CMNP starts Rp 1.3t giant toll road project

SURABAYA (JP): Publicly listed PT Citra Marga Nusaphala Persada (CMNP) started construction of the 36.6 kilometer toll road to connect Waru in Juanda to Tanjung Perak in Surabaya yesterday.

The minister of public works, Radinal Moocthar, inaugurated the groundbreaking ceremony, witnessed by the minister of finance, Ma'rie Muhammad.

Total investment for the development of the road is around Rp 1.3 trillion (US$546.21 million). It is scheduled for completion by 2001.

Citra Marga Nusaphala Persada is a toll operator controlled by the eldest daughter of President Soeharto, Siti "Tutut" Hardijanti Rukmana.

Tutut said the development of the road would be done in three stages. The first stage, 14.4 kilometers long, would connect Juanda and Waru and was expected to be completed in 1999. The second stage, 11.1 kilometers long, would link Tanjung Perak and Kenjeran and was expected to be completed by 2000. The third phase, 11.3 kilometers long, would connect Tanjung Perak and Tambak Oso and was expected to be completed in 2001.

However, she said, the accomplishment of the toll road project would totally depend on the land clearance along the road.

"The land clearance will be coordinated by the Surabaya and Sidoardjo administrations," he said.

The land clearance is likely to face problems, especially between Sidoardjo and the eastern part of Surabaya, as people residing in the area are mostly government officials and do not want to move.

"Most property developers willing to develop property projects along the line failed because the people defended their land," one property observer told The Jakarta Post.

Director of CMNP, Bambang Soeroso, said the toll road project would cover around 260 hectares, of which 70 percent had been provided by the Surabaya administration.

Soeroso said part of the funds to develop the toll road would be derived from bonds issued by the firm recently and from the company's retained earnings. He did not mention the amount of the retained earnings.

CMNP recently issued $125 million Eurobonds in Luxembourg and Rp 275 billion in Indonesia.

Besides that, he said, the company would also issues rights shares to help finance the projects.

The toll road project, built under a build-operate-transfer scheme that will last 32 years, is expected to break even after 22 years of operation.

Tutut said the presence of the toll road was expected to cater to the fast growing business development in Surabaya, the second largest business city in Indonesia after Jakarta.

The company's net profit and revenue were Rp 94.58 billion and Rp 153.84 billion respectively in 1995. (09/nur)