The project was previously estimated to be US$2 billion over budget, raising the total cost to 113 trillion Indonesian rupiah (US$7.36 billion), according to the consortium of Indonesian and Chinese state companies building the railway, known as PT KCIC.

“We agreed on the cost overrun figure of US$1.2 billion. There are several items that they are still reviewing regarding taxes, frequency clearing fees, but we have agreed on the numbers,” said deputy minister of state-owned enterprises, Kartika Wirjoatmodjo.

Further details including an additional loan from the China Development Bank to cover the extra costs are to be finalised within a month, he added.

Companies involved in the consortium were expected to increase their equity participation, while Indonesia’s state-owned railway firm PT KAI, which along with state-owned construction company Wijaya Karya controls 60% of KCIC, received a 3.2 trillion Indonesian rupiah capital injection from the government last month to help complete the project.

The 142km line, which will connect the capital Jakarta with one of the country’s largest cities, Bandung, was awarded to KCIC in 2015 but has faced several issues including construction delays due to the pandemic.

The project is expected to be completed in June 2023.