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Govt struggles with Trans Sumatra toll road project
Financing issues have hobbled the government’s plan to complete the mega Trans Sumatra toll road on schedule
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Financing issues have hobbled the government’s plan to complete the mega Trans Sumatra toll road on schedule.
It is likely that contractors will fail to meet the August deadline set by President Joko “Jokowi” Widodo for the completion of a toll road network connecting Bakauheni, Lampung, to Palembang in South Sumatra.
Jokowi wanted the project to be ready for the Asian Games, which will kick off in mid-August.
Presidential Regulation No. 117/2015 assigned state construction firm Hutama Karya to finish building eight sections of the Trans Sumatra toll road by next year, including the Palembang-Indralaya route, Medan-Binjai, Bakauheni-Terbanggi Besar and Terbanggi Besar-Pematang Panggang route.
The eight sections will make up 645 kilometers of a new toll road network connecting the entire island of Sumatra. However, Hutama Karya data shows that only 21.86 km is operational, including the 6.17-km second section, the Medan-Binjai route, connecting Semayang and Helvetia.
The company recently completed 10 km of the Trans Sumatra toll road network, which is not yet operational.
“We are doing a concerted effort [to finish the project]. When we made the projection [of when the toll road network would be operational], the land [acquisition] should have been completed,” Indonesian Toll Road Authority (BPJT) head Herry Trisaputra Zuna said on Wednesday.
One of the main four sections connecting Pekanbaru and Dumai is currently facing land procurement issues, with only 64.86 percent of the land required available for development.
So far, Hutama Karya has completed only 8.66 percent of the section. The Pekanbaru-Dumai toll road was initially projected to start operating in December, while the remaining sections are expected to be completed by the same time next year.
Another major problem hampering construction is a lack of funds, especially as the toll road network is expected to see less traffic compared to the Trans Java network, BPJT noted.
Hutama Karya estimated that for the eight main toll roads, the company will need at least Rp 88 trillion (US$6.1 billion). It has fallen short of its targeted equity by Rp 13.7 trillion.
And with the additional sections — such as the Palembang-Tanjung Api-Api, which is included in the presidential regulation, Padang-Pekanbaru and Medan-Aceh — the firm will need Rp 250.5 trillion, of which it fell short by Rp 128.681 trillion in equity.
To address the project’s financing, the government provided capital injections (PMN) in 2015 and 2016 amounting to Rp 5.6 trillion. The PMN has been used to build the four main sections.
The government has also given concession contracts for the Jakarta Outer Ring Road (JORR) and Tanjung Priok Port access road in Jakarta to Hutama Karya for an underlying asset to seek financing.
It was followed by a state guarantee on the Hutama Karya loan for the Medan-Binjai section amounting to Rp 481 billion, and Rp 1.2 trillion for the Palembang-Indralaya section. Hutama Karya then issued a state-guaranteed bond worth Rp 6.5 trillion.
“In 2018, Hutama Karya requested an additional PMN from the government and DPR [House of Representatives] of Rp 12.5 trillion,” said Hutama Karya finance director Anis Anjayani.
Riko Amir, head of the Finance Ministry’s division for state budget risk mitigation, said the government conceded that it had a limited budget to support the project and would look for other financing options.
“If the equity does not work out, Hutama Karya will issue another bond with a state guarantee, but we have to see what the underlying asset will be like,” he said.
