Dutch firm seeks payoff from Manado government

Dutch firm seeks payoff from Manado government

Jongker Rumthe, The Jakarta Post/Manado

A Dutch company is demanding that the Manado municipal
administration of North Sulawesi province pay Rp 30 billion
(US$3.3 million) in compensation over last week's cancellation of
a tap water agreement.

The Manado mayor had signed in February a cooperation
agreement with Waterleiding Maatschapij Drenthe (WMD), which was
canceled last Friday after the city's tap water firm PDAM refused
to endorse it.

WMD president director Kaarst Hoogsteen said the compensation
demanded was half the amount of funds the firm had disbursed
toward a joint analysis and other costs for the tap water
project.

He said he would soon submit an official demand to the Manado
administration and Manado Council ahead of taking the case to
court.

"Both parties should be held mutually responsible for the Rp
60 billion that had been disbursed by the WMD during survey and
exploration procedures.

"And because of that, we request the municipal administration
to return Rp 30 billion to us," Hoogsteen, accompanied by
Indonesian Ambassador to the Netherlands Mohammad Yusuf, told a
press conference in Manado on Friday night.

Hoogsteen said the demand was in line with international
business standards that if a joint agreement was canceled, funds
that had been disbursed for survey and exploration should be
accounted for by both parties.

Hoogsteen lamented the cancellation of the agreement due to
PDAM's refusal to sign it.

The Manado mayor had signed the joint agreement on Feb. 16,
but Hoogsteen questioned why PDAM, which falls under the auspices
of the municipal administration, refused to endorse it.

Last-ditch negotiations were conducted on Friday morning
between the WMD and the Manado administration, but was fruitless.
In the afternoon, PDAM met again with WMD representatives at the
city's Ritzy Hotel, during which the two parties agreed to
terminate the cooperation.

PDAM Manado managing director Theo Nangoy said the agreement
was canceled because of several as-yet unsettled legal
requirements.

Meanwhile, head of PDAM supervisory board Tommy Sumakud said
the company refused to sign the agreement because the WMD had not
agreed to several conditions, including Law No. 22 on regional
autonomy.

A presidential decree states that projects of at least Rp 50
billion must go through an open tender, he added.

Tommy did not say if the canceled WMD project was offered
through a public tender, while he denied that the joint agreement
contained requirements for arranging fund transfers.

Moreover, he said, no documentation or other proof existed to
show whether the funds had been disbursed to PDAM Manado, as the
WMD also had joint projects with several other regions.

Tommy added that funding problems were an assumed risk in any
business.