Kereta Api Borneo to team up with KAI, Inka

PT Kereta Api Borneo, the local subsidiary of Russian Railways, which plans to develop a coal railway in East Kalimantan, plans to team up with Indonesia?s state-owned rail operator PT Kereta Api Indonesia (KAI), and train car producer PT Industri Kereta Api (Inka) in carrying out the project, Bisnis Indonesia daily reported Thursday.

Head of Regional Corporate Affairs at Kereta Api Borneo Yadi Sabiannoor said that details of the planned cooperation are still being drafted, but hopefully it could be implemented next year following the groundbreaking of the project.

Yadi said that the cooperation with the state-owned firms followed recommendation made by the Coordinating Minister for the Economy, Hatta Rajasa.

The project will be developed by Russian firm JSC Russian Railways based on the Memorandum of Understanding (MoU) signed in February 2012 by Awang and Andrey Shigaev, a director at Kalimantan Rail Pte. Ltd, which is thesubsidiary of Russian Railway.

The Kutai Barat-Balikpapan 191 km line is the first phase of the railroad to be developed by the Russian firm in Kalimantan. In the second phase, it will build another 60-km railroad connecting the Murung Raya regency in Central Kalimantan to the Kutai Barat-Balikpapan line.

All the projects are estimated to cost US$2.4 billion, including $1.8 billion for the Kutai Barat-Balikpapan line. The projects will be funded by private investors and Russian state development bank Vnesheconombank. The railway, if completed, will play a crucial role in transporting commodities, particularly coal, from East and Central Kalimantan?s hinterland to the seaport of Balikpapan. The railway will be able to transport 20 million tons of coal annually in the first phase. (*)