Suez Lyonnaise and Thames to invest US$25m
JAKARTA (JP): Britain's Thames Water Overseas Ltd. and French conglomerate Suez Lyonnaise des Eaux are to invest Rp 350 billion (US$25 million) as part of their cooperation agreement with city- owned water management firm PDAM Jaya to improve water infrastructure in the capital, it was announced yesterday.
In a two-page release signed jointly by managing directors John Hurcom of Thames and Christian Michelon of Suez Lyonnaise made available to The Jakarta Post yesterday, the companies said the funds would be the first stage of their investment program.
The decision "was made following their extensive planning and investigation on the condition of the water supply infrastructure in the capital city over the past few months", it said.
The two companies, however, did not disclose the delivery date or the start of the projects.
Under the scheme, the two foreign firms will fund the repair and replacement of approximately 120 kilometers of pipes; the refurbishment of water treatment plants; the laying of transmission mains, and construction of a new reservoir.
All the projects will be awarded to local contractors and are expected to provide jobs for 600 people for approximately 12 months.
"Both companies are very keen to publicly announce this to the people of Jakarta. It will enable us to reduce leakage throughout Jakarta and serve more customers," said Hurcom.
His counterpart from Suez Lyonnaise added: "We are determined to honor our obligations under the cooperation agreement with the Jakarta administration and PDAM Jaya and in doing so will continue to make a very significant investment in Indonesia."
The two foreign firms resumed their contracts with PDAM recently after the Jakarta administration canceled tap water concessions with PT Kekar-Thames Airindo (Kati) -- the Thames joint venture -- and PT Garuda Dipta Semesta (GDS), which involved Suez Lyonnaise, shortly after Soeharto resigned as president on May 21.
The cancellation of the deals to supply water to Jakarta customers was taken on the grounds that the awarding of the projects was not done fairly.
Kati is owned by former president Soeharto's eldest son Sigit Hardjojudanto in cooperation with a subsidiary of Thames.
GDS is a subsidiary of the giant Salim group owned by tycoon Soedono Salim, which has close ties to the family of Soeharto. All their business dealings are now under scrutiny by the Indonesian government.
Last week, Suez Lyonnaise said in Paris that it has acquired a further share of GDS and that it is now the majority shareholder.
In yesterday's statement, the two firms stated that they had invested "substantial funds" during the initial development of the cooperation agreement.
They, however, gave no details.
Under the initial cooperation, a 25-year deal, PDAM announced an increase of up to 65.71 percent in water tariffs from April 1. This sparked considerable public anger.
Under the new deal, PDAM has promised to lower its water tariffs to appease Jakartans although this has yet to be realized.
Last week, Governor Sutiyoso announced that the administration decided to lower the tariffs by an average of 25 percent, starting next month.
He said the decision was made after the two foreign business partners agreed to the new tariff proposals.
"The new tariffs are still in accordance with the cross- subsidy principle in that wealthy customers subsidize those in the middle-to-lower classes," Sutiyoso said. (bsr)