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Indonesian private port operators get more time to prepare bids for public port concessions

Indonesian private port operators get more time to prepare bids for public port concessions
Indonesia's private port operators have welcomed an extension on the signing of concession agreements to operate bigger terminals, local media reported.

The transportation ministry extended the deadline for issuing of concessions to private port operators to run public terminals from end-February to June pending assessment by the operators.

New regulations allow them to also run bigger public terminals which had previously been the domain of only state-owned companies. They are currently only allowed to run special terminals and dedicated terminals, or public terminals on yearly permits.

“We are ready to sign the concession, but we need time to calculate the amount of time needed for the concession,” Indonesian Port Operators Association (ABUPI) chairman Aulia Febrial Fatwa said.

Aulia was optimistic that private port operators would be able to complete preparations for the concession by June, adding that “the February deadline was a rush”.

Aulia said private operators saw benefits in running bigger terminals rather than special or dedicated ones but needed to assess potential profit and capital investment for assets during the concession, as fixed assets must be returned and the ministry will be entitled to buy movable assets at the end of the concession.

“For example, for land assets, they will keep increasing, but movable assets tend to depreciate. This has to be calculated, with a forecast for five to 15 years later,” he said.

Aulia said out of Indonesia's 2,000 ports, 900 are managed by special or dedicated port operators, state port operator Pelindo manages 112 ports, while the rest are operated by the transportation ministry.

The ABUPI chairman said at least 18 port operators had been invited by the ministry and had expressed their readiness to sign the concession from early February.

Aulia, who is also commercial and business development director of Pelabuhan Tegar Indonesia, the operator of Marunda Center Terminal multipurpose port in West Java, said the company aimed to sign the concession this year and plans to put to concession its first and second phases of development, in which it will upgrade its current 7.5m tonnes yearly capacity to 12-14m tonnes to prepare to become a public terminal.

The port operating unit of state-owned steelmaker Krakatau Steel, Krakatau Bandar Samudra, is another party interested in upgrading its facilities to a public terminal. “The application process for concession started in December,” said Krakatau Bandar Samudra commercial and development director David Rahadian.

It aims to more than double capacity from 21m tonnes to 40-45m tonnes by 2025 to prepare for future public terminal operation. The business will partly rely on Krakatau Steel’s business development.