Date set to deal with suspect toll road contractors

Date set to deal with suspect toll road contractors

JAKARTA (JP): A decision on what to do with toll road
developers suspected of corruption will be taken before March,
Minister of Public Works Rachmadi Bambang Sumadhijo has said.

Rachmadi said on Tuesday that his office would decide whether
to cancel, review, or continue with toll road projects awarded to
contractors collusively and on the basis of nepotism by March at
the latest.

He said that his team had investigated 107 toll road project
contracts to determine whether they were awarded by corrupt
means.

"We have found strong indications that 21 projects worth Rp
10.68 trillion were awarded to private contractors in an
inappropriate manner," Rachmadi told reporters at a gathering to
break the fast at the ministry.

Rachmadi said that in all of the 21 projects, private partners
had been appointed directly by the government without any
competitive tender. Sixteen of these projects, he added, would
have resulted in substantial losses to the government had they
been allowed to go ahead.

He said that the ministry was currently renegotiating the
contracts for the 21 projects, all of which were awarded to the
private sector on a profit-sharing basis.

"The negotiations involve all the investors in the 21
projects. Some are in operation and the others are under
construction or in the stage of land acquisition. Investors have
been told that they have until late March this year to
renegotiate their contracts," he was quoted by Antara as saying.

Rachmadi said the renegotiations would primarily address the
period over which concessions to operate the roads would last and
the profit-sharing ratio.

Rachmadi said the contracts would be renegotiated on the basis
of Presidential Decree No. 7/1998, which offers guidelines for
awarding government contracts.

He also warned that his office would take legal action if the
negotiations ran into difficulty.

In November, the government canceled 24 toll road contracts
worth Rp 15.83 trillion which were still undergoing feasibility
studies because they did not conform to the terms of the new
decree.

The government also canceled a further 29 toll road contracts
worth over Rp 16 trillion after developers ran into financial
difficulties.

Rachmadi conceded that toll road projects were no longer
attractive because they required a large investment of capital
while government-set toll rates had remained unchanged for five
years.

He acknowledged that his office was considering increasing
toll rates, but said this could only take place once corruption,
collusion and nepotism had been eradicated from the operation of
the roads.

"I have told investors that if we cannot get rid of
corruption, then don't talk about an increase in toll rates," he
said. (gis)