Indonesia looks for more funds as bill for China-backed rail project balloons by US$2 billion
- The Jakarta-Bandung high-speed railway, part of the Belt and Road Initiative, will cost more due to price changes for materials and land acquisition delays
- The Indonesian side also claims there are communication issues with their Chinese counterparts – though analysts say bilateral ties will stay smooth
The project’s estimated cost has increased to US$7.9 billion, up from its initial budget of around US$6 billion, due to price changes for the likes of materials and machinery, as well as delays caused by land acquisition, according to state-owned railway operator Kereta Api Indonesia (KAI).
KAI is part of the Indonesian consortium that owns 60 per cent of Kereta Cepat Indonesia-China (KCIC), the joint venture with a Chinese consortium that has the remaining 40 per cent.
“In September [2019], there had been an indication of the potential cost overrun as the project faced delays, furthermore the pandemic hit in March [last year],” Didiek Haryanto, the president director of KAI, told a parliamentary hearing on Wednesday. “Your concerns that this will be a burden for state coffers … that is exactly what will happen.”
The Indonesian government wants to use 4.1 trillion rupiah (US$287.5 million) of government funds next year to partly pay for the project’s cost overrun. Meanwhile, KAI revealed at the hearing that the Indonesian consortium had yet to pay its mandatory basic capital contribution of 4.3 trillion rupiah to KCIC.