China Eximbank provides $676 million preferential buyer’s credit for Semarang-Demak Toll Road Project

Project narrative

On November 18, 2022, China Eximbank and the Government of Indonesia signed a $676,087,000 preferential buyer’s credit (PBC) agreement for the Semarang-Demak Toll Road Project. The estimated borrowing terms of the loan (PBC) include a 13.2-year maturity, a 5.1-year grace period, and a 2.9% interest rate. The borrower was expected to use the proceeds of the loan to finance commercial contracts with Beijing Urban Construction Group Co Ltd (BUCG), PowerChina, and China Road and Bridge Corporation (CRBC). The purpose of the project is to construct a toll road that connects Semarang with Demak in Java, Indonesia. The 24.7km (15.3 mi) toll road will act as a complement to the Trans-Java Toll Road. The toll road seeks to increase accessibility and road network in the northern parts of Java. The toll road will be integrated with a sea dike at the northern beach of Semarang City, all the way until the Sayung River at Demak Regency. The goal of constructing this toll road is to minimize congestion along the Semarang–Demak-Surabaya northern coast road of Java and also to the tourist cities in Demak (namely, Kadilangu/Sunan Kalijaga Tomb and Demak Great Mosque). Another goal of the project is to overcome tidal flooding along the northern coast as a retaining sea wall guarder. The toll road is divided into two sections. Section 1 is 10.69 km and it runs from Semarang to Sayung. Section 2 is 16.31 km and it runs from Sayung to Demak. Beijing Urban Construction Group Co Ltd (BUCG) is the general EPC contractor responsible for implementation for the Semarang-Demak Toll Road 1A Project. It has hired PT Hutama Karya (Persero) — an Indonesian state-owned company — as a subcontractor. CRBC is the general EPC contractor responsible for implementation for the Semarang-Demak Toll Road 1B Project. It has hired PT Wijaya Karya Tbk (Wika) and PT PP Tbk (PTPP) — two Indonesian state-owned firms — as subcontractors. Power Construction Corporation of China (PowerChina) is the general EPC contractor responsible for implementation for the Semarang-Demak Toll Road 1C Project. It hired PT Adhi Karya Persero (an Indonesian state-owned company) as a subcontractor. By May 2024, the project had achieved a 9.25% completion rate and it was on track for completion in February 2027. Section 2 running from Sayung to Demak was inaugurated on February 25, 2023.