Investors Sought For $4.5 Billion in Government Projects

The Jakarta Globe, Muhamad Al Azhari, March 26, 2009

The State Ministry of National Development Planning announced on Wednesday that it was offering eight infrastructure projects worth a total of $4.5 billion to investors through joint government and private sector partnerships.

The government said it could afford only about 30 percent of the Rp 1.429 trillion ($124.32 billion) needed to finance infrastructure projects it has planned for 2010-14. It hopes to secure the rest from the private sector.

Potential private investors, however, have lacked interest in the partnership scheme because they are wary on the return on investment and many complain that government-offered projects are not ready to be developed. The investors are also facing liquidity troubles.

To catch their attention, the ministry has made available the eight projects, which it considers ready to go, out of its grand design to construct 87 projects which include toll roads, railways and power plants.

The government defines projects ready for development as those which have completed bidding documents, already have a special team to handle procurement and have acquired official support for settling obstacles, such as land acquisition and financing guarantees.

The most expensive project on offer is a 2,000 megawatt coal-fired power plant in Central Java Province, estimated to cost $2 billion.

The government is also offering a toll road project in North Sumatara Province worth $126 million connecting Medan to Binjan and another worth $476 million linking Medan, Kualanamu and Being Tinggi. Another is a planned toll road in West Java Province worth $395 million.

The government also has two railways in the pipeline. The first, worth $740 million, would be located in Central Kalimantan Province. The other project would be a $700 million rail line connecting Soekarno-Hatta Airport to Manggarai. Other small projects include a cruise terminal in Bali Province worth $24 million and the construction of water supply facilities in Bandung for $54 million.