Kalimantan railroad 'in the works'

Ika Krismantari and Nurni Sulaiman, The Jakarta Po - 2007-04-17 10:27

Jakarta, April 17, 2007 (The Jakarta Post) - Following the enactment of the new Rail Transportation Law, which allows the private sector to play a role in the development and operation of railroads, Japan's Itochu has announced preliminary plans to build a 700-kilometer rail line in Central Kalimantan.

The railroad, which will be the first in Kalimantan and is expected to cost about US$1 billion to build, will initially be used to transport coal in the natural resource-rich province. To show its commitment to the plan, the company signed a memorandum of understanding with the central government Monday for the conducting of a four-month-long feasibility study to determine the design of the railroad and the actual cost of the scheme — the first rail project outside of Java and Sumatra islands.

Itochu's chief officer for Indonesia; Yasuo Ichimura, said that the feasibility study would be conducted on the first 300-kilometer stretch of line from Muara Teweh in North Barito regency, Central Kalimantan, where the company has a coal concession trading under the name Marunda Grahamineral, to Buntok, which is located on the banks of the Barito river.

The first phase of the project, which is estimated to cost about $300 million, would be open to traffic by 2012.

"The next 400 kilometers will be built two years after the opening of the first segment," Ichimura said.

He said that the company was fully aware of the project's great future potential given the province's abundant coal resources — estimated at more than 50 percent of the country's total coal reserves of 5.8 billion tons.

The Energy and Mineral Resources Ministry expects that a railroad coal transportation system will be in place to link coal mines and terminals in the northern part of East Kalimantan, Central Kalimantan and the southern part of South Kalimantan by 2020. It also expects there to be some 38 coal mining firms availing of the railroad network by that time.

Ichimura said that Itochu had proposed a public-private financing scheme, under which the Indonesian government and the Japan Bank for International Cooperation would cover 70 percent of the cost required for track-laying and the construction of other infrastructure, while the remaining 30 percent of the cost would be covered by the company and its partners.

Responding to this suggestion, Transportation Minister Hatta Radjasa, who represented the central government during the MoU signing ceremony, said the government could only afford to cover 30 percent of the total project cost.

Separately, Public Works Minister Djoko Kirmanto said that his ministry had rejected a request from the East Kalimantan provincial administration for some Rp 11 trillion (about $1.2 billion) to be allocated from the national budget to cover the cost of part of the 1,860-kilometer Trans East Kalimantan Highway.

The central government, which this year paid out some Rp 540 billion for public works in East Kalimantan, had no more money to meet the request, Djoko said Monday during a visit to Balikpapan.

The highway, which is 87 percent completed, will connect big cities in East Kalimantan, including Balikpapan and Samarinda.

The project is part of a government project to open up road access in remote areas of the country, which it is hoped will be completed by 2009.