Council discloses silent approval of tap water rate hike
Bambang Nurbianto, The Jakarta Post, Jakarta
The Jakarta City Council has revealed that it had given silent approval to the administration's 30 percent tap water rate hike to accommodate the demands of two foreign partners of city tap water operator PD PAM Jaya.
Chairman of City Council Commission D for development affairs Koeswadi Soesilohardjo told The Jakarta Post on Wednesday that the decision was made during a Council leadership meeting in November, before the Idul Fitri holiday.
"The leadership meeting approved the proposal and the figure of the tap water rate hike is not very different from the administration's proposal," said Koeswadi, who represents the Indonesian Democratic Party of Struggle (PDI Perjuangan) faction.
His statement contradicted his Nov. 11 statement -- that councillors needed to know the findings of the audit before making a decision on the proposed tap water rate hike.
The audit is scheduled to be completed by early January.
Councillors had earlier urged the administration to wait for the result of the audit being carried out by Stone Webster's Independent Combined Experts team in collaboration with experts from the Development Finance Comptroller on the real extent of the shortfall suffered by the two foreign partners, PT Thames PAM Jaya (TPJ) and PT PAM Lyonnaise Jaya (Palyja).
They had also agreed that in the long run, the scope of the audit must be expanded to include the international firms' performance, because the administration had been accepting reports from TPJ and Palyja without a proper audit.
Several councillors reacted with surprise at discovering that the leadership meeting had approved the water rate hike, as their factions had yet to approve the proposal.
"The Council leaders have the right to make the decision, but my faction has not given its approval," Abdul Azis Matnur of the Justice Party (PKS) told the Post.
Councillor Tjuk Sudono of the National Mandate Party (PAN) pointed out that his faction could not endorse the proposal, as the tap water operators had not fulfilled conditions set by the Council when it agreed to increase the water rate by 40 percent in April.
The Council approved the April hike on condition that Palyja and TPJ improved their services and efficiency, curbed water leakages and cut the number of expatriate staff.
The City Water Regulatory Body said earlier that 17 percent of the 30 percent hike would be used to pay off PAM Jaya's Rp 900 billion (US$105.88 million) debt to the two partners.
The debt is a cumulative result of the difference between the water rate paid by customers and the water charges that PAM Jaya pays to its partners.
PAM Jaya plans to pay Rp 237.59 billion, or 24 percent of its debts, in installments to TPJ and Palyja next year.
The remaining 13 percent of the rate hike will be used to cover inflation and the partners' operational costs.
Koeswadi said the Council leaders' approval would be given as an executive recommendation to increase the water rate.
Since PD PAM Jaya established its partnership with TPJ and Palyja in early 1998, the water rate has increased three times -- 15 percent in February 1998, 35 percent in April 2001 and 40 percent in April 2003. Meanwhile, customers continue to complain that there has been no significant improvement in services, distribution or facilities.