Nusantara New Capital Project: Construction pushed back to September

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Bisnis Indonesia - Proyek IKN Nusantara: Konstruksi mundur ke September

12 August 2022

By: Muhammad Ridwan


Jakarta – New Capital City (IKN) Nusantara construction project in East Kalimantan is pushed back to September due to unfinished tenders.

Public Works and Public Housing (PUPR) Minister Basuki Hadimuljono said that, until now, there were only two contracts with completed tenders. In the same month, tenders of several toll road project packages will also be completed.

The government is aiming for the contracts of several projects to be signed by the end of August 2022.

However, Basuki emphasised that the construction being delayed for one month was still in line with the IKN construction target as the contract is a multi-year contract until 2024.

“The contracts will be signed [by the end of August]. Then, construction will commence. Yes, [in September],” Basuki said on Thursday (11/8).

According to him, the signing process of contracts from finished tenders is still waiting for the Finance Ministry to include their budget in the budget execution document (DIPA).

“I thought that the DIPA has been approved by the Finance Minister. They all have a budget, which is currently being studied,” he revealed.

Basuki currently cannot ensure if President Joko Widodo would inaugurate the groundbreaking.

According to him, President Jokowi prefers visiting ongoing projects, not projects that have not commence.

“Regarding groundbreaking, the President does not like it. He never [attends] groundbreaking anymore,” he stated.

Regarding the budget, the PUPR Minister is optimistic about absorbing all of the allocated budget for the construction of IKN Nusantara worth Rp5.4 trillion this year. Basuki said that he had calculated the budget proposal submitted to the Finance Ministry this year.

“Previously, we asked for more than Rp7 [trillion]. However, as [construction] can only commence in September, [the required funding in 2022] becomes Rp5.4 trillion. If it is not [lowered], there will be a leftover in the DIPA, which is embarrassing,” he explained.

Previously, Finance Minister Sri Mulyani Indrawati said that she was calculating and checking the documents for the disbursement of the funds for IKN this year.

“It has already been discussed with [PUPR Minister] Basuki. We are seeing the completeness of the documents and their capability to complete the project until December. We will make the calculations together with Basuki,” she said on Wednesday (10/8).

Transportation Implementation Affairs Head of the IKN Infrastructure Development Implementation Task Force, Atyanto Busono, said that the required budget for the construction of IKN in East Kalimantan from 2022-2024 reached Rp43.7 trillion.

He said that the budget was required for the construction carried out by the PUPR Ministry. The funds will be used to construct several projects carried out by entities in the PUPR Ministry, such as Highways Directorate General, Human Settlements Directorate General, Water Resources Directorate General, and Housing Directorate General.

“Until 2024, we need Rp43 trillion. This is only for us,” Atyanto said.

Underwater toll road

The government is also designing the construction of the deepest underwater toll road in the world in IKN. The PUPR Minister said that the underwater toll road was a part of the toll road that will connect Balikpapan-Samarinda-Balang Island Bridge spanning 47 kilometres (km).

To preserve the habitat of animals endemic to Kalimantan, such as the habitat of proboscis monkeys, 1.5 km of the toll road will be a tunnel. Basuki explained that the tunnel would be built on land, then it would be submerged under the sea. Hence, the construction of the tunnel will not drill a hole on the bottom of the sea.

The government is currently carrying out a feasibility study with South Korea to determine the economic, social, and environmental aspects.

“The technology is different as it will not make a hole. It will be constructed on land, then it will be submerged. It is the deepest in the world,” Basuki explained.

The required cost of the underwater toll road in IKN Nusantara is around Rp4 trillion per km.

Expert Staff to the Minister for Technology, Industry, and Environment, Endra S. Atmawidjaja, said that they would build an underwater toll road spanning 1.5 km to connect Balikpapan to IKN.

“The cost is Rp4 trillion per km. An immersed tunnel spanning 1.5 km is aimed to be built with the habitat of the proboscis monkeys on top,” he revealed.

In other developments, the PUPR Ministry has been greenlighted by the Finance Ministry to receive an additional budget of Rp6 trillion next year. The additional budget is not part the IKN construction budget.

“So, in 2023, an additional budget of Rp26 trillion is approved with Rp20 trillion for IKN and Rp6 trillion for dams and housing,” Basuki stated.

Previously, Basuki said that, with the 2023 budget ceiling, his agency would only be capable of completing three dams, namely Cipanas Dam, Karian Dam, and Sepaku Semoi Dam. Moreover, to pursue the 2023 target, 13 dams must be completed.

Previously, Water Resources Directorate General was set to receive an indicative budget ceiling allocation of Rp35.8 trillion in 2023. From the amount, Rp9.32 trillion is allocated to construct dams. The target is to continue the construction of 24 dams and complete 3 dams.


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