Government to Give Financial Assistance to PDAM

DENPASAR ~ Heavily indebted Denpasar Water Company (PDAM) signed a cooperation deal this week with the Finance and Development Monitoring Board of Bali (BPKP) in a bid to boost its finances, officials said.

The cooperation, said Putu Gede Mahaputra, director of PDAM, was necessary because the company has financial problems that had been affecting the quality of its service to customers.

Currently PDAM covers 67 percent of Denpasar, while people living in the other 33 percent get their water independently, he said.

PDAM deputy director Wayan Melaya told The Bali Times that there were two main causes of the problem, namely a lack of infrastructure and limited production capability, adding that the difficulties were connected to a government-owed debt burden carried by the company.

“The company’s total debt this year is Rp101 billion (US$10.7 million), among which Rp81 billion is already due for payment in 2006,” he said.

“Our biggest problem is that the company doesn’t have enough funds to pay the debts, because we keep losing money from sales since the mayor set the price far below the production cost.”

Melaya said PDAM was currently selling its mains water for Rp1,030 per meter cubic, while production cost about Rp1,650 per meter cubic.

“With an obligation to give a subsidy on the rate, we are not capable of providing enough infrastructure to provide coverage for all areas in Denpasar or to increase production,” he told The Times, adding that now the company produced 1,075 liters per second while the need was currently 1,300 liters per second.

“Based on the cooperation agreement, BPKP will help us to optimize our financial capability before we request an extension of our debt repayments to the government,” said Melaya.

The entire debt was supposed to have been paid back in full, to the Ministry of Finance, by the end of last year.

“We plan to propose a 20-year extension, but that will be the decision of the Finance Ministry,” said Melaya.

Meanwhile, head of BPKP Bali Sidik Wiyoto, said that the main problem of PDAM Denpasar was that it had not yet gained any profit from its business.

“We will assist the company to build a better and transparent financial management,” he said.

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