Batu Ampar project uncertain

JAKARTA: Government reminds Compagnie Maritime d'Affretement-Compagnie Generale Maritime (CMA CGM) to immediately decide the investment plan for constructing transshipment port in Batu Ampar, Batam worth US$470 million.Government gives the France-based
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News Editor - Bisnis.com 27 Mei 2011  |  05:19 WIB

JAKARTA: Government reminds Compagnie Maritime d'Affretement-Compagnie Generale Maritime (CMA CGM) to immediately decide the investment plan for constructing transshipment port in Batu Ampar, Batam worth US$470 million.Government gives the France-based investor 2 months extension from April to May 2011 to decide whether it will continue the investment or not.Previously, the government has given the investor a deadline until the end of this month to make a decision, Transport Vice Minister Bambang Susantono said.The ministry believes that the government will provide certain decision regarding transshipment port construction. We give them two months until May, he said, yesterday.Government projects Batu Ampar port in Batam as transshipment port or transfer of international container ships.CMA-CGM is the tender winner for Batu Ampar container terminal construction project in 2005 but then its construction was halted because the concession is only allowed to be managed for 25 years.Government then permitted the investor to manage the port for 50 years using extension option so that it will not violate applicable regulation.The managing permit through build operate transfer (BOT) pattern for 50 years is given based on the high value invested on that project, which needs a long payback time.As planned, CMA-CGM will construct 700 meter port or threefold from initial plan at 250 meter, which needs US$250 million funds.Such fund is lower compared to the initial result of study that estimated the construction of 250 meter port will requires US$120 million investments.Batam is projected to have container terminal with capacity of 1.2 million TEUs that ready to serve transshipment activity similar to Tanjung Pelepas and Singapore.Other investorsThe port construction is very essential to make Sumatra and Java as national logistic center, Deputy Minister for Economic Affairs, Industry and Trade Edy Putra Irawady said.Several foreign investors are interested to invest in Batu Ampar project. We are currently still looking for another strategic partner. Cosco and Evergreen had expressed their interest, he added.The contract values between the government and CGM-CMA totaling to US$700 million, where the foreign investor will invest US$400 million in first year and US$300 million in second year. It will provide capacity of 1.7 million TEUs.However, CMA-CGM is currently having financial difficulty and it can not continue the project that was halted since 2009.He added that the government is still welcoming other investors that interested to invest in the transshipment project in Batam. Our contract with CMA-CGM will be reviewed in June.The port construction is also part of government's strategy to accelerate and expand national economy development through maritime sector.Many of local investors have also been proposing to continue the port project.(T06/NOM)

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Editor : Muhammad Fariz Aulia

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