Two Regional Banks Allocate Rp 300 B for PDAM

Indonesia Finance Today - 26/06/2012

 Region-owned banks Bank Pembangunan Daerah Jawa Tengah and Bank Pembangunan Daerah Bali allocate Rp 300 billion (US$ 31.8 million) to fund the development of regional water companies (Perusahaan Daerah Air Minum/PDAM). The government expects the availability of funds for the development of drinking water sector to increase with the fund allocation from the regional banks.

Danny Sutjiono, Director of Drinking Water at the Directorate General of Human Settlement of the Ministry of Public Works, said that with the addition of funding allocation, the available fund to fund PDAMs from banks is at Rp 4.5 trillion. Five banks previously allocated fund of Rp 4.2 trillion to fund PDAMs.

Danny said that of the Rp 4.2 trillion available funding allocations, a figure of Rp 202.1 billion is already used to fund five companies. He also said that two other companies had just signed an agreement for PDAM funding. The two companies are Kota Malang PDAM with Rp 42 billion funding from PT Bank BNI Tbk (BBNI) and Banjarmasin Regency PDAM with Rp 110 billion funding from Bank Pembangunan Daerah Kalsel.

Danny said that the Ministry of Public Works targets at least 20 DPAMS to be able to use bank loan of Rp 600 billion this year. Danny also said that the Ministry is in the process of finalizing the loan agreement of several PDAMs. The PDAMs are Tasikmalaya PDAM at Rp 51.1 billion, Serang PDAM at Rp 36 billion, Paser PDAM, Wonosobo PDAM at Rp 5.6 billion, Kota Pekalongan PDAM at Rp 9.9 billion, Kuningan Regency PDAM at Rp 14.8 billion, Banyumas Regency PDAM at Rp 13.4 billion and Karawang Regency PDAM at Rp 29.2 billion.

Rachmat Karnadi, Head of Drinking Water System Support and Development Agency at the Ministry of Public Works, said that the loan for the 29 PDAMs will be adjusted with the financial condition and loan capability of each company.

“We are urging other restructured companies to use this facility. However, there are many PDAMs that are still afraid to make a loan agreement. Therefore, the actualization is still low,” he said.

PDAMs that already obtained government guarantee must be able to reach full cost recover by raising tariffs and lower cost by reducing leakage and conducting efficiency in operations. After the restructuring, the decline of leakage must reach 20 percent, and conduct billing collection at a maximum of 45 days