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Indonesia, China agree $1.2bn cost overrun for high-speed train

A China Development Bank loan to cover extra costs to be finalized within a month

The budget for Indonesia's first high-speed railway project has overrun by $1.2 billion.    © Reuters

JAKARTA (Reuters) -- Indonesia and China have agreed to a budget overrun to the tune of $1.2 billion for the first high-speed railway project in the Southeast Asian country, an Indonesian government official told parliament on Monday.

The project was previously estimated to be $2 billion over budget, raising the total cost to 113 trillion rupiah ($7.36 billion), according to the consortium of Indonesian and Chinese state companies building the railway, known as PT KCIC.

"We agreed on the cost overrun figure of $1.2 billion. There are several items that they are still reviewing regarding taxes, frequency clearing fees, but we have agreed on the numbers," said Deputy Minister of State-Owned Enterprises, Kartika Wirjoatmodjo.

Further details including an additional loan from the China Development Bank to cover the extra costs are to be finalised within a month, he added.

Companies involved in the consortium were expected to increase their equity participation, while Indonesia's state-owned railway firm PT KAI, which along with state-owned construction company Wijaya Karya controls 60% of KCIC, received a 3.2 trillion rupiah capital injection from the government last month to help complete the project.

The 142-kilometre line, which will connect the capital Jakarta with one of the country's largest cities, Bandung, was awarded to KCIC in 2015 but has faced several issues including construction delays due to the pandemic.

The project is expected to be completed in June 2023.

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