Road Project Transactions, Indonesia

Current Transaction
In December 2004, six toll-road projects were tendered out in the first batch. Thirty-five consortia (20 foreign companies and 15 local companies) expressed interest in the PQ. Eighteen consortia attended the pre-bid conference and conducted site visits. Land acquisition cost is to be provided by the investor.
Under Batch 1, four toll roads elicited private interest; there were no bids for the other two.
In the second batch, 13 projects were tendered, including the 2 that did not elicit any bids under Batch I. The PQ result was announced on 20 January 2006; only four projects in Jabodetabek Toll Road Network have sufficient number of qualified bidder. Again there were no bids for the Medan–Binjai and Cileunyi–Sumedang toll roads.
There was little interest from overseas investors since the land for ROW (right of way) has not been acquired for any of the 13 toll roads tendered. The GOI consider this is as cross sector issues. Policy, regulatory, and institution framework for land acquisition is now being set up to improve marketability of the projects.
Another problem encountered was the biased nature of the concession agreement used, which investors regarded as not “bankable”. A more “bankable” and “investor friendly” template concession agreement conforming to international standards has been developed.
The toll roads under Batch III are now being offered and include important links in the Trans Java Road Network: Solo-Mantingan-Ngawi and Ngawi-Kertosono. The PQ submission has been closed in September 2006. These projects have been considered as economically feasible, but financially marginal and need government financial support to make them commercially viable.

Future Transaction
There are 18 toll road projects under preparation by BPJT. The government has decided to build the Suramadu Toll Bridge and the proposed access toll road to Tanjung Priok Port, but private sector is likely to have the opportunity to operate them.

Source: KKPPI, Sector Review 2006