INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE. I. Basic Information Date prepared/updated: 12/13/2006

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I. Basic Information Date prepared/updated: 12/13/2006 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Report No.: 1. Basic Project Data Country: Indonesia Project ID: P Project Name: Indonesia: Expansion of Water Services in Low Income Areas of Jakarta Task Team Leader: Iain Menzies Estimated Appraisal Date: NA Estimated Board Date: NA Managing Unit: IEF Lending Instrument: Output Based Aide Sector: Water supply (100%) Theme: Other urban development (S) Trust Fund Amount (US$m.): 5.00 Environmental Category: B - Partial Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) [ ] No [ ] 2. Project Objectives The proposed pilot project will implement an output-based approach for expanding water service to selected low income areas of Jakarta. The goal of the pilot would be to extend coverage (as per household demand) to these areas, by metered individual household connections, which would subsequently receive services from Jakarta s water concessionaires and pay tariffs. 3. Project Description Since 1995, water supply in Jakarta has been managed by two private concession companies (PT Pam Lyonnaise Jaya- Palyja and Thames Pam Jaya- TPJ ) who retain responsibility for raising finance for and managing network investments. However, network growth in Jakarta remains far too slow (about 10,000 new connections a year) to make significant impact on the low access rate, leaving large areas of Jakarta deprived of network access, with only 51% of inhabitants having network water, compared to an average of 79% for Asian Cities. The main reason behind the low investment levels is that tariff revenues from services, despite significant increase over the last years, have been insufficient to fund major capital investment, largely because the government had accumulated significant arrears towards both concessionaires during the high inflation period of The proposed pilot project would test and output based approach (OBA) for expansion of service coverage by providing grant based payments to the water concessionaire in return for installing individual metered connections to selected low income urban areas of Jakarta. The project will initially focus on the concession area of Palyja and at a later date expand to the TPJ concession area

2 The communities were chosen based on technical criteria (in areas with adequate levels of service such that new connections will not affect the service in neighboring areas; in areas where there is no need for secondary or primary network construction, and in areas with limited or polluted groundwater resources), policy criteria (poverty level and compatability with DKI Jakarta spatial plans) and social criterion (willingness to connect). A total of nine communities (2621 households) will receive Type I connections (standard metered household connection with an underground connection pipe) and one community (500 households) will receive Type II connections (a community based system with bulk metering and above ground connection pipes). OBA payments will be made to the concessionaire upon confirmation of installation of the connections. The payment amount is agreed upfront based on preliminary designs and confirmed through an independent assessment and benchmarking process. Outputs would be considered as met once customers have had their connection services rendered to their satisfaction and in line with regulatory requirement over a specified period of time and have paid their bills during that period. OBA grants will be disbursed upon certification of outputs by an auditing firm in the amounts specified and consultations with the regulator, from an escrow account established with the local branch of a reputable international financing institution, directly to the concessionaires. 4. Project Location and salient physical characteristics relevant to the safeguard analysis The communities are located in the areas of Jakarta outlined below. These are in urban areas with modest housing and low income and all are in the Palyja Concession Area. Kecamantan Kelurahan Concession Area Penjaringan Pejagalan Palyja Penjaringan Muaru Baru Palyja Kalideres Kalideres Palyja Pegadungan Kalideres Palyja Cengkareng Tega; Alur Palyja Cengkareng Cengkareng Barat Palyja Kebon Jeruk Kepa Duri Palyja As the numbers of communities may be expanded at a later date the project may include other areas including those in the TPJ concession area. 5. Environmental and Social Safeguards Specialists John Morton, Environmental Specialist

3 6. Safeguard Policies Triggered No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Cultural Property (OPN 11.03) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: The works in the project trigger the Environmental Assessment Policy due to the safety, construction and traffic related impacts. As no system will be designed that would require land acquisition or resettlement, the Involuntary Resettlement Policy is not triggered. An environmental management plan has been developed for the works that utilizes requirements for the construction contractors and associated standard operating procedures. Monitoring and reporting will also be undertaken as part of the program. The environmental management plan is outlined in the Minimum Environmental and Community Requirements for Palyja Projects. The measures include: personal protective equipment for workers; trench safety procedures; public safety and traffic management; handling removal of asbestos cement pipes if encountered; handling and disposal of solid, liquid (including oils and fuels) waste; management of burrow sites for backfill material and chance finds procedures for cultural property. Additionally, it also requires that no asbestos cement pipes be used in the works. If the project will expand to include the TPJ concession area, a similar approach will be developed and reviewed by the Bank for consistency with safeguards policies. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Impacts are small in scale, temporary and site specific,

4 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. No project alternative: The no project alternative is to have these communities exposed to increased health risks by relying on informal sources of water that can limit the quantity of water available for use in hygiene and by of uncertain quality (including groundwater, public hydrants, push carts and water terminals). Other alternatives: The main design alternatives were considered as part of the process of community selection. The criteria used in site selection helped maximize environmental benefits and reduce impacts. In particular, the criteria indicated that project would focus on areas that required limited construction (no primary or secondary networks), areas with adequate water pressure so as not to sacrifice water availability in neighboring areas and areas with limited or polluted groundwater so as to maximize the benefits of substituting the water resources with the new connections. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Palyja has a corporate environmental policy and an adequate system of contracting and contractor supervision for environmental and safety issues. They have also begun reporting environmental compliance through their environmental officer. As part of preparation some additions to their environmental, monitoring and consultation approach were made in order to strengthen their approach. Given these improvements their capacity to implement is adequate. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Consultation on the safeguards issues at the community level will be done on a programmatic basis where the communities will be informed of the project activities and environmental and safety management expectations and given an opportunity to provide input before project work begins. A mechanism to allow communities to raise concerns or complaints on the execution of the project works and environmental management plan will also be provided. The environmental management plan has been disclosed in the Infoshop and in country [STILL TO BE DONE]

5 B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank Nov 2006 Date of "in-country" disclosure 2006 Date of submission to InfoShop 2006 For category A projects, date of distributing the Executive NA Summary of the EA to the Executive Directors * If the project triggers the Pest Management and/or Cultural Property, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP Environment Assessment Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? To be done No No

6 D. Approvals Signed and submitted by: Name Date Task Team Leader: Iain Menzies Environmental Specialist: John Morton Social Development Specialist Additional Environmental and/or Social Development Specialist(s): Approved by: Sector Manager: Comments: