INDONESIA’S BREAKTHROUGH IN ACHIEVING MDGs FOR WATER SUPPLY

A Presentation for ASIA WATER 2012

Kuala Lumpur, March 28, 2012By

Executive Director of PERPAMSI – Agus Sunara(PERSATUAN PERUSAHAAN AR MINUM SELURUH INDONESIA)

Summary program from :

1

OUTLINE• Existing condition of Water Services and MDGs

Achievement Program

• PDAMs Bussiness Development Program

• Water Grant Program

• NRW Reduction

• Synchronized water development program with PDAMs

2

Existing condition of Water Services and MDGs Achievement Program

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Proportion of people with access to the safe drinking water

National : 47,71 %

Urban : 49,82 %

Rural : 45,72 %

Total servicecoverage of piped water

National : 25,56 %

Urban : 43,96 %

Rural : 11,54 %

Direction of RI’s Pres ident:To overcome water crisis in dry and arid area to avoid water crisis in 2025

Proportion of people with access to the safe drinking water

National : 68,87 %

Urban : 78,19 %

Rural : 61,60 %

Total servicecoverage of piped water

National : 41,03 %

Urban : 68,32 %

Rural : 19,76 %

EXISTING CONDITION OF SERVICES WATER SERVICES TARGET 2015

Remarks :1) Target of drinking water services Y 2015 refer to

MDGs

2) Target of Dwater services (safe access) Y 2020: 85 % and Y 2025 : 100 %

EXISTING CONDITION and TARGET OF SERVICES

MDGs Target of Water Services per ProvinceYear 2015

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2015

Population Source: BPS August

2009

Acces to safe drinkingwater (total), Source: Susenas 2009

Acces to safe drinking water (total) MDGs 2015

(people) (%) (%)(1) (3) (2) (6)

1 Aceh 4.374.901 30,60% 50%2 Sumatera Utara 13.282.201 51,04% 71%3 Sumatera Barat 4.838.658 46,62% 70%4 Riau 5.325.773 40,96% 70%5 Jambi 2.841.734 51,19% 71%6 Sumatera Selatan 7.239.190 48,53% 70%7 Bengkulu 1.671.012 33,02% 50%8 Lampung 7.508.573 40,29% 70%9 Kep. Bangka Belitung 1.140.678 36,84% 52%

10 Kep. Riau 1.525.830 37,74% 50%11 DKI Jakarta 9.234.978 34,81% 50%12 Jawa Barat 41.597.759 40,51% 70%13 Jawa Tengah 32.902.860 58,30% 75%14 DI Yogyakarta 3.507.306 60,38% 80%15 Jawa Timur 37.316.833 55,70% 73%16 Banten 9.812.829 27,47% 45%

REGION I

NO. PROVINCE

2009

MDGs Target of Water Services per ProvinceYear 2015 (continued)

2015

(%) (%)(1) (3) (2) (6)

17 Bali 3.556.628 59,99% 75%18 Nusa Tenggara Barat 4.445.475 44,96% 70%19 Nusa Tenggara Timur 4.633.754 45,45% 70%20 Kalimantan Barat 4.330.635 54,02% 72%21 Kalimantan Tengah 2.090.462 36,89% 52%22 Kalimantan Selatan 3.504.254 51,97% 70%23 Kalimantan Timur 3.176.417 55,71% 73%24 Sulawesi Utara 2.232.257 44,49% 70%25 Sulawesi Tengah 2.487.149 44,36% 70%26 Sulawesi Selatan 7.925.474 50,13% 70%27 Sulawesi Tenggara 2.125.432 59,12% 74%28 Gorontalo 985.873 44,85% 70%29 Sulawesi Barat 1.050.292 42,92% 70%30 Maluku 1.342.613 55,50% 71%31 Maluku Utara 977.555 43,75% 70%32 Papua Barat 746.147 48,08% 70%33 Papua 2.104.262 35,44% 50%

INDONESIA 231.835.791 47,71% 68,87%

2009

NO.

REGION II

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Population Source: BPS August

2009

Acces to safe drinkingwater (total), Source: Susenas 2009

Acces to safe drinking water (total) MDGs 2015

(people)

PROVINCE

Source Peoples Budget(Rp Trillion)

1) APBN (national budget) + DAK (Special Alocation Fund) for Urban + Rural

16.942.200 37,62 T

2) APBD (regional budget)/PDAMs/PPP/Bank loan + DAK

25.397.390 27,64 T

Total Budget 65,26 TTo achieve MDGs target, 8.5 million new connection has to be installed

FUNDING NEEDS TO ACHIEVE MDGs

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Rural

IKK (Kecamatan capital)

Water-prone villages

Village with easy raw water (Pamsimas)

Raw WaterProduction/WTP

Transmission

APBNAPBDPDAMPPP (APBN)

APBDPDAMPPPAPBN (MBR)

APBN APBN APBN (up to public hydrant)

APBN APBNAPBN (up to public

hydrant)

APBNAPBNAPBDCBD

APBN : 70 %APBD : 10 %CBD : 20 %

PAM

SIMA

S

HC

PTDistribusion

Note : All existing systems operated by LG/PDAM/CBD (community base dev) APBN : Budget from Central GovAPBD : Budget from Local GovMBR : Low income communities

POLICY SCHEME FOR WATER DEVELOPMENT FUNDING

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WATER SERVICES COVERAGE DEVELOPMENT PROGRAM

Water Grant

ServiceExpansion

NRW Reduction

PDAMs’ business development

program

Loan

Technical assistance for PDAM

improvement

Well performed

PDAM

Management AssistanceDebt

Restructuring

Low Income Communities

Services

Proj Aid

NRW Grant

Under performed

PDAM

PPP

MDGs Urban Water

Services

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PDAMsBusiness Development Program

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Well performed

PDAMBUSINESS DEV

Subsidized Loan- Pres. Reg No. 29/2009- MoF Reg No. 229/2009

PPP (B TO B)MoPW Reg No. 12/2010

ACHIEVINGMDGs

!((

199 Under performed PDAM

175 PDAMs with bad loan have to be restructured in line with MoF Reg120/2008

80 PDAMs not yet propose

PROGRAM PENCAPAIAN MDG’sPDAMs Business Development Program

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PUBLIC PRIVATE PARTNERSHIP

Definition

An Agreement of Cooperation (MCC) or contract, between government agencies with a business entity/ private parties, in which:• private parties carrying out some functions of

government for a period of time• private parties to receive compensation for the

implementation of these functions, either directly or indirectly

• private parties are responsible for most of the risks arising from the implementation of these functions,

• government facilities, land or other assets can be transferred or used by private parties during the contract period.

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l Limited investmentl Management and developmentl Profit for all partiesl High efficiencyl Moderate risks

5. CONCESSION

Nature: to improve services consistently

1. SERVICE CONTRACT

l Limited investmentl Limited to O & Ml Limited risks

Nature: Out Sourcing

2. MANAJEMEN CONTRACT

l Limited investmentl Limited risks

Nature : to improve management efficiency

3. LEASE CONTRACTNature: to improve operational

efficiencyl Limited investmentl Limited to tools costl Moderate profitl Moderate efficiencyl Limited risks

l Limited investmentl Infrastructure development

l High qualityl Profit for all partiesl High efficiencyl Relatively high risksl Suitable for stable economy

4. BOT / BOOTNature : Out Sourcing

PPP MODALITY

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Investment Program be guaranteed and subsidized byCentral Govt. in accordance to President Regulation No.29/2009 & MoF Regulation No. 229/2009.

GUARANTEED & SUBSIDIZED by Central + Local Govt

GUARANTEED SUBSIDIZED

1.BI Rate + max 5%;2.(Commercial Interest Rate – BIRate) ≤ 5 %Case :If CIR 14 % and BI Rate 6 % 9 % for PDAMIf CIR 11 % and BI Rate 6 % 6 % for PDAMIf CIR 10 % and BI Rate 6 %? 6 % (= BIR)

1) 70% of Principle guaranteedby Govt (40 % CG, 30 % LG ifany default);

2) 30% Creditor Risk’s

Criteria : 1. Well performed PDAM (HEALTHY) (BPPSPAM evaluation)2. Approved of Debt Restruct (if any)3. Full cost recovery Water Tariff

LOAN (Domestic Bank)

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PDAMS LOAN PROGRESS to THE BANK

A. 5 State Bank committed for Rp 4,22 T :1) BRI Rp 1,8 T2) BNI: Rp 1,8 T3) Bank Jabar Banten: Rp 0,1 T4) Bank Kalsel Rp 0,12 T5) Bank Mandiri: Rp 0,4 T

B. 6 PDAM propose the Loan. And 3 PDAM signed Loan Agreement , 3 PDAM on going (appraisal) process.

Signed Loan Agreement :1. PDAM Kab. Ciamis Rp. 14,7 M2. PDAM Kab. Lombok Timur Rp. 11,18 M3. PDAM Kab. BogorRp. 24,312 M

On Going (Project Appraisal Document) :1. PDAM Kota Banjarmasin Rp. 110 M2. PDAM Kota Malang Rp. 44,974 M3. PDAM Kab. Tasikmalaya Rp. 51,18 M

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LESS HEALTHY

129

UNHEALTY 70

199 NON-PERFORMED PDAM

BPPSPAM• Diagnose

DIT. PAM• Treatment

DIT. PAM & BPPSPAM• Performance evaluation

RECOVERY PROCESS OF NON-PERFOMED PDAM

(Unhealthy & Less Healthy)

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1. Inefficiency of O & M

2. Inefficiency of Bill Collection

3. Average Tariff < Cost

4. Bad loan

5. Incompetent human resources.

Why PDAM Non performed

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1. Project Aid (Banpro) to optimize the system

2. Management Assistance (Capacity Building) :

• Tech Trainning (NRW reduction, operational efficiency)

• Finance + Manag Trainning (Billing System, Financial

Report, Water Tariff, etc)

Diagnosis of PDAMTechnical Assistance (Bantek)

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in principle (BanPro) to optimize drinkingwater system, not for expansion, e.g :

Rehabilitation of WTP Back up power (Genset) Install Main Water Meter Rehab Raw Water Trans and Distrib

Project Aid (BanPro)

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Water Hibah (Grant) Program

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1. Aim :

To provide access to safe drinking water for low income

communities (MBR).

2. Criteria

a. Local govt. Without debt arrears or in the process of debt

restructuring

b. Having idle capacity

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3. HOW MUCH MONEY for WATER HIBAH

Up to 1.000 HC

HIBAH (GRANT)

Rp 2 million / HC

> 1.000 HC

Rp 3 million / HC

Number of Grants given to local government for a maximum annual savings that have beenissued for this activity

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4. Terms and Condition for Water Hibah

Having waiting List

Approval Document of APBD as bridging finance

Readiness of DED (Distribution)

Comply to be verified and audited

Provide budget for overhead of Project Implementaion Unit (PIU)

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NRW Reduction

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TWINNING PROGRAM

SUBJECT: NRW REDUCTION

PILOT PROJECT (DMA)8 PDAM TWINNING INT’L + 2 LOCAL TWINNING

IMPLEMEN-TATION

NRW HIBAHTARGET: 10 PDAMs

BEING MENTOR

(CENTER OF EXCELLENT)

PIP2B

10

30

9025

Synchronized water development program with PDAMs

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DIT. PAM PERPAMSI

1. Management support through assistances and training

1. Provide mentor from well performed PDAM to share best practices to non-performed PDAM

2. Program Assistances 2. Monitor benefit values of Management and Assistances Program in improving PDAMs performances.

DIT. PAM PERPAMSI

1. Regular meeting with PDAM and Perpamsi Regional Board min. twice a year

1. Consolidation of PDAMs proposed activity

2. Project aid for water system 2. Agreement on the sort of assistances

A. PROGRAM CONSOLIDATION

B. PDAM RECOVERY

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DIT. PAM PERPAMSI1. Concept establisment 1. Program promotion

2. Program controling management

2. Replication through domestic program

3. Generate source of funding

3. Proposing PDAM to be mentor and recipient in internasional twinning program and center of excellent

C. TWINNING PROGRAM

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Synchronized Provincial Satker PK-PAM with PDAMs/Perpamsi Regional

1. PDAMs submit their proposal to Satker (physical and nonphysical support)

2. PDAMs preparing their Business Plan containing their needs. The Business Plan will be examined by Satker to determine any support to be provided

3. Perpamsi Regionals invite Provincial Satker in every proper technical or non-technical meeting.

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