Providing Clean Water and Sanitation to the Poor

Providing Clean Water

Kementerian Pekerjaan Umum BAPPENAS Kementerian Keuangan
Republik Indonesia Republik Indonesia

The Water and Sanitation Hibah programme is an output-based grant programme implemented by
the Government of Indonesia through the Ministry of Public Works, the Ministry of Finance and Bappenas,
and Sanitation to the Poor
in partnership with the Government of Australia.
Australia’s Support for Water and Sanitation in Indonesia

October 2011
Indonesia Infrastructure Initiative
Providing Clean Water
and Sanitation to the Poor
Australia’s Support for Water and Sanitation in Indonesia
 Providing Clean Water
Providing Clean Water and Sanitation to the Poor:
Australia’s Support for Water and Sanitation in Indonesia
Published by the Indonesia Infrastructure Initiative (IndII), Indonesia, October 2011

and Sanitation to the Poor

The Indonesia Infrastructure Initiative is an Australian Government-funded project designed to
promote economic growth in Indonesia by enhancing the relevance, quality and quantum of
infrastructure investment. It is operated by SMEC under contract with AusAID.

SMEC
220-226 Sharp Street
(PO Box 356)
Cooma NSW 2630 Australia
Australia’s Support for Water and Sanitation in Indonesia
© Commonwealth of Australia.
All original intellectual property contained within this document is the property of the
Commonwealth of Australia acting through AusAID. It may only be used, copied, supplied or
reproduced by contractors and consultants preparing documents, reports, designs, plans and
advice to IndII or AusAID.

The author’s views expressed in this publication do not necessarily reflect the views of the
Government of Australia. Every attempt has been made to ensure that referenced documents
within this publication have been correctly attributed. However, IndII would value being
advised of any corrections required, or provided with advice concerning source documents
and/or updated data.

ISBN 978-602-99114-2-8

For further information, contact:

Indonesia Infrastructure Initiative (IndII)
E-Trade Building, 7th Floor
Jl. KH Wahid Hasyim No. 55 Menteng
Jakarta Pusat 10310, Indonesia

Cover photo: A smiling beneficiary in Cilacap, Central Java gives the AusAID-funded water
grant programme a thumbs up. (Photo by United Communication)

Indonesia Infrastructure Initiative

 Acknowledgements
This book documents work carried out by the Australian Government-funded Indonesia Infrastructure Initiative (IndII),
which is implementing an Urban Water and Sanitation Programme in more than 38 locations in Indonesia.

This programme has been successfully implemented through a partnership with the Ministry of Finance,
the Ministry of Public Works, and the National Development Planning Agency (Bappenas).

The programme was successful thanks to the local governments, PDAMs (local water utility companies)
and local communities in each location, which supported execution of the programme.
 8 FOREWORDS
8 Minister Counsellor AusAID, Indonesia
9 Minister of Public Works
10 The Clean Water Challenge
12 Background
14 Australia’s Support to Indonesia
17 Pursuing the Seventh Millennium Development Goal
19 Water and Sanitation Grants
19 Wastewater Master Planning

Table of
20 Water Hibah
22 What is the Water Hibah Programme?

Contents
24 Why Use a Grant Mechanism?
26 Water Hibah Benefits
26 1. Partnership
31 2. Innovation
35 3. Affordability
38 4. Better Governance
41 5. Serving the Poor
47 6. Sustainability
50 Household Connections
52 Sanitation Hibah
56 Wastewater Master Planning
58 The Way Forward
59 Future AusAID Support
60 Afterwords
60 Director of Water Supply Development, Ministry of Public Works
61 Director of Sanitation and Housing Development, Ministry of Public Works
62 Director of Regional Financing and Capacity, Ministry of Finance
63 Director of Housing and Settlement, Bappenas

8 Public Works and Bappenas to try the new way of doing business.
u (Photo by Ricardo Basnur)
Foreword
The Australian Government is proud to be working together with the
Indonesian Government to provide clean water and better sanitation
to people across Indonesia. Approximately 77,000 households
were connected to clean water and around 5,000 households were
connected to sewerage systems across 35 regencies and cities
by the end of June 2011. This will directly benefit around 415,000
people. This is an impressive achievement.
The Water and Sanitation Hibah (grant) programme is an innovative
means for poor people to access cheaper and safer water and
household sewerage connections. However, the programme is not
just about the water and sanitation connections that have been
made. It is about working with the Ministry of Finance, the Ministry of
It is about developing a new output-based tool to provide incentives
to local governments to build additional infrastructure. Australia is
committed to ongoing support for this successful hibah pilot to help
Indonesia achieve its goals in water and sanitation.
I would like to convey my appreciation for the hard work of the local
governments and the local water companies to install water and
sewerage connections, and for the close cooperation between the
central government, local governments and local communities. The
Australia Government is proud to have been part of an innovative
project to provide the public with clean water. And we are particularly
pleased to help Indonesia work towards the Millennium Development
Goal target of halving the proportion of citizens without access to
clean drinking water and basic sanitation.
Jacqui de Lacy
Minister Counsellor AusAID, Indonesia
Foreword
The challenge to provide water supply and sanitation in Indonesia is
becoming more critical as the backlog of unconnected households
grows due to high population growth, especially in urban areas.
Meanwhile, the Government of Indonesia has declared the
International Agreement on the Millennium Development Goals, with
the target of increasing national coverage of water supply services
to about 69 percent and improved sanitation to about 62 percent
by 2015.
To overcome these challenges, the Government of Indonesia is
committed to improving people’s access to water supply and
sanitation facilities, particularly for low-income people, through
9
various subsidy programmes.
This programme has received attention and support from various
countries and international financial institutions. As one of the
supporting countries, the Australian Government, through AusAlD,
has granted A$25 million to provide 77,000 household water
connections and 5,000 wastewater connections for low-income
communities.
On behalf of the Government of Indonesia, we would like to express
our great appreciation to the Government of Australia for providing
this grant to improve the water supply and sanitation systems in
Indonesia.
Ir. Djoko Kirmanto, Dipl. HE
Minister of Public Works
u (Photo by United Communication)
The
Clean Water
Challenge
11

uClean water flowing from a tap in Muara Enim, South Sumatra (Photo by United Communication)
 Background
Before the decentralisation initiatives of 1999, the central government
provided financing to local water companies (PDAMs) through
World Bank and ADB loans. After decentralisation and the financial
crisis, PDAMs faced financial problems and the Ministry of Finance
stopped loan financing to PDAMs. Financing of water supply
became the responsibility of local governments. However, only a
few local governments invested capital in their PDAMs to expand
service coverage. Most PDAMs were expected to self-finance
growth from water tariffs that were too low because of decades
12 of concessional funding. This resulted in decreasing investment 13
in the water sector and as a result, urban water coverage across
Indonesia had reached less than 48 percent by 2010.

The Government of Indonesia (GoI) tackled this problem through:

• Landmark regulations on water tariffs

• PDAM debt restructuring and low-interest commercial loans
• Institutional and operational reform of the PDAMs

This allowed the Government of Indonesia to take loans and grants

from the donor community and pass them on to local governments
as grants, paving the way for the launch of the Water Hibah grant
programme.

uA young man carries a water pipe in Donggala, Central Sulawesi.

(Photo by Umar Faruq/Ricardo Basnur)
Australia’s
Support to 15

Indonesia

uJournalists cover a visit to grant beneficiaries during the programme launch in Palembang,
South Sumatra. (Photo by United Communication)
 Pursuing the Seventh
Millennium Development Goal
The Government of Indonesia requested support from the Government
of Australia to meet the Seventh Millennium Development Goal of
halving the number of people without access to clean drinking water.

The Australian Government responded with a tailored programme of

grant assistance as part of its global Water and Sanitation Initiative.

16 17

uA man in Donggala, Central Sulawesi draws polluted water from a stream

where local women do their washing. (Photo by Umar Faruq/Ricardo Basnur)
 Water and Sanitation Grants
The Australian Government has funded an A$25 million Water
and Sanitation Hibah grants programme to (a) improve access
to piped water for poor urban communities; and (b) expand
household sewerage connections. The programme is being
implemented by the Indonesian Government in cooperation with
the Australian Government.

The program awards grants as incentives to 38 qualifying local

18 governments to provide piped water connections to 77,000 poor 19
households, and sewage connections to 5,000 poor households.

Wastewater Master Planning

Sewerage plans are being developed for eight cities in Indonesia.
They will provide local and central governments with bankable
investments for the next 20 years.

uThe Ambassador of Australia, H.E. Greg Moriarty shakes hands with the head of
Jombang local government during his visit to Water Hibah beneficiaries in East Java.
(Photo courtesy of Dedi Budianto)
20
Water
Hibah

uA grandmother drinks clean water from a PDAM connection at her home in Jayapura,
Papua. (Photo by Andy Sutedja)
 What is the Water Hibah
Programme?

The Water Hibah programme is an output-based grant that rewards

local governments that pre-finance their own water companies to
expand water distribution networks to poor households. The grant
is paid to the local government for each new water connection to
a poor household following verification that the connection has
been functioning for three months.
22 23
The Indonesian Government selects local governments to
participate in the programme based on (a) local government
commitment to pre-finance the local water company, and (b) the
water company’s ability to provide water to new households.
Selection is followed by a survey of areas with the largest
concentrations of poor households to determine how many people
need water connections. Grants are then allocated.

Once the water company has made the connections, the

Directorate General of Human Settlements determines how many
poor households now have piped water, and whether they are
satisfied with the service. The local government can then ask the
Ministry of Finance (MoF) to disburse the grant.

uA boy washes his hands using piped water next to his family’s old well in Muara Enim,
South Sumatra. (Photo by United Communication)
 Why Use a Grant Mechanism?
The Water Hibah programme aims to stimulate local government
investment in water utilities because this is the most sustainable
way to develop water sector infrastructure.
The programme pioneers the large-scale use of output-based
support from the MoF for local government services. The local
governments receive the grants, the PDAMs receive equity
investment, and poor households receive subsidised piped
water connections.
24
• The programme is implemented through GoI systems and
agencies, enhancing programme sustainability and effectiveness.
• There is local government ownership and engagement in the water
sector, rather than unsustainable central government investment.
• The programme rewards performance. Local governments
receive grants after investing in the PDAMs, which improve their
service delivery and management in a sustainable way.
25

Everyone benefits.

Local governments have welcomed this output-based approach,

making use of 100 percent of the available grants in most regions.
In just 12 months, around 415,000 poor people have benefitted
from new clean water connections.

uA local official demonstrates a new piped water connection in Kuningan,

West Java. (Photo by Adhi Setyo/Erland)
 Water Hibah Benefits
1. Partnership

A key factor in the success of the Water Hibah is the partnerships it

has created. The programme was able to double its size with the full
cooperation of GoI agencies and AusAID.

Partnerships were built (a) within the GoI; (b) between the central
government and local governments; and, most importantly, (c)
26 between the local executive, local council and water company on the 27
one hand, and consumers on the other.

uOfficials and donors meet grant beneficiaries in Klaten, Central Java.

(Photo by United Communication)
 “Now that I’m a PDAM customer, it’s so much more convenient.
The water only costs us 40,000 rupiah per month.”
Parmi
50, fried food vendor, Klaten, Central Java

28 29

“The Water Hibah programme is fantastic. We no longer have to buy

water or waste time drawing water from the well. The piped water
costs us just 30,000 rupiah a month. The water is clear and clean,
and it doesn’t smell.”
Mohammad Masud
Maker of leather jackets, Malang, East Java

uWashing the dishes using tap water in Karawang, West Java

(Photo by United Communication)
 2. Innovation

The PDAM decides its connection policy for poor households.

The local government and PDAM decide the internal financing
arrangements to expand the water supply network. The local
government may either provide upfront funding for the PDAM’s
investment or ask the PDAM to pre-finance the investment.
PDAMs use incentives to encourage poor households to connect.

“Water Hibah is being socialised by distributing pamphlets using

30 multi-level marketing. Each person referring a new PDAM customer 31
will receive a referral fee of 5 percent of the installation cost.”
H. Aang Hamid Suganda
Regent of Kuningan, West Java

uA piped water meter installed at a low-income household in Cilacap, Central Java

(Photo by United Communication)
 “I was very excited when I found out that we could pay for a PDAM
water connection in 12 instalments. We’re no longer exhausted
from collecting water, and we don’t have to prepare a bucket of
water every night. The piped water is clean and clear.”
Abraham
Civil Servant, Donggala, Central Sulawesi

32 33

uWater gushes from a tap in Muara Enim, South Sumatra. (Photo by United Communication)
 3. Affordability

Local water companies have offered substantial discounts and

low monthly instalments to make piped water affordable for the
poor. Having piped water can substantially reduce the electricity
bill if the beneficiaries previously used electric water pumps
to obtain their water. And beneficiaries no longer have to buy
bottled drinking water.

The time and energy saved in obtaining water also allows the
poor to spend more time earning money.
34 35

“We used to use smelly and dirty well water for bathing and washing,
and spent 50,000 rupiah a month on bottled water for cooking and
drinking. The PDAM water is cleaner and healthier. I have a young
child, so having tap water available at home 24 hours a day has
made life so much easier.”
Honita
27, housewife, Muara Enim, South Sumatra

uPiped water can result in electricity savings in Pekalongan, Central Java.

(Photo by Adhi Setyo/Erland)
36 37

“My family used to get our drinking water from the river. But then
my son had diarrhoea, so we started buying bottled water. Now
that we have tap water, my family is in better health and we
spend much less on water.”
Kamarudin
Fisherman, Palangkaraya, Central Kalimantan

uPeople no longer need to use dirty water from the Musi river in Palembang,
South Sumatra. (Photo by United Communication)
 4. Better Governance

Local governments are fully responsible for implementing the

programme through their PDAMs. They must first obtain approval
for the PDAM equity investment from the local council (DPRD).
This places local government responsibility for water services
firmly on the DPRD’s agenda.

This investment encourages the local government to

establish mutual trust with its PDAM, which must then fulfil its
responsibilities. In some cases, the PDAM committed to the
38 programme before the local government made the investment. 39

“The Donggala water company currently serves about 24 percent

of the local population. The Water Hibah programme can raise
that figure to 30 percent.”
Ali Abdullah
Managing Director of PDAM, Donggala, Central Sulawesi

“The public were really interested in benefitting from this aid

programme. One hundred percent of the programme was
realised; in fact, we exceeded the target.”
Ir. Bambang Riyadi
Managing Director of PDAM, Cilacap, Central Java

uA water treatment plant in Padang, West Sumatra

(Photo by United Communication)
 5. Serving the Poor

PDAMs prefer to serve non-poor households, assuming that

poor customers will either default on their bills or consume only
the small initial amount of water that is sold at a subsidised tariff.
But these fears have proved to be unfounded. Poor customers
are paying their bills and consuming more water than expected.
They clearly value their piped water.

Local governments have also found that providing water to

poor households is good constituency politics, with the benefits
outweighing the costs of subsidised tariffs.
40 41

“There are stringent criteria for poor households to obtain this

facility. For instance, the electricity of a house must not exceed
450 watts, or in some cases 900 watts.”
Karyawan Fathurachman
Deputy Regent, Bogor, West Java

“The strong demand for connections from Wonosobo residents

reflects the people’s need for clean water, especially for daily
needs for food and drink.”
Retnoningsih
PDAM Managing Director, Klaten, Central Java

uLow-income families in Palembang, South Sumatra now have

piped water connections. (Photo by United Communication)
 “We live on a riverbank, so we would use river water for bathing
and washing. For cooking and drinking, we put the water in a
bucket and added chlorine to kill the bacteria, or else bought
bottled water. We are so happy to have piped water now. It’s
been good for our health and saves us money.”
Rohimah
Housewife with four children, Palembang, South Sumatra

“We used to get our well water from a neighbour, but it contained
sand and gravel that we had to remove before we used it for
bathing, washing and drinking. And in the rainy season, the
42 43
water is polluted by river waste. I’m so happy to have benefitted
from the Water Hibah programme. If I were still young I’d really
enjoy life now, because we no longer have to struggle to find
clean water.”
Siti Halimah
Housewife, Muara Enim, South Sumatra

uOld habits of collecting dirty water are dying out with the arrival of piped water
for poor households in Palembang, South Sumatra. (Photo by United Communication)
 “I had to use the well in a nearby village, but the water was cloudy
and smelly. In the dry season, I rode my bicycle three kilometres
to get water from a well. It was very tiring. Now that I’m a PDAM
customer, I’m no longer exhausted from collecting water. Our
family uses piped water for all our needs. All we need to do is
turn on the tap. Everyone benefits.”
Ngadiman
35, carpenter, Klaten, Central Java

44 45

“I had to use well water before, but it was so bad; it was yellow
and contained iron, so we had to distil it for three hours. The
piped water from PDAM has made my family really happy. Now
we can be healthy, and our clothes are always clean.”
Dedi
Father of four, tempeh seller, Garut, West Java
uA beneficiary family in Bangkalan, East Java expresses satisfaction
at becoming a PDAM customer. (Photo by Adhi Setyo/Erland)

46
uAusAID Director General Peter Baxter and Minister of Public Works
Ir. Djoko Kirmanto, along with other dignitaries from the Government of Indonesia
and AusAID, visit Sanitation Hibah beneficiaries in North Banjarmasin.
(Photo courtesy of Eleonora Bergita)
6. Sustainability
The programme’s success has led other organisations to
express interest in becoming involved. In the participating
regions, households outside the expansion area want to be
included. Other local governments in nearby regions also want
to participate.
Other donors have also expressed interest in implementing the
programme. Next year, AusAID will implement a US$10 million
Water Hibah programme on behalf of USAID. The World Bank
and ADB are also preparing programmes using the Water
47
Hibah mechanism, which is becoming the preferred mode for
disbursing water supply grants to local governments.
“We are really committed to helping the poor benefit from piped
water. We will pursue this commitment until all of the poor in
Malang have clean water.”
Peni Suparto
Mayor of Malang, East Java
“Although the grants have now ended, we will carry on with the
programme using methods adapted in the field. We will finance
this through the local budget and PDAM.”
Yudi Adrianto
Managing Director, PDAM Jombang, East Java
 “Drinking water is the biggest problem in our neighbourhood. We
haven’t had enough clean water for years. The only option is the
Musi river, which the community depends on for all its water needs.
Now that we have piped water, I only hope that the programme
continues so that more poor households can have clean water.”
Anwar
Retired civil servant, Palembang, South Sumatra

“After receiving training from PDAM Bogor under the Water Hibah
programme, I now understand the water and health issues. I’m
no longer worried about cooking and drinking the water, since the
48 49
quality of PDAM water is guaranteed. I’ve told all my neighbours
to join the programme.”
Edi Rachmat
45, labourer, Bogor, West Java

uA boy and his grandmother appreciate the convenience of having a water connection
at their home in Muara Enim, South Sumatra. (Photo by United Communication)
 Household Connections

The first phase of the Water Hibah programme began in mid-2010

and ended in July 2011. During this period, AusAID supported
grant allocations for 77,000 poor households across Indonesia
that obtained piped water on demand through this programme.

75,800 77,000
73,500 76,108
75,250
69,734 72,302
Connections (number of households) 69,261
65,022
63,754
60,000
50 55,722 51
52,531

44,652

40,000
40,263

33.542
32,402
Grant Agreements
Signed 25,864

Project Design Funding Approved, 21,528 23,552

20,000
Appraised Grant Award 17,980 19,640
Notification
12,779
10,756 12,560 Cumulative Target
4,750 Cumulative Installed
7,840
1,445 4,890
1,350 2,530
0
9 9 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1
v-0 c-0 n-1 b-1 r-1 r-1 y-1 n-1 Ju
l-1 g-1 p-1 t-1 v-1 c-1 n-1 b-1 r-1 r-1 y-1 n-1 Ju
l-1 g-1
No De Ja Fe Ma Ap Ma Ju Au Se Oc No De Ja Fe Ma Ap Ma Ju Au

Cumulative Water Hibah Progress - Status: 15 August 2011

uPiped water meters ready for installation in Cilacap, Central Java
(Photo by Adhi Setyo/Erland)
52
Sanitation
Hibah

uA waste water treatment plant in Semanggi, Central Java (Photo courtesy of Watsan Team IndII)
 Only 11 cities in Indonesia currently have sewerage systems. The
Sanitation Hibah is an output-based grant programme to expand
household sewerage connections to the existing systems of five
city governments – Jakarta, Bandung, Banjarmasin, Balikpapan
and Surakarta.

Five thousand Sanitation Hibah grants were allocated, and 4,826

poor households benefitted from sewerage connections.

Connections (number of households)

5,000 5,000 5,000

54 5,000 55
4,640
4,491 4,826 4,826 4,826
4,550
3,920 4,280
4,000
3,560
3,216
3,000 Grant Agreements
Signed
2,390
Project Design Funding Approved, 1,941 1,941
2,000 Appraised Grant Award
1,541 1,971 1,971
Notification 1,741
1,141
Cumulative Target
1,000
700 874 Cumulative Installed

00 506
276
0
-09 -09 -10 -10 10 10 -10 -10 -10 0 0 0 0 0 1 1 1 1 1 1 1 1
v c n b ar- pr- y n Ju
l g-1 p-1 t-1 v-1 c-1 n-1 b-1 r-1 r-1 y-1 n-1 Ju
l-1 g-1
No De Ja Fe M A Ma Ju Au Se Oc No De Ja Fe Ma Ap Ma Ju Au

Cumulative Sanitation Hibah Progress - Status: 15 August 2011

uSanitation pipes awaiting installation by the public works department in Banjarmasin,

South Kalimantan (Photo courtesy of Dedi Budianto)
 The Government of Indonesia is now focusing on the need to
improve sewerage, having included it in the 2010-2014 five-year
development plan. To help the GoI achieve its targets, IndII has

Wastewater
been providing technical assistance to governments in eight large
cities that have committed to improved wastewater management:
56

Master Planning
Makassar, Surabaya, Bogor, Cimahi, Bandar Lampung, Palembang,
Pekanbaru and Batam.

IndII’s assistance includes help in preparing master plans, feasibility

studies and detailed engineering designs for new sewerage
systems.

“Through programmes like this, we can improve our wastewater

management step by step. So, provided we are committed and
determined, we will eventually have decent sanitation systems.”
Ir. M. Sjukrul Amien, MM
Director of Sanitation and Housing Development,
Ministry of Public Works

u A well maintained clean waterway in Central Java (Photo courtesy of Watsan Team IndII)
The Way Future AusAID Support

Forward
59

In the forthcoming programme of support for the Water Hibah, IndII

plans to implement more competitive selection of local governments
and offer multi-year grant disbursements that will make it possible
for financially weaker local governments and water companies to
participate. The programme will also be linked to other initiatives for
reform. Key features of this support include:

• Implementation over multiple years

uDirector General of AusAID Peter Baxter and Minister of Public Works
Ir. Djoko Kirmanto (Photo by Umar Faruq/Ricardo Basnur)
• More flexibility for local governments in executing the
programme
• Investment burden to be spread over multiple years
• Better governance through multi-year grants that hold the
PDAMs accountable
• Competitive selection of the PDAMs

Afterword
Danny Sutjiono, Director of Water Supply Development,
Directorate General of Human Settlement, Ministry of Public
Works
This Water Hibah Programme is very beneficial to the people of
Indonesia. Currently, water service coverage in Indonesia is only
about 48 percent, and most people not currently receiving piped
drinking water are from low-income communities that are unable
to afford the connection fee. Through this grant programme in
cooperation with AusAID, we can see the benefits of this service for
low-income communities. These people are the direct beneficiaries
of the programme, and they can now obtain drinking water at an
60
affordable price.
This programme is very supportive of our efforts to achieve one of the
Millennium Development Goals, which is to increase the proportion
of people with sustainable access to safe drinking water to 68.87
percent by 2015. This has also been mandated by President Susilo
Bambang Yudhoyono under the clean water programme for our
citizens, which aims to give all Indonesians access to safe drinking
water by 2025.
u (Photo by United Communication)
Afterword
Ir. M. Sjukrul Amien, MM, Director of Sanitation and Housing
Development, Directorate General of Human Settlement,
Ministry of Public Works
Sanitation covers wastewater management, garbage handling, and
drainage systems, among other things. We need better sanitation
systems since good sanitation will improve the quality of life for
generations to come. So we must all endeavour to improve the
sanitation system.
The Government of Indonesia has taken positive steps in that
direction. A total of 4,826 new household sanitation connections
have been installed in five cities across Indonesia. This has been
made possible through the Sanitation Hibah programme, an output-
based grant programme initiated by the Government of Indonesia
with assistance from the Government of Australia through AusAID. 61
We would like to thank the Australian Government, which, through
the Indonesia Infrastructure Initiative, has assisted the municipal
governments in these five cities to provide sanitation connections
for local communities.
We still need better sanitation systems, and we hope that these
connections are a first step towards improving sanitation facilities
as a whole. Through these programmes, we can also continually
improve our handling of wastewater. Apart from wastewater
management, we also need to improve garbage handling systems.
There is still a huge amount of garbage being dumped directly
under people’s homes, and this should gradually be eliminated.
There is no doubt that we all want to improve the quality of life
of our fellow citizens through efficient sanitation systems. Indeed,
Indonesia is committed to achieving the Millennium Development
Goal of reducing the proportion of citizens without access to proper
sanitation. But we can only achieve this with determination and
commitment from every one of us. u (Photo courtesy of Ir. M. Sjukrul Amien, MM.)
 Afterword
Adriansyah, Director of Regional Financing and Capacity,
Directorate General for Fiscal Balance, Ministry of Finance
First, we have to see that drinking water is a basic necessity in
all people’s lives, no matter what group they belong to. The
majority of people in Indonesia still face many problems in meeting
their need for water. With this background, the government has
been cooperating with AusAID to organise a grant programme to
provide drinking water connections for low-income households.
This Water and Sanitation Hibah Program is also related to another
important element: the fiscal relationship between central and local
62 government, which has not been implemented smoothly since the
arrival of regional autonomy. Looking at the outputs, this programme
has operated as expected. That is a good thing because it shows
that local governments have the capacity to fund the local water
companies (PDAMs) to provide clean water.
Perhaps not all local governments can do this, considering that
some of them do not have sufficient capacity. However, providing
clean water is a public service obligation. If the local government
is unable to provide the funding on its own, it must find another
way – for example, by taking out a loan. In any case, the provision
of drinking water and sanitation under this programme is a basic
human need, which is also one of the President’s priority directives.
u (Photo courtesy of IndII)
Afterword
Ir. Nugroho Tri Utomo, MURP,
Director of Housing and Settlement, Bappenas
Cooperation between the Government of Indonesia and the
Government of Australia (AusAID) implemented by the Indonesia
Infrastructure Initiative (IndII), specifically in the drinking water and
sanitation sectors, is one of the best forms of cooperation in both
sectors. Through this IndII programme, we are able to explore
and try out many innovations, and most of them have shown very
impressive results, including the Water Hibah and Sanitation Hibah
programmes and also IEG (Infrastructure Enhancement Grant).
Although the Government of Indonesia has built sewerage systems 63
and sewage treatment plants in 11 cities throughout Indonesia, the
number of household connections has increased very slowly due to
the low willingness of our communities to pay for them. Through the
sanitation grants, the central government has been working with
local governments to agree on a plan to significantly increase the
number of household connections. These connections will initially
have to be constructed by the local government. Once the results
have been verified as successful, the funds that have been spent
will be reimbursed using funds from Indll.
So this is a breakthrough that enables households to have sewerage
connections – especially low-income households that previously
could not afford to connect their homes to the sewerage system.
This programme also highlights a new approach that is appropriate
and can be improved continuously.
u (Photo courtesy of Ir. Nugroho Tri Utomo, MURP)
 Providing Clean Water and Sanitation to the Poor
Providing Clean Water
Kementerian Pekerjaan Umum BAPPENAS Kementerian Keuangan
Republik Indonesia Republik Indonesia

The Water and Sanitation Hibah programme is an output-based grant programme implemented by
the Government of Indonesia through the Ministry of Public Works, the Ministry of Finance and Bappenas,
and Sanitation to the Poor
in partnership with the Government of Australia.
Australia’s Support for Water and Sanitation in Indonesia

October 2011
Indonesia Infrastructure Initiative