Govt to speed up gas network construction

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.