[Kabar-indonesia] Govt drops plan to guarantee Jakarta monorail project

[JoyoNews at aol.com]

The Jakarta Post
Thursday, August 3, 2006

Government drops plan to guarantee monorail project 

Rendi Akhmad Witular and Prodita Sabarini, 
The Jakarta Post, Jakarta

The central government announced Thursday it would not provide a blanket loan 
guarantee to PT Jakarta Monorail (JM) for the development of the 
transportation system in the capital, despite previously agreeing in principle to provide 
the facility.

Without the guarantee, it is likely that a consortium led by Dubai Islamic 
Bank will have to postpone its commitment to channel about US$500 million in 
loans to JM 
to finance the ambitious monorail project, which was initiated by the Jakarta 
administration. 

The uncertainty over financing may lead to a halt in the ongoing construction 
work of the project, with the potential to exacerbate the notorious traffic 
jams in the capital. 

Transportation Minister Hatta Radjasa said Finance Minister Sri Mulyani 
Indrawati refused to provide the guarantee for the project because it would violate 
several regulations concerning transparency and fairness. 

According to regulations, such a guarantee should be given to project 
developers appointed through a competitive bidding process, not based on a direct 
appointment, as in the case of JM which was selected by Jakarta Governor 
Sutiyoso. 

"The finance minister requested that the Jakarta administration review the 
feasibility study of the project in order to convince the Dubai Bank that it is 
profitable and risk free," Hatta said after a meeting with Vice President 
Jusuf Kalla. 

He explained that if the JM management was able to convince the bank, the 
future profit from the project could be used as a guarantee in securing the loans 
and a government guarantee would no longer be necessary. 

Sutiyoso said separately Wednesday that the government had yet to reach a 
final decision on the guarantee requested by the consortium. 

"Every person has his or her own assumptions which are different to others," 
he told The Jakarta Post when asked to comment on Hatta's statement. 

He insisted that major projects like the monorail system should be guaranteed 
by the government or else no investors would be interested in the potential 
risk. 

The Dubai Bank syndicate has expressed a commitment to financing the monorail 
project, but requires a blanket guarantee because of doubts it would be able 
to turn a profit with an estimated 160,000 passengers per day. 

When completed, the monorail would serve the business districts of the city 
through a 14.3-kilometer line as well as a a 13.5-km route from Kampung Melayu 
in East Jakarta to Mal Taman Anggrek shopping mall in West Jakarta. 

JM has signed contracts with several companies, including state-owned PT Adhi 
Karya for civil work, PT Bukaka Trans System for rolling stocks, MTRC Hong 
Kong for project management and services integration and MacDonald as 
independent engineers. 

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Joyo Indonesia News Service
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