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)