CEPA abuses power project: House member

CEPA abuses power project: House member

JAKARTA (JP): A legislator accused yesterday the developer of
the Tanjung Jati power plant, PT Consolidated Electric Power Asia
(CEPA) Indonesia, of using the unfinished project to improve its
portfolio and enable it to sell its shares.

House of Representatives member Iskandar Mandji, in a hearing
with the president of state electricity firm PT Perusahaan
Listrik Negara (PLN), Djiteng Marsoedi, said he suspected CEPA
had used the Tanjung Jati project only to improve its
performance.

"If this is true, it is similar to what Bre-X has done in the
Busang case," he said.

Bre-X is said to have overestimated gold deposits in East
Kalimantan's Busang mines for capital gain.

Iskandar said CEPA had sold 80 percent of its shares to
Southern Electric International Holdings, a subsidiary of
Atlanta-based Southern Company. The shares were said to be worth
US$2 million.

Iskandar said PLN should make sure the takeover by the U.S.
firm did not delay the construction of the Tanjung Jati plant and
disturb power between Java and Bali.

Iskandar also questioned a letter sent by the Minister of
Mines and Energy requesting CEPA Indonesia cut the price of
Tanjung Jati B's power supply to PLN to at least the same level
as Tanjung Jati A.

In a power purchase agreement for Tanjung Jati B, PLN and CEPA
agreed on an electricity price of 6.45 U.S. cents a kilowatt hour
(kWh)

Tanjung Jati A, which is to be built by a Bakrie Group-led
consortium, had said it would sell electricity to PLN at 5.74
cents a kWh.

CEPA started building the 1,300 MW Tanjung Jati B power plant
in Jepara, Central Java, last November.

The power project, worth US$1.77 billion, had previously been
stalled because of disputes about the site.

But the government finally decided to allow private company to
continue construction, with some amendments to its agreement with
PLN.

In the power purchase agreement, signed by PLN and CEPA in
September 1994, the price was initially set at 7.39 U.S. cents.
But after PLN proposed the government cancel the contract with
CEPA, the private company was willing to reduce the price to 6.45
cents.

PLN proposed in July the government cancel CEPA's handling of
the Tanjung Jati-B project because the private company failed to
begin construction as scheduled. But the government decided to
allow CEPA to continue the project provided it renegotiated its
contract with PLN. (pwn)