Indonesia searches for funds to get stalled rail schemes moving

The government of Indonesia is experiencing difficulties in financing large-scale rail projects, including the $5.1bn Jakarta-to-Bandung high-speed rail link and the $2bn Greater Jakarta light railway.

The bullet train scheme is being held up by the need to buy land.

The project was inaugurated by President Joko Widodo in January 2016 and is expected to complete by 2019. However, the 75% of the project finance that was to be supplied by the China Development Bank has yet to materialise.

Indonesian website reports that Antonius Kosasih, the finance director of state-owned construction company Wijaya Karya (Wika), as saying 2 trillion rupiah ($150m) still had to be raised to pay for "land clearing".

Wika is part of Fast Trains Indonesia-China (KCIC), the consortium building the rail link.

As well as China Railways, it includes four state-owned Indonesian companies. Hanggoro Budi Wiryawan, the president of KCIC, said the company will purchase 500ha of land in Karawang and Purwakarta owned by private companies and locals.

KCIC has urged all shareholders to chip in to pay for the land clearance. Some of this money is expected to be raised by from the increased in property values caused by the project.

The greater Jakarta light rail system project is further behind schedule. The project was officially opened by President Joko Widodo in September 2015, but only 12% has since been completed.

The initial plan was to finance the project through the state budget. However, it has now been decided to make state-owned railway company Kereta Api Indonesia (KAI) the operator and the investor to move the scheme off the state’s balance sheet.

KAI will run the system for 50 years and would pay its operational and capital costs.

The Jakarta Post reports that the government will provide a subsidy for 12 years, as well as a $680m cash injection that will be used to secure a $1.4bn loan from state-owned banks.

Image: A publicity poster for Jakarta’s planned light rail system (KAI)

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