Power crisis inhibiting investment in North Sumatra: Official

Apriadi Gunawan, The Jakarta Post, Medan | Tue, 11/17/2009 9:44 PM

Not only has the protracted power deficit caused hundreds of companies in North Sumatra to cut production, but a number of foreign investors have reportedly relocated their plants from the province.

North Sumatra Investment Coordinating Board chief Salman Ginting on Tuesday said a Japanese investor recently canceled its bid to open a silicon production plant in Deli Serdang and had gone to Surabaya instead because of the limited power supply.

“Their reason made sense because the power supply in North Sumatra could not meet their demand,” Salman said.

Many other foreign investors had reconsidered plans to do business in the province for similar reasons.

PT Kawasan Industri Medan (KIM) industrial estate marketing manager Jefri Sirait said the power crisis had forced at least 340 companies operating in the industrial estate to halve their production capacities over the last five years. Other companies have been forced to close their operations, he added.

“So far there have been no new investors expressing interest in opening plants in the industrial estate because of the power shortages,” Jefri said.

Power outages resulting from maintenance work at the gas-fired Belawan power plant have exacerbated the crisis, he said.

Salman recommended the government accelerate the construction of the Asahan III and Tanjung Pasir power plants to end to the deficit.