Jakarta: Adani group plans to invest in a USD 1.6 billion coal railway project in Indonesia's South Sumatra province, a government official said on Wednesday, providing funding for much-needed infrastructure.
While Indonesia has abundant natural resources, including coal, oil and gas, lack of investment in exploration and infrastructure has limited extraction and development.
The island of Sumatra, which includes South Sumatra province, has 11.5 billion tonnes of mineable coal reserves -- or 57 percent of the country's total mineable reserves of 20 billion tonnes, according to data from the energy and mines ministry.
But the province only produced 11.5 million tonnes of coal in 2009, because of poor transportation.
The new 270-kilometres (168 miles) railway will be an addition to another railway project which is being developed by state-owned miner PT Perusahaan Batubara Bukit Asam.
Alex Noordin, governor of South Sumatra, said the railway project will require total investment of USD 1.6 billion including a coal terminal.
"The coal terminal will have the capacity to handle 50 million tonnes of coal. Bukit Asam will supply around 34 million tonnes," Noordin said.
Diversified Adani Enterprises controls Indian power utility Adani Power.
Indonesia's Kalimantan, on Borneo Island, accounts for most of the remaining coal produced by Indonesia, the world's top thermal coal exporter, and is also seeking investments in coal railway projects.
