Sat, 16 Oct 2010


By Bloomberg & JG
Jakarta. A number of Japanese companies are mulling investments in Indonesia, including energy and infrastructure projects, with cooperation from government officials in both countries.

Japan and Indonesia will cooperate on developing power, port and road projects, according to government documents.

Japan will provide funds and advice on coal and geothermal projects and associated infrastructure for so-called economic development corridors in Indonesia, according to the documents circulated at a forum in Tokyo on Thursday, attended by government officials and executives from Japan and Indonesia.

Indonesia has identified six economic corridors in Sumatra, Java and other islands to boost growth and alleviate transport bottlenecks and power shortages.

Japan wants to spur growth by exporting technology for more efficient coal power plants, smart grids and railways as demand declines at home.

Bastary Pandji Indra, the director of public-private partnerships at Bappenas, said the corridor projects in question were still under discussion.

“We have not decided whether the projects will use the [partnership] scheme or not,” he said.

By developing Indonesian electricity projects, Japan is aiming to earn carbon credits to offset polluting emissions blamed for global warming. Japan has pledged to cut emissions of carbon dioxide by 25 percent from 1990 levels by 2020.

Mitsubishi and Marubeni were among companies selected by Japan’s trade minister in August to conduct feasibility studies for pollution-cutting projects to earn carbon credits in Indonesia and other Asian countries.

Sumitomo, JGC Corp. and Electric Power Development and other Japanese companies are cooperating with the government to sell geothermal power technology overseas, with Indonesia as the first target, said Satoshi Nakamura, assistant director at the Japanese trade ministry’s Agency for Natural Resources and Energy.

Twenty companies including Itochu, Mizuho Corporate Bank and Sumitomo Mitsui Banking have set up a working group to promote Japanese technology, said Hiroyuki Kudo, general manager of the international cooperation division at the Energy Conservation Center, which serves as the group’s secretariat.

Japan and Indonesia have agreed to cooperate on building infrastructure for geothermal power, Nakamura said.

Indonesia’s government aims to boost its geothermal power capacity to 9,500 megawatts by 2025 from 1,200 now.

The Japanese group first met on Oct. 8, with the Trade Ministry and the Japan Bank for International Cooperation attending as observers.

Developing power from sources underground such as hot springs is estimated to cost between $3,000 and $4,000 per kilowatt, according to Tadashi Kaneda, head of the overseas division at Fuji Electric Systems Co., a unit of Fuji Electric Holdings Co.

A 100 megawatt geothermal plant would cost between $300 million and $400 million, Kaneda said, meaning Indonesia’s geothermal market may be worth as much as $38 billion within 15 years, based on Indonesian government targets.

“Japan’s technological strength can set itself apart from others,” Kaneda said, citing a method for preventing corrosion caused by hydrogen sulfide in the ground.

“Risks are involved in geothermal projects ... so government assistance is necessary,” he said.