"They were daring back then because the price of coal was high."
Rel Kereta
Donang Wahyu | KATADATA

The government is questioning the commitment of Russian investors to the railway project in East Kalimantan province. The Transport Ministry will be posing this question to Kereta Api Borneo, a subsidiary of Russian Railways, which is responsible for the project.

The ministry’s Director General of Railways Prasetyo Boeditjahjono said that currently, he had no information about the development of the project. The ministry confirmed that it had seen any concrete steps taken by the Russian investors to build railways in Kalimantan.

“We want to ask about their intentions, either by letter or at a meeting,” Prasetyo told Katadata, Thursday (4/8). (Read: Four Russian Conglomerates Express Interest in Investment)

If the investors are serious, they should have delivered results of their feasibility studies and route plans to the Transport Ministry. These are the requirements that must be fulfilled to obtain a permit for the project.

Prasetyo said that several obstacles were getting in the way of the investors,including low coal prices, which have depreciated the economic value of the railway project.

Initially, the plan was to construct railways to transport goods and passengers. The railway would rely on transporting goods, especially coal, which is the main commodity of the region. However the coal business is sluggish and the project cannot rely on transporting passengers to get a return on investment.

“They were daring back then because the price of coal was high,” he said. “What happens now is they need to make meticulous and careful calculations,” he added.

The Russian investors also refused to participate in a public-private partnership tender. Another obstacle was the availability of land for the construction of the project.

The government is in the process of accelerating infrastructure development, especially infrastructure projects that are strategic national projects. That is why the government is questioning the commitment of investors to developing infrastructure projects, including the Kalimantan railway project. (Read: Luhut Demands High-Speed Train and Airport Projects Accelerated)

In Presidential Regulation No. 3/2016 on Acceleration of the Development of Strategic National Projects, there are two railway projects in Kalimantan that are identified as strategic projects: the Puruk Cahu-Bangkuang railway in Central Kalimantan, and railway development in East Kalimantan.

The East Kalimantan railway project was launched by President Joko “Jokowi” Widodo on 19 November 2015. The railway project consists of two routes; the 203-km northern route (from West Kutai District to Paser Penajam Utara District), and the 1135-km southern route (from Kutai Kertanegara District to Kutai Timur District). The total investment cost for the two routes is some US$3.7 billion.

Previously, Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan requested that licences for and work on several railway projects be accelerated. Railways improve connectivity, which the President wants. Luhut has requested that the issue of permits for the Jakarta-Bandung high-speed train and the airport train, and the Kalimantan railway be accelerated.