Disbursement of WB river dredging loan likely delayed

Agnes Winarti, The Jakarta Post, Jakarta | Tue, 02/17/2009 2:05 PM  

The disbursement of the World Bank's US$150 million soft loan for dredging 13 major rivers in the capital is likely to be delayed due to technicalities, a council speaker said. 

"If the administration can show us the detailed plan of the loan use and its installment plan, we will approve it immediately," Dani Anwar, deputy speaker of the Jakarta City Council, told The Jakarta Post on Monday. "There is no reason to disapprove it because we are aware that it is in the public's interest." 

The loan will finance a project called the Jakarta Emergency Dredging Initiative. The project is expected to return city's huge flood cycle from the current once every five years to once every 25 years. 

At the latest meeting between the administration and council, Dani said the administration failed to provide a detailed plan on specific usage of the fund, installments to be paid each year and the readiness of the city budget to pay the installments. 

"It is such a large loan that will have to be paid by the people of Jakarta for years to come," Dani said. 

Head of the committee on the World Bank loan, Maringan Pangaribuan, said the council should have no problem, in principle, disbursing the loan as soon as possible. 

"We will approve it within a week once the administration provides all the details we have been asking for." 

"We expect to see the details, including the amount of fee ought to be paid by the administration to the government, as the fund is a government-to-government loan program." 

The World Bank loan was provided to the central government. 

The loan payment is divided into 42 percent to the administration and 58 percent to the government. 

Previously, the head of the city planning agency (Bappeda), Nurfakih Wirawan, said the administration would be responsible for some $63 million debt to be paid over 10 years. 

The administration will have to pay for a Rp 70 billion each year. The figure is not regarded as to big a burden, because the city budget reached Rp 22.4 trillion this year. 

Nurfakih said the fund would be disbursed by April, and the city could start dredging by May. 

Recently, the head of the city public works agency, Budi Widiantoro, said the tender for the river dredging project would be performed in the middle of the year. 

Out of the total $150 million loan, $5 million will be for buying large dredging equipment, while the remaining is for field operations. 

On Monday, Governor Fauzi Bowo said that based on a governmental regulation on regional loans, the administration was required to cash in revenue from loans received from the central government. 

"But the government, including the National Planning Board (Bappenas) and Finance Ministry, agreed with the administration...that the efforts to reduce the loss caused by flooding could be seen as potential revenue," Dani said. 

"We do not mind to seeing the effort as a potential source of revenue. All we want is the detailed plan."