Itochu to build Kalimantan railway

Coordinating Minister for the Economy Hatta Rajasa announced on Thursday that Japan?s Itochu would invest in a $2.2 billion coal-transporting railway and port project in Central Kalimantan, The Jakarta Globe online edition reported.

?We?re right now in the process of finalizing the decision,? Hatta told reporters at his office.

Stretching 1,829 kilometers across Kalimantan on four lines that would connect ports and mines, the railway is one of dozens of public-private partnership infrastructure projects being shopped to foreign investors by the government.

The National Development Planning Agency (Bappenas) announced on Wednesday that it was delegating public-private partnership duties to the Investment Coordinating Board (BKPM) to speed development, but the transfer of responsibilities had no impact on the Itochu deal.

Bastary Panji Indra, director of PPP at Bappenas, told the Jakarta Globe that before the tender process began in June, 15 investors were interested in the railway project, including Itochu, China Harbor Engineering, Jasa Power Indonesia and Singapore?s Vestindo Primaland.

Itochu will construct the rail line and operate it for 30 years, guaranteeing that all coal transported from the area will be carried by rail.

The government expects construction to be completed by 2013 at the earliest.

The railway is expected to carry 10 million tons per year during its first 10 years of operation, and 20 million per year thereafter. Thus, some 500 million tons of coal will be transported over the course of the 30 year operating agreement. (*)