Jasa Marga (JSMR IJ) tariff hike + toll road update from Sarina Lesmina: - CLSA Indo

Toll road tariff to increase in September. The govt plans to increase toll road tariff in September 2011 for some of the toll road concessions. The tariff increase will be adjusted according to last two year's inflation. The Public Works Ministry stated that they are still waiting for the Central Statistics Agency to release the inflation number before deciding.

Comment: Inflation-hedge play Jasa Marga (JMSR IJ) toll road operator will see eleven of its 13 toll roads get tariff rate hikes. JSMR is also a direct beneficiary of the land acquisition bill scheduled to be approved in parliament this year.

Government will appoint new investors for stalled toll road projects that fail to pass evaluation process, targeted to be completed by end of this month. Since July 2010, government had evaluated 24 projects and recently had stated that 13 of the projects can proceed, while the remaining 11 needs decisions from the current investors. Government is targeting land clearing to be completed by 2012 for the 24 projects. Most of the projects are under land clearing phase now, but progress is very slow. Only Gempol-Pasuruan section has been 100% cleared; this belongs to Jasa Marga. Land revolving scheme will also be continued, where government will prepare the fund of Rp3.8tn to prioritize land clearing in 9 toll roads of Trans Java so it can be operational by end 2014.

Comment: We are glad to learn that government is moving ahead with this process, albeit at a very slow pace. We hope with the coming land bill and the closing of this evaluation, these stalled projects can re-commence. On land revolving fund, Jasa Marga has been utilizing this scheme successfully, along with the land capping fund in their new projects.