With investments of US$1.2 billion, North Sumatra's Kuala Tanjung Port will become one of the world's largest ports, according to state port operator Pelindo I.
Pelindo I president director Bambang Eka Cahyana said on Wednesday that Kuala Tanjung Port could reach 30th position in the Best Port List.
Located in Batubara regency, home to resources such as oil palm and aluminum, Kuala Tanjung Port would become a transit hub for shipments to Europe, he said, adding that with its modern facilities, and strategic location, the port could even compete with Singapore's largest port.
'Once the port has been fully developed, then many large ships heading to Europe can transit via Kuala Tanjung Port instead of via Singapore,' Bambang said, adding that the port had a more strategic position than its counterpart in Singapore.
He said that the construction of the port would commence soon after his company had received the concession rights from the government.
'We have prepared for three years and we eventually obtained an environmental impact analysis permit in December last year. We received concession rights from the Transportation Ministry two weeks ago,' he went on.
Roger Clasquin, the managing director of the Port of Rotterdam, Pelindo I's advisor for the project, said he was upbeat that Indonesia could develop a world-class port as well as an industrial estate, similar to those of Singapore.
'Singapore has disadvantages in natural resources, but it has built up industrial clusters, so there's no reason why Indonesia can't do the same thing,' he said.
Coordinating Maritime Affairs Minister Indroyono Susilo informed reporters that the fully developed Kuala Tanjung Port would serve to support the government's objective of slashing the country's logistics costs.
'We're aiming to cut our logistics costs to 19 percent of total gross domestic product [GDP] from the current 24 percent,' he said.
Kuala Tanjung Port's multi-year development, which will be carried out in four phases, is estimated to cost around Rp 15.4 trillion (US$1.2 billion).
While Pelindo I had no specific deadline for the port's final development phase, the firm was focused on completing the first and second development phases by 2018 and 2019, respectively, Bambang said.
Under its plan, Pelindo I aims to construct a liquid bulk multipurpose terminal in the first development phase and an industrial estate in the second development phase.
It is planned that the multipurpose terminal will have a total capacity of 3.5 million tons of palm oil, 4,000 20-foot equivalent units (TEUs) of cargo and 1 million tons of dry bulk.
According to Bambang, for the first development phase alone, Pelindo I required $400 million, with 70 percent from bank loans and the remaining 30 percent from its equity.
He added, however, that his firm would likely issue Rp 300 billion-bonds in the second half of this year if it could not provide the funds required from its internal cash and bank loans.
The firm has already secured commitments for a Rp 1 trillion-loan from state lender PT Bank Mandiri and another Rp 1 trillion-loan from Bank Rakyat Indonesia (BRI).