Practical Indonesian PPP
1
Western Jakarta water servicesApril 2010
PALYJA Shareholding
SUEZ Environnement CITIGROUPASTRATEL
30% 51% 19%
2
PALYJAPALYJA
30% 51% 19%
• MIDR 200,630 Capital (paid in 1997 and 1998)• Effective July 2006 Astratel and Citigroup become new Shareholders. • Astratel is fully owned by PT Astra International Tbk, a well-known company and a business leader in Indonesia
Jakarta Water Service
UPP
Pusat
Wilayah Usaha
2
UPP
UPP Barat
Wilayah Usaha
3
3
PAM Jaya delegated its water services on February 1st, 1998 to :
• PALYJA : Western part of Jakarta
• AETRA : Eastern part of Jakarta (originally Thames Water)
through a 25 years Concession type of contract
UPP
Selatan
Wilayah
Usaha
6
Ciliwung River
Institutional Stakeholders Mapping
DKI Jakarta
Administration
DPRD
City Council
4
PAM JAYA
Customers
Regulatory
Body
PALYJAPALYJA
Cooperation Agreement
PALYJA scope
5
Drinking Water only
• Production
• Distribution
• Customer service (metering – billing – collection)
• Maintenance & Repair
• Investment
Contract performances measured in terms of “Level of Service”
Scope of services
DesignSystem
General
BuildSystem
New works
OperateSystem
Operation
Maintenance
Human resources
FinanceBusiness
New works
financing
ManageBusiness
Overall
management
CAPEX &
OPEX
Customer Care
Billing
Cash
6
General
design
Detail
design
Construct
Refurbish
Supplies
Human resources
Technical control
Quality control
Training
financing
Debt service
Asset
management
OPEX
management
Master plan
Public
relations
Standards
compliance
Cash
collection
Front office
Back office
Call centres
Contractual Performance Objectives
Technical Targets
• Volume of water billed
• Water production
Service Standards
• Quality of water supplied to the customers
7
• Water production
• Non Revenue Water
• Number of connections
• Service coverage ratio
the customers
• Pressure at customers connection level
• Customers care
• Routine interruption in distribution network
• Response time for new connections
• Population : 4.5 millions
• Connections : 412,000
• 5,258 km of pipes
• Volume distributed : 138 M m3/y
PALYJA SnapshotWestern Jakarta
UPP
Wilayah Usaha
2
UPP Barat
Wilayah Usaha
3
8
• Number of employees: 1,376
• Revenues 2009 : ≈ 100 M US$
• Investments : ≈ 140 M US$
UPP
Pusat
2
UPP
Selatan
Wilayah
Usaha
6
Ciliwung River
Cikokol90 L/sec
62%
1%
PALYJA main Water Resources
9
62%
32% 5%
Financing Schemes
• 1998 – capital contribution : 200 B IDR
• July 2005 - issuance of local currency bonds 650 B IDR for re-financing the USD 55 million debt
PALYJA rated A- Stable Outlook
10
• 2007 – World Bank grant of 2,5 M USD under GPOBA (Global Partnership for Output Based Aid) program
�to provide access to water to some 7 000 customers in deprived area.
• Year 2007/ Early 2008 – secure a 455 B IDR long-term non recourse loan with Asian
Development Bank
�CAPEX funding for the next 5 years
�Cash flow facility helping bonds & dividends payment in the future
Volume Sold
137.73
11
129.34
130.04
130.26
134.51
137.73
2005 2006 2007 2008 2009
Volume Sold
NRW(6 Monthly Mobile Average)
50.6%
48.0%
46.6%48%
50%
52%
12
43.9%
46.6%
45.3%
40%
42%
44%
46%
2005 2006 2007 2008 2009
NRW
Service Coverage Ratio
49.9%52.2%
53.7% 54.6%55.5%
59.0%
61.8%
63.9%
55%
60%
65%
70%
13
35.2%
37.8%
42.3%
48.3%49.9%
52.2%
33.8%
30%
35%
40%
45%
50%
55%
Feb
9819
9819
99
200020
01
2002
200320
04
200520
06
200720
08
2009
Improvement of Supply Conditions
20091998
14
Continuous Supply Intermittent Supply No Water
Over 11 years, about 1,700 km1,700 km of pipe have been laid for rehabilitating or extending the network
PALYJA action in favor of low
income population
48,610
23,501
80,218
86,426
33,166
K4A
K4B
Feb 1998 : 201,668
2009 : 412,456
+ 41%
+ 78%
Domestic and in particular low income population benefited the most of Coverage extension and increase in connections
15
1,992
9,585
64,029
53,950
3,514
82,269
126,863
80,218
K1
K2
K3A
K3B
2009Feb-98
+ 758%
+ 98%
+ 49%
PALYJA action in favour of low
income population
Evolution of Low Income population connection 1998-2009
64,023
126,858
K3A 2A2
Dec-09
16
9,489
82,028
- 20,000 40,000 60,000 80,000 100,000 120,000 140,000
K2 2A1
Dec-09
Feb-98
Results of Customer Satisfaction
Survey
17
Level of current water tariff
• Current Tariff is Affordable, according to international standard, for low-income household, following an independent study performed
18
for low-income household, following an independent study performed in 2007/2008
• Jakarta water service based on full cost recovery scheme(not the case in other Asian capital cities and large cities even in Europe).
• Jakarta average domestic water tariff is lower than Beijing, Macao, Singapore, Hong Kong and Manila West tariffs
Price in Rupiah
6,300
9,076
Rice
Cooking Oil
Water is life and ……
it cost …nothing compared to
1 kg
1 Liter
19
100
525
2,067
4,500
5 PAM Water
SMS
Cigarette
Mineral Water
Petrol
1 Liter
1 Liter
1 cigarette
1 SMS
1 Liter
Domestic Water tariff in Asian cities2008-2010 figures
0.51
0.55
0.59
0.61
0.54
0.90
West Jakarta'09
Macao'08
Beijing'09
West Manila'09
Hongkong'09
Singapore'09
Jakarta water service on full cost
20
0.23
0.42
0.21
0.16
0.46
0.24
0.30
0.28
0.51
Surabaya'08
Kuala Lumpur'09
Delhi'09
Colombo'09
East Manila'10
Phnom Penh'08
Bangkok'09
Ho Chi Minh'08
West Jakarta'09
US$/m3
Jakarta water service on full cost
recovery scheme
A large number of Asian cities have their water services subsidised by
local or central government
Reminders on RCA benefits to
Jakarta population
At contract mid-term, PAM Jaya with its operator PALYJA significantly improved the water service to the population of Jakarta, bearing in mind that since Cooperation Agreement started in February 1998 the raw water resource remained unchanged in quantity :
� network length increased by an additional 1 228 km of pipe
� Network rehabilitation of 850 km of pipe
� Number of customers more than doubled to reach 412 456
� Population served increased by around 1 300 000 inhabitants
21
� Population served increased by around 1 300 000 inhabitants
� Water losses (NRW) has been reduced from almost 60% to less than 44%
thanks to 1 355 B IDR invested in the public service, and to the satisfaction of 73% of Western Jakarta customers.
On-going Challenges (contract term 2023)
• Capacity to secure cash for investments• Tariff adjustment (political decision) is essential to enable PALYJA to meet
the increasing demand and keep improving the level of service
• Coverage
22
• Large reserve of potential new customers within the low-income population and deep wells users conversion
• New water resource and transmission lines are necessary to ensure reliable water service together with alternative financing to reduce the pressure on tariff
• NRW reduction• Illegal connections and illegal use (depending on public authority support
and actions) are at stake to significantly improve NRW to reach less than 30% target
Balance of Stakeholder Interests
ConsumersConsumersMarketMarket SphereSphere
23
Public AuthorityPublic Authority OperatorOperator
RegulatoryRegulatoryBodyBody
Political SpherePolitical SphereCommercial SphereCommercial Sphere