Alsthom agrees to cut cost of power project<\/p>\n
JAKARTA (JP): French-based engineering, construction and
\nprocurement company Alsthom has agreed to develop the Kediri
\npower transmission project in East Java at a cost equal to a
\nsimilar project in Depok, West Java, said the president of state
\nelectricity company PT PLN Kuntoro Mangkusubroto.<\/p>\n
But Kuntoro said Alsthom demanded nine conditions to
\nsignificantly lower the cost of the project, including
\neliminating the requirement to use local content, local
\ncontractors and the counter purchase provision.<\/p>\n
\"The figures from Alsthom are very attractive. I hope the
\ngovernment will accept it,\" he told the House of Representatives
\nCommission VIII on energy and mining at a hearing on Tuesday,
\nwhich was also attended by Minister of Finance Prijadi
\nPraptosuhardjo.<\/p>\n
Kuntoro said it would be up to Coordinating Minister for the
\nEconomy Rizal Ramli whether to accept the conditions demanded by
\nAlsthom.<\/p>\n
The Kediri power transmission project and a similar project in
\nTasikmalaya, West Java, became controversial after PLN revealed
\nrecently that there were strong indications of markup practices
\nin the costs of the two projects.<\/p>\n
The Kediri project is being developed at a proposed cost of Rp
\n342.28 billion (US$3.68 million), and the Tasikmalaya project at
\nRp 386.91 billion. A similar project called Depok III, which will
\nbe developed later this year, will cost some Rp 136.7 billion.<\/p>\n
The Kediri project is developed by a local consortium of PT PP
\nand PT Indokomas. The Depok III project was built by a consortium
\nwhich also includes Alsthom.<\/p>\n
Kuntoro said Siemens, the engineering contractor of the
\nTasikmalaya project, also sent a new proposal but it was \"not as
\nclear\" as what Alsthom had proposed.<\/p>\n
There had been a suggestion for PLN to cancel the two
\nprojects, but Kuntoro recently warned that delaying the Kediri
\nproject would risk causing a shortage in the power supply in East
\nJava.<\/p>\n
Kuntoro said a new tender would set back the Kediri project by
\neight months, during which the power demand would outstrip PLN's
\npresent capability to distribute power.<\/p>\n
He said by then, independent power producer Paiton II would
\nhave completed its power plant, but would not have an adequate
\ntransmission infrastructure to distribute the power.<\/p>\n
The projects are part of 17 power transmission projects to be
\nbuilt by PLN to anticipate a surge in power supply, following the
\ncompletion of power plant projects developed by 27 independent
\npower producers (IPPs).<\/p>\n
The high-profile Indonesian Corruption Watch recently revealed
\nthat there had been cost markups in 15 of the projects.<\/p>\n
The 15 projects cover Java, North Sumatra, West Sumatra and
\nSouth Sulawesi.<\/p>\n
Kuntoro said PLN's legal division was still studying the
\npossibility of canceling some of the projects.<\/p>\n
He said a decision by legal experts was expected to come on
\nThursday or Friday.<\/p>\n
\"We must be very careful in making decisions so that there
\nwill be no legal consequences,\" he said.<\/p>\n
Kuntoro also said there was a possibility of canceling some
\npower generating projects developed by the IPPs, particularly
\nthose which had not yet been started.<\/p>\n
\"If the power is not needed, we'll cancel the projects,\" he
\nsaid.<\/p>\n
PLN has signed power purchase agreements with 27 IPPs, under
\nwhich the former will buy power from the latter in U.S. dollars.
\nBut the sharp depreciation of the rupiah against the dollar
\ncaused PLN to be unable to meet the purchase agreements. PLN is
\ntrying to renegotiate the power price. There has also been
\nallegations that the IPPs marked up the cost of the projects
\ncausing the power price to be high.<\/p>\n
Many of PLN's power projects went to companies linked to the
\nfamily and friends of former president Soeharto. The cost of the
\nprojects had been significantly higher than the international
\nstandard.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/alsthom-agrees-to-cut-cost-of-power-project-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}