Banks pledge Rp 3.7 trillion for water projects

Nani Afrida, The Jakarta Post, Jakarta | Sat, 06/12/2010 11:34 AM

Three state-owned banks have signed a commitment to disburse a total of Rp 3.7 trillion (US$402 million) in credit to finance water distribution projects commissioned by the directorate general for urban development, Cipta Karya.

The banks are Bank BNI, Bank BRI and Bank Jabar Banten. In an agreement between parties signed on Friday, BNI will allocate Rp 1.8 trillion, BRI Rp 1.8 trillion and Jabar Banten Rp 100 billion.

“This is the first time that banks have given financial support to water companies. Usually, these companies rely heavily on the state budget or foreign loans,” Cipta Karya director general Budi Yuwono Prawirosudiorjo.

Budi said the funds would be channeled to water distribution companies owned by regional government (PDAM). He added that 75 companies had applied for the loan, 15 of which had received approval from the banks. There are 393 water companies in Indonesia.

“The water companies should have healthy financial performance or have to have restructured their debt,” he said, referring to the requirements for water companies to access the fund.

BNI business banking director Krisna Suparto said BNI was interested in offering credit to

water companies because the water industry had “a bright future, as do as other infrastructure

projects such as electricity or roads”.

He added that better management of water distribution was key to improving the lives of the

people. In Indonesia, about 70 million people have no access to clean drinking water.

He added that offering credit to water companies would boost BNI’s credit disbursement by 10 percent.

“We will offer a special rate for water companies, as the government will subsidize the rate by 5 percent,” he said, adding that the rate would follow the state bank’s rate and that the credit had a 10-year maturity period.

Bank Mandiri, Indonesia largest bank by assets, also plans to disburse credit worth Rp 1.8 trillion to water companies.

Budi said Indonesia required Rp 33 trillion in the next five years to construct water installations to provide clean drinking water.

“The government has allocated Rp 11.8 trillion from the budget. We still require about Rp 22 trillion and expect to source this from bank loans,” Budi said.

According to a Country Program report from UN Habitat 2008-2009, Indonesians’ access to clean water facilities remained relatively low.