Saturday, November 28, 2015

No Deals Yet With AIIB on Coal-Fired Plants: Finance Ministry

Jakarta. Indonesia has yet to open discussions with the China-backed Asia Infrastructure Development Bank on the financing of coal-fired power plants in the country, the Finance Ministry says.

The Jakarta Globe reported last week that Indonesia planned to take a $1 billion loan from the AIIB to develop the country's infrastructure, especially for coal-fired power plants.
Robert Pakpahan, director general of debt management at the Finance Ministry, however, clarified on Friday that no deals have been signed.

"The AIIB is expected to work closely with existing multinational development banks to help narrow the infrastructure gap in the region," Robert said in a statement.

"In this respect, AIIB is expected to be the one of the sources of alternative financing to complement government budget and private sector investment in infrastructure in supporting Indonesia's high and sustainable growth in the future," he said.

Indonesia is a founding member of the AIIB and has pledged to contribute $672 million, making it the eighth-largest shareholder.

Jakarta Globe

Indonesia to Boost Biodiesel Output to Meet New Mandates: Industry

Bali. Biodiesel producers in Indonesia are planning to ramp up output capacity next year by almost a fifth to 8 million kilolitres to meet higher mandates, a senior industry official said.

Indonesia has been pushing for greater local use of edible oil-based biodiesel to cut its fossil fuel import bill and create more demand for palm oil, of which it is the world’s biggest producer and exporter followed by

“Right now our capacity is 6.8 million kilolitres for biofuel, the next year our expectation is 8 million kilolitres,” Paulus Tjakrawan, chairman of the Indonesian Biofuel Producers Association, said at an industry conference in Bali on Thursday.

“It will be enough to support B15 and B20 next year, this is for sure,” Tjakrawan said, referring to the country’s biodiesel program that requires a minimum bio content in diesel fuel of 15 percent, which will rise to 20 percent in 2016.

Benchmark Malaysian palm oil prices should get a boost if Indonesia soaks up more of its crude palm oil for blending into biodiesel as the country moves to B20, leaving less of the tropical oil available for exports.

The country’s automobile association is gearing up to ensure that vehicles are able to use 20 percent biodiesel.

“Based on our road test, we are confident to process B20,” said Abdul Rochim, member of Indonesia Automotive Industries Association.

“We cannot avoid (going up to B20), we have to follow, but what we need is an improvement in specifications”, so it is not bad for the engines, he added.

Tjakrawan said biodiesel producers were working to improve the quality standards.
Higher biodiesel consumption is seen as crucial for Indonesia to meet its commitments on cutting greenhouse gas emissions. Last year, biodiesel usage contributed 11.8 percent of the nation’s energy and transportation sector’s emission savings, Tjakrawan said earlier this week.

Indonesia is the fifth biggest greenhouse gas emitter if forest losses are taken into account, and is under international pressure to curb the destruction of carbon-rich peatlands and forests which cause choking smoke to spread across much of Southeast Asia each year.

Ahead of the U.N. Paris climate conference next month, Southeast Asia’s biggest economy promised it would curb its rising greenhouse gas emissions by 2030.


Monday, November 16, 2015

Indonesia's Pertamina Calls for Diesel Import Tax in 2016 to Secure Domestic Fuel Sales

Jakarta. Indonesian state energy company Pertamina has asked the government to impose an import tax on diesel to secure domestic sales amid an expected oversupply of the fuel next year, a company official said on Friday.

“Next year we will have an oversupply of diesel of 400,000 barrels per month, so we hope the government will apply an import tax on diesel,” Pertamina Marketing Director Ahmad Bambang told reporters.

Earlier, Pertamina said it expects no diesel imports in 2016 due to new government rules encouraging the use of biodiesel.


Thursday, October 29, 2015

GE Unveils Plans to Invest $1b in Indonesia Power, Railway Projects

Jakarta. General Electric announced plans to invest in four infrastructure projects in Indonesia worth more than $1 billion on Tuesday, as part of a $20 billion bilateral trade and investment deal signed between US and Indonesian businesses during President Joko Widodo's visit to Washington earlier this week.

“We are pleased to play a role in developing Indonesia’s infrastructure by providing technology and capabilities to our customers who will bring much-needed power and transportation services to the Indonesian people,” GE vice chairman John Rice said in a statement issued on Tuesday.

The four projects are spread out across 12 diversified sectors including energy and transportation .

The statement also said that Indonesia's state-owned utility PLN would use GE’s aeroderivative gas turbine technology for a 500-megawatt power project in Batam, in the Riau Islands. GE will provide gas turbines with engine cores manufactured in Cincinnati, Ohio, for the project.

GE also signed two joint cooperation agreements with Indonesia Power, a subsidiary of PLN and independent power producer Cikarang Listrindo, to evaluate the feasibility of developing power projects using combined cycle technology.

In addition to these projects, GE and Indonesian state-owned railway operator KAI signed a letter of intent to provide maintenance services for 50 diesel-electric locomotives, the latest additions to its current fleet.

“GE has worked with KAI for more than 60 years, bringing 350 locomotives to the country,” it said in the statement.

GE has been doing business in Indonesia for 75 years and has contributed to 20 percent of the country’s power generation capacity through its technology.

Jakarta Globe

Sunday, October 25, 2015

Maersk Teases Indonesia Shipping Cap with $3b Expansion Plan

Jakarta. Indonesia's shipping law stands in the way of Danish shipping company Maersk Line's plans to invest $3 billion over the next five years in expanding its logistics business in Indonesia, State-Owned Enterprise Minister Rini Soemarno said over the weekend.

Maersk, the world's largest container shipping company, has operated in Indonesia since 1958 shipping cargo in and out of the country and now sees huge potential in domestic shipping.

"[Maersk] expressed interest to transports goods within our territory, in order to reduce logistics costs," Rini said as quoted by Investor Daily over the weekend. "But they stumbled upon our shipping law that requires majority shareholders to be locals. They wanted to be the majority."

The 2008 law states only domestic-controlled shipping firms can transport goods between islands in the archipelago, using locally-registered ships and Indonesian captains. Indonesia also introduced the cabotage principle in 2005 which rules only national ships can carry national cargoes.

Ocean-based shipping makes up the majority of Indonesia's shipping industry, responsible for transporting 826 million tons of goods in 2013. The sector grows around 5 to 6 percent each year.

President Joko Widodo has placed an emphasis on sea transportation connecting the commodity-rich eastern part of the country with the manufacturing centers in the western region as part of his infrastructure push.

But, local shipping companies still largely depend on expensive ships and spare parts from abroad, as well as high-cost financing from domestic lenders limiting their ability to expand.

The government is now revising a lists that protect certain business from foreign control in order to attract more investment as part efforts to boost the ailing economy. Still, Rini did not elaborate whether the shipping sector would be liberalized.

Maersk is among the 62-company delegate that will accompany Queen Margrethe II's state visit to Indonesia on Thursday, seeking to bolster the two countries ties in logistics, renewable energy, water management, transport and education.

Jakarta Globe

Pertamina, Sojitz Join Forces to Build 250MW Power Plant in Medan

Jakarta. Indonesian state energy company Pertamina has signed on with Japanese trading group Sojitz and North Sumatra local government firm Pembangunan Prasarana Sumatera Utara to build a $250 million gas-fired power plant in Medan by 2019.

“North Sumatra needs an additional 700 to 800 megawatts of capacity to avoid rolling blackouts,” said Djohardi Angga Kusumah, senior vice president for gas and  power at Pertamina.

The planned Medan plant will have an output of 250 MW.

The three companies signed a memorandum of understanding on Friday in the presence of 

Acting North Sumatra Governor Erry Nurady. (The incumbent, Gatot Pujo Nugroho, has been suspended and is in custody on corruption charges.)

“We hope that this project can be realized soon,” Erry said. "Our power supply is barely enough to meet demand and we don’t have any backup. There are many factories and hotels that need the power.”

Djohardi said Pertamina hoped to get the plant online in four years, assuming the permit process goes smoothly. The company has secured a gas supply commitment from the Arun field in Aceh, which it operates, but has not yet finalized a power purchase agreement deal with state-owned utility PLN, which has a monopoly on electricity distribution.

Jakarta Globe

Saturday, October 17, 2015

Oil Extends Fall on Renewed Worries Over Supply Surplus

Seoul. Crude oil futures slipped on Wednesday, extending losses from the prior session when an International Energy Agency report said the market would stay oversupplied for at least another year.

Front-month Brent for November delivery edged down 15 cents at $49.09 a barrel on Wednesday morning after it ended at $49.24 per barrel, down 1.24 percent, or 62 cents on Tuesday.

US crude edged down 5 cents at $46.61 a barrel after settling 0.93 percent, or 44 cents, lower at $46.66 a barrel.

Crude futures rose 15 percent in early October but have since fallen back by almost 10 percent as global production continues to outpace demand and concerns over China's slowing economy prevail despite the strong import figures published this week.

"Prices should remain low...the main reason for that is because global supply and demand for crude did not change much over the past few weeks or even months. We are still in oversupply," Daniel Ang, an investment analyst at Phillip Futures.

"Considering that you know we are looking for possible worsening oversupply coming from Iran..this puts the whole situation a lot more bearish."

ANZ said in a morning note: "Commodity prices were weaker overnight. Base metals, iron ore and crude oil all fell as the impact of the relief rally starts to wane."

A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key Organization of Petroleum Exporting Countries members maintain near-record output, said the International Energy Agency, even as low prices curb supply outside the producer group.

US shale production is expected to fall the most on record in November, extending a nationwide output decline into its seventh consecutive month, according to a forecast on Tuesday from the US. Energy Information Administration.

The number of North Dakota oil wells that have been drilled but not fracked rose to an all-time high in August of almost 1,000, as producers delayed bringing them online as long as possible in hopes that crude would rebound.

Global offshore oil production in ageing fields will fall by 10 percent next year as producers abandon field upgrades at the fastest rate in 30 years, in the first clear sign of output cuts outside the US shale industry, exclusive data shows.

As the oil market remains over supplied, Saudi Arabia failed to attract offers for additional oil cargoes for loading in October, industry sources said.

Venezuelan Oil Minister Eulogio del Pino said on Tuesday that eight non-OPEC countries have been invited to an Oct. 21 technical meeting of oil experts from OPEC and non-OPEC countries in Vienna.