Building coal transportation ships needs investment of Rp 34T

Indonesia needs an investment of US$3.1 billion or around Rp 34 trillion to build or purchase 390 coal transportation vessels of various types until 2010 when the country starts requiring all domestic products be trasnported using Indonesian-flagged ships.

Indonesia needs 10 units of panamax (60,000 DWT), 13 units of handymax (45,000 DWT) and 367 sets of tug/barge or sea train, according to data at the Directorate General of Transportations of the Transportation Ministry.

A panamax vessel is now priced at $56.5 million, a handymax vessel at $34 million, and a set of used tug or barge at around $6 million.

It is urgent for the national shipping companies to buy the vessels because the government will implement cabotage system starting Jan. 1, 2010, requiring all domestic commodities be transported by ships with Indonesian flag.

To date, the companies grouped in the Indonesian National Shipowners' Association (INSA) operate a total of 9 panamax ships, including Dewi Umayi, Banowati, Umila, Suryawati, Citrawati, Indrani, Mustikawati (owned by PT Arpeni Pratama Ocean Line Tbk.) and Victory Union (PT Jaya Samudra Karunia), and three panamax ships, including Zaleha Fitrat (PT Gurita Lintas Samudra), Saraswati (Arpeni), and Adhiguna Tarahan (Bahtera Adhiguna).

Coal demand is expected to show an upward trend from year to year as Indonesia wants to speed up the coal power plant construction projects. Coal demand from the coal power plant projects is estimated to reach 32.5 million tons in 2009 and 33.6 million tons in 2010.

Director of Transportation and Sea Transportation at the the Transportation Ministry Leon Muhamad said that the ministry allows foreign ships to operate in Indonesia as long as they hold coal transportation contract with local coal-producing companies.

However, he said that a decision to issue a permit on domestic coal transportation to foreign ships should be made at the recommendation from INSA. (*)