Water privatization in Indonesia

Water privatization in Indonesia began in February 1998 with the award of two 25-year water concessions to serve the city of Jakarta. A subsidiary of The French firm Ondeo (now Suez), called Palyja, was awarded the concession for the western part of the city and a subsidiary of the British firm Thames Water International called TPJ was awarded a concession for the eastern part.

Due to the impact of the 1997 East Asian financial crisis the contracts were renegotiated in 2001 and the [http://www.jakartawater.org/eng/|Jakarta Water Supply Regulatory Body (JWSRB)] was established as an "autonomous" regulator in charge of supervising the concessions on behalf of the Governor of Jakarta and the Ministry of Public Works. [ Lanti, Achmad, in: International Journal of Water Resources Development, Volume 22, Number 2, June 2006 , pp. 255-276(22) [http://www.ingentaconnect.com/content/routledg/cijw/2006/00000022/00000002/art00006;jsessionid=2qs6pohmfp5kd.alice?format=print] ] Since early 1998 the water rate has increased by 15% in February 1998, 35% in April 2001, 40% in April 2003 and 30% in January 2004 in nominal value prices. [ [http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20040106.A04 Jakarta Post 2004] ] The inflation rate in Indonesia was 12% in 2003, 6.6% in 2004, 6.1% in 2005 and 10.5% in 2006. [ [http://www.indexmundi.com/indonesia/inflation_rate_(consumer_prices).html Index Mundi] ] More frequent tariff increase had been contractually scheduled to finance needed investments and to compensate for inflation. However, Jakarta Governor Sutiyoso and the City Council had refused to raise water rates according to schedule, thus forcing the two concessionaires to cut down on investments.

In 2004 a consumer group sued the concessionaires for providing poor services. The lawyers of the utilities rejected the claims saying that the evidence presented was poor and that a survey to support the claims was not carried out by an independent agency. [ [http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20040617.G03 Jakarta Post] ]

In early 2004 a regular increase of tariffs every six months between January 2004 and 2007 was agreed. Subsequently investments picked up again, focusing on replacing the decrepit distribution network. [ [http://www.bkpm.go.id/bkpm/news.php?mode=baca&info_id=1480 Investment Indonesia Online] ]

See also

Water supply and sanitation in Indonesia

References