Trafalgar House to sue over road contract
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.TRAFALGAR House intends to sue the Indonesian government for up to $60m in damages if its contract to build a $700m toll road in the country does not go ahead.
It has also emerged that cancelling the project, awarded four years ago by the Suharto regime, could cost the British taxpayer up to $4m.
The concession to build and operate the 60 kilometre road in West Java was suspended last September by the Suharto government as a condition of its financial bail-out by the International Monetary Fund.
Indonesian officials have now indicated that the concession may be re- let because the consortium assembled by Trafalgar House included a company controlled by the daughter of President Suharto.
Trafalgar, now owned by the Norwegian group Kvaerner, and its Indonesian partners are understood to have spent about $30m on the project so far. The consortium is owned 40 per cent by Trafalgar, 30 per cent by the state- owned Indonesia toll road operator, Jasa Marga, and 30 per cent by Citra Lamtoro Gung Persada, a company controlled by Suharto's eldest daughter Tutut.
The project also received more than pounds 10m in aid from the British Government. About $4m of this has so far been handed over to Jasa Marga to help fund its financial contribution to the consortium.
The British aid has been used to pay for initial design work on the toll road and some engineering services. The aid was granted because a lot of the steelwork for the road, which would go through a mountainous area of West Java, was intended to come from another Kvaerner subsidiary, Cleveland Bridge.
The Trafalgar consortium is understood to have submitted the lowest bid for the contract. The equity financing was also structured so that Trafalgar's two Indonesian partners put up their share of the initial costs.
Under the original bid Trafalgar's stake would have dropped to 15 per cent when project financing was in place for the road. The shareholding of the Suharto-controlled company would have fallen to 5 per cent.
"If this project does not proceed then we are entitled to compensation and there is a lot of money at stake," said one source.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments