Govt to speed up gas network construction
Rendi A. Witular, The Jakarta Post, Jakarta
The government will provide a number of fiscal and non-fiscal supports for the business community to speed up the construction of an integrated gas transmission network that will link Java, Sumatra and Kalimantan.
The decision was taken to help the nation in its efforts to wean itself off dependence on oil by maximizing the use of natural gas, which is available in abundance.
After meeting Vice President Jusuf Kalla on Thursday, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that supports would include the exemption of import tax for materials and capital goods needed for gas network construction.
"During the meeting, we decided to take necessary steps to help the speed up the project construction so that we can immediately take advantage of this energy source," said Purnomo.
The tax exemption policy was currently being looked at by the Ministry of Finance.
The government has initiated the so-called Integrated Indonesian Gas Pipeline (IIGP) projects, which will distribute gas from production points in East Kalimantan, South Sumatra, Riau and East Java to industrial and household consumers in Java and Sumatra.
The projects, which are estimated to cost some US$3 billion with a combined transmission length of over 2,000 kilometers, are expected to be completed by 2009.
The projects will all be led by state gas utility firm PT Perusahaan Gas Negara (PGN).
Purnomo said aside from fiscal support, the government would also provide non-fiscal supports in the form of speeding up the construction approvals and tender process for investors willing to team up with PGN.
For the Gresik-Semarang transmission section as well as the Semarang-Cirebon section, the government-sponsored oil and gas regulator BP Migas has pledged to wrap up the tender within three or four months.
The 480-kilometer of projects are expected to be completed in 2008.
The government will also offer gas transmission projects to investors in collaboration with PGN that will link the Duri field in Riau with consumers in Medan, North Sumatra, which is scheduled to be completed in 2008.
At present, PGN is still constructing gas transmissions that will link gas producers in South Sumatra with buyers in Banten and West Java.
The transmission network, slated for completion in 2007, will connect the producers with the planned liquefied natural gas (LNG) terminal belonging to state oil and gas firm PT Pertamina in Cilegon, Banten, and the Muara Tawar power plant run by state power firm PT Perusahaan Listrik Negara (PLN) in Bekasi, West Java.
Tubagus Haryono, head of downstream regulator at BP Migas, said the government would also offer 1,200-kilometers of underwater gas transmission projects worth some Rp 1 billion that would link gas producers in East Kalimantan with consumers in Java.
Tubagus said that aside from fiscal support, the government will also ask other institutions such as the National Land Agency and the Ministry of Home Affairs to help the private sector in the process of land acquisition for the projects.
The government has recently issued a presidential regulation for land acquisition for developments that are in the public interest.