EAST ASIA AND PACIFIC

MARINE ELECTRONIC HIGHWAY DEMONSTRATION

PROJECT APPRAISAL DOCUMENT

EAST ASIA AND PACIFIC

EASTR

Date: May 10, 2006
Team Leader: Sally L. Burningham
Country Director: Andrew D. Steer
Sectors: Ports, waterways and shipping
Sector Manager/Director: Jitendra N. Bajpai
(80%);Central government administration
Project ID: P068133
(20%)
Focal Area: International waters
Themes: Regional integration (P);Pollution
Lending Instrument: Specific Investment Loan management and environmental health (P)
Environmental screening category: Not
Required
Project Financing Data
[ ] Loan [ ] Credit [X] Grant [ ] Guarantee
[ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$m.): 0.00
Proposed terms:
Financing Plan (US$m)
Source
Local
Foreign
Total
BORROWER/RECIPIENT 2.60
0.10
2.70
GLOBAL ENVIRONMENT FACILITY
0.00
8.30
8.30
FOREIGN PRIVATE COMMERCIAL
0.00 6.00 6.00
SOURCES (UNIDENTIFIED)
Total: 2.60
14.40
17.00
Borrower:
Republic of Indonesia
Indonesia
International Maritime Organization
United Kingdom
Responsible Agency:
Ministry of Environment
Otorita Batam Building A 6 th Floor
Jln. DI Panjaitan Kav. 24 Kebon Nanas
Jakarta, 13410
Indonesia
Tel: 62-21-8590 5638/4923 Fax: 62-21-6590 4929
pkelp@menlh.go.id

---

International Maritime Organization
4 Albert Embankment
London
United Kingdom
SE1 7SR
Tel: 44-20-7735-7611 Fax: 44-20-7587 3210
INFO@imo.org
Estimated disbursements (Bank FY/US$m)
FY
2006 2007 2008 2009 2010 0
0
0
0
Annual
0.00 6.09 1.01 1.20 0.00 0.00 0.00 0.00 0.00
Cumulative
0.00 6.09 7.10 8.30 8.30 8.30 8.30 8.30 8.30
Project implementation period: Start July 3, 2006 End: June 30, 2010
Expected effectiveness date: July 3, 2006
Expected closing date: June 30, 2011
Does the project depart from the CAS in content or other significant respects?
[ ]Yes [X] No
Ref. PAD A.3
Does the project require any exceptions from Bank policies?

Ref. PAD D.7
[ ]Yes [X] No
Have these been approved by Bank management?
[X]Yes [ ] No
Is approval for any policy exception sought from the Board?
[X]Yes [ ] No
Does the project include any critical risks rated "substantial" or "high"?
[ ]Yes [X] No
Ref. PAD C.5
Does the project meet the Regional criteria for readiness for implementation?
[X]Yes [ ] No
Ref. PAD D.7
Project development objective Ref. PAD B.2, Technical Annex 3
The project's development objective is to assist the Republic of Indonesia, Malaysia, the
Republic of Singapore and representatives of some of the large commercial ship owners that use
the Strait of Malacca and the Strait of Singapore, to collectively decide whether to establish a
marine electronic highway for the entire length of the Straits of Malacca and Singapore.

Global Environment objective Ref. PAD B.2, Technical Annex 3
The project's global environment objective is to improve maritime safety and reduce
environmental damage to the globally-significant shared natural resources of the Straits of
Malacca and Singapore.

Project description [one-sentence summary of each component] Ref. PAD B.3.a, Technical
Annex 4
The project consists of the following five components:

Component 1: MEH System Design, Coordination and Operation (US$2.88 million). This
component will provide for project management by the International Maritime Organization
(IMO) on behalf of the participating countries, coordination of the design, development and
operation of the MEH demonstration system and also provide for key technical inputs to the
project.

---

Component 2: MEH System Development (US$7.04 million). This component will provide for
production of the navigational information on which the MEH system will be based, and its
incorporation into real-time electronic charts that ship operators will be able to use to navigate
with precision through the MEH demonstration section of the Straits.

Component 3: Ship-board Equipment and Communications (US$6.00 million). Carrying out of
testing of the demonstration MEH system by about 160 ships fitted with type-approved
electronic chart display and information systems, including internet connectivity. This
component will be executed by the owners of at least 160 large oil tankers and container ships
that regularly transit the Straits, and will be facilitated by two major ship owner representative
organizations, the International Association of Independent Tanker Owners and the International
Chamber of Shipping.

Component 4: Marine Environment Protection(US$0.85 million). This component will be
executed jointly by the institutions in the littoral states that are responsible for marine navigation
and environmental management and the International Maritime Organization and will consist of
Oil Spill and Sand Wave Models; Sensitive Area Mapping and Emergency Response Systems.

Component 5: Information Dissemination, Evaluation and Scale-Up Plan (US$0.23 million).
This component will be managed by the IMO through the PMO, and will consist of Website and
Publicity, Evaluation of the MEH system and System Development.

Which safeguard policies are triggered, if any? Ref. PAD D.6, Technical Annex 10
Although the project triggers OP/BP 7.50 "Projects on International Waterways" the requirement
of notification of other riparians does not arise. This is because the three littoral states of the
Strait of Malacca, namely Indonesia, Malaysia and Singapore, are participating in the
implementation of the project, and have signed an Memorandum of Understanding regarding
their participation

Significant, non-standard conditions, if any, for:
Ref. PAD C.7
Board presentation:
The Condition of Board Presentation has been met, namely that the International Maritime
Organization and the Republic of Indonesia have concluded an Agreement, acceptable to the
Bank, specifying the functions; staffing, including support staff; facilities including office space
to be provided to the Project Management Office in Batam, as well as who will provide the
required staff, facilities, and operating costs.

Loan/credit effectiveness:
Grant with the International Maritime Organization

(a)
The Global Environment Facility Trust Fund Grant Agreement shall have been executed
on behalf of the Republic of Indonesia and the Bank.
(b)
The IMO shall have provided to the Bank a Project management memorandum,
acceptable to the Bank.

---

(c)
The Project Implementation Plan, acceptable to the Bank, shall have been adopted by the
IMO and endorsed by the Republic of Indonesia, Malaysia and the Republic of Singapore.

Grant with the Republic of Indonesia

(a) The GEF Trust Fund Grant Agreement shall have been executed on behalf of the
International Maritime Organization and the Bank.
(b)
The Project Coordination Unit shall have been established
(c)
The Project Implementation Unit shall have been established
(d) The Republic of Indonesia shall have established auditing arrangements, acceptable to
the Bank, including provisions to make the audit report available to the public.
(e)
The Project Implementation Plan, acceptable to the Bank, shall have been adopted by the
Republic of Indonesia.

Covenants applicable to project implementation:
Grant Agreement with the International Maritime Organization

1.
The IMO shall take all steps necessary to ensure that the Project Steering Committee
shall be maintained until completion of the Project.
2.
The IMO shall, in accordance with the provisions of the Memorandum of Agreement,
establish by December 31, 2006, and, thereafter, maintain until the completion of the Project, the
Project Management Office, with term of reference and staff and at all times acceptable to the
Bank, including a Project Manager.
3.
The IMO shall, until completion of the Project, maintain at its headquarters a
procurement officer, acceptable to the Bank.
4.
The IMO shall prepare and furnish to the Bank a Project management memorandum,
acceptable to the Bank, setting forth the management tasks to be carried out by the Recipient
under the Project, including the estimated cost of each task.
5.
The IMO shall adopt and, thereafter apply in the implementation of the Project, the
Project Implementation Plan, acceptable to the Bank, which shall include the description of: (a)
implementation arrangements, (b) the procurement procedures set forth in the Grant Agreement
and standard procurement documentation, (c) reporting requirements, financial management
procedures and audit procedures as set forth in the Grant Agreement, (d) the Project Performance
Indicators set forth in the Grant Agreement, and shall not amend, suspend, abrogate, repeal or
waive any provisions of the Project Implementation Plan without the prior agreement of the
Bank.
6.
The IMO shall cause the Project Steering Committee to:
(a) furnish to the Bank for its review and comments not later than September 30 in each year,
commencing September 30, 2007, and until completion of the Project, draft revisions to the
Project Implementation Plan for the components of the Project not yet carried out, with emphasis
on the activities to be carried out in the following calendar year, including the scope of the
activities to be carried out, cost estimates, time based implementation schedules, financing plan,
budget arrangements, and the relevant procurement plan; and
(b) finalize the revised Project Implementation Plan by November 30 in each year, commencing
November 30, 2007, taking into account the comments of the Bank thereon.
7.
In carrying out Component 2.3 of the Project, the IMO shall provide all required

---

technical assistance to the Republic of Indonesia, Malaysia and the Republic of Singapore to
ensure the production of the electronic navigational charts by March 31, 2008.
8.
In carrying out Component 3 of the Project, the IMO shall provide the required technical
assistance to ensure that the International Association of Independent Tanker Owners and the
International Chamber of Shipping have each, by December 31, 2008, at least 60 and 100 ships,
respectively, equipped with type-approved electronic chart display and information systems,
including internet connectivity.
9.
In carrying out Component 5 of the Project, the IMO shall:
(a) by May 31, 2010, furnish to the Bank the draft final report on the technical, financial,
economic, and legal feasibility of a scaled-up Marine Electronic Highway system for the entire
Straits of Malacca and Singapore; and
(b) by August, 2010, taking into account the comments of the Bank, furnish to potential
participants and beneficiaries of the full-scale Marine Electronic Highway system the finalized
feasibility study, including the design of an operational and financing plan and an institutional
structure for the scaled-up Marine Electronic Highway system.
10.
The IMO shall:
(a) maintain policies and procedures adequate to enable it to monitor and evaluate on an
ongoing basis, in accordance with the indicators set the Grant Agreement, the carrying out the
Project and the achievement of the objectives thereof;
(b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or
about June 30 of each year, commencing June 30, 2007, a report integrating the results of the
monitoring and evaluation activities performed pursuant to the Grant Agreement on the progress
achieved in the carrying out of the Project during the period preceding the date of said report and
setting out the measures recommended to ensure the efficient carrying out of the Project and the
achievement of the objectives thereof during the period following such date; and
(c) review with the Bank, by September 30 of each year, commencing September 30, 2007, or
such later date as the Bank shall request, the report referred to the Grant Agreement, and,
thereafter, take all measures required to ensure the efficient completion of the Project and the
achievement of the objectives thereof, based on the conclusions and recommendations of the said
report and the Bank's views on the matter.
11.
The IMO shall:
(a) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or
about September 30, 2008, a report integrating the results of the monitoring and evaluation
activities performed pursuant to the Grant Agreement, on the progress achieved in the carrying
out of the Project, including an assessment of the commitment of the partners in the Project, the
interest of other countries in the scaled-up marine electronic highway, evaluation of new
technologies and their potential applicability and inclusion in the marine electronic highway, and
determination of the need for Project restructuring, if any.
(b) review with the Bank and with the parties to the Memorandum on Arrangements, by
December 31, 2008, the report referred to in the Grant Agreement, and, thereafter, take all
measures required to ensure the efficient completion of the Project and the achievement of the
objectives thereof.

Grant Agreement with the Republic of Indonesia

---

1.
The Republic of Indonesia shall, until completion of the Project, remain a member of,
and an active participant in, the Project Steering Committee.
2.
The Republic of Indonesia shall, in accordance with the Memorandum of Agreement,
cause to be established by December 31, 2006, and, thereafter, maintained until the completion
of the Project, the Project Management Office, with facilities and support staff at all times
acceptable to the Bank.
3.
The Republic of Indonesia shall establish, and thereafter maintain until completion of the
Project:
(a) the Project Coordination Unit with terms of reference, facilities and staff at all times
acceptable to the Bank; and
(b) the Project Implementation Unit with term of reference, facilities and staff, including a
procurement officer and a financial officer, at all times acceptable to the Bank.
4.
The Republic of Indonesia shall adopt and, thereafter, apply in the implementation of the
Project, the Project Implementation Plan, acceptable to the Bank, which shall include the
description of: (a) implementation arrangements, (b) the procurement procedures set forth in the
Grant Agreement and standard procurement documentation, (c) reporting requirements, financial
management procedures and audit procedures as set forth in the Grant Agreement, (d) the Project
Performance Indicators set forth in the Grant Agreement, and shall not amend, suspend,
abrogate, repeal or waive any provisions of the Project Implementation Plan without the prior
agreement of the Bank.
5.
In carrying out Component 2.1 of the Project, the Republic of Indonesia shall, not later
than April 30, 2007, complete the purchase and installation of new tidal stations and the
upgrading of existing tidal stations.
6.
The Republic of Indonesia shall:
(a) maintain policies and procedures adequate to enable it to monitor and evaluate on an
ongoing basis, in accordance with the indicators acceptable to the Bank, the carrying out of
Component 2.1 of the Project and the achievement of the objectives thereof;
(b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or
about June 30 of each year, commencing June 30, 2007, a report integrating the results of the
monitoring and evaluation activities performed pursuant to paragraph (a) of this Section, on the
progress achieved in the carrying out of Component 2.1 of the Project during the period
preceding the date of said report and setting out the measures recommended to ensure the
efficient carrying out of Component 2.1 of the Project and the achievement of the objectives
thereof during the period following such date; and
(c) review with the Bank, by October 1 of each year, commencing October 1, 2007, or such
later date as the Bank shall request, the report referred to in the Grant Agreement, and, thereafter,
take all measures required to ensure the efficient completion of Component 2.1 of the Project
and the achievement of the objectives thereof, based on the conclusions and recommendations of
the said report and the Bank's views on the matter.

---