Infrastructure Indonesia: Government Offers Toll Road Projects
Indonesia's Ministry of Public Works and Housing said the government plans to offer three toll road projects to investors in the first quarter of 2016: (1) Cileunyi-Sumedang-Dawuan (Cisumdawu) in West Java, (2) Serang-Panimbang in Banten, and (3) Legundi-Bunder in East Java. These projects are part of the Indonesian government's target to add 1,000 kilometers of new toll roads up to 2019 in an effort to enhance the country's infrastructure development, hence improving connectivity across the archipelago and reduce logistics costs.
Herry Trisaputra Zuna, Head of the Toll Road Regulatory Agency (BPJT) within the Public Works and Housing Ministry, said the government intends to offer these three toll road projects to investors for bidding in Q1-2016 and concession agreements are expected to be signed somewhere in the third quarter of the year. These three toll road projects are assumed to be the last roads that will be offered by the Indonesian government under the Joko Widodo administration (2014-2019).
The first two sections of the Cisumdawu toll road (58.6 kilometers) will be developed by the government as this is part of the Trans Java toll road.
The Serang-Panimbang toll road (83.9 kilometers) will be ready for the bidding process after the exact location has been secured.
Although the land procurement for the three toll roads has not been completed yet, the government already requests investors to declare their interest and provide necessary documents to the government in order to speed up the process. Land procurement for the Sumedang section of the Cisumdawu toll road has just begun, while only 10 percent of the land procurement for the Legundi-Bunder toll road (29.3 kilometers) has been completed. Further land procurement will be undertaken parallel with construction, Zuna said.
Land procurement remains an obstacle as the land needed for the toll road development in 2016 is estimated to cost IDR 12 trillion, while the government's State Budget only allows IDR 1.4 trillion for public spending on land procurement.
There may be additional toll road projects offered to investors. However, these roads are offered by the private sector for bidding. Examples are the Jakarta-Cikampek II toll road and the Jakarta Elevated project. Both these projects were proposed by state-controlled toll road developer Jasa Marga. Previously, the Ministry of Public Works and Housing had approved Waskita Karya's proposal to offer the IDR 5.9 trillion Legundi-Bunder toll road.
In recent months Indonesia's Ministry of Public Works and Housing signed infrastructure project contracts worth IDR 8.8 trillion. These were the result of early bidding in 2015.