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Economics of Jakarta-Bandung rail project increasingly bleak
Unforeseeable factors, such as the capital city relocation plan and the pandemic, have added to growing doubts over the economic viability of the Jakarta-Bandung high-speed railway link.
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A tunnel entrance of the Jakarta-Bandung high-speed rail project in Cipatat, West Bandung, West Java, is seen in this photograph taken on May 27, 2020. (Antara/Raisan Al Farisi)
T
he business case for the Jakarta-Bandung high-speed rail (HSR) has worsened as a result of the COVID-19 pandemic and the government’s plan to move the nation’s capital to East Kalimantan.
PT Kereta Cepat Indonesia China (KCIC), the consortium responsible for the project, said on Monday that the demand projection – based on a recent third-party review – had fallen to just 31,215 passenger trips per day, just over half of the 61,157 estimated in a 2017 feasibility study.
The consortium has appointed the China Railway Design Corporation (CRDC) and global auditing network KPMG International to review and update the project’s feasibility with new assumptions to account for the change in circumstances over the last five years.
“We assume that [passenger] growth, adjusted for COVID-19, will be very small in the first five years,” KCIC president director Dwiyana Slamet Riyadi told a virtual meeting with House of Representatives lawmakers, adding that the consortium had also accounted for the impacts of the capital city relocation and development project.
Referring to several new assumptions, KCIC also estimated that the payback period would swell to 40 years from the 26 years assumed in the 2017 study, but it also promised to find new revenue streams to shorten this.
“This is a railway investment and as such, [achieving] the break-even point (BEP) was never going to be easy. Most railway investments come with [a BEP] of more than 20 years,” Dwiyana explained.
Read also: Jakarta-Bandung high-speed train gets bigger govt backing after cost overrun
