U.S. and RI sign $3.46b power deal

U.S. and RI sign $3.46b power deal

JAKARTA (JP): Four American-Indonesian joint ventures
yesterday won contracts to explore and develop geothermal fields
in West and Central Java and to establish power plants with a
total capacity of up to 1,420 megawatts (MW).

"The agreements allow the contractors to operate for 42 years,
including a production period of 30 years," Minister of Mines and
Energy I.B. Sudjana said at the ceremony for the signing of the
contracts, which was attended by U.S. Ambassador Robert L. Berry
here yesterday.

The four ventures signed the agreements on the exploration and
production of geothermal steam with the state oil company
Pertamina and those on the establishment of power plants with the
state electricity company PLN.

Sudjana and Berry earlier yesterday also signed a memorandum
of understanding on resource and environment cooperation between
the Indonesia's Directorate General for Geology and Mineral
Resources and the United States Geological Survey on the
Development of Geoscience and the U.S. Office of Surface Mining
and Reclamation.

All the four geothermal power agreements will require the
contractors to invest around US$3.46 billion.

The four ventures include PT Mandala Magma Nusantara BV with
its commitment to setting up geothermal power plants with a total
capacity of 400 MW in Wayang Windu of West Java, PT Karaha Bodas
Company with plants of 220 MW in Karaha of West Java, PT Patuha
Power Ltd. with plants of 400 MW in Patuha of West Java and PT
Himpurna California Energy Ltd. with plants of 400 MW in Dieng of
Central Java.

After negotiations of almost one year, the government and the
contractors have agreed on sale prices based on a three-tiered
rate for their electricity within 30 years, Sudjana said.

Prices

Under the agreements, Mandala Magma Nusantara, a joint venture
between the California-based Magma Power Corp, Oka Satrya Mandala
and Figears, will sell electricity to PLN at 7.879 U.S. cents per
kilowatt hour (kWh) for the first 14 years, 5.694 cents for the
following eight years and at 4.973 cents for the remaining eight
years. Magma Power controls a 90 percent stake in the firm, while
Oka Satrya and Figears, both owned by President's Soeharto's son
Hutama (Tommy) Mandala Putra, hold the remaining 10 percent.

Meanwhile, Karaha Bodas, which is 90 percent owned by the New
York-based Caithness Resources Inc. and 10 percent by PT Sumarah
Dayasakti, will sell electricity under a similar scheme at 7.597
cents, 5.750 cents and 5.028 cents.

Patuha Power -- 90 percent owned by California Energy
International Ltd. and 10 percent by PT Emerindo Supra Abadi --
is committed to selling electricity at 7.909 cents, 5.706 cents
and 4.985 cents, while Himpurna California, which is 90 owned by
California Energy International and 10 percent by PT Himpurna
Enersindo Abadi, will offer its electricity at 7.643 cents, 5.545
cents and 4.858 cents, respectively.

PLN's president, Zuhal, said the first supply of electricity
is expected to come by 1997, when power plants, each with a
capacity of 55 MW, will have been set up in Wayan Windu, Karaha
and Patuha and a 150 MW plant in Dieng.

He expected that in 15 years, plants with a total capacity of
1,420 MW will be in operation.

Shareholding

Pertamina's director for exploration and production, G.A.S.
Nayoan, told The Jakarta Post that Pertamina will hold a certain
stake in each of the joint ventures. "But the percentage of the
stake will be discussed with the existing shareholders later," he
said.

Magma Power's vice president, Kenneth J. Kerr, said Pertamina
will likely take a maximum stake of 20 percent in each of the
ventures.

Nayoan said that the contractors will also be responsible for
the financing of geothermal exploration and production and the
construction of power plants under a build, own and operate (BOO)
scheme.

Donald O'Shei, vice president of California Energy Int'l, told
the Post that his company, which was awarded contracts for the
Patuha and Dieng plants, has been committed to investing $2
billion for the establishment of two plants with a combined
capacity of 800 MW.

Kerr said that his company plans to spend $800 million for a
400 MW plant in Wayang Windu. Meanwhile, Karaha Bodas' director
Mohamad Bawazeer said: "My company expects to spend around $660
million for the construction of a 220 MW power station in
Karaha."

Yesterday's agreements were the second made by the government
this year, after Pertamina last month clinched a $330 million
deal with Unocal Geothermal Indonesia, a subsidiary of Unocal
Corp. of the U.S., for the building and operating of three 55-MW
geothermal plants at Gunung Salak in West Java.

Vincent T. Radja, a PLN geothermal expert, told the Post that
PLN is now offering new geothermal power plants in Surulla of
North Sumatra (with a capacity of 110 MW) and in Lampung (110 MW)
to private firms.

PLN also plans to construct small-scale geothermal plants in
Tulehu, Ambon, with a capacity of 5,000 kilowatt (kw), in
Sembalun, Lombok, with a capacity of 5,000 kw, in Kerinci, Jambi,
with a total capacity of 350 kw and in Ulumbu, East Nusa
Tenggara, with a capacity of 3,000 kw, he said.

Indonesia thus far operates five geothermal plants with a
combined capacity of 144.75 MW in Kamojang (West Java), Dieng and
Lahendong (North Sulawesi). The biggest units are located in
Kamojang, with a combined output capacity of 140.25 MW. (fhp)