Water company raises prices up to 40 percent
JAKARTA (JP): The city-owned water company, PAM Jaya, raised water prices by 40 percent beginning this month, the firm's management told reporters yesterday.
Sjamsu Romli, the firm's president, said that through the price increase, the firm expects to bring in extra income to finance a number of its projects now under construction as well as to pay its debts.
"But, the price hike is designed as such so that it will not burden the poor," Romli said.
Explaining the reasons for the price increase, Romli said the firm is currently developing several projects across the city as part of its giant plan to serve 65 percent of the Jakarta population by the year 2000, compared to its present ability to meet the needs of only 44 percent of the city's 8.4 million residents.
The projects include the construction of water treatment plants in Pulogadung and Buaran and the installation and renovation of a pipe network.
The projects are estimated to cost a total of Rp 1.4 trillion (US$652 billion), most of which was borrowed by the company from the International Bank for Reconstruction and Development (IBRD) and Overseas Economic Cooperation Fund (OECF).
Romli said in accordance with the joint agreement between the firm and the IBRD and OECF, the firm must increase its water price once every three years so it can meet its financial obligations.
IBRD proposed a price increase of 50 percent starting in January this year, Romli said.
The firm, however, managed to lower it to 40 percent and hold the increase off until June. Consumers pay the June bill in July.
The price increase, he said, is espoused by two gubernatorial and ministerial decrees issued this month.
Thus far, the firm has increased its water price four times. The first increase of 60 percent occurred in 1983. The second one of 212 percent was in 1988, and the third one of 40 percent occurred in September 1991.
The firm's management had previously said that, at present, the production cost is Rp 1,400 (US$0.65) per cubic meter.
Under the new rate, the poor, categorized as those living in modest houses or low-cost apartments, as well as those in social facilities, such as state-owned hospitals, orphanages and houses of worship, will be charged Rp 390 (US$0.18) per liter, compared to the former price of Rp 350 (US$0.16).
This means these groups still receive a considerable subsidy.
Although all houses were formerly charged the same rate, the company -- under what it calls a cross-subsidy system -- will now apply different prices, with luxury houses paying more.
The embassy, which is categorized as a luxury house, is charged between Rp 1,550 and Rp 2,340 (US$0.72 and 1.08) per liter.
Dissolve
In a related development, Saud Rachman and Ronggo Sutrisno Tahir, both city councilors from the PPP (United Development Party) faction, expressed their concerns over the price hike, although the City Council had earlier supported the measure.
"We support the price increase with one condition, that all staff members of the firm must be replaced. They are corrupt," said Saud.
PAM experienced water leakage of 47 percent in 1993, but the management predicts it will drop to 46 percent this year and 40 percent by 2000.
Thus far, the management argued the water leakage occurs primarily because of water theft by the public.
City councilors, however, insist it is because of corruption by the staff.
"The present management of the firm must be dissolved and replaced by new people. Otherwise, the price hike will only mean they will steal more public money," Saud said. (jsk)