The Water and Sanitation Hibah is a program developed by the Australian Agency for International Development and the Indonesia Infrastructure Initiative whereby local governments are encouraged to invest in urban water utilities through an output-based payment mechanism. An independent evaluation of the program was conducted in 2011, which AusAID's management reviews and responds to in this document. They have endorsed plans to implement a second phase of the project taking into account the recommendations of the evaluation, which include improving monitoring and evaluation and mitigating environmental impacts.
- The Water Hibah was piloted on 35 local governments, resulting in 77,000 water connections. Five governments participated in the sanitation program, which yielded 4,862 sewerage connections.
- There was greater demand and capacity to implement the water component of the program than the sanitation component, thus the original budget was shifted more towards water.
- The second phase of the project will include additional capacity building activities for local governments and utilities.
- Another recommendation that will be acted on was to increase community education activities.
- While it is not possible to completely synchronize the Australian and Indonesian budget cycles due to their different financial years, funds availability will not be affected by this mismatch after the first year of the multiyear program.