The combination of programmatic policy-based assistance and TA support provided under this initiative proved to be effective and should be continued. The lack of qualified and experienced local consultants had been a recurring issue, and the Ministry of Health (MOH), the executing agency, continued to face a shortage of sanctioned staff. By giving consultant support to key departments of MOH, the TA contributed to knowledge transfer and capacity building for these departments, and to stronger coordination across the MOH and other ministries.
Effective implementation of system reforms, given their long-term horizon, requires phased support from development partners. The multiple tranche arrangement employed by this program ensured satisfactory progression as a precondition for continued ADB assistance and strengthened the government’s accountability for the reforms.
The policy actions pursued under this program were developed in an open, participatory manner. They were fully aligned with the country’s Health Sector Reform Strategy and Health Sector Development Plan. The participatory development and full alignment of the reform program with the country sector strategy and development plan ensured strong and broad ownership and commitment from the government, and with the assistance of development partners, strengthened policy dialogue and coordination.
Social safeguard designs initially underestimated the resettlement impacts, omitted right-of-way compensation requirements, and proposed unsuitable mitigation measures such as voluntary land donations. As a result, the project was non-compliant with social safeguards requirements for 26 months. Safeguards implementation came into better shape, following the reconduct of detailed measurement survey of losses and execution of a resettlement corrective action plan in 2018. Although some issues remained pending as of project physical completion in 2019, these were eventually resolved with the resumption of discussions between ADB and the EA in 2020. The experience highlights the importance of an accurate assessment of potential impacts and EA/IA safeguards capacity and EA/IA training and capacity building to ensure proper safeguards design and implementation. Context-sensitive issues such as the suitability of voluntary land donations, should be carefully weighed and agreed with the EAs/IAs at the early stage of project implementation.
The project has been annually audited by independent external auditors. However, APFS covering only the physical implementation period may not capture all project-related expenses and loan disbursements. To facilitate the reconciliation of ADB records with the APFS on which the auditors have provided a qualified opinion, financial auditing was continued until project financial closure.
Not all safeguards monitoring reports were submitted under this project and the ADB loan disbursement records and latest audited project financial statement (APFS) remained unreconciled at project completion review mission. These non-compliances may have been mitigated through the participation of safeguards and financial management staff in review missions.
The need for some project outputs can decline over time, leading to changes in scope. Such changes should be documented and reflected in the DMF to ensure that they are properly considered and would not compromise the validity and reliability of project monitoring reports and performance evaluation.
Since some of the capacity building-related components under output 2 were linked to the transmission line and substation components under output 1, no separate arrangements for consultant engagement were made for output 2. With the project management unit (PMU) focusing on output 1, the two output 1-related capacity building activities were implemented. The others were not also due to the changed needs during implementation, but this was not brought to ADB’s attention. In the absence of consultants, the EA should have included staff from relevant divisions in the PMU to at least help in output 2 progress reporting.
In the initial stages of the project, the absence of a safeguards consultant resulted in the EA unable to submit some semiannual safeguards monitoring reports. This was timely rectified and based on the monitoring reports produced during implementation, the project did not come across safeguards issues significant enough to alter its outcome or outputs.
Although it traversed mostly rural and agricultural land, the construction of a new transmission line under this project was objected to by some locals. The objections were manifested between April 2017 and March 2018, delaying construction by 226 days. The issue was cleared when the High Court came out with a verdict in favor of the executing agency (EA). The experience highlights the importance of engaging in extensive stakeholder consultations and information dissemination early enough to address issues and concerns that may impede implementation. Mitigation measures, including minimizing the slack time and cost implications of objections and complaints, should also be mapped out and implemented as soon as possible.
Against an estimated $183.2 million, the total project cost at completion amounted to $202.1 million. The cost increase was prompted by minor modifications to the technical design of the project components. The modifications also required a longer implementation period than estimated at loan appraisal. The modifications enhanced system stability and reliability and made the project more relevant. They were addressed through loan reallocations and a 6-month extension in loan closing.
The non-achievement of some GAP targets under could have been avoided if remedial actions were done during the MTR. Specifically, the agreed relegation of the setting up of the nonrevenue water (NRW) task force to the Public Health Engineering Department and the agreed reduction of the target number of women marshals should have been formally documented or reflected in the MTR aide memoire. This lesson underscores the need to regularly monitor the GAP progress to identify unrealistic targets and for the ADB responsible gender officer or assigned consultant to participate in the MTR mission to raise corrective measures.
Three covenants related to financial management were not complied with. No APFS and AEFS were submitted for FY 2008. The APFSs for FY2018 were rejected as they included a combined audit report for all three MFF projects despite separate reports and opinions being required. Also, AEFSs for FY 2017 and prior years were combined with APFSs. These non-compliances may have been avoided if ADB monitored and followed up closely on the submissions made in line with the financial loan covenants.
While the design of projects 1–3 at appraisal was appropriate to achieve the expected outcomes and outputs, it could have considered incorporating comprehensive end-to-end solutions such as 24/7 water supply with O&M arrangements built in construction contracts. This would have maximized the benefits from the improved water supply systems and enhanced the sustainability of both the project benefits and assets.
Program implementation was hampered by procurement delays due to limited contractor interest and state capacity, on-and-off civil unrest, and the historic 100-year flooding in 2014. Prolonged recruitment of the initial PMC and DSC (15 months) and their replacements (17 months for the new PMC while the new DSC was recruited only in July 2014) also caused significant delays alongside slow-moving works contracts and the need to rebid poorly performing contracts. The new PMC and DSC performed substantially better than their predecessors. However, the delivery of their services was held back by site constraints, design changes, and delays in finalizing the drawings. In future, a realistic timeframe for consultant recruitment, detailed design development, and civil works contracts should be ensured to mitigate the risk of implementation delays.
The financial sustainability analysis conducted at MFF completion showed that there are enough state operating receipts to meet the O&M expenses of the project facilities. Given that the operating institutions did not achieve recovery of the O&M costs as envisaged at appraisal, fiscal transfers from the state and central governments need to continue to ensure the sustainability of the project assets.
All the subprojects planned at appraisal, except for tourism, were implemented. The tourism subproject, planned to be undertaken in five towns, had to be dropped because of security reasons. Also, during implementation, state capacity was found more constrained than assessed at appraisal, leading to delays in capacity building and the reform program. More careful assessment of EA/IA capacity and the local context is needed to ensure a realistic project scope and implementation period.
The overlapping implementation periods between project 1 and then-ongoing ADB Loan 2151 and other national programs, and concurrent preparation and appraisal of projects 2 and 3 of the MFF imposed a heavy burden on the ERA. Exacerbating this burden was the initially weak capacity of project implementation units (PIUs). ADB providing greater implementation support, particularly for the preparation of subsequent tranches, would help address this challenge in future MFFs. Such support would also help enhance the quality of subsequent tranches of the MFFs and mitigate the risk of implementation delays.
Safeguards implementation arrangement in the ERA was adequate. An officer with the rank of chief engineer was deputed as the director of safeguards and was supported by four environmental and resettlement experts responsible for implementing safeguard requirements. Two officers from the state revenue department were posted as land acquisition officers. These land acquisition officers provided much-needed support to the high-powered committee Divisional Level Committee established by the state government to fast-track the implementation of the resettlement plans for subprojects under projects 2 and 3. Creating a land acquisition office in the PMU to manage unavoidable involuntary resettlement may be explored in ongoing and future projects.
During the preparation of the multitranche financing facility (MFF) in 2007, only outline plans and designs were required to formulate the investment program and generate cost estimates to secure the proposed ADB financing. This meant that detailed surveys and designs had to wait after the approval of the periodic financing requests. But as the recruitment of the first project management consultant (PMC) and design and supervision consultant (DSC) took 15 months, MFF startup and the development of detailed designs for project 1 were significantly held back. By the time all contracts were awarded, and project 1 implementation went full swing, it was already past midpoint of the original implementation period for the whole program. The delay in the completion of project 1 amounted to 61 months. By contrast, although there were spillover works that needed to be finished post-MFF completion, projects 2 and 3 were both completed with minimal delays of three months each. Early preparation of the detailed designs for these projects, concurrent with the implementation of project 1, was key to the timelier completion of these projects.
This program’s results framework and targets were closely aligned with PLN’s key performance indicators (KPIs), which were based on PLN’s RUPTL, 2015–2024 and Indonesia’s National Medium-Term Development Plan (RPJMN), 2015–2019. PLN has established KPIs in its corporate plan and has regularly reflected these in its annual reports. The close alignment between the PLN’s KPIs and the program’s results framework and targets encouraged the PLN to achieve the DLI targets. Power utility companies in other countries would benefit from similar arrangements that are beneficial for the attainment of both the program and corporate performance targets.
completion, six of the seven safeguard PAPs were achieved. The implementation of the safeguard PAPs has improved the capacity of PLN, especially at the unit level, to manage environmental and social impacts. By excluding 190 circuit-kilometer (ckm) of medium-voltage lines in the indigenous peoples’ area and 428.19 ckm of medium-voltage lines and 284.98 ckm low-voltage lines in the key biodiversity areas, the PAPs minimized the risks to ADB safeguards compliance. But the exclusion also eliminated indigenous peoples’ access to program benefits. In the upcoming review of ADB’s Safeguard Policy Statement, the provisions for this modality could consider how significant risks associated with government-funded programs could be better addressed.
The RBL modality tested in Indonesia through this program came out successful and easier to implement with lower transaction costs. It was flexible enough and allowed the PLN to select investments based on its changing requirements even during program implementation. Therefore, it is well suited to large power systems where demand and the technology available can change within a short time. By focusing on aggregate outputs and result areas as opposed to monitoring each contract, the program was able to support PLN in an effective programmatic manner.
Monitoring the progress against targets of PLN’s broader Sumatra program, which the RBL supported, was not considered part of the RBL administration responsibility. Therefore, the threats posed by the lack of financing for the broader program and the subsequent removal of some of its major components were not sufficiently tracked down and addressed under the RBL. It is important for future RBL programs to include in their monitoring all associated interventions that could have an impact on their implementation to enable necessary actions to be taken promptly to address deficiencies and/or avoid negative unintended consequences.
Some of the DLI targets and baselines set during program preparation were found to be conservative or inconsistent. Adjustments were made during implementation to make them more realistic. The target on energy sales was significantly affected by external factors beyond PLN’s control, including lower economic growth than anticipated under the PLN’s Power Supply Business Plan (RUPTL), energy subsidy removal, and the changing costumer consumption behavior. The experience has highlighted the importance of (i) setting DLIs that are within program control and not vulnerable to external factors, (ii) setting ambitious but achievable targets based on historic trends and EA/IA capacity, and (iii) having enough flexibility to adjust to changes in the external environment.