PLN Batam proposes $140m loan to ICBC

Fadli, The Jakarta Post, Batam, Riau Islands

The Batam office of state-owned electricity company, PT Perusahaan Listrik Negara (PLN), has proposed a US$140 million loan to the Industrial Commercial Bank of China (ICBC) to finance the construction of its two 50 Megawatt, coal-fired power plants.

PLN Batam corporate secretary Binarto told The Jakarta Post on Tuesday that the proposal was submitted in mid 2004. The power plants are needed to supply electricity to the islands of Batam, Rempang and Galang, that are currently served with diesel power plants.

"We really hope the loan can be disbursed soon so that we can start with the planned construction of the Tanjung Kasam coal- fired power plants, which are scheduled for operation in 2008," he said.

Customers in Batam suffered a power crisis for two months last year due to lack of supply. PLN Batam can only produce 197.10 Megawatts for its 126,441 customers, while demand is increasing at the rate of 1.5 megawatts per month.

"The project for the construction of the Tanjung Kasam coal- fired power plants is also to convert the current diesel power plant, which needs huge maintenance fees, and to anticipate the government's planned hike in fuel prices, including for diesel fuel," Binarto said. "Should that happen, we won't have to increase electricity prices."

Three provinces in Sumatra -- West Sumatra, Jambi and Riau, which also covers Batam -- experienced severe power shortages in June and July of 2004. Power was shut down in rotation in the three provinces, after the water debit in several reservoirs in the provinces -- used by several power plants to generate electricity -- dropped due to a prolonged dry season.