Financial problems hamper 10,000 MW power projects

Financial problems have hampered the construction of several coal-fired power plants to be built in Java as part of state-owned electricity company PLN's crash program to provide additional power supply of about 10,000 megawatt (MW), an official has said.

Yogo Pratomo, the head of the govenrment's team for the 10,000 MW power crash program, said during a hearing with the Commission VII of the House of Representatives Thursday that the financial problem particularly affected three large power projects, that is Banten 2, Banten 3, West Java 2 and East Java 1.

The auction of the 2x300 MW Banten 2 project had been cancelled following the withdrawal of ABN Amro from the project, he said, adding that the Dutch bank had pledged to provide loans worth US$373.4 million but pulled out from the project without clear reasons.

He said that PLN was currently in talks with local banks such as Bank Mandiri, Bank BNI and Bank BRI to replace ABN Amro as the financier of the Banten 2 project.

Meanwhile, the constructin of the 3x300 MW Banten 3, 3x300 MW West Java 2 and 2x300 MW East Java power plants could not be commenced as planned due to the delay in the disbursement of upfront payment from PLN.

"We hope PLN could provide the upfront payment (amounting about 15 percent of the total value of the projects) in March," he said, adding that the funds would be raised from the bonds to be sold by PLN.

PLN plans to launch in February the third-round tender to raise funds for 2x350 MW Pacitan, 3x315 MW Teluk Naga and 3x315 MW Pelabuhan Ratu power projects. The projects need a total of US$1.23 billion.

Meanwhile, five power plants outside Java as part of the 10,000-MW crash program has postponed construction due to a change in the project planning.

"The construction of the five power projects will be delayed at least until 2011," Yogo said

The five coal-fired power projects include 2x100 MW North Sumatra 1, 2x150 MW North Sumatra 2, 2x10 MW Bangka Belitung 1, 2x10 MW Bangka Belitung 2, 2x7 MW Central Kalimantan 2 and 2x25 MW North Sulawesi 1.

Yogo said North Sumatera 1 and 2 would be combined into a single plant, while Bangka Belitung 1 and 2, Central Kalimantan 2 and North Sulawesi 1 would be offered to independent power producers (IPPs), instead of being built by PLN.

Despite the delay, a number of coal-fired power plants to be built outside Java as part of the crash program would go as scheduled, he said, adding that Amurang in North Sulawesi, Gorontolo and West Nusa Tenggara 2 (Jiranjang) would commence operation in 2009 as the original schedule.

Several coal-fired power plants to be built in Java including Labuhan in Banten, Indramayu 1 in West Java, and Rembang in Central Java would also begin operation as scheduled in 2009.

Also speaking during the hearing, PLN's President Director Eddie Widiono said that the state-owned electricity company still relied on oil fuel in operating some of its power plants.

He said that in 2008 PLN will need about 7.2 million kiloliters of high speed diesel (HSD), about 3.4 million kiloliters of marine fuel oil (MFO), about 1,905 kiloliters of international oil diesel, about 1,878 kiloliters of biofuel, about 198,105 million British thermal unit of natura gas and about 20.957 million tons of coal this year . (godang)