NEW DEAL BOOSTS CONFIDENCE IN TRANS-JAVA PROJECT

May 2, 2016, Jakarta Post

The Public Works and Public Housing Ministry has finally signed the toll road concession agreement (PPJT) with state construction firms Jasa Marga and Waskita Karya Toll Road, marking the beginning of construction of the long-stalled Batang-Semarang toll road as part of the mega trans-Java project.

The Rp 11 trillion (US$833 million) toll road was previously built under the concession with PT Marga Setia Puritama, which failed to achieve the required progress on the toll road construction on time and pay the guarantee fee, prompting the government to re-tender the project.

“With these new owners, I hope there will not be any problems in the future,” Public Works and Public Housing Minister Basuki Hadimuljono said on Wednesday.

The toll road is slated to be finished in October 2018, with a concession of 45 years.

The consortium also signed a guarantee agreement with infrastructure project financing guarantee agency, PT Penjaminan Infrastruktur Indonesia (PII), covering political risks for the company, while the ministry also signed another agreement with PII.

The toll road, included on the list of the national strategic projects, also became the first toll road to be covered with guarantee from the Finance Ministry through PII.

With such a guarantee, he hoped a toll road connecting Jakarta and Semarang, Central Java, would be in place by 2018. The Pejagan-Pemalang toll road connecting East Brebes and Jakarta, another Trans-Java toll road project, is slated to open to the public in June.

Finance Minister Bambang Brodjonegoro said land acquisition would not be an issue in the project development thanks to a new scheme allowing firms to pay for land acquisition and later be reimbursed by the government.

“The key for the Batang-Semarang project is land acquisition. We have prepared the scheme for it,” he said, reffering to the public service agency (BLU) for land asset management to be established to solve the land acquisition woes.

Land acquisistion for the toll road’s first section now stands at 50.8 percent since the signing of the project contract in July 2006, while that for the second section is progressing more slowly at 41.63 percent. The third and fifth sections have seen no progress at all from the target of complete land acquisition by December 2012. Currently, the acquired land has reached 20 kilometers from the total of 75 kilometers.

The government has prepared BLU to oversee the land acquisition for various infrastructure projects, including toll roads and ports.

The BLU will reportedly be established after the agreement of the 2016 revised state budget.

The Public Works and Public Housing Ministry expects the BLU to receive Rp 16 trillion this year and Rp 28 trillion next year, to fulfill the demand for land acquisition, especially for toll roads.

To ensure that the toll road projects continue to progress over the months leading to the revised state budget, the government has also urged construction firms to bridge any funding shortfall.

The Ministry’s Toll Road Regulatory Agency (BPJT) head Herry Trisaputra Zuna said that PT Jasa Marga Semarang Batang, the consortium, has prepared Rp 1.9 trillion from its internal funds to cover land procurement funding from the more than Rp 2 trillion required.

“If this is all settled, they can go on to build the remaining 20 kilometers,” he said.

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