Indonesia to Negotiate with China over Fast Train's Budget Swell to US$1.67bn

TEMPO.CO, Jakarta - The Indonesian government will negotiate with the Chinese government about the swelling budget for the Jakarta-Bandung fast train project. The project was reported to have experienced a cost overrun of US$1.675 billion or around Rp24 trillion.

"Cost overruns are the obligation of shareholders; PSBI (PT Pilar Sinergi BUMN Indonesia) and Beijing Yawan. But if PSBI and Beijing Yawan have difficulties to finance the [cost overrun], the two of them can seek help from funding institutions," PT Kereta Api Fast Indonesia-China (KCIC) president director Dwiyana Slamet said in Bandung Regency, Thursday, April 20.

KCIC's calculation showed that the project's budget had been rising since 2020 over a number of factors, including unexpected costs from price escalations and inflation.

The project initially required a budget of US$6.07 billion. After reviewing the amount of additional costs needed, Dwiyana said that other parties need to be involved to source funds.

"Certainly, the first to be offered is the CDB (China Development Bank), the lender that has been financing 75 percent of our project," said Dwiyana.

Dwiyana said that in several meetings that have taken place, the Indonesian government said they hope that the financing for the cost overrun will use the same funding structure, which is 75 percent from loans and 25 percent from shareholder equity.

Read: Jakarta-Bandung Fast Train's Piers Rebuilt; KCIC Ensures Budget Won't Swell

FRANCISCA CHRISTY ROSANA | CAESAR AKBAR