China Communications takes $1.7bn stake in Indonesian road builder

The Indonesian subsidiary of China Communications Construction Corporation is to buy a stake in a company that won a contract to build a 170km toll road on the island of Java, Reuters reports.

China Communications Construction Indonesia (CCCI) will pay $1.7bn for a stake in Jasamarga Probolinggo Banyuwangi, a unit of Indonesian state-owned toll road operator Jasa Marga. The unit is to build a toll road between the cities of Probolinggo and Banyuwangi in east Java.

Adrian Priohutomo, director of Jasa Marga, said his company presently owned 94% of the subsidiary, and would retain at least 51%. He said: "When CCCI enters, we will maintain our majority, to what percent will depend on the result of the due diligence," he said.

Priohutomo said the company was aiming to break ground on the project next year.

Indonesia has plans for a massive expansion of its toll road network. In June, the newly-re-elected government of Indonesian President Joko Widodo suggested the private sector should fund a $70bn investment in 5,400km-worth of new highways by 2024, tripling the length of the country’s current toll road network.

World Highways reports that the government is now looking at a slightly less ambitious target: up to $25bn for a 2,500km programme of works. Major roads are planned to cross Sumatra and Java, as well as the islands of Sulawesi and Kalimantan routes.

Image: Java’s road and rail network (Gunawan Kartapranata/CC BY-SA 3.0)

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