Tanjung Jati sets lowest power price

JAKARTA (JP): State-owned electricity company PLN will buy power from PT Tanjung Jati Power Company at 5.74 U.S. cents per kilowatt hour (kWh), claimed to be the lowest sales price ever to be paid to a private generator in Indonesia.

PLN yesterday signed a power purchasing agreement with PT Tanjung Jati which is building a US$1.66 billion power generation plant in Central Java.

"We hope our selling price can be taken as the benchmark for all private power projects in the future," said President Soeharto's second daughter Siti Hediati Harijadi Prabowo, who is Tanjung Jati's president commissioner.

The Tanjung Jati consortium is 30 percent owned by Tomen Power Corporation (Asia) Ltd, a wholly-owned subsidiary of Japan's Tomen Corporation, 30 percent by Britain's National Power, 20 percent by Siti's Maharani Paramitra and 20 percent by PT Bakrie Power Corporation, another Indonesian private company.

The consortium won the project through a competitive bid in 1995 by defeating four other bidders.

The consortium is building a coal-fired power plant with a generation capacity of 1,320 Megawatt (MW) in Tanjung Jati, Jepara, about 80 kilometers northeast of the Central Java capital city of Semarang.

It will operate the plant under a 30-year concession.

The plant is called Tanjung Jati A plant to differentiate it from another power project in the area -- Tanjung Jati B plant -- which is being developed by PT Consolidated Electric Power Asia (CEPA) of Hong Kong

The construction of the Tanjung Jati A plant is scheduled to be completed in 2001. It will need about 4 million tons of coal a year.

PLN's purchasing prices of private electricity under previous agreements ranged from 6 U.S. cents to 7 U.S. cents per kWh.

For example, the Paiton II power plant in East Java set its price at 6.6 cents and the Sibolga A power plant in North Sumatra at 6.55 cents.

The investors of the adjacent Tanjung Jati B plant initially asked for 7.5 cents, before they lowered the price to 6.45 cents.

"Our sales price is okay. We will still get a fair profit margin," said Siti.

Bakrie group's chief executive officer Tanri Abeng said the consortium was able to set a low price because it succeeded in negotiating lower pre-operating and construction and technology costs.

Siti said 75 percent of the $1.66 billion investment would be financed by foreign loans and the remainder by equity capital.

Many banks were interested to finance the project because they considered it highly feasible, she said.

Minister of Mines and Energy I.B. Sudjana who witnessed the signing of the agreement called on the consortium to involve local companies in the project construction.

Sudjana said PLN had previously signed 23 power purchase agreements with private companies. They would generate 9,055 MW, of which 7,980 MW would be generated in Java and 1,075 MW in Sumatra. (jsk)

Table: LIST OF PRIVATE POWER COMPANIES WHICH HAVE SIGNED POWER PURCHASE AGREEMENTS WITH STATE OWNED ELECTRICITY COMPANY PLN.

No Name of Location Power capacity price to PLN

Projects (MW) (US cents/kWh) ---------------------------------------------------------------- 1. Amurang N. Sulawesi coal 110 6,7 2. Cilacap C. Java coal 450 6,26 3. Cilegon W. Java coal 400 6,06 4. Paiton I E. Java coal 1,230 8,56 (1-6th yr)

8.1 (7-12th yr)

5.54 (13-30th yr) 5. Paiton II E. Java coal 1,220 6,59 6. Sibolga A N. Sumatra coal 200 6,55 7. Tanjung C. Java coal 2000 6,45

Jati B 8. Palembang S. Sumatra gas 130 6,48

Timur 9. Pasuruan E. Java gas 500 5,76 10. Sengkang S. Sulawesi gas 135 6,55 11. Bedugul Bali geothermal 220 7,15 12. Cibuni W. Java geothermal 10 6.9 13. Drajat W. Java geothermal 275 6,95 14. Dieng C. Java geothermal 150 9,81 (1-14th yr)

7,41 (15-22th yr)

6,21 (22-30th yr) 15. Kamojang W. Java geothermal 60 7,03 16. Karaha W. Java geothermal 220 8,46 (1-14th yr)

6,57 (15-22nd yr)

5,63 (23-30th yr) 17. Patuha W. Java geothermal 220 7,25 (1-14th yr)

5,63 (15-22nd yr)

4,82 (23-30th yr) 18. Salak 4,5,6 W. Java geothermal 165 8,46 (1-14th yr)

4,94 (15-30th yr) 19. Sarulla N. Sumatra geothermal 330 Not decided 20. Sibayak N. Sumatra geothermal 120 7,1 21. Wayang W. Java geothermal 220 8,39 (1-14th yr)

Windu 6,51 (15-22nd yr)

5,57 (23-40th yr) 22. Pare-Pare S. Sulawesi gas 60 6,02 23. Asahan I N. Sumatra Hydro 180 7,39 (1-15th yr)

3,45 (16-30th yr) 24. Tanjung C. Java coal 1,320 5,74

Jati A

Source: PLN's reports to the House of Representatives April 1, 1997.