Deals

Japanese consortia win Jakarta MRT PPP

Two consortia of Japanese construction companies have won the first phase of the Jakarta MRT PPP, worth a combined $370m.

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After a prolonged bidding process involving two governments and many Japanese construction companies, three of eight packages of Jakarta’s Mass Rapid Transit (MRT) system have been awarded to two Japanese consortia through a public-private partnership (PPP) programme.

The winning consortia are Shimizu-Obayashi-Wijaya Karya-Jaya Construction Joint Venture for two of the packages, while Sumitomo Mitsui Construction Company (SMCC)-Hutama Karya Joint Operation won the last package, according to a Jakarta government statement. Altogether, this stage of the PPP programme is expected to cost IDR3.6 trillion (€283 million; $370 million).

With this announcement, the first phase of Jakarta MRT’s construction has been “officially launched by Jakarta Governor Joko Widodo,” according to the statement.

“The MRT construction has started, the meter is running, and the contractors have been appointed. It is up to the contractors now when they would start the construction,” Widodo said in the statement. The MRT is expected to be completely finished by 2017.

The Jakarta MRT PPP is a fairly straightforward contract, according to an SMCC spokesman: the winning bidders will be paid by the Indonesian government for the construction. The entire project, however, is being funded by a JPY125 billion (€964 million; $1.3 billion) loan from the Japanese government – or the Japan International Cooperation Agency specifically.

“They lent the money for this, so the Indonesian government would of course make an international decision,” he said. Part of the loan’s terms were that Japanese companies could attend the bidding process. In fact, SMCC knows of no companies currently bidding for the MRT’s packages that aren’t Japanese –  though there are no known rules against other companies entering the process.

SMCC itself bid for two of the MRT’s packages and was awarded one, according to the spokesman. It is not planning to bid on any of the remaining five packages.

The Indonesian government is still drafting the contract for the Japanese construction companies, and SMCC doesn’t expect it will be done for another month or more, even though bidding started last year. However, PT MRT Jakarta chief executive Dono Boestami insisted in the government statement that construction will begin this year.