Russian Railways readies long-awaited $1.7b railway in East Kalimantan

EAST KALIMANTAN, Nov 14: Russian Railways, Russia’s largest rail and locomotive company, hopes to begin soon the construction of a freight line in East Kalimantan after more than a year of preparing for the venture.

Denis Muratov, an adviser to the president of Russian Railways, told the Jakarta Globe on Wednesday that the company was investing $1.7 billion in a railway stretching almost 190 kilometers from West Kutai district to Balikpapan city, the country’s coal and oil hubs, respectively.

“We have begun the negotiation for land acquisition,” Muratov said. He added that the project would break ground soon, but did not give a specific date.

Muratov said Russian Railways now had the majority ownership for the project through its local unit, Kalimantan Rail, while a smaller stake was controlled by a private investor that Muratov declined to name. More investors were expected to get on board the project, he said.

Kalimantan Rail signed a memorandum of understanding with the East Kalimantan administration in February last year and since then has done a thorough study for the project, including legal and land acquisition concerns. The railway will be integrated with a seaport in Balikpapan and will have the capacity to carry up to 40 million tons of coal per year.

Awang Faroek Ishak, the governor of East Kalimantan, said the railway would transport commodities including coal and palm fruit or crude palm oil. He added it could also be used to transform people.

Awang said the project could be extended by a further 60 kilometers to Murung Raya district in Central Kalimantan. The extension may require an investment of $400 million.

Awang was speaking at a meeting at the Indonesia International Infrastructure Conference and Exhibition in Jakarta.

In his presentation, he highlighted 40 infrastructure projects in the province that were currently under development or would commence soon.

These projects include a runway extension at Balikpapan’s Sepinggan International Airport and a 135-kilometer rail line, with investment coming partly from Ras al-Khaimah of the United Arab Emirates.

Meanwhile, Russian Railways may also look to other infrastructure investment possibilities in East Kalimantan.

“We have already discussed with Governor Awang about many opportunities. We are looking at railroads and bridge projects in East Kalimantan,” Muratov said.

Russian Railways is the biggest rail transportation company in Russia, operating some 86,000 kilometers of railways and more than 20,000 train cars.

The company was established in 2003, when a decree was passed to separate the railways from Russia’s ministry of transportation.

source: The Jakarta Globe