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Indonesia: Jakarta Court Bans Water Privatization

(Mar. 30, 2015) On March 24, 2015, the Central Jakarta District Court ruled that provision of water in the city of Jakarta could not be privatized. The decision came in a case filed by the Coalition of Jakarta Residents Opposing Water Privatization (the Coalition) in March 2013; the Coalition comprised city residents, trade unions, and water justice activists. The decision in effect annulled a public-private partnership that had been formally concluded by the city and two private water businesses, Palyja and Aetra, in June 1998 that had been planned to last until 2023. (Corry Elyda & Dewanti A. Wardhani, Palyja, Aetra to Appeal Water Verdict, JAKARTA POST (Mar. 26, 2015); Jakarta Court Cancels World’s Biggest Water Privatisation After 18 Year Failure, Transnational Institute website (Mar. 25, 2015).)

The Coalition’s suit against the city covered the initial decision to privatize water resources and the poor service record of the private companies. Water leakage levels were reported to be as high as 44% in Jakarta, and the price for the water increased from Rp1,700 to Rp7,020 (about US$0.13 to $0.54) per cubic meter, a rate 2.7 times that charged by the public water utility in Surabaya, the second largest city in the country. (Jakarta Court Cancels World’s Biggest Water Privatisation After 18 Year Failure, supra.)

Iim Nurohim, the presiding judge of the Court, stated that the “defendants have been negligent in fulfilling Jakarta residents’ right to water.” (Elyda & Wardhani, supra.) He ordered the end of the privatization of water, calling the existing agreement null and void. According to the Coalition, in the time since the agreement was concluded, only 60% of the residents have received piped, clean water. The judge also noted that PAM Jaya, the city-owned partner in the water agreement, had lost Rp1.17 trillion (about US$90 million) since the arrangement began, because the structure of the agreement favored the private firms. (Id.)

Reaction of the Companies

Both Palyja and Aetra intend to appeal the Court’s decision. Meyritha Maryanie of Palyja expressed surprise and disappointment about the decision, but added, “[w]e have decided to appeal the verdict. Therefore, the cooperation contract remains in full force and effect until the future ruling.” (Id.) Pratama S. Adi of Aetra concurred, stating that the company would submit documents to appeal the decision next week and would continue to invest in the water business. (Id.)

Reaction of Local Government

Basuki “Ahok” Tjahaja Purnama, Jakarta’s Governor, spoke about the situation on March 25, saying that due to the appeal, the city could not comply with the Coalition’s wish that the administration immediately take control of water resources. He added that he hoped for a quick resolution. Prior to the District Court’s decision, the city had planned to acquire shares in Palyja, through PAM Jaya, in the hope that water services would be improved; Ahok indicated that the administration would pursue the acquisition of shares, in addition to restructuring the leadership of PAM Jaya. (Id.)

Reaction of Water Rights Advocates

The decision was hailed by Rosa Pavanelli, General Secretary of Public Services International, a trade union federation. She said, “[y]esterday’s decision is a success for the Jakarta citizens and workers, but also for the global water movement.” (Jakarta Court Cancels World’s Biggest Water Privatisation After 18 Year Failure, supra.)

Similar views were expressed by Fiona Dove, Executive Director of the, Transnational Institute, who called the decision a “citizen’s victory” and said that it “will give an enormous boost to the growing global trend of cities overturning failed privatizations and taking back control over critical water services. This will empower many more local governments to close the book on privatization, which has proven socially and economically unsustainable across the world.” (Id.) The Transnational Institute describes itself as an “international research and advocacy institute committed to building a just, democratic and sustainable planet.” (Introduction, Transnational Institute website (Apr. 9, 2009).)

Nila Ardhianie, Director of Amrta Institute for Water Literacy, an organization located in Indonesia, said, “[f]or Jakarta, the ball is now in the governor’s court. Together, we can build a strong public utility for all Jakartans. We can also get help from strong public utilities, both in Indonesia and from overseas, but without the distortions of profit maximization.” (Jakarta Court Cancels World’s Biggest Water Privatisation After 18 Year Failure, supra; About Us, Amrta Institute for Water Literacy website(last visited Mar. 30, 2015).)

Recent, Related Decision

The District Court decision is consistent with the February 18, 2015, Constitutional Court action that revoked as unconstitutional the 2004 Law on Water Resources. That Law had permitted private sector companies to sell packaged tap water. The decision means that private companies will not be able to have exclusive control of water resources. (See Constance A. Johnson, Indonesia: Water Law Overturned by Court, GLOBAL LEGAL MONITOR (Mar. 3, 2015).)