Water project

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