Wednesday, February 02, 2005

Jakarta quietly hikes water rates

Source: The Jakarta Post

The city administration has secretly increased tapwater rates by between 4 and 16 percent, depending on the level of water consumption and customer classification.

Jakarta water regulatory board chairman Achmad Lanti said at City Hall on Tuesday that the increase took effect on Jan. 20 and was one of the automatic water rate hikes that would take place every six months for the next five years.

"We have decided to raise water rates this year and we will continue increasing them every six months for the next five years," Lanti said.

He did not explain why the water hike was only announced on Tuesday, more than 10 days after it took effect.

Up until Jan. 20, poor consumers paid Rp 500 per cubic meter, while well-off consumers paid Rp 9,100 per cubic meter. Under the new regime, however, the poor will pay Rp 550, an increase of 10 percent, while the rich will pay Rp 9,750, or an increase of 7 percent.

Lanti, accompanied by an assistant to the City Secretary for Development Affairs, Hari Sandjojo, and the technical director of PAM Jaya, Kris Tutuko, said the money earned from the hike would be used mostly to pay PT PAM Jaya's outstanding debts of Rp 938 billion to its foreign partners -- PT PAM Lyonaisse Jaya and PT Thames PAM Jaya.

Palyja, a subsidiary of France's ONDEO (formerly Lyonaisse des Eaux) serves customers in western part Jakarta, while TPJ, a subsidiary of Britain's Thames Water International, supplies tapwater to customers in eastern part Jakarta.

"Hopefully, with a slight increase every six months, we will be able to repay all our debts to the two foreign partners within five years in 10 installments," he said.

In addition to its debts to the foreign partners, PAM Jaya also owes about Rp 1.7 trillion to the central government.

The automatic tariff increase scheme was approved by the City Council on July 23, 2004.

According to Lanti, the regulatory board, whose duties include proposing tariff increases, mediating in any disputes that might arise between PAM Jaya and its foreign partners, was also playing a role in the negotiations for a new water charge.

The water charge is the sum of money PAM Jaya must pay to the tapwater operators for treating and supplying water.

"Both PAM Jaya and Palyja have reached a consensus to accept a new charge of Rp 4,450 per cubic meter. Unfortunately, TPJ has refused to accept the proposed new charge of Rp 3,671 per cubic meter and has appealed to an international expert to help mediate the dispute," he said.

Palyja and TPJ plan to connect 5,500 and 4,251 new customers respectively this year.

A senior executive with Palyja, Bernard Lafronge, said that his company planned to invest Rp 551 billion this year, including investment in a 148-kilometer long pipeline in North and West Jakarta.