T

he proposed Sunda Strait Bridge (SSB) between Java and Sumatra Islands is running foul of the public-private partnerships (PPP) scheme that the government says are needed to build the bridge.

An administrative inertia said to stem from the vested interests of members of President Susilo Bambang Yudhoyono’s economic team has been blamed for creating chaos around the project, which has attracted interest from investors in China, Japan and South Korea.

Take the case of the Graha Banten Lampung Sejahtera, the business consortium led by politically wired tycoon Tomy Winata that initiated the project.

Under the presidential decree, Graha Banten was given the right to bid 10 percent higher than the lowest bid received for the project, if no state money was spent.

However, in a letter Finance Minister Agus Martowardojo sent to Public Works Minister Djoko Kirmanto on June 8, Agus unexpectedly proposed that state money pay for the SSB’s feasibility study.

Agus’ proposal counters a presidential decree issued in 2011 that prohibits the use of taxpayer money for the bridge. The decree stipulates that the private sector firms must bear all the construction costs for the bridge and its surrounding economic zones, which have estimated to top US$20 billion.

The government would have to spend as much as Rp 4 trillion ($430 million) on the feasibility study, if Agus’ proposal was adopted. So if the government funds the feasibility study, the consortium will lose its preferential treatment.

However, in his letter, Agus said that the consortium should “be considered” for participation in the project bidding without preference.

Agus also proposed that the consortium be compensated for its occurring expenses based on an assessment from an independent auditor appointed by the government should it fail in winning the project.

As reported earlier, the Sunda Strait Bridge project has become a contentious issue between Agus and Coordinating Economic Minister Hatta Rajasa and the public works minister, both of whom supported awarding Tomy the project and have pushed to accelerate construction.

Wisnu Tjandra, the vice president director of Tomy’s Artha Graha Group, said the consortium would comply with the government’s decision. “In line with the presidential decree, we plan to conduct a feasibility study and basic design on the project. This might be different from the finance minister’s opinion.”

Indonesian Institute of Sciences (LIPI) economist Latif Adam said that the chaos surrounding the project was an example of how public-private partnership schemes could go awry without proper coordination among stakeholders.

“We need to have an institution that is responsible for resolving disputes between stakeholders. We have seen too many conflicts between the Finance Ministry and other technical ministries. This needs to be resolved by Hatta or the President.”

Agus declined to comment.

The SSB project has added to the general confusion surrounding PPPs after the Jakarta monorail project and the Bojonegero seaport hub in Banten were terminated in 2010.

Private companies spent money on both projects before policy uncertainties led to their demise. (han)