Indonesias shipping needs $1.25 billion

Indonesia’s shipping industry needs $1.25 billion in investment to produce a fleet of coal carriers to meet the government’s crash program in the power supply sector to build new coal fired power plants with a total capacity of 10,000 megawatts to be completed before 2010.

The crash program is feared to be hampered by problems in the transport of coal as not enough ships are available, the Indonesian National Ship owners Association (INSA) said. INSA Chairman Budhi Halim said around 35 handymax and 55 short-sea vessels will be needed to transport coal to Java from coal mines in Sumatra or Kalimantan. In the short term 18 handymax carriers will be needed in 2007 to transport 30 million tonnes of coal.

Budhi expressed fears that investment could not be made immediately with bank interest rate still high at 16%. With such level of interest rate and repayment in 15 years, investment will not be feasible, he added. Shipping companies may have to place orders for new ships abroad where interest rates range only from 3% to 3.5%, he said.