Trans-Sumatera Toll Road Construction to Begin on October

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  • Proyek Tol Trans Sumatera

    Proyek Tol Trans Sumatera

    TEMPO.CO, Jakarta - After the Presidential Regulation on the Development of the Trans Sumatera toll road was signed last week, Hutama Karya, the construction company responsible for the project, is preparing a US$418 million investment for the first stage of the toll road development. The fund will be used to construct the Medan-Binjai and Palembang-Indralaya toll road.

    "For all [segments] of the toll roads, it would require a total fund of US$2.5 billion," said Ary Widyantoro, Company Secretary of Hutama Karya, on Monday, September 22, 2014. The project will begin on October 16, 2014.

    He explained that 30 percent of the fund required for the project will be originated from the company's equity while the other 70 percent will be originated from bank loans.

    Previously, the project has been offered to investors through several tenders but returned with low results mainly because the internal rate of return (IRR) for the project is considered very low. Private companies hoped that the IRR of the Trans Sumatera toll road should be around 15 to 17 percent, 4 to 5 percent higher than the average interest rate.

    FAIZ NASHRILLAH | SAID HELABY