Feasibility Study for Promotion of International Infrastructure Projects

in FY2011

Study on the High Speed Railway Project

(Jakarta-Bandung Section), Republic of Indonesia

FINAL REPORT

【Summary】

November 2012

Prepared for:

The Ministry of Economy, Trade and Industry

Prepared by:

Yachiyo Engineering Co., Ltd.

Japan International Consultants for Transportation Co., Ltd.
(1) Background and Necessity of the Project
The Republic of Indonesia (hereinafter called as “Indonesia”) has a total population of approximately 240
million as of 2011, which is the fourth largest in the world. The economy in Indonesia has been steadily
growing and the current economic growth rate is more than 6 %, and even in 2009 when Indonesia was
affected by Lehman Shock, the growth rate exceeded 4.6 %.

In Java Island where the population is more than 100 million, the transportation infrastructure has not been
developed sufficiently to cope with such a large scale of population. The railway service, in particular, is
less competitive in terms of the required time than passenger cars, so that more than 80 % of passengers rely
on the passenger cars as transportation means. Therefore, since the traffic congestion has been serious due to
the increasing number of cars mainly in the urban areas, the necessity of inter-city connection by railway
has been identified.

According to the national development plan called “Masterplan for Acceleration and Expansion of
Indonesia Economic Development (MP3EI)”, the development of the high-speed railway between both
Jakarta-Bandung and Jakarta-Surabaya is recognized as one of the corridor transportation infrastructures to
support economic development. Moreover, the National Railway Master Plan (NRMP) also highlights the
development of Jakarta-Surabaya high-speed railway. In addition, the high-speed railway between Jakarta
and Bandung is nominated as Priority Project in Master Plan for JABODETABEK Metropolitan Priority
Area (MPA) which is jointly conducted by both Indonesian and Japanese governments.

In 2008, the feasibility for introducing the high-speed railway between Jakarta and Surabaya for about 700
km was examined, but the project cost was estimated as JPY 2.1 trillion which was not practical for the
Indonesian government. Thus, the study for the high-speed railway in the section between Jakarta and
Bandung was carried out by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) in Japan.
In accordance with the result of this study, the Indonesian government requested the Japanese government
to conduct more practical study including the examination of the prior development route (Jakarta-Bandung
section), the possibility of future extension (Bandung-Cirebon), and the project scheme. Therefore, in the
Study, the proper route is examined for the high-speed railway between Jakarta and Cirebon as a priority
section in the Jakarta-Surabaya high-speed railway plan by comparing two routes (Bandung Route and
Coastal Route). In addition to those two routes, the section between Jakarta-Bandung-Gedebage in the
Bandung Route is analyzed. Therefore, concerning those three alternative routes, the appropriate route is
selected by the technical, economic, financial and project scheme analysis on the selected one route.

Moreover, as positive impacts to Japan, various railway related companies with superior technologies of
rolling stocks, signals and communications, etc. are expected to expand their business opportunities into
foreign market by exporting the Japanese Shinkansen.

(2) Basic Policies for Decision of Project Components

For the implementation of the Study on the High Speed Railway Project (Jakarta-Bandung Section) in
Indonesia (hereinafter called as the “Study”), the basic policy of the Study is formulated as described below
in accordance with the intension of the National Development Planning Agency (BAPPENAS) and the
Directorate General of Railway (DGR) of the Ministry of Transportation (MOT) which formulated the
National Railway Master Plan (NRMP) and in consideration of the consistency with related development
plans and the results of the site surveys.

1) Appropriateness as Frist Phase of Jakarta-Surabaya High-Speed Railway

The appropriateness for the implementation of the high-speed railway in the section between Jakarta and
Bandung is examined as the first phase of Jakarta-Surabaya high-speed railway which is stipulated in the
NRMP from the technical, demand and financial viewpoints. Moreover, the project scheme for the
implementation is analyzed for the promotion of Japanese ODA Loan.

2) Applicability of the Japanese Shinkansen System to Indonesia

In the Study, to apply the Japanese Shinkansen System to Indonesia, the technical, economic and financial
applicability is examined.

Regarding the technical applicability, the route selection is conducted based on the consultation with the
related organizations and site survey, and the comparative analysis is implemented on the routes.
Furthermore, based on the survey on the users’ preference, the demand forecasting is conducted to identify
the conversion from the conventional transportation means to the high-speed railway and operation plan is
formulated to secure the optimal transportation capacity. In addition, the technical specifications of the
high-speed railway are examined based on the technical standards of Japanese Shinkansen, and the review
of structures and analysis of environmental impact are performed.

Moreover, for the realization of the Project based on the examinations mentioned above, the required costs
for the construction and operation and maintenance are estimated, and the schedule for the project
implementation is examined. Furthermore, the project scheme of the high-speed railways in Indonesia is
analyzed in consideration of the related legal systems in Indonesia, and the feasibility of the Project is
evaluated from financial and economic viewpoints.
3) Legislation for introduction of high-speed railways in Indonesia

To realize the Project in Indonesia, it is necessary to confirm the legal system regarding the high-speed
railway as well as environmental impact assessment and land acquisition, and to identify the issues for the
project implementation.

Concerning the environmental and social considerations, the policy, items and schedule of the
environmental impact assessment in Indonesia are examined. Moreover, since the land acquisition is
inevitable for the project implementation, some issues are recognized such as cost for the land acquisition
and volume of involuntary resettlement. The project scheme is analyzed in consideration of the related laws
in Indonesia and role allocation between the public and private sectors.

(3) Summary of the Project

1) Target Routes of the Study

In the previous study conducted by the MLIT in Japan, the high-speed railway in the section between
Jakarta and Bandung was examined. On the other hand, the route of Jakarta-Surabaya high-speed railway in
the NRMP runs along the coastal line. Therefore, in the Study, the route from Jakarta to Cirebon via
Bandung is set and both routes are comparatively examined as shown in Figure 1. On the Bandung Route,
the difference of the elevation is approximately 700 m between Jakarta and Bandung with steep gradient.
The vertical profiles of the Bandung and Coastal Routes are shown in Figure 2 and Figure 3 respectively.

Figure 1 Comparison between Bandung Route and Coastal Route (between Jakarta and Cirebon)

Java Sea Bandung Route

(Jakarta～Cireton)
Jakarta (Jakarta～Gedebage)
Bekasi Coastal Route
Cikarang
Cikampek
207.3km
Karawang

Kertajati

Tangkubanparahu
Cirebon
144.6km Tampomas

Sumedang
Cereme
Bandung
Gedebage
256.0km

Source: prepared by Study Team

 Figure 2 Elevation profile of the Bandung Route (between Jakarta and Cirebon)

km

Grade

Curve

Source: prepared by Study Team

Figure 3 Elevation profile of the Coastal Route (between Jakarta and Cirebon)

km

Grade

Curve

Source: prepared by Study Team

2) Selection of Routes and Stations

In the Study, the proper route is examined for the high-speed railway between Jakarta and Cirebon as a
priority section in the Jakarta-Surabaya high-speed railway plan. For the comparison of the routes, three
alternatives are considered: Bandung Route (Jakarta-Bandung-Cirebon), Coastal Route (Jakarta-Cirebon)
and Jakarta-Bandung-Gedebage in the Bandung Route as the first phase of the construction.
 Table 1 Outline of Alternative Routes
Route Section Outline
 Route connecting to the third largest city of Bandung and to Karawang and Kertajati
Jakarta-
where construction of the international airports is planned. This is also the route where
Bandung-
the high demand is expected.
Cirebon
Bandung Route  Total length is 256.0km.
Jakarta-
 Route connecting to Gedebage via Bandung as first phase of Bandung Route
Bandung-
 Total length is 144.6 km.
Gedebage
Jakarta-  Route connecting Jakarta and Cirebon with almost the shortest distance
Coastal Route
Cirebon  Total length is 207.3 km.
Source: prepared by Study Team

For the route selection, it is considered to connect stations with the shortest distance. The continuous straight
and horizontal sections are needed as long as possible not to prevent the high speed operation. Even when
inevitable due to geological reasons, the steepest slope shall be 30‰. In order to avoid excessive loading to
the cars, the steep slope sections shall not be continuous.

Considering the land acquisition, the areas for existing toll roads and conventional railways will be utilized
as long as available. Interference with the urban area, factories, commercial facilities, grave, mosque, and
other public facilities shall be avoided as much as possible. In particular, in the center of DKI Jakarta, the
route will be taken under the ground because it has been developed. In principle, access to the planned
airport will be an underground structure. The structure may be on the ground if the opening schedule and
development location of airport are not fixed. Moreover, the route crosses the principal roads, toll roads and
conventional railways as flyover with the specified clearance.

Since the stations for the high-speed railway are assumed mainly for use as passenger stations, the location
of the station shall be convenient for the passengers to reach and with easy access to other transport means.
However, it may be more rational to establish a new station in the suburb and to develop its surrounding
area because the land acquisition is difficult in the urban area and the railway route will be restricted.
Moreover, unless otherwise specific reason, the distance between each station of the high-speed railway will
be planned with 20 km or more to avoid lowering of the schedule speed.

Regarding the structure, to avoid excessively long bridge, the route will cross a large river at a right angle as
much as possible. In addition, the maximum length of a tunnel will be less than 20 km, and the vertical
alignment of tunnel section shall be determined in consideration of the excavation direction and drainage
system.

The route shall avoid the disaster hazard areas, such as landslide and fault as much as possible. Moreover,
the route needs to avoid passing near the area where adverse impacts on the natural environment, animal
protection, etc., are predicted.
3) Comparison of Alternative Routes

Table 2 shows the result of comparative analysis of alternative routes in terms of the route length,
topographic characteristics, linkage with other transport means and disaster risks. While the Bandung Route
has the steep slope and requires the relatively long tunnel, the Coastal Route runs through the alluvial plain
of soft ground. Therefore, the structures shall have the sufficient earthquake resistance. On the other hand,
Japan has the experiences of design and construction to cope with those similar issues, so that there will be
no technical problems for both routes.

Table 2 Comparison of Alternative Routes for High-Speed Railway

Bandung Route
Item Coastal Route
Jakarta-Cirebon Jakarta-Gedebage
Length 256.0 km 144.6 km 207.3 km
Topographic Steep slope of maximum 30‰ used to overcome the Not much undulation because the
Characteristics elevation of 700 m route mainly runs through the plain
Linkage with other Connect with conventional lines in principal cities and Connected to the conventional line in
Traffic Means satisfactory accessibility to the planned international airport Jakarta, Cikampek, Cirebon
As the route passes through the
Relatively resistive against disaster because of high ratio of flood-prone plain of soft ground, the
Disaster Risk
tunnel sections less affected by meteorological conditions route is readily affected by earthquake
and weather.
Source: prepared by Study Team

4) Technical Specifications for the High-Speed Railway

The Japanese Shinkansen System will be introduced for Jakarta-Bandung-Cirebon with the following
characteristics. The technical specifications of the high-speed railway are summarized in Table 3.

<Characteristics of the System>

 The Shinkansen had no fatal accident during about 50-year operation since 1964. The average
delay time per train is less than 1 minute with high safety and reliability.
 Since the designated track is required, it has advantage in the prevention of accident and the
increase of transportation capacity compared to the conventional railway.
 Regarding the slope, operation on continuous steep slope of 30‰ has been made at the operation
speed of 210 km/h in Japan. Therefore, it is applicable in the steep slope section between Cikampek
and Bandung.
 The earthquake detection technology is a unique system of Shinkansen, so that it is valuable in
Indonesia which many earthquakes has been occurred.
 Table 3 Technical Specification of High-Speed Railway
Parameter Data
Track Gauge 1,435 mm
Power Supply System AC25kV/50Hz
Maximum Operating Speed 300 km/h
Number of Car per Car-Train (MT ratio) 12 cars (9M3T)
12-car train with 960 passengers
Passenger Capacity
Mono-class: 5-row seats
(for reference: estimate)
All reversible reclining seats
Maximum Axle Load (with capacity passengers) 14 t or less
Length (head/tail car) 26,500 mm
(intermediate car) 25,000 mm
Car Principal
Maximum Width about 3,350 mm
Dimensions
Maximum Height 3,700 mm
Wheel Base 17,500 mm
Body Structure Aluminum double-skin body structure (airtight body structure)
Design Bolsterless type
Bogie Wheel Diameter Φ＝860 mm
Wheelbase 2,500 mm
VVVF inverter control system
Control System
Three-level PWM control with IGBT’s
Main Circuit Main Motor Induction motor: 300kW/unit or more
2/car-train
Pantograph
Single-arm low noise type
Brake System Electric commanding air brake with regenerative brake
Traction and Braking Command Circuit Digital transmission control and back-up commanding line
Protection System Single-step continuous (pattern) control by ATC
Source: prepared by Study Team

5) Demand Forecasting

Based on the number of users of conventional transportation means, the number of users to be converted to
the high-speed railway is estimated by using the binary logit model. With interview survey, the acceptability
and willingness to pay for the high-speed railway is surveyed and the conversion ratio from existing railway,
long-distance bus and passenger car is quantitatively examined. As a result, the appropriate fare between
Jakarta and Bandung is calculated as Rp. 200,000. The fares for Bandung Route and Coastal Route are
shown in Table 4 and Table 5 respectively.
 Table 4 Fare (Bandung Route)
Station Jakarta Bekasi Cikarang Karawang Bandung Gedebage Sumedang Kertajati Cirebon
Jakarta - 40,000 70,000 90,000 200,000 220,000 260,000 310,000 380,000
Bekasi 40,000 - 30,000 60,000 160,000 180,000 220,000 280,000 350,000
Cikarang 70,000 30,000 - 30,000 130,000 150,000 190,000 250,000 320,000
Karawang 90,000 60,000 30,000 - 110,000 120,000 160,000 220,000 290,000
Bandung 200,000 160,000 130,000 110,000 - 20,000 60,000 110,000 180,000
Gedebage 220,000 180,000 150,000 120,000 20,000 - 40,000 100,000 170,000
Sumedang 260,000 220,000 190,000 160,000 60,000 40,000 - 60,000 130,000
Kertajati 310,000 280,000 250,000 220,000 110,000 100,000 60,000 - 70,000
Cirebon 380,000 350,000 320,000 290,000 180,000 170,000 130,000 70,000 -
Source: prepared by Study Team (Unit: Rp.)

Table 5 Fare (Coastal Route)

Station Jakarta Bekasi Cikarang Cikampek Cirebon
Jakarta - 40,000 70,000 110,000 300,000
Bekasi 40,000 - 30,000 70,000 270,000
Cikarang 70,000 30,000 - 40,000 240,000
Cikampek 110,000 70,000 40,000 - 190,000
Cirebon 300,000 270,000 240,000 190,000 -
Source: prepared by Study Team (Unit: Rp.)

Table 6 Comparison of Traveling Time

Transportation Mode Jakarta-Bandung Jakarta-Cirebon
Conventional Railway 3 hours 3 hours
Passenger Car 2 hours 5 hours
Long-distance Bus 2 hours 6 hours
Bandung Route 37 minutes 70 minutes
High-Speed
118 minutes 49 minutes
Railway Coastal Route
(Change to existing railway at Cikampek)
Source: prepared by Study Team

According to the result of the demand forecasting, it is identified that the number of users for the Bandung
Route is estimated as 57,000 persons/day in 2020 and 171,000 persons/day in 2050. For the Coastal Route,
this will be 17,000 persons for 2020 and 40,000 persons for 2050. It is clear that the demand of the Bandung
Route is three or four times larger than that of the Coastal Route.

Table 7 Result of Demand Forecasting

Bandung Route Coastal Route
Jakarta-Cirebon Jakarta-Gedebage Jakarta-Cirebon
2020 57,000 39,000 17,000
2050 171,000 127,000 40,000
Source: prepared by Study Team (Unit: person/day)
 Table 8 Result of Demand Forecasting

2020 2050

Jakarta Bekasi
Jakarta Bekasi

Cirebon Cirebon
Cikarang
Jakarta-Cirebon

.Kertajati Cikarang
.Kertajati
(Karawang)
Karawang

Sumedang Sumedang
Bandung Route

Bandung
Gedebage Bandung Gedebage

Jakarta Bekasi Jakarta Bekasi

(Cirebon) (Cirebon)
Jakarta-Gedebage

Cikarang Cikarang
(Kertajati) .(Kertajati)
(Karawang)
Karawang

(Sumedang) (Sumedang)

Bandung Gedebage Bandung Gedebage

Jakarta-Cirebon
Coastal Route

Jakarta Karawang Cikampek

Cirebon
Jakarta Karawang Cikampek Cirebon
Bekasi
Bekasi

Unit: 100 persons/both-way

Source: prepared by Study Team

6) Environmental and Social Consideration

The Japanese Shinkansen System is designed to enhance the environmental performance such as energy
efficiency with light weight, low noise and so on. Moreover, due to the conversion from the conventional
railways and passenger cars to the high-speed railway, the traffic congestion will be mitigated resulting in
the reduction of CO2 emission. In comparing the CO2 reduction in the construction of the Jakarta-Cirebon
section, the reduction for the Bandung Route will be more than 10 times higher than that for the Coastal
Route.

Figure 4 CO2 Reduction Effect by Implementation of High-Speed Railway

Unit：t-CO2/day

180,000 Reduction Reduction

22,640t/day 17,879t/day
160,000

140,000
Reduction
120,000 2,083t/day
100,000

80,000

60,000

40,000

20,000

0
Jakarta～Cirebon Jakarta～Gedebage Jakarta～Cirebon
Bandung Route Coastal Route
Without Project Case 158,207 158,207 101,993
With Project Case 135,566 140,328 99,960

Source: prepared by Study Team

On the other hand, the adverse impacts by the project implementation are indicated as the alternation of the
topography in the regulated forests (reserved forest and production forest) by the new structures, the soil
runoff and landslide. Therefore, it is necessary to take countermeasures against those issues. Moreover, the
involuntary resettlement due to the land acquisition will occur along the routes, so that the land acquisition
will be implemented with reasonable and equitable compensation in accordance with the Law No. 2 of 2012
on Land Acquisition for Development for Public Interest, which clearly stipulates the administrative
procedures and authorities of the government.

In the environmental and social consideration aspects, the government of Indonesia will be required to
conduct the following matters for the project implementation: consensus building among stakeholders,
implementation of Environmental Impact Assessment (AMDAL), preparation and approval of Land
Acquisition and Resettlement Action Plan (LARAP), implementation of land acquisition and compensation,
and establishment of monitoring structure during construction and operation.
 Table 9 Land Acquisition and Resettlement
Bandung Route Coastal Route
Jakarta-Cirebon Jakarta-Gedebage Jakarta-Cirebon
Land Acquisition (ha) 430 222 360
Resettlement (household) 2,000～3,000 1,200～1,800 1,500～2,000
Source: prepared by Study Team

7) Total Project Cost

The construction costs for rolling stock, land acquisition as well as other required costs for the project
implementation costs in Jakarta-Cirebon section are estimated as JPY 726.4 billion for the Bandung Route
and JPY 584.2 billion for the Coastal Route. Since the length of tunnel sections is long compared to the total
length in the section of Jakarta-Bandung-Gedebage in the Bandung Route, the cost per km is relatively high.
The total project costs for all the routes are summarized in Table 10.

Table 10 Total Project Costs

Bandung Route Coastal Route
Item Jakarta-Bandung Jakarta-Bandung
Jakarta-Cirebon
-Cirebon -Gedebage
Civil Engineering (Subgrade Course) 19,401 7,547 12,730
(Bridge) 118,717 90,537 197,216
(Tunnel) 174,955 110,286 54,234
Track Construction Cost 28,211 16,393 26,976
Station Construction Cost 17,200 11,100 11,100
Various Building Cost 4,174 3,340 3,372
Depot Machinery Cost 26,690 23,240 23,150
Power Line Cost 28,070 19,509 23,159
Communication Line Cost 10,101 6,545 8,187
Safety Equipment Cost 24,117 15,760 18,659
System Construction Cost 6,990 6,453 6,698
Train Track Cost 25,716 15,643 19,495
Substation Cost 54,342 38,879 40,863
Rolling Stock Cost 48,000 33,600 28,800
Total Construction Cost 586,684 398,832 474,639
Consulting Service Cost 29,334 19,942 23,732
Tax 61,602 41,877 49,837
Overhead Cost 2,933 1,994 2,373
Land Acquisition Cost 18,883 14,627 11,283
Contingency 26,934 18,262 22,292
Total Project Cost 726,370 495,534 584,156
Project Cost per km 2,837 3,427 2,818
Source: prepared by Study Team (Unit: JPY million)

8) Preliminary Economic and Financial Analysis

With estimation of the economic benefits (reduction of vehicle operating cost and travel time cost) by the
project implementation, the Economic Internal Rate of Return (EIRR) is estimated as 13.6 % for the
Bandung Route and a negative EIRR for the Coastal Route. These figures proved that the Bandung Route
has an advantage over the Coastal Route and that the construction of the high-speed railway on the Bandung
Route will be beneficial for the national economy. If the 1st stage construction on the Bandung Route is
terminated in Gedebage where there is considerable demand for the railway, EIRR will increase further.

Meanwhile, it is considered difficult for the private sector to construct the high-speed railway even for the
Bandung Route by itself because of the low Financial Internal Rate of Return (FIRR). If the government
provides 50 % of the initial investment which excludes the cost for rolling stock and station (11 % of total
project cost) burdened by the private sector, FIRR will be around 8.5 % for both BOT and Concession
Schemes. However, FIRR is improved into approximately 15 % for DBL Scheme. The above-mentioned
findings have proven that the construction of the high-speed railway on the Bandung Route is economically
and financially feasible with certain financial support from the government.

In accordance with the above examinations, the stage construction between Jakarta and Gedebage is the
most preferable due to the high economic and financial feasibility and high demand. The results of
economic and financial analysis are summarized in Table 11.

Table 11 Results of Economic and Financial Analysis

Bandung Route Coastal Route
Index
Jakarta-Bandung-Cirebon Jakarta- Bandung-Gedebage Jakarta-Cirebon
B/C 1.30 1.91 0.11
EIRR 13.6 % 16.2 % Negative
ENPV (JPY million) 127,295 260,079 Negative
BOT (AF 50%*) 8.5 % 8.6 % 4.9 %
FIRR Concession (Gov-S 50%*) 8.4 % 8.6 % 2.3%
DBL (LC 1.4 %) 15.5 % 15.8 % Negative
BOT: Build-Operate-Transfer, AF: Availability Fee, Gov-S: Government Support,
DBL: Design-Build-Lease, LC: Lease Cost
* Initial cost excluding rolling stock and station (11 % of total project cost) burdened by the private sector
Source: prepared by Study Team

9) Project Scheme and Prospects for Funding for the Project

In the section between Jakarta-Bandung-Gedebage of the Bandung Route which shows the high economic
and financial feasibility, in accordance with the guidelines on PPP and the latest development of PPP in
Indonesia, the following 3 project schemes are analyzed for the high-speed railway: 1) BOT
(Build-Operate-Transfer) Scheme (with Availability Fees), 2) Concession Scheme (with government
support) and 3) DBL (Design-Build-Lease) Scheme. While all the schemes will require financial
contribution from the government in one way or another, all of those schemes have potential to be
financially feasible. Among those three schemes, the DBL Scheme is considered as a method in which
profitability of a private project company is ensured as the financial burden is small throughout the period of
project implementation and know-how of the private sector can be utilized to the maximum.
The project scheme, cash flow and comparison of each scheme are shown in Figure 5, Figure 6 and Table
12 respectively.

Figure 5 Analyzed PPP Schemes in the Study (Three Schemes)

GCA: Government
Contracting Agency BOT with AF

AF: Availability Fee

PPP Agreement
Service Purchase
Design Consultant Equity
Project Company Sponsor
Financial
Construction Contractor Close
Facility
Ownership
Operator
Service Fare
Lenders
Contract Debt
Maintenance Company Passenger

GCA: Government
Contracting Agency Concession with Gov-S

Governmental Support
PPP Agreement
Concession Right
Design Consultant Equity
Project Company Sponsor
Financial
Construction Contractor Close
Facility
Ownership
Operator
Service Fare
Lenders
Contract Debt
Maintenance Company Passenger

GCA: Government
D&B Contract Contracting Agency DBL
Facility
Ownership
Design Consultant
PPP Tariff
Construction Contractor Agreement Lease
Equity
Project Company Sponsor
Financial
Close

Operator
Service Fare
Lenders
Contract Debt
Maintenance Company Passenger

Source: prepared by Study Team

 Figure 6 Cash Flow (Three Schemes)

Source: prepared by Study Team

 Table 12 Comparison of Three Financial Schemes
Scheme BOT Scheme Concession Scheme
DBL Scheme
Item (with Availability Fee) (with Gov-S)
- BOT: Build-Operate-Transfer. - Private sector: with concession - DBL: Design-Build-Lease.
- Private sector: design, right, perform design and - Private sector: design,
construction, operation and construction, operation and construction, operation and
maintenance, and financing, maintenance, and financing for maintenance.
then transfer the facilities to the facilities. - Public sector: purchase
Description

public sector after the end of the - Private sector is financially constructed facilities by and lease
-
project period. independent in principle, but them to, and collect lease fee from
- Revenue: fare revenue and public subsidies will be provided private sector.
Availability Fee paid from as part of the initial investment to - Business efficiency is improved
public sector for service enhance financial stability. through the project company
delivery. undertaking design and
construction management.
Initial Cost Overrun Private Private Public
O&M Cost Overrun Private Private Private
Demand Changing Shared Shared Shared
Risk Allocation

- Guarantee for unpredictable - Guarantee for unpredictable - Guarantee for unpredictable

demand decrease is necessary. demand decrease is necessary. demand decrease is necessary.
- Option: fare revenue flows
through public sector.
Financing Private Private / Public Facilities for Lease: Public
* depend on amount of Government Others: Private
Support
(LC 1.4 %) (LC 0.2 %)
FIRR 8.6 % (AF 50 %*) 8.6 % (Gov-S 50 %*)
15.8 % 18.6 %
CF Analysis

LLCR 1.1 1.5 4.6 4.9

DSCR min. 1.0 1.0 1.1 1.4
Equity-IRR 8.7 % 14.2 % 34.0 % 37.4 %
Year to be Profitable Annual: 2035 (16th year) Annual: 2032 (13th year) Annual: 2020 (1st year)
Accumulated: 2044 (25th year) Accumulated: 2034 (15th year) Accumulated: 2020 (1st year)
Financial (-) It is not favorable if the (+) The effect to lower the cost of (+) It can take advantage of low
financing costs in the private funds is high with public funds. interest financing by the public
Advantage / Disadvantage

sector are high. (-) It may require additional (there is no use of private funds).
(+) Availability fee can mitigate measures to cover the shortage of (+) It is possible to set the tariff in
the shortage of funds at the funds at initial stage of operation. accordance with the profitability.
beginning stage of project.
Operational (+) It can be expected that (+) By granting concession right, an (-) The degree of utilization of
payment mechanism and project incentive for private sector will be private technology is likely since the
monitoring maintain and improve clear to carry out the project property owner is public.
the level of service. voluntarily. (+) It can be affordable and fare for
user can be reduced.
* 50 % of project costs excluding rolling stocks and stations (as 11% of Total Project Cost) which the
project company is responsible for.
Source: prepared by Study Team
(4) Implementation Schedule
As the first phase of the Jakarta-Surabaya high-speed railway, it is considered that the section between
Jakarta-Bandung-Gedebage has high feasibility. Moreover, the construction period will be for 5 years
including the operation test for 1 year. Therefore, the implementation schedule for the Project is shown in
Table 13.

Table 13 Project Implementation Schedule (Jakarta-Bandung-Gedebage)

Items 2013 2014 2015 2016 2017 2018 2019 2020

1. Feasibility Study
(Basic Design, Final Business Case,
Tender Document, AMDAL)
2. Preparation of
Presidential Decrees
3. Establishment of BUMN ★

4. Exchange Note & Loan Agreement ★

5. Selection of Project Company

6. Land Acquisition

7. Detailed Design

8. Civil Works & Procurement

9. Training in Operation

10. Start of Service ▼

Source: prepared by Study Team

(5) Technical Advantages of Japanese Company

Japanese Shinkansen is the first high-speed railway in the world, which started operation in 1964. Due to
the shortage of the transportation capacity by conventional railways, it was constructed with designated
tracks as the high standard. The conventional railways in Japan employ a narrow gauge of 1,067 mm, but
the Shinkansen employs the standard gauge of 1,435 mm. To secure safety during high-speed operation,
grade crossing with other transportation means was eliminated and the possibility of collision was
thoroughly removed. Also, an epochal concept and the latest technology was introduced in a total system
completely different from the conventional trains, such as train method of distributed traction, unified train
performance, in-train signal method, highly reliable operation management system, separation of operation
with maintenance, and so on. As a result, the exceptional safety and stability are realized together: the speed
beyond 200 km/h which a narrow gauge train cannot achieve, no fatal accidents of passengers for 48-year
operation, and an average delay of 1 minute or less per a train. The advantage of Japanese Shinkansen
System and expected effects of the application are summarized in Table 14.
 Table 14 Advantages of Shinkansen System and Effects of Application on the Project
Advantages of Shinkansen System Effects of Application on the Project
High safety and stability By employing the Shinkansen System to the project, it is possible to realize
• No fatal accident of passengers for 48-year a high-speed railway having the same safety and stability of Japanese
operation system.
• Average delay of 1 minute or less per train Japan’s technology for earthquake detection and earthquake-proofing of
• In Great East Japan Earthquake, the high-speed railway structures will be very beneficial for Indonesia where many
train safely stopped and there was no injury. earthquakes happen.
Efficiency and mass transportation By increased capacity and high density operation, it can flexibly respond
• Large number of passenger capacity due to wide to increased demands due to economic development of Indonesia which
gauged and car body has the 4th largest population in the world.
• High density operation with minimum driving
interval of 3 minutes
Low-cost infrastructure Low axle load of rolling stock reduces load to the infrastructure, and
• Low axle load of rolling stock enables saving of maintenance cost. Due to high acceleration/
• Response to continuous rapid slope and sharp deceleration performance, it is possible to respond to continuous steep
curve slopes existing on the route of this project.
• Tunnel with smaller cross-section The tunnel construction technology of Japan will contribute to the project
where there are many tunnel sections.
Labor saving maintenance Employment of AC motor for the rolling stock, high speed inspection
• Employment of AC motors vehicle, and mechanization of facility maintenance, and other labor
• Inspection car, mechanized maintenance saving contribute to reduced maintenance cost.
• Slab tracks Slab tracks require high initial investment amount but the life-cycle cost
will be lower including the maintenance cost. If the personnel cost of
maintenance staff is low, ballasted tracks may be advantageous.
Environmental compatibility, energy saving High speed and response to severe environmental standards (noise,
• High speed performance and response to severe vibration, etc.) will contribute to the protection of wayside environment,
environmental standard and also to higher speed in cities and reduction of construction cost.
• Low consumption of energy Smaller operation consumption energy and CO2 emission contribute to
protection of the global environment through shifting to railway from
road traffic and airplanes.
Comfort The high comfort by rotating seats and wide interval between seats will
• High comfort through wide seat interval, rotating be a great selling point in competition with aircrafts.
seats and air conditioning system The vibration control technology by active suspension will improve
• Technology to control vibration by active comfort during running.
suspension
Technology of transfer to the existing lines Due to the necessity of changing tracks and electrification, utilization of
• Realize by changing tracks of existing lines this technology is not realistic in Indonesia.
Source: prepared by Study Team

(6) Practical Schedule and Potential Risks for Project

Implementation
1) Policy Deciding Process in Indonesia

Since it is difficult for the private sector to finance the construction of the high-speed railway even in
Bandung Route (Jakarta-Bandung-Gedebage) by itself, a certain type of involvement of the public sector
will be needed. In particular, the following supports will be required.
a) Involvement of Public Sector in Financing the Initial Costs

Involvement of the public sector is essential in securing long-term low-interest-rate loans. The government
may a) pay for the services provided by project company for a certain period of time during the project
period (BOT Scheme), b) provide a financial support to project company in the initial costs (Concession
Scheme), or c) finance the entire project costs and receive payback from project company in the form of
lease fees after the company commences the operation (DBL Scheme). The Government of Indonesia has
conducted the projects with BOT Scheme. For the use of Concession Scheme, it is necessary to coordinate
and consensus building among the related government institutions in accordance with the legalization
process on government subsidy. Even though the DBL Scheme is a new scheme in Indonesia, it is a scheme
to encourage the participation of the private sector. Therefore, it is necessary to examine the applicability of
DBL Scheme for the project implementation in line with the relevant legal frameworks in Indonesia.

b) Deregulation

Since it is possible to be difficult to cover the repayment of debt by the ticket sales revenue, the analysis on
the incentive mechanism for the private sector will be required, such as tax exemption and granting of the
concession for the area development along the high-speed railway route.

2) Land Acquisition

In case of the implementation of the high-speed railway in the section of Jakarta-Cirebon of the Bandung
Route, the land acquisition is required for 430 ha. with the involuntary resettlement of 2,000 to 3,000
households. However, considering the total length of the route in 256 km, the impacts by the land
acquisition and resettlement will be minimized since the available lands for the existing toll roads and
railways are utilized. Moreover, the land acquisition and the resettlement shall be conducted with reasonable
and equitable compensation.
(7) Map of Project Site in Indonesia
The map showing the study points is shown in Figure 7 below.

Figure 7 Map of Study Area

Legend:
Railway
Expressway
Road
Administrative Boundary

Studied Route
(Coastal Route)

Studied Route
(Bandung Route)

Source: prepared by Study Team based on Google Map