China Railway Wins $4.8 Billion Indonesia Project

BusinessWeek, March 25, 2010, 6:10 AM EDT

March 25 (Bloomberg) -- China Railway Group Ltd. won a $4.8 billion order from PT Bukit Asam, Indonesia’s state-owned coal producer, for a coal transport project on Sumatra island.

PT Bukit Asam Transpacific Railway, a unit of Bukit Asam, and China Railway signed the contracts on March 23, Tanjung Enim, South Sumatra-based Bukit Asam said in an e-mailed statement today. The contracts include rights to build and operate the facilities, the Chinese railroad builder said in a statement to the Shanghai Stock Exchange.

Inadequate infrastructure outside Java, Indonesia’s most populated island, has hindered companies’ ability to develop resources in Southeast Asia’s biggest economy. The railway project will enable Bukit Asam to tap the bulk of the company’s coal reserves on Sumatra, boosting its annual output.

The railway, which is scheduled to start operating in 2014, will increase Bukit Asam’s coal transport capacity by 25 million metric tons a year, the company said.

Bukit Asam and partners are in talks with four Chinese lenders to finance 70 percent of the project and the rest will come from internal cash, the statement said.

The project will help Bukit Asam increase its annual coal- transport capacity to 40 million tons by 2013, Achmad Sudarto, the company’s corporate secretary said on Oct. 21.

Shares of Bukit Asam gained 450 rupiah, or 2.75 percent, to 16,800 rupiah a share in the Indonesia Stock Exchange at 3:07 p.m. Jakarta time.

To contact the reporter on this story: Jian Guo Jiang in Shanghai at jjiang@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editor responsible for this story: Greg Ahlstrand at gahlstrand@bloomberg.net;