$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)