Debt restructure of toll road may cause bank losses

JAKARTA (JP): The restructuring of the Jakarta Outer Ring Road (JORR) toll road project by the Indonesian Bank Restructuring Agency could cause local banks losses of approximately Rp 1.5 trillion (about US$143 million).

The president director of Bank IFI, Harry Rachmadi, said on Thursday IBRA had only acknowledged about Rp 1 trillion of the more than Rp 2.5 trillion in total debt owed by the toll road's developers to local banks.

"IBRA said the remaining Rp 1.5 trillion was unaccounted for," he said on the sidelines of a seminar on the impact of the restructuring of the JORR project on creditors and foreign investors.

The JORR project was initially developed by PT Citra Bhakti Margatama Persada (CBMP), PT Citra Mataram Satriamarga Persada (CMSP) and PT Marga Nurindo Bhakti (MNB) under a build-operate- transfer scheme with state-owned toll operator PT Jasa Marga.

The three companies, which were partly owned by former president Soeharto's daughter Siti Hardijanti Rukmana, also known as Tutut, obtained Rp 1.15 trillion in loans from a syndicate of local banks, including Bank IFI.

The loans turned sour after the economic crisis hit the country in 1998. The project was then suspended as part of the government's retrenchment program to cope with the crisis. IBRA later took over 87 percent of the three companies' principal debt, or about Rp 1.07 trillion, as part of the consolidation of the country's banking industry.

IBRA and Jasa Marga established a new company -- PT Jalantol Lingkar Luar Jakarta (JLJ), in December last year to take over the toll road project. The new company is also responsible for settling the debts owed to IBRA by the three companies previously involved in the project.

Mohammad Syahrial, the head of IBRA's asset management credit division, said earlier IBRA only took over Rp 1.07 trillion of the debt because the remaining 13 percent of the money had not been used to finance the toll road project.

However, Harry Rachmadi said the total debt, including interest payments and penalties, had swelled to Rp 2.59 trillion as of December last year, because the toll road developer had failed to make any installment payments.

Furthermore, he said, IBRA's plan to convert the debt to equity in JLJ would put foreign investors, in this case the Malaysian consortium BRD-HiCom, in control of the toll road project with a 65 percent majority stake in the new company.

"If the total debt (including interest and penalties) was accounted for, IBRA and Jasa Marga would own a 56 percent majority in the new company," he said.

The bank syndicate which provided the loans originally comprised 20 local banks, though only seven of these banks survived the economic crisis.

Five of these seven banks are in IBRA's restructuring program, including the project's major creditor, Bank International Indonesia. The other two banks are Bank IFI and Bank Panin.

The Malaysian consortium, which comprises two subsidiaries of BRD-HiCom BHD -- Perspec BHD and Comtrac BHD, as well as road builder SDB BHD and Ranhill Corporation SDN BHD, has been named the preferred bidder for the toll road project.

The Malaysian consortium was named the preferred bidder after it agreed to provide Rp 800 billion to finance land acquisitions for the project. (tnt)