Crisis forces RI to delay natural gas pipeline projects
Crisis forces RI to delay natural gas pipeline projects
SINGAPORE (Reuters): Gas pipeline projects in Indonesia have
been delayed as a result of the country's economic woes as would-
be financiers hold off negotiations until the rupiah stabilizes,
a senior official said yesterday.
"All the projects have been affected by the crisis at the
moment," Qoyum Tjandranegara, President Director of state gas
utility company PT Perusahaan Gas Negara (PGN), told Reuters in
an interview.
"Projects have been postponed for at least one year."
He said a plan to build a natural gas pipeline network from
South Sumatra to Cilegon in west Java, which would also connect
with Asamera's Corridor Block and Palembang in South Sumatra, had
been shelved as finances have not been firmed.
The whole project was expected to cost around US$590 million,
he said.
"Negotiations with the World Bank for financing of the project
was supposed to be in October last year, but it has been delayed
by one year," Tjandranegara said.
He said other projects delayed included a pipeline from East
Kalimantan province to east Java, and another from East Natuna to
Java as talks with finance companies have also been postponed.
Talks with the finance companies for these projects were
supposed to start last year, he said.
Most energy infrastructure projects in Indonesia are financed
partly by the private sector, and partly by the government,
although there is no fixed percentage of the breakdown,
Tjandranegara said.
He was in Singapore for a conference on gas pipeline
infrastructure in the Asia Pacific region.
The Asian crisis had affected PGN badly since it bought gas
from state oil company Pertamina in U.S. dollars, but sold to the
domestic market in rupiah.
Indonesia's economic woes were triggered by a sharp
depreciation in the rupiah, which has lost 70 percent of its
value against the U.S. dollar since July.
In February, Pertamina asked the government to assist PGN
financially because of the fall in the value of the rupiah and
the government responded with a Rp 75 billion loan to PGN,
Tjandranegara said.
He said he expected that to last around three months, but was
hopeful of a stabilized rupiah by that time.
Tjandranegara said the government was also trying to promote
gas pipeline projects to make gas supplies readily available and
reduce the country's dependence on imports of more expensive
diesel for power generation.
"To import diesel, you would pay more than if you buy gas
domestically," he said.
Indonesia is one of the largest spot buyers of diesel in
Southeast Asia, taking around three to five million barrels per
month on average.
For March, Pertamina attempted to stop diesel imports to save
on foreign exchange, but was forced to resume purchases due to
inadequate domestic supplies following an unexpected shutdown of
its 125,000 barrels-per-day Balongan refinery.
Tjandranegara said that only 10 percent of power in Indonesia
is obtained from using gas, with diesel making up the bulk.
This, he said, was mainly due to inadequate infrastructure and
the inability of power stations to get easy access to gas.
He said supplies were ample and most power plants in Indonesia
could switch easily from using diesel to gas.
By 2020, the government is planning to have adequate
infrastructure and raise the usage of gas to for power up to 45
percent, he said.