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