City sewerage project might not be realized
City sewerage project might not be realized
Bambang Nurbianto, The Jakarta Post, Jakarta
The planned construction of a sewage system in the city is in jeopardy because the administration and an investor have failed to reach agreement on the letter of intent (LoI), an official said.
"The memorandum of endorsement (MoE) expired in May but we have not reached an agreement with the investor because of very significant differences," the city secretary's assistant for development affairs, Irzal Jamal, told The Jakarta Post.
The city administration announced in April it would construct a sewage system, with the Australian firm Global Grid as the investor.
The project is meant to improve sanitation in the capital, particularly the contamination of the city's groundwater by E. coli bacteria. The groundwater is used by over half of the city's eight million people.
The planned project, which includes constructing a system of deep tunnels and pipes connecting all the houses in the capital, is estimated to cost about Rp 50 trillion (about US$5.3 billion). It is to be developed under a 25-year build, operate and transfer (BOT) scheme.
Irzal said the city administration could not accept several conditions contained in the draft LoI submitted by Global Grid to the city administration.
According to Irzal, Global Grid was unable to convince the city when the BOT scheme would effectively begin. He said this point was vital, as work on the project would go on for some 25 years.
"If this is not specified in the LoI, they can claim that the BOT begins only after the entire project has been completed," he said.
Irzal said the city administration also found unacceptable the condition that Global Grid would take over all of the assets and employees of PT PAL, which manages the city's sewage system.
He also said that during earlier negotiations, Global Grid demanded the authority to charge all houses for pumping out their human waste before the piping project was implemented.
Another request rejected by the administration was that the city and Global Grid open an escrow account, into which the funds from the waste pumping services would be placed.
"We cannot accept that the city administration should put additional funds into the escrow account should the funds derived from the pumping services be inadequate to cover the operational costs," said Irzal.
Irzal also said the Australian company was unable to name other companies that would provide financial support for the project.
"I heard that Thames Waters from Britain withdrew its commitment from the project," he added.
The president of Global Grid Pty. Ltd., Peter A.F. Risk, refused to comment, saying the project was part of a government- to-government cooperation between the province of Jakarta and the state of New South Wales.