Indonesia National Slum Upgrading Project (P154782)

The World BankIndonesia National Slum Upgrading Project (P154782)

REPORT NO.: RES34626

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

NATIONAL SLUM UPGRADING PROJECT

APPROVED ON JULY 12, 2016

TO

REPUBLIC OF INDONESIA

URBAN, RESILIENCE AND LAND

EAST ASIA AND PACIFIC

Regional Vice President: Victoria Kwakwa Country Director: Satu Kristiina Jyrintytar Kahkonen

Regional Director: Benoit BosquetPractice Manager/Manager: Abhas Kumar Jha

Task Team Leaders: Evi Hermirasari, Andre A. Bald

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ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank AIIB Asian Infrastructure Investment BankAWP Annual Work PlanBappenas National Development Planning Agency BKM/VCC Community Board of Trustee / Village Community CenterCCMU Central Management UnitCERC Contingency Emergency Response Component CSP Community Settlement Plan CHS Complaints Handling SystemCOFN Co-financingCOVID19 Novel Coronavirus 2019CSRRP Central Sulawesi Reconstruction and Rehabilitation Program CY19 Calendar Year 2019DA Designated AccountDED Detailed Engineering DesignDDO Deferred Drawdown OptionDFAT Department of Foreign Affairs and Trade of the Australian GovernmentDG Treasury Directorate General of Treasury, Ministry of FinanceDIPA Allocation of Government’s Annual BudgetDKI Jakarta Capital Special Region of JakartaEA Environmental AssessmentEROM Emergency Response Operations Manual FM Financial ManagementFY Fiscal YearGIS Geographic Information SystemGoI Government of Indonesia GRM Grievance Redress MechanismIA Implementing AgencyIBRD International Bank for Reconstruction DevelopmentIMF International Monetary FundJICA Japan International Cooperation AgencyKabupaten District Kelurahan Urban wardLC/VLC Land Consolidation/Vertical Land ConsolidationLn/Cr/Tf Loan/Credit/Trust FundMASP Ministry of Agrarian and Spatial Planning MIS Management Information SystemMoF Ministry of FinanceMPWH Ministry of Public Works and HousingNGO Non-government OrganizationNSUP National Slum Upgrading ProjectNSUP-ESMF National Slum Upgrading Project - Environmental and Social Management FrameworkOPCS Operations Policy and Country ServicesOP 4.01 Operation Policy Environmental AssessmentOP 4.12 Operation Policy Involuntary ResettlementOSP Oversight Service Provider


PAD Project Appraisal DocumentPAMSIMAS III Third Water Supply and Sanitation for Low-Income Communities PAP Project-affected PeoplePBCs Performance Based OptionsPDO Project Development ObjectivePMU Project Management UnitPIU Project Implementation UnitPokja PKP Housing and Settlements Task ForcePOM Project Operations ManualRETF Recipient Executed Trust Fund RVP Regional Vice PresidentSIAP Slum Improvement Action PlanSHG Self-help GroupTF Trust FundUNDP United Nations Development ProgramUSD United State DollarVLD Voluntary Land DonationWB The World Bank


BASIC DATA

Product Information

Project ID Financing Instrument

P154782 Investment Project Financing

Original EA Category Current EA Category

Partial Assessment (B) Partial Assessment (B)

Approval Date Current Closing Date

12-Jul-2016 31-Mar-2022

Organizations

Borrower Responsible Agency

Republic of Indonesia Ministry of Public Works and Housing,Bappenas,Ministry of Agrarian and Spatial Planning

Project Development Objective (PDO)

Original PDO

To improve access to urban infrastructure and services in targeted slums in Indonesia.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing (US$, Millions)

Ln/Cr/Tf Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

COFN-C1390 24-Jun-2016 01-Sep-2016 11-Oct-2016 31-Mar-2022 216.50 114.70 101.80

IBRD-86360 12-Jul-2016 22-Aug-2016 11-Oct-2016 31-Mar-2022 216.50 114.70 101.80

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No


I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

1. Overview of Restructuring. This Level Two restructuring seeks the approval of the Regional Vice President to make changes to the Indonesia National Slum Upgrading Project (NSUP, P154782), IBRD 8636, and associated amendments to the project’s legal documents. The proposed restructuring will:

Revise the Project Development Objectives (PDO) to reflect the activation of the Contingent Emergency Response Component (CERC) for the post-disaster activities in Central Sulawesi;

Respond to the COVID-19 pandemic by reallocating existing project resources to quicker-disbursing job-creating community grants in targeted poor urban communities; and other urgent activities supporting the pandemic response;

Extend the original loan closing date by 9 months in response to: (i) the known COVID-19 disruptions to local government budgets which preclude timely delivery of counterpart financed upstream preparation activities, (ii) increasing disruptions to supply chains and contractor mobilization, and (iii) the complexity of interim remote operations and supervision arrangements. The implementation period of CERC activities under NSUP will also be extended to June 30, 2021.

Inclusion of the Ministry of Agrarian and Spatial Planning (MASP) as a new implementing agency, and host of a new project implementation unit (PIU) under Component 1 Institutional Development and Policy Development to develop more effective policies and solutions on land issues.

2. This restructuring paper also describes specific scope of activities of the USD 5.5 million grant from the Department of Foreign Affairs and Trade of the Australian Government (DFAT) to support program activities. This amount itself was included in the appraisal of the project as presented in the Project Appraisal Document (PAD) of the NSUP which was approved by the Board on July 12, 2016. The task team will process the grant agreement between the World Bank and the Government of Indonesia (GoI) and the grant is expected to become effective at the same time the amendments to the Loan Agreement required for this restructuring become effective. The Closing Date for the DFAT Grant Agreement will be June 30, 2022 because the closing date of the parent TF is December 31, 2022.

3. NSUP Implementation Progress. NSUP is a well performing project, which builds upon the Bank’s decades of community-based development engagements in the urban sector. Progress towards achieving the PDO and Implementation Progress are rated as Moderately Satisfactory. All 12 outcome indicators passed the midterm targets (2018) and are on-track to achieve end-project targets. Seven out of nine intermediate indicators have achieved their 2020 annual target. The project has disbursed USD 229 million, equivalent to 53% financial progress (June 1, 2020), which is behind the original disbursement projection by 30% for this period. There are no known significant fiduciary or safeguards issues, or risks (with the exception of COVID-19, see below) beyond those identified at appraisal. The 2018 project audit report was received on time and had a clean opinion. As the deadline of audit report of CY19 originally due in June 30, 2020 has been extended to September 30, 2020 in consideration of the challenges posed by COVID-19, there are currently no outstanding audits.

4. CERC Activation and Progress. NSUP included a CERC, which was activated in November 2018 to support recovery to a series of earthquakes in 2018 in Lombok and Central Sulawesi. The CERC totals USD 100 million – with financing split equally between the World Bank and the Asian Infrastructure Investment Bank (AIIB). The activation of the CERC


necessitates several administrative changes reflected in this restructuring, including (i) revising the PDO, (ii) changing allocations between components, and (iii) updating the results framework.

5. CERC implementation is slower than expected, disbursing USD 5.4 million to date, but with commitments totaling USD 83 million. The remaining USD 17 million balance from the original USD 100 million budget will be reallocated to NSUP community grants for COVID-19 interventions. The key reasons for implementation delays are the difficulties acquiring ‘clean and clear’ land for settlement reconstruction and the challenging operating environment. All CERC financed activities (which include technical assistance, settlement infrastructure, and housing) remain highly relevant and are critical for the upstream preparation of the broader reconstruction response, via the Central Sulawesi Reconstruction and Rehabilitation Program (CSRRP)1.

6. COVID-19 Implications and NSUP Response. The GoI declared the COVID-19 pandemic a national calamity on April 13, 2020. An estimated 91,751 people have tested positive for the virus, with 4,459 deaths recorded (as of July 22, 2020) 2. The economic impacts are acute and will be sustained, with 0 percent of economic growth in 2020 predicted by the World Bank (WB), or up to negative 2 percent predicted by the Ministry of Finance. Three million job losses were incurred in the first two months since the COVID-19 pandemic was declared by the Government. The urban poor are particularly vulnerable to short and long-term health, social and economic impacts. Conditions in slums are prime for transmission.

7. The Bank’s global response to COVID-19 is centered on protecting people and economies, focused on lives, livelihoods, and the future. Labor intensive public works programs are a recognized tool to mitigate shocks, boost local economies, create jobs, and build productive assets. NSUP’s existing project architecture and capacity position it ideally to aid in protecting health and the recovery of vulnerable urban communities. Through this restructuring and with existing resources, 1,000 kelurahans (urban wards) in poor urban areas will benefit from: (i) expanded water and sanitation coverage, and (ii) cash for work programs generating an additional 2 million workdays (estimated). Community grant resources will target COVID-19 affected areas, and local project facilitators will prioritize cash for work programs to the urban poor, who lost jobs or experienced other economic hardships as a result of the pandemic.

8. Monitoring mechanisms will be put in place to assess the impact and effectiveness of the first wave of COVID-19 targeted interventions. This will provide important data in the event that these activities may need to be scaled-up in the future. Furthermore, the NSUP platform is being utilized for broader monitoring of socio-economic impacts through frequent remote phone surveys and mobile applications. This will provide a better real-time understanding of conditions in urban areas and for low-income communities in general.

9. Recipient Executed Financing from DFAT. DFAT has committed USD 5.5 million for co-financing of the NSUP under an Amendment 1 Administrative Agreement TF072765 that was signed on May 9, 20183. As defined in the Project Appraisal Document (PAD) for this operation at para 36, the estimated total cost of the project is USD 1,743 million, to be funded by an IBRD and AIIB loan, and counterpart funds which include national, provincial and local government

1 CSRRP is a WB-funded project that will support the Government’s recovery program in Central Sulawesi and help rehabilitate, reconstruct, and reduce potential human and economic losses during future earthquakes and other disaster events (such as flooding) by improving the building quality and sustainability of critical public facilities and housing settlements. CSRRP will achieve this through three key components such as resilient construction of permanent housing units and settlement infrastructure, public facilities, and project implementation support. This will complement settlement infrastructure construction and infrastructure recovery activities supported by other World Bank-financed projects (including the National Slum Upgrading Project, NSUP/KOTAKU) as well as other development partners (including ADB, JICA and UNDP).2 https://covid19.go.id3 Support Trust Fund for Pamsimas III (Third Water Supply and Sanitation for Low-Income Communities / Community Based Water Supply Project

Single Donor Trust Fund)


budgets, community contribution, and funds from other stakeholders (e.g. private sectors, NGOs, donors, etc.) where applicable. The DFAT financing has been envisaged under the counterpart funds from other stakeholders contributing to the overall project cost. The fund will be used as kelurahan grants (Sub-Component 3.2) to support developing thematic pilots in about 20 kelurahans in selected cities under NSUP where settlement upgrading is particularly challenging as a result of high exposure to environmental risk and/or urbanization. Special attention will be given to improve access to water supply, sanitation and solid waste management and COVID-19 interventions with a similar nature of sub-projects under NSUP. Initiatives in these selected kelurahans are expected to generate learning for replication in the overall project. DFAT implementation will follow NSUP arrangements, including technical manuals, fiduciary, as well as safeguards.

10. Environmental and Social Safeguards. The nature of the Project, sub-projects and institutional arrangements managing safeguards in the restructured Project will remain the same as those in the original Project. As has been the case with the ongoing Project, environmental and social impacts of the improvement or construction of primary/secondary city-level infrastructure under the restructured Project remain low to moderate, whereby impacts are not significant/sensitive, non-irreversible nor unprecedented. Similarly, implementation of tertiary infrastructure at the community level in the restructured Project will have insignificant impacts and can be managed locally by the community. Performance of the ongoing Project in environmental management is satisfactory and in social safeguards management is moderately satisfactory. The overall environmental and social safeguards management in the restructured Project will remain the same with strengthened capacity due to experiences in managing environmental and social safeguards in the ongoing Project. The restructured Project remains as Category B Project for environmental assessment, will not trigger any new safeguard policies and will continue adopt the NSUP-Environmental and Social Safeguards Framework (ESMF) and Project Operations Manuals.

11. The COVID-19 activities will follow similar ongoing community-based civil works activities financed through community grants (Component 3.2). The current practice of participation of local community members or beneficiaries as laborers (cash for works) for the community-based civil works activities will be promoted. As has been the case with the ongoing community-based infrastructure development, job creation associated with the new COVID-19 activities will remain accessible and open for all community members (except child labor) regardless of gender and their vulnerability with appropriate type of skills needed. Labor-intensive works may increase the risks of COVID-19 transmission among workers and to the local communities and therefore prevention for this to happen during construction should be enforced following the Ministry of Public Works and Housing’s Instruction No 02/2020 on the Protocols to Prevent and Handling of COVID-19 during Construction as well as Circulation Letter of the Director General of Human Settlements of MPWH on Protocols of Prevention of the Spread of COVID-19 in the Labor-intensive Works. The Project will give more attention on the prevention to workers above 60 years and those who have hereditary disease. The community grants will finance job creation activities for local communities impacted by the pandemic and the other urgent activities supporting pandemic response such as provision of hand-washing facilities in public areas, opening public space in a dense settlement areas through the clean-up and development of unused public land as green space to improve air circulation in the settlement areas and expand distancing but with strict protocols for the community to use it; production of community socialization media; training and socialization for the oversight consultants, facilitators and for the community especially communities workers. The activities due to COVID-19 do not increase overall safeguards risks.

12. Environmental and Social Safeguards Capacity of Implementing Agencies. The current project management structure along with the oversight consultants and facilitators are sufficient to monitor and supervise the project’s activities as a consequence of scale-up due to COVID-19. The appointment of MASP as an additional IA will in fact strengthen the Project’s capacity in managing environmental and social safeguards particularly land-related aspect. The Project will continue to adopt the NSUP-ESMF, Project Operations Manuals (POM) and Emergency Response Operations Manual (EROM), which have accommodated the changes due to the restructuring activities. The Project will adopt the


COVID-19 protocols issued by the Government and especially the MPWH’s Instruction No. 02/2020 on the Protocols to Prevent and Handling of COVID-19 during Construction and Circulation Letter of the Director General of Human Settlements of MPWH on Protocols of Prevention of the Spread of COVID-19 in the Labor-intensive Works socialize these protocols to and train the oversight consultants, facilitators and community (including community workers). The protocol will adopt several measures in the project sites, including among others, identification of potential risks, provision of health facilities, medical supplies, handwashing facilities, masks and disinfectant, body temperature measurement on daily basis, as well as temporary closure of construction sites and quarantine of workers if any COVID-19 positive cases were found.

13. The Grievance Redress Mechanism (GRM) of NSUP is in place. The data on complaints is provided in the program website www.kotaku.pu.go.id. The GRM provides several channels for the project-affected people (PAPs) to register complaints or provide suggestions. The PAPs can register complaints directly/face to face to the community institutions (BKMs), make a direct phone call, send text messages directly to the national GRM system as well as by sending an email through the program website. PAPs will receive a tracking number after submitting their complaint and can monitor the status of their complaint through the program website. As of June 2020, the project complaints handling system (CHS) recorded a total of 63,163 complaints, and about 0.2% were related to safeguards issues. All complaints on safeguards were information seeking or clarification request, mostly on the mechanism of land donation and waste management during construction. Of total complaints recorded, about 99% were resolved, whereas 100% of complaints related to safeguards were resolved. Currently, the project is in compliance with public disclosure of all relevant safeguard instruments.

14. The GoI’s Restructuring Requests. The Government has requested the proposed restructuring actions through two requests. The first, received on April 6, 2020, sought (i) revision of the PDO to reflect activating the CERC; (ii) extending the CERC estimated implementation period (this request was approved by the Country Director on April 30, 2020 and did not require restructuring); and (iii) appointment of the Directorate of Land Consolidation of the MASP as the new PIU. The second, follow-up request was issued in response to COVID-19 (via an intergovernmental coordination meeting; the minutes, sent from Bappenas). The second request seeks: (i) an extension of the NSUP closing date by nine months to December 31, 2022, (ii) reallocation among the project components and disbursement categories to respond to COVID-19, and (iii) further extension of the CERC implementation period from 31 December 2020 to 30 June 2021.

A. Rationale for Restructuring

15. Reflect the activation of the CERC. The project requires restructuring upon activation of the CERC to reflect the inclusion of new activities beyond the original PDO, including associated indicators and targets, and disbursement category allocations.

16. Immediate Response to COVID-19. NSUP is ideally positioned to address the health, social, and livelihoods impacts of COVID-19 given the existing project architecture and resources, ability to target interventions in vulnerable communities and disburse quickly. GoI intends to utilize NSUP nationally to deliver its cash for works agenda supporting COVID-19 recovery, maximizing existing project resources. This type of intervention is both a GoI and Bank priority.

17. Extension of Closing Date by nine months. NSUP is disbursing well and will continue to be an effective means to support economic recovery from the impacts of the pandemic. However, COVID-19 is having broad impacts across the economy, civil service, industry, labor markets, logistics, supply chains, and government budgets – it is clear that these impacts will affect the speed of delivery of some elements of NSUP. The component for primary infrastructure is projected to be delayed, as new unexpected shortfalls in local government budgets will slow their ability to finance their

http://www.kotaku.pu.go.id


preparation of upstream activities (safeguards instruments, designs, etc.). Measures will be taken – such as reallocating all resources feasible to the faster disbursing community grants component – to execute activities as swiftly as possible within the operating environment. The nine-month extension of the Closing Date for the Loan Agreement to December 31, 2022 will provide local governments with the clarity and required time for planning and budgeting their remaining counterpart contributions over the life of the project.

18. Inclusion of the Ministry of Agrarian and Spatial Planning (MASP) as a new implementing agency, and host of a new project implementation unit (PIU). The project mid-term review (May 2019) concluded that the inclusion of MASP as the implementing agency is critical to develop more effective policies and solutions to strengthen vertical collaboration across the government on land in slum areas. The proposed project restructuring includes appointment of the Directorate of Land Consolidation of the MASP as the PIU under Component 1 Institutional Development and Policy Development and budget allocation to support the MASP by reallocating WB and AIIB loan funds of USD 1 million from Component 3 Urban Infrastructure and Services Investment Support to Component 1.

19. The restructuring of the IBRD and AIIB loans will be processed in parallel. The project co-financing arrangement through the World Bank and AIIB loans (IBRD Loan 8636-ID and AIIB COFN-C1390 respectively), requires joint financing by the Bank and AIIB with 50/50 split for project activities/expenditures identified to be financed by the Bank and AIIB. The Bank and AIIB will jointly co-finance all components under the project. The AIIB restructuring will be processed in parallel with the World Bank’s restructuring.

II. DESCRIPTION OF PROPOSED CHANGES

The proposed Level Two restructuring will include the following key elements:

20. Change of PDO and Project Coverage: The original PDO is “to improve access to urban infrastructure and services in targeted slums in Indonesia”. The revised PDO accommodates the additional objective of the CERC is “to improve access to urban infrastructure and services in targeted slums in Indonesia and to reconstruct and strengthen public facilities and settlements in selected disaster-affected areas.” The coverage of the project will be changed reflecting the adaptable approach to respond to the earthquakes in 2018 and now the COVID-19 pandemic. The PAD originally called for focusing infrastructure investment in 13,000 ha of slum areas, within 154 targeted cities (153 cities plus DKI Jakarta Province). With the activation of CERC, two new cities were added into the project (Kabupaten Sigi and Kabupaten Donggala).

21. Project beneficiaries. The original direct beneficiaries of the project were 9.7 million people (of which 4.85 million were expected to be women). With the activation of CERC and response to COVID-19’s impact, the targeted number of project beneficiaries will be reduced from 9.7 million to 7.2 million people (of which 50% are expected to be women). The reason for the reduction is the change in the scope of activities from the larger, slower to implement, primary infrastructure investments impacting broader swaths of the cities in Component 3.1; to the more nimble and pro-poor community-level block grants in Component 3.2, and upstream preparation work for Component 5. Furthermore, the (reduced) Component 3 activities leveraged more counterpart contributions – but given the tight fiscal space of local government, it is beneficial to reallocate to components that are not dependent on counterpart contributions. Despite the reduction in total beneficiaries, the restructuring approach is expected to: (i) reduce project risks overall; (ii) increase the relevance of the operation; (iii) strategically utilizes resources for upstream disaster recovery initiatives in Central Sulawesi and Lombok; and (iv) respond more effectively to the urgent needs of the current COVID-19 crises and recovery.


22. PDO Indicators and outcome targets. The reallocation of funds in the amount of USD 83 million from Component 3 Urban Infrastructure and Services Investment Support to Component 5 Contingency for Disaster Response reduces the original target outcomes and results, especially under Component 3.1. Several key performance indicators need to be added under Component 5 (CERC), including housing constructed, water and sanitation facilities, education facilities, and health facilities. The proposed changes of the indicators and targets are presented in Table 1. The dynamic and uncertain situation surrounding COVID-19 may require further adjustments to the expected targets.

Table 1. Revised Target of Selected KPIs and Additional KPIs

NO. INDICATORS Unit Original End Target

Revised End Target

PDO Indicators People provided with improved infrastructure under the project Number 9,500,000 7,000,000People provided with “improved water sources” under the project (of which women) Number 800,000 560,000

People provided with “improved sanitation” under the project (of which women) Number 1,200,000 800,000

People provided with access to all-season roads within 500 meters range under the project (of which women) Number 3,700,000 3,700,000

People provided with regular solid waste collection under the project (of which women) Number 1,500,000 1,500,000

People provided with “improved drainage” under the project (of which women) Number 3,600,000 2,320,000

Slum area alleviated Ha 7,800 6,360Direct project beneficiaries- CORE Number 9,700,000 7,200,000Component 3: Urban infrastructure and services in selected cities

3.1 Number of cities that have completed 90% of primary/secondary infrastructure and services connected to slum areas Number 40 30

3.2 Number of kelurahan that have completed 90% of tertiary infrastructure works and services implemented in slum areas Number 2,500 2,500

Component 5: Contingency for Disaster Response *)

5.1 Percentage of housing constructed to project resilience standards % - 70%5.2 Percentage of water supply facilities have been built % - 65%5.3 Percentage of sanitation facilities have been built % - 75%

5.4 Percentage of schools and higher education building rehabilitated or reconstructed to project’s resilience standards % - 75%

5.5 Percentage of health facilities and public service building rehabilitated to project’s resilience standards % - 75%

*) Note: The proposed revised target of outcomes and results of Component 3 has included DFAT’s contribution (the details are as shown

in Annex 2). On Component 5, the number of affected people has been fluctuating and further verification is still required, especially for housing reconstruction that will involve relocation to the new sites.

These are the tentative list of activities and are subject to change: (1) Housing constructed to project resilience standards:1,600 units. 100% of the houses constructed must fulfill the earthquake resistance standard; (2) Water supply facilities: 7 activity packages; (3) Sanitation facilities: 7 activity packages; (4) Schools and higher education building rehabilitated or reconstructed to project’s resilience standards: 10 activity packages; (5) Health facilities, public service building and market rehabilitated to project’s resilience standards: 7 activity packages and 2 units of public service buildings.

23. Change of Project Components and Cost. Changes in project costs will cover: (1) Reallocation of the loan among components: USD 83 million and USD 1 million from Component 3 Urban Infrastructure and Services Investment Support to Component 5 CERC and Component 1 Institutional Development and Policy Development respectively; USD 32 million


from Sub-Component 3.1 Primary and Secondary Infrastructure to Sub-Component 3.2 Tertiary Infrastructure; and (2) Proportionate reduction of the estimated total project cost, as reduction of loan finance available for Component 3 Urban Infrastructure and Services Investment will also result in less leveraged financing. Therefore, the total project cost is reduced by approximately 20%, from USD 1,743 million to USD 1,420 million.

Table 2. Changes of the Project Components (WB and AIIB Co-financing)

Original Allocation(USD million)

Proposed Allocation after restructuring for CERC and

COVID-19 Response(USD Million)

Component 1: Institutional Development and Policy Development 2 3Component 2: Integrated Planning Support and Capacity Building for Local Government and Communities

78 78

Component 3: Urban Infrastructure and Services Investment Support 310 2263.1 Primary and Secondary Infrastructure 190 743.2 Tertiary Infrastructure 120 152

Component 4: Technical Assistance and Implementation Support 43 43Component 5: Contingency for Disaster Response (CERC) 0 83Total 433 433

Table 3. Proposed Changes of the Project Cost

Total Central Govern-

ment

Provincial and Local

Gov, Communities,

Others *)

World Bank AIIB

ORIGINAL Component 1: Institutional Development and Policy Development 7 5 - 1 1Component 2: Integrated Planning Support and Capacity Building for Local Government and Communities 84 6

- 39 39

Component 3: Urban Infrastructure and Services Investment Support 1578 610 658 155 155Component 4: Technical Assistance and Implementation Support 74 31 - 21.5 21.5Component 5: Contingency for Disaster Response - - - - - Total 1743 652 658 216.5 216.5REVISED AFTER CERC and COVID-19 Component 1: Institutional Development and Policy Development 8 5 - 1.5 1.5Component 2: Integrated Planning Support and Capacity Building for Local Government and Communities 84 6

- 39 39

Component 3: Urban Infrastructure and Services Investment Support 1171.2 452.4 492.8 113 113Component 4: Technical Assistance and Implementation Support 74 31 - 21.5 21.5Component 5: Contingency for Disaster Response 83 - - 41.5 41.5Total 1420.2 494.4 492.8 216.5 216.5*) Revised budget allocation from Provincial and Local Gov, Communities, Others included DFAT and its leveraged funds.


24. Change of Allocation of Loan Proceeds and Disbursement Estimates. The proposed reallocation of USD 16 million from the CERC and Primary/Secondary Infrastructure to Tertiary Infrastructure will require the reallocation of expenditure categories from Category 3 Emergency Expenditures (USD 8.5 million) and Category 2 Goods, Works, consultants’ services, non-consulting services and training and workshops (USD 7.5 million) to Category 1 Kelurahan Grants. In total, USD 16 million will need to be reallocated to Category 1 Kelurahan Grants from Categories 2 and 3.

Table 4. Reallocation of Loan Proceeds (Loan No. IBRD 8636)

Category Original Allocation(USD million)

Revised Allocation after

CERC Activation*(USD Million)

Proposed Allocation after restructuring for CERC

and COVID-19 Response(USD Million)

(1) Kelurahan Grants under Part 3.2 of the Project 60,000,000 60,000,000 76,000,000(2) Goods, works, consultants’ services, non-consulting

services and training and workshops under Parts 1, 2, 3.1, and 4 of the project

156,500,000 106,500,000 99,000,000

(3) Emergency Expenditures under Part 5 of the Project 0 50,000,000 41,500,000Total amount 216,500,000 216,500,000 216,500,000

Letter of the World Bank Country Director No CD-179/WB/XI/2018 on November 14, 2019, Re: Fulfillment of Disbursement Conditions, Activation of the CERC under Part 5.

25. The revised disbursement target based on the proposed project closing date on 31 December 2022 is in Table 5.

Table 5. Proposed Revision of Disbursement Plan (IBRD FY)2017 2018 2019 2020 2021 2022 2023

Original Disbursement plan Annual 15 50 50 50 30 21.5 Cumulative 15 65 115 165 195 216.5 Actual & Revised Disbursement plan after restructuring for CERC and COVID-19 Annual 14.5 40.7 27.65 31.85 61 35 5.8Cumulative 14.5 55.2 82.85 114.7 175.7 210.7 216.5


26. MASP as Additional Implementing Agency. The GoI proposes that MASP become a new implementing agency, in addition to the current implementing agencies of the project: MPWH and Bappenas (National Development Planning Agency). Bappenas and MASP will be the implementing agencies for Component 1 Institutional Development and Policy Development. This component will largely support institutional strengthening and capacity building of central government agencies, support the steering committee or National Housing and Settlements Task Force (e.g. Pokja PKP) and ensure effective participation of key stakeholders at national level. The MASP will carry out strategic studies, capacity building, and implementation support for selected cities with land issues, including pilots on land consolidation. Given the complex issues related to land in slum areas, including squatters and informal settlements, the solution to these issues will be best supported by MASP, especially the Directorate of Land Consolidation (Dit.LC) as the PIU. MASP will support NSUP to achieve the following objectives: (i) Provide evidence-based policies and alternative solutions for managing land issues in slum areas; (ii) Improve institutional capacities of land agencies at the central and local levels, through National and Local Task Forces; and (iii) facilitate preparation and implementation of pilot Land Consolidation in selected slum areas (on-site redevelopment). Annex 1 outlines the institutional arrangements with MASP as a new implementing agency. This restructuring would also clarify Bappenas’ role as an implementing agency of Component 1 Institutional Development and Policy Development, as stated in para 44 of the PAD, that has effectively chaired the National Housing and Settlements Task Force (Pokja PKP). 27. Extension of Closing Date by 9 months. The restructuring seeks to put into effect first, the extension of NSUP from 31 March 2022 to 31 December 2022, or nine months from the original closing date; and second, the extension of the CERC implementation end-date from 31 December 2020 to 30 June 2021 because of COVID-19 pandemic4.

4 The original CERC implementation end-date of April 30, 2020 was extended to December 31, 2020 based on GoI’s request dated April 6, 2020. The CERC implementation was slower than estimated because of difficulties acquiring ‘clean and clear’ land for settlement reconstruction, the challenging operating, project management, and coordinating environment in the post-disaster context in Sulawesi.


III. SUMMARY OF CHANGES

Changed Not Changed

Implementing Agency ✔

Project's Development Objectives ✔

Results Framework ✔

Components and Cost ✔

Loan Closing Date(s) ✔

Reallocation between Disbursement Categories ✔

Disbursement Estimates ✔

Overall Risk Rating ✔

Institutional Arrangements ✔

Implementation Schedule ✔

DDO Status ✔

PBCs ✔

Cancellations Proposed ✔

Disbursements Arrangements ✔

Safeguard Policies Triggered ✔

EA category ✔

Legal Covenants ✔

Financial Management ✔

Procurement ✔

Other Change(s) ✔

Economic and Financial Analysis ✔

Technical Analysis ✔

Social Analysis ✔

Environmental Analysis ✔


IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_IA_TABLE

IMPLEMENTING AGENCY

Implementing Agency Name Type ActionMinistry of Public Works and Housing Implementing

AgencyNo Change

Bappenas Implementing Agency

New

Ministry of Agrarian and Spatial Planning Implementing Agency

New

OPS_DETAILEDCHANGES_PDO_TABLE

PROJECT DEVELOPMENT OBJECTIVE

Current PDOTo improve access to urban infrastructure and services in targeted slums in Indonesia.

Proposed New PDOTo improve access to urban infrastructure and services in targeted slums in Indonesia and to reconstruct and strengthen public facilities and settlements in selected disaster-affected areas.

OPS_DETAILEDCHANGES_COMPONENTS_TABLE

COMPONENTS

Current Component Name

Current Cost

(US$M)Action Proposed

Component NameProposed

Cost (US$M)

Institutional and Policy Development 7.00 Revised Institutional and Policy

Development 8.00

Integrated Planning Support and Capacity Building for Local Government and Communities

84.00 No ChangeIntegrated Planning Support and Capacity Building for Local Government and Communities

84.00

Urban Infrastructure and Services Investment Support 1578.00 Revised Urban Infrastructure and

Services Investment Support 1171.20

Implementation Support and Technical Assistance 74.00 No Change Implementation Support and

Technical Assistance 74.00

Contingency for Disaster Response 0.00 Revised Contingency for Disaster

Response 83.00

TOTAL 1,743.00 1,420.20

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE


LOAN CLOSING DATE(S)

Ln/Cr/Tf StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

COFN-C1390 Effective 31-Mar-2022 31-Dec-2022 30-Apr-2023

IBRD-86360 Effective 31-Mar-2022 31-Dec-2022 30-Apr-2023

OPS_DETAILEDCHANGES_REALLOCATION _TABLE

REALLOCATION BETWEEN DISBURSEMENT CATEGORIES

Current Allocation Actuals + Committed Proposed Allocation Financing %(Type Total)

Current Proposed

COFN-C1390-001 | Currency: USD

iLap Category Sequence No: 1 Current Expenditure Category: C1390 - KELURAHAN GRANTS PT. 3.2

60,000,000.00 55,821,101.82 76,000,000.00 100.00 126.67

iLap Category Sequence No: 2 Current Expenditure Category: GDS,WO,CS,NON-CS,TR/WS PT.1,2,3.1&4

106,500,000.00 29,533,843.14 99,000,000.00 100.00 92.96

iLap Category Sequence No: 3 Current Expenditure Category: EMERGENCY EXP UNDER PT.5

50,000,000.00 1,752,121.38 41,500,000.00 100.00 83

Total 216,500,000.00 87,107,066.34 216,500,000.00

IBRD-86360-001 | Currency: USD

iLap Category Sequence No: 1 Current Expenditure Category: IBRD8636 - KELURAHAN GRANTS PT. 3.2

60,000,000.00 55,821,101.83 76,000,000.00 100.00 126.67

iLap Category Sequence No: 2 Current Expenditure Category: GDS,WO,CS,NON-CS,TR/WS PT.1,2,3.1&4

106,500,000.00 29,533,843.15 99,000,000.00 100.00 92.96


iLap Category Sequence No: 3 Current Expenditure Category: EMERGENCY EXP UNDER PT.5

50,000,000.00 1,752,121.39 41,500,000.00 100.00 83

Total 216,500,000.00 87,107,066.37 216,500,000.00

OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE

DISBURSEMENT ESTIMATES

Change in Disbursement EstimatesYes

Year Current Proposed

2017 15,000,000.00 14,500,000.00

2018 50,000,000.00 40,700,000.00

2019 50,000,000.00 27,650,000.00

2020 50,000,000.00 31,850,000.00

2021 30,000,000.00 61,000,000.00

2022 21,500,000.00 35,000,000.00

2023 0.00 5,800,000.00

OPS_DETAILEDCHANGES_SORT_TABLE

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating at Approval Current Rating

Political and Governance Moderate Moderate

Macroeconomic Moderate Moderate

Sector Strategies and Policies Low Low

Technical Design of Project or Program Moderate Moderate

Institutional Capacity for Implementation and Sustainability

Substantial Moderate

Fiduciary Moderate Moderate

Environment and Social Moderate Moderate

Stakeholders Moderate Low

Other

Overall Moderate Moderate


.


.Results framework

COUNTRY: IndonesiaIndonesia National Slum Upgrading Project

Project Development Objectives(s)

To improve access to urban infrastructure and services in targeted slums in Indonesia.

Project Development Objective Indicators by Objectives/ OutcomesRESULT_FRAME_TBL_PDO

Indicator Name PBC Baseline Intermediate Targets End Target

1 2 3 4 5 6 7

To improve access to urban infrastructure and services in targeted slums in Indonesia.

People provided with improved infrastructure under the project (Number)

0.00 2,900,000.00 7,000,000.00 7,000,000.00

Action: This indicator has been Revised

People provided with "improved water sources" under the project (of which women) (Number)

0.00 240,000.00 560,000.00 560,000.00


People provided with "improved sanitation" under

0.00 360,000.00 800,000.00 800,000.00


RESULT_FRAME_TBL_PDO


1 2 3 4 5 6 7

the project (of which women) (Number)


People provided with access to all-season roads within 500 meter range under the project (of which women) (Number)

0.00 1,110,000.00 3,700,000.00 3,700,000.00


People provided with regular solid waste collection under the project (of which women) (Number)

0.00 450,000.00 1,500,000.00 1,500,000.00


People provided with "improved drainage" under the

0.00 1,080,000.00 2,320,000.00 2,320,000.00




1 2 3 4 5 6 7

project (of which women) (Number)


Slum Area Alleviated (Hectare(Ha)) 0.00 2,200.00 6,360.00 6,360.00


Percentage of slum dwellers who are satisfied with the quality of urban infrastructure and services (of which women, of which bottom 40%, of which poor) (Percentage)

0.00 60.00 80.00 80.00


Percentage of complaints resolved (Percentage)

0.00 80.00 90.00 90.00


Establishment of functional task forces for slum alleviation at

0.00 30.00 60.00 70.00 80.00 90.00 90.00 90.00




1 2 3 4 5 6 7

local level (%Local Governments) (Percentage)


Direct project beneficiaries (Number) 0.00 3,000,000.00 5,000,000.00 7,200,000.00 7,200,000.00


Female beneficiaries (Percentage) 0.00 1,500,000.00 2,500,000.00 3,600,000.00 3,600,000.00


To reconstruct & strengthen public facilities & settlements in selected disaster-affected areas (Action: This Objective is New)

Direct project beneficiaries (Number) 0.00 40,000.00 40,000.00 40,000.00

Action: This indicator is New

Female beneficiaries (Number) 0.00 20,000.00 20,000.00 20,000.00


PDO Table SPACE


Intermediate Results Indicators by ComponentsRESULT_FRAME_TBL_IO


1 2 3 4 5 6 7

Institutional and Policy Development

Indicator 1.1. Establishment of functional task force for slum alleviation at national level (Yes/No)

No Yes Yes Yes


Indicator 1.2. Establishment of slum inventory database/profiling (Text)

No Yes Done and updated


Integrated Planning Support and Capacity Building for Local Government and Communities

Indicator 2.1 Percentage of local governments that have completed Slum Improvement Action Plans (SIAPs) which have been approved by Bupati/Walikota (Percentage)

0.00 30.00 60.00 70.00 80.00 90.00 90.00 90.00



RESULT_FRAME_TBL_IO


1 2 3 4 5 6 7

Indicator 2.2. Percentage of kelurahans which have Community Settlement Plans (CSPs) that have been consolidated with SIAPs (Percentage)

0.00 50.00 70.00 80.00 90.00 90.00 90.00 90.00


Urban Infrastructure and Services Investment Support

Indicator 3.1. Number of cities which have completed 80% of primary and secondary infrastructure works and services connected to slum areas (Number)

0.00 20.00 10.00 15.00 20.00 30.00 30.00


Indicator 3.2. Number of kelurahans that have completed 90% of tertiary infrastructure and services implemented in slum areas (Number)

0.00 1,400.00 1,500.00 1,600.00 1,700.00 2,000.00 2,500.00 2,500.00



RESULT_FRAME_TBL_IO


1 2 3 4 5 6 7

Indicator 3.3. Percentage of good quality of infrastructure and services (Percentage)

0.00 80.00 90.00 90.00 90.00 90.00 90.00


Indicator 3.4. Percentage of infrastructure built that is fully functioning (Percentage)

0.00 70.00 70.00 70.00


Implementation Support and Technical Assistance

Indicator 4.1. Percentage of local governments that have project monitoring structure and provide regular information on project implementation (Percentage)

0.00 20.00 30.00 50.00 60.00 70.00 70.00 70.00


Indicator 4.2. Percentage of kelurahans with

0.00 80.00 80.00 90.00 90.00 90.00 90.00 90.00


RESULT_FRAME_TBL_IO


1 2 3 4 5 6 7

completed annual financial audits (Percentage)


Contingency for Disaster Response (Action: This Component is New)

Indicator 5.1 Percentage of housing constructed to project resilience standards (Percentage)

0.00 70.00 70.00 70.00


Indicator 5.2 Percentage of water supply facilities has been built (Percentage)

0.00 65.00 65.00 65.00


Indicator 5.3 Percentage of sanitation facilities have been built (Percentage)

0.00 75.00 75.00 75.00


Indicator 5.4 Percentage of schools 0.00 75.00 75.00 75.00


RESULT_FRAME_TBL_IO


1 2 3 4 5 6 7

and higher education building rehabilitated or reconstructed to project’s resilience standards (Percentage)


Indicator 5.5 Percentage of health facilities and public service building rehabilitated to project’s resilience standards (Percentage)

0.00 75.00 75.00 75.00


IO Table SPACE


ANNEX 1Proposed Additional PIU - MASP

Ministry Public Work and Housing

DG of Human Settlement

Directorate of Settlement Development

PMU

Central Project Implementation Unit

Provincial Project Implementation Unit

City/Regency Project Implementation Unit

Advisory Team Evaluation Team

National Management Consultant

OSP for Capacity Building

Regional Management Consultant (Oversight Consultat) & Technical Management

Consultant)

City Coodinator Team

Steering Team of National Housing &

Settlement Task Force

National Housing & Settlement Task Force

CCMU

Provincial Housing & Settlement Task Force

Governor

City Housing & Settlement Task Force

Mayor

Head of DistrictFacilitator Team

Head of Kel/Village

Urban Planner Team Hired for Community

VCC

SHG

Volunteer

TechnicalVolunteer

COLABORATING & COORDINATING LINE

EXECUTING & IMPLEMENTING LINE SUPPORTING LINE

Kel/Village Level

District Level

City Level

Provincial Level

National Level

BKM/VCC

1. Implementation Arrangement. Bappenas and MASP will be the implementing agencies of the Component 1 Institutional Development and Policy Development, consisting of three major activities as follow: (a) institutional strengthening and capacity building of central as well as local governments, (b) support for policy development including policy options with respect to tenure security or informal settlements, and (c) integration and synchronization of slum data and definition. Bappenas will be the leader of the overall implementation by working with relevant ministries at national level, which is also named CCMU (Central Coordinating Management Unit), whereby the MASP, especially through Directorate of Land Consolidation as the PIU (Project Implementing Unit), will focus on development land-related policies and initiatives. MASP will collaborate with Bappenas and MPWH to select a few pilot locations to test the proposed alternatives, such as land consolidation, land sharing or other viable options.

PIU-MASP


ANNEX 2Summary of Activities Supported by DFAT – Recipient Executed Trust Funds (RETF)

1. Recipient Executed Trust Fund from DFAT. The GoI has received USD 5.5 million in DFAT funding for co-financing of the NSUP under the Administrative Agreement that was signed on May 9, 2018. 5 As defined in the Project Appraisal Document (PAD) for this operation (para 66, 87, and 36), NSUP is a national collaborative platform financed by multiple sources, including central and local governments, the private sector, communities, as well as multi-lateral donors. This platform seeks to leverage all resources (organizational and financial) available from national, provincial and local government programs, alongside donor financing. The estimated total cost of the project is USD 1,743 million, to be funded by an IBRD and AIIB loan, and counterpart funds which include national, provincial and local government budgets, community contribution, and funds from other stakeholders (e.g. private sectors, NGOs, donors, etc.) where applicable. The DFAT financing has been envisaged under the counterpart funds from other stakeholders contributing to the overall project cost. DFAT implementation will follow NSUP arrangements, including technical manuals, fiduciary, as well as safeguards. The grant is expected to be available by August 2020.

2. Background. The DFAT grant (USD 5.5 million) will support developing thematic pilots in select cities where settlement upgrading is particularly challenging as a result of high exposure to environmental risk and/or urbanization. Additional technical assistance, policy, planning and implementation support will be provided via training, workshops and coaching clinics to increase the scope of programming, spatial planning and associated budgeting in select cities as well as recruiting specific expertise and sub-specialists and investment support as needed. Themes covered by the pilots will include, but are not limited to settlements beside or above water such as riverbank or coastal area, settlements with high disaster exposure such as low or high lying, and economic areas such as commercial and touristic areas. The kelurahans to be used as pilots will be selected later based on the complexity of issues identified in the Slum Improvement Action Plans (SIAPs) developed by local governments and Community Settlement Plans (CSPs) by communities in the select cities especially related to water, sanitation, solid waste issues.

3. Purpose of the Grant. The DFAT Grant will support GOI in implementing sub-component 3.2 of the Project,8 more prominently to mainstream successful pilots and help to improve local level capacity in planning, design and financing of slum upgrading projects by strengthening overall collaborative instruments of NSUP and conducting capacity building activities, relevant surveys and studies at the local level. Capacity building in pilots locations will include the following issues among others: (a) mainstreaming disability inclusive infrastructures in urban areas, (b) the use of GIS, including the

5 Support Trust Fund for Pamsimas III (Third Water Supply and Sanitation for Low-Income Communities / Community Based Water Supply Project Single Donor Trust Fund)

6 For achieving the target of zero percent slums, the GoI has established the National Slum Upgrading Program (popularly known in Indonesia as KOTAKU) as a national collaborative platform financed by multiple sources, including central and local governments, the private sector, communities, as well as multi-lateral donors. The World Bank, the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), and the Islamic Development Bank (ISDB) will each work on a subset of cities within the program. The World Bank and AIIB will work in the same subset of NSUP cities. KOTAKU aims to establish an integrated and collaborative system for slum upgrading interventions between ministries, as well as enable local governments to lead design and implementation in their respective cities. This platform seeks to leverage all resources (organizational and financial) available from national, provincial and local government programs, alongside donor financing.

7 Except for housing, all programs are managed under the Directorate General of Human Settlements (DGHS), which is also the executing agency for the proposed project. Such institutional arrangements will ensure effective coordination between various national sectoral initiatives as well as the donors. Given that the aim of KOTAKU is to address slums nationally, the MPWH is making a concerted effort to ensure that a single platform is utilized for implementation by all donor agencies providing support for various cities

8 Under the loan agreement for the Project, sub-component 3.2 provides “Kelurahan Grants to Participating Kelurahans to fund Sub-projects for tertiary infrastructure upgrading in selected Cities based on a community-driven approach including, inter alia, small scale water supply, drainage, sanitation, footpaths, fire safety and site improvements, as well as for strengthening community-based livelihoods through the construction of livelihood-enabling facilities and services as important for slum prevention.”


use of geo-tagging for local governments to improve urban development planning and local budget allocations, (c) policy formulation related with land, housing and infrastructures such as river-banks settlements redesign, and (d) mainstreaming the use of MIS in decision-making processes by local governments and communities. These learnings will be disseminated through a series of capacity building activities (face to face and e-learning, workshops, on-the job training and tutorial videos), guidelines and training materials for project stakeholders (local governments, communities and technical support teams).

Specific Scope of Activities

4. This is a Recipient Executed Trust Fund. Physical investment in pilot locations will be used to improve connectivity of slum areas to urban infrastructure and services, and improve local environmental conditions, as well as technical support as needed. Infrastructure improvements may include construction to connect household-level systems to secondary and primary infrastructure and site preparation for neighborhood redevelopment and livelihood facilities. The physical works will mostly be financed under the national and local budget, estimated at around USD 45 million, with support from DFAT for specific innovations, inclusiveness (disability), and eco-friendly sustainable design. Special attention will be given to improved access to water supply, sanitation and solid waste management. The tentative cities to be included among others are: Jakarta, Surabaya, Makassar, Banjarmasin, Mataram, Yogyakarta, Semarang, and Ambon. The DFAT financing will also be utilized for COVID-19 interventions in selected cities.

5. DFAT Grant Allocation for selected cities. Investments in pilot locations will be implemented by local governments and communities under close supervision of the PMU. The amount of grant disbursed to cities and kelurahans will be based on the needs identified in the SIAPs and CSPs. DFAT funds will only be used for specific subprojects at community level, funded through community block grants. The PMU will propose the list of locations and subprojects to get approval from the World Bank prior to the fund disbursement. DFAT grant allocation for cities will be consulted and reviewed by the Bank on an annual basis. The PMU will submit proposals for revised allocation to the Bank in the project’s annual work plan (AWP), which will be used as a basis for developing the grant budget document (DIPA). Investment allocation per-city will be in in range of USD 0.5 million to USD 1 million.

6. Kelurahan selection mechanism. About 20 kelurahans will benefit from the program. A mechanism to select locations and subprojects has been developed by the PMU and has been applied to locations that are funded by various donors. The PMU will select priority kelurahans based on CSPs. In addition, for DFAT funding, the following criteria will be added: (a) severity of the slums especially related to water supply, sanitation, and solid waste management issues, (b) performance of kelurahans, particularly related to financial management, and (c) potential replicability.

7. Sub-project eligibility. As described in the Project Appraisal Document (PAD), the project’s funds, including the DFAT grant, cannot be used to finance (a) the purchase of land; (b) economic activities involving revolving funds; (c) activities with significant, sensitive, complex, irreversible and unprecedented potential adverse environmental and social impacts requiring a full environmental assessment to manage and mitigate such impacts in accordance with World Bank OP 4.01 and OP 4.12, Ministry of Environment Regulation No. 5, 2012 and Ministry of Public Works and Housing Regulation No. 10, 2008; and (d) a subproject with cost above USD 500,000.

Implementation arrangement

8. Institutional and implementation arrangement. DFAT Grant will be delivered with the same structure with the NSUP. A steering committee was established under Echelon I and II of the Government, chaired by Bappenas with


members from various relevant Ministries), to provide guidance and oversight to the program at the national level. The steering committee will ensure cross-sector coordination and will have different units dedicated to slums, housing, land, water and sanitation and data management. In addition, a Project Management Unit (PMU) and a PIU were established under Directorate General of Human Settlements (DGHS) of the Ministry of Public Works and Housing (MPWH) with the task for overall project management and execution. There is no separate arrangements or institutions established only for the Grant.

Fiduciary

9. Procurement. DFAT RETF will finance tertiary infrastructure which will be managed by communities. Purchase of materials will be governed by Community Procurement Procedures outlined in the NSUP Existing Manual, which is acceptable to the World Bank Guidelines. PIU will be responsible for providing technical facilitators to help the communities in preparing the detailed engineering design (DED), carrying out procurement for shopping, implementing the construction works and carrying out operation and maintenance to ensure sustainability of the services provided by the infrastructures. In addition, technical support will be provided to ensure compliance of technical specification of infrastructures, as well as, training to communities for planning, implementation and operation and maintenance.

10. Financial Management. The overall Financial Management of the grant follows closely the arrangements under the NSUP loan of the World Bank. The DFAT RETF, will only focus on the Block Grant to the community and Technical Assistance related directly to the provision of infrastructure such as detailed design and supervision. The Closing Date for the RETF will be 30 June 2022.

11. Fund channeling mechanism. The financial support for urban infrastructure and services to communities will be channeled through a block grant mechanism (Sub-Component 3.2). The fund will be transferred to communities through several tranches based on the fund utilization plan (Rencana Penggunaan Dana), financial progress and physical verification by the consultants/facilitators hired by the Project Management Unit in the Ministry of Public Works and Housing. There will be no performance-linked payment adopted for this grant. The DFAT grant will finance specific subprojects which are distinctly separate from other sources of financing. This is to avoid overlap or ensure accountability of outputs. A blended source of financing for the same subproject is not allowed.

12. Designated account for the RETF. A Designated Account (DA) denominated in US dollars for the trust fund will be opened by DG Treasury (MOF) in the Bank Indonesia (Central Bank). Advances from the Bank will be deposited to this DA and will be solely used to finance eligible expenditures.

Social and Environmental Safeguards.

13. The scope of activities funded by the Grant is aligned with the original project scope as appraised during the project preparation. Therefore, there is no update or amendment be needed to the applied safeguard policies. Given the expected nature of sub-projects, the project is classified as Category B as potential environmental and social impacts at the community level in slum areas will be low to moderate, site-specific and can be managed by the beneficiaries. The project will not generate large scale, significant and/or irreversible adverse environmental and social impacts. Improvement and/or construction of new tertiary infrastructure in the slum areas, which DFAT RETF under Sub-Component 3.2 will contribute, may need small land size and it is anticipated that beneficiaries may voluntarily contribute the needed land as is a common practice. Issues on voluntary land donation (VLD) are mainly documentation and legal processing of the donated land.


Specific Output and outcomes14. This DFAT Grant will be used to finance project regular activities as identified earlier, and the relevant outputs and outcomes will contribute into the overall outputs and outcomes targets as well as the objective. However, specific indicators and targets only for DFAT Grant are presented here for the purpose of reporting and accountability. These indicators and targets are part of the overall result framework in the PAD.

Indicator Name Base line 2021End

Target(2022)

OUTCOME INDICATORS 0.00 10,000 20,000

Number of people provided with improved infrastructure under the project (of which women) 0.00 10,000 20,000

Number of people provided with “improved water sources” under the project (of which women) 0.00 3,000 6,000

Number of people provided with “improved sanitation” under the project (of which women) 0.00 3,000 6000

Number of people provided with regular solid waste collection under the project (of which women) 0.00 10,000 20,000

Number of people provided with “improved drainage” under the project (of which women) 0.00 3,000 6,000

RESULT INDICATORS

Activity 3. Support to Pilot Schemes in Infrastructure and Services

Percentage of water and sanitation facilities built and functional, adopting disability inclusive design 0 40 50

Indonesia National Slum Upgrading Project (P154782)

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