Operator proposes phased 22.7% water tariff hike

The Jakarta Post, Jakarta | Sun, 12/14/2008 10:33 AM 

 

Private tap water supplier PT PAM Lyonnaise Jaya (Palyja) has proposed an average increase of 22.7 percent over the next four years in water tariffs to fund investments that would improve tap water distribution in western Jakarta.

 

A presentation on Thursday showed that the company would invest Rp 853 billion (US$78 million) to improve distribution. Of this, Rp 200 billion is earmarked for 2009 and will be used to replace old water pipelines and perform production maintenance.

 

"We have reached an agreement with state-owned water company PAM Jaya to adjust tariffs by as much as 22.7 percent as soon as possible. The proposal has been submitted to the governor and the regulator," Palyja commissioner, Bernard Lafrogne, said during a press conference held by the company.

 

The rate of inflation (20 percent over the last two years) also plays a role in the tariff adjustment, Bernard said. The last time the company made a tariff increase was in January 2007 and current rates range between Rp 1,050 and Rp 12,550 per cubic meter.

 

"The final decision is in the governor's hand. We only propose the new tariffs with the consideration that we haven't made any adjustment for the last two years, despite the inflation," Palyja Corporate Communication Head Meyritha Maryanie, said.

 

Palyja said it would utilize the investment to add 21 kilometers of primary pipe lines and to rehabilitate the 877-kilometer distribution network. The rehabilitation projects is expected to be completed in 2012.

 

The rehabilitation is expected to eventually reduce the rate of non-revenue water (NRW), Palyja said. NRW occurs mostly because of leakage in pipelines and theft.

 

Irzal Z. Djamal, head of the Jakarta Water Supply Regulatory Body said his organization is currently analyzing the proposal.

 

"The most important thing to determine is the water charge rate, not the tariff," Irzal said on Saturday.

 

The water charge is the price PAM Jaya pays to a water contractor such as Palyja for supplying water. Customers pay bills based on PAM Jaya's water tariff plus Palyja's added charges.

 

Irzal did not give a time-frame of when the regulatory body will finish its analysis of the proposal.

 

"All I can say is that we have had a lot of meetings with both PAM Jaya and Palyja to discuss the proposal," he said.

 

Palyja's plan to increase tariffs is questioned by consumer groups.

 

Secretary-General of the Jakarta Tap Water Customers Association (Komparta), Suta Widhya, said it was illogical for Palyja to ask customers to fund their investment.

 

"They should look for other sources of funding like bank loans. Why should the consumers pay for their investment? This is strange," he said on Saturday.

 

"If the executive body (governor) approves the proposal, then Komparta will demand a proper explanation from him," he added.

 

Suta finds the tariff increase proposal odd, because PAM Jaya recently said that the water charge rate would be cut from Rp 7,400 to Rp 7,020, based on an agreement between Palyja and PAM Jaya. The cut should have given the opportunity for the reduction or at least stabilization of tariffs, he said.

 

To provide Jakartans with clean water, PAM Jaya appointed two contractors to handle water distribution - Palyja for the western part of the capital and PT Aetra Air Jakarta for the eastern.

 

Both contractors must have the same tariff rate.

 

Aetra is currently discussing a debasing deal with PAM Jaya, Aetra's President Director, Syahril Japarin told The Jakarta Post on Saturday. Syahril did not mention if Aetra planned to propose a tariff increase or not. (hdt)