The document proposes new paradigms for improving urban water services in Indonesia through more efficient and innovative approaches. It discusses two key ideas: 1) A "1% for 7C Global Movement" where 1% of water company sales in Europe would be transferred to developing countries to help achieve Millennium Development Goals. This establishes public-public partnerships between water companies. 2) Developing "community water enterprises" and "community-based independent sanitation systems" to provide water and sanitation services in low-income dense urban areas not served by conventional means. These would be locally managed and owned by communities to help fund infrastructure and create local financial systems.

1. NEW PARADIGMS FOR HIGHLY EFFICIENT
URBAN WATER SERVICES IN INDONESIA
Dr. Riant Nugroho
Jakarta Water Supply Regulatory Body (Jakarta)
Steering Committee “1% for 7C” Global Movement (Geneva)
Steering Committee World Alignment Cities Against Poverty (WACAP) (Rotterdam)

2. Ideas we have today
Government as
Poor service delivery Privatization: public
service provider –
and business private participation
Public Company
performance (PPP)
(PDAM)
About 5% of PDAMs Poor service delivery
are performing and business
performance

3. Start in Europe in
February 2011
1% of total sales of
water companies in
Europe will be
transferred to the
developing countries

4. Recent ideas: “1% for 7C Global Movement”
1% of total sales of Europe public water
companies will be transferred to the
public water companies in developing
Netherland countries to speed up the 7C of the
MDG. Initiated by UNDP Geneva of
Water company Water company Water company Innovative Partnerships Office
France
Water company Water company Water company
1% for 7C
Committee
Indonesia The global movement is being back
to back with WACAP movement
(World Align Cities Against Poverty).
Water company Water company Water company
Initiated by UNDP Geneva of
Innovative Partnerships Office

5. It is about another “PPP”: public to public
partnership

6. Business model
Hub
Exchange house
Global administrator
Hub-Innovative 1% for Goal 7C
Project parties
Partnership UNDP Project Team
Project Team & SC A bunch of strategies
Distributed among
Project Team
actors and targets
Monitoring the Project
Project team & SC implementation implementation
Project Team & SC Evaluate the project
Project Team Reporting the project MDG 7C

7. Water and sanitation income generating
Good for business and
therefore economic
development
Water and
sanitation
improvement Sickness,
unhealthy

8. Innovative funding for water, yesterday-today
Yesterday innovation Today innovation
“Privatization”
?
(PPP and the like)

9. Privatization (PPP) basic mistaken
assumption

10. Privatization (PPP) basic mistaken
assumption
Case b: 25 year of effective
investment period (or more) and 5
years of payback period
Water tariff case A
Case A: 25 year of effective
investment period (or more) and
20-25 years of payback period Water main infrastructure
development (i.e. water
5 years 5 years 5 years 5 years 5 years treatment plant)
1st 2nd 3rd 4th 5th

11. It is not about “anti PPP”. It is just about sound performance or poor performance!
Water loss: “revise target to get the target”
Target : Revised target: Revised target: Actual
Year
1998-2022 2003-2007 2008-2012 performance
1998 58,35 % 61,17 %
1999 54,79 % 57,94 %
2000 48,51 % 50,94 %
2001 47,15 % 50,78 %
2002 45,38 % 47,75 %
2003 43,50 % 44,65 % 45,26 %
2004 41,63 % 43,34 % 47,81 %
2005 39,76 % 41,75 % 50,36 %
2006 37,89 % 39,86 % 51,17 %
2007 36,02 % 37,99 % 51,01 %
2008 35,06 % 36,92 % 48,25 % 50,20 %
2009 34,11 % 35,56 % 47,15 % 46,85 %
2010 33,15 % 34,18 % 46,05 % 44%
2011 32,19 % 32,77 % 44,52 %
2012 31,23 % 31,21 % 43,25 %
2013 30,28 % 30,00 % 41,62 %
2014 29,32 % 28,68 % 40,00 %
2015 28,36 % 28,05 % 38,37 %

12. By today’s paradigm, it is almost impossible to
provide service for the poor in Jakarta
Private
Water charge + IDR 7.000/m3
operators
Every additional of 100.000 new connection of poor/low income
household, which each of them consume 40m3/month, there is a shortfall
IDR 23,8 billion/month instantly –and about IDR 285,6 billion/year. Nobody
want to take the accountability
Poor
Water tariff + IDR 1.050/m3
people

13. Key problem of the water companies in
the developing countries is not money…
Community
Government Management
(consumer)
• Politics and • Undermanaged • Over
bureaucracy • Lack of demanding
intervention professionalism • Water crime
• Water as (illegal
political connection and
commodity consumption)
MANAGEMENT TRANSFORMATION. Transforming the management of the water
enterprise first, then lend them (or grant them) with money. Make them competence to
manage the institution and therefore the loan (or grant)

14. 1st proposal: innovative IPO, “go public” to the
customer
Water companies
40-60%
Government Customer
ownership ownership
In Jakarta, the capital injection of the “innovative IPO” generate money more than
enough to take over private ownership; or equal to a 10-12 years of new investment.

15. Financial exercise
Jakarta is having 800.000 customers: 40% is the low-income customer, 20% is the
middle-income customer, 20% is the high-income customer, and 10% is the highest
income customer.
There are 30% of customer that “have money” to funding the water service.
In 2006, Thames PAM Jaya (one of the concessionaire) was sold to a Singapore
based enterprise. There was no formal announcement of the selling price, but a
source noted that the price was about USD 15,000,000. In 2006, it was about IDR
150,000,000,000. It means that the “market price” of the water service in Jakarta
was about USD 30,000,000, or IDR 300,000,000,000. It could mean that Jakarta
needs money that much to funding their business”.
Assumed, 30% of the number of the Jakarta water customer means 240,000.
Assumed, 49% of the stock of the Jakarta water enterprise is sold to them with
price IDR 10,000,000 (about USD 1,000) per customer, it would be IDR
2,400,000,000,000. It is more than enough to take over and finance water
services.
Assumed, the two private operators invest about IDR 240,000,000,000 per year. It
is only 10% from total money that could generated from “innovative IPO”.

16. Lesson learned
• Take care and exploit
the gigantic “hidden
capital” before we
conclude that “we
need a help from
private”

17. 2nd proposal: community water enterprise (CWE)
Community
representatives Water
enterprise
manager
technical finance
CWE
Low income customer in the dense population that unable to be served conventionally

18. 2nd proposal: community water enterprise
(CWE)
1. to develop a “people-owned small enterprise” at the grass-root level
2. the enterprise owned by all the customer in those poor communities of
the dense area
3. the enterprise business is to distribute water to their communities
4. the enterprise managed by local people
5. the enterprise buy water from city Water enterprise with price of “N”,
and sell to their customer with price “(N) + (N x 30%)”
6. the business profit is for:
management fee (10%)
operation and maintenance cost (10%)
Dividend (10%)
7. the “dividend” can be managed as “local saving” that might be managed
as “local banking system” (versus shark loan) for local people. It will be a
“banking operation” with a new profit to generate local financial system.
Additional value: injecting management competence and then culture of managing

19. Innovative funding for sanitation, yesterday-
today
Yesterday innovation Today innovation
“sanitarization”* (toilets) ?
* From the word of “sanitary”

20. Sanitation issue, Indonesia case
• Poor sanitation cost Indonesia over IDR 58 Trillion (USD 6.8
billion) per year (WB, 2007)
• Over 94 million Indonesians do not have sanitary toilets; 43%
of total population; …and only 2% of urban population served
by integrated sewerage system.

21. Water and sanitation income generating
Water and
sanitation
improvement

22. Sanitation, two proposals
1 2
Government investment Government, donors, CSR

23. 1st proposal: Public sewerage plant (PSP)
Government invests sewerage treatment plant (STP).
Public enterprise (government owned) managed the STP
Private sector manage in a clusters methods; arranged by
housing complex
Sanitation billing system earmarked with electric bill.

24. 2nd proposal : community-based independent
sanitation system (CISS)
Community Public
representatives sewerage
enterprise
manager
technical finance
CISS
Low income customer in the dense population that unable to be served conventionally

25. 2nd proposal : community-based
independent sanitation system (CISS)
1. Jakarta most dense population is grouping into 500 clusters of 100 households.
Each cluster is having a single common closed septic tank as CISS
2. Government and/or donor provide limited funding for developing the sanitation
system
3. The CISS infrastructure is located in under the kampong street, which is
accessible, by mobile-septic-collection.
4. Septic tank managed by local communities; following the micro funding for
water service (1.a.)
the enterprises owned by all the customer in the community
the enterprise management do manage billing system of the sanitation service
the enterprise managed by local people
the enterprise charge at “N” per household (according to the number of the people)
the business profit is for: operation and maintenance cost (60%), management fee
(20%), Dividend (20%)
the “dividend” can be managed as “local saving” that might be managed as “local
banking system” for local people. It will be a “banking operation” with a new profit to
generate local financial system.
5. Periodically, there is service from mobile-septic-collection. Periodically, there is
government conduct inspection the CISS

27. Thank you