Indonesia Infrastructure Report Q3 2008

The Indonesian state utility PT Perushaan Listrik Negaga (PLN) is currently managing the ongoing power shortage in Indonesia through scheduled outages. Tendering and in some cases construction has already begun on projects associated with the governments crash programme, a mid term scheme to develop an additional 10,000 megawatts (MW) of electricity capacity by 2010. One such project update over the last quarter (May 2008) was the 990MW coal fired power plant under construction in Indramayu in West Java, which received a US$592.2mn loan from the Bank of China. BMI notes that a number of Chinese companies have also become involved on a number of power projects in Indonesia. These companies include China Huadian (CHD), China National Techical Import Export Corporation (CNTIC), China National Machinery Import and Export Corporation (CMC) and China National Machinery and Equipment Import and Export Corporation (CMEC).

The major announcement in Indonesia's power infrastructure sector was the announcement of an new 10,000MW power program, which will stretch into the long term and displays the Indonesian government's commitment to solving its power deficit. The difference between the new and old power program is the fuel that will be utilised. Whilst in the first Indonesia turned to the quick and easy option of fuel. The country is now devising a 10,000MW scheme, which will be powered mainly by renewables.

Coal will fuel just 30% of the new plants within the initiative and due to the heightening pollution levels on Java, the coal fuelled plants will be constructed on Indonesia's other islands. The renewables, which Indonesia plans to use will be hydro and geothermal. Industry reports suggest Indonesia holds a vast hydro-power potential of up to 76GW. BMI believes that progress to realise this potential has been slowed due to the substantial up-front capital investment that hydropower plants require. BMI estimates that Indonesia today has more than 800MW of geothermal capacity, making it the fourth largest producer of geothermal power in the world behind the US, the Philippines and Mexico. The Indonesian government estimates that the country holds large untapped geothermal resources, with the potential to supply up to 27 gigawatts (GW) of additional generating capacity.

Spanning over 17,508 Islands Indonesia's transport infrastructure varies greatly. The transport network is most developed on the islands of Java, Sumatra, and Bali, which are also the main population centres. As an archipelago Indonesia has developed its sea transport infrastructure, for both domestic trade and international import and exports. A recent interesting development in this sector is a plan to cater for the country's tourism sector needs through the country's port and terminal infrastructure. The Indonesian Transportation Ministry has allocated IDR20bn (US$2.15mn) for the construction of a port to service cruise ships on the island of Bali. The facility would open up Indonesia's tourist sector to the lucrative cruising market with cruise ships carrying tourists from other countries to Singapore expected to call at Bali after the port is ready.