Sumatra Rail Venture Gets $1.3b in Chinese Bank Loans

By webadmin on 09:43 pm Nov 18, 2011
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Dion Bisara

Nusa Dua. Bukit Asam Transpacific Railway secured financing with Chinese lenders to help it build a railway network to transport coal in South Sumatra.

Rudiantara, president director of the company (BATR), said it has $1.3 billion in loans from China Development Bank, ICBC, Bank of China and the Exim Bank of China.

He said the total cost of building the railroad would be $2 billion, with $700 million in investment coming from shareholders. It is the biggest rail project undertaken by a private company in Indonesia.

BATR signed the loan in Bali on Friday during the Asean Business and Investment Summit at Nusa Dua.

BATR is a joint venture between Rajawali Asia Resources, a unit of the Rajawali Group, and Tambang Batubara Bukit Asam (PTBA), a state coal miner.

Rudiantara said Rajawali controls 90 percent of BATR and Bukit Asam the remaining 10 percent.

As part of the loan agreement with the banks, the Chinese government — through its China Railway Group — will control 10 percent of BATR, Rudiantara said. Bukit Asam’s stake will rise to 30 percent, said Bukit Asam president director Sutrisno.

Rajawali’s stake would decline to 60 percent.

BATR will build and operate a 300 kilometer-long railway that will transport coal from a mining plant in Tanjung Enim to Bandar Lampung in southern Sumatra.

The railway project is part of the country’s massive economic development initiative to improve infrastructure in Southeast Asia’s largest economy.

Under the government’s master plan for development (MP3EI), Indonesia will be divided into six economic corridors. Sumatra, as one corridor, will be developed as an agricultural and national energy center.

“This project represents China’s involvement in developing Indonesia infrastructure in MP3EI,” said Zhang Qi Yue, China’s ambassador to Indonesia. “China is committed to increasing investment here.”

Sutrisno said that the license and other approvals from the Indonesian government are expected to be completed in one-and-a-half years.

If everything goes smoothly, BATR plans to start construction on the railway in 2013 and begin operating in 2015.

The coal-mining joint venture is expected to produce medium-quality thermal coal used in power generation.

Rudiantara said that 25 percent of the coal would be sold domestically, 50 percent to China and the remainder to India.