Tue, 08 Jul 2003

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.