Indonesia proposes Rp24 trillion injection to save toll road projects

Finance Minister Indrawati suggested that the injections be disbursed in the first quarter of next year.

Deni Ghifari

Deni Ghifari

The Jakarta Post


Workers of PT Waskita Sriwijaya, a subsidiary of state-owned construction firm Waskita Karya, pave a section of the Trans-Sumatra toll road on April 3, 2023, in Ogan Komering Ilir regency, South Sumatra. PHOTO: ANTARA/ THE JAKARTA POST

September 13, 2023

JAKARTA – The government has proposed state capital injections (PMN) of Rp 24.6 trillion (US$1.59 billion) to continue work on toll road projects handled by debt-laden state-owned enterprises (SOEs).

Speaking in front of House Commission XI, which oversees financial affairs, Finance Minister Sri Mulyani Indrawati suggested that the injections be disbursed in the first quarter of next year given the importance of the continuation of some toll road projects that are included in the list of national strategic projects (PSN).

“The timing of this [disbursement] for PSN decides the health of these SOEs,” said Sri Mulyani on Tuesday.

PT Hutama Karya has taken over several toll road projects from fellow SOE PT Waskita Karya (WIKA) to reduce burden on the latter amid financial distress.

The projects listed by Sri Mulyani included phase one of the Trans-Sumatra Toll Road as well as the Bogor-Ciawi-Sukabumi (Bocimi) and Kayu Agung-Palembang-Betung toll roads.

According to the proposal, Hutama Karya would receive Rp 18.6 trillion to fund those three projects, while WIKA would receive Rp 6 trillion for its PSN, including toll roads.

WIKA is handling 23 PSN as of the first half of this year. Sri Mulyani did not specify which of those projects the Rp 6 trillion in PMN was intended for.

Waskita Karya is in the middle of a debt restructuring process after failing in May to make timely coupon payments on its corporate bonds, which prompted Indonesia Stock Exchange (IDX) to temporarily halt trading of its shares.

By earmarking PMN disbursements for specific projects the government aims to ensure that the money will not be used for paying off debts since it will not be included on the companies’ balance sheets.

“Even though we are giving out injections, there will be conditions on which project they are earmarked for. They will not be part of the balance sheet, given that [the firm] is in the middle of restructuring,” said Sri Mulyani.

“So, it will ensure that the PMN does not disappear or get diluted by the various financial problems of said SOE,” she added.

Waskita Karya also defaulted on Rp 135.5 billion of coupon payments last month, adding to its long list of delayed payments.

SOEs Minister Erick Thohir revealed last month that Jakarta plans to turn Waskita Karya into a subsidiary of Hutama Karya, which is reportedly in a healthier financial state, after its restructuring process is concluded.

A Finance Ministry official said in August that Jakarta had never paid off SOE debts directly using state budget funds and that the companies should sort out their debt issues on their own.

Editor’s note: This article was corrected after erroneously stating that trading of WIKA shares had been suspended on Indonesia Stock Exchange in May.

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