Financing, land acquisition issues hamper strategic toll road projects
- Mardika Parama and Marchio Irfan Gorbiano
The Jakarta Post
Jakarta / Thu, July 9, 2020 / 06:02 pm
The Cisumdawu toll road (Public Works and Public Housing Ministry/Public Works and Public Housing Ministry)
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A lack of financing and the country’s age-old issues with land acquisition have delayed the development of the government’s strategic toll road projects, namely the 2,800-km trans-Sumatra toll road and the 62 km Cileunyi-Sumedang-Dawuan (Cisumdawu) toll road in West Java.
President Joko “Jokowi” Widodo said on Tuesday that no permanent solutions had been found to resolve the reoccurring issues that have hampered the projects, especially delays in land acquisition in the Cisumdawu project.
“I still see many reoccurring technical and administrative issues with no permanent solution. We haven’t created a simple and concise regulation that offers a real solution to these issues,” he said during a limited meeting on National Strategic Projects (PSN) at the Merdeka Palace.
He said the land acquisition issues included delays in repayments for land acquisition costs, likely referring to repayments to PT Citra Karya Jabar Tol (CKJT), a subsidiary of publicly listed toll road operator PT Citra Marga Nusaphala Persada (CMNP), which is in charge of several sections of the project.
Land acquisition has long been an obstacle for the country’s toll road projects, along with administrative challenges, high costs of land clearance and difficult terrain.
Previously, three state-owned construction companies, PT Waskita Karya, PT Hutama Karya and PT Wijaya Karya, stated that they were seeking repayments from the government for Rp 5.6 trillion (US$390.4 million) in accumulated land acquisition expenses for infrastructure projects.
The opening of the Cisumdawu toll road, which will connect the West Java capital of Bandung and the newly built Kertajati International Airport in Majalengka, has been the delayed from the end of this year to September 2021 because of land problems. The completion of the Rp 8.41 trillion toll road project is highly anticipated, as it is expected to cut travel time from Bandung to the airport to less than an hour from around 2.5 hours at present.
The government is building the toll road in cooperation with CKJT. Of the toll road’s six sections, the government is in charge of building sections 1 and 2, spanning 29 km, while CKJT is responsible for the remaining 32.8 km.
Public Works and Housing Minister Basuki Hadimuljono confirmed there had been land clearance issues, concerning land prices and regulations, but said the Agrarian and Spatial Planning Ministry was tasked with resolving the issues.
“The government-built section is 81.6 percent complete, while the land clearance is 91.23 percent complete,” Basuki said after the meeting with the President.
He added that CKJT had also started to build the sixth section on land owned by state-owned forestry company Perhutani, with construction 5 percent complete.
Meanwhile, Basuki also said the trans-Sumatra project had suffered from funding issues, as the government has only secured Rp 113 trillion of the Rp 500 trillion required for the project.
A large chunk of the funding, Rp 72.2 trillion, has come from the banking industry’s commitment, while Rp 21.6 trillion and Rp 19.6 trillion has come from government support and a state capital injection (PMN) for Hutama Karya, the state-owned construction firm in charge of a large part of the project, respectively. The government support includes a loan from the Japan International Cooperation Agency (JICA) for the construction of Padang-Pekanbaru tunnel.
“Even for the backbone toll roads, which span 1,970 km between Bakauheni [in Lampung] and Aceh, we still need Rp 191 trillion of the Rp 266 trillion required,” he said, referring to one section of the toll road.
The government is currently mulling the issuance of government-backed long-term bonds to finance the project.
The World Bank has urged the government to improve its public-private partnership (PPP) financing schemes to attract more private capital that could help cover the government’s budget shortage for infrastructure projects, including toll road project.
World Bank transportation specialist Elena Chesheva said on June 25 that the government should continue consolidating small toll-road contracts into larger ones valued at more than Rp 30 billion to attract bigger firms.
She also urged the government to decrease its reliance on state-owned enterprises (SOEs) to execute toll and national road projects and allow private companies to build economically viable projects.
https://www.thejakartapost.com/news...sues-hamper-strategic-toll-road-projects.html
Government set to operate sections of toll roads in Aceh, Manado amid pandemic
- Mardika Parama
The Jakarta Post
Jakarta / Mon, July 20, 2020 / 07:02 pm
Aerial view of Cikubang railway and bridge in Cikampek-Purbaleunyi-Padalarang (Cipularang) toll road that connects Jakarta and Bandung, West Java. (Shutterstock/Akhmad Dody Firmansyah)
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Public Works and Public Housing Minister Basuki Hadimuljono has approved the operation of 35 kilometers of two strategic toll roads, namely the Banda Aceh-Sigli in Aceh and the Manado-Bitung in North Sulawesi, to boost economic recovery amid the COVID-19 pandemic.
In Aceh, a 14-km section has been opened connecting Indrapuri and Blang Bintang, where Sultan Iskandar Muda International Airport is located. Meanwhile, two toll road sections in North Sulawesi, spanning 21 km, which will connect Manado, Airmadidi, and a part of Kauditan, are also set to operate soon.
“The toll roads connecting productive regions will reduce logistics costs and improve the competitiveness of local products. They will also boost regional economic growth and establish new economic centers,” Basuki said in a statement released on Sunday.
COVID-19 restrictions, which are now being phased out in some places, have caused logistical disruptions along the supply chain by limiting mobility. Meanwhile, the economy grew 2.97 percent in the first quarter of this year, the lowest in 19 years.
However, the government is committed to continuing the development of strategic national projects during the COVID-19 health crisis with the addition of 89 projects with an estimated investment value of Rp 1.42 quadrillion (US$96.8 billion).
Coordinating Economic Affairs Minister Airlangga Hartarto stated recently that the new projects were an addition to the existing 223 strategic national projects and were expected to employ about 4 million additional workers each year from 2020 to 2024.
The Banda Aceh-Sigli toll road, stretching for 74 km in total, is the first-ever toll road in Aceh. Construction started in 2018 by state-owned construction firm Hutama Karya. The investment in the project, with a total of six road sections, is estimated at Rp 12.35 trillion, with a construction cost of Rp 9 trillion.
It is expected to cut the journey between provincial capital Banda Aceh and Sigli to one hour from the previous three hours.
Meanwhile, the 46-km Manado-Bitung toll road is estimated to cost Rp 6.19 trillion. The government is set to build the first section, while the second section will be constructed using a public-private partnership (PPP) scheme with PT Jasa Marga Manado Bitung.
The toll road will provide a boost for the region’s tourism, especially the Manado-Bitung-Likupang area, which has been listed as one of the five priority tourism areas to be developed this year.
https://www.thejakartapost.com/news...-toll-roads-in-aceh-manado-amid-pandemic.html
