Fast Train Concession Asked To Be 80 Years, This Is The Reason

JAKARTA - PT Kereta Cepat Indonesia-China asked the Jakarta-Bandung Train concession (KCJB) to be extended from 50 to 80 years. The Ministry of SOEs revealed that the reason was due to the consideration of the cost overrun.

As is known, the cost overrun value of the KCJB project agreed by Indonesia-China is US$ 1.2 billion or equivalent to Rp. 18.2 trillion.

Special Staff to the Minister of SOEs, Arya Sinulingga, said that the addition of concession time was not only the wish of the Chinese consortium but also Indonesia, in this case the BUMN consortium.

The consideration is that the cost overrun will increase the cost, the cost of each consortium. So surely they asked for additional concessions at the time," Arya told reporters, written on Sunday, February 19.

Moreover, said Arya, that Indonesia owns 60 percent of the shares in the KCJB project through a BUMN consortium. Meanwhile, the Chinese consortium owns 40 percent of the shares.

"So don't say it's China's wish. Do you want SOEs too. The shares are 60 percent BUMN," he said.

Furthermore, Arya considered that the extension of the concession's time was a solution like the operator of the Jakarta-Bandung high-speed train.

"That (the extension of the concession) makes the operator relieved," he said.

KCIC Starts Giving Phased Data to the Ministry of Transportation

General Manager of Corporate Secretary KCIC Rahadian said the submission of data and information needed by the Ministry of Transportation to review the extension of the KCJB concession period, so far it has been carried out in stages.

Furthermore, Rahadian said the Demand Forecast data from the UI Polar Study, Financial Model Data from KPMG Consultants, Feasibility Data from CRDC Consultants and several other data had been submitted and an in-depth joint discussion was held between KCIC and the Ministry of Transportation.

"To strengthen the request, we have conducted a joint study with Polar UI regarding demand forecast and several things related to the commercial aspect. We have also submitted the results of the study to the Ministry of Transportation at the meeting which also involved the Coordinating Ministry for Maritime Affairs and Investment," he said in a statement, Friday, February 17.

Furthermore, Rahadian assessed that the request for an extension of the concession is possible in a regulatory manner as stipulated in the Regulation of the Minister of Transportation of the Republic of Indonesia Number 38 of 2021 and is included in one of the clauses of the Concession Agreement which was previously signed.

"The application is based on several factors such as changes in passenger demand forecast due to the impact of the pandemic and other factors, changes in the total cost of the project after the cost overrun, extensions of the construction period, changes to non-farebox business schemes, and various other factors," said Rahadian.

Rahadian said the addition of the concession period would maintain indicators of investment feasibility and ensure that there would be more sustainable fast train services.

"KCIC will always cooperate and communicate with the Ministry of Transportation regarding data submission, including if there are other additional data needed," said Rahadian.