PDAM Jaya told to rework its agreements with foreign firms

PDAM Jaya told to rework its agreements with foreign firms

JAKARTA (JP): City Council on Monday demanded the city-owned
water company PDAM Jaya revise its cooperation agreement with
joint venture partners Pam Lyonnaise Jaya (Palyja) and Thames Pam
Jaya (TPJ).

During a meeting with the three parties, councilors of
commission D for development affairs queried a contract term
allowing for an automatic increase in the water rate every six
months, charging it would be burdensome to the people.

"The policy would only make things difficult for most
Jakartans, who at this time of hardship are already facing
serious financial problems," said commission head Ali Wongso
Sinaga.

Under the agreement signed in February, the rate can be
increased every six months in line with inflation.

According to Ali, the deal should also regulate that the
salary standard for expatriates and Indonesians should be
commensurate with their skills.

"Equal salaries for local and foreign staff members is badly
needed to avoid discrimination."

Palyja is a joint venture between PDAM Jaya and Suez Lyonnaise
des Eaux of France, while TPJ joins PDAM Jaya and British water
company Thames Water.

Both companies are responsible for managing, operating,
maintaining and improving the water supply system in the capital,
with Palyja in the western part and TPJ in the north.

Palyja and TPJ resumed their 25-year contracts with PDAM Jaya
in May after the administration canceled previous tap water
concessions with two joint venture firms, which also involved
Lyonnaise and Thames.

Although no PDAM Jaya official was available on Monday to
comment on the councilors' demand, Palyja's local representative
Bernard Lafrogne said the revision was already in process.

The reworking also involves representatives of PDAM, the World
Bank, the Ministry of Finance, the Ministry of Home Affairs and
the National Development Planning Board, he said.

"There are points which should be changed or only revised due
to lack of communication." He declined to elaborate.

Lafrogne insisted that three firms would suffer financial
losses if the water rate could not be increased at the six-month
intervals.

"However, we have decided to resume the cooperation due to the
25-year-agreement and for our reputation. Our projects in Manila,
Casablanca and France will be affected if we terminate our
contract (here)."

He said Palyja's income from consumer payments would be Rp 35
billion per year.

"But for the operation management cost only we need about Rp
75 billion. It's the risks of the agreement and we should take
it." (ind)