REPUBLIKA.CO.ID, JAKARTA -- The Indonesian government has launched the Rp1.28 trillion Palapa Western Ring Package optic fiber network service project by signing a cooperation agreement with PT Palapa Ring Barat (Moratel-Ketrosden Triamitra consortium).

The agreement was signed at the Finance Ministry building in a ceremony witnessed by Finance Minister Bambang Brodjonegoro on Monday. The government was represented by Communications and Informatics Minister Rudiantara in his capacity as the Person in Charge of the Cooperation Project (PJPK).

"With this project, we want to narrow the infrastructure gap between regions in and outside Java," Rudiantara noted after the signing of the agreement.

The Palapa Ring projects constitute the backbone of the national optic fiber to be built in regions that will link all districts/municipal cities in Indonesia. The optic fiber network was part of the efforts to increase access to information and provide more opportunities to the people for further prosperity. This could be in the form of facilitating e-commerce facilities.

Of the three Palapa optic fiber ring projects, the first is the West Package which will link areas in the provinces of Raiu, Riau Islands and Natuna Island with 2,000 kilometers long total optic fiber cable.

The second is the Middle Package which will cover Kalimantan, Sulawesi and North Maluku, with an optic fiber cable length of 2,700 kilometers. The third, called the East Package, will cover East Nusa Tenggara (NTT), Maluku, West Papua and Papua with a total optic fiber cable length of 6,300 kilometers.

Rudiantara's target is to begin the construction of Palapa West and Middle Ring projects in 2016 and have then these operational by January 2019.

"For the East Package, the government will again float its tender, hoping that the winner will be announced by the third quarter of 2016," the minister said.

The Palapa optic fiber ring program is the first government-company cooperation project (KPBU) in the telecommunications sector with an availability payment (AP) scheme. They payment will be made periodically during the concession period, based on the availability of infrastructure put in place by the company.

The AP funds will come from the universal service obligation (USO) contribution.

"With this system in place, the project will not depend on the state budget from which the scope of fund allocation for infrastructure development is limited," Finance Minister Bambang Brodjonegoro, said.

The West Package project has a NPV AP fund of Rp1.71 trillion which will be paid periodically during the 15 years concession period. The government guarantees the continuity of this payment through PT PII infrastructure guarantor company.