Spain to finance coal railway project in S. Sumatra

The Spanish government has agreed to provide up to US$102 million in loan to finance the procurement of 1,000 km rail tracks for the Sumatra railway project, which will be developed to boost coal transportation from South Sumatra province, Investor Daily reported on Tuesday.

Minister of Transportation Hatta Rajasa said in Jakarta on Monday that the railway project would comprise the construction of a new railway system of about 240 km in length from Tanjung Enim, South Sumatra to Tanjung Api-api port in Bangka strait and the improvement of the existing railway track linking Tanjung Enim to Tarahan port in Lampung.

State-owned PT Tambang Batubara Bukit Asam (PTBA) operates a major coal mine in Tanjung Enim. The company can only ship up to nine million tons of coal a year due to the low capacity of the existing railway system.

Earlier reports said that PTBA expected to invest about US$1.14 billion in the construction of the railway tracks, which would be built in cooperation with two Chinese companies China CITIC and China Railway.

CITIC would build the 240-km railway track between the company's mining site in Tanjung Enim to Tanjung Api-api , while China Railway would built the other 230-km railway track linking Tanjung Enim and Tarahan port.

Hatta also said that the feasibility study on the construction of 500 km railway system in Kalimantan which would also be partly used to transport coal had been completed. "We are now waiting for the completion of detail engineering design before beginning the construction works," he said, adding that a Chinese company had expressed its interest to develop the railway project. (*)