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Jakarta Post

Water privatization defected in its execution: Witness

  • Corry Elyda

    The Jakarta Post

Jakarta   /   Wed, February 5, 2014   /  08:23 am

Human Rights Watch activist Andreas Harsono has said that cooperation between city water operator PAM Jaya and its foreign partners over the privatization of the clean water supply business has defects, including a lack of bidding and transparency.

Andreas, who was a witness in a citizen lawsuit hearing centering on water privatization at the Central Jakarta Court on Tuesday, revealed that according to his interview with a consultant for the World Bank, Andrew McLernon, the project did not carry out bidding and also lacked transparency as well as an independent regulator.

'€œThe appointment of two foreign companies, Thames Water Overseas Ltd. in London and Suez Lyonnaise des Eaux in France, to operate the water supply in the capital city was a direct order from then president Soeharto in 1995 and did not carry out bidding,'€ he said.

Thames and Soeharto'€™s son, Sigit Harjojudanto, later established PT Kekar Thames Airindo, currently known as PT Aetra Air Jakarta, which manages the water supply to the east side of the city, while Suez and Salim Group founded PT PAM Lyonnaise Jaya (Palyja), which is tasked with clean water distribution to the west side.

The activist said bidding was mandatory for all logistics procurement in the bureaucracy but was not carried out when the two companies took over water management in the capital city of 7.5 million people at the time.

'€œThe World Bank, who initiated the water privatization project after lending PAM Jaya US$92 million, once proposed the bidding for the water operator but the president refused the idea,'€ he said.

He added that water management could not be privatized by foreign companies but that then home minister Mohamed Yogie SM issued a ministerial decree to exclude water from the negative investment list.

Andreas was a witness as his articles were used as evidence in the lawsuit filed by the Coalition of Jakarta Residents Opposing Water Privatization (KMMSAJ).

Andreas said he reviewed a number of documents, including contracts, minutes of meetings and letters to write the articles. He also interviewed 120 people, including officials of the central government, the city administration, PAM Jaya, Palyja, Aetra and the World Bank.

The coalition, which filed the citizen lawsuit in March 2013, demands the court to annul the agreement and return the authority of clean water management to the city administration.

After 16 years of operation, both companies have failed to supply clean water to 7.5 million Jakartans and have caused state losses of at least Rp 590 billion ($ 48.38 million) as a form of debt from PAM Jaya to the two companies.

The city administration has decided to resolve the water supply problem by acquiring Rp 1.5 million worth of Palyja'€™s shares and revising the agreement with Aetra.

The trial was adjourned until Feb. 18.

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