Jakarta-Bandung High-Speed Rail Project Cost Overruns; KAI Explains

TEMPO.CO, Jakarta - State-run railway operator PT KAI's Director of Finance and Risk Management, Salusra Wijaya, revealed the main cause of the over budget in the Jakarta-Bandung high-speed rail project.

He said it was mainly due to the cost overrun on the contruction project (EPC) and land acquisition. According to Salusra Wijaya, the land acquisition process was quite difficult given the long route of the railway and passing through commercial areas.

“Several industrial areas are also relocated, so it is quite costly,” said Salusra in a meeting with the House of Representatives' (DPR) Commission VI on Wednesday, September 1.

The over-budget was also attributable to the financing costs. The delay of the high-speed rail project caused the financial burden in the form of interest during the construction to rise. Besides, the head office and pre-operation costed more than they should.

“Due to the delay of this project, the operating cost and other costs increased. This is also quite tough because the 142-kilometer long route requires a strong signal so this is highly costly to maintain the safety and security standard,” Salusra underlined.

In detail, the increase in EPC cost was estimated at US$0.6 billion to US$1.2 billion, land acquisition costs at US$0.3 billion, head office and pre-operation costs at US$0.2 billion, funding cost at US$ 0.2 billion, and other costs at US$ 0.05 billion.

Thus, the estimated cost overrun at the Jakarta-Bandung high-speed rail project was around US$1.4 billion to US$1.9 billion or equal to around Rp27.17 trillion, from the initial plan of US$6.07 billion. The consortium of state-owned companies is predicted to bear Rp4.1 trillion due to the cost overrun.

“From the calculation, this is what we propose to the government to be fulfilled through PMN (state capital injections),” Salusra concluded.

Read: KCIC Talks of Jakarta-Surabaya Fast Train

CAESAR AKBAR