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2011, Toll Road Length Only Increased by 19 Km

By Tri Listiyarini

JAKARTA – Only 19.1 kilometres (km) of the toll road projects of 2011 are estimated to be built and operated, or less than half of the realisation of toll road projects in 2009 of 44.7 km. Nevertheless, the government is still optimistic it will be able to achieve the target of operating 700 km of toll roads from 2010-2014.

Meanwhile, in the master plan of toll road network development in Indonesia, the government is going to develop 5,376 km of toll roads. 3,281 km of this length are a potential development and 2,095 km are the development priorities. Out of the priority toll road projects, only 758 km are operational. Vice Minister of Public Works Ahmad Hermanto Dardak said that given the total toll road realised in 2010 and the target of 2011 of 63.8 km, the Ministry of Public Works needs to work extra hard to pursue the remaining 636.1 km out of the 700 km target, with 620 km being contributed by Trans Java toll road networks. “We are still sure that by 2014 we will have been able to complete the 620 km of Trans Java toll roads yet to be built. Therefore, we will achieve the 700 km target. This year, three toll road projects, two of which are part of Trans Java, will be realised by 19.1 km,” Hermanto said to Investor Daily in his office last weekend.

The government previously expected to be able to operate 120.35 km of toll roads by 2011. However, it seemed the target was so difficult to achieve that the government is only optimistic to be able to operate 19.1 km. Actually, the length of toll roads of 19.1 km was part of the 2010 target, because the government set the 63.8 km of toll roads in 2010 to have included three toll roads of 19.1 km. The contribution of 19.1 km of toll roads this year comes from the access toll road to Tanjung Priok Port (Priok Access) section E1 (Rorotan-Cilincing) of 3.4 km, Surabaya-Mojokerto toll road section I (Waru-Sepanjang) of 4.5 km, and Semarang-Solo toll road section I (Tembalang-Ungaran) of 11.2 km. Hermanto Dardak said that the optimism of achieving the 700 km target was based on two aspects. First, the Land Acquisition Law, which will be enacted around July 2011. Second, the completion of the evaluation of 24 suspended toll road projects marked by the intention of the toll road construction companies (BUJT) to amend this agreement soon.

“The slow processes of land acquisitions have been the main obstacle for the toll road construction to commence. The Land Acquisition Law may just be the key solution to this, because the civil rights of the land owners are removed, making land executions quicker and giving each process a set time limit,” he explained. Head of the Tol Road Authority (BPJT) Ahmad Ghani Gazali admitted, the pace toll road construction in Indonesia is not as good as that in its neighboring South East Asian countries. Since 1978, only 758 km of toll roads are operating, which means 20 km are constructed each year, while Malaysia has been able to construct around 280 km of toll roads per year. “With 700 km being achieved by 2010, the pace of toll road construction in Indonesia may increase to 125 km per year. In order to achieve this, the government has made various efforts, such as giving support for toll roads, from land capping to financing part of the projects,” Ghani said.

24 Suspended Toll Roads
Hermanto further explained, considering the importance of 24 toll road projects already tendered without significant progress (suspended) in realising the 700 km target of toll roads, the government is working on speeding up the construction of the toll roads. All that is left to do is for the government to check the administrative aspects of each toll road.

Target of Toll Road Operations in 2011
  • Access toll road to Tanjung Priok Port (Priok Access) section E1 (Rorotan-Cilincing) of 3.4 km
  • Surabaya-Mojokerto toll road section E1 (Waru-Sepanjang of 4.5 km)
  • Semarang-Solo toll road section E1 (Tembalang-Ungaran) of 11.2 km
Source:Ministry of Public Works, processed by Investor Daily

According to Hermanto, the evaluations of the feasibility of the toll roads, either economically or financially, have been completed since the end of 2010 and these 24 toll roads are feasible to continue with a number of consequences to be born by the BUJT. The administrative checks of the consequences to be born by the BUJT is what the government is now doing, such as checking whether the transfer of stocks to the new partner has been cleared. “The checking is in progress, we expect that soon all parties will sign the amendment of Toll Road Agreement (PPJT). These do not need to happen simultaneously, but one thing for sure, Cikampek-Palimanan toll road will be dealt with first. We also maintain constant coordination with the Vice President regarding this matter,” he said.

Hermanto added, signing PPJT amendment means that the BUJT of the toll road concerned agrees to bear 100 percent of the incrased investment costs. As we know, the investment value of 24 toll road projects has increased quite significantly from the previous estimate of Rp. 77 trillion to Rp. 111 trillion. On the other hand it also agrees to the concepts of the new PPJT which imposes automatic contract termination. “Given such a contract, we would like to find BUJT really serious in developing toll roads with the capacity for it, particularly financial capacity. If they cannot fulfill the contract, we will find new BUJT. We will not be held hostage by investors any longer. If this is realised along with the Land Acquisition Law, by the end of 2014 all land issues will be completed and constructions can commence in 2014,” he said.

In the new PPJT concepts, five key clauses are included. First, BUJT is to submit a guarantee of execution of 1 percent of the total investment value no later than one month following PPJT amendment. Second, once 75 percent of the land acquisition process is completed, BUJT is required to provide one third of the total equity value. Third, no later than six months following PPJT amendment, BUJT is to submit a verification of Credit Agreement (PK) with bank. Fourth, two months following the submission of PK, bank loans can be disbursed. Fifth, BUJT is to meet the physical construction progress in accordance with the construction timeline set by the government.