Jakarta Water (Western District)

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In June of 1997, a consortium led by Suez Lyonnaise des Eaux (renamed SUEZ in May 2001)was awarded the 25-year concession contract from PT Pam Jaya, the municipal water authority of Jakarta, for the operation and management of the entire water system for the western half of Jakarta, west of the Ciliwug River. In 1997, the project area had a main network which was approximately 3,000 km long and served around 5 million consumers. The UK's Thames Water simultaneously won a similar contract for the eastern half of the city. PT Garuda Dipta Semesta was originally a partnership between Suez Lyonnaise des Eaux water subsidary Ondeo (40%) and the Salim Group (60%), the latter of which was headed by Sudono Salim, considered a close ally of former president Suharto. Following President Suharto's resignation in 1998, the City of Jakarta put pressure on the Salim Group to divest its stake. In June 1998, Suez Lyonnaise des Eaux purchased the 60% stake held by the Salim Group and disposed of 5% to the government. In August of 1998, Suez Lyonnaise des Eaux and PT Bangun Tjipta Sarana announced their new joint-venture firm PT Pam Lyonnaise Jaya (Palyja), owned 95% by Suez Lyonnaise des Eaux and 5% by the state-owned firm. In July 2006, Astratel, a subsidiary company of ASTRA International, together with Citigroup Financial Products Inc. acquired a 49% of PT PAM Lyonnaise Jaya (PALYJA) from SUEZ Environment. Most of the water for the project was to come from the Pejomponang Treatment plant which produced 483,840 cubic meters per day. The remaining supply was bought from a plant that was built and operated by PT Titr Cisadane, a subsidiary of Suez's Degremont. Under the oncession contract, Palyja had committed itself to reaching 5.5 million consumers, thus increasing the water supplied from 40% of the population to 70% by 2002 and raising the billing ratio to 80% by the end of the concession period. Palyja also agreed to reduce the water leakage from 50% to 35% by the end of the first five years. The total cost of the project was projected to be US$300 million within the first 5 years of the concession. As part of the concession, the joint venture also assumed the loan obligations of PAM Jaya. Financial closure was reached in July 1998 when financing was arranged by Credit Agricole Indosuez Merchant Bank Asia Ltd and seven banks that provided a syndicated loan of US$70 million. Also in July of 1998, the European Investment Bank committed a US$61.3 million loan to the project. The balance of the project cost was funded by the equity of the sponsors and the cash flow internally generated. 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 not positive. Service coverage was expected to rise from 41% in 1996 to 70% in 2002, but by 2002 coverage was only 41% in the Suez concession as Suez had reportedly invested only about half of its commitments in the first five years of the contract. In May 2005, Palyja issued six series of bonds worth a total of Rp700 billion (US$73.7 million). In October 2012, in a disclosure to the Philippine Stock Exchange, Manila Water said it had signed a purchase agreement with Indonesia's Suez Environment to acquire the latter's 51-per-cent equity in PT PAM Lyonnaise Jaya (Palyja). http://www.palyja.co.id