Tap water tariffs to increase 25% for major users
JAKARTA (JP): Tap water tariffs for the city's large-scale users will be increased an average 25 percent as of April 1, Governor Sutiyoso announced yesterday.
But the tariffs for small-scale users are to be lowered, the governor said, without disclosing the percentage discount to be granted.
"I assure you that the hike will not burden the low-income people. On the contrary the price for them will be lower," Sutiyoso said after the pact-signing ceremony for the privatization of drinking water company PDAM Jaya at City Hall.
PDAM Jaya categorizes its large-scale consumers as those living in luxury homes, and businesses using water for commercial and industrial purposes.
Currently, water tariffs per cubic meter for those living in affluent houses are set at up to Rp 1,845, commercial users between Rp 1,350 and Rp 3,100, and industrial users between Rp 1,175 and Rp 5,050, depending on consumption.
In comparison, the tariff for small-scale users living in cheap houses are set at Rp 390, while social service buildings, including orphanages, places of worship, and hospitals, must pay between Rp 390 and Rp 930.
According to Sutiyoso, the plan to raise the tariffs should have been implemented this month.
"Due to several unfinished preparations, it is likely that the hike will become effective in April, as approval from the Ministry of Home Affairs is still needed."
The new tariffs are based on the inflation rate and water index, Sutiyoso said.
The city's assistant for administrative and development affairs, Prawoto Danoemihardjo, said Thursday that the increase was "fair enough" because tap water rates have not been raised for four years.
From Jan. 1, 1994 to April 1998 the water rates should have increased by an estimated 25 percent, he said.
The tariffs will be further "adjusted" every six months following the official privatization of PDAM Jaya yesterday, Prawoto said.
Privatization
The privatization of the firm is meant to bail out PDAM Jaya which has a huge debt and poor management system.
In the first five years, the privatized PDAM Jaya could supply 75 percent of the city's users.
With its new status, PDAM Jaya -- which will only control and supervise water productivity, production processes and financial affairs -- is to cooperate with two local companies.
The 25-year cooperation agreement was also signed yesterday by executives of PDAM Jaya and the two firms: PT Garuda Dipta Semesta of the giant Salim Group, owned by tycoon Soedono Salim, and PT Kekar-Thames Airindo, which is partly owned by Sigit Hardjojudanto, President Soeharto's eldest son.
Under the deal, PT Garuda will be in charge of water treatment and distribution in the western parts of Jakarta, while PT Kekar- Thames will operate in the eastern part of the city.
The two private companies will work in cooperation with French firm Lyonnaise des Eaux and British firm Thames Water International.
Under the accord, the private investors have the authority to operate, maintain and expand the water distribution system in the city, including the management of PDAM Jaya's customers.
"The first thing we will do is to repair water pipelines and leakage. That's our priority. And I can tell you for sure that no employees from PDAM Jaya will be fired," Fachry Thaib from Kekar- Thames Airindo said.
Ten percent of PDAM Jaya employees will remain at its headquarters while another 1,300 will work for Kekar-Thames. The remaining employees will be absorbed by Garuda Dipta.
The two Indonesian companies are to invest Rp 3 trillion during the first five years of the 25-year profit sharing scheme.
After five years, the cooperation is expected to reduce water leakage from its current rate of 54 percent to 35 percent.
Director of PDAM Jaya Rama Boedi said the private companies would be taking responsibility of collecting Rp 24 billion in unpaid customers' bills.
"The payment was delayed due to the changing system of payment. It is not a leak, so please don't make such a big fuss out of it," he said, refusing to elaborate. (edt)