Palapa Ring Project Indonesia: Construction West Section to Start
The West section of Indonesia's Palapa Ring project is ready for construction according to the Indonesian Communication and Information Ministry. The majority of funds for the West Palapa Ring section - estimated to require IDR 1.28 trillion (approx. USD $97 million) in total - are ready to be disbursed. The Palapa Ring project, which consists of three sections (the West, Central and East sections), is one of Indonesia's priority infrastructure projects. It involves a huge undersea fiber-optic cable network that will offer faster broadband to the entire archipelago.
The signing of a contract between Indonesia's Communication and Information Ministry (responsible for the Palapa Ring project) and local company PT Palapa Ring Barat (winner of the tender for the construction of the West section of the Palapa Ring) will ensure the disbursement of the funds. PT Palapa Ring Barat is a consortium consisting of Mora Telematika Indonesia and Ketrosden Triasmitra. Meanwhile, the independent supervisor for the project is local company PT Surveyor Indonesia. Some preliminary work on the West Palapa Ring had already been undertaken earlier. Rudiantara, Indonesian Minister for Communication and Information, said these activities were financed by internal cash reserves of PT Palapa Ring Barat.
Last month, state-controlled financial institution Bank Mandiri agreed to a IDR 875 billion (approx. USD $66.2 million) loan for the West Palapa Ring project. This loan has an eight year term with a grace period of two years. These funds will be used to finance the construction of fiber optic networks in five cities and regencies in the Riau Islands. This will require some 1,980 kilometers of optic fiber cable.
Besides the above-mentioned loan, Bank Mandiri will also provide financial assistance in the form of a non-cash loan. This involves a domestic credit letter (LC/SKBDN) and a treasury line to help smoothen the procurement of materials and equipment for the project.
The Palapa Ring project has been on the agenda of Indonesian authorities since the late 1990s. However, the Asian financial crisis in 1997-1998 and the tough road toward becoming a full democracy consumed lots of time and energy and therefore the Palapa Ring project was postponed (in the 1990s the project was still known under the name 'Nusantara 21'). After the central government of Indonesia renewed its focus on infrastructure development, made the project a priority project, and agreed to guarantee the Palapa project through state-owned financing guarantee company Penjamin Infrastruktur Indonesia, the private sector finally became more willing to participate the project.
The project, which is the first government-to-business cooperation scheme within the nation's telecommunications industry, involves a vast undersea fiber-optic cable network that stretches across some 13,000 kilometers as well as an onshore network of nearly 22,000 kilometers. The main aim of the project is to provide fast broadband Internet to all Indonesians, in both urban and rural areas. The whole project (West, Central and East sections) should be completed by 2019.
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Sir,
I represent Arabia Generale, Dubai, a Financial institution looking for investment in Indonesia. The Palapa Ring Project is something that AG will like to invest in.
Could the contact details of the President Director of the project be made available to me?
Thanks & regards,
Arun Mathur.