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July 6, 2008

Power crisis may force Japanese firms to quit Indonesia
Several Japanese firms have threatened to pull out of Indonesia unless the government fixes electricity supplies, as power cuts have caused production and financial losses, Reuters quoted a business association as saying Saturday.

Indonesia urgently needs to invest billions of dollars in improving its infrastructure in areas such as power and transportation.

PT Perusahaan Listrik Negara (PLN), the monopoly power supplier, has 24,000 MW of generating capacity but daily output is well below capacity due to old and inefficient plants, and parts of Java, Bali and Sumatra islands suffer frequent outages.

Japan's ambassador to Jakarta sent a letter of complaint to the Indonesian government on behalf of about 400 Japanese firms operating in Indonesia, Mohammad Hidayat, chairman of the Indonesian Chamber of Commerce and Industry (KADIN), told Reuters.

"They sent a letter on July 3, urging the government to take action to solve electricity problems for industry because it is affecting production," said Hidayat.

"They urged the government to take action because if the recent situation continues, their losses will increase."

Local media reported that members of the Jakarta Japan Club -- including Panasonic Lighting Indonesia, which has operations in East Java -- were among companies which threatened to move production to other parts of Asia, such as China, if the situation did not improve.

Further disruptions to power are expected this month.

BP Indonesia, a unit of oil major BP will shut its offshore West Java gas field for maintenance for two weeks from July 11, halting gas supplies to two power plants operated by PLN in Jakarta.

Indonesia is trying to tap alternative sources of energy to meet rising power demand and cut consumption of expensive crude oil as its own reserves dwindle.

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