ADB to provide $300m for Aceh reconstruction

ADB to provide $300m for Aceh reconstruction

Urip Hudiono, The Jakarta Post/Jakarta

The Asian Development Bank (ADB) will provide an additional
US$300 million in grants for the reconstruction of tsunami-
stricken Nanggroe Aceh Darussalam and parts of North Sumatra.

The money will be part of the $600 million in additional funds
that the Manila-based bank is to provide out of its Asian Tsunami
Trust Fund to five badly hit countries in the region: India, the
Maldives, Sri Lanka, Thailand and Indonesia.

The additional money will bring the ADB's total financial
commitment to the tsunami-affected areas to $775 million,
including the $175 million it had pledged from the reallocation
of ongoing projects for tsunami-related relief efforts.

Previously, the ADB had provided an emergency soft loan of
$126.37 million for Aceh and North Sumatra out of funds
originally earmarked for 13 ADB projects in Indonesia to address
immediate and short-term requirements in humanitarian relief
efforts and repairing critical basic services.

ADB president Haruhiko Kuroda said he hoped the
additional money could be promptly disbursed for projects to
restore essential infrastructure and services.

"The disbursement of the funds is essential to ensure that the
incomes and livelihoods of people in the area are quickly
restored," he said, after witnessing the signing of a memorandum
of understanding on the additional funds on Thursday by ADB
director general for Asia and the Pacific Shamshad Akhtar and
State Minister for National Development Planning Sri Mulyani
Indrawati.

Kuroda said the $300 million would be used to finance a
two-phase, multi-sector Earthquake and Tsunami Emergency Support
Project (ETESP) to support disaster management, reconstruction
and rehabilitation in the affected areas of the two provinces.

The first phase would last from April to June 2007, and would
involve the tackling of urgent priorities in some of the less
devastated areas.

"These include projects on health services, rural water and
sanitation, irrigation and flood control, restoration of roads
and bridges, local government capacity building and spatial
planning," Kuroda said.

The second phase would run from June 2007 until April 2008,
and would involve disaster management and reconstruction
activities in the most devastated areas.

"The work will include continuing the first phase activities,
especially spatial redesigning, as well as the restoration of
community infrastructure, rural electrification and public
administration," he added.

To ensure that the money reached the intended targets, the ADB
would set up a treasury office in Aceh and sponsor a ministerial-
level conference on March 18 in Manila to monitor the progress
made and share information on fund management.

"We are also open to cooperating with public auditors to
monitor the funds," he said.

The Supreme Audit Agency (BPK) has stated that it intends to audit donor
funds for Aceh, while the Ministry of Finance also plans to open
a treasury office in the province.

Meanwhile, Mulyani gave assurances that the additional funds
would be used to finance Aceh's reconstruction, the blueprint for
which is expected to be finished by the end of March. She also
expressed the hope that the ADB grant would encourage other
donors to give aid in the form of grants.

The Consultative Group on Indonesia (CGI) has already pledged
a preliminary commitment of $1.2 billion in grants and $500
million in interest-free loans for Aceh, apart from $3.4 billion
in new loans from the group for Indonesia this year.

Mulyani said the government would likely need up to Rp 10
trillion (US$1.07 billion) for the reconstruction of Aceh this
year and Rp 45 trillion over the next five years. The government
had previously assessed material losses and damage in the
province at $4.5 billion.