Foreign banks may fund Suralaya, Paiton power projects

A number of foreign banks including Barclays, ABN Amro and HSBC have expressed interest in providing funds for the construction of the Suralaya Baru and Paition Baru coal-fired power plants, Kontan reported Friday.

Yogo Pratomo, the acting chairman of the National Team for the Power Crash Program, said in Jakarta Thursday that the foreign banks would be appointed to finance the construction of the two power plants if the Chinese banks refused to provide the interest rate required by the team.

"If negotiations with the Chinese banks fail, the foreign banks would become the alternative banks to finance the power projects," he said.

State-owned electricity company PLN has named Chinese contractors to build the Suralaya Baru and Paiton Baru power plants which would have a capacity of 625 megawatt and 660 megawatt, respectively, on the condition that the contractors would find their own banks to finance the projects. But there is a delay in the loan distribution due to differences over the interest rate.

"The negotiation with the Chinese banks is still going on. PLN gives the dateline until the end of this year,? he said.

The construction of the Suralaya Baru and Paiton Baru power plants are part of PLN's crash program to provide additional power supply of about 10,000 megawatt in three years until 2009. Most of the projects have been won by Chinese companies.(*)