Jasa Marga told to delay key bond plan
Rendi A. Witular, Jakarta
State toll road operator PT Jasa Marga will have to delay its plan to issue Rp 10 trillion (about US$1.11 billion) worth of bonds later this year as the Capital Market Supervisory Agency (Bapepam) refuses to give its approval to it until a key bill on toll roads has been endorsed.
The delay in the issuance of the bonds is likely to hamper the development of some toll road projects, which experts say are vital infrastructure for economic development.
"Bapepam has yet to approve the plan ... We have projected such a move will delay the construction of (toll) roads since there will insufficient funds to finance the projects," Minister of Infrastructure and Regional Settlement Soenarno said recently.
Soenarno said Jasa Marga initially planned to issue the bonds in October or November, with proceeds from the bonds expected to be received by the company in late November.
The bonds, which will mature in five to seven years, will be issued in the form of asset-backed securities -- a type of bond based on underlying asset pools. Through such a scheme, the toll road projects run by the company will be used as collateral.
Proceeds from the bonds would be used to fund 14 of Jasa Marga's toll road projects, which include the completion of the Jakarta Outer Ring Road and the Padalarang to Bandung, Semarang to Soloand and the Cikampek to Cirebon projects.
The roads are part of a 1,486 kilometer toll road that will link Merak in Banten to Banyuwangi in East Java, at a total cost of about Rp 86 trillion, with completion scheduled for 2009.
The Rp 10 trillion bonds are the first tranche of a series of bonds planned by the government to finance the projects.
Bapepam bureau chief for investment management and research Freddy Rikson Saragih said the capital market watchdog had not yet given clearance for Jasa Marga to issue the bonds, pending the endorsement of the highway bill currently being deliberated by the government and the House of Representatives.
"There is uncertainty about the company's operations. This is not good for investors. We have seen that the uncertainty can only be addressed if the House and the government endorse the highway bill," Freddy said.
Freddy said the bill aimed to separate Jasa Marga's current role both as regulator and operator of the country's toll road sector, a move that may impact Jasa Marga's current projects and future revenue.
Another uncertainty factor for investors is linked to land clearing for toll road projects, which in the past had often caused major delays in toll road development due to resistance from nearby residents and protests from landowners
"The highway bill is expected to address those problems, and we have to wait for its endorsement. But at the same time we will try to seek clarification from Jasa Marga about these issues in order to ease the uncertainty," Freddy said.