Two state firms to jointly build power plant in Sumatra

JAKARTA (JP): State electricity company PT Indonesia Power and state-owned coal mine operator PT Tambang Batubara Bukit Asam have agreed to jointly build a power plant in South Sumatra which they claimed could produce the cheapest electricity in the world.

President of Indonesia Power Firdaus Akmal said that the plant would require an investment of about $160 million, which both Indonesia Power and Tambang Batubara, would finance with their internal funds.

The power generation from the plant would only cost about 3.2 U.S. cents a kilowatt hour (kWh), he said, adding that costs could even further be reduced to 2.6 U.S. cents per kWh.

"This makes it the cheapest in the world," Firdaus was quoted by Antara as saying on Saturday.

As a comparison, the median tariff paid to independent power producers in the Southeast Asian countries is about 6.6 U.S. cents per kWh.

Firdaus said the plant would be built in Lahat regency in South Sumatra, and will have an installed capacity of 2 X 100 megawatt (MW), or 1 X 250 MW, adding that its fuel would mainly come from soft coal or lignite.

"Lignite supply in the area of about one billion to two billion tons makes it strategic for the project," he said, adding that the lignite is not economically viable for exports but is perfect for fuel.

He said a feasibility study was underway and would finish in three months, this would be followed up by a project funding report, price agreement, construction, and getting local administrations to participate as shareholders.

Tambang Batubara president R.A. Sunardi said that the participation of local administrations as shareholders would greatly depend on how much the administration could participate in funding the project.

"Our target is that with a construction period of about four years, by 2005 this commercial hydrothermal electric plant would be commercially operational," Firdaus said.

Sunardi said that the project would be useful in contributing to electricity supply in southern Sumatra and West Sumatra.

"It would be very useful especially for southern Sumatra as the area is lacking up to 70 megawatts of electrical power," he said.

Indonesia Power is a subsidiary of state-owned electricity power company PT Perusahaan Listrik Negara (PLN). (tnt)