Indah Setiawati, Jakarta – The success of a water supply management scheme does not depend on whether it is privatized, but on its operator's corporate performance, a research publication by the Water Dialogue revealed Tuesday.

The case study says both public and private water companies could enhance their performance depending on the following four factors: water source quality and availability, the local political situation, accessibility to loans and their communication strategy.

"The water source availability will influence service coverage and the rates of illegal connection, while the local political situation will affect how much rates can be ad-justed," Krishna S. Pribadi, the research team coordinator, said in his presentation.

He said accessibility to loans played an important role in the fulfillment of performance indicators and the service coverage.

Communication strategy, as he went on to say, was key to gauging customer satisfaction and understanding when rates could be adjusted.

Last October, Krishna's research team compared Tirta Pakuan Bogor, which represents a state water company (PDAM) to PT Adhya Tirta Batam (ATB), a private company representing the private sector. Both entities supplied over 75,000 connections, or a population of 750,000.

The research was conducted to determine the pros and cons of private participation in water supply services, and included a survey of 150 customers and 75 non-customers, document reviews, interviews and focus group discussions.

According to the research, ATB's annual service coverage growth reached 17 percent compared to 7 percent for Tirta Pakuan.

Krishna said water accessibility was a deciding factor, as people in Batam had no other choice but to buy water from the company. "Meanwhile, Bogor has a big source of water and a supporting topography," he said.

The research says the bill collection period in Tirta Pakuan was 46 days, 16 days shorter than ATB's, which may have been the result of better customer satisfaction for Tirta Pakuan that reached 62 percent, 14 percent higher than the private ATB. Public enterprise Tirta also responded to complaints twice as fast as ATB.

Riant Nugroho, a member of the regulatory body of water service for Jakarta, said there was a clear difference between how public and private water companies proposed rate adjustments.

He said public service companies were hesitant to ask for a rate adjustment because the directors' appointment often involved a conflict of interest, while private companies were more aggressive in asking for water rate increases because they strived for profits.

Economist Faisal Basri said the most important thing to retain private companies was a clear contract and terms of condition. He said if PDAM had the money and competency, there would be no need for privatisation.

"The thing is, many PDAM are not bankable, so they cannot get loans to broaden their service coverage," he said, adding their small service coverage resulted in high operational costs.

He said the public water companies needed an independent financial audit as a first step to becoming bankable.