24 toll road projects, worth Rp 13t, canceled

JAKARTA (JP): The Ministry of Public Works has canceled 24 toll road projects with investments valued over Rp 13 trillion (US$2 billion) on the grounds that they were tainted with corruption, collusion and nepotism.

Minister of Public Works Rachmadi Bambang Sumadhijo said on Thursday among the canceled projects were the Solo-Yogyakarta toll road in Central Java and Jakarta's triple-tiered project developed by PT Citra Lamtoro Gung Persada, a company owned by Soeharto's eldest daughter, Siti "Tutut" Hardijanti Rukmana.

The Pasar Minggu-Depok toll road project in Jakarta and a toll road linking Jakarta-Jonggol-Cianjur, developed by PT Tri Daya Esta, a company controlled by Tutut's brother Bambang Trihatmodjo, was also canceled.

A toll bridge planned for the Sunda Strait, a project developed by PT Pakarti Trimitra, a company linked to Soeharto's young grandson Ari Sigit, was also canceled.

The ministry also canceled the Soedyatmo-Teluknaga-Tangerang toll road developed by the Salim Group.

Rachmadi said although the 24 projects were yet to begin, the projects had already gained approval from the Ministry of Public Works.

"We decided to cancel the projects because the private partners were appointed directly by the government without competitive tender," he said at a media conference.

"However, we will retender or renegotiate contracts which were vital to the state."

The projects were to be jointly developed by private companies and the state toll road operator PT Jasa Marga.

Rachmadi said only 46 out of the 107 toll road projects jointly developed by Jasa Marga and private companies were found free from corrupt, collusive and nepotistic practices.

He said the ministry's findings indicated another 21 toll road projects had received special treatment which were obtained through political connections.

Nine of the projects were being renegotiated due to construction being inconsistent with the deal and revenue distributed unfairly in projects with large investments.

The projects included the Tangerang-Merak toll road in West Java, developed by PT Marga Mandala Sakti, owned by Soeharto's youngest son Hutomo "Tommy" Mandala Putra, the Surabaya-Gresik road and the Waru (Aloha) Wonokromo-Tanjung Perak toll road in Surabaya, East Java. Both are already in operation.

Another 12 projects, he said, were currently under renegotiation because their deals were a potential burden for Jasa Marga.

Jasa Marga's director of commercial development, Frans S. Sunito, said his company was currently reviewing deals for potential contingent liabilities, including clauses that require Jasa Marga to take over debts from partners or provide bridging finances for them.

Frans said five of the unfair deals, the Jakarta Outer Ring Roads, the Cawang-Tanjung Priok toll road, the Harbor Road, and the Cikampek-Padalarang toll road, were made with companies linked to Tutut.

He said the developer of Cawang-Tanjung Priok toll road and Harbor Road, PT Citra Marga Nusaphala Persada (CMNP), owned by Tutut, secured a $175 million credit at a floating rate of an annual 1.5 percent interest rate above the London Interbank Offering Rate (LIBOR). The debt matured in August last year.

One of the clauses of Jasa Marga-CMNP's deals stated Jasa Marga required to take over debts from its partners or provide bridging finances for them.

The Jakarta outer ring roads (JORR) is currently in a construction phase while the Cawang-Tanjung Priok is in operation.

Rachmadi said the Indonesian Bank Restructuring Agency (IBRA) was currently conducting a due diligence audit on five toll road projects because the developers defaulted on debts to banks under the agency's control.

"If IBRA takes over the toll road projects, Jasa Marga will negotiate with IBRA on the future of the projects," he said.

The five projects, JORR, Palimanan-Cirebon toll road, Bekasi- Cawang-Kampung Melayu road and the Surabaya-Gresik toll road, have an investment value of Rp 4.1 trillion.

He added the government now expected the toll road projects to be taken over could be continued with $6.5 trillion soft loans provided by the Japanese government.

"One of the requirements for the special loans is any dispute with the developers should be settled. But I'm quite optimistic that we can get the loans," he said.

Frans said Jasa Marga had also canceled another 16 projects which were still in a planning stage as further studies showed there was no urgency to build them. (gis)