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)