The people of Indonesia, especially those living in urban areas, still have unequal access to clean water and sanitation facilities. As part of the nation’s aggressive development in public infrastructure, the government has aspired to make clean water accessible by as many people as possible within the fastest time so they offer the private sector the opportunities to participate in the projects to build and operate water treatment facilities and supply clean water to the state-owned water company PDAM as this will expedite the process to widen the clean water access in the country.
Having years of experience in treating mine water into clean water and distributing it to the communities surrounding its operational location in South Kalimantan, the Adaro Group decided to capitalize on this experience by extending its business into the water treatment sector in Indonesia. Therefore, in 2017, Adaro Tirta Mandiri (ATM) and its subsidiaries PT Drupadi Tirta Gresik (DTG) and PT Drupadi Tirta Intan (DTI) formed the Adaro Water pillar, diversifying the group’s businesses into the fields of raw water treatment, waste water treatment, management of non-revenue water, and water solution services.
Along the way, Adaro Water is also expected to be one of the group’s pillars that deliver impactful contributions to the government’s efforts to improve people’s wellbeing by making clean water more available. In other words, the Adaro Group believes that this business segment will not only generate profits, but also manifest its social initiatives for the nation.
ATM’s subsidiaries DTG and DTI have been supplying clean water to PDAM Gresik in East Java and PDAM Intan Banjar in South Kalimantan, respectively. In 2018, DTG’s water supply volume to PDAM Gresik increased by 11.08% year-on-year to 9.7 million m3 while DTI’s water distribution volume to PDAM Intan Banjar increased 2.26% from 8.45 million m 3 in 2017 to 8.6 million m3 in 2018.
In 2018, as part of its expansion program, ATM explored and subsequently acquired new water supply projects to be added to its operations. ATM selects the projects in which it will participate using several criteria, such as ensuring the availability of:
- The support of the local government in the forms of regional plans, policies, and regulations, etc.;
- The demand from the local PDAM to improve the coverage of drinking water and the distribution management in the respective area(s); and
- The potential to manage a water supply business in a manner that the business will be profitable and sustainable, which means there is continuous availability of raw water in a sufficient amount throughout the contract period.
To that effect, in 2018 ATM expanded its operations in the water treatment sector by acquiring 90% of the shares of PT Inogreen Tirta Mentaya, which has now been renamed as PT Adaro Tirta Mentaya. PT Adaro Tirta Mentaya has a 20-year Rehabilitation, Build, Operate and Transfer (RBOT) Agreement with the PDAM of Kotawaringin Timur regency in Central Kalimantan. This agreement includes a project to the increase capacity from 90 liters per second to 320 liters per second due in 2019.
In addition to acquiring PT Adaro Tirta Mentaya, in 2018, ATM also participated in various tender processes to build and operate water treatment facilities. In most of its tender participations, ATM collaborates with well-established state-owned companies that have built experience in the sector.
Similar to AE’s other non-coal mining pillars; ATM will increasingly focus on undertaking business activities that will add value to the Adaro Group. To support its operations, ATM has set a target to reach a total capacity of 4,000 liters per second in the medium term, for which it will continue to take a proactive approach by discussing with PDAM on the opportunities of potential projects and persuading the state-water company to add prospective projects deemed to make clean water access more equal for the communities into their plans.
ATM will also continue to increase the capacities of DTG and DTI to be able to increase the supply of clean water to PDAM Gresik and PDAM Intan Banjar and ensure that the clean water supplied to them always fulfills the required quality standards as specified in the contract agreements.