Sat, 17 May 2008
From: The Jakarta Post
By Novia D. Rulistia, The Jakarta Post, Batam
The Indonesian Drinking Water Association (Perpamsi), which groups together hundreds of heavily indebted state tapwater firms (PDAMs), is drafting a standardized business plan to help restructure their debts.

With most debts owed to the Finance Ministry, the State Development Finance Controller (BPKP) is also taking part in the drafting process, Perpamsi chairman Achmad Marju Qodari said Thursday.

Achmad said the drafting was expected to be completed in June, as was the ministry's draft on a debt-restructuring facility.

"As soon as the ministry regulation on debt restructuring is issued, we will immediately familiarize our members with it so more companies understand its importance," he said.

There are a total 316 PDAMs, of which 206 are heavily indebted. According to the World Bank, the 206 firms owed a combined Rp 3.88 trillion (about US$411 million) at the end of 2006.

The ministry initiated a debt-restructuring facility in 2005, but only 20 PDAMs have so far applied.

The World Bank said the changes were needed to attract investment for the water infrastructure sector.

Achmad said the plan would include the companies' operational plans for the next five years as well as its investment strategy for improving its PDAMs' production rates and quality.

"By my calculation, a PDAM will need around Rp 200 billion of investment to add about 100,000 customers, including the installation of new pipes," Achmad said.

The ministry also hopes more PDAMs will be attracted by the facility.

"I hope there will be more companies interested in having their debts restructured."

The World Bank also said total investment in the sector from 1995 to 1999 came close Rp 4 trillion, but fell to only Rp 377 billion in the succeeding five years.

Apart from the debt restructuring program, Achmad said, increasing tariffs, which are out of sync with operational and maintenance costs, would also improve the PDAMs' performances.

"The rate is about Rp 700 to Rp 1,000 per cubic meter, lower than the minimum standard of Rp 3,500 per cubic meter," he said.



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