Operators need to reduce water leakage, YLKI says

Operators need to reduce water leakage, YLKI says

Bambang Nurbianto, The Jakarta Post, Jakarta

The Indonesian Consumers Foundation (YLKI) has urged the city's
water operators to focus on the reduction of water leakage and
other losses to curb high operational costs, rather than
burdening customers with price increases.

"If the leakage rate is still high, it would swell operational
costs of the operators, which use various chemical substances in
producing the water," YLKI executive Daryatmo told The Jakarta
Post on Tuesday.

Daryatmo said that water leakage contributed significantly to
the companies' financial losses, as they had high production
costs in processing the water, including buying raw water and
various kinds of chemical substances.

However, he said that a review of the leakage rate was part of
the agreement signed in 1998 between city water operator Pam Jaya
and its foreign partners. The agreement was revised in 2001.

"The operators should also be able to reach the target of
reducing the leakage to 35 percent by the end of 2002," Daryatmo
added.

Since 1998, the city's clean water consumers have been served
by two companies: PT Thames Pam Jaya (TPJ), which is a subsidiary
of Britain's Thames Water International, supplies customers in
the eastern areas of Jakarta; PT Pam Lyonnaise Jaya (Palyja), a
subsidiary of France's ONDEO (formerly Lyonaisse des Eaux),
serves customers in the western parts of the city.

Data jointly issued by TPJ and Palyja, however, showed that
TPJ could decrease their water loss from 57.6 percent in 1998 to
only 43.5 percent in December 2002 and Palyja, from 61 percent to
43.3 percent.

Commenting on investors' threats to withdraw from the
agreement if the city administration failed to increase water
prices, Daryatmo explained that the water operators relied upon
two financial structures: initial cost recovery and loan
installments.

"It is unfair, as when they borrow money, they do not discuss
it with the public; but when they have financial problems, they
burden the consumers through a price adjustment," he added.

Meanwhile, TPJ Communication & External Relations Director
Rhamses Simanjuntak denied that the raised price would be used to
pay its debts. He said the price adjustment was necessary to make
back their initial cost of investment, so that they could make
further investments.

"The adjustment to the water price is needed to cover
inflation, which has caused increases in electricity, chemicals
and manpower, as well as investment costs," he said in his
statement.

Rhamses revised his previous statement for possible pulling
out from the agreement with the city if there is no price
increase, saying his company would maintain its commitment to the
project in Jakarta.

"Even during the economic crisis and political instability,
TPJ's commitment was tenaciously maintained. As such at present
we have no intention to pull out from the project," he added.

He said since the cooperation began in 1998, TPJ had invested
over 434 billion rupiah, and was planning to invest a further 208
billion rupiah in 2003.