Railway capacity for coal transportation to be increased

The government will increase the capacity of railway for coal transportation in Sumatra and Kalimantan by 20 million tons a year by 2010 from 8 million a year at present to meet the surge in the demand from both of local and overseas buyers, Kompas reported on Tuesday.

Speaking in Jakarta late last week, Minister of Transportation Hatta Rajasa said that aside from involving private companies in the projects, the government would allocate some funds for the development of the infrastructure.

The projects would include the construction of new railway tracks linking state owned coal mining company PT Tambang Batubara Bukit Asam?s (PTBA) mining area in Tanjung Enim in South Sumatra to coal terminals in Lampung and Bengkulu.

"We hope private companies to take part in the projects," he said, adding that the draft law on railway which is now being deliberated at the House of Representatives (DPR) will allow private companies to operate railway both for passenger and cargo transportation.

The construction of new railway track project linking Tanjung Enim to Tarahan coal terminal in Lampung will need an investment of about US$800 million. PTBA will have 10 percent stake in the project and PT Transpacific and China Railway will have 90 percent.

As part of the expansion project, a new railway and a canal linking Tanjung Enim and Bangka island will also be built with a total investment of about $490 million. PTBA will have between 5 and 10 percent stake in the project, with the remainder to be held by China International Trust and Investment Corporation. (*)