Megawati to relaunch multibillion-dollar projects

Megawati to relaunch multibillion-dollar projects

Evi Mariani, The Jakarta Post, Jakarta

President Megawati Soekarnoputri is scheduled on Thursday to
relaunch a number of projects worth billions of dollars, which
were shelved in the wake of the 1997 economic crisis.

The projects include a power project in Central Java, a number
of toll road projects in East Java and a flood control project in
Jakarta.

The relaunching ceremony will be held at the site of the
Tanjung Jati B power plant project in Jepara, Central Java, one
of the projects to be revived by the President.

The 1,329 Megawatt power plant, which was half finished prior
to the crisis, had changed hands several times until Japanese
construction firm Sumitomo agreed to continue the project in a
joint venture, PT Central Java Power, with state electricity
company PT PLN. Japan Bank for International Cooperation (JBIC)
has agreed to provide US$1.65 billion in loans for the
development of the project.

Aside from marking the resumption of the Tanjung Jati B
project, Megawati is also to commend the success of PLN to
renegotiate most of its contracts with independent power
producers (IPP), director general of electricity and energy
development Luluk Sumiarso at the Ministry of Energy and Mineral
Resources said at a press conference.

PLN signed power purchase contracts with 27 IPPs prior to the
crisis. In the wake of the crisis, most of the projects were
suspended, which led to years of dispute involving PLN, the IPPs
and the government. PLN recently claimed that it had managed to
settle almost all of the disputes and had reached agreements on a
new pricing formula for power produced by the IPPs.

Fearing the prospect of a power shortage, the government has
been seeking hard to woo all power investors to revive their
projects in the country.

During the ceremony, Megawati will also relaunch the
development of three toll roads in East Java worth a total of Rp
4.92 trillion (US$595 million).

The toll roads are the 37.25 kilometer (km) Surabaya-Mojokerto
road, the 13.5 km Waru-Juanda road and the 18.4 km Waru (Aloha)-
Wonokromo-Tanjung Perak road. The three projects are expected to
be completed in 2005, 2006 and 2007 respectively, director
general of regional infrastructure Hendriyanto Notosoegondo at
the Ministry for Resettlement and Regional Infrastructure said at
the conference.

The development of toll road will improve traffic flow in
Surabaya and its surrounding areas, Hendriyanto said.

Another giant project to be relaunched by the President is the
East Canal flood-control project in Jakarta.

"The canal, which will be built gradually along Cipinang,
Cakung, Sunter, Buaran, Jatikramat and Blencong rivers, is
expected to protect 207 square kilometer areas in eastern Jakarta
from floods," said Roestam Sjarief, director general for water
resources at the Ministry for Resettlement and Regional
Infrastructure at the conference.

He said the canal would absorb Rp 4.12 trillion in investment,
of which Rp 2.18 trillion would be allocated for clearing land
and the remaining Rp 1.93, for infrastructure development.

"The government will finance the 7.5 km canal construction,
while the JBIC has pledged to finance the remaining 16.5
kilometers," he said, and that the project was expected to be
completed in seven years.

The building of the canal, which would also be used as a
transportation route, and a business and recreation facility, is
expected to control the annual floods that inundate many parts of
the capital, causing much loss of life and property.