The Jakarta-Bandung high speed railway (HSR) test run with Chinese President Xi Jinping is only a month away, yet the project’s cost overrun has yet to be settled. In the most recent audit, the Chinese and Indonesian sides calculated different cost overruns. A spokesperson for the Development Finance Comptroller (BPKP) said the difference was quite significant.

The HSR project is in need of additional funding to cover the overrun cost incurred from the project delays, which is expected to come from a state capital injection (PMN) and a loan from the China Development Bank (CDB) (Read: Jakarta-Bandung HSR faces another delay, unresolved cost overrun). However, from the perspective of the CDB and the Chinese state-owned enterprise (SOE) consortium, it appears as though Indonesia is exaggerating the value of the cost overrun. Since there has been no agreement on the value of the overrun cost, it prevents both funds from being disbursed, risking another delay so close to Xi’s visit.

The first audit assertion in the first quarter of 2022 estimated the overrun to be US$1.2 billion. Then, the second audit assertion in the third quarter of 2022, came out with even bigger number. The full report for the second audit is not yet available and is pending review from an arbitrator. However, sources said the second audit estimated more than a US$1.4 billion cost overrun, which includes additional construction costs, taxes and the relocation of public facilities. Changes in component prices for engineering, procurement and construction may even cause the estimate to reach US$1.9 billion. By comparison, the cost overrun estimated by China was US$982 million.

PT Kereta Cepat Indonesia Cina (KCIC) secretary Rahadian Ratry confirmed that there was a difference between how China and Indonesia calculated costs. The main cause of the discrepancy was differences in the assumptions and methods. For example, China assumed that the GSM-R frequencies, which are used for signaling trains, were free like in China. However, GSM-R in Indonesia is provided through a frequency sharing program with Telkomsel, which is not free and has an investment cost.

In a hearing with the House of Representatives last July, PT Kereta Api Indonesia (KAI) president director Didiek Hartantyo said the company had only US$771 million as of September 2022. However, the projected cash outflow for the fourth quarter of 2022 was US$ 1.46 billion, which meant that the project was short US$689 million to continue construction up to the end of the year.

In preparation for the test run, KCIC has recently completed the track laying phase in Depo Tegalluar station, which is where the test run will be held. The test run will use an inspection train with a speed cap of 80 kilometers per hour. The test run itself is an isolated process, which means builders don’t need to connect Tegalluar station to any other station.

Transportation Minister Budi Karya Sumadi is confident that the HSR will be ready in time for the November 2022 test run with President Xi Jinping and that the project can still meet its June 2023 deadline for full operation.

Currently, according to KCIC, the Jakarta-Bandung HSR construction is 78.38 percent complete, while the investment progress was at 89.11 percent as of September 2022. The construction of tunnels and bridges is almost completely done, at 95 percent completion. However, the construction of Padalarang Station, which is the meeting point between the HSR and feeder trains, is only 7.79 percent done.

What’s more

PT Anugerah Logistik Prestasindo (ALP), the electric multiple unit (EMU) supplier for the Jakarta-Bandung HSR project, is being accused of having colluded with the bid organizer, the China Railway Rolling Stock Corporation (CRRC) Sifang Indonesia. ALP is believed to have little to no experience as an EMU supplier due to various technical issues that they have consistently experienced throughout the project.

Just recently, their multi-axle truck crashed on Sept. 30 while transporting a high-speed train car to Tegalluar, Bandung. This was after an insider within the project reported that they had been failing to transport even one train car a day. The insider asserted that this was a very low standard and that the other bidders had promised in their documents to deliver four to six units a day.

PT Citra Selaras Logistik and PT Logistics Plus International, two of the four bidders to serve as the project’s EMU supplier, filed a complaint with the Business Competition Supervision Commission (KPPU) in August, before the crash. The complaint accused the bid organizer CRRC Sifang of colluding with the winner of the bid.

According to PT Citra Selaras Logistik president director Yeni Supriatna, there were suspicious practices in the bid process. First, the location for the evaluation itself was at the Ascott Apartments in South Jakarta instead of at CRRC Sifang’s office. But in addition to that, the organizer sought to prevent the fellow bidders from interacting or finding out each other’s qualifications.

Even more suspicious was the announcement of the bid winner. Bidders received the announcement by email on June 2022. However, the email did not contain anything other than the name of the winning company.

The bid brief said the winner would be announced to the other bidders along with a scoring system. However, no such score was attached to the announcement email that Yeni’s company received.

What we’ve heard

Not long after the incident where the multi-axle trailer carrying HSR train cars crashed on the Cipularang toll road, KCIC’s internal WhatsApp group broke into an uproar. The internal group of KCIC immediately began gossiping about the part of PT Anugerah Logistik Prestasindo (ALP), the company that won the tender to transport the HSR train cars to Tegalluar, Bandung, in the crash. The multi-axle trailer consisted of a convoy of eight trucks.

The source who was aware of this incident explained that KCIC had been trying to ensure that news of the crash did not spread.

“KCIC doesn’t want a similar outcry to the one the LRT experienced when they had a crash,” said the source.

It was for that reason that the trucks carrying the train cars rushed to continue the transportation at the break of dawn not long after the incident. Fortunately, the trucks were not significantly damaged. Other than the crash, the trucks hydraulics also had technical difficulties while on the Cipularang toll road.

However, the incident did not dampen the gossip of KCIC’s internal team. KCIC employees were curious how PT ALP was chosen as the tender winner. Not only did they offer a higher price, the company also did not have prior work experience with transporting train cars. In addition to that, PT APL is also rumored to have connections with someone on the Chinese side of KCIC’s board of directors. PT ALP so far has transported numerous pieces of heavy equipment from China.

This relationship of PT ALP allowed it to be picked by China Railways Rolling Stock (CRRC) Sifang Indonesia as the tender winner, even though its competitors had experience transporting KRL, LRT and even MRT carriages and offered a cheaper price. The same source added that since the beginning, CRRC had given a signal that said companies who offered low prices would not automatically be picked as the bid winner. In addition to that, PT ALP is also rumored to have connections to other executives of KCIC.

A primary source of suspicion behind the bidding process was the tender document from CRRC, which didn’t have a letterhead and didn’t have an owner estimate (OE). During the opening and evaluation of the tender documents, bidders were also prohibited from participating. However, some witnesses say they saw ALP employees going into the evaluation room for the tender documents. This incident occurred in the Ascott Apartment in Mega Kuningan, Jakarta. From then, the rumors began that CRRC had already chosen ALP before the tender evaluation had even begun.

CRRC itself, as the bid organizer, was rumored to have an office at a coworking space in Bandung. But when the tender concluded, the company vacated the premises in a rush. Not a single CRRC employee has been seen since the office lease ended.

Even before various suspicious incidents surrounding the tender were being gossiped about in KCIC internally, the project was up in the air because neither the Indonesian government nor the China Development Bank could finalize the project’s cost overrun. This was because of a discrepancy between the calculated value by Indonesia and China. Because of this discrepancy, the CDB did not want to give out the loan to cover the cost overrun. The same applies to the House of Representatives, which would not approve the PMN until the cost overrun was finalized between the Chinese and Indonesian parties.

Another source mentioned that there was one more incident that occurred before the CDB asked for a government guarantee for its loan to cover the cost overrun. He claimed that Finance Minister Sri Mulyani was unwilling to offer a government guarantee because the cost overrun discrepancy was still unresolved. The same source said that the committee supervising the project, which was led by the Office of the Coordinating Maritime Affairs and Investment Minister, was still waiting for a third audit by the BPKP.

Disclaimer

This content is provided by Tenggara Strategics in collaboration with The Jakarta Post to serve the latest comprehensive and reliable analysis on Indonesia’s political and business landscape. Access our latest edition to read the articles listed below:

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