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Indonesia: Power XXIII Project

sector: Energy | country: Indonesia

This validation generally agrees with the lessons identified in the project completion report (PCR) summarized here:

(a) ADB missions should ensure that the data needed for a PCR and for the final project evaluation are preserved, especially in cases where implementation has significant delays. Completion reports, data, and pertinent information from the EA should be gathered soon after completion of each project component.

(b) ADB should encourage executing agency (EA) staff to prepare file notes on project-related matters and record these interviews, as these would be valuable during PCR preparation. (ADB missions generally provide such documentation in back-to-office reports.)

(c) The PCR states that third party mediation, mandatory arbitration, or court settlement of contractor claims should be pursued as a last resort in view of the contract management difficulties experienced by the EA for the Musi hydropower scheme (HPS). This validation is of the view that claims can be complex and the method of avoidance or settlement of contractor claims should be addressed by contract claims experts, together with the EA and ADB. Preparation for addressing claims should start at the time of, or before, the start of the contract.

In addition, this validation report highlights the importance of a fiscal impact analysis, especially for an investment operation, in helping assess sufficiency and sustainability of provision of fiscal resources to the project. ADB should ensure that the overall context of financial sustainability, as this relates to the sector, is fully understood. All these would generally be underpinned by careful consideration of political-economy issues and institutional arrangements.

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