By Reuters
JAKARTA, Sept 8 (Reuters) – Indonesia will take control of the company operating its $7.3 billion China-funded high-speed railway next week, putting a government investment agency in charge of the heavily indebted project as Jakarta prepares a major expansion.
Finance Minister Purbaya Yudhi Sadewa said the government plans to transfer a 60% controlling stake in the railway operator on Sept. 15 to either sovereign wealth fund Indonesia Investment Authority (INA), state development financier Sarana Multi Infrastructure (SMI), or a combination of the two.
Chinese companies will retain the remaining 40%.
Indonesia’s first bullet train, commercially known as Whoosh, runs 142 kilometers between Jakarta and Bandung. It began operating in 2023, eight years after the project was awarded to a joint venture of Indonesian and Chinese state-owned companies.
The railway, part of China’s Belt and Road Initiative, has struggled with cost overruns that pushed its price tag to $7.3 billion. Indonesia began talks with China last year to restructure its debt.
Purbaya said China had agreed to stretch the loan repayment period to 80 years.
The original $4.5 billion loan from China Development Bank carried a 40-year term and a 10-year grace period. Indonesia later borrowed more money to cover rising construction costs.
The new controlling shareholder will take responsibility for repaying the project’s outstanding loans, Purbaya said. He did not say whether the current Indonesian shareholder, a consortium led by state railway company Kereta Api Indonesia, would be compensated for giving up its stake.
The government is already looking beyond the existing Jakarta-Bandung route.
Purbaya said Indonesia plans to extend the railway about 700 kilometers east to Surabaya, the country’s second-largest city, after the ownership transfer.
He did not say how the much larger extension would be financed.—Reuters
