S. Sumatra's coal railway project to start in October: Report

After years of delay, works on a $1.28 billion railway project for coal transportation in South Sumatra involving state-owned coal miner PT Tambang Batubara Bukit Asam (PTBA), Indonesia's Transpacific Group and Chinese investors may finally start in October, officials said on Thursday.

?We?re glad that the implementing regulations for the railway sector are finally going to be issued,? Sukrisno, PTBA?s President Director, told the Jakarta Globe. ?We?re now in close communication with the Transportation Ministry?s Director General of Railways to obtain a license for the project.?

?I hope we can get the license this month,? he said, adding that the company planned to start construction works in October, with one of the shareholders, China Railway Engineering Corp., serving as the main contractor.

?We?re confident of finishing the construction of the $1.28 billion project by 2013 if there?s no land-acquisition obstacles,? Sukrisno added.

The project, which involves the building of a 300-kilometer railway from PTBA?s Banko coal concession in South Sumatra to Tarahan Port in Lampung, was conceived in 2007 by PTBA, Transpacific Railways and China Railway Engineering.

The parties agreed in 2008 to form a joint venture company, PTBA, Transpacific Railways, to develop the railway.

PTBA will only control 10 percent of the joint venture. Transpacific will own 80 percent and provide the bulk of the financing, and China Railway Engineering will own 10 percent.

According to Sukrisno, if the project is completed in 2013, it would allow the company to boost coal output by 5 million tons in the first year, 10 million tons in the second year and 22 millions tons by 2016. (*)