Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10545-IND Type: (PCR) DE WIELLE,/ X31'108 / T9 102/ OEDD3 PROJECT COMPLETIONREPORT INDONESIA JAKARTA-CIKAMPEK HIGHWAY PROJECT (LOAN 2049-IND) MARCH 31, 1I92 Infrastructure OperationsDivision Country Department III East Asia and Pacific RegionalOffice This document has a restricted distribution andmaybe used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Infrastructure Operations DivisionCountry Department IIIEast Asia and Pacific Regional Office
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Bina Marga Directorate General of HighwaysERR Economic Rate of ReturnGOI Government of IndonesiaJabotabek Greater Jakarta Metropolitan AreaJasa Marga PT (Persero) Jasa Marga - National Toll Road CorporationKFAED Kuwait Fund for Arab Economic DevelopmentORR Outer Ring Road of JakartaSAR Staff Appraisal ReportTRIP Toll Road Investment Plan
AFOR OMCIAL USE ONLYTHE WORLD BANK
Washing on, D.C. 20433U.S.A.
Offe iE DteckwtoGeneralOpetatine EvaIlutU
April 17, 1992
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Indonesia Jakarta-Cikampek HighwayProject (Loan 2049-IND)
Attached, for information, is a copy of a report entitled 'ProjectCompletion Report on Indonesia Jakarta-Cikampek Highway Project (Loan 2049-IND)"prepared by the East Asia and Pacific Regional Office with Part II of the reportcontributed by the Borrower. No audit of this project has been made by theOperations Evaluation Department at this time.
Attachment
I This document has a restricted distribution and may be used by recipients only in the performance| of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
FOR OF.- "AL USE ONLY
PROJECT COMPLETION REPORT
INDONESIAJAKARTA-CIKAMPEK HIGHWAY PROJECT
(LOAN 2049-IND)
TABLE OF CONTENTS
Page No.
PREFACE ........................ i
EVALUATION SUMMARY ii
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
1. Project Identity .12. Background .13. Project Objectives and Description. 24. Project Design and Organization 45. Project Implementation. 56. Project Results. 77. Project Su;4tainability. 88. Bank Performar.... 99. Performance of the Borrower .10
10. Project Relationship .1111. Consulting Services 1112. Project Documentation and Data 11
PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE
A. Adequacy and Accuracy of Factual Information inPart III of the PCR 13
B. Comments on the Analysis Contained in Part Iof the PCR .13
C. E-aluation of the Bank's Performance andLessons Learned .13
D. Evaluation of Borrower's Own Performance andLessons Learned . ........................ 14
E. Effectiveness of the Relationship betweenthe Bank and the Borrower 17
F. Evaluation of the Performance of Cofinanciersand Their Relationship with the Borrower .17
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
PART III: STATISTICAL INFORMATION
Table 1: Related Bank Loans and Credits in theHighway Sector .................................... 19
Table 2: Project Timetable .................................... 20Table S: Lcan Disbursements .............................. 21Table 4: Project Implementation .............................. 22Table 5: Project Costs and Financing ........................ 23Table 6: Project Results .................................... 26Table 7: Status of Covenants .............................. 27Table 8: Use of Bank Resources .............................. 29
ANNEX I: ECONOMIC AND FINANCIAL ASPECTS OF THE PROJECT
ME: IBRD 15036
FROJECT COMPLETION REPORT
INDONESIAJAKARTA-CIKAMPEK HIGHWAY PROJECT
(LOAN 2049-IND)
PREEE
This is the Project Completion Report (PCR) for the Jakarta CikampekHighway Project in Indonesia, for which Loan 2049-IND in the amount of US$ 85million was approved on October 9, 1981. The loan was closed on June 30, 1990,two and a half years after the original closing date. It was fully disbursed andthe last disbursement was made in November 1990.
The PCR was jointly and simultaneously prepared by the InfrastructureOperations Division of Country Department III of the East Asia and PacificRegional Office (Preface, Evaluation Summary, Parts I and III and Annex I), andthe Borrower (Part II). Subsequently the Bank sent the Borrojwer Parts I and IIIfor comment but none were received. The co-financier, Kuwait Fund for ArabEconomic Development (KFAED), did not provide comments on the PCR.
Preparation of this PCR is based on information contained in the StaffAppraisal Report, the Loan Agreement, supervision reports, consult;ants' progressand final reports, correspondence in the project files and internal Bankmemoranda.
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PROJECT COMPLETION REPORT
INDONESIAJAKARTA-CIKAMPEK HIGHWAY PROJECT
(LOAN 2049-IND)
EVALUATION SUMMRY
Project Objectives and Description
The primary objective of the project was to increase the capacity ofthe main road transport corridor east of Jakarta. The second objective was toimprove GOI's management of and development planning capacity for the transportsystem in the greater Jakarta metropolitan area. Main project's components were:(i) the construction of a new 72 km lcng toll road between Jakarta and Cikampek;(ii) the improvement of the existing highway between Jakarta and Cikampek; and(iii) technical assistance and studies.
Implementation Experience
On the whole, there were no major difficulties in projectimplementation. Yet, a delay in implementation of about two years developed atthe start of the pr"ja't, mainly due to confusion regarding the role that JasaMarga was to play (paras 4.1, b.3, and 5.6).
There was a major difference between the engineer's cost estimatesand the bids received for civil works and for construction supervision. Fundsthus made available were used to correct deficiencies in original project designand carry out studies mostly for improving urban transport in Izndonesia anddefining future toll road investments. Disbursement percentages were alsnincreased to help GOI counteract the effects of the 1986 changes in oil prices(paras 5.2, 5.3 and 5.5).
Parts of the toll road that had been constructed only with two lanesunder the project were widened to four lanes soon after completion (para 5.4).
Delays in establishing the legal framework for axle load controlresulted in some damage to the pavement and a reduction in the design life of thetoll road (para 5.7).
Results
The project achieved all the physical objectives stated in the SAR.Traffic in the Jakarta-Cikampek corridor and on the toll road developed quitedifferently from projected, however. On average, traffic (and particularly heavytraffic) on the toll road is quite lower than expected. Economic returns for theproject are also substantially different. -The suburban section of the toll roadis likely to have an ERR much higher than the SAR estimate (23Z) although it isnot possible to reevaluate the ERR precisely. On the contrary, the rural sectionof the toll road has a low ERR (about 1OZ) and its construction was most likelypremature (paras 6.2 and 6.3).
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Traffic safety on the toll road proved to be a problem partly becausethe international design standards and criteria that were used may not reflectdrivers' behavior in Indonesia. The early start of a road safety prcgram mighthave improved the situation (paras 4.7 and 5.4)
Sustainability
The outlook is good to sustain project benefits. Through theproject, GOI has gained valuable experience with toll road design, constructionand management, which is iow being applied. Axle load control and traffic safetyproblems were also eventually addressed satisfactorily. In addition, theperiodic maintenance of both the toll road and the existing road are wellprovided for. A specific problem that will need careful attention in the futureis that routine maintenance appears to be neglected (para 6.5, 7.1 and 7.2).
Main Lessons Learned
Because of the innovative nature o. roject, it is not surprising-t change and additions had to Ue made during implementation. The Bank showedeat unde: -anding and flexibility and this helped considerably fulfill projectctives : he most efficie.it way. With new and untested project designs, as
in thit case, physical contingencies should be increased and the loan agreementshould bc written -Ln such a way that the.c. is scope for flexibility duringprojact execution (pazas 5.5, 8.2 and 8.4).
Experience under the project highlights the complexity of projectingtraffic and the high margin of lncertainty which remains unavoidable in such anexercise. Studieis of the value of time and the price elasticity of demand forIndonesian drivers .and of diversion rates froia existing roads to alternative tollroads are urgently required (paras 4.8 and 6.2).
Organizational and institutional issues need to be resolved pr-or toproject implementation (paras 4.3, 5.6 and 10.2). Measures that are of aregulatory nature or requires inter-agency coordination take time to implement(paras 5.7 and 7.2).
Research is required on road design standards, driver behavior andappropriate safety measures in Indonesia. This, in combination with the trafficstudies mentioned above, would improve substantially the planning and design ofhighway capacity development projects in Indonesia (paras 4.7 and 5.4).
The Bank ought to look into the possibility of producing a moregeneral report on its experiences with motorway construction and in particularon the various technical issues raised in this PCR (para 12.3).
PROJECT COMPLETION REPORT
INDONESIAJAKARTA-CIKAMPEK HIGHWAY PROJECT
(LOAN 2049-IND)
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
1. PROJECT IDENTITY
Project Name : Jakarta - Cikampek Highway ProjectLoan No. 2049-INDRVP Unit : East Asia and Pacific Regional Office Country Department IIICountry IndonesiaSector : TransportSubsector : Highways
2. BACKGROUND
2.1 At the time of project appraisal in April-May, 1980, The Eank hadalready financed five Highway projects with a total Loan/Credit E.Auv,lL in theorder of USS 329 Million.
2.2 The development objectives for the transport sec.or were to keep pacewith Government's plans for economic growth, which were aimed at steering theeconomy away from'its dependency on oil through diversification of themanufacturing sector, expansion of export trade and settlements in the outerislands, and to improve the efficiency in general in the transport sector. Inthe highway sub-sector, this was reflected in a high proportion of the BankGroup involvement in Indonesia being directed toward the rehabilitation andthen increasingly towards the expansion of infrastructure facilities, duringthe first three five-year development plans. About 16Z of the budgets wereallocated to transport, and more than half of this was allocated to the roadsub-sector.
2.3 The first systematic approach to the development of the highwaysubsector began with the Fifth Highway Project (Loan 1696-IND, May 1979) whenthe Bank attempted to introduce the Government to the application of economiccriteria in the preparation of highway investment and maintenance programs andto engage the Government in a dialogue on overall sector strategy and a rangeof sector issues. The issues included the improvement of sector organizationand management, overhaul of the road traffic and road licensing laws,rationalization of the assessment and collection of road user charges,elimination of fuel price subsidies and enforcement of vehicle dimension andaxle load regulations. The policy context--of Bank operations was becomingbetter focussed on the need to improve efficiency and establish and maintain atransport system that is self financing and responsive to demand.
2.4 Bank involvement ir the highway sector became broader and deeper in the
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two projects that followed, namely, the First Highway Betterment Project(Loan 2404-IND, April,1984) and the Highway Maintenance and Betterment Project(Loan 2717-IND, June 12, 1986). The Bank's attention had already shifted fromfinancing civil works only to traininF and strengthening institutions atcentral, provincial and district levels. The Bank now sought to involveitself in the whole of the Government's highway expenditure program and tocontribute to improving performance of the subsector. The Bank was edgingtowards sector type lending operations which became a reality in the ongoingHighway Sector Project (Loan 3133-IND, Nov-iber, 1989).
2.5 The 1972 Trans Java Highway Feasibility Study, supported by the USAID,came up with the recnmmendation to construct a new highway from Jakarta toCikampek/Purwakarta as the first link of a Trans Java Highway. In 1974,Government appointed a German consulting firm to study the possibility ofimplementing a toll-road system in the Greater Jakarta area by integrating thethree regional links to Bogor, Merak and Cikampek. The report recommended theJakarta - Cikampek Highway to be built i-' stages with implementation to startin 1980. In 1977, the Government, with IBRD support, commissioned the sameconsultant to carry out a review of the feasibility study anO' to do thedetailed enginee.ing for the Jakarta - Cikampek highway.
3. PROJECT ̂ PjECTIVES AND DESCRIPTION
3.1 Project Objectives. The primary objective of the project was to providethe urgently needed increase in the capacity of the road network in theJakarta - Cikampek corridor. In addition, the project would improve themanagement of - and development planning capacity for - the transport systemin the Greater Jakarta Metropolitan Area.
3.2 Project Components. The project, as originally defined, consisted ofthe following elements:
(a) Construction of a new limited access, fully grade-separated tollroad of 72 Km between Jakarta and Cikampek;
(b) Improvement to the existing Jakarta-Cikampek highway betweenBekns4 and Cikampek, by:
ti) construction o by-passes around major settlements;
(ii) grade separation of road and rail traffic at one location;
(iii) establishing uniform widths of pavements and widened hard-surfaced shoulders to accommodate human and animal propelledtraffic;
(iv) low cost traffic management measures; and
(v) drainage improvements.
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(c) Consulting services to:
(i) supervise the civil works and ancilla., operations requiredto improve the existing Jakarta-Cikampek Highway and toconstruct the new toll road;
(ii) assist in strengthening the capacity of P.T. Jasa Marga tomanage toll road operations (75 man-months);and
(iii) assist in implementing arrangements for impreved regionaltransport planning and system management for the GreaterJakarta Metropolitan Area (75 man-months).
The first 25 km out cf Jakarta was ou.lt with four lanes ction A), whereasthe remainder, (Sections B aad C) wit" two lanes, with provisior -or wideningat a later stage, as the traffic increased. Five spur roads weve included,totalling 34 km.
3.3 During project implementation, partly as a result of the low bi ; oncivil works, certain feeder roads and access facilities, originally foreseento be included in a separate project or as a second phase construction, wereapproved by the Bank and included in the project. In addition, new items ofcivil works as well as related studicv, were included at various times duringimplementation. In some cases, amendment to the Loan agreement was required.A complete list of additional components (excluding ordinary variationorders), is given below:
In Section A:
1. Jatibening Access, excluding toll facilities.2. Toll facilities, Outer Ring Road (ORR) and Jatibening.3. Traffic devices and street lights, ORR, Klender road.4. Frontage road, (ORR).5. Banjir canal bridge and underpass (ORR).6. DKI flyover (ORR).7. Traffic boxes and slab bridge at 5 locaW.ons,(ORR).8. Retaining wall, (ORR).9. Barrier Gate ard Related works, section A.
In Section D:
1. Feeder road Cika_ 'ig2. Cikampek - Jomin road.
Land Protection:
1. Land protection in Sections A,B and-C, including maintenanc
Additional Consulting Services:
1. Design and Supervision of additional works.
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Technical Assistance and studies:
1. Construction Indastry Development Program,2. Gempol- Malang Toll Road, Feasibility Study.3. Environcuintal impact Study, Cikampek-Padalarang.4. Toll Road Investment Program.5. Various Urban studies.
4. PROJECT DESIGN AND ORGANIZATION
4.1 The project was planned to be executed by the Government of the Republicof Indonesia through the Directorate General of Highwaye, (DGII or Bina Marga),under the Ministry of Public Works. However, those parts which de< with thetoll road construction and operation were, during implementa.'-n, handed overto the Indonesian National Highway Corporation (Jasa Marga).
4.2 The project was parallel funded by IBRD and the Kuwait Fund for ArabEconomic Development (KFAED). IBRD assisted in financing Sections A, and D,whereas KFAED assisted in f iancing Section B and C. In the later stages ofproject implementation, the Export and Import Bank of Japan, (Exim Bank)contributed to the project by co-financing of local costs. As a result of theGulf war in 1990/91, bridging finance far portions of the KrF'.- Credit wasmade available through the Chemical "nk Asia Ltd.
4.3 Counterpart funding was raised as an issue in 1983-84, when it becameclear -.hat Jasa Marga was unable to raise enough funds for its financialobligations on the open market, and the Government failed to make adequatefunds available through regular budget provisions. After lengthy discussionsbetween the GOI and the Bank, an exchange of letters dated January 1984,established GOI's commitment and responsibility to cover the local portion(50Z), as well as GOI's obligation to make Jasa Marga into a financiallyviable entity. The relationship between GOI and Jasa Marga was defined, andplans to improve the management capacity of Jasa Marga was agreed upon. (Atone stage, the civil works contractor had to agree to cover local costs on thecontracts, out of his own pocket for a period of 3 to 4 months).
4.4 Detailed engineering for the civil works of the pro,ect was prepared byconsultants ahead of project appraisal, apart from the additional componentsdescribed in para.a.2. Government experienced some delays in landacquisition, and some design changes and adjustments became necessary becauseof lack of zoning enforcement resulting in uncontrolled changes in land useand rapid development of residential and commercial land along the newhighway.
4.5 The concept of cost recovery through toll-collection was wellunderstood by the Borrower who had gained-veIuable experiences in this fieldthrough previous projects. Some of the details regarding toll-plaza layout,not finalized prior to tendering, were resolved partly through the technicalassistance assignment financed under the project. The stage constructionconcept for meeting the growing demand for capacity over time, was taken intoaccount in a rational manner in project design. All stadies needed to ensure
proper implementation of all the road segments, had been catered for in theproject. The civil works was tendered in early 1982, and the bids receivedwere only about SOZ of the engineer's estimate. Similar cost-savings weremade in respect of consultants services. At the request of Government, IBRDagreed in July, 1986 to include additional components, para. 3.2, and toincrease the disbursement percentage3.
4.6 The project set out '.o address the capacity problem in the corridorbetween Jakarta and Cikamrek. It was expected that even with a new highcapacity motor way (fully access controlled) through the corridor, additionalcapacity was still needed for the existing national road, running parallel,and up to 10 Km to the north of the new road. A comprehensive approachincorporating the existing road, the new motor way and the links between thetwo facilities was adopted. The split in traffic between the new and the oldroad could to some degree, be influenced by the level of tolls to be applied.
4.7 American/European geometric design standards were used. These do notnecessarily reflect driver behavior in Indonesia. This might to some extentexplain the type and severity of the traffic accidents that developed,especially on the single carriageway sections. Partly because of thepolitical pressure resulting from these accidents, GOI started theconstruction of the second carriageway earlier than generally acceptedcapacity -n1culations would have indicated. The early start of a road safetyprogram (it was initiated only late in 1989) might have improved considerablythe road safety situation without this major investment. The ongoing CapacityManual consultancy should address this issue so that future motor way projectsin Indonesia can benefit from this experience.
4.8 The old road was widened and in places relocated to bypass heavilyurbanized sections and to avoid level crossings with the railway, includingone road-over-rail bridge. The ribbon development along this stretch of roadis very intense, and the road has to serve as a busy semi-urban street as wellas a through road. How to address the design problems related to this dualpurpose is worth investigating. The tariff structure on the toll road couldpossibly be used more efficiently to achieve a better traffic split betweenthe old and the new facility. The fact that the operator of the toll roadfacility, in this case Jasa Marga, is mostly interested in maximizing theirown revenues, rather than the economic benefits for the country as a whole,may often distort the fixing of rates.
4.9 The Government appointed two Project Managers (PM). One was in chargeof Section A,B and C and the other for improvement works on the old road. ThePM's were assisted by a Consultant who supervised the construction works onthe six contracts involving five contractor groups.
5. PROJECT IMPLEMENTATION
5.1 The civil works was divided into six separate contracts for sectionsA,B,C,D and for Landscaping on Sections A,B and C. Five different contractors,either Indonesian firms or foreign firms in joint venture with local firms,were awarded the contracts starting in 1983, and with the last addendum issued
in 1990. All contracts have been completed, including the addenda, and thelast final hand-over date for the last addition (Overlay on the Main HighwaySection A) is scheduled for October 1991. The formal closing date was exiendedthree times. The first from December 31, 1987 to December 31, 1988. Thesecond up to December 31, 1989, and the third up to June 30, 1990.
5.2 There was a substantial difference between the Engineer's estimate andthe bids received for civil works and fo- construction supervision. How todeal with funds thus made available out of the Bank loan was made the subjectof detailed discussions between the GOI and the Bank during the period fromNovember 1983 to July 1986. Eventually, various addenda were approved forrequired additional works and studies, and the Loan Agreement was amended toreflect changes in the disbursement percentages (agreed in 1986 for macro-economics reasons) and adjustments in project description. Almost all changesconformed with the original project concept, i.e. to assist the Government insolving the severe capacity problem in the Jakarta - Cikampek corridor and inthe metropolitan area as a whole.
5.3 The fact that the details related to toll-plaza construction had notbeen finalized prior to tendering, could have resulted in claims and increasedcosts. However, it seems as if the procedures used by the Client were soundin so far as the main contracts were let at the right time in terms of price,and that the details for toll ccllaction could be worked out based on localand overseas experience in an orderly manner and iincluded in the works withoutinterfering unduly with the progress of the main civil works contracts.
5.4 The project assumed that dualling of Sections B and C would not berequired until about 1994. However, as soon as the single carriagewaysections were opened to traffic in 1988, traffic accidents (mainly speedrelated) occured along this stretch of road and Jasa Marga initiated theconstruction of the second carriageway which will soon be completed. Thisphase of construction was carried out under a private BOT (Build, Operate &Transfer) arrangement with toll receipts being shared between Jasa Marga andthe BOT investors for that portion of the road. Such action cannot bejustlfied on capacity grounds alone. Again, it seems as if theinternationally accepted design standards and criteria may not fit the localconditions. Traffic in Indonesia tends to operate with shorter distancebetween cars than what is normal in those countries where capacity standardswere developed. Also, during congested periods, drivers tend to takeadvantage of the relatively wide lanes as well as the shoulders and therebymake the two lanes into a four lane carriageway. Safety measures (includingdriver education) need to be adapted to such behavior. There is a case forfurther investigations into the capacity, driver behaviour and road safetyaspects of high capacity roads in Indonesia.
5.5 In many ways, the project was executed as if it was a sector operationwith the added flexibility such projects provides. The Bank and theGovernment took advantage of the low bids received and managed to solve anumber of important issues related to the original concept (particulirlyconcerning access roads and toll plazas), by introducing additional componentsor addenda to ongoing works as well as new studies in preparation for new Bankoperations in the sub-sector. Also, when the country's economy suffered from
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reduction in oil revenues, the Bank was able to assist by increasirg itsparticipation at short notice and thereby avoiding potential claim. from thecontsactors, had there been any shortage of local funds.
5.6 A delay in implementation of about two years developed at the start ofthe project, mainly due to confusion regarding the role t.at Jasa Marga was toplay. See para. 4.3., GOI decided in late 1982 that Jasa Marga should be theimplementing agency and provide local financing from its own limitedresources. Additional delays developed, and in 1988, disbursements were3 1/2 years behind SAR estimates. This is, however, not the best measure ofimplementation progress, since the unit rates were so much lower thanestimated in the SAR. In terms of physical progress of work, the delays wereprobably less than two years throughout implementation. Considering all thechanges and additions during project execution, it would have been surprisingif the project could be successfully completed without delays.
5.7 Overloading became an issue soon after the road was opened to traffic.Axle loads up to 30 tons were recorded. Delays in establishing the legalframework for ax'.e load control on toll roads, resulted in some damage to thepavement, and a reduction in the design life.
5.8 The transport studies were reduced in scope to focus on the JakartaMetropolitan area in preparation for a possible Jakarta Transport Project. Atthe same time, the Loan agreement was amended to include similar studies forfour other major cities ( Semarang, Surabaya, Medan and Bandung). Thecontract for these studies were signed in May, 1985.
6. PROJECT RESULTS
6.1 The project achieved all the objectives stated in the SAR. In addition,due to substantial cost savings in the civil works components, it was possibleto include new items, most of them necessary to fulfill project objectives,that otherwise would have had to be included in a later project.
6.2 Traffic in the Jakarta Cikampek corridor and on the toll road hasdeveloped quite differently from projected. On average, for the entirecorridor, actual traffic is similar to the forecast. However, the forecastunderestimated substantially the growth of traffic demand between Jakarta andBekasi (now mostly an urbanized area) while probably overestimating the growthbetween Bekasi and Cikampek (still mostly a rural area). More importantly thediversion rate (i.e. the share of total corridor traffic that chooses to usethe toll road) turncd out to be much lower than expected (about 35Z instead of80Z) probably because the value of time and convenience is lower for driversand transport companies than assumed while the proportion of local trips onthe existing road may be higher. As a result, the traffic on the toll road ison average quite lower than expected, especMally for heavy traffic. Thesedevelopments are discussed in more detail in Annex 1. It highlights thecomplexity of projecting traffic and the high margin of uncertainty whicL.remains unavoidable in such an exercise.
6.3 The economic returns of the project are also substantially different
from SAR estimates. Between Jakarta and _ekasi, total corridor traffic hasnow probably exceeded the capacity of the existing road and further capacityimprovements are not possible except at an extremely high (construction andenvironmental) cost which the PCR mission was not in a position to estimate.The part of the toll road between Jakarta and Bekasi therefore has an ERRprobably substantially higher than the SAR estimate (23Z). Instead, betweenBekasi and Cikampek, total traffic could have been accommodated (at leastuntil the late 1990s or early 2000s) by the existing road widened to fourlanes probably around 1993-94, a cheaper alternative than constructing thetoll road. This second part of the toll road, therefore, was premature andhas a relatively low ERR (about lOZ - see Annex 1 for more details) whencompared to the above alternative. No separate ERR was given in the SAR forthe improvement of the existing road. Given the very high traffic on thisroad and the relatively low cost of improvements, this third part of theproject is likely to have a high ERR.
6.4 The environmental impact of the project is considerable. A 50 m wideroad reserve had to be set aside, mainly from highly productive agriculturalland, and the Banjir Canal was a special feature in the area requiring specialconsiderations. The land acquisition was carried out in a reasonable fashion,and the problem of the visual impact of such a large highway project waseffectively addressed through good geometric design and through extensive andpleasing landscaping works. The demand for additional crossing points forpedestrians became apparent during construction. New overpasses wereconstructed in several places, indicating that this aspect was not adequatelyassessed during project preparation.
6.5 Through the preparation and implementation of the project, theGovernment, through Jasa Marga and Bina Marga, gained valuable experience withtoll road design, construction and management. The institutions werestrengthened and are better capable of addressing the serious issue of how tosolve the considerable need for high capacity roads in the urban and semi-urban areas of Indonesia in the years to come.
6.6 Technical assistance in toll road management was quite successful. AsJasa Marga's respcnsibilities increased during implementation, additionalservices were needed. An addendum covering policies and procedures for thedesign, construction and maintenance of toll roads and to improve the capacityof Jasa Marga staff, was approved by the Bank in 1984.
6.7 All the studies, both those included in the original project, and thoseadded during project implementation, were successfully completed. The urbantransport studies were the basis of the Bank's Regional Cities Urban Transportand First Jabotabpk Projects. The construction industry studies helpeddevelop a comprehensive set of recommendations to improve the efficiency ofthe industry. The other studies helped Jasa-Marga identify and study priorityinvestments in toll roads.
7. PROJECT SUSTAINABILITY
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7.1 The sustainability of the project depends on the technical and financialcapacity of Jasa Marga to develop, maintain and operate the toll road network.Jasa Marga is taking action when periodic maintenance is required, but thereis some doubt whether Jasa Marga and Bina Marga in the case of the old road,are adequately equipped and organized to take care of routine maintenancetasks that will become more and more important as the facilities get older.The hard shoulders, for example on the old road and near the rest areas on thetoll road, are already showing signs of distress. The Bank should assist theGovernment in its efforts to improve the routine maintenance capability bothin Bina Marga and in Jasa Marga.
7.2 Jasa Marga had already established good contpct and agreements with thetraffic police for the operation of the Jakarta-Bogor toll road. Thisarrangement has now been extended although quite late to the Jakarta-Cikampektoll road. It is hoped that more intensive police surveillance as well as theopening of the second carriageway will help improve the accident situation ingeneral, on the toll road. It is also hoped that with the new Governmentregulation on toll roads, Jasa Marga will be able to better control axle loadson the road.
8. BANK PERFORMANCE
8.1 At an early stage in project preparation, April 1979, the Bank set outthe reasons for its support for the project. These were:
"(i) The catalytic role the Bank could play in arranging co-financing.
(ii) The opportunity for the Bank to broaden its policy dialogue withthe Government by assisting in a new area where complex pricing,financial and organizational issues are being formulated; and
(iii) The unusual complex nature of the project, which, while not inconflict with sector lending, cannot lend itself to a sectorlending approach, but rather requires in-depth appraisalcapability which is not expected to be available within thecountry at the present."
The Bank's willingness to assist in formulating an innovative program likethis one deserves credit. Government succeeded in attracting co-financing, thedialogue with the executing agencies and with the policy makers regarding tollroads operation and management must have been beneficial to both the Bank andto Government and the technical guidance that the Bank provided, must havecontributed greatly to the success of the project.
8.2 Because of the innovative nature of the project, it is not surprisingthat changes and additions had to be made-dwring implementation. The Bankshowed great understandimng and flexibility in this situation. T he low bidsfor civil works did of course make it easier for all parties to be flexible inthis way. The lesson to be learned would be that in new and untested projectdesigns, the physical contingencies should be increased and the loan agreementshould be written in such a way that there is scope for flexibility during
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project execution.
8.3 When considering the complex nature and the size of the project, it issuLprising that the Bank considered a frequency of supervision missions of 12months or more to be adequate. (Most of the supervision missions were evencarried out in combination with supervision or preparation of two or threeother projects and probably did not include enough time of an economist).
8.4 The question of how the Bank handled the large savings 1 (In the orderof US$ 30 Million ac the start of the project) resulting from the very lowbies compared to the engineer's estimate and successive devaluations of theRupiah, was confusing to the Borrower. Bank staff indicated its willingnessto reco.=mend adjustments to the project description and disbursementarrangements at an early stage, but as the matter was taken up officially withBank management, the Bank's policy of canceling any surplus funds was strictlyapplied. However, this decision was rescinded in April 1986 ".. in order tomitigate the impact of the FY86187 budget allocations.." which weredrastically reduced to adjust to the collapse of oil prices. Project costestimates were regularly updated during supervision missions. The contingencycategory, physical and price, was maintained at a very high level in theseestimates, even when over 30Z of the civil works were completed, and manycontracts had been let. It is understandable that the Borrower and Bankproject staff would try to maximize the use of zv-ilable funds during projectimplementation. However, when the "savings" re%ches the proportion it did inthis case, it might be considered inappropriate to maintain such large sums inthe project as a reserve. However, important additional work to fulfillproject objective, increases in the disbursement percentage required for themacro-economic reasons outlined above and new studies, combined withunavoidable cost escalation during the extended implementation period (due inparticular to the major appreciation of the yen in dollar terms) resulted inthe whole of the IBRD component being utilized by the time the project wasclos'ed in June 1990.
9. PERFORMANCE OF THE BORROWER
9.1 The Government has continued to prepare and execute Bank-financedprojects in an efficient manner. However, in this case, delays occurred as aresult of the Government's decision to make Jasa Marga responsible for raisingfunds to cover the local cost comoonent through issuing bonds on the openmarket. Jasa Msrga as a parastatal company, was not well established at thattime, and raising the funds became a problem which took some time to resolve.
9.2 Questions raised by the Bank during preparation of the project wereanswered promptly and competently.
1 Saving is not strictly the correct term in this case, because it can beargued that the design of the project was not complete at the time the projectwas started. This was particularly the case in respect of access roads,pedestrian crossings and interchanges. Additional work had to be included tofullfill the original objective of the project.
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9.3 Government and the two implementing agencies, made timely decisions andinitiated requests to the Bank for additional studies and works when thisbecame necessary.
9.4 Jasa Marga experienced problems with traffic control, including axleload restrictions, soon after the toll road was opened to traffic. it islikely that some of the accidents and other problems could have been avoidedhad the special traffic police unit for the toll roads and other measures beenintroduced at an earlier stage. Axle load control is being introduced by JasaMarga in an effort to reduce premature deterioration to the pavement.
9.5 Also, the routine maintenance arrangements have not been given highenough priority, and the result is now showing up as shoulder failure, both on.he toll road (rest areas) and along sections of the old road.
10. PROJECT RELATIONSHIP
10.1 The relationship between the Borrower and the Bank was good throughoutthe preparation and implementation periods. Both parties reacted in a timelymanner to changes in circumstances that developed as the project progressed.This is demonstrated in that apart from the initial delays due to confusionregarding Jasa Marga's role and later on due to additional works, the .vjectproceeded according to plan. Bank supervision missions offered valuableadvice which was followed up by the Borrower in a spirit of good co-operation.
10.2 The fact that Jasa Marga's role in project execution was not properlydefined at the start of the project created undue confusion during the earlystages. The lesson that can be drawn from this, is that the Bank shouldinsist on Government clarifying the institutional situation prior tonegotiations.
11. CONSULTING SERVICES
11.1 Overall, the performance of the consultants for the many studiesfinanced under the project was satisfactory. The supervising consultant forthe civil works components showed flexibility during the many changes indesign and composition of the various components, and provided the requiredstaff in a timely manner.
12. PROJECT DOCUMENTATION AND DATA
12.1 Taking into consideration the innovative character of the project, thedocumentation was as well prepared in advance as can be expected. Some of thecivil works details were not available at-the time of tendering, but this wasknown by all parties, and rectified during implementation without additionalcost. The detailed engineering did not adequately foresee the cost of works,resulting in substantially lower bids than anticipated. Under normalcircumstances, this would indicate some degree of negligence on the part ofthe design engineer. In this case, however, the Engineer's estimate was based
_ 12 -
upon recer,t bids for similar work in the region. What was not foreseen, wasthat the competitive situation in the contracting industry had changeddrastically prior to tendering. However, the magnitude of the differencebetween estimate and bids, is so large that it gives rise to some doubtsregarding the quality of the Engineer's estimate.
12.2 The Borrower only prepared progress reports for the toll road's civilworks and did not fulfill its obligation to prepare progress reports to theBank on the various other components and the overall status of the project.Audit reports were prepared on time and were found satisfactory.
12.3 The Bank ought to look into the possibility of producing a more generalreport on its experiences from this and other involvements in motorwayconstruction to update our knowledge on toll roads preparation and operationand in particular on the various technical issues raised in this PCR. (Roadcapacity, road design standards, local driver behaviour, Road safety, Land-useplanning, time value and traffic diversion rates, etc.).
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PROJECT COMPLETION REPORT
INDONESIAJAKARTA-CIKAMPEK HIGHWAY PROJECT
(LOAN 2049-IND)
PART II: PROJECT REVIEW FROM BORROEOR'S PERSPECTIVE
A. Adeauacv and Accuracy of Factual Information in Part III of the PCR
(Part III not yet available for Borrower's confirmation)
B. Comment on the Analyses Contained in Part I of the PCR
(Part I not yet available for Borrower's comment)
C. Evaluation of Bank's Performance and Lesons Learned
Bank personnel were recognized as highly professional in allrelevant respects. The missions monitoring the Projectimplementation came frequently enough to Jakarta so that acontinuous exchange of information, guidance and opinion could takeplace creating an atmosphere of mutual benefit for the Projectincluding for the various other studies financed under the loan.
The Bank's flexibility to increase its share of participation forcertain works and services, and to extend its participation toadditional construction works in Section A and D was highlyappreciated.
In retrospect, however, the following subjects might give room foradjustment in future projects of similar nature:
- Disbursements
The Bank's missions during almost all visits over the lastfive years expressed their dissatisfaction concerning the slowpace of disbursement with increasing concern in recent years.Unfortunately the Borrower could not convince the Bank thatthe main reason for such 'slow pace of disbursement" weremainly:
1) an unrealistic disbursement schedule established at thetime of drafting the loan agreement (1981),
2) the necessity to keep reserves for currency fluctuation,a main risk for long implementation times involvingvarious freely floating currencies,
3) the uncertainties for price revision over such long timeperiod.
It is admitted that part of the delay in disbursement isaccountable to Borrower's initial difficulties to processinvoices and withdrawal applications efficiently and thedelayed performance of the Contractor of Section D-I, but themain share of the Bank's financing was allocated for SectionA construction, where physical progress was never a source ofconcern. In order to improve the disbursement in line withthe Bank's expectations,
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the Borrower's Project Management felt obliged to promoteinvoicing larger amounts than it would have been necessaryunder normal more business like attitudes.
Hereby, of course, commitment fees could be saved, but higherinterest costs for both, the foreign and the local financedcost portions had to be accepted by far out-running thesavings in commitment fees.
Loan Closing Date
The loan closing date had to be extended three times and wasfinally fixed for the 30th of June 1990. In the last monthsprior to this closing date, major construction activities,mainly overlay works in Section A and D-II construction stilltook place and a potential danger existed that certain workswould not be physically completed prior to this final closingdate.
Consequently any effort was taken to increase the dailyproduction of the Contractors, which included regular nightwork and the mobilization of additional equipment and staff.Generally, under such circumstances quality standards are moredifficult to enforce.
The potential danger that physica.. works might remainunfinished at the final deadline creLed an atmosphere ofuncertainties and worries. A more flexible approach of theBank in this matter would have been appreciated.
D. Evaluation of Borrower's Own Performance and Lessons Learned
The performance of the participating institutions wasgenerally satisfying. There were some shortcomings incommunications with the Bank and other institutions which mayhave delayed approvals for contract extensions and contractchanges. Also initially disbursement procedures were runningunsmooth with some delay. In retrospect the following majorsubject could be mentioned:
D. Works and SuRervision
- Delay o. contract signing
Bids for construction contracts of Section ABC and Dwere received in May 1982, but contracts were signed onJuly 7th 1983 for Section D and on October 27th 1983 forSection ABC and Supervisory Services.
The delay of approx. 1 year was accountable to thedifficulties to provide Rp-financing for the projects.
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ROW acquisition difficulties
Most ROW was available when necessary for construction. Someminor areas could not be cleared due to pending compensationclaims, but physical progress was hereby not severelyhampered.
An exception, however, was the acquisition of Government ownedland in possession of the Ministry of Forestry (km 86 - 90)and the Ministry of Defense (km 21 - 23.5). In the first caseit took 6 months and in the second case even 18 months fromthe take over of the site till the area could be entered. Toavoid similar delays in the future ROW needs and problemsshould be brought to higher Ministerial levels for timelydecision and enforcement of the actual release
Opening of the rollwav in stafes
Contractual stipulations called for the completion of theproject in various stages, starting with an opening of themost feasible segment from Cawang to Bekasi in early 1987 andending with the completion of the last segment in 1990.
This gave Jasa Marga the opportunity to start its operation ona small scale in an open system and to grow gradually over aperiod for 3 years to the full scale operation for a closedsystem with 13 tollplazas and full maintenance responsibility.
Utility relocations
The delayed relocation of high tension power-lines andtelephone cablts was an obstacle for a steady progress of theworks. The utility companies which made these relocationsfully at the project's account were unable to give reliableschedules for their relocation works.
Local financing
After initial delay reported above local financing from "DIP"and in case of Jasa Marga from bond issues was continuouslyavailable and the disbursements, took place promptly. FromJuly 1988 on all local financing was taken over by the EximBank (Japan) based on an Inter-governmental agreemant withJapan.
Development of local contractors
Local contractors as partners of joint operations with theleading foreign contractor had good opportunities to improvetheir professional skill in technical as well as managerialmatters.
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This enabled the local partner of Section C construction totake the lead of the same joint operation in the privatelyfinanced second stage construction of the Cikarang - CikampekSegment (southern lanes).
A general promotion of adequate participation of the localjoint venture partner and its monitoring during the projectwould probably improve the role of local contractors.
Overloaded truck traffic
Shortly after the opening of the full length of the tollway anexcessive heavy truck traffic developed with a measuredaverage ESA-factor of more than 4 and maximum single axleloads of up to 30 tons, causing ruting and alligator cracks inthe Jakarta bound outer lane between Karawang-East and Bekasi-West.
Pt. Jasa Marga had initially no legal tool to avoid suchoverloaded trucks for using the tollway till Governmentaldegrees were issued to allow the enforcement of axle loadlimitation.
In the 1.5 years uncontrolled operation prior to the issuanceof respective degrees a substantial share of the pavementdesign life was consumed.
Construction Rerformance
Contractor's performance was generally satisfying. However,delays occurred in Section D-I which were fully attributableto contractors initial unability to recruit in due time atteam of professional staff with adequate experience inmanagerial and technical matters.
In Section A and B were physical progress was generally good,the enforcement of quality was a source of concern due to thelarge number of partly less skilled and responsible site teamswhich operated wide spread at many places simultaneously inSection A and B. Probably if contractor's management andsupervisory staff could have concentrated on one section only,quality could have been easier secured.
projects DeveloRment Impact
The implementation of the Project greatly enhanced thedevelopment of the area served by the Project. Large scalehousing complexes in the Bekasi area providing accommodationfor more than 200,000 people were built in recent years andplans for iauch more urban development are in preparation.
In the Kabupaten Bekasi and Karawang in the proximity of thetollway accesses major industrial developments areanticipated. Newly established Master Plan for theseKabupatens earmark here for 15,600 ha itu Karawang and 6,000 ha
- 17 -
in Bekasi. A substantial portion of this development with5,500 ha in Karawang and 3,630 ha in Bekasi is already in theimplementation phase and various plants have already startedproduction. Beside this, the general development in thecities and villages along the Project have improved.Especially transport intonsive construction materials from theCikarang-Karawang area such as tiles, bricks sand and gravelbecame more competitive which increased its production by morethan 30X.
This development is also reflected in the continuous aboveaverage increase of the traffic using the tollway with annualrates of 30 - 50X.
The Government's policy to bring more development to theregions by better access to Jakarta and to develop Jabotabekmore in east-west direction have been fully supported by theProject.
=Design
The original design of 1978 was updated during theimplementation to match progressing development in the area.Changes were mainly necessary in respect to better and moreaccesses to the tollway, further improvements in the feederand adjacent local road system and design adjustments to copewith reduced ROW available and to realize value engineeringopportunities. The necessity to have continuously competentstaff in the project to recognize in due time nscessaryadjustments in design, to prepare such revisions promptly andmonitor its proper implementation has been confirmed.
D. 2. Other Studies - CIDP:
Due to limited budget, only studies issued and no evaluationarise whether this studies is acceptable or give benefit toborrower.
E. Effectiveness of the RelationshiD between the Bank and theBorrowe
Bank relationship with the Government of Indonesia and theinstitutions involved in the project has been good. Somedifficulties in communication may have occurred but did notnegatively effect this relationship.
F. Evaluation of thg Performance of Cofinanciers and TheirRelaUionship with the Borrower
The performance of the Kuwait Fund for Arab EconomicDevelopment (KFAED) was a pleasant experience. Regularcompetent missions of the Fund generally consisting of oneexpert each for technical economic, legal and disbursementmatters visited the project for project monitoring.
- 18 -
The missions were mostly in a position to make directdecisions in writing during their visits or to give theirdecisions per telex shortly after their arrival in Kuwait.Concerning disbursement and loan closing date, the Fund showedfull understanding for the actual needs of the project and wasready to adjust disbursement schedules and loan closing dateto actual needs without big affairs.
The Fund's unability to continue operation after August 2nd1990 was deeply regretted.
Jakarta, May 06, 1991
Directorate General of Highways
Part III: STATISTICAL INFORMATION
1. RELATED BANK LOANS AND CREDITS IN THE HIGHWAY SUB-SECTOR.
LOAN/CREDIT YEAR OFLOAN/CREDIT TITLE AMOUNT PURPOSE APPROVAL STATUS
S MILLION
Cr 164-IND First Highway 28.0 Highway rehabilitation and maintenance 1989 Completed
Cr 260-IND Second Highway 34.0 Highway construction 1971 Completed
Cr 388-IND Third Highway 14.0 Highway construction, maintenance and studies 1973 Completed
Ln. 1238-IND Fourth Highway 130.0 Highway bettermen,technical assistance and 1976 Completedinstitution building
Ln. 1898-IND Fifth Highway 123.2 Highway betterment,bridge replacement, technical 1979 Completedassistance, studies and institution building
Ln. 2049-IND Jakarts-Cikampek .) 86.0 Construction of toll road, upgrading and studies 1981 CompletedI
I Ln. 2083LIND Rural Roads 100.0 District roads improvement and maintenance, and 1982 CompletedDev-lopment institution building.
Ln. 2881-IND Second Rural Roads 190.0 District roads improvement and maintenance, and 1987 Ongoingdevelopment institution building.
Ln. 3133-IND Highway Sector 350.0 Improving overall efficiency of the highway 1989 Ongoingsubsecto. with package of policy reforms,civil works and technical assistance.
*) Subject of this PCR.
2. Project Time table
DATE DATE DATEITEN PLANNED REVISE) ACTUAL
Identification unclear
Preparation (First PB) 4/78 4/78
Apprisadl mission 4/80 4/80
Post Appraisal - 11/80
Loan Negotiation 6/81 6/81
Board Approval 6/81 9/81
Loan Signature 10/82 10/81
Loan Effectiveness 2/82 2/82
Loan Closing 12/87 6/90 o
Loan Completion 6/87 12/90
COIENTS:In the first Project Brief, dated April, 1978, the following issue
were flagged:(i) Staged construction related to traffic growth.
(ii) Level of Bank and co-financier's contribution, and(iii) Linkage between thA proposed highway and the urban situation.The following issues were raised with Government at Appraisal:Ci) Toll road Scheme and Financing Plan. Hereunder, Goverrment's
contribution, Other sources of financing, the nature of tollsJasa Marga's financial situation and future. Toll road policy
(ii) The number of access points required.(Mii) The traffic dispersal at the western terminus, i.e. in Jakart(iv) The functions of the Provincial Public Works Agency, (DPUP)(v) The Rock Asphalt Conporent, (Asbutar.'
(vi) Land AquisitionDuring project implementation, land aquisition and local counterpa
that had to be 4.
3. Loan disbur4ements
Cumutative Estimated and Actual Disbursements (S mittion)
Note: 1990 actual figures are a forecast based on short-term trends
B. Economic Rates of Return
Approval Estimate Actual (1990)Toll Road
Jakarta-Bekasi } 23Z HighBekasi-Cikampek } 1oz
Existing Road Not in SAR High
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7. Status of Covenants
Section Subject Deadline for StatusL.A. ___ Compliance
3.05 Borrower shall acquire all land as As required. Compliedneeded for the project and take with, withappropriate steps to minimize delays.relocation hardships.
3.06 Toll road to be operated and - Compliedmaintained efficiently. Borrower to with exceptensure that Jasa Marga has power, formanagement and administration to deficienciesoperate and maintain project. in routineBorrower to provide additional maintenance.funds if required to cover anyfinancing shortfall.
3.07 Borrower to continue maintenance of - Compliedexisting Jakarta Cikampek highway with exceptand public roads around Bekasi and forKarawang. deficiencies
in routing
maintenance.
3.08 (A) Borrower to prepare and furnish (A) 6 months (A) Compliedto Bank a study of toll rates for before with partlythe project. opening (B) Complied(B) Borrower to monitor use of first with inroads under project and take action section substanceto ensure that roads are used (B) None withinefficiently. tolling
constraints
3.09 Dimensions and axle loads of None Not possiblevehicles to be consistent with untildesign standards recently
because oflack ofappropriateregulation
3.10 Borrower to take all actions At project Compliednecessary to introduce a highway completion withsafety program for the project
3.11 Borrower to carry out program for None Compliedtraining of Jasa Marga personnel with
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R
B. Use of Bank Resources
A. Staff Inputs (Staff weeks)
STAGE OF PLANNED REVISED FINAL CONtENTSPROJECT CYCLE
NOTE: Preparation and supervision work was noruall1co-ordinated vith other task work in the countruand the number of staff-eeks is therefor not cosparable toother projects carried out in isolation.
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R
9. Missions
STAGE OF MONTHI NUMBER OF DAYS SPACIALIZATION PERFORMANC TYPES OFPROJECT CYCLE YEAR PERSONS IN FIELD REPRESENTED al RATING PROBLEMS
I 7182 1 a H III 6/83 2 7 H+FA IIII 9/93 1 2 H 2 Fin, and ManagerialIV 5/84 1 6 H 2 FinancialV 11/84 1 6 H 1VI 6/85 2 7 FA+H 1VII 6/96 3 8 E+H+ 2 FinancialVIII 10186 3 7 E+H+H 1IX 11/97 1 9 H IX 11/99 1 7 H IXI 12/89 1 3 E 1
XII 3/90 1 2 E 1
a) En Economist, Ha Highuag Engineer, FAi FinanciaL fnillstUPe Urban Planner and TPz Transportation Planner
11 Missions which were coabined with other Tasks.- -__ ---- ___ - - - --------------------- - ---- __-_ _____ _______ __ ................................................................... __ .... ____
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Annex I
INDONESIA: JAKARTA - CIKAMPEK HIGHWAY PROJECT (LOAN NO 2049-IND)
PROJECT COMPLETION REPORT
Economic and Financial Aspects of the Project
1. The purpose of this annex is to discuss briefly (i) trafficdevelopment; (ii) toll rates; and (iii) estimated ecunomic and financial ratesof return of the Project.
Traffic Developments
2. Traffic forecasting bears great importance on the accuracy ofeconomic and financial analysis. Yet, traffic forecasts for toll roads inIndonesia have proven unreliable. A comparison of the actual and forecastedtraffic volumes for five toll roads in Indonesia was done in 1990 byconsultants to Jasa Marga (Toll Road Investment Plan - TRIP - study bySWEROAD). All these projections were undertaken in the 708, and onlyJakarta - Cikampek was envisaged as a toll facility. Of all, three (Jagorawi,Jakarta - Tangerang, and Waru - Gempol) successfully forecasted initialtraffic volumes, but none correctly foresaw the traffic growths two wereunder-proiected and one over-projected. For the remaining Jakarta - Cikampektoll road and Semarang Bypass, traffic for the former was over-projected andthat for the latter was under-projected.
3. Table 1 gives a comparison of actual and forecasted trafficvolumes between Jakarta and Cikampek in 1988. The comparison indicates thatthe toll road traffic has been grossly over projected, namely, 9,442 actualAADT vs. 25,620 forecasted (actual oitly 35Z of forecast). Accuracy offorecasting, however, varies from different segments. While the actualtraffic on the Jakarta - Bekasi section, which is de facto a 4-lane urbanroad, had approximated the forecast (73Z of the forecast), that on theBekasi - Cikampek section, most part of which is a 2-lane undivided intercityhighway, had been greatly over estimated, with the actual traffic only aboutone-quarter of the projected. It must be noted however that the actual 1990traffic was not ready for the PCR mission. The difference between actual andprojected traffic would have been less striking given the substantial trafficgrowth between 1988 and 1990.
4. The projection of the total traffic, however, was closer to thereality (Table 1). While the traffic between Bekasi and Cikampek was slightlyover-projected by 172, that between Jakarta and Bekasi was actually grosslyunder-projected by 52Z. Apparently the assumed high diversion rate of trafficonto the toll road (over 80? of the total traffic) was the major source oferror that led to the unrealistic high toll traffic projection (Table 1).This suggests that t'ere is (a) an urgent-need to study time values anddiversion rates in Indcnesia; and (b) a potential to improve the economic andfinancial viability of the project, if a higher diversion rate were to beachieved by Jasa M:rga.
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Table I
Comparison of Forecasted and Actual Traffic Volumos 1988
Toll Road Total Traffic
Dis- Fore- Actual Fore- Actual
tance Casted Actual As X of Caste Actual As X of Diversion Rate
km AADT AADT Foreca. AADT AADT Foreca. Expected Actual
5. The power of setting or modifying toll rates rests in the hands ofthe President. The toll road authority (Jasa Marga) may initiate a tariffproporal, but it must be agreed and sponsored by the Ministry of Public Works,then by the Ministry of Finance, then by the State Secretary. Only by thenmay the President sign a decree to enact the change. There are no detailedstate guidelines on setting the rates, but a rule is used that customersshould not be charged more than 752 of the user cost savings. (Consultantsfor the TRIP study reported that rates ranged from 282 to 702 of the savingsfor toll roads in Indonesia.
6. Tariffs of Jakarta - Cikampek Highway have not been adjusted sincethe toll road opened to traffic in mid-1988 until very recently. As of March1991, two separate rates were imposed. On average, light vehicles (below 2.5ton) were charged Rp 78 per vehicle per kilometer, and heavy ones wereRp 124/vehicle/km. These rates wr:e the second highest of all the toll roadsin the country (the highest is the Jakarta - Cenkareng toll road).
7. These tariffs might have been too high, judging from a lowdiversion rate on each section of the Highway (332 rather than expected 83Z in1988). In a country such as Indonesia, drivers' decision to use the toll roadis not likely to be based on the value of VOC savings, but on whether thebenefits of comfortability and time savings are worthwhile the out-of-pocketcash payment. Given that the opportunity cost of timf. lb not high, demand maybe highly elastic (although this needs a serious investigation); if this istrue, a slightly lowered tariff may attract much more traffic, thus a higherrevenue could be generated than under the current tariff structure.
8. The toll revenue collected from the Jakarta - Cikampek Highway hasbeen growing from Rp 21.6 billion (annually adjusted) in 1988 to Rp 31.6billion in 1990, among the fastest growth seen in all the toll roads inoperat.on in Indonesia. It is expected that within this year (1991) this roadwill become the largest contributor to Jasa Marga's toll revenue, surpassingthat of tollroad Jagorawi.
Economic and Financial Rates of Return
9. It must be borne in mind that due to the project delay (theHighway was only open to traffic around mid-1988), sufficient data have notyet been generated to evaluate the economic and financial impacts of theproject. The following exercise is merely to re-estimate some econom4c andfinancial indicators of the project, namely preliminary economic and financialrates of return of the project.
10. Extensive cost and design changes, and the decision to expand theCibitung - Cikampek section from 2-lane undivided to 4-lane divided soon afteropening (rather than 5 or 6 years later as-expected at appraisal), make athorough reappraisal of the project extremety difficult, if not impossible.First, the project costs for investment and maintenance, and when they were(or will be) incurred, have borne little resemblance to the original plan.Second, benefits would have to be completely re-estimated, because among other
- 34 -
things, revisions of the project have drastically altered the traffic patternand volumes and two major devaluations have changed relative valuessubstantially. Thus, a serious reappraisal would require efforts equivalentto a true appraisal, far beyond the resources allowed for a regular post-construction reappraisal.
11. In order to overcome this resource constraint, this annex uses asimplified reappraisal methodology prepared by the consultants of the TRIPstudy. Rather than using the actual data and information, the reappraisal isbased on comparing nationally standardized costs and benefits (VOC,construction, O&M, and time) for "without" and "with project situations. Inaddition, the construction "costs" are not recorded at the time they actuallyincurred but on the basis of a simplified schedule. It is in particularassumed that the widening of the Cibitung-Cikampek section of the toll roadwould be carried out at a more appropriate time.
12. In re-estimating the economic IRR for the toll road, Jakarta -Bekasi (14 km) and Bekasi - Cikampek (58.5 km) sections are handledseparately. For the J-B section, although the actual traffic was only 73Z ofthe forecasted, yet the actual total corridor traffic was 502 more thanexpected. Today, the traffic has exceeded the old road handling capacities(the volume-capacity ratio of the existing road exceeded 1.0 perhaps fiveyears ago). Without the toll road, traffic in this area would most likely tobe in a complete chaos. In retrospect, therefore, the toll road constructionis h4 -hly economically justified. Since the "without" situation cannot besensibly defined, the economic IRR is not re-estimated. It is self-evidentthat a very high economic rate of return for this part of the road is mostcertainly attained.
13. The re-estimation of Economic IRR for the Bekasi - Cikampeksection is based on readjusted traffic projections (Annex 2). Compared to theoriginal SAR forecast, the main differences are that the heavy vehicles(trucks and buses) traffic on the toll road has been greatly reduced while thelight traffic has been much increased to reflect actual current traffic.
14. Based on the new traffic forecasting, the EIRR is re-estimated at1OZ, far below the SAR estimate for the entire toll road (23Z). This islargely due to the fact that foreseeable traffic demand could have beenreasonably well accommodated until about 2005 by improving the existing roadwidened to 4 lanes around 1993-94 which would have been much cheaper thanbuilding the new toll road (this alternative is the "without" project scenarioin the reevaluation).
15. The net present value at 15Z discount rate (SAR did not calculate)is negative Rp 95 billion.
16. By using the methodology of the TRIP study, and based on the samescenario adopted for new economic IRR calculations, the financial internalrates of return are re-estimated. For the-entire toll road, the FIRR is 142,with a net present value of negative Rp 18 billion, at 15? discount rate, orpositive Rp 115 billion at 1OZ discount rate. The FIRRs are also re-estimatedfor Jakarta - Bekasi and Bekasi - Cikampek sections separately. The estimated
- 35 -
FIRR for the J-B section is 21Z, with the net present value 152 discount rateRp 29 billion and that 3102 discount rate Rp 83 billion. For the Bekasi -Cikampek section, the FIRR is 11.5Z, with a negative net present value (@15Z)of Rp 47 billion and that 102 Rp 32 billion. (The financial IRRs were notestimated in the SAR.)
17. The above analysis indicates that the economic acceptability ofthe project, in retrospect, is mixed. While the Jakarta - Bekasi section ofthe toll road h&s achieved, and will sustain a high economic rate of return(not quantifiable), construction of the Bekasi - Cikampek section appears tohave been premature. The expansion of this section into a 4-lane dividedhighway is even less justified if purely economic and financial criteria wereused. The overall financial viability of the p:oject is also mixed. Whilere-estimated FIRR for the Jakarta - Bekasi section has a high return (21Z,constant price), that for the Bekasi - Cikampek is only 11.5Z. As a result,the re-estimated FIRR for the entire toll road is brought down to 142, whichis only on the border line of being accepted, if the real cost of capital inIndonesia is taken into account.
- 36 -
Attachment 1
INDONESIA: Toll Roads and Bridges in Operation.
Main Road Access Road Starting YearNo. Road Link k.m. k.m. Of ODeration
1 Jagoravi 47.0 9.0 19782 Citarum Bridge 0.2 0.7 19793 Tallo Lama Bridge 0.2 0.7 19814 Kapuas and Landak Bridges 0.6 2.0 19825 Mojokerto Bridge 0.2 0.6 19826 Semarang Artery (Sec. A&B) 15.0 -- 19837 Ciujung and Serang Bypass 12.0 -- 19848 Jakarta - Tangerang 27.0 6.0 19849 Cengkareng Access 14.0 -- 198510 Belmera 34.0 9.0 198611 Surabaya - Gempol 43.0 6.0 198612 Jakarta - Cikampek 73.0 11.0 198813 Cavang - Tomang 17.0 -- 198914 North - South Link 17.0 -- 199015 Cakung - Cikunir 9.0 45.0 1990
T O T A L 309.3 89 9
Source: Jasa Marga
- 37 -
Attachment 2
Table ARe-forecasted Toll Road and Corridor Traffic
TOLL ROAD TRAFFIC TOTAL TRAFFICAADT DIVER- CAPA- AADT
YEAR LIGHT HEAVY TOTAL SION CITY VCR LIGHT HEAVY TOTAL
o The same traffic forecasting is used as in re-estimating EIRR.
O Basic tariffs: Rp 90/km for light vehicles and Rp 120/km for heavyvehicles. No allowance for real tariff increase is made.
O Construction cost: Rp 3,370 million/km for 2-lane road construction;Rp 1,275 million/km for 2-lane to 4-lane road expansion. Constructioncost is assumed to spread over three years, with the followingdistribution:
First and second years - 40Z;the third year - 20Z.
o The maintenance cost: 1312*AADT/1000000 Rp million/km.The toll operations cost: (0.765 + 1176.5*AADT/1000000) Rp million/km.
Paramneters used in calculating maintenance and toll operations costs areobtained through regression on 7' ' data.
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Attachmc.,t 4a
Calculation of Financial Internal Rate of Return:The Entire Jakarta - Cikampek Toll Road(Rp million)
Toll Total NETCons- Mainte- Collec- Total Toll CASH
Total Light Heavy Year truction nance tion Costs Revenue FLOW
o The same traffic forecasting is used as in re-estimating EIRR.
O Basic tariffs: Rp 90/km for light vehicles and Rp 120/km for heavyvehicles. No allowance for real tariff increase is made.
O Construction cost: Rp 3,370 million/km for 2-lane road construction;Rp 1,275 million/km for 2-lane to 4-lane road expansion. r'nstructioncost is assumed to spread over three years, with the follou.ngdistribution:
First and second years - 40Z;the third year - 20Z.
o The maintenance cost: 1312*AADT/1000000 Rp million/km.The toll operations cost: (0.765 + 1176.5*AADT/1000000) Rp million/km.
Parameters used in calculating maintenance and toll operations costs areobtained through regression on ".P data.
BED 15036id^V R} fXP IEu s{t - ,,r I .0OtA . JANUARY Rol
JAKARTA-CIKAMPEK CORRIDOR PROJECTPROJECT LOCATtON
- PR-SDCO *AOUOCT R0AD CATUCTION
TRA Ii= DWAYS
4 PR CI~~~~740
450,T3-.. O V O w 5 t. r u o o k M ,o ,n..'o. 9-4.N D ;
