11% of water price rice to be used to repay loans
Bambang Nurbianto, The Jakarta Post, Jakarta
The City Administration admitted Wednesday that 11 percent of the profits generated from Governor Sutiyoso's proposed 45 percent increase in water prices would be used to pay city water operator PT Pam Jaya's debts totaling Rp 2.33 trillion (about US$262 million).
The assistant to city secretary for development affairs, Irzal Jamal, said PT Pam Jaya's loans from the government since 1998 had reached Rp 1.7 trillion, while loans from its foreign partners had reached Rp 630 billion.
The city-owned company signed a partnership early in 1998 with two foreign investors, namely PT Thames Pam Jaya (TPJ), which is a subsidiary of Britain's Thames Water International, and PT Pam Lyonnaise Jaya (Palyja), a subsidiary of France's ONDEO (formerly Lyonaisse des Eaux).
Irzal said the remaining 34 percent increase would cover inflation, electricity price increases and the increase in the prices of chemicals used to produce the water.
The council is expected to approve the increase next month.
The Rp 1.7 trillion loan was signed in 1998 before the company secured a deal with the foreign investors.
Pam Jaya President Director Haryadi Priyohutomo said, in regard to the loans from TPJ and Palyja, that water charges set by the two companies was Rp 3,400 per cubic meter while the city- owned firm sold the water at Rp 3,100 per cubic meter.
"The shortfalls of the charges since the cooperation began in 1998 reached some Rp 620 billion that should be paid to the two foreign companies," Haryadi told The Jakarta Post on Wednesday.
Irzal said if water charges were increased, Pam Jaya could pay off its loans by 2012, otherwise they could not be paid till 2023.
Previously, Indonesian Consumers Association (YLKI) executive Daryatmo criticized the company's reason for increasing water prices.
"It is unfair as when they borrowed the money, they did not involve the public, but when they have financial problem, it burdens the public through price adjustments," he told the Post on Tuesday.
Irzal and other officials from the City Administration met with the Jakarta City Council's Commission D for development affairs and Commission C for financial affairs to discuss the price increase.
Commission D chairman Koesnadi S said the commissions would still have to discuss it at their respective leadership meetings.
"We will meet with the council leaders on Monday (March 31) to discuss the water proposal. We have no comment yet about it," he said, adding that he also could not confirm whether a decision on the price increases would be made on Monday.
Sutiyoso proposed the water charge increases to the city council last week in response to the demands of Palyja and TPJ. The foreign investors have threatened to quit the agreement if there is no water charge increase.
The first agreement with the two foreign partners was signed in February 1998. The companies pledged to invest Rp 3 trillion within five years and to reduce water leakage from around 60 percent to 35 percent.
But, the agreement was revised in October 2001. The public have never been told details of the revised contract.
According to Haryadi, in the revised agreement, there is no such obligation from the investors. He explained that all financial assumptions drastically changed following the downfall of former president Soeharto.
"You know that when the agreement was signed, the dollar rate was Rp 2,400, inflation was only 8 percent and growth was 7 percent. And after the agreement, all assumptions could no longer be used."