The money raised, combined with its remaining cash of Rp 1.4 trillion from a state capital injection (PMN), will cover the financing needs for the first phase of the construction of the megaproject, which will cost Rp 6 trillion. The project is set to be complete in 2019 with a total investment of Rp 27 trillion.

Adhi Karya finance director Haris Gunawan said 40 percent of the 4.6 trillion debt, Rp 1.84 trillion, would be raised from bonds while the remaining 60 percent, Rp 2.76 trillion, would be from bank loans.

“We will issue shelf-registered bonds totaling Rp 5 trillion over two years. The 2017 issuance will be Rp 3.5 trillion, and next year Rp 1.5 trillion. The underwriters are Danareksa Sekuritas, Mandiri Sekuritas, Bahana Sekuritas, and BCA Sekuritas,” Haris said after Adhi Karya’s annual shareholder meeting in Jakarta on Thursday.

The bonds will be issued in the first half of 2017. While Rp 1.84 trillion is slated for the LRT project, the remainder will be kept in the company’s reserves. “We will have to allocate some of it for capital injection into our subsidiary Adhi Persada Gedung and Adhi Persada Beton,” Haris said.

As for the loans, he further explained, the company was negotiating with three state-owned lenders namely Bank Negara Indonesia (BNI), Bank Mandiri, and Bank Rakyat Indonesia (BRI), as well as state-owned infrastructure financing agency PT Sarana Multi Infrastruktur (SMI).

The LRT project has seen significant progress, reaching 15 percent of its construction target. For the first track, which will run from Bekasi, West Java, to Senayan, South Jakarta, with 16 stations, Adhi has acquired land for the development of 10 stations, and has constructed four.

The government has signaled that the project will commence soon as it prepares the revision of Presidential Regulation No. 65/2016 to allow state railway operator Kereta Api Indonesia (KAI) to invest in the infrastructure and the facilities. The current regulation stipulates that KAI only acts as the investor for the facilities.

With the appointment of KAI as the investor as well as the operator, the government has granted KAI a 50-year concession in the LRT project. It will also aid the company through a PMN and operational subsidies.

The government has previously stated that it aims to finish the revision of the presidential regulation this week, along with the scheduled upcoming additional contract with Adhi Karya, which won the contract on Feb. 10.

However, the existing contract left out the financing scheme, because of state budget restrictions. The government promised an additional contract to be signed on March to detail the financing scheme and repayment of the firm’s costs.

The total injection is expected to reach Rp 9 trillion, including a Rp 2 trillion PMN from the 2015 state budget and an additional one in the revised 2017 state budget of around Rp 5.6 trillion.

KAI finance director Didiek Hartantyo said the presidential regulation would reveal the complete financing scheme for the project, such as the size of PMN, the government guarantee for the loans as well as the subsidy.

“With the LRT fare priced at Rp 12,000, we are looking forward to getting the [subsidy]. It will include the margin and has to sustain the company’s operation,” he said.

The government guarantee will also be instrumental in getting loans from the state-owned banks. “Without it, they won’t give us the loans because of our [limited debt-to-equity] ratio,” Didiek added.

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