The project’s main investor, state-owned railway operator PT KAI, signed a 50-year concession contract to build, maintain and operate the LRT and its supporting facilities with the Transportation Ministry. In addition, state-owned construction firm PT Adhi Karya also reinstated its contract with the ministry.

With the contracts, both state firms now have the stability needed to implement the financing plan for the Rp 29.9 trillion (US$2.2 billion) project, as well as meet the targeted timeline.

KAI finance director Didiek Hartantyo said the firm aimed at reaching financial closure of its investment plan totaling Rp 25.7 trillion by Dec. 22.

“At the moment we are finalizing [the process] with the banks,” he said on Tuesday.

KAI is set to secure syndicated loans from several banks, namely state-owned lenders Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia and private lenders Bank Central Asia and CIMB Niaga, as well as state infrastructure financing firm Sarana Multi Infrastruktur. The parties will lend KAI Rp 18.1 trillion in total to fund the project.

To help the firm secure the loans, the government has committed to give the firm a capital injection worth Rp 7.6 trillion next year. This year, it has been given Rp 4 trillion.

Didiek said after the loan agreement was signed, the banks would disburse the money for KAI to pay the sole contractor, Adhi Karya, by Jan. 15, 2018.

The latter has been using its own funds to execute the project since it began in 2015. It has spent around Rp 5 trillion so far and completed 26.2 percent of the construction.

The firm is in charge of financing up to Rp 4.2 trillion to build the train depot and 17 LRT stations and has only been endowed with a Rp 1.4 trillion state capital injection in 2015.

Adhi Karya finance director Haris Gunawan said the firm would ask Bank Mandiri to provide a Rp 2.8 trillion loan to meet the funding gap.

“Our target is to sign a memorandum of understanding [MoU] to commit Bank Mandiri to the funding,” he said.

The MoU will be followed by an indicative letter and a loan agreement in January.

Adhi Karya has maintained its debt-to-equity ratio of 1.4 times, lower than its bond covenant at 3.5 times.

“All issues have been settled regarding the payment next year,” Haris said.

Adhi Karya president director Budi Harto said the company expected to receive Rp 4.2 trillion in payment from KAI in January next year for the LRT construction up to September this year. It also hoped to receive payments on a quarterly basis from now on.

The state builder sought to spend Rp 5.5 trillion by the end of this year, accounting for 28 percent of the development.

Under its contract with the Transportation Ministry, Adhi Karya is subject to complete construction by May 31, 2019.

Adhi Karya will also operate transit oriented development (TOD) infrastructure in 11 spots around the LRT stations, with an initial fund of Rp 1.3 trillion by next year.

The LRT’s construction is divided into two phases. The first phase, which is ongoing, will cover a 44.4 kilometer-long track from Bogor in West Java to Jakarta. The second phase will stretch 38.5 km.

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