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)