National Water Operators' Partnerships (WOPs) are promoted to be able to deliver better performance results as they can overcome common hurdles in partnerships related to language and culture barriers. Our paper argues that although the underlying idea of national WOPs appears sensible, the findings in Indonesia suggest that the actual functioning and performance of the WOPs is very much dependent on the governance framework under which these utilities operate. As such, the national WOP is not able to transcend this politicized environment, but rather becomes part and parcel of it.

## INTRODUCTION

Infrastructural funding and developments in the water sector have not kept pace with the rapid urbanization in the Global South. As a result, water utilities have not been able to provide water services to match this increasing demand, while managing systems characterized by high levels of non-revenue water (NRW), weak financial control and unsustainable operations. These problems, paired up with new challenges derived from new phenomena related to climate change, aggravate the performance of already ill-equipped utilities (Global Water Operators’ Partnerships Alliance [GWOPA] 2013).

In 2006, the concept of ‘Water Operators' Partnerships’ (WOPs) surfaced as a highly-promoted capacity development configuration for improving service provision in developing countries (Water and Sanitation Program [WSP] 2009). The UNSGAB (United Nations Secretary-General's Advisory Board on Water and Sanitation) formalized this initiative in the First Hashimoto Action Plan (HAP I) as an emerging tool that would contribute to the achievement of the Millennium Development Goal targets on water and sanitation (Hashimoto 2006). Many operators in these regions struggle to find and utilize capacity to expand services of quality to their citizens, and can be partnered to other utilities, with arguably stronger performance records, that can transfer knowledge and support the development of their operations through capacity development activities.

WOPs are defined as ‘any formal or informal collaboration or structured partnership aimed at capacity building on a not-for-profit basis' (International Water Association [IWA] et al. 2009). These partnerships incorporate several principles that distinguish them from classic public-private partnerships. WOPs rely on the development of capacity of the recipient partner rather than replacing the partner utility. In doing so, these collaborations are based on peer-to-peer solidarity, and performance improvements achieved in a WOP will be the result of cooperation on a not-for-profit basis.

National WOPs concern partnerships developed between utilities that operate within the boundaries of the same country. In these partnerships, the shared cultures are argued to reduce obstacles in the partnering process, as difficulties in sharing knowledge can be aided when the differences in culture, language and political interests, laws and policies are small or nonexistent (Dawes & Prefontaine 2003). Dawes et al. (2011) identify several factors that play a role in more effective cooperation between partners, and argue that the shorter the ‘contextual distance’ between partners in relation to these factors the better the cooperation (Dawes et al. 2011, p. 4). These factors are: (i) shared cultural traits and beliefs, (ii) existing local networks (iii) relational distance linked to past collaborations among partners, (iv) shared organizational goals and interests (organizational culture), (v) physical distance, (vi) technical distance, meaning the type of technology being used for service provisioning and (vii) knowledge distance between the knowledge available and what is to be received in the exchange.

Clearly, the context in which a partnership such as a WOP takes place is relevant and the environment in which WOPs develop is, in reality, complex. Often WOPs unfold in a context in which various actors have numerous and often conflicting interests (Schwartz et al. in preparation). These interests and influences manifest themselves at the utility level, in cooperation and development policies and/or in the relations between international agencies and national governments. In this paper we explore these complexities in the development of National WOPs in the Indonesian water sector. We argue that while partnerships at national level do, to a certain extent, benefit from shared values, culture and other short-distance benefits, these WOPs are also subject to the intricate shared political environment in which they develop.

## MATERIAL AND METHODS

This research has been funded by the Ministry of Foreign Affairs of the Netherlands and developed in cooperation with GWOPA (Global Water Operators' Partnerships Alliance) under a project (Boosting Effectiveness of Water Operators' Partnerships) that seeks better understanding of the functioning of WOPs to develop tools for their improved effectiveness. The data was collected during November 2014 through semi-structured interviews at mentor and recipient utilities, with PERPAMSI (Persatuan Perusahaan Air Minum Indonesia – PERPAMSI is the national association of water utilities in Indonesia) and the Ministry of Public Works of Indonesia. The cases studied were selected in consultation with PERPAMSI, which identified four utilities that had participated in recently developed partnerships and that were able and willing to participate in this study.

## WATER SUPPLY SERVICES IN INDONESIA

In Indonesia, the provision of water and sanitation services in urban areas is the responsibility of the PDAMs (Perusahaan Daerah Air Minum – local government-owned corporation for drinking water). Policy and regulatory responsibilities are shared at the national level by a number of ministries related to water issues, while the Ministry of Public Works remains the most important organization for the physical development of infrastructure for water services. At the regional and local level, PDAMs are influenced and controlled by the owner of the PDAMs (which can be the mayor or chief of district), provincial governor and regional regulatory bodies. It is generally understood that PDAMs should operate on the basis of full cost recovery, and preferably contribute to the budget of the local government (Hadipuro 2010).

## CASE STUDIES

### Tirta Raharja-Tirta Kepri

Tirta Raharja provides water services in the Bandung Regency on Java. They became the mentor of Tirta Kepri, which services the municipality of Tanjung Pinang on Sumatra in the second batch of WOP programs organized by PERPAMSI. Both utilities agreed to develop and implement a work plan for the reduction of NRW and development of an improved billing system. Tirta Kepri chose Tirta Raharja as a mentor because they were familiar with the work they had developed in the field of IT-supported billing systems and in the reduction of NRW (Table 1).

Table 1

Key Performance Indicators (KPIs) overview Tirta Raharja/Tirta Kepri – selection (BPPSPAM 2013)

Tirta Raharja
Tirta Kepri
201020112012201020112012
Billing collection efficiency 97.9% 114.1% 129.6% 90.8% – 86.5%
Coverage 37.1% 53.1% 30.9% 55.8% – 42.3%
Service continuity (hours/day) 24 18 24 – 13
Employees/1,000 connections 3.9 3.6 3.4 6.7 – 8.2
Score 3.53 3.85 3.89 2.27 – 2.73
Tirta Raharja
Tirta Kepri
201020112012201020112012
Billing collection efficiency 97.9% 114.1% 129.6% 90.8% – 86.5%
Coverage 37.1% 53.1% 30.9% 55.8% – 42.3%
Service continuity (hours/day) 24 18 24 – 13
Employees/1,000 connections 3.9 3.6 3.4 6.7 – 8.2
Score 3.53 3.85 3.89 2.27 – 2.73

The degree to which this partnership is seen as a success varies between the partners. According to the mentor and facilitator, this WOP did not develop to its full potential. The inability of the mentee to raise sufficient funds to develop the pilot site in a timely manner is one of the main reasons attributed to the poor results. According to Tirta Kepri, the funds were disbursed with some delay by the Ministry of Public Works. However, once disbursed – upon the completion of the WOP– they implemented the pilots suggested by Tirta Raharja. This appears to be corroborated by the improved assessment of the utility, which went from unhealthy to less healthy in the national classification. Tirta Kepri claims to be implementing the lessons learned from Tirta Raharja to sustain these performance improvements. Since the changes were only implemented upon the official completion of the WOP, the attribution of lessons learned and improved performance that Tirta Kepri claims is not shared by Tirta Raharja, nor PERPAMSI. The delays experienced during the WOP are perceived as a burden by Tirta Raharja, as the collaboration with Tirta Kepri did not produce any ‘clear results’ (Tirta Raharja Technical Director, 12-11-2016) during the WOP. At the same time, engaging in such partnerships does come at considerable costs. As a mentor, Tirta Raharja not only has additional out-of-pocket costs that are not covered by the partnership agreement, but also misses some of its experienced staff, who are involved in the WOP's activities in their routine operations. These additional efforts come at an additional burden when results cannot be measured.

Tirta Raharja has a good relationship with the Ministry of Public Works and has benefited over the past years from a number of development programs initiated by the Ministry. They have had the opportunity to participate in a WOP with an international partner, they stand high in the national classification, and they have displayed continued performance improvement over the past years. In return, the Ministry requests that they participate in several capacity development programs in Indonesia. Given the costs involved, the management of Tirta Raharja wishes to limit the contributions of their organization to these programs. However, they feel they are not able to decline programs fostered and promoted by national organizations with which they are strongly linked and dependent upon. The Technical Director of Tirta Raharja takes care to maintain good relationships with the Ministry. As one of his colleagues explained: ‘He makes sure he is very present in Jakarta [Ministry of Public Works]. Everybody knows him there’ (Tirta Raharja Employee, 11-11-2014). Participating in partnerships and being visible in the sector and at the Ministry of Public Works in Jakarta is in the interest of Tirta Raharja. ‘Participating in these activities [WOPs] has strengthened our relationships. What we want now from the Ministry of Public Works, we can easily get’ (Tirta Raharja Technical Director, 12-11-2014).

Since the positive results of the pilot, Tirta Kepri has been receiving additional funds for infrastructure development from the Provincial Government to further improve the utility's performance. This leads to a situation that puts the management of Tirta Kepri at odds. From one side, they want to showcase the utility's results and (significant) improvements (Table 1), while on the other hand upgrading to the ‘healthy’ category would inhibit the utility from receiving additional grants from the provincial and national government for infrastructure development. Moreover, they would be expected to contribute to the capacity development program by becoming a mentor PDAM. As a result, the managing director of Tirta Kepri jokingly suggested that he would prefer not to see the improved performance of his utility reflected in official documents.

### Tirta Musi-Tirta Mayang

Tirta Musi, which provides services in Palembang, Sumatra, had partnered in the past with Tirta Mayang, which services the municipality of Jambi on Sumatra. In the 1990s, Tirta Mayang mentored Tirta Musi in the Geographic Information System mapping of the water services infrastructure in Palembang. However, the performance of Tirta Mayang deteriorated over the last 15 years (Table 2) and in 2012 Tirta Musi became the mentor of Tirta Mayang for a program on reduction of NRW (Table 2). Both partners and the facilitator consider this a successful partnership. The reason for this is that a pilot project was set up during the time allocated for the WOP. Early in the WOP, Tirta Mayang was able to allocate funds (from their internal budget) to the development of a District Metered Area (DMA). The pilot was successfully developed but it was not replicated. The managing director of Tirta Mayang did not believe in the positive outcomes of the WOP and decided to stop further development of DMAs. Following the appointment of a new (interim) managing director, however, Tirta Mayang is considering restarting the NRW program with the installation of new DMAs. These DMAs will likely be developed under a new agreement of cooperation that the municipalities of Palembang and Jambi signed at the end of 2014 to improve basic services. This highlights the influence of individuals, particularly in management and political positions, in the development of a WOP. It also highlights the importance of the relationship between the managing director and mayor.

Table 2

Key Performance Indicators (KPIs) overview Tirta Musi/Tirta Mayang – selection (BPPSPAM 2013)

Tirta Musi
Tirta Mayang
200920102011201020112012
Billing collection efficiency 97.3% 98.3% 98.3% 100% 94.5% 100%
Coverage 78.2% 85% 87.2% 56.4% 65.6% 66.5%
Service continuity (hours/day) – – 18 19 19
Employees/1,000 connections 3.1 2.7 3.4 5.3 5.1 2.8
Score 3.14 3.13 3.03 2.65 3.18 3.09
Tirta Musi
Tirta Mayang
200920102011201020112012
Billing collection efficiency 97.3% 98.3% 98.3% 100% 94.5% 100%
Coverage 78.2% 85% 87.2% 56.4% 65.6% 66.5%
Service continuity (hours/day) – – 18 19 19
Employees/1,000 connections 3.1 2.7 3.4 5.3 5.1 2.8
Score 3.14 3.13 3.03 2.65 3.18 3.09

The Director of Tirta Musi has a good relationship with the mayor of Jambi, who originates from Palembang. Through this relationship he believes he has positively influenced the development of water services in Jambi. Both utilities feel that having the support of the mayors in this cooperation facilitates changes that the utilities wish to implement. The staff of the utility of Palembang had little influence on the changes introduced in Tirta Mayang once the WOP was finished. However, the director of Tirta Musi has tried, through personal relations, to influence the cooperation between municipalities mentioned earlier. He has also mediated with Palembang's mayor to discuss with Jambi's mayor a ‘proper’ successor of the Director of Tirta Mayang.

## ARE NATIONAL WOPs IN INDONESIA ALL OPPORTUNITIES

### Peer-to-peer solidarity

The philosophy of solidarity imposed by PERPAMSI is widely shared among utilities in the sector. This sense of solidarity plays a positive role in the development of WOPs. Despite minor funding, mentors and recipient PDAMs have shown their willingness and commitment to these partnerships by contributing with their own resources. This willingness and commitment is strongly linked to the shared understanding and drive to develop and improve the national water sector. However, the participation of PDAMs in these WOPs requires them to free up experienced staff to support the development of the WOPs, as well as financial resources. WOPs in Indonesia seem to have overcome the hurdle of limited available funds. Generally, WOPs are financed by external agencies unless there are available funds internally to the utilities to carry out the program. The reliance on external actors for funds leaves these programs subject to the interests and priorities of these external actors. This limitation would not apply to a self-funded, and self-managed, partnership, but it does limit the full implementation of programs and it excludes from participating in this program certain PDAMs with a lack of their own resources. In Indonesia, the parties that are interested in the development of WOPs either have no resources or clear specific interests that may collide with those of utilities.

At the same time, ‘solidarity’ between the PDAMs is also a result of the strong intertwinement of the PDAMs with provincial and national water organizations. Given the low levels of local government investment in the water services sector, many PDAMs are dependent on sourcing funds from the provincial and national agencies like the Ministry of Public Works. The PDAMs realize that sourcing these funds requires them to participate in the capacity development programs of these organizations, as well as adhering to programs and priorities identified by these parties.

### Limits to performance improvements

The benchmarking exercises that classify utilities are of great influence for the few governmental agencies that are in control of funds and infrastructural development. For a utility to obtain grants instead of guaranteed loans, a utility must be classified as ‘less healthy’ or lower. PDAMs may thus lack incentives to move from a less-healthy status to a healthy status as this endangers access to grant funding, and puts in jeopardy the potential learning opportunity and improvements resulting from a WOP. This also has an impact on how WOPs are approached, as some utilities who are on the border of becoming healthy may have an incentive to limit the successfulness of the partnership.

### Political environment

Given the local government ownership of the PDAMs, the success of national WOPs in Indonesia is very much dependent on the relations between mayors and directors of the PDAMs involved in the WOP and the discretionary budget allowance given to Directors. In comparison with international WOPs the influence of the political realm appears to be bigger in national WOPs. As the PDAMS operate under the same national agencies, they are also subject to the same political realm, expanding the influence from local decisions to regional or national budget distributions. As a consequence, the embedding of the partnership in the political environment is of crucial importance for understanding national WOPs.

## CONCLUSIONS

The underlying idea of National WOPs appears sensible in the development of our cases, and our findings in Indonesia suggest they can be an effective tool for capacitating weak utilities. By shortening the ‘contextual differences', cultural and technical barriers are reduced. Moreover, the knowledge that utility staff are working on improving the national water services sector appears to be a strong motivation for many utility staff. At the same time, the findings suggest that the actual functioning and performance of the WOPs is very much dependent on the governance framework under which these utilities operate, as well as factors surrounding the WOP such as the shared national regulatory and support framework. As a result of this, WOPs cannot be looked at merely as capacity development programs. This is particularly visible in Indonesia, where water utilities are tightly linked and highly dependent on the political environment. This political environment involves both local mayors, who act as the owners of the utility, and the Ministry of Public Works, which is heavily involved with utilities in supporting investment plans in water supply infrastructure. National WOPs develop within this politicized environment, and are perhaps more subject to this political environment than international WOPs.

Being dependent on both local government owners and the Ministry of Public Works, utilities must maneuver carefully to ensure workable relationships with both entities. The national WOP is, thus, not able to transcend this politicized environment, but rather becomes part and parcel of it. Therefore, when analyzing the effectiveness and efficiency of a WOP it does not suffice to look at matters of knowledge management and knowledge transfer, such as number of trainings, quality of trainers, capacity needs assessment and the like. The political environment in which they are embedded will also need to be taken into account as an enabling or disabling factor of shared values, language and systems. Further research is needed to understand the idiosyncrasies of the national set ups for WOPs and understand which factors play a more relevant role in the development of these partnerships to determine their design and effectiveness.

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