Jokowi puts govt’s MRT financing scheme on hold
Jakarta Governor Joko “Jokowi” Widodo is putting the government’s new offer of a Mass Rapid Transit (MRT) financial scheme on hold after learning that his administration will still have to cover more of the cost than the central government.
Jokowi became aware on Wednesday that ministers had denied his request for the central government to repay a bigger portion of the Japan International Cooperation Agency’s (JICA) US$1.5 billion loan that will be used to finance the $1.8 billion project.
The central government has offered to repay 49 percent of the loan with the city administration repaying the remaining 51 percent.
The current scheme will require the city administration to repay 58 percent and the government the rest.
“I need to recalculate everything. I will give my response maybe tomorrow or the day after,” Jokowi told reporters upon arriving at City Hall after a meeting with Vice President Boediono.
The governor said he would need to calculate the impact of the scheme on construction costs, subsidies, the burden to the budget that the administration would have to cover and also its effect on future ticket prices.
The loan from JICA is tied to the Special Terms for Economic Partnership (STEP) agreement and calls for a loan period of 40 years, a grace period of 10 years and an interest rate of 0.2 percent per year.
Last week, Jokowi agreed to bargain, asking the central government to repay 60 percent of the loan, while the city would repay 40 percent, which was more than his initial demand of a 70-30 repayment scheme.
Jokowi had repeatedly met with Coordinating Economic Minister Hatta Rajasa and other ministers, including Finance Minister Agus Martowardojo and National Development Planning Minister Armida Alisjahbana to push his request.
Hatta said that he expected Jokowi to agree to the new financial scheme. “I am convinced that the new scheme is agreeable. The MRT project needs to go on,” Hatta said.
Jokowi has been struggling with the MRT project since he took over the helm of Jakarta governor from Fauzi Bowo in October. The long-awaited project was supposed to have begun construction late last year.
The MRT’s first phase is expected to connect Lebak Bulus in South Jakarta to the Hotel Indonesia traffic circle in Central Jakarta and begin operations in 2016.
The first MRT track will have six underground stations, seven elevated stations and is planned to serve around 173,420 passengers per day.
Jokowi’s main concerns are whether or not the MRT will be profitable enough to be able to repay the massive loan and not burden the city’s coffers with a hefty subsidy.
The governor considers that the estimated fare of around Rp 38,000 ($3.94) per passenger is quite expensive and needs to be cut to around Rp 10,000.