Adani withdraws from $1.6 billion coal railway project

The South Sumatra provincial government will retender the development of a 270-kilometera coal railway connecting Muara Enim regency and Tanjung Api-api port in the province because the Indian conglomerate Adani Global which previously agreed to build the railway had withdrawn from the project, Bisnis Indonesia reported on Thursday.

The head of the transportation department of the South Sumatra provincial government, Musni Wiaja, said that he had been informed that Adani had pulled out from the coal railway project. ?But we have not received a written statement about its withdrawal,? he said.

He did not know why the Indian company decided to quit from the project. However, he acknowledged that the construction of the railway had been hampered by difficulties to obtain permits to use protected forest areas, which would be passed by the railway.

In early 2011, Adani signed an agreement with PT Tambang Batubara Bukit Asam (PTBA) and the local government of South Sumatera to develop a 270 kilometer railway track linking Muara Enim and Tanjung Api-api.

The railway, which will be used to transport PTBA?s coal from its mine in Muara Enim to Tanjung Api-api, will cost about US$1.6 billion to build. (*)