Anti Privatization Debate, Opaque Rules and Neglected ‘Privatised’ Water Services Provision: Some Lessons from Indonesia

Abstract

Out of 100 Articles in the Water Law, only one is dedicated to specifically regulate the drinking water and sanitation sector. Even this one article regulates Private Sector Participation (PSP) very vaguely. The Water Law neither provides clarity on the form of ownership nor the desired regulatory model. The implementing regulation of the Water Law implies that contracts between the government and the private sector will be the desired model, but left no clarity as to how the contract should be regulated.

As a result, there is a major lack of regulation in the water services sector. The idea to retain the ownership of assets while allowing PSP through contracts appears to be a modus-vivendi generated by the privatization debate. However, the contracts are not complemented by higher regulation to safeguard consumer’s interest. In many regions, service levels and consumers rights are thus subjected to contractual negotiations to be agreed bilaterally between the authorities and the private sector while citizens are considered only as an auxiliary to the whole process.

This is the pre-peer reviewed version of the of the article which has been published in final form at the IDS Bulletin.

Keywords: water, law, privatisation, indonesia, infrastructure, utilities