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.