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Govt to inject funds into Jakarta-Bandung high-speed railway project next month
The state-owned railway company will get Rp 3.2 trillion (US$204.1 million) in a state capital injection next month to address the cost overrun issue in the Jakarta-Bandung high-speed railway project, but the Indonesian and Chinese sides involved in the project have yet to reach agreement on the funding gap.
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tate-owned railway company PT Kereta Api Indonesia (KAI) will get Rp 3.2 trillion (US$204.1 million) in a state capital injection next month to address the cost overrun issue in the Jakarta-Bandung high-speed railway project with the aim of completing it in the first half of next year.
Deputy State-Owned Enterprises (SOEs) Minister Kartika Wirjoatmodjo told lawmakers on Wednesday that the injection would fill up the equity of the consortium in charge of the high-speed railway project, which has been depleted multiple times due to cost overrun, including after an injection of Rp 4.3 trillion in December last year.
The government plans to plug 25 percent of the funding gap with equity from the consortium and 75 percent with new loans from China Development Bank (CDB). It will be supported by a financing guarantee from the Indonesian side, details of which are being discussed with the Finance Ministry, according to Kartika.
“We believe the state-capital injection support and funding from the CDB can be disbursed in December, so, God willing, we can meet the schedule for operations [to commence] in June next year,” Kartika said in a meeting with House Commission VI, which oversees SOEs, investment and trade.
Read also: As Xi visit draws near, delays haunt Jakarta-Bandung rail project
On Nov. 1, Kartika explained that without the injection, PT Kereta Cepat Indonesia China (KCIC), the Indonesian-Chinese consortium responsible for the project, would face a cashflow problem as early as this November, which could push the launch of operations back to the end of 2023.
Didiek Hartantyo, the CEO of state-owned railway company KAI, one of the shareholders in the consortium, warned on July 6 that if no state capital injection was made this year, more delays would be imminent.
During the meeting, lawmakers of House Commission VI conveyed their support for the injection. Kartika added that the ministry had secured approval from the Finance Ministry and the House’s Budget Commission to conduct the capital injection into KAI before the end of this year.
Aside from the cost overrun, the fresh capital injection will be used partly to form a project management office (PMO) tasked with improving connectivity between nearby cities and the high-speed railway stations – for instance through feeder buses or trains – in collaboration with private entities.
The Indonesian and Chinese sides have come up with different figures on the cost overrun of the joint project, partly because of different cost assessments for railway signaling costs, electricity transmission lines and land clearance.
Kartika told reporters that the government had yet to finish discussing the figures with the Chinese side but would carry on nevertheless in the hope an agreement would be reached soon.
“The [cost overrun figure] is not final yet. We haven’t reached an agreement. It is still in the process [of negotiation],” Kartika said.
