PTBA plans Rp 1.8t investment for railway

PTBA plans Rp 1.8t investment for railway

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned coal mining firm PT Tambang Batubara Bukit Asam
(PTBA) plans a huge investment next year to improve the railway
facilities used to transport its coal products.

PTBA president Ismet Harmaini said the company, along with
power firm PT Indonesia Power and state railway firm PT KAI, had
planned to invest some Rp 1.8 trillion (about US$200 million) to
enhance railway facilities in South Sumatra and Lampung.

Ismet said improvement in the railway would help PTBA expand
its production output and prevent disturbance in distribution
chains due to the poor condition of the railway system and
associated facilities.

"Transporting coal by train has always constituted an obstacle
for the company in increasing production and meeting market
demand," Ismet said before a hearing of the House of
Representatives Commission IX for energy and mining on Monday.

The investment will cover costs for constructing new railway
lines, replacing and repairing old railway lines, and providing
new locomotives and coaches.

PTBA has often faced problems in delivering its coal from
Tanjung Enim mine in the inland area of South Sumatra to the
Tarahan port in Lampung.

PTBA's coal production target for this year has been revised
downward to 9.9 million tons from 10.2 million tons, because a
collapsed railway bridge has hampered coal delivery from the mine
to the port.

Transportation problems have also forced the company to reduce
its coal supply to the Suralaya power plant, which in turn has
reduced the power plant's capacity to supply electricity into the
Java-Bali power grid.

Ismet said the company was currently still discussing with
Indonesia Power, the owner of Suralaya plant, and KAI, the
railway authority, on the respective investment amount of each of
the companies.

"If we are burdened with the greater portion of the
investment, we will need to issue bonds or seek loan facilities,"
said Ismet, adding that the work for improving the railway
facilities would start next year.

The publicly listed company is seeking to produce some 10
million tons of coal next year, which is slightly higher than
this year's target of 9.9 million tons. The company produced
10.03 million tons of coal in 2003.

The company estimates that sales revenue will increase by 114
percent to Rp 6 trillion this year due to higher coal prices
worldwide. Net profit is also expected to jump higher by 139
percent to Rp 341 billion.

PTBA shares ended ... on the Jakarta Stock Exchange on Monday.