Government Gives No Financial Guarantee For Express Train Project

Jakarta (Antara Bali) - The government will give no financial guarantee for the Jakarta-Bandung  speed train project to be built by China, Minister for National Development Planning Sofyan Djalil said.

President Joko Widodo has warned the minister for state enterprises to make sure that everything must be clear in the contract for the mega project, Sofyan said seeking to convince the legislators of the Commission XI in a meeting here Tuesday.

The  project will be build  and financed by a consortium of Indonesian state companies and a Chinese counterpart.

The government has awarded the project, originally to be built as government project, to the private sector to be built without involving the government.

Construction of the 140 kilometer track  will cost around US$5.5 billion.

Around 75 percent of the fund for the project will be in loan from China Development Bank.

The loan, carrying an annual interest of 2 percent will be repayable in 40 years  with a grace period of 10 years.

The remaining 25 percent would be put up by the Indonesian and Chinese consortium.

A legislator of the Commission Haerul Saleh raised question about the feasibility of the project.

Even if the project is to be implemented purely as a business to business project, the government has to consider the financial risk to be faced by state companies taking part in the consortium, Haerul Saleh said.

The state companies joining the consortium include PT. Wijaya Karya, PT. Perkebunan Nusantara VIII, PT. INKA, PT. Kereta Api Indonesia  and PT. Jasa Marga. The four companies will establish a joint venture companies with the Chinese consortium led by  China Railway Corporation. (WDY)