JAKARTA -- China Development Bank (CDB) has agreed to lend $4.5 billion to a consortium of state-owned companies from Indonesia and China building the 140km Jakarta-Bandung railway as Beijing steps up efforts to move the delayed project forward.
The agreement was signed during President Joko Widodo's visit to a Belt and Road Initiative forum in Beijing on Sunday that included bilateral talks with China's President Xi Jinping.
The loan will cover 75% of the project's estimated cost, with the consortium taking on the balance. The project was agreed last year, but the signing reaffirms CDB's commitment after estimated costs swelled from $5.1 billion to $6 billion.
An Indonesian executive in the consortium said the loans will be disbursed from as early as June subject to relevant documentation being completed. "Conditions have been met but some minor documents have not been submitted," Bintang Perbowo, president of state-owned construction company Wijaya Karya, told the Nikkei Asian Review.
Perbowo added that the loan terms are unchanged from the initial agreement, with 60% in U.S. dollars and the rest in Chinese yuan.
Bidding for a rail link that will connect the Indonesian capital to the capital of West Java in 45 minutes was won by China in 2015 against strong competition from Japan. Observers see the project as evidence of China's growing role in addressing Asia's enormous infrastructure needs.
Although ground was broken on construction in January 2016, the project has been dogged by difficulties acquiring land and permits. The consortium still aims to complete the project by 2019, when Widodo's five-year term ends.
Nikkei staff writer Erwida Maulia contributed to this story