Case study on the integrated water resources development based on PPP modality in Indonesia

Abstract EN

In many of developing countries water security issues are tied to their economic development, poor infrastructure, land-use changes, increase of the population and so.

To cope with water shortage issues, the integrated water resources development is recommended.

Recently the conventional water development and management in the field of the agriculture and irrigation sector has been expanded into broader sectors such as municipal, industrial water.

Meanwhile the economic growth has not been accompanied by a corresponding expansion of infrastructure and institutional capacity.

Therefore the Public- Private-Partnership (hereinafter “PPP”) modality is actively used in order to facilitate the financial mobilization and to enhance its efficiency in operation and maintenance.

According to the recent increasing population and urbanizationin Jakarta and its neighboring areas, these areas have undergone a rapid water shortage.

To cope with the various water demands, Indonesian government (hereinafter “GOI”) conducted the comprehensive study on the integrated water resources development in cooperation with the Korean government.

As a result, the Karian Dam, located in Banten province, is under construction supported by EDCF1 and is scheduled to be completed by 2019.

Its effective storage capacity is about 207.5million cubic meters, and 14.6m3/sec is available for the municipal, domestic and irrigation needs.

Now, GOI and EDCF are concerned with how to connect the secured water with various end users in the service areas.

Also the GOI has sought to increase the involvement of the private sector in the provision of goods and services traditionally provided by the public sector.

Thus in recognition of necessities for the Karian Water Supply System (hereinafter “KSCS”) based on the PPP modality, now the EDCF has provided the GOI with technical assistances.

The main work scope of this survey is i)water market survey and analysis, ii) settlement of technical issues such as regional water allocation, water tariff and so on, iii) establishment of the suitable PPP scheme, iv) preparation of the PPP implementation plan.

In technical views the KWSS consists of two categories such as i) raw water conveyance system from Karian dam to each Water Treatment Plant, having the total length of 47.9km, ii) Five Water Treatment Plants and Transmission Pipeline from Water Treatment Plant to Distribution Center Reservoir.

In PPP scheme, the public sector is recommended to cover the CAPEX and OPEX3 for the raw water conveyance system, on the other hand the private sector covers the CAPEX and OPEX2 for the Water Treatment Plant and Transmission pipeline in the urban area.

Especially, loan can be recommended for the public sector.

In terms of the business scheme, the Business Entity (hereinafter “BE”), which is composed of private investors and state owned entrepreneur, sells the bulk treated water to PDAM3 through the off-take contract between the BE and Government Contract Agency.

According to the analysis for this PPP scheme, financial and economic Internal Return Rate proves its feasibility.