US bank eyes Sunda Strait Bridge project
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The Export-Import Bank (Exim Bank) of the United States says it is looking at financing part of the Sunda Strait Bridge (SSB) project, apparently undeterred by an impending change to a presidential decree on the project.
The interest was contained in a letter sent by Exim Bank director Patricia Loui to Tomy Winata, chairman of the Artha Graha Network, which established the PT Graha Banten Lampung Sejahtera consortium with the Banten and Lampung regional governments to conduct a feasibility study for the project.
Loui said in the letter that the SSB project would be crucial in improving connectivity in Indonesia and would be a trigger for further economic growth in the country.
“Although Exim does not provide equity financing on projects, we can assist with long-term financing to purchase US products and services and with 30 percent of local costs associated with the purchase,” Loui said.
Loui said that any long-term financing that Exim Bank offered would use fixed rates based on London Interbank Offered Rates (LIBOR).
“With LIBOR rates at historic levels, these fixed rates can be very attractive to foreign buyers,” Loui said.
The Exim Bank would share SSB project materials with another US government entity, the Overseas Private Investment Corporation (OPIC), which undertakes equity investments, Loui said.
The Exim Bank is one foreign institution that has officially stated interest in investing in the SSB project.
Other interested investors include the GS Engineering and LG Group from South Korea and the JG Corporation, Nippon Koei and Nippon Steel from Japan. The China Railway Construction Corporation and the China Development Bank have also stated their interest.
Meanwhile, the consortium met with representatives from the Japan’s Ministry of Economy, Trade and Industry (METI) in Jakarta.
Following the meeting, the consortium’s president director, Agung R. Prabowo, said that the Japanese government had expressed an interest in the SSB project but had not made a commitment on financing.
Agung said that the recent brouhaha surrounding the amendment of a presidential decree on the SSB project had not discouraged foreign investors from expressing interest in the Rp 100 trillion (US$10.7 billion) undertaking.
The Finance Ministry has proposed changing a presidential regulation on the project in order to finance its feasibility study with state funds.
The proposed change would void a stipulation of the current decree that would give the consortium preferential bidding rights on the project tender. The government will finance the feasibility study under the change. The Finance Ministry’s interim fiscal agency head, Bambang Brodjonegoro, said on Tuesday that PT Graha Banten Lampung Sejahtera would be compensated for its costs for the feasibility study if the project tender was awarded to another vendor.