Subway will start in June

Subway will start in June

JAKARTA (JP): Construction of the long-awaited subway will
start on June 1 with or without a presidential decree, the
chairman of the project's consortium has promised.

Aburizal Bakrie, who heads the Indonesian Japanese European
Group consortium, said yesterday the government had given the
green light to the investors to begin the US$2.2 billion project.

"God willing, we can start development about three months from
now, on June 1," Aburizal, director of PT Bakrie Investindo said
after a meeting to discuss the project's financial proposal at
the Agency for Technology Assessment and Application.

Among those present at yesterday's meeting were agency
chairman/State Minister of Research and Technology B.J. Habibie,
who heads the project's steering committee, Minister of
Transportation Haryanto Dhanutirto, Minister of Public Works
Radinal Moochtar, Jakarta Governor Surjadi Soedirdja and Deputy
Governor for Economic and Development Affairs Tb. M. Rais.

Only Aburizal was willing to comment on the outcome of the
meeting. Habibie was seen hugging a member of the consortium
after the meeting.

Aburizal did not say where the construction of the 14.5-
kilometer subway would begin. The planned route is from Blok M in
South Jakarta to downtown Kota.

When asked about the necessity of a presidential decree as a
prerequisite to begin the mass rapid transportation project,
Aburizal said this would be up to the government.

"If it's necessary we will follow (the requirement). If not,
we can go ahead," Aburizal said.

So far both the municipality and the consortium have expressed
the need for a presidential decree.

Rais had said the decree was essential to determine the city's
role in any public transportation project. This was regardless of
whether a subway or the alternative proposal, a three-tiered road
and rail link was built, he said.

This latter proposal was forwarded by PT Citra Lamtoro Gung
Persada owned by Siti Hediyanti Rukmana, President Soeharto's
eldest daughter.

The presidential decree was also considered essential to
enable the city to draw additional funds from the public purse.

But Surjadi and Rais said later they would wait for the new
law on fees and taxes.

According to initial proposals the city was to raise $25
million per year for five years as its equity in the project, and
another $35 million a year for 25 years to pay back loans.

Surjadi has also said the municipality would find it difficult
to raise the funds as it is not allowed to secure loans.

Aburizal said the government gave the green light to the
consortium under several conditions, including that the
government would not provide any loan guarantees.

"We are allowed to seek loans for the project from private
investors but without the government's guarantee," Aburizal said.

He added the subway's project management unit had been
assigned to discuss details of the development with the
consortium.

"We expect a special body will be formed under the steering
committee to supervise the development phase," Aburizal said.

He denied reports quoting a public works ministry official and
a legislator who said the project, initially scheduled to begin
in April, was delayed because of differences over the eventual
fares.

Despite the city's difficulties in raising funds, he said
investment was not a problem either.

"There're no technical or investment problems concerning the
subway project ... we're only waiting for the (government's)
green light," Aburizal said.

He said the consortium had long agreed to provide 100 percent
of the funds to finance the project.

"We have agreed to provide 30 percent of the project's funds
on our own and the remaining 70 percent from loans," Aburizal
said, adding these would be soft loans.

He said the consortium would form a company to handle the
project's financial matters, including repaying the loan.

Several countries have expressed their willingness to give
soft loans to the consortium. "It's still unofficial though,"
Aburizal said.

The subway project is expected to be completed by Aug. 17,
2001, Indonesia's Independence Day.

The 17-station subway is an initial step in the long-term plan
to ease traffic congestion.

The city and the consortium, which includes local companies PT
Bakrie Investindo, PT Pembangunan Jaya, Lippo Group, PT Bukaka
Corporindo and PT Steady Safe, and firms from France, Canada,
Japan, the United States, Germany, and Australia, signed a
memorandum of understanding in August 1995.

Last July one of Soeharto's sons, Bambang Trihatmodjo, joined
the consortium. (ste)