Faster process for privatization of Soekarno-Hatta airport demanded

JAKARTA (JP): Indonesia's major airport operator is hoping the government will soon recommence the tender process for the privatization of Soekarno-Hatta International Airport in Jakarta after being delayed for over a year.

President of Indonesia's major airport operator PT Angkasa Pura II, Miskul Firdaus, said on Thursday that he had sent a letter to the Minister of Finance informing him of the previous options available to the airport.

He said that last year, the government had come to two options, to re-tender the contract or to renegotiate with the two bidders remaining from the 1999 tender.

The government had in fact set a deadline for the privatization process to be finalized by November this year, but there were no definite plans to recommence the process, Miskul said.

The two foreign bidders are the French airport authority Aeroport de Paris in conjunction with GTM, a subsidiary of another French firm, Suez Lyonnaise des Eaux SA; and a consortium of Airport Schiphol in Holland and the British Airport Authority, he said.

Re-tendering the contract would take a long time to finalize, Miskul said, adding that the government would need to relaunch the tendering process from preliminary bids to due diligence process.

However, if the government decided to pick up negotiations with the two investors, it may trigger criticism from other interested investors, he added.

The now defunct State Ministry for the Empowerment of State Enterprises had selected the Soekarno-Hatta airport to be privatized by the end of March 1999, it has since been postponed due to a disagreement on the value of the contract and the reshuffling of the Cabinet which has taken place several times since early 1999 when the privatization plan was made.

The preferred privatization method for the company was through a 30-year concession, including management inputs by a strategic partner to help solve the various problems of the airport management company which included lack of customer-oriented services, overdue receivables, red-tape and weak organizational structure.

Miskul said that outside of the air traffic control division, the company would sell 49 percent of its shares to a strategic investor.

According to the government privatization blueprint, a concessionaire typically pays an annual fee (netted against any explicit subsidies paid by the government).

The concessionaire is usually responsible not only for maintaining and replacing existing assets, but also for making new investments as required by the business and the license.

At the end of the concession, the assets will be returned to the government, possibly with compensation for the acquisition of new and unexpired assets. (tnt)