CONTENTS

List of Contents Tables

1 Introduction ......................................................................................................................... 1 Table 1.1: Condition of Main Rivers in Central Kalimantan ....................................................... 2
1.1 Background ............................................................................................................ 1 Table 2.1: Current Coal Demand by Industries in Indonesia ..................................................... 5
1.2 Transportation Constraints .................................................................................... 1 Table 2.2: Indonesian Coal Resources/Reserves ....................................................................... 6
1.3 Long Term Plan ...................................................................................................... 1 Table 2.3: Coal Resources in Central Kalimantan Province ....................................................... 6
1.4 Central Kalimantan Overview ................................................................................ 2 Table 2.4: Coal Reserves by Mining Concessionaires (PKP2B)................................................... 7
2 Demand for Coal and Likely Supply from the Project Area .................................................. 4 Table 2.5: List of Mining Companies and Plans for Coal Production ......................................... 9
2.1 Global Demand for Coal......................................................................................... 4 Table 3.1: Project Cost for Puruk Cahu – Bangkuang Coal Railway (Financial)........................ 11
2.2 Domestic Coal Consumption and Supply ............................................................... 5 Table 4.1: Base Case: Results of Economic Analysis ................................................................ 12
2.3 Coal Resources, Reserves and Production in Central Kalimantan.......................... 6 Table 5.1: Estimated Numbers of Trains per Day .................................................................... 14
3 The Project ......................................................................................................................... 11 Table 5.2: Train Formation and Rolling Stock .......................................................................... 14
3.1 Project Scope ....................................................................................................... 11
3.2 Project Cost Estimate........................................................................................... 11 Figures
3.3 Implementation Schedule.................................................................................... 11 Figure 1.1: Phased Railway Development Program in Central Kalimantan ............................... 2
4 Economic and Financial Evaluations................................................................................... 12 Figure 2.1: World Coal Consumption by Country Grouping, 1980-2030 ................................... 4
4.1 Economic Evaluation............................................................................................ 12 Figure 2.2: Non-OECD Coal Consumption by Region, 1980, 2006, 2015 and 2030 ................... 4
4.2 Financial Evaluation ............................................................................................. 12 Figure 2.3: Estimation of Production, Export and Domestic Demand of Coal in Indonesia ...... 5
5 Railway Alignment and Train Operations ........................................................................... 13 Figure 2.4: Coal Concessions and Resources in Central Kalimantan ......................................... 8
5.1 Selection of Location for Coal Loading or Unloading ........................................... 13 Figure 2.5: Coal Mining Concessions and Proposed Railway in Central Kalimantan ............... 10
5.2 Provisional Train Operations Plan ........................................................................ 14 Figure 5.1: Rail Alignment ....................................................................................................... 13
6 Outline of Key Laws and Regulations Applicable to the Project ......................................... 15
6.1 Railway Sector Law .............................................................................................. 15 Appendices
6.2 PPP Cross Sector Regulatory Framework............................................................. 15
Appendix 1: Risk Allocation ........................................................................................................ i
6.3 Relevant Ministerial Regulations ......................................................................... 15
Appendix 2: Implementation Schedule ..................................................................................... ii
6.4 Environmental and Social Resettlement Laws and Regulations .......................... 15
6.5 Other Laws ........................................................................................................... 15
7 Environmental and Land .................................................................................................... 16
7.1 Environmental and Social Characteristic of the Area........................................... 16
7.2 Land Acquisition and Resettlement Characteristics of the Area.......................... 16
7.3 Outline of Environmental and Land Issues Connected with the Coal Rail Project
16
7.4 Environmental Requirements .............................................................................. 17
7.5 Land Acquisition-Resettlement Requirements .................................................... 17
Executive Summary: Central Kalimantan Coal Railway
Puruk Cahu - Bangkuang

Central Kalimantan is a major source of high grade coal that is in demand much acquisition of buildings or resettlement. The project will require an Deleted: This Information Memorandum is on
nationally and internationally. The Government has already issued permits AMDAL (Environmental Impact Assessment) which will be prepared by the the proposed coal railway between Puruk Cahu
- Bangkuang in the Barito river valley in Central
for the extraction of coal in large areas of the Barito River valley and actual project concessionaire. Kalimantan. ¶
extraction is now starting. However, there are significant constraints to the Deleted: developer. Most of the land is state-
transportation of coal to the seaports on the Kalimantan coast caused by This Information Memorandum presents the currently available information owned (Ministry of Forestry). The Central
distance, remoteness of the area, and the lack of reliable transportation. to potential investors. A proposed project implementation schedule indicates Kalimantan Provincial Government now has
responsibility for management of the land.
Transportation by road is only feasible for comparatively short distances, a timeline for implementation.
Deleted: A Public Consultation meeting for this
and the Barito River suffers from seasonal variations which make project was conducted on 23rd May 2009 and
transportation during the dry season unreliable except in the lower reaches there was general support for the Project.
of the river. Deleted: , in Appendix 2,

The construction of a coal railway will ensure a cost effective, reliable, and
all season transportation of coal in this region. The construction of the
railway is an integral part of the Central Kalimantan Province railway
development program. The proposed project has already received the
approval of the Provincial assembly. A Public Consultation meeting for this
project was conducted on 23rd May 2009 and there was general support for
the Project. The Provincial Government will be responsible for land Deleted:
acquisition and cost. The railway line is 185 km long and will include the Deleted: e
provision of land, railway infrastructure, signalling, telecommunications and
electricity system, rolling stock, stations, depot, workshops, loading on/off
track facilities, stock piles, and an O&M system.

The project is prima facie technically, economically and financially feasible.

The project cost estimate is about US$ 1.5 billion. The forecast project ROE
is 13.8%.

The route passes through commercial forests which are now being
exploited. The project is likely to have impacts on the remaining adjacent
forests, particularly during the construction phase. Most of the land is state-
owned (Ministry of Forestry). The Central Kalimantan Provincial Government
now has responsibility for management of the land. There is unlikely to be
1. Introduction

1 Introduct ion

The areas to be mined are mainly in the upper and northern parts of the
1.1 Background Barito river valley where barging is even more difficult.
Coal has always played an important role in the development of the overall
1.3 Long Term Plan
economy in Indonesia. The Country has extensive deposits, possibly
sufficient for more than 150 years based on recent calculations. Coal is seen As a result of the present transportation constraints tthe Central Kalimantan
as an alternative to the dwindling domestic oil resources. Indonesia Provincial Government is considering the development of a railway network;
increased coal production in the early 1990’s and now has the seventh
To secure a reliable all season mode of transport for the exploitation
largest annual coal production world-wide
wide (approx
(approximately 200 million tons of various resources such as coal, plantations and forests, to
per year). Indonesia is now also the second largest coal exporting country overcome the very limited capacity of the road network and
(150 million tons per year) after Australia. About
bout 70% of Indonesian coal is constraints in river transport;
exported to Asian countries, of which Japan is the largest importer
To provide a high volume, more reliable and safer mode of transport.
(approximately 30 million tons). It is also environmentally less damaging compared to other transport
modes;
Kalimantan has some of the most extensive coal resources and the coal
Too ensure a more cost effective transportation system.
extracted is known for its high calorific,
c, low ash and low sulphur content. The development of a railway network for Central Kalimantan consists of the
Coal
oal resources in the Central Kalimantan are currently estimated to be about following phases: (See Figures 1.1)
4.8 billion tons.
Phase 1A : Puruk Cahu-Bangkuang
Bangkuang (185km)
1.2 Transportation Constraints Phase 1B : Bangkuang- Lupak Dalam (175km)
Phase 2 : Kudangan-Kumai
Kumai (195km)
At present most
ost of the coal mined in Central Kalimantan is transported by
Phase 3 : Puruk Cahu-Kuala
Kuala Kurun
Kurun-Kuala Pembuang (466km)
private roads to the Barito River and then barged to intermediate and final
Phase 4A : Tumbang Samba-Nanga
Nangabulik (418km)
stockpiles downstream on the same river.. Below Bangkuang
Bangkuang, the river
Phase 4B : Kuala Kurun-Lupak
Lupak Dalam (390km)
remains navigable by large barges throughout the year that transport coal to
the port of Lupak Dalam in the Java Sea. There are significant problems
associated with transporting coal on the Barito River due to the low water Phase 1,, which is the subject of this Information Memorandum
Memorandum, will be a
levels during the dry season, making the river impassable even for smaller railway from Puruk Cahu to Bangkuang on the Barito River. At that point,
barges. The problems are obviously more acute in the upper reaches of the river transport will be utilized from Bangkuang to Lupak Dalam offshore
river and during longer dry seasons. terminal.

The river constraints have the effect of limiting present coal production in The proposed project is in the Regional Medium Term Development Plan
Central Kalimantan to about 1.5 million tons per year. Other factors are the (RPJMD) 2006-2010
2010 and Spatial Plans (RTRW) Central Kalimantan
unreliability of road transport and higher costs. Without these constraints the Province
rovince 2007. In addition, the project has been approved by the regional
coal production could increase in the project area to 20 million tons per year. parliament (DPRD) (letter No. 162/1866/DPRD/2008).

1
1. Introduction

Figure 1.1:: Phased Railway Development Program in Central The province has many rivers flowing through the area. From the northern
Kalimantan area there are with 11 major rivers and over 30 small rivers flowing to the
Java Sea. Table 1.1 below shows the condition of the 11 wide widest rivers. The
rivers in Central Kalimantan function as important transport links to connect
regencies, districts and villages, and also the northern part and southern
parts of Kalimantan. The Barito is clearly the most significant of these rivers.
Table 1.1:: Condition of Main Rivers in Central Kalimantan
Length of River (km)
Potential Depth
No. Name of River Navigable Width (m)
Navigable (m)
Length (km)
Length (km)
1. Sungai Jelai 200 150 150 8
2. Sungai Arut 250 190 100 4
Sungai
3. 300 250 150 6
Lamandau
4. Sungai Kumai 175 100 250 6
5. Sungai Seruyan 350 300 250 5
6. Sungai Mentaya 400 270 350 6
7. Sungai Katingan 650 520 250 6
Sungai
8. 200 150 100 5
Sebangau
9. Sungai Kahayan 600 500 450 7
10. Sungai Kapuas 600 420 450 6
11. Sungai Barito 900 700 500 8
Source: Central Kalimantan Provincial Government

The Gross Regional Domestic Product (GRDP) of Central Kalimantan was

Source: Central Kalimantan Provincial Government
Rp. 32.35 trillion in 2008 at current market price. This is the lowest in the
1.4 Central Kalimantan Overview whole of Kalimantan and is only 13% % of the GRDP of Eastern Kalimantan.
The Central Kalimantan’s economic growth rate was 6.2% in 2008 at
The southern part of Central Kalimantan comprises coastal and swamp constant 2000 prices, which is higher than the growth rate for the whole of
areas with an altitude of 0-50
50 m above sea level, the middle part comprises Indonesia. The agriculture sector accounts for 30.4% of total GRDP in 2008,
flat land and plateau with an altitude of 50-150
150 m above sea level, and the followed by the trade, hotel and restaurant sector (1
(19.7%) and the services
northern part is hilly and mountainous, with an altitude of more than 150 m sector (12.4%).
above sea level. There are no volcanic mountains.
The total length of public roads
ds in Central Kalimantan was 12,134 km in
2007, consisting of 1,715 km of national roads, 1,708 km of provincial roads

2
1. Introduction

and 8,711 km of Regency/City roads. Although the road length in Central

Kalimantan is the second
econd longest in Kalimantan, the road network density
(roads per 1,000 km2 area) is onlyy 79 km, which is very low compared to
200 km, the average for the whole of Indonesia. It is estimated that about
56% of the total road length in Central Kalimantan is unsurfaced, and about
40% of the road length is in poor condition. Even on national roads, the
average width is only 4.5 m and the maximum load capacity is limited to 8
tons.
Central Kalimantan has 10 seaports consisting of 6 national ports and 4
regional ports. In addition, there are also two special quays for loading CPO
(Crude Palm Oil) and two special ports for coal transportation.
The 2007 population of Central Kalimantan is 2,048,000, and this is forecast
to increase by about 60% to 3,414,000 by 2025. 5. The province shows the
highest population growth of the four provinces within Kalimantan. Such a
high growth of future population is an important factor for developing
regional economic activities.
Central Kalimantan is now seeking to attract investment not only from
foreign but also local investors in such sectors as forestry, food crops, estate
crops, livestock, fishery, mining, trade, industry, tourism, etc. In order to
support such investment opportunities, the development of infrastructure is
indispensable, with the transportation sector is given the highest priority.

3
2. Demand for Coal and likely Supply
upply from the Project Area

2 Demand for Coal and Likely Supply from the Project Area

2.1 Global Demand for Coal Figure 2.2: Non-OECD

OECD Coal Consumption by Region, 1980, 2006
2006, 2015
and 2030
2.1.1 World Coal Consumption
According to the International Energy Outlook 2009, world coal consumption
is expected to increase by 49% from 2006 to 2030, and coal’s share of world
energy consumption will increase from 27% in 2006 to 28%28 in 2030. The
world coal consumption will increase by 49%,, from 127.5 quadrillion Btu in
2006 to 190.2 quadrillion Btu in 2030 (Figure 2.1).
).
The growth rate for coal consumption is fairly even over the period,
averaging 1.9% per year from 2006 to 2015 and d 1.6%
1.6 per year from 2015 to
2030—generally
generally reflecting the growth trends for both world GDP and world
primary energy consumption. Regionally, increased use of coal in non- non
OECD countries accounts for 94% of the total growth in world coal
consumption over the entire period.
Figure 2.1:: World Coal Consumption by Country Grouping, 1980-2030
1980

2.1.2 Non-OECD Countries

Led by strong economic growth and rising energy demand in non non-OECD
Asia, total coal consumption in the nonnon-OECD countries is projected to
increase to 139.6 quadrillion Btu in 2030, an increase of 73 percent over the
2006 total (Figure 2.2). ). The increase of 59.0 quadrillion Btu, which
represents 94 percent of the projected increase in total world coal
consumption, underscores the continuing importance of coal in meeting
overall energy demand in the non-OECD
OECD nations. Over the entire reference
refer
case horizon, coal accounts for about one
one-third of total non-OECD energy
consumption.

2.1.3 Non-OECD Asia Deleted: Growth in Dema

Demand for Coal

The countries of non-OECD

OECD Asia account for 90
90% of the projected increase
in world coal consumption from 2006 to 2030. Strong economic growth is
expected for non-OECD
OECD Asia, averaging 5.7
5.7% pa from 2006 to 2030, with

4
2. Demand for Coal and likely Supply
upply from the Project Area

China’s economy averaging 6.4% per year and India’s by 5.6% 5.6 per year. 2.2.2 Future Domestic Coal demand
Much of the increase in demand for energy in nonnon-OECD Asia, particularly in
the electric power and d industrial sectors, is expected to be met by coal. Figure 2.3:: Estimation of Production, Export and Domestic Demand of
Because China has limited reserves of oil and natural gas, coal remains the Coal in Indonesia
leading source of energy in its industrial sector. In India, more than 71
71% of
450
the growth in coal consumption is expected to be in the electric power sector 400 405
and most of the remainder in the industrial sector. Coal use for electricity 350 361
generation in India is projected to grow by 1.9% per year, to 9.3 quadrillion 300
321

Million Tons
Domestic
Btu in 2030, as an additional 65 gigawatts of coal-fired
coal capacity (net of 250
229 230
250
Export
217 220
retirements) is brought on line. 200 193 184 186 201 191
170
185 Production
150 154 163 160
131 145
OECD Asia, coal consumption is expected to
In the other nations of non-OECD 100 95
113
84
120
69 66
grow by an average of 3.0% per year, from 5.1 quadrillion Btu in 2006 to 50
36 41 48 54

10.4 quadrillion Btu in 2030, with increases in both the electric power and 0
2004 2005 2006 2007 2008 2009 2010 2015 2020 2025
industrial sectors. In the electric power sector, significant growth in coal
Year
consumption is expected in Indonesia and Vietnam, where considerable
amounts of new coal-fired
fired generating capacity are expected to come on line
Source: Ministry of Energy and Mineral Resources
before 2030.
As the demand for coal has steadily increased in the industries shown in
2.2 Domestic Coal Consumption and Supply Figure 2.3,, it is expected that the demand keeps increasing in each industry
in Indonesia. The domestic demand for coal has steadily increased in the
2.2.1 Estimate of Coal Production in Indonesia
Indonesi industries as shown in Table 2.1

Coal
oal production in Indonesia reached 212.5 million tons (MT) in 2007, up Table 2.1:: Current Coal Demand by Industries in Indonesia
8.4% from 2005. The major part of this coal output was produced by 29 (Units: Million Tons)
Coal CV>5100 Kcal/kg Coal CV<5100 Kcal/kg
companies which are PKP2B (mainly owned by Foreign
Foreig Private Companies) Metalurgy, Briquite,
Year Total
contractors while PT. Bukit Asam (PT. BA) (State Owned Enterprises) Electricity Cement Textile, Others
Sub
Total
Electricity UBC Fertilizer,
Sub
Total
Pulp BCL, Licol
produced about 9.3 MT and companies with mining rights produced around
2006 27.1 5.3 1.9 13.0 47.3 0.7 0.0 0.0 0.7 48.0
0.22 MT. So far, all the coal produced by PT. Bukit
B Asam has been sold 28.9 6.5 7.2 7.5 50.1 3.5 0.4 0.1 3.9 54.0
2007
within Indonesia as the fuel for the Suryalaya Thermal Power Plant.
Plant 2008 30.0 6.8 9.4 16.5 62.7 5.5 0.4 0.1 5.9 68.6
2009 32.0 8.1 10.9 6.6 57.6 9.6 0.4 0.1 10.0 67.6
2010 32.0 9.0 11.1 6.6 58.7 15.2 1.0 0.1 16.3 75.0
2011 30.0 9.9 27.0 66.9 21.0 1.2 4.1 26.2 93.1
2012 28.0 10.4 28.4 66.8 21.0 1.3 5.8 28.1 94.9
2013 28.0 10.9 29.2 68.2 21.0 1.4 5.9 28.2 96.4
2014 28.0 11.5 31.4 70.9 30.0 1.8 7.3 39.1 110.0
Source: Ministry of Energy and Mineral Resources

5
2. Demand for Coal and likely Supply
upply from the Project Area

As seen in Table 2.1, the demand in the electricity industry is expected to Indicated:: Coal for which estimates of the rank, quality, and quantity has been computed partly Formatted: Font: 8 pt, (Asian) Japanese,
from sample analyses and measurements and partly from reasonable geologic projections.
double in 2010 - 2014 compared with the demand in 200 2007. It is urgent to (Other) English (U.S.)
improve production capacity at coal mining sites and also to improve the Measured: Coal for which estimates of the rank, quality, and quantity has been computed, within Formatted: Font: 8 pt
supply and transportation of coal to domestic coal users. a margin of error of less than 20 percent, from sample analyses and measurements from
closely spaced and geologically well-known
known sample sites. Formatted: Font: 8 pt, (Asian) Japanese,
Between 2015 and 2020,, it expected that the quantity of coal exported Resources: Concentrations of coal in such forms that economic extraction is currently or may
(Other) English (U.S.)
abroad and domestic demand in Indonesia will be balanced
balanced. After 2020 it is become feasible. Formatted: Font: 8 pt
expected that the growth in domestic consumption will be larger than that of
Reserves comprise the sum of Indicated and Measured Resources Formatted: Font: 8 pt, (Asian) Japanese,
coal exports. Furthermore, the demand for electricity,
electric which consumes 80% (Other) English (U.S.)
of domestic coal output is growing at a high rate.. It is expected therefore that 2.3 Coal Resources, Reserves and Production in Central
there will be no lack of demand for the coal to be mined in the north-eastern Formatted: Font: 8 pt
parts of Central Kalimantan province. Kalimantan Formatted: Font: 8 pt, (Asian) Japanese,
(Other) English (U.S.)
The coal resources and reserves in Central Kalimantan were announced by
2.2.3 Supply of Coal in Indonesia the Provincial Office of Mining and Energy of Central Kalimantan in June Formatted: Font: 8 pt

The coal resources and reserves in Indonesia (in 2007) are indicated in 2008, as indicated in Table 2.3.
Table 2.2. Table 2.3:: Coal Resources in Ce
Central Kalimantan Province
Table 2.2:: Indonesian Coal Resources/Reserves
Resources (Unit: Million Tons)
T

Quality kcal/kg Resources (million tonnes) Measured Indicated Inferred Total

% Formatted Table
Hypothetical Inferred Indicated Measured Total Resources 1,178 1,344 2,293 4,815 Deleted: (Resources)
Low <5100 1,685 8,711 2,382 2,317 15,094 25 Reserves 1,178 1,344 - 2,512
Medium 5100-6100 1,924 19,653 9,176 4,939 35,692 59 Source： Provincial Office of Mining and Energy in Central Kalimantan excluding hypothetical resources
Deleted: 2,512
High 6100-7100 71 4,998 670 3,326 9,066 15 Formatted: Centered, Space After: 0 pt, Tab
Very High >7100 0 464 11 187 662 1 Total measured and indicated
ndicated resources (reserves) in Central Kalimantan stops: 3", Centered + 6", Right
Total 3,680 33,826 12,239 10,769 60,514 100 Province amount to some 2,500 MT of coal. Deleted: (Reserves)
Source: Indonesia Coal Brief 2007
Formatted: Normal, Tab stops: 3", Centered
2.3.1 Coal Reserves by Mining Concessionaires (PKP2B) + 6", Right
Indonesia is one of the big coal exporters (with Australia and Colombia).
Total measured reserves are more than 10,000 MT of coal, of which more The Indonesian coal industry consists of four types of producer, namely:
than 80% is of medium to high calorific value. State Owned Mining Company (PT Bukit Asam /PTBA), Mining Contractors
(PKP2B). Mining Authorization Holder
Holders (KP holder), and Cooperative Units
Notes on Classification System: (KUD). However in Central Kalimantan most coal development and Formatted: Font: 8 pt
Hypothetical: Undiscovered Coal Resources in beds that may reasonably be expected to exist production is confined to the Mining Conc
Concessionaire (PKP2B) group. Formatted: Font: 8 pt, (Asian) Japanese,
in known mining districts under known geologic conditions. In general, Hypothetical Resources (Other) English (U.S.)
are in broad areas of coal fields where points of observation are absent and evidence
evidenc is from In Central Kalimantan at present the KP holders are inactive but they may
distant outcrops, drill holes, or wells. Exploration that confirms their existence and reveals become important suppliers of coal, because of their large concessions.
quantity and quality will permit their reclassification as a Reserve or Identified Sub-economic
Sub Formatted: Font: 8 pt
Resource. Fifteen Mining Concessionaires are active (see Table 2.4) Formatted: Font: 8 pt, (Asian) Japanese,
Inferred: Coal in unexplored extensions of Demonstrated
monstrated Resources for which estimates of the (Other) English (U.S.)
Coal resources are extensive and of high calorific value. Coal reserves total
quality and size are based on geologic evidence and projection. Formatted: Font: 8 pt

6
2. Demand for Coal and likely Supply
upply from the Project Area

some 1.42 BT.

T. Many PKP2B mines have calorific values of over 7,000 ADB. Table 2.4: Coal Reserves by Mining Concessionaires (PKP2B)
(Unit:
t: Billion Tons
Tons)
For example, during the period 2004-2008
2008 PT Marunda Graha Mineral
[MGM] mined about 5 MT of coal. In 2008 they mined 1.5 MT o
of coal and all Quality
production was exported. Coal Reserves/
No. Company Measured/ Indicated Activity Condition
2.3.2 Location of Resources and Concessions PKP2B 1 PT Marunda Graha 0.12 Cal : 7.239 – 7.627 adb’
Mineral 0.10 Ts : 0,45 – 1,05 %: CSN : 3 – 5,5
Production
The location of the resources and concessions of the Mining 0.01 Ca,l: 5.015 – 7.614 adb.
PT Asmin Bara
Concessionaires (PKP2B) are shown in Figure 2.4
4. 2 Bronang 0.02 Construction Ts : 0,22 – 3,43
3 0.01 Cal : 6.038 adb;
At present the 15 coal mining companies listed in Table 2.4
2. have 527,444 ha
PT Asmin Bara Jaan 0.02 Construction Ts : 0,63 %
of Concessions. 4 0.06 Cal : 6.114 – 8.556 adb;
PT. Asmin Koalindo
Tuhup 0.03 Construction Ts : 0,79 % ; CSN : 0,5 – 9,0
0.22 Cal : 5.104 – 6.466 adb;
PT Batubara Duaribu
5 Abadi 0.17 Construction Ts : 0,19 – 2,74 %
6 0.08 Cal : 6.788 – 7.855 adb;
Feasibility Study +
PT Bharinto Ekatama 0.10 Construction Ts : 0,3 – 2 %
7 na Cal : 7.515 – 8.239 adb ;
PT Juloi Coal 0.00 Exploration Ts : 0,63 % ;
8 na Cal : 7.736 – 8.507 adb,
PT Kalteng Coal 0.00 Exploration Ts :0,62,
9 0.01 Cal : 7.223 – 7.731 adb
PT Lahai Coal 0.00 Exploration-Construction Ts : 1,24 %
10 0.00 Cal : 8.000 adb,
PT Maruwai Coal 0.13 Feasibility Study Ts : 0,52 %
11 0.07 Cal : 6.507 – 8.422 adb’
PT Multi Ts : 0,4 – 2,4 %
Tambangjaya Utama 0.02 Production
12 PT Pari Coal na Exploration na
13 PT Ratah Coal na Exploration na
14 na Cal : 8.350 – 8.383 adb ;
PT Sumber Barito
Coal 0.00 Exploration Ts : 0,88 % ;
0.03 Cal : 5.853 – 8.157 adb;
PT Suprabari
15 Mapanindo Mineral 0.23 Construction Ts : 0.93 %
Total 1.42 －
Notes: [Coal Reserves): upper box provides Indicated key Reserves, lower box indicates
Measured Reserves
Notes: Cal: Calorific Value, Ts: Total Sulfur, CSN: Crushable Swelling No.

Source: Central Kalimantan Provincial Government

7
2. Demand for Coal and likely Supply
upply from the Project Area

Figure 2.4: Coal Concessions and Resources in Central Kalimantan

Coal Mining Company (PKP2B)
① PT Marunda Graha Mineral
② PT Asmin Bara Bronang
③ PT Asmin Bara Jaan
④ PT Asmin Koalindo Tuhup

⑤ PT Batubara Duaribu Abadi

⑥ PT Bharinto Ekatama
⑦ PT Juloi Coal
⑧ PT Kalteng Coal
⑨ PT Lahai Coal

⑩ PT Maruwai Coal
⑪ PT Multi Tambang Jaya Utama
⑫ PT Pari Coal
⑬ PT Ratah Coal
⑭ PT Sumber Barito Coal
⑮ PT Suprabari Mapanindo Mineral

Legend
Deleted: <sp><sp>

Coal Concession Scheduled Route of Railway

Deleted: <sp><sp><sp>
<sp>
Road Scheduled Stockpile Formatted: Font: (Default) Arial, 11 pt

River
Source: Provincial Office of Mining and Energy Bureau in Central Kalimantan

8
2. Demand for Coal and likely Supply
upply from the Project Area

2.3.3 Coal Production by Mining Authorization Holders (KP Although the target production is high, actual implementation will depend
Holders) and PKP2B upon a) the mining contractor’s capabilities (at present the existing coal
production is only some 1.5 MT p.a.)
p.a. and b) the areas of utilization which
The list of mining companies of all types which have ccoal resources and would need approvals from the Ministry of Forestry.
reserves in Central Kalimantan located in the eastern area near the River
The latest coal mining concessions (under the production and construction
Barito are indicated in Table 2.5.
stages) as well as the railway alignment plan is shown in Figure 2.5.
Table 2.5: List of Mining Companies and Plans
Plan for Coal Production
No. Name of Company Type of Average Target Port Plan / District
Concession Production Location
Contract [ton / year]

1 PT Borneo Prima KP 600,000 Laung Tuhup Sub-District Murung Raya

2 PT Bara International KP 850,000 Laung Tuhup Sub-District Murung Raya
3 PT Daya Bumindo KP 850,000 Laung Tuhup Sub-District Murung Raya
4 PT Marunda Graha Mineral PKP2B 2,000,000 Laung Tuhup Sub-District Murung Raya
5 PT Asmin Koalindo Tuhup PKP2B 5,000,000 Laung Tuhup Sub-District Murung Raya
6 PT Lahai Coal PKP2B 600,000 Laung Tuhup Sub-District Murung Raya
7 PT Maruwai Coal PKP2B 3,000,000 Laung Tuhup Sub-District Murung Raya
8 PT Victor Dua Tiga Mega KP 600,000 Lahai Sub-District Barito Utara
9 PT Duta Nurcahya KP 600,000 Lahai Sub-District Barito Utara
10 PT Trisula Kencana Sakti KP 600,000 Teweh Tengah Sub-District Barito Utara
11 PT Padang Anugrah KP 600,000 Teweh Tengah Sub-District Barito Utara
12 PT Batara Perkasa KP 600,000 Teweh Tengah Sub-District Barito Utara
13 PT Rizki Baratama Mandiri KP 600,000 Teweh Tengah Sub-District Barito Utara
14 PT Bharinto Ekatama PKP2B 5,000,000 Teweh Tengah Sub-District Barito Utara
15 PT Bara Prima Mandiri KP 600,000 Dusun Utara Sub-District Barito Selatan
16 PT Batubara Duaribu Abadi PKP2B 5,000,000 Karau Kuala Sub-District Barito Selatan
17 PT Multi Tambang Jaya Utama PKP2B 2,000,000 Karau Kuala Sub-District Barito Selatan
18 PT Batubara Duaribu Lestari KP 600,000 Karau Kuala Sub-District Barito Selatan
19 PT Bara Prima Mandiri KP 600,000 Dusun Utara Sub-District Barito Selatan
20 PT Batubara Bandung Pratama KP 600,000 Telang Baru Barito Timur
21 PT Bangun Nusantara Jaya Makmur KP 1,500,000 Telang Baru Barito Timur
22 PT Bara Meratus KP 500,000 Telang Baru Barito Timur
23 PT Kike KP 600,000 Telang Baru Barito Timur
24 PT Karya Gemilang Limpah Rejeki KP 300,000 Telang Baru Barito Timur

Total 33,800,000

Source: Provincial Office of Mining and Energy in Central Kalimantan, June 2009.

There are some 24 companies, of KP and PKP2B classification, with plans

for coal production in the influence area of the railway.
ailway.
The total production plans illustrate a potential transport requirement (by
railway and/or barge) of some 34 MT p.a. however not all of these plans are
likely to be realized.

9
2. Demand for Coal and likely Supply
upply from the Project Area

Figure 2.5: Coal Mining Concessions and Proposed Railway in Central

Kalimantan 2.3.4 Estimate of Coal to be Hauled on the Coal Freight Railway
Based on the above preliminary demand exercises, demand projections of a
fixed 10 million ton/year for the first 10 years and 20 million ton/year from the
tenth year onward have been assumed
assumed. These projections depend also on
the effective restriction of the construction of new private coal roads to the
Barito River and its tributaries and the use of the Barito River beyond
Bangkuang for transportation of coal. The construction of new roads
between mines and the proposed railway will of course be allowed.
Over a 30 year concession period, it is therefore expected that a minimum of
500 MT of coal would be mined in the nort
northern area and transported on the
railway. If exploration confirms larger deposits of coal then annual coal
transport of 20 MT could commence earlier than 2022.
The Project, based on somewhat conservative estimates of coal transport
demand, and the known problems with river transport on the Barito River,
results in rail transport becoming the most reliable mode of transport to
move coals speedily from the mines to river ports to the south having all year
round barge access.

Source: Provincial Office of Mining and Energy in Central Kalimantan, June 200
2009
10
3. The Project

3 The Project

3.1 Project Scope Table 3.1: Project Cost for Puruk Cahu – Bangkuang Coal Railway Deleted: ¶
(Financial)
The Project Scope is as follows: No
Total Cost
a) Land acquisition Cost USD 1,000
b) Construction of single track between Puruk Cahu – Bangkuang
Item
(185km) including civil, bridge, signaling & facilities works;
1 USD = Rp 10,000
c) Others station, workshop and depot, coal loading/unloading
facilities; 1 Civil Works 637,448
d) Procurement and maintenance of rolling stock; 2 Bridge Works 5,742
e) Consultant service; and 3 Railway Track 102,856
f) Operation & management. 4 Preparing Works 115,000
5 Station 875
3.2 Project Cost Estimate 6 Workshop and Depot 33,300
The financial cost estimate in Table 3.1 is derived from engineering cost 7 Signal & Telecom 10,100
8 Loading/Unloading Facility 90,000
estimates. Hence, in the absence of a basic c engineering design, it is
7 Maintenance Equipment 1,000
somewhat difficult to validate some figures, but ut they have been rrefined Deleted: erify
based on field visit and on-site inspection. Capital
tal cost ((capex) is about US$ Sub-Total 1 996,321 Deleted: the estimated
1.5 billion. Deleted: . Some
ome (downward) adjustments to
8 Consultant Fee 49,766 some of the cost elements have been made
3.3 Implementation Schedule 9 VAT 104,609 based upon information received during the
Consultant
A proposed implementation schedule is shown in Appendix 2. 10 Project Management Fee 99,532
Deleted: s
11 Land Cost 10,606
12 Contingency 13,226 Deleted: to Central Kalimantan
Sub-Total 2 277,739 Formatted: Heading 2, Left
Railway Infrastructure Formatted: Font: (Default) Arial, 10 pt
Grand Total A 1,274,060
(excl. Rolling Stock)
13 Main Locomotive 78,000
14 Shunting Locomotive 6,000
15 Coal Wagon 144,900
Sub-Total 3 228,900
Rolling Stock Grand Total B 228,900
Railway Infrastructure Grand Total C 1,502,960
(incl. Rolling Stock)
Source: TAS-IRSDP/JTC Study 2009

11
4. Economic and Financial
4. 4.0

4 Econ o mic and Financial Evaluat ions

4.2.2 Financial Results

4.1 Economic Evaluation

Return on Equity (IRR on Eq Equity) = 13.8%, nearly 6 percentage
The most important benefits from the transport improvement could include points above the cost of capital at 8%.
any or all of the following:
Financial
cial Net Present Value = US$ 125 million

Debt Service Coverage Ratio as shown in Table 4.2
th
• Reduced operating expenses,
Project Cost recovery
ecovery is estimated to occur in 2028 (19 year of
• Stimulation of economic development; concession period)
• Savings in time for freight shipments; and
• Fewer accidents and reduced property damage.
Table 4.2:: Debt Service Coverage Ratio (tariff of $22 per ton)
In the calculation of EIRR, only direct benefits s were considered excluding
indirect and intangible
gible benefits, the results are shown in (Table 4.1). Benefits Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
and costs were calculated based on constant 2008 priceprices. DSCR 1.17 1.16 1.15 1.14 1.13 1.11 1.10 1.09 1.07 1.05 1.98 1.96
Table 4.1:: Base Case: Results of Economic Analysis Source: TAS IRSDP

EIRR 27.9% Formatted: Heading 3, Left, Space Before: 0

4.2.3 Risk Allocation
pt, After: 0 pt
NPV (million US$ ) 2,909
An assessment of project risks is shown in Appendix 1. Formatted: Left, Space Before: 0 pt, After:
Source: TAS IRSDP 10 pt
Formatted: Font: Not Italic
The sensitivity analysis confirmed that the project is economically viaviable.
The EIRR is well above a cut-off rate of 10%,
%, and NPV is still substantial.

4.2 Financial Evaluation

4.2.1 Assumptions

The investment cost is projected to be about US $1.5 billion.

Financial modeling is in US$ terms

US$ denominated debt is charged at 8% interest rate with a 12-year
12
loan repayment assumed.

Minimum target Return on Equity
quity is assumed at 12%

Tariff is assumed US$ 22 per ton of coal transported.

12
5 Railway Alignment and Train Operations

5 Rai lway Al ign ment and Trai n Operat ions

5.1 Selection of Location for Coal Loading or Unloading

U Figure 5.1:: Rail Alignment

Considering several requirements for the location of coal loading or

unloading, such as the required space for on and off loading, access from
mines or to the existing barge ge ports, consistency with the railway
development program for Central Kalimantan Province, and to construct a
special place for unloading from where it would be possible to carry out the
stable transport of coal throughout the year to large ships offshore, a
location near Puruk Cahu was selected as a loading terminal and
Bangkuang was selected as an unloading terminal.

The rail alignment connecting these two locations is shown in the figure 5.1
has been selected as the most suitable route, however this is only for
reference purposes.

Source: JTC Study

13
5 Railway Alignment and Train Operations

5.2 Provisional Train Operations Plan

The required numbers of trains per day, the train formation, the rolling stock, Table 5.2:: Train Formation and Rolling Stock
etc. to transport the programmed coal volume (10 million ton/year in Case A Case A Case B
and 20 million ton/year in Case B) have been estimated, as shown in the (1) Transport volume (ton/day) 33,300 66,600
table below, based upon various conditions (2) No. of train to be operated
5 10
per day
Table 5.1: Estimated Numbers of Trains per Day (3) Headway (min.) 288 144
Case (4) Operating time without
1.Condition 290 290
stopping (min.)
A B
(5) Dwelling time (min.) 288 (Max) 144 (Max)
1. Transport Volume
a 10,000,000 20,000,000 (6) Total stopping time at
(Ton/Year) 10 10
2. Transport Volume intermediate station
b = a/300 33,300 66,600 (7) One cycle operation time
(Ton/Day) 588 444
3. Required No. of (min.)
c = b/70 476 952 (1) No. of train formation for 4 (588 x 6 (444 x
Wagon
4. Required No. of Train operation 2/288) 2/144)
d = c/100 5 10 2.Train (2) No. of reserved train
per Day 2 2
Formation formation
5. Headway (min.) e = 1440/d 288 144
(3) Total of required train
Source : JTC Study 6 8
formation
(1) Required number for
The crude train diagram has been arranged, based upon the travel time 12 (6x2) 16(8x2)
operation
between stations with 300 min. (5 hours) for both cases, whereby the 3.Locomotive (2) Reserved one for
2 3
average operating speed is 37.2 km/h. Itt is necessary to allocate for Hauling maintenance (15%) Deleted:
intermediate stations for train passing. (3) Total number of required
14 19 Deleted: ¶
locomotive According to this train diagram, i
(1) Required number for
600 800 Deleted: with three stations in Case A, and
operation
(2) Reserved one for with five stations in Case B (e.g. the addition of
4. Wagon 90 120 two intermediate stations to Case A).
maintenance
(3) Total number of required
690 920
wagon
(1) Required for shunting 2 2
5.Locomotive (2) Reserved for maintenance 1 1
for Shunting (3) Total number of required
3 3
shunting locomotive
Source : JTC Study

14
6. Outline of Key Laws and Regulations Applicable to the Project

6 Outl ine of Key Laws and Regulati ons Applicable t o the Project

6.1 Railway Sector Law As the proposed coal railway is essentially a private railway and is deemed
financially viable, the demand risk will not be covered by any government
Railway Law No.23/2007 promotes private provision of infrastructure and support.
related services in the railway sector. On the basis of the Law, the MOT
permits a local government to act as a contracting authority for PSP. 6.4 Environmental and Social Resettlement Laws and
Regulations
The Law superseded the previous law, which stipulated that PSP could only
be undertaken under a joint venture agreement with a state entity. The As the project
roject alignment is more than twenty
twenty-five (25) kilometres, the Project Deleted: Regulations on environmental
movement away from a joint venture modality is consistent with Presidential must comply with the EIA requirements (Regulation of Ministry of impacts assessment
ssessment (EIA),
(EIA) to include land
acquisition and resettlement, have recently
Regulation No.67/2005, as the e latter stresses the principle of transparency. Environment No.11/2006)
.11/2006) and an AMDAL must be prepared. been revised, and,
The
he separation of the contracting, regulatory and operating roles would Deleted: a
minimize conflict of interest. 6.5 Other Laws
Deleted: P
Law No. 17/2008 on Shipping, Law No. 25
25/2007 on Investment, and Law Deleted: that are described under the decrees
6.2 PPP Cross Sector Regulatory Framework
No. 41/1999
1999 on Forestry may also be relevant to the Project, and a local of the Central Kalimantan Provincial
Government.
Presidential Regulation (Perpres) No.67/2005
2005 provides the cross sector lawyer should be consulted.
regulatory framework for Private Sector Participation (PSP) in infrastructure Deleted:
and related facilities. Perpres No.67/2005 stipulates that the private sector Deleted: counsel
concessionaire must be selected through competitive and transparent
bidding and that tariffs have to be set for full cost recovery.
recovery Perpres
No.67/2005
67/2005 further states the principle that risks should be allocated to the
party that is best able to manage and control them. The Regulation
describes in detail the rules and procedures for the bidding process.

6.3 Relevant Ministerial Regulations

To ensure re that risks of individual PPP projects are appropriately allocated
between the public and private sectors, and that the Government’s overall
exposure is well managed, the Minister of Finance issued Regulation
No.38/2006. The dual objective of the new risk k mitigation and management
policy is to support infrastructure development while maintaining fiscal
sustainability of the Government budget. Regulation No.38/2006 describes
the types of risks the Government may consider sharing (those related to
political events, project performance
nce and demand).

15
7. Environmental and Land

7 Environ ment al and Land

7.1 Environmental and Social Characteristic of the Area activities but this can only be confirmed later in the pl
planning and design
process.
The area through which the proposed rail alignment passes is suffering from
environmental pressures and the southern and central areas are already Central Kalimantan Provincial Government has stated that they will be Deleted: e
degraded through the activities of commercial forest
forestry, opencast mining and responsible for all land and building acquisition activities and all costs
mining transportation routes. In the northern part of the alignment much of associated with acquisition and resettlement.
the forest remains untouched.
7.3 Outline of Environmental and Land Issues Connected with
The remaining areas of forest have extensive flora and fauna resources. No the Coal Rail Project
information is available at present as to the ststatus of any endangered
species. However the development of forestry and coal mining in the Throughout this part of Central Kalimantan there are very significant
southern and central areas has significantly impacted the local forest environmental issues connected with coal mining and commercial forestry.
biodiversity. Of particular concern is the extensive use made of purpose built coal roads
from the coal mining areas to the Barito River. Public roads are not used for
The main areas of human settlement lie adjacent to the river Barito. There the transportation of coal within the project area. The coal roads cause
are a number of sizeable settlements in this area, the largest being Buntok
Bu significant environmental problems. The road corridors are wide and the
with a population of approximately 20,000. Other urban settlements include
inclu construction and operation of these roads have caused: loss of forest cover
Muara Teweh h and Puruk Cahu which are ports on the Barito River. Other for long distances, significant dust creation particularly during the
permanent urban settlement is very smalll and there are reported to be no construction phase, blocking of local drainage channels and only limited
settlements along the rail alignment. Traditional activities by local replacement of cross and parallel drainage. The operation of ththe road also Deleted: No detailed information is available
communities in the forest areas (collection of fruits and nuts, hunting, fishing, on any Indigenous or traditional communities
causes considerable noise disturbance to the area. living within the forests.
slash and burn agriculture etc) may have already been abandoned in many
areas. The
he most significant environmental impacts will be related to the direct loss Deleted: Based on a recent review by the
of some forest and disturbance to adjacent forest areas. This disturbance Technical Advisory Services (TAS)

7.2 Land Acquisition and Resettlement Characteristics of the will be particularly acute during the construction phase when noise, vibration Deleted: t

Area and dust will occur. There will also be disturbance to any remaining
traditional forest communities.
It is reported by the Provincial Forestry agency that only production forests
for
are affected by the alignment. The Central Kalimantan Provincial Although the rail construction
uction and operation will cause environmental
Government now has responsibility for management of the land land. The impacts it is likely that these impacts will be less than impacts caused by the
Governor has also requested all Kabupaten along the alignment not to issue continued construction of coal roads. In addition the environmental benefits
any new development and transaction permits for land along the alignment. of rail for the transportation of coal will be greater if the construction of new
coal roads is restricted for all new coal mines. Coal roads will still be
Land acquisition has not yet been examined in detail but it has been necessary from the mine to the rail head, but coal roads to the Barito River
estimated that about 70% of the land is stated-owned
owned (Ministry of Forestry). will not be necessary. Restricting the development of coal roads to the river Deleted: in Government ownership
Resettlement of permanent housing is not likely to be significant. It is will have significantnt environmental benefits and can be achieved through Deleted: but there is no information on the
t
estimated that 16 million m² (1,600ha) of land is required for all of the rail ownership characteristics of the other 30%

16
7. Environmental and Land

controls and agreements with the Province and/or Kabupaten: the exact
means of doing this is still to be determined.

7.4 Environmental Requirements

In accordance with the regulation of the Ministry of Environment
En No. 11 year
2006 for all railway developments of over 25 km an AMDAL (Environmental
Impact Assessment) is required and should be prepared by consseionaire.
Certain preliminary activities are however required to be undertaken prior to
selection of the concessionaire in order to assist in defining the main impacts
and their characteristics. These preliminary activities include preparation of
an initial environmental examination (IEE) and preparation of Draft Scoping
and Draft Terms of Reference (TOR) for the AMDAL. Deleted: This will not be a formal Kerangka
Acuan (KA ANDAL) which will be prepared later
by the concessionaire.

7.5 Land Acquisition-Resettlement

Resettlement Requirements
To ensure a transparent and equitable process a Resettlement Plan should
be prepared. The Resettlement Plan should include details of the area of
land required, estimate of the number of owners, estimate of the number of
houses and buildings required, compensation
pensation and resettlement policies,
estimate of total compensation costs, and any resettlement requirements.
Full community consultation will also be necessary. The Resettlement Plan
can only be completed later in the planning and design process when more
mo
detailed information is available on the alignment. Deleted: As stated above all land acquisition
costs and activities will be the responsibility of
Central Kalimantan Province.

17
Appendix 1: Risk Allocation

Appendix 1: Risk Allocation

Risk Risk Allocation

Item Description / Comments Shared Govern Private

ment

Land acquisition Risk of delay and cost. Central Kalimantan LG will acquire and pay for a
the land

Landsite unsuitability Risk is that ground conditions are unsuitable. a

Environmental Risk is that there are major adverse environmental impacts requiring a
major mitigation cost.

Construction & Risk

isk is that there will be delays and cost over-run. a
completion

Operational The risk is that the railway is not fully functioning. a

performance
(including
maintenance)

Inflation a

Foreign exchange Risk related to foreign exchange fluctuations a

Interest Rate Risk is that debt service cost will be higher because of interest rate rise. a

Demand Risk that demand is insufficient a

Political/Regulatory Risk that certain terms and conditions in the PPP agreement are not a
Risk fulfilled.

Force Majeure Risk of acts of God and certain man-made

man events occurring. a

i
 Appendix 2: Proposed Implementation Schedule

Appendix 2: Implementation Schedule

ID Task Name
2009 2010
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
1 A. Pre-FS Preparation
2 Survey & Analysis
3 Report & Recommendation
4 Corridor/Alignment Approval (from MOT)
5 Completion of the Study (Extended)
6 B. Pre-Market Sounding, Pre-Qualification, and Tender Document
7 Project Assessment
8 Preparation of Public Consultation Document
9 Public Consultation
10 Preparation and Finalization of Info Memo
11 Pre-Market Sounding
12 PQ Documentation
13 Issuance of Request for Expression of Interest (EOI)
14 RFQ Announcement and Distribution of PQ Document
15 Submission of PQ Proposal
16 Evaluation of PQ Proposals
17 Announcement of PQ Result
18 Bid Documentation (incl. Draft Concession Agreement)
19 Environmental Analysis (IEE, Draft Scoping, Draft TOR Amdal & Draft Resettlement Plan)
20 C. Bid Process
21 RFP Issuance
22 Extended Bid Conference
23 Due Diligence and Submission of Bids
24 Evaluation of Bids and Announcement of the Preferred Bidder
25 Announcement of Concessionaire
26 Signing of Concession Agreement
Contacts:

PPP Directorate
National Development Planning Agency / Bappenas
Jl. Taman Suropati 2
Jakarta 10310
Contact No. +62 21 31934175
Email: [email protected]

Regional Development Planning Agency / Bappeda

Provincial Government of Central Kalimantan
Jl. Diponegoro 60
Palangka Raya, Central Kalimantan
Contact No. +62 536 3221645
Email: [email protected]