Govt resumes massive toll road projects

The Jakarta Post Jakarta

The government is planning to build 4,400 kilometers of toll roads across the country, and is adopting a new tariff policy to lure investors, a senior government official said on Thursday.

Minister of Resettlement and Regional Infrastructure Soenarno said the projects were located in Java, Sumatra, Kalimantan and Sulawesi.

Their construction plans were resumed after President Megawati Soekarnoputri lifted a decree last year that suspended them due to the 1997 economic crisis, he said.

"Financing it shouldn't be a problem, we'll leave that up to the private sector," Soenarno said in a press briefing after attending a Cabinet meeting.

In Java, he said, toll road projects would take up 1,400 kilometers, linking Banten in Java's westernmost province of Banten with Banyuwangi on the island's easternmost tip.

"Of the 1,400 kilometers, 575 kilometers are already in use," he added.

One of the suspended projects includes the Jakarta Outer Ring Road, which hit a snag over finding the right investor.

He said the government was also evaluating whether old investors still had funds to build the remaining 825 kilometers in Java. "If they don't have the financial means, we'll have to drop them and retender the projects."

The construction of toll roads has virtually come to a halt since the 1997 economic crisis, with neither the government nor private local investors having enough capital.

Foreign investor interest has remained high, however, as traffic flows continue to grow, helped by a boost in economic activities.

Last year, Soenarno said a number of foreign investors had approached the government over the financing of the construction of toll roads in Java. He said a Saudi Arabian investor had pledged some US$800 million for their development.

The government's reluctance to raise toll tariffs had, however, dampened investors' appetites.

"We have had plenty of talks with foreign investors, they complain about many things but at the end of the day it comes down to tariffs," said Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti.

To this end, the government will draw up a new tariff policy for not only toll tariffs but also water and transportation fares among others, Soenarno said.

Under the present mechanism, raising toll tariffs is a political decision in need of legislators approval.

Soenarno said discussion over the new tariff policy had yet to start. But according to him, the government wants a more flexible tariff policy and also to lend regional governments a greater say.

Dorodjatun added that President Megawati would inaugurate a number of giant projects on Wednesday next week.

The projects include a petrochemical plant, a fertilizer plant and a gas pipeline, he said.