Tap water supply agreement with Sigit, Liem halted

JAKARTA (JP): The city administration canceled Saturday a cooperative agreement with two private companies involved in water management on the grounds that the awarding of the project stank of corruption, collusion and nepotism.

The administration also demanded that the companies relinquish Rp 90 billion (US$7.5 million) in income they had obtained from the short-lived accord, director of the city-owned management company PDAM Jaya, Rama Boedi, said.

Boedi said that the deal with PT Garuda Dipta Semesta (GDS), a subsidiary company owned by tycoon Soedono Salim -- better known as Liem Sioe Liong -- and PT Kekar-Thames Airindo (Kati), controlled by former president Soeharto's eldest son Sigit Hardjojudanto, was done without an open bid and that the companies did not pay their equities.

"Pressure to end the cooperation was mounted by our 3,000 employees who, from the outset, have opposed it."

According to Boedi, in the past he could not reject the accord because the letter of recommendation came from the minister of public works in 1995.

The minister recommended that Jakarta and the West Java governor cooperate with the companies.

The cancellation of the agreement was signed Saturday by director of Kati Fachri Thaib, director of GDS Iwa Kartiwa and Rama Boedi.

Sigit and Anthony Salim, son of Soedono Salim, were invited but did not attend.

PDAM had cooperated with the two companies since February.

After the cooperation was signed, PDAM announced a 25 percent average increase in tariffs effective as of April 1. The decision came under fire from customers who have complained that it was an improper move during a time of economic hardship.

The new tariffs mostly affected affluent customers who must pay an increase of up to 65.71 percent. The company cut prices by 3.85 percent for special customers like orphanages, dormitories run by noncommercial institutes and places of worship in an effort to maintain its cross-subsidy policy.

Rama said that after the cooperation was canceled, the tariffs would be lowered. The revised tariffs have not been determined.

The next step is asking the two companies to return the income they have earned, which the city administration estimates at Rp 90 billion, he said.

"We have cooperated for three months and our income is about Rp 30 billion each month. But, of course, we will consider their expenses during the cooperation."

Rama said cancellation of the agreement had been approved by Governor Sutiyoso.

He said GDS and Kati had failed to improve the service after the water tariffs were raised.

"People have flooded us with complaints that the companies failed to install new pipelines in their area although they had long been paying for it," Rama said.

The companies also failed to provide chemical substances to sterilize drinking water, he said.

"We then were forced to provide it ourselves even though it is their responsibility." (ind)