The World Bank Regional Infrastructure Development Fund (P154947) REPORT NO.: RES37029 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF REGIONAL INFRASTRUCTURE DEVELOPMENT FUND APPROVED ON MARCH 10, 2017 TO MINISTRY OF FINANCE SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Rodrigo A. Chaves Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Abhas Kumar Jha Task Team Leader: Marcus John Jin Sarn Lee, Adri Asmoro Laksono Poesoro The World Bank Regional Infrastructure Development Fund (P154947) I. BASIC DATA Product Information Project ID Financing Instrument P154947 Investment Project Financing Original EA Category Current EA Category Financial Intermediary Assessment (F) Financial Intermediary Assessment (F) Approval Date Current Closing Date 10-Mar-2017 31-Dec-2020 Organizations Borrower Responsible Agency Ministry of Finance PT Sarana Multi Infrastruktur Project Development Objective (PDO) Original PDO To increase access to infrastructure finance at the subnational level through a financially sustainable financial intermediary. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed COFN-C1480 22-Mar-2017 07-Jun-2017 28-Sep-2017 31-Dec-2020 100.00 11.57 88.43 IBRD-87140 10-Mar-2017 12-May-2017 28-Sep-2017 31-Dec-2020 100.00 11.58 88.42 TF-A3871 10-Mar-2017 12-May-2017 28-Sep-2017 30-Jun-2019 3.00 1.02 1.98 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Regional Infrastructure Development Fund (P154947) I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES 1. This Restructuring Paper is for an extension of the existing Recipient-Executed Trust Fund (RETF) grant (TF0A3871), under the Regional Infrastructure Development Fund (RIDF) project. The existing closing date of this RETF grant is June 30, 2019. The proposed extension is for 18 months until December 31, 2020, so that the grant closing date matches that of the IBRD loan for RIDF (Loan 8714-ID). 2. Background and Context: RIDF is a domestic financial intermediary that provides loans to participating subnational governments in Indonesia, for selected infrastructure subprojects. RIDF is implemented by PT Sarana Multi Infrastruktur (PT SMI), a state-owned enterprise wholly owned by Indonesia’s Ministry of Finance, with a mandate to catalyze infrastructure financing in the country. Capital support for RIDF is provided by a $100 million loan from IBRD, co-financed by a $100 million loan from the Asian Infrastructure Investment Bank (AIIB). 3. The RIDF project includes a Project Development Facility (PDF), which is also implemented by PT SMI. The PDF supports subnational governments in subproject identification and preparation. This includes, but is not limited to, preparation of feasibility studies, detailed engineering designs (DEDs), environmental and social assessments, resettlement plans or relocation action plans, and hands-on support for the preparation of standard bidding documents. The PDF is supported by this RETF grant in the amount of $3 million, provided by the Indonesia Sustainable Urbanization Multi-Donor Trust Fund (IDSUN MDTF). 4. Summary of Project Status: The Project has made steady but slower than expected progress. The current RIDF portfolio consists of seven subprojects across five subnational governments, with total loans of Rp. 792.96 billion (approximately $56.6 million): North Sulawesi (general hospital and eye hospital), Central Lombok (public market), South Halmahera (roads and public market), Ogan Komering Ulu (hospital), and Banjarbaru (public market). Construction is underway in Central Lombok and South Halmahera; procurement is underway in North Sulawesi, Ogan Komering Ulu, and Banjarbaru. Another four subprojects worth around IDR 535 billion (approximately USD 38.2 million) are in the RIDF pipeline, including in Bengkulu (street lighting), Palopo (tourism-related infrastructure), Tapin (hospital) and Manado (public market). 5. The PDF has received applications for project preparation support from 22 subnational governments. PDF assistance has been provided for the preparation of 11 subprojects, including to North Sulawesi, Banjarbaru, South Halmahera, Ogan Komering Ulu, Central Lombok, Kepahiang, Bengkulu, and Palopo. This assistance has included a number of feasibility studies, DEDs, environmental assessments/plans (AMDAL), and resettlement action plans. TF0A3871 has disbursed $1,024,054, or 34% of the total RETF grant amount. With the current PDF portfolio and applications received, it is that all of the remaining RETF grant amount will be fully utilized within the proposed extension period through December 2020. 6. Proposed Change: The only proposed change is to extend the closing date of the existing RETF grant (TF0A3871), from June 30, 2019 to December 31, 2020. This new closing date would match the existing closing date of the IBRD and AIIB loans. 7. This extension would allow for the full implementation of planned activities under the PDF, which would help expand the RIDF subproject loan portfolio. This in turn would lead to further loan disbursements, as more subprojects are constructed and completed. Limited capacity at the subnational level remains a challenge for RIDF implementation. The PDF, supported through this RETF grant, has a crucial function in continuing to build capacity and improve subnational governments’ preparation of RIDF subprojects. The World Bank Regional Infrastructure Development Fund (P154947) II. DETAILED CHANGES