Govt, PLN to hold tender for four power plants

Ika Krismantari, The Jakarta Post, Jakarta

The government and state electricity company PT PLN will later this month invite bids for the financing of the company's four coal-fired power plants.

The head of the government's power-sector development program, Yogo Pratomo, said Thursday that the tender aimed to seek loans valued up to US$2 billion, or about 85 percent of the total funds needed to build the projects.

The development of the four power plants is part of the government's ambitious crash-program to build coal-fired power plants able to generate 10,000 megawatts (MW) by 2009.

The four are the 600 MW Pacitan plant in East Java, the 900 MW Pelabuhan Ratu plan in West Java, the 900 MW Teluk Naga plant in Banten and the 600 MW Tanjung Awar-awar plant in East Java.

Yogo said that the tender was opened to both domestic and foreign lenders, adding that he had sent 20 invitations to to local and overseas banks.

The tender will be the second after the first one last year, when four power plant projects were put on offer. The four are the 600 MW Labuan plant in Banten, the 900 MW Indramayu plant in West Java, the 600 MW Rembang plant in Central Java and the 600 MW Paiton Baru plant.

For the first tendering process, Yogo said PLN had managed to secure financing or loans of up to $1 billion for Rembang and Indramayu plants from both local and foreign banks.

PLN has secured dollar-denominated loans from the Bank of China and the U.S. Berkeley Bank and rupiah-denominated loans from Bank Mandiri and Bank Central Asia.

The government is still in the negotiation process with Chinese banks for Paiton and Labuan, Yogo added.

Under this crash-program, the government instead of PLN will decide the tender process and its winners, in particular because of the government's decision to provide a guarantee for the power plant projects.

Normally, no tenders would be held for the financing of power plants as they fall under the responsibility of the contractors, while PLN has only to bear 15 percent of the required funds.

Under the government's crash program, 10 coal-fired power plants with a total capacity of 6,900 MW will be built in Java, while 25 with a total capacity of 3,100 MW will be built outside Java.

The program aims to provide an additional 10,000 MW of power to the country by 2009, to push to supplies to around 39,000 MW.

PLN is turning to non oil-based fuels to generate power, including coal, amid the sky-rocketing price of oil on the global market.

At present, over 70 percent of PLN's power plants are fired by oil-based fuels.