IndII Progress and Workplan

1. IndII Progress and Workplan Presentation to the IndII Board 22 April 2010

2. Structure of Presentation IndII Progress Strategy and forward workplan Infrastructure Enhancement Grants (IEGs) update Key issues for board guidance

3. IndII Progress What has happened since the last Board meeting? • Reconfiguration of IndII to accommodate WSI implementation • Transport program rapidly expanding to rail, ports, air and urban transport. Multiple activities now at MOT. • Rapid expansion of cross cutting policy and inv. component • Progressive engagement: many scoping activities in 2009 setting the stage for larger, well designed programs in 2010/11 • Strengthening institutional relationships: DGH, DGHS and MOT

4. The table above outlines the various components of the IndII implemented AusAID infrastructure programs highlighting funding sources, the various roles of the IndII MC and the respective program budgets and spend to date. IndII and WSI: Structure, Role and Budget

9. ** Funds managed by IndII MC Building Momentum in 2010 IndII is now well placed to meet exp. targets with demand- driven, well designed programming • Progressive Engagement: much of 2009 was spent doing smaller stage 1/scoping programs to ensure: • Highly effective program design and development • Consistency with GOI policies and priorities • Maximum possible GOI buy in and commitment • As a result 2010 will see larger programs building off the foundations provided by these smaller stage 1 activities • For example, most recently in the DGH roads and roads safety programs totalling over $A 8.5 million • Candidate IEGs (infrastructure enhancement grants) in sanitation are now also being prepared. This will allow relatively large allocations to be directly channelled to improve urban welfare – to balance our assistance provided on policy and infrastructure program management.

10. Work plan summary Water and sanitation • Water: improving the external environment to ensure better governance of, and investment in, PDAMs by LGs • Sanitation: building a pipeline for future investments through master planning; targeted direct investments in select systems Transport • DGH Roads: improved efficiency through institutional change and renewal; road safety audits/investigation capacity building • MOT/National Govt: developing policy and institutional settings to improve implementation of new transport sector laws • Local: developing links with cities to support urban transport Policy and Investment • PPP support: business case development for select bulk water PPPs (e.g. Umbulan Springs) • Other infrastructure financing support: PSOs, BLUDs, Hibah etc

11. Select Forward Workplan: DGH DGH senior management views the coming three years as a “Golden Period” for organisational and process reform, with the key drivers including: • introduction of the MTEF-PBB; • institutional change and renewal within MPW and specifically DGH; • increased budget resources provided to support capacity expansion after a long period of funding drought; • recognition that sub-national road authorities need significant financial and technical support; and • recognition that all these factors mean that DGH must modernize its structure and delivery style;

12. DGH... cont’d The program, as proposed and designed by DGH, will support that change process by: • helping to increase efficiency and effectiveness of service delivery both for national and sub-national roads; • supporting the development of a MTEF-PBB with related measures of performance achievement; • helping to modernize the institutional structure; • helping to provide a clear physical and institutional developmental roadmap for the future 20 years; and • assisting in developing a framework for road planning, finance and development at the local government level.

13. Infrastructure Enhancement Grants Why IEGs? • IEGs are a prominent feature of the IndII program and the GoI/GoA grant agreement • They are tangible evidence of AID reaching communities • They leverage GoI investments and enhance delivery of services through better infrastructure Selection Criteria: • Sanitation projects are the initial focus of IEGs (possibly BRT). • Proposed projects should be on LG budget for 2010 and satisfy certain planning criteria. • Proposed projects should be ready to implement (design done, environmental impact study done) • Projects must be supported by relevant central govt agency. • Delivery through Grant mechanism PMK 168/69 • Proposals should fit into an output based aid format

14. IEGs preparation Pipeline Tight schedules and selection criteria narrowly restricts IEG choices. IndII suggests a separate briefing session on IEG possibilities.

15. Board Guidance Required Endorsement of forward work plan Approval of pending DGH program Funding Priorities:

16. Board Guidance: Funding Priorities Specific recommendations on budget priorities • Where possible use WSI to fund some IEG sanitation projects (e.g. Bandung wastewater) • Limit IEGs in wastewater/solid waste (and possibly BRT) to a budget limit of around $3-4 million • Limit commitments to one agency (e.g. DGH) to a maximum 30% of total available funds • Continue development of programming at MOT (e.g. follow-on ports/rail/air programs) • Continue development of urban transport issues at both the national and local government level • Continue development of policy and investment program: • limited support for PPPs in bulk water (Umbulan and Jatiluhur); • on going but limited support for infrastructure financing mechanisms: Hibah, PSOs and BLUDs.