PERPAMSI Persatuan Perusahaan Air Minum Seluruh Indonesia

Indonesian Water Supply Association www.perpamsi.org

CAPACITY BUILDING IN NRW REDUCTION IN INDONESIA: HOW BENCHMARKING CAN HELP TO MONITOR IMPROVED PERFORMANCE World Bank Water Week 2005 Conference 1. – 3. March 2005, Washington DC Dr. Werner BRENNER, Advisor, PERPAMSI

Overview of Presentation ¾Introducing the PERPAMSI water utility BM program

¾Monitoring NRW reduction capacity building programs with BM ¾Dissemination of best practices in NRW reduction to other water utilities 2

Water Utility Benchmarking in Indonesia ¾PERPAMSI implemented a World Bank supported program (PPIAF) in 2002/2003 where 80 water utilities participated. ¾Increase to 180 utilities by the end of 2007 planned. Water Utilities: Identify strengths / weaknesses in performance & efficiency in service delivery, compared to other utilities.

Investors:

Government:

Receive reliable / comparative information on utility performance and PSP opportunities.

Give appropriate guidance regarding institutional, managerial and financial issues. 3

BM System operation: Central Benchmarking

External Stakeholders:

Results

$$$

Team (Jakarta)

Government Donors

Results & Support

$$$

$$$

Verified data

Results & Support Support Raw data

Utilities Benchmarking team

Provincial Bench marking teams Utilities

Investments, Loans, Policies

Investors

Benchmarking Indicators used in Indonesia 1. Standard set of key performance indicators: ¾ Primary indicators (10) ¾ Secondary or supporting indicators (19)

2. Calculation of additional indicators possible! Up to 82 different items are collected from the utility. ¾ Technical ¾ Financial ¾ Managerial ¾ Customer orientation 5

Benchmarking Results (1) Financial Indicators ; Average results for 2002; 80 Utilities P1

WORKING RATIO

86

%

P2

DEBT SERVICE RATIO

108

%

P3

CURRENT RATIO

188

%

P4

TARIFF REVISION

109

%

S1

TOTAL COST RECOVERY

70

%

S2

RETURN ON NET FIXED ASSETS

1

%

S3

UNIT OPERATIONAL COST

0,103

US$ / M3

S4

LABOUR COST RATIO

44

%

S5

ENERGY COST RATIO

20

%

S6

AVERAGE WATER CHARGES

0,163

US$ / M3

S7

COLLECTION PERIOD

4

months

S8

RATIO OF SOCIAL CHARGES

2

%

S9

RATIO OF COMMERCIAL CHARGES

13

%

S10

DEBT EQUITY RATIO

158

%

S11

AVERAGE AGE OF TANGIBLE ASSETS

n. a.

%6

Benchmarking Results (2) II Customer Indicators ; Average results for 2002; 80 Utilities P5

CUSTOMER SATISFACTION INDEX

n. a.

-

P6

POPULATION SERVED IN SERVICE AREA

52

%

S12

IDLE CAPACITY

34

%

S13

SERVICE AREA RATIO

48

%

S14

METERS REPLACED

6

%

S17

AFFORDABILITY

n. a.

%

III Operational Indicators ; Average results for 2002; 79 Utilities P7

NON REVENUE WATER

35

%

P8

WATER QUALITY INDEX

n. a.

-

P9

CONTINUITY OF SERVICE

18

hours / day

S15

OPERATING BULK METERS

45

%

S16

MAINS REHABILITATION

1

%

n. a.

-

IV Personnel Indicators ; Average results for 2002; 79 Utilities P10

EMPLOYEE SATISFACTION INDEX

S18

EMPLOYEES / 1000 CONNECTIONS

8,8

Staff/1000 con.

S19

TRAINING BUDGET

0,2

%

7

Overview of Presentation ¾Introducing the PERPAMSI water utility BM program

¾Monitoring NRW reduction capacity building programs with BM ¾Dissemination of best practices in NRW reduction to other water utilities 8

Capacity Building in NRW Reduction: Is BM an ideal tool to monitor the performance of utilities? ¾ Process BM (setting targets) is a good instrument for monitoring capacity building programs on NRW reduction in utilities ¾NRW reduction is practically a complex issue which affects a number of BM indicators ¾NRW reduction must be done with an integrated approach, which addresses key operational, financial and sustainability elements e. g. service continuity, water quality, asset management, capacity components, financial flows 9

Capacity Building in NRW Reduction: But where to start? ¾High NRW rates are an indication for poor performance of a utility (global indicator) ¾Effective NRW reduction starts with an assessment of the current utilities performance and selection of performance indicators to monitor improvements ¾Define realistic targets for short, medium and long term periods Ö NRW reduction action plan which addresses issues like: ¾Determine organizational and operational changes needs ¾Determine network rehabilitation and renewal needs ¾Determine the financial needs for NRW reduction 10

NRW Components ¾Physical losses: ¾Background leakage ¾Burst leakage

¾Commercial losses: ¾Metering errors ¾Illegal connections ¾Meter reading errors ¾Billing errors 11

PERPAMSI Water Utility BM: NRW Performance Indicators ¾P7: NRW rate [% of produced water lost unpaid] ¾P9: Continuity of services [average hours per day] ¾S14: Meter replacement rate [% replaced per year] ¾S15: Operational bulk meter [% of bulk meter working] ¾S16: Distribution mains rehabilitation [% of network replaced per year] 12

Overview of Presentation ¾Introducing the PERPAMSI water utility BM program

¾Monitoring NRW reduction capacity building programs with BM ¾Dissemination of best practices in NRW reduction to other water utilities 13

Dissemination of Best Practices in NRW Reduction to other Utilities ¾BM information can be used as a tool to help to improve utilities performance systematically ¾Disseminate best practices to stakeholders and other utilities and create a ‘competitive environment’ in the sector ¾Feedback to staff to understand and motivate improved performance ¾Avoid BM becoming and end in itself-only tool! 14

PERPAMSI Persatuan Perusahaan Air Minum Seluruh Indonesia Indonesian Water Supply Association www.perpamsi.org

Thank you for your attention!

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