Tariffs for the Cikampek-Palimanan toll road in West Java are expected to increase after delays in land purchases caused investment costs to soar. (Antara Photo/Dedhez Anggara)

Motorists to Pay as Costs of Cipali Toll Road Soar


JUNE 15, 2015

Jakarta. Delays in land acquisition caused investment costs for a new 116.75-kilometer stretch of toll road in West Java to soar by more than Rp 1 trillion ($75 million), an executive for the toll road operator said over the weekend.

President Joko Widodo on Saturday inaugurated the Cikopo-Palimanan (Cipali) toll road that connects the existing Jakarta-Cikampek section with Palimanan-Kanci. The Cipali toll road is the second longest toll road in Indonesia, after the Jakarta-Merak toll road.

"Initial calculations estimated investment for the Cikampek-Palimanan section at about Rp 12.6 trillion, but it soared to Rp 13.7 trillion due to some additional costs for land acquisition and delays in the process,” said Hudaya Arryanto, vice president director at Lintas Marga Sedaya, a joint venture of Indonesian and Malaysian investors that secured a 35-year concession period to operate the toll road.

A delay in purchasing land would mean extending contractors' services, inevitably increasing expenditure. The company would also have to bear interest rate costs should development slow down.

LMS — 55 percent of which is controlled by Malaysian investor Plus Expressways Berhad and the remaining 45 percent by Bhaskara Utama, controlled by businessman Sandiaga Uno – signed a toll road concession deal in 2006, but groundbreaking didn't take place until December 2011.

Construction came to a halt only months later and re-started in February 2013.

Minister of Public Works and Public Housing Basuki Hadimuljono confirmed that delays in acquiring land were largely due to soaring costs, but praised Lintas Marga for completing construction earlier than expected.

Joko's administration previously set a target to inaugurate the toll road in August.

Consumers pay soaring costs

A spike in investment costs would also mean a rise in toll road tariffs.

According to Achmad Gani Ghazali Akman, head of the toll road regulatory agency (BPJT) under the Ministry of Public Works and Public Housing, initial tariff calculations for vehicles in Category I — which includes sedans, jeeps and pickup trucks — stood at Rp 750 per kilometer. The figure has had to be adjusted to Rp 823 per kilometer.

The increase would bring the maximum tariff for the entire toll road to Rp 96,000 per vehicle in Category I.

Larger vehicles, such as trucks with five axles, that fall into the Category V, will be charged up to Rp 288,500 for using the entire 116.75 kilometers.

"That's already regulated in a ministerial letter," Achmad said.

Indonesian Consumers Foundation (YLKI) operational manager Tulus Abadi said he regretted that consumers will have to bear the soaring costs — and that it shouldn't be that way.

"It's a miscalculation in investment.... The contractor should be penalized," he added.

The government has said it hopes the Cipali toll road can provide a solution to the heavy traffic on the 1,430-kilometer Pantura road along Java's northern coast, but realizes that the high tariffs may deter motorists from using Cipali.

"If the toll tariff is too expensive, companies wouldn't want to take the toll road," Tulus said.

Cipali was one of the the "missing links" of the Trans Java toll road, a gigantic project initiated under the administration of former president Susilo Bambang Yudhoyono to connect the most western part of Java in Merak, Banten province, to the most eastern part in Surabaya, East Java.

Many toll road sections in the massive endeavor have yet to be completed.

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