Water ties with foreign partners to go on

JAKARTA (JP): The city administration has made progress in its water management deal with two foreign firms -- Thames Pam Jaya (TPJ) and Pam Lyonnaise Jaya (Palyja) -- and only needs to secure the City Council's approval to start the project.

The progress was achieved after renegotiations between the city administration and its two foreign partners finalized all items in the water management agreement.

"There were eight items discussed in the renegotiations. They were concerning deep well construction, material procurement, water supplies, labor, monitoring and audit systems, escrow account mechanisms, company's assets and water charges," Sutiyoso said in a letter, dated Jan. 20, to the City Council.

The council now has to decide whether to endorse the deal or reject it.

"The renegotiations, for instance, have resulted in a lowered tender amount for material procurement, from US$ 5 million to Rp 500 million (US$ 67,500). They have also decided that the city water tap company (PAM Jaya) is no longer responsible for water supply to the partners," Sutiyoso said.

Another result was the equalization of all PAM Jaya's employees working for the foreign partners. They would have the same rights as other employees, he added.

"The renegotiation has also lowered the water charge paid to the foreign partners. Previously, the water charge was raised every six months in line with the inflation rate and investment value," he said.

"The previous water charge was higher than the water tariff itself. This caused a shortfall that was counted as PAM Jaya's debt to the foreign partners," he added.

PAM Jaya will hold no responsibility for the shortfall since Feb. 1, 1998.

The renegotiations also resulted in the simplification of PAM Jaya's board of management.

"There will be three directors from the current four. Department heads will be cut from 13 to seven," Sutiyoso said, while citing the result was in line with the city council's recommendations, dated Dec. 28, 1999.

He also said the city administration would study the possibility of commercializing PAM Jaya's assets.

"We'll conduct a feasibility study to find what kind of business is applicable," he said.

Councilor Tjuk Sudono of the National Mandate Party (PAN) faction said the result of the renegotiation was satisfactory.

"However, there are no clauses in the draft agreement ordering the investigation of violations by former PAM Jaya and city administration officials before the partnership was recommended by the council's team of 11," he said.

Tjuk is a member of the team that was established to study the cooperation with the foreign partners. The team had earlier submitted its recommendation to the governor. (05)