Influence brokers inflate prices of electricity plants<\/p>\n
JAKARTA (JP): The involvement of lobbyists and brokers in
\nnegotiations for the construction of three power projects in Java
\nhas caused contractors to charge high prices, the president of
\nthe State Electricity Company (PLN), Zuhal, says.<\/p>\n
He bluntly told members of the House of Representatives (DPR)
\nin a hearing here yesterday that brokers and lobbyists with
\nstrong political ties had intervened in the bid evaluation
\nprocess, forcing foreign contractors to increase their asking
\nprices by up to US$2.14 billion.<\/p>\n
\"The decision making process was like a long chain, in which
\nlobbyists and brokers tried to influence every step of the
\nevaluation process,\" he said.<\/p>\n
But Zuhal declined to identify the lobbyists and brokers.<\/p>\n
\"PLN has persistently bargained for and demanded that
\ncontractors give rock bottom prices,\" he said.<\/p>\n
He added that after the contracts were awarded to the three
\nforeign contractors on a repeat-order basis in March they agreed
\nto reduce their prices to $1.76 billion and further cut them down
\nin April to $1.65 billion.<\/p>\n
The 982-megawatt (MW) Muara Tawar combined-cycle (steam and
\ngas) power project in West Java was awarded to a consortium of
\nGerman ABB and Japanese Marubeni, the 505-megawatt Tambak Lorok
\none-cycle project in Central Java to Japan's Sumitomo and
\nAmerica's General Electric and the 855-megawatt Grati combined-
\ncycle power project in East Java to a consortium including
\nMitsubishi and Germany's Siemens.<\/p>\n
Fair prices<\/p>\n
Zuhal said that the latest prices submitted by the contractors
\nseemed to be fair, given the tight requirements imposed on them
\nsuch as the minimum 25-percent local content for the jobs and the
\nturn-key system set for the projects.<\/p>\n
However, the repeat order set off a controversy because an
\nAnglo-French company, GEC Alsthom, claimed it could complete the
\nthree projects for much less.<\/p>\n
A fact finding team sent by the Ministry of Mines and Energy
\nlast month to Malaysia and Thailand to conduct price-comparison
\nstudies did find out that the contractors' prices for the Java
\npower projects were indeed much higher.<\/p>\n
The contractors' prices ranged from $610 to $701 per kW for
\ncombined-cycle (steam and gas) power generation, compared to
\n$489-502 in Thailand and $597-599 in Malaysia.<\/p>\n
Their prices for open-cycle (gas only) power generation ranged
\nfrom $529 to $534 per kilowatt (KW), as against $424-510 in
\nThailand and $372-493 in Malaysia.<\/p>\n
But Zuhal defended the repeat order, saying that the three
\nprojects should be constructed immediately to cope with the
\nsevere power shortage.<\/p>\n
He said that PLN had to increase its installed generation
\ncapacity by 9,522 MW during the current sixth five year plan
\nperiod (1994-1999). Its installed capacity is now 13,290 MW. (09)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/influence-brokers-inflate-prices-of-electricity-plants-1447893297",
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"sponsor": "Okusi Associates",
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