Govt wipes debt, companies expand water networks

Adianto P. Simamora ,  The Jakarta Post ,  Jakarta   |  Thu, 12/18/2008 11:20 AM  |  National

The government plans to write off the debts of state-owned water firms to speed up the expansion of pipe networks and provide 10 million households with access to drinking water within three years.

The target for completing the expansion of the water network was brought forward from prior estimates of five years.

Data from the World Bank shows that by 2006, 206 state-run water companies owed nearly Rp 4 trillion to the Finance Ministry.

Vice President Jusuf Kalla said the government would provide a string of incentives for local administrations to help build piped water infrastructure.

"We will forgive all your errors in the past, including by writing off your debts," Kalla said at the launch of a three-day water expo in Jakarta on Wednesday, which is being attended by representatives from tap water firms.

He said local administrations should contact the Finance Ministry in order to have their debts with water companies cleared.

"The government will set aside money from the state budget, ask the banking sector for financial help and invite countries to be involved in building (piped water) infrastructure," he said.

Indonesia, a signatory member to the Millennium Development Goals (MDGs), has so far provided piped water access to only 28 percent of its population, or 7.1 million households, mostly in urban areas.

The MDGs require signatory nations to provide access to clean water to at least 65 percent of their national households.

The government has predicted it requires around Rp 80 trillion to construct piped water facilities for 10 million households.

Kalla warned water companies to improve their performance and upgrade management of their financial reports.

"Don't make it (revenue) the main source of income for local budgets, nor spend too much money sponsoring activities like soccer events. Promoting soccer is good, but water is still more important," he said.

He said there a review into current tap water tariffs was also necessary to allow the operations of piped water firms to be sustainable.

Kalla also urged Forestry Minister Kaban Malam Sambat to take action and protect forests to ensure cleaner water passed into rivers.

"If the forests are damaged, the water will be murky and dirty, increasing operational and water processing costs," he said.

Meanwhile, the World Bank said investment in water and sanitation infrastructure in Indonesia had long been insufficient and could not support the expansion of piped water systems.

"Investment has declined from an average US$400 million in 1999 to less than $45 million in 2005," Sonia Hammam, sector manager at the World Bank, said.

"It (the investment) is about one tenth of what is needed to achieve the 2012 MDG goal of halving the proportion of the urban population without sustainable access to safe drinking water and basic sanitation."

She said the World Bank was ready to forge a close partnership with the central and local administrations and water utilities to increase households access to safe water and sustainable sanitation.

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.