Foreign firms keep water contracts under new deal
Foreign firms keep water contracts under new deal
JAKARTA (JP): The city administration has decided to continue
cooperating with Lyonnaise des Eaux of France and Thames Water
International of Britain in water management as long as the two
foreign firms set up new joint ventures with city-owned firms.
Deputy Governor for Development Affairs Budiardjo Soekmadi
said the decision was taken following the decision by the local
partners in the privately run PT Garuda Dipta Semesta (GDS) and
PT Kekar-Thames Airindo (Kati) to transfer their stakes to their
two foreign partners.
This was taken in the wake of mounting pressure against the
two local private companies, which were accused of winning the
contracts through nepotism.
Budiardjo said that GDS, whose local partner is tycoon Sudono
Salim, and Kati, which is 20 percent owned by former president
Soeharto's son Sigit Harjojudanto, had agreed to transfer their
stakes to the French and British companies respectively during a
meeting between officials of city-owned water firm PDAM Jaya and
representatives of both the local and foreign business partners
on Friday.
"After the transfer, PDAM will cooperate with the two foreign
companies as long as they form joint ventures with city-owned
firms," Budiardjo told reporters after a meeting with city
councilors yesterday.
He said the administration still needed to cooperate with
foreign companies to manage huge projects, including water
management.
PDAM's director Rama Boedi canceled and took over the water
supply management and operation activities from GDS and Kati on
May 23 on the grounds that the two companies had neglected their
technical and financial obligations as partners.
The 25-year cooperation agreement between PDAM and the two
joint venture firms was approved by Governor Sutiyoso on Feb. 5.
After the signing of the agreement, PDAM announced an increase
in tariffs by an average of 25 percent effective as of April 1.
Customers protested that the hike was improper considering the
economic turmoil.
Budiardjo explained that the administration would let the
foreign partners resume their activities later this week.
The city council's speaker, Edy Waluyo, said that during
yesterday's meeting councilors asked the administration to revise
points of agreement before resuming cooperation.
"The revision must show fairness and balance in the
distribution of rights and responsibilities of all parties," he
said.
Edy also said that the restructuring of the shares of each
stake's ownership should be regulated as well.
However, Edy, Budiardjo and Rama all refused to give details
each stake's ownership.
"We are counting (the stakes) now," Budiardjo said.
Head of Commission D for Development Affairs, Ali Wongso
Sinaga, said that the administration must first reappraise each
of the parties' financial and technical expertise capabilities
before developing the contracts under the new cooperation
agreement.
Ali demanded that the council be involved in the deliberation
of the contract agreement.
Edy also underlined the importance of returning water tariffs
to their former level, while the new cooperation was being worked
out.
Commenting on Edy's remarks, Budiardjo said he would first
report to the governor. "It's the governor prerogative to set the
tariffs, but we will try to work on it as soon as possible."
Asked about allegations that each city councilor was paid Rp 2
million for every meeting they attended on PDAM's cooperation
agreement, Edy said he had never heard about that.
"It's possibly not true," he said.
A member of the United Development Party faction, Saud Rahman,
said that PDAM's director should be held responsible for the
case.
"He should be responsible because he was involved in the
agreement process. If not, he should resign," he said.
However, both Edy and Budiardjo opposed the suggestion, saying
that it was better to forget what had happened in the past.
Edy said: "All of us are guilty. What's more important here is
trying to do the best for tomorrow." (ind/cst)