Letter: Liberalizing the water sector

Mon, 05/12/2008 10:51 AM  |  Reader's Forum

Hamong Santono of the People's Coalition on the Right to Water (Kruha) wrote in The Jakarta Post on April 7, that US$6.4 billion worth of investment would be required to fund a clean water project in Indonesia.

The available fund is only around Rp 500 billion. He also mentioned the water sector may not be as financially attractive as energy and telecommunication sectors.

I agree with his investment concerns on several counts, but the situation is about to change. According to a report, the annual turnover for the water sector in the EU is around 80 billion euros, more than the turnover of the gas sector.

In many parts of the world, water treatment is becoming a booming due to increasing pollution and developments in nanotechnology that make it possible water treatment facilities to operate cheaper and more efficiently. One of the strategies that is being widely discussed in the EU and other countries to produce higher quality of water and a better sewerage service is the liberalization of the sector.

Liberalization is the unbundling of ownership and/or control of water and sewerage components, with the purpose of inviting more players to participate. The players could be either private or public.

Hamong proposed community-public partnership as one of the methods to attract funding. It is true this method could be realistically implemented in some localities. Small scale water projects have actually already started under the liberalization process.

When the participants of community-public partnerships grow larger, laws to regulate the market players would need to be established. The idea of water provision community-public partnership needs to be supported.

In order to be efficient, however, a roadmap detailing the rules of the game for the participants needs to be drafted. This is where the Competition Law and the Third Party Access rule come into place.

MOHAMAD NOVA AL'AFGHANI
Jakarta

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