The government expected to secure the loan from the AIIB this year.
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JORR W2 Kebon Jeruk-Ulujami toll road. Arief Kamaludin|KATADATA

The government has offered the Pekanbaru - Dumai section of Trans Sumatra toll road project to the Chinese development bank Asian Infrastructure Investment Bank (AIIB) due to mounting costs. The decision was made because the government’s investment in Hutama Karya – the contractor of the section –is swelling, resulting in the need for other financing.

Advisor to the Minister of Public Works on Integrated Development, Danis Hidayat Sumadilaga, said that the government is still calculating the portion of the toll road’s financing that will be offered to the AIIB. Previously, the construction of the 126-km toll road was estimated to cost no less than IDR 16 trillion.

Danis explained that the Committee for Accelerating Priority Infrastructure Development (KPPIP) and Hutama Karya will immediately prepare a loan proposal for the toll section to be submitted to the AIIB. The government expected to secure the loan from the AIIB this year. (Read: Cisumdawu and Mando Toll Road Projects to Resume After Securing Chinese Loan).

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“We will immediately hold a cross-ministerial technical meeting to follow up on this,” said Danis after attending a coordination meeting of the KPPIP at the office of the Coordinating Minister for Economic Affairs, Jakarta, Wednesday (22/6). (Read: Cancellation of State Capital Participation for Land Public Service Agency to Hamper InfrastructureProject).

He added that this would be a direct loan to Hutama Karya. Going forward, the government’s equity participation in, and assignment to, the state construction firm will be focused on other sections of Trans Sumatra toll road such as Bakauheni - Terbanggi Besar. Another consideration is that Hutama Karya has so many assignments that the government has had to increase funding for Pekanbaru - Dumai section.

The meeting of the KPPIP also decided that the Serang - Panimbang toll section road will be financed using a hybrid model between the government through Viability Gap Fund (VGF) and the private sector through Availability Payment (AP). This financing model has already been adopted for other toll road sections such as Balikpapan - Samarinda, Manado - Bitung, and Pandaan- Malang.

On the same occasion, KPPIP Secretary Wahyu Utomo said that Hutama Karya equity to finance this toll road amounted to just IDR 11.3 trillion. That is why KPPIP is looking for an alternative source to cover the financing gap of IDR 4.9 trillion. 

“Because the AIIB is new, we expect the loan to be disbursed soon,” said Wahyu. (Read: Government to Take Over Stalled Toll Road Projects).