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)