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.