Developer upbeat on land issue settlement

The Jakarta Post, Jakarta | Business | Mon, August 11 2014

Despite the prolonged land acquisition process for the Batang power plant development in Central Java, the consortium in charge of the project, PT Bhimasena Power Indonesia (BPI), is confident it will complete negotiations with local residents to secure the required land.

PT Bhimasena corporate secretary Dyah Kumala Sari declined to comment on news reports that the government is considering looking for another location for the power plant.

At a coordination meeting in Semarang last week Coordinating Economic Minister Chairul Tanjung said the construction of the power plant would need extra time, given the local opposition.

According to Chairul the state electricity company PT PLN, which would distribute the electricity generated by the power plant, had proposed another location.

“We attended the [coordinating] meeting. What we understood is that Pak CT [Chairul Tanjung] would use persuasive ways to continue the land acquisition,” Dyah said.

“The land acquisition will be based on the 2012 Law Number 2 and the acquisition will be performed by the government and in this case will be carried out by PLN [state owned power firm Perusahaan Listrik Negara],” Dyah added.

Last week Chairul led a meeting in Semarang, the capital of Central Java, as part of the efforts to settle the problem that has disrupted the development of the twice-1,000 megawatt coal-fired plant.

Previously, BPI declared a contractual force majeure over the project because of the prolonged land acquisition process.

While saying the government, under the 2012 Law, has the authority to seize land for public interest, Chairul said directors of PLN also proposed an alternative site to build another plant with the same capacity.

He didn’t reveal the possible new location.

“We will, however, continue the Batang project if the land acquisition is completed,” Chairul said.

PLTU Batang development is crucial for generating more power to meet growing demand on Java. Further delay of the project, or cancelation, will result in an electricity crisis on the densely populated island.

BPI, a consortium consisting of PT Adaro Energy, J-Power Electric Power Development Co. Ltd and Itochu Corp. won the tender for the Batang project in 2011.

The plant, which is part of the government’s ambitious Master Plan for the Acceleration and Expansion of Economic Development (MP3EI), needs 226 hectares of land.

Under the initial plan the first stage of development of the US$4 billion Batang power plant was scheduled to finish in 2016.

The director general for electricity at the Energy and Mineral Resources Ministry, Jarman, said the land acquisition at the current location would be conducted in parallel with an attempt to process the new alternative site, which is also in Central Java but in a different regency.

“The alternative site is ready. Its land acquisition has been completed. If the plant development can be started by the end of the year, the plant will be finished in four years,” Jarman said.

If the land acquisition for the Batang power plant could be completed after the construction of the power plant in a new site is started, Chairul said, the government is committed to finishing both projects, giving Central Java a total of 4,000 megawatts of new power.

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