Monday, December 18, 2006

How Japan outsmart China in Indonesia's electricity business

"You may think that China swept most of new power generating projects in Indonesia. But don't ever underestimate the Japanese. They managed to block China with the postponement of IPP projects and at the same time ask Mitsui and Sumitomo to expand their existing facilities in Paiton and Tanjung Jati B respectively so there will be no more rooms for new IPPs in Java," one China-backed investor said over the weekend. But how they did it?

"Well, first of all, Japan use ADB to lobby government to conduct a study on IPPs first before proceeding with the bidding. The study would take one year at least. Government agreed to postpone the IPPs and only proceed the 10,000 MW crash program. In the meantime, Japan asked Mitsui & Sumitomo to expand their existing power plants," he explained.

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