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span class="inline inline-left">Long way to go: Coal awaits shipment at PT Bukit Asam’s open pit coal mine in Tanjung Enim, South Sumatra. Government-sponsored guarantee agency PT Penjaminan Infrastruktur Indonesia (PII) will guarantee a coal railway project in the Puruk Cahu-Bangkuang-Batanjung route in Central Kalimantan, requiring US$2.3 billion investment. Bloomberg/Dadang TriGovernment-sponsored infrastructure guarantee agency PT Penjaminan Infrastruktur Indonesia (PII) has agreed to guarantee a US$2.3 billion railway to be built in Central Kalimantan.

PII president director Sinthya Roesly said that PII would guarantee investors’ investment in the project from risks, which could arise resulting from licensing delays, land acquisition and government policy changes.

“We want to make sure that investors feel safe to invest here, starting with the project’s preparation, to construction and then operation,” she said after the signing of the guarantee agreement in Jakarta on Wednesday at a ceremony which was also attended by Central Kalimantan Governor Agustin Teras Narang.

The 38-kilometer railway project, which will link Puruk Catur, Bangkuang and Batanjung districts in the province, would be the second infrastructure project to be guaranteed by PII.

In October, PII signed an agreement to guarantee a large coal-fired power plant in Central Java. State electricity company PLN named a consortium of J-Power, Itochu Corporation of Japan and local coal producer PT Adaro Energy Tbk to build the power plant, which will have a capacity of 2,000 MW. The consortium will sell the electricity to PLN.

Four consortiums of foreign and local companies have been shortlisted to take part in the tender for the railway project, which will be mainly used to transport coal in the province, which is one of the largest coal producers in the country. The tender will be officially opened in the second quarter of next year.

The four consortiums include Itochu-Toll consortium, Drydocks World LLC-PT MAP Resources Indonesian consortium, PT Bakrie-SNC Lavalin-Thyssencrupp consortium and China Railway Group Limited-PT Mega Guna Garda Semesta-PT Royal Energi consortium.

“The winner will be named in the second semester,” Sinthya said.

Central Kalimantan governor Agustin Teras Narang said that the winner would start construction on the railway by the end of 2012 so that it could be completed in early 2015.

The governor said that these projects were part of the government’s Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) launched in May this year by President Susilo Bambang Yudhoyono.

The project, which runs from 2011 to 2025, aims to strengthen national connectivity through infrastructure designed for six economic corridors: Sumatra, Java, Kalimantan, Sulawesi, Nusa Tenggara–Bali and Maluku–Papua.

The Central Kalimantan railway would span 385 kilometers, and pass through five regencies: Murung Raya, Barito Utara, Barito Selatan, Barito Timur and Kapuas.

“The railway will connect mining industries in the northern part of Central Kalimantan [Puruk Cahu] with a port in the south of the province [Batanjung],” Teras said. (fem)