Program

INDONESIA’S BREAKTHROUGH IN ACHIEVING MDGs FOR WATER SUPPLY

A Presentation for ASIA WATER 2012 Kuala Lumpur, March 28, 2012 By 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

3

EXISTING CONDITION and TARGET OF SERVICES EXISTING CONDITION OF SERVICES Proportion of people with access to the safe drinking water

National

: 47,71 %

National : 68,87 % Proportion of people with access to the safe drinking water

Urban : 49,82 %

Rural : 45,72 %

National Total service coverage of piped water

WATER SERVICES TARGET 2015

: 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

Urban : 78,19 % Rural : 61,60 %

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 %

National : 41,03 % Total service coverage of piped water

Urban : 68,32 % Rural : 19,76 %

MDGs Target of Water Services per Province Year 2015 2009

NO.

PROVINCE

(1) REGION I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Aceh Sumatera Utara Sumatera Barat Riau Jambi Sumatera Selatan Bengkulu Lampung Kep. Bangka Belitung Kep. Riau DKI Jakarta Jawa Barat Jawa Tengah DI Yogyakarta Jawa Timur Banten

Population Source: BPS August 2009

(people) (3) 4.374.901 13.282.201 4.838.658 5.325.773 2.841.734 7.239.190 1.671.012 7.508.573 1.140.678 1.525.830 9.234.978 41.597.759 32.902.860 3.507.306 37.316.833 9.812.829

2015

Acces to safe drinking water (total), Source: Susenas 2009

(%) (2)

30,60% 51,04% 46,62% 40,96% 51,19% 48,53% 33,02% 40,29% 36,84% 37,74% 34,81% 40,51% 58,30% 60,38% 55,70% 27,47%

Acces to safe drinking water (total) MDGs 2015

(%) (6)

50% 71% 70% 70% 71% 70% 50% 70% 52% 50% 50% 70% 75% 80% 73% 45%

5

MDGs Target of Water Services per Province Year 2015 (continued) 2009

NO.

PROVINCE

Population Source: BPS August 2009

(people) (1) REGION II 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

Bali Nusa Tenggara Barat Nusa Tenggara Timur Kalimantan Barat Kalimantan Tengah Kalimantan Selatan Kalimantan Timur Sulawesi Utara Sulawesi Tengah Sulawesi Selatan Sulawesi Tenggara Gorontalo Sulawesi Barat Maluku Maluku Utara Papua Barat Papua

INDONESIA

(3) 3.556.628 4.445.475 4.633.754 4.330.635 2.090.462 3.504.254 3.176.417 2.232.257 2.487.149 7.925.474 2.125.432 985.873 1.050.292 1.342.613 977.555 746.147 2.104.262

231.835.791

2015

Acces to safe drinking water (total), Source: Susenas 2009

(%) (2)

59,99% 44,96% 45,45% 54,02% 36,89% 51,97% 55,71% 44,49% 44,36% 50,13% 59,12% 44,85% 42,92% 55,50% 43,75% 48,08% 35,44%

47,71%

Acces to safe drinking water (total) MDGs 2015

(%) (6)

75% 70% 70% 72% 52% 70% 73% 70% 70% 70% 74% 70% 70% 71% 70% 70% 50%

68,87%

6

FUNDING NEEDS TO ACHIEVE MDGs

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 T

To achieve MDGs target, 8.5 million new connection has to be installed

7

POLICY SCHEME FOR WATER DEVELOPMENT FUNDING Raw Water Rural

Water-prone villages

Distribusion  APBD  PDAM  PPP  APBN (MBR)

APBN

APBN

APBN (up to public hydrant)

APBN

APBN

APBN

 APBN  APBD  CBD

HC PT

APBN (up to public hydrant)

 APBN  APBD  CBD

PAMSIMAS

Village with easy raw water (Pamsimas)

Transmission

 APBD  PDAM  PPP (APBN)

APBN

IKK (Kecamatan capital)

Production /WTP

: 70 % : 10 % : 20 %

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

8

WATER SERVICES COVERAGE DEVELOPMENT PROGRAM MDGs Urban Water Services

Low Income Communities Services

Service Expansion

Water Grant

PDAMs’ business development program

Loan NRW Reduction

PPP

Well performed PDAM NRW Grant Debt Restructuring

Under performed PDAM

Proj Aid

Management Assistance

Technical assistance for PDAM improvement 9

PDAMs Business Development Program

10

PDAMs PROGRAM Business PENCAPAIAN Development MDG’s Program Well performed PDAM

BUSINESS DEV

PPP (B TO B) MoPW Reg No. 12/2010 Subsidized Loan - Pres. Reg No. 29/2009 - MoF Reg No. 229/2009

199 Under performed PDAM

175 PDAMs with bad loan have to be restructured in line with MoF Reg !(( 120/2008 80 PDAMs not yet propose

ACHIEVING MDGs

11

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.

12

PPP MODALITY

5. CONCESSION Nature: to improve services consistently l Limited investment l Management and development l Profit for all parties l High efficiency l Moderate risks

4. BOT / BOOT Nature : Out Sourcing l Limited investment l Infrastructure development l High quality l Profit for all parties l High efficiency l Relatively high risks l Suitable for stable economy 3. LEASE CONTRACT Nature: to improve operational efficiency

1. SERVICE CONTRACT Nature: Out Sourcing l Limited investment l Limited to O & M l Limited risks

l Limited investment l Limited to tools cost l Moderate profit l Moderate efficiency 2. MANAJEMEN CONTRACT l Limited risks Nature : to improve management efficiency l Limited investment l Limited risks

13

LOAN (Domestic Bank) Investment Program  be guaranteed and subsidized by Central Govt. in accordance to President Regulation No. 29/2009 & MoF Regulation No. 229/2009. Criteria :

1. Well performed PDAM (HEALTHY) (BPPSPAM evaluation) 2. Approved of Debt Restruct (if any) 3. Full cost recovery Water Tariff GUARANTEED & SUBSIDIZED by Central + Local Govt

GUARANTEED

SUBSIDIZED

1) 70% of Principle guaranteed by Govt (40 % CG, 30 % LG if any default); 2) 30% Creditor Risk’s

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

14

PDAMS LOAN PROGRESS to THE BANK A. 5 State Bank committed for Rp 4,22 T : 1) BRI Rp 1,8 T 2) BNI: Rp 1,8 T 3) Bank Jabar Banten: Rp 0,1 T 4) Bank Kalsel Rp 0,12 T 5) 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 M 2. PDAM Kab. Lombok Timur Rp. 11,18 M 3. PDAM Kab. BogorRp. 24,312 M On Going (Project Appraisal Document) : 1. PDAM Kota Banjarmasin Rp. 110 M 2. PDAM Kota Malang Rp. 44,974 M 3. PDAM Kab. Tasikmalaya Rp. 51,18 M 15

RECOVERY PROCESS OF NON-PERFOMED PDAM (Unhealthy & Less Healthy) 199 NON-PERFORMED PDAM

BPPSPAM • Diagnose

DIT. PAM • Treatment

DIT. PAM & BPPSPAM • Performance evaluation

UNHEALTY 70

LESS HEALTHY 129

16

Why PDAM Non performed 1. Inefficiency of O & M 2. Inefficiency of Bill Collection 3. Average Tariff < Cost 4. Bad loan 5. Incompetent human resources.

17

Diagnosis of PDAM Technical Assistance (Bantek) 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)

18

Project Aid (BanPro) in principle (BanPro) to optimize drinking water system, not for expansion, e.g :    

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

19

Water Hibah (Grant) Program

20

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

21

3. HOW MUCH MONEY for WATER HIBAH

HIBAH (GRANT)

Up to 1.000 HC

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 been issued for this activity

22

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)

23

NRW Reduction

24

TWINNING PROGRAM

PILOT PROJECT (DMA)

SUBJECT: NRW REDUCTION

8 PDAM TWINNING INT’L + 2 LOCAL TWINNING

IMPLEMENTATION

PIP2B BEING MENTOR (CENTER OF EXCELLENT)

NRW HIBAH TARGET: 10 PDAMs

10

30 90 25

Synchronized water development program with PDAMs

26

A. PROGRAM CONSOLIDATION DIT. PAM

PERPAMSI

1. Regular meeting with PDAM 1. Consolidation of PDAMs and Perpamsi Regional Board proposed activity min. twice a year 2. Project aid for water system

2. Agreement on the sort of assistances B. PDAM RECOVERY

DIT. PAM

PERPAMSI

1. Management support through assistances and training

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

2. Program Assistances

2. Monitor benefit values of Management and Assistances Program in improving PDAMs performances. 27

C. TWINNING PROGRAM DIT. PAM PERPAMSI 1. 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

28

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.

29

30