A new deal for Jakarta’s water?

At the end of October, former public utility Pam Jaya and Palyja, the private concessionaire providing water services to the city’s western zone, agreed that they would renegotiate their public-private partnership contract. The contract has been through several rounds of renegotiation already, none of which has proved able to deliver a stable and sustainable structure for Jakarta’s water supply, so the announcement may not be greeted with great optimism. They have set themselves an ambitious deadline to complete the process in 6 months.

Pam Jaya argues that the contract needs to be modified to bring the PPP in line with PPP regulations issued at the tail end of 2015 which stipulate that government should be responsible for raw water resource management and for customer service, but that private participation was permitted in treatment and distribution.

The crux of the negotiation will be the adjustment to the water charge, the amount paid to the concessionaire for each unit of water sold. Palyja would be expected to argue for retaining the current price, while Pam Jaya will want to reduce the price to reflect the transfer of staff and the cost of customer service supply. 18 years on from the award of the Jakarta concessions, it is unclear whether Pam Jaya will have the capacity to run the customer side of the operation.

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