Toll project hangs in the balance<\/p>\n
Rendi A. Witular, Jakarta<\/p>\n
A giant toll road project stretching from the western tip of
\nJava to the easternmost city on the island might not be completed
\nas scheduled, as the Ministry of Finance seems reluctant to
\napprove a pivotal loan facility for the project.<\/p>\n
The project started early this year and is scheduled to be
\ncompleted in 2009, while the loan guarantee facility for the
\nproject was approved by the Office of the Coordinating Minister
\nfor the Economy in January this year.<\/p>\n
However, Syarifuddin Alamabai, president of state-owned toll
\nroad operator PT Jasa Marga, said the Ministry of Finance had yet
\nto approve the loan guarantee facility.<\/p>\n
"The government (the Ministry of Finance) seems reluctant to
\nsupport this strategic project," said Syarifuddin after a meeting
\nwith House of Representatives Commission IX for financial
\naffairs.<\/p>\n
Under a plan approved by the Cabinet, the toll road will
\nstretch 1,486 kilometers from Merak, Banten, to Banyuwangi, East
\nJava. The project is estimated to cost some Rp 77.3 trillion
\n(about US$8.22 billion).<\/p>\n
Several toll road operators, including Jasa Marga, doubted
\ntheir ability to raise the necessary finance for the project
\nbecause the total financing requirement was significantly greater
\nthan the value of their accumulated assets.<\/p>\n
For instance, in view of its asset value, Syarifuddin said,
\nJasa Marga could borrow only up to Rp 2 trillion from banks,
\nsufficient to finance the construction of around 100 kilometers
\nof toll road.<\/p>\n
The loan guarantee facility would enable toll road operators
\nto obtain loans higher than their asset value.<\/p>\n
However, if the finance ministry continued to refuse to
\napprove the facility, construction of the project would progress
\nat a very slow pace, at around 100 kilometers per year, meaning
\nthe project would take 10 years to be completed, he said.<\/p>\n
Regarding the company's plan to sell a 30 percent shareholding
\nto the public via an initial public offering (IPO), Syarifuddin
\nsaid the plan had been approved by the Office of the State
\nMinister of State Enterprises and the firm was now seeking
\napproval from the Office of the Coordinating Minister for the
\nEconomy.<\/p>\n
"I expect the IPO will be made in October this year, with
\nproceeds estimated at Rp 2 trillion to Rp 3 trillion. The
\nproceeds will be allocated mostly to finance our projects," he
\nsaid.<\/p>\n
Aside from the IPO proceeds, Jasa Marga expects to finance its
\nproject using a Rp 1.5 trillion loan from a local bank consortium
\ncomprising Bank Mandiri, Bank Central Asia, Bank Negara Indonesia
\nand Bank Bukopin.<\/p>\n
Jasa Marga finance director Djojo Subagdja said the loan would
\nhave a six-year maturity period with an interest rate of 11
\npercent to 12 percent. The loan would be used this year to
\nconstruct 40 kilometers of toll road to connect Jakarta and
\nBandung, and to complete the remaining 8 kilometers of the
\nJakarta Outer Ring Road.<\/p>\n
"We are seeking bank loans this year to finance our projects,
\nas we have canceled our plan to issue bonds due to currently
\nunfavorable market conditions," said Djojo.<\/p>\n
In a bid to finance part of the project, the company is also
\nplanning to put to tender construction of 20 kilometers of toll
\nroad that will connect Medan and Binjai, North Sumatra.<\/p>",
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