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Cirebon-Semarang gas pipeline project in limbo
Recently appointed BPH Migas head Erika Retnowati said on Monday that the agency considered clarity on the Cisem project critical to secure funding from the 2022 state budget.
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he Downstream Oil and Gas Regulatory Agency (BPH Migas) is turning its attention to PT Bakrie & Brothers (BNBR) over the completion of the delayed Cirebon-Semarang gas pipeline project (Cisem) project.
Recently appointed BPH Migas head Erika Retnowati said on Monday that the agency considered clarity on the Cisem project critical to secure funding from the 2022 state budget.
The Cisem project comprises the 84-kilometer Semarang-Batang and the 153-km Batang-Cirebon pipeline segments. The construction of the first segment, set to kick off in 2022, is prioritized because the Batang industrial area will soon be operational.
“This is urgent because the Batang industrial area will be used soon,” Erika told House of Representatives Commission VII, which oversees energy and mineral resources, during a virtual work meeting in Jakarta.
There has been a long debate regarding the financing of the Cisem project, according to Erika, as the previous BPH Migas committee had been reluctant to use state funding for the project.
BNBR corporate communications head Bayu Nimpuno declined to provide further details on the matter but said the company and BPH Migas would arrange a meeting in the near future.
“We cannot comment yet,” he told The Jakarta Post on Tuesday.
The previous BPH Migas committee on Aug. 8 appointed BNBR to take over the Cisem project from state-owned construction firm PT Rekayasa Industri (Rekind). BNBR came second in a tender for the project in March 2006, after Rekind.
The gas pipeline connecting Cirebon in West Java with Semarang in Central Java is set to accommodate between 350 and 500 million metric standard cubic feet per day (mmscfd).
The construction of downstream gas infrastructure aims to connect more households and industries to Indonesia’s sizable reserves of natural gas, which is seen as the country’s fuel of choice for the future and in many cases as a replacement for oil.
Read also: Cirebon-Semarang industrial gas pipe construction kicks off after 14-year delay
Funding for the Semarang-Batang segment has been earmarked in the budget draft (RAPBN). Should the funding be agreed to, approximately Rp 1 trillion (US$69.43 million) would be allocated in the 2022 state budget for the first stage.
Meanwhile, the construction of the Batang-Cirebon segment, which is set to begin in 2023, is expected to require another Rp 1.89 trillion.
“Whether we will use the state budget or government-to-business cooperation [KPBU] for the 2023 Batang-Cirebon [segment] has yet to be decided,” Erika added.
