PT PLN awards 19 power projects to private firms

PT PLN awards 19 power projects to private firms

JAKARTA (JP): State electricity company PT PLN has signed 19
power purchase agreements with private companies, which together
will generate 6,545 Megawatts (MW).

"We have awarded 19 power projects to private companies under
build-operate-transfer or build-operate-own schemes," PLN's
president Djiteng Marsoedi said yesterday after signing the 19th
power purchase contract with a new private generator PT
Dayalistrik Pratama.

Djiteng said the 19 private companies would build power
stations with a total capacity of 6,545 MW, of which 4,480 MW
would be generated by coal, 265 MW by gas and 1,800 MW by
geothermal steam.

PLN signed a power purchase agreement with PT Dayalistrik
Pratama, which is 45 percent owned by Ansaldo Energia S.p.A. of
Italy, 45 percent by Sachsen Holding B.V. -- a subsidiary of NRG
Energy Inc. of the U.S. -- and 10 percent by PT Fenergy Cipta --
a subsidiary of the local Kalimanis Group, owned by timber tycoon
Mohamad (Bob) Hasan.

Djiteng said the 6,545 MW were part of the 45,000 MW
generation capacity which the government had assigned to private
power generators.

"This is to anticipate rising demand for electricity in the
2000s," he said, adding that electricity demand is growing about
20 percent a year.

PLN alone has planned to increase its generation capacity by
3,000 MW in the next five years, he said.

Asked whether there would be an oversupply of electricity in
the 2000s, he said: "The development will proceed in stages
according to electricity demand. After all, we should prepare a
generation capacity up to 130 percent of total electricity
demand, using the other 30 percent as reserve."

PT Dayalistrik will spend US$560 million building a coal power
plant in Serang, West Java, with a generation capacity of 400
megawatt (MW).

"We'll start construction later this year and hopefully it
will begin operating in 1999," said Carlo Del Corso, the
president of PT Dayalistrik.

He said that based on the agreement PLN would buy electricity
from the coal power plant for 6.06 U.S. cents a kilowatt hour
(kWh).

"We're also required to use local content as much as possible.
This will include boilers, steel structure and engineering," he
said, adding that the power project would be built under a 30-
year build, operate and own scheme.

Del Corso said 75 percent of the investment to build the plant
would be funded by a loan from a syndication of foreign banks,
and 25 percent by equity funds.

"But we cannot tell you the name of the banks yet because
we're negotiating the loan," he said.

He said his company had already secured about one million tons
of coal a year from PT Berau Coal in Kalimantan.

He said the power plant would use Flue Gas Desulphurization
equipment that could reduce Sulphate oxide (SO2) to avoid air
pollution.

According to Djiteng, PLN would soon sign more power purchase
agreements with the private sector: "we hope to sign some of the
agreements before the end of this year." (bnt)