Indonesia's transport ministry and three consultants have pushed back on a China-funded consortium's plan to start full commercial operations of the country's $7.3 billion first high-speed train service in August.
The 142 km (88 miles) line from capital Jakarta to Bandung is being built by a consortium of Indonesian and Chinese state firms and is already $1.2 billion over the initial budget and four years behind schedule.
A smooth opening of the railway line, the most high-profile BRI project in Southeast Asia's largest economy, as part of Independence Day celebrations would be a boost for its ruling party ahead of a general election next year.
Source:
https://en.wikipedia.org
Months before its proposed commercial launch in August, the showpiece project is beset by fresh problems. The consortium's Chinese participants want a full operational worthiness certificate for the line despite an incomplete station. Instead, the transport ministry and consultants Mott MacDonald, PwC and local law firm Umbra have suggested that full-fledged commercial operations could start in January 2024.
Indonesia is negotiating with China on an additional $560 million loan and asking for an interest rate of 2.8% for the portion of the loan in yuan, which is lower than the China Development Bank (CDB) offer of 3.46%. Debt negotiations underway with CDB is focused on the interest rate.
The railway plans to begin a free trial with passengers in mid-August, with paid trips expected in September and the incomplete station likely finished by November. The fresh loan is needed to help cover a $1.2 billion cost overrun.
PT KCIC expects it will take 40 years for its investment to become profitable, twice as long as initial estimates. One-way tickets on the line will cost up to 350,000 rupiah ($23.56) depending on the distance travelled. The planned 45-minute train ride between Jakarta and Bandung compares with a car journey of two to three hours or the current three-hour rail trip. But with the terminal stations located outside the city centres, the high-speed rail line could struggle to attract the business passengers being targeted.
Whatever the case, at least this HSR is near completion. We could learn some valuable lessons for the proposed HSR from KL to Singapore. Cost, financing, tenure of debt, equity level business model and project management are all key points for the success of a project of this nature.
Reference:
Indonesia’s delayed China-funded rail project beset by fresh problems, Stefanno Sulaiman, Reuters, 8 June 2023
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