Govt to issue guarantee for winner of C. Java electricity project

Erwida Maulia, The Jakarta Post, Jakarta | Tue, 12/21/2010

The government says it will issue a letter of guarantee for the winner of a 2 x 1,000-megawatt power plant project in Central Java, aimed at providing security for the executor of the long-term project.

Finance Minister Agus Martowardojo said Tuesday there were currently seven bidders from three different countries bidding for the project, which is the government’s prime public-private-partnership infrastructure project for the year 2010.

“We’re currently preparing the contract. Once the winner of the bid is known, we will issue the guarantee letter,” Agus said after a Cabinet meeting on public-private-partnership programs at the Vice Presidential Office in Jakarta.

He added that the tender for the power plant project would be held in January.

Different from clarification letters the government has issued for previous infrastructure projects, Agus said, a letter of guarantee would provide more clarity over clauses the government would guarantee for its partners in the execution of a public-private-partnership project.

“It covers, among other things, guarantees regarding license-related risks, force majeure risks and (state electricity company) PLN’s obligations to project companies. So it has quite wide coverage.”

Agus said the 2 x 1,000-megawatt power plant project in Central Java was estimated to be worth US$3 billion and take 54 months to construct.

Tuesday's Cabinet meeting also discussed the progress of preparations of four other public-private-partnership projects, including the construction of a railway from Manggarai in Central Jakarta to Soekarno-Hatta International Airport in Tangerang on Jakarta’s outskirts.