Water operators face tough talks over investment plans

Damar Harsanto, Jakarta

City tap water operator PD PAM Jaya and its foreign partners British firm Thames PAM Jaya (TPJ) and French firm PT PAM Lyonnaise Jaya (Palyja) are involved in tough discussions to resolve differences over their investment plans.

"It is not easy to reach a consensus in the discussions since we have to consider numerous calculations in the business," said PAM Jaya president director Haryadi Priyohutomo at City Hall on Wednesday.

He said PAM had estimated a five-year investment program of about Rp 300 billion (US$34.7 million), much lower than the two foreign firms' estimate of Rp 1 trillion.

An audit by an International Combined Expert (ICE) team of London-based independent auditor Stone Webster, which completed its report in the middle of March, recommended an investment of between Rp 400 billion and Rp 500 billion over the next five years.

"The ICE team came up with a figure that was hard for either us or our foreign partners to accept," Haryadi said following a meeting between Governor Sutiyoso and Trevor Jones, chairman of Thames Water International, the holding company of TPJ.

The assistant to the city secretary for development affairs, IGKG Suena, said TPJ would not accept the audit by the ICE team and had proposed another audit.

"He (Jones) asked for another audit. I think it is unlikely since the team has already come up with its final audit report," he said, adding that the ICE team was part of a cooperation between the Ministry of Resettlement and Regional Infrastructure and the Asian Development Bank.

Suena said at least three working groups comprising representatives of PAM, Palyja and TPJ were currently involved in intense discussions over the ICE team's audit report.

The administration expects the discussions could reach a consensus by the end of this month.

Should the parties reach a consensus, they will come up with a revised basis for calculating their investment over the next five years, including a new basis for calculating water rates and capital expenditure.

"With the new basis, we hope that we will no longer be in the red by 2007 and that we will also be able to manage to pay off our debts," Suena said.

PAM currently owes the Ministry of Finance about Rp 1.6 trillion.