Discrepancy found in water firm debt

Discrepancy found in water firm debt

Damar Harsanto, The Jakarta Post, Jakarta

The City Water Regulatory Agency has revealed a discrepancy in
the amount of debt owed by city-run tap water operator PD PAM
Jaya to its two foreign partners, British firm Thames PAM Jaya
(TPJ) and French firm PT PAM Lyonnaise Jaya (Palyja).

"An audit report by the Development Finance Comptroller (BPKP)
stated that the operator's debt was smaller than what has been
claimed by the two foreign partners," agency head Achmad Lanti
told The Jakarta Post on Thursday.

Lanti, however, declined to divulge the figure, saying that
the amount was currently being discussed by the related parties
including those representing PD PAM Jaya, TPJ and Palyja.

Both TPJ and Palyja earlier claimed that PD PAM Jaya's debt
stood at Rp 990 billion (US$116.5 million), but the figure from
the comptroller's audit report was not available.

The debt was the main reason behind the decision of the
Jakarta administration to raise the tap water rate early this
year by 30 percent on average to enable PAM Jaya to repay its
debts to its foreign partners.

The rate hike was first proposed in late November although
city councillors had earlier demanded the increase to be delayed,
pending an audit by an independent consultant.

On the first day of 2004, the administration increased the
rate amid public outcry. Jakartans have been complaining about
the operator's poor service and constant disruption in water
supply.

PAM Jaya plans to pay 24 percent of its debt in installments
to TPJ and Palyja this year.

Councillor Agus Darmawan of Commission B overseeing economic
affairs called on the administration to submit the audit report
to the City Council.

He promised that the council would support any moves by the
administration to repay its debt to private companies as long as
the debt was audited by an independent audit body first.

Aside from the audit report from the comptroller, an
International Combined Experts (ICE) team of London-based
independent auditor Stone Webster and its local experts already
finished its report in mid March.

The audit was a part of a grant from the Asian Development
Bank (ADB) given to the Ministry of Resettlement and Regional
Infrastructure.

A reliable source with the administration said that the audit
report was currently being discussed by a joint team from the
ministry and the administration.

"Besides the report, the ICE team also came up with several
recommendations on calculation, for instance in water charges and
capital expenditure, in order to prevent a further deficit in the
tap water operation," the source said.

The joint team is scheduled to submit the audit report and
recommendations from the ICE team to Minister Soenarno and
Governor Sutiyoso by the end of this month.

Sutiyoso assured the public that his administration would not
raise the tap water rate again.

"There is no plan to increase the rate as everything is in
accordance with the existing contract (with TPJ and Palyja)...,"
he said. "We only need to complete the basis of the calculation
in the tap water business by next month."