Consultant Team or Institution for Developing Technical and Financing Option Scheme for KPSPAMS Service Expansion

Background

Indonesia is facing an enormous challenge reaching its goal of a universal, safely managed water and sanitation system. Nationally, only 19% of Indonesians have access to piped water, and a sewage connection is available to less than 2% of the population. This means only 7.4% of wastewater is safely collected and treated, while 92.6% is discharged untreated. The World Bank estimates that 70% of groundwater pollution is the result of leaking septic tanks and septage disposed in waterways2 posing a significant health risk to people across the country. The Medium-Term National Plan 2019-2024 (RPJMN) set out to address the gap in WASH services. Starting from a 2018 baseline of 89% of households with access to improved drinking water, and 77% with access to improved sanitation facilities, the RPJMN estimates that an $18.4 billion investment is required to meet its intermediate WASH goals3. These include 100% of households access improved drinking water; 15% of households access safe drinking water and 30% access piped water; while 90% of households access improved sanitation, 15% of households access safe sanitation, and the number of households utilizing safe wastewater management increases to 6.5 million. Current national and local budget allocations will meet only $11.3 billion or 35% of the need, illustrating the resource gap towards meeting the 2030 goal of universal access, per the SGD #6 standards as stated in the Presidential Decree 59/2017.

Given the need for massive investment in WASH infrastructure and broad changes in individual and collective behaviors to achieve the countries targets by 2024, the involvement of communities, households, and the private sector will be pivotal at every stage. Closing the financing gap will require diverse resource investments, reducing costs, increasing tariff, taxes, and transfers, and exploring alternative financing tools. Market-based solutions that can connect unserved and underserved populations to WASH products and services may help close this financing gap.

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