If Indonesia’s public water utilities are to expand service delivery of piped water and sanitation services, they will need to set forth the necessary preconditions to enable them to mobilize commercial finance. As a practical matter, these preconditions include the establishment of full cost recovery tariffs. However, the concept of full-cost recovery has been interpreted in different ways. To some it means the full recovery of all cash outflows through the prices charged to users, while for others it means the full recovery of all operating cash costs, plus depreciation and dividends. It will be necessary in the future for ESP to work closely with concerned authorities at the Ministry of Home Affairs to arrive at a common definition of this term that is acceptable to all stakeholders.