JAKARTA. The government plans to relax regulation for Regional Drinking Water Company (PDAM) to find funding sources from banks by revising the Presidential Regulation No 29/2009 on Guaranty and Interest Subsidy by National Government to Accelerate Provision of Water Supply.
Director of the Development of Water Provision System at Directorate General of Cipta Karya at Ministry of Public Works and People’s Housing M Natsir said that the revision will include some important points.
First, the limit for loans disbursement. Natsir said that the proposal refers to the duration for loans disbursement during the last 2009-2014 period. During that time, PDAM only absorbed Rp 360 billion of Rp 4.4 trillion offered credit due to the slow process of the disbursement. “Under the revision, the credit has to be disbursed immediately after the completion of requirements,” said Natsir.
Second, the point related to the credit insurance. If PDAM experience defaulted payment of its debts, government will provide bridging funds to cover 70% of the debts. The existing regulation still stipulates that government will cover 70% of principal and non-principal debts if PDAM experiences faulted payment.
The risk of defaulted payment
In order to prevent faulted payment, government will increase the risks. The existing regulation stipulates that bank will only cover 30% of principal and non-principal debts if PDAM experience defaulted payment. Under the revision, bank will be requested to cover 70% of the non-principal debts in the case of the defaulted payment.
The incentives are provided to PDAM due to the large amount of budget provisions to develop water supply system. Based on the data from Directorate General of Cipta Karya, the amount of budget needed to improve water supplies by 2019 is Rp 253 trillion, while the Ministry of Public Works and People’s Housing can only contribute Rp 52.08 trillion or 20% of the total budgets needed.
Member of Commission V of House of the Representatives Fathan Subchi appreciated the government decision to revise the presidential regulation. In the future, the development of PDAM is essential to anticipate the growing demands for clean water.
Recently, some people prefer to buy water from water companies, due to the lack of confidence on the quality of water supplied by PDAM. “Government has to be able to guarantee clean water supply for wide public interest”, he said.
(Muhammad Farid/Translator)
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