The Effect of the Increase of Electrical and Crude Oil Price on the Sustainability of Kupang Regency's Water Company (PDAM)

• Main Author: CHRISTINOVA M. SILALAHI (NIM. 24006078), MARISI
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/10851
• Institution: Institut Teknologi Bandung

The increase of basic electrical tariff (TDL) and crude oil price is one of the factors that triggers the increase of the operational cost of Kupang Regency's water company (PDAM) because the company uses electrical energy from the government's electrical company (PLN) and crude oil to operate its 17 water pumps.<p>The study is aimed to see the effect of the increase of the electrical and crude oil price to the sustainability of the company by studying the feasibility of running the company. The methods used to study the feasibility of the company operation were the NPV and IRR. These methods were also used not only to determine the suitable tariff for the operational years being studied but also to calculate the cost of using Jatropah plants to replace the use of crude oil for operating the company's water pumps.<p>In this study four scenarios were used. The first scenario was based on the water tariffs of Rp. 2.719/m3 for the year 2008 and Rp. 4.000/m3 for the year 2010. Under 3% and 10% of MARR as well as 3% of IRR for the respective tariffs, the NPV for the respective tariffs were Rp 3.529.559 /m3 and Rp. -6.004.368.784. In addition, under the water tariff of Rp. 3.002/m3 for the year 2008 and Rp. 4.804/m3 for the year 2010 with 3% and 10% of MARR as well as with 10% of IRR for the respective tariffs, the NPV for the respective tariffs were Rp. 10.159.928.333 and Rp. -2.181.469. As for the second scenario, the water tariff was set at Rp. 2.756/m3 for the year 2008 and Rp. 4.066/m3 for the year 2010. Under 3% and 10% of MARR as well as under 3% of IRR for the respective tariffs, the NPV for those tariffs were Rp. 3.713.147 and Rp. -6.002.731.999. Also, with the tariff of Rp. 3.019/ m3 for the year 2008 and Rp. 4.891/ m3 for the year 2010 in which the MARR were 3% and 10%, and the IRR was 10% for the respective tariffs, the NPV for the respective tariffs were Rp. 10.183.470.499 and Rp. -1.308.876.<p>As for the third and fourth scenario, in which the use of crude oil was replaced by Jatropah plant showed that the range of tariff tends to be the same. Therefore, a reasonable tariff calculation is needed. Also, the progressive tariff should be applied to those whose water use is more than the amount of water they are supposed to use. Further more, it is suggested that the Kupang Regency's water company use Jatropah plant oil to operate their water pumps and to anticipate the possibility of the fuel subsidy reduction in the future by the government. <br />