Council against sale of water firms' shares

Council against sale of water firms' shares

Ahmad Junaidi, The Jakarta Post, Jakarta

The City Council rejected on Tuesday a planned divestment of
city-owned water supply company PAM's two foreign partners, PT
PAM Lyonnaise Jaya (Palyja) and PT Thames PAM Jaya (TPJ), as it
would be against the standard procedure and without consultation
with the Council.

"We regret the planned sale of shares in the foreign firms,
which was carried out without consulting the Council," chairman
of Council Commission B for economic affairs Syarief Zulkarnaen
said at a plenary meeting here on Tuesday.

Zulkarnaen, of the United Development Party, said that the
plan to sell five percent of the foreign companies' shares to
local companies should have been discussed with the Council, as
the foreign firms were partners of city-owned PAM Jaya.

Reportedly, the city administration had asked the two foreign
firms to sell part of their shareholding to PT Bangun Tjipta
Sarana, owned by former public housing minister Siswono
Yudohusodo, and to PT Thera Meta Phora, which was believed to be
related to Lim Sioe Liong, alias Sudono Salim, a close friend of
former president Soeharto.

Zulkarnaen said that he strongly suspected collusion in
choosing the two local firms to buy the shares. "They should sell
the shares to PAM Jaya, instead of the two local firms," he
suggested.

Although adopting the name of PAM, Palyja is 100 percent owned
by the French company Lyonnaise des Eaux, while TPJ is 100
percent owned by the British firm British Thames Water
International.

Palyja has about 275,000 customers, mostly in western parts of
Jakarta, and TPJ has similar numbers of customers, mostly in the
eastern part of the city.

According to the government regulations on investment, a
foreign company is only allowed to own 95 percent of the shares
in a strategically important business entity here.

Palyja's spokeswoman Maria Sidabutar confirmed on Monday the
planned sale of the company's shares to the local companies.

"At least five percent of the company's shares would be sold
if we obeyed the regulation," Maria told the Jakarta Post.

The council also regretted that the planned sale had not been
conducted through an open tender.

Economic assistant to the city secretary Rusdi Yusuf claimed
on Tuesday that the planned sale had been discussed with the
council.

"The planned sale was recommended by the council. We have the
recommendation letter," Rusdi told The Post.

He rejected a suggestion that PAM Jaya should buy the shares,
saying there would be a conflict of interest as the city water
supply agency had to cooperate with the foreign firms in managing
the city's water supply.

The cooperation between PAM Jaya and its foreign partners has
been controversial since the agreement was signed in December
1997.

Palyja and TPJ earlier cooperated with local firms PT
Kekarpola, controlled by former president Soeharto's eldest son
Sigit Harjojudanto and PT Garuda Dipta Semesta, owned by Sudono
Salim.

Following the enforced resignation of Soeharto in 1998, the
local firms then withdrew from the cooperation.