City aims to end water dispute by May
The city administration expects to conclude renegotiations over the contract that will improve water supply services at the end of the month at the earliest.
The renegotiations are ongoing between city-owned water company PAM Jaya and private operator PT Aetra Air Jakarta.
Aetra president director Mohamad Selim said the companies were half-way to finishing the revised clauses for the new contract.
“We are looking forward to finishing this by the end of this month [April], and we can start on it,” Selim said at City Hall on Friday.
Selim and his team held a meeting with Deputy Jakarta Governor Basuki Tjahaja Purnama to discuss the follow-ups to the negotiation process.
PAM Jaya director Sri Kaderi Widayanto and Selim signed a renewed contract agreement in June last year during former governor Fauzi Bowo’s administration.
The clauses changed included the agreement that Aetra would not increase water tariffs until the end of the contract term in 2022, while both have agreed to set a new internal rate of return (IRR), which Selim did not disclose. IRR is a rate used to measure the profitability of investments.
In addition, PAM Jaya need not change the water charge rate every six months — like it used to — with a probable increase of only 1 to 2 percent by the end of the contract.
Selim added that Aetra also set a target rate of water loss, or non-revenue water (NRW), at 39 percent this year down from the previous 43 percent.
He said as much as 130 kilometers of the pipe network would be replaced to reach the number this year.
“Around 65 percent of NRW comes from physical problems, like broken pipes,” he said.
The initial contract, signed on June 6, 1997, which took effect in February 1998, contains a double financing scheme that critics say hampers the provision of clean water to low-income households.
The scheme defines water charges — the price that PAM Jaya has to pay to operators to supply water to households — differently from water tariffs — the charge levied on customers.
Problems occurred when the water charges were higher than the revenue from water tariffs, which used a cross-subsidy system.
The gap consequently forced PAM Jaya to borrow money from the private operators — Aetra and PT PAM Lyonnaise Jaya (Palyja).
Basuki appreciated the progress that Aetra had made and hoped to see more lower-income families enjoying the service this year under the new contract.
Selim added that Aetra was looking forward to seeing an additional 12,000 customers by the end of this year, with 60 percent of the number coming from middle- to lower-income households.
“We will be supplying 170 million cubic meters this year, up from last year’s 150 million cubic meters,” he said.
Aetra would handle the water supply operations in eastern Jakarta and Palyja the western side.
Rigorous talks between PAM Jaya and Aetra had been going on since the tenure of Fauzi Bowo, when Maurits Napitupulu was PAM Jaya president director.
Contract renewal negotiations with Aetra only started after the abrupt dismissal of Maurits in December 2011, but PAM Jaya and Palyja are still in a contract renewal deadlock.
Maurits left the water company amid the heated negotiations with Palyja to renew their contract.