MCU sets prices for its Umbulan water reservoir

JAKARTA (JP): Mandala Citra Umbulan (MCU) is to sell water from its Umbulan water reservoir in Pasuruan, East Java to the local state-owned water company at Rp 888 (37.2 U.S. cents) per cubic meter, says a senior official.

An official from the administration of East Java province said in Surabaya over the weekend that the price had been approved by the East Java governor.

As a part of the deal to develop the Umbulan reservoir, MCU also agreed to pay a royalty of up to US$200,000 to the province's state-owned water company in the first year of the contract. The royalty would be increased by eight percent per year in the following years, according to Bisnis Indonesia Saturday.

Another East Java administration official said that the province's water company was expected to resell the water at Rp 2,400 per cubic meter to industrial estates and between Rp 250 and Rp 350 per cubic meter to housing complexes in greater Surabaya including Gersik.

An official with PT Kawasan Industri Gersik said the planned water tariffs would be lower than the existing rates.

The water tariff for big industrial estates in Gersik currently ranges from Rp 2,000 to Rp 4,000 per cubic meter.

"The new rate will be good news for Gersik industrial estates," he said.

MCU, a joint consortium of President Soeharto's youngest son Hutomo Mandala Putra, Ciputra Development owned by property tycoon Ciputra and Bechtel Corporation of the United States, was appointed by the East Java administration to build and operate the Rp 800 billion (US$339 million) Umbulan water reservoir.

The project is said to have a capacity of 5,500 cubic meters of water. So far, only 1,500 cubic meters have been exploited by the public. It is expected to eventually supply around 4,000 cubic meters of water per second.

The project's water source is located in Pandaan, Pasuruan, around 55 kilometers south of Surabaya, the capital of East Java.

Director of Ciputra Development Harun Hajadi said Tommy, the popular name of Hutomo, and Ciputra Development would seek the financing for the project and Bechtel Corporation would the provide technical expertise.

Part of the consortium's plan is to seek offshore loans to finance the project, he said.

The Bromo Consortium -- which groups Northwest Water, Matt McDonald & Co and Trans Bakrie, a joint venture between Bakrie & Brothers Group and Transfield from Australia, also bid for the project. It offered Rp 904 per cubic meter but the provincial administration imposed a price of Rp 628 per cubic meter. (09)