Threats do the trick as power prices come down
Threats do the trick as power prices come down
JAKARTA (JP): Strong pressure from the Coordinating Minister
for Economy and Finance Saleh Afiff may have finally persuaded
three consortiums led by foreign power giants that it is better
to bring down their prices then it is to lose their projects.
"Their willingness has been reflected in letters, which were
sent today to the state electricity company PLN," David Tombeg,
PLN's spokesman, told The Jakarta Post here yesterday.
Tombeg said the consortiums pledged at a meeting with PLN last
week to finish new feasibility studies on price reductions and
submit new proposals by May 1.
"Their responses are encouraging but I cannot tell you the
details of the letters because PLN should study the proposals
carefully," he said.
This is just the most recent installment in a saga that two
weeks ago saw Minister Afiff block the firms' attempts to secure
export credit.
The government granted the three projects last year on a non-
competitive, repeat order basis, in a move it said would speed up
construction and head off a looming power crisis.
In recent months, however, dissatisfaction within the
government over the prices led to an announcement that the orders
would be canceled and the projects thrown open to competitive
bids.
Early last month, the cancellation was canceled when the
consortiums agreed to lower their prices from a total of US$2.14
billion to $1.76 billion. Afiff was still not satisfied, perhaps
prompted by GEC Alsthom International's assertion that it could
shave $410 million off the total cost, and urged the consortiums
to make further cuts.
PLN is scheduled today to hold a meeting to discuss the new
proposals, Tombeg said.
"On May 1, we should have sent our response to the new
proposal to Minister of Mines and Energy Ida Bagus Sudjana and
Minister Afiff," he said.
The consortiums are Asea Brown Bovery (ABB) of Switzerland and
Japan's Marubeni, to build a 982-megawatt (MW) combined-cycle
power plant at Muara Tawar in West Java, Japan's Sumitomo and
General Electric of the U.S., to set up a 505-MW one-cycle power
plant at Tambak Lorok in Central Java and Japan's Mitsubishi and
the German Siemens, to establish a 855-MW combined-cycle power
plant at Grati in East Java. (fhp)