T

he Bali administration plans to begin construction of a toll road connecting Denpasar-Ngurah Rai airport and Nusa Dua next month.

The island’s first toll road is expected to ease congestion along the Ngurah Rai bypass, currently the sole traffic headway connecting the airport with major tourism hubs such as Sanur and Nusa Dua.

The decision was made during a meeting of the provincial council on Friday, attended by government officials and representatives of PT Jasa Marga Bali Tol, a development company established by a consortium of seven companies.

Nyoman Wija, the government’s official in charge of economic and development affairs, said the administration had yet to decide the amount of investment needed to construct the 11-kilometer road.

“For the early phases, the council has allocated Rp 50 billion [US$5.7 million] from this year’s revised budget, but we have yet to decide the total amount of our investment,” Wija said about the project, which is estimated to cost Rp 2.4 trillion.

Some Rp 1.6 trillion of the investment would come from a loan from a group of financial institutions, while the remaining Rp 800 billion would be financed by seven companies in the consortium.

The seven companies are PT Jasa Marga Tbk, PT Pelindo III (operator of Benoa ferry and fishing harbor), PT Angkasa Pura (operator of Ngurah Rai airport), PT Bali Tourism Development Corporation (operator of Nusa Dua tourism enclave), PT Wijaya Karya, PT Adhi Karya and PT Hutama Karya.

“We will contribute to the Rp 800 billion investment, but we will see how much we can invest,” Wija said.

The decision to invest came
once it was established that the toll road would be a profitable project, he said.

“Investing in the toll road has good prospects, as we have seen the experiences of other provincial administrations such as Jakarta, West Java and Central Java that own up to 40 percent of the shares. This is very profitable.”

Since it is a long-term investment, with a concession of 50 years, the break-even point will be reached after 20 years, he estimated.

The administration will need to issue two bylaws as the legal basis for the investment. Based on the bylaws, the administration will establish an enterprise as the official shareholder in the project.

“It will take time to draft the bylaws, but that’s not a problem because we could start investing when the construction project is under way,” he said, adding that the project would be completed within 18 months.

He said the administration would discuss further with the consortium after the council issued a recommendation letter of approval for the administration’s investment.

Council deputy speaker Ketut Suwandhi said the council would soon issue the letter of approval.

“We have agreed to the administration’s plan to invest in the toll road project and we will soon issue the letter,” he said.

“It is impossible to do road expansion in Bali, so the construction of the toll road is a solution to easing traffic jams and is a promising investment,” he added.

Tito Karim, president director of PT Jasa Marga Bali Tol, said that the company was ready to incorporate the administration in the investment.

He confirmed that the project would be completed by 2013 before the APEC Summit in November 2013.

Part of the toll road will be built on 1.5 hectares of mangrove forest, following approval by the Forestry Ministry.