Power projects worth US$2 billion in Aceh cancelled

The construction of the Peusangan hydropower plant worth about US$2 billion in Aceh has been canceled because the government has failed to take the advantage of the available foreign loans for the project due to armed conflicts in the province, Investor Daily reported on Friday.

"The project should have been realized during the period between 1998 to 2006. It could, however, not be realized as scheduled due to the prolonged armed conflicts," Secretary of the State Minister for National Planning Board, Syahrial Loetan, said in Jakarta.

The Asian Development Bank (ADB) and Japan Bank for International Corporation (JBIC) as the creditors of the project had demanded the government to ensure the security as the main condition for the disbursement of the projects. "But it was difficult to meet their demand because of the prolonged conflicts," he added.

According to Syahrial, the $2 billion funds is part of the $8.2 billion foreign loans which could not be disbursed due to the problems related to the preparation of the recipients mostly state owned companies.

"I admit that the preparation made by state firms to use the loans is quite poor," he said, adding that loans mostly pledged by ADB, JBIC and the World Bank. (*)