Consortium established to build $6b power plant

Consortium established to build $6b power plant

JAKARTA (JP): A consortium was formed here yesterday to
develop a 5,000-megawatt (MW) power plant worth US$6 billion in
Cirenti, Riau, to supply power to Malaysia.

The consortium is made up of state electricity company PLN;
state coal company PT Tambang Bukit Asam; PT Krakatau Engineering
Corp, a subsidiary of state steel company PT Krakatau Steel; PT
Nusantara Ampera Bhakti (Nusamba), which is controlled by timber
tycoon Muhammad "Bob" Hassan; and PT Pembangunan Selaras
Indonesia.

The project will start in two years after a feasibility study,
which has yet to be conducted. It is expected to go on stream
after 2003.

The establishment of the consortium, which has not yet been
named, was signed by PLN president Djiteng Marsudi, Bukit Asam
president AR Sunardi, Krakatau Engineering president Djoko S.
Widodo, Nusamba president Abdul Madjid and Pembangunan Selaras
president Henry Supanni at a closed ceremony presided over by
Minister of Mines and Energy I.B. Sudjana at the ministry's
headquarters.

Sudjana said in his speech that the development of the project
was part of the energy cooperation signed by the governments of
Indonesia and Malaysia in 1978 to anticipate a shortage of power
in Malaysia in 2000.

He said the Cirenti power plant would be codeveloped by the
newly established Indonesian consortium and the Malaysian
consortium, made up of Tenaga Nasional Berhad, Renong and Sikap.

The project will be developed in two stages to generate a
total of 5,000 MW of power with the first stage generating 1,500
MW at a cost of between $1.5 billion and $2 billion. The total
cost needed to develop 5,000 MW is $6 billion.

The power will be transmitted along a 170-kilometer cable
network -- including 150 km of overhead cable and 20 km of
submarine cable -- stretching across the Riau archipelago and the
Strait of Malacca to Malaysia.

The transmission line could be continued to Thailand later on,
Sudjana said. He said the project could become a step to realize
a power interconnection of the Association of Southeast Asian
Nations (ASEAN).

ASEAN ministers had talked about the ASEAN power
interconnection in several meetings in Bali in 1995, he said.

"If realized, the project will become Indonesia's first large-
scale project of power export to neighboring countries," Sudjana
said.

However, he said the consortium had yet to conduct a
feasibility study for the project, including studies on the coal
deposits available in Cirenti, the environmental impact of the
project and power demand in Malaysia.

Cirenti has been chosen as the location of the power project
because the area reportedly contains a huge coal deposit.

Head of the negotiation team for the Indonesian consortium
Rahardjo Moecharar said the feasibility study would be conducted
by PLN on funds provided by PLN, Bukit Asam and Tenaga Nasional.
The study is scheduled to be completed in one and a half years.

He said the Indonesian consortium would take the majority of
the project's shares and the Indonesian shares would be equally
distributed among its five members.

Rahardjo, who is also a PLN construction director, said the
project would not undermine the government's retrenchment program
to cope with the monetary crisis, because the project still had a
long way to go.

The government has postponed many large projects, including
dozens of power projects, to deal with the monetary crisis which
has been gripping the country since the middle of last year.
(jsk)