JAKARTA (HRNW) – Indonesia and China have agreed to a budget overrun to the tune of $1.2 billion for the first high-speed railway project in the Southeast Asian country, an Indonesian government official told parliament on Monday.
The project was previously estimated to be $2 billion over budget, raising the total cost to 113 trillion rupiahs ($7.36 billion), according to the consortium of Indonesian and Chinese state companies building the railway, known as PT KCIC.
“We agreed on the cost overrun figure of $1.2 billion. There are several items that they are still reviewing regarding taxes and frequency clearing fees, but we have agreed on the numbers,” said Deputy Minister of State-Owned Enterprises, Kartika Wirjoatmodjo.
Further details including an additional loan from the China Development Bank to cover the extra costs are to be finalised within a month, he added.
Companies involved in the consortium were expected to increase their equity participation, while Indonesia’s state-owned railway firm PT KAI, which along with state-owned construction company Wijaya Karya controls 60% of KCIC, received a 3.2 trillion rupiah ($210.66 million) capital injection from the government last month to help complete the project.