1. Where is Community-Based Piped Water Supply Headed in Indonesia? Results of the Indonesia Multi-Village Pooling Project (2008-2009) DeviariandySetiawan 13 April 2010

2. Outline Presentation Indonesia at a Glance Context of Rural Water Supply Development Capacity Assessment of Community-Based Water Supply Organizations (CBOs) and their Support Systems Main Challenges Proposed New Mechanisms to Support CBOs

4. 17,504 islands across 1,890,754 km2

5. GDP per capita US$4,149 <35 million (15%) below poverty line.

6. Human Development Index ranking 111 of 182 countries

7. Culture: More than 300 ethnic groups; 580 languages and dialects

9. Since 1990s, Government has been investing in projects through community schemes expected to reach over 40,000 villages by 2014 with support from development banks, corporate philanthropies and national revenues

10. Evidence of high level of unmet demand in areas where community-managed systems have been introduced.

11. Under current model, pace of overall progress will be slow, even as future sustainability of access is uncertain.Significant investment is being made in community water systems in part because of the very poor state of local water utilities. Going forward, community systems need to interface with institutionally provided services – parallel delivery is not desirable as it may undermine both the overall sector objectives and the sustainability of community systems themselves.

12. Status of “First Generation Project” Even though under decentralization, local governments (LGs) were given the authority & responsibility for WSS service, most LGs take a hands-off approach to the post-project development………. Central Government invests in RWSthrough community based approach & CBOs creation CBOs trained & expected to perform well in their new role to operate and maintain the system Most CBOs have difficulties to perform as expected; especially when system expands Most LGs take a hands-off approach to the post-project development & supervision of CBOs. Community-based water organizations (CBOs) ‘coping’ mechanisms organically emerging under those investment programs

14. Objective indicators

15. Self-assessment

16. Administered by support organizations

17. Sampling framework

18. 632 CBOs identified from East and West Java through Ministry of Health, ministry of Public Works, and NGOs projects

19. At least 25% sample from each area

21. Average CBO customers is 260 HH or 1300 people

22. More than 100 CBOs in a district

23. 70% of House Connection is metered

24. Many have significant assets & are investing more

25. Average current fixed assets of US$ 50,000 per CBO

26. Assets include water supply production facilities and networks, land and office Total people served by CBOs in a district is more than average of 80% utilities’ customer in Indonesia

28. Technically possible, service level satisfactory

29. 101 out of 171 have no water availability restrictions

30. Majority provides 7 days/week (84%); 20-24 hours/day (67%)

31. Customer perception confirms satisfactory performance

32. Financially probable, but constrained

33. 67% generate surplus income

34. Collection management and financial reporting could be issues, Collection period for about 30% is more than a month

36. Support organizations capacities also limitedAssessment of 5 district-level organizations supporting CBOs

38. Government, national and local is looking to invest more

39. A great many people will continue to rely on them, for better or worse

40. Significant demand in areas where CBOs were introduced remain unmet

41. The first generation of project investments focused on building systems and organizing CBOs where there was none before

42. Complicated enough, so understandably, these were formed to a minimum level of viability

43. CBOs are increasing in numbers, looking for ways to cope

44. Cracks in the status quo are showing:

45. High potential CBOs are unable to take full advantage of the market opportunity by improving/expanding – which is linked both to their ability to become better viable and to sector objectives of increasing access to improved water services

46. Local government resources are becoming tied up to supporting the same CBOs

48. Use the current strength of CBOs; align incentives to sustain systems

49. Involve local governments in oversight

51. Introduce market-based CBO financing with performance incentives

52. Introduce local regulations and performance monitoring

54. Service agreements with clear timelines, targets and consequences

55. Local regulation

56. Reduced subsidy policy for existing CBOs

57. They have been subsidized once before and now generating cash internally

58. However, expansion projects are not likely to be fully financed by internally generated revenues, even with financing available

59. Financing service to maximize the use of CBO internally generated revenues for investments now

60. Support institutions/intermediaries are emerging, but have limited resources

61. Building demand for services by outsourcing support activities for a group of CBOs (pooling)

62. Building demand for services by partnering with local governments on ‘delegated’ functions such as performance monitoring

63. Possibly, introduce a third party player such as the private sector

64. Testing the waters

65. Gradually building trust through a commercial relationship

66. Strengthen ability on both sides of the table to ‘bargain’