Chinese banks to provide $1.05 billion for PTBA?s railway project

A consortium of four Chinese banks have agreed to provide loans amounting to US$1.05 billion to partly finance the construction of a 307-kilometer railway connecting PT Tambang Batubara Bukit Asam (PTBA)?s mining area in Bangko Tengah, South Sumatra to Srengsem area in Lampung.

PTBA?s corporate secretary Achmad Sudarto told Petromindo.com on Wednesday that the consortium comprised ICBC China, the Bank of China, Exim Bank and China Development Bank. ?They are already committed,? he said.

The four Chinese banks will provide about $1.05 billion or about 70 percent of the total $1.5 billion funds needed for the construction of the railway, he said. The other 30 percent or about $450 million would be provided by PTBA, Rajawali Group and China Railway, the shareholders of the joint venture called PT Bukit Asam TransPacific Railway (BATR), which would build and operate the railway.

BATR consists of PTBA with a share ownership of 10 percent, Rajawali Group (80 Percent) and China Railway Engineering Corporation (CREC) (10 percent).

The first loan will be disbursed when the construction of the project started, which is expected to start by the end of this year or early next year, he said.

The project is expected to start construction at the end of this year or early 2011 at the latest. The railway is scheduled to start operation in mid or end of 2014 and will be able to transport 25 million tons of PTBA?s coal per year

He also said that PTBA has option to increase the stake in the JV firm to 30 percent from 10 percent currently. ?We will study first, weather it good for us or not,? he added. (denny)