The Investment Costs of the KCJB Project Swell to $1.2 Billion

KCJB and LRT Projects Expected to Boost Property Market in Jakarta and Surrounding Areas
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The Jakarta-Bandung High-Speed Rail (KCJB) initiative has encountered a substantial increase in project costs, reaching a significant figure of $1.2 billion, equivalent to around Rp18.36 trillion. This financial escalation has consequently resulted in the total projected investment cost of this ambitious endeavor to stand at $7.2 billion, a substantial sum akin to Rp110.16 trillion.

Dwiyana Slamet Riyadi, who occupies the position of CEO at PT Kereta Cepat Indonesia China (KCIC), has officially attested that this sum represents the definitive and ultimate financial commitment for the project.

This final determination of costs was attained through consensus within the High-Speed Rail Committee, a body presided over by none other than Luhut Binsar Pandjaitan, the Coordinating Minister for Maritime Affairs and Investment (Menko Marves). It is important to note that other prominent figures within this committee include Sri Mulyani Indrawati, the Minister of Finance, Erick Thohir, the Minister of State-Owned Enterprises, and Budi Karya Sumadi, the Minister of Transportation.

In an effort to provide clarity regarding the financial intricacies, Dwiyana has elaborated on how the payment for the exceeded costs of the KCJB project will be allocated. It is stipulated that this financial burden will be shared proportionally between the Indonesian consortium, responsible for 60 percent of the investment, and the Chinese consortium, responsible for the remaining 40 percent.

The outcome of this allocation process amounts to a contribution of approximately $720 million from the Indonesian consortium, while the Chinese consortium will bear the remainder, a sum of around $480 million.

Highlighting the specifics of the financial arrangement, Dwiyana explains that a quarter of the Indonesian consortium’s payment towards the overall cost overrun will be financed through funds sourced from PT Kereta Api Indonesia (Persero), a pivotal member of the consortium.

“The balance of 75 percent is to be managed through a loan arrangement that has been duly negotiated with the China Development Bank (CDB),” Dwiyana articulates, seeking to clarify these intricate financial dynamics during a statement issued on the 16th of August, 2023.

In parallel to these financial considerations, the initial plan to initiate a partial operation of the Jakarta-Bandung High-Speed Rail project on the 18th of August, 2023, to coincide with the commemoration of Indonesia’s Independence Day, has encountered a delay.

PT Kereta Cepat Indonesia China (KCIC), the designated operator, has communicated that the launch of the KCJB high-speed rail’s operational phase is now anticipated to take place in the coming month.

Eva Chairunisa, the astute General Manager of KCIC, further accentuates the intricacies involved in this operational phase shift. “Our current efforts at PT KCIC are dedicated to comprehensive preparations spanning a multitude of operational aspects. It is our intention to commence pre-operational trials in early September of 2023,” Eva states, shedding light on the logistical intricacies during a formal communication on the 7th of August, 2023.

With unwavering emphasis, Eva underscores that the operation of the Jakarta-Bandung high-speed rail represents a significant milestone for both Indonesia and Southeast Asia as a whole.

She underscores the meticulous nature of the preparations required for this pioneering transportation mode, establishing its pioneering significance in the region’s mobility landscape.