Operation and maintenance financial feasibility analysis of centralized domestic wastewater treatment system (case study: Palembang City Sewerage Project)

Abstract

Budget needed for operation and maintenance of centralized domestic wastewater management in Indonesia is often overlooked. This results in fail systems, high idle capacity, and abandoned assets. While the economic feasibility often used as the basis for centralized domestic wastewater infrastructure construction, the financial feasibility often shown a different result. The construction phase will be feasible according the analysis, while the operation and maintenance phase will have a different result. As unsolicited projects, the operation and maintenance of sewerage in Indonesia always have budget difficulties, thus needed scenario to resolve the matter. In this study, cost and revenue variable will be analyzed to determine the feasibility value based on NPV, BCR, and IRR calculations. The revenue comes from user charge tariffs on household and commercials connections, and cost variable consists of: chemical usage cost; sludge disposal cost; personnel wage cost; fuel and electricity cost; spare-part replacement cost. The analysis will determine whether both household connection and commercials connection in the sewerage system have positive results. Should negative results emerged, follow up analysis added to elevate the results consists of following scenarios: sensitivity analysis for tariffs adjustment; sensitivity analysis adding grant as option; sensitivity analysis adding loan as option. While analysis of base tariffs shown negative results on NPV, BCR, and IRR calculation, the follow up analysis shown significant changes thus the results is desirable.