Bakrie raises cost estimates for Tanjung Jati A project to $2 billion

PT Bakrie Power has raised cost estimates for the construction of the Tanjung Jati A coal-fired power plant to about US$2 billion from $1.2 billion due to an increase in the engineering, procurement and construction (EPC) costs.

Bakrie Power?s President Director Ali Herman Ibrahim said in Jakarta on Wednesday that the Tanjung Jati A would have two units each with a capacity of 2 x 660 megawatt.

He said that the company would raise loans from foreign and local banks including state owned banks to finance 70 percent of the costs needed for the construction of the power plant. ?The remaining 30 percent is expected to be financed by the company?s equity,? he said.

Ali Herman, a former senior executive of state-owned electricity company PT Perushaan Listrik Negera (PLN), said that the project had been delayed because PLN had not yet agreed with the prices of the electricity proposed by Bakrie.

He said that Bakrie proposed a price range of between 6 US cent and 7 US cent per kWh for the electricity to be produced from the Tanjung Jati A plant, but the proposal was rejected by PLN. ?The negotiation is still underway to settle the difference,? he added.

A difficulty in obtaining the land in Jepara for the power plant had also hampered the power project, he said, adding that the company could relocate the plant site to Pemalang, also in Central Java, if the land appropriation problem could not be settled.

Ali said that he was optimistic that the power plant would be able to begin operation in 2014 despite such problems. (bernard)