"New Thinking on Water Governance“ Conference

Public Private Partneship Public Private Partneship City of Jakarta ExampleCity of Jakarta Example

Lee Kuan Yew School of Public PolicySingapore July 2009

Barce SimarmataLuc Martin

11

22

33 Challenges for the Future

PALYJA and its concession contract

Public Private Partnership (PPP) Principles

11

22

33 Challenges for the Future

PALYJA and its concession contract

Public Private Partnership (PPP) Principles

PPP Contract StructuresPPP Contract Structures

Contract Duration

in Years3 ∞5 10 3020

AFFERMAGE(Lease Contract)AFFERMAGEAFFERMAGE

((Lease ContractLease Contract))

Operations&

Maintenance

OperationsOperations& &

MaintenanceMaintenance

BOT / ROTBOT / ROTBOT / ROT

Degreeof PrivatePartnerInvolvement

Design

BuildOperate

DesignDesign

BuildBuildOperateOperate

Technical AssistanceTechnical Technical

AssistanceAssistance

ManagementContract

ManagementManagementContractContract

CONCESSIONCONCESSIONCONCESSION

Joint VenturePublic/PrivateJoint VentureJoint VenturePublic/PrivatePublic/Private

Private CompanyPrivate CompanyPrivate Company

MunicipalityMunicipalityMunicipality

FullyPrivately Owned

FullyFullyPrivately OwnedPrivately Owned

PartnershipPartnership

ApproachApproach

• Integration of SUEZ ENVIRONMENT global water skills into the local context.

• Partnership with local industrial and commercial organisations.

• Formalised partnership relationship with community leadership on long term basis.

• Mutual respect & understanding.• Combining strengths.

CreationCreation

of of specialisedspecialisedLOCALLOCAL

WATER WATER COMPANY COMPANY

to SERVE the COMMUNITYto SERVE the COMMUNITY

Key Elements ofKey Elements of PPPPPP

• Contract provides:– Clear objectives– Clear standards– Strong control– Regulated price (decided by the Public Authority)

• Assets ownership remains with public authority

• Operational responsibilities delegated to private sector

• Long term planning and control firmly in hands of public authority

Balance of Stakeholder InterestsBalance of Stakeholder Interests

ConsumersConsumers

Public AuthorityPublic Authority OperatorOperator

Service Service Quality & Quality &

PerformancePerformance

Political SpherePolitical SphereCommercial SphereCommercial Sphere

MarketMarket

SphereSphere

Who Owns the Infrastructure ?

Who Takes the Decisions ?

Who Sets the Water Tariff ?

Who Operates ?

Who Regulates?

Public Authority

Defined in the Contract

Public Authority

Private Operator

Public Authority

Review of Key QuestionsReview of Key Questions

11

22

33 Challenges for the Future

PALYJA and its concession contract

Public Private Partnership (PPP) Principles

Concession AreaConcession Area

PALYJAWestern Part of

DKI Jakarta

Westward of Ciliwung river

UPP BaratUPP Pusat

UPP Selatan

3 UPP : Unit 3 UPP : Unit PelayananPelayanan

PelangganPelanggan+ 1 UPP for Key Account + 1 UPP for Key Account

PALYJA OwnershipPALYJA Ownership(since July 2006)(since July 2006)

Suez Environnement

51 %- Lead Operator -

PT. Astratel

Nusantara(ASTRA Group)

30%

CitigroupFinancial Products Inc.

19%

PALYJA

Institutional Stakeholders MappingInstitutional Stakeholders Mapping

DKI JakartaAdministration

PAM JAYA

Customers

RegulatoryBody

PALYJAPALYJA

Cooperation Agreement

DPRDCity Council

Contractual Performance ObjectivesContractual Performance Objectives

Technical Targets

• Volume of water billed.• Water production.• Non Revenue water.• Number of connections.• Service coverage ratio.

Service Standards

• Quality of water supplied to the customers.

• Pressure at customers connection level.

• Customer care.• Interruptions in distribution

network.• New connections.

Raw Water & Bulk Treated Water Raw Water & Bulk Treated Water SuppliesSupplies

Cikokol90 L/sec

62%

32%

1%

5%

2 majors Water Treatment Plant2 majors Water Treatment Plantss (62 % of the total supply) (62 % of the total supply)

WTP Pejompongan 1 WTP Pejompongan 1 (Degremont 1953)(Degremont 1953)

WTP Pejompongan 2 WTP Pejompongan 2 (Degremont 1965) (Degremont 1965)

1998 2008

Continuous supply No waterUnstable supply

Approximate limit of salinity in shallow wells

Extension & Improvement of Water SupplyExtension & Improvement of Water Supply19981998--20082008

201 662

398 557

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

Feb 1998 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Num

ber o

f Cus

tom

ers

Number of CustomersNumber of Customers

Number of customers increased by almost 100%

Coverage RatioCoverage Ratio

62.52%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

Feb-98

Aug-98

Feb-99

Aug-99

Feb-00

Aug-00

Feb-01

Aug-01

Feb-02

Aug-02

Feb-03

Aug-03

Feb-04

Aug-04

Feb-05

Aug-05

Feb-06

Aug-06

Feb-07

Aug-07

Feb-08

Aug-08

Feb-09

Customer base evolution Customer base evolution

1,992

9,585

53,950

112,639

23,502

3,500

68,481

78,986

216,822

30,768

Social

Low Income Domestic

Middle Class

Upper Class and Small Business

Non domestic

Feb-98 Dec-08

+ 31 %

+ 92 %

+ 46 %

+ 614 %

+ 76 %

6-Month Average Sales and NRW since Take Over

2,800

3,000

3,200

3,400

3,600

3,800

4,000

4,200

4,400

4,600

Feb-

98M

ay-

Aug

-N

ov-

Feb-

99M

ay-

Aug

-N

ov-

Feb-

00M

ay-

Aug

-N

ov-

Feb-

01M

ay-

Aug

-N

ov-

Feb-

02M

ay-

Aug

-N

ov-

Feb-

03M

ay-

Aug

-N

ov-

Feb-

04M

ay-

Aug

-N

ov-

Feb-

05M

ay-

Aug

-N

ov-

Feb-

06M

ay-

Aug

-N

ov-

Feb-

07M

ay-

Aug

-N

ov-

Feb-

08M

ay-

Aug

-N

ov-

Feb-

09

Sale

s flo

w -

6 M

MA

(L/s

)

40%

45%

50%

55%

60%

65%

UFW

- 6M

MA

(%)

Sales flow - 6MMA (L/s) UFW - 6MMA (%)

61 %

51 %

45 %

11

22

33 Challenges for the Future

PALYJA and its concession contract

Public Private Partnership (PPP) Principles

New business model : Output Based Aid

New business model : Output Based Aid DKI

Jakarta

PALYJA

Concession Contract

Jakarta

WaterWaterServicesServices

Communities not yet connected (at least legally)

Connect Communities +Provide Service

GPOBAWorld Bank

Escrow Account Bank Subsidy

Outputs

PAM JayaRegulator

First Output: connections laid75% re-imbursement

Second Output: 3 consecutive bills with water consumption > 10 m3/month

25% re-imbursement

With the GPOBA grant of US$ 2.5 million, PALYJA will provide access to the water system to about 7,000 low-income households by 2009

Main challenges faced by JakartaMain challenges faced by JakartaThe city of Jakarta is still looking for an increase of the piped water coverage

Groundwater usage, on which rely currently 25% of the population, is likely to be gradually reduced:

– The city of Jakarta is “sinking”

because of the groundwater over-exploitation and risk of flooding increase –Groundwater is getting more and more polluted

(salt intrusion, chemical and microbiological pollutants)–Groundwater tariffs

will

be increased and aligned with piped water tariffs

Therefore, new water resources and additional treatment facilities will be needed within the next 5 years to face growing demand and service coverage expansion

Thank you

Terima

Kasih

Merci

Muchas

Gracias

Matur

Nuwun

Hatur

Nuhun

Mauliate

Teşekkürler

Xie-xie

Obrigado