Jakarta Monorail struggles to reach deal before deadline

Bambang Nurbianto, The Jakarta Post, Jakarta

Almost a year after PT Jakarta Monorail (JM) signed a concession agreement with the city administration, the company is still struggling to close a deal with potential financiers.

JM Director Sukmawaty Sjukur said on Wednesday she could not mention the target date for the financial closing because JM was still waiting for official offers from monorail car producers from China and South Korea.

Sukmawaty said that JM had proposed an extension of its agreement with the administration because it was unlikely to complete the financial closing by the end of this month.

"We are trying to complete the financial closing as soon as possible, but we are also proposing an extension of our agreement with the administration," she told The Jakarta Post.

The agreement between the administration and JM was signed on May 31, 2004.

Under the agreement, signed by Governor Sutiyoso and JM president director Ruslan Diwiryo, the company is required to complete a financial closing within a year, which could be extended for six months. Beyond that, the two parties may have to sign another agreement.

The process could be lengthy as JM is still looking at suppliers of monorail trains that can give financial support.

According to Sukmawaty, there are three choices -- South Korea's Rotem company, China's Citik, and Japan's Hitachi.

She said Rotem and Citik were expected to submit their official offers to JM before the agreement with the administration expires on May 31.

Sukmawaty added that Japan's Hitachi also plans to submit its revised offer to JM and has expressed its plan to lower the price. She said that initially Hitachi submitted a proposal to supply monorail cars at a total cost of US$400 million.

JM considered the offer too high, particularly after failing to gain financial support from the Japanese government.

Sutiyoso and executives of the company visited China and South Korea recently to seek alternative monorail train suppliers.

Sukmawati said South Korea's Rotem and China's Citik expressed interest in supplying monorail trains at lower prices. "But we still don't know the exact figure of their respective offers," he added.

Chairman of City Council Commission D for development affairs Sayogo Hendrosubroto warned the administration to be careful in negotiating with JM, particularly regarding its demand for an annual subsidy of $20 million and demand for equity with the administration.

"We must be careful in negotiating with the developer. Otherwise, we would face a complicated financial dispute because the feasibility study did not consider many things, including guarantee on the number of users of the two monorail lines to be constructed," he added.

Sutiyoso said the administration may extend its agreement with JM, in the hope that the firm could find cheaper monorail technology so that the city administration would not have to give an annual subsidy to the company.

"If the total cost of the project is less than $500 million, the administration will not give a subsidy," he told The Jakarta Post on Wednesday.

JM is supported by three local companies -- PT Adhi Karya, Global Profex Synergy and PT Radian Pilar Pasifik -- and three foreign companies -- Singapore Mass Rapid Transit (SMRT), Singapore Technology Electronics (ST - Electronics) and Hitachi Asia Ltd.