Water cooperation pact with private firms signed
JAKARTA (JP): City-owned water company PDAM Jaya signed a 25- year cooperation agreement with private investors to manage city water treatment and distribution yesterday.
The agreement, the first of its kind ever held in the city, was signed by PDAM Jaya director Rama Boedi, and Fachry Thaib and Iwa Kartiwa in their capacity as representatives of private investors. The ceremony was witnessed by Governor Surjadi Soedirdja at City Hall.
Surjadi said that under the accord, the private investors have the authority to operate, maintain and expand the water distribution system in the city, including in the management of PDAM Jaya's customers.
Private investors involved in the agreement were PT Garuda Dipta Semesta of the Salim Group, owned by tycoon Sudono Salim, and PT Kekarpola Airindo, owned by Sigit Hardjojudanto, President Soeharto's eldest son.
Other guests at the ceremony were City Council Speaker M.H. Ritonga, Secretary for Development Supervision and Operation Lt. Gen. A.M. Hendropriyono, as well as French Ambassador Thierry Martin de Beauce, Anthony Salim of the Salim Group, Sigit Hardjojudanto and representatives of Lyonnaise des Eaux and Thames Water International firms.
PT Garuda will be in charge of water treatment and distribution in western parts of Jakarta, while PT Kekarpola will operate in the eastern part of the city.
The two private companies will cooperate with French firm Lyonnaise des Eaux and British firm Thames Water International.
The tap water treatment is expected to start six months after the signing of the contract.
The agreement was expected to boost distribution services, which cover only 40 percent of the city's population at present, up to 70 percent by the year 2001, according to PDAM Jaya's data.
The data show that by 2001, the city's population is projected to substantially increase from 9.2 million people now to 9.8 million, while the number of customers is expected to jump from 417,215 families this year to about 765,400 in 2001.
Governor Surjadi said the cooperation was badly needed given PDAM Jaya's limited funds to finance more area coverage of water distribution or other repair works.
He expected the cooperation to help PDAM Jaya pay its debt to the government and enable the company to profit.
Complicated
"I realize that the risks in managing the city water are very complicated because water has a social function in that its tariffs should be affordable," Surjadi said.
Under the agreement the investors proposed an investment of Rp 3 trillion (US$1.2 billion) for the first five years of the 25- year profit sharing scheme.
After five years, the cooperation was expected to reduce water leakage from the current 54 percent to 35 percent.
Surjadi also urged the Ministry of Finance to approve the city's request to reschedule the payment of PDAM Jaya's debt.
"It's not because PDAM Jaya refuses to pay the debt, but the rescheduling of the payment will give the firm enough time to improve its performance," Surjadi said.
Under the agreement, private investors are also responsible for the payment of PDAM Jaya's credit.
Deputy Governor of Economic and Development Affairs Tb.M. Rais supported Surjadi's request, saying that the rescheduling was necessary. "However, it's up to the government. The most important thing here is that the debt will be paid," he said.
Initially, the cooperation agreement was scheduled to be signed last February. A memorandum of understanding was signed on Oct. 6, 1995, and another one on April 6 last year.
In response to the planned increase in tap water tariffs next January, Rama said that PDAM Jaya was currently in the process of evaluating classification of water tariffs.
"We're going to simplify classifications, which currently classify customers into 48 groups. If the tariffs increase in early 1998, it won't apply to all customers, especially those of the middle and low-income brackets," Rama said.
It was also predicted that the city's tap water will be drinkable within the next 10 years, he said. (ste)