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)