Threats do the trick as power prices come down<\/p>\n
JAKARTA (JP): Strong pressure from the Coordinating Minister
\nfor Economy and Finance Saleh Afiff may have finally persuaded
\nthree consortiums led by foreign power giants that it is better
\nto bring down their prices then it is to lose their projects.<\/p>\n
"Their willingness has been reflected in letters, which were
\nsent today to the state electricity company PLN," David Tombeg,
\nPLN's spokesman, told The Jakarta Post here yesterday.<\/p>\n
Tombeg said the consortiums pledged at a meeting with PLN last
\nweek to finish new feasibility studies on price reductions and
\nsubmit new proposals by May 1.<\/p>\n
"Their responses are encouraging but I cannot tell you the
\ndetails of the letters because PLN should study the proposals
\ncarefully," he said.<\/p>\n
This is just the most recent installment in a saga that two
\nweeks ago saw Minister Afiff block the firms' attempts to secure
\nexport credit.<\/p>\n
The government granted the three projects last year on a non-
\ncompetitive, repeat order basis, in a move it said would speed up
\nconstruction and head off a looming power crisis.<\/p>\n
In recent months, however, dissatisfaction within the
\ngovernment over the prices led to an announcement that the orders
\nwould be canceled and the projects thrown open to competitive
\nbids.<\/p>\n
Early last month, the cancellation was canceled when the
\nconsortiums agreed to lower their prices from a total of US$2.14
\nbillion to $1.76 billion. Afiff was still not satisfied, perhaps
\nprompted by GEC Alsthom International's assertion that it could
\nshave $410 million off the total cost, and urged the consortiums
\nto make further cuts.<\/p>\n
PLN is scheduled today to hold a meeting to discuss the new
\nproposals, Tombeg said.<\/p>\n
"On May 1, we should have sent our response to the new
\nproposal to Minister of Mines and Energy Ida Bagus Sudjana and
\nMinister Afiff," he said.<\/p>\n
The consortiums are Asea Brown Bovery (ABB) of Switzerland and
\nJapan's Marubeni, to build a 982-megawatt (MW) combined-cycle
\npower plant at Muara Tawar in West Java, Japan's Sumitomo and
\nGeneral Electric of the U.S., to set up a 505-MW one-cycle power
\nplant at Tambak Lorok in Central Java and Japan's Mitsubishi and
\nthe German Siemens, to establish a 855-MW combined-cycle power
\nplant at Grati in East Java. (fhp)<\/p>",
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