Thursday, 20 November 2008

Water Supply Industry, Indonesia

Treatment and distribution of clean water in urban areas is the responsibility of about 318 water enterprises (PDAMs) under the ownership/jurisdiction of local government. In Jakarta, Batam and 20 other locations in Indonesia (BPP SPAM, 2005), concessions for water supply have been awarded to the private sector. Elsewhere, the role of the private sector in WSS is limited to that of supplier or contractor. The PDAMs supply water to customers through house connections (presently about 39% of the urban population).
About 61% of the population receives water through informal distribution networks and various water vending operations. PDAM distribution in rural areas is estimated at 8%.
Approximately 40.15 million people live in the urban areas served by the PDAMs. Based on 2005 data, only about 44% of the urban communities are served. The remaining 60% of the urban population, of which many are low-income, rely on other sources of water that includes self-provision and commercial on-selling.
In rural areas, that community-managed systems are estimated to meet the needs of about 30% of the population, most of which have been established in rudimentary forms by the communities themselves, and some with the support of NGOs using national and donor funds. The success of these participatory initiatives represents an important lesson learned for possible application in cities as part of future initiatives to enable urban poor communities to access clean water at an affordable price and ensure that informal systems also meet financial sustainability criteria.
These informal systems will need to be sourced from (i) groundwater abstraction, (ii) bulk supplies from PDAM distribution pipelines, or (iii) handcart vending. The legal basis for distribution of PDAM water by other providers is often not clear, but it occurs on a massive scale; the success of expanding community managed systems in urban areas could be improved by formalizing self-provision and establishing a framework by allocating responsibilities for policy-making and regulation.
Household-managed water supply through self-provision is feasible in areas where the groundwater table is fairly high and unpolluted. However, groundwater water quality is often poor in urban and rural area, as well as supply sustainability being uncertain.
In rural areas, more than 90% of communities receive water supply through various self-help arrangements, which are often unreliable and time consuming.
The great majority of PDAMs are struggling, with their financial situation deteriorating, and service quality falling. About 70% of the PDAMs are heavily indebted, having on their books more than 400 outstanding loans from the Ministry of Finance (MOF) that need to be restructured, as almost two thirds are in arrears or default. As stated in PMP 107, MOF invites PDAMs to prepare Corporate Performance Inprovement Plans (RPKP) to improve its performance to enable it to expand its services to consumers. The RPKP contains an analysis of all the existing problems of the PDAM, whether they are technical, financial, commercial or managerial. RPKP are to be prepared by PDAMs with assistance from MPW, with consultation with the MOF, particularly with respect to the debt settlement.
Through PMK 107, the government offers the restructurizing program for the PDAM debt through principal rescheduling and partial write-offs of arrears on interest and penalties. However, it is by Treasury DG decree 43/PB/2006 concerning guidelines for state receivables.

Source: KKPPI, Sector Review 2006

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