

reversed a 1998 governor’s instruction to stop ISF collection; in many locations ISF collection reportedly continues but under WUA management.

9

32. The overall impact of the agricultural development component was marginal. Most TDU programs were carried out before irrigation systems were upgraded. This aggravated field operation problems and precluded most water management extension activities (often due to lack of water control structures and/or lack of water). TDU operations that began after R&U works generally lasted only 1–2 years, and few TDUs continued after project funding stopped. Although data are not available on farmer outreach, in terms of adoption rates of improved practices, the OEM estimates that the TDU program did not result in a significant increase in yields in the seven subproject areas. Rehabilitation significantly increased the capacity of the seed farms to produce higher yielding certified seed. However, widespread increased use of certified seed by project farmers is not evident due to (i) uncertainty about the quality and benefits of certified seed, (ii) higher prices than for seed purchased from other farmers, and (iii) timely availability of seed.

4. Part D: Soil and Water Conservation

33. This component comprised establishing soil erosion control measures to safeguard the existing Wadaslintang Reservoir in South Kedu, Central Java. The risk to Wadaslintang Reservoir was documented by ADB in the PPAR for the Wadaslintang Multipurpose Project (footnote 4). The older Sempor Reservoir is designed to augment supplies to the South Kedu irrigation subprojects but suffers from water shortages because of reduced reservoir storage. Small-scale physical interventions were included under the Project for 4,500 ha of critical land in the watershed. Although adequately constructed, the works are considered inadequate in nature and scope to have any significant positive impact on the overall watershed condition. 34. Sediment monitoring is not carried out by Wadaslintang Reservoir operators, despite the long-standing concerns about reservoir storage capacity and the availability of echo-sounding equipment on the nearby Sermo Reservoir where monitoring surveys are undertaken biannually. The ongoing South Java Flood Control Sector Project14 (SJFC) includes catchment protection activities in the Wadaslintang Reservoir catchment area. However, consultant reports indicate that ongoing activities are unlikely to seriously address the sedimentation problems emanating from the watershed.

5. Part E: Women in Development

35. WID activities commenced in late 1993 on a pilot basis in Telang and Saleh. The South Sumatra Provincial Agricultural Service implemented the component with assistance from the consultants, who designed and implemented training activities for 1,300 participants in 10,930 training days. In general, technology transfer and institutional development programs were directed at the head of the household, although only a small percentage of them were women. The most successful intervention was the project-supplied drinking-water storage tanks that reportedly had a significant impact on reducing waterborne diseases. WID activities in the project area ceased after the Project.

6. Part F: Strengthening Coordination and Monitoring

36. Under ADB TA 1363-INO,15 four monitoring and evaluation (M&E) models were developed and tested in 1992–1993, using the Project as a pilot area. The models all included methodology for measuring (i) financial progress, (ii) physical progress, (iii) water management, 14 Loan 1479-INO: South Java Flood Control Sector Project, for $103 million, approved on 7 November 1996. 15 TA 1363-INO: Strengthening Project Benefit Monitoring and Evaluation Activities of the Directorate General for

Water Resources Development, for $458,000, approved on 22 August 1990.

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(iv) project benefits, and (v) environmental impact. The TA provided a robust, simple, and flexible M&E system that minimized new field data collection and therefore allowed high geographic coverage at low incremental cost. During the TA, ADB consultants recommended that the M&E system be introduced into project provinces. Instead, the M&E activities under part C of the Project designed a detailed database based on rapid rural surveys and devised an M&E technique based on logical framework techniques. The M&E system was to monitor and evaluate the impact of budgetary support interventions in any sector. The method, which was adopted nationwide, used, in sequential order, a set of development parameters to track the expenditures. This system was not designed specifically for the irrigation sector and the M&E proposal designed under TA 1363 was not directly or indirectly used. The two systems were conceived to perform different tasks: (i) the TA used time-based systems for M&E, and (ii) the Project used a logical framework general procedure to monitor the impact of individual budget expenditures. 37. Under part C, the project M&E units of the provincial water resources service (PWRS) were not strengthened in monitoring irrigation system performance. They were directed away from the models prepared under TA 1363 toward collecting primary data through surveys, focusing on detailed information on sample schemes rather than global coverage, annual performance monitoring against predetermined targets (measured as a ratio rather than absolute parameters), and discontinuing the simple time series presentation of M&E reporting. As a result of the change in focus of the project M&E away from the irrigation sector, the advances made under the World Bank Irrigation Sector Support Project and TA 1363 were severely curtailed. The OEM found no continuation of routine M&E of the irrigation sector in any of the project provinces except Southeast Sulawesi. The Central Java M&E Unit is considered to be active but is preparing detailed expensive reports focusing on measuring performance against short-term budget expenditure rather than irrigation sector M&E. 38. Coordination activities of BAPPEDA under part F were institutionally difficult (perhaps inappropriate) as project funds were channeled through national-level funding mechanisms in all sectoral agencies. BAPPEDA and provincial and district irrigation and agriculture organizations had, during project implementation, no direct management role or responsibilities in implementing project activities. Terminology in the appraisal report does not differentiate between nationally funded, provincially based irrigation projects from provincially based, provincially funded (Dinas) organizations. B. Performance of the Operating Entity

39. DGWRD and its provincial, district, and subdistrict irrigation agency counterparts from the subproject areas have successfully executed and implemented many funding agency-assisted projects. Together, they have thousands of engineers who have been the recipients of numerous government and funding agency-sponsored formal training programs, as well as technical knowledge transfer from specialized consultants over the past 20 years or more. However, the Project still relied heavily on the use of domestic and international consultants in its implementation, with the executing agencies focusing on their administrative role and construction supervision. For survey and design of irrigation and drainage works, the shortcomings included (i) low status of the provincial hydrology units and the failure to process incoming hydrology data at the provincial level; (ii) lack of staff time to monitor developments by other agencies, such that programs for paddy development were not well coordinated with overall special planning activities; (iii) relative inexperience of technical staff who checked designs by domestic consultants; (iv) lengthy administrative procedures and poor information systems; (v) insufficient time in the field to ensure that main system designs were adequate;

11

(vi) unprogrammed time-consuming redesigns of ongoing construction works; (vii) lack of full-time qualified surveyors; (viii) low budget allocations (on a per hectare basis) to domestic design consultants; (ix) consultants' work often preceding contract administration, which led to some confusion in supervisory duties and the timing of consultant submittals; and (x) lack of any supporting programs to establish and coordinate WUA involvement in design activities. 40. Many of these shortcomings were amplified by (i) the inexperience and lack of end-product concern by many domestic design consultants, and (ii) the absence of quality assurance procedures in routine contract execution and supervision. C. Economic Reevaluation

41. Based on directly quantifiable benefits and costs, the EIRR of the overall Project has been reestimated by the OEM at 8.3 percent, compared with the appraisal estimate of 15.9 percent and the PCR estimate of 13.4 percent. The EIRRs for the various subprojects range from 12.6 percent for the South Kedu subproject to 3.1 percent for the Batang Anai subproject, all lower than those calculated at appraisal and at project completion (Appendix 6).

42. Sensitivity analyses carried out for changes in yields, cropping intensities, crop prices, and production costs indicate that relatively modest changes (either positive or negative) would have a significant impact on economic efficiency. However, yields and production on Java during the 1990s stagnated. The Government’s lack of progress in reversing watershed degradation or improving O&M makes any positive change in this trend unlikely.

D. Sustainability

43. Sustaining project facilities and outputs requires an effective irrigation O&M program. A de facto culture of deferred maintenance of irrigation systems, which was fostered by project support for R&U, resulted in scheme rehabilitation investment that was six to seven times higher in present value terms than that required if maintenance had been satisfactorily undertaken.16 Although O&M funding remained constant in real terms during project implementation, allocated funds were used primarily for provincial irrigation agency staff remuneration and only 15–40 percent was generally used for urgent repairs and minor civil works. Since 1997, funding has been provided to provinces as part of the general provincial block-grant transfer mechanism. This, in conjunction with the fiscal crisis, has resulted in the allocation by provincial governments of even fewer resources for O&M than expected in the central Government’s block-grant budgeting assumptions. Due to the rupiah devaluation, the value of the budgeted O&M subsidy has been reduced from about $12–15 equivalent/ha before 1997 to $3–4 equivalent/ha thereafter. 44. The Government and ADB recognized the inadequacy of irrigation O&M during project design. However, ADB believed that the Government’s 1987 Statement of Policies for Irrigation Operation and Maintenance (IOMP),17 combined with a 15-year action plan and support from ADB and other funding agencies, would result in an efficient O&M program throughout the country, with 100 percent of the financial burden carried by water user beneficiaries. In retrospect, the IOMP had the right policy goals, but conditions did not exist for effective implementation. It was promulgated through confidential policy dialogue with funding agencies without the benefit of public consultation. Ownership of the IOMP within the Government was

16 Based on World Bank average estimates for all irrigation systems in Indonesia. 17 The full Statement of Policies for IOMP is given in Appendix 3 of the appraisal report.

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never strong. It was also bound to fail because of (i) inadequate legal and regulatory frameworks; (ii) weak sectoral institutions for integrated planning and management; (iii) involvement of a number of uncoordinated government agencies pursuing narrow functional mandates; (iv) ineffective administrative and implementation performance of provincial and district irrigation agencies; (v) complexity of staff deployment and performance incentives, budget transfer, and organizational structure to implement the IOMP; (vi) the absence of mechanisms for beneficiary participation in decision making; and (vii) inconsistent and unreliable data and management information systems for irrigated areas.

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

A. Socioeconomic Impact 45. Direct project benefits have been captured primarily by small farm families with incomes near or below the poverty line. However, due to the very small average farm size, adverse price trends of inputs and outputs, and the lack of progress on crop diversification, a significant percentage of beneficiaries are unlikely to have achieved economic status permanently above the poverty line. Off-farm income, often representing 30–50 percent of farm family income, has also been significantly affected by the financial crisis. Based on the appraisal report, the large majority of farmer beneficiaries had operational holdings of 0.5 ha or less, with the exception of farmers in the resettlement areas of the Telang and Saleh, and Wawotobi subprojects, where farm sizes averaged 2.0 or more ha. The OEM estimates that over the past 10 years, farm sizes in Central Java and DI Yogyakarta subproject areas have decreased to an average of 0.25–0.40 ha due to ever-increasing population pressure and, recently, from reverse migration from large urban areas. However, in the Telang and Saleh areas, farm size has increased dramatically to 4.0–6.0 ha because many original settlers have left the area due to depressed socioeconomic conditions. Estimates of average farm-family crop income in the future with and without the Project are given in Table 1. 46. Income increases in US dollar terms range from 17 percent for Central Java subprojects to 115 percent for the Batang Anai subproject. However, average increases may distort the real situation at the individual farm level, based on the location of the farm in the system. Farmers in the upper third of most irrigation systems (closest to the main and secondary canals), who likely received adequate water supplies even before the Project, would be largely unaffected by project investments. Conversely, farmers in the lower end of the systems, who previously received little or no water, may have experienced a doubling of both cropping intensity and yield, and resulting income increases of 300–400 percent. 47. Although estimates are not available, project activities during implementation likely required close to the appraisal estimate of 39,000 person-years of unskilled labor, as most civil works were simple and labor-intensive. The OEM also estimates that higher cropping intensity and incremental rice production have directly and indirectly created an additional demand of 25,000–30,000 person-years of annual employment.

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Source: Project Completion Report and OEM estimates. B. Environmental Impact

48. The flood control and drainage measures for the Central Java core subprojects are assumed to have reduced flooding in agricultural, village, and some semiurban areas. However, no reliable data are available on the reduced incidence of flooding, which remains a serious problem in many areas. The success of the national integrated pest management program, ongoing since 1988, the removal of pesticide subsidies in 1989, and the inclusion of integrated pest management demonstrations in the agricultural development program for the project-supported TDUs have likely reduced pesticide usage in rice production in the subproject areas. Fertilizer use is estimated to have slightly increased due to the marginal increases in cropping intensities, offset by the deteriorating paddy-fertilizer price ratios because of the reduced price support for paddy and gradual removal of fertilizer subsidies induced by the financial crisis. As reported in the PCR and confirmed by the OEM and other ADB studies,18 increasing population pressure, unregulated land use (particularly cassava production on steep slopes), and unabated deforestation have caused extremely high rates of soil erosion in six of the seven watersheds above the subprojects’ irrigated areas. The impact of these increasing soil losses will include (i) a shorter than expected life of the Sempor, Wadaslintang, and Sermo reservoirs, which serve subproject areas in Central Java and DI Yogyakarta; (ii) sediment disposition behind all major weirs, in canal networks, and main river offtakes, which will reduce irrigation supplies significantly below design capacity (and will require costly annual maintenance); (iii) increased flooding and drainage problems; and (iv) loss of important fishing grounds and mangrove complexes in the lagoons that serve as drainage outlets to the sea in Central Java and DI Yogyakarta. The Project partially addressed these problems with the soil and water conservation component in the Wadaslintang watershed and partial dredging of the Sagara Anakan lagoon in the Lower Citanduy subproject, but erosion and soil deposition rates continue to increase.

C. Impact on Institutions and Policy

49. The introduction of ISF was slow and complex, and collections problematic. Project-financed R&U and EOM, combined with central Government subsidies for O&M (also 18 TA 2665-INO: Institutional Strengthening of the Forestry and Soil Conservation Services in the Segara Anakan

Basin, for $250,000, approved on 17 October 1996.

With Project

Item Irrigated

Revenues 4,711 12,078 17,002 4,711 14,162 16,475 2,154 2,550 2,692 7,439 13,717 9,004 12,645

Expenses 1,732 4,978 6,722 1,732 5,644 6,466 1,106 1,278 1,433 3,624 5,517 3,900 5,203

Income 2,979 7,101 10,280 2,979 8,518 10,008 1,048 1,273 1,259 3,815 8,200 5,104 7,443(Owner) $270 $644 $932 $270 $773 $908 $95 $115 $114 $346 $744 $463 $675

Income 1,192 2,840 4,112 1,192 3,407 4,003 2,096 2,545 504 1,526 3,280 5,104 7,443(Tenant) $108 $258 $373 $108 $309 $363 $190 $231 $46 $138 $297 $463 $675

Rainfed Irrigated Irrigated

With Project

Without Project

Rainfed Irrigated

With Project

Irrigated

Without Project

Irrigated

Without Project

Irrigated Areas

Without Project

With Project

Without Project

With Project

Rainfed All Areas Rainfed

Table 1: Annual per Hectare Farm Budgets forRice Paddy Crops (Rp'000)

WawotobiBatang AnaiTelang-SalehKulon Progo Central Java

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covenanted under the Project), gave a mixed signal, namely, that there was little need to be serious about collecting ISF. This undermined the urgency of reforms. Project implementation arrangements split functional subproject organization from the regular structure of the provincial irrigation agencies involved and put control in the hands of managers familiar with civil works who were motivated to achieve physical and financial targets, but unfamiliar with and generally uninterested in implementing institutional reforms (i.e., strengthening WUAs and ISF). The top-down approach used for forming WUAs resulted in leaders being chosen from above rather than through a bottom-up organization. The focus on establishing WUAs to meet targets was easily disconnected from substantive development of management capacity for irrigation O&M. This explains the large number of WUAs that have become inactive. By disregarding existing local farm organizations, the social capital embodied in existing networks among farmers, their mutual trust, and history of cooperation were neglected. These local organizations had been responsible for the original construction of many small irrigation schemes, including areas later incorporated into larger schemes.

50. Project support for the IOMP did not change the underlying dynamics of irrigation development. The Government continued its role as an operator, directly implementing activities rather than assuming the role of an enabler. Farmers gained some means for a greater voice, but technical, legal, and organizational services to aid WUAs were largely absent, except for the Government’s own targeted programs directly delivering conventional classroom training that was not conducive to the effective development of WUAs.

V. OVERALL ASSESSMENT

A. Relevance

51. Overall project relevance has changed considerably in some respects from the time of approval to evaluation. Project goals of increasing farm productivity, creating new employment opportunities, and improving the living standards of farmers, the majority of whom are living below or near the poverty line, remain highly relevant. Achieving this through investments to improve irrigation efficiency and O&M similarly remains cogent. However, funding agency- subsidized investments (primary beneficiaries contribute nothing to the investment costs and little to O&M) in large-scale R&U (i) foster a deferred maintenance culture, (ii) are an estimated six to seven times more expensive than annual maintenance, and (iii) result in only temporary marginal improvements in irrigation efficiency. The highly top-down centralized approach of project design and implementation and lack of public consultation on policy reforms are also outdated. Major investments in isolated transmigration areas for transforming fragile swampland into irrigated rice areas (Telang and Saleh subproject) has also been largely curtailed as they have generally been shown to be economically, ecologically, and technically unsound. Based on the rationale of the Project and relevance of project design at appraisal, the Project is assessed as relevant, although borderline to being partly relevant due to the weaknesses discussed.

B. Efficacy

52. In general, the Project achieved its physical targets for R&U, TDUs, introduction of EOM, transfer of facilities and small irrigation systems, establishment of WUAs, WID, soil and water conservation, and training. The higher cropping intensities and rice yields resulted in substantial incremental output of rice, increased farmer incomes, and job creation, but these were lower than the optimistic appraisal expectations. Growth in rice crop yields and farm income have been affected by deteriorating rice-fertilizer price ratios and the economic recession. Physical completion of R&U, which dominated project expenditures, was significantly delayed and in

15

most cases did not achieve full restoration of capacity or efficiency of the irrigation systems. Project funding was inadequate to fully address all system needs (particularly drainage and tertiary canal development), yet supported some works that may not have been technically or economically justified (i.e., construction of large new weirs rather than rehabilitation of existing weirs, and overextension of canal lining). Deterioration in most systems started soon after project completion due to less than adequate O&M funding and management. Progress on ISF has not been significant, and development of self-sustaining WUAs was largely not achieved. Overall, the Project is assessed partly efficacious in terms of achieving its stated purpose and targets.

C. Efficiency

53. The EIRR estimates for the seven subproject areas range from 12.6 percent for the South Kedu subproject to 3.1 percent for the Batang Anai subproject. Although the selection criteria for approval of noncore subprojects were sound and comprehensive, approval of the Batang Anai, and Telang and Saleh subprojects should have been withheld based on technical and economic considerations. Gains in O&M efficiency and crop yields could have been greater and achieved more efficiently and sustainably through much less investment in large civil works, and more emphasis on investments in institutional aspects of O&M. These include PRIS systems and procedures for planning and operating irrigation systems, assessing water availability and demand, operating reservoirs, and upgrading basic system information. Efficiency gains could also have been higher if the project had placed more emphasis on tertiary system development tied to improvements in empowerment and organizational capacity of WUAs for better irrigation management. Given the acceptable overall EIRRs in two of the seven subprojects, and the overall project EIRR of 8.3 percent, the Project is assessed partly efficient.

D. Sustainability

54. Overall, under current circumstances, the sustainability of irrigation systems operations and project incremental outputs is assessed as less likely. The unabated deterioration of project watersheds will continue to cause flooding and drainage problems in the wet season, reduce water availability in the dry season, exacerbate the problems associated with increased sedimentation, and reduce water quality over time. Fiscal austerity induced by the continued financial crisis and the move toward decentralization have substantially reduced central Government funding for O&M, which was already inadequate prior to the crisis. Fiscal austerity has also affected financial incentives for farmers to use the level of inputs required for continued high rice yields. ISF policies have not been effective. ISF payments have continued to dwindle and have not been able to reduce the fiscal burden on government resources for O&M. Turnover of small irrigation systems has had some success, but the majority of WUAs in these systems remain incapable of performing adequate O&M, as do the large majority of WUAs on large-scale systems. High population pressure, particularly on Java, and continued urbanization and industrialization will continue to reduce commandable irrigation area and compete more aggressively for reduced supplies of quality freshwater. Hope for the future rests with a seemingly renewed resolve by the Government, combined with a better, more focused approach by funding agencies,19 to deal effectively with the institutional, regulatory, and legal issues at the root of many problems in the water sector, which have now reached crisis proportions.

19 Such as the World Bank’s Water Sector Adjustment Loan (WATSAL).

16

E. Institutional Development and Other Impacts

55. The Project’s substantial commitments to improve institutional capacity at all levels within the irrigation subsector were laudable but yielded little long-term impact. WUAs were not, in general, developed into effective, empowered, self-sustaining farmer organizations. The IOMP and ISF programs were an admitted failure, although they have been replaced since 1999 by more potentially meaningful reforms under WATSAL. The EOM program has been effectively halted. The Project’s impact on poverty reduction was likely very significant in limited areas within command areas of most subprojects, particularly areas where flooding and drainage were substantially improved and/or cropping intensities effectively doubled. Overall, institutional development and other impacts of the Project are assessed as low.

F. Overall Project Rating

56. The overall project rating, based on the analysis of existing reports and data, the findings and observations of the OEM, and a weighted matrix of the above five rating criteria, is only partly successful. The Project has substantially achieved most of its physical targets and improved the incomes and welfare of a large percentage of poor farm families in the areas covered by the Project. However, there have been (i) substantive shortfalls on O&M, WUA development, and cost recovery targets; (ii) significant shortfalls in improvements in WID and executing agency institutional capacity; (iii) accelerated deterioration of watersheds and resultant problems of sedimentation, drainage, and flooding in a number of subproject areas; (iv) insufficient attention to tertiary irrigation and drainage canal development; (v) negligible long-term impact of TDU and seed production components; (vi) substantial noncompliance with major loan covenants on irrigation policy reforms; and (vi) questionable selection of some subprojects for investment. Issues (i), (iii), and (vi), in particular, represent a significant threat to the productivity and sustainability of irrigation infrastructure, and have already adversely affected achievement of projected full development benefits of the Project. G. Assessment of ADB and Borrower Performance

57. Based on discussions and descriptions of project design and implementation throughout the PPAR, the Borrower’s performance in project undertakings is rated as less than satisfactory. The complex organizational arrangements and the difficulties in coordinating activities among the various executing agencies support this rating. ADB’s performance is rated satisfactory as monitoring and supervision of project activities by ADB staff is deemed adequate.

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A. Key Issues for the Future

58. For sustainability, a holistic, project-cycle, sector approach to irrigation development requires a long-term commitment (8–10 years) to institutional development and capacity building in a project area. The Project, like ADB’s East Nusa Tenggara Irrigation Sector Project20 and Third Irrigation Sector Project (footnote 2), failed to provide long-term replicable sectoral support to strengthen institutions in the regions covered. A stop-start approach to irrigation development reduces opportunities for institutional capacity building, leads to an inefficient deferred maintenance regime, and raises false hopes with water users and government agencies that development will continue in a well-planned, long-term manner. A long-term commitment to irrigation sector development is required, with major sectoral 20 Loan 952(SF)/953-INO: Nusa Tenggara Agricultural Development, for $25 million, approved on 7 February 1989.

17

institutional changes addressed through other loan modalities. ADB’s sector development program approach, combining a sectoral investment and program modality within a long-term framework,21 is considered appropriate.

59. The decentralization legislation of 1999 and ongoing major water sector reforms (WATSAL), which are delegating responsibility for irrigation O&M to WUAs, and reorganizing and redefining river basin management, are fundamental. These far-reaching reforms are crucial to sustainable management of the enormous investments in this sector. O&M under the Project followed the 1987 IOMP, which was unsuccessful principally because of (i) lack of delegation of budget and responsibility; (ii) inadequate understanding during program design of the institutional setup; and (iii) an inappropriate environment for WUA participation. EOM was designed for all projects of the World Bank and ADB (prior to ADB’s loans 860(SF)/861) to be just another project activity. As such it bypassed, and effectively weakened, the role of local government agencies in system O&M.

60. Farmers, and collectively WUAs, were not generally involved in a participatory manner in project activities. Paternal, top-down attitudes of all executing agencies, together with (i) inappropriate funding mechanisms, (ii) less than satisfactory institutional project design, and (iii) less than optimum use of consultants and nongovernment organizations, all contributed to a lack of beneficiary participation. The involvement of WUAs in irrigation management at the main system level, despite irrigation committees, was ineffective. At the tertiary level, and often at the secondary level, farmers reacted to their own needs through seasonal maintenance and simple operational activities. On-farm water management and tertiary development were not adequately addressed under the Project. Tertiary designs and water management without WUA participation led to incomplete development of tertiary systems. Considerable effort on WUA strengthening and legal reform was made under the project training and institutional activities. These were partially successful in their own right, but were not coordinated with implementation and utilization of physical works. TDUs were successful in introducing short-term demonstrations and catalyzing dialogue between agencies. TDUs were not sustained and a successful model for the extension services to WUA for on-farm water management remains unavailable.

61. Under the project design, ADB and Government resources required to ensure efficient and effective implementation were severely stretched. The Project, executed through six government agencies, was geographically diverse and included three unusual subprojects: (i) Batang Anai with peat soils; (ii) Wawotobi with high land development needs; and (iii) the core subproject Telang-Saleh, a major swamp pilot project accounting for some 25 percent of the project area. These subprojects were not representative of the irrigation sector in Indonesia and had major technical differences from the Java irrigation subprojects. Limiting the Project to Java subprojects, which were more homogeneous, contiguous in area, and similar in development requirements, would have significantly simplified implementation and allowed major works and activities (drains, flood prevention, tertiary development, and institutional support) to be finished.

62. A considerable effort was made under the Project and under TA 1363 (footnote 15) to provide and test a framework for irrigation sector M&E. Activities under Part F failed to institutionalize the results of this TA and currently, while effort and interest in the project M&E field has been considerable, the lack of a national policy to institutionalize M&E activities leads to considerable wasted effort and poor information available for irrigation sector managers.

21 An implementing modality similar to the adjustable program loan of the World Bank could also be considered.

18

More effort by ADB and the Government is needed in the future to ensure that benefits and synergies from previous sector interventions are fully exploited.

63. The ongoing ADB-supported Segara Anakan22 and SJFC projects23 have activities in the Lower Citanduy core subproject area. Drainage, flooding, and sedimentation problems are complex and severely affect the sustainability of the Segara Anakan lagoon and Lower Citanduy subproject. A comprehensive river basin development plan including a review of the results of TA 2665 (footnote 18) and a subsequent implementation program under the Segara Anakan loan are required. 64. Watershed activities under the Project were of a piecemeal, pilot nature, and had insignificant effect on sediment reduction. High and continuously growing sediment yields due to deforestation, population pressure, and changing land use in upper watersheds are an increasing threat to irrigation and drainage infrastructure sustainability. Part D (paras. 33-34) provided a basis for coordination dialogue between agencies involved in water resources development and watershed protection in the project area. Future investments in major R&U should only be considered in areas where upper watersheds are stable or where equal attention is given to watershed protection such that rates of soil erosion (and therefore sediment yields) will be within acceptable limits to ensure sustainability of water infrastructure. Significant interventions are still required to address major concerns regarding sediment runoff and sustainability, particularly in the Wawotobi and Citanduy subprojects.

65. Access roads built under the Project were seen to be very beneficial to overall rural development providing access to markets, landholdings, and infrastructure. Due to funding constraints a number of roads were canceled and maintenance on a significant portion of roads constructed has deteriorated. Adequate coverage and maintenance of suitable roads is essential and should include (i) access roads along all primary and secondary canals, (ii) access into all tertiary areas, (iii) paved access to subproject area and local markets, and (iv) access to all primary and secondary drains.

B. Lessons Identified

1. Project Design and Formulation

66. Nationally managed provincial irrigation project activities need to be transferred to the local PWRS and district water resources services. The pressure to retain control at the center (national and provincial) rather than to delegate and decentralize continues to decrease institutional and project implementation efficiency. During project design, institutionalization of project activities needs to be given priority. The optimal arrangements for decentralization need to be determined, with proper definition and assessment of roles, responsibilities, and absorptive capacities of PWRs and district water resource services. All future irrigation development projects should be formulated with mechanisms encouraging and ensuring the full participation and ownership of beneficiaries with the support of PWRS and district water resources service for future system management.

22 Loan 1476-INO(SF): Segara Anakan Conservation and Development Project, for $22.8 million, approved on

17 October 1996. The project has inadequate watershed management components to control the high level of sediment present in runoff that enters the Lower Citanduy and lagoon area.

23 The Citanduy SJFC subproject office informed the OEM that they were using a 1975 Citanduy Flood Master Plan for piecemeal selection of works. A recent mathematical model designed under part A of the Segara Anakan Project should be used for the basis of a detailed review of drainage and flooding in the Citanduy River.

19

2. WUAs and Beneficiary Participation

67. WUA formation and operational efficiency are prerequisites to the implementation of government policy in many aspects of irrigation development. PWRS does not have an appropriate social orientation to carry out WUA establishment and training activities effectively. Beneficiaries must participate if they are to feel a sense of ownership and responsibility, which will also effect attitudes to ISF and O&M. The impact of institutional development in this regard has been limited. Lack of appreciation of the need to develop linkages with target groups during WUA formation has hindered programs for WUA development. In forming WUAs, care has to be taken to minimize disruption to existing social structures. 68. Farmers are reluctant to form and join government-induced WUAs that substitute for traditional associations that have survived for a long time. WUA establishment and strengthening should be accelerated with a focus on (i) quality organizations, (ii) involvement in tertiary and main system O&M, and (iii) a clear linkage between irrigation service and ISF. As the Government has not been able to adequately fund postproject O&M, private O&M managers, financed by WUAs, should be considered as an alternative to publicly provided O&M. The number of WUAs that require formation and training is beyond the scope of a single short-term project. All future development projects should include components specifically orientated toward WUA development. However, WUA institutional building is a complex process: appropriate performance indicators must be identified and progress of capacity building efforts strictly monitored. An institutionalized PTGA (on-farm water management) subproject, working through BAPPEDA or routine extension service organization, should be used to coordinate the activities. However, training activities require administrative, logistical, and organizational assistance. Full-time PTGA subproject working teams will be necessary for the larger irrigation schemes like Serayu and Citanduy and in districts with significant irrigation developments. Training at the field level (PTGA level C) with a two-year routine follow-up program and regular backstopping activities are required for all technical irrigation and village schemes in accordance with the respective development programs. The training and PTGA unit should be institutionalized and training budgets provided through routine regional development budget sources at district and provincial levels.

3. The Project Approach and Coordination Issues

69. Regular coordination meetings within provincial and district BAPPEDA are important and should concentrate on the needs for interagency planning; identification of planning priorities; and assessment of proposals for scheme, subproject, and sector M&E, as well as institutional development coordination. Interagency action programs for irrigation development can be successful through regular consultations at BAPPEDA-chaired routine meetings. PWRS needs to strengthen its technical department for irrigation planning and design, BAPPEDA needs to allocate regular budgets to fund such meetings, and beneficiaries need incentives and assistance to participate in bottom-up planning and implementation activities. An appropriate cost recovery mechanism could be arranged to ensure that provinces and districts are able to raise adequate funds to finance their policymaking, coordination, and monitoring functions.

4. Project Implementation

70. Strengthening of administrative sections of PWRS and district water resources service through the focused training of administrative staff and streamlining of procedures is required. The gradual increase in depth of experience in technical departments should free senior staff from involvement in routine administrative issues if appropriate delegation of tasks can be

20

achieved. The proposed introduction of efficient management information systems could also be very effective in promoting the more efficient use of staff time. Special care needs to be taken in preparing budgets, cost estimates, and realistic implementation schedules. Designs, bills of quantities, and contracts must be carefully checked by the project staff. This involves senior staff spending more time and effort on supervision. All checking should be carried out independently within a quality assurance framework.

5. Irrigation Development Policy

71. More involvement of provincial and district authorities and beneficiaries in key policy directives is essential. Implementation of Government O&M policy (and WATSAL) should be formulated, explained, and discussed jointly with the PWRS district and provincial managers, BAPPEDA (provincial and district), and other senior provincial government officials in a participatory manner. Understanding of, and/or preparation for, the implications of the policy on short-term and long-term planning is minimal. A long-term provincial/district irrigation development plan should be ratified by provincial planners and beneficiaries, and used for annual program definition.

6. Comprehensive Program for Irrigation Scheme Commissioning

72. Commissioning requirements have only been studied at the demonstration subdistrict offices. A two-year commissioning period is generally required for adequate development programs for medium-scale schemes with a four-year period for large and major schemes. Programs should include

(i) continued training of staff and WUAs in operating schemes until an optimum acceptable management level is reached;

(ii) minor modifications and infrastructural improvements that may be necessary for structures and gates to ensure accurate measurement and control and/or system extensions;

(iii) development of adequate information techniques for reporting crop planting activities from the field to the operators;

(iv) adjustment and change from a theoretical (as designed) water allocation system to one based on actual needs (social and technical), calibration of measuring structures, and the development of appropriate water management techniques;

(v) adjustment and optimization of needs-based budgets; (vi) familiarization period between operators and farmer groups necessary to develop

relationships and trust; (vii) minor repairs to structures that may have been overlooked by the contractors

and supervision staff; (viii) review of tertiary system infrastructure; and (ix) purchase and commissioning of necessary equipment and training in its use.

7. Difficulties in Promoting Farmer Participation in Irrigation Development

73. Community organizers are required to ensure beneficiaries participate in government-led activities. However, a sustainable mechanism should be introduced whereby project beneficiaries are not dependent on community organizers. Farmers need to participate and be organized into WUAs (or other suitable institutions) at the earliest possible stage of system planning. Ensuring farmer involvement in tertiary system construction and main system design, and prior to agreement on the modality of subproject development and O&M, is essential. For

21

farmers to be available to participate in planning and design activities, field motivators must be active and in place in a timely manner, coinciding with the fielding of the survey, investigation, and design consultant. All costs and time-consuming coordination activities should be borne by a community organizer consultancy or integrated into the survey, investigation, and design consultancy. 74. To achieve farmer contributions through provision of labor and materials to field-level system construction, significant efforts, outside the capabilities and time constraints of PWRS staff, are required. These efforts should not be underestimated; district and subdistrict officials understand these requirements better than national planners. Every project should include comprehensive, long-term, institutionalized WUA development programs. 75. Specific recommendations for improved farmer participation in irrigation developments and management include (i) small scheme design activities (handover [PIK] and village [PID] schemes) should be carried out in a participatory manner at subdistrict level with support from district offices and consultants; (ii) WUA establishment and strengthening activities under the multiagency PTGA training program should be accelerated and routine PTGA training (pembinaan pengairan) financed through the regional development budget; the legal status of WUAs should allow the WUA to undertake contracts with second parties and choose where they obtain their services; and (iii) WUAs should be formed before R&U design activities commence and be encouraged, by the use of community organizers, to participate in system design. A program of tertiary and field-level system construction with farmer participation should be scheduled to be complete within one year of the main system works.

8. Training

76. A human resources development program should be the basis of the training program. Training units need to be incorporated into the structural organization. All staff holding positions (surat keputusan) should be compelled to undertake a fixed number of training days as instructors each year. All irrigation staff attending should have fixed work positions with the respective government organization. A training monitoring system and information system should be established to provide feedback for future courses. O&M implementation and budgetary and organizational policy need to be clear before further training at district and subdistrict levels can be effective.

9. More Efficient Use of Consultants

77. Although the performance of consultants was generally satisfactory, specific aspects should be addressed in future irrigation projects to ensure optimal use of consulting resources. First, weak agency staff will not benefit from day-to-day counterpart strengthening unless staff are assigned full time, given specific tasks, and provided with project funds for subsistence and travel. Second, the role of consultants in construction supervision should be as ‘Engineer,’ not assistant. This will result in a fairer, transparent execution of contracts. Third, the main task and assisting roles of consultants need to be adequately defined and resources allocated accordingly. Fourth, projects must avoid a high number of consulting contracts that require an inordinate amount of executing agency administration. Lastly, the effectiveness of part F consultants and severe staffing problems in the Telang-Saleh subproject (with personal disputes leading to staff changes) illustrate the need to closely monitor and ensure value for money from both domestic and international consultants. Mechanisms should be incorporated into future projects to ensure that a reasonable level of performance is attained during implementation and recorded on certifiable curriculum vitae of consultants.

22

C. Follow-Up Actions

78. The OEM identified a number of specific, monitorable follow-up actions designed to redress remedial and nonremedial project issues related to additional physical works, O&M procedures of irrigation and drainage schemes, submission of audited financial statements, and future ADB coordination with policy initiatives of the Government and other funding agencies (Appendix 7). The OEM recommends that the Indonesia Resident Mission take the overall responsibility in ensuring that follow-up actions are implemented adequately and in a timely manner.

23

APPENDIXES

Number Title Page Cited on (page, para.)

1 Cost Breakdown by Project Components 24 3, 12 2 Summary of Physical Accomplishments 25 5, 17 3 Organization Chart for Project Implementation 31 6, 23 4 Status of Compliance with Loan Covenants 32 7, 25 5 Operational Performance of Rehabilitation and

Upgrading of Irrigation and Drainage Schemes 36 8, 27

6 Economic Reevaluation 42 11, 41 7 Follow-up Actions 71 22, 78

24 Appendix 1

COST BREAKDOWN BY PROJECT COMPONENTS ($ million)

Appraisal Estimate Actual

Component Foreign Local Total Foreign Local Total

Civil Works 57.40 95.20 152.60 63.14 81.16 144.30Equipment and Vehicles 5.00 2.40 7.40 6.18 5.08 11.26Consulting Services 15.40 17.00 32.40 16.47 17.21 33.68Training, Demonstration, Monitoring 1.00 4.60 5.60 0.84 2.50 3.34Incremental O&M 0.00 5.50 5.50 0.00 4.92 4.92Administration & Land Acquisitiona 0.00 16.30 16.30 0.00 16.30 16.30Taxes and Duties 0.00 20.00 20.00 0.00 12.32 12.32

Interest and Charges

ADB 23.80 0.00 23.80 23.84 0.00 23.84 Government of Netherlands 0.20 0.00 0.20 0.00 0.00 0.00

Refinancing TA 0.20 0.00 0.20 0.17 0.00 0.17 Total 103.00 161.00 264.00 110.64 139.49 250.13

ADB = Asian Development Bank, O&M = operation and maintenance, TA = technical assistance. a The Operations Evaluation Mission could not confirm actual expenditures specifically related to the Project, as accounts were

consolidated with other projects in Central Java, Southeast Sulawesi, and West Sumatra. Source: Project Completion Report and Operations Evaluation Mission estimates.

Appendix 2, page 1 25

SUMMARY OF PHYSICAL ACCOMPLISHMENTS

Table A2.1: Irrigation Development Activities, Appraisal and Actual Targets (ha)

Handover < 500 ha Rehab. & Upgrading Efficient O&M No. of

Subproject Appraisal Actual Appraisala Actual Schemes Actual

Yogyakarta:Kulon Progo 7,000 6,942 7,000 — 4 128 Central Java: 76,200 70,382 98,000 100,369 52 4,430 South Kedu 28,000 27,377 53,000 52,417 39 2,993 Serayu and Ijo-Tipar 22,800 20,795 18,000 22,286 4 412 Lower Citanduy 25,200 22,210 27,000 25,666 9 1,025 South Sumatra: Telang-Saleh 10,000 10,000 10,000 7,168 — — West Sumatra: Batang Anai 7,000 6,764 7,000 1,200 — — South East Sulawesi: Wawotobi 7,947 10,000 3,624 — — Total 110,000 102,035 132,000 112,361 56 4,558 — = not avail7able, O&M = operation and maintenance. a The original targets included 7,000 hectares (ha) for Kulon Progo and 7,000 ha for Batang Anai, which were later excluded from the

Project. Efficient O&M for these areas were financed under a World Bank- financed project, Irrigation Subsector Project II. Sources: Project Completion Report, Directorate General of Regional Development (DGRD), June 1997; and Project Database,

DGRD, November 1996.

Table A2.2: Development of Water Users Associations (status as of November 1996a)

No. of No. of Tertiary No. of Classification of WUA

Subproject Villages Units WUAs Undeveloped Handover < 500 ha

Developed

Kulon Progo 69 143 134 40 78 16 South Kedu 669 1,636 629 93 447 89 Serayu 143 209 143 48 84 11 Lower Citanduy 84 434 84 4 63 17 Telang-Saleh 28 573 68 0 68 0 Batang Anai 18 121 69 12 57 0 Wawotobi 24 185 25 0 21 4 Total 1,035 3,301 1,152 197 818 137 WUA = water users association. a For details for each WUA, refer to Project Database (pp. 11-50), Directorate General of Regional Development (DGRD), 1986. Source: Project Completion Report, DGRD, June 1997.

Appendix 2, page 2 26

Table A2:3: Summarized Training, by Component a Staff of Executing Agencies Farmers No. of Total No. of Total

Province/Component Persons Person- Days

Persons Person-Days

A. D.I. Yogyakarta Irrigation development — 5,762 0 0 Agricultural development 210 1,350 2,580 51,600 Coordination and monitoring 324 928 0 0 Subtotal (A) 534 8,040 2,580 51,600 B. Central Java Irrigation development — 36,555 — 3,078 Irrigation service fee 1,152 82,234 140 140 Agricultural development 324 1,890 4,035 29,245 Soil and water conservation 61 819 665 3,330 Coordination and monitoring 157 334 0 0 Subtotal (B) 1,694 121,832 4,840 35,793 C. South Sumatra Irrigatiom development 241 1,937 1,060 11,480 Agricultural development 1,245 7,190 2,000 16,000 Women in development 80 710 2,760 10,220 Coordination and monitoring 269 1,442 0 0 Subtotal (C) 1,835 11,279 5,820 37,700 D. West Sumatra Irrigatiom development 130 1,170 141 846 Agricultural development 850 8,420 1,290 6,510 Coordination and monitoring 132 537 0 0 Subtotal (D) 1,112 10,127 1,431 7,356 E. Southeast Sulawesi Irrigation development — 11,598 0 0 Agricultural development 270 1,800 1,684 94,108 Coordination and monitoring 40 355 0 0 Subtotal (E) 310 13,753 1,684 94,108 Total 5,485 165,031 16,355 226,557 — = not available. a For details on the different types of training and duration of each activity, see Project Database

(pp. 83-101), Directorate General of Regional Development (DGRD), November 1996. Source: Project Completion Report, DGRD, June 1997.

Table A2.4: Irrigation Service Fee Collections (Rp million)

1993/94 1994/95 1995/96

Area Area Area Location (ha) Target Actual (ha) Target Actual (ha) Target ActualSouth Kedu 16,044 90.6 81.0 26,397 125.9 82.9 33,116 175.1 121.8 Banyumas 3,399 50.1 52.7 3,546 66.1 58.1 4,566 84.8 18.0 Serayu 5,203 55.8 30.1 5,203 60.9 36.6 5,203 59.2 36.4 Lower Citanduy 7,277 41.6 32.4 7,277 61.3 44.4 7,277 81.7 64.9 Wawotabi 1,441 45.1 4.5 2,181 19.1 5.4 3,261 27.3 11.0 Total 33,364 283.2 200.7 44,604 333.3 227.4 53,423 428.1 252.2 Source: Project Completion Report, Directorate General of Regional Development, June 1997.

Table A2.5: Tertiary Development Units, Table A2.6: Civil Works and Other Contracts Location and Area

No. of AmountProvince/District Location Area (ha) Category Contracts ($'000)

01A : Civil Works (Part A) - Loan 1017-INO 121 90,701 Central Java 01A : Civil Works (Part A) - Loan 1018-INO 45 30,070

Purworejo Purwodali 100.0 01C : Civil Works (Part C) 85 1,856 Banyu Urip 50.0 01D : Civil Works (Part D) 38 527 Kemiri 55.0 01F : Civil Works (Part F) 14 89 Kutowinangun 52.3 Subtotal 303 123,243 Kebumen Kebumen 98.7 02A : Equipment/Vehicles (Part A) 23 3,965 Petanahan 71.4 02B : Equipment/Vehicles (Part B) 3 182 Gombong 53.1 02C : Equipment/Vehicles (Part C) 41 1,559 Cilacap Kroya 96.0 02D : Equipment/Vehicles (Part D) 4 42 Kesugihan 139.6 02E : Equipment/Vehicles (Part E) — — Kawungantan 64.4 02F : Equipment/Vehicles (Part F) 40 437 Sidareja 74.0 03A : Consulting Services (Part A) 49 23,733 Kedung Reja 98.7 03B : Consulting Services (Part B) 1 794 Majenang 59.4 03C : Consulting Services (Part C) 10 5,714 Banyumas Sumpiuh 92.2 03E : Consulting Services (Part E) 1 732 03F : Consulting Services (Part F) 2 2,320 D.I. Yogyakarta 04A : Overseas Training (Part A) 10 463 Kulon Progo Nanggulan 107.0 04C : Overseas Training (Part C) 4 268 04F : Overseas Training (Part F) 13 105 South Sumatra 06A : Equipment/Vehicles - Local (Part A) 49 3,356 Musi Banyu Asin Saleh Agung 8.7 06B : Equipment/Vehicles - Local (Part B) 2 15 Sri Mulyo 15.8 06C : Equipment/Vehicles - Local (Part C) 35 1,194 Margo Rahayu 16.0 06D : Equipment/Vehicles - Local (Part D) 3 78 Sumber Mulyo 16.0 06E : Equipment/Vehicles - Local (Part E) 2 199 06F : Equipment/Vehicles - Local (Part F) 19 83 West Sumatra 08A : Local Training/BME (Part A) 73 1,383 Padang Pariaman Pasir Lawas 59.2 08B : Local Training/BME (Part B) — — 08C : Local Training/BME (Part C) 35 580 Southeast Sulawesi 08D : Local Training/BME (Part D) 3 8 Kendari Asolu 87.0 08E : Local Training/BME (Part E) 4 71 Benua 68.0 08F : Local Training/BME (Part F) 64 549

Source: Project Completion Report, Volume II, IISP-I, Directorate General of Regional Development, June 1997.

09 O&M (Part A) 100 2,891

Total 893 173,964 BME = benefit monitoring and evaluation. Source: Asian Development Bank records.

Appendix 2, page 4 28

Table A2.7: Kulon Progo Irrigation Schemes, Major Works of Irrigation Rehabilitation and Upgrading

Scope of Work Planned Actual

Normalization of main canals 1,742 m 1,646 m Normalization of secondary canals 68,226 m 31,104 m Normalization of tertiary canals 18,141 m 22,219 m Lining of tertiary canals 11,396 m 13,367 m Lining of canals 56,181 m 81,336 m Tunnels 430 m 1,320 m Flumes 927 m 1,047 m Weirs and appurtenant works 5 units 5 units Turnout structures 167 units 213 units Siphons 22 units 27 units Culverts 189 units 232 units Bridges 324 units 370 units m = meter. Source: Project Benefit Monitoring and Evaluation Review Study, Directorate General of Water Resources Development, December 1996.

Table A2.8: Kulon Progo Irrigation Schemes, Major Works of Drainage Rehabilitation and Upgrading

Scope of Work Planned Actual

Normalization of canals 41,773 m 41,773 m Lining of canals 3,014 m 3,014 m Weirs and appurtent works 1 unit 1 unit Flumes 1 m 1 m Outlet/Inlet structures 87 units 87 units Siphons 1 units 1 units Bridges 42 units 42 units m = meter. Source: Project Benefit Monitoring and Evaluation Review Study, Directorate General of Water Resources Development, December 1996.

Appendix 2, page 5 29

Table A2.9 : Major Civil Works of the Rehabilitation and Upgrading of South Kedu Irrigation Schemes

Type of Civil Works Unit Actual

Rehabilitation of primary and secondary canals m 114,535 Construction of secondary canals m 8,130 Concrete lining: primary and secondary canals m 53,439 Weir rehabilitation/replacement units 3 Deepening, widening rivers, and internal drainage m 93,970 Structures: secondary canals units 367 Structures: drainage units 247 Gates: rivers and drainage units 12 Gates: secondary canals units 314 m = meter. Source: Completion Report, South Kedu Irrigation, Construction Supervision, DHV Consultants and Associated Consultants, Directorate General of Water Resources Development, March 1994.

Table A2.10: Major Civil Works of the Rehabilitation and Upgrading of the Serayu Irrigation Schemes

Type of Civil Works Unit Actual

Concrete lined canals m 34,166 Earth canals, including side drains m 283,716 Miscellaneous structures units 749 Tertiary systems ha 21,903 Deepening and widening of river canals (package III/1) Rehabilitation and improvement of main drainage (ljo and Gatel rivers) m 15,111 Rehabilitation and improvement of secondary drainage m 16,418 Construction of new collector drains m 10,996 Deepening and widening of river canals (package III/2) Rehabilitation and improvement of main drainage (Tipar and Upper Tipar rivers) m 13,109 Rehabilitation and improvement of secondary drainage/tributaries m 3,196 Construction of new collector drains' m 8,484 Deepening and widening of river canals (package III/3) Rehabilitation and improvement of rivers (Sabuk, Lancar, Kedungbaya, Sitopong) m 18,181 m = meter. Source: Completion Report, Serayu Barrage and Ijo Tipar Drainage, Bureau Central d'Etudes pour les Equipements d'Outre-Mer and Associated Consultants, Directorate General of Water Resources Development.

Appendix 2, page 6 30

Table A2.11: Major Civil Works, Planned and Actual

Main Feature Planned Actual

New Construction Primary canal 7,500 m 7,513 m Secondary canal 62,075 m 54,936 m Tertiary canal 160,000 m 152,113 m Primary and secondary 61,000 m 62,765 m Concrete lining Flood levee 59,190 m 67,824 m Drainage improvements 109,100 m 98,508 m Tidal levees 55,000 m 67,186 m Inspection roads 28,000 m 29,341 m Rehabilitation Tertiary 23,000 ha 22,000 ha ha = hectare, m = meter. Source: Completion Report, Part A, Lower Citanduy Irrigation Improvement Project, Directorate General of Water Resources Development, October 1996.

Table A2.12: Major Rehabilitation and Upgrading

Civil Works in Telang and Saleh Whole Area Pilot Area 60,000 ha 10,000 ha

Item Appraisal Actual Appraisal Actual R&U navigation/primary canals

Survey and designs 102 km Reconstruction of existing canals 71.0 km 70.4 km Construction of new canals 6.1 km Reconstruction of flood embarkment 18.5 km

R&U of roads and transport Infrastructure Bridges over primary canals 20 units 7 units Bridges over secondary canals 32 units 11 units Roads 250 km 38 km

Phase I preparation Design review 5,000 ha 5,000 ha Surveys and investigations, secondary blocks 10,000 ha Detailed designs, secondary blocks 10,000 ha

Phase II preparation Surveys and investigations, secondary blocks 15,000 ha 17,000 ha Detailed designs secondary blocks 15,000 ha 17,000 ha

R&U secondary drainage systems Secondary drains 185 km 110.5 km Secondary flap gate structures 44 units 14 units

R&U tertiary systems Existing tertiary drains 185 km 85 km Additional tertiary drains 200 km 72 km Tertiary stop log structures 920 units 312 units

ha = hectare, km = kilometer, R&U = rehabilitation and upgrading. Source: Completion Report, Telang and Saleh Agricultural Development Project, Euroconsult and Associated Consultants, Directorate General of Water Resources Development, June 1997.

Project Offices:- South Kedu- Serayu- Lower Citanduy- South Sumatra

PRAS = provincial agricultural services, PRIS = provincial irrigation services, SLRSC = subcenter for land rehabilitation and soil conservation.

a Irrigation service fee will be introduced with assistance from various agencies at provincial and district levels.

ORGANIZATION CHART FOR PROJECT IMPLEMENTATION

coordination

District Irrigation Service

District Agricultural Services Branch SLRSC

BAPPEDA I

Office of the Minister of State for the Role

of WomenMinistry of Forestry

GOVERNOR

Ministry of Home Affairs

Directorate Regional

Development

Directorate Regional Financea

BAPPEDA II

GOVERNMENT OF INDONESIA

SLRSC

Regional Office (Kanwil)

Dir. Food Crops Agric. Prod. Div. Dir. Food Crops Production Dir. Food Crops Agric. Extension Dir. Planning & Programming Dir. Of Agric. Area Dev.

BAPPENAS

Director General, Water Resources

Development

Director General, Food Crops

and Horticulture

Director General, Reforestation and

Land Rehabilitation

Director General, Regional

Development

Director General, Public Administration

& Regl Autonomy

Ministry of Public Works Ministry of Agriculture

Programming

Nat

iona

lLe

vel

PRIS PRAS

Prov

inci

alLe

vel

Dir. of Rivers

Regional Office (Kanwil)

Regional Office (Kanwil)

Directorate Soil Conservation Dir. Reforestation & Regreening Dir. Extension

Dir. of Irrigation - IDir. of Irrigation - IIDir. of SwampsDir. of Planning and

Dis

tric

tLe

vel

normal responsibilityproject responsibility

31Appendix 3

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Reference to Loan

Document

Covenant Due Date Status at PCR Status at Evaluation

Article IV, Section 4.06(b)

The Directorate General of Water Resources Development (DGWRD), Directorate General of Public Administration and Regional Autonomy (DGPARA), Directorate General of Food Crops and Horticulture (DGFCH), Directorate General of Reforestation and Land Rehabilitation (DGRLR), and Directorate General of Regional Development (DGRD) to furnish audited accounts not later than nine months after each related fiscal year

31 December every year

Partially complied with. Only DGWRD submitted required audit reports. DGFCH and DGPARA submitted the Annual Fiscal Statement (AFS) for Fiscal Year (FY) 1993/94, 1994/95, and 1995/96 to the Project Completion Review (PCR) Mission in April 1999. A limited number of audit reports from the provinces (not per the executing agency [EA]) have been submitted to the Asian Development Bank (ADB).

Partially complied with delay.

Article IV, Section 4.07(b)

DGWRD, DGPARA, DGFCH, DGRLR, and DGRD to furnish a quarterly progress report, to be consolidated by DGWRD

Every quarter

Partially complied with. DGWRD, DGFCH, and DGRD submitted reports prepared by consultants. Completion report received from DGRLR. No consolidated reports since completion of the project coordination and monitoring unit (PCMU) (DGWRD consultants) in May 1995.

Partially complied with.

Article IV, Section 4.07(c)

DGWRD, DGPARA, DGFCH, DGRLR, and DGRD to furnish a PCR

Three months after completion of the Project

Complied with. The consultant for part F of the Project prepared and submitted a consolidated PCR for the entire project.

Complied with.

Schedule 5, para. 3

Establishment and/or strengthening of a PCMU within DGWRD, DGFCH, and DGRLR

10 November 1990

Complied with. PCMU was active at DGWRD as a result of consultant’s involvement.

Complied with.

Schedule 5, para.5

Reassignment and/or recruitment of additional staff, as required, in each concerned Regional Development Planning Agency (BAPPEDA)

During project implementation

Partially complied with. Provincial offices had difficulty in hiring additional staff.

Partially complied with delay. (Incomplete data)

Schedule 5, para. 7(a)

Each provincial irrigation service (PRIS) to designate a project manager

Upon approval of the state development budget for FY1990/91

Complied with.

Complied with.

Reference to

Loan Document

Covenant Due Date Status at PCR Status at Evaluation

Schedule 5, para. 7

Reassignment and/or recruitment of additional staff, as required, in each concerned PRIS, district, and subdistrict irrigation service

During project implementation

Partially complied with. Provincial offices had difficulty in hiring additional staff.

Partially complied with delay.

Schedule 5, para. 8

Strengthening of South Kedu Water Operations Center (WOC) and incorporation of Central Java PRIS

10 Aug 1992

Partially complied with. WOC installed computer simulation model, but data were provided 2-4 weeks late by Cabang and Ranting Dinas. WOC is under control of Wadaslintang Project Office at the reservoir site.

Partially complied during the project period. WOC is no longer operational.

Schedule 5, para. 10

Establishment of a project management unit by the provincial agricultural service in each concerned province.

10 Nov 1990

Complied with.

Complied with.

Schedule 5, paras. 10 and 13

Reassignment and/or recruitment of additional staff, as required, by each provincial agricultural service in the concerned province

During project implementation

Partially complied with. Shortages were apparent in West and South Sumatra.

Partially complied with delay. (incomplete data)

Schedule 5, para. 14

Selection and processing of subproject

In accordance with criteria and procedures agreed upon

Complied with.

Substantially complied, however, technical and economic feasibility of some subprojects appear questionable.

Schedule 5, para. 17

Issuance of formal certificate of landownership to farmers in Telang and Saleh core subproject and Southeast Sulawesi subproject

Prior to completion of civil works

Partially complied with. Assistance required from all concerned district level agencies

Partially complied with delay.

Schedule 5, para. 18

Issuance of binding statement agreeing to transfer ownership of land in the extension area of the Lower Citanduy core subproject to the cultivating farmers and effecting such transfer

Prior to commencing implementation in extension area; prior to completion of civil works

Partially complied with. Loan was amended in 1995 to allow a longer period to transfer ownership based on experience under Loan 479-INO: Lower Citanduy Irrigation Project.

Not complied with. Farmers in the extension area are still without titles after more than 10 years.

Schedule 5, para. 20

Formulation of a comprehensive training program

10 Aug 1991

Complied with. DGWRD, DGFCH, and DGRD submitted comprehensive training programs to ADB.

Complied with delay.

Schedule 5, para. 22(b)

Introduction of efficient operation and maintenance (EOM)

Upon completion of civil works

Complied with. Schemes (over 112,361 ha) were introduced in the EOM program

Complied with.

Reference to

Loan Document

Covenant Due Date Status at PCR Status at Evaluation

Schedule 5, para. 24(a)

Transfer of operation and maintenance (O&M) responsibility of main system from central Government to concerned PRIS

Upon completion of civil works

Partially complied with. Three out of four main schemes have been officially turned over. Serayu has not been officially transferred.

Complied with delay. ADB agreed that Serayu barrage would remain under the responsibility of the central authority.

Schedule 5, para. 24(a)(i)

Transfer of Sidareja-Cihaur primary and secondary irrigation facilities in Lower Citanduy core subproject to Central Java PRIS

10 Feb 1991

Complied with. EOM is ongoing by PRIS Central Java. Rehabilitation and upgrading is controlled by DGWRD.

Complied with. (note: PRIS is now provincial water resources service).

Schedule 5, Para. 24(a)(ii)

Transfer of Wadaslintang and Sempor reservoirs and primary canals under South Kedu core subproject to Central Java PRIS upon incorporation of the WOC

10 Aug 1992

Partially complied with. Reservoirs will not be turned over to PRIS. Main systems are under PRIS Central Java and have entered the EOM program.

Complied with. During implementation ADB agreed that reservoirs would remain under the responsibility of the central authority.

Schedule 5, para. 24(b)

Transfer of subprojects with areas less than 500 ha to water users associations (WUAs)

Upon completion of civil works

Complied with. 4,430 have been turned over in Central Java.

Complied with.

Schedule 5, para. 25

Maintenance of FY1989/90 level of O&M funding on all public irrigation schemes in project provinces

FY1990/91 onward

Partially complied with. O&M funding has been inadequate.

Not complied. Shortfalls in O&M expenditures have been substantial during and after the project period.

Schedule 5, para. 26

Increase in level of O&M funding on all subprojects where efficient O&M has been introduced

FY1990/91 onward

Partially complied with. O&M funding has been inadequate.

Not complied. Shortfalls in O&M expenditures have been substantial during and after the project period.

Schedule 5, para. 28

Introduction of irrigation service fee (ISF) in the project area with a view towards full cost recovery of O&M by FY1999/00.

Within one year after the introduction of EOM

Partially complied with. Arrangements for collection of service fees not introduced in Batang Anai and Telang-Saleh.

Substantially not complied with. ISF assessment and collection performance has been ineffective.

Schedule 5, para. 29

Improve revenue performance of PBB (land and building tax) through introduction of revised PBB rates

In parallel with implementation of subprojects

Complied with. The improvement of PBB collection is not part of the Project.

Complied with.

Schedule 5, para. 30

Simplify and rationalize procedures for funding irrigation O&M

FY1993/94 onward

Complied with. In Central Java, system of rating and monitoring condition of irrigation and drainage schemes have been simplified and used.

Not substantially complied with. EOM funding on a project basis was introduced. No long-term sustainable needs-based budget system was implemented. O&M funding is not linked to a monitoring and evaluation system.

Reference to

Loan Document

Covenant Due Date Status at PCR Status at Evaluation

Schedule 5, para. 31

Establish or reactivate provincial and district irrigation committees

10 Feb 1991

Complied with.

Complied with. However, intended involvement of committees in system management was not achieved.

Schedulel5, para. 32

Establishment of viable WUAs

During project implementation

Partially complied with. This is an ongoing program. WUAs are in various stages of development in the subprojects.

Substantially not complied. Majority of WUAs in the Project areas have not achieved full viability as per LA.

Schedule 5, para. 34

Establishment of a project monitoring and evaluation (PME) unit in each of the provinces concerned

31 Dec 1990

Complied with. PME action plan approved.

Complied with.

Schedule 5, para. 34

Preparation of benefit monitoring and evaluation review study

Upon completion of the Project

Complied with. Benefit monitoring and evaluation review study completed.

Complied with.

Schedule 5, para. 34

Submission of annual summary of PME reports to ADB.

For a period of five years after project completion

Not yet due.

Partially complied. PME reports have not been submitted to ADB since project completion.

Schedule 5, para. 34

Preparation of PME reports for each subproject

Upon introduction of EOM

Complied with. PME reports prepared in Central Java and submitted to DGWRD

Complied with.

Appendix 5, page 1 36

OPERATIONAL PERFORMANCE OF REHABILITATION AND UPGRADING OF IRRIGATION AND DRAINAGE SCHEMES

A. Kulon Progo and Sermo Dam (Joyakarta) 1. The Kulon Progo subproject consisted of rehabilitation and upgrading (R&U) (7,984 hectares [ha]) of the Opak-Serang Irrigation System and construction of the Sermo Dam. The actual irrigated area is estimated at 6,942 ha, about 600 ha more than the future without-project condition. Average paddy yields have increased by about 10 percent from 5.5 to 6.0 metric tons (t)/ha. Cropping intensity has significantly improved by about 33 percent—from 155 percent to 200 percent. These improvements have resulted in an annual incremental production of about 27,000 t of paddy. The Operations Evaluation Mission (OEM) estimates are consistent with the project completion report (PCR) cropping intensities but slightly lower than PCR yield estimates (6.4 t/ha). 2. Construction quality for R&U was generally very good. The subproject area is currently being used as a pilot project for water users association (WUA) strengthening financed by the World Bank. WUAs and federations of WUAs are involved in participatory irrigation system development. Preparatory operation and maintenance (O&M) activities were carried out under the Project. O&M implementation to date has been underfunded. The increased beneficiary involvement in system management requires intensification and further technical support, particularly related to optimum cropping patterns and water management of Sermo Dam and drainage systems. Drainage canals in the lower end of the system were poorly maintained. The Asian Development Bank (ADB)-funded South Java Flood Control (SJFC) Project1 is addressing some of the flooding constraints not ameliorated under the Project in the lower reaches of the subproject area. Flooding and drainage problems currently affect about 1,000 ha. 3. Sermo Dam, a new 58-meter (m) high dam constructed under the Project, replaced an existing weir and is designed to deliver about 4 cubic meters (m3)/second (sec) of supplemental water primarily in the dry season. The dam, in general, is well maintained with active routine reading of dam instrumentation and a sediment monitoring program. Development of local roads, which would direct traffic away from the dam crest and improve access to 750 families, has not been implemented. A small water supply for Wates is now taken from the reservoir. Limited local community interviews suggested that resettlers to Bengkulu may not have received full compensation in accordance with promised allocations. B. South Kedu (Central Java) 4. R&U covered nine schemes in 27,377 ha (appraisal 28,000 ha) with efficient operation and maintenance (EOM) over 52,417 ha (target 53,000 ha), and included a new, well-constructed Boro Weir, which replaced an old gabion structure, serving 5,127 ha. Average paddy yields increased by about 5 percent from 5.8 t/ha in the future without project condition (5.4 t/ha pre-Project) to 6.0 t/ha at the end of the Project. Cropping intensity has slightly improved from 190 percent to 200 percent. These improvements have resulted in an annual incremental production of about 27,000 t of paddy. OEM estimates are consistent with both PCR and appraisal estimates. 5. Construction quality was satisfactory. The irrigation schemes in the South Kedu area have been included in a series of R&U, special (deferred) maintenance, and EOM programs in 1 Loan 1479-INO: South Java Flood Control Sector Project, for $103 million, approved on 7 November 1996.

Appendix 5, page 2 37

the past. Project activities were piecemeal and focused on canal normalization and lining. Tertiary works were identified during EOM activities as inadequate, but were classified as a farmer responsibility and subsequently not developed. Key drainage works along a number of rivers (including Wawar) were either canceled (lack of funds, inadequate time) or excluded from the Project during the design process. Significant areas in the lower reaches are subject to frequent inundation. The SJFC project is addressing some of the severe drainage and flood control issues. 6. The main canals picking up flows sourced from the Wadaslintang reservoir are operated at 20–30 percent below capacity because of canal embankment instability. The South Kedu area operates in the dry season in acute water shortage. Farmers augment surface water irrigation flows, particularly in downstream coastal areas, through the extensive use of shallow groundwater by manual lifting or small portable pumps. 7. The Wadaslintang and Sempor Dams Water Operational Center, strengthened with office facilities, equipment, training, and consulting services under the Project, no longer exists. Instead, dam operations are carried out following manual operational curves based on requests from downstream managers. 8. WUAs within the Boro Irrigation System, under the ongoing World Bank-supported Java Irrigation Improvement and Water Resources Management Project, have recently participated in system planning and design activities in fiscal year (FY) 2000 and have constructed R&U works under a direct contract award system. Using rehabilitation funds to stimulate WUAs to participate in system development has some merits. However, the major gains in sustainable utilization of the existing facilities will be from improved WUA participation in routine O&M. Irrigation committee implementation is less than participatory; government institutional management structures, despite recent reforms, remain overly centralized, complex, and do not include adequate beneficiary representation. Government-managed irrigation service fee (ISF) collection for main systems has been low. However, routine contributions by WUAs of funds to contribute to tertiary-level activities have been seven to nine times higher and demonstrate a willingness and ability of farmers to participate in O&M funding. 9. Further attention to providing adequate institutional arrangements to allow improved system management is required. Drainage, flood, and drain access need development under the ADB-supported SJFC, and a participatory tertiary development study should be undertaken to ascertain the most appropriate tertiary system development model in the highly populated South Kedu area. C. Serayu and Ijo-Tipar Irrigation and Drainage Schemes 10. The Serayu Barrage replaces the existing Gambarsari (15,547 ha) and Pasanggrahan (3,633 ha) pumped schemes and includes an extension of 4,700 ha, giving an appraised area of 22,800 ha. The irrigated area has increased from about 17,890 ha pre-Project to 21,030 ha. Average paddy yields have increased by about 5 percent from 5.7 t/ha in the future without- project condition (5.4 t/ha pre-Project) to 6.0 t/ha. Cropping intensity has improved from 150 percent to 175 percent. These improvements have resulted in an annual incremental production of about 57,400 t of paddy. OEM estimates are consistent with the PCR, but lower than appraisal (11 percent average yield increase and final cropping intensity of 200 percent).

Appendix 5, page 3 38

11. The barrage was complete in 1996 and is in good condition with O&M under a centrally funded special budget. Minor works are required for measurement and control systems, and upgrading existing personal computers and providing a backup system for operational software is considered essential. The size and technical complexity of the barrage warrant introduction of a routine inspection mechanism using technical competent staff. Late completion of the barrage is the reason given for not adequately testing and commissioning the canal system despite pumping station availability. When the tests were subsequently taken, a number of new canal sections collapsed. 12. A number of major technical design/construction discrepancies where found during the OEM’s site visit, including (i) foot bridges on the Cilacap main canal that had inverts below the full supply water level of the canal; (ii) areas of instability on embanked canals; and (iii) low main canal offtake construction (1.5 m below ground level at canal marker BS24), effectively cutting off all downstream supplies, to more than 1,500 ha. 13. Canal system maintenance was fair along the Serayu canal but the Cilacap canal discharge was reduced to 50–60 percent of capacity due to heavy weed growth and sedimentation. Drainage systems were poorly maintained and a high percentage of gate flaps were either missing or not functioning. Tertiary development was, in general, unsuccessful, lacking participation and farmer agreement on infrastructure requirements. Major drainage works affecting about 5,000 ha were deferred to SJFC due to insufficient budget. 14. The new water supply link to the Cilacap town waterworks is ongoing and scheduled for completion in 2002. 15. Current institutional policy changes concerning water resources and decentralization initiatives have further reduced the budget for O&M in the subproject area. WUAs are partially active and have a dual fee collection system, historically contributing up to 100–200 kilograms (kg)/harvest to system (generally tertiary) O&M. D. Lower Citanduy Irrigation (Central Java) 16. The Lower Citanduy subproject comprises R&U over the 20,040 ha Sidareja-Cihaur irrigation (including 2,170 ha of new extension). Tidal levees, drainage works, and initial dredging of 1.3 million m3 of sediments from the Segara Anakan lagoon were also included under part A. As a result of the Project, the irrigated area has increased from about 17,870 ha pre-Project to about 19,160 ha. Average paddy yields have increased by about 8 percent from 5.8 t/ha in the future without-project condition (5.4 t/ha pre-Project) to 6.2 t/ha. Cropping intensity has improved by about 11 percent, from 180 to 200 percent. These gains have increased annual paddy production by an estimated 47,350 t. OEM estimates are consistent with the PCR (appraisal estimates not stated for this core subproject). 17. Construction quality was generally good. Irrigation R&U works consisted mainly of canal upgrading by lining programs and developing the tertiary system. Tertiary canals in flat areas used an innovative raised concrete canal with low land usage, which was well accepted by farmers. Tertiary canal development in steeper upper areas was less successful. Secondary canal R&U provided an unusually high density main system conveyance network. Maintenance of main canal systems is poor; often canal lining was difficult to see and some secondary canals in extension areas were almost undetectable.

Appendix 5, page 4 39

18. Canal and drainage works in extension areas were delayed partly because of protracted procedures in transferring landownership/use titles between government-owned bodies. Farmers in these areas still lack titles. Settlement into these areas has been slow and improved access roads and rural infrastructure are needed to support exiting communities. In general drainage and flood defense works followed old design studies. Postconstruction sedimentation of the Cimeneng floodway (1.0–1.5 m) illustrates the speed of change in the Segara Anakan environment and the importance of a comprehensive holistic approach to development (including watershed protection). Significant drainage and flood control works remain unfinished. An ADB-funded watershed catchment protection implementation study proposed major institutional and technical interventions in the lower Citanduy subproject watersheds. These works have not, to date, been implemented by government funding or ADB’s Segara Anakan and SJFC project. Both these projects are currently active in the project area. 19. O&M funds for district offices were not included in the 2001 budget. E. Telang-Saleh (South Sumatra) 20. The Telang-Saleh subproject, located in the extensive coastal swamp plains in South Sumatra, consisted of intensive rehabilitation and institutional support on a 10,000 ha pilot study area (phase I). The objective was to determine appropriate development models for the total drainage area of about 60,000 ha: (i) Telang I, 26,680 ha; (ii) Telang II, 13,800 ha; and (iii) Saleh, 19,090 ha. Project interventions have resulted in little sustainable improvement. About 65 percent of the pilot area was developed for crop production through an extensive drainage-water management system. Overall cropping intensities for the subproject remain at the preproject level of about 80 percent. Average paddy yields in the pilot area have increased by an estimated 40 percent, but started from a very low base and are still below 3.0 t/ha. Annual incremental paddy production is estimated at 10,600 t. OEM estimates on cropping intensity are consistent with the PCR but lower than appraisal (92 percent). For yields, OEM estimates are consistent with appraisal but lower than the PCR (average of 60 percent yield increase). 21. Implementation was delayed due to cancellation of the Government of Netherlands‘ $8.0 million equivalent bilateral grant, and intense internal government debate concerning appropriate techniques for swamp-water drainage management. 22. The PCR summarizes project outputs and raises important questions regarding continued research, phase II development, and risks to sustainability of phase I infrastructure due to the absence of clear provisions and organizational arrangements for O&M. The OEM noted that many of these concerns have not been addressed. Continued research in the swamp coastal plains is acknowledged as important by local administration and academic institutions. Ongoing research programs continue to add to the understanding of the complex environmental regime in the coastal lowland areas. Notwithstanding the general interest, project-based research initiatives instigated in Telang-Saleh phase I have not continued. Many farmers have left the area, leaving a low density of farmers practicing extensive crop production. Extension services at the field level by agriculture and public works O&M institutions were unsatisfactory. No budget for O&M activities, including staff salaries of day workers, was allocated in FY2001, despite fiscal decentralization that resulted in large local availability of funds. 23. All control gate structures visited were nonfunctional due to stolen or broken parts. Water management in any form cannot be practiced due to poor infrastructure maintenance. Most problems are simple and relatively cheap to resolve; original construction quality was good. Ownership of existing facilities and management of research, beneficiary participation,

Appendix 5, page 5 40

future infrastructure developments, and O&M needs to be addressed at provincial and district levels with some urgency. 24. Rural infrastructure improvements (roads, bridges, and water supply) carried out under the Project were considered very valuable by local communities. 25. Poor coordination and inefficient use of consultants in South Sumatra resulted in less than optimum design and inefficient implementation. 26. Including Telang-Saleh in a long-term swamp development project rather than a sectoral irrigation subproject, would have been more appropriate. F. Batang Anai (West Sumatra) 27. The Batang Anai subproject, West Sumatra, includes headworks, main system, and partial tertiary development of phase I (6,740 ha) of the total scheme design area of 13,604 ha. The current irrigated area is estimated at 4,500 ha, compared with 3,200 ha at the start of the Project. Average paddy yields are about 40 percent higher than future without-project yields (4.9 versus 3.5 t/ha). Overall cropping intensity for the phase I area has increased by about 30 percent to 130 percent (173 percent in fully irrigated areas). Annual incremental production is about 19,000 t of paddy. OEM estimates are consistent with PCR yield and cropping intensities, but the PCR indicates an irrigated area of 6,520 ha. 28. An existing gabion weir was replaced with an expensive masonry structure; main and secondary canals are lined and provided with technical control structures. Construction quality is generally good. 29. The lower part of the project area remains under the jurisdiction of a swamp project and drains are currently being reexcavated to allow clear drainage flows to the sea. The Batang Anai Project has not been transferred to the provincial government. Land is cropped close to populated areas but inadequate access to peat areas, lack of farmers, and poor soil discourage agricultural activities over much of the potential command area. Project and supplementary postproject land development contracts have cleared a portion of the shallow peats; secondary swamp forest remains in deep peat areas. Land use for agricultural production decreases rapidly at a distance of about 500 m from villages in this area.2 30. Subdistrict staff have had extensive technical training in systems management. Budgets for system maintenance have historically been inadequate (averaging 25–40 percent of routine needs) and, in the current fiscal year, under decentralization, no system maintenance budget has been allocated. 31. The phase II area, where soils are considered more suitable for flooded rice agriculture, was visited. Exceptionally high rainfall (annual average of 4,000 mm) in the subproject area minimizes the need for supplementary irrigation. Careful review of the soil type, land use, and

2 The Directorate General of Water Resources Development (DGWRD) and ADB, following a lengthy process of

redrafting the summary subproject report (SSR), accepted the subproject. Major problems relating to soil type and farmer availability, although known constraints to irrigation development in the area, were omitted from the final SSR. Subsequent to SSR approval, a special soils study by the project consultants produced a soil map of the proposed area reconfirming concerns by classifying deep peat soils (1–6 m) as unsuitable or marginally suitable following treatment. Such soils cover some 80 percent of the phase I area.

Appendix 5, page 6 41

incremental benefits from irrigation is needed before any investment in the phase II area can be considered. G. Wawotobi (South East Sulawesi) 32. Seven irrigation schemes (7,947 ha) were upgraded following approval of the summary subproject reports. The Wawotobi schemes are typical of off-Java systems, where R&U work is predominantly upgrading: three new weirs were constructed and three others had major upgrades. The irrigated command area has increased by about 1,400 ha (21 percent) over the preproject condition. Paddy yields have improved from 4.1 t/ha in the future without-project condition (3.8 t/ha pre-Project) to 5.1 t/ha (25 percent gain). Cropping intensity has improved from 155 to 175 percent. The gains in command area, yield, and cropping intensity have increased annual paddy production by an estimated 29,300 t. OEM and PCR estimates are consistent, with the exception of higher yields estimated by the PCR. 33. All schemes are located in the Kendari district where the Project has contributed significantly to overall regional development as a result of new irrigation, drainage flood protection infrastructure, and access roads. WUAs are partly developed where irrigation is predominantly practiced by Java and Bali transmigrants; local indigenous farmers tend to own and farm tree crops in addition to paddy land. 34. Construction quality was above average, particularly taking into consideration the remote location. Designs were found to be expensive and not always appropriate.3 Summary subproject report water-balance sheets showed unacceptable water shortages of 30–50 percent in the Walay and Ameroro schemes, indicating that design areas had been overestimated. Expensive spill weirs, separate from existing weirs (Maluku scheme), could have been simple gabion structures or incorporated into the existing weir structure. Cropping is less intensive in downstream areas partly due to poor canal maintenance (Walay scheme) but also affected by poor water availability/management and low population density. Local government institutions are not adequately developed for participatory development.

3 The Asoro Weir intake gates were poorly positioned on the inside bend on a heavily silted river, the desilting basin

flushing channel is high, and inadequate flushing allows large amounts of sediment to enter the main canal.

42

ECONOMIC REEVALUATION

A. Methodology and Assumptions 1. The economic viability of the Project was reassessed applying the same methodology used in the appraisal report and project completion report (PCR). The basic methodology for the economic analysis follows the approach given in the Asian Development Bank (ADB) Guidelines for the Economic Analysis of Projects. The rehabilitation and upgrading of irrigation and drainage facilities, supported by tertiary development units (TDUs), and capacity building for irrigation agencies and water users associations (WUAs) was expected to lead to higher cropping intensities and yields, and resulting increases in farm income. Economic internal rates of return (EIRRs) were calculated for each of the seven subproject irrigation areas and the overall Project. The analysis is based on production data obtained during the Operations Evaluation Mission (OEM) from government sources, backed up by interviews with farmers and government officials. Data from PCRs prepared by consultants for the Government and other sources have also been used. 2. The EIRR calculations are based on the following major assumptions:

(i) The economic life of the project irrigation and drainage facilities is assumed to be 30 years starting from 1991.

(ii) All taxes and other transfer payments are removed from the financial costs and

benefit streams. The financial benefits and costs are converted to economic costs and benefits using a standard conversion factor of 0.9 for nontraded items.

(iii) A shadow wage rate factor of 0.81 is applied to reflect conditions of

unemployment and underemployment in most rural labor markets at the world price level.

(iv) Past and projected rice (import parity) and fertilizer (export parity for urea, import

parity for others) prices are based on April 2000 World Bank commodity price projections, adjusted for quality differences, transport, handling, marketing, and other costs to determine economic farmgate prices (Tables A6.1-A6.4).

(v) Other current costs and benefits are converted to 2001 prices by applying the

World Bank’s manufacturer’s unit value index for the traded components and gross domestic product deflator for all local costs.

(vi) Project investment costs comprise actual financial costs for all civil works, design

and supervision, equipment and vehicles, training, consulting services, land development, and project management (Table A6.5).

B. Estimation of Project Benefits 3. The quantifiable benefits were estimated as the difference in agricultural production with and without project interventions, adjusted for incremental costs of production. Projected estimates for future yields and cropping intensities assumes a marginal deterioration in operation and maintenance (O&M) based on (i) current physical condition of irrigation systems observed by the efficient operation and maintenance (EOM); (ii) the expected continued gradual degradation of watersheds and their adverse consequences on system O&M; (iii) persistent

Appendix 6, page 1

43

flooding and drainage problems; (iv) the assumption of no real increase in O&M funding; and (v) only marginal improvements in irrigation service fee collections and overall effectiveness of WUAs. 4. For subprojects located in Java, additional investments have been made after the close of the Project by the Government from its own funds as well as donors. These investments generally include remedial civil works for irrigation schemes financed by the Government, plus additional ADB-supported investments in major drainage and flood control (still ongoing), and World Bank support for WUA development and river basin planning (still ongoing). The economic evaluation of the Project excludes any estimation of benefits and costs from these additional interventions. 5. The combined impact of project interventions currently produces an estimated incremental increase in paddy production of about 142,000 tons (t) per annum in the four core subprojects and 217,000 t for the Project as a whole as compared with the future without- project situation. This compares with the appraisal and PCR estimates of 190,000 t and 146,000 t, respectively for the four core subprojects, and 230,000 and 260,000 t, respectively, for the Project as a whole. 6. Consistent with the methodology used in the PCR, the OEM analysis did not attempt to quantify the benefits and costs of any possible incremental production of soybeans, peanuts, coconuts, or cassava. These crops are primarily grown under rainfed conditions, and the area devoted to these crops is relatively small. Production of these crops is also not materially affected by project investments in the future with-project situation compared with the future without. Also, though identified in the appraisal, separate incremental production of these crops is not stated. C. Economic Internal Rates of Return 7. The economic analysis was carried out for each of the seven subprojects and for all subprojects combined (Tables A6.6–A6.13). EIRRs are lower than those estimated at appraisal and the PCR, in particular, the EIRRs for the noncore subprojects for which no appraisal estimates were made as these subprojects were formally approved later during implementation. EIRR comparisons are indicated as follows: (i) South Kedu (12.6 percent versus appraisal estimate of 19.8 percent and PCR estimate of 14.0 percent); (ii) Serayu (8.4 percent versus appraisal estimate of 15.4 percent and PCR estimate of 10.5 percent); (iii) Lower Citanduy (11.8 percent versus appraisal estimate of 17.3 percent and PCR estimate of 14.7 percent); (iv) Telang and Saleh (4.0 percent versus appraisal estimate of 11.6 percent and PCR estimate of 10.8 percent); (v) Kulon Progo/Sermo dam (7.5 percent versus PCR estimate of 15.1 percent); (vi) Batang Anai (3.1 percent versus PCR estimate of 13.7 percent); and (vii) Wawatobi (9.0 percent versus PCR estimate of 16.0 percent). 8. The difference in the overall viability compared with the analysis in the appraisal and PCR is explained by differences in the estimates of incremental increases in yields and cropping intensities (lower OEM estimates), incremental production costs (higher OEM estimates), lower achievements on land development, and higher percentage of command areas that do not receive adequate irrigation supplies and/or remain vulnerable to frequent flooding and poor drainage. Investment cost per hectare (ha) of actual command area was another critical factor directly linked to subproject viability. South Kedu had the highest EIRR and the lowest investment cost per ha (about $600). Batang Anai had the lowest EIRR and the highest cost (about $6,000)—the high cost resulted from the large new weir constructed to serve a much

Appendix 6, page 2

44

larger area (13,000 ha) than was planned under the Project (6,520 ha). The remaining area was expected to be developed at a later stage. In addition, about half of the 6,520 ha area under the subproject was a mixture of rainfed paddy land (2,020 ha) and noncropped land (1,300 ha). Due to the abundance of peat soil that is not well-suited for paddy cultivation in these areas, little land development occurred, and rainfed areas required entire new canal systems rather than rehabilitation and upgrading. In total, only an estimated 4,500 ha are currently irrigated. D. Sensitivity Analysis 9. Given the uncertainty and lack of project data and information, it was considered important to analyze the sustainability of the Project under different assumptions. Sensitivity analyses were, therefore, carried out for unfavorable changes in yields, cropping intensities, crop prices, and production costs (Table A6.14). The analysis indicates that relatively modest changes in yields and/or cropping intensities (either positive or negative) would have a significant impact on economic efficiency. Growth in yields and production on Java during the 1990s has been essentially flat and the Government’s lack of progress in reversing watershed degradation or improving O&M means this trend is unlikely to improve. Declining trends in the paddy-fertilizer price ratio reflect changes in production costs and crop prices, and may also adversely impact yields as farmers either maintain or reduce input levels. During 1992–1997, total fertilizer use on food crops in Indonesia dropped by about 21 percent.

Appendix 6, page 3

Item Unit 1994 1995 1996 1997 1998 1999 2000 2001

Milled rice, 5% broken, FOB Bangkoka in 1990 constant prices 242.80 269.20 297.30 280.50 291.90 239.90 235.50 239.00MUV multiplier 1990 to 2001 constant, 1.088Milled rice, 5% broken, FOB Bangkok in 2001 constant prices $/ton 264.17 292.89 323.46 305.18 317.59 261.01 256.22 260.03

less quality adjustment for Project rice output,b 15% $/ton 39.62 43.93 48.52 45.78 47.64 39.15 38.43 39.00Freight and insurance to Cilacap, Padang, Palembang Portsc $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00CIF, bagged milled rice at major Indonesian ports of destination $/ton 264.54 288.96 314.94 299.41 309.95 261.86 257.79 261.03

Financial Prices in 2001 constant termsCIF, bagged milled rice at major Indonesian ports of destination Rp/kg 2,917 3,186 3,472 3,301 3,417 2,887 2,842 2,878Port handling, storage, and transport charges to wholesalers, 5% Rp/kg 146 159 174 165 171 144 142 144Import parity wholesale pricec Rp/kg 3,062 3,345 3,646 3,466 3,588 3,031 2,984 3,022

less estimated transport costs - from rice mills to wholesalers Rp/kg 195 195 195 195 195 195 195 195less traders' margins, 10% Rp/kg 306 335 365 347 359 303 298 302

Ex-mill price Rp/kg 2,561 2,815 3,086 2,924 3,034 2,533 2,491 2,524Conversion to Paddy price at mill gate,d 63% Rp/kg 1,613 1,774 1,944 1,842 1,911 1,596 1,569 1,590

less milling costs Rp/kg 119 119 119 119 119 119 119 119less estimated transport costs from farms to mills Rp/kg 54 54 54 54 54 54 54 54

Import parity financial farmgate price Rp/kg 1,440 1,600 1,771 1,669 1,738 1,422 1,396 1,417

Economic Prices in 2001 constant termsCIF, bagged milled rice at major Indonesian ports of destination Rp/kg 2,917 3,186 3,472 3,301 3,417 2,887 2,842 2,878Port handling, storage, and transport charges to wholesalers Rp/kg 131 143 156 149 154 130 128 130Import parity wholesale price Rp/kg 3,048 3,329 3,628 3,449 3,571 3,017 2,970 3,007

less transport costs - from rice mills to wholesalers Rp/kg 176 176 176 176 176 176 176 176less traders' margins Rp/kg 276 301 328 312 323 273 269 272

Ex-mill price Rp/kg 2,597 2,852 3,125 2,962 3,072 2,568 2,526 2,560Conversion to paddy price at mill gate Rp/kg 1,636 1,797 1,969 1,866 1,936 1,618 1,591 1,613

less milling cost Rp/kg 107 107 107 107 107 107 107 107less transport from farms to mills Rp/kg 49 49 49 49 49 49 49 49

Import parity economic farmgate price Rp/kg 1,480 1,641 1,812 1,710 1,779 1,462 1,435 1,456CIF = cost, insurance freight; FOB = free on board; kg = kilogram; MUV = manufacturing unit value.a Rice (Thai), 5 percent broken, milled, FOB Bangkok; Source: World Bank. 2000. Commodity Markets and the Developing Countries .b Based on average price difference between Thai 5 percent and 25 percent brokens (1998-2000 quarterly data), World Bank, May 2000.c Freight and insurance to major Indonesian ports nearest project sites.d Converted to paddy equivalent at 63 percent of milled rice, equivalent to the Indonesian term GKG: Gabah Kering Giling . World Bank. 1999. Indonesia:Essays on Agricultural Institutions and Policy .Source: Project Completion Report and Operations Evaluation Mission estimates.

Table A6.1: Import Parity Paddy Price at Farmgate(Expressed in 2001 Constant Prices)

45Appendix 6, page 4

Table A6.1 (continued)Item Unit 2002 2003 2004 2005 2006 2007 2008 2009

Milled rice, 5% broken, FOB Bangkoka in 1990 constant prices 241.90 249.13 256.37 263.60 261.96 260.32 258.68 257.04MUV multiplier 1990 to 2001 constant, 1.088Milled rice, 5 % broken, FOB Bangkok in 2001 constant prices $/ton 263.19 271.06 278.93 286.80 285.01 283.23 281.44 279.66

less quality adjustment for project rice output,b 15% $/ton 39.48 40.66 41.84 43.02 42.75 42.48 42.22 41.95Freight and insurance to Cilacap, Padang, or Palembang Portsc $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00CIF, bagged milled rice at major Indonesian ports of destination $/ton 263.71 270.40 277.09 283.78 282.26 280.74 279.23 277.71

Financial Prices in 2001 constant termsCIF, bagged milled rice at major Indonesian ports of destination Rp/kg 2,907 2,981 3,055 3,129 3,112 3,095 3,078 3,062Port handling, storage, and transport charges to wholesalers, 5% Rp/kg 145 149 153 156 156 155 154 153Import parity wholesale pricec Rp/kg 3,053 3,130 3,208 3,285 3,268 3,250 3,232 3,215

less estimated transport costs - from rice mills to wholesalers Rp/kg 195 195 195 195 195 195 195 195less traders' margins, 10% Rp/kg 305 313 321 329 327 325 323 321

Ex-mill price Rp/kg 2,552 2,622 2,692 2,761 2,746 2,730 2,714 2,698Conversion to paddy price at mill gate,d 63% Rp/kg 1,608 1,652 1,696 1,740 1,730 1,720 1,710 1,700

less milling costs Rp/kg 119 119 119 119 119 119 119 119less estimated transport costs from farms to mills Rp/kg 54 54 54 54 54 54 54 54

Import parity financial farmgate price Rp/kg 1,434 1,478 1,522 1,566 1,556 1,546 1,536 1,526

Economic Prices in 2001 constant termsCIF, bagged milled rice at major Indonesian ports of destination Rp/kg 2,907 2,981 3,055 3,129 3,112 3,095 3,078 3,062Port handling, storage, and transport charges to wholesalers Rp/kg 131 134 137 141 140 139 139 138Import parity wholesale price Rp/kg 3,038 3,115 3,192 3,269 3,252 3,234 3,217 3,200

less transport costs - from rice mills to wholesalers Rp/kg 176 176 176 176 176 176 176 176less traders' margins Rp/kg 275 282 289 296 294 292 291 289

Ex-mill price Rp/kg 2,588 2,658 2,728 2,798 2,782 2,766 2,750 2,735Conversion to paddy price at mill gate Rp/kg 1,630 1,674 1,719 1,763 1,753 1,743 1,733 1,723

less milling cost Rp/kg 107 107 107 107 107 107 107 107less transport from farms to mills Rp/kg 49 49 49 49 49 49 49 49

Import parity economic farmgate price Rp/kg 1,474 1,518 1,563 1,607 1,597 1,587 1,577 1,567a Rice (Thai), 5 percent broken, milled, FOB Bangkok; Source: World Bank. 2000. Commodity Markets and the Developing Countries .b Based on average price difference between Thai 5 percent and 25 percent brokens (1998-2000 quarterly data), World Bank, 2000.c Freight and insurance to major Indonesian ports nearest project sites.d Converted to paddy equivalent at 63 percent of milled rice, equivalent to the Indonesian term GKG: Gabah Kering Giling . World Bank. 1999. Indonesia:Essays on Agricultural Institutions and Policy .

46Appendix 6, page 5

Item Unit 1994 1995 1996 1997 1998 1999 2000 2001

Urea, Eastern Europe FOB port of origina (1990 constant) $/ton 155.73 162.70 164.50 118.00 98.90 81.10 84.80 91.90MUV multiplier—1990 to 2001 constant prices 1.088Urea, FOB port of originb (2001 constant) $/ton 169.43 177.02 178.98 128.38 107.60 88.24 92.26 99.99Freight & insurance to major Indonesian ports, c 100% $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00Urea, bagged, CIF Indonesian ports (2001 constant prices) $/ton 209.43 217.02 218.98 168.38 147.60 128.24 132.26 139.99

Financial Prices in 2001 constant prices Urea, bagged, FOB Indonesian ports Rp/kg 2,309 2,393 2,414 1,856 1,627 1,414 1,458 1,543Handling, loading and port charges, 3% Rp/kg 69 72 72 56 49 42 44 46Ex-factory price Rp/kg 2,240 2,321 2,342 1,801 1,579 1,371 1,414 1,497Handling & transport to provincial wholesalers/distributors Rp/kg 190 190 190 190 190 190 190 190Wholesalers' margin, 7% Rp/kg 170 176 177 139 124 109 112 118Wholesale price Rp/kg 2,600 2,686 2,709 2,130 1,892 1,670 1,716 1,805Transport, loading and unloading costs to retailers Rp/kg 98 98 98 98 98 98 98 98Retailers' margin, 7% Rp/kg 189 195 196 156 139 124 127 133Transport to project sites, farmgate Rp/kg 49 49 49 49 49 49 49 49Farmgate price, urea, bagged 46% nitrogen content Rp/kg 2,935 3,028 3,052 2,432 2,178 1,941 1,990 2,084

Economic Prices in 2001 constant pricesUrea, bagged, FOB Indonesian ports Rp/kg 2,309 2,393 2,414 1,856 1,627 1,414 1,458 1,543Handling, loading, and port charges Rp/kg 62 65 65 50 44 38 39 42Ex-factory price Rp/kg 2,247 2,328 2,349 1,806 1,583 1,376 1,419 1,502Handling & transport to provincial wholesalers/distributors Rp/kg 171 171 171 171 171 171 171 171Wholesalers' margin Rp/kg 153 158 159 125 111 98 101 106Wholesale price Rp/kg 2,571 2,657 2,679 2,102 1,866 1,645 1,691 1,779Transport, loading, and unloading costs to retailers Rp/kg 88 88 88 88 88 88 88 88Retailers' margin Rp/kg 170 175 177 140 125 111 114 120Transport to project sites, farmgate Rp/kg 44 44 44 44 44 44 44 44Farmgate price, urea, bagged 46% nitrogen content Rp/kg 2,872 2,964 2,988 2,375 2,123 1,888 1,937 2,030CIF = cost, insurance, and freight; FOB = free on board; kg = kilogram; MUV = manufacturing unit value.a Urea (46% N), bagged, varying origins, FOB Eastern Europe. Source: World Bank. 2000. Commodity Markets and the Developing Countries .b Using an MUV multiplier to convert prices from 1990 to 2001 constant terms.Source: Project Completion Report and Operations Evaluation Mission estimates.

Table A6.2: Urea - Financial and Economic Export Parity Prices(expressed in 2001 constant prices)

47Appendix 6, page 6

Table A6.2 (continued)Item Unit 2002 2003 2004 2005 2006 2007 2008 2009

Urea, Eastern Europe f.o.b. port of origina (1990 constant) $/ton 98.50 99.13 99.77 100.40 101.04 101.68 102.32 102.96MUV multiplier—1990 to 2001 constant prices 1.088Urea, FOB port of originb (2001 constant) $/ton 107.17 107.86 108.55 109.24 109.93 110.63 111.32 112.02Freight & insurance to major Indonesian ports, c 100% $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00Urea, bagged, CIF Indonesian ports (2001 constant prices) $/ton 147.17 147.86 148.55 149.24 149.93 150.63 151.32 152.02

Financial Prices in 2001 constant prices Urea, bagged, FOB Indonesian ports Rp/kg 1,623 1,630 1,638 1,645 1,653 1,661 1,668 1,676Handling, loading and port charges, 3% Rp/kg 49 49 49 49 50 50 50 50Ex-factory price Rp/kg 1,574 1,581 1,589 1,596 1,603 1,611 1,618 1,626Handling & transport to provincial wholesalers/distributors Rp/kg 190 190 190 190 190 190 190 190Wholesalers' margin, 7% Rp/kg 123 124 124 125 126 126 127 127Wholesale price Rp/kg 1,887 1,895 1,903 1,911 1,919 1,927 1,935 1,943Transport, loading, and unloading costs to retailers Rp/kg 98 98 98 98 98 98 98 98Retailers' margin, 7% Rp/kg 139 139 140 141 141 142 142 143Transport to project sites, farmgate Rp/kg 49 49 49 49 49 49 49 49Farmgate price, urea, bagged 46% nitrogen content Rp/kg 2,172 2,181 2,189 2,198 2,206 2,215 2,223 2,232

Economic Prices in 2001 constant pricesUrea, bagged, FOB Indonesian ports Rp/kg 1,623 1,630 1,638 1,645 1,653 1,661 1,668 1,676Handling, loading and port charges Rp/kg 44 44 44 44 45 45 45 45Ex-factory price Rp/kg 1,579 1,586 1,594 1,601 1,608 1,616 1,623 1,631Handling & transport to provincial wholesalers/distributors Rp/kg 171 171 171 171 171 171 171 171Wholesalers' margin Rp/kg 111 112 112 112 113 113 114 114Wholesale price Rp/kg 1,861 1,868 1,876 1,884 1,892 1,900 1,908 1,916Transport, loading, and unloading costs to retailers Rp/kg 88 88 88 88 88 88 88 88Retailers' margin Rp/kg 125 126 126 127 127 128 128 129Transport to project sites, farmgate Rp/kg 44 44 44 44 44 44 44 44Farmgate price, urea, bagged 46% nitrogen content Rp/kg 2,117 2,126 2,134 2,142 2,151 2,159 2,168 2,176a Urea (46% N), bagged, varying origins, FOB Eastern Europe. Source: World Bank. 2000. Commodity Markets and the Developing Countries .b Using an MUV multiplier to convert prices from 1990 to 2001 constant terms.

48Appendix 6, page 7

Item Unit 1994 1995 1996 1997 1998 1999 2000 2001

TSP, FOB port of origina (1990 constant) $/ton 119.90 125.50 154.30 158.90 166.10 152.60 133.80 137.90MUV multiplier 1.09TSP, FOB port of originb (2001constant) $/ton 130.45 136.54 167.88 172.88 180.72 166.03 145.57 150.04Freight & insurance to major Indonesian ports $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00CIF at major Indonesian ports $/ton 170.45 176.54 207.88 212.88 220.72 206.03 185.57 190.04

Financial Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 1,879 1,946 2,292 2,347 2,433 2,271 2,046 2,095Handling and port charges, 5.0% Rp/kg 94 97 115 117 122 114 102 105Handling & transport to provincial wholesalers/distributors Rp/kg 163 163 163 163 163 163 163 163Wholesalers' margin, 7.0% Rp/kg 150 154 180 184 190 178 162 165Wholesale price Rp/kg 2,285 2,361 2,749 2,811 2,908 2,726 2,473 2,528Transport, loading, and unloading costs to retailers Rp/kg 98 98 98 98 98 98 98 98Retailers' margin,7.0% Rp/kg 167 172 199 204 210 198 180 184Transport to project sites, farmgate Rp/kg 49 49 49 49 49 49 49 49Farmgate price, TSP 46% P Rp/kg 2,599 2,679 3,095 3,161 3,265 3,070 2,799 2,858Farmgate price, equivalent to superphosphate, 36% P Rp/kg 2,034 2,097 2,422 2,474 2,555 2,403 2,190 2,237

Economic Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 1,879 1,946 2,292 2,347 2,433 2,271 2,046 2,095Handling and port charges Rp/kg 85 88 103 106 110 102 92 94Handling & transport to provincial wholesalers/distributors Rp/kg 146 146 146 146 146 146 146 146Wholesalers' margin Rp/kg 135 139 162 166 171 161 146 149Wholesale price Rp/kg 2,245 2,319 2,703 2,765 2,861 2,681 2,430 2,485Transport, loading, and unloading costs to retailers Rp/kg 88 88 88 88 88 88 88 88Retailers' margin Rp/kg 150 155 179 183 189 178 162 165Transport to project sites, farmgate Rp/kg 44 44 44 44 44 44 44 44Farmgate price, TSP 46% P Rp/kg 2,527 2,606 3,014 3,080 3,182 2,990 2,724 2,782Farmgate price, equivalent to superphosphate, 36% P Rp/kg 1,977 2,039 2,359 2,410 2,490 2,340 2,132 2,177CIF = cost, insurance, and freight; FOB = free on board; kg = kilogram; MUV = manufacturing unit value; TSP = triple superphosphate.a TSP (triple superphosphate 46% P), bulk, FOB US Gulf. Source: World Bank. 2000. Commodity Markets and the Developing Countries.b Using an MUV multiplier to convert prices from 1990 to 1999 constant terms.

Source: Project Completion Report and Operations Evaluation Mission estimates.

Table A6.3: Phosphate - Financial and Economic Import Parity Prices(expressed in 2001 constant prices)

49Appendix 6, page 8

Table A6.3 (continued)Item Unit 2002 2003 2004 2005 2006 2007 2008 2009

TSP, FOB port of origina (1990 constant) $/ton 138.90 137.26 135.63 133.99 132.35 130.71 129.08 127.44MUV multiplier 1.09TSP, FOB port of originb (2001constant) $/ton 151.12 149.34 147.56 145.78 144.00 142.22 140.43 138.65Freight & insurance to major Indonesian ports $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00CIF at major Indonesian ports $/ton 191.12 189.34 187.56 185.78 184.00 182.22 180.43 178.65

Financial Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 2,107 2,087 2,068 2,048 2,029 2,009 1,989 1,970Handling and port charges, 5.0% Rp/kg 105 104 103 102 101 100 99 98Handling & transport to provincial wholesalers/distributors Rp/kg 163 163 163 163 163 163 163 163Wholesalers' margin, 7.0% Rp/kg 166 165 163 162 160 159 158 156Wholesale price Rp/kg 2,541 2,519 2,497 2,475 2,453 2,431 2,409 2,387Transport, loading, and unloading costs to retailers Rp/kg 98 98 98 98 98 98 98 98Retailers' margin,7.0% Rp/kg 185 183 182 180 179 177 175 174Transport to project sites, farmgate Rp/kg 49 49 49 49 49 49 49 49Farmgate price, TSP 46% P Rp/kg 2,873 2,849 2,825 2,802 2,778 2,754 2,731 2,707Farmgate price, equivalent to superphosphate, 36% P Rp/kg 2,248 2,230 2,211 2,193 2,174 2,156 2,137 2,119

Economic Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 2,107 2,087 2,068 2,048 2,029 2,009 1,989 1,970Handling and port charges Rp/kg 95 94 93 92 91 90 90 89Handling & transport to provincial wholesalers/distributors Rp/kg 146 146 146 146 146 146 146 146Wholesalers' margin Rp/kg 150 148 147 146 144 143 142 141Wholesale price Rp/kg 2,498 2,476 2,454 2,432 2,411 2,389 2,367 2,345Transport, loading, and unloading costs to retailers Rp/kg 88 88 88 88 88 88 88 88Retailers' margin Rp/kg 166 165 163 162 161 159 158 157Transport to Project sites, farm gate Rp/kg 44 44 44 44 44 44 44 44Farmgate price, TSP 46% P Rp/kg 2,796 2,773 2,750 2,726 2,703 2,680 2,657 2,633Farmgate price, equivalent to superphosphate, 36% P Rp/kg 2,188 2,170 2,152 2,134 2,115 2,097 2,079 2,061a TSP (triple superphosphate 46% P), bulk, FOB US Gulf. Source: World Bank. 2000. Commodity Markets and the Developing Countries.b Using an MUV multiplier to convert prices from 1990 to 1999 constant terms.

50Appendix 6, page 9

Item Unit 1994 1995 1996 1997 1998 1999 2000 2001

KCL, FOB port of origina (1990 constant) $/ton 95.90 98.80 102.60 107.50 112.20 114.50 115.40 114.00MUV multiplier 1.088KCL, FOB port of originb (2001 constant) $/ton 104.34 107.49 111.63 116.96 122.07 124.58 125.56 124.03Freight & insurance to major Indonesian ports $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00CIF at major Indonesian ports $/ton 144.34 147.49 151.63 156.96 162.07 164.58 165.56 164.03

Financial Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 1,591 1,626 1,672 1,730 1,787 1,814 1,825 1,808Handling and port charges, 5% Rp/kg 80 81 84 87 89 91 91 90Handling & transport to provincial wholesalers/distributors Rp/kg 163 163 163 163 163 163 163 163Wholesalers' margin, 7% Rp/kg 128 131 134 139 143 145 146 144Wholesale price Rp/kg 1,962 2,001 2,052 2,118 2,182 2,213 2,225 2,206Transport, loading, and unloading costs to retailers Rp/kg 98 98 98 98 98 98 98 98Retailers' margin, 7% Rp/kg 144 147 150 155 160 162 163 161Transport to project sites, farmgate Rp/kg 49 49 49 49 49 49 49 49Farmgate price, KCL Rp/kg 2,252 2,294 2,349 2,420 2,487 2,521 2,534 2,513

Economic Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 1,591 1,626 1,672 1,730 1,787 1,814 1,825 1,808Handling and port charges Rp/kg 72 73 75 78 80 82 82 81Handling & transport to provincial wholesalers/distributors Rp/kg 146 146 146 146 146 146 146 146Wholesalers' margin Rp/kg 116 118 121 125 128 130 131 130Wholesale price Rp/kg 1,925 1,963 2,014 2,079 2,142 2,173 2,185 2,166Transport, loading, and unloading costs to retailers Rp/kg 88 88 88 88 88 88 88 88Retailers' margin Rp/kg 130 132 135 140 144 146 146 145Transport to project sites, farmgate Rp/kg 44 44 44 44 44 44 44 44Farmgate price, KCL Rp/kg 2,186 2,227 2,281 2,351 2,417 2,450 2,463 2,443CIF = cost, insurance, and freight; FOB = free on board; KCL = potassium chloride; kg = kilogram; MUV = manufacturing unit value.a Standard grade, spot FOB Vancouver. Source: World Bank. 2000. Commodity Markets and the Developing Countries .b Using an MUV multiplier to convert prices from 1990 to 1999 constant terms.Source: Project Completion Report and Operations Evaluation Mission estimates.

Table A6.4: Potassium Chloride - Financial and Economic Import Parity Prices(expressed in 2001 constant prices)

51Appendix 6, page 10

Table A6.4 (continued)Item Unit 2002 2003 2004 2005 2006 2007 2008 2009

KCL, FOB port of origina (1990 constant) $/ton 111.10 108.96 107.13 105.34 103.45 101.59 99.77 97.98MUV multiplier 1.088KCL, FOB port of originb (2001 constant) $/ton 120.88 118.55 116.56 114.61 112.55 110.53 108.55 106.60Freight & insurance to major Indonesian ports $/ton 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00CIF at major Indonesian ports $/ton 160.88 158.55 156.56 154.61 152.55 150.53 148.55 146.60

Financial Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 1,774 1,748 1,726 1,705 1,682 1,660 1,638 1,616Handling and port charges, 5% Rp/kg 89 87 86 85 84 83 82 81Handling & transport to provincial wholesalers/distributors Rp/kg 163 163 163 163 163 163 163 163Wholesalers' margin, 7% Rp/kg 142 140 138 137 135 133 132 130Wholesale price Rp/kg 2,167 2,138 2,113 2,089 2,064 2,039 2,014 1,990Transport, loading, and unloading costs to retailers Rp/kg 98 98 98 98 98 98 98 98Retailers' margin, 7% Rp/kg 159 156 155 153 151 150 148 146Transport to project sites, farmgate Rp/kg 49 49 49 49 49 49 49 49Farmgate price, KCL Rp/kg 2,472 2,441 2,414 2,389 2,361 2,334 2,308 2,282

Economic Prices in 2001 constant pricesCIF at major Indonesian ports Rp/kg 1,774 1,748 1,726 1,705 1,682 1,660 1,638 1,616Handling and port charges Rp/kg 80 79 78 77 76 75 74 73Handling & transport to provincial wholesalers/distributors Rp/kg 146 146 146 146 146 146 146 146Wholesalers' margin Rp/kg 128 126 124 123 122 120 119 117Wholesale price Rp/kg 2,127 2,099 2,075 2,051 2,025 2,001 1,976 1,953Transport, loading, and unloading costs to retailers Rp/kg 88 88 88 88 88 88 88 88Retailers' margin Rp/kg 143 141 139 138 136 135 133 132Transport to project sites, farmgate Rp/kg 44 44 44 44 44 44 44 44Farmgate price, KCL Rp/kg 2,402 2,372 2,346 2,320 2,293 2,267 2,241 2,216a Standard grade, spot FOB Vancouver. Source: World Bank. 2000. Commodity Markets and the Developing Countries .b Using an MUV multiplier to convert prices from 1990 to 1999 constant terms.

52Appendix 6, page 11

53 Appendix 6, page 12

Subprojects 1991 1992 1993 1994 1995 1996 TotalSCF 0.90

Taxes on Local Expenditures 10%

Kulon Progo and Sermo Dam Civil Works 13,110 17,367 29,388 35,857 28,952 14,433 139,108 Equipment and vehicles 505 801 737 1,012 1,424 932 5,411 Consulting services 4,601 6,039 10,299 12,432 10,022 4,909 48,302 Training 8 11 628 334 18 174 1,174 EOM 0 0 0 0 67 6 73

Subtotal 18,225 24,218 41,052 49,635 40,483 20,454 194,068South Kedu Civil Works 11,448 15,327 26,129 30,506 24,201 11,643 119,254 Equipment and vehicles 468 659 1,126 2,023 885 353 5,514 Consulting services 782 1,025 1,749 2,111 1,702 834 8,203 Training 52 0 45 0 113 0 211 EOM 387 519 878 1,042 777 411 4,014

Subtotal 13,136 17,530 29,927 35,683 27,680 13,240 137,196Serayu and Ijo Tipar Civil Works 28,666 37,705 64,256 77,435 62,472 30,574 301,107 Equipment and vehicles 5,098 6,677 11,395 13,776 11,099 5,441 53,486 Consulting services 3,533 4,637 7,908 9,546 7,696 3,770 37,091 Training 0 0 0 0 0 0 0 EOM 0 0 0 0 0 0 0

Subtotal 37,297 49,019 83,560 100,757 81,266 39,785 391,685Lower Citanduy Civil Works 21,829 28,714 48,930 58,966 47,571 23,281 229,291 Equipment and vehicles 0 0 0 0 389 0 389 Consulting services 1,711 2,246 3,830 4,624 3,388 1,826 17,625 Training 0 0 0 0 0 0 0 EOM 0 0 0 0 0 0 0

Subtotal 23,540 30,960 52,760 63,589 51,348 25,107 247,305Telang-Saleh Civil Works 5,624 8,352 12,607 15,725 13,388 5,998 61,695 Equipment and vehicles 1,717 516 3,684 4,278 1,539 2,842 14,577 Consulting services 3,970 5,211 11,220 10,726 8,647 4,640 44,414 Training 186 247 611 2,128 463 1,224 4,859 EOM 0 0 0 196 0 22 218

Subtotal 11,497 14,326 28,122 33,054 24,037 14,727 125,764Batang Anai Civil Works 94,590 16,709 28,402 34,362 27,626 13,462 215,151 Equipment and vehicles 287 663 514 311 446 438 2,659 Consulting services 1,987 2,608 4,447 5,368 4,328 2,120 20,857 Training 28 37 224 268 151 164 871 EOM 0 0 0 30 11 0 41

Subtotal 96,892 20,016 33,587 40,339 32,561 16,184 239,579Wawotobi Civil Works 15,974 21,646 35,849 37,072 35,725 20,385 166,651 Equipment and vehicles 296 808 206 249 434 2,103 4,096 Consulting services 1,467 1,925 3,283 3,963 3,194 1,565 15,396 Training 34 309 232 336 100 171 1,183 EOM 73 89 165 252 179 88 845

Subtotal 17,843 24,776 39,734 41,872 39,633 24,313 188,171Other Costs Civil Works 84 2,332 2,562 2,628 925 6,829 15,360 Equipment and vehicles 3,092 2,460 9,104 873 1,075 5,414 22,018 Consulting services 1,246 1,635 115,163 11,832 3,917 1,329 135,122 Training 814 2,230 2,080 4,768 2,192 7,438 19,522 Admin. & Supervision 5,924 5,110 11,633 10,186 8,114 4,610 45,577

Subtotal 11,159 13,766 140,543 30,288 16,223 25,619 237,599

Total 229,589 194,611 449,286 395,218 313,232 179,430 1,761,367EOM = efficient operation and maintenance, SCF = standard conversion factor.Source: Project Completion Report and Operations Evaluation Mission estimates.

Table A6.5: Economic Project Costs in Constant 2001 Prices(Rp million)

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Incremental Benefits Rice, before milling (GKG equivalent) tons 3,158 19,197 25,928 27,316 Incremental farm gate economic value, 100% Rp mn 5,400 34,159 37,906 39,202

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 9,808 9,808 9,808 9,808 9,808 9,808 10,240 12,724 13,884 13,884 Annual planted - rainfed area a ha/year 1,573 1,573 1,573 1,573 1,573 1,573 1,505 1,386 990 990 Total Costs, 100% Rp mn 22,454 26,864 27,881 27,759

Without Project Annual planted - irrigated area a ha/year 9,808 9,808 9,808 9,808 9,808 9,808 9,808 9,808 9,808 9,808 Annual planted - rainfed area a ha/year 1,573 1,573 1,573 1,573 1,573 1,573 1,573 1,573 1,573 1,573 Total Costs Rp mn 20,961 20,596 19,997 19,897

Incremental, excluding harvesting Rp mn 1,493 6,268 7,884 7,862 Incremental harvesting costs, % of harvest, 13% Rp mn 702 4,441 4,928 5,096 Incremental production costs Rp mn 2,195 10,709 12,811 12,958

b. Investment Costs Rp mn 18,225 24,218 41,052 49,635 40,483 20,454 Add a share of project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Irrigation command area, with project ha 6,328 6,328 6,328 6,328 6,328 6,328 6,400 6,525 6,942 6,942 Irrigation command area, without project ha 6,328 6,328 6,328 6,328 6,328 6,328 6,328 6,328 6,328 6,328 Incremental irrigated area for O&M ha 0 0 0 0 0 0 72 197 614 614

Incremental O&M b 135,000 Rp mn 990 1,005 1,056 1,05695,000

Total Costs Rp mn 19,819 26,184 61,130 53,962 42,801 24,114 3,185 11,714 13,867 14,014

Net Benefits Rp mn (19,819) (26,184) (61,130) (53,962) (42,801) (24,114) 2,216 22,445 24,039 25,188EIRR 7.5%Net Present Value at 12 Percent Rp mn (59,687)

EIRR = economic internal rate of return, GKG = Gabah Kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 1999 prices from 1997 plus an estimated Rp440 million in O&M costs for the new Sermo dam.

This O&M provision represents an increase of about Rp95,000 per ha from the O&M provision without the Project.Source: Operations Evaluation Mission estimates.

Table A6.6: Kulon Progo Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices54

Appendix 6, page 13

Table A6.6 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020

Incremental Benefits Rice, before milling (GKG equivalent) tons 27,316 27,316 27,316 27,316 27,316 27,316 27,316 27,316 27,316 27,316 Incremental farmgate economic value, 100% Rp mn 39,786 40,269 41,476 42,682 43,888 43,615 43,341 43,068 42,794 42,521

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 13,884 13,884 13,884 13,884 13,884 13,884 13,884 13,884 13,884 13,884 Annual planted - rainfed area a ha/year 990 990 990 990 990 990 990 990 990 990 Total Costs, 100% Rp mn 28,092 28,326 28,284 28,249 28,214 28,177 28,141 28,106 28,071 27,993

Without Project Annual planted - irrigated area a ha/year 9,808 9,808 9,808 9,808 9,808 9,808 9,808 9,808 9,808 9,808 Annual planted - rainfed area a ha/year 1,573 1,573 1,573 1,573 1,573 1,573 1,573 1,573 1,573 1,573 Total Costs Rp mn 20,114 20,261 20,229 20,202 20,174 20,146 20,118 20,090 20,063 20,005

Incremental, excluding harvesting Rp mn 7,978 8,065 8,055 8,047 8,039 8,031 8,023 8,015 8,008 7,988 Incremental harvesting costs, % of harvest, 13% Rp mn 5,172 5,235 5,392 5,549 5,705 5,670 5,634 5,599 5,563 5,528 Incremental production costs Rp mn 13,150 13,300 13,447 13,596 13,745 13,701 13,658 13,614 13,571 13,516

b. Investment Costs Rp mn Add a share of project-wide costs Rp mn

c. Operation and Maintenance Irrigation command area, with project ha 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 Irrigation command area, without project ha 6,328 6,328 6,328 6,328 6,328 6,328 6,328 6,328 6,328 6,328 Incremental irrigated area for O&M ha 614 614 614 614 614 614 614 614 614 614

Incremental O&M b 135,000 Rp mn 1,056 1,056 1,056 1,056 1,056 1,056 1,056 1,056 1,056 1,05695,000

Total Costs Rp mn 14,206 14,355 14,503 14,652 14,801 14,757 14,713 14,670 14,627 14,571

Net Benefits Rp mn 25,580 25,914 26,973 28,030 29,087 28,858 28,628 28,398 28,167 27,950

a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 1999 prices from 1997 plus an estimated Rp440 million in O&M costs for the new Sermo dam.

This O&M provision represents an increase of about Rp95,000 per ha from the O&M provision without the Project.

55Appendix 6, page 14

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Incremental Benefits Rice, before milling (GKG equivalent) tons 10,923 12,703 25,187 26,829 26,829 26,829 26,829 Incremental farmgate economic value, 100% Rp mn 16,163 20,844 45,649 45,875 47,742 39,224 38,503

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 47,636 49,552 51,469 53,933 54,206 54,480 54,754 54,754 54,754 54,754 Annual planted - rainfed area a ha/year 0 0 0 0 0 0 0 0 0 0 Total Costs, 100% Rp mn 113,081 115,336 118,244 111,942 109,641 106,108 105,636

Without Project Annual planted - irrigated area a ha/year 47,636 49,552 51,469 52,016 52,016 52,016 52,016 52,016 52,016 52,016 Annual planted - rainfed area a ha/year 0 0 0 0 0 0 0 0 0 0 Total Costs Rp mn 104,813 106,306 108,496 102,742 100,884 97,832 97,321

Incremental, excluding harvesting Rp mn 8,268 9,030 9,748 9,200 8,757 8,275 8,315 Incremental harvesting costs, % of harvest, 13% Rp mn 2,101 2,710 5,934 5,964 6,206 5,099 5,005 Incremental production costs Rp mn 10,369 11,739 15,682 15,164 14,964 13,374 13,321

b. Investment Costs Rp mn 13,136 17,530 29,927 35,683 27,680 13,240 Add a share of project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Irrigation command area, with project ha 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 Irrigation command area, without project ha 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 Incremental irrigated area for O&M ha 0 0 0 0 0 0 0 0 0 0

Incremental O&M b 135,000 Rp mn 2,341 2,341 2,341 2,341 2,341 2,341 2,34195,000

Total Costs Rp mn 14,731 19,496 50,005 52,720 44,077 34,923 17,504 17,305 15,715 15,661

Net Benefits Rp mn (14,731) (19,496) (50,005) (36,557) (23,233) 10,726 28,370 30,437 23,509 22,842EIRR Percent 12.6%Net Present Value at 12 Percent Rp mn 5,843

EIRR = economic internal rate of return, GKG = Gabah Kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 2001 prices from 1994. This O&M provision represents an increase of about Rp95,000 per ha from the O&M provision without the Project.Source: Operations Evaluation Mission estimates.

Table A6.7: South Kedu Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices56

Appendix 6, page 15

Table A6.7 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020Incremental Benefits Rice, before milling (GKG equivalent) tons 26,829 26,829 26,829 26,829 26,829 26,829 26,829 26,829 26,829 26,829 Incremental farmgate economic value, 100% Rp mn 39,077 39,552 40,737 41,921 43,106 42,838 42,569 42,300 42,032 41,763

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 54,754 54,754 54,754 54,754 54,754 54,754 54,754 54,754 54,754 54,754 Annual planted - rainfed area a ha/year 0 0 0 0 0 0 0 0 0 0 Total Costs, 100% Rp mn 106,930 107,838 107,676 107,537 107,401 107,259 107,119 106,982 106,848 106,544

Without Project Annual planted - irrigated area a ha/year 52,016 52,016 52,016 52,016 52,016 52,016 52,016 52,016 52,016 52,016 Annual planted - rainfed area a ha/year 0 0 0 0 0 0 0 0 0 0 Total Costs Rp mn 98,429 99,178 99,013 98,870 98,730 98,584 98,440 98,299 98,161 97,861

Incremental, excluding harvesting Rp mn 8,502 8,660 8,663 8,667 8,671 8,675 8,679 8,683 8,687 8,683 Incremental harvesting costs, % of harvest, 13% Rp mn 5,080 5,142 5,296 5,450 5,604 5,569 5,534 5,499 5,464 5,429 Incremental production costs Rp mn 13,582 13,802 13,959 14,117 14,275 14,244 14,213 14,182 14,151 14,112

b. Investment Costs Rp mn Add a share of project-wide costs Rp mn

c. Operation and Maintenance Irrigation command area, with project ha 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 Irrigation command area, without project ha 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 27,377 Incremental irrigated area for O&M ha 0 0 0 0 0 0 0 0 0 0

Incremental O&M b 135,000 Rp mn 2,341 2,341 2,341 2,341 2,341 2,341 2,341 2,341 2,341 2,34195,000

Total Costs Rp mn 15,922 16,143 16,300 16,457 16,616 16,585 16,554 16,523 16,492 16,453

Net Benefits Rp mn 23,154 23,409 24,437 25,464 26,490 26,253 26,015 25,777 25,540 25,310

a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 2001 prices from 1994. This O&M provision represents an increase of about Rp95,000 per ha from the O&M provision without the Project.

57Appendix 6, page 16

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Incremental Benefits Rice, before milling (GKG equivalent) tons 7,872 41,327 57,415 57,415 Incremental farmgate economic value, 100% Rp mn 13,459 73,540 83,939 82,397

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 26,835 26,835 26,835 26,835 26,835 26,835 27,730 34,700 36,803 36,803 Annual planted - rainfed area a ha/year 3,553 3,553 3,553 3,553 3,553 3,553 3,553 570 570 570 Total Costs, 100% Rp mn 60,277 70,053 71,881 71,563

Without Project Annual planted - irrigated area a ha/year 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 Annual planted - rainfed area a ha/year 3,553 3,553 3,553 3,553 3,553 3,553 3,553 3,553 3,553 3,553 Total Costs Rp mn 56,589 55,598 53,971 53,698

Incremental, excluding harvesting Rp mn 3,687 14,456 17,910 17,865 Incremental harvesting costs, % of harvest, 13% Rp mn 1,750 9,560 10,912 10,712 Incremental production costs Rp mn 5,437 24,016 28,822 28,576

b. Investment Costs Rp mn 37,297 49,019 83,560 100,757 81,266 39,785 Add a share of project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Irrigation command area, with project ha 17,890 17,890 17,890 17,890 17,890 17,890 17,890 21,030 21,030 21,030 Irrigation command area, without project ha 17,890 17,890 17,890 17,890 17,890 17,890 17,890 17,890 17,890 17,890 Incremental irrigated area for O&M ha 0 0 0 0 0 0 0 3,140 3,140 3,140

Incremental O&M b 135,000 Rp mn 1,980 2,361 2,361 2,36195,000

Total Costs Rp mn 38,891 50,985 103,638 105,084 83,584 43,445 7,417 26,377 31,183 30,937

Net Benefits Rp mn (38,891) (50,985) (103,638) (105,084) (83,584) (43,445) 6,043 47,163 52,756 51,460EIRR Percent 8.4%Net Present Value at 12 Percent Rp mn (92,240)

EIRR = economic internal rate of return, GKG = Gabah kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 2001 prices from 1997. This O&M provision represents an increase of about Rp95,000 per ha from the O&M provision without the Project. Barrage O&M is estimated at Rp500 million a year.Source: Operations Evaluation Mission estimates.

Table A6.8: Serayu Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices

58Appendix 6, page 17

Table A6.8 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009

Incremental Benefits Rice, before milling (GKG equivalent) tons 57,415 57,415 57,415 57,415 57,415 57,415 57,415 57,415 57,415 Incremental farmgate economic value, 100% Rp mn 83,624 84,640 87,176 89,712 92,247 91,672 91,098 90,523 89,948

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 36,803 36,803 36,803 36,803 36,803 36,803 36,803 36,803 36,803 Annual planted - rainfed area a ha/year 570 570 570 570 570 570 570 570 570 Total Costs, 100% Rp mn 72,436 73,048 72,938 72,845 72,753 72,657 72,563 72,471 72,380

Without Project Annual planted - irrigated area a ha/year 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 26,835 Annual planted - rainfed area a ha/year 3,553 3,553 3,553 3,553 3,553 3,553 3,553 3,553 3,553 Total Costs Rp mn 54,289 54,689 54,601 54,526 54,452 54,374 54,298 54,223 54,150

Incremental, excluding harvesting Rp mn 18,147 18,359 18,337 18,319 18,302 18,283 18,265 18,247 18,230 Incremental harvesting costs, % of harvest, 13% Rp mn 10,871 11,003 11,333 11,663 11,992 11,917 11,843 11,768 11,693 Incremental production costs Rp mn 29,018 29,362 29,670 29,982 30,294 30,201 30,108 30,015 29,923

b. Investment Costs Rp mn Add a share of project-wide costs Rp mn

c. Operation and Maintenance Irrigation command area, with project ha 21,030 21,030 21,030 21,030 21,030 21,030 21,030 21,030 21,030 Irrigation command area, without project ha 17,890 17,890 17,890 17,890 17,890 17,890 17,890 17,890 17,890 Incremental irrigated area for O&M ha 3,140 3,140 3,140 3,140 3,140 3,140 3,140 3,140 3,140

Incremental O&M b 135,000 Rp mn 2,361 2,361 2,361 2,361 2,361 2,361 2,361 2,361 2,36195,000

Total Costs Rp mn 31,379 31,724 32,031 32,343 32,655 32,562 32,469 32,377 32,285

Net Benefits Rp mn 52,245 52,916 55,145 57,369 59,592 59,110 58,629 58,146 57,663

a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 2001 prices from 1997. This O&M provision represents an increase of about Rp95,000 per ha from the O&M provision without the Project. Barrage O&M is estimated at Rp500 million a year.

59Appendix 6, page 18

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000Incremental Benefits Rice, before milling (GKG equivalent) tons 0 0 0 0 0 8,488 28,185 37,669 47,345 47,345 Incremental farmgate economic value, 100% Rp mn 15,384 48,192 67,030 69,217 67,945

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 32,166 32,166 32,166 32,166 32,166 33,060 36,404 37,362 38,320 38,320 Annual planted - rainfed area a ha/year 2,062 2,062 2,062 2,062 2,062 2,062 836 836 836 836 Total Costs, 100% Rp mn 73,890 75,270 75,651 75,084 74,752

Without Project Annual planted - irrigated area a ha/year 32,166 32,166 32,166 32,166 32,166 32,166 32,166 32,166 32,166 32,166 Annual planted - rainfed area a ha/year 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 Total Costs Rp mn 69,230 65,614 64,446 62,528 62,207

Incremental, excluding harvesting Rp mn 4,660 9,656 11,205 12,555 12,545 Incremental harvesting costs, % of harvest, 13% Rp mn 2,000 6,265 8,714 8,998 8,833 Incremental production costs Rp mn 6,660 15,921 19,919 21,554 21,378

b. Investment Costs Rp mn 23,540 30,960 52,760 63,589 51,348 25,107 Add a share of project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Irrigation command area, with project ha 17,870 17,870 17,870 17,870 17,870 17,870 19,160 19,160 19,160 19,160 Irrigation command area, without project ha 17,870 17,870 17,870 17,870 17,870 17,870 17,870 17,870 17,870 17,870 Incremental irrigated area for O&M ha 0 0 0 0 0 0 1,290 1,290 1,290 1,290

Incremental O&M b 135,000 Rp mn 1,685 1,685 1,685 1,68595,000

Total Costs Rp mn 25,134 32,926 72,838 67,916 53,666 35,428 17,605 21,603 23,238 23,062

Net Benefits Rp mn (25,134) (32,926) (72,838) (67,916) (53,666) (20,043) 30,586 45,427 45,979 44,883EIRR Percent 11.8%Net Present Value at 12 Percent Rp mn (3,272)

EIRR = economic internal rate of return, GKG = Gabah kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 2001 prices from 1996. This O&M provision represents an increase of about Rp95,000

per ha from the O&M provision without the Project.Source: Operations Evaluation Mission estimates.

Table A6.9: Citanduy Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices

60Appendix 6, page 19

Table A6.9 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020Incremental Benefits Rice, before milling (GKG equivalent) tons 47,345 47,345 47,345 47,345 47,345 47,345 47,345 47,345 47,345 47,345 Incremental farmgate economic value, 100% Rp mn 68,957 69,795 71,886 73,977 76,068 75,594 75,119 74,645 74,171 73,697

Incremental Costsa. Production Costs With Project Annual planted - irrigated area a ha/year 38,320 38,320 38,320 38,320 38,320 38,320 38,320 38,320 38,320 38,320 Annual planted - rainfed area a ha/year 836 836 836 836 836 836 836 836 836 836 Total Costs, 100% Rp mn 75,662 76,301 76,186 76,089 75,993 75,893 75,795 75,699 75,604 75,390

Without Project Annual planted - irrigated area a ha/year 32,166 32,166 32,166 32,166 32,166 32,166 32,166 32,166 32,166 32,166 Annual planted - rainfed area a ha/year 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 Total Costs Rp mn 62,903 63,374 63,271 63,182 63,094 63,002 62,912 62,824 62,737 62,549

Incremental, excluding harvesting Rp mn 12,759 12,926 12,916 12,907 12,899 12,891 12,883 12,875 12,867 12,841 Incremental harvesting costs, % of harvest, 13% Rp mn 8,964 9,073 9,345 9,617 9,889 9,827 9,765 9,704 9,642 9,581 Incremental production costs Rp mn 21,723 22,000 22,261 22,524 22,788 22,718 22,648 22,579 22,509 22,422

b. Investment Costs Rp mn Add a share of project-wide costs Rp mn

c. Operation and Maintenance Irrigation command area, with project ha 19,160 19,160 19,160 19,160 19,160 19,160 19,160 19,160 19,160 19,160 Irrigation command area, without project ha 17,870 17,870 17,870 17,870 17,870 17,870 17,870 17,870 17,870 17,870 Incremental irrigated area for O&M ha 1,290 1,290 1,290 1,290 1,290 1,290 1,290 1,290 1,290 1,290

Incremental O&M b 135,000 Rp mn 1,685 1,685 1,685 1,685 1,685 1,685 1,685 1,685 1,685 1,68595,000

Total Costs Rp mn 23,408 23,684 23,945 24,209 24,473 24,403 24,333 24,263 24,194 24,106

Net Benefits Rp mn 45,549 46,111 47,941 49,768 51,595 51,191 50,786 50,382 49,977 49,591

a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp135,000 per ha in constant 2001 prices from 1996. This O&M provision represents an increase of about Rp95,000

per ha from the O&M provision without the Project.

61Appendix 6, page 20

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Incremental Benefits Rice, before milling, GKG equivalent tons 0 0 0 3,182 3,182 3,711 3,711 6,893 10,075 10,604 Incremental farmgate economic value, 100% Rp mn 4,708 5,221 6,727 6,346 12,266 14,729 15,219

Incremental Costsa. Production Costs With Project Annual planted, phase 1 rainfed areaa ha/yr 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 Annual planted, outside phase I - rainfeda ha/yr 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 Total Costs, 100% Rp mn 25,518 25,706 26,004 24,706 24,483 24,092 24,007

Without Project Annual planted, phase 1 rainfed areaa ha/yr 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 Annual planted, outside phase I - rainfeda ha/yr 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 Total Costs Rp mn 24,040 24,201 24,467 23,887 23,708 23,377 23,297

Incremental, excluding harvesting Rp mn 1,478 1,505 1,538 819 775 716 710 Incremental harvesting costs, % of harvest, 13% Rp mn 612 679 874 825 1,595 1,915 1,978 Incremental production costs Rp mn 2,090 2,183 2,412 1,644 2,370 2,630 2,688

b. Investment Costs Rp mn 11,497 14,326 28,122 33,054 24,037 14,727 Project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Drainage command area, phase I 120,000 ha 6,620 6,620 6,620 6,620 6,620 6,620 6,620 6,620 6,620 6,620 Drainage command area, outside phase I 48,000 ha 26,532 26,532 26,532 26,532 26,532 26,532 26,532 26,532 26,532 26,532 Incremental O&M b 20,000 Rp mn 663 663 663 663 2,068

Total Costs Rp mn 13,091 16,293 48,200 39,471 28,538 21,462 2,307 3,033 3,293 4,756

Net Benefits Rp mn (13,091) (16,293) (48,200) (34,763) (23,317) (14,736) 4,039 9,233 11,436 10,462EIRR 4.0%Net Present Value at 12 Percent Rp mn (61,267)

EIRR = economic internal rate of return, GKG = Gabah kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an incremental annual O&M provision of Rp120,000 per ha in constant 1999 prices from year 2000 for phase I area. For outside phase I area, incremental O&M is assumed at Rp 48,000/ha from year 2000. Incremental O&M from 1996 to 2001 is estimated not to exceed Rp 20,000/ha for the entire area.Source: Operations Evaluation Mission estimates.

Table A6.10: Telang-Saleh Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices62

Appendix 6, page 21

Table A6.10 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020Incremental Benefits Rice, before milling, GKG equivalent tons 10,604 10,604 10,604 10,604 10,604 10,604 10,604 10,604 10,604 10,604 Incremental farmgate economic value, 100% Rp mn 15,445 15,633 16,101 16,570 17,038 16,932 16,826 16,719 16,613 16,507

Incremental Costsa. Production Costs With Project Annual planted, phase 1 rainfed areaa ha/yr 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 Annual planted, outside phase I - rainfeda ha/yr 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 Total Costs, 100% Rp mn 24,148 24,243 24,223 24,205 24,187 24,169 24,151 24,133 24,115 24,093

Without Project Annual planted, phase 1 rainfed areaa ha/yr 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 5,296 Annual planted, outside phase I - rainfeda ha/yr 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 21,226 Total Costs Rp mn 23,416 23,494 23,475 23,458 23,441 23,424 23,407 23,390 23,373 23,340

Incremental, excluding harvesting Rp mn 732 750 748 747 746 745 744 743 742 753 Incremental harvesting costs, % of harvest, 13% Rp mn 2,008 2,032 2,093 2,154 2,215 2,201 2,187 2,173 2,160 2,146 Incremental production costs Rp mn 2,740 2,782 2,841 2,901 2,961 2,946 2,931 2,917 2,902 2,899

b. Investment Costs Rp mn Project-wide costs Rp mn

c. Operation and Maintenance Drainage command area, phase I 120,000 ha 6,620 6,620 6,620 6,620 6,620 6,620 6,620 6,620 6,620 6,620 Drainage command area, outside phase I 48,000 ha 26,532 26,532 26,532 26,532 26,532 26,532 26,532 26,532 26,532 26,532 Incremental O&M b 20,000 Rp mn 2,068 2,068 2,068 2,068 2,068 2,068 2,068 2,068 2,068 2,068

Total Costs Rp mn 4,808 4,850 4,909 4,969 5,029 5,014 4,999 4,984 4,970 4,967

Net Benefits Rp mn 10,637 10,783 11,192 11,601 12,009 11,918 11,827 11,735 11,643 11,540

a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an incremental annual O&M provision of Rp120,000 per ha in constant 1999 prices from year 2000 for phase I area. For outside phase I area, incremental O&M is assumed at Rp 48,000/ha from year 2000. Incremental O&M from 1996 to 2001 is estimated not to exceed Rp 20,000/ha for the entire area.

63Appendix 6, page 22

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Incremental Benefits Rice, before milling, GKG equivalent tons 0 0 0 0 0 2,400 17,180 22,355 26,518 25,685 Incremental farmgate economic value, 100% Rp mn 4,350 29,375 39,780 38,768 36,861

Incremental Costsa. Production Costs With Project Annual planted, phase 1 rainfed areaa ha/yr 4,800 4,800 4,800 4,800 4,800 4,800 8,100 8,325 8,325 8,325 Annual planted, outside phase I - rainfeda ha/yr 1,919 1,919 1,919 1,919 1,919 1,919 684 684 684 684 Total Costs, 100% Rp mn 11,530 15,869 15,985 15,483 15,400

Without Project Annual planted, phase 1 rainfed areaa ha/yr 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 Annual planted, outside phase I - rainfeda ha/yr 1,919 1,919 1,919 1,919 1,919 1,919 1,919 1,919 1,919 1,919 Total Costs Rp mn 9,986 9,580 9,456 9,228 9,178

Incremental, excluding harvesting Rp mn 1,544 6,289 6,529 6,255 6,221 Incremental harvesting costs, % of harvest, 13% Rp mn 565 3,819 5,171 5,040 4,792 Incremental production costs Rp mn 2,110 10,108 11,700 11,295 11,013

b. Investment Costs Rp mn 96,892 20,016 33,587 40,339 32,561 16,184 Add a share of project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Irrigation command area, with project ha 3,200 3,200 3,200 3,200 3,200 3,200 4,500 4,500 4,500 4,500 Irriation command area, without project ha 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 Incremental O&M b 135,000 ha 0 0 0 0 0 0 1,300 1,300 1,300 1,300

95,000 Rp mn 274 432 432 432 432

Total Costs Rp mn 98,486 21,983 53,665 44,666 34,879 22,228 10,539 12,132 11,726 11,445

Net Benefits Rp mn (98,486) (21,983) (53,665) (44,666) (34,879) (17,878) 18,836 27,648 27,042 25,416EIRR 3.1%Net Present Value at 12 Percent Rp mn (119,647)

EIRR = economic internal rate of return, GKG = Gabah kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp125,000 per ha in constant 1999 prices from 1996. This O&M provision represents an increase of about Rp85,000 per ha from the O&M provision without the Project.Source: Operations Evaluation Mission estimates.

Table A6.11: Batang Anai Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices64

Appendix 6, page 23

Table A6.11 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020Incremental Benefits Rice, before milling, GKG equivalent tons 24,296 22,928 21,581 20,255 18,950 17,666 16,403 15,161 13,940 13,468 Incremental farmgate economic value, 100% Rp mn 35,387 33,800 32,768 31,649 30,447 28,207 26,026 23,903 21,839 20,964

Incremental Costsa. Production Costs With Project Annual planted, phase 1 rainfed areaa ha/yr 8,220 8,115 8,010 7,905 7,800 7,695 7,590 7,485 7,380 7,275 Annual planted, outside phase I - rainfeda ha/yr 684 684 684 684 684 684 684 684 684 684 Total Costs, 100% Rp mn 15,394 15,326 15,110 14,899 14,688 14,477 14,267 14,058 13,850 13,620

Without Project Annual planted, phase 1 rainfed areaa ha/yr 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 Annual planted, outside phase I - rainfeda ha/yr 1,919 1,919 1,919 1,919 1,919 1,919 1,919 1,919 1,919 1,919 Total Costs Rp mn 9,260 9,312 9,297 9,283 9,270 9,257 9,243 9,230 9,217 9,191

Incremental, excluding harvesting Rp mn 6,134 6,014 5,813 5,615 5,418 5,221 5,024 4,828 4,633 4,429 Incremental harvesting costs, % of harvest, 13% Rp mn 4,600 4,394 4,260 4,114 3,958 3,667 3,383 3,107 2,839 2,725 Incremental production costs Rp mn 10,734 10,408 10,073 9,730 9,376 8,887 8,407 7,936 7,472 7,154

b. Investment Costs Rp mn Add a share of project-wide costs Rp mn

c. Operation and Maintenance Irrigation command area, with project ha 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 Irriation command area, without project ha 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 3,200 Incremental O&M b 135,000 ha 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300

95,000 Rp mn 432 432 432 432 432 432 432 432 432 432

Total Costs Rp mn 11,166 10,840 10,505 10,161 9,807 9,319 8,839 8,367 7,904 7,586

Net Benefits Rp mn 24,221 22,960 22,263 21,488 20,640 18,888 17,187 15,536 13,935 13,378

GKG = Gabah kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp125,000 per ha in constant 1999 prices from 1996. This O&M provision represents an increase of about Rp85,000 per ha from the O&M provision without the Project.

65Appendix 6, page 24

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000Incremental Benefits Rice, before milling, GKG equivalent tons 0 0 0 1,015 2,030 5,499 19,726 23,241 27,930 29,321 Incremental farmgate economic value, 100% Rp mn 3,330 9,967 33,729 41,357 40,833 42,079

Incremental Costsa. Production Costs With Project Annual planted irrigated areaa ha/yr 10,148 10,148 10,148 10,148 10,148 10,475 13,113 13,510 13,907 13,907 Annual planted, rainfed areaa ha/yr 0 0 0 0 0 0 0 0 0 0 Total Costs , 100% Rp mn 19,529 20,600 24,336 24,591 24,498 24,362

Without Project Annual planted, irrigated areaa ha/yr 10,148 10,148 10,148 10,148 10,148 10,148 10,148 10,148 10,148 10,148 Annual planted, rainfed areaa ha/yr 0 0 0 0 0 0 0 0 0 0 Total Costs Rp mn 16,357 16,691 15,980 15,767 15,362 15,267

Incremental, excluding harvesting Rp mn 3,172 3,909 8,356 8,824 9,137 9,095 Incremental harvesting costs, % of harvest, 13% Rp mn 433 1,296 4,385 5,376 5,308 5,470 Incremental production costs Rp mn 3,605 5,205 12,741 14,201 14,445 14,565

b. Investment Costs Rp mn 17,843 24,776 39,734 41,872 39,633 24,313 Add a share of project-wide costs Rp mn 1,594 1,967 20,078 4,327 2,318 3,660

c. Operation and Maintenance Irrigation command area, with project ha 6,547 6,547 6,547 6,547 6,547 6,547 7,947 7,947 7,947 7,947 Irrigation command area, without project ha 6,547 6,547 6,547 6,547 6,547 6,547 6,547 6,547 6,547 6,547 Incremental irrigated area for O&M ha 0 0 0 0 0 0 1,400 1,400 1,400 1,400 Incremental O&M b Rp mn 560 730 730 730 730

Total Costs Rp mn 19,437 26,743 59,812 46,199 45,556 33,737 13,471 14,931 15,175 15,295

Net Benefits Rp mn (19,437) (26,743) (59,812) (46,199) (42,226) (23,770) 20,258 26,426 25,658 26,784EIRR 9.0%Net Present Value at 12 Percent Rp mn (38,339)

EIRR = economic internal rate of return, GKG = Gabah kering Giling, ha = hectare, KCL = potassium chloride, O&M = operation and maintenance.a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp125,000 per ha in constant 1999 prices from 1996. This O&M provision represents an increase of about Rp85,000

per ha from the O&M provision without the Project.Source: Operations Evaluation Mission estimates.

Table A6.12: Wawotobi Schemes - Economic Internal Rate of Return, expressed in 2001 Constant Prices

66Appendix 6, page 25

Table A6.12 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020Incremental Benefits Rice, before milling, GKG equivalent tons 29,321 29,321 29,321 29,321 29,321 29,321 29,321 29,321 29,321 29,321 Incremental farmgate economic value, 100% Rp mn 42,705 43,224 44,519 45,814 47,109 46,815 46,522 46,228 45,935 45,641

Incremental Costsa. Production Costs With Project Annual planted irrigated areaa ha/yr 13,907 13,907 13,907 13,907 13,907 13,907 13,907 13,907 13,907 13,907 Annual planted, rainfed areaa ha/yr 0 0 0 0 0 0 0 0 0 0 Total Costs , 100% Rp mn 24,658 24,858 24,814 24,776 24,738 24,699 24,661 24,623 24,586 24,506

Without Project Annual planted, irrigated areaa ha/yr 10,148 10,148 10,148 10,148 10,148 10,148 10,148 10,148 10,148 10,148 Annual planted, rainfed areaa ha/yr 0 0 0 0 0 0 0 0 0 0 Total Costs Rp mn 15,411 15,502 15,474 15,449 15,424 15,399 15,374 15,349 15,325 15,276

Incremental, excluding harvesting Rp mn 9,246 9,356 9,340 9,327 9,314 9,300 9,287 9,274 9,261 9,230 Incremental harvesting costs, % of harvest, 13% Rp mn 5,552 5,619 5,787 5,956 6,124 6,086 6,048 6,010 5,972 5,933 Incremental production costs Rp mn 14,798 14,975 15,128 15,283 15,438 15,386 15,335 15,283 15,232 15,163

b. Investment Costs Rp mn Add a share of project-wide costs Rp mn

c. Operation and Maintenance Irrigation command area, with project ha 7,947 7,947 7,947 7,947 7,947 7,947 7,947 7,947 7,947 7,947 Irrigation command area, without project ha 6,547 6,547 6,547 6,547 6,547 6,547 6,547 6,547 6,547 6,547 Incremental irrigated area for O&M ha 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 Incremental O&M b Rp mn 730 730 730 730 730 730 730 730 730 730

Total Costs Rp mn 15,528 15,705 15,858 16,013 16,168 16,116 16,065 16,013 15,962 15,893

Net Benefits Rp mn 27,177 27,519 28,661 29,801 30,941 30,699 30,457 30,215 29,973 29,748

a This is equivalent to physical areas multiplied by annual cropping intensities.b Assuming an annual O&M provision of Rp125,000 per ha in constant 1999 prices from 1996. This O&M provision represents an increase of about Rp85,000 per ha from the O&M provision without the Project.

67Appendix 6, page 26

Item Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Incremental Benefits

tons 0 0 0 15,120 17,914 45,286 106,662 177,511 222,039 224,516 Kulon Progo Rp mn 0 0 0 0 0 0 5,400 34,159 37,906 39,202 South Kedu Rp mn 0 0 0 16,163 20,844 45,649 45,875 47,742 39,224 38,503 Serayu Rp mn 0 0 0 0 0 0 13,459 73,540 83,939 82,397 Lower Citanduy Rp mn 0 0 0 0 0 15,384 48,192 67,030 69,217 67,945 Telang-Saleh Rp mn 0 0 0 4,708 5,221 6,727 6,346 12,266 14,729 15,219 Batang Anai Rp mn 0 0 0 0 0 4,350 29,375 39,780 38,768 36,861 Wawotobi Rp mn 0 0 0 0 3,330 9,967 33,729 41,357 40,833 42,079 Subtotal 100% Rp mn 0 0 0 20,871 29,395 82,078 182,377 315,875 324,617 322,205

Incremental Costs - Production, O&M and Investments Kulon Progo Rp mn 19,819 26,184 61,130 53,962 42,801 24,114 3,185 11,714 13,867 14,014 South Kedu Rp mn 14,731 19,496 50,005 52,720 44,077 34,923 17,504 17,305 15,715 15,661 Serayu Rp mn 38,891 50,985 103,638 105,084 83,584 43,445 7,417 26,377 31,183 30,937 Lower Citanduy Rp mn 25,134 32,926 72,838 67,916 53,666 35,428 17,605 21,603 23,238 23,062 Telang-Saleh Rp mn 13,091 16,293 48,200 39,471 28,538 21,462 2,307 3,033 3,293 4,756 Batang Anai Rp mn 98,486 21,983 53,665 44,666 34,879 22,228 10,539 12,132 11,726 11,445 Wawotobi Rp mn 19,437 26,743 59,812 46,199 45,556 33,737 13,471 14,931 15,175 15,295 Subtotal 100% Rp mn 229,589 194,611 449,286 410,019 333,101 215,337 72,028 107,094 114,199 115,171

Total Net Benefits Rp mn (229,589) (194,611) (449,286) (389,147) (303,706) (133,260) 110,348 208,780 210,418 207,034EIRR 8.3%NPV at 12 percent Rp mn (368,609)EIRR = economic internal rate of return, GKG = Gabah kering Giling, NPV = net present value, O&M = operation and maintenance.Source: Operations Evaluation Mission estimates.

Total incremental rice production (GKG equiv.)

Table A6.13: Overall Project - Economic Internal Rate of Return, expressed in 2001 Constant Prices

68Appendix 6, page 27

Table A6.13 (continued)Item Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

to 2020

Incremental Benefits

tons 223,127 221,759 220,412 219,086 217,781 216,497 215,234 213,992 212,771 212,298 Kulon Progo Rp mn 39,786 40,269 41,476 42,682 43,888 43,615 43,341 43,068 42,794 42,521 South Kedu Rp mn 39,077 39,552 40,737 41,921 43,106 42,838 42,569 42,300 42,032 41,763 Serayu Rp mn 83,624 84,640 87,176 89,712 92,247 91,672 91,098 90,523 89,948 89,373 Lower Citanduy Rp mn 68,957 69,795 71,886 73,977 76,068 75,594 75,119 74,645 74,171 73,697 Telang-Saleh Rp mn 15,445 15,633 16,101 16,570 17,038 16,932 16,826 16,719 16,613 16,507 Batang Anai Rp mn 35,387 33,800 32,768 31,649 30,447 28,207 26,026 23,903 21,839 20,964 Wawotobi Rp mn 42,705 43,224 44,519 45,814 47,109 46,815 46,522 46,228 45,935 45,641 Subtotal 100% Rp mn 324,980 326,913 334,663 342,325 349,903 345,673 341,501 337,386 333,332 330,466

Incremental Costs - Production, O&M and Investments Kulon Progo Rp mn 14,206 14,355 14,503 14,652 14,801 14,757 14,713 14,670 14,627 14,571 South Kedu Rp mn 15,922 16,143 16,300 16,457 16,616 16,585 16,554 16,523 16,492 16,453 Serayu Rp mn 31,379 31,724 32,031 32,343 32,655 32,562 32,469 32,377 32,285 32,164 Lower Citanduy Rp mn 23,408 23,684 23,945 24,209 24,473 24,403 24,333 24,263 24,194 24,106 Telang-Saleh Rp mn 4,808 4,850 4,909 4,969 5,029 5,014 4,999 4,984 4,970 4,967 Batang Anai Rp mn 11,166 10,840 10,505 10,161 9,807 9,319 8,839 8,367 7,904 7,586 Wawotobi Rp mn 15,528 15,705 15,858 16,013 16,168 16,116 16,065 16,013 15,962 15,893 Subtotal 100% Rp mn 116,417 117,301 118,051 118,804 119,549 118,755 117,972 117,197 116,433 115,740

Total Net Benefits Rp mn 208,563 209,612 216,612 223,521 230,354 226,918 223,529 220,189 216,899 214,726

Total incremental rice production (GKG equiv.)

69Appendix 6, page 28

Appendix 6, page 28 70

Table A6.14: EIRR Comparison with Appraisal and PCR Estimates and Sensitivity Analysis

Subprojecta

Appraisal Estimates

PCR

OEM Base Case

Incremental Production

Costs 10% lower

(1)

Rice Prices 10%

higher (2)

Incremental Crop

Yields 10% higher

(3)

Total (1)(2)(3)

Kulon Progo — 15.1 7.5 8.3 8.5 8.5 10.0 South Kedu 19.8 14.0 12.6 15.0 13.5 13.5 16.3 Serayu 15.4 10.5 8.4 9.3 9.4 9.4 11.2 Lower Citanduy 17.3 14.7 11.8 13.1 12.9 12.9 14.9 Batang Anai — 13.7 3.1 5.3 9.8 4.8 6.7 Telang-Saleh 11.6 10.8 4.0 3.7 4.0 4.0 5.3 Wawatobi — 16.0 9.0 9.7 10.0 10.0 11.5 Overall Project 15.9 13.4 8.3 8.8 9.5 9.5 10.9

— = not available, EIRR = economic internal rate of return, OEM = Operations Evaluation Mission, PCR = project completion report. a These subprojects were formally approved after loan effectiveness and not included in the appraisal economic analysis.

Appendix 7, page 1 71

FOLLOW-UP ACTIONS

Action Responsible for Action

Responsible for Monitoring

Timing

South Kedu Subproject Implement a semiannual program of sediment monitoring for Wadaslintang Reservoir. Last monitoring was reportedly 10 years ago.

Serayu Bogowonto River Basin Project

Directorate General of Water Resources Development (DGWRD) and provincial water resources service (PWRS)

By June 2002

Reestablish full operational capacity of the Water Operations Center (WOC) of Wadaslintang river basin and integrate WOC with the relevant Balai (Regional Water Resources Planning Center).

Serayu Bogowonto River Basin Project

PWRS

By June 2002

Serayu and Ijo-Tipar Subproject Initiate a routine procedure to ensure regular inspections of Serayu Barrage by qualified technical inspectors.

DGWRD Bintek

Indonesia Resident Mission (IRM)

Immediate—continue based on government guidelines

Provide backup to control mechanisms for Serayu Barrage. Replace missing hardware, reinstall software on the second computer, obtain reproducable barrage operations software on CD-ROM, and upgrade computers.

Central Java Irrigation Project (CJIP)

DGWRD

Missing hardware— immediate Software—immediate Computers—within two years

Check current capacity of Cilacap primary canal and resurvey as built section of Sumpiuh primary canal at BS 24.

CJIP

DGWRD and PWRS

Immediate

Restore Sumpiuh primary canal to final design levels from BS 24 to end (affecting about 1,500 ha).

CJIP

DGWRD and PWRS

By end 2002

Heighten bridges that impede flow along the Cilacap primary canal.

CJIP

DGWRD and PWRS

By end 2002

Complete water supply canal system for Cilacap (land already acquired, construction under bidding).

PDAM (drinking water company owned by the regional government)

DGWRD and PWRS

By end 2002

Lower Citanduy Subproject Prepare river basin masterplan for Citanduy.

Project Induk Citanduy

DGWRD and IRM

By end 2002

Complete drainage and flood prevention works under the Segara Anakan loan in the Sidareja-Cihaur irrigation project.

Project Induk Citanduy

DGWRD and IRM

By loan closing

72 Appendix 7, page 2

Action Responsible for Action

Responsible for Monitoring

Timing

Review the status of catchment interventions under the Segara Anakan loan and the status of implementation of recommendations made under TA 2665-INO.

IRM

IRM

By September 2002

Wawotobi Subproject Review the water balance on Wawotobi subprojects and reassess potential area for irrigation in order to rationalize land development plans and irrigation system operations.

PWRS

Binlak Timur

By end 2001

Batang Anai Subproject Collect current population, landownership, and land use figures for the phase I area; and prepare, based on September 1993 Soil Survey Report of the Rural Development Corporation, et al., a water management, and community development plan for the S3/N1 and N2 marginally and currently not suitable land classification areas covering 3,804 ha.

West Java Provincial Water Resources Service (PISB)

IRM

By March 2002

Prepare a maintenance program for drains in the lower project area.

PISB DGWRD and PRWS By March 2002

General Actions Review current policy and implementation of irrigation monitoring and evaluation (M&E). Initiate dialogue with provinces and districts aimed at standardizing key parameters to provide appropriate time-bound M&E information for irrigation sector planners and managers.

DGWRD Bintek

IRM

By March 2002

Conduct an inventory and replace and/or restore to working order all flap gates on main and secondary drains for all three Central Java subprojects and Wawotobi.

Provincial Irrigation Projects (PIPs)

DGWRD Binlak and PWRS

By end 2003

Conduct an inventory and replace and/or restore to working order all tidal embankments, regulatory structures, and flap gates on secondary drains for Telang-Saleh.

PWRS

DGWRD Binlak

By end 2003

Issue formal certificates of landownership to all affected farmers in Telang-Saleh, Wawotobi, and Lower Citanduy subprojects.

National Land Board (BPN)/ Directorate General for Regional Development (BANGDA)

IRM

By March 2002

73 Appendix 7, page 3

Action Responsible for Action

Responsible for Monitoring

Timing

Conduct an inventory, restore, construct, and maintain service roads for all main canal and drainage systems for all subprojects, utilizing ongoing donor-assisted project funds to the extent possible.

PIPs

BANGDA

Inventory—end 2001 Restore—end 2002 Construct—end 2003 Maintain—annually

Ensure that adequate O&M budgets are allocated and released for all subprojects according to needs-based budget assessments by DWRS.

Kabupatan BAPPEDA and DWRS

IRM/ DGWRD/BANGDA

Annually starting in FY2002.

ADB requirements for audited financial statements have not been fully met. All project executing agencies are required to comply with Article IV, Section 4.06(b) of the Loan Agreement, and submit all outstanding audited annual financial statements.

DGWRD, DGFCH, and Directorate General of Regional Development

IRM

Immediate

Review the status of irrigation sector reform under WATSAL and how it may affect operations in Indonesia.

IRM IRM By March 2002