MEC invests USD 1 bn in Indonesia's first private rail line

Dubai/Kolkata, Dec 15 : MEC Infra Tuesday announced that it will invest USD 1 billion for construction of a 130 km railway line, which, the company claims, will be Indonesia's first private rail track.

The announcement came after a meeting with Indonesian President Susilo Bambang Yudhoyono and Crown Prince and Deputy Ruler of Ras Al Khaimah HH Sheikh Saud Bin Saqr Al Qasimi.

'The first-ever private railway in Indonesia is ready for construction,' said a MEC release on Tuesday.

MEC Coal and MEC Infra, joint ventures between the Ras Al Khaimah Investment Authority proposed the development of the 130 km railway to facilitate the transport raw materials and finished products in and out of the East Kutai regency in Indonesia's East Kalimantan Province.

'This project is fully supported by the Indonesian Investment Coordinating Board as well as the regional governments of East Kalimantan province and East Kutai regency,' said the company release.

'This undertaking will create multiple benefits to the development of the local economy in East Kalimantan. It sets a positive tone for future investments from the Middle East,' said President Yudhoyono.

HH Sheikh Saud said: 'This type of public-private, Middle Eastern-Indonesian initiative is a fantastic example of what can be accomplished when the fundamentals make sense for all parties involved. This project will help meet the development needs of East Kalimantan communities, while also serving to meet the energy challenges in Asia , particularly India and China.'

Meanawhile, Gita Irawan Wirjawan, Chairman, Indonesian Investment Coordination Board (BKPM), said MEC Infra was able to purchase and clear the land for the entire 130km corridor within a few months.

'MEC Infra will invest USD 1 billion in constructing the 130 kilometre railway corridor to link the mine site at Muara Wahau to Bengalon on the coast. Despite certain perceptions about Indonesia, MEC Infra was able to purchase and clear the land for the entire 130km corridor within a few months.'

'MEC's mine and railway are central to the development of a complex of integrated industrial facilities that will include a power plant fuelled by coal from MEC Coal, an aluminium smelter, a fertilizer plant and a high capacity port terminal with a total integrated investment valued at USD 5 billion.

'MEC has formulated strategic partnerships with industry leaders to realize the 'Mines to Market' vision. Together with MEC's Madhu Koneru we see the appointment of these industry leaders as a testament to Indonesia's burgeoning future. This investment serves as a huge vote of confidence from an investor base that Indonesia shares long term strategic interests with,' said Wirjawan.

MEC is partnering with global railway and transportation services leader, CANAC for railway and port operations and maintenance.

With equity partner NALCO, an Indian government entity and Asia's largest integrated aluminium complex, MEC and NALCO proposed to invest USD 2 billion in a Greenfield aluminium smelter producing 500,000 tons of aluminium per annum. A further USD 2 billion investment will build a 1,250 MW captive power plant and other auxiliary facilities for the smelter.

IL and FS Transportation Networks Limited, (ITNL) a subsidiary of India's Infrastructure Leasing and Financial Services ('IL and FS') Group provides MEC financing to build the transportation infrastructure, railway network and deep sea port.

'The land acquisition is almost complete and the project is on schedule. In the next five years MEC's investments alone will create 5,000 new jobs in East Kalimantan. More important, it will transform East Kalimantan into a model for the future of Indonesia by providing a strong platform for growth, helping Indonesia to attract further investments of USD 20 billion by 2030 and creating more than 100,000 jobs,' said Madhu Koneru, Group CEO of MEC Holdings.