No toll hikes before unfair deal is revoked: Minister

Berni K. Moestafa and Anastashya Emmanuelle, The Jakarta Post, Jakarta

The government ruled out hiking toll road prices for a number of routes in Jakarta before revoking a ministerial joint decree it said unfairly divided profit between toll road operators PT Jasa Marga and PT Citra Marga Nusaphala Persada (CMNP).

Minister for Regional Settlement and Infrastructure, Soenarno said the current profit sharing deal earned the state-owned Jasa Marga just 25 percent of the cake, with the rest going to CMNP.

"The government doesn't agree on raising the toll until after the joint decree has been revoked," Soenarno told reporters on Thursday.

The joint decree in question was signed in 1996 by then Finance Minister Mar'ie Muhammad and Minister of Transportation Haryanto Dhanutirto.

It regulated the profit sharing between Jasa Marga and CMNP for the operation of the Cawang-Tanjung Priok-Pluit and the Cawang-Tomang-Pluit toll roads.

But Soenarno said that consultant PricewaterhouseCoopers evaluated the profit sharing scheme and found it to be unfair.

"We had to first study why the deal had been set at 75-25. Now we're calculating how much the investment was, and how many vehicles use these routes," he explained.

According to him the ideal profit sharing deal should be set at 52 percent for Jasa Marga and 48 percent for CMNP.

PwC audited Jasa Marga's performance between 1995 to 1999 as part of reform targets set out by the International Monetary Fund (IMF).

It estimated that Jasa Marga had incurred losses of over Rp 7 trillion (about $7 billion) because of inefficiencies and bad investment decisions.

Of that amount some Rp 3 trillion is believed to have come from Jasa Marga investment cooperation with CMNP.

According to PwC, interference from the government has resulted in Jasa Marga operating unprofitable toll roads.

The 1996 joint decree is one example of such interference.

CMNP has ties to Siti "Tutut" Hardiyanti Rukmana, the eldest daughter of former President Soeharto.

For the publicly listed CMNP the likely end of its lucrative deal with Jasa Marga marks another blow after the government last year banned it from bidding for the Jakarta Outer Ring Road (JORR) project because of CMNP's links with Tutut.

Asked about the possibility of CMNP suing the government if it moved to annul the deal, Soenarno said they could, "go ahead."

But revoking the existing deal must be preceded by a joint study by the Public Works' office and the Ministry of Finance, he said.

Plans for raising the toll could however wet investors' appetite for investing in future toll road projects.

The development of such infrastructure projects would also be a boon for the construction industry which has been in the doldrums since the economic crisis in 1997.