Foreign investors invited to enter toll road projects

Foreign investors invited to enter toll road projects

JAKARTA (JP): Foreign investors will be invited to buy stakes
in 13 toll roads currently in operation or under construction in
a rescue effort to stop them collapsing, a government official
said on Friday.

Secretary-general of the Ministry of Public Works Sunaryo
Sumadji said the more than 510 km of toll roads -- part of the
Trans-Java network connecting Jakarta and Surabaya -- should be
saved because they had "significant national importance".

"We expect the entry of foreign investors either through
financial lending or strategic partnerships," he told the media
on the sidelines of a seminar on infrastructure.

Nearly US$1 billion is needed, he added.

Sharp depreciation of the rupiah against the U.S. dollar has
inflicted a devastating impact on many toll road operations
because earnings were in local currency but most of their debts
were in foreign exchange, he said. The decline in traffic volumes
and the government's decision to delay new tariff increase
worsened the situation of the toll road operators.

"Those under construction are faced with high interest rate
charges."

Sunaryo explained that several foreign investors had shown
strong interest in participating in the refinancing, but further
negotiations with the operators and the government were needed to
obtain a clear and precise risk sharing mechanism.

"The issue of certainty in the regular review of the toll
tariff will be the most difficult."

Many foreign parties voiced unease at the unstructured basis
of the current review system, founded on a presidential decree.

"There isn't any guarantee for investors ... sometimes we
revised (tariffs) every two years, sometimes in three years. It
really depends on the sociopolitical condition," he said.

Sunaryo promised the government would create a more conducive
investment environment.

"The government has embraced the need to establish clear, fair
and transparent policies, and regulations as a matter of
urgency."

The 13 toll roads are part of 79 awarded to private companies
under a build, operate and transfer (BOT) scheme. Most of the
projects have been battered by the cumulative effects of the
crisis and allegations of rampant corruption, nepotism and
collusion practices in their operations.

Sunaryo pledged that the government would make sure that the
13 toll projects were free of the practices before foreign
investors stepped in. (rei)