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Small-Scale Indonesia PPP Project on Water Supply and Sanitation
Viewing from Different Perspectives
Presented by Eko Bagus Delianto - INKINDOJakarta, 16 April 2010
Infrastructure Asia 2010 International Conference
“Breaking Down the Barriers to PPP”
�Email: eko.delianto@gmail.com, inkindo@inkindo.org, www.inkindo.org, mobile+62 811 105 026
Presentation Outline
1. Legal Framework analysis for PPP Business in
Indonesia water supply sector
2. MDG 2015 target for Indonesia water supply
sector as our challenge
3. PPP Project Screening and Prioritization (best
practices by private sector)practices by private sector)
4. PPP procurement process
5. Business case – O&M Contract WTP Ciasem
6. Best practices small scale PPP Business on
Sanitation sector
7. Potential PPP O&M Contract for WTPs
8. Conclusions
Legal Framework analysis for PPP Business in Indonesia Water Supply sector
� Law No. 7 /2004 regulates the Water Resource issues which explicitly elaborate the role of
Private Sector, cooperative and the community in the development of water supply (Article 40 Clause 4);
� Government Regulation No. 16 /2005 as the implementing regulation of Law No. 7 /2004
regulates the Development of Water Supply System (Articles 37 and 64);
� Presidential Regulation No 13 /2010 regulates the cooperation between Government and � Presidential Regulation No 13 /2010 regulates the cooperation between Government and
Business Entities in the provision of infrastructure stipulating the procurement process;
� Government Regulation No. 50/2007 regulates regulates cooperation between LG-owned
enterprise (i.e. PDAM) and Private Sector;
� MoHA Decree No. 43/2000 regulates cooperation between LG-owned enterprise (i.e.
PDAM) and Private Sector;
� MoHA Decree No. 23 /2006 regulates Water Tariff (full cost recovery, affordability, authority of local government, cross subsidize)
Source: Law 7/2004, PP 16/2005, PP 50/2007, Perpres 13/2010, Kepmendagri 43/2000 and 23/2006
MDG 2015 Target for Urban Water Supply Subsector
Small Scale PPP Life Cycle
PROJECT
PREPARATION
REVIEW OF
EX. CONDITION
REVIEW OF
EX. CONDITION
11111111
1.11.11.11.11.11.11.11.1
LOCAL GOV.
STATEMENT
LOCAL GOV.
STATEMENT
1.21.21.21.21.21.21.21.2
PROJECT IDENTIFICATION
Quick Scanning
PROJECT IDENTIFICATION
Quick Scanning
1111....33331111....3333
PROJECT
SOCIALITATION
PROJECT
SOCIALITATION
1.41.41.41.41.41.41.41.4
CAPACITY
BUILDING
CAPACITY
BUILDING
1.51.51.51.51.51.51.51.5
INSTITUTIONALINSTITUTIONAL
1.61.61.61.61.61.61.61.6
LEGAL
ASPECT
LEGAL
ASPECT
1.71.71.71.71.71.71.71.7
ASSET
TURN OVER
44444444
ASSET
EVALUATION
ASSET
EVALUATION
4.14.14.14.14.14.14.14.1
COMPESATIONCOMPESATION
4.24.24.24.24.24.24.24.2
PROJECT
TRANSFER
PROJECT
TRANSFER
4.34.34.34.34.34.34.34.3
PROJECT ARRAGEMENT
22222222
INITIAL
EXPLANATION
& MOU
INITIAL
EXPLANATION
& MOU
2.12.12.12.12.12.12.12.1
SCOPE OF
THE PROJECT
SCOPE OF
THE PROJECT
2.22.22.22.22.22.22.22.2
PREPARATION
DOCUMENTS
PREPARATION
DOCUMENTS
2.32.32.32.32.32.32.32.3
PRE
QUALIFICATION
PROCESS
PRE
QUALIFICATION
PROCESS
2.42.42.42.42.42.42.42.4
BIDDING
PROCESS
BIDDING
PROCESS
2.52.52.52.52.52.52.52.5
DPRD APPROVAL
& SIGNING
CONTRACT
DPRD APPROVAL
& SIGNING
CONTRACT
2.62.62.62.62.62.62.62.6
PROJECT IN
OPERATION
33333333
CONDITION
PRECEDENT
CONDITION
PRECEDENT
3.13.13.13.13.13.13.13.1
IMPLEMENTATIONIMPLEMENTATION
3.23.23.23.23.23.23.23.2
MONITORING &
EVALUATION
MONITORING &
EVALUATION
3.33.33.33.33.33.33.33.3
PPP Project Screening & Prioritization(Quick scanning process by Private Sector)
Start
Identification
Terms of
Reference (ToR)
�Phase 1: Identification for PPP Scheme
Collectexisting data
Update existing data
Define Terms
of Reference
�Projects
�Identification
�Collect basic
�project data�Desk study
Long List
(15 – 20 projects)
�Phase 2: Project Identification, long list
�Phase 3 : Project Identification, short list
�Phase 4 : Identification of project leads
Project Lead
(3 - 5 projects)
�Assess project based on
�project criteria
Identified client’s needs
�Develop project�finance and
�implementation
Check if the clientis open for
co-operation?
How do we add
Value to the
Project?
Are we able to
develop/execute
the Project?
Short List
(7 - 10 projects)
Outline Business Case
(OBC)
Final OBC
PHASE IV: CONTRACT
IN OPERATION
6-7 Months 15-16 Months
Project Readiness
Bid Implementation
1-2 Months
PPP Procurement Process
Large -Scale PPP(22 - 25 months)
PHASE II: PROJECT PREPARATION
PHASE I: PROJECT ID & PREPARATION (SCREENING & PRIORITIZATION)
PHASE III: TRANSACTION ADVISORY
PHASE II: PROJECT PREPARATION
Initial Assessment & Identify Project
Quick Scanning Process &
OBC
Assess Local Government Capacity
Legal Framework
PHASE III: PROJECT PREPARATION &
PRESENTATION
Final OBC & I Presentation
& MOU
Local Government Support
Bid Implementation & DPRD Approval
3-4 Months 1-2 Months 2-3 Months
Small -Scale PPP(6 – 9 months)
PRIORITIZATION)
1-2 Months
PHASE I: PROJECT ID & PREPARATION (SCREENING & PRIORITIZATION)
PHASE V: CONTRACT
IN OPERATION
PHASE IV: TRANSACTION ADVISORY
Operated PPP in Water Supply Sector
Cities Modalities of PPP Contract Investor / Operator
Jakarta (Western) Full Concession 6.200 l/sec PT PALYJA
Jakarta (Eastern) Full Concession 6.500 l/sec PT AETRA
Medan BOT WTP 550 l/Sec PT Tirta Lyonnaise Medan
Batam Full Concession 3.000 l/sec PT Adhya Tirta Batam
Tangerang O&M Contract WTP 300 l/sec PT Tirta Cisadane
Badung – Bali BOT - WTP 300 l/sec PT Tirta Arha Buana
Samarinda BOT - WTP 400 l/sec PT WATTS
Jambi BOT - WTP 200 l/sec PT Novco
Subang O&M Contract - WTP 40 l/sec PT MLD
Semarang RUOT – WTP 600 l/sec PT Gajah Mungkur
Pekanbaru Join Operation 580 l/sec PT KTDP and WFI
Sidoarjo BOT - Bulk Water 650 l/sec Vivendi/PT Harinda
Banjarmasin BTO – WTP 500 l/sec PT Adhi Karya
Tangerang RUOT – WTP 1.500 l/sec PT TKCM/Petrosea
Business Case: O&M Contract WTP Ciasem (Q=40 lps) Subang District, West Java Province
Benefits for District Government and PDAM Subang:
N P V (13.5%, 10 years) 2,149,688,927
F I R R 71.43%
Payback Period 2.57
Discounted Payback Period 2.40 Benefits for District Government and PDAM Subang:
� Accelerating the fulfillment of the increased community water demand from 1.800 HC (2002) to
4.000 HC (2005);
� Reducing public financing burden with private investment by MLD;
� Clarity of function between ‘owner’ and “operator”;
� Increasing income and profit for PDAM Subang;
� More professional and responsive service (operation in 24 hours, high quality and zero complaints);
� Introducing new technology to maintain efficiency;
� Assets maintenance and updating guaranteed (10 years O&M Contract, 2002 – 2012).
�Source: Courtesy of PDAM Subang, March 2010
Best Practices Small Scale PPP on Sanitation
�Public Toilet managing by Private �Public Toilet of PT Pasadenta at
PLAZA PARAHYANGAN BANDUNG
�PT GMT’ s Truck for Solid Waste
Compost Producer at TPA Bantargebang Disposal Site
owned by PT WIRA GULFINDO SARANA (WGS)
�Courtesy pictures from ISSDP (Bappenas & World Bank) – quoted at Bisnis Sanitasi Book “100 Juta Konsumen Menunggu Anda”
Mr. Yusman’s Truck for human disposal sludge at Rawamangun, East Jakarta
Potential O&M Contracts for WTPs (Example)(Small Scale PPP Business in Water Supply)
WTP Subang (Q=10 lps) WTP Cililin - West Bandung Regency (Q = 20 lps) WTP TANJUNG SARI – SUMEDANG(Q = 40 lps)
WTP Nangorak – Sumedang Regency, Q = 100 lps
Source: Site Visit March 2010 in various WTPs in West Java Province
�SKEMATIK SISTEM PENYEDIAAN AIR BERSIH
INTAKE RESERVOIR
TRANSMISION PIPE
River
DISTRIBUTION PUMP
Gra
vit
y D
istr
ibu
tio
n S
yste
m
istr
ibu
tio
n S
yste
m
Reticulation System
TRANSMISI PUMP
Water Supply Production Unit
�Water Supply Scheme
Water Treatment Plant
PPP arrangements
Gra
vit
y D
istr
ibu
tio
n S
yste
m
Pu
mp
ing
Dis
tr
Main Distribution
System
Secondary Distribution
System
Distribution Unit
Service Area
Authority & Private
Ownership
�Level of involvement
�& Risk
�PPP Timeline (Years)
�Investm
ent ( Rp/$ )
Service Contract
“Low end”
O & M
ROT/RUOT
BOT/BOO
Concession
“High end”
Conclusions (1/2)A call for Governments, Private Sectors, and Business Development Partners to design
innovative solutions
1. Local Government perceptions on PPP
� Lack of know-how
2. Infrastructure Financing poses a complex set of issues:
� Lack of market-friendly policy framework
� Regulatory risks and uncertainty of contract enforcement� Regulatory risks and uncertainty of contract enforcement
� Institutional constraints on raising local financing
Pre-Construction risks significantly reducing private sector appetite for PPP contract
� Delays in land acquisition, failure to pay land acquisition compensation;
� Failure to provide regulatory approach, issues licenses, and permits, etc
� Failure to connect to existing infrastructure water supply networks;
� Bureaucratic delays in signing contract agreement.
Conclusions (2/2)
There are lot of Small Scale PPP Business Opportunities for Water Supply sector in cooperation with LGs/PDAMs
� PDAM Bekasi – West Java
� PDAM Makassar – South Sulawesi
� PDAM Donggala & Palu – Central Sulawesi
� PDAM Rantau Prapat – North Sumatra
� PDAM Kabupaten Bogor – West Java
� PDAM Indramayu – West Java
� PDAM Cirebon – West Java� PDAM Rantau Prapat – North Sumatra
� PDAM Purwakarta – West Java
� PDAM Karawang – West Java
� PDAM Semarang – Central Java
� PDAM Lamongan – East Java
� PDAM Balikpapan – East Kalimantan
� PDAM Jambi – Jambi (Sumatra)
� PDAM West Bandung – West Java, etc.
� PDAM Cirebon – West Java
� PDAM Palembang – South Sumatra
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