Indonesia’s first private railway project ready for construction
A group of investors will soon begin building the first ever private railway in Indonesia, worth US$1 billion, as a key part of the planned development of a massive $5 billion integrated industrial facility in East Kalimantan.<br /><br />The project’s readiness was announced at a meeting Tuesday between Indonesian President Susilo Bambang Yudhoyono and the crown prince and deputy ruler of the Emirate of Ras Al Khaimah, Sheikh Saud Bin Saqr Al Qasimi.<br /><br />The two were joined by Gita Wirjawan, chairman of Indonesia’s National Investment Coordinating Board (BKPM), Madhu Koneru, group CEO of MEC Holdings,<br /><br />Hari Sankaran, managing director and CEO of Infrastructure Leasing and Financial Services Ltd. (IL&FS), and Allen Alexander, the chairman, president and CEO of SavageCANAC Corporation, a media statement said.<br /><br />MEC Coal and MEC Infra, two joint ventures of MEC Holdings and Ras Al Khaimah Investment Authority, will develop a 130-kilometer railway line to facilitate the transport of raw materials and finished products in and out of East Kutai regency in East Kalimantan.<br /><br />Gita said MEC Infra had been able to purchase and clear the land for the entire corridor within just a few months.<br /><br />“This undertaking will create multiple benefits for the development of the local economy in East Kalimantan,” Yudhoyono said in the statement.<br /><br />“It sets a positive tone for future investments from the Middle East.”<br /><br />Sheikh Saud said, “This type of public-private, Middle Eastern-Indonesian initiative is a fantastic example of what can be accomplished when the fundamentals make sense for all parties involved.<br /><br />“This project will help meet the development needs of East Kalimantan communities, while also serving to meet the energy challenges in Asia.”<br /><br />Under the project agreement, MEC Infra will invest up to $1 billion in constructing the railway line linking the mine site at Muara Wahau to Bengalon on the coast.<br /><br />MEC’s mine and railway are central to the development of a complex of integrated industrial facilities.<br />These will include a power plant fuelled by coal from MEC Coal, an aluminium smelter, a fertilizer plant and a high-capacity port terminal, Gita said.<br /><br />All these, he added, would require total “investment value of $5 billion”.<br /><br />MEC Coal has a 12,000 hectare coal concession in East Kutai.<br /><br />The statement also MEC and Nalco - an Indian government entity - would invest $2 billion for an aluminium smelter capable of producing 500,000 tons of aluminium a year, with another $2 billion for the construction of a 1,250-megawatt captive power plant and other facilities. Both are scheduled for completion by 2013.<br /><br />“This investment serves as a huge vote of confidence from an investor base with which Indonesia shares long-term strategic interests,” Gita said.<br /><br />Over the next five years, the project is expected to create 5,000 new jobs in the province.<br /><br />MEC’s Koneru said the project would help “transform East Kalimantan into a model for the future of Indonesia by providing a strong platform for growth, helping Indonesia to attract further investments”.