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Govt urges Pelindo II to cancel new contract awarded to Hutchison Port
Peaceful protest: Employees of PT Jakarta International Container Terminal (JICT) stage a rally outside the State Palace in Jakarta on Thursday
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span class="inline inline-center">Peaceful protest: Employees of PT Jakarta International Container Terminal (JICT) stage a rally outside the State Palace in Jakarta on Thursday. They were protesting against PT Pelindo's decision to extend Hutchison Port Holdings' contract to operate the container terminal. JP/Jerry Adiguna
The Transportation Ministry has urged state-owned port operator Pelindo II, also known as the Indonesia Port Corporation (IPC), to cancel a new contract awarded to the Hong Kong-based Hutchison Port Holding (HPH) to operate the PT Jakarta International Container Terminal (JICT) until 2039.
The ministry's director general for sea transportation, Bobby Mamahit, said on Thursday that Pelindo II had not secured permission from the ministry to renew the contract.
'The Tanjung Priok Port authority has sent Pelindo II a letter to cancel the renegotiation deal because they should follow the mechanism, which means any deal should first be approved by the transportation minister,' Bobby told The Jakarta Post. 'We have urged the port authority to immediately resolve the matter,' he continued.
Earlier this week, Pelindo II signed a contract with HPH, renewing the latter's rights to operate JICT for another 20 years. HPH's concession to operate JICT ' which is a joint venture between Pelindo II and HPH established in 1999 ' would end by 2019.
Pelindo II president director Richard Joost Lino did not respond to the Post's question regarding the matter, and corporate secretary Rima Noviyanti refused to comment.
Lino said, however, in a written statement that with the cooperation, JICT could immediately improve the facilities in the port's northern dock, by deepening it to minus 16 low water spring (LWS) from the current minus 14 LWS without having to wait until the contract ends in the next five years.
Under the agreement, Pelindo II has increased its ownership in JICT to 51 percent from 49 percent previously.
According to Lino, under the new agreement, Pelindo II has the chance to change the terms and conditions of the cooperation in favor of the state port operator.
Under the new terms and conditions, HPH would have to pay US$250 million in advances to Pelindo II.
Pelindo II, which is currently on its way to speed up the construction of Kalibaru Port in North Jakarta, has also raised HPH's rent from US$60 million to $120million per year.
Lino said in the statement that the move was solely aimed at improving the firm's services as well as reducing the country's logistical costs.
He said in the future, vessels with capacities of more than 5,000 20-foot equivalent units (TEUs) would be able to enter Priok, and that JICT was expected to have similar facility and service standards as Priok's new container terminal. The Development Finance Comptroller (BPKP) and Attorney General's Office (AGO) had reviewed the agreement, Lino claimed. To meet its target of completing the container terminal at Kalibaru Port by the middle of next year, Pelindo II has raised a syndicated loan amounting to $1 billion. The syndication involved six lenders, namely Deutsche Bank, ANZ, BTMU, SMBC, Mizuho, Societe Generale and UOB.
The company expects the first phase of Kalibaru Port construction to begin operations by 2017, adding 4.5 million TEUs of capacity to the existing Tanjung Priok Port.
