The 142km project will help connect the Indonesia’s capital city Jakarta with Bandung. Credit: John Nash from Pixabay.

Indonesia and China have agreed on spending an additional $1.2bn for the high-speed railway project in Indonesia, reported Reuters citing an Indonesian government official.

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PT KCIC, a consortium comprising Indonesian and Chinese state companies that are building the railway, earlier expected the project to be $2bn over budget, increasing the overall expenditure to $7.36bn.

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Indonesia state-owned enterprises deputy minister Kartika Wirjoatmodjo was quoted by the news agency as saying: “We agreed on the cost overrun figure of $1.2bn.

“There are several items that they are still reviewing regarding taxes and frequency clearing fees, but we have agreed on the numbers.”

He also stated that more details, including a further loan from the China Development Bank to meet the extra costs, will be finalised in a month.

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Firms included in the consortium were anticipated to raise their equity interest.

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Indonesia’s state-run rail operator PT KAI secured $210m from the government last month to support the completion of the project.

PT KAI, along with state-owned construction company Wijaya Karya, has a 60% stake in KCIC.

Designed to connect Jakarta with Bandung, the 142km project contract was won by KCIC in 2015.

Claimed to be the first high-speed rail project in Indonesia, the project is anticipated to conclude in June 2023 after facing delays due to the pandemic.