Councilors attack water firm's plan on joint venture

Councilors attack water firm's plan on joint venture

JAKARTA (JP): A city councilor has denounced plans that would
allow private firms to supply water along with the city-owned
water company, PDAM.

The head of the City Council's commission D for development
affairs, Bandjar Marpaung, said yesterday that private sector
involvement in supplying water violates provincial decree
13/1992.

"The decree states that PDAM is only allowed to undertake a
joint venture with private firms for the production of equipment
that supports its operations," he said.

Article 45 in the decree states that joint ventures are only
allowed for making products related to water supply and
distribution, such as installation equipment, water meters, pipes
and spare parts.

The controversy started when the Ministry of Public Works
approved the participation of four local and foreign private
companies in the distribution of drinking water in Jakarta.

The four companies are PT Garuda Dipta Semesta of the Salim
Group; PT Kekarpola Airindo, owned by President Soeharto's eldest
son Sigit Hardjojudanto; as well as French firm Lyonnaise des
Eaux and British firm Thames Water International.

Their participation is expected to boost PDAM's capacity to
28,500 liters per second from the current capacity of 16,652
liters per second and extend the water company's distribution
coverage by 49 percent.

"The cooperation plan is likely to adopt a BOT (build, operate
and transfer) system, which allows private parties to invest and
operate water distribution for a certain length of time, and
return the assets to PDAM at the end of the contract," explained
Marpaung, a member of the Golkar faction.

Under such a system, he said, the management of the city's
drinking water supply can be kept under government's control.

The chairman of the council's Indonesian Democratic Party
faction, Lukman Mokoginta, said the plan will benefit PDAM by
increasing its capital and technology.

"What's most important is that PDAM remain the majority
shareholder and that it be able to control all the business
procedures, especially the regulation of prices," he added.

A number of councilors also lamented an earlier comment from
Prawoto Danoemihardja, an assistant to the city secretary, who
suggested that the council's approval was not necessary to form a
plan of cooperation between private investors and PDAM.

Saud Rahman of the United Development Party faction also
objected. The council has to be involved to make sure that PDAM's
service is beneficial to the public, he said.

Ary Amier Armas, representing Golkar and a member of the
council's commission E for public welfare, said that even without
the provincial decree PDAM should seek approval from the council,
which represents the interests of the people. (04)