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Presidential Regulation Opens Door to Long-Term Financing for Water Utility

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Presidential Regulation Opens Door to Long-Term Financing for Water Utility NEWS VOL 005 - JUNE 2013 , WHAT S NEW Kendal District is located 30 km west of Semarang City and has a total population of 900,000 people. With 46,000 household connections, the Water Utility of Kendal District’s IN THIS EDITION: service coverage is 24 percent. Presidential Regulation opens door to long-term PHOTO CREDIT: WATER UTILITY OF KENDAL DISTRICT, CENTRAL JAVA financing for Water Utility of Kendal District 1 Mojokerto District leveraging raw water management and climate change adaptation program 3 Presidential Regulation opens Online billing system at Water Utility of Pematangsiantar City 4 door to long-term financing for Water Utilities committed to replicate non-revenue water (NRW) reduction pilot project 5 Water Utility of Kendal District Public private partnership to expand water utility service in Gresik 6 Water Utility of Kendal District takes advantage of a Water Utility of Jeneponto District stepping up water quality 7 presidential regulation to seek long-term financing plan from banking sector to increase service coverage and improve clean A happy ending for ‘HEBAT’ Program 8 water access in Kendal District. Persuasion power in scaling-up community-based total sanitation (STBM) 9 KENDAL. Water Utility of Kendal District will build a water treatment plant Revitalizing sewage treatment plant for better with the capacity of 310 liter per second worth Rp 300 billion to increase sanitation in Batang District 10 water service coverage to prospective customers and ensure improved access to Sanitation development to support clean water for the district population. Makassar Global City 11 The water utility has finalized the detail engineering design (DED) document Media catches sanitation bug 12 that comprises detailed design, drafting, engineering, and other related INSIST Program closing and kedoteng handover 13 services necessary to purchase equipment and materials for the construction Improved Urban Sludge Management Workshop 14 of the water treatment plant. The DED has been discussed with related stakeholders, such as Public Works-Water Resources Office, the Provincial Work Unit and local government, to seek the funds from central and local governments. PDAM KENDAL DISTRICT, CENTRAL JAVA CENTRAL DISTRICT, KENDAL PDAM Telogo Mili Spring, one of raw water resources of Water Utility of Kendal District. The local government of Kendal District has a strong commitment to increase water access. Additional funds to finance the water Timur – and the cities of Malang and appraisal process to minimize the risks treatment plant need to be sourced Banjarmasin, have enjoyed long-term of such major investment. from commercial sector. In the past investment credit from national banks year, IUWASH has been facilitating the by way of the Presidential Regulation. At present, Kendal Water Utility is Water Utility of Kendal District and It took them two years to go through waiting for local government share local stakeholders to obtain financial all the requirements to secure funds in a of financing commitment from local supports from state-owned banks scheme stipulated by the regulation. At legislative body, which has agreed to Bank Rakyat Indonesia and Bank present, 11 water utilities are waiting approve the financing for the water Pembangunan Daerah of Central Java for the share of financing from the treatment plant through its plenary branches. Following the issuance of Directorate of Drinking Water Services session. Once the legislative body Presidential Regulation No. 29/2009 on at the Ministry of Public Works. approved the funding, the water utility the Provision of Guarantees and Interest will seek financing commitment from Subsidies by the Central Government Presidential Regulation No. 29/2009 the central government through the to Accelerate Drinking Water Supply, facilitates two important items Directorate of Drinking Water Services seeking funds from commercial banks to in financing major water utility at the Ministry of Public Works and the provide long-term financing for water investment; interest subsidies and Ministry of Finance. utilities investment has become a viable guarantee from the central government. option. The regulation ensures that the loan However, the process of plenary session interest will be based on the central may take a while, and the process solely Water supply sector has not been bank rate (SBI) and the central depends on the legislative body. A fast popular in Indonesia’s banking industry. government will bear up to 5 percent track process for certain decision takes The Presidential Regulation was issued of the remaining interest on effective about six months, while a longer one to encourage national banking industry market rate. This scheme makes the will take up to two years. Meanwhile, to start investing in the sector, and program attractive for both water the local government of Kendal District therefore accelerate the achievement of utilities and financiers. has agreed to fund land acquisition and Millennium Development Goals Target other related costs. 7C, which is to reduce the proportion of Another plus point of the regulation people without sustainable access to safe is that the central government will The water treatment plant in Kendal drinking water and basic sanitation by carry 70 percent of repayment default, District aims to serve 24,000 new half in 2015. while the remaining 30 percent is the connections, which will provide clean financier’s risk. This scheme is also water for about 120,000 people by 2015. As of 2013, five water utilities in three very attractive for banking industry, as Nugroho Andwiwinarno, Ardita Çaesari/ districts – Bogor, Ciamis and Lombok most banks usually have rigorous credit IUWASH Jakarta 2 | iuwashnews vol 005 - June 2013 TOOL BOX Mojokerto District leveraging raw water management and climate change adaptation program The construction of 650 infiltration ponds is estimated to benefit 2,600 households in Mojokerto District. villages, namely Claket, Padusan and Kembang Belor. Both local governments and community members gave the initiative a warm welcome. Mojokerto government has asked the Environmental Office to prepare district-wide water management and replenishment strategy. Another successful leverage was the policy of Mojokerto Head District, which obliged villages that received the support from PNPM Mandiri (the government’s flagship community- driven development program) to allocate the funds to construct infiltration ponds in all villages, in coping with the high rate of rainwater run-offs. In May 2013, IUWASH signed a memorandum of understanding (MoU) with state-owned forestry company Perum Perhutani Unit II East Java. YAYASAN LINGKUNGAN HIDUP SELOLIMAN HIDUP LINGKUNGAN YAYASAN With this agreement, 175 infiltration The Deputy Head of Mojokerto District, Mrs. Choirun Nissa and the representatives of Bappeda ponds will be built to replenish the and Water Utility of Mojokerto District accompanied Ms. Jennifer Frankel-Reed (USAID Senior water flow around the catchment areas Climate Change Specialist) and IUWASH team during a field visit to observe the infiltration ponds of Jubel and Ubalan Springs in Pacet’s constructions in Yayasan Lingkungan Hidup Seloliman and Claket Village, Mojokerto. Forest Area Consolidation Center (Balai Pemantapan Kawasan Hutan/BKPH) of Pasuruan Forest Management Unit (Kesatuan Pemangkuan Hutan/KPH) MOJOKERTO. The assessment on As part of the raw water management in Mojokerto. During the construction water supply vulnerability conducted and climate change adaptation of the infiltration ponds, Lembaga by IUWASH and Brawijaya University scheme, water replenishment Masyarakat Desa Hutan (LMDH) or the found that water discharge in seven program in Mojokerto is the second organization of local communities living springs in Mojokerto district has collaborative program between around BKPH Pacet, is actively involved decreased at an alarming rate of 50 CCFI and IUWASH, following the to ensure the long-term benefit of the percent to 70 percent. For example, same initiative in Sibolangit, North program. Jubel Spring, Mojokerto District Sumatra. In Mojokerto, CCFI handed Water Utility’s main raw water source out US$225,000 grant to construct In total, 650 infiltration ponds (250 were currently discharges water with the rate 650 infiltration ponds and provided already constructed by May 2013) are set of 18.4 liter per second, or a 74 percent environmental conservation advocacy to to be completed by October 2013. It is drop from 70 liter per second initially. support sustainable tourism village in estimated that around 2,600 households Padusan Spring, Pacet subdistrict. will benefit from this program. CCFI IUWASH shared this study with and IUWASH will further facilitate Mojokerto government and its CCFI and IUWASH appointed the development of a policy on raw stakeholders during a workshop in Yayasan Lingkungan Hidup Seloliman water management and climate change December 2012. Being aware of this (YLHS) as the implementing partner adaptation in Mojokerto, as agreed by problem, the government welcomed for this program. Based on IUWASH the Deputy Head District. the water replenishment program held geohydrology mapping of water Siti Ngaisah, Yudyana Viernadi/IUWASH by Coca Cola Foundation Indonesia recharge points, the project started East Java, Alifah Lestari, Virgi Fatmawati/ (CCFI), in collaboration with IUWASH. with an socialization in three targeted IUWASH Jakarta iuwashnews vol 005 - June 2013 | 3 FIELD NOTE | WATER Online billing
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