Indonesia's Toll Road Recovery Continues
According to Fitch Ratings, the recovery of Indonesian toll road operators' traffic to pre-pandemic levels is on pace, notwithstanding recent increases in fuel prices and the removal of mobility restrictions connected to C0v1d-19.
Traffic at PT Jasa Marga (Persero) Tbk (JSMR) grew 15.6% year on year in 1H22 to 596.2 million vehicles, or 13.8% if the Cengkareng-Batuceper-Kunciran toll road, which was not operational in 1H21, is omitted. The firm, Indonesia's largest toll road operator in terms of road network, has topped its 1H19 traffic owing to a robust volume of 307.8 million cars in 2Q22, compared to the quarterly average of 307 million vehicles in 2019.
Since the breakout of C0v1d-19 in 2020, the Indonesian government has not prohibited individuals from returning to their hometowns for Eid celebrations. As a result, toll road traffic is expected to peak in May 2022. This, along with a low base of comparison in the first quarter, resulted in a 7% year on year growth in traffic in 2022.
Fitch believes that the latest fuel price hike will have little impact on JSMR's traffic recovery since Indonesian toll road volumes have been robust in the face of past higher fuel prices. JSMR, for example, saw 11% traffic growth in 2013 and 3% growth in 2014 after the government raised gasoline prices in June 2013 and November 2014. We also expect that the impending year-end Christmas season and a significant recovery in domestic vehicle sales will help JSMR's traffic growth. Domestic automobile sales, which include both passenger cars and commercial vehicles, increased by 21% year on year in 8M22 to roughly 658,000 units.
By the end of June 2022, JSMR's subsidiaries and affiliates will operate a total of 1,260km of toll roads. By operational road length, the consortium controls around half of the toll road market. Its portfolio of mature toll assets and assets in the ramp-up phase is well-balanced.
Due to government initiatives to limit transportation during the epidemic, JSMR traffic declined by roughly 20% year on year in 2020. JSMR spent IDR21.1 trillion (2019: IDR13.8 trillion) in that year to build numerous new toll roads, most notably the Jakarta-Cikampek elevated toll road. JSMR's leverage, as measured by net debt/EBITDA, increased to 10.3x by end-2020 from 6.1x at the end of 2019. However, with current traffic recovery and sales of minority interests in assets in the ramp-up phase, JSMR's leverage will fall to 6.7x by the end of June 2022.