Water charges set to rise in April

Water charges set to rise in April

The Jakarta Post, Jakarta

The city administration will increase water charges in April this
year despite continuing leakages that reach 250 million cubic
meters per year, an official revealed on Tuesday.

Jakarta Water Regulatory Board chairman Achmad Lanti claimed
that the charges for poor families and charitable institutions
would not be increased.

"The increases will be applied to middle and upper-income
families, and office and industrial users. However, the size of
the increases has yet to be decided," Lanti told reporters after
meeting with Governor Sutiyoso at City Hall.

He said the hikes in water charges could not be avoided even
though the charges had been increased twice, by 20 percent and 35
percent respectively, since the city-owned water utility, PAM
Jaya, entered into collaborative ventures with two foreign
partners in February 1998.

He said that since the collaboration agreements with PT Thames
Pam Jaya (TPJ) and PT Pam Lyonaise Jaya had been signed, the
aggregate inflation rate had reached 154 percent.

TPJ, which is a subsidiary of Britain's Thames Water
International, supplies customers in the east of Jakarta while
Palyja, a subsidiary of France's ONDEO (formerly Lyonaisse des
Eaux), serves customers in the west of the city.

The agreements are due to last for 25 years.

The regulatory board, which was set up two years ago under
gubernatorial decree No. 95/2001, consists of independent
members, mostly pensioners from the Ministry of Infrastructure
and Regional Resettlement.

The board's duties include proposing charge increases,
mediating in any disputes that might arise during the term of the
collaboration agreements and periodically reviewing the
agreements.

Lanti revealed on Tuesday that the two foreign partners
produced about 500 million cubic meters of water a year, but 49
percent of this water was lost.

"The losses are due to illegal connections and leakage," he
said.

The City Council's Commission B for economic affairs on
Saturday suggested the cancellation of the agreements with the
foreign investors as they had failed to benefit the
administration while service remained poor.

Lanti rejected the council's view.

"This is impossible as the city has no money to pay
compensation. It would also damage the foreign investment climate
here," he said.

If the agreements were canceled, he said, under penalty
clauses the city would have to pay compensation of Rp 1.9
trillion to the foreign partners, the equivalent of what they had
invested here.

The city would also have to repay foreign debts worth Rp 1.5
trillion belonging to PAM Jaya through the Ministry of Finance if
it were to annul the agreements.

"To return the management to PAM Jaya would also be risky due
to the company's long history of corruption," he explained.