Govt approves Rp 10t in bonds to fund toll projects
Govt approves Rp 10t in bonds to fund toll projects
Rendi A. Witular, Jakarta
The government has approved a plan by state-owned toll road
builder and operator PT Jasa Marga to issue Rp 10 trillion
(US$1.11 billion) worth of bonds to raise funds for the
construction of a massive toll road project in Java.
President director of Jasa Marga Syarifuddin Alambai said that
the Office of the Coordinating Minister for the Economy had
recently approved the bond issue, after the Ministry of Finance
rejected a request for a loan guarantee facility for the project.
"The bonds are the first tranche of series of bonds planned by
the government to finance the project... We plan to issue the
bonds in September this year," said Syarifuddin recently,
refusing to disclose the indicative rates for the bonds.
Syarifuddin said that the bonds, which will have a maturing
period of between five and seven years, will be issued in the
form of asset-backed securities -- a type of bonds that are based
on underlying pools of assets. Through such a scheme, the toll
road projects run by the company will be used as collateral.
The government plans to appoint state-owned Bank Negara
Indonesia and Bahana Securities, which is controlled by Bank
Indonesia, as the arranger for the issue.
The bond plan is among three feasible capital-raising options
previously considered by the company and the government, apart
from an initial public offering (IPO) and offering projects to
investors with the government serving as the guarantor of the
projects' loans.
However, the last proposal was rejected by the Ministry of
Finance over fears that it would disturb the allocation of funds
for the state budget.
Syarifuddin said that proceeds from the bonds would be used to
fund 14 of Jasa Marga's construction projects this year, which
included the completion of the Jakarta Outer Ring Road project,
the Padalarang-Bandung project, the Semarang-Solo project and the
Cikampek-Cirebon project.
The roads are part of a 1,486-kilometer toll road that will
link Merak in Banten to Banyuwangi in East Java, which is
expected to cost a total of around Rp 86 trillion with the
completion scheduled for 2009.
With the Rp 10 trillion fund, the company expects to build
around 330 kilometers of toll road.
The company is also planning to issue the second tranche of
bonds in 2006, which will be worth around Rp 36 trillion.
Proceeds from the bonds are expected to finance 440 kilometers of
toll roads.
"Although we have bonds to finance the projects, we are
unlikely to meet the completion schedule in 2009. We estimate that
only 770 kilometers of the road will be completed, with the
remaining 716 kilometers left hanging," said Syarifuddin.
He explained that the delay would be primarily caused by the
lack of contractors available to carry out all the projects.
As for the company's initial public offering (IPO) plan,
Syarifuddin said it would be realized later this year.
"The IPO, offering up to 40 percent of our total shares, will
hopefully be done in October or November," he said, adding that
the IPO would target Rp 1.5 trillion in proceeds.
Jasa Marga currently manages 383 kilometers of the country's
520 kilometers of toll roads. The remainder is managed by private
investors.
Despite the company's higher operating revenue in the first
half of this year compared to the same period of last year, its
net profit slightly declined due to higher operating expenses and
soaring interest burden for its debts.
The company recorded an operating revenue of Rp 806 billion,
up from Rp 607.8 billion. However, net profit dropped to Rp 121.9
billion from Rp 122.3 billion.