Institutional model development for implementation of track access charge in Indonesia

Abstract

Provision of transportation services and infrastructure provision is an essential key to economic growth and sustainable development. As one of the developing countries, Indonesia is currently trying to improve its competitiveness by increasing the quality and availability of train services and infrastructure. Train services play a crucial role in everyday life, offering speed, safety, and a large capacity to deliver people from one place to another. However, Indonesia is now dealing with Operation and Maintenance (OM) problems caused by the financing issue burdened by PT Kereta Api Indonesia (Persero) as the sole operator of railroad infrastructure and facilities. This issue can be addressed by implementing the Public-Private Partnership (PPP) scheme as a financing approach for the OM of railways. Therefore, this study analyzes the financing and institutional schemes from the PPP model by calculating the life cycle cost (LCC), consisting of development costs, OM costs, and revenues. An optimal IRR of 14.05% is obtained from all available financing, which shows that the project is financially viable. Based on the IRR, the private sector was found to have shared development costs of 42.78%, operations and maintenance of 66.67%, and revenues of 71.99%. Meanwhile, the rest is the government's responsibility.