EB 2015 116 R 19 Project Design Report

Asian Development Bank
Republic of Indonesia:
Integrated Participatory Development and
Management of Irrigation Sector Project
Project Administration Manual
25 November 2015
Republic of Indonesia
Integrated Participatory Development and Management of Irrigation Sector Project
Table of Contents
I. PROJECT DESCRIPTION 9
A. Rationale 9
B. Impact and Outcome 12
II. PROJECT IMPLEMENTATION APPROACH 13
A. Implementation Approach 13
B. Project Readiness Activities 16
C. Project Implementation Plan 16
D. Implementing Agencies 17
III. PROJECT MANAGEMENT ARRANGEMENTS 19
A. Legal Basis 19
B. Project Implementation Organizations - Roles and Responsibilities 19
IV. COSTS, FINANCING AND ECONOMIC ANALYSIS 26
V. FINANCIAL MANAGEMENT 37
A. Financial Management Assessment 37
B. Budgeting, Fund Flow Arrangement 39
C. Accounting Policies and Procedures 47
D. Reporting, Auditing and Public Disclosure 47
VI. PROCUREMENT AND CONSULTING SERVICES 48
A. Advanced Procurement 48
B. Procurement of Goods, Works and Consulting Services 50
C. Methods, Thresholds, Review and 18-Month Procurement Plan 52
D. National Competitive Bidding 53
VII. SAFEGUARDS 54
A. Environmental Safeguards 54
B. Social Safeguards 55
C. Indigenous People 58
D. Prohibited Investment 59
VIII. GENDER AND SOCIAL DIMENSIONS 59
IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND LEARNING 60
X. ANTICORRUPTION POLICY 64
XI. ACCOUNTABILITY MECHANISM 64
XII. RECORD OF PAM CHANGES 64
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List of Tables
Table 1: Project readiness activities 16

Table 2: Summary project Implementation Plan 16
Table 3: Project outputs and implementing agencies 17
Table 4: Project stakeholders and management roles and responsibilities 20
Table 5: Project Investment Plan 26
Table 6: Project Financing Plan (in US$ Million) 27
Table 7: Detailed Cost Estimates by Expenditure Category (in US$ Million) 28
Table 8: Detailed Costs Estimates by Financier (in US$ 000) 29
Table 9: Detailed Cost Estimates by Output / Component (in US$ 000) 30
Table 10: Detailed Cost Estimates by Year (in US$ 000) 31
List of Figures
Figure 1: Project Organizational Structure 25
Figure 2: Fund flow diagram for APBN-funded activities 40
Figure 3: Disbursement flow chart for Direct Payment (ADB) 41
Figure 4: On-granting fund flow mechanism 42
Figure 5: Procedures for verification 43
Figure 6: Fund flow for de-concentration (Dekonsentrasi/TugasPembantuan - DEKON) 44
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Project Administration Manual Purpose and Process
The Project Administration Manual (PAM) describes the essential administrative and
management requirements to implement the project on time, within budget, and in accordance
with Government and Asian Development Bank (ADB) policies and procedures. The PAM
should include references to all available templates and instructions either through linkages to
relevant URLs or directly incorporated in the PAM.
1. The Directorate General of Water Resources (DGWR), Ministry of Public Works and Housing
(MoPWH) as the executing agency; Agricultural Extension and Human Resource Development
(AAEHRD), Ministry of Agriculture (MoA); the Directorate General of Regional Development
(DGRD), Ministry of Home Affairs (MoHA); and the Directorate for Water Resources and
Irrigation (DWRI), State Ministry of National Development Planning and Development
(BAPPENAS) as implementing agencies, are wholly responsible for the implementation of ADB
financed projects, as agreed jointly between the borrower and ADB, and in accordance with
Government and ADBs policies and procedures. ADB staff is responsible to support
implementation including compliance by DGWR, DGAEHRD, DGRD and DWRI of their
obligations and responsibilities for project implementation in accordance with ADBs policies and
procedures.
2. At Loan Negotiations the borrower ADB and IFAD shall agree to the PAM and ensure
consistency with the Loan Agreements. Such agreement shall be reflected in the minutes of the
Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the
Loan Agreement, the provisions of the Loan Agreement shall prevail.
3. After ADB Board approval of the project's Report and Recommendations of the President (RRP)
changes in implementation arrangements are subject to agreement and approval pursuant to
relevant Government and ADB administrative procedures (including the Project Administration
Instructions) and upon such approval they will be subsequently incorporated in the PAM.
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Abbreviations
AAEHRD Agency for Agricultural Extension and Human Resource Development

ADB Asian Development Bank
ADF Asian Development Fund
AFS Audited Financial Statements
AKNOP Angka Kebutuhan Nyata Operasi & Pemeliharaan (real cost needs for
operations & maintenance)
AMDAL Analisa Mengenai Dampak Lingkungan (environmental impact
assessment)
APBD Anggaran Pendapatan dan Belanja Daerah (regional revenue and
budget)
APBN Anggaran Pendapatan dan Belanja Negara (national revenue and
budget)
APFS Annual Project Financial Statement
AWP Annual Work Plan
BAPPEDA Badan Perencanaan Pembangunan Daerah (Provincial / District
Development Planning Agency)
BAPPENAS Badan Perencanaan Pembangunan Nasional (National Development
Planning Agency)
BBI Balai Benih Insuk
BBWS Balai Besar Wilayah Sungai (Central River Authority)
BPK Badan Pengawas Keuangan (Financial Monitoring Agency / State
Auditor)
BPPSDMP Badan Penyuluhan dan Pengembangan Sumber Daya Manusia
Pertanian (Agency for Agricultural Extension and Human Resource
Development)
BPS Badan Pusat Statistik (National Centre for Statistics)
BMT Baitul Maalwat Tamwil
BWS Balai Wilayah Sungai (River Basin Organization)
CBFO Community Based Financial Organisation
CPE Country Programme Evaluation
CQS Consultant Qualification Selection
DAK Dana Alokasi Khusus (specially allocated funds aimed at supplementing
regular district development funds)
DD Due Diligence
DED Detailed Engineering Designs
DEKON Dana Dekonsentrasi (funds for supporting GOI de-concentration policy)
DGFB Directorate General of Fiscal Balance
DGHR Directorate General Human Resources
DGRD Directorate General of Regional Development
DGWR Directorate General of Water Resources
DI Daerah Irrigation (irrigation scheme)
DILL Directorate of Irrigation and Low Land
DMF Design and Monitoring Framework
DoIS Directorate of Irrigation and Swamps
DOM Directorate of Operation and Maintenance
DPP Directorate of Planning and Programming
DPRD Dewan Perwakilan Rakyat Daerah (regional hall of representatives)
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DSPEF Directorate of Spatial Planning and Environmental Facilitation

DWRI Directorate of Water Resources and Irrigation
EA Executing Agency
EARF Environmental Assessment and Review Framework
EIA Environmental Impact Assessment
EMP Environmental Management Plan
ESMS Environmental and Social Management System
FMA Financial Management Assessment
GACAP Governance and Anticorruption Action Plan
GDP Gross Domestic Product
GoI Government of Indonesia
HPP Harga Pokok Produksi (government rice-purchasing price)
IA Implementing Agency
ICB International Competitive Bidding
IDR Indonesian Rupiah
IED Independent Evaluation Department
IEE Initial Environmental Examination
IFAD International Fund for Agricultural Development
ILS Innovation, Learning and Scaling-up
IME Independent Monitoring and Evaluation
IMP Irrigation Management Plan
IMRP Irrigation Management Reform Program
IOB Operations Evaluation Department
IP Indigenous People
IPDMIP Integrated Participatory Development and Management of Irrigation
Sector Project
IPM Integrated Pest Management
IPP Indigenous People Plan
IPPF Indigenous People Planning Framework
IR Involuntary Resettlement
JICA Japan International Cooperation Agency
KMC Knowledge Management Centre
KOMIR Irrigation Commission
KPIU Kapubaten (District) Project Implementation Unit
KPKN Kantor Pembendaharaan dan Kas Negara (National Treasury)
KPMU District Project Management Unit
KPPN Kantor Pelayanan Perbendaharaan Negara (regional office of the
National Treasury)
KSO Kerja Sama Operasional (Operational collaboration)
LARP Land Acquisition and Resettlement Plan
LKM-A Lembaga Keuangan Mikro Agribisnis
M&E Monitoring and Evaluation
MoA Ministry of Agriculture
MoF Ministry of Finance
MoA Ministry of Agriculture
MoHA Ministry of Home Affairs
MoPWH Ministry of Public Works and Housing
NCB National Competitive Bidding
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MP3EI Master Plan for Acceleration and Expansion of Indonesia Economic

Development
MP3KI Master Plan for the Acceleration and Expansion of Indonesia Poverty
Reduction
MSP Multi Stakeholder Platform
NGO Non Government Organization
NPIU National Project Implementation Unit
NPMU National Project Management Unit
NSCIA National Steering Committee for Irrigated Agriculture
NSCWR National Steering Committee on Water Resources
NTT East Nusa Tenggara
OGA On-Granting Agreement
OJK Otoritas Jasa Keuangan
O&M Operation and Maintenance
OWP Overall Work Plan
OWPB Overall Work Plan and Budget
PAI Pengololaan Aset Irigasi
PAM Project Administration Manual
PCA Procurement Capacity Assessment
PCSS Procurement Contract Summary Sheet
PERDA Peraturan Daerah (regional government regulations)
PTGA Proyek Tata Guna Air (Water Use Project)
PPMS Project Performance Management System
PPTGA Water Management Knowledge and Training Centres
PIC Project Implementation Consultant
PISP Participatory Irrigation Support Project
PIU Project Implementation Unit
PMC Project Management Consultant
PPL Petugas Penyuluhan Lapangan (agricultural field extension worker)
PPP Public Private Partnership
PPIU Provincial Project Implementation Unit
PPMS Project Performance Management System
PPMU Provincial Project Management Unit
PPSIP Pengembangan dan Pengelolaan Sistem Irigasi Partisipatif (Participatory
Irrigation System Development and Management)
PPTA Project Preparation Technical Assistance
PUPR Pekerjaan Umum dan Perumahan Rakyat (Department of Public Works
and Housing)
PWH Public Works and Housing
QBS Quality Based Selection
QCBS Quality- and Cost Based Selection
RBO River Basin Organization
R&D Research and Development
RRP Report and Recommendation of the President to the Board
RP21 Rencana Pengembangan dan Pengelolaan Irigasi (District Irrigation
Development and Management Plan)
RPJNM Rencana Pembangunan Jangka Menengah
PRJPN Rencana Pembangunan Jangka Panjang Nasional
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RSPK Recana Strategis Kementerian Pertanian

RSPU Recana Strategis Pekerjaan Umum
SDA Sumber Daya Air (River Basin Authority)
SBD Standard Bidding Documents
SGIA Second Generation Imprest Accounts
SAI (Indonesian) Supreme Audit Institution
SOE Statement of Expenditure
SOP Standard Operating Practices
SPS Safeguard Policy Statement
SPRSS Summary Poverty Reduction and Social Strategy
SSR Sub-Project Summary Report
TOR Terms of Reference
UKL/UPL Environmental management/monitoring measures
UPSUS Upaya Khusus Swasembaba Pangan
UU Undang-Undang (National Law)
US$ United States Dollar
VCF Value Chain Fund
WISMP Water Resources and Irrigation Sector Management Project
WUA Water User Association
WUAF Water User Association Federation
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CURRENCY EQUIVALENTS
(as of 30 September 2015)
Currency unit Indonesian Rupiah (IDR)

IDR 1.00 = $ 0.00008
$1.00 = IDR 13,500
NOTES
(i) The fiscal year (FY) of the Government of Indonesia and its agencies ends
on 31 December. FY before a calendar year denotes the year in which the
fiscal year ends, e.g., FY2016 ends on 31 December 2016.
(ii) In this report, $ refers to US dollars.
This Project Administration Manual is a document of the borrower. The views expressed herein do not
necessarily represent those of ADB's Board of Directors, Management, or staff, and may be
preliminary in nature. Your attention is directed to the terms of use section of this website.
In preparing any country program or strategy, financing any project, or by making any designation of or
reference to a particular territory or geographic area in this document, the Asian Development Bank
does not intend to make any judgments as to the legal or other status of any territory or area.
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I. PROJECT DESCRIPTION
A. Rationale
1. Country Context Indonesia is at a critical junction in its development. Over the past ten years it
has achieved admirable growth in Gross Domestic Product (GDP) which now stands at over 6% per
annum, has a rapidly growing middle class and has experienced a rapid growth in its consumer class that
is stronger than in any economy in the world apart from China and India. It has achieved a reduction in
poverty in the period from 1984, when it stood at 63%, to 2011 when it had declined to 12.5%. This was
achieved together with a reduction in income disparity, in contrast to most developing and developed
countries where rapidly rising incomes are associated with rising inequality. Building on these
achievements, the Government of Indonesia (GoI) has ambitious goals of for the next 10 to 15 years, as
spelled out in its Master Plan for Acceleration and Expansion of Indonesia Economic Development
(MP3EI) that envisages an increase in economic growth of 7% to 9% and an increase in GDP per capita
from 6% to 7%. This plan together with the Master Plan for the Acceleration and Expansion of Indonesia
Poverty Reduction (MP3KI), provide the framework for development initiatives in the Country.
2. Although growth forecasts have recently been revised downwards due to international economic
headwinds, generally there is a positive overall outlook for the Indonesian economy with a projection
over the next two decades of a tripling of the consuming class, a major shift in population from rural to
urban, and an increase in market opportunities in core sectors including agriculture and fisheries, climbing
from a mere USD 0.5 million in 2012 to US$ 1.8 trillion by 2030. For these targets to be realized three
important challenges must be met, the most critical of which concerns productivity. It estimated that it
would be necessary to increase productivity growth by 60% over and above the rate achieved over the
past ten years if the 7% annual increase in GDP is to be achieved. This is a sizeable challenge and as it
notes will require more intensive production systems with a substantive contribution from high value
crops. The second challenge is in terms of the potential threat of rising inequality, with strongly growing
incomes in some part of the country and the risk that poorer areas are left behind thus the need for a
strong emphasis on inclusive development. The third challenge focuses on the need to avoid
infrastructure and resource constraints as growth accelerates.
3. In spite of its achievements, Indonesia still has a substantial number of people in poverty, and an
equally important portion, often referred to as the near poor, who are close to and can easily slip below
the poverty line due to unforeseen events such as food price increases, natural disasters, or ill health
which can drive them back into poverty. The vulnerability of this group is evident by the fact that more
than a quarter of all Indonesians have been in poverty at least once, between 2008 and 2010. However,
poverty is not evenly distributed with some areas considerably poorer than others. Eastern Indonesia is
statistically poorer than the western areas of the country. However, there are sizeable numbers of poor in
Java, Sumatra and other parts of western Indonesia, which have considerably higher population
densities, and consequently larger concentrations of poor than many of the outer islands in Eastern
Indonesia.
4. There are a number of structural constraints that affect agricultural productivity in general. The
most important are: (i) under investment in supporting infrastructure, with irrigation and maintenance of
irrigation schemes being particularly important for rice, problems of accessibility constraining development
of many production areas and on-farm infrastructure constraining productivity; (ii) insufficient spending on
research and development (R&D), which while in line with Vietnam and Lao Republic, is around half the
Asian average and less than 20% of that in Malaysia; (iii) underperforming government extension
services which have suffered from lack of operating budget and poor organization now that most
responsibility has been decentralized; (iv) problematic access to finance, especially for micro, small and
medium enterprises, and for smallholders without collateral, in spite of a range of credit guarantee and
rural finance schemes that have tended to benefit larger farmers and enterprises, furthermore only limited
advantage has been taken of new technologies such as mobile cash and agent banking; (v) lack of a
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consistent policy on land tenure, with forest lands coming under the central government and non-forest
land under local government, and confusion caused by overlapping and conflicting spatial plans, lack of
recognition of communal land rights and a slow registration process; (vi) and lack of supportive policies
with legislation not always encouraging foreign and direct investment, a heavy focus on rice which
reducing incentives for high value commodities for which there is a growing international and domestic
demand, which in turn is impacting on smallholders as the returns that they are currently achieving may
be lower than they could get from estate crops such as oil palm, cocoa, coffee and rubber or fruits and
vegetables. Also, until recently, the lack of effective investment for a number of the productivity factors
cited above, such as for irrigation and R&D, has been a result of the high portion of agricultural funding
going to subsidize inputs, essentially at the expense of other development initiatives.
5. Policy Framework The Integrated Participatory Development and Management of Irrigation
Sector Project (IPDMISP) is set within a number of key GoI policy documents. The Long-term National
Development Plan 2005-2025 or the Rencana Pembangunan Jangka Panjang Nasional (RPJPN) and the
Medium-Term National Development Plan 2015-2019 or the Rencana Pembangunan Jangka Menengah
(RPJNM) outline national priorities and both give prominence to agricultural sector development, in
particular ensuring food security, self-sufficiency, and food sovereignty through increase of domestic
production capacity; and improved provision of food that is sufficient in quantity, diversified, and meeting
the requirement of food safety, quality, nutrient content in affordable price.
6. GoIs concern for increasing rural incomes and rural communities more broadly is reflected in
three other policy documents: (i) the Master MP3KI pursues GoIs commitment to community
empowerment, puts emphasis on supporting the economic livelihoods of those in poverty with agriculture
recognised as playing a key role in rural livelihoods; (ii) the Law 19/2013 on the Protection and
Empowerment of Farmers, which as yet lacks regulations for its implementation, seeks to assist small-
scale farmers in dealing with lack of assets, risk and climate change, as well as improve their capacity for
farming through training, improved marketing systems, land consolidation, improved access to technology
and strengthened farmer organization; and (iii) the Law 6/2014 concerning Villages serves to strengthen
village community cohesion and organization, improve the accountability of village assemblies as key
decision-making bodies, promote public services for community members and promote the economic
advancement of village communities.
7. The Project will support the implementation of the Ministry of Public Works and House (MoPWH)
strategic plan for water resources the Recana Strategis Pekerjaan Umum (RSPU) 2015-2019 to: (i)
increase agricultural productivity; and (ii) fully realize the poverty reduction potential of irrigated
agriculture. The Project will also support implementation of the Ministry of Agriculture (MoA) strategic plan
for agriculture the Recana Strategis Kementerian Pertanian (RSKP) 2015-2019 which is derived from
the RPJNM to: (i) increase rice production for food security; (ii) develop higher value cropping to improve
rural livelihoods; and (iii) promote more productive irrigation infrastructure and its sustainable
management. In recent years, and in line with the RPJPNs aim to achieve a green and ever-lasting
Indonesia, issues around environmental sustainability have also attracted greater policy focus - these
include the need to conserve agricultural land, promote sustainable agricultural intensification, conserve
water, adapt to climate change and reduce greenhouse gas emissions.
8. The Project is also set within a number of key GoI policy documents pertaining in particular to
water and irrigation. These are the Water Law No 11/1974, the Government Regulation on Irrigation No
82/1991, and the Law on regional Autonomy No 23/2014. The details of the technical implementation
arrangements are in correspondence with the PERMEN PUPR No. 30/PRT/M/2015 on Irrigation
Development and Management, PERMEN NOPR No. 12/PRT/M/2015 on Irrigation Operations and
Management, PERMEN PUPR No. 17/PRTR/M/2015 on Irrigation Commission and PERMEN PURT No
23/PRT/M/2015 on Irrigation Asset Management (PAI).
9. Rationale The President of Indonesia has decreed that Indonesia will be food sovereign within
3 years of his election in October 2014. GoI has the ambitious target to reach rice self-sufficiency by 2017
through rehabilitating 3.2 million ha of irrigation systems for rice production, but also by raising the
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government rice-purchasing price (HPP) by roughly 10% to Indonesian Rupiah (IDR) 7,260 (US$ 0.57)
per kilogram in January 2015. This has placed considerable focus on the agriculture and water sectors,
both public and private sector players, to consider comprehensive and collaborative responses to the
Presidents challenge. Earlier attempts to enhance the productivity of irrigated agriculture using a largely
engineering focus have achieved disappointing results in the long term due to two important weaknesses:
(i) failure to provide farmers with a farming systems response which maximizes their opportunities to
capture sustainable economic benefits from the engineering investments; and (ii) failure to ensure that all
parts of the new or rehabilitated irrigated schemes are well maintained, thus ensuring that capital
investments made by GoI and economic benefits available to all farmers in the scheme command areas
are sustained for the full economic life of the investment.
10. Food security is a significant government concern made more prominent by the world price
shocks of 2008. Presidential Decree No. 5 Year 2011 calls for increased surplus rice production of 10
million tons (about 15%) by 2015 to address food security through rice self-sufficiency. Despite positive
trends in rice production and productivity, and a solid recovery in the total factor productivity, Indonesia
still faces challenges with respect to all dimensions of food security. The primary challenge is the
production of sufficient and nutritionally suitable food for all. Achieving this will require improvements in
the availability of land, infrastructure and production management. In 2012, Indonesia produced 69 million
tons of rice of which, 95% came from irrigated lands. Overall, production has been growing slowly (about
1% annually) over the last ten years mainly from increases in irrigated area and cropping intensity. With a
growing urban population, rising incomes and increased levels of consumption, diets are diversifying and
demand for high quality food is increasing. Despite increasing production, food security is challenged in
the medium term by declining rural infrastructure, mainly irrigation infrastructure. Indonesia also faces
serious challenges in adapting to climatic variation as witnessed with the current El Nio related drought
that are promoting public debate about food and rice stocks.
11. As the economy has grown over the last past decades, the contribution of the agriculture sector to
national GDP in Indonesia has gradually declined, from 30% in 1975 to almost 13% in 2011. Rapid
macro-economic growth (between 1980 and 2011 Indonesia achieved an average annual GDP growth
rate of 4.9%) has been contrasted by highly variable performance in the agricultural sector. Following
rapid growth in the sector during the 1970s and 1980s, there was a period of stagnation (19932001)
marked by slow growth of total output, total inputs, output per worker, and even land per worker; and it
was only after 2002 that growth rates increased once more (3-4% per year between 2002 and 2011).
These fluctuations reflect changes both in levels of government spending and the sector policy
framework. In the 1970s and 1980s the government invested heavily in public goods including irrigation,
R&D, extension services and rural mainly roads) infrastructure, driving the increase in agriculture
productivity. During the 1990s public spending in the sector (particularly on public goods) declined. The
2000s saw liberalisation and increased spending by GoI spending as a share of GDP in agriculture
increased from 10% and 8% in the 1970s and 1980s to 40% today though an important share of that
goes to subsidies on private inputs (fertilizers and seeds).
12. Agriculture remains an important sector in terms of the locus of poverty and the paths to poverty
alleviation. Poverty in Indonesia is still a predominantly rural and agricultural phenomenon in 2010 over
60% of those earning less than US$ 1.25 per day lived and worked in agriculture. Agriculture in general
and irrigation in particular, however, has historically contributed to significant growth with increased
employment and reduction of poverty the percentage of the population living on less than US$ 1.25 per
day is down from 62% in 1984 to 12% in 2012. There is a well-documented link between improving
agriculture productivity and reducing poverty. In Indonesia around 40% of the entire work force is
employed in agriculture many of whom are engaged in small scale production more than 40 million
people and agriculture is the main source of employment in rural areas where poverty is most prevalent.
13. Indonesian agriculture and food security would be greatly enhanced by making agriculture a more
attractive sector for investment. There are significant improvements in the potential for strengthened
public investment in agriculture and to promote growth in the agricultural sector and improvement in the
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welfare of famers. As Indonesia is in the process of economic restructuring resulting in a fall in

employment in agriculture, not only in relative but also soon in absolute terms, a long term vision of
agricultural restructuring and rural transformation is needed. Reallocating spending from subsidizing
private inputs towards providing improved agriculture and irrigation public goods and services must drive
this vision. There is also opportunity to re-orientate support to assist smallholders to gain access to
markets and to provide incentives for smallholders to pursue productive investments.
14. The total area under irrigation is currently around 7.2 million hectares (ha). Since 2005, the area
of irrigated land with infrastructure in good condition has declined from 78% to less than 50% today, while
at the same time the central government transferred around $1.2 billion to provinces and districts to
operate and maintain irrigation schemes. Deteriorating infrastructure is a consequence of inadequate
financing and delivery of O&M, which limits possible rice and other high value crop productivity increases.
High transport and logistics costs are a serious constraint on business operations and undermine the
competitiveness of agricultural value chains. In addition, a need exists to increase higher value cropping
and to commercialize agriculture to improve rural livelihoods. Technical and administrative capacity
constraints hamper effective planning, management, and development as Indonesias decentralized
government structure heightens capacity challenges. District, provincial, and central government roles
and fund flows need to be clearer and better coordinated, and different agencies program, policy, and
management responsibilities harmonized. Climate change will further challenge Indonesias water
sources as water scarcity worsens in some areas, extreme weather events become more frequent, and
rainfall patterns become less favourable for agriculture.
1
15. A recent study recommends a revival of investment in the most basic of production aids, such as
irrigation, where in recent years government expenditure has been only about US$ 500 million/year,
covering new investment, rehabilitation, and operation and maintenance of a system officially rated at 7.2
million hectares, but likely to be less. The study noted that the rehabilitation of irrigation systems is an
urgent national priority, even if rice self-sufficiency is rejected as an impractical and inefficient goal. The
imbalance between high prices for consumers and enormous subsidies on items like fertilizer, as against
public goods (like irrigation), which are absolute necessities for rice production, argues for a return once
again to a robust irrigation program with heavy central funding.
16. The rationale for the Project is to fully realize the poverty reduction potential of irrigated
agriculture, building on lessons learnt from the ADB-financed Participatory Irrigation Support Project
(PISP) and other projects.
B. Impact and Outcome
17. The impact will be improved food security, rural incomes and livelihoods in Indonesia; and
outcome objective will be increased value and sustainability of irrigated agriculture. The Design and
Monitoring Framework (DMF) including performance indicators is presented in Appendix 1.
C. Outputs
18. To achieve its expected outcome, the Project will have the following four outputs:
(i) Increased irrigated agricultural incomes will focus on improving agricultural production
and market systems and services, including financial services, mainly for rice and high value
irrigated crops. The agricultural production activities will concentrate primarily although not
exclusively on rice and will cover the recruitment and training of extension staff, facilitating
the delivery of enhanced extension services to farmers and farmer groups, improving their
access to improved rice seeds and demonstrating the use of small-scale farming equipment.
The market systems activities will concentrate primarily although not exclusively on high
value irrigated crops and will involve value chain mapping, value chain development training
and the provision of a value chain development fund to provide shared cost funding to
farmers and farmer groups. The financial services activities will involve the mobilization and
1
Indonesia Country Study, JICA, Centennial Group International, January 2013
12
training of savings and credit groups, financial literacy training for these groups, the provision
of savings and credit facilities in partnership with existing financial services providers and
support to the strengthening of district-level micro-credit supervisory agencies.
(ii) Improved irrigation systems infrastructure will focus on rehabilitating, up-grading and or
modernizing primary, secondary and tertiary irrigation systems and drainage infrastructure,
for national, provincial and district irrigation schemes. The will involve hydrological
assessments and civil works. The hydrological assessments will consist of activities to
provide reliable information regarding water availability at basin level in relation the irrigation
scheme so as to ensure the scheme has adequate water to meet the irrigation schemes. The
civil works will include engineering assessments of irrigation systems and drainage
infrastructure, surveys and feasibility designs, detailed engineering designs and
arrangements for implementation of civil works including operations and maintenance. The
assessments and works will cover primary, secondary and tertiary irrigation systems as well
as farm roads with primary and secondary works financed by project funds and tertiary works
and farm roads financed by extra-government funds.
(iii) Improved irrigation systems management will focus on improving water delivery systems
at scheme level. This will include establishing and strengthening water use associations and
federations, improving irrigation systems field management and operationalizing irrigation
systems asset management. The activities around associations and federations will include
conducting status assessments, training, capacity and institutional building. The irrigation
systems field management activities will support central, provincial and districts governments
to improve irrigation water management through combined irrigation performance
assessments, preparation of irrigation management plans and irrigation service plans,
volumetric discharge measurement and water accounting pilot, needs-based planning and
budgeting and related support. An irrigation management unit will be established in all project
financed irrigation schemes and will be responsible for all aspects of irrigation management.
(iv) Strengthened policy and institutional frameworks for irrigated agriculture will focus on
strengthening the capacity of government institutions and supporting project executing and
implementing agencies at national, provincial and district levels to conduct overall project
management and supervision. This will include strengthening local-level policy, regulatory
and institutional frameworks, establishing water management training centres, establishing a
knowledge management centre and establishing project management and implementation
support. The policy, regulatory and institutional frameworks activities will include a process of
policy dialogue accompanied by documentation, identification of options and
recommendations on policy actions. The activities around both the water management
training centres and the knowledge management centre will cover establishment, training,
capacity and institutional building. The support to project management and implementation
activities will support the executing agency to conduct overall project management and
supervision and to strengthen the planning, implementation and management capacity of the
implementing agencies.
II. PROJECT IMPLEMENTATION APPROACH
A. Implementation Approach
19. The approach to implementation is based on the success achieved under the recently completed
ADB PISP - although some adjustments have been made to strengthen and broaden linkages between
the agriculture and the irrigation rehabilitation interventions, to ensure effective poverty targeting, and as
well as to respond to the need to expedite project implementation in view of contributing to the national
targets for agriculture and irrigation rehabilitation as outlined above. The PISP approach has also been
modified to reflect the combined lessons learnt from ADBs and IFADs project implementation
experiences in Indonesia.
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20. The Project area will cover 16 provinces (5 in Sumatra, 4 in Java, 2 in Kalimantan, 3 in Sulawesi
and 2 in Nusa Tenggara) comprising initially 74 districts and up to 1,800 irrigation schemes, covering a
total area of around 1,900,000 ha. The Project activities are planned to cover an area of approximately
450,000 ha. or approximately 14% of the 3.2 million ha. targeted in the MoPWH and MoA strategic plans -
RSPU and RSKP 2015-2019).
21. The Project will feature sub-projects as developed in PISP. These comprise a part of or
complete irrigation scheme(s) that has adequate water supply and where there would be potential
benefits arising from enhancement of agriculture, improving irrigation and water management systems
and up-grading, rehabilitating and modernizing irrigation and drainage infrastructure. Sub-projects will
include national schemes of >3000 hectares, provincial schemes of size 1000-3000 hectares or district
schemes of <1000 hectares.
22. Implementation Steps The following steps for the selection, design, and implementation sub-
projects will be followed in the implementation of the Project.
23. Step I Selection This step has been conducted during the design phase of the Project and has
involved the selection of provinces, districts and candidate irrigation schemes. This selection has been
based on criteria provided by GoI and used by the Project to select target irrigation schemes include the
following: (i) schemes listed in the national strategic irrigation list or Daerah Irigasi Strategis Nasional for
DGWR; (ii) Provinces included in the priority food security list or Provinsi Lumbung Pangan; (iii) irrigation
schemes listed in the Ministerial decree PERMEN PUPR No 14/PRT/M/2015 on irrigation schemes
status (Status Daerah Irigasi), with 60% of the schemes under national responsibility, 10% and 30% under
provincial and district authorities respectively; (iv) sub-system of more than 100 ha assuming that the
minimum area managed by one WUA is about 100 ha; (v) irrigation infrastructure classified as poor and
very poor condition based on the 2014 technical audit carried out by DGWR; (vi) irrigation schemes that
are not covered yet by DAK; and (vii) a total cumulative area within a selected district of at least 500 ha.
As a result, approximately 1,800 schemes included in 16 provinces and 74 districts have been proposed
for project interventions.
24. On the 30 September 2015, DGWR, the Directorate General of Regional Development (DGRD)
and MoA jointly conducted a socialization of the proposed project with target provinces and districts. At
the same time, a detailed questionnaires covering agriculture, infrastructure and institutional aspects will
be completed by agencies in the target provinces and districts. This enabled the Project to further refine
the planning of proposed activities.
25. Step II Assessment This step will be conducted during the implementation phase of the Project, and
will involve the assessment of candidate irrigation schemes preselected from those selected in Step I and
the preliminary design of sub-projects. The assessment will follow rapid participatory assessment
principles, based on guidelines to be developed prior to project implementation, which follow procedural
requirements of GoI and the Project. The first assessment will be the Profil Sosial Ekonomi Teknis
Kelembagaan (PSETK) and other relevant documents, which is a widely used and well accepted
procedure assessing the social, economic, technical and institutional aspects of irrigation schemes. This
PSETK report will be the basis for the scheme assessment and the proposed list of interventions will be
presented in the form of a draft Sub-project Summary Report (SSR). A template of the SSR will be
presented in the final full version of the PAM prior to implementation. In accordance with the SSR
template will include an outline of the following: (i) the sub-project area context; (ii) the outputs, sub-
outputs and activities; (iii) outcomes, beneficiaries and benefits direct and indirect; (iv) due diligence (i.e.
resettlement and or rehabilitation, gender and social, indigenous peoples, environmental impacts); and (v)
costs, benefits and risks. The assessment will also include procedures for linking to the PPMS. The draft
SSR is not expected to be longer than 10 pages (excluding appendices) and will serve as the basis upon
which decisions (pending revisions where deemed necessary and or feasible) on technical grounds will
be made on each and every sub-project. A technical assessment team comprising agricultural agency
and irrigation agency personnel and the Project will be responsible for completing the draft SSR. Further
14
discussions will be held concerning which agency will be responsible for approving, on institutional
grounds, the sub-project.
26. Step III Implementation This step will be conducted during the implementation phase of the Project,
will be for those sub-projects that have been given the go-ahead to proceed to design and will involve the
full design of sub-projects. In this step provision will be Detailed Engineering Designs (DEDs) for the
infrastructure works, including the primary, secondary and tertiary irrigation canals and the farm roads.
Provision will be also made in this step for an outline of the sub-project implementation schedule. The
final SSR is not expected to be longer than 20 pages (excluding appendices) and will serve as the basis
for implementing the sub-project activities. A technical design team comprising Department of Agriculture
and the Department of Irrigation personnel and the Project, ideally including members of the technical
assessment team, will be responsible for the final SSR.
27. As part of the design process of the Project sample SSRs have been prepared for the following
sub-projects: 1) D.I. Mon Sukon Sub-Project, Aceh Utara District in North Sumatra Province; 2) D.I.
Karowa Sub-Project, Minahasa District in North Sulawesi Province; and 3) D.I. Lembor Sub-Project,
Manggari Barat Sub-Project in East Nusa Tenggara Province. These design phase sub-projects are
presented in the form of draft SSRs will be presented in the final full version of the PAM prior to
implementation. DEDs are at present being completed for each of these sub-projects and final SSRs will
be completed prior to commencement of the Project.
28. The design-phase sub-projects will be finalized and be made ready for implementation in Year 1 of
the proposed project. As with PISP and other similar projects, Year 1 of the proposed project will
commence with capacity building of with provincial and district level agencies, including technical
personnel in the Department of Agriculture and the Department of Irrigation, to ensure there are sufficient
skills to implement as well as select, design, assess sub-projects. This is a particularly important aspect of
the Project because it will expedite the immediate disbursement of project funds and, over the longer
term, will increase significantly the likelihood that these and other processes are integrated with district
spatial and annual development planning and financing.
29. The selection, assessment and design of additional implementation-phase sub-projects will
commence and be completed in Year 1 of the implementation phase and be made ready for
implementation in Years 2-4 of the proposed project
30. This process whereby the completed design of sub-projects are scheduled and rolled out across all
16 provinces and 74 districts will be elaborated prior to implementation of the Project. There is recognition
of concerns surrounding the big-bang decentralization that took place in 2001, which empowered
provincial, district and municipal governments to deliver public services and make investments in among
other things irrigation infrastructure - numerous observers have argued that decentralization has actually
led to inefficiency although evidence is inconsistent. To address these concerns the Project will examine
realistic opportunities for enhancing the participation of partnership organizations, including farmer and
water organizations, non-governmental agencies, possibly private sector operators along selected value
chains, to leverage service delivery capacity and investment. This is consistent with GoIs approach to
good governance, which through Law 12/2011 on Formulating Laws and Regulations (revising Law
10/2004), allows for the participation of the general public in the regulation making process.
31. The following activities while important aspects of the overall project fall outside of the immediate
scope of the sub-projects: Sub-output 3.2 (up-dated national asset management system); Sub-output 4.1
(Strengthened policy and regulatory framework); Sub-output 4.2 (Enhanced policy dialogue); and Sub-
output 4.3 (Developed Knowledge Management Centres).
32. Community Facilitation Community Facilitators will be contracted by the Project to support the
assessment and implementation steps described above and acting as the main interlockers between
technical consultants and the various beneficiaries of the Project. The job description of community
facilitators will be presented in the final full version of the PAM prior to implementation although the
position is expect to include amongst other tasks conducting the participatory assessments leading up to
15
and involving the PSETK and SSR in conjunction with the technical assessment teams, supporting the
technical teams responsible for each of the outputs including the agricultural production, value chain and
finance teams under Output 1, the engineering teams under Output 2 and the institutional strengthening
teams under Output 3 and 4.
B. Project Readiness Activities
33. The Project Readiness Activities are provided in Table 1.
Table 1: Project readiness activities
2015 2016
Indicative activities Oct Nov Dec Jan Feb Mar Apr May Jun Who is Responsible
Advance contracting DGWR, Implementing

actions Agencies (IAs)
Retroactive financing DGWR, IAs
actions
Establishing project DGWR, IAs
implementation
arrangements
Completion of Si RP2I ADB
upgrade
Development of WAMI PUSAIR/DELTARES
module
Loan negotiations ADB GoI, ADB/IFAD, DGWR,
IFAD IA
Board considerations IFAD ADB ADB/IFAD

Loan signing IFAD ADB GoI, DGWR, ADB/IFAD
GoI legal opinion GoI
provided
GoI budget inclusion DGWR and IAs
Loan effectiveness IFAD GoI, ADB/IFAD, DGWR
ADB
C. Project Implementation Plan

34. The Project will be implemented over six years from 2016 to 2021. To respond to a request from
the GoI for the Project to contribute to national development targets, specific results milestones have
been sectioned across the six-year implementation period. Milestones for the larger and more specific
hardware investments has been set to be achieved within 4 years, between 2016 and 2019, in line with
the GoI commitments. For the software investments including agriculture, institutional change and
activities that focus on sustainability, milestones has been set to be achieved within the final two years of
project implementation, between 2020 and 2021. A summary project implementation plan is presented in
Table 2. The shaded area represents the period over which outputs and sub-outputs will be conducted
and the symbol indicates the expected completion date. A more detailed plan will be completed during
preparations for implementation in consultation with project stakeholders.
Table 2: Summary project Implementation Plan
16
Outputs and Activities Years

16 17 18 19 20 21
Output 1: Increased irrigated agricultural incomes
1.1 Improved farm productivity and services
1.2 Improve market access and services
1.3 Improve financial access and use of services
Output 2: Improved irrigation systems infrastructure
2.1 Hydrological assessment
2.2 Irrigation systems rehabilitated, up-graded and modernized
Output 3: Improved irrigation systems management

3.1 Empowered water user associations
3.2 Improved irrigation systems field management
3.3 Operationalized national asset management system
Output 4: Strengthen policy and institutional frameworks and project management
4.1 Strengthen local-level policy, regulatory and institutional

framework
4.2 Establish and operate water management knowledge and
training centres
4.3 Coordinate policy for irrigated agriculture
4.4 Project management and implementation support
D. Implementing Agencies
35. Project Implementing Agencies The implementing agencies will implement activities grouped
under the five outputs, as presented in Table 3.
Table 3: Project outputs and implementing agencies
OUTPUT DESCRIPTION IMPLEMENTING AGENCIES

1.1 Improved farm productivity and Agency for Agricultural Extension and Human Resource
services Development (AAEHRD), provincial and agricultural
extension agencies, BBI, BBU and BPTP
1.2 Improved market access and Provincial and agricultural extension agencies
services
1.3 Improved financial access and Provincial and agricultural extension agencies and financial
use of services service providers
Output 2: Improved irrigation systems infrastructure
17
2.1 Hydrological assessments BBWS, provincial and district public works agencies and
WUA/Fs
2.2 Irrigation systems rehabilitated, BBWS, provincial and district public works agencies and
up-graded and or modernized WUA/Fs
Output 3: Improved irrigation systems management
3.1 Empowered WUAs BBWS, provincial and district public works agencies and
WUA/Fs
3.2 Improved irrigation systems BBWS, provincial and district public works agencies and
field management WUA/Fs
3.3 Operationalized national asset Directorate of Operation and Maintenance
management system (DoM)/DGWR/MoPWH and provincial and district irrigation
agencies
Output 4: Policy and institutional support and project management
4.1 Strengthened local-level policy, Provincial and District BAPPEDA
regulatory and institutional
framework
4.2 Established of Water Provincial and district public works agencies and BAPPEDA
Management Knowledge and
Training Centres
4.3 Improved policy coordination BAPPENAS
for irrigated agriculture
4.4 Established project Central, provincial and district-level coordinating and
management and implementing agencies and BAPPENAS
implementation support
18
III. PROJECT MANAGEMENT ARRANGEMENTS
A. Legal Basis
36. Based on law UU No. 23 / 2014, responsibility for development and O&M of irrigation schemes in
the Republic of Indonesia is distributed among different levels of government based on the following
principles: (i) Central Government are responsible for schemes of size more than 3,000 ha and in cases
of schemes that cross provincial boundaries. (ii) Provincial-level Government (Public Works Agency for
Irrigation) are responsible for schemes of size between 1,000-3,000 ha and in the case of irrigation
schemes that cross district boundaries; (iii) district-level Government (Public Works Agency for Irrigation)
is responsible for schemes of size below 1,000 ha. Central Government (DGWR) is responsible for the
implementation of O&M and rehabilitation of schemes of size more than 3,000 ha. These responsibilities
are normally delegated to the Provincial-level River Basin Organization (RBO) or BWS.
37. In line with meanwhile defunct PP 20/2006 on irrigation, whilst the Irrigation Infrastructure
Rehabilitation Component of the Project will be delivered by the respective agencies according to size of
scheme, the other components will be delivered by district-level agricultural agencies and BAPPEDA).
2
Until the law was annulled by the Constitutional Court in February 2015 , implementation of irrigation
infrastructure development, rehabilitation and O&M was governed by law UU 7 / 2004 regarding water
resources which provided the basis for a participatory method (PPSIP) in undertaking design,
3.
construction and O&M activities
38. The recently completed PISP (Participatory Irrigation System Project) financed by the ADB and
the on-going WISMP II (Water Resources and Irrigation Sector Management Program) financed by the
World Bank are two examples of project designs based on the above-mentioned participatory
methodology.
39. Efforts are underway by GoI to enact new policy regarding PPSIP which will provide the legal
basis for this Projects (a) application of PPSIP principles in Project design and implementation, (b) link to
Integrated Water Resources Management Institutions and functions, and (c) delegation of Central
Government responsibilities to BWS in accordance with the division of jurisdiction among the three levels
of government in accordance to size and trans-boundary nature of irrigation schemes. The issuing of the
5 first PERMEN PUPR on irrigation are a first step in this.
B. Project Implementation Organizations - Roles and Responsibilities
40. The DGWR of the MoPWH will be the executing agency for the Project. A National Project
Management Unit (NPMU) of the Executing Agency (EA) will be established and headed by the Director
General of SDA and include as members all heads of NPIUs. The head of the Directorate of Irrigation and
Low Land (DILL) will act as the head of the NPMU secretariat. The NPMU is responsible for ensuring
overall coordination for implementation of the Project including all disbursement related activities. Under
this NPMU a total of four National Project Implementation Units (NPIUs) will be established: one in the
Directorate of Irrigation and Lowlands (DIILS), DGWR responsible for the implementation of the irrigation
infrastructure systems and related activities; one in the DoIS, DGWR responsible for the implementation
of the O&M related activities; one in Directorate of one in MoHA responsible for the overall guidance and
responsibility of provincial and district planning agencies (BAPPEDAs); and one in the AAEHRD, MoA
responsible for the implementation of the agriculture and related activities, in cooperation with provincial
and district agriculture agencies. The project organizational chart is presented in Figure 1 below.
41. The role and responsibilities of NPIUs along with the Provincial Project Planning Units (PPIUs)
and the Kabupaten (District) Project Planning Units (KPPUs) have been confirmed with proposed
executing agency and the implementing agencies. The draft decrees for the establishment of the NPMU
2
Putusan Makhamah Konstitusi No. 85/PUU-XI/2013, 18 Februari 2015.
3
Peraturan Menteri Pekerjaan Umum No. 30/PRT/M/2007 tentang Pedoman Pengembangan dan Pengelolaan Sistem Irigasi
Partisipatif.
19
and the NPIUs will prepared by the end of September 2015. Based on the agreed list of selected
provinces and districts, MoHA conducted, as noted in Chapter II above, the socialization of the Project on
30 September 2015 to: (i) inform provincial and district governments about the project objectives and
scopes; (ii) reconfirm investment needs and DAK for infrastructure and UPSUS for agriculture
development; and (iii) initiate the preparation of the OWPs as a basis for the preparation of the on
granting agreement (OGA).
42. The main project stakeholders and their management roles and responsibilities are presented in
Table 4 below.
Table 4: Project stakeholders and management roles and responsibilities
Project Stakeholders Management Roles and Responsibilities
DGWR, MoPWH Executing Agency for the Project

Overall implementation, administration, financial accountability and
monitoring of the Project
Executing Agency will keep supporting documents, submit any
reporting requirements, including the annual report and financial
statements, and establish and maintain the imprest account
NSCWR Provide policy and strategic direction, and program coordination
Coordinate different agency activities for complex national issues,
cross sector coordination, and formulate solutions to impediments to
Project implementation
Monitor and evaluate the overall Project performance and outcomes
Review and endorse annual work plans
Meet twice a year and as required
DWRI, BAPPENAS Act as the secretariat of the NSCWR
Facilitate and support the executing agency and implementing
agencies in any issues related to the Project implementation
Procure and effectively utilize Independent Monitoring and
Evaluation services with regard to overall project performance (at the
level of project outcomes and impact).
Approval of the OWPBs and projects OWP
Approval of the AWPs
Conduct annual review of progress and direction of Project activities
to harmonize with national priorities.
Oversee effective interaction between the Knowledge Management
Centre and IMEU in order to feed into the ILS agenda of the Project
programmatic approach to improve project arrangements, delivery
and performance.
NPMU, MoPWH. Headed by the Director General of Water Resources, and daily
secretariat headed by Director of Irrigation and Lowlands, as
Secretary of the NPMU.
Day-to-day Project implementation, planning and budgeting,
procurement, disbursement, monitoring, reporting
Procure and effectively deploy and utilize Project Management
(NPMC) as well as Project Implementation Consulting (NPIC)
services in support of the NPMU, NPIUs and P/KPIUs respectively.
Verify the requests and payment-related documents submitted by
Project Manager then prepare and submit withdrawal application
20

(WA) (through MoF) to ADB and IFAD.
Submit an annual work plan showing supporting (general) and Sub-
Project activities to ADB and IFAD for review and no objection
Coordinate and provide guidance on Project implementation to local
government and other relevant agencies
Conduct all environmental and social safeguard monitoring and
compliance
Carry out administrative, technical and financial management and
reporting at central level
Carry out strategic steps to overcome obstacles in Project
implementation
Facilitate and coordinate the implementation activities carried out by
the NPIUs
Establish a financial management system and submit to Ministry of
Finance details required for timely withdrawal applications to ADB
and IFAD ensuring timely financial audits as per agreed timeframe
Coordinate timely provision of agreed counterpart funds from
executing agency and implementing agencies for Project activities
Responsible for collection and consolidation of all support
documents, reporting documents and annual audit report and
financial statements and public disclosure
Endorsement of the SSRs
Monitoring and evaluation of Project activities and outputs, including
periodic review, preparation of progress reports identifying issues
and action plans
Collection, consolidation and safekeeping of all Project progress
reports, site reports, technical and financial reports and their
submission to ADB and IFAD.
Preparation of Quarterly Progress Reports; Mid-term Project
Evaluation Report and the overall Project Completion Report
Monitor compliance with environmental and social safeguards
Sign the withdrawal applications for both loans
Ensure compliance with the 2 loan covenants
AAEHRD, Directorate NPIA for Output 1
General of Human Procure and effectively deploy and utilize Project Implementation
Resources (DGHR), MoA Consulting Services to support both the NPIA as well as P/KPIUs.
Implement activities that may need to be implemented at the central
government level.
Provide technical guidance to P/KPIUs).
Coordinate with related provincial and district agencies in order to
maximize intra- and inter-agency synergies.
Prepare and conduct procurement of goods and services to support
Project implementation
Monitor the Project implementation and prepare quarterly and annual
project reports
Ensure that an adequate baseline database has been established
and surveys include key indicators in order to enable tracking of
effectiveness of interventions e.g. productivity and production
increases, uptake of demonstrated technologies, value chain
developments and successes etc.
21
Directorate of SUPD II, The NPIU will be headed by Director of SUPD II and includes a full
DGRD, MoHA time Manager and staff as follow: (i) a secretary, (ii) finance officer,
(iii) procurement officer, (iv) project coordinator, (v) M&E officer, (vi)
technical counterparts, (vii) a social officer, and (viii) an environment
officer. The NPIU tasks include:
Procure and effectively utilize Project Implementation Consulting
Services to be provided to the NPIA as well as P/KPIUs.
Provide technical guidelines and guidance to Project Implementation
Units at Provincial and District BAPPEDA.
Support and facilitate P/KPMU in program management including:
(a) application of the ILS agenda toward improving project delivery
and performance, (b) 5-year and annual planning and budgeting; (c)
provision of training of trainers; (d) monitoring and evaluation; and (d)
reporting
Prepare and conduct procurement of goods and services to support
project implementation
Facilitate coordination with provincial and district agencies to support
the land acquisition and resettlement activities, preparation and
implementation of indigenous peoples plans and gender action
plans.
Conduct routine and incidental field M&E, effectively contribute
towards the PPMS which will generate quarterly, annual and specific
reports (e.g. Mid Term Review, Project Completion).
PPIU, BAPPEDA Day-to-day project management, planning and budgeting,
monitoring, evaluation and reporting
Effectively use Provincial Project Management Consulting (PPMC)
services.
Coordinate and facilitate project implementation activities conducted
by PPIUs
Carry out administrative, technical and financial management and
reporting
Carry out strategic steps to overcome obstacles in project
implementation
Operate a financial management system and submit to NPMU in
details as required for timely withdrawal applications to ADB ensuring
timely financial audits as per agreed timeframe
Approval of the SSR/BSR reports
Responsible for collection and consolidation of all support
documents, reporting documents and annual audit report and
financial statements
Monitoring and evaluation of project activities and outputs, including
periodic review, preparation of progress reports identifying issues
and action plans
Ensure PPIUs for adherence to loan covenants
Participating Provincial and Implement, monitor, and evaluate project plan activities at the
District Technical Agencies provincial and district level under the coordination of the P/KPMU
including sub-district level Establish and maintain effective and efficient coordination
offices (public works and mechanisms with partner agencies so as to deliver an integrated
agriculture) project intervention and generate economically feasible benefits for
participating farmer households.
22
Provincial and or district Support land acquisition and resettlement preparation and issue the
Project location determination (if any)
Preparation and enactment of local level laws and regulations in
support of PPSIP implementation and harmonization/integration
farmer groups and WUA objectives and support.
Provide budget allocations for pre-financing of project activities
financed under on-granting arrangements.
Provide adequate annual budget allocations to support routine O&M
of irrigation infrastructure
Internalize sustainability of irrigation development investments with
spatial plans (geo-spatial identification and protection of sub-project
areas under LP2B status).
Ministry of Finance (MoF) Establishment of imprest accounts
Allocation and timely release of t funds
Enter into and implement OGA with Governors and Bupati
Support timely amendment of OGA in line with OWPB.
Facilitate disbursement and withdrawal application
Communicate with ADB for any amendments in the reallocation of
the loan amount
ADB/IFAD Financing of project loans
Approval of the OWPB and the first 2 SSRs of every PIU.
Approval of the OWP and the AWPs
Supervision and performance monitoring of project implementation
Review of procurement and provision of no objections
Fiduciary review and fund flow
43. Composition of the Steering Committee The National Steering Committee Water Resources
(NSCWR) will be chaired by the Deputy of Infrastructure Affairs, BAPPENAS (National Development
Planning Agency) with the Director of Water Resources and Irrigation, BAPPENAS as Secretary. The
NSCWR includes Rank (echelon) I officials of BAPPENAS, Ministry of Public Works and Housing,
Ministry of Agriculture, and Ministry of Home Affairs.
44. National Project Management Unit (NPMU) The NPMU will be established under the
Directorate of Irrigation and Lowlands (DILL), DGWR with the DILL Director General as the NPMU Head.
The PMU will include the following members: (i) a project accounting officer, (ii) a procurement officer, (iii)
a monitoring and evaluation officer, (iv) a land acquisition and resettlement officer, and (v) an environment
officer.
45. National Project Implementation Units (NPIUs) at DGWR/MoPWH, DGRD/MoHA, DGHR/MoA
and BAPPENAS The NPIUs will be headed each by the designated Director and will include a full time
Manager and staff as follow: (i) a secretary; (ii) finance officer; (iii) procurement officer; (iv) project
coordinator; (v) M&E officer; (vi) technical counterparts; (vii) a social safeguards officer; and (viii) an
environmental safeguards officer.
46. Provincial and District Project Management Units (PPMUs/KPMUs) The PPMUs and KPMUs
will be established under the Provincial and District BAPPEDA with the Head of Provincial and District
BAPPEDA as the PPMU and KPMU Heads respectively. The PPMUs and KPMUs will include the
following members: (i) a project accounting officer, (ii) a procurement officer, (iii) a monitoring and
23
evaluation officer, (iv) a land acquisition and resettlement officer, (v) a social officer (gender, IP and
participation), and (vi) an environmental safeguards officer. Depending on work requirements positions
(iv) and (v) may be combined.
47. Provincial and District Project Implementation Units (PPIUs/KPIUs) The PPIUs and KPIUs
will be headed by each relevant Provincial and District-level agency heads respectively and include a full
time Manager and staff as follows: (i) a secretary; (ii) finance officer; (iii) procurement officer; (iv) project
coordinator; (v) M&E officer; (vi) technical counterparts; (vii) a social officer (gender, IP and participation);
(viii) land acquisition and resettlement officer (where necessary); and (ix) environmental safeguards
officer. Depending on work requirements it is envisaged that positions (vii) and (viii) may be combined.
24
Figure 1: Project Organizational Structure

GOI
ADB/IFAD
NSCWR
(BAPPENAS)
Secretary of
NSCWR MoF
NATIONAL LEVEL
NPMU/EA
(MoPWH-DGWR)
Secretary of
NPMU/EA
NPIU NPIU NPIU

NPIU
MoPWH-DGWR MoPWH-DGWR MoA
MoHA
(DoI&S) (DoO&M) (PSP,BPP-SDMP)
PPIU
B(B)WS PPMU
(BAPPEDA)
Secretary of PPMU Member of

Member of Member of
PROVINCIAL LEVEL (BAPPEDA) Prov. Coordinating
Prov. PWH Agency Prov. Agr. Agency
Extension Agency
PPIU
PPIU PPIU PPIU
(Prov. Agr. Extension
(Prov. PWH Agency) (BAPPEDA) (Prov. Agr. Agency)
Agency)
KPMU
(BAPPEDA)
Secretary of KPMU Member of

Member of Member of
(BAPPEDA) Kab. Implementing
Kab. PWH Agency Kab. Agr. Agency
DISTRICT LEVEL Extension Agency
KPIU
KPIU KPIU KPIU
(Kab. Agr. Extension
(Kab. PWH Agency) (BAPPEDA) (Kab. Agr. Agency)
Agency)
Note:
_______ : Command Line
: Coordination Line
25
IV. COSTS, FINANCING AND ECONOMIC ANALYSIS
48. The Project is estimated to cost US$ 852.86 million including physical and price contingencies of
US$49.92 million, financial charges during implementation of US$ 0.52 million and excluding taxes and
duties of $80.24 million. The project investment plan is shown in Table 5. Detailed cost estimates by
expenditure category, detailed cost estimates by financier, detailed cost estimates by output and detailed
cost estimates by year are shown in the following tables.
Table 5: Project Investment Plan
a
Amount Share of
Item
(US $ Millons) total (%)
b
A. Base Cost
1. Increased Agricultural Incomes 92.79 12
2. Improved Irrigation Systems Infrastructure 398.95 50
3. Improved Irrigation Systems Management 81.77 10
4. Institutions, Policy and Project Management 179.73 22
Total Base Cost (A) 753.25 94
c
B. Contingencies 49.17 6
Total Project Cost (A+B) 802.42 100
d
C. Financing Charges During Implementation 50.44 6
Total (A+B+C) 852.86 106
a
Excluded taxes and duties of $80.242 million to be financed by government resources.
b
In mid-2015 prices.
c
Physical contingencies computed at 5% for all expenditure categories except land acquisition at 10% and 0% for
consultants, finance and credit and service and fixed term contracts. Price contingencies computed at 1.4% for 2016,
1.5% for subsequent years on foreign exchange costs and at 6.4% for 2016, 6.7 % thereafter on local currency costs;
includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange
rate.
d
Includes interest and commitment charges. Interest during construction for the ADB loan has been computed at the 5-
year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per
year to be charged on the undisbursed loan amount. Interest during construction for the IFAD loan has not been
computed.
Source: Design Mission estimates.
49. GoI has requested a loan of $600 million from ADBs ordinary capital resources to help finance the
project. The loan will have a 25-year term, including a grace period of 6 years, an annual interest rate
determined in accordance with ADBs London interbank offered rate (LIBOR)-based lending facility, a
commitment charge of 0.15% per year, an average loan maturity premium of 0.1% based on a straight-line
repayment schedule, and such other terms and conditions set forth in the draft loan and project
agreements. The GoI has provided ADB with (i) the reasons for its decision to borrow under ADBs LIBOR-
based lending facility based on these terms and conditions, and (ii) an undertaking that these choices were
its own independent decision and not made in reliance on any communication or advice from ADB. The
ADB Loan will be applied to financing of Outputs 2 and 3 for Irrigation Systems Infrastructure and
Management and for Project Management under Output 4.
50. GoI has also requested financing of US$ 98.5 million from IFAD to finance the Project. In addition,
IFAD will provide a grant of US$ 1.5 million to assist with policy coordination for the irrigated agriculture
sector. The IFAD loan will be on ordinary terms and shall have a rate of interest per annum equivalent to
one hundred per cent (100 per cent) of the variable reference interest rate, as annually by the IFAD
Executive Board, and a maturity period of fifteen (15) to eighteen (18) years, including a grace period of
three (3) years. No commitment charge shall be levied on the IFAD loan. The terms and conditions for the
IFAD financing will be set forth in the project financing agreements. Excluding the taxes and duties the
IFAD loan will finance completely Output 1: Increased Irrigated Agricultural Incomes, the local facilitation
under Output 3: Improved Irrigation Systems Management, and policy and knowledge activities under
Output 4: Institutions Policy and project management. The financing plan is show in Table 6.
26
Table 6: Project Financing Plan (in US$ Million)

Amount Share of Total
Source (%)
Asian Development Bank 600.00 70.4
International Fund for Agricultural Development Loan 98.51 11.6
International Fund for Agricultural Development Grant 1.49 0.2
Government of Indonesia** 152.86 17.9
Total 852.86 100.0
Note: *) Including contingencies
**) Excluded taxes and duties, estimated $80.242 million to be financed by government resources
27
Table 7: Detailed Cost Estimates by Expenditure Category (in US$ Million)

% of Total
Item Total
Base Cost
A. Investment Costs
1. Civil Works 329.82 41
2. Equipment & Vehicles 18.86 2
3. International Consultants 6.08 1
4. National Consultants 60.10 7
5. Term Staff 5.09 1
6. Service Contract 10.65 1
7. Workshop, Training, Socialization 63.09 8
8. Survey and Studies 97.27 12
9. Institutional Capacity Building 12.66 2
10. Safeguards, Land Acquisition, Resettlement 1.20 0
11. Materials 14.57 2
12. Finance and Credit 20.49 3
Subtotal (A) 639.86 80
B. Recurrent Costs
1. Incremental Administration Costs 113.39 14
Subtotal (B) 113.39 14
Total Base Cost 753.25 94
C. Contingencies
1. Physical and Price 49.17 6
Subtotal (C) 49.17 6
Total Project Cost 802.42 100
D. Financing During Implementation
1. Interest during implementation 50.44 6
Subtotal (D) 50.44 6
Total Project Cost (A+B+C+D) 852.86 106
Note: *) Excluded taxes and duties, estimated $80.242 million to be financed by government resources
28
Table 8: Detailed Costs Estimates by Financier (in US$ 000)

IFAD IFAD Grant ADB The Government Total
Amount % Amount % Amount % Amount % Amount %
I. Investment Costs
A Civil Works - - - - 362,804.53 100.0 - - 362,805 42.5
B Vehicle and Equipment 4,662.81 4.7 150.11 10.1 14,991.20 2.5 - - 19,804 2.5
C Consulting Services - International 2,708.69 2.7 - - 3,797.99 0.6 - - 6,507 0.8
D Consulting Services - National 18,154.17 18.4 361.20 24.2 44,585.66 7.4 - - 63,101 7.9
E Term Staff 5,342.31 5.4 - - - - - - 5,342 0.7
F Service Contract 1,038.02 1.1 - - 10,140.56 1.7 - - 11,179 1.4
G Workshop, Training, Socialization 29,013.91 29.5 271.13 18.2 36,955.84 6.2 - - 66,241 8.3
H Survey and Studies 777.47 0.8 326.67 21.9 101,032.06 16.8 - - 102,136 12.7
I Institutional Capacity Building - - - - 13,293.00 2.2 - - 13,293 1.7
Safe Guard/Land
J Acquisition/Resettlement - - - - 1,260.00 0.2 - - 1,260 0.2
K Materials 15,297.18 15.5 - - - - - - 15,297 1.9
L Finance & Credit 21,516.44 21.8 - - - - - - 21,516 2.7
II. Recurrent Cost
A Incremental Administration Cost - - 379.87 25.5 11,139.09 1.9 102,420.97 100.0 113,940 14.2
Total PROJECT COSTS 98,511 12.3 1,489 0.2 600,000 74.8 102,421 12.8 802,421 97
Interest During Implementation - - - - - - 49,916.84 100.0 49,917 5.9
Commitment Charges - - - - - - 524.29 100.0 524 0.1
Total Disbursement 98,511 11.6 1,489 0.2 600,000 70.4 152,862 17.9 852,862 100.0
Note: Including contingencies
Excluded taxes and duties, estimated $80.242 million to be financed by government resources
29
Table 9: Detailed Cost Estimates by Output / Component (in US$ 000)
Strengthened Policy and

Increased Irrigation Improved Irrigation Improved Irrigation
Institutional Frameworks for Total
Agricultural Income Infrastructure System Management
Expenditure Accounts Irrigated Agriculture
% Cost % Cost % Cost

amount amount amount amount % Cost Category amount
Category Category Category
I. Investment Costs
A Civil Works - - 344,351 94.9 17,138 4.7 1,316 0.4 362,805
B Vechile and Equipment 4,663 23.5 - - 14,116 71.3 1,025 5.2 19,804
C Consulting Services-Int'l 2,709 41.6 1,625 25.0 - - 2,173 33.4 6,507
D Consulting Services-Nat'l 18,154 28.8 23,779 37.7 - - 21,168 33.5 63,101
E Term_Staff 5,342 100.0 - - - - - - 5,342
F Sevice Contract - - - - 11,179 100.0 - - 11,179
G Workshop, Training, Socialization 29,014 43.8 - - 299 0.5 36,928 55.7 66,241
H Survey and Studies 777 0.8 64,837 63.5 31,017 30.4 5,504 5.4 102,136
I Institutional Capacity Building - - - - 12,737 95.8 556 4.2 13,293
J Safe Guard/Land Acquisition/Resetlement - - - - - - 1,260 100.0 1,260
K Materials 15,297 100.0 - - - - - - 15,297
L Finance & Credit 21,516 100.0 - - - - - - 21,516
Total Investment Cost 97,473 14.2 434,592 63.1 86,486 12.6 69,930 10.2 688,481
II. Recurrent Costs
A Incremental Admin. Cost - - - - 156 0.1 113,784 99.9 113,940
Total Recurrent Cost - - - - 156 0.1 113,784 99.9 113,940
Total PROJECT COSTS 97,473 12.1 434,592 54.2 86,642 10.8 183,714 22.9 802,421
Interest During Implementation 6,966 14.0 31,057 62.2 6,180 12.4 5,714 11.4 49,917
Commitment Charges 73 14.0 326 62.2 65 12.4 60 11.4 524
Total 104,512 12.3 465,974.8 54.6 92,887 10.9 189,489 22.2 852,862
Note: Including contingencies

Excluded taxes and duties, estimated $80.242 million to be financed by government resources
30
Table 10: Detailed Cost Estimates by Year (in US$ 000)

2016 2017 2018 2019 2020 2021 Total
I. Investment Costs
A Civil Works 19,241.6 101,029.5 108,572.7 80,495.1 17,145.1 3,338.3 329,822
B Vehicle and Equipment 6,818.0 7,776.1 1,790.5 1,422.2 667.2 387.2 18,861
C Consulting Services-Int'l 1,215.4 1,700.3 1,502.5 682.4 556.7 410.3 6,067
D Consulting Services-Nat'l 6,402.9 11,221.0 10,827.2 10,632.4 10,545.3 10,467.5 60,096
E Term Staff - 1,017.6 1,017.6 1,017.6 1,017.6 1,017.6 5,088
F Service Contract 988.6 1,931.5 1,931.5 1,931.5 1,931.5 1,931.5 10,646
G Workshop, Training, Socialization 5,777.5 13,400.7 15,625.4 13,187.3 8,445.9 6,649.8 63,087
H Survey and Studies 20,447.5 44,215.4 18,174.8 8,585.0 5,618.0 231.9 97,273
I Institutional Capacity Building 2,342.2 5,149.3 2,181.1 1,340.7 891.9 754.8 12,660
J Safe Guard/Land Acquisition/Resettlement - 346.7 853.3 - - - 1,200
K Materials 370.2 1,227.3 8,242.8 1,576.1 1,576.1 1,576.1 14,569
L Finance & Credit 549.6 5,485.9 4,003.0 3,484.4 3,484.4 3,484.4 20,492
Total Investment Cost 64,152 194,500 174,722 124,354 51,878 30,248 639,853
II. Recurrent Cost
A Incremental Administration Cost 20,331.4 18,800.0 18,800.0 18,800.0 18,496.0 18,167.2 113,395
Total Recurrent Cost 20,331 18,800 18,800 18,800 18,496 18,167 113,395
Total BASE COSTS 84,483 213,300 193,522 143,154 70,374 48,415 753,247
Physical & Price Contingencies 4,295.1 14,874.2 14,282.6 10,353.3 3,570.4 1,798.0 49,174
Total PROJECT COSTS 88,778 228,174 207,804 153,507 73,944 50,213 802,421
Note: Excluded taxes and duties, estimated $80.242 million to be financed by government resources
31
Table 11: Detailed Financing Plan (in US$ 000)
2016 2017 2018 2019 2020 2021 Total

1. Increased Irrigation Agricultural Income 3,273 18,328 28,172 18,686 13,563 10,766 92,788
2. Improved Irrigation Infrastructure 32,886 126,823 126,812 86,857 21,406 4,170 398,953
3. Improved Irrigation System Management 18,074 33,138 6,935 9,178 8,350 6,099 81,774
4. Strengthened Policy and Institutional Frameworks for Irrigated 30,251 35,010 31,601 28,433 27,055 27,380 179,730
Agriculture
Total BASE COSTS 84,483 213,299 193,521 143,153 70,374 48,415 753,245
Physical & Price Contingencies 4,297 14,876 14,285 10,353 3,569 1,796 49,176
Total PROJECT COSTS 88,780 228,176 207,805 153,506 73,943 50,211 802,421
32
4
51. Economic Analysis The Project is expected to lead to increased incomes of smallholder
farmers and reduced poverty among rural households and communities. Benefits would accrue from:
(a) improved extension delivery; (b) use of improved seeds; (c) adoption of better water management
techniques; (d) access to mechanization; (e) access to finance, (f) enhanced access to and more
reliable irrigation, and (g) enhanced productivity in agriculture. Yet, in addition to on-farm investments,
the higher returns are also generated by other important factors including: (i) improved tertiary
irrigation system; (ii) more functional WUAs; (iii) improved access to farm roads; and (iv) farmer
training on water budgeting and on financial literacy.
52. Illustrative models have been prepared to demonstrate the financial and economic viability of
the expected investments including: (i) rice crop models for head, middle and tail sections of irrigation
systems; (ii) a vegetable crop model for which chilli is used as a proxy for all vegetables, (iii) farm
models that represent the expected impact on typical farm households. Data for these models is
drawn from the three sample subprojects studied during the ADB preparatory technical assistance for
the project, combined with relevant data from national statistical sources and other similar projects in
Indonesia. A cash-flow analysis is finally carried out to present the with and without programme
analysis.
53. Farm household models have been prepared for large (1.0 ha), medium (0.6 ha) and small
(0.3 ha) farms in the head, middle and tail sections of irrigation systems. These models all result in
increases in income for households, as is seen in Table 12 below. While there are quite significant
differences, on average, at present in the farm income for households, depending on their location
along canals (and, in fact, there will be significant differences among the 1800 subprojects included in
the project) these differences will be greatly reduced by successful implementation of the project,
which will ensure that all water users along a canal have equal access to the available water. It is
noted that small farms are relatively more productive (i.e. have higher net income per ha.) than larger
farms. In general, those with only small areas to cultivate are under greater pressure to produce than
those with larger areas. They are also much less likely to hire labour for farm tasks, except perhaps
at the peak of activity, and therefore have lower production costs (family labour excluded).
DRAFT PAM
Table 12: Models results financial analysis (IDR)

Location on Canal
Farm Size
Head Middle Tail
Large (1.0 ha)
- present 15,497,923 15,918,756 12,639,881
- with project (at
full development) 30,991,950 30,991,950 27,452,751
- increment 15,494,027 15,073,194 14,812,870
Medium (0.6 ha)
- present 11,253,985 10,296,802 10,117,545
- with project (at
- increment 10,440,710 10,654,530 9,083,749
Small (0.3 ha)
- present 9,038,612 8,524,484 7,977,087
- with project (at
- increment 6,211,149 6,003,872 5,913,023
54. On the other hand, larger farms have higher returns to family labour (Table 13) because of
larger overall production and because the average household size of about 4 persons does not
change with farm size and the use of hired labour increases the return to the relatively fewer family
labour days used in production. Nevertheless, the project will still generate increases in the return to
4
For a fuller explanation of the economic analysis will be presented in the final full version of the PAM prior to implementation.
33
family labour of IDR 19,809 (US$ 1.41) per labour-day, an increase of 31% compared with the present
situation.
Table 13: Returns to Family Labour

Head Middle Tail
Large
- present 277,741 283,858 272,411
- with
394,300 394,300 392,182
project
- increment 116,559 110,442 119,771
Medium
- present 137,512 131,504 135,770
- with
193,151 190,918 188,470
project
- increment 55,639 59,413 52,700
Small
- present 66,480 65,082 64,918
- with
87,683 85,461 84,727
project
- increment 21,203 20,379 19,809
55. The increases in farm income shown above will be a positive contribution to poverty reduction
in the project areas, keeping in mind that many farm households also have income from other
activities besides crop production on their irrigated land, including both on-farm and off-farm sources.
56. The total area to be covered by the project is 450,000 ha. Given an average farm size of
about 0.5 ha or less (0.3 ha or less on Java), this gives about 1 million farms, which given an average
household size of just under 4.0 gives a total number of direct beneficiaries approaching 4 million.
For the economic analysis it has been assumed that large farms occupy 20% of the project area and
medium and small farms 40% each. This gives a total of 990,000 farms: 90,000 large farms, 300,000
medium farms and 600,000 small farms. These households are phased into project activities 50% in
each of the first two years.
57. The overall economic internal rate of return (EIRR) of the project is estimated at 17% for the
base case. The net present value (NPV) of the net benefit stream, discounted at 10%, is IDR 4,944
billion. The EIRR was subject to sensitivity analysis to measure the impact variations in key variables
due to unforeseen factors. The results are in the following table and indicate that the most significant
of these risks would be if the with-project rice yields achievable have been over-estimated or if there is
a two-year (or more) delay in achieving project benefits. The former is considered a low risk since the
yield potential of available rice varieties that are genetically superior to the varieties normally used by
farmers at present is well known. The latter will only be a risk if there are delays, once the project has
started, in implementing the improvements to infrastructure and in establishing the programme for
improving agricultural production. The various agencies that will be implementing the project are
under pressure from government to show positive results within a short period and this should ensure
that any delays in implementation are minimized.
Table 14: Sensitivity Analysis
NPV Switching
EIRR
(Rp. million) Values
Base Case 17.0% 4 944 640
Investment costs +10% 15.3% 3 986 629 +51%
All benefits -10% 15.0% 3 408 213 -32%
Benefits -10% & costs +10% 13.3% 2 450 202 -
34
With project rice yields +10% 22.7% 9 461 512

-12%
With project rice yields -10% 10.7% 427 768
Present rice yields +10% 13.6% 2 399 890
+21%
Present rice yields -10% 20.2% 7 489 390
Delay in benefits 1 year 14.1% 3 203 031 -
Delay in benefits 2 years 12.0% 1 619 750 -
SWRF = 0.85 16.5% 4 561 441 -
SCF = 1,5 & SER = 14,000 14.1% 2 830 507 -
58. Distribution of project benefits A distribution analysis based on the differences between
economic and financial NPVs for project costs and benefits have been carried out. The differences in
benefit values arise chiefly from the effect of the shadow, taking into account the number of farms in
each size category, the greatest benefits accrue to large farms and the least to small farm
households.
59. Applying the rural poverty rate of 14.7% to the distributed differences accruing to farm
households and the overall national poverty rate of 11.3% to the differences accruing to government
and the economy generates a poverty impact ratio for the project of 14.1%.
35
Table 15: Distribution Analysis

Net Present Values (Rp. million)
Farm Households /
Item Economic Difference Govt/ Economy Total
Financial (A) Labour
(B) (B)-(A)
Project Benefits
Large farms 7 509 069 5 299 813 -2 209 256 2 209 256 2 209 256
Medium farms 8 802 924 6 189 826 -2 613 098 2 613 098 2 613 098
Small farms 5 724 678 3 874 630 -1 850 048 1 850 048 1 850 048
Total Project Benefits 22 036 671 15 364 269 -6 672 402
Project Investment Costs

Increased agricultural incomes 1 236 258 997 020 -239 238 239 238 239 238
Improved irrigation systems
infrastructure 5 984 029 5 138 726 -845 302 845 302 845 302
Improved irrigation systems
management 1 890 837 1 579 086 -311 751 311 751 311 751
Policy, institutions & project
management 2 236 006 1 865 273 -370 732 370 732 370 732
Total Costs 11 347 129 9 580 105 -1 767 024
Net Benefits -11 347 129 -9 580 105 1 767 024 1 527 786 6 672 402 8 200 188
Benefits (losses)
Proportion of the poor 11.3% 14.7%
Benefits to the poor 172 640 980 843 1 153 483
Poverty Impact Ratio 14.1%
36
V. FINANCIAL MANAGEMENT
A. Financial Management Assessment

60. The Financial Management Assessment (FMA) has been prepared in accordance with ADBs
and IFADs Guidelines for the Financial Management and Analysis of Projects5 (the Guidelines) and
6
the publication Financial Due Diligence: A Methodology Note . This FMA incorporates the Financial
Management Internal Control and Risk Management Assessment required by the Guidelines.
Supplementary Document No. 3 (SD03) presents the consolidated results of the completed FMA
Questionnaires from the executing agencies (EA) and implementing agencies (IAs). This assessment
was prepared by reviewing documents, interviewing staff of Government agencies, consultants,
targeted project beneficiaries and other stakeholders. Mitigating actions were identified together with
the stakeholders. The assessment purpose was to determine the robustness of the accounting,
financial controls and internal audit arrangements, and the capability of the EA and IAs to meet all the
fiduciary requirements, which are set out in the loan agreements and other Project documents. Within
this context, this chapter presents results of an FMA of the EA and three IAs including agreed Project
financial arrangements, financial responsibilities of each of the EA, IAs and associated entities, and
perceived financial risks and risk management. The assessment concludes that the overall project
financial management risk is moderate. The key risks, activities to mitigate risks, responsibilities to
address these risks and a timeline are summarized in the Table 16.
Table 16: Mitigation of financial management risks
KEY RISKS MITIGATION ACTIVITIES TIMELINE RESPONSIBILITY
Need of separate lines During project-set up to set up Before loan GoI and ADB and
for availability and clear mechanism for availability signing IFAD
disbursement of ADB and disbursement of loan funds
and IFAD loan funds
Involved PIUs not Proper socialization by NPIU Before loan NPIU BANGDA
familiar and/or BANGDA on on-granting signing
comfortable with the mechanism
on-granting
mechanism
Involved Proper assessment of financial First Project PIUs
administrations not capacity of involved Year
having the financial administrations during OWPB
capability to pre- compilation. If limited financial
finance project related capacity, administration can
activities request certain costly activities to
be funded under APBN
Implementation Establishment of PPMU KPMU at Formally, post- EA and IAs in
arrangements - local government levels, which Loan Signing. close coordination
between the EA and include all PIUs will ensure with BAPPENAS,
IAs of three different regular coordination to ADB and IFAD
ministries and PIUs in expeditiously address and resolve
16 provinces and project delivery issues at field
74districts level and local Govt. level.
Establishment of an NPMU at the
central government level, which
includes the EA and IAs will
ensure regular coordination to
5
Financial Management and Analysis of Projects. ADB. 2005. Refer page 14 of Knowledge Management Addendum for more
information on the Financial Management Assessment.
6
Financial Due Diligence A Methodology Note. ADB. 2009. Refer page 3 for more information on the Financial Management
Assessment.
37
KEY RISKS MITIGATION ACTIVITIES TIMELINE RESPONSIBILITY

address and resolve strategic and
guidance issues at Central
government as well as local
government. level.
The NSCWR will steer overall
project management at the central
government level via semi-annual
coordination meeting with the
NPMU.
Country level Strengthening of the EA, PMUs After the EA, IA and NPMU
weaknesses identified and IAs/PIUs capacity in establishment together with ADB
by the PEFA report - preparing the financial of PMU and resident mission
PFM reform program management report will be PIUs. specialist.
such as the provided through PMC and ADB
introduction of accrual- resident mission specialist.
based accounting may
impact the preparation
of financial report.
Lack of experience, Strengthening of the EA, IAs and After the EA, IA and NPMU
especially at the PIU PIUs at local level capacity establishment together with
levels in ADB and financial management and of NPMU and resident mission
IFAD financial reporting will be provided through PIUs. specialist. PPMUs
management the NPMC and PPMC financial and KPMUs.
procedures. specialists, and ADB resident
mission specialist.
High pre-mitigation Coordinate with BPKP to improve After the EA, IA and NPMU
financial management internal control system. Work establishment together with ADB
(FM) related to weak closely with EA, IAs, PMUs and of NPMU and project officer.
internal controls, PIUs to improve the project PIUs.
limited FM capacity of specific internal control system.
EA/IAs, weaknesses in PPMC financial specialist and
internal audit assistants to provide guidance to
capabilities and improve project staff (PMU/PIU)
reconciliations. capacity.
In-sufficient attention Close monitoring by the NPMU to Year 1 NPMU
to collection of contain financial management
required evidence specialists and to be mobilized
(SPM, SP2D and timely
others)
Late operation of the Development and operational of Year 1 NPMU
web-based the PPMS/FMS web-based
PPMS/Financial system assured in year 1
Management System
Late and/or insufficient Training of KPIU/PPIU staff in Year 1 NPMU
training of KPIU/PPIU PPMS/FMS operation planned in
staff assigned for FMS year 1
operation
Lack of operational Locate centers of verification at Before loan NPMU
funds for involved provincial level signing KPIU/PPIUsU
KPIU to go to In first AWP funds for verification KPIU/PPIU to
verification location to be made available assign funds in
first year
38
61. Conclusion The assessments indicate that on the whole, the prevailing government financial-
, accounting- and auditing rules and systems in principle meet generally acceptable international
accounting and auditing standards. The Government has adequate internal control systems and
financial reporting arrangements. The EA and the IAs have worked in the past with ADB/IFADF and/or
other development partners and are implementing well the on-going ADB-funded projects for some of
them. The overall performance of the EA and the IAs in implementing financial management of the on-
going projects is acceptable. The DGWR/MoPWH, appointed as the Projects EA, and AAEHRD/MoA,
DGRD/MoHA and DWRI/BAPPENAS as the implementing agencies, have substantial and highly
relevant experience in implementing externally financed projects including ADB and IFAD loans.
B. Budgeting, Fund Flow Arrangement
62. Imprest Account(s) After loan effectiveness, the Government will open two Imprest Accounts
nominated in US$, in the name of the Ministry of Finance (MoF) at Bank Indonesia (BI), one for the
ADB loan funds and one for the IFAD loan funds. Funds in the imprest accounts will be used to pay
for eligible Project expenses incurred by the NPMU, NPIUs, PPMUs, PPIUs, KPMUs and KPIUs. The
modalities the imprest account/designated account for the IFAD resources will be detailed in the Letter
to the Borrower, which would be issued by IFAD. MoF will administer the imprest accounts.
63. The ADB loan proceeds will be disbursed in accordance with ADBs Loan Disbursement
7
Handbook (2012, as amended from time to time) , and detailed arrangements agreed upon between
the Government and ADB. IFAD loan proceeds will be disbursed in accordance with IFAD Loan
8
Disbursement Handbook and its detailed arrangements would be outlined in the Letter to the
Borrower.
9
64. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS) ADB funds may not be applied
to the activities described on the ADB Prohibited Investment Activities List will be presented in the
final full version of the PAM prior to implementation. All financial institutions will ensure that their
investments are in compliance with applicable national laws and regulations and will apply the
prohibited investment activities list to subprojects financed by ADB.
65. Overall, there will be three types of disbursement mechanisms for the project which consist of:
(i) direct payments from the Loan/Grant resources from ADB; (ii) replenishments of the Special
Account/Designated Account of ADB/IFAD; and (iii) reimbursement of pre-financed expenditures by
ADB/IFAD.
66. The flow of funds for the project would be determined by the implementation strategies
adopted by the Implementing Agencies which will consist of a combination (i) reimbursement from
APBN-funded (Anggaran Pendapatan dan Belanja Negara national revenue and budget) activities
which would then be passed on to the local government through Dekonsentrasi/Tugas Pembantuan
mechanism (illustrated by Figure 3 and Figure 7) and (ii) reimbursement for activities implemented
under the pre-financing agreements (illustrated by Figure 5) is validated by a systemic verification of
the various expenditures against approved plans and budget (illustrated by Figure 6).
67. Reimbursement from direct payments from the Imprest Account For all reimbursement
from Direct Payments from the Imprest Accounts payments for contracts are eligible for
reimbursement up to their callus as stated in the PCSS (Procurement Contract Summary Sheet)
statement, as shown in Figure 4 for all direct-payment activities which are funded by ADB. It is
envisaged that there would not be any direct payments associated with activities funded by IFAD.
7
Available at: http://www.adb.org/documents/loan-disbursement-handbook.
8
Available at: http://www.ifad.org/operations/finance/pack/pack.htm
9
Available at: http://www.adb.org/sites/default/files/pub/2009/Safeguard-Policy-Statement-June2009.pdf
39
Figure 2: Fund flow diagram for APBN-funded activities
40
Figure 3: Disbursement flow chart for Direct Payment (ADB)
Legend: Fund flow

Document flow
41
Figure 4: ADB/IFAD On-granting fund flow mechanism
DGFB = Directorate General of Fiscal Balance;DGRD = Directorate General of Regional Development;DGT = Directorate
General of Treasury; DIPA-HPD = Central Government Budget Document for On-granting; DPA = Provincial/District
Government Budget Document; KPA-HPD = KuasaPenggunaAnggaranHibahke Daerah (On-granting Budget Authorized User);
MoF = Ministry of Finance; NPMU-DGWR = National Project Management Unit, Directorate General Water Resources;
NSCWR = National Steering Committee Water Resources; OWPB = Overall Work Plan Budget; RKA-PHD =
RencanaKerjadanAnggaranPenerusanHibah Daerah (On-granting Budget Document); SKPD = SatuanKerjaPerangkat Daerah
(Provincial/District Working Unit.
42
Figure 5: Procedures for verification
DGFB Directorate General of Fiscal Balance

KPA-HPD Kuasa Pengguna Anggaran Hibah ke Daerah (On-granting Budget Authorized User)
KPKN Kantor Pembendaharaan dan Kas Negara (national treasury)
PMU Project Management Unit
PMC Project Management Consultant
SKPD Satuan Kerja Perangkat Daerah (Provincial/District Working Unit)
SPM Surat Perintah Membayar (Letter of Order to Pay from Treasurer to KPPN)
SPP Surat Perintah Pembayaran (Letter of Order to Pay)
SP2D Surat Perintah Pencairan Dana (Letter of Instruction to Liquidate Budget)
43
Figure 6: ADB/IFAD Fund flow for de-concentration (Dekonsentrasi/TugasPembantuan -

DEKON)
NSCWR
Provincial/
DGAIF-MoA District
NPMU-
DGWR
OWPB
Imprest
DGB-MoF RKA-MoA Account
SPP & SPM

DIPA TP- SPP & SPM
DGT-MoF MoA SPP & SPM
Imprest
Account
SPP&&SPM
SPP SPM
SP2D
DGAIF Directorate General of Agriculture Infrastructure and Facilities, MoA

DGB Directorate General of Budget, MoF
DGT Directorate General of Treasury, DIPA
NPMU-DGWR National Project Management Unit, Directorate General Water Resources
NSCWR National Steering Committee on Water Resources
OWPB Overall Work Plan Budget
RKA Rencana Kerjadan Anggaran, MoA
SPM Surat Perintah Membayar (Letter of Order to Pay from Treasurer to KPPN)
SPP Surat Perintah Pembayaran (Letter of Order to Pay)
SP2D Surat Perintah Pencairan Dana (Letter of Instruction to Liquidate Budget)
TP-MoA Central Government Budget Document for dekon/TP
44
68. Before the submission of the first withdrawal application, the borrower will submit to ADB and
IFAD sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on
behalf of the borrower, together with the authenticated specimen signatures of each authorized
person. The minimum value per withdrawal application is US$ 100,000, unless otherwise approved by
ADB. The same threshold is also applicable to IFAD resources. The borrower is to consolidate claims
to meet this limit for reimbursement and imprest account(s) claims. ADB reserve the right not to
accept WAs below the minimum amount.
69. The NPMU will be responsible for preparing the annual disbursement projections; timely
preparing of withdrawal applications, and timely submission of withdrawal applications to ADB. The
four PIUs are responsible for collecting supporting documents for the project expenditures they have
incurred, and the NPMU is responsible to compile these expenditure evidences.
70. The NPIU DGRD is assigned to demand all PPIU and KPIUs to (a) in the annual budget-
preparations assign budgetary allocations in the DPA in line with the approved AWPs, and (b) to
require all KPIUs and PPIUs to submit their payment evidence in a timely manner for verification and
subsequent disbursement (in principle not later than 2 months after payment).
71. All PPKs are responsible for monitoring procurements and managing the payments for
procured works, goods or services. The payments are made by the treasury (Kantor
Pembendaharaan dan Kas Daerah KPKD) at the request of PPK and following the approval by the
budget holders. The fund will be transferred to budget holders through the regular government
budgets.
72. Statement of Expenditure (SOE) The SOE procedure may be used for reimbursement of
eligible expenditure and liquidation of advances to the imprest account(s). The SOE ceiling is US$
100,000 equivalent per individual payment. SOE records should be maintained and made readily
available for review by the joint Government of Indonesia, ADB and IFAD review or upon ADBs and
IFAD's request for submission of supporting documents on a sampling basis.
73. For every liquidation and replenishment request of one of the imprest accounts, the borrower
will furnish to ADB/IFAD (a) statement of Account (bank Statement) where the imprest accounts are
maintained, and (b) the Imprest Account(s) Reconciliation Statement (IARS) reconciling the above
mentioned bank statement against the EAs records. Sample forms for withdrawal of loan proceeds,
replenishment and liquidation of imprest account(s), and SOE can be downloaded from the ADB
10 11.
website and IFAD website NPMU will be responsible for ensuring that SOEs are operated in
accordance with ADB's and IFAD's requirement. Separate SOE should be prepared for expenditures
financed by ADB and IFAD resources.
74. On-Granting Mechanism In conformance with Financial Ministers Regulation (PERMEM
LEU Nr. 188/PMK.07/2012), loan proceeds for regional administrations (provinces and districts) will be
made available through On-Granting Agreements (OGA) or Perjanjian Hibah between the Ministry of
Finance and the head of the concerned regional administration. These OGA will cover the funding of
the majority of the loan-funded activities at the subnational level. There would be separate OGAs
based on the funding sources, one for the ADB-funded activities and one for the IFAD funded
activities. An innovation under the IPDMIP will be the establishment of a mechanism (and provision of
technical support) to process re-imbursements directly at the Provincial level (through the Provincial
KPKN office) rather than at the Central-level. It is foreseen that under the IPDMIP, for each
administrative level, a two-staged process for establishing on-granting agreements (OGA) will be
observed between the Ministry of Finance (MoF) and the respective regional administration. A
preliminary OGA will be established at project start-up based on cost estimates calculated under
(project readiness activities see Table 5) for components 2-5 activities per province and district,
mainly covering ADB funded activities and some start-up funds12 for the agricultural component. A
10
Available at: http://www.adb.org/documents/handbooks/loan_disbursement/default.asp
11
Available at: http://www.ifad.org/operations/finance/pack/pack.htm
12
To finance field assessments and design of the agricultural component activities for the proposed sub-project areas / districts
/ provinces.
45
second (or amended) OGA will be made after the overall program work plan budget (OWPB) has
been submitted by the sub-national implementing at Province and Districts concerned and approved
by the NSCWR.
75. OGA The following procedures will be applied for entering into an OGA:
a) After Loan Agreement signing, DGWR-MoPWH (NPMU) and AAEHRD DGHR (NPIU), will
request to the Directorate General of Fiscal Balance (DGFB), MoF to issue a MoF decree on
loan allocation to be made available for local governments based on evaluation.
b) After issuance of the decree, DGWR-MoPWH (NPMU) and AAEHRD DGHR (NPIU) will
establish for every participating administrative level (districts and province) an initial estimate
for performance targets and related fund allocation to be confirmed by the participating
administrative level.
c) After the concerned administrative government has confirmed the performance target and
related fund allocation DGRD/MoHA will request to each participating district and province to
prepare a formal request to MOF for the concerned on-granting amount.
d) After issuance of these decrees, DGFB-MoF will prepare the formal on-granting agreements
between MoF and the provincial/district governments, which indicate the total loan amount to
be made available for all initial start-up activities, including assessment, preparation of SSRs
and the drafting of the OWBP.
e) Relevant provincial/district agencies will assign the SKPDs to prepare the budget for the first
year.
f) DGFB in close coordination with DGWR-MoPWH (NPMU) and AAEHRD DGHR (NPIU) and
DGRD will prepare the work and budget plan of on-granting (RKA-HPD) which then will be
submitted to DGT to produce a DIPA-HPD.
g) In the first year all participating administrations will prepare a comprehensive OWBP for
endorsement by the NSCWR.
76. Amended OGA (Optional) For any amendment to the OGA, the following procedures will be
applied:
a) After endorsement by NSCWR (BAPPENAS) of the OWPB the DGWR MoPWH (NPMU) and
AAEHRD DGHR (NPIU) will request to the Directorate General of Fiscal Balance (DGFB),
MoF to issue a decree of Minister of Finance on loan re-allocation to be made available for
local governments based on the values as included in the OWPB.
b) After issuance of these decrees, DGFB will amend the formal on-granting agreements
between MoF and the provincial and district governments. Relevant provincial and district
agencies will assign their SKPDs to prepare AWPS based on the approved comprehensive
OWP for endorsement by NSCWR
c) DGFB in close coordination with DGWR-MoPWH (NPMU) and AAEHRD DGHR (NPIU) and
DGRD will prepare the work and budget plan of on-granting (RKA-HPD) which then will be
submitted to DGT to produce a DIPA-HPD.
d) In parallel, the provincial and district governments will issue their own DPA-SKPD.
77. With the amended OGA, the participating administrative units have a guarantee that activities
as foreseen in the OWPB and included in the approved AWP for the pre-agreed percentages can be
reimbursed for under the loans after having been verified.
78. Overall Work Plan and Budget For the implementation of the Project for each participating
district or province an overall work plan and budget (OWPB) will be prepared by the involved regional
administrations. These OWPB comprise the following details:
For all non-scheme related activities: (i) the kind of activities; (ii) its impact; (iii) its contribution
to the loan performance indicators (if applicable); (iv) the year(s) of implementation; (v) the total
costing; and e) which part of the costs are charged from the loan and which part to other
financing sources, and
For all scheme related activities: (i) the kind of activities; (ii) its coverage in units (Ha, M, WUAF
or others); (iii) its contribution to the loan performance indicators (if applicable); (iv) the year(s)
46
of implementation; (v) the total costing; and e) which part of the costs are charged from the loan
and which part to other financing sources.
79. After the OWPB for each district and or province has been endorsed by NWSWR, for each
participating administrative level (district, province, central) it will be used as basis for their (1) annual
financial planning and (2) after implementation for reimbursement.
80. Procedures for Activities under the OGA Once the first OGA is effective, the SKPD will
start implementing their activities. The first step to be done is to include the AWP activities in the local
DPA program for endorsement by the provincial APBD as the activities first have to be pre-financed by
the districts using their own financial resources (uang talangan) The local government will request
their local treasurer to use budget available in the local governments general treasurer account.
81. Special Considerations for Financing Arrangements For a selected number of activities,
alternative/optional financing arrangements other than the OGAs may be applied, viz. (i) for
infrastructure works for which specific knowledge/technology is required and/or which require multi-
years contracts and/or which concern large amounts of financial resources - these activities may be
implemented by the BWS concerned using APBN funds instead of on-granting funds; (ii) for all
agricultural value chain improvement activities, related activities which will be implemented by the
Provincial Agricultural Agency with APBN funds using DEKON procedures.
C. Accounting Policies and Procedures
82. Financial transactions, covering both DGWR-MoPWH (NPMU) and IAs (including OGAs)
expenditures, will be recorded in the government accounting system and included in government
accountability reports. The projects staffing will include financial specialist and assistants to manage
the accounting requirements of the Project. As well as managing the overall accounting system, the
financial officers will also be responsible for ensuring adequate records and verification of field-level
expenditures. The DGWR-MoPWH (NPMU) will prepare: (i) separate consolidated project financial
statements reports suitable for project monitoring purposes, and (ii) aggregate financial reports and
submit them to ADB/IFAD on a six monthly basis using an agreed format. In the first year of project
implementation, The DGWR-MoPWH (NPMU) shall also prepare consolidated financial statements of
the operations, resources and expenditures related to the project in respect of each Fiscal Year to be
delivered to ADB and IFAD within two months of the end of such period.
D. Reporting, Auditing and Public Disclosure
83. Auditing Requirements The DGWR will cause the detailed consolidated Project accounts to
be audited in accordance with International Standards on Auditing by an auditor acceptable to ADB
and IFAD. The audited Project financial statements will be submitted in the English language to ADB
and IFAD within six (6) months of the end of the fiscal year by the EA. The annual audit report will
include a separate audit opinion on the use of the imprest account, SOE procedures and financial
loan covenants. The Government has been made aware of ADBs policy on delayed submission, and
the requirements for satisfactory and acceptable quality of the audited project financial statements.
ADB reserves the right to verify the Project's financial statements to confirm that the share of ADBs
financing is used in accordance with ADBs policies and procedures. The audited Project financial
statements must be disclosed in the ADB and the EA website. IFAD requires that the project accounts
be audited (by approved independent auditors) in accordance with auditing standards consistent with
IFAD Guidelines for Project Audits (for Borrowers use).
84. Auditors will express an opinion on the annual consolidated financial statements and
determine whether project funds have been correctly accounted for and have been used in
accordance with the financing agreements. They will also determine the adequacy of supporting
documents and controls on the use of Statement of Expenditures (SOEs) as a basis for disbursement.
The auditors will also furnish a separate Management Letter, which will identify any material
weakness in accounting and internal controls at all levels and report on the degree of compliance with
financial covenants of the IFAD Financing Agreement, including a review of the procurement of goods,
works and consultant services
47
85. External Audit and Public Disclosure The EA will engage the Badan Pengawas Keuangan
(BPK), the Indonesian Supreme Audit Institution (SAI), to audit the consolidated Project financial
statements annually and the audit of the Project EA's/IA's. The EA will submit to ADB/IFAD certified
copies of audited annual Project financial statements as well as the auditors report and the
management letter within six (6) months of each financial year-end during implementation. The terms
of reference (ToR) of auditors have been discussed with BPK and BPK will allocate adequate budget
to properly audit the Project.
86. The annual audit report for the audited Annual Project Financial Statements (APFS) will
include audited Project financial statements, auditor opinions and management letter. Auditor opinions
cover (i) whether the Project financial statements present a true and fair view or are presented fairly,
in all material respects, in accordance with the applicable financial reporting framework; (ii) whether
loan and grant proceeds were used only for the purposes of the Project or not; (iii) the level of
compliance for each financial covenant contained in the legal agreements for the Project; (iv) use of
the imprest fund procedure; and (v) the use of the statement of expenditure procedure certifying to the
eligibility of those expenditures claimed under SOE procedures, and proper use of the SOE and
imprest procedures in accordance with ADBs and IFADs Loan Disbursement Handbook and the
Project documents.
87. Compliance with financial reporting and auditing requirements will be monitored by
review missions and during normal program supervision, and followed up regularly with all concerned,
including the external auditor. The Government, the EA and IAs have been made aware of ADBs
policy on delayed submission, and the requirements for satisfactory and acceptable quality of the
APFSs13. ADB reserves the right to require a change in the auditor (in a manner consistent with the
constitution of the borrower), or for additional support to be provided to the auditor, if the audits
required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed.
ADB and IFAD reserve the right to verify the Project's financial accounts to confirm that the share of
ADBs and IFAD's financing is used in accordance with ADBs and IFAD policies and procedures.
88. Public disclosure of the Project financial statements, including the audit report on the
14
Project financial statements will be guided by ADBs Public Communications Policy (2011) . After
review, ADB will disclose the Project financial statements for the Project and the opinion of the
auditors on the financial statements within thirty (30) days of the date of their receipt by posting them
on ADBs website. The Audit Management Letter will not be disclosed. The draft ToR of BPK is being
discussed between ADB and BPK, and has not been finalized since BPK, MoF, and ADB should
approve the ToR.
VI. PROCUREMENT AND CONSULTING SERVICES
A.
Advanced Procurement
89. Due to the scope of the Project, it is imperative that preparatory activities scheduled for 2016
commence without undue delay. Construction activities are scheduled to commence as early as 2016
in three design phase sub-project locations as well as in other districts where acceptable DEDs have
already been prepared for sub-projects. So as to be mobilized as soon as possible following Loan
Effectiveness, advance procurement will be necessary for all Project Management and Project
Implementation Consulting Services.
13
ADB Policy on delayed submission of audited project financial statements. When audited project financial statements are not
received by the due date, ADB will write to the executing agency advising that (i) the audit documents are overdue; and (ii) if
they are not received within the next six months, requests for new contract awards and disbursement such as new
replenishment of imprest accounts, processing of new reimbursement, and issuance of new commitment letters will not be
processed. When audited project financial statements have not been received within 6 months after the due date, ADB will
withhold processing of requests for new contract awards and disbursement such as new replenishment of imprest accounts,
processing of new reimbursement, and issuance of new commitment letters. ADB will (i) inform the executing agency of ADBs
actions; and (ii) advise that the loan may be suspended if the audit documents are not received within the next six months.
When audited project financial statements have not been received within 12 months after the due date, ADB may suspend the
loan.
14
Available from http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications
48
90. All advance contracting will be undertaken in conformity with ADBs Procurement Guidelines
15
(April 2015, as amended from time to time) and ADBs Guidelines on the Use of Consultants (March
16
2013, as amended from time to time). The issuance of invitations to bid under advance contracting
will be subject to ADB approval. The borrower and DGWR, DG AAEHRD, DGRD, and DWRI have
been advised that approval of advance contracting does not commit ADB to finance the Project. ADB
financing is subject to the governments compliance of the relevant provisions of the loan agreement
and ADB guidelines. The Government was also advised that ADB will not finance expenditures
incurred by the government prior to loan effectiveness, even if advance contracting is approved by
ADB. It is envisaged that there would not be any advance contracting for IFAD funded activities.
91. The following steps for the recruitment of consultants can be concluded in advance: (i)
submission to ADB for review and approval of the Term of Reference (ToR), Cost Estimates and
Shortlisting evaluation criteria, (ii) advertisement, (iii) shortlisting of consulting firms, (iv) issuance of
the request for proposals, (v) evaluation of technical proposals, and (vi) evaluation of financial
proposals and final ranking. DGWR, DG AAEHRD, DGRD, and DWRI will advertise all consulting
opportunities in Consulting Services Recruitment Notice at www.adb.org.
92. The following steps for the procurement of vehicles and office equipment, and civil works can
be undertaken in advance: (i) submission to ADB/IFAD for review and approval of the draft bidding
document, (ii) advertisement, (iii) issuance of bid documents, (iv) bid opening, and (v) evaluation of
bids.
93. To facilitate rapid start-up, the Government and ADB agreed that advance action could be
undertaken for the (i) engagement of Project Management and Project Implementation consultants
under DGWR, DGAAEHRD, DGRD, and DWRI (Bappenas), (ii) procurement of consultants to
implement updating of the SI-PAI and RP2I systems (sub-component 3.3), and (iii) three core sub-
project civil works packages under Component 2 (plus any other ready-to-go sites for which DED
have or would have been prepared before project implementation commences). This is necessary to
ensure (i) consultants are available to support the early stages of project implementation, and (ii)
urgent civil works can start at early stage of the project.
94. With regard to item (i) above (engagement of project management and implementation
consultants), consultants will be selected and defined as a company or individual consultants under
the provisions of ADB Guidelines on the Use of Consultants by Asian Development Bank and its
Borrowers. Selection of consultants is made based on the evaluation and establishment of Quality
and Cost (QCBS) by observing the following procedures:
95. Invitation to make technical and cost proposals:
An invitation to submit technical and financial proposal (hereinafter abbreviated as Request
for Proposal or RFP) and all related documents must be approved by ADB prior to publication.
For this purpose, three copies of the draft RFP, the name of the consultants included in the
short-list, the proposed criteria for evaluating the proposal, the draft contract of the consultant,
and other related documents should be submitted to the ADB. Both proposals have to be
submitted in a period of not less than 45 days. A copy of the final RFP issued together with
the related documents should be submitted to ADB immediately following publication.
The validity period the technical and cost proposals are set out in the RFP, usually not
exceeding three months from the date set for the submission of said proposals.
ADB approval will be obtained for any request for extension of the validity period, including
any extension of the contract. Except if the Bank does not agree, then the validity period
including any extension must not exceed the maximum period of six months. If the contract is
not signed within the validity period provided for in the Guidelines for Use of Consultants, then
the selection is not valid and the consultation selection process and determination as
described in this paragraph shall be repeated.
96. Evaluation and scoring of technical proposal:
15
Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf
16
Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf
49
As soon as the technical proposes are evaluated and assigned value, ADB will provide
approval for the evaluation and determination of the value of the technical proposals. In this
case, ADB should be sent three copies of the technical proposals.
Evaluated and scoring proposal costs and technical and cost proposals sequence.
After cost proposals have been evaluated and rated, the order of technical and financial
proposals will be set.
97. Contract implementation:

Upon conclusion of negotiations, the draft contract should be submitted to the ADB for
approval. Upon contract signing, ADB should be provided with 3 copies of the signed contract.
In the event of any fundamental changes to be made to the contract following execution of the
works, proposed changes should be submitted to ADB for prior approval.
98. Individual consultants must be selected and specified by the Borrower with the following
procedures:
The list of candidates together with their qualifications and ranked order, evaluation criteria
used in determining the ranking (order), verification, and draft contract should be submitted to
the ADB for prior approval before finalization of the selection.
Three copies of signed contracts should be submitted to the ADB.
99. Irrigation scheme improvements will be conducted by SRR (sustainable replacement of

rehabilitation) method as well as regular rehabilitation. SRR refers to small scale repair works which
are planned to verify that the previous maintenance cycle has been disrupted but that the condition of
the existing network may still be maintained. SSR works involve WUAs or WUAFs deemed qualified
to undertake the repairs themselves. Works beyond the capacity of WUAs/WUAFs are classified as
rehabilitation works which should be undertaken by contractors, but involving WUA/WUAF
participation in the form of operational collaboration (kerjasama operasional or KSO). Rehabilitation
works requiring the KSO method are usually associated with primary canals or scheme networks.
B. Procurement of Goods, Works and Consulting Services
100. All procurement of goods and works will be undertaken in accordance with ADBs
Procurement Guidelines (2015, as amended from time to time) and IFAD Procurement Guidelines and
its Handbook consistent with National Procurement Guidelines. Under the project, civil works will be
procured through national competitive bidding (NCB) procedures acceptable to ADB for packages up
to or equal to US$25,000,000 equivalent. Goods will be procured through NCB procedures acceptable
to ADB for packages up to or equal to $3,000,000 equivalent. For packages of US100,000 equivalent
or less, shopping method may be used. Small-scale works and good contracts with average value of
US$10,000 - US$30,000 equivalent may be awarded to community groups following procurement
procedures for community participation in procurement as contained in ADB's Procurement
Guidelines. The use of the E-procurement system is allowed for national competitive bidding (NCB)
packages for MPWH, Bappenas, MOA and MOHA. For Quality- and Cost-Based Selection (QCBS) all
consulting services recruitment notice (CSRN) must be posted in the ADB consultant management
system (CMS) and the executing and implementing agencies must ensure that all expressions of
interest are received via CMS and evaluated accordingly. Hence executing and implementing
agencies will provide assurance that the use of MPWH procurement software to engage the
consulting firms will not hamper the advertisement of the CSRN in CMS or the receipt of all EoI and
corresponding evaluation of EoI.
101. A Project Procurement Risk Assessment was prepared in accordance with ADBs Guide on
Assessing Procurement Risks and Determining Project Procurement Classification.17 The overall
procurement classification for the Project is assessed as Medium Risk (Category Medium) and
recommended the following (Table 17) to improve procurement capacity:
17
ADB. 2014. Guide on Assessing Procurement Risks and Determining Project Procurement Classification. Manila
50
Table 17: Procurement Risk Description

Procurement Risk Description
Indicators Description
1. Legislative and Regulatory Framework - The procurement strictly follows the national
regulations. However, the ministry classifies
contractors based on their qualification
(expertise) and classification (size). A particular
contractor may only participate in the
procurement packages according to their
qualification and classification.
- Complaint handling mechanism system exists
but sanction system needs improvement.
- SBDs are used, however, the one for large
contracts requiring international competition
may need further improvements to attract more
bidders
2. Institutional Framework and - Advance procurement is practiced in the end of
Management Capacity each year to anticipate the new fiscal year, with
strict stipulation that bid winner will be
determined when the budget document (DIPA)
is effective
- Procurement planning may require further
enhancement to anticipate widespread
scattered contracts based on the current
extensive demands for water resources
management sector development
- Procurement Service Unit is a permanent
function unit.
- Each procurement working group members is
procurement certified
3. Procurement Operation and Market - For large contract procurement, the number of
Practices competitive private sector is rather limited.
- Advertisement of a procurement opportunity is
adequately made in transparent manner.
However, there may be an inadequate
comprehensive public awareness program to
show the general advantages for the private
sector in participating in large value government
contracts
- The sector has a long experience in procuring
large water resources development projects
financed by various loans
- Under the current regulations the cost estimate
is based on market assessment, however, no
further guidance/manual is provided on how to
conduct such market assessment, and there is
no proper supervision either on the application
of the market survey.
- Implementing unit is used to refer to unit price
list endorsed by each local government
- e-katalog for some items of goods is available
4. Integrity and Transparency of the Public - Procedures and requirements on conducting
Procurement System procurement audit is still missing, so far which
has been implemented nationally is financial
audit which includes the review of the
application of procurement procedures
- Many improvements made in fighting against
corruption and collusion however it needs to be
addressed in a more institutional and
51
Procurement Risk Description

Indicators Description
sustainable way
Overall Rating Medium
102. An 18-month procurement plan indicating threshold and review procedures, goods, works,
and consulting service contract packages and national competitive bidding guidelines are in Section C
below (Procurement Plan).
C. Methods, Thresholds, Review and 18-Month Procurement Plan
103. Except as the Asian Development Bank (ADB) and IFAD may otherwise agree the following
(Table 18, Table 19) process thresholds shall apply to procurement of goods and works.
Table 18: Methods and thresholds for procurement of goods and works
PROCUREMENT OF GOODS AND WORKS
Method Threshold Comments

National Competitive Between US$ 100,001 and US$ Prior review is required.
Bidding for Goods 3,000,000
Shopping for Goods Up to US$ 100,000 Post review.
Community Up to US$ 30,000 Post review.
Participation in
Procurement for
Goods
National Competitive Between US$ 100,001 and US$ Prior review is required.
Bidding for Works 25,000,000
Shopping for Works Up to US$ 100,000 Post review.
(small works)
Community Up to US$ 30,000 Post review.
Participation in
Procurement for
Works
Table 19: Consulting services
CONSULTING SERVICES
Method Comments
Consultants For small contracts (maximum US$ 200,000) with highly specialized
Qualification Selection organizations for time critical assignment.
for Consulting Firm
Least-Cost Selection For very small contracts (maximum US$ 100,000) of standard or
for Consulting Firm routine nature for time critical assignment.
Quality- and Cost- Default method, for consulting team contracts that do not meet the
Based Selection criteria of other selection methods.
(QCBS) for Consulting
Firm
Quality-Based For engagement of NGOs and similar entities or complex assignment
Selection for requiring high specialization.
Consulting Firm
Others for Consulting For specialized inputs.
Firm
52
D. National Competitive Bidding

1. General
104. Procurement under this Project shall be undertaken in accordance with the Borrowers
national procurement laws (Perpres 54/2010, Perpres 70/12 and Prepres 84/2012) and Prepres
4/2015 their amendments as long they are consistent with ADB and IFAD procurement Guidelines.
2. Registration
(i) Bidding shall not be restricted to pre-registered firms and such registration shall not be a
condition for participation in the bidding process.
(ii) Where registration is required prior to award of contract, bidders: (i) shall be allowed a
reasonable time to complete the registration process; and (ii) shall not be denied registration
for reasons unrelated to their capability and resources to successfully perform the contract,
which shall be verified through post-qualification.
3. Prequalification
105. Post qualification shall be used unless prequalification is explicitly provided for in the loan
agreement/procurement plan. Irrespective of whether post qualification or prequalification is used,
eligible bidders (both national and foreign) shall be allowed to participate.
4. Joint Ventures
106. A bidder declared the lowest evaluated responsive bidder shall not be required to form a joint
venture or to sub-contract part of the supply of goods as a condition of award of the contract.
5. Preferences
(i) No preference of any kind shall be given to domestic bidders or for domestically manufactured
goods.
(ii) Regulations issued by a sector ministry, provincial regulations and local regulations which
restrict national competitive bidding procedures to a class of contractors or a class of
suppliers shall not be applicable.
6. Advertising
(i) Invitations to bid (or prequalify, where prequalification is used) shall be advertised in at least
one widely circulated national daily newspaper or freely accessible, nationally-known website
allowing a minimum of twenty-eight (28) days for the preparation and submission of bids and
allowing potential bidders to purchase bidding documents up to at least twenty-four (24) hours
prior the deadline for the submission of bids. Bidding of NCB contracts estimated at
US$500,000 or more for goods and related services or US$1,000,000 or more for civil works
shall be advertised on ADBs website via the posting of the Procurement Plan.
(ii) Bidding documents shall be made available by mail, electronically, or in person, to all who are
willing to pay the required fee, if any.
(iii) Bidders domiciled outside the area/district/province of the unit responsible for procurement
shall be allowed to participate regardless of the estimated value of the contract.
(iv) Foreign bidders from ADB member countries shall not be precluded from bidding.
7. Bid Security
107. Where required, bid security shall be in the form of a bank guarantee from a reputable bank.
8. Bid Opening and Bid Evaluation
(i) Bids shall be opened in public, immediately after the deadline for submission of bids.
(ii) Evaluation of bids shall be made in strict adherence to the criteria declared in the bidding
documents.
(iii) Bidders shall not be eliminated from detailed evaluation on the basis of minor, non-substantial
deviations.
(iv) No bid shall be rejected on the basis of a comparison with the owner's estimate or budget
ceiling without the ADBs and IFADs prior concurrence.
(v) The contract shall be awarded to the technically responsive bid that offers the lowest
evaluated price.
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9. Rejection of All Bids and Rebidding

(i) Bids shall not be rejected and new bids solicited without the ADBs prior concurrence.
(ii) When the number of responsive bids is less than three (3), re-bidding shall not be carried out
without the ADBs and IFADs prior concurrence.
10. Member Country Restrictions

108. Bidders must be nationals of member countries of ADB, and offered goods and services must
be produced in and supplied from member countries of ADB. IFAD does not impose any restrictions.
VII. SAFEGUARDS
A. Environmental Safeguards
109. The Project is categorized as environment Category B in accordance with ADBs SPS
(Safeguard Policy Statement) 2009. Details about the procedures to ensure that potential
environmental impacts are avoided, reduced and mitigated in accordance with ADB SPS 2009 and
regulations from the Government of Indonesia can be found in the Environmental Assessment and
Review Framework (EARF) (Linked Document 10 to the RRP). Three separate Initial Environmental
Examination (IEE) reports were prepared for the three design-phase subprojects, i.e. D.I. Mon Sukon,
D.I. Karowa and D.I. Lembor, including Environmental Management and Monitoring Plans (EMP)
(Linked Documents no. 11a, 11b and 11c). Based on the screening for potential adverse
environmental impacts and risks, the IEEs concluded that the three design-phase subprojects can be
implemented in an environmentally acceptable manner with the corresponding EMP. ADBs approval
of the IEEs for the core subprojects is required before loan negotiation. As per Indonesian regulations,
UKL/UPL (GOI environmental management / monitoring requirements) are to be prepared, i.e. the
Project Proponent, DGWR (Directorate of Water Resources) is to request an accredited agency (e.g.
BBS river basin organization) to prepare the required UKL/UPL documentation as soon as possible.
110. For implementation-phase subprojects (i.e. those to be prepared during implementation), the
Project Proponent is to decide whether either one AMDAL (full Environmental Impact Assessment
EIA18) is required for the whole Project, or to screen each additional subproject for adverse
environmental impacts and prepare individual UKL/UPL for Category B sub-projects, or AMDAL for
Category A projects. In general it is recommended not to select Category A subprojects due to the
time, effort and resources needed to undertake AMDAL, and to approve these subprojects. In all
instances UKL/UPL and AMDAL documentation will be accepted by ADB as an IEE or EIA,
respectively, on the condition that the English version of the full UKL/UPL or AMDAL is reviewed and
considered to be consistent with SPS 2009 requirements. Details of these requirements can be found
in the EARF. The draft UKL/UPL or AMDAL in English of future subprojects will be consulted with ADB
before government approval to ensure compliance with ADB SPS 2009. The operational steps for
environmental mitigation measures for major activities will be included in the SOP (Standard
Operating Procedures) for Environmental Safeguards.
111. During implementation, the NPMU, with assistance from the national environmental safeguard
specialist of the PIC team, shall be responsible for the following activities related to environmental
safeguards: (i) screen all subprojects for categorization in accordance with ADB SPS 2009 and
Government of Indonesia and submit to ADB for approval; (ii) contract an accredited agency to
prepare UKL/UPL or AMDAL study (in Bahasa Indonesia and English) as required based on the
categorization; (iii) ensure the UKL/UPL or AMDAL meet ADB SPS 2009 requirements as described in
the EARF; (iv) ensure that the UKL/UPL or AMDAL has been approved by the respective
environment agency, and cleared by the Bupati or Governor; (v) consolidate semi-annual
environmental monitoring reports; (vi) ensure timely disclosure of final UKL/UPL or AMDAL and
updated EMP in locations and form accessible to the public; and (vii) address, record, and report on
any grievances brought about through the Grievance Redress Mechanism in a timely manner.
18
If a Category A subproject be identified, an EIA will be required. If a subproject is identified as Category A for environment,
GoI and ADB will change the categorization of the overall Project to category A as well, subject to approval.
54
112. The PIU, with assistance from the environmental officers will: (i) confirm that the EMP is
included in the bidding documents and civil works contracts; (ii) ensure Contractors EMPs are
prepared by contractors prior to actual construction, and presented during the Pre-Construction
Meeting (PCM); (iii) supervise the implementation of environmental mitigating measures required for
the construction activities; (iv) review, monitor and evaluate the effectiveness of the implemented
Contractors EMPs, and recommend necessary corrective actions; (v) prepare monthly and quarterly
environmental monitoring reports and submit quarterly environmental monitoring report to the
PPMU/NPMU during construction phase; (vi) prepare and submit semi-annual environmental
monitoring report to the PPMU/NPMU during the operational phase of the subproject; (vii) contract an
independent safeguard monitoring entity to conduct water quality monitoring as specified in the IEEs
and EIAs (UKL/UPL and AMDAL) environmental monitoring plans; and (viii) address, record, and
report on any grievances brought about through the Grievance Redress Mechanism in a timely
manner.
113. The NPIU will each assign an environment officer to ensure EMP implementation. An
independent safeguard monitoring entity will be engaged by the PIU to conduct water quality
monitoring for the subprojects as specified in the environmental monitoring plan under the IEE or EIA
and the UKL/UPL or AMDAL. They will provide quarterly environmental safeguard monitoring reports
to the PIU.
114. The operational steps for implementation of environmental safeguard for subprojects will be
included in the SOP for Environmental Safeguards.
B. Social Safeguards
115. GOI has enhanced its country system in order to address land acquisition issues for public
interest development project purposes. The new Land Acquisition Law 2/2012 places people in the
center of development and the affected people rights of their land and property are fully respected
when their land is needed to build infrastructure for public interest. ADB SPS (Safeguard Policy
Statement), 2009 looks at projects assisted by ADB as development opportunities for affected persons
(APs) to improve their living standards. The new Land Acquisition Law and its implementing rules and
regulations approximate harmonization with the ADB SPS, 2009. The new law grants that affected
person with no legal title over the land they occupy or utilize are entitled to compensation for
improvements found thereon, including job and business losses, moving cost, etc. A comprehensive
land acquisition-planning document is required to be prepared by the executing agency and agreed by
eligible party and stakeholders before government will issue a project location determination letter.
People affected by land acquisition, are consulted and their complaints heard and resolved in the
most expeditious way during the planning and implementation of land acquisition. A social action plan
(SAP) is prepared as part of the activities for livelihood restoration program, which includes provision
of capacity, and activities for post-harvest and other skills development.
116. The Project is categorized as Involuntary Resettlement Category B in accordance with ADB
SPS, 2009. Project activities are aimed primarily and rehabilitation and upgrading of existing irrigation
infrastructure within respective reserve areas. As such, limited and acquisition and resettlement
impacts are envisaged. The LARF prepared for this project (Linked Document 12a to the RRP) is in
line with the Land Acquisition Law no 2/2012 and its related regulations, as well as the ADB SPS
2009, are meant to guide the preparation and implementation of LARPs (Land Acquisition and
Resettlement Plans) for candidate sub-projects. Details about the procedures to ensure that potential
involuntary resettlement impacts are avoided or minimized are provided therein. The LARF also
includes provisions on voluntary land donation / contribution and negotiated land principles. When
negotiated settlement is used to acquire land, there will be agreement with ADB on consultation
process, and principle of willing buyer willing seller as per market price third-party validation and
record requirements.
117. This LARF is based on the LARF prepared for the ADB-financed FMSRBSP (Flood
Management in Selected River Basins Sector Project) which was approved by GOI on 27 October
2014 to be uploaded onto the ADB website.
55
118. Based on an initial screening exercise (a IR check-list is provided will be presented in the final
full version of the PAM prior to implementation) in the three design-phase subproject areas with
respect to proposed Component 2 activities (improved irrigation infrastructure), it was found that (i)
one household would have to be relocated in the case of D.I. Mon Sukon; (ii) no land acquisition
impacts or temporary crop losses are expected in the case of irrigation infrastructure rehabilitation
works planned for D.I. Karowa; (iii) potential land acquisition impacts affecting 42 households would
occur in the case of D.I. Lembor where construction of a new weir and 2 km long canal connecting the
weir to the existing irrigation network is planned.
119. For the design-phase and implementation-phase subprojects, LARPs will be prepared and/or
updated following completion of DEDs and Detailed Measuring Survey (DMS) and concurred by the
Government and approved by ADB prior to implementation. Summary information of the LARP for the
core subproject will be disclosed to the affected persons (APs) and other stakeholders and uploaded
on ADBs website. The similar disclosure will apply for the future and updated LARPs.
120. Under the aegis of the MoPWH as the executing agency, the Project through the DGWR shall
uphold the legal provisions under the 2012 law and all other Government laws while harmonizing with
the ADB SPS. The respective PIUs (for Output 2) will carry out project activities, and overall LARP
preparation and implementation (where required). The key institutions in the project that have roles
and responsibilities regarding implementation, monitoring and reporting of land acquisition and
resettlement aspects are identified by levels (see Table 20): national, regional and site levels.
Table 20: Land Acquisition Process and Activities and Agencies under Law No. 2/2012
Time Frame/
No Phase of Land Acquisition Responsible Agencies Working
days
I PLANNING PHASE
1 Make Land Acquisition Plan in the public interest
2 Prepare Land Acquisition Planning Document that Agency needing land and
include; objectives of the development plan, in line relevant technical
with regional spatial planning and national/regional agency/ies, assisted by
development plan, land location, land size needed, professional institution if
land status, period of land acquisition needed
implementation, implementation construction, land
value, and budget. The planning document should
be based on the feasibility study:
- Social Economic survey Agency needing land and
- Location feasibility study relevant technical
- Analysis of cost and development benefit agency/ies, assisted by
- Estimated land value professional institution if
- Environmental and social impacts needed
- Other study as necessary
3 Certify the Land Acquisition Planning Document Agency needing the land
4 Submission of the planning document to the Agency needing the land
provincial government
II PREPARATION PHASE 130 207
days
1 Establishment of preparatory team Governor/Bupati/Mayor 10
2 Notice on development plan Provincial Preparatory 20
Team (PPT)/District
Preparatory Team (KPT)
3 Preliminary identification PPT/KPT 30
4 Re-public consultation, if any rejection PPT/KPT 30
5 Public Consultation PPT/KPT 60
6 Issuance on project location determination Decree Governor/Bupati/Mayor
7 Announcement of project location determination Governor/Bupati/Mayor
and agency needing the
land
56
Time Frame/
days
Grievance/Complaint raised by entitled parties
8 Complaint lodging/rejection on project area Compliant 14
9 Establishment of assessment team Governor/Bupati/Mayor
10 Assessment on complaints Complaint/grievance
assessment team
11 Acceptance/rejection on the complain Governor
12 Complaint lodging to the Administrative Court Compliant 30
(PTUN)
13 Administrative Court decision Court 30
14 Complaint lodging to Supreme Court (MA) Compliant 14
15 Location determination, if complaint is rejected Supreme Court 30
(Location determination is valid for 2 years and 1
year for extension)
- Project located in more than 1 districts/cities Provincial Preparatory Team (PPT)
- Project located in a district/city established by the Governor
District Preparatory team (KPT)
established by the Bupati
III IMPLEMENTATION PHASE 382 days
max
1 Preparation of land acquisition implementation led Head of Provincial
by head of provincial BPN/ led of land Office BPN/Head of District Land
Office
2 Inventory of losses (IOL) and legal assessment of Provincial LAIT / District 30
affected assets LAIT- Task team for IOL
3 Announcement of the IOL Provincial LAIT / District
LAIT
4 Data verification, if any complaint on IOL Provincial LAIT / District 14
LAIT
5 Mobilization of appraiser /public appraiser Provincial LAIT / District 30
LAIT
6 Appraisal/valuation of losses Independent appraiser
7 Deliberation of forms of compensation Provincial LAIT / District 30
LAIT
Grievance/Complaint raised by entitled parties
8 Complaint lodging on compensation to the court Compliant 14
9 Court decision on the complaint Court 30
10 Complaint lodging to Supreme Court Compliant 14
11 Supreme court final decision Supreme Court 30
12 Deposit compensation money in the court
13 Delivery of compensation Provincial LAIT / District
LAIT and agency needing
the land
14 Delivery of compensation in the specific condition Provincial LAIT / District
LAIT and agency needing
the land
15 Release of land acquisition objects (land and non- District Land Office 7
land assets)
16 Breaking of legal relation between entitled parties Provincial LAIT / District 7
and land acquisition objects LAIT
17 Documentation of land plot map, list of nominative Provincial LAIT / District
(entitled parties), and land acquisition LAIT and District Land
administrative data Office.
- Land acquisition located in more 1 districts/cities Provincial LAIT / District
- Land Acquisition located in 1 district/city LAIT
District Land Office.
IV HANDOVER OF ACQUIRED LAND
1 Handover land acquisition documents from land Provincial LAIT / District 7
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Time Frame/
days
acquisition implementer to agency needing the LAIT
land
2 Commencement of infrastructure development1 Agency needing the land
(For urgent need;
3 Certification of the acquired land Agency needing the land 30
V MONITORING and BUDGET
1 Controlling of use and utilization of the acquired BPN RI
land
2 Sources of funds:
- National project National budget (APBN)
- Regional project Regional budget (APBD)
- National State owned enterprise project National SOE (BUMN)
- Regional state owned enterprise project Regional SOE (BUMD)
121. The implementation of the LARPs for the core subproject and future subprojects that require
LARPs, will precede the commencement of civil works. No LARP shall be implemented without prior
concurrence from ADB. Efforts will be taken to avoid or minimize any adverse impacts. If unavoidable,
mitigation measures to enhance or at least restore the livelihoods of all affected persons to pre-project
levels, and to improve the standards of living of the displaced poor and other vulnerable groups will be
made. People who are displaced will be given compensation at full replacement cost for their affected
land assets, non- land assets, and economic losses including job loss, business income loss, change
of profession, restriction in land use and livelihood, relocation assistances for physically relocated
affected persons, and livelihood restoration program for vulnerable and severely affected persons as
per agreed entitlement matrix. Where applicable/triggered, the SAP (provided for under the Land
Acquisition Law) mentioned above will be incorporated into LARPs. Under this provision, project
authorities in collaboration with local governments will arrange the livelihood and income restoration
program for the affected persons. All relevant information regarding the project is disseminated and
the opinions of the affected persons are taken into consideration in developing and/or updating the
LARPs.
122. Social safeguards specialists attached to the PMC (Project Management Consultant) services
will guide Provincial / District PIUs in conducting initial preliminary screening of all proposed sub-
projects to determine whether there are any involuntary resettlement impacts. Proposed sub-projects
(DI) with no or minimal resettlement impacts will be given priority for selection. In cases where land
acquisition and/or crop losses are expected, the respective PIUs (Project Implementation Units) will
ensure that LARPs are prepared and submitted to the ADB, and with the assistance from Design and
Supervision consultants ensure that the LARPs are satisfactorily completed19 prior to
construction/rehabilitation activities. The consultants will assist the respective PIUs to prepare and
provide to the ADB necessary supporting documentation in any cases of voluntary land donation prior
to implementation of the relevant activities.
C. Indigenous People
123. Details about the procedures to ensure that indigenous people or communities (who may be
affected adversely or who are unable to fully benefit from development projects) are enabled to
benefit equally from the Project in accordance with ADB SPS 2009 and regulations from the
Government of Indonesia can be found in the Indigenous Peoples Planning Framework (IPPF)
(Linked Document No. LD13 to the RRP). In the Republic of Indonesia, designation of indigenous
peoples / communities status is guided by (i) Inventory of Isolated Customary (Adat) Communities
compiled by the Ministry of Social Affairs (2009); and (ii) the Map of Indigenous Peoples (IP) issued by
the World Bank.
19
Review and monitor (i) that entitlement matrixes of AHs (affected households) are satisfactorily fulfilled, and (ii) the
transparency of negotiations and compensation payments.
58
124. The Project will cover 16 provinces in accordance to Blue Book provisions (2015-2019).
NPMU will refer to the above guidelines and will consult with AMAN (Alliance of Indigenous Peoples
Communities) to corroborate whether there are Indigenous Peoples Communities in the target district.
125. Based on the above references and an initial screening exercise (ADB IP check-list), no
indigenous peoples / communities were found in the three core sub-project locations. As such, no
Indigenous Peoples Plans have been formulated in any of the cases. IP screening check-lists are
attached to the respective SSRs.
126. All candidate sub-project irrigation schemes (DI) will be screened for IP safeguards triggers
20
using the ADB IR checklist. Where IPPF provisions have been triggered, IPPs will be prepared and
approved by ADB as a condition for contract signing, and implemented satisfactorily as a condition for
construction mobilization. Where applicable, PPMU and KPMU will consult with local AMAN branch
offices in order to facilitate formulation and implementation of IPPs (Indigenous Peoples Plans) as
provided for by the IPPF.
127. Sub-Project selection criteria will prioritize sub-projects (DI) with no or minimal IP impacts (i.e.
which require basic measures to ensure inclusion and enable affected IPs to benefit equitably from
the respective sub-project).
D. Prohibited Investment
128. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),21 ADB funds may not be
applied to the activities described on the ADB Prohibited Investment Activities List will be presented in
the final full version of the PAM prior to implementation. All financial institutions will ensure that their
investments are in compliance with applicable national laws and regulations and will apply the
prohibited investment activities list to subprojects financed by ADB.
VIII. GENDER AND SOCIAL DIMENSIONS
129. A Poverty and Social Analysis was prepared to examine social development issues and the
Projects potential impact, especially on poor people. Based on this, the Summary Poverty Reduction
and Social Strategy (SPRSS) provides for addressing poverty issues and identifies the
implementation of a Gender Action Plan (GAP), a Stakeholders Communication Strategy and
measures to address identified social risks.
Social dimensions will be integrated into the programmatic approach of the Project through
targeting and selection based on the following principles:
The irrigation system has a clearly established capacity to reduce poverty through either
micro pathways (increasing returns to physical, human and social capital); meso pathways
(integrating the poor into factor-production and knowledge/information markets) or macro
pathways (improving agricultural productivity and second generation positive externalities).
The relative potential of these pathways in the context of different irrigation systems has been
established and the characteristics of the irrigation system are such that the lessons can be
replicated and scaled-up in other irrigation systems.
The demand and absorptive capacity of beneficiaries for project interventions has been
established.
130. The project design includes mainstreamed mechanisms to ensure social inclusion, especially
of women. The Project's gender classification is "Effective Gender Mainstreaming" (EGM) indicating
that at least two of the Project outputs are specifically targeted to support womens active
participation. Irrigation is not traditionally womens domain, but given the programmatic approach of
the project looking at agriculture as linked to irrigation options it is important that women are given
20
This will be conducted in tandem with the IR checklist.
21
Available at: http://www.adb.org/sites/default/files/pub/2009/Safeguard-Policy-Statement-June2009.pdf
59
the tools and information required to make informed decisions. The following table describes the main
characteristics of women as a target group.
Table 21: Target group characteristics of women
Constraints on benefiting Though spread across poverty levels women share the following
from irrigated agriculture characteristics and vulnerabilities:
Limited property rights/ownership of productive assets
High burden of labour, including domestic water supply.
Lesser education
Responsibility for irrigation due to male migration not
commensurate with experience.
Lesser organizational representation/ access to market related
information.
Womens needs and Improved balance between domestic and agricultural labour.
priorities Access to productive assets as well as information networks that
enable them to improve household food security and nutrition.
Increased access to advisory and technical services tailored to
gender influenced constraints.
The main pathways to Micro pathways (increasing returns to female physical, human and
support women social capital);
meso pathways (integrating women into factor-production and
knowledge/information markets) and/or;
macro pathways (improving benefits for women from agricultural
productivity and second generation positive externalities).
131. A social and gender action plan has been prepared to promote the effectiveness of the project
and ensure that its benefits accrue equitably to women and men. The social actions are directed to
ensuring full inclusion and effective targeting to the poor whilst the gender action plan has the
following objectives: (i) men and women have full awareness of the project through a gender
mainstreaming campaign; (ii) livelihood, project participation, and development opportunities in
agriculture for women are reinforced; (iii) womens participation in all project-related implementation
activities is strengthened; (iv) womens participation in the project management is ensured. The
project will both support womens inclusion in mixed groups and create activities specifically tailored to
womens needs and priorities.
132. The NPMU through the DGWR/MoPWH, DGAAERD/MoA and DGRD/MoHA will have the
overall responsibility to implement these social and gender actions. Social and gender focal persons
will be assigned in the NPIU, PPMU/KPMU and PPIU/KPIU to ensure social and gender coordination
and linkage across the various activities.
133. The social and gender actions that will contribute to the project impact and outcome will be
presented in the final full version of the PAM prior to implementation.
IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND LEARNING
134. Monitoring and Evaluation (M&E) in the Project will serve three distinct functions. The first will
be a management function: to provide timely information that enables the managers of the project to
confirm whether implementation and financial performance are proceeding as planned and the
projects outputs, outcome and impact are being achieved, and to take corrective action as necessary.
The second will be an accountability function: to provide the information that enables Government to
report on its performance to ADB/IFAD and confirm its compliance with the provisions of the financing
agreements. The third will be a learning function: generating knowledge that can serve to inform
policy processes at district, provincial and national levels. The M&E system is defined with these
diverse purposes in mind.
135. The Project Performance Monitoring System (PPMS) The PPMS will consolidate the M&E
functions into a unified system. It will comprise both a comprehensive list of performance indicators at
60
impact, outcome, output and sub-output levels, derived from the project Design and Monitoring
Framework (DMF) i.e. the logical framework; and impact and post-completion performance data.
Data will be disaggregated by component and, wherever possible, by district, gender and other
dimensions. In addition, it will serve ADBs compliance and safeguard policy requirements. The
indicators used will include those that contribute to IFADs Results and Impact Measurement System
(RIMS), which is a system for measuring and reporting the results and impact achieved by IFAD-
financed projects.
136. The PPMS will also define procedures and schedules for data collection and clear definition of
roles and responsibilities between the Project (responsible for monitoring of inputs, sub-outputs and
outputs) and the Independent Monitoring and Evaluation (IME) Unit in Bappenas (responsible for
assessing outcomes and impact); and between the different implementing agencies of the Project.
Monitoring will address both implementation and financial performance.
137. Building on the successful example of the IFAD-supported Coastal Communities
Development Project (CCDP), the project will establish as part of the PPMS a dashboard providing
key implementation and financial performance data, which initially will be updated on a monthly basis.
The dashboard, which will be operational by the end of the first year of implementation, will promote
transparency and sharing of information, and allow for real-time monitoring of implementation and
financial progress, and comparison and benchmarking of project-supported schemes and district.
Ensuring adequate incentives to report on performance will also be an important dimension to
consider in the design of the PPMS, and again, the CCDP experience is relevant. Under CCDP the
level of project funds made available to an individual district is dependent on its performance, while
the annual assessment of project consultants is linked to their performance in submitting timely
reports.
138. The PPMS will be designed to eventually be web-based, to allow for real-time input of data;
their automatic aggregation; and open access to, and sharing of, results among all project
stakeholders. Prior to the development and establishment of the web-based system however, data will
need to be collected using a range of tools and methods, including phone, smart phone apps, emails
and so on, which allow for rapid and real-time data entry.
139. The PPMS will be established by the NPMU, in collaboration with IMEU Bappenas,
satisfactory to ADB and IFAD within one year of the loan effective date.
140. Monitoring and evaluation approach In broad terms, three different kinds of M&E will be
carried out under the Project: (i) monitoring of implementation and financial progress, and
achievement of sub-outputs; (ii) safeguard monitoring; and (iii) evaluation of outputs, outcome and
impact.
141. Implementation progress monitoring This will measure and report on use of project inputs and
achievement of project sub-outputs. Input monitoring will serve to measure and report on the provision
and use of resources financial and physical in support of the project activities, against allocations
defined in the project annual work plan (AWP). It will involve the collection of data at all levels
related to the allocation and use both of project funds and human resources, as well as procurement
of goods and services.
142. Sub-output monitoring will measure the progress of activities and achievement of sub-outputs,
against annual targets in the AWP for each project output and the overall targets in the project DMF.
This can be linked to the financial expenditure on the concerned activities. Where possible, data will
be disaggregated by gender, to maintain the projects focus on promoting gender equality and
womens empowerment. Among the sub-outputs monitored will be a number of RIMS First Level
Results, measured through simple quantitative indicators of the outputs achieved as a consequence
of the project activities that have been carried out. The Project will select only those that are relevant
to the outputs it expects to achieve: possible Level 1 indicators of possible relevance to the Project
will be presented in the final full version of the PAM prior to implementation
143. Reviewing and reporting Drawing on the data collected through the dashboard, the NPMU,
NPIUs, PPMUs and PPIUs will review project performance each quarter, while the NPMU and
61
ADB/IFAD will jointly assess project implementation at least once every year. The DGWR/MoPWH will
provide ADB/IFAD with: (i) quarterly progress reports in a format consistent with ADB's project
performance reporting system (to be presented in the final full version of the PAM prior to
implementation); (iii) consolidated annual reports including progress achieved by output as measured
through the indicator's performance targets, key implementation issues and solutions, an updated
procurement plan, and updated implementation plan for next 12 months; and (iv) a project completion
report within 6 months of physical completion of the Project. To ensure project investments continue to
be both viable and sustainable, project accounts and the executing agencys Audited Financial
Statements (AFSs), together with the associated auditor's report, will be adequately reviewed.
144. Safeguards monitoring The NPMU with the support of consultants will supervise the
preparation and implementation of the Land Acquisition and Resettlement Plan (LARP) and will
monitor and report on all social safeguards activities. Project progress reports will indicate which
subprojects require a LARP and Analisis Mangenai Dampak Lingkunjan (AMDAL) Indonesias
environmental impact assessment procedures and the status of implementation. Semi-annual
monitoring reports on the implementation of the LARPs and AMDALs will be submitted to ADB for
review, and will be posted on the ADB and project website.
145. Performance evaluation The project outputs, as well as its expected outcome and impact, will
provide the focus for the Projects evaluation efforts. These will serve to assess, on one hand, whether
the outputs identified in the project DMF are in fact being realized, and if not why not; and on the
other, and looking forward, the extent to which they are likely to contribute to the achievement of the
Projects outcome. The design for performance evaluation will thus support the programmatic
approach of the project by generating lessons learned and evidence that can inform policy dialogue. It
will also seek to enhance the sustainability of benefits by tracking the synergistic integration of
interventions, effectiveness of internalization, and how well the project exit strategy has been
designed and is being operationalized.
146. Assessment of achievement of outputs The PPMS will provide information on output delivery,
drawing on both the indicators in the DMF and those selected from the menu of RIMS Second Level
Results (a list of possible Level 2 RIMS results and indicators will be presented in the final full version
of the PAM prior to implementation). Data against level 2 indicators will be collected at the mid-term
review and annually after that through the annual outcome survey (AOS), and submitted each year to
IFAD. The AOS will serve to provide information on the immediate results (outputs) of project
interventions and how they are being delivered, as well as initial information on project outcome and
impact. While it will use a quantitative approach, the AOS could also draw on qualitative
methodologies as well as official statistics and reports. However, it will be designed to be short, simple
and easy to implement. Annual stakeholders workshops will be held to review the findings of the AOS,
gather different points of view on project performance, and establish or validate performance ratings;
and these will be a key part of the process of reflection and learning.
147. Evaluation of outcome and impact The PPMS will evaluate the degree to which the Project
has achieved its outcome and overall impact. It is expected that this will provide an understanding of
the extent to which, and how, the achievement of project outputs has resulted in the achievement of
outcome and objectives. As well as quantifying benefits and estimating the degree to which such
changes can be attributed to project interventions, the impact evaluation agenda would the degree to
which poorer households, women and disadvantaged groups have been able to participate in the
project and benefit from project outputs.
148. A baseline survey undertaken at irrigation scheme level will provide the starting point for
future assessments of project impact to be carried out during and after project implementation. The
baseline survey will therefore be conducted at project start-up, with subsequent impact assessments
at mid-term, and again at project completion. The baseline survey and mid-term assessment in
particular will both play a critical role in enabling the project managers to understand better the project
target group of irrigating farmers and the appropriateness of the project design in responding to their
needs, and in providing recommendations to improve the overall implementation approach and the
specific activities of the Project.
62
149. The M&E function will be one that goes beyond the PPMS, and also seeks to pose questions
and provide answers on key issues that can improve the relevance, effectiveness and efficiency of the
Project. The IME Unit, in collaboration with the NPMU and other key project stakeholders, will identify
specific topics technical, institutional, policy-derived that need particular investigation and analysis
and conduct snapshot studies. For each study topic, a learning plan will be developed to ensure that
the study feeds into a larger process of reflection at the project level and, where appropriate, beyond.
The studies themselves would be contracted out to suitably qualified and experienced individuals and
or agencies drawn from the pool of experts established under the Knowledge Management Centre
(KMC) as per Output 4.3.
150. A comprehensive mid-term review will be carried out three years after commencement of
project implementation. Taking into account the PPMS results, the MTR will review and evaluate the
scope, design, and implementation arrangements of the Project; assess implementation performance;
review and establish compliance with the loan covenants; identify critical issues, problems, and
constraints; and, as necessary, recommend adjustments in Project design, targets or implementation
strategy and arrangements and associated financial allocations in order to ensure the full
achievement of the project impact. The mid-term impact assessment will provide a key building block
for the mid-term review
151. Implementation responsibilities Overall responsibility for M&E will be split between the NPMU
in DGWR/MoPWH as the executing agency, and the IME Unit in Bappenas.
152. The NPMU will be responsible for designing the overall PPMS in collaboration with the IMEU,
and for maintaining the PPMS focusing on physical progress (delivery of sub-outputs) and financial
progress (disbursements), including supporting the collection of data at the various levels (national,
provincial and district). The NPMU will include a PPMS specialist, who will be have overall
responsibility for managing the PPMS; an M&E specialist who will support him/her in managing and
operating PPMS; and a Management Information Systems (MIS)/Geographical Information System
(GIS) Specialist to manage scheme level data. A short-term consultant PPMS Design specialist will be
recruited to design and establish the PPMS, define implementation responsibilities and train relevant
staff. This will be done in close collaboration with the PPMS specialist in the NPMU and another
PPMS Specialist in the IME Unit. An Information Technology (IT) Specialist will be recruited to design
the PPMA as a web-based system; and social and environmental safeguard specialists will also be
recruited to the NPMU to support the NPIUs, PPMUs/DDMUs and PPIUs/DPIUs.
153. At the level of the province, the PPMS specialist will be located in each of the 16 PPMUs in
Bappeda. These will all contribute to ensuring that the PPMS is able to draw on and integrate data
from the district, provincial and national levels, and to supporting those responsible for data
collection/reporting. These responsibilities will be diffused across all entities with tasked with project
implementation at the different levels: the NPIUs and the PPIUs in the three line ministries. At the
national level, a financial/PPMS specialist will be located in each of the NPIUs to guide the process of
physical and financial monitoring in the individual implementing agencies.
154. The IME Unit will be particularly focus on analysing and assessing those components of the
PPMS concerned with project outputs, outcome and impact, and with drawing out lessons (e.g. on
successful approaches, policy constraints) to inform policy dialogue around irrigated agriculture. In
collaboration with the NPMU, the IME Unit will contribute to the design of the overall PPMS, and it will
develop a plan that will accommodate baseline data requirements and evaluation needs. It will design
and oversee the implementation of the baseline, mid-term and final impact surveys; the AOS; as well
as specific studies (e.g. case studies, snap-shot studies, policy reviews). The Project will provide
consultancy support to Bappenas for the IME Unit: team leader/PPMS specialist;
economist/participatory-based M&E Specialist; and MIS/GIS /database management specialist. The
IME Unit will contract out the conducting of key studies (i.e. baseline and impact evaluation studies,
annual outline surveys, case studies) to experienced and proven service providers. These may
include private consultants, universities and policy research institutes, and they may be drawn from
the pool of experts established under the KMC.
63
X. ANTICORRUPTION POLICY
155. ADB reserves the right to investigate, directly or through its agents, any violations of the
22
Anticorruption Policy relating to the Project. All contracts financed by ADB shall include provisions
specifying the right of ADB to audit and examine the records and accounts of the executing agency
and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on
ADBs anticorruption debarment list are ineligible to participate in ADB-financed activity and may not
23
be awarded any contracts under the Project.
156. To support these efforts, relevant provisions are included in the loan agreement/regulations
and the bidding documents for the Project.
XI. ACCOUNTABILITY MECHANISM
157. People who are, or may in the future be, adversely affected by the project may submit
complaints to ADBs Accountability Mechanism. The ADB Accountability Mechanism provides an
independent forum and process whereby people adversely affected by ADB-assisted projects can
voice, and seek a resolution of their problems, as well as report alleged violations of ADBs
operational policies and procedures. Before submitting a complaint to the ADB Accountability
Mechanism, affected people should make a good faith effort to solve their problems by working with
the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, they
24
should approach the ADBs Accountability Mechanism.
XII. RECORD OF PAM CHANGES
158. All revisions/updates during course of implementation will be retained in this Section to
provide a chronological history of changes to implemented arrangements recorded in the PAM.
REVISION DATE ORIGINATOR DESCRIPTION / MAIN CHANGE
00 13 February 2015 PPTA First draft for external review

01 19 February 2015 PPTA First revised draft for external review
02 26 February 2015 PPTA Second revised draft for external review
04 9 May 2015 PPTA + IFAD PAM updated for consultation
(Consinjering) with GoI stakeholders
05 21 June 2015 PPTA PAM further updated for Final Workshop
and ADB-IFAD fact finding Mission
06 10 July 2015 IFAD PPTA handed over draft PAM to IFAD
07 30 September 2015 IFAD/ADB Draft PAM prepared and submitted to
IFAD and ADB
08 25 November 2015 IFAD/ADB Final Draft prepared and submitted to
IFAD and ADB
22
Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf
23
ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp
24
For further information see: http://www.adb.org/Accountability-Mechanism/default.asp.
64
65
Appendix 1: Design and Monitoring Framework

Data Sources and
Results Chain Performance Indicators with Targets and Baselines Reporting Assumption/ Risks
Impact
Improved food security At least 50% of the targeted 900,000 households with RIMS impact Change in Governments
a
and livelihoods in rural improvement in RIMS household asset index surveys development priorities
Reduction in prevalence of child malnutrition
a
Indonesia MoPW, MoHA, MoA
At least 75% of the targeted 900,000 households have Limited fiscal capacity of Local
improved food security
a Baseline data Government
Outcome
Increased value of At least 450,000 hectares are served by improved irrigation MoPW, MoHA, MoA Change in Governments
sustainable irrigated systems infrastructure development priorities
Baseline data
agriculture At least 75% of the targeted 900,000 beneficiaries/50% of
whom are women are involved in rice and or high value
irrigated crop production
At least 90% of irrigation schemes show improved performance
in management, operations and maintenance
Outputs
1. Increased irrigated At least 75% of the targeted 900,000 beneficiaries adopt MoPW, MoHA, MoA Government guidelines are not
agricultural improved practices for rice production properly implemented due to poor
Baseline data
incomes At least 25% of the targeted 900,000 beneficiaries are involved capacity or commitment
in production and or post-production of rice and or high value Demotivation of extension staff and
irrigated crops field facilitators impede activities
Agriculture extension system not in
the position to provide and
disseminate the technology, as
expected
No re-generation of young farmers as
agricultural sector is no longer
attractive
66
1.1 Improved Farm At least 50% increase in rice yields (outside Java)
Productivity and At least 25% increase in cropping intensity (outside Java)
Services At least 75% of the targeted 900,000 beneficiaries have access
to extension services
At least 10,000 extension workers trained and working
1.2 Improved At least 20% increase in the volume of rice and or high value
Market Access and irrigated crop production
Services At least 200,000 beneficiary farmers are trained in value chain
development
At least 500 beneficiary farmers have received value chain
development fund support
1.3 Improved At least 75% of the targeted 900,000 beneficiary farmers have
Financial Services access to and use of mainstream financial services
& use of Services At least 200,000 farmers trained in basic financial literacy
At least 8 financial services providers provide financial service
to beneficiary farmers
At least 500 farmers registered as savings and credit groups
2. Improved irrigation Number of irrigation schemes having water balance MoPW, MoHA, MoA Government guidelines are not
systems computation and financial feasibility increased to 100 % by properly implemented due to poor
infrastructure 2021 (2015 baseline: 0 %) capacity or commitment
Number of irrigation schemes having DEDs prepared in line Political issues impede the
with government guidelines increased to 1144 units by 2021 establishment and functioning of
[2015 baseline: minimal 100 units] commissions and WUAs.
Demotivation of WUAs, staff and
Number of irrigation infrastructure in program areas field facilitators impede activities
rehabilitated and upgraded increased to 100 % by 2021 [2015
baseline: less than 50 %]

At least 50 % irrigation schemes modernized according to
government technical standards by 2021 [2015 baseline 0 %
schemes]
3. Improved irrigation At least 52 irrigation commissions operationalized by 2021 MoPW, MoHA, MoA Government guidelines are not
67
systems [Baseline 2015: 39 irrigation commissions] properly implemented due to poor

management 90 % Irrigation Development and Management Plans (IMPs) capacity or commitment
endorsed by Provincial and District Irrigation Commissions by Political issues impede the
2021 [2015 baseline: 0 % Plans] establishment and functioning of

The number of WUA/Fs established and trained with program commissions and WUAs.
support increased to 4981 by 2021 [2015 baseline: 1516 Demotivation of WUAs, staff and
Associations] field facilitators impede activities
Number of irrigation schemes managed by WUA/Fs increased
to 50 % by 2021 [2015 baseline: 0 %]
Number of updated and GIS-based Irrigation asset
management systems increased to 75 % by 2021 [2015
baseline: 0 systems updated]
4. Strengthened Number of IMP incorporated into regional medium-term MoPW, MoHA, MoA Regional parliaments delay
policy and development plans (RPJMD) increased to 90 % by 2021 [2015 endorsement of IMPs for RPJMD for
institutional baseline: 0 %] political or other reasons
frameworks for Competency certification system established for irrigation
irrigated agriculture planning, financing & participatory management
At least 70% of staff and field facilitators certified by the system
by 2021 [baseline 0%]
Key activities with milestones
1.1 Recruit new and train existing extension staff, facilitate the deliver services, improve access to seeds, skill on water irrigation management and
demonstrate mechanization.
1.2 Value chain mapping of rice and high value crops, facilitate farmer groups training on water irrigation management, facilitate value chain training and
establish and administer a value chain fund.
1.3 Mobilize savings and credit groups, provide supervisory support and establish and administer financial service partnerships with existing providers.
Output2. Improved irrigation systems infrastructure2.1. Prepare water accounting and scheme assessments covering technical, social, economic, climate
change, and institutional aspects.2.2. Select, evaluate, and design rehabilitation and upgrading of irrigation systems using the participatory approach
according to government guidelines.2.3. Rehabilitate, upgrade and modernize irrigation systems through various contracting modalities. 2.4. Equip irrigation
canals with hydropower turbines, and support additional water discharge using embung kecil (small embankment) etc. especially at the semi-arid area, where
technically, economically and institutionally feasible.
Output3. Improved irrigation systems management

3.1. Establish, re-organize and strengthen water user associations, federations and apex organizations.
3.2. Prepare irrigation system performance assessment and irrigation service plans at scheme level.
68
3.3. Improve water monitoring, measurement and management and water allocation.
3.4. Establish irrigation management unit.
3.5. Update the irrigation asset management system nationally.
3.6. Conduct diagnostic for modernization of irrigation system under water stress.
Output4. Strengthened policy and institutional frameworks for irrigated agriculture

4.1. Establish, re-organize and strengthen irrigation commissions.
4.2. Institutionalize asset management and participatory irrigation regulations.
4.3. Prepare, monitor and evaluate Irrigation Development and Management Plans (RP2I) at district level.
4.4. Support inclusion of RP2I in province and district medium term development plans (RPJMD).
4.5. Support capacity strengthening and certification of irrigation staff and facilitators.
4.6. Provide technical capacity building for relevant agencies.
4.7. Ensure coordination among project stakeholders and ensure efficient project delivery.
Inputs
Government of Indonesia: $152 million
ADB: $600 million
IFAD: $100 million
Assumptions for partner financing: Outputs necessary to reach the outcome that are not administered by ADB include those largely financed by the
Government of Indonesia and those financed by the International Fund for Agricultural Development (IFAD). The assumption is that these partners have
sufficient resources as planned for these outputs to achieve goals for irrigated agriculture and food security in Indonesia.
Notes: IFAD specific Indicators targeted area and number of households will be updated after the baseline survey has been conducted.
69

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Asian Development Bank

Project Administration Manual

Table 1: Project readiness activities 16

Project Administration Manual Purpose and Process

AAEHRD Agency for Agricultural Extension and Human Resource Development

DSPEF Directorate of Spatial Planning and Environmental Facilitation

MP3EI Master Plan for Acceleration and Expansion of Indonesia Economic

RSPK Recana Strategis Kementerian Pertanian

Currency unit Indonesian Rupiah (IDR)

(ii) In this report, $ refers to US dollars.

welfare of famers. As Indonesia is in the process of economic restructuring resulting in a fall in

Advance contracting DGWR, Implementing

Board considerations IFAD ADB ADB/IFAD

C. Project Implementation Plan

Table 2: Summary project Implementation Plan

Outputs and Activities Years

1.1 Improved farm productivity and services

1.2 Improve market access and services

1.3 Improve financial access and use of services

Output 2: Improved irrigation systems infrastructure

2.1 Hydrological assessment

2.2 Irrigation systems rehabilitated, up-graded and modernized

Output 3: Improved irrigation systems management

3.2 Improved irrigation systems field management

3.3 Operationalized national asset management system

Output 4: Strengthen policy and institutional frameworks and project management

4.1 Strengthen local-level policy, regulatory and institutional

4.4 Project management and implementation support

OUTPUT DESCRIPTION IMPLEMENTING AGENCIES

Output 1: Increased irrigated agricultural incomes

III. PROJECT MANAGEMENT ARRANGEMENTS

Project Stakeholders Management Roles and Responsibilities

DGWR, MoPWH Executing Agency for the Project

Project Stakeholders Management Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities

Figure 1: Project Organizational Structure

NPIU NPIU NPIU

Secretary of PPMU Member of

Secretary of KPMU Member of

IV. COSTS, FINANCING AND ECONOMIC ANALYSIS

Table 6: Project Financing Plan (in US$ Million)

Table 7: Detailed Cost Estimates by Expenditure Category (in US$ Million)

Table 8: Detailed Costs Estimates by Financier (in US$ 000)

Table 9: Detailed Cost Estimates by Output / Component (in US$ 000)

Strengthened Policy and

% Cost % Cost % Cost

Note: Including contingencies

Table 10: Detailed Cost Estimates by Year (in US$ 000)

Table 11: Detailed Financing Plan (in US$ 000)

2016 2017 2018 2019 2020 2021 Total

Table 12: Models results financial analysis (IDR)

Table 13: Returns to Family Labour

With project rice yields +10% 22.7% 9 461 512

Table 15: Distribution Analysis

Project Investment Costs

A. Financial Management Assessment

KEY RISKS MITIGATION ACTIVITIES TIMELINE RESPONSIBILITY

KEY RISKS MITIGATION ACTIVITIES TIMELINE RESPONSIBILITY

Figure 2: Fund flow diagram for APBN-funded activities

Figure 3: Disbursement flow chart for Direct Payment (ADB)

Legend: Fund flow

Figure 4: ADB/IFAD On-granting fund flow mechanism

Figure 5: Procedures for verification