Palyja, TPJ promise bigger investments

Palyja, TPJ promise bigger investments

Damar Harsanto, The Jakarta Post, Jakarta

Two foreign partners of city tap water company PAM Jaya -- PAM
Lyonaisse Jaya (Palyja) and Thames PAM Jaya -- have promised
higher investment this year and in coming years.

"As the situation is much better now, we are ready to make
another huge investment," French Palyja commissioner Bernard
Lafronge said in a hearing with the City Council's special team
on tap water issues.

He did not reveal the planned amount of investment, but said
rebuilding wornout water pipes would be prioritized.

"The replacement of old pipes is the main challenge of both
Palyja and TPJ. We will continue to see high losses of tap water
as well poor water quality as long as we fail to replace old
pipes. That's why we will focus on the replacement of the old
network," he said.

Out of the 4,300 kilometers of old water pipes laid during
Dutch occupation, Palyja has replaced 690 kilometers only, while
TPJ has repaired 159 kilometers since beginning operations in the
capital in 1998.

Lafronge said that the situation at both PAM Lyonaisse Jaya
(Palyja) and Thames PAM Jaya had improved due to recent water
rate increases.

The latest hikes between 5 percent and 63 percent were
introduced early this month. The hikes met with public criticism
since a higher percentage of increase was levied on the low-
income group, while a lower percentage was levied on high-income
customers.

The administration quietly increased tap water rates by
between 4 percent and 16 percent on Jan. 20.

Similarly, British TPJ communications director Rhamses
Simanjuntak said that his company would also invest much money in
the future.

"We will not wait to generate cash from operations to finance
our investment as we believe the revenue we get will be able to
guarantee our investment now," he said.

Palyja and TPJ both envision a brighter future at least until
2007 since the City Council has agreed on a mandatory rate
increase every six months until 2007.

Both Lafronge and Rhamses acknowledged that they had
significantly cut their investments when Jakarta Governor
Sutiyoso refused to raise water rates according to schedule.

"The lower revenue we got forced us to get a loan for
investment from our (holding) company in France in order to
maintain a minimum investment level," Lafronge said.

Palyja, a subsidiary of the French Suez Group, has borrowed
$60 million from its holding company to date but has repaid part
of it through obligation issuance.

Jakarta residents have long complained about the quality of
tap water and regular disruptions to water supply by the two
companies.

Palyja serves customers in the western part of Jakarta, while
TPJ, a subsidiary of Britain's Thames Water International,
supplies tap water in the eastern part of Jakarta.