Proposal made to raise tap water tariffs by 12%

Proposal made to raise tap water tariffs by 12%

JAKARTA (JP): City-owned drinking water company PDAM Jaya has
proposed the city administration raises tap water tariffs by up
to 12 percent, an official said yesterday.

Director of PDAM Jaya, Rama Boedi, told a press conference the
proposal was made because the tariffs had not been increased
since the 1995/1996 fiscal year.

"The proposal on the tariff hike is not meant to burden
people. On the contrary, we need it to enable us to install new
pipeline projects. Moreover the rise is necessary to take into
account inflation and production costs that have risen over the
past two years," Rama said.

Water tariffs for social service buildings, including
orphanages and hospitals, are currently set at between Rp 390
(US$15 cents) and Rp 930 per cubic meter, depending on the
consumption rate.

The tariff for households is set between Rp. 390 (for small-
scale users in cheap houses) and Rp 1,845 (for major consumers in
luxurious homes), the commercial rate is between Rp 1,350 and Rp
3,100 and industries are charged between Rp 1,175 and Rp 5,050.

"The hike proposal also covers subsidies for the social
service buildings. We'll arrange the distribution of revenue so
as to reduce the burden on low-income people," Rama said.

He explained that a similar proposal would also be made by the
Jatiluhur Authority, which supplied water to PDAM Jaya. Under the
proposal the water input tariff would be raised from Rp 25 to Rp
35 per cubic meter.

"The raise is expected to cover the authority's installation
of new pipe lines from Kalimalang, East Jakarta, to Pejompongan,
Central Jakarta," he said.

However, Rama said that the final decision on the tariff hike
would be made by the governor.

"We understand that the city must discuss the issue seriously
to ensure public interests are not affected," he said.

PDAM currently supplies water to up to 50 percent of Jakarta's
population of more than nine million, he said.

Yesterday's press conference was also attended by Fachry Thaib
and Iwa Kartiwa, representatives of PDAM Jaya's private partners.

Last June, PDAM Jaya signed a 25-year cooperation agreement
with private investors to manage water treatment and
distribution.

The latter were 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.

Garuda Dipta Semesta will be in charge of water treatment and
distribution in west of Jakarta, while Kekarpola Airindo will
operate in the east.

The two private companies will cooperate with French firm
Lyonnaise des Eaux and British firm Thames Water International.

"The agreement will be effective in Jan, 1998," Iwa, director
of PT Garuda Dipta Semesta, said yesterday.

Iwa said that the private investors, PDAM Jaya and the city
administration had submitted a proposal to the Ministry of
Finance to reschedule the payment of Rp 1.5 trillion (US$566
million) of PDAM's debts.

Governor Surjadi Soedirdja said earlier that it had nothing to
do with PDAM Jaya's inability to repay the debts but the
rescheduling would give greater time for the firm to improve its
performance.

"I realize that the risk in managing the city water is very
high because on the one hand water has a social function and on
the other it must be affordable," Iwa said.

Under the agreement the investors proposed an investment of Rp
3 trillion for the first five years of the 25-year profit-sharing
scheme.

After five years, the cooperation is expected to reduce water
leakage from the current 54 percent to 35 percent.

Despite the current liquidity problem, Iwa said the private
investors would not back down from the project.

"We will continue this project and we guarantee that none of
the 2,803 workers employed at PDAM will be fired unless they
break company rules," Iwa said in response to PDAM workers who
were worried about their company's privatization. (07)