MTD: Cost of Jakarta toll road to top RM1b

BTimes
By Sharen Kaur
Published: 2008/09/26

The construction and toll road operator had earlier allocated RM858 million for the Cibitung-Cilincing highway, but the project cost could be 35 per cent more.

MTD Capital Bhd (MTD), a construction and toll road operator, said the 37km Cibitung-Cilincing toll road in Jakarta, Indonesia, will cost the company over RM1.1 billion to build or more than 35 per cent than originally budgeted.When MTD signed a 30-year concession agreement with the Indonesian government early last year, it allocated US$250 million (RM858 million) for the highway."The cost has built up with the increase in fuel and material prices. Land acquisition by the Indonesian government is also pending. We are hoping to start work by the second half of next year," MTD chairman Datuk Dr Nik Hussain Abdul Rahman told Business Times after the company's annual general meeting in Selangor yesterday.He said the project cost will be reviewed if there is a further price rise.

Nik Hussain said while there is no cost variation for the project, it will work out a price mechanism with the Indonesian government for toll collection over the concession period to mitigate the higher cost.MTD is targeting a return on investment of 20 per cent to 30 per cent from all its overseas toll operations.Besides the toll road in Indonesia, where it holds a 95 per cent interest, MTD has a 80 per cent stake in the 11.3 billion peso (RM875 million) South Luzon Expressway toll project in Manila, the Philippines."We hope to complete Phase 1 by the first quarter of next year and Phase 2 by 2010, which is when it will start to contribute to group revenue and profit," Nik Hussain said.It also holds less than 20 per cent interest in a consortium comprising IJM Corp, Bumi Hiway, WCT and CIDB, which has a 30-year highway concession in Andhra Pradesh, India.MTD aims to build its toll concession business and will move to Sri Lanka and China and look for new projects in the Philippines and Indonesia.

In Malaysia, it holds four toll concessions -
the Kuala Lumpur-Karak Highway,
the East Coast Expressway 1,
the East-West Link Expressway and
the Kuala Lumpur-Seremban Expressway, which are held via its subsidiary MTD Infraperdana Bhd (MTD Infra).

"The roads are profitable. We have made our money from operating them," Nik Hussain said.Combined daily traffic at the four highways is 330,000 and is expected to rise by two per cent to four per cent per year.Nik Hussain also said MTD Infra is expected to do better this year as more cars use the highways.For the 12 months to March 31 2008, it achieved a net profit of RM68.4 million on a revenue of RM277.5 million.