Adhi Karya, a listed state construction firm, is set to build a $760 million light rail system in Jakarta slated to break ground at the end of this year, scrapping the company’s initial plan of a monorail system.
“We’ll continue to participate in solving the traffic congestion in the capital city of Jakarta,” Adhi Karya president director Kiswodarmawan said at a press conference in Jakarta on Friday.
“But we’ve decided to go with a light rail system and we’ve already pursued a study on that solution.”
The light rail system — which is estimated to begin operations by 2018 — will go from Cibubur, a neighborhood in the eastern region of Jakarta, to Grogol in West Jakarta through Cawang and Semanggi in South Jakarta, he added.
Adhi Karya was assigned to build a monorail system last year by the Ministry of State-Owned Enterprises, connecting the eastern suburbs of Jakarta from Bekasi to Kuningan.
However, the plan was later scrapped as President Joko Widodo announced he opted for the light rail system instead in hopes of integration with the mass rapid transit system.
The decision was also made against the backdrop of the prior monorail project in Jakarta, which has remained incomplete after over a decade of construction.
Kiswodarman added that the company had chosen the light rail because the transportation system can be easily integrated to the existing transportation system — such as the TransJakarta bus system — and is “flexible to maneuver in a highly developed city, such as Jakarta.”
The state-owned company plans to finance 30 percent of the project from the government’s capital infusion and the remaining 70 percent from bank loans, he said.
“We’re just waiting for the president’s orders for the disbursement,” the Adhi Karya president director said.
“Once that’s issued, our hope is to hold the rights issuance at the end of the first term.”
The national legislature had approved a capital injection of Rp 37.276 trillion ($2.8 billion) to state-owned enterprises in the 2015 state budget last month.
Among the SOEs, Adhi Karya is slated to receive up to Rp 1.4 trillion from the government through a rights issuance.
Aside from the light rail system, Adhi Karya aims to expand its real estate and property arm with the launch of three new hotels this year.
Profit at Adhi Karya is targeted to grow by 36 percent to Rp 440.1 billion this year up from Rp 324.1 billion last year, on the back of the company’s real estate andproperty division, which is expected to contribute more than 60 percent of profit for the year.
The state-owned contractor previously earmarked Rp 837.2 billion in capital spending this year — down 5 percent from last year — with 32 percent allocated to the development of its hotel business.