Indonesia to Take Majority Stake in $7.3B High-Speed Rail

Indonesia’s central government is moving to assume direct operational control over the country's flagship high-speed railway line. A designated entity within the Finance Ministry will take over a 60 percent controlling interest in PT KCIC, the company responsible for managing the high-speed bullet train service, officials revealed on Wednesday.

Commercially branded as "Whoosh," the 142-kilometer (88-mile) transit line connects the capital city of Jakarta with the regional center of Bandung in West Java. The infrastructure endeavor carries an estimated price tag of $7.3 billion and was originally built with significant backing from Chinese funding.

Speaking at a joint press briefing alongside sovereign wealth fund Danantara, Finance Minister Purbaya Yudhi Sadewa outlined the restructuring plan. While the financial valuation of the 60 percent stake remains undisclosed, Purbaya emphasized that the assigned state agency will handle the settlement of outstanding loans associated with the rail line without drawing money from the primary state budget.

According to Danantara Chief Operating Officer Dony Oskaria, authorities expect to complete the official equity transfer no later than mid-September. Dony previously noted in April that Jakarta had wrapped up debt negotiations with Chinese entities regarding the project's financing terms.

The state intervention follows prolonged operational and financial challenges for the Whoosh rail project. Since its inception, the mega-project has encountered significant hurdles, including complicated land procurement processes, construction delays linked to the COVID-19 pandemic, and substantial budget overruns.