[Kabar-indonesia] JP Editorial: Dodgy Water Business

[Joyo at aol.com]

The Jakarta Post
October 7, 2006

Editorial

Dodgy Water Business 

Do Jakartans care about World Habitat Day which falls on the first Monday of 
October? Should they do so when their wells are running out of water in this 
dry season? The answers to these questions will be "No".

Water scarcities during the dry season are inevitable in many areas of the 
country. Jakarta is no exception. 

In several kampongs in the capital city, families have been forced to share 
wells to get clean water for washing and bathing. 

Groundwater conservation campaigns have never been successful here, with 
uncontrolled population increase being the most serious constraint. Green spaces 
have been converted into residential areas, and office and business estates, 
leading to shrinking groundwater deposits over time. No doubt, many artesian 
wells in Jakarta now become dry sooner than they used to do in previous years. 

In a dense kampong in South Jakarta bordering on Tangerang, the absence of 
empty spaces has forced locals to drill into the roads outside their homes in 
order to find new water sources. 

Meanwhile, the subscribers of water companies PT Thames PAM Jaya (TPJ) and PT 
PAM Lyonnaise Jaya are worried about the water shortage too. Water supplies 
have decreased due to the dry season. In some areas, families have given up 
subscribing to the tap water companies due to supply problems. 

Besides uncertainty over the raw water supply, various technical problems 
have burdened city-owned PAM Jaya in the past. This encouraged the private sector 
to get involved in the tap water business. 

In 1996, PAM Jaya signed agreements with Thames Water and Lyonnaise. 
Strangely, the two companies were given favorable water concessions without a tender 
or public consultation. Thames was at that time reportedly aligned with PT 
Kekar Pola Airindo, which belonged to then President Soeharto's eldest son Sigit 
Harjojudanto, while Lyonnaise was affiliated to PT Garuda Dipta Semesta, a 
subsidiary of the Salim group, which was owned by tycoon Soedono Salim, alias Liem 
Sioe Liong, a well-known crony of Soeharto. 

Despite the involvement of the two private firms, the Jakarta 
administration's hope of improving the mains water supply to customers has not been 
fulfilled. In fact, there have been disimprovements, according to the Indonesian Forum 
for the Environment (Walhi) 

Before the two foreign companies joined the business, 52 percent of Jakartans 
enjoyed access to tap water. That figure has dropped to only 50 percent since 
the introduction of private sector involvement. 

The rate of leakage from pipes remains high. Currently, the leakage rate 
stands at 48 percent, or only a 5 percent improvement over the previous situation 
when PAM Jaya was solely responsible for the tap water supply. It is apparent 
that the two firms, PT Thames Pam Jaya (TPJ) and PT Pam Lyonnaise Jaya 
(Palyja), have not complied with the terms of their contracts. 

Ironically, the two companies appear to be more interested in selling their 
shares than in seeking ways to improve public services. This move might reflect 
their frustration following their failure to address the continuing water 
problems in Jakarta. 

On July 25, Palyja sold 49 percent of its city-granted shares to PT Astratel 
Nusantara and Citigroup Financial Products Inc. 

Under the 25-year agreement, the sale of more than a 50 percent stake must be 
approved by the Jakarta administration and be informed to the city council. 

While the controversy over Palyja's maneuver continues, Thames Water will 
likely sell all its shares in PT Thames Pam Jaya to Aquatico, a consortium 
consisting of Indonesia's ReCapital Advisors and Glendale Partners. 

Sayogo Hendrosubroto, the chairman of the Jakarta Council's infrastructure 
commission, is against the sale of the companies' shares, branding the move a 
robbery. He accused the companies of taking advantage of "loopholes" in their 
contract, which will come up for review by the Jakarta administration in 2007. 

What has really made the companies decide to get out of the water business in 
Jakarta? 

Before signing their deals in 1996, the two foreign firms must have studied 
all the possibilities, including the benefits of retaining the existing PAM 
Jaya employees, who had been adamantly opposed to the privatization for fear of 
being laid off or dismissed. 

No doubt, both TPJ and Palyja's moves to sell their shares are 
business-motivated decisions. 

Therefore, it is apparent that the history of the private sector's 
involvement in the water business in Jakarta is something that the next city 
administration will need to study. Lamentations, criticism and even condemnation will not 
stop the two companies from pushing ahead with their plans, which the 
administration had clearly failed to anticipate. 

According to the 1945 Constitution, water is a basic human need that should 
be controlled by the state to ensure the maximum well-being and welfare of the 
people. It is, therefore, the duty of the Jakarta administration and central 
government to be more circumspect in determining which firms will be allowed to 
purchase TPJ's and Palyja's shares. Whoever wins must be firmly committed to 
a social function and mission. 

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Joyo Indonesia News Service
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