Water deals 'could be canceled'

JAKARTA (JP): Governor Sutiyoso said on Tuesday cooperation agreements between the city water management company PDAM Jaya and two foreign partners could be canceled if they were found to cause losses to the city administration.

It was his first explicit statement on the controversial partnerships, which have led hundreds of PDAM employees to hold almost daily protests in recent weeks demanding their cancellation.

"If our (local) interests are not accommodated, then why should we continue the cooperation?" Sutiyoso told reporters after attending a ceremony for the handover of a donation of 500 tons of rice from Singapore.

He warned, however, that canceling the deals could be legally problematic.

"We should be ready for possible risks to be sued if we take such step. Remember, it's not a local affair but it relates to foreign companies."

According to the governor, PDAM Jaya has adequate time to discuss its status in the deals because the period of renegotiation with Lyonnaise des Eaux of France and Thames Water International of Britain would last until August.

The protests were triggered by the salary disparity between PDAM Jaya employees and those seconded to the two foreign companies, who are on a lower pay scale.

Of the 3,000-personnel PDAM Jaya workforce, 200 are assigned to PDAM Jaya headquarters, 1,500 at Palyja, which is the joint venture with Lyonnaise, and 1,300 at TPJ, the cooperation with Thames.

PDAM Jaya president Rama Boedi recently granted a 45 percent increase in wages and allowances for employees working at headquarters, causing resentment among his employees working under the foreign firms.

They quickly launched protests demanding equal wages with their colleagues.

Protest coordinator Idris Mansuri said on Monday that the protesters' main demand now was the cancellation of the partnerships, which he said were illegal and caused losses to the city administration.

"The demand about raising wages and allowances was only a 'warm-up'," he said.

Rama Boedi told reporters at City Hall on Monday the wage increase was not a calculated ploy to foment trouble among employees at Palyja and TPJ, with the intent to stymie the partnerships.

"Don't ever think that I'm behind all these things," Boedi said.

During a news conference on Monday, Palyja's commissioner Bernard Lafrogne challenged the protesters to show financial losses allegedly suffered by the administration.

Lafrogne insisted that under the deals, the company targeted to cut water leakages from 55 percent to 30 percent and produce potable tap water within the next seven years.

"It's not true that the administration has suffered losses in the partnership. Instead, it's the two partners that have faced losses because we should pay the deficit resulting from escalating operational costs when the water tariff remained the same," he said.

TPJ's sales and marketing manager Nani Sariati said funds used to cover the deficit were counted as investment.

Nani and Lafrogne also questioned the PDAM employees' motivation in demanding a halt to the water business cooperation.

The companies said they invested Rp 265.6 billion in 1998 and Rp 450 billion in 1999.

Separately on Tuesday, the Jakarta chapter of the tap water contractors' association (Akaindo) announced it sent letters to President B.J. Habibie and Minister of Defense and Security/Armed Forces Commander Gen. Wiranto to express concern over the protests by PDAM Jaya employees.

An Akaindo executive, speaking on the condition of anonymity, said the letter to Wiranto explicitly requested security to safeguard the water supply in the capital, and also stressed the legality of the agreement between PDAM Jaya and the partners. (ind/ylt)