The rich to pay more, the poor less for tap water

The rich to pay more, the poor less for tap water

JAKARTA (JP): The city-owned drinking water company, PDAM
Jaya, plans to increase its tariffs for wealthy customers but
lower fees for the poor and welfare organizations, an official
said yesterday.

Director Rama Boedi said that the new tariff will be
implemented as of next month, pending approval from the
municipality.

"The tariff for the big consumers will be raised by 6 to 40
percent, while for the small ones it will be reduced 2 to 5
percent," Rama said after a meeting with Governor Sutiyoso and
private investors to discuss the city's water treatment and
distribution management.

Rama said the largest consumers were those who had luxury
houses, commercial businesses or were from the industrial sector.

Consumers living in modest houses and buildings used for
social and public services -- such as religious houses, hospitals
and orphanages -- generally used less.

He denied that the plan was merely a way of increasing the
water tariff, which he said had not been increased since the
1995/1996 fiscal year.

Instead, the plan was a method of cross subsidization.

"The plan is not aimed at burdening people," he said.

Many people on high incomes have been taking advantage of the
current tariff, which is subsidized by the government, he said.

"This is unfair. So, we think it would be better to get more
from the rich while at the same time helping the poor."

And the proposed tariff would also help PDAM Jaya finance some
of its pipeline installations and meet "adjustments to inflation
rates and the cost of production that has been rising over the
past two years", he said.

PDAM Jaya's current tariffs per cubic meter of water for
social service buildings are set at between Rp 390 (15 U.S.
cents) and Rp 930; small houses Rp 390; luxury houses Rp 1,845;
commercial businesses between Rp 1,350 and Rp 3,100; and the
industrial sector between Rp 1,175 and Rp 5,050.

Rama said the water company decided to issue new tariffs
following a significant hike in water rates by state-owned
Jatiluhur Authority Company, which supplies water to Jakarta.

He said the company has raised its tariff from Rp 25 to Rp 35
per cubic meter.

"The hike is due to the commencement of operations of its new
water pipelines from Kalimalang in East Jakarta to Pejompongan in
Central Jakarta."

PDAM Jaya supplies water for up to 50 percent of Jakarta's
population of more than nine million, he said.

Among investors attending yesterday's meeting were Sigit
Hardjojudanto and Fachry Thaib, the owner and director of PT
Kekarpola Airindo respectively.

In cooperation with French firm Lyonnaise des Eaux and British
firm Thames Water International, Kekarpola and another private
company -- PT Garuda Dipta Semesta of the widely diversified
Salim Group -- have been given priority to manage water treatment
and distribution in eastern and western Jakarta, respectively.

"The agreement will be effective as of next month," Fachry
said.

Under the agreement, the investors plan to inject Rp
3 trillion for the first five years of the 25-year profit-sharing
scheme.

After five years, the joint venture is expected to reduce
water leakage -- due to old pipes and customer pilferage -- from
the current 53 percent to 35 percent, Fachry said.

But he predicted that during the early stages of the first
five years there would be numerous complaints from customers.

"It's because we will change and repair most of the pipeline
network, meaning that it could cause water pressure to drop and
the water will probably be a bit dirty.

"But we will try our best to eliminate the problems." (edt)