Quo Vadis Jakarta-Bandung High Speed Train
The Jakarta-Bandung high-speed train continues to generate controversy regarding the project management aspect where it was found that there was a cost overrun which then had an impact on the financial side of the project. Initially, this project was worth around US$ 6 billion, and the business scheme was agreed upon on a B to B basis by Presidential Regulation 107/2015. The parties involved in this project formed a consortium of KCIC (Indonesia-China Fast Train) in which the shareholders are a consortium of PT Pilar Sinergi BUMN (WIKA, JSMR and PTPN VIII) and investor partners from China. The composition of SOE shares is 60 per cent and China’s is 40 per cent.
The initial funding for this project was agreed to come from the China Development Bank (CDB) at 75% and the remaining 25% from shareholder equity. Credit from CDB has a tenor of 40 years with an interest rate of 2% per year and provides a grace period of 10 years.
Problems arising from this project started from the lack of capital deposits of the BUMN consortium which hampered project operations. The SOE consortium seems to be waiting for PMN disbursement from the government for this project so their capital contribution from equity is relatively small. Then WIKA also experienced difficulties as the lead of the BUMN consortium so this task was handed over to PT Kereta Api Indonesia.
Problems began to grow complex in working on this project due to delays in work progress plus the arrival of covid 19 in 2019-2021. One of the reasons for the delay in work was the immature project planning process. There have been several project adjustments related to the need for the integration of transportation modes, such as connections with MRT and other transportation modes. Likewise, investment in telecommunications networks along the railroad track is necessary. Apart from that, there are also difficulties in acquiring and relocating land, as well as difficulties related to the geological aspects of tunnel construction. These are all triggers for cost overruns
