Water tariffs to be cut by a quarter

JAKARTA (JP): The city administration, beset by a deluge of complaints over new tap water rates, decided yesterday to lower them by an average of 25 percent starting next month.

Governor Sutiyoso said the decision was made after the two foreign business partners of city-owned water management company PDAM Jaya agreed to the new tariff proposals.

Tariffs for affluent customers will not be affected.

Customers categorized in middle and low economic brackets -- such as residents of low-cost apartments, buildings for social services, houses of worship and hospitals -- would have their rates lowered by 17 percent, he said.

"The new tariff is still set under the cross-subsidy principle in that the wealthy customers subsidize those of the middle to lower class."

Sutiyoso could not provide further details on new tariffs and told reporters to check with PDAM.

The city administration raised tap water tariffs by an average of 25 percent April 1. The highest increase of 65.71 percent was imposed at that time on affluent customers, with the cost per cubic meter of water rising from Rp 1,175 to Rp 2,545.

Tariffs for middle income families were raised by 38.36 percent, from Rp 930 to Rp 1,935 per cubic meter, while those for poorer families went up 38 percent from Rp 775 to Rp 1,600.

PDAM made the increases after it signed a 25-year cooperation agreement with PT Kekar-Thames Airindo (Kati), a joint venture between former president Soeharto's eldest son Sigit Hardjojudanto and Thames Water International of Britain, and PT Garuda Dipta Semesta (GDS), a cooperation between the giant Salim business group and Lyonnaise des Eaux of France.

Customers strongly protested the increase in the midst of the economic crisis.

The administration subsequently canceled the cooperation last month as the contracts with the two joint venture firms were believed to have been won through nepotistic and collusive practices.

PDAM then established new deals with the foreign partners.

City Council urged the administration on Monday to lower the tariffs as promised following the revocation of the cooperation agreements.

Sutiyoso said yesterday the administration had not dragged its feet on its previous pledge to lower the tariffs. The delay was due to lengthy negotiations with its partners, he said.

"The decision was made through a hard struggle because we had to negotiate with our partners as we have a commitment to them."

The governor mentioned several issues which had to be considered before establishing the new tariffs, such as the smaller revenues to be collected by PDAM even as it had to pay off huge debts.

"We also had to consider maintenance costs, salaries for employees and so on. Following that, we found the 25 percent decrease to be the most reasonable."

The governor said he would ask members of his staff to soon make an explanation before the City Council.

Meanwhile, head of the council's Commission C for financial affairs, Amarullah Asbah, warmly welcomed the tariff decrease and said: "We are waiting for the executive's explanation on it."

He recommended that the move should be followed by efforts to reduce leakages in water production and distribution, estimated to reach up to 40 percent. (ind)