Government to establish toll road agency

Government to establish toll road agency

Rendi A. Witular, The Jakarta Post, Jakarta

The government will soon establish a toll road agency that will
function as a regulator and supervisor for all toll roads, a move
that is expected to assist the business community to better
engage in the sector.

Hendrianto Notosoegondo, director general for regional
infrastructure at the Ministry of Public Works, said on Wednesday
the agency was slated to be inaugurated in July and that the
ministry was presently in the process of recruiting officials for
the body.

"We expect the agency will be formed soon, possibly in July.
The agency is crucial to help manage the toll road business and
encourage the private sector into the sector," said Hendrianto on
the sidelines of a hearing with lawmakers.

The agency, to be called the Toll Road Regulatory Agency
(BPJT), will initiate the liberalization of the toll road sector
by separating the functions of regulator and operator -- both of
which are currently held by state toll operator PT Jasa Marga,
with critics arguing such a structure has often led to conflicts
of interest to occur.

Currently, Jasa Marga is involved in all toll road projects,
whether as part of a joint venture or as the sole constructor.

The planned agency will remain under the auspices of the
Ministry of Public Works, especially in regard to the
determination of interim toll fees and concession rights, based
on input from toll operators. The agency and the operators will
jointly review fees every two years.

Preliminary negotiations for the fees and concession periods
will be handled by the agency.

Based on Law No. 38/2004 concerning highways, the government
must set up the agency within 12 months of the law going into
effect, which was in September last year.

The agency will also be tasked with taking over toll roads
after concession periods expire, providing facilities for
investment and land clearance, as well as supervising highway
operations and services.

Hendrianto reiterated that the planned agency would manage the
tender process for all toll road sections. However, the current
tender process for a number of sections would still be carried
out by the ministry.

Presently, the ministry is conducting a tender process for six
toll road sections worth more than Rp 5 trillion (US$526
million), as well as an upcoming tender for 13 sections worth
some Rp 40 trillion in July.

"We are still handling the tender process, pending the
agency's official inauguration. The sections currently managed by
the ministry are projected to be completed in 2008," said
Hendrianto.