RI TO SPEED UP CLEAN WATER SUPPLY PROGRAM by Fardah

     Jakarta, Aug. 4, 2009 (ANTARA) - The Indonesian government has set itself the target of giving 80 percent of the country's urban population and 60 percent of the rural population access to clean water by 2015, up from only 40 percent and 20 percent respectively today.

         To achieve the target, Indonesia plans to speed up the installation of 10 million new water pipe connections by 2013. The plan would also help the country to meet the target in The United Nations Millennium Development Goals (MDG) in 2015.

         "The connections should be installed sooner than the five year target, if possible it will be completed within three years," Vice President Jusuf Kalla said at the opening of the "Nusantara Water Exhibition 2008" at the Jakarta Convention Center (JCC).

         MDG 7, which calls for ensuring environmental sustainability, has as one of its targets the halving of the proportion of people without sustainable access to safe drinking water and basic sanitation by 2015.

         Access to clean water will improve the people's health and reduce the multiple burdens on women and girls in particular as they are the primary collectors, providers, users, and managers of water in the household.

         "We have to push the supply of piped water to about 10 million households within five years. Otherwise, we will be left behind and fail to meet the MDGs target," Public Works Minister Joko Kirmanto said as quoted by the Jakarta Post in September 2008 after meeting with Vice President Jusuf Kalla, a couple of days before leaders from around the world, including Indonesia, gather in New York to report on progress and map out agendas for the MDGs.

         "We are facing critical problems in the supply of drinking water. Pak Kalla gave the order to increase piped water connections," Joko said.

         Regional water supply companies (PDAMs) would need Rp70-Rp80 trillion (about US$7-8 billion) for the 10 million new water pipe connections.  They expect to get the funds from state bank loans at low interest.

         The World Bank predicted Indonesia will need about US$4.6 billion to reach the MDGs target.

         According to data from the Public Works Ministry, Indonesia currently provides piped water to only 24 percent of the population, or 50 million people. Fifty-five percent of them are located in urban areas. In Jakarta, only 65 percent of the city's 9 million residents have access to piped water, while the rest use groundwater.

         The Association of Clean Water Supply Companies (Perpamsi) has hailed the government's support in speeding up the works with its new 10 million of water pipe connections for regional water service utilities (PDAM) up to 2013.   
    "We have already had six meetings with the vice president (M Jusuf Kalla) to discuss the additional 10 million connections. However, we still face a lack of commitment from regional administrations until now," Perpamsi Chairman Achmad Marju Kodri said in a press statement early July 2009.

         According to the press statement, Vice President M Jusuf Kalla said in an interactive dialog on state TV station TVRI on July 3 that the government supported the accelerated establishment of the new 10  million connections of water pipes until 2013 for the improvement of the people's health and welfare.

         For that purpose, the vice president asked all heads of regional administrations to support the target among other things by not preventing water tariff increase, as the tariff was currently less than the water supply production cost.

         He also urged PDAMs to restructure their debts and formulate business plan as demanded in the finance ministry's regulation No. 120/2008, in order to improve their financial condition and water supply service to the public.

         Kalla said that two years ago only 10 percent of the total 351 PDAMs in Indonesia were in a sound condition, and now the figure has increased to 30 percent.

         According to him, the PDAMs have so far been indebted because they had to sell water below the production cost. They could not increase the water tariffs so far due to the public's perception, which believed that water was a free commodity.

         In May 2008, the Vice President decided to write off interest and outstanding fines on water supply companies' debts amounting to Rp4 trillion, slashing the amount of the companies total debt to Rp1 trillion to help them improve their services.

         When speaking at a national working meeting of Perpamsi in Mataram, West Nusa Tenggara, June 2008, Kalla said water supply tariffs should also reach a basic economic price level to support the proper management of water supply services.

         "Water should be managed commercially, meaning that its price should be set in accordance with the basic cost of its production. But it should not be too high," Kalla said.

         If water supply tariffs reached an economic level, they would encourage the conservation of water and help the water supply companies (PDAMs) develop themselves, Kalla said.

         If the tariffs were too low PDAMs would not be able to develop, he said.

         "If the tariffs are too low, we in fact harm and disadvantage the poor. The poor who are not yet covered by PDAMs' water supply services now have to pay more to buy water from vendors," he said.

         The vice president had decided to write off Rp4 trillion from the amount of outstanding interest and fines slashing the amount of the companies total debt to Rp1 trillion.

         Finance Minister Sri Mulyani Indrawati said in Aug 2008 that the government would conduct semestral evaluations of the restructurization of local clean water companies (PDAM)'s debts to ensure the program is carried out according to good financial management principles.

         "There must be a review every six months which means that in January 2009, I will get a report from my director general on what has happened, which PDAMs have made progress and which ones have not," she said.

         As per June 30, 2008, 175 clean water companies in Indonesia had a backlog of debts totaling Rp4.65 trillion made up of Rp1.5 trillion in principal and Rp3.1 trillion in non-principal debt.

         The debt restructurization would be conducted through a debt-to- investment scheme or write-offs of non-principal debt.

         The minister dismissed criticism that the scheme would reward poorly performing companies, saying she would evaluate whether the restructurization program was encouraging problematic companies to improve their capability to invest.

         Achmad Mardju Kodri said the debt restructurization program would help PDAMs to reach the target of 10 million clean water pipe connections over the next three years.***3***
(F001/A/HAJM/B003)