Japan delays investment in Indonesia?s power sector

Japan?s leading credit agency Japan Bank for International Cooperation (JBIC) has decided to delay its plan to provide loans for Indonesia?s power sector due to fears of change in the existing laws after the next year?s general election, Koran Tempo newspaper quoting Bloomberg reported on Thursday.

JBIC is currently planning to provide loans for one or two power plants in Indonesia.

?We have not yet decided (on funding). We have to wait until next year for the election of new president as well as the parliament and see their policies,? JBIC?s executive director for Asia and Oceania Fumio Hoshi told Bloomberg on Wednesday in Singapore.

JBIC, according to Hoshi, had agreed in July 2003 to provide US$666 million loan to Indonesia?s state-owned electricity company PT Perusahaan Listrik Negera (PLN) for building of new power plants.

Hoshi said JBIC has allocated $1 billion per year to fund Indonesia?s power, oil, gas pipeline and other infrastructure projects.

With electricity demand growing at 7 percent per year, the PLN needed this year US$2.5 billion in investment funds -- $1.7 billion for the construction of new power plants and $800 million for transmission development. (*)