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Anti privatization debate, opaque rules and neglected ‘privatised’ water

services provision

Some lessons from Indonesia…

Mohamad Mova Al ‘Afghani

March, 19, 2011

IHP-HELP Centre for Water Law, Policy and Science | under the auspices of UNESCO Slide | 2

Anti privatization debates

Around 868 individuals and 16 non governmental organizations asked the Constitutional Court to revoke the Law 7/2004 on Water Resources

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Anti privatization debates

“These agencies are not contributing to constructive advocacy, but channel their energy in the redundant debate of anti-privatization by focusing on two specific Jakarta concessions. There are over 324 PDAMs in Indonesia that provide piped-water services to the citizens. Depolarization of public debates must begin. Only then can a mutually enforcing and reinforcing water accountability framework be developed.” (A. Regmi)

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Opaque rules

Out of 100 Articles in the Water Law, only one paragraph specifically regulates private sector participation, paragraph 4 of Article 40:

“Cooperatives, privately-owned business enterprises and the [members of the] society may participate in the undertaking of the development of drinking water provision system

IHP-HELP Centre for Water Law, Policy and Science | under the auspices of UNESCO Slide | 5

Opaque rules

While paragraph 3 of Article 40 of the Water Law reads:

“State Owned Enterprises and Regional Owned Enterprise are the undertakers of drinking water provision system”

Is that mean that private sectors are not the undertakers?

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Opaque Rules

Implementing regulation of the Water Law states:

“cooperatives and/or privately owned business enterprise may participate in the development of drinking water provision system in regions which is not yet covered by services provided by SOE or regional SOEs” (GR-16, Article 64.1)

Does this means ‘greenfield’-only projects? What about BOT WTP project in already-served areas?

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Neglected PSPs: Jakarta vs Bogor

No. Provisions Jakarta (‘Concession’) Bogor(Publicly Owned)

Customer’s Rights The ‘right’ to object against incorrect water meter to PAM Jaya, the ‘right’ to object against imposition of penalties by the Governor (see below), the ‘right’ to request for examination of water meter. Even these are not formulated as rights. The word use is ‘may’ (i.e. “dapat mengajukan keberatan” / may propose objection). Article 15

Right to obtain results on the examination of water quality, accuracy of metering device, calculation of water bill. Right to obtain explanation on the agreed terms when submitting new connection requests.Right to obtain information on the structure and amount of tariff.Right to obtain 50% discount of monthly fee if water supply is disconnected in 3 consecutive days without prior notice.Right to obtain discount if the water company fail to respond within 3 days after leakage occurs, which causes elevation of customer’s bills.Right to obtain replacement of water meter if the installed meter is not working.Convey their complaints on water bills, water distribution, quality and other matters related to water services

IHP-HELP Centre for Water Law, Policy and Science | under the auspices of UNESCO Slide | 8

Neglected PSPs: Batam case

A water provider was charged by the competition commission for:

• discriminating business entities (x)• abusing dominant position (x)• controlling the production and marketing of

goods which results in monopolistic practices

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Towards regulating PSPs

Differences in Administrative Legal SystemThe administrative Court can Only decide a case: • Dismissed • Lapsed• Rejected• Proven: Order the official to revoke, issue or

revoke old Decision and issue a new oneNo ‘Administrative Contract’, no power to modify PSP contract

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Towards Regulating PSPs

What is a concession?Several types of licenses: Dispensasi (dispensation), Lisensi (licence), and Konsesi (concession).A concession is “…an administrative decision which is legally very complex as it contains a set of dispensations, permits and licences followed by some kind of limited ‘governmental authorities’ to the concessionaires”

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Towards Regulating PSPs

1. Public Service Law2. Freedom of Information Law3. Model Regional-By-Law

Potential, but need reforms

Thank You