Ownership of water facilities transferred
JAKARTA (JP): The government has transferred ownership of its water pipeline networks, worth Rp 51.08 billion (US$20.9 million), to city-owned water company PDAM Jaya.
The ownership transfer agreement was signed yesterday by the Ministry of Public Works' Director General of Human Settlements Rachmadi B.S. and PDAM Jaya's director, Rama Budhi, and witnessed by Governor Surjadi Soedirdja.
The agreement was a follow-up to the minister of home affairs' request last April that ownership of all government assets under the management of city-owned water companies throughout the country's 27 provinces be transferred to city administrations and mayoralties.
The minister of finance approved the transfer of ownership of government assets worth Rp 1.6 trillion on May 5.
The water facilities transferred to PDAM Jaya consist of a emergency facility for the management of clean water worth Rp 11.3 billion and a facility for the management and distribution of clean water valued at Rp 39.7 billion.
Surjadi also said that PDAM Jaya, which is striving to improve its water services and water distribution, still faced a number of problems.
"Water leakage in the city, for example, remains high, reaching about 53 percent of PDAM Jaya's water production. The high level of water leakage forces many people to depend on underground water, and high-rise buildings to use artesian wells," Surjadi said.
He said the possibility of environmental damage caused by a high level of underground water exploitation was a worry.
"Therefore the use of artesian wells should be reduced or even stopped in a bid to help prevent the city from subsiding," Surjadi said.
Surjadi warmly welcomed the government's decision to transfer the facilities. A large amount of investments are still needed to help the water company develop new installations and distribution and repair old pipes.
"That's why the city administration plans to cooperate with private investors on water management," he said.
The city will sign a cooperation agreement today with private companies to manage water production.
In response to whether the cooperation would cause an increase in tariffs next year, Surjadi assured that the tariffs would be kept in line with people's financial ability.
He said that tap water tariffs would still be affordable, even though they are continuously adjusted.
"But, if there's any increase in tap water tariffs, it will not be applied across the board. Customers' categories will be taken into account," Surjadi said.
On Wednesday, the city's assistant secretary on development affairs, Prawoto S. Danoemihardjo, said the planed cooperation would increase tap water tariffs next year.
"The city has not raised the tariffs over the last two years," he said.
PDAM's director Rama Budhi also confirmed yesterday that water tariffs would be raised next year, but declined to give details.
The private investors in the water cooperation are PT Garuda Dipta Semesta of the Salim Group, owned by tycoon Sudono Salim, and PT Kekarpola Airindo, owned by Sigit Hardjojudanto, President Soeharto's eldest son.
The two private companies will also cooperate with French firm Lyonnaise des Eaux and British firm Thames Water International.
The investors will invest Rp 2 trillion for the first five years. The cooperation, which involves a 25-year profit sharing scheme, is expected to increase tap water production to 40,000 liters per second by 1998.
Currently PDAM Jaya produces 16,982 liters of water a second and serves only 417,215 of Jakarta's 1,640,380 families.
By 2000 the firm is expected to substantially raise production to 22,287 liters of water a second and serve 663,177 families.
The cooperation between PDAM Jaya and the private companies is expected to increase water quality and distribution services by up to 49 percent. (ste)