Japan pledges loan for suspended projects
Ainur R Sophiaan and Moch. N. Kurniawan, The Jakarta Post, Surabaya/Jakarta
The Japanese government has promised to provide a US$1.3 billion loan to revive several large projects in Java that were suspended several years ago due to the economic crisis.
Governor of East Java Imam Utomo told reporters in Surabaya on Wednesday that the money would be used to finance the development of Tanjung Jati B, a huge coal-fired power plant in Jepara, Central Java, and a petrochemical center in Tuban, East Java, owned by PT Trans Pacific Petrochemical Indotama (TPPI).
The governor said he was informed of the loan from Coordinating Minister of the Economy Dorodjatun Kuntjoro-Jakti in a meeting last week.
"The loan is expected to be disbursed in June and September," Imam quoted Dorodjatun as saying.
The projects were among many that were suspended by the government in late 1997 as part of retrenchment efforts to cope with the mid-1997 monetary crisis.
Today, as the economic situation has been easing, the government is seeking to resume some of the projects to meet growing demand.
Java and Bali are predicted to face a shortage of power in the next several years unless new power plants are built.
The resumption of Tanjung Jati B, which has the power to generate 1,320 megawatts (MW), is aimed at preventing power shortages.
TPPI, which is partly owned by Japanese firms Nisho Iwai and Itochu, is expected to supply about 300 tons of fertilizer per year, about half of East Java's fertilizer demand.
Separately, W.M.P Simandjuntak, president of state-owned gas company PGN said his company and Japan Bank International Corporation (JBIC) were finalizing talks on a special yen loan equal to $413 million to be given to PGN to develop a gas pipeline connecting South Sumatra and West Java.
He expected the Indonesian and Japanese governments would sign the loan agreement sometime in June or July.
According to him, the loan commitment was expressed by the Japanese government during a meeting with a delegation sent by the Indonesian government to Japan last month.
According to him, PGN would use another $73 million from its own resources to finance the $486 million pipeline project.