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Japanese PM puts heat on Indonesia over stalled Japan-funded power plant
Publication Date : 08-10-2013
Japanese Prime Minister Shinzo Abe on Monday called on Apec member economies to pursue green growth, and pressed Indonesia to advance a Japan-funded power plant project stymied by land acquisition issues.
Pursuing economic growth that is sustainable and environmentally friendly is “a challenge that only Apec can take on”, Abe said in his remarks delivered before top corporate executives attending the Apec CEO Summit in Bali.
“We will aim to achieve environmentally friendly, green growth here in the Asia-Pacific region,” the prime minister stated.
Abe emphasised the need for Apec members to join forces in building green infrastructure projects, which usually come at a higher price than conventional projects.
However, the term “lower is better” when discussing costs might not be acceptable when talking about infrastructure, he said. “Bad technology drives out good. It does not fit with Apec, which is free and dynamic.”
Abe also put pressure on the Indonesian government over the stalled development of a coal-fired power plant in Batang regency, Central Java, in which Japanese companies are involved.
He allocated nearly one-fifth of his speech specifically to the power plant’s technology and the benefits it could bring to Indonesia.
Abe estimated the total investment needed for the Batang power plant was US$4 billion in a long-term contract that would allow the plant to sell power over 25 years.
With a capacity of 2,000 megawatts, the project would become Southeast Asia’s biggest power plant by capacity, and a leading example of a public-private partnership (PPP), which has been touted as a solution to the infrastructure shortfall in Indonesia.
The plant’s development has been led by PT Bhimasena Power Indonesia a consortium that comprises Japan-based J-Power Electric Power Development Co. Ltd., Itochu Corporation, as well as local coal miner PT Adaro Energy.
The project’s development was scheduled to start in October 2012 but the plan has stumbled on land procurement issues as well as opposition from locals and environmental groups.
Earlier this month, J-Power confirmed that the deadline had been pushed back to October 2014 as the consortium faced continued delays in the acquisition of land.
Abe disagreed with environmental groups that argued the Batang power plant would generate dirty emissions and was no different to conventional coal-fired power plants.
The Batang power plant would use the so-called Ultra Super Critical Generation technology that burned coal at a high temperature, something that would make “great progress” in the Apec economies’ fight against climate change, he noted.
“Japan’s technology will converge with the local knowledge that Indonesia’s Adaro Energy possesses,” said Abe. “My message to you is the following: When considering the mounting need for infrastructure and urban development in your countries, always remember you have Japan.”
Abe’s comments showed that Japan was “still committed to the project and it may be concerned” about the recent developments surrounding the Batang power plant, according to Deputy Coordinating Economic Minister Luky Eko Wuryanto.
The government is now expediting the land procurement process and communicating with locals and environmental groups so the project could proceed, said Luky, who oversaw regional planning and infrastructure development at the ministry.
“We do not want this project to fail because this is our first PPP project. It’s important for Indonesia,” the deputy minister said. “We need to give certainty. If this fails and we have to redo the tender process, what will foreign investors say?”
Many of the country’s major infrastructure projects have run into the sand due to protracted land acquisition processes. Landowners have regularly held out, refusing to sell up unless investors pay considerably inflated prices.
In a bilateral meeting on Monday, President Susilo Bambang Yudhoyono and Abe, the plant was high on the agenda.
Yudhoyono told his Japanese counterpart that he appreciated Japan’s cooperation in the construction of the Batang power plant. The President said he hoped it could help pave the way for stronger Jakarta-Tokyo cooperation particularly in the energy sector.
The two leaders also agreed to improve cooperation trade, investment and industry.
Abe also asked Indonesia to help assist Japan with preparations for the 2020 Olympics. “Strong cooperation among nations is essential to ensure the 2020 Olympics are a success,” the Prime Minister told Yudhoyono.