State Companies constructs geothermal plant

PT Geo Dipa Energi (GDE), inked a deal Wednesday with state engineering company PT Rekayasa Industry and state-run Bank Negara Indonesia (BNI) to construct and finance a geothermal power plant in West Java.

GDE is a joint venture company of state oil and gas company PT Pertamina and state power company PT Perusahaan Listrik Negara (PLN).

The geothermal project, located in Patuha, Bandung, West Java, will have a capacity of 55 megawatt (MW) from a potential of 400 MW.

"This project is very vital to the second phase of the country's 10,000 MW energy crash program because 4,733 MW of it will be powered by geothermal energy, including from this one," said GDE president director Praktimia Semiawan said.

She said the construction of the Patuha plant was to be completed in two years and fully operational by late 2011, generating around 500 million KWH per year, saving PLN production costs of about Rp 750 billion (US$65.2 million).

Praktimia said a diesel-fueled power plant usually cost about Rp 2,250-Rp 2,500 per KWH while the recurrent cost of geothermal energy was about 8 US cents per (Rp 900).

Praktimia said the construction of the Patuha plant would cost GDE $143 million, of which about $80 million would be financed by a syndicated loan of state banks while the rest would be from company equity. "We have appointed state BNI as the syndication leader for the loan," she said, adding other state banks -- Bank Mandiri and Bank Rakyat Indonesia (BRI) -- were included.

BNI president director Gatot M. Suwondo said the bank was very much interested to finance power plant projects in line with the government strategy to improve the country's business infrastructure.

He said the lender had disbursed around Rp 8.32 trillion for power plant projects by December last year.

The proposed power projects were located in Cikarang, Indramayu, Rembang, Wayan Windu in West Java; Cilacap, in Central Java; Palu and Poso in Central Sulawesi; Pangkalan Bun in Central Kalimantan; Sibayak in North Sumatra; and Bintan in Riau Islands.

As well as Patuha, GDE is developing geothermal sources in Mount Dieng in Central Java, with a potential capacity of 400 MW. The company has already installed a 60 MW power plant there.

Geothermal energy will play an important role in the second phase of the 10,000 MW crash program. Geothermal energy sources are expected to power nearly half of the projects in the program. Hydro-power will account for 1,174 MW, with coal and gas provide the remaining 4,056 MW;thejakartapost.com

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Capital Unity will take too Long

Indonesia has cast doubt on the viability of an integrated capital market among ASEAN member states by 2015, citing regulatory differences.

Lack of a common regulatory framework shared between states was among the daunting factors dampening the realization of the plan, chairman of the capital market and financial institution supervisory agency (Bapepam-LK) Fuad Rahmany said during a seminar Tuesday.

He added there was so much to be done before being able to realize the dream of having a single integrated capital market in the ASEAN region by the 2015 deadline.

"I don't know whether this can be achieved by 2015; we're still at the discussion stage," he said.

He also said that among the obstacles was a way to synchronize the regulations that were issued by each member country.

This included policies relating to taxation, investor protection and dispute settlements.

Most ASEAN member states have inherited deep-rooted legal systems from their former colonial occupiers, making it difficult to adopt a single regulation to suit all needs.

The Indonesian legal system, for instance, is heavily influenced by that of the Netherlands, while the legal systems of Singapore and Malaysia are closely linked to that on the United Kingdom, and the system in the Philippines resembles that in the United States.

ASEAN has embarked on an ambitious plan to have an integrated capital market under its ASEAN Economic Community (AEC) blueprint.

Under the single integrated capital market system, investors and companies in ASEAN countries can freely trade securities in any market at competitive costs.

There will also be an ASEAN virtual bourse, known as the ASEAN linkage, which will act as a single stock market featuring the region's top 200 companies.

The ASEAN linkage is scheduled for a launch next year.

"It may not be realized. Harmonizing each of the members' regulations will take ages," Fuad said.

However, he said Indonesia would remain committed to forming the capital market integration because such a system was deemed inevitable.

"The globalized market is heading to a more integrated system. And as part of the community, we support it."

Former Hong Kong Securities and Futures Commission chairman and chief adviser to the China Banking Regulatory Commission, Andrew Sheng, said the capital market integration should be prioritized during this time of crisis.

He said ASEAN could use the moment to rise as a new power to possibly replace the Western market system, which was losing credibility; from thedjakartapost.com

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