Group seeks to continue T. Jati A power project

JAKARTA (JP): PT Tanjung Jati Power Company has asked the government to allow it to continue its US$1.66 billion Tanjung Jati A power project in Jepara, Central Jakarta, the company said yesterday.

Aburizal Bakrie, chairman of the Bakrie and Brothers Group -- a member of the project's consortium -- suggested in a recent letter to the government that the project be lifted from "under review" status and be allowed to continue.

Government approval is needed to allow the consortium to get foreign loan disbursements for the project.

The coal-fired 1,320 MW power project is among six private power projects which were put under review by the government as part of a package of measures launched to cope with the current monetary crisis.

The measures, which were announced last month, allowed ten private power projects to continue, but postponed 13 other power projects.

"We are optimistic that the project will be allowed to continue because the project is needed by the public and is good in light of its cheap price," Aburizal said on the sideline of the Asia Pacific Countertrade Association conference.

Tanjung Jati A is 30 percent owned by Japan's Tomen Power, 30 percent by Britain's National Power, 20 percent by Bakrie Power and 20 percent by Maharani Paramitra, controlled by President Soeharto's daughter Siti Hediati Harijadi Prabowo.

The consortium signed a power purchase agreement with state- owned electricity company PLN last April.

Under the agreement, PLN will buy power from Tanjung Jati A at 5.74 U.S. cents per kilowatt hour (kwh) starting from the beginning of its operation in 2001. Thus far it is the cheapest price offered by a private power company.

Aburizal said while waiting for the government's new policy regarding the project the consortium would continue to work on the project.

"We decided to continue the project because we have completed some main stages of preparation, including making financial arrangements with foreign banks, several months ago," he said.

"The banks are scheduled to close financing for the project by June next year," Aburizal said, refusing to give further details.

According to the current ruling, a private power company which has signed a power purchase agreement with PLN has to conclude energy and construction contracts and financing arrangements in order to be allowed to obtain foreign loan disbursements to develop the project.

Among other power companies which have asked for government approval to continue their projects was Unocal Geothermal Indonesia Ltd, a subsidiary of American Unocal Corp.

Unocal had been licensed to develop two geothermal power projects: the $266 million Salak power project in West Java with a capacity of 165 MW and the $570 million Sarulla power project in North Sumatra with a capacity of 220 MW.

However, the government only allowed the Salak power project to continue.

The vice president and general manager of Unocal Geothermal of Indonesia, Olin D. Whitescarver, recently said the company had spent some $50 million of its equity capital to develop the Sarulla project.

Whitescarver said he was optimistic that the government would give the go-ahead for the project to continue in the near future. (jsk)