Investors ask city to finance monorail project

Damar Harsanto, The Jakarta Post/Jakarta

Financial questions surrounding the PT Jakarta Monorail consortium, which the city administration appointed to develop an ambitious monorail system, has left the fate of the project in doubt.

Governor Sutiyoso said on Friday foreign investors in the consortium had asked the city administration to finance at least 30 percent of the US$650 million project.

"They asked the administration and local partners to help finance 30 percent of the project, while they will cover the remaining 70 percent," Sutiyoso said at City Hall.

Sutiyoso said the city administration likely would agree to the request, pointing out that similar equity sharing schemes were used to finance monorail projects in Bangkok and Manila.

The governor previously said investors would wholly fund the monorail and the administration would only provide the necessary legal facilities.

The investors said in December several foreign financial institutions, including the Asian Development Bank, the Islamic Development Bank and the Japan Bank for International Cooperation, had asked the consortium to complete some legal documents required to process their loans.

The legal documents included a gubernatorial decree on the use of certain lots of land for the project. The city administration issued the required documents, but it is unclear whether the financial institutions have disbursed the loans.

The chairman of City Council's Commission D on development affairs, Sayogo Hendrosubroto, rejected the equity sharing scheme.

"My answer is no. We must not take part in any financial plans made by the consortium until we conduct an in-depth study of their plan," said Sayogo, adding that the councillors would have the final say on the matter, not the consortium.

"Since the very beginning I have been suspicious and doubtful about the consortium's ability to get the money for the project. It has always been reluctant to disclose the sources of its financing for us to verify," he added.

However, PT Jakarta Monorail president director Ruslan Diwirjo denied the consortium did not have the funds to complete the project.

"No, that is not the reason," Ruslan told the Post over the phone.

He said the reason for proposing the equity sharing scheme was to convince foreign investors that the administration was really serious about supporting to the project.

"Governor Sutiyoso has agreed to the proposal, but since it is impossible to materialize the scheme in this year's city budget, we plan to use next year's budget," he said.

The monorail project is expected to be completed toward the end of 2006.

Meanwhile, the State Secretariat, which controls the Bung Karno sports complex in Central Jakarta, has not given permission for the project to pass in front of the complex.

The consortium already has erected several pylons along Jl. Asia-Africa in front of the sports complex, disrupting traffic along the street.