Government involvement would require a revision of a binding contract between the city and its two operators, Palyja and PT Aetra Air Jakarta.

The contract, which was signed in 1998 and is valid until 2017 is based on a full cost recovery system that means revenue from water bills must cover all operational costs, including investment.

"Bills are supposed to cover the production costs, but they are not. We need a price increase or intervention from the government that will save us from further damage," PAM Jaya director Mauritz Napitupulu said during a journalism workshop on Friday.

He was referring to the full cost recovery system, which has lead to a lack of development in tap water infrastructure, which in turn has forced residents to dig for ground water, which experts have said causes land subsidence.

The idea, Mauritz said, had been conveyed to Governor Fauzi Bowo several times, but had never been followed up.

Palyja's president director Philippe Folliassion voiced the same view, saying that his company needed help from the city to ensure a stable source of income for investment.

"Some *investment* can be covered by us, but we need more. Maybe an extension should be done by the city because it's very difficult for us to use the current system," he told The Jakarta Post at the workshop.

He said the source of that investment came from US$50 million in loans from the Asia Development Bank and the issuance of bonds.

Public policy observer Agus Pambagio said a proposal to change content in the contract would require approval from the City Council.

"There will be some consequences for such a change in the contract, but I haven't taken a close look at that point," he said.

Agus said the city's tap water was facing crucial problems, including production's heavy dependence on the Jatiluhur dam in West Java, and water contamination.

Aetra and Palyja have claimed they have invested heavily in fixing and replacing damaged pipes.

There are 5,200 kilometers of water pipes beneath Jakarta. Most of the pipes are more than sixty years old.

Both companies claimed they had built 1,200 kilometers of new pipes and repaired 800 kilometers of pipes since 1998.

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