Water rate hike 'must wait for audit result'

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.