Republic of Indonesia
Japanese ODA Loan Mid-Term Review Report
Project Type Sector Loan for Water Resources Development (II)Evaluators: Yasuhiro Kawabata
Sanshu Engineering Consultant
Field Studies: May 2009 - July 20091.

Project Profile

Location of Project Site

1.1

Batang Angkola Irrigation Aqueduct Bridge

Objective
The objective of the project is to enhance food production, for the self-sufficiency ofrice through construction/development of medium-size irrigation facilities in western andcentral Indonesia, thereby contributing to poverty alleviation and strengthening production
infrastructure in rural agricultural lands. The project location is shown in Figure 1.

Figure 1

Location of the Project Sites

1

1.2

Outline of Loan Agreement
Loan Amount/Disbursed Amount(as of July end 2009)
Loan Signing/Closing Date
Terms and Conditions- Interest rate
- Repayment period (grace
period)- Procurement
Borrower
Executing Agency
Consultant Services
Feasibility Study

1.3

18.676 billion yen / 14.054 billion yen (as of July
2009)
July 2001 /December 2011
1.8%, 30 years (10 years), General untied andConsultant: 0.75%, 40 years (10 years), bilateraltied
Government of Indonesia
Directorate General of Water Resources (DGWR)
Nippon Koei Co.
JICA Technical Study 「Water Use Association
Promotion Study」, February 2000 – December
2001

Background
Under the project, numerous small size subprojects have been implemented. Due to cost

increase and farmer’s disagreement to the conversion to paddies, the scope of subprojects has
been reduced. Thus, it is essential to analyze these impacts which may exert on efficiency andeffectiveness of the project and recommend the actions to be taken. Taking this project as atarget for mid-term review, the project was reviewed in terms of evaluation criteria based on
the results of field surveys and conclusions were derived.
2. Mid-Term Review Results
2.1

Relevance

2.1.1 Consistency with national/government policies
Under the 5-year National Development Plan (Propenas 2000-2005), which was valid at
the time of project appraisal, aiming at “poverty alleviation and fulfillment of basic national
demands”, the agricultural development was classified as a priority agenda. Particularly,
increase of agricultural production, diversification of agricultural products, which meet theagroindustry’ s demand, and increase of farmer’s income were major policy agendas, and thusincrease of rice production and diversification of horticultural crops has become more
important.
On the other hands, under the currently valid Medium-Term Development Plan
(Rencana Pembanguan Janka Menengah: RPJM 2004-2009), revitalization of agriculture isclassified as an important agenda in order to support development of national economy andrealize self-sufficiency in food. As an action to be taken for revitalization of agriculture, aprogram addressing development and maintenance of irrigation networks, wetlands andirrigation channels has been established, and aims at: i) enlivenment farmers; ii)
strengthening of organizations, which are responsible for operation and maintenance of2

irrigation facilities; iii) optimization of irrigated areas and wetlands, which have been alreadydeveloped, and iv) promotion of citizen’s participation. The Indonesian government has apriority target under RPJM, which aims to increase the growth rate of the agriculture sector to
3.5% per annum by 2009, increase farmer’s income and enhance national welfare. The
objective of the project is still consistent with the national policies and plans.
2.1.2

Consistency with development needs
At appraisal, rice deficit caused by increase of rice consumption due to increase of

population and income, and reduction of farm lands in Java was an unsolved main issue for along time in Indonesia. Food, particularly self-sufficiency of rice was one of pillars ofnational policies, and thus development of irrigation facilities to achieve the self-sufficiency
was a high-priority agenda. The self-sufficiency rate as of 2003 was 97.9 %（FAO STAT Food
Balance Sheet）．President Yudhoyono (reelected in July 2009) announced the plan, in whichby 2008 the rice import would be reduced and the self-sufficiency rate would be heightenedby increasing the domestic production, and declared that the rice production of 55 million
tons in 2004 would be increased to 61 million tons per year by 2008.
This project intends to increase the farmer’s income through enhancing the agricultural
productivity and alleviating poverty.

Even though about 677 ha farmlands are irrigated inIndonesia, the irrigation rate in farmlands greatly varies by region. Moreover, in the 25%(about 167 ha) of farmlands, the irrigation facilities are not properly functioning, and in Javaand Sumatra about 30% of irrigation facilities have been deteriorated. In addition, about
35,000 ha irrigated farmlands have been converted to non-agricultural lands every year inJava. Taking into account the current condition, this project is consistent with thedevelopment needs.
The project objective was/is consistent with the national development policies andstrategies and development needs both at appraisal and at post evaluation, and thus therelevance of the project is high.
2.2

Efficiency

2.1.1 Outputs
The project is consisted of the following two components.
(a) Civil Works: Construction of irrigation drainage and dams(b) Consulting Services: Studies/designs, consulting services on the project
implementation (quality control and funding management, review of civil work
designs, assistance/guidance/advice on P/Q and tendering activities, preparationof an operation and maintenance manual, implementation of baseline surveys onsocio-economic status, environmental protection related work),

3

Way Curup Secondary Channel

Lemah Abang Tertiary Channel(1) Progress of Civil Works
Since the project commencement, it was foreseen that the estimated project cost would
exceed the originally estimated cost, three subprojects have been suspended from the project.
The total number of subprojects is now 16. Regarding the progress of civil works under 16
subprojects as of October 2009, 10 subprojects have been completed and 2 projects haveachieved more than 80 % progress. Among remaining 4 subprojects, the progress of 3
subprojects is between 60% and 80% and one project will be soon commenced after thetendering process to be completed by end 2009 since the extension of the loan closing date
was concurred. The implementation of the project has been delayed and thus continuing
supervision for acceleration is essential.
Among 16 subprojects, the scope of work has been reduced in 10 subprojects. It wasnoted that there are 6 subprojects, in which the irrigated area upon completion would be
reduced by more than 30% of the original plan, Main reasons for substantial reduction are
disagreement to the conversion to paddies due to increase of price of palm oil and lubber,increase of construction costs, and design changes based on design review. Even though the
project objective has not changed due to reduction of irrigated area, review of monitoring
indicators established at appraisal to assess the achievement of the objective would beneeded.
(2) Consulting services
The implementation progress of consulting services as of October 2009 is as follows:- Construction supervision: Among 6 subprojects, works under 8 packages are being
supervised.
- Design review: Designs for all the subprojects (19 sites) were completed in
December 2005.
- Assistance/guidance/advice on P/Q and tendering activities: Regarding 15

4subprojects, it was implemented during August 2003 – September 2006. With theextension of the loan closing date, that for the Lanang subproject, which was
decided to be included in the project was implemented during May – September
2009.
- An operation and maintenance manual: under preparation. Almost completed by
October 2009.
- Baseline surveys on socio-economic condition: implemented in 2003.
- Environmental protection related services (four items): completed by December
2005.
Additional assignments:- Designs and construction supervision of reconstruction works due to the
Yogyakarta Earthquake: completed in December 2006.
- Formulation and design review for the newly proposed Participatory Irrigation
Rehabilitation Improvement Management Project (PIRIMP): completed in
December 2006.
- Bridging consulting services for PIRIMP: almost completed by end October 2009.
2.2.2

Project period
The original implementation schedule and the revised schedule at the mid-term review(after the loan closing date was extended) by item are shown below.
Item
Selection of
consultant
Consulting
services
Detailed designs(SID)
Civil works
including
procurement
Retention

OriginallyplannedMay 2001 October 2001
November 2001 December 2006
February 2002 November 2002
November 2002 November 2006

Proposed revised
schedule at Mid-term
September 2001
- February 2002
March 2002 July 2011
December 2003
- December 2005
February 2004
- June 2011

November 2006 October 2007

July 2011- December 2011

Main reasons for delay of implementation are as follows:a) Selection of consultants: commencement of procurement process for consulting
services was delayed.
b) Consulting services: The review was originally planned only on the critical/important sections of subprojects. However, since the quality of the original
implementation plans, surveys, and designs was not sufficient, the review needed tocover more sections/subprojects and caused delay in the implementation schedule.

5Additional survey works due to design changes and the extension of civil work
implementation schedule are other reasons for delay.
c) Detail designs: Due to substantial design changes, it took more time to define thescope of work by the executing agency.
d) Civil works: External factors for the delay include occurrence of natural disasters(earthquake and flooding), and funding problem of contractors due to price increaseof fuel and materials in 2008. Internal factors for the delay include delay of design
review work, continuous design changes, delay of payment to contractors because of
disagreement on amendment of price increase due to inflation and land acquisition.
2.3

Effectiveness2.3.1 Quantitative impact(1)

Operational indicators
The operational effectiveness indicator established at appraisal was irrigated areas (ha),and effectiveness indicators were production quantities of rice and corn. At the time of
mid-term review, these indicators were reviewed and new operational indicators, whichreflect more properly the current condition, were established. Actual figures confirmed andthe proposed indicators were established based on the consequence of confirmation withexecuting agencies and supervision consultants, review results of the detailed designs,
suspension of three subprojects from the project, and review results of the reduced project
scope. As monitoring indicators, in addition to production quantity, measurable indicatorssuch as unit yield, rice cropping intensity, average annual income per household, agricultural
gross income per household, and WUA covering ratio1, were additionally proposed. With
respect to production quantity, at appraisal, corn was also included as an indicator. However,since there are numerous subprojects without any cultivation of corn, it is also suggested to
exclude this item from indicators.

Baseline at
appraisal(2000)

Original Targets(at projectcompletion: 2007)

Actual at
Mid-Term
Review (July2009)

Irrigated area (ha)32,3581

22,506

Rice production (ton)Unit yield: average.
(ton/ha/season)
Rice cropping
intensity: average(%/year)Average annual

250,565
3.6

92,249(78790)2
471,552
4.5

Proposed Targets at
Mid-Term Review(December 2013, 2
years after projectcompletion)
61,816286,175
3.3

434,161
4.6

109

172

125

187

9.87

15.17

Indicators

1

Referring to answers from DGWR to the questionnaire made from the mid-term review
team
6income perhousehold (Rp.mil)
5.12
10.32
Agricultural grossincome perhousehold (Rp.mil)
WUA covering ratio
100
38.7
100
(%)
Note 1: From attachments to appraisal documents
Note 2: Exclude 3 subprojects (B.Batahan, Jabung and Leuwi Goon), which have been suspended from the
project.
Note 3: Other figures are from responses from DGWR
Note 4: Regarding average annual income per household and agricultural gross income per household(baseline established at mid-term review), interview surveys with 200-250 farmers of each
subproject were made on their income and the average income was calculated.
Note 5: Targets established at mid-term review were estimated by dividing the estimated total householdincome and household agricultural gross income upon project completion by the number offarmers surveyed in the field.

The project implementation status is shown by status of progress (completed andunder implementation) and operation and effect indicators in varied implementation stages
were analyzed: Baseline at appraisal (2000); Original targets at appraisal (at projectcompletion: 2007); Actual at Mid-Term review and Proposed targets at Mid-Term review(Project completion: December 2013).
1) Subprojects which have been completed as of October 2009 (Simodong, Batang Tonger,
Panti Rao, Way Curup, Way Rarem, Lemah Abng, Lodan, Sapon, Bajulamti, Amandit)
Even though the target (2007) for the irrigated area for 10 subprojects established at
appraisal was 50,963 ha, an actual figure of the irrigated area at this moment is 22,206 ha.
Since these subprojects have been recently completed, the actual figure of the irrigated area
is about half of the targets made at appraisal. However, the rice production is reduced byonly 9%, and this confirms that the productivity was improved. Main reasons for less
irrigated area are conversion of irrigated area to other purposes, and change of project scopeat the project sites.

Indicators

Irrigated area (ha)Rice production (ton)Unit yield(ton/ha/season)
Rice cropping
intensity (%/year)
Average annual
income perhousehold (Rp.mil)
Agricultural grossBaseline at
appraisal(2000)

Original Targets(at projectcompletion: 2007)

Actual at
Mid-Term
Review (July
2009)

27,624
153,961
3.5

50,963270,063
4.7

22,206
236,930
3.8

Proposed Targets at
Mid-Term Review(December 2013, 2
years after projectcompletion)
45,886
307,785
4.6

105

167

139

186

10.93

15.50

6.46

11.04

7

income perhousehold (Rp.mil)
WUA covering ratio
(%)

100

55

100

2) Subprojects under implementation as of October 2009 (Batang Angkola, Air Lakitan,
Muko-muko Kanan, Lanang, Karau)
Even though the target (2007) for the irrigated area of 6 subprojects established at
appraisal was 27,827 ha, an actual figure of the irrigated area at this moment is 2,300 ha.
Main reasons for reduction of the irrigated area are: disagreement to conversion to paddies
due to price increase of palm oil and lubber, increase of construction costs, and designchanges based on design review. Reduction of the irrigated area will not much affect the
project objectives. Subprojects are still under implementation and the rice production at thismoment is about 25% of the targets.
Indicators

Baseline at
appraisal(2000)

Original Targets(at projectcompletion: 2007)

Actual at
Mid-Term
Review (July
2009)

4,734
96,604

27,827201,4892,300
49,245

Proposed Targets at
Mid-Term Review(December 2013, 2
years after projectcompletion)
15,930126,376

3.3

4.1

3.2

4.6

111

183

101

188

8.11

14.62

2.87

9.14

12

100

Irrigated area (ha)Rice production(ton)Unit yield(ton/ha/season)
Rice cropping
intensity (%/year)
Average annual
income perhousehold (Rp.mil)
Agricultural grossincome perhousehold (Rp.mil)
WUA covering ratio
(%)

100

(3) Internal rate of return
EIRR at appraisal was 19.3%. EIRRs of 16 subprojects, which have been completed orunder implementation, are 3.6% at minimum (Air Lakitan) and 53.1% at maximum (Lemah
Abang) with the average EIRR of 17.6%.
2.3.2 Qualitative impact
In the meetings with farmers at the project site, it was learned that the householdincome has increased with the growth of rice production upon project completion. However,since the data to verify the change of poor households by subproject was not available,
contribution of the project to poverty alleviation has not been assessed at the mid-term
review.

8

2.4

Others (Items which affect project outcome, operation and maintenance)

2.4.1 Coordination with NGO, local universities.
There has been no coordination with NGO and local universities under this project.
2.4.2 Coordination with the grant aid and technical assistanceNo coordination was confirmed with the following two projects: i) “Study on Transfer
of Control to Water Use Associations (WUAs)” conducted by JICA during February
2000-December 2001, under which a plan was developed to establish and strengthen WUAs
and to develop plans for improvement of water control and facilities maintenance, aiming attransfer of control to WUAs for irrigation facilities; and ii) “A Plan for strengthening WUAs
in Indonesia”, conducted during April 2004-March 2006. There would be no impacts on
project effectiveness and maintenance.
2.4.3 Coordination with other donors
There has been no coordination with other donors.
2.4.4 Environmental impact
Regarding the environmental issues during the project implementation, awarded
contractors are obliged to take necessary measures, and it is stated in the contract that anenvironmental management plan is to be submitted by the contractors before commencement.
With respect to environmental protection in the field, a project manager of the employer andconsultants monitor under the supervision work, and provide guidance. Environmental impact
studies on eight subprojects under the scope of work for consultants were undertaken during
2002-2005. The land acquisition and resettlement activities under the project have been
completed and alternative lands have been provided or compensation has been paid to thepeople resettled. Thus, the original life quality before the project commenced has been
restored and no particular issues on resettlement have been reported.
2.4.5

System, technical capacity, and financial status for operation and maintenance(1) Operation and MaintenanceIn 2004, the Indonesian government amended the law on water resources, and it was
decided that among the operation and maintenance functions of irrigation facilities, thecentral and local government would be in charge of main and secondary channels and thewater use associations (WUAs) in charge of tertiary channels. The policy under which theirrigation service fee (ISF) was to be collected was abolished. Regarding budget
allocation/funding, the central and local government would be responsible for primaryirrigation facilities including dams and gates, and main and secondary channels, and WUAs
(farmers) responsible for maintenance of tertiary irrigation facilities (including thirdchannels) with the financial assistance from the central and local government. Water use

9associations have been established under the subprojects (7 subprojects) which were alreadyin six months to one year upon completion, and almost 100% of farmers have become an
association member.

WUAs are managed by the united WUA in each region, and theFederal WUAs (upper unit integrating several WUAs) and WUAs (bottom unit) responsible
for routine maintenance work, removal of deposited materials and simple repair works. In
addition, they are partly in charge of secondary channels by providing labors.
(2) Technical capacity in operation and maintenance
For a while until the new system works well, several relevant regional organizations in
the irrigation sector are jointly responsible for coaching and strengthening operation of
WUAs.

In the established objectives of WUAs, training to members on cropping/planting

and other agricultural works is included, and training programs are regularly implemented.
(This fact was confirmed through interviews with WUA members)(3) Financial status on operation and mainenance
ISF has not been collected (at least since 2007) and the central and local government
provides budget for operation and maintenance of main and secondary channels. In case of
the Balai Besar Wilayah Sungai Mesuji-Sekampung in Lampung, which is in charge of Way
Curup and Way Rarem subprojects, the operation and maintenance budget is provided by thecentral government since the benefited area is more than 3,000 ha. The budget is directly
allocated to the state budget.

The budget is distributed to each subproject through the state

maintenance office (Balai Kecil), which is located in each region, and about Rp. 150,000/ha
was paid in 2009 fiscal year.
In Way Rarem, 120,000 Rp./ha was distributed in 2008. Its 60% was used for routine
operation and maintenance work, 27.5% for periodic maintenance works, 10% for
procurement of materials and 2.5% for general administration expenses. According to thefield maintenance office, 250,000 Rp./ha is needed for proper operation and maintenance.
Regarding maintenance of terminal irrigation facilities (including third channels),
100kg unhulled rice/ha/crop2 (valued at about 250,000 Rp.) is collected from association
members and collected money is used for maintenance.

In case of Way Rarem, no change inproductivity per hector is observed. However, the cropped area was increased by 2,000 ha andthe total production was increased. The amount to be provided by a member varies by WUAs.
In case of Way Curup, 40kg unhulled rice/ha/crop is collected and thus, rice valued at about
200,000 Rp. is collected since cropping twice a year is feasible. In Way Curup, production
was increased from 4 tons/ha (one crop per year) to 6 tons/ha (two crops per year).

The

current rice price to be purchased by the government is about 2,500 Rp./kg. However, thegovernment sells rice taking into consideration the swing of market price. In Sapon, an
association fee is collected from members in cash (70,000 Rp./crop with 2-3 crops/year).
2

100 kg unhulled rice per ha is collected per crop.

10The WUAs in these three subprojects are currently functioning well and thus, no maintenanceissues have arisen. However, since in the long term basis, major rehabilitation works are
expected, monitoring of the maintenance condition needs to be continued.
Among the subprojects visited, it was confirmed that in Lemah Abang, theconcept/system of WUAs has not been working well. In 2005, when the work was almost
complete, 25 kg unhulled rice/ha was collected.

However, since irrigated water was not later

supplied during the construction period of main channels under other projects in the project
area, the WUA system did not function. Then, instead of collecting unhulled rice, the WUAchanged the system in which farmers provide labors to maintain the secondary channels.
Currently, WUA members are engaged in routine maintenance work at least 7 days per every
quarter. The work, which needs construction material is undertaken with some financial
assistance from the local government.
3.

Conclusion, Lessons Learned, and Recommendations

3.1 Conclusion
The stable supply of food based on the increase of rice production is a critical political
agenda in Indonesia, and thus, the relevancy of the project with national policies anddevelopment needs is high, therefore the project needs to be further supported. On the other
hand, since procurement of consultants and implementation of civil works have been
substantially delayed, further acceleration of the project implementation is needed. Regarding
operation and effect indicators, current indicators need to be reviewed and revised with
reduction of the project scope. Since WUAs would play an important role in order to establish
a sound operation and maintenance system, their functions need to be further strengthened.

3.2

Recommendations

3.2.1 Recommendations to executing agencies(1)

One of reasons for delay of the project implementation is that the cash flow ofcontractors was affected due to delay of payment by the employer. The delay of payment wascaused by that counterpart funds were not allocated corresponding to the planned
implementation schedule. Since at the appraisal stage, the implementation schedule anddisbursement plans corresponding to the implementation schedule are established.

The

implementation schedule and the budget disbursement plan need to be strictly practiced.
However, when compliance with plans/schedule is not feasible, both implementation anddisbursement schedules need to be reviewed and revised as needed. During the project
implementation, review needs to be continued and the implementation needs to be monitored
so that payment to contractors can be proceeded corresponding to progress of work

3.2.2

Recommendations to JICA

11

(1)

Due to reasons stated in 2.2.2 Project Period, the project implementation has been

substantially delayed. The project is implemented under the sector loan instrument, and the
project sites are spread over in 3 islands and 19 sites, where each subproject has hugebenefited area.

Since the project subject area is huge, the information to be obtained fromprogress reports should be fully utilized, and the progress and issues could be timely
recognized so that issues can be promptly handled. In addition, in order to enforce the projectmonitoring, it is suggested that local individual consultants be hired to monitor the progressof all subprojects in the field once or twice a year (twice a year at the early stage of
implementation) so that issues can be timely recognized and actions to be taken can beproposed.
(2)

Regarding the effectiveness and sustainability of the project, how the water use

associations (WUAs) to be established upon completion of the project will function is a key
point. As part of the consulting services under this project, the baseline surveys onsocio-economic status were conducted in 2003. Since more WUAs have been established as
more subprojects are completed, studies on actual status of WUAs established need to beundertaken in one year after completion, and the further assistance (particularly, the training
program for association members) needed to be planned to strengthen the WUA setup. Items
to be studied shall include: ①organizational setup of WUAs; ②number of members; ③
number of farmers and households in the subject region; ④operations/activities of the WUA;
⑤budget, income and expenditures, financial status; ⑥relations with upper FWUAs andregional government institutes; ⑦items of maintenance works for irrigation channels; ⑧amount of rice production; ⑨area of owned paddies; ⑩problems the WUA faces. Since each
subproject involves several hundreds of farmers, the sampling rate could be about 10% of
farmers in all subprojects (at least 1,000 farmers). If other aid agencies (World Bank andADB) are implementing projects involving components for strengthening WUAs in the same
region, the scope of assistance (particularly contents of training programs) needs to beclarified, and the relations with this project needs to be analyzed. Results of analysis should
be incorporated in preparation of further assistance program.
(3)

As stated in the above 2.3.1, adequacy of operational indicators was reviewed taking

into account the current implementation status. The background for its review is: that the landacquisition did not progress as planned; and that the land use has changed from proposed ricepaddies to other purposes. These situation and changes could not be predicted at the appraisalstage. It is suggested that monitoring indicators to be adopted at the ex-post evaluation stage
should be discussed and agreed between JICA and executing agencies based on the results ofthe mid-term review.

12