Project repeal draws mixed reactions
JAKARTA (JP): The government's decision to cancel and review 15 megaprojects to cope with the worsening monetary crisis has drawn mixed reactions.
The decision has disappointed investors who own the projects, but earned praise from legislators and analysts.
"We really hope the decision will help solve the monetary dilemma," legislator of the United Development Party (PPP) Muhsin Bafadal told The Jakarta Post yesterday.
The government issued a presidential decree Saturday to cancel seven projects and put under review another eight projects.
The projects, including eight power projects and eight toll road projects, were among dozens of projects which were postponed or put under review under a presidential decree last September. But the government, also under a presidential decree issued in November, allowed some of the projects to continue.
Minister/State Secretary Moerdiono said Saturday the government had earlier intended to continue the projects but after further review, it learned they required huge financing that could undermine the government's effort to deal with the monetary crisis.
Muhsin said that under "normal conditions" the government might be blamed by the public for inconsistency by issuing such a decree, but the public could accept the decision now because the monetary situation had been abnormal.
"Investors have the right to be disappointed by such a decision, but it is good for the country's economy," Muhsin said.
Business observer Iskandar Mandji said the decree showed the government's seriousness in handling the economic crisis.
Mandji told Antara that he agreed with the cancellation and postponement of the eight power projects, because power projects required huge financing.
The eight power projects are the Patuha 1 geothermal power plant, the Asahan 1 hydropower plant, the coal-fired Tanjung Jati A power plant, the coal-fired Tanjung Jati C power plant, the Karaha 1 geothermal power plant, the Sarulla geothermal power plant, the Darajat 1 geothermal power plant and the Palembang Timur combined-cycle power plant.
Mandji, who is also a former legislator, said the cancellation and review of the projects would not cause a shortage of power in the near future since existing power plants, plus those allowed to be built, would supply enough power until 2003.
Furthermore, he said, the demand for power, especially from industries, was projected to decrease due to the economic crisis.
The presidential decree has raised concerns among investors.
American company CalEnergy International, which has majority ownership in the Patuha power project in West Java, made a media statement to protest the decree which put its project under review.
The company warned that the Indonesian government might have to pay compensation for losses as a result of the violation of the contract signed by the company and state-electricity company PLN because the project carried political risk insurance, which was backed by the U.S. government.
"The Patuha project has spent well over US$100 million on well drilling and construction to date. The contract with PLN does not allow for postponement," CalEnergy Asia chief operating officer Donald M. O'Shei said in a statement sent to The Post yesterday.
Director General of Highways Tjuk Sudarsono said yesterday his office would soon brief toll road investors affected by the decree.
The decree puts under review the Semarang Section C toll road, the Ujungpandang toll road, the Pondok Aren-Serpong toll road and cancels the Aloha-Tanjung Perak toll road.
Tjuk said the Semarang Section C toll road was 98 percent complete, while one of three sections of the Ujungpandang toll road had been completed.
The Pondok Aren-Serpong toll road was in a land-appropriation stage, while the Aloha Waru-Tanjung Perak was already under construction. (jsk)