Toll road construction: New scheme to suppress fraud

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Bisnis Indonesia - Pembangunan jalan tol: Skema anyar tekan penyelewengan

19 October 2023

By: Alifian Asmaasyi & Hendra Wibawa

Jakarta - The government is currently preparing certain measures to strengthen governance in toll road projects, particularly those relating to the indicators for evaluating the Owner Estimate price (harga perkiraan sendiri/HPS) to avoid project value markups.

The measures were taken as a response to the alleged corruption case in a toll road project involving a Toll Road Business Entity (BUJT) and the project’s contractor.

According to the Public Works and People’s Housing (PUPR) Minister, Basuki Hadimuljono, his office will tighten oversight on toll road project tenders in order to close any loophole for the criminal act of corruption.

“To that end, we plan to introduce a mechanism going forward. Yesterday we had an internal meeting at the Public Works [office], and I’d like to add that the Owner Estimate price must first be approved by us,” he said during the Signing Ceremony for Cikunir–Ulujami JORR-E Toll Road Construction Guarantee in Jakarta, Tuesday (17/10).

He added that the procurement process has been identified as an easy target for project tender fraud, particularly in toll road construction projects.

In order to prevent fraud, the Public Works and People’s Housing (PUPR) Ministry will collaborate with independent entities or corporations that will conduct value engineering evaluation in every existing project.

“We will hire entities for value engineering. We will hire from non-BUJTs so as to remain independent,” he said.

With regard to the scheme, Basuki explained that BUJTs with projects will first be required to submit tender data to the PUPR Ministry to be tested for value engineering. Once approval is obtained, the BUJT concerned is allowed to proceed with the goods and services procurement process.

“With BUJTs carrying out the procurement process themselves, it would be reasonable to suspect that something [fraudulent] might be happening there. And I don’t want anything negative happening after we [retire],” he added.

One of the alleged corruption cases in a toll road project supposedly concerns the Cikunir–Karawang Barat segment of the Jakarta–Cikampek II Elevated Toll Road project.

The case is currently being handled by the Supreme Court wherein three suspects from the BUJT and the consultant have been identified. In addition, there is also a suspect from the private entity executing the project.

Besides toll road projects, the Corruption Eradication Commission (KPK) also detected an alleged misappropriation of budget for a road infrastructure project.

Previously, KPK Deputy Chief Nurul Ghufron stated that Indonesia’s massive toll road construction projects are quite vulnerable to corruption practices.

KPK’s records concerning indications of corrupt practices in toll road projects include delayed completion of toll road projects, increased costs for toll road construction, extension of toll road concession periods which should have expired, and transfers of controlling shares in toll road business entities.

Cikunir-Ulujami JORR

In other developments, the Head of Toll Road Regulatory Agency (BPJT) Miftachul Munir explained that PT Jakarta Metro Expressway, a public and private consortium company consisting of PT Marga Metro Nusantara (MMN), PT Adhi Karya Tbk. (ADHI), and PT Acset Indonusa Tbk. (Acset) will start the construction of Cikunir–Ulujami Jakarta Outer Ring Road Elevated (JORR-E) in July 2024.

In his statement, the construction of this elevated toll road with a total investment of Rp21.2 trillion is targeted for completion and to start operating by April 2027.

He explained that the construction stage of Cikunir–Ulujami JORR-E toll road will take approximately 3 years.

“The construction schedule under PPJT is 33-month long, from July 2024 to March 2027, while operation is scheduled by April 2027,” Miftachul said, Tuesday (17/10).

He also clarified that this toll road will have three on/off ramps located in Pondok Indah, Bambu Apus, and Jagorawi. The starting point of the project is in Jatiasih and the end point is in Ulujami junction, designed for a planned vehicle speed of 80 km/h.

“By constructing this JORR and connecting it to the existing JORR, we expect to reduce high traffic on existing toll roads,” he said.

President Director of JKTMetro, Danni Hasan revealed that 70% funding of the project came from domestic banking loans.

“[We] have started exploring bank loans, and these [loans] are mostly local, although there were a few international banks showing interest [in lending] but it’s rather complicated because the structures and tenors are different. At this time, the composition is 30% equity and 70% loans.”

Previously, Salim Group’s PT Nusantara Infrastructure Tbk. (META) through its subsidiary PT Jakarta Metro Expressway (JKTMetro) signed a Toll Road Procurement Agreement (PPJT) for Cikunir–Ulujami JORR Elevated (JORR-E) with the PUPR Ministry’s BPJT.

Infographics:

Toll road construction in Indonesia has been a project that the Indonesian government is still continuously developing in order to build connectivity. To date, the total length of toll roads across Indonesia is illustrated as follows:

Kalimantan: 97.27 km
Bali: 10.07 km
Sulawesi: 61.46 km
Trans Sumatra: 751.18 km
Non-Trans Java: 327.77 km
Trans-Java: 1,056.38 km
Greater Jakarta (Jabodetabek): 348.58 km