Experts doubt ability to meet water targets

Experts doubt ability to meet water targets

JAKARTA (JP): A group of experts expressed doubt yesterday
over the government's ability to provide clean water for the
country's ever-increasing urban population, unless it changes the
way the state-run water companies are managed.

The Association of Health and Environment Technology Experts
described as "ambitious" the government's target of piping clean
water to 62 percent of Indonesia's urban population by 2008.

The target means the government must provide clean water to 66
million people, association chairman Rama Boedi said in a
workshop on urban water policy.

Rama presented the Urban Water Sector Policy Framework, a
report commissioned by the World Bank, to representatives of
water companies run by the 27 provincial administrations, and
executives from the National Development Planning Board and the
Ministry of Public Works Directorate General of Human
Settlements.

Rama said that at the end of the Fifth Five Year Program in
1994, 24 million people, or 36 percent of Indonesia's urban
population, received water from state-run water companies.

In order to achieve the targets, he said, Indonesia would need
to invest Rp 7 billion and Rp 10.8 billion in the seventh and
eighth Five-Year Plans respectively between 1999 and 2008.

The government has earmarked Rp 3 billion in the current Sixth
Five Year Plan.

Rama said water companies run by regional administrations
(PDAMs) must be revamped to become autonomous service companies
that are creditworthy and customer-driven.

Unless the clean water industry, regarded as a high-risk
investment sector, could attract commercial loans, the burden of
achieving the Five-Year Plan targets would fall solely on the
government, he said.

He noted that the government's spending on clean water
projects is to shrink in the Seventh Five-Year Plan, and that the
PDAMs will be expected to finance their own investments, either
through their own sources, or through the stock market.

This, he said, could be achieved by raising water rates, from
an average of Rp 650 per cubic meter in 1985 to Rp 950 (at
current prices) by 2008.

Rama said: "Theoretically, average water rates in Jakarta
could be reduced if the company could achieve greater
efficiency."

The study proposes a number of changes to the government's
urban water policy.

First and foremost is the separation of ownership and
management of the 300-odd water companies currently managed by
regional administrations. This would lead to greater efficiency
and accountability by the managements and minimize the political
aspects of the day-to-day operations.

The study also proposes a regulation on private sector
participation in the water industry. The absence of such a
regulation has deterred many potential investors, particularly
given the high risk.

A third proposal is better financial management of PDAMs,
which have relied on government aid and concessional loans
because very few are considered creditworthy.

It fourthly urges simpler tariff structures, recalling that
the present system encourages major users to tap artesian wells,
causing huge losses in potential revenue.

The workshop highlighted the success of the cooperation
between PDAM Bali and a group of private investors in managing
water resources in the province since 1991

Uki Ahardijatno, head of PDAM Bali, said the company enlisted
major hotel owners in Bali to participate in the project

"Our investors are also our customers," Uki said.

PDAM Jaya, which supplies clean water in Jakarta, signed a
cooperation agreement in June with three private companies to
jointly manage water treatment and distribution in the capital.
(04)