11% of water price rice to be used to repay loans
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."