Itochu to build US$1 billion coal railway track in C. Kalimantan

Major Japanese trading and investment company Itochu Corporation, in cooperation with TransAsia Resources, will build a railway track that will transport coal in Central Kalimantan under the public private partnership scheme.

Itochu Indonesia?s president director Yasuo Ichimura and Central Kalimantan Governor Agustin Teras Narang signed a memorandum of understanding (MoU) on the Initial Feasibility Study on the construction of coal transporting railway track in Jakarta Monday, witnessed by Minister of Transportation Hatta Rajasa.

Yasuo said that the entire railway track construction project that includes the construction of a 700-km long railway track and its supporting facilities, such as stations, wagons a sea port, will need an investment of up to US$1 billion.

The construction of the railway track will be conducted in two stages. In the first stage, the project will be focused on the construction of a 290 km-long line connecting Puruk Cahu-Muara Teweh-Buntok, which needs an investment of some US$400 million.

According to Yasuo, the initial feasibility study on the line connecting Puruk Cahu and Buntok is expected to be completed by the end of June, 2007. The construction will start in early 2009, with operation targeted to commence in early 2012.

?We have started to be in talk with Japan bank for International Corporation (JBIC) on the funding of the project but we have yet to reach an agreement,? Yasuo said.

In the second stage, the project will be focused on the construction of a 400 km-long track connecting Buntok-Bahaur.

Before the plan to construct a railway track in the second stage is materialized, the transportation of coal from Buntok to Bahaur will use barges.

Meanwhile, Wisnu Suhardono, president director of Satria Gemareksa, a partner of Itochu Corporation, said that the proposed public funding is 70 percent which is sourced from the government of Indonesia, including the administration of Central Kalimantan. The funding will be in the form of land clearance amounting to 20 percent and a loan from JIBC amounting to 50 percent.

The Itochu consortium will provide 30 percent in funds comprised of its own funds (10 percent) and loan (20 percent). (godang)