Monorail project going off track as city, company sling the mud

Bambang Nurbianto and Damar Harsanto, The Jakarta Post, Jakarta

At least two transportation observers are calling for the termination of a contract between the Jakarta administration and a consortium of investors grouped under the company PT Jakarta Monorail.

They claim that the private company is not financially credible nor able to carry out the ambitious monorail project valued at US$650 million.

The consortium has requested that the administration provide $60 million, or 30 percent of the initial capital outlay of about $200 million.

In the original agreement, the consortium said it could wholly fund the monorail project and the administration would only have to provide the necessary legal permits.

The City Transportation Council (DTK) chairman Sutanto said that the administration had the right to terminate the agreement because the project had been stalled since a groundbreaking ceremony nearly a year ago by then president Megawati Soekarnoputri.

Darmaningtyas of the Institute Transportation and Development Policy (ITDP) concurred with Soetanto.

"They should not continue the project since it would only put another burden on Jakarta taxpayers. It'd be better if the administration terminated the cooperation."

If the administration decides to terminate the agreement, it will be the second such failure in the last 13 months. Early last year, it scrapped an agreement with Malaysian firm MTrans Holding.

Meanwhile, Deputy Governor Fauzi Bowo lamented the lack of transparency by the consortium in its financial reports to the administration.

PT Jakarta Monorail president director Ruslan Diwirjo responded by explaining that the company had been putting money into the project for nearly four years, but the city still needed to show "goodwill" in order for other investors to come through on earlier pledges.

"We have been financing the project since 2001. Our commitment has also been proven by our goodwill by starting some of the construction before there was any financing arranged," Ruslan clarified in a statement.

Ruslan admitted that they were having difficulties in securing soft loans from foreign investors (Hitachi and the Japan Bank for International Cooperation) but said it was because the Indonesian government could not act as guarantor for private company projects, but should instead show goodwill in cooperating on the project.

Governor Sutiyoso emphasized that government participation or an equity-sharing scheme was commonplace in similar monorail projects in other cities, such as Manila or Bangkok.

"I have been trying to raise money from local investors, but so far we have yet to find any who are seriously willing to invest in us," he clarified.

The monorail project had been slated to open in 2006 under a 30-year build-operate-transfer scheme.