German Landesbank backs Indonesian cable car

Stuttgart-based LBBW is set to provide up to €40m to local developer Aditya Dharmaputra Persada to build an aerial transportation system in the country’s third-largest city.

Aditya Dharmaputra Persada (ADP), an eco-focused property and infrastructure developer, has been granted a €10 million loan from German-based Landesbank Baden-Württemberg (LBBW) to build a cable car in the Indonesian city of Bandung.

The system, the first of its kind to be built in the capital of West Java, will link two of the city centre's highly populated and congested shopping areas. An extended €30 million loan is currently under negotiation to further support its development.

ADP has hopes that this project can set a trend throughout the country as authorities strive to tackle pollution and congestion issues, building on the successful completion of cable car systems in cities such as Rio de Janeiro or La Paz in Latin America.

“We are in talks with the mayor of Bogor, who is very interested, but we need to find the necessary funds. Because public financing needs to come from the city itself and not from the province or state coffers, which is tougher to come by, we need local government backing as well as the private sector,” Sandjaya Susilo, president director of ADP, told Infrastructure Investor.

“For the Bandung project, we have found that domestic banks were very risk-averse, and we have had to look for capital offshore. But we are convinced that once people see the project in operation, they will realise all the benefits of this mode of transportation.”

A tender process is expected to be initiated in Bogor in six to 12 months’ time, according to Susilo.

Once complete, the Bandung cable car system will have capacity to transport 4,800 people an hour between the two malls, which are less than a kilometre apart. It is expected to do so in four minutes, saving its users a 25-minute car ride and reducing traffic in the city centre. Construction is due to start mid-July.

Cable car systems have lower construction costs and shorter construction phases than rail links, according to Susilo.

“Whereas these modes of transportation are necessary to address congestion in the long run, I believe cable cars can be an efficient intermediary measure while we wait for long-term rail projects to be completed.”

In a country where land acquisition has been pointed to as the most serious cause for delays in the completion of infrastructure projects, permitting is also much quicker to obtain for such systems than for land transport projects, as the land to be acquired or leased is minimal.

The cable car line, which will cover an area of about 2.5 kilometres in its initial phase, is expected to reach 10 kilometres in its final stage. It includes parking for 500 cars in a stackable system as well as the leasing of land for posts and commercial buildings it will be set on. Local authorities are providing the land construction clearances. Ticket sales will cover operational costs, with the return on investment coming from revenues generated by shopping centres at the system’s two stations.

The project was presented to President Joko Widodo two years ago when he was still in office as mayor of Jakarta, but negotiations have stalled in the run-up to last year’s presidential elections. According to Susilo, the company is set to re-engage in talks with the government shortly.