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Indonesia rail company gets $273 million capital top up for China-backed project

Straits Times - January 3, 2023

Jakarta – Indonesia's state-owned railway firm KAI said on Tuesday it has received a 3.2 trillion rupiah (S$273 million) capital injection from the government to help a consortium of Indonesian and Chinese state companies complete a high-speed rail project.

The capital top up will partially finance rising costs to build a 142km high-speed rail line linking the capital Jakarta with the textile hub of Bandung, West Java.

When completed, the high-speed rail will be the first in South-east Asia capable of handling trains travelling at speeds of up to 350km per hour. It will cut travel time between Jakarta and Bandung from more than three hours to just 40 minutes.

Daily passenger volume is projected at 44,000 on average, with the number expected to rise in the following years.

The total project cost was initially estimated at US$6 billion (S$8 billion), but last year, Jakarta said an additional US$1.45 billion was needed to meet a deadline for a commercial launch by June 2023.

Companies involved in the consortium, called Kereta Cepat Indonesia China (KCIC), were expected to increase their equity participation and Indonesia would also seek about US$1 billion through an additional loan from the China Development Bank to cover the cost overrun.

The project, part of China's Belt and Road Initiative, was awarded to KCIC in 2015.

Indonesian state companies, including KAI and Wijaya Karya, control 60 per cent of KCIC, while China Railway Engineering Corporation and other Chinese companies hold the remaining stake.

Originally set to be operational by 2019, the project had faced problems with land acquisition and construction delays due to Covid-19.

During a bilateral meeting with Chinese President Xi Jinping at the Group of 20 summit last November, Indonesian President Joko Widodo set a new deadline of June 2023 for the completion of the railway.

But two Chinese workers died and four others were injured last month when a work train careened off the tracks, and the Transportation Ministry had to suspend the construction work pending investigation.

China's ambassador to Indonesia Lu Kang said the incident did not compromise the safety of the railway. KAI also said in Tuesday's statement that it would commit to ensure project safety.

In early December, a Transportation Ministry spokesman said the high-speed rail was 91.7 per cent complete.

– Reuters, The Jakarta Post/Asia News Network

Source: https://www.straitstimes.com/asia/se-asia/indonesia-rail-company-gets-273-million-capital-top-up-for-china-backed-projec