Investors agree to reduce value of 'marked up' roads

YOGYAKARTA (JP): Investors in 21 troubled toll road projects have agreed to lessen the projects values and shorten the concession periods following allegations that the contracts were obtained from the government through corruption, collusion and nepotism.

Minister of Public Works Rachmadi Bambang Sumadhijo said on Saturday that several conditions of the contracts had to be renegotiated because the investment values of the toll road projects were allegedly marked up.

"The renegotiation process is still ongoing, but the investors have principally agreed to reduce the investment values to reasonable levels," he told reporters following the signing of a cooperation agreement between the Ministry of Public Works and the University of Gadjah Mada.

Rachamadi, however, declined to give the amounts of the investment revaluations or the new periods of concessions.

He only said that details of the contract renegotiations would be provided after the process had been completed.

He explained that allegations of corruption, collusion and nepotism in obtaining toll road projects were still being investigated by the Attorney General's Office.

He declined to provide more details.

The 21 toll road projects are either in operation, under construction or in the stage of land acquisition.

Among the contracts set for revaluation and renegotiation are the lucrative intra-Jakarta toll road projects under former president Soeharto's daughter Siti Hardiyanti Rukmana.

Many of the country's toll road projects were awarded to Soeharto's family and close friends under the build, operate and transfer mechanism.

The government has canceled many toll road projects not only because of allegations that they were unlawfully awarded, but also due to the 18-month old economic crisis.

Most of the canceled projects were still in feasibility planning stages.

The government is expected to raise and restructure the toll tariff once the sector is cleared of charges of corruption, collusion and nepotism in a bid to attract foreign investors to road infrastructure projects, seen as an important factor in the economy's recovery. (44/rei)