WIKA to sign Rp 17t contract for railway

September 1, 2016, Jakarta Post

State-owned construction firm Wijaya Karya (WIKA) is looking to sign a Rp 17 trillion (US$1.28 billion) civil work contract this month for the construction of Indonesia’s first high-speed railway.

WIKA is part of the Indonesian-Chinese consortium Kereta Cepat Indonesia China (KCIC) that is responsible for the overall project to connect Jakarta and Bandung in West Java via a 142.3-kilometer
railroad.

WIKA president director Bintang Perbowo said on Wednesday that civil works on the project would take place in Walini, West Java, and along the Jakarta-Bogor-Ciawi (Jagorawi) toll road.

The project is estimated to cost $5.1 billion in total, with 75 percent of the funding to come from a China Development Bank (CDB) loan and the remaining 25 percent to come from the consortium.

WIKA corporate secretary Suradi said the state-controlled firm was willing to provide initial financing for the civil works, because CDB had not disbursed the loan yet.

“We have obtained a Rp 1 trillion funding commitment,” he said over the phone, adding that the funds would come from a separate state bank loan.

CDB requires all participants in the consortium to come up with their parts before the Chinese lender disburses the loan.

For WIKA, that means it has to provide a total of Rp 4.6 trillion, representing the 38 percent stake it holds in the consortium.

As reported before, the high-speed railway is one of the national strategic projects included in Presidential Regulation No. 3/2016, which stipulates that the government and related agencies must provide assistance by issuing permits for projects listed in the regulation.

The government has given KCIC a fixed concession period of 50 years starting on May 31, 2019, and all construction work must have been completed by then.

However, the project has faced several obstacles, such as land procurement. So far, KCIC has only procured around 60 percent of the total land needed.

Most of the land is owned by the four state-owned enterprises that are members of the consortium, namely WIKA, construction firm Jasa Marga, railway operator Kereta Api Indonesia (KAI) and plantation firm PTPN VIII.

The Transportation Ministry has granted a construction permit—which is also one of the requirements put forward by CDB to disburse the loan—and is giving KCIC time until December 2017 to secure 600 hectares of land needed for the project.

Meanwhile, Bintang said his company would transfer Rp 726 billion this year to meet the agreement with CDB. He said he was certain the whole project would go smoothly until 2019.

WIKA plans to partner with a Chinese firm on the civil construction work.

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