The Signing Of Cooperation Agreement For The “Central Package” Of The Palapa Ring Project

04 MARCH 2016

Jakarta, 4 March 2016 – The Minister of Communication and Informatics as the Contracting Agency (CA) of Palapa Ring Project “Central Package” has signed a Cooperation Agreement with Len Telekomunikasi Indonesia. This project worth for Rp 1.38 trillion and is one of national strategic infrastructure projects as stated in the Presidential Decree No. 3/ 2016.

The Palapa Ring Project Central Package was part of Palapa Ring Project which consist of  3 (three) packages:

Western package that will connect Riau Province, Riau Islands and the Natuna Island off Sumatera with a total length of 2,000 km
Central package that will connect the region of Kalimantan, Sulawesi and North Maluku with a total length of about 2,700 km
Eastern package that will connnect East Nusa Tenggara, Maluku, West Papua, and remote places inside Papua with a total length of about 6,300 km.
Palapa Ring is the first Public Private Partnership project in telecommunication sector using Availability Payment (AP) schemes. The AP scheme was initiated by the Ministry of Finance with the source of fund is derived from the Universal Service Obligation (USO).

The Minister of Communication and Informatics, Rudiantara, said that the acceleration of growth and equitable development of telecommunication network will eventually reach and increase broader access to information for the people of Indonesia. Palapa Ring project shows the Government’s commitment in cooperation with investors in infrastructure development in Indonesia. Currently, many groups have joined in support of the Palapa Ring project, such as the National Development Planning Agency (Bappenas), the Ministry of Finance and IIGF, so that the process of project preparation can be relatively fast – less  than one year. The project has gained Project Development Funding support and AP scheme principle permit from the Minister of Finance.

The Minister of Coordinator for Economic Affairs, Darmin Nasution, as the Chairman of Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) witnessed the signing ceremony of this project. Palapa Ring project has a multiplier effect in stimulating economic growth so it was categorized as a priority project supported by KPPIP as stated in the Ministerial Regulation No. 12 of 2015. Darmin expects this project could be a success story for PPP project under Availability Payment scheme to increase feasibility of the project. Furthermore, this scheme has never been used in other infrastructure projects.