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.