Jakarta Water (Eastern District)

active

In June of 1997, a consortium led by Thames Water of the U.K. was awarded a 25-year concession contract by PT PAM Jaya, the municipal water authority of Jakarta, to supply potable water to the eastern half of Jakarta, east of the Ciliwug River. The company was to manage the water supply for about 3.5 million people in the project area. France's Lyonnaise des Eaux (later SUEZ) simultaneously won a similar contract for the western half of the city. PT Kekar Thames Arindo (KTA) was initially a joint venture that was owned 80% by Thames Water and 20% by PT Kekarpola Airindo, the latter of which was a company owned by Sigit Harjojudanto, a son of former President Suharto. Following President Suharto's resignation in 1998, the City of Jakarta revoked the company's concession agreement. Months later, the concession was reinstated on the condition that PT Kekarpola Airindo sell its stake in the company. Thames Water bought out 15% of its partner's holding in June 1998, but was prevented from taking complete control by Indonesian law governing foreign ownership of water resources. In August of 1998, Thames Water and PDAM Jaya announced their new joint-venture firm PT Thames Pam Jaya (TPJ) owned 95% by Thames while the city-owned firm held onto the remaining 5% stake. In October 2006, a Singaporean consortium, Acuatico Ltd, acquired 95% stake of Thames Water in TPJ. The move is part of Thames’ drive to focus on its investment programme in the UK, and follows the sale of other Thames businesses in Thailand. Acuatico was a Singapore-based company owned by the Indonesian firms PT Recapital Advisors and PT Glendale Partners. The eastern portion of Jakarta was served by two water treatment facilities: Pulagadong with a capacity of 450,000 cubic meters per day and Biuran with a capacity of 300,000 cubic meters per day. Under the initial agreement, KTA was required to install 1,100 km of pipes within the first five years and replace 200 km of existing pipeline. The company was also required to increase the amount of water supply from 98 million cubic meters per year (about 268,493 cubic meters per day) to 168 million cubic meters per year (about 460,274 cubic meters per day) as well as increase the customer base from 2 million to 3.5 million. Furthermore, the agreement stipulated that leakages were to be reduced from 60% to 35% by the end of the 5th year and below 20% by the end of the 20th year. The delinquency rate of customers also had to be reduced from 50% to 30% by the end of the fifth year. The company took over operations and management on February 1, 1998. The total projected project cost was initially US$260 million in the first five years and Thames was to invest US$72 million for its stake. As part of the concession, the joint venture also assumed the loan obligations of PAM Jaya. In July 1998, The European Investment Bank (EIB) announced a US$49 million loan to the project. Due to political difficulties and inflation and currency movements which undermined the value of the original contract, the company and the Indonesian government renegotiated the contract in February 2000. Under the revised terms, TPJ was to spend US$200 million by 2003 to supply water to the eastern half of Jakarta in return for revised tariffs, greater flexibility in hiring workers from PAM Jaya and direct contracts to purchase water. Also due in part to the political and financial crises that occurred in Indonesia over the first years of the concession and the contract renegotiations that followed, initial results were mixed. Service coverage was expected to rise from 41% in 1996 to 70% in 2002. By 2002 coverage was 62% in the Thames concession. By end 2005, TPJ had reportedly invested Rp 711 billion to finance the installation of big and small water pipes to replace old leaking pipes, some of which were installed by the Dutch in the 1930s. In the beginning of 2007, TPJ was acquired by Acuatico, a Singaporean consortium which was consisted of PT. Recapital Investment and PT. Glendale. Acuatico pledged to invest US$15 million for TPJ's capital expenditure. TPJ was subsequently renamed into PT Aetra Air Jakarta. None None