Luhut Says China Agrees On Debt Restructuring

Luhut said, it was originally a problematic project but had gone through a process of improvement and audit by the Financial and Development Supervisory Agency (BPKP).

"Because I was the one who worked on it from the start, because I accepted that the stuff was rotten, then we tried to fix it, we audited it, BPKP, then we negotiated with China, and China wanted to do it," said Luhut on the agenda of 1 Year of the Prabowo-Gibran Government in Jakarta, Thursday, October 16.

Currently, said Luhut, the restructuring process is still waiting for the presidential decree (Ceppres) to be signed by President Prabowo Subianto so that the official team can immediately negotiate.

Furthermore, Luhut said that the change of government some time ago made the formation of the team too late.

"Now we need to wait for the presidential decree, so that the team can immediately negotiate, and while the China is ready, there is no problem," he said.

Previously, Danantara would restructure the debt of the Jakarta-Bandung High Speed Rail (KCJB) project. This restructuring is one of the focuses of 22 work programs that will be accelerated in the remaining 2025 by Danantara.

The high-speed rail project, known as MAYh, experienced a cost overrun of US$1.2 billion. Of this amount, 60 percent is charged to the Indonesian consortium or around US$720 million.

The financing structure consists of 25 percent through KAI's State Capital Participation (PMN) worth IDR 3.2 trillion. While the remaining 75 percent were sourced from loans to the China Development Bank (CDB) amounting to USD 542.7 million.

Danantara Indonesia Chief Operating Officer (COO) Dony Oskaria said his party would propose several alternatives to restructuring the fast train debt to the government.

"Indeed, we are thinking about this fast train, and we will propose it soon. But there are still some alternative solutions that we will offer, we will convey to the government about the completion of this fast train," said Dony when met at the DPR Building, Jakarta, Wednesday, July 23.

Dony explained that this debt restructuring needs to be done in order to maintain the performance of SOEs involved in the high-speed rail project, especially PT Kereta Api Indonesia (Persero) which is the leader of the Indonesian consortium.

For your information, the operator of the Fast Train-Jakarta Bandung, PT Kereta Cepat Indonesia China (KCIC) is a joint venture between the Indonesian consortium, PT Pilar Sinergi BUMN Indonesia (PSBI) with 60 percent share ownership, and the remaining 40 percent have a Chinese consortium, Beijing Yawan HSR Co. Ltd.

PSBI's shareholder composition consists of PTPT Kereta Api Indonesia (Persero) 58.53 percent, PT Wijaya Karya (Persero) Tbk 33.36 percent, PT Perkebunan Nusantara I 1.03 percent, and PT Jasa Marga (Persero) Tbk 7.08 percent.

"This is an operation, we are currently seeing how the long-term solution will be regarding the debts of this consortium which is quite large. We will convey this later (to the government)," he said.

Dony said the debt restructuring of the Jakarta-Bandung high-speed rail project would be carried out comprehensively and would not interfere with KAI's performance.

"We want the settlement this time to be comprehensive and not interfere with the performance of the Indonesian Railway in the future," he said.