Water project

With regard to a report in The Jakarta Post on Oct. 29, 2001, entitled Medan's water supply project questioned, we would like to give clarification as follows:

1. A joint venture between PDAM Tirtanadi Propinsi Sumut and Lyonnaise des Eaux Perancis was approved by the governor of North Sumatra province on July 18, 2000. Under the agreement, both parties have agreed to set up a joint venture company, called PT Tirta Lyonnaise Medan, with a share composition of 85 percent owned by Lyonnaise des Eaux and 15 percent in the form of a plot of land in Sei Belumai owned by PDAM Tirtanadi. The construction and management of the clean water facility and infrastructure were based on the Build, Operate and Transfer (BOT) system for a period of 25 years. Thereafter, all facilities and infrastructure will become the property of PDAM Tirtanadi Propinsi Sumut.

2. The average sales price of Rp 1,150 per cubic meter is a price set for various classes of customers. Tariffs ranging from Rp 0.335/liter to Rp 6.31/liter are pursuant to customer classification and the amount of water used. Therefore, tariff differences as reported in this paper of Rp 1,150/ cubic meter charged for individual use and Rp 6,000 for luxury housing complexes are not true.

3. Under the agreement, PDAM Tirtanadi distributes the water processed and supplied by PT Tirta Lyonnaise Medan to customers in Zone I. The water is bought at Rp 0.975/liter. Currently PDAM Tirtanadi has 16 branch offices responsible for providing water to some 300,000 customers in Dili Serdang Regency up to Nias Regency, an island off North Sumatra.

4. The agreement was made on a mutually beneficial basis for both parties and customers.

H. RUSLANSYAH

Head of Legal & Personnel Dept.

Medan, North Sumatra