Financing the Intermodal Freight Transport in Java, Indonesia

Multi-stakeholder discussion on the financial design of intermodal freight transport in Java, Indonesia

The Ministry of Transportation of the Republic of Indonesia and GIZ through TRANSfer III Project are jointly developing the financial design for the implementation of the intermodal freight transport action plans in order to increase the market share of rail freight transport in Java. This financial design aims to set a high-level financing concept that estimates the costs and revenues of various measures or interventions that had been identified under the previous Technical Design and Impact Assessment study conducted in 2020.

The financing concept includes a context analysis, an identification of the costs and revenues of programme implementation, a financial and economic viability analysis, and the design of possible financing mechanisms. The following are collection of intervention that could help to increase the market share of rail freight transport identified under the financial design:

1. Extension of the rail line from JICT station to the dockyard/seaway – DKI Jakarta
2. Reactivation and construction of the rail line from Ronggowarsito Station to the Port of Tanjung Emas (dockyard or seaway area) – Central Java
3. New rail connection to the Port of Teluk Lamong – East Java
4. New rail connection to Patimban Port – Wet Java
5. Rail connection to industrial areas in Gresik – East Java
6. Reduction of Track Access Charge (TAC)

The selected interventions are in accordance with the Ministry of Transportation’s policy on developing new railway networks and services as stated in planning documents such as Strategic Plan (RENSTRA) of Directorate General of Railways 2020-2024 and National Railways Masterplan (RIPNAS) 2018.

On 24 September 2021, a multi-stakeholder discussion on the financial design of intermodal freight transport action plan was held. It was led by the Director of Railways Traffic and Transport, Mr. Danto Restyawan, and jointly organize with GIZ. The financial design result was presented by PricewaterhouseCoopers (PwC) on behalf of Ministry of Transportation and GIZ. The event has attracted more than 90 high-level participants from various stakeholders, including from government, state-owned enterprises, businesses, associations, development banks, think tanks and academicians. For the next step, this financial design study needs to be developed in more detail with feasibility study that includes technical, commercial, economic, etc. in order to determine the bankability of the project and to identify how to make the project feasible. The Ministry of Transportation need to lead and coordinate funding mobilization, together with BAPPENAS and Ministry of Finance, to include programmes under the Bluebook of medium-term planned external loans.