$2.4b Paiton 1 power project going ahead

$2.4b Paiton 1 power project going ahead

HONG KONG (Dow Jones): A U.S.-led consortium is going ahead with construction of a US$2.4 billion power project in Indonesia and isn't planning to renegotiate with the government over payment terms, a senior official at the U.S. Export-Import Bank said yesterday.

"We are continuing our disbursements and we think it will be best for all for the project to be completed," said Rita M. Rodriguez, a director for policy planning at the Ex-Im Bank, one of the banks backing the Paiton 1 project.

The 1,230 MW coal-fired power station, widely hailed as a landmark foreign power project in Indonesia, is due to be completed in the fourth quarter this year.

Rodriguez added that the project sponsors, led by U.S.-based Edison Mission Energy, aren't renegotiating with the Indonesian government, which has put pressure on several other power projects.

Following the more than 70 percent depreciation of the rupiah since early last year, Indonesia's state electric utility, PT Perusahaan Listrik Negara, has been pressuring operating power plants to help ease PLN's foreign exchange obligations.

Rodriguez added, however, that the investors would be ready to address a default in payments if needed. In April, Moody's Investors Service said the Paiton Funding B.V. project could default next year when debt payments become due.

Tariffs for the Paiton-1 plant are among the highest in the country at 7.5 cents per kilowatt hour.

The Paiton-1 project is sponsored by Edison Mission Energy, a unit of Edison International (EIX), Mitsui & Co., Batu Hitam Perkasa and TransCanada PipeLines Ltd..

Rodriguez was in Hong Kong speaking at a corporate conference sponsored by the Asia Society and Dow Jones & Co.

Meanwhile, Enron International, a unit of U.S.-based Enron Corp. said its 500-megawatt gas-fired project in East Java, Indonesia, remains on hold.

The project, along with 11 others, was postponed indefinitely by the government in January as part of a bailout agreement with the International Monetary Fund.

"We'll be able to move forward on that. As soon as the economy begins to recover and the Indonesian government gives it a green light," Robert Baldwin, Enron International's managing director for Asia Pacific said.

However, to date, Enron has had no communication with the government about the project's future status.