Jakarta water woes

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.