Deadline for toll road funding nearing
Deadline for toll road funding nearing
JAKARTA (JP): Japan's Overseas Economic Cooperation Fund (OECF) has until the end of this month to decide on funding the Suramadu toll road in East Java, otherwise the project will be handed over to private investors.
Secretary-General of the Ministry of Public Works Ruslan Diwiryo said over the weekend that if, by March 31, the OECF decides against funding the Rp 500 billion (US$217.39 million) project, which will span the 5.4 kilometers between Surabaya and Madura island, it will be offered to private investors.
So far, the only private investor to express interest in the project is PT Citra Lamtoro Gung Persada, which is owned by President Soeharto's eldest daughter, Siti Hardijanti Rukmana.
Bisnis Indonesia daily reported that she said earlier last week that her company was prepared to conduct the road project.
The toll road will be the main infrastructure supporting the development of Madura into an industrial center.
Eighty percent of the funding for the project is expected to come from the Japanese government through its OECF program, and the remaining 20 percent from domestic investors grouped in the PT Dhipa Madura Pratama consortium.
Joint venture
Dhipa Madura Pratama has established a joint venture with a Japanese consortium consisting of Mitsubishi Corp., C. Itoh & Co., The Long Term Credit Bank of Japan Ltd. and the Shimizu Corp.
Ruslan said that even if the OECF decides to fund the project, it will have to be renegotiated, especially if changes take place in the composition of the consortium's membership.
He said there is the possibility of new investors -- such as Citra Lamtoro Gung -- entering the consortium, if this were viewed as helping speed up the completion of the project.
A new investor, he said, could strengthen the capital structure for the project and cut back the funding necessary from the OECF.
The construction of the Suramadu toll road was scheduled to begin in early 1995, but the OECF disagreed with the collateral terms for the funding.
The OECF wanted the Indonesian government to guarantee the payment of its loan and its interest if the consortium failed to do so. But the government refused unless the OECF extended soft loans for the project. The OECF was against this.
PT Jasa Marga, the state-owned road management company which is a member of the consortium, was then asked to become guarantor for the project. But the company was only willing to pay the debt services directly related to the road's construction costs and not the total investment of the consortium. (pwn)