Performance bond dispute may thwart monorail

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.