T

he dispute over the contract between the Jakarta city administration and PT Pam Lyonnaise Jaya (Palyja) has become so serious that the administration has signaled that it will unlikely continue its partnership with the tap water operator, which serves the western part of the capital city. The eastern part of the city is served by PT Aetra Air Jakarta.

Jakarta Governor Joko 'Jokowi' Widodo has repeatedly expressed willingness to acquire the 51 percent share in the company held by Palyja, a subsidiary of French utility company Suez Environment, which reportedly intends to sell its shares to Manila Water South Asia, a subsidiary of the Philippines-based Manila Water. The remaining 49 percent of the company is owned by PT Astratel Nusantara, an affiliate of PT Astra International.

As part of the acquisition plan, the governor has reportedly signed a disposition letter, ordering a city official to set up a city-owned company to procure the shares from Palyja.

It is a battle purely for the city's bureaucrats as it makes no difference to Jakartans, particularly customers of the tap water service, who owns the company. The most important thing for them is that they get an uninterrupted supply of tap water at a reasonable price.

Therefore, it would be in the best interests of the public that the administration and Palyja immediately end their dispute so that they can improve water services.

The dispute is all due to the internal rate of return (IRR), which has been set at 22 percent. With such a rate, the city administration would owe Palyja some Rp 10 trillion (about US$ 1 billion) if the contract were to continue through to completion in 2022.

'If their target cannot be reached, the Jakarta city administration would have to pay about Rp 10 trillion [to the company]. Do such terms of contract exist in any other country?' Jakarta Deputy Governor Basuki 'Ahok' Tjahaya Purnama has been as quoted as saying.

The city officials' concerns are understandable as the company's failure to reach its target would mean great losses for Jakarta and its citizens. Renegotiation of the 25-year contract, which came into effect in 1998, is unlikely to lead to a solution. The question is whether there is still room for negotiation.

First, the two parties need to have the goodwill to end their dispute. Otherwise, they need to find an immediate solution, including the possibility of the city administration acquiring shares. Any such solution would obviously require transparency, particularly concerning a credible audit of the company's financial standing. Both parties need to agree on the necessity of hiring an independent audit company to verify the company's financial condition. Based on the audit results, a fair solution could be made.

Jakartans have waited too long for better tap water services. After 15 years under the management of private companies, however, many problems remain. There are still complaints about both the quality and the quantity of water supplied by the operators. Meanwhile, the possibility of having on-tap drinkable water remains a vain hope.

An immediate solution should be earnestly sought because it is the only way to move forward.