State-owned construction firm PT Hutama Karya signed on Wednesday a syndicated loan totaling Rp 8 trillion (US$590 million) by seven domestic lenders, both state-owned and private, to finish the construction of the Bakauheni-Terbanggi Besar toll road in Sumatra.

The lenders include state-owned Bank Mandiri and Bank Negara Indonesia (BNI), as well as private lenders Bank Central Asia (BCA), Bank CIMB Niaga, Maybank Indonesia, Bank ICBC Indonesia and PermataBank.

The loan has added to the funds required by the firm, which amounts to Rp 16.7 trillion, to build the 140-kilometer toll road. In addition to the loan, the firm previously secured Rp 8.7 trillion in equity between 2015 and 2017, Hutama Karya president director I Gusti Ngurah Putra said in the signing ceremony.

Meanwhile, The equity consisted of Rp 2.2 trillion allocated from the state budget in 2015 and 2016 through the state capital injection (PMN) program and 6.5 trillion worth of bonds issuance by Hutama Karya between 2016 and 2017, he said.

“The government has asked us to complete this project in time by 2019 as mandated by President Jokowi [Joko Widodo] in a 2015 presidential decree on the trans-Sumatra toll road,” Putra said in Jakarta on Wednesday, adding that as the project had reached financial closure, it should be completed on schedule.

Putra added that as the toll road project continued to face land acquisition issues; around 7 percent of the land needed for the toll road had not yet been cleared.

“Nevertheless, I appreciate that the finance minister, public works and public housing minister and state-owned enterprises minister have been actively making efforts to solve this issue,” he said.

Hutama Karya finance director Anis Anjayani said on the same occasion that another state-owned infrastructure financing firm, PT Sarana Multi Infrastruktur (SMI), had provided a standby loan of Rp 7.5 trillion as cash deficiency support (CDS) to further support the toll-road project.

“In the early days of [this toll road operation], its revenue will not be able to cover its operational and maintenance cost as well as pay the credit, so PT SMI has agreed to help us to fulfill these obligations,” Anis said.

The syndicated loan has a 15-year tenure and seven-year grace period, whereas the CDS will be provided at a 25-year tenure and 15-year grace period, she added.

As part of the trans-Sumatra toll road network, the future highway will stretch from Bakauheni Port in southern Lampung to Terbanggi Besar regency in Central Lampung. Hutama Karya kicked off its construction in April 2015 and as of late 2017, the project is 51 percent complete.

Finance Minister Sri Mulyani Indrawati, who attended the signing ceremony, lauded the action, particularly the role of PT SMI, which had provided the standby loan.

“This is the first time for SMI to provide a CDS facility and I’m glad that the company, as an SOE, has continued to innovate its ongoing programs to adjust with its budget,” Sri Mulyani said in her speech.

“I appreciate that all parties involved in this project have been able to reach financial closure just a few days before the end of the year [...] I hope this funding structure can bring certainty to the project, and in turn, the lenders can find certainty about the project’s risks,” she added.

The minister also acknowledged that the Bakauheni-Terbanggi Besar toll road’s commercial value was not as high as the toll roads situated in Java, hence resulting in a higher equity proportion.

“But thankfully, we still managed to gain support from private firms so I hope this project can go as planned.”

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