Indonesia plans to invite investors to bid for contracts to build a $1.5 billion coal railway line in Central Kalimantan, a planning ministry official said on Wednesday.

Growth in Southeast Asia’s largest economy has been held back by poor infrastructure following years of under-investment in ports, roads and power plants.

The government wants to woo domestic and international investors to join public-private partnerships (PPPs) as a way of financing new infrastructure projects.

Dedy Supriyadi Priatna, the ministry’s deputy in charge of infrastructure, said that the 185 kilometre (115 miles) railway project planned for Central Kalimantan, on the Indonesian half of Borneo island, would be built under a PPP scheme and that construction contracts would be tendered in May.

“We have received a lot of interest from local and international investors,” he said.

Under PPP schemes, the government usually provides the land and guarantee for the project, while the private sector is in charge of the construction process.

Construction of the single-track coal railway project, the first of its kind in Central Kalimantan, is scheduled to start by the end of this year and begin operating in 2013.

The project is expected be the first part of a 1,900-km railway network planned for the province.

Coal exporters currently have to rely on Central Kalimantan’s rivers and limited road network to transport coal. Priatna also said that Indonesia expects to spend 918 trillion rupiah ($99 billion) in the next five years on infrastructure projects using the PPP mechanism, including power plants, toll roads, ports, housing, clean water and telecommunications projects. “The fund will be used to finance infrastructure projects proposed by six government agencies,” Priatna said, referring to the ministries of public works, housing, transportation, energy, telecommunication as well as the state search and rescue agency. Of the total amount, 407 trillion rupiah is expected to be contributed by the private sector, 84 trillion rupiah from external loans and grants and about 427 trillion rupiah from the state budget. (Reuters)