The country’s first-ever high-speed railway, backed by China, may require more funds following a sudden change in track design that will also significantly boost the speed of the train.

Indonesia-China joint venture firm Kereta Cepat Indonesia-China (KCIC), the caretaker of the project, will widen its railway tracks’ distance to 5 meters from 4.6m previously, to comply with a suggestion from the Transportation Ministry.

With the new railway track distance, the high-speed train will be able to run 350 kilometers per hour (kph), as opposed to 250 kph in the previous design.

“As we decide to comply with the regulation, the implication is there will be a need for additional funds,” KCIC president director Hanggoro Budi Wiryawan said recently, without disclosing the new investment figure.

The investment for the 142.3-km high-speed rail connecting Jakarta and Bandung, West Java, previously stood at US$5.1 billion.

Around 75 percent of the funds is slated to be covered by a loan from China Development Bank (CDB) and the rest from KCIC equity, in which an Indonesian consortium of four state enterprises holds 60 percent of the stake.

Even with ballooned investment, CDB is likely to still be able to finance the project, said Hanggoro.

“They will still cover 75 percent of the funds,” he added.

However, Hanggoro admitted the company had yet to inform CDB of the change in design and the possible increasing costs.

To date, KCIC has yet to be able to disburse the loan from the bank, due to a lack of government permits for the project, as well as its inability to meet several requirements from the bank.

The requirements include the commitment of state enterprises to transfer their equity during the targeted three years of construction until 2019, as well as an independent appraisal of the project’s feasibility study and a financial model.

“We have begun to meet the requirements gradually. We expect the loan agreement to be secured by the end of July,” Hanggoro said.

The CDB also highlighted the importance of a construction permit for the remaining 137.3-km of railway track as a requirement for the loan disbursement, he added. The company acquired the construction permit for the first 5-km of the project in Walini in March, months after the groundbreaking in January.

The high-speed trains will stop at four stations between Jakarta and Bandung, namely Halim, Karawang, Walini and Tegalluar.

The government has given the KCIC a fixed concession period of 50 years starting on May 31, 2019, which means construction must be completed by then. However, based on a ministry report, there has not been any notable construction on the site to date.

Hanggoro cited financial hurdles and the change in railway design as culprits of the delayed construction. Land procurement has reached almost 60 percent, or 84-km of the total rail track length, mostly in the western part of Bandung, he said.

Separately, the ministry’s director general for railways, Prasetyo Boeditjahjono, stated that the hampered construction might be due to the changing design of the railway.

However, he said the ministry could only issue the next batch of construction permits for the areas in which land had been procured, either acquired or rented.

“We don’t want to issue a construction permit in areas where land still belongs to another party,” he said.

There is a possibility that the ministry could issue construction permits for areas in which the land belongs to state firms in the Indonesian consortium, including state plantation firm PT Perkebunan Negara VIII and state toll road operator Jasa Marga, which might make up to 40 percent of the total land needed.

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