Performance of Drinking Water Companies: Improving PDAM management capacity
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
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29 November 2018
Bandung — The Ministry of Home Affairs and The Association of Supervisory Boards for Regional Drinking Water Companies across Indonesia (ADPPDAMSI) are pushing Regional Drinking Water Company (PDAM) management capacity to boost the performance of companies that are still “sick”.
Secretary General of ADPPDAMSI Agus Teguh Suryawan said PDAMs categorised as “sick” still account for around 12% of 386 PDAMs.
As many as 58% of them have been declared “healthy” by Drinking Water Supply System (SPAM) Supervisory Board (BP), whereas the remaining 30% are still “unhealthy”.
“This is assessment data in 2018, we see [the poor performance of some PDAMs] in terms of lack of capability of PDAM managers, both the directors and supervisory boards,” he said in Bandung, on Tuesday (27/11) evening.
According to Agus, several problems have caused some PDAMs to remain “sick”. In terms of services, PDAMs in certain areas still find it difficult to even increase the tariffs due to strong resistance from customers and Regional House of Representatives (DPRD). “Improving PDAM health is not easy. Tariffs will be a problem until DPRD gives approval,” he said.
Moreover, the gap in competence between PDAM directors and supervisory boards is rather big. This is because the directors are mostly people from internal PDAM, whilst the supervisory boards come from various backgrounds and have different interests.
“Because they are the organs of PDAM, so the supervisory boards’ competence has to catch up [the competence of the directors],” he said.
According to him, the position of supervisory boards in an attempt to make PDAMs healthy is important because in dealing with the public, there are many things that can cause the occurrence of irregularities.
According to him, if supervisors can have more understanding on their roles, PDAM performance can be improved.
“That is why we are pushing the capacity and competence of supervisory boards, so intensive supervision can boost the performance of PDAM directors,” he said.
At the same venue, Director General for Regional Financial Development of the Indonesian Ministry of Home Affairs, Syarifuddin said there are many factors causing PDAMs to get “sick”, one of which is the professionalism of the managers and supervisors.
“Some PDAMs have good performance, but some [PDAMs] also need support so they can improve their performance, and this is the responsibility of all relevant parties, including the association with their supervisory function,” he said.
Challenges
He mentioned that in general, PDAMs are facing several challenges. The first one is non-revenue water due to leak or other significant factors. The second one is about service coverage.
“So in the guidelines for APBD (Regional State Budget) preparation each year, if the coverage hasn’t reached 80%, don’t aim to seek PAD (local genuine income) in advance but to improve services to the public,” he said.
According to him, in Law No. 23 of 2014, there are three purposes of the establishment of regionally-owned enterprises (BUMD), that is to say driving local economy, bringing general benefits from goods and service procurement to meet people’s needs, and to gaining profits.
“The first and third ones are difficult to achieve, but at least the second one, which is to bring benefits, can be met,” he said.
The Treasury of ASPPDAMSI Sriwidiyanto Kaderi added that many “sick” and “less healthy” PDAMs are located in areas that are not heavily populated.
This criteria is also attached to newly separated areas. “If before separation, there were plenty of customers, after being separated, [the number of customers] becomes smaller,” he said.
