Governor kicks off low-cost apartments construction

The Jakarta Post, Jakarta | Wed, 12/24/2008 1:38 PM  

Jakarta Governor Fauzi Bowo kicked off the construction of low-cost rented apartments in Pulogebang of East Jakarta on Wednesday in a bid to provide affordable homes for poor residents, tempointeraktif.com has reported. 

The governor said on Wednesday that the apartments would accomodate residents who wanted to remove from their previous living places, such as under toll bridge and slum areas. 

“I have expected that people who occupy the apartment can keep it well so that it won't turn out to be another slump and dirty area,” he said, adding that the apartment is scheduled to be complete by nexy year. 

Beside Pulogebang, he added, the city administration and developers would construct another apartment in Muara Baru in Pluit of North Jakarta. 

“The apartment will provide homes for people who want to move from their places that are above Pluit dam to the apartment,” he said. (ewd)

Apexindo still getting contracts

The Jakarta Post, Wed, 12/24/2008 10:49 AM  

Publicly listed PT Apexindo Pratama Duta, the biggest oil and gas services company in Southeast Asia, said Tuesday it would remain upbeat about next year's prospects as contracts keep coming in despite the tough global economic environment. 

"We aim to secure contracts with big oil and gas companies which have large reserves," said Apexindo president director Hertriono Kartowisastro. 

For 2009, the company has so far secured US$279 million in contracts, including a 2-year contract with Chevron worth $32.6 million, a $43.9 million contract with Total E&P Indonesia and $26.9 million contract with Vico. 

"We are now working to secure another contract from Total E&P Indonesia in Tunu, East Kalimantan," Hertriono added. 

In the first nine months of 2008, Apexindo generated $182.5 million in revenue and managed to book $96.8 million in EBITDA -- or earnings before interest, taxes, depreciation and amortization. 

"We expect to get $30-$40 million in net profits this year. We forecast our net profit will rise to $55 millions next year," vice president Tito Sulistio said. 

Currently, the company operates eight on-shore rigs, six off-shore rigs and an FPSO (floating production storage and offloading facility), which is expected to start to contribute to revenue next year. 

Apexindo's total capitalization, as of Nov. 4, was estimated at $680 million. 

Tito, however, said the company had no plan to invest in more rigs next year and would only spend no more than $20 million on capital expenditure, mostly for maintenance. 

On Nov. 14, local tracking company PT Mitra Rajasa bought 98.14 percent of the company's shares for $500 million. 

Before the sale, Apexindo was 48.87 percent owned by the country's second largest oil producer PT Medco Energi International, 31.7 percent by Encore International Ltd, and the remainder by the Panigoro family and the public. 

The acquisition of Apexindo has contributed to the increase in Mitra Rajasa's net profits by a multiple of 35 times from Rp 1.6 billion ($146,205) in the January-September period last year to Rp 58.4 billion during the same period this year. -- JP/hwa

Lampung builds special school to support bioenergy program

Oyos Saroso H.N., The Jakarta Post, Bandarlampung | Tue, 12/23/2008 10:59 AM  

The Lampung provincial administration is building an integrated biofuel school in Central Lampung regency as part of its plan to become a national bioenergy center. 

Construction of the special school in Sulusuban village, Central Lampung, is expected to cost Rp 216 billion (US$19.6 million), funded by the central government (50 percent), province (30 percent) and regency (20 percent). 

Construction work commenced in the middle of the year and is scheduled for completion in 2017. 

Head of the Lampung office Development Planning Board, Suryono S.W., said the school would be located within the compound of the Agency for the Assessment and Application of Technology (BPPT) in Sulusuban village in Seputihagung district. 

"The budgeted Rp 216 billion will be used to build the school, from elementary to university levels. A vocational school will be built in the initial phase, followed by a polytechnic," Suryono said recently. 

"Both schools will focus on the field of bioenergy. The integrated school will also be associated with BPPT's large-scale projects." 

According to Suryono, the Lampung provincial administration is serious about turning the province into a center for renewable energy. It is also actively seeking to attract investors in building cassava- and jatropha-based biofuel plants, as well as supporting and empowering farmers to cultivate the crops. 

"A number of investors from South Korea and China have currently signed memorandums of understanding with the Lampung administration to build bioenergy plants. BPPT in Sulusuban has also spearheaded bioethanol development in Indonesia," Suryono said. 

"So it's very timely that the administration is working with the BPPT in setting up and developing the special school." 

He said the potential for bioenergy in Lampung was very promising because of the area's vast cassava plantations and a number of bioethanol plants in Central and North Lampung regencies. 

"They should be supported by skilled workers in the field of bioenergy. That's why we have built the integrated bioenergy school," he added. 

The cooperation with BPPT, said Suryono, took the form of land use and provision of teaching staff. 

"BPPT has provided 317 hectares for the school, and construction commenced this year," he said. 

A number of investors have been building bioethanol factories in Lampung since 2006. PT Medco, for instance, has invested $40 million in North Lampung in developing renewable bioethanol at an output capacity of 60 million liters annually. 

The plant also produces biogas to feed boilers, 33,000 metric tons of liquid carbon dioxide, 13,000 metric tons of organic fertilizer and 118,000 liters of fusel oil. 

In Central Lampung, PT Medco has built a biodiesel plant based on crude palm oil at a cost of around $6 million, deriving raw materials from palm oil farmers. 

For raw materials, PT Medco has developed a partnership program encompassing six districts in Central Lampung over a total of 7,901 hectares: Pubiam (1,773 ha), Padang Ratu (1,939 ha), Selagai Lingga (1,178 ha), Sendang Agung (972 ha), Anak Tuha (1,662 ha) and Anak Ratu Aji (377 ha). 

PT Madu Lampung Indah has also set up a bioethanol plant with an output capacity of 50 million liters annually. It is currently using about 1,600 hectares of cassava farms and expects to be able to manage 4,000 hectares of cassava farms in partnership programs with farmers in East and South Lampung regencies. 

The Lampung BPPT office has been developing bioenergy fuel since the 1980s, with the arrival of equipment bought with the assistance of the Japanese government. Researchers at BPPT have conducted further studies on other raw materials for bioethanol, such as sugarcane, corn and other crops. 

Earlier, Lampung BPPT researchers developed raw material for bioethanol from molasses at a 20.5 percent sugar content. However, sugarcane supplies were limited at the time because of the demand from the food industry. 

One BPPT researcher, Arief Yudiarto, said that, according to Lampung BPPT's estimates, Indonesia would have to set up 50 new bioethanol-processing plants by 2010 if the entire petroleum demand in Indonesia were replaced by gasohol, which has an ethanol content of 10 percent (Gasohol BE-10). 

"That is if Indonesia wants to be serious about developing renewable energies," Arief said.

BNI gives $70m loan to Timah

The Jakarta Post, Tue, 12/23/2008 10:58 AM 

JAKARTA: State-run Bank Negara Indonesia (BNI), the nation's third largest lender, agreed Monday to channel US$70 million of standby loans to state mining company PT Timah to complete the building of 10 vessels currently being delayed by the state shipyard company PT PAL. 

"Currently PAL has about 10 delayed orders, each costing around $7 million to complete," Timah president director Wahid Usman said after signing the loan agreement. 

According to Wahid, Timah will benefit from helping the ailing PAL, as the company's subcontractor, because it wishes to learn more about vessel construction to improve the shipbuilding experience of its subsidiary PT Dok dan Perkapalan Airkantung (DAK). 

DAK provides dock services and vessel repairs, as well as producing small vessels for Timah. 

Under the deal with BNI, Timah is required to finish one vessel at a time before being able to withdraw the remaining loans. 

"The construction process will cost less than $70 million," said Usman. 

The shipbuilding project will also involve a deal between PAL and state-owned steel company PT Krakatau Steel, which will supply steel at a cheaper price to PAL. The Surabaya-based PAL will need around 14,000 tons of steel to finish the project. -- JP/(dis)

Sinar Mas still keen to take over Century

The Jakarta Post, Jakarta | Tue, 12/23/2008 10:58 AM 

Publicly listed investment and financing company PT Sinar Mas Multiartha still finds ailing Bank Century an attractive proposition and says it will take the bank over once the government supported Deposit Insurance Agency (LPS) completes its work. 

During the company's public disclosure session Monday, Sinar Mas president director Edward Hadidjaja said that interest in Century would depend on the agreed selling price the LPS was willing to offer. 

"Our interest in Century remains, but it will depend on the restructuring progress currently being handled by the LPS," said Edward. 

Sinar Mas, owner of mid-size Bank Sinarmas and Sinarmas Securities, announced on Nov. 17 a plan to buy a 70 percent stake in Century prior to the government taking over of the bank on Nov. 21 due to its deteriorating capital adequacy ratio (CAR), which had plunged to negative 2.3 percent. 

The CAR is a gauge of a bank's financial health, with the mandatory minimum set at 8 percent. 

Century has ever since been under the wing of the LPS, which has so far injected Rp 2.5 trillion (US$221 million) into the bank bringing its CAR back up to more than 10 percent. 

As reported earlier, Bank Indonesia has suggested that private investors, including Sinarmas, should help to clear up banking problems. 

Sources at BI have said the central bank had to persuade Sinar Mas Group to buy Century because if it had to be liquidated, the LPS did not have enough funds to cover all the possible defaults on the bank's deposits. 

However, the group requested Century to be restructured by the LPS before the takeover could be completed as it perceived it to be far more risky to buy Century prior to supervized restructuring by the LPS. 

Sinar Mas Group, the parent of Sinar Mas Multiartha, is controlled by tycoon Eka Tjipta Widjaya, the former owner of Bank Internasional Indonesia. 

BI has said Century would likely stay under the LPS for at least six months. (hwa)

 

Sinar Mas Multiartha performance (in million rupiah)

----------------------------------------------Sept 2008--------Sept 2007

• Asset----------------------------16.411.556-------11.806.734
  
• Operational revenue-----7.424.330---------5.072.056
  
• Net profit--------------------------346.303------------586.593
  

MNK to build new plants worth $56m

Ika Krismantari, The Jakarta Post, Jakarta | Tue, 12/23/2008 10:59 AM  

After being acquired by PT Ancora Indonesia Resources (AIR), PT Multi Nitrotama Kimia (MNK), an explosives raw material producer, is set to build a new plant to increase existing capacity with a total investment of US$56 million. 

MNK plans to start building the plant with a total capacity of 100,000 metric tons of ammonium nitrate -- a material used for explosives -- in its industrial site in Cikampek, West Jawa. The plant is targeted for completion in 2009. 

AIR president director Usman H.Darus said on Monday the decision to build the plant was taken as the explosives business would be a good opportunity for the company, enabling it to take advantage of the robust growth in the mining sector. 

AIR has recently taken over 40 percent of MNK shares under its strategy to become a service provider for mining companies. 

Jakarta-based AIR is a subsidiary of Hongkong-based investment and buyout company Ancora Capital Management Limited which was founded by JPMorgan alumni Gita Wirjawan. 

MNK currently controls 70 percent of the country's market share for explosive materials. 

The expansion plan is expected to meet the rising demand for explosives, which has been steadily growing at an average of 7 percent annually. This year, demand is expected to reach 300,000 metric tons. 

MNK owns two plants producing nitric acid and ammonium nitrate with a capacity of 37,000 metric tons and 55,000 metric tons, respectively. 

Meanwhile, AIR is also planning to acquire mining sites in the hope of expanding its mining business. 

Usman said the company was currently in talks with a number of coal companies in Kalimantan to acquire five coal concession with a total reserve of 15 million tons.

RI, China sign Rp 35t deals on energy, mining

Alfian and Adianto Simamora, Jakarta, The Jakarta Post | Tue, 12/23/2008 10:59 AM  

Indonesia and China signed deals Monday covering cooperation on eight energy and mining projects worth a total of around Rp 35 trillion (US$3.13 billion). 

The cooperation agreements were signed during the third Indonesia-China Energy forum (ICEF), which was attended by Vice President Jusuf Kalla and China's visiting Deputy Prime Minister Li Keqiang. 

"This is in the interest of the two countries. So we will purchase China-made products for the projects to help propel their economy, which will eventually have an impact on us as well," said Kalla. 

"Investment in energy these days is far cheaper, and if we invest today, we will ready when the world economy recovers," he said. 

The eight projects include one oil and gas project, one biodiesel development project, two coal mining projects and four power plant projects. 

The first project is the extension of an oil and gas contract in the Madura Strait, East Java, which is run by China's CNOOC and Canada's Husky. 

Upstream oil and gas regulator BPMigas signed a deal with the two companies to extend their contracts for another 20 years. Initially, the contract would have expired in 2012. 

Four cooperation agreements on electric power production projects are also included, two of them including commitments from the Exim Bank of China to finance two coal-fired power plant projects initiated by the state power company PT PLN. 

The two power plants are located in Pelabuhan Ratu, West Java, and Pacitan, East Java. Pelabuhan Ratu's power plant will have a total capacity of 1,050 megawatts and Pacitan's power plant 630 megawatts. 

Both plants are expected to be in operation by 2010, according to PLN president director Fahmi Mochtar. 

PLN has also signed a power project agreement with China National Technical Import and Export (CNTIE) and Shanghai Electric Group Company Ltd. 

The two companies, together with two other local partners, will construct a power plant in Adipala, Cilacap, Central Java with a total capacity of 660 megawatts. 

Fahmi said PLN was still looking for financing sources to complete the financing for this project. He added the three power plants were part of PLN's 10,000 megawatt coal-fired accelerated power production program. 

PLN also signed a power purchasing agreement for a fourth power plant with a private independent power producer (IPP) PT GH EMM Indonesia, a subsidiary of a China-based power producer currently building a 227 megawatt coal-fired power plant in Simpang Belimbing, Muara Enim, South Sumatra. 

"My hope is these deals will not merely be signed on paper but become reality and be implemented concretely," said China's Keqiang. 

The ICEF also witnessed two coal mining cooperation agreements, including a joint venture between state mining company PT Tambang Batubara Bukit Asam and China's Huadian Corporation. 

A deal to develop biodiesel plants in Jambi and South Sumatra was also signed. 

Purnomo said the financial commitments for the eight projects would not be spent entirely until next year. 

"The projects will take place over several years. Thus, the investments will be spent pro rata with the pace of project development," he said. 

The projects are expected to provide almost 32,000 new job opportunities, he added. 

RI-China deal - Project / Value

1. Oil and gas contract extension in Madura Strait (BP Migas, CNOOC and Husky Madura Ltd) - US$642 million
   
   
2. Power plant financing in Pelabuhan Ratu (The Exim Bank of China and PT PLN) - US$481.94 million
   
   
3. Power plant financing in Pacitan (The Exim Bank of China and PT PLN) - US$293.23 million
   
   
4. Power plant construction in Cilacap - US$605.29 million 
   (PLN, CNTIE and Shanghai Electric) - Rp 2.45 trillion
   
   
5. Power purchase agreement for Muara Enim (PT PLN and PT GH EMM Indonesia) - US$330 million
   
   
6. Coal mining joint venture in Muara Enim (Bukit Asam and Huadian Corp) - US$14.40 million
   
   
7. Biodiesel development in Jambi and South Sumatra (PT Kurnia Selaras and China Development Bank) -   US$255 million
   
   
8. Coal mining cooperation in East Kalimantan (PT Budi Dharma Kencana and Lark Guangdong Power Resources Inc) - US$350 million
   
   

Sources: The third Indonesia-China energy forum 2008

Government To Support Handicraft Industry

The Jakarta Globe, Dian Ariffahmi & Teguh Prasetyo, 22 December 2008

The government plans to host hundreds of promotional events and trade shows in 2009, which it has dubbed the “Year of Creative Industries” in response to complaints that it isn’t doing enough to stop foreign producers from cashing in on Indonesia’s cultural heritage by selling imitation handicrafts, officials have said. 

President Susilo Bambang Yudhoyono will officially launch the campaign today in Jakarta. 

Traditional Indonesian products such as batik are increasingly being imported from countries such as China and Malaysia, drawing complaints from local producers. 

“We will actively promote Indonesia’s traditional culture so the world can learn about our heritage,” said Subagyo, director general for domestic trade at the Ministry of Trade. 

Trade Minister Mari Pangestu said the government would promote local products through events and help Indonesians working in the creative industries to protect intellectual property. 

The creative industries, which include sectors such as handicrafts, fashion, film and furniture production, make significant contributions to Indonesia’s gross domestic product and employ 5.4 million people, Pangestu said. 

“People from around the world will soon be able to recognize authentic Indonesian batik,” Pangestu said. “Some countries may claim to have similar batik, but they don’t.” 

The Trade Ministry has invited young entrepreneurs from 14 creative industries to showcase their products at promotional events and trade shows next year. 

Tonton Taufik, a businessman who exports rattan furniture products to more than 50 countries, praised the government initiative, saying it would help accelerate growth in the creative industries. He said he had earned $1.5 million this year by exporting his own products and helping other rattan and handicraft producers expand production and exports to overseas markets. 

“I work at home and market my rattan furniture on the Internet, and my shipments to overseas markets have been increasing steadily every year,” he said. 

Film-industry professionals, meanwhile, say Indonesian moviemakers have limited exposure overseas and almost exclusively rely on local audiences. Mira Lesmana, one of the country’s most critically acclaimed young directors, said Indonesian filmmakers should start seeking international recognition. 

Adrian Elkana, director of Castle Productions, the only producer of animated films in Indonesia, said the film industry had the potential to expand domestic and foreign sales. 

Indonesia’s animation industry has already been outsourcing on foreign film productions for several years, he said. 

Film critics “have been encouraging local filmmakers to produce and export animated films that are based on Indonesian culture and characters, but still suited to contemporary trends and the demands of teenagers,” Adrian said. 

Indonesia’s exports have slowed down in recent months due to the global economic slowdown. Exports in October fell 11.6 percent from September, although they were up 4.9 percent compared to the same month last year. 

Non oil and gas exports reached $9 billion, or down 8.1 percent from September.

Life insurance to continue to flourish

The Jakarta Post, Jakarta | Mon, 12/22/2008 11:06 AM  

The country's life insurance industry will ride the waves of global economic downturn largely unscathed, with growth in premium income likely to hit 33 percent next year, say business players. 

David Beynon, vice chairman of the Indonesian Life Insurance Association (AAJI), told an industry seminar last week that the growth anticipated for 2009 was due to the under-penetrated insurance market, and the nature of the business. 

Whilst temporary cuts in profits may inevitable during a downturn, life insurance is a long term business, and profitability should be judged over many years, he said. 

Peter Heidinger, managing director and regional industry head of financial institutions for Citi Asia Pacific region, said although the insurance industry declined worldwide in the past year, the Indonesian market is of significant potential, in particular, the life insurance sector. 

In 2007, total insurance premiums in Indonesia grew by more than 30 percent. Most of this, 60 percent, came from the life sector. The general sector only rose by 2 percent, Heidinger explained. 

The Indonesian insurance market is supported by more than 100 providers, although overall, the insurance market in the country remains significantly under-penetrated, he said. 

In terms of life insurance penetration, the Indonesian market in terms of premiums was equivalent to 1.1 percent of GDP in 2007. This was far lower than Singapore's premium penetration of 6.2 percent of GDP, or Malaysia with 3.1 percent. 

Indonesian premiums per capita were only $20.4 in 2007, while Singaporeans spent $2,244.7 per capita on premiums and Malaysians $221.5. 

A study jointly undertaken by Allianz and the United Nations Development Program in 2006 projected there could be as many as 2 million microinsurance policies in Indonesia by 2010, and that this could double to 4 million by 2012. 

Isa Rachmatarwata, head of the insurance division of the Indonesian Capital Market and Non-Bank Financial Institutions Supervisory Agency (Bapepam-LK) said the insurance industry had a huge market still to explore. 

He said there was no reason to be pessimistic although a prudent attitude towards investment was required. "The agency will monitor the investment practices of insurance companies, specifically those under investment managers." 

Isa said Indonesia's premium income in 2007 was Rp 48.5 trillion (US$4.3 billion) from life insurance and Rp 20.2 trillion from non-life premiums. In the first three quarters of 2008, income from life insurance had reached Rp 40.8 trillion alongside Rp 17.9 trillion for non-life premiums. 

For example, insurance company PT Asuransi Jiwa Manulife Indonesia had received Rp 889.7 billion in premiums as of September 2008. 

Its new business premiums had grown 108 percent by the third quarter of 2008 compared year on year to the previous period, said Beynon, who is also the president director of the company. 

Beynon said insurance products which would be in favor with the customers next year included the traditional premium and the regular unit-linked premium. "These will take over the single premium unit link market and continue to grow." 

Single premium unit link is an insurance product that required the policy holder to pay once in advance. The product was then invested into other financial products. 

Regular premium unit link is also invested into other products in another financial body, but the customers pay the premiums in installments. (iwp)

Pertamina to spend big on upstream

Alfian, The Jakarta Post, Bandung | Mon, 12/22/2008 11:06 AM  

State oil and gas company PT Pertamina plans to spend around Rp 11 trillion (US$1 billion) on upgrading its upstream facilities as part of an effort to boost output, the company's upstream director, Karen Agustiawan, says. 

The company expects to see a 7 percent rise in oil output next year to 171,250 barrels of oil per day (bopd) up from an estimated 159,000 bopd in the previous year. 

Karen said some 6 trillion (US$541.76 million) of planned expenditure would go to PT Pertamina EP, the subsidiary which produces and sells oil and gas. 

"Of the total Rp 11 trillion investment for upstream we have planned for 2009, nearly Rp 6 trillion will go to PT Pertamina EP," Karen said on Saturday. 

Karen said that Pertamina's upstream investment target this year would also be close to Rp 11 trillion, but only 70 percent of it would be realized by the end of the year. 

Pertamina's oil and gas production has been derived from two of its upstream subsidiaries -- Pertamina EP and PT Pertamina Hulu Energi. Pertamina Hulu manages and develops oil and gas upstream portfolios through partnership schemes. 

Nearly 80 percent of Pertamina's total oil output is from Pertamina EP. 

Due to liquidity shortages in the past, Pertamina could not invest much in upgrading Pertamina EP facilities. 

Karen said the planned investment for Pertamina EP would be spent to upgrade production assets in the Limau oil fields in South Sumatra and Tambun gas fields in Bekasi, West Java. 

"The two fields are the backbone of Pertamina EP, and they will become pilot projects (for facility upgrading)," she said. 

Karen did not specify what facilities would be added. 

Of this year's targeted oil output, 125,000 bopd will be from Pertamina EP while the remaining 34,000 bopd will come from Pertamina Hulu. 

Karen said Pertamina Hulu had managed to meet its target, while Pertamina EP could only produce 119,000 bopd due to a major overhaul of its facilities in March and May. 

Pertamina has targeted to produce 171,250 bopd next year. From this target, Pertamina EP is expected to contribute 132,250 bopd and Pertamina Hulu 39,000 bopd. 

Karen said Pertamina EP was expected to gain a quite significant additional output next year because it would receive 6,750 bopd from its new oil block in Cepu. 

However, she believed the 2009 target was a moderate one. 

"I don't want to create expectations that would be too high. We are keeping to modest targets while we are upgrading our facilities," she said. 

Meanwhile, crude oil prices on the New York Mercantile Exchange have fallen 77 percent from a record US$147.27 a barrel on July 11 to US$33.87 a barrel on Friday, Bloomberg reported. 

In response to the price decline, Karen said Pertamina would not revise downward next year's target as the company was responsible for meeting domestic oil needs. 

Karen added oil production costs in Indonesia were still lower than the current oil prices. 

"The production cost is only about US$10 per barrel in Java and between $8 and $9 in other areas," she said. 

Pertamina is also to continue with its plan to acquire stakes in other oil and gas blocks. 

The company has repeatedly said it plans to secure bigger shares in several blocks, including the West Madura block in East Java, Total's Mahakam block in East Kalimantan, and Chevron's deep-water fields off East Kalimantan. 

Pertamina has also sent official requests to obtain a higher stake in Inpex's Masela offshore block in the Timor Sea. 

"We hope we can get 30 percent (of a stake in the block)," Pertamina's president director Ari Soemarno said Friday. 

Pertamina is also in talks with Verenex Energy Inc. to buy the Canada-based firm's stakes in an oil field in the Ghadames Basin in Libya. 

Karen believed now was the right time for Pertamina to expand its oil and gas fields. 

"I think this is the right time for shopping, because all the prices have dropped in alignment with declining oil prices," she said.

Krakatau Steel sells 14,000 tons of steel to national ship builder

The Jakarta Post, Jakarta | Mon, 12/22/2008 5:34 PM  

State-owned steel company PT Krakatau Steel has agreed to supply 14,000 tons of steel to state-owned ship builder PT PAL for the construction of two ships, Antara news agency reported Monday. 

The supply agreement was signed in Jakarta on Monday at the State Enterprises Ministry. 

PAL President Director Harsusanto said the company has received an order from Germany to build two 50,000 deadweight tons (DWT) ships to be completed next year. 

He, however, did not reveal the value of the steel procurement agreement. The price of steel is still fluctuating in the market; Antara recorded steel had been traded at US$600 per ton on Monday. 

Harsusanto said PAL had pending orders to construct 16 ships, ranging form 22,000 to 50,000 DWT, to be completed by the end of 2012. He said each ship would require between 7,000 and 8,000 tons of steel. 

Separately,  Krakatau Steel Marketing Director Irvan Hakim said the company was ready to allocate 25,000 tons of steel, out of an annual production of 360,000, for PAL contracts. 

"Our cooperation with PAL has been running for a long time and the company will continue to be a strategic partner for us," he said. (dre)

PetroChina Reports Oil Discovery in Jambi Province

The Jakarta Globe, Reva Sasistiya, 19 December 2008 

PetroChina Co., the biggest oil and gas producer in Asia, has found oil in Jabung block, Jambi Province, that is expected to add 2,500 barrels of oil equivalent per day to the company’s total production level in Indonesia. The find comes amid PetroChina’s drive to double its Indonesian production by 2012. 

The discovery was made in the Marmo-1 Wild Cat well in Marmo field, Jabung block. It will bring the current production of the block to 59,000 barrels of oil equivalent per day — 71,000 barrels if oil condensates and gas are included. 

“Initial production of 500 barrels will take place early next year,” Budi Setiadi, the company’s vice president for Indonesia operations, said on Friday. 

PetroChina drilled seven wells in Marmo field in August. The exploration test in the Marmo-1 well discovered the 2,484 barrels of oil equivalent per day and 9,911 standard cubic meters of gas per day, Budi added. 

PetroChina operates the Jabung block and owns a 27.8 percent stake, while Malaysia’s Petronas holds a 27.8 percent stake. Other shareholders in the block include PP Oil and Gas Ltd. (Indonesia-Jabung) with 30 percent and state-owned oil and gas company PT Pertamina with 14.3 percent. 

As part of a 20-year contract with Singapore, PetroChina is to supply the city-state with 3.7 million standard cubic meters of Jabung gas per day via a 450 kilometer pipeline connected to the Corridor-Duri pipeline through Batam Island. 

The company is currently developing oil and gas production fields in Papua and East Java Province with a total production level of 90,000 barrels of oil equivalent per day. 

As part of its plan to double production in Indonesia to 200,000 barrels per day by 2012, PetroChina also expects to drill 58 wells in the next 12 months, Wei Zhigang, PetroChina’s president director said. 

In Sumatra, the Chinese energy giant is operating in three blocks, including Jabung, Bangko and South Jambi B. 

The company is preparing to drill a second delineation well in the Kenong field in Bangko block after it observed a total gas flow rate of 396,436 cubic meters per day in the field, Zhang Honglin, PetroChina’s senior project manager said. 

“We are also preparing drill sites in Siter and Organ to test the potential,” Zhang added. 

The Siter and Organ sites are located in Bangko block’s West Piano field. At East Java’s Tuban block, Budi said that PetroChina would continue its hunt for hydrocarbons by drilling five more exploration wells over the next two years.

Chinese Deputy PM to observe Suramadu bridge project

Surabaya, East Java (ANTARA News) - Chinese Deputy Prime Minister Li Keqiang during a visit to East Java is on Sunday (Dec 21) scheduled to observe the Suramadu bridge project which is to connect Madura island with mainland Java, a project official said. 

The project`s chief officer, Atyanto Busono, said here on Friday the Chinese deputy prime minister would observe the construction of the middle section of the bridge from a ferry boat which he would board at Surabaya`s Tanjung Perak seaport. The Chinese deputy prime minister would be accompanied by executive directors of China`s Exim Bank and East Java Governor Setya Purwaka. 

"The Chinese deputy prime minister will made the visit as part of China`s commitment to disbursing the second tranche of its loan to finance the building of the middle section of the bridge project," Busono said. 

He said the second tranche of the loan through China`s Exim Bank totaled US$68.93 million. 

"The bank also provided a first stage loan of US$160.2 million for the construction of the bridge in 2004-2005. This first phase loan has been used up," Busono said. 

He said the second phase loans was to be disbursed in October 2008 but due to the global financial crisis, the disbursement was delayed. 

"With the delay in disbursement of the Chinese loan, Bank Jatim has disbursed Rp50 billion for the project so that the work would not be interrupted while waiting for the disbursement of the Chinese loan," he added. 

Up to early this month, about 88.46 percent of the construction work on the bridge has been completed. Of the progress, about 99.80 percent of the causeway construction on the Surabaya side has been completed and 99.80 percent on the Madura side had been finished. 

The bridge, named Suramadu (acronym for Surabaya-Madura), would connect East Java`s provincial capital of Surabaya with Madura island.

Related Article:

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Chinese Vice Premier arrives in Indonesia for official visit

Indonesia to host World Islamic Economic Conference

Jakarta  (ANTARA News) - Indonesia will host the World Islamic Economic Conference (WIEF) here on March 1-4, 2009, the chief organizer said here on Thursday. 

Deputy Chairman of the Regional Representatives Council (DPD), who is also chairman of the WIEF Steering Committee,Irman Gusman, said the WIEF will focus on food security, energy and bottom line business handling of financial crisis. 

"This forum is of vitally importance because Islamic countries, particularly those in the Middle East, are no longer backward," Irman Gusman said. 

He said that countries in the Middle East had surplus funds amounting to US$1.5 trillion which were deposited in a funding facility called Sovereign Wealth Funds (SWF), or Sovereign Welfare Funds (SWF). 

"SWF was set up as a state-owned financial institution to serve as an investment instrument overseas," he said adding that other countries like Singapore, Malaysia and China had also set up similar funding facilities," Gusman said. 

Indonesia is expected to take advantage of the SWF to face the world economic crisis by asking owners of the surplus funds to invest in Indonesia. 

"We can take the advantage of the Beijing-Dubai-New Delhi axis. Here lies our future," he said. 

He said that at present China, India and the Middle East were now leading the front line in settling the global economic problem.

Minister: castor oil machine trial run in Rote

Kupang, E Nusa Tenggara (ANTARA News) - Research and Technology State Minister Dr Kusmayanto Kadiman  succeeded a trial operation of  his Castor oil machine in  Rote Ndao Regency, East Nusa Tenggara (NTT). 

"At Rote Ndao, the minister managed the conduct a trial run of the Castor machine which produces Castor oil and Castor pressure stove, fueled with Castor oil," said a NTT mining official, Alex Djari here Thursday. 

The minister  visited Rote Ndao, NTT, Wednesday (12/17). 

The technology equipment is very useful to tackle fossil oil fuel scarcity (diesel, gasoline and kerosene) on which the  people had been complaining these days. 

Besides, the Castor and kesambi oil fuel is environmentally friendly. 

The Castor machine and Castor pressure stove trial took place in Dodale village, South RoteSub-district, Rote Ndao Regency, Wednesday.

Wind turbines fail to generate power

The Jakarta Post, Sat, 12/20/2008 12:11 PM   

Seven wind turbines launched in Nusa Penida, an island southeast of Bali, during the United Nations Framework on Climate Change Conference (UNFCCC) in December 2007 have failed to deliver any of their promised power to local residents. 

A solar plant was also opened during the conference, as a demonstration of the administrations commitment to renewable energy. The solar plant continues to perform efficiently, producing up to 30 kilowatts of electricity per hour. The wind farms, however, have stayed silent. 

Head of Nusa Penida district Wayan Sumarta acknowledged that the seven wind plants have never been operational. 

He said he regrets their failure, lamenting the fact that the plants cost billions of rupiah to construct and had not lived up the high hopes locals had for them as an alternative source of energy. 

"It is truly regrettable that a major project like this was not been managed appropriately. Now, they are nothing more than monuments. We expect the government to pay serious attention to them," he said. 

Each wind turbine cost a reported Rp 3.5 billion ($US325,000) to build and had a planned production capacity 80 kilowatts. 

Contacted by phone, spokesperson of the Bali branch of the state-owned electricity company PT PLN, Agung Mustika, denied that the plants have never worked. 

"All of the plants operate normally. If their turbines do not move, they are storing the energy. It doesn't mean they are not functioning," he said. 

PLN financed in part the construction of the plants and is responsible for their operation and maintenance.--JP/Ni Komang Erviani

Indonesia temporarily shuts Thai Lanna coal unit ops

Fri Dec 19, 2008 6:08am EST  

JAKARTA, Dec 19 (Reuters) - Indonesia has ordered a unit of Thai coal miner and ethanol producer Lanna Resources PCL LANN.BK to temporarily halt coal production after it was found to be in violation of mining operation rules, an energy and mines official said on Friday. 

PT Lanna Harita Indonesia, which operates a coal mine in East Kalimantan, did not reclaim idle mining pits, causing one of the pits to break down during the wet season and flood nearby a village, said MS Marpaung, a director at the energy and mines ministry. 

"They should do reclamation on idle mining pits but they didn't. They didn't exercise good mining practice," Marpaung said. 

"As the head of mining inspection, we have the authority to close down the mine until they can improve it," he said. 

The ministry ordered the firm to halt its coal production early this month and gave it three months to do reclamation on its idle mining pits before it could resume production, Marpaung said. 

Officials from Thai Lanna and PT Lanna Harita Indonesia could not be reached immediately for comment. 

Despite temporarily shutting down on production, the firm will still be allowed to export coal which had been collected in stockpile, Marpaung said. 

Lanna Resources owns 55 percent of PT Lanna Harita Indonesia (LHI), the firm said in its website. 

It has mineable reserves estimated at 15 million tonnes with annual production of 1.5 million tonnes. (Reporting by Fitri Wulandari, editing by Ben Tan)

Nalco, UAE co JV for smelter in Indonesia

DNA India, Nandini Goswami, Saturday, December 20, 2008  01:14 IST                      

KOLKATA: National Aluminum Co (Nalco) has entered into a joint venture agreement with United Arab Emirates government linked RAK Minerals and Metals Investment for setting up a 5 lakh tonne smelter in Indonesia at a project cost of around $4 billion. The venture is likely to have Nalco as majority partner with around 75% stake. 

“This company is almost like a local company, which will be involved in construction of railways and ports in Indonesia on a built, own, operate basis. We are in the process of tying up other logistics on the coal front. The smelter, which will be set up in Sumatra is likely to start production in a year and a half’s time,” sources told DNA Money. 

“Some other approvals are also expected along with technical issues that have to be cleared. The entire project would include a 1,250 mw power plant as well,” the source said. DNA Money had reported on November 13 that Nalco was tying up its logistics in Indonesia and had earmarked a land in the south Sumatra province after exploring 2-3 sites for its project viability and had almost frozen its joint venture partner. 

The company would provide a detailed project report following clearance of various issues and the project could take off by early 2010. Nalco is also actively pursuing setting up a gas-based 3.1 lakh tonne smelter in Iran. A 750 mw power plant would be set up as well along with the smelter. “In Iran we would again go in for a joint venture with an Iranian company, which cannot be divulged now,” he added. 

Meanwhile the aluminum major has put its plans in South Africa and Saudi Arabia, the other proposed projects on the backburner. Back home, the company is awaiting the clearance for allotment of water for its proposed 5 lakh smelter in Jharsuguda in western Orissa, following which it will proceed on the land front. 

Nalco has ambitious plans to invest Rs 40,000 crore in greenfield projects in India and abroad.

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$4bn Tanjung Aluminum Project Planned

Gresik picks Mandiri to arrange 6.3 trl rupiah loan

Fri Dec 19, 2008 10:18am GMT  

JAKARTA, Dec 19 (Reuters) - Indonesia's biggest cement maker, PT Semen Gresik Tbk (SMGR.JK), said on Friday it has appointed PT Bank Mandiri Tbk (BMRI.JK) to arrange a 6.3 trillion rupiah ($576.9 million) syndicated loan to help finance the construction of new cement plants. 

Semen Gresik said it needs around $1.3 billion to build 2 cement factories - in Central Java province and South Sulawesi province - and 2 power plants in South Sulawesi to support the operation. 

"Despite current economic crisis, Semen Gresik will continue with the construction because production utilitisation has reached maximum, and we anticipate growing cement demand after the crisis," Gresik's president director, Dwi Soetjipto, said in a statement. 

The firm expected the plant in Central Java province to be completed in 2011 and the plant in South Sulawesi in 2012. Each will have a production capacity of 2.5 million tonnes a year. 

Currently, Gresik has a production capacity of 18 million tonnes a year. 

Bank Mandiri, the country's largest lender, will arrange the syndicated debt with its brokerage arm, PT Mandiri Sekuritas. The funds are expected to be ready for disbursement in the first quarter of 2009. 

"The loan will have a 10 year term. As for the interest rate, we are still looking into a number of factors such as inflation and market conditions. But it may come between the range of 12.5-15 percent," Bank Mandiri's president director, Agus Martowardojo, told reporters. 

Indonesia's cement consumption in November fell by 2.4 percent from a year earlier to 3.27 million tonnes. Still, total consumption for the year to date is up 12.6 percent from a year earlier at 34.96 million tonnes. 

Semen Gresik and its main rival PT Indocement Tunggal Prakarsa (INTP.JK) had both predicted last month that cement demand would decline in 2009 because of tougher economic conditions. 

Gresik's shareprice ended 0.63 percent higher at 4,025 rupiah on Friday, bucking a 0.26 percent fall in the broader market .JKSE, while Mandiri's shareprice finished 3.53 percent lower to 2,050 rupiah, after gaining strongly this week. ($ 1 = 10,920 rupiah) 

(Reporting by Andreas Ismar, editing by Neil Fullick)

Decree on fiber optics to be issued next year

Tifa Asrianti, The Jakarta Post, Jakarta | Fri, 12/19/2008 11:02 AM  

Traffic congestion caused by continuous excavations will be diminished as the city administration plans to create a master blueprint of the underground optic network. 

The blueprint will be part of a gubernatorial decree regulating fiber optic development. 

Governor Fauzi Bowo on Thursday said the decree would be ready by the first quarter of next year. 

"We want to provide better services ... There will be no more overlapping road excavation projects," he said at City Hall. 

The city administration has stopped issuing permits for all road excavation projects while the regulation is being drafted. 

"We do not have a verification system for fiber optic development. For the time being, we only have permits for road excavations and another permit for short-time excavation. After the decree issuance, we will use the short-time permits for fiber optic development," Fauzi said. 

He said the master plan would contain calculations on future demand for traffic lights, electronic traffic control, tax transmission data and surveillance cameras that would use fiber optics. 

"We will let private companies operate the fiber optic network. There will be a city-owned company involved in the fiber optic network operation, but we will treat it like a private company," he said. 

Jakarta currently has a 2,221-kilometer-long fiber optic network. 

Fauzi said development was previously disorganized because operators usually set up networks at the request of consumers, usually in upscale business areas. 

"We even found operators applying for cable permits for what later turned out to be fiber optic projects. 

"We realized that fiber optics will be needed not only by businesses, but by households as well." 

Yusuf Effendi Pohan, head of public street lights and utilities, said the administration needed to anticipate fiber optic development after seeing 50 percent growth last year. 

Ardi Sudarto, sales marketing manager for corporate solutions at fiber optic-based Internet service provider CBN, said his company saw the regulation as an opportunity to expand fiber optic networks to new areas. 

"Perhaps the regulation is aimed at organizing the network and excavation activities. We support the decree as long as it allows us to do business and serve customers," he said. 

Yusuf said the fiber optic development would help reduce the number of base transceiver stations (BTS) in the city as it could transfer data quicker than regular cable networks. 

Currently, there are 3,400 BTS towers in Jakarta. The city administration plans to limit them to 800 towers. 

"With fiber optics, cellular phones will have better signals," he said. 

Yusuf said the administration would make fiber optics in line with ducting projects, which aim to integrate utility networks such as electrical wiring, water pipes and sewer pipes. 

The 200-meter ducting under Menteng Park, Central Jakarta, is one of the ducting projects completed by the city administration.

Ministry: Tourism arrivals to rise 25 percent

The Jakarta Post, Jakarta | Fri, 12/19/2008 11:41 AM 

Almost certain to meet this year's revised downward target, the government remains boldly confident foreign tourist arrivals will rise 25 percent next year, betting partly on the results of higher promotional budgets, says a ministry official. 

Sapta Nirwandar, a director general at the Culture and Tourism Ministry said Thursday, the industry would continue to grow despite the global economic downturn and financial crisis due to loyal travelers who visited Indonesia to pursue their hobbies and for cultural reasons. 

"This is a crisis-proof industry," Sapta told a seminar on tourism. 

For 2009 the ministry forecast 8 million people would visit the country, 1 million more than the initial target, compared to a targeted 6.4 million for this year. 

This seems overly optimistic, since until the end of October, foreign tourist arrivals stood at 5.09 million. With monthly arrivals averaging 500,000, many have expressed doubts the full-year 2008 target can be achieved, even with help from the Visit Indonesia Year program. 

In 2007, 5.05 million tourists traveled to Indonesia. 

For next year, Sapta anticipated a decline in arrivals from the United States and European countries, but largely compensated for by an increase in visitors from South Korea, China and the Middle East. 

"We are going to promote more health and beauty tourism, also marine tourism and smaller islands," Sapta said. 

Hobbyists, such as surfers and divers, and the nature and culture oriented travelers would not take Indonesia off their agendas, he said. "Small islands and new destinations would be promoted more intensely." 

Promotion activities would be helped by a 10 percent increase in the promotional budget for 2009 to Rp 285 billion (around US$25.8 million). 

"We have more than 300 ethnic groups, and these rich cultures never fail to attract tourists," he said. 

Chairwoman of Indonesian Association of Hotels & Restaurant (PHRI) Yanti Sukamdani welcomed the plans for more intensive promotional activities. 

"The association is more than ready to welcome international tourists, because we now have a special agency to give certificates to tourism professionals." 

"The agency will be launched Friday," Yanti said. 

She brought a long wish list for the government though, from international airports to lower taxes on imported beverages. 

"We need more international airports. For example, one third of tourists coming to Bintan were from Singapore, one third from Japan and Korea, and one third from everywhere else including Russia. Why don't we build an (international) airport over there?" 

"We also need to give visas on arrival at more international gates, such as in Kupang and Merauke." Another wish was: "Cleaner toilets, especially in airports." 

The tourism industry is a key foreign exchange income earner for Indonesia. In 2007, it brought $5.345 billion into the country.

Govt eyes $25b of investment in energy and mining

Alfian, The Jakarta Post, Jakarta | Fri, 12/19/2008 11:42 AM  

In a bold move, the government forecasts investment in the oil, gas, power and mining sectors next year will grow by 16.7 percent compared to this year, despite the global financial crisis and economic downturn constraining some financial flows. 

An official statement from the Energy and Mineral Resources Ministry issued late Wednesday showed that oil, gas, mining, and electricity projects are expected to attract US$25.39 billion investment in 2009, up from this year's target of $21.74 billion. 

Energy and Mineral Resources Ministry Purnomo Yusgiantoro said earlier in the day the global financial crisis would have only a minor impact on these sectors which all represent long-term projects. 

"Business in oil, gas, mining, and electricity is not short-term. The projects can last between 20 and 30 years. Thus, despite the crisis, these sectors will still be able to attract investment next year," Purnomo said. 

Purnomo added he had received information there were three mining companies, including the U.S.-based copper and gold mining company Freeport, which were in the process of laying off part of their workforce, but he was convinced that the dismissals reported now were far less than the workers these sectors would hire in 2009. 

"We have information that about 200 workers have been laid off, but the projects in these sectors could provide jobs for 150,000 workers next year," Purnomo said. 

Of the $25.39 billion of targeted investment for oil, gas, energy and mining in 2009, the oil and gas sector is expected to contribute the lion's share, at about $16.64 billion, or 66 percent of the total. 

The ministry said the investment would go into existing and new oil and gas blocks, as well as into coal bed methane development. 

Kardaya Warnika, the ministry's advisor for information and communication and former chairman of upstream oil and gas regulator BPMigas, said Indonesia's oil and gas sector was attractive for investors as production costs here were still reasonably lower than oil prices, even at the current levels. 

"Although the oil prices have now declined to below $50 per barrel, investors could still gain as the production cost for oil in Indonesia is only about $10 per barrel," he said. 

The ministry said investment in the oil and gas sector would also come from downstream projects, including two small oil refinery projects and three small LPG compression terminals. 

The oil and gas sector is expected to provide 56,650 new job opportunities in 2009. 

Electricity projects, including the state power firm PT PLN 10,000 megawatts accelerated program and a further 15,629 megawatts of power projects planned with private power producers (IPPs), are expected to bring in contributions in the coming year of $6.61 billion of inward investment. 

These new power projects are expected to generate about 92,250 jobs. 

The mining sector may attract up to $2.15 billion in investment. It was not stated if the recently endorsed mining law -- which many consider as not being business-friendly -- would have an affect on this forecast. 

The government has targeted that investment in oil and gas should reach $14.79 billion this year. While the mining and electricity sectors are expected to bring in $1.55 billion and $5.40 billion of inward investment, respectively. 

The ministry will publish the figures for actually achieved 2008 inward investment in these sectors by the end of this month.