City water deal
We wish to clarify the content of a news report published in The Jakarta Post of March 12, 1999, on page three, under the headline of "ICW links Soeharto to city water deal". Since your report quoted the statement of Mr. Teten Masduki of Indonesian Corruption Watch (ICW) we also have obtained Mr. Masduki's endorsement of this clarification.
1. The World Bank has made only one investment loan for PAM Jaya -- the Second Jabotabek Urban Development Project (IBRD Loan 3219 IND) effective in February 1991 and completed by December 1997 -- which provided US$92 million for extension of the PDAM Jaya distribution network, and an additional $15 million for the Jakarta City Administration (DKI) equity investment in PAM Jaya. The total of $107 million is to be repaid by DKI and PAM Jaya in U.S. dollars, equivalent at current exchange rates to approximately Rp 965 billion (not the Rp 2.4 trillion stated in the Post article).
2. World Bank loans always go to the Ministry of Finance as the borrower and are always expressed in the U.S. dollar terms. The Ministry of Finance will then open subsidiary loans to implementing agencies. World Bank loans cannot go to private companies. The Post news report, however, implies that the foreign firms (concessionaires of PAM Jaya) benefited from the World Bank loan. The World Bank loan was given to PAM Jaya, through the Ministry of Finance, to benefit the citizens of Jakarta.
3. The World Bank is not a party in the concession agreements between PAM Jaya with Thames Water International or Lyonnaise des Eaux. Any ensuing privatization or concession agreement that was carried out by DKI and PAM Jaya after receiving the subsidiary loan from the World Bank through the Ministry of Finance did not involve the World Bank, except that responsibility for repayment of previous loans from all sources was passed to the concession operators. However, the World Bank was requested only to provide technical advice to PAM Jaya in order to level the table when it negotiated with experienced international firms such as Thames Water and Lyonnaise.
H. BENJAMIN FISHER
Country Program Coordinator
TETEN MASDUKI
Indonesian Corruption Watch