This Week’s Highlighted News (September 3, 2010)
- TATA Power consortium wins geothermal bid in Indonesia
- House Accept Government's Oil Price and Production Estimates
- Thai Firm Rejects Indonesia's 2.4-Billion Oil Spill Claim
- PLN Needs to Plug Rp 2.6 Trillion (US$2.8 Billion) Deficit
- Govt targets one million barrels of oil in 2014
- Bukit Asam Ready to Have More Investment
- Adaro seeks Bhakti Energi deal to boost coal reserves
- Krakatau Steel files IPO documents on Sept. 6
- Number of domestic passengers increases 20.56%
- Garuda promotes Ambon tourism enchantment
- 17-Point Plan to Cut the Jams
- Indonesia Offers Infratructure Project to French Firms
- Indonesian Government Eyes Bonds to Help Fill Infrastructure Funding Gap
Energy and Minings
TATA Power consortium wins geothermal bid in Indonesia
Steelguru.com – 03/08/2010
TATA Power Company announced that the consortium comprising of TATA Power, Origin Energy (47.50%) and PT Supraco Indonesia (5%) were declared as the successful bidder for the Sorik Marapi geothermal project in Northern Sumatra of Indonesia.
The Sorik Marapi project is estimated to support the development of nearly 240 MW of geothermal generation capacity. The project will be developed by PT Sorik Marapi Geothermal Power, a Special Purpose Vehicle formed by the Consortium.
The Consortium would undertake a detailed exploration program over the next 18 months. The expected commercial operation date for the project is June 2015Mr Prasad R Menon MD of TATA Power said that “TATA Power is happy that its efforts to explore new avenues in the renewable space is moving on a steady path and in the right direction. TATA Power has a strong mission to achieve at least 25% of its generation portfolio through renewable sources of energy by 2017, geothermal energy being one of the prime renewable growth engines.
The Sorik Marapi exploration is testament to our faith in the untapped potential of geothermal energy. I would like to take this opportunity to congratulate the entire team that has put in their relentless efforts during the bidding process. Our association with Origin Energy has been fruitful and rewarding. This is in line with our overall growth strategy to build global relationships and partnerships with organizations which are leaders in their field.”
Ms Karen Moses executive director finance and strategy of Origin said that “The Joint Venture is consistent with Origin’s strategy of pursuing exploration opportunities for energy resources near growing markets. This joint venture is reflective of our belief that geothermal can provide large scale renewable base load energy.”
House Accept Government's Oil Price and Production Estimates
IOGNews, Jakarta – 02/09/2010
The Energy Commission of the House of Representatives approved the oil price and production estimates proposed by the executive in the delibration of the 2011 state budget projection which the Energy Department after suggesting a lower price and a higher production target.
Chairman of the hearing Teuku Rifky Harsa (Democratic Party) said at the end of the hearing today (2/9) "Commission VII of the House of Representatives concluded that the Indonesian Crude Price is set at USD 80 per barrel and crude oil production target at 970 thousand barrels per day," as proposed by the government in the August 16th state address before the parliament by President Susilo Bambang Yudhoyono.
Some of the lawmakers had suggested earlier that the government should put the price estimate at USD 77 a barrel and raise production target at 975 thousand barrel per day.
The governemnt actually came with a production target of between 960,000 and 970,000 barrel a day after oil producers barely cope with this year's production target of 965,000 barrel which forced the Finance Department and the house to revise the target to 955,000 barrel a day. But some of the current lawmakers insisted that production could reach 975,000 a day.
Thai Firm Rejects Indonesia's 2.4-Billion Oil Spill Claim
Agence-France Presse, Sydney – 03/09/2010
A Thai-owned firm Friday rejected Indonesia's 2.4 billion US dollar compensation claim over a major oil spill off Australia's north which campaigners say hit the livelihoods of thousands of poor fishermen.
PTTEP Australasia, a unit of Thailand's PTT Exploration and Production PCL, said it "has not accepted any claim" by Indonesia over the months-long Montara spill, Australia's worst offshore drilling accident.
"PTTEP Australasia wishes to confirm that it has not accepted any claim made by the Indonesian government for compensation," a statement said, adding that "no verifiable scientific evidence" has been given to support the claim.
Indonesia made the claim this week, saying it included compensation for damage to coral reefs. The leak in the Timor Sea from August 21 to November 3 was the worst from an offshore oil platform in Australian history, although it was smaller than the recent BP spill in the Gulf of Mexico.
Like the BP spill, it dragged on for months as the company tried to plug the flow with a relief well, a process that eventually succeeded.
It also led to calls for tougher regulation of offshore drilling and criticism of the authorities responsible for monitoring the operation.
Evidence given at a commission of inquiry showed the Montara slick grew to almost 90,000 square kilometres (35,000 square miles) and entered Indonesian waters, according to environmental group WWF.
The West Timor Care Foundation, which supports poor fishermen in eastern Indonesia, estimates the spill affected the livelihoods of about 18,000 fishermen. Businesses such as seaweed and pearl farms were also reportedly hit.
Following this year's Gulf of Mexico spill, which was the biggest maritime spill on record and spewed some 4.9 million barrels of oil, BP set up a 20-billion-dollar compensation fund.
PLN Needs to Plug Rp 2.6 Trillion (US$2.8 Billion) Deficit
Alfian. The Jakarta Post, Jakarta – 03/09/2010
State power firm PT PLN says public pressure on its policies pertaining to power rates will cost the company Rp 2.6 trillion in the form of a budget deficit by the end of year.
The adjustment of power rates that began July 1 would cut the company’s spending by only Rp 2.2 trillion instead of Rp 4.8 trillion as initially discussed with the government and lawmakers.
The rate adjustment met massive criticism from the public and the private sector, forcing PLN to cap the rate increases to no more than 18 percent.
Previously, the rate increases was planned to range between 30 and 100 percent, depending on power consumption categories.
The latest survey by the Central Statistics Agency (BPS) shows that the increases for each type of rate averaged at 15.07 percent.
“The additional revenue increase will not reach Rp 4.8 trillion. We estimate we will get only Rp 2.6 trillion by the end of the year, meaning there will still be a deficit of up to Rp 2.2 trillion,” PLN finance director Setio Anggoro Dewo said Wednesday.
PLN still had no idea on how to cover the deficit, he said.
“We don’t know what to do yet. Perhaps we will decide this later with the government,” he said
However, the government was also still in the dark on the matter.
“I will check PLN’s calculations,” Energy and Mineral Resources Minister Darwin Zahedy Saleh said in a text message.
While the 2009 Law on Electricity paved the way for private companies to be involved in the power business from upstream to downstream, PLN remains the main power distributor in Indonesia.
As of July 2010, PLN served around 41.04 million customers, around 90 percent of which were household customers.
PLN has repeatedly said the recent increase will only save the government spending on electricity subsidies, but would do nothing for the company’s financial performance, because its electricity rates are still far below its production costs.
PLN estimates that the average power rate after the increase will be Rp 750 (8.32 US cents) per kilowatt hour (kWh). The same amount of power costs the company around Rp 1,100 to produce.
The government has said it plans to increase power rates by an average 15 percent again in January next year. Darwin said that without the increase the power subsidy would jump from Rp 41.02 trillion to Rp 49.02 trillion in 2011. The government and lawmakers are still discussing the matter.
However, Coordinating Economic Minister Hatta Rajasa said Thursday the proposed electricity subsidy reduction in 2011 may not include another power rate adjustment.
“[The proposed subsidy reduction in 2011] doesn’t automatically mean a 15 percent electricity rate hike next year,” Hatta said without detailing how the plan would work.
In 2011, electricity subsidies will decrease to Rp 41 trillion (US$4.55 billion) from Rp 55.1 trillion this year.
The electricity subsidy is part of the government’s budget allocation for subsidies worth Rp 184.8 trillion, comprising Rp 133.8 trillion for energy and Rp 51 trillion for non-energy, as stipulated in the 2011 state budget.
In 2010, the government allocated a larger sum to subsidy spending, worth Rp 201.3 trillion.
Govt targets one million barrels of oil in 2014
ANTARA News, Jakarta – 02/09/2010
The government has targeted an oil lifting of over one million barrels per day (bopd) in 2014, a senior official said.
"The government is doing its best to produce over one million barrels of oil per day," Director General for Oil and Gas of the Ministry of Mines and Energy (ESDM), Evita Legowo told a House hearing here Thursday.
She said that the efforts to produced over one million barrels per day would be made in stages and it was expected that the target would have been achieved before 2014.
Evita Legowo also said that due to high uncertainty in efforts to increase the production, the lifting target for 2011 was proposed at 960 - 975 thousand barrels per day.
In the 2011 draft state budget, the assumption of oil lifting was set at 970 thousand barrels per day, she said.
In order to achieve the 2011 production target, additional production would be made through new field exploitations such as the NDD area 12-CPI Rokan, Banyu Urip-Mobil Ceput, Sukowati phase IV-JOB Pertamina East Java, Pondok Makmur-Pertamina EP, and Pulau Gading-JOB Talisman.
Additional production would also be made through explorations in newly found fields, among others in Sabar Utara-Petro Cina Jabung and Pendalian 3-Siak Putra Energy as well as additional production from new EOR (Rantau, Prabumulih, and Musi Barat-Pertamina EP) projects.
"In order to achieve the full production scale, we still need to develop production facilities which are expected to be completed in 2013," the director general said.
Energy observer Pri Agung of the ReforMiner Institute said earlier that the oil lifting target set at the draft state budget at 970 thousand barrels per day reflected no substantial change in the country`s oil and gas production sector
Bukit Asam Ready to Have More Investment
VIVANews, Jakarta – 03/09/2010
Mining company PT Tambang Batubara Bukit Asam Tbk (PTBA) projected that the company's capital expenditure in 2011 will be larger than this year following its plan to expand more.
"Our capital expenditure next year may be lower than this year," said PTBA Managing Director, Sukrisno, in Bank Mandiri's office, Jakarta.According to Sukrisno, the company is predicted to work on various projects compared to this year.
"We will be involved in many tenders of the IPP projects next year," said Sukrisno.
PTBA this year allocates a capital expenditure worth Rp 1.44 trillion. The fund will among any others be used for acquiring other companies such as two mining companies in Kalimantan.
Up until the first semester of 2010, the realization of capital expenditure has reached Rp 420 billion-Rp 560 billion which will be mostly used for opening out mining infrastructures.
PTBA is targeting that the production volume in 2010 will reach around 15 million tonnes. Earlier in 2009, the company sold 12.5 million tonnes with a total production of 11.6 million tonnes.
Adaro seeks Bhakti Energi deal to boost coal reserves
Janeman Latul. Reuters, Jakarta – 02/09/2010
Adaro Energy, Indonesia's biggest coal miner by market value, said on Thursday it saw output rising by 13 percent again next year and aimed to add to its reserves by buying miner Bhakti Energi Persada.
The deal for Bhakti, which Adaro sees being finalised by the end of 2010, means Adaro would overtake Bumi Resources (BUMI.JK) to have the biggest coal reserves among Indonesian firms in the world's top exporting country for thermal coal.
"The negotiation is in place, we expect to finalise it by year end," said Andre Mamuaya, an Adaro director, adding that the firm will use internal funds for the purchase. He declined to give a value for the deal.
"It's one big mine, very rare in Kalimantan now," he said.
Bhakti has total coal reserves in Indonesia's East Kalimantan province of 5.7 billion tonnes, much bigger than Adaro's current reserves of around 900 million tonnes.
Adaro told Reuters earlier this year it was looking for a sizeable domestic acquisition in 2010 to double output and sate Asia's growing demand for coal in power stations.
Bhakti's reserves have an average calorific value of 5,300 and gross-as-received (GAR) of 3,400 to 3,500.
The company is owned by Benny Subianto and Teddy Rachmat, who also own shares in Adaro.
Adaro said on Thursday it expects its production next year to climb to 52 million tonnes, a similar rise to its 2010 forecast for increased output of 45-46 million tonnes versus 2009's 40.6 million.
Despite the rising production, it said on Thursday it saw flat profit growth in 2010 because of contracts signed last year when coal prices were low.
"Profit is expected to be flat, no growth but no decline too," said Mamuaya.
Adaro's second-quarter net profit fell 73 percent because of lower coal prices and a stronger rupiah, but it said earlier this week it expected to meet analysts' forecasts for the full year because of higher coal prices in the second half.
Analysts forecast full-year net profit of 4.02 trillion rupiah ($446.1 million), according to the consensus in Thomson Reuters I/B/E/S, versus 4.37 trillion rupiah in 2009.
Adaro's stock has risen 3.5 percent this year, underperforming the 23 percent gain in the benchmark Jakarta index .JKSE but better than rival Bumi's 30 percent slide.
Krakatau Steel files IPO documents on Sept. 6
Bambang P. Jatmiko. Bisnis.com, Jakarta – 02/09/2010
PT Krakatau Steel (Persero) (KS) will submit a ducment of IPO (initial public offering) to Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) dated on September 6. This schedule is missed from expected on August 20.
President of KS Fazwar Bujang confirmed that so far is preparing all requirements for the corporate action.
“On last August 20, we had submitted to Indonesia Stock Exchange. To Bapepam-LK, we plan to submit on September 6 [Monday next week], he asserted today.
However, Fazwar didn’t elaborate further on the IPO’s process. According to him, it’s a black out period.
"I am not able yet to comment,” he continued.
KS will issue its share to a maximum of 30%. For the first stage, the state-owned steel producer plans to release 19.26% and the rest by 10.74% will be issued later.
The proceed from the first stage’s share disposal will be allocated to finance the company’s business expansion.
The company also will privatize its three subsidaries through IPO after completing its corporate action at the parent company.
Transportation
Number of domestic passengers increases 20.56%
Raydion Subiantoro. Bisnis.com, Jakarta – 02/09/2010
The number of domestic route airplane passengers for period January-July 2010 surged 20.56% to 23.87 millions from 19.8 million passengers for period January-July 2009.
Data by the Central Statistics Agency (BPS) showed the number of passengers at Soekarno-Hatta airport reached 8.75 million passengers, rising 17.78% from 7.42 million passengers for period January-July 2009.
In the meantime, the number of passengers at Polonia airport (Medan), Juanda airport (Surabaya), Ngurah Rai airport (Bali) and Hasanuddin airport (Makassar) reached 1.42 millions, 3.01 millions, 1.48 millions, and 1.3 millions, respectively.
Meanwhile, the number of passengers at other airports hit 7.89 million passengers.
Sriwijaya Air spokesperson Ruth Hanna Simatupang said the stronger domestic economic condition was one reason for the upbeat domestic aviation market.
"We experience a significant increase in the number of passengers, but I cannot yet tell you the exact figures.
What is certain, many holidays amid the domestic economic recovery is one of the factors bolstering the market," she informed yesterday.
She continued Sriwijaya this year operated 27 airplanes and was currently ordering 5 units of Boeing airplanes, which would be shipped directly from the manufacturer in Seattle, the US.
Load factor of 90% Separately, General Director of Lion Air Edward Sirait confirmed the airline also experienced a significant increase in the number of passengers, thanks to additional armada.
He disclosed Lion had added 8 units of Boeing 737-900 Extended Range (ER) airplanes to fly several domestic routes.
"However, we have not yet held the exact figure. What is certain, an increase in the number of passengers is attributable to the additional armadas. Lion Air currently operates 56 airplanes," he said yesterday.
In the meantime, the average load factor of Lion Air's domestic routes hovered at 80% - 90% or the same as last year.
Last year, Lion Air was an airline carrying the highest number of domestic route flyers, namely 13.33 million passengers, which outstripped Garuda Indonesia, which was only able to carry 8.39 million passengers.
"For this year, we have not yet known it [whether Lion again is ranked first]. Let the data show us later," he said.
Garuda promotes Ambon tourism enchantment
ANTARA News, Jakarta – 02/09/2010
The National flag carrier Garuda Indonesia promotes eastern Indonesian city of Ambon in its cabin magazine of June 2010 edition.
Garuda Ambon branch manager Hendra Sumarno said here on Thursday that Garuda magazine contains photos and data about tourism in the island city of Ambon.
He said the cover of the magazine displays Ambon`s marine tourism enchantment with "Oh, the Beauty of Ambon Manise" on it.
The magazine is made available on every seat of Garuda aircraft of both domestic and overseas destinations.
"Garuda magazine promoting Ambon tourism is bilingual, Indonesian and English, in an effort to facilitate English speaking passengers to know more about Ambon with its hospitable people," Hendra said.
He said the magazine also displays photos of and data of Ambon marine tourism, Waisalaka egg-eating giant eels at Waai village, Amsterdam fort, old mosques and churches, as well as typical Pantai Natsepa fruit salad of Suli village.
"We are part of Ambon tourism component and therefore, since resuming its route to Pattimura airport in June this year Garuda Indonesia has been trying to make local government program in tourism sector here a success," Hendra said.
On June 3, 2010 Garuda reopened its Jakarta-Ambon route with a stopover in Makassar, South Sulawesi.
The Jakarta-Makassar-Ambon route was served with aircraft having a capacity of 14 to 16 business-class seats and 120 economy-class seats.
In cooperation with the Maluku Culture and Tourism Office, Garuda is scheduled to realize Ambon-Amsterdam route by making use of "Family Trip" program on October 17, 2010.
"The most important thing is the public awareness to maintain the natural beauty of Ambon and its supporting facility to make foreign tourists feel at home," Hendra said.
17-Point Plan to Cut the Jams
Arientha Primanita, Abe Silangit & Zacky Pawas. The Jakarta Globe, Jakarta – 03/09/2010
Jakarta officials are preparing a slew of measures to ease the traffic crisis that is costing the city an estimated Rp 12.8 trillion ($1.42 billion) a year.
“We need very serious action or Jakarta will see total gridlock by 2012 ,” vice presidential spokesman Yopie Hidayat said after a meeting to discuss the problem on Thursday.
The meeting, chaired by Vice President Boediono and attended by ministers, governors, senior officials and the city’s traffic police, considered efforts to improve traffic flow in and around the capital.
Citing research by the Presidential Working Unit for Development Supervision and Control (UKP4), Yopie said the high cost of traffic jams included the extra cost of running cars, increased health problems and productivity lost while stuck in traffic.
He said Boediono had appointed UKP4 head Kuntoro Mangunsubroto to coordinate the government’s efforts.
The meeting came up with 17 ways to solve traffic problems in the short, middle and long term, and they involve the transportation and public works ministries as well as the governors of Jakarta, Banten and West Java.
Ideas include speeding up the introduction of an electronic road pricing system for the main south-north artery, clearing TransJakarta bus lanes and opening more of them, reviewing parking bylaws and improving railways.
The government will also offer incentives to phase out minivans in favor of larger buses, crack down on illegal buses and forge ahead with Mass Rapid Transport and monorail development.
Select public transportation will get access to cheaper fuel and a Greater Jakarta Transportation Authority is to be established.
Governor Fauzi Bowo said that although the government could not restrict the growth in the number of vehicles on the roads it could limit their use.
He cited restrictions for private vehicles and limiting trucks and vans to evening deliveries.
Regarding the ERP system, Fauzi said authorities were still studying whether to use a satellite-based GPS system or the gate system.
In the short term, police have closed Plaza Semanggi’s vehicle entrance on Jalan Gatot Subroto and a nearby city toll entrance.
The city has already closed several U-turns that clog traffic and more closures are expected.
Danang Parikesit, the chairman of the Indonesian Transport Society (MTI), said the crisis demanded radical action. He said if the congestion were not taken seriously, traffic could be crawling along at five kilometers per hour within five years.
According to Yopie, the average speed is now 8.3 kph.
Danang said transportation in the Greater Jakarta area must be integrated and the central government must allocate enough funds to ensure the system worked.
He said 4.5 million people commuted to the city daily, 2.5 million in private vehicles.
The Old Ones Are the Best: The Ideas to Improve Traffic
- Electronic Road Pricing scheme to be fast-tracked.
- Crackdown on vehicles using TransJakarta busway lanes.
- Jakarta administration to review parking bylaw.
- Road repair fund based on multiyear contract.
- Two more busway corridors to open this year and two in 2011.
- More gas stations to offer subsidized fuel for TransJakarta buses.
- Drive to reduce number of road-clogging mikrolet vans. Government to urge use of bigger buses with more capacity.
- Trains rerouted and more services and cars added to move three million commuters daily.
- Police to crack down on illegal buses.
- Renewed pledge to start building MRT stage one from Lebak Bulus to Hotel Indonesia traffic circle in 2011, for monorail building to restart and Manggarai-Cengkareng railway development to be fast-tracked.
- Greater Jakarta transportation authority to be established.
- Master plan for Greater Jakarta integrated public transportation system to be revised.
- Rail line to Cikarang to be made a double track.
- Faster development of inner-city rail project to be integrated with Jakarta's transportation system.
- Six new inner-city toll roads to be built.
- Government to issue policies aimed at halting growth in vehicle use.
- Park-and-ride sites to be built near train stations to cut private vehicle use. Home affairs minister to urge governors of Jakarta, Banten and West Java to coordinate.
Infrastructure
Indonesia Offers Infratructure Project to French Firms
Sapto Yunus. Tempo Interactive, Paris – 03/09/2010
French government have expressed interest to invest in one of Indonesia’s infrastructure projects promoted by the Indonesian government under the tagline “public private partnership” program that include transport, power, and clean water projects.
After a meeting between French International Trade Minister Anne-Marie Idrac yesterday (2/9), Director of the Investment Board Coordinator Gita Wirjawan said “the french minister said there is no reason for french infrastructure firm for skipping investment opportunities in Indonesia especially on railway project.”
At a second meeting with 27 executives from several major french businesses later in the day Gita tried to persuade the french businessmen about the security guarantee prepared by the government for investments made in the projects being offered.
Gita said the government is setting up an investment insurance agency with US$200 provided by Finance Department, Asian Development Bank and a german financial institution, and promised a simplified bureaucracy for foreign investments as all administration requirements at all level of authorities should be handled by his agency when amendments on several government regulations approved.
At the business meeting French miner Eramet committed to invest about US$4 billion in the next five years and Danone will expand its production capacity by one billion litres.
The five priority projects in the public private partnership programs are railway construction, toll roads, seaport, clean water facility, and coal power plant.
Indonesian Government Eyes Bonds to Help Fill Infrastructure Funding Gap
Lee Chyen Yee. Reuters, Jakarta – 03/09/2010
Infrastructure and green bonds were being considered to help come up with the billions of dollars needed to develop the ailing sector, a senior government adviser said on Thursday.
The country needs $140 billion over the next five years in infrastructure development, ranging from paving roads and highways to providing more power and water supplies nationwide.
As much as two-thirds of that amount would have to come from the private sector, said Edward Gustely, a government adviser.
“I’ve been in discussions on infrastructure bonds and green investment bonds and again, it’s a combination of the ability to tap into institutional capital that is looking to participate in this,” he said on the sidelines of an investment conference in Hong Kong, but added that no details had yet been decided.
“It’s being studied both by the government and the private sector.”
In India, the government plans to issue tax-free infrastructure bonds with a minimum tenure of 10 years to help fund the construction of roads, ports and power plants, a scheme that Indonesia is studying.
Emerging Asian countries, such as China, India and Indonesia, have been trying to boost their infrastructure to help accelerate economic growth and manage fast-expanding cities, where hours-long traffic jams are common.
Shortages in the power supply would also mean frequent outages in industrial towns, hampering factory output and incurring costs for investors.
“The lack of infrastructure over the next few years is the only [thing], in my assessment, holding back Indonesia,” Gustely said.
“If you’re a plastics manufacturer, the last thing you want is a power outage that costs you money. We’ve got an issue with power generation, and that affects the industrial aspects of Indonesia.”
Indonesia’s economy is expected to expand by 6 percent this year and 6.3 percent in 2011, then reaching as much as 7.7 percent by 2014, officials have said, but the levels still lag behind regional giants China and India.
Indonesia has been trying to attract more foreign investors to pour money into its infrastructure, but some global institutions are concerned about regulations and practices when investing there compared to countries such as China and India.
There is still a lot of infrastructure that needs to be developed throughout Indonesia. According to Gustely, only 53 percent of the country’s population has access to electricity from power grids, and only a third have piped water.
The nation’s capital and financial center, Jakarta, is also overcrowded, set in an earthquake zone, prone to flooding and crippled by inadequate infrastructure. “Every year we fail to [fix the situation], we lose time and the situation gets worse,” Gustely said.