Hatta defends rights of SSB initiator

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Coordinating Economic Minister Hatta Rajasa says the revision to the presidential decree on the construction of the Sunda Strait Bridge (SSB) may still allow preferential treatment for the initiator of the project, PT Graha Banten Lampung Sejahtera.

The company is owned by Banten and Lampung administrations along with Bangungraha Sejahtera Mulia, a subsidiary of the Artha Graha Group, which is founded by tycoon Tomy Winata.

The presidential decree specifies that the initiator will conduct a feasibility study for the construction of the bridge that will connect Sumatra and Java and be eligible for the right to match any offer from other project bidders and the right to bid 10 percent higher than the lowest bid and still win.

Speculation is rife that Tomy and his cohorts may lose these rights after a document revealed that Finance Minister Agus Martowardojo was demanding a revision to the decree due to the high financial risk to the state budget.

The government is required under the decree to cover all expenses if the project does not come on stream after the feasibility study is completed, whatever the reason.

Agus proposed the feasibility study be funded entirely from the state budget and carried out under the auspices of the Public Works Minister. The minister has so far refused to speak to the media about his demand. On his behalf, the Finance Ministry’s fiscal agency interim head Bambang Brodjonegoro said that a revision to the decree was necessary to ensure “prudence and fairness” in the bidding process for the project.

Hatta insisted that a revision to the decree does not automatically mean that preferential treatment for the initiator would be abolished.

“This is something we need to discuss together.... if he [Agus] wants state funds to finance the feasibility study, then we also need to discuss sources for funding,” Hatta said.

It was better, he said, to allocate the state budget for infrastructure projects in areas that were still economically underdeveloped.

The SSB project is a plan to construct a 26-kilometer-long bridge with six lanes and a double-track railway with total investment cost to range between US$10 billion and $20 billion. The feasibility study for the project could cost as much as Rp 4 trillion.

To ensure the commercial viability of the project, the central government has agreed to give the winner of the tender exclusive rights to manage two economic zones to be established at each end of the bridge, one in Banten and the other in Lampung.

Agus also objected to the idea of pairing bridge construction with management of the economic zones in the two provinces, demanding the bridge construction entirely independent.

Lampung Governor Sjachroedin and Banten Governor Ratu Atut have sent a formal complaint to the minister, saying that the separation of the bridge and the management of economic zones would render the project economically unfeasible.

“The finance minister’s statement has raised speculation that the government has a lack of confidence in the private sector in developing infrastructure,” Sjachroedin and Atut said in the letter.