Japan lends RI US$616m as power crisis looms

The Jakarta Post , Jakarta | Sat, 03/29/2003 9:43 AM | Business

A'an Suryana, The Jakarta Post, Jakarta

The Japanese government has signed a yen loan deal worth US$616 million with the Indonesian government to assist the country in dealing with an imminent electricity crisis in 2005.

The $616 million loan will be used to expand the generating capacity of both the Muara Tawar and Muara Karang gas-fired power plants, located in Bekasi and North Jakarta respectively.

The loan deal was signed by Japan's Ambassador to Indonesia Yutaka Iimura and Primo Alui Julianto, the director for East Asia and the Pacific at the Ministry of Foreign Affairs.

With the latest batch of loans, Indonesia's debt to Japan has grown to a staggering amount of 4.122 billion, according to a release made available to the media.

Of the total $616 million in loans, $465 million will be allotted for the Muara Karang gas power plant project, while the Muara Tawar gas-fired power plant extension project gets the remaining $152 million.

The 30-year loan has a 10-year grace period and carries a 1.8 percent interest rate.

The new loan agreement will allow state electricity company PT PLN to raise the power generating capacity of the Muara Karang power plant from 300 MegaWatt (MW) to 720 MW by modifying the gas turbine power plant into a gas-fired combined cycle power plant.

The Dow Jones newswires quoted Japan Embassy sources as saying that the fresh loans could boost the capacity of the Muara Tawar power plant to 1,225 MW from the planned 1,000 MW.

The provision of fresh loans by the Japanese government reflects foreign confidence that Indonesia has come full circle, especially in the electricity sector.

The new investment is of high importance for PLN, because it needs more power plants in order to prevent a power crisis by 2005.

For Japan, the loans will be significant to secure a power supply for its large number of manufacturing projects in Indonesia.`

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