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Document of

The World Bank

Report No. 15295-IND

STAFF APPRAISAL REPORT

REPUBLIC OF INDONESIA

STRATEGIC URBAN ROADS INFRASTRUCTURE PROJECT

June 4, 1996

Infrastructure Operations DivisionCountry Department IIIEast Asia and Pacific Region

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CURRENCY EQUIVALENTS

(As of December 1995)

Currency Unit = Indonesia Rupiah (Rp)$1.00 = Rp 2,300

Rp I million = US$ 435

WEIGHTS AND MEASURES

Metric Units

FISCAL YEAR OF BORROWER

April I - March 31

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INDONESIAN WORDS AND ACRONYMS

Acronym English Bahasa Indonesia

AADT Annual Average Daily Traffic Lalu Lintas Harian Rata-Rata

ADB Asian Development Bank Bank Pembangunan Asia

AMDAL Environmental Impact Assessment (Process) Analisa Mengenai Dampak Lingkungan

ANDAL Environmental Impact Assessment (Report) Analisa Dampak Lingkungan

APBD Annual Local Govemment Development Budget Anggaran Pendapatan dan Belanja Daerah

APBN Annual National Development Budget Anggaran Pendapatan dan Belanja Negara

AWP Annual Work Program Program Kerja Tahunan

BANGDA Directorate General for Regional Development Direktorat Jenderal Pembangunan Daerah

BAPEDAL National Environmental Impact Management Agency Badan Pengawasan Dampak Lingkungan

BAPPEDA Development Planning Agency Badan Perencana Pembangunan Daerah

BAPPENAS National Development Planning Agency Badan Perencana Pembangunan Nasional

BINKOT Directorate of Urban Road Development Direktorat Bina Jalan Kota

BOT Build-Operate-Transfer Pembangunan-Pengoperasian- Pengal ihan

BPKP Development and Financial Controle Board Badan Pengawas Keuangan danPembangunan

BUPATI Regent/District Chief Executive Bupati

CAS Country Assistance Strategy Kebijaksanaan Bantuan Negara

DGH Directorate General of Highways Direkhorat Jenderal Bina Marga

DGHS Directorate General for Human Settlement Direktorat Jenderal Cipta Karya

DGLT Directorate General of Land Transportation Direktorat Jenderal Perhubungan Darat

DKI JAKARTA Jakarta Metropolitan Area Daerah Khusus Ibukota Jakarta

DLLAJ Road Traffic and Transport Unit Dinas Lalu Lintas Angkutan Jalan

DPUP Provincial Office of Public Work Dinas Pekerjaan Umum Propinsi

DPUK District/Municipal Office of Public Works Dinas Pekerjaan UmumKabupaten/Kotamadya

EA Environmental Assessment Kajian Lingkungan

ERR Economic Rate of Retum Tingkat Ekonomis Pengembalian Investasi

FED Final Engineering Design Perencanaan Teknik Akhir

GDP Gross Domestic Product Pendapatan Domestik Bruto

GOI Govemment of Republic of Indonesia Pemerintah Republik Indonesia

HLRIP Heavy Loaded Road Improvement Project (of OECF) Proyck Peningkatan Jalan Untuk KendaraaanBerat (OECF)

HSL2 Second Highway Sector Loan (Ln. 3712-IND) Pinjaman Sektor Jalan Tahan Kedua (Ln.3712-lND)

ICB Intemational Competitive Bidding Pelelangan dengan Prosedur Intemasional

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INPRES Presidential Instruction, a central govemment grant program to Instruksi Presidentlocal govemment

IRI Intemational Roughness Index Indeks Kekasaran Jalan

IRMS Integrated Road Management System Sistim Manajemen Jalan Terpadu

IUDP Integrated Urban Development Program Program Pembangunan Kota Terpadu

IUIDP Integrated Urban Infrastructure Development Project Proyck Pembangunan Prasarana KotaTerpadu

IWG Interministerial Working Group Kelompok Kerja Antar Departemen

JABOTABEK Region comprising Jakarta, Bogor, Tangerang and Bekasi Jakarta, Bogor, Tangerang, Bekasi

JASA MARGA Indonesia Toll Road Corporation P.T. Jasa Marga (Persero)

JUDP-3 Third JABOTABEK Urban Development Project (Ln. 3246- Proyek Pembangunan Jabotabek IllIND)

JUKLAK Implementation Guidelines Petunjuk Pelaksanaan

KABUPATEN Regency/District (Level 11 autonomous local government) Kabupaten

KEPRES Presidential Decree Keputusan President

KIP Kampung (Neighborhood) Improvement Program Program Perbaikan Kampung

KOTAMADYA Incorporated Municipality/City (Level 11 autonomous local Kotamadyagovernment)

LIDAP Local Institutional Development Action Plan Rancangan Kegiatan Pengembangan InstitusiPemerintah Daerah

LTDP-II Land Transport Development Project - Phase 11 Proyek Pengembangan Perhubungan DaratTahap 11

MHA Ministry of Home Affairs Departemen Dalam Negeri

MOC Ministry of Communications Departemen Perhubungan

MOF Ministry of Finance Departemen Keuangan

MPW Ministry of Public WVorks Departemen Pekerjaan Umum

NCB National Competitive Bidding Pelelangan dengan Prosedur Nasional/ Lokal

NJ(T)C North Java (Transport) Corridor Koridor Transportasi Pantai Utara Jawa

NMT Non Motorized Transport Angkutan dengan Kendaraan Tidak Bermotor

NPV Net Present Value Nilai Bersih Saat Ini

O&M Operations & Maintenance Operasi dan Pemeliharaan

OECF Overseas Economic Cooperation Fund of Japan Dana Kerjasama Ekonomi Luar Negeri Jepang

OED Operations Evaluation Department Bagian Evaluasi Operasi

PAP Project Affected Person Orang yang terkena Dampak Proyek

PIM Project Implementation Memorandum Nota Pelaksanaan Proyek

PJM Medium-term Expenditure Program Program Jangka Menengah

PMU Project Management Unit Unit Manajemen Proyek

pPBS Planning, Programming and Budgeting System Sistim Perancangan, Pemograman danPenganggaran

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PSAP Policy Statement and Action Plan Rumusan Kebijaksanaan dan RancanganKegiatan

PUOD Directorate General for Public Administration and Regional Pemerintah Umum dan Otonomi DaerahAutonomy

RBO Regional Betterment Office Proyck Perencanaan dan Pengawasan TeknisPeningkatan Jalan

RCUTP Regional Cities Urban Transport Project (Ln. 2817-IND) Proyek Transportasi Kota

RDA Regional Development Area Wilayah Pengembangan Regional

REPELITA Five Year Development Plan Rencana Pembangunan Lima Tahun

RIAP Revenue Improvement Action Plan Rencana Kegiatan Untuk PeningkatanPendapatan

RIDPD Road Improvement and Development Projects Database Kumpulan Data Dasar Proyek Peningkatandan Pembangunan Jalan

ROW Right of Way Daerah Milik Jalan

SK Decree of a Senior Official Surat Keputusan

SOE Statement of Expenditure Statement of Expenditure (no Indonesiansentence)

SURIP Strategic Urban Roads Infrastructure Project Proyek Prasarana Jalan Kota Yang BersifatStrategis

TA Technical Assistance Bantuan Teknis

TKPP Urban Development Coordination Team Tim Koordinasi Pembangunan Perkotaan

TOR Terms of Reference Kerangka Acuan Kerja

UKL Environmental Management Plan Upaya Kelola Lingkungan

UPL Environment Monitoring Plan Upaya Pemantauan Lingkungan

URMS Urban Road Management System Sistim Manajemen Jalan Kota

VOC Vehicle Operating Costs Biaya Operasi Kendaraan

WALIKOTA Municipal Chief Executive Walikota

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LOAN AND PROJECT SUMMARY

Borrower: Republic of Indonesia

Implementing The National Development Planning Agency (BAPPENAS) has overall responsibilityAgencies: for project coordination. The Directorate General of Highways (DGH) in the Ministry

of Public Works is the Executing Agency. The Directorate of Urban RoadDevelopment (BINKOT) of DGH is the lead implementing agency. The DirectorateGeneral of Land Transport (DGLT) of the Ministry of Communications, the localgovernment districts of Cirebon, Demak, Kendal, Kudus and Pemalang, and the localgovernment incorporated municipalities of Cirebon, Pekalongan and Semarang areimplementing agencies. The Ministry of Home Affairs is assisting in theimplementation.

Beneflciaries: Road users of the North Java Transport Corridor between Jakarta and Surabaya, andresidents of the towns of Cirebon, Pemalang, Weleri, Kaliwungu, Semarang, Demakand Kudus.

Poverty: Not applicable

Amount: US$86.9 million

Terms: Standard amortization term, grace period and interest rate for fixed-rate US Dollarsingle currency loans with an expected disbursement period of 3-6 years.

Commitment 0.75% on undisbursed loan balances, beginning 60 days after signing,Fee: less any waiver

Onlending Not applicableTerms:

Financing Plan: See Table 4.3

Economic Rate ERRs for identified subprojects range between 15% to 30%.of Return:

MOP: Report number P-6793-IND

Map: IBRD 27993

Project ID: ID-PE-4016

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TABLE OF CONTENTS

1. URBAN TRANSPORT SECTOR ................................................... 1

B. URBAN DEVELOPMENT ....................................................C. TRANSPORT TRENDS ................................................... 2D. INSTITUTIONAL FRAMEWORK .................................................. 3E. THE ROAD NETWORK ................................................... 5F. GOVERNMENT URBAN STRATEGY ................................................... 6

G. GOVERNMENT TRANSPORT POLICIES ................................................... 7

2. BANK INVOLVEMENT AND LESSONS LEARNED .................................................. 10

A. PAST INVOLVEMENT .................................................. 10B. PORTFOLIO PERFORMANCE .................................................. 10C. LESSONS LEARNED .................................................. 11

E. RATIONALE FOR BANK INVOLVEMENT .................................................. 1 3

3. THE NORTH JAVA CORRIDOR .................................................. 14

A. URBAN DEVELOPMENT .................................................. 14B. OVERALL TRANSPORT DEMAND .................................................. 14C. ROAD TRANSPORT NETWORK .................................................. 1 5D. JAVA TRAFFIC CHARACTER .................................................. 1 6E. CURRENT AND EMERGING ISSUES .................................................. 1 8

4. THE PROJECT ....................................................... ,,,,,19

A. PROJECT ORIGIN AND FORMULATION .................................................. 19B. OBJECTIVES ......................... 20C. MONITORING PROJECT OUTCOMES .................................................. 20D. PROJECT DESCRIPTION .................................................. 21E. ENVIRONMENTAL CONSIDERATIONS .................................................. 24F. LAND ACQUISITION, RESETTLEMENT AND SOCIAL CONSIDERATIONS .................................................. 25G. PROJECT COSTS ................................................... 26H. FINANCING .......................... 26

5. PROJECT IMPLEMENTATION .................................................. 29

A. IMPLEMENTING AGENCIES .................................................. . 29B. IMPLEMENTATION PROGRAM .................................................. . 29C. PROJECT MANAGEMENT ....................... 30................................................ 30D. IMPLEMENTATION SCHEDULE ....... 31E. PROCUREMENT ....... 32

F. DISBURSEMENTS..33 ................................................................. ,, 35G. FINANCIAL MANAGEMENT..35H. PROJECT MONITORING..35

J. OPERATIONS AND MAINTENANCE ........................ 37K. BANK SUPERVISION ............... 3......7..........., 37

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6. PROJECT JUSTIFICATION AND RISKS ................................................................. 39

A. POLICY CONTEXT .................................................................... 39B. ECONOMIC JUSTIFICATION .................................................................... 39C. SUSTAINABILITY ................................................................... 43D. RISKS .................................................................... 43

7. AGREEMENTS REACHED AND RECOMMENDATION ................................................................. 45

TABLES IN TEXTTABLE 3.1: DEMAND FOR INTERURBAN TRANSPORT, JAVA, 1982 - 1991 ..................................................... ......... 15TABLE 3.2: TRAFFIC COMPOSITION, CENTRAL JAVA 1994 (PERCENT) .................................................... 17TABLE 3.3: NORTH JAVA TRANSPORT CORRiDOR (1991) .................................................... 17

ORIGIN/DESTINATION OF TRAFFIC IN CENTRAL JAVA SECTION .................................................... 20TABLE 4.1: PROJECT OUTCOME INDICATORS .................................................... 21TABLE 4.2: PROJECT COST SUMMARY .................................................... 27TABLE 4.3: PROJECT FINANCING PLAN .................................................... 28TABLE 5.1: PROCUREMENT ARRANGEMENTS .................................................... 33TABLE 5.2: DISBURSEMENTS .................................................... 34TABLE 5.3: ESTIMATED IBRD DISBURSEMENTS BY IBRD FY .................................................... 34TABLE 5.4: PROJECT OUTPUT INDICATORS ..................................................... 38TABLE 6.1: SUMMARY OF ECONOMIC ANALYSIS .................................................... 41

ANNEXES .................................................................................................................................................................. 471. URBAN INFRASTRUCTURE AND ROAD PROJECTS ................................................................... 492. PERFORMANCE INDICATORS ................................................................... 503. COMPONENT A: SCHEME DETAILS ..................................................................... 524. COMPONENT A: SURIP ROAD DESIGN STANDARDS AND GUIDELINES ................................................................ 615. COMPONENT A: CRITERIA FOR APPROVAL OF ROAD SCHEME SUB-PROJECTS FOR FUNDING ............................... 656. COMPONENT B: URBAN MANAGEMENT AND QUALITY OF LIFE IMPROVEMENTS .................................................. 667. OUTLINE SCOPE OF POLICIES, PROCEDURES AND GUIDELINES .................................................................... 718.. ENVIRONMENTAL IMPACT ASSESSMENT .729. PROJECT COMPONENTS AND COST SUMMARY .............................................................. 7410. DRAFT MODEL PROJECT IMPLEMENTATION MEMORANDUM ............................................................... 771 1. OUTLINE OF ANNUAL WORK PROGRAM .............................................................. 8412. PROCUREMENT PACKAGING AND PRIOR REVIEW CONTRACT PROFILE .............................................................. 8513. DISBURSEMENTS .............................................................. 8614. SUPERVISION STAFFING AND SCHEDULE ................................................................................................................ 8815. ECoNoMiC ANALYSIS.8 . . . .9.. . . . .................................................. 8916. DOCUMENTS ON FILE ....................................................... 97

MAPSTRATEGIC URBAN ROADS INFRASTRUCTURE PROJECT - NORTH JAWA CORRIDOR (MAP No IBRD 27993)

This report is based on the findings of an appraisal mission which visited Indonesia between November 30 andDecember 14, 1995 comprising Edward Dotson, Urban Transport SpecialisVTask Manager EA31N, and KojiTsunokawa Highway Engineer TWUTD, Suhadi Hadiwinoto (Resettlement Specialist) and Robert Scouller(Implementation Engineer) from RSI Jakarta, and consultants Stewart Joy (Transport Economist), Doug MartinEnvironmental Specialist), and Phil Sayeg (Transport Planner). Ms. Marianne Haug, Director, EA3, andMr. Anupam Khanna, Division Chief, EA31N, have endorsed the project.




1. URBAN TRANSPORT SECTOR

A. BACKGROUND

1.1 Economic Development. Over the past ten years, the Indonesian economy has grown at morethan 6% per annum with growth in the past five years being slightly higher at close to 7%. Non-oilmanufacturing has provided the engine of growth with an average annual growth rate of 11.5% perannum. In the process, the share of manufacturing in GDP increased from 14.6% in 1984 to 23.9% in1994 while that of agriculture declined from 22.7% to 17.4% over the same period. Growth was mostrapid in provinces with a strong manufacturing base oriented towards exports, i.e. DKI Jakarta and Westand East Java. This is reflected clearly in the ports of Jakarta and Surabaya, which registered a doublingin container traffic in less than four years. Under the Sixth Five Year Development Plan (REPELITA VI:1994/95 - 1998/99) GDP is projected to grow at 6.2% per annum with the population growing at 1.6%per annum. Non-oil exports are expected to continue driving the economy, in particular exports based onindustrial capital and human resources.

1.2 Demographic Trends. During the 1980s, Indonesia experienced one of the highest urbangrowth rates in East Asia. Urban population increased from 33 million (22% of total population) to 55million (31% of total population) between the censuses of 1980 and 1990. The urban population isgrowing at over 5% per year - almost three times the overall national population growth rate. Indonesiaincludes 15 large cities of more than 500,000 people, 40 secondary cities of over 100,000 (provincialheadquarters and incorporated municipalities), 200 towns of over 20,000 (district headquarters), andabout 3,200 service centers (subdistrict headquarters) with 3,000 to 20,000 people. Seven of Indonesia'sten largest metropolitan areas are on Java. Current forecasts estimate an urban population of some 80million or 40% of the total population in the year 2000. Outside the Jakarta metropolitan region, whichalready has over II million people, 13 cities are forecast to have populations over I million, whileanother II are forecast to have populations of over 500,000.

B. URBAN DEVELOPMENT

1.3 Urban Infrastructure Issues. Average incomes in urban areas have risen substantially over thepast decade. However, income distribution remains relatively unequal. In 1990, more that 17% ofIndonesian urban dwellers were estimated to be in "absolute poverty" based on their expenditure levels.The problems of low income are exacerbated by deficiencies in basic services and degradedenvironmental conditions. Only about 20-25% of urban households have direct access to piped watersupply, another 15% buy drinking water from vendors or standposts, and the rest rely on shallow wellsand sometimes on surface water courses. These are generally polluted due to inadequately treatedwastewater. Only about 40% of urban households have access to adequate sanitation facilities. In thelarger cities, inadequate water supply and liquid and solid waste disposal are serious problems.

Strategic Urban Roads Infrastructure Project - 2 - Staff Appraisal Report

1.4 Urban Infrastructure Constraints and Priorities. Urban areas in Indonesia face the followingessential constraints: (a) lack of coordination in integrating infrastructure investments with landmanagement and transport objectives; (b) no administrative status for local governments, other than thelargest cities (Kotamadya); (c) weak management of water enterprises; (d) poor financial managementsystems (deficient accounting practices, inadequate cost recovery, weak revenue generation, and poorinformation systems); (e) inefficient programming of design and construction cycles, often compressedinto single fiscal years; (f) complex relationships among local, provincial and central agencies withrespect to responsibilities for project and program preparation, appraisal, financing, implementation, andO&M; (g) a shortage of trained and experienced managers and technical personnel; and (h)infrastructure deficiencies and backlogs in operations and maintenance (O&M). All of these except (c)and (d) also apply to urban roads. The Bank's 1993 Urban Public Infrastructure Services Report (No.121 54-IND) estimated that the 1990 infrastructure investment backlog was at least some US$5 billion forthe main five subsectors (piped water, sanitation, solid waste, urban roads, and drainage). Further, asubstantial backlog prevails in the maintenance of facilities, which has resulted in decreased productivityof previous infrastructure investments.

C. TRANSPORT TRENDS

1.5 Motorization. The economic development during the past decade has encouraged the ownershipand use of private vehicles and increased travel. The motorized vehicle fleet more than doubled in the1980s in line with urban population growth. In 1989, 29% of urban households owned a motorizedvehicle, (around 3/4 of which were motorcycles) and 35% a nonmotorized vehicle. Motorcycles makeup almost 70% of the total motorized vehicle fleet, cars 15%, trucks and buses 15%.

1.6 With an average motor vehicle availability (excluding motorcycles) of 19 vehicles per 1000population Indonesia is still in the early stages of motorization. But differences in motorization betweenregions in Indonesia are marked (ranging from 23/1000 pop. for Java and Bali to 6/1000 pop. for NusaTenggara). The differences between provinces are even more pronounced. In the Jakarta metropolitanarea, for example, vehicle availability at 150/1000 pop. is comparable to that in some of the moredeveloped countries in East Asia.

1.7 Based on the key determinants of income levels, income distribution and cost of ownership anduse, international experience suggests that nationally Indonesia is not expected to reach the exponentialgrowth phase of motorization in the short termn. However as incomes and cities continue to grow at highrates, the motorized fleet will continue to increase, with cars gaining in share. The physical expansion ofcities has increased journey length and the demand for motorized travel. The numbers of vehicles andtraffic volumes are therefore expected to grow in and around urban centers, increasing demands ontransport systems and posing challenges for expansion of road network capacity.

1.8 Transport Activity. The strong growth in non-oil manufacturing was accompanied by rapidgrowth in transport activity which increased by close to 7% per year over the past ten years. Alltransport modes - road, rail, shipping, civil aviation, and inland waterways - were affected. In general,the modes are complementary with each serving specific markets or transport needs. Competitionarnong them is limited to a few corridors. Sea transport moves large quantities of freight, mainly bulk oiland coal carried by the oil and coal industries. General cargo movements by sea are comparativelysmall, the predominant flows being between Java and the outer islands with Jakarta and Surabaya as thefocal points.

Strategic Urban Roads Infrastructure Project - 3 _ Staff Appraisal Report

1.9 For interurban transport of both passengers and freight by land, road is by far the dominantmode. Interurban domestic freight movements (ton/km) grew by around 60% on Java and Sumatrabetween 1982 and 1991. While data are not available on journey times, congestion and capacityconstraints are emerging in heavily trafficked corridors and are very visible in North Java. In particularin 1992 it was estimated that of the total of 47 billion vehicle/km on national and provincial roads about50% was in Java and Bali (which account for only 22% of the network). Average daily traffic has grownrapidly since the early 1970s, ranging between 5% and 10% p.a. depending on the area. In recent years,traffic growth as recorded by the annual traffic counting system has leveled off to about 5% on average.Growth has been most dramatic on the approaches to the main urban centers and in particular on the highcapacity, limited access tolled roads approaching Jakarta (where annual growth of 15% to 30% has beenobserved over the past five years).

D. INSTITUTIONAL FRAMEWORK

1.10 Central Government. There is no single ministry responsible for urban development and nosingle agency responsible for urban transport. The National Development Planning Agency,BAPPENAS, is responsible for overall planning and allocation of resources, focused within REPELITAand Annual National Development Budgets (APBN). Within BAPPENAS, the Bureau for UrbanDevelopment, Settlement and Public Housing, under Deputy V (Regional and Provincial Development),is responsible for oversight and coordination of urban infrastructure development. Major roaddevelopment is the responsibility of Deputy III (Infrastructure).

1.11 The principal central ministries involved in urban transport are the Ministry of Home Affairs(MHA), the Ministry of Public Works (MPW), the Ministry of Transport (MOT), and the Ministry ofFinance (MOF). The MHA is responsible for oversight of the regional governments, primarily throughits Directorate General for Public Administration and Regional Autonomy (PUOD) and DirectorateGeneral for Regional Development (BANGDA). The MPW (or DPU) is responsible for oversight ofmost infrastructure. Within MPW, the Directorate General for Human Settlements (DGHS or CiptaKarya) is responsible for oversight of city and regional planning, while the Directorate General ofHighways (DGH or Bina Marga) is responsible for oversight of roads and bridges. The MOF isresponsible for central and local finance; the Directorate General for Budget (Anggaran or DGA)administers budget transfers. Within MOT, the Directorate General of Land Transport (DGLT) hasoverall responsibility for road traffic and transport matters.

1.12 Regional Government. There are 27 provincial (TK I) and 304 local (TK II) govenmmentswhich operate with increasing responsibilities and delegated authority. The 304 local governmentsinclude 57 kotamadyas (urban municipalities) and 247 kabupatens (districts). Legislative powers at bothprovincial and local levels are held by elected People's Representative Councils (Dewan PerwakilanRakyat Daerah).

1.13 Under Indonesia's unitary system of govermnent, all units of regional govemment are overseenby the Ministry of Home Affairs. Provincial governments are headed by appointed governors whorepresent the President and the central govemment. The govemors also head the semi-autonomousprovincial administrations. Walikotas (municipal mayors) and Bupatis (district heads) representprovincial governments, and head their own local governments. Development Planning Agencies(BAPPEDA I and II) report directly to their respective governors, mayors, or district heads and areresponsible for planning and resource allocation. Govemment services at TkI and TkII are provided byseparate departments (Dinas I and II) analogous to line ministries of the central government.

Strategic Urban Roads infrastructure Project - 4 - StaffAppraisal Report

1.14 Finances of provincial and local governments have long been dominated by central governmenttransfers and are characterized by weak local resource mobilization, low per-capita budgets and limiteduse of credit for capital investment. Grants and other revenue sharing mechanisms used by GOI arebeing used to resolve the disparity between increasingly decentralized service responsibilities and localresource mobilization. Restructuring of central-local government financial relationships and improvedfiscal capacities for local governments in Indonesia are topics of on-going policy dialogue which aregaining increased urgency as growth in urban services requirements outpace local capacities to respond.Local government borrowing capacities are generally quite limited and incentives to borrow are weak inthe current financing pattern although some capable local governments are willing to accelerate theirdevelopment program by borrowing.

1.15 Urban and Regional Planning. GOI has a National Structure Plan (Strategi NasionalPengembangan Pola Tata Ruang), which includes the regional planning goals for particular areas.Provincial structure plans incorporate the concept of Regional Development Areas (RDAs) which appearto be purely conceptual. Local urban plans in Indonesia may be developed through several avenues,which may lead to inconsistent local plans and uncoordinated road projects. Provincial governmentsproduce and local governments contribute to Guidelines of Provincial Policy, (Pola Dasar PembangunanDaerah) often the basis for land use and development within urban areas. Local governments throughtheir planning units (Bappeda Tk II) prepare, often in conjunction with IUIDP/IUDP projects, broadstructure plans for the area of their responsibility. These plans indicate in a broad way desired futureroad, public transport and other infrastructure. Local governments also control building approvals andmay have local regulations (Perda), for example, for imposing setbacks on buildings from roads andcontrols on access to roads.

1.16 Highways. DGH is the central authority with overall responsibility for the development andmaintenance of the nation's highways. However, there is an ongoing process of decentralization ofcentral government functions to provincial and kabupaten/kotamadya governments. In broad terms thefocus of DGH's responsibilities is on the overall planning and monitoring while at the lower-tier roadagencies the focus of responsibilities is on implementation.

1.17 Since August 1994, DGH has had six directorates reporting to the Director General, three ofwhich are responsible for planning, design and urban roads respectively, and three of which are regionaldirectorates responsible for implementation. The Directorate of Urban Road Development (BINKOT) iscomposed of five sub-directorates. Two are responsible for road development and design respectively,and two for implementation in metropolitan and large cities. A fifth sub-directorate is responsible for theplanning of all toll roads, whether urban or inter-urban.

1.18 Urban Roads. Primary arterial roads in urban areas are included in the national road networkand are managed centrally through DGH and expenditures are programmed through the Integrated RoadManagement System (IRMS) system as for National and Provincial roads. (Primary arterial roadsprovide links between provincial (level 1) cities or between these cities and the Level 11 cities). All otherurban roads are the responsibility of the municipal government (Level II) with technical guidance fromDGH. Design and construction standards, and cost estimations are based on the DGH guidelines. Someguidelines on road planning, and the programming of operations and maintenance (O&M) expenditureshave been developed with Bank support. Guidance on economic evaluation for projects is given in aDGH manual. The larger road projects are still often financed directly from the national budget(APBN/DIP) with design and supervision by the Regional Betterment Offices (RBO) of Bina Marga.


However responsibility for land acquisition of these projects rests with local government and can lead tofinancial obligations which the local governments are not capable of meeting without special assistance.

1.19 Until now, systematic surveying and expenditure programming of the urban networks has notbeen formalized. An Urban Road Management System (URMS) to aid municipalities in this function,initially for maintenance expenditures, is under development by DGH through the HSL2 project. Apartfrom central statistics on the roads, the first forrnal inventory of urban roads in 306 cities of over 20,000population was conducted in 1993. The most urgent problems relate to traffic congestion which is severeon 36% of urban arterial and collector roads so that capacity expansion and traffic management are keypolicy aspects requiring attention.

1.20 Urban Traftic and Transport. Within MOT, the Directorate General of Land Transport(DGLT) has overall responsibility for road traffic and transport matters. It comprises three directorates:Infrastructure Systems Development, Traffic and Transport, and Safety and Engineering. Each of thesethree directorates includes at least one sub-directorate dealing with road-related matters. Safety andenvironmental matters for all land transport modes are handled by a single sub-directorate of safety.This functional organization structure has not proven very effective and changes are under consideration,including creating a section for urban traffic and transport.

1.21 In principle the role of bGLT at the center should be focused on policy formulation andcoordination with all executing functions delegated to decentralized entities. MOT's regionalorganization is based on a single office (Kanwil) in each province dealing with all transport modes. EachKanwil has at least one section handling land transport matters. DLLAJ, coming under the provincialadministration are responsible for, among other things, traffic signs and signals, motor vehicleinspection, vehicle weight and dimensions, have existed for a number of years in the larger provinces andare gradually being established throughout the country.

1.22 Enforcement of road traffic and transport regulations is divided between the DLLAJ and theTraffic Police. The enactment in 1992 of a modern Road Traffic and Transport Law (Law 14) followedby the main implementing regulations in 1993 represented a major milestone. These regulationsprovided for the establishment of local government DLLAJ nationally, with responsibilities includingurban transport planning, road and public transport network planning, and traffic management.Implementation has remained slow, with only three DLLAJs established by the end of 1995 in Java.

E. THE ROAD NETWORK

1.23 Past Development. In line with economic growth, Indonesia's classified road network hasexpanded rapidly in the past 25 years, from 82,125 km in 1969 at the start of the five-year plans, to244,164 km in 1994 at the end of REPELITA V. The urban road network more than doubled in lengthduring the 1980s. Road length has been increasing in line with the overall increase in the vehicle fleet,and the numbers of urban households. Urban road length at around 25,500 kms is around 11% of thetotal road length in Indonesia. They are carrying 44% of the 47 billion motorized vehicle kilometers ofannual travel. Of all urban roads 3772 kms or 15% are national primary roads.

1.24 The road networks in Indonesian cities are typically of low density (road km per capita) and arebecoming increasingly congested especially on Java. In considering road capacity it is important to notethat the majority of the roads are of low geometric standard, i.e. less than 7m wide. In addition, there isextensive frontage development along main roads from towns and cities continuing for many kilometers.

Strategic Urban Roads Infrastructure Project - 6 - StaffAppraisal Report

Frontage development reduces traffic speed and lowers road capacity as a result of traffic entering andleaving the road, parked vehicles, pedestrians, and bicycles.

1.25 Future Requirements. Analysis of road capacity and traffic flow for the national and provincialnetwork indicates that a growing number of road sections are near capacity. As detailed in the recentRoads Sector Study (Report no. 15394-IND), expansion of road capacity by small widenings of roads isprobably inappropriate. However new larger road investments needed require much longer preparationtimes, typically on the order of three to five years, than has been the case for the traditional smallerbetterment investments. This results from the requirements for more elaborate planning; feasibilitystudies including full analysis of options; the assessment of environmental and social impacts andpreparation of a mitigation action plan; land acquisition; resettlement; and greater coordination andcollaboration within GOI agencies.

1.26 In 1994, 22% of the interurban network and 58% of the urban network had congestion sufficientto warrant consideration of widening. In order to offset the costs of such congestion it is estimated thatin the decade 1995-2004, some capacity expansion could be economically warranted for up to 28,000 km(45%) of national and provincial roads and 4,500 km (34%) of urban roads. Expansion opportunities onurban roads are limited by the much higher costs of land acquisition and by planning and socialconstraints. Therefore, capacity expansion has to include an effective combination of trafficmanagement, road widening, new roads and bypasses.

1.27 Funding. The higher levels of expenditure required for capacity expansion of the interurban andurban networks (and reconstruction Kabupaten roads) could be achieved through reallocation of publicresources between different categories of road and programs for efficiency improvements. Provided asuitable regulatory framework is in place, private sector resources could also be mobilized for somebankable projects mostly on Java. Furthermore, there are considerable opportunities for more efficientimplementation of programs. Factoring in resource and implementation capacity constraints, a 10%increase in overall road funding for capacity expansion is recommended in the Road Sector Study.

F. GOVERNMENT URBAN STRATEGY

1.28 For the 1990s, the key elements of GOI's development strategy are (i) maintaining growth andmacroeconomics stability; (ii) improving public sector management; (iii) enhancing private sectordevelopment; (iv) reducing poverty and enhancing human resource development; and (v) improvingenvironmental management. Investment in transport is a part of the GOI strategy to help foster theattainment of its objectives by providing adequate infrastructure. In its successive REPELITAs, the GOIhas devoted significant resources to improving transport infrastructure. Outlays for maintenance wereincreased in order to sustain the quality and productivity of the transport.

1.29 Facing large deficiencies in urban infrastructure and a fast-growing urban population, in 1987,GOI issued a Statement of Policies, representing a consolidated view of development in the sector. Itincludes: (a) strengthening local governments to build, operate and maintain local services;(b) improving the planning and programming of urban infrastructure investments; (c) mobilizing localrevenues and optimizing their use; (d) implementing coordinated financing and administration systemsfor local services; and (e) strengthening consultative processes at various levels of government,particularly the participation of municipalities and districts.


1.30 The Policy Statement called for Integrated Urban Infrastructure Development Programs (IUIDP)as the operational approach for achieving the above objectives. These comprised action plans for localinstitutional strengthening (Local Institutional Development Action Plan or LIDAP), improvements inlocal resource mobilization (Revenue Improvement Action Plans or RIAP), and medium-terrnexpenditure programs (PJM), and financing arrangements. The World Bank, ADB and bilateral donorshave supported GOI in a nation-wide program for IUIDP preparation and implementation since 1987.More than 75% of local governments have so far adopted the IUIDP approach.

1.31 REPELITA VI and the second 25-Year Plan, both of which started in April 1994, emphasizesustainable urban development With goals of improved quality of life, increased urban productivity,poverty alleviation, and reduction of regional imbalances. The main objective to meet these goals is toaddress the backlog in the provision of basic urban services. Infrastructure to support economicdevelopment is considered to be crucial. Management of land as a strategic resource, including effectivedevelopment control, is seen as important as investment in infrastructure. The Strategy to achieve thesegoals includes effective institutional development (clarification of roles and responsibilities,management systems, Planning, Programming and Budgeting Systems (PPBS), and human resourcedevelopment), clarification of the legal framework for decentralization, and resource mobilization,including private sector and community participation. REPELITA VI also expands the IUIDP approachinto an Integrated Urban Development Program (IUIDP) that includes, amongst other things, broaderspatial and urban planning in addition to public works infrastructure development plans.

1.32 An important GOI objective for the infrastructure sector in REPELITA VI is to enhance the roleof the private sector in the provision of public services which is a growing phenomenon in East Asia.Bank advice has been sought in three areas, namely shifting the appropriate balance between public andprivate roles; developing sector policy and regulatory framework; and analyzing financial (includingdebt) implications. The Bank has helped prepare framework papers for private participation in power,ports and solid waste management. Workshops for central and regional government officials have beenorganized in these sectors as well as water supply where GOI is seeking to involve private operationsboth in operation and financing but progress has been slow to-date.

G. GOVERNMENT TRANSPORT POLICIES

1.33 Policy Statement and Action Plan (PSAP) on Road Infrastructure. Following a review ofpast policies, and recommendation of a number of studies, the GOI prepared in 1989 a comprehensivePolicy Statement and Action Plan (PSAP) on Road Infrastructure and Road Traffic and Transport. ThePolicy Statement covered seven main areas: legal and regulatory reform; institutional development andcoordination; integration of transport sector policy formulation and planning; planning, programming,and execution of road works; road user taxation; vehicle weight and dimension limits; traffic safety.Specific actions to be taken during the period 1990-1992 are focused primarily on interurban transportand were included in the Stage I Action Plan, which was supported by the Highway Sector Project (Loan3133-IND). The Stage II Action Plan covering the period 1993-1996 is supported by the Bank's SecondHighway Sector Investment Project (HSL 2, Loan-3945-IND). Further details of the PSAP are availablein Annex 2 of the HSL 2 SAR (Report no. 12161-IND).

1.34 Cost Recovery. Under its Road Traffic and Transport PSAP of 1989, GOI adopted a "userpays" approach to charging for road use. Nationwide, an aggregate cost recovery factor of 1.13 wasachieved by 1994/95 through a combination of fuel prices increases, a restructuring of the annual vehicleregistration fee, increases in the fee for commercial vehicles, and a start to phasing out of the ownership


transfer tax. Aggregate road expenditures are recovered from all vehicle categories combined. However,when cost recovery is considered by individual category the picture remains unbalanced as more thanthree-quarters of tax receipts still accrue from small gasoline-engined vehicles. Taxes on trucks whichcause most of the road damage and require the construction of strong road pavements remain marginal.The annual registration fee rather than encouraging greater efficiency in the road transport system, is stillto a certain extent penalizing vehicle types which cause less damage but more congestion.

1.35 Urban Roads. There is no single document that sets out current GOI polices for urban roads.However a good understanding can be obtained from the Policy Statement for Urban Development(1987), the Policy Statement and Action Plans on Road Infrastructure and Road Traffic and Transport,and statements on the urban sector and urban transport in REPELITA VI. More specific Governmentstrategy in relation to urban roads is set out in the Ministry of Communications' (MOT) elaboration ofREPELITA VI.

1.36 Policy development and implementation for broader urban transport issues have been limited inIndonesia. This results from fragmentation of institutional responsibilities, a general lack ofcoordination within central government, and inadequate responsibility and strength to deal withfinancing and implementation of urban transport policy and projects across all modes within localgovernments (even DKI Jakarta). Despite the current lack of a coherent action plan for urban transport,many useful but isolated initiatives are under way. A most useful initiative is the recent creation inBAPPENAS of an Interministerial Working Group (IWG) to analyze urban transport policy and todevelop by mid 1997 an urban transport policy to be included in urban policy being prepared for theperiod of REPELITA VII.

1.37 Toll Roads. GOI initiated a policy of developing a network of high capacity limited accessmotorways through toll revenues in the late 1970s. The first toll road was opened to traffic in 1978 andin the same year Jasa Marga, the state toll road corporation, was established as the sole entity toconstruct and operate toll roads and given authority to raise funds by public bond issues. The keyprinciples underlying the Government's toll road policy have been that:

* road facilities in the more developed parts of the country can be financed throughcontributions from road users (justification on equity grounds);

* a free alternative road has to be available to road users; and* toll rates shall not be higher than 70% of the savings road users gain from traveling on the

toll road.

1.38 Between 1978 and 1990 some 280 km of toll roads and three tolled bridges were opened totraffic. These facilities were concentrated in the Jakarta area in the form of urban express ways androads radiating from Jakarta. Jasa Marga's sources of funds for these investments consisted of bondissues on the domestic market, foreign loans arranged by the government and toll revenues. Loanfinancing took the form of loans from international development agencies (including the Bank) to GOIthat were onlent to Jasa Marga.

1.39 Private Sector Participation in Toll Roads. Private participation is sought in areas of highgrowth where private investment is economically and financially feasible. The main stated policyobjective on private participation in toll roads is to obtain additional funding. References were alsomade to faster procurement and implementation. By regulation (No 8 of 1990) all private investment intoll roads is to be in the form of cooperation with Jasa Marga. The suggested form of cooperation is ajoint venture or joint operation which are GOI's selected forms of cooperation or "working together"


with the private sector. To implement the policy, an administrative procedure - involving DGH, the TollRoad Corporation, and the Ministry of Finance - for discussing and negotiating agreements with privateparties was established. Implementation of the policy, however, was not formulated in detail, and itproceeded on an ad-hoc basis. A revised - but still not well codified - procedure was instituted in early1995 for the implementation of a new program of private participation in toll roads under the current fiveyear plan.

1.40 By mid- 1995 some 200 km of toll roads involving private sector parties had been completed orwere under construction. Total financing for toll road schemes involving private participation over theperiod 1990/94 is estimated at some US$555 million or about 5% of the US$11.4 billion of GOIfinancing for all public roads combined over the same period. Under REPELITA VI the government isseeking a contribution of US$3.1 billion from the private sector for toll road financing.


2. BANK INVOLVEMENT AND LESSONS LEARNED

A. PAST INVOLVEMENT

2.1 The Bank has a long standing association with GOI, in the urban and urban transport sectors. Inthe mid 1980s the Bank contributed analytical inputs to policy development leading to the urban policystatement of 1987, which was supported by an Urban Sector Loan (Ln. 28167-IND). Since the mid1980s there has also been a series of investment projects. Two of these namely the Regional Cities UrbanTransport Project (LN. 2817-IND, RCUTP) and the JABOTABEK Urban Development Project(Ln. 2932-lND) focused on urban transport, including road construction. In the 1990's, urban roaddevelopment and traffic management are also a significant component of Integrated Urban InfrastructureDevelopment Projects (IUIDP) for the East Java/Bali UDP (Ln. 3304-IND), Sulawesi/Irian Jaya UDP(Ln. 3340-IND), Surabaya UDP (Ln. 3726-lND), Semarang/Surakarta UDP (Ln. 3749-IND), andKalimantan UDP (Ln. 3854-lND).

2.2 The Bank has also financed a series of road projects during the past two decades. The projectssupported development of the national, provincial and kabupaten (local government) road networks.Four are under implementation - Third Kabupaten Roads (Ln. 3490-IND), Eastern Indonesia KabupatenRoads (Ln. 3579-IND), Fifth Kabupaten Roads (Ln. 3732-IND), and the HSL-2 (Ln. 3712-IND).Lending has been directed at three broad objectives:

* improving the quality of the road network through maintenance, rehabilitation,improvement (minor widening) and new road construction.

- developing the capability of the road agencies at central and local level- strengthening the capacity for road sector policy formulation and implementation, and

improving road sector policy through support for the GOI Policy Statement and Action Planon Road Infrastructure.

Annex 1 lists previous urban infrastructure and road projects.

B. PORTFOLIO PERFORMANCE

2.3 The project implementation record for transport projects in Indonesia has been solid. The sixmost recently completed projects were rated satisfactory by the Department and by OED in terms ofoverall outcome and sustainability. The institutional impact of the six was rated substantial in threecases, moderate or partial for three, and negligible for one, the Regional Cities Urban Transport Project(RCUTP), discussed in para. 2.6. In the current road portfolio of five projects, all are rated satisfactoryin terms of development objectives, and all but one (HSL-2) are rated satisfactory in terms ofimplementation progress. The unsatisfactory rating is due to delays in procurement and in preparingsubprojects caused by weak project management. The longer term prospects for achieving a satisfactoryrating are good. The project management and oversight arrangements for this project (see section 6)have been designed to minimize the potential for delays.

2.4 For the portfolio of recently completed urban projects, all three were rated satisfactory by theDepartment and OED in terms of overall outcome. Sustainability was mixed, and institutional impactmoderate or substantial. All six projects in the current urban portfolio are rated satisfactory in terms ofdevelopment objectives, and all but one (Third JABOTABEK Urban Development Project, JUDP-3, Ln.

Strategic Urban Roads Infiastructure Project - 1I - Staff Appraisal Report

3246-[ND) are rated satisfactory in terms of implementation progress. The JUDP-III unsatisfactoryrating is due to a major procurement irregularity on the KIP program in DKI Jakarta involving contractstotaling about $20 million. This project is being supervised attentively and its prospects for achieving asatisfactory rating by June 1996 are good.

C. LESSONS LEARNED

2.5 Bankwide experience with urban road projects is that strong institutional arrangements are thekey to project success and sustainability. This is bome out in Indonesia. Civil works for road projectshave generally been completed on time and to an adequate quality standard. Audit reports confirm thatthe projects have been well justified and are sustainable. This can be attributed to the strength andcontinuing improvement in the capability of road agencies. The Directorate General of Highways (BinaMarga) has developed into a strong and capable central agency. Even so, civil works undertaken in bothroad and IUIDP projects have generally been limited to routine maintenance, rehabilitation, wideningand improvement on existing alignments, with limited new works or realignment. Urban roadcomponents in IUIDP have suffered from a lack of longer termn plans and construction programs.

2.6 RCUTP is the previous project closest in scope to SURIP. The main lessons learned fromRCUTP are set out in the recently completed Project Completion Report (Report No. 1 5245-IND). Thisreport indicates that although the civil works were successfully completed and staff trained at the localgovernment level, sustainable capacity was not created at a local level to undertake similar works infuture. The ascribed cause was the delay in enacting enabling regulations for devolution ofresponsibilities for transport planning, road programs and traffic management from central to localgovernment. These regulations are now in place, and GOI is proceeding with the establishment of thenecessary road traffic and transport units (DLLAJ) in all local governments.

2.7 Bankwide experience is that to achieve major and sustainable improvements in the capability ofroad agencies, institutional development components require:

* considerable Bank staff input over an extended period of time;* well prepared and detailed implementation arrangements;* continuing attention and support from Govemment decision makers; and* a flexible approach which will provide for the improvements to take account of, and be

integrated into Government systems and procedures.

D. BANK STRATEGY

2.8 The Bank Country Assistance Strategy (CAS) discussed in March 1995 for Indonesia has fivemain objectives: reducing poverty, managing resources sustainably, enhancing human resourcedevelopment, maintaining growth with macroeconomics stability, enhancing competitiveness. It seeksinfrastructure investment that supports private sector development and competitiveness, strengthenscapacities at all levels of government and decentralizes responsibilities. It seeks to improve public sectormanagement and environmental management. These are key objectives of relevance to urban transport.

2.9 The Bank's Country Study, Indonesia Environment and Development of July 1994 (ReportNo. 12083-IND), discusses urban transport and the control of vehicle emissions. It indicates thatreducing the rate of growth of congestion and the number of vehicles in key urban centers will be criticalto minimizing efficiency losses and to protecting the health and welfare of the urban population. Thestudy states that an effective strategy would need to include key elements of land use planning,


improving the communications network (expanding the urban road network should receive a highpriority), traffic management and engineering, technical options for vehicles and fuels, improved publictransport, and demand management.

2.10 In the urban sector, the Bank has oriented its overall sector lending to assist GOI to deliveradequate urban infrastructure investments in cost effective ways. In promoting efficient urbandevelopment, the Bank's strategy supports the expanded IUIDP approach. However implementationshould include both sectoral and integrated approaches as appropriate. While all plans should beintegrated, in some cases implementation could be handled through separate sectoral projects. Forexample in smaller municipalities multisectoral projects are generally of manageable size andcomplexity. An integrated approach would therefore be more appropriate. In other cases, where therequirements of a particular sector are sufficiently large and complex, both in technical terms as well ason policy, institutional and financial matters, sectoral projects within the framework of an integrated planmay be better.

2.11 The Bank's urban sector strategy also promotes establishing an enabling regulatory and planningframework for urban land management. A key focus of the Bank's strategy will be to support GOIefforts to establish an effective land management system and simplify other regulations to facilitate moreefficient and environmentally sound urban land use and strengthen land tenure. The Bank is helping theGovernment develop improved implementation frameworks for addressing environmental and socialimpacts of urban projects.

2.12 Urban Transport. The context for the Bank's working strategy on urban transport in Indonesiais provided by the Country Assistance Strategy, the Country Environmental Study and the Urban SectorStrategy. The framework is provided by the Technical Paper on Urban Transport in Asia (1994), and theBank Transport Sector Policy Review presented to the Board on September 22, 1995. The basic thrust ofthis working strategy is to support through physical works and TA components in sectoral and integratedinvestment projects, GOI initiatives for:

Implementation of existing GOI transport policies in urban areas, including: improving roadsafety, integrating transport planning and urban planning and mitigating the adverse social andenvironmental impacts of motorization;

Formulation of GOI urban transport policy at national and local levels that supports a path ofdevelopment that is economically, financially, environmentally and socially sustainable;

Implementation of action plans for these GOI policy initiatives in metropolitan regions andother urban areas in which the Bank is funding projects;

Institutional development of central and local government capacities to formulate andimplement Urban Transport Policy, and to support GOI initiatives for decentralization of theseactivities to local government;

Human resource development for policy formulation, urban transport planning, trafficmanagement, public transport planning and operations, air pollution monitoring and control,environmental and social assessment, management and monitoring; and


Infrastructure and services provision that is affordable and commensurate with forecast demandto: facilitate economic growth; increase urban productivity; alleviate poverty; and improve thequality of life in urban areas.

E. RATIONALE FOR BANK INVOLVEMENT

2.13 Indonesia has been successful in generating economic growth of 7% a year over the past tenyears, and as a result is experiencing rapid urbanization and rapid motorization. A number of donors,including the ADB and OECF are assisting GOI initiatives to manage these processes of rapidurbanization and motorization. This project fills a gap of major strategic importance in the road andurban portfolios of the donors. The project is designed to complement the projects being funded by otherdonors in particular the recently approved ADB North Java Road Improvement Project (ADB Loan1428-INO), as well as projects funded by GOI from their own resources.

2.14 The Bank is currently involved in operations which are related to this project. The HSL2provides a range of support for the roads sector, and includes the upgrading of some interurban sectionsof the national primary arterial road network. Urban projects under implementation and underpreparation in a number of cities include components for upgrading and expansion of the urban roadnetworks. SURIP helps bridge a serious policy and institutional gap. Developing and implementingsustainable transport policy will require cooperation and coordination between different GOI Ministriesand agencies (MPW, MOT, BAPPENAS, BAPEDAL), different agencies in MPW (Bina Marga, CiptaKarya), different sections of Bina Marga, and different levels of Government. The Bank is well placedto act as a catalyst and to facilitate this cooperation given its pioneering role in IUIDP/IUDP and HSL 2.


3. THE NORTH JAVA CORRIDOR

A. URBAN DEVELOPMENT

3.1 Setting. The 750 km long North Java Corridor (NJC) follows the gentle terrain of the northerncoastline of the provinces of West, Central and East Java. It is generally constricted to a relativelynarrow coastal plain between the volcanic backbone of Java and the Java Sea which historically has beena center for human settlement. The NJC is anchored by two major conurbations. To the west, themegacity of JABOTABEK, comprising DKI Jakarta, and the municipalities of Bogor, Bekasi andTangerrang in West Java province. To the east, the more compact but rapidly growing city of Surabaya,Indonesia's second largest city (and also an international gateway) in the East Java province. Theintermediate towns and cities of Cirebon (an important port), Tegal, Pekalongan and Semarang and othersmaller towns are all dynamic growth centers with strong mutual linkages and with their economichinterlands. Surabaya is the regional center for the surrounding cities including Gresik and Malang andaccordingly generates extensive interaction between them.

3.2 Economic Development. Indonesia's real GRDP per capita doubled from 1983 to 1989. Thiswas also the case for DKI Jakarta. However, real per capita GRDP grew at a slightly higher rate in theprovinces of Java. GRDP per capita of these three provinces was about 35% of that for Jakarta and about80% of that for Indonesia in 1989.

3.3 Demographic Trends. The bulk of the population growth on Java is expected to occur inJABOTABEK and greater Surabaya. JABOTABEK is forecast to grow from 17 million in 1990 to30 million in 2005. Over the same period greater Surabaya is forecast to grow from 8 million to14 million. While the overall population of Central Java is forecast to grow little, the urban population isforecast to grow substantially, particularly of the major towns and cities.

B. OVERALL TRANSPORT DEMAND

3.4 The NJC is served by both road and rail. In addition, airline services exist for travel betweenDKI Jakarta, Cirebon, Semarang, Surabaya and the towns of Surakarta and Yogyakarta to the south. TheLand Transport Development Plan Study Phase II Study (LTDP-II) made broad estimates of the demandfor interurban transport from 1982 to 1991 shown in Table 3.1. Interurban passenger transport demandgrew at 7.2% per annum.

3.5 In the short to medium term, the likelihood of significant changes in the railway's market shareis not good on grounds of rail capacity. The key mainline sections of the railway in Java are now beingoperated close to or at capacity. Developing Java's railway to a stage where it is capable of carrying amuch increased share of future interurban passenger traffic and of general and other freight traffic willrequire major investments in double-tracking and/or signaling and far reaching institutional and policyreforms, both of which will take a considerable time to be completed. The initial steps now being takenby Government will not in themselves have any significant impact on the demand for road transport inthe short to medium term.


TABLE 3.1: DEMAND FOR INTERURBAN TRANSPORT, JAVA, 1982 - 1991

Road Rail Sea Total1982 1 1991 1982 1 1991 1982 1 1991 1982 E79199

Passenger

Billion passenger/km 70.4 133.1 5.8 9.2 -- 0.2 76.2 142.5Mode Share 92.4% 93.4% 7.6% 6.5% 100% 100%

Freight

Billion tone/km 18.9 27.6 0.7 1.1 n/a 42.1 n/a 70.8Mode Share n/a 39% n/a 1.6% n/a 59.5% n/a 100%

(1) Traffic on national and provincial highway system only(2) n/a = not available

Source: Table 3.1, LTDP - II, Final Report, 1992

3.6 For the long tern, rail has the potential to play a much expanded role in interurban passengertransport in Java. With larger traffic volume the relative cost advantage of rail improves. Furthermore,as road transport causes much higher external costs on account of congestion, pollution and accidents,charging for these costs would also work in favor of rail transport. Rail could help, therefore, in meetingthe growth in transport demand and in alleviating the adverse consequences of exponential growth ofmotorization. For general freight movements over short, medium and most long (by Indonesianstandards) distance, road transport will continue to be the most economical mode, particularly since thegeographical pattern of industrial development is being shaped largely by the expanding toll roadnetwork. For long distance bulk movements, shipping, if a technical option, will remain far moreeconomical than rail.

C. ROAD TRANSPORT NETWORK

3.7 The principal route for road traffic traveling between Jakarta and Surabaya is currently the roadparalleling the north coast via Semarang and Tubang. The North Java Transport Corridor study foundthat most Jakarta - Surabaya traffic, which may only be 10% of traffic on an intermediate link, uses thisroad. Much of this route currently consists of two lane highway sections. Traffic volumes in the corridorrange from about 10,000 to 20,000 vehicles annual average daily traffic (AADT) of which commercialvehicles (light goods vehicles, buses and trucks) are typically over half of all vehicles. At a volume ofbetween 15,000 and 20,000 AADT congestion is very apparent on two-lane highways and consequently aprogram of capacity expansion is underway, to provide a four lane standard on the inter-urban sections ofthe route. Due to the existing and emerging congestion and vehicle mix on the highways, safety is also ofconcern.

3.8 To respond to increasing transport demands, major inter-urban road improvement projects areon-going including the proposed development of an expanded system of toll roads to be developed in thenext five to ten years. Regional transport improvements in the corridor are guided by the North JavaTransport Corridor (NJTC) Study. However the NJTC Study is concerned solely with the investment needsin new and improved inter-urban roads to facilitate travel between Jakarta and Surabaya. It did not addressthe requirements for road investment in the main urban areas. The recently approved ADB Loan 1428-INO


for the North Java Road Improvement Project (NJRIP) is based on the recommendations of the NJTCStudy.

3.9 Furthermore, the Heavy Loaded Road Improvement Project (HLRIP) recommends interurbanroad improvements along the NJTC route and various national highways and primary roads of Java. Theconstruction of selected HLRIP road improvement projects is in progress with funding assistance fromthe Overseas Economic Cooperation Fund of Japan (OECF). This project is consistent with the plans andrecommendations of the NJTC Study and the HLRIP. It will support the achievement of the regionaltransport goals of the NJTC. Individual road scheme sub-projects are designed to complement these on-going road capacity expansion activities along the NJTC.

3.10 Toll Road Proposals. An ambitious program has been prepared to extend the existing370 kilometers inter-urban toll road network in Java. Construction of about 510 kilometers of new tollroads is proposed within the next ten years, most envisaged as build-operate-transfer (BOT) projects withterms of normally 25 to 30 years. Proposals at various stages of development, from initial study toconcession negotiations, exist to complete a toll road along the North Java Corridor. The state toll roadcorporation, PT Jasa Marga, will build and operate the 28 kilometers long Palimanan to Losari segment,which skirts Cirebon. Implementation plans are fairly well advanced, and it is expected to open in 2002.It is considered probable that the segment between Pemalang and Batang will be completed in 2006.The 75 kilometers long segment between Batang and Semarang is expected to open by year 2005.Opening of the Semarang to Demak segment is not expected until some time later, perhaps by 2007 or2008. No information is available on the implementation schedule for toll roads in the other sections ofthe corridor.

3.11 Experience of private participation in toll roads world wide and in Indonesia indicates thateffective private participation does not come about easily. GOI's outline masterplan for the strategicnetwork of high capacity limited access toll roads is generally sound, but is not well integrated withparallel plans for capacity expansion on public roads. GOI Policy is that there always has to be analternative public route to a toll road. Along the North Java Corridor GOI has taken a view that thealternative route should be a good quality four lane road. What needs to be done on a priority basis is tofirm up: (i) the most appropriate route alignments of the key links in the masterplan so that individualsections can be filled in as and when justified; and (ii) the appropriate timing of construction ofindividual high priority links in the light of the experience with toll road traffic growth and trafficdiversion of the past five years. Private funding over the next five years is likely to amount toUS$2 billion at the most. This would comprise: (i) urban toll road projects already committed and welljustified such as the Jakarta outer ring road and totaling some 50 km; and (ii) a program of economicallyand financially viable interurban toll road projects on the order of some 200 km involving funding ofanother US$1 billion.

D. NORTH JAVA TRAFFIC CHARACTERISTICS

3.12 Trafric Composition. Average traffic composition for Central Java is considerably different forurban and rural links, as shown in Table 3.2.


TABLE 3.2: TRAFFIC COMPOSITION, CENTRAL JAVA 1994 (PERCENT)

Vehicles Class Rural Urban

Cars 29.2 42.4Light passenger 16.7 20.9Light goods 21.3 16.4Buses 10.7 7.1Trucks 22.1 13.2

Total 4-wheel: 100.0 100.0(as % of 4-wheel total trafic).

Motorcycles 29.0 71.0Unmotorized vehicles 15.0 48.0

It should be noted that the term "rural link" may in many cases be a misnomer since a considerablenumber of "rural" links are in areas which are at least semi-urban (i.e., built up on both sides of the road)in character. For this project, traffic composition will tend to be similar to that for rural links.

3.13 The 1991 National Origin-Destination Survey. This survey provides some indication of travelpatterns for four wheeled traffic along the North Java Corridor. For the survey Central Java was dividedinto 35 zones involving 29 kabupaten and six kotamadya areas. Of these, 15 zones are located along theNorth Java Transport Corridor from Brebes in the west to Rembang in the east. Survey points were atkabupaten/kotamadya boundaries. The results are shown in Table 3.3. Intra-kabupaten trip distances areestimated to be between 40 and 90 kilometers with an average of about 50 kilometers. The average trafficvolume in the corridor of 11,000 vehicles (AADT) is at the lower end of the range estimated in the NJTCStudy as it will exclude most shorter distance trips (under 50 kms).

TABLE 3.3: NORTH JAVA TRANSPORT CORRIDOR (1991)ORIGIN/DESTINATION OF TRAFFIC IN CENTRAL JAVA SECTION

Origin/Destination AADT Percent

Within the North Java Corridor 4,400 39.9

Corridor to/from the rest of Central 2,000 18.2Java

Corridor to/from the rest of Java 1,040 9.5

Intra-Kabupaten 3,560 32.4

Estimated Totals 11,000 100.0


3.14 Traffic Growth Forecasts. Traffic growth on the national and provincial road network, andspecifically for the North Java Corridor, has been forecast by various previous studies including:HLRIP, NJTCS, and LTDP-II. These give a range of forecasts, from 5.3%-6.2% a year to 2002, and 4%-6.5% from 2003-2010. For this project, growth rates by vehicle type were determined, based on forecasteconomic growth, as discussed in Chapter 6.

E. CURRENT AND EMERGING ISSUES

3.15 Dense development, increasing urbanization and incomes are expected to continue to increasedemands for travel throughout Java and in particular within the North Java Corridor (NJC). Roadtransport's role will grow rapidly for both commercial and private transport. Attention has until nowmainly been focused on the inter-urban highways and the larger cities (within for example, IUIDPPrograms). The smaller but still significant small and medium size towns require assistance instrengthening land use planning, provision of strategic roads and strengthening secondary road networks(to prevent overloading of the primary networks).

3.16 Increasing congestion has been accompanied by delays and stop-start conditions at numerousbottlenecks in the corridor which are often within or on the approaches to towns. These slow conditionsgive rise to excessive levels of exhaust fumes and noise, and increased accident risk. Relief from thiscongestion would be beneficial for the quality of life within towns and for the medium to long distancecommercial vehicle and other traffic.

3.17 While appropriate strategic roads including bypasses are required in many urban areas in theNorth Java Corridor, they must be carefully located and implemented to ensure they are attractive to use,have a favorable effect on the growth patterns of the towns in question and are sensitive to the urbanfabric. Quality of design and implementation is paramount to realize benefits, mitigate negativeenvironmental and social impacts and to manage road use and abutting land use.


4. THE PROJECT

A. PROJECT ORIGIN AND FORMULATION

4.1 Previous Studies and Projects. A number of studies and projects funded by the Bank, ADBand OECF have considered the development of the interurban sections of the primary road network inIndonesia. While Indonesia has a relatively sophisticated road management system for interurban roads,there has been no systematic nation-wide consideration of urban sections of the primary road network.This is a shortcoming of increasing significance given the rapid urbanization in Indonesia.

4.2 In parallel, throughout Indonesia, Integrated Urban Infrastructure Development Programs(IUIDP) are being implemented and more are under preparation. IUIDPs include mainly water supply,sanitation, waste management, drainage, and road investments within a specific local government area(Kabupaten or Kotamadya) for a five year period. The road component generally covers construction,improvement and rehabilitation of secondary, collector and local roads, and should in principle alsoinclude primary roads which pass through the urban area. In practice major investments to primaryurban roads are often excluded from the IUIDPs for a variety of reasons, both of design approach (theneed to examine the relationship of individual links with the primary road network as a whole, as well aswith the local urban road network), and administrative responsibility.

4.3 The Program. The result of the current approach is that congestion on primary roads in urbanareas is not well addressed. Government of Indonesia (GOI) officials have expressed concern thatbottlenecks to economic growth are developing in urban areas, especially on Java, where the export-oriented manufacturing industry is concentrated. The Strategic Urban Roads Program has beenconceived to assist GOI in addressing these concerns. This program is seen as a series of projects withsimilar objectives and components, but with each project in different geographical areas and/or cities.

4.4 Strategic Assessment. A nationwide analysis of 306 cities was undertaken as part of projectpreparation. In order to analyze congestion problems, and identify possible future projects, the analysisdistinguished between groups of small to medium sized cities along a road corridor and larger cities withpopulations greater than 500,000. The split was due to the complexity of the problems to be analyzed,the potential packaging of investments, and the length of time required to prepare projects. Moresophisticated analysis is required for the larger cities including integrated land use/transport studieswhich must precede feasibility studies. On the other hand, it is fairly robust to have feasibility studies asthe starting point for project preparation in the corridors. Furthermore, issues such as those related toinvoluntary resettlement are also more tractable in such contexts.

4.5 The project. The GOI suggested that the North Java Corridor has the most pressing congestionproblem in the country. The analysis carried out for the Strategic Assessment confirmed GOI'sassessment. This project is the first of two projects intended to address bottlenecks in small andmedium-sized towns in the North Java Corridor. Within the corridor the Bank is currently engaged inurban projects with road components in Jakarta, Semarang and Surabaya. The ADB North Java RoadImprovement Project (ADB Loan 1428-INO) and the OECF Heavily Loaded Road Infrastructure Project(HLRIP-OECF IP 383) are supporting improvements to the interurban primary arterial road sections.The road sections being improved or prepared for improvement under this project will complete theupgrading of the North Java corridor route to four lane standard between Jakarta and Surabaya.


B. OBJECTIVES

4.6 Objectives. There are five objectives for this project:

a) to reduce traffic bottlenecks on the national roads in selected urban areas in the North Javacorridor;

b) to address the environmental and social issues associated with the increased usage of thenational road network in these urban areas;

c) to assist GOI in the process of decentralizing responsibility for the planning, design,construction, maintenance, management and regulation of urban transport from central tolocal government as set out in recent government regulations;

d) to strengthen technical and institutional capabilities, particularly with respect to dealingwith environmental and social issues, of GOI's central and local government agenciesinvolved in urban road development and management. and

e) to assist GOI in the formulation, articulation and implementation of urban transport policy.

4.7 Requirements. In meeting these objectives, the project should satisfy thefollowing requirements:

a) to ensure that any new road provision in the selected urban areas includes measures whichfacilitate the efficient, equitable and environmentally sustainable use of new road capacity

b) to ensure that the provision of primary urban roads in the selected urban areas is fullyintegrated with regional and urban spatial planning and Integrated Urban DevelopmentPrograms (IUDP) at the local government level; and

c) to ensure the most effective and efficient utilization of the existing road network.

C. MONITORING PROJECT OUTCOMES

4.8 Indicators for monitoring the outcome of the project against the five objectives are shown inTable 4.1 and discussed in Annex 2. Indicators for monitoring inputs (disbursements, contracts awarded,person months of technical assistance), and outputs (physical works completed, policies and guidelineswritten, persons trained) will be reported as part of normal project management. They are described inChapter 5. Indicators have been developed from two recent papers: "Performance Indicators for theRoad Sub-Sector: Concepts and Examples for Indonesia" given at a presentation of DGH in May 1995,as well as from the Highway Mode Indicators in the First Edition Note "The Use of Sectoral and ProjectPerformance Indicators in Bank Financed Transport Operations" (Report TWU 21) April 1995.

4.9 To the extent possible, quantifiable indicators have been selected. Where this was not possiblethe ratings will be based on the professional judgment of suitably qualified GOI and Bank staffmonitoring the project. Indicators have been selected which should be monitored by agencies as part ofnormal operations in accordance with international good practice. Where this monitoring is not currentlybeing undertaken, the project will assist in establishing the data collection and analysis procedures.Review of the indicators will be included in the joint GOI/Bank formal annual review of the project.


TABLE 4.1: PROJECT OUTCOME INDICATORS

Objective Target Outcome

a) Reduce traffic bottlenecks on the national All seven bypass sub-projects attract at least 80% ofroad network in selected urban areas in the N. forecasted through traffic and operate without congestionJava corridor. over most (80%) of their length.

b) Address the environmental and social issues Project affected persons (PAP) who have to be resettledassociated with the usage of the national road have their living standards improved.network.

c) Assist GOI in the process of decentralization All eight DLLAJ established, staffed, staff trained andof responsibilityfor urban transport participated in the preparation and implementation of those

parts of the project within their areas of responsibility.

d) Strengthen capabilities of GOI's central and Environmental Assessment, Management and Monitoringlocal government agencies involved in urban fully integrated into project preparation, and influencingroad development and management planning, design and implementation of at least 90% of

BINKOT projects.

e) Assist GOI in the articulation and Central Government Urban Transport Policy agreed andimplementation of urban transport policy. incorporated into the Transport Sector part of REPELITA

VII.Note: Indicators for monitoring inputs, outputs and project progress are shown in Table 5.4.

4.10 The outcome indicators chosen are directly related to project inputs and outputs. Theseoutcomes can be influenced by the GOI and the Bank. The GOI can influence the outcome bymonitoring progress through good practice project management and taking corrective action asappropriate. The Bank can influence the outcomes through active supervision and the annual review.During negotiations agreement was reached on the outcome indicators and that project outcomes willbe surveyed approximately one year after the conpletion date of any sub-project

D. PROJECT DESCRIPTION

4.11 The project is made up of five components:A. Road ConstructionB. Urban Management and Quality of Life ImprovementsC. Institutional and Human Resource DevelopmentD. GOI Urban Road Program DevelopmentE. Policy Articulation and Implementation

Component A: Road Construction (US$132 million)

4.12 This component corresponds to objectives (a) and (b). It consists of seven sub-projects (roadschemes):

* completion or new construction of ring roads or bypasses on new alignments around fourtowns: Weleri, Kaliwungu, Demak and Kudus; and

* widening and improvement to existing ring roads or bypasses around three towns: Cirebon,Pemalang and Semarang.


All the towns are in the Central Java Province, except Cirebon, which is in West Java. The total roadlength is some 57 kms. The cost includes land acquisition (including resettlement) and construction,remaining scheme preparation, (including final engineering design, environmental and resettlementaction plans) traffic signals, construction supervision, project management and performance monitoring.The works include construction of culverts, bridges, road junctions, junction approach roads, andmeasures to address environmental and social considerations. Subprojects are described in Annex 3.

4.13 All roads are being designed to a dual two lane carriageway standard, with an overall crosssection width of 22 meters. The roads are also being designed for limited access with widely spacedjunctions (minimum spacing 500m), with signal control or grade separation. Bridges are provided overrailways, where justified economically on operational and engineering grounds. Further details of theroad design standards are given in Annex 4. A Right of Way (ROW) width of 40 meters has beenadopted for these roads to provide adequate space at junctions, and to permit later provision of frontageroads if required. Land is being acquired for the 40 meter ROW, with a minimum initial acquisition of a22m ROW. The sub-projects are in different stages of design. Final Engineering Design (FED) iscomplete for the Weleri sub-project, and all other FED is scheduled to be completed by December 1996.A programmatic approach to the approval of the subprojects will be used. Selection of a sub-project inaccordance with the criteria set out in Annex 5, Bank approval of the sub-project, and whereapplicable implementation of the RAP acceptable to the Bank, will be a condition of disbursement.These criteria have been met for the Weleri sub-project, scheduled to start construction in year I of theproject.

Component B: Urban Management and Quality of Life Improvements (USS 32.3 million)

4.14 The objective of this component is to take advantage of the diversion of through traffic toimprove the quality, safety and amenity of the urban environment, and to enhance business functions.While Components A and B are described separately, they are considered as complementary packages ofphysical works. In any town, both components are necessary to meet the objectives of the project, andachieve the economic, social and development benefits. Funding of the construction of by-passes will bepredicated on local governments agreeing to prepare and implement this component. To ensure theexisting road space is not used merely to accommodate more motorized traffic, a series of traffic,environmental, and land use management measures will be implemented once the bypasses are open totraffic. Local governments will be assisted to prepare and implement this component according toagreed eligibility criteria for funding.

4.15 This component comprises these activities:

Bi A Traffic and Environmental Management Plan for the existing road and adjacent areasto be implemented once the by-pass is opened including road scheme subprojects and othercivil works to be included in the medium term expenditure program (PJM) for the town,with a time based implementation schedule;

B2 A Structure Plan Review. Carrying out reviews of the impact of the construction of thebypass on the land use plan/strategic structure and transport investment plans (PJM) foreach town, together with time based proposals for any additional road scheme subprojectsrequired as a result of this review to be included in the traffic and environmentalmanagement plan; and

B3 Protection of the function and the Right of Way of the bypass, through regulations, andby making provision for development at acceptable locations along the bypass.


B4 Provision of equipment for routine road maintenance of the existing road and otherroads in the larger participating local governments, including training of operators.

4.16 Outline scopes of the activities, detailed guidelines on traffic and environmental managementmeasures, and civil works suitable for funding are set out in Annex 6. A time based approach to thepreparation of a potential package of measures for each town, as well as to carry out the reviews of theStrategic Structure Plans and transport investment plans has been developed. This approach will includelocal participation of business and civic groups, is also shown in Annex 6. Selection of a road schemesub-project in accordance with the criteria set out in Annex 6, Bank approval of the sub-project, andwhere applicable implementation of the RAP acceptable to the Bank, will be a condition ofdisbursement.

Component C: Institutional and Human Resource Development TA (US$ 2.2 million)

4.17 This component will assist in the decentralization of responsibilities for urban transport(including roads, traffic management and public transport) from central to local government, as set out inLaw 14 of 1992 and the subsequent enabling regulations, and the strengthening of BINKOT to deal withenvironmental and social issues. The component consists of activities directly linked to construction andoperation of the SURIP bypasses, as set out below.

4.18 Cl Strengthening of DLLAJ in participating local governments. Based on theirresponsibilities under GOT regulations DLLAJ in the participating local governments covering projecttowns should take the lead in preparing and implementing the "Quality of Life" improvements, whichshould be put in place once the bypasses are open to traffic. For this reason, and to benefit from thelessons learned from RCUTP, the initiation by the participating local government of the process for theestablishment of DLLAJ is a condition of sub-project approval as indicated in Annex 5. As the DLLAJare new organizations, they will need TA support in their initial period of operation. The project willprovide support for the institutional strengthening of the newly established DLLAJ and training of localgovemment staff in the DLLAJ to fulfill their new roles using training material already prepared underprevious Bank funded projects. The TA will include preparation of draft guidelines for traffic andenvironment area management.

4.19 C2 Strengthening of BINKOT AMDAL Section. This activity will provide further operationalsupport to BINKOT AMDAL Section. The TOR for this further support will be similar to the TOR forthe TA funded under HSL 2, a copy of which is on the project file. The support will be scheduled so thatthe BINKOT AMDAL Section can take the lead role in the environmental management and monitoringof the road scheme sub-projects. This TA will also support updating of BINKOT technical guidelines onthe environmental and resettlement aspects of urban roads.

Component D: Urban Road Program Development (US$ 0.6 million)

4.21 This component is intended to provide on initial step in improving the road planning system forurban areas. Technical assistance support will be provided to BINKOT for the creation and updating of adatabase to support the urban road investment program, as part of the overall Urban Road ManagementSystem (URMS) which is being implemented progressively on a modular basis with support from theBank and ADB. The database will be established at a national level, but designed to be capable ofapplication also at a provincial or local government level. Support under this project will assist BINKOTto complete the establishment of a road network data base for 306 cities, to analyze the data and toupdate previous analysis from SURIP project preparation and the Road Sector Study.


Component E: Policy Formulation and Articulation (US$ 0.6 million)

4.23 This component will provide Technical Assistance (TA) to GOI in the articulation andimplementation of urban transport policy. There are two activities, Urban Transport Policy andPrograms, and Planning, Programming, and Execution of Urban Road Works.

4.24 El Urban Transport Policy and Programs. Under this sub-component, support is to beprovided to the Interministerial Working Group (established formally in December 1995 byBAPPENAS) to prepare by mid 1997 an urban transport policy for incorporation in the Transport Sectionpart of REPELITA VII. A Japanese PHRD grant fund of $1.34 M equivalent has been obtained to assistGOI to formulate a national urban transport policy framework, and within this framework to developurban transport policies and investment programs for case study cities.

4.25 E2 Planning, Programming and Execution of Urban Road Works. This activity will provideconsultant services to support BINKOT in the preparation/updating of existing policies, procedures andguidelines, on the planning, design and management of urban roads for application at the national andlocal level, including for IUDP. This activity will complement the institutional development activity inBINKOT and will be undertaken in parallel with the preparation of other potential SURIP projects. Itwill also extend similar policy development activities for interurban roads being undertaken as part of theBank funded Second Highway Sector Loan. Initial technical areas to be addressed will includefeasibility studies, functional design guidelines, economic evaluation, , and IUDP. Further details areprovided in Annex 7.

E. ENVIRONMENTAL CONSIDERATIONS

4.26 Impacts. The proposed project has been classified as environmental category A under theBank's procedures as significant impacts are expected to occur. The construction of new roads in oradjacent to existing urban areas impacts on the environment, particularly in terms of noise, air pollution,road safety and community severance. Air and noise pollution are to be expected to accompany theconstruction of the road schemes. However the by-passes will relieve the existing roads through thecenter of the towns of the through-traffic of trucks and buses. This will reduce levels of noise and airpollution in town centers and enhance their role as a focus for social interaction.

4.27 Environmental Procedures. The legal basis for environmental protection and management inIndonesia was substantially modified by Government Regulation No. 51 of 1993 (PP 51/1993). Thisrecent legislative change has served to extend the AMDAL system to an activity which is "required aspart of the decision-making process". While overall coordination of the AMDAL system rests with theEnvironmental Impact Management Agency (BAPEDAL), central and provincial level governmentagencies are directly responsible for implementing these procedures.

4.28 Bina Marga has recently finalized an AMDAL screening process for road projects, shown inAnnex & This process is being applied to road schemes in this project. This screening process providesa systematic approach to environmental impact assessment, monitoring and management, based on aproject's type, scale and location in relation to a range of sensitive environmental areas. For all projectsthat may result in significant environmental impacts and/or involve sensitive environmental areas, thepreparation of an ANDAL study (a detailed environmental impact assessment) is required and will besubmitted to the Bank as part of the sub-project approval process. Such ANDAL studies substantiallycomply with World Bank requirements for project-specific environmental assessments.


4.29 Sub-Projects. An overriding objective of BINKOT and the Bank in reviewing the alignmentand detailed design of the urban road sub-projects proposed for the project has been to avoid resettlementas far as possible and to minimize the adverse impact on the environment. The EnvironmentalAssessment (EA) has been completed, and a summary EA prepared for the five schemes beingconsidered for construction starts in years I and 2 of the project. These are Stage I of the Cirebon andPemalang by-passes, Weleri, and Kaliwungu bypasses and Semarang Northern bypass Stage 1. Thissummary in Bahasa Indonesia has been made available for public inspection in the affected localities.Weleri and Kaliwungu by-passes are on green field alignments, but in both cases there is a Kampung(village) close to the road which will suffer significant increases in noise and pollution levels. Noisebarriers or mitigation measures are required for compliance with draft Indonesian standards.Environmental Management and Monitoring Plans have been prepared.

4.30 EAs for sub-projects to be constructed in later years are in progress, and are part of the processfor completion of road scheme sub-project design which has been agreed with GOI. Critical issueswhich will be included in these documents are included in Annex 8. The need for full ANDAL (EIA)studies has been agreed for the flyovers being evaluated for the railway crossings on the Cirebon by-pass(stage 2) and the Kalibanteng roundabout at the western end of Semarang Northern Ring Road. For roadschemes sub-projects, completion of satisfactory EA, management and monitoring plans is one of thecriteria that have to be met before the sub-project is approved as indicated in Annex 5.

F. LAND ACQuISITION, RESETTLEMENT AND SOCIAL CONSIDERATIONS

4.31 Presidential Decree 55 (KEPRES 55, 1993), on land acquisition for public facilities, seeks toensure adequate access to information, fair negotiations, compensation awards based on real values, andrights of appeal to the courts. KEPRES 55 still has gaps primarily in the areas of entitlement eligibilityand funding sources, and time will be required to develop implementation capacities based on localexperiences. Land acquisition and resettlement are required for the road schemes. Every effort has beenmade in designing the road sub-projects to minimize resettlement. Some land acquisition took placeprior to KEPRES 55/1993, using national funds (APBD), and before Bank identification of the project.Some resettlement has taken place within the framework of KEPRES 55. Further resettlement will bebased on policy guidelines which resolve the differences between KEPRES 55 and OD 4.30. A singlelocal government decree Surat Keputusan (SK) Walikota/Bupati has been issued by the localwalikotas/bupatis. To clarify the policy and procedures described in the decree, further explanation isrequired, to be provided by a Juklak (Implementation Guidelines) to be issued by each walikota/bupati.A draft model Juklak was agreed at negotiations. Together the Surat Keputusan and Juklak will providethe policy and procedures framework and describe a Resettlement Action Plan that will be furnished tothe Bank as part of the process for approval of sub-projects. Approval and issuance by eachwalikota/bupati of the Juklaks, taking into account the agreements reached at negotiations, will be acondition of loan effectiveness.

4.32 Some 63 hectares have been acquired and a further 58 hectares of land are to be acquired for theby pass sub-projects. Land acquisition requirements are being refined as final engineering designs arecompleted. Some 1800 families are affected by the by passes at Cirebon, Pemalang, Weleri, Kaliwunguand Kudus. Only 52 families of the 1800 families affected require resettlement for the bypass sub-projects at Weleri, Kaliwungu and Kudus. Requirements for other sub-projects are still beingdetermined. Detailed resettlement action plans for sub-projects will be prepared and submitted to theBank for review as part of the programmatic approval process for sub projects agreed with GOI. Tominimize resettlement needs at Pemalang, a new alignment is being investigated for the western sectionof the bypass. At Weleri, the bypass runs through the edge of a Kampung (as noted above). The road is


to be constructed on an embankment to maintain a local road connection between the two parts of theKampung, mitigating the severance.

G. PROJECT COSTS

4.33 For the road construction component (Component A), costs are generally based on FED andinclude a 5% physical contingency. For some short sections, costs are based on preliminary designs andinclude a 10% physical contingency, which will be reduced to 5% when FED is completed.

4.34 The direct and indirect foreign exchange component has been estimated based on recent Bankprojects of a similar nature. Price contingencies have been estimated based on rates of inflation of 2.3%foreign and 6.0% local. For the Quality of Life Component (Component B), costs are based onpreliminary estimates of the resources required to undertake work of a similar nature in other towns aspart of the Bank-funded IUIDPs, and include a 15% contingency. The resulting costs are shown inTable 4.2. Further details are provided in Annex 9.

H. FINANCING

4.35 The proposed Bank loan of US$86.9 million would finance about 52% of total project cost,representing 100% of foreign cost and 35% of local cost. GOI would finance the remaining US$80.7million equivalent, or about 48% of the total estimated project cost, through annual budgetaryallocations from the central government budget APBN. The financing of the proposed project is shownin Table 4.3.


TABLE 4.2: PROJECT COST SUMMARY

Rupiabs US Dollars % % of % of

COMPONENT (Billion) (Million) Foreign Base Total

Local Foreign Total Local Foreign Total Exchange Cost Cost

A. ROAD AND BYPASS CONSTRUCTIONLand Acquisition and Resettlement 14.91 14.91 6.48 6.48 4.8% 3.90/6

Civil Works 128.79 69.35 198.13 55.99 30.15 86.14 35.0% 64.2% 51.4%

Goods (Traffic Lights) 0.34 6.49 6.83 0.15 2.82 2.97 95.0% 2.2% 1.8%

Engineering Services 11.46 3.82 15.28 4.98 1.66 6.64 25.0% 4.90/. 4.0%o

Performance Indicator Surveys 1.05 0.35 1.40 0.46 0.15 0.61 25.0/o 0.5% 0.4%

Project Management Unit (PMU) Support 6.90 2.30 9.20 3.00 1.00 4.00 25.0% 3.0O/. 2.4%

Subtotal 163.44 82.30 245.74 71.06 35.78 106.85 33.5% 79.6% 63.7%

B. URBAN MANAGEMENT ANDQUALITY OF LIFE

Civil Works (APBN) 7.08 3.81 10.90 3.08 1.66 4.74 35.0% 3.5% 2.8%

Civil Works (APBD) 24.88 13.40 38.28 10.82 5.82 16.64 35.0% 12.4% 9.9%/0

Goods (Road Maintenance Equipment) 0.09 1.68 1.77 0.04 0.73 0.77 95.0% 0.6% 0.5%

Engineering Services (APBN) 0.61 0.20 0.81 0.26 0.09 0.35 25.0% 0.3% 0.2%

Engineering Services (APBD) 2.29 0.76 3.06 1.00 0.33 1.33 25.06% 1.0% 0.8%

Urban Planning Review 0.86 0.29 1.15 0.38 0.13 0.50 25.0%h6 0.4% 0.3%

Subtotal 35.81 20.15 55.96 15.57 8.76 24.33 36.0% 18.1% 14.5%

C. INSTITUTIONAL AND HUMANRESOURCE DEVELOPMENT

DDLAJ Development and Training 1.73 0.58 2.30 0.75 0.25 1.00 25.0%/. 0.7% 0.6%

BINKOT AMDAL Unit 1.73 0.58 2.30 0.75 0.25 1.00 25.00N 0.7% 0.6%

Subtotal 3.45 1.15 4.60 1.50 0.50 2.00 25.0% 1.5% 1.2%

D. URBAN ROAD PROGRAIMDEVELOPMENT

Urban Road Database Development 0.86 0.29 1.15 0.38 0.13 0.50 25.0% 0.4% 0.3%

Subtotal 0.86 0.29 1.15 0.38 0.13 0.50 25.0% 0.4% 0.3%

E. POLICY FORMULATION ANDARTICULATION

Urban Transport Policy and Programs <- Japan Grant Fund

Planning. Progranming and Execution of 0.91 0.30 1.21 0.39 0.13 0.525 25.0% 0.4% 0.3%Road Works

Subtotal 0.91 0.30 1.21 0.39 0.13 0.53 25.0% 0.4% 0.3%

TOTAL BASE COST 204.47 104.19 308.66 83.90 45.30 134.20 33.8% 100.0%/ 80.1%

Physical Contingencies 15.32 8.88 24.20 6.66 3.86 10.52 36.7% 7.8% 6.3%

Price Contingencies 24.74 12.49 37.23 10.75 5.43 16.19 33.6% 12.1% 9.7%

Taxes (GOI Expenditure) 10.07 5.39 15.46 4.38 2.34 6.72 34.90/o 5.0% 4.0%

Subtotal Contingencies and Taxes 50.13 26.76 76JS9 21.79 11.64 33.43 34.8% 24.9% 19.9%

TOTAL PROJECr COST 254.60 1130.95 3815.55 1110.70 156.94 1167.63 1 34.0%1 124.9%1 100.0%

Notes: 1. Engineering services includes Final Engineering Design (FED), Environmental and Resettlement Plans, and ConstructionSupervision.

2. Institutional Development includes training.3. Valued Added Tax (PPN) is assessed only on GO[ ftnanced proportion of the project.


TABLE 4.3: PROJECT FINANCING PLAN

Components A, C-E Component B Total

Billion Rp IMillion USI % of total Billion Rp. I Million US S I % of total Billion Rp I Million US % of total

Central Govemment 139.8 60.8 44.9% 7.9 3.4 10.5% 147.7 64.2 38.3%

Local Govemments 15.6 6.7 5.0 22.40 9.8 30.4% 38.0 16.5 9.8

IBRD 156.0 67.8 50.1% 43.9 19.1 59.1% 199.9 86.9 51.9°/.

Total Financing 311.4 135.3 100.0% 74.2 32.3 100.0% 385.6 167.6 100.0%

Note: Local Govemment financial contribution towards by-passes is for land acquisition.


5. PROJECT IMPLEMENTATION

A. IMPLEMENTING AGENCIES

5.1 Project. The project falls within the general responsibilities of BAPPENAS, Deputy Chairmanfor Infrastructure Development.. Within the Transportation Bureau, the IWG for urban transportationwill oversee the planning and implementation of urban transportation programs. It will be theresponsibility of the IWG to steer and monitor the progress of the project, to ensure that it meets nationalgoals and objectives and to facilitate coordination among the different ministries and across departments.The Directorate General of Highways (DGH) of the Ministry of Public Works is the Executing agency.The Directorate of Urban Road Development (BINKOT) of DGH is the lead implementing agency forthe project. Implementation is to be managed through a Project Management Unit (PMU) to beestablished within BINKOT and described in Section C.

5.2 Components. Existing agencies at the central and local government levels will be responsiblefor the day to day implementation of individual sub-components, as follows:

A. Road Construction. All sub-projects will be implemented directly by BINKOT. Landacquisition and resettlement for schemes is the responsibility of the individual participatinggovernments.

B. Urban Management and Quality of Life. This component and sub-projects will beimplemented by the participating local governments through BAPPEDA Tkll, except forsub components on primary urban roads, which will be implemented by BINKOT.Planning and design of the traffic and environmental management measures will beundertaken by the DLLAJ, and implementation by the local government Public WorksDepartment (DPUK).

C. Institutional and Human Resource Development. Overall responsibility for the sub-component Cl program of strengthening the DLLAJ in the project towns will be theresponsibility of DGLT (MOC) assisted by DG PUOD (MHA). In individual localgovernments responsibility will fall on the BAPPEDA TkII. Responsibility forstrengthening BINKOT AMDAL section rests with BINKOT.

D. Urban Road Program. This component will be implemented by BINKOT.

E. Policy Development. Sub-component El - Urban Transport Policy and Programs will beimplemented by the BAPPENAS Urban Transport IWG. The lead agency for sub-component E2 Planning, Programming and Execution of Urban Road Works will beBINKOT.

B. IMPLEMENTATION PROGRAM

5.3 The Project Implementation Memorandum (PIM) will document the respective roles,responsibilities and procedures for project implementation, in the form of a memorandum ofunderstanding between DGH, DGLT and the participating local governments. Annex 10 displays a draftmodel PIM, agreed during negotiations. Signature of thefinal PIM will be a condition of effectiveness.


5.4 The Project Implementation Plan (PIP) is a technical working document for use by the PMU inthe project management of the implementation of all components of the project during the period of theloan. The PIP will include the implementation schedule, procurement plan, disbursement schedule,performance indicators and monitoring for the overall project and for individual sub-projects andactivities. A draft PIP is in the project file. The PIP will also indicate all implementation activities to beundertaken in any GOI fiscal year. This information will provide the framework for the preparation bythe implementing agencies of annual work programs.

5.5 Annual Work Programs. Based on the provisions of the PIM, and the technical framework inthe PIP, Annual Work Programs (AWP) will be drawn up by BINKOT, DGLT and the participating localgovernments. Through the AWPs, these implementing agencies would commit themselves to undertakein a given year specific sub-projects and activities of the project, and to achieve specific targets. Thedraft AWPs will be prepared by July 31 of each year, for presentation to the GOI/Bank Annual ReviewMeetings in October, and finalization by the following April 15. It will be the responsibility of the PMUto assemble the AWP's into a single document for presentation to the Annual Review Meetings, and toupdate the PIP to reflect the finalized AWPs.

5.6 An outline of the AWP agreed at negotiations is presented in Annex 11. BINKOT is the onlyexecuting agency with any expenditure scheduled for year 1, (GOI FY 96/97). Assurances were givenby GOI at negotiations that (a) the A WP for year 1 will be adopted by BINKOT not later thanNovember 1, 1996 and (b) commencing on April 5, 1997 and thereafter by April 15 in each year untilcompletion of the project, A WP will be adopted by BINKOT, DGLT and each of the participating localgovernments. Executed A WP documents for each participating local government for year 2 of theproject (GOI FY 97/98) will be a condition of disbursement.

5.7 Annual Review Meeting. The annual review of the project will provide the opportunity toreview the progress of the implementation of the project, and to institute actions to mitigateunsatisfactory performance. The review will take place by October 31 of each year, to coordinate withthe GOI Budget process, and to ensure appropriate provision is made for counterpart funds in GOIbudgets. The review will focus on the following:

a) the evaluation of progress for the preceding fiscal year;b) the draft AWPs proposed for the following fiscal year; andc) performance monitoring targets.

The proposed arrangement for annual reviews by October 31 of each year were confirmed by GOI atnegotiations.

C. PROJECT MANAGEMENT

5.8 The PMU in BINKOT will be responsible for the day-to-day management of the project, andensuring the overall technical quality of the project implementation. Specific responsibilities of thePMU include:

a) preparing and maintaining a detailed project implementation schedule for all sub-projectsand components including key activities to be undertaken, and key milestones to beachieved, in accordance with the loan agreement;

Strategic Urban Roads Infrastructure Project -3 1 - Staff Appraisal Report

b) ensuring that procurement of goods, works and consultant services uses standard documentsand follows Bank guidelines, particularly with regard to prequalification, shortlisting andbid evaluation;

c) establishing, maintaining and monitoring a uniform project accounting system includingpreparation, consolidation and auditing of Project accounts;

d) monitoring and reporting inputs and physical and financial progress towards the outputs ofall sub-projects and sub-components;

e) advising on alternative courses of corrective action when physical or financial progresstowards project outputs deviates from agreed targets and limits;

f) preparation of monthly, quarterly and annual reports on overall Project implementation, andsubmission of these reports to the Bank for its review and approval;

g) review of the AWPs, including targets for project output indicators, and their assembly intoa single document for the annual review meetings;

h) finalizing TOR for consulting services, including for consulting services not financed underthis project for preparation of future SURIP projects;

i) reviewing proposed sub-projects and submitting them to the Bank for approval;

j) preparing and issuing guidelines and standard operating procedures for the implementationof sub-projects by participating local governments;

k) supervision of the implementation of environmental mitigation and management measures;and

I) establishing and maintaining the monitoring of project outcome indicators and other projectindicators.

5.9 The PMU will be supported by a consultant. The TOR and shortlist for these consultant servicesare on the project file. Establishment of the PMU will be a condition of disbursement. At negotiationsit was agreed that the PMU will be established about one month after the signing of the LoanAgreement, and that the consultants to assist the PMU will be mobilized about one month after loaneffectiveness.

D. IMPLEMENTATION SCHEDULE

5.10 The project will be implemented over five years, starting in GOI FY 96/97 (year 1), and becompleted in GOI FY 2001/02 as shown in Annex 9. A project launch workshop will be scheduled closeto loan effectiveness. The program of civil works is scheduled to commence procurement afternegotiations, with contracts scheduled to be awarded once the loan is effective. For road schemessubprojects scheduled to start construction in year 1, the criteria for approval listed in Annex 5 have beenmet, and contract documents have been submitted to the Bank for review. Design for later year schemesis largely complete, with all design scheduled to be completed by mid December 1996. Designs for


Component B 1 will be finalized during the construction of the bypasses, with construction starting soonafter the bypasses are open to traffic.

5.11 Outline TOR for all consulting services and TA have been prepared. Shortlists of consultants forconsulting services are being drawn up. The remainder of the request for proposals package forconsulting services will use standard documents.

E. PROCUREMENT

5.12 Procurement of works and goods will follow the "Guidelines for Procurement under IBRD Loansand IDA Credits" dated January 1995 and revised in January 1996. Large civil works contracts costingUS$3 million equivalent or more and goods contracts costing US$250,000 equivalent or more would beprocured following International Competitive Bidding (ICB) procedures, using the Bank's standardbidding documents (SBD). A general procurement notice would be issued in advance to encourageparticipation of eligible parties. Domestic preference would be provided during bid evaluation at a rateof 15 percent of the CIF price or the applicable customs duty, whichever is lower for local manufacturersparticipating in the ICB procurement of goods. Smaller civil works contracts, valued at less than US$3 million equivalent up to an aggregate amount of US$25.8 million, and goods estimated to cost lessthan $250,000 equivalent, up to an aggregate amount not to exceed $550,000, may be procured underNational Competitive Bidding (NCB) procedures acceptable to the Bank. All consultant services underthe Bank loan would be procured by the responsible agency for each contract in accordance with the"Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as ExecutingAgency" dated August 1981. The Bank's standard form of contract for Consultant's Services, datedJune 1995 will be used.

5.13 Prequalification. Invitations for prequalification or bids concerning large, specialized, orimportant contracts (that is contracts estimated to cost the equivalent of US$10 million or more) wouldbe advertised as Specific Procurement Notices (SPN) in the U.N. Development Business and/or well-known technical magazines, newspapers, and trade publications of wide international circulation.Contractors for civil works of US$3 million equivalent or more in value would be pre-qualified inaccordance with procedures satisfactory to the Bank. The Bank's standard documents forprequalification will be used.

5.14 Procurement Review. The following will be subject to prior review by the Bank: civil workscontracts of US$3 million equivalent or more in value; goods contracts of US$250,000 equivalent ormore in value; and consultant contracts with an estimated value of US$100,000 or more for engagementof firms and US$50,000 or more for the hiring of individuals. The first contract for civil works andgoods for each implementing agency would also be subject to prior review by the Bank, to assure use ofstandard procedures and contract forms. The balance of contracts, including those reimbursed understatements of expenditure, would be subject to selective post-review by the Bank. TORs for allconsulting services, including engineering design and construction supervision, studies, other technicalassistance, and all single source selections would also be subject to prior review by the Bank. Priorreview by the Bank is expected to cover approximately 80% of the total value of civil works contractsfinanced by the project, and approximately 80% of the total value of goods contracts financed by theproject.

5.15 Procurement Design. Where technically feasible and administratively practical, sub-projectshave been packaged together for tendering. Procurement of physical components has been kept separatefor each agency, and for each level of government to avoid administrative delays and complex payment


procedures. Table 5.1 summarizes the procurement arrangements. Details of procurement packagingare in Annex 12.

Table 5.1: PROCUREMENT ARRANGEMENTS (US$ million)

Expenditure ICB NCB Other A N.B.F. Total CostCategory

Civil Works

Centrally Contracted 106.7 2.7 0.0 109.4(53.3) (1.4) (0.0) (54.7)

Locally Contracted 0.0 22.1 0.0 22.10.0 (13.3) (0.0) (13.3)

Goods 3.4 0.6 0.0 0.2 4.2(3.2) (0.5) (0.0) (3.7)

Consultant Services

Engineering Services (FED & Supervision) 9.3 9.3(7.7) (7.7)

Other Implementation Support TA 5.7 5.7(4.7) (4.7)

Institutional Development TA 0.6 0.6(0.5) (0.5)

Policy Support TA 0.6 0.6(0.5) (0.5)

Training 2.2 2.2(1.8) (1.8)

Land 6.8 6.8

Taxes and Duties 6.7 6.7

Total Project Cost 110.1 25.4 18.4 13.7 167.6(56.5) (15.2) (15.2) (86.9)

- ~~~~~~~., -. . ... ..................... ...... , .. -. ... ...

Notes: Figures in parentheses are amounts financed by IBRD.a) Includes selection of consultants following IBRD guidelines.b) Not Bank Financed (Goods NBF are vehicles for routine road maintenance).

F. DISBURSEMENTS

5.16 Disbursement Rates. IBRD loan disbursements will be made at the following rates for thevarious expenditure categories as detailed in Table 5.2 below: (a) civil works - 50% of total costs forworks contracted by central GOI agencies, and 60% of total costs for works contracted by theparticipating local governments; (b) goods - 100% of foreign expenditures, 100% of local expenditures(ex-factory cost), and 65% of local expenditures for other items procured locally; (c) consultant servicesand training - 80% of total costs for ervices contracted and training, and 100% of costs of servicescontracted by the participating local governments. The estimated Bank disbursements by Bank fiscalyear based on a planned effectiveness date of October 1996 are given in Table 5.3. Disbursements by


quarter, compared to the standard profile are shown in Annex 13. The loan closing date is September 30,2001.

TABLE 5.2: DISBURSEMENTS (US$ MILLION)

Category Loan Amount Disbursement Percentages

l) Civil works for Sub-projectsa) Contracted by central GOI agencies 50.8 50% of total costsb) Contracted by the participating local 11.8 60% of total costs

governments

2) Goods for Sub-projects contracted by 3.5 100% of foreign expenditurescentral GOI agencies

100% of local expenditures(ex-factory cost), and

65% of local expenditures forother items procured locally

3) Consultants' servicesa) Contracted by central GOI agencies 11.3 80% of total costsb) Contracted by the participating local 2.1 100% of total costs

governments

4) Training1.8 80% of total costs

5) Unallocated 5.6

TOTAL 86.9Notes: Loan Amount for categories I to 4 has been calculated by applying the disbursement rate to the total cost excluding

physical contingencies.

TABLE 5.3: ESTIMATED IBRD DISBURSEMENTS BY IBRD FY (US$ MILLION)

1997 1998 1999 2000 2001 2002

Annual 10.0 22.6 20.9 18.8 12.1 2.5Cumulative 10.0 32.6 53.5 72.3 84.4 86.9

Note: Disbursements are based on a planned effectiveness date of October 1996.

5.17 Special Account. In order to facilitate disbursements, GOI would establish a Special Account inthe amount up to US$7 million in Bank Indonesia, corresponding to four months of estimateddisbursements. This account should be maintained by the Director General of Budget in the Ministry ofFinance. The Special Account would be used for all eligible foreign and local expenditures.Replenishment of the Special Account will be made on a monthly basis, or when 20% of the SpecialAccount balance has been used, whichever comes first.


5.18 Disbursements from the Loan for the following contracts would be made against fulldocumentation: (a) civil works contracts valued at US$3 million equivalent or more; (b) goods contractsvalued at or more than US$250,000 equivalent and (c) consultant services contracts with consultingfirmns valued at or more than US$100,000 equivalent and with individual consultants valued at more thanUS$50,000 equivalent. All other disbursements, including first contracts by implementing agencies,would be made against statements of expenditure for which relevant documents would be retained by theMOF Directorate General for Budget Administration (DG TUJA) and the implementing agencies andmade available to the Bank for review upon request.

G. FINANCIAL MANAGEMENT

5.19 Project Accounts and Audits. The BINKOT PMU will have overall responsibility forestablishing, maintaining and monitoring a uniform project accounting system. The PMU will alsoprepare project accounts of all components implemented directly by the central agencies. Projectaccounts for sub-components implemented by local governments will be the responsibility of thestructural financial agency within the local government secretariat. The BINKOT PMU will also beresponsible for consolidating quarterly project accounts and submitting them annually for consolidatedaudit purposes by the BPKP Central Office. The PMU will also coordinate statements of expenditureaudits with the Directorate General for the Budget, Bank Indonesia and the State Audit Board's CentralOffice. At negotiations, assurances were given by GOI that:

a) the implementing agencies would keep separate accountsfor the proposedproject;b) the project accounts, including documentation for statement of expenditures will be

audited annually by independent auditors acceptable to the Bank; andc) the consolidated audit reports will be submitted to the Bank within six months after the

end of each fiscal year.

H. PROJECT MONITORING

5.20 The PMU will be responsible for monitoring project inputs, outputs and other indicators. Projectinputs include contracts awarded, contract commitments, disbursements, and person months ofconsultant services. Project outputs are discussed below. Other monitoring indicators include noise andair pollution (part of environmental monitoring), road accidents (part of social monitoring), and trafficspeeds. These indicators will be monitored to provide data on conditions before and after construction ofthe road scheme sub projects. The PMU will be responsible for ensuring that this "before and after"monitoring is undertaken. To assist in project monitoring the PMU will implement a managementinformation system that will monitor amongst other things; physical and financial progress in projectimplementation, contract commitments, disbursements, environmental management and resettlementaction plans.

5.21 Project Outputs. Table 5.4 shows outputs for each project component, and the target indicatorsfor satisfactory implementation. The satisfactory achievement targets for year I are contained in thedraft AWP for year I agreed at negotiations. Annual targets towards the achievement of these outputs forthe second and subsequent years of the project will be agreed during the Annual Reviews. The PMIU willbe responsible for monitoring and reporting on progress towards these output targets. The level ofachievement of the outputs and any corrective actions required as a result of unsatisfactory achievementwill be one of the items for the Annual Review.


5.22 Environmental Monitoring. The environmental management and monitoring procedures forthis project draw on the experience gained by Bina Marga and the Bank in the implementation of HSL2.Environmental Protection Measures during construction will be included in the civil works contractdocuments, and bonded. The TOR for the consultant to support the PMU includes a requirement forforeign and local environmental officers to supervise implementation of environmental and socialmitigation measures.

5.23 As part of the environmental and social monitoring of sub-projects provided for within theAMDAL procedures, it will be necessary to determine noise, air quality and socio-economic impacts atselected sites. Data would be collected on actual levels as well as on community perception. As trafficvolumes will be the most significant component of noise generation, traffic data will also be collected aspart of the one monitoring program. It is envisaged that a local consultant will carry out the programwith support from the environmental officer in the PMU. The AMDAL section in BINKOT isdeveloping its own capability to carry out and manage project monitoring according to recommendationsin UPL and/or RKL reports. The TA being provided for institutional strengthening of BINKOT AMDALsection will support this capacity building.

5.24 Social Monitoring. As part of the social monitoring of sub-projects provided for within theAMDAL procedures, it will be necessary to determine socio-economic impacts of selected sites. Datawill be collected on actual impacts as well as on community perception. In particular, the socio-economic conditions of project-affected persons who are resettled will be surveyed one year afterresettlement, while all affected persons will be surveyed one year after the completion of the sub-projectaffecting them. Road accidents will be monitored, using data collected as part of the normal operatingprocedures of the traffic police.

1. REPORTING

5.25 The PMU will be responsible for preparing monthly, quarterly and annual progress reportscovering all SURIP components. The PMU will consolidate govemment agency and consultant monthlyreports into an overall monthly progress report for submission to BINKOT management. These monthlyreports will form the basis for monitoring progress of the project.

5.26 Quarterly Reports. These will be prepared and submitted to the Bank by the PMU on the basisof inputs from the various central, Kabupaten and Kotamadya implementing agencies. The quarterlyreports will include summaries of progress of each project for submission to DGH, MPW, BAPPENAS,MOF, and the Bank. The reports will include an overall summary and cover progress on:

a) physical progress of each component;b) financial progress of each component, including project costs, contract commitments, and

forecast disbursement schedule;c) consulting services, including reports produced, and details of Steering Group and

Technical Committee meetings;d) compliance with loan covenants; ande) a list of action to be taken by the various parties.

Quarterly reports will be submitted within 30 days from the end of each quarter, starting with the quarterending in September 1996.


5.27 Annual Reports. These reports will be prepared and submitted to the Bank by the PMU, on thebasis of reports prepared by the implementing agencies, no later than July 31 of each year. They willcontain similar data to the data contained in the quarterly reports, and will include an evaluation ofprogress relative to the agreed Performance Indicator targets. The annual reports will provide the basisfor the annual reviews of project implementation. Assurances were given by GOI at negotiations thatthe Inspectorate General of MPPW and the relevant kabupaten or kotamadya inspectorates will carryout annual technical audits during project implementation by October 31 of each year.

5.28 Implementation Completion Report. On completion of the project and within six months ofthe Loan closing date, BINKOT, together with the participating Kabupatens and Kotamadyas, willprepare an Implementation Completion Report for review by GOI and the Bank.

J. OPERATIONS AND MAINTENANCE

5.29 The new road scheme sub-projects will be designated as national roads and DGH will beresponsible for maintenance. The Road Sector study found that overall the level of funding formaintenance of national roads was adequate. The existing national roads passing through towns, will behanded over to Kotamadya/Kabupaten once the bypasses are opened to traffic. DGH will be relieved ofthe responsibility of maintaining these roads. As a result there will be a minor increase in the lanelength of road that DGH has to maintain, the maintenance of which can be absorbed by DGH throughongoing efficiency measures.

5.30 The traffic management plans prepared under component BI of the project are designed toensure that the most effective use and efficient operation of the road networks in the project towns oncethe by-passes are opened to traffic. The extra road length will represent a very small percentage of theroad length in the Kotamadya. Based on findings of the Road Sector study, the local governments shouldbe able to find the resources to maintain these roads through efficiency gains in their overall roadmaintenance programs. It will be necessary to ensure that the local governments have sufficientresources to maintain the extra road length. Routine road maintenance equipment and training forequipment operators is to be provided under the project to assist the local government in this task.BINKOT will assess the technical and financial capabilities of project cities for maintaining additionalroads. Depending on the results of this assessment, BINKOT will initiate a dialogue with the Ministry ofHome Affairs regarding an increase in the INPRES grant reflecting the increase in road network assets.

K. BANK SUPERVISION

5.31 The project will require about 20 to 25 staff weeks of Bank supervision during the first andsecond years of the project, and 15-20 staff weeks for the following years. Details are shown inAnnex 14. These estimates assume that supervision missions for the proposed project will be combinedwith missions for preparation of possible future SURIPs in Bank FY97 and 98 and missions forsupervision of these projects in later years. Three missions a year are planned in FY97 and 98 asanalysis by OED suggests that extra supervision during this period assists in achieving satisfactoryproject outcomes, with two missions a year thereafter. Typically one mission in October would conductthe Annual Review, while a mission in April would review the final AWPs. The annual review missionis scheduled to coordinate with GOI budget process to ensure appropriate provision is made forcounterpart funds in GOI budgets. Supervision missions will include engineering, transport planning,environmental and resettlement expertise. Other skills would be added as required, particularly for theannual review. Between missions, supervision activity will include pre-construction screening of lateryear sub-projects, review of procurement documents and procedures and physical progress on site, and


review of TA outputs. Much of this routine procurement and site supervision work will be undertakenby staff from RSI Jakarta. These proposed arrangements for project supervision were confirmed byGOI at negotiations.

TABLE 5.4: PROJECT OUTPUT INDICATORS

Components Output Achievement Targets

A Seven Road Sub-Projects All schemes built to specification, on time and within estimatedcost (* I0%)

B I Traffic and environmental management plan, (including Plan prepared and works implemented in any town within twocivil works) for seven towns. years of opening date of bypass, to agreed specification and cost.

Plans to include provisions for pedestrians, NMV and publictransport.

B2 Structure Plan Review for seven project towns. All reviews completed by mid 1998, with new road shown onplans and IUIDP assumptions modified.

B3 ROW for seven road schemes protected. 1. Local govemment regulation (Perda) for individualsubprojects by opening date of road.

2. Land use plans showing acceptable locations for developmentalongside road prepared by road opening date.

C I DLLAJ Strengthened and staff trained in the eight All DLLAJ staff given appropriate level of training early enoughparticipating local governments to permit them to contribute meaningfully to preparation of

component B I.

C2 Strengthened BINKOT AMDAL section. TA provided in time to permit BINKOT section to take lead rolein environmental management and monitoring of sub-projects.

D Urban Road Program SURIP and Road Sector Study network analysis updated by end1997.

El Urban Transport Policy and Programs Policy document prepared for IWG by end 1997.

E2 BINKOT Guidelines Drafts of three guidelines (feasibility studies, functional designguidelines and economic evaluation) prepared under this TAsub-component in time for preparation of a possible secondSURIP. Drafts of environment and resettlement guidelinesprepared under TA sub-component C2, traffic managementguidelines under TA sub component B I, and scheme planningand design schedule guidelines by the PMU..


6. PROJECT JUSTIFICATION AND RISKS

A. POLICY CONTEXT

6.1 Overall, the project is expected to contribute towards the further development of anenvironmentally sustainable transport policy in a country facing increased motorization, and to thefurther transfer of responsibility for the implementation of such policy to local government. Benefitswill flow to producers and consumers through reduced transport costs. Residents of the towns being by-passed will benefit from a safer and more pleasant urban environment. The overall level of road safetyshould be improved.

6.2 Linkage to Country Assistance Strategy (CAS) and Sector Work. From a nationalperspective, the overall project assists in the implementation of GOI urban and transport sector policy,with the different components supporting implementation of specific policy initiatives as well as the GOIpolicy on decentralization. The project also supports the CAS by assisting in the reduction of transportcosts (and hence enhancing competitiveness), and by taking steps to improve environmental managementand decentralized public sector management.

B. ECONOMIC JUSTIFICATION

6.3 The assessment carried out during the preparation of this project found that the project corridorhas the most pressing congestion problems among the national urban road sections. A number ofregional studies have forecast a continuing growth in traffic in the corridor, with little change in roadshare. The road schemes proposed are consistent with the plans and recommendations of the NJTCStudy, and the HLRIP. They will complement the interurban road capacity expansion in the NJTCfunded under the recently approved ADB Loan No. 1428 -INO. Justification by component is discussedbelow.

6.4 Analysis of Alternatives. Potential options to address the identified congestion problems are:

(a) widening the existing roads, and(b) building a new road on a new alignment.

Within option (b), alternatives were considered for design and construction standards, staging ofconstruction, and financing as a public or toll road. The road scheme sub- component designs adoptedrepresent the least cost options over a 20-year period on the basis of engineering and economicjudgment. The costs include construction, land acquisition, resettlement, environmental mitigationmeasures and annual maintenance costs.

6.5 Except in Cirebon, Pemalang and Semarang, the option of widening the existing road was notconsidered feasible due to the extent of resettlement of residents and demolition of commercial propertyand resultant high land acquisition costs. The alignments for the new roads at Weleri, Kaliwungu andKudus were selected and partially constructed by the local government prior to Bank identification ofthis project. These alignments were reviewed during site visits and considered to be generallyacceptable. A number of changes have been incorporated at the request of the Bank to reduceenvironmental impacts and to improve the network operating efficiency. Alternative alignments were


investigated at Pemalang for part and at Demak for all of the bypass, to reduce environmental impacts,construction and land acquisition costs.

6.6 The highway design standards are a function of the volume and vehicle mix of traffic expected touse the road links over the initial ten-year road pavement design life, and chosen so as to minimizeconstruction and maintenance costs. The 40 meter ROW width has been selected based on a 20 yearinitial design life for the road, to protect the road investment for at least this period The option of anarrower (22 meter) ROW was considered but rejected as likely to result in the road gradually taking ona local access road function so that in five to ten years another by-pass would be required. Options for atgrade or grade separated crossings of railways and local roads, and staged construction have beenevaluated to arrive at the preferred design and staging of the individual road schemes. Analysis of stagedconstruction involved evaluation of the NPV for the initial construction of a two or four lane main road,and consideration of timing of construction of frontage access roads within the 40 meter ROW.

6.7 Potential for Private Sector Participation/Toll Roads. Current toll road proposals relevant tothe road schemes in this proposed project are described in Chapter 4. Tolling the project roads wouldleave the existing congested link for traffic unwilling to pay the toll. Only at Demak and Kudus couldthe alignments proposed be considered for inclusion in the Semarang - Kudus toll road. The privatesector would require the financial viability to be firmly established, which is not the case for theproposed project roads. Analysis indicates that the financial rate of return for individual sub-projectsunder this project will be below the 25% sought by many institutional investors for a road project.

6.8 The approach adopted in this project (and for ADB Loan 1428-INO) was therefore to accept thatthe "free" public road improvement would precede the parallel toll road and to assess the potentialdiversion of traffic to the toll road at various opening dates for the toll road. For economic analysis ofthe road schemes the opening dates assumed (and GOI targets) are Cirebon 2002 (1998), Pemalang 2006(2002), Weleri and Kaliwungu 2005 (2003), Demak and Kudus 2007 (2003). There is some risk thatconstruction of the sub-project will delay investment in toll roads, since the GOI does not (and shouldnot) give a "traffic guarantee" to investors. However, GOI has already committed itself to investments inthe interurban sections of the public road in the corridor which are likely have a greater impact oninvestor interest.

6.9 Fiscal Impact and Cost Recovery. The Road Sector Study discusses the future fiscal impact ofroad programs at a national level. At a local level the transfer of the existing national road to localgovernment following opening of the bypass will increase local maintenance expenditures. The impactis not considered to be significant, but is to be reviewed by BINKOT so that the central governmentbudget transfers can be adjusted if necessary (see Section 5.30).

6.10 Beneficiaries. Direct beneficiaries of the road schemes will be two groups. First, the road userswho will benefit from lowered Vehicle Operating Costs (VOC) and travel times. Second, the residentsof the newly by-passed towns of Pemalang, Weleri, Kaliwungu,, Demak and Kudus will benefit from thereduction in through traffic. The quantifiable economic benefits to road users have been calculated usinga standard methodology. Existing traffic likely to use the by-passes has been estimated from Origin andDestination surveys of existing traffic entering and leaving the towns. Future traffic levels have beenestimated by applying growth factors to these traffic levels of 6.5% a year from 1995 to 2003, and 5.5%thereafter. The growth factors are within the bounds of traffic projections in four previous studies in thecorridor, as discussed in Chapter 3. The analysis included sensitivity tests on these traffic projections.

Strategic Urban Roads Infiastructure Project - 41 - StaffAppraisal Report

6.11 Benefits. Benefits are a function of changes in VOC and in journey times for vehicle occupantsmaking business trips (trips in the course of their work). 25% of trips by vehicle occupants are assumedto be for business, and to have an economic value of Rp 1020/hour per bus passenger and Rp 6000/hourper car occupant. Travel time savings for other trips are not included. Travel times have beendetermined by applying speed/flow curves from the Indonesian Highway Capacity Manual to the forecasttraffic flows. Based on these flows, average speeds are expected to increase from 32 km/h to 54 - 60km/h in the year of opening. VOC have been derived using the VOC module (VOCM-4) of the Bank'sHighway Design and Maintenance Model (HDM III). Basic road user cost data have been obtained fromthe IRMS VOC Parameter File, and updated to September 1995. Based on international experience, it isexpected that there will be a reduction in fatalities, and a reduction in accident rates (fatalities/vehiclekm) from the new road construction.

6.12 Economic Rates of Return (ERR) and Net Present Value. The ERR for individual roadscheme sub-projects are shown in Table 6.1. All road sub-projects have a positive net present value(NPV) with a discount rate of 15% with the value of time savings only for business trips included in thebenefit stream. When all such time savings are excluded from the benefits, the NPV is positive with thelower discount rate of 10%, except for the Kaliwungu and Demak projects. The estimated accidentreduction benefits for the sub-projects at Cirebon, Pemalang, Semarang and Weleri are between 7% and25% of VOC benefits, at Demak 62% and at Kudus 75%. As the Kaliwungu bypass is longer than theexisting road, the overall accident benefits are estimated to be much higher than the VOC benefits.

TABLE 6.1: SUMMARY OF ECONOMIC ANALYSIS(Costs and NPV in Rp million)

Benefits Time SavingsSub-Project Total Cost NPV ERR as (%) of

Benefits

Cirebon Bypass 21,613 12,257 24% 67%Pemalang Bypass 25,739 21,835 28% 55%Weleri Bypass 17,013 12,461 24% 46%Kaliwungu Bypass 23,825 16,308 27% 79%Semarang Northern Ring Road 55,220 30,243 21% 35%(Section I and 2)Demak Bypass 29,853 3,782 17% 56%Kudus Bypass 25,660 35,430 30% 61%

Notes: Cost includes construction, ROW and resettlement costs.Benefits include travel time savings.Time Savings % is the contribution of Present Value (PV) of passenger time savings to total PV of all benefits.ERR = Economic Rate of Return.NPV = Net Present Value @ 15% discount rate.

6.13 Sensitivity Analysis. Sensitivity tests were undertaken to test the robustness of the resultsagainst changes in key input parameters: average speeds, traffic growth rates, diversion to toll roads, andthe percentage of trips with economic value. The ERR's remain above 15% even if about half theenvisaged gain in vehicle speeds fails to materialize i.e. average speeds on all road sub-project schemescould be reduced by 10 km (to 44-50 km/h). The Demak bypass is most sensitive to traffic volumes, areduction in traffic volumes in traffic growth rates to 5.5% a year from 1995 to 2003, and 4.5% thereafterwould reduce the ERR to around 15%. In the case of the Cirebon bypass, with these lower traffic growth


rates and a 60% diversion of bypass traffic to the proposed toll road, (in place of the 40% assumed forthe main analysis), the ERR would also be reduced to around 15%. The other subprojects would still beviable. In the main analysis, it is assumed that 25% of all passenger trips have economic value. Testswere carried out to calculate the minimum percentage of passenger business trips required to achieve anERR of 15%. For Cirebon and Pemalang, the value could be about half that in the main analysis (10-14%), in Semarang it could be about a third lower, while at Demak and Kudus, it could be reduced to aquarter of the value in the main analysis. Further details of the economic evaluation results are given inAnnex 15.

6.14 Analysis of Institutional Capacity. As reported in Chapter IV, Bina Marga has the capacity todeliver road construction projects on time and to an adequate quality standard. BINKOT was able tosuccessfully implement the Regional Cities Urban Transport Project, with a PMU supported byconsultants. It is considered that with similar arrangements, BINKOT has the capacity to implement thisproposed project. The one area where BINKOT is still developing capacity is the environmental field.Support for the development of this capacity is provided in this proposed project While localgovernments are generally able to undertake the smaller scale civil works envisaged in Component B,for reasons set out in paragraph 1.22, they currently lack the capacity to plan, design and implement localtransport policies and traffic management schemes. Support for the development of this capacity isprovided in this proposed project.

6.15 Poverty Analysis. No specific analysis has been undertaken of the benefits (or costs) of theproject to the low income population of the project towns. (Nor has the extent and spatial distribution ofthe low income population of project towns been surveyed except as part of base line surveys for landacquisition). Crossing facilities for pedestrians and NMV are included in the road schemes. Provisionhas been made in the design of these road schemes for construction of footpaths and NMV frontage roadsas required. Sub-component B 1 is specifically designed to benefit pedestrians and NMV users.

6.16 Environmental Benefits. The environmental aspects of the proposed project are discussed inChapter 5. Residents of the five by-passed towns (Weleri, Kaliwungu, Pemalang, Demak, & Kudus) areexpected to benefit through reduction of accidents, air pollution and noise. A monitoring program isbeing developed to determine outcomes. However, there is insufficient data available on Indonesianconditions to quantify these benefits.

6.17 Component C: Institutional and Human Resource Development, will increase the overalleffectiveness of the urban road investment program, and the sustainability of transport policy, as well asreduce expenditure on foreign consultants. The benefits will be in improvements in the allocation offunds, and greater efficiency in the use of funds at the implementation stage.

6.18 Component D: The Urban Road Program. Improvements in the allocation of funds for roadworks was one of the five areas suggested in the Road Sector Study to meet the long term challenges inthe sector. Increasing funding for urban roads is one of these challenges. This component will assistdecision making on the size of the overall budget for urban road development, as well as the allocation ofresource by geographical or administrative area and road type. It will also permit the selection ofindividual projects or programs targeted to specific regions in response to GOI initiatives, or targeted toaddress, within a town or region, specific GOI policy initiatives or IUDP. Rolling programs facilitateproject preparation, and the efficient use of road planning and design resources.

6.19 Component E: Policy Formulation. The sector study has forecast increases in urban traveldemand. The benefit of an urban transport policy is that it will provide the framework for a


comprehensive approach to controlling congestion costs and allocating resources for investment in andmanagement of urban transport and urban development. The guidelines and manuals will assist in theimplementation of this policy as well as in improving efficiency in the use of funds for urban roads at theimplementation stage.

C. SUSTAINABILITY

6.20 The sustainability of the project has been assessed in relation to the categories of financial,environmental, social, and institutional sustainability adopted in the Bank's Sustainable Transport:Priorities for Policy Reform (May 1996).

Financial Sustainability. The project is designed to assist financial sustainability by making transportmore cost effective.

Environmental Sustainability. The project is designed to be environmentally sustainable by:* placing emphasis on integrating environmental considerations into the design process, from the

stage of problem identification through to construction and operation of individual road sub-projects;

* implementing urban environmental management measures designed to ensure that the road space intowns is not used simply to accommodate extra vehicular traffic; and

* strengthening of environment management capability in BINKOT.

Social Sustainability. The project is designed to be socially sustainable by:* placing emphasis on avoiding resettlement in the planning and design of individual road schemes,

and in designing and implementing quality resettlement action plans as an integral part of roadscheme implementation;

* including provision for investments to benefit pedestrians and NMT users; and* promoting local government participation in design and implementation.

Institutional Sustainability. The project is designed to produce a sustainable improvement in themanagement of the urban transport sector by:* placing emphasis on the institutional and human resource development of the responsible agencies,

and through preparation/updating of guidelines combining international good practice and localexperience; and

* supporting GOI initiatives to decentralize responsibility for urban transport infrastructure andservices from central to local government level, and in assisting central and local governmentagencies to fulfill their new roles.

D. RisKs

6.21 Only Civil Works Implemented. Based on past experience, the major risk of the project is thatinadequate attention will be paid to the institutional development, HRD and policy components (C, D& F) which may compromise the sustainability of the project. The PIM and AWP are designed tominimize this risk and to ensure the ownership of, and commitment to these components by theirimplementing agencies. The annual review process is intended to focus attention on components whereprogress is unsatisfactory, and to institute corrective actions. Funding for the road scheme subprojects isconditional on the DLLAJ (which will benefit from the component Cl and D) being operational.


6.22 Component B Not Implemented. There is also a risk that the sub-projects and activities inComponent B will not be implemented by the participating local governments. The PIM and AWP aredesigned to minimize this risk and to ensure the ownership of and commitment to the implementation ofComponent B by the participating local governments. The other risks of the project relate to the roadschemes themselves.

6.23 Construction Costs and Timing. To minimize construction cost overruns, cost estimates arebased on Final Engineering Designs to an agreed design specification, and +/-10 % cost limits.Construction supervision and project management arrangements within the Project Implementation Planare designed to closely monitor actual costs during construction. Part of this risk is reduced bydiversification. As this project contains a series of separate road schemes, any problems with one shouldnot transfer to the others and the risk to the overall project from any difficulty is reduced. The maintiming risk relates to land acquisition for critical small sites. Completion of land acquisition andresettlement is one condition of issuance of a NOL for starting bidding on civil works.

6.24 Traffic Risk. There are a number of interconnected traffic risks: (a) overall traffic growth willbe less than forecast; (b) the amount of traffic using the by pass will be less than estimated; and (c) thetoll roads will attract more traffic than assumed. To minimize these risks the traffic growth rates in thecorridor used are based on past trends and are considered conservative. These growth rates are afunction of the macro-economic growth rates and are therefore susceptible to changes in levels ofeconomic activity. The by-passes all offer faster routes and easier driving conditions than the routes theyreplace. To minimize the risk that through traffic will not use the bypass, traffic calming measures in thetown centers will be implemented under Component B to discourage (but not prevent) through trafficfrom using the existing roads.

6.25 The extent of diversion to the toll roads (when opened) assumed for the economic analysis isgreater than the proportion of travelers on recently opened interurban toll roads. In the base caseevaluation it has been assumed that the opening date of the toll road sections are later than the GOI targetdate, and that these roads will divert 40% of the forecast through traffic using the bypass. (The 40%diversion factor is at the mid point of the range of diversions assumed by ADB for the evaluation ofinterurban roads in the corridor.) Sensitivity tests were undertaken assuming the GOI opening date and alarger diversion.

6.26 Toll Roads. There is a risk that the parallel links in the toll road network will be constructed byor earlier than the GOI target opening date. Earlier than targeted opening of the toll road would reducethe immediacy of the need to build the proposed schemes, and would lead to more staged construction.Based on experience to date with toll roads in Indonesia, the risk of an early opening is considered low.

6.27 Ribbon Development. Experience in Indonesia suggests that the new roads could encourageribbon development alongside, encroachment on agricultural land and creeping urbanization between theexisting town and the bypass, so that eventually another bypass would be required. To minimize this riskthe roads are being designed with a ROW sufficient to provide access roads for frontage development ata later date if necessary to protect the primary function of the by-pass. Land is being acquired for thispurpose under this project, or safeguarded through local regulations. Component B is also designed toprovide means of handling these development pressures in an environmentally sustainable way.


7. AGREEMENTS REACHED AND RECOMMENDATION

7.1 Agreed Actions. During negotiations, agreements were reached on the following matters:

a) Project outcome indicators and that project outcomes will be surveyed one year aftercompletion of any sub-project (para 4.10);

b) Selection and carrying out of sub-projects in accordance with criteria acceptable to the Bank(para 4.13 and 4.16);

c) Annual Work Programs (AWP) to be adopted by BINKOT, Participating LocalGovernments and DGLT by April 15 in each year (para 5.6);

d) Carrying out of annual reviews of Project Implementation (para 5.7);

e) Use of the Bank's 1995 Procurement Guidelines (revised in January 1996) (para 5.12);

f) The project's implementing agencies will keep separate accounts, that will be auditedannually and that the annual audit report will be furnished to the Bank not later than sixmonths after the closing of the fiscal year (para 5.19);

g) The Inspectorate General of the Ministry of Public Works and the relevant Kabupaten asKotamadya inspectorates will carry out annual technical audits during projectimplementation (para 5.27); and

h) Proposed arrangements for project supervision (para 5.31).

7.2 The condition of effectiveness are: (i) the issuance by the Chief Executives of each of theparticipating local governments of the implementation guidelines for resettlement acceptable to the Bankand (para 4.31); and (ii) signature of the PIM (para 5.3).

7.3 The conditions of disbursement are:

a) for civil works and goods, selection of a sub-project in accordance with criteriaacceptable to the Bank, and Bank approval of the sub-project and, where applicable,implementation of the RAP acceptable to the Bank (paras. 4.13 and 4.16);

b) for civil works and consultant's services, that the 97/98 AWP, acceptable to the Bank,has been adopted by relevant participating local governments (para 5.6); and

c) for civil works and goods, establishment of the PMU (para 5.9).

7.4 With the above agreements, the project would be suitable for a Bank loan of $86.9 million with astandard amortization term, grace period and interest rate for fixed rate US dollar single currency loanswith an expected disbursement period of 3-6 years.

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STRATEGIC URBAN ROADS INFRASTRUCTURE PROJECT (SURIP)


ANNEXES

1. URBAN INFRASTRUCTURE AND ROAD PROJECTS2. PERFORMANCE INDICATORS3. COMPONENT A: SCHEME DETAILS4. COMPONENT A: SURIP ROAD DESIGN STANDARDS AND GUIDELINES5. COMPONENT A: CRITERIA FOR APPROVAL OF ROAD SCHEME SUB-PROJECTS FOR FUNDING6. COMPONENT B: URBAN MANAGEMENT AND "QUALITY OF LIFE" IMPROVEMENTS7. OUTLINE SCOPE OF POLICIES, PROCEDURES AND GUIDELINES8. ENVIRONMENTAL IMPACT ASSESSMENT9. PROJECT COMPONENT AND COST SUMMARY10. DRAFT MODEL PROJECT IMPLEMENTATION MEMORANDUM11. OUTLINE OF ANNUAL WORK PROGRAM12. PROCUREMENT PACKAGING AND PRIOR REVIEW CONTRACT PROFILE13. DISBURSEMENTS14. SUPERVISION STAFFING AND SCHEDULE15. ECONOMIC ANALYSIS16. DOCUMENTS ON FILE

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ANNEX 1

REPUBLIC OF INDONESIASTRATEGIC URBAN ROADS INFRASTRUCTURE PROJECT

URBAN INFRASTRUCTURE AND ROAD PROJECTS

Loan No. FY Closing Project Name Original PPAR YearEffect. Date Loan PCR/ICR

Amount Report(USSM) No.

1040 1975 1981 Jakarta Urban Development 25.00 4620 19831049 1975 1982 Five Cities Water Supply 14.50 6256 19861336 1977 1984 Second Urban Development 52.50 6329 19861653 1979 1987 Third Urban Development 54.00 8583 19901709 1981 1987 Second Water Supply 36.00 8622 19901972 1982 1988 Fourth Urban Development 43.00 8583 19902236 1983 1991 Jakarta Sewerage/Sanitation 22.40 12150 19932275 1983 1990 East Java Water Supply 30.0 10853 19922408 1984 1991 Fifth Urban Development 39.25 11501 19922632 1986 1993 E. Java Water Supply 11 43.30 13637 19942725 1986 1992 Housing Sector Loan 200.00 13296 19942816 1987 1991 Urban Sector Loan 270.00 10388 19922817 1987 Oct. 94 Reg. Cities Urban Transport 51.00 15245 19952932 1988 Mar 96 Jabotabek Urban Developmt 150.003219 1990 Dec 96 Jabotabek Urban Dev. 11 190.003246 1991 Dec 96 Jabotabek Urban Dev. III 61.003304 1991 Dec 96 East Java/Bali UDP 180.303340 1991 Dec 96 Sulawesi/lrian Jaya UDP 100.003726 1995 Sept 99 Surabaya UDP 175.003749 1995 Sept 99 Semarang/Surakarta UDP 174.003854 1996 June 01 Kalimantan UDP 136.004017 March 00 East Java UDP 11 142.7

CO1540 1969 12/31/75 Roads Emergency Rehab. 32.58C02600 1971 5/14/79 Highway 11 34.31C03880 1973 5/2/79 Highways III 14.00L12360 1976 5/15/81 Highways IV 83.80L12365 1976 12/31/82 Highways IV 46.20L16960 1979 5/15/81 Highways V 10.58L16965 1979 12/31/85 Highways V 119.42L20830 1982 12/31/87 Rural Roads 100.00L20490 1982 6/30/90 Jakarta Cikampek 85.00L24040 1984 12/31/88 Highway Betterment 240.00L27170 1986 12/31/90 H'way Maintenance & 300.00

BettermentL28810 1988 6/30/94 Rural Roads 11 190.00L31330 1990 6/30/95 Highway Sector 350.00L37120 1994 12/31/99 Highway Sector 11 350.00L34900 1992 9/30/96 Kabupaten Roads III 215.00L35790 1993 6/30/98 E. Indonesia Kabupate 155.00L35890 1993 12/31/96 Earthquake Reconstruction 42.10L37320 1994 6/30/99 Kabupaten Roads V 101.50

TOTAL 4659.44

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ANNEX 2(Page I of 2)


PERFORMANCE INDICATORS

1. Indicators for monitoring and rating project outcomes against the five projectdevelopment objectives as agreed at negotiations, are shown in Table 1. The baselinesituation is the current position identified during project preparation, against which theprogress of the project towards the target outcome will be assessed. This baselineposition has been identified for all objectives. For objectives a and b the baseline positionwill be precisely defined through surveys.

2. The targeted outcomes represent the ideal outcome, if the project performs well,and GOI and the Bank respond well to events occurring during the life of the project,including unforeseen events over which they may have limited control. Satisfactoryoutcomes have been determined on the basis of those milestones in projectimplementation over which GOI and the Bank can exercise some control, and can takecorrective action to mitigate poor performance during the life of the project. Reviewingperformance and taking corrective actions is one focus of the annual review.

3. The monitoring indicators chosen for intermediate years for objectives a and b aresimilar to the baseline indicators. For objectives c to e, monitoring will be againstdefined milestones in the implementation schedule towards the target outcome.

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ANNEX 2(Page 2 of 2)

PERFORMANCE INDICATORS: RATING SYSTEM

Objective Baseline Situation Intermediate Years Implementation Suggested RatingsCompletion Report

a) Reduce TraMc Traffic counts and Origin Traffic counts and license Traffic counts and HS-AII seven bypassesbottlenecks on the Destination (OD) surveys plate surveys on bypass and license plate surveys on attract 80%/ of throughnational road network on existing road and existing road one year after bypass and existing roads traffic and operate withoutin selected urban areas projections of traffic on opening date of bypass sub- congestion (V/C ratio S 0.8)in the N. Java corridor new road done for project over at least 80%/ of their

economic cvaluation as lengthpart of project S-Five to Six bypassespreparation US-Four bypasses

HU-Three or less

b) Address the Baseline position Socio-economic surveys one Socio-economic surveys HS-All PAP better offenvironmental and established by socio- year after resettlement only of those PAP S-No PAP worse offsocial issues associated economic surveys of requiring funther support US-10f% PAP worse offwith the usage of the project affected persons as shown by survey in HU>ION. worse offnational road network. (PAP) intermediate year

c) Assist GOI in the Baseline is that there is Review of progress on Review of status against HS-GOI UT Policyformulation and no single unified GOI milestones to preparation as milestones incorporated in REPELITAarticulation of urban Urban Transport Policy part of annual review Vn of the Transport Sectortransport policy, process. Possible milestones S-UT Policy Statement

1. Draft policy produced for endorsed by BAPPENASIWG using TA US-Draft not agreed2. Draft policy endorsed by HU-No Draft StatementIWG after consultation and produced by IWGdiscussion3. Policy endorsed byBAPPENAS for inclusion inREPELITA VIl4. UT Policy incorporatedinto Transport Sector part ofREPELITA VI[

d) Assist GOI in the Baseline Position is that Review of progress on Review of participation HS-All eight DLLAJprocess of work is undertaken by milestones as part of annual by each of the eight paticipated in at least 75%decentralization of central agencies, and that review. Possible milestones DLLAJ in the of preparation andresponsibility for urban there are DLLAJ only in 1. DLLAJ operational preparation and implementation activities.transport. participating local 2. TA mobilized implementation of S-6 DLLAJ participating in

govemments of Kendal 3. Staff Trained Component B. 50% of activitiesand Kudus 4. Staff paticipated In US-4 or less DLLAJ

preparation and participating in 50% ofimplementation of actvities.Component B. HU-DLLAJ operational, but

not paticipating

e) Strengthen Baseline position to be Review of progress on Detailed review of tasks HS-Full integration ofcapabilities of GOI's established by detailed milestones as part of the performed nd AMDAL into design and atcentral agencies review of work of annual review. Suggested percentage of BINKOT least 90% of schemesinvolved in urban road BINKOT AMDAL milestones schemes pro-atvely revieweddevelopment and Section. General I. Stage 11 TA mobilized reviewed and design S-50% schemes reviewedmanagement understanding is that the 2. 25/S0%/5/75W100% of influenced in preceding USs50% schemes review

section is reviewing BINKOT road schemes 12 months. HU-No change in cunrentdocuments but is not proactively reviewed and operationsreally influencing design influenced

I planning and design. Note: HS - Highly Satisfactory; S - Satisfactory; US - Unsatisfactory; HU - Highly Unsatisfactory11 During implementation, detailed techniques will be developed to mneasure the extent of DLLAJ participation.

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COMPONENT A: SCHEME DETAILS

1.0 Cirebon Bypass

The Cirebon Bypass is a 8.1 kilometer asphaltic concrete (AC) road comprised of three undivided two-lane cross-sections separated by two segments of divided four-lane cross sections (Sta 2 + 400 to Sta 3 +400 and Sta 4 + 370 to Sta 5 + 700). The original two-lane AC road was constructed in 1970; the 4-lanesegments (totaling approximately 2.3 kilometers) were widened in 1989/1990 and in 1993/1994. Workusing APBN funds is currently in progress between Sta 3+380 and Sta 4+380 to widen the roadway tofour lanes and improve the intersections at Sta 3+810, Sta 4+270 and 4+370. Three-way intersectionsmark the eastern and western extremities of the road segment. The bypass traverses two active rail linesnear its eastern extremity: the Purwokerto-Yogyakarta line at Sta 6 + 400 (34 trains/day) and the Tegal-Semarang line at Sta 7 + 070 (44 trains/day). Both are at-grade crossings controlled by automatic gates.

The bypass has been divided into three segments. Section I is from Sta 0+000 to 5+991. Section 2 isfrom Sta 5+991 to 8+100 which crosses two railway lines of grade and which may require railwayflyovers at some future date. Section 3 is the upgrading and improving of the traffic managementsystem for the traffic circle located at the western terminal of the bypass.

Section 1: The works involve the construction of 5.91 km of roadway which includes widening three 2-lane sections to 4-lane divided highway standards and upgrading two segments of existing 4-laneroadway to SURIP standards. The works include widening 25 meters of existing bridges and theprovision of drainage-structures, as well as upgrading and signalizing the intersections at Sta 2+400 andSta 5+510. The road works include common excavation, placement of common and select embankment,and construction of the pavement structure and paved shoulder which will include placement ofAggregate Classes A and B, and Asphalt Treated Base and Asphalt Concrete. The road works alsoinclude construction of a raised median, the provision of traffic signals and signs, and road markings.Drainage works include the extension of existing culverts, widening of short span bridges and theprovision of lined drains on both sides of the roadway.

Section 2: This section crosses two railway lines approximately 600 metres apart. The initial feasibilitystudy showed that the construction of an elevated overpass as an alternative to an at-grade crossing gavenegative rates of return, and would not become economically feasible until higher traffic levels wereencountered. As an interim solution, therefore, this section is proposed for widening at grade, butnegotiations with PERUMKA will be required to resolve legal difficulties with upgrading at-gradecrossings. The Works will continue the designs of Sections 1 and 2, and will require the provision ofappropriate railway crossings and facilities. FED has not yet been completed for this alternative.

Section 3: The works for this package consist of upgrading and widening the 3-way intersection at thewestern terminus of the project. It will include revision of the overall junction to improve conditions forport traffic joining the national road about 50-75 meters west of the bypass intersection. This project is acontinuation of the work being done under the ADB-assisted North Java Road Improvement Project(NJRIP).

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2.0 Pemalang Bypass

The proposed Pemalang Bypass is a 4-lane bi-directional bypass located north of and through the city.The bypass utilizes the east bound portion of the existing 2-lane diversion road located north ofPemalang. Under current conditions the local and through traffic at Pemalang uses a one-way diversionsystem. The westbound heavy traffic must turn left at the outskirts of Pemalang off the North JavaTransport Corridor (NJTC) main road onto a narrow, 2-lane and low standard local road which traversesbuilt-up and residential areas in the southern portion of the city. The diversion road crosses theprovincial road leading south of Pemalang and rejoins the NJTC main road west of the urbanized areaand continues a short distance to the kabupaten boundary. This circuitous one-way route, which isapproximately 14 kilometers long, will be eliminated by construction of the bypass.

The eastbound heavy traffic follows a diversion route north of the city center and has a length of 9.6kilometers. The route begins at the intersection just east of the kabupaten boundary and proceedseastward along the NJTC main road. This 2.6 kilometer section, located on the west side of Pemalang,traverses built-up areas with one major intersection and where the right-of-way is constructed. The routecontinues east on the 7.2 kilometer, 2-lane diversion road built in 1992 which passes through mostlyagricultural areas to the north of Pemalang. The existing eastbound bypass road rejoins the NJTC mainroute east of the city.

The project is divided into two sections: Section I located between Sta 0+175 and Sta 5+400 andSection 2 located between Sta 5+400 and the western terminus of the project located at approximatelySta 9+900.

Section 1 (Sta 0-175 to Sta 5+400): This 5.575 km long section begins east of the Waluh Bridgelocated east of the existing intersection of the NJTC main road and the 2-lane bypass east of Pemalangand follows the existing alignment to Station 5+400, a point just east of the new bus terminalintersection. The work involves widening and upgrading 4, 575 kilometers of existing 2-lane roadway toSURIP 4-lane divided highway standards and the completion of I km of 4-lane roadway currently underconstruction using APBN funding. The project includes 22.6 meters of bridge widening and 105.4 linearmeters of bridge work for two 2-lane bridge structures to be constructed parallel to the existing bridges.

The road works required include common excavation, placement of common and select embankment,and construction of the pavement structure and paved shoulder which will include placement ofAggregate Classes A and B, Asphalt Treated Base and Asphalt Concrete. The road works also includeconstruction of a raised median, the provision of traffic signals at the major intersections, traffic signsand road markings. Drainage works include the extension of existing culverts and irrigation crossstructures, replacement of the Baros Bridge with a triple box-culvert, and the provision of lined drains onboth sides of the roadway. The major works required to complete the project include:

* Constructing the roadway embankment, pavement section and extension of minor drainage structuresbetween Sta 0-175 and Sta 5+400.

* Construction of a triple box culvert at Sta 5+250.

* Widening the existing Wahul Bridge at Sta 0+038 from two lanes to three lanes and constructing anew two-lane bridge parallel to the existing structure.

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* Upgrading and signalizing the three-way inter-section at Sta 0+200.

* Constructing a new two-lane bridge parallel to the existing bridge at Sta 2+812.

Section 2: A number of alternative alignments for this section were investigated during projectpreparation, and of these, widening within the existing alignment is the option preferred by BINKOT, butfinal confirmation and approval will require further limited review of environmental impacts andresettlement implications. FED will be finalized following approval of and agreement to this alternativeby local authorities. Design standards will be as for Section 1, with a basic ROW width of 22m. The4.315 km of existing 2-lane road will be widened to 4-lane divided highway standard, and the worksinclude:

* Constructing the roadway embankment, pavement section and extension of minor drainage structuresbetween Sta 5+400 and Sta 9+715;

* Replacing the existing 2-lane bridge at Sta8+268 with a new 4-lane structure, and constructing a new2-lane bridge parallel to the existing structure at Sta 9+675;

* Upgrading the 3-way intersection at Sta 7+082;* Upgrading and signalizing the intersections at Sta 5+600, Sta 6+904 and Sta 9+300;* Realigning approximately one kilometer of the existing truck route located to the south of the

national road so that it joins the national road at Sta 9+300.

3.0 Weleri Bypass

The Weleri Bypass consists of constructing a new 4.8 kilometer, 4-lane divided bypass road north of andaround Weleri, to enable heavy and other vehicle through-traffic to avoid Weleri's built-up residentialareas. Three underpasses will be built to accommodate vehicular and pedestrian traffic on two minorroads. The project begins very close to the intersection of the North Java Transport Corridor (NJTC)main road with a low-standard road serving Desa Wonotenggang, east of Weleri and ends at a proposednew intersection for the NJTC main road near Krajasari to the west of Weleri. Most of the aligmment isthrough agricultural fields, although portions of the proposed project pass close to built-up residentialareas.

Beginning in 1993, components of the project were built based on budgetary allocations. Construction ofthe bypass to 2-lane standards was started between the triple box culvert at Sta 1+377 and the underpassat Sta 4+244. The components included a 2-lane, 7.5 meter high railroad flyover, various box culvertsand drainage structures, as well as grading and placement of common embankment along 3.9 kilometersof the alignment. The grading and placing of common embankment for the eastern 1.38 kilometersection of the bypass started in late 1995. Right-of-way and grading is required on the western section ofthe bypass between Sta 4+250 and Sta 4+800. A 30 meter wide right of way has been acquired for thebalance of the project.

The bypass is to be completed under the project. The works, from Sta 1+100 to Sta 5+131, involveconstructing 4.8 kilometers of 4-lane divided highway to SURIP standards and construction of a new31.6 meter-long 2-lane flyover parallel to an existing structure. The road works required to complete theproject include common excavation, placement of common and select embankment, construction of thepavement structure and paved shoulder which will include placement of Aggregate Classes A and B,

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Asphalt Treated Base and Asphalt Concrete. The works also include the construction of a raised median,the provision of traffic signals at the major intersections, traffic signs and road markings. Drainageworks include the extension of existing culverts, widening of short span bridges and the provision oflined drains on both sides of the roadway. The major works required to complete the 4-lane bypassinclude:

* Widening the existing embankment and extending the existing culverts between Sta 1+400 andSta 4+240.

* Constructing the roadway embankment, pavement section and extension or construction of minordrainage structures for the full length of the bypass, from Sta 0- 100 to Sta 5+131.

* Constructing a triple box culvert at Sta 1+377.* Constructing three underpasses at Sta 1+595, Sta 3+108 and Sta 4+244.* Constructing a new 31.6 meter two-lane flyover parallel to the existing flyover at Sta 3+924.* Upgrading and signalize the three way inter-sections at Sta 0+200 and Sta 4+800.

4.0 Kaliwungu Bypass

The proposed Kaliwungu Bypass sub-project consists of constructing a new 7.7 kilometer, 4-lane bypassto the north of and around Kaliwungu. Construction includes improvements to 0.6 kilometers of theexisting NJTC road, so the total length of the project is 8.3 kilometers. Two underpasses are to beprovided to accommodate local pedestrian and vehicular traffic on two minor roads. The bypass beginsat the unimproved intersection of the North Java Transport Corridor (NJTC) main road with theunsurfaced road near the community of Mijen, east of Kaliwungu, and ends at a proposed newintersection to be created on the NJTC main road near Brangsong, to the west of Kaliwungu. Most of thealignment passes over level terrain and through agricultural fields. Near Desa Sarirejo, it crosses anexisting access road serving an industrial area (plywood factories, private port facilities) located alongthe coast several kilometers north of the alignment.

Work on the bypass began in 1992/93 using APBN funding with the construction of a 2-lane, 7.5 meterhigh railroad flyover at the eastern end of the bypass, a 2-lane concrete bridge (Jembatan Kenceng),some 22 box culverts, grading and placement of common embankment along some six kilometers of thealignment (from Station 0+00 through 6+00). Grading and placement of common embankment for theremaining 1.7 kilometers section of the alignment is currently in progress.

The road works required to complete the project include common excavation, placement of common andselect embankment, construction of the pavement structures and paved shoulder which will includeplacement of Aggregate Classes A and B. Asphalt Treated Base and Asphalt Concrete as well asconstruction of a raised median, the provision of traffic signals at the major intersections, traffic signsand road markings. Drainage works include the extension of existing culverts, widening of short spanbridges and the provision of lined drains on both sides of the roadway. Under the current SURIPimplementation schedule, completion of the bypass is divided into two sections. Brief descriptions ofSections I and 2 follow.

Section 1: From Sta 3+300 to Sta 8+100 the work involves constructing 4.8 kilometers of 4-lane dividedhighway, the 2-lane Waridin Bridge and two underpasses. The bridge structure's total length is 31.6meters. As given above, the GOI has already started earthworks and drainage structures on this section.The major works required to complete the section to 4-lane SURIP standards include:

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* Widening the existing embankment and extending the existing culverts to 4-lane requirementsbetween Sta 3+600 and Sta 6+200.

* Completing construction of the embankment, pavement structure and culverts for the full length ofthe section.

* Constructing one 31.6 meter 2-lane bridge at Sta 8+000.

* Constructing underpasses at Sta 3+400 and Sta 4+848.

* Constructing and signalizing the inter-sections at Sta 7+780.

Section 2: From Sta 0-200 to Sta 3+300 the work involves constructing 3.5 kilometers of 4-lane dividedhighway, one 2-lane bridge and one 2-lane flyover parallel to the existing structures. The bridge andflyover structures have a total length of 63.2 linear meters. As given above, the GOI has already startedearthworks and drainage structures, and constructed the first 2-lane structures for the Kaliwungu Flyoverand Kenceng Bridge. The major works required to complete this section of the bypass to 4-lane SURIPstandards include:

* Widening the existing embankment and extending the existing culverts to 4-lane requirementsbetween Sta 0-200 and Sta 3+300.

* Completing construction of the embankment, pavement section and culverts for the full length of thebypass.

* Constructing a parallel 31.6 meter-long 2-lane span at the Kaliwungu Flyover, Sta 0+350.

* Constructing a parallel 31.6 meter long 2-lane span at the Kenceng Bridge, Sta 1+889.

* Constructing the intersections at Sta 0+200 and Sta 3+400.

5.0 Semarang Northern Ring Road (SNRR)

The existing 2-lane SNRR connects the NJTC national highway at the Kalibanteng Roundabout on thewest side of the city to the northern port area of the city. The road traverses an alluvial plain consistingof deep, low strength, highly compressible soils. The ring road was originally constructed under theRegional Cities Urban Transport Project (Ln. 2817-IND) in 1992. The SNRR currently terminates at themain port entrance. An extension of the SNRR, to connect with the existing road to Demak is planned.The first stage, the northern two lanes, is now being tendered for construction under the Bank fundedSemarang-Surakarta Urban Development Project (Ln. 3749-rND).

The proposed SNRR project comprises three road sections and one flyover. Sections I and 2 involvewidening 7.7 km of the existing 2-lane road to SURIP 4-lane divided highway standards, together withassociated improvements to drainage structures and the provision of three 2-lane bridges having a totallength of 306 meters constructed parallel to the existing structures. The project also includesconstructing 276 meters of new 2-lane railway flyover parallel to the existing Cakrawala Flyover. Theroad works required to complete the project include common excavation, placement of common andselect embankment, construction of the pavement structure and paved shoulder which will include

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placement of Aggregate Classes A and B, Asphalt Treated Base and Asphalt Concrete. The worksinclude construction of a raised median, the provision of traffic signals at the major intersections, trafficsigns and road markings. Since the roadway embankment crosses soft ground, a system of fiber wickdrains, sand blankets and surcharge embankment loading is required to pre-consolidate and strengthenthe underlying soils. Drainage works include the extension of existing culverts, widening of short spanbridges and the provision of lined drains on both sides of the roadway.

Section 1 (Sta 0+500 to Sta 6+100): This section begins between the Kalibanteng traffic circle and theCakrawala Flyover and continues eastward beyond the Kali Semarang Bridge. Most of this sectionrequires construction of an embankment on deep highly compressible low strength soils. To allowconstruction in the soft ground areas, special staged construction procedures are required for theembankment and bridge abutments. Controlled surcharge embankment, geotextiles and pile foundationswill be required to control the effects of settlement and to increase the bearing capacity of the underlyingsoils to accelerate its consolidation. The section, which includes 5.6 kilometers of 2-lane roadwayparallel to the existing road, a new flyover parallel to the existing Cakrawala Flyover, 2 bridges parallelto existing structures, and three major intersections, has been divided into two packages:

Package 1 - extends from Sta 3+550 to Sta 6+100 and includes the following major works:

* Widening the existing embankment and extending the existing culverts to 4-lane requirementsbetween Stas 3+550 and 6+100 using pre-load techniques.

- Constructing the pavement structure, paved shoulders and center median.

- Constructing the Banjir Kanal Barat and Kali Semarang 2-lane bridges which have a total length of256 meters at Sta 3+890 and Sta 5+550.

- Upgrading and signalizing one major intersection at Sta 4+250.

Package 2 - extends from Sta 0+500 to 3+550 and includes the following major works:


* Constructing the pavement structure, paved shoulders and center median.

* Constructing an eight span 276 meter 2-lane flyover at Sta 0+777.

* Upgrading and signalizing two major intersections at Sta 1+800 and Sta 2+900.

Section 2 (Sta 6 + 100 to 7 + 695): This section begins between the Kali Semarang and KalibaruBridges and continues eastward to the main entrance to the port. It includes widening 1.6 kilometers ofexisting 2-lane roadway to four lanes, constructing one 50 meter bridge parallel to existing structure atKalibaru, constructing an underpass at Sta 6+275, frontage roads in the developed areas and two majorintersections.

In addition to settlement of the embankment resulting from construction over highly compressible soils,soil subsidence caused by over-pumping the underlying artesian aquifer is also a major problem in this

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area. Consequently, surface water drainage in this area is poor because the mean water surface elevationremains constant as the land subsides. The rate of subsidence in approximately 1.5 centimeters a year;therefore, much of the infrastructure in the area will have to be raised.1 As with section 1, special stagedprocedures are required to construct the embankment and bridge abutments on the soft ground.Controlled surcharge embankment, geotextiles and pile foundation are required to control the effects ofsettlement, to increase the bearing capacity of the underlying soils and to accelerate consolidation.

Additional ROW on the southern edge of most of this section is needed to accommodate the intersectionat the main port entrance and the additional 2-lanes required in this area. The required land has beenidentified and is reported to be controlled by government owned and operated companies: its acquisitionshould not be a problem. The major works required to complete Section 2 of the ring road include:


* Construction of the pavement structure, paved shoulders and center median.

* Constructing the 50 meter 2-lane Kalibaru bridge at Sta 6+460.

* Designing and constructing a local traffic underpass at Sta 6+275 and the related frontage roadsbetween the underpass and the intersection at Sta 6+800.

* Upgrading and signalizing two major intersections at Sta 6+800 and Sta 7+695.

Section 3: This section begins at the eastern end of Section 2 of the main entrance to the port, andcontinues to a junction with the existing main road to Demak. It consists of the second (southern)carriageway of the SNRR extension being funded under SSUDP.

Kalibanteng Roundabout and Flyover: The roundabout connects the NJTC route with the SNRR. Intotal, it accommodates six approach roads plus a driveway entrance to a proposed hospital. Twoimprovements are proposed here. The first is directed toward short term solutions which includeimprovement of traffic management (signalization) and changes to improve the geometry of theroundabout. This work is to be implemented outside of the SURIP program using under APBN funding.The second long term improvement, entails the construction of a flyover to accommodate the majortraffic movements across the roundabout. The most appropriate layout for the flyover is being evaluated.

6.0 Demak Bypass

The proposed Demak Bypass is to be constructed to relieve congestion in the built up areas of Demakand improve the travel time and speed of through traffic. The bypass intersects the NJTC road to the eastand west of the city at locations away from the built up areas of the city. It passes through relativelylevel agricultural lands to the south of the center of the town, crosses one minor kabupaten road, crossesa major water supply canal and a paved 2-lane provincial road going to Purwodadi. A major intersection

For example, southern edge of the recently (1990) constructed concretefour lane section of road just to the westof the main port entrance is almost at water level. Base and subbase materials were observed to be pumpedthrough the construction joints as heavy traffic used the road.

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and bridge are to be constructed where the proposed bypass crosses the water supply canal and adjacentprovincial road. Two bridges are required to cross minor rivers.

The project involves the construction of 6.967 kilometers of 4-lane divided highway, three 4-lanebridges, two 2-lane underpasses and three box culverts as well as three major intersections. The bridgestructures have a total length of 131 linear meters. Observations indicate that the surfical soils in the areacontain expansive clays. The roadway embankments are to be constructed with non-expansive materialsto minimize the effects of expansive soils on embankments and pavement structure.

The road works required to complete the project include common excavation, placement of common andselect embankment, construction of the pavement structure and paved shoulder which will includeplacement of Aggregate Classes A and B, Asphalt Treated Base and Asphalt Concrete. The road worksinclude construction of a raised median, the provision of traffic signals at the major intersections, trafficsigns and road markings. Drainage works include the provision of standard culverts, box culverts andthe provision of lined and unlined drains. The major works required to construct the bypass to 4-laneSURIP standards include:

- Constructing the embankment, pavement section, and culverts for the full length of the bypassbetween Sta 0+000 and Sta 6+970.

* Constructing two 2-lane underpasses for the kabupaten roads at Sta 1+250 and Sta 3+750.

e Constructing three 4-lane prestressed girder bridges having a total length of 131 meters at Sta 2+615,Sta 3+075 and Sta 5+075.

* Constructing and signalizing two major intersections at Sta 0+000 and Sta 6-970.

7.0 Kudus Southeastern Bypass

The proposed Kudus Southeastern Bypass consists of constructing a new 10.8 kilometer, 4-lane bypasssoutheast of and around the city center. The bypass begins approximately 4.0 km east of the city centerwhere the existing one-way west bound truck route turns south off of the NJTC main road. The bypassproceeds south for approximately 3.8 km before it turns westward and continues on another 7 km to theintersection of the NJTC main road. The western terminus of the bypass is located approximately 4 kmsouthwest of the city center. The Bypass intersects two roads, a kabupaten road at Sta 2+400, and theprovincial road from Kudus to Purwodadi at Sta 8+600. At Sta 9+300 the bypass forks. The west boundtraffic continues on to the left on the existing road to the bus terminal and onward to Semarang. Theright fork carries the east-bound bypass traffic and limited west bound traffic proceeding to theSouthwest Ring Road and the western limits of Kudus. One bridge structure is to be constructed at Sta1+400. Final design of the traffic system at the western terminus of the bypass from the fork in thebypass at Sta 9+300 to the Southwest Ring Road and the Bus Terminal is still in progress. Work on thebypass using GOI funding has already started between Sta 0+000 and Sta 8+600. In this area culvertshave been installed and common embankment has been placed for the width of the existing ROW.Between Sta 8+600 and the Bus Terminal, the bypass follows the existing road system. Work has notstarted on the right fork of the bypass between Sta 9+300 and Sta 10+400, the junction of the NJTC mainroad and the Southwest Ring Road.

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The road works required to complete the project include common excavation, placement of common andselect embankment and construction of the pavement structure and paved shoulders which will includeplacement of Aggregate Class A and B, and Asphalt Treated Base and Asphalt Concrete. The roadworks will also include construction of a raised median, the provision of traffic signals at the majorintersections, traffic signs and road markings. Drainage works include the extension of existing culvertsand the provision of lined drains on both sides of the roadway. The major works required to completethe bypass to 4-lane SURIP standards include:

* Completing the existing roadway embankments and extending the existing culverts to 4-lanerequirements for the full length of the bypass.

* Constructing frontage roads in the developed area between Sta 0+000 and Sta 2+450.

* Constructing the pavement structure, paved shoulders and the median for the full length of thebypass.

* Constructing lined and unlined drains on both sides of the roadway as required.

* Constructing one triple box culvert at Sta 1+400.

* Constructing and signalizing the major intersections at Sta 0+000, 2+400, 8+600 and 10+400.

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COMPONENT A: SuRiP ROAD DESIGN STANDARDS AND GUIDELINES

I. The purpose of this annex is to summarize the salient features of the design standards andguidelines used for the SURIP bypasses. These have been used by BINKOT in designing the roads, andby the BANK in reviewing the designs.

URBAN ROAD DESIGN STANDARDS

Functional classification

2. Given the estimated traffic volume and the design function, the SURIP bypass are designed forType 11, Class I roadway. Design speed is 60 km/h. This implies that the bypasses are designed as thehighest standard street of 4 or more lanes with partial access control to serve longer distance, higherspeed traffic. The basic cross section is 22 meters wide, containing a 2 x 2 lane road with pavedshoulders. The right of way (ROW) is 40 meter wide except for Cirebon, where a 38 meter ROW hasbeen designated for some time.

Geometric design standards

3. With exception of the normal cross slope and vertical grade, the standards are the same as thosepresented in the Standard Specification for Geometric Design of Urban Roads, March 1992 (1992Geometric Design Standards, hereinafter). Based upon BINKOT's experience, the recommendedstandard for normal cross slope was increased from 2.0% to 2.5% to improve drainage, and themaximum grade was reduced from 5.0% to 4.0% to reduce the impact of steep grades on truckmovement.

Cross Section

4. The typical cross-section has the following characteristics:* A raised 2 meter wide center median* 7.0 meter wide dual carriage ways with 0.5 meter wide margin strips on each side of the

median* 2.0 meter wide paved shoulders, or curbs and side-walks, depending upon urban area needs,

and* Drainage facility at the outer edges of the ROW

At intersection locations, the typical 7.5 meter dual carriage ways are widened to 10.25 meter or more toaccommodate a third lane for turning movements.

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Intersection design

5. The 1992 Geometric Design Standards when applied for SURIP bypasses (Type 11, Class I roadswith a design speed of 60 kilometers) prescribe that all intersections are to be controlled by trafficsignals. However it was decided that this was not feasible on the SURIP by-passes. Guidelines wereadopted for SURIP to provide traffic signal controls at all major intersections and restrict access at minorcross road intersections. When at-grade access is provided for minor intersections and driveways, it islimited to left turning movements, (Left in, Left out).

Pavement thickness design

6. The Bina Marga Method of Component Analysis (SKBI 2.3.26. 1987 - SNI No. 1732-1989-F)has been used to design pavement sections for the first year projects. The same design life of 10 yearshas been used for both carriage way and shoulder pavements. The design traffic loading, however, for theshoulder pavement is halved from that of the carriage way to account for an anticipated distribution overthe cross section, which resulted in slightly less structural requirement for the shoulder section than thatof the carriage way.

7. Because widening of the SURIP roads to include frontage roads is anticipated in the future, theshoulders have been designed to minimize the construction effort required to widen the roads at a laterdate. The idea of the proposed shoulder section pavement design is to simplify the initial construction atthe joint between the carriage way and shoulder. (see Detail A of Figure 4 - I)

Structural design

8. All structures are designed for Class I Bina Marga loads in accordance with "Bina MargaLoading Specifications for Highway Bridges," SKBI - 1.3.28. 1987, Department Pekerjaan Umum. "TheBridge Management System (BMS)" of Directorate General of Highways, Ministry of Public Works,Republic of Indonesia and "Standard Specification for Highway Bridges of American Association ofState Highway and Transportation Officials," 15th edition, 1991 (AASHTO) were used for the design ofall structures.

DESIGN GUIDELINES FOR SURIP ROADS

Safeguarding road function - ROW width, access and land use control

9. It was agreed that BINKOT would require limited access control as a condition of providing thenew road for the Kotamadya and the Kabupaten. This entails making provision for the ultimate designstage for frontage roads which provide access for local traffic. However since, except for a limitednumber of road segments, frontage roads are not provided from the initial stage of bypass construction, itis important to acquire or designate by local land use control regulation, perda, the ultimate 40 meterROW in order to safeguard the construction of frontage roads at a later stage. Also, it is imperative toconfirm that the provisional designs of running sections and intersections conform to their ultimatedesigns.

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Design of bypass junctions with existing NJC roads

10. Bypass junctions with existing NJC roads should be designed with the bypasses as main routesso that the diversion of through traffic to the bypasses may be maximized. Although this concept can bebest achieved by grade separation, it is recommended that it be used only at such junctions wherethrough traffic onto the bypass is required to make right turns and grade separation is economicallyjustified. Junctions which do not require right turns for the through traffic should be designed withcontinuous flow lanes for through traffic without using grade separation. As a result, only the easternjunctions of Kaliungu is recommended to be designed with grade separation.

Guidelines for the provision of major intersection, minor intersection and underpass and futureupgrade thereof

I. Clear guidelines should be developed regarding the provision of major and minor intersections,and underpasses (where no access is provided from the minor road to the bypass and vice versa). Theguidelines should delineate conditions for providing these different intersections and underpasses interms of conditions of the crossing roads themselves, such as functional classification of the roads, andthe situational conditions including the distances from the neighboring intersections, etc. Guidelinesshould also be developed for the conditions for upgrading intersection types and provision of lampsconnecting grade separated minor roads with the bypass.

U-turns

12. No U-turns without proper design should be allowed on the SURIP bypasses. All designs shouldbe reviewed to ensure that appropriate provisions are made to all movements on the bypass so that novehicles are required to travel excessive distance without resorting to U-turns. U-turn provision shouldbe made only when it is deemed to be the only feasible solution. Guidelines should be developed for theprovision of U-turns designs which clearly delineates conditions under which the U-turns provision iswarranted. The guidelines should also include standard designs for U-turns. A possible standard designwas discussed during the appraisal mission.

Pedestrians, NMVs and slow moving vehicles

13. All road segments along the bypasses should be identified where slow moving vehicle, NMV andpedestrian traffic volumes are deemed to be high. All geometric designs for such segments should bereviewed to ensure the safe and smooth travel of these traffic. Frontage roads should be designed andconstructed from the initial stage wherever possible and necessary (particularly at intersections) to ensurethis requirement and to reduce side friction for motorized vehicle traffic. Parallel roads should also beinvestigated in this design process to identify possible alternative means for providing appropriate routesto pedestrians and NMVs.

14. The safe passage of pedestrians and NMVs must be addressed in the design of all locationswhere bypasses cut across existing pedestrian/NMV paths and no intersections are provided. Themeasures to be considered include underpass, median cutting and traffic island.

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Hydrology and hydraulic analysis

15. Hydrology and hydraulic analyses shall be done in the design of bridges and other majordrainage structures to determine the waterway requirements for the particular structure. .It was learned,however, that such analyses have not been done so far in the preparation of SURIP projects. The practicein Indonesia has often been to proceed with design without doing these analyses and to verify thefulfillment of hydrologic and hydraulic requirements expost. Appropriate modifications to the design, iffound necessary, are accommodated in the field in the form of change orders. Apparently, this is not asound practice, and therefore, it is strongly recommended that the appropriate hydrology and hydraulicanalyses be preceded to the design of bridges and other major drainage structures. The BridgeInvestigation Manual stipulates the procedures to be used for such analyses and should be used as SURIPguidelines..

Pavement design method

16. The Project Preparation Document should clearly describe the method used for conductingstructural analysis of the pavement..

- 65 -ANNEX 5


COMPONENT A: CRITERIA FOR APPROVAL OF RoAD SCHEME SUB-PROJECrS FOR FUNDING

1. "Before" Surveys (of the existing road)* Classified Traffic Counts* Origin and Destination (OD) of Traffic* Travel Times* Noise* Air Pollution* Road Accident Data (Time series data over several years).

2. Civil Works Contract DocumentsVolume-I Instructions to BiddersVolume-2 Conditions of ContractVolume-3 SpecificationsVolume-4 DrawingsVolume-5 Form of Bid and Bill of QuantitiesVolume-6 Special Specifications.

3. Land Acquisition - Confirmation that land has been acquired.

4. Resettlement - Confirmation that resettlement (if required) has been completed according to anapproved Resettlement Action Plan.

5. Environmental Assessment, Management and Monitoring Plans.

6. Economic Evaluation - Economic evaluation updated to reflect Final Construction and ROWcosts, and actual construction schedule.

7. Quality of Life Improvement Package - Basic Concepts.

8. Initial steps for the establishment of the DLLAJ have been taken by the participating LocalGovernment where the sub-project will be implemented.

9. Operations and Maintenance Arrangements on Completion.

10. Performance Monitoring Arrangements - Time-based schedule for "After" surveys, with detailsof agencies responsible.

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COMPONENT B: URBAN MANAGEMENT AND "QUALITY OF "LIFE" IMPROVEMENTSOUTLINE SCOPE OF ACTIVITIES

Bl. TRAFFIC AND ENVIRONMENTAL MANAGEMENT PLANS

I1. Preparation of plans for the existing road and adjacent areas, to change the function of the roadthrough the town from a primary arterial to a local traffic street or collector road, where the requirementsof pedestrians, NMV and local traffic movements take precedence over longer distance traffic. This isdone by a series of measures designed to make the route less attractive for longer distance traffic whichdoes not wish to stop in the town, and also designed to make the road safer for pedestrians and NMV.

2. The plan will focus on measures to:

(a) reduce the traffic function of the existing main road by reducing the road capacity,altering the horizontal alignment to reduce speeds, removing or modifying parking restrictionsexcept where necessary for road safety, improving at grade pedestrian crossings, or closure ofshort sections to create pedestrian areas, or to improve the setting of important buildings.(b) ensure the safety of the road user, especially the pedestrian by providing sidewalks,pedestrian crossing, bicycle lane, traffic lights, road marking etc.;(c) prevent local traffic congestion by improving traffic management and enforcement,providing bus stops, appropriate parking space and restrictions, improving control over roadsideactivities that encroach on the roadspace;(d) enhance amenity by greening/ tree planting, improved sidewalks and other measures;

3. Specific measures to consider in preparation of traffic and environmental management plans

(i) Traffic Management, Circulation and Parking Scheme. This will consist of the followingelements that together will comprise an integrated approach to improvement of the urban area:

* traffic management and minor improvements on existing and proposed roads todisperse traffic more efficiently;

* parking policies to improve and control on-street parking;* improvement of facilities for pedestrians;* public transport improvements including bus priority measures, stops, circulation

and terminal improvements.

(ii) Protection of Sensitive Local Areas from truck intrusion by use of local areamanagement measures.

(iii) Route Enhancement: along existing local roads that provide a vital connectivity andtherefore in functional terms a secondary role

* traffic management may be needed to increase capacity;

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* localized widening at intersections and bus stops;* management of market, street vendors and becak terminal parking;* street lighting;* non-signalized intersection improvements;* removal of fixed road-side objects.

(iv) Improvement of facilities for pedestrians, including:

* footpath widening and upgrading;* road closures and provision of pedestrian-only street sections;* installation of new medians to increase pedestrian and traffic safety;* installation of 2-phase pedestrian signals for busy roads;* rehabilitation of existing pedestrian overpasses and construction of new ones;* street lighting.

(v) Facilities for Non-Motorized Public Transport

* where services lanes are provided and used by bicycles, improved surfacing,connections and drainage;

* provision at intersections and crossings for bicycles and barrows;* consideration to provision of integrated bicycle and NMV routes;* parking areas for bicycles and NMV's.

4. Criteria for approval of road scheme sub-projects for funding

(i) Civil Works Contract DocumentsVolume-I Instructions to BiddersVolume-2 Conditions of ContractVolume-3 SpecificationsVolume-4 DrawingsVolume-5 Form of Bid and Bill of QuantitiesVolume-6 Special Specifications.

(ii) Land Acquisition (if required) - Confirmation that land has been acquired.

(iii) Resettlement (if required) - Confirmationthat resettlement has been completed accordingto an approved Resettlement Action Plan.

(iv) Environmental Assessment, Management and Monitoring Plans, according to GOIrequirements.

(v) Operations and Maintenance Arrangements on Completion.

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B2. STRUCTURE PLAN REVIEW.

5. Ensuring that the layout, function and improvements planned for the town road network reflectthe presence of the by-pass and the ability of the by-pass to take the through traffic as well as the longerdistance intra-urban traffic. This requires a review of the road network shown in the Strategic StructurePlan, and improvement proposals in the PJM of the IUDP, and amendments as appropriate, includingadditional works that could be funded through SURIP.

B3. PROTECTION OF THE FUNCTION AND RIGHT OF WAY (ROW) OF THE BY-PASS:

6. Ensuring that the land use plans and regulations of the town make provision for dealing with thedevelopment pressure that will arise along the by-pass. This has several aspects:

* defining a 40 m ROW for by-pass, with access via junctions at locations governed by highwaydesign criteria, and limited or no access elsewhere;

* protecting the ROW with local government regulations;* protecting the ROW with physical measures such as drainage ditches, embankments and walls;* providing sites close to the junctions for commercial development;- providing access roads from the junctions to these sites.

TIME BASED PROGRAM FOR PREPARATION OF COMPONENT B

7. Overview: The basis of the program is the assumption that the "Quality of Life" (QLI)subprojects will be planned during the completion of the bypass subproject, but designs will not befinalized until after some period of operation of the bypass has elapsed. For this purpose, it is assumedthat project preparation for the QLI subprojects needs to be completed three months after opening of thenew bypass, On this basis, the attached Implementation Schedule shows the various stages and their timedependency. Particular aspects of the program are noted below.

8. Relationship with DLLAJ Unit Setup and Staff Training: Assuming that an immediate startcan be made in setting up the DLLAJ units by the respective Bupati/Walikota and MHA, and allocating26 weeks for this to occur, it can be seen that this will be completed before the TA Services for TrainingDLLAJ staff will commence. It can be seen from the attached Schedule that DLLAJ training will becompleted well before there is a need to begin QLI program planning in any city.

9. Elements of the Project Preparation Process: It is apparent from the attached Schedule thatcompleting designs after three months operation of the bypass delays completion of QLI programimplementation until 18 months after bypass completion. It has been assumed that planning consultantswill be procured for each city. For cities where bypasses will be constructed in a number of sectionsand/or packages of civil works, with completion dates several years apart, separate QLI packages willalso be required.

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N URBAN ROADS ROUTINE MAINTENANCE UNIT

TENTATIVE LIST OF EQUIPMENT

Item Type of Equipment UnHt Quantity by Kotamadya Total Unit Cost Total CostNo. Semarang Cirabon Pokalongam Quantity US$'000 USS'000

1 Dump Truck, 3.5 T unit 4 2 2 8 20 1602 Flatbed with crane, 3.5 T unit 2 1 1 4 30 1203 Pickup ' unit 2 1 1 4 15 604 Wheel Loader, 0.75 m3 and Backhoe unit 1 1 0 2 55 1105 Roller, 2T (vibro) unit 2 1 1 4 30 1206 Baby Roller unit 2 1 1 4 8 327 Vibro Plate Tamper unit 2 1 1 4 1 48 Vibro Rammer unit 2 1 1 4 1.25 5

9 Air Compressor with Breaker set 1 1 0 2 15 3010 Asphalt Heater and Sprayer unit 2 1 1 4 2.5 10

11 Pan Mix unit 2 1 1 4 4 1612 Chain Saw unit 2 1 1 4 0.75 313 Generating Set unit 1 0 0 1 10 1014 Tool and Safety signs set 2 1 1 4 2 815 Mechanical Tools set 2 1 1 4 3 1216 Allowance for Operator Training by Supplier 70

TOTAL 770

'Vehides Not Bank Financed 220

TOTAL Bank Financed 550

IMPLEMENTATION SCHEDULE FOR QLI PROJECTS

1996 [ 1997 1998 1999 2000ID Task Name Durat. Start Finish A J A J 0 J A J 0 ° .J I A I J I 0 | J I A IJ 1 Establish DLLAJ Units 26w 6/3/96 11/29/96

2 Procure DLLAJ Consultants 40w 6/3/96 3/7/97

3 DLLAJ Training 52w 3/10/97 3/6/98

4 First Year Projects 0.2w 6/3/96 6/3/96

5 Cirebon Section 1 78w 3/3/97 8/28/98

6 Semarang NRR S1, Pkg 1 104w 3/3/97 2/26/99 .

7 Kudus 78w 3/3/97 8/28/98

8 Weleri 78w 3/3/97 8128/98

9 Kaliwungu Pkg 1 78w 3/3/97 8B28/98

10 Example Schedule for 1st year c 106w 9/1/97 9/10/99

11 Procure Planning Consultants 35w 9/1/97 5/1/98

12 QLI Planning 26w 6/1/98 11/27198

13 Project Approvals 13w 11130/98 2/26/99 I

14 Procure Const. Supervision C 35w 10/1/98 6//99|

15 Tender Civil Works 28w 3/11/99 9/10/99

16 Construction, OLI 26w 9/13/99 3/10/00 1

17 Later Civil Works Projects 0.2w 6/3/96 6/3/96

18 Pemalang Sect 1 78w 11/5197 5/4/99

19 Demak 78w 11/3/97 4/30/99

20 Kaliwungu Pkg 2 78w 10/8/98 4/5t00

21 Cirebon Section 3 52w 4/1199 3/29100

22 Kalibanteng 78w 4/1/99 9/27/00

23 Pemalang Sect 2 78w 4/1/99 9/27/00

24 Cirebon Section 2 78w 4/11/99 9/27/00

25 Semarang NRR S3 104w 1/1/99 12/28/00

26 Semarang NRR St, Pkg 2 104w 4/11/99 3/28/01

27 Semarang NRR S2 104w 4/11/99 3/28/01 ;

l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ >IMPLEMENTATION SCHEDULE Task MIstons * Smnmary -OLI Progam CD Z

LA

- 71 -ANNEX 7

REPUBLIC OF INDONESIASTRATEGIC URBAN ROADS INFRASTRUCTURE PROJECT.

OUTLINE SCOPE OF POLICIES, PROCEDURES AND GUIDELINES

COMPONENT A: ROAD CONSTRUCTION

(a) Scheme planning and design. The topics to be covered, the milestones and the elapsed time necessaryin the process from initial concept through to final engineering design of a road scheme are not well understood.This manual, which should be prepared by the PMU with consultant support, would cover the whole process forall aspects of a road scheme including engineering , economics, environment, land acquisition, resettlement,finance, and public participation.

COMPONENT B1: TRAFFIC AND ENVIRONMENTAL AREA MANAGEMENT PLANS

(b) Traffic Management. DGLT has published a Traffic Engineering Handbook in Bahasa Indonesia. Thisneeds to be expanded to include good examples of "Quality of Life" improvements, as well as the methodology forundertaking traffic management studies of the type to be undertaken in Component B of this project.

COMPONENT C2: STRENGTHENING OF BINKOT AMDAL SECTION

(c) Environment. The project will support continued development jointly by the GOI and the Bank of apolicy statement and guidelines for urban roads and the environment, to reflect international good practice. Thisdevelopment work will draw on the recently published TWU Report 13 'Roads and the Environment: AHandbook" which has been translated into Bahasa Indonesia. These guidelines could then be refined in theimplementation of SURIP schemes, and the planning and design of other BINKOT road schemes. This policywork will complement the Institutional Development of BINKOT AMDAL section.

(d) Resetlement. Detailed Bank policy guidelines and good practice for urban road schemes are beingdeveloped. The project will support work jointly by GOI and the Bank to develop a policy statement and bestpractice guidelines to ensure to the extent possible the living standards of people affected or resettled as a resultof urban road schemes in Indonesia have their living standards improved or at least restored. These guidelinescould then be refined in the preparation of any future Bank funded road projects.

COMPONENT E2: PLANNING PROGRAMMING AND EXECUTION OF URBAN ROADs WORKS

(e) Feasibility Studies. There appears to be no accepted definition in Indonesia of what constitutes a"Feasibility Study". This manual will provide such a definition and examples of good practice.

(f) Functional Design Guidelines. The SURIP road design guidelines in Annex 6 evolved during thepreparation of this project. They will formn the basis for good practice guidelines to be used for the preparation ofroad schemes for future primary urban road projects, including but not limited to SURIP Projects.

(g) Economic Evaluation. Standard methodologies are currently being used to evaluate road schemes, andthe results are robust, but each project or study customizes the process. The resulting models are not userfriendly and it is doubtful they could be run by a local highway engineer with assistance from a local transporteconomist. "What if" scenarios to do sensitivity tests on key variables are not easily done. BINKOT needs todevelop models and software that are user friendly and standard across all projects of similar scope.

(b) Technical Memorandum on Urban Roads for IUDP. The memorandum currently in general use (dueto the lack of any other material) was prepared in 1988 by consultants as a Technical Report for the original EastJava IUIDP. There is general agreement that it needs to be updated, and issued as a BINKOT Manual.

ENVIROMENTAL IMPACT ASSESMENT: SCREENING FOR ROAD PROJECTS

New ConststoRequires ANDAL (Environmnental Inmpact

- Toll Roads nd Flyovems Statement), RKL (Environmental Managemnent- Natonal nd Provinda Highways > 25km * Yes Yes * Plan), RPL (Environmental Monutorng Plan)- Urban and Metopolitan Roads > 5km- Urban and Metropoitan Road Bettermentoutside of right of way > 5 krn

- Bndges > 60 m long

YvUII the proposed prolect Lnerse_ A _I ____MPOSW proled bwvwu: Potentially significant1. Area of Signifl Socia l pa impact?2. Strict Natur Reserve (CA)

- - - - - - - - - - - - -- - - - - - - - - - - --- 3. W ildlHfe Resrve (SM)?L 4. ConservatIn Forest?New Construction of National and 5 Biodvnty Protesbon Area?Provincal roads c 25 km 6. vMidlife Reuge_:

Yes 7. Protection Forest (HL)? Yes ENVtRONMENTAL FIELDL __ _ __ 5 BSwanpOV and Area? STUDY

RRoad bettemnent outsidethJe rgligt of 1 , Uper Waterd Are7 km a 11 Aron sunounding I_Ake and Reservoirs? N

! .. ................ I : ~~~12. Springs and Water supply Aron?__ ~~~~~~~~~~13. Main and Frnbrwa Coservabon Areas?

New local (kabupaten) road 14. Magove Area?construction 15. Nabional Pa? No significant impact

16. Natre Park?17. Rereaibon Pa k18. Cultural Reserves and Scientkic Research Areas719 Natural Hazard Zones?20 Steep Se and ohew Fragil Areas? UKL (Environmental Management Plan) and UPL

__________________ _ _ (Environmental Monitoring Plan)

V t * Special cases of minor road improvement on ' Dsson on-9°n sechral UKLJUPLNo existing roads within right of way in sensitive

areas should be dealt with on a case by casebasis No

Implementation of Standard Operabng ProceduresRoad betterment within the nght of way, routne Yes (SOPs) to mitigate environmental impacts.and perirohc maintenance s_

....................................................

- 73 -ANNEX 8

(Page 2 of 2)


ENVIROMENTAL IMPACT ASSESMENT:CRITICAL ISSUES To BE INCLUDED IN DOCUMENTATION

1. Description of Existing Situation

On a map of scale not less than 1:1000 or where these are not available on a carefully prepared schematicrepresentation of the study area.

* identify existing land use on either side of the road (and estimate area(s)identify on either side of the road numbers of people and housing or community facilities affectedby the project with their exact location

* identify drainage patterns and comment on local hydrology e.g. where are the existing streams and isthere any history of flooding in the areaindicate whether the soils are sandy, silty or clayeyindicate any trees which may be affected by the road

measure existing traffic volume on existing roads and identify their present functionidentify any existing traffic hazards

c comment on existing sources of noise (both stationary and moving sources)* measure the existing noise with a hand held noise monitor three times per day (once in the morning

once in the afternoon and once at night) at the same locations where traffic volumes are collected.

c comment on existing air quality.

2. Proposed Road Scheme

2.1 For each stage of the proposed road scheme provide:

* an assessment of the impact of the project on traffic volume and day/night distribution* a brief assessment of the noise impact e.g. will the noise level increase by more than 5 dB(A) in the

housing areas* a brief assessment of impact on safety e.g. will the project affect the safety of pedestrians and non

motorized vehicles (NMV)* a brief assessment of anticipated changes in air quality

a qualitative assessment of how the project will affect local businesses and industries* a brief assessment of how the project will affect the quality of life of local residents in the immediate

vicinity of the proposed sub-project.

2.2 If noise levels are anticipated to increase by more than 5 dB(A) in residential areas or on communityfacilities such as schools or hospitals, then a proposal to mitigate or manage the problem should be included in theUKL/RKL and a proposal to monitor implementation should be included in the UPL/RPL. This proposal should bediscussed with the project manager in BINKOT. If barrier construction is anticipated a pro forma design shouldincluded. If relocation is considered to be the preferred option then evidence the process to relocate the houses,school or hospital has been started should be included.

SIJEP PROGRAM COMPONENT SUMMARYCW FUNDING SPLI: 001 . 60% (40% for Tk II) IStD . 60% (00% for Tk II)

US I.00-0 (Cs.-t Co. bluIdI. Pt. -. )s1 Pr1.. CPrflm IF.0o .- 2 4 a I P 7

1450 AOIBflO 4 R0ESETTLEMEN

cIOO-S.d4lhI LAR1 Parb It Apr.56 2 4 5.-67 . IL L L L. L. 1 353 6

Cir.b nS...2 LAR P6..& Ap,-96 3 7 Apr-59 L I L I L LIL L L I 31 8 1 1.204

C.lW- Sdl.ar3 1AR ParrdN Apr-N 2 4 Ap,r.SS -L L L _ L L I L L L4 P1.110

P- Wm SWI.1r2 LAP9 P-r.II My.y-6 3 0 Oct.96 L LLL L L L L L ,6 ,4 3 3.332

S VS.rrr5. 2 LAR P ..r Jo-96 2 4 D-9.7 L L L L L LLL 2 4 0245.7

S-Vro K.%-MmFO LAR P..* Apr.56 2 4 Apr.6a I L L L7IL ,114

D-.k LAR~~~~14. P-.r4 O.t-55 1 6 J.c97 LLLLLI5

K.*. 150 P.. II Jo-06 12 D.-SE II . .52.. ___ ______2 ___I____ _____ __PI _6.775

myApm SPOECTSCkM Sdk. ON Ice Fb.57 1I A.g-55 0022222X ,12 .40 1.2 4.76080

cloSO Solon S O LC Apr-56 12 Apr-00 & 576 1 25 70

P.rNong 0~~~~~~~r I 044~~o 52B "--SI 15 1."" 5-55XX 1.946 2.4 15 1,165 5,534

Add. Projnr (Ar.Pooon . 2 ON Ice Mo-SE 24 1.-01 A? -A- 2.527 4.404 5.105 1.456 13.496

ww.d c~~ ~~~wI 52B Jo-S 1 J4.59S 0022202 109 ,37 2.5 7.572

KA.ft-W P'c5t cw Ks J-9.7 Is hi-S 0 0 0x 0 0 0 470.4 .1 5,544

K.M..W6 Pkg 2 cw KM 05t.56 I 8 Apr.00 1III .675 2.218 775 4.570

S.I.r. RR S.0ono1 PkglI cw Ea J-c6 2 4 J-9. x0 2 2 5 0 0x 5 970 72 3675307

S0"-0- 5 _S ,, If9 ON 2W 52 Apr.0 24 APr.0 5.±X.X:024 3.703 1.001 10.229

S.r.cr N6R Sol. 2 045 52 Apr-5 2 4 Apr.01 2.650 2.100 651 5.601l

Sronrg 5~~~~~~ ~~r 3 LW~~O K2 Jo-SO 24 J-- n.01 l l 1.121 1,31 1,06' 4.305

8rronM K.K.W.V PO cw KM Apr.65 IS O.p.00 T 4.243 2.647 7.210

D..*P ON CB Ncc6 1 Jot-gB 4,652 5,763 2,766 13.204

6.400 11,635~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~TlI o2 e 648 360137

0K3ALrr7 OF LE 004ME1NNT

7505n6o VAP"N Ch LOP Apr.67 12 Apr.66 76 6 6

Prj 1t.5.5 CWO5) LOP M-9.6 369 M4y5.0 5 14 61.471 6,750 7,117 1.244 22.131

T.ft Meld M, '- - aDam jm JuW7 9 M-94 x ~~~~~~~~~~~~~~~3.354 3.364

R.6.* P,W Lk* SoAr. 52B 0 Apr.7 12 Apr.65 666 10 764

________________________________ _______ 4.645 lOP 4151~~~~~~~~~~~~i ixN MIM ,15

SURFP PROGRAM COMPONENT SUMMARYCW FUNDING SPLM GOI o 50% (40% for Th II) lBRD =50% (60% for Tk II)

' IS fl (Cn.-t Coo. Inclodir Ph,.clod rd Pol.

~ p- S-- 996107 '997,98 9 I D IQ1102 2012103 1 2 L A L TOTAL

Piqooimoooo-a Corofl(PMLJ TA ice p~0 SDw Doe0 S. ,5 5L 0x D x 5 0 2 D 0 17 0 D 5 0 5 3 0 4 50 027 070 515 963 S07 4.542

Peooooo kb.ho Sinoy TA UCB is o- 20 Ja-Si 0 --- 7 213 2 99 78 7 20

Ckda Sar a soLB D- 6 J9 Pardwi~~~~~~ Soar 2 SE~~~~~ LCO Dc-96 4 Apr-07 is

S..rong KiMutOg FO ESE LCO Dec96 0 Aoo-97 5 Dx II 3 2

LAd&Woo PP.*I.0F-eUk, StO.es FS LC Fot-o 0 Aog-97 2 I .I o 149

Fool EoW..io D-.r FE C -9 l-e202 rio7ai

CUJ Db'MCk.boo (Poor Ac Ro.d -APBN) PED' Oa Dc-S 4 uo P09cSoWr (AFBN) FEDr GI Dc-OS LZo-N" 0 tl.O P%.Si Rortle ko OU 5O C -9 J0 XL .----- -4 i 5 40

PP.9.01010W '~~~~~~~~~~~~~~~~~~~wrooo~~~~~~~~~ WV 152 iSO 42 403II.1 170 .:1 110,121,1

coopoo Sl.. I Cs us Fd-07 r a Au5-03 ass 16lo 0CocOar Soda3CsrB Ap-9 I p40 3* 5 45a

Pseoral,i7g: Mlp9 xx Sodr i2O 1V? 756 360 -

K096. P04aQo aiag c2 Cs am Uc-OG I 24 Mu-Or retx 207 334 00:990

KdasM P42C D 04 Ia A,0 x 122 144 Si a31

5- W = oOc 11.6 FoPg 2 Cs N P.2 24 A,0 xl x[ x1327 242 9 0

NinWi RO Soda2C C A,99 rio raT so 3~70

St. . . d V Sar 3 Cs IB J2 -1L T T T73 90 12 20i

D.* s N__ 301 374 liD 657Kit. 749~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~x :1 ~ :

Coc-OnCU (Foo Acoo Rood -APBI" Cs L.OS Mw-07 iS Moo-OS 31P.aiog.r Cu (WifE) 50~~~~~~~~~~~~~~~~~~~Ix X 1 0 56

Pr.9.ob 10 So MuilOod ~ CO CB M." 3 y- Ix - xxx xxx xx25 312 329 345 Orell

Psig P.%. A E.-A. di Rod ab" TA LOS Oci-O7 S Apr-906 473 553 550

U.odi P 1-I.Not DtoSo. TA LOS Dc.907 30 D.-OS 5 67 179 109V 149 574_____________________________________ 930 262 ill 141 1 ISO~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$3 2 2 S*1 1 .

DDLAJ D.oeioprroo ai TrosgTA ED Apr.0 30 MuO _550 300 aoo r.rD7 x

khoot Ow SMNOT AMDAL 8ega rA CB Ap.0 36 Mw-Oo 30 0 D 1.107

701 797 770 2.214.WJUTCTA 10,1 731 412'.63 39.361 30.626 26,649 :.560l S0.0

PIZ

(IQ

CONSULTANT SERVICES (for Engineering services and Technical Assistance) and TRAINING1I______________________ _IRefarence Descripton Agency Assisted Objectve end Scope of Works Re Estimated Desirable

Resourcesl Costs Time Start(p months) n iiiiloni (months) Date

Engineering Services .COMPONENT A Road Construction

_____ A1 Schems Design RBINKOT FS, Fhet Engineerug Dwesign (FED), Ensro(mFen,E lal and Resettlement Plans 620,000 See Not DecA2 Construction Supervision (CS) 8INKOT EnEsue schemes eare buit as designed and specified 6.020,000 See Note Jan-97

COMPONENT B Urban Management and Quality of Life Improvementsa 1 1 Scheme Design (APBD) Loral Governmrt FED oftrafficand environmentalianagement schemes _410,000 36 Jan-97B 1.2 Construction Supetvision (APBD) ___ _ Local Governmenl Ensue sctemes are built as designed arv dspedied 90__,00 39 Mar-98

_ _ ~~~~~~~ ~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Subtotal 1,330,000 12 Mr9B 1.3 Construction Supervision (APBN) BINKOT Ensue schemes are built as designed end specifed 350,000_12_

ENGINEERING SERVICES TOTAL 8,320,000=Implementation SupportCO lPONENT A Road Construction imptementation Support

A3 Suppor to Project Management Uni (PMU) BINKOT Projset Management, monior and reporting 4,000.000 60 Sep-96A4 Performance Montoring Swveys BINKOT Surveys of proine outcome widicators 610t000 29 Jan-9

COMPONENT B Urban Management and Quality of Lile Improvements Implement;alion SupportB 2 Urban Ptanning Review Local Governmentl Support hinniipa nninn oft B1, Strure Plan Review (82)and in 500,0J0 36 Jan 97

develo,ing measures for ROW Prote-ction (B3)

Subtotal Implementation Support 5,110,000 Z

Institutional DevelopmentCOlMPONENT D Urban Road Program Development

D1 IUrban Road Network Datsbase BINKOT 500,000 36 O9i

I________ Subtotal Institutional Development 500,000Policy Support __COMPONENT r E: Policy Formulation, Articulation & Impltmenntaon

El Urban Transport Policy and Programs. BAPPENAS Prepar urban tansport polcy for Repelita VIl, and programs in case study cit 80 JGF See Note Sep-96E2 Planning, Programming, and ExeaAion of Urban Road Works BINKOT _ _updsi BINKOT n licie, procedires arid guidelines 525,000 6 Ort9 7

Tiechnicx AMsmorandum on Urban Roads for IUIDP)

Subtotal Policy Support =25,000

TrainIng TECHNICAL ASSISTANCE TOTAL 6,135,000cOMPONE. , T C InstltuHfonal and Human Resource Development

Cl DLA Strengthening and Training for DLLAJ staff DGLT Organzaional development of DLLAJ, and technical training of staff, and 1,0000000 36 Apr-preparation of techinical guidelsies to assist in prepaation of Component B ___

C2 Stage 11 Strengthening of BINKOT AMDAL Uni BINKOT Operation support, trainig of staff, and updat ng of guidelines on the 1_,000.000 36 Apr-97anvronmental and resettlement aspeps of urban road schemes

TRAINING TOTAL 2,000,000 =

TOTAL 16,455,000

Note: Componetnt A 2 & A2.: There are several contracts with different startinp times and durations. The desirable start shown is for the first contractCornponent E 1: The work will be undertaken in stages.

w Z0vX

- 77 -ANNEX 10(Page I of 7)


DRAFF MODEL PROJECT IMPLEMENTATION MEMORANDUM (PIM)

1. INTRODUCTION

1.1 The Government of Indonesia (GOT) has obtained a loan from the World Bank for theimplementation of the Strategic Urban Roads Infrastructure Project (SURIP - the Project). Details of theProject are provided in the Loan Agreement and in the Staff Appraisal Report (SAR) of the World Bank.

1.2 This Project Implementation Memorandum (PIM) is a memorandum of agreements among theimplementing agencies, defining the roles and responsibilities of the implementing agencies, theelements of the Project and its mode of execution, and providing a framework of agreement within whichthe Annual Work Programs will be prepared for the duration of the project.

1.3 The executing and implementing agencies who are parties to this PIM are:(a) The Directorate General of Highways is the executing agency; and(b) The implementing agencies are the Directorate General of Land Transport and the Tingkat 11Govemments of:

* Kabupaten Cirebon;* Kabupaten Demak.* Kabupaten Kendal;* Kabupaten Kudus;* Kabupaten Pemalang;* Kotamadya Cirebon;* Kotamadya Pekalongan;* Kotamadya Semarang.

1.4 The Directorate of Urban Road Development (BINKOT) of the Directorate General of Highwaysis the Lead Implementing Agency.

1.5 BAPPENAS and the DG. PUOD in the Ministry of Home Affairs (MHA) also have roles in theproject, but are not considered as implementing agencies for the purposes of this PIM.

- 78 -ANNEX 10(Page 2 of 7)

2. ROLES AND RESPONSIBILITIES OF IMPLEMENTING AGENCIES

2.1 The roles and responsibilities of the Executing Agency and of each of the ImplementingAgencies are summarized in the Table below.

Implementing Role ResponsibilitiesAgency

I. Directorate General Executing Agency * Overall coordination of projectof Highways preparation and implementation

* Strengthening the operationalcapabilities of participating localgovernments in routine roadmaintenance

2. Directorate of Urban Lead Implementing * Establish, manage, supervise and directRoad Development Agency the Project Management Unit(BINKOT) * Provide technical direction of all

aspects of the project* Manage procurement of consultants,

contractors and equipment for theproject, except for that portion underthe responsibility of local government

* Monitor all aspects of the project, andreport on progress

* Arrange for and report on technical andfinancial audits

* Ensure compliance with GOI andWorld Bank environmental andresettlement regulations and guidelines

3. Directorate General Implementing * Direct and supervise consultants inof Land Transport Agency for DLLAJ training DLLAJ staff

4. Tingkat II (a) Implementing * Together with MHA (PUOD), establishGovernments agency for planning DLLAJ units

and implementation * assign staff to direct, supervise andof QLI projects in coordinate QLI preparation, executionproject cities. and implementation

* prepare traffic and environmentalmanagement plan

* undertake structure plan review-

* prepare QLI projects* implement QLI projects* Land Acquisition* Undertake necessary actions to project

function and ROW for Bypasses* Preparation and implementation of

Resettlement Action Plans (RAP)

- 79 -


2.2 The Ministry of Home Affairs (MHA) through DG PUOD is the central agency to be consultedfor the establishment of the DLLAJ in Tingkat II Governments. DG PUOD will assist in:

(a) the establishment of the DLLAJ in participating local governments; and(b) the reviews of funding levels for road maintenance for the additional roads to betransferred to or constructed in the participating local governments as part of the Project.

2.3 BAPPENAS, through its Interministerial Working Group (IWG) for urban transport, will beresponsible for:

(a) formulating the urban transport policy;(b) overseeing the overall progress of the Project implementation; and(c) ensuring coordination of project activities among the implementing agencies.

3. GENERAL PROVISIONS

3.1 The Implementing Agencies declare their commitment to the objectives of the Project as setforth in Schedule 2 to the Loan Agreement and to this end shall carry out their Respective Parts of theProject with due diligence and efficiency and in conformity with appropriate administrative, financial,engineering, environmental and resettlement practices, and shall provide, or cause to be provided,promptly as needed, the funds, facilities, services and other resources required for the implementation ofthe Project.

3.2 The Implementing Agencies shall carry out their Respective Parts of the Project in accordancewith technical criteria, cost estimates and financing arrangements, implementation timetables, operationsand maintenance programs, institutional capacity development programs and the Performance Indicatorssatisfactory to GOI and the Bank.

3.3 The Lead Implementing Agency shall, through the PMU, ensure that procurement of the goods,works and consultants' services required by the Implementing Agencies for their Respective Parts of theProject, and to be financed out of the proceeds of the Loan, be governed by the provisions of Schedule 4to the Loan Agreement.

3.4 The Implementing Agencies shall use the goods and services financed out of the proceeds of theLoan exclusively for the purposes of their Respective Parts of the Project.

3.5 The Implementing Agencies, through the Executing Agency, shall monitor the implementationof all proposed activities, and to inspect jointly with representatives of the World Bank if the Bank sorequests, from time to time, the goods, works and services procured under their Respective Parts of theProject, including all records and documents relating thereto.

3.6 The Implementing Agencies shall promptly inform the Borrower of any condition whichinterferes or threatens to interfere with the progress in carrying out their Respective Parts of the Projectand ensure that appropriate corrective measures are taken by the relevant Implementing Agency.

- 80 -


3.7 The Executing Agency shall cause each Implementing Agency to:

(a) from time to time, at the request of either the Executing Agency or the Bank, exchangeviews regarding progress achieved in carrying out their Respective Parts of the Project; and

(b) furnish to the Bank all such information and documents related thereto as mayreasonably be requested. Each Implementing Agency shall further agree to obtain suchinformation and documents as may be required by the Executing Agency to fulfill itssupervision, monitoring, recording and reporting obligations to the Bank.

4. PROJECT IMPLEMENTATION AND PREPARATION

4.1 Technical Criteria and Guidelines

All aspects of project identification, feasibility studies, environmental and resettlement impactassessment and final engineering designs, shall be undertaken according to existing Standards andGuidelines as listed in Appendix 1, and others as may be prepared from time to time as part of the SURIPprogram.

4.2 Resettlement Framework

Resettlement Action Plans are to be prepared, if necessary, following the provisions of the relevant SKWalikotamadya/Bupati and Juklak.

4.3 Environmental Assessment, Management and Monitoring

All environmental assessment, management and monitoring will be undertaken according to GOIregulations, and all required documents (UKL/RKL and UPL/RPL) are to be produced as required.Relevant standards and guidelines produced by BINKOT are to be followed. Documents are to be madeavailable for public review. The contents are indicated in Appendix 2.

4.4 Review and Approval Road Construction Sub-components

Packages of Civil Works projects under the Road Construction Component of the Project are to beprepared to a standard suitable for funding approval by the World Bank. A number of criteria that are tobe satisfied are listed in Appendix 3. Project preparation works will be programmed in the Annual WorkProgram.

4.5 Preparation, Review and Approval of Urban Management and Quality of LifeImprovements

The Quality of Life Improvement (QLI) program will take advantage of the diversion of through trafficto improve the quality, safety and amenity of the urban environment, and to enhance business functions.To ensure the existing road space is not used merely to accommodate more motorized traffic, a series oftraffic, environmental, and land use management measures will be implemented once the bypasses areopen to traffic. This component comprises three activities for each location:

- 81 -ANNEX 10

(Page 5 of 7)

* A Traffic and Environmental Management Plan for the existing road and adjacent areas to beimplemented once the by-pass is opened including road scheme subprojects and other civil works tobe included in the medium term expenditure program (PJM) for the town, with a time basedimplementation schedule;

* A Structure Plan Review. Carrying out reviews of the impact of the construction of the bypass onthe land use plan/strategic structure and transport investment plans (PJM) for each town, togetherwith time based proposals for any additional road scheme subprojects required as a result of thisreview to be included in the traffic and environmental management plan; and

* Protection of the function and the Right of Way of the bypass, through regulations, and by makingprovision for development at acceptable locations along the bypass.

Outline scopes of the activities, detailed guidelines on traffic and environmental management measures,and civil works suitable for funding are set out in Appendix 4. A time based approach to the preparationof a potential package of measures for each town, as well as to carry out the reviews of the StrategicStructure Plans and transport investment plans, will be developed as part of the Annual Work Program.This approach will include local participation of business and civic groups.

5. PROJECT IMPLEMENTION ARRANGEMENTS

5.1 Project Management Unit

Overall project management will be provided through a Project Management Unit (PMU). Staff will beassigned by BINKOT to the positions outlined below, and consultants will be appointed to support thePMU in discharging its functions. The key staff are:

* Head of PMU - overall management of the Project, assumed by the Director of BINKOT;- Project Manager - for day to day arrangements on financial matters, directly responsible to the

Head of PMU, and working hand in hand with the Project Officer; and* Project Officer - the day to day management on technical matters, directly responsible to the

Head of PMU, and assisted by the Project Management Consultant.

5.2 Tingkat II Government

The Development Planning Agency in each Participating Local Government (BAPPEDA 11) shall beresponsible for overall supervision of Sub-projects under the Urban Management and Quality of LifeComponent of the Project, including programming and planning of civil works under such Sub-projects.To this end, BAPPEDA II shall assign, and thereafter maintain throughout Project implementation,qualified and experienced technical officers who shall carry out day-to-day coordination activities,including preparation and dissemination of consolidated progress reports. Implementation underComponent B is by Dinas PU Kotamadya/Kabupaten (DPUK).

5.3 Road Construction Component

Implementation of the Road Construction Component will be undertaken by the Directorate General of

- 82 -ANNEX 10(Page 6 of 7)

Highways, through the Provincial Bina Marga (Dinas PU Bina Marga). Supervision will be through theRegional Betterment Office (RBO) Bandung (for Cirebon), and the P3TNAS in Semarang (for cities inCentral Java).

5.4 Annual Work Program

An Annual Work Program (AWP) will be prepared by each Implementing Agency for the followingfiscal year and provided to the Project Management Unit (PMU) of DGH by the 15th July of each year.The AWPs will set out for each sub-project and activity, the scope, costs, time-based implementationschedules, performance monitoring targets, a financing plan and detailed budget arrangements. Anoutline of an AWP is contained in Appendix 5.

5.5 Progress Reporting and Monitoring

Overall progress monitoring and reporting, and the monitoring and reporting of performance indicatorswill be the responsibility of the PMU. Agreed Performance Indicators and output targets are given inAppendix 6. The PMU will detail the requirements for project monitoring and reporting, to beundertaken by the Implementing Agencies.

5.6 Annual Review of Progress

An annual review of the project will be undertaken, jointly by GOI and the Bank. This review willprovide the opportunity to review the progress of the implementation of the Project, and to instituteactions to mitigate unsatisfactory performance. The review will take place each October, to coordinatewith the GOI Budget process, and to ensure appropriate provision is made for counterpart funds in GOIbudgets. The review will focus on the following:

- the evaluation of progress for the preceding fiscal year;- the draft AWPs proposed for the following fiscal year; and* performance monitoring targets.

6. DISBURSEMENTS AND FINANCIAL MANAGEMENT

6.1 Budget Consultations and Approvals

Budgeting for each sub-project and for works under the Project will be undertaken as part of the annualbudgeting process. GOI counterpart funding consistent with the AWP requirements will be provided.

6.2 Project Accounting and Auditing Arrangements

The PMU will have overall responsibility for establishing, maintaining and monitoring a uniform projectaccounting system. The PMU will also prepare project accounts of all components implemented directlyby the central agencies. Project accounts for sub-components implemented by local governments will bethe responsibility of the structural financial agency within the local government secretariat, andseparateaccounts for each will be kept. The PMU will also be responsible for consolidating quarterlyproject accounts and submitting them annually for consolidated audit purposes by the BPKP Central

- 83 -


Office. The PMU will also coordinate statements of expenditure audits with the Directorate General forthe Budget, Bank Indonesia and the State Audit Board's Central Office.

7. PROCUREMENT

7.1 Procurement of works and goods will follow the "Guidelines for Procurement under IBRD Loansand IDA Credits" dated January 1995 and revised in January 1996. Large civil works contracts costingUS$3 million or more and goods contracts costing US$250,000 or more would be procured followingInternational Competitive Bidding (ICB) procedures, using the Bank's standard bidding documents(SBD). A general procurement notice would be issued in advance to encourage participation of eligibleparties. Domestic preference would be provided during bid evaluation at a rate of 15 percent of the CIFprice or the applicable customs duty, whichever is lower for local manufacturers participating in the ICBprocurement of goods. Smaller civil works contracts, valued at less than US$3 million would beprocured under National Competitive Bidding (NCB) procedures acceptable to the Bank.

8. COMPLETION OF PROJECT

8.1 Preparation Of Plans For Future Operation And Maintenance

The bypass roads to be constructed will be designated as national roads, and DGH will be responsible forongoing maintenance. A Ministerial Decree will be prepared to implement the road classification beforeexpiry of the maintenance warranty period. Existing national roads that are replaced by the bypass willbe handed over to the Kotamadya or Kabupaten at the same time as new bypass roads are classified. Areview of the financial capabilities of Tingkat II government for increased road maintenance will beundertaken as part of the Annual Review.

8.2 Preparation of the Report upon Project Completion

On completion of the project and within six months of the Loan closing date, BINKOT, together with theparticipating Kabupatens and Kotamadyas, will prepare a report for review by GOI and the Bank.

9. OTHER PROVISIONS

APPENDICES1. Technical Standards and Guidelines2. Environmental Impact Assessment: Critical Issues to be Included in Documentation

(See SAR Annex 8)3. Criteria for Approval of Road Scheme Sub-projects for Funding (See SAR Annex 5)4. Urban Management and "Quality of Life" Improvements - Outline Scope of Activities

(See SAR Annex 6)5. Outline of Annual Work Program (See SAR Annex 11)6. Performance Indicators and Outcome Targets (See SAR Annex 2)

- 84 -

ANNEX 11


OUTLINE OF ANNUAL WORK PROGRAM

Objectives: The Annual Work Program is to be prepared by each Implementing Agency, and furnished to theProject Management Unit, for consolidation into a single document for the Project. It is intended to be a flexibleworking document to be adjusted every year.

Section 1. Work Program for Sub-projects and Other ActivitiesDescription of all Sub-projects and other activities to be carried out during the next fiscal year by the implementingagency. An Annex to the Annual Work Program will provide a clear identification of these Sub-projects, and a detailedProject Implementation Schedule.

Section 2. ProcurementSpecific procurement activities to be undertaken, including preparation and processing of bidding documents. To beidentified in Project Implementation Schedule.

Section 3. Engineering Services and Technical AssistanceProvides details of all planned activities related to project preparation (for both sub-projects and QLI projects);construction supervision activities; and the Technical Assistance program. A detailed implementation schedule willidentify all necessary steps for procurement, and give the proposed timetable.

Section 4. Financing and DisbursementProvide details of proposed financing sources and timing for the provision of such funds for all project components.Detailed disbursement schedules are to be provided for all components.

Section 5. Environmental Assessment, Management and Monitoring.Provide detailed information and an implementation schedule for all aspects of proposed environmental assessmentstudies to be undertaken; particular activities proposed for environmental management; and the monitoring ofenvironmental impacts to be undertaken during the period.

Section 6. Land Acquisition and ResettlementProvide detailed information about proposed land acquisition for the year, including planned expenditure program andsources of funding. Provide work program and schedule detailing activities related to the preparation of ResettlementAction Plans; community participation as part of resettlement/compensation; and monitoring as required.

Section 7. Other MattersAny other items not specifically provided for in the above.

APPENDICES

I . Detailed Descriptions of Sub-Projects and Other Activities;2. Detailed Procurement Schedules;3. Program of Engineering Services and Technical Assistance;4. Project Implementation Schedule covering all components;5. Detailed Schedule of Disbursements.

- 85 -

ANNEX 12


PROCUREMENT PACKAGING & PRIOR REVIEW CONTRACT PROFILE

Range of Contract Values COMPONENT Estimated value Cumulative Value Percentage of(Inc.tax and contingencies) & Contracts I ContractB Total ContractB

wAthin each rang above threshold *bove Threshold(US $ million) Sub Project Estimated Value Added Value Number Estimated Number Estimated Number

Value Tax including Value Value(US $ million) PPN Tax (US $ million) (US miflion)

Civil WorksA:Bypass/Rlng RoadsSemarang NRR

Section 1 Package 2 10.23 0.51 10.74Demak 13.20 0.66 13.86Kudus 11.64 0.58 12.22

10,000 to 14,999 subtotal 35.07 1.75 36.83 3 36.83 3 26.71% 10.34%Pemalang Sectionl 5.53 0.28 5.81Pemalang Section 2 7.70 0.39 8.09Weleri 7.87 0.39 8.27Kallwungu Package 1 5.84 0.29 6.14Semarang NRR 0.00 0.00

Section 1 Padeap 1 8.31 0.42 8.72Section 2 5.80 0.29 6.09Kalibanteng Flyover 7.21 0.36 7.57

Additional Works 4.68 0.23 4.91(a. Cirebo, a Pemalung Section 2) 0.00 0.00

5000 to 9999 subtotal 52.95 2.65 55.59 8 92.42 11 67.03% 37.93%Cirebon Section 1 4.68 0 32 4.91Kaliwungu Package 2 4.87 0.24 5.11Semanng NRR Sed 31SSUDP 4.31 0.22 4.52

0.00 0.00B: Cirebon Port Access 4.84 0.24 5.08

3,000 to 4999 subtotal 18.69 0.93 19.63 2 112.05 13 81.26% 4.83%Review threhhold US$ 3 million

SUBTOTAL 106.71 5.34 112.05Component B:10 Conlracts 22.13 0.89 23.02

2,000 to 2,999 subtotal 22.13 0.89 23.02 3 135.06 16 97.95% 55.17%A:Cirebon Ring Road 1.12 0.056 1.18

Section 2

1,000 to 1999 subtotal 1.12 0.06 1.18 11 136.24 27 98.81% 93.10%A Pekdlongan 0.86 0.04 0.90A: Cirebon Ring Road 0.71 0.04 0.74

Section 30 to 999 subtotal 1.57 0.08 1.65 2 137.88 29 100.00% 100.00%

Below review threshold subtotal 24.82 1.02 25.84 18.74%TOTAL T 131.53, 6.36 137.88 29 _

Conrctn a pa r of Component B1 Traffic and Environmental Mangement

Goods:Only one goods contract value US $3.7 million for prior review

- 86 -




DISBURSEMENTS: COMPARISON OF PROFILES

Quartersfrom IndonesiaBoard Transport KR3 KREI HSL2 KR6 SURIP

Approval Profile (Ln. 3490) (Ln. 3579) (Ln. 3712) (Ln. 3732) (Proposed)% of Loan Disbursed

2 0 7 7 7 5 34 6 16 13 10 11 126 14 31 24 16 21 248 22 49 32 24 30 38

10 38 56 50 5012 50 79 60 6214 58 84 7216 70 __r_ _ 8318, 82 _ 9020 90 _ 9722 94 _ _ 10024 98 i i26 100 _____

100

90

80 80-+Indonesia Transport Profile %

70 Loan Disbursed-- I6 KR3 (Ln. 3490)

.o 650 _-KREI (Ln. 3579).0 50

O -40-- KR5 (Ln. 3732)40

30 0- HSL2 (Ln. 3712)

20 -+- SURIP (Proposed)

10

01 2 3 4 5 6 7 8 9 10 11 12 13

Quartem from Board Approval

- 87-

ANNEX 13( Page 2 of 2)


ESTIMATED SCHEDULE OF DISBURSEMENTS BY QUARTER

Fiscal Year Quarter Ending Quarterly (US$ m) Cumulative (US$ m) Cumulative1997 31-Dec-96 3.0 3.0 3%

31-Mar-97 3.0 6.0 7%30-Jun-97 4.0 10.0 12%

1998 30-Sep-97 5.5 15.5 18%31-Dec-97 5.7 21.2 24%31-Mar-98 5.7 26.9 31%30-Jun-98 5.7 32.6 38%

1999 30-Sep-98 5.3 37.9 44%31-Dec-98 5.3 43.2 50%31-Mar-99 5.3 48.5 56%30-Jun-99 5.0 53.5 62%

2000 30-Sep-99 4.7 58.2 67%31-Dec-99 4.7 62.9 72%31-Mar-00 4.7 67.6 78%30-Jun-00 4.7 72.3 83%

2001 30-Sep-00 3.1 75.4 87%31-Dec-00 3.0 78.4 90%31-Mar-01 3.0 81.4 94%30-Jun-01 3.0 84.4 97%

2002 30-Sep-01 2.0 86.4 99%31-Dec-01 0.5 86.9 100%

Assumptions: efectiveness in October 1995; closing date of September 30, 2001.

- 88-ANNEX 14


SUPERVISION STAFFING AND SCHEDULE

Mission Dates Purpose StafMing Requirements (sw)

October 1996 Project Launch Workshop Urban Transport Specialist (I sw)Environmental Specialist (I sw)Resettlement Specialist (I sw)Highway Engineer (I sw)Transport Planner (I sw)Operations Officer (I sw)Disbursement Officer (I sw)Lawyer (I sw)

January 1997 Supervision Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

April 1997 Supervision Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

October 1997 Annual Review Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Highway Engineer (I sw)Transport Planner (I sw)Operations Officer (I sw)Resettlement Specialist (1 sw)

January 1998 Supervision Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

April 1998 Supervision Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Transport Planner (1 sw)Operations Officer (I sw)

October 1998 Annual Review Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Resettlement Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

April 1999 Supervision Mission Environmental Specialist (I sw)Transport Planner (I sw)Operations Officer (1 sw)

October 1999 Annual Review Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Resetlement Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

April 2000 Supervision Mission Environmental Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

October 2000 Annual Review Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Resettement Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

April 2001 Supervision Mission Environmental Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

August 2001 Implementation Completion Mission Urban Transport Specialist (I sw)Environmental Specialist (I sw)Resettlement Specialist (I sw)Transport Planner (I sw)Operations Officer (I sw)

Total number of staff weeks by Bank FY for supervision is as follows:20-25 (FY97), 20-25 (FY98), 15-20 (FY99), 15-20 (FY00), 15-20 (FY01), 5-7 (FY02)

- 89 -



ECONOMIC ANALYSIS

1. This annex provides some details of the inputs and outputs of the economic analysis ofthe seven road scheme sub-projects in component A of the project. Further information oninputs, methodology and sensitivity testing is provided in documents on the project file.

2. Scheme Details and Total Costs. The schemes analyzed are those described in Annex3, except as noted below. The sub project length for analysis is the distance between the centrelines of the junctions with the existing North Java Corridor at the start and end of the sub-project.This may be less than the road length included in the engineering designs which will generallyalso include all of the junction at either of the sub project.

- Cirebon By pass - the costs include section 3 (the western junction), and an at gradecrossing of both railways in section 2.

* Pemalang. - the costs are for alternative 1, which includes widening of the existingroad over section 2 - the western section of the by pass.

- Semarang Northern Ring Road -the costs are for sections I & 2, excluding theconstruction of the Kalibanteng Flyover.

3. Vehicle Operating Cost (VOC) Savings. The VOC savings have been calculated bycomparing VOC on the existing and new (bypass sub project) roads with the VOC on theexisting road without the new bypass for the forecast traffic volumes at five year intervals. VOCon the existing road are forecast to grow faster than the forecast growth in traffic as congestionbuilds up.

4. The rate of growth of VOC savings will be reduced at the time of opening of toll roadsections parallel to the sub project. It has been assumed that 40% of the by pass traffic willdivert to the parallel toll road section.

5. The Kaliwungu by pass is longer than the existing road. As a result, for the initial yearsof operation of the by pass VOC are greater than on the existing road, and overall accidentbenefits are much higher than VOC benefits.

- 90 -


CIREBON Sections 1, 2 & 3

Length 6.13 kms. (for economic analysis)AADT 4W 24776 in opening year Toll Road Opening Year Assumed 2002

Costs and benefits in Rp millionYEAR Total Maintenance VOC Saving Passenger Accident Undiscounted Without Time

Cost Cost LV & Bus Trucks Time Savings Benefits Net Benefits Savings1997 -10807 -10807 -108071998 -10806 -10806 -108061999 -27 1243 1369 2613 703 5901 32882000 -27 1243 1369 2613 703 5901 32882001 -27 1243 1369 2613 703 5901 32882002 -27 1243 1369 2613 703 5901 32882003 -27 1243 1369 2613 703 5901 32882004 -27 939 1040 2385 596 4933 25482005 -2023 978 1080 2524 605 3164 6402006 -27 1017 1120 2663 614 5387 27242007 -27 1056 1160 2803 623 5615 28122008 -27 1095 1200 2943 633 5844 29012009 -27 1219 1378 3319 663 6552 32332010 -27 1344 1556 3697 694 7264 35672011 -27 1468 1733 4073 725 7972 38992012 -2023 1592 1911 4451 755 6686 22352013 -27 1716 2089 4828 786 9392 45642014 -27 1946 2465 5532 819 10735 52032015 -27 2177 2842 6238 854 12084 58462016 -27 2406 3218 6943 888 13428 64852017 -27 2637 3595 7648 922 14775 71272018 -27 2868 3971 8353 956 16121 7768

Discount rate: 15.0% ERR FYRR NPV24.2% 27.3% 12,257 Inc. Time Savings13.0% 15.2% (2,263) excl. Time Savings

Overall cost/km 3607Routine Maint./km 4.4 Accident Benefits as %Periodic cost/km 330 of VOC Benefits 25%

Contribution of time savings to(discounted) benefits. 67%

IRR: Internal rate of returnNPV: Net Present ValueFYRR: First year rate of return

Passenger trips with economic value = 25%

- 91 -


PEMALANG

Length 9.93 kms.AADT 4W 12250 in opening year * Toll Road Opening Year Assumed 2006

* Assuming 2 way traffic on existing roadCosts and benefits In Rp million

YEAR Total Maintenance VOC Saving Passenger Accident Undiscounted Wlthout TimeCost Cost LV & Bus Trucks Time Saving Beneflts Net Beneflts Savings

1997 0 0.01998 -12869.5 -12869.5 -12869.51999 -12869.5 -12869.5 -128702000 -44 1120 1257 3079 596 6008 29292001 -44 1250 1434 3522 637 6799 32772002 -44 1380 1611 3965 677 7589 36242003 -44 1510 1787 4407 717 8377 39702004 -44 1662 2033 4923 760 9334 44112005 -44 1814 2279 5438 802 10289 48512006 -3277 1967 2524 5954 844 8012 20582007 -44 2119 2770 6469 887 12201 57322008 -44 2271 3015 6984 929 13155 61712009 -44 2278 3044 7145 926 13349 62042010 -44 2284 3072 7307 924 13543 62362011 -44 2291 3100 7468 921 13736 62682012 -44 2298 3129 7629 919 13931 63022013 -3277 2304 3157 7790 916 10890 31002014 -44 2512 3555 8604 956 15583 69792015 -44 2720 3952 9418 995 17041 76232016 -44 2929 4350 10232 1035 18502 82702017 -44 3137 4748 11046 1075 19962 89162018 -44 3345 5146 11860 1115 21422 95622019 -44 3567 5577 12734 1155 22989 10255

Discount rate: 15.00% IRR FYRR NPV28.65% 23.34% 22,000 incl. Time Savings15.02% 11.38% 27 excl. Time Savings

Overall cost/km 2205 Accident Benefits as %Routine Maintenance/km 4.4 of VOC Benefits 19%Periodic costlkm 330


IRR: Internal rate of returnNPV: Net Present ValueFYRR: First year rate of returnPassenger trips with economic value = 25%

- 92 -


WELERI BYPASS

Length km AADT 4WProject road: 4.62 13123 in opening yearExisting road: 4.5 7551 with projectToll Road Opening Year Assumed 2005

Costs and benefits in Rp millionYEAR Total MAINT. VOC Saving PASSENGE Accident UNDISCOU WITHOUT

Cost COST LV & BUS TRUCKS TIME SAVIN Benefits NET BENEFI TIME

1997 -8506.5 -8506.5 -85071998 -8506.5 -8506.5 -85071999 -20 493 477 1154 591 2695 15412000 -20 570 577 1357 634 3118 17612001 -20 647 677 1560 678 3542 19822002 -20 723 777 1764 721 3965 22012003 -20 800 876 1967 764 4387 24202004 -20 1036 1195 2442 809 5462 30202005 -1525 1271 1514 2917 855 5032 21152006 -20 1506 1833 3392 900 7611 42192007 -20 1741 2152 3867 945 8685 48182008 -20 1977 2471 4341 991 9760 54192009 -20 1854 2313 4142 938 9227 50852010 -20 1731 2155 3943 886 8695 47522011 -20 1608 1997 3744 834 8163 44192012 -1525 1485 1839 3545 782 6126 25812013 -20 1362 1680 3346 730 7098 37522014 -20 1758 2251 4193 762 8944 47512015 -20 2154 2822 5041 793 10790 57492016 -20 2550 3393 5888 825 12636 67482017 -20 2946 3963 6735 857 14481 77462018 -20 3342 4534 7583 888 16327 8744

Discount rate: 15.00% IRR FYRR NPV24.39% 15.84% 12,461 incl. Time Savings15.36% 9.06% 399 excl. Time Savings

Overall cost/km 3521 Accident Benefits as %Routine Maint./km 4.4 of VOC Benefits 7%Periodic cost/km 330


IRR: Internal Rate of ReturnNPV: Net Present ValueFYRR: First Year Rate of ReturnPassenger trips with economic value = 25%

- 93 -


KALIWUNGU By Pass


Costs and benefits In Rp millionYEAR TOTAL MAINTENAN VOC SAVIN VOC SAVIN PASSENGE Accident UNDISCOUNT WITHOUT

COST COST LV & BUS TRUCKS TIME SAVIN Benefits NET BENEFIT TIME

19992000 -11912.5 -11913 -11912.52001 -11912.5 -11913 -11912.52002 -33 -1051 -834 3669 1384 3135 -5342003 -33 -1060 -792 4122 1471 3708 -4142004 -33 -688 -406 5346 1561 5780 4342005 -33 -317 -20 6571 1651 7852 12812006 -33 55 366 7795 1741 9924 21292007 -33 427 752 9019 1831 11996 29772008 -2051 798 1138 10244 1921 12050 18062009 -33 667 1015 9708 1822 13179 34712010 -33 535 893 9171 1723 12289 31182011 -33 403 771 8635 1624 11400 27652012 -33 271 648 8099 1525 10510 24112013 -33 139 526 7563 1426 9621 20582014 -33 792 1209 9558 1488 13014 34562015 -2051 1445 1892 11554 1550 14390 28362016 -33 2098 2575 13549 1611 19800 62512017 -33 2750 3258 15545 1673 23193 76482018 -33 3403 3941 17540 1735 26586 90462019 -33 3913 4985 19791 1797 30453 106622020 -33 4501 5732 22166 1859 34225 120592021 -33 5175 6592 24826 1921 38481 13655

Discount rate: 15.00% ERR FYRR NPV27.01% 13.16% 21,978 incl. Time Savings6.20% 2.24% -11,608 excl. Time Savings

Overall cost/km 3612 Accident Benefits as %Routine Maint./km 4.4 of VOC Benefits 259%Periodic cost/km 330


IRR: Internal Rate of ReturnNPV: Net Present ValueFYRR: First Year Rate of ReturnPassenger trips with economic value = 25%

- 94 -


SEMARANG Northern Ring Road Sections 1 & 2

Length km 7.72 (for economic analysis)AADT 4W 23212 in opening year

Costs and benefits In Rp millionYEAR TOTAL MAINTENAN VOC SAVIN VOC SAVIN PASSENGE Accident UNDISCOUNT WITHOUT

COST COST LV & BUS TRUCKS TIME SAVIN Benefits BENEFITS TIME1997 -27610 -27610 -276101998 -27610 -27610 -276101999 -32 907 2035 1991 979 5880 38892000 -32 1037 2438 2342 1046 6831 44892001 -32 1167 2840 2693 1112 7780 50872002 -32 1296 3243 3043 1179 8729 56862003 -32 1426 3646 3394 1245 9679 62852004 -32 1717 4657 4100 1319 11761 76612005 -2376 2009 5669 4805 1393 11500 66952006 -32 2300 6680 5511 1467 15926 104152007 -32 2591 7691 6216 1541 18007 117912008 -32 2882 8703 6922 1615 20090 131682009 -32 3558 11305 8576 1689 25096 165202010 -32 4234 13907 10230 1764 30103 198732011 -32 4910 16510 11884 1838 35110 232262012 -2376 5586 19112 13538 1913 37773 242352013 -32 6262 21714 15192 1987 45123 299312014 -32 6582 23152 16257 2074 48033 317762015 -32 6902 24589 17321 2160 50940 336192016 -32 7222 26027 18386 2246 53849 354632017 -32 7542 27464 19450 2332 56756 373062018 -32 7862 28901 20515 2418 59664 39149

Discount rate: 15.00% ERR FYRR NPV21.07% 10.65% 30,243 incl. Time Savings15.96% 7.04% 4,172 excl. Time Savings

Overall costkm 4559Routine Maint./km 4.4 Accident Benefits as %Periodic cosVkm 330 of VOC Benfits 15%

Contribution of time savings toIRR: Internal rate of return (discounted) benefits. 35%NPV: Net Present ValueFYRR: First year rate of returnPassenger trips with economic value = 25%

- 95 -


DEMAK BYPASS


Costs and benefits in Rp millionTOTAL MAINTENAN VOC SAVIN VOC SAVIN PASSENGE Accident UNDISC NE WITHOUT

YEAR COST COST LV & BUS TRUCKS TIME SAVIN Benefits BENEFITS TIME

199719981999 -14791.5 -14791.5 -14791.52000 -14791.5 -14791.5 -14791.52001 -30 251 200 1901 945 3267 13662002 -30 301 283 2146 1007 3707 15612003 -30 351 365 2391 1068 4145 17542004 -30 528 615 2867 1131 5111 22442005 -30 704 865 3343 1195 6077 27342006 -30 880 1115 3820 1258 7043 32232007 -2287 1057 1366 4296 1322 5754 14582008 -30 1233 1616 4772 1385 8976 42042009 -30 1171 1538 4604 1313 8595 39912010 -30 1109 1460 4436 1241 8216 37802011 -30 1046 1382 4268 1169 7835 35672012 -30 984 1304 4100 1096 7454 33542013 -30 921 1227 3931 1024 7073 31422014 -2287 1252 1701 4761 1069 6496 17352015 -30 1582 2175 5590 1113 10430 48402016 -30 1912 2649 6420 1157 12108 56882017 -30 2242 3123 7249 1202 13786 65372018 -30 2572 3597 8078 1246 15463 73852019 -30 2880 4143 9002 1290 17285 82832020 -30 3226 4640 9992 1334 19162 9170

Discount rate: 15.00% IRR FYRR NPV17.24% 11.04% 4,067 incl. Time Savings6.93% 4.62% -11,869 excl. Time Savings

Overall cost/km 3491Routine Maint./km 4.4 Accident Benefits as %Periodic cost/km 330 of VOC Benefits 62%

Contribution of time savings toIRR: Internal Rate of Return (discounted) benefits. 56%NPV: Net Present ValueFYRR: First Year Rate of ReturnPassenger trips with economic value = 25%

- 96 -


KUDUS


Costs and Benefits In Rp millionYEAR TOTAL MAINTENAN VOC SAVIN VOC SAVIN PASSENGE Accident UNDISCOUNT WITHOUT

COST COST LV & BUS TRUCKS TIME SAVIN Benefits BENEFITS TIME

1997 -12830 -12830 -128301998 -12830 -12830 -128301999 -46 247 342 2979 1640 5162 21832000 -46 308 471 3488 1764 5985 24972001 -46 368 599 3997 1889 6807 28102002 -46 429 728 4505 2013 7629 31242003 -46 489 857 5014 2137 8451 34372004 -46 799 1329 6306 2265 10653 43472005 -3432 1108 1801 7599 2393 9469 18702006 -46 1418 2273 8891 2521 15057 61662007 -46 1728 2745 10184 2649 17260 70762008 -46 2037 3216 11477 2777 19461 79842009 -46 2057 3193 11528 2634 19366 78382010 -46 2077 3169 11579 2490 19269 76902011 -46 2097 3145 11630 2347 19173 75432012 -3432 2117 3121 11681 2203 15690 40092013 -46 2137 3097 11732 2060 18980 72482014 -46 2980 4311 15233 2149 24627 93942015 -46 3824 5524 18733 2238 30273 115402016 -46 4667 6737 22234 2327 35919 136852017 -46 5511 7950 25735 2416 41566 158312018 -46 6354 9163 29235 2506 47212 17977

Discount rate: 15.00% ERR FYRR NPV29.69% 20.12% 35,430 incl. Time Savings15.56% 8.51% 1,002 excl. Time Savings

Overall cost/km 2284 Accident Benefits as % of VOC BenefitsRoutine Maint./km 4.4 75%Periodic costtkm 330

Contribution of time savings to discounted benefits61%

IRR: Internal Rate of ReturnNPV: Net Present ValueFYRR: First Year Rate of Return

Passenger trips with economic value = 25%

- 97 -

ANNEX 16


DOCUMENTS ON FILE

1. Preparation of the Primary Urban Road Component of the Proposed StrategicUrban Roads Infrastructure Project, Louis Berger International, Inc. in association with P. TIndec and Associates, Ltd., P. T Eskapindo Matra, P. T Indah Karya:

1. Inception Report, March 19952. Interim Report 1, June 19953. Travel Time and Delay Surveys, June 1995

4. Summary Environmental Assessment, August 19955. Executive Summary of the Summary Environmental Assessment, Dec. 1995

6. Strategic Assessment Working Paper on the South Bali Corridor, August 19957. Strategic Assessment Working Paper on the North Sumatra Corridor, Aug. '958. Interim Report on Strategic Assessment, July 1995

9. Technical Report of License Plate OD-Survey10. Technical Report of Air Quality and Noise Baseline Survey11. Technical Report of Social Economic Survey for PAP on Cirebon Section 1

12. Final Report (Two Volumes) February 1996

2. Strategic Urban Roads Infrastructure Project, Travers Morgan July 1995:

I. Cleaning of SJJP data, July 19952. Review of Data Sources, June 1995

3. Presentation Folder brought by Indonesian Delegation to Negotiations:VOLUME 1

Section I FinancialSection 2 Component B: QLI ComponentSection 3 Criteria for Funding Schemes (Component A Subprojects)Section 4 Economic Evaluation


Section 5 Land Acquisition for Year I SchemesSection 6 KotamadyalKabupaten Decree (SK)Section 7 Environment Assessment

- 98 -


Section 8 Urban Transport PolicySection 9 Summary of Project TA & Consultant Services ComponentSection 1 0 Loan Processing and Implementation ArrangementsSection 11 DIP & PO FY 1996/1997Section 12 Miscellaneous

6. Other Documents brought by the Indonesian Delegation to Negotiations

l. Short list of Consultant for Consultancy Services of General Consultantsupport to PMU (including the criteria method of evaluation)

2. Short list of Consultant for TA of Urban Transport Policy(including the criteria method of evaluation)

3. Complete Package of Contract Document of Weleri (Vol. 1, 2, 3, 4 and 5)4. Contract Drawing Document (Vol. 4) of Cirebon Section 1, Pemalang Section 1,

Pekalongan, Weleri, Kaliwungu Section I & 2, Semarang Section I Package 1,Demak, and Kudus

5. Engineering Estimate6. Landscape Plan applied to all those proposed bypass

7. AMDAL Documents (18);* Executive Summary of the SEA (l)* Summary Environmental Assessment (SEA) (1)* Ringkasan Eksekutif Rangkuman Kajian Lingkungan (1)* RKL and RPL Cirebon Bypass (2)* KL, UKL and UPL Pemalang Bypass (3)* KL, UKL, and UPL Weleri and Kaliwungu (5)* RKL and RPL Semarang NRR (2)* Kerangka Acuan Kalibanteng FO (1)* RKL and RPL Kudus Bypass (2)

BRD 2799

110 IT, INDONESIA

JMATERA STRATEGIC URBAN ROADS INFRASTRUCTURE PROJECTNORTH JAWA CORRIDOR

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h4rcaL DK L JAKARTA NORTH JAVA CORRIDOR ROUTE NATIONAL HIGHWAYS RIVERS

.JAtKARTA r,o,,_____ PROVINCE ROADS .. _. _ PROVINCE IPROPINSI) ROUNDARIES

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Report No: 15295 INDType: SAR