Dongfang?s contract for Tanjung Kasam power plant terminated

The contract awarded to Chinese firm Dongfang Electric Company to build Tanjung Kasam coal-fired power plant in Batam has been terminated due to the company?s failure to carry out construction works according to schedules, Bisnis Indonesia reported on Monday.

Margamulia Arifin, the president director of the power plant operator PT. Tanjung Kasam Power (TKP), said in Batam late last week that the contract was formally ended on June 30 based on a mutual agreement.

TKP is owned PT Petra Unggul Sejahtera, a subsidiary of Intraco Penta Group.

TKP would soon hold a tender to find a new contractor to continue the construction of the Tanjung Kasam power plant which would have a capacity of 2 x 55 megawatt, he said.

Margamulia said that he had sent invitation letters to other Chinese companies including China Machinery Export Corporation (CMES) and China Huadian Engineering Corporation (CHEC) to take part in the tender.

He hoped that the construction of the US$126 million power plant could be completed in early 2011 according to the initial schedule despite the delay in the construction works.

Due to its internal and external problem Dongfang has been unable to continue the construction works of the Tanjung Kusam power plant. The Chinese company has conducted a feasibility study including engineering and designs, he added.

Dongfang signed the engineering, procurement and construction (EPC) contract for the Tanjung Kasam coal-fired power project in August 2006. The first unit is scheduled for operation in March 31, 2009 and the second unit in June 30, 2009.

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. (*)