Sat, 05 Apr 2003

Jakarta water woes

The Jakarta City Council has finally agreed to a 40 percent increase in the city's tap water tariff, or 5 percent lower than the administration had initially proposed. The new tariff is effective as of this month.

The increase, which is the third since city-owned tap water company PT PAM Jaya joined with PT Thames PAM Jaya (TPJ) and PT PAM Lyonnaise Jaya (Palyja) in 1998, is generally considered to be reasonable. Inflation, the increased prices of chemicals needed to purify the raw water, and the recent increase in electricity rates have been cited as major reasons for the increase in the price of tap water.

Another reason -- which makes it sound as if the rate of the increase is generous, at least from the point of view of the water companies -- is the cross-subsidy scheme by which hotels and nightspots classified under Group IVB, are being charged the highest rates, while orphanages and places of worship classified under Group I, as well as small residential houses classified under Group II, continue to enjoy the old tariff of Rp 375 per liter. Group IVB must now pay Rp 6,800 for every liter of water used, or Rp 1,600 higher than the previous tariff for this group.

From a business perspective, the tariff increase is the only way to return the private investors' money, which amounts to a total of Rp 1 trillion. Governor Sutiyoso earlier said that the two investors would collapse if the tap water tariff was not increased.

On the other hand, complaints from customers are also understandable. Tap water customers in several areas in the city say that the service provided by PAM Jaya and its partners still leaves much to be desired. Many residents say the water is bad -- it smells and is muddy. Others complain that the water pressure is too weak.

Apart from the increase in the tariff, there is yet another very interesting point for further discussion, which is the leaks that have been blamed for the financial deficiencies in PAM Jaya management.

The head of the Tap Water Regulating Agency in Jakarta, Achmad Lanti, defended the tariff increase, saying in January that water theft and an antiquated pipe network were causing between 47 and 49 percent of the clean water produced by PAM Jaya and its partners to vanish. Those companies produce a total of 500 million cubic meters of tap water annually.

Such statements, however, are surprising, to say the least. Reports on water theft and the old pipes have been making newspaper headlines since 20 years ago, or about 18 years before PAM Jaya signed its joint cooperation scheme with the two private partners.

Officials involved in the tap water business reported in the 1980s that between 45 and 48 percent of the tap water produced was lost due to what they called "administrative and technical leakages". Administrative leakages include theft and embezzlement by company officials, while technical leakage is water leakage due to broken old pipes.

The question now is: What did PAM Jaya do to tackle the leakages before it signed deals with the two private companies? After 20 years, PAM Jaya still has not managed to minimize theft and has also failed to make public what it has done to repair the old pipes, although, as a city-owned company, it is responsible to the public.

Legal action was taken in the early 1980s when several people were sent to court and punished for illegal water tapping. But this is not enough -- the theft continues.

Only this January was explanation provided about pipe network repairs by the commissioner of PT Palyja, Bernard Lafgrone, who said that Palyja had repaired 600 kilometers out of a total of 5,000 kilometers of old piping, while PT TPJ had repaired and reinstalled a total of 720 kilometers of piping.

State-owned institutions that became delinquent customers of PT PAM Jaya were reportedly another unresolved matter. Unfortunately, detailed reports on delinquent customers have never been made available to the public.

Given all these facts, we have no choice but to conclude that the professionalism of PT PAM Jaya management was -- and is -- the main problem.

During President Soeharto's regime, when the ruling Golkar Party dominated all sorts of government institutions, PAM Jaya had been led by politicians, rather than managers.

PT PAM Jaya should have restructured itself before joining with private investors and setting up new companies which would be expected to be more professional and clean of corrupt, collusive and nepotistic practices. Now, as the increase in tap water charges have become unavoidable, people just want to see a professional management that is responsive to public demands.

The leakages must be dealt with promptly and properly, because it would be absurd for people to be told that these leakages would remain between 47 and 49 percent for the next five years.

Moreover, now that customers are willing to pay more for the water, they certainly deserve better service.

This is the basis for the kind of mutual respect that we all should strive to develop. It is only in this way that PT PAM Jaya and its partners can gradually earn a greater trust from the public.