Govt to tender all power projects
Govt to tender all power projects
JAKARTA (JP): The government will tender all electricity projects to international bidders, including projects to be financed with export credits, the president of state-owned electricity company PLN, Djiteng Marsudi said yesterday.
Speaking at a hearing with Commission VI of the House of Representatives, Djiteng said the new policy would nullify all contracts related to direct or repeat orders.
He said the new tender policy would also affect electricity projects financed with foreign funds, including export credits. The projects are estimated to have a total value of about US$400 million in the 1996/1997 fiscal year.
"All projects to be funded by export credits will be open to international tenders," he told the commission, which oversees industry, energy, mining, manpower and investment.
Djiteng acknowledged that PLN's decision to scrap the direct and repeat order system was opposed by certain parties, including those who provide the overseas funding.
"But we are committed to abolishing the system to improve efficiency," he said.
In the past, the government often directly assigned foreign companies to carry out particular projects. Existing contractors could also receive "repeat orders" to do similar projects, without having to undergo the tender process.
Djiteng also told House members about the PLN's plan to float both its shares and bonds to support its financing requirements, which could reach Rp 10 trillion.
He said the government allocated about Rp 4.14 trillion ($1.5 billion) in the 1996/1997 budget to finance electricity projects, most of the amount will be foreign loans.
PLN plans to raise the same amount by issuing bonds, or from credit exports.
He said privatization is part of PLN's strategy to raise development funds.
"We hope we will be able to go public next year," he said, adding that any problems related to the plan should be cleared before the end of this year.
An important part of its plan is the formation of two subsidiaries. One is named PT Pembangkit I, and will operate PLN's power plants in West and Central Java.
The second subsidiary is PT Pembangkit II. It will be responsible for power plants in East Java and Bali.
Djiteng said that the two subsidiaries, which will be separately listed on both the domestic and international exchanges, will manage commercial operations. PLN, as the holding company, will concentrate on social missions. (hen)