C. Java power tender bidders request for more guarantee letter

The announcement of the winner of the tender for the development of a 2x1000 MW Pemalang coal-fired power plant in Central Java, might be further delayed because some bidders have asked for more guarantee letter from the central government.

National Planning Agency BAPPENAS?s program management specialist Lukas Hutagalung told Petromindo.Com that consortiums of Mitsui-International Power and J-Power-Itochu-Adaro had asked for guarantee letters that provide wider coverage.

The Ministry of Finance has declined the request, he said, without providing details.

The government has issued a guarantee letter to investors willing to take part in the tender for the development of the project. Finance Minister Agus Martowardojo said in Jakarta December last year that the letter would guarantee winner of the tender to obtain a license for the construction, to obtain lands, coal supply and to ensure that the government will buy the electricity.

?The guarantee is much broader than those provided for power plants developed under the first-track of 10,000 MW power plant development plan program,? he said, adding that the project will be guaranteed by the government, in cooperation with PT Penjaminan Infrastruktur Indonesia (PII).

The project will cost about US$3 billion to build as part of the public private partnership (PPP).

Seven foreign companies have passed the prequalification phase of the tender, that is 1) China Shenhua Energy Company Limited 2) CNTIC ? Guandong Yudean Consortium 3) GDF Suez - J Power Consortium 4) Korea Electric Power Company (KEPCO) 5) Marubeni Corporation 6) Mitsubishi Corporation 7) Mitsui-International Power Consortium.

The project will be developed under independent power producer (IPP) and build-own-operate-transfer (BOOT) schemes with PLN obliged to buy the power supplies under a 25-year power purchasing agreement (PPA). (denny)