ITC picks local trains amid rift with partner

ITC picks local trains amid rift with partner

Damar Harsanto, The Jakarta Post/Jakarta

The majority shareholder of PT Jakarta Monorail (JM), PT
Indonesia Transit Central (ITC), decided on Thursday to pick
local companies that can supply trains using technology provided
by Siemens of Germany for the Jakarta monorail project.

The decision was made despite strong objections from its
foreign partner, Omnico Pte. Ltd of Singapore, which claimed that
ITC had made the decision unilaterally.

ITC, which owns 55 percent of the consortium, prefers to use
local rolling stock with the technology provided under license by
Siemens in order to reduce the cost of the monorail, while
Omnico, which holds 45 percent of the project, is insisting on
the use of magnetic levitation (Maglev) technology from South
Korea's Rotem.

"We have decided to use Siemens technology for the monorail as
we deem it to be cheaper ... Jakarta Governor Sutiyoso supports
our decision," ITC president director Ruslan Diwirjo told
reporters after a meeting with officials at City Hall.

Ruslan said that the use of local trains would bring the total
cost down to less than US$500 million, much lower than the
estimated cost of $826 million should Maglev technology be used.

Reacting to Ruslan's statement, Omnico chairman Abdul Rachman
strongly objected to the decision, arguing that it had been made
without any discussion with his company.

"We don't agree (with the decision). The fact that we have
only 45 percent and are the minority shareholder does not mean
that they (ITC) can do whatever they want ... I am very
disappointed with this," he said.

He denied the statement that the use of Maglev technology
would significantly inflate the cost.

"This statement is simply not true. The total price of the
system is only $540 million, not $826," he said, while
acknowledging that his company had yet to calculate banking and
consultancy fees.

Despite the objection, he said his company could not withdraw
from the consortium due to the various commitments involved in the
project, including those made by the Singaporean, Japanese,
Chinese and Indian governments, besides the Jakarta
administration.

"But, we want to see what happens after this," he said, adding
that his company had spent one-and-a-half years and huge sums of
money on the project.

Meanwhile, ITC director Sukmawaty Sjukur said that the JM
would go ahead with or without Omnico.

"We are ready to replace Omnico's 45 percent shareholding in
the consortium with other companies from China, Malaysia and some
local companies, should it withdraw," she said.

She added that JM would gather all local investors at City
Hall to discuss the project's follow-up on Friday afternoon.

A local consortium led by Bukaka Group, which partly belongs
to the family of Vice President Jusuf Kalla, is willing to supply
the trains, JM has revealed.

The consortium will involve state train car maker Inka and
state electronics maker LEN Industry.

JM said that Hongkong company, Mass Transit Railway
Cooperation (MTRC), would be in charge of overseeing the rolling
stock and system. American investment bank JP Morgan would
look for foreign financiers for the project, while AAA Security
would be responsible for getting local financiers.

The monorail system will consist of two lines. The first line,
called the Green Line, will link the lucrative business districts of
Kuningan and Sudirman in South Jakarta, while the second line,
called the Blue Line, will serve a less lucrative corridor from
Kampung Melayu in East Jakarta to the Taman Anggrek shopping
center in West Jakarta.