Jasa Marga seeks $7.3 billion by 2019 for New Tolls

Pejagan Toll Road (Image Credit : Cabinet Secretary)

JAKARTA (TheInsiderStories) – State-owned toll road operator PT Jasa Marga (Persero) Tbk (IDX: JSMR) is gearing up to raise funds from the capital market by issuing bonds, the proceeds of which will be used to fund its toll road projects.

President Director of Jasa Marga Desy Arriyani stated the company has set a plan to build around 600 kilometers new toll roads up until 2019, or 200 kilometers each year, starting from 2017.

To finance these projects, the company needs Rp100 trillion, or approximately $7.3 billion, in funds, which they hope to obtain from a combination of internal cash and external funding.

Arriyani admitted that raising funds from internal cash is quiet challenging, due to the Debt to Equity Ratio (DER) regulation which prohibits the company from borrowing beyond a limited ratio.

‘While we have to invest at least Rp100 trillion, as a public company we must maintain our debt ratio to minimize risks,’ she explained.

The company currently operates and manages 1,260 kilometers of toll road concessions. Approximately 73 per cent of toll roads in Indonesia are operated by Jasa Marga, which makes this company the dominant player in Indonesia’s toll road sector.

Previously, Jasa Marga issued an asset-backed KIK-EBA collective investment contract, guaranteed by toll road revenue and paving the way for alternative financing for government infrastructure projects.

Under the collective investment contract scheme, the funds Jasa Marga borrows from investors will be paid back within five years from Jagorawi Toll Road revenues. Such a contract will allow Jasa Marga to receive cash for its projects.

As the scheme has proved popular with investors — it attracted Rp 5.1 trillion bidding, 2.5 times the target — Jasa Marga should be able to push down the costs of funding well below bank interest rates.

‘We have been successful in raising funds from this scheme.  We plan to do it again next year, with the Inner City Toll Road as the next potential target’, she added.

Jasa Marga also plans to issue rupiah-denominated global bonds worth Rp3.9 trillion (US$200-300 million) to meet capital needs for the construction of toll roads.

The company is still studying existing regulations, since rupiah-denominated global bonds are relatively new in this country, she stressed.

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com