Govt: Investors Eye Six Water Supply System Projects

Currently, only 50 percent of the population has access to clean water. (IFT/STANLIE)

JAKARTA (IFT) – The government sees that six drinking water projects are ready to be offered to investors through public-private partnerships. The total project value is US$ 311.47 million.

Rachmat Karnadi, Head of Supporting Agency for Water Supply System Development, is optimistic that the water supply projects will be attractive to investors. The high investor interest is reflected in the Umbalan project, where 12 companies participated in the prequalifying bidding process.

Rachmat added that all the water supply projects are economically and financially feasible, due to government support in land acquisition. “The project has been guaranteed by PT Penjamin Infrastruktur Indonesia, and there should be no doubt of investors participating in this project,” he said.

The projects are the Drinking Water Supply System in Bandar Lampung, with an estimated project value of US$ 30 million; Jatiluhur with US$ 189.30; Pondok Gede, Bekasi with US$ 22.43; Surakarta, Central Java with US$ 6.74 million; Tukad Unda, Bali with US$ 43.50 million; and Maros, South Sulawesi with US$ 11.5 million.

“The six projects will be offered for bidding soon. The government currently prioritizes in completing the water supply project bidding in Umbalan,” Rachmat said.

Djoko Kirmanto, Public Works Minister, received Malaysian businessmen from the Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM). He said that investments are open for the provision of drinking water and is in need for support from the private sector, as the government is only to able to fund about 20 percent to 30 percent for the infrastructure project.

Malaysian investors are interested in the drinking water sector. The government has made various efforts to facilitate and minimize the risks of private investment. Currently, only 50 percent of the population has access to clean water.

Loan Guarantee

Regarding the filing of credit guarantee that is proposed by the local water companies, Rachmat said that revision of the Finance Minister Decree Number 229 /Year 2009 has been conducted. With the revision, the central government only guarantees the principal loan of local water companies, and offers a subsidized interest of five percent maximum. Since the company will receive subsidy, the government will not guarantee its interest rate.

The companies that have proposed loan guarantees are PDAM Bogor, which proposed a loan of Rp 24.3 billion to PT Bank Rakyat Indonesia Tbk (BBRI); PDAM Ciamis with loan of Rp 14.7 billion to PT Bank Jabar-Banten Tbk (BJBR); PDAM Lombok Timur with Rp 11.2 billion to PT Bank Negara Indonesia Tbk (BBNI); PDAM Tasikmalaya with Rp 51 billion to PT Bank Jabar-Banten Tbk (BJBR); and PDAM Malang with Rp 52 billion to PT Bank Nasional Indonesia Tbk (BBNI).

PDAM Banjarmasin and PDAM Kota Banjar are also planning to apply for loans for the investment requirement of Rp 120 billion.

Business players observed that demand for clean water in urban areas, especially in Java, will significantly rise in the future, following the increase in population and urban density. For that, investment is needed to replace worn-out water pipes, increase water distribution and reduce water pipe leaks.