Jakarta – The workers union of city-owned water operator PDAM Jaya has urged the Jakarta administration to review the sales of shares in its foreign partners, saying it was concerned the two companies had failed to meet contractual commitments.
Benny D. Setianto, the union's legal consultant, told a press conference Wednesday that under the 1998 contract between PDAM Jaya, France-based PT Lyonnaise Jaya (Palyja) and the German PT Thames PAM Jaya (TPJ), the foreign partner companies were obliged to invest locally.
The new investments were to include the upgrading of production services and coverage, improving management and efficiency, stopping water losses due to pipe leaks and providing purified water by 2007, Benny said.
"None of them were realized... We don't want them to be able to easily escape their obligations by selling part of their shares to a third party," he said. He said PDAM annually lost 74.4 million liters of water and Rp 1.3 trillion in income to pipe leakages.
Data from PDAM shows that since joining with the foreign companies, the city water provider's debt has doubled, from Rp 900 billion in 1998 to Rp 1.7 trillion at the beginning of 2006.
PDAM workers union deputy chairman Zainal Abidin said the company's debt rose because PDAM had adopted the international standardization methods of Palyja's owner, Suez Environment, and TPJ boss RWE. "It included a 'know-how' license agreement worth four percent of the annual revenue. Moreover, the board of directors' salaries ranged from Rp 8 million to Rp 9 million is this a month," Zainal said.
"The sad part is that the employees are being neglected, as many of us no longer receive our annual bonuses like we did before 1998."
On July 26 this year, Palyja announced that it had sold 49 percent of its shares to local partners PT Astratel Nusantara and Citigroup Financial Products Inc. It said the move was hoped to improve the company's service performance.
Then, on Aug. 3, TPJ sought the approval of the city administration to sell 100 percent of its shares to Acquatico and Alberta, two firms part of local holding company the Recapital Group, which is aligned with the Singaporean Glendale International Corp. TPJ said its owner wanted to withdraw from the water industry.
"The city administration must calculate all the potential losses it may incur... it also has to considering terminating the working contract as it is not benefiting the public," Benny said.
Nila Ardhianie, director of the Amrta Institute for Water Literacy, a group focusing on water services and technology, said the administration needed to scrutinize the new investors to make sure the parties had credible backgrounds in the water sector.
"As I see it, Astratel is not a local company, more than 50 percent of its shares are owned by a British businessman," she said, adding that neither Astratel nor Citigroup had any experience in the water industry.