City to sign deal with foreign firms for monorail

City to sign deal with foreign firms for monorail

Damar Harsanto, The Jakarta Post, Jakarta

After dropping a Malaysian firm from its list of potential
investors for the monorail project earlier this month, the
Jakarta administration confirmed on Monday that it would sign a
memorandum of understanding (MOU) with a consortium led by
Japanese firm Hitachi for the project.

"The MOU between the administration and the consortium will be
signed in mid-April," Governor Sutiyoso said on Monday.

The initiation of the project will be on June 22, to coincide
with the commemoration of Jakarta's anniversary.

The consortium -- comprising Indonesian companies PT Adhi
Karya, Global Profex Synergy and Radiant Utama, grouped as
Indonesian Transit Central (ITC) and foreign companies Hitachi,
Temasek and Singapore Mass Transit -- was appointed by the
administration last year to carry out the project.

"The consortium, which will carry the name PT Jakarta
Monorail, will handle all administrative work including securing
agreement with the administration," said assistant to the City
Secretary for Development Affairs IGKG Suena.

Hitachi will provide the technology for the monorail
construction while Temasek and Singapore Mass Transit will
finance the project. The Indonesian companies will build the
supporting structures.

The monorail project is slated to become operational in 2006
under a 30-year build-operate-transfer scheme. The consortium
will have the right to determine fares on the monorail.

Suena said the administration would not subsidize the project
because it involved huge sums that the administration could not
afford.

According to Sutiyoso, the project is estimated to cost US$600
million, more than the proposal by MTrans Holding of Malaysia at
$540 million. However, he argued that the Japanese firm was
awarded the project as it promised to meet all requirements set
by Jakarta.

The decision to use Hitachi was made soon after Sutiyoso
visited Japan early this month at the invitation of the Japanese
firm. Besides, the MOU between ITC and MTrans, which was signed
last year, had already expired on Feb. 28 and the Malaysian firm
did not respond to Jakarta's demand that it build the monorail on
both the more and less lucrative routes.

The lucrative route will run for 14.8 kilometers, serving the
city's golden triangle area of Kuningan, Sudirman and Senayan,
with 16 stations. The less lucrative route will be 12.2
kilometers long, from Kampung Melayu, East Jakarta, to Roxy, West
Jakarta.

Sutiyoso had previously expressed concern that his
administration would not be able to find investors for the less
lucrative line if they were only interested in the more
profitable one.