Councilors back city water price hikes
JAKARTA (JP): City councilors yesterday supported the plan of the City Water Company, PDAM Jaya, to increase water charges by an average of 40 percent this June, while the Indonesian Consumer Foundation (YLKI) expressed dissatisfaction, saying it will place an undue burden on the poor.
"We can understand why PDAM Jaya has to come to such a decision," Helmy A.R. Syihab, the chairman of the City Council's Commission C on finance told The Jakarta Post.
When asked for the reason, Helmy said he agreed with all the arguments of Machmud Ranusemito, the water company's director of administration and finance.
Machmud said that the massive increase will help defray the losses sustained by the company in recent years, which has subsidized the purchases of household users, who make up 85 percent of all its subscribers.
Machmud said that all household users were charged Rp 350 per cubic meter of water last year, while production costs were Rp 1,100.
The water company has said the increases will now discriminate between users, with the affluent being charged more than the poor, which is supposed to make the subsidies sustainable.
Some do not agree. Tini Hadad, vice chairperson of YLKI,said she regretted that the proposed increase was approved by the councilors without any corrections or changes.
"This shows that the councilors are not able to channel the aspirations of the majority of the community, the low-income people, who may find the increase another burden to their thin purses," Tini said.
Tini said that PDAM Jaya should review the planned increase because while low-income people will still receive subsidies, they will also have to pay more.
"The planned increase in subscription fees should be applied to the rich only, while the low-income people be exempt from it," Tini said.
PDAM Jaya has been loaned Rp 500 billion (US$232 million) by the World Bank to finance the company's various water installation projects and is under pressure to pay some of this money back.
According to Machmud, the World Bank demanded that PDAM Jaya increase its fees by 50 percent this year, but the water company has managed to limit the increase to 40 percent.
"If they (the World Bank) mind, they may question us why we do so. But we have the answers," Machmud said.
Decree
The planned increase, if approved by Governor Surjadi and enacted in the form of a gubernatorial decree, will be their fourth. The first increase, of 60 percent, took place in 1983. The second one, 212 percent, was applied in 1988. The third and latest one, 40 percent, became effective in September 1991.
Machmud also cited mounting costs as a factor. The company is predicting production costs of Rp 1,400 this year, a 300 Rp increase in cost. He said most water firms in the region are also raising rates.
When asked to comment on the increase, Mahmud S. Chaniago, a member of the City Council's Commission B on economy, said the increase in fees should enhance PDAM Jaya's ability to improve and expand its service, especially to those who do not as yet receive water from PDAM Jaya.
Currently, PDAM Jaya is able to serve only 44 percent of the city's population.
According to Machmud, only household subscribers who live in very modest houses and modest houses will receive subsidies.
The poorest will receive subsidies ranging from Rp 625 to Rp 1,010 per cubic meter, while those slightly more fortunate will get breaks from Rp 300 to Rp 625 per cubic meter of water.
At present, a subsidy of Rp 750 is given to household users without discrimination. With the increase in costs, a poor person given a Rp 1,010 subsidy will pay Rp 390, an increase of 60 Rp over the current charged.
The demographic breakdown of users of city water was not made available and it remains uncertain how many categories there are or how many people will within each category. (06)