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October 18, 2015

China forms joint venture to build $5.5bn high-speed rail line in Indonesia

China Railway International has signed a agreement to form a joint venture with a consortium of Indonesian state companies to build the first $5.5bn high-speed rail link between Jakarta and the West Java provincial capital of Bandung, Indonesia.

China Railway International has signed a agreement to form a joint venture with a consortium of Indonesian state companies to build the first $5.5bn high-speed rail link between Jakarta and the West Java provincial capital of Bandung, Indonesia.

Construction under the project is expected to start next year and end in 2018, with the line scheduled to begin operating in 2019.

The high-speed railway is the biggest infrastructure project started by Indonesian President Joko Widodo.

Last month, the Japan announced that China has won the Indonesian contract after the former offered to build the high-speed line without investments from the Indonesian Government.

"Construction under the project is expected to start next year and end in 2018, with the line scheduled to begin operating in 2019."

China proposed to finance the project through a Chinese loan, while Japan’s proposal were to be funded through the Indonesian budget and a low-interest loan from Japan.

The Indonesian Government is reluctant to use the state budget for the train project, therefore Japan’s bid was rejected as it would require government funding.

About 75% of the funding for the project will come from China Development Bank and the remaining from a Chinese railway company and Indonesian consortium.

The 160km line will connect the city of Bandung to Jakarta, Indonesia’s capital city.

The high-speed line will cover eight stations on the route, and the trains will travel at a speed of around 250km/h.

In addition, a team of Chinese firms led by China Railway International, along with China’s Export – Import (Ex-Im) Bank, have expressed interest in building a major part of the proposed $68bn high-speed railway (HSR) project in California, US.

The Chinese firms proposed to supply design expertise, construction, equipment procurement and rolling stock, with financing from the Ex-Im Bank.

Earlier this year, the California High-Speed Rail Authority (CHSRA) has asked private firms to suggest how to reduce costs, speed up construction of the rail line, as well as attract outside money.

In June, CHSRA has awarded a $1.23bn contract to a joint venture team of Hochtief subsidiary Flatiron and Dragados USA, to build a 60-mile stretch of the planned 520-mile HSR line between Los Angeles and San Francisco.

The HSR system is expected to be operational by 2029 from San Francisco to the Los Angeles basin.

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