S. Sumatra’s $1.67b coal railway to begin soon

The Jakarta Post, Jakarta | Thu, 08/26/2010 9:52 AM

State coal mining company PT Bukit Asam, construction company PT Adani Global and South Sumatra administration have agreed to build a US$1.67 billion railway track connecting Tanjung Enim and Tanjung Api Api port in South Sumatra.

The three parties signed a Memorandum of Understanding in Jakarta on Wednesday, paving the way for the realization of the 270-kilometer track that has been delayed for almost two years.

Investment Coordinating Board (BKPM) chairman Gita Wirjawan said on Wednesday said the development of the track and coal terminal would boost the economy of South Sumatra, one of seven provinces selected by the BKPM earlier this year to their readiness to accelerate investment.

“I’m happy we will soon see the development of the Tanjung Api Api coal railway track and terminal, which have been long delayed,” Gita said after the signing of the MoU.

The track and terminal would have a capacity to transport up to 35 million tons of coal a year from PT Bukit Asam’s Tanjung Enim mine, Gita said.

The project could take three years to complete, with land acquisition seen as the biggest obstacle, he said.

However, the land acquisition would not impede the project because the local government was also committed to supporting the project, Gita added.

“We will provide appropriate compensation for landowners,” South Sumatra Governor Alex Noerdin said, adding that his administration would free a 50-meter-wide path to accommodate the track.

Despite the challenges in land acquisition, the project needed to be completed by 2014, he said.

“With a strong commitment for the improvement of infrastructure, God willing, we will complete the project on time,” Alex said.

The project is scheduled to begin next year, following the completion of the land acquisition at the end of this year, he said.

“We are targeting to complete the project within 48 months,” said Ganeshan V, the president director of PT Adani Global, the developer and financier of the project that would be given a contract to transport coal for 25 to 30 years.

PT Bukit Asam president director Sukrisno said in 2014 the track would begin transporting 7.5 million tons of coal a year.

“We will gradually meet our target of 35 million tons in 2015-2016,” he said, adding that South Sumatra had estimated coal reserves of 32 billion tons.

At present, Bukit Asam, one of Indonesia’s major coal producers, transports its coal by a train to a coal terminal in Tarahan, Lampung, for shipment to both local and foreign customers.

Alex said the Tanjung Api Api project was very important to the economy of in South Sumatra.

Apart from the railway track and coal terminal, he said, the project would also include the development of a port worth Rp 8 trillion and an industrial zone worth Rp 54.27 trillion.

The project expects to employ around 100,000 people,” he said, adding that the coal produced in South Sumatra comprised about 48.5 percent of Indonesia’s total coal output.

He said the development of Tanjung Api Api coal railway project and terminal would also support the establishment of an aluminium smelting plant, jointly developed by the government of South Sumatra province and the National Aluminium Company Ltd (Nalco), an Indian aluminium state-owned company. (ebf)