Tue, 07 Nov 2000

Norway to develop hydropower project in Jambi province

JAMBI (JP): A consortium of local administrations, Indonesia's state-owned electricity company PLN and Statkraft SF power- generation company from Norway and local private company PT Binatek Reka Energi has set up a joint venture to develop a 350- megawatt hydropower project in Jambi province on the southeastern part of Sumatra island.

The agreement for the joint venture company, called PT Kerinci Tirta Energi, was signed in Jambi on Sunday by Jambi Governor Zulkifli Nurdin, Kerinci Regent Fauzi Si'in, PLN director Eddie Widiono, Statkraft SF chief representative in Jakarta Kjell Tore Laroi and Binatek president Erwin Jahja.

The joint venture company will initially have an authorized capital of US$500 million with the following shareholding composition: Statkraft and PLN each with 35 percent, the Jambi administration and PT Binatex each with 15 percent.

Also witnessing the signing of the agreement were Norwegian Ambassador to Indonesia Sjur Torgersen and deputy chairman of the National Development Planning Agency for regional development Herman Haeruman.

"This power station will be completed within seven years after the start of construction," Governor Zulkifli said.

The hydropower project will be located at the mouth of the Merangin river in Kerinci regency and will harness the water of Kerinci lake.

Preparations for the Kerinci power project date back to 1995 when both the governments of Indonesia and Norway signed a memorandum of understanding on cooperation in energy development.

This agreement was followed in mid-October, 1996 by a memorandum of understanding between PLN, Statkraft SF and PT Binatek regarding the development of hydropower in Kerinci regency under a foreign investment project.

The executives of the joint venture company visited the project site on Sunday and briefed the local people on the benefit of the project for the local and national economy.

Separately, Sverre Nygaard, a senior vice president at Statkraft, was quoted by Reuters as saying in Oslo on Monday the Kerinci Hydropower Project would generate 1,450 gigawatt hours of electricity annually and could be ready by 2006.

"Before we can start the construction we certainly have to ensure that we will be able to finance the project in the international market, and that will be the biggest hurdle," Nygaard said.

An assessment of the plant's cost four years ago was set at US$550-$600 million, but a new study is required in the wake of the collapse of Indonesia's currency, the rupiah, in 1997-98.

"We expect the numbers to go down, and just changing the design will enable us to reduce the costs," Nygaard said.

"In general, Asia is still a pretty challenging place to get financing internationally, and Indonesia, in particular, is not the easiest place to finance a hydropower project like that," he added. (alx)