Clean water tariff structure must be negotiable: Radinal
JAKARTA (JP): Minister of Public Works Radinal Moochtar said here yesterday that the tariff structure for clean water must be negotiable with private investors in order to ensure cost recovery.
Addressing a session at the World Infrastructure Forum-Asia 1994, Radinal said the tariff-flexibility policy hopes to attract more private investment in the area of water supply.
The minister said 73 percent of investments needed for water supply, which are projected to reach US$7.8 billion during the next five years, is expected to come from the private sector.
When asked about water as a public commodity, Radinal said the government will take a better look at the matter and added, "as long as it is regarded as a public commodity, it is difficult for the private sector to enter. In this case, the government must do it alone," he told journalists after addressing the session.
The government, with its limited funds, will concentrate on the development of water supply only for the urban poor, the rural sector and for small urban centers.
Facilities for the supply of clean water for medium, large and metropolitan centers such as Jakarta, Medan, Surabaya and Bandung, will be offered to project creditors under bilateral and multilateral arrangements and to the private sector.
Better service
The private sector is better suited to serve urban centers which have higher service standards, and also higher tariffs.
"Look at the Kemang Pratama water supply in Bekasi of West Java. The supplier charges higher tariffs than those set by the city water company PDAM Jaya, but consumers are satisfied with the service," the minister said.
About 50 percent of the urban population is served through pipelines but only 20 percent of them is served with proper direct connections. This indicates potential for rapid expansion of the service through private investment.
At the moment, the government is examining proposals by private sector companies for two water treatment projects in Jakarta with an investment of US$280 million, two transmission pipeline projects at $45 million, two water treatment projects in Surabaya at $85 million and one water treatment project in Semarang with $60 million investment.
The government will offer 20 new water supply projects during the next six years. They are intake, water treatment, reservoir and main trunk projects in Tangerang, Bogor, Sidoarjo, Bandung, Medan, Pekanbaru, Ujungpandang, Bandar Lampung, Lhok Seumawe and Balikpapan. (rid)