PLN will sign power plant contracts despite protest

Ika Krismantari, The Jakarta Post, Jakarta

Defying protests from other bidders, state electricity firm PT Perusahaan Listrik Negara (PLN) will go ahead with its plan to sign a letter of intent next week to formally name China National Technical Import & Export Corp. (CNTIC) and Harbin Power, also of China, as the winners of the tender for the construction of two 600 megawatt coal-fired power plants in Suralaya in Banten and in Paiton in East Java, respectively.

PLN director of power plants and primary energy Ali Herman said in Jakarta on Friday that the final contracts with the two companies would be signed on Jan. 19.

"There will be a process for adjustment and renegotiation before the contract signing," Ali said.

Commenting on protests from other bidders, he said that PLN would stick to the tender committee's decision on the winners of the two power projects.

On Dec. 8, CNTIC was selected as the winner of the tender for the construction of the Suralaya Baru power plant in Suralaya, Banten, and Harbin as the winner for the construction of the Paiton Baru power plant in East Java, based on the consideration that the two companies offered the cheapest prices for the construction of the two power plants.

According PLN's calculations, CNTIC offered the lowest price of Rp 378 (3 U.S. cents) per kilowatt hour (kWh) for constructing the Suralaya power plant, while its competitor, the Shanghai Maxima consortium offered Rp 378.97 per kWh, the Dongfang-Dalle-HEPEC consortium Rp 379.97 per kWh and the Marubeni-Doosan-PT Tripatra-PT MCC consortium Rp 414.59 per kWh.

For the Paiton power plant, Harbin submitted the lowest price of Rp 385.76 per kWh, while other bidders, the Shanghai Maxima consortium Rp 398.42 per kWh, the China Huadian-PT DGI consortium Rp 420.95 per kWh and the Marubeni-Doosan-PT Tripatra-PT MCC consortium Rp 421.07 per kWh.

However, other bidders, including China Huadian and Dongfang, say that they made better offers with better plant specifications.

In its objection materials, China Huadian said that its offer was $378 million cheaper than the one offered by Harbin Power because it needed only eight months to complete the construction works, shorter than the 36 months offered by the winner.

The objection addressed to CNTIC was submitted by Dongfang, saying that the machine used by the winner had emission was above the normal rate of 750 milligram ---- per cubic meter.

In response, Ali said that the duration for projects had been determined based on PLN's due diligence, saying that the period of 36 months was the most ideal for the construction project.

"All the bidders have also agreed on the duration of 36 months in the first offer. So, it would be not fair to also evaluate the one who offered 28 months," Ali said.

Commenting on the emission issue, he said that he could guarantee that the coal which would be used for the project was the highest quality and contained little sulfur.

He said that if the bidders remained dissatisfied with the result, they could take a legal action, while PLN would stick to its schedule for the projects as part of the government's "crash program".

The program, which is aimed at helping prevent power shortages and cutting the nation's dependence on oil-based fuels for generating electricity, is targeted for completion by 2009.