Thames Water has said it still wants to run water services in the Indonesian capital of Jakarta, despite the suspension of its contract.

The British company confirmed on Monday evening that the 25-year deal it had signed to improve and run domestic water supplies in East Jakarta had been suspended.

Thames Water say the contract is 'not lost yet'

The contract involved a joint venture between Thames Water and another company controlled by the eldest son of former president Suharto, Sigit Harjojudanto.

It was suspended after a representative of Mr Suharto resigned from the board.

But Thames Water's Director of Finance, David Luffrum, said the deal was not lost yet.

A spokeswoman for the group added: "The situation is changing all the time, we are in negotiations and do not regard the contract as cancelled but as suspended."

Indonesian backlash

Newspaper reports blamed the backlash against the Suharto family's business interests for the suspension of Thames' contract.

Thames has a 75% stake in the joint venture with the rest held by its local partner PT Kekarpola Airindo.

The water firm announced in June 1997 that it had won the contract to manage and improve the water supply in east Jakarta.

The company said then that capital investment associated with the project was estimated at £160m and that the project involved supplying an additional 3m people with piped water, bringing the total population served to 5m.

At the same time the Jakarta authorities awarded a concession to operate water services in the western half of the city to Suez Lyonnaise des Eaux and its local partner, the Salim Group.

Blow to profits

Analysts said in 1997 that by year 10, the Jakarta concession might be contributing about £25m ($40.5m) to pre-tax profits.

Thames itself said that turnover from the concession would average about £57m ($92.5m) a year for the first five years and could exceed £200m ($325m) a year in later years.

However since last year the Indonesian currency has tumbled against sterling and at the last estimate Thames reckoned it would be looking at £80m of capital investment over the five year period.

A Thames' spokeswoman said the group only started work in February and so has done little work on the contract, but would not say how much of the £80m has been spent.

She said: "Day to day management has temporarily reverted to the old water authority but that still leaves a pressing need for Jakarta to upgrade the system and get its inhabitants onto a piped water supply."

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