I blogged two weeks ago about the launch of the Pekanbaru Water Supply PPP project pre-qualification process. The launch of the transaction process took a lot of Indonesian infrastructure watchers by surprise as, according to most interpretations of the current legal framework, private participation in the water sector is currently illegal.
Back in February, Indonesia's constitutional court struck down as law 7/2004 on Water Resources as unconstitutional, effectively returning regulation of the water sector to law 11/1974 on Irrigation, which does not permit private participation in the sector. I'm no lawyer, but people who should know have told me that, effectively, this means any proposed water PPP project is on hold until the law is replaced.
The lack of legal certainty has been used as an excuse for the lack of progress on the procurement of the long delayed Umbulan and Lampung water projects, both of which began procurement many years ago.
There have been recent media reports that the signing of the draft governmental regulation on water resources (an interim measure while the new law is prepared) is imminent. I haven't seen a draft, but private operators voiced their concerns with the draft that was put to them back in June.
I hope the launch of a new PPP project in the water sector is a sign that the new governmental regulation is indeed imminent, and that it is drafted in a way that allows private sector operators to participate and improve water service to Indonesia's citizens.