Water rate hike 'must wait for audit result'

Bambang Nurbianto, The Jakarta Post, Jakarta

Councillors called on the Jakarta Administration on Tuesday to wait for an audit report from an independent consultant before increasing tap water rates.

Chairman of the City Council's Commission D for development affairs, Koeswadi Soesilohardjo, said that the councillors needed to know the findings of the audit before making a decision on a proposed water rate hike of 30 percent.

"We must know the real size of the cumulative shortfall in the payments made by city-owned tap water operator PD PAM Jaya because in the proposal the administration says it will use 17 percent of the hike to pay its debts to its two foreign partners," Koeswadi of the Indonesian Democratic Party of Struggle (PDI Perjuangan) told The Jakarta Post.

Councillor Achmad Heryawan of the Council's Commission E for people's welfare supported Koeswadi's statement.

"How can we decide on new water rates if the main reason for the increase, which is the shortfall, is still being calculated," he told the Post.

Two international firms, PT Thames PAM Jaya (TPJ) and PT PAM Lyonnaise Jaya (Palyja), have reported a Rp 990 billion (US$116.47 million) shortfall in the payments they have received from PD PAM Jaya. This figure differs from the Rp 600 billion estimated by PD PAM Jaya president director Didiet Haryadi.

The Ministry of Settlement and Regional Infrastructure has hired London-based independent auditors, Stone Webster, to ascertain the real extent of the shortfall.

City Water Regulatory Body chairman Achmad Lanti said that Stone Webster's Independent Combined Experts (ICE) team, consisting of three foreign and five domestic experts, had already started working. The team would collaborate with experts from the Development Finance Comptroller (BPKP).

Lanti said that the Asian Development Bank (ADB) has given a US$200,000 loan to the ministry to pay for the team. He also said that the audit report was expected to be completed in early January.

PD PAM Jaya hopes to pay around a quarter of its debts to the two foreign partners. The remaining 13 percent of the water rate increase would be used to cover inflation and the two international firms' operating costs.

Lanti had said that the debts were the result of the difference between the water rates paid by customers and the water charges that had to be paid by PD PAM Jaya to its foreign partners.

Both Koeswadi and Heryawan agreed that in the long run, the scope of the audit must be expanded to include the international firms' performance because the administration had been accepting reports from both foreign partners without any proper auditing process.

"The administration has just received reports on the foreign partners' total investment and the projects that they have carried out. However, we don't know the accuracy of these reports," Heryawan said.

The council will summon the managements of PD PAM Jaya, TPJ and Palyja on Thursday to explain the proposal and the shortfall.