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Energy deal between Indonesia and China

Updated On: Dec 29, 2008

Indonesia and China inked US$4 billion worth of trade deals during the third Indonesia-China Energy forum (ICEF) held as part of the Chinese First Vice Premier Li Keqing’s four day official visit to Jakarta.

Foreign media reported that these deals included the construction of three coal-fired power plants in Indonesia which includes a US$482 million loan by the Export-Import (EXIM) Bank of China for the plant in Pelabuhan Ratu West Java, another US$293 million loan for another one in Pacitan East Java (both managed and initiated by Indonesian state power company PT PLN) and the third plant (660 megawatts) costing US$605 million will be constructed by China National Technical Import and Export Corporation (CNTIE) and Shanghai Electric Group Company Ltd in Adipala, Cilacap Central Java.

Pelabuhan Ratu's power plant will have a total capacity of 1,050 megawatts and Pacitan's power plant 630 megawatts, to be operational by 2010. For the Central Java plant, the two chinese companies would work with local partners to realize the eventual state power company PT PLN vision of 10,000 megawatt coal-fired accelerated power production program.

The Indonesian media reported even more projects in the pipeline as a form of collaboration between the two countries: one oil and gas project, one biodiesel development project, two coal mining projects and four power plant projects.

The oil and gas contract in the Madura Strait, East Java, is run by China's CNOOC and Canada's Husky and they will be joined by Indonesia’s upstream oil and gas regulator BPMigas. Another component of these eight projects would be a joint venture between state mining company PT Tambang Batubara Bukit Asam and China's Huadian Corporation. The deal to develop biodiesel plants in Jambi and South Sumatra was also signed.

PLN also signed the agreement for a fourth power plant with (IPP) PT GH EMM Indonesia, a subsidiary of a China-based power producer to construct a 227 megawatt coal-fired power plant in Simpang Belimbing, Muara Enim, South Sumatra.

The energy deals would project 32 000 new jobs for the Indonesian economy, according to the local media. In addition to the energy deals, Indonesia will also loan US$1 billion to buy Chinese industrial goods like machinery and steel.  

Sources:

Agence France Press, “Indonesia, China ink energy, trade pacts worth $5.8b” dated 23 December 2008 in Straits Times (Singapore: Straits Times), 2008, p. A11.

Jakarta Post, "Indonesia, China Sign Rp 35t Deals On Energy, Mining" dated 23 Dec 2008 in the Jakarta Post website [downloaded on 25 December 2008], avaialble at 
http://www.indonesia-oslo.no/economic-affairs/277-indonesia-china-sign-r... and http://old.thejakartapost.com/detailbusiness.asp?fileid=20081223.L01&ire...







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