T

he construction of the Trans Sumatra highway remains on schedule despite potential financing problems related to the freezing of a state capital injection for the toll road developer, according to an official.

'€œIt is still on schedule,'€ Indonesia Toll Road Authority (BPJT) board member Koentjahjo Pamboedi said on Thursday.

He was confident that the Palembang-Indralaya toll road section in South Sumatra, which is targeted to be completed before the 2018 Asian Games, would also finish on time.

He said state construction firm Hutama Karya, which is in charge of the highway construction, would still be able to build two sections of the total four with its existing capital.

The two toll road sections are the 17-km Medan-Binjai section and the 22-km Palembang-Indralaya section.

'€œThere'€™s no problem with the construction, as long as there are no problems with land procurement or financing,'€ he said.

Hutama Karya development director Putut Ariwibowo said the company had secured financing for the Medan-Binjai section, while it would get an additional Rp 990 billion (US$72.62 million) in loans from state financing firm PT Sarana Multi Infrastruktur (SMI) this week for the Palembang-Indralaya section.

The company has received Rp 3.6 trillion in a state capital injection (PMN) from the 2015 state budget for the development of four sections of the toll road. In addition, the company was promised Rp 3 trillion in PMN from the 2016 state budget.

Unexpectedly, following a series of political lobbying, the House of Representatives and the government changed their mind and decided to '€œfreeze'€ the Rp 40.42 trillion PMN funds until the two sides meet again at the beginning of next year to revise the 2016 state budget.

'€œPreviously, before the postponement of the PMN disbursement, we would have been able to secure the financing for two sections, Palembang-Indralaya and Terbanggi Besar-Bakauheni. But now we can only secure the financing for Palembang-Indralaya,'€ Putut said.

The financing issues for Terbanggi Besar-Bakauheni toll road and Pekanbaru-Dumai toll road would not be settled until the company received PMN funds or other forms of financing, he said, adding, however, that the postponed capital injection would not get in the way of the construction process, as the company might build strategic partnerships with banks.

During the event, Putut shed light on the latest progress of the toll road project.

Land acquisition for the Medan-Binjai section was 69.7 percent complete, he said, while the Palembang-Indralaya section had progressed 59.73 percent. Both toll road sections have also begun with land work and engineering design. The Medan-Binjai section is slated to begin operating by 2018.

Meanwhile, the land acquisition process for the other two sections, Terbanggi Besar-Bakauheni and Pekanbaru-Dumai, has progressed only 0.37 percent and 7.72 percent, respectively.

The Trans-Sumatra highway is designed as a 2,600-km toll road comprising 24 sections. The total project is estimated to cost Rp 331.69 trillion and slated to finish by 2019.

The government has assigned Hutama Karya to build the toll road to improve connectivity in the region despite the lack of commercial appeal.

The government has also considered assigning Hutama Karya to do the construction of four more sections in the project.

'€œWe might ask for Rp 8 trillion in additional PMN funds next year, if there are an additional four sections,'€ Putut said. (fsu)