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Jakarta-Bandung high-speed train gets bigger govt backing after cost overrun
The government can now provide loan guarantees and state capital injections to the project, which is facing a US$2 billion cost overrun.
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A worker inspects a tunnel-boring machine inside Tunnel 1 of the Jakarta-Bandung high-speed railway project in Pondok Gede, Bekasi, West Java on Dec. 15, 2020. The machine has completed the 1.8-kilometer tunnel located under the Jakarta-Cikampek toll road. JP/Wendra Ajistyatama (JP/Wendra Ajistyatama)
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new regulation allows the government to guarantee the Jakarta-Bandung high-speed railway project, better ensuring the completion of the nationally strategic, but grossly over-budget, Chinese-Indonesian infrastructure project.
Presidential Regulation No. 93/2021, which came into effect on Oct. 6, allows the government to use the state budget to help finance the project, whether through a loan guarantee or a state capital injection. Using a single rupiah from the state budget for the project was forbidden under the preceding regulation passed in 2015.
The regulatory change comes as the project’s budget had overran by Rp 27.17 trillion (US$1.9 billion) to Rp 113.9 trillion as of September, which the State-Owned Enterprises (SOEs) Ministry has acknowledged was due to land acquisition problems, overoptimistic planning and poor project management.
“Like it or not, we have to ask the government to participate in providing funding,” SOEs Ministry spokesman Arya Sinulingga said in a voice recording statement on Sunday.
“We want the project to finish in time, not be delayed.”
He also blamed COVID-19 for the change of policy, saying the pandemic had shrunk the cash flow of many construction SOEs involved in the project.
Read also: KAI to lead Indonesian side in high-speed rail project with China
