THE GOVERNANCE OF THE JAKARTA WATER POST PPP: THE ROLE OF THE REGULATORY BODY

Dr. Riant NugrohoLecturer of the University of Malaya (2010-201), Indonesia Defense University (2011-now)Board Member of the Jakarta Water Supply Regulatory Body, Jakarta Member of Steering Committee of Global Committee for “1% 7Cs” of MDGMember of Steering Committee of World Alliance of Cities Against Poverty (WACAP)

The World Water Week, 23 August 2011 StockholmStockholm International Water Institute (SIWI)

Jakarta Water Supply

• Policy: 25 years of full concession to the private sector• Term : 1998-2022• Method: Full cost recovery• West concession (PAM LYONNAISE JAYA):� Prior to July 2006 : Suez Environtment formerly Ondeo Service

(majority) and PT. and PT. Bangun Tjipta Sarana.� After July 2006 : Suez Environtment (majority), PT Astratel

Nusantara, Citigroup Financial Products

• East concession (AETRA AIR JAKARTA)• Prior to 2007 : Thames Water Overseas Limited (majority) and PT. Tera

Meta Phora• 2007 : Acuatico Pte. Ltd (majority) and PT. Alberta Utilities

Ciliwung River

Java Sea

Jakarta East AreaAETRA

Jakarta West AreaPALYJA

Performance (2010)

Technical target Palyja Aetra

1. Water loss (NRW) 42.60% 50.17%

2. Production 169.79 million m3 272.83 million m3

3. Connection 419.776 385.377

4. Volume sold 147.27 million m3 135.95 million m3

5. Coverage ratio 64.66% 59.98%

Governance: about modality

• “governance is the institutional capacity of public organizations to provide the public and other goods demanded by a country’s citizens or their representatives in an effective, transparent, impartial, and accountable manner, subject to resource constraints” (The World Bank, 2000).

Pre: PPP governance

Post (existing) : PPP

Jakarta Water Supply Regulatory Body (JWSRB)

• Founded in Jakarta, November 2001• Mission : to maintain balanced interest between public, the cooperating parties and

Government of Jakarta City to undertake water service provision in the DKI Jakarta Province

• Vision : to originate the regulatory body as an independent, professional, efficient, and accountable institution functioned as a mediator, a facilitator, and a regulator to undertake water service provision in the DKI Jakarta Province.

• Governance : 1. 5 Member of The Board:

a) Chairperson : Irzal Djamal, M.Eng.b) Technical : Dr. Firdaus Alic) Finance : Agus Kretarto, MBAd) Legal : Rusdiati Utami, SHe) Customer & Communication : Dr. Riant Nugroho

2. Independent & impartial a) Publicly selectedb) No government officer and member of the related partiesc) Accountable to the Governor, but no government intervention

3. Board-collegial decission making4. 3 years of the term of office of each member

PE

L

A YA N A N A I RM I N

UM

PE

L

A YA N A N A I RM I N

UM

JWSRB in hierarchical structure

Chairperson

Member 3 Member2 Member 4

Assistants Secretariat

Member 1

(Secretary)

Assistants AssistantsAssistants

Governor of

Jakarta

Jakarta Authority

Executive & Local

Parliament• Technical expertise• Financial expertise• Legal expertise• Customer expertise

JWSRB in the “center-less model” of governance

Chairperson

Member

1 (Secretary)

Member

2

Member

3

Member

4

Consultants

Macro governance, still center-less

Main tasks : Water (Good) Governance

1. Oversight the concession 2. Setting tariff policy (recommendation)3. Conflict mediation

� Among PAM and private partners (operators)� Among operators and customers� Among parties and other parties

4. Developing and Promoting “WGG”

1. Customer small scale meeting

2. Customer annual meeting

3. Stakeholders annual meeting

5. Monthly Working Group Meeting

6. Transparency : Performance (and Promise)

Five Yearly Rebasing : facilitator, mediator

1998 2022

Jakarta water services

provided by Local State

Owned Enterprise

(LSOE/PAM Jaya)

PPP driven by central

government and supported by

the international financial

institution : 25 years of a full

concession of water servicesRebasing process : 5 years of the

new/revised target and water charge –and

therefore water tariff

2002 2007 2012 20171998-1999 :

Economic

crises

Policy Decision before the establishment of JWSRB

PAM Jakarta

Palyja Aetra

Jakarta Authority

(Governor)

1. Tariff proposal

2. Tariff proposal

3. New tariff

4. New tariff4. New tariff

Customer

5. New tariff

Policy Decision post-JWSRB’s establishment

PAM Jakarta

Palyja Aetra

Jakarta Authority

(Governor)

1. Tariff proposal

2.Tariff

proposal

3a. Financial and

performance assessment

7. New tariff7. New tariff

Customer

8. New tariff

JWRB Customer 3b. Public

assessment

4a. YES: Promote

the new tariff

4b. NO: Not

promote the

new tariff

5a.YES: agree for

the new tariff

5b. NO: not agree the

proposal of the new tariff

6. Jakarta

Authority

decision

Policy Guideline for Tariff Setting Proposal

Performance Financial

requirement

Service quality

improvement*

Affordability Judgment

1 Y Y Y Y Confirmed: new tariff proposed

2 Y Y Y N Proposed new tariff

3 Y N Y Y Proposed new tariff

4 Y Y N Y Proposed new tariff

5 Y Y N N Proposed new tariff

6 Y N N N Considering to propose new tariff

7 Y N Y N Considering to propose new tariff

8 Y N N Y Considering to propose new tariff

9 N Y N Y Not to propose new tariff

10 N Y Y Y Not to propose new tariff

11 N Y Y N Not to propose new tariff

12 N N Y Y Not to propose new tariff

13 N Y N N Confirmed: Not to propose new tariff

14 N N Y N Confirmed: Not to propose new tariff

15 N N N Y Confirmed: Not to propose new tariff

16 N N N N Confirmed: Not to propose new tariff

* Survey on perception

Probability (opportunity) for each option

no option probability of option

1 Confirmed: new tariff proposed 1/16

2 Proposed new tariff 4/16

3 Considering to propose new tariff 3/16

4 Not to propose new tariff 4/16

5 Confirmed: Not to propose new tariff 4/16

Conclusion

• PPP (public private partnership) policy implementation need independent institutions as oversight body to assure its performance: regulatory body

• Professionalism, independency, and impartiality

• Jakarta water good governance1. Effectiveness : performance base cooperation 2. Accountability : revise the signed contract3. Transparency : Jakarta Water Voice4. Impartiality : conflict resolution, proposal for policy improvement

Thank you