WB may not disburse last tranche of Watsal

Muninggar Sri Saraswati The Jakarta Post Jakarta

The World Bank may not disburse the third and last tranche of the Water Resources Sector Adjustment Loan (Watsal), worth US$150 million, to Indonesia if the controversial water resources bill fails to meet a 1999 commitment on water resource policy reform.

Guy Alaerts, the bank's senior water resources specialist, said on Tuesday that the bank was confused about developments in the water bill deliberation.

"We must discuss it with the government whether to continue the programs (or not). If there are different thoughts with regards the policy, the funding may not continue," said Alaerts.

The House of Representatives (DPR) has put the bill's deliberation on hold, due to strong public reactions concerning the privatization of the water sector.

The bill has also triggered debates on whether water was a commodity or a basic human right.

According to Alaerts, the water resources bill was "absolutely not in line with the loan agreement, the on-going projects nor the grant agreement".

"Therefore, the investment would be useless because there may not be interests or benefits," he said.

Confronted with a severe economic crisis, the government agreed in 1999 to reform the country's legislation on water to allow the privatization of the water sector, in exchange for $300 million in loans. The first and second tranches were disbursed in June 1999 and 2001 respectively, totaling US$150 million.

Many analysts and non-governmental organizations have expressed their opposition to the existing draft water resource bill, as it considers water as an economic commodity, which they say threatens people with uncertainty over access to safe and affordable water.

The World Bank sponsored a similar program in Bolivia in 1999, but the program has been at the root of frequent protests over access to safe and affordable water.

Alaerts claimed that the bank and other donors had invested some $1 billion for various projects in water resource management reform in Indonesia, including Watsal.

"If the Indonesian government and the House do not want to continue it, it would create problems not only to Indonesia, but also to donors," he warned.

He said the World Bank and other donors had conducted an initial discussion with the government about the issue.

Alaerts rejected allegations that the water resources investments from the bank was a vehicle for multinational water companies to enter the country.

"Some 95 percent of all funding from the World Bank has nothing to do with private companies. We're not interested in helping them ... no benefit," he said. "(The World Bank) only hopes for more equitable management of water resources so people would be assured access to water in the future."

Legislator Amri Husni Siregar of the Reform faction said the House would not be hasty in deliberating the bill.

"We have no target. We are only concerned about making a legislation that is good and is accepted by the public," he asserted, adding that the House was scheduled to resume the deliberation later this month.

Amri, who is also a member of the House working committee for the bill's deliberation, said the House would accommodate public scrutiny of the bill.

Simon L. Himawan, director of water resources and irrigation with the National Development Planning Board (Bappenas), said the issue had become the government's concern.

"(If they stop the disbursement), Minister (of Finance) Boediono will have a headache, as it will affect the state's financial balance," he said. He suggested the bank to understand that the deliberation was beyond the government's authority, as it was in the hands of the House.