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)