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RI, Japan talk financing for port project
Mauritz HM Sibarani (dephub
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Mauritz HM Sibarani (dephub.go.id) (dephub.go.id)
Mauritz HM Sibarani (dephub.go.id)
The Indonesian government and its Japanese counterpart are discussing how to finance the new deep-sea port project in Patimban, Subang, West Java. The new port will replace the scrapped Cilamaya port project.
Following the cancellation of the Cilamaya port project, the Indonesian government offered the Japanese government the option to take out the largest share of a US$2.49 billion private loan.
The interest rate on the loan is 0.25 percent and spans 40 years, including a grace period of 10 years. The total cost of the project is estimated to reach $3.09 billion and the Indonesian government has proposed to cover the remaining $600 million.
'We have exchanged letters,' the Transportation Ministry's port and dredging director Mauritz HM Sibarani said.
Noting that the details were still being negotiated, Mauritz said Indonesia's Transportation Ministry would wait until next month for the Japanese government's final decision on the proposed plan.
The new loan scheme is different from an initial plan to set up a public-private partnership with Japan, as previously proposed by National Development Planning Board (Bappenas) transportation director Bambang Prihartono.
The scheme also contrasts with the government's previous stance that the project should be fully funded by the private sector to reduce state expenditure.
Mauritz said that the ministry would look for other investors if the Japanese chose to turn down the project.
Under such tenuous circumstances, he admitted that the government might have to go deeper into its already cash-strapped state budget to finance the port, given that the private sector has not been particularly eager to finance the project.
According to the ministry, the loan agreement is expected to be signed by the end of 2016, with groundbreaking scheduled for 2017. Ideally, the port will begin its first phase of operations by 2019.
The port will have a container capacity of 250,000 twenty-foot equivalent units (TEUs) in 2019, which will then be expanded to 7.5 million TEUs by 2037.
Japan seemed to have the project in the bag after the administration of then president Susilo Bambang Yudhoyono commissioned the Japan International Cooperation Agency (JICA) to conduct a feasibility study, which was estimated to cost JICA $2.5 million to $3 million.
However, Vice President Jusuf Kalla then scrapped the Cilamaya project because of concerns it would affect the expansion of state-run oil and gas firm Pertamina's nearby offshore operations. The government has moved the project further east.
Patimban has been selected because it is thought to tick all the necessary boxes in terms of legal issues, expected demand, low soil sedimentation and thus low dredging maintenance, safety and how it stands with Pertamina's pipes.
Other sites in consideration, such as Tarumanegara in Bekasi, Balongan in Indramayu and Cirebon, all in West Java, all failed on issues related to demand or technical and safety issues.
The project has also been put on the national strategic projects list of 30 priority infrastructure projects. These priority projects are backed up by a presidential regulation that instructs relevant government officials to accelerate the development of the projects by issuing permits quickly and efficiently.
