Water operators face tough talks over investment plans

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.