Minister Luhut Reschedules Electricity Projects in Java

TEMPO.CO, Jakarta - Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said a number of electricity infrastructure projects in Java Island would be postponed in the wake of rupiah depreciation against US dollar.

“We will reschedule several electricity projects,” said Luhut at Jakarta, Thursday, September 6.

Luhut explained the suspension was one of the government’s measures to stabilize the current declining rupiah exchange rate. “The electricity supply in Java is now enough. So, we will postpone several projects for six months or a year. We will first handle the currency issue,” he said.

The government opted to reschedule several electricity infrastructure projects to curb import of the components as it considered affected the trade deficit which further weakened rupiah. Power plant firms were suspected to did not meet the mandatory use of local contents and so it increased the component import.

Read: Govt Should Postpone Projects to Stabilize Rupiah Economist 

The reschedule would take effect to those projects that had not close their financial deals yet. “So [projects] that have completed the financial close will be continued,” he explained.

The electricity projects targeted to begin in 2019 reached some 15,200 MW and that would be postponed until 2021-2026. However, the government assured the target of the electrification ratio could be met by 99 percent in 2019.

Earlier, an economist Shanti Ramchand Shamdasani urged Indonesian government postpone infrastructure projects in the pipeline and use their funding to stabilize the rupiah.

"I suggest that projects in the pipeline should be stopped," the economist stated at a press conference on Wednesday, September 5.

ANTARA