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Jakarta water privatisation: Anies takes over clean water management

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

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07 February 2019

By Feni Freycinetia

 

Jakarta — Jakarta Governor Anies Baswedan confirmed that he will still take over clean water management from the private parties even though the Supreme Court has ruled in favour of the Judicial Review proposed by the Finance Ministry.

Previously, the Finance Ministry proposed Judicial Review over the Supreme Court’s Ruling No. 31K/Pdt/2017 on the Termination of Drinking Water Privatisation in Jakarta Province and the Supreme Court ruled for the Judicial Review on 30 November 2018.

“Last week, we already had a meeting among leaders specifically for that matter and now it is in the process. The point is we will continue to take over the privatisation policy to be managed by the government. Municipalisation will carry on,” he said Tuesday (5/2).

He said that he has assigned PAM Jaya to further discuss on the matter with the private parties, namely Aetra and Palyja.

According to him, in the initial talks, the two operators gave their responses to the idea of clean water service take-over or municipalisation by PAM Jaya.

“They [the private operators] responded positively, but earlier the talks was still in the context of implementing the Supreme Court’s ruling. Now the ruling has been revoked but the talks are still carried on,” he added.

Anies also appreciated the positive attitude of the private operators. He explained that the government’s purpose is nothing but to facilitate all of its citizens to gain access to clean water. Water services should be perceived as a basic need, not as a mere business.

Meanwhile, Amrta Institute Director Nila Ardhianie said the Judicial Review provisions only deal with the formal aspects and not the material ones.

If the Supreme Court ruled in favour of the Judicial Review like what we see in the case summary which has been decided and uploaded on the Supreme Court’s website, it shows that the Supreme Court only focuses only on the formal aspects and not the legal justice.

Nevertheless, all parties need to read the copy of the ruling comprehensively in advance. “The award to the Finance Ministry’s Judicial Review will actually harm the Ministry itself. They did not seem to understand the issue, so they proposed for a judicial review,” she said.

In fact, the Supreme Court’s previous ruling puts the Finance Ministry in advantage because they do not have to pay for the obligations PAM Jaya fails to meet by the time the contract ends.

She said in 2001 the Finance Ministry issued a support letter, which was a guarantee letter from the central government for Jakarta water privatisation projects. The main point of the letter was that if PAM Jaya failed to meet the payment obligations, Jakarta Provincial Government would bear the obligations, and if Jakarta Government was also unable to do so, the obligations would be assumed by the Finance Ministry.

In the privatisation cooperation that lasts for 20 years, PAM Jaya would have difficulty in fulfilling several obligations worth around Rp8 trillion to Palyja and Aerta.

But with the ruling in favour of the Finance Ministry’s Judicial Review, the letter will be valid again, so private companies can use the guarantee letter. Before, with the past ruling of the Supreme Court, it would be difficult to cash in on the letter.

“So actually the winning Judicial Review of the Finance Ministry will harm the Finance Ministry, Jakarta Provincial Government, and of course the citizens because the hopes for all citizens to have clean water access become more difficult to be realised,” she said.

Earlier, Member of Advocacy Group of the People’s Coalition Against Jakarta Water Privatisation Nelson Nikodemus Simamora also said the Supreme Court’s Ruling No. 85/PUU-XI/2013 ruled that water services should be managed by the state, either through state-owned enterprises or regional-owned enterprises.

If the water management is to be transferred to private parties, tight requirements should be imposed on the private party who will manage the water services.

“Water should be owned by the state. Jakarta Government should take over and has to make every effort to make it return to the state with the lowest cost possible. For instance, contract termination will cost less than purchasing trillions of shares,” said Nelson.

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