The view from Indonesia - Sigit Budiono
Right to water activist Sigit Budiono shares the devastating history of the World Bank’s privatisation of Jakarta’s water system
By: Fight Inequality
Sigit is giving testimony on Wednesday 11 October, 09:30-15:30 Casablanca Time at the Peoples’ Alternative Global Tribunal on the IMF and World Bank in Marrakech, Morocco. Watch live via Facebook.
Jakartan and specifically vulnerable groups, women, urban poor, etc have long experience of inequality and discrimination regarding essential services, namely water services. The story begins with the case of Jakarta water privatization. The privatization of water services has caused Jakartan to suffer and caused losses to the country.
More than 3.5 million Jakartan don’t have piped water access. Coverage of piped water has stagnated, namely at 65%. This means, 25 years of privatization only increased coverage by around 20% from the level of service coverage before which reached 45.3%.
Meanwhile, Jakartan who have water connections receive poor services. They often experience dead or intermittent water supply. Women in Rawa Badak, North Jakarta, have to stay up until 2 am to wait for water flow for just around 2-3 hours, collecting it in buckets or other containers. The water quality is not drinkable and often smells, tastes salty or unpleasant, or has a dirty color. They have to settle the water, cook it first, and add other water sources, including groundwater and bottled water. Ironically, they still have to pay dearly for these poor water services.
Privatization also discriminates against poor households. Many poor households who live in areas that the authorities carelessly call gray/illegal areas, cannot have piped water from the main network. The group is forced to rely on alternative mechanisms, which are often exploitative and expensive, such as Master Meters, Water Kiosks, etc. Residents of Muara Baru, for example, can only access water from the master meter and connect it to their homes. The “master meter” then sets prices which are often far above the normal price (two or three times).
According to World Bank data, poor households have to spend between 13-25% of their income on water. Even though the Ministry of Home Affairs regulations clearly state that households cannot spend more than 4 percent of their income on daily water consumption.
The Local Parliament or PAM Jaya admits, unable to intervene and serve the area, because projects to increase water supply must have permission from the companies. Privatization has been cited by state agencies as an obstacle to developing water services for communities.
The contract also caused financial losses for PAM Jaya and the State. Mechanism for achieving profits for the companies causes “shortfall” which must be paid by PAM Jaya or included as debt. Claims that the debt bill that PAM Jaya must pay even reaches hundreds of billions to trillions of rupiah as claimed by Palyja. Palyja even claimed the “shortfall” reached 10 trillion. In the end, PAM Jaya had to pay IDR 481 billion to the company.
World Bank’s Role in Jakarta Water Privatization
The privatization began in 1991 under the Water Sector Adjustment project worth a $92 million loan from the World Bank. This project claimed to be “way out” of the water service management problems in Jakarta, including low water quality, lack of investment, and vulnerability to corruption.
Then, based on World Bank’s advice, in 1995 Soeharto ordered water privatization, appointing two foreign companies (Thames (England) and Suez (France) without open bidding). The World Bank believes privatization is the solution to the failure to provide public water in Jakarta and inequality of access to water. Private companies are believed to be able to provide better management.
The privatization finally took place in 1997. Through a partnership with the Soeharto family and Soeharto's cronies, the concession contract was signed without public consultation. A 25 year concession agreement was signed by PAM Jaya and foreign private companies who collaborated with Soeharto's children and cronies. PT Aetra finally controlled the eastern part of the city and PT Palyja controlled the other half. Over the years, there’ve been changes in ownership and terms of the Cooperation Agreement.
The World Bank in Indonesia also initiated the Water Resources Sector Adjustment Loan Project (WATSAL). This 300 million dollar loan aims to restructure water policies in Indonesia by including water as an economic good and changing water regulations so the private sector role becomes legitimate and strong.
Indonesian people’s demands
The World Bank has caused water services in Jakarta to become just a means of making profits for private water companies. We demand the World Bank should stop all its interventions that encourage the idea of privatization to all governments in the world in running all public services. We also demand a change in the world system that is no longer subject to institutions such as the World Bank, with all its outdated ideas, which were formed and based on the efforts of capitalist countries to facilitate corporations in extracting world wealth for the benefit of the one percent.