City OKs fare subsidy for monorail
Damar Harsanto, The Jakarta Post, Jakarta
Governor Sutiyoso revealed on Monday that the city administration had decided to accept the request by the PT Jakarta Monorail (JM) consortium, for a subsidy for monorail fares in order to keep them at an affordable level of Rp 5,000 per single trip.
"We will certainly provide the fare subsidy, but we are still calculating the exact amount," Sutiyoso told reporters at City Hall.
JM, which is owned by PT Indonesia Transit Central (ITC) and Omnico Singapore, Pte. Ltd, has asked the administration to provide an annual fare subsidy of up to US$20 million for eight years to reduce fares to Rp 5,000 from the estimated economic level of Rp 12,500.
However, Sutiyoso asserted that the administration would seek to reduce the fare subsidy by changing the monorail technology to be used.
"That's why I will leave next week for South Korea and the People's Republic of China to seek alternative, cheaper monorail technology to replace costly technology from Japan," Sutiyoso said.
If JM and the administration were to push ahead with using technology from Japan's Hitachi, they will have to shove deeper into their cash-strapped pockets to finance the project, which is valued at $650 million.
Both have decided to drop the technology owing to financial constraints and will seek alternatives by using Korean or Chinese technology, which it is believed will to be much cheaper.
Sutiyoso is scheduled to visit Seoul and Beijing for four days next week.
No details were immediately available on Monday on what the differences were between the Japanese technology and Korean or Chinese technology.
Previously, JM and the administration had terminated a contract worth $540 million for the same project with a Malaysian company, MTrans Holding Bhd, also due to financing problems.
Aside from the fare subsidy, JM had earlier also requested the administration to provide 30 percent of the initial equity of $200 million, which would amount to approximately $60 million, it needs in order to convince banks to provide loans worth $450 million.
JM operational director Sukmawaty Syukur, however, revealed that her consortium had withdrawn the request for equity participation by the administration.
"We think that our funds are enough (to go on with the project) thanks to the expected revision in the technology, which will significantly reduce investment costs," Sukmawaty said.
She added that JM had received a number of approaches from local companies that were interested in taking part in the project.
She said that one local company was interested in buying the 30 percent equity previously offered to the city administration, but asked The Jakarta Post not to reveal the name of the firm, saying that the matter was still subject to negotiation.
She admitted that protracted uncertainties clouding the project would likely put the completion of the project.
"I think it will definitely miss the initial target (of opening by the end of 2006). But, we hope the monorail will start operating early in 2007 at the latest," she said.
When up and running, the monorail will cater to transportation needs in prime business areas of the city through a 14.3 kilometer line and less lucrative areas through a 13.5 kilometer line from Kampung Melayu, East Jakarta to Taman Anggrek Mall, West Jakarta.