Business

Kereta Api wins steel
delivery contract from
Krakatau

State railway operator PT Kereta Api has signed a contract with state-owned steel producer PT Krakatau Steel to transport steel plates from Cilegon, West Java to Surabaya, East Java, and agreed to a transfer fee of Rp 180,000 (US$19) per ton.

“Actually we have been transporting the product since last month,” Kereta Api president director Ignasius Jonan told reporters during a breakfast meeting held by the State-Owned  Enterprises Ministry in Jakarta on Thursday.

“We will bring the products using 3 to 5 trains every week,” Jonan said.

Kereta Api spokesperson Adi Suryatmini said the railway company would transport 30 tons per-carriage of steel plates using a train with 12 freight wagons.

Suryatmini did not reveal the  contract value saying that the agreement between Kereta Api and KS would expire in December this year, but it could be renewed.

She added that the order from Krakatau did not require the firm to make new investments as it would rely on existing railway facilities to transport the steel products.

Apart from services to Krakatau, Kereta Api is also transporting coal for another state company, PT Tambang Bukit Asam, in Sumatra.

Kereta Api expects to net between 10 and 15 percent growth in revenue this year. Last year the company booked Rp 6 trillion in revenue, higher than the Rp 4.32 trillion in 2008.

Last year’s revenue was dominated by passengers (70 percent) with 30 percent or revenue from freight.

Kereta Api plans to boost freight transportation from 10 million tons per year in 2009 to 22 million tons by 2014.

The company proposed a 50 percent tariff rise for its economy class passengers in June, in case the government refused to meet its request for an increased public service obligation (PSO) payment, which is a form of government subsidy.

The company has proposed Rp 670 billion for the PSO this year, up from an initial budget proposal of Rp 535 billion. In 2008, the government set Rp 710 billion for the PSO.

According to the Transportation Ministry, the total railway network in Indonesia comprises just over 6,000 kilometers.

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