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Jakarta Post

City turns down Palyja offer to sell water shares

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Tue, June 25, 2013   /  11:18 am

Jakarta water company PT PAM Jaya rejected France-based utility company Suez Environment'€™s request to sell its 51 percent stake in private firm PT Pam Lyonnaise Jaya (Palyja) to Manila Water South Asia, a subsidiary of the Philippines-based Manila Water.

The remaining 49 percent in Palyja is owned by PT Astratel Nusantara, a subsidiary of automotive giant PT Astra International.

PAM Jaya managing director Sriwidayanto Kaderi said on Monday that his company denied the request because the prospective buyer did not fulfill the requirements.

'€œManila Water [South Asia] does not have the reliable finances to support our plan to rebalance the contract [with Suez Environment], and it will not make the price for water supply in the city to be affordable for the poor,'€ he said.

According to a researcher from Indonesia Corruption Watch (ICW) Tama Satria Langkun, the contract, which was signed on June 6, 1997, has kept the city deep in debt with a dual financing scheme that differentiates between the price PAM Jaya pays private operators to supply water to households and the prices charged to customers, allowing the firms to book huge profits by overcharging customers. Under the contract, Palyja manages the water for the west of the city, while the east is managed by PT Aetra Air Jakarta (Aetra).

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

Tama said the company would suffer total losses of Rp 18 trillion if the contract continued until 2023.

Meanwhile, PAM Jaya lawyer Iskandar Sonhadji reported that the company'€™s current losses caused by water privatization had reached at least Rp 590,68 billion .

The city administration has been trying to terminate the water privatization contract with Governor Joko '€œJokowi'€ Widodo recently conveying his intentions to acquire the shares in Palyja to visiting French Trade Minister Nicole Bricq.

The water privatization contract has not only been opposed by the city administration, but also by the public.

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.

The lawsuit is being processed by the Central Jakarta District Court, which is scheduled to decide on the interlocutory of the case on Tuesday.

Coalition member Muhammad Reza of the People'€™s Coalition for the Rights to Water (KRuHA) said if the court decided to terminate the case, they would seek assistance from the United Nations.

'€œWe would ask UN special rapporteur for human rights to safe drinking water and sanitation, Catarina de Albuquerque, to report the conditions caused by water privatization to the UN.'€

PAM Jaya on Monday sent a public letter to the court demanding justice; expecting the commencement of the case could ignite a public debate on the water contracts and could lay the foundations for the city firm to provide quality and affordable water to residents. (ian)