Possible Rail Link: Riau, Sumatra

By Barrie | June 11th, 2007 | No Comments

After failing to secure a double-track railway project from Cirebon to Kroya in Java, the China Railway Engineering Corporation (CREC) is now eyeing even bigger projects in Riau and Central Kalimantan.

CREC president Li Changjin met Vice President Jusuf Kalla and Riau Governor Rusli Zainal here on Thursday to discuss the possibility of the company building a new 400-kilometer rail line in Riau, linking Dumai, Duri, Pekanbaru, Taluk Kuantan and Muaro in Jambi.

Speaking to journalists after the meeting, Rusli said that CREC had come up with a pricing scheme for the project — US$15 million per kilometer — with trains able to travel at up to 250 kilometers per hour. This means the total cost of the project would be US$6 billion.”But that’s for a line capable of carrying trains at 250 kilometers per hour. We don’t need trains traveling at that speed. Half of that would be enough for us, and this would mean the cost would be roughly about half of the originally estimate, which would be acceptable to us,” Rusli said.

In addition to CREC, Rusli said that a German engineering firm had also expressed interest in the project.

“Let’s see what’s the best offer they put on the table. In terms of technology, both the German and Chinese technology is good. Our concern now is about pricing,” he said.

Last month, CREC, the biggest railway engineering company in China, signed a memorandum of understanding with the Central Kalimantan administration to build a 500-kilometer-long rail line in the province.

During Thursday’s meeting, Li and Kalla discussed financing possibilities for the Central Kalimantan railway project. It is still not clear how much the project will cost, how it will be financed and when it might start.

Earlier, CREC had been selected to build a double-track rail line from Cirebon in West Java to Kroya in Yogyakarta, to be financed using loans from the Chinese government. However, the government decided that the pricing scheme proposed by CREC was too expensive.

Rusli said whichever company won the railway project in Riau would be required to also supply the funding, either from borrowing or from its government. While the overall scheme had still not been finalized, it would have to be in line with the newly-passed Railway Law.

When asked about funding, Rusli said that his administration needed to discuss this with the central government. He said Riau was ready to pay for part of the cost.

He said the Riau rail project was included on the central government’s list of priority projects to be commenced in the near future.

“Last year, we had planned to make a budget allocation for the project, but as it had not yet been fully hammered out, we didn’t proceed. However, we are ready to allocate the money as soon as the project is ready and on the table,” he said.

Riau is one of the richest provinces in Indonesia. Half of the country’s crude oil production of about 1 million barrels per day comes from Riau, and the provincial government receives a significant proportion of the revenues accruing from this from the central government.

When asked if a rail line was really needed in Riau, considering the sparseness of the province’s population, Rusli said it would not only carry people, but also freight, particularly oil-palm kernels and timber for the province’s pulp and paper mills.

Riyadi Suparno