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Jakarta Post

Water privatization challenged after 16 years

Water privatization challenged after 16 years Penalty preparation: Members of the Coalition of Jakarta Residents Opposed to Water Privatization (KMMSAJ) Siti Badriyah (left) and Tama Satrya Langkun, donate money. The city administration may have to pay a penalty terminating a contract with private partners PT PAM Lyonnaise Jaya (Palyja) and PT Aetra Air Jakarta (Aetra). (JP/Ricky Yudhistira) (KMMSAJ) Siti Badriyah (left) and Tama Satrya Langkun, donate money. The city administration may have to pay a penalty terminating a contract with private partners PT PAM Lyonnaise Jaya (Palyja) and PT Aetra Air Jakarta (Aetra). (JP/Ricky Yudhistira)
Corry Elyda and Sita W. Dewi
Jakarta   ●   Wed, June 5, 2013

Penalty preparation: Members of the Coalition of Jakarta Residents Opposed to Water Privatization (KMMSAJ) Siti Badriyah (left) and Tama Satrya Langkun, donate money. The city administration may have to pay a penalty terminating a contract with private partners PT PAM Lyonnaise Jaya (Palyja) and PT Aetra Air Jakarta (Aetra). (JP/Ricky Yudhistira)

The Coalition of Jakarta Residents Opposing Water Privatization (KMMSAJ) filed a lawsuit against city water operator PAM Jaya and its foreign partners over the privatization of the water supply business.

KMMSAJ lawyer Tommy AM Tobing told a press conference on Tuesday, that the citizen lawsuit was aimed at annulling the agreement signed on June 6, 1997, among PAM Jaya and two partners, private firms PT Pam Lyonnaise Jaya (Palyja) and PT Aetra Air Jakarta.

Tommy said the partnership was not beneficial to Jakarta residents and hindered public access to affordable clean water.

'€œPalyja and Aetra charges all operational costs of the firms to customers. It makes the price too high, so the poor cannot access the facility,'€ he said.

Jakartans pay around Rp 7,000 (71 US cents) per cubic meter, with the exception of low-income residents who pay only Rp 1,050 per cubic meter. The gap in prices has limited the access of poor neighborhoods to piped water.

Tommy said the contracts also enabled Palyja and Aetra to charge PAM Jaya, which would take the fund from the local budget to pay the shortfall.

According to Indonesian Corruption Watch (ICW) researcher Tama Satrya Langkun, the contracts with both companies had kept the city deep in debt with a dual financing program that differentiates between the price PAM Jaya pays operators to supply water to households and prices charged to customers, allowing the firms to book huge profits by overcharging customers.

Tama said that in its 16th year of operation, both Palyja, which manages the west side of the city and Aetra, which manages the east side, only fulfilled the needs of 34.8 percent of Jakarta residents.

Tommy said if they won the case, which is now waiting for an interlocutory at the Central Jakarta District Court, the city administration would not have to pay a single dime to take over the operation.

He explained that the city must only pay the penalty if the contract was terminated by one of the parties in the agreement. '€œThe residents are not one of the parties in the contracts,'€ he said.

Tommy said the lawsuit was not only aimed at annulling the contract but also to declare the effort to privatize water as an unlawful act.

Tama said that in order to take over the operation, the city administration had two other options '€“
either terminate the contracts or buy shares from the companies.

'€œThe first option would cost the city around Rp 2.2 trillion while buying the all the shares would be around Rp 9 trillion,'€ he said.

'€œWe will help the administration by calling on residents to chip in if the administration wants to buy them,'€ he said, adding that the coalition had installed donation boxes in several places such as the ICW headquarters.

Meanwhile, after a closed-door meeting with French trade minister Nicole Bricq at City Hall on Monday, Governor Joko '€œJokowi'€ Widodo told reporters that he had conveyed the city administration'€™s intention to acquire Suez Environment'€™s 51 percent share in Palyja to the minister.

'€œI have told the French trade minister that we want to take over [Suez'€™s] shares in Palyja. Money is not a problem,'€ Jokowi said.

'€œWe are capable so why not? This is a huge step and we have to be brave,'€ he emphasized, adding that '€œthe minister smiled in response to my aspiration.'€

Jokowi said that he had unveiled a '€œplan B'€ should the city not get the green light to acquire the majority shares.

'€œI want the city to be able to manage its water so that citizens can get wider access to water. It'€™s all for the people,'€ he said.