City firm to acquire Palyja majority stake

JAKARTA. City-owned property developer PT Pembangunan Jaya will take over majority shares in water firm PT Pam Lyonnaise Jaya (Palyja), which were previously controlled by French company Suez Environment, after city water company PT PAM Jaya turned down Suez’ proposal to sell the stake to Philippines-based Manila Water.

The remaining 49 percent in Palyja is owned by PT Astratel Nusantara, a subsidiary of automotive giant PT Astra International.

“[Suez Environment] has agreed to sell the stake to PT Pembangunan Jaya, Tbk. The city administration expects that the company issues a letter of interest next week,” Deputy Governor Basuki “Ahok” Tjahaja Purnama told reporters at City Hall on Thursday.

Assistant to city secretary for economy Hasan Basri confirmed the deal.

“A business to business negotiation process is currently ongoing,” he told The Jakarta Post, declining to elaborate the details.

Ahok said that the city administration aimed to inject up to Rp 1 trillion (US$99 million) in government investment participation (PMP) to PT Pembangunan Jaya to support its effort to take over the majority stake.

“The total shares are worth around Rp 1.5 trillion,” Ahok pointed out.

The deputy governor added that after the process was completed, the city administration will proceed by approaching Astratel Nusantara to take over the remaining shares.

“We endorse [city-owned property developer] PT Jakarta Propertindo to acquire the remaining stake so the water firm will become a city-owned enterprise,” he said, adding that he was optimistic that both companies were capable to run the water firm.

“Pembangunan Jaya is a public company, while Jakarta Propertindo will become a public company in 2015. They are professionals,” he said.

Palyja spokesperson Meyritha Maryanie declined to comment on the city administration’s plan to acquire 100 percent of Palyja’s shares.

“The Palyja management has yet to learn about the plan. However, we are committed to deliver a professional service to residents in the west of Jakarta,” she told The Jakarta Post, adding that “we don’t have the authority over the share acquisition.”

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.

The contract has kept the city deep in debt with a dual financing scheme that differentiates between the price PAM Jaya pays private operators to supply water to households and the prices charged to customers, allowing the firms to book huge profits by overcharging customers.

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 aging pipes. (Sita W. Dewi)