State utility PT Perusahaan Listrik Negara plans to invest $2.2 billion in an electricity-transmission network in Sumatra, including an underwater link connecting the Sumatra and Java grids for the first time, a company official said on Thursday.
The connector will ensure that power from the Sumatra grid can be transferred to Java and Bali when needed, which officials hope will mean fewer power cuts. Sumatra and Java are not currently linked, which means that power cannot be transferred and excess generation is wasted.
PLN will open tenders in the second quarter of next year for the construction of the 700-kilometer network, which will link six power plants in South Sumatra, with a total capacity of 3,600 megawatts, said Bambang Praptono, PLN’s director of planning and technology.
Bambang said the Japan International Cooperation Agency will provide 85 percent of the financing for the project, with PLN providing the rest.
JICA will provide soft loans with 40-year maturities, including grace periods of 10 years, he said.
Construction is set to start in 2011 and will be finished in 2016.
PLN will transmit the power from the plants to Muara Enim in South Sumatra, where it will be converted to direct current and sent along a 40-kilometer submarine cable under the Sunda Strait to the Java-Bali system.
“The biggest cost will be the procurement of the converters so the power can be transmitted to the grid,” Bambang said, adding that major electromechanical suppliers had expressed interest in the project, including France’s Areva and Japan’s Mitsubishi.
Fabby Tumiwa, an analyst at the Institute for Essential Services Reform, said the project would not necessarily improve supplies.
“ It will all depend on future supply and consumption conditions,” she said.
Demand for power on the Java-Bali grid is growing at an estimated 6 percent a year.