China railway consortium gets permit

JAKARTA. The government on Thursday issued a railway infrastructure business permit for PT Kereta Cepat Indonesia China (KCIC), paving the way for the China-Indonesia joint venture company to develop the Jakarta-Bandung high-speed rail project.

KCIC, however, needs to secure one more permit — the construction permit — before it can begin the construction of the railway track.

KCIC is a consortium consisting of China Railway Corporation and four Indonesian state-owned companies.

During the signing of the agreement, which gives KCIC a fixed concession period of 50 years, on Wednesday, Transportation Minister Ignasius Jonan promised to issue the necessary permit this week.

“Yes, the ministry has signed the railway infrastructure operational permit,” Joice Hutajulu, spokesperson for the ministry’s railway directorate general, said on Thursday.

Hermanto Dwiatmoko, the ministry’s director general for railways, was reported to have had a private, lengthy discussion with Jonan before the announcement of the signing.

KCIC president director Hanggoro Budi Wiryawan confirmed the news, stating that the permit had been signed by Jonan.

“They will sign the construction permit tomorrow morning,” he said over the phone, referring to the construction permit for the first five kilometers of the project.

He said that all of the necessary documents had been submitted but he could not confirm whether construction work would start right away next week or whether the company would need to prepare more.

Also, the company has not retrieved the loans from China Development Bank, which make up roughly 75 percent of the US$5.1 billion slated for the project. The delay in the concession agreement signing was blamed for the delay in the loan.

The project’s groundbreaking ceremony was conducted in January and featured the attendance of President Joko “Jokowi” Widodo.

The two-month vacuum between January’s groundbreaking and the commencement of the project was due to the failure of KCIC to submit the necessary documentation.

Meanwhile, Hanggoro said KCIC had started preparing the necessary documents to get the construction permit. He planned to submit the documents in April at the latest.

Based on the concession agreement, KCIC gets the right to operate the Jakarta-Bandung railway line for a span of 50 years, starting from May 31, 2019.

The company estimates that it will break even within 40 years.

The ministry has also set a three-year time limit for the construction of infrastructure from the issuance of the construction permit.

The flagship project between Jakarta and Bandung spans 142.3 kilometers and will stop at four stations, namely Halim, Karawang, Walini and Tegalluar.

In one point of the concession, the ministry also granted KCIC the authority to approve or disapprove of other high-speed railway operators that intend to use its track.

The ministry also decided to give KCIC the exclusive right to operate the railway track. The ministry will allow other rail operators to use the track and build stations as long as the stations are about 25 kilometers away from a station belonging to KCIC. Previously, KCIC wanted the distance to be 50 kilometers.

“During the concession period, this exclusivity is their right. But after that, it’s not,” Joice said. (Farida Susanty)