WB to end RI railways reform project

WB to end RI railways reform project

The World Bank will end its loan program to Indonesia's State Railway Company PT Kereta Api Indonesia (KAI) in September and cancel unused funds because of "unsatisfactory" efforts to reform the ailing state enterprise, sources said on Tuesday.

"The World Bank has several times assessed the Indonesian government's and KAI's performance as unsatisfactory. "Consequently, it will terminate its loan program in September this year," Taufik Hidayat, executive director of Indonesian Railway Watch (IRW), a private watchdog of the state railways, said.

World Bank executive David Hawes explained the loan's closing date has been extended by one year to Sep. 30, 2003, to enable completion of ongoing works and activities.

"Loan funds that had not already been committed and that could not be utilized effectively during the one-year extension have been canceled," said Hawes.

He said the project implementation was rated as "unsatisfactory" due to a combination of delays on the physical components, and limited progress on policy reform components. In January 1997, the World Bank provided a US$85 million loan to the Transportation Ministry for the so-called "Railway Efficiency Project."

Under the scheme the KAI was supposed to improve protective measures for the public, and instill within the management team customer-orientation and efficiency, while reducing the state enterprise's dependence on state subsidies -- dpa