Infrastructure Indonesia: Loan for Jakarta-Bandung Railway Signed
A large chunk of the costs for the development of Indonesia's first high-speed railway - between the capital city of Jakarta and Bandung - is covered now a consortium of Indonesian and Chinese companies signed a USD $4.5 billion loan with the China Development Bank. This loan should cover about 75 percent of the total (estimated) costs to develop this railway. In 2015 the Indonesian government, rather unexpectedly, awarded the contract for this project to China, sidestepping Japan that thought it would be appointed to establish this railway.
Hanggoro Budi Wiryawan, Head of the consortium, and Hu Huaibang, Chairman of the China Development Bank, signed the loan on Sunday (14/05) in Beijing, China. The signing was witnessed by Indonesian President Joko Widodo and Chinese President Xi Jinping. Widodo is also in Beijing to attend the Belt and Road Forum for International Cooperation between May 14–15, 2017.
Kereta Cepat Indonesia China (KCIC) is tasked to construct the Jakarta-Bandung high-speed railway. KCIC consists of a consortium called Pilar Sinergi BUMN Indonesia (60 percent stake) and China's largest rail operator China Railway International Co Ltd (40 percent). The Pilar Sinergi BUMN Indonesia consortium consists of four Indonesian state-owned companies: Wijaya Karya, Kereta Api Indonesia, Jasa Marga, and Perkebunan Nusantara VIII.
Although the groundbreaking ceremony for the Jakarta-Bandung railway project was conducted in January 2016, the project - similar to many other infrastructure projects in Indonesia - was plagued by a long delay. This delay was primarily attributed to bureaucracy related to the operational and construction permits for the 142.3 kilometers-long railway project.
Reportedly, the China Development Bank had been hesitant to sign the loan earlier because the land acquisition process for the railway project had not been completed (and not all permits had been collected). Considering the lengthy and costly land acquisition process in Indonesia, the state-owned Chinese lender found it too risky to agree to the loan sooner. Whether all required land has now been acquired remains unclear.
KCIC was granted a 50-year concession period that will commence on 31 May 2019 when the high-speed railway is scheduled to become operational. It is expected to require 40 years to reach the break even point. Trains between Jakarta and Bandung are estimated to be able to carry 29,000 passengers per day, with ticket prices expected at IDR 200,000 (approx. USD $15.4) per passenger. Trains will be able to reach a maximum speed of 250 kilometers per hour.
The Jakarta-Bandung railway is expected to boost employment in West Java. For the three-year construction phase an estimated 39,000 workers are needed, while an additional 48,000 workers are needed in the next 15 years for the construction of various property and infrastructure projects related to the Jakarta-Bandung railway as new economic centers and cities are expected to rise along the 142 km long route.
| Jakarta-Bandung Fast Train: | |
| Elevated | 73.0 km (51.3%) |
| Ground | 52.6 km (37.0%) |
| Tunnel | 16.8 km (11.7%) |
| Speed | 250 km/hour |
| Ticket Price | ± USD $16 |
Source: Bisnis Indonesia