Making TransJakarta a World Class BRT System - ITDP | Institute for ...

An additional 34 buses were procured 2004 in roughly the same manner, of which 4 have
already been put into operation, and the additional 30 are being held in reserve.
TransJakarta has retained ownership of the buses, and did not pass ownership on to PT
JET, the operating company.
There are several problems with having DisHub rather than private bus operators procure
the buses. The most obvious point is that the taxpayers needlessly picked up the full cost,
rather than private bus operators. Secondly, with public procurement anywhere there is a
heightened risk of graft. Thirdly, because DisHub is not a bus operator, they lacked the
technical expertise to select an optimal bus. The buses they selected were heavier and
more powerful than were necessary for operating TransJakarta routes. As a result, the
roadbed deteriorated more rapidly than anticipated, and the buses use more fuel than
necessary. Both of these have needlessly increased operating costs. Finally, because PT
JET does not own the buses, they do not have as strong an incentive to properly maintain
the buses, which is also increasing operating costs.
The lack of a competitive bid, and the speed with which the procurement was done, also
increased the risk of graft, and it weakened DKI Jakarta’s bargaining position relative to
the bus manufacturers . As a result, DKI Jakarta ended up overpaying for the buses.
During negotiations with PT JET, DisHub agreed to pay PT JET Rp.6100/km (roughly
$0.75). It was recently renegotiated to Rp.6000/km. The basis of this figure was
negotiation.
TransJakarta’s payments to PT JET are considerably higher than they would have been
had the operating contracts been awarded based on competitive bidding. Calculations
done by our experts indicate that at $0.75 per kilometer, bus operators could not only
provide the service and make a profit, they could also afford to purchase and maintain the
buses, and still make a profit. In Bogota’s TransMilenio, for example, which uses much
more expensive buses, the operators are paid $0.70 per bus kilometer, and this figure is
more than sufficient to cover the cost of the bus procurement. Because PT JET can use
TransJakarta’s buses free of charge, they are making a very good profit.
Given the Governor’s timetable, which was reasonable to impose from a political
perspective, and given the financial risks associated with opening the new system, it was
perhaps reasonable to award a contract to a single operator at a reasonably high rate in
order to insulate the private sector participants from financial risks.
TransJakarta wisely insulated itself against long term financial burdens by making the
contract only 2 years in duration. Thus, TransJakarta now has an opportunity in January
of 2006 to renegotiate these contractual relationships. Before discussing
recommendations, however, plans for Corridor II and III ,which are also scheduled to
open in January of 2006, need to be discussed.
Final Recommendations for TransJakarta, p. 31