ANALYSIS SENSITIVITY FACTORS OF PEKANBARU RIAU CLEAN WATER DEVELOPMENT PROJECT FEASIBILITY

Abstract

n 2011, an existing water supply service in Pekanbaru City, Riau Province was limited to cover 8% of 900.000 populations mainly located at the City Central area. However, in 2006 an extension of the water supply scheme for southern part of the city was initiated but the progress was slow as uncertainty of financial resources. It was estimated the capital investment required to produce and to supply a 500 liter/second of clean water covering 40.000 house connections was Rp 459.3 Billion. Initially it was planned to procure this investment from the soft loan obtained from Government to Government resources (G to G as much as 80%), APBN (7%) and APBD (13%). This study investigated various sensitive factors affecting project feasibility. After conducting numerous simulations, this study identified 5 significant factors affecting economic parameters of the project; (i) fluctuation of inflation rates, (ii) efficiency in collecting revenues, (iii) water tariffs, (iv) water demand, and (v) un-accounted for water. It was identified that the BEP of the project is relatively long (23 years, near the project lifecycle of 24 years), BCR was 1.02, and IRR 8.86% (relatively low). Hence, it is recommend that, to take any necessary precautions to control and mitigate these 5 sensitive factors to ensure achieving project objectives.