Mining, energy ministry to limit loans in yen
Mining, energy ministry to limit loans in yen
JAKARTA (JP): The government will limit financing the
development of Indonesia's mining and energy industries with yen-
dominated loans in order to decrease the risk caused by the
appreciation of the Japanese currency, a minister says.
Minister of Mines and Energy Ida Bagus Sudjana said over the
weekend that his office is minimizing the use of yen to finance
projects to avoid increasing the government's debt burden. The
country's debt increased unexpectedly following the steady
appreciation of the Japanese yen against other major currencies,
especially the U.S. dollar.
"We are trying very hard not to use yen for our projects.
Instead, we try to use U.S. dollars in any contracts involving
foreign partners, including those from Japan," Sudjana said after
closing a three-day workshop of officials from the Ministry of
Mines and Energy.
According to official data, Indonesia's foreign debt stood at
US$87.6 billion as of last December, including $58.6 billion owed
by the government and $29 billion by private and state-owned
companies. Over 40 percent of the debt was in yen.
Economists estimate that every time the yen rises one percent
against the U.S. dollar, it adds at least $300 million to
Indonesia's outstanding debts.
Sudjana said exports of oil and gas, which account for 25
percent of the country's total exports, are mainly paid in
dollars.
"All our oil and gas export contracts have so far been made in
dollars. As all international prices for oil and gas are stated
in dollars, it is worthless to change our export contracts into
yen," Sudjana said.
Oil exports
Indonesia's oil and gas exports decreased by 0.53 percent to
$9.69 billion last year. Japan bought the largest portion, $5.4
billion, of Indonesia's oil and gas.
Sudjana indicated that Indonesia's oil and gas exports will
decrease further in coming years and Indonesia will become a net
importer of oil after the year 2000 if new oil and gas reserves
are not found.
He suggested that Indonesia begin diversifying its energy
sources to meet growing energy needs. Currently, he said,
Indonesia is relying heavily on oil energy because it has not yet
maximized the utilization of coal, gas and geothermal resources.
"Energy, especially electricity, is an essential factor in the
industrialization process. So we need to consider maximizing the
use of gas, coal and geothermal energy to generate electricity,"
Sudjana said.
Since 1981, Indonesia's gas production has increased seven
percent per annum. Last year, Indonesia produced a daily average
of 8.06 billion cubic feet, of which 56.6 percent was exported in
the form of liquefied natural gas (LNG).
The largest use of gas in Indonesia has been for the
petrochemical industry, accounting for 6.8 percent of the total
national gas output. Currently, only a limited number of local
companies, including state-owned steel company PT Krakatau Steel,
state-owned electricity company PT PLN and a number of private
cement companies, use gas as fuel.
Director General of Oil and Gas Suyitno Patmosukismo said his
office will initiate the development of an integrated gas
pipeline to distribute gas to industries.
Suyitno said the first phase of the pipeline project is
expected to be completed next year. "The first phase of the
project, if successful, will save up to 64,000 barrels of oil a
day," he said.
In addition to gas, he explained that his office is also
promoting geothermal energy. "We can only use this energy to
generate electricity. If we can increase the use of it, we can
save more oil and delay becoming a net importer of oil," he said.
(rid)