Private companies to take part in airport upgrade projects

Private companies to take part in airport upgrade projects

The government is inviting private companies to invest in the development of several airports across the country through public private partnership (PPP) schemes to help speed up the upgrade of air transportation infrastructure.

So far, the government has said it would seek PPPs in development projects at 10 airports: Fatmawati Soekarno Airport in Bengkulu; Hanandjoeddin Airport in Belitung; Radin Inten II Airport in Lampung; Tjilik Riwut Airport in Central Kalimantan; Juwata Airport in North Kalimantan; Komodo Airport in East Nusa Tenggara; Sultan Baabullah Airport in North Maluku; Mutiara Airport in Central Sulawesi; Matahora Airport in Southeast Sulawesi; and Sentani Airport in Papua.

These airports see a high number of passengers and are located in tourism destinations and mining industry centers.

Transportation Deputy Minister Bambang Susantono said he hoped the tender process for the projects would begin next year.

"We want the private sector, including foreign investors, to participate in the development of these 10 airports because we want to further improve their level of services in anticipation of increased future demand," Bambang said on Wednesday.

"We admit that if we only rely on state funds to develop these airports, we are not going to catch up with demand, as the budget is rigid, limiting us when we want to increase capacity and services."

Bambang said that state budget allocations from the fiscal years 2010-2014 for 233 airports managed by the Transportation Ministry only amounted to Rp 19.5 trillion (US$1.62 billion), while the cost of optimal development was Rp 54 trillion.

He also said that the 10 airports saw more than 5 per cent growth annually, with up to 500,000 passengers passing through them a year.

"We plan to provide a VGF [Viability Gap Fund] to any private company that is interested in participating in the projects, and we are currently calculating how much we can allocate," he added.

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