Govt to revoke decree on project suspension

Govt to revoke decree on project suspension

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The government planned to revoke a presidential decree which
suspended developing infrastructure projects in the wake of the
1997 financial crisis, Minister of Mineral Resources and Energy
Purnomo Yusgiantoro said.

The Minister further said the government was also looking at
allowing mining in protected forest parks.

Purnomo said on Tuesday that the move to revoke decree No.
39/1997 was necessary to provide legal certainty for investors to
resume certain projects.

"The government is still discussing it... however, it's
important to annul the decree," he said.

He added the government had set up a team to examine the
decree and to recommend which projects should be continued.

The former administration of president Soeharto suspended
infrastructure projects worth Rp 111.1 trillion (about US$10.78
billion) in 1997 to help ease pressure on the local currency and
state finances.

The giant projects included the 1,320-megawatt coal-fired
Tanjung Jati C power plant in Jepara, Central Java; the 330-
megawatt Sarulla geothermal power plant in North Sumatra; a new
airport in Medan, North Sumatra; several toll roads in Java and
some property projects.

The suspended power projects are those owned by 27 independent
power producers (IPPs). The projects were also canceled because
the state-owned electricity company PLN was unable to purchase
power from the IPPs as set under the initial contracts.

But the government and PLN have recently managed to
renegotiate new power pricing with several IPPs, paving the way
for the resumption of the projects.

Separately, director general for electricity and energy
utilization Luluk Sumiarso confirmed that a team consisting of
experts from various ministries would evaluate the decree.

"We have proposed (to the president) that some power plant
projects are worth resuming," he said. He refused to name the
projects.

He added the team had set several criteria for IPPs to be
excluded from the suspension list, including profitability of the
projects, the outcome of negotiations on the power price, and the
urgency of the projects in relation to regional needs and the
national power supply plan.

At present, of the 27 IPPs contracts, PLN has clinched long-
term agreements with 7 IPPs which will amend the previous
contracts. PLN has also terminated 5 contracts and is still
negotiating 15 contracts.

Elsewhere, Purnomo said the government was mulling over
allowing mining in protected forest areas.

He said that the government was calculating the "benefit and
cost".

He said that if the tangible benefits were greater than the
cost, the government would permit mining activities in the forest
conservation area.

Law No 41/1999 on forestry prohibits mining company from
carrying out open pit mining activities in the protected forests.