Benget Besalicto Tnb., Jakarta – The government is pushing liberalization of the railway sector by drafting a regulation on the separation of track management and train service businesses, opening up to private sector participation.
Tunjung Inderawan, the director general of railways at the Transportation Ministry, said Wednesday his ministry had presented a draft regulation to the president for approval.
The draft regulates the separation of track management and train services, and the establishment of a new agency to manage the tracks.
"Once the government regulation is effective, then we'll initiate a transitional period for three years before we proceed with taking over the business of railroad operations from state-owned PT Kereta Api and giving it to a new company that we'll set up later," he said.
The regulation will be the follow-up to a law enacted in 2007, which mandated the liberalization of the railway industry in the country.
Under article 214, the ministry is required to reform the state-owned sole railway operator PT Kereta Api by conducting a total audit and financial audit, improving its public service obligation (PSO), and improving its human resources, also auditing its pension fund totaling Rp 8 trillion.
"After finalizing all of these [steps]required by the Law, we then proceed with setting up a new company to manage the railway tracks. Only by doing this can we improve the safety of train transportation and invite the private sector to participate in the business," he said.
He added that by implementing this separation the government will be implementing the principle of open access with multi operators.
"Currently, PT KA still controls both the railway tracks and train services. There are private firms operating the train services but only to a small extent and they are very dependent on KA for using the tracks."
"Giving the business of railway track [management] to the new company is the basic requirement for creating fair competition. It will then be possible to provide equal treatment to all players wanting to enter the business," he said.
He said in future, private investors could enter the track management business or the train services business. He pointed as an example to the Manggarai-Cengkareng Airport railway development project.
"We'll conduct a re-tender of the project early next month with seven participating companies," he said.
The government has to re-tender the project as six of the seven firms participating in the tender had not presented their necessary documents on time. Among the participants were Alstom of France, and Mitsui and Sumitomo from Japan.
With only PT Railink, a consortium of PT KA and PT Angkasa Pura, left to participate in the tender, then the government was left with no option but to re-tender the project next month.
"If they [private firms] don't participate in next month's tender, we'll decide to take over the project. We'll get an allocation of funds from the state budget in 2010," he said.
He noted the issuance of the new regulation should kick-start the government's program to revitalize the railways.
"For the revitalization program we actually need a total of about Rp 150 trillion until the year 2020 or between Rp 12 and Rp 15 trillion per year. But as our state budget is limited we need the participation of private investors to take part in the business," he said.