JBIC may help develop power network

Leony Aurora, Bloomberg / The Jakarta Post - 2007-04-13 11:23:48

Jakarta, April 13, 2007 (Bloomberg) - Japan Bank for International Cooperation may lend $155 million to Indonesia's state utility to build part of a backbone electricity line in Sumatra to prevent blackouts.

JBIC, as Japan Bank is known, has agreed to fund the construction of a quarter of the 1,200 kilometer transmission line planned in Indonesia's second-most populous island, Herman Darnel Ibrahim, vice president of transmission and distribution at PT Perusahaan Listrik Negara (PLN), said in Jakarta.

Power outages often occur in Sumatra because the utility, hobbled by a government order to cap prices, hasn't had funds to upgrade its aging network and build new lines to connect the island's cities.

PLN needs the backbone to accommodate 1,300 megawatts of power plants, about 43 percent of current capacity, planned to be built by 2012.

PLN now has more than 630 kilometers of the 275-ki'lovolt transmission line in the middle part of Sumatra.

The company needs Rp 5.7 trillion (US$625 million), lower than earlier estimates of $900 million, to build additional network and connect the north and south tips of the island by 2010, Ibrahim said.

The company will install 16 main stations that convert high- voltage electricity to lower-voltage power suitable for homes and businesses, he said.

PLN is also considering building a 440-kilometer transmission line, which includes four sub-marine cables, to connect Sumatra and Java, Ibrahim said. The $1.1 billion project may have a capacity to transport 3,000 megawatts of electricity and may be completed in 2010.

Indonesia needs to spend about $27 billion on new plants and power lines by 2012 to meet demand, according to the World Bank. At least 47 more power stations and 14 high-voltage transmission lines will be required in the next 10 years, Listrik Negara estimated in 2005.

Meanwhile, a transport ministry official said that Mitsubishi Corp. and two other Japanese groups were shortlisted by the Indonesian government to bid for a rail project that will cost as much as Rp 6 trillion ($659 million).

Mitsubishi. Japan's largest trading company that has set up a joint venture with Sumit-omo Corp., will compete with Marubeni Corp. and its partner Tokyu Corp., as well as Itochu Corp.'s tie up with Tai-sei Corp., Japan's second-largest construction company, Suprapto, spokesman at the directorate-general of railway at the transport ministry, said by telephone today.

Indonesia is counting on infrastructure improvements to boost its economy, South-east Asia's biggest, and generate employment.

Indonesia's parliament last month passed a law to allow private investment in railways, ending state-owned PT Kereta Api's monopoly, which it has held for 61 years.

"They have passed the pre-qualification and are short-listed for the tender" next month, Suprapto said.

Construction for the 35-kilometer, four-track railway from Manggarai in South Jakarta to Cikarang in West Java province is expected to begin by the end of this year, Suprapto said.