PDAM Jaya becomes private company<\/p>\n
JAKARTA (JP): Governor Sutiyoso is scheduled to sign an
\nagreement today to privatize city-owned drinking water company
\nPDAM Jaya, an official said yesterday.<\/p>\n
"Actually, the privatization was effective as of Feb. 1. So
\ntomorrow (Friday) is only the official inauguration of the deal,"
\nPrawoto Danoemihardjo, the city's assistant for administrative
\nand development affairs, said.<\/p>\n
The municipality approved the privatization of PDAM Jaya in
\norder to bail out the company which had a huge debt and poor
\nmanagement system. And the city needs to provide a clean water
\nsupply for its 9 million residents.<\/p>\n
"The city simply could not afford to run PDAM Jaya in its
\ncurrent condition. Therefore, with this accord, PDAM Jaya will
\nact as the regulator and private companies will be the
\noperators," Prawoto told The Jakarta Post.<\/p>\n
PDAM Jaya is to control and supervise water productivity and
\nthe water production process. It will also supervise the
\nfinancial aspects.<\/p>\n
The private companies to sign the 25-year cooperation
\nagreement with PDAM Jaya are PT Garuda Dipta Semesta of the Salim
\nGroup, owned by tycoon Sudono Salim, and PT Kekar-Thames Airindo,
\nwhich is partly owned by Sigit Hardjojudanto, President
\nSoeharto's eldest son.<\/p>\n
Under the accord, the private investors have the authority to
\noperate, maintain and expand the water distribution system in the
\ncity, including the management of PDAM Jaya's customers.<\/p>\n
PT Garuda will be in charge of water treatment and
\ndistribution in the western parts of Jakarta, while PT Kekar-
\nThames will operate in the eastern part of the city.<\/p>\n
The two private companies will work in cooperation with French
\nfirm Lyonnaise des Eaux and British firm Thames Water
\nInternational.<\/p>\n
Under the agreement the companies are to invest Rp 3 trillion
\n(about US$300 million at current rate) during the first five
\nyears of the 25-year profit sharing scheme.<\/p>\n
After five years, the cooperation is expected to reduce water
\nleakage from its current rate of 54 percent to 35 percent.<\/p>\n
"The first thing they will do is repair all the pipelines to
\nreduce leakage," Prawoto said.<\/p>\n
He explained that the municipality was currently preparing two
\ngubernatorial decrees about water tariff adjustment and a ban on
\ndeep wells.<\/p>\n
The decrees are needed to support the management privatization
\nof PDAM Jaya and to become legal bases for the ongoing operation
\nof the company, he said.<\/p>\n
"Water tariffs, for instance, have not been raised for four
\nyears. So the decree will set the terms and regulations about the
\ntariff adjustment, such as simplifying the classification of
\nwater customers from 48 groups to only six."<\/p>\n
When asked about the tariff hike, Prawoto said the tariffs
\nwould be adjusted in line with the inflation rate and water
\nindex.<\/p>\n
"From Jan. 1, 1994 to April, 1998, the average increase was
\nprojected to be up to 25 percent. Later, when the privatized
\noperation is running smoothly, we will adjust the tariff every
\nsix months."<\/p>\n
Drafts of the tariff adjustments have been discussed with the
\nCity Council and are currently waiting for approval from the
\nMinistry of Home Affairs.<\/p>\n
The new prices for tap water are to start next April, he said.<\/p>\n
"It is impossible to avoid an increase in water prices as the
\nproduction costs are already way over our head."<\/p>\n
Another decree on the control, supervision and ban of deep
\nwells in the city is also needed because the wells are considered
\nharmful for the environment, he said.<\/p>\n
"Under the decree, if one area has a tap water pipeline
\nnetwork, the deep wells must be closed up to prevent the ground
\nfrom subsiding further," he said. (edt)<\/p>",
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