Performance bond dispute may thwart monorail
Bambang Nurbianto, The Jakarta Post, Jakarta
The city's proposed monorail project might be suspended as the Malaysian investor and its local counterparts have declined to deposit a performance bond of 1 percent of the total US$400 million value of the investment in an escrow account.
"The bond is a requirement for the project, and we need it so that we can proceed with the signing of the memorandum of understanding (MoU)," Irzal Djamal, the assistant to the city secretary for development affairs, told the press on Wednesday.
He said that the money would be forfeited by the investors should they fail to develop the project without giving acceptable reasons.
The administration and the investors were scheduled to sign the MoU two weeks ago. However, the plan will only go ahead if the investors pay a $4 million performance bond.
Irzal said that the administration would accept the investor's seriousness even of they deposited $1 million only.
Ruslan Diwirjo, chief executive officer of Indonesia Transit Central (ITC), said that the investors had not agreed to the requirement as it had no legal basis.
"It's okay if the administration has a legal basis for requiring a performance bond. However, we don't see any legal basis for this requirement," he told The Jakarta Post by phone.
ITC is the consortium set up to develop the monorail project. The consortium comprises local companies PT Adhi Karya, Global Profex Synergy and Radiant Utama, and Malaysian firm M Trans Holding.
The monorail is planned to link Bekasi in the east of the capital and Tangerang in the west through a 22.5-kilometer corridor passing major arteries including Jl. Casablanca, which is notorious for its traffic jams.
The route could be changed as the investors have shown interest in running the monorail through other congested areas of the city.
Irzal said that the reason the administration required a performance bond was to ensure the investors' seriousness about the project.
"We don't want to sign MoUs with private companies unless they are committed to performing the project," he said, adding that the administration had prepared a draft MoU for the monorail project.
Neither Irzal nor Ruslan could say when the MoU would be signed.
"It's up to the city administration," said Ruslan.
A similar response was also given by Irzal.
Previously, Governor Sutiyoso had said that the construction of the monorail could start in December, the same month as the city administration is due to restart its stall bus rapid transit (BRT), or busway, project connecting Blok M in South Jakarta and downtown Kota in Central Jakarta.
The monorail project is part of the Greater Jakarta Transportation Plan that was designed by a team from the University of Indonesia (UI).
This blueprint for the future of transportation in the city includes a monorail (light rapid transit, or LRT), busway, subway and plans for water transportation.
Earlier plans for developing an MRT system here were abandoned for various reasons, including financing problems.