PALYJA to double investment

PALYJA to double investment
to improve clean water supply

PT PAM Lyonaise Jaya (PALYJA), a subsidiary of ONDEO Services
of France, will more than double its investment to improve and
expand the supply of clean water in western Jakarta.

"New investment of about Rp 700 billion (US$80 million) by
2007 is required for the construction and replacement of
facilities for the production and distribution of clean piped
water in the western zone of Jakarta's Ciliwung river," says
PALYJA's president director, Gauthier Prate.

This new investment plan designed to extend the coverage of
piped water and further improve further service quality has been
submitted, together with a tariff adjustment plan, to the
relevant authorities.

PALYJA, under a 25-year agreement with PAM Jaya, is
responsible for the processing, supply and distribution of clean
water in the western zone of the Ciliwung river -- including West
and South Jakarta, as well as major parts of Central and North
Jakarta.

It is assigned to manage water treatment plants already
established in Pejompongan (with a processing capacity of 5,600
liters per second), in Cilandak (400 liters per second), in Taman
Kota (200 liters per second) and in Muara Karang (100 liters per
second), and to operate the distribution centers and reservoirs
in Lebak Bulus and Kebon Jeruk, each with a supply capacity of
1,400 liters per second.

Since the establishment of the 25-year partnership with PAM
Jaya in February 1998, PALYJA has invested more than Rp 550
billion for the expansion of its pipeline network from 3,000
kilometers to 3,702 km, the replacement of 394 km of pipes, and
the installation of 90,500 consumption meters for new customers
and replacement of 77,200 meters for existing customers. It has
also rehabilitated the water treatment plants and pumping
facilities in Pejompongan, Cilandak and Muara Karang.

"With the planned improvement of the quality and coverage of
our water supply and services, more and more residents and
offices in the city are expected to rely on our services," Prate
says. "Thus, we will help sustain the health of Jakarta's residents
and the environment." City residents, he says, should be made aware about the
importance of relying more on piped water because the increased
utilization of ground water, as a result of the rapid increase in
development activities and high population growth, has caused
environmental degradation. The city administration, for example, has warned that over-
exploitation of ground water, together with a major increase in
construction, may cause the subsidence of land in the city by a
rate of 1.5 centimeters to eight centimeters a year. "With the improved awareness of the residents, we aim to
increase our customer base by more than 50 percent by the end of
2007," he says. The number of PALYJA customers has already increased by nearly
50 percent, from 200,000 in February 1998 to almost 300,000 at
present. About one third of the customers are low-income
families, for whom the water rate is set at the lowest level.
However, the rate needs to be adjusted in order to allow further
investment and alleviate the problems faced by Jakarta residents,
especially in the north. PALYJA's water rates are set progressively, ranging from the
lowest level of Rp 375 to the highest level of Rp 5,200 per cubic
meter for big users only. Since 1998, PALYJA increased the water
sold to the customers by over 20 percent. Prate says PALYJA's new investment plan will enable it to
continue improving its operational efficiency so that its water
losses, which have declined from more than 60 percent in 1998 to
47 percent at present, will continue decreasing to 37 percent by
2007. Ondeo, the water division of SUEZ, comprises four key
businesses: Ondeo Services, Ondeo Nalco, Ondeo Degrimont and
Ondeo Industrial Solutions.

The world leader in water-related services, Ondeo serves 115
million consumers and 60,000 industrial customers, and has built
more than 10,000 water treatment plants around the world. Ondeo's
objective is to be the premier provider of sustainable water-
related solutions and services worldwide, through long-term
partnerships that benefit its customers, communities, employees,
and the environment.

In 2001 Ondeo's revenue reached over 10 billion euros.