The Surabaya water utility is committed to providing excellent services to 100% of the city’s population. To achieve this ambitious objective, the water utility has undertaken a range of extensive projects, with pipe rehabilitation being a key focus.
Palupi Wikandari, the Planning and Development Senior Manager of Surabaya Water Utility, emphasizes their aim of rehabilitating 150 km of pipes annually. Recognizing the magnitude of this undertaking, the project is projected to be a long-term project spanning the next decade.
“The pipe rehabilitation is a strategic project because some of the distribution pipes are old, some were even built during the Dutch colonial era.” Palupi Wikandari, often called Palupi, explained.
The old pipes have contributed to the high-water loss rate in Surabaya water utility. According to Surabaya water utility’s performance report in 2021, the water loss in Surabaya water utility reached 30.18%, higher than the national rate at 20%. Palupi added,” our several distribution pipes’ diameter is getting smaller so that their water pressure is low. As such, water service continuity to the customers could be disrupted.”
Despite the significance of the pipe rehabilitation, it is not easy for the water utility to finance the project on their own. Palupi explained,” pipe rehabilitation requires huge investments, but we have limited cash flow. Hence, we are seeking alternative financing mechanisms.”
To meet the financial needs, Surabaya water, with support from USAID IUWASH Tangguh, approached banks and other financial institutions, including PT SMI—which has had an agreement with USAID IUWASH Tangguh to provide commercial investment for the project’s partners. Additionally, USAID IUWASH Tangguh also assisted Surabaya water utility to develop a business plan, which the private companies could use as a basis for analyzing the water utility’s project feasibility.
After holding a series of discussions with Surabaya water utility, PT SMI agreed to support Surabaya water utility to develop the water supply system, including the pipe rehabilitation. The Executive Director of Surabaya Water Utility, Arief Wisnu Cahyono, and the Director for Public Financing and Project Development of PT SMI, Faaris Pranawa, signed an agreement on the technical assistance for water supply system development in March 2023. Through this agreement, PT SMI assists Surabaya water utility to prepare the feasibility study and detailed engineering design (DED) for the water supply system improvement to ensure that the project is viable for investment.
Palupi hopes that the investment from PT SMI will help the water utility rehabilitate their pipes without disturbing the company’s cash flow. “With the new pipes, we hope that we are able to improve water pressure management, decrease water loss, and deliver water services to customers 24/7,” Palupi hopes.
Faaris Pranawa hopes that the partnership between PT SMI and Surabaya water utility, which performs well, will inspire other water utilities to improve their transparency and governance so that they can access private sector funds. He also hopes that with their participation in the water sector, they can inspire other financial institutions to assist water utilities in Indonesia with activities that address the core issues, investment to deliver quality water services to the community.
USAID IUWASH Tangguh remains committed to fostering private sector involvement in the water sector, aiming to provide valuable support to water utilities in enhancing their service delivery of safely managed drinking water services to diverse segments of the population. This includes prioritizing the provision of clean and accessible drinking water to individuals of all ages, genders, socioeconomic backgrounds, and other vulnerable groups within the community.
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