T

wo years after the groundbreaking for the light rail transit (LRT) project in Greater Jakarta, the government has found that its costs are higher than they should be.

According to an evaluation carried out by consultants hired by the Transportation Ministry, the project should cost Rp 1.6 trillion (US$119.86 million), lower than the initial proposal of Rp 23.3 trillion.

“This [the figure] is the result of consultants’ review on the reasonable costs for the scope of the project,” Adhi Karya operational director III Pundjung Setya Brata told The Jakarta Post recently.

Adhi Karya is the state construction firm assigned to handle the project through a presidential regulation.

The group of consultants — consisting of four Indonesians, one Japanese national and one Australian — worked with the firm for two months to reach the conclusion.

Pundjung said the lower figure came as a result of price comparisons for some items used in the project related to civil and design engineering, and construction, including for rail work, signal systems and power supply.

He added that Adhi Karya would consequently “need to work harder to optimize the project’s construction and achieve the target.”

“We have to work more economically, putting more effort into the engineering and planning side without sacrificing the quality of the project and time.”

Adhi Karya is waiting Transportation Minister Budi Karya Sumadi to issue an addendum to its contract regarding the new costs.

“We expect the addendum to be finished in July,” Pundjung said.

The LRT’s construction is divided into two phases; the first will span from Bogor in West Java to Jakarta through a 43.3-kilometer-long track across Cibubur-Cawang, Bekasi Timur-Cawang and Cawang-Dukuh Atas. It is expected to be finished by 2019.

Meanwhile, the second phase will build a 38.5-kilometer-long track traveling Cibubur-Bogor in West Java, Dukuh Atas-Palmerah-Senayan to Palmerah-Grogol in Jakarta.

The project has been marred by financing uncertainties. According to the initial plan, it was to be funded by the state budget, but the government then assigned state railway firm PT Kereta Api Indonesia (KAI) as investor through Presidential Regulation No. 49/2017.

Prior to the appointment, KAI was assigned to handle the facilities of the LRT and serve as its future operator.

Adhi Karya has spent Rp 3.2 trillion so far on the project, with progress reaching 15.1 percent of the target.

However, the payback scheme from KAI to Adhi Karya remains unclear. Adhi Karya president director Budi Harto said the firm had set aside up to Rp 9 trillion until the end of the year to fund the project.

KAI is looking to secure more than Rp 18 trillion in syndicated loans from state banks and other financial institutions, such as Bank Mandiri and Bank Negara Indonesia (BNI), with an 8.25 percent interest.

It also hopes to obtain an additional Rp 5.6 trillion in state capital injection (PMN) to jack up its equity to Rp 9 trillion to fund the project.

Transportation Ministry railway transportation director-general Prasetyo Boeditjahjono said that the revised figure for the project might appear in a future contract between the Transportation Ministry and KAI as the investor.

“We have agreed to sign the contract after reaching a financial closing for the project. We expect [to ink the deal] in November,” Prasetyo said.