Indonesia to Hand Over Whoosh High-Speed Rail Control to State Entities

Indonesia's finance minister, Purbaya Yudhi Sadewa, announced on Tuesday that the government will transfer the controlling stake in the company operating the country's high-speed railway to a state-owned entity next week. The move comes after months of discussions with China to restructure the project's debt.

The railway, commercially known as "Whoosh," connects Jakarta with Bandung over a 142-kilometer stretch. It began operations in 2023, eight years after the project was awarded to a joint venture of Indonesian and Chinese state firms. The $7.3 billion project, part of China's Belt and Road Initiative, has faced challenges including significant cost overruns.

Purbaya said authorities are deciding whether the 60% stake will be given to the Indonesia Investment Authority (INA) or Sarana Multi Infrastructure (SMI), a development financing agency under his ministry. Chinese firms will retain the remaining 40%.

"Maybe we use SMI and INA, or maybe either one of them," he told reporters. The handover is scheduled for September 15.

The minister did not clarify whether the current stakeholder, a consortium led by state railway firm Kereta Api Indonesia, would receive compensation. However, he confirmed that the new controlling stakeholder will be responsible for repaying the project's outstanding loans.

Following restructuring talks, China has agreed to extend the loan's tenure to 80 years. The original $4.5 billion loan from China Development Bank had a 40-year tenure with a 10-year grace period. Indonesia had taken on additional loans to cover cost overruns.

Purbaya also indicated that after the handover, the railway will be extended approximately 700 kilometers east to Surabaya, Indonesia's second-largest city. He did not specify how the extension would be funded.