Reconstruction of Indonesia’s Drinking Water Utilities
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Transcript of Reconstruction of Indonesia’s Drinking Water Utilities
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Reconstruction of Reconstruction of Indonesia’s Drinking Water Indonesia’s Drinking Water
UtilitiesUtilities
Assessment and Stakeholders Assessment and Stakeholders Perspectives on Private Sector Perspectives on Private Sector
Participation in the Capital Participation in the Capital Province of JakartaProvince of Jakarta
Nur Endah ShofianiEESI 2002/2003
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Research ObjectivesResearch Objectives
Assess and evaluate Public Private Assess and evaluate Public Private
Partnership (PPP) in eastern half ofPartnership (PPP) in eastern half of
Jakarta:Jakarta:
• Process of PPPProcess of PPP
• Perception of different stakeholdersPerception of different stakeholders
• Expectation of the consumersExpectation of the consumers
• Service quality during the last 5 yearsService quality during the last 5 years
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Study AreaStudy Area
Jakarta Bay
North Jakarta
West Jakarta
East Jakarta
Central Jakarta
N
The Province of West Java
The Province of
West Java
South Jakarta
Ciliwung River
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Ciliwung River
RWE Thames Water(Thames PAM Jaya)Suez-Lyonnaise
(PAM Lyonnaise Jaya
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MethodsMethods
Inductive methodology:Inductive methodology:
• Collection of documentsCollection of documents
• Interview with the representatives of Interview with the representatives of stakeholders (stakeholders (7 different groups7 different groups))
• Consumers survey (Consumers survey (350 consumers350 consumers))
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Water PrivatisationWater Privatisation
• What is Privatisation?What is Privatisation? ¤¤
• Why need Privatisation?Why need Privatisation? ¤¤
• How Privatisation works?How Privatisation works? ¤¤
• Who advocate in Privatisation?Who advocate in Privatisation? ¤¤
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Rationales of Water Rationales of Water Privatisation Privatisation in Indonesiain Indonesia• High population growthHigh population growth
• High demand of infrastructure servicesHigh demand of infrastructure services
• Only 36% of urban population (67 mil) Only 36% of urban population (67 mil) have access to piped waterhave access to piped water
Therefore:Therefore:
• investments is neededinvestments is needed
But:But:
• The GoI could not provide the capitalsThe GoI could not provide the capitals
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PopulationPopulation
Indonesia:Indonesia:
• In 2000 203.5 millions (growth rate 1.35%)In 2000 203.5 millions (growth rate 1.35%)
• 59% reside in Java (7% of total area)59% reside in Java (7% of total area)
• Population density 945 heads/km2Population density 945 heads/km2
Jakarta:Jakarta:
• In 2002 8.4 millions (growth rate 0.16%)In 2002 8.4 millions (growth rate 0.16%)
• Area 662km2Area 662km2
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Jakarta Water Supply Jakarta Water Supply ProblemsProblems• Population of 8.4 millions (growth Population of 8.4 millions (growth
0.16%)0.16%)
• Low service area coverage (48%)Low service area coverage (48%)
• High water losses (53% UFW)High water losses (53% UFW)
• Low population coverage (29.61%)Low population coverage (29.61%)
• Excessive groundwater abstractionExcessive groundwater abstraction
• Land subsidies and saltwater intrusionLand subsidies and saltwater intrusion
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Jakarta’s History of Jakarta’s History of PrivatisationPrivatisation• 5 June 1995: GOI invited private to 5 June 1995: GOI invited private to
participateparticipate• 6 Oct 1995: MoU agreed and signed with two 6 Oct 1995: MoU agreed and signed with two
appointed consortia ¤appointed consortia ¤• Jan 1996: Submission of Feasibility StudyJan 1996: Submission of Feasibility Study• 6 June 1997: Concession Agreements for 25 6 June 1997: Concession Agreements for 25
years were signedyears were signed• 1 Feb 1998: The effective day of agreement1 Feb 1998: The effective day of agreement• 1 June 1998: Renegotiation of partnership 1 June 1998: Renegotiation of partnership
agreementagreement• 19 Sept 2001: New agreements were signed19 Sept 2001: New agreements were signed
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Findings and ResultsFindings and Results
• The Stakeholders InterviewsThe Stakeholders Interviews
• The Consumers SurveyThe Consumers Survey
• Supporting literaturesSupporting literatures
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The Stakeholder InterviewsThe Stakeholder Interviews
• Stakeholder and Institutional Stakeholder and Institutional RelationshipRelationship
• Jakarta Drinking Water SystemJakarta Drinking Water System
• Asset and operationAsset and operation
• Tariff and RevenuesTariff and Revenues
• Technical TargetsTechnical Targets
• Target achievementsTarget achievements
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Stakeholders and Institutional Stakeholders and Institutional RelationshipRelationship
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Jakarta Drinking Water Supply Jakarta Drinking Water Supply SystemSystem
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Tariff and RevenueTariff and Revenue
• Water tariff and water charge ¤ Water tariff and water charge ¤ • Tariff and charge adjustment: regularlyTariff and charge adjustment: regularly• Revenue: from water tariffRevenue: from water tariff• Revenue sharing mechanism:Revenue sharing mechanism:
– Debt and operational cost of PAM JayaDebt and operational cost of PAM Jaya– The cost of regulatory bodyThe cost of regulatory body– Local government income/revenueLocal government income/revenue– Compensation to the private partnerCompensation to the private partner
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Technical Targets and Service Technical Targets and Service StandardStandard• Technical targets:Technical targets:
– Volume of water billedVolume of water billed– Water productionWater production– Unaccounted for waterUnaccounted for water– Number of connectionNumber of connection– Service coverageService coverage
• Service standardService standard– Water qualityWater quality– Water pressureWater pressure– Consumer serviceConsumer service
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Target AchievementTarget Achievement ¤ ¤¤ ¤
Target Achievement
0.0020.0040.0060.0080.00
100.00120.00
Volume ofWater Billed
WaterProduction
UFW Number ofconnections
CoverageRatio
Technical Standards
Pe
rce
nta
ge
(%
)
1997 2001
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The Consumers SurveyThe Consumers Survey
• General InformationGeneral Information
• Responses to the QuestionnaireResponses to the Questionnaire
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General InformationGeneral Information
• Number of consumers: 348 760 (July Number of consumers: 348 760 (July 2003)2003)
• Distribution of sex: F/M = 180/170 Distribution of sex: F/M = 180/170 (100/105)(100/105)
• Employment StatusEmployment Status• Income per monthIncome per month• Persons per housePersons per house• Consumer GroupsConsumer Groups ¤¤
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The Consumer GroupsThe Consumer Groups
Very poor Very poor householdshouseholds
Group IGroup IOrphanageOrphanage
Group IIGroup IIPoor householdsPoor households
Group IIIAGroup IIIALow-IncomeLow-Income
Group IIIBGroup IIIBMiddle IncomeMiddle Income
Group IVAGroup IVAHigh-IncomeHigh-Income
Group IVBGroup IVBOffices hotels etcOffices hotels etc
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Responses to the Responses to the QuestionnaireQuestionnaire• The operatorThe operator
• Expenses for waterExpenses for water
• Water tariff adjustmentWater tariff adjustment
• Water continuityWater continuity
• Water quality problemsWater quality problems ¤¤
• Additional source of drinking waterAdditional source of drinking water ¤¤
• Improvement in water service provision Improvement in water service provision ¤¤
• Customer satisfactionCustomer satisfaction ¤¤
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DiscussionDiscussion
• Water as a fundamental need vs economic Water as a fundamental need vs economic goodgood
• Role of International Financial InstitutionsRole of International Financial Institutions
• The absence of appropriate regulatory The absence of appropriate regulatory frameworkframework
• Premature institutional transformationPremature institutional transformation
• Semi concession agreementSemi concession agreement
• The government fully guarantee the loss of The government fully guarantee the loss of the private companythe private company
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Discussion (cont.)Discussion (cont.)
• Bilateral cooperation between UK and Bilateral cooperation between UK and IndonesiaIndonesia
• Contract renegotiationsContract renegotiations
• No performance bondNo performance bond
• Limited access to water and low coverage ratioLimited access to water and low coverage ratio
• Independent regulatory bodyIndependent regulatory body
• Lack of public participationLack of public participation
• High water tariff and low service performanceHigh water tariff and low service performance
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RecommendationRecommendation
• Establishment of appropriate regulatory Establishment of appropriate regulatory frameworkframework
• Increase institutional capacityIncrease institutional capacity• Establishment of independent Establishment of independent
regulatory bodyregulatory body• Regular classification of consumers Regular classification of consumers
groupgroup• Delay tariff adjustmentDelay tariff adjustment• Water in public handWater in public hand
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Definition Definition (Gleick, 2002)(Gleick, 2002)
• Water Privatisation is a process of Water Privatisation is a process of transferring some or all of the assets transferring some or all of the assets or operations of public water system or operations of public water system into private hands. into private hands.
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5 Driving Forces of 5 Driving Forces of Privatisation Privatisation (Gleick, 2002)(Gleick, 2002)
• Ideological PressureIdeological Pressure
• Pragmatic PressurePragmatic Pressure
• Societal PressureSocietal Pressure
• Financial PressureFinancial Pressure
• Commercial PressureCommercial Pressure
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Models of Privatisation Models of Privatisation (Blokland, 1999)(Blokland, 1999)
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Who’s Involved?Who’s Involved?
• Private water companies, including Private water companies, including Transnational CompaniesTransnational Companies
• International Financial Institutions International Financial Institutions (IFIs): World Bank, IMF, Asian (IFIs): World Bank, IMF, Asian Development Bank, etc.Development Bank, etc.
• International Trade Treaties: GATT, International Trade Treaties: GATT, WTO, GATS, NAFTA, AFTA, etc. WTO, GATS, NAFTA, AFTA, etc.
• Governments: institutions and policiesGovernments: institutions and policies
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The Two ConsortiaThe Two Consortia
• Eastern Jakarta (Zone II, III and VI): Eastern Jakarta (Zone II, III and VI): PT. Thames PAM Jaya (TPJ)PT. Thames PAM Jaya (TPJ)– RWE Thames WaterRWE Thames Water– PT. Kekarpola AirindoPT. Kekarpola Airindo
• Western Jakarta (Zone I, IV, and V): Western Jakarta (Zone I, IV, and V): PT. PAM Lyonnaise Jaya (PALYJA)PT. PAM Lyonnaise Jaya (PALYJA)– Suez-Lyonnaise des EauxSuez-Lyonnaise des Eaux– PT. Garuda Dipta SemestaPT. Garuda Dipta Semesta
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STAKEHOLDERSTAKEHOLDER GROUPSGROUPS DESCRIPTIONDESCRIPTION
GovernmentGovernment - Sub-directorate of clean water, National Development Planning Sub-directorate of clean water, National Development Planning Agency Agency (BAPPENAS)(BAPPENAS)
- Sub-directorate of urban clean water, Ministry of Settlement and Sub-directorate of urban clean water, Ministry of Settlement and Regional Infrastructure Regional Infrastructure (KIMPRASWIL)(KIMPRASWIL)
- Sub-directorate of technical advisory, Ministry of Settlement and Sub-directorate of technical advisory, Ministry of Settlement and Regional Infrastructure Regional Infrastructure (KIMPRASWIL)(KIMPRASWIL)
- Investment and Construction Development Agency Investment and Construction Development Agency (BAPEKIN)(BAPEKIN)
Regional Water Regional Water AuthoritiesAuthorities
- Jakarta Municipal Waterworks Jakarta Municipal Waterworks (PAM Jaya)(PAM Jaya)- The Regulatory BodyThe Regulatory Body
International International AgenciesAgencies
- Urban Development Sector Unit, Urban Development Sector Unit, World BankWorld Bank - Urban Development and Water Supply Sector, the Asian Urban Development and Water Supply Sector, the Asian
Development Bank Development Bank (ADB)(ADB)
Private CompanyPrivate Company PT. Thames PAM Jaya PT. Thames PAM Jaya (TPJ)(TPJ) a consortia of RWE Thames Water a consortia of RWE Thames Water
NGOsNGOs - Indonesian Consumers Organization Indonesian Consumers Organization (YLKI)(YLKI)- Indonesian Forum for Environment/Friends of Earth Indonesia Indonesian Forum for Environment/Friends of Earth Indonesia
(WALHI)(WALHI)- Indonesia Drinking Water Communication Forum Indonesia Drinking Water Communication Forum (FORKAMI)(FORKAMI)- International NGO Forum on Indonesian Development International NGO Forum on Indonesian Development (INFID)(INFID)
AssociationAssociation Indonesian Water Supply Association Indonesian Water Supply Association (PERPAMSI)(PERPAMSI)
ConsumerConsumer Households, social and commercialHouseholds, social and commercial
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ZonZonee
RayonRayon ConsumeConsumerr
PercentaPercentagege
RespondeRespondentnt
IIII Zone IIZone II 139 029139 029 40%40% 140140
IIIIII Zone Zone IIIIII 123 482123 482 35%35% 124124
VIVI Zone Zone VIVI 86 24986 249 25%25% 8686
TotalTotal 348 760348 760 100%100% 350 350 Actual Ratio of Consumer VS Ratio of Respondents
0
10
20
30
40
50
60
70
Group I Group II Group III A Group III B Group IV A Group IV B
Consumer Groups
Per
cen
tag
e (%
)
Actual Ratio of Consumers Ratio of Respondents
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General Information (cont.)General Information (cont.)
34.00
1.71
33.43
6.869.14 9.71
2.86 2.29
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Employee Employer SelfEmployed
StateEmployee
PrivateWorker
Retired NoPermanent
Job
Others
Employement Status
Per
cen
tag
e (%
)
8.57
32.86 32.57
13.43
3.716.57
2.29
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
< 0.5 0.5 - 1.0 1.0 - 2.0 2.0 - 4.0 4.0 - 5.0 > 5.0 Others
Income Group (in millions Rupiah)
Per
cen
tag
e (%
)
43.43
46.57
6.29 3.71
1 - 4 persons 5 - 8 persons9 - 12 persons >12 persons
0.29
12.00
65.14
15.71
4.862.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
I II III A III B IV A IV B
Consumer Groups
Pe
rce
nta
ge
(%
)
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Response to the Questionnaire Response to the Questionnaire (cont.)(cont.)
Water Operator
28%
39%
11%
22%
Public Private Joint I don't know
Expenses for Water
55
30
94 2
0102030405060
< 5% 5% - 10% 10% - 20% > 20% others
Expenses for Water based on Montly Salary (Rp)
Per
cen
tag
e (%
)
Tariff Increase
10%
33%
28%
29%
Acceptable Unacceptable No comment No increase
Water Continuity
1.71 3.14 5.43 7.71 12.57
69.43
0.00
20.00
40.00
60.00
80.00
0 - 4hours
5 - 8hours
9 - 12hours
13 - 16hours
17 - 20hours
21 - 24hours
Water Continuity (hours)
Per
cen
tag
e (%
)
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Response to the Questionnaire Response to the Questionnaire (cont.)(cont.)
Water Quality Problems
59.71
21.7111.14
1.14 6.29
0.00
20.00
40.00
60.00
80.00
No Problem Turbidity Odor Colour Turbidityand Odor
Water Quality Problems
Per
cen
tag
e (%
)
Additional Source of Drinking Water
55.43
1.43
24.00
1.7111.14 6.29
0.00
10.00
20.00
30.00
40.00
50.00
60.00
No other
source
Vendor Bottled Water Groundwater Groundwater +
Pump
Bottled Water,
Groundwater +
Pump
Other Source of Drinking Water
Per
cen
tag
e (%
)
Improvement in Water Service
8%
92%
Yes No
Customers Satisfaction
58%
42%
Yes No
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Major Issues in Water Major Issues in Water ProvisionProvision• Water tariffWater tariff• Water quality, quantity, continuity and Water quality, quantity, continuity and
pressurepressure• Billing collectionBilling collection• Meter readingMeter reading• Technical problemsTechnical problems• ManagementManagement• AdministrationAdministration• Customer serviceCustomer service• informationinformation
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Water and Sanitation Water and Sanitation FacilitiesFacilities
Low-IncomeLow-Income Mid-IncomeMid-Income High-IncomeHigh-Income
Water WellWater Well Water StorageWater Storage Water TapWater Tap
Tap & FilterTap & Filter Water MeterWater Meter Water TankWater Tank
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Water Charge vs Water Water Charge vs Water TariffTariff
970
1740 1829 1861
2363
2660
1305
1619
2448
28052643
2543
800
1200
1600
2000
2400
2800
1997 1998 1999 2000 2001 2002
Year
Wat
er T
arif
f an
d C
har
ge
(Rp
/m3)
Average Water Tariff Water Charge
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Detailed Target Detailed Target Achievement (1)Achievement (1)
Unaccounted for Water
30
35
40
45
50
55
60
1997 1998 1999 2000 2001 2002
Year
UF
W (
%)
Target (2000) Realization Target (1997)
200000
220000
240000
260000
280000
300000
320000
340000
360000
380000
1997 1998 1999 2000 2001 2002
Year
Ho
use
of
Co
nn
ecti
on
(u
nit
s)
Target 2002 Realization Target (1997)
Water Production
7200740076007800800082008400860088009000
1997 1998 1999 2000 2001 2002
Year
Pro
du
ctio
n (
L/s
ec)
Target (2002) Realization Target (1997)
Volume of Water Billed
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
1998 1999 2000 2001 2002
Year
Vol
ume
(mill
ion
m3)
Target (2002) Realization Target (1997)
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Detailed Target Detailed Target Achievement (2)Achievement (2)
Coverage Ratio
50
55
60
65
70
75
1997 1998 1999 2000 2001 2002
Year
Ra
tio
(%
)
Target (2000) Realization Target (1997)