INDONESIA’S state railway company KAI has secured loans totalling nearly US$450 million from the China Development Bank (CDB) to fund the increasing cost of constructing the country’s first high-speed railway, the firm said.

Indonesia launched the 142-kilometre railway line connecting the capital Jakarta to Bandung city in October, even as the project was running US$1.2 billion over budget due to elevated land procurement costs and pandemic-related delays.

KAI, the leader of the consortium of Indonesian and Chinese companies building and operating the bullet train line named Whoosh, said in a stock exchange filing that it signed two loan facilities with CDB on Feb 7.

The first loan amounted to US$231 million, while the second loan was denominated in Chinese yuan, equivalent to US$217.1 million, KAI said.

Indonesia had initially sought loans of US$560 million before the railway’s launch, but negotiations on interest rates and government guarantees prolonged the process.

KAI’s statement did not elaborate on the details of the new loans.

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The loans were in addition to the US$4.55 billion CDB approved in 2017 for the project. The original loan has a 40-year tenure, with 10-year grace period, and carries an interest rate of 2 per cent per annum.

The total cost to build the railway increased to US$7.3 billion due to the cost overrun, according to Indonesian authorities.

Indonesia has said that it is considering extending the railway by more than 700 km to its second-largest city of Surabaya in East Java. REUTERS