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)