Water operator PT PAM Lyonnaise Jaya (Palyja) has asked Jakarta Governor Fauzi Bowo to approve a proposed rate hike of 22.7 percent, while promising to increase investment in the business.

On Wednesday, Palyja commissioner Bernard Lafrogne said the rate increase was needed to subdue the inflationary pressure from the past two years.

"The requested hike is in accordance with the 20 percent inflation rate over the last two years," Lafrogne said after the meeting at City Hall.

January 2007 was the last time the company made a rate increase, up by 9.7 percent, with current rates ranging between Rp 1,050 and Rp 12,550 per cubic meter of water.

Lafrogne said Palyja was committed to investing a total of Rp 856 billion in the next five years to improve water distribution.

"We reserve the final say to the governor," he said.

However, Fauzi demanded Palyja and another water operator, Aetra, to complete their rebasing proposals first before proposing any rate hikes.

The two operators should have completed their rebasing deal, which covers the purchase of water, the sale of water to customers, and acceptable levels of water loss, by the beginning of this year.

However, only Palyja, which operates in the western part of the city, has carried out its obligation, while Aetra, which serves the eastern part of the city, has not completed it.

"I don't accept tardiness because it incurs shortfalls that in turn have to be paid for by the city administration," Fauzi said.

The governor also demanded both water operators continue improving their services.

Hariyadi Priyohutomo, president director of city-run water company PD PAM Jaya, said he hoped Aetra would be able to complete its rebasing by this week.

Lafrogne said his company had invested Rp 175 billion last year for revamping and expanding pipe networks.

He added Palyja had succeeded in cutting down non-revenue water to 45 percent, saying, "We're targeting to decrease it further, to 35 percent by 2012."

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