Govt to guarantee loan for toll road<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
In a bid to expedite the construction of a massive toll road
\nproject in Java, the government is planning to provide guaranteed
\nbank loans for toll road companies.<\/p>\n
Director-General of Regional Infrastructure Hendrianto
\nNotosoegondo told The Jakarta Post that the plan was driven by
\nthe fact that toll road investors were having difficulties
\nobtaining loans from local banks, which have just started to
\nrecover from the devastating impact of the late 1990s financial
\ncrisis.<\/p>\n
\"We want to encourage and enable toll road operators in
\ngetting loans from local banks by becoming the guarantor of the
\nloans, so that they can get the financing needed,\" said
\nHendrianto recently.<\/p>\n
The Directorate-General of Regional Infrastructure is under
\nthe Ministry of Resettlement and Regional Infrastructure.<\/p>\n
Hendrianto said that the plan was now being processed by
\nofficials at the economy ministry, and a ruling on it was
\nexpected to be issued next month.<\/p>\n
The government is planning to build a 1,486-kilometer toll
\nroad that would link Merak in Banten with Banyuwangi in East
\nJava. The projects, scheduled to start this year and continue
\nuntil 2009, are estimated to cost some Rp 77.3 trillion (about
\nUS$9.2 billion). Private investors have been encouraged to
\nconstruct different sections of the road.<\/p>\n
It will be divided into three phases with the first phase
\ncovering the construction of a 64-kilometer toll road for the
\nunfinished Jakarta outer ring road (JORR) and the Cikampek-
\nPadalarang stage II, in West Java.<\/p>\n
The first project is estimated to cost Rp 3.25 trillion.<\/p>\n
The second phase will be the construction of a 356-km section,
\ncomprising a series of highways that will connect Cikampek with
\nCirebon, Semarang with Demak, Surabaya with Mojokerto and Madura
\nand SS Waru with Tanjung Perak. This stage is estimated at around
\nRp 16.57 trillion.<\/p>\n
The third and largest section will be the construction of a
\n1,066-kilometer road at an estimated cost of Rp 57.5 trillion.
\nThe JORR part II project, Bogor ring road, Probolingo-Banyuwangi,
\nSolo-Mantingan and Pejagaan-Pemalang are included in this
\ncategory.<\/p>\n
Hendrianto said the government believed that most of the cost
\nfor the project could be financed by local financial
\ninstitutions.<\/p>\n
However, several of the institutions have questioned that
\nbecause the amount needed was significantly higher than the
\naccumulated assets owned by all the toll roads operators, he
\nsaid.<\/p>\n
Therefore, a government guarantee was needed to enable toll
\nroad operators, such as state-owned PT Jasa Marga, to get
\nfinancing that exceeded their asset value, Hendrianto said.<\/p>\n
\"This is our attempt to entice banks to finance the project,
\nIf the operators default on their loans, the government will bail
\nthem out. However, the mechanism is still being discussed,\" he
\nsaid.<\/p>\n
Infrastructure Minister Soenarno said recently that if the
\ntoll road firms could obtain enough money from banks to finance
\nthe project, it would boost the economy overall, especially the
\nailing construction sector.<\/p>\n
The banking sector has largely declined to offer greater
\nincentives for new lending to the corporate sector, despite
\nimprovements in many key macroeconomic indicators. Bankers argue
\nthat lending to the sector is still risky due to slow progress in
\nthe restructuring of corporate debt.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-guarantee-loan-for-toll-road-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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