Ministry of Public Works Faces Rp 88 Billion Shortfall, Indonesia's Longest Toll Road Project Affected

The Ministry of Public Works (PU) has stated that budget constraints in 2027 could slow the preparation of several Public-Private Partnership (PPP) projects, including a number of toll road sections. The Directorate General of Infrastructure Financing (DJPI) is facing a budget shortfall of nearly Rp 88 billion, precisely Rp 87.99 billion. Acting Director General of Infrastructure Financing and Head of the Toll Road Regulatory Agency (BPJT) at the Ministry of PU, Ni Komang Rasminiati, said the DJPI’s budget requirement for 2027 reaches Rp 157.12 billion. However, the indicative ceiling received so far is only Rp 69.12 billion. “To meet the targets in the DJPI and Ministry of PU strategic plans, a budget of Rp 157.12 billion is required. However, based on a joint letter from the Minister of National Development Planning/Head of Bappenas and the Minister of Finance regarding the indicative ceiling for ministry/institution spending and the Special Allocation Fund for 2027, the indicative ceiling for DJPI for the 2027 fiscal year is Rp 69.12 billion,” Komang said during a Hearing Meeting with Commission V of the Indonesian House of Representatives (DPR RI) at the parliamentary complex in Jakarta on Tuesday. “Therefore, to achieve DJPI’s priority targets, we still need an additional budget of Rp 87.99 billion, or there is a budget backlog of Rp 87.99 billion,” she continued. Komang explained that the budget limitations have not yet led to the cancellation of PPP projects. However, the project preparation process cannot be carried out early if the additional budget is not available. “This means we cannot carry out the preparation early, so it might appear in the following year,” she said when met after the meeting. She added that the government still hopes for an additional budget allocation during discussions with the Budget Committee (Banggar) of the DPR, so that project preparation can proceed as planned. “But we are still hopeful, as members of Commission V mentioned from Banggar, there may still be potential, the potential for additional budget is still moving, because these preparation projects for government and business entity cooperation can be prepared earlier,” Komang said. Based on the DJPI’s presentation, the budget constraints mean several PPP project preparation activities cannot yet be funded. In the Highways sector, the budget does not yet cover the preparation and evaluation of pre-feasibility study documents for 12 projects, transaction advisory for four projects, and various other preparatory activities. Meanwhile, in the Water Resources sector, the budget is also unavailable for the preparation and evaluation of pre-feasibility study documents for 13 projects and transaction advisory for seven projects. For the toll road sector, additional budget is needed, among other things, to prepare pre-feasibility study documents for the Tuban-Babat-Lamongan-Gresik Toll Road, the Saringin-Dramaga-Salabenda Toll Road, and the Mengwitani-Ngurah Rai Toll Road. In addition, budget is also required for preparing investment cooperation support for the Malang-Kepanjen Toll Road, the Pontianak-Kijing Toll Road, and the Ciranjang-Padalarang Toll Road. Meanwhile, PPP project advisory is also needed for the Gedebage-Tasikmalaya Toll Road, the Gilimanuk-Mengwi Toll Road, the Caringin-Cisarua Toll Road, the Semarang Harbour Toll Road, the Pluit-Airport Toll Road, and the Bitung-Serpong Toll Road. On the other hand, Komang said the government continues to evaluate the financing scheme for PPP projects so that the need for government support can be reduced without compromising investment viability. “Yes, indeed the directive is how to minimise government support for PPP projects. Perhaps we will conduct another review, updating the feasibility studies to find the most efficient scheme so that the project is viable but with minimal government support,” she said. One step that has been taken is adjusting the scope of the Gilimanuk-Mengwi Toll Road project to reduce the need for government support. “Like Gilimanuk-Mengwi, we are re-scoping it, we are narrowing the target to only from Pekutatan to Mengwi. So from the initial 90 kilometres, we are shortening it to around 40 kilometres. That is one strategy to improve its financial viability,” she concluded.