State shipping company PT Pelabuhan Indonesia (Pelindo) I inked a joint commitment with private firms and local governments on Thursday on a port development program estimated to be worth US$500 million in total investment.
Those involved in signing the commitment agreement include state oil company PT Pertamina, shipping company Maersk Line, Regional Container Line (RCL), Langkat Regency of North Sumatera, Sabang Regency and the North Aceh Regency of Aceh and the Dumai Regency of Riau.
The program mainly involve expansion of existing ports in Aceh, Batam, North Sumatra and Riau with financing both from company internal cash and from Indonesia's development partners including the Islamic Development Bank (IDB) and the Japan Bank for International Cooperation (JBIC).
Bambang Eka Cahyana, a director of commercial and business development at Pelindo I, said the company had so far secured a loan worth $87 million from IDB and expected to secure another from JBIC.
"The *total* $500 million in funds will be used to finance projects in the next five years," he said.
The program, Bambang said, aims to improve services given in ports through work space expansion and procurement of new infrastructure.
"For Belawan and Batam, we plan to expand the ports so that they will be able to handle more containers. It is estimated these projects will spend $83 million and $100 million respectively," he said.
The project in Riau, on the other hand, focuses on transforming the Dumai Port so that it will be an ideal hub for crude palm oil distribution from Kalimantan and Sumatra. This project is estimated to need about $125 million of investment funds.
Bambang said government planned to make Dumai a CPO spot market hub with direct transactions between sellers and producers.
"In the future, the price of CPO will be decided in Dumai port before exports *take place*," Bambang said.
The remaining $192 million, he said, would be spent on developing the Malayahati and Sabang ports in Aceh and the Perawang port in Riau.
"These projects in Aceh and Riau will mostly focus on expanding and improving cargo terminals. We hope national logistic costs will decline after ports are improved," he said.
Pelindo I finance director Suwono said that to support the development of these projects, the company had allocated Rp 53.2 billion ($5.32 million) solely for the procurement of supporting equipment.
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