CalEnergy asks to go on with geothermal projects
JAKARTA (JP): The United States-based CalEnergy Company Inc. is optimistic that the government will allow it to continue its geothermal power projects in Patuha, West Java and Bedugul, Bali.
The president and chief operating officer of CalEnergy Asia, Donald M. O'Shei Jr, told The Jakarta Post last week the company had asked the government to allow it to continue the projects, which have been on hold as part of the government's retrenchment policy to cope with the currency crisis.
He said that he was optimistic that the government would fulfill the request because the projects were beneficial, needed by the public and had a strong legal basis to be continued.
"There are many good reasons to be optimistic that all geothermal power projects, including ours, will be allowed to continue," O'Shei said.
The power projects which CalEnergy has asked to continue include three power units at the Patuha power plant -- Patuha 2, 3 and 4, -- which have a combined capacity of 240 megawatts; and four power units at the Bedugul power plant -- Bedugul 1, 2, 3 and 4 -- which have the combined capacity of 320 megawatts.
The Patuha project is being codeveloped by CalEnergy and Indonesia's Mahaka Energy, while CalEnergy's partner for the Bedugul project is Indonesia's PT Pandanwangi Sekartaji, a subsidiary of the Panutan group.
President Soeharto, in a decree issued on Sept. 20, postponed and put under review some US$37 billion worth in infrastructure projects financed by foreign loans to cope with the rupiah's sharp depreciation against the U.S. dollar.
The decree postponed Patuha units 2, 3 and 4 and Bedugul units 3 and 4, and put under review Patuha Unit 1 and Bedugul units 1 and 2.
However, the decree gave the go-ahead to CalEnergy's 400- megawatt geothermal power project in Dieng, Central Java.
CalEnergy is developing the Dieng project with its Indonesian partner PT Himpurna Enersindo Abadi, a company formed by the retired military association Himpurna.
The President issued another decree on Nov. 1 which allowed for the continuance of 15 major projects previously reviewed and postponed, including the 80-megawatt Patuha 1 power unit.
O'Shei believed the government would issue more decrees in the near future to allow other projects to continue and he was optimistic over CalEnergy's prospects for its geothermal projects in Patuha and Bedugul to be included in such decrees.
He said one reason for the optimism was the fact that unlike coal and gas-fired power plants, contracts for geothermal power projects provided no legal allowances for delays.
"Geothermal power projects can't be postponed. There is no legal mechanism for that under the contracts," he said.
Another reason is that geothermal power projects are more environmentally sound than power plants using fossil fuels, such as coal and gas, he said.
From the macroeconomic point of view, the development of geothermal power plants are good for Indonesia's balance of payments as they could reduce the domestic use of coal, oil or gas for power generation so that excess fossil fuels could be exported to create more revenue in dollars, he said.
"We see that the government has been increasingly aware of the benefits of geothermal power projects and it looks like it will show more favor to them," O'Shei said.
With regards to the Bedugul project, O'Shei said, Bali very much needed the project due to potential power distribution problems from Java to the island.
He said the state-owned electricity company PLN supplies power from Java to Bali through undersea cables which are prone to failure due to ocean currents.
"If that (failure in power distribution) happens, Bali will not have enough power," he said.
O'Shei said CalEnergy had thus far invested $192 million for the Dieng project, $83 million for the Patuha project, and $20 million for the Bedugul project.
He said the Patuha 1 unit was now under construction and could come on line in 1999, while the construction of the Patuha 2 unit could be commenced late this year and the Bedugul project in the middle of 1998.
O'Shei said the financial closing for all of CalEnergy's projects in Indonesia had been concluded with Credit Suisse First Boston as the lead arranger for two syndicated loans worth $560 million. (jsk)