Thames PAM Jaya clarifies

In reference to the article Water investors threaten to quit agreement published in The Jakarta Post on March 25, we would like to clarify the matter as follows.

PT Thames PAM Jaya (TPJ) would like to confirm its position that TPJ is commited to providing clean water services to the people of East Jakarta for the long term. Since the cooperation began in 1998, TPJ has invested over Rp 434 billion and is planning to invest a further Rp 208 billion in 2003 and over Rp 1 trillion by 2007. Our parent company provides all the funding for this investment and neither Thames Water as our parent company nor TPJ itself has ever discussed plans to leave Indonesia.

In the last five years, TPJ has rehabilitated and expanded the existing network. This investment was implemented at a time when many companies were leaving Indonesia, proving TPJ's commitment.

We see the rate adjustment as an urgent necessity to sustain water services to the people of Jakarta. Pipes and equipment need to be maintained and upgraded and there is a major investment attached to this given the condition of the assets when our contract began in 1998.

As well as normal inflationary factors, production costs have gone up significantly in the past two years due to the quarterly increases in electricity by PLN, labor costs and chemical costs have exceeded revenue and in the absence of any rate adjustments to cover these rising expenses, our capacity to continue investing is clearly threatened.

Please remember that our last rate increase was in March 2001, over two years ago, so an increase now is reasonable given the inflationary environment we operate in.

RHAMSES SIMANJUNTAK Director of Communications and External Relations PT Thames PAM Jaya Jakarta