PLN signs contract with Alstom consortium

PLN signs contract with Alstom consortium

The Jakarta Post, Jakarta

State electricity firm PT PLN has signed a contract with a
consortium comprising Japanese, Indonesian and American firms for
the provision of boilers for the Tarahan power project in South
Sumatra.

Under the contract signed on June 26, the consortium,
comprising Alstom Power Inc. USA, Marubeni Corp., Japan and PT
Alstom Power Energy System Indonesia, will provide PLN with two
circulating fluidized bed (CFB) boilers for both the Tarahan 3
and Tarahan 4 power plants.

Both boilers are valued at US$118.264 million, according to
Eko Sulianto, a director of PT Alstom Power Energy System
Indonesia.

Both PT Alstom Power Energy System and Alstom Power Inc., USA,
are subsidiaries of French engineering giant Alstom. The former
had a plant in Surabaya, which produces, among other things,
boilers.

A CFB boiler is an environmentally friendly type of furnace
that can use low-grade coal. This type of coal, which accounts
for 60 percent of Indonesia's coal reserves, cannot be used in
power plants equipped with standard boilers.

Eko told The Jakarta Post over the weekend that the signing of
the contract had eased worries regarding the future of the
project.

The construction of the Tarahan 3 and 4 power pants was
initially scheduled to start before the end of last year and to
be completed by the end of 2006. Each of the power plants has a
capacity of 100 megawatts and both are valued at US$350 million.

However, PLN was forced to delay the construction work because
the Japan Bank for International Cooperation (JBIC), as the
financier of the project, was unable to finish the evaluation of
the tender results for the projects by the end of last year.

The project is seen as crucial in view of the current power
crisis in the region. Installed power generation capacity in
southern Sumatra currently stands at 580 MW with the demand at
about the same amount. A power grid should have power reserves
amounting to 30 percent of capacity.

Eko said as a result of the delay in the construction of the
project, the power plants would come into operation later than
the initial schedule, that is, in 2007 for Tarahan 4 and 2008 for
Tarahan 3.