The fate of Tanjung Jati B lies with finance minister

The fate of Tanjung Jati coal-powered power plant in Central Java now lies with the finance minister, as he is the only minister in the Keppres 133/2000 team who has not signed the financial lease agreement with Tanjung Jati investors, Koran Tempo reported on Thursday.

A source told Koran Tempo said all other members of the team had signed the agreement. They are the coordinating minister for the economy, the minister of energy and mineral resources, the chairman of the National Development Board, and the president of state electricity company PT PLN.

The source said the Finance Ministry could not yet agree on the resolution of the project through financial lease scheme.

Nevertheless, the source said the resolution to Tanjung Jati B had to be completed before the convening of Indonesia's donor countries grouped at the Consultative Group on Indonesia (CGI) in November, as Japan, Indonesia's largest bilateral donor, had required the government to settled Tanjung Jati B issue.

The 2 X 660 megawatt Tanjung Jati B project is controlled by Sumitomo Corp of Japan and PT Hopewell Impa Power Tubanan.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the Kepres 133/2000 team had basically agreed to continue the development of Tanjung Jati B through financial lease scheme, because this will not require the government to inject any cash into the project.

Purnomo also revealed that the team had also agreed with the investors to set the electricity price from Tanjung Jati B at between 4.2 U.S. cents and 4.3 U.S. cents per kilowatt-hour.

With the new scheme, the government's plan to buyout the project at the value of $1.15 billion was automatically canceled.

Purnomo contended that the team chose leasing scheme because it would not burden the government's finance in short term.

If the team chose the buyout scheme, the government has to provide additional fresh fund of $500 million.

The investors for Tanjung Jati B have secured new financing from Japan Bank for International Cooperation (JBIC), with a guarantee of liquidity facility from the government that ensures the continuity of the project. (*)