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)