Councilors back city water price hikes

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)