Govt gets Japan loan for undersea cable

President Susilo Bambang Yudhoyono has approved the government?s plan to borrow money from Japan to lay an undersea electricity cable from Java to Sumatra, The Jakarta Globe reported on Tuesday.

The government needs an estimated US$2.12 billion to fund the mega project. ?Agreed, agreed,? Armida Alisjahbana, the minister for national development planning, said at the State Palace on Monday when asked about the approval for the loan.

The government will borrow $993.8 million from Japan. ?The total amount of investment for the project is $2.12 billion, comprising four stages. The funding for stages one and two is already available,? she said.

State electricity company PLN is confident that the high-voltage direct current cable project can start at the end of next year and be completed by 2018. PLN?s planning and affiliation director, Murtaqi Syamsuddin, said the project was still in the tender auction process and that PLN would announce the winner this year, with construction to start next year.

Murtaqi said that once construction of all power plants in Sumatra was completed, they were expected to produce 3,000 megawatts of electricity. ?The land clearing process is ongoing. Permits have been obtained and it?s expected that the construction can start in 2015,? he said.

The cable will cross a 35 kilometer-wide portion of the Sunda Strait and will be able to transmit 500 kilovolts of electricity to the power-hungry Java-Bali grid. The project was in the works for some time but stalled from lack of funding.

Armida said $1.19 billion of the required funds for stages one and two would come from the Japan International Cooperation Agency (JICA), a body which promotes development in emerging economies.

?The power from coal-fired power plants in Sumatra must be distributed so it?s not all concentrated in Sumatra. That?s why we need the transmission cable to Java,? said Dedy Priatna, the deputy planning minister.(*)