Dongfang might be axed from Tanjung Kasam power project

Dongfang Electric Corporation of China might be ousted from the Tanjung Kasam coal-fired power project in Riau Islands province for its failure to begin the project according to the schedule, Bisnis Indonesia daily reported on Wednesday.

The Riau islands administration has recently sent a letter to Energy and Mineral Resources Minister Purnomo Yusgiantoro urging the government to review the project.

?If the investor is unable to carry out the project, it should be replaced,? Riau islands governor Ismeth Abdullah said in Batam on Tuesday. He said that the construction of the power plant should be begun as soon as possible in order to help cope with the growing power crisis in the province.

Dongfang signed the engineering, procurement and construction (EPC) contract for the Tanjung Kasam coal-fired power project in August 2006. The power plant will have two units each with a capacity of 55 megawatt. The first unit is scheduled for operation in March 31, 2009 and the second unit in June 30, 2009.

The plant is owned by local company PT. Tanjung Kasam Power (TKP). TKP is owned PT Petra Unggul Sejahtera, a subsidiary of Intraco Penta Group.

PLN, as an offtaker, will purchase power from the plant at Rp 424 per kilowatthour (KwH) on the assumptions that the dollar is valued at Rp 9,000 and coal is priced at US$25 per ton. (*)