Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I. Basic Information Date prepared/updated: 04/27/2010 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Report No.: AC4967 1. Basic Project Data Country: Indonesia Project ID: P111577 Project Name: Local Government and Decentralization Project Task Team Leader: Peter D. Ellis Estimated Appraisal Date: March 1, 2010 Estimated Board Date: May 25, 2010 Managing Unit: EASIS Lending Instrument: Specific Investment Loan Sector: Sub-national government administration (100%) Theme: Municipal governance and institution building (67%);Decentralization (33%) IBRD Amount (US$m.): 220.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 0.00 0.00 Environmental Category: B - Partial Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) [ ] No [] 2. Project Objectives The objective of the project is to improve the accountability and reporting of the central government Specific Purpose Grants (DAK) for the infrastructure sub-sectors within pilot local governments (LGs). This will be done through improved financial and technical reporting, and verification of outputs delivered by LGs with the DAK. 3. Project Description The project will cover 81 LGs, in five provinces, namely: Jambi; East Java; Central Kalimantan; West Sulawesi; and North Maluku, to reimburse a portion of the DAK transfers, focusing on infrastructure, and provide technical assistance to support institutional strengthening both at the central and LG level. The project is expected to have a positive impact beyond the infrastructure sector investments proposed for DAK reimbursement, since the improvements in LG capacity will also translate into improved utilization of DAK resources and investments in other sectors. The project will work with the existing mechanisms for transfer of DAK resources, and seek to strengthen the framework for improving the quality of DAK expenditures. This will be done by improving the delivery of physical outputs, as well as strengthening monitoring and verification of DAK implementation by LGs. Current GoI and LG
systems of monitoring and reporting will be important in terms of providing baseline information and criteria for evaluating and preparing performance criteria to be used. The project consists of three components, as follows: Component 1: DAK Reimbursement (US$220 million) This component will be implemented using an Output-Based Disbursement (OBD) financing approach. Under this approach, the project will reimburse the existing DAK for infrastructure (roads, water, sanitation, and irrigation) based on reported and verified physical outputs delivered by participating LGs. Verification of outputs (VO) will be conducted by Indonesia#s State Finance and Development Supervisory Board (Badan Pengawasan Keuangan dan Pembangunan, BPKP). The amount reimbursed by the project will be based on meeting eligibility conditions for outputs delivered, as specified in the table below. Outputs with or exceeding a contract value of US$400,000 will not be considered eligible for reimbursement. Component 2: Institutional Strengthening to Central and Local Governments and Project Management Support (US$8.5 million) This component will support the strengthening of the basic institutional functioning of the project. It will be split into four sub-components: (i) Developing a Monitoring and Evaluation System; (ii) Web-Based Monitoring and Reporting System; (iii) Technical Assistance for Central Government and LGs; and (iv) Project Management Support to implement and monitor the project. Component 3: Verification of Outputs This component will constitute BPKP doing the verification of outputs (VO). BPKP will finance the VO function, plus any needed hiring of new staff and capacity enhancement from their own budget. Annex 4 in the PAD contains greater detail on BPKP role as VO. In the event that the BPKP fails to provide the required documentation for the budget and the work plan for any fiscal year by October 31 in the preceding fiscal year, then the Bank has the right not make any Advance Payment or Reimbursement for that year. 4. Project Location and salient physical characteristics relevant to the safeguard analysis The project will cover 81 LGs in five provinces, namely: Jambi, East Java, Central Kalimantan, West Sulawesi, and North Maluku. As the project will cover all LGs in these provinces, it is likely that investment will take place in villages where Indigenous Peoples (IPs) or Isolated and Vulnerable Peoples (IVPs) are living. IPs in these provinces are among others, Suku Anak Dalam (Jambi), suku Tobaru and Galela (North Maluku), Dayak (Kalimantan), and Binggi (West Sulawesi). In addition, there are also ethnic minority in East Java province, namely Osing and Tengger. Geographical distribution of IPs in these five provinces is available in the project file. The project will reimburse DAK mainly for maintenance, rehabilitation and improvement of four types of investments; i.e. roads (fixing pot-holes, some road
resurfacing, minor realignment, etc), irrigation (replacing existing canals, upgrading, and minor realignments), and water supply and sanitation (repairing existing lines and some upgrades). There might be new construction of small roads, irrigation channels, water and sanitation facilities, and local water supply facilities and distribution pipes to improve the existing services of the above-said infrastructures. These investments will range from $50,000 to $250,000. Outputs with or exceeding a contract value of US$400,000 will not be considered eligible for reimbursement. Given this nature of the subproject investment, land acquisition for a sub-project would be insignificant. The project may increase the exposures of the IP groups to outsiders as access to their villages is improved and a better, new farming practice is introduced as irrigation networks improved. Potential adverse environmental impacts will be small-scale, localized and not irreversible, and therefore can be locally managed. 5. Environmental and Social Safeguards Specialists Ms Indira Dharmapatni (EASIS) Mr Andrew Daniel Sembel (EASIS) 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) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) 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: Given the nature of the project, potential adverse environmental impacts will be small scale, on-site, not irreversible, and therefore can be managed locally. In fact, improving these infrastructures will have positive environmental impacts to the beneficiaries. The project is classified as Category B for environmental assessment. The project anticipates that there will be insignificant [involuntary] land acquisition. Extension or expansion of these infrastructures will be limited. Some of the investments may require temporary or some permanent land for some minor adjustment in the alignment. It is anticipated that there would be two types of approaches in acquiring the needed land. The most common one is the voluntary contribution from the beneficiaries. The second approach, which might take place in few cases, is the involuntary land acquisition whereby subproject has to acquire land through compensation.
The project will cover 81 LGs in five provinces, namely: Jambi, East Java, Central Kalimantan, West Sulawesi, and North Maluku. As the project will cover all LGs in these provinces, it is likely that investment will take place in villages where Indigenous Peoples (IPs) or Isolated and Vulnerable Peoples (IVPs) are living. IPs in these provinces are among others, Suku Anak Dalam (Jambi), suku Tobaru and Galela (North Maluku), Dayak (Kalimantan), and Binggi (West Sulawesi). In addition, there are also ethnic minority in East Java province, namely Osing and Tengger. The project may affect the IPs as subproject would increase the exposures of the IP groups to outsiders as access to their villages is improved, and a better and new farming practice is introduced due to the improvement of the irrigation networks. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. 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. Given the above nature of the subproject investment, it was agreed that there is no need for stand-alone environmental and social safeguard frameworks. Instead, the Bank safeguards requirements will be incorporated into the current MPW Technical Guidelines to LGs for use of DAK Grants. In addition, the project Operation Manual will detail the compliance process and outcomes (implementation, monitoring, and reporting) of the adoption of the environmental and social safeguards specified in the Supplement of the MPW Technical Guidelines. The Annex 10 of the PAD outlined in detail the aspects that need to be included in the Supplement of the Technical Guidelines and the Project Operation Manual. A supplement to the MPW Technical Guidelines will be developed in lieu of a standalone environmental impact assessment (EMP or a Framework (EMF)), a stand-alone Resettlement policy Framework, and, a stand-alone IP of IVP Frameworks. The supplement will cover (a) requirements, procedures and protocols for screening and mitigating potential adverse environmental impacts for the four types of investments during design, construction and operation; (b) requirements, procedures and protocols for various schemes of land acquisition (land donation, compensation, exchange, etc), to address livelihoods, to carry out consultation and grievance mechanisms and documentations; and, (c) requirements, procedures and protocols for subprojects involving IPs or IVPs to ensure that there is a free, prior, and informed consultation leading to broader support by the IP communities during the planning, implementation and operation stage.
The MPW will issue the Supplement of the Technical Guidelines through a Circular Letter signed by the Minister of Public Works. The Project Operation Manual (POM) will be issued by the Ministry of Finance. Both the Supplement and the POM will have to be approved by the Bank prior to Loan Effectiveness. The Supplement of the Technical Guidelines will be disseminated and socialized to the participating LGs in 2010. The Supplement of the Technical Guidelines applies for a sub-project investment that is partly or wholly financed by the project. Furthermore, it will be applied to all local investments for which reimbursement will be made under the Project. Any investment that is found incompliance with the safeguards arrangements as set out in the Supplement of the Technical Guidelines will be ineligible for reimbursement. The Project will reimburse the DAK expenditure in 2012 for the spending of 2011. It is expected that LGs start adopting the Supplement of the Technical Guidelines for the DAK subprojects to be implemented in 2011. Part of the roles of the BPKP (as a verifier) in cooperation with the MPW will be to ensure compliance with safeguards by LGs. The BPKP will undertake sampling of a percentage (10-20%) of projects. In addition, large DAK investments should also be given special review by the BPKP to ensure compliance with safeguards. This would create an additional layer of supervision and risk mitigation, since the project would not reimburse expenditures where safeguards are violated. The project will develop a simple monitoring indicator and tracking compliance approach as part of the overall project design. Any local investment that is found through this sampling and review process not to comply with the safeguards arrangements set out in MPW Technical Guidelines as agreed with the Bank will be excluded from reimbursement. The project will review the safeguard compliance of sub-projects that have investment size higher than a certain threshold, for example US$150,000. The project will also provide environmental and social safeguards training to the technical agency (Ministry of Public Works), BPKP, and MOF as well as to LG beneficiaries. The project will not reimburse sub-projects that have investment size higher than US$400,000 and other than the four above-mentioned project types: roads, water and sanitation, and irrigation. The MPW has experienced in many Bank supported projects since the last three decades and therefore has a good understanding on the Bank environmental and social safeguards policies. It has sufficient capacity to implement the Bank environmental and social safeguards policies, but its capacity to monitor and assess the performance of the LGs in implementing the Supplement of the Technical Guidelines will have to be strengthened. The BPKP and the MOF have a very limited awareness and experience in implementing the Bank environmental and social safeguards policies, and therefore need to be strengthened. LGs have some capacity in implementing environmental and social safeguards instruments according to Indonesian regulations. However, their understanding and capacity to implement the Bank requirements on environmental and social safeguards will have to be improved. Socialization and close monitoring and supervision of the implementation of the Supplement of the Technical Guidelines by the LGs will have to be done by the project. The project will have to ensure that quarterly reports prepared by LGs include the information of the implementation of the requirements, procedures and protocols of the environmental and social safeguards as
specified in the Supplement of the Technical Guidelines to LGs for use of the DAK Grants. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Stakeholders involved in this project are BPKP, MOF, MPW and 81 LGs. The Supplement of the MPW Technical Guidelines and the POM will be disseminated and socialized to relevant agencies in all LGs. The MPW is planning to have a training workshop in each province, inviting all respective LGs in the region, to introduce the implementation of the Supplement of the Technical Guidelines. The draft of the Supplement of the MPW Technical Guidelines will be disclosed in the MOF and MPW websites as well as in the Infoshop by appraisal. Both of the approved Supplement and POM will be disclosed in the same websites prior to loan effectiveness. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Date of receipt by the Bank 04/20/2010 Date of "in-country" disclosure 04/20/2010 Date of submission to InfoShop 04/26/2010 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank 04/20/2010 Date of "in-country" disclosure 04/20/2010 Date of submission to InfoShop 04/26/2010 Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank 04/20/2010 Date of "in-country" disclosure 04/20/2010 Date of submission to InfoShop 04/26/2010 Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop * If the project triggers the Pest Management and/or Physical Cultural Resources, 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 4.01 - 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? OP/BP 4.10 - Indigenous Peoples Has a separate Indigenous Peoples Plan/Planning Framework (as appropriate) been prepared in consultation with affected Indigenous Peoples? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit or Sector Manager? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? 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? No No No
D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Peter D. Ellis 04/07/2010 Environmental Specialist: Mr Andrew Daniel Sembel 04/07/2010 Social Development Specialist Ms Indira Dharmapatni 04/07/2010 Additional Environmental and/or Social Development Specialist(s): Approved by: Sector Manager: Ms Sonia Hammam 04/08/2010 Comments: