Project repeal draws mixed reactions
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)