The 11.19 kilometer toll road, part of the Jakarta Outer Ring Road (JORR) 2, requires an estimated investment of Rp 4.7 trillion.

The syndicated loan is provided by state-owned lenders Bank Negara Indonesia (BNI), Bank Mandiri and Bank Rakyat Indonesia (BRI) as well as private lender Bank Central Asia (BCA) and regional development bank Bank Riau Kepri.

The loan has a tenure of 15 years.

“I hope the signing of the loan [agreement] gives us new spirit to complete the construction as planned,” MTN president director Truly Nawangsasi said during the signing event.

She added that the firm expected to start operating the toll road by the second quarter of next year, while the construction itself was expected to be completed in January 2019.

That time line marks a delay over to the company’s initial expectation that construction would be wrapped up this year.

“It is delayed by the land procurement. The land procurement was initially expected to be completed by May or June, but there was a problem, so it was delayed,” Truly said.

MTN revealed that the land procurement for the Cinere-Serpong section of the toll road in South Tangerang, which is being built by fellow Jasa Marga subsidiary PT Cinere Serpong Jaya, had reached 96.9 percent to date.

The Cinere-Serpong section will be connected to the Kunciran-Serpong section.

Construction on the Kunciran-Serpong toll road has reached 58 percent of completion as of July.

The 6.9 km subsection from Kunciran to Parigi is 55.9 percent complete, while construction on the 4.3 km subsection connecting Parigi and Serpong has progressed to 60.3 percent.

The syndicated loan will be used for construction and to finance the procurement of the remaining land.

The company has estimated that land procurement for the project will require around Rp 4.5 trillion in total.

The land procurement has thus far been financed by the special public service agency (BLU) of the Toll Road Regulatory Agency (BPJT) at Rp 1 trillion, as well as MTN’s bridging fund of Rp 2.7 trillion.

The bridging fund is a financing scheme whereby the toll road operator funds land procurement and is later reimbursed by the government through the State Asset Management Agency (LMAN).

Jasa Marga holds 60 percent of the shares in MTN, while the rest is owned by Astra Infra, a subsidiary of diversified conglomerate Astra International.

Jasa Marga finance director Donny Arsal said the rest of the financing required for the project would be fulfilled by shareholders in the form of equity.

He also acknowledged that there were concerns from the banks about the massive toll road development in the last two to three years, while the company had a limited balance sheet.

Jasa Marga previously stated that it sought to strengthen its equity structure through its last rights issue, during which it obtained Rp 1.7 trillion, as well as through state capital injections (PMN) from the government amounting up to Rp 1.2 trillion.

“We will ask banks to work with us, not just for the initial financing but also to support us in refinancing our debts,” he said, mentioning an asset and debt recycling program.

Infrastructure development is one of the priorities of President Joko “Jokowi” Widodo’s administration.

According to the government’s calculations, some Rp 4.7 quadrillion is required to implement the planned infrastructure projects during the five-year term of Jokowi’s administration.

Jokowi’s vision includes building more than 1,800 km of toll roads, 2,650 km of other roads, as well as kick-starting the development of 49 new dams and finishing the ongoing development of 16 dams.

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