Class 10 1 reference 1 aid effectiveness to infrastructure a compartive study of east asia and sub sahara africa indonesia case study

BRANTAS RIVER BASIN DEVELOPMENT PROJECT The Brantas Project ……… 2 2.1 The Brantas Project and its Development Performance ……… 2 2.2 Institutions Developed during the Course of the Branta

JBICI Research Paper No 36-2

July 2008

ISSN 1347-5703

JBIC Institute Japan Bank for International Cooperation

Aid Effectiveness to Infrastructure:

A Comparative Study of East Asia and

Sub-Saharan Africa Case Studies of East Asia

JBICI Research Paper No 36-2

July 2008

JBIC Institute Japan Bank for International Cooperation

Aid Effectiveness to Infrastructure:

A Comparative Study of East Asia and

Sub-Saharan Africa Case Studies of East Asia

JBICI Research Paper No 36-2

Japan Bank for International Cooperation (JBIC)

Published in July 2008

© 2008 Japan Bank for International Cooperation

All rights reserved.

This Research Paper is based on the findings and discussions of the JBIC The views expressed in this paper are those of the authors and do not necessarily represent the official position of the JBIC

No part of this Research Paper may be reproduced in any form without the express permission of the publisher For further information please contact the Planning and Coordination Division of our Institute.

Prof Koji Fujimoto

Takushoku University

Aid Effectiveness to Infrastructure:

A Comparative Study of East Asia and

Sub-Saharan Africa Indonesia Case Study

Table of CONTENTS

1 INTRODUCTION ……… 1

2 BRANTAS RIVER BASIN DEVELOPMENT PROJECT (The Brantas Project) ……… 2

2.1 The Brantas Project and its Development Performance ……… 2

2.2 Institutions Developed during the Course of the Brantas Project by Stakeholders ……… 17

2.3 Institutional Development and Development Performance of the Brantas Project ……… 38

3 A COMPARATIVE VIEW ON THE BRANTAS RIVER BASIN DEVELOPMENT PROJECT AND THE CITARUM RIVER BASIN DEVELOPMENT PROJECT ……… 47

3.1 Development Area ……… 47

3.2 Development Principle ……… 47

3.3 Development History ……… 48

3.4 Coordination between Planning and Project Implementation ……… 49

3.5 Project Management Unit ……… 49

3.6 Projects (Master Plans/Studies and Physical Projects) Implemented and External Assistance ……… 51

3.7 Performance (Output and Outcome) ……… 52

3.8 Institutions Created and Developed ……… 52

4 JAKARTA WATER SUPPLY SYSTEM DEVELOPMENT PROJECT (The JWSSD Project) ……… 56

4.1 The JWSSD Project and its Development Performance ……… 56

4.2 Institutions Developed during the Course of the JWSSD Project by Stakeholders ……… 68

4.3 Institutional Development and Development Performance of the JWSSD Project ……… 86

5 CONCLUSION ……… 93

5.1 Stakeholders and Institutions Created/Developed ……… 93

5.2 Performances within the Project Cycle and Spillover Performance outside the Project Cycle ……… 94

5.3 Contributions of Institutions to Performances ……… 94

1 References for the Brantas Project and the Citarum Project ……… 97

2 References for the JWSSD Project ……… 98

INTERVIEWEES

1 List of Interviewees on the Brantas Project and the Citarum Project ………… 99

2 List of Interviewees on the JWSSD Project ……… 100

List of Figures

Figure 2.1: Organization of Brantas River Basin Development Executing Office … 31 Figure 2.2: Linkages between Institutions and Development Performances

of the Brantas Project ……… 46

Figure 4.1: Organization of the Jakarta Project Office -PMU- ……… 79

Figure 4.2: Organization of Pulogadong Project Site Office (Sub-PMU) ……… 79

Figure 4.3: Organization of Buaran Project Site Office (Sub-PMU) ……… 79

Figure 4.4: Organization of PJSIP Project Site Office (Sub-PMU) ……… 80

Figure 4.5: Organization of Ministry of Public Works ……… 81

Figure 4.6: Linkages between Institutions and Development Performances of JWSSD Project ……… 92

List of Tables

Table 2.1: Master Plans and Projects Implemented ……… 6

Table 2.2: Dam and Hydropower Projects ……… 7

Table 2.3: Barrage Projects ……… 7

Table 2.4: Irrigation Projects ……… 8

Table 2.5: River Improvement Projects ……… 9

Table 2.6: Debris Control/ Sabo Projects ……… 9

Table 2.7: Installed Capacity of Electricity in Java and in Brantas Basin ……… 10

Table 2.8: Agricultural Land Use and Irrigation ……… 12

Table 2.9: Rice Yields in Brantas Basin ……… 12

Table 2.10: Number of Brantas Office Staff……… 15

Table 2.11: Number of Staff Distributed to Each Organization ……… 16

Table 2.12: Average Annual Income per Farming Household……… 16

Table 2.13: Aid Commitments to Indonesia by Major Donors on CGI Basis ……… 19

Table 3.1: Comparison between Brantas River Basin Development Project and Citarum River Basin Development Project ……… 54

Table 3.2: Summary of External Assistance to the Citarum River Basin Development ……… 55

Table 4.1: Japanese ODA Assistance and Development of Jakarta Water Supply System……… 59

Table 4.2: Summary of Japanese Assistance to JWSSD ……… 61

Table 4.3: Performances in Project Implementation ……… 62

Table 4.4: Planned Costs and Actual Costs ……… 65

Table 4.5: Changes in Project Scope ……… 66

Table 4.6: Financial Internal Rate of Return (FIRR) ……… 67

Table 4.7: Water Treatment Plant ……… 67

Table 4.8: Served Population and Service Ratio ……… 67

Table 5.1: Stakeholders and Institutions Identified ……… 96

Acronyms and Abbreviations

AAP Annual Action ProgramADB Asian Development BankCFE Compagnie Francaise d’EnterpriseCGI Consultative Group for IndonesiaCOB Coyne et Bellier ConsultantDWS Directorate of Water SupplyEIRR Economic Internal Rate of ReturnETC East Tarum Canal

FIRR Financial Internal Rate of ReturnGOJ Government of Japan

IDA International Development AssociationIGGI Inter-Governmental Group on IndonesiaIRR Internal Rate of Return

JBIC Japan Bank for International CooperationJICA Japan International Cooperation AgencyJWSS Jakarta Water Supply System

JWSSD Jakarta Water Supply System DevelopmentMDBs Multilateral Development Banks

M/Ps or M/P Master Plans

NK Nippon Koei Co., Ltd

NTC North Tarum CanalODA Official Development AssistanceOECF Overseas Economic Cooperation FundOJT On-the-Job-Training

OMM Operation, maintenance and managementOTCA Overseas Technical Cooperation AgencyPCR Project completion report

PJSIP PAM JAYA System Improvement ProjectPJT Perum Jasa Tirta Public CorporationPLN National Power Company

PMU Project Management UnitSAPROF Special Assistance for Project Formationthe Brantas Project the Brantas River Basin Development Projectthe Citarum Project the Citarum River Basin Development Projectthe JWSSD Project the Jakarta Water Supply System Development ProjectTOR Terms-of-Reference

TSL Two Step Loan

WTC West Tarum Canal

WTP Water Treatment Plant

1 INTRODUCTION

In accordance with the research framework and TOR spelled out in the Framework Paper of this study “Aid Effectiveness to Infrastructure: A Comparative Study of East Asia and Sub-Saharan Africa” (Jerve and Nissanke, 2008), the Indonesian case selected two projects; the Brantas River Basin Development Project (the Brantas Project) and the Jakarta Water Supply System Development Project (the JWSSD Project) In addition, the Citarum River Basin Development Project (the Citarum Project), which is quite similar to the Brantas Project in its natural, climatic and physical conditions, is chosen as a reference project for a brief comparative study against the Brantas Project One of the distinct characteristics common to the Brantas Project and the JWSSD Project is that each Project is composed of multiple individual projects Throughout this paper, therefore, both Projects are analyzed in an aggregate manner, not on an individual project basis

The analytical framework applied to the Brantas Project and the JWSSD Project

is the same It consists of three steps First, a big picture of project development à-vis Japanese assistance is reviewed together with its development performances at each stage of the project cycle (pre-implementation stage, implementation stage and post-implementation stage) Second, major stakeholders involved are specified from the donor side, Japan, and the recipient side, Indonesia Then, a variety of institutions created and developed by all the stakeholders during the course of Project’s realization are identified In doing so, backgrounds and reasons why those institutions are formed are also investigated Third, relationships between project performances perceived

vis-in the first step and vis-institutions identified vis-in the second step are analyzed vis-in such a way as to identify cause-and-effect linkages between them as well as qualitative and quantitative contributions of the institutions related to the performances

In addition, in an attempt to assess the effectiveness of Japanese ODA, the assisted Brantas Project and the Euro/World Bank-assisted Citarum Project are comparatively analyzed, within the analytical framework of the Brantas Project/the JWSSD Project, with institutional development in mind

Japan-In this paper, assuming that all the stakeholders make their best efforts to carry out their roles and responsibilities in the most effective and efficient way or to reduce transaction costs in the North’s terminology and, to this end, develop a variety of institutions, the author defines “institutions” in the broadest sense and, therefore, includes systems, measures, methods, policies, rules/regulations, procedures, modalities, organizations and so forth, anything that can contribute to project performances

2 BRANTAS RIVER BASIN DEVELOPMENT PROJECT

(The Brantas Project)

2.1 The Brantas Project and its Development Performance

Japan has assisted in the development of the Brantas River Basin for 40 years The

Brantas Project is said to be the flag symbol of the successful cooperation between

Japan and Indonesia on water resources development We, in this sub-section, review

the entire picture of the Brantas Project, as well as continuous and massive Japanese

development assistance together with its performances

(1) Prelude to Brantas River Basin Development

Development of the Brantas river basin began during the Dutch colonial days in the

1840s During the period of World War II and independence, between 1941 and 1947

in particular, the condition and performance of the facilities deteriorated badly due to

the shortage of funds for maintenance In the late 1950s, the government of Indonesia

established a national development policy to develop irrigation and hydropower with

priority to increase food production and to accelerate industrialization The Brantas

river basin was selected as one of the strategic basins for this policy

A Japanese consulting company, Nippon Koei Co., Ltd (NK) was established in

1946 by Mr Yutaka KUBOTA Mr Kubota, in his attempt to foster his consulting

company to be regarded as an international development consultant, visited

Indonesia, Thailand, Burma, India and Pakistan in September 1953 A few years

later, Mr Kubota revisited Indonesia having the Asahan River Hydropower

Development Project in mind and recommended its implementation to the Secretariat

of the President Office The Indonesian authorities then, instead of the Asahan

project, requested Mr Kubota to undertake a pre-investment study on the Brantas

river basin development NK under the guidance of Mr Kubota quickly responded

to this request and prepared a study report on the Brantas river basin development

under Indonesian Government’s contract number: 16/MISPRI-33/59 This report was

initiated by a reconnaissance report completed in October 1959, followed by an interim

report in August 1960 A preliminary report was released in September 1960 which

was finalized as the Comprehensive Report on the Kali Brantas Overall Project in

April 1961, the first Master Plan for the Brantas River Basin Development

In 1961, the Brantas Project was formerly launched under the initial title of “State

Electricity Company, Brantas Hydropower Development Project” as stipulated by the

decree of the Minister for Public Works and Power Generation, number: 16/2/11 dated

June 6, 1961 The late Prof Ir Suryono was appointed as the first project manager

NK was awarded contract (No MISPRI/178/62) to undertake the engineering services for the Karangkates dam and power station which was the first priority infrastructure project within the first master plan

(2) Socio-Economic Conditions of the Brantas Basin during the Early Days of Its Development

The Brantas River Basin covering a catchment area of 12,000 km2, blessed with favorable natural conditions such as water resources and a tropical climate, had been developed as the granary of Java for many years Besides, making the most use of its favorable conditions various industries had been developed around Surabaya city This was attributable not only to the above available resources but also to the favorable transportation conditions, such as the fairly developed railway, a highway linked with Middle Java and the second largest sea port located in the center of inter-insular trade among Java, Kalimantan, Sulawesi and other islands

The major industry in the basin was agriculture in which about 70% of the population was engaged Total farmland occupied 730,000ha or about 60% of the basin area Mountain slopes mostly occupied the remaining areas where the lands were not

so suitable for irrigation farming due to the topography and soils as well as limited availability of water

The major agricultural products in the basin were rice, sugar cane, cassava, soybean and maize The total production of milled rice in 1971 was about 600,000 tons, accounting for about 5% of the national production The basin produced about 230,000 tons of sugar annually occupying about 30% of the total production in Indonesia

The population in the basin was about 10 million in 1971 which constituted 13% of the population of Java or 8% of the country’s total The population density in the basin was as high as 850 persons per km2 Population versus land area naturally limited the average holding size of farmland as little as 0.5 ha per farming family There existed substantial surplus labor force in the rural area which would be available for various industries when they were developed later on Such unemployment or underemployment, therefore, could only be mitigated by intensification of crop farming for years to come Thus, special attention had to be paid to the increase of crop yield to raise the living standard and to stabilize the farm economy Crop diversification would have to be studied to improve the diet of the people in the area from depending on starchy foods to protein and vegetable fat foods

Out of 730,000 ha of farmlands in the basin, the paddy area occupied 321,000 ha

The irrigation areas which depended on the Brantas main stream were 77,000 ha The

existing intakes for these irrigation areas mostly faced the river directly However, the

river water of the Brantas was not always effectively utilized for these areas due to

the unfavorable condition of intake structures, deterioration of the existing irrigation

facilities and insufficient maintenance and management The river water used

for municipal and pollution control was also limited However, water demand was

gradually increasing along with the progress of industrialization of Surabaya Thus,

much more effective utilization of the water resources was to be planned under a well

balanced distribution of the available river discharge

Against this socio-economic background, efforts to develop the Brantas River Basin

started in the late 1950s under the assistance of the Japanese Official Development

Assistance (ODA) program

(3) Brantas River Basin Development and Japanese Assistance

Since the late 1950s, development of the Brantas river basin has been achieved

using a holistic approach, with well planned, sustainable and environmentally sound

management, based on the philosophy of “One River, One Plan and One Management”

The development projects have been constructed steadily based on four Master Plans

(M/Ps or M/P) which were formulated in 1961, 1973, 1985/86 and 1998 on a 10 year

review basis Each M/P contained several to a dozen feasibility studies The first M/

P (Comprehensive Report on the Kali Brantas Overall Project, 1961) was prepared by

NK with the financial support of the Japanese war reparation fund The second M/P

(Report on the Brantas River Basin Development Plan, 1973) was also formulated by

NK with a T/A grant sponsored by OTCA (present JICA) The third (Final Report for

the Study of Widas Flood Control and Drainage Project Part I & Part II Study, 1985

(I) and 1986 (II)) and the fourth M/P (Operation, Maintenance and Rehabilitation of

Brantas River Basin Development, 1998) were prepared by NK with a T/A grant by

JICA Almost all the projects proposed in the M/Ps were implemented with Japanese

financial loan assistance by OECF (present name is JBIC and hereinafter referred to

as such) In Table 2.1, the four Master Plans, and major development projects proposed

in the M/Ps and implemented over 40 years are sorted out

Throughout the development of the Brantas River Basin, the principle of “One

River, One Plan and One Management” has been well kept The Brantas River has

been the only target There were four M/Ps, but the relationship between them has

been so closely interrelated and synchronized as if they were one long-term plan

Further at an early stage of the Brantas development (1965), the Brantas River

Basin Development Executing Office was firmly established as an independent

Project Management Unit This Unit supervised and implemented the projects in a

unified manner This development principle must have been supported partly by NK who had been for over 40 years the sole expatriate consultant for the entire Brantas development.

It is quite interesting to see that some of the projects recommended in a particular M/P were implemented in the following M/P period Tulungagung Diversion Improvement Project and Waruturi Irrigation Project are a case in point They were planned in the M/P II and implemented during the period of the M/P III And it turned out that both projects were Asian Development Bank (ADB) loan-assisted The Japanese ODA loaning institution, JBIC, almost solely provided the financial loan assistance However, the World Bank (IBRD) and ADB as well as Austrian government supported, on an ad hoc basis, some of the projects proposed in the M/Ps

As of 1996, total investment in the Project (except for urban-related development projects) amounted to \216.9 billion including local funds Of this, the foreign currency component amount was \103.7 billion, of which Japan’s loans and grants (including the reparations provided during the early phase of the development) account for approximately 73% Further, it is estimated that a sum almost equal to the above investment to the Brantas Project was invested in the urban related development projects of Surabaya The investments up to 1996 on the Brantas Project are less than US$250 per resident at the 1996 current price basis on a population average

of 25 years In a way, it can be said that an investment as little as US$250 laid the foundation for acceleration of the economic activities of the entire basin

Table 2.1: Master Plans and Projects Implemented

(4) Development Performance of Japanese Assistance over 40 Years

(i) Physical Structures Implemented

Almost three dozen physical structures were constructed over 40 years and they are

sorted out and grouped by their characteristics in the 5 tables below

Generally speaking, all those projects were implemented fairly successfully

as planned and considerably satisfied their performance indicators in terms of

conventional evaluation

(a) Dam-cum-Hydropower Projects

Nine multi-purpose dams were constructed, out of which 7 dams were supported

by Japan in one form or another Of the remaining two, one, Sengguruh Dam, was

financially supported by ADB and Austria, and the other, Tulungagung Hydropower,

by Austria Austrian Government supported the latter project in response to

Indonesian Government’s aid request due to the fact that an Austrian contractor

supplied Austrian-made mechanical and electrical equipment to Sengguruh Dam

project, and the Brantas Office as well as the Indonesian Government wanted to

quickly acquire Austrian technologies which were then new to them (Table 2.2 below)

Table 2.2: Dam and Hydropower Projects

(b) Barrage ProjectsFor over 40 years 6 barrages, as shown in Table 2.3, were constructed along the Brantas River These barrages were mostly constructed for irrigation purposes, but a couple of them had different purposes such as flood control (New Lengkong Barrage) and water supply (New Lengkong Barrage and Tiudan Headworks) Of these 6 projects, only one, the Mrican Barrage project was financed by ADB This barrage covers the entire Widas river area and ADB as well as IBRD supported the irrigation development in and around the down stream area of the Mrican Barrage Specifically, the Kediri-Nganjuk Groundwater Irrigation project and Warujayeng-Tri Tunggorono Irrigation project was respectively supported by IBRD and ADB (Table 2.4 below)

Table 2.3: Barrage Projects

(c) Irrigation ProjectsEight projects listed in Table 2.4 are characterized as irrigation projects and were constructed successfully over the years The very first project of the Brantas Project was South Tulungagung Drainage project or South Tulungagung Irrigation project (so called, the Neyama Diversion Tunnel project), which was implemented between 1959

and 1961 This project was funded by the Japanese war reparation fund

In those days, every year the 3,000 ha marsh area in the Ngrowo river middle

reaches expanded up to 28,000 ha during the rainy season For many years, the

Government of Indonesia tried to construct an open channel to discharge the

rainy season flood water into the Indian Ocean without succeeding NK proposed

to the Indonesian Government a plan to drain these floodwaters directly into the

Indian Ocean by constructing a tunnel (7.2 m in dia ×1,000 m in length) NK and

the Japanese construction company (Kajima Corporation) successfully completed

the project in less than three years as promised to the Government of Indonesia

Indonesian Government high officials were greatly impressed with the level of

Japanese technology used on as well as efficiency and economy of the Japanese

consultant and the contractor that worked for the Neyama Diversion Tunnel project

One of the reasons that NK has been appointed as the main consultant throughout

the Brantas Project must have been due to this early demonstration of success The

Neyama Tunnel project brought about great effects such as the expansion of the rice

growing area by over 25,000 ha and even a reduction of the 3,000 ha marsh by half, an

increase of farming products worth US$2 million per annum which is approximately

equivalent to the construction cost of the Neyama Tunnel project Further, unlike the

pre-tunnel days, malaria has been nearly eradicated in the area, a salient factor not

to be understated Out of the 8 irrigation projects, only three projects were financed

by Japanese assistance As touched briefly in “Barrage Projects” above, ADB played

a substantial role in constructing irrigation facilities under the Brantas Project Out

of the remaining 5 projects, 4 projects by ADB and one by IBRD were financed, yet

NK was the consultant for all 8 projects So far as the irrigation sector projects are

concerned, Japanese assistance did not play a major role The Brantas Project was too

grand for Japan to support totally by itself

Table 2.4: Irrigation Projects

(d) River Improvement ProjectsRiver improvement is the backbone of Brantas water resources development, and therefore all 7 projects tabled below were carried out continuously over 30 years in sequence one after another JBIC handled 6 projects along the Brantas main stream over the middle reach, and the lower reach (Porong River and Surabaya River) which runs through the City of Surabaya ADB financed a branch river project, the Widas River Improvement project to support the JBIC-financed Widas Irrigation project (Table 2.5 below)

Table 2.5: River Improvement Projects

(e) Debris Control/Sabo ProjectsTwo major debris control/Sabo projects are listed in Table 2.6 One is the ever-lasting debris control project, financed by the Government of Indonesia, which started in 1960 and is still under implementation This project is meant for eruptive debris control JBIC assisted the other project, Mt Kelud Emergency Debris Control Project, which was to rehabilitate the crater lake diversion tunnel It was completed in 1997

Table 2.6: Debris Control/ Sabo Projects

(ii) Development Benefits(a) Electric Power

Electrification is indispensable to promote the living standard of people through enhanced economic and social activities The electrification rate of the Brantas Basin villages was below 10% in the 1960s

In order to integrate hydroelectric generation as one of the purposes of the Brantas

Project, two fundamental principles of planning were employed: 1) hydroelectric

generation is to be introduced where possible, as part of multipurpose development,

along with water resources development, and 2) mini-hydroelectric development is to

be included where economically feasible

The power generation capacity in the basin in 1961 was 31.7 MW for hydroelectric

and 21.6 MW for thermal power (53.3 MW in total) Hydroelectric power was

developed as part of the Brantas Project and as of 1993 it reached 268 MW (Table 2.7),

an 8-fold increase Progress of industrial development in particular further boosted

the demand for electricity in the basin and thermal power generation was drastically

increased As of 1993, the installed capacity of thermal power generation reached

1,350 MW (Table 2.7) Thus, the installed capacity of power generation increased from

52 MW in 1960 to 1,618 MW in 1993

Thanks to the development of electric power generation, the electrification of

the Brantas River villages improved from less than 10% in 1960s to 85% in 1993

Although the effects of the electrification are difficult to measure, there is no doubt

that such progress enhanced substantially the living standard of the Brantas people

Table 2.7: Installed Capacity of Electricity in Java and in Brantas Basin

(b) Flood Control

Flood control was a serious concern not for only the classic Mataram Kingdom (8th

and 10th century AD) but right through to the Dutch colonist as well Rudimentary

dikes and flood retaining structures were constructed as early as the 9th century

The Dutch also constructed various gates and flood diversion channels in the late

19th century However, around 1958, when the Brantas Project was initiated, a huge

amount of debris produced by the eruption of Mt Kelud accumulated on the beds of

the Brantas main stream and its tributaries This sediment deposition decreased the

river discharge capacity especially for carrying floodwaters This incurred flooding

almost every year, which caused human calamities, crop damage and loss of assets

In order to prevent the basin from flooding, three measures were introduced in the development planning First, multipurpose dams are to be constructed in the upper reaches to control floods Second, floodwaters of the upper Brantas and its tributaries are to be partly discharged into the Indian Ocean Third, natural retarding basins in the middle reaches of the main Brantas are to be converted to artificial basin for more efficient reduction of the flood runoff in the lower reaches

Most of the measures were successfully carried out in the form of specific projects and, as a result, the Brantas River Basin succeeded in reducing flood damages considerably, as it is evidenced in an article written in Kompas (Indonesian Newspaper), dated February 17, 1993, “Why is it that in the year 1993 there were floods in many places, even in the Citarum River Basin with 3 big reservoirs, but in the Brantas River Basin no floods occurred?”

The total cost of flood control projects of the Brantas Project is estimated to be approximately \85 billion at 1988 prices On the other hand, the estimated savings

in flood related damages to residential, agricultural and social capital is estimated

to be \13.5 billion per annum From these figures alone, the flood control projects can be considered very effective In addition, there must have been invaluable effects brought about by the projects such as the stabilization of livelihoods, improvement of living environments, sophistication of land use, urban development, and promotion of industrialization

(c) Agricultural Production and IrrigationAgriculture is the key industry in the Brantas Basin and, reflecting the serious economic conditions of the country, the Government of Indonesia stipulated self-sufficiency of rice production as the country’s top priority development objective in the first 25 year long-term development plan (PJP I 1969/70 ~ 1993/94) The basin has prospered as Java’s granary since the 1800s, largely due to the then-advanced irrigation system established by the Dutch colonials The irrigation facilities, however, deteriorated during World War II and for subsequent years of political and economic disorder after the war In addition, Brantas irrigation depended on the natural runoff

of rivers, as there were no large reservoirs in the basin

In view of the above, irrigation work was planned and implemented under the following three basic principles: 1) rehabilitation of the existing irrigation system, 2) development of new paddy fields where possible, and 3) supply of sufficient irrigation water through the construction of multipurpose dams in the upper reaches

Thanks to the irrigation projects, the irrigated paddy fields increased 77,000 ha

or 25% of the total paddy fields in 1970 to a total of 324,000 ha or 100% in 1993

(Table 2.8) Trends in rice and unit yields are shown for the years 1970-93 in Table 2.9

During these 23 years, the paddy field area increased only 3% (10,000 ha), but the

rice production jumped by 87% and the yield per ha by 81% This was partially due

to the use of fertilizers and improved rice species However, the major factor was the

improved dry season runoff As a matter of fact, cropping intensity increased from

80-90% in the 1960s to 130% by 1993 In addition, the top priority objective of

self-sufficiency of rice production stipulated in the 25 year development plan (PJP I) was

accomplished in the basin in 1978, six years earlier than the target year of 1984

Table 2.8: Agricultural Land Use and Irrigation

Table 2.9: Rice Yields in Brantas Basin

(d) Sabo (Volcanic Disaster Prevention)

Mt Kelud erupts every 15 years on an average The eruption damage falls broadly

into two steps Firstly, an eruption causes the water pooled in the crater’s lake to

run down rivers mixed with ejecta, and the resultant mudflow hits agricultural

fields and houses, causing direct damage (primary damage) Secondly, volcanic ash

accumulates on mountainsides and is then washed down by rainfall This causes a rise

in the riverbeds of the lower reaches over time, eventually causing floods (secondary

damage)

To prevent this damage, two kinds of measures were undertaken: 1) to construct a

diversion tunnel to reduce the amount of water pooled in Mt Kelud’s crater lake, and

2) to construct sand pockets to check erupted earth.

The lake had 40 million m3 and 20 million m3 of water at the time of the 1919 and

1966 eruptions, respectively Following the vast primary damage, ejecta flowed into the main stream of the Brantas River, raising the riverbeds to as high as 1 ~ 2 m in some places, which consequently caused floods in the Brantas mainstream and the Polong River The years between 1951 and 1990 saw less primary damage since the lake was being drained through a diversion tunnel before the eruptions, reducing the water to 1.8 million m3 and 2.5 million m3, respectively The 1990 eruption occurred after sand pockets and the Sabo dams had been completed at the foot of Mt Kelud, which checked successfully the flow of ejecta into the main stream of Brantas which gave only a slight rise to the river beds

(e) Domestic and Industrial Water Supply to SurabayaDomestic and industrial water supply to Surabaya urban area increased rapidly thanks to the Brantas Project Water supply for domestic and industrial uses in 1970 was 123 million m3 per year and 335 million m3 in 2000 Demand for domestic water increased in accordance with the population growth and improvement of the living standard of the residents of Surabaya Water supply of domestic use, thus, increased from less than 100 million m3 in 1970 to more than 200 million m3

Owing partly to the reliable supply of industrial water, impressive industrial development was recorded Industrial production increased from Rp 41.9 billion in

1970 to Rp 7,723 billion in 2000, which occupied 58% and 77% of East Java’s total production, respectively In terms of the of the number of employees, it increased 30,000 in 1970 to 959,000 in 2000, which shared 9% and 45% of total employees in East Java, respectively

(iii) Contribution to Brantas Economy and National Development ObjectivesThe Indonesian Government historically has three basic priority development objectives; namely, development of human resources, enhancement of national life, and equitable distribution of income and eradication of poverty

(a) Human Resource DevelopmentThe first few Brantas projects commenced under the jurisdiction of different government offices such as the Irrigation Service of the Ministry of Public Works, Surabaya Municipal Irrigation Service, or the State Electric Power Corporation (PLN)

It was, however, soon recognized that the Brantas Project, being a multipurpose Project, would be difficult to carry out within the framework of a single project Thus, the Brantas River Basin Development Executing Office (the Brantas Office)

was created in 1965 as a body under the direct supervision of the Ministry of Public

Works, with Mr Suryono appointed as the first General Manager The Brantas Office

was vested two years later in 1967 with the authority broadly covering the office

operations and the project execution including hiring of staff and laborers, the decision

of their treatment, and budget administration Since then, the Brantas Project has

been pursued literally under the “One Management” philosophy

The trends in the number of staff at the Brantas Office are shown in Table 2.10

(excluding general laborers) The Brantas Project employed in its 1970s peak a large

number of staff, up to 7,300 Almost all 7,000 were technical staff In other words,

the Brantas Project trained and fostered, mostly through On-the-Job-Training (OJT),

7,000 engineers and technicians During this period, it was estimated that there

existed almost 30,000 engineers and technicians in Indonesia at large Of these, 7,000

were from the Brantas Project, which accounts for over 20% of the national total of

engineers and technicians

The Faculty of Engineering of Brawijaya University in Malang City, where the

Brantas Office was located, was established in 1963 in close collaboration with the

Brantas Office or Prof Ir Suryono, in particular, who was appointed as the Dean of

the Faculty from 1963 through 1982 During the early stages, the Brantas Project was

the cradle of the Faculty of Engineering and later the Faculty became a foreground

of education for the young engineers of the Brantas Project Thanks to the close and

continuous relationship between them, the Faculty produced 498 graduates by 1983,

and 72 of them (14%) joined the Brantas Office From Table 2.10 below, it is obvious

that most of the staff with the university degree were recruited from the Faculty of

Engineering of Brawijaya University

The Brantas Office, in addition, delivered various types of lectures based on the

practical fieldwork experiences of the Brantas Project to engineering students of other

Universities such as ITB (Institute of Technology Bandung), Institute of Technology

Surabaya and Meurdeka University of Malang

Table 2.10: Number of Brantas Office Staff

During the early stages of the Brantas Project (between the early 1960s and the mid-1970s), nearly 50 expatriate consultants per annum on an average were assigned

to a number of on-going projects However, the number reduced gradually and toward the end of the 1990s, down to four or five The number of foreign consultants assigned

to projects varies as they differed a lot in scope and characteristics The Karangkates Dam project implemented from 1962 to 1973 involved 318 foreign consultants and construction guidance engineers in total, or 32 per annum on an average, while the Wlingi Dam from 1972 to 1977 required 44 foreign consultants in total, or 4.4 per annum on an average The reduction of expatriate consultants implies that the local consultants and/or engineers and planners of the Brantas Office acquired considerable technical skills and replaced the foreign consultants Needless to say, the role of Indonesian engineers and planners as well as Indonesian consultants in formulating the M/P II, III and IV increasingly and acceleratingly expanded

(b) Sprouted-out Private/Semi-private Companies

As a result of the human resource development, the Brantas Office sprouted out three independent organizations with a substantial number of its staff during 1980s Namely, P.T Indra Karya (a consulting company) was practically re-established with

500 employees in 1981, P.T Brantas Abipraya (a construction company) was newly established with 519 employees in 1985 and Perum Jasa Tirta (a water resources management public corporation) with 439 employees in 1990, and the Brantas Office was squeezed into a smaller entity as shown in Table 2.11 Thus, the Brantas Office was directly involved in expanding the private sector of the country

Table 2.11: Number of Staff Distributed to Each Organization

(c) Development of Economic Welfare

The primary objective of the Brantas Project was to develop basic economic

infrastructure related to water resource development, which in turn accelerated

agricultural development and industrialization through private investment and

which raised the regional economic welfare of the area often measured in GDP In

this sequence the Brantas Project contributed to the improvement of the economic

conditions of the people residing within the entire Brantas Basin

The Indonesian GDP per capita of 1993 was US$674, with that for Java coming

near to the national per capita GDP In comparison, the GDP per capita for the

Brantas Basin was $884, well above the national average And in the same year, it is

recorded that the GDP per capita of Surabaya City was $1,464 which is close to that

of Jakarta, the most developed city in Indonesia These facts prove that the Brantas

Project contributed considerably to lifting up the level of economic welfare of the

people residing in the basin

In terms of farmer household income, a similar fact was observed In 1993, the

average annual income per farming household was Rp 1.63 million for Indonesia as a

whole, while it was Rp 1.52 million for East Java and Rp 1.76 million for the Brantas

Basin As can be seen, the annual growth rate in the 1970s was 0.1% for Indonesia, 1.0%

for East Java and 4.5% for the Brantas Basin This fact as well as figures shown in

Table 2.12 lay a sufficient foundation to believe that the Brantas Project substantially

impacted the income of farming household

Table 2.12: Average Annual Income per Farming Household

(d) Poverty Reduction and Income DistributionThe second long-term development plan (PJP II 1994/95~2018/19) was aimed at balanced development of the entire nation with a focus on future regional development

of the eastern part of Indonesia as well as poverty reduction The Master Plan III (1985/86~2002/03) pre-fetched this national development thinking The M/P, as a matter of course, paid special attention to the balanced development of the basin Development projects implemented under the M/P I and M/P II focused on the economic efficiency and priority needs, based on the review of the previous master plan and the development conditions to date Over a 25-year period, many local residents benefited from the projects implemented under the M/P I and II During this period, however, it was impossible to achieve a perfectly balanced development; disparity in development level and living standards of the people in the Brantas Basin was created Against this background, M/P III was formulated in such a way as to develop the lagging regions such as Ngrowo, Widas basin, the upper regions of Lesti, and the surrounding areas too Thus, the Brantas Project would thereby contribute to poverty reduction and equitable income distribution to a wider degree

In addition to the above, some other development impacts were recognized First, the people’s mindset in the basin changed considerably The local residents not only accepted the value of modern living but also motivated themselves to access modern amenities and facilities They also accepted the modern way of work customs and ethics Second, as the reputation of the Brantas Project prevailed internationally, several LDCs who were interested in developing their own river basins sent official missions to Indonesia to study the Brantas Project Bangladesh, Egypt, Viet Nam and Ghana are the countries in point Third but not the last, the projects constructed in the Brantas Project were replicated as national projects in other parts of Indonesia by Brantas-men and Brantas School graduates who were invited and transferred to those projects Those projects include, among others, Klara Irrigation Project (Sulawesi), Tajun and Nawangan Dam (Central Java), Rora Besar Dam (West Nusa Tenggara), Batujai Dam (Lombok Island) and Juran Sate Irrigation (Lombok Island)

2.2 Institutions Developed during the Course of the Brantas Project by Stakeholders

In this sub-section, institutions developed during the course of the Brantas River Basin development, which are believed to have had direct and indirect impacts on the Brantas Project, are identified on a stakeholder-by-stakeholder basis There are 3 stakeholders on the Japanese donor side; namely, the Japanese Government, JICA and JBIC, and 4 stakeholders on the Indonesian recipient side; namely, the Indonesian Government, BAPPENAS, DGWRD of Ministry of Public Works and the Brantas Office All the stakeholders made their best efforts to carry out their roles and

responsibilities in a more efficient and effective way or to reduce transaction costs in

the North’s terminology, and, to this end, developed a variety of institutions

(1) Japanese Government

(i) Coordinated Procedure between Planning Assistance (Technical Assistance by ODA

Grants) and Implementation Assistance (Financial Assistance by ODA Loans)

The Government of Japan developed a sequential procedure between technical and

financial assistance at an early stage of its aid to Indonesia The case of Brantas fits

in this formula As a result, the Brantas Project lasted over 40 years until almost all

priority projects recommended in the 4 Master Plans were implemented In a way, the

commitment of the first M/P assistance seems to have meant unwritten commitments

for the following technical assistance and financial assistance for a number of projects

Consequently the way Japan assisted the development of the Brantas River Basin

proved to be more effective, and more efficient with more benefits accruing

(ii) High Level ODA Dialogue Mission to Indonesia

Prior to starting every 5-year development plan (REPLITA), the Government of

Japan made it a rule to send a high-level policy dialogue mission on ODA to Indonesia

and to reach a fundamental understanding on development policies and strategies of

the country for the coming 5 years The results were readily reflected in Japan’s ODA

policies and the actual ODA itself to Indonesia

Thus, the dialogue between the Japanese Government and the Indonesian

Government was an important ceremony to deepen the understanding on their

respective roles and responsibilities for the succeeding 5 years

(iii) Continuous and Annual Commitment of ODA/AID at CGI/IGGI

In 1966, the governments of 14 countries, including Japan, the United States, West

Germany and the Netherlands, formed the Inter-Governmental Group on Indonesia

(IGGI) and its first conference was held in Tokyo, at the request of Indonesian

government for the furtherance of economic assistance Until 1991, economic

cooperation to Indonesia by donor countries and international organizations had

been pledged at the annual conference of IGGI In that year, IGGI was transformed

into the “Consultative Group for Indonesia” (CGI) whose fundamental characteristics

were to be the same as those of IGGI Thus, it has been the practice of Japan to make

an annual commitment of ODA through the CGI And Japanese commitment has

been based on an “add-up” of specifically identified technical and financial assistance

projects Table 2.13 shows that Japan, IBRD and ADB were the major donors and they

jointly aided more than 80% of the total aid to Indonesia, each providing aid almost

equally

This modality of logistics was used to economize the time and labor of tedious and lengthy commitment procedures that the Japanese Government would, otherwise, have gone through.

(iv) Procurement Conditions of Loans ~Shift from Tying to UntyingThe Government of Japan, in compliance with DAC resolution of 1974, started to relax its procurement conditions from tying to untying In Indonesia, the LDC untying condition (procurement is tied to Japan and LDCs) was first introduced in 1973 and applied to a couple of loan projects (one of them was the Karangkates project), and this condition was applied to an increasing number of project loans as the years went by

In 1979, the general untying condition was introduced and applied to several projects, and this condition was applied to more loan projects as time passed by By 1988, the general untying condition was applied to practically all loan projects

Thus, most of the Brantas projects committed from 1973 onwards were implemented

in a more economical and efficient manner

Table 2.13: Aid Commitments to Indonesia by Major Donors on CGI Basis

(2) JICAJICA is the sole agency of technical assistance (T/A) of Japanese ODA JICA provides various kinds of T/A such as Development Studies, Acceptance of Trainees, Dispatch of Experts, Japan Overseas Cooperation Volunteers, Emergency Disaster Relief, and the development studies (or the pre-investment studies) are one of the most important JICA’s T/A activities

(i) Pre-Investment Studies for the Brantas Project

For the term of over 40 years Japan (JICA) sponsored 4 Master Plans for the

Brantas River Basin Development The first comprehensive master plan commenced

in 1961 and it was periodically reviewed in order to update its contents to cope with

the changing conditions and needs of the subsequent master plans The four master

plans are listed below

The First Master Plan covering 1962 to 1973, prepared by NK and sponsored by

Japanese reparation fund: Comprehensive Report on the Kali Brantas Overall

Project, 1961

The Second Master Plan covering 1974 to 1985, prepared by NK and sponsored

by the Overseas Technical Cooperation Agency of Japan (OTCA): Report on the

Brantas River Basin Development Plan, 1973

The Third Master Plan covering 1986 to 2003, prepared by NK and sponsored

by Japan International Cooperation Agency (JICA): Final Report for the Study

of Widas Flood Control and Drainage Project Part I & Part II Study, 1985 (I) and

1986 (II)

The Fourth Master Plan covering 2004 to 2015, prepared by NK and Nikken

Consultants Co., Ltd and sponsored by JICA: Operation, Maintenance and

Rehabilitation of Brantas River Basin Development, 1998

In addition, feasibility studies for a few dozen projects identified and prioritized in

the M/Ps were carried out by JICA’s assistance and subsequently implemented by

Japanese financial assistance under JBIC

This comprehensive plan making mechanism was considered to be one of the best

ways to prepare long-term development plans and feasibility studies

(3) JBIC

JBIC’s ODA wing is the sole agency of the Japanese ODA loan to LDCs The volume

of ODA lending operations of JBIC used to be as large as a half of that of IBRD and

International Development Association (IDA) combined and its lending conditions

were between of IBRD and IDA

(i) Annual Cyclical Modality on JBIC Loans Commitment to Indonesia

Since the very beginning of Japan’s ODA loan assistance, JBIC in collaboration with

the Japanese Government and the Government of Indonesia had developed an annual

cyclical modality of Yen loan commitment and consolidated it as below during the first few years of CGI.

August to September: Selection of Candidate Projects by Each Executing

Agency of the Government of IndonesiaNovember to January: JBIC’s Sector Survey Mission to Indonesia (Policy

Dialogue on Sectoral Development and Discussion of Future Priority Projects in All the Sectors)

January: Finalization of Candidate Projects for Japan’s ODA Loan

Assistance by BAPENAS (vis-à-vis Blue Book)January to February: ODA Loan Request from BAPPENAS to Japanese

Government via Embassy of Japan in JakartaMarch to April: Mission of Japanese Government (Ministry of Foreign

Affairs, Ministry of Finance, Ministry of International Trade and Industry and Economic Planning Agency) to Indonesia

March to May: JBIC Appraisal Mission to Indonesia for Final Selection

of JBIC’s Loan Projects

June to July: Pledge by Japanese Government at CGI MeetingSeptember to October: Conclusion of Exchange of Notes between Japanese and

Indonesian GovernmentSeptember to October: Signing of Loan Agreement between JBIC and Indonesian

Government

This annual cycle made the entire lending operations of JBIC ready to

stand-by, easy to schedule, effective and efficient in terms of cost and timesaving All the Brantas basin projects pledged at CGI were processed to the implementation stage in

a readily prepared and in a timely fashion

(ii) Procurement Guidelines and Procedures of JBIC Loan ProjectsJBIC carried out its project implementation in accordance with two guidelines:

“Guidelines for the Employment of Consultants by JBIC Borrowers” and “Guidelines for Procurement under JBIC Loans” These guidelines laid the foundations for fair, competitive and transparent procurement of consultant services as well as goods and services (contractors) and contributed to the minimization of ill practices of procurement such as those that included corruption, collusion and nepotism Needless

to say, they are quite similar to those of MDBs such as the IBRD and ADB

Furthermore, they gave positive impacts on the consolidation of Indonesian domestic procurement rules and regulations The latest Indonesian procurement guidelines (the

Presidential Decree No 16 of 1994 and Ministerial Decree No 158/KDTS/1995) were

stipulated in line with the international guidelines

(iii) Delegation of Procurement Authorities to JBIC Jakarta Office from JBIC HQ

In 1988, JBIC shifted its procurement authorities from its HQ to the Jakarta

Office In this way, the chief representative of the JBIC Jakarta Office was given

full authority to approve or not all contracts as well as contractual procedures

Accordingly, the Jakarta Office increased its staff by assigning HQ staff and started

to employ highly educated Indonesian staff as professionals Both the Japanese

and the Indonesian staff quickly acquired professional knowledge on international

procurement through continuous on-the-job-training

Thus, the transfer of procurement authorities aimed to upgrade quality and speed

of procurement works As a result, for instance, while it took at least two weeks to

complete a contract approval before the transfer, it was reduced into a few days after

the transfer

(iv) Meetings and Workshops for Project Monitoring and Supervision as well as

Disbursement and Procurement Promotion

In 1988, JBIC and the Government of Indonesia agreed in the Master Agreement

(in the case of Indonesia, common clauses applicable to all loan agreements were

extracted and bundled into one agreement which is called “Master Agreement”) that

they exchange views with regard to the progress, completion and operation of the

project and furnish all such information to each other As a result, several methods of

project monitoring and supervision vis-à-vis disbursement and procurement promotion

were stipulated as below

Annual Action Program

In reality, however, JBIC, in collaboration with other stakeholders, established and

carried out the following six workshops/meetings to promote project implementation

(a) Workshop on Procurement and Disbursement

In April every year, the JBIC Jakarta Office hosts, with the help of BAPPENAS,

a workshop on procurement and disbursement concerning JBIC’s Yen loan projects

for newly appointed Indonesian counterpart officers of Executing Agencies (incl

DGWRD) The JBIC’s professional staff of Jakarta Office headed by the deputy chief representative gives a series of lectures and they study together with the Indonesian officers problematic cases of past projects.

(b) Annual Action Program Workshop

As a method of project monitoring and supervision, the Annual Action Program (AAP) was introduced formally in 1988 The AAP stipulates the detailed and concrete processing schedule for every JBIC project and its target amount of disbursement for the fiscal year which should be realized by the Executing Agencies (incl DGWRD) and is agreed by JBIC and BAPPENAS who represents the Executing Agencies of all the line ministries The AAP, then, is an important guiding tool for managing the project during the fiscal year The Executing Agencies are responsible for keeping the schedule stipulated in the AAP and give daily attention to the progress of project implementation Monitoring procedures of procurement and making necessary arrangements for achieving the target of project progress and disbursement are the main components of project management In order to keep track of the APP, a quarterly review meeting is also held between JBIC, BAPPENAS, the Executing Agencies such as DGWRD and Ministry of Finance

(c) Weekly Issues Meeting between JBIC and BAPPENASThe deputy chief representative of the JBIC Jakarta Office and one of the Indonesian professional staff have weekly meetings with officers of the BAPPENAS Japan desk to discuss issues which require urgent settlement JBIC’s intention is to cause BAPPENAS to instruct the Executing Agencies to take necessary actions to avoid delay in planned implementation schedules of the project

(d) Quarterly Review Meeting between JBIC, BAPPENAS, Executing Agencies and Ministry of Finance

On a quarterly basis, all the stakeholders of JBIC project implementation gather together at BAPPENAS and review the progress of all on-going projects in line with the AAP If there are any problems and/or issues, responsible stakeholders are requested to take necessary actions without delay

(e) Regular Progress Meeting between JBIC and the Executing Agency on a Staff BasisStaff of the JBIC Jakarta Office meet the officer in charge of the project of the executing agency on a regular basis to monitor progress of project implementation, in addition to day-to-day communication Issues that can not be solved at the staff level are usually brought to the Weekly Issues Meeting between JBIC and BAPPENAS

(f) Quarterly Review Meeting between JBIC and the Executing Agency

This is the meeting between the deputy chief representative of the JBIC Jakarta

and the Director General of DGWRD Its aim is to share the knowledge about the

state of affairs of project implementation with the Director General and confirm issues

and problems that need to be solved under his initiatives

All these meetings and workshops were programmed to avoid delays in procurement

and fund disbursement vis-à-vis prompt and timely project monitoring and

supervision

(v) Local Cost Financing Schemes

JBIC provides loans primarily for foreign currency procurement of goods and

services needed for the implementation of a project, while the local currency portion

for local procurement is, in principle, financed by the recipient countries Over the

years, however, cases of developing countries requesting local cost financing has

increased, reflecting their tight budgetary situation

In view that the expansion of the local cost financing makes it probable not only to

prevent new and on-going projects from being delayed or interrupted due to shortages

of local currency funds, but also to assist high priority projects with a high local cost

component, which had not been implemented because of budgetary constraints on

the part of the recipient government, JBIC evolved its local financing scheme in three

separate stages

The first is the “local cost financing loan” that JBIC introduced for Indonesia in

1971, 72 and 73 for the projects committed for assistance in each respective year This

assistance was initiated to cope with Indonesian budgetary shortage caused by high

inflation which took place during 1962-67 Five Brantas projects committed in 1970

and one Brantas project committed in 1973 benefited by this scheme After more than

10 years of absence, the local cost financing loan assistance was revived once again

In 1986, 87 and 88, the Government of Indonesia suffered an acute shortage of local

currency funds due to the sharp drop in oil prices and the subsequent decrease of

budgetary revenue To assist the government during this short fall in revenues, JBIC

revived the local cost financing loan scheme to assist the then on-going JBIC projects

Seven Brantas projects were benefited by this scheme Further, the same type of loans

for IBRD- and ADB-assisted projects were separately extended to Indonesia in 1988

by JBIC

On reflection of the experience of the early 1970s, JBIC gradually developed another

local financing scheme which entailed a certain percentage of the local currency

portion of each project cost to be assisted Towards the latter half of the 1980s, JBIC solidified its policy and internally established a “30% Financing Scheme” which implies that 30% of local currency component, in addition to full foreign currency component, of the project is entitled to be covered by a JBIC loan.

Taking the 30% policy further, in 1989 JBIC introduced a new scheme called the

“Pro-rated Local Cost Financing Scheme” This scheme determines the total amount

of JBIC loan by multiplying the total project cost by a certain percentage (presumably larger than 70%), without determining which procurement component is to be financed

as a foreign or local currency portion As of March 1993, for instance, the upper limit

of the total loan amount was set at 85% of the total project cost or the total foreign exchange cost, whichever is larger

These innovative schemes were invented, to a large extent, to cope with the Indonesian budget difficulties which seriously hampered project implementation at times

(vi) Post-Evaluation and Post-Monitoring

As the last step in a project cycle (Project Identification, Preparation, Appraisal, L/

A Negotiation and Board Presentation, Implementation and Supervision, and Evaluation), JBIC post-evaluates and post-monitors all projects and judges how successful they are and extracts lessons learned for future projects The few dozen projects implemented in the Brantas Project are no exceptions Generally speaking, those individual projects were proved to have produced more or less satisfactory benefits and returns A bundle of projects implemented under each M/P were all reviewed carefully and all the lessons learned were integrated into the successive M/P based on the “One Plan” philosophy

Post-This integration of lessons of post-evaluation and post-monitoring was expected to offer solutions and precautions to various problems to be envisaged throughout the project cycle

(vii) Technical Assistance Schemes of JBIC JBIC created three kinds of T/A facilities on a grant basis, namely, SAPROF (Special Assistance for Project Formation), SAPI (Special Assistance for Project Implementation) and SAPS (Special Assistance for Project Sustainability) These facilities are implemented in up-stream, middle-stream and down-stream phases

of the project cycle, respectively JBIC employs consultants/experts, using its own budget fund, to carry out the T/As These 3-facilities are briefly described below

(a) SAPROF

Adequate project preparation is an essential prerequisite for successful implementation

of any development project Even where a feasibility study has been completed, JBIC

sometimes learns that the results are not fully adequate as a basis for a decision

concerning JBIC financing The cause is often that the borrowing country/government

(Borrower) had difficulties in completing sufficient project preparation because of such

factors as time constraints and/or lack of the necessary resources

In 1988, JBIC introduced the SAPROF scheme to assist prospective Borrowers in

drawing up a complete implementation program for each project

(b) SAPI

While responsibility for project implementation rests with the Borrower, JBIC

keeps track of progress, through its own project supervision making appropriate

recommendations for attainment of smoother implementation of the project

JBIC monitors the overall schedule of the project, procedure required by the loan

agreement and disbursement of loan fund JBIC also pays attention to such matters

affecting the project as socio-cultural factors, the environment, institution-building

and technology transfer These are, in fact, sometimes too complex and diverse to deal

with completely at the stage of project implementation To deal with these complex

issues satisfactorily, JBIC introduced the SAPI scheme in 1992

SAPI studies and identifies problems which may hinder effective implementation of

a particular project and proposes remedial measures to solve those problems on an

as-needed basis

(c) SAPS

Operation, maintenance and management (OMM) have a crucial role to play in

achieving the objectives of a development project, once physical implementation has

been completed The primary role of JBIC is to make loan funds available, while OMM

are primarily the Borrower’s responsibility Nevertheless, to the extent permitted,

JBIC endeavors to keep track of project performance after completion in order to

ascertain whether the project actually attains the targets, as JBIC feels a continuing

interest in the project as the development finance institution assisting it

In the course of such endeavors, JBIC sometimes finds that a project is showing

poor performance In such a case, JBIC has usually done what it could, if so requested,

in collaboration with the Borrower or Executing Agency, to help to solve the problems

facing the project As a vehicle for bringing such collaboration into being, JBIC

introduced in 1986 a scheme, called SAPS, specially designed for projects whose

physical implementation has been completed but have yet to yield the intended

benefits because of OMM problems

While these three facilities were meant to supplement project preparation (i.e feasibility study), project implementation (i.e physical construction) and post-implementation performance (i.e benefits), respectively, the Brantas Project utilized 5 SAPSs in 1987, 1991, 2000 (2 cases) and 2001.

(4) Indonesian Government(i) Request for ODA Projects to Japan and CGIIndonesian Government made it a rule to prepare a Blue Book annually in which all the priority development projects were listed Based on the Blue Book, as discussed

in 2.2-(1)-(iii) above, the Government requested the international donor community to help implement the listed projects at CGI The major donors have been Japan, IBRD and ADB Each of these institutions traditionally shared approximately 1/3 of the total annual commitment The projects financed by Japan (JICA and JBIC) were all committed at CGI in one way or another Needless to say, the Brantas region projects were all included in the commitment statement at CGI

This modality of logistics was meant to save the time and labor to fill the annual resource gap for Indonesia At the same time, the Government of Indonesia could envision the picture of Japanese ODA for the following fiscal year in advance

(ii) Indonesian Budgetary System for Foreign-Assisted ProjectsThe Government of Indonesia has tried hard to secure and allocate a budget to foreign-assisted projects The Indonesian budget was composed of “Recurrent Budget” and “Development Budget” BAPPENAS was responsible for the development budget and the Ministry of Finance for the recurrent budget BAPPENAS, primarily

a planning ministry, thus, controlled both the development planning and the development budgeting Over the years, BAPPENAS in collaboration with the Ministry

of Finance and the line ministries developed the fiscal discipline, the allocation discipline and the operational discipline Under this system, the Government developed more systematic budgetary discipline to manage the “Development Budget” Those budgetary disciplines were consolidated over time thanks to disciplined foreign development assistance as well as relatively successful long-term economic growth

All in all, this budgetary system was introduced to secure efficient and effective budget appropriation for national development projects including the Brantas Project

(iii) Meetings and Workshops for Project Monitoring and Supervision as well as Disbursement and Procurement Promotion

As stated in 2.2-(3)-(iv), in 1988, the Government of Indonesia and JBIC agreed to hold, in the Master Agreement, the following six workshops and meetings on a regular

basis: “Workshop on Procurement and Disbursement”, “Annual Action Program

Workshop”, “Weekly Issues Meeting between JBIC and BAPPENAS”, “Quarterly

Review Meeting between JBIC, BAPPENAS, Executing Agencies and Ministry of

Finance”, “Regular Progress Meeting between JBIC and the Executing Agency on

a Staff Basis”, and “Quarterly Review Meeting between JBIC and the Executing

Agency”

These meetings and workshops were programmed to avoid delays in procurement

and disbursement vis-à-vis prompt and timely project monitoring and supervision

(5) BAPPENAS

(i) Political Commitment vis-à-vis Priority Projects on the Blue Book

The Blue Book is the state of the art institution in the history of Indonesian

socio-economic development BAPPENAS was solely responsible for the national

development planning as well as development budgeting and, therefore, played a

most important role in preparing the Blue Book The Blue Book is a book which is

prepared annually and contains a list of priority candidate projects to be assisted

by foreign donors The Blue Book is compiled through a particular inter-ministerial

procedure First, the line ministries prepare a list of high priority projects and send

it to BAPPENAS BAPPENAS, then, scrutinizes all those projects and selects the

top priority projects from the national developmental point of view It is, therefore,

believed that the projects listed in the Blue Book themselves are proved to be a

reflection of the political commitment It is interesting to learn that in Indonesia

there are no foreign-assisted projects which were cancelled totally by the Indonesian

Government once the implementation started, which implies that the Blue Book is the

authoritative document

Thus, the Blue Book system equaled the efficient and effective selection procedure of

national priority development projects

(ii) Meetings and Workshops for Project Monitoring and Supervision as well as

Disbursement and Procurement Promotion

Similarly as discussed in 2.2-(3)-(iv), BAPPENAS as the representative and window

ministry of foreign aid projects in Indonesia took part in 4 higher level meetings

and workshops for project monitoring and supervision as well as disbursement and

procurement promotion; namely, “Workshop on Procurement and Disbursement”,

“Annual Action Program Workshop”, “Weekly Issues Meeting between JBIC and

BAPPENAS” and “Quarterly Review Meeting between JBIC, BAPPENAS, Executing

Agencies and Ministry of Finance”, and practiced a strong supervisory role over the

line ministries It is understood that the reason why BAPPENAS had such influential

power on each project was that it had budgetary authority over national development planning and the projects therein

These meetings and workshops were held to avoid delays in procurement and disbursement vis-à-vis prompt and timely project monitoring and supervision

(6) Ministry of Public Works -Directorate General of Water Resources Development: DGWRD-

(i) Sectoral Development Planning Exercises by DGWRDOne of the DGWRD’s roles in water resources development is to formulate development plans in which policies, strategies and projects/programs are spelled out, and to provide infrastructure facilities for water resources development

The executing agencies of line ministries, regardless of their intention, seem to have consolidated a unique method of plan making over time They, instead of making the development plan from scratch, usually made the most use of various development studies such as master plans and sector plans, which were often supported by foreign assistance They then made it a rule to scrutinize those plans and select their own appropriate policies, strategies and projects/programs for REPELITAs and the Blue Book

(ii) Meetings and Workshops for Project Monitoring and Supervision as well as Disbursement and Procurement Promotion

Similarly as discussed in 2.2-(3)-(iv) and 2.2-(5)-(ii), DGWRD as the Executing Agency participated in all the related workshops and meetings often together with other stakeholders such as CIPTA KARYA, JBIC, BAPPENAS, and other Executing Agencies for the sake of project monitoring and supervision as well as disbursement and procurement promotion Out of 6 workshops and meetings listed in 2.2-(3)-(iv), DGWRD attended 5 except “Weekly Issues Meeting between JBIC and BAPPENAS”

(7) Brantas Office(i) The Brantas Office and Relationship between the Brantas Office and Individual Project Site Offices

During the first several years, the Brantas Project was managed under a few government bodies While water resources development projects were under control

of the Ministry of Public Works, the Karangkates Project belonged to PLN (State Electricity Corporation) and the Selorejo Project was under control of the East Java Provincial Irrigation Office In view that the Brantas Project was too complex to be governed and executed by various different government bodies, the Brantas River Basin Executing Office was newly established in 1965 as the unified executing office to