FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF URBAN WATER SUPPLY AND SANITATION PROJECT IBRD LOAN NO.
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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FO OFFICIAL USE ONLY ESTUCTUING PAPE ON A POPOSED POJECT ESTUCTUING OF UBAN WATE SUPPLY AND SANITATION POJECT IBD LOAN NO ID TO THE EPUBLIC OF INDONESIA December 19, 2013 INDONESIA SUSTAINABLE DEVELOPMENT UNIT EAST ASIA PACIFIC EGION eport No: v1 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
2 ABBEVIATIONS AND ACONYMS IBD KPI PA PAD PCU PDAM PIU PMM International Bank for econstruction and Development Key Performance Indicator Performance Agreement Project Appraisal Document Project Coordination Unit Perusahaan Daerah Air Minum (local water utility) Project Implementation Unit Project Management Manual egional Vice President: Country Director: Sector Manager: Task Team Leader: Axel van Trotsenburg odrigo A. Chaves Nathan M. Belete Irma Magdalena Setiono 2
3 INDONESIA ID-UBAN WATE SUPPLY AND SANITATION CONTENTS Page A. SUMMAY... 4 B. POJECT STATUS... 4 C. POPOSED CHANGES... 4 ANNEX 1: ESULTS FAMEWOK AND MONITOING... 6 ANNEX 2: LETTE FOM MINISTY OF FINANCE POPOSING POJECT ESTUCTUING
4 ID UBAN WATE SUPPLY AND SANITATION ESTUCTUING PAPE A. SUMMAY The proposed restructuring involves revision and update to the esults Framework and its key performance indicators described in the Project Appraisal Document (PAD) to ensure that a more efficient set of indicators are applied during project implementation and they are consistently presented in the Performance Agreements between Local Governments and their respective PDAMs. This revision will also include retrofitting inclusion of the core indicator for water supply, and to make correction and update to the baseline data and targets. This restructuring will better reflect progress of project implementation and its impact in improving service performance. The proposed restructuring does not involve changes to the project implementation period, the total loan amount, loan allocation between different categories, or changes to the mechanisms to ensure compliance with the safeguard policies. The proposed changes will also not result in change of impact in any other sections of the PAD. B. POJECT STATUS Based on the latest implementation support mission conducted in April and May 2013, project implementation progress is rated as Moderately Satisfactory. The project is currently rated as Satisfactory towards achievement of its Project Development Objectives and overall Implementation Progress is rated as Moderately Satisfactory. All other IS ratings are either S or MS and there are no major issues pending. Procurement processes and implementation of construction contracts have started and are progressing in all locations (some are already completed). Disbursements have been improving and will continue to improve in the future. Disbursement rate is at 59.93% and with completion of most project activities by end of June 2014, it is very likely that all funds will be used by closing date. All budgets to fund project activities has been fully allocated in the government s budgeting system (DIPA allocation) and all key ingredients for project implementation are in place (the Project Management Manual, the Project Coordination Unit PCU, the PCU Advisory Consultant, the Project Implementation Units PIUs and their supervision consultants). There are still delays in some construction activities although there will still be adequate time to complete all constructions prior to the end of project period. The PCU and PIUs are still having issues with monitoring and evaluation and reporting the progress of Key Performance Indicators achievement due to some confusion caused by inconsistencies of definition between the KPIs stated in their respective Performance Agreement and the definition stated in their regular reporting systems, as well as in the PAD 4
5 C. POPOSED CHANGES The proposed changes to be included in this restructuring include: (i) revision and update of the esults Framework (description and definition of Key Performance Indicators to include core indicator and to ensure consistency between all project documents); and (ii) to correct and update baseline data and targets. The changes are proposed to assist the PCU and PIUs in having more clarity and streamlined monitoring and evaluation process, thus improving the project s reporting mechanism. With this improved monitoring and evaluation process, the project will be better positioned to reflect the progress of implementation and its impact. Changes to the results/indicators include clarification of the definitions, correction and updating baseline data and targets, as well as inclusion of core indicator of water sector. The new sets of indicators are realistic, achievable and measurable, and take into account the capacities of the PIUs. The changes to the results/indicators are shown in the Annex 1. 5
6 ANNEX 1: esults Framework and Monitoring Project Development Objective (PDO): Improved and expand water supply services in project areas by strengthening local water utilities to become operationally efficient and financially sustainable evised Project Development Objective: N/A PDO Level esults Indicators* Core D=Dropped C=Continue N= New =evised Unit of Measure Baseline (2009) Cumulative Target Values** Frequency Data Source/ Methodology esponsibility for Data Collection Indicator One: Increment in capacity of production system Indicator Two: Increment in number of connections Indicator Three: Number of new piped household water connections that are resulting from the project intervention Indicator Four: Improvements in customer satisfaction, indicated by: (a) Quality (b) Service Hours (c) eliability Increment in installed production capacity l/s 1, C HC 86,587 12,250 16,421 N HC 0 0 Improvements in customer satisfaction, indicated by: (a) Quality (a) % (b) Hours (c) % (b) 23 (c) , ,087 12,250 18,021 8,500 1,600 (b) 23.5 (c) , ,587 12,974 19,521 17,000 1,125 3,100 (b) 24 (c) , ,087 13,484 22,021 25,500 1,635 2,500 (b) 24 (c) , ,587 15,200 24,521 34,000 3,351 2,500 (b) 24 (c) > , ,087 17,700 27,021 42,500 5,851 2,500 (b) 24 (c) >95.00 Semi-annual project progress report Semi-annual financial management reports Annual Audit eports Annual or biannual Procurement Audit eports Annual eviews Mid Term eviews Final Completion eports PDAM s Annual Audited eport PDAM s Monthly eport Procurement Post eviews PCU Monitoring and Evaluations Bank Implementation Support Missions and Field Visits PIU/PDAM/ PEMDA PCU Independent Financial Auditor (BPKP)
7 (b) Service Hours (c) Complaint handling (b) 8.62 (c) M. Enim (b) 5 (c) 100 (b) (c) 91 (3 M. Enim (b) 5 (c) 89.2 (b) 9.5 (c) 90 M. Enim (b) 5 (c) 100 (b) 8.43 (c) 100 M. Enim (b) 5 (c) 100 (b) 14 (c) >95 M. Enim (a) >90 (b) 6 (c) >90 (b) 18 (c) >95 M. Enim (a) >90 (b) 12 (c) >90 Indicator Five: Operating atio Indicator Six: Debt Service Coverage atio (only for Bogor) C < < <1 <1 <1 <1 <1 <1 C 2.68 >1.3 >1.3 >1.3 >1.3 >1.3 <1 <1 <1 INTEMEDIATE ESULTS Intermediate esult (Outcome 1): Improved PDAM Operations One: Additional volume of water produced Two: Non-evenue Water Three: Number of bulk meters replaced, repaired or installed evised Intermediate esult (Outcome 1): N/A Increment volume of water produced C D l/s % Unit 1, , , , , ,
8 Four: Number of individual meters replaced or repaired One: Number of employees per connection Two: Water tariffs collection period Number of individual meters replaced or repaired, or calibrated Unit 19, , , Intermediate esult (Outcome Two): Improvement of PDAM Corporate Management evised Intermediate esult (Outcome Two): N/A Number of employees per 1,000 connections Water tariffs collection efficiency Staff % Intermediate esult (Outcome Two): Improvement in PEMDA Corporate Ownership evised Intermediate esult (Outcome Two): N/A C One: % Tariff increases to maintain operating ratio , > , >95 > , >95 > *Please indicate whether the indicator is a Core Sector Indicator (see further **Target values should be entered for the years data will be available, not necessarily annually. 8
9 Annex 2 Letter from Ministry of Finance
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