PGN supplies gas to power plant in Sumatra

State gas distributor PT PGN will supply natural gas to state power company PT PLN's power plants in North Sumatra and power plant in Talang Duku ini South Sumatra in need of 150 MMBTU (Million Metric British Thermal Units) of gas. The plan was laid down in a natural gas sales purchase Memorandum of Understanding for power plants in North Sumatra, and a natural gas sales and purchase agreement for the power plant in Talang Duku in South Sumatra with PT PLN signed at the office of the state minister for state enterprises in Jakarta Wednesday. Under the MoU, PGN agreed to channel natural gas from the Liquefied Natural Gas (LNG) terminal which will be built in Belawan for the needs of the electric power centers in North Sumatra. PGN will provide gas from the LNG terminal in Belawan to PLN straight to the PLN's delivery point.
Source: antara.com, 31 December

Contractors rejected CoW revision, urged for Mining Energy and Coal Law revision

The government is urged to revise article 169 (b) of Law No. 4/2009 on Mineral and Coal since adjustment of Contract of Work (CoW) and Coal Mining Business Permit cannot be completed within one year since the Mining Energy and Coal Law was passed at the end of 2008. Executive Director of the Center for Indonesian Energy and Resources Law, Ryad Chairil said in line with the mandate of the law, since within one year the CoW and Business Permit cannot be adjusted the government must amend the regulation. If not, the condition may affect the stability and certainty of legal framework in the mineral and coal mining sector.
Source: PA Asia: Detik finance website, 4 January

Local Biofuel Output Dives In 2009 as CPO Price Rises

Indonesia fell woefully short of its biofuels target in 2009 as producers halted operations because of the surging price of crude palm oil, the main raw material. Total biofuel production was just 104,100 kilolitres in 2009, a 96% fall from the 2.56 million kilolitres produced in the previous year, the Energy Minister said. Biofuel producers spent most of the year sitting on their hands as they waited for the government to work out the price formula used to set the benchmark biofuel price, as well as the all-important subsidy level. "Biofuel production slumped last year because biofuel companies were waiting for assurance on the government subsidy as the palm oil rise meant it was not economically feasible to develop without the subsidy," Evita Legowo, director general of oil and gas at the Energy Ministry, said on Sunday.
Source: The Jakarta Globe, p.B1, 4 January

Power supply problems overcome by October 2010: Minister

The electricity supply problems in a number of regions in Indonesia will be overcome by October 2010, Coordinating Minister for Economic Affairs Hatta Radjasa said here on Monday. "Outages in a number of regions will be overcome in the next 10 months," he said in his evaluation of economic performance in 2009 and prospects for 2010. He said the state electricity company PLN would take steps to overcome electricity crisis in several regions by among others continuing the purchase of excess power of other companies. In terms of finance, he said, the government would improve PLN's finance by increasing its funding to reach Rp 30 trillion. The additional funding would be taken from the increasing margin from formerly 5% against the principle production cost (BPP) to 8%.
Source: antara.com, 5 January

Government Notifies Asean of Plan To Renegotiate China FTA

Indonesia has notified the Asean council of its plan to modify the implementation of the Asean-China Free Trade Agreement by renegotiating 228 tariff categories in eight industrial sectors, a senior cabinet minister said on Monday. "We have sent notification for a renegotiation with Asean and China regarding the agreement because it has a potential to weaken local industries," Coordinating Minister for the Economy Hatta Rajasa said. The government is seeking to delay the implementation of tariff cuts on 228 categories of products to give local industries a chance to become more competitive to withstand the onslaught of cheap Chinese imports. In return, it is offering to accelerate the implementation of tariff cuts on 153 tariff categories. The trade deal took effect on Friday.
Source: The Jakarta Globe, p.B, 5 January

Illegal fishing practices declining

The Marine Affairs and Fisheries Ministry has sunk 35 foreign vessels involved in illegal activities fishing activities throughout 2009. Director General for Marine Resources Monitoring and Control, Aji Sularso said the number is far lower compared to the same figure in 2008, indicating a decline in illegal fishing activities. The government is intensifying its efforts to eradicate illegal fishing in line with the implementation of the European Union's catch certification, which has been effective since January 1st, 2010.
Source: PA Asia: Investor Daily, p.21, 6 January

Kuntoro to eradicate court mafia without reserve

Kuntoro Mangkusubroto pledged here on Wednesday he would eradicate all "court mafia" members regardless of whether they are members of high ranking official families or common people. "(I will) do it (eradicate the court mafia). I do not care who they are, "the chief of the newly-established task force assigned to deal with the problem said after meeting with Attorney General Hendarman Supandji. "The meeting discussed about the need to make an MOU so that in case we have a problem later we can immediately get a direct backup from the attorney general's office," Kuntoro said. Kuntoro said the attorney general's office would deal more with steps to cut the illegal practice as the task force's functions are coordination, evaluation and monitoring. "Coordination will be done with the Corruption Eradication Commission (KPK), the attorney general's office and the police," he said.
Source: antara.com, 6 January

Insurance Fund to Protect Indonesia Infrastructure Investments

The government has established a state-owned guarantee fund to protect investors in infrastructure projects from any "unfavorable" policies that could hurt their investments, the Finance Ministry said on Tuesday. The fund-called PT Penjaminan Infrastruktur Indonesia (PII) - will act like an insurance company, compensating investors for losses if, for example, a promised tariff hike on a toll road did not materialize. Investors will have to pay premiums but not as high as those charged by traditional insurance firms. "The objective in establishing PPI is, firstly, to reduce the cost of financing public-private partnerships (PPPs) by improving the quality of the PPP projects and their creditworthiness," Arif Baharudin, the Finance Ministry's director of state assets, said. PII was formally established last week and will report directly to the finance minister. The government has injected Rp 1 trillion (US$ 107 million) as initial capital the Finance Ministry said.
Source: The Jakarta Globe, p. B, 6 January

MUI Plans to Regulate Indonesia's Halal Imports

The country's highest authority on Islamic affairs, the Indonesian Council of Ulema, is planning to insist that all imported food labeled as halal obtain the council's own halal certification before it can be sold here. The council's Food, Drugs and Cosmetic Assessment Institute is the sole issuer of halal certificates for such goods. Meanwhile, food importers fear that regular quarantining of products would result in a costly but unofficial system of payments to get them released.
Source: thejakartaglobe.com, 7 January

Bank Indonesia to Give Incentives to Boost Lending

Bank Indonesia is finalizing a raft of incentives to kickstart corporate lending and ensure that the economic recovery gathers pace in the coming year. The key incentive will allow banks that lend more to reduce the size of their minimum statutory reserves (GWM), which lenders are obliged to deposit with the central bank. Despite the central bank keeping its key lending rate at a record low of 6.5% for the past five months, banks have been reluctant to pass on the reduced borrowing costs to their corporate customers. Overall lending grew just 10.7% last year, below Bank Indonesia's target of 15%, as many companies were reluctant to take on further debt and many lenders were wary of adding risk. The central bank hopes it can drive credit growth to 20% this year by providing incentives to lend.
Source: The Jakarta Globe.com, p. B, 7 January