Sidoarjo water project wins government's approval

Sidoarjo water project wins government's approval

JAKARTA (JP): A consortium of two local companies and a
foreign enterprise have won government approval to develop a Rp
130 billion (US$53.83 million) drinking water project in
Sidoarjo, East Java, under a 25 year build-operate-transfer
contract.

The consortium, comprising PT Hansa Lestari, PT Agumar Nusa
and Compagnie Generale des Eaux (CGC) of France, said yesterday
the construction of the water treatment plant would start soon.

Philippe Sirven, a representative of CGC, said the contract
signed Thursday was Indonesia's first build-operate-transfer deal
for water services awarded to private companies.

The consortium, backed by President Soeharto's son Bambang
Trihatmodjo and noted businessman Johannes Kotjo, would sell
clean water to city-owned water company PDAM.

"The first water treatment plant will begin operation in
January next year and total investment will reach around Rp 130
billion in five years," he said. "We expect to breakeven in five
to six years," he added.

Sirven said the new water treatment project would double clean
water connections in Sidoarjo to 42,000 connections from about
21,000 connections now.

Current water production is only enough for 20 percent of
total demand in Sidoarjo, he said.

The water project would produce 200 liters per second and be
sold to PDAM at Rp 750 (30 U.S. cents) a cubic meter, he said.

PDAM charges the public about Rp 1,500 a cubic meter.

"Both the private and government companies will make a profit
with the rate, because the investor can operate at a lower cost
by increasing efficiency and PDAM will have more water to sell,"
he said.

If PDAM had to build the plant itself it would have to wait
another four to five years, but the demand can no longer wait, he
said.

Servin said the consortium, under the contract, would only
sell its clean water to PDAM, which would then sell it to the
public.

He said he hoped the consortium would be allowed to sell the
water directly to the public under a joint operation with PDAM.

"By managing water distribution in the city, we could cover 80
percent of the total water demand in Sidoarjo," he said.

PT Hansa Lestari and Compagnie Generale control 62 percent of
the consortium, while PT Agumar Nusa controls the remaining 38
percent.

The feasibility study for the water project was completed in
December last year and negotiations had taken place since then.

PT Mandala Citra Umbulan, controlled by Soeharto's youngest
son Hutomo Mandala Putra, also won approval from the Surabaya
administration recently to construct and operate a water plant
worth over Rp 800 billion ($399 million) in Pasuruan, also in
East Java.

The company would cooperate with Bachtel Corporation of the
United States in developing the water plant.

Compagnie Generale des Eaux is among the top largest
corporations in France with 2,700 subsidiaries operating in water
treatment, transportation, telecommunication, energy,
construction, and waste management.

CGC is now looking into cooperating with the state-owned
railway company to develop the transportation sector, including
the development of railways on the outskirt of Jakarta, and light
railway systems in cities outside of Jakarta, he said. (02)