Sign up for E-Blast


View Sample
Managed by: SMEC

Water Infrastructure Needs Rp 48 Trillion Funds

BPSPAM prepares a team of lawyers to help local governments

By Mia Chitra Dinisari

JAKARTA: Investment needs from the private sector for development of water supply facilities over the next four years have been estimated at Rp 48 trillion, or Rp 12 trillion per year. With such a level of investment, the coverage of infrastructure for drinking water services is expected to reach 68.8 percent of the requirement in the country.

Head of the Support Agency for the Restructuring of Water Supply System (BPSPAM) Rachmat Karnadi said there are at least five water sector infrastructure projects that will be ready to offer. The five projects consist of the Umbulan SPAM to the value of Rp 2 trillion, Jatiluhur SPAM with a value of Rp 2 trillion, SPAM in Tangerang worth Rp 500 billion, and Bandar Lampung SPAM to the value of Rp 500 billion.

Rachmat said that of the five projects, three are ready for their contracts to be signed, namely the Bandar Lampung SPAM, the Umbulan SPAM, and also the SPAM in Tangerang, which is scheduled to be inaugurated this weekend.

"In 2025, water service is expected to have reached 100 percent. Before heading to that direction, the service coverage is expected to have reached 68.8 percent by 2015 and 80 percent by 2020," he said yesterday.

With the high level of needs, he explained, the government is intensifying efforts to attract private investors to finance the projects using the scheme of public-private partnership, with the provision of investment guarantee.

In addition, he said, the government is also committed to providing facilities for prospective investors by improving some of the rules, both in terms of business licenses and the implementation of the projects themselves in due course.

"We are also working to find other sources of financing such as bank loans, bonds, securities or other applicable legal mechanisms applicable with financial institutions. Currently all the funding sources are being discussed and we hope they can be realised as soon as possible," he added.

Just 44 percent
Based on data from BPSPAM of the Ministry of Public Works, until 2009 the service coverage of water supply in urban areas reached 44 percent, whereas in rural areas it was only 11.5 percent.

In the framework of cooperation with the private sector, Rachmat added that the agency also provides support through a team of lawyers who help local governments assess the cooperation agreements with private parties. One example is the Umbulan clean water supply project in East Java, which is now in the process of (dealing with) tender rebuttal.

The provision of the team, he continued, is a form of anticipation against the points of agreement with the private sector that carry risks that can potentially harm consumers or the local governments. "We are preparing (the lawyers) to assist local governments in assessing the clauses in the cooperation project agreements between the government and the private sector. This is to ensure that the case of Jakarta will not be repeated again."

He added that the government also needs funds for wastewater management. The funding amount is expected to reach Rp 10 trillion until 2015.

According to him, the pipeline provision of waste water is still very small, not more than three percent. In fact, the quantity and quality of raw water is declining as a result of the global climate change and excessive raw water harvesting. (mia.dinisari@bisnis.co.id)

Water infrastruktur projects (in four years)

Drinking water investment Rp 48 trillion
Pipeline investment Rp 53 trillion


Projects on offer

SPAM Umbulan Rp 2 trillion
SPAM Jatiluhur Rp 2 trillion
SPAM Bandar Lampung Rp 500 billion
PAM Tangerang Rp 500 billion

Source: BPP SPAM
BISNIS/RADITYO EKO