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)