Indonesia State Enterprises Eye Opportunities In PNG

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Telecom, electric energy, airline routes under consideration

PORT MORESBY, Papua New Guinea (PNG Post-Courier, June 20, 2013) – Indonesian state-owned enterprises (SOE) are looking east to Papua New Guinea in great numbers to take advantage of emerging opportunities in the Pacific nation.

Among the SOEs expanding their reach to PNG are energy company Pertamina, telecommunications provider Telekomunikasi Indonesia, electricity supplier Perusahaan Listrik Negara and airline Garuda Indonesia.

Garuda recently announced plans to open a route connecting Port Moresby and Bali, while Pertamina and Telkom on Tuesday signed a memorandum of understanding (MOU) with their PNG counterparts in Jakarta on Tuesday.

Pertamina and PNG National Petroleum Company signed an agreement to explore oil and gas opportunities together.

"It will give us access to PNG’s seismic information," said Afdal Bahaudin, Pertamina’s director of investment planning and risk management.

The MOU will allow PNPC to learn about the operation and development of liquefied natural gas projects, chairman Frank Kramer said.

"Indonesia has over 30 years of experience in the operation of LNG plants," he said.

Badak NGL operates East Kalimantan’s Bontang LNG plant, Indonesia’s oldest.

"Exxonmobil is currently developing an LNG plant in PNG which would be the country’s first," Mr. Kramer said, adding that the Pacific country holds some 25 trillion cubic feet in natural gas reserves.

Telkom signed its MOU with state-owned TelikomPNG.

Arief Yahya, president director of Telkom, said the Bandung-based company has agreed to extend its fiber optics network from the Indonesian province of Papua to PNG.

"The scheme of cooperation still needs to be discussed further, but basically we will build the infrastructure, for which we will receive a fee," he said.

Telkom is keen to enter the mobile-phone market in PNG, where only half of the country’s 7 million population use mobile phones.

Telkom is currently building a fiber optic network in Indonesia’s Papua that will cost some Rp 700 billion [US$70.5 million], Arief said.

On the electricity front, PLN president director Nur Pamudji said the company will soon export electricity to areas in PNG near the Indonesian border. He said the amount would be "not much, only 2 megawatts," and was an effort to seek friendship rather than revenue.

State Enterprises Minister Dahlan Iskan said PNG recorded robust recent growth in gross domestic product, encouraging the expansion of Indonesian SOEs. "Their GDP growth was about 9 percent," he added.

PNG’s economy last year stood at K16.9 billion [US$7.7 billion], following a five-year annual compound growth rate of 7.3 percent. With GDP per capita at K2,532 [US1,069$], the average person engages in significantly less economic activity than their counterpart in Indonesia, where GDP per capita stood at K4,666 [US$2,121].

PNG has recently undergone some political instability following claims on government leadership positions by rival candidates. The country is a significant recipient of foreign aid.

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