TEMPO.CO, Jakarta - The government has given an investment permit for the construction of an oil refinery in Nipa Island, Batam. The project, estimated to worth US$ 500 million, will be carried by private company PT Surya Mina Asinusa.

"We have obtained a 34-hectare land-use allocation at Nipa since 2014 from the Ministry of Defense and the Ministry of Maritime Affairs and Fisheries," Surya Mina Asinusa manager Andi Tan said in Batam on Monday, June 22.

"The refinery construction uses a joint operation scheme (KSO) with the Defense Ministry that has a maturity period of up to 30 years," Tan said.

Nipa Island is one of Indonesia's leading areas in Batam city, situated in close proximity to Singapore. When Megawati Soekarnoputri was president, a reclamation project was initiated on the island, which was drowning.

The refinery will serve as an oil trading spot for both domestic and foreign companies, including PT Pertamina.

Coordinating Maritime Affairs Minister Indroyono Soesilo said Nipa Island is very important for the national unity and sovereignty. It is also a strategic location for private investment.

Nipa Island has an area of 60 hectares, of which approximately 40 hectares are used as the TNI Navy headquarters to observe conditions in the Malacca Strait between Indonesia and Singapore.

"Nipa Island is very important for Indonesia, it must be saved. If we lose this point, Indonesia will lose a large size of its territory; especially waters," he said.

ANTARA | RR