KL investor eyes Rp 6 trillion toll road project
JAKARTA (JP): Malaysia's DRB-Hi Com is considering financing the long delayed construction of the Rp 6 trillion (about US$674 million) worth Jakarta Outer Ring Road (JORR) project, state- owned toll road company PT Jasa Marga said on Thursday.
Jasa Marga president Wiyoga Adiwasito said the Malaysian company had signed a memorandum of understanding early this year and he hoped the work on the toll road project would resume next year.
"The entrance of the investor is expected to accelerate the completion of the project," Wiyoga said in a written response during a hearing with the House of Representatives' Commission IV for infrastructure and transportation affairs.
He said Jasa Marga revoked the 35-year concession rights of JORR's former three operators after they defaulted on their debts.
JORR's initial operators were PT Citra Mataram Satriamarga Persada, PT Marga Nurindo Bhakti and PT Citra Bhakti Margatama Persada. They obtained the contract from Jasa Marga to operate the toll road under a Build-Operate-Transfer (BOT) scheme long before the crisis hit the country in late 1997.
The three investors financed the project with loans worth Rp 1 trillion from local banks. The loans turned sour after the government suspended JORR's development in 1998.
The Indonesian Bank Restructuring Agency (IBRA) took over the nonperforming loans extended to the three companies from the nationalized banks.
Wiyoga said IBRA and Jasa Marga then formed a joint venture, called New Co, to continue the project.
Jasa Marga's director of operation Marjanto said New Co was founded to accommodate the assets that belonged to IBRA and Jasa Marga.
Jasa Marga and IBRA will convert their loans into equity in the new company, although the composition of ownership are still being negotiated, he said.
New Co, he went on, would then operate the project but must first seek investors.
However, Marjanto warned that it was not easy to find investors interested enough to enter the toll road industry.
He said a major constraint in attracting investors to finance toll road projects was the uncertainty over tariff rates.
"When can we raise tariff rates, on what basis can we raise them? These require regulation, otherwise how can investors calculate their income?," he said.
Under the current government regulation No 8/1990, the president approves a tariff hike under the recommendation of the minister of transportation.
Marjanto said the last the government raised toll tariff rates was nine years ago.
"Considering the inflation rate, we expect a hike of about 30 percent," he said.
He said because of this uncertainty, the Malaysian investor was still hesitant to join the JORR project.
Jasa Marga and the government, he continued, were working on clarifying the regulation on tariff hikes.
"We then hope construction will start sometime in mid-2001," he added.
Wiyoga said under an improved investment climate next year, the company planned to resume several toll road projects that the government had suspended.
These include the construction of the Cikampek-Padalarang toll road in West Java, the Surabaya-Gresik toll road and the toll road in Ujung Pandang.
In 1998, the government suspended developments of several large infrastructure projects as part of its retrenchment program to cope with the economic crisis.(bkm)