102747 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

DISCLAIMER

The opinions expressed herein are those of the authors and do not necessarily represent the official position of the World Bank Group. The data provided in the tables and figures are not official Bank data. Permission is granted to reproduce this publication in whole or in part for noncommercial purposes only and with proper attribution to the authors, the Directorate General of Human Settlements of the Ministry of Public Works, the Water Partnership Program and the Bank. II I. III FOREWORD

Ir. Budi Yuwono, Director General of Human Settlements, Ministry of Public Works Mr. Franz Drees-Gross, Sector Manager, EASIS, World Bank Office, Jakarta

Indonesia continues to face the dual challenges of low water The Government strategy for water supply development includes Since the economic crisis of 1998, the development of water the water supply sector including Directorate General of Water supply coverage and low service quality. Nation-wide, in 2010, central government support for raw water source development, supply in Indonesia has been constrained by a number of factors Resources (DGWR), DG Cipta Karya, Ministry of Finance (MOF) only 47.71 percent of the total population had access to a poverty alleviation, areas with water scarcity, remote and dry including limited funding and a lack of capacity in most local (fiscal balance, treasury, debt management, budget), Sarana sustainable source of safe water, and only about 25.56 percent of areas, fishing villages and areas near borders with neighboring water companies (Perusahaan Daerah Air Minum - PDAMs) and local Multi Infrastructure (SMI), Indonesia Infrastructure Guarantee the population had access to piped water. An ambitious target of countries. This strategy is translated into various programs such governments to support additional infrastructure and provide Fund (IIGF), Bappenas, Badan Pendukung Pengembangan Sarana access to safe water for 68.87 percent of the population in 2015 as a program,for IKK (capital of subdistricts), raw water source new connections. Provision of water infrastructure has not kept Air Minum (BPP SPAM), and the Ministry of Home Affairs. has been set. To reach the target, about 56 million new people development, transmission pipeline, water treatment plants and main pace with population growth because rapid decentralization and will need to gain access between 2011 and the end of 2014. In distribution networks. For rural areas, central government support outstanding PDAM debt arrears resulted in an interruption of on- The sector needs more than the current level of investments in addition, an instruction from the President calls fir provision of includes continuation of projects for community-based water supply lending for large scale water supply investments. order to meet the Government’s targets. The funding gap and water to prevent future water crises in remote, dry areas and and water supply for low-income communities such as WSSLIC/ the annual sector investment from all resources have been areas with water scarcity. PAMSIMAS. To reach the MDG water target, the Government estimates Between 1998 and 2008 the proportion of Indonesia’s urban quantified in the Roadmap. The current GOI strategy to achieve that a total of Rp. 65.25 trillion will be needed between 2011 and 2014, population served by piped water decreased from 36 percent to the water MDG target relies heavily on local government Under the Water Resources Law 7 of 2004, the responsibility leaving a probable funding gap in the amount of Rp. 36.76 trillion. only 31 percent. To reach the water Millennium Development Goal investment, but the amount of the central government’s for providing water services rests with the local government. (MDG) target, local governments have to increase piped water stimulus budget and its scope for intervention are limited.

Considering the weak fiscal capacity of most local governments, The Directorate General Cipta Karya, working jointly with the World coverage in urban areas to 55 percent of the urban population The current strategy also relies heavily on other non-central INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER the central government needs to stimulate local governments Bank team, has prepared and developed this Roadmap for Water by the end of 2014. The government has launched a national government sources such as Public Private Partnerships (PPP), through targeted incentives to provide an adequate stock of Investment, 2011-2014. This important document proceeds from an program to add more than 10 million (mainly piped) new water internal cash generation, and revolving funds. infrastructure to meet national development targets for urban assessment of the problems and issues to identification of activities connections from 2010 to 2015. To achieve this ambitious and rural areas. So ,far, there has been satisfactory progress in and funding sources needed to reach the water MDG. This is the first program in an orderly manner, an investment plan or ‘roadmap’ Although there has been recent progress, much remains to rural areas, but in urban areas, policies must confront the weak time such a document has been prepared. It will be used for policy is required. For this reason, in mid 2010, the Directorate General be done to address the investment absorption capacity of capacity of the PDAM and a low sense of responsibility for water guidance by the government, particularly Directorate General of Cipta of Cipta Karya (DGCK), Ministry of Public Works, asked the World the sector and the ability of service providers to sustain supply in most local governments. Karya of the Ministry of Public Works, as well as by related ministries, Bank to provide technical assistance to prepare a national water and maintain the new and existing infrastructure. Estimates government agencies, and donor agencies. supply roadmap that will help guide the government in reaching of actual central government and local government/PDAM the MDG target. The objective of the assistance is to produce and expenditure for water in 2009 and 2010 were about Rp 2.5 trillion disseminate a national roadmap for investment from government (about USD280 million) per year, still a small fraction of the as well as multilateral, bilateral, and private sector institutions investment levels needed to meet Indonesia’s water MDG target. in water supply projects during the period from 2011 to 2015. In addition, PDAMs and other service providers may not be able to absorb and use increased funding without timely technical A grant was provided by the Water Partnership Program (WPP) assistance and the enabling activities described in this roadmap. to support this technical assistance including a (i) review of data and documents on national policy statements; and (ii) The World Bank is honored to work in partnership with the review of current and planned water supply investments in Government of Indonesia as it confronts the formidable challenges the next 3-5 years. These tasks included interviewing officers of increasing access to sustainable sources of safe water. We in concerned departments regarding issues, priorities, and hope that this Roadmap for Water Investments 2011-2014 will lessons learned to date. The findings were discussed in a prove useful to decision makers in the national government as workshop held on June 1, 2011 and attended by stakeholders in well as in local governments.

Jakarta, February 2012 Jakarta, February 2012 Director General of human settlements (Cipta Karya) Sector Manager Ministry of Public Works Infrastructure, Environment, Rural and Social Development The World Bank Office, Jakarta

Ir. Budi Yuwono, Dipl. SE Franz Drees-Gross V IV II. III. ACKNOWLEDGEMENTS EXECUTIVE SUMMARY

The period 2009-2015 was intended to mark a transition Directorate General Cipta Karya has a strategy for enabling from predominantly centrally-funded to predominantly access to water for 41 million additional people in urban locally-funded local water infrastructure programs. During areas, and 15 million people in rural areas, totaling 56 this period, the Government of Indonesia is undertaking million people. The total amount required for water supply the largest investment program in water supply in the last investment for the period 2011-1014 is estimated at Rp 20 years to reach the Millennium Development Goal for 65 trillion, and a scenario is proposed to fill the potential increasing access to a sustainable source of safe water central and local government investment gap of around Rp by 2015. But as of 2011, local government funding of 36 trillion. With the total expenditure of only about Rp 2.5 urban water infrastructure programs still lags well behind trillion in 2008 and 2009, the investment levels need to annual targets (funding targets as well as coverage), and be substantially higher. Increased in investment requires recent investment in the urban water sector has not kept substantial increase in technical capacity, as to ensure pace with population growth or depreciation. There has that higher absorption capacity will also be maintained. been more success in the rural water sector where central

government-stimulated community-based programs A recommended five programming principles underlie INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER continue to proliferate and reach more beneficiaries. the proposed Investment Roadmap, which also takes THIS REPORT WAS PREPARED BY A TEAM CONSISTING OF IRMA MAGDALENA SETIONO into account the strategy of Directorate General Cipta (WATER AND SANITATION SPECIALIST), JAMES WOODCOCK (INTERNATIONAL WATER In addition to the lack of sufficient expenditure, mainly Karya (March and October 2011). It includes efficiency SPECIALIST), BENNY DJUMHANA (FINANCIAL ANALYST), AND RISYANA SUKARMA in urban areas, water sector development is further improvements for the existing systems in the urban areas, (WATER AND SANITATION ENGINEER). A SHORT-TERM INPUT WAS PROVIDED BY challenged by a lack of local government sense of access to new funding sources, grants for increasing BENNETT PARTON (WATER SUPPLY FINANCE SPECIALIST). ownership and good governance, low level of access to access to new sources of finance, and scaling up of water on an equitable basis, lack of inter-departmental community-based programs in rural areas, such as The team is grateful to all those in central government ministries and donor agencies coordination, weak PDAM management, and limited PAMSIMAS (community-based water and sanitation). These who generously gave their time to meet with the team and provide essential data and availability and increased pollution of water resources. recommended programming principles are: (i) attracting information. Particular thanks are due to Mr. Danny Sutjiono and his staff of both the Failure to increase water supply investment before 2015 significant local government financing; (ii) funding the Directorate of Water Supply and Directorate of Program Development of the Directorate may result in a failure to meet the MDG water target. most reliable and rapid access-enhancing activities; General of Cipta Karya, Ministry of Public Works for valuable information and advice (iii) use of idle capacity; (iv) open access to all funding provided to the team. Peer reviews are gratefully acknowledged from Sudipto Sarkar A new regulatory framework was put in place in 2009 sources for all qualified local governments; and (v) (Sector Leader), Almud Weitz (Water and Sanitation Program Regional Leader), David and 2010 to provide access to new and large sources of improved existing monitoring system. Michaud, Bill Kingdom and George Soraya of the World Bank. Valuable inputs were received investment funds for local governments. Among the new from Franz R. Drees-Gross (Sector Manager). regulations are (i) MOF decree 120/2008 for PDAM debt The main sources of funds over the next three years are restructuring, (ii) Perpres 29/2009 for a partial guarantee also identified. These include the existing schemes from The Team would like to thank the Water Partnership Program for its financial support in the and interest subsidy for loans from commercial banks, (iii) central government funding support (APBN – central preparation and completion of this report. Perpres 13/2010 to strengthen partnerships with the private government funds), access to credit from commercial sector, and (iv) Perpres 78/2010 to provide a guarantee fund banks and from the private sector (through the PPP). mechanism for viable PPP schemes. These new financing New possible sources of funds have also been identified instruments that have already been in place need to be which include the financing facilities such as Indonesia monitored closely if the combined impact of these measures Infrastructure Funding Facility (IIFF) and Indonesia is yielding increase in investment. Otherwise, the strategy Investment Agency (PIP), Corporate Social Responsibility needs to be re-analyzed and adjusted. (CSR) from the private sector as well as the Water and Sanitation Funding Facility which is under preparation. The Government has, under RPJMN or the Medium Term The latter is a Facility that will allow pooling of funds from National Development Plan, laid out policies to increase bilateral and multilateral agencies which could support water coverage and quality, and set the targets for the acceleration of water supply investments in both urban 2010-2014 planning period. In support of the RPJMN, the and rural areas to expand coverage and improve services. VI IV. VII TABLE OF CONTENTS

TABLES VIII FIGURES IX ACRONYMS AND ABBREVIATIONS X

CHAPTER 1 > INTRODUCTION 01

CHAPTER 2 > EXISTING CONDITION 05 2.1 Current Status 06 2.1.1 The Period of Transition 06 2.1.2 access to Water Supply for reaching MDG 07 2.1.3 institutional and Operational Aspects 10

2.1.4 community-based Water Supply System 14 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER 2.2 Government Policies and Targets in the Water Sector 14 2.2.1 Present Policies 14 2.2.2 Present Central Government Targets 16 2.2.3 POLICY IMPLEMENTATION AT LOCAL GOVERNMENT LEVEL 18 2.2.4 WATER SELF-PROVISION 18

CHAPTER 3 > CHALLENGES 25 3.1 Challenges at the Central Government Level 26 3.2 The Water Governance Challenge at the Local Level 26 3.3 Environmental Challenges 27 3.4 Risk of Not Meeting Access Targets 28

CHAPTER 4 > ASSESSMENT OF ISSUES AND PROPOSED ACTIONS 31 4.1 Issues on Service Coverage 32 4.1.1 urban Water Supply 32 4.1.2 community-based Water Supply 32 4.2 Issues on Institutions and Governance 33 4.3 Issues on Funding 34 4.3.1 funds Mobilization for PDAM 34 4.3.2 central Government Funding Support 35

CHAPTER 5 > PROPOSED PROGRAMS AND FUNDING SOURCES 39 5.1 Programming Principles 40 5.2 Proposed programs and activities 42 5.3 Identification of Funding Sources 43

CHAPTER 6 > ROADMAP FOR WATER SUPPLY INVESTMENT 49 6.1 Recommended Technical Assistance and 50 Investment Packages 6.2 PROPOSED FLOW OF ACTIVITIES 52 IX VIII V. VI. TABLES FIGURES

TABLE 1 Breakdown of Percent of Population by Self-provision and Water Purchase (p. 7) FIGURE 1 > Primary Sources of Drinking Water Nationwide (p. 8) TABLE 2 Current Urban and Rural Water Program to 2014 (p. 20) FIGURE 2 > Access to Sources of Safe Water 1993-2009 (p. 9) TABLE 3 Gap in Funding for Water Investment by Central and Local Government, FIGURE 3 > Households’ Primary Source of Drinking Water in Urban and Rural Areas (p. 10) 2011-2014 (p. 29) FIGURE 4 > Urban Population Access to Various Water Sources by Expenditure Decile (p. 11) TABLE 4 Proposed Program/Activities (p. 42) FIGURE 5 > Growth of “Healthy” PDAMs (p. 12) TABLE 5 Conservative and Best Case Scenario for Augmenting LG Budget (p. 44) FIGURE 6 > PDAMs by Number of Connections in 2010 (p. 13) TABLE 6 Challenges, Programming Principles and Proposed Programs/Activities (p. 47) FIGURE 7 > Funding Gap for Water Investment by National and Local Government (p. 29) TABLE 7 Annual Gaps for Increased urban and Rural Investments (p. 51) FIGURE 8 > Conservative and Best Case Scenario for Funds to Match Urban APBN (p. 44) TABLE 8 Calculation of Estimated Beneficiaries (p. 53) FIGURE 9 > Proposed Flow of Loans, Grants and Key Monitoring/Evaluation Activities (p. 54) TABLE 9 Summary of Proposed Investment (to close funding gap) (p. 53) WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

VII. ANNEXES

ANNEX 1 > PDAM Database (p. 56) ANNEX 2 > PDAM with Debt Restructuring Program, 2009 (p. 57) ANNEX 3 > PDAM Piped Connection, 2009 (p. 58) ANNEX 4 > Map Showing PDAM Pipe Connection Distribution by Region, 2009 (p. 62) X VIII. XI ACRONYMS & ABBREVIATIONS

ADB Asian Development Bank LG Local Government APBD Local Government Budget MBR Low Income Community APBN National Budget MDG Millennium Development Goal AusAID Australian Bilateral Assistance NAWASIS National Water and Sanitation Information System

BAPPENAS National Development Planning Agency NRW Non Revenue Water INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER BPD Regional Bank OBA Output Based Aid BPP SPAM Support Agency for Water Supply Development PAMSIMAS Water Supply and Sanitation for Low Income Communities/WSSLIC BPS Central Bureau of Statistics PERPAMSI Association of Indonesian Water Utilities BPSAB Badan Pengelola Sarana Air Bersih (Water Supply CBO) PDAM Local Government Owned Water Utility BPAM Badan Pengelola Air Minum (transitional body of water supply operator) Perpres Presidential decree CBO Community Based Organization PIP Indonesia Investment Agency CSR Corporate Social Responsibility PMK Ministry of Finance decree DAK Special Allocation Funds PP Government Regulation DAU General Allocation Funds PPP Public Private Partnership DDUB Local Government Funds for Joint Projects PPSP Program for Accelerated Development of Sanitation in Settlements DGCK Directorate General Cipta Karya RPJMN National Medium Term Development Plan DGWR/SDA Directorate General Water Resources SANIMAS Community Based Sanitation Program HWTS Household Water Treatment System SIDA Swedish Development Assistance IIGF Indonesia Infrastructure Guarantee Fund SUSENAS National Social Economy Survey IKK Capital of Sub District USAID United States Agency for International Development IndII Indonesia Infrastructure Initiative (AusAID) UWSSP Urban Water Supply and Sanitation Project JICA Japan International Cooperation Agency WIRA Water Investment Roadmap Assistance Kabupaten District WSFF Water and Sanitation Funding Facility prepared through the Indonesia Water and Kota City Sanitation Financing Program (IWSFP) Keppres Presidential decree 01 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

01: INTRODUCTION 02 03

CHAPTER one 01: INTRODUCTION

01. Subsequent to the Millennium Declaration of RPJMN and MDG goals through water sector 06. The flowchart below represents the at the General Assembly of the United Nations in investment is a part of the national effort to reach the organization of the water investments Roadmap in a 2000, the Government of Indonesia is undertaking goals in an orderly fashion. simplified form. the largest program of investment in water supply in the last decade, aimed at attainment of the 04. In view of the new role of the central Millennium Development Goals (MDGs) for access to government as facilitator instead of implementer, a sustainable source of safe water by 2015 for about water supply investments need a programming ORGANIZATION ROADMAP FOR WATER SUPPLY 68.8 percent of the population nationwide. The structure to draw out local government investment government of Indonesia classifies water sources as and to provide multiple funding sources to reach either improved or unimproved, which are equivalent MDG targets. The overall plan involves funding from

to safe and not-safe drinking water for measurement the private sector, corporations, other private sector INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER of progress toward the MDG target. Access to safe participants, local governments, banks, and, in the water is measured by the number of people who can case of community-based systems, households. PEMDA ANALYSIS RECOMMENDED obtain an adequate amount of water for drinking and Local governments often face structural obstacles OF COURSE essential household activities on a continuing basis. in accessing funds, and planning for MDG targets GOVERNANCE OF ACTION There is no single test to determine "sustainable," requires contingencies for local governments being PDAM ISSUES but "access" is measured in numbers of people. It unable to provide their share of project finance. is easiest for national planners to use the number Additionally, even if funding for new infrastructure of connections as a target, based on an average is available, lack of good governance at the local INSTITUTIONAL number of people served by one connection, usually government level and low capacity of most of CONCERNS five people in urban areas and ten in rural areas. the PDAMs, particularly in the managerial and operational aspects, casts doubt on sustainable good CURRENT CONDITION MDG TARGET 02. In 2009 and 2010, the Government of Indonesia management and maintenance of new infrastructure. EXISTING PLANS 7C implemented a series of reforms intended to focus CONSTRAINTS 2015 local government owners on their responsibility to 05. This Roadmap supports and follows the FUNDING provide convenient and affordable piped water service strategy of the Directorate General Cipta Karya CONCERNS to all eligible citizens. The reforms included a program (DGCK), Ministry of Public Works, dated March 2011 to reschedule massive debt owned by the water and updated in October 2011, that quantifies the utilities to the Ministry of Finance and to turn them into production capacities, kilometers of pipe, and house cost-recovering enterprises. Another reform provided connections required to reach the MDG targets partial subsidies for house connections for the lowest in urban and rural areas by the end of 2014. It is ANALYSIS income groups in urban centers. also based on an analysis of a data base of PDAMs APBN/APBD RECOMMENDED OF POTENTIAL & provided by DGCK and shown in Annex 1. Longer term COURSE RISKS OF ACTION 03. In 2010, Indonesia began implementing a and cross-cutting institutional and governance OTHERS National Medium Term Development plan (RPJMN) that issues in the Indonesian water sector must be is expected by 2015 to halve the proportion of people considered in planning for attainment of MDG targets. who did not have access to a sustainable source of These will be addressed in the report, but they will be safe drinking water in 1993 when 62 percent of the discussed in less detail. Sanitation is the other side population lacked a sustainable source. Thus, 69 of the water supply coin, but discussion of sanitation percent (68.87 percent precisely) of the population issues will be limited because GOI has already will have access in 2015. This roadmap for attainment prepared a Sanitation Roadmap. 04 05 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

02: EXISTING CONDITION 06 07

CHAPTER TWO 02: EXISTING CONDITION

2.1 CURRENT STATUS 9. Following the Asian Financial Crisis of 1997- TABLE 1: BREAKDOWN OF PERCENT OF POPULATION BY SELF-PROVISION AND WATER PURCHASE 98, local governments were reluctant to raise tariffs, 7. Indonesia has registered impressive economic and loans were not repaid, triggering interest and growth rates in the last few years as it moves toward penalty arrears. In 2007, outstanding principal, PERSENTAGE OF HOUSEHOLD URBAN URBAN NATIONAL inclusion in the group of medium- income countries. penalty and interest for loans for PDAMs amounted Yet, the quality of public services has not grown to Rp. 6.3 trillion ($700 million). Partly due to the Buy water 47.35 47.35 30.90 appreciably. Urbanization has involved growth in a few PDAM/local government debt impasse and partly Do not buy water 52.65 52.65 69.10 large cities with crowding, land-scarcity, pollution, and due to the reluctance of local governments to fund Total 100 100 100 growing low-income populations. In the water services water infrastructure under decentralization, the sector, a decade without significant investment in period 1999-2010 saw no significant new investment

urban water supply infrastructure has been a major in urban water supply infrastructure. There was, SOURCE: SUSENAS CORE DATA 2009 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER factor in the decline in the proportion of urban dwellers however, growing investment in rural community- that have piped water connections. Lack of investment, managed water supply. 2.1.2 Access to Water Supply for reaching MDG1 carry it to areas that are beyond the piped network. insufficient PDAM revenue and other factors behind In rural areas, about 15 percent of households buy sluggish growth in access to water services will be 10. The period 2009-2015 is a time of transition National access water, generally from small scale community-based discussed in more detail in this chapter. from systems and procedures suited for centrally- water supply organizations. funded and implemented activities to systems 11. Self provision is still the main mode of 2.1.1 The Period of Transition emphasizing stimulus for locally-funded access to water for households throughout 13. looking at Table 1, in 2009 about 70 infrastructure programs. Current programming Indonesia. Nationwide, a little more than 30 percent of Indonesians obtained their primary 8. The state of water supply in 2012 was shaped constraints include rigidities in local government percent of Indonesians obtain water from various source of water through self-provision, by a period of rapid central government-driven planning and budgeting, weak bottom-up external sources with piped water being generally accessing groundwater, wells, streams, or other build-up of water supply infrastructure during the pressure to replace central government pressure the least expensive and water from vendors being sources. About half of urban householders International Water Decade of the 1980s. Funds on local governments, incomplete regulations, the most expensive. continue to use deep wells and shallow wells to borrowed from international development banks were and insufficient central government monitoring/ access groundwater, and it is difficult for local mostly passed on to PDAMs as grants for projects that sanctions to ensure compliance with mechanisms 12. In urban areas, about 50 percent of urban governments to collect groundwater extraction fees were planned and implemented by central government such as the central funding earmarks for the dwellers buy water. Of those who buy water, about when piped water coverage is not yet available. agencies. In later years, loan funds were on-lent to water special allocation fund (DAK). Under the half buy from municipal water enterprises (as In many coastal cities such as Jakarta, the PDAMs or the local governments for activities which decentralized environment, incentives are the shown in figure 3), and the other half buy from growing withdrawal of groundwater by households were planned and implemented by the PDAM. central government’s main mechanism to stimulate bulk water vendors and neighbors. There is a gray and industries is causing land subsidence and investment, but the effect of each incentive program area between piped water and water received saltwater intrusion. As pollution of surface and cannot be known until it is actually put in place. from vendors because surveys indicate that most groundwater increases in densely-populated areas, vendors obtain water from piped water taps and many urban self-providers are expected to turn to

1 There are two discrete systems tracking progress toward the MDGs in Indonesia. The first is the national system that is coordinated by the National Development Planning Agency and based on the data of the National Bureau of Statistics. The national system is used for five-year national medium range development plans and for evaluation of the national development program. The second is the system used by the Joint Monitoring Program. This system is used for comparing progress in all participating countries. The two systems use different data sources, different definitions of “access,” different methods of projection, and different population estimates. Use of two different systems often leads to confusion as to what is the "right" measure of progress toward the MDGs. This roadmap is intended to be a guide mainly to local governments and donors in Indonesia and thus it uses the official Government of Indonesia national system. 08 09

FIGURE 1: PRIMARY SOURCES OF DRINKING WATER NATIONWIDE FIGURE 2: ACCESS TO SOURCES OF SAFE WATER 1993-2009

Percent with access to safe water 70 URBAN

OTHER 18% BOTTELED 13% 60

RURAL UNPROTECTED WELL 8% PIPED 15% 50

NATIONAL 40 PROTECTED WELL 28%

PUMP 18% 30

20

10

PERCENT ACCESS 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

SOURCE: SUSENAS CORE DATA JULY 2009 SOURCE: ROADMAP TO ACCELERATE ACHIEVEMENT OF MDGS 2010, BAPPENAS INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

piped water as the most economical alternative. 16. Government of Indonesia regulations state Self-provision is most common in rural areas that water utilities should provide drinking quality where about 85 percent of the people have limited water, although few PDAMs have achieved that target. availability of piped water schemes. Even in the areas where utilities are able to provide drinking quality water at the tap, the customers are 14. Most households obtain drinking water from still in the habit of boiling water prior to consumption. more than one source, but the National Social Economy The government continues to conduct programs Survey (SUSENAS) measures only the primary source to accelerate access to sustainable sources of of water. Nevertheless, survey data regarding primary improved drinking water which includes water from sources provides a reliable indicator of the trend in use piped systems, rainwater, springs, or wells that are of water sources nationwide. According to SUSENAS protected from contamination. Sources that are URBAN DWELLERS NOT CONNECTED TO PIPED SYSTEM USUALLY Core data obtained in July 2009, the primary source URBAN DWELLERS OFTEN RELY ON PUBLIC WATER SUPPLIES not protected from contamination or water that is GET THEIR WATER FROM VENDORS WHO MUST TRANSPORT AND of water for more than half of all Indonesians was WHICH ARE PRONE TO CONTAMINATION transported in jerry cans or drums by water vendors SELL WATER AT A HIGHER UNIT PRICE groundwater from wells (36 percent) or pumps (18 are termed unimproved or unprotected sources of percent). Other primary sources include rainwater, water. As urbanization continues, water pollution rivers, streams, lakes (18 percent), municipal and 15. Figure 2 shows that the nationwide raises the cost of production. Figure 3 shows other piped water (15 percent), and bottled water percentage of access to safe water has declined households’ primary source of drinking water in urban (13 percent). Although it is much more expensive, steadily since 2001, while rural coverage increased and rural areas. bottled water is becoming more popular because during the same period. At the end of the medium of the convenience of being able to drink it directly range development program 2004-2009, 48 percent Urban access from the container. Indonesians are accustomed to of Indonesia's population had sustainable access boiling water from sources such as PDAM pipes or to sources of water that are protected from 17. Figure 3 shows that the primary source of wells. The municipal water sector still provides the contamination, broken down into 49.8 percent drinking water in urban areas is PDAM piped water, most cost-effective opportunity to increase access of urban dwellers and 45.7 percent of the rural followed by bottled water, pumped water, and to clean water in urban areas because the municipal population. The Figure shows that between 2002 wells. Conversely, consumers in increasingly lower utility affords economy of scale, and water is most and 2009 urban coverage declined at a rate of expenditure deciles have difficulties assessing piped IN RURAL AREAS, STREAMS ARE COMMONLY USED AS SOURCES economically transported through pipes. about 2.2 percent per year. The urban poor are more water, and their predominant source of drinking FOR DRINKING WATER, AND IN MANY AREAS THE WATER IS STILL vulnerable to a lack of access to safe water because water is unprotected wells (see Figure 4). There OF GOOD QUALITY of contamination of wells and groundwater by E. coli. are still many barriers to the urban poor gaining 10 11

FIGURE 3: HOUSEHOLDS’ PRIMARY SOURCE OF DRINKING WATER IN URBAN AND RURAL AREAS FIGURE 4: URBAN POPULATION ACCESS TO VARIOUS WATER SOURCES BY EXPENDITURE DECILE

Households' Primary Source of Water Primary Source Urban Water by Expenditure Decile 12,000,000 100 URBAN OTHER 90 10,000,000 80 RURAL UNPROTECTED WELL 70 8,000,000 60 PROTECTED WELL 6,000,000 50 PUMP 40 4,000,000 30 PIPED 20 2,000,000 10 BOTTLED Households PERCENT BOTTLED PIPED PUMP PROTECTED WELL UNPROTECTED WELL OTHER POOREST 2 3 4 5 6 7 8 9 RICHEST

SOURCE: SUSENAS CORE DATA JULY 2009 SOURCE: SUSENAS CORE DATA JULY 2009 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

access to comparatively lower-cost piped water, supply programs. The primary sources of water governments are both the owners of PDAMs and the for water could lead to reforms by the Ministry of including outdated local regulations requiring house in rural areas are protected wells and rainwater, regulators of tariffs in urban areas. Thus, central Finance to ensure that all of the water DAK is spent ownership, high up-front connection fees, local rivers, streams, and lakes, and piped water in rural government strategic plans are aimed at enabling for water development. requirements that PDAMs sell water to the poor at areas may be provided by a small public utility or by local governments to provide water services through subsidized rates, provision of water to the poor community-managed piped water schemes. technical assistance and access to capital through The role of local government through public taps that often afford monopoly rent on-lending, private sector investment, or guarantee to water “mafia”, and a widespread myth that the 2.1.3 Institutional and Operational Aspects schemes. Yet, the central government still invests 22. Attitudes adopted from the centralization poor cannot afford piped water. Studies by the World more than local governments in their local water supply years still hold sway among many local governments Bank2 have shown that poverty reduction increases The key role of central government infrastructure. The central government is constructing that the PDAMs, and not the local government, are growth in the national economy, yet there is a water source infrastructure and water systems in responsible for provision of local water services, natural tendency for the higher decile expenditure 19. The central government is mainly an enabler remote areas and areas near international borders although many local governments realize that the groups to gain access to piped water first unless helping local governments fulfill their responsibility where water is scarce and problematic. PDAM belongs to them because it is their main there is government intervention for provision of water services. Since the official source of locally-derived revenue. Most PDAMs onset of decentralization in January 2001, the 21. Many central government agencies play were originally BPAMs, or transitional bodies Rural access central government has been excluded from key roles in the water sector, but coordination funded by and managed from central government, implementing projects of water supply, except in among these agencies needs to be strengthened. and eventually they were turned over to local 18. According to Figure 2, while urban coverage unusual cases such as where local governments or There have been several recent improvements governments. Many urban water supply assets that shows a declining trend, rural coverage steadily populations are unable to help themselves. Most in the inter-ministerial coordination with the are currently in use by the PDAMs have not been increased about 1.8 percent per year from 2001. central government agencies are being transformed establishment of the water and sanitation working officially turned over to the PDAM by either local Net rural-to-urban migration explains only a part of from service providers to enablers of service group (Pokja AMPL), whose membership includes governments or the central government, causing the trend. Estimates of urban growth from 2000- provision by local governments. ministries involved in the provision of water. The uncertainty as to the true extent of PDAM assets. 2015 vary between 1 and 3 percent per year and PDAM Debt Restructuring Program has required In the case of rural infrastructure, local governments rural growth is expected to shrink at 0.7 percent 20. The issuance of Law 7 in 2004 and Government closer coordination among relevant ministries, but generally invest in community-managed water per year. The steadily increasing trend in rural Regulation No. 16 in 2005 emphasized the division of there is still room for improvement. For instance, infrastructure, and central government contributions areas may be attributable to accelerated activity roles and responsibilities between the central and there is a need for greater coordination between are considered grants. of government-driven community-based water local governments in water supply provision. Local agencies involved in bulk water supply and those involved in provision of water services. Further, 23. local government and PDAM funding is often 2 World Bank, Office of the Chief Economist - Poverty Reduction and Growth: Virtuous and Vicious Circles. Latin America closer monitoring of Special Budget Allocation not coordinated. Local governments may operate Needs to Cut Poverty to Boost Growth, 2006 Funds for local governments (DAK) expenditures small water supply facilities in areas that are not 12 13

investment in the municipal water sector originated FIGURE 6: PDAMS BY NUMBER OF CONNECTIONS IN 2009 from the central budget and was programmed through 197 PDAM by Number of Connections central government agencies. After decentralization, local governments have accumulated substantial savings on deposit with regional development banks while investment remains low.

25. local governments are both the owners and 88 tariff regulators of PDAMs, and guidance from the central government requires that tariffs should be

cost recovering. Yet, largely for political reasons, 24 12 14 PROPER TARIFFS WILL ENABLE THE PDAMS AT LEAST TO many local governments are reluctant to approve 7 3 3 2 4 6 MAINTAIN THEIR ASSETS PROPERLY tariff increases or they tend to defer tariff decisions until after an election year has passed.

<10,000 >100,000

80,001-90,000 70,001-80,000 60,001-70,000 50,001-60,000 40,001-50,000 30,001-40,000 20,001-30,000 10,001-20,000 controlled by the PDAM, and if they provide funding for PDAM’s operational and institutional aspects 90,001-100,000

the PDAM, they use their own budget funds, usually SOURCE: MINISTRY OF PUBLIC WORKS DATA FROM PROVINCES 2009 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER through their city Public Works Department which 26. The proportion of “healthy” PDAMs has been designs and procures infrastructure, often without increasing. Every year, BPP SPAM monitors the 27. The positive trend in recent years is expected of Water Utilities (PERPAMSI), one-quarter of its 402 prior consultation with the PDAM that ultimately must technical and financial health of about 350 PDAMs to continue as PDAMs and local governments join the member-PDAMs have less than 5,000 connections. maintain and operate it. The local government budget based on the results of annual audit data. The debt restructuring program that relieves PDAMs of process does not accommodate multi-year projects, data is weighted with 55 percent for financial data a large portion of their arrears and requires them to 29. Water tariffs have been too low. In 2009, and many local governments are still reluctant to such as profitability, 30 percent for management adhere to business plans that include cost-recovering more than one-half of all PDAMs charged tariffs spend their funds on water projects. data such as number of employees per 1,000 tariffs, conduct fit and proper tests for Managing that were too low to recover costs. Without connections, and 15 percent for technical indicators Directors, and publish audited accounts. The Ministry sufficient operating income, PDAMs were unable 24. local governments and PDAMs have invested in such as the amount of non-revenue water. The of Public Works targets 240 PDAMs to be “healthy” to invest in new facilities or maintain existing water service provision to a modest extent, but their number of “sick” PDAMs has decreased steadily while by 2014. However, there has been an increase in facilities. Current guidance from the Ministry investment has not kept pace with population growth the number of “healthy” PDAMs has increased in the number of new PDAMs, most of which are not of Home Affairs (MOHA regulation No. 23/2006) and depreciation. Before decentralization, most recent years as shown in Figure 5. healthy. Furthermore, some PDAMs in the restructuring requires that PDAMs recover operating costs program are having difficulty adhering to targets in through tariffs while at the same time subsidizing FIGURE 5: GROWTH OF “HEALTHY” PDAMS their business plan, so more work needs to be done to lower income communities through higher tariffs ensure that PDAMs stay healthy. to businesses and wealthier communities. Reduction in Sick PDAMs Tariff should be at least high enough to recover 250 HEALTHY 28. There are too many small PDAMs. operation costs. Entry of a PDAM into the debt The number of small PDAMs serving less than 10,000 restructuring program requires that tariffs recover 200 UNHEALTHY connections has been growing, mainly due to the costs, so the number of PDAMs charging cost- splitting of districts subsequent to decentralization. recovering tariffs is expected to grow. 150 SICK Annex 3 details the PDAMs and their reported number of connections. Almost all PDAMs lack a water supply 30. Many local governments still take “dividends”

100 master plan which, according to law 25/2007, must from their PDAMs for which there is a provision in be included in a spatial master plan. Profitability of the local government enterprises law 5 of 1962 that a PDAM depends on the source of water and other local governments may recover their investment 50 factors, but it is difficult for most PDAMs to achieve through profit-sharing dividends. In fact, many enough economy of scale to keep tariffs low when PDAMs were established with central government Numbers of PDAMs 2004 2005 2006 2007 2008 2009 they have less than 10-15,000 customers. Figure 6 investment and handed over to local governments. shows that more than half of all PDAMs have less Some local governments still pay out “dividends,” or SOURCE: BPP SPAM, MINISTRY OF PUBLIC WORKS than 10,000 connections. According to Association contributions, whether or not their PDAM is making 14 15

2.2 Government Policies and Targets in It will encourage public awareness of the need for period 2010 to 2014, making possible 5,000-6250 the Water Sector a healthy way of life and the need for conservation new connections at Rp. 4 million per connection. of surface and groundwater resources by citizens. The possibility to adjust the limit should be 2.2.1 Present Policies The Government advocates the creation by local assessed if the Water Hibah program continues to governments of water master plans that cover prove popular among local governments. 33. Present policies at both the central and provision of both community- and institutionally- local government levels are based on the Water based water in accordance with the Ministry of 39. Areas unable to serve themselves. PP16 Resources Law number 7 of 2004, the “umbrella” Public Works regulation 18 of 2007 regarding 2005 provides for the central government to help water resources law that provides for decentralized development of water supply systems. In addition, PDAMs that are unable to serve a specific area, and development and management of water resources, incentives may be provided for local governments the IKK (Ibu Kota Kecamatan) program is aimed at generally-defined responsibilities of various levels that are willing to support cost-recovering tariffs providing financial assistance to local governments SECURING CLEAN WATER RESOURCES IS IMPORTANT IN PROVIDING of government, and private sector involvement. and/or realize greater economy of scale through through the provincial governments for small water RAW WATER FOR GROWING URBAN WATER DEMANDS It states that water is both a social and an aggregation of PDAMs for mutual benefit. systems. Some IKK schemes are managed by the economic good, and it is the basis for implementing PDAMs and other IKKs by the local governments. The regulations of the ministries that are responsible Central government targets special Ministry of Public Works is able to provide funds for a profit. This practice is discouraged by central for different aspects of water resources communities the construction of new IKK water treatment plants

government guidance and central government development. This Law is further complemented and some portion of distribution pipes which are INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER programs, including the debt restructuring program with regulation PP 16 2005. 36. Special attention will be paid to increasing transferred to the local governments. because it leads to the false impression that the access to water for low income groups, water deficit primary role of the PDAM is to earn income for the Secure and increase raw water availability areas, strategic areas, small islands and areas on New central government initiatives on local government. A revision to the old law of 1962 national boundaries, as well as remote areas. financing instruments is expected to repair this provision, and it is waiting 34. The Government will provide funding to In addition, special attention will be paid to target for approval by the national parliament. secure and increase the availability of raw water low income communities and those areas where the 40. In 2008, the Ministry of Finance Decree services on a watershed basis in accordance with local governments cannot serve the population. (PMK) 120/2008 provided for write-off of PDAM 31. Many operational PDAM issues such as minimum service standards through provision arrears for interest and penalties and allowed low billing efficiency, tacit approval of illegal for inter-basin transfer for raw water needs, 37. Low income urban communities. Studies local governments to borrow for water supply connections, excess employees, lack of construction of new transmission channels and have shown that, because their monthly income projects, providing local governments assumed maintenance, and lack of customer orientation have storage and encouragement of private sector is so low, poor urban households can save ten the PDAM debt and local governments and PDAMs been addressed, without success, by ad hoc training participation in financing. There has been percent or more of their income if they have a adhered to the PDAM business plan that included programs because they have been seen as symptoms increased coordination between DGWR/SDA and house connection and pay the same tariffs as cost-recovering tariffs, governance targets, and a of a general lack of knowledge and understanding. DGCK on water security issues, and the government other income groups. Despite the responsibility of repayment schedule. But there is growing evidence from recent projects is discussing the possibility of the establishment local governments for provision of water services that they are all symptoms of the endemic absence of a national entity for provision of bulk water to citizens, the central government has a special 41. In 2009, presidential regulation (Perpres) of good water governance, an issue that will be supply in urban areas. Responsibility to increase concern for increasing access to sustainable 29/2009 provided for a Loan Guarantee and Interest discussed in more detail in Chapter 3. production facilities in existing PDAMs and IKKs, as sources of safe water for low income urban Subsidy program to help local governments arrange well as to expand distribution networks is expected communities. Strategic, isolated, and water- loans from commercial banks for healthy PDAMs 2.1.4 Community-based Water Supply System to be borne by local governments, which can obtain stressed areas will receive special priority in order that have cost-recovering tariffs. The central funding from their own investment, banks, or to ensure balanced development. government will guarantee 70 percent of the 32. Over the last ten years, the community-based through collaboration with the private sector. amount of the loan, and the local government water sector has progressed through national 38. A Water Hibah Program for low income urban will guarantee 30 percent. The present uptake is programs such as PAMSIMAS, PNPM and programs Continued institutional/regulatory communities was made possible by the Ministry of still limited because the PDAM personnel require assisted by bilateral donors and NGOs. Since the development Finance Regulations PMK 168 and 169/2008. The intensive technical assistance to comply with approval of the National Community Based Water and Water Hibah program currently provides grants to regulations. An “umbrella” agreement signed by Sanitation Policy in 2003, Government of Indonesia 35. As many important regulations affecting 35 local governments to reimburse partial costs the PDAM and the local government and the central programs to stimulate local government investment PDAMs are outdated and contradictory, the central of new piped water connections for low income government will allow the central government to in community-based water and sanitation projects government plans to strengthen the regulatory communities. The amount of grants to each local deduct unpaid amounts from amounts owed to have increased in number with impressive results. system and encourage deregulation when necessary. government is limited to Rp. 20-25 billion during the the local government. The central government 16 17

will provide an interest rate subsidy of up to five 44. Central government programs are designed Central Government activities 48. Central government investment programs percentage points through a guarantee mechanism. to stimulate investment from local government with 100 percent central funding in rural budgets, private sector participation, or borrowings 47. As seen in Table 2, central government areas focus on small projects of water supply 42. In 2010, the Government issued presidential from banks. About 68.8 percent of the population investment programs with 100 percent central construction for remote, water stressed, regulation (Perpres) 13/2010 which replaces in 2015 is projected to get access to safe water, funding in urban areas focus on raw water intake border and post-conflict areas. These programs the earlier Keppres 67/2005 on the government where about 41 million people (mainly in urban and transmission, and/or water production and ensure more balanced national development partnership with the private sector on infrastructure areas) will gain access through piped water, and main distribution for regional facilities. Raw water are mandated by the national medium term PPP. To encourage private sector investment in 15 million (mainly in rural areas) through non-piped provision, funded through the budget of the Ministry development strategy (RPJMN). The State Ministry infrastructure development, including the water sources of water such as privately-owned shallow of Public Works, Directorate General of Water of Research and Technology funds a program sector, the government further issued Perpres and deep wells. The projection is based on an urban Resources, should include construction of intakes providing access to water for islands in areas 78/2010 on a guarantee fund mechanism. Accordingly, growth rate of 1.36 percent per year, as shown in and transmission lines to urban centers. The raw near the border with neighboring countries, and PT Penjaminan Infrastruktur Indonesia (Indonesia Table 2, conforming to BPS projections. (The table water target may be based on the expected number of the State Ministry for Research and Technology Infrastructure Guarantee Fund - IIGF), a state owned was derived from DGCK and does not necessarily beneficiaries because in 2010 self-reported data from conducts a small program for water–stressed guarantee company, is ready to provide guarantee represent the most current status as it is changing 80 percent of local governments and PDAMs indicates areas. The Ministry of Energy and Natural funds to any feasible PPP project. Despite this over time). DGCK’s updated strategy of October a total installed capacity of 151,190 liters per second Resources and State Ministry for Acceleration of encouraging development, progress on PPP schemes 2011 plans for attaining the MDGs during the and production capacity of 124,289 liters per second, Development in Underdeveloped Regions provide

remained slow. Only a few PDAMs have entered period 2011-2014. or an average idle capacity of only 17.8 percent. programs to provide deep wells in rural areas. INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER into a successful partnership with private sector There is, however, a large variation in idle capacity partners, and only one PDAM is expected to have a PPP 45. The DGCK October 2011 strategy as shown in among individual PDAMs, and idle capacity may be 49. Central government incentive investment scheme with guarantee funds from the government. Table 2 is supported by the roadmap that appears found to be higher than expected. Large projects programs that share central/local government funding Nevertheless, these new regulations enable greater in Chapter 6. It sets forth the physical targets and designed to bring raw water to cities take a focus on urban areas on the Local Government Funds local government access to water investment funds. estimated costs to increase access to 56 million long time to develop, and they often encounter for Joint Projects (DDUB)3 program for improvement PPP is also envisaged to support development of raw new people by the end of 2014. The updated strategy unexpected delays. Many efforts are underway to and expansion of existing piped water systems and water resources. However, private sector participants calculates a need for Rp. 65.3 trillion in total strengthen private sector financing, but it is unlikely construction of new IKK facilities. The DDUB program prefer to invest in provision of raw water at a stated investment (including Rp. 7 trillion from Directorate that there will be sufficient time to develop new is the main vehicle for central government incentive price and quantity rather than depending on local General of Water Resources for water source large projects before 2014. funding for urban water supply infrastructure through government-mandated tariff increases for their profit. development) for development of new water sources, processing, and distribution, consisting of about Rp. 2.2.2 Present Central Government Targets 24.6 trillion from the central government (excluding Rp 7 trillion from DGWR/SDA), Rp. 6 trillion from DAK, 3 The term, DDUB (Dana Daerah untuk Urusan Bersama), is commonly used to describe the Joint Funding Program for poverty alleviation, 43. Overall, macro targets are determined by and Rp. 27.6 trillion from other sources such as local based on the guidance of Ministry of Finance regulation 168/PMK.07/2009 and subsequent regulations. Technically, DDUB refers to the the RPJMN, the National Medium Term Development governments, banks, and the private sector. local government (APBD) portion of the funding, and DUB refers to the national (APBN) portion. DDUB is a part of the Urban and Rural National Plan for 2010-2014, which includes Indonesia’s Poverty Alleviation Programs (PNPM, Program Nasional untuk Penanggulangan Kemiskinan). Annual allocations for the program are based on commitment to achievement of the Millennium 46. Table 2 shows that the urban programs to be technical indicators developed by various ministries/institutions such as the Ministries of Health and Public Works, and a financial capacity Development Goals. The Government of Indonesia implemented over the next three years include raw Fiscal (IFRD, Indeks Ruang Fiskal Daerah) and Regional Poverty Index (IPPMD, Indeks Persentase Penduduk Miskin Daerah) that are developed plans to reach MDG water supply target 7c by water provision, improvement/expansion of existing by the Ministry of Finance by March of every year and sent to Bappenas and the ministries/institutions. The structure of the program the end of calendar year 2014. Most of the new installations, construction of new IKK installations, ensures that poverty alleviation funds will be allocated for community empowerment on a transparent, accountable, and proportional beneficiaries are expected to gain access through and water quality improvement. The principal rural basis without favor to any one region. The size of the overall program is determined each year by the TNPPK (Tim Nasional Percepatan programs funded by sources outside of the central program is the PAMSIMAS community-based water Penanggulangan Kemiskinan), the National Team for Acceleration of Poverty Alleviation. In June of each year, ministries/institutions/ government budget. Self-provision should be supply program. It is complemented by small rural mayors/regents prepare a joint program plan in cooperation with Bappenas based on a temporary program ceiling. Local governments expected to increase at the same annual rate as in projects to assist water-stressed and remote areas. and provincial governments must allocate additional operational costs, such as for transportation, running costs, and office space for previous years. Fifty-six million Indonesians must The final rural program involves non-piped activities the work team. In December of each year, the ministers/mayors/regents sign joint funding agreements describing the activities, source gain access to safe water between 2011 and 2014. supported by the Ministry of Health and DAK. and amount of funds, construction period, responsibilities, and reporting requirements. At this point, the officer responsible for each activity is designated. The central government portion (DUB) is channeled directly to the community, community groups and/or community organizations in cash for implementation of projects. The community groups have to complete implementation of the projects within three months after the end of the fiscal year, and reporting is made to the mayor/regent who sends financial reports to the local parliaments. Reports are made also to the ministries/institutions and the National Team for Acceleration of Poverty Alleviation. 18 19

which central government investment funds are participate in the DDUB investment-sharing program, matched by local government/PDAM investments. although the levels of contribution and amount Local governments and PDAMs can draw on loans or of investment are far below the target. Response grants for this part of the DDUB program. Expansion of to the debt restructuring program has also been existing PDAM and IKK production facilities is funded slow, mostly due to the lack of capacity of the local 100 percent by local governments/PDAMs while governments and PDAMs in preparing their debt expansion of existing distribution infrastructure can restructuring proposal. Annex 2 shows the PDAMs be funded 40 percent by the central government and in the program at the end of 2009. Most new local 60 percent by local governments and/or PDAMs. The government policies to support access to water central government will fund 100 percent of water supply have been driven by the commitment of the production facilities and 40 percent of distribution regent or mayor, but these policies often change infrastructure for new IKK. The main central when there is a change of leadership. government incentive program in rural areas is the PAMSIMAS community-based program. 2.2.4 Water self-provision

50. local government supported investment 52. There is no central or local government cost

programs with 100 percent local funding in urban associated with self provision in Table 2. Urban INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER areas are mainly maintenance and expansion households without access to piped water supply of piped water supply. They are not specified have to rely on groundwater through deep wells There is also an immediate in Table 2 because their extent has not been and pumps. Appropriate technology for household- monitored. Since the advent of the DDUB program, level water treatment systems (HWTS) needs to be need for expanded technical most local government investment in urban water introduced in both urban slums and rural areas to supply has been matched with central government ensure that quality of drinking water is maintained. assistance to improve, and funding. In rural areas, local governments use Water In rural areas, self-provision of water supply, mainly DAK funding to construct non-piped rural water by shallow and deep wells, is expected to grow strengthen the monitoring and supply. Central government advisory and monitoring slightly faster than the rate of rural population activities in urban areas include water quality growth. Self-provision is assisted by surveillance evaluation system and to enable surveillance, guidance, and capacity building. In and behavior change programs conducted by urban areas, they include surveillance of non-piped the Ministry of Health, and rural self-provision is increased access to sources schemes and encouragement of healthy behavior. expected to be assisted and encouraged by local governments through DAK funds. such as PIP, CSR and the Water 2.2.3 Policy Implementation at Local Government Level and Sanitation Financing Facility.

51. local governments vary widely in their implementation of the central government policies on the need to increase access to water supply. In general though, they respond to central government guidance and regulation. Most local governments 20 21

TABLE 2: CURRENT URBAN AND RURAL WATER PROGRAM TO 2014

NO PROGRAM FUNDING PROGRAM TARGET BUDGET 2011 2012 2013 2014 SOURCE DESCRIPTION 2011-2014 ESTIMATE

TARGET EST'D TARGET EST'D TARGET EST'D TARGET EST'D BUDGET BUDGET BUDGET BUDGET URBAN WATER SUPPLY

1 WATER RESOURCE SUPPORT APBN Raw water needs 135 m3/s 13.50 m3/s 40.5 m3/s 40.5 m3/s 40.5 m3/s Construction of intake and raw 40 m3/s 7.00 4.00 m3/s 0.80 12.00 m3/s 2.07 14.29 m3/s 2.50 9.71 m3/s 1.63 water transmission 2 IMPROVEMENT OF EXISTING WS APBD,PPP Additional production unit 45.33 m3/s 5.47 4.53 m3/s 1.22 13.6 m3/s 1.64 13.6 m3/s 1.64 13.6 m3/s 0.97 SYSTEM IN URBAN/IKK national banks

Large/metro cities, 75 cities APBD/PDAM/banks/ Additional distribution network 81,300 km 5,081 km 20,664 km 24,390 km 31,165 km INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER Medium-size cities,288 cities PPP (60%) Additional HC 5.42 mln unit 24.00 0.34 mln unit 1.50 1.38 mln unit 6.10 1.63 mln unit 7.20 2.08 mln unit 9.20 Small cities, 156 cities APBN (40%) 3 NEW IKK APBN PU New production unit 12.9 m3/s 3.35 5.77 1.50 1.77 0.46 3.08 0.80 2.28 0.59 1136 IKK APBN/PDAM/banks/ New distribution network 13,619 km 12.95 1,451 km 1.38 3,218 km 3.06 2,661 km 2.53 6,289 km 5.98 PPP (60%) New HC 2.48 mln unit 0.26 mln unit 0.59 mln unit 0.48 mln unit 1.15 mln unit APBN (40%) 0.104 4 IMPROVING QUALITY OF WATER APBN MOH Water quality surveillance 449 unit 0.387 449 unit 0.09 449 unit 0.094 449 unit 0.099 449 unit APBD 0.001 APBN MOH Support on water quality 96 package 0.004 63 package 0.001 73 package 0.001 83 package 0.001 96 package APBD improvement, cap bldg, advocacy, socialization 5 NON PIPED SCHEME Self-financing Individual/commmunal 4 mln 4 mln 1.2 mln 1.2 mln 1.2 mln non-piped scheme families families families families families (20%) of urban population TOTAL URBAN AREAS 53.16 6.49 13.43 14.77 18.48

SOURCE: MINISTRY OF PUBLIC WORKS DATA 22 23

TABLE 2: TABLE 2 CURRENT URBAN AND RURAL WATER PROGRAM TO 2014 (CONTINUED)

NO PROGRAM FUNDING PROGRAM TARGET BUDGET 2011 2012 2013 2014 SOURCE DESCRIPTION 2011-2014 ESTIMATE

TARGET EST'D TARGET EST'D TARGET EST'D TARGET EST'D BUDGET BUDGET BUDGET BUDGET RURAL WATER SUPPLY

1 PAMSIMAS APBN PU Construction of comm-based 5,000 village 2.10 1,250 village 0.30 1,250 village 0.60 1,250 village 0.60 1,250 village 0.60 rural WS (raw water 7,500 l/s 1,071 l/s 2,143 l/s 2,143 l/s 2,143 l/s relatively easy) 2 WATER SCARCITY APBN PU Construction of rural WS with 1,303 village 0.98 186 village 0.14 372 village 0.28 372 village 0.28 372 village 0.28 water scarcity/need high-tech 1,303 l/s 186 l/s 372 l/s 372 l/s 372 l/s

APBN PDT Remote areas: construction of 78 village 0.12 13 village 0.08 17 village 0.01 21 village 0.01 27 village 0.02 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER rural WS with relatively easy water source APBN PDT Border island, post conflicts: 304 village 0.31 68 village 0.07 77 village 0.08 79 village 0.08 80 village 0.08 construction of rural WS with difficult source/need high-tech APBN PDT Remote areas: construction of 50 village 0.04 17 village 0.02 10 village 0.01 10 village 0.01 13 village 0.01 rural WS with relatively easy water source APBN RISTEK Construction of rural WS with 15 village 0.075 1 village 0.005 4 village 0.02 5 village 0.025 5 village 0.025 difficult source/need high-tech 75,000 l/day 5,000 l/day 20,000 l/day 25,000 l/day 25,000 l/day APBN ESDM Pumping gound water 200 point 0.113 200 point 0.113 point 0 point 0 point 0 3 NON PIPED SCHEME DAK WS/ Construction of non-piped rural 36,000 village 6.00 2,400 village 0.40 11,160 village 1.86 11,220 village 1.87 11,220 village 1.87 Self-financing WS for individual/communal APBN MOH Improvement of quality of non- 36,000 village 2.00 2,400 village 0.139 1,160 village 0.65 11,220 village 0.65 11,220 village 0.65 DAK piped scheme surveillance, HWTS stimulus APBN MOH Changing hygienic behavior 36,000 village 0.36 2,400 village 0.02 11,160 village 0.111 11,220 village 0.112 11,220 village 0.112 APBD water scarcity and water-borne disease areas TOTAL RURAL AREAS 12.10 1.29 3.62 3.64 3.65 TOTAL urban and rural areas 65.26 7.78 17.05 18.41 22.12 * apbn urban and rural 31.62 4.43 8.05 9.06 10.17 ** DAK 6.00 0.40 1.86 1.87 1.87 APBD/pdam/banks/ppp 27.64 2.95 7.14 7.48 10.08

NOTE: * the DGCK figure is 21.26 ** the DGCK figure is 9.31

SOURCE: MINISTRY OF PUBLIC WORKS DATA 24 25 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

03: CHALLENGES 26 27

CHAPTER THREE 03: CHALLENGES

3.1 Challenges at the Central sense of ownership of responsibility for water higher tariffs linked to service improvements. 3.3 Environmental Challenges Government Level service; (ii) tendency of local governments to rely on This common interest can be accommodated in central government funding for local water supply an activity to help communities establish a PDAM- 59. Densely populated areas must cope with 53. Implementation of present government projects; and (iii) non-optimal management of consumer link that is beneficial both to PDAMs and increased pollution and often dependency on policies to reach MDG targets must employ a program water infrastructure. As mentioned in Chapter 2, the to local governments that want to demonstrate water sources that lie in other jurisdictions. approach that addresses, but does not necessarily basic challenge underlying all of these obstacles their concern to voters for water issues. Eventually As towns grow into cities, the water source solve, fundamental and endemic challenges in has been identified as the need for better water a PDAM-consumer link can help establish a moves farther away, and cities often rely on the water sector. At the central government level, governance at the local government level. A 2009 strong link between communities and their neighboring jurisdictions for their source of these challenges include the need for greater report for the World Bank, “Policies for Better Water local governments, including local parliaments, water. Water sources are not equally distributed capacity in development, planning and monitoring Supply and Sanitation in Indonesia,” found that good through availability of data on water governance over the region. In some areas water sources are

and prompt feedback of evaluation into central governance is the critical missing factor in good performance. In the short-run, a first step toward abundant, but it is expensive to transport water INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER government programs. There is also a need for water service and that local governments with good better governance will be better monitoring and to settlements. greater coordination among the ministries that share governance have seen improved water services. assistance based on NRW or other indicators of responsibility for stimulation of local governments performance, rather than pro-rated-rewards-to-all. Funding Challenges to provide access to water. For example, since 55. Good water governance can be defined as enactment of the Water Resources Law of 2004, a local government fulfilling its duties to provide 57. Bulk water supply leads to economy-of-scale, 60. In 2010 the Department of Public Works there is still a need to establish a functioning adequate water services as laid down in the Water but often a local government that controls water planned that 60 million new people4 would gain apex water body that will make politically difficult Resources Law of 2004, by listening to the needs sources is not always willing to cooperate with its access to a sustainable source of safe water national decisions regarding inter-jurisdictional of voters, providing investment and support for a neighbors, and the national apex body that should between 2010 and 2015. Increased access was to environmental protection and sharing of water responsible water service provider, and monitoring resolve this problem has not met for many years. be made possible largely with local government resources. Closer coordination between departments the result. Improved water governance leads financing, but a shortfall in local government can ensure enhanced local government access to to more efficient use of resources, consumer- 58. Insufficient operation and maintenance financing resulted in an updated program in available financing, simultaneous completion of oriented service, and adequate maintenance of (O/M) results in rapid deterioration of plant 2011 emphasizing increased national budget both upstream and downstream civil works, closer infrastructure. The water governance challenge is and equipment. One symptom of sub-optimal allocations and incentives to local governments, monitoring of implementation, and legal foundations essentially a long-term political one that until now management is the water loss statistic that including access to alternative sources of for urgently needed reforms. Better monitoring has not been addressed substantially, despite a measures the difference between water that is finance. and evaluation are needed, and incorporation number of technical assistance efforts in various produced and water that is sold. In some PDAMs of a simplified and improved National Water and aspects that have been provided by the central the level of NRW persists at a constant level over 61. There is a significant gap between the Sanitation Information System (NAWASIS) monitoring government. But a programming approach over decades, while in other PDAMs NRW may drop current levels of funding by the central and local and evaluation system should be investigated. the next three years can enhance responsiveness dramatically during a given year. This indicates that government and the needs shown in Table 2 to NAWASIS monitoring is presently integrated with the of local governments to consumer needs, either the high level of NRW is not merely due to technical meet MDG targets, mainly for piped water supply. Accelerated Sanitation Development Program for directly or through forging stronger links between deficiencies of the network, but in many cases due The gap has been calculated by subtracting Settlements (PPSP) monitoring system. PDAMs and consumers. to lack of good management, including weak PDAM probable funding scenarios from calculated Supervisory Board and staff capability. needs. The potential gap of Rp 36.4 trillion is 3.2 The Water Governance Challenge at 56. Recent small water governance projects have the Local Level identified and tested approaches to strengthen water governance at the local government level. 54. The principal obstacles to full implementation There is empirical evidence that well-run PDAMs 4 Of which, about 65 percent are located on the main islands of Java and Bali, 24 percent in Sumatera, 7 percent in Kali- of central government incentive programs at the and their consumers have a common interest in mantan and Sulawesi, and 4 percent on the remaining islands. In Java, 7 percent live in Jakarta alone, and 22 percent, 14 local level have been (i) lack of local government increased investment, better service, and even percent and 13 percent live in West Java/Banten, Central Java and East Java respectively. The distribution of piped con- nections by province is shown in Annex 4. (Source: Team assessment of PDAM database). 28 29

shown in Table 3. Figure 7 shows the funding gap TABLE 3: GAP IN FUNDING FOR WATER INVESTMENT BY CENTRAL AND LOCAL GOVERNMENT, 2011-2014 in graphical presentation. For Local Government (IN RP TRILLION) (LG)/PDAM, the potential gap of Rp 22.27 trillion is a special challenge that will be further discussed in FUNDING INVESTMENT FUNDING Potential NOTES FOR Chapter 5 (5.3 Identification of Funding Sources). SOURCE NEEDED* CAPABILITY* Gap ACCELERATED PROGRAM

62. In addition to funding requirements for DG Cipta Karya 21.21 14.97 6.24 Must obtain from outside investment, there is a need to seek funds for funding sources technical assistance. Table 2 indicates that there is already a budget allocation for soft component (non DG Water Resources 7.00 3.88 3.12 Increase allocation for SDA construction) activities. This should be targeted for providing technical assistance that will encourage Other central government 3.40 2.13 1.28 Potential to access health and facilitate local governments and PDAMs to funds for water participate in the Debt Restructuring program and to help eligible local governments and PDAMs to DAK (water) 6.00 2.15 3.85 Need to increase spending of access existing funding mechanisms such as loans DAK water

from Perpres 29, SLAs, and Water Hibah grants. INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER There is also an immediate need for expanded LG/PDAM 27.64 5.37 22.27 Must find other outside technical assistance to improve and strengthen the funding sources** monitoring and evaluation system, and to enable TOTAL 65.26 28.49 36.76 increased access to sources such as PIP, CSR and the Water and Sanitation Financing Facility. NOTE: *BASED ON INFORMATION PROVIDED BY DGCK

**THIS POTENTIAL GAP WILL BE FURTHER DISCUSSED, AND RECOMMENDATIONS PROPOSED IN CHAPTER 5. 3.4 Risk of Not Meeting Access Targets The Central Government incentive FIGURE 7: FUNDING GAP FOR WATER INVESTMENT BY NATIONAL AND LOCAL GOVERNMENT 63. The discussion of the existing situation, targets, and challenges indicates that there is a very 14.97 programs must emphasize the REAL, high risk that water supply access and investment DGCK RP TRILLION 6.24 targets may not be achieved by the end of 2014. importance of good performance FUNDING GAP, Local governments must increase investments, 3.88 RP TRILLION to qualify for access to further largely through access to funding sources that DGWR must be brought on line and facilitated by technical 3.12 support in the next year. assistance within the next two years. Central 2.13 government incentive programs must emphasize Other Ministries the importance of good performance to qualify for 1.28 access to further support in the next year. Thus, 2.15 ministries must find consensus on establishment DAK and optimum use of an upgraded monitoring and 3.85 evaluation system. 5.37

LG/PDAM 22.27

28.49

TOTAL 36.76

SOURCE: MINISTRY OF PUBLIC WORKS DATA FROM PROVINCES 2009 30 31 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

04: ASSESSMENT OF ISSUES & PROPOSED ACTIONS 32 33

CHAPTER FOUR 04: ASSESSMENT OF ISSUES & PROPOSED ACTIONS

4.1 Issues on Service Coverage 67. In many urban areas, households that based planning and operation. Community-based cannot access piped water systems tend to solutions, such as master meter programs, are 4.1.1 Urban Water Supply access groundwater through deep wells and being implemented in urban areas where physical pumps, although in many densely-populated or regulatory barriers prevent the PDAM distribution

64. Depletion of groundwater, urban crowding, areas groundwater quality has been deteriorating network from reaching beneficiaries. Therefore, and water pollution prevent many citizens from due to contamination from domestic waste. To involvement of communities in urban and rural water drawing on alternatives to piped water supply. A avoid over-exploitation, the use of groundwater, supply planning needs to be continued. Water Hibah program has the advantage of serving especially from deep wells, should be closely low income families in densely-populated areas monitored and strictly regulated. In practice 4.2 Issues on Institutions and while reducing a PDAM’s idle capacity. Scaling up though, most local governments are reluctant to Governance

of the Water Hibah program is one of the fastest charge groundwater withdrawal fees. INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER ways to increase urban piped water coverage. URBAN DWELLERS OFTEN RELY ON PUBLIC WATER SUPPLIES 72. Poor water governance in water supply can Until all the urban poor are served, the limiting 68. Regarding water quality, the Ministry of WHICH ARE PRONE TO CONTAMINATION be rectified when consumer needs are received and factor for scaling up appears to be the ability of Health conducts a program of water quality acted upon by local government owners of PDAMs. In a local governments to provide equity investment in capacity-building and monitoring in urban areas. democratic environment, this mechanism is normally their PDAMs. The first Water Hibah program defined This program needs to be strengthened to ensure contribution from the provincial government. found in periodic elections where the electorate poor households as those having electrical power that the drinking water quality at the consumer’s Plans are underway to adjust local government chooses individuals who have made a campaign to connections of 1300 KVA or less. tap is maintained. For urban self-provision, contribution to future PAMSIMAS activities to match represent the people's interests and cares. Although assistance should be provided, mainly through local government fiscal capacity. capacity building and training are important for the 65. The results of the first Water Hibah program, distribution of guidelines and practical handbooks technical and management improvement of PDAMs, assisted by AusAID, showed that 70,000 low income on appropriate, low-cost technology household 70. Facilitation of water Community-based improvement of the overall local governments’ families consumed more than the minimum amount water treatment system (HWTS), where the Organizations (CBOs or BPSAB) for access to bank responsiveness to the needs of the community is often of water per month, demonstrating to PDAMs that Ministry of Health takes the lead. credit can increase rural access. The World Bank’s the key behind the well performing PDAMs. Therefore, low income does not mean low consumption or Water and Sanitation Program estimates there are apart from addressing the technical and management lower revenues. Scaling up the program by opening 4.1.2 Community-based Water Supply 10,000 CBOs throughout Indonesia that have been aspects at the water sector level, it is also important it to the larger PDAMs (shown in Annex 3) where formed by projects such as WSLIC and PAMSIMAS. to improve the link between the community and local there are larger urban poor populations. Also, the 69. Community-based water development IndII is assisting and providing partial subsidies to government, which requires a longer-term political possibility of raising the funding ceiling per city programs such as PAMSIMAS are based on the a number of CBOs (which is called BPSAB--Badan solution at the local government level. may be assessed. Another way to serve the urban national community-based strategy of 2003. The Pengelola Sarana Air Bersih) in registering and poor is through master meter programs to sell development of a standard operating procedure borrowing funds. Planned borrowings for 25 CBOs in 73. A long-term water governance improvement water in bulk to a CBO that will distribute the water and almost a decade of work on these programs 6 districts presently amount to about Rp 4.6 trillion. activity can demonstrate the advantages to local to its members, collect the tariff, maintain the reduce the risk that rural access targets will not This credit program for CBOs needs to be continued to government leaders of better water governance, distribution system, and pay the PDAM every month. be met. The main source of funds for the largest enhance and increase the effectiveness of PAMSIMAS. to measure and recognize outstanding local of these programs, PAMSIMAS, is the national government owner performance, and instill

66. Increased effectiveness of production and development budget (70 percent of costs), with 71. One of the key lessons learned over the last sustainable habits such as the annual public review distribution works in existing PDAM/IKK is a high funding provided from the World Bank and AusAID. couple of decades is that plant and equipment are of a business plan and local government rewards priority and is recommended. This will increase PAMSIMAS needs to be expanded and modified to better maintained when the beneficiaries are involved and sanctions for not adhering to agreed annual revenue and provide more water for PDAMs to attract more than the current local government in their planning, construction, and operation. Most targets. A technical assistance activity on water increase coverage. contribution (about 10 percent) and additional rural-based water supply projects involve community- governance may be needed in this respect. 34 35

4.3 Issues on Funding Making use of new initiatives on funding 80. It may be possible to quickly pool corporate service (investment) standards as part of the instruments social responsibility funds together with small local action plan will help ensure adequate local 4.3.1 Funds Mobilization for PDAM grant funds from bilateral donors to channel government investment. 77. Some existing and new mechanisms are corporate contributions to increase access to water, Improving PDAM financial management expected to draw out greater local government especially to the poor, in ways that are attractive to 4.3.2 Central Government Funding Support investment. Some PDAMs have qualified for the donors. Such a pooling operation would have to 74. Improving PDAM financial management has Perpres 29 funding, and continuation of technical be created quickly and efficiently, probably following 83. The rate of expansion of access to water in been the government’s concern for decades. assistance should result in the initiation of more the model of an existing organization. urban areas depends largely on increased provision The debt rescheduling program was introduced PDAMs to private bank financing. To date, only the of local government funds. However, central after the 1998 financial crisis. Some PDAMs most creditworthy PDAMs with strong institutional 81. The Government of Indonesia is committed government still can provide funding for specific are having difficulty adhering to the terms of capacity can apply for Perpres 29 commercial credit to improving the investment climate to enable communities such as those in low-income areas, debt rescheduling. In order to qualify for debt support, and applications still require considerable increased participation of the private sector and new un-served areas, water-stressed areas, and rescheduling, PDAMs must have business plans high-level consultant input. the community through public private partnerships strategic areas, in addition to supporting rural with NRW targets, fit and proper test provisions, and cooperation with the private sector. The water supply schemes through community-based greater local government support, and cost 78. Subsidiary loan agreements (SLA) were the Ministry of Public Works and Ministry of Home approach. Although many local governments are recovering tariffs. Debt rescheduling requires that predominate form of water supply investment Affairs provide supervision and support to local reported to have substantial savings in regional 5 the amount of interest and penalties that have financing in the 1980s and 1990s, and they still governments who are responsible for arrangement development banks , local governments have INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER been waived must be spent by the local government provide the lowest interest rate with a long of private sector participation in water supply. spent a limited amount on water infrastructure, on improvement of piped water services. Technical grace period and the longest tenor of all existing Support is needed because most local governments particularly in urban areas, further constraining assistance will be needed to help them return instruments. Preparation requires a long lead time do not have previous experience in creating, progress toward the urban piped water target. to the development path laid down by the debt but the ongoing UWSSP project is available for local negotiating, and managing bank loans and private rescheduling plan. governments and PDAMs that want to fund large sector contracts, and many potential private 84. The implementation of ongoing programs infrastructure projects that are beyond the scope sector partners will not accept local government is progressing but at a rather slow pace. Central 75. One of the easiest first steps to increase PDAM or capability of commercial banks. guarantees. The Ministry of Finance regulations government’s commitment to support expansion of profitability is to sell more water and reduce idle for private bank funding are aimed at opening the access to water for the poor is still high. Central capacity. The Directorate General Cipta Karya and 79. Other forms of financing that have been door for private bank financing when PDAMs have government funding currently provides grants for BPP SPAM should maintain and continue programs of explored, and worth further assessment, are developed a credible financial record. the Water Hibah program, PAMSIMAS, 100 percent training and capacity-building for PDAMs. water funds, corporate social responsibility of new IKK production facilities, and 40 percent of funds, municipal bonds, and financing through Readiness for implementation distribution funding in urban and new IKK areas, 76. In early 2009 the Ministry of Home Affairs insurance companies and pension funds. Existing based on the estimate that about 40 percent of released a circular letter specifying that PDAMs funds include the Ministry of Finance and SMI 82. Readiness criteria are to be applied before the ultimate beneficiaries in these areas will be that had not yet covered 80 percent of the (persero)-owned non-bank intermediary Indonesia the central government will provide co-funding the urban poor. Some local governments such population with piped water should not pay out Infrastructure Finance Facility for long-term through the DDUB program. The readiness criteria as in Medan and Jambi have been successful dividends to the government as the owner, and lending to individual projects. IIFF is just now being require (i) there is a detailed activity plan, (ii) in engaging private sector investment in bulk they announced their intention to send letters to staffed, and the PIP, the longer term investment performance criteria is commensurate with the production activities, and the Government provides mayors of cities that did not follow this advice. fund, is operated by the Ministry of Finance. Other master plan, (iii) land is available, (iv) social support for negotiations and technical studies. The Letters and follow-up enforcement should be initiatives include provision of guarantee funds and environmental issues are addressed, (v) government should continue its programs involving continued to ensure that local governments for feasible PPP schemes from IIGF. A Water and well-developed detailed engineering design is the private sector in developing large bulk water fulfill their responsibility to provide adequate Sanitation Financing Facility (WSFF) that would completed, (vi) financial evaluation of the viability projects such as for Umbulan and Jatiluhur. and affordable water services. Government of pool multilateral and other funds for water and of investments, (vii) availability of local government Indonesia policies must provide incentives without sanitation financing is under preparation by the contribution, (viii) readiness of an activity 85. Nevertheless, the main engine of encouraging local governments to wait for central World Bank and the Government of Indonesia. It is implementation unit, and (ix) readiness to set a development of water supply infrastructure government handouts. expected to be operational in early 2013. reasonable water tariff. Implementation of minimum remains central government investment incentives.

5 According to one study, at the end of 2005, local governments had reserves of Rp 41.7 trillion or 21.5 percent of their total expenditures in that year, and at the end of 2006 their reserves were estimated at Rp. 95 trillion. 36 37

Currently, all government-driven urban programs are essentially piped water programs and most central government-driven rural programs are community-based programs. The major rural community-based programs monitor the number The improved monitoring and evaluation of beneficiaries, but they tend to count all systems because there is not a need to distinguish between system will provide key input for piped and non-piped rural programs. Maintenance of a roadmap until the end of 2014 will require an determining actual progress and need for up-to-date information system and a strategy to reduce shortfalls in funding. For this reason, the allocation of additional resources. improved monitoring and evaluation system will provide key input for determining actual progress and the need for allocation of additional resources. One incentive for sustainability may be 86. The Government is expected to take steps

to ensure that the new infrastructure will be found in the readiness criteria requiring INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER maintained by introducing incentive mechanisms. The urgency of reaching MDG physical targets (i) designation of an institution that will often causes neglect of incentives for the establishment of transparency and follow-up perform post-construction management, systems such as public budget hearings. As a result, local governments are often unable to and (ii) designation of a percentage respond to citizen’s needs. One incentive for more sustainability may be found in the readiness of total costs for maintenance and criteria requiring (i) designation of an institution that will perform post-construction management, operations of infrastructure. and (ii) designation of a percentage of total costs for maintenance and operations of infrastructure built for poverty alleviation. 38 39 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

05: ASSESSMENT OF ISSUES & PROPOSED ACTIONS 40 41

CHAPTER FIVE 05: PROPOSED PROGRAMS & FUNDING SOURCES

5.1 Programming Principles PROGRAM PRINCIPLE 2: Provide funding for PROGRAM PRINCIPLE 5: Improve the existing existing rapid access-enhancing activities monitoring and evaluation system 87. The proposed programming approach supports the broad strategy articulated by the 89. The only exception might be for special 92. Improvement of the existing monitoring and Ministry of Public Works in October 2011, as shown areas and access for the urban poor. Should evaluation system will reduce improper use of DAK in Table 2. It is clear from previous discussions that an activity such as Water Hibah turn out to be funds and streamline the planning process in a the great risk to attainment of the MDG targets is absorbed rapidly, that program can be scaled coordinated manner. Use of transfer funds, and the inability to invest sufficient local government or up with unused funds from other programs, especially Water DAK funds, must be monitored in local government-acquired financing such as DAK, whether they are urban or rural. The Government a reliable and timely manner, and incentives and PPP, local banks and private sector bank financing. of Indonesia is committed to an overall national disincentives should be used to employ 100 percent

In view of the short time remaining to 2014, it is target of 68.87 percent of the national population of water DAK to national development. DAK funds INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER proposed that the government adopts the program in 2015, so there should be flexibility in shifting PDAMs often operate water treatment at a level far below can be a significant source of funding to reach principles as elaborated below. funding between urban and rural, plus or minus a their design capacity. PDAMs should consider using up idle MDGs, especially at a time when local governments reasonable percentage. For instance, a PAMSIMAS capacity first before constructing a new plant. state that they do not have adequate resources rural connection costs less than half of an urban to meet their share of contributions. There is an PROGRAMMING PRINCIPLES: house connection. As monitoring indicates there willingness and capability. Experience with Perpres interdepartmental group studying reforms to DAK, is a need to accelerate the program further, 29 technical assistance has shown that the main and this is the appropriate time to make reforms 1. ATTRACT LOCAL GOVERNMENT FINANCING resources may be diverted from urban to rural obstacle to success is lack of human resources that ensure that all water DAK funds contribute to 2. PROVIDE FUNDING FOR EXISTING RAPID programs. depth and expertise to propose and service loans. the national effort to reach water MDGs. There is an ACCESS-ENHANCING ACTIVITIES Although it is clear that the larger PDAMs are the ongoing loan program to provide incentives to local 3. PDAM IDLE CAPACITY SHOULD BE USED UP FIRST PROGRAM PRINCIPLE 3: PDAM idle capacity should best candidates for water Hibah and Perpres 29 governments to use DAK properly. 4. OPEN ACCESS TO ALL FUNDING SOURCES FOR ALL be used up first financing, lack of reliable data from BPKP audits QUALIFIED LOCAL GOVERNMENTS and lack of data regarding the most critical success 93. Funds attracted from other sources should 5. IMPROVE EXISTING MONITORING AND 90. New connections using idle capacity are the factors (availability of clean water, technical be added to, rather than subtracted from, the DGCK EVALUATION SYSTEM cheapest form of new connections, so they should background of senior personnel, commitment of annual budget. Allowing the addition of outside be implemented as soon as possible. Programs local government and PDAMS, etc.) would make it funds encourages acquisition of new funds, helps that use up idle capacity include Water Hibah necessary to investigate candidacy for programs retire the funding shortfall, and acknowledges that PROGRAM PRINCIPLE 1: Attract as much significant and Jakarta and Surabaya OBA. Idle capacity was on a case-by-case basis. Community-based water there is a risk of not meeting MDG targets. In the local government financing as possible estimated in the most recent self-reported PDAM and sanitation programs have demonstrated that unlikely case where infrastructure targets have been data as being about 18+ percent of capacity, but self-selection leads to the greatest success rate, exceeded, it is always possible to reduce the next 88. It is prudent to scale up or upgrade existing many observers feel the percentage is higher. indicating that it is more efficient to inform PDAMs year’s infrastructure budget. activities that have attracted significant local of their financing choices and choose from among government financing. Such activities would include PROGRAM PRINCIPLE 4: Open access to all their proposals. It is possible for DGCK to enlist 94. Health funds must comprise 10 percent of the Water Hibah which was oversubscribed in June funding sources for all qualified PDAMs/ intermediary professional associations such as IATPI each local government budget. They may be used 2011, and PAMSIMAS which brings out a reliable share of local governments and PERPAMSI to supplement DGCK information- for water supply as a part of preventive health, local government contribution. In fact, experience with sharing that is aimed first toward the larger PDAMs especially in areas where the health budget SANIMAS and WSSLIC-2, have shown that it is possible 91. Due to the short period of time remaining that do not have arrears. cannot be well spent for curative measures. to structure an add-on program to PAMSIMAS to attract and shortage of funds for reaching MDGs by the provincial government contribution and significantly end of 2014, each funding source will be most more than 10 percent local government contribution, efficiently allocated if it is available to all qualified thus reducing the cost to the central government. PDAMs/local governments that demonstrate 42 43

Local departments of health already use Local investment programs/activities, (ii) program Principle no. 3 prioritizes the use of idle capacity of 5.3 Identification of Funding Sources Government Funds (APBD) health funds for support technical assistance, and (iii) advisory the PDAMs, particularly because this activity needs preventive measures such as vaccinations, so and monitoring system improvements. less funding but gains more results, provided that it is 99. Funding for water supply is a local there are many precedents for use of health funds properly implemented. The program includes initiating government responsibility. Although many local for preventive rather than curative measures. Investment Programs/Activities NRW Hibah, expansion of Water Hibah to saturation governments have accumulated large cash Similarly, political support is needed for full point, and stimulating short term, simple type PPP reserves, most local governments state that, after utilization of the Water DAK and utilization of local 96. Program Principle no. 1 promotes the increase such as outsourcing and contract management. budgeting for mandatory expenses such as staff government reserves for water investment. in local government financing. The proposed salaries, education, and health expenditures, investment program includes introduction of Water Program Support Technical Assistance there are not sufficient funds left over from 5.2 Proposed Programs Hibah Program in larger cities, and implementation of locally-generated revenue (PAD) and annual and Activities PAMSIMAS with higher local government contribution. 97. The fourth program principle promotes open transfers from the central government (DAU) to Under Program Principle no. 2, the focus is on access to all funding sources for all qualified PDAMs/ finance construction of new large-scale water 95. The above programming principles are the provision of funding for existing rapid access- local governments. This needs significant program infrastructure treatment plants and distribution underlying principles upon which the proposed enhancing activities. The program includes expanding support Technical Assistance. The proposed program networks. Thus, the central government has programs and activities are developed. At the Water Hibah to larger PDAMs to increase maximum includes the use of intermediary institutions for provided incentives for local government to same time, the programs and activities that allowable Hibah connections, continue piped water information sharing and proposals from PDAMs, and a borrow funds, such as the PDAM debt restructuring

central government has formally launched as in IKK program, allow for additional PDAMs to the number of TAs to introduce/ integrate new sources of program, the commercial credit support program, INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER presented in Table 2 are taken into consideration. existing UWSSP loan, and implementation of Perpres water funds such as PIP and WSFF. and the PIP investment finance fund. The proposed programs and activities can be 29 for access to domestic loan, although the appetite broken down into three main categories (i) for these programs by PDAMs is still low. Program Advisory and Monitoring 100. Table 5 and Figure 8 show the conservative (Rp 10.5 trillion) and best-case scenarios (Rp TABLE 4: PROPOSED PROGRAM/ACTIVITIES 98. The fifth program principle promotes the 22.3 trillion) for augmenting local government monitoring of use of funds transfer in a reliable and budgets to match central government inputs PROGRAMS/ACTIVITIES PRINCIPLE CHALLENGE timely manner. This is particularly important where in the DDUB program. Following Figure 7, the allocation and use of Water DAK funds will increase following section discusses funding sources Continue PAMSIMAS with higher LG contribution; Water Attract Local Lack LG interest, in the future. The government has commenced a for local government budgets including (a) Hibah introduced in larger cities Government Financing low fund level monitoring and evaluation system under a national PDAM and local government funds, (b) provincial NAWASIS monitoring and evaluation system. government funds, (c) Government and Private Expand Water Hibah to larger PDAMs to increase Fund existing Urgency of reaching This initiative needs to be continued with some Sector Participation (Water Operator Partnership, maximum allowable hibah connections; continue piped rapid-access activities goal by end of 2014. improvements. Table 4 below provides a summary Large scale PPP, Small scale PPP); (d) On-lending water, IKK; additional PDAMs to on-going UWSSP; Open Use of new financing of the proposed programs and activities, based (UWSSP); (f) On-granting; (g) Financing facilities access to domestic loan using Perpres 29 instrument (Perpres 29) on the program principles, and takes into account (PIP, IIFF, WSFF); and (h) Commercial credit requires higher financial existing government plans. The last column provides support (Perpres 29). sophistication in PDAMs a number of challenges for each proposed program that needs to be addressed properly. NRW Hibah; expansion of Water Hibah to saturation Use up PDAM idle Shortage of funds point; OBA-type operation; stimulate short term, capacity first simple PPP schemes

Continue NAWASIS initiative, improve and simplify Monitor use of Need to use all of the system funds promptly water DAK

Use of intermediary institutions for information sharing Open access to all funding Difficult to gather enough and proposals from PDAMs, TA to introduce/ integrate activities information to select the new funds such as PIP, WSFF; TA for increased best PDAMs for financing provincial, LG funds; TA for water CSR 44 45

PDAM and local government funding 104. Small scale private sector cooperation is TABLE 5: CONSERVATIVE AND BEST CASE SCENARIO FOR AUGMENTING LG BUDGET popular among PDAMs, mainly for provision of 101. PDAM and local government funds are often raw or treated water, and/or new water supply FUNDING SOURCES FOLLOW ON ACTIVITIES CONSERVATIVE BEST CASE PROJECTION, SCENARIO, indistinguishable from one another. For instance, system in a specific new service area (‘greenfield’ RP TRILLION RP TRILLION in the Water Hibah program, which is aimed at projects). A technical assistance program can encouraging local government’s investment in water increase absorption of small scale local private LG/PDAM/Provincial Support Ministry of Home Affairs (MOHA) and MOF agree to assess the 3.96 3.96 utilities, PDAMs pre-funded the local governments’ sector participation for projects averaging 100 liters possibility of using LG reserves as security for loan from regional contribution until local government’s budget became per second. The program may be combined with banks. MOHA and MOF agree to enforce the implementation of the available. The total contribution of PDAM and local developing alternative small scale funding such as regulations to ensure that PDAM’s revenue is used firstly to expand government funds to the DDUB program in 2009 supplier’s credit. and improve services and implement the full cost recovery (FCR) was about Rp 0.6 trillion. It is expected that PDAM and local government funding will increase at 25 105. Large-scale Public Private Partnership (PPP) Government-to-government Water Operator Partnership 0.35 0.35 percent per year from the 2010 level because of the is a potential source of investment funds for water strict application of readiness criteria and greater supply providing an added opportunity for greater PPP Continue large scale (Tangerang, Umbulan, Bandar Lampung) and 1.69 1.69 attention to local government contribution with efficiency and professionalism in operating and small scale PPP schemes incentives diverted to better performers. There is a managing water supply systems. Enabling conditions possibility that local government reserves, which for private sector entry should be considered,

On-granting Expansion of Water Hibah; NRW Hibah 1.93 1.93 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER were reported to be Rp 95 trillion at the end of 2006, such as improving existing regulations to ensure could be used as security for loans from regional competitiveness and transparency are maintained. On-lending Additional cities under UWSSP 0.18 0.18 development banks for investment, but details After decentralization however, most local would have to be agreed between the Ministries of governments have been reluctant to spend APBD Financing Facility WSFF/PIP 1.19 1.19 Home Affairs and Finance. funds to match private funding for water supply. In addition, the PPP transaction process is constrained Commercial credit support Application of Perpres 29 to other PDAMs 1.62 1.62 Provincial government funding by the need for understanding of the basic PPP concept itself, mostly by local governments and TOTAL 10.92 10.92 102. Between 2009 and 2010, provincial PDAMs. Because of the long lead time for private government contribution to the DDUB program sector funding, PPP is considered a potential source increased by 75 percent. It is expected that of funds for medium to longer term development. FIGURE 8: CONSERVATIVE AND BEST CASE SCENARIOS FOR FUNDS TO MATCH URBAN APBN, RP. TRILLION provincial funding will increase at a more modest The current projects that are likely to result in water TOTAL 10.92 pace of 25 percent per year with application of supply infrastructure before the end of 2014 are in 22.27 a technical assistance program to enhance the Tangerang, Umbulan Spring, and Bandar Lampung.

COMMERCIAL 1.62 interest and participation of location governments in CREDIT SUPPORT 2.58 water supply projects. 106. Corporate Social Responsibility (CSR). There is a large potential to employ corporate social ON-LENDING 1.19 7.54 Government-to-Government and Private Sector responsibility (CSR) funding for water access, based Participation on UU25 and 40/2007, especially from state-owned FINANCING 0.18 enterprises which are required to provide 5 percent FACILITY 0.41 103. Government-to-government programs include of their net profit for social purposes with 3% for ON-GRENTING 1.93 the Water Operator Partnership whereby Indonesian enhancing the environment. The potential for 2.46 PDAMs cooperate with counterpart PDAMs in other CSR funding for all sectors has been estimated at PPP 1.69 countries for internal strengthening and general between Rp 10 and 20 trillion annually. Technical 3.1 capacity-building for a limited number of PDAMs assistance would be required to establish a fund

G TO G 0.35 through bilateral donors. The capacity building for water and sanitation projects that matches CSR 1.48 programs would help PDAMs access credit and company requirements with needs in the field. develop efficiency programs such as NRW reduction, LG/PDAM/ 3.96 PROVINCIAL micro-credit, energy efficiency, billing efficiency, SUPPORT 4.7 and supplier’s credit. 46 47

On-lending Commercial credit support TABLE 6: CHALLENGES, PROGRAMMING PRINCIPLES AND PROPOSED PROGRAMS/ACTIVITIES

107. Prior to the Asian Financial Crisis, on-lending 110. Presidential instruction (Perpres) 29 of 2009 was the main source of funds for new water supply is intended to open access of local governments CHALLENGE PRINCIPLE PROGRAMS/ACTIVITIES infrastructure, but PDAM on-lending was restrained to commercial banks to water investment funds. when PDAM and local government repayments fell in Under AusAID cooperation with the Department of Lack LG interest, Attract Local PAMSIMAS with higher LG contribution, Water Hibah introduced arrears. The national government’s debt restructuring Public Works through the Indonesia Infrastructure low fund level Government Financing in larger cities; TA for increased provincial, LG funds program has cleared the way for a resumption of Initiative (IndII), preliminary technical assistance to on-lending activities, although at a smaller scale 20 “healthy” PDAMs resulted in three PDAMs being Urgency of reaching goal Fund existing Expand water Hibah to larger PDAMs, increase maximum than before. Experience shows that preparation of able to access commercial loans in 2011. Templates by end of 2014 rapid-access activities allowable Hibah connections; continue piped water, IKK, on-lending vehicles requires many years. Due to the for evaluation of PDAMs for loan applications are PAMSIMAS programs; add to UWSSP; TA for water CSR; considerable lead time required to prepare loans available, and larger and more creditworthy PDAMs accelerate WSFF from multilateral agencies, the only possible vehicle with better loan-processing capacity may be available for on-lending is now the World Bank- assisted by the continuing technical assistance Shortage of funds Use up PDAM idle NRW Hibah, expansion of water Hibah to saturation point, assisted Urban Water Supply and Sanitation Project project. The Perpres 29 mechanism is expected to capacity first stimulate short term PPP (UWSSP). The project enables a small number of be refined by the Ministry of Finance so that it will

PDAMs to increase water supply infrastructure, and it become a reliable source of funds for medium to Need to use all of Monitor use of “Performance evaluation for water supply” monitoring, INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER could be expanded to double its present size with the longer-term development. water DAK funds promptly Cooperation with AWASIS, coordination among ministries addition of qualifying PDAMs and projects. Financing Facilities Difficult to select best Open access to all funding Use of intermediary institutions for information sharing On-granting PDAMs for financing activities and proposals from PDAMs, TA to introduce/ integrate new 111. Funds are needed for both the central and funds such as PIP, WSFF 108. The main on-granting vehicle is the Water Hibah local government budgets, and at present the program which uses the on-granting mechanism main vehicle for assistance to the national budget provided through Government Regulation 56 of 2005 appears to be the financing facility that is under only 3 years, its assets grew from Rp5 trillion in 2007 113. Indonesia Water and Sanitation Financing and MoF Regulations 168 and 169 of 2008. The 2010- preparation. This facility could be one of the main to 15.4 trillion in 2011 (April). PIP may be accessed Program (IWSFP). The World Bank, in cooperation with 2011 Water Hibah program was oversubscribed, and sources of funds to meet the shortfall in funding for by creditworthy PDAMs and local governments, the Government of Indonesia and other donors, is it was completed more or less on time. An expanded central government funds (totaling Rp 10.3 trillion) but facilitation would be required by a technical preparing this program which is aimed at increasing program can connect lower income groups and sell idle as well as local government funds (the remaining assistance project. access to and improving water supply and sanitation capacity. The program will be expanded until there are gap of Rp 22.3 trillion, which will augment local services. The proposed program would include signs of slowing of the absorptive capacity in each city government budgets). The availability of a financing establishment of a water and sanitation investment where idle capacity exists. facility is exemplified by PIP (Pusat Investasi facility (the Facility) that will provide capital grants, Pemerintah) and Indonesia Water and Sanitation output-based grants, and loans through program 109. Water Hibah has been so popular among local Financing Program (IWSFP) currently under partner facilities, and support to central and local governments that it may be used as an incentive for preparation by the World Bank. government capacity strengthening. The Program is enhanced local government/PDAM performance, for expected to be ready in early 2013. The facility will instance in reducing NRW, improvement of energy 112. Pusat Investasi Pemerintah (PIP) or the pool funds from bilateral, multilateral, and private efficiency, or a case where the local government Indonesia Investment Agency was established in sources to provide water and sanitation investment provides public service obligations, undertaking 2007 under Ministry of Finance auspices as a public for proposals from creditworthy local governments. to support part of the cost of production and service agency that provides long-term investment WSFF may use PIP as a vehicle for implementation, distribution of water. An NRW Water Hibah program is and capital shares. Long-term loans are provided and thus technical assistance to launch access to the most likely to be implemented in time to provide to local governments, state owned enterprises, WSFF may be combined with technical assistance results before the end of 2014. A NRW Water Hibah and the private sector. This agency has provided for accessing PIP. program, established through a technical assistance long term assistance for infrastructure investments effort, will provide the benefits of a Water Hibah such as highways, airports and hospitals. Although program and the increased availability of revenue- it is relatively new, the Agency has demonstrated producing water. remarkable progress in a relatively short time. In 48 49 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

06: ROADMAP FOR WATER SUPPLY INVESTMENT 50 TABLE 7: RECOMMENDED INVESTMENT PACKAGES 51

PACKAGE SOURCE AMOUNT COMMENT RP TRILLION

CHAPTER SIX INVESTMENT 06: Application of Perpres 29 to open access of Local banks PM This is in line with program principle 2. ROADMAP FOR WATER domestic loan funding to qualified PDAMs PDAMs added to the on-going UWSSP WB loan Rp 0.41 T Addition of 5-6 new PDAMs to ongoing project using existing funding SUPPLY INVESTMENT and on-lending channels. This is in line with program principle 2. Water Hibah Bilateral TBD Current funding sources are from AusAid and USAID, already secured 6.1 Recommended Technical their use. In the best-case scenario, total investment until 2014. Need for additional funding to expand until LG uptake abates. Assistance and Investment Packages over four years for both urban and rural water supply is expected to be Rp. 65.34 trillion. NRW Hibah Bilateral/ multilateral TBD New initiative to be launched with TA. 114. The largest portion of funding is expected to come from local government funds supplemented 117. The newly-introduced financing instruments CSR Grants to LG Private TBD New initiative to be launched with TA. by loans from banks and funding pools such as such as Perpres 29 and PIP will need to be introduced Perpres 29, PIP/WSFF, and water CSR. Small scale to more PDAMs qualified for such instruments. In Loans from infrastructure fund to LG PIP Rp 4.58 T To launch loans and assist LG. TA needed, perhaps from WSFF PPP is expected to take up a smaller portion of the addition, it will be possible to add about US$20 preparation funding. local government share. The second largest source million to the UWSSP project. The bulk of loan funds will be central government stimulus funds. The are expected to come from the WSFF and PIP. Each Loans and grants from water and PIP, WSFF Rp 13.58 T To launch loans and grants that can be accessed by central

recommended investment packages for attainment funding source will require technical assistance to sanitation fund to LG, CG government and LGs to expand as well as to improve services. INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER of MDG 7c are shown in Table 7. Loans from WSFF may prepare and assist PDAMs and local government for TA needed to establish working procedures, identification and contribute to central government as well as local participation. Two technical assistance activities to preparation of TA packages for LGs/PDAMs, etc. government budgets. Aside from WSFF, all other loan be funded by either loans or grants appear at the end and technical assistance packages will contribute to of the table because they will yield more long-term Technical Assistance the local government contribution to investment. benefits, but these benefits are also important in the Water Operator Partnership Gov’t to Gov’t Rp 2.3 T Twinning technical assistance for selected PDAMs. short run. A long-needed technical assistance project Bilateral 115. Table 2 summarizes projected central and for water governance can ensure that the value local government financing and physical targets of MDG-oriented infrastructure investments is not PDAM-focused TA facilitation for Bilateral TBD The IUWASH project is facilitating 50 PDAMs; there is a need for until the end of 2014. Chapter 5 underlines the diminished through neglect or mismanagement. efficiency and access to funds facilitation for other PDAMs. IUWASH also supports raw water proposed programs and possible funding sources TA for absorption of Perpres 29 acquisition in 20 locations. as developed from the previous chapters. Local/ 118. The annual gaps for various funding sources funding provincial government funding, including PDAM own that must be filled in the best case scenarios funds, and central government grants are important, are shown in Table 8. They are compared with the TA for pooling, lending water CSR Bilateral/ TBD IndII provided Technical Assistance for first round of 4 PDAMs, but they are not sufficient to reach the water MDG. calculated current funding capability, assuming applying lessons learned to second round. With five underlying programming principles as the TA activities to launch the operation of funding proposed in Chapter 5, the Roadmap for Water Supply sources, such as WSFF, are implemented. In the TA to establish NRW Hibah multilateral grant TBD TA will establish legal basis, procedures of water Corporate Social Investment involves many investment packages. case of water DAK, the gap is the difference between Responsibility pool, a Secretariat, and begin operation. estimates of what has been spent now and how 116. The recommended investment packages are much should be spent from water DAK allocations. TA facilitating access to small scale Bilateral TBD TA will pioneer use of water Hibah as incentive, first by rewarding expected to result in enhanced spending in the short-term NRW reduction. best case scenario for both rural and urban areas 119. The calculation of beneficiaries shown in according to Table 6. Only the best-case scenario Table 9 is based on the categories of assistance PPP Bilateral TBD TA will leverage previous spontaneous successes to accelerate funding amounts and the most likely packages appear (new production/ distribution, infill, community- short term small scale PPP and supplier credit. in Table 7. For instance, it is considered unlikely based, etc.) of all funding sources and most likely that local government reserves will be used as number of beneficiaries given best-case scenarios. TA to increase provincial, LG Bilateral TBD TA will work with DGCK to use information sharing, incentives, and security for water infrastructure loans as suggested The best-case scenario investments detailed in contribution to DDUB recognition to increase provincial, LG contributions to water supply in Table 4, so such a package is not shown. Total the Roadmap translate into about 56 million new to match DDUB funds. investment is expected to more than double in 2012 beneficiaries between 2011 and the end of 2014, at with the application of new funding mechanisms and a cost of Rp 65.34 trillion. incentive-based, output-based policies to accelerate 52 TABLE 7: RECOMMENDED INVESTMENT PACKAGES (CONTINUED) TABLE 8: ANNUAL GAPS FOR INCREASED URBAN AND RURAL INVESTMENTS 53

PACKAGE SOURCE AMOUNT COMMENT FUNDING SOURCE FUNDING CAPABILITY TRILLIONS OF RUPIAH RP TRILLION AND GAP 2011 2012 2013 2014 TOTAL Other Activities to Promote Longer-term Benefits DGCK Capability 3.09 3.49 3.94 4.45 14.97 TA for Establishment of streamlined Bilateral TBD TA project will work with several ministries to facilitate acceleration Gap 0.00 1.51 1.63 3.09 6.24 procedures for large scale PPP of large scale PPP based on lessons learned (offer good projects to DGWR Capability 0.80 0.90 1.02 1.15 3.88 the private sector, educate LG in commercial principles). Gap 0.00 1.17 1.48 0.48 3.12 TA for establishment of sustainable Bilateral TBD Other Ministries Capability 0.44 0.50 0.56 0.63 2.13 water governance habits Multi-year TA project will use lessons learned and PDAM- Gap 0.00 0.48 0.43 0.37 1.28 consumer alliance to work with selected LG to establish DAK Capability 0.40 0.48 0.58 0.69 2.15 sustainable water governance in some LG. Gap 0.00 1.38 1.29 1.18 3.85 LG/PDAM Capability 1.00 1.20 1.44 1.73 5.37 Gap 1.95 5.94 6.04 8.35 22.27 Total Capability and Gap 7.68 17.05 18.41 22.12 65.25* APBN Capability and Gap 4.33 8.05 9.06 10.17 31.61 LG/PDAM Capability and Gap 2.95 7.14 7.48 10.08 27.64 DAK Capability and Gap 0.40 1.86 1.87 1.87 6.00 WATER INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER

NOTE: *USING DGCK FIGURES; THE ACTUAL CALCULATION PROBABLY DIFFERS DUE TO ROUNDING

TABLE 9: CALCULATION OF ESTIMATED BENEFICIARIES (RESULTING FROM UPDATED PROGRAM)

MILLIONS OF BENEFICIARIES 2011 2012 2013 2014 TOTAL 6.2 Proposed Flow of Activities 122. Establishment of CSR water and sanitation pooling is expected to take 9 months, but secretariat URBAN WATER 3.42 10.30 11.02 16.65 41.39 120. Figure 9 indicates the possible proposed flow activities may be performed by technical assistance Raw water (CG) 0.00 0.00 0.00 0.00 0.00 of activities. The darker lines indicate a greater after the pooling mechanism is identified. Small Piped (CG) 1.20 3.94 4.22 6.46 15.82 flow of funds and therefore a more critical activity. scale local investments in production of facilities Piped (LG) 1.80 5.91 6.33 9.69 23.73 Technical assistance for water Hibah is an ongoing will require about six months for negotiation of Water Quality 0.00 0.00 0.00 0.00 0.00 activity, so consultants are continuing assistance. terms and contracting before investment funds Self-provision (swadaya) 0.42 0.45 0.47 0.50 1.84 TA for assistance to CBO finance and Perpres 29 are would be available. RURAL WATER 2.80 3.42 3.98 4.41 14.61 not included in this Figure because they are ongoing. PAMSIMAS (CG) 2.25 2.09 2.55 3.25 10.14 123. The upgraded monitoring system, integrated PAMSIMAS (LG) 0.00 0.00 0.00 0.00 0.00 121. In the best case scenario, funds can be made under NAWASIS, is expected to provide a Water-stressed, remote (CK) 0.12 0.29 0.21 0.21 0.82 available to facilitate access to PIP through WSFF funds. management tool for following the progress of the Water-stressed, remote (other CG) 0.03 0.02 0.02 0.02 0.09 Flow of loan funds from PIP would begin earlier than flow updated program and making timely revisions and DAK 0.40 1.03 1.20 0.93 3.56 of WSFF funding because WSFF is expected to be ready adjustments as necessary. Total 6.22 13.72 15.00 21.06 56.00 in early 2013. TA for access to NRW Hibah funds will CG 3.60 6.33 7.00 9.94 26.87 require the presence of consultants during the period of DAK 0.40 1.03 1.20 0.93 3.56 reduction of NRW and evaluation of PDAM performance. LG/PDAM/Other 1.80 5.91 6.33 9.69 23.73 Swadaya 0.42 0.45 0.47 0.50 1.84

NOTE: LG CONTRIBUTIONS TO PAMSIMAS (ABOUT 10%) ARE NOT COUNTED IN RURAL WATER.

PENDING ENFORCEMENT OF DAK RULES, MISCELLANEOUS RURAL ACTIVITIES SHOULD FILL UP SHORTFALLS. 54 55

FIGURE 9: PROPOSED FLOW OF LOANS, GRANTS AND KEY MONITORING/EVALUATION ACTIVITIES

2011 2012 2012 2012

Loan Add new PDAMs to UWSSP and PerPres 29 Operationalizing the financing facility (WSFF and PIP) Grants TA for Water Hibah Program TA to establish NRW Water Hibah TA to facilitate access to WSFF, PIP TA to assist PDAM in small scale PPP TA for promotion to increased provincial and LG contribution NRW Water Hibah program funding CSR for water funding activities Investments Small scale PPP funded

Key Activities INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER Monitoring and Evaluation through upgraded NAWASIS Use of key institutions to inform LG/PDAM of funding options

NOTE: DARKER LINES INDICATE GREATER FLOW OF FUNDING 56 ANNEX Annex 2: PDAM with Debt Restructuring Program, 2009 57 Province Debt restructuring Debt restructuring Province Debt restructuring Debt restructuring under approved under process approved process

NAD Kota Banda Aceh EAST JAVA Kab. Gresik Kab. Lumajang Annex 1: PDAM Database - Provincial Summary, 2009 NAD Kab. Aceh Barat EAST JAVA Kab. Bangkalan Kab. Nganjuk NORTH Sumatera Kota Sibolga EAST JAVA Kab. Pamekasan Kab. Ponorogo No Province No of No of POPULATION, 2009 Production Installed No of NORTH Sumatera Kab. Tanjung Balai EAST JAVA Kota Blitar CITY/ PDAM Total In Service SERVED Capacity Capacity connection NORTH Sumatera Kota Pematang Siantar EAST JAVA Kota Pasuruan PROVINCE with Data (people) Area PEOPLE (%) (l/sec) (l/SEC) (unit) NORTH Sumatera Kota Tebing Tinggi EAST JAVA Kota Mojokerto (people) WEST Sumatera Kota Padang Kab. Padang Pariaman EAST JAVA Kab. Tulungagung WEST Sumatera Kota Solok EAST JAVA Kab. Blitar 1 NAD 23 22 4,292,464 1,359,816 671,556 49% 2,629 2,127 137,755 WEST Sumatera Kab. Sawahlunto EAST JAVA Kab. Jember 2 North Sumatera 28 23 12,566,590 5,907,619 2,800,540 47% 9,872 9,125 612,868 WEST Sumatera Kab. Padang Panjang Banten Kab. Tangerang Kab. Lebak 3 West Sumatera 19 18 4,676,172 1,876,276 835,347 45% 3,965 3,051 195,276 WEST Sumatera Kab. Tanah Datar Bali Kab. Tabanan Kab. Jembrana 4 Riau 11 10 4,987,361 1,631,149 237,523 15% 1,708 1,192 56,152 WEST Sumatera Kab. Pasaman Bali Kab. Badung 5 Jambi 10 7 2,200,664 790,026 547,379 69% 2,012 1,566 131,672 Jambi Kota Jambi Bali Kab. Gianyar 6 South Sumatera 15 15 7,238,096 8,868,208 924,610 10% 6,108 4,469 219,102 Jambi Kab. Kerinci Bali Kab. Klungkung 7 Bengkulu 9 6 1,310,497 594,480 234,954 40% 1,164 956 55,501 Bangka Belitung Kota Pangkal Pinang Bali Kab. Karang Asem 8 Lampung 11 11 7,508,573 1,695,002 271,086 16% 1,739 1,238 66,413 SOUTH Sumatera Kota Palembang Bali Kota Denpasar 9 Bangka Belitung 7 4 670,519 394,447 58,028 15% 845 453 13,899 Lampung Kota Bandar Lampung Kab. Lampung Selatan NTT Kota Kupang

10 Kep. Riau 7 3 315,375 250,686 102,171 41% 340 237 22,874 WEST JAVA Kab. Indramayu Kab. Cirebon WEST Kalimantan Kota Pontianak INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER 11 West Java 26 23 36,527,753 19,785,949 4,211,228 21% 19,982 16,427 1,145,912 WEST JAVA Kab. Subang Kab. Majalengka CENTRAL Kalimantan Kota Palangkaraya 12 DKI Jakarta 1 0 9,215,356 9,215,356 - 0% - - 794,930 WEST JAVA Kab. Purwakarta Kab. Sumedang SOUTH Kalimantan Kota Banjarmasin 13 Central Java 35 35 32,758,169 13,587,514 3,822,438 28% 16,951 12,763 968,056 WEST JAVA Kab. Karawang SOUTH Kalimantan Kab. Banjarbaru 14 DI Yogyakarta 5 5 3,507,306 2,376,470 349,750 15% 1,973 1,488 109,297 WEST JAVA Kab. Bekasi EAST Kalimantan Kota Samarinda 15 East Java 38 37 36,564,402 15,470,795 6,148,458 40% 23,244 18,885 1,242,452 WEST JAVA Kab. Sukabumi EAST Kalimantan Kab. Bulungan 16 Banten 7 6 9,314,155 4,623,061 754,579 16% 6,013 5,660 170,848 WEST JAVA Kota Bandung NORTH SULAWESI Kota Bitung 17 Bali 9 8 3,297,790 1,928,164 1,100,518 57% 4,602 3,978 265,185 WEST JAVA Kab. Garut NORTH SULAWESI Kab. Bolaang Mongondow 18 NTB 9 6 4,200,510 1,291,287 557,696 43% 2,703 2,166 142,999 WEST JAVA Kab. Ciamis SOUTH SULAWESI Kota Makassar Kab. Bone 19 NTT 20 20 4,633,754 1,183,113 320,817 27% 1,316 818 75,045 WEST JAVA Kab. Kuningan SOUTH SULAWESI Kota Palopo Kab. Barru 20 West Kalimantan 14 12 4,135,810 1,478,355 592,749 40% 2,834 2,125 132,953 CENTRAL JAVA Kab. Cilacap SOUTH SULAWESI Kab. Gowa Kab. Tana Toraja 21 Central Kalimantan 14 26 2,090,462 762,087 360,222 47% 1,607 1,228 84,333 CENTRAL JAVA Kab. Sragen SOUTH SULAWESI Kab. Bulukumba 22 South Kalimantan 12 10 2,824,579 1,241,646 790,337 64% 3,500 3,087 211,320 CENTRAL JAVA Kab. Grobogan SOUTH SULAWESI Kab. Maros 23 East Kalimantan 14 11 2,845,061 1,702,187 1,102,363 65% 5,390 4,421 257,452 CENTRAL JAVA Kab. Blora SOUTH SULAWESI Kab. Takalar 24 North Sulawesi 13 9 2,170,457 969,383 350,407 36% 2,519 1,851 89,848 CENTRAL JAVA Kab. Rembang SOUTH SULAWESI Kab. Pangkajene Kepulauan 25 Central Sulawesi 11 6 2,643,900 749,212 214,029 29% 1,098 773 50,212 CENTRAL JAVA Kab. Semarang SOUTH SULAWESI Kab. Enrekang 26 South Sulawesi 23 9 4,066,917 2,015,005 925,453 46% 3,893 3,385 202,839 CENTRAL JAVA Kab. Purbalingga CENTRAL SULAWESI Kab. Toli Toli 27 Southeast Sulawesi 12 9 1,784,696 590,024 245,735 42% 1,054 920 54,743 CENTRAL JAVA Kota Surakarta z Kab. Donggala 28 Gorontalo 6 3 628,418 276,513 97,621 35% 500 383 24,819 CENTRAL JAVA Kota Semarang CENTRAL SULAWESI Kab. Muna 29 West Sulawesi 5 5 1,050,292 428,551 125,960 29% 395 305 26,800 CENTRAL JAVA Kota Pekalongan CENTRAL SULAWESI Kab. Buton 30 Maluku 9 6 1,069,574 317,160 106,951 34% 687 539 22,918 CENTRAL JAVA Kab. Wonosobo CENTRAL SULAWESI Kab. Kolaka 31 North Maluku 8 6 872,253 360,987 176,818 49% 662 536 37,889 Yogyakarta Kab. Sleman Gorontalo Kota Gorontalo 32 West Papua 9 3 418,837 269,782 76,506 28% 441 261 19,617 EAST JAVA Kab. Jombang Kab. Malang WEST SULAWESI Kab. Mamuju 33 Papua 27 10 824,690 486,936 194,672 40% 1,189 865 42,718 EAST JAVA Kab. Madiun Kab. Pasuruan NORTH MALUKU Kota Ternate Indonesia 467 384 213,211,452 104,477,247 29,308,502 28% 132,930 107,275 6,889,768 EAST JAVA Kab. Magetan Kab. Kediri Papua Barat Kab. Manokwari EAST JAVA Kab. Bojonegoro Kab. Lamongan Papua Kota Jayapura

SOURCE: DGCK Database Source: Ministry of Finance 58 Annex 3: PDAM Piped Connection, 2009 Annex 3: PDAM Piped Connection, 2009 (CONTINUED) 59

NO PROVINCE CITY/PROVINCE Connection NO PROVINCE CITY/PROVINCE Connection NO PROVINCE CITY/PROVINCE Connection NO PROVINCE CITY/PROVINCE Connection

1 DKI Jakarta Kota Jakarta 794,930 48 Bali Kab. Buleleng 33,086 95 WEST JAVA Kab. Sukabumi 18,292 142 CENTRAL JAVA Kab. Tegal 12,667 2 EAST JAVA Kota Surabaya 407,225 49 WEST JAVA Kab. Tasikmalaya 32,954 96 Riau Kota Pekan Baru 18,189 143 Banten Kab. Lebak 12,567 3 NORTH SUMATERA Kota Medan 397,065 50 EAST JAVA Kota Madiun 31,681 97 Bengkulu Kab. Rejang Lebong 17,428 144 Yogyakarta Kab. Bantul 12,540 4 WEST JAVA Kota Bandung 146,247 51 NTB Kab. Lombok Tengah 31,200 98 Gorontalo Kota Gorontalo 17,262 145 WEST KALIMANTAN Kab. Sambas 12,440 5 SOUTH SUMATERA Kota Palembang 142,651 52 CENTRAL JAVA Kab. Demak 29,841 99 Banten Kota Tangerang 17,243 146 CENTRAL JAVA Kab. Sukoharjo 12,275 6 WEST JAVA Kab. Bekasi 137,474 53 Bali Kab. Badung 28,997 100 SOUTH SULAWESI Kab. Gowa 17,242 147 EAST JAVA Kab. Bondowoso 12,164 7 SOUTH SULAWESI Kota Makassar 130,486 54 WEST JAVA Kab. Cianjur 28,745 101 NORTH SULAWESI Kota Manado 17,076 148 WEST KALIMANTAN Kota Singkawang 12,099 8 CENTRAL JAVA Kota Semarang 129,933 55 NAD Kota Banda Aceh 28,532 102 CENTRAL JAVA Kab. Kebumen 17,061 149 Banten Kota Cilegon 12,000 9 WEST JAVA Kab. Bogor 126,399 56 WEST JAVA Kab. Subang 26,984 103 CENTRAL JAVA Kab. Grobogan 17,030 150 EAST JAVA Kab. Lamongan 11,943 10 SOUTH KALIMANTAN Kota Banjarmasin 117,199 57 Papua Kota Jayapura 26,106 104 NORTH SUMATERA Kab. Tanjung Balai 17,021 151 NORTH SUMATERA Kota Sibolga 11,849 11 Banten Kab. Tangerang 103,000 58 WEST JAVA Kab. Garut 25,989 105 CENTRAL SULAWESI Kab. Donggala 16,806 152 SOUTH KALIMANTAN Kab. Hulu Sungai Utara 11,755 12 WEST JAVA Kota Bekasi 102,000 59 EAST JAVA Kab. Jember 25,481 106 EAST JAVA Kota Pasuruan 16,676 153 NORTH SUMATERA Kab. Tapanuli Selatan 11,706 13 EAST JAVA Kota Malang 97,374 60 CENTRAL JAVA Kab. Klaten 25,426 107 CENTRAL KALIMANTAN Kota Palangkaraya 16,358 154 Banten Kab. Pandeglang 11,641 14 EAST KALIMANTAN Kota Balikpapan 92,307 61 CENTRAL JAVA Kab. Temanggung 25,371 108 SOUTH SULAWESI Kota Pare Pare 16,135 155 Riau Kota Bengkalis 11,637 15 EAST KALIMANTAN Kota Samarinda 90,849 62 CENTRAL JAVA Kab. Purbalingga 24,730 109 NAD Kab. Aceh Besar 16,110 156 EAST KALIMANTAN Kota Bontang 11,576 16 EAST JAVA Kab. Sidoarjo 88,240 63 SOUTH KALIMANTAN Kab. Banjarbaru 24,671 110 NORTH SUMATERA Kab. Deli Serdang 16,055 157 NTB Kab. Bima 11,566 17 WEST JAVA Kota Bogor 82,487 64 CENTRAL JAVA Kota Salatiga 24,588 111 NORTH SULAWESI Kota Bitung 16,000 158 EAST JAVA Kab. Mojokerto 11,489 18 Jambi Kota Jambi 80,104 65 CENTRAL JAVA Kab. Semarang 24,554 112 CENTRAL JAVA Kab. Brebes 15,858 159 EAST JAVA Kab. Sumenep 11,321

19 WEST SUMATERA Kota Padang 75,345 66 WEST JAVA Kab. Sumedang 24,240 113 CENTRAL JAVA Kota Pekalongan 15,858 160 CENTRAL SULAWESI Kota Bau Bau 11,251 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER 20 WEST KALIMANTAN Kota Pontianak 71,785 67 CENTRAL JAVA Kota Magelang 24,050 114 NTB Kab. Lombok Timur 15,853 161 NORTH SUMATERA Kota Binjai 11,106 21 Bali Kota Denpasar 66,583 68 Bengkulu Kota Bengkulu 23,000 115 NORTH SUMATERA Kab. Tanah Karo 15,738 162 SOUTH SUMATERA Kab. Ogan Komering Ulu 11,076 22 EAST JAVA Kab. Malang 66,140 69 CENTRAL JAVA Kab. Jepara 22,688 116 EAST JAVA Kab. Tulungagung 15,707 163 Papua Barat Kota Sorong 11,046 23 EAST JAVA Kab. Gresik 63,596 70 EAST JAVA Kab. Tuban 22,675 117 SOUTH SUMATERA Kab. Muara Enim 15,686 164 SOUTH KALIMANTAN Kab. Tabalong 11,042 24 NTB Kota Mataram 60,811 71 EAST JAVA Kab. Situbondo 22,620 118 WEST SUMATERA Kota Payakumbuh 15,599 165 Bali Kab. Bangli 10,995 25 WEST JAVA Kota Cirebon 55,331 72 EAST JAVA Kab. Madiun 22,471 119 EAST JAVA Kab. Ponorogo 15,577 166 SOUTH KALIMANTAN Kab. Hulu Sungai Selatan 10,667 26 CENTRAL JAVA Kota Surakarta 54,828 73 EAST KALIMANTAN Kab. Kutai 21,794 120 CENTRAL JAVA Kab. Rembang 15,478 167 EAST JAVA Kab. Sampang 10,549 27 CENTRAL JAVA Kab. Wonosobo 54,400 74 WEST JAVA Kota Sukabumi 21,531 121 SOUTH SUMATERA Kab. Musi Banyuasin 15,460 168 CENTRAL SULAWESI Kab. Banggai 10,229 28 WEST JAVA Kab. Indramayu 53,865 75 WEST JAVA Kab. Purwakarta 21,414 122 NORTH SULAWESI Kab. Minahasa 15,405 169 EAST JAVA Kab. Pacitan 10,135 29 WEST JAVA Kab. Bandung 53,046 76 CENTRAL JAVA Kab. Kudus 20,818 123 NORTH SULAWESI Kab. Bolaang Mongondow 15,218 170 WEST SUMATERA Kab. Agam 10,095 30 NORTH SUMATERA Kota Pematang Siantar 51,402 77 CENTRAL JAVA Kab. Wonogiri 20,689 124 CENTRAL JAVA Kab. Purworejo 15,209 171 SOUTH KALIMANTAN Kab. Hulu Sungai Tengah 10,060 31 CENTRAL JAVA Kab. Cilacap 50,235 78 CENTRAL KALIMANTAN Kab. Kotawaringin Timur 20,545 125 EAST JAVA Kab. Nganjuk 14,602 172 WEST SUMATERA Kab. Pasaman 9,821 32 EAST JAVA Kab. Magetan 48,808 79 CENTRAL SULAWESI Kota Kendari 20,425 126 CENTRAL JAVA Kota Tegal 14,428 173 CENTRAL SULAWESI Kab. Kolaka 9,750 33 WEST JAVA Kota Depok 46,716 80 CENTRAL JAVA Kab. Pati 20,422 127 Banten Kab. Serang 14,397 174 WEST SUMATERA Kota Bukit Tinggi 9,729 34 Bali Kab. Gianyar 46,443 81 NTB Kab. Sumbawa 20,305 128 WEST SUMATERA Kab. Padang Pariaman 14,381 175 Bengkulu Kab. Bengkulu Utara 9,661 35 CENTRAL JAVA Kab. Banyumas 44,992 82 NORTH MALUKU Kota Ternate 20,027 129 SOUTH SULAWESI Kota Palopo 14,266 176 Riau Kab. Indragiri Hilir 9,648 36 WEST JAVA Kab. Karawang 43,046 83 EAST JAVA Kab. Ngawi 20,001 130 NORTH SUMATERA Kab. Langkat 14,249 177 NORTH SULAWESI Kab. Kep. Sangihe Talaud 9,443 37 CENTRAL JAVA Kab. Kendal 42,684 84 Yogyakarta Kab. Sleman 19,914 131 NORTH SUMATERA Kab. Asahan 14,211 178 WEST KALIMANTAN Kab. Sanggau 9,380 38 CENTRAL JAVA Kab. Magelang 39,949 85 CENTRAL JAVA Kab. Pemalang 19,878 132 EAST JAVA Kab. Jombang 14,172 179 EAST JAVA Kota Batu 9,365 39 Bali Kab. Tabanan 39,783 86 Bali Kab. Klungkung 19,809 133 WEST JAVA Kab. Majalengka 14,151 180 CENTRAL JAVA Kab. Blora 9,253 40 WEST JAVA Kab. Cirebon 38,000 87 CENTRAL JAVA Kab. Boyolali 19,585 134 NAD Kab. Aceh Utara 13,949 181 CENTRAL KALIMANTAN Kab. Kotawaringin Barat 9,210 41 EAST JAVA Kab. Banyuwangi 35,393 88 Kepulauan Riau Kota Tanjung Pinang 19,524 135 EAST JAVA Kab. Bangkalan 13,807 182 SOUTH KALIMANTAN Kab. Tapin 9,189 42 Yogyakarta Kab. Gunung Kidul 34,976 89 Bali Kab. Karang Asem 19,489 136 WEST SUMATERA Kab. Tanah Datar 13,690 183 CENTRAL KALIMANTAN Kab. Kapuas Hulu 9,141 43 CENTRAL JAVA Kab. Karanganyar 34,859 90 WEST JAVA Kab. Ciamis 19,434 137 EAST JAVA Kota Probolinggo 13,332 184 CENTRAL SULAWESI Kab. Toli Toli 9,088 44 CENTRAL JAVA Kab. Sragen 34,801 91 WEST JAVA Kab. Kuningan 19,418 138 EAST KALIMANTAN Kota Tarakan 13,108 185 NTT Kab. Sikka 9,075 45 Yogyakarta Kota Yogyakarta 34,552 92 EAST JAVA Kab. Lumajang 19,410 139 EAST JAVA Kota Kediri 12,908 186 NORTH SUMATERA Kab. Dairi 9,055 46 Jambi Kab. Kerinci 33,925 93 EAST JAVA Kab. Pasuruan 19,338 140 EAST JAVA Kab. Kediri 12,758 187 NORTH SUMATERA Kota Tebing Tinggi 9,050 47 Lampung Kota Bandar Lampung 33,256 94 CENTRAL JAVA Kab. Batang 19,214 141 EAST JAVA Kab. Probolinggo 12,687 188 CENTRAL KALIMANTAN Kab. Barito Selatan 9,018 60 Annex 3: PDAM Piped Connection, 2009 (CONTINUED) Annex 3: PDAM Piped Connection, 2009 (CONTINUED) 61

NO PROVINCE CITY/PROVINCE Connection NO PROVINCE CITY/PROVINCE Connection NO PROVINCE CITY/PROVINCE Connection NO PROVINCE CITY/PROVINCE Connection

189 NAD Kab. Bireuen 8,986 236 Jambi Kab. Sarolangun 5,046 283 EAST KALIMANTAN Kab. Malinau 3,118 330 Kepulauan Riau Kab. Natuna 1,900 190 EAST JAVA Kab. Pamekasan 8,844 237 WEST Sumatera Kab. Sawahlunto 5,016 284 EAST KALIMANTAN Kab. Penajam Paser Utara 3,095 331 SOUTH SUMATERA Kab. Empat Lawang 1,894 191 WEST Sumatera Kota Solok 8,527 238 SOUTH Sumatera Kab. Ogan Ilir 4,942 285 WEST KALIMANTAN Kab. Bengkayang 3,062 332 Gorontalo Kab. Pohuwato 1,883 192 EAST JAVA Kab. Blitar 8,440 239 SOUTH SULAWESI Kab. Tana Toraja 4,847 286 Lampung Kab. Tanggamus 3,040 333 NAD Kab. Gayo Lues 1,876 193 WEST Sulawesi Kab. Mamuju 8,300 240 NAD Kota Sabang 4,843 287 WEST KALIMANTAN Kab. Melawi 3,021 334 Babel Kab. Belitung 1,856 194 Maluku Kota Ambon 8,293 241 EAST JAVA Kab. Trenggalek 4,777 288 Lampung Kota Metro 3,014 335 Riau Kab. Rokan Hulu 1,811 195 CENTRAL JaVa Kab. Banjarnegara 8,278 242 NAD Kab. Aceh Barat 4,749 289 NAD Kab. Pidie Jaya 3,000 336 NAD Kab. Aceh Singkil 1,702 196 EAST Kalimantan Kab. Paser 8,184 243 WEST Papua Kab. Manokwari 4,538 290 Lampung Kab. Pesawaran 2,988 337 CENTRAL KALIMANTAN Kab. Pulang Pisau 1,690 197 WEST JAVA Kota Banjar 8,149 244 SOUTH Kalimantan Kab. Balangan 4,510 291 CENTRAL SULAWESI Kab. Buton 2,953 338 CENTRAL SULAWESI Kab. Konawe 1,681 198 NAD Kota Langsa 8,100 245 Lampung Kab. Lampung Utara 4,420 292 CENTRAL SULAWESI Kab. Tojo Una Una 2,948 339 SOUTH SUMATERA Kota Lubuk Linggau 1,500 199 CENTRAL Kalimantan Kab. Barito Utara 7,943 246 WEST Kalimantan Kab. Kapuas Hulu 4,338 293 NTT Kab. Belu 2,928 340 NTT Kab. Sumba Barat Daya 1,500 200 NTT Kab. Ende 7,942 247 Papua Kab. Yapen Waropen 4,277 294 CENTRAL SULAWESI Kab. Kolaka Utara 2,925 341 CENTRAL KALIMANTAN Kab. Barito Timur 1,496 201 NAD Kota Lhokseumawe 7,898 248 EAST JAVA Kota Mojokerto 4,275 295 NORTH SULAWESI Kab. Kep. Talaud 2,818 342 CENTRAL SULAWESI Kab. Muna 1,475 202 WEST Sumatera Kab. Solok 7,587 249 NAD Kab. Bener Meriah 4,257 296 CENTRAL SULAWESI Kab. Wakatobi 2,808 343 CENTRAL SULAWESI Kab. Bombana 1,475 203 WEST Sumatera Kab. Polewali Mandar 7,500 250 NORTH Sulawesi Kab. Minahasa Selatan 4,243 297 NORTH SUMATERA Kab. Simalungun 2,757 344 Maluku Kab. Maluku Tenggara Bar. 1,469 204 NTT Kab. Manggarai 7,431 251 Riau Kab. Indragiri Hulu 4,221 298 NORTH SUMATERA Kab. Nias 2,712 345 NTT Kab. Lembata 1,468 205 Yogyakarta Kab. Kulon Progo 7,315 252 NORTH Sumatera Kab. Toba Samosir 4,219 299 SOUTH SUMATERA Kab. Ogan Komering Ulu Tim. 2,689 346 Kepulauan Riau Kab. Kep. Anambas 1,450 206 NAD Kab. Aceh Tenggara 7,075 253 NORTH Maluku Kab. Halmahera Selatan 4,200 300 CENTRAL SULAWESI Kab. Buol 2,673 347 NORTH SUMATERA Kab. Mandailing Natal 1,438

207 NORTH Sumatera Kab. Labuhan Batu 7,000 254 Lampung Kab. Lampung Barat 4,157 301 Lampung Kab. Lampung Timur 2,667 348 Riau Kota Dumai 1,431 INVESTMENT ROADMAP | 2011-2014 INDONESIA WATER 208 WEST Sulawesi Kab. Majene 7,000 255 Jambi Kab. Batang Hari 4,125 302 WEST SUMATERA Kota Pariaman 2,600 349 Lampung Kab. Way Kanan 1,404 209 NAD Kab. Aceh Tamiang 6,943 256 NTT Kab. Flores Timur 4,108 303 Maluku Kab. Maluku Tenggara 2,570 350 Jambi Kab. Muaro Jambi 1,394 210 SOUTH Sulawesi Kab. Pinrang 6,943 257 WEST Kalimantan Kab. Sintang 4,072 304 NAD Kab. Aceh Selatan 2,548 351 WEST SUMATERA Kota Lima Puluh Koto 1,324 211 WEST Sumatera Kab. Pesisir Selatan 6,870 258 SOUTH Sumatera Kab. Lahat 4,065 305 Bengkulu Kab. Mukomuko 2,528 352 NTT Kab. Manggarai Timur 1,300 212 SOUTH Kalimantan Kab. Kotabaru 6,747 259 Papua Barat Kab. Fakfak 4,033 306 Papua Kab. Nabire 2,520 353 Lampung Kab. Tulang Bawang 1,233 213 SOUTH Sulawesi Kab. Bulukumba 6,735 260 Babel Kota Pangkal Pinang 4,000 307 Maluku Kab. Buru 2,462 354 NTT Kab.Rote Ndao 1,231 214 SOUTH Sumatera Kab. Banyuasin 6,668 261 WEST SULAWESI Kab. Mamasa 4,000 308 Maluku Kab. Kepulauan Aru 2,462 355 SOUTH SUMATERA Kab. Musi Rawas 1,112 215 EAST JAVA Kota Blitar 6,471 262 WEST KALIMANTAN Kab. Pontianak 3,998 309 Riau Kab. Kuantan Singingi 2,460 356 CENTRAL KALIMANTAN Kab. Gunung Mas 1,028 216 Lampung Kab. Lampung Selatan 6,363 263 Riau Kab. Kampar 3,965 310 Papua Kab. Paniai 2,451 357 CENTRAL KALIMANTAN Kab. Sukamara 945 217 NAD Kab. Pidie 6,224 264 NTT Kab. Sumba Timur 3,883 311 NAD Kab. Aceh Tengah 2,409 358 CENTRAL KALIMANTAN Kab. Seruyan 897 218 SOUTH Sulawesi Kab. Wajo 6,185 265 Lampung Kab. Lampung Tengah 3,871 312 Bengkulu Kab. Kepahiang 2,404 359 WEST KALIMANTAN Kab. Landak 770 219 NTT Kab. Ngada 6,180 266 NORTH SULAWESI Kota Tomohon 3,847 313 Riau Kab. Pelalawan 2,390 360 CENTRAL KALIMANTAN Kab. Lamandau 684 220 CENTRAL JaVa Kab. Pekalongan 6,126 267 NORTH MALUKU Kota Tidore Kepulauan 3,738 314 EAST KALIMANTAN Kab. Kutai Barat 2,318 361 NAD Kab. Subulussalam 605 221 Babel Kab. Bangka 5,986 268 SOUTH SUMATERA Kab. Ogan Komering Ulu Sel. 3,698 315 NTT Kab. Manggarai Barat 2,272 362 CENTRAL SULAWESI Kota Palu 585 222 NTT Kab. Timor Tengah Sel. 5,979 269 SOUTH SUMATERA Kab. Prabumulih 3,680 316 CENTRAL KALIMANTAN Kab. Murung Raya 2,217 363 NORTH SUMATERA Kab. Padang Sidempuan 542 223 NAD Kab. Aceh Timur 5,949 270 Papua Kab. Merauke 3,600 317 NORTH SUMATERA Kab. Serdang Begadai 2,206 364 NTT Kab. Sumba Tengah 532 224 WEST Kalimantan Kab. Ketapang 5,929 271 NORTH Sumatera Kab. Tapanuli Tengah 3,484 318 NORTH SUMATERA Kab. Batubara 2,206 365 Bengkulu Kab. Seluma 480 225 CENTRAL Sulawesi Kab. Poso 5,922 272 WEST Sumatera Kab. Solok Selatan 3,443 319 WEST KALIMANTAN Kab. Sekadau 2,059 366 WEST SUMATERA Kab. Dharmasraya 411 226 NORTH Sulawesi Kab. Minahasa Utara 5,798 273 NORTH Maluku Kab. Kep. Sula 3,375 320 Babel Kab. Belitung Timur 2,057 367 Riau Kab. Rokan Hilir 400 227 NORTH Sumatera Kab. Tapanuli Utara 5,797 274 Papua Kab. Biak Numfor 3,373 321 NTT Kota Kupang 2,050 368 Papua Kab. Jayawijaya 391 228 EAST Kalimantan Kab. Bulungan 5,788 275 NORTH Maluku Kab. Halmahera Utara 3,364 322 SOUTH SUMATERA Kab. Pagar Alam 2,027 229 Gorontalo Kab. Gorontalo 5,674 276 WEST Sumatera Kab. Pasaman Barat 3,360 323 NAD Kab. Aceh Jaya 2,000 230 Maluku Kab. Maluku Tengah 5,662 277 NTT Kab. Timor Tengah Utara 3,352 324 NORTH SUMATERA Kab. Nias Selatan 2,000 231 WEST SUMATERA Kab. Padang Panjang 5,543 278 NTT Kab. Alor 3,304 325 Jambi Kab. Tebo 1,990 232 SOUTH KALIMANTAN Kab. Tanah Laut 5,480 279 NTB Kab. Sumbawa Barat 3,264 326 CENTRAL SULAWESI Kab. Morowali 1,961 233 NTT Kab. Kupang 5,467 280 NORTH Maluku Kab. Halmahera Barat 3,185 327 SOUTH SUMATERA Kab. Ogan Komering Ilir 1,954 234 EAST KALIMANTAN Kab. Kutai Timur 5,315 281 CENTRAL Kalimantan Kab. Katingan 3,161 328 WEST SUMATERA Kab. Sawahlunto/ Sijunjung 1,935 235 Jambi Kab. Bungo 5,088 282 NTT Kab. Nagekeo 3,120 329 NTT Kab. Sumba Barat 1,923

Source: Database DJCK 62 Annex 4: Map showing PDAM Piped Connection Distribution by Region/Island, 2009

INDONESIA

Sumatera Maluku, 1,511,512 WEST Papua, Sulawesi Papua Kalimantan 449,261 123,142 WEST JAVA, 686,058 DKI JAKARTA, Banten 2,111,690

EAST JAVA 1,242,452

CENTRAL Bali, JAVA, NTB, YOGYAKARTA NTT 1,077,353 483,229

PDAM Piped Connection by Region/Island

SOURCE: www.undp.org