AGO bars Malaysia firm from joining JORR project

AGO bars Malaysia firm from joining JORR project

A'an Suryana, The Jakarta Post, Jakarta

The dream of a Malaysian consortium to be appointed the
strategic investor for developing the long-delayed Jakarta Outer
Ring Road (JORR) toll road project may be dashed as the Attorney
General's Office (AGO) has issued a legal opinion which would
appear to bar the consortium from participating.

"I have just been informed by Dorodjatun about the decision.
This decision underlines the fact that the consortium has no
right to be selected as the preferred strategic partner in the
project," Minister of Resettlement and Regional Infrastructure
Soenarno told reporters before attending a meeting with
legislators at the House on Wednesday.

He failed to provide any details.

Dorodjatun Kuntjoro-Jakti is the coordinating minister for the
economy, and chairs the Financial Sector Policy Committee (FSPC),
a grouping of senior economic ministers that has the final say on
the country's major corporate and bank restructuring programs.

The FSPC is responsible for deciding on the fate of the
consortium as regards the project, a decision that will be based
on the legal opinions of several parties, including the Attorney
General's Office and independent lawyers.

The decision is set to be taken this week, according to a
circular from the FSPC.

As the Malaysian consortium would most likely be ousted from
the project, Soenarno said that his ministry preferred state-
owned told road PT Jasa Marga to be appointed the project
executor.

"I have proposed Jasa Marga to the FSPC," Soenarno
acknowledged on Wednesday.

Soenarno, a staunch supporter of Jasa Marga in the dispute,
said that Jasa Marga was worthy of being selected as the executor
as it was financially healthy, as proven by the fact that it
booked profits amounting to Rp 157 billion in 2001.

The JORR was initially to be developed by three investors, PT
Cakra Bhakti Margatama Persada, PT Citra Mataram Satriamarga
Persada and PT Marga Nurindo Bhakti under a build-operate-
transfer (BOT) scheme.

The investors borrowed around Rp 1 trillion (US$115 million)
from local banks to finance the project, but it was canceled in
1997 due to the 1997-1998 financial crisis.

The investors then found themselves unable to repay the banks,
which forced the Indonesian Bank Restructuring Agency (IBRA) to
take over the loans and the project. IBRA then teamed up with
Jasa Marga to set up a new company called PT Jalantol Lingkar
Luar Jakarta (JLJ) to proceed with the project and find new
investors.

Among the investors interested in participating in the
project, only the Malaysian consortium was prepared to meet the
government's requirements. Consequently, the government picked
the consortium as the strategic investor.

The House of Representatives then annulled the government's
decision as the consortium was proposing tolls of Rp 500 per
kilometer, which was considered too expensive by the House.

As the House's decision left the project in limbo, the
government then held an open tender to resolve the issue.

However, the tender was a complete failure as none of the
bidders were prepared to meet the government's requirement of
paying Rp 1.2 trillion into an escrow account as a sign of their
seriousness, plus the need to post a bond of up to US$20 million.

The FSPC is set to decide this week on whether to select Jasa
Marga or the Malaysia consortium to execute the project.