Govt may remove barter requirement tied on Tanjung Jati project

The government may soon remove the barter trade requirement attached to the planned construction of the Tanjung Jati B steam power plant in Jepara, Central Java after Minister of Industry and Trade Rini Soewandi finally withdrew her demand due to opposition from Minister of Energy and Mineral Resources Purnomo Yusgiantoro and Coordinating Minister on Economy Dorojatun Kuntjoro-Jakti, Koran Tempo reported on Saturday.

Director General of Foreign Trade Sudar SA said in Jakarta on Friday that the minister of trade and industry had withdrawn her demand and then asked the coordinating minister of economy to decide the matter.

"It is now up to Minister Dorojatun to decide whether or not the barter trade deal would be imposed," Sadar was quoted as saying. He, however, said that Minister Rini was still on the opinion that such a requirement was needed.

Sumitomo Corporation of Japan has delayed the construction of the Tanjung Jati B due to certainties resulting from the counter trade deal attached in the importation of the equipment for the massive power project.

The counter trade deal has caused a problem to Sumitomo because the company faced difficulties to find out what kinds of commodities that would be imported from Indonesia as part of the deal.

The construction of the Tajung Jati B power plant with a capacity of 1,320 MW began in 1994. However, its investor Hopewell Holding which developed the project in cooperation with Impa Energy and Sumiomo as the main contractor failed to complete it due to financial difficulties.

The state-owned electricity company PLN then assigned Sumitomo to take over the project which has been 30 percent completed. However, the resumption of the project has been hurdled by the barter deal required by minister of industry and trade

PLN has said that the delay in the US$1.4 billion power project would result in the shortage of the power supply for Java and Bali up to 600 MW in 2004 and 900 MW in 2005. (*)