The six provincial governments that signed the MoU are from South Sulawesi, Central Sulawesi, Southeast Sulawesi, North Sulawesi, West Sulawesi and Gorontalo.
Deputy Transportation Minister Bambang Susantono said that the output from the MoU would be the establishment of a task force and a grand master plan for railway development in Sulawesi.
"For now, the most important thing is that we are in possession of the grand design. From
there we can see the routes and determine the unit cost," Bambang said in a statement. He added that the Sulawesi railway network will be 2,000km in length and will cost approximately IDR 50tn (USD 5.2bn).
"This is a rough estimation," he said. "With a length of 2,000 kilometers [and] over flat terrain, it would cost IDR 20bn (USD 2M) per kilometer, but the cost will be doubled should the route include tunnels and cover uneven ground."
Construction of the mega project, which will lay down a railway spanning six provinces on Sulawesi, is expected to begin sometime in 2013. There is currently no railway network in Sulawesi.
Bambang said that construction will start in the most economically developed region, and that railways in those areas be built partially before being subsequently integrated in
the final phase.
"For instance we will build from Makassar to Pare-Pare [both located in South Sulawesi]. Why these two regions? Because these two developed the fastest. Then there will be [a line] from Gorontalo to Manado [North Sulawesi’s capital], depending on which region develops first." he said.
Bambang added that the project will be developed under a private-public partnership scheme.
"Currently there are several serious investors from China and Russia. But we cannot say yet which is the most serious."
Railway development is a big part of the government’s infrastructure push, also known as the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development, or MP3EI.
Based on the government’s national railway network master plan, Indonesia will need to invest at least IDR 605tn (USD 62.8bn) from now until 2030 for infrastructure development.
The MP3EI, which is estimated to cost IDR 4,000tn (USD 416bn), aims to increase development and economic growth across the country through various projects, including the development of infrastructure such as roads, railways, ports and airports.
