House wants Tanjung Jati B project restarted
A'an Suryana, The Jakarta Post, Jakarta
In contrast to its usual nationalistic stance, the House of Representatives put more pressure on the government on Wednesday to exempt a Japanese contractor from a countertrade regulation that is hampering the resumption of the Tanjung Jati B coal-fired power plant project.
"The construction of the power plant must be started up again on time," said Emir Moeis, the chairman of the House's mines and energy commission, while reading out his commission's conclusions after a hearing with government officials from the electricity sector team set up by Presidential Decree No. 133.
After the hearing, Emir said that rapid resolution was a necessary as the role of the Tanjung Jati B plant was essential so as to prevent a future electricity crisis in the country.
The US$41.6 billion Tanjung Jati B project is located in Jepara, Central Java, and will have a power-producing capacity of 1,320 Megawatts (MW).
The construction of the US$1.6 billion thermal power plant was suspended in 1998 due to the economic crisis, but the government decided last year to resurrect the project after it learned that Indonesia might suffer from an electricity crisis in the coming years.
Responding to the House request, the head of the joint team, Coordinating Minister for Economic Affairs Dorodjatun Kuntoro- Jakti, said that the government was seeking advice from legal experts so as to resolve the matter.
"Legal advice is being sought, whether we can provide an exemption to the countertrade scheme. If an exemption can be provided, the project should resume soon," Dorodjatun told reporters after the hearing.
The resumption of construction, which was originally slated for March this year, has been hampered by a 1982 government regulation regarding countertrade.
The regulation provides that every foreign purchase exceeding $500 million that affects the state budget must be based upon a countertrade arrangement.
Such countertrade schemes, promoted by the Ministry of Trade and Industry, are aimed at boosting exports, especially non-oil exports.
They are, however, not popular with foreign investors, in this case Sumitomo Engineering, the main contractor for the power plant project.
A government official has said that the investor had expressed objections, and these could possibly delay the resumption of the project.
Learning from the controversy, Minister of Industry and Trade Rini MS Soewandi said that countertrade schemes should be flexible.
Dorodjatun's office, as the final arbiter, is expected to resolve the matter.
Tanjung Jati B will be financed mostly by Japanese loans. Sumitomo Corporation is to provide $550 million, while the remaining funds will come from the Japan Bank for International Cooperation (JBIC) and a consortium of Japanese financial institutions.
Under the contract between state electricity company PT PLN and Sumitomo Corp., PLN must pay Rp 405 billion (US$45 million) every six months, and after 20 years the power plant will become fully owned by PLN.
The plant is due to start generating electricity in 2006.