HK company to construct US$2 billion power plant

HK company to construct US$2 billion power plant

JAKARTA (JP): The state-owned electricity company PT
Perusahaan Listrik Negara (PLN) yesterday awarded a contract to
Hong Kong-based Consolidated Electric Power Asia (CEPA) Ltd. for
the construction of a US$2 billion power plant in Tanjung Jati,
Jepara, Central Java.

Through its wholly owned subsidiary, PT Consolidated Electric
Power Asia Indonesia, CEPA will construct two coal-fired power
generation units with a combined capacity of 1,320 megawatts
under a build, operate and own scheme.

CEPA is an affiliate of the Hong Kong-based Hopewell Holdings
Ltd.

Yesterday's deal was signed here by PLN's president, Zuhal,
CEPA's chairman, Gordon Ying Sheung Wu, and CEPA's managing
director and chief executive officer, Stewart W.G. Elliott, who
also represented Hopewell Holdings.

Wu told reporters that around US$1.6 billion of the $2 billion
needed for the project will be financed with offshore loans,
while the remaining 400 million will be financed with CEPA's
equity.

He said that his company, which has built power plants in
China, Thailand and the Philippines, has received commitments
from the U.S. Export Import Bank and Japan's Export Import Bank
for providing loans of some $1 billion for the project.

Some commercial banks, including Citibank of the United
States, Industrial Bank of Japan, Sakura Bank of Japan, Fuji Bank
of Japan and HongKong Shanghai Bank, will provide the remaining
$600 million.

Purchase

Yesterday's agreement also allows CEPA to sell its electricity
to PLN for 30 years. During the first six years of operation,
CEPA will sell its electricity at 7.665 U.S. cents per kilowatt
hour (kWh), in the next six years at 7.388 cents and in the
remaining 18 years at 5.988 cents.

Ermansyah Jamin, the head of Indonesia's negotiating team for
the project, said that PLN will pay for CEPA's electricity in
rupiah.

Jamin, who is also an expert assistant to the Minister of
Mines and Energy on electricity affairs, said the plant is
scheduled to start operation in 1998.

PLN expects that the Tanjung Jati power station will
ultimately have a total capacity of 4,000 megawatts.

Wu said that even though the Indonesian government allows
foreign investors to control 100 percent of equity in large-scale
projects under its new deregulatory measures, CEPA is inviting
domestic companies to take part in the project's ownership.

"We are now negotiating with PT Pembangunan Perumahan to take
part in the project. We expect there will be more local companies
joining us," Wu said.

Pembangunan Perumahan is owned by PT Pembangunan Jaya, a
company controlled by businessman Ciputra and the Jakarta
municipal administration.

Zuhal said that CEPA is the fifth private company to build a
major power project in the country.

PLN has thus far awarded a contract to PT Paiton Energy
Company, a consortium of Indonesian, Japanese and American firms,
to establish a 1,230 MW coal-fired power generation plant in
Paiton, East Java, a consortium of Asea Brown Bovery (ABB) of
Switzerland and Japan's Marubeni, for a 982-MW combined-cycle
power plant at Muara Tawar in West Java, a consortium of Japan's
Sumitomo and General Electric of the United States for a 521-MW
one-cycle power plant at Tambak Lorok in Central Java and a
consortium of Japan's Mitsubishi and German Siemens for a 868-MW
combined-cycle power station in Grati in East Java. (fhp)