Final tenders for three power plants project approved
JAKARTA (JP): The government, after tough negotiations for half a year, has finally reached agreement with three consortia on the pricing of three major power projects planned to be established in Java at a total cost of US$1.67 billion.
"The new bidding prices reflect a 22-percent decline from $2.14 billion offered by the consortia in their first proposal to the state-owned electricity company PLN on Feb. 15," Coordinating Minister for Economy and Finance Saleh Afiff briefed some 50 reporters at his office here yesterday.
Minister of Mines and Energy Ida Bagus Sudjana was present at yesterday's briefing, which was also attended by Secretary General of the Ministry of Mines and Energy Umar Said, Director General for Electricity and New Energy Artono Arismunandar, PLN's president, Zuhal, and PLN's director for financial affairs, Ruswito.
Saleh said that in its final offer on June 30, a consortium of Asea Brown Boveri (ABB) of Switzerland and Marubeni Corp. of Japan agreed to reduce its bidding price to $733.3 million for construction of the 982-megawatt (MW) Muara Tawar combined-cycle power project in West Java, as compared to $912.1 million it offered on April 26.
On the same date, the consortium of Japanese Sumitomo and American General Electric proposed a cost of $372 million for the establishment of a 505-MW combined-cycle power generation plant in Tambak Lorok of Semarang, Central Java, as compared to the previous offer of $394 million.
"A group of Japan's Mitsubishi and German Siemens, meanwhile, offered a cost of $571.1 million for construction of a combined- cycle power generation plant with a capacity of 855 MW in Grati, East Java," he said. Previously, the Japanese-German consortium proposed a $617.4-million cost for the Grati project, he added.
Repeat-order
The three projects, which will be set up under a repeat-order basis, were in limbo for half a year since it was offered to the consortia last November. Their offered prices in fact sparked long debates among business leaders and members of the House of Representatives (DPR), most of whom came in conclusion that the prices proposed by the consortia were too excessive.
Saleh himself asked PLN some months ago to review the prices offered by the consortia because they were "still too high", as compared to those in neighbor countries.
President Soeharto even instructed PLN in February to open a bidding for the three projects if the consortia were not ready to lower their prices.
On Feb. 26, the ABB-Marubeni consortium offered its price of $744 million for the Muara Tawar project, down from its first offer of $912.1 million on Feb. 15, the Sumitomo-General Electric group offered $395 million for the Tambak Lorok plant, down from $473.7 million and Mitsubishi-Siemens consortium offered $630 million for Grati project from $761.2 million.
Capacity
Saleh said that during negotiations between the government and the ABB-Marubeni executives, the consortium was even committed to increasing the capacity of the planned Muara Tawar plant to 1,094.5 MW from the original plan of 982 MW.
"The Muara Tawar project will be even equipped with a new main electricity machine, which was not included in the previous offer," he said.
Zuhal, meanwhile, assured that the ABB-Marubeni consortium has agreed to give three years in guarantee for the operation of the machine. An informed source close to the consortium told The Jakarta Post that the machine, called the 13E2 gas turbine machine, will be assembled in Germany.
Saleh argued: "If we calculate the total investment offered by the three consortia with the inclusion of the additional capacity offered by the ABB-Marubeni consortium, the planned deals are 25 percent lower than the first offer of $540.6 million."
Zuhal said the newly-approved prices are relatively lower than those offered for the construction of similar power plants in Malaysia and Thailand.
Both Saleh and Zuhal said that differences of prices in foreign countries, among others, laid on their exclusion of local components, risk factors, terms of payment and cooling system requirements.
With the approval of the government, Zuhal said, PLN is now preparing to sign the three contracts. "We expect that we can sign the contracts in August," he said.
He added that the construction of the open-cycle power plants in Muara Tawar, Tambak Lorok and Grati will be completed within 17 months from the date of signing, while the construction of their combined-cycle facilities will take 14 months after the completion of the open-cycle plants. (fhp)