JAKARTA: The government has finalised a plan to restructure the consortium and debt behind the Jakarta-Bandung high speed rail (HSR), Whoosh, that is expected to satisfy Chinese stakeholders, according to the finance minister.
“I met with the Chinese finance minister earlier and said a decision has been made, which is pending an announcement, so there’s no need to worry,” Finance Minister Purbaya Yudhi Sadewa told reporters on Wednesday (April 22) in Jakarta, on the sidelines of an event for the ministry’s PT Sarana Multi Infrastruktur.
He added that Chinese investment partners of the transportation megaproject were “expected to be satisfied” with the new arrangement, which Coordinating Infrastructure Minister Agus Harimurti Yudhoyono would be announcing in the coming days.
Purbaya declined to disclose details, saying only that the debt restructuring would reflect a risk-sharing approach, with both Indonesian and Chinese stakeholders bearing losses proportionate to their share.
Local consortium PT Pilar Sinergi BUMN Indonesia is entirely made up of state-owned enterprises (SOEs) led by national railway company PT Kereta Api Indonesia as the largest shareholder.
The others are construction firm PT Wijaya Karya (WIKA), toll operator PT Jasa Marga and agribusiness company PT Perkebunan Nusantara VIII, which provided the land.
Under the latest restructuring plan, the Finance Ministry is set to control a larger share of PT Kereta Cepat Indonesia China (KCIC) as part of state asset fund Danantara’s overall aim to resolve financial strains burdening state firms in the project.
Purbaya said the challenges facing the Whoosh project stemmed partly from slow land acquisition and poor interagency coordination since it broke ground.
Its Chinese partners had also complained about delays and poor issue management, with responsibilities tossed around between ministries, he added.
“They asked who was actually in charge of the project, and there wasn’t a clear answer,” the minister said, and that it was hoped the latest restructuring plan would also address these coordination challenges.
“Even projects that are viable, like Whoosh and the Greater Jakarta LRT [light rapid transit], suffer from diffused accountability and weak oversight so that when problems arise, the costs balloon into tens of trillions of rupiah,” he said.
Whoosh has faced mounting financial pressure after a cost overrun pushed its budget from initially US$6 billion to US$7.2 billion.
Loans from China Development Bank account for around 75 per cent of the project’s fund, with KCIC contributing the rest in a 60:40 split between the Indonesian and Chinese consortiums.
The original loans have an interest rate of two per cent, while additional financing for the cost overrun carries a higher rate of 3.4 per cent, resulting in a combined interest expense of roughly US$121 million each year.
Earlier this month, Danantara COO Dony Oskaria said the Whoosh restructuring aimed to allow SOEs to refocus on their core business, with WIKA exiting the Indonesian consortium.
The state-owned construction firm, which is undergoing its own restructuring under Danantara, has said its involvement in the project has saddled it with annual losses of up to Rp 1.8 trillion rupiah (US$110 million). - The Jakarta Post/ANN
