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.