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$4b Batang power plant lays hope on new land acquisition ruling

Investors and the government hope that a revision on the regulation on land acquisition will be able to expedite the land-acquisition process, which has caused delays to the construction of a giant power project in Batang regency, Central Java

Raras Cahyafitri (The Jakarta Post)
Jakarta
Sat, April 26, 2014

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$4b Batang power plant lays hope on new land acquisition ruling

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nvestors and the government hope that a revision on the regulation on land acquisition will be able to expedite the land-acquisition process, which has caused delays to the construction of a giant power project in Batang regency, Central Java.

Giving updates of the power plant development at his office on Friday, Coordinating Economic Minister Hatta Rajasa said 29 hectares of land were still in question from the 226 hectares needed for the mega project.

'€œWe are asking that the developer complete the acquisition process. This plant cannot fail because it will supply about 30 percent of the electricity to Java,'€ Hatta told reporters after the meeting.

The development of the 2x1,000 megawatt (MW) Batang power plant (PLTU Batang), which will be the biggest in Southeast Asia, has faced opposition from local residents due to concerns over the environmental effects of the project, in addition to difficulties in acquiring the land.

The US$4 billion power plant will be built by PT Bhimasena Power Indonesia, a consortium comprising Jakarta listed PT Adaro Energy, J-Power Electric Power Development Co. Ltd. and Itochu Corp. The power plant will sell electricity it produces to state-owned electricity company PT PLN under a 25-year-contract.

National Land Agency (BPN) head Hendarman Supandji said on Thursday that the government would revise the presidential regulation on land acquisition for public development to speed up the land acquisition process, which had hampered the construction of many infrastructure projects.

The land agency said that the planned revision would ease land-acquisition procedures so that the purchase of land up to 5 hectares could be directly carried out with land owners. Under the current regulation, land acquisitions of more than 1 hectare are required to pass through several stages under the supervision of a special committee.

Speaking separately, Adaro president director Garibaldi Thohir said land acquisition was currently a big stumbling block.

'€œWe can pay them now, however, no one wants to sell the land. This project has enormous benefits as it will provide electricity to industry, which can provide jobs. Moreover, we cannot see it delayed anymore because Java and Bali would suffer if the project doesn'€™t go ahead,'€ Garibaldi said.

Garibaldi said that he expected the planned revision of the presidential regulation regarding would accelerate the land acquisition process. If the regulation is revised, land acquisitions could be completed by the year end, Garibaldi said.

Indonesia needs additional power-generating capacity of an average 5,700 MW per year to meet growing demand, which is rising by around 8 to 9 percent per year, according to the Energy and Mineral Resources Ministry'€™s directorate general.

The tender of the Batang PLTU project was announced in 2011 while a target to finish the first stage of commercial operation in 2016 and the second phase in 2012.

Hatta said the project would likely be completed in 2017 and 2018.

As part of an attempt to anticipate the electricity crisis should Batang PLTU not be able to deliver power by 2018, PLN is planning to accelerate works on several other power plants, according to the company'€™s planning director Murtaqi Syamsuddin. The power plants to be accelerated, according to Murtaqi, are a plant in Grati in East Java as well as Tanjung Priok and Muara Karang in Jakarta.

'€œHowever, the three power plant will only produce around 1,200 megawatt and cannot actually replace Batang PLTU'€™s scale of up to 2,000 megawatts,'€ Murtaqi said.

However, he continued, the development of the three plants, which will need around $450 million in total, would depend on PLN'€™s financial ability. (alz)

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