By Stefanno Sulaiman
JAKARTA (Reuters) – Indonesia is prioritising safety ahead of the planned commercial launch of its China-funded $7.3 billion high-speed railway, its transport minister said on Friday – addressing concerns about a project already years behind schedule.
A flagship project of President Joko Widodo and part of China’s Belt and Road Initiative, the 142-kilometre (88-mile) railway connecting Jakarta to the city of Bandung was originally set to be completed by 2019.
But it has been beset by problems, including delays due to land procurement issues, the COVID-19 pandemic and a $1.2 billion cost overrun.
The consortium of Indonesian and Chinese state companies building the railway, PT KCIC, earlier this week postponed a planned free trial run by about two weeks to Sept. 1 to ensure safety.
It continues to aim for a commercial launch on Oct. 1, but Transport Minister Budi Karya Sumadi told Reuters in an interview that these dates are not set in stone.
“The president told me not to rush it. He knows that the number one priority is safety…this is the first (high-speed train) in Indonesia and ASEAN, and it has an advanced technology so we have to be careful,” Budi said, referring to the Association of South East Asian Nations.
His ministry is currently doing safety tests, the minister said, while underscoring the complexity of the project.
Last month, Chinese President Xi Jinping told President Widodo during the Indonesian leader’s trip to China that both countries must ensure the project adheres to high standards as it nears completion.
“Any delay will mean delayed income (for project operator) and there will be consequences to financial ratios. But we as technical people think safety is paramount, and the president has considered all consequences,” Budi said.
KCIC is already struggling to deal with the project’s cost overrun, especially as one of the consortium members, Indonesia’s construction firm PT Wijaya Karya, is facing its own debt troubles.
Negotiations for an additional $560 million loan from the Chinese Development Bank are underway to complete the remaining construction.
Given the rising cost, there have been concerns that ticket prices will have to be set high to ensure investment returns.
Budi said the train fare would be set at 250,000-300,000 rupiah ($16.44-$19.72) – below the 350,000 rupiah estimate without government intervention – with the leader of the consortium, Indonesian railway firm PT Kereta Api Indonesia, expected to subsidise prices.
Still, that would be twice the price travellers now pay for a trip between the two cities aboard a regular train.
“We hope with the subsidy, the economical price will be near the price that the passengers are willing to pay,” Budi said.
($1 = 15,210.0000 rupiah)
(Reporting by Stefanno Sulaiman; Editing by Gayatri Suroyo and Hugh Lawson)