Investors ask city to finance monorail project

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.