Posco begins feasibility study on East Kalimantan rail project

The Jakarta Post, Jakarta

A business consortium led by South Korean conglomerate Posco Engineering and Construction Ltd. has begun a feasibility study on the construction of a 350-km railway in East Kalimantan.

The railway, which will be specially designed for the transportation of coal in the province, will require an investment of about Rp 22 trillion (about US$2 billion), Antara reported Wednesday.

Other consortium members are Kenertec Co. Ltd., also of South Korea, and two local firms, PT Nuansa Cipta Coal Investment (NCCI) and PT Kereta Api Indonesia (KAI).

"We are optimistic that the project will prove to be feasible. We only have to wait for the feasibility study results, which will come through in October," representative director of Kenertec, Guang Yil Hong, told reporters after a meeting with the East Kalimantan administration Tuesday.

Guang said that the rail line would be 350 km in length and link East Kalimantan with Central Kalimantan.

Head of accident prevention at KAI, Budi Noviantoro, said that coal had been transported to date in East Kalimantan by barge to Balikpapan.

He said that the rail line would be able to carry 18.5 million tons of coal per year.

He said that according to a 2006 report by Nippon Koe and Marubeni, the Mahakam route was the preferred one as it passed through areas with the biggest reserves of coal in Kalimantan.

"Construction will start from Balikpapan through Kalipapak, Central Kalimantan, and end in Muara Tuhuk, which is projected to become a coal terminal," he said.

NCCI director Makbul Sujudi said that if the project turned out to be feasible, the consortium would start construction work in 2009, with completion expected within three or four years.