News Update

Wed, 12 Jun 2013

City moves closer to PALYJA acquisition plan

Jakarta, The Jakarta Post - The city’s plan to acquire a majority share in the France-based water firm PT PAM Lyonnaise Jaya (PALYJA) is likely to be realized soon.

A source close to the acquisition plan said that Governor Joko “Jokowi” Widodo signed on Tuesday a disposition letter ordering an official to prepare a city-owned company to buy the shares.

Assistant to the city’s secretary for finance, who supervises cityowned firms, Hasan Basri, however, refused to disclose anything related to the takeover plan, saying that the governor had made a clear statement about it to the media and that he did not want to add to it.

“Not yet. The process is still going on,” he told The Jakarta Post when asked whether Jokowi had named the company he had appointed to make the acquisition.

Early this year, the city had expressed its intention to award the contract for water distribution to an experienced city-owned enterprise, such as PD Pembangunan Jaya, as a counter to a plan of France’s utility company Suez Environment to sell its 51 percent stake in 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.

Jakarta’s clean water facilities have been managed by PALYJA in the west of the city and PT Aetra Air Jakarta in the east for 16 years.

The water-privatization contracts were signed on June 6, 1997, under the administration of Soerjadi Soedirdja, and became effective in February 1998 under Sutiyoso’s administration.

PALYJA’s spokeswoman Meyritha Maryanie said she only learned about the acquisition plan from the media. She said it would not affect the company’s daily operations.

“Whoever takes over PALYJA will fi nd the high price of raw water in the west is a problem,” she told the Post, referring to the price of water bought from Tangerang regency.

The city has been facing a clean water crisis as it heavily depends on other provinces to get raw water, while struggling to reduce the water loss caused by illegal connections and ageing pipes.

PALYJA claimed that water loss accounted for 37.9 percent, 40 percent of which was caused by water theft. Meanwhile, the offi cial website of Aetra said that in 2012, the water loss in the company was 45.49 percent, down from 58.27 percent in 1998. Meyritha questioned the city’s commitment to help curb illegal connections and improve raw water supply.

“The city said it would involve Satpol PP [Public Order Agency] to monitor illegal connections, but we have seen no action so far,” she said, adding that the agency questioned who would finance the crackdown instead.

Back in July 2010, former governor Fauzi Bowo ordered the formation of a special division in the agency that would work with other institutions to reduce water loss and monitor groundwater use.

Meanwhile, the agency’s newly installed chief Kukuh Hadi Santoso was not aware of the division.

“As far as I know, there is no such special division in Satpol PP. However, I need to study this first because it [the order] was in 2010,” he told the Post over the phone.

Meyritha said her company had reported perpetrators of illegal connections to the police, but she wished for heavier punishment.

“One of the perpetrators was a high ranking military officer and he only got eight months in prison. With such a lenient punishment, it is possible that they will repeat the crime because it is easy to sell water.

She also wondered whether the city would realize its plan to build closed pipes along West Tarum Canal or Kalimalang River to get an additional supply of some 5,000 liters per second of water from Jatiluhur Dam in Purwakarta, West Java.

The project, estimated to cost Rp 2.1 trillion (US$213 million), was announced by the city in 2009 to ensure the supply of tap water.

The Jakarta Post, 12 Juni 2013, Page 2