$1.3b subway project may start next year

$1.3b subway project may start next year

JAKARTA (JP): The city administration hopes to start the
construction of its Fatmawati-Kota subway project, which is to be
financed by a Japanese loan worth US$1.3 billion, next year, a
senior official said on Thursday.

"If the final design of the project can be completed early
next year, we expect that the construction will also be able to
start next year," Deputy Governor for Development Affairs
Budihardjo Sukmadi told reporters after accompanying Governor
Sutiyoso to a meeting with executives from Japan's Itochu
Corporation.

Budihardjo claimed that the central government had given the
green light for the city administration to proceed with the
project after it was postponed following the signing of a
memorandum of understanding for the project in 1995.

However, he said, the central government required that the
Japanese loan for the project should be fully covered by the city
administration's budget.

"We are still hoping that the central government will cover
half of the loan. But if it refuses, then we will cover it
although it will be very difficult for the city," Budihardjo
said.

He predicted that with a maturity period of 40 years, the city
would have to pay Rp 300 billion (US$35 million) per year without
the help of the central government.

But, he said, if the central government were to pay half of
the installments, the city would only have to pay Rp 150 billion
per year for the project.

"With a contingency fund of more than Rp 500 billion a year, I
think the city will be able to repay the loan," he said, adding
that the city currently had a contingency fund of Rp 1.5
trillion.

The 2001 City Budget is expected to reach Rp 8.1 trillion.

The planned subway will stretch for 15 kilometers from the
Fatmawati area in South Jakarta to the Kota downtown area in West
Jakarta.

Budihardjo said the Itochu corporation would lobby the
Japanese government to provide the loan while the city
administration had already approached the central government for
approval for the project.

He revealed that Itochu very much hoped that the
administration would proceed with the project as the company had
completed its basic design.

"The company has its own interests. If the project is to be
continued, it still has some work to do. However, Governor
Sutiyoso really supports the project," he added.

Separately, chairman of the City Council's Commission D for
development affairs Sayogo Hendrosubroto said that he supported
the administration's plan to proceed with the project.

"The project is very important for the city which is facing a
serious transportation problems," Sayogo, from the Indonesian
Democratic Party of Struggle, said.

Besides Itochu, which led the Japanese consortium, the project
had earlier involved a European consortium led by Ferrostaal AG
of Germany.

The city administration has not yet established a local
consortium to partner Itochu. It is also not clear as to whether
the project will also involve the European consortium.

Some Indonesian firms which were earlier involved in the
project include the city-owned developer PT Pembangunan Jaya, PT
Bukaka Teknik Utama and a company controlled by former President
Soeharto's eldest daughter Siti Hardiyanti Rukmana, PT Citra
Lamtoro Gung.

Sutiyoso had earlier promised that the project would not
involve companies owned by members of the Soeharto family. (jun)