Senong to build US$500m railroad in E. Kalimantan

JAKARTA (JP): Local company PT Senong Corporindo plans to build a US$500 million railroad network in East Kalimantan to transport coal and forest products around the province, the company said yesterday.

Company president HA Samad Senong said the company would first build a 120-kilometer track connecting the coal port of Tanjung Batu in Balikpapan to Samarinda.

He said the railroad would be used to transport coal, plywood and agroindustry products produced by companies operating in the nearby areas.

In the second stage, the company is to build another 130-km line linking Balikpapan to coal mining operations in Central Kalimantan.

"The total project will need an investment of US$500 million, including $264 million for the development of the railroad network linking Balikpapan and Samarinda," Samad said.

The company said it would begin 18 months of engineering and basic designs and market analysis this month and the construction of the Balikpapan-Samarinda railroad was scheduled for completion in 2003.

"We hope our economy will recover by 2003 and the project will be the backbone of the economy in East Kalimantan," company director Lucky Satrio said.

East Kalimantan produced 20 million metric tons of coal and 1.1 million tons of wood products in 1997. These were mostly sold in export markets.

Lucky said the company expected to receive financing from foreign investors including the United States investment company Newman Investment Ltd, the World Bank and the Asian Development Bank.

No financing agreements have been signed.

The Kaltim Railway Network, if realized, will become the first built by Indonesians.

All the railroad networks currently operating in the country date back to the Dutch colonial era.

Samad said he hatched the idea of developing the project in 1993.

After getting support from the East Kalimantan administration, the company teamed up with Dutch consultancy company Infraneth to carry out a pre-feasibility study in 1994.

The same year, Senong signed a memorandum of understanding (MOU) with the state railroad company Perumka to co-operate in the railroad network under a build-operate-transfer (BOT) contract.

Samad said the company had also signed MOUs with five state engineering companies -- train equipment maker PT Inka, military equipment maker PT Pindad, engineering firm PT Barata, telecommunications equipment maker PT Inti, electronics manufacturer PT Len -- to supply equipment to the company. All these companies have been incorporated into the newly established holding company PT Pakarya Industri.

State construction company PT Waskita Karya will serve as the contractor.

Another local company, PT Bonto Bulaeng, has said it plans to build a railroad network in East Kalimantan but the head of Perumka's joint operations office, Suhaimi, said the company had not yet reported to Perumka, the sole company entitled by law to operate the country's railroad networks. (jsk)