QUARTERLY REPORT NO. 8 JANUARY – MARCH 2007 APRIL 2007 This publication was produced by Development Alternatives, Inc. for the United States Agency for International Development under Contract No. 497-M-00-05-00005-00 Photo credit: Ristina Aprillia, ESP East Java Hello, water : children at Gang Langgar Dukur, Surabaya practice hand-washing with soap – now with clean water provided by PDAM Surabaya. For more about this, please read the Cover Story on page 1. QUARTERLY REPORT NO. 8 JANUARY – MARCH 2007 Title: Quarterly Report No. 8, January-March 2007. Program, activity, or project number: Environmental Services Program, DAI Project Number: 5300201. Strategic objective number: SO No. 2, Higher Quality Basic Human Services Utilized (BHS). Sponsoring USAID office and contract number: USAID/Indonesia, Contract number: 497-M-00-05-00005-00. Contractor name: DAI. Date of publication: April 2007. TABLE OF CONTENTS COVER STORY ........................................................................................................................... I FUNDING THE FLOW: MICRO CREDIT PROGRAM HELPS SURABAYA RESIDENTS CONNECT TO PIPED WATER....................................................................................................................................................................... I INTRODUCTION AND SUMMARY ....................................................................................... 3 ESP OVERVIEW .....................................................................................................................................................4 SUMMARY OF QUARTERLY ACHIEVEMENTS ............................................................................................6 ESP REGIONAL UPDATES.................................................................................................... 13 NANGGROE ACEH DARUSSALAM........................................................................................................................ 15 NORTH SUMATRA ................................................................................................................................................. 22 DKI JAKARTA .......................................................................................................................................................... 27 WEST JAVA.............................................................................................................................................................. 33 CENTRAL JAVA ....................................................................................................................................................... 40 EAST JAVA ............................................................................................................................................................... 47 NATIONAL & PROGRAM MANAGEMENT UPDATES .................................................... 54 NATIONAL UPDATES ..................................................................................................................................... 55 PROGRAM MANAGEMENT UPDATES....................................................................................................... 62 PROJECT MONITORING & EVALUATION........................................................................ 64 APPENDICES ........................................................................................................................... 83 COVER STORY FUNDING THE FLOW: MICRO CREDIT PROGRAM HELPS SURABAYA RESIDENTS CONNECT TO PIPED WATER Ibu Aminatus, age 60, smiled broadly that afternoon. A resident of Gang Langgar Dukur, Kertajaya, Juwingan, Surabaya, East Java, Ibu Aminatus talked enthusiastically about a new addition to her home: a direct connection to PDAM (Perusahaan Daerah Air Minum, or municipal water company) Surabaya’s water supply network. “I’m so happy.....even my grandson teases me by saying, ‘Wow, Grandma, now you can take a shower using PDAM water and make your skin white!’” Since 1975 residents of Gang Langgar Dukur have purchased clean water from vendors, as well as obtaining water from artesian wells using an electric pump. Thanks to a micro credit program launched by PDAM Surabaya, in conjunction with a local branch of Bank Rakyat Indonesia (BRI), however, a direct connection to piped-water is now affordable to residents of the densely populated Juwingan area. “The procedure was simple,” explained Ibu BasukiIbu, a neighbor of Ibu Aminatus, who was also present that afternoon. “Someone from BRI came and interviewed me, asking me what kind of valuable things I had. And since I only have a TV set, that was the only thing he put on the list. What’s even better is that he didn’t take it away from me. I just signed the credit agreement on 28 December, and two weeks later, piped water was available at my home.” On 15 January 2007, PDAM Surabaya completed the installation of piped water supply services to five households in Gang Langgar Dukur, including those of Ibu Aminatus and Ibu Basuki. Since new customers are required to cover the installation costs of both the tertiary piping leading to their home and the household connection itself, the five residents must each pay a base charge of Rupiah 2.7 million. Such a fee is difficult for low-income households to pay in one lump sum. Using a micro credit scheme allows aspiring customers to spread this cost out into more affordable, monthly installments. “I chose a one-year program” said Ibu Aminatus, “which allows me to pay an installment of a little less than Rp. 300,000 per month.” QUATERLY PROGRESS REPORT NO.8 JANUARY – MARCH 2007 Prior to the installation, these residents had already been on PDAM Surabaya’s customer waiting list since October of 2005. Once the credit agreement was signed, their connection was prioritized by the utility. The micro credit program for new household installations is expected to become a solution for communities who are unable to enjoy piped water facilities from the PDAM due to prohibitive, upfront connection charges. In addition to BRI, Bank Jatim also supports the financing scheme for the micro credit program. PDAM Surabaya anticipates that as many as 5,000 households may utilize the micro credit program to connect to the water supply network. “For the micro credit program, USAID/ESP served as a facilitator of the agreement process between the PDAM and BRI,” said Gusril Bahar, an Environmental Finance Specialist based in ESP’s Jakarta Office. Over a period of approximately 6 months, Mr. Bahar introduced the concept to the respective parties, shared the benefits of micro credit as an alternative financing strategy, and explained the structure of the credit scheme. It is hoped that the micro credit program will help solve two complicated problems currently facing the provision of piped water in Surabaya: the PDAM’s lack of funds for new installation development and communities’ inability to subscribe to the PDAM’s service due to the initial connection costs. As for local banking institutions—especially those that target lower income groups—the program provides a promising opportunity to capture a larger market and expand their customer base. ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID II QUATERLY PROGRESS REPORT NO.8 JANUARY – MARCH 2007 SECTION 1 INTRODUCTION AND SUMMARY INTRODUCTION USAID's Environmental Services Program (ESP) promotes better health through improved water resources management and expanded access to clean water and sanitation services. This Quarterly Progress Report for ESP is submitted to the United States Agency for International Development (USAID) by Development Alternatives, Inc. (DAI) in accordance with Article II, Section G, Reports (as modified) of Contract No. 497-M-00-05-00005-00, originally executed January 11, 2005. This document represents Quarterly Progress Report No. 8 of the Environmental Services Program, for the period January 1 through March 31, 2007. This report provides information on the execution of program activities in the regions covered by ESP. Copies of this report are also provided to Government of Indonesia steering committee members, other relevant programs of USAID, as well as subcontractors and partners of the ESP Program per the distribution list attached to the transmittal letter. Section I of this report provides the reader with an executive-style summary of the program and its achievements from January 1 through March 31, 2007, and contains the following subsections: Section 1.1 ESP Overview Section 1.2 Summary of Quarterly Achievements Section 2 describes integrated program activities in each region in greater detail. The final two sections provide an update on national initiatives and program management (Section 3), and program monitoring and evaluation (Section 4). ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID 3 QUATERLY PROGRESS REPORT NO.8 JANUARY – MARCH 2007 SECTION 1.1. ESP OVERVIEW THE ENVIRONMENTAL SERVICES PROGRAM ESP works with national and local government, private sector, NGOs, community groups and other stakeholders to improve the management of water resources and broaden the distribution of safe water to urban dwellers by strengthening watershed management and delivery of key environmental services, including clean water supply, wastewater collection and treatment and solid waste management in Indonesia. The period of the project is from December 2004 through September 2009 including an initial transition from previous programs. ESP is a five-year project which was developed by USAID/Indonesia to