Sutiyoso wants in cheap for big transportation projects
The Jakarta Post, Jakarta
Amid pressure for better transportation and infrastructure in the capital, Governor Sutiyoso suggested on Wednesday that the estimated expense of the ongoing monorail project and the planned mass rapid transit project were too high.
He said it was necessary to reduce the cost of both projects.
"I'm not sure about the estimated total cost ... but the cost should be lower, there is no floor price to it," he said after meeting with Vice President Jusuf Kalla, Minister of Transportation Hatta Radjasa and State Minister of State Enterprises Sugiharto.
The meeting was held to discuss Jakarta's infrastructure budget, including funds for the monorail, the mass rapid transit (MRT) and the Jakarta New Port projects.
The monorail, construction of which began last year and is expected to be completed in 2007, is valued at US$650 million.
It is being built by a consortium of investors grouped in PT Jakarta Monorail.
Sutiyoso argued that the Japanese technology used in the construction had inflated the cost.
"We'll review whether we can apply Chinese technology ... cheaper is better so we can resume construction."
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.
The project has been stalled since a groundbreaking ceremony last year that was officiated by then president Megawati Soekarnoputri.
The city administration failed to the acquire land in the initial planned path of the project, causing the developer to change the blueprint a number of times.
When the Sutiyoso administration decided to expedite the deadline to 2006, the consortium had difficulty in securing soft loans from foreign investors Hitachi and the Japan Bank for International Cooperation.
Instead the developer offered the government an equity sharing scheme, which required the latter to provide $60 million, or 30 percent of the initial capital outlay.
"The central government, the Jakarta administration, state enterprises and private investors will be invited to participate in the scheme," Sutiyoso remarked, expressing hope that the financial matter could be settled this year.
He also revealed that the central government would soon complete all paperwork on the MRT, the construction of which is expected to start early next year.
Sutiyoso said that the government had offered soft loans from Japan with an interest of 1 percent per year.
"Still, the value of the project is considered high at Rp 500 billion for each kilometer of MRT track," he complained.
The MRT will stretch from Lebak Bulus in South Jakarta to Dukuh Atas in Central Jakarta, with underground stations at Ratu Plaza in Senayan and Dukuh Atas, a distance of approximately 3.5 kilometers.