Jakarta. State railway operator Kereta Api Indonesia secured a Rp 19.25 trillion — around $1.35 billion — syndicated loan from local and foreign banks on Friday (29/12) to be used in the construction of the Greater Jakarta light rail transit network.

The loan gives much needed lifeline to the project, which has been beset by financing uncertainties since its inception in 2015.

KAI signed the loan agreement with 12 banks — Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA), CIMB Niaga and Sarana Multi Infrastruktur (SMI) act as joint mandated lead arrangers and bookrunners.

Other lenders in the syndication are Bank DKI, Bank of Tokyo-Mitsubishi UFJ, Hana Bank, Shinhan Bank Indonesia, Bank Sumut and Bank Mega.

"This [loan signing] represents very good progress. It is the first time a government project can involve a syndicated loan," Maritime Affairs Coordinating Minister Luhut Binsar Pandjaitan said at the signing ceremony on Friday.

The loan contract is for 18 years, comprising Rp 18.1 trillion in investment loans and Rp 1.15 trillion in working capital loans.

Luhut said he hoped the agreement can become a model for future infrastructure projects.

"In this way we do not have to burden the state budget unnecessarily," Luhut said.

"With this model, the loan can be refinanced in the next three to four years, hopefully with lower interest. That will allow us to maximize the LRT network," he said.

The Greater Jakarta LRT project, which connects Cawang in East Jakarta to the East Bekasi industrial area in West Java on a 44-kilometer long elevated track, has been thrown into confusion in the last year or so after the government pulled back its state budget support.

The government created a new financing scheme in November, appointing Kereta Api Indonesia (KAI) as a project concession holder — replacing the government — with help from state construction company Adhi Karya that has promised to fund a minor part of the project.

The government granted the LRT concession to KAI for 50 years and promised to subsidize it for the next 12 years, but the company still needs fresh financing to complete initial construction on the network.

KAI President Director Edi Sukmoro said the loan will give peace of mind to KAI and Adhi Karya, the project's contractor.

The latter has a standing construction bill of Rp Rp 4.3 trillion at the end of September that has yet to be paid.

"We hope with this loan the LRT project will proceed smoothly and meet its target of being operational by 2019," Edi said.