Water firms pressed to improve service
Novan Iman Santosa, The Jakarta Post, Jakarta
Jakartans may have to dig deeper into their wallets as soon as the city administration and City Council agree on an inevitable hike in tap water charges in the coming months, despite what consumer groups say is the continuing poor service provided.
The hike will be an additional burden on some 648,000 tap water subscribers following the central government's decision to hike fuel and electricity prices, claim the consumer groups.
However, the city-owned tap water company, PAM Jaya, was quick to defend itself.
"The revenue we receive from our customers does not cover production costs. The deficit is worsened by the fact that we are subsidizing subscribers from the lower income groups," the operational and technical director of PAM Jaya, Chris Tetuko, told participants during a discussion with the City Council on Wednesday.
Chris said the cost of water was Rp 3,100 (34 U.S. cents) per cubic meter while water was being sold at only Rp 2,700 per cubic meter.
He also said that the subsidy given to the lower income groups reached Rp 120 billion per year while the upper income groups could only contribute some Rp 20 billion of this under a cross- subsidy scheme.
The last time subscribers experienced an increase in water charges was in October 2001, when the price of water went up by 35 percent. Earlier in 1998 there was another hike of some 20 percent.
Other speakers at the discussion were the chairman of the City Council's budget commission, Anna Rudhiantina, development commission chairman Koeswadi Susilo Harjo, and Sudaryatmo of the Indonesia Consumers' Foundation (YLKI).
Sudaryatmo emphasized that the hike had to be accompanied by improvements in service and products.
"Water quality is still poor while most of the time residents have to wait very late in the evening to get the water flowing.
"Not to mention that the network coverage mostly only reaches those from the upper income groups. It is very unfair to residents from the lower income groups," he said.
Sudaryatmo also said that the water pricing policy should be made accountable by providing all relevant information to the public.
"The process must consider the interests of both consumers and producers. The subscribers' ability to pay and willingness to pay have also to be taken into consideration."
PAM Jaya and its foreign partners should improve their performance before increasing water charges, he added while pointing to the fact that the company still lost some 46 percent from its water production due to decrepit pipe network and theft.
PAM Jaya no longer directly produces and distributes tap water to its subscribers as these duties have been delegated to its two foreign partners from England and France.
Thames Pam Jaya (TPJ), a subsidiary of Britain's Thames Water International, serves the city to the east of the Ciliwung River while the area to the west is served by PAM Lyonnaise Jaya (Palyja), a subsidiary of ONDEO (formerly Lyonaisse des Eaux).
Their contracts stipulate that the foreign partners are entitled to increase water charges annually to cover their production costs.
"Cutting these losses by at least 10 percent could greatly reduce the companies' costs instead of them keeping increasing water charges," said Sudaryatmo.
Chris said that the foreign partners had managed to reduce water losses from some 57 percent in 1998 to 48 percent last year.
Meanwhile, Palyja spokeswoman Maria Sidabutar said the hike was needed not only to finance further investment but also to make up for the high level of inflation over the past five years.
"Inflation during the past five years has reached some 150 percent while we have only enjoyed price increases of about 50 percent.
"It is hoped that this year's hike can reduce our burden especially as there was no hike last year," she added.