City OKs fare subsidy for monorail

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that her consortium had withdrawn the request for equity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.