Water rate increases opposed by new head

Mustaqim Adamrah , The Jakarta Post , Jakarta | Sat, 06/28/2008 11:55 AM | City

The newly installed Jakarta Water Supply Regulatory Body head Irzal Z. Djamal says he has objections to the periodical water rate increases agreed on in a contract between the Jakarta administration and private water operators.

"I will not approve any water price increases if the water operators haven't met all the requirements," he said Friday at the Jakarta bureau of capital investment and regional monetary management after his installment ceremony.

"Their achievements will be grounds to decide new water rates."

Irzal said he would examine how much operators PT PAM Lyonnaise Jaya (Palyja) and PT Aetra Air Jakarta (Aetra) had been able to reduce the level of water loss and expand their service coverage.

In 1997, the administration signed the 25-year working contract with the two operators. The contract is subject to a five-year evaluation.

The contract includes performance targets for every five years, including production volumes, water consumption, non-revenue water (water lost through illegal consumption), pipe pressure and service coverage.

In 2004, the two operators and the administration made an agreement stipulating that the latter -- through city-owned water operator PAM Jaya -- would raise water rates every six months until 2010 in order to pay off Rp 800 billion (US$86.81 million) in debts owed to the operators.

The debts were incurred as a consequence of not raising water rates during the Asian economic crisis, which begun in 1997.

The two operators previously asked for a water rate 22 percent higher than the current average Jakarta rate of Rp 5,932 per cubic meter, the highest rate in the country, former regulatory body head Achmad Lanti said. A 10 percent increase would be ideal, he said.

The administration has suspended water price increases for 1.5 years, according to Palyja commissioner Bernard Lafrogne, who also attended the ceremony.

He said Palyja earlier planned to propose an increase of around 20-25 percent from the current water price of Rp 7,000 per cubic meter.

"But fuel price increases have made our operational costs jump," he said. "So, we're now considering 30 percent increases."

He said he would submit Palyja's proposed price increase by mid-July.

"It will be PAM Jaya's responsibility to cover the deficit operators are suffering if the administration doesn't approve the increases," Lafrogne said.

Palyja runs services in the western part of the city, while Aetra -- formerly known as PT Thames PAM Jaya (TPJ) -- operates in the eastern part of the city.

According to Aetra external relations and communication director Rhamses Simanjuntak, the contract states that Aetra should have reached 41 percent of non-revenue water and a 74 percent service coverage ratio last year.

However, the company has only achieved 53 percent of non-revenue water and 66 percent service coverage ratio, he said.

Last year, the company recorded 1,156 illegal connections and 5,397 incidents of illegal consumption that cost them 2.5 million cubic meters of tap water, he said.

Comments (0) | Post comment

A | A | A |