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Public works ministry offers private firms Rp21.7t worth of road, bridge projects

Jakarta Post - October 2, 2020

Mardika Parama, Jakarta – The Public Works and Housing (PUPR) Ministry is proposing a set of infrastructure projects worth Rp 21.7 trillion (US$1.46 billion) for private investors through a public-private partnership (PPP) scheme during a market sounding event on Wednesday.

The proposed infrastructure projects include the Gilimanuk-Mengwi toll road project in the tourism hub of Bali, worth Rp 19.35 trillion, and bridge replacement and or duplication across Java Island with a total investment of Rp 2.35 trillion. Most of the bridges are of the Callender-Hamilton truss type.

"Through the PPP scheme, the government can offer [investors] various facilities, including viability gap funding, feasibility support and the state infrastructure guarantee [...] to expedite Indonesia's infrastructure development," PUPR Minister Basuki Hadimuljono said in a statement on Wednesday.

The Gilimanuk-Mengwi toll road stretches 95.5 kilometers in the northern and western part of the island and is constructed to boost tourism in the northern region. The toll road, part of the trans-Java-Bali development, will connect the high traffic route from Gilimanuk Port to the island capital of Denpasar and its surrounding cities, known as the Sarbagita Metropolitan region.

The return on investment for the Gilimanuk-Mengwi toll road, on a 45-year concession, will be determined through a user-based payment scheme. Such scheme means that the return is based on the usage and demand for the service provided. Construction is slated to begin in 2021 and the toll road is to be fully operational by 2024.

The Finance Ministry has previously encouraged infrastructure financing to be sourced from alternative funding schemes, including PPP, as the state and regional budget would be geared toward accelerating the economic recovery from the coronavirus pandemic

The National Development Planning Agency (Bappenas) has estimated that the country will need $429.7 billion in infrastructure investment, equal to 6.1 percent of its annual GDP, between 2020 and 2024. However, the government might only be able to finance 30 percent of the projects using the state budget.

While the government is still committed to develop infrastructure as one of the priority sectors and has allocated Rp 413.8 trillion for infrastructure development in the recently passed 2021 state budget, that is down from Rp 423.3 trillion in the 2020 state budget.

In addition to the toll road project in Bali, the public works ministry also proposed a PPP investment scheme for the replacement and or duplication of 38 Callender-Hamilton bridges across Java with a combined length of 3,000 meters.

The bridges' renewal will adopt an availability payment investment scheme with a concession period of 12 years. Construction on the bridges will begin next year, and they are to be fully operational by 2023.

Investment Coordinating Board (BKPM) chairman Bahlil Lahadalia in a statement congratulated the PUPR Ministry for the market sounding and expressed hope that the projects could help Indonesia's economic recovery.

"The BKPM congratulates the ministry for moving fast in proposing infrastructure projects despite the COVID-19 pandemic, which will help propel our economic growth and create new jobs," he said.

Source: https://www.thejakartapost.com/news/2020/10/02/public-works-ministry-offers-private-firms-rp21-7t-worth-of-road-bridge-projects.html