Water deals 'could be canceled'

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)