Alstom eyes a slice in projects in mega second 10,000 MW power program

Alfian, THE JAKARTA POST, SURABAYA | Mon, 03/02/2009 10:23 AM  

Power plant equipment giant Alstom is eyeing an opportunity to take a part in the second phase of the 10,000 megawatt (MW) electricity program, as the government has said it will issue a sovereign guarantee for the project’s financing. 

“We are looking forward to the second phase of the 10,000 MW [project]. The government’s early commitment to issue a sovereign guarantee will attract investment from various sources,” said Johan T. Budisusetija, president director of PT Alstom Power Energy Systems Indonesia (Alstom Power ESI), here last Friday. 

Alstom Power ESI is a subsidary of Alstom Indonesia, providing equipment and services for power generation. 

Alstom Indonesia has another subsidiary, Alstom Transport, which provides signalling systems for railway networks. 

Johan said Alstom Power ESI missed out on the opportunity to participate in the first phase of the 10,000 MW project because at the beginning of the project the Finance Ministry had not made any provisions for a guarantee, making the project’s financing unclear to investors.  

Later, the government issued a sovereign guarantee for the first phase of the 10,000 MW project, but the investors chosen made it difficult for Alstom to join the project. 

“The investors brought their own supplier. Meanwhile, overseas demand for power plants was booming, so we focussed more on exports,” Johan said. 

The first phase of 10,000 MW project also received significant financing commitment from Chinese banks, but this is currently facing problems since the banks have begun to ask if they can increase the interest rates on the loans. 

The government guarantee for the second phase would make the project more attractive to other financial resources, Johan said. 

Alstom did not provide details of the types of power plants the company was looking into under the second phase project. 

“We tend to go after the large scale projects,” Alstom Indonesia’s country manager, Edward Thiessen, hinted. 

Alstom Power ESI has a factory in Surabaya producing power plants, boilers and heat recovery steam generators (HRSG). 

The factory is big enough to manage between four and six projects annually. 

The Surabaya factory has been involved in several overseas and domestic power plant projects. Domestic projects have included boilers for the Paiton 1 to 8 power plants in Pasuruan, East Java, and heat recovery steam generators for the Tangguh LNG project in Papua. 

Edward said Alstom had no plans yet to build a new factory in Indonesia. 

During the first nine months of its current fiscal year (from April 1 to Dec. 31 2008), Alstom worldwide booked orders amounting to 21.5 billion euro, up by 8 percent from the same period of the previous fiscal year. Sales were at 13.5 billion euro, or up by 12 percent. 

No figures as to the portion of Alstom Indonesia’s contributions to the company’s global revenue were made available. 

The company would not be too badly affected by the global financial turmoil, Edward said.

“We should be just fine, because it takes a long time to build power plants, so we believe that governments will stick to their initial plans. Moreover, big utility companies have very good balance sheets.” 

The guarantee for the second 10,000 MW project would make it more attractive to investors