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.