Indonesia's Bukit Asam Asks China Banks for Railway Funding

JAKARTA, Mar. 29 -- Indonesian state-owned coal miner, PT Tambang Batubara Bukit Asam Tbk (PTBA.JK: Quote), has asked at least four Chinese banks to help finance a $1.3 billion coal railway project in Sumatra, an executive said at the weekend.

Bukit Asam Tbk (PTBA.JK: Quote) announced on Thursday it had signed contracts for a total of $4.8 billion for a new rail project to transport its coal to a port in Sumatra.

The deal consists of a $1.3 billion contract for the construction of a new rail line in Sumatra and an operation and maintenance contract worth $3.5 billion over 20 years, both with China Railway Engineering Corp (601390.SS: Quote) (0390.HK: Quote).

The Sumatra railway, due to be completed in four years, will significantly increase Bukit Asam's coal transport capacity.

Sukrisno, Bukit Asam's president director, said late on Saturday that at least four Chinese banks, including China Export-Import Bank, Bank of China (3988.HK: Quote), and Industrial and Commercial Bank of China (1398.HK: Quote) (601398.SS: Quote), have been invited to discuss possible financing of the project.

"All of them confirmed to support the financing of the project," said Sukrisno.

"However, it depends on the cost and we will compare it with the local banks, whether they are cheaper than the Chinese banks."

Sukrisno had previously said that Chinese banks would be approached to finance the project given that China Railway Engineering Corp will build and operate the railway.