MCU sets prices for its Umbulan water reservoir

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)