Power project delayed due to agreement failure

Power project delayed due to agreement failure

JAKARTA (JP): British Gas International has yet to start
developing a proposed US$350 million gas-fired power plant in
Serpong, West Java, because it has been unable to secure a power
purchase agreement with state-owned electricity company PLN.

British Gas, leading a consortium of local and foreign
companies, got the government licenses to develop the 400-MW
(Megawatt) project three years ago.

It then asked a local partner to get the power purchase
agreement from PLN. But the partner had apparently failed to do
this, a source told The Jakarta Post yesterday.

"This has caused the power plant construction delay," he said.

"The consortium has been trying to get the agreement since
1994 when we got a license from the ministry of mines and energy
to construct the Serpong gas-fired power plant," he said.

At that time, the minister of mines and energy was authorized
to sign the power purchase agreement, he said. Now the authority
is with the president of PLN.

The consortium is made up of British Gas, with a 56 percent
share, Bakrie Power Corp 25 percent, Asia Infrastructure Fund of
the US 15 percent, and Indonesia Binatek Widipratama four
percent.

"The power plant was due to be completed in two years. But
they are still negotiating it," the source said, adding that it
had now turned from a business issue to a political issue.

He said that up until now none of the partners had been
sufficiently politically influential to secure the agreement.

He said that local and foreign companies were offering to help
get the power purchase agreement. "And as far as I know British
Gas has not yet made a decision on its partnership. But
negotiations are still going on," he said.

British Gas' new general manager in Indonesia, Geoff E. Reed,
who replaced Dennis Paterson, said his company was negotiating
its partnership, and gas supply from state-owned oil and gas
company Pertamina.

He said his company still wanted a bigger share in the
consortium despite the entrance of new partners.

Asked to identify the new partners, he said, "I cannot yet
tell you. But hopefully, we can finalize all the problems this
year and start building the power plant."

He did not say how much British Gas had spent on the project
until now.

But the source said British Gas had spent about $30 million in
the last three years. (bnt)