Government Agrees to Rp 1.7t West Palapa Ring Concession

Communication and Information Technology Minister Rudiantara, left, West Palapa Ring director, Yopie Widjaja, right, and Finance Minister Bambang Brodjonegoro. (JG Photo/Rezza Estily)

By : Tabita Diela | on 2:18 PM March 01, 2016
Category : Business, Corporate News

Jakarta. Indonesia's Communication and Information Technology Ministry signed a concession agreement with a consortium for the west part of the Palapa Ring II project on Monday (29/02), marking the start of a crucial broadband infrastructure construction that would connect the entire country with high speed Internet service by the next decade.

Palapa Ring Barat, a consortium of of Jakarta-based telecom company Mora Telematika Indonesia and submarine cable deployer firm, will be responsible for connecting Riau province, the Riau Islands and the Natuna Island off Sumatra with 2,000-kilometers of fiber-optic cable.

The consortium is entitled to a 15-year concession for the broadband connection worth Rp 1.71 trillion ($127 million) in net present value.

The concession would be paid under availability payment scheme  a first in Indonesia's telecommunication sector. The consortium does not collect fees from the fiber optic connection. Instead, they get guaranteed payments from the government over the period of the concession, as long as they deliver the project as specified.

The broadband connection, costs Rp 1.28 trillion ($95.7 million) and is expected to be online in January 2019.

"It is another ICT Ministry's milestone after 10 years of just discussions and planning stages without execution of the Palapa Ring project," said Lis Sutjiati, an adviser to the communications minister.

Penjaminan Infrastruktur Indonesia (PII), the state-owned infrastructure guarantee fund, provides insurance for the project to cover any consortium losses should the government fail or stop the project funding.

Palapa Ring II, which will stretch 11,000 kilometers of fiber optic cable across the archipelago, consists of the west, central and east packages. Pandawa Lima, a consortium of state-owned LEN, Teknologi Riset Global Investama, Sufia Techologies, Bina Nusantara Perkasa and Multi Kontrol Nusantara will work on the central package that connects Kalimantan, Sulawesi and North Maluku.

The government is yet to name a winner for the east package connecting East Nusa Tenggara, Maluku, West Papua and Papua, as it need more time to map out complex geographical features of the region.



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